<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

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


(Mark one)
     [X]     Quarterly Report Under Section 13 or 15(d) of The Securities
                              Exchange Act of 1934


             FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

     [ ]     Transition Report Under Section 13 or 15(d) of The Securities
                              Exchange Act of 1934


             For the transition period from ______________ to _____________

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


                         Commission File Number: 0-10999

                        COMPOSITE TECHNOLOGY CORPORATION
        (Exact name of small business issuer as specified in its charter)

           Nevada                                             59-2025386
----------------------------                         --------------------------
  (State of incorporation)                            (IRS Employer ID Number)

          18881 Von Karman Avenue, Suite 1630, Irvine, California 92612
          -------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (949) 756-1091
                         (Registrant's telephone number)

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


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

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:    May 13, 2002: 67,788,098
                                             ------------------------

Transitional Small Business Disclosure Format (check one):    YES       NO X
                                                                  ----    ---

<PAGE>

                        COMPOSITE TECHNOLOGY CORPORATION

                Form 10-QSB for the Quarter ended March 31, 2002

                                Table of Contents


                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

  Item 1   Financial Statements                                               3

  Item 2   Management's Discussion and Analysis
           of Financial Condition and Plan of Operation                      20


PART II - OTHER INFORMATION

  Item 1   Legal Proceedings                                                 23

  Item 2   Changes in Securities                                             23

  Item 3   Defaults Upon Senior Securities                                   24

  Item 4   Submission of Matters to a Vote of Security Holders               24

  Item 5   Other Information                                                 24

  Item 6   Exhibits and Reports on Form 8-K                                  24


SIGNATURES                                                                   25


                                       2
<PAGE>
<TABLE>

ITEM 1 - PART 1 - FINANCIAL STATEMENTS
--------------------------------------

                      COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                         (formerly Eldorado Financial Group, Inc.)
                                CONSOLIDATED BALANCE SHEETS
                                  March 31, 2002 and 2001

                                        (UNAUDITED)
<CAPTION>
                                                                  March 31,         March 31,
                                                                    2002              2001
                                                                ------------      ------------
                                          ASSETS
                                          ------
<S>                                                             <C>               <C>
CURRENT ASSETS
   Cash on hand and in bank                                     $     5,098       $         -
   Prepaid expenses and other                                       311,167                 -
                                                                ------------      ------------
      TOTAL CURRENT ASSETS                                          316,265                 -
                                                                ------------      ------------

PROPERTY AND EQUIPMENT - AT COST
   Office furniture and equipment                                     8,684                 -
   Accumulated depreciation                                          (2,596)                -
                                                                ------------      ------------
      NET PROPERTY AND EQUIPMENT                                      6,088                 -
                                                                ------------      ------------

OTHER ASSETS
   Contract rights                                                  165,000                 -
   Investments in other companies                                   236,470                 -
                                                                ------------      ------------
      TOTAL OTHER ASSETS                                            401,470                 -
                                                                ------------      ------------

   TOTAL ASSETS                                                 $   723,823       $         -
                                                                ============      ============

                           LIABILITIES AND SHAREHOLDERS' EQUITY
                           ------------------------------------
CURRENT LIABILITIES
   Notes payable to a shareholder                               $    62,000       $         -
   Accounts payable - trade                                         405,328                 -
   Accrued officers compensation                                     80,759                 -
   Accrued interest payable                                           1,300                 -
   Accrued dividends payable                                         23,671                 -
                                                                ------------      ------------
      TOTAL CURRENT LIABILITIES                                     573,058                 -
                                                                ------------      ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
   Preferred stock - $0.001 par value
      5,000,000 shares authorized
      1,485 and -0- issued and outstanding, respectively                  1                 -
   Common stock - $0.001 par value
      200,000,000 shares authorized
      67,788,098 and -0- shares issued and
         outstanding, respectively                                   67,788                 -
   Additional paid-in capital                                     2,352,046                 -
   Accumulated deficit                                           (2,269,070)                -
                                                                ------------      ------------

   TOTAL SHAREHOLDERS' EQUITY                                       150,765                 -
                                                                ------------      ------------

   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $   723,823       $         -
                                                                ============      ============
</TABLE>

The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.

                                            3
<PAGE>

<TABLE>

                           COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                              (formerly Eldorado Financial Group, Inc.)
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                            Six and Three months ended March 31, 2002 and
                       Period from March 28, 2001 (date of inception) through
                                           March 31, 2001

                                             (UNAUDITED)
<CAPTION>

                                         Six months      Period from    Three months   Period from
                                            ended       March 28, 2001      ended      March 28, 2001
                                          March 31,         through       March 31,         through
                                            2002       March 31, 2001       2002       March 31, 2001
                                       -------------------------------------------------------------
<S>                                    <C>                <C>          <C>                <C>
REVENUES                               $          -       $     -      $           -      $      -
                                       -------------      ---------    --------------     ---------

