SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

                                 AMENDMENT NO. 3


                                   (Mark One)

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
                                       OR

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

               FOR THE TRANSITION PERIOD FROM ________ TO ________

                         Commission file number: 0-28123

                               eCHAPMAN, INC.
                 (Name of Small Business Issuer in Its Charter)
                 ----------------------------------------------

          MARYLAND                                              52-2184621
-------------------------------                              -------------------
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

401 EAST PRATT STREET, SUITE 2800, BALTIMORE, MARYLAND             21202
------------------------------------------------------           ----------
(Address of Principal Executive Offices)                         (Zip Code)

Issuer's telephone number, including area code: (410) 625-9656
Securities registered pursuant to Section 12(b) of the Exchange Act: No
Securities registered pursuant to Section 12(b) of the Exchange Act:

                    COMMON STOCK, PAR VALUE $0.001 PER SHARE
                    ----------------------------------------
                                (Title of Class)

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 disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, 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 were: $7,681,000.

The aggregate market value of the voting stock and non-voting common equity held
by non-affiliates computed by reference to the average bid and asked price of
such common equity on February 28, 2002 was $475,800.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS
The number of outstanding shares of Common Stock of the registrant as of
February 28, 2002 was 12,281,096. Transitional Small Business Disclosure Format
(check one). Yes [ ] No [X]

<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the Registrant's Annual Report to Stockholders for the year
ended December 31, 2001 and selected portions of the Proxy Statement pertaining
to the 2002 Annual Meeting are incorporated herein by reference into Parts II
and III.


ON APRIL 16, 2002 eCHAPMAN, INC. FILED FORM 10-KSB, AS AMENDED ON FORM 10-KSB/A
ON APRIL 24, 2002, WHICH INCLUDED UNAUDITED FINANCIAL STATEMENTS IN LIEU OF
AUDITED FINANCIAL STATEMENTS BECAUSE eCHAPMAN, INC. ("eCHAPMAN") ELECTED AS
DISCLOSED IN TEMPORARY NOTE 2T TO ARTICLE OF REGULATION S-X, AS ISSUED BY THE
SEC. NOT TO HAVE ARTHUR ANDERSEN LLP (eCHAPMAN'S INDEPENDENT AUDITORS THROUGH
MARCH 14, 2002) ISSUE A MANUALLY SIGNED AUDIT REPORT WITH RESPECT TO THOSE
FINANCIAL STATEMENTS. SEE RISK FACTORS ENTITLED "WE HAVE TERMINATED OUR
RELATIONSHIP WITH ARTHUR ANDERSEN, LLP AS OUR INDEPENDENT AUDITORS," "eCHAPMAN
HAS RETAINED NEW INDEPENDENT AUDITORS EFFECTIVE MARCH 14, 2002," "OUR PREVIOUS
FILINGS ON FORM 10-KSB AND FORM 10-KSB/A, FILED APRIL 16, 2002 AND APRIL 24,
2002, RESPECTIVELY, CONTAINED UNAUDITED FINANCIAL STATEMENTS WHICH ARE NOT
SUBSTANTIALLY DIFFERENT THAN THE AUDITED FINANCIAL STATEMENTS FILED HEREIN." SEE
"FINANCIAL STATEMENTS," BEGINNING AT PAGE F-1. SEE "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- RECENT DEVELOPMENT"
HEREIN."

<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>


                                                                                                          PAGE
                                                                                                           ----
<S>        <C>                                                                                           <C>
Part I ......................................................................................................3
Item 1.    Description Of Business ..........................................................................3
Item 5a.   Risk Factors ....................................................................................12
Item 6.    Management's Discussion And Analysis Of Financial Condition And Results Of Operations ...........15
Item 7.    Financial Statements ............................................................................21
           Other Information Previously Omitted From Echapman's Proxy Statement Pursuant To Securities
           Exchange Act Of 1934, As Amended, Release No. 34-45589 ..........................................21

Item 13.   Exhibits List And Reports On Form 8-K ...........................................................23



</TABLE>




Domestic Emerging Markets(R) and DEM(R) Are Registered Trademarks and DEM
Profile(TM), DEM Universe(TM), DEM Company(TM), DEM Index(TM) and the stylized
C-Eagle logo are trademarks of Nathan A. Chapman, Jr.

                                        2


<PAGE>

                                     PART I
ITEM 1. DESCRIPTION OF BUSINESS

                                     GENERAL

eChapman (eChapman) is a strategically integrated financial service organization
designed to provide innovative financial service offerings and asset management
solutions. eChapman brings together the financial services capabilities of The
Chapman Co., Chapman On-Line, Inc., Chapman Capital Management, Inc. and The
Chapman Insurance Agency, Inc., along with Chapman Network, Inc., which provides
opportunities for on-line distribution of financial services and information.
Effective June 20, 2000, Chapman Holdings, Inc. (CHI), Chapman Capital
Management Holdings, Inc. (CCMHI) and subsidiary and Chapman Insurance Holdings,
Inc. (CIH) and subsidiary merged into separate wholly owned subsidiaries of
eChapman (collectively, the Company).


                                       3
<PAGE>

                                    STRATEGY

Our management team has recognized the broad economic, market and sector
challenges faced by the U.S. economy during calendar year 2001. Our online
brokerage operation is symbolic and reflective of the operating climate. During
this period, several minority portals have discontinued operations and others
have merged with similar web sites in order to achieve economies of scale and
continue operations. Our on-line strategy and projected internet marketing
strategy, subject to broader market forces has been reevaluated to be in line
with current industry demand. As a consequence of this reevaluation, we have
substantially reduced the scope of our efforts in this area. This change will
permit us to focus our resources on our core businesses of investment
management, investment banking and brokerage.


              SECURITIES BROKERAGE AND INVESTMENT BANKING SERVICES


BROKERAGE SERVICES

The Chapman Co. is registered as a broker-dealer with the SEC and in 50 states,
the District of Columbia, and Puerto Rico and is a member firm of the NASD. The
Chapman Co. provides brokerage services to institutional and retail clients.

The Chapman Co. charges commissions to these clients for executing buy and sell
orders for securities on national and regional exchanges and in the
over-the-counter market. The Chapman Co.'s primary source of revenue for its
brokerage business has historically been commissions generated from
institutional brokerage. The Chapman Co.'s institutional clients include
investment managers, corporate retirement plans and municipal retirement plan
sponsors. The Chapman Co. maintains floor broker relationships on the New York,
American and Chicago Stock Exchanges and executes buy and sell orders in the
over-the-counter markets. Approximately 26.10% of our revenue during the year
ended December 31, 2001 was derived from our brokerage business.


The Chapman Co. clears all transactions for its brokerage customers on a
fully-disclosed basis with its clearing agent, which carries and clears all
customer securities accounts. The clearing agent may lend funds to our brokerage
customers through the use of margin credit. These loans will be made to
customers on a secured basis, with the clearing agent maintaining collateral in
the form of salable securities, cash or cash equivalents. Under the terms of our
agreement with the clearing agent, in the event that customers fail to pay for
their purchases, to supply the securities that they have sold, or to repay funds
they have borrowed, we would be obligated to indemnify the clearing agent for
any resulting losses.

The Chapman Co. also participates in fixed income secondary market trading in
government securities primarily for fixed income investment managers, municipal
treasurers and other investment professionals. This business is done on a
competitive basis where The Chapman Co. acts as a broker. Approximately 5.09% of
our revenue during the year ended December 31, 2001 was derived from secondary
market trading.


The Chapman Co. was approved to be a registered market-maker for the securities
of up to five companies at any time during 2001, including eChapman. During the
year ended December 31, 2001, The Chapman Co. only made a market in the
securities of eChapman. Subsequent to December 31, 2001, The Chapman Co.
terminated its market making activities.

The Chapman Co.'s trading activities involve the purchase, sale or short sale of
securities as a principal, and, accordingly, involve risks of a change in market
price of these securities and of a decrease in the liquidity of markets, which
can limit our ability to sell securities purchased or to purchase securities
sold in such transactions. The stock of eChapman held by The Chapman Co. in its
market making inventory is recorded in the equity section of our balance sheet
at cost like treasury stock. The Chapman Co. experienced a gain on trading of
$50,000 for the year ended December 31, 2001 and a loss on trading of $361,000
for the year ended December 31, 2000. As of December 31, 2001 and 2000 The
Chapman Co.'s inventory of market-making securities was $0 and $644,000,
respectively.


                                        4


<PAGE>




CORPORATE FINANCE

To date, The Chapman Co.'s corporate finance activities have been limited
primarily to participation in syndicates. Approximately .86% of our revenue
during the year ended December 31, 2001 was derived from corporate finance
transactions.

GOVERNMENT FINANCE

The Chapman Co. participates in the tax-exempt public finance market and has
managed, primarily as co-manager, more than 500 transactions in 23 states and
the District of Columbia, including approximately 116 transactions in the past
two years. More than half of the total dollar amount of these transactions has
been with jurisdictions located in California, Pennsylvania, and Tennessee.

Approximately 20.27% of our revenue during the year ended December 31, 2001 was
derived from management fees, financial advisory fees and selling concessions in
public finance transactions. The Chapman Co. currently employs five investment
bankers whose primary responsibility is the development of its public finance
business.

INVESTMENT ADVISORY SERVICES

Our investment advisory subsidiary, Chapman Capital Management, currently
manages two active mutual funds: the DEM Equity Fund and The Chapman U.S.
Treasury Money Fund, each a portfolio of The Chapman Funds, Inc., an open-end
management investment company registered under the Investment Company Act of
1940. Chapman Capital Management has also managed one private investment trust,
the DEM-MET Trust. Chapman Capital Management also advises corporate,
institutional and individual investors on a separate account basis.


As of February 28, 2002, Chapman Capital Management's total assets under
management attributable to mutual funds were approximately 31.7% of its total
assets under management.

DEM Equity Fund is a non-diversified portfolio of The Chapman Funds, Inc. The
principal investment objective of the DEM Equity Fund is aggressive long-term
growth through investment in equity securities of DEM companies. As of February
28, 2002, the DEM Equity Fund had approximately $13.6 million in assets. The DEM
Equity Fund commenced operations in April 1998.

The Chapman U.S. Treasury Money Fund, also a portfolio of The Chapman Funds,
Inc., invests solely in short-term direct obligations of the U.S. Government and
repurchase agreements collateralized fully by direct obligations of the U.S.
Government. This fund is intended primarily for state and local governments and
their authorities and agencies. As of February 28, 2002, The Chapman U.S.
Treasury Money Fund had $75.8 million in assets. The Chapman U.S. Treasury Money
Fund began operations in June 1989.

DEM-MET Trust was organized in 1996 under New York law and is intended to
qualify as a tax-exempt pooled trust for qualified employee benefit plans and
certain governmental plans. Chapman Capital Management, which acts as investment
adviser to the DEM-MET Trust, seeks to enhance performance and reduce market
risk by allocating assets among multiple sub-advisers. The sub-advisers may
have, but are not necessarily required to have, dissimilar investment styles and
security selection disciplines. At December 31, 2001 the DEM-MET trust had
assets of $211 million. The DEM-MET Trust was fully liquidated on February 5,
2002. Chapman Capital Management, Inc. has terminated all sub-advisor
relationships.

Chapman Capital Management also provides investment advisory services to
separate accounts under individual investment advisory agreements. Chapman
Capital Management manages equity and debt portfolios with varied investment
objectives including long term capital appreciation and current income. As of
February 28, 2002, approximately 68.3% of the separate accounts under management
incorporate the DEM strategy as an investment objective.

As of February 28, 2002, Chapman Capital Management managed approximately $193
million in assets for separate accounts, of which approximately $191 million was
invested under the DEM Strategy.


                                       5

<PAGE>

MARKETING AND CUSTOMER SERVICE

Chapman Capital Management's marketing strategy focuses on distribution of its
separate account and proprietary investment products through a variety of
channels. We seek to market our investment products to public pension fund
sponsors, defined contribution plan distributors, and high net worth
individuals. Our marketing strategy encompasses distribution of our proprietary
products through separate account assignments, and wholesale agreements with
financial intermediaries. Additionally, Chapman Capital Management seeks to
remain the primary source for investment in the Domestic Emerging Markets.

Chapman Capital Management targets its marketing efforts to the various types of
customers that use its investment advisory and asset management services.
Chapman Capital Management's separate accounts are typically large institutional
investors. Chapman Capital Management markets to these accounts through customer
support activities and personal sales efforts by officers of Chapman Capital
Management.

