<PAGE>

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

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

                                   FORM 10-KSB

(MARK ONE)

[X]      Annual Report under Section 13 or 15(d) of the Securities Exchange Act
         of 1934
         For the fiscal year ended December 31, 1999

[ ]      Transition Report under Section 13 or 15(d) of the Securities
         Exchange Act of 1934
         For the transition period from __________ to __________

                         Commission file number 0-28572

                             SUNDERLAND CORPORATION
             (Exact name of registrant as specified in its charter)

         DELAWARE                                        52-2102142
         --------                                        ----------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation of Organization)

                 2901 El Camino Avenue, Las Vegas, Nevada 89102
                 ----------------------------------------------
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (702) 227-0965
                                                         --------------

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

                                      NONE

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

                         Common stock, $.0001 par value
                         ------------------------------
                                 Title of class

Check whether 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
                            ------               ------


<PAGE>

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.

                   YES                        NO   X
                            ------               -----

State issuer's revenues for its most recent fiscal year: $11,861,995.

As of March 15, 2000, there were 6,161,270 shares of the registrant's common
stock, $.0001 par value, issued and outstanding.

State the aggregate market value of the voting and non-voting common equity held
by nonaffiliates computed by reference to the price at which the common equity
was sold, or the average bid and ask price of such common equity, as of a
specified date within the past 60 days.

As of March 15, 2000: Approximately $18,529.000.

Transitional Small Business Disclosure Format         Yes         No    X
                                                         -------    --------

                      DOCUMENTS INCORPORATED BY REFERENCE:


         The information required in Part III, Items 9, 10, 11 and 12 is
incorporated by reference herein from Sunderland Corporation's definitive Proxy
Statement for the Annual Meeting of Stockholders to be held on or about May 18,
2000 which will be filed on or about April 15, 2000.



                                       2
<PAGE>

                                     PART I


Item 1. DESCRIPTION OF BUSINESS

Introduction

         Sunderland Corporation (the "Company"), through its wholly-owned
subsidiary, Capsource, Inc., originates and arranges the purchase and sale of
loans secured by real property primarily for commercial and residential
developers.

         The Company was formed in Delaware on June 2, 1998, as Sunderland
Acquisition Corporation (the "Company" or "Sunderland"). On August 13, 1998, the
Company filed a Registration Statement on Form 10-SB under the Securities
Exchange Act of 1934, as amended. On April 27, 1999, the Company acquired all
the outstanding capital stock of Capsource, Inc., a licensed Nevada mortgage
company, in exchange for 20,000 post-split shares of common stock of the
Company. Simultaneously with the Capsource Acquisition, the Company acquired
certain assets and assumed certain liabilities of Del Mar Mortgage, Inc. and Del
Mar Holdings, Inc. in exchange for 4,891,270 post-split shares of common stock
of the Company. Capsource, Del Mar Mortgage and Del Mar Holdings are related
entities by virtue of being under the common management and controlling
ownership of Michael Shustek, Chief Executive Officer and Chairman of the
Company.

         Upon the completion of the three acquisitions the Company changed its
name from "Sunderland Acquisition Corporation" to "Sunderland Corporation," and
effected a 5-for-3 stock split of its issued and outstanding common stock. On
October 15, 1999, the Company filed a Registration Statement on Form SB-2
covering 1,926,270 shares of common stock held by various stockholders.

         In the last quarter of 1999, the Company consummated an agreement to
acquire DM Financial Services, Inc., a broker-dealer, and DM Mortgage Advisors,
Inc., a mortgage business, in exchange for the Company"s common stock. Both
companies were wholly owned by Michael Shustek, who received 10,300 shares of
the Company's common stock for DM Financial Services, Inc., and 17,700 shares of
the Company's common stock for DM Mortgage Advisors, Inc. The acquisition of DM
Financial Services, Inc. is pending regulatory approval of both the National
Association of Securities Dealers and the Corporate Securities Division of the
State of Nevada. The acquisition of DM Mortgage Advisors, Inc. received
regulatory approval by the State of Arizona.

         The Company has filed a registration statement with the Securities and
Exchange Commission for the establishment of DM Mortgage Investors, LLC (the
"Fund"), which will offer and sell up to $100,000,000 of limited liability
company units. Capsource, the Company's wholly owned subsidiary, is the Manager
and sole member of the Fund.

         In January of 2000, the Company entered into a Letter of Intent to
acquire the assets of L.L. Bradford & Company, certified public accountants and
consultants for 800,000 shares of the


                                       3
<PAGE>

Company's common stock. L.L. Bradford is majority owned by Leilani D. Bradford
and Laince Bradford, the Company's Chief Financial Officer and a Director.

Background

         The Company originates loans, primarily for commercial and residential
developers, and obtains funds for these loans through private lenders. The
Company earns its principal revenues through (i) loan origination fees on the
loans it originates; and (ii) loan fees equal to the spread between the interest
rate collected from borrowers and the interest rate to be paid to investors.
Because of the speed of the Company's approval and funding of loans (typically
10-20 days). The Company earns a higher interest rate than that charged by
conventional lenders. This higher rate enables the Company to attract investors
willing to fund those loans.

         The Company is also an investor in selected real estate mortgage
assets.

The Mortgage Lending Business

         Mortgage lending refers to the origination and funding of loans secured
by real property. Loan origination involves the processing of a loan
application, which includes various documents and research, the approval of the
loan and the funding of the loan.

         The mortgage lending industry consists of large public and private
institutional lenders, such as banks, insurance companies, and savings and loan
associations, as well as numerous private and non-conventional lenders. To
obtain a loan borrowers need to establish (i) good character, as determined
through credit checks and references, (ii) capacity to repay the loan, as
determined by bank statements and sources of income, and (iii) adequate
collateral, as determined by property appraisal, environmental reports and other
documentation. A deficiency in any one area can result in rejection of the loan
application.

         The Company seeks to address the needs of borrowers unable or unwilling
to meet the more restrictive requirements of traditional lenders, and who
require quicker responses. When evaluating prospective borrowers, these lenders
typically focus on the value of collateral, which reduces the paperwork and time
needed to evaluate other factors.

Key Markets

         The Company's key market is borrowers who have an average of 35% to 40%
equity in real property but whose needs the Company believes are not being met
by traditional mortgage lenders. Commercial and residential real estate
developers are an important class of these borrowers.



                                       4
<PAGE>

         Typically, real estate developers depend upon, among other things, the
timely completion of a project to obtain a competitive advantage when selling
their properties. The Company has sought to attract real estate developers by
offering expedited loan processing, which generally provides quicker loan
approval and the funding of a loan between 3-4 months earlier than traditional
mortgage lenders. As a result, the Company has established a market niche as a
non-conventional mortgage lender. Currently, approximately 85% of the loans
originated by the Company service real estate developers. The remaining
approximately 15% of the Company's loans involve primarily (i) land loans (10%),
and (ii) bridge financing loans (5%).

         Sources Of Revenue

         The Company recognizes revenue primarily from loan origination fees,
loan servicing fees, and extension fees. Loan origination fees are recorded as
revenue at the close of escrow and reduced by direct loan origination costs.
Loan servicing fees are recorded as revenue when such services are rendered.
Servicing fees represent the interest spread between what is paid to the
investor and what the borrower pays for the use of the money. This can vary from
loan to loan. Extension fees are recorded as revenue at the extension grant
date.

         Loan Fees

         For each loan originated by the Company, the Company receives a loan
origination fee of up to 4% of the principal amount of the loan. A processing
fee of approximately $2,000 per loan is charged to document and package the
loan. Late charges are assessed for non-timely payments. The Company may also
receive additional fees for closing accounts upon termination of the loan (i.e.,
"EXIT FEES"). Lastly, the Company receives loan extension fees when extending
the term of any loan.

         Loan Fees -- Interest Spread

         Loan fees are amounts the Company retains that are the difference
between the interest rates charged to borrowers and the interest rates paid to
lenders. The Company typically receives interest rate spreads of 0.75% as loan
fees. For construction loans, which constitute the bulk of the Company's loans,
interest begins to accrue on the amounts contained in the initial draw schedule
as of the date of each draw, with the condition that interest will commence to
accrue on the entire principal of the loan committed in the fifth (5th) month
after the closing of the loan regardless of the draw schedule. If the actual
schedule of the borrower differs from the draw schedule, interest will still
begin to accrue on the dates and in the amounts contained in the draw schedule,
or sooner if the actual draw downs precede the scheduled dates. Therefore, if
the borrower experiences delays, the actual draw downs will occur later than the
initial draw schedule and the borrower will begin to pay interest on the draw
amounts even though actual disbursement has not been made.