EXPENSES
   General and
     administrative expenses                275,217             -           173,232             -
   Legal, professional
     and consulting fees                  1,474,070             -         1,083,185             -
   Interest expense                           1,300             -             1,300             -
   Depreciation                               1,362             -               681             -
                                       -------------      ---------    --------------     ---------
     Total operating expenses             1,751,949             -         1,258,398             -
                                       -------------      ---------    --------------     ---------

LOSS FROM OPERATIONS                     (1,751,949)            -        (1,258,398)            -

OTHER INCOME (EXPENSE)                            -             -                 -             -
                                       -------------      ---------    --------------     ---------

LOSS BEFORE
   PROVISION FOR INCOME TAXES            (1,751,949)            -        (1,258,398)            -

PROVISION FOR INCOME TAXES                        -             -                 -             -
                                       -------------      ---------    --------------     ---------

NET LOSS                                 (1,751,949)            -        (1,258,398)            -

OTHER COMPREHENSIVE INCOME                        -             -                 -             -
                                       -------------      ---------    --------------     ---------

COMPREHENSIVE LOSS                     $ (1,751,949)      $     -      $ (1,258,398)      $     -
                                       =============      ========     =============      ========

Earnings per share of common
   stock outstanding computed
   on net loss - basic and fully
   diluted                             $      (0.03)          nil      $      (0.02)          nil
                                       =============      ========     =============      ========

Weighted-average number of
   shares outstanding - basic and
   fully diluted                         66,610,607         - 0 -        66,710,449         -0-
                                       =============      ========     =============      ========
</TABLE>

The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.

                                                 4
<PAGE>
<TABLE>

                           COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                              (formerly Eldorado Financial Group, Inc.)
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 Six months ended March 31, 2002 and
                       Period from March 28, 2001 (date of inception) through
                                           March 31, 2001

                                             (UNAUDITED)
<CAPTION>
                                                                             Six months      Period from
                                                                                ended       March 28, 2001
                                                                              March 31,        through
                                                                                2002        March 31, 2001
                                                                            ------------    --------------
<S>                                                                         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss for the period                                                  $(1,751,949)      $     -
   Adjustments to reconcile net loss
      to net cash provided by operating activities
         Depreciation                                                             1,362             -
         Consulting fees and Amortization of
            prepaid expenses paid with common stock                             997,442             -
         (Increase) Decrease in
            Prepaid expenses and other assets                                   (32,500)            -
         Increase (Decrease) in
            Accounts payable - trade                                            395,703             -
            Accrued officer compensation                                         89,501             -
            Accrued interest payable                                              1,300             -
                                                                            ------------      --------
NET CASH USED IN OPERATING ACTIVITIES                                          (299,141)            -
                                                                            ------------      --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Cash advanced to officers                                                          -             -
   Purchase of property and equipment                                            (1,284)            -
                                                                            ------------      --------
NET CASH USED IN INVESTING ACTIVITIES                                            (1,284)            -
                                                                            ------------      --------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from notes payable to a shareholder                                  62,000             -
   Proceeds from sale of preferred stock                                         32,000             -
   Proceeds from sale of common stock                                           178,510             -
                                                                            ------------      --------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                       272,510             -
                                                                            ------------      --------

INCREASE (DECREASE) IN CASH                                                     (27,915)            -

Cash at beginning of period                                                      33,013             -
                                                                            ------------      --------

CASH AT END OF PERIOD                                                       $     5,098       $     -
                                                                            ============      ========

SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
      Interest paid for the period                                          $         -       $     -
                                                                            ============      ========
      Income taxes paid for the period                                      $         -       $     -
                                                                            ============      ========

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
      Common stock exchanged for
         Investment in Other Companies                                      $   191,250       $     -
                                                                            ============      ========
</TABLE>


The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.

                                                 5
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

Composite Technology Corporation (CTC or Company) was incorporated under the
laws of the State of Florida on February 26, 1980 as Eldorado Gold &
Exploration, Inc. On January 13, 1987, the Company amended its Articles of
Incorporation to change the corporate name to Eldorado Financial Group, Inc. and
modified the Company's capital structure to allow for the issuance of up to
100,000,000 shares of common stock at $0.001 par value per share.

On June 27, 2001, the Company changed its state of Incorporation from Florida to
Nevada by means of a merger with and into Eldorado Financial Group, Inc., a
Nevada corporation formed on June 25, 2001 solely for the purpose of effecting
the reincorporation. The Articles of Incorporation and Bylaws of the Nevada
corporation are the Articles of Incorporation and Bylaws of the surviving
corporation. Such Articles of Incorporation did not make any changes to the
capital structure of the Company.

On November 3, 2001, the Company exchanged 60,000,000 shares of restricted,
unregistered common stock for 100.0% of the issued and outstanding common stock
of Transmission Technology Corporation, a privately-owned Nevada corporation
incorporated on March 28, 2001. Transmission Technology Corporation (TTC) was
formed to own a license agreement related to patent-pending composite reinforced
electrical transmission lines utilizing composite core materials. Transmission
Technology Corporation became a wholly-owned subsidiary of the Company.

