SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

                   For the fiscal year ended December 31, 2003

                         Commission File Number 0-28375

                            SILVERADO FINANCIAL, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Nevada                                     86-0824125
--------------------------------------------------------------------------------
 (State or other jurisdiction of                       (IRS Employer
  incorporation or organization)                   Identification Number)

   5976 W. Las Positas Blvd., Suite 112, Pleasanton, CA            94588
--------------------------------------------------------------------------------
         (Address of principal executive offices)                (Zip Code)

                        Telephone Number: (925) 227-1500

          Securities registered pursuant to Section 12(b) of the Act:

                                                      Name of each exchange
      Title of Each Class                              on which registered
---------------------------------                 ---------------------------
              None                                             None

          Securities registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                              --------------------
                                (Title of Class)

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

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not 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. [ ]

The Registrant's revenues for the year ended December 31, 2003 were $115,823.

The approximate aggregate market value of Common Stock shares held by
non-affiliates of the Registrant on December 31, 2003 was $2,034,994; based on
14,839,492 total outstanding shares less 2,120,777 shares held by affiliates for
a total of 12,718,715 non-affiliated shares and a closing price of $0.16 per
share on December 31, 2003.

On December 31, 2003, the Registrant had outstanding 14,839,492 shares of Common
Stock, $0.001 par value.

                                       1
<PAGE>


                                 TABLE OF CONTENTS                         PAGE

PART I

ITEM 1. DESCRIPTION OF BUSINESS ............................................  3

ITEM 2. PROPERTIES ......................................................... 24

ITEM 3. LEGAL PROCEEDINGS .................................................. 24

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................ 25

PART II

ITEM 5.  MARKET FOR THE  REGISTRANT'S  COMMON  EQUITY AND RELATED
           STOCKHOLDER MATTERS ............................................. 26

ITEM 6. MANAGEMENT'S PLAN OF OPERATION ..................................... 27

ITEM 7. FINANCIAL STATEMENTS ............................................... 29

ITEM 8. CHANGES AND DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING
          AND FINANCIAL DISCLOSURE ......................................... 52

ITEM 8A. CONTROLS AND PROCEDURES ........................................... 52

PART III

ITEM 9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND CONTROL
           PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT ...... 53

ITEM 10. EXECUTIVE COMPENSATION ............................................ 54

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .... 57

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS .............. 57

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K .................................. 58

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES ............................ 59

SIGNATURES ................................................................. 60


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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Business Development

Background of the Company

Silverado Financial, Inc. (the "Company",  "We", "Us" and "Our") is incorporated
under the laws of the State of Nevada and based in Campbell,  California  in the
San  Francisco  Bay Area.  We provide  first and  second  mortgage  products  to
borrowers  in  California  through  our  operating  subsidiary,  Realty  Capital
Corporation (RCC).

The  corporation  was  initially  formed on February 26, 1987 as Toledo  Medical
Corporation. Our name was changed to Almaz Space Corporation on February 9, 1991
and to Ready When You Are Funwear,  Inc. on April 14, 1992. On December 30, 1994
a group of individuals  acquired  control of the Company.  On February 17, 1995,
they changed the name to Rhombic  Corporation.  On March 19,  2003,  the company
changed its name to Silverado Financial, Inc.

Our efforts, since inception,  until October of 2002, had been primarily focused
on the acquisition of the rights to intellectual property that could lead to the
development  of innovative  scientific  technologies.  During the years 1999 and
2000 we began to focus on the  research  and  development  of our  portfolio  of
acquired intellectual property.  During 2001, our main objective was to identify
and develop specific  applications  from our  intellectual  property in order to
make them  commercially  marketable.  In November  2002,  we acquired  Financial
Software,  Inc.  as the  first  part of its  strategy  to  enter  the  lucrative
financial services sector.

During 2003 the company had six wholly owned subsidiaries. They are:

         * Financial Software, Inc. ("FSI");
         * Realty Capital Corporation ("RCC");
         * Rockford Technology Associates, Inc. ("Rockford");
         * Nanophase Diamond Technologies, Inc. ("Nanophase");
         * AEP Technologies, Inc. ("AEPT"); and
         * Rhombic Detection Technologies, Inc. ("RDT").

Rockford,  Nanophase, AEPT and RDT are inactive and have no assets,  liabilities
or operations and never were active,  held any assets or had any  liabilities or
operations.  These  subsidiaries  were  created  for the  purpose of  developing
specific  applications  from  our  scientific  intellectual  property.  We never
implemented our plans to develop our scientific intellectual property and all of
our  scientific  intellectual  properties,   together  with  certain  marketable
securities held for sale, were sold, in 2003 to a director,  in exchange for the
return of 62,000  shares of our Common Stock and the  cancellation  of $1,100 in
debt.

We acquired  Financial  Software,  Inc.  (formerly  Wall  Street  Web,  Inc.) on
November  19,  2002 a share for share  exchange  basis for  4,400,000  shares of
common stock and the  assumption of a note in the amount of $275,000.  Financial
Software,  Inc.(FSI),  a New Jersey  corporation  engaged in the  development of
Internet  and  Intranet  financial  software in addition  to  operating  several
financial industry publishing web-sites. We acquired FSI in order to gain access
to certain proprietary software products owned by FSI which we intend to further
develop  and extend  into a  comprehensive  back office  platform  necessary  to
accomplish our business objectives.

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<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

On May 9, 2003, we acquired  Realty Capital  Corporation in exchange for 729,452
shares of  restricted  common stock from John E.  Hartman,  the president of the
Company and a director. Realty Capital Corporation (RCC) is a mortgage brokerage
company  licensed by the  California  Department of Real Estate and is currently
seeking  licensure by the California  Department of  Corporations  as a Consumer
Finance Lender.  RCC generated all of the Company's 2003 revenue and has offices
in Campbell California and Pleasanton, California.

In  addition  to  continuing  and  expanding  the  operation  of RCC,  our other
activities have consisted of developing the business plan, obtaining a warehouse
line of credit,  raising capital,  business plan implementation and recruiting a
management  team.  From  inception  to December  31,  2003,  the Company has had
revenues of $129,052 of which  $115,823 was earned during 2003, and has expensed
operating  costs in the  amount of  $9,492,482  due in part to the write down of
scientific  intellectual properties in the amount of $2,168,038 and research and
development expenses of $688,563. Historically, the Company has had nominal cash
resources and has been largely  dependent on the direct financial support from a
few  shareholders,  directors and officers along with limited revenue to pay for
cash expenditures.  In addition, the Company has been dependent on its officers,
directors and certain key vendors  accepting  restricted  common stock for their
services.

Business of the Issuer

General

We provide  mortgage  products to borrowers in California  through our operating
subsidiary,  Realty  Capital  Corporation  (RCC).  We  offer  mortgage  products
designed for borrowers who generally satisfy the credit,  documentation or other
underwriting  standards  prescribed by  conventional  mortgage  lenders and loan
buyers,  such as Fannie  Mae and  Freddie  Mac as well as those  who do not.  We
originate  loans on the basis of the  borrower's  ability to repay the  mortgage
loan,  the  borrower's  historical  pattern of debt  repayment and the amount of
equity in the borrower's  property (as measured by the borrower's  loan-to-value
ratio,  or LTV).  We have  been  originating  these  types of  loans  since  our
acquisition of RCC on May 9, 2003 and believe we have developed a  comprehensive
and sophisticated plan to grow the company going forward.

RCC  operates  out  offices in Campbell  and  Pleasanton,  California  with more
offices slated to open during 2004. Our plan is to expand throughout California,
Nevada and Arizona during 2004 with offices in Sacramento,  Woodland Hills,  San
Diego,  Las Vegas,  Reno,  Phoenix and Tucson.  We have developed  sophisticated
information  technologies to allow us to move into these areas with a minimum of
cost and start up while  allowing  the company to maintain  tight  control  over
regional offices.

In 2003, we  originated  100% of our loans in  California.  Of the loans that we
originated,  65% were  refinances  of  existing  mortgages  and 35% were for the
purchase  of  residential  property.  Of the  refinance  transactions,  80% were
cash-out  refinances in which the borrower receives  additional  proceeds to pay
off other debt or meet other financial needs.

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ITEM 1. DESCRIPTION OF BUSINESS - continued

Recent Operating Highlights

We achieved several significant  operational  milestones during 2003,  including
the following:

     o    Revenues.   We  achieved   revenues  of  $115,823  in  2003.  This  is
          significant  as it is  the  first  time  that  we  have  achieved  any
          significant revenues.

     o    Current  Assets.  Current Assets  including  cash,  cash  equivalents,
          receivables and marketable securities held for sale equaled $30,410 at
          December 31, 2003 which  represents a 231% increase over 2002 year-end
          current assets of $13,188.

Strengths and Competitive Advantages

We believe that we have several strengths and competitive  advantages that allow
us to compete effectively in our business, including:

     o    High  Quality  Customer  Service.  We strive  to make the  origination
          process  easy for our  borrowers  and sales  executives  by  providing
          prompt  responses,  consistent and clear procedures and an emphasis on
          ease of use through technology.

     o    Performance-Based   Compensation  Structure.  We  have  implemented  a
          performance-based  compensation structure, which allows us to attract,
          retain and motivate qualified personnel.

     o    FinanCenter(C)   Software.   We  plan  to  enhance   our   proprietary
          FinanCenter(C)  Software to provide our sales  executives  with a wide
          array of unique  products  and services  offered by no other  mortgage
          company.

Product Types

We offer both fixed-rate loans and adjustable-rate loans, or ARMs. We also offer
loans with an  interest  rate that is  initially  fixed for a period of time and
subsequently  converts to an adjustable  rate. At each interest rate  adjustment
date,  rates are adjusted,  subject to certain  limitations on the amount of any
single adjustment and a cap on the aggregate of all adjustments.

In addition,  our products are  available at different  interest  rates and with
different  origination  and  application  points  and  fees,  depending  on  the
particular   borrower's   risk   classification.   See   "Business--Underwriting
Standards."  Borrowers  may choose to increase or decrease  their  interest rate
through the payment of different  levels of  origination  fees. Our maximum loan
amount is generally  $500,000  with a  loan-to-value  ratio of up to 90%. We do,
however,  offer larger loans with lower  loan-to-value  ratios through a special
jumbo program. We also offer products that permit a loan-to-value ratio of up to
95% for selected borrowers with an internal risk classification of "A+" or of up
to 90% for selected  borrowers with an internal risk  classification of "A-". We
also offer our "AA" product  designed to appeal to  borrowers  of higher  credit
quality.

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<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

Marketing

RCC's operations rely primarily on outbound telemarketing and on targeted direct
mail and to attract  borrowers.  Our  telemarketing  programs  are  managed by a
centralized staff that create a targeted mailing list oversee  operations by our
telemarketing  staff.  All calls or written  inquiries from potential  borrowers
that result from the telemarketing are tracked centrally and then forwarded to a
branch  location and handled by branch loan  officers.  Under the  telemarketing
program,  our  staff  solicits  prospective   borrowers,   makes  a  preliminary
evaluation of the  applicant's  credit and the value of the collateral  property
and refers  qualified leads to loan officers in the retail branch closest to the
customer.  In  addition,  this unit  maintains a  comprehensive  database on all
customers with whom it has had contact and markets to these potential  customers
as well.

The   direct   mail   program   uses   the   Retail    Division's    Web   site,
www.silveradofinancial.com,  to provide information to prospective borrowers and
to allow them to complete an application online

Financing Loan Originations and Loans Held for Sale

We  require  access to credit  facilities  in order to  originate  and  purchase
mortgage loans and to hold them pending their sale or securitization. Currently,
we do not have any such  facilities,  but we are in the  process of  obtaining a
warehouse  line  of  credit  and  are  finishing  negotiations  and  application
documentation.

Underwriting Standards

When we obtain a warehouse  line of credit,  the loans we intend to originate or
purchase will have to meet the underwriting  guidelines of the warehouse lender.
These  guidelines take into account the applicant's  credit history and capacity
to repay the proposed loan as well as the secured  property's value and adequacy
as  collateral  for the loan.  Each  applicant  completes  an  application  that
includes personal  information on the applicant's  liabilities,  income,  credit
history and  employment  history.  Based on review of the loan  application  and
other data from the applicant against our underwriting guidelines,  we determine
the loan terms, including the interest rate and maximum loan-to-value ratio.

Credit History

Underwriting  guidelines require a credit report on each applicant from a credit
reporting  company.  In evaluating an  applicant's  credit  history,  we utilize
credit  bureau  risk  scores,  generally  known  as a  FICO  score,  which  is a
statistical ranking of likely future credit performance developed by Fair, Isaac
& Company and the three national credit data  repositories--Equifax,  TransUnion
and Experian.

Collateral Review

A qualified  independent appraiser inspects and appraises each mortgage property
and verifies that it is in acceptable condition.  Following each appraisal,  the
appraiser  prepares a report  that  includes a market  value  analysis  based on
recent sales of comparable homes in the area and, when appropriate,  replacement
cost analysis  based on the current cost of  constructing  a similar  home.  All
appraisals  must  conform to the Uniform  Standards  of  Professional  Appraisal
Practice adopted by the Appraisal Foundation's Appraisal Standards Board and are
generally on forms  acceptable  to Fannie Mae and Freddie Mac. Our  underwriting


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ITEM 1. DESCRIPTION OF BUSINESS - continued

guidelines  require a review of the appraisal by one of our qualified  employees
or by a qualified  review  appraiser  that we have  retained.  Our  underwriting
guidelines  then require our  underwriters to be satisfied that the value of the
property being financed,  as indicated by the appraisal,  currently supports the
outstanding loan balance.

Income Documentation

Underwriting   guidelines   include   three   levels  of  income   documentation
requirements,  referred to as the "full documentation,"  "limited documentation"
and  "stated  income  documentation"  programs.  Under  the  full  documentation
program,  we  generally  require  applicants  to  submit  two  written  forms of
verification  of  stable  income  for at  least 24  months.  Under  the  limited
documentation  program, we generally require applicants to submit 12 consecutive
monthly bank  statements on their  individual  bank  accounts.  Under the stated
income  documentation  program, an applicant may be qualified based upon monthly
income as stated on the mortgage loan application if the applicant meets certain
criteria.  All of these  documentation  programs  require that,  with respect to
salaried employees,  the applicant's employment be verified by telephone. In the
case of a purchase money loan, we require  verification  of the source of funds,
if any,  to be  deposited  by the  applicant  into  escrow.  Under each of these
programs,  we review the applicant's  source of income,  calculate the amount of
income from sources indicated on the loan application or similar  documentation,
review the applicant's credit history, and calculate the debt  service-to-income
ratio to determine the applicant's ability to repay the loan. We also review the
type, use and condition of the property being financed.  Our  underwriters use a
qualifying  rate  that is  equal  to the  initial  interest  rate on the loan to
determine the  applicant's  ability to repay an  adjustable-rate  loan. We use a
qualifying  rate  that is 3%  higher  than the start  rate for  determining  the
repayment ability of applicants for our interest-only product.

Competition

We face intense  competition  in the  business of  originating,  purchasing  and
selling  mortgage  loans.   Our  competitors   include  other  consumer  finance
companies,  mortgage banking companies,  commercial banks, credit unions, thrift
institutions,  credit  card  issuers  and  insurance  finance  companies.  Other
financial institutions have gradually expanded their lending capabilities.  Many
of these  companies have greater access to capital at a cost lower than our cost
of capital under our warehouse,  aggregation,  and asset backed commercial paper
facilities.  Federally chartered banks and thrifts can preempt some of the state
and  local  lending  laws  to  which  we  are  subject,  thereby  giving  them a
competitive advantage.  In addition, many of these competitors have considerably
greater technical and marketing resources than we have.

Competition  among  industry   participants  can  take  many  forms,   including
convenience in obtaining a loan,  customer  service,  marketing and distribution
channels, amount and term of the loan, loan origination fees and interest rates.
Additional  competition  may lower the rates we can  charge  borrowers,  thereby
potentially lowering gain on future loan sales and securitizations. In 2003, the
most  significant  form of  competition  was  pricing  pressure  among  mortgage
originators.  Some of our  competitors  lowered  rates and fees to  preserve  or
expand their market share.

Our results of operations,  financial  condition and business prospects could be
materially  adversely  affected  if  competition  intensifies  or if  any of our
competitors significantly expands its activities in our markets. Fluctuations in
interest rates and general  economic  conditions may also affect our competitive


                                       7
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

position.  During periods of rising rates,  competitors  that have locked in low
borrowing  costs may have a competitive  advantage.  During periods of declining
rates, competitors may solicit our customers to refinance their loans.

Regulation

Our business is regulated by federal,  state, and local  government  authorities
and  is  subject  to  extensive  federal,   state  and  local  laws,  rules  and
regulations.  We are also subject to judicial and administrative  decisions that
impose  requirements  and  restrictions  on our business.  At the federal level,
these laws and regulations include the:

     o    Equal Credit Opportunity Act;

     o    Federal Truth and Lending Act and Regulation Z;

     o    Home Ownership and Equity Protection Act;

     o    Real Estate Settlement Procedures Act;

     o    Fair Credit Reporting Act;

     o    Fair Debt Collection Practices Act;

     o    Home Mortgage Disclosure Act;

     o    Fair Housing Act;

     o    Telephone Consumer Protection Act;

     o    Gramm-Leach-Bliley Act;

     o    Fair and Accurate Credit Transactions Act;

     o    CAN-SPAM Act;

     o    Sarbanes-Oxley Act; and

     o    USA PATRIOT Act.

These laws, rules and regulations, among other things:

     o    impose licensing obligations and financial requirements on us;

     o    limit the interest rates,  finance charges, and other fees that we may
          charge;

     o    prohibit discrimination;

     o    impose underwriting requirements;

     o    mandate disclosures and notices to consumers;

     o    mandate the collection and reporting of statistical data regarding our
          customers;

     o    regulate our marketing techniques and practices;



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ITEM 1. DESCRIPTION OF BUSINESS - continued

     o    require us to safeguard non-public information about our customers;

     o    regulate our collection practices;

     o    require  us  to  prevent   money-laundering  or  doing  business  with
          suspected terrorists; and

     o    impose corporate governance,  internal control and financial reporting
          obligations and standards.

