U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended September 30, 2001

[_] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from ___________ to ____________

Commission File Number:  1-11883

                                 EMB CORPORATION
                                 ---------------
                 (Name of small business issuer in its charter)

            Hawaii                                                95-3811580
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)


         5075 Warner Avenue, Suite B, Huntington Beach, California 92649
         ---------------------------------------------------------------
                    (Address of principal executive offices)

Issuer's telephone number: (714) 377-2118

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

     Title of each class           Name of each exchange on which registered
     -------------------           -----------------------------------------
            N/A                                      N/A

Securities registered under Section 12(g) of the Exchange Act: Common Stock, no
par value

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B 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-KSB
or any amendment to this Form 10-KSB. [ X ]

The issuer's revenues for its most recent fiscal year: $9,253,502

The aggregate market value of voting stock held by non-affiliates of the
registrant as of January 7, 2002: Common stock, no par value: $1,266,315

The number of shares of the registrant's common stock outstanding as of January
7, 2002: 20,897,569

Documents incorporated by reference: Not Applicable

         Transitional Small Business Disclosure Format: Yes [ ]  No [X]

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                           FORWARD-LOOKING STATEMENTS

     This annual report contains forward-looking statements. In some cases, you
can identify forward-looking statements by terms such as "may," "will,"
"should," "could," "would," "expects," "plans," "anticipates," "believes,"
"estimates," "projects," "predicts," "potential" and similar expressions
intended to identify forward-looking statements. These statements reflect our
current views with respect to future events and are based on assumptions and
subject to risks and uncertainties. These risks, uncertainties and other factors
may cause our actual results, performances or achievements to be materially
different from those expressed or implied by our forward-looking statements. Our
forward-looking statements in this annual report include, but are not limited
to, statements relating to:

     o    our anticipated business strategy;

     o    the market opportunity for our systems, including anticipated growth
          of our industry and expected demand for our products;

     o    our plans for hiring additional personnel;

     o    our estimates regarding our future capital requirements and needs for
          additional financing; and

     o    any of our other plans, objectives, expectations and intentions
          contained in this prospectus that are not historical facts.

     You should read this annual report completely and with the understanding
that our actual future results may be materially different from what we expect.
We will not update these forward-looking statements, even though our situation
may change in the future. We qualify all of our forward-looking statements by
these cautionary statements.

     Our forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to be materially
different. Such factors include, among others, the risk and other factors set
forth in the section "Risk Factors" as well as the following:

     o    changes in general economic and business conditions;

     o    changes in current pricing levels;

     o    reductions in sales to any of our significant customers or in customer
          capacity generally;

     o    our ability to hire and retain qualified personnel;

     o    changes in our sales mix to lower margin financial products;

     o    increased competition; and

     o    our ability to keep up with technological change and changes in
          customer demands.

     If one or more of these risks or uncertainties materialize, or if
underlying assumption prove incorrect, our actual results may vary materially
from those expected, estimated or projected. Because of these uncertainties, you
should not place undue reliance on forward-looking statements.

                                       2
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                                     PART I

Item 1. Description of Business.
--------------------------------

     General. The Company, formerly called "Pacific International, Inc.", a
Hawaii corporation, was incorporated in 1960, and was originally organized to
acquire and manage developed and undeveloped real estate. However, the Company
had not conducted significant operations for a number of years until it agreed
to acquire substantially all of the assets and assume certain liabilities of
Sterling Alliance Group, Ltd. ("SAG") in December 1995. Subsequently, the
Company changed its name to EMB Corporation to reflect the change in the purpose
and nature of its business.

     In December 1998, EMB Corporation (the "Company") substantially ceased
operations of its EMB Mortgage Corporation subsidiary. In January 2000, the
Company adopted a plan to divest itself of its remaining mortgage banking
operations. On February 22, 2000, the Company sold its interest in Residential
Mortgage Corporation ("RMC") to another mortgage banking entity, through the
cancellation of 40,000 shares of the Company's common stock. On April 12, 2000,
the Company entered into an Amended and Restated Purchase Agreement with e-Net
Financial.com Corporation (now known as Anza Capital, Inc.) ("e-Net") to sell
all of the outstanding stock currently held by the Company of American
Residential Funding, Inc. ("AMRES") and certain other assets of the Company. On
February 3, 2000, the Company acquired Titus Real Estate Corporation, which
owned a combination of non-operated working and royalty interests in 71
producing oil and gas wells located in the State of Oklahoma. However, in
September 2000 this transaction was rescinded and the common stock issued to the
prior owner of Titus Real Estate Corporation was returned to the Company for
cancellation.

     On June 24, 2000, the Company entered into an asset purchase agreement with
Cyrus Ltd. ("Cyrus") to acquire rights to operate two natural gas processing
plants in Tennessee. In connection with this agreement, the Company issued
2,500,000 shares of common stock. On November 10, 2000, the Company and Cyrus
rescinded the transaction due to the quality of the gas available for processing
and the common stock issued to Cyrus was returned to the Company for
cancellation.

     On November 10, 2000, the Company's Board of Directors approved a plan to
acquire various natural gas pipelines, located in the State of Oklahoma, from
Commanche Energy, Inc. ("Commanche"), for total consideration of $1,200,000, the
purchase price of which to be paid by means of a convertible promissory note.
The proposed acquisition was subject to the Company's due diligence
investigation regarding the pipelines. Following such investigation, the Company
determined not to proceed with the proposed acquisition.

     On June 26, 2001, the Company entered into a Settlement Agreement with
e-Net Financial.Com Corporation ("e-Net"), AMRES Holding LLC ("AMRES Holding"),
Vincent Rinehart ("Rinehart"; AMRES Holding and Rinehart being collectively, the
"Rinehart Parties"), and Williams de Broe ("WdB"). This Settlement Agreement
represented a "global" settlement by the parties involved with respect to
various claims or obligations asserted by one or more parties against one or
more parties. While reference is made to Exhibit 10.16 hereto for all terms and
conditions of the Settlement Agreement, including the asserted claims and/or
obligations, the following is a synopsis of the actions performed by the parties
pursuant to the Settlement Agreement. (Please note that all of the following
claims and obligations are, in accordance with the Settlement Agreement, deemed
to be asserted claims and/or obligations, only, and not deemed to be admitted by
any party.)

                                       3
<PAGE>


     o    e-Net withdrew the Registration Statement filed by it with the
          Securities and Exchange Commission, which included, among other shares
          being registered, the 7.5 million shares of e-Net common stock owned
          by the Company that were partial consideration tendered to the Company
          in respect of its sale of American Residential Funding to e-Net on or
          about April 10, 2000;

     o    e-Net issued 1.5 million shares of its restricted common stock to the
          Company;

     o    e-Net issued 3.0 million shares of its restricted common stock to WdB
          in exchange for a release by WdB of e-net's purported guarantee of the
          Company's obligation to WdB in the remaining amount of $657,349;

     o    The Company credited e-Net with the sum of $424,766 against e-Net's
          obligation to the Company (which constituted a portion of the original
          consideration to the Company as a result of its sale of American
          Residential Funding to e-Net), leaving a then-unpaid balance in favor
          of the Company of $788,850;

     o    The Company then assigned to AMRES Holding (subject to allocation
          among the Rinehart Parties) $484,446 of the $788,850 e-Net obligation
          due the Company, leaving a then-unpaid balance in favor of the Company
          of $303,404;

     o    WdB canceled the Company's remaining amount of $657,349 due WdB and,
          in light of the e-Net issuance of 3.0 million of its shares to WdB,
          accepted a new promissory note from the Company in the amount of
          $348,109 and 147,000 shares of the Company's restricted common stock
          in satisfaction of certain unpaid interest on the original $657,349
          obligation;

     o    The Company credited e-Net with the sum of $200,000 of e-Net's
          remaining $303,404 obligation, canceled e-Net's $303,404 promissory
          note, and accepted a new convertible promissory note from e-Net in the
          amount of $103,404.

     On July 6, 2001, the management and directors of the Company resigned, with
the exception of Ann L. Peterson, who remained as a director, and James E.
Shipley, who previously acted as President and a director of the Company, was
elected Chairman and President. Mr. Shipley was also named acting Secretary and
acting principal accounting and Chief Financial Officer.

     On July 16, 2001, the Company entered into an Agreement for Consulting
Services with Belvidere Networking Enterprises ("Belvidere"), whereby Belvidere
agreed to provide consulting and advisory services relating to (a) the
identification of, and preliminary negotiations with, mortgage and other
financial services related companies for possible acquisition by, or merger
with, the Company; (b) assisting the Company in completing due diligence
investigations of companies which are being considered for potential acquisition
by, or merger with, the Company; and (c) providing the Company with
recommendations regarding management strategies for the Company's operating
subsidiaries. This agreement provides for the Company to pay a total of
$1,500,000 over the three year term of the agreement, with said sum payable in
the form of the Company's common stock.

     On July 24, 2001, the Company entered into Settlement Agreements with Ben
Campbell, the former Director and President of the Company, and with Kenneth J.
Quist, the former Vice President, Secretary, Principal Accounting and Chief

                                       4
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Financial Officer and Director of the Company, to compensate them for services
rendered during the prior year of service in such capacities and to reimburse
them for expenses incurred on behalf of the Company during that period. The
terms of the Settlement Agreements, among other things, provided that the
Company issue 150,000 shares and 100,000 shares of the Company's restricted
common stock to Messrs. Campbell and Quist, respectively. On the same date, the
Company agreed to issue 10,000 shares of the Company's restricted common stock
to each of Roger D. Hall, a former Director of the Company, and Ann L. Petersen,
a remaining Director of the Company, as compensation for services rendered in
such capacities for the prior year.

     On July 24, 2001, the Company and William R. Parker closed a transaction,
whereby the Company purchased all of the capital stock of Saddleback Investment
Services, Inc. ("Saddleback"), which does business as American National
Mortgage. A more detailed description of this transaction between the Company
and Mr. Parker and the business of Saddleback may be found in the Company's
Current Report on Form 8-K dated July 23, 2001, which was filed with the
Securities and Exchange Commission on August 8, 2001. On September 21, 2001, the
Company agreed to issue 500,000 shares of its Series E Convertible Preferred
Stock to Saddleback in exchange for 100,000 shares of Saddleback's Series A
Convertible Preferred Stock. In connection therewith, certain of the documents
relating to the acquisition of Saddleback were amended and restated to
effectuate this transaction and are included herein as Exhibits 10.10, 10.12 and
10.13.

     On July 26, 2001, the Company and William V. Perry closed a transaction,
whereby the Company sold to Mr. Perry all of the capital stock of EMB Mortgage
Corporation. Prior to this transaction, EMB Mortgage Corporation had been a
wholly-owned subsidiary of the Company, with Mr. Perry serving as its President.
Prior to June 21, 2000, Mr. Perry had also been a Director of the Company. A
more detailed description of this transaction between the Company and Mr. Perry
may be found in the Company's Current Report on Form 8-K, which was filed with
the Securities and Exchange Commission on August 10, 2001.

     On July 26, 2001, the Company and David Berman closed a transaction,
whereby the Company sold to Mr. Berman all of the capital stock of Ameritelecon,
Inc. Prior to this transaction, Ameritelecon, Inc. had been a wholly owned
subsidiary of the Company, with Mr. Berman serving as its President. A more
detailed description of this transaction between the Company and Mr. Berman may
be found in the Company's Current Report on Form 8-K, which was filed with the
Securities and Exchange Commission on August 10, 2001.

     On July 31, 2001, William R. Parker, President of Saddleback was named to
the Board of Directors of the Company.

     On August 1, 2001, the Company entered into an Agreement for Consulting
Services with Castle Gate Group, Ltd. ("Castle Gate"), whereby Castle Gate
agreed to provide consulting and advisory services relating to the
identification of, and preliminary negotiations with, mortgage and other
financial services related companies for possible acquisition by, or merger
with, the Company and other related matters. This agreement provides for the
Company to pay a total of $1,000,000 over the three-year term of the agreement,
with said sum payable in the form of the Company's common stock.

                                       5
<PAGE>


     On September 30, 2001, the Company, the Company and FGFC Holdings, Inc.
closed a transaction, whereby the Company purchased all of the capital stock of
First Guaranty Financial Corporation ("First Guaranty"). As a part of the
transaction, the Company agreed to issue 2,000,000 shares of its Series E
Convertible Preferred Stock to First Guaranty in exchange for 100,000 shares of
First Guaranty's Series A Convertible Preferred Stock. A more detailed
description of this transaction may be found in the Company's Current Report on
Form 8-K dated September 30, 2001, which was filed with the Securities and
Exchange Commission on October 15, 2001.

     On December 7, 2001, Rodney K. Thompson, President of First Guaranty was
named to the Board of Directors of the Company.

Description of Business of First Guaranty Financial Corporation.
----------------------------------------------------------------

     First Guaranty is a mortgage banking entity with its principal office
located in Santa Ana, California. First Guaranty was formed in June 1988 and
operated solely as a wholesale mortgage banker until June, 1998. At that time,
the management of First Guaranty determined that it should expand its operations
to include retail operations, as well. First Guaranty's current operations have
approximately 20% of its loans generated as retail mortgage business, with the
loans being originated by in-house loan officers, and 80% generated by wholesale
lending operations, with the loans being originated by independent mortgage
brokers and submitted to First Guaranty for funding. At present, First Guaranty
has a total of 4 offices, its principal office in Santa Ana, California and
branch offices in Colton, California, Bakersfield, California and Rancho
Cucamonga, California. First Guaranty has approximately 70 employees (41 of whom
are in loan operations, 15 in sales, and 14 in administration). In the fiscal
year ended September 30, 2001, First Guaranty funded and closed approximately
3,000 loans with a total value of approximately $491,900,000.

     First Guaranty generates its income primarily through fees and expenses
charged to borrowers and from yield-spread premiums and/or service release
premiums paid to First Guaranty when the closed loans are sold by First
Guaranty.

     First Guaranty is presently approved to do business in approximately 14
states, including the State of California, by means of qualifying with each
state through individual licensing or registration processes.

Description of Business of Saddleback Investment Services, Inc.
---------------------------------------------------------------

     Saddleback, presently doing business as American National Mortgage
("American National") is a mortgage broker and banking entity with its principal
office located in Santa Ana, California. American National was formed in
November, 1992 and operated primarily as a wholesale mortgage banker until
January, 2001. At that time, the management of American National determined that
it should change its operational business plan to focus more on the retail
mortgage business and to originating its own loans through a network of loan
officers, rather than on the wholesale lending operations, where it would remain
dependent independent, third party mortgage brokers for its business. American
National expects that, under its new business plan, approximately 90% of its
loans will be generated as retail mortgage business and 10% will be generated by
wholesale lending operations. As a result of this change of operations strategy
and pending the build up of its retail loan operations, American National
terminated a number of its employees, reducing its staff from approximately 10
employees (nine of whom were in loan operations, and one of whom was in
administration) to five as September 30, 2001 (two of whom were in loan
operations, one in administration, and two were loan sales representatives).

                                       6
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     American National generates its income primarily through fees and expenses
charged to borrowers and from yield spread premiums and/or service release
premiums paid to American National when the closed loans are sold by American
National.

     American National is presently approved to do business in approximately 16
states, including the State of California, by means of qualifying with each
state through individual licensing or registration processes.

Description of Mortgage Operations of First Guaranty and American National.
---------------------------------------------------------------------------

     Loan Standards. Mortgage loans made by First Guaranty and American National
are loans with fixed or adjustable rates of interest, secured by first
mortgages, deeds of trust or security deeds on residential properties with
original principal balances that, generally, do not exceed 95% of the value of
the mortgaged properties, unless such loans are FHA-insured or VA-guaranteed.
Generally, each mortgage loan having a loan-to-value ratio, as of the date of
the loan, in excess of 80%, or which is secured by a second or vacation home,
will be covered by a Mortgage Insurance Policy, FHA Insurance Policy or VA
Guaranty insuring against default of all or a specified portion of the principal
amount thereof.

     The mortgage loans are "one to four-family" mortgage loans, which means
permanent loans (as opposed to construction or land development loans) secured
by mortgages on non-farm properties, including attached or detached
single-family or second/vacation homes, one to four-family primary residences
and condominiums or other attached dwelling units, including individual
condominiums, row houses, townhouses and other separate dwelling units even when
located in buildings containing five or more such units. Each mortgage loan must
be secured by an owner occupied primary residence or second/vacation home, or by
a non-owner occupied residence. The mortgaged property may not be a mobile home.

     In general, no mortgage loan is expected to have an original principal
balance less than $30,000. While most loans will have an original principal
balance of less than $700,000, loans of up to $4,000,000 may be funded by First
Guaranty. American National funds loans up to $500,000. Fixed-rate mortgage
loans must be repayable in equal monthly installments, which reduce the
principal balance of the loans to zero at the end of the term.

     Credit, Appraisal and Underwriting Standards. Each mortgage loan must (i)
be an FHA-insured or VA-guaranteed loan meeting the credit and underwriting
requirements of such agency, or (ii) meet the credit, appraisal and underwriting
standards established by First Guaranty and American National. For certain
mortgage loans that may be subject to a mortgage pool insurance policy, First
Guaranty or American National may delegate to the issuer of the mortgage pool
insurance policy the responsibility of underwriting such mortgage loans, in
accordance with respective credit appraisal and underwriting standards of First
Guaranty and American National. In addition, First Guaranty or American National
may delegate to one or more lenders the responsibility of underwriting mortgage
loans offered to First Guaranty or American National by their lenders, all in
accordance with the respective credit, appraisal and underwriting guidelines of
First Guaranty and American National.

                                       7
<PAGE>


     The respective underwriting standards of First Guaranty and American
National are intended to evaluate the prospective mortgagor's credit standing
and repayment ability, and the value and adequacy of the proposed mortgaged
property as collateral. In the loan application process, prospective mortgagors
will be required to provide information regarding such factors as their assets,
liabilities, income, credit history, employment history and other related items.
Each prospective mortgagor will also provide an authorization to apply for a
credit report, which summarizes the mortgagor's credit history. With respect to
establishing the prospective mortgagor's ability to make timely payments, First
Guaranty and American National will require evidence regarding the mortgagor's
employment and income, and of the amount of deposits made to financial
institutions where the mortgagor maintains demand or savings accounts.

     The underwriting standards generally follow guidelines acceptable to FNMA
and FHLMC; however, underwriting policies may be varied in appropriate cases. In
determining the adequacy of the property as collateral, an independent appraisal
is made of each property considered for financing. The appraiser is required to
inspect the property and verify that it is in good condition and that
construction, if new, has been completed. The appraisal is based on the
appraiser's judgment of values, giving appropriate weight to both the market
value of comparable homes and the cost of replacing the property.