In conjunction with the November 3, 2001 transaction, the Company, in November
2001, changed its corporate name to Composite Technology Corporation and amended
its Articles of Incorporation to allow for the issuance of up to 5,000,000
shares of $0.001 par value Preferred Stock from none previously authorized and
for the issuance of up to 200,000,000 shares of $0.001 par value Common Stock
from the 100,000,000 shares previously authorized.

On December 28, 2001, the Company's Board of Directors, and the Board of
Directors for TTC established the initial year-end of September 30 for the
Registrant's wholly-owned subsidiary, Transmission Technology Corporation and,
concurrently, elected to change the fiscal year-end of CTC from December 31 to
September 30. This action was taken after an evaluation and review of the
November 3, 2001 acquisition transaction, the operations of both the Company and
Transmission Technology Corporation during the period since the last annual
filing on Form 10-KSB and consideration of future economic events and
opportunities.

The acquisition of Transmission Technology Corporation, on November 3, 2001, by
the Company effected a change in control and was accounted for as a" reverse
acquisition" whereby Transmission Technology Corporation is the accounting
acquiror for financial statement purposes. Accordingly, for all periods
subsequent to the reset year-end of September 30, 2001, the financial statements
of the Company reflect the historical financial statements of Transmission
Technology Corporation from its inception on March 28, 2001 and the operations
of the Company subsequent to September 30, 2001.

                                       6
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS - CONTINUED

During interim periods, the Company follows the accounting policies set forth in
its Transitional Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 on Form 10-KSB for the period ended September 30, 2001 as
filed with the U. S. Securities and Exchange Commission. The information
presented herein may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
contained in its Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 on Form 10-KSB when reviewing the interim financial results
presented herein.

In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending September 30, 2002.

The accompanying consolidated financial statements contain the accounts of
Composite Technology Corporation (formerly Eldorado Financial Group, Inc.) and
its wholly-owned subsidiary, Transmission Technology Corporation. All
significant intercompany transactions have been eliminated. The consolidated
entities are collectively referred to as "the Company".

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.

For segment reporting purposes, the Company operates in only one industry
segment and makes all operating decisions and allocates resources based on the
best benefit to the Company as a whole.


NOTE B - RELATED PARTY TRANSACTIONS

Prior to the November 3, 2001 acquisition of Transmission Technology Corporation
(TTC) by the Company, TTC engaged in significant transactions involving both
Preferred Stock and Common Stock of TTC with Red Guard Industries, Inc. (Red
Guard), an entity in which a shareholder, officer, and director of TTC, and
subsequently, the Company, is also a shareholder and was an officer through
December 2001. Key transactions involving this relationship include the issuance
of the Series A and Series B Preferred Stock, the issuance of Common Stock to
acquire various marketable and restricted securities in various unrelated
entities and to acquire the rights to negotiate to acquire the license to
manufacture, develop and sell certain patent-pending Composite Reinforced
Aluminum Conductor technology.


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Cash and cash equivalents
   -------------------------

   For Statement of Cash Flows purposes, the Company considers all cash on hand
   and in banks, including accounts in book overdraft positions, certificates of
   deposit and other highly-liquid investments with maturities of three months
   or less, when purchased, to be cash and cash equivalents.

                                       7
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

2. Property and Equipment
   ----------------------

   Property and equipment are recorded at historical cost. These costs are
   depreciated over the estimated useful lives of the individual assets,
   generally 4 to 10 years, using the straight-line method.

   Gains and losses from disposition of property and equipment are recognized as
   incurred and are included in operations.

3. Marketable Securities
   ---------------------

   Investments in the equity securities of other companies that have readily
   determinable fair values (as defined in Statement of Financial Accounting
   Standards No. 115, "Accounting for Certain Investments in Debt and Equity
   Securities" (SFAS 115) are classified, at the date of acquisition, into three
   categories and accounted for as follows:

      Available-for-Sale Securities - Equity securities not classified in either
      of the above categories are reported at fair value, with unrealized gains
      and losses excluded from earnings and reported in a separate component of
      shareholders' equity.

      Trading Securities - Equity securities that are bought and held
      principally for the purpose of selling them in the near term are reported
      at fair value. Unrealized gains and losses will be included in earnings
      subsequent to December 31, 1993, the Company's adoption date. As of the
      adoption date of SFAS 115, however, the net unrealized gain has been
      reflected as a separate component of shareholders' equity in accordance
      with SFAS 115.

      Held-to-Maturity Securities - Equity securities that the Company has the
      positive intent and ability to hold to maturity are reported at amortized
      cost.

      Other investments that do not have a readily determinable fair value are
      recorded at amortized cost.

   The Company evaluates the carrying value of all marketable securities
   classified as "held-to-maturity" or "other investments that do not have a
   readily determinable fair value" on a quarterly basis in accordance with
   Statement of Financial Accounting Standards No. 121 "Accounting for the
   Impairment of Long-Lived Assets and Long- Lived Assets to be Disposed of".
   Any permanent impairment, if any, is charged to operations in the quarter in
   which the determination of impairment is made.

   For purposes of computing realized gains and losses, the specific
   identification method is used.