Chapman Capital Management's proprietary investment products are distributed by
The Chapman Co. Chapman Capital Management offers its proprietary investment
funds to banks, insurance companies, providers of 401(k) deferred compensation
plans and other institutions for resale to their customers. Chapman Capital
Management provides support to The Chapman Co. in marketing to institutional
resellers and to the institutional resellers' own retail sales forces.

RESEARCH

As of February 28, 2001, Chapman Capital Management employed two portfolio
managers. Chapman Capital Management currently employs one buy-side analyst to
assist the portfolio managers in investment research, monitoring of investment
opportunities and the development and maintenance of Chapman Capital
Management's proprietary valuation and screening model. Chapman Capital
Management also utilizes the research services of The Chapman Co.

DEPENDENCE ON KEY INVESTMENT MANAGEMENT CLIENTS

At December 31, 2001 the DEM-MET trust had two clients with total assets of $211
million. The DEM-MET Trust was fully liquidated on February 5, 2002. Chapman
Capital Management, Inc. has terminated all sub-advisor relationships.

Our advisory fee revenue will be reduced by the impact of the termination of the
DEM-MET Trust. These assets and revenue reductions may be offset by inflows of
assets in other products. But we can not guarantee that inflows of assets will
occur.

ANNUITY PRODUCTS

Our insurance subsidiary, The Chapman Insurance Agency, sells annuity products
on an agency basis for insurance underwriters however, Chapman Insurance Agency
has not had significant operations to date. Chapman Insurance Agency currently
offers only variable annuities. Policyholders are able to choose among several
available separate account options offered by the insurance underwriter and may
transfer monies between the various annuity options on a tax-deferred basis.


The Chapman Insurance Agency sells products on an agency basis only, meaning
that it sells insurance products underwritten by other insurance companies.

eCHAPMAN INTERNET PORTAL

We have considerably reduced the scope of our internet strategy, symbolic of
what has occurred in the financial and technology markets.



                                        6

<PAGE>

The purchase of the assets of NetNoir, Inc. during the third quarter of
calendar year 2001, resulted in an expansion of services offered by The Chapman
Network, the Firms's online marketing affiliate.

The firm continues to reevaluate its online marketing and distribution strategy.

ON-LINE TRADING

Chapman On-Line, Inc. is registered as a broker-dealer with the SEC and in the
District of Columbia, Maryland, Virginia and South Carolina and is a member firm
of the NASD. Chapman On-Line provides brokerage services to retail clients
through the eChapman web site. Chapman On-Line has terminated its registrations
in the remaining States.

Chapman On-Line charges commissions to these clients for executing buy and sell
orders for securities on national and regional exchanges and in the
over-the-counter market. Chapman On-Line commenced operations in April 2000 and
was not a significant source of our revenue during the year ended December 31,
2001. The on-line brokerage market has been impacted by uncertantity in the
market, the effects of September 11, and the economic recession. The Firm has
reevaluated its on-line brokerage strategy and projects that on-line brokerage
will not be a significant source of future revenue, consistent with industry
trends.

Chapman On-Line clears all transactions for its brokerage customers on a
fully-disclosed basis with its clearing agent, which carries and clears all
customer securities accounts. The clearing agent may lend funds to our brokerage
customers through the use of margin credit. These loans are made to customers on
a secured basis, with the clearing agent maintaining collateral in the form of
salable securities, cash or cash equivalents. Under the terms of our agreement
with the clearing agent, in the event that customers fail to pay for their
purchases, to supply the securities that they have sold, or to repay funds they
have borrowed, we would be obligated to indemnify the clearing agent for any
resulting losses.

                              GOVERNMENT REGULATION

SECURITIES BROKERAGE AND INVESTMENT BANKING SERVICES


The securities business is subject to extensive and frequently changing federal
and state laws and substantial regulation under such laws by the SEC and various
state agencies and self-regulatory organizations, such as the NASD.

The Chapman Co. and Chapman On-Line are each registered as broker-dealers with
the SEC and are member firms of the NASD. Much of the regulation of broker-
dealers has been delegated to self-regulatory organizations, principally the
NASD, which has been designated by the SEC as The Chapman Co.'s primary
regulator. The NASD adopts rules, which are subject to approval by the SEC, that
govern its members and conducts periodic examinations of member firms'
operations. Securities firms are also subject to regulation by state securities
administrators in those states in which they conduct business. The Chapman Co.
is registered as a broker-dealer in 50 states and the District of Columbia and
Puerto Rico. Chapman On-Line has reduced its area of operations and is
registered as a broker-dealer in the District of Columbia, Maryland, Virginia
and South Carolina and is a member firm of the NASD. Chapman On-Line has
terminated its registrations in the remaining States.


Broker-dealers are subject to regulations which cover all aspects of the
securities business, including:

o Sales methods and supervision

o Trading practices among broker-dealers

o Use and safekeeping of customers' funds and securities

o Record keeping

o Conduct of directors, officers, and employees.



                                       7
<PAGE>

The principal purpose of regulation and discipline of broker-dealers is the
protection of customers and the integrity of the securities markets. Additional
legislation, changes in rules promulgated by the SEC and self-regulatory
organizations, or changes in the interpretation or enforcement of existing laws
and rules, may directly affect the mode of operation and profitability of
broker-dealers.

The SEC, self-regulatory organizations and state securities commissions may
conduct administrative proceedings which can result in censure, fines, the
issuance of cease-and-desist orders or the suspension or expulsion of a
broker-dealer, its officers or employees.

The Chapman Co.'s mutual fund distribution business is subject to extensive
regulation as to its duties, affiliations, conduct and limitations on fees under
the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the
regulations of the NASD. The NASD has prescribed rules with respect to maximum
commissions, charges and fees related to investment in any mutual fund
registered under the 1940 Act.

As registered broker-dealers and member firms of the NASD, The Chapman Co. and
Chapman On-Line are subject to the net capital rule of the SEC. The net capital
rule, which specifies minimum net capital requirements for registered
broker-dealers, is designed to measure the general financial integrity and
liquidity of a broker-dealer and requires that at least a minimum part of its
assets be kept in relatively liquid form. Net capital is essentially defined as
net worth, which consists of assets minus liabilities, plus qualifying
subordinated borrowings less certain mandatory deductions that result from
excluding assets not readily convertible into cash and from valuing certain
other assets, such as a firm's positions in securities, conservatively. Among
these deductions are adjustments in the market value of securities to reflect
the possibility of a market decline prior to disposition.

The Chapman Co. has elected to compute its net capital under the standard
aggregate indebtedness method permitted by the net capital rule, which requires
that the ratio of aggregate indebtedness to net capital, both as defined, shall
not exceed a 15-to-1 ratio.

Failure to maintain the required net capital may subject a firm to suspension or
expulsion by the NASD, the SEC and other regulatory bodies and ultimately may
require its liquidation.

As of December 31, 2000, The Chapman Co., a subsidiary of eChapman, had less
than the minimum net capital required to meet the SEC net capital rule. This net
capital deficiency was corrected as of March 8, 2001, at which time The Chapman
Co. was in compliance with the net capital rule and had net capital of $627,000,
a net capital requirement of $250,000 and a ratio of aggregate indebtedness to
net capital of 1.68-to-1. On March 9, 2001, The Chapman Co. filed a notice of
noncompliance with the net capital rule with the SEC and the NASD. The SEC and
NASD have not indicated what, if any, action either may take as a result of The
Chapman Co.'s net capital noncompliance.

As of December 31, 2001, The Chapman Co., a subsidiary of eChapman, was in
compliance with the SEC net capital rule and had net capital of $797,000, a net
capital requirement of $250,000 and a ratio of aggregate indebtedness to net
capital of .33-to-1.

INVESTMENT ADVISORY SERVICES

Chapman Capital Management's business is subject to various federal and state
laws and regulations. These laws and regulations are primarily intended to
protect investment advisory clients and stockholders of registered investment
companies. Under these laws and regulations, agencies that regulate investment
advisors have broad administrative powers, including the power to limit,
restrict, or prohibit an advisor from carrying on its business in the event that
it fails to comply with applicable laws and regulations. Possible sanctions that
may be imposed include:

o Suspension of individual employees

o Limitations on engaging in certain lines of business for specified periods of
time

o Revocation of investment advisor and other registrations



                                       8
<PAGE>

o Censures

o Fines

Chapman Capital Management is registered with the SEC under the Investment
Advisers Act of 1940 and is subject to examination by the SEC. Under Section 206
of the Advisers Act, it is unlawful for any investment advisor to:

o Employ any device, scheme, or artifice to defraud any client or prospective
client

o Engage in any transaction, practice, or course of business which operates as a
fraud or deceit upon any client or prospective client

o Engage in any act, practice, or course of business which is fraudulent,
deceptive or manipulative. The Advisers Act imposes numerous other obligations
on registered investment advisors including:

- Fiduciary duties

- Recordkeeping requirements

- Operational requirements

- Disclosure obligations

The SEC is authorized to institute proceedings and impose sanctions for
violations of the Advisers Act, ranging from censure to termination of an
investment adviser's registration. Any failure to comply with the requirements
of the SEC could have a material adverse effect on eChapman.

An investment advisor to a registered investment company, its principals, and
its employees may also be subject to proceedings initiated by the SEC to impose
remedial sanctions for violation of any provision of the federal securities laws
and the regulations adopted thereunder, and the SEC may prohibit an investment
advisor to an investment company from continuing to act in its capacity as an
investment advisor to an investment company. Stockholders of registered
investment companies or the SEC may also bring an action against the officers,
directors, and investment advisor for breach of fiduciary duty in establishing
the compensation paid to the investment advisor.

The mutual funds managed by Chapman Capital Management are registered with the
SEC under the Investment Company Act, and the sale of shares in these funds has
been registered under the Securities Act. Investment companies such as The
Chapman Funds, Inc. and any future registered investment companies established
and/or advised by Chapman Capital Management, are subject to considerable
substantive regulation. Such companies must comply with periodic reporting
requirements. Proxy solicitations are subject to the general proxy rules as well
as to special proxy rules applicable only to investment companies. Shares of
open-end investment companies, such as the DEM Equity Fund and The Chapman U.S.
Treasury Money Fund, can only be offered at a uniform public offering price
based on the current net asset value per share plus the sales load.

No more than 60% of the directors of registered investment companies can be
interested persons, defined to include, among others, persons affiliated with
the management company or underwriter, and a majority of the directors must not
be affiliated with the underwriter. In the case of investment companies, such as
The Chapman Funds, which have adopted 12b-1 plans for their portfolios in order
to permit these portfolios to pay for distribution expenses, the rules under the
Investment Company Act require that no more than 50% of the fund's directors can
be interested persons.

The advisory agreement must have initially been approved by a majority of the
outstanding shares and, after two years, must be annually approved, either by
the board or by a majority of the outstanding voting shares. The advisory
agreement must be subject to termination upon 60 days notice by the board or by
a majority of the outstanding voting shares.




                                        9
<PAGE>

The underwriting agreement must be annually approved by the board or by a vote
of a majority of the outstanding voting shares, and must provide for automatic
termination in the event of an assignment. With limited exceptions, transactions
between the investment company and an affiliate can be entered into only if
approved by the SEC, after notice and opportunity for hearing, as fair and
equitable.

Chapman Capital Management derives a large portion of its revenues from its
investment company management agreements. Under the Advisers Act, the Company's
investment management agreements terminate automatically if assigned without the
client's consent. Under the Investment Company Act, advisory agreements with
registered investment companies such as the mutual funds managed by Chapman
Capital Management terminate automatically upon assignment. The term assignment
is broadly defined and includes direct assignments as well as assignments that
may be deemed to occur, under certain circumstances, upon the transfer, directly
or indirectly, of a controlling interest in Chapman Capital Management.

ECOMMERCE AND THE INTERNET

There are currently a limited number of federal or state laws or regulations
that specifically regulate communications or commerce on the Internet. However,
federal and state governments are increasingly asserting an intent to more
actively regulate the Internet. These efforts include attempts to apply existing
laws of general applicability to the Internet, including actions involving:

o User privacy, including sending of unsolicited email or spamming

o Consumer protection to ensure quality products and services and fair dealing

o Media regulation, such as libel and obscenity

                                   COMPETITION

We encounter intense competition in our securities and investment advisory
businesses. Both The Chapman Co. and Chapman Capital Management compete directly
with other larger national securities firms and investment advisors, a
significant number of which have greater capital and other resources, including,
among other advantages, more personnel and greater marketing, financial,
technical and research capabilities. In addition, these firms offer a broader
range of financial services than The Chapman Co. and Chapman Capital Management
and compete not only with The Chapman Co. and Chapman Capital Management and
among themselves but also with commercial banks, insurance companies and others
for retail and institutional clients. This competition has intensified with the
passage of the Gramm-Leach-Bliley Act, which removed barriers to affiliation
between banks, insurance companies and securities firms.