     Certain states where the mortgaged properties may be located are
"anti-deficiency" states, where, in general, lenders providing credit on one to
four-family properties must look solely to the property for repayment in the
event of foreclosure. See "Certain Legal Aspects of the Mortgage Loans --
Anti-Deficiency Legislation and Other Limitations on Lenders". First Guaranty's
and American National's underwriting standards in all states (including
anti-deficiency states) require that the underwriting officers be satisfied that
the value of the property being financed, as indicated by the independent
appraisal, currently supports and is anticipated to support in the future the
outstanding loan balance, and provides sufficient value to mitigate the effects
of adverse shifts in real estate values.

     Title Insurance Policies. First Guaranty and American National will require
that, at the time of the origination of the mortgage loans and continuously
thereafter, a title insurance policy be in effect on each of the mortgaged
properties and that such title insurance policy contain no coverage exceptions,
except those permitted pursuant to the guidelines established by FNMA.

Certain Legal Aspects of Mortgage Loans.
----------------------------------------

     General. The mortgages originated by First Guaranty and American National
are either mortgages or deeds of trust, depending upon the prevailing practice
in the state in which the property subject to a mortgage loan is located. A
mortgage creates a lien upon the real property encumbered by the mortgage. It
does not, generally, have priority over liens for real estate taxes and
assessments. Priority between mortgages depends on their terms and generally on
the order of filing with a state or county office. There are two parties to a
mortgage, the mortgagor, who is the borrower and homeowner (the "Mortgagor"),
and the mortgagee, who is the lender. Under the mortgage instrument, the
Mortgagor delivers to the mortgagee a note or bond and the mortgage. Although a
deed of trust is similar to a mortgage, a deed of trust formally has three
parties, the borrower-homeowner called the trustor (similar to a Mortgagor), a
lender (similar to a mortgagee) called the beneficiary, and a third-party
grantee called the Trustee. Under a deed of trust, the borrower grants the
property, irrevocably until the debt is paid, in trust, generally with a power
of sale, to the Trustee to secure payment of the obligation. The Trustee's
authority under a deed of trust and the mortgagee's authority under a mortgage
are governed by law, the express provisions of the deed of trust or mortgage,
and, in some cases, the directions of the beneficiary.

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     Foreclosure. Foreclosure of a deed of trust is generally accomplished by a
non-judicial Trustee's sale under a specific provision in the deed of trust
which authorizes the Trustee to sell the property to a third party upon any
default by the borrower under the terms of the note or deed of trust. In some
states, the Trustee must record a notice of default and send a copy to the
borrower-trustor and to any person who has recorded a request for a copy of a
notice of default and notice of sale. In addition, the Trustee must provide
notice in some states to any other individual having an interest in the real
property, including any "junior lienholders". The borrower, or any other person
having a junior encumbrance on the real estate, may, during a reinstatement
period, cure the default by paying the entire amount in arrears, plus the costs
and expenses incurred in enforcing the obligation. Generally, state laws require
that a copy of the notice of sale be posted on the property and sent to all
parties having an interest in the real property.

     Foreclosure of a mortgage is generally accomplished by judicial action. The
action is initiated by the service of legal pleadings upon all parties having an
interest in the real property. Delays in completion of the foreclosure may
occasionally result from difficulties in locating necessary parties. Judicial
foreclosure proceedings are often not contested by any of the parties. However,
even when the mortgagee's right to foreclose is contested, the court generally
issues a judgment of foreclosure and appoints a referee or other court officer
to conduct the sale of the property.

     In the case of foreclosure under either a mortgage or a deed of trust, the
sale by the referee or other designated officer or by the Trustee is a public
sale. However, because of the difficulty a potential buyer at the sale would
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
uncommon for a third party to purchase the property at the foreclosure sale.
Rather, it is common for the lender to purchase the property from the Trustee or
referee for an amount equal to the principal amount of the mortgage or deed of
trust, accrued and unpaid interest and the expense of foreclosure. Thereafter,
the lender will assume the burdens of ownership, including obtaining casualty
insurance and making such repairs at its own expense as are necessary to render
the property suitable for sale. The lender will commonly obtain the services of
a real estate broker and pay the broker's commission in connection with the sale
of the property. Depending upon market conditions, the ultimate proceeds of the
property may not equal the lender's investment in the property. Any loss may be
reduced by the receipt of any mortgage insurance proceeds.

     Rights of Redemption. In some states, after sale pursuant to a deed of
trust or foreclosure of a mortgage, the borrower and foreclosed junior lienors
are given a statutory period in which to "redeem" the property from the
foreclosure sale. In some states, redemption may occur only upon a payment of
the entire principal balance of the loan, accrued interest and expenses of
foreclosure. In other states, redemption may be authorized if the former
borrower pays only a portion of the sums due. The effect of a statutory right of
redemption is to diminish the ability of the lender to sell the foreclosed
property. The rights of redemption would defeat the title of any purchaser from
the lender subsequent to foreclosure or sale under a deed of trust.
Consequently, the practical effort of the redemption right is to force the
lender to retain the property and pay the expenses of ownership until the
redemption period has expired.

                                       9
<PAGE>


     Anti-Deficiency Legislation and Other Limitations on Lenders. Certain
states have imposed statutory prohibitions that limit the remedies of a
beneficiary under a deed of trust or a mortgage. In some states, statutes limit
the right of the beneficiary or mortgagee to obtain a deficiency judgment
against the borrower following foreclosure or sale under a deed of trust. A
deficiency judgment would be a personal judgment against the former borrower
equal in most cases to the difference between the net amount realized upon the
public sale of the real property and the amount due to the lender. Other
statutes require the beneficiary or mortgagee to exhaust the security afforded
under a deed of trust or mortgage by foreclosure in an attempt to satisfy the
full debt before bringing a personal action against the borrower. Finally, other
statutory provisions limit any deficiency judgment against the former borrower
following a judicial sale to the excess of the outstanding debt over the fair
market value of the property at the time of the public sale. The purpose of
these statutes is generally to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the judicial sale.

     In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including the federal bankruptcy laws and state laws
affording relief to debtors, may interfere with or affect the ability of a
secured mortgage lender to realize upon collateral and/or enforce a deficiency
judgment. For example, with respect to federal bankruptcy law, a court with
federal bankruptcy jurisdiction may permit a debtor through his or her Chapter
11 or Chapter 13 rehabilitative plan to cure a monetary default in respect of a
mortgage loan on a debtor's residence by paying arrears within a reasonable time
period and reinstating the original Mortgage Loan payment schedule even though
the lender accelerated the mortgage loan and final judgment of foreclosure had
been entered in state court (provided no sale of the residence had yet occurred)
prior to the filing of a debtor's petition. Some courts with federal bankruptcy
jurisdiction have approved plans based on the particular facts of the
reorganization case, that effected the curing of a mortgage loan default by
paying arrearages over a number of years.

     Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a mortgage loan secured by property of the debtor may be modified.
These courts have suggested that such modification may include reducing the
amount of each monthly payment, changing the rate of interest, altering the
repayment schedule, and reducing the lender's security interest to the value of
the residence, thus leaving the lender a general unsecured creditor for the
difference between the value of the residence and the outstanding balance of the
loan.

     The Internal Revenue Code of 1986, as amended, provides priority to certain
tax liens over the lien of a mortgage. In addition, substantive requirements are
imposed upon mortgage lenders in connection with the origination and the
servicing of mortgage loans by numerous Federal and some state consumer
protection laws. These laws include the federal Truth-In-Lending Act, Real
Estate Settlement Procedures Act, Equal Credit Opportunity Act, Fair Credit
Billing Act, Fair Credit Reporting Act, and related statutes. These federal laws
impose specific statutory liabilities upon lenders who originate mortgage loans
and who fail to comply with the provisions of the law. In some cases, this
liability may affect assignees of the mortgage loans.

                                       10
<PAGE>


     Enforceability of Certain Provisions. Certain of the mortgage loans contain
due-on-sale clauses. These clauses permit the lender to accelerate the maturity
of the loan if the borrower sells, transfer or conveys the property. The
enforceability of these clauses has been the subject of legislation and
litigation in many states, and in some cases the clauses have been upheld, while
in other cases their enforceability has been limited or denied.

     Upon foreclosure, courts have imposed general equitable principles. These
equitable principles are generally designed to relieve the borrower from the
legal effect of a default under the loan documents. Examples of judicial
remedies that have been fashioned include judicial requirements that the lender
undertake affirmative and expensive actions to determine the causes for the
borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lender's judgment and have required that lenders reinstate loans or recast
payment schedules in order to accommodate borrowers who are suffering from
temporary financial disability. In other cases, courts have limited the right of
the lender to foreclose if the default under the mortgage instrument is not
monetary, such as the borrower failing to maintain the property adequately or
the borrower executing a second mortgage or deed of trust affecting the
property. Finally, some courts have been faced with the issue of whether federal
or state constitutional provisions reflecting due process concerns for adequate
notice require that borrowers under deeds of trust or mortgages receive notices
in addition to the statutorily-prescribed minimum. For the most part, these
cases have upheld the notice provision as being reasonable or have found that
the sale by a trustee under a deed of trust, or under a mortgage having a power
of sale, does not involve sufficient state action to afford constitutional
protections to the borrowers.

     Applicability of Usury Laws. Title V of the Depository Institutions
Deregulation and Monetary Control Act of 1980 ("Title V"), provides that state
usury limitations do not apply to certain types of residential first mortgage
loans originated by certain lenders after March 31, 1980. The Federal Home Loan
Bank Board is authorized to issue rules and regulations and to publish
interpretations governing implementation of Title V, the statute authorizes any
state to reimpose interest rate limits by adopting a law or constitutional
provision which expressly rejects application of the federal law. In addition,
even where Title V is not so rejected, any state is authorized by the law to
adopt a provision limiting discount points or other charges on mortgage loans
covered by Title V. As of the date hereof, certain states have taken action to
reimpose interest rate limits and/or to limit discount points or other charges.

                                       11
<PAGE>


Sales and Marketing.
--------------------

     As of September 30, 2001, the Company marketed and sold its mortgage
banking services primarily through a direct sales force based in Santa Ana,
California, with other marketing through the three First Guaranty branch offices
in California. The First Guaranty sales and marketing organization consisted of
approximately 15 employees as of September 30, 2001, with an additional 2 loan
sales representatives being employed by American National.

     The Company's strategy is to expand its marketing efforts to reach a broad
customer base in its targeted mortgage industry. The Company's field sales force
conducts multiple presentations and demonstrations of the Company's mortgage
products as a part of the direct sales effort.

Competition.
------------

     The Company will continue to face intense competition in the origination,
acquisition and liquidation of its mortgage loans. Such competition can be
expected from banks, savings and loan associations and other entities, including
real estate investment trusts. Many of the Company's competitors have greater
financial resources than the Company.

Proprietary Rights and Licensing.
---------------------------------

     The Company relies on certain software that it licenses from third parties,
including software, which is used in conjunction with the Company's mortgage
products delivery systems. There can be no assurance that such firms will remain
in business, that they will continue to support their products or that their
products will otherwise continue to be available to the Company on commercially
reasonable terms. The loss or inability to maintain any of these software or
data licenses could result in delays in processing, underwriting, funding or
selling of loans, or result in cancellation of loans in process. Any such delay
or cancellation could materially adversely affect the Company's business,
financial condition or results of operations.

Environmental Matters
---------------------

     The Company has not been required to perform any investigation or clean up
activities, nor has it been subject to any environmental claims. There can be no
assurance, however, that this will remain the case in the future.

     In the course of its business, the Company may acquire properties securing
loans that are in default. Although the Company primarily lends to owners of
residential properties, there is a risk that the Company could be required to
investigate and clean up hazardous or toxic substances or chemical releases at
such properties after acquisition by the Company, and may be held liable to a
governmental entity or to third parties for property damage, personal injury and
investigation and cleanup costs incurred by such parties in connection with the
contamination. In addition, the owner or former owners of a contaminated site
may be subject to common law claims by third parties based on damages and costs
resulting from environmental contamination emanating from such property.

                                       12
<PAGE>


Trade Names and Service Marks
-----------------------------

     The Company will devote substantial time, effort and expense toward
developing name recognition and goodwill for its tradenames for its operations.
The Company intends to maintain the integrity of its trade names, service marks
and other proprietary names against unauthorized use and to protect the
licensees' use against claims of infringement and unfair competition where
circumstances warrant. Failure to defend and protect such trade name and other
proprietary names and marks could adversely affect the Company's sales of
licenses under such trade name and other proprietary names and marks. The
Company knows of no current materially infringing uses.

Government Regulation.
----------------------

     We, like all private employers, are subject to laws governing our
relationship with our employees, including minimum wage requirements, overtime,
working conditions and citizenship requirements. We are also subject to
government regulation in connection with our mortgage lending activities,
including state and federal licensing laws, disclosure requirements to
applicants and borrowers, regulation of government-insured loan products, and
other government regulations. See "Certain Aspects of Mortgage Loans".

     The Company is unable to predict the nature of such future laws,
regulations, interpretations or applications, nor can it predict what effect
additional governmental regulations or administrative orders, when and if
promulgated, would have on its business in the future. Any or all of such
changes in regulatory requirements could have a material adverse effect on the
Company's financial position, results of operations and cash flows.

Business Risks Factors.
-----------------------

     The business risks factors below, along with those discussed in the
"Certain Legal Aspects of Mortgage Loans", "Competition" and "Government
Regulation"" sections of this Annual Report on Form 10-KSB, reflect some, but
not necessarily all, of the risks and uncertainties that could have a material
adverse affect on our ability to operate its businesses successfully. Our actual
results could differ materially from our business plan due to some or all of the
factors discussed below.

Our future revenues are unpredictable and our operating results are likely to
fluctuate from quarter to quarter

     Our quarterly and annual operating results have fluctuated in the past and
are likely to fluctuate significantly in the future due to a variety of factors,
some of which are outside of our control. Accordingly, we believe that
period-to-period comparisons of our results of operations are not meaningful and
should not be relied upon as indications of future performance. Some of the
factors that could cause our quarterly or annual operating results to fluctuate
include market acceptance of our mortgage services and systems, business
development, ability to originate and process mortgage loans, and competitive
pressures.

                                       13
<PAGE>


The mortgage lending business is affected by interest rates and other factors
beyond our control

     The results of the Company's operations will be affected by various
factors, many of which are beyond the control of the Company. The results of the
Company's operations will depend, among other things, on the level of net cash
flows generated by the Company's mortgage assets and the supply of and demand
for mortgage loans. The Company's net cash flows will vary as a result of
changes in interest rates, the behavior of which involves various risks and
uncertainties as set forth below. Prepayment rates and interest rates depend
upon the nature and terms of the mortgage assets, the geographic location of the
properties securing the mortgage loans, conditions in financial markets, the
fiscal and monetary policies of the United States government and the Board of
Governors of the Federal Reserve System, international economic and financial
conditions, competition and other factors, none of which can be predicted with
any certainty. Because interest rates will significantly affect the Company's
activities, the operating results of the Company will depend, in large part,
upon the ability of the Company to utilize appropriate strategies to maximize
returns to the Company while attempting to minimize risks.

Mortgage loans are subject to the risk of default by borrowers and certain
inherent risks related to real estate

     Mortgage loans are subject to varying degrees of risk, including the risk
of a default by the borrowers on a mortgage loan, and the added responsibility
on the part of the Company of foreclosing in order to protect its investment.
The ability of the borrowers to make payments on non-single-family mortgage
loans is highly dependent on the borrowers' ability to manage and sell,
refinance or otherwise dispose of the properties and will be dependent upon all
the risks generally associated with real estate investments which are beyond the
control of the Company. The Company must rely on the experience and ability of
the borrowers to manage, develop and dispose of or refinance the properties.
Investing in real estate is highly competitive and is subject to numerous
inherent risks, including, without limitation, changes in general or local
economic conditions, neighborhood values and interest rates, limited
availability of mortgage funds which may render the sale or refinancing of the
properties difficult, increases in real estate taxes, other operating expenses,
the supply and demand for properties of the type involved, toxic and hazardous
wastes, environmental considerations, zoning laws, entitlements, rent control
laws, other governmental rules and fiscal policies and acts of God, such as
floods, which may result in uninsured losses.

We may not diversify our portfolio of mortgage loans

     The mortgage loans made by the Company may be obligations of a limited
number of borrowers on a limited number of properties. The lack of diversity in
the type, number and geographic location of mortgage loans made by the Company
would materially increase the risk of an investment in the Common Stock.

In the event we are not successful in securitizing mortgage loans, we will
continue to bear the risks of borrower defaults and bankruptcies, fraud losses
and special hazard losses

     The Company may acquire and accumulate mortgage loans as part of its
long-term investment strategy or until a sufficient quantity has been acquired
for securitization into mortgage-backed securities. There can be no assurance
that the Company will be successful in securitizing mortgage loans. While
holding mortgage loans, the Company will be subject to risks of borrower
defaults and bankruptcies, fraud losses and special hazard losses. In the event
of any default under mortgage loans held by the Company, the Company will bear
the risk of loss of principal to the extent of any deficiency between the value
of the mortgage collateral and the principal amount of the mortgage loan. It may
not be desirable, possible or economic for the Company to complete the
securitization of any or all mortgage loans which the Company acquires or funds,
in which case the Company will continue to hold the mortgage loans and bear the
risks of borrower defaults and special hazard losses.

                                       14
<PAGE>


     Mortgage loans invested in by the Company will be secured by the properties
and will also be a recourse obligation of the borrower. In the event of a
default, the Company would be able to look to the borrower to make up any
deficiency between the value of the collateral and the principal amount of the
mortgage loan.

     It is expected that when the Company acquires mortgage loans, the sellers
will represent and warrant to the Company that there has been no fraud or
misrepresentation with respect to the origination of the mortgage loans and will
agree to repurchase any loan with respect to which there is fraud or
misrepresentation. There can be no assurance that the Company will be able to
obtain the repurchase agreement from the sellers. Although the Company may have
recourse to the sellers based on the sellers' representations and warranties to
the Company, the Company will be at risk for loss to the extent the sellers do
not perform their repurchase obligations.

     The Company may acquire mortgage loans from failed savings and loan
associations or banks through United States government agencies such as the
Resolution Trust Corporation or the Federal Deposit Insurance Corporation. These
institutions do not provide the seller's typical representations against fraud
and misrepresentation. The Company intends to acquire third party insurance, to
the extent that it is available at a reasonable price, for such risks. In the
event the Company is unable to acquire such insurance, the Company would be
relying solely on the value of the collateral underlying the mortgage loans.
Accordingly, the Company will be subject to a greater risk of loss on
obligations purchased from these institutions.

     During the past several years, First Guaranty's growth in originating loans
has been significant. In light of this growth, the historical financial
performance of the Company may be of limited relevance in predicting future
performance. Also, the loans originated by the Company have been outstanding for
a relatively short period of time. Consequently, the delinquency and loss
experience of the Company's loans to date may not be indicative of future
results. It is unlikely that the Company will be able to maintain delinquency
and loan loss ratios at their present levels to the extent that the Company's
loan portfolio becomes more seasoned and are not resold by the Company.