         Loans

         The various stages in the development of land and the construction of
structures on it correspond to the different types of loans the Company
originates.



                                       5
<PAGE>

         Raw And Unimproved Land Loans

         The Company offers loans for the purchase or development of raw,
unimproved land. Generally, the Company determines whether to make these loans
based upon the 90-day quick sale value of the property and the borrower's actual
capital investment in the property. The "90-day quick sale value" is the highest
price for which the land could actually be sold within the next 90 days, the
approximate time of a foreclosure, as determined by local real estate brokers
and others. The value is generally the same as the cost of the land to the
borrower. Typically, the Company will lend less than 60% of the "90-day quick
sale value," and the Company usually requires that the borrower have invested in
the property actual capital expenditures of at least 25% of the property's
value.

         Raw Land Inventory Loan

         Raw land inventory loans represent property that is outside of current
urbanization, but is in the next area to be developed. This land contains no
improvements or infrastructure (i.e. roads, sewer hook-ups, power lines), but
infrastructure is within the municipal plans for expansion. For raw land
inventory, the Company also typically does a " 90-day quick sale valuation,"
upon which it will generally lend up to 60% of that value. Additionally, the
Company usually requires that the borrower have invested in the property actual
capital expenditures of at least 20% of the property's value.

         Development Property Loans

         A development property loan is a loan to complete the basic development
of the property, such as utility installation and curbing, just before
construction. Upon completion of development, the property can readily be sold.
Generally, the Company conducts an appraisal of the value of the property and
will make a loan of up to 60% of the approved value.

         Construction Loans

         A construction loan provides funds for the construction of one or more
structures on developed land. Typically, the Company conducts an appraisal of
the value of the property and proposed improvements and will lend up to 75% of
the appraised value. If the construction loan is for the construction of
multiple structures, such as a subdivision of homes, the Company will make its
loan based solely upon the construction of the model homes, which are used to
attract homebuyers. Upon satisfactory completion of the model homes, the Company
will provide an additional loan for the construction of the remainder of the
subdivision. The additional loan amount will depend upon the pre-sales activity
for the homes to be built. If the developer has signed a contract for the sale
of a home, then the Company will generally lend up to 100% of the cost of
construction to build that home. The loan amount for unsold houses varies and
can exceed the 75% loan to value ratio of the model homes.

         Bridge Loans



                                       6
<PAGE>

         A bridge loan provides funds for commercial borrowers to make
improvements to the property needed to increase the net operating income of the
property so that it can qualify for institutional refinancing. The Company will
value the existing property and generally loan up to 75% of that value.

         Brokered Loans; Home Mortgage Loans

         In addition to originating loans, the Company acts as a broker for
permanent residential loans. After completing a construction loan for a
residential development, the Company typically offers the homebuyers an
opportunity to obtain a home mortgage loan through the Company. In that case,
because of the low interest rate involved in individual home mortgages, the
Company will usually arrange the loan with the borrower and place the loan with
another lender. Loans brokered by the Company typically meet the specific
underwriting standards of the Government National Mortgage Association (Ginnie
Mae), Federal National Mortgage Association (Fannie Mae), and other such
entities, which make these loans readily resaleable in the secondary market.
During 1999 the Company did not broker any of these types of loans.

         Operations

         Loan Processing

         Upon receipt of a loan request, the Company commences the loan
application and approval process. The Company reviews the borrower's financial
condition, the purpose of the loan and the real property involved. This
information may include, among other things, credit reports, environmental
reports and property appraisals. All loans originated by the Company are first
reviewed and approved by the loan committee to confirm that all requirements
have been satisfied, although the loan committee may waive certain loan
requirements based upon its overall review of the loan. The loan committee
consists of three or more officers or loan managers of the Company authorized to
approve loans. The loan committee members have substantial experience in the
real estate and mortgage lending industries.

         Loan Funding

Currently, the Company obtains funds for its loans primarily through investors
providing funds by investing in all or portions of the promissory notes secured
by deeds of trust of the borrowers. Investors are comprised primarily of
individuals. The investors receive monthly interest payments from the promissory
notes. The deeds of trust grant a security interest in the real property that
serves as collateral for the loan. Because of the low loan-to-value ratio
required by the Company and the borrower's equity in the properties, the secured
notes offer substantial protection for the investment while yielding a
significant return.

         The Company filed a registration statement with the Securities and
Exchange Commission for the establishment of DM Mortgage Investors, LLC (the
"Fund"), which will offer and sell up to $100,000,000 of limited liability
company units. Capsource, the Company's wholly owned subsidiary is the manager
and sole member of the Fund.

         Competition



                                       7
<PAGE>

         Competition in the mortgage lending industry is intense. Many
institutional and other financial lenders are engaged in originating mortgage
loans. The Company considers its direct competitors to be the providers of
non-conventional mortgage loans, that is, lenders who offer short-term,
equity-based loans on an expedited basis for slightly higher fees and rates than
those charged by conventional lenders. To a lesser extent, the Company also
competes with conventional mortgage lenders, such as banks and other financial
institutions that offer conventional mortgage loans. Competition in the
Company's market niche depends upon a number of factors, including price and
interest rates of the loan, speed of loan processing, cost of capital,
reliability, quality of service and support services.

         The Company's principal competitors in its market niche as a
non-conventional mortgage lender in the Nevada area include: Consolidated
Mortgage Corp., and Interstate Mortgage Corp. Funding, both of which engage in
originating the same types of loans as those currently made by the Company. In
the broader market, the Company's competitors consist of conventional mortgage
lenders, which include Bank of America, Bank One, Wells Fargo, Residential
Funding, First Security Bank, United Bank of Texas. Many of the companies
against which the Company competes have substantially greater financial,
technical and other resources than the Company.

         Regulation

         The operations of the Company are conducted through its wholly-owned
operating subsidiary, Capsource. These operations are subject to extensive
regulation by federal, state and local laws and governmental authorities.
Capsource conducts its real estate mortgage business under a "PRIVILEGED"
license issued by the Nevada Division of Financial Institutions (the
"Division"). Under Nevada Revised Statutes ("NRS") Sections 645B.010 through
645B.230, the Division has broad discretionary authority over Capsource's
activities, including the authority to conduct periodic regulatory audits of all
aspects of Capsource's operations.

         Del Mar Mortgage, Inc. and Michael V. Shustek were subject to
disciplinary action by the Division in the past which action was subsequently
vacated after an audit of Del Mar Mortgage Inc.'s operations.

         The Company is required to comply with the Equal Credit Opportunity Act
of 1974, (which prohibits creditors from discriminating against loan applicants
on the basis of race, color, sex, age or marital status), and the Fair Credit
Reporting Act of 1970 (which requires lenders to supply applicants with the name
and address of the reporting agency where the applicant is denied credit). The
Company is also subject to various other federal and state securities laws
regulating the issuance and sale of securities, as well as the Employee
Retirement Income Security Act of 1974, and other federal, state and local laws.




                                       8
<PAGE>

         Because the Company's business is highly regulated, the laws, rules and
regulations applicable to the Company are subject to regular modification and
change. There can be no assurance that laws, rules or regulations will not be
adopted in the future that could make compliance much more difficult or
expensive, restrict the Company's ability to originate, service or broker loans,
further limit or restrict the amount of commissions, interest and other charges
earned on loans originated or brokered by the Company, or otherwise adversely
affect the business or prospects of the Company.

         Employees

         As of December 31, 1999, the Company employed 20 personnel, of whom 18
were full time and 2 were part-time. Of these employees, 4 were employed in
underwriting and 3 performed general and administrative functions. The Company
has entered into employment agreements with senior managers to fill the
positions of President, Chief Executive Officer and Vice-President of Regulatory
Affairs. No employees are covered by a collective bargaining agreement. The
Company considers its relationship with its employees to be good.