4. Reorganization costs
   --------------------

      CTC and TTC have adopted the provisions of AICPA Statement of Position
      98-5, "Reporting on the Costs of Start-Up Activities" whereby all
      organization and initial costs incurred with the incorporation and initial
      capitalization of TTC, the costs associated with the reverse acquisition
      of TTC by CTC and costs incurred by TTC related to the reverse acquisition
      transaction with CTC were charged to operations in the period the
      respective costs were incurred.

                                       8
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

5. Research and development expenses
   ---------------------------------

   Research and development expenses are charged to operations as incurred.

6. Advertising expenses
   --------------------

   Advertising and marketing expenses are charged to operations as incurred.

7. Income taxes
   ------------

   The Company utilizes the asset and liability method of accounting for income
   taxes. At March 31, 2002 and 2001, respectively, the deferred tax asset and
   deferred tax liability accounts, as recorded when material, consist of
   temporary differences. Temporary differences represent differences in the
   recognition of assets and liabilities for tax and financial reporting
   purposes, primarily allowance for doubtful accounts and accumulated
   depreciation.

   As of March 31, 2002 and 2001, the deferred tax asset related to the
   Company's net operating loss carryforward is fully reserved. Due to the
   provisions of Internal Revenue Code Section 338, the Company may have no net
   operating loss carryforwards available to offset financial statement or tax
   return taxable income in future periods as a result of a change in control
   involving 50 percentage points or more of the issued and outstanding
   securities of the Company.

8. Income (Loss) per share
   -----------------------

   Basic earnings (loss) per share is computed by dividing the net income (loss)
   by the weighted-average number of shares of common stock and common stock
   equivalents (primarily outstanding options and warrants). Common stock
   equivalents represent the dilutive effect of the assumed exercise of the
   outstanding stock options and warrants, using the treasury stock method. The
   calculation of fully diluted earnings (loss) per share assumes the dilutive
   effect of the exercise of outstanding options and warrants at either the
   beginning of the respective period presented or the date of issuance,
   whichever is later. As of March 31, 2002, the Company's outstanding stock
   options are considered anti-dilutive due to the Company's net operating loss
   position. As of March 31, 2001, the Company had no warrants and/or options
   issued and outstanding.


NOTE D - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.

                                       9
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE E - YEAR-END CHANGE AND COMPARABILITY (UNAUDITED)

On December 28, 2001, the Company's Board of Directors elected to change the
fiscal year-end of the Company from December 31 to September 30. Additionally,
the Board of Directors established the initial year-end of September 30 for the
Registrant's wholly-owned subsidiary, Transmission Technology Corporation. The
following unaudited information presents selected annualized financial data as
if the fiscal year had been reset as of September 30, 2001 and 2000,
respectively.

                                           (pre-acquisition)  (pre-acquisition)
                                            October 1, 2000    October 1, 1999
                                                through            through
                                           September 30, 2001 September 30, 2000
                                           ------------------ ------------------

         Revenues                              $         -        $         -
         Gross profit                                    -                  -
         Income taxes                                    -                  -
         Loss from continuing operations           (90,636)            (1,620)
         Earnings per share                            nil                nil
         Proforma weighted-average number
           of shares issued and outstanding     66,500,000         66,500,000


NOTE F - CONTRACT RIGHTS

On April 12, 2001, TTC issued 165 shares of restricted, unregistered Series A
Cumulative and Convertible Preferred Stock to Red Guard to acquire the rights to
negotiate to acquire the license to manufacture, develop and sell certain
patent-pending Composite Reinforced Aluminum Conductor technology. This
transaction was valued at an agreed- upon amount of approximately $165,000.

TTC entered into a technology license agreement with W.B.G., Inc., a California
corporation ("WBG"), on May 7, 2001 (the "License Agreement"). The License
Agreement related to patent pending composite reinforced aluminum conductor
technologies and gave TTC an exclusive license to the technologies covered by
the License Agreement. The License Agreement currently is the basis for our
rights to the composite reinforced aluminum conductor technologies. The Company
intends to file patent applications for several cable designs resulting from any
future development and testing work. WBG and Red Guard were and are unrelated
entities.

In the License Agreement, WBG represented and warranted to TTC that WBG had the
right to enter into the License Agreement, including without limitation the
right to grant TTC the exclusive rights to the technologies covered by the
License Agreement.

TTC agreed to pay royalties to WBG, initially at a maximum rate of 5% of Gross
Revenues (as defined in the License Agreement) received by TTC from the sale of
the Technology products until sales of product have equaled the design capacity
of the first commercial production line. Design capacity of each commercial
production line shall be defined as the capacity stated on the specifications by
the builder which is WBG. The royalty shall decline by ONE percent (1%) of Gross
Revenues as sales of product from each additional commercial production line
reaches design capacity. TTC shall pay WBG a minimum royalty of TWO percent (2%)
of Gross Revenues received by TTC from the sale of the Technology products. In
the event of any sub-license agreements, TTC shall pay the same royalty to WBG
as it would if it sold the products itself.