Our failure to comply with these laws can lead to:

     o    civil and criminal liability;

     o    loss of approved status;

     o    demands for  indemnification  or loan  repurchases  from buyers of our
          loans;

     o    class action lawsuits; and

     o    administrative enforcement actions.

Compliance, Quality Control and Quality Assurance

We regularly  monitor the laws, rules and regulations that apply to our business
and analyze any changes to them. We also maintain  policies and procedures,  and
summaries and  checklists to help our  origination  personnel  comply with these
laws.

Licensing

As of  December  31,  2003,  we were  licensed  only  in  California  under  the
California  Department  of Real  Estate  (DRE).  As of March 28,  2004,  we have
applied for licensure under the California Department of Corporations (DOC) as a
Consumer  Finance Lender (CFL).  This change from the DRE to the DOC will enable
us to hire W-2  employees to act as sales  executives  instead of licensed  real
estate  agents.  This will allow us to pay lower  commissions  and hire from the
significantly  larger pool of available sales professionals who are not licensed
by the DRE.

We are currently interviewing law firms to assist us in gaining licensure in all
50 States and the District of Columbia. Our next license applications will be in
the States of Arizona and Nevada.

Regulatory Developments

During 2003,  federal and state legislators and regulators  adopted a variety of
new or expanded  regulations,  particularly in the areas of privacy and consumer
protection.

Privacy

The federal  Gramm-Leach-Bliley  financial reform legislation imposes additional
obligations  on us to safeguard the  information  we maintain on our  borrowers.
Regulations  have  been  proposed  by  several  agencies  that  may  affect  our
obligations to safeguard information. In addition, regulations that could affect
the content of our notices are being  considered  by several  federal  agencies.


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ITEM 1. DESCRIPTION OF BUSINESS - continued

Also,  several states are considering even more stringent  privacy  legislation.
California has passed legislation known as the California Financial  Information
Privacy Act and the California  On-Line  Privacy  Protection Act. Both pieces of
legislation are effective July 1, 2004, and will impose additional  notification
obligations  on us that are not  pre-empted  by existing  federal  law. If other
states choose to follow  California  and adopt a variety of  inconsistent  state
privacy legislation, our compliance costs could substantially increase.

Fair Credit Reporting Act

The Fair Credit Reporting Act provides  federal  preemption for lenders to share
information   with   affiliates   and  certain  third  parties  and  to  provide
pre-approved offers of credit to consumers.  Congress acted in late 2003 to make
this  preemption  permanent,  otherwise  it would have expired at the end of the
year and states could have imposed more stringent and  inconsistent  regulations
regarding  the use of  pre-approved  offers  of  credit  and  other  information
sharing.  Congress  also amended the Fair Credit  Reporting Act to place further
restrictions on the use of information shared between affiliates, to provide new
disclosures to consumers when risk based pricing is used in the credit decision,
and to help protect  consumers from identity theft.  All of these new provisions
impose  additional  regulatory  and  compliance  costs  on  us  and  reduce  the
effectiveness of our marketing programs.

Home Mortgage Disclosure Act

In 2002, the Federal  Reserve Board adopted  changes to Regulation C promulgated
under the Home Mortgage  Disclosure  Act ("HMDA").  Among other things,  the new
regulations  require  lenders  to  report  pricing  data on  loans  with  annual
percentage  rates  that  exceed  the yield on  treasury  bills  with  comparable
maturities by 3%. The expanded  reporting takes effect in 2004 for reports filed
in 2005.  We  anticipate  that a majority  of our loans  would be subject to the
expanded reporting requirements.

The expanded  reporting does not provide for additional loan information such as
credit risk, debt-to-income ratio,  loan-to-value ratio,  documentation level or
other salient loan features. As a result, lenders like us are concerned that the
reported  information may lead to increased  litigation as the information could
be misinterpreted by third parties.

Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003

The  CAN-SPAM  Act of 2003  applies  to  businesses,  such  as  ours,  that  use
electronic  mail  for  advertising  and   solicitation.   This  law,   generally
administered  by the  Federal  Trade  Commission,  preempts  state  laws  to the
contrary, and establishes,  among other things, a national uniform standard that
gives consumers the right to stop unwanted emails.  New requirements are imposed
for the  header  caption  in  emails,  as well as return  email  addresses,  and
consumers are granted the right to `opt out' from receiving  further emails from
the sender.  These new provisions  impose  additional  regulatory and compliance
costs on us and reduce the effectiveness of our marketing programs.

The Alternative Mortgage Transaction Parity Act

This law was  enacted  to enable  state  chartered  housing  creditors  to make,
purchase and enforce alternative mortgage transactions (i.e., loans that are not
fixed rate, fully amortized) without regard to any state law on the subject,  so
long as  these  creditors  complied  with  the  same  regulatory  guidelines  as
federally  chartered housing lenders.  The Office of Thrift  Supervision,  under


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ITEM 1. DESCRIPTION OF BUSINESS - continued

whose guidelines we operate, amended its regulations, effective July 1, 2003, to
eliminate from the preemptive effect of the Act the regulation of prepayment and
late charges on alternative  mortgage loans.  States can now regulate prepayment
penalty and late charge provisions on alternative mortgage loans, and so on July
1, 2003,  in less than a dozen  states,  we became  subject to more  restrictive
state laws as to these issues.

Telephone  Consumer  Protection Act and  Telemarketing  Consumer Fraud and Abuse
Prevention Act

These laws,  enacted in 1991 and 1994,  respectively,  are  designed to restrict
unsolicited  advertising using the telephone and facsimile  machine.  Since they
were enacted, however, telemarketing practices have changed significantly due to
new technologies that make it easier to target potential  customers while at the
same time making it more cost  effective  to do so. The  Federal  Communications
Commission and the Federal Trade Commission have  responsibility  for regulating
various   aspects  of  these  laws,  such  as  regulating   unwanted   telephone
solicitations and the use of automated telephone dialing systems, prerecorded or
artificial  voice  messages,  and telephone  facsimile  machines.  In 2003, both
agencies adopted `do-not-call'  registry  requirements,  which, in part, mandate
that companies  such as us maintain and regularly  update lists of consumers who
have chosen not to be called.  These  requirements  also  mandate that we do not
call consumers who have chosen to be on the list. During this same time, over 25
states have also adopted similar laws, with which we also comply.  As with other
regulatory  requirements,  these  provisions  impose  additional  regulatory and
compliance costs on us and reduce the effectiveness of our marketing programs.

Predatory Lending Legislation

The Home  Ownership and Equity  Protection  Act of 1994  ("HOEPA")  identifies a
category of mortgage loans and subjects them to more stringent  restrictions and
disclosure requirements. In addition, liability for violations of applicable law
for loans covered by HOEPA extends not only to the  originator,  but also to the
purchaser  of the loans.  HOEPA  generally  covers  loans with  either (i) total
points and fees upon  origination  in excess of the greater of eight  percent of
the loan amount or $499 (an annually adjusted dollar amount),  or (ii) an annual
percentage  rate (APR) of more than eight  percentage  points higher than United
States Treasury  securities of comparable  maturity on first mortgage loans, and
ten  percentage  points  above  Treasuries  of  comparable  maturity  for junior
mortgage loans.

We do not originate  loans covered by HOEPA because of the higher legal risks as
well  as the  potential  negative  perception  of  originating  loans  that  are
considered to be "high cost" under federal law.

Several  federal,  state and local laws and regulations have been adopted or are
under consideration that are intended to eliminate so-called "predatory" lending
practices.  Many of these  laws and  regulations  go  beyond  targeting  abusive
practices by imposing broad  restrictions on certain  commonly  accepted lending
practices,  including  some of our  practices.  In addition,  some of these laws
impose liability on assignees of mortgage loans such as loan buyers, lenders and
securitization  trusts.  Such provisions deter loan buyers from purchasing loans
covered by the applicable law. For example,  after the October 1, 2002 effective
date of the Georgia Fair Lending Act, many lenders and  secondary  market buyers
refused to finance or purchase  Georgia loans. As a result,  many companies were
forced to cease  providing  mortgages in Georgia until the law's amendment a few
months later.  Similar laws have gone into effect in New Jersey,  as of November
27, 2003 ("New Jersey Home  Ownership  Act of 2002"),  and in New Mexico,  as of


                                       11
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

January 1, 2004 ("New  Mexico Home Loan  Protection  Act"),  that have  impacted
origination of loans in those states.

However,   there  can  be  no  assurance  that  other  similar  laws,  rules  or
regulations,  won't  be  adopted  in the  future.  Adoption  of  these  laws and
regulations   could  have  a  material   adverse   impact  on  our  business  by
substantially  increasing the costs of compliance with a variety of inconsistent
federal,  state and local rules,  or by restricting  our ability to charge rates
and fees adequate to compensate us for the risk  associated  with certain loans.
Adoption  of these laws could  also have a material  adverse  effect on our loan
origination volume,  especially if our lenders and secondary market buyers elect
not to finance or purchase loans covered by the new laws.

Efforts to Avoid Abusive Lending Practices

In an effort to prevent the  origination  of loans  containing  unfair  terms or
involving  predatory  practices,  we have adopted many policies and  procedures,
including the following:

   Product Policies

     o    We do not originate "high cost loans" as defined by HOEPA.

     o    We do not  originate  loans  containing  single  premium  credit life,
          disability or accident insurance.

     o    We do  not  originate  loans  containing  balloon  payments,  negative
          amortization, mandatory arbitration clauses or interest rate increases
          triggered by borrower default.

     o    We offer loans with and without prepayment penalties.  When a borrower
          opts for a loan with a prepayment charge, the borrower benefits from a
          lower interest rate or pays lower upfront fees.

     o    Prepayment  penalties  do not  extend  beyond  three  years  from  the
          origination date. On fixed rate loans, the maximum  prepayment penalty
          term is three years.  Prepayment penalties on adjustable rate loans do
          not extend beyond the first adjustment date.

     o    We do not originate  loans that pay off zero  interest rate  mortgages
          provided  by  charitable   organizations  or  the  government  without
          borrower third-party counseling.

Loan Processing Policies

     o    We only originate loans from  applications  that evidence a borrower's
          ability to repay the loan.

     o    We  consider  whether  the  loan  terms  are  in the  borrower's  best
          interests.

     o    We do not  solicit our loan  portfolio  within  twelve  months of loan
          origination.

     o    We do not ask appraisers to report a  predetermined  value or withhold
          disclosure of adverse  features.  Appraisers  are paid by the borrower
          either  at  closing  of form the  borrowers  own funds  regardless  of
          whether or not the loans are closed.

                                       12
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

We plan to continue to review,  revise and improve our  practices to enhance our
fair  lending  efforts  and support the goal of  eliminating  predatory  lending
practices.

Environmental

In the course of our business, we may acquire properties securing loans that are
in default. There is a risk that hazardous or toxic waste could be found on such
properties.  If this occurs,  we could be held responsible  under applicable law
for the cost of cleaning up or removing  the  hazardous  waste.  This cost could
exceed the value of the underlying properties.

Employees

At December 31, 2003, we employed no employees.  As is standard  practice in the
industry,  all of our loan officers and processors are independent  contractors.
We have no collective bargaining agreements.  We believe that our relations with
our independent contractors are satisfactory.

Available Information

We make available,  free of charge, on the Investor Relations Section of our Web
site  (http:/www.silveradofinancial.com/investors.htm)  a link to the Securities
and Exchange Commission Web Site where all of our filings may be found.

RISK FACTORS

Stockholders  and  prospective  purchasers of our common stock should  carefully
consider the risks  described  below before  making a decision to buy our common
stock.  If any of the following  risks  actually  occurs,  our business could be
harmed.  In that case, the trading price of our common stock could decline,  and
you may lose all or part of your investment. When determining whether to buy our
common stock,  stockholders and prospective  purchasers should also refer to the
other information in this Form 10-K,  including our financial statements and the
related notes.

A prolonged  economic  slowdown or a lengthy or severe  recession could hurt our
operations, particularly if it results in a decline in the real estate market.

The risks associated with our business are more acute during periods of economic
slowdown or recession  because  these  periods may be  accompanied  by decreased
demand for consumer  credit and declining  real estate  values.  Declining  real
estate  values  reduce the  ability of  borrowers  to use home equity to support
borrowings  because  they  negatively  affect  loan-to-value  ratios of the home
equity collateral. In addition, because we make a substantial number of loans to
credit-impaired  borrowers, the actual rates of delinquencies,  foreclosures and
losses on these loans could be higher during economic  slowdowns.  Any sustained
period of increased delinquencies, foreclosures or losses could adversely affect
our ability to sell loans, the prices we receive for our loans, the value of our
mortgage loans held for investment or our residual interests in securitizations,
which  could  have a  material  adverse  effect on our  results  of  operations,
financial condition and business prospects.

Our earnings may decrease  because of increases or decreases in interest  rates.
Our  profitability  may be directly  affected by changes in interest rates.  The
following  are some of the risks we face  related  to an  increase  in  interest
rates:

                                       13
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

     o    An interest  rate  increase  may affect our  earnings by reducing  the
          spread  between  the  interest we receive on our loans and our funding
          costs.

     o    A substantial and sustained increase in interest rates could adversely
          affect our loan  origination  volume  because  refinancing an existing
          loan would be less  attractive  and qualifying for a purchase loan may
          be more difficult.

     o    During periods of rising interest rates,  the value and  profitability
          of  our  loans  may  be  negatively   affected  between  the  date  of
          origination or purchase and the date we sell or securitize the loan.

     o    When and if we securitize  loans,  the value of residual  interests we
          retain and the income we receive from the  securitizations  structured
          as financings  are based  primarily on the London  Inter-Bank  Offered
          Rate  ("LIBOR").  This  is  because  the  interest  on the  underlying
          mortgage  loans is based on fixed  rates  payable on the loans for the
          first two or three  years while the  bondholders  are  generally  paid
          based on an adjustable LIBOR-based yield. An increase in LIBOR reduces
          the net income we would receive from, and the value of, these mortgage
          loans and residual interests.

     o    Our adjustable-rate mortgage loans have periodic and lifetime interest
          rate caps above which the interest  rate on the loans may not rise. In
          the event of general interest rate increases,  the rate of interest on
          these mortgage  loans could be limited,  while the rate payable on the
          senior certificates  representing  interests in a securitization trust
          into which these loans are sold may be uncapped. This would reduce the
          amount   of  cash  we   receive   over  the  life  of  the   loans  in
          securitizations  structured as financings and our residual  interests,
          and could  require us to reduce  the  carrying  value of our  residual
          interests.

We are also subject to risks from  decreasing  interest  rates.  For example,  a
significant  decrease in interest  rates could  increase the rate at which loans
are prepaid,  which also could  require us to reduce the  carrying  value of any
residual interests.  If prepayments are greater than expected, the cash we would
receive   over  the  life  of  our   residual   interests   would  be   reduced.
Higher-than-expected  prepayments could also have a negative effect on the value
of any servicing portfolio.

Any such changes in interest  rates could have a material  adverse effect on our
results of operations, financial condition and business prospects.

An interruption or reduction in the  securitization and whole loan markets could
hurt our financial position.

As we implement our plan to become a full service mortgage  banking company,  we
will become increasingly  dependent on the securitization market for the sale of
our loans because we intend to securitize  loans directly in the future and many
of the  whole  loan  buyers  who  purchase  loans  do so with the  intention  to
securitize  them.  The  securitization  market  is  dependent  upon a number  of
factors,  including  general economic  conditions,  conditions in the securities
market   generally  and  conditions  in  the  asset-backed   securities   market
specifically.  In addition,  poor  performance of previously  securitized  loans
could harm our access to the securitization  market.  Accordingly,  a decline in
the  securitization  market or a change in the  market's  demand for loans could


                                       14
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

have a material adverse effect on our results of operations, financial condition
and business prospects.

If we are unable to maintain adequate  financing  sources,  our earnings and our
financial   position  will  suffer  and   jeopardize  our  ability  to  continue
operations.

We require  substantial  cash to support  our  operating  activities  and growth
plans.  Our primary  sources of cash are profits  generated by sales of mortgage
products  and the sale of our  capital  stock;  however,  we intend to  generate
income from warehouse and aggregation credit facilities, asset-backed commercial
paper and the  proceeds  from the sales and  securitizations  of loans.  We also
intend to finance residual  interests in securitization  transactions  using Net
Interest  Margin,  or  NIM,  structures.  As of  December  31,  2003,  we had no
short-term   warehouse  and  aggregation   credit   facilities  or  asset-backed
commercial  paper  providing  us with any  committed  or  uncommitted  borrowing
capacity to fund loan originations and purchases pending the pooling and sale of
such loans. As of March 27, 2004, we are in negotiations to acquire a short term
warehouse  facility.  If we cannot  maintain  or  replace  these  facilities  on
comparable  terms and  conditions,  we may incur  substantially  higher interest
expense that would reduce our profitability.

During volatile times in the capital and secondary markets, access to warehouse,
aggregation and residual  financing as well as access to the  securitization and
secondary markets for the sale of loans has been severely constricted. If we are
unable to  maintain  adequate  financing  or other  sources of  capital  are not
available, we would be forced to suspend or curtail our operations,  which could
have a material adverse effect on our results of operations, financial condition
and business prospects.

New legislation  could restrict our ability to make mortgage loans,  which could
adversely impact our earnings.

