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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                      For the Year Ended December 31, 2001

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                           Commission File No. 0-21417


                            CAPITAL TITLE GROUP, INC.
                 (Name of Small Business Issuer in its charter)


           Delaware                                              87-0399785
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)


2901 East Camelback Road, Phoenix, Arizona                          85016
 (Address of principal executive offices)                         (Zip Code)


         Issuer's telephone number, including area code: (602) 954-0600


              Securities registered under Section 12(b) of the Act:

                                      NONE


              Securities registered under Section 12(g) of the Act:

                          Common Stock, $.001 par value
                                (Title of class)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]

On March 5, 2002, the aggregate market value of the voting and non-voting common
equity held by non-affiliates  of the registrant was approximately  $26,969,000.
This  figure  was  estimated  based  the on March 5, 2002  closing  price of the
Company's  common  stock.  The number of shares of Common Stock  outstanding  on
March 5, 2002 was 17,220,281.

Indicate by check mark if there is no disclosure of delinquent  filers  pursuant
to Item 405 of Regulation  S-K is not contained in this form,  and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy or
information statements  incorporated by reference in Part III of this Form 10-K,
or any amendment to this Form 10-K. [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Proxy  Statement  for the 2002 Annual  Meeting of
Stockholders to be held on May 22, 2002 are  incorporated by reference into Part
III hereof.
<PAGE>
                                     PART I

ITEM 1. BUSINESS

COMPANY HISTORY AND OVERVIEW

     Capital Title Group,  Inc. (the "Company") is a Delaware  corporation which
acts as the parent holding company of the following subsidiaries:

     Capital Title Agency,  Inc.  ("Capital  Title") is an Arizona  corporation,
     which has  operated  under  the  authority  of the  Arizona  State  Banking
     Commission  since  November  1981.  Capital Title is an  independent  title
     agency  that  provides  escrow  services  and,  as an agent for five  title
     insurance  companies,  issues title  insurance  policies to the real estate
     industry  in  Maricopa,  Yavapai,  Mohave and Pinal  Counties  in  Arizona.
     Capital Title currently  operates 34 offices located  throughout  Maricopa,
     Yavapai and Mohave Counties in Arizona.

     New Century Title Company ("New  Century"),  a California  corporation that
     began operations in July 1998, is an independent title agency that provides
     escrow  and  title  services  to  the  real  estate  industry  in  selected
     California  counties.  New  Century  currently  has 12 offices in  southern
     California where it is licensed to conduct  business in San Diego,  Orange,
     Riverside,  San Bernardino and Los Angeles  Counties.  New Century also has
     operations  in northern  California,  which it obtained by  acquisition  in
     November  1998.  New  Century  has an  additional  12 offices  in  northern
     California,  where it is  licensed to conduct  business  in Sonoma,  Contra
     Costa and Alameda Counties. In March 2002, New Century received its license
     to conduct business in the northern California counties of Santa Clara, San
     Mateo and Sacramento.

     The Company plans to continue its growth in Arizona and California,  and as
conditions  merit, to expand into other southern and  southwestern  states.  The
Company  intends  to  accomplish  this  planned   expansion   primarily  through
recruitment of escrow  officers with  significant  existing  revenue  production
based upon their  relationships  with real estate brokers,  mortgage lenders and
other  industry  participants.   The  Company  will  attempt  to  attract  these
significant producers through employment packages that include commissions based
on revenue generated and stock options.

     The  executive  offices of the Company  are located at 2901 East  Camelback
Road,  Phoenix,  Arizona 85016,  the telephone  number is (602) 954-0600 and the
website is www.capitaltitlegroup.com.

COMPANY OPERATIONS

     The Company is an independent  title agency  providing escrow services and,
as an agent for First  American Title  Insurance  Company,  Stewart  Information
Services  Corporation,  United General Insurance Company, Old Republic Insurance
Company and American  Pioneer Title  Insurance  Company,  issues title insurance
policies to service the real estate  industry.  As a title insurance  agent, the
Company  derives  revenue from providing title search services and issuing title
insurance policies on behalf of the underwriter.

     Capital  Title's  operations  commenced in 1981 in Prescott,  Arizona.  The
Company is  licensed  to conduct  business  in four  counties  in Arizona and 11
counties in  California.  During late 1996 the Company  began its  expansion  in
Maricopa County,  Arizona and in 1998 expanded into Mohave County, Arizona along
with entering the California market.

     The Company's  operations have been influenced by the geographic  locations
in which it operates.  Arizona and  California  rank among the top states in the
nation in the rate of new job creation,  population growth and gains in personal
income.  These states have some of the largest single family housing  markets in

                                       2
<PAGE>
the  nation  including  the  Los  Angeles,   San  Diego,   Oakland  and  Phoenix
metropolitan areas.

INDUSTRY OVERVIEW

     Title  insurance  has  become  accepted  as the  most  efficient  means  of
determining  ownership  of, and the  priority  of  interests  in, real estate in
nearly all parts of the  United  States.  Virtually  all real  property  lenders
require their borrowers to obtain title insurance  policies at the time mortgage
loans are made.

     The major expense of a title agency  company is the search and  examination
function in preparing preliminary title reports, commitments and title policies.
Companies have focused on advancing technology in order to reduce costs, improve
accuracy and respond to the continuing pressures within the real estate industry
for faster and more cost effective processing of transactions.

     The Company  possesses  advanced  title report  generation  and  processing
technology that combines title  information from multiple sources via electronic
data exchange. This technology facilitates expansion of the Company's operations
in existing markets, and management believes it provides a competitive advantage
compared to the technology of competing title companies.

     TITLE  POLICIES.  Title  insurance  policies state the terms and conditions
upon  which  a  title  underwriter  will  insure  title  to  real  estate.   The
beneficiaries of title insurance  policies are generally buyers of real property
or secured lenders.

     Title  insurance  is  different  from other types of  insurance  because it
relates to past events that affect  title to property at the time of closing and
not  unforeseen  future  events.  Prior to  issuing  policies  underwriters  can
eliminate future losses by accurately performing searches and examinations.  The
premium  for  title  insurance  is due in full on the  closing  date of the real
estate  transaction and is based upon the purchase price of the property insured
or the amount of the secured loan.

     Title insurance policies are issued on the basis of a preliminary report or
commitment.  These reports are prepared after a search of public  records,  maps
and other relevant  documents to ascertain  title ownership and the existence of
easements,  restrictions,  rights  of way,  conditions,  encumbrances  or  other
matters affecting the title to, or use of, real property. A visual inspection of
the property may also be made prior to the issuance of certain  title  insurance
policies.

     To facilitate the preparation of preliminary  reports without the necessity
of manually searching public records,  copies of public records,  maps and other
relevant historical  documents are compiled and indexed in a "title plant." Each
title plant  relates to a  particular  county and is kept  current on a daily or
other frequent basis by the addition of copies of recorded documents that affect
rights  in  real  property  in the  particular  county.  Title  companies  often
subscribe to independent title information services to assist in the updating of
their title plants and the maintenance of title records.

     DIRECT VS.  AGENCY  SALES.  Preliminary  reports and  commitments  to issue
policies are prepared by title  underwriters  (direct  sales) or by  independent
agents on behalf of the  underwriters  (agency sales).  The terms and conditions
upon which the real property will be insured are  determined in accordance  with
the standard policies and procedures of the title underwriter.  In direct sales,
the title underwriter  issues the preliminary  report and commitment and retains
the entire title  premium paid in  connection  with the  transaction.  In agency
sales, the search and examination function is performed by the independent agent
and the vast  majority of the premium  collected is retained by the agent,  with
the balance remitted to the title underwriter. The Company competes against both
title  underwriters and other independent  agents.

     THE TITLE POLICY PROCESS.  A brief  description of the process of issuing a
title insurance policy is as follows:

     (i)  The customer,  typically a real estate  salesperson or broker,  escrow
          agent or lender, places an order for a title policy.

                                       3
<PAGE>
     (ii) After the relevant  historical  data on the property is compiled,  the
          title  officer  prepares a preliminary  report that  documents (a) the
          current  status  of  title  to  the  property,   (b)  any  exemptions,
          exceptions and/or limitations that might be attached to the policy and
          (c)  specific  issues that need to be  addressed  and  resolved by the
          parties  to the  transaction  before the title  policy  will be issued
          (such as removal of prior tax liens and  payment of prior loans on the
          property). The preliminary report is circulated to all the parties for
          satisfaction of any specific issues.

    (iii) After all specific  issues  identified in the  preliminary  report are
          satisfied,  the escrow agent closes the transaction in accordance with
          the instructions of the parties and the policy conditions.

     (iv) Once the  transaction is closed and all monies have been  released,  a
          final  policy  is issued  (a) to the  owner  and the  lender on a sale
          transaction or (b) to the lender only on a refinancing transaction.

     LOSSES  AND  RESERVES.  The  maximum  amount  of  liability  under  a title
insurance  policy issued by a title  insurance  underwriter  is usually the face
amount of the policy plus the cost of defending the  insurer's  title against an
adverse  claim.  The reserve for claim losses is based upon known claims as well
as losses the insurer expects to incur based on historical  experience and other
factors,  including  industry  averages,  claims  loss  history,  current  legal
environment,  geographic  considerations and type of policy written. Because the
Company operates an independent agency, it provides title insurance on behalf of
third party  underwriters.  As such, the Company's  losses and reserves are less
than   those   carried   by  a  title   insurance   underwriter   (see   Company
Operations-Claims and Underwriting).

     ECONOMIC FACTORS AFFECTING INDUSTRY.  Title insurance revenue is related to
the level of  activity  in the real  estate  market and the price of real estate
sales.  Real estate sales are directly  affected by the availability of money to
finance purchases.  Other factors affecting real estate activity include demand,
mortgage interest rates, family income levels and general economic conditions.

     During 2001, there was a significant  increase in the refinance market from
prior year levels as a result of decreased mortgage interest rates.

COMPANY STRATEGY

     The  Company's  strategy  is to  pursue  aggressive  growth  in  the  title
insurance industry in the Southwestern United States.  Essential elements of the
Company's strategy are as follows:

     COMMITMENT TO SERVICE. The Company is built on three basic  entrepreneurial
premises: (1) every employee is a salesperson for the Company; (2) the Company's
services are a one-stop,  computer-based  contact point for complete real estate
transactions;  and (3)  success  is  achieved  through  a focus on an  unequaled
quality  of  customer  service.  Because  title  insurance  policies  and escrow
functions are generally  standardized,  the level of service provided is the key
differentiating  factor among  competitors  in the title  industry.  Through its
commitment to customer service, the Company seeks to build lasting relationships
with its real estate industry clients.

                                       4
<PAGE>
     MARKET  FOCUS.  The  Company's  market  focus  is on real  estate  brokers,
mortgage  lenders and  developers  as this business has  historically  been more
consistent  and less prone to  fluctuation  than  commercial,  new home sales or
refinancing  segments of the market.  To set itself apart as a service  company,
the Company  continues to enhance industry  specific  information  technology to
better serve its clients.

     MANAGEMENT.  The Company  recognizes that its aggressive  growth plan calls
for executive  management  with  extensive  industry  operational  and expansion
experience.  The Company was  co-founded by Donald R. Head, and he has served as
Chairman of the Board and Chief Executive Officer since inception.  Mr. Head has
extensive experience as a real estate developer and entrepreneur within the real
estate industry and has 20 years of experience in the title insurance industry.