Item 2. DESCRIPTION OF PROPERTY

         The Company maintains its executive offices at 2901 El Camino Ave.,
Suite 206, Las Vegas, Nevada which consist of about 7,000 square feet of office
space. These offices contain the Company's marketing, loan processing and
administrative personnel. The current lease expires in March, 2004.


Item 3. LEGAL PROCEEDINGS

         Del Mar Mortgage, Inc. is involved in several legal actions arising in
the ordinary course of its business. Del Mar Mortgage, Inc. is vigorously
defending itself through legal counsel against these legal actions. In one case,
which is still in the discovery phase, the adverse party has claimed damages in
excess of $790,000. Michael Shustek, the Company's Chairman and sole stockholder
of Del Mar Mortgage, Inc., has agreed to indemnify Del Mar Mortgage, Inc.
against any loss that may be incurred. Consequently, Del Mar Mortgage, Inc. does
not believe that an adverse determination in that action would have a material
adverse effect on its liquidity or financial statements. As a result of the
asset acquisition, the Company may be determined to be a successor in interest
to Del Mar Mortgage, Inc. in these legal actions.


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

         No matters were submitted to a vote or consent of the shareholders
during the fourth quarter of 1999.


                                       9
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                                    PART II


Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         (a) Market Information: Trading in the Company's common stock commenced
on December 10, 1999 under the symbol "DLMA" on the OTC Bulletin Board which is
maintained by Nasdaq. The Company has applied for listing on the Nasdaq Small
Cap Market.

         The table below lists the high and low bid prices for the common stock
as reported by the National Quotation Bureau for the Company's last two fiscal
years. Bid prices represent prices between broker-dealers and do not include
retail mark-ups and markdowns or any commission to broker-dealers. In addition,
these prices do not necessarily reflect actual transactions.

                                                          OTC Bulletin Board
                                                       -------------------------
                                                       US$ High          US$ Low
                                                       --------          -------
          2000
          ----
          First Quarter through March 15, 2000          7.63              6.13

          1999
          ----

          4th Quarter                                   6.38              5.38



         (b) Holders

         At February 28, 2000, there were approximately 300 stockholders of
record of the Company's common stock.

         (c) Dividends

         The Company's policy is to retain all earnings, if any are realized,
for the development and growth of its business. The Company has never declared
or paid cash dividends on its common shares and does not anticipate paying cash
dividends in the foreseeable future. Any determination to pay dividends will be
at the discretion of the Company's Board of Directors and will depend upon the
Company's financial condition, results of operations, capital requirements,
limitations contained in loan agreements and such other factors as the Board of
Directors deems relevant.




                                       10
<PAGE>

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

         This Annual Report on Form 10-KSB contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. This
Act provides a "safe harbor" for forward-looking statements to encourage
companies to provide prospective information about themselves and provide
meaningful cautionary statements identifying important factors that could cause
actual results to differ from the projected results. All statements other than
statements of historical fact made in this Annual Report on Form 10-KSB are
forward looking. In particular, the statements regarding industry prospects and
future results of operations or financial position are forward-looking
statements. Forward-looking statements reflect management's current expectations
and are inherently uncertain. The Company's actual results may differ
significantly from management's expectations.

         The following financial review and analysis is of the financial
condition and results of operations of the Company, for the years ended December
31, 1999 and 1998. This information should be read in conjunction with the
Company's Consolidated Financial Statements and accompanying notes and other
detailed information regarding the Company appearing elsewhere in this Form
10-KSB. All operations of the Company are conducted through its wholly owned
subsidiary, Capsource, Inc.

Overview

         On April 27, 1999, the Company, then a non-operating public company
with nominal net assets, acquired certain assets and assumed certain liabilities
representing the operations of Del Mar Mortgage, Inc. and Del Mar Holdings, Inc.
(the "Del Mar Entities") in exchange for 4,891,270 shares of the Company common
stock (after the 5-for-3 stock split). The combination of the Del Mar Entities
has been accounted for in a manner similar to a pooling of interest, as the
companies were under common control. The Company (after the 5-for-3 stock split)
concurrently acquired 100% of the outstanding common stock of Capsource, Inc. in
exchange for 20,000 shares of Company common stock.

         Under generally accepted accounting principles, the acquisition of the
Del Mar Entities is considered to be a capital transaction in substance, rather
than a business combination. That is, the acquisition is equivalent to the
issuance of stock by the Del Mar Entities for the net monetary assets of the
Company, accompanied by a recapitalization, and is accounted for as a change in
capital structure. Accordingly, the accounting for the acquisition is identical
to that resulting from a reverse acquisition, except that no goodwill is
recorded. Under reverse takeover accounting, the post reverse-acquisition
comparative historical financial statements of the "legal acquirer" (the
Company), are those of the "legal acquiree" (Del Mar Entities) (i.e. the
accounting acquirer).

         Accordingly, the consolidated financial statements of the Company as of
December 31, 1999, and for the years ended December 31, 1999 and 1998, are the
combined historical financial statements of Del Mar Mortgage, Inc. and Del Mar
Holdings, Inc. The assets not acquired, net of the liabilities not assumed, have
been accounted for as distributions to the stockholder of Del Mar Mortgage, Inc.
and Del Mar Holdings, Inc., Michael Shustek, Chairman and Chief Executive
Officer of the Company.



                                       11
<PAGE>

         The business combination with Capsource has been accounted for as a
purchase business combination. The cost of Capsource is based upon the fair
value of the 20,000 common shares issued to the Capsource shareholder, which was
$12,360.

RESULTS OF OPERATIONS:

COMPARISON OF YEAR ENDED DECEMBER 31, 1999 AND YEAR ENDED DECEMBER 31, 1998

         The historical operations of the Company for the year ended December
31, 1999, and 1998 are analyzed as follows:

         Revenue. Revenue is primarily comprised of loan origination and
servicing fees, and interest income. The Company reported total revenues of
$11.9 million in 1999, an increase from $7.2 million in 1998. The increase in
revenue was primarily due to increases in overall loan volume by approximately
$104 million and in the portfolio of loans serviced for others by approximately
$64 million compared to 1998. The Company had approximately 102 and 79 loans as
of December 31, 1999, and 1998, respectively. Repeat borrowers accounted for
over 25% of loans originated during the year ended December 31, 1999.

         Sales and Marketing Expenses. Sales and marketing expenses primarily
consist of advertising, and commissions. Sales and marketing expenses of $1.7
million for the year ended December 31, 1999, increased from $500,000 in 1998.
The 1999 increase is primarily due to an overall increase in commissions paid as
a result of increased loan volume as discussed above.

         General and Administrative Expenses. General and administrative
expenses primarily consist of payroll and related expenses, transition fees,
professional fees, and general corporate expenses. General and administrative
expenses of $6 million for the year ended December 31, 1999, increased from $3.8
million in 1998. The 1999 increase in general and administrative expenses was
primarily due to transitions fees of about $2.6 million in 1999, while no such
fees were incurred in 1998. On April 27, 1999, the Company entered into a
non-renewable transition agreement with Del Mar Mortgage, Inc., a company wholly
owned by the Company's majority stockholder. The transition agreement requires
the Company to pay Del Mar Mortgage, Inc. 25% of loan origination fees earned
from April 27, 1999, through October 26, 1999, and 12.5% of such fees from
October 27, 1999 through April 26, 2000. The Agreement also requires the Company
to remit to Del Mar Mortgage, Inc. all future loan servicing and extension fees
recognized on loans originated by the Company prior to April 27, 1999. The
Agreement terminates on April 26, 2000.

         Income before Income Taxes. As a result of the foregoing factors,
income before income taxes of $3.9 million for 1999, increased from $2.7 million
in 1998.




                                       12
<PAGE>


         Pro Form Net Income. Prior to the recapitalization of the Company
(April 27, 1999), the earnings of Del Mar Mortgage, Inc., which are included in
the Consolidated Statements of Income, were taxed to the stockholder of Del Mar
Mortgage, Inc. pursuant to an election to be taxed as an S corporation. The pro
forma information reflects a provision for income taxes as if Del Mar Mortgage,
Inc. had been a C corporation for the years ended December 31, 1999 and 1998
using an assumed effective tax rate of 34%. Pro forma net income per share has
been computed by dividing pro forma net income by the weighted average shares
outstanding.