                                       10
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE F - CONTRACT RIGHTS - CONTINUED

For commercial product line development, TTC agrees to pay WBG to design, build,
test, install, provide specifications, manuals, and training for complete
commercial product equipment lines for each Technology. The price to be mutually
agreed upon based upon costs plus reasonable overhead fees. TTC understands and
agrees that it must advance funds to WBG for each phase as required under a
mutually agreed upon budget and schedule. As of September 30, 2001 and periods
subsequent thereto, no mutually agreed upon budget has been developed or agreed
to by either party. Further, for additional commercial product lines, TTC has
agreed to purchase additional commercial product lines from WBG for all
additional plant lines as required at mutually agreed upon prices and delivery
schedules. If WBG is unable to supply said additional commercial product lines,
then TTC shall have the right to produce same. No such requirements exist as of
September 30, 2001 or subsequent thereto.

WBG also agreed to provide TTC full disclosure of all current and future
technologies covered by the License Agreement as well as disclosure of any
interested parties in such technologies. TTC agreed to pay WBG to design, build,
install and provide specifications, manuals and training to complete commercial
product equipment lines for the technologies, with the price to be mutually
agreed upon. TTC would advance funds to WBG for each phase as required under a
mutually agreed upon budget and schedule.

As of March 31, 2002 and subsequent thereto, the Company, TTC and WBG are
involved in litigation questioning the validity of the original license
agreement (See Note M - Contingencies). Management is of the opinion that the
license agreement will be upheld and no valuation impairment of the original
agreed-upon acquisition cost has been provided in the accompanying financial
statements.


NOTE G - INVESTMENTS IN OTHER COMPANIES

Investments in other companies consists of the following at March 31, 2002:

                                                         Carrying value at
       Investee company                                   March 31, 2002
       ----------------                                   --------------
Held-to-Maturity
----------------
   Integrated Performance Systems, Inc.                       $  1,000
   STL Group, Inc.                                               1,000
   TMA Ventures, LLC/ MEMX, Inc.                                 1,000
   AMJ Logistics, Inc.
     Equity investment, including
       conversion of cash advances                             233,470
                                                              --------

       Totals                                                 $236,470
                                                              ========

On April 12, 2001, the Company exchanged 15,086,000 equivalent post-acquisition
shares of restricted, unregistered common stock with Red Guard for various
marketable and restricted securities in various unrelated entities. The initial
exchange transaction was valued using an agreed-upon valuation of approximately
$137,750.

Through September 30, 2001, upon evaluations in accordance with Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of", management has
recognized a permanent valuation impairment of approximately $137,230 against
these holdings.

                                       11
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE G - INVESTMENTS IN OTHER COMPANIES - CONTINUED

Integrated Performance Systems, Inc. (IPS) is a publicly-traded electronics
manufacturing corporation located in Frisco, Texas. IPS is a manufacturer and
supplier of performance-driven circuit boards for high-speed digital computer
and telecommunications applications. The Company acquired an aggregate 3,000
shares of IPS in the April 12, 2001 transaction.

STL Group, Inc. (STL) is a privately-owned company based in Cleveland, Ohio
involved in manufacturing and distributing patented and FDA approved solid
surgical implants and other surgical products. The Company acquired an aggregate
15,000 post-STL forward split shares of STL in the April 12, 2001 transaction.

TMA Ventures, LLC/MEMX, Inc. is a privately-owned company which was formed in
2000 to commercialize micro electro-mechanical systems "MEMS" technologies
licensed by Sandia National Laboratories, specifically to make an all optical
cross-connect microchip for optical switches. The Company acquired an aggregate
3,389 units in TMA Ventures, Inc., which convert on a one-for-one basis into
shares in MEMX, Inc., in the April 12, 2001 transaction.

AMJ Logistics, Inc. (AMJ) is a privately-owned software company based in Tucson,
Arizona. AMJ's primary product is an open-architecture, event-driven,
object-oriented integrated Electronic Data Interchange (EDI) system providing
transaction accountability for a complete audit trail for history and accurate
tracing of costs.

The Company, on August 11, 2001, executed a 30-day purchase option to acquire up
to an additional 110,000 unregistered, restricted shares of AMJ at prices
ranging between $12.40 and $16.00 per share. During August 2001, the Company
paid $10,000 in cash and issued 158,800 equivalent post-acquisition shares of
restricted, unregistered common stock, valued at $4,500.00, to acquire
approximately 72,665 shares of AMJ common stock under this option.

On September 29, 2001, the Company made an advance of $30,000 cash to AMJ. On
October 13, 2001, AMJ and the Company agreed to convert this $30,000 advance and
an additional advance of $20,000, made on October 3, 2001, into 3,125 shares of
AMJ restricted, unregistered common stock.

In December 2001, the Company and AMJ settled the outstanding balances on the
purchase option agreement with the issuance of 42,500 shares of the Company's
restricted, unregistered common stock to AMJ in exchange for 37,335 shares of
restricted, unregistered AMJ common stock. This transaction was valued at
approximately $909,635, which approximated the discounted "fair value" of the
Company's common stock based upon the quoted closing price of the Company's
unrestricted equity securities as quoted on the date of the transaction.