Several states and cities are  considering  or have passed laws,  regulations or
ordinances aimed at curbing predatory lending practices.  The federal government
is also  considering  legislative  and regulatory  proposals in this regard.  In
general, these proposals involve lowering the existing federal Homeownership and
Equity   Protection  Act  thresholds  for  defining  a  "high-cost"   loan,  and
establishing  enhanced  protections  and remedies for borrowers who receive such
loans.  However,  many of these laws and rules extend beyond  curbing  predatory
lending practices to restrict commonly  accepted lending  activities,  including
some of our  planned  activities.  For  example,  some of these  laws and  rules
prohibit any form of prepayment charge or severely restrict a borrower's ability
to finance the points and fees charged in  connection  with his or her loan.  In
addition,  some of these laws and  regulations  provide for  extensive  assignee
liability for warehouse lenders,  whole loan buyers and  securitization  trusts.
Because of enhanced risk and for  reputational  reasons,  many whole loan buyers
elect not to  purchase  any loan  labeled as a "high cost" loan under any local,
state or federal  law or  regulation.  Accordingly,  these laws and rules  could
severely  constrict the secondary  market for a significant  portion of our loan
production.  This would  effectively  preclude us from  continuing  to originate
loans that fit within  the newly  defined  thresholds.  For  example,  after the
October 1, 2002 effective date of the Georgia Fair Lending Act, many lenders and
secondary  market  buyers  refused to finance or purchase  Georgia  loans.  As a
result, many companies were forced to cease providing mortgages in Georgia until
the law's  amendment a few months  later.  Similar laws have gone into effect in
New Jersey,  as of November 27, 2003 ("New Jersey Home  Ownership Act of 2002"),
and in New  Mexico,  as of  January 1, 2004 ("New  Mexico  Home Loan  Protection


                                       15
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

Act"),  that have impacted  origination of loans in those states.  The potential
long term  reduction  in loans in New Jersey  and in New  Mexico  could be quite
severe.  Moreover,  some of our  competitors who are national banks or federally
chartered  thrifts may not be subject to these laws and may as a consequence  be
able to capture market share from us and other lenders.  For example, the Office
of the Comptroller of the Currency recently issued regulations effective January
7, 2004 that preempt state and local laws that seek to regulate mortgage lending
practices.  Passage of such laws could  increase  compliance  costs,  reduce fee
income and reduce origination volume, all of which would have a material adverse
effect on our results of operations, financial condition and business prospects.

We are no longer able to rely on the Alternative  Mortgage  Transactions  Parity
Act to preempt  certain state law  restrictions on prepayment  penalties,  which
could adversely impact our earnings.

The value of a mortgage loan depends,  in part, upon the expected period of time
that the mortgage  loan will be  outstanding.  If a borrower pays off a mortgage
loan in advance of this  expected  period,  the holder of the mortgage loan does
not realize the full value  expected to be received  from the loan. A prepayment
penalty  payable by a borrower  who repays a loan earlier  than  expected  helps
offset the reduction in value resulting from the early payoff. Consequently, the
value  of a  mortgage  loan is  enhanced  to the  extent  the  loan  includes  a
prepayment penalty, and a mortgage lender can offer a lower interest rate and/or
lower loan fees on a loan which has a prepayment penalty.  Prepayment  penalties
are an important feature used to obtain value on loans.

Certain state laws restrict or prohibit prepayment  penalties on mortgage loans,
and until July 2003,  lenders  could rely on the  federal  Alternative  Mortgage
Transactions  Parity Act (the "Parity Act") and related rules issued in the past
by the Office of Thrift  Supervision (the "OTS") to preempt state limitations on
prepayment  penalties.  The  Parity  Act was  enacted  to  extend  to  financial
institutions,  other  than  federally  chartered  depository  institutions,  the
federal  preemption  that federally  chartered  depository  institutions  enjoy.
However,  on September  25,  2002,  the OTS released a new rule that reduced the
scope of the Parity Act preemption and, as a result;  we are not able to rely on
the  Parity Act to preempt  state  restrictions  on  prepayment  penalties.  The
effective date of the new rule,  originally  January 1, 2003,  was  subsequently
extended by the OTS until July 1, 2003 in response to concerns  from  interested
parties about the burdens  associated with  compliance.  The elimination of this
federal  preemption  requires us to comply with state restrictions on prepayment
penalties.  These restrictions  prohibit us from charging any prepayment penalty
in eight  states  and limit  the  amount or other  terms and  conditions  of our
prepayment penalties in several other states. This may place us at a competitive
disadvantage  relative to financial  institutions that continue to enjoy federal
preemption  of such state  restrictions.  Such  institutions  are able to charge
prepayment  penalties without regard to state restrictions and, as a result, may
be able to offer loans with interest rate and loan fee structures  that are more
attractive  than the interest rate and loan fee  structures  that we are able to
offer.

The scope of our lending operations exposes us to risks of noncompliance with an
increasing and inconsistent body of complex laws and regulations at the federal,
state and local levels.

Currently,  we are  licensed to  originate  mortgage  loans only in  California,
however we are in the process of applying for licenses to generate  loans in all
50  states,  and when  licensed  we will be forced  to comply  with the laws and
regulations,  as well as judicial and administrative decisions, for all of these


                                       16
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

jurisdictions,  as well as an extensive body of federal law and regulations. The
volume of new or modified  laws and  regulations  has increased in recent years,
and,  individual  cities and  counties  have  begun to enact laws that  restrict
non-prime loan origination activities in those cities and counties. The laws and
regulations of each of these  jurisdictions are different,  complex and, in some
cases, in direct  conflict with each other. As our operations  continue to grow,
it may be more difficult to comprehensively  identify,  to accurately  interpret
and to  properly  program  our  technology  systems  and  effectively  train our
personnel with respect to all of these laws and regulations, thereby potentially
increasing  our  exposure  to the risks of  noncompliance  with  these  laws and
regulations.

Our failure to comply with these laws can lead to:

     o    civil and criminal liability;

     o    loss of approved status;

     o    demands for indemnification or loan repurchases from purchasers of our
          loans;

     o    class action lawsuits; or

     o    administrative enforcement actions.

Any of these  results  could have a material  adverse  effect on our  results of
operations, financial condition and business prospects.

If warehouse lenders and securitization underwriters face exposure stemming from
legal  violations  committed by the companies to whom they provide  financing or
underwriting  services,  this could increase our borrowing  costs and negatively
affect the market for whole loans and mortgage-backed securities.

In June 2003,  a  California  jury found a warehouse  lender and  securitization
underwriter liable in part for fraud on consumers  committed by a lender to whom
it  provided  financing  and  underwriting  services.  The jury  found  that the
investment bank was aware of the fraud and substantially  assisted the lender in
perpetrating  the fraud by providing  financing and  underwriting  services that
allowed the lender to  continue to operate,  and held the bank liable for 10% of
the  plaintiff's  damages.  This  is the  first  case we  know  of in  which  an
investment  bank was held partly  responsible  for  violations  committed by the
bank's  mortgage  lender  customer.  If other  courts or  regulators  adopt this
theory,  investment  banks may face  increased  litigation  as they are named as
defendants in lawsuits and  regulatory  actions  against the mortgage  companies
with which they do business. Some investment banks may exit the business, charge
more for  warehouse  lending or reduce the  prices  they pay for whole  loans in
order to build in the costs of this potential  litigation.  This could, in turn,
have a negative  effect on our results of  operations,  financial  condition and
business prospects.

High delinquencies or losses on mortgage loans in  securitizations  may decrease
cash flows or impair our ability to sell or securitize loans in the future.

Loans made to lower credit grade borrowers, including credit-impaired borrowers,
entail a higher  risk of  delinquency  and  higher  losses  than  loans  made to
borrowers with better credit. We plan to make a substantial portion of our loans
to borrowers who do not qualify for loans from conventional mortgage lenders. No
assurance  can be given that our  underwriting  criteria or methods  will afford


                                       17
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

adequate protection against the higher risks associated with loans made to lower
credit grade  borrowers.  We will be subject to risks of default and foreclosure
following  the sale of loans through  securitization.  To the extent such losses
are greater than expected;  the cash flows received through  residual  interests
and from  securitizations  structured as financings would be reduced.  Increased
delinquencies  or losses may also  reduce or  eliminate  our  ability to sell or
securitize  loans in the future and could have a substantial,  material  adverse
effect on our operations, financial condition and business prospects.

Our inability to realize cash proceeds  from loan sales and  securitizations  in
excess  of the loan  acquisition  cost  could  adversely  affect  our  financial
position.

The net cash proceeds  received from loan sales consist of the premiums received
on sales of loans in excess of the outstanding  principal balance, plus the cash
proceeds  received from  securitizations,  minus the discounts on any loans that
are sold for less than the outstanding  principal  balance.  If we are unable to
originate loans at a cost lower than the cash proceeds realized from loan sales,
our results of operations,  financial  condition and business prospects could be
materially adversely affected.

Warehouse  and  aggregation  financing  is subject to margin  calls based on the
lender's opinion of the value of loan collateral.  An unanticipated large margin
call could adversely affect our liquidity.

The amount of  financing  we may receive  under any  warehouse  and  aggregation
financing  agreements  depends in large part on the  lender's  valuation  of the
mortgage  loans  that  secure  the  financings.  Asset-backed  commercial  paper
facilities have similar  provisions.  Each such facility provides the lender the
right,  under certain  circumstances,  to reevaluate  the loan  collateral  that
secures  outstanding  borrowings at any time. In the event the lender determines
that  the  value of the  loan  collateral  has  decreased,  it has the  right to
initiate a margin  call.  A margin  call would  require us to provide the lender
with additional collateral or to repay a portion of the outstanding  borrowings.
Any such  margin  call could have a material  adverse  effect on our  results of
operations, financial condition and business prospects.

We face intense competition that could adversely affect our market share and our
revenues.

We face intense competition from finance and mortgage banking companies and from
Internet-based  lending  companies.  In addition,  certain  government-sponsored
entities,  such  as  Fannie  Mae and  Freddie  Mac,  are  also  expanding  their
participation in the non-prime  mortgage  industry.  These  government-sponsored
entities have a size and  cost-of-funds  advantage  that allows them to purchase
loans  with  lower  rates  or fees  than we are  willing  to  offer.  While  the
government-sponsored  entities  presently  do not have the  legal  authority  to
originate mortgage loans,  including non-prime loans, they do have the authority
to buy  loans.  A  material  expansion  of their  involvement  in the  market to
purchase  non-prime loans could change the dynamics of the industry by virtue of
their sheer size,  pricing  power and the  inherent  advantages  of a government
charter.  In  addition,  if as a result  of their  purchasing  practices,  these
government-sponsored  entities  experience  significantly   higher-than-expected
losses,  such experience could adversely affect the overall investor  perception
of the non-prime mortgage industry.

Competitors with lower costs of capital have a competitive advantage over us. In
addition,  establishing  a lending  operation such as ours requires a relatively


                                       18
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

small  commitment  of capital  and human  resources.  This low  barrier to entry
permits new  competitors to enter our markets  quickly and compete with us. This
could have a material  adverse  effect on our results of  operations,  financial
condition and business prospects.

Some thrifts, national banks and their operating subsidiaries are also expanding
their lending  activities.  By virtue of their charters,  these institutions are
exempt  from  complying  with many of the state and local  laws that  affect our
operations.  For example,  they can offer loans with prepayment  charges in many
jurisdictions where we cannot. If more of these federally chartered institutions
are able to use their preemptive ability to provide more competitive pricing and
terms than we can offer, it could have a material  adverse effect on our results
of operations, financial condition and business prospects.

The  intense  competition  in the  mortgage  industry  has  also  led  to  rapid
technological developments, evolving industry standards and frequent releases of
new  products  and  enhancements.  As mortgage  products are offered more widely
through  alternative  distribution  channels,  such as the  Internet,  we may be
required  to make  significant  changes  to our  information  systems to compete
effectively. Our inability to continue enhancing our current capabilities, or to
adapt to other  technological  changes  in the  industry,  could have a material
adverse  effect on our results of operations,  financial  condition and business
prospects.

Our hedging  strategies may not be successful in mitigating our risks associated
with changes in interest rates.

We intend to use various derivative financial  instruments to provide a level of
protection  against  changes in  interest  rates,  but no hedging  strategy  can
protect us  completely.  When rates change we expect to record a gain or loss on
derivatives  which would be offset by an inverse change in the value of loans or
residual interests.  We cannot assure you, however,  that our use of derivatives
will offset the risks  related to changes in interest  rates.  It is likely that
there will be periods in the future,  during  which we will incur  losses  after
accounting for our derivative  financial  instruments.  The derivative financial
instruments  we select may not have the effect of  reducing  our  interest  rate
risk. In addition,  the nature and timing of hedging  transactions may influence
the effectiveness of these strategies.  Poorly designed strategies or improperly
executed  transactions could actually increase our risk and losses. In addition,
hedging  strategies  involve  transaction  and other costs. We cannot assure you
that our hedging strategy and the derivatives that we use will adequately offset
the risk of interest rate volatility or that our hedging  transactions  will not
result in losses.

The  complex  federal,   state  and  municipal  laws  governing  loan  servicing
activities could increase our exposure to the risk of noncompliance.

We intend to service the loan we originate on a nationwide basis.  Therefore, we
must  comply  with  the  laws  and   regulations,   as  well  as  judicial   and
administrative  decisions,  of all  relevant  jurisdictions  pertaining  to loan
servicing,  as well as an extensive  body of federal laws and  regulations.  The
volume of new or modified  laws and  regulations  has increased in recent years,
and, in addition,  some individual  municipalities have begun to enact laws that
restrict loan servicing  activities.  The laws and  regulations of each of these
jurisdictions are different, complex and, in some cases, in direct conflict with
each  other.  As our  servicing  operations  continue  to  grow,  it may be more
difficult to comprehensively  identify,  to accurately interpret and to properly
program our technology  systems and effectively train our personnel with respect


                                       19
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

to all of  these  laws  and  regulations,  thereby  potentially  increasing  our
exposure to the risks of noncompliance with the laws and regulations  pertaining
to loan  servicing.  Our failure to comply with these laws could lead to,  among
other things:  (i) civil and criminal  liability,  including  potential monetary
penalties; (ii) legal defenses causing delaying or otherwise adversely affecting
the  servicer's  ability to enforce  loans,  or giving the borrower the right to
rescind or cancel the loan  transaction;  (iii) class action lawsuits;  and (iv)
administrative  enforcement  actions.  This could  result in a material  adverse
effect on our results of operations, financial condition and business prospects.

Any non-prime  loans we originate  will generally  have higher  delinquency  and
default  rates,  which could  result in losses on loans that we are  required to
repurchase.

Non-prime  mortgage loans  generally have higher  delinquency  and default rates
than prime mortgage loans. Delinquency interrupts the flow of projected interest
income from a mortgage loan,  and default can  ultimately  lead to a loss if the
net  realizable  value  of the  real  property  securing  the  mortgage  loan is
insufficient to cover the principal and interest due on the loan. Also, our cost
of financing and servicing a delinquent  or defaulted  loan is generally  higher
than for a performing loan. We bear the risk of delinquency and default on loans
beginning  when we originate  them. In whole loan sales our risk of  delinquency
typically only extends to the first payment,  but when we securitize we continue
to bear some exposure to delinquencies and losses through our residual interests
and the loans underlying our on-balance sheet  securitization  transactions.  We
are required to establish  reserves based on our anticipated  delinquencies  and
losses.  We also  re-acquire the risks of delinquency and default for loans that
we are obligated to repurchase. We attempt to manage these risks with risk-based
loan pricing and appropriate  underwriting policies and loan collection methods.
However,   if  such  policies  and  methods  are  insufficient  to  control  our
delinquency and default risks and do not result in appropriate  loan pricing and
appropriate  loss reserves,  our business,  financial  condition,  liquidity and
results of operations could be harmed.

We are subject to losses due to  fraudulent  and  negligent  acts on the part of
loan applicants, mortgage brokers, other vendors and our employees.

When we originate  mortgage loans, we rely heavily upon information  supplied by
third  parties  including  the  information  contained in the loan  application,
property appraisal,  title information and employment and income  documentation.
If any of this information is intentionally  or negligently  misrepresented  and
such  misrepresentation  is not detected prior to loan funding, the value of the
loan may be significantly lower than expected.  Whether a  misrepresentation  is
made by the loan applicant,  the mortgage broker,  another third party or one of
our  employees,  we  generally  bear  the  risk  of  loss  associated  with  the
misrepresentation.  A loan subject to a material  misrepresentation is typically
unsaleable  or subject to  repurchase  if it is sold prior to  detection  of the
misrepresentation,  and the persons and entities involved are often difficult to
locate and it is often  difficult  to collect any  monetary  losses that we have
suffered from them.

There are controls  and  processes  designed to help us identify  misrepresented
information in our loan origination  operations.  We cannot assure you, however,
that we have detected or will detect all misrepresented  information in our loan
originations.

We may be subject  to fines or other  penalties  based  upon the  conduct of our
independent brokers.

                                       20
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

The mortgage brokers from which we obtain loans have parallel and separate legal
obligations to which they are subject.  While these laws may not explicitly hold
the  originating  lenders  responsible  for the  legal  violations  of  mortgage
brokers,  increasingly  federal  and state  agencies  have sought to impose such
assignee  liability.  Recently,  for example,  the United  States  Federal Trade
Commission  ("FTC")  entered into a settlement  agreement with a mortgage lender
where the FTC  characterized a broker that had placed all of its loan production
with a single lender as the "agent" of the lender. The FTC imposed a fine on the
lender in part because,  as "principal," the lender was legally  responsible for
the mortgage broker's unfair and deceptive acts and practices. The United States
Justice  Department in the past has sought to hold a non-prime  mortgage  lender
responsible for the pricing practices of its mortgage brokers, alleging that the
mortgage lender was directly  responsible for the total fees and charges paid by
the borrower under the Fair Housing Act even if the lender neither dictated what
the  mortgage  broker  could  charge  nor kept the  money  for its own  account.
Accordingly,  we may be  subject  to  fines or other  penalties  based  upon the
conduct of our independent mortgage brokers.

Our business is  dependent  upon  conditions  in  California  where we conduct a
significant amount of our business.