To the extent that we are unable to maintain an adequate warehouse line of
credit, we may have to curtail loan origination and purchasing activities

     The Company relies significantly upon its access to warehouse credit
facilities in order to fund new originations and purchases. The Company expects
to be able to maintain its existing warehouse line of credit (or to obtain
replacement or additional financing) as the current arrangements expire or
become fully utilized; however, there can be no assurance that such financing
will be obtainable on favorable terms, if at all. To the extent that the Company
is unable to maintain an adequate warehouse line of credit, the Company may have
to curtail loan origination and purchasing activities, which could have a
material adverse effect on the Company's operations and financial condition.

                                       15
<PAGE>


Variations in mortgage prepayments may cause changes in our net cash flows

     Mortgage prepayment rates vary from time to time and may cause changes in
the amount of the Company's net cash flows. To the extent that prepayments
occur, the yield on the Company's mortgage loans would be affected as well as
the Company's net cash flows. Prepayments of adjustable-rate mortgage loans
included in or underlying mortgage-backed securities generally increase when
then-current mortgage interest rates fall below the interest rates on such
adjustable-rate mortgage loans. Conversely, prepayments of such mortgage loans
generally decrease when then-current mortgage interest rates exceed the interest
rate on the mortgage loans included in or underlying such mortgage-backed
securities. Prepayment experience also may be affected by the geographic
location of the properties securing the mortgage loans included in or underlying
mortgage-backed securities, the assumability of such mortgage loans, the ability
of the borrower to convert to a fixed-rate loan, conditions in the housing and
financial markets and general economic conditions.

Our portfolio of mortgage loans may include privately issued pass-through
certificates which are typically not guaranteed by the United States Government

     The Company may include privately issued pass-through certificates backed
by pools of adjustable-rate single family and multi-family mortgage loans and
other real estate-backed mortgage loans in its investment portfolio. Because
principal and interest payments on privately issued pass-through certificates
are typically not guaranteed by the United States government or an agency of the
United States government, such securities generally are structured with one or
more types of credit enhancement. Such forms of credit enhancement are
structured to provide protection against risk of loss due to default on the
underlying mortgage loan, or bankruptcy, fraud and special hazard losses, such
as earthquakes. Typically, third parties insure against these types of losses,
and the Company would be dependent upon the credit worthiness of the insurer for
credit-rating, claims paying ability of the insurer and timeliness of
reimbursement in the event of a default on the underlying obligations.
Furthermore, the insurance coverage for various types of losses is limited in
amount, and losses in excess of the limitation would be the responsibility of
the Company.

     The Company may also purchase mortgage loans issued by GNMA, FNMA or FHLMC.
Each of these entities provides guarantees against risk of loss for securities
issued by it. In the case of GNMA, the timely payment of principal and interest
on its certificates is guaranteed by the full faith and credit of the United
States government. FNMA guarantees the scheduled payments of interest and
principal and the full principal amount of any mortgage loan foreclosed or
liquidated on its obligations. FHLMC guarantees the timely payment of interest
and ultimate collection of principal on its obligations, while with respect to
certificates issued by FNMA and FHLMC, payment of principal and interest of such
certificates are guaranteed only by the respective entity and not by the full
faith and credit of the United States government.

We are is dependent upon independent mortgage brokers and others, none of whom
is contractually obligated to do business with the company

     The Company depends in part on independent mortgage brokers, financial
institutions, realtors(R) and mortgage bankers for its originations and
purchases of mortgage loans. The Company's competitors also seek to establish
relationships with such independent mortgage brokers, financial institutions,
realtors(R) and mortgage bankers, none of whom is contractually obligated to
continue to do business with the Company. In addition, the Company expects the
volume of wholesale loans that it originates and purchases to increase. The
Company's future results may become more exposed to fluctuations in the volume
and cost of its wholesale loans resulting from competition from other
originators and purchasers of such loans, market conditions and other factors.

                                       16
<PAGE>


We will have little control over the operations of the pass-through entities in
which we may purchase interests

     If the Company purchases interests in various pass-through entities, it
will itself be in the position of a "holder" of shares of such entities
including, real estate investment trusts, other trusts or partnerships, or a
holder of other types of pass-through interests. Therefore, the Company will be
relying exclusively on the management capabilities of the general partners,
managers and trustees of those entities for the management and investment
decisions made on their behalf. In particular, except for voting rights on
certain matters, the Company will have no control over the operations of the
pass-through entities in which it purchases interests, including all matters
relating to the operation, management, investment decisions, income and expenses
of such entities, including decisions with respect to actions to be taken to
collect amounts owed to such entities. If such managers, trustees or general
partners take actions or make decisions which are adverse to a pass-through
entity or the Company, it may not be cost-efficient for the Company to challenge
such actions or decisions. Moreover, if the Company does not become a
substituted owner of such interests, it would not have the right to vote on
matters on which other interest owners in such entities have a right to vote or
otherwise challenge management decisions. Finally, should any of such managers,
trustees or general partners experience financial difficulties for any reason,
the entities in which the Company invests could be adversely affected, thereby
adversely affecting the value of the Company's investments.

Borrowers may not have sufficient assets to pay off the balloon payments at
maturity

     Mortgage loans, other than those representing mortgage loans on
single-family residential, may represent "balloon" obligations, requiring no
payments of principal over the term of the indebtedness with a "balloon" payment
of all of the principal due at maturity. "Balloon" payments will probably
require a sale or refinancing of properties at the time they are due. No
assurance can be given that the borrowers will have sufficient assets to pay off
the indebtedness when due, or that sufficient liquidity will be generated from
the disposition or refinancing of the properties to enable the owner to pay the
principal or interest due on such mortgage loans.

Upon foreclosure of a property, we may have difficulty in finding a purchaser or
may have to sell the property at a loss

     If a mortgaged property is not sold by the maturity date of the underlying
mortgage loan, the borrower may have difficulty in paying the outstanding
balance of such mortgage loan and may have to refinance the property. The
borrower may also experience difficulty in refinancing the property if that
becomes necessary due to unfavorable interest rates or the unavailability of
credit.

     If any amounts under a mortgage loan are not paid when due, the Company may
foreclose upon the property of the borrower. In the event of such a default
which requires the Company to foreclose upon a property or otherwise pursue its
remedies in order to protect the Company's investment, the Company will seek to
obtain a purchaser for the property upon such terms as the Company deems
reasonable. However, there can be no assurance that the amount realized upon any
such sale of the underlying property will result in financial profit or prevent
loss to the Company. In addition, because of potential adverse changes in the
real estate market, locally or nationally, the Company may be forced to own and
maintain the property for a period of time to protect the value of its
investment. In that event, the Company may not be able to receive any cash flow
from such mortgage loan and the Company would be required to pay such sums as
may be necessary to maintain and manage the property.

                                       17
<PAGE>


We may be required to investigate and clean up hazardous or toxic substances of
properties securing loans that are in default

     The Company has not been required to perform any investigation or clean up
activities, nor has it been subject to any environmental claims. There can be no
assurance, however, that this will remain the case in the future.

     In the course of its business, the Company has acquired and may acquire in
the future properties securing loans that are in default. Although the Company
primarily lends to owners of residential properties, there is a risk that the
Company could be required to investigate and clean up hazardous or toxic
substances or chemical releases at such properties after acquisition by the
Company, and may be held liable to a governmental entity or to third parties for
property damage, personal injury and investigation and cleanup costs incurred by
such parties in connection with the contamination. In addition, the owner or
former owners of a contaminated site may be subject to common law claims by
third pies based on damages and costs resulting from environmental contamination
emanating from such property.

The amount of interest charged to a borrower is subject to compliance with state
usury laws

     The amount of interest payable by a borrower to the Company may exceed the
rate of interest permitted under the California Usury Law and the usury laws of
other states. Although the Company does not intend to make or invest in mortgage
loans with usurious interest rates, there are uncertainties in determining the
legality of interest rates. Such limitations, if applicable, may decrease the
yield on the Company's investments.

     With respect to the interest rate charged by the Company to borrowers in
the State of California, the Company will be relying upon the exemption from its
usury law which provides that loans that are made or arranged by a licensed real
estate broker and which are secured by a lien on real property are exempt from
the usury law. The Company intends to use licensed real estate brokers to
arrange the mortgage loans so that no violation of the applicable usury law
would take place. Additionally, if any employee or director of the Company or
its subsidiaries is a licensed real estate broker in the State of California,
the Company may use such person to arrange all or a portion of the mortgage
loans to qualify for the usury exemption.

     The consequences for failing to abide by the usury law include forfeiture
of all interest payable on the loan, treble damages with respect to excessive
interest actually paid, and criminal penalties. The Company believes that
because of the applicable exemptions and the provisions of California Civil Code
1917.005 exempting lenders who originate loan transactions from the California
usury laws, no violation of the California Usury Law will occur. The Company
shall attempt to rely on similar exemptions in other states if necessary but
there is no guarantee that it will be able to do so.

                                       18
<PAGE>


If a borrower enters bankruptcy, an automatic stay will prevent us or any
trustee from foreclosing on the property securing such borrower's loan until
relief from the stay can be sought

     If a borrower enters bankruptcy, either voluntarily or involuntarily, an
automatic stay of all proceedings against the borrower's property will issue.
This stay will prevent the Company or any trustee from foreclosing on the
property securing such borrower's loan until relief from the stay can be sought
from the bankruptcy court. No guaranty can be given that the bankruptcy court
will lift the stay, and significant legal fees and costs may be incurred in
attempting to obtain such relief.

We face competition in the acquisition of mortgage loans from competitors having
greater financial resources

     The Company will face intense competition in the origination, acquisition
and liquidation of its mortgage loans. Such competition can be expected from
banks, savings and loan associations and other entities, including REITs. Many
of the Company's competitors have greater financial resources than the Company.

Because of intense competition for skilled personnel, we may not be able to
recruit or retain necessary personnel on a cost-effective basis

     Our future success will depend in large part upon our ability to identify,
hire, retain and motivate highly skilled employees. We plan to significantly
increase the number of our marketing, sales, customer support and operations
employees to effectively serve the evolving needs of our present and future
customers. Competition for highly skilled employees in our industry is intense.
In addition, employees may leave our company and subsequently compete against
us. Our failure to attract and retain these qualified employees could
significantly harm our business. The loss of the services of any of our
qualified employees, the inability to attract or retain qualified personnel in
the future or delays in hiring required personnel could hinder the development
and introduction of new and enhanced products and harm our ability to sell our
products. Moreover, companies in our industry whose employees accept positions
with competitors frequently claim that their competitors have engaged in unfair
hiring practices. We may be subject to such claims in the future as we seek to
hire qualified personnel, some of whom may currently be working for our
competitors. Some of these claims may result in material litigation. We could
incur substantial costs in defending ourselves against these claims, regardless
of their merits.

The loss of any of our key personnel could significantly harm our business

     Our success depends to a significant degree upon the continuing
contributions of our key management, technical, marketing and sales employees.
The loss of the services of any key employee could significantly harm our
business, financial condition and results of operations. There can be no
assurance that we will be successful in retaining our key employees or that we
can attract or retain additional skilled personnel as required. Failure to
retain key personnel could significantly harm our business, financial condition
and results of operations.

Claims that we infringe third-party intellectual property rights could result in
significant expenses or restrictions on our ability to sell our products

     From time to time, other parties may assert patent, copyright, trademark
and other intellectual property rights to technologies and in various
jurisdictions that are important to our business. Any claims asserting that our
products infringe or may infringe proprietary rights of third parties, if
determined adversely to us, could significantly harm our business. Any claims,
with or without merit, could be time-consuming, result in costly litigation,
divert the efforts of our technical and management personnel, cause product
shipment delays or require us to enter into royalty or licensing agreements, any
of which could significantly harm our business. Royalty or licensing agreements,
if required, may not be available on terms acceptable to us, if at all. In the
event a claim against us was successful and we could not obtain a license to the
relevant technology on acceptable terms or license a substitute technology or
redesign our products to avoid infringement, our business would be harmed.

                                       19
<PAGE>


Any acquisitions that we may undertake could be difficult to integrate, disrupt
our business, dilute shareholder value and significantly harm our operating
results

     We expect to review opportunities to buy other businesses or technologies
that would complement our current products, expand the breadth of our markets or
enhance our technical capabilities, or that may otherwise offer growth
opportunities. While we have no current agreements or negotiations underway, we
may buy businesses, products or technologies in the future. If we make any
future acquisitions, we could issue stock that would dilute existing
stockholders' percentage ownership, incur substantial debt or assume contingent
liabilities. We have no experience in acquiring other businesses and
technologies. Potential acquisitions also involve numerous risks, including:

     o    problems assimilating the purchased operations, technologies or
          products;

     o    unanticipated costs associated with the acquisition;

     o    diversion of management's attention from our core business;

     o    adverse effects on existing business relationships with suppliers and
          customers;

     o    risks associated with entering markets in which we have no or limited
          prior experience; and

     o    potential loss of the purchased organization's or our own key
          employees.

     We cannot assure you that we would be successful in overcoming problems
encountered in connection with such acquisitions, and our inability to do so
could significantly harm our business.

Our headquarters and many of our customers are located in California where
natural disasters may occur

     Currently, our corporate headquarters, and many of the borrowers for whom
we provide mortgages are located in California. California historically has been
vulnerable to natural disasters and other risks, such as earthquakes, fires and
floods, which at times have disrupted the local economy and posed physical risks
to our property. We presently do not have redundant, multiple site capacity in
the event of a natural disaster. In the event of such a disaster, our business
would suffer.

The market price of our common stock may experience fluctuation unrelated to
operating performance, including future private or public offerings of our
capital stock

     The market price of the Common Stock of the Company may experience
fluctuations that are unrelated to the Company's operating performance. In
particular, the price of the Common Stock may be affected by general market
price movements as well as developments specifically related to the mortgage
industry such as, among other things, interest rate movements. In addition, the
Company's operating income on a quarterly basis is significantly dependent upon
the successful completion of the Company's loan sales in the market, and the
Company's inability to complete these transactions in a particular quarter may
have a material adverse impact on the Company's results of operations for that
quarter and could, therefore, negatively impact the price of the Common Stock.

                                       20
<PAGE>


     The Company may increase its capital by making additional private or public
offerings of its Common Stock, securities convertible into its Common Stock,
preferred stock or debt securities. The actual or perceived effect of such
offerings, the timing of which cannot be predicted, may be the dilution of the
book value or earnings per share of the Common Stock outstanding, which may
result in the reduction of the market price of the Common Stock and affect the
Company's ability to access the capital markets.

Need for additional funding.

     Historically, the Company has relied on debt and equity investment
infusions of cash to continue operations. If the Company is unable to generate
and maintain positive operating cash flows and operating income in the future,
or to continue to obtain equity or debt financing from its current sources or
those who have committed to provide such financing (as to all of which there can
be no assurance), it would require funding from other sources. If financing is
required, the Company's inability to raise capital would materially and
adversely harm the Company's business and financial condition. To the extent
that additional capital is raised through the sale of equity or convertible debt
securities, the issuance of these securities could result in dilution to the
Company's stockholders.

Going Concern Opinion.

     The Company's financial statements for the years ended September 30, 2001
and 2000 contain an emphasis paragraph regarding "going concern" from the
Company's independent accountants. The Company's independent accountants note
that the Company's, recurring losses from operations, and shareholders'
deficiency raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty. In response to such concerns,
management has developed operational and strategic plans to improve the
Company's long-term financial condition, and financial sourcing strategies with
the goal of providing working capital to the business. To maintain operating
cash levels, the Company expects to periodically obtain equity funding,
attempting to balance cash needs and the stockholder dilution that is created by
the issuance of new shares. Management's operational plans and initiatives
include marketing plans for the growth of our mortgage lending operations. While
the Company's strategic, operational, and financing plans are designed to
improve the Company's financial condition and meet its working capital needs,
there can be no assurance that the Company will be able to achieve its desired
results or that other factors may not cause the Company's financial condition to
be further weakened.

                                       21
<PAGE>


Item 2. Description of Property.
--------------------------------

     The Company maintains it corporate headquarters in Huntington Beach,
California. It currently subleases approximately 4,000 square feet of office
space at a monthly rate of $4,000 plus utilities, or approximately $4,500 per
month, on a month-to-month basis. The current subleases expires in July 2002.
The Company considers its facilities adequate for the near-term future and it is
the present intention of the Company to enter into a new lease directly with the
landlord upon expiration of the present sublease.

     First Guaranty maintains four offices. Its headquarters is located in Santa
Ana, California, where it leases approximately 6,681 square feet at a rate of
$11,246 per month (plus common area expenses). The current lease expires July
25, 2005. A rental increase to $15,822.55 per month (plus common area expenses)
is scheduled for July 26, 2002.

     First Guaranty maintains three branch offices in Colton, California,
Bakersfield, California, and Rancho Cucamonga, California. Each of the branch
offices is rented on a month to month basis with the following rents: Colton -
$800; Bakersfield - $2,315; and Rancho Cucamonga - $5,080.

     American National is currently negotiating a new lease of the space which
it presently occupies in an executive offices suite in Santa Ana, California,

     The Company considers the facilities occupied by First Guaranty and
American National to be adequate for the near-term future. However, significant
expansion of operations of either First Guaranty or American National would
require the acquisition of additional office space.

Item 3. Legal Proceedings.
--------------------------

     As a result of the sale of EMB Mortgage Corporation, the following
discussion excludes those matters that pertained solely to the Company's former
subsidiary, EMB Mortgage Corporation, except as noted.

     On or about November 17, 1998, the Company entered into a Stipulated
Judgment in the matter of Yamaichi International (America) Inc., vs. EMB
Corporation, USDC, Southern District of New York, Case No. 98-7152 (DLC). The
lawsuit arose out of the obligation of the Company to pay rent for its branch
corporate office in New York City. The total amount of the judgment was
$186,000. As of June 30, 2001, the Company has paid approximately $7,100 toward
the judgment.

     The Company and Joseph K. Brick are currently engaged in litigation, Joseph
K. Brick vs. EMB Corporation, Circuit Court, Seventh Judicial District, Volusia
County, Florida, Case no. 99-30669 CICI, which was filed on or about March 23,
1999. The Company filed an appeal of a lower court ruling entering a default
judgment against the Company and in favor of Mr. Brick. In February 2001, this
appeal was denied. Subsequent thereto, a judgment was entered by the Court in
Volusia County, Florida, in favor of Mr. Brick in the amount of $1,303,440.22.
As of June 27, 2001, Mr. Brick obtained entry of a sister-state judgment against
the Company in the State of California.