     Milt  Ferrantelli,  President and CEO of Capital  Title Agency,  joined the
Company in 1997. Prior to joining the Company, Mr. Ferrantelli  purchased United
Title  Insurance  Agency  in 1986 with two  active  partners  and  served as its
President  and Chief  Executive  Officer,  prior to its  acquisition  by Norwest
Financial in 1994. Mr.  Ferrantelli has over 20 years of experience in the title
and escrow industry in the Arizona marketplace.

     Mervyn L.  Morris,  President  of New  Century  Title  Company,  joined New
Century in September  1999.  Mr.  Morris has over 28 years of  experience in the
title and  escrow  industry.  Prior to  joining  New  Century,  Mr.  Morris  was
Executive  Vice  President,  Southern  Division  Manager for Old Republic  Title
Company, covering 25 branch offices and approximately 600 employees.

     In addition,  the Company employs managers to run the day-to-day operations
in the  counties  the Company  operates  in and to support  the above  mentioned
executives.  These  managers  average over 20 years  experience in the title and
escrow industry.

     EQUITY  PARTICIPATION  BY ESCROW  OFFICERS.  Escrow  officers are the major
revenue  producers  for  title  insurance   companies.   It  is  their  business
relationships with real estate brokers,  lenders and other industry participants
that are primarily  responsible  for the direction of escrow and title business.
The Company will seek to attract the most  successful  escrow  officers  through
employment packages that include commissions based on revenue produced and stock
options as added  motivational  incentives.  The Company  believes such programs
will also promote  Company  loyalty,  which will help to insulate the  Company's
escrow officers from competitive recruiting efforts.

COMPANY OPERATIONS

     The Company  reported  revenue of $64.4 million for the year ended December
31, 2001  compared to $36.9 million for the year ended  December 31, 2000.  (See
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations).

     MARKETING.  The Company believes that the primary source of its business is
from referrals from participants in the real estate industry such as real estate
brokers,  mortgage  lenders and developers.  In addition to the referral market,
the Company markets its services directly to larger brokerages and real property
lenders.  Marketing  activities  are  performed  by the escrow  officers  of the
Company and marketing representatives whose sole function is the solicitation of
business from major real estate brokers, developers, owners and lenders.

     ESCROW  SERVICE.  The Company's  escrow  departments  are  responsible  for
handling the consummation of real estate transactions.

                                       5
<PAGE>
     The escrow  officers and  assistants  typically  prepare  escrow  documents
pursuant to the real estate contract.  The escrow instructions  provide guidance
to all  concerned  parties as to the  conditions  required  for the real  estate
transaction.  The escrow  officers then receive funds and disburse them pursuant
to the escrow instructions.

     The escrow agents are held accountable by state  governmental  agencies for
strict compliance with their fiduciary  responsibilities  outlined by the escrow
instructions.  The officers must possess a high degree of skill, professionalism
and confidentiality in the handling, preparation,  collecting and recordation of
all escrow  matters  between the buyer,  seller,  real estate  brokers and their
agents, developers, lenders and investors.

     TITLE  DEPARTMENT.  The  primary  function of the title  department  is the
accumulation  and analysis of various  documents from the many sources that make
up the  public  record.  From this  analysis,  a  preliminary  report is written
showing  the  present  condition  of title.  This  report is given to the escrow
officer  who, in turn,  distributes  it to the parties  involved in the purchase
agreement.  After the  preliminary  report has been read and approved by all the
parties and the requirements of the report have been fulfilled,  the escrow will
proceed to closing and a final title insurance policy will be issued.

     The  accumulation  of title data from public  records  which  provides  the
history of each parcel of real estate in a particular county is referred to as a
"title plant." The Company has entered into  multi-year  service  agreements for
title plant access in the counties it operates. In certain counties, the Company
may be a partial owner in a title plant or own a title plant which contains data
prior to the time period  covered by a third party  title  plant  provider.  The
Company  believes it will be able to obtain  access to title plants on terms and
conditions  that are acceptable to it as the Company expands into other markets;
however, there can be no assurance in this regard.

     CLAIMS AND  UNDERWRITING.  The Company provides title insurance as an agent
of five title  insurance  companies.  These  services are  provided  pursuant to
Underwriting  Agreements  with  each  of  these  underwriters  which  state  the
conditions on which the Company is authorized to issue a title insurance  policy
on behalf of the  underwriter  and prescribe the  circumstances  under which the
Company may be liable to the  underwriter  if a policy loss is  attributable  to
errors made by the Company.

     Claims against title insurance  policies normally arise out of human error.
During the process of  accumulation  and analysis of the public record,  certain
inaccuracies  and  inconsistencies  are encountered  that sometimes  result in a
situation in which  interpretation of these documents could lead to a claim. The
Company's  exposure is typically limited to $5,000 for any loss resulting from a
title insurance claim. The Company assumes the entire risk of losses incurred in
errors  made  during the  escrow  process;  however,  it has  secured  insurance
coverage up to $1 million with a $10,000  deductible,  to limit any  significant
losses.

CUSTOMERS

     The Company is not  dependent  upon any single  customer or single group of
customers. The loss of any one customer would not have a material adverse effect
on the Company.

SEASONALITY

     The title  insurance  business is closely related to overall levels of real
estate sales  activity.  Historically,  real estate sales activity slows down in
the winter months with volumes  showing  significant  improvements in the spring
and summer months. In addition,  the title insurance business is cyclical due to
the effect of  interest  rate  fluctuations  on the level of real  estate  sales
activity.  Periods of high interest rates adversely  effect real estate activity
and therefore title and escrow revenues.

                                       6
<PAGE>
COMPETITION

     The  title  insurance  business  is  highly  competitive.   Companies  with
significant  market  share in Arizona and  California  include  First  American,
Chicago Title,  Old Republic,  Stewart Title,  Fidelity Title and Lawyers Title.
The number and size of competing companies varies in different geographic areas.
In those  areas where the  Company  operates  and intends to operate the Company
will face  competition  from  other  independent  agencies  and  major  national
insurance  underwriters,  many of  which  have  financial  and  other  resources
significantly  greater  than those of the  Company.  The Company  believes  that
quality  and  timeliness  of  service  are the key  competitive  factors  in the
industry because parties to a real estate transaction are usually concerned with
time schedules and costs  associated with delays in the closing of transactions.
In those states where prices are not  established  by  regulation,  the price of
title insurance is also an important competitive factor.

REGULATION

     The Company  conducts  its  business  under  licenses  granted by the State
Banking and Insurance  Departments of the State of Arizona and the Department of
Insurance in California. The title insurance and escrow businesses generally are
subject to  extensive  regulation  under  applicable  state laws,  including  in
California,  a requirement to maintain a minimum net worth. These laws establish
supervisory  agencies with broad  administrative  powers relating to issuing and
revoking  licenses,  regulating trade  practices,  licensing  agents,  approving
policy  forms  and  approving  rate  schedules.  Failure  to comply  with  these
regulations  or an inability to secure or maintain any required  licenses  could
materially adversely affect the Company's business. The Company believes that it
is in compliance  with applicable laws and regulations and that it will maintain
and obtain all licenses required for the conduct of its business.

EMPLOYEES

     As of December 31, 2001, the Company had a total of 710 employees, of which
347 were located in Arizona and 363 in California. The Company believes that its
relations with its employees are excellent.

ITEM 2. PROPERTIES

     The Company  conducts its business  operations  primarily in leased  office
space. The Company currently leases offices at 59 locations with remaining lease
periods ranging from one to sixty months.  The Company's monthly rental payments
at the foregoing locations are approximately $293,100. The Company owns a 24,000
square  foot  building  in  Phoenix,   Arizona,  which  includes  its  corporate
headquarters  and its Maricopa County  operations.  In January 2001, the Company
entered into a sale-lease  back  transaction  in which it sold and leased back a
14,250 square foot building in Santa Rosa, California.

ITEM 3. LEGAL PROCEEDINGS

     The Company is involved in certain legal actions, which arise in the normal
course of its title business. The Company believes, based on the advice of legal
counsel,  that  none  of  these  claims  are  material  to the  Company,  either
individually or in the aggregate, and the final outcome will not have a material
adverse  affect on the Company's  financial  position,  results of operations or
liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were  submitted to a vote of security  holders during the fourth
quarter of the fiscal year ended December 31, 2001.

                                       7
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  Common Stock has been quoted on The Nasdaq  SmallCap  Market
under the symbol  "CTGI"  since  September  21,  1998 and on the OTC  Electronic
Bulletin Board from May 15, 1997 to September 20, 1998.

     The  following  table sets forth  high and low  reported  bid prices of the
Company's  Common  Stock for the periods  indicated.  Bid  quotations  represent
interdealer prices, without retail mark-up, mark-down or commissions and may not
represent actual transactions.

                Date                                High           Low
-------------------------------------              -----          -----
2000  First Quarter                                $2.06          $ .25
      Second Quarter                                1.75           1.00
      Third Quarter                                 1.37            .81
      Fourth Quarter                                3.56            .43
2001  First Quarter                                 1.59            .94
      Second Quarter                                2.74           1.06
      Third Quarter                                 2.90           1.95
      Fourth Quarter                                2.54           2.00
2002  First Quarter (through March 1)               2.34           2.00

     As of December 31, 2001, the Company had issued and outstanding  17,065,381
shares of common stock. In addition,  3,900,000 shares are reserved for issuance
under the Company's  1996 Stock Option Plan and 600,000  shares are reserved for
issuance under the Company's  Non-Employee Directors Plan. At December 31, 2001,
there were approximately 1,100 holders of record of the Company's common stock.

     In March 1998, the Company issued  463,500  warrants in conjunction  with a
private placement. Each warrant entitles the holder to purchase one share of the
Company's  common stock at $2.50 until  December 31,  2002.  In April 1998,  the
Company  issued  308,642  warrants to an  investment  banking firm that acted as
placement  agent in  connection  with another  private  placement.  Each warrant
entitles the holder to purchase one share of the Company's common stock at $1.62
until May 1, 2002.

     The Company has never paid a dividend on its Common Stock. The Company does
not  anticipate  paying any  dividends  on its Common  Stock in the  foreseeable
future.  Rather,  the Company  anticipates  that its  earnings,  if any, will be
retained to fund the Company's  working capital needs and the planned  expansion
of its  business.  The  payment  of any  dividends  will be  dependent  upon the
discretion of the Board of Directors. Furthermore, under Delaware corporate law,
in the absence of current or retained  earnings,  the Company may be  prohibited
from paying dividends (whether in cash or otherwise).

                                       8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

Selected Financial Data-Five Year Summary
  (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
For The Year:                                     2001        2000        1999        1998        1997
                                                --------    --------    --------    --------    --------
<S>                                             <C>         <C>         <C>         <C>         <C>
Title insurance fees, net                       $ 41,161    $ 22,628    $ 20,808    $ 13,175    $  4,865
Escrow and related fees                           20,468      11,447      11,088       7,535       2,718
Interest and other income                          2,807       2,823       2,080       1,037         271
                                                --------    --------    --------    --------    --------
Total revenue                                     64,436      36,898      33,976      21,747       7,854
Net income (loss)                                  5,070      (2,252)     (1,969)      1,676        (245)
Net cash flows provided by (used in)
operating activities                               9,674         121      (2,075)      2,472        (199)
Net cash flows used in investing activities         (582)     (1,369)     (3,674)     (3,080)       (768)
Net cash flows provided by (used in)
financing activities                              (2,190)        140       2,799       5,243       1,089
Per share data:
Net income (loss) per common share - Diluted        0.28       (0.13)      (0.12)       0.11       (0.02)
Weighted average shares outstanding - Diluted     18,031      17,158      16,868      15,938      11,088
At Year End:
Total assets                                    $ 21,025    $ 14,301    $ 15,199    $ 16,528    $  2,254
Long term obligations                              3,873       4,264       4,556       1,885         415
Stockholders' equity                              11,104       6,730       8,544      10,790         818
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATION

     The  following  discussion of the results of the  operations  and financial
condition  of the  Company  should  be read in  conjunction  with the  Company's
Consolidated  Financial  Statements and Notes thereto included elsewhere in this
report.  Historical results and percentage  relationships among accounts are not
necessarily an indication of trends in operating results for any future period.