The mutual investment funds managed by Chapman Capital Management are similarly
subject to competition from nationally and regionally distributed funds offering
equivalent financial products with returns equal to or greater than those
offered by Chapman Capital Management's affiliated investment funds. The
investment advisory industry is characterized by relatively low cost of entry
and the formation of new investment advisory entities which may compete directly
with Chapman Capital Management. Chapman Capital Management's ability to
increase and retain assets under management could be materially adversely
affected if client accounts or the Chapman Capital Management's affiliated
mutual funds under-perform specified market benchmarks. Chapman Capital
Management's ability to compete with other investment management firms also
depends, in part, on the relative attractiveness of their investment
philosophies and methods under prevailing market conditions.

Our securities brokerage and investment banking businesses are concentrated in
the securities industry, which is subject to numerous and substantial risks,
particularly in volatile or illiquid markets and in markets influenced by
sustained periods of low or negative economic growth. Such risks include the
risk of losses resulting from:

o Underwriting and ownership of securities

o Trading and principal activities




                                       10
<PAGE>

o Counterparty failure to meet commitments

o Customer fraud

o Employee errors

o Misconduct and fraud (including unauthorized transactions by traders)

o Failures in connection with the processing of securities transactions

In addition, our investment banking revenues may decline in periods of reduced
demand for public offerings or reduced activity in the secondary markets and
when there are reduced spreads on the trading of securities.


                                   TRADEMARKS

We have the right to use the following registered trademarks and common law
trademarks pursuant to our non-exclusive royalty-free Service Mark Licensing
Agreement with Nathan A. Chapman, Jr.:

o Domestic Emerging Markets(R)

o DEM(R)

o C-Eagle Logo(TM)appearing on the front of this prospectus

o DEM Index(TM)

o DEM Profile(TM)

o DEM Universe(TM)

o DEM Community(TM)

o DEM Company(TM)

o DEM Multi-Manager(TM)

o Chapman(TM)

o Chapman Education(TM)

o Chapman Network(TM)

o Chapman Trading(TM)

o Chapman Marketplace(TM)

o Chapman Kids Club(TM)

o eChapman(TM)

o NET NOIR(SM)

o Chocolate Kisses(SM)

                                       11


<PAGE>



We regard our trademarks and other intellectual property as critical to our
success. We rely on trademark law to protect our intellectual property rights.
Despite our precautions, it may be possible for third parties to obtain and use
our intellectual property without authorization. Furthermore, the validity,
enforceability and scope of protection of intellectual property in
Internet-related industries is uncertain and still evolving. The laws of some
foreign countries do not protect intellectual property to the same extent as do
the laws of the United States.

                                    EMPLOYEES

As of February 28, 2002, we had 39 full-time employees, including 23 registered
representatives.

We consider our relationship with our employees to be good. Our future success
will depend on our ability to identify, attract, retain and motivate highly
skilled technical, managerial, sales, marketing and customer service personnel.
Competition for these persons is intense.




ITEM 5A. RISK FACTORS

               WARNING AS TO OUR USE OF FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements concerning eCHAPMAN.
These forward-looking statements are based on the beliefs of our management, as
well as on assumptions made by and information currently available to us at the
time such statements are made. The discussion of our business strategy is not
based on historical facts but is comprised of forward looking statements based
upon numerous assumptions about future conditions, which may ultimately prove to
be inaccurate. When we use words such as anticipate, believe, estimate, intend
and similar expressions in this prospectus, we intend to identify
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors set
forth below, the matters set forth or incorporated in this report generally and
economic and business factors, some of which are beyond our control. In
analyzing our company, you should carefully consider, along with other matters
referred to in this report, the risk factors detailed in this Risk Factors
section and throughout this report and future reports issued by our company.

Forward-looking statements are intended to apply only at the time they are made.
Moreover, whether or not stated in connection with a forward-looking statement,
we undertake no obligation to correct or update a forward-looking statement
should we later become aware that it is not likely to be achieved. If we were to
update or correct a forward-looking statement, investors and others should not
conclude that we will make additional updates or corrections thereafter.


WE HAVE TERMINATED OUR RELATIONSHIP WITH ARTHUR ANDERSEN, LLP, AS OUR
INDEPENDENT AUDITORS.


On March 14, 2002, the Board of Directors of eChapman terminated Arthur Andersen
LLP as its independent auditors. The Board of Directors elected to terminate
Arthur Andersen LLP because Arthur Andersen LLP indicated that it would not be
able to issue the Company's audited financial statements within a reasonable
timeframe, enabling us to file eChapman's Form 10-KSB within the prescribed
deadlines, as well as in light of the fact that Arthur Andersen LLP has recently
been indicted for obstruction of justice charges, which caused the Board of
Directors to have substantial concerns about the ability of Arthur Andersen LLP
to certify and stand by any report they might issue in connection with their
review of the Company's financial statements. Arthur Andersen, LLP has indicated
that its inability to timely prepare the audited financial statements for the
company was due to the fact that Arthur Andersen had not received any
notification from the management of eChapman about a formal non-public
investigation which has been undertaken by the Securities and Exchange
Commission relating to the initial public offering of eChapman or the fact that
eChapman had received a letter from the Securities and Exchange Commission,
describing certain deficiencies noted by the Securities and Exchange Commission
in connection with a routine annual audit and examination of the books and
records of the Chapman Funds, Inc (affiliate) and Chapman Capital Management,
Inc. (a subsidiary)


                                       12
<PAGE>

WE HAVE RETAINED NEW INDEPENDENT AUDITORS EFFECTIVE MARCH 14, 2002

As a result of eChapman's termination of Arthur Andersen, LLP, eChapman has
retained the accounting firm Wilkens McNair P.C. to serve as its new independent
auditors. EChapman has a limited history with Wilkens McNair, P.C. and cannot
guarantee that the new independent auditors can adequately fulfill the needs of
eChapman in connection with the preparation of its audited financial statements.

WE ARE CURRENTLY THE SUBJECT OF A FORMAL NON-PUBLIC INVESTIGATION UNDERTAKEN BY
THE SECURITIES AND EXCHANGE COMMISSION RELATING TO THE INITIAL PUBLIC OFFERING
OF THE COMPANY AND CERTAIN SALES AND RECORD-KEEPING PRACTICES OF THE CHAPMAN
COMPANY.

Although we cannot not express an opinion as to the final outcome of the
Securities and Exchange Commission inquiry, an adverse finding with respect to
the aforementioned investigation could impact the Company's ability to properly
conduct its business and could negatively impact eChapman's results of
operations, financial position, cash flows or changes in shareholders' equity
and share price. The investigation is ongoing.


WE HAVE BEEN NOTIFIED BY THE NASDAQ THAT THE COMPANY FAILS TO COMPLY WITH THE
MINIMUM BID PRICE REQUIREMENT FOR CONTINUED LISTING AS SET FORTH IN MARKETPLACE
RULE 4310.



On February 15, 2002, we received a Nasdaq Staff Determination Letter that the
minimum bid price for eChapman fails to comply with the continued listing
requirements under Marketplace Rule 4310 and that eChapman's common stock,
therefore, was subject to delisting from the Nasdaq National Market. In the
event that eChapman is delisted from the Nasdaq National Market there is no
guarantee that eChapman will be able to sustain an adequate market for its
securities on either the Over-The Counter Bulletin Board or the "Pink sheets".
Any listing on either the Over-The Counter Bulletin Board or the " Pink Sheets"
will substantially and materially impair the market that exists for the trade of
our securities, which in turn have a material adverse effect on eChapman's
results of operations, financial position, cash flows or changes in
shareholders' equity. eChapman intends to pursue alternatives to delisting,
including becoming listed on the Nasdaq SmallCap Market.



MARKET DRIVEN ADJUSTMENTS TO ON-LINE STRATEGY

We intend to limit future investment in our website and Internet business and
focus our resources on our core businesses of investment management, investment
banking and brokerage. In doing so, we will seek to lower our operating expenses
as a percentage of revenue. If we are unsuccessful in lowering our operating
expenses as a percentage of revenue or if our efforts to lower expenses result
in less revenue, our business, results of operations and financial condition may
be materially and adversely affected.

                                       13


<PAGE>

THE CHAPMAN CO. NET CAPITAL VIOLATION

As of December 31, 2001, The Chapman Co., a subsidiary of eChapman, was in
compliance with the SEC net capital rule and had net capital of $797,000, a net
capital requirement of $250,000 and a ratio of aggregate indebtedness to net
capital of .33-to-1.

As of December 31, 2000, The Chapman Co., a subsidiary of eChapman, had less
than the minimum net capital required to meet the SEC net capital rule. This net
capital deficiency was corrected as of March 8, 2001, at which time The Chapman
Co. was in compliance with the net capital rule and had net capital of $627,000,
a net capital requirement of $250,000 and a ratio of aggregate indebtedness to
net capital of 1.68-to-1. On March 9, 2001, The Chapman Co. filed a notice of
noncompliance with the net capital rule with the SEC and the NASD. The SEC and
NASD have not indicated what, if any, action either may take as a result of The
Chapman Co.'s net capital noncompliance.

LIQUIDITY

To the extent that eChapman's liquid resources and cash provided by operations
are not adequate to meet its operating expenses and capital requirements,
eChapman may need to raise additional capital through loans or equity. There can
be no assurance that eChapman will be able to borrow funds or raise additional
capital.

OUR INVESTMENT ADVISORY SUBSIDIARY IS DEPENDENT ON A FEW MAJOR INVESTMENT
MANAGEMENT CLIENTS, AND IF ANY OF THESE CLIENTS TERMINATED THEIR ADVISORY
ARRANGEMENTS WITH US, OUR ADVISORY FEE REVENUE WOULD BE MATERIALLY REDUCED.

All of Chapman Capital Management's agreements with its advisory clients are
terminable by the client upon short notice (typically 30-60 days prior written
notice).

At December 31, 2001 the DEM-MET Trust had two clients with total assets of $211
million. The DEM-MET Trust was liquidated on February 5, 2002. Chapman Capital
Management, Inc. has terminated all sub-advisor relationships. Our advisory fee
revenue will be reduced by the impact of these withdrawals. In our regular
course of business clients contribute, withdraw and reallocate assets on a
regular basis. These assets and revenue reductions may be offset by inflows of
assets in other products, but we can not guarantee that inflows of assets will
occur.

Because of the concentration of our assets under management with a limited
number of customers, our assets under management at any time can fluctuate. If
any of our key investment management clients terminate their advisory
arrangements with us or make substantial withdrawals of their assets under
management, our advisory fee revenue would be materially affected.

VOLATILITY OF BUSINESS

The Company's revenues and operating results may fluctuate from month to month,
quarter to quarter and year to year due to a combination of factors, including
the number of underwriting transactions in which the Company participates,
access to public markets for companies in which the Company has invested as a
principal, the level of institutional and retail brokerage transactions, and
expenses of establishing new business units. The Company's revenues from an
underwriting transaction are recorded only when the underwritten security
commences trading; accordingly, the timing of the Company's recognition of
revenue from a significant transaction can materially affect the Company's
operating results. As a result, the Company could experience losses if demand
for the above transactions declines faster than the Company's ability to change
its cost structure.

In the normal course of operations of an investment manager, clients add
investments to and withdraw investments from the asset portfolio. This activity
is done by clients as they continue to make investment decisions and diversify
their portfolio. The earnings from investment management is effected by the
additions and withdrawals of investments under management.



                                       14

<PAGE>


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS



OVERVIEW

eChapman is a strategically integrated financial service organization designed
to provide innovative financial service offerings and asset management
solutions. The initial public offering of common stock of
eChapman occurred on June 15, 2000, and as a result of the mergers, which closed
on June 20, 2000, eChapman indirectly controls The Chapman Co., Chapman Capital
Management and The Chapman Insurance Agency. eChapman's common stock began
trading on the NASDAQ National Market under the symbol ECMN on June 20, 2000,
and it commenced consolidated operations on June 20, 2000.