     The Company has also initiated a lawsuit against Mr. Brick, his wife,
Florence M. Brick, and their company, FMB Mortgage Corporation, in a matter
entitled EMB Corporation and EMB Mortgage Corporation vs. Joseph K. Brick,
Florence M. Brick, FMB Mortgage Corporation and Does 1 through 10, Superior
Court of the State of California, County of Orange, Case No.00CC08083, filed
August 7, 2000. In this litigation, the Company and its former subsidiary, EMB
Mortgage Corporation, allege that Mr. Brick breached the Separation, Asset
Purchase Agreement and Release entered into by and between the Company and Mr.
Brick by failing to indemnify the Company against losses incurred by the Company
resulting from operations of the Company's Daytona Beach, Florida office (the
"Daytona Office") which was managed by Mr. and Mrs. Brick. The Company further
alleges negligence Mr. and Mrs. Brick in their management of the Company's
Daytona Office and fraud and conversion against Mr. and Mrs. Brick, together
with FMB Mortgage, Inc. (the company which they formed to carry on the business
of the Daytona Office), concerning tax reporting by FMB Mortgage, Inc. In summer
of 2001, this litigation was dismissed without prejudice by the Company;
however, the Company intends to refile and pursue these claims. The Company and
EMB Mortgage Corporation have agreed, between themselves, that the Company will
bear all expenses of litigation, including attorneys fees and associated costs,
and will be entitled to the entire judgment, if any.

                                       22
<PAGE>


     The Company and James C. Saunders, the former manager of the Company's
Denver, Colorado office (the "Denver Office") were engaged in litigation in the
matter entitled James C. Saunders vs. EMB Corporation, EMB Mortgage Corporation,
and Does 1 through 30, Superior Court of California, County of Orange, Case No.
00CC06034, filed May 18, 2000. In this litigation, Mr. Saunders alleged the
Company owed him certain moneys arising from the reacquisition of the Denver
Office by Mr. Saunders from the Company. A settlement was reached by the parties
to this litigation whereby the Company issued its convertible promissory note to
Mr. Saunders in the amount of $500,000 in exchange for a dismissal of this
action, which was entered on May 24, 2001.

     The Company and Deposit Guaranty Mortgage Company ("DGMC") were engaged in
litigation in a matter entitled CarrAmerica Realty, L.P., vs. Deposit Guaranty
Mortgage Company, District Court of Dallas County, Texas, 68th Judicial
District, Case No. DV99-01262-C, filed October 19, 1999, in which the Company is
named as a Third Party for indemnification of DGMC for rent allegedly owed for
the Company's former office in Dallas, Texas. The Company and DGMC stipulated to
judgment against the Company and in favor of DGMC in the amount of $30,000. No
part of this judgment has been paid.

     On January 3, 2001, the Company was sued in the lawsuit styled, FirstBank
of Aurora vs. Investment Consulting Inc., Jane and/or John Does 1-100 and EMB
Corporation, Denver Colorado District Court Number 01CV0018. Plaintiff seeks
damages in the amount of $29,878.13 in respect of its allegation that the
Company's bank account was overdrawn by such amount. In addition, Plaintiff
seeks interest on such amount, and its costs and attorneys' fees. The Company
was served on January 21, 2001. The Company believes the allegations raised in
the Complaint to be without merit; however, as of this date, no responsive
pleading has been filed.

     The Company and Great West Life & Annuity Insurance Company ("Great West")
were engaged in litigation in the matter styled, Great West Life & Annuity
Insurance Company v. EMB Corporation, Superior Court of the State of California,
County of Orange, Case No. 00CC2472. In this litigation, Great West alleged that
the Company owed moneys for premiums for medical insurance coverage provided by
Great West to the Company and its former employees through the period ended
December 31, 1998. The Company and Great West stipulated to judgment against the
Company and in favor of Great West in the amount of $42,648.48. No part of this
judgment has been paid.

     The Company and Donald Egan were engaged in litigation in the matter
entitled Donald Egan vs. EMB Corporation, et al, District Court, Denver County,
Colorado, Case No. 99CV-000736 Division 1. In this litigation, the Plaintiff
alleged that the Company owed moneys on an outstanding promissory note. On June
3, 1999, a Court judgment was entered against the Company in the amount of
$174,136.50. The current balance on the judgment with accrued interest after
credits for payments on behalf of the Company is $79,065.62. On November 12,
2001 the Company and Donald Egan entered into a General Release and Settlement
Agreement whereby, as full satisfaction of the judgment, the Company assigned to
Mr. Egan all of its interest in 1,500,000 shares of common stock of e-net that
the Company had acquired in the "Global Settlement" Agreement by and between the
Company, e-Net and other parties. See Part I, Item 1, "Description of Business"
for a complete description of the "Global Settlement" Agreement.

                                       23
<PAGE>


     EMB Mortgage Corporation and Impac Funding Corporation are engaged in
litigation, Impac Funding Corporation vs. EMB Mortgage Corporation, et al.,
Superior Court, County of Monterey, Case No. M50028, filed on August 1, 2000.
This is a judicial foreclosure action, wherein Impac is seeking to foreclose the
Monterey, California, real property owned by EMB Mortgage Corporation. The
obligation arises out of a promissory note secured by deed of trust for moneys
alleged owed to the plaintiff by EMB Mortgage Corporation for loans required to
be repurchased by EMB Mortgage Corporation or other alleged defaults by EMB
Mortgage Corporation of the various agreements with Impac concerning the funding
and purchase of loans by Impac on behalf of EMB Mortgage Corporation. The
Company and EMB Mortgage Corporation have agreed that the Company will bear all
expenses of litigation, including attorneys fees and associated costs and, at
its sole option, may elect to assist EMB Mortgage Corporation in reaching a
resolution of the pending legal action. On or about October 4, 2001, EMB
Mortgage Corporation entered into a settlement agreement with Impac Funding
Corporation whereby the term of the promissory note was extended for one year,
with several interim payments. It was further agreed, and the Company concurred,
that, at the extended date of the note, the Company would issue shares of its
common stock to Impac Funding Corporation equivalent in value to the then unpaid
balance of the note. The Settlement Agreement also provides that the Company
will issue to Impac Funding Corporation a five-year warrant for the purchase of
up to 100,000 shares of the Company's common stock at a price of $0.0563 per
share.

     On August 30, 2001, First Guaranty was sued in a lawsuit styled NFC
Consultants, Inc., HomeZipr Corp. vs. First Guaranty Financial Corporation, et
al, Superior Court of California, County of Orange, Case No. 01CC1121. This
lawsuit alleges moneys owed by First Guaranty or other defendants arising out of
a purported consulting agreement whereby First Guaranty would receive retail
mortgage leads from one of the plaintiffs. The lawsuit also alleges that First
Guaranty and other defendants retained certain personal property of the one of
the plaintiffs arising out of the termination of a sublease of premises
unrelated to First Guaranty. The Company believes the allegations raised in the
Complaint to be without merit and has filed a Demurrer to the action. A Court
hearing on the Demurrer is presently scheduled.

     The Company, and its subsidiaries, are not engaged in any other legal
proceedings except litigation in the ordinary course of business. In the opinion
of management, the amount of ultimate liability with respect to those
proceedings will not be material to the Company's financial position or results
of operations.

Item 4. Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------

     No matters were submitted to a vote of security holders of the Company
during the fourth quarter of the fiscal year ended September 30, 2001.

                                       24
<PAGE>


                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.
-----------------------------------------------------------------

     Market for Common Equity. The Common Stock of the Company is currently
quoted in the over-the-counter market on the electronic bulletin board
maintained by the National Association of Securities Dealers, Inc. under the
symbol "EMBI".

     When the trading price of the Company's Common Stock is below $5.00 per
share, the Common Stock is considered to be "penny stock" that are subject to
rules promulgated by the Securities and Exchange Commission (Rule 15g-1 through
15g-9) under the Securities Exchange Act of 1934. These rules impose significant
requirements on brokers under these circumstances, including: (a) delivering to
customers the Commission's standardized risk disclosure document; (b) providing
to customers current bid and offers; (c) disclosing to customers the
brokers-dealer and sales representatives compensation; and (d) providing to
customers monthly account statements.

     For several years prior to January 1, 1996, the market price of the Common
Stock of the Company was either nominal or non-existent because the Company had
no substantial assets and had little or no operations. However, after the
Company entered into an acquisition agreement regarding the purchase of certain
assets of Sterling Alliance Group, Ltd. in December 1995, the Common Stock of
the Company began actively trading.

     The following table sets forth the range of high and low closing bid prices
per share of the Common Stock as reported by National Quotation Bureau, L.L.C.
for the periods indicated.

Fiscal Year Ended September 30, 2000:
------------------------------------
1st Quarter ..................................   $  5.17        $  2.34
2nd Quarter ..................................   $ 28.59        $  3.05
3rd Quarter ..................................   $ 12.42        $  1.41
4th Quarter ..................................   $  2.11        $  0.49


Fiscal Year Ended September 30, 2001:
------------------------------------
1st Quarter ..................................   $  0.50        $  0.16
2nd Quarter ..................................   $  0.19        $  0.02
3rd Quarter ..................................   $  0.06        $  0.03
4th Quarter ..................................   $  0.19        $  0.03

(1)  The Company is unaware of the factors which resulted in the significant
     fluctuations in the bid prices per share during the periods being
     presented, although it is aware that there is a thin market for the Common
     Stock, that there are frequently few shares being traded and that any sales
     significantly impact the market.

(2)  On June 21, 2000, the Company effectuated a 1-for-15 reverse split of its
     common stock. The high/low closing bid prices in the table above have been
     adjusted to reflect such split.

     On January 7, 2002, the closing bid and asked prices of the Common Stock of
the Company were $0.125 bid and $0.135 asked per share. The foregoing prices
represent inter-dealer quotations without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions. On January 7,
2002, there were approximately 18 broker-dealers publishing quotes for the
Common Stock of the Company.

                                       25
<PAGE>


     As of January 7, 2002, there were 20,897,569 shares of Common Stock issued
and outstanding, which were held by approximately 844 holders of record. As of
January 7, 2002, there were 2,500,000 shares of Series E Convertible Preferred
Stock outstanding, which were held solely by the Company's subsidiaries. No
shares of any other series of Preferred Stock were outstanding as of January 7,
2002.

     Dividends. The Company has not paid any dividends on its Common Stock and
does not expect to do so in the foreseeable future. The Company intends to apply
its earnings, if any, in expanding its operations and related activities. The
payment of cash dividends in the future will be at the discretion of the Board
of Directors and will depend upon such factors as earnings levels, capital
requirements, the Company's financial condition and other factors deemed
relevant by the Board of Directors, and is subject to any dividend rights of the
8% Convertible Preferred Stock, Series A and 10% Convertible Preferred Stock,
Series B of the Company to the extent any of such shares are outstanding. In
addition, the Company's ability to pay dividends may be limited under future
loan agreements of the Company which restrict or prohibit the payment of
dividends.

     Recent Sales of Unregistered Securities. On or about July 25, 2001, the
Company issued 250,000 shares of its common stock pursuant to the Settlement
Agreements reached with certain of its former officers and directors for
services rendered and moneys advanced on behalf of the Company during the one
year period ended June 30, 2001. In addition, on the same date, the issued
10,000 shares of its common stock to each of Roger D. Hall, a former director,
and Ann L. Peterson, a current director, for services rendered during the one
year period ended June 30, 2001, and 147,000 to Williams de Broe pursuant to the
"Global Settlement" agreement. Also on July 25, 2001, the Company issued 500,000
shares of its common stock to third parties pursuant to consulting agreements.
On or about August 7, 2001, the Company issued 500,000 shares of its common
stock to William R. Parker in connection with the acquisition of all of the
capital stock of Saddleback Investment Services, Inc. Pursuant to various
consulting agreements with third parties the Company issued 1,960,000 shares of
its common stock between August 7, 2001 and September 14, 2001. On or about
September 17, 2001, the Company issued 5,000,000 shares of its common stock to
James E. Shipley, Chairman, President and acting Secretary and Chief Financial
Officer of the Company, for cancellation of $600,000 of indebtedness owed to Mr.
Shipley as a result of moneys loaned to the Company or paid on its behalf. On or
about September 18, 2001, the Company issued 300,000 shares to a third party in
connection with a consulting agreement. On September 30, 2001, the Company
issued 5,000,000 shares of its common stock to FGFC Holdings, Inc., in
connection with the acquisition of all of the capital stock of First Guaranty
Financial Corporation.

     On September 21, 2001 and September 30, 2001, the Company issued 500,000
shares and 2,000,000 shares, respectively, of its Series E Convertible Preferred
Stock to its subsidiary companies, Saddleback Investment Services, Inc. and
First Guaranty Financial Corporation. Each of these stock transactions was made
in reliance upon the exemption from registration under Section 4(2) of the
Securities Act.

     Pursuant to a Settlement Agreement between the Company's former subsidiary,
EMB Mortgage Corporation, and Impac Funding Corporation, on or about October 4,
2001, the Company issued warrants to Impac Funding Corporation to purchase up to
100,000 shares of the Company's common stock at a price of $0.0563 per share.
The warrants may be exercised during the five-year period commencing upon
issuance of the warrants, but not before the earlier of either (i) the default
or (ii) full performance of EMB Mortgage Corporation under the terms of the
Settlement Agreement.

                                       26
<PAGE>


Item 6. Management's Discussion and Analysis or Plan of Operation.
------------------------------------------------------------------

     Except for historical information, the materials contained in this
Management's Discussion and Analysis are forward-looking (within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934) and involve a number of risks and uncertainties. These
include the Company's historical losses, the need to manage its growth, general
economic downturns, the present turmoil relating to the September 11, 2001
attacks on the United States and our country's response thereto, intense
competition in the financial services and mortgage banking industries,
seasonality of quarterly results, and other risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission. Although
forward-looking statements in this Annual Report reflect the good faith judgment
of management, such statements can only be based on facts and factors currently
known by the Company. Consequently, forward-looking statements are inherently
subject to risks and uncertainties, actual results and outcomes may differ
materially from the results and outcomes discussed in the forward-looking
statements. Readers are urged to carefully review and consider the various
disclosures made by the Company in this Annual Report, as an attempt to advise
interested parties of the risks and factors that may affect the Company's
business, financial condition, and results of operations and prospects.

Overview

     During the fiscal year ending September 30, 2001, the Company abandoned its
plans to enter the energy-related marketplace. Following a change of management
in July 2001, new management determined that it would be in the best interests
of the Company and its shareholders to return to the financial services sector.
In July 2001, it acquired Saddleback Investment Services, Inc., dba American
National Mortgage. In September 30, 2001, it acquired First Guaranty Financial
Corporation.

     At the time of its acquisition, American Naitonal was not actively doing
business. Nevertheless, it was deemed to be an attractive candidate for
acquisition because of the numerous state licenses and its approved lending
status with government lending institutions. Since its acquisition, American
National has recommenced doing business, expanded its retail staff and begun to
implement a plan for aggressive expansion in those states in which it is
presently licensed to do business. Much of the anticipated growth of the
operations of American National will be focused on lending to the burgeoning
Hispanic communities in California and other southwestern states.

     The Company's acquisition of First Guaranty Financial Corporation was
deemed appropriate because of First Guaranty's strong performance in the
wholesale mortgage banking sector of the mortgage industry. Prior to its
acquisition, First Guaranty had been experiencing a rapid expansion of its
business. Additionally, First Guaranty was deemed to be a good candidate for
acquisition because of its high profitability based upon mortgage fundings. In
short, it was, and continues to be, a well-run business operation. While First
Guaranty was acquired at the end of the Company's and First Guaranty's fiscal
years, First Guaranty has continued its aggressive growth strategies in the
ensuing months following the fiscal year that is the subject of this Annual
Report.

                                       27
<PAGE>


     Beginning in July 2001, the Company entered into several business
transactions that altered the composition of the Company. On July 23, 2001, the
Company acquired all of the outstanding capital stock of Saddleback Investment
Services, Inc., dba American National Mortgage. On July 26, 2001, the Company
disposed of its other two subsidiaries, EMB Mortgage Corporation and
Ameritelecon, Inc. Finally, on September 30, 2001, the Company acquired all of
the capital stock of First Guaranty Financial Corporation in exchange for 5
million shares of the Company's common stock. As a result of this exchange of
stock and the other transaction, the Company's acquisition of First Guaranty was
accounted for as a "Reverse Acquisition". Accordingly, for accounting purposes,
First Guaranty was treated as the continuing reporting entity and "Accounting
Acquirer" that acquired the Company.

Results of Operations

REVENUES

     Revenues increased by $5,435,127 or 142%, to $9,253,502 for the year ended
September 30, 2001, compared to $3,818,375 for the year ended September 30,
2000. The growth in revenues is primarily attributable to the expansion and
growth of First Guaranty's mortgage lending operations. First Guaranty, as did
most of the mortgage industry, benefited greatly from the decline in interest
rates over the last twelve months. Typically, as interest rates fall, the
refinance market heats up expanding the market of interested borrowers beyond
those borrowing for the purchase of their primary residence. First Guaranty
benefited from this market upturn, as they had the capacity in terms of people
and infrastructure to accommodate the additional business.

Costs and Expenses.

     Commissions are paid to loan agents on funded loans. Commissions increased
by $943,724 or 185%, for the year ended September 30, 2001, and to $1,451,840
from $508,116 for the year ended September 30, 2000. This increase is primarily
related to the increased revenues discussed above.

Salaries and Wages.

     Salaries and wages totaled $1,961,234 in fiscal 2001 compared to $935,304
in the year ended September 30, 2000, an increase of $1,025,930, or 109%. The
increase is directly related to the expansion of First Guaranty's operations.

General and Administrative Expenses.

     General and administrative expenses totaled $2,838,838 for the year ended
September 30, 2001, compared to $1,414,737 for the year ended September 30,
2000. This increase of $1,424,101, or 100%, can be primarily attributed to the
business growth of the operating subsidiaries, namely First Guaranty, as
additional personnel, office space, and other administrative costs are required
to handle the expansion. In addition, the Company incurred costs at the
corporate level related to professional services for items relating to the
reporting requirements associated with being a publicly-traded company and for
consulting fees paid with respect to computer and Internet technologies matters
and administrative matters.

                                       28
<PAGE>


Interest Expense.

Interest expense was $2,723,615 as of September 30, 2001, compared to $1,041,548
as of September 30, 2000. This increase is associated with the growth of First
Guaranty and is composed primarily of interest on the warehouse line of credit
of First Guaranty.

Net Profits.

The Company realized net profits (after provision for income tax) of $265,537 in
the fiscal year ended September 30, 2001 compared to a net loss of $16,055 for
the year ended September 30, 2000, or $0.02 and ($0.00) per share respectively.

LIQUIDITY AND CAPITAL RESOURCES.

In the year ended September 30, 2001, operating activities provided net cash of
$500,862 as compared to September 30, 2001 when net cash of $264,989 was used in
operating activities. For the earlier period, the Company incurred a net loss
from operations while in the current period it realized an operating profit. Net
cash provided by investing activities was $97,032 for the year ended September
30, 2001. Net cash provided by investing activities was $167,580 for the year
ended September 30, 2000. The sole component of the cash provided by investing
activities for the period ended September 30, 2001 was cash received from the
acquisition of business. Net cash used by financing for the period ended
September 30, 2001 totaled $80,477 and consisted of principal paid on a note
payable. In the year ended September 30, 2000, net cash was provided by
financing in the amount of $61,229, which was composed of principal paid on a
note payable and cash contributed to equity.