     CRITICAL ACCOUNTING POLICIES

The  preparation  of  consolidated   financial  statements  in  conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make a number of estimates and  assumptions  that affect
the reported  amounts of assets and  liabilities  and  disclosure  of contingent
assets and liabilities at the date of the financial  statements.  Such estimates
and assumptions  affect the reported amounts of revenues and expenses during the
reporting  period.  On an ongoing  basis,  management  of the Company  evaluates
estimates and  assumptions  based upon  historical  experience and various other
factors and  circumstances.  The Company  believes its estimates and assumptions
are  reasonable in the  circumstances;  however,  actual results may differ from
these estimates under different future conditions.

Management  believes that the estimates and assumptions  that are most important
to the portrayal of the Company's financial condition and results of operations,
in  that  they  require  management's  most  difficult,  subjective  or  complex
judgments, form the basis for the accounting policies deemed to be most critical
to the  Company.  These  critical  accounting  policies  relate  to  bad  debts,
impairment  of  intangible  assets and long lived  assets,  reserves  related to
escrow  and title  policy  losses,  reserves  related to  self-funded  insurance
programs,  and  contingencies  and  litigation.  For  additional  information on
accounting policies,  refer to Note 1 in the Notes to the Company's Consolidated
Financial  Statements.  Management believes estimates and assumptions related to
these critical  accounting  policies are  appropriate  under the  circumstances;

                                       9
<PAGE>
however,   should  future  events  or   occurrences   result  in   unanticipated
consequences, there could be a material impact on our future financial condition
or results of operations.

OVERVIEW

     Capital Title Group,  Inc. reported a net income of $5,070,270 for the year
ended  December 31, 2001 compared to net losses of $2,252,287 and $1,969,027 for
the years  ended  December  31,  2000 and 1999,  respectively.  The  significant
improvement  in earnings was due in part to a strong housing market and a record
level of refinance  transactions resulting from low mortgage interest rates. The
losses  in  prior  years  resulted  from  losses  in  the  Company's  California
operations  due to a downturn in refinance  business  resulting  from  increased
interest  rates in 1999  and  2000  and  costs  associated  with  expanding  its
infrastructure and branch operations.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods  indicated,  the components
of the Company's  revenue and expenses  along with the  percentage  they bear to
total revenue:

<TABLE>
<CAPTION>
                                                    For The Years Ended December 31,
                                ------------------------------------------------------------------------
                                    2001         %            2000         %            1999         %
                                -----------    -----      -----------    -----      -----------    -----
<S>                             <C>            <C>        <C>            <C>        <C>            <C>
Title insurance fees, net       $41,160,736     63.9%     $22,628,088     61.3%     $20,808,128     61.3%
Escrow and related fees          20,468,323     31.8       11,446,792     31.0       11,087,910     32.6
Interest and other income         2,806,692      4.3        2,823,440      7.7        2,080,470      6.1
                                -----------    -----      -----------    -----      -----------    -----
                                $64,435,751    100.0%     $36,898,320    100.0%     $33,976,508    100.0%
                                ===========    =====      ===========    =====      ===========    =====

Personnel cost                  $30,717,974     47.6%     $22,224,246     60.2%     $20,819,793     61.3%
Escrow commissions                8,258,437     12.8        3,243,248      8.8        2,781,947      8.2
Rent                              4,225,423      6.6        3,297,689      8.9        2,459,120      7.2
Other operating expenses         15,118,823     23.5       10,083,323     27.4        9,598,155     28.3
Interest expense                    277,252      0.4          334,756      0.9          286,520      0.8
                                -----------    -----      -----------    -----      -----------    -----
                                $58,597,909     90.9%     $39,183,262    106.2%     $35,945,535    105.8%
                                ===========    =====      ===========    =====      ===========    =====
Opened orders                       110,620                    49,616                    46,211
Closed orders                        69,320                    33,789                    32,914
Average revenue per
closed order                    $       930               $     1,093               $     1,032
</TABLE>

FISCAL 2001 COMPARED TO FISCAL 2000

     The Company's revenues increased by $27,537,431 or 74.6% for the year ended
December 31, 2001 as compared to the year ended  December 31, 2000. The increase
is primarily  attributable to a favorable real estate and refinance market,  the
Company's  expansion and increased  market share. The decrease during 2001in the
revenue per closed  order  resulted  from an  increase  in the mix of  refinance
orders,  which have lower fee per order than the  Company's  residential  resale
orders.

     The  Company's  revenue from title  insurance  and escrow fees is primarily
from three sources:  residential resale,  lender/refinance  and commercial.  The
Company's marketing plan is to have the vast majority of the Company's title and
escrow  revenue be derived from the resale  business.  Historically,  the resale
business  has  been  more  consistent  and less  subject  to  fluctuations  than
commercial,  new  home  sales,  or  refinancing  segments  of  the  market.  The
commercial,  new home sales and refinancing  segments tend to be more influenced
by interest rates and other economic conditions.

                                       10
<PAGE>
     Title  insurance  fees are net of title  remittance  fees paid  pursuant to
title insurance underwriting agreements the Company has with five national title
companies. Title remittance fees were $4,416,665,  $2,518,608 and $2,170,919 for
the years ended December 31, 2001, 2000 and 1999, respectively.

     Personnel costs, including commissions,  are the most significant component
of the  Company's  operating  expenses.  The  number of people  employed  by the
Company increased from 493 on December 31, 2000 to 710 on December 31, 2001. For
the year ended December 31, 2001,  personnel  costs including  commissions  were
60.4% of total  revenue  compared  to 69.0% of total  revenue for the year ended
December 31, 2000.  This  decrease was a result of higher  productivity  coupled
with the increase in revenue.

     Rent  expense  decreased  as a  percentage  of  revenue  in the year  ended
December 31, 2001 to 6.6% from 8.9% in 2000. This decrease was the result of the
relatively fixed nature of these costs coupled with the increase in revenue.

     The significant  components of other operating  expenses include  supplies,
utilities, insurance,  depreciation, title plant maintenance and access, postage
and  professional  fees. Other operating  expenses  decreased as a percentage of
total revenue to 23.5% in 2001 from 27.4% in 2000.  This decrease was the result
of cost  containment  efforts and the  relatively  fixed nature of many of these
expenses in relation to the overall increase in revenues.

     An income  tax  provision  of  $768,000  was  recorded  for the year  ended
December 31, 2001. The availability of net operating loss carryforwards resulted
in a much lower tax provision in 2001 than would be expected  based on statutory
income tax rates. No provision was recorded for 2000 as a result of the net loss
reported that year. As of December 31, 2001,  the Company has fully utilized its
net operating loss  carryforward,  which will result in future  operating income
being taxed at statutory rates approximating 40%.

FISCAL 2000 COMPARED TO FISCAL 1999

     The Company's  revenues  increased by $2,921,812 or 8.6% for the year ended
December 31, 2000 as compared to the year ended  December 31, 1999. The increase
is primarily attributable to the Company's expansion and increased market share.

     Personnel costs, including commissions,  are the most significant component
of the  Company's  operating  expenses.  The  number of people  employed  by the
Company increased from 468 on December 31, 1999 to 493 on December 31, 2000. For
the year ended December 31, 2000,  personnel  costs including  commissions  were
69.0% of total  revenue  compared  to 69.5% of total  revenue for the year ended
December 31, 1999.  This  decrease was a result of higher  productivity  coupled
with the increase in revenue.

     Rent  expense  increased  as a  percentage  of  revenue  in the year  ended
December  31, 2000 to 8.9% from 7.2% in 1999.  This  increase  was the result of
adding new offices and scheduled increases in existing leases.

     The significant  components of other operating  expenses include  supplies,
utilities, insurance,  depreciation, title plant maintenance and access, postage
and  professional  fees. Other operating  expenses  decreased as a percentage of
total revenue to 27.4% in 2000 from 28.3% in 1999.  This decrease was the result
of cost  containment  efforts and the  relatively  fixed nature of many of these
expenses in relation to the overall increase in revenues.

                                       11
<PAGE>
     No income tax provision was recorded for the years ended  December 31, 2000
and 1999 as a result of the net loss reported in each year.

LIQUIDITY AND CAPITAL RESOURCES

     Capital  Title  Group  requires  capital to expand its  geographical  base,
further  implement  its  market  penetration  program,  recruit  and  train  new
personnel  and  purchase  additional  property and  equipment  to implement  its
expansion program. During the year ended December 31, 2001, the Company financed
its operating and business  development  activities through operating cash flows
and through the use of cash on hand.

     The Company has a $1,500,000 revolving line of credit, which bears interest
on any  outstanding  balance at the prime rate (4.75% at December 31, 2001).  At
December  31,  2001,  there  were no cash draws  against  this  credit  facility
compared  to  $900,000  outstanding  at  December  31,  2000.  There is  $75,000
committed  against the credit line for a standby letter of credit pursuant to an
office  lease.  This  credit  facility  matures  in May  2002,  but the  Company
anticipates renewing this line of credit for an additional one-year term.

     In  January  2001,  the  Company  sold an office  building  in Santa  Rosa,
California which provided approximately $785,000 in cash and retired $963,600 in
debt related to the building.  Additionally, the remaining net cash received was
used to pay down the Company's revolving line of credit.

     At December 31, 2001,  the Company had current assets  totaling  $8,593,831
compared to current liabilities,  which totaled $6,047,862.  Cash flows provided
by operating  activities  were  $9,673,914  for the year ended December 31, 2001
compared to cash flows provided by operating activities of $121,007 in 2000. The
increase in 2001 was primarily the result of an improvement in operating results
with net income of $5,070,270 for the year ended December 31, 2001 compared to a
net loss of $2,252,287 in the prior year.  The principal  non-operating  uses of
cash for the year ended  December  31,  2001 were  $2,178,535  expended  for the
purchase of property and  equipment,  $1,933,276  in debt  service  payments and
$715,284  expended  for the  purchase  of its  common  stock.  Other  sources of
non-operating  cash for 2001 came from the sale of a building and from employees
exercising stock options in the amount of $1,749,055 and $458,292, respectively.

     In September 2001, the Company  executed a definitive  agreement to acquire
BridgeSpan  Title  Company's  title  and  escrow  operations  for  the  northern
California  counties of Santa Clara, San Mateo and Sacramento for  approximately
$3.3  million,  subject to  adjustments.  The  transaction  includes five branch
offices  and  ownership  interest in joint title  plants for the  counties.  The
agreement  is subject to  regulatory  approval and  contains  customary  closing
conditions.  The Company has a commitment  for a prime rate three year term loan
to finance $1.5 million of the purchase price.

     In September  2001,  the  Company's  Board of Directors  authorized a stock
repurchase  program of up to one million shares of its outstanding common stock.
As of December 31, 2001,  an  aggregate of 333,896  shares had been  repurchased
under this  program at a total cost of $715,284.  Between  December 31, 2001 and
March 5, 2002,  the Company has paid an additional  $180,971 (net of proceeds in
the case of shares  repurchased  related to the  exercise  of stock  options) to
repurchase 203,300 shares of its common stock.