In 2003,  100% of the mortgage  loans we originated  were secured by property in
California.  An overall  decline in the economy or the  residential  real estate
market,  or the occurrence of a natural  disaster,  such as an earthquake,  or a
major terrorist  attack in California  could  adversely  affect the value of the
mortgaged  properties  in  California  and  increase  the  risk of  delinquency,
foreclosure,  bankruptcy, or loss on mortgage loans in our portfolio. This would
negatively  affect our ability to purchase,  originate and  securitize  mortgage
loans,  which could have a material  adverse  effect on our business,  financial
condition and results of operations.

If many of our borrowers  become  subject to the  Soldiers'  and Sailors'  Civil
Relief Act of 1940, as amended our cash flows from our residual  securities  and
our securitizations structured as financings may be adversely affected.

Under the Soldiers' and Sailors' Civil Relief Act of 1940, a borrower who enters
military service after the origination of his or her mortgage loan generally may
not be  charged  interest  above an annual  rate of 6% during  the period of the
borrower's  active duty  status.  The Act also  applies to a borrower who was on
reserve  status and is called to active duty after  origination  of the mortgage
loan.  A  prolonged,  significant  military  mobilization  as part of the war on
terrorism or the war in Iraq could  increase the number of the  borrowers in our
securitized  pools who are subject to this Act and thereby  reduce the  interest
payments  collected from those borrowers.  To the extent the number of borrowers
who are subject to this Act is significant, the cash flows we receive from loans
underlying our on-balance sheet  securitizations and from our residual interests
would be  reduced,  which  could  cause us to reduce the  carrying  value of our
residual interests and would decrease our earnings.  In addition,  the Soldiers'
and Sailors' Civil Relief Act of 1940, imposes limitations that would impair the
ability of the  servicer to foreclose  on an affected  mortgage  loan during the
borrower's period of active duty status, and under certain circumstances, during
an  additional  three month period  thereafter.  Any such  reduction in our cash
flows or impairment in our performance  could have a material  adverse effect on
our results of operations, financial condition and business prospects.

The inability to attract and retain qualified employees could significantly harm
our business.

                                       21
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

We are dependent on our account  executives  and retail loan officers to attract
borrowers  by,  among other  things,  developing  relationships  with  financial
institutions,   other  mortgage  companies  and  brokers,  real  estate  agents,
borrowers  and others.  We believe that these  relationships  lead to repeat and
referral  business.  The market for skilled account executives and loan officers
is highly  competitive and historically has experienced a high rate of turnover.
In addition,  if a manager leaves New Century,  there is an increased likelihood
that other  members of his or her team will follow.  Competition  for  qualified
account  executives and loan officers may lead to increased hiring and retention
costs.  If we are  unable to attract  or retain a  sufficient  number of skilled
account  executives  at  manageable  costs,  we will be  unable to  continue  to
originate  quality  mortgage loans that we are able to sell for a profit,  which
would have a material  adverse  effect on our results of  operations,  financial
condition and business prospects.

An  interruption  in or breach of our  information  systems  may  result in lost
business.

We rely  heavily  upon  communications  and  information  systems to conduct our
business.  Any failure or  interruption or breach in security of our information
systems or the  third-party  information  systems  on which we rely could  cause
underwriting or other delays and could result in fewer loan  applications  being
received,  slower  processing  of  applications  and reduced  efficiency in loan
servicing.  We are  required  to  comply  with  significant  federal  and  state
regulations with respect to the handling of customer information, and a failure,
interruption  or breach of our  information  systems  could result in regulatory
action and  litigation  against us. We cannot  assure you that such  failures or
interruptions  will not occur or if they do occur  that they will be  adequately
addressed by us or the third  parties on which we rely.  The  occurrence  of any
failures or interruptions could have a material adverse effect on our results of
operations, financial condition and business prospects.

The success and growth of our business  will depend upon our ability to adapt to
and implement technological changes.

Our mortgage loan origination  business is currently  dependent upon our ability
to effectively interface with our brokers, borrowers and other third parties and
to efficiently  process loan applications and closings.  The origination process
is becoming more dependent upon technological  advancement,  such as the ability
to process applications over the Internet, accept electronic signatures, provide
process status updates instantly and other  customer-expected  conveniences that
are  cost-efficient  to our  process.  In  addition,  we are in the  process  of
implementing a new loan origination system. Implementing and becoming proficient
with the new loan  origination  system  and other new  technology  will  require
significant  financial and personnel  resources.  There is no guarantee that the
implementation  of our new loan origination  system or other new technology will
be successful. To the extent that we become reliant on any particular technology
or technological  solution, we may be adversely affected to the extent that such
technology or  technological  solution (i) becomes  non-compliant  with existing
industry  standards,  (ii)  fails  to meet or  exceed  the  capabilities  of our
competitors'  equivalent  technologies  or  technological  solutions,  or  (iii)
becomes  increasing  expensive  to service,  retain and  update.  Any failure to
acquire  technology  or  technology  solutions  when  necessary  could limit our
ability to remain  competitive  in our industry and could also limit our ability
to increase the  cost-efficiencies  of our operating  model,  which would have a
material  adverse effect on our results of operations,  financial  condition and
business prospects.

                                       22
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

We may be required to  repurchase  mortgage  loans or indemnify  investors if we
breach  representations  and  warranties,   which  could  adversely  impact  our
earnings.

When we sell  loans,  we are  required  to make  customary  representations  and
warranties  about  such  loans  to the  loan  purchaser.  Our  whole  loan  sale
agreements require us to repurchase or substitute loans in the event we breach a
representation   or   warranty   given   to  the  loan   purchaser   or  make  a
misrepresentation  during the mortgage loan origination process. In addition, we
may be required  to  repurchase  loans as a result of  borrower  fraud or in the
event of early payment default on a mortgage loan. Likewise,  we are required to
repurchase  or  substitute  loans if we breach a  representation  or warranty in
connection with our  securitizations.  The remedies  available to a purchaser of
mortgage  loans are  generally  broader  than those  available to us against the
originating  broker or  correspondent.  Further,  if a  purchaser  enforces  its
remedies  against us, we may not be able to enforce the remedies we have against
the sellers.  The  repurchased  loans  typically can only be financed at a steep
discount to their repurchase price, if at all. They are also typically sold at a
significant  discount to the unpaid principal  balance.  Significant  repurchase
activity could negatively affect our cash flow and results of operations.

We are exposed to risk of  environmental  liabilities with respect to properties
to which we take title.

In the course of our business,  we may  foreclose and take title to  residential
properties,  and could be subject to  environmental  liabilities with respect to
these  properties.  We may be held liable to a  governmental  entity or to third
parties for property damage, personal injury, investigation,  and clean-up costs
incurred by these parties in connection with environmental contamination, or may
be  required  to  investigate  or clean up  hazardous  or toxic  substances,  or
chemical  releases at a property.  The costs  associated with  investigation  or
remediation activities could be substantial. In addition, as the owner or former
owner of a  contaminated  site,  we may be subject to common law claims by third
parties based on damages and costs  resulting from  environmental  contamination
emanating  from  the  property.   If  we  ever  become  subject  to  significant
environmental  liabilities,  our  business,  financial  condition and results of
operations could be materially and adversely affected.

Our charter and bylaws and Nevada law contain provisions that could discourage a
takeover.

Our  amended  and  restated  certificate  of  incorporation  and our amended and
restated bylaws include various  provisions that could delay, defer or prevent a
takeover  attempt that may be in the best  interest of our  stockholders.  These
provisions include the existence of a classified board of directors, the ability
of our board of  directors to issue shares of our  preferred  stock  without any
further  stockholder  approval and requirements  that (i) our stockholders  give
advance notice with respect to certain  proposals they may wish to present for a
stockholder  vote, (ii) our  stockholders act only at annual or special meetings
and  (iii)  two-thirds  of all  directors  approve  a change  in the  number  of
directors  on our board of  directors.  Issuance  of our  preferred  stock could
discourage bids for the common stock at a premium as well as create a depressive
effect on the market price of our common stock.

We are also subject to Nevada  General  Corporation  Law which could  discourage
potential  acquisition  proposals,  delay or  prevent  a change of  control  and
prevent changes in our management.

                                       23
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS - continued

If we do not manage our growth effectively,  our financial  performance could be
harmed.

Rapid  growth  places,  and will  continue to place,  certain  pressures  on our
management,  administrative,  operational  and financial  infrastructure.  As of
December 31, 2003, we had no employees as all of our personnel were  independent
contractors;   however,  we  have  recently  applied  for  licensure  under  the
California  Department of  Corporations  as a Consumer  Finance  Lender and will
begin  hiring loan  executives  as  employees.  Many of these  employees  have a
limited  understanding of our systems and controls.  The increase in the size of
our  operations  may make it more  difficult  for us to ensure that we originate
quality loans and that we service them effectively.  We will need to attract and
hire  additional  sales and  management  personnel in an  intensely  competitive
hiring  environment  in order to preserve and increase our market share.  At the
same  time,  we will need to  continue  to upgrade  and  expand  our  financial,
operational and managerial systems and controls.

Various  factors  may  cause  the  market  price of our  common  stock to become
volatile, which could adversely affect our ability to access the capital markets
in the future.

The  market  price of our  common  stock may  experience  fluctuations  that are
unrelated to our operating performance.  In particular,  the price of our common
stock may be affected by general market price  movements as well as developments
specifically related to the consumer finance industry and the financial services
sector.  These could  include,  among other  things,  interest  rate  movements,
quarterly  variations or changes in financial estimates by securities  analysts,
or a significant  reduction in the price of the stock of another  participant in
the consumer finance  industry.  This volatility may make it difficult for us to
access the capital markets through additional  secondary offerings of our common
stock, regardless of our financial performance.

ITEM 2. PROPERTIES

None.

ITEM 3. LEGAL PROCEEDINGS

On January  27,  2004 DL Pacific  Center LP ("DL  Pacific")  filed a lawsuit for
$40,444 plus costs and attorney's  fees against us in San Diego County  Superior
Court.  The suit alleges that,  after we purchased San Francisco  Funding,  Inc.
("SFF") in November 2003, we assumed SFF's obligations  pursuant to DL Pacific's
lease with SFF by accepting the benefits of such lease and by  negotiating  with
DL Pacific for amendments to the lease. We are vigorously defending the lawsuit.
It is  managements  opinion,  that we have  meritorious  defenses based upon the
facts  that (1) we did not  accept  the  benefits  of the lease  and/or  (2) the
alleged  promise(s)  made by us is  (are)  unenforceable  under  the  California
Statute of Frauds  because the alleged  lease was for more than one year and was
not in writing, as required under the Statute.

On March 9, 2004 Robert E. Vener ("Vener") filed an amendment to his lawsuit for
$7,500 per month from November 2003 to March 2006 plus costs and attorney's fees
against us in Marin  County  Superior  Court.  The suit alleges  that,  after we
purchased San Francisco Funding, Inc. ("SFF") in November 2003, we assumed SFF's
obligations  pursuant to Vener's lease with SFF by stating and  representing  to
Vener that we would be responsible  for any amounts due from SFF pursuant to the
lease, and that Vener relied on our representations by allowing SFF to remain on
the premises following SFF's default in the payment of rent on the lease. We are


                                       24
<PAGE>

ITEM 3. LEGAL PROCEEDINGS - continued

vigorously  defending  the  lawsuit.  It is  managements  opinion,  that we have
meritorious defenses based upon the facts that (1) we did not state or represent
that we would be responsible  for any amounts due from SFF pursuant to the lease
and/or (2) the alleged  promise(s) made by us is (are)  unenforceable  under the
California  Statute of Frauds  because the  alleged  lease was for more than one
year and was not in writing, as required under the Statute.

In regard to the DL Pacific and/or Vener lawsuit(s),  management intends to file
a  cross-complaint  against  the SFF and its major  stockholder(s)  MR. and Mrs.
Daniel Selis, for indemnity for the cost of defending the actions and for breach
of  contract,   fraud  and/or   interference  with  our  advantageous   business
relationships because of : (1) SFF's material breaches of the SFF stock purchase
agreement and SFF's material  misrepresentations  to us of their liabilities and
obligations,  (2) SFF's  written false  statements to its creditors  that we had
assumed  their debts,  and (3) SFF's  forwarding of its phone calls tour offices
and directing  their creditors to call our offices  concerning  payment of their
liabilities and obligations.  We anticipate that SFF will file a non-meritorious
cross-complaint against us for breach of the stock purchase agreement.

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

None.



                                       25
<PAGE>

PART II

ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
MATTERS

GENERAL

The Company has an  authorized  capitalization  of  20,000,000  shares of common
stock and  1,000,000  shares of preferred  stock,  $0.001 par value per share of
which  14,839,492  were issued and outstanding at December 31, 2003. On April 3,
2003 the Company  increased the common shares  authorized to 100,000,000  shares
and the  preferred  stock to  5,000,000  shares.  On April 29,  2003 the company
reversed the number of authorized  shares from 100,000,000  common and 5,000,000
preferred to 20,000,000 and 1,000,000  respectively.  The issued and outstanding
were similarly reversed on a five for one basis.

MARKET INFORMATION

The Company's common stock is traded in the  over-the-counter  market on the OTC
Bulletin Board under the symbol "SLVO". The following table sets forth the range
of high and low bid quotes of the  Company's  Common Stock per calendar  quarter
which  reflect   inter-dealer  prices  without  retail  mark-up,   mark-down  or
commission and may not necessarily represent actual transactions.

                                  2003
                                          Low       High
             Fourth Quarter (1)        $ 0.150   $ 0.420
             Third Quarter (1)         $ 0.100   $ 0.220
             Second Quarter (1)        $ 0.150   $ 0.210
             First Quarter (1)         $ 0.200   $ 0.350

                                  2002
                                          Low       High
             Fourth Quarter (1)         $ 0.100  $ 0.900
             Third Quarter (1)          $ 0.110  $ 0.600
             Second Quarter (1)         $ 0.110  $ 0.275
             First Quarter (1)          $ 0.080  $ 0.300

             (1)  As adjusted by the April 29, 2003 five for one rollback.

On March 10, 2000 the  Company's  common  shares began trading on the Berlin and
Frankfurt Stock Exchanges in Germany under the symbol "919335".

HOLDERS

The Company estimates that there are approximately 200 shareholders of record of
the Company's Common Stock and approximately 300 additional shareholders holding
Common Stock in street name.

RECENT SALES OF UNREGISTERED SECURITIES

On December 2, 2003 the company  issued  20,000  restricted  Common shares to an
accredited  investor in consideration of the cancellation of $2,500 in debt. The
issuance of the stock was exempt from  registration  under  Section  4(2) of the
Securities Act. No underwriter was involved in the offer of sale of the shares.

                                       26
<PAGE>

ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
MATTERS - continued

On December 12, 2003 the company issued 400,000  restricted  Common shares to an
accredited  investor  for  $14,000  in cash and a  $16,000  retainer  for  legal
services.  The issuance of the stock was exempt from registration  under Section
4(2) of the Securities  Act. No underwriter was involved in the offer of sale of
the shares.

DIVIDENDS

The Company has never  declared or paid cash  dividends  on its common stock and
anticipates  that future  earnings,  if any, will be retained for development of
its business.  Payment of cash dividends in the future will be wholly  dependent
upon the Company's earnings, financial condition, capital requirements and other
factors  deemed  relevant by them. It is not likely that cash  dividends will be
paid in the  foreseeable  future.  In the event of the  acquisition of or merger
with a  business  by the  Company,  control  of the  Company  and its  Board  of
Directors may pass to others.  In that event,  the payment of dividends would be
wholly dependent upon such persons.

ITEM 6. MANAGEMENT'S PLAN OF OPERATION

THIS REPORT (AND ESPECIALLY THIS SECTION)  CONTAINS  FORWARD-LOOKING  STATEMENTS
WITHIN THE  MEANING  OF  SECTION  21E OF THE  SECURITIES  EXCHANGE  ACT OF 1934,
INCLUDING, WITHOUT LIMITATION,  STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS,
BELIEFS,  INTENTIONS, PLANS OR FUTURE STRATEGIES THAT ARE SIGNIFIED BY THE WORDS
"EXPECTS",  "PLANS" "ANTICIPATES",  "INTENDS",  "BELIEVES", OR SIMILAR LANGUAGE.
SUCH FORWARD-LOOKING  STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, THE SEEKING OF
REVENUE  PRODUCING  ACQUISITIONS,  THE DEVELOPMENT PLANS FOR THE TECHNOLOGIES OF
THE COMPANY,  TRENDS IN THE RESULTS OF THE  COMPANY"S  DEVELOPMENT,  ANTICIPATED
DEVELOPMENT  PLANS,  OPERATING  EXPENSES AND THE COMPANY'S  ANTICIPATED  CAPITAL
REQUIREMENTS AND CAPITAL  RESOURCES.  THESE  FORWARD-LOOKING  STATEMENTS INVOLVE
RISKS,  UNCERTAINTIES AND OTHER FACTORS. ALL FORWARD-LOOKING STATEMENTS INCLUDED
IN THIS DOCUMENT ARE BASED ON  INFORMATION  AVAILABLE TO THE COMPANY ON THE DATE
HEREOF AND SPEAK ONLY AS OF THE DATE HEREOF.  THE RISK FACTORS DISCUSSED IN THIS
ANNUAL  REPORT  ON FORM  10-KSB  ARE  AMONG  THOSE  FACTORS  THAT IN SOME  CASES
MAYAFFECT  THE  COMPANY'S  RESULTS AND COULD CAUSE THE ACTUAL  RESULTS TO DIFFER
MATERIALLY AND ADVERSELY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS.
SUBJECT  TO THE  ABOVE  QUALIFICATIONS  AND SUCH  RISK  FACTORS,  THE  FOLLOWING
DISCUSSION IS INTENDED TO PROVIDE AN ANALYSIS OF MANAGEMENT'S  PLAN OF OPERATION
AND SHOULD BE READ IN CONJUNCTION  WITH THE COMPANY'S  FINANCIAL  STATEMENTS AND
THE NOTES THERETO.

Silverado  Financial is incorporated  under the laws of the State of Nevada. Our
principal business consists of the origination,  funding,  sale and servicing of
mortgage  loans,  primarily  secured by first and  second  trust  deeds  against
residential and commercial properties.  We are planning to expand our operations
in this market by opening new offices and through  acquisitions  of  established
companies engaged in real estate related financial services.