Liquidity and Capital Resources

         Liquidity is a measure of a company's ability to meet potential cash
requirements, including ongoing commitments to fund lending activities and for
general purposes. Cash for originating loans and general operating expenses is
primarily obtained through cash flows from operations and private investors.

         At December 31, 1999, the Company's principal sources of liquidity
consisted of $1.2 million of cash and marketable securities, and cash flows from
$5.5 million of investments in mortgage loans on real estate with maturities of
one year or less. As of that date, the Company's principal commitments consisted
of a line of credit of $2.0 million, and income taxes payable of $700,000.

         During 1999, cash flows from operating activities of the Company
provided $4.0 million compared to $2.6 million provided during 1998. This
increase was primarily due to the increase in income before provision for income
taxes. Cash used in investing activities approximated $3.5 million during 1999
compared to $2.7 million in 1998. Investing activities during 1999 consisted
primarily of purchases of mortgage loans in the amount of $3.1 million. Cash
provided by financing activities approximated $168,000 in 1999 compared to cash
used of approximately $144,000 in 1998. Financing activities during 1999
consisted primarily of an advance on a line of credit of $2.0 million and
distribution to stockholder of $2.1 million. Prior to the recapitalization


                                       13
<PAGE>

of the Company on April 27, 1999, the net income of Del Mar Mortgage, Inc.,
which is included in the Consolidated Statements of Income, were taxed to the
shareholder of Del Mar Mortgage, Inc. Accordingly, the distribution to
stockholder approximating $2.1 million relates to net income of Del Mar
Mortgage, Inc. from January 1, 1999 through April 26, 1999.

         The Company relies upon the cash flow from operations to provide for
its capital requirements. Management believes that cash generated from
operations, together with cash flows and investments in mortgage loans on real
estate on hand at December 31, 1999, will be sufficient to provide for its
capital requirements for at least the next 12 months. From time to time, the
Company considers potential acquisitions of related businesses or assets, which
if undertaken could have a material effect upon the Company's results of
operations and liquidity position. The Company may seek additional equity
financing in the fourth quarter of 2000 through an offering of its common stock
in the range of $15 million to $20 million. Further, the Company will be
actively seeking initial credit lines or other arrangements for additional
financing. There can be no assurance that the Company will be able to complete a
secondary offering or obtain additional financing.


Impact Of Inflation and Changing Prices

         The Consolidated Financial Statements and related data presented herein
have been prepared in accordance with generally accepted accounting principles,
which require the measurement of financial position and operating results in
terms of historical dollars (except for securities that are carried at market
value), without considering changes in the relative purchasing power of money
over time due to inflation. Unlike most industrial companies, substantially all
of the assets and liabilities of the Company are monetary in nature. As a
result, interest rates have a more significant effect on the Company's
performance than the effects of general levels of inflation. Interest rates do
not necessarily move in the same direction or with the same magnitude as the
changes in prices of goods and services.


Item 7. FINANCIAL STATEMENTS:

         The Company's consolidated financial statements as of December 31, 1999
and for the years ended December 31, 1999 and 1998 begin on page F-1.





                                       14
<PAGE>

                     SUNDERLAND CORPORATION AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


         REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS................  F-1

         CONSOLIDATED BALANCE SHEET........................................  F-2

         CONSOLIDATED STATEMENTS OF INCOME.................................  F-3

         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY...................  F-4

         CONSOLIDATED STATEMENTS OF CASH FLOWS.............................  F-5

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS........................  F-6

         REPORT OF HANSEN, BARNETT AND MAXWELL ON
           DEL MAR HOLDINGS, INC........................................... F-20

         REPORT OF HANSEN, BARNETT AND MAXWELL ON
           DEL MAR MORTGAGE, INC........................................... F-21



                                       15
<PAGE>

Report of Independent Certified Public Accountants


Board of Directors
Sunderland Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheet of Sunderland
Corporation and Subsidiaries (formed as a result of the combination of Del Mar
Mortgage, Inc. and Del Mar Holdings, Inc.) as of December 31, 1999 and the
related consolidated statements of income, stockholders' equity, and cash flows
for the year then ended. The consolidated financial statements give retroactive
effect to the merger of Del Mar Mortgage, Inc. and Del Mar Holdings, Inc. on
April 27, 1999, which has been accounted in a manner similar to the pooling of
interests method as described in the notes to the consolidated financial
statements. These consolidated financial statements are the responsibility of
the management of Sunderland Corporation. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

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

The financial statements of Del Mar Mortgage, Inc. and Del Mar Holdings, Inc.
(not separately presented herein) as of and for the year ended December 31,
1998, were audited by other auditors whose reports dated April 9, 1999 and May
21, 1999, respectively, expressed an unqualified opinion on those statements. We
also audited the combination of the accompanying consolidated statements of
income, stockholders' equity, and cash flows for the year ended December 31,
1998, after restatement for the 1999 pooling of interests; in our opinion, such
consolidated statements have been properly combined on the basis described in
Note A of the notes to the consolidated financial statements.


/S/ GRANT THORNTON LLP


Reno, Nevada
February 11, 2000

                                      F-1
<PAGE>

                    Sunderland Corporation and Subsidiaries
                           CONSOLIDATED BALANCE SHEET
                                December 31, 1999


                                     ASSETS

Cash                                                                 $ 1,085,753
Accounts receivable                                                      902,622
Notes receivable                                                         323,000
Investments in marketable securities                                     114,949
Investment in real estate held for sale                                1,293,194
Investments in mortgage loans on real estate                           5,516,244
Deferred tax asset                                                        27,542
Other assets                                                             115,870
Property and equipment, net                                               35,005
                                                                   -------------
         Total assets                                                $ 9,414,179
                                                                   =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                                       $ 232,935
Accrued expenses                                                         197,751
Line of credit                                                         1,980,000
Income taxes payable                                                     736,875
Due to related party                                                     244,641
Note payable                                                           1,290,000
                                                                    ------------
         Total liabilities                                             4,682,202
                                                                    ------------
Commitments and contingencies                                                 -
                                                                    ------------

Stockholders' equity
     Preferred stock, $.0001 par value;
       20 million shares authorized;
       no shares issued                                                       -
     Common stock, $.0001 par value;
       100 million shares authorized;
        6,161,270 shares issued and outstanding                              616
     Additional paid-in capital                                        1,642,490
     Retained earnings                                                 3,088,871
                                                                    ------------
          Total stockholders' equity                                   4,731,977
                                                                    ------------
          Total liabilities and stockholders' equity                 $ 9,414,179
                                                                    ============


         The accompanying notes are an integral part of this statement.

                     Sunderland Corporation and subsidiaries

                       CONSOLIDATED STATEMENTS OF INCOME

                            Year ended December 31,


                                                        1999                1998
                                                       ------              -----
Revenues
     Loan origination and related fees              $11,237,208       $6,517,057
     Interest income                                    605,468          646,698
     Other income                                        19,319           24,199
                                                     ----------        ---------

          Total revenues                             11,861,995        7,187,954
                                                     ----------        ---------
Expenses
     Sales and marketing expenses                     1,749,948          536,077
     General and administrative expenses              6,049,323        3,820,273
     Interest expenses                                  142,489          115,956
                                                     ----------        ---------

          Total expenses                              7,941,760        4,472,306
                                                     ----------        ---------

          Income before provision for income taxes    3,920,235        2,715,648

Provision for income taxes                              959,333               -
                                                     ----------        ---------


          NET INCOME                                 $2,960,902       $2,715,648
                                                     ==========       ==========

Pro forma information (unaudited) (Note A):
     Historical income before income taxes           $3,920,235       $2,715,648

     Pro forma income taxes                           1,341,202          923,320
                                                     ----------       ----------
     Pro forma net income                            $2,579,033       $1,792,328
                                                     ==========       ==========

     Pro forma net income per share - basic
      and diluted                                         $0.42            $0.38
                                                     ==========       ==========

     Weighted average shares outstanding              6,154,914        4,730,284
                                                     ==========       ==========


         The accompanying notes are an integral part of this statement.