     The Company is the custodian of cash  deposited by customers  with specific
instructions  as to its  disbursement  from  active  escrow,  trust and  account
servicing  files. The balances in these accounts have not been included in these
consolidated financial statements. As of December 31, 2001, the accounts contain
balances  of  approximately  $254,810,000.  In  the  case  of a loss  in  escrow
accounts, the Company has financial exposure for these balances.

                                       12
<PAGE>
     The Company's  future debt and lease  obligations are summarized by year as
follows:

                          Debt           Minimum Lease        Total Cash
                       Maturities         Commitments         Obligations
                      -----------         -----------         -----------
            2002      $    40,766         $ 3,532,472         $ 3,573,238
            2003           31,890           2,928,926           2,960,816
            2004           33,947           2,100,989           2,134,936
            2005           37,664           1,040,317           1,077,981
            2006           40,966             665,422             706,388
      Thereafter        2,897,602           5,008,462           7,906,064
                      -----------         -----------         -----------
                      $ 3,082,835         $15,276,588         $18,359,423
                      ===========         ===========         ===========

     Management believes that cash on hand, anticipated future cash receipts and
borrowings  available  under its credit  facility will be sufficient to meet the
Company's  expansion plans and to pay all obligations as they become due for the
next twelve months.

NEW ACCOUNTING PRONOUNCEMENTS

     In July 2001,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement No. 141,  BUSINESS  COMBINATIONS,  and Statement No. 142, GOODWILL AND
OTHER  INTANGIBLE  ASSETS.  Statement 141 requires  that the purchase  method of
accounting be used for all business combinations  initiated after June 30, 2001.
Statement 141 also specifies  criteria  intangible assets acquired in a purchase
method business  combination  must meet to be recognized and reported apart from
goodwill, noting that any purchase price allocable to an assembled workforce may
not be accounted  for  separately.  Statement 142 will require that goodwill and
intangible  assets with  indefinite  useful  lives no longer be  amortized,  but
instead  tested  for  impairment  at  least  annually  in  accordance  with  the
provisions of Statement  142.  Statement  142 will also require that  intangible
assets with definite useful lives be amortized over their  respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance with FASB No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.

     The  Company  is  required  to  adopt  the   provisions  of  Statement  141
immediately  and  Statement  142  effective  January 1, 2002.  Furthermore,  any
goodwill and any intangible asset  determined to have an indefinite  useful life
that are acquired in a purchase  business  combination  completed after June 30,
2001 will not be amortized,  but will continue to be evaluated for impairment in
accordance  with  the  appropriate   pre-Statement  142  accounting  literature.
Goodwill  and  intangible  assets  acquired in business  combinations  completed
before  July 1, 2001 will  continue  to be  amortized  prior to the  adoption of
Statement 142.

     Statement  141 requires,  upon adoption of Statement  142, that the Company
evaluate its existing  intangible  assets and goodwill  that were  acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from  goodwill.  Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible  assets acquired
in purchase business  combinations,  and make any necessary  amortization period
adjustments by the end of the first interim period after adoption.  In addition,
to the extent an intangible  asset is identified as having an indefinite  useful
life, the Company will be required to test the  intangible  asset for impairment
in  accordance  with the  provisions  of Statement  142 within the first interim
period.  Any  impairment  loss will be measured  as of the date of adoption  and
recognized as the cumulative  effect of a change in accounting  principle in the
first interim period.

                                       13
<PAGE>
     In  connection  with  the  transitional  goodwill  impairment   evaluation,
Statement 142 will require the Company to perform an assessment of whether there
is an  indication  that  goodwill is impaired  as of the date of  adoption.  Any
transitional  impairment  loss will be recognized as the cumulative  effect of a
change in accounting principle in the Company's statement of operations.

     As of the  date of  adoption,  the  Company  expects  to  have  unamortized
goodwill  of  approximately  $205,000,  all of  which  will  be  subject  to the
transition provisions of Statements 141 and 142. Amortization expense related to
goodwill was  approximately  $13,000 for the year ended  December 31, 2001.  The
Company is evaluating  these recently issued  accounting  standards but does not
believe  that  adopting  these  Statements  will have a  material  impact on the
Company's consolidated financial statements.

     On October 3, 2001, the FASB issued  Statement No. 144,  ACCOUNTING FOR THE
IMPAIRMENT  OR  DISPOSAL  OF  LONG-LIVED  ASSETS,   which  addresses   financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
While  Statement  No. 144  supersedes  Statement  No.  121,  ACCOUNTING  FOR THE
IMPAIRMENT OF LONG-LIVED  ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, it
retains many of the fundamental provisions of that Statement.

     Statement No. 144 also  supersedes the accounting and reporting  provisions
of APB  Opinion  No. 30,  Reporting  the  Results of  Operations--Reporting  the
Effects of Disposal of a Segment of a Business,  and Extraordinary,  Unusual and
Infrequently Occurring Events and Transactions, for the disposal of a segment of
a  business.  However,  it retains the  requirement  in Opinion No. 30 to report
separately  discontinued operations and extends that reporting to a component of
an entity  that  either  has been  disposed  of (by sale,  abandonment,  or in a
distribution  to owners) or is classified  as held for sale.  By broadening  the
presentation of discontinued  operations to include more disposal  transactions,
the FASB has enhanced  managements'  ability to provide  information  that helps
financial statement users to assess the effects of a disposal transaction on the
ongoing operations of an entity. Statement No. 144 is effective for fiscal years
beginning  after  December 15, 2001.  At the current time,  management  does not
believe  that the  adoption  of this  statement  on  January 1, 2002 will have a
material impact on the Company's  financial  position,  results of operations or
liquidity.

FORWARD-LOOKING STATEMENTS

     This  Annual   Report  on  Form  10-K  contains   certain   forward-looking
statements. The forward-looking statements contained herein are based on current
expectations  that involve a number of risks and  uncertainties.  Among  others,
these  forward-looking  statements are based on  assumptions  that (a) volume of
real estate transactions in the Company's market areas will remain at sufficient
levels to  support  the  Company's  business,  (b) the  Company  will be able to
successfully  integrate  acquired  businesses  and  the  results  of  operations
therefrom will support the  acquisition  price,  (c) the Company will be able to
retain,  and when needed,  add key personnel,  (d) the Company's  forecasts will
accurately  anticipate  market  demand,  (e) there will be no  material  adverse
changes in the Company's existing operations and (f) the Company will be able to
obtain  sufficient  equity or debt funding to increase its capital  resources by
the amount needed for new business acquisitions,  if any. Assumptions related to
the foregoing  involve  judgments  with respect to, among other  things,  future
economic,  competitive and market conditions, and future business decisions, all
of which are beyond the control of the Company.  Although  the Company  believes
that the assumptions  underlying the forward-looking  statements are reasonable,
any of the assumptions  could prove inaccurate and,  therefore,  there can be no
assurance that the results  contemplated in  forward-looking  statements will be
realized. In addition, the business and operations of the Company are subject to
substantial   risks,   which   increase   the   uncertainty   inherent  in  such
forward-looking  statements.  In light of the significant uncertainties inherent
in the  forward-looking  information  included  herein,  the  inclusion  of such
information  should not be regarded as a representation  by the Company,  or any
other person, that the Company's plans or objectives will be achieved.

                                       14
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The  Company's  exposure to market risk is limited to interest rate risk on
its  revolving  credit  agreement  which bears  interest at the prime rate.  The
Company  does not have any  derivative  financial  instruments.  At December 31,
2001, the carrying amounts reported in the Company's Consolidated Balance Sheets
for cash and cash equivalents,  accounts  receivable,  accounts payable and debt
approximate fair value. The Company does not believe it is subject to any market
risks,  which could reasonably be expected to have a material impact on the fair
value of these assets and  liabilities  as reflected in the unaudited  Condensed
Consolidated Balance Sheets contained in this report.

     The  Company's  business  is cyclical  due to the effect of  interest  rate
fluctuations  on the level of real  estate  activity.  Periods of high  interest
rates  adversely  effect real estate  activity  and  therefore  title and escrow
revenues. In addition, the amount of interest income derived from available cash
is subject to interest rate fluctuations.

                                       15
<PAGE>
ITEM 8. FINANCIAL STATEMENTS

                          Independent Auditors' Report

Stockholders and Board of Directors
Capital Title Group, Inc.:

     We have audited the  accompanying  consolidated  balance  sheets of Capital
Title Group,  Inc. and  subsidiaries  (the  Company) as of December 31, 2001 and
2000,  and the related  consolidated  statements  of  operations,  stockholders'
equity,  and cash  flows  for each of the  years in the  two-year  period  ended
December  31,   2001.   These   consolidated   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the  consolidated  financial  statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall consolidated  financial statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects,  the financial position of the Company
as of December 31, 2001 and 2000, and the results of their  operations and their
cash flows for each of the years in the two-year period ended December 31, 2001,
in conformity with accounting principles generally accepted in the United States
of America.


                                  /s/ KPMG LLP


Phoenix, Arizona
February 28, 2002

                                       16
<PAGE>
                         Report of Independent Auditors

Stockholders and Board of Directors
Capital Title Group, Inc.:

     We have audited the consolidated balance sheet of Capital Title Group, Inc.
and subsidiaries (the Company) as of December 31, 1999 (not presented separately
herein)   and  the   accompanying   consolidated   statements   of   operations,
stockholders' equity, and cash flows for the year ended December 31, 1999. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

     We conducted our audit in  accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the  audit  to  obtain  reasonable  assurance  about  whether  the  consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audit provides a reasonable basis for our opinion.

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
the Company at December 31, 1999and the consolidated results of their operations
and cash  flows  for the year  ended  December  31,  1999,  in  conformity  with
accounting principles generally accepted in the United States.


                              /s/ Ernst & Young LLP


Phoenix, Arizona
March 3, 2000

                                       17
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       December 31,
                                                                ---------------------------
                                                                    2001           2000
                                                                ------------   ------------
<S>                                                             <C>            <C>
ASSETS
Current Assets:
    Cash and cash equivalents                                   $  7,676,760   $    775,586
    Accounts receivable, net                                         462,793        360,331
    Notes and other receivables                                      261,390        359,129
    Other current assets                                             192,888        268,298
                                                                ------------   ------------
         Total Current Assets                                      8,593,831      1,763,344

Property and Equipment, net                                       10,075,328     11,011,305

Other Assets:
    Notes receivable                                                  48,018         47,929
    Investment in title plant                                        677,481        521,278
    Deposits and other assets                                      1,088,213        723,408
    Goodwill                                                         205,237        233,242
    Deferred income taxes                                            337,276             --
                                                                ------------   ------------
         Total Assets                                           $ 21,025,384   $ 14,300,506
                                                                ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
    Current portion of long-term debt                           $     40,766   $  1,006,152
    Accounts payable                                               1,934,599        869,688
    Accrued expenses                                               4,072,497      1,430,232
                                                                ------------   ------------
         Total Current Liabilities                                 6,047,862      3,306,072

Long-term debt, less current portion                               3,042,069      4,009,959
Other Liabilities                                                    831,191        254,202