We plan to raise  capital to open new  offices  throughout  the  Western  United
States.  It is our  belief  that by  leveraging  recent  technological  advances
including, but not limited to, new Internet based communications strategies, and
the development of new software platforms,  that we can rapidly open new offices
with substantially  lower capital cost than is common in the industry.  Although
there can be no assurance  that we will be  successful in this  endeavor,  it is
management's  belief that we can be  successful.  To that end, we have  recently
opened  our  second  office,  in  Pleasanton,  California,  and have  moved  our
corporate office from Campbell, California to Pleasanton.

                                       27
<PAGE>

ITEM 6. MANAGEMENT'S PLAN OF OPERATION - cotinued

We plan to consolidate consumer lending, mortgage brokerage and mortgage banking
companies throughout the Western United States and, eventually,  nationwide. Our
goal is to attain a 12.5% internal  Year-Over-Year  growth rate; of course there
can be no  assurance  that we will be able to achieve that goal.  Our  challenge
will  be  to  tie  various   revenue   centers   together  into  one  contiguous
infrastructure.  Given current changes occurring within the lending industry, we
believe that there will be a migration of non-affiliated  brokerage companies to
link directly with the mortgage banking  institutions as semi-captive agents. We
intend to capitalize on this migration and plan to acquire companies in order to
do so. However,  there can be no assurance that such companies will be available
for  acquisition  on acceptable  terms and conditions or that we will be able to
obtain the necessary financing to complete such acquisitions.

To that end, we are  currently  attempting  to acquire  established,  profitable
mortgage  brokerage  and  mortgage  banking  companies  in the United  States to
consolidate  with our current  operations in order to increase  profitability in
wholesale and secondary  operations and to create  economies of scale by further
consolidating vendors and suppliers on a regional,  and, hopefully on a national
basis.  We intend to act as the  marketing  arm of any companies we may acquire,
centralizing technology, advertising, lead generation, accounting and purchasing
in order to allow any acquired  companies to focus on  increasing  sales volume.
While there can be no assurance that we will be successful in implementing  this
strategy,   we  believe   that  if  we  are,   we  will  create  a  marriage  of
entrepreneurial  energy and public capital which may result in the creation of a
more  efficient  loan  distribution  system which could provide a broad range of
loan products and services to our clientele.

                                       28
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

The following financial information is filed as part of this report:

REPORT OF INDEPENDENT AUDITORS ....................................... F-1 - F-2

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2003 ......................... F-3

CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 2003 AND 2002 ................................................. F-4

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE
YEARS ENDED DECEMBER 31, 2003 AND 2002 ..................................... F-5

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2003 AND 2002 ............................................ F-6 - F7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS .......................... F-8 - F-22



                                       29
<PAGE>


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



To the Stockholders and Board of Directors of Silverado Financial, Inc.:

We have audited the accompanying balance sheet of Silverado Financial, Inc. (the
Company),  a development stage company,  as of December 31, 2003 and the related
statements of operations,  stockholders' equity and cash flows for the year then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.  We believe 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 Silverado Financial, Inc. as of
December 31,  2003,  and the results of its  operations  and cash flows the year
ended  December 31, 2003, in conformity  with  accounting  principles  generally
accepted in the United States of America.

As disclosed in Note 1, the accompanying financial statements have been prepared
assuming  that the Company  will  continue as a going  concern.  The Company has
experienced  material  operating  losses  and has a working  capital  deficit of
$352,479 at December 31, 2003. Should additional financial resources be required
prior to the Company attaining  profitability and/or cash flow breakeven levels,
the Company would be required to seek  additional  financial  resources from its
existing  investors or others.  There can be no assurances that the Company will
obtain sufficient capital or that operations will become  profitable.  These and
other conditions raise substantial doubt about the Company's ability to continue
as a going concern.  The  accompanying  financial  statements do not include any
adjustments  that might be necessary should the Company be unable to continue as
a going concern.




/s/EPSTEIN, WEBER & CONOVER, PLC
   Scottsdale, Arizona

   May 7, 2004
                                      F-1

                                       30
<PAGE>




INDEPENDENT ACCOUNTANTS' REPORT


To the Stockholders and Board of Directors of
SILVERADO FINANCIAL, INC.
(Formerly known as Rhombic Corporation):

We have  audited  the  accompanying  consolidated  balance  sheets of  Silverado
Financial, Inc., formerly Rhombic Corporation, (a Development Stage Company) and
subsidiaries as of December 31, 2002, and the related consolidated statements of
operations, stockholders' equity and cash flows for the two years then ended and
the period from inception to December 31, 2002.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the 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 our audits  provide 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 Silverado  Financial,  Inc.,
formerly Rhombic Corporation,  and its consolidated  subsidiaries as of December
31, 2002,  and the results of their  operations and cash flows for the two years
then ended and the period from  inception to December 31,  2002,  in  conformity
with accounting principles generally accepted in the United States of America.

As disclosed in Note 1, the accompanying financial statements have been prepared
assuming  that the Company  will  continue as a going  concern.  The Company has
experienced  material  operating  losses  and  has yet to  commence  significant
revenue producing  operations.  Ultimate  realization of material investments in
intellectual   properties  is  uncertain.   These  and  other  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The accompanying  financial statements do not include any adjustments that might
be necessary should the Company be unable to continue as a going concern.


                                                /s/ James C. Marshall, CPA, P.C
                                                --------------------------------
                                                    James C. Marshall
Scottsdale, Arizona
April 14, 2003
                                      F-2

                                       31
<PAGE>

                            SILVERADO FINANCIAL, INC.
                           CONSOLIDATED BALANCE SHEET
                              AT DECEMBER 31, 2003

                                     ASSETS
                                     ------
CURRENT ASSETS
   Cash                                                      $        1,230
   Receivables                                                       11,405
   Marketable securities held for sale                               17,775
   Total Current Assets                                              30,410

OTHER ASSETS
   Intellectual property                                          1,398,020
   Furniture, fixtures & equipment-net                              116,370
   Other                                                              6,900
                                                           ----------------
Total assets                                                 $    1,551,700
                                                           ================


                                   LIABILITIES
CURRENT                            -----------
   Accounts Payable                                          $      244,821
   Accrued interest                                                  28,068
   Convertible notes payable                                         36,000
   Due to affiliates                                                 74,000
                                                           ----------------
Total current liabilities                                           382,889

OTHER LIABILITIES

   Note payable                                                     275,000
                                                           ----------------
Total liabilities                                                   657,889

                              STOCKHOLDERS' EQUITY
                              --------------------
 Preferred stock, $.001 par value,
   1,000,000 shares authorized, none issued

Common stock, $.001 par value, 20,000,000 shares                     14,839
   authorized, 14,839,492 issued and outstanding
Deferred Stock Compensation                                         (16,000)
Additional paid-in capital                                       10,455,513
Accumulated Deficit                                              (9,560,541)
                                                           ----------------

Total stockholders' equity                                          893,811
                                                           ----------------

Total liabilities and stockholders' equity                   $    1,551,700
                                                           ================

See accompanying notes to consolidated financial statements.
                                      F-3
                                       32
<PAGE>


                                  SILVERADO FINANCIAL, INC.
                            CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                                              For the years ended December 31,
                                                     2003             2002
                                              ---------------- ----------------
Revenues
  Commission & processing revenue              $       115,823  $         7,500
  Cost of sales                                         91,016                0
                                              ---------------- ----------------
Gross profit                                            24,807            7,500
                                              ---------------- ----------------

Operating expenses
  Research & development                                     0           (9,184)
  Write down on intellectual property                        0          276,250
  Consulting                                           584,137                0
  General and administrative                           326,428          136,587
  Depreciation                                          18,537                0
                                              ---------------- ----------------
Total operating expenses                               929,102          403,653
                                              ---------------- ----------------

Other Income and Expense
  Interest income                                            9                0
  Interest (expense)                                   (26,304)          (6,820)
                                              ---------------- ----------------
Total non-operating income                             (26,295)          (6,820)
                                              ---------------- ----------------

Net (Loss) from operations                            (930,590)        (402,973)

Other revenues and expenses
  (Loss) gain on sale of investments                    (6,201)               0
  (Loss) gain on disposal of equipment                  (1,269)               0
                                              ---------------- ----------------
Net (Loss)                                     $      (938,060) $      (402,973)
                                              ================ ================

Net (Loss) per share:
Basic                                          $         (0.07) $         (0.06)
                                              ================ ================

Diluted                                        $         (0.07) $         (0.06)
                                              ================ ================

Weighted Average Shares Outstanding
Basic                                               12,534,235        6,389,045
                                              ================ ================

Diluted                                             12,534,235        6,389,045
                                              ================ ================

See accompanying notes to consolidated financial statements
                                      F-4

                                       33
<PAGE>



                            SILVERADO FINANCIAL, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

<table>
<caption>
                                                                                                              Net
                                                                                                          Unrealized
                                                                                                         Holding loss
                                                   Common Stock     Additional                           on available
                                          -----------------------     Paid-In     Deferred   Accumulated   for sale
                                              Shares     Amount       Capital   Compensation   Deficit    securities       Total
                                          ------------ ---------- -------------- ----------- ----------- ------------ ------------
<S>                                            <C>         <C>          <C>          <C>         <C>          <C>         <C>
Balance at December 31, 2001                 5,339,408 $    5,739  $   8,475,587             $(8,219,508) $    (7,476) $   254,342

Shares issued for services                     260,592        261         54,937                                            55,198
Shares issued for Financial Software, Inc.   4,400,000      4,400      1,085,503                                         1,089,903
Net unrealized holding gain on available
 for sale securities                                                                                           14,875       14,875

Net (loss)                                                                                      (402,973)                 (402,973)
                                          ------------ ---------- -------------- ----------- ----------- ------------ ------------

Balance at December 31, 2002                10,400,000   $ 10,400    $ 9,616,027             $(8,622,481) $     7,399  $ 1,011,345
Net unrealized holding (loss) on
 securities available held for sale                                                                            (7,399)      (7,399)
Shares issued for cash                         186,666        186         13,814                                            14,000
Shares issued for payables                     566,367        566        170,109                                           170,675
Shares issued for services                   2,770,635      2,771        493,408     (16,000)                              480,179
Shares issued for Realty Capital Corp.         729,452        730        126,924                                           127,654
Shares issued for debt                         248,372        248         51,853                                            52,101
Cancellation of shares                         (62,000)       (62)       (16,622)                                          (16,684)
Net loss                                                                                        (938,060)                 (938,060)
                                          ------------ ---------- -------------- ----------- ----------- ------------ ------------
Balance at December 31, 2003                14,839,492  $  14,839  $  10,455,513  $  (16,000)$(9,560,541) $         -  $   893,811
                                          ============ ========== ============== =========== =========== ============ ============
</table>
See accompanying notes to consolidated financial statements
                                      F-5
                                       34
<PAGE>


<table>
<caption>
                            SILVERADO FINANCIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                          For the years ended December 31,
                                                                  2003           2002
                                                           -------------- --------------
<S>                                                               <C>            <C>
OPERATING ACTIVITIES

Net (loss) income for the period                            $    (938,060) $    (402,973)
   Adjustments to reconcile net
    cash used by operations:
      Depreciation expense                                         18,537              -
      Write down on intellectual property and patents                            276,250
      Loss (gain) on sale of marketable securities                  6,201              -
      Loss (gain) on disposal of equipment                          1,268              -

      Common stock issued for services and trade payables         650,854         55,198


     (Increase)/decrease  in accounts receivable                   33,648        (12,627)
     (Increase)/decrease  in prepaid expenses                           -            300
     (Increase)/decrease  in other assets                             292         (6,899)
      Increase/(decrease) in accounts payable                     148,433         (1,880)
      Increase/(decrease) in accrued interest                      24,976          3,092
      Increase/(decrease) in due to affiliates and officers        19,000         55,000
                                                           -------------- --------------

Net Cash (Used) by Operating Activities                           (34,851)       (34,539)
                                                           -------------- --------------
FINANCING ACTIVITIES

Proceeds from private placements                                   14,000              -
Proceeds from convertible debentures                               10,000         26,000

                                                           -------------- --------------
   Cash provided from financing activities                         24,000         26,000
                                                           -------------- --------------
INVESTING ACTIVITIES
   Cash obtained from acquisition of Realty Capital Corp.           1,245
   Proceeds from the sale of marketable securities                 10,275              -
                                                           -------------- --------------
     Cash (used) in investment activities                          11,520              -
                                                           -------------- --------------

Increase (decrease) in cash                                           669         (8,539)
Cash at beginning of period                                           561          9,100
                                                           -------------- --------------

Cash at end of period                                       $       1,230  $         561
                                                           ============== ==============
</table>

                                      F-6

                                       35
<PAGE>




                            SILVERADO FINANCIAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (continued)
<table>
<caption>
                                                               For the years ended December 31,
                                                                      2003            2002
                                                                -------------- --------------
<S>                                                                    <C>            <C>
SUPPLEMENTAL CASH FLOW INFORMATION

Interest expense                                                 $      26,304  $       6,820
                                                                ============== ==============

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES


Issuance of 4,400,000 common shares for Financial Software, Inc.                $   1,089,903
                                                                               ==============

Issuance of 729,452 common shares to John E. Hartman
for all assets and liabilities of Realty Capital Corporation     $     127,654
                                                                ==============

Issuance of 248,372 common shares in exchange for cancellation
of debt                                                          $      52,101
                                                                ==============

Receipt and cancellation of 62,000 shares from a director
for the sale of all scientific intellectual property             $     (16,684)
                                                                ==============
</table>
See accompanying notes to consolidated financial statements.
                                      F-7

                                       36
<PAGE>


                            SILVERADO FINANCIAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR YEARS ENDED DECEMBER 31, 2003 AND 2002

Note 1 - ORGANIZATION AND BASIS OF PRESENTATION

Silverado Financial, Inc. (the "Company",  "We", "Us" and "Our") is incorporated
under the laws of the State of Nevada and based in Campbell,  California  in the
San  Francisco  Bay Area.  We provide  first and  second  mortgage  products  to
borrowers  in  California  through  our  operating  subsidiary,  Realty  Capital
Corporation (RCC).

The  corporation  was  initially  formed on February 26, 1987 as Toledo  Medical
Corporation. Our name was changed to Almaz Space Corporation on February 9, 1991
and to Ready When You Are Funwear,  Inc. on April 14, 1992. On December 30, 1994
a group of individuals  acquired  control of the Company.  On February 17, 1995,
they changed the name to Rhombic  Corporation.  On March 19,  2003,  the company
changed its name to Silverado Financial, Inc.

Our efforts, since inception,  until October of 2002, had been primarily focused
on the acquisition of the rights to intellectual property that could lead to the
development  of innovative  scientific  technologies.  During the years 1999 and
2000 we began to focus on the  research  and  development  of our  portfolio  of
acquired intellectual property.  During 2001, our main objective was to identify
and develop specific  applications  from our  intellectual  property in order to
make them  commercially  marketable.  In November  2002,  we acquired  Financial
Software,  Inc.  as the  first  part of its  strategy  to  enter  the  lucrative
financial services sector.

During 2003 the company had six wholly owned subsidiaries. They are:

         * Financial Software, Inc. ("FSI");
         * Realty Capital Corporation ("RCC");
         * Rockford Technology Associates, Inc. ("Rockford");
         * Nanophase Diamond Technologies, Inc. ("Nanophase");
         * AEP Technologies, Inc. ("AEPT"); and
         * Rhombic Detection Technologies, Inc. ("RDT").

Rockford,  Nanophase, AEPT and RDT are inactive and have no assets,  liabilities
or operations and never were active,  held any assets or had any  liabilities or
operations.  These  subsidiaries  were  created  for the  purpose of  developing
specific  applications  from  our  scientific  intellectual  property.  We never
implemented our plans to develop our scientific intellectual property and all of
our  scientific  intellectual  properties,   together  with  certain  marketable
securities held for sale, were sold, in 2003 to a director,  in exchange for the
return of 62,000  shares of our Common Stock and the  cancellation  of $1,100 in
debt.

On November 19th,  2002, the Company  acquired all of the issued and outstanding
shares of Financial  Software,  Inc., (FSI) a New Jersey corporation  engaged in
the  development  of  Internet  and  Intranet  financial  software in edition to
operating several Financial Industry publishing web-sites.  This acquisition was
completed  on a share  for share  exchange  basis  for  4,400,000  shares of the
Company's  common  stock.  FSI was  acquired  in order to gain access to certain
proprietary  software products owned by FSI which the Company intends to further
develop and extend into comprehensive  mortgage platforms called  MortgageCenter
and FinanCenter.

A majority of the shareholders of record on February 10, 2003 voted to amend the
Articles of Incorporation of the Registrant to change the name of the Company to
                                      K-8

                                       37
<PAGE>

Note 1 - ORGANIZATION AND BASIS OF PRESENTATION - continued

Silverado  Financial,  Inc.  and to  change  the  authorized  common  shares  to
100,000,000 and the authorized  preferred shares to 5,000,000 as described in an
information  statement  filed  on Form  14C with  the  Securities  and  Exchange
Commission  on February 11, 2003.  The  Registrant  filed with the  Secretary of
State of Nevada a Certificate of Amended  Articles of Incorporation on March 21,
2003.  Subsequently,  on April  29,  2003 the  company  effected  a one for five
reversal of its authorized shares. See Note 2 below.

On May 9, 2003,  in a non-arms  length  transaction  with John E.  Hartman,  the
company's  president,  the company issued  729,452  shares of restricted  common
stock at a purchase price of $0.175 per share, which was based on the prior five
days average  trading price,  in exchange for all of the  outstanding  shares of
Realty Capital Corporation. The purchase price of Realty Capital Corporation was
$127,654  and was  the  net  asset  value  of  Realty  Capital  Corporation,  as
determined  by an  independent,  third party  valuation.  The shares were issued
under Section 4(2) of the 1933 Securities Act.