Chapman Network is eChapman's media and advertising subsidiary. An agreement to
purchase the assets of NetNoir, Inc. was completed July 20, 2001, resulting in
an expansion of services offered by the Chapman Network. Chapman Online, Inc.,
an integral component of eChapman's interactive on-line community, is the online
brokerage unit of eChapman. Chapman Online offers online trading. The Chapman
Company is a full service securities brokerage and investment banking company
that engages in corporate and government finance, retail and institutional
brokerage, research and trading. Chapman Capital Management is a registered
investment advisor that acts as financial advisor to separate accounts, and a
family of mutual funds. The Chapman Insurance Agency sells annuity products on
an agency basis.

RESULTS OF OPERATIONS

                            PRO FORMA FINANCIAL DATA

The following audited pro forma consolidated statements of operations are
provided for informational purposes only and do not purport to present the
actual results of operations of eChapman. The audited pro forma consolidated
statements of operations should be read in conjunction with the historical
audited consolidated financial statements of eChapman, including the related
notes, included elsewhere in this document.

The audited pro forma consolidated statement of operations gives effect to the
consolidation of eChapman for the period December 31, 2001 compared to the year
ended December 31, 2000. Because the eChapman, Chapman Holdings, Chapman Capital
Management Holdings and Chapman Insurance Holdings merger was a merger of
companies under common control, their merger was accounted for similar to a
pooling of interest.




                                       15
<PAGE>



RESULTS OF OPERATIONS

The following table reflects items in the Statements of Operations as dollar
amounts and as percentages of total revenue.

                       eCHAPMAN.COM, INC. AND SUBSIDIARIES
          COMBINED AND CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                             Twelve Months Ended December 31, 2001
                                                -----------------------------------------------------------------
                                                            2001                               2000
                                                -----------------------------      ------------------------------
                                                                Percentage of                       Percentage of
                                                  Amounts       Total Revenue        Amounts        Total Revenue
                                                -----------------------------      ------------------------------
<S>                                             <C>                 <C>            <C>                 <C>
REVENUE:
Commissions                                     $  3,702,000         48.8%         $ 3,043,000           32.4%
Underwriting and management fees                     642,000          8.5%           1,113,000           11.9%
Investment management fees                         3,779,000         49.8%           5,237,000           55.8%
Interest, dividends and other income                 406,000          5.3%             623,000            6.6%
Gain (loss) on trading                                50,000          0.7%            (361,000)          -3.8%
Loss on investments, net                            (898,000)       -11.8%                  --            0.0%
                                                -----------------------------      ------------------------------
     Total revenue                                 7,681,000        101.2%           9,655,000          102.8%
Interest expense                                      90,000          1.2%             264,000            2.8%
                                                -----------------------------      ------------------------------
     Net revenue                                   7,591,000        100.0%           9,391,000          100.0%

OPERATING EXPENSE:
Compensation and benefits                          3,851,000         50.7%           4,936,000           52.6%
Floor brokerage and clearing fees                    470,000          6.2%             591,000            6.3%
Management fees                                    1,074,000         14.1%           1,658,000           17.7%
Depreciation and amortization expense              1,884,000         24.8%           1,470,000           15.7%
Other operating expense                            4,630,000         61.0%           5,216,000           55.5%
                                                -----------------------------      ------------------------------
     Total expenses                               11,909,000        156.9%          13,871,000          147.7%
                                                -----------------------------      ------------------------------

Operating loss                                    (4,318,000)       -56.9%          (4,480,000)         -47.7%
Other income (expense)
     Impairment loss                              (6,676,000)       -87.9%                 --             0.0%
                                                -----------------------------      ------------------------------
Net loss                                        $(10,994,000)      -144.8%         $(4,480,000)         -47.7%
                                                =============================      ==============================
</TABLE>



                                       16
<PAGE>





PRO FORMA RESULTS OF OPERATIONS

Net revenue decreased $1,800,000, or 19.2%, to $7,591,000 for the year ended
December 31, 2001 from $9,391,000 for the prior comparable period. The decline
in net revenues for the year ended December 31, 2001 reflects weakness in the
overall equity market and the effects of September 11, resulting in a reduction
in assets under management.

Commission revenue increased by $659,000, or 21.7%, to $3,702,000 for the year
ended December 31, 2001 from $3,043,000 for the prior comparable period. The
increase was primarily due to an increase in municipal participation and
commission revenue from international brokerage activity. Commission revenue
from municipal participation increased $770,000, or 129.32%, to $1,366,000 for
the year ended December 31, 2001 from $596,000 for the prior comparable period.
eChapman participated in 58 municipal deals during the twelve month period ended
December 31, 2001 compared to 67 municipal deals in the prior comparable period.
The increase in municipal revenue can be attributed to larger deal sizes.
Commission revenue from international brokerage totaled $248,000 for the year
ended December 31, 2001. There was no international brokerage activity for the
prior comparable period. These increases were partially offset by a decrease in
institutional commission revenue and 12b1 fee commission. Commission revenue
from the sale of institutional brokerage decreased $260,000, or 14.84%, to
$1,492,000 for the year ended December 31, 2001 from $1,752,000 for the prior
comparable period. 12b1 fee commission decreased $35,000, or 37.51%, to $58,000
for the year ended December 31, 2001 from $93,000 for the prior comparable
period.

Underwriting and management fee revenue decreased by $471,000, or 42.3%, to
$642,000 for the year ended December 31, 2001 from $1,113,000 for the prior
comparable period. The decrease in underwriting and management fee revenue was
partially due to a decrease in syndicate commission of $280,000, or 90.95%, to
$28,000 for the year ended December 31, 2001 from $308,000 for the prior
comparable period. This decrease was due to shrinkage in the overall equity
market volume. The decrease in underwriting and management fee revenue was also
due to a decrease in corporate finance revenue of $294,000, or 81.86%, to
$65,000 for the year ended December 31, 2001 from $359,000 for the prior
comparable period. These decreases were partially offset by an increase in
management fee revenue of $113,000, or 83.87%, to $247,000 for the year then
ended December 31, 2001 from $134,000 for the prior comparable period.

The firm's revenue from its asset management business was impacted by the
ongoing weakness in the equity market and the effect of September 11, resulting
in lower fee revenue for the year ended December 31, 2001 compared to the prior
comparable period. Investment management fee revenue decreased $1,458,000, or
27.8%, to $3,779,000 for the year ended December 31, 2001 from $5,237,000 for
the prior comparable period. The decrease was primarily due to a net decrease of
$97.1 million in assets under management to $523.3 million as of December 31,
2001, from $620.4 million as of December 31, 2000.

Interest, dividends and other income decreased by $217,000, or 34.8%, to
$406,000 for the year ended December 31, 2001 from $623,000 for the prior
comparable period. The decrease in interest, dividends and other income was
primarily due to a decrease in interest and dividend revenue. The decrease in
interest and dividend revenue was partially offset by an increase in other
income. Other income increased for the three months ended December 31, 2001 due
to revenue generated from online advertising, events and media by the newly
formed Chapman Network Inc.


                                       17
<PAGE>


A gain on trading of $50,000 was recognized for the year ended December 31,
2001, and a loss on trading of $361,000 was recognized for the prior comparable
period. eChapman's gain on trading is attributable to trading activity and the
change in market value of its market making securities.

The loss on investments, net was $898,000 for the year ended December 31, 2001
compared to $0 for the prior comparable period. This loss reflects a one time
market value reduction in investments held by the parent company.

Interest expense decreased by $174,000, or 65.9% to $90,000 for the year ended
December 31, 2001, from $264,000 for the prior comparable period.

Total expenses, excluding interest expense, decreased by $1,962,000, or 14.1%,
to $11,909,000 for the year ended December 31, 2001 from $13,871,000 for the
prior comparable period. The reduction in expenses is the direct result of the
cost containment strategy designed to offset market volatility and position the
company for profitable growth during 2002.

Compensation and benefits decreased by $1,085,000, or 22.0%, to $3,851,000 for
the year ended December 31, 2001 from $4,936,000 for the prior comparable
period. The decrease in compensation and benefits is due to a cost containment
strategy and attrition. As a percentage of total revenue, these expenses were
50.7% and 52.6%, respectively, for the year ended December 31, 2001 and the
prior comparable period. Compensation expense includes salaries and sales
commissions paid to brokers, which varies in relation to changes in commission
revenue.

Floor brokerage and clearing fees decreased by $121,000, or 20.5%, to $470,000
for the year ended December 31, 2001 from $591,000 for the prior comparable
period. The decrease is due to a decline in equity trading resulting from market
volatility.

Management fees, which consist primarily of Chapman Capital Management's
payments to sub-advisors associated with its multi-manager investment product,
the DEM-MET Trust, decreased by $584,000, or 35.2%, to $1,074,000 for the year
ended December 31, 2001 from $1,658,000 for the prior comparable period. The
decrease in management fee expense largely reflects the trend in assets under
management noted above in the investment management fee revenue analysis.

Depreciation and amortization expense increased by $414,000, or 28.2% to
$1,884,000 for the year ended December 31, 2001 from $1,470,000 for the prior
comparable period. The increase was due to depreciation for capitalized website
development costs which began during the last quarter of calendar year 2000.
These expenses primarily include merger related amortization.

Other expenses decreased by $586,000, or 11.2%, to $4,630,000 for the year ended
December 31, 2001 from $5,216,000 for the prior comparable period. The decrease
was primarily due to a decrease in advertising and promotion expense, travel
expense, and conference and seminar costs. The decrease in these costs is the
result of a change in business strategy. Other expenses increased for the year
ended December 31, 2001 due to development costs associated with Chapman Network
Inc. Expenses for Chapman Network include website, consulting fees, and other
startup administrative costs.

Excluding depreciation, the amortization of intangibles, and one time charges,
eChapman realized an operating loss of $877,000, a decrease of $2,133,000 or
70.9%, for the year ended December 31, 2001 from an operating loss of $3,010,000
for the prior comparable period.

The net loss increased by $6,514,000, or 145.4%, to $10,994,000 for the year
ended December 31, 2001 from $4,480,000 for the prior comparable period,
primarily due to a net non-cash adjustment of $6,676,000 for the impairment of
merger related goodwill.



                                       18
<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2001, eChapman had cash and cash equivalents of $426,000 and a
$654,000 cash deposit held by its clearing agent related to its investment in
proprietary stock.

With the exception of goodwill and other intangible assets which amount to
$15,312,000 as of December 31, 2001, our assets are reasonably liquid, with a
consisting of cash and cash equivalents, deposits with our clearing
organization, investment securities, and receivables from clients, all of which
fluctuate depending upon the levels of customer business and trading activity.
Receivables from clients turn over rapidly. Both our total assets as well as the
individual components as a percentage of total assets may vary significantly
from period to period because of changes relating to customer demand, economic
and market conditions, and proprietary trading strategies. Our total assets as
of December 31, 2001 were $17,983,000.


                                       19
<PAGE>


The Chapman Co. and Chapman On-Line are subject to the net capital rules of the
SEC. As such, The Chapman Co. and Chapman On-Line are subject to certain
restrictions on the use of capital and their related liquidity.

As of December 31, 2001, eChapman had a subscription stock receivable from its
majority stockholder in the amount of $1,291,000 reserved as an adjustment to
equity.

On July 20, 2001, eChapman purchased the net assets of NetNoir, Inc. This
acquisition, made by a combination of cash and eChapman stock, will enable the
strategic expansion of media distribution by the Chapman Network, Inc.
affiliate.

eChapman's overall capital and funding needs are continually reviewed to ensure
that its capital base can support the estimated needs of the business. These
reviews take into account business needs as well as regulatory capital
requirements. To the extent that eChapman's liquid resources and cash provided
by operations are not adequate to meet its operating expenses and capital
requirements, eChapman may need to raise additional capital through loans or
equity, and may be unable to participate in some brokerage or underwriting
opportunities. There can be no assurance that eChapman will be able to borrow
funds or raise additional equity. Currently, eChapman has no debt obligations.
eChapman does not presently maintain a line of credit or other credit facility
to fund its operations.

INFLATION

We believe the effects of inflation have not had a significant impact on our
results of operations.

NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain statements under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operation" and elsewhere in this report
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, general economic and business conditions in the
Company's market area, inflation, fluctuations in interest rates, changes in
government regulations, competition and the ability of the Company to implement
its business strategy and other risks discussed in the Company's Registration
Statement on Form SB-2 (File No. 333-90987) as it was declared effective by the
Securities and Exchange Commission, and in this and other reports filed by the
Company.