<PAGE>



<TABLE>
<CAPTION>

                    Sunderland Corporation and Subsidiaries

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                      Year ended December 31, 1999 and 1998



                                             Preferred Stock         Common Stock            Additional     Receivable
                                              ---------------   --------------------------      Paid-in         From
                                              Shares   Amount     Shares         Amount         Capital      Stockholder
                                              ------   ------   -----------    -----------    -----------    -----------
<S>                                           <C>      <C>      <C>            <C>            <C>            <C>
Balance at January 1, 1998                        --   $   --     4,477,870    $       448    $   612,323    $        --

Issuance of common stock for cash, January
through August 1998, $5.35 per share              --       --       413,400             41      2,211,025             --

Distribution of receivable to a
stockholder                                       --       --            --             --     (2,101,087)            --

Distribution of mortgage loans to a
Stockholder                                       --       --            --             --       (362,762)            --

Cash advances to stockholder                      --       --            --             --             --       (535,646)

Net income                                        --       --            --             --      2,715,648             --

Balance at December 31, 1998                      --       --     4,891,270            489      3,075,147       (535,646)

Cancellation of $0.0001 common stock in
Connection with recapitalization                  --       --      (100,000)           (10)            --             --

<CAPTION>

                                                Retained
                                                Earnings        Total
                                               -----------   -----------
<S>                                            <C>           <C>
Balance at January 1, 1998                     $   127,969   $   740,740

Issuance of common stock for cash, January
through August 1998, $5.35 per share                    --     2,211,066

Distribution of receivable to a
stockholder                                             --    (2,101,087)

Distribution of mortgage loans to a
Stockholder                                             --      (362,762)

Cash advances to stockholder                            --      (535,646)

Net income                                              --     2,715,648

Balance at December 31, 1998                       127,969     2,667,959

Cancellation of $0.0001 common stock in
Connection with recapitalization                        --           (10)

</TABLE>



                                       F-2
<PAGE>

                    Sunderland Corporation and Subsidiaries

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                     year ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                              Preferred Stock         Common Stock            Additional     Receivable
                                              ---------------   --------------------------      Paid-in         From
                                              Shares   Amount     Shares         Amount         Capital      Stockholder
                                              ------   ------   -----------    -----------    -----------    -----------
<S>                                           <C>      <C>      <C>            <C>            <C>            <C>
Issuance of $0.0001 common stock in
Connection with recapitalization                  --       --     1,350,000            135            291             --

Distribution of assets, net of liabilities,
to Del Mar Mortgage, Inc.                         --       --            --             --     (1,152,046)            --

Distribution of assets, net of liabilities,
to Del Mar Holdings, Inc.                         --       --            --             --       (643,260)            --

Acquisition of Capsource                          --       --        20,000              2         12,358             --

Contribution by stockholder through
relief of note payable                            --       --            --             --        350,000             --

Payments received on receivable from
Stockholder                                       --       --            --             --             --        535,646

Net income                                        --       --            --             --             --             --
                                              ------   ------   -----------    -----------    -----------    -----------
Balance at December 31, 1999                      --   $   --     6,161,270    $       616    $ 1,642,490    $        --
                                              ======   ======   ===========    ===========    ===========    ===========

<CAPTION>

                                               Retained
                                               Earnings        Total
                                              -----------   -----------
<S>                                           <C>           <C>
Issuance of $0.0001 common stock in
Connection with recapitalization                       --           426

Distribution of assets, net of liabilities,
to Del Mar Mortgage, Inc.                              --    (1,152,046)

Distribution of assets, net of liabilities,
to Del Mar Holdings, Inc.                              --      (643,260)

Acquisition of Capsource                               --        12,360

Contribution by stockholder through
relief of note payable                                 --       350,000

Payments received on receivable from
Stockholder                                            --       535,646

Net income                                      2,960,902     2,960,902
                                              -----------   -----------
Balance at December 31, 1999                  $ 3,088,871   $ 4,731,977
                                              ===========   ===========
</TABLE>

                                      F-3

<PAGE>


                     Sunderland Corporation and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,



<TABLE>
<CAPTION>

                                                               1999                 1998
                                                              ------               ------
<S>                                                       <C>                  <C>

Cash flow from operating activites:
   Net income                                              $2,960,902          $  2,715,648
   Adjustments to reconcile net income
    to net cash provided by operating
    activities:
   Depreciation                                                 6,806                12,854
   Interest and loan extension fee added
   to note payable Changes in operating
   assets and liabilities:
       Accounts receivable                                   (501,096)             (308,954)
       Defferred tax asset                                    (27,542)                    -
       Other assets                                            (5,025)               (3,038)
       Due from related party                                (292,033)                  983
       Accounts payable and accrued expenses                  764,594               216,417
       Due to related party                                   332,270              (159,404)
       Income taxes payable                                   736,875                     -
                                                         ------------          ------------
         Net cash provided by operating activities          3,975,751             2,574,506
                                                         ------------          ------------

Cash flows from investing activities:
   Purchase of property and equipment                         (19,507)              (18,562)
   Purchase of investment in note receivable                 (323,000)
   Purchase of investment  in marketable securities          (114,949)                    -
   Purchase of real estate held for sale                       (3,194)                    -
   Purchase of investments in mortgage loans               (3,055,520)            (2,643,491)
                                                        -------------          -------------
         Net cash used in investing activities             (3,516,170)            (2,662,053)
                                                        -------------          -------------
Cash flows from financing activities:
   Advance on line of credit                                1,980,000                      -
   Advances to related party                                        -             (1,636,087)
   Advances to stockholder                                          -               (535,646)
   Proceeds on short-term note                                      -                100,000
   Payments on short-term note                               (100,000)              (280,000)
   Distribution to stockholder                             (2,132,305)                     -
   Payments received from note receivable
    from stockholder                                          535,646                      -
   Payments on capital lease obligations                            -                 (3,763)
   Proceeds from issuance of common stock                           -              2,211,066
   Deferred offering costs                                   (115,100)                      -
                                                        -------------          -------------
         Net cash provided by (used in) financing
            activities                                        168,241                144,430
                                                        -------------          --------------
         NET INCREASE (DECREASE) IN CASH                      627,822               (231,977)

Cash at beginning of year                                     457,931                689,908
                                                        -------------          --------------
Cash at end of year                                     $   1,085,753          $      457,931
                                                        =============          ==============
Supplemental cash flow information:
  Cash paid for Federal income taxes                    $     250,000          $        1,513
                                                        =============          ==============
  Cash paid for interest                                $     128,783          $       19,447
                                                        =============          ==============
Noncash investing and financing activities:
  Investment in real estate held for sale               $   1,290,000          $            -
                                                        =============          ===============

  Contribution by stockholder through relief
    of note payable                                     $     350,000          $             -
                                                        =============          ===============
  Distribution of liabilities, net of assets assumed
    to stockholder of Del Mar Mortgage, Inc. and Del
    Mar Holdings, Inc.                                  $     336,999          $             -

                                                        =============          ===============

  Distribution of receivable to stockholder             $           -          $     2,101,087
                                                        =============          ===============

  Distribution of mortgage loans to stockholder         $           -          $       362,762
                                                        =============          ===============
</TABLE>

         The accompanying notes are an integral part of this statement.






<PAGE>

                     Sunderland Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 1999 and 1998



Note A - Organization and Summary of Significant Accounting Policies

      Organization

      Sunderland Corporation ("Sunderland" or the "Company"), was incorporated
      in the state of Delaware on June 2, 1998. The Company conducts its
      operations primarily through Capsource, Inc. (Capsource), its wholly owned
      subsidiary. Capsource operates as a mortgage company licensed in the state
      of Nevada. Capsource is engaged in the origination, arrangement and
      secondary purchase and sale of loans secured by real property. The
      Company's primary operations consist of arranging for investor funding of
      mortgage loans for the construction of commercial and residential projects
      in southern Nevada. The Company also services such loans and operates in
      one business segment.

      On April 27, 1999, Sunderland, a non-operating public company with nominal
      net assets, acquired certain assets and assumed certain liabilities
      representing the operations of Del Mar Mortgage, Inc. and Del Mar
      Holdings, Inc. (the "Del Mar Entities") in exchange for 4,891,270 shares
      of Sunderland common stock (post 5-for-3 stock split). The combination of
      the Del Mar Entities has been accounted for in a manner similar to a
      pooling of interests, as the companies were under common control.
      Sunderland concurrently acquired 100% of the outstanding common stock of
      Capsource in exchange for 20,000 shares of Sunderland common stock.