Commitments, Contingencies and Subsequent Events

Stockholders' Equity:
    Common stock, $.001 par value, 50,000,000 shares
        Authorized; 17,065,381 and  17,392,849 shares
        issued and outstanding in 2001 and 2000, respectively         17,065         17,393
    Additional paid-in capital                                    10,911,469     11,105,436
    Retained earnings (accumulated deficit)                          175,728     (4,392,556)
                                                                ------------   ------------
         Total Stockholders' Equity                               11,104,262      6,730,273
                                                                ------------   ------------
                  Total Liabilities and Stockholders' Equity    $ 21,025,384   $ 14,300,506
                                                                ============   ============
</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                       18
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                     Years ended December 31,
                                           -------------------------------------------
                                               2001           2000            1999
                                           ------------   ------------    ------------
<S>                                        <C>            <C>             <C>
REVENUE:
    Title insurance fees, net              $ 41,160,736   $ 22,628,088    $ 20,808,128
    Escrow and related fees                  20,468,323     11,446,792      11,087,910
    Interest and other income                 2,806,692      2,823,440       2,080,470
                                           ------------   ------------    ------------
         Total Revenue                       64,435,751     36,898,320      33,976,508
                                           ------------   ------------    ------------

EXPENSES:
    Personnel costs                          30,717,974     22,224,246      20,819,793
    Escrow commissions                        8,258,437      3,243,248       2,781,947
    Rent                                      4,225,423      3,297,689       2,459,120
    Other operating expenses                 15,118,823     10,083,323       9,598,155
    Interest expense                            277,252        334,756         286,520
                                           ------------   ------------    ------------
         Total Expenses                      58,597,909     39,183,262      35,945,535
                                           ------------   ------------    ------------

    Income (loss) before income taxes         5,837,842     (2,284,942)     (1,969,027)

    Income tax expense(benefit)                 767,572        (32,655)             --
                                           ------------   ------------    ------------

    Net income / (loss)                    $  5,070,270   $ (2,252,287)   $ (1,969,027)
                                           ============   ============    ============

    Net income (loss) per common share:
         Basic                             $       0.29   $      (0.13)   $      (0.12)
                                           ============   ============    ============
         Diluted                           $       0.28   $      (0.13)   $      (0.12)
                                           ============   ============    ============

    Weighted average shares outstanding:
         Basic                               17,230,950     17,158,414      16,868,292
                                           ============   ============    ============
         Diluted                             18,031,252     17,158,414      16,868,292
                                           ============   ============    ============
</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                       19
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                   Common Stock                              Retained
                                           ----------------------------     Additional       Earnings
                                                               Par            Paid-in      (Accumulated
                                              Shares          Value           Capital         Deficit)          Total
                                           ------------    ------------    ------------    ------------    ------------
<S>                                        <C>             <C>             <C>             <C>             <C>
Balance at December 31, 1998                 16,926,791    $     16,927    $ 10,944,294    $   (171,242)   $ 10,789,979

Shares issued in connection with
options exercised                               127,900             128         127,772              --         127,900

Escrowed shares to Northwestern's
stockholders returned to Company               (146,790)           (147)       (453,998)             --        (454,145)

Shares issued to retire debt                     15,000              15          29,985              --          30,000

Shares issued for building                       25,000              25          19,124              --          19,149

Net loss                                             --              --              --      (1,969,027)     (1,969,027)
                                           ------------    ------------    ------------    ------------    ------------
    Balance at December 31, 1999             16,947,901          16,948      10,667,177      (2,140,269)      8,543,856

Shares issued in connection with
options exercised                                20,500              21          18,480              --          18,501

Shares issued in connection with
a cost basis investment, net                    424,448             424         419,779              --         420,203

Net loss                                             --              --              --      (2,252,287)     (2,252,287)
                                           ------------    ------------    ------------    ------------    ------------
    Balance at December 31, 2000             17,392,849          17,393      11,105,436      (4,392,556)      6,730,273

Shares issued in connection with
options exercised                               438,300             438         457,854              --         458,292

Shares cancelled in connection
with rescission of cost basis investment
and return of escrowed shares from
a 1998 acquisition                             (431,872)           (432)       (438,857)             --        (439,289)

Shares repurchased and cancelled               (333,896)           (334)       (212,964)       (501,986)       (715,284)

Net income                                           --              --              --       5,070,270       5,070,270
                                           ------------    ------------    ------------    ------------    ------------
    Balance at December 31, 2001             17,065,381    $     17,065    $ 10,911,469    $    175,728    $ 11,104,262
                                           ============    ============    ============    ============    ============
</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                       20
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                           Years Ended December 31,
                                                                  -----------------------------------------
                                                                     2001            2000           1999
                                                                  -----------    -----------    -----------
<S>                                                               <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                 $ 5,070,270    $(2,252,287)   $(1,969,027)
Adjustments to reconcile net income (loss) to net
      cash provided by (used in) operating activities:
    Depreciation and amortization                                   1,981,658      1,678,566      1,389,924
    Benefit for deferred income taxes                                (337,276)            --             --
Increase (decrease) in cash resulting from changes in:
    Accounts receivable                                              (102,462)      (249,535)       181,489

    Notes and other receivables                                        94,439        (62,014)        36,253

    Other current assets                                               60,843        142,413        163,842

    Deposits and other assets                                        (773,578)        74,738          1,258
    Accounts payable                                                1,064,911        232,058       (253,345)
    Accrued expenses                                                2,642,265        686,102     (1,637,598)
    Other liabilities                                                 (27,156)      (129,034)        12,421
                                                                  -----------    -----------    -----------
Net Cash Flows provided by (used in) Operating Activities           9,673,914        121,007     (2,074,783)
                                                                  -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Additions to property and equipment                            (2,178,535)    (1,417,660)    (5,014,567)
    Proceeds from sale of property and equipment                    1,749,055             --      1,156,982
    Purchase of title plant                                          (156,203)            --             --
    Purchase/sale of subsidiaries, net cash                                --             --       (107,035)
    Collection of notes receivable                                      3,211         48,352        290,542
                                                                  -----------    -----------    -----------
Net Cash Flows used in Investing Activities                          (582,472)    (1,369,308)    (3,674,078)
                                                                  -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings (repayments)                                          (900,000)       400,000      4,630,000
    Debt service payments                                          (1,033,276)      (274,428)    (1,958,806)
    Proceeds from the issuance of stock, net                          458,292         14,256        127,900
    Purchase of Treasury Stock                                       (715,284)            --             --
                                                                  -----------    -----------    -----------
Net Cash Flows provided by (used in) Financing Activities          (2,190,268)       139,828      2,799,094
                                                                  -----------    -----------    -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS                                                         6,901,174     (1,108,473)    (2,949,767)

CASH AND CASH EQUIVALENTS
AT THE BEGINNING OF THE YEAR                                          775,586      1,884,059      4,833,826
                                                                  -----------    -----------    -----------
CASH AND CASH EQUIVALENTS
AT THE END OF THE YEAR                                            $ 7,676,760    $   775,586    $ 1,884,059
                                                                  ===========    ===========    ===========
</TABLE>

                   The accompanying notes are an integral part
                    of the consolidated financial statements

                                       21
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF OPERATIONS:

Capital Title Group, Inc. (the "Company") is a Delaware corporation,  which acts
as the parent holding company of the following subsidiaries:

Capital Title Agency,  Inc. ("Capital Title") is an Arizona  corporation,  which
has operated under the authority of the State Banking  Commission since November
1981. Capital Title is an independent title agency that provides escrow services
and, as an agent for five title  insurance  companies,  issues  title  insurance
policies to the real  estate  industry in  Maricopa,  Yavapai,  Mohave and Pinal
Counties  in Arizona.  As of March 1, 2002,  Capital  Title  operated 34 offices
located throughout Maricopa, Yavapai and Mohave Counties in Arizona.

New Century Title Company ("New Century"),  a California  corporation that began
operations in July 1998, is an independent title agency that provides escrow and
title services to the real estate industry in selected California counties.  New
Century currently has 12 offices in southern  California where it is licensed to
conduct business in San Diego, Orange, Riverside, San Bernardino and Los Angeles
Counties.  New Century  also has  operations  in northern  California,  which it
obtained by  acquisition  in November  1998.  New Century has an  additional  12
offices in northern  California,  where it is  licensed  to conduct  business in
Sonoma, Contra Costa and Alameda Counties.

SIGNIFICANT ACCOUNTING POLICIES:

The accompanying  consolidated  financial statements include the accounts of the
Company  and its  wholly-owned  subsidiaries.  All  inter-company  accounts  and
transactions have been eliminated in consolidation.

USE OF ESTIMATES:

The  preparation  of  consolidated   financial  statements  in  conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make a number of estimates and  assumptions  that affect
the reported  amounts of assets and  liabilities  and  disclosure  of contingent
assets and liabilities at the date of the financial  statements.  Such estimates
and assumptions  affect the reported amounts of revenues and expenses during the
reporting  period.  On an ongoing  basis,  management  of the Company  evaluates
estimates and  assumptions  based upon  historical  experience and various other
factors and  circumstances.  The Company  believes its estimates and assumptions
are  reasonable in the  circumstances;  however,  actual results may differ from
these estimates under different future conditions.

Management  believes that the estimates and assumptions  that are most important
to the portrayal of the Company's financial condition and results of operations,
in  that  they  require  management's  most  difficult,  subjective  or  complex
judgments, form the basis for the accounting policies deemed to be most critical
to the  Company.  These  critical  accounting  policies  relate  to  bad  debts,
impairment  of  intangible  assets and long lived  assets,  reserves  related to
escrow and title policy losses, reserves related to self-insurance programs, and
contingencies  and  litigation.  Management  believes  estimates and assumptions
related  to  these  critical  accounting  policies  are  appropriate  under  the
circumstances;   however,   should  future  events  or  occurrences   result  in
unanticipated  consequences,  there  could be a  material  impact on our  future
financial condition or results of operations.

                                       22
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

CASH AND CASH EQUIVALENTS:

Cash and cash equivalents  include all highly liquid investments  purchased with
an initial maturity of three months or less.

ACCOUNTS RECEIVABLE:

The Company uses the allowance  method to account for  non-collectible  accounts
receivable.  The allowance is  established  based on a review of the  individual
accounts and the Company's prior collection history.

REVENUE RECOGNITION:

Title insurance and escrow fees are recognized as revenue at the time of closing
the related real estate  transaction.  The Company  reports title insurance fees
net of title  remittance  fees paid pursuant to agreements  the Company has with
underwriters.  Title remittance fees for the years ended December 31, 2001, 2000
and 1999 were $4,416,665, $2,518,608 and $2,170,919,  respectively. Revenue from
account servicing and other fees is recognized when the service is performed.

PROPERTY AND EQUIPMENT:

Property  and  equipment  are  stated  at cost and are  being  depreciated  on a
straight-line basis over the estimated useful lives of the related assets, which
range  from five to forty  years.  Leasehold  improvements  are  amortized  on a
straight-line  basis over the lesser of the lease term or the  estimated  useful
lives of such assets.

CAPITAL LEASE OBLIGATIONS:

The Company is the lessee of office  equipment  under capital lease  agreements,
which expire  throughout  the year 2002.  The assets and  liabilities  under the
capital  leases are  recorded at the lower of the  present  value of the minimum
lease  payments or the fair market value of the asset.  The assets are amortized
over the lower of their related lease term or their estimated useful lives.

TITLE PLANT:

Title  plants are  recorded  at the cost  incurred  to  construct  and  organize
historical  title  information  to the  point  it can be used to  perform  title
searches.  Cost  incurred  to  maintain,  update and  operate  title  plants are
expensed as incurred.  Title plants are not amortized as they are  considered to
have an indefinite life if maintained.