As a result of all AMJ transactions, through December 31, 2001, the Company owns
an aggregate 114,125 shares of AMJ, including the initial 1,000 shares acquired
in the April 12, 2001 transaction.


NOTE H - PREFERRED STOCK TRANSACTIONS

Preferred stock consists of the following as of March 31, 2002 and 2001,
respectively:

<TABLE>
<CAPTION>
                                              March 31, 2002                March 31, 2001
                                        --------------------------     ----------------------
                                        # shares par value# shares     par value
                                        --------------------------     ---------
<S>                                         <C>           <C>                <C>       <C>
Series A Cumulative Convertible Stock         165         $ -                -         $   -
Series B Cumulative Convertible Stock       1,000            1               -             -
                                            -----         ----           -----         -----

     Totals                                 1,165         $  1               -             -
                                            =====          ====          =====         =====
</TABLE>

                                       12
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE H - PREFERRED STOCK TRANSACTIONS - CONTINUED

On April 12, 2001, the Company authorized and allocated 165 shares of Series A
10.0% Cumulative Convertible Preferred Stock. The Series A Preferred Stock
(Series A Stock) was issued at $1,000.00 per share. The Series A Shares shall be
entitled to receive cumulative cash dividends at a rate of 10.0% per annum of
the issue price ($1,000.00 per share) from the date of issuance of the shares
until such shares are converted into common stock or redeemed by the Company.
The dividends shall be payable quarterly on the last day of March, June,
September and December in each year, commencing on September 30, 2001. The
Series A Shares are convertible into common stock at an negotiated conversion
rate of $0.47 per effective post-acquisition share at the election of the holder
beginning 90 days after the date of issuance. The Series A Shares are callable
at any time by the Company at a price of 102.0% of issue value upon a 10-day
advance written notice. These shares were issued on April 12, 2001 to Red Guard,
to acquire the rights to negotiate to acquire the license to manufacture,
develop and sell certain patent- pending Composite Reinforced Aluminum Conductor
technology. This transaction was valued at an agreed-upon amount of
approximately $165,000.

On June 27, 2001, the Company authorized and allocated 2,000 shares of Series B
10% Cumulative Convertible Preferred Stock. The Series B Preferred Stock (Series
B Stock) was issued at $100.00 per share. The Series B Stock shall be entitled
to receive cumulative cash dividends at a rate of 10.0% per annum of the issue
price ($100.00 per share) from the date of issuance of the shares until such
shares are converted into common stock or redeemed by the Company. The dividends
shall be payable quarterly on the last day of March, June, September and
December in each year, commencing on September 30, 2001. Any dividends on the
Series B Stock that are not paid within 30 days after the date upon which
payment thereof is due shall bear interest at 10.0% per annum from such date
until ultimately paid. The shares are convertible into common stock at a rate of
$1.25 per effective post-acquisition share at the election of the holder
beginning 90 days after the date of issuance. The Series B Stock is callable at
a price of 109.0% at any time by the Company upon 10-day advance written notice.
The Company sold 1,000 Series B Shares to Red Guard for cash proceeds of
approximately $100,000 on August 28, 2001.


NOTE I - COMMON STOCK TRANSACTIONS

On December 26, 2000, the Company cancelled an aggregate total of 833,485 shares
of its issued and outstanding common stock. Management, upon extensive research
into transactions approved by former officers and or controlling shareholders,
determined that all of such shares may have been issued improperly, inasmuch as
no corporate authorization of the issuances existed and no consideration was
received by the Company for such shares.

Specifically, the cancellations were as follows:

     400,000 shares were purchased by the then majority stockholder from a
     former officer of the Company for a cash consideration of $15,000 and
     returned to the Company's treasury for no consideration.

     403,485 shares issued to former officers, directors and individuals. These
     shares were issued improperly as (a) at the time of such issuance, the
     corporate charter of the Company had been revoked by the Secretary of State
     of Florida for failure to make required filings and to pay associated fees
     and (b) no consideration was received by the Company for such shares. Many
     of the certificates representing these shares were never delivered and
     remained in the possession of the Company's transfer agent since their
     initial issuance.

                                       13
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE I - COMMON STOCK TRANSACTIONS - CONTINUED

     30,000 shares issued to a company in anticipation of fees due for
     investment banking activities. These shares were issued improperly as (a)
     there was no action by the Company's Board of Directors authorizing the
     issuance of any of such shares, and (b) at the time of such issuance, the
     corporate charter of the Company had been revoked by the Secretary of State
     of Florida for failure to make required filings and to pay associated fees.

As a result of the cancellation of these 833,485 shares of Company common stock,
the Company then had 9,166,515 shares outstanding. The effect in the
accompanying financial statements was to restate the par value of the issued and
outstanding shares with a corresponding offset to the additional paid-in capital
account. There was no impact on the earnings of the Company as a result of this
event.