     Our consolidated financial statements have been prepared assuming the
Company will continue as a going concern. Because the Company has incurred
significant losses from operations in the years prior to the acquisition of
First Guaranty and American National, it has an accumulated deficit of
$11,198,550 with total liabilities exceeding total assets by $8,364,565. As a
result it will require additional financing to meet its cash requirements. Our
auditors included an explanatory paragraph in their report raising substantial
doubt about its ability to continue as a going concern. Cash requirements depend
on several factors, including but not limited to, the pace at which all
subsidiaries continue to grow and generate positive cash flow, as well as the
ability to obtain additional services for common stock or other non-cash
consideration.

     If capital requirements vary materially from those currently planned, the
Company may require additional financing sooner than anticipated. At present,
there are no firm commitments for any additional financing, and there can be no
assurance that any such commitment can be obtained on favorable terms, if at
all. Management plans to continue its growth plans to generate revenues
sufficient to meet its cost structure. Management believes that these actions
will afford the Company the ability to fund its daily operations and service its
remaining debt obligations primarily through the cash generated by operations;
however, there are no assurance that management's plans will be successful. No
adjustments have been made to the carrying value of assets or liabilities as a
result of these uncertainties.

                                       29
<PAGE>


Item 7. Financial Statements.
-----------------------------

     Information with respect to this Item is set forth in "Index to Financial
Statements".

Item 8. Changes In and Disagreements with Accountants on Accounting and
        Financial Disclosure.
-----------------------------------------------------------------------

     The following changes in Accountants for the Company were disclosed in the
Company's Current Report on Form 8-K, filed with the Securities and Exchange
Commission on August 30, 2001, as amended in the Current Report on Form 8-K/A,
filed with the Securities and Exchange Commission on September 19, 2001.

     On August 28, 2001 the Company dismissed its independent accountants,
McKennon, Wilson & Morgan LLP. The reports of McKennon, Wilson & Morgan LLP for
the fiscal years ended September 30, 2000 and September 30, 1999 contained no
adverse opinion, disclaimers of opinion nor were they modified as to
uncertainty, audit scope or accounting principles, other than an explanatory
paragraph regarding the substantial doubt about the Company's ability to
continue as a going concern. The decision to dismiss McKennon, Wilson & Morgan
LLP was made by the Board of Directors of the Company. At no time during the
fiscal years ended September 30, 1999 and September 30, 2000, nor during the
interim period from October 1, 2000 through August 28, 2001, were there any
disagreements with McKennon, Wilson & Morgan LLP, whether or not resolved, on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure.

     On August 28, 2001, the Company engaged the firm of Kabani & Company, Inc.,
of Fountain Valley, California, as independent accountants for the Company.
Prior to August 28, 2001, neither the Company, nor anyone on its behalf, had
consulted with Kabani & Company, Inc. concerning the accounting principles of
any specific completed or contemplated transaction, any type of audit opinion on
the Company's financial statements or any other material factor which might be
considered by the Company in reaching a decision as to any accounting, auditing
or financial reporting issue.

                                       30
<PAGE>


                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act.
--------------------------------------------------------------------------------

     The directors and executive officers of the Company are as follows:

Name(1)(2)                Age      Position
----------                ---      --------
William R. Parker          52      Director, and President of Saddleback
                                   Investment Services, Inc.

Ann L. Petersen            64      Director

James E. Shipley(3)(4)     66      Director, President, Acting Secretary and
                                   Acting Principal Financial and
                                   Accounting Officer

Rodney K. Thompson         48      Director, and President of First Guaranty
                                   Financial Corporation

(1)  The Company presently has no executive committee, nominating committee or
     audit committee of the Board of Directors.
(2)  The officers of the Company hold office until their successors are elected
     and qualified, or until their death, resignation or removal.
(3)  Member of the Company's Stock Option Committee for "1996 Stock Option, SAR
     and Stock Bonus Plan" and "1999 Stock Compensation Plan".
(4)  Member of the Company's Compensation Committee. See "Compensation
     Committee", below.

     The background and principal occupations of each director and executive
officer of the Company are as follows:

     Mr. Parker was appointed to the Company's Board of Directors on July 31,
2001. Mr. Parker has been employed in the mortgage industry from 1982 to
present. From 1989 to present, he has served as Chief Executive Officer of
several mortgage banking enterprises. He presently acts as President and Chief
Executive Officer of Saddleback Investment Services, Inc., dba American National
Mortgage, having served in such capacity since that firm's formation in 1992.

     Mrs. Petersen became a director of the Company on November 25, 1992. She is
a resident of Hawaii and has not been employed outside of the house since 1958.

     Mr. Shipley was first elected to the Board of Directors of the Company on
January 15, 1996, and became the President of the Company on April 29, 1996. On
March 1, 1999, he was elected Principal Financial and Accounting Officer. On
June 24, 2000, Mr. Shipley resigned as an officer and director of the Company.
On July 6, 2001, was again elected a director of the Company. He was also named
as President, acting Secretary, and acting Accounting and Chief Financial
Officer.

                                       31
<PAGE>


     Mr. Thompson was appointed to the Board of Directors of the Company on
December 10, 2001. Mr. Thompson has been employed in the mortgage industry from
April 1977 to present. From April 1991 to March 1998 he served as Senior Vice
President of Stuart Wright Mortgage, Inc., of La Palma, California, where he
directed secondary marketing and the wholesale division. From March 1998 through
December 1998, Mr. Thompson served as Senior Vice President of Citifed
Diversified, Inc., of Santa Ana, California. In this capacity he established a
retail division and created various conventional wholesale loan products. From
January 1999 to present, Mr. Thompson has been employed by First Guaranty. From
January 1999 to January 2000, he served as Senior Vice President and in January
2000 he was named President and a Director of First Guaranty.

     Compliance with Section 16(a) of Securities Exchange Act of 1934. To the
best of the knowledge of the Company, its directors, officers and 10% beneficial
owners have filed all reports in compliance with the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year
ended September 30, 2001.

Item 10. Executive Compensation.
--------------------------------

     The following table sets forth the compensation required to be reported
pursuant to Item 402 of Regulation S-B. No executive officer or director of the
Company received compensation in excess of $100,000 during its fiscal year ended
September 30, 2001. Ben Campbell, the Chief Executive Officer from June 24, 2000
to July 6, 2001 had no compensation, other than reimbursement of moneys advanced
on behalf of the Corporation during his term in office. James E. Shipley, the
current and a former Chief Executive Office did have not other compensation
required to be reported other than that set forth herein.

                           SUMMARY COMPENSATION TABLE
                           --------------------------

Name and Principal Position          Fiscal Year                    Salary
---------------------------          -----------                    ------
James E. Shipley, CEO                    1999                       $    0
                              2000 through June 24, 2000            $    0
                                2001 from July 6, 2001              $    0

     Compensation Committee. The Compensation Committee of the Board of
Directors is presently comprised of Mr. James E. Shipley. The Committee makes
decisions regarding the Company's employee stock plan and makes decisions
concerning salaries and incentive compensation for the executive officers,
employees and consultants of the Company.

     401(k) Plan. In August 1997, the Company adopted a Section 401(k)
Retirement Savings Plan (the "401(k) Plan"). The 401(k) Plan is a tax-qualified
plan covering Company employees who, as of the enrollment eligibility dates
under the 401(k) Plan, have completed at least six months of service with the
Company and elect to participate in the 401(k) Plan. The Company may make
discretionary matching cash contributions to each participant based upon his or
her elective deferrals in a percentage determined by the Company prior to the
end of each plan year, and may make additional contributions in its sole
judgment. All employee contributions are fully vested at all times and
contributions by the Company to the 401(k) Plan vest over a six-year period
based upon years of service. Benefits will normally be distributed to an
employee upon (i) the employee reaching age 65, (ii) the employee's retirement
with the Company, (iii) the employee's death or disability, (iv) the termination
of the employee's employment with the Company, or (v) the termination of the
401(k) Plan. As of January 1, 1999, the Company terminated the 401(k) Plan with
respect to additional contributions and/or new participants. The 401(k) Plan
continues to be in effect for former employees who have not elected to withdraw
their accounts. As of September 30, 2001, there were approximately 10 remaining
participants in the 401(k) Plan, none of which are presently officers, directors
or employees of the Company.

                                       32
<PAGE>


     Board Compensation. Directors of the Company may be compensated by the
Company for meeting attendance by a monthly directors' fee of $2,000, and are
entitled to reimbursement for their travel expenses. From time to time,
directors who are not employees of the Company will receive grants of options to
purchase the Company's Common Stock or stock bonuses. The Company does not pay
additional amounts for committee participation or special assignments of the
Board of Directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
------------------------------------------------------------------------

     The total number of shares of Common Stock of the Company beneficially
owned by each of the officers and directors, and all of such directors and
officers as a group, and their percentage ownership of the outstanding capital
stock of the Company as of September 30, 2001, are as follows:

                                                  Shares         Percent of
        Management                             Beneficially      Outstanding
      Shareholders(1)                            Owned(1)           Stock
      ---------------                            --------           -----

William R. Parker........................         500,000             3%
  5075 Warner Avenue, Suite B
  Huntington Beach, CA 92649

Ann L. Petersen .........................          10,417             *
  Star Route 5080
  Keaau, Hawaii 96749

James E. Shipley.........................       5,006,636(2)          30%
  5075 Warner Avenue, Suite B
  Huntington Beach, California 92649

Rodney K. Thompson.......................       5,000,000(3)          30%
  5075 Warner Avenue, Suite B
  Huntington Beach, CA 92649

Directors and officers as a group
  (4 persons, including the above).......      10,517,053             63%


     (1) Except as otherwise noted, it is believed by the Company that all
     persons have full voting and investment power with respect to the shares,
     except as otherwise specifically indicated. Under the rules of the
     Securities and Exchange Commission, a person (or group of persons) is
     deemed to be a "beneficial owner" of a security if he or she, directly or
     indirectly, has or shares the power to vote or to direct the voting of such
     security, or the power to dispose of or to direct the disposition of such
     security. Accordingly, more than one person may be deemed to be a
     beneficial owner of the same security. A person is also deemed to be a
     beneficial owner of any security which that person has the right to acquire
     within 60 days, such as warrants or options to purchase the Common Stock of
     the Company.

     (2) Includes 6,366 shares of the Company owned by World Trends Financial,
     Ltd., a corporation beneficially owned by Mr. Shipley.

     (3) Represents 5,000,000 shares owned by FGFC Holdings, Inc., of which Mr.
     Thompson is a Director, President and 12% shareholder.

                                       33
<PAGE>


Security Ownership of Certain Beneficial Owners

     The following table sets forth information with respect to the beneficial
ownership of each class of equity securities of the Company by each shareholder
who beneficially owns more than five percent (5%) of each class of the Company's
equity securities, the number of shares beneficially owned by each and the
percent of such class of equity securities so owned of record as of September
30, 2001. The Company has two outstanding classes of equity securities: Common
Stock and Series E convertible preferred stock. It is believed by the Company
that all persons listed have sole voting and investment power with respect to
their shares, except as otherwise indicated.

<TABLE>
<CAPTION>

   Name and Address
          Of                                        Amount and Nature of  Percent of Class of
   Beneficial Owner               Title of Class    Beneficial Ownership   Equity Securities
   ----------------               --------------    --------------------   -----------------
<S>                                <C>                   <C>                      <C>
James E. Shipley                   Common Stock          5,006,636                30%
   5075 Warner Avenue
   Suite B
   Huntington Beach, California
   92649
FGFC Holdings, Inc.                Common Stock          5,000,000                30%
   3 Hutton Center Drive
   Suite 150
   Santa Ana, California 92707
First Guaranty Financial Corp.    Conv. Preferred        2,000,000                80%
   3 Hutton Center Drive          Stock, Series E
   Suite 150
   Santa Ana, California 92707
Saddleback Investment             Conv. Preferred         500,000                 20%
   Services, Inc.                 Stock, Series E
   3700 Susan St.
   Suite 250
   Santa Ana, California 92704

                                       34
</TABLE>
<PAGE>


Item 12. Certain Relationships and Related Transactions.
--------------------------------------------------------

     On September 17, 2001, the Company issued 5,000,000 shares of its common
stock to James E. Shipley, Director, President, Acting Secretary and Acting
Chief Financial Officer, as consideration for cancellation of indebtedness for
moneys loaned to or paid on behalf of the Company during the 4 years preceding
such date. This transaction valued the common stock at $.12 per share for a
total debt cancellation of $600,000.00. As a result, the Company was indebted to
Mr. Shipley, and entities which he controls, in the amount of $286,544 as of
September 30, 2001.

Item 13. Exhibits and Reports on Form 8-K.
------------------------------------------

     (a)  Exhibits: (Items marked with "*" are included herein)

   Exhibit
   Number                            Description
   ------                            -----------

    3.1        Restated Articles of Incorporation of EMB Corporation are
               incorporated by reference to Exhibit 3(i) to the Registrant's
               registration statement on Form 10-SB (No. 1-11883), filed with
               the Commission on June 28, 1996 (the "Form 10-SB").

    3.1.a      Certificate of Designation of Rights, Privileges, Preferences and
               Restrictions of Series D Convertible Preferred Stock of EMB
               Corporation, dated September 12, 2001, filed with the State of
               Hawaii, Department of Commerce and Consumer Affairs on September
               18, 2001, which was filed with the Securities and Exchange
               Commission on October 15, 2001, as Exhibit 3.1.a to the Company's
               Current Report on Form 8-K, is hereby incorporated by this
               reference.

    3.1.b      Certificate of Designation of Rights, Privileges, Preferences and
               Restrictions of Series E Convertible Preferred Stock of EMB
               Corporation, dated September 12, 2001, filed with the State of
               Hawaii, Department of Commerce and Consumer Affairs on September
               18, 2001, which was filed with the Securities and Exchange
               Commission on October 15, 2001, as Exhibit 3.1.b to the Company's
               Current Report on Form 8-K, is hereby incorporated by this
               reference.

    3.2        The Bylaws of the Registrant are incorporated by referenced to
               Exhibit 3(ii) of Form 10-SB of the Registrant.

    10.10*     Amended and Restated Purchase Agreement, dated September 21,
               2001, by and between the Company, William R. Parker and
               Saddleback Investment Services, Inc.

    10.11      Secured Promissory Note of EMB Corporation dated July 24, 2001,
               which was filed with the Securities and Exchange Commission on
               August 8, 2001, as Exhibit 10.11 to the Company's Current Report
               on Form 8-K dated July 23, 2001, is hereby incorporated by this
               reference.

    10.12*     Amended and Restated Security Agreement, dated September 21,
               2001, by and between EMB Corporation and William R. Parker.

                                       35
<PAGE>


   Exhibit
   Number                            Description
   ------                            -----------

    10.13*     Amended and Restated Collateral Agent Agreement, dated September
               21, 2001, by and among EMB Corporation, William R. Parker and the
               Collateral Agent.

    10.14      Purchase Agreement, dated July 26, 2001, by and between EMB
               Corporation and William V. Perry, which was filed with the
               Securities and Exchange Commission on August 10, 2001, as Exhibit
               10.14 to the Company's Current Report on Form 8-K dated July 26,
               2001, is hereby incorporated by this reference.

    10.15      Purchase Agreement, dated July 26, 2001, by and between EMB
               Corporation and David Berman, which was filed with the Securities
               and Exchange Commission on August 10, 2001, as Exhibit 10.15 to
               the Company's Current Report on Form 8-K dated July 26, 2001, is
               hereby incorporated by this reference.

    10.16      Settlement Agreement, dated June 26, 2001, by and among, EMB
               Corporation, e-Net Financial.Com Corporation (now known as Anza
               Capital, Inc.), AMRES Holding LLC, Vincent Rinehart and Williams
               de Broe, which was filed with the Securities and Exchange
               Commission on September 11, 2001, as Exhibit 10.16 to the
               Company's Quarterly Report on Form 10-QSB/A for the period ended
               June 30, 2001, is hereby incorporated by this reference.

    10.16.a    Promissory Note dated June 27, 2001, executed by EMB Corporation
               in favor of Williams de Broe, which was filed with the Securities
               and Exchange Commission on September 11, 2001, as Exhibit 10.16a
               to the Company's Quarterly Report on Form 10-QSB/A for the period
               ended June 30, 2001, is hereby incorporated by this reference.

    10.16.b    Promissory Note dated June 27, 2001, executed by e-Net
               Financial.com Corporation (now known as Anza Capital, Inc.) in
               favor of EMB Corporation (later terminated), which was filed with
               the Securities and Exchange Commission on September 11, 2001, as
               Exhibit 10.16b to the Company's Quarterly Report on Form 10-QSB/A
               for the period ended June 30, 2001, is hereby incorporated by
               this reference.

    10.16.c    Promissory Note dated June 27, 2001, executed by e-Net
               Financial.com Corporation (now known as Anza Capital, Inc.) in
               favor of EMB Corporation (later terminated), which was filed with
               the Securities and Exchange Commission on September 11, 2001, as
               Exhibit 10.16c to the Company's Quarterly Report on Form 10-QSB/A
               for the period ended June 30, 2001, is hereby incorporated by
               this reference.

    10.16.d    Redeemable Convertible 10% Promissory Note dated June 28, 2001
               executed by e-Net Financial.com Corporation (now known as Anza
               Capital, Inc.) in favor of EMB Corporation, which was filed with
               the Securities and Exchange Commission on September 11, 2001, as
               Exhibit 10.16d to the Company's Quarterly Report on Form 10-QSB/A
               for the period ended June 30, 2001, is hereby incorporated by
               this reference.

                                       36
<PAGE>


   Exhibit
   Number                            Description
   ------                            -----------

    10.17      Settlement Agreement, dated July 24, 2001, by and between the
               Company and Ben Campbell, which was filed with the Securities and
               Exchange Commission on September 11, 2001, as Exhibit 10.17 to
               the Company's Quarterly Report on Form 10-QSB/A for the period
               ended June 30, 2001, is hereby incorporated by this reference.

    10.18      Settlement Agreement, dated July 24, 2001, by and between the
               Company and Kenneth Quist, which was filed with the Securities
               and Exchange Commission on September 11, 2001, as Exhibit 10.18
               to the Company's Quarterly Report on Form 10-QSB/A for the period
               ended June 30, 2001, is hereby incorporated by this reference.

    10.19      Agreement for Consulting Services, dated July 16, 2001, by and
               between the Company and Belvidere Network Enterprises, which was
               filed with the Securities and Exchange Commission on September
               11, 2001, as Exhibit 10.19 to the Company's Quarterly Report on
               Form 10-QSB/A for the period ended June 30, 2001, is hereby
               incorporated by this reference.

    10.20      Agreement of Consulting Services, dated August 1, 2001, by and
               between the Company and Castle Gate Group, Ltd., which was filed
               with the Securities and Exchange Commission on September 11,
               2001, as Exhibit 10.20 to the Company's Quarterly Report on Form
               10-QSB/A for the period ended June 30, 2001, is hereby
               incorporated by this reference.