      Under generally accepted accounting principles, the acquisition of the Del
      Mar Entities is considered to be a capital transaction in substance,
      rather than a business combination. That is, the acquisition is equivalent
      to the issuance of stock by the Del Mar Entities for the net monetary
      assets of Sunderland, accompanied by a recapitalization, and is accounted
      for as a change in capital structure. Accordingly, the accounting for the
      acquisition is identical to that resulting from a reverse acquisition,
      except that no goodwill is recorded. The post reverse-acquisition
      comparative historical financial statements of the "legal acquirer"
      (Sunderland), are those of the "legal acquiree" (Del Mar Entities) (i.e.
      the accounting acquirer).

      Accordingly, the consolidated financial statements of Sunderland as of
      December 31, 1999, and for the years ended December 31, 1999 and 1998, are
      the combined historical financial statements of Del Mar Mortgage, Inc. and
      Del Mar Holdings, Inc. The assets not acquired, net of the liabilities not
      assumed, have been accounted for as distributions to Del Mar Mortgage,
      Inc. and Del Mar Holdings, Inc.'s stockholders.



                                      F-4
<PAGE>

      The business combination with Capsource has been accounted for as a
      purchase business combination. The cost of Capsource is based upon the
      fair value of the 20,000 common shares issued to the Capsource
      shareholder, which was $12,360.

                                       F-5

<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998



Note A - Organization and Summary of Significant Accounting Policies
                                                         - Continued

                  Principles of Consolidation

      The consolidated financial statements include the accounts of the Company
      and it's wholly-owned subsidiaries. All significant inter-company
      transactions and balances have been eliminated in consolidation.


      Concentrations

      Substantially all of the Company's operations are derived from Southern
      Nevada. Consequently, the Company's results of operations and financial
      condition are affected by general trends in the Southern Nevada economy
      and its commercial and residential real estate market.



      The Company's mortgage loans will require the borrower to make a balloon
      payment of the principal at maturity. To the extent that a borrower has an
      obligation to pay a mortgage loan in a lump sum payment, its ability to
      satisfy this obligation may be dependent upon its ability to refinance or
      raise a substantial amount of cash. An increase in interest rates over the
      mortgage rate applicable at origination of the loan may have an adverse
      effect on the borrower's ability to refinance.



      Financial instruments, which potentially subject the Company to credit
      risk, consist primarily of cash in bank. The Company maintains its cash in
      bank deposit accounts, which at times may exceed Federally insured limits.


      Use of Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.




                                      F-6
<PAGE>

      Revenue Recognition

      The Company recognizes revenue primarily from loan origination fees, loan
      servicing fees, and extension fees. Loan origination fees are recorded as
      revenue at the close of escrow and reduced by direct loan origination
      costs. Loan servicing fees are recorded as revenue when such services are
      rendered. Servicing fees represent the interest spread between what is
      paid to the investor and what the borrower pays for the use of the money.
      This can vary from loan to loan. Extension fees are recorded as revenue at
      the extension grant date.

      Loan Origination Fees

      Loan origination fees related to investments in mortgage loans on real
      estate are amortized principally by the effective interest method over the
      term of the related obligation.




                                      F-7
<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998



Note A - Organization and Summary of Significant Accounting Policies
                                                         - Continued

      INVESTMENTS IN MARKETABLE SECURITIES

      Investments in equity securities consist of common stock. The securities
      are stated at market value as determined by the most recently traded price
      of each security at the balance sheet date. All marketable securities are
      classified as available-for-sale securities under the provisions of
      Statement of Financial Accounting Standards No. 115, "Accounting for
      Certain Investments in Debt and Equity Securities."

      Management determines the appropriate classification of its investments in
      marketable securities at the time of purchase and reevaluates such
      determination at each balance sheet date. Securities that are bought and
      held principally for the purpose of selling them in the near term are
      classified as trading securities and unrealized holding gains and losses
      are included in earnings. Debt securities for which the Company does not
      have the intent or ability to hold to maturity and equity securities are
      classified as available-for-sale. Available-for-sale securities are
      carried at fair value, with the unrealized gains and losses, net of tax,
      reported in other comprehensive income. The net unrealized gains and
      losses were immaterial for the years ended December 31, 1999 and 1998. The
      cost of investments sold is determined on the specific identification or
      the first-in, first-out method.

      Property and Equipment

      Property and equipment are stated at cost. Depreciation is provided
      principally on the straight-line method over the estimated useful lives of
      the assets of 5 and 7 years. The cost of repairs and maintenance is
      charged to expense as incurred.

      Comprehensive Income

      The Company has no material components of other comprehensive income, and
      accordingly, comprehensive income is the same as net income for the
      period.

      Advertising Costs

      Advertising costs are expensed as incurred and amounted to $339,000 and
      $493,000 for the years ended December 31, 1999 and 1998, respectively.

      Income Taxes

      The liability method is used to account for income taxes. Under this
      method, deferred income tax assets and liabilities are determined based on
      differences between the financial reporting


                                      F-8
<PAGE>

      and tax bases of assets and liabilities and are measured using the enacted
      tax rates and laws that are scheduled to be in effect when the differences
      are expected to reverse. Prior to the recapitalization of the Company
      (April 27, 1999), the earnings of Del Mar Mortgage, Inc., which are
      included in the Consolidated Statements of Income, were taxed to the
      stockholder of Del Mar Mortgage, Inc. pursuant to an election to be taxed
      as an S corporation.




                                      F-9
<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998

Note A - Organization and Summary of Significant Accounting Policies
                                                         - Continued

      Pro Forma Financial Information (Unaudited)

      The pro forma information reflects a provision for income taxes as if Del
      Mar Mortgage, Inc. had been a C corporation for the years ended December
      31, 1999 and 1998 using an assumed effective tax rate of 34%. Pro forma
      net income per share has been computed by dividing pro forma net income by
      the weighted average shares outstanding.

      Impairment of Long-Lived Assets to be Disposed

      The Company continually monitors events and changes in circumstances that
      could indicate carrying amounts of long-lived assets may not be
      recoverable. When such events or changes in circumstances are present, the
      Company assesses the recoverability of long-lived assets by determining
      whether the carrying value of such assets will be recovered through
      undiscounted expected future cash flows. If the total of the future cash
      flows is less than the carrying amount of those assets, the Company
      recognizes an impairment loss based on the excess of the carrying amount
      over the fair value of the assets. Assets to be disposed of are reported
      at the lower of the carrying amount or the fair value less costs to sell.

      Earnings Per Share

      Basic and diluted earnings per share is based on the weighted-average
      number of outstanding common shares during the applicable period.





Note B - Accounts Receivable

      The Company services loans which have been arranged for the investor
      parties through a servicing agreement. The servicing agreement stipulates
      that all extension fees charged on behalf of the investors shall be
      retained by the Company as part of the loan servicing fees. Accounts
      receivable represent extension and loan origination fees earned but not
      yet received.


                                      F-10
<PAGE>


Note C - Investment in Real Estate Held for Sale

      The Company has an investment in real estate held for sale totaling
      $1,293,194 at December 31, 1999. The investment in real estate held for
      sale is recorded at the lower of historical cost or net realizable value
      (see Note F).



                                      F-11

<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998

Note D - Investments in Mortgage Loans on Real Estate

      The Company invests in mortgage loans. The mortgage loans are secured by
      first trust deeds on real estate. These loans have maturities of one year
      or less with interest rates ranging from 12% to 14% payable monthly, with
      principal due at maturity. Management believes the underlying value of the
      assets securing the mortgage loans was sufficient at December 31, 1999 to
      realize their carrying value. Accordingly, no allowance for loan losses
      has been established.


NOTE E - PROPERTY AND EQUIPMENT


      Property and equipment consists of the following at December 31, 1999:

        Furniture and equipment                         $ 52,429
        Less:  Accumulated depreciation                  (17,424)
                                                     -------------

                                                        $ 35,005
                                                     =============


NOTE F - NOTE PAYABLE


      In 1999, the Company foreclosed on real estate which was subject to an
      existing lien (the "note"). The term of the note is for one year and
      includes interest at 12.75% per annum. The note is secured by certain real
      estate. The note was originally due on October 8, 1999 and was extended to
      April 8, 2000. The note requires monthly interest payments with the
      balance of unpaid principal and interest due on April 8, 2000.