Forward-looking statements are intended to apply only at the time they are made.
Moreover, whether or not stated in connection with a forward-looking statement,
the Company undertakes no obligation to correct or update a forward-looking
statement should the Company later become aware that it is not likely to be
achieved. If the Company were to update or correct a forward-looking statement,
investors and others should not conclude that the Company will make additional
updates or corrections thereafter.

The following discussion and analysis should be read in conjunction with
eChapman's consolidated financial statements and related notes included
elsewhere in this document. The discussion of results, causes and trends should
not be construed to imply any conclusion that such result or trend will
necessarily continue in the future.

Our future operating results are also dependent upon the level of our operating
expenses, which are subject to fluctuation for the following or other reasons,
changes in the level of advertising expenses in response to market conditions,
variations in the level of compensation expense due to among other things,
changes in the employee count and mix, and competitive factors; expenses and
capital costs, such as technology assets, and research and development, incurred
to maintain and enhance our operating services infrastructure including Internet
capabilities.

Our business is also subject to substantial governmental regulation and changes
in the legal, regulatory, accounting, tax, and compliance requirements may have
a substantial effect on our operations, and results, including but not limited
to effects on costs we incur and effects on investor interest in mutual funds
and investing in general.



                                       20
<PAGE>


ITEM 7. FINANCIAL STATEMENTS


The audited financial statements of eChapman and related notes, are set forth at
pages F-1 through attached hereto.

OTHER INFORMATION PREVIOUSLY OMITTED FROM eCHAPMAN'S PROXY STATEMENT PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, RELEASE NO. 34-45589.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
eChapman, Inc.:

We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated balance sheet and statement of operations,
changes in stockholders' equity and cash flows for the year ended December 31,
2001 of eChapman, Inc. and subsidiaries (the Company) included in this Form 10-K
and have issued our report thereon dated May 15, 2002. Our audits were made for
the purpose of forming an opinion on the basic financial statements taken as a
whole. The schedule listed in the accompanying index is the responsibility of
the Company's management and is presented for purposes of complying with the
Securities Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the aduit of the basic financial statements and, in our opinion, fairly
state, in all material respects, the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.


Wilkins McNair, PC

May 15, 2002



                                       21
<PAGE>

Fiscal 2001 Audit Fee Summary

         Audit Fees

         Arthur Andersen LLP billed eChapman an aggregate of $57,000 in fees for
professional services rendered in connection with the audit of eChapman's
financial statements for the most recent fiscal year and the reviews of the
financial statements included in each of the Company's Quarterly Reports on Form
10QSB during the fiscal year ended December 31, 2001. Wilkins McNair, P.C.
billed eChapman an aggregate of $24,212 in fees for professional services
rendered in connection with the audit of eChapman's financial statements for the
fiscal year ended December 31, 2001.

         Financial Information Systems Design and Implementation Fees

         Arthur Andersen LLP did not perform or bill eChapman for professional
services during the fiscal year ended December 31, 2001 in connection with the
design and implementation of financial information systems.



                                       22
<PAGE>


ITEM 13. EXHIBITS LIST AND REPORTS ON FORM 8-K


(a)      EXHIBITS


EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------

3.1      Articles of Amendment and Restatement of the Company (Filed as Exhibit
         3.1 to Pre-Effective Amendment No. 3 to the Company's Registration
         Statement on Form S-4 (File No. 333-91251) as filed with the Securities
         and Exchange Commission on March 30, 2000 and hereby incorporated by
         reference)

3.2      Amended and Restated Bylaws of the Company (Filed as Exhibit 3.2 to
         Pre-Effective Amendment No. 3 to the Company's Registration Statement
         on Form S-4 (File No. 333-91251) as filed with the Securities and
         Exchange Commission on March 30, 2000 and hereby incorporated by
         reference)

4        Form of common stock certificate (Filed as Exhibit 4 to Amendment No. 1
         to Company's Registration Statement on Form SB-2 (File No. 333-90987)
         as filed with the Securities and Exchange Commission on January 18,
         2000 and hereby incorporated by reference

10.1     eChapman, Inc. 1999 Omnibus Stock Plan (Filed as Exhibit 10.1 to
         the Company's Registration Statement on Form SB-2 (File No. 333-90987)
         as filed with the Securities and Exchange Commission on November 15,
         1999 and hereby incorporated by reference)

10.2     Service Mark License Agreement between the Company and Nathan A.
         Chapman, Jr. dated November 12, 1999 (Filed as Exhibit 10.2 to the
         Company's Registration Statement on Form SB-2 (File No. 333-90987) as
         filed with the Securities and Exchange Commission on November 15, 1999
         and hereby incorporated by reference.)

10.3     Agreement and Plan of Merger by and among the Company, CHI Merger
         Subsidiary, Inc. and Chapman Holdings, Inc. dated November 15, 1999
         (Filed as Exhibit 10.3 to Amendment No. 1 to Company's Registration
         Statement on Form SB-2 (File No. 333-90987) as filed with the
         Securities and Exchange Commission on January 18, 2000 and hereby
         incorporated by reference)

10.4     Agreement and Plan of Merger by and among the Company, CCMHI Merger
         Subsidiary, Inc. and Chapman Capital Management, Inc. dated November
         15, 1999 (Filed as Exhibit 10.4 to Amendment No. 1 to Company's
         Registration Statement on Form SB-2 (File No. 333-90987) as filed with
         the Securities and Exchange Commission on January 18, 2000 and hereby
         incorporated by reference)


                                       23
<PAGE>

EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------

10.5     Agreement and Plan of Merger by and among the Company, CIH Merger
         Subsidiary, Inc. and Chapman Insurance Holdings, Inc. dated November
         15, 1999 (Filed as Exhibit 10.5 to Amendment No. 1 to Company's
         Registration Statement on Form SB-2 (File No. 333-90987) as filed with
         the Securities and Exchange Commission on January 18, 2000 and hereby
         incorporated by reference)

10.6     Support Agreement between the Company and Nathan A. Chapman, Jr. dated
         November 12, 1999 (Chapman Holdings, Inc.) (Filed as Exhibit 10.6 to
         the Company's Registration Statement on Form SB-2 (File No. 333-90987)
         as filed with the Securities and Exchange Commission on November 15,
         1999 and hereby incorporated by reference.)

10.7     Support Agreement between the Company and Nathan A. Chapman, Jr. dated
         November 12, 1999 (Chapman Capital Management Holdings, Inc.) (Filed as
         Exhibit 10.7 to the Amendment No. 1 to Company's Registration Statement
         on Form SB-2 (File No. 333-90987) as filed with the Securities
         and Exchange Commission on January 18, 2000 and hereby incorporated by
         reference)

10.8     Support Agreement between the Company and Nathan A. Chapman, Jr. dated
         November 12, 1999 (Chapman Insurance Holdings, Inc.) (Filed as Exhibit
         10.8 to the Amendment No. 1 to Company's Registration Statement on Form
         SB-2 (File No. 333-90987) as filed with the Securities and Exchange
         Commission on January 18, 2000 and hereby incorporated by reference)

10.9     Fully Disclosed Clearing Agreement between the Pershing Division,
         Donaldson, Lufkin & Jenrette Securities Corporation and The Chapman Co.
         dated March 16, 1999 (Filed as Exhibit 10.9 to the Company's
         Registration Statement on Form SB-2 (File No. 333-90987) as filed with
         the Commission on November 15, 1999 and hereby incorporated by
         reference.)

10.10    Distribution Agreement between The Chapman Co. and The Chapman Funds,
         Inc. on behalf of The Chapman U.S. Treasury Money Fund and The Chapman
         Institutional Cash Management Fund dated April 30, 1997 (Filed as
         Exhibit 5(A) to Post-Effective Amendment No. 13 to The Chapman Funds,
         Inc.'s Registration Statement on Form N-1A (File Nos.
         33-25716;811-5697) as filed with the Securities and Exchange Commission
         on August 7, 1997 and hereby incorporated by reference)

10.11    Distribution Agreement between The Chapman Co. and The Chapman Funds,
         Inc. on behalf of the DEM Equity Fund dated October 28, 1997 (Filed as
         Exhibit 5(B) to Post-Effective Amendment No. 15 to The Chapman Funds,
         Inc.'s Registration Statement on Form N-1A (File No. 33-25716;811-5697)
         as filed with the Securities and Exchange Commission on March 2, 1998
         and hereby incorporated by reference)


                                       24
<PAGE>

EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------


10.12    Distribution Agreement between The Chapman Co. and The Chapman Funds,
         Inc. on behalf of the DEM Index Fund dated October 28, 1997 (Filed as
         Exhibit 5(C) to Post-Effective Amendment No. 16 to The Chapman Funds,
         Inc.'s Registration Statement on Form N-1A (File Nos.
         33-25716;811-5697) as filed with the Securities and Exchange Commission
         on May 29, 1998 and hereby incorporated by reference.)

10.13    Distribution Agreement between The Chapman Co. and The Chapman Funds,
         Inc. on behalf of the DEM Fixed Income Fund dated February 11, 1998
         (Filed as Exhibit 5(D) to Post-Effective Amendment No. 17 to The
         Chapman Funds, Inc.'s Registration Statement on Form N-1A (File Nos.
         33-25716;811-5697) as filed with the Securities and Exchange Commission
         on June 12, 1998 and hereby incorporated by reference.)

10.14    Distribution Agreement between The Chapman Co. and The Chapman Funds,
         Inc. on behalf of the DEM Multi-Manager Equity Fund dated February 11,
         1998 (Filed as Exhibit 5(E) to Post-Effective Amendment No. 18 to The
         Chapman Fund, Inc.'s Registration Statement on Form N-1A (File Nos.
         33-25716;811-5697) as filed with the Securities and Exchange Commission
         on September 30, 1998 and hereby incorporated by reference.)

10.15    Distribution Agreement between The Chapman Co. and The Chapman Funds,
         Inc. on behalf of the DEM Multi-Manager Bond Fund dated February 11,
         1998 (Filed as Exhibit 5(F) to Post-Effective Amendment No. 21 to The
         Chapman Funds, Inc.'s Registration Statement on Form N-1A (File Nos.
         33-25716;811-5697) as filed with the Securities and Exchange Commission
         on July 15, 1999 and hereby incorporated by reference.)

10.16    Equipment Lease Agreement between The Chapman Co. and Chapman Limited
         Partnership dated October 1, 1993 (Filed as Exhibit 10.7 to Chapman
         Holdings, Inc.'s Registration Statement on Form SB-2 (File No.
         333-43487) as filed with the Securities and Exchange Commission on
         December 30, 1997 and hereby incorporated by reference)

10.17    Trademark Assignment from The Chapman Co. to Nathan A. Chapman, Jr.
         dated December 24, 1997 (Filed as Exhibit 10.8 to Chapman Holdings,
         Inc.'s Registration Statement on Form SB-2 (File No. 333-43487) as
         filed with the Securities and Exchange Commission on December 30, 1997
         and hereby incorporated by reference)

10.18    Trademark Assignment from The Chapman Co. to Nathan A. Chapman, Jr.
         dated December 24, 1997 (Filed as Exhibit 10.9 to Chapman Holdings,
         Inc.'s Registration Statement on Form SB-2 (File No. 33343487) as filed
         with the Securities and Exchange Commission on December 30, 1997 and
         hereby incorporated by reference)

10.19    License Agreement between The Chapman Co. and Nathan A. Chapman, Jr.
         dated December 26, 1997 (Filed as Exhibit 10.10 to Chapman Holdings,
         Inc.'s Registration Statement on Form SB-2 (File 333-43487) as filed
         with the Securities and Exchange Commission on December 30, 1997 and
         hereby incorporated by reference)


                                       25
<PAGE>

EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------

10.20    Advisory and Administrative Services Agreement between Chapman Capital
         Management, Inc. and The Chapman Funds, Inc. on behalf of The Chapman
         U.S. Treasury Money Fund and The Chapman Institutional Cash Management
         Fund dated April 30, 1997 (Filed as Exhibit 5(A) to Post-Effective
         Amendment No. 13 to The Chapman Funds, Inc.'s Registration Statement on
         Form N-1A (file Nos. 33-25716;811-5697) as filed with the Securities
         and Exchange Commission on August 7, 1997 and hereby incorporated by
         reference)

10.21    Advisory and Administrative Services Agreement between Chapman Capital
         Management, Inc. and The Chapman Funds, Inc. on behalf of the DEM
         Equity Fund dated October 28, 1997 (Filed as Exhibit 5(B) to
         Post-Effective Amendment No. 15 to The Chapman Funds, Inc.'s
         Registration Statement on Form N-1A (File No. 33-25716;811-5697) as
         filed with the Securities and Exchange Commission on March 2, 1998 and
         hereby incorporated by reference)

10.22    Advisory and Administrative Services Agreement between Chapman Capital
         Management, Inc. and The Chapman Funds, Inc. on behalf of the DEM Index
         Fund dated October 28, 1997 (Filed as Exhibit 4(C) to Post-Effective
         Amendment No. 16 to The Chapman Funds, Inc.'s Registration Statement on
         Form N-1A (File Nos. 33-25716;811-5697) as filed with the Securities
         and Exchange Commission on May 29, 1998 and hereby incorporated by
         reference.)