GOODWILL:

The Company recorded  approximately $263,000 of goodwill in 1998 related to cost
in excess of net assets  acquired  pursuant to its purchase of a title agency in
San  Diego,  California.  Goodwill  is being  amortized  over  twenty  years and
accumulated  amortization at December 31, 2001 was  approximately  $43,050.  The
Company  will no longer be required to amortize  goodwill  effective  January 1,
2002.

                                       23
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


IMPAIRMENT OF LONG-LIVED ASSETS:

The Company records  impairment  losses on long-lived  assets used in operations
when events and circumstances indicate that the assets might be impaired and the
undiscounted  cash flows estimated to be generated by those assets are less than
the carrying  amounts of those assets.  This methodology  includes  goodwill and
intangible  assets  acquired.  As of  December  31,  2001,  management  has  not
identified any events or circumstances which indicate that any long-lived assets
are impaired.

SELF INSURANCE:

The Company is partially  self-insured for its group health program.  Under this
program, which is funded by employee and Company contributions, the Company pays
health insurance claims for eligible  employees up to $35,000 per employee and a
$2 million  aggregate limit. A provision for incurred but not reported claims is
recorded by monthly charges to the statements of operations  based on enrollment
date,  claims  experience and pending claims.  As of December 31, 2001 and 2000,
the Company had accrued  $424,700 and $106,000,  respectively,  for incurred but
not reported claims, which is included with accrual expenses on the accompanying
consolidated balance sheets.

ESCROW AND TITLE POLICY LOSSES:

The Company  operates  under  agency  agreements  with various  title  insurance
companies.  In the  event of a title  insurance  policy  loss,  the  Company  is
generally responsible for the first $5,000 of loss. A provision for future title
losses is maintained by periodic  charges to the statements of operations  based
on  historical  title loss  experience.  As of December  31, 2001 and 2000,  the
Company had accrued  $524,000 and $237,000,  respectively,  for title and escrow
losses, which is included with accrued expenses on the accompanying consolidated
balance sheets.

INCOME TAXES:

The Company and its subsidiaries file consolidated  federal and state income tax
returns.  Deferred tax assets and  liabilities are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
basis, and the utilization of the net operating loss ("NOL") carryforwards,  net
of valuation allowances.

Deferred  tax  assets and  liabilities  are  measured  using  enacted  tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.

SEGMENT REPORTING:

The Company  views its  operations as one operating  business  segment,  a title
agency providing escrow services in the Southwestern United States.

EARNINGS PER SHARE:

Basic earnings (loss) per share ("EPS") is computed by dividing  earnings (loss)
available to stockholders by the  weighted-average  number of shares outstanding
for the  period.  Diluted  earnings  (loss)  per share  reflects  the  potential
dilution  that could occur if securities or contracts to issue common stock were
exercised  or  converted to stock or resulted in the issuance of stock that then
shared  in the  earnings  or  loss  of the  Company.  The  assumed  exercise  of
outstanding  stock options and warrants have been excluded from the calculations
of diluted net loss per share as their effect is antidilutive.

                                       24
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


The following table sets forth the computation of basic and diluted EPS:

<TABLE>
<CAPTION>
                                      2001                                  2000
                     ------------------------------------   -------------------------------------
                                                Per share                               Per share
                     Net income       Shares      amount      Net loss        Shares      amount
                     -----------    ----------    ------    -----------     ----------    ------
<S>                  <C>            <C>         <C>         <C>             <C>         <C>
Basic EPS            $ 5,070,270    17,230,950    $ 0.29    $(2,252,287)    17,158,414    $(0.13)
                                                  ======                                  ======
Effect of Dilutive
Securities:
  Stock options                        751,619                                      --
  Warrants                              48,683                                      --
                     -----------    ----------              -----------     ----------
Diluted EPS          $ 5,070,270    18,031,252    $ 0.28    $(2,252,287)    17,158,414    $(0.13)
                     ===========   ===========    ======    ===========    ===========    ======

                                      1999
                     -------------------------------------
                                                 Per share
                       Net loss        Shares      amount
                     -----------     ----------    ------
Basic EPS            $(1,969,027)    16,868,292    $(0.12)
                                                   ======
Effect of Dilutive
Securities:
    Stock options                            --
    Warrants                                 --
                     ------------    ----------
Diluted EPS          $(1,969,027)    16,868,292    $(0.12)
                     ============    ==========    ======
</TABLE>

At December 31, 2001, the Company has options  outstanding to acquire  3,418,000
shares of common  stock at a  weighted  average  price of $1.82  per  share,  in
addition,  the Company had warrants  outstanding  to acquire  772,142  shares of
common stock at a weighted average price of $2.15 per share.

FAIR VALUE OF FINANCIAL INSTRUMENTS:

The Company discloses fair value  information about financial  instruments where
it is  practicable  to estimate  their  value.  The Company  estimates  that the
carrying  value  of  its  financial   instruments,   consisting  of  cash,  cash
equivalents,  certificates of deposit,  notes  receivable  accounts  payable and
accrued expenses approximate their fair values at December 31, 2001 and 2000 due
to the short term nature of these items.  The terms of the  Company's  long term
debt  instruments  are  comparable  to what they  could be  replaced  for in the
current market,  therefore the carrying value  approximates  their fair value at
December 31, 2001 and 2000.

NEW ACCOUNTING PRONOUNCEMENTS:

In July 2001,  the FASB issued  Statement No. 141,  Business  Combinations,  and
Statement No. 142, Goodwill and Other Intangible Assets.  Statement 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated after June 30, 2001.  Statement 141 also specifies criteria intangible
assets  acquired  in a  purchase  method  business  combination  must meet to be
recognized  and reported  apart from  goodwill,  noting that any purchase  price
allocable  to an  assembled  workforce  may  not be  accounted  for  separately.
Statement 142 will require that goodwill and intangible  assets with  indefinite
useful lives no longer be amortized,  but instead tested for impairment at least
annually in accordance with the provisions of Statement 142.  Statement 142 will
also require that intangible assets with definite useful lives be amortized over
their respective  estimated useful lives to their estimated residual values, and
reviewed for  impairment in  accordance  with FASB No. 121,  ACCOUNTING  FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.

                                       25
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


The Company is required to adopt the provisions of Statement 141 immediately and
Statement  142  effective  January 1, 2002.  Furthermore,  any  goodwill and any
intangible asset determined to have an indefinite  useful life that are acquired
in a purchase  business  combination  completed  after June 30, 2001 will not be
amortized,  but will continue to be evaluated for impairment in accordance  with
the appropriate pre-Statement 142 accounting literature. Goodwill and intangible
assets  acquired in  business  combinations  completed  before July 1, 2001 will
continue to be amortized prior to the adoption of Statement 142.

Statement  141  requires,  upon  adoption  of  Statement  142,  that the Company
evaluate its existing  intangible  assets and goodwill  that were  acquired in a
prior purchase business combination, and to make any necessary reclassifications
in order to conform with the new criteria in Statement 141 for recognition apart
from  goodwill.  Upon adoption of Statement 142, the Company will be required to
reassess the useful lives and residual values of all intangible  assets acquired
in purchase business  combinations,  and make any necessary  amortization period
adjustments by the end of the first interim period after adoption.  In addition,
to the extent an intangible  asset is identified as having an indefinite  useful
life, the Company will be required to test the  intangible  asset for impairment
in  accordance  with the  provisions  of Statement  142 within the first interim
period.  Any  impairment  loss will be measured  as of the date of adoption  and
recognized as the cumulative  effect of a change in accounting  principle in the
first interim period.

In connection with the transitional  goodwill impairment  evaluation,  Statement
142 will  require the Company to perform an  assessment  of whether  there is an
indication  that  goodwill  is  impaired  as  of  the  date  of  adoption.   Any
transitional  impairment  loss will be recognized as the cumulative  effect of a
change in accounting principle in the Company's statements of operations.

As of the date of adoption,  the Company expects to have unamortized goodwill of
approximately  $205,000,  all  of  which  will  be  subject  to  the  transition
provisions of Statements 141 and 142.  Amortization  expense related to goodwill
was  approximately  $13,000 for the year ended December 31, 2001. The Company is
evaluating these recently issued accounting  standards but does not believe that
adopting  these  Statements  will  have  a  material  impact  on  the  Company's
consolidated financial statements.

On October 3, 2001,  the FASB  issued  Statement  No.  144,  ACCOUNTING  FOR THE
IMPAIRMENT  OR  DISPOSAL  OF  LONG-LIVED  ASSETS,   which  addresses   financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
While  Statement  No. 144  supersedes  Statement  No.  121,  ACCOUNTING  FOR THE
IMPAIRMENT OF LONG-LIVED  ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, it
retains many of the fundamental provisions of that Statement.

Statement No. 144 also supersedes the accounting and reporting provisions of APB
Opinion No. 30,  Reporting the Results of  Operations--Reporting  the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions,  for the disposal of a segment of a business.
However,  it retains  the  requirement  in Opinion  No. 30 to report  separately
discontinued  operations  and extends that reporting to a component of an entity
that either has been disposed of (by sale, abandonment,  or in a distribution to
owners) or is classified as held for sale. By  broadening  the  presentation  of
discontinued  operations  to include more  disposal  transactions,  the FASB has
enhanced  managements'  ability to  provide  information  that  helps  financial
statement  users to assess the effects of a disposal  transaction on the ongoing
operations  of an entity.  Statement  No.  144 is  effective  for  fiscal  years
beginning  after  December 15, 2001.  At the current time,  management  does not
believe  that the  adoption  of this  statement  on  January 1, 2002 will have a
material impact on the Company's financial position.

                                       26
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


RECLASSIFICATIONS:

Certain  reclassifications  have  been made to the 2000  consolidated  financial
statements to conform to the 2001 presentation.

2. CASH IN ESCROW:

The Company is the  custodian  of cash  deposited  by  customers  with  specific
instructions  as to its  disbursement  from  active  escrow,  trust and  account
servicing  files. The balances in these accounts have not been included in these
consolidated  financial  statements.  As of  December  31,  2001 and  2000,  the
accounts  contain  balances  of  approximately   $254,810,000  and  $98,275,000,
respectively.

3. CONCENTRATION OF CREDIT RISK:

The  Company   maintains  cash  and  cash  equivalents  with  various  financial
institutions. Deposits not to exceed $100,000 at each institution are insured by
the Federal Deposit Insurance Corporation. At December 31, 2001, the Company had
uninsured cash and cash equivalents of approximately  $6,564,000.  Additionally,
the  Company's  revenue is  generated  solely from  activities  in the states of
Arizona  and   California,   and   accounts   receivable   are   typically   not
collateralized.

4. PROPERTY AND EQUIPMENT:

Property and equipment consists of the following:

                                       Useful Lives      2001          2000
                                       ------------   -----------   -----------
Land                                           N/A    $   107,994   $   888,756
Buildings and leasehold improvements    3-40 years      5,842,036     6,802,782
Office equipment                         3-7 years      8,390,682     6,526,908
Furniture and fixtures                     7 years      1,349,655     1,231,116
Vehicles                                   5 years         61,971        77,911
                                                      -----------   -----------
                                                       15,752,338    15,527,473
Less: Accumulated depreciation and
      amortization                                     (5,677,010)   (4,516,168)
                                                      -----------   -----------
                                                      $10,075,328   $11,011,305
                                                      ===========   ===========

5. INCOME TAXES:

The income tax expense (benefit) consists of the following:

                                                  Years Ended December 31,
                                           -------------------------------------
                                             2001          2000          1999
                                           ---------     ---------     ---------
Current:
  Federal                                  $ 918,009     $      --     $      --
  State                                      186,839         7,250
Deferred:
  Federal                                   (282,622)      (39,905)           --
  State                                      (54,654)           --            --
                                           ---------     ---------     ---------
                                           $ 767,572     $ (32,655)    $      --
                                           =========     =========     =========

Total current tax payable equaled $440,248 and $0 at December 31, 2001 and 2000,
respectively,  which  is  included  in  accrued  expenses  on  the  accompanying
consolidated balance sheet.