GOING CONCERN AND PLAN OF OPERATIONS

The  accompanying  consolidated  financial  statements have been prepared on the
basis of accounting principles applicable to a going concern, which contemplates
the realization of assets and extinguishment of liabilities in the normal course
of business.

As shown in the accompanying financial statements, the Company had a net loss of
$938,060  and  $402,973  for  the  years  ended  December  31,  2003  and  2002,
respectively.  It has incurred an  accumulated  deficit of $9,560,541  and has a
deficit in working  capital of $352,479 as of December 31, 2003.  The ability of
the Company to continue as a going concern is dependent on obtaining  additional
capital and financing and operating at a profitable  level.  The Company intends
to seek  additional  capital  either  through  debt or  equity  offerings,  or a
combination  thereof,  and to seek acquisitions which will generate sales volume
with  operating  margins  sufficient  to achieve  profitability.  The  financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RESTATEMENT OF SHARE AMOUNTS

Effective April 29, 2003 the Company changed its trading name and trading symbol
to "SLVO" on the OTCBB and decreased the number of issued and outstanding shares
of common stock by issuing one new share for each five shares held.  This action
was  authorized  by the board of directors at a meeting of the board on April 3,
2003

CONSOLIDATION

The consolidated financial statements include the results of operations, account
balances and cash flows of the Company and its wholly owned  subsidiaries  after
elimination  of  inter-company   transactions.   Realty  Capital   Corporation's
operations are consolidated from May 9, 2003 through December 31, 2003.

CASH

Cash  includes  all  short-term  highly  liquid  investments  that  are  readily
convertible  to known  amounts  of cash and have  original  maturities  of three
months or less. At times cash deposits may exceed government insured limits.
                                      F-9
                                       38
<PAGE>

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

PROPERTY AND EQUIPMENT

Property and  equipment  consists of computer  equipment,  office  furniture and
Property  and  equipment  is  stated  at  cost  less  accumulated  depreciation.
Depreciation is recorded on a straight-line  basis the estimated useful lives of
the assets ranging from 3 to 10 years.  Depreciation  expense for the year ended
December 31, 2003 was $18,537.

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.

REVENUE RECOGNITION

Commissions generated from brokering loans are recognized at the date of close.

FINANCIAL INSTRUMENTS

Financial  instruments  consist  primarily of cash,  investments  in  marketable
securities and  obligations  under accounts  payable and accrued  expenses.  The
carrying amounts of cash, accounts receivable,  accounts payable,  notes payable
and accrued  expenses  approximate fair value because of the short term maturity
of those instruments.

INVESTMENTS

Statements of Financial  Accounting  Standards No. 115,  Accounting  for Certain
Investments  in Debt and  Equity  Securities,  ("SFAS  115")  requires  that all
applicable  investments be classified as trading securities,  available for sale
securities  or held to  maturity  securities.  The  Company  did  not  have  any
investments classified as trading securities or held-to-maturity securities. The
statement  further  requires that  available for sale  securities be reported at
fair value, with unrealized gains and losses excluded from earnings but reported
in a separate  component  of  shareholders'  equity (net of the effect of income
taxes)  until they are sold.  At the time of sale,  any gains or losses  will be
recognized as a component of operating results.

At December 31, 2003 and 2002, respectively, the Company's investments were held
for sale.

INTELLECTUAL PROPERTY

The Company's intellectual property is comprised of a software platform acquired
with  the   acquisition  of  Financial   Services  Inc.  in  2002.  The  Company
periodically  evaluates the  recoverability  of intangible assets and takes into
account events or circumstances  that warrant revised  estimates of useful lives
or that indicate that an impairment exists. The Company's intangible assets will
be subject to amortization when put into productive use.

IMPAIRMENT OF LONG-LIVED ASSETS

In the event that facts and  circumstances  indicate that the cost of long-lived
assets,  primarily  intellectual  property  and patents,  may be  impaired,  the
Company performs a recoverability  evaluation. If an evaluation is required, the
                                      F-10

                                       39
<PAGE>

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

discounted  estimated  future cash flows associated with the assets are compared
to the assets'  carrying amount to determine  whether a write-down to fair value
is required.

On January 1, 2002,  the Company has adopted  SFAS No. 144  "Accounting  for the
Impairment or Disposal of  Long-Lived  Assets"  which  requires that  long-lived
assets to be held and used be reviewed for impairment whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.

The Company evaluates its long-lived  assets for impairment  whenever changes in
circumstances  indicate  that  the  carrying  amount  of the  asset  may  not be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying amount of an asset to future  undiscounted cash flows
expected to be generated by the asset.  If assets are considered to be impaired,
the  impairment to be recognized is measured by the amount by which the carrying
amounts  exceed the fair  values of the  assets.  Assets to be  disposed  of are
reported at the lower of carrying values or fair values, less costs of disposal.

STOCK-BASED COMPENSATION

Statement of  Financial  Accounting  Standard  (SFAS) No. 123,  "Accounting  for
Stock-Based  Compensation",  ("SFAS 123") as amended by SFAS No. 148 "Accounting
for  Stock-Based   Compensation  -  Transition  and   Disclosure",   established
accounting  and  disclosure  requirements  using a  fair-value  based  method of
accounting  for  stock-based  employee  compensation.  The Company  periodically
issues  options  to  consultants  and  members  of the Board of  Directors.  The
estimated  value of these options is determined in accordance  with SFAS No. 123
and expensed as the granted options vest to the grantees.

INCOME TAXES

The Company has adopted the provisions of SFAS No. 109,  "Accounting  for Income
Taxes". SFAS 109 requires recognition of deferred tax liabilities and assets for
the expected  future tax  consequences  of events that have been included in the
consolidated  financial statements or tax returns.  Under this method,  deferred
tax  liabilities and assets are determined  based on the difference  between the
financial  statement and tax basis of assets and  liabilities  using enacted tax
rates in effect for the year in which the differences are expected to reverse.

LOSS PER SHARE

(Loss) per common  share is computed  based on the  weighted  average  number of
common shares  outstanding  during each period.  Convertible  equity instruments
such  as  convertible   debentures  and  warrants  are  not  considered  in  the
calculation of net loss per share, as their inclusion would be antidilutive.

NEW TECHNICAL PRONOUNCEMENTS

TECHNICAL PRONOUNCEMENTS

In June 2002,  FASB issued  Statement  No. 146 (SFAS No. 146),  "Accounting  for
Costs  Associated  with Exit or Disposal  Activities,"  effective for activities
that are initiated after December 31, 2002, with early  application  encouraged.
This Statement addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies Emerging Issues Task Force (EITF)
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other  Costs to Exit an  Activity  (including  Certain  Costs  Incurred in a
                                      F-11

                                       40
<PAGE>

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Restructuring)."  The adoption of SFAS No. 146 did not have a material effect on
the Company's financial position or results of operations.

In  November  2002,  the FASB  issued  FASB  Interpretation  No. 45 ("FIN  45"),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect Guarantees of Indebtedness of Others." FIN 45 expands on the accounting
guidance  of  SFAS  No.  5,  57 and  107 and  incorporates  without  change  the
provisions  of FASB  Interpretation  No. 34, which is being  superseded.  FIN 45
elaborates on existing  disclosure  requirements for most guarantees,  including
standby letters of credit.  It also clarifies that guarantees must be recognized
as an initial  liability  for fair value,  or market value,  of the  obligations
assumed  under the  guarantee  and that this  information  must be  disclosed in
interim and annual financial  statements.  FIN 45 applies on a prospective basis
to guarantees issued or modified after December 31, 2002. The adoption of FIN 45
did not have a material effect on the Company's financial position or results of
operations.

In December 2002, FASB issued Statement No. 148 (SFAS No. 148),  "Accounting for
Stock-Based  Compensation  -- Transition  and Disclosure -- An Amendment of FASB
Statement  No.  123."  SFAS  No.  148  amends  SFAS  No.  123,  "Accounting  for
Stock-Based  Compensation," to provide  alternative  methods of transition for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation.   In  addition,  SFAS  No.  148  amends  the  disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim  financial  statements  about the method of accounting  for  stock-based
employee compensation and the effect of the method used on reported results. The
Company is required to follow the  prescribed  format and provide the additional
disclosures  required by SFAS No. 148 in its annual financial statements for the
year ended  December  31,  2002 and must also  provide  the  disclosures  in its
quarterly reports containing  condensed financial statements for interim periods
beginning  with the quarterly  period ended March 31, 2003. The adoption of SFAS
No. 148 did not have a material  effect on the Company's  financial  position or
results of operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities" ("FIN 46") which is an interpretation of Accounting  Research Bulletin
No. 51, "Consolidated Financial Statements." FIN 46 requires a variable interest
entity  (VIE) to be  consolidated  by a  company  that is  considered  to be the
primary  beneficiary  of that VIE. In December  2003, the FASB issued FIN No. 46
(revised December 2003);  "Consolidation  of Variable  Interest  Entities" ("FIN
46-R") to address certain FIN 46 implementation  issues. The effective dates and
impact of FIN 46 and FIN 46-R for our consolidated  financial  statements are as
follows: Special purpose entities ("SPEs") created prior to February 1, 2003. We
must apply either the  provisions of FIN 46 or early adopt the provisions of FIN
46-R at the end of the first  interim or annual  reporting  period  ending after
December 15, 2003. We have completed our assessment and determined  that we have
no SPE's.

     1.   Non-SPEs  created  prior to February 1, 2003. We are required to adopt
          FIN 46-R at the end of the first  interim or annual  reporting  period
          ending after March 15,  2004.  While not  required,  we could elect to
          adopt FIN 46 or FIN 46-R for these non-SPEs as of the end of the first
          interim or annual  reporting period ending after December 15, 2003. We
          have not  entered  into any  material  joint  venture  or  partnership
          agreements prior to February 1, 2003.
                                      F-12
                                       41
<PAGE>

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

     2.   All  entities,   regardless  of  whether  a  SPE,  that  were  created
          subsequent  to  January  31,  2003.  We  are  required  to  apply  the
          provisions of FIN 46 unless we elect to early adopt the  provisions of
          FIN 46-R as of the first  interim or annual  reporting  period  ending
          after  December 15, 2003.  If we do not elect to early adopt FIN 46-R,
          then we are required to apply FIN 46-R to these entities as of the end
          of the first interim or annual reporting period ending after March 15,
          2004.  We  have  not  entered  into  any  material  joint  venture  or
          partnership  agreements  subsequent  to January 31, 2003 and we do not
          expect to enter  into any such  material  agreements  during our first
          interim   period  ended  January  31,  2004.  If  we  enter  into  any
          significant  joint  venture and  partnership  agreements in the future
          that would  require  consolidation  under FIN 46 or FIN 46-R, it could
          have a material  impact on our  consolidated  financial  statements in
          future filings.

EITF  00-21,  "Revenue  Arrangements  with  Multiple  Deliverables,"  was  first
discussed at the July 2000 EITF meeting and was issued in February 2002. Certain
revisions  to the  scope  language  were  made and  finalized  in May  2003.  It
addresses  the  accounting  for multiple  element  revenue  arrangements,  which
involve more than one deliverable or unit of accounting in  circumstances  where
the delivery of those units takes place in different  accounting  periods.  EITF
00-21 requires  disclosures of the accounting policy for revenue  recognition of
multiple  element  revenue  arrangements  and the nature and description of such
arrangements.  The  accounting  and  reporting  requirements  are  effective for
revenue  arrangements  entered into in fiscal periods  beginning  after June 15,
2003. Adoption of EITF 00-21 does not have a significant impact on our financial
statements.

In April  2003,  the FASB  issued  SFAS  149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging  Activities."  SFAS 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts  (collectively referred to as
derivatives)   and  for  hedging   activities.   The  accounting  and  reporting
requirements will be effective for contracts entered into or modified after June
30,  2003  and  for  hedging  relationships  designated  after  June  30,  2003.
Currently,  we do not  have any  derivative  instruments  and do not  anticipate
entering into any derivative contracts.  Accordingly,  adoption of SFAS 149 does
not have a significant impact on our financial statements.

In May  2003,  the FASB  issued  SFAS 150,  "Accounting  for  Certain  Financial
Instruments  with  Characteristics  of both  Liabilities  and Equity."  SFAS 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability  (or an asset in some  circumstances).  SFAS 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15,  2003.  Adoption  of SFAS  150 does not  have a  significant  impact  on our
financial statements.

In December of 2003, the FASB issued Statement of Financial Accounting Standards
No. 132 (Revised)  ("Revised SFAS 132"),  "Employer's  Disclosure about Pensions
and  Other  Postretirement   Benefits."  Revised  SFAS  132  retains  disclosure
requirements in original SFAS 132 and requires additional  disclosures  relating
to assets,  obligations,  cash flows and net periodic benefit cost. Revised SFAS
132 is effective  for fiscal years ending after  December 15, 2003,  except that
certain  disclosures  are effective for fiscal years ending after June 15, 2004.
                                      F-13

                                       42
<PAGE>

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Interim period  disclosures  are effective for interim  periods  beginning after
December  15,  2003.  The  adoption  of SFAS No.  132  (Revised)  did not have a
material effect on the Company's financial position or results of operations.

Note 3 - INTELLECTUAL PROPERTY

Since its inception, the Company entered into numerous agreements as a result of
having  acquired  certain  rights to  various  complex  intellectual  scientific
properties.  On November  19, 2002 the Company  acquired  intellectual  property
comprised of a software  platform  acquired with Financial  Services Inc. during
2002.

During the quarter ended June 30, 2003, in a non-arms  length  transaction  with
Robert George Krushnisky, a director of the company, the company received 62,000
shares of its own common stock together with cancellation of an outstanding debt
in the  amount of  $1,100 in  exchange  for all of the  scientific  intellectual
property  assets acquired prior to the acquisition of FSI in November of 2002 as
well as all shares of Rockford Technology held for sale by the company.

The Company  periodically  analyzes its investment in intellectual  property for
impairment.  The stages of development in which the intellectual  property is in
make estimation of value or  determination of impairment a difficult task. There
has been no substantive  revenues generated or value derived from the technology
since its acquisition. The Company has determined that there is no evidence that
the book  value  of the  intellectual  property  is  impaired  until it has been
determined  that  there is no  likely  commercial  application  or one that will
produce adequate cash flow to support those values.

On November 19, 2002, in connection with the acquisition of Financial  Software,
Inc., the Company acquired certain software, web sites and intellectual property
which can aggregate financial information from a large number of data sources on
an  individual  basis,  amalgamate  the data and provide  accurate  and detailed
insight into an individual's  personal  financial  picture on a real time basis.
This  software  can manage a host of  disparate  objectives  as they relate to a
persons  financial goals, be they investment or debt related or any combination.
This software suite, together with mortgage generation capabilities can create a
variety of new and different  mortgage,  investment or insurance  products.  The
Company  recorded the software on its books at the seller's basis of $1,398,020.
The  company  engaged  an  experienced  software  developer  based in Palo Alto,
California  to perform an  independent,  third party  valuation  of the software
during 2003.  The Company  anticipates  putting the software into service during
the fourth  quarter of 2004 and intends to amortize  the  software  over a three
year period commencing upon the in-service date. Estimated  amortization expense
on this  intangible  asset is estimated to be as follows for the years  December
31:

                    2004                  $ 233,010
                    2005                    466,000
                    2006                    466,000
                    2007                    233,010
                                  -----------------
                    Total                $1,398,020
                                  =================
                                      F-14
                                       43
<PAGE>

Note 4 - INVESTMENTS

The Company has the following investments at December 31, 2003:

                                              December 31, 2003
                                       --------------------------------
                                                           Estimated
                                            Cost           Fair Value
                                       -------------    ---------------
AVAILABLE FOR SALE SECURITIIES
Limelight Media Group, Inc., fka
Showintel Networks, Inc.                $     17,775     $       17,775
                                       -------------    ---------------
Totals                                  $     17,775     $       17,775
                                       =============    ===============

During  the year  ended  2003,  the  Company  reversed  its  unrealized  gain on
securities held for sale by $7,476. During 2003, the Company sold 100,000 shares
of Showintel  Networks,  Inc. and recorded a gain of $1,275 which resulted in an
overall loss of $6,201 from the sale of securities held for sale.

The  estimated  fair value of the 197,500  shares of Limelight  Media Group Inc.
held by the  Company  was  estimated  based on the quoted  trading  price of the
security at December 31, 2003.  The security began trading under its new name of
Limelight Media Group Inc. on November 10, 2003.

Note 5 - ACQUISITIONS

On November 19th,  2002, the Company  acquired all of the issued and outstanding
shares of Financial  Software,  Inc., (FSI) a New Jersey corporation  engaged in
the  development  of  Internet  and  Intranet  financial  software in edition to
operating several Financial Industry publishing web-sites.  This acquisition was
completed  on a share  for share  exchange  basis  for  4,400,000  shares of the
Company's  common  stock.  FSI was  acquired  in order to gain access to certain
proprietary  software products owned by FSI which the Company intends to further
develop and extend into comprehensive  mortgage platforms called  MortgageCenter
and FinanCenter.

Through the  acquisition  of FSI, we  acquired  assets of $26,775 in  marketable
securities,  $1,398,020 in Intellectual property (MortgageCenter and FinanCenter
software),  and $1,904 in computer  equipment.  We also acquired  liabilities of
$61,796 in  accounts  payable and  $275,000  through  the  assumption  of a note
payable.

On April 8, 2003 the company entered into a binding Letter of Intent with Realty
Capital  Corporation whereby the Company will acquire Realty Capital Corporation
for a purchase  price to be determined by the net asset value of Realty  Capital
as determined by an  independent,  third party  valuation.  The  transaction was
subject  to  receipt  by the  Company  of said  valuation  as well as  financial
statements  and the  affirmative  vote of the  majority of the  shareholders  of
Realty Capital  Corporation.  Realty Capital Corporation was majority controlled
by the President of Silverado Financial, Inc., John E. Hartman and his spouse.