Note G - Line of Credit

      The Company maintains a $3,000,000 floating line of credit with a
      financial institution. The outstanding balance as of December 31, 1999
      totaled $1,980,000. The line of credit, which is guaranteed by the
      Company's majority shareholder, is payable in monthly installments of
      interest only at the bank's prime lending rate plus 1.5% (10% at December
      31, 1999) and expires on December 15, 2000. The line of credit is secured
      by 1,450,000 shares of the Company's common stock held by the majority
      stockholder (23.5% of the outstanding stock at


                                      F-12
<PAGE>

      December 31, 1999) and the deeds of trust on the property being advanced
      against. The line of credit contains certain covenants, which the Company
      has complied with as of December 31, 1999.


                                      F-13
<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998


NOTE H - CREDIT AGREEMENT


      The Company has entered into a credit agreement with a financial
      institution that maintains non-interest bearing trust funds held on behalf
      of the investors and the Company (Note I). The credit agreement allows the
      Company to borrow funds up to the amount held in the trust accounts at a
      rate of 1% and invest those funds in commercial paper (securities). The
      Company has provided the financial institution with a security interest in
      the securities and, at all times, the securities remain in the financial
      institution's custody and control. The balance drawn down upon the credit
      agreement was $0 at December 31, 1999.


NOTE I - TRUST ACCOUNTS


      The Company manages on behalf of Del Mar Mortgage, Inc., a company wholly
      owned by the Company's majority stockholder, certain trust assets
      including cash and receivables on behalf of the investors. The cash is
      held at a financial institution and the Company records and reconciles the
      receivables from borrowers. At December 31, 1999, the cash held in trust
      was $667,345 and the trust receivables were $1,215,466. The related trust
      liability was $1,882,811 at December 31, 1999. The trust assets and
      liabilities are not recorded on the balance sheet of the Company at
      December 31, 1999.



Note J - LOANS SERVICED FOR OTHERS

      The Company services loans for others, which are not shown on the balance
      sheet. The face amount of these loans at December 31, 1999 approximated
      $227,000,000. Loans serviced for others include construction loans that
      are originated by the Company.



                                      F-14
<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998

Note K - Related Party Transactions

      On April 27, 1999, the Company entered into a non-renewable transition
      agreement (the "Agreement") with Del Mar Mortgage, Inc., a company wholly
      owned by the Company's majority stockholder. The Agreement requires the
      Company to pay Del Mar Mortgage, Inc. 25% of loan origination fees earned
      from April 27, 1999 through October 26, 1999 and 12.5% of such fees from
      October 27, 1999 through April 26, 2000. The Agreement also requires the
      Company to remit to Del Mar Mortgage, Inc. all future loan servicing and
      extension fees recognized on loans originated by the Company prior to
      April 27, 1999. The Agreement terminates on April 26, 2000. The Company
      incurred $2,597,641 in fees related to the Agreement for the year ended
      December 31, 1999, which have been recorded as general and administrative
      expenses in the consolidated financial statements.

      The Company has recorded accounts receivable from Del Mar Mortgage, Inc.
      of $443,390 as of December 31, 1999. The Company also has a balance due to
      Del Mar Mortgage, Inc. of $244,641. These balances bear no interest and
      are due on demand.

      The Company incurred accounting and financial consulting fees of $150,000
      and $180,000 for the years ended December 31, 1999 and 1998, respectively,
      which were paid to an accounting firm whose managing principal is an
      officer, director and stockholder of the Company (see Note S).

      On December 23, 1999, the Company consummated agreements to acquire two
      related party companies (see Note Q).

      In 1998, the Company paid various expenses totaling $2,101,087, for and on
      behalf of Shustek Investments, Inc., resulting in a receivable from
      Shustek Investments, Inc. for that amount. On December 31, 1998, this
      receivable was distributed to the majority stockholder of the Company.



                                      F-15
<PAGE>
                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998



Note L - Income Taxes

      The components of income tax expense (benefit) are as follows as of
      December 31:

                                               1999            1998
                                           -------------     ---------

        Current                               $986,875       $    -
        Deferred                               (27,542)           -
                                           -------------     ---------

                                              $959,333        $   -0-
                                           =============     =========

      Deferred taxes result from temporary differences in the recognition of
      certain revenue and expense items for income tax and financial reporting
      purposes. The significant components of the Company's deferred taxes as of
      December 31, 1999 are as follows:

        Deferred tax assets:
             Accrued compensation                             $27,542
        Less:  Valuation allowance                                -
                                                           -----------

        Net deferred taxes                                    $27,542
                                                           ===========

      The reconciliation of the statutory federal rate to the Company's
      effective income tax rate is as follows for the years ended December 31:

                                                 1999            1998
                                            --------------- ---------------

        Statutory tax provision                $1,332,880        $923,320
        Earnings taxed to shareholder            (381,867)       (923,320)
        Non-deductible expenses                     8,320              -
                                            --------------- ---------------

                                               $ 959,333         $     -0-
                                            =============== ===============




                                      F-16
<PAGE>

NOTE M - EMPLOYEE BENEFIT PLAN

      The Company maintains a 401(k) Savings Plan which covers substantially all
      full-time employees. Participants may make tax-deferred contributions of
      up to 15% of annual compensation (subject to other limitations specified
      by the Internal Revenue Code). The Company matches employee contributions
      dollar for dollar up to 5% of compensation. The Company contributed $
      37,537 and $20,316 to the plan for the years ended December 31, 1999 and
      1998, respectively.



                                      F-17
<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998


NOTE N - EMPLOYMENT AGREEMENTS

      The Company has employment agreements and arrangements with certain
      officers and key employees. The agreements generally continue for a period
      of three years or until terminated by the executive or the Company with
      cause. The agreements and arrangements provide the employees with a base
      salary and benefits. The agreements contain covenants against competition
      with the Company, which extend for a period of time after termination.


NOTE O - FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying amounts of cash, accounts receivable, notes receivable,
      mortgage loans, accounts payable and notes payable approximate fair value
      because of the short-term maturity of these instruments.


NOTE P - COMMITMENTS AND CONTINGENCIES

      Lease Commitments

      The Company operates from a leased office facility under a noncancellable
      operating lease. The lease requires the Company to pay certain escalation
      clauses for real estate taxes, operating expense, usage and common area
      charges. Rent expense for the leased office facility charged to operations
      for the years ended December 31, 1999 and 1998 was $140,000 and $194,000,
      respectively.

      The Company leases equipment under a noncancellable operating lease. Rent
      expense for the equipment was $20,000 and $3,600 for the year ended
      December 31, 1999 and 1998, respectively.

Future minimum rental payments required under the operating leases as of
December 31, 1999, are as follows:

        2000                  $180,418
        2001                   190,193
        2002                   193,728
        2003                   197,128
        2004                    66,363
                           ------------
                              $827,830
                           ============



                                      F-18
<PAGE>

                     Sunderland Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1999 and 1998

Note Q - Acquisitions

      On December 23, 1999, the Company consummated an agreement to acquire all
      the outstanding capital stock of DM Financial Services, Inc., a Las Vegas,
      Nevada based securities broker-dealer for 10,300 shares of the Company's
      common stock and DM Mortgage Advisors, Inc., a Phoenix, Arizona based
      mortgage funding company for 17,700 shares of the Company's common stock.
      The acquisition of DM Financial Services, Inc. is pending regulatory
      approval of both the National Association of Securities Dealers and the
      Corporate Securities Division of the State of Nevada. The acquisition of
      DM Mortgage Advisors, Inc. is also pending regulatory approval by the
      State of Arizona.


NOTE R - LITIGATION

Item 18. The Company is a defendant in various lawsuits incurred in the normal
course of business. In the opinion of management, after consulting with legal
counsel, the liabilities, if any, resulting from these matters will not have a
material effect on the consolidated financial statements of the Company.