    10.21      Redeemable Convertible 10% Promissory Note dated April 10, 2001
               executed by the Company in favor of James Saunders, which was
               filed with the Securities and Exchange Commission on September
               11, 2001, as Exhibit 10.20 to the Company's Quarterly Report on
               Form 10-QSB/A for the period ended June 30, 2001, is hereby
               incorporated by this reference.

    10.22      Purchase Agreement by and between EMB Corporation, FGFC Holdings,
               Inc. and First Guaranty Financial Corporation dated September 30,
               2001, which was filed with the Securities and Exchange Commission
               on October 15, 2001, as Exhibit 10.22 to the Company's Current
               Report on Form 8-K dated September 30, 2001, is hereby
               incorporated by this reference.

    10.23      Secured Promissory Note of EMB Corporation dated September 30,
               2001, which was filed with the Securities and Exchange Commission
               on October 15, 2001, as Exhibit 10.23 to the Company's Current
               Report on Form 8-K dated September 30, 2001, is hereby
               incorporated by this reference.

    10.24      Security Agreement by and between EMB Corporation and FGFC
               Holdings, Inc. dated September 30, 2001, which was filed with the
               Securities and Exchange Commission on October 15, 2001, as
               Exhibit 10.24 to the Company's Current Report on Form 8-K dated
               September 30, 2001, is hereby incorporated by this reference.

    10.24      Collateral Agreement by and among EMB Corporation, FGFC Holdings,
               Inc. and the Collateral Agent, dated September 30, 2001, which
               was filed with the Securities and Exchange Commission on October
               15, 2001, as Exhibit 10.25 to the Company's Current Report on
               Form 8-K dated September 30, 2001, is hereby incorporated by this
               reference.

                                       37
<PAGE>


   Exhibit
   Number                            Description
   ------                            -----------

    21.1*      Description of the subsidiaries of the Registrant.

    99.1       Articles of Incorporation of First Guaranty Financial
               Corporation, dated June 10, 1988, filed with the California
               Secretary of State on June 13, 1988, which was filed with the
               Securities and Exchange Commission on October 15, 2001, as
               Exhibit 99.1 to the Company's Current Report on Form 8-K dated
               September 30, 2001, is hereby incorporated by this reference.


    99.2       Certificate of Amendment to Articles of Incorporation of First
               Guaranty Financial Corporation, dated September 28, 2001, filed
               with the California Secretary of State on October 10, 2001, which
               was filed with the Securities and Exchange Commission on October
               10, 2001, as Exhibit 99.2 to the Company's Current Report on Form
               8-K dated September 30, 2001, is hereby incorporated by this
               reference.

    99.3       Certificate of Determination of Rights, Privileges, Preferences
               and Restrictions of Series A Convertible Preferred Stock of First
               Guaranty Financial Corporation, dated September 28, 2001, filed
               with the California Secretary of State on October 10, 2001, which
               was filed with the Securities and Exchange Commission on October
               10, 2001, as Exhibit 99.3 to the Company's Current Report on Form
               8-K dated September 30, 2001, is hereby incorporated by this
               reference.

    99.4*      Certificate of Amendment of Articles of Incorporation of
               Saddleback Investment Services, Inc., dated September 14, 2001,
               filed with the California Secretary of State on September 20,
               2001.

    99.5*      Certificate of Determination of Rights, Privileges, Preferences
               and Restrictions of Series A Convertible Preferred Stock of
               Saddleback Investment Services, Inc., dated September 17, 2001,
               filed with the California Secretary of State on September 21,
               2001.

                                       38
<PAGE>


     (b)  Reports on Form 8-K.

          (1)  On August 8, 2001, the Company filed a Current Report on Form
               8-K, which disclosed (i) the Purchase Agreement, dated July 23,
               2001, and other related agreements, entered into by and between
               the Company and William R. Parker, whereby the Company agreed to
               purchase all of issued and outstanding capital stock of
               Saddleback Investment Services, Inc. and (ii) the election of
               William R. Parker as a Director of the Company.

          (2)  On August 10, 2001, the Company filed a Current Report on Form
               8-K, which disclosed (i) the Purchase Agreement, dated July 26,
               2001, entered into by and between the Company and William V.
               Perry, whereby the Company sold all of the issued and outstanding
               capital stock of EMB Mortgage Corporation and (ii) the Purchase
               Agreement, dated July 26, 2001, entered into by and between the
               Company and David Berman, whereby the Company sold all of the
               issued and outstanding capital stock of Ameritelecon, Inc.

          (3)  On August 30, 2001, the Company filed a Current Report on Form
               8-K, which disclosed the dismissal of its independent
               accountants, McKennon, Wilson & Morgan LLP, and the engagement of
               Kabani & Company, Inc., as independent accountants for the
               Company, both of which events occurred on August 28, 2001.

          (4)  On September 19, 2001, the Company filed an amended Current
               Report on Form 8-K/A, which included as an exhibit thereto the
               letter of McKennon, Wilson & Morgan LLP in compliance with Item
               304(a)(3) of Regulation S-K.

          (5)  On October 15, 2001, the Company filed a Current Report on Form
               8-K, which disclosed (i) the Purchase Agreement, dated September
               30, 2001, and other related agreements, entered into by and
               between the Company, FGFC Holdings, Inc., and First Guaranty
               Financial Corporation, whereby the Company agreed to purchase all
               of issued and outstanding capital stock of First Guaranty
               Financial Corporation and (ii) the intended election of Rodney K.
               Thompson as a Director of the Company.

          (6)  On December 26, 2001, the Company filed an amended Current Report
               on Form 8-K/A which included as exhibits thereto (i) an audited
               balance sheet and related statement of operations, stockholders
               equity and cash flows for First Guaranty Financial Corporation
               for the year ended September 30, 1999; (ii) audited balance sheet
               and related statement of operations, stockholders equity and cash
               flows for First Guaranty Financial Corporation for the year ended
               September 30, 2000 and unaudited balance sheet and related
               statement of operations, stockholders equity and cash flows for
               First Guaranty Financial Corporation for the year ended September
               30, 2001; and (iii) the Company's unaudited pro forma condensed
               consolidated balance sheet as of September 30, 2001 and unaudited
               pro forma condensed consolidated state of operations for the year
               ended September 30, 2001 to reflect the acquisition of First
               Guaranty Financial Corporation and Saddleback Investment
               Services, Inc.

                                       39
<PAGE>


                                   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.

Registrant:                EMB Corporation


                           By: /s/ James E. Shipley
                           -----------------------------------
                           James E. Shipley, President

     In connection with 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.

Date:  January 14, 2002


/s/ James E. Shipley                         /s/ William R. Parker
--------------------------------------       ---------------------
James E. Shipley                             William R. Parker
Director, President, Acting Secretary,       Director
and Acting Principal Financial
and Chief Accounting Officer


/s/ Rodney K. Thompson
----------------------
Rodney K. Thompson
Director




                                       40
<PAGE>

                   Index to Consolidated Financial Statements
                         EMB Corporation and Subsidaries


1.  Report of Kabani & Company, Inc.                                 F-1

2.  Consolidated Balance Sheet as of September 30, 2001              F-2

3.  Consolidated Statements of Operations for the years ended
    September 30, 2001 and 2000                                      F-3

4.  Consolidated Statements of Stockholder's Equity for years
    ended September 30, 2001 and 2000                                F-4

5.  Consolidated Statements of Cash Flows for the years ended
    September 30, 2001 and 2000                                      F-5

6.  Notes to the Consolidated Financial Statements                   F-6 to F-19

7.  Report of Briglio & Cheung                                       F-20


<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


To the Stockholders and Board of Directors
EMB Corporation

We have audited the accompanying consolidated balance sheet of EMB Corporation,
a Hawaii Corporation and subsidiaries (the "Company") as of September 30, 2001
and the related consolidated statements of operations, stockholders' deficit and
cash flows for the year then ended. 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 did
not audit the financial statements of Saddleback Investment Services, Inc. a
wholly owned subsidiary through September 30, 2001, which statements reflect
total stockholders' equity of 529,000 as on September 30, 2001. Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for Saddleback Investment
Services, Inc. is based solely on the report of the other auditors.

We conducted our audit 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 financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
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 financial position of EMB Corporation and
subsidiaries as of September 30, 2001 and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

The Company's consolidated financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. The Company has accumulated deficit of $$11,198,550 and excess of
total liabilities over total assets of $8,364,565 on September 30, 2001. These
factors as discussed in Note 3 to the financial statements, raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



/s/ KABANI & COMPANY, INC.
--------------------------
KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Fountain Valley, California
December 12, 2001

                                      F-1
<PAGE>
<TABLE>
<CAPTION>

                          EMB CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEET
                                 SEPTEMBER 30, 2001

                                       ASSETS
                                       ------
<S>                                                                      <C>
Current assets:
     Cash and cash equivalents                                           $    578,936
     Accounts receivable                                                      482,229
     Loans held for sale                                                   40,516,386
     Other current assets                                                      24,810
                                                                         ------------
           Total current assets                                            41,602,361

Property and equipment, net                                                   130,120

Other assets:
     Restricted cash                                                          132,387
     Note receivable                                                          103,404
     Deposits and other assets                                                216,584
                                                                         ------------
           Total other assets                                                 452,375
                                                                         ------------
                                                                         $ 42,184,856
                                                                         ============

                        LIABILITIES AND STOCKHOLDERS' EQUITY
                        ------------------------------------

Current liabilities:
     Accounts payable                                                         487,186
     Accrued expenses                                                       2,966,231
     Net liabilities of discontinued operations                             4,582,757
     Current portion of long term debt                                         66,418
     Notes payable - global settlement                                        448,109
     Notes payable related parties                                            830,112
     Convertible notes payable                                                500,000
     Warehouse credit line                                                 40,516,386
                                                                         ------------
           Total current liabilities                                       50,397,199
                                                                         ------------
Long term debt:
     Note payable - long term                                                 152,222

Stockholders' deficit:
     Common stock, no par value; 30,000,000 shares authorized,              2,833,985
            16,706,944 shares issued and outstanding
     Preferred convertible shares Series E , no par value; 3,000,000          235,000
            shares authorized; 2,500,000 shares issued and outstanding
     Treasury stock, preferred convertible shares                            (235,000)
     Accumulated deficit                                                  (11,198,550)
                                                                         ------------
           Total stockholders' deficit                                     (8,364,565)
                                                                         ------------
                                                                         $ 42,184,856
                                                                         ============


                  The accompanying notes are integral part of these
                         consolidated financial statements.

                                        F-2
<PAGE>

                        EMB CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000


                                                       2001            2000
                                                   ------------    ------------
REVENUES
       Fees and premiums                           $  7,035,083    $  3,346,320
       Interest income                                1,870,735         270,256
       Other income                                     347,684         201,799
                                                   ------------    ------------
                 Total Revenue                        9,253,502       3,818,375
                                                   ------------    ------------
OPERATING EXPENSES
       Salaries and wages                             1,961,234         935,304
       Interest and fees                              2,723,615       1,041,548
       Commissions                                    1,451,840         508,116
       Other general and administrative expenses      2,838,838       1,414,737
                                                   ------------    ------------
                 Total Operating Expenses             8,975,527       3,899,705
                                                   ------------    ------------
 INCOME (LOSS) FROM OPERATIONS                     $    277,975    $    (81,330)
                                                   ------------    ------------
OTHER INCOME (EXPENSE)
       Gain on sale of securities                          --            65,275

NET INCOME BEFORE INCOME TAX                            277,975         (16,055)

PROVISION FOR INCOME TAX                                 12,648            --
                                                   ------------    ------------
NET PROFIT                                         $    265,327    $    (16,055)
                                                   ============    ============

BASIC WEIGHTED AVERAGE NUMBER OF
    COMMON STOCK OUTSTANDING                          8,490,952       5,000,000
                                                   ============    ============

BASIC NET INCOME (LOSS) PER SHARE                  $       0.03    $      0.000
                                                   ============    ============

DILUTED WEIGHTED AVERAGE NUMBER OF
    COMMON STOCK OUTSTANDING                         11,777,526       5,000,000
                                                   ============    ============

DILUTED AND DILUTED NET INCOME (LOSS) PER SHARE    $       0.02    $      0.000
                                                   ============    ============


                The accompanying notes are integral part of these
                       consolidated financial statements.

                                      F-3
<PAGE>

                                                EMB CORPORATION AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
                                        FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000


                                                               PREFERRED STOCK                COMMON STOCK             ADDITIONAL
                                                         ---------------------------   --------------------------       PAID-IN-
                                                            SHARES         AMOUNT         SHARES         AMOUNT         CAPITAL
                                                         ------------   ------------   ------------   ------------    ------------

Balance September 30, 1999                                       --     $       --        5,000,000   $    170,997    $  2,280,179
Net loss for the year ended 9/30/99                              --             --             --             --              --
Realized Gain                                                    --             --             --             --              --
Contribution, Cash                                               --             --             --             --           111,000
Reclassification to Note Payable                                 --             --             --             --          (400,000)
Contribution of Note Receivable                                  --             --             --             --           550,000
Contribution of Stock                                            --             --             --             --         1,034,915
                                                         ------------   ------------   ------------   ------------    ------------
Balance September 30. 2000                                       --             --        5,000,000        170,997       3,576,094
Return of assets to a shareholder upon reprganization:
    Note Receivable                                              --             --             --         (550,000)           --
    Investment in Genesisintermedia                              --             --             --       (1,893,750)           --
Note Payables adjustment as a part of reorganization             --             --             --          400,000            --
Restatement of common stock due to
    reorganization (See Note 17)                            2,500,000        235,000     11,706,944      4,706,738      (3,576,094)
Net income for the year ended 9/30/00                            --             --             --             --              --
                                                         ------------   ------------   ------------   ------------    ------------
Balance September 30, 2001                                       --     $    235,000     16,706,944   $  2,833,985    $       --
                                                         ============   ============   ============   ============    ============

Table continues below:
----------------------

                                                                                TREASURY STOCK             TOTAL
                                                           RETAINED      ---------------------------    STOCKHOLDERS'
                                                           EARNINGS         SHARES         AMOUNT          EQUITY
                                                         ------------    ------------   ------------    ------------

Balance September 30, 1999                               $ (1,558,454)           --     $       --      $    892,722
Net loss for the year ended 9/30/99                           (16,055)           --             --           (16,055)
Realized Gain                                                    --              --             --              --
Contribution, Cash                                               --              --             --           111,000
Reclassification to Note Payable                                 --              --             --          (400,000)
Contribution of Note Receivable                                  --              --             --           550,000
Contribution of Stock                                            --              --             --         1,034,915
                                                         ------------    ------------   ------------    ------------
Balance September 30. 2000                                 (1,574,509)           --             --         2,172,582
Return of assets to a shareholder upon reprganization:
    Note Receivable                                              --              --             --          (550,000)
    Investment in Genesisintermedia                              --              --             --        (1,893,750)
Note Payables adjustment as a part of reorganization             --              --             --           400,000
Restatement of common stock due to
    reorganization (See Note 17)                           (9,889,368)      2,500,000       (235,000)     (8,758,724)
Net income for the year ended 9/30/00                         265,327            --             --           265,327
                                                         ------------    ------------   ------------    ------------
Balance September 30, 2001                               $(11,198,550)      2,500,000   $   (235,000)   $ (8,364,565)
                                                         ============    ============   ============    ============


                     The accompanying notes are integral part of these consolidated financial statements.

                                                          F-4
<PAGE>

                                   EMB CORPORATION AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                            FOR THE YEARS ENDED SEPTEMBER 30, 2001 AND 2000

                                                                                  2001            2000
                                                                              ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
        Net profit (loss)                                                     $    265,327    $    (16,055)
        Adjustments to reconcile net loss to net cash provided by (used in)
        operating activities:
            Depreciation                                                            99,288          90,080
            (Increase) Decrease in accounts receivable                            (187,593)        169,708
            (Increase) Decrease in loans held for sale                         (21,236,400)     (2,641,759)
            (Increase) Decrease in restricted assets                               (21,970)           --
            Increase in accounts payable                                           251,522        (363,135)
            Increase in income taxes payable                                        12,648            --
            Increase in other payables                                              81,640        (145,587)
            Increase in warehouse credit line                                   21,236,400       2,641,759
                                                                              ------------    ------------
        Net cash flows provided by (used in) operating activities                  500,862        (264,989)
                                                                              ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
            Decrease in Securities investment                                         --           151,701
            Cash received from acquisition of business                              97,032            --
            Purchase of property and equipment                                        --           (20,983)
            Decrease in other investments                                             --            36,862
                                                                              ------------    ------------
        Net cash provided by investing activities                                   97,032         167,580
                                                                              ------------    ------------
CASH FLOW FROM FINANCING ACTIVITIES
            Cash contributed to equity                                                --           111,000
            Principal paid on note payable                                         (80,477)        (49,771)
                                                                              ------------    ------------
        Net cash used in financing activities                                      (80,477)         61,229
                                                                              ------------    ------------
NET INCREASE(DECREASE) IN CASH & CASH EQUIVALENTS                                  517,417         (36,180)

CASH & CASH EQUIVALENTS, BEGINNING BALANCE                                          61,519          97,699
                                                                              ------------    ------------
CASH & CASH EQUIVALENTS, ENDING BALANCE                                       $    578,936    $     61,519
                                                                              ============    ============

Interest Paid                                                                 $  2,729,615    $  1,041,548
                                                                              ============    ============
Income Taxes Paid                                                             $       --      $       --
                                                                              ============    ============
Non-Cash Items:

     Note receivable, acquired                                                $       --      $    550,000
                                                                              ============    ============
     Contribution of stock, addition                                          $       --      $  1,034,915
                                                                              ============    ============
     Issuance of preferred stock, as treasury stock                           $    235,000    $       --
                                                                              ============    ============
     Return of note receivable to a shareholder on acquisition                $   (550,000)   $       --
                                                                              ============    ============
     Return of investment to a shareholder on acquisition                     $ (1,893,750)   $       --
                                                                              ============    ============
     Adjustment of note payable on acquisition                                $    400,000    $       --
                                                                              ============    ============


           The accompanying notes are integral part of these consolidated financial statements.

                                                F-5
</TABLE>
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Organization and Nature of Operation

EMB Corporation (formerly called Pacific International, Inc.) (EMB) was
incorporated under the laws of the State of Hawaii on May 5, 1960. Effective
December 16, 1995, EMB acquired the net assets of Sterling Alliance Group, Ltd.
("SAG") which included 100% ownership in Electronic Mortgage Banc, Ltd. ("EMB
Mortgage") and certain land held for sale in Monterey County, California. EMB
was inactive at the time of the acquisition. For financial statement purposes,
the transaction was recorded as a recapitalization of SAG.

In fiscal 1998, EMB expanded its mortgage banking operations through its
acquisitions of Investment Consultants, Inc. ("ICI") and Preferred Holding
Group, Inc. ("PHG"). In fiscal 1999, EMB ceased its mortgage banking operations
of EMB Mortgage and divested itself of the assets of ICI and PHG due to an
economic downturn in the mortgage banking industry. In May 1999, EMB began
slowly to recommence its mortgage banking operations through acquisitions of
American Residential Funding ("AMRES") and Residential Mortgage Corporation
("RMC").