10.23    Advisory and Administrative Services Agreement between Chapman Capital
         Management, Inc. and The Chapman Funds, Inc. on behalf of the DEM Fixed
         Income Fund dated February 11, 1998 (Filed as Exhibit 4(D) to
         Post-Effective Amendment No. 17 to The Chapman Funds, Inc.'s
         Registration Statement on Form N-1A (File Nos. 33-25716;811-5697) as
         filed with the Securities and Exchange Commission on June 12, 1998 and
         hereby incorporated by reference.)

10.24    Advisory and Administrative Services Agreement between Chapman Capital
         Management, Inc. and The Chapman Funds, Inc. on behalf of the DEM
         Multi-Manager Equity Fund dated October 23, 1999 (Filed as Exhibit 4(E)
         to Post-Effective Amendment No. 18 to The Chapman Funds, Inc.'s
         Registration Statement on Form N-1A (File Nos. 33-25716;811-5697) as
         filed with the Securities and Exchange Commission on September 30, 1998
         and hereby incorporated by reference.)

10.25    Advisory and Administrative Services Agreement between Chapman Capital
         Management, Inc. and the Chapman Funds, Inc. on behalf of the DEM
         Multi-Manager Bond Fund dated October 23, 1998 (Filed as Exhibit 4(F)
         to Post-Effective Amendment No. 21 to The Chapman Funds, Inc.'s
         Registration Statement on Form N-1A (File Nos. 33-25716;811-5697) as
         filed with the Securities and Exchange Commission on July 15, 1999 and
         hereby incorporated by reference.)


                                       26
<PAGE>

EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------

10.26    Advisory Agreement for Separate Account dated June 1, 1995 (Filed as
         Exhibit 10.5 to Amendment No. 2 to Chapman Capital Management Holdings,
         Inc.'s Registration Statement on From SB-2 (File No. 333-51883) as
         filed with the Securities and Exchange Commission on June 22, 1998 and
         hereby incorporated by reference)

10.27    Agreement & Declaration of Trust between Chapman Capital Management,
         Inc. and Bankers Trust Company dated November 1, 1996 (Filed as Exhibit
         10.6 to Chapman Capital Management Holding's Registration Statement on
         Form SB-2 (File No. 333-51883) as filed with the Securities and
         Exchange Commission on May 5, 1998 and hereby incorporated by
         reference)

10.28    Agreement between Bankers Trust Company and Chapman Capital Management,
         Inc. dated November 1, 1996 (Filed as Exhibit 10.7 to Chapman Capital
         Management Holding's Registration Statement on Form SB-2 (File No.
         333-51883) as filed with the Securities and Exchange Commission on May
         5, 1998 and hereby incorporated by reference)

10.29    Agreement between Bankers Trust Company and Chapman Capital Management
         and Tremont Partners, Inc. and Stamberg Prestia, Ltd. dated November 1,
         1996 (Filed as Exhibit 10.8 to Chapman Capital Management Holding's
         Registration Statement on Form SB-2 (File No. 333-51883) as filed with
         the Securities and Exchange Commission on May 5, 1998 and hereby
         incorporated by reference)

10.30    Service Mark License Agreement between Chapman Capital Management
         Holdings, Inc., Chapman Capital Management, Inc. and Nathan A. Chapman,
         Jr. dated as of June 9, 1998 Filed as Exhibit 10.10 to Amendment No. 2
         to Chapman Capital Management Holdings, Inc.'s Registration Statement
         on Form SB-2 (File No. 333-51883) as filed with the Securities and
         Exchange Commission on June 22, 1998 and hereby incorporated by
         reference)

10.31    $242,000 Promissory Note to Chapman Capital Management Holdings, Inc.
         from Nathan A. Chapman, Jr. dated as of July 29, 1999 (Filed as Exhibit
         10.2 to Chapman Capital Management Holdings, Inc.'s Quarterly Report on
         Form 10Q-SB (File No. 0-24213) as filed with the Securities and
         Exchange Commission on August 20, 1999 and hereby incorporated by
         reference)

10.32    Lock-up Agreement between Nathan A. Chapman, Jr. and The Chapman Co.
         dated March 14, 2000 (Filed as Exhibit 10.41 to Pre-Effective Amendment
         No. 3 to the Company's Registration Statement on Form S-4 (File No.
         333-91251) as filed with the Securities and Exchange Commission on
         March 30, 2000 and hereby incorporated by reference)

10.33    $32,836.53 Promissory Note to The Chapman Co. from Nathan A. Chapman,
         Jr. dated December 31, 1999 (Filed as Exhibit 10.42 to Pre-Effective
         Amendment No. 3 to the Company's Registration Statement on Form S-4
         (File No. 333-91251) as filed with the Securities and Exchange
         Commission on March 30, 2000 and hereby incorporated by reference)

                                       27


<PAGE>


EXHIBIT
NUMBER                                 DESCRIPTION
------                                 -----------


10.34    Amended and Restated Expense Limitation Agreement by and among The
         Chapman Funds, Inc., on behalf of The Chapman U.S. Treasury Money Fund,
         DEM Equity Fund, DEM Index Fund, DEM Multi-Manager Equity Fund and DEM
         Multi-Manager Bond Fund, and Chapman Capital Management, Inc. dated
         March 17, 2000 (Filed as Exhibit 10.43 to Pre-Effective Amendment No. 3
         to the Company's Registration Statement on Form S-4 (File No.
         333-91251) as filed with the Securities and Exchange Commission on
         March 30, 2000 and hereby incorporated by reference)

10.35    Amendment No. 1 dated November 9, 2000 to Amended and Restated Expense
         Limitation Agreement dated March 17, 2000 between Chapman Capital
         Management, Inc. and The Chapman Funds, Inc. (Filed as Exhibit 4J to
         Post-Effective Amendment 25 to the Registration Statement of The
         Chapman Funds, Inc. on Form N-1A (File Nos.: 33-25716; 811-5697) as
         filed with the Securities and Exchange Commission on December 31, 1999
         and hereby incorporated by reference)

10.36    $1,149,639 Promissory Note to eChapman. from Nathan A. Chapman, Jr.
         dated February 22, 2001 (Filed herewith)

21       Subsidiaries of the Company (Filed as Exhibit 21 to Amendment No. to
         the Company's Registration Statement on Form SB-2 (File No. 333-90987)
         as filed with the Securities and Exchange commission on January 18,
         2000 and hereby incorporated by reference.)

23.1     Consent of Wilkins McNair, P.C.

24.1     Power of Attorney (Filed herewith)

(b)      REPORTS ON FORM 8-K:

         The Company filed no reports on Form 8-K during the Fourth Quarter of
2001.



                                       28

<PAGE>



                                   SIGNATURES

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

                                            eChapman, Inc.






Dated: May 31, 2002                         By: /s/ Nathan A. Chapman, Jr.
                                                --------------------------
                                                Nathan A. Chapman, Jr.
                                                PRESIDENT




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



<TABLE>
<CAPTION>



SIGNATURES                                         TITLE & CAPACITY                   DATE
----------                                         ----------------                   ----
<S>                                                <C>                                <C>
                                                   President and Director
/s/ Nathan A. Chapman, Jr.                         (Principal Executive Officer)      May 31, 2002
--------------------------
Nathan A. Chapman, Jr.
                                                   Chief Financial Officer
/s/ Demetris B. Brown                              (Principal Financial and           May 31, 2002
---------------------                              Accounting Officer)
Demetris B. Brown

The Entire Board of Directors

    /s/  Nathan A. Chapman, Jr.               /s/  Raymond Haysbert
----------------------------------       --------------------------------------
         Nathan A. Chapman, Jr.                    Raymond Haysbert

    /s/  Earl U. Bravo, Sr.                   /s/  Mark Jefferson
----------------------------------       --------------------------------------
         Earl U. Bravo, Sr.                        Mark Jefferson

    /s/  Donald V. Watkins                    /s/  Adolph D. Washington
----------------------------------       --------------------------------------
         Donald V. Watkins                         Adolph D. Washington


    /s/  Lottie H. Shackelford                /s/  Theron Stokes
----------------------------------       --------------------------------------
         Lottie H. Shackelford                     Theron Stokes

By: /s/ Nathan A. Chapman, Jr.                                                        May 31, 2002
    --------------------------
     Nathan A. Chapman, Jr.
     Attorney-in-Fact
</TABLE>


                                       29


<PAGE>


                                                                 ARTHUR ANDERSEN




REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors of
eChapman.com, Inc.:

We have audited the accompanying consolidated balance sheet of eChapman.com,
Inc. (a Maryland corporation) and subsidiaries as of December 31, 2000, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the year ended December 31, 2000, and the period from May 14,
1999 (inception) to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the 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 principle used and significant estimates
made by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of eChapman.com, Inc.
and subsidiaries as of December 31, 2000, and the results of their operations
and their cash flows for the year ended December 31, 2000, and the period from
May 14, 1999 (inception) to December 31, 1999, in conformity with accounting
principles generally accepted in the United States.



                                                   /s/  Arthur Andersen LLP
                                                   -------------------------


Baltimore, Maryland
March 20, 2001

COPY

THIS REPORT IS A COPY OF A PREVIOUSLY ISSUED ANDERSEN REPORT AND THE REPORT HAS
NOT BEEN REISSUED BY ARTHUR ANDERSEN, LLP.


<PAGE>


                                 eCHAPMAN, INC.

                         AUDITED FINANCIAL STATEMENTS

                      FOR THE YEAR ENDED DECEMBER 31, 2001






                                      F-1
<PAGE>


                                TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT.................................................F-3

CONSOLIDATED BALANCE SHEET...................................................F-4

CONSOLIDATED STATEMENTS OF OPERATIONS........................................F-5

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY...................F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS........................................F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS...................................F-8


                                      F-2

<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
eChapman, Inc.:

We have audited the accompanying consolidated balance sheet of eChapman, Inc. (a
Maryland corporation) as of December 31, 2001, and the related statement of
operations, changes in stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the 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 financial statements referred to above present fairly, in
all material respects, the financial position of eChapman, Inc. as of December
31, 2001, and the results of its operations and cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States.