On November 3, 2001, in connection with a business combination transaction, the
Company's then controlling shareholder surrendered and cancelled an aggregate
3,116,515 shares of common stock to the Company for no consideration. The effect
of this transaction was to reduce the common stock account by the par value
(approximately $3,117) and increase the additional paid-in capital account.

On November 3, 2001, the Company executed an Agreement and Plan of
Reorganization whereby the Company issued an aggregate 60,000,000 shares of
restricted, unregistered common stock to the shareholders of Transmission
Technology Corporation (TTC) in exchange for 100.0% of the issued and
outstanding stock of TTC. TTC was incorporated as a Nevada corporation on March
28, 2001 to own a license agreement related to patent-pending composite
reinforced electrical transmission lines utilizing composite core materials.
Transmission Technology Corporation became a wholly-owned subsidiary of the
Company.

On November 3, 2001, the Company issued an aggregate 450,000 shares of
restricted, unregistered common stock to four (4) unrelated entities and/or
individuals as compensation for various financial consulting services provided
in the above discussed Agreement and Plan of Reorganization. This transaction
was valued at approximately $90,000, which approximates the "fair value" of the
Company's stock on the date of the transaction using the discounted closing
price of the Company's common stock as quoted on the NASDAQ Electronic Bulletin
Board.

Upon completion of the November 3, 2001 reverse acquisition transaction, the
Company had an aggregate 66,500,000 shares of issued and outstanding common
stock.

On October 30, 2001, TTC issued an aggregate 79,402 equivalent post-acquisition
shares of restricted, unregistered common stock to its corporate law firm at an
agreed-upon value of approximately $300,000 as a retainer for future legal
services to be provided during a one-year period from October 30, 2001. The
retainer shares shall vest against normal monthly billings from the law firm to
the Company using the agreed-upon valuation of $3.78 per share, regardless of
the open market price of the Company's common stock during the billing month. If
the aggregate market value of the 79,402 shares are worth less than $450,000 in
the open market at the average mean of the bid and ask price for the shares
during the one-month period just preceding the first anniversary of the retainer
agreement (October 30, 2002) then the law firm will have 15 days to make a
written election to either a) exercise a downward adjustment in the agreed-upon
price of $3.78 to an amount of not less than $1.89 per share, which would cause
the Company to issue up to an additional 79,402 equivalent post-acquisition
shares to the law firm or b) put all 79,402 shares back to the Company and
require payment in cash for the legal services provided during the initial term
of the agreement. During January 2002, the Company and the law firm agreed to
rescind this transaction and the 79,402 shares were returned to the Company. All
future transactions between the Company and the law firm will be conducted on a
cash transaction basis.

                                       14
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE I - COMMON STOCK TRANSACTIONS - CONTINUED

On December 4, 2001, the Company issued 42,500 shares of the Company's
restricted, unregistered common stock in exchange for 37,335 shares of
restricted, unregistered AMJ common stock. This transaction was valued at
approximately $191,450, which approximates the "fair value" of the Company's
stock on the date of the transaction using the discounted closing price of the
Company's common stock as quoted on the NASDAQ Electronic Bulletin Board.

On February 27, 2002, the Company filed a Registration Statement Under The
Securities Act of 1933 on Form S-8 to register an aggregate 9,000,000 shares of
common stock pursuant to the 2002 Non-Qualified Stock Compensation Plan. During
the period from February 28, 2002 through March 31, 2002, the Company issued an
aggregate 1,325,000 shares of common stock pursuant to this plan. These shares
were issued at prices ranging between $0.55 and $1.85 per share, as based on the
closing quoted stock price on the respective date of each transaction. These
transactions were valued at an aggregate approximate $1,618,750.


NOTE J - STOCK OPTIONS

On July 12, 2001, TTC granted to Red Guard an option to purchase up to $500,000
of 10% Series B Cumulative Convertible Preferred Stock of TTC (the "TTC Series B
Preferred") at $100 per share (the "Red Guard Option") and a warrant to purchase
up to 120,000 shares of TTC Common Stock at $20.00 per share (the "Red Guard
Warrant") in reliance upon the exemption from registration set forth in Section
4(2) of the Securities Act as an inducement for revising the initial conversion
terms of the TTC Series A Preferred. The Red Guard Option and Warrant was
granted to Red Guard as an inducement to modify the conversion price of the TTC
Series A Preferred from an initial conversion price of $0.20 per share, as
adjusted for TTC stock splits prior to the November 3, 2001 reverse acquisition
transaction with CTC, to $0.47 per share after accounting for the effects of the
CTC reverse acquisition transaction. The Red Guard Option was exercisable at any
time and expired on January 12, 2002.