On January 12, 2000, EMB's Board of Directors adopted a plan to discontinue the
operations of its mortgage banking activities. On February 22, 2000, EMB sold
its interest in RMC to another mortgage banking entity, through the cancellation
of 40,000 shares of EMB's common stock. A loss of $569,000 resulted from the
exchange. On April 12, 2000, EMB consummated an Amended and Restated Purchase
Agreement with e-Net Financial.com Corporation ("e-Net") to sell all of the
outstanding stock currently held by EMB of AMRES for $11.5 million in cash and
stock. EMB recorded a gain of $9.04 million in connection with the sale.

On February 14, 2000, the EMB acquired Titus Real Estate Corp. ("Titus Real
Estate") for $110,500 as an entry into oil and gas operations. In September
2000, the parties rescinded the transaction.

On June 24, 2000, EMB entered into an asset purchase agreement with Cyrus Ltd.
("Cyrus") to acquire rights to operate two natural gas processing plants in
Texas, through a newly formed subsidiary, Global Energy Reserves, Inc. In
connection with this agreement, EMB issued 2,500,000 shares of common stock. Due
to unforeseen circumstances, the parties were unable to close the transaction,
and the 2,500,000 shares were returned to EMB.

Pursuant to a Purchase Agreement dated July 23, 2001, EMB acquired all of the
issued and outstanding shares of Saddleback Investment Services, Inc., a
California corporation ("SB") from William R. Parker ("Mr. Parker"), its sole
shareholder. SB was incorporated on November 9, 1992 under the laws of the State
of California. SB operates under a DBA American National Mortgage. SB assists
third parties in obtaining long term trust deed (mortgage) financing. SB is
subject to the laws and regulations issued by HUD and other regulatory agencies.
Saddleback, presently doing business as American National Mortgage ("American
National") is a mortgage broker and banking entity with its principal office
located in Santa Ana, California. American National was formed in November 1992
(see note 17).

Pursuant to a Purchase Agreement dated September 30, 2001, EMB acquired all of
the issued and outstanding shares of First Guaranty Financial Corporation, a
California corporation ("FG") from FGFC Holdings, Inc., a California corporation
("FGFC Holdings"), its sole shareholder. FG was organized June 13, 1988. First
Guaranty is a mortgage banking entity with its principal office located in Santa
Ana, California. First Guaranty was formed in June 1988 and operated solely as a
wholesale mortgage banker until June 1998. At that time, the management of First
Guaranty determined that it should expand its operations to include retail

                                      F-6
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


operations, as well. First Guaranty's current operations include loans generated
as retail mortgage business with the loans being originated by in-house loan
officers, and also loans generated through wholesale lending operations with the
loans being originated by independent mortgage brokers and submitted to First
Guaranty for funding. FG is subject to the laws and regulations issued by HUD
and other regulatory agencies. For accounting purposes, the transaction would be
treated as a recapitalization of FG with the FG as the accounting acquirer
(reverse acquisition), and would be accounted for in a manner similar to a
pooling of interests (see note 17).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of EMB
and its 100% wholly owned subsidiaries, FG and SB (collectively the "Company").
All significant inter-company accounts and transactions have been eliminated in
consolidation. The acquisition of FG (on September 30, 2001) has been accounted
for as a purchase and treated as a reverse acquisition since the former owners
of FG became the largest and controlling shareholder of EMB immediately
following the acquisition. The balance sheet includes balance sheets of EMB, FG
and SB while the statements of operation, shareholders equity and cashflows
include only FG's statements since the reverse acquisition took place on the
last day of the year.

Change in reporting entity

The accompanying financial statements in the accounts of FG for the periods
presented as a result of the reverse acquisition of EMB on September 30, 2001.
The operations of EMB and SB are included in operations from the dates of
acquisition. The consolidated entity is refereed to herein as EMB Corporation
and subsidiaries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

The Company considers all liquid investments with a maturity of three months or
less from the date of purchase that are readily convertible into cash to be cash
equivalents. Balances in bank accounts may, from time to time, exceed federally
insured limits.

Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make 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 and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Income taxes

Deferred income tax assets and liabilities are computed annually for differences
between the financial statements and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future based on enacted laws
and rates applicable to the periods in which the differences are expected to
affect taxable income (loss). Valuation allowance is established when necessary
to reduce deferred tax assets to the amount expected to be realized.

                                      F-7
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Basic and diluted net loss per share

Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.

Stock-based compensation

The Company has adopted the disclosure provisions only of SFAS 123 and continues
to account for stock based compensation using the intrinsic value method
prescribed in accordance with the provisions of APB No. 25, Accounting for Stock
Issued to Employees, and related interpretations. Common stock issued to
employees for compensation is accounted for based on the market price of the
underlying stock, generally the average low bid price.

The Company accounts for stock-based compensation issued to non-employees and
consultants in accordance with the provisions of SFAS 123 and the Emerging
Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for
Equity Instruments that are Issued to Other Than Employees for Acquiring or in
Conjunction with Selling, Goods or Services". Common stock issued to
non-employees in exchange for services is accounted for based on the fair value
of the services received.

Fair value of financial instruments

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.

Comprehensive income

Statement of financial accounting standards No. 130, Reporting comprehensive
income (SFAS No. 130), establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity, except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No. 130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in
financial statements that are displayed with the same prominence as other
financial statements. The Company adopted this standard in 1998 and the
implementation of this standard did not have a material impact on its financial
statements.

Reporting segments

Statement of financial accounting standards No. 131, Disclosures about segments
of an enterprise and related information (SFAS No. 131), which superceded
statement of financial accounting standards No. 14, Financial reporting for
segments of a business enterprise, establishes standards for the way that public
enterprises report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performances. The Company
adopted this standard in 1998 and the implementation of this standard did not
have a material impact on its financial statements.

                                      F-8
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Revenue

The Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin
(SAB) 101, "Revenue Recognition in Financial Statements," in December 1999. The
SAB summarizes certain of the SEC staff's views in applying generally accepted
accounting principles ("GAAP") to revenue recognition in financial statements.
The management of the Company believes its revenue recognition policies are in
accordance with the relevant accounting pronouncements. In that regard,
commissions generated from brokering loans are recognized at the date of close.
Notary services related revenue is recognized when the services are performed.
Loan origination fees are deferred. Upon the sale of loans to third parties
without recourse, such deferred fees are recorded as income.

Advertising

The Company expenses advertising costs as incurred.

Accounts Receivable

No allowance for un-collectible accounts has been provided. Management has
evaluated the accounts and believes they are all collectible.

Loans held for sale

Loans held for sale are recorded at the lower of cost or market. Loan
origination fee and related direct cost to originate the loans for loans held
for sale are capitalized as part of the carrying amount of loans held for sale.

Regulatory capital requirement and restricted cash

As an approved HUD non-supervised lender, the Company is subject to adjusted
capital requirements of $1,000,000 and minimum liquidity requirements of
$100,000. The cash reserved of such requirements is restricted.

Property & equipment

Property & equipment is depreciated, using the straight-line method, over
estimated useful lives of five to seven years. Depreciation expense for the
fiscal year ended September 30, 2001 was $99,288 compared to $90,080 for the
fiscal year ended September 30, 2000. Property and equipment consist of
following at September 30, 2001:

                     Furniture & fixture        $  72,211
                     Computer & software          274,749
                     Office equipment              56,053
                     Accumulated depreciation    (272,893)
                                                ---------
                                                $ 130,120
                                                =========

                                      F-9
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Contingent rights

The Company has entered into certain loan repurchase agreements with the lenders
to which they sell mortgage loans. If the borrowers of these loans fail to make
payments or irregularities are noted, the Company may be required to repurchase
these loans.

Market Risk

The Company is involved in the real estate loan market. The fluctuations of the
interest rates or other market condition within the real estate loan market may
have a significant effect on the volume and the profitability of business of the
Company. Reclassifications

Certain items in the prior year financial statements have been reclassified for
comparative purposes to conform with the presentation in the current period's
presentation. These reclassifications have no effect on the previously reported
income (loss).

Recent Pronouncements:

On July 20, 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." These statements make
significant changes to the accounting for business combinations, goodwill, and
intangible assets.

SFAS No. 141 establishes new standards for accounting and reporting requirements
for business combinations and will require that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
Use of the pooling-of-interests method will be prohibited. This statement is
effective for business combinations completed after June 30, 2001.

SFAS No. 142 establishes new standards for goodwill acquired in a business
combination and eliminates amortization of goodwill and instead sets forth
methods to periodically evaluate goodwill for impairment. Intangible assets with
a determinable useful life will continue to be amortized over that period. This
statement becomes effective January 1, 2002.

Management is in the process of evaluating the requirements of SFAS No. 141 and
142, but does not expect these pronouncements will materially impact the
Company's financial position or results of operations.

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations". SFAS 143 addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The impact of
the adoption of SFAS 143 on the Company's reported operating results, financial
position and existing financial statement disclosure is not expected to be
material.

In August 2001, Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), was issued.
This statement addresses financial accounting and reporting for the impairment
or disposal of long-lived assets and broadens the definition of what constitutes
a discontinued operation and how the results of a discontinued operation are to
be measured and presented. The provisions of SFAS 144 are effective for
financial statements issued for fiscal years beginning after December 15, 2001.
The impact of the adoption of SFAS 144 on the Company's reported operating
results, financial position and existing financial statement disclosure is not
expected to be material.

                                      F-10
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


In January 2001, the Financial Accounting Standards Board Emerging Issues Task
Force issued EITF 00-27 effective for convertible debt instruments issued after
November 16, 2000. This pronouncement requires the use of the intrinsic value
method for recognition of the detachable and imbedded equity features included
with indebtedness, and requires amortization of the amount associated with the
convertibility feature over the life of the debt instrument rather than the
period for which the instrument first becomes convertible. Management is in the
process of evaluating the requirements of EITF 00-27, but does not expect this
pronouncement will materially impact the Company's financial position or results
of operations.

3. GOING CONCERN UNCERTAINTY

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of the
company as a going concern. However, the Company has an accumulated deficit of
$11,198,550. The Company's total liabilities exceed its total assets by
$8,364,565. The Company faces continuing significant business risks, including,
but not limited to, its ability to maintain vendor relationships by making
timely payments when due.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying balance
sheet it dependent upon continued operations of the company, which in turn is
dependent upon the Company's ability to raise additional capital, obtain
financing and succeed in its future operations, The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. The Company is actively pursuing
additional funding and potential merger or acquisition candidates and strategic
partners which would enhance stockholders' investment. In that regard, the
Company had a reverse acquisition with FG on September 30, 2001. Management
believes that the above actions will allow the Company to continue operations
through the next fiscal year.

4. LOANS HELD FOR SALE

The Company held conventional uninsured mortgages totaling $40,516,386 as of
September 30, 2001. These loans were originated by FG and SB with various
interest rates ranging from 7-13%, per annum. The warehouse line of credit (note
9) is collateralized by the Company's loans held for sale.

5. GLOBAL SETTLEMENT, NOTE RECEIVABLE AND NOTE PAYABLE

On June 26, 2001, EMB entered into a Settlement Agreement with e-Net
Financial.Com Corporation ("e-Net"), AMRES Holding LLC ("AMRES Holding"),
Vincent Rinehart ("Rinehart") (AMRES Holding and Rinehart being collectively,
the "Rinehart Parties"), and Williams de Broe ("WdB"). This Settlement Agreement
represented a "global" settlement by the parties involved with respect to
various claims or obligations asserted by one or more parties against one or
more parties. The resolutions of this agreement include the following: (a) e-Net
issued 1.5 million shares of its restricted common stock to EMB; (b) e-Net
issued 3.0 million shares of its common stock to WdB in exchange for
cancellation of its purported guarantee of an obligation of EMB due WdB in the
amount of $657,349; (c) EMB credited e-Net with the sum of $424,766 against the
e-Net obligation due EMB; (d) EMB assigned to AMRES Holding (subject to

                                      F-11
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


allocation among themselves by the Rinehart Parties) $484,446 of the e-Net
obligation due EMB, with EMB retaining $303,404 of the e-Net obligation due EMB;
(e) EMB issued to WdB a new promissory note in the principal amount of $348,109,
interest at 10% and at 12% if not paid by due date, payable by March 31, 2002;
(f) EMB issued 147,000 shares of its restricted common stock to WdB; and (g) EMB
credited e-Net with the sum of $200,000 on the remaining obligation of e-Net due
the Company, with the promissory note of such obligation being canceled and a
new convertible promissory note in the amount of $103,404 being issued by e-Net
to EMB. The note bears an interest rate of 10% per annum. The note has a
mandatory conversion into e-Net's common stock on December 15, 2001.

6. EQUITY INVESTMENT

In connection with the sale of its subsidiary to e-Net Financial.com Corporation
("e-Net") in April 2000, EMB received 7,500,000 shares of e-Net's common stock.
The investment is accounted under the equity method. On June 26, 2001, EMB
received an additional 1,500,000 of e-Net's common stock in connection with the
Global agreement (note 5). At September 30, 2001, the Company controlled
approximately 21% of the issued and outstanding common stock of e-Net. Since
e-Net's financial statements as of October 31, 2001 reflect stockholders'
deficit of $156,539, this investment is recorded at zero value as required by
the equity method of accounting.

7. ACCRUED EXPENSES

Accrued expenses as of September 30, 2001 consist of the following:

                Litigation reserve                    $1,847,095
                Professional fees                        136,116
                Officers and directors compensation      270,000
                Payroll taxes                            300,000
                Interest payable                          91,150
                Other                                    321,870
                                                      ----------
                                                      $2,966,231
                                                      ==========

8. NET LIABILITIES OF DISCONTINUED OPERATIONS

During the years ended September 30, 2001 and 2000, EMB disposed several of its
subsidiaries by selling its interest in those subsidiaries (note 1). The net
liabilities of discontinued operations are summarized as follows as of September
30, 2001:


           Current assets                               $    89,920
           Property and equipment, net                      319,490
           Land                                             800,000
           Other assets                                      29,952
           Current liabilities, excluding
             payroll liabilities                         (1,359,618)
           Payroll liabilities                           (3,416,046)
           Notes payable                                 (1,046,455)
                                                        -----------
           Net liabilities of discontinued operations   $(4,582,757)
                                                        ===========


At September 30, 2001, the Company has unpaid federal and state payroll tax
liabilities of approximately $3.4 million, including estimated penalties and
interest. During fiscal year 1999 and 1998, payroll tax deposits of
approximately $1.0 million were not made through the date the Company ceased
operations of EMB Mortgage in the first fiscal quarter of 1999. Certain officers
may be held personally liable in the event the Company does not satisfy these
obligations. Management has engaged legal counsel to effecta settlement of such
amounts due.

                                      F-12
<PAGE>


                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


On July 26, 2001, the Company and William V. Perry closed the transaction
whereby the Company sold to Mr. Perry all of the capital stock of EMB Mortgage
Corporation for a nominal consideration of $10. Prior to this transaction, EMB
Mortgage Corporation had been a wholly-owned subsidiary of the Company, with Mr.
Perry serving as its President. Prior to June 21, 2000, Mr. Perry had also been
a Director of the Company.

On July 26, 2001, the Company and David Berman closed the transaction whereby
the Company sold to Mr. Berman all of the capital stock of Ameritelecon, Inc.
for a nominal consideration of $10. Prior to this transaction, Ameritelecon,
Inc. had been a wholly owned subsidiary of the Company, with Mr. Berman serving
as its President.

9. WAREHOUSE LINE OF CREDIT

FG has entered into a revolving mortgage purchase facilities totaling
$50,000,000. This arrangement is used to fund one-to-four family residential
first mortgages originated by FG. Prior to funding, FG is required to have
written investor commitments. These one-to-four family mortgages also serve as
the collateral for the line of credit. Daily interest is charged for each loan
outstanding at a rate determined by the agreement and varies from time-to-time.
As of September 30, 2001, the outstanding balance was $40,339,934.

SB has a $2,000,000 line of credit. The line bears interest at the prime-lending
rate. The line may only be used to fund pre-sold and pre-approved secured real
estate loans. The loans are collateral for the warehouse lines. When the loans
are purchased by a investor, the warehouse bank is repaid immediately. The loans
on warehouse line must be paid off within 60 days of funding.

10. NOTES PAYABLE

The Company has notes payable of $60,000 and 158,640 outstanding on September
30, 2001. The notes are secured by the properties of SB and FG respectively,
bear interest rate of 10.5% per annum and are due by September 2004. The current
portion of the notes amounts to $66,418. The long-term portion is due by
September 2004 with yearly installments of $66,418.

11. NOTES PAYABLE - REALTED PARTIES

Notes payable consist of amounts payable to shareholders. $230,112 is due to the
president of the Company. The note is due on April 1, 2002 and bears an interest
rate of 7% and 12% if unpaid after due date. The Company has a note payable of
$500,000 to former shareholder of FG. The note bears the interest rate of 10%
per annum and is due by September 30, 2003. The Company has a note payable of
$100,000 to former shareholder of SB. The note bears the interest rate of 6% per
annum and is due by March 1, 2003. The notes payable to former shareholders of
FG and SB are secured by share capital of respective entities. Interest expense
for the related party obligation for the period ended September 30, 2001 was $
56,443.

12. CONVERTIBLE NOTES PAYABLE

On or about April 10, 2001, the Company issued a 10% convertible note amounting
$500,000. The conversion price for the note is the volume-weighted trading
average Closing Bid Price during the ten (10) consecutive Trading Days
immediately preceding the Conversion Date. Interest is payable at maturity, or
upon conversion of the note, at 10% per annum. During fiscal year 2000, the
Company accrued interest of $24,312 on the note.

                                      F-13
<PAGE>

                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


13. SHAREHOLDERS EQUITY

Common stock:

The Company is authorized to issue 35,000,000 shares of capital stock;
30,000,000 shares are no par value common stock and 5,000,000 shares are
preferred stock. The preferred stock may be divided into and issued in one or
more series.

From time to time, the board of directors approve the issuance of common stock
for services and assets. The Company follows a policy of using the closing bid
price or the average closing bid prices near the transaction closing date, less
a discount of approximately 15% for transferability restrictions, to estimate
the fair value of the services or assets received. In rare cases, the Company
uses the value of the assets received.

During the year ended September 30, 2001, the Company issued 5,000,000 shares to
an entity owned by the President of the company in exchange of settlement of
debt owed by the EMB amounting $600,000. The exchange of shares was valued at
prevailing market rate of the shares of the Company.