On May 9, 2003 the board of directors approved the acquisition of Realty Capital
Corporation,  a  mortgage  brokerage  company,  from John  Hartman  for  729,452
restricted  common shares.  Mr. Hartman abstained from the vote. The acquisition
was made at a trading value of $127,654  which was the net asset value of Realty
Capital  and the  average  closing  bid price of the  Company  on the prior five
trading days. Mr. Hartman's holdings of Silverado  Financial,  Inc. Common stock
were 103,511 shares (0.87% of total shares outstanding) prior to acquisition and
                                      F-15

                                       44
<PAGE>

Note 5 - ACQUISITIONS - continued

832,963  shares (6.59% of total shares  outstanding)  after the  acquisition  of
Realty Capital Corporation, respectively.

Through the acquisition of Realty Capital Corporation,  we acquired total assets
of $168,233,  consisting of $33,963 in accounts receivable and prepaid expenses,
$49,284 in computers and equipment,  and $84,986 in furniture.  We also acquired
liabilities of $7,871 in accounts  payable and $32,708 through the assumption of
notes payable.

Had the Realty  Capital  acquisition  occurred at January 1, 2003,  consolidated
revenues and net income of the Company would have been  $196,766 and  ($919,400)
respectively for the year ended December 31, 2003  (unaudited).  There would not
have been any affect on the pro forma loss per share.

Note 6 - INCOME TAXES

The Company  does not provide any current or deferred  income tax  provision  or
benefit for any period  presented  because it has experienced  operating  losses
since inception.  The Company has provided a full valuation allowance because of
the  uncertainty  regarding  the  utilization  of the net  operating  loss carry
forwards.

                                                 For the year ended December 31,
                                                  ----------------------------
                                                         2003          2002
   Current income tax benefit                       $    348,504  $     51,956
   Deferred income tax benefit (charge)                 (348,504)      113,263
   Total current and deferred income tax benefit              -0-      165,219
                                                  -------------- -------------
Valuation allowance                                           -0-     (165,219)
                                                  -------------- -------------
Benefit of income taxes                             $         -0- $         -0-
                                                  ============== =============

Income tax expense  does not differ from  amounts  computed by applying the U.S.
Federal  income  tax rate of 34% and the  state  rate of 8.84%,  except  for the
valuation allowance for the year ended December 31, 2002.

The following is a reconciliation of differences between effective and statutory
income tax rate for the year ended December 31, 2003.

   Federal Statutory Rates                            $ (318,940)    (34%)
   State Rates                                           (56,284)     (6%)
   Change in Valuation Allowances                        323,504      34%
   Expiration of Net Operating Loss Carry Forward         51,720       6%
                                                    ------------ --------
                                                      $      -0-      - %
                                                    ============ ========

At December 31, 2003, the Company had realized  Federal net operating  losses of
approximately $7,833,932.  California net operating losses are carried forward 5
or 10 years at 50% to 60% of the amount realized.  Future realization of the net
deferred tax assets is dependent on generating  sufficient  taxable income prior
to their expiration. The realized net operating losses expire, as follows:
                                      F-16
                                       45
<PAGE>

Note 5 - ACQUISITIONS - continued

                   Expiration             Federal             State
               -------------------    -------------       ------------

                       2004                                  $ 520,465
                       2009             $  44,994
                       2010               379,485            2,109,954
                       2011               461,101              318,228
                       2012               236,028               76,034
                       2013                                    871,260
                       2018               861,526
                       2019               603,950
                       2020             3,670,269
                       2021               578,596
                       2022               126,723
                       2023               871,260
                                      -------------       ------------
  Total net operating loss available     $7,833,932         $3,962,186
                                      =============      =============

At December 31, 2003, there was a total deferred income tax asset of $3,079,000,
comprised of book/tax differences in compensation  payables of $24,000 and other
accrued  expense of $40,000 and  $3,014,000  related to net operating loss carry
forwards.  There is a  deferred  income  tax  liability  of  $74,000  related to
book/tax  differences in intangible assets.  The valuation  increased during the
year ended December 31, 2003 to $3,004,000.


Note 7 - ACCOUNTS AND NOTES PAYABLE

Accounts Payable

The  Company  owes  its  vendors  a total  of  $244,821  of  which  $86,518  are
outstanding payables over ninety days.

Notes Payable

As part of the acquisition of Financial  Services  Software,  the Company became
obligated under a note for $275,000 at 8% per annum, payable monthly, in arrears
and  amortized  over  eighteen  equal  installments  of $16,258.  Principal  and
interest  payments  due under the note will not be paid  until the  Company  has
raised  sufficient  capital  through  the sale of stock and /or notes to raise a
minimum of four times the  monthly  payment  due.  Further,  additional  monthly
payments are abated until the Company is able to maintain  sufficient capital to
allow it to remain cash flow positive and continue  making the  payments.  There
was $24,531 of accrued unpaid interest at December 31, 2003.

Convertible Notes payable

The Company has three  convertible  notes  payable  totaling  $36,000 at 10% per
annum  maturing  during  2004 as a result  of the  Company's  extensions  of two
convertible  notes that were originated during 2002. There was $3,537 of accrued
unpaid interest at December 31, 2003.

A  Schedule  of the  maturity  dates of the  convertible  debentures  with their
attached warrants are as follows:
                                      F-17
                                       46
<PAGE>

Note 7 - ACCOUNTS AND NOTES PAYABLE - continued

    Amount       Original        Extended
              Maturity Date    Maturity Date   Warrants Outstanding

   $16,000     10/11/03         10/11/04       40,000 shares at $.40 per share
   $10,000     11/16/03         11/16/04       25,000 shares at $.40 per share
   $10,000      7/23/04          7/23/05       25,000 shares at $.40 per share

All  debentures can be converted into common stock for the same amount of shares
as their right to purchase the same number of shares through their warrants.

Assuming the Company has the ability to make all note payments under their terms
commencing  October 1, 2003 and does not convert or extend the convertible notes
payable, the minimum annual payments are as follows:

                         Year                  Amount
                        --------          -------------
                         2004                 $ 221,096
                         2005                    89,904
                                          -------------
                                               $311,000
                                          =============

Note 8 - COMMITMENTS

During May 2003, the Company became  responsible for a lease entered into by its
subsidiary,  Realty  Capital  Corporation,  during October 2002 for 3,179 square
feet in an office building in Campbell, California. The lease is for a period of
two years ending on October 31, 2004. The base rental under the lease is $80,111
per annum ($6,675.90 per month) during the first twelve month period and $82,514
($6,876.17 per month) during the second twelve month period.  The lease provides
for the Company to pay its  proportionate  share of the landlord's  common costs
during second twelve month period.

Rent expenses  totaled  $53,808 and $15,773 for the twelve months ended December
31, 2003 and 2002, respectively.

Minimum future commitments under all operating leases are as follows:

                      Years Ending             Amount
                      December 31,
                    -----------------     -------------
                         2004                   $68,762
                                          =============

Note 9 - STOCKHOLDERS' EQUITY

At December 31, 2003 and 2002, the Company had  14,839,492 and 6,000,000  shares
outstanding, respectively. The Company has 20,000,000 shares of $0.001 par value
authorized and 1,000,000 shares of Preferred stock.

During 2003, the Company issued a total of 4,501,493  common shares at a trading
value of $861,609  and  cancelled  62,000  common  shares at a trading  value of
$16,684.  A total of 3,075,277  shares issued were  restricted and had a trading
value of $539,755 and 1,426,216 shares were issued without restriction under the
registered  compensation  plan and had a trading value of $321,854.  The Company
also cancelled 62,000 restricted shares that had a trading value of $16,684.
                                      F-18
                                       47
<PAGE>

Note 9 - STOCKHOLDERS' EQUITY - continued

During the first two  quarters of 2003 the company  issued a total of  2,382,884
common shares at a trading value of $500,224.  A total of 1,090,056  shares were
issued for services at a trading value of $198,519,  563,376  common shares were
issued for debt and  payables at a trading  value of  $174,051,  issued  729,452
common  shares to its  president  John E.  Hartman,  for all of the  outstanding
shares  of  Realty  Capital  Corporation  at a trading  value of  $127,654.  Mr.
Hartman's holdings of Silverado Financial, Inc. Common stock were 103,511 shares
(0.87% of total shares  outstanding)  prior to  acquisition  and 832,963  shares
(6.59% of total shares  outstanding)  after the  acquisition  of Realty  Capital
Corporation, respectively.

During June of 2003,  62,000  common  shares were  returned to the  treasury and
cancelled in a  transaction  involving the sale of the  scientific  intellectual
property to a director of the Company at a trading value of $16,684.

During the  quarter  ended  September  30,  2003,  the  Company  issued  300,000
restricted common shares to an individual for investor relations services valued
at $45,000.  The shares were issued under  Section  4(2) of the 1933  Securities
Act. The Company also issued 226,363 restricted common shares to the officers of
the Company for accrued  compensation  of $45,000.  The shares were issued under
Section  4(2) of the 1933  Securities  Act.  The  Company  also  issued  300,000
restricted  common  shares  to a public  relations  firm at a  trading  value of
$62,000 for investor  relations  services and issued 466,591  restricted  common
shares to officers of the Company for services  rendered  during the quarter and
the  previous  quarter at a trading  value of  $81,000.  All of the shares  were
issued under Section 4(2) of the 1933 Securities Act.

During  the  quarter  ended   September  30,  2003,  the  Company  issued  5,000
unrestricted  shares under its S-8 2003  Employees and  Compensation  Plan to an
individual at a trading  value of $700 for legal  services  rendered  during the
prior quarter ended June 30, 2003.

During the  quarter  ended  September  30,  2003,  the  Company  issued  284,591
unrestricted  shares  to two  consultants  under  its  S-8  2003  Employees  and
Compensation Plan at a trading value of $49,000 for various consulting  services
rendered during the current quarter ended September 30, 2003 relating to matters
of corporate governance, software consulting, legal and other services.

During  the  quarter  ended  December  31,  2003,  the  Company  issued  342,246
unrestricted shares to consultants under its S-8 2003 Employees and Compensation
Plan at a trading  value of $90,660 for  various  consulting  services  rendered
during the  current  quarter  ended  December  31,  2003  relating to matters of
corporate governance, software consulting, legal and other services.

During the fourth  quarter of 2003, a total of 20,000  restricted  common shares
were issued for $3,025 in full  satisfaction of a debt. Also 400,000  restricted
common shares were issued for $14,000 in cash and a $16,000  legal  retainer for
future legal services in a private placement to an accredited investor.

Note 10 - STOCK OPTIONS

The Company issues stock options  periodically to consultants and members of the
Board of Directors.  The Company has adopted  Statement of Financial  Accounting
Standards  No.  123,  "Accounting  for  Stock-Based  Compensation".  For options
granted in the years ended  December  31, 2003 and 2002,  which were  granted to
individuals  other than  employees,  the  intrinsic  value method  prescribed by
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
                                      F-19

                                       48
<PAGE>

Note 10 - STOCK OPTIONS - continued

Employees",  does not apply. Accordingly,  compensation cost has been recognized
for the stock options granted to other than employees.

Under the  provisions  of SFAS No.  123,  there was no charge to expense for the
value of options  during the  periods  ended  December  31,  2003 and 2002 as no
options were issued.

The Board of Directors  authorized  the granting of no options  during the years
ended December 31, 2003 and 2002, respectively. The price of any options granted
pursuant  to these  grants is not to be less than 100 percent of the fair market
value of the shares on the date of grant.  The options expire one year from date
of grant and are immediately vested.

Note 11 - LOSS PER SHARE

At December 31, 2003,  there were no outstanding  options;  however,  there were
convertible  debentures  with  exercisable  warrants  outstanding.   Outstanding
options,  warrants and convertible  securities to purchase common stock were not
considered in the calculation for diluted earnings per share for the years ended
December  31,  2003 and 2002  because  the  effect of their  inclusion  would be
antidilutive. A reconciliation of the numerator and denominator of the basic and
diluted per share  calculations  for the loss from  continuing  operations is as
follows:

<table>
<caption>
                                                2003                                 2002
                             --------------------------------------  -------------------------------------
                                  Loss        Shares     Per share       Loss       Shares      Per share
                             ------------  -----------  -----------  -----------  -----------  -----------
<S>                                <C>         <C>          <C>          <C>          <C>          <C>
Net (Loss)                     $ (938,060)                            $ (402,973)

BASIC LOSS PER SHARE
Loss available to common
stockholders                   $ (938,060)  14,839,492      $ (0.07)  $ (402,973)   6,389,045     $ (0.06)

Effect of dilutive securities

DILUTED LOSS PER SHARE                                      $ (0.07)                                $ (0.06)
</table>

Convertible  notes and warrants to purchase 90,000 and 65,000 shares and options
to  purchase  90,000  and 65,000  shares of common  stock  were  outstanding  at
December  31, 2003 and 2002,  respectively.  All shares which could be exercised
from  convertible  notes,  warrants  and stock  options were  excluded  from the
computation  of diluted  loss per share  because  the effect of their  inclusion
would be anti-dilutive.

Note 12 - RELATED PARTY TRANSACTIONS

On December 18, 2002,  the Company  entered into a memorandum  of  understanding
with Realty Capital Corporation whereby Realty Capital Corporation would utilize
office  space and  telephone  services  at the  company's  offices in  Campbell,
California  in  exchange  for  payment of  $15,000  per  month.  Realty  Capital
Corporation  was majority  controlled by the  President of Silverado  Financial,
Inc., John E. Hartman and his spouse.
                                      F-20
                                       49
<PAGE>

Note 12 - RELATED PARTY TRANSACTIONS - continued

On April 8, 2003 the company entered into a binding Letter of Intent with Realty
Capital  Corporation whereby the Company will acquire Realty Capital Corporation
for a purchase  price to be determined by the net asset value of Realty  Capital
as determined by an  independent,  third party  valuation.  The  transaction was
subject  to  receipt  by the  Company  of said  valuation  as well as  financial
statements  and the  affirmative  vote of the  majority of the  shareholders  of
Realty Capital  Corporation.  Realty Capital Corporation was majority controlled
by the President of Silverado Financial, Inc., John E. Hartman and his spouse.

On May 9, 2003 the board of directors approved the acquisition of Realty Capital
Corporation,  a  mortgage  brokerage  company,  from John  Hartman  for  729,452
restricted  common shares.  Mr. Hartman abstained from the vote. The acquisition
was made at a trading value of $127,654  which was the net asset value of Realty
Capital  and the  average  closing  bid price of the  Company  on the prior five
trading days. Mr. Hartman's holdings of Silverado  Financial,  Inc. Common stock
were 103,511 shares (0.87% of total shares outstanding) prior to acquisition and
832,963  shares (6.59% of total shares  outstanding)  after the  acquisition  of
Realty Capital Corporation, respectively.

As of December 31, 2003, Sherry Hartman, the broker of record for Realty Capital
Corporation and the spouse of the President of Silverado Financial, Inc. had an
outstanding debt to the company in the amount of $11,405.

Note 13 - SUBSEQUENT EVENTS

On May 5, 2004 the Company acquired of all of the issued and outstanding shares
of Lendingtech.com, Inc., (Lendingtech), from Michael Petrullo, its sole owner
and shareholder, for $520,000 of debt with the following terms:

                    $200,000 15% Promissory Note
                    $144,000 8% Promissory Note
                    $176,000 5% Convertible Promissory Note
                    ---------------------------------------
                    $520,000 Purchase Price

The Company did not issue any of its shares or pay any cash as consideration for
the acquisition. The Company acquired two computer servers, its web site, client
base of  approximately  24,000  persons  and loans in a pipeline  which were all
valued at $520,000.

The  acquisition was determined at arms length between the owners of Lendingtech
and the registrant.

Lendingtech.com  was established in 1988 as a mortgage  brokerage company called
Calabasas Mortgage.  It has had a history of providing California homeowners and
investors with real estate financing options. Using Internet technology combined
with customer service it has been able to offer competitive rates in its product
line. Its technology enables loans to close quickly,  at a low cost by combining
the use of the  Internet  along  with  its  processing  software  and  automated
underwriting systems.

Lendingtech  generated  unaudited  year-end  2003 revenue of  $960,000,  with an
adjusted  EBITDA of $375,000 and  generated  unaudited  year-end 2002 revenue of
961,000,  with an adjusted EBITDA of $379,000.  The Company believes that it can
increase  Lendingtech's  gross revenue to as much as $3,000,000  and  $1,500,000
EBITDA within the next 12-months of operation.
                                      F-21
                                       50
<PAGE>

Note 13 - SUBSEQUENT EVENTS - continued

As a result of this  transaction,  Lendingtech  has become and shall continue to
operate as a wholly-owned subsidiary of the Registrant.
                                      F-22

                                       51
<PAGE>

ITEM 8. CHANGES AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

None.

ITEM 8A. CONTROLS AND PROCEDURES

a)  Evaluation  of  disclosure  controls and  procedures.  The  Company's  chief
executive  officer  and  principal  financial  officer,   after  evaluating  the
effectiveness of the Company's  "disclosure controls and procedures" (as defined
in the Securities  Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the
end of the period  covered by this annual report (the  "Evaluation  Date"),  has
concluded that as of the Evaluation Date, the Company's  disclosure controls and
procedures  were  adequate  and  designed  to ensure that  material  information
relating to the Company and its consolidated subsidiaries would be made known to
him by others within those entities.

(b)  Changes  in  internal  control  over  financial  reporting.  There  were no
significant  changes in the Company's internal control over financial  reporting
during the fourth fiscal  quarter that  materially  affected,  or are reasonably
likely to materially  affect,  the  Company's  internal  control over  financial
reporting.

                                       52
<PAGE>

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

The following  table sets forth the names and ages of the current  directors and
executive officers of the Company,  the principal offices and positions with the
Company  held by each  person  and the date such  person  became a  director  or
executive  officer of the Company.  Each serves until the next annual meeting of
the stockholders.