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the  Company's  deferred  tax  assets as of  December  31,  2001 and 2000 are as
follows:

                                       27
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


                                                     2001              2000
                                                  -----------       -----------
Deferred tax assets:
  Accounts receivable                             $    77,968       $    12,972
  Alternative minimum credit                           77,086            45,588
  Net operating loss carryforwards                         --         1,721,260
  Reserve for losses                                  233,979           164,016
  Deferred gain on sales-leaseback                    222,017                --
  Accrued vacation                                    177,891                --
  Other                                                84,479             3,420
                                                  -----------       -----------
                                                      873,420         1,947,256
Less: valuation allowance                                  --        (1,903,553)
                                                  -----------       -----------
Total deferred tax assets                             873,420            43,703

Deferred tax liabilities:
  Property and equipment                             (536,144)          (43,703)
                                                  -----------       -----------
Total deferred tax liabilities                       (536,144)          (43,703)
                                                  -----------       -----------
Net deferred tax assets                           $   337,276       $        --
                                                  ===========       ===========

At December 31, 2001,  the Company has used all  available  net  operating  loss
carryforwards.

The  reconciliation  of the provision for income taxes with the expected  income
taxes based on the statutory federal income tax rate is as follows:

<TABLE>
<CAPTION>
                                                        Years Ended December 31,
                                              ---------------------------------------------
                                                 2001             2000             1999
                                              -----------      -----------      -----------
<S>                                           <C>              <C>              <C>
Expected income tax expense (benefit) at
  the federal statutory rate                  $ 2,043,245      $  (799,053)     $  (669,469)
State income taxes net of federal benefit          71,160            4,713         (154,481)
Other                                             158,099          (38,845)         (25,363)
Change in valuation reserve,  net of state
  change in valuation reserve                  (1,504,932)         800,530          849,313
                                              -----------      -----------      -----------
    Income tax expense (benefit)              $   767,572      $   (32,655)     $        --
                                              ===========      ===========      ===========
</TABLE>

                                       28
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


6. LONG TERM DEBT:

Long term debt consists of the following:

                                                      Years Ended December 31,
                                                     --------------------------
                                                        2001           2000
                                                     -----------    -----------
8.32% term loan with GMAC Commercial Mortgage,
  with monthly installments of $23,940 including
  principal and interest, due August 2009;
  secured by a building                              $ 3,071,388    $ 3,095,468

Note payable to Comerica Bank bearing interest
  at the prime rate, with monthly principal
  payments of $2,800, due December 2002;
  secured by a building                                       --        963,600

Credit line with Comerica Bank bearing interest
  at the prime rate, credit line matures May 2002;
  secured by furniture and equipment                          --        900,000

Capital lease obligations, with varying rates of
  9% to 13%, due throughout the year 2002;
  secured by equipment                                    11,447         57,043
                                                     -----------    -----------
                                                       3,082,835      5,016,111
Less: current portion                                    (40,766)    (1,006,152)
                                                     -----------    -----------
                                                     $ 3,042,069    $ 4,009,959
                                                     ===========    ===========

The Company has a $1,500,000  revolving line of credit from Comerica Bank, which
bears interest on any outstanding  balance at the prime rate. As of December 31,
2001,  there  were no cash  draws  against  the  credit  line.  There is $75,000
committed  against  the  credit  line for a standby  letter  of credit  required
pursuant to an office lease.

The maturities of long-term debt after December 31, 2001 were as follows:

                        2002                   $    40,766
                        2003                        31,890
                        2004                        33,947
                        2005                        37,664
                        2006                        40,966
                     Thereafter                  2,897,602
                                               -----------
                                               $ 3,082,835
                                               ===========

In January 2001, the Company sold an office  building in Santa Rosa,  California
under a sale-leaseback  arrangement,  which provided  approximately  $785,000 in
cash and retired  $963,600 in debt  related to the  building.  This  transaction
resulted in a gain of approximately  $604,000,  which will be amortized over the
10 year leaseback term.

7. OPERATING LEASE COMMITMENTS:

The Company  leases  offices and office  equipment at 59 locations.  These lease
periods range from one month to 59 months with renewal  options up to ten years.
In addition,  the Company has a 50 year ground lease, through December 2047, for
its corporate office with annual payments of approximately $102,000,  subject to
adjustments  based on the consumer price index. For the years ended December 31,
2001,  2000 and 1999 rental  expense was  $4,225,423,  $3,297,689 and $2,459,120
respectively.

                                       29
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company's future minimum lease  commitments  after December 31, 2001 were as
follows:

                        2002                   $ 3,532,472
                        2003                     2,928,926
                        2004                     2,100,989
                        2005                     1,040,317
                        2006                       665,422
                     Thereafter                  5,008,462
                                               -----------
                                               $15,276,588
                                               ===========

8. CONTINGENCIES AND UNCERTAINTIES:

The  Company  is a  defendant  in  various  lawsuits  and  claims,  which  it is
vigorously defending.  It is management's contention that such matters arise out
of the  normal  course  of  business,  primarily  related  to title  and  escrow
disputes.  While the results of litigation  cannot be predicted with  certainty,
management  believes,  based on the  advice  of legal  counsel,  that the  final
outcome of such lawsuits and claims will not have a material  adverse  effect on
the Company's financial position, results of operations, or liquidity.

In  September  2001,  the  Company's  Board  of  Directors  authorized  a  stock
repurchase  program of up to one million shares of its outstanding common stock.
As of December 31, 2001,  333,896 shares had been repurchased under this program
at a total cost of $715,284.  Subsequent  to December 31, 2001,  the Company has
paid an additional $180,971 to repurchase its common stock.

In addition,  as of December 31,  2001,  2000 and 1999,  the Company had accrued
$129,000,  $149,000 and  $318,000,  respectively,  for other  potential  claims.
During  1999,  the  California  State  Controller's  Office  examined  all title
companies to identify unclaimed property escheatable to the State of California.
The majority of the accrual at December 31, 1999  related to  escheatable  funds
owed by subsidiaries the Company  acquired,  of which $183,000 was paid in early
2000 to fulfill the Company's  obligations  identified in the examination of its
California operations.

In  September  2001,  the Company  executed a  definitive  agreement  to acquire
BridgeSpan  Title  Company's  title  and  escrow  operations  for  the  northern
California  counties of Santa Clara, San Mateo and Sacramento for  approximately
$3.3  million,  subject to  adjustments.  The  transaction  includes five branch
offices  and  ownership  interest in joint title  plants for the  counties.  The
agreement  is subject to  regulatory  approval and  contains  customary  closing
conditions.  The Company has a commitment  for a prime rate three year term loan
to finance $1.5 million of the purchase price.

                                       30
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. SUPPLEMENTAL CASH FLOW INFORMATION:

The following  supplemental  cash flow  information  is provided with respect to
interest and tax payments,  as well as certain non-cash  investing and financing
activities.

<TABLE>
<CAPTION>
                                                               Years Ended December 31,
                                                         -----------------------------------
                                                           2001         2000         1999
                                                         ---------    ---------    ---------
<S>                                                      <C>          <C>          <C>
Cash paid (refunded) during the year:
  Interest                                               $ 277,252    $ 334,756    $ 286,520
  Income taxes                                             664,600     (142,181)     228,604
Non-cash investing and financing activities:
  Issuance/(recission) of equity exchange                 (424,448)     424,448           --
  Conversion of convertible debt                                --           --       30,000
  Shares issued in connection with a building purchase          --           --       19,149
  Acquisition of Northwestern Consolidated Corporation          --           --     (454,140)
</TABLE>

10. EMPLOYEE BENEFIT PLAN:

     PROFIT SHARING PLAN:

The Company maintains a profit sharing plan under Section 401(k) of the Internal
Revenue Code. Under this plan,  substantially all full-time  employees may elect
to defer up to 15% of their  salary.  The  Company  contributes  $0.33 for every
$1.00  the  employee  contributes,  up to a  maximum  of  four  percent  of  the
employee's  earnings.  Vesting  of  matching  contributions  is based on certain
service requirements. Employees are fully vested after six years of service.

Employer contributions for the years ended December 31, 2001, 2000 and 1999 were
approximately $174,600, $134,000 and $72,600, respectively.

     CAFETERIA PLAN:

The Company  maintains an Internal  Revenue Code Section 125 Cafeteria Plan as a
benefit to its employees.  The plan provides for employee and dependent coverage
to be paid from  before  tax  compensation.  As such,  there is no effect on the
consolidated financial statements.

11. STOCK OPTION PLANS:

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25") and related  Interpretations
in  accounting  for its 1996 Stock  Option Plan and the  Company's  Non-Employee
Directors  Stock Option Plan.  Under APB 25,  because the exercise  price of the
Company's  stock options equals the market price of the underlying  stock on the
date  of  grant,  no  compensation   expense  is  recognized  in  the  Company's
consolidated financial statements.

The Company's  1996 Stock Option Plan ("The Plan") has  authorized  the grant of
common stock options to all the Company's employees. Currently, 3,900,000 shares
of Common Stock are authorized for issuance pursuant to the Plan. As of December
31, 2001,  3,028,000 options are outstanding under the Plan. All options granted
have 5-year  terms.  Fifty  percent of the options  can be  exercised  after two
years,  the remaining  options can be exercised  after three years  provided the
optionee remains employed with the Company at such vesting date. Options granted
under  the Plan are not  transferable  and the per  share  exercise  price of an
incentive  stock  option  granted  under  the Plan may not be less than the fair
market value of the common stock on the date of grant.

                                       31
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


The Company's  Non-Employee  Directors Stock Option Plan ("Directors  Plan") has
authorized  the  grant  of  options  to  non-employee  members  of the  Board of
Directors and advisory  boards.  Currently,  600,000  shares of Common Stock are
authorized for issuance pursuant to the Directors Plan. As of December 31, 2001,
390,000  options are  outstanding  under the Directors Plan. All options granted
have 5-year  terms.  Fifty  percent of the options  can be  exercised  after two
years;  the  remaining  shares can be exercised  after three years  provided the
optionee remains an eligible director at such vesting date. Upon election to the
Board of Directors  each board  member is granted the option to purchase  15,000
shares of common stock.  In addition to the foregoing  option grants,  each year
every non-employee director  automatically  receives an option to acquire 10,000
shares of the  Company's  common stock on the third  business day  following the
date the Company publicly announces its annual financial results;  provided that
such  director  has  attended  at  least  75% of the  meetings  of the  Board of
Directors  and the Board  Committees  of which such  non-employee  director is a
member in the preceding fiscal year.

In December  2000,  the Company gave all employees the option to cancel  options
they currently held with the intent to have a like number of options  granted on
July 2, 2001 (more than six months  after the date of the  cancellation)  at the
greater of $1.00 or the then-current  market price. A total of 1,073,100 options
with a  weighted  average  price  of  $2.24  were  cancelled  pursuant  to  this
arrangement.  On July 2, 2001, 1,039,050 options were regranted pursuant to this
agreement at an option price of $2.45.