Preferred stock:

All shares of Common Stock shall be of junior rank to all Preferred Shares in
respect to the preferences as to distributions and payments upon the
liquidation, dissolution and winding up of the Company. Preferred stock is
convertible into common stock of no par value at a conversion rate of 100%.
Mandatory Conversion: At any time or times on or after the Issuance Date, any
Holder of Preferred Shares shall be entitled to convert any whole number of
Preferred Shares into fully paid and non-assessable shares of Common Stock. If
any Preferred Shares remain outstanding on the Mandatory Conversion Date, such
Preferred Shares shall be converted at the Conversion Rate as of such date.
Preferred Stock have dividend rights subject to a declaration thereof by the
Company's Board of Directors, whereby each holder (a "Holder" and, collectively,
the "Holders") of the Preferred Shares shall be entitled to a dividend
(individually, a "Dividend"; collectively, the "Dividends") at a rate determined
by the Company's Board of Directors on a pari-passu basis with the holders of
Common Shares and other classes of preferred shares of the Company, except for
those holders of any class of preferred shares which have a preference with
respect to the right to receive dividends. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the Holders
of the Preferred Shares shall be entitled to receive in cash out of the assets
of the Company, whether from capital or from earnings available for distribution
to its stockholders (the "Liquidation Funds"), before any amount shall be paid
to the holders of any of the capital stock of the Company of any class junior in
rank to the Preferred Shares in respect of the preferences as to the
distributions and payments on the liquidation, dissolution and winding up of the
Company, an amount per Preferred Share equal to $1.00 and any accrued but unpaid
Dividends (such sum being referred to as the "Liquidation Preference"); provided
that, if the Liquidation Funds are insufficient to pay the full amount due to
the Holders of Preferred Shares, each Holder of Preferred Shares shall receive a
percentage of the Liquidation Funds equal to the full amount of Liquidation
Funds payable to such Holder as a liquidation preference. Until all of the
Preferred Shares have been converted as provided herein, the Company shall not,
directly or indirectly, redeem, or declare or pay any cash dividend or
distribution on, its Common Stock without the prior express written consent of
the Holders of not less than three-fifths (3/5) of the then outstanding
Preferred Shares. Holders of Preferred Shares shall have no voting rights,
except as required by law, including but not limited to, the Hawaii Business
Corporation Act, and as expressly provided in this Certificate of Designation.

                                      F-14
<PAGE>

                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


The Company issued 5,500,000 shares of common stock and 2,500,000 shares of
series E preferred stock for the acquisition of FG and SB (see note 17).

14. INCOME TAXES

At September 30, 2000, EMB has net deferred tax assets of approximately
$14,500,000 comprised primarily of its net operating loss carryforward. Based on
the Company's assessment of future realizability of deferred tax assets, a
valuation allowance has been provided, as it is more likely than not that
sufficient taxable income will not be generated to realize certain temporary
differences.

EMB's provision for income taxes differs from the benefit that would have been
recorded, assuming the federal rate of 34%, due to the valuation allowance for
net deferred tax assets.

FG's provision of taxes is consist of the following:

                             Federal      $ 93,211
                             State          26,058
                                          --------
                                           119,269
                             Tax credit    106,621
                                          --------
                                          $ 12,648
                                          ========

FG had a net operating loss carryover from prior years, of $1,211,573 and a
capital loss carryover of $86,426 which could be applied against future capital
gains. FG elected to forgo any loss carry-back and will apply the losses to
future years. FG's total deferred tax asset at September 30, 2001 is as follows:

                   Tax benefit of net operating
                          loss carry forward      $ 420,000
                   Valuation allowance             (420,000)
                                                  ---------
                                                  $    --
                                                  =========

The valuation allowance decreased to $420,000 from $527,000 during the year
ended September 30, 2001. It is reasonably possible that the FG's estimate of
the valuation allowance will change. Differences between financial statement and
tax losses in both the years consisted primarily of depreciation and was not
very significant. The net operating loss carry forward may be used to reduce
taxable income through the year 2015. Net operating loss for carry forwards for
the State of California are generally available to reduce taxable income through
the year 2005. The availability of the FG's net operating loss carry forwards
are subject to limitation if there is a 50% or more positive change in the
ownership of the FG's stock.

15. COMMITMENT

The Company has leased a facility in Santa Ana, California through July 25,
2005. The monthly rental ranges from $12,000 to $13,000 per month. The Company
has sub-leased a portion of the facility through July 25, 2002 at $7,337 per
month. Following is the net-commitment schedule for the year ended September 30:

                2002                       $  55,200
                2003                         111,041
                2004                         184,411
                2005                         153,676
                                           ---------
                Total                      $ 504,328
                                           =========

                                      F-15
<PAGE>

                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


The Company has a consulting agreement with a consulting Company to receive
consulting services in computer and Internet technologies matter. The term of
the agreement is through July 31, 2002. Under the agreement the Company will
issue 640,000 share of its common stock to the consulting Company valued at
$54,000. Through September 30, 2001, the Company has issued 460,000 shares to
the consulting company.

The Company has a consulting agreement with a consulting Company to receive
consulting services in strategic planning and identification of possible
acquisition candidate. The term of the agreement is through July 15, 2004. Under
the agreement the Company will issue share of its common stock to the consulting
Company valued at $1,000,000. Through September 30, 2001, the Company has issued
600,000 shares to the consulting company valued at $130,000 under the agreement.

The Company has a consulting agreement with a consulting Company to receive
consulting services in assembling and managing the operations of various
mortgage-lending entities. The term of the agreement is through July 15, 2004.
Under the agreement the Company will issue share of its common stock to the
consulting Company valued at $1,500,000. Through September 30, 2001, the Company
has issued 800,000 shares to the consulting company valued at $225,000 under the
agreement.

During the year ended September 30, 2001, the Company entered into various other
consulting agreements and issued a total of 900,000 shares of restricted common
stock to various consultants valued at $75,000.

16. LITIGATION

On or about November 17, 1998, the Company entered into a Stipulated Judgment in
the matter of Yamaichi International (America) Inc., vs. EMB Corporation, USDC,
Southern District of New York, Case No. 98-7152 (DLC). The lawsuit arose out of
the obligation of the Company to pay rent for its branch corporate office in New
York City. The total amount of the judgment was $186,000. As of June 30, 2001,
the Company has paid approximately $7,100 toward the judgment. The outstanding
balance of the judgment has been accrued and reflected in the consolidated
financial statements.

The Company and Joseph K. Brick are currently engaged in litigation, Joseph K.
Brick vs. EMB Corporation, Circuit Court, Seventh Judicial District, Volusia
County, Florida, Case no. 99-30669 CICI, which was filed on or about March 23,
1999. The Company filed an appeal of a lower court ruling entering a default
judgment against the Company and in favor of Mr. Brick. In February 2001, this
appeal was denied. Subsequent thereto, a judgment was entered by the Court in
Volusia County, Florida, in favor of Mr. Brick in the amount of $1,303,440.22.
As of June 27, 2001, Mr. Brick obtained entry of a sister-state judgment against
the Company in the State of California.

The Company has also initiated a lawsuit against Mr. Brick, his wife, Florence
M. Brick, and their company, FMB Mortgage Corporation, in a matter entitled EMB
Corporation and EMB Mortgage Corporation vs. Joseph K. Brick, Florence M. Brick,
FMB Mortgage Corporation and Does 1 through 10, Superior Court of the State of
California, County of Orange, Case No.00CC08083, filed August 7, 2000. In this
litigation, the Company and its former subsidiary, EMB Mortgage Corporation,
alleged that Mr. Brick breached the Separation, Asset Purchase Agreement and
Release entered into by and between the Company and Mr. Brick by failing to
indemnify the Company against losses incurred by the Company resulting from
operations of the Company's Daytona Beach, Florida office (the "Daytona Office")

                                      F-16
<PAGE>

                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


which was managed by Mr. and Mrs. Brick. The Company further alleged negligence
Mr. and Mrs. Brick in their management of the Company's Daytona Office and fraud
and conversion against Mr. and Mrs. Brick, together with FMB Mortgage, Inc. (the
company which they formed to carry on the business of the Daytona Office),
concerning tax reporting by FMB Mortgage, Inc. The Company and EMB Mortgage
Corporation have agreed, between themselves, that the Company will bear all
expenses of litigation, including attorney's fees and associated costs, and will
be entitled to the entire judgment, if any, obtained against the defendants
herein. The Company has accrued $1,300,000 in the consolidated financial
statements to cover any potential loss in the future.

The Company and James C. Saunders, the former manager of the Company's Denver,
Colorado office (the "Denver Office") were engaged in litigation in the matter
entitled James C. Saunders vs. EMB Corporation, EMB Mortgage Corporation, and
Does 1 through 30, Superior Court of California, County of Orange, Case No.
00CC06034, filed May 18, 2000. In this litigation, Mr. Saunders alleged the
Company owed him certain moneys arising from the reacquisition of the Denver
Office by Mr. Saunders from the Company. A settlement was reached by the parties
to this litigation whereby the Company issued its convertible promissory note to
Mr. Saunders in the amount of $500,000 in exchange for a dismissal of this
action, which was entered on May 24, 2001.

Both the convertible note for $500,000 plus accrued interest through September
30, 2001 have been recorded by the Company to cover this debt.

The Company and Deposit Guaranty Mortgage Company ("DGMC") were engaged in
litigation in a matter entitled CarrAmerica Realty, L.P., vs. Deposit Guaranty
Mortgage Company, District Court of Dallas County, Texas, 68th Judicial
District, Case No. DV99-01262-C, filed October 19, 1999, in which the Company is
named as a Third Party for indemnification of DGMC for rent allegedly owed for
the Company's former office in Dallas, Texas. The Company and DGMC stipulated to
judgment against the Company and in favor of DGMC in the amount of $30,000. No
part of this judgment has been paid. The Company has accrued $30,000 in the
financial statements to cover the judgment.

On January 3, 2001, the Company was sued in the lawsuit styled, FirstBank of
Aurora vs. Investment Consulting Inc., Jane and/or John Does 1-100 and EMB
Corporation, Denver Colorado District Court Number 01CV0018. Plaintiff seeks
damages in the amount of $29,878.13 in respect of its allegation that the
Company's bank account was overdrawn by such amount. In addition, Plaintiff
seeks interest on such amount, and its costs and attorneys' fees. The Company
was served on January 21, 2001. The Company believes the allegations raised in
the Complaint to be without merit. However, as of this date, no responsive
pleading has been filed. The Company has accrued $30,000 in the financial
statements to cover the litigation.

The Company and Great West Life & Annuity Insurance Company ("Great West") were
engaged in litigation in the matter styled, Great West Life & Annuity Insurance
Company v. EMB Corporation, Superior Court of the State of California, County of
Orange, Case No. 00CC2472. In this litigation, Great West alleged that the
Company owed moneys for premiums for medical insurance coverage provided by
Great West to the Company and its former employees through the period ended
December 31, 1998. The Company and Great West stipulated to judgment against the
Company and in favor of Great West in the amount of $42,648.48. No part of this
judgment has been paid. The Company has accrued $43,000 to cover the judgment.

The Company and Donald Egan were engaged in litigation in the matter entitled
Donald Egan vs. EMB Corporation, et al, District Court, Denver County, Colorado,
Case No. 99CV-000736 Division 1. In this litigation, the Plaintiff alleged that
the Company owed moneys on an outstanding promissory note. On June 3, 1999, a
Court judgment was entered against the Company in the amount of $174,136.50. The

                                      F-17
<PAGE>

                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


current balance on the judgment with accrued interest after credits for payments
on behalf of the Company is $79,065.62. On November 12, 2001 the Company and
Donald Egan entered into a General Release and Settlement Agreement whereby, as
full satisfaction of the judgment, the Company assigned to Mr. Egan all of its
interest in 1,500,000 shares of common stock of e-net that the Company had
acquired in the "Global Settlement" Agreement by and between the Company, e-Net
and other parties. See Part I, Item 1, "Description of Business" for a complete
description of the "Global Settlement" Agreement. The Company has accrued
$79,000 to cover the settlement.

EMB Mortgage Corporation and Impac Funding Corporation are engaged in
litigation, Impac Funding Corporation vs. EMB Mortgage Corporation, et al.,
Superior Court, County of Monterey, and Case No. M50028, filed on August 1,
2000. This is a judicial foreclosure action, wherein Impac is seeking to
foreclose the Monterrey, California, real property owned by EMB Mortgage
Corporation. The obligation arises out of a promissory note secured by deed of
trust for moneys alleged owed to the plaintiff by EMB Mortgage Corporation for
loans required to be repurchased by EMB Mortgage Corporation or other alleged
defaults by EMB Mortgage Corporation of the various agreements with Impac
concerning the funding and purchase of loans by Impac on behalf of EMB Mortgage
Corporation. The Company and EMB Mortgage Corporation have agreed that the
Company will bear all expenses of litigation, including attorney's fees and
associated costs at its sole option, elect to assist EMB Mortgage Corporation in
reaching a resolution of the pending legal action. On or about October 4, 2001,
EMB Mortgage Corporation entered into a settlement agreement with Impac Funding
Corporation whereby the term of the promissory note was extended for one year,
with several interim payments. It was further agreed, and the Company concurred,
that, at the extended date of the note, the Company would issue shares of its
common stock to Impac Funding Corporation equivalent in value to the unpaid
balance of the note. The Settlement Agreement also provides that the Company
issue to Impac Funding Corporation a five-year warrant for the purchase of up to
100,000 shares of the Company's common stock at a price of $0.0563 per share.

On August 30, 2001, First Guaranty was sued in a lawsuit styled NFC Consultants,
Inc., HomeZipr Corp. Vs. First Guaranty Financial Corporation, et al, Superior
Court of California, County of Orange, Case No. 01CC1121. This lawsuit alleges
moneys owed by First Guaranty or other defendants arising out of a purported
consulting agreement whereby First Guaranty would receive retail mortgage leads
from one of the plaintiffs. The lawsuit also alleges that First Guaranty and
other defendants retained certain personal property of the one of the plaintiffs
arising out of the termination of a sublease of premises unrelated to First
Guaranty. The Company believes the allegations raised in the Complaint to be
without merit and has filed a Demurrer to the action. A Court hearing on the
Demurrer is presently scheduled.

On July 24, 2001, the Company entered into Settlement Agreements with Ben
Campbell ("Campbell"), the former Director and President of the Company and
Kenneth J. Quist ("Quist"), the former Vice President, Secretary, Principal
Accounting and Chief Financial Officer and Director of the Company, to
compensate them for past services rendered in such capacities and to reimburse
them for expenses incurred on behalf of the Company during the nine months ended
June 30, 2001. The terms of the Settlement Agreements, among other things,
provided that the Company issue 150,000 shares and 100,000 shares of the
Company's restricted common stock to Campbell and Quist, respectively. On the
same date, the Company agreed to issue 10,000 shares of the Company's restricted
common stock to each of Roger D. Hall, a former Director of the Company, and Ann
L. Petersen, a remaining Director of the Company, as compensation for past
services rendered in such capacities. The Company had expensed $165,000 in the
year ended September 30, 2000, and had expensed $56,250 during the three months
ended December 31, 2000. These expenses were charged to additional paid in
capital as the value of services provided by management. As of June 30, 2001,
the Company reversed the charge to additional paid in capital for $221,250 and
recorded a liability for the $270,000 with the difference recorded as settlement
expense.

                                      F-18
<PAGE>

                        EMB CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


The Company, and its subsidiaries, might be engaged in other legal proceedings
which are ordinary in normal course of business. In the opinion of management,
the amount of ultimate liability with respect to those proceedings, if any, will
not be material to the Company's financial position or results of operations.

17. ACQUISITIONS

Pursuant to a Purchase Agreement dated July 23, 2001, the Company, on July 24,
2001, closed a transaction, whereby it acquired all of the issued and
outstanding shares of capital stock of Saddleback Investment Services, Inc., a
California corporation ("Saddleback") from William R. Parker ("Mr. Parker"), its
sole shareholder. In exchange for the shares of Saddleback, the Company issued
500,000 of its restricted common stock to Mr. Parker and delivered to Mr.
Parker, the Company's secured promissory note payable to Mr. Parker in the
initial principal amount of $100,000, bearing interest at the rate of six
percent (6%) per annum. The Company has secured its promissory obligation with
the shares of Saddleback acquired by the Company in this transaction. In
addition, the Company issued to SB 500,000 shares of the Company's restricted
Series E Convertible Preferred Stock in exchange for 100,000 shares of SB's
restricted Series A Convertible Preferred Stock.

Pursuant to a Purchase Agreement dated September 30, 2001, the Company acquired
all of the issued and outstanding shares of capital stock of First Guaranty
Financial Corporation, a California corporation ("FG") from FGFC Holdings, Inc.,
a California corporation ("FGFC Holdings"), its sole shareholder. In exchange
for all of the shares of common stock of FG, the Company issued 5,000,000 shares
of its restricted common stock to FGFC Holdings and delivered to FGFC Holdings
the Company's secured two-year promissory payable to FGFC Holdings in the
initial principal amount of $500,000, bearing interest at the rate of ten
percent (10%) per annum. In addition, the Company issued to FG 2,000,000 million
shares of the Company's restricted Series E Convertible Preferred Stock in
exchange for 100,000 shares of First Guaranty's restricted Series A Convertible
Preferred Stock. As a part of the transaction, FG returned to a former
shareholder, a note receivable amounting $550,000 and investments in marketable
securities amounting $1,893,750. The return of such assets have been treated as
a part of the acquisition. The Purchase Agreement also provides that Rodney K.
Thompson, who presently serves as a Director and President of First Guaranty,
and is also a Director and President of FGFC Holdings, Inc., is to be named to
the Board of Directors of the Company.

For accounting purposes, the transaction would be treated as a recapitalization
of FG, with the FG as the accounting acquirer (reverse acquisition), and would
be accounted for in a manner similar to a pooling of interests. The operations
of the Company is those of FG for the years ended September 30, 2001 and 2000.
The operations of the combined entity has been merged since September 30, 2001,
the date of the acquisition. The consolidated balance sheet reflects position of
the combined companies at September 30, 2001.

                                      F-19
<PAGE>

                           INDEPENDENT AUDITORS REPORT


Board of Directors
Saddleback Investment Services, Inc., dba American National Mortgage
Santa Ana, CA

We have audited the accompanying balance sheet of Saddleback Investment
Services, Inc. dba American National Mortgage as of October 31, 2001 and the
related statements of income, retained earnings, and cash flow for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion of these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Saddleback Investment Services,
Inc. dba American National Mortgage at October 31, 2001, and the results of its
operations and cash flows for the year then ended, in conformity with generally
accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued a report dated November 7,
2001 on our consideration of the Company's internal controls and a report dated
November 7, 2001 on its compliance with specific requirements applicable to
major HUD programs. Those reports are an integral part of an audit performed in
accordance with Government Audit Standards and should be read in conjunction
with this report in considering the results of our audit.

Our audit was conducted for the purpose of forming an opinion of the basic
financial statements taken as a whole. The supplemental information included in
the report is presented for the purpose of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the audit procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.


/s/ Briglio & Cheung
--------------------
BRIGILIO & CHEUNG
Matthew Briglio - Audit Partner
Alhambra, California
November 7, 2001

                                      F-20