     Name of Executive
     Officers & Directors         Age        Title                       Since
     --------------------------  -----  ----------------------------- ----------
     R.G. Krushnisky              42    Director                        1/1/1995
     Albert Golusin               49    C.F.O & Chairman of the Board   2/5/1999
     John Hartman                 38    President, CEO & Director      9/26/2002
     Ilja (Sean) Radetich         35    Director                       1/10/2003

R.G.  Krushnisky,  Director  of the  Company.  Mr.  Krushnisky  served  as  past
President  of  Rockford  Technology  Corporation  which  is a  Canadian  company
involved in  Hydrogeneration  plants.  Since 1984,  Mr.  Krushnisky has been the
owner and  operator of  International  Laser Games,  Ltd.,  a British  Columbia,
Canada,  and coin-operated  arcade machinery  business.  He is a graduate of the
United  States  International  University  at San Diego with a Bachelor  Science
degree in Business and International Commerce

Albert Golusin, Chief Financial Officer,  Chairman of the Board and Director, is
a Certified Public Accountant in Phoenix,  Arizona.  Since 1992, Mr. Golusin has
been in private practice as an accounting consultant to public companies. He has
also served as a controller for Glenayre  Electronics,  a NASDAQ  company,  from
1984 - 1991.  From 1983 to 1984,  Mr.  Golusin  worked for  Kenneth  Leventhal &
Company. From 1979 to 1981, Mr. Golusin worked for the international  accounting
firm of Grant  Thornton & Company.  Mr.  Golusin  graduated  from Brigham  Young
University in 1978. Mr. Golusin  worked  full-time for Silverado  during part of
2000 and has continued working on a part-time basis.

John Hartman is President,  Chief Executive Officer and a member of the Board of
Directors  of  Rhombic  Corporation.  Prior to  joining  Rhombic,  he was  Chief
Executive Officer and Chairman of the Board for NEXT Advisors,  Inc. in San Jose
California.  Before  joining NEXT  Advisors,  Inc.,  he was Managing  Partner of
Hartman and Kauffman,  which was subsequently merged into NEXT Advisors.  As the
Managing  Partner of Hartman & Kauffman he increased  the gross sales of the San
Jose  office  400% and grew the sales  force from 2 to 30.  From 1995 to January
1999,  Mr.  Hartman  was a  Financial  Advisor  with  Morgan  Stanley.  Prior to
beginning  his  career at Morgan  Stanley,  he was a Partner  of Realty  Capital
Partners of Scotts Valley, California. Prior to Realty Capital Partners, he held
several positions with Grubb & Ellis and Company,  a commercial real estate firm
headquartered in San Francisco,  California. He received his Masters in Business
Administration  (MBA) from California Coast University in Santa Ana,  California
and Bachelor of Science  Degree in Business  Administration  from San Jose State
University in San Jose, California.

Ilja (Sean)  Radetich  has over 12 years of hands-on  experience  in  investment
banking and corporate finance, and has spent his professional career identifying
and working with emerging  growth  companies.  In that time,  his main focus has
been on PIPE  (Private  Investment  in  Public  Equities)  financings.  His PIPE
experience includes straight equity,  convertible preferred equity,  convertible
debenture  and  subordinated  debentures  of  NASDAQ/AMEX,  OTCBB,  and  foreign
securities.  Since 1991 Sean has  structured  and  negotiated  the risk  capital


                                       53
<PAGE>

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT - continued

investments   for  some  of  Europe's   largest   banks  and  asset   management
institutions. Sean is the founder and managing director of Odyssey Advisors LLC,
an investment firm specializing in PIPE financing.  Sean also has worked for LBI
Group and SBC Warburg in the Private Placement Divisions. Over the past 10 years
Sean has  identified  and developed key financial  advisory  relationships  with
public and private  firms  including  Wall Street Web,  eLiberation,  Clearworks
Technologies,  CyberMerchants Exchange and Cekatel, and has managed transactions
for them including PIPE's, private company investments, and secondary offerings.
In addition to investment  banking,  Sean served as Chief Financial  Officer for
WebCash  Corporation,  a B2B  infrastructure  company  backed by Berg McAfee and
Silicon Valley Angel Fund, and presently in  acquisition  negotiations.  Sean is
currently active on several boards, including Navigate Network, GoNet2k board of
directors,  and Wall  Street Web board of  advisors.  He  received  his B.S.  in
International Economics from the University of Oldenburg,  Germany, and attended
the Haas School of Business, University of California at Berkeley.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the securities  Exchange Act of 1934, as amended,  requires the
Company's  directors,  executive officers and persons who own more than 10% of a
class of the Company's equity securities which are registered under the Exchange
Act to file with the  Securities  and  Exchange  Commission  initial  reports of
ownership  and reports of changes of  ownership of such  registered  securities.
Such executive  officers,  directors and greater than 10% beneficial  owners are
required by  Commission  regulation  to furnish  the Company  with copies of all
Section 16(a) forms filed by such reporting persons.

To the  Company's  knowledge,  based  solely on a review  of the  copies of such
reports  furnished to the Company and on  representations  that no other reports
were  required,  no person  required to file such a report failed to file during
fiscal 2003. Based on stockholder  filings with the SEC, SunnComm  Technologies,
Inc. is subject to Section 16(a) filing requirements.

CODE OF ETHICS

The  Company  has not  adopted a Code of  Ethics as of the date of this  report.
Resources and time necessary to adopt written standards  reasonably  designed to
deter  wrongdoing  have not been  available as of the date of this  report.  The
Company plans to engage a consultant to assist in drafting of a Code of Ethics.


ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the compensation
paid by the Company for services rendered in all capacities to the Company for
the three fiscal years ended December 31, 2003, 2002 and 2001 for all officers,
individually, and, as a group, for all officers and directors.

                                       54
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION - continued

SUMMARY COMPENSATION TABLE

<table>
<caption>
                                                  Annual Compensation                 Long Term Compensation
                                                                                                Awards
                                                                                                     Securities
                                                                 Other Annual   Restricted Stock     Underlying       All Other
Name and Principle Position           Year Salary ($) Bonus ($) Compensation ($)  Award(s) ($)    Options/SARs (#) Compensation ($)
------------------------------------- ---- ---------- --------- ---------------- ------------- ------------------ ----------------
<S>                                   <C>        <C>       <C>              <C>           <C>                <C>              <C>
John E. Hartman, CEO (4)              2003          -         -                -     $ 105,000               None                -
                                      2002          -         -                -             -               None                -
                                      2001          -         -                -             -               None                -

Albert Golusin CFO & CEO (3)
                                      2003          -         -                -     $  60,000               None                -
                                      2002          -         -                -             -               None                -
                                      2001          -         -                -             -               None                -


Ilya "Sean" Radetich, VP (7)          2003          -         -                -     $  33,000               None                -
                                      2002          -         -                -             -               None                -
                                      2001          -         -                -             -               None                -


Roger Duffield, CEO (2)               2003          -         -                -             -               None                -
                                      2002          -         -         $ 10,000             -               None                -
                                      2001  $7  0,000         -                -             -               None                -

All Officers & Directors as a group
(two persons) (3)(4)(5)(6)(7)(8)      2003          -         -                -     $ 203,000               None                -
                                      2002          -         -                -     $  85,675               None                -
                                      2001  $ 145,000         -         $ 46,000             -               None                -
</table>

(2) During the year 2001, the Company issued 125,000 restricted common shares at
a trading value of $10,000 to reimburse Roger Duffield for moving expenses.

(3) During 2001,  Albert Golusin,  Chief  Financial  Officer and Director of the
Company, received $60,000 in cash for his services. During 2002 he served as the
Chief Financial  Officer and the Chief Executive Officer from January 1, 2002 to
September 25, 2002. During 2002 he received  1,189,156  restricted common shares
at a trading  value of $48,153.  During  2003,  he received  280,228  restricted
common shares at a trading value of $60,000

(4) John  Hartman  became the Chief  Executive  Officer on  September  26, 2002.
During 2002 he received 238,610  restricted  common shares at a trading value of
$15,000.  During 2003, he received 503,913 restricted common shares at a trading
value of $105,000

(5) R.G.  Krushnisky,  Vice President and Director of the Company,  provides his
consulting  services on a part-time basis.  During 2001, Mr. Krushnisky received
$15,000 for services as a Vice  President.  He also earned  $18,000 for director
fees during 2001. During 2002 he received 304,532  restricted common shares at a
trading value of $15,261.  During 2003,  he received  25,014  restricted  common
shares at a trading value of $5,000

                                       55
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION - continued

(6) Stanley Porayko,  Secretary and former Director of the Company, provided his
consulting  services on a part-time  basis. He did not receive any shares during
2001 for services. During 2001, he earned $18,000 in director fees. During 2002,
he received 181,532  restricted  common shares at a trading value of $7,261.  He
did not receive any shares during 2003 for services.

(7) Ilya "Sean" Radetich,  Vice President and Director of the Company,  provides
his consulting  services on a part-time basis.  During 2003, he received 137,014
restricted common shares at a trading value of $33,000

(8)  All  of the  current  directors  collectively  had an  option  to  purchase
1,000,000  shares at $0.50 per share  until June 30,  2002 and did not  exercise
their  option.  The options  expired and the directors and officers did not have
any options outstanding at December 31, 2002.

There  are no  current  plans to pay cash or stock  dividends  on the  Company's
stock.

VALUE OF OPTIONS AT DECEMBER 31, 2003

The Company had no options  outstanding  from which it could  obtain cash during
the entire year 2003.

OPTION GRANTS IN THE LAST FISCAL YEAR

The Company granted no options during 2003.


COMPENSATION OF DIRECTORS

The  company  compensates  all  independent  directors  $500  for  each  meeting
attended.  The amount is paid in Common shares, the price of which is determined
by the average  closing  price of the Common stock during the month in which the
meeting is held. No compensation is paid to any employee director for attendance
at any meeting or any other services provided as a director.

STOCK OPTION PLAN

The Board of Directors of the Company has approved its year 2000 Incentive Stock
Option  Plan  ("Plan")  that  authorizes  the Company to grant  incentive  stock
options. The Plan relates to a total of 500,000 shares of common stock including
all unexercised  options from prior plans.  All options which may be outstanding
at any  point  in time  must be  exercised  no later  than  three  months  after
termination of employment or service as a director, except that any optionee who
is unable to  continue  employment  or service  as a  director  due to total and
permanent  disability  may exercise such options  within one year of termination
and the options of an optionee  who is employed or disabled and who dies must be
exercised within one year after the date of death.

The  Plan  is to be  administered  by the  Company's  Board  of  Directors  or a
committee  thereof which determines the terms of options granted,  including the
exercise price, the number of shares of common stock subject to the option,  and
the  terms  and  conditions  of  exercise.  Options  granted  under the plan are
transferable by the optionee.

                                       56
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table contains information, as of December 31, 2003, regarding the
shareholdings of (1) The Company's current directors and executive officers, (2)
those persons or entities who  beneficially own more than 5% of its common stock
and (3) all of the directors and executive officers as a group (giving effect to
the  exercise  of the  warrants  held by each  such  person or  entity).  Unless
otherwise indicated,  the person or entity listed in the table is the beneficial
owner of the shares and has sole voting and investment power with respect to the
share indicated:

<table>
<caption>
                                    Number of shares of Common      Percent of Common Stock
         Name                        Stock Beneficially Owned        Beneficially Owned (1)
<S>                                              <C>                         <C>
John Hartman
Chief Executive Officer, Director
1475 South Bascom Ave. # 210
Campbell, CA. 95008-0629                       1,121,087                      7.55%

Albert Golusin
Chief Financial Officer, Director
10641 North 44th Street
Phoenix, Arizona 85028                           582,060                      3.92%

R.G. Krushnisky
Director
93 English Bluff Road
Tsawwassen, British Columbia
Canada V4M 2M4                                    170,022                     1.15%

Ilya (Sean) Radetich
Director
1475 South Bascom Ave. # 210
Campbell, CA. 95008-0629                          247,608                     1.67%

Total shares owned by Directors and
 Officers of the Company (4 persons)            2,120,777                    14.29%
</table>

(1) Based upon  14,839,492  outstanding  shares of common  stock on December 31,
2003.There were no options outstanding at December 31, 2003.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On December 18, 2002,  the Company  entered into a memorandum  of  understanding
with Realty Capital Corporation whereby Realty Capital Corporation would utilize
office  space and  telephone  services  at the  company's  offices in  Campbell,
California  in  exchange  for  payment of  $15,000  per  month.  Realty  Capital
Corporation  was majority  controlled by the  President of Silverado  Financial,
Inc., John E. Hartman and his spouse.

On April 8, 2003 the company entered into a binding Letter of Intent with Realty
Capital  Corporation whereby the Company will acquire Realty Capital Corporation
for a purchase  price to be determined by the net asset value of Realty  Capital
as determined  by an  independent,  third party  valuation and that no value for
goodwill or  intellectual  property  would be included in the purchase price and
that in exchange  for  eliminating  any such value,  the company  would agree to


                                       57
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS - continued

forgive any debt owed under the December 18, 2002  memorandum of  understanding.
The  transaction  is subject to receipt by the Company of said valuation as well
as  financial  statements  and  the  affirmative  vote  of the  majority  of the
shareholders  of Realty  Capital  Corporation.  Realty Capital  Corporation  was
majority  controlled  by the  President of Silverado  Financial,  Inc.,  John E.
Hartman and his spouse.

On May 9, 2003 the board of directors approved the acquisition of Realty Capital
Corporation,  a  mortgage  brokerage  company,  from John  Hartman  for  729,452
restricted  common shares.  Mr. Hartman abstained from the vote. The acquisition
was made at a trading value of $127,654  which was the net asset value of Realty
Capital  and the  average  closing  bid price of the  Company  on the prior five
trading days.


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

(a) EXHIBITS.  The following  exhibits required by Item 601 to be filed herewith
are incorporated by reference to previously filed documents:

Exhibit No.    Description and Method of Filing
-----------    -----------------------------------------------------------------

  2.1          The  Agreement  and  Plan  of   Reorganization   between  Rhombic
               Corporation and Emerald  Acquisition  Corporation filed in an 8-K
               on January 21, 2000.
  3.1          Certificate of Incorporation of Emerald  Acquisition  Corporation
               filed on December 3, 1999 in the Form 10SB
  3.2          The corporate  by-laws filed on December 3, 1999 in the Form 10SB
               10.1 Stock Option Plan filed in the 10-QSB on May 17, 2000.
 10.2          Letter  Agreement  to purchase  Financial  Software  Inc.,  dated
               November 15, 2002,  incorporated  by reference to Exhibit 10.1 to
               Form 8-K dated November 26, 2002.
 10.3          Audited financial  statements of Financial  Software Inc. through
               April 30, 2002 and 2001,  respectively,  and unaudited statements
               through October 31, 2002, incorporated by reference to Form 8-K/A
               dated February 6, 2003.
 16            Letter on change of accountant, incorporated by reference to Form
               8/K filed on March 19, 2004 and on Form 8-K/A on April 7, 2004
 21.1          Subsidiaries of Issuer as of December 31, 2003
 31.1          Certification  of  Chief  Executive   Officer  pursuant  to  Rule
               13a-14(a)/15d-14(a)
 31.2          Certification  of  Chief  Financial   Officer  pursuant  to  Rule
               13a-14(a)/15d-14(a)
 32.1          Certification of Chief Executive Officer pursuant to Section 1350
 32.2          Certification of Chief Financial Officer pursuant to Section 1350

(b) REPORTS ON FORM 8-K

1. Form 8-K dated December 2, 2003 relating to the  acquisition of San Francisco
Funding,  Inc. 2. Form 8-K dated December 24, 2003 relating to the rescission of
the acquisition of San Francisco Funding, Inc.

                                       58
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

James C.  Marshall  C.P.A.,  P.C.,  "Marshall",  was the  Company's  independent
auditor  for the year  ended  December  31,  2002  and  reviewed  the  quarterly
financial  statements  for  the  first  three  quarters  during  2003.  Marshall
performed the services listed below and was paid the fees listed below.

AUDIT FEES

Marshall  billed  aggregate fees of  approximately  $9,300 for the review of the
financial  statements included in the Company's Quarterly Reports on Form 10-QSB
for each of the  three  quarters  ended  September  30,  2003 and  approximately
$15,000 for year ended December 31, 2002 for professional  services rendered for
the  audit of the  Company's  annual  financial  statements  and  review  of the
financial statements included in the Company's Quarterly Reports on Form 10-QSB.

Marshall  billed  aggregate fees of  approximately  $8,700 for the review of the
financial  statements included in the Company's Quarterly Reports on Form 10-QSB
for each of the  three  quarters  ended  September  30,  2002 and  approximately
$12,000 for year ended December 31, 2001 for professional  services rendered for
the  audit of the  Company's  annual  financial  statements  and  review  of the
financial statements included in the Company's Quarterly Reports on Form 10-QSB

TAX FEES

Marshall  billed $600 for the  preparation of its tax returns for the year ended
December 31,  2002.  Marshall  did not provide any  services  pertaining  to tax
advice or strategies.

ALL OTHER FEES

Marshall did not provide or bill for any other professional  services during the
two years ended December 31, 2003.



                                       59
<PAGE>

SIGNATURES

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

SILVERADO FINANCIAL, INC.


Date: May 15, 2004                  By /s/ John E. Hartman
                                    --------------------------------------------
                                    John E. Hartman, Chief Executive Officer


Date: May 15, 2004                  By /s/ Albert Golusin
                                    --------------------------------------------
                                    Albert Golusin, Principal Accounting Officer

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

Date: May 15, 2004                  By /s/ John E. Hartman
                                    --------------------------------------------
                                    John E. Hartman, Director


Date: May 15, 2004                  By /s/ Albert Golusin
                                    --------------------------------------------
                                    Albert Golusin, Director


Date: May 15, 2004                  By /s/ Ilja (Sean) Radetich
                                    --------------------------------------------
                                    Ilja (Sean) Radetich, Director


Date: May 15, 2004                  By /s/ R.G. Krushnisky
                                    --------------------------------------------
                                    R.G. Krushnisky, Director


                                       60
<PAGE>