A summary of the Company's  stock option  activity  pursuant to its stock option
plans, and related information for the years ended December 31 is as follows:

<TABLE>
<CAPTION>
                                          2001                      2000                      1999
                                  ---------------------     ---------------------     ---------------------
                                               Weighted                  Weighted                  Weighted
                                                Average                   Average                   Average
                                   Options       Price       Options       Price       Options       Price
                                  ----------     ------     ----------     ------     ----------     ------
<S>                                <C>           <C>        <C>            <C>        <C>            <C>
Outstanding-
  Beginning of year                2,298,100     $ 1.42      3,224,400     $ 1.84      2,778,150     $ 1.53
Granted                            1,834,700       2.14        574,600       1.20        929,950       2.75
Exercised                           (435,600)      1.05        (30,500)      1.00       (127,900)      1.00
Forfeited                           (279,200)      1.71     (1,470,400)      2.19       (355,800)      2.05
                                  ----------                ----------                ----------
Outstanding-
  End of year                      3,418,000       1.82      2,298,100       1.42      3,224,400       1.84
                                  ==========                ==========                ==========

Exercisable at end of year         1,154,500       1.48      1,494,300       1.23      1,271,100       1.06
                                  ==========                ==========                ==========
Weighted-
  Average fair value of options
  granted during the year         $     1.34                $     0.51                $     1.27
                                  ==========                ==========                ==========
</TABLE>

Stock options outstanding at December 31, 2001 were as follows:

<TABLE>
<CAPTION>
                                    Options Outstanding                       Options Exercisable
                         ----------------------------------------------    ---------------------------
                                      Weighted average     Weighted                       Weighted
   Range of                              Remaining          Average                        Average
Exercise price            Options     Contractual life   Exercise price     Options     Exercise price
--------------           ----------   ----------------   --------------    ----------   --------------
<S>                      <C>              <C>                <C>           <C>              <C>
 $1.00-$1.50              1,378,100       1.9 years          $1.07            705,050       $1.00
 $1.62-$2.50              1,958,800       3.8 years           2.28            408,775        2.10
 $3.00-$4.00                 81,100       2.2 years           3.51             40,675        3.51
                         ----------       ---------          -----         ----------       -----
                          3,418,000       3.0 years          $1.82          1,154,500       $1.48
                         ==========       =========          =====         ==========       =====
</TABLE>

                                       32
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


Pro forma information regarding net income and earnings per share is required by
Statement  123, and has been  determined as if the Company had accounted for its
employee stock options under the fair value method of that  statement.  The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions:  risk-free
interest rate of 2% for 2001, and 4.5% for 2000 and 1999; dividend yields of 0%;
volatility  factors of the expected  market price of the Company's  common stock
was 118% for 2001,  and 49% for 2000 and 1999; and a  weighted-average  expected
life of the options for 2001, 2000 and 1999 of 4 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options,  which have no vesting  restrictions and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.

Because the Company's stock options have characteristics significantly different
from  those of traded  options,  and  because  changes in the  subjective  input
assumptions  can  materially  affect the fair value  estimate,  in  management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its stock options.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the  options'  vesting  period.  If the Company had
accounted for its stock-based compensation plans using a fair value based method
of accounting the pro forma information would have been reported as follows:

<TABLE>
<CAPTION>
                                                          Years ended December 31,
                                                -----------     -----------     -----------
                                                   2001            2000            1999
                                                -----------     -----------     -----------
<S>                                             <C>             <C>             <C>
Pro forma net income (loss)                     $ 4,715,510     $(2,938,274)    $(2,639,686)
Pro forma net income (loss) per share-basic     $      0.27     $     (0.17)    $     (0.16)
Pro forma net income (loss) per share-diluted   $      0.26     $     (0.17)    $     (0.16)
</TABLE>

12. ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS RECEIVABLE

Changes in the allowance for  uncollectible  accounts  receivable  for the years
ended December 31, 1999 2000 and 2001 are as follows:

Balance as of December 31, 1998                 $  27,942
  Provision charged to operations                      --
  Write-offs, net of recoveries                   (14,192)
                                                ---------
Balance as of December 31, 1999                    13,750
  Provision charged to operations                  16,250
  Write-offs, net of recoveries                        --
                                                ---------
Balance as of December 31, 2000                    30,000
  Provision charged to operations                 169,506
  Write-offs, net of recoveries                    (6,506)
                                                ---------
Balance as of December 31, 2001                 $ 193,000
                                                =========

                                       33
<PAGE>
                   CAPITAL TITLE GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


13. EQUITY EXCHANGE:

Pursuant to an agreement  dated June 6, 2000 between the Company and  9keys.com,
there was an  exchange  of common  stock on July 19,  2000  whereby  each of the
companies  received two and one-half  percent of the other company's  issued and
outstanding  common  stock.  9keys.com is a privately  held  financial  and real
estate organization providing a one-stop-realty shopping concept to the southern
California  real estate  market.  This  transaction  resulted in the issuance of
424,448  shares of  Capital  Title  Group,  Inc.  common  stock.  The  Company's
investment  in 9keys.com was recorded at $424,448 and is included in the Balance
Sheet classification of Deposits and Other Assets as of December 31, 2000.

Subsequent  to December 31, 2000,  the  companies  agreed to rescind this equity
exchange and the 424,448 shares of Capital Title Group,  Inc.  common stock were
returned and cancelled.

14. SELECTED QUARTERLY FINANCIAL DATA

The following table sets forth unaudited selected  quarterly  financial data for
each quarter of the years ended December 31, 2001 and 2000.

<TABLE>
<CAPTION>
                                March 31        June 30     September 30    December 31      Total
                               -----------    -----------    -----------    -----------    -----------
<S>                            <C>            <C>            <C>            <C>            <C>
2001
Total revenue                  $12,322,905    $17,568,380    $16,599,983    $17,944,483    $64,435,751
Net income                         501,558      2,100,948      1,452,280      1,015,484      5,070,270
Net income per common share:
  Basic                               0.03           0.12           0.08           0.06           0.29
  Diluted                             0.03           0.12           0.08           0.06           0.28

2000
Total revenue                  $ 7,914,324    $ 9,856,753    $ 9,181,996    $ 9,945,247    $36,898,320
Net loss                          (938,212)      (116,314)      (746,488)      (451,273)    (2,252,287)
Net loss per common share:
  Basic                              (0.06)         (0.01)         (0.04)         (0.03)         (0.13)
  Diluted                            (0.06)         (0.01)         (0.04)         (0.03)         (0.13)
</TABLE>

                                       34
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     On November 30, 2000,  KPMG LLP replaced Ernst & Young LLP as the Company's
independent  accountants.  There were no disagreements with Ernst & Young on any
matter of accounting principles or practices,  financial statement disclosure or
auditing scope or procedure. During the past two fiscal years and the subsequent
interim period preceding the date of the change in independent accountants,  the
Company  had not  consulted  with  KPMG LLP  regarding  (1) the  application  of
accounting  principles to a completed or proposed transaction or (2) the type of
audit  opinion that might be rendered on the  Company's  consolidated  financial
statements.

                                    PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information  required by this Item is incorporated by reference to the
Company's Proxy Statement for its 2002 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

     The  information  required by this Item is incorporated by reference to the
Company's Proxy Statement for its 2002 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information  required by this Item is incorporated by reference to the
Company's Proxy Statement for its 2002 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Not Applicable.

                                     PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

     (a) 1. & 2. Financial Statements and Financial Statement Schedules

The  Financial  Statements  filed as part of this report are listed in Item 8 of
Part II of this report.

         3. Index to Exhibits

                                                                       Method of
Exhibit No.                      Description                            Filing
-----------                      -----------                           ---------
      2        Share Exchange Agreement between Capital Title              (1)
               Agency, Inc. and Norvex, Inc. dated May 23, 1996
    3.1        Certificate of Incorporation                                (1)
    3.2        Amended and Restated Bylaws                                 (1)
   10.1        Underwriting Agreement between Capital Title Agency,        (1)
               Inc. and Old Republic National Title Insurance
               Company dated March 1, 1996
   10.2        Underwriting Agreement between Capital Title Agency,        (1)
               Inc. and First American Title Insurance Company
               dated August 16, 1996
   10.3        Underwriting Agreement between Capital Title Agency,        (2)
               Inc. and United General Insurance Company dated
               January 21, 1998.
   10.4        Placement Agent Agreement between Registrant and            (3)
               Sanders Morris Mundy Inc. dated April 13, 1998.
   10.5        Title Plant Agreement between Registrant and Security       (3)
               Union Title Insurance Company dated April 29, 1998
   10.6        Purchase and Sale Agreement between Registrant and          (3)
               KDC-AZ, LLC dated July 1, 1998
   10.7        Merger Agreement among Registrant, Northwestern             (4)
               Consolidated Corporation and related subsidiaries
               dated September 1, 1998.
   10.8        Credit Agreement between Registrant and Imperial            (3)
               Bank dated February 1, 1999.
   10.9        Access Agreement By and Between Security Union Title        (5)
               Insurance Company and New Century Title Company
               Company dated September 30, 1999.

                                       35
<PAGE>
                                                                       Method of
Exhibit No.                      Description                            Filing
-----------                      -----------                           ---------
  10.10        Title Plant Lease and Service Agreement by and              (5)
               between Security Union Title Insurance Company and
               Capital Title Agency Inc. dated May 19, 1999.
  10.11        Promissory Note between CTG Building Co. and GMAC           (5)
               Commercial Mortgage Corporation dated July 30, 1999.
  10.12        Amendment to Underwriting Agreement by and between          (5)
               Stewart Title Guaranty Company and New Century
     21        Subsidiaries                                                (5)
   23.1        Consent of Ernst & Young, LLP                               (*)
   23.2        Consent of KPMG LLP                                         (*)

----------
*    Filed herewith
(1)  Incorporated  by reference to the  Registrant's  Form 10-QSB filed with the
     Securities and Exchange Commission on September 20, 1996.
(2)  Incorporated  by  reference  to the  Registrant's  Form 10-KSB for the year
     ended December 31, 1997, filed with the Securities and Exchange  Commission
     on March 25, 1998.
(3)  Incorporated  by  reference  to the  Registrant's  Form 10-KSB for the year
     ended December 31, 1998, filed with the Securities and Exchange  Commission
     on March 23, 1999.
(4)  Incorporated  by  reference  to the  Registrant's  Form 8-K filed  with the
     Securities and Exchange Commission on December 10, 1998.
(5)  Incorporated  by  reference  to the  Registrant's  Form 10-KSB for the year
     ended December 31, 1999, filed with the Securities and Exchange  Commission
     on March 27, 2000.

     (b)  Reports on Form 8-K

     The  Company  did not file any  reports  on Form 8-K  during the year ended
December 31, 2001.

SIGNATURES

     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.

                                        CAPITAL TITLE GROUP, INC.

                                        By /s/ Donald R. Head
                                           -------------------------------------
                                           Donald R. Head
                                           Chief Executive Officer

Date: March 20, 2001

In accordance with the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

/s/ Donald R. Head          Chairman of the Board, President      March 20, 2001
------------------------      and Chief Executive Officer
Donald R. Head

/s/ Mark C. Walker          Vice President, Chief Financial       March 20, 2001
------------------------         Officer and Treasurer
Mark C. Walker

/s/ David C.Dewar                      Director                   March 20, 2001
------------------------
David C. Dewar

/s/ Theo F. Lamb                       Director                   March 20, 2001
------------------------
Theo F. Lamb

/s/ Robert B. Liverant                 Director                   March 20, 2001
------------------------
Robert B. Liverant

/s/ Stephen A McConnell                Director                   March 20, 2001
------------------------
Stephen A McConnell

/s/ Ben T. Morris                      Director                   March 20, 2001
------------------------
Ben T. Morris

                                       36