                              /s/ Wilkins McNair, P.C.
                              -------------------------

                               Baltimore, MD
                               May 15, 2002



                                       F-3

<PAGE>



                                 eCHAPMAN, INC.
                           CONSOLIDATED BALANCE SHEETS
                     DECEMBER 31, 2001 AND DECEMBER 31, 2000


<TABLE>
<CAPTION>
                        SEE INDEPENDENT AUDITORS' REPORT

ASSETS                                                                                  2001           2000
------                                                                            -------------    ------------
<S>                                                                                <C>             <C>
     Cash                                                                          $    426,000    $  2,554,000
     Cash deposits with clearing organization                                           654,000       1,372,000
     Investments, available for sale                                                    349,000         358,000
     Receivables from brokers and dealers                                               176,000         484,000
     Receivables, other                                                                  78,000              --
     Management fees receivable                                                         321,000         489,000
     Advances to officer/employee                                                       103,000       1,150,000
     Office equipment, net                                                              118,000          93,000
     Prepaids and other assets                                                          446,000         892,000
     Intangible assets, net                                                          15,312,000      23,867,000
                                                                                   ------------    ------------
                                                                                   $ 17,983,000    $ 31,259,000
TOTAL ASSETS                                                                       ============    ============

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

     Accounts payable                                                              $  1,389,000    $  1,417,000
     Margin loan payable                                                                     --         884,000
     Other liabilities                                                                  150,000         150,000
                                                                                   ------------    ------------
TOTAL LIABILITIES                                                                     1,539,000       2,451,000
STOCKHOLDERS' EQUITY
     Common stock, $.001 par value, 50,000,000 shares authorized, 14,569,422 and
        12,281,096 shares issued and outstanding, and 2,288,326 treasury shares           9,000          13,000
     Additional paid-in-capital                                                      36,602,000      37,774,000
     Accumulated deficit                                                            (18,702,000)     (7,220,000)
     Subscription stock receivable                                                   (1,291,000)             --
     Cumulative realized loss on trading of proprietary
        stock of company held by subsidiary                                            (173,000)       (307,000)
     Proprietary stock of company held by subsidiary
        at cost                                                                          (1,000)       (884,000)
     Accumulated comprehensive income adjustment                                             --        (568,000)
                                                                                   ------------    ------------
TOTAL STOCKHOLDERS' EQUITY                                                           16,444,000      28,808,000
                                                                                   ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                         $ 17,983,000    $ 31,259,000
                                                                                   ============    ============

</TABLE>



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS
--------------------------------------------------------------------------------


                                      F-4
<PAGE>





                                 eCHAPMAN, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

                        SEE INDEPENDENT AUDITORS' REPORT


REVENUE                                               2001            2000
-------                                          ------------   ---------------

      Commissions                                 $  3,702,000   $   3,043,000
      Underwriting and management fees                 642,000       1,113,000
      Investment management fees                     3,779,000       5,237,000
      Interest, dividends and other income             406,000         623,000
      Gain (loss) on trading                            50,000        (672,000)
      Loss on Investments                             (898,000)             --
                                                  ------------    ------------
TOTAL REVENUE                                        7,681,000       9,344,000
      Interest Expense                                  90,000         264,000
                                                  ------------    ------------
NET REVENUE                                          7,591,000       9,080,000
                                                  ------------    ------------
EXPENSES
      Compensation and benefits                      3,851,000       4,936,000
      Floor brokerage and clearing fees                470,000         591,000
      Management fees                                1,074,000       1,658,000
      Travel and business development                  415,000         408,000
      Professional fees                              1,324,000         582,000
      Advertising, promotion and publicity              41,000         858,000
      Depreciation and amortization expense          1,884,000         894,000
      Other operating expense                        2,850,000       3,368,000
                                                  ------------    ------------
TOTAL EXPENSE                                       11,909,000      13,295,000
                                                  ------------    ------------
OPERATING LOSS                                      (4,318,000)     (4,215,000)

OTHER EXPENSE
      Impairment loss                               (7,252,000)             --
                                                  ------------    ------------
      Loss before minority interest and income
         tax benefit                               (11,570,000)     (4,215,000)

      Minority interest                                     --         701,000
                                                  ------------    ------------
NET LOSS                                          $(11,570,000)   $ (3,514,000)
                                                  ============    ============
BASIC AND DILUTIVE EARNINGS PER SHARE DATA:
Net Loss                                          $      (0.91)   $      (0.26)
                                                  ============    ============
Weighted average shares outstanding                 12,662,000      13,535,000
                                                  ============    ============



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS
--------------------------------------------------------------------------------



                                      F-5
<PAGE>






                                 eCHAPMAN, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                                                  CUMULATIVE
                                                                                                               REALIZED LOSS ON
                                                                                                                    TRADING
                                                                                                              PROPRIETARY STOCK
                                                                ADDITIONAL                                      OF COMPANY BY
                                                     COMMON      PAID-IN       COMPREENSIVE     ACCUMULATED      SUBSIDIARY OF
                                                     STOCK       CAPITAL          INCOME          DEFICIT           COMPANY
                                                     -----       -------          ------          -------           -------
<S>                                                   <C>        <C>              <C>            <C>               <C>
Balance, December 31, 1999                            8,000      13,148,000              --      (3,706,000)       (161,000)
Realized loss on trading of
   proprietary stock of company
   held by subsidiary                                    --              --              --              --        (146,000)
Merger of CHI, CCMH,and CIA                           5,000          (5,000)             --              --              --
Comprehensive income:
          Net loss                                       --              --      (3,514,000)     (3,514,000)             --
          Unrealized loss on securities                  --              --        (568,000)             --              --
                                                                               ------------
Comprehensive income:                                    --              --      (4,082,000)             --              --
                                                                               ============
Minority interest step-up                                --      24,297,000                              --              --
Net proceeds from initial public offerings            1,000      12,059,000                              --              --
Proprietary trading stock hold in inventory              --              --                              --              --
Retirement of proprietary stock                      (1,000)    (11,725,000)                             --              --
                                                    -------    ------------                    ------------    ------------

 Balance, December 31, 2000                          13,000      37,774,000                      (7,220,000)       (307,000)

 Stock issued in acquisition                             --         250,000                              --              --
 Subscription stock receivable                           --              --                              --              --
 Conversion of stock                                 (4,000)          4,000                              --              --
 Comprehensive income:                                   --              --                              --              --
           Net loss                                      --              --                     (11,570,000)             --
           Unrealized gain on securities                 --              --                              --              --
           Proprietary stock, net                        --      (1,426,000)                         88,000              --
           Net realized gain on trading                  --              --                              --         134,000
                                                    -------    ------------    ------------    ------------    ------------
 Balance December 31, 2001                          $ 9,000   $ 36,602,0000                   $(18,702,000)    $   (173,000)
                                                    =======    ============    ============    ============    ============
</TABLE>


<TABLE>
<CAPTION>

                                                                    ACCUMULATED     SUBSCRIPTION      TOTAL
                                                      PROPRIETARY  COMPREHENSIVE        STOCK      STOCKHOLDERS'
                                                        STOCK          INCOME         RECEIVABLE      EQUITY
                                                         -----         ------         ----------      ------
<S>                                                   <C>             <C>              <C>           <C>
Balance, December 31, 1999                            (842,000)             --              --       8,447,000
Realized loss on trading of
   proprietary stock of company
   held by subsidiary                                       --              --              --        (146,000)
Merger of CHI, CCMH,and CIA                                 --              --              --              --
Comprehensive income:
          Net loss                                          --              --              --      (3,514,000)
          Unrealized loss on securities                     --        (568,000)       (568,000)
Comprehensive income:                                       --              --              --              --
Minority interest step-up                                   --              --              --      24,297,000
Net proceeds from initial public offerings                  --              --              --      12,060,000
Proprietary trading stock hold in inventory            (42,000)             --              --         (42,000)
Retirement of proprietary stock                             --              --              --     (11,726,000)
                                                  ------------    ------------    ------------    ------------

 Balance, December 31, 2000                           (884,000)       (568,000)             --      28,808,000

 Stock issued in acquisition                                --              --              --         250,000
 Subscription stock receivable                              --              --      (1,291,000)     (1,291,000)
 Conversion of stock                                        --              --              --              --
 Comprehensive income:                                      --
           Net loss                                         --              --              --     (11,570,000)
           Unrealized gain on securities                    --         568,000              --         568,000
           Proprietary stock, net                      883,000              --              --        (128,000)
           Net realized gain on trading                     --              --              --         134,000
                                                  ------------    ------------    ------------    ------------
 Balance December 31, 2001                       $     (1,000)    $         --    $ (1,291,000)   $ 16,444,000
                                                  ============    ============    ============    ============
</TABLE>



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS
--------------------------------------------------------------------------------



                                       F-6
<PAGE>

                                 eCHAPMAN, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

                        SEE INDEPENDENT AUDITORS' REPORT

<TABLE>
<CAPTION>

                                                           2001             2000
                                                       -------------     -------------
<S>                                                    <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss                                             $ (11,570,000)    $  (3,514,000)

Adjustments to reconcile net loss to net cash from
operating activities:
  Depreciation and amortization expense                    1,884,000           894,000
  Goodwill impairment                                      7,252,000          (701,000)

  Effect from changes in assets and liabilities
     Receivables                                             230,000           100,000
     Management fees receivable                              168,000            86,000
     Prepaids and other assets                             1,338,000         1,000,000
     Accounts payable and accrued expenses                   (28,000)           47,000
     Other liabilities                                            --          (163,000)
                                                       -------------     -------------
NET CASH FROM OPERATING ACTIVITIES                        (1,834,000)       (2,251,000)
                                                       -------------     -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment                                      (25,000)               --
  Purchase of Nemoir assets                                 (150,000)               --
  Purchase of investments                                   (593,000)         (331,000)
  Advances to officer/employee                              (244,000)          (90,000)
                                                       -------------     -------------
  NET CASH FROM INVESTING ACTIVITIES:                     (1,012,000)         (421,000)
                                                       -------------     -------------
CASH FLOW FROM FINANCING ACTIVITIES:
  Net proceeds from initial public offering, net                  --        12,060,000
  Payment on retirement of treasury stock                 (1,108,000)      (11,726,000)
                                                       -------------     -------------
  NET CASH FROM FINANCING ACTIVITIES                      (1,108,000)          334,000
                                                       -------------     -------------
  NET DECREASE IN CASH AND CASH EQUIVALENTS               (2,846,000)       (2,338,000)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD             3,926,000         6,264,000
                                                       -------------     -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD               $   1,080,000     $   3,926,000
                                                       =============     =============
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED STATEMENTS
--------------------------------------------------------------------------------



                                      F-7
<PAGE>






                                 eCHAPMAN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

--------------------------------------------------------------------------------

1. ORGANIZATION AND BUSINESS:

eChapman, Inc. (eChapman.) a Maryland corporation was formed on May 14, 1999
and is designed to bring together the financial services capabilities of The
Chapman Co., Chapman Capital Management, Inc. and Chapman Insurance Agency
Incorporated.

Effective June 20, 2000, Chapman Holdings, Inc., Chapman Capital Management
Holdings, Inc. and Chapman Insurance Holdings, Inc. merged into separate wholly
owned subsidiaries of eChapman (collectively, the Company). Also, effective on
June 20, 2000, eChapman completed its initial public offering (IPO) of 1,260,000
shares of common stock at $13 per share. eChapman received net proceeds of
approximately $12,060,000. The merger of Chapman Holdings, Inc. (CHI), Chapman
Capital Management Holdings, Inc. (CCMHI), and Chapman Insurance Holdings, Inc.
(CIH) into wholly owned subsidiaries of eChapman was accounted for as a
combination of entities under common control; thus the portion of the combined
entities not under common control was stepped-up in basis to the fair market
value at date of the IPO. The step-up basis generated approximately $24.3
million in goodwill.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION
---------------------

The accompanying consolidated financial statements are presented on the accrual
basis of accounting in accordance with accounting principals generally accepted
in the United States. All significant intercompany balances have been eliminated
in consolidation. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.

MANAGEMENT FEES
---------------

The Company's investment management's fees are based on a percentage of the
funds managed and when the value of these funds are increased or reduced, the
Company's management fee is increased or reduced.

CASH
----

Cash includes cash invested in the Chapman U.S. Treasury Money Fund, a fund
managed by the Chapman Capital Management, Inc. and affiliate.

INVESTMENTS
-----------

Investments as of December 31, 2001, consist of investments in common stock
private companies. The cost of those investments approximate market.

TREASURY STOCK
--------------

The Chapman Co. is also the market maker for eChapman. However, as eChapman is
the parent of The Chapman Co., all purchases and sales of eChapman's stock by
The Chapman Co. have been accounted for as treasury stock transactions in the
accompanying consolidated financial statements. The Company has cash on deposit
with the clearing agent of $654,000 as of December 31, 2001. During 2001, cash
held on deposit with the clearing agent was used for the payments on proprietary
stock. The securities purchased with the funds are held by the clearing agent as
collateral.



                                      F-8
<PAGE>






                                 eCHAPMAN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


--------------------------------------------------------------------------------

FINANCIAL INSTRUMENTS
---------------------

The carrying amounts reported in the consolidated balance sheets for cash
equivalents, receivables, investments, securities owned, advances, accounts
payable and accrued expenses, margin loan payable and subordinated loan from
parent approximate fair value.

EARNINGS PER SHARE
------------------

Earnings per share are based on the weighted average number of common and
dilutive common equivalent shares outstanding during the period the calculation
is made. Common equivalent shares consist of shares usable upon the exercise of
stock options, using the treasury stock method. The weighted basic and diluted
average shares outstanding for the year ended December 31, 2001, was the
weighted basic average common shares outstanding because the loss for the period
presented made the common stock equivalents antidilutive.

RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No,
141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires business combination initiated after June 20,
2001 to be accounted for using the purchase method of accounting and broadens
the criteria for recording intangible assets separately from goodwill. Recorded
goodwill and intangibles will be evaluated against these new criteria and may
result in certain intangibles being subsumed into goodwill, or alternatively,
amounts initially recorded as good will may be separately identified and
recognized apart from goodwill. SFAS No. 142 requires the use of a
non-amortization approach to account for purchased goodwill and certain
intangibles. Under a non-amortization approach, goodwill and certain intangibles
will not be amortized into results of operations, but instead would be reviewed
for impairment and written down and charged to the results of operations only in
the periods in which the recorded value of goodwill and certain intangibles is
more than its fair value. The provisions of each statement which apply to
goodwill and intangible assets acquired prior to June 30, 2001, will be adopted
by the Company on January 1, 2002. The Company expects the adoption of these
accounting standards will result in certain intangibles being subsumed into
goodwill and will have the impact of reducing its amortization of goodwill and
intangibles commencing on January 1, 2002; however, impairment reviews may
result in future periodic write-downs.

INTANGIBLE ASSETS
-----------------

Intangible assets consist of two non-compete agreements of $300,000 being
amortized over 3 years related to the DEM-MET acquisition and $75,000 being
amortized over 2 years related to the Chapman On-Line acquisition. Intangible
assets also include goodwill of $24.2 million, being amortized over 20 years,
related to the merger, $70,000 being amortized over 15 years related to the
Chapman On-Line acquisition and $640,000 in DEM-MET acquisition costs being
amortized over 5 years. Amortization expense for the year ended December 31,
2001 $ 1,884,000.

IMPAIRMENT OF GOODWILL
----------------------

The merger of Chapman Holdings, Inc. (CHI), Chapman Capital Management, Inc.
(CCMH), and Chapman Insurance Holdings, Inc. (CIH) into wholly owned
subsidiaries of eChapman, Inc. was accounted for as a combination of entities
under common control; thus, the portion of the combined entities not under
common control was stepped-up in basis to the fair market value at the date of
the Initial Public Offering (IPO). The step-up in basis generated approximately
$24.2 million in goodwill. Subsequent to the distribution date, the market value
of eChapman's stock had declined substantially below its market value recorded
at the date of the IPO. As a result of this decline in market value and
management's expectations that market value in the investment industry would
continue to fall due to the events of September 11, 2001 and other pending
factors, management has evaluated the



                                      F-9
<PAGE>






                                 eCHAPMAN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001


--------------------------------------------------------------------------------

IMPAIRMENT OF GOODWILL (CONT'D)
-------------------------------

recoverability of its goodwill. Management has measured the amount of
impairment, by assessing current and future levels of income and cash flows as
well as other factors, such as business trends, prospects, market and economic
conditions. Based upon the assessments, management has concluded that goodwill
has been impaired. In such, at December 31, 2001, the Company recorded goodwill
impairment in the amount of $7,252,000.

As of December 31, goodwill was $15.3 million in 2001, net of accumulated
amortization of $1.2 million.

SEGMENT REPORTING
-----------------

The Company has adopted SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information as of December 31, 1998, and has identified
three distinct operating segments: securities brokerage and investment banking
services, investment advisory and management services, and internet portal
operations. The accounting policies for those segments are the same as those
described in the summary of significant accounting policies. Certain intangible
assets are not allocated to distinct segments and are recorded at the corporate
level. The Company evaluates performance based on profit or loss from operations
before income taxes. The Company's reportable segments for the year ended
December 31, 2001 are strategic business units that offer different services.

All revenue and Company activities are within the United States.

REVENUE RECOGNITION
-------------------

The Company records commission revenue and related expenses on a trade date
basis as the securities transactions occur. Management fees are recognized in
the period the services are provided, and underwriting fees are recognized when
the transactions close.

VOLATILITY OF BUSINESS
----------------------

The Company's revenues and operating results may fluctuate from month to month,
quarter to quarter and year to year due to a combination of factors, including
the number of underwriting transactions in which the Company participates,
access to public markets for companies in which the Company has invested as a
principal, the level of institutional and retail brokerage transactions, and
expenses of establishing new business units. The Company's revenues from an
underwriting transaction are recorded only when the underwritten security
commences trading; accordingly, the timing of the Company's recognition of
revenue from a significant transaction can materially affect the Company's
operating results. As a result, the Company could experience losses if demand
for the above transactions declines faster than the Company's ability to change
its cost structure.

In the normal course of operations of an investment manager, clients add
investments to and withdraw investments from the asset portfolio. This activity
is done by clients as they continue to make investment decisions and diversify
their portfolio. The earnings from investment management are affected by the
additions and withdrawals of investments under management.

PROPERTY AND EQUIPMENT
----------------------

Property and equipment are stated at cost. Depreciation and amortization are
provided for financial reporting purposes principally on the straight-line
method over the following estimated useful lives:

Office equipment           3 - 5 years
Furniture                      5 years



                                      F-10
<PAGE>






                                 eCHAPMAN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

--------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT (CONT'D)
-------------------------------

Straight-line and accelerated methods of depreciation are used for income tax
purposes. Depreciation expense for the year ended December 31, 2001 was $23,000.

TRANSACTIONS WITH CLEARING ORGANIZATION
---------------------------------------

The Company is required to have cash on deposit with its clearing agent for
general trading purposes. In addition, receivables from and payables to the
clearing organization arise from cash settlements on ordinary trading activity
and clearing expenses.

Proprietary accounts held at the clearing organization (PAIB Assets) are
considered allowable assets in the computation of net capital pursuant to an
agreement between the Company and the clearing organization which requires,
among other things, for the clearing organization to perform a computation of
PAIB Assets similar to the customer reserve computation set forth in Rule
15c3-3.

INCOME TAXES
------------

The Company accounts for income taxes under the liability method, whereby
deferred income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities.

3. COMMITMENTS AND CONTINGENCIES:

The Company has an operating lease agreement for its office facilities which
expires on October 15, 2005. Rent expense under this agreement was $213,000 in
2001. Under the lease agreement, a proportionate share of real estate taxes and
building expenses in excess of base year amounts are charged to the Company.

During 2000, the Company leased furniture and equipment from the Chapman Limited
Partnership I (the Partnership), an entity in which certain officers and
stockholders of the Company are partners. The lease required monthly payments of
approximately $10,000 and contained one year renewable terms, at the option of
the Company, through September 2000, at which time the Company could purchase
the furniture and equipment at fair value. As of December 31, 2001, the Company
exercised its option to purchase the furniture and equipment. The appraisal
value of the equipment, of $11,000 was recorded to reflect the obligation of the
purchase. Rent expense under this lease agreement was $98,000 in 2001.

The Company clears all transactions for its brokerage customers through its
clearing agent, which carries and clears all customer securities accounts. The
clearing agent also lends funds to the Company's brokerage customers through the
use of margin credit. These loans are made to customers on a secured basis, with
the clearing agent maintaining collateral in the form of saleable securities,
cash or cash equivalents. Pursuant to the terms of the agreement between the
Company and the clearing agent, in the event that customers fail to pay for
their purchases, to supply the securities that they have sold, or to repay funds
they have borrowed, and the clearing agent satisfies any customer obligations,
the Company would be obligated to indemnify the clearing agent for any resulting
losses. For the year ended December 31, 2001, the Company did not incur such
losses.

Securities brokerage firms become parties to arbitration's brought by
dissatisfied customers in the general course of business. The Company is
currently party to such proceedings. The company was advised in late November
2001 that the Securities Exchange Commission (SEC) has entered an order of a
formal non-public investigation relating to the initial public offering of
eChapman, Inc. and certain sales and record-keeping practices of the Chapman
Company. Losses, if any, associated with the proceedings cannot be estimated at
this time.



                                      F-11
<PAGE>






                                 eCHAPMAN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

--------------------------------------------------------------------------------

4. REGULATORY REQUIREMENTS:

Pursuant to the requirements of the Securities and Exchange Commission's (SEC)
Uniform Net Capital Rule (Rule 15c3-1), the Chapman Co. is required to maintain
net capital, as defined, of not less than $250,000 and a ratio of aggregate
indebtedness to net capital, as defined not to exceed 15 to 1. As of December
31, 2001, the Chapman Company and subsidiary had net excess of $547,000 and a
ratio of aggregate indebtedness to net capital of .33 to 1. As of December 31,
2000, the Company had consolidated net excess capital of $207,000 and a ratio of
aggregate indebtedness to net capital of .94 to 1. As of December 31, 2000, The
Chapman Co. an affiliate broker dealer, had deficit net capital of $221,000 and
a ratio of aggregate indebtedness to net capital of 14.4 to 1. A notice of
noncompliance was filed on March 9, 2001, with the SEC and the National
Association of Securities Dealers, Inc. (NASD). Subsequent to December 31, 2000,
management took actions to cure the net capital noncompliance.

The Company is subject to compliance with various SEC and NASD regulations.
During 2000, the SEC and NASD performed a periodic review of the Company's
records and procedures for compliance with its requirements. This review
identified several for which the Company was in violation. These violations may
subject the Company to fines and other penalties. As the SEC and NASD have not
completed their review, the amount, if any, of fines or other penalties, is not
known and not recorded in the consolidated financial statements.

5. STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURE:

Supplemental cash flow disclosure for the year ended December 31, 2001 is a
follows:

                  Cash paid - interest          $   9,000

6. EMPLOYEE SAVINGS PLAN:

The Company's Retirement Savings Plan, a 401(k) plan, provides participants a
mechanism for making contributions for retirement savings. Each participant may
make pre-tax and after-tax contributions based upon eligible compensation. The
Company may make discretionary contributions based on the participants'
compensation for the plan year. The Company elected not to contribute to the
plan for the year ended December 31, 2001.



                                      F-12
<PAGE>






                                 eCHAPMAN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

--------------------------------------------------------------------------------

7. OMNIBUS STOCK PLAN:

In 1998, Chapman Holdings and Chapman Capital Management Holdings started an
Omnibus Stock Plan (the Plan) to enable selected management, employees,
consultants and directors to acquire interest in Chapman Holdings and Chapman
Capital Management Holdings through ownership of common stock. The options
vested on the grant date and have a three-year term. Those options were
converted to eChapman options in June 2000. The grant date, expiration date and
vesting period did not change. A summary of the status of the Company's option
plan as of December 31, 2001, and changes during the year is presented below:

                                                               Weighted-Average
                                                 Shares         Exercise Price
                                                 -------       ----------------
Outstanding as of May 14, 1999                   136,510            $4.49
         Exercised                                    --               --
         Forfeited                                    --               --
                                                 -------
Outstanding as of June 20, 2000                  136,510             4.49
         Exercised                                (3,966)            4.27
         Forfeited                                (1,352)            4.92
                                                 -------
Outstanding as of December 31, 2000              131,192             4.51
         Exercised                                    --             4.51
         Forfeited                               (86,524)            4.51
                                                 -------
Outstanding as of December 31, 2001               44,668             4.51

The range of exercise prices for the stock options was $3.76 to $4.92. The
weighted average exercise price was $4.51.

The Company accounts for its stock-based compensation plans as permitted by FASB
No. 123, Accounting for Stock-Based Compensation, which allows the Company to
follow Accounting Principles Board Opinion No. 25 (APB No. 25), Accounting for
Stock Issued to Employees and recognize no compensation cost for options granted
at fair market prices.

8. RELATED PARTY TRANSACTIONS:

As of December 31, 2000, the Company had outstanding advances to its majority
stockholder of $1,134,000. The advances to the majority stockholder were
reflected in five notes. Four of the notes were three-year notes that accrued
interest at a range of 4.33 to 5.54 percent per annum. No interest or principal
payments were due until maturity, which was February through December 2001.
There was also a demand note that accrued interest at 5.5 percent per annum. The
interest rates on the note were based on the IRS applicable federal rate in
effect from time to time. All of the above notes were rolled into one demand
note on February 22, 2001. The new note bears interest at the IRS applicable
federal rate as in effect on February 22, 2001, which was 5.18%. As of December
31, 2001, the advance to the majority stockholder of $1,291,000 was reserved as
a subscription stock receivable.

During 2001, the Company issued an additional advance to the majority
shareholder of $74,000. This is classified on the Consolidated Balance Sheet as
Due from officer/employee. In addition, payments were made to the majority
shareholder for business development expenses incurred during year 2001 for
$169,000.

9. SUBSEQUENT EVENT:

Chapman Capital Management acts as an investment advisor to the DEM-MET Trust,
which is intended to qualify as a tax-exempt pooled trust for qualified employee
benefit plans and certain governmental plans. The DEM-MET Trust was organized in
1996 under New York Law. As of December 31, 2001, the DEM-MET Trust had assets
fo $211 million. The DEM-MET Trust was liquidated on February 5, 2002. Chapman
Capital Management, Inc. has terminated all sub-advisor relationships.
--------------------------------------------------------------------------------



                                      F-13