NOTE S - SUBSEQUENT EVENTS

Item 21. In January 2000, the Company entered into a letter of intent to merge
with an accounting firm (the "Firm") whose managing principal is an officer,
director and shareholder of the Company. The proposed transaction would transfer
100% of the outstanding common stock of the Firm to the Company in exchange for
800,000 common shares of the Company's stock.



                                      F-19
<PAGE>
                   [LETTERHEAD OF HANSEN, BARTNETT & MAXWELL]

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Stockholders
Del Mar Holdings, Inc.
Las Vegas, Nevada

We have audited the balance sheet of Del Mar Holdings, Inc. as of December 31,
1998, and the related statements of operations, stockholders' equity, and cash
flows for the year then ended (not presented herein). Those financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 Del Mar Holdings, Inc. as of
December 31, 1998, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.

                                                       HANSEN, BARNETT & MAXWELL



Salt Lake City, Utah
May 21, 1999



                                      F-20





<PAGE>




                   [LETTERHEAD OF HANSEN, BARTNETT & MAXWELL]

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Stockholders
Del Mar Mortgage, Inc.
Las Vegas, Nevada

We have audited the balance sheet of Del Mar Mortgage, Inc. as of December 31,
1998, and the related statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein). Those financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on those financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 Del Mar Mortgage, Inc. as of
December 31, 1998, and the results of its operations and cash flows for the year
then ended in conformity with generally accepted accounting principles.

                                                       HANSEN, BARNETT & MAXWELL



Salt Lake City, Utah
April 9, 1999


                                      F-21





<PAGE>


 Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

         On December 13, 1999, the Company dismissed Hansen, Barnett & Maxwell
("HBM") as its independent auditor. On January 3, 2000 the Company retained
Grant Thornton LLP ("Grant Thornton") as independent certified public
accountants to replace HBM.

         The Company and HBM have not, in connection with the audit of the
Company's financial statements for each of the two years ended December 31, 1998
and 1997, had any disagreement on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreement, if not resolved to HBM's satisfaction, would have caused HBM
to make reference to the subject matter of the disagreement in connection with
its reports. In connection with the Company's June 30, 1999, unaudited
consolidated financial statement, HBM disagreed with the appropriate accounting
for the net assets of the Del Mar Entities that were not transferred to the
Company. It was resolved that these net assets would be accounted for as capital
distributions from the accounting acquirer. In addition, there were
disagreements regarding the representation of the operations of the Del Mar
Entities prior to the reorganization as those of predecessor entities. This
matter was also resolved to present those prior operations.

         The reports of HBM on the Company's financial statements for the past
two years did not contain an adverse opinion or a disclaimer of opinion and were
not qualified or modified as to uncertainties, audit scope or accounting
principles.

         The decision to change accountants was approved by the Company's Board
of Directors.

         The Company had no relationship with Grant Thornton that is required to
be reported under Regulation S-B Item 304(a)(2) during the two years ended
December 31, 1998 and 1997 or the subsequent interim period prior to and
including December 13, 1999. The Registrant knows of no disagreements with Grant
Thornton on accounting and financial disclosure.


                                    PART III


         The Proxy Statement for the Annual Meeting of Stockholders to be held
on May 18, 2000, which when filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934, will be incorporated by reference in this
Annual Report on Form 10-KSB pursuant to General Instruction E(3)A. The Proxy
Statement will provide the information required under Part III (Items 9, 10, 11
and 12).

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Consolidated Financial Statements filed herewith as required under
Item 8 of this report include the Consolidated Balance Sheet at December 31,
1999, and the Consolidated


                                      15
<PAGE>

Statements of Income, Stockholders Equity and Cash Flows for
the years ended December 31, 1999 and 1998.

         (b)None.

         (c) The following exhibits are included in this report or are
incorporated by reference:

<TABLE>
<CAPTION>
Exhibit                                Exhibit                                            Sequentially
Number                                                                                      Numbered
                                                                                              Page

<S>     <C>                                                                               <C>
2.1**    Agreement and Plan of Reorganization between The Company, a Delaware
         corporation, and Stephen J. Byrne, dated as of April 9, 1999, filed
         with the Form 8-K of The Company (file no. 0-24802) filed with the
         Commission on April 27, 1999 and incorporated herein by reference

2.2**    Asset Acquisition Agreement between the Company, a Delaware
         corporation, and Del Mar Holdings, Inc., a Nevada corporation, dated as
         of April 19, 1999 on Form, 8K, of the Company (file no. 0-24803) filed
         with the Commission on April 27, 1999, and incorporated herein by
         reference

2.3**    Asset Acquisition Agreement between the Company, a Delaware
         corporation, and Del Mar Mortgage, Inc., a Nevada corporation, dated as
         of April 9, 1999 filed with the Form 8-K of the Company (file no.
         0-24803) filed with the Commission on April 27, 1999, and incorporated
         herein by reference

2.4**    Letter of Intent dated January 12, 2000 between the Company and L.L.
         Bradford & Company

3.1**    Certificate of Incorporation (incorporated by reference to Exhibit 2.1
         to the Company's registration statement on Form 10-SBA, file no.
         0-24803, filed with the Commission on August 13, 1998)

3.2**    By-laws (incorporated by reference to Exhibit 2.2 to the Company's
         registration statement on Form 10-SBA, filed with the Commission on
         August 13, 1998

4.       Specimen Common Stock Certificate; Specimen Preferred Stock
         Certificate; Articles Four, Eight, Ten and Twelve of the Certificate of
         Incorporation (incorporated by reference to Exhibit 3.1 to the
         Company's registration statement on Form 10-SBA, file no. 0-24803,
         filed with the Commission on October 12, 1997)
</TABLE>


                                      16
<PAGE>

<TABLE>
<CAPTION>
Exhibit                                Exhibit                                            Sequentially
Number                                                                                      Numbered
                                                                                              Page
<S>     <C>                                                                               <C>
10.1     Employment Agreement between Del Mar Mortgage, Inc. and Stephen J.
         Byrne dated November 3, 1998

10.2     Transition Agreement between Del Mar Mortgage, Inc. and Capsource, Inc.
         dated April 27, 1999 and First Amendment to Transition Agreement dated
         April 27, 1999

10.3     Employment Agreement between Del Mar Mortgage, Inc. and Michael
         Whiteaker dated May 3, 1999

10.4     The 2000 Stock Option Plan of Sunderland Corporation

10.5     Employment Agreement between the Company and Michael Shustek dated
         December 1, 1999

16       Letter on Change of Certifying Accountant (Incorporated by reference to
         Exhibit 16.1 to the Company: Form 8-K (file no. 0-24803) filed with
         the Commission on December 12, 1999.)

21       List of Subsidiaries

27       Financial Data Schedule
</TABLE>

----------
**   Previously filed.


         (d) Schedules filed herewith include:

         All schedules for which provision is made in Regulation S-K of the
Commission are not required under the related instructions or are not applicable
and therefore have been omitted.

                                      17
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



     March  29, 2000        SUNDERLAND CORPORATION



                            By:  /s/ Michael V. Shustek
                               ---------------------------------------------
                                 Michael V. Shustek, Chief Executive Officer
                                 (Principal Executive Officer)



                            By:  /s/ Lance Bradford
                               ---------------------------------------------
                                 Lance Bradford
                                 (Chief Financial Officer)


Pursuant to the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.


     March  29, 2000        By:  /s/ Michael V. Shustek
                               ---------------------------------------------
                                 Michael V. Shustek, Director


     March  29, 2000        By:  /s/ Stephen J. Byrne
                               ---------------------------------------------
                                 Stephen J. Byrne, Director


     March  29, 2000        By:  /s/ Robert W. Fine
                               ---------------------------------------------
                                 Robert W. Fine, Director


     March  29, 2000        By:  /s/ Lance Bradford
                               ---------------------------------------------
                                 Lance Bradford, Director


                                      18
<PAGE>

     March  29, 2000        By:  /s/ John E. Dawson
                               ---------------------------------------------
                                 John E. Dawson, Director


     March  29, 2000        By:  /s/ Robert L. Forbuss
                               ---------------------------------------------
                                 Robert L. Forbuss, Director


     March  29, 2000        By:  /s/Robert Aalberts
                               ---------------------------------------------
                                 Robert Aalberts, Director



                                      19