On August 28, 2001, Red Guard exercised a portion of the Series B option and
purchased an aggregate $100,000 of Series B Preferred from the Company. On
October 11, 2001, Red Guard assigned an additional portion of this option to an
unrelated individual who then exercised the option to purchase an aggregate
$32,000 of Series B Preferred from the Company The following table summarizes
all common stock options granted from the grant date through March 31, 2002:

                Options   Options      Options       Options      Exercise price
                granted  exercised    terminated   outstanding      per share
                -------  ---------    ----------   -----------      ---------

Series B
   Preferred   $500,000   $132,000     $368,000    $     -          $100.00
               --------   --------     --------    -------

Totals         $500,000   $132,000     $368,000    $     -
               ========   ========     ========    =======

                                       15
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE J - STOCK OPTIONS - CONTINUED

On May 15, 2001, TTC established the 2001 Incentive Compensation Stock Option
Plan (Plan). The purpose of the Plan is to grant options to purchase the
Company's common stock to employees of the Company and any subsidiaries to
attract and retain persons of ability and provide incentives for them to exert
their best efforts on behalf of the Company. The Plan is administered by either
the Company's Board of Directors or a committee established and appointed by the
Board of Directors. Under the Plan, the Board has reserved 4,764,000 shares of
common stock to support the underlying options which may be granted. The
exercise price of the underlying shares will be determined by the Board of
Directors; however, the exercise price may not be lower than 100.0% of the mean
of the last reported bid and asked price of the Company's common stock as quoted
on the NASDAQ Bulletin Board or any other exchange or organization. The term of
each option will be established by the Board of Directors at the date of issue
and may not exceed 10 years. The Plan shall automatically terminate on May 15,
2021 and no options under the Plan may be granted after May 15, 2011.

In June 2001, the Board of Directors granted an aggregate 1,357,740 options to
various officers and employees to purchase an equivalent number of shares of
restricted, unregistered common stock. The options were issued exercise prices
of either $0.31 or $0.35 per share and expire in either June 2006 or June 2011.

On March 31, 2002, the Company granted an aggregate 5,200,000 options to various
consulting professionals to purchase an equivalent number of shares registered
under the Company's Form S-8, filed in February 2002. The options were issued at
exercise prices between $0.40 and $2.00 per share. These options expire at
various dates between March 31, 2003 and December 31, 2011.

There were no exercise of any options during the periods ended September 30,
2001 and March 31, 2002, respectively. The following table summarizes all common
stock options granted through March 31, 2002.

<TABLE>
<CAPTION>

                   Options   Options      Options       Options      Exercise price
                   granted  exercised    terminated   outstanding      per share
                   -------  ---------    ----------   -----------      ---------
<C>                <C>             <C>          <C>   <C>             <C>
2001 employees     1,357,740       -            -     1,357,740       $0.31 - $0.35
2002 consultants   5,200,000       -            -     5,200,000       $0.40 - $2.00
                   ---------  ------       ------     ---------

     Totals        6,557,740       -            -     6,557,740
                   =========  ======       ======     =========
</TABLE>

The weighted average exercise price of all issued and outstanding options at
March 31, 2002 is approximately $0.93 and approximately 4,087,895 of the issued
and outstanding options are vested and eligible for exercise.

Had compensation cost for options granted been determined based on the fair
values at the grant dates, as prescribed by SFAS 123, the Company's net loss and
net loss per share would not have changed significantly as the exercise price of
the options was relatively equivalent to the market price at the grant date.

The calculations to estimate the fair value of the options were made using the
Black-Scholes pricing model which required making significant assumptions. These
assumptions include the expected life of the options, which was determined to be
the initial life of the corresponding option, either five (5) or ten (10) years,
the expected volatility, which was based on fluctuations of the stock price over
a 12 month period, the expected dividends, determined to be zero based on past
performance, and the risk free interest rate, which was estimated using the bond
equivalent yield of 6.0% at March 31, 2002 and 2001, respectively.

                                       16
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE K - STOCK WARRANT

On July 12, 2001, the Company issued to Red Guard, as an inducement to modify
the conversion price of the TTC Series A Preferred from an initial conversion
price of $0.20 per share, as adjusted for TTC stock splits prior to the November
3, 2001 reverse acquisition transaction with CTC, to $0.47 per share after
accounting for the effects of the CTC reverse acquisition transaction, a stock
warrant to purchase 1,905,600 shares of the Company's restricted, unregistered
common stock at a price of $1.26 per share, in reliance upon the exemption from
registration set forth in Section 4(2) of The Securities Act of 1933. This
warrant is exercisable at any time after its issuance and expires on June 12,
2006. Due to the uncertainty related to the ultimate exercise for purchase of
any shares covered by this warrant, the Company did not assign any compensation
expense upon the issuance of this warrant.

On October 18, 2001, the holder of the Warrant to purchase shares of the
Company's common stock exercised 7,940 warrants and purchased 7,940 shares of
restricted, unregistered common stock for $10,000 cash.

<TABLE>
<CAPTION>
                                      Warrants             Warrants
                                     originally         outstanding at
                                       issued           March 31, 2002     Exercise price
                                       ------           --------------     --------------
<S>                                   <C>                  <C>            <C>
Series A Preferred Stock Warrants     1,905,600            1,897,660      $1.26 per share
                                      ---------            ---------

Totals at March 31, 2002              1,905,600            1,897,660
                                      =========            =========
</TABLE>


NOTE L - COMMITMENTS

The Company operates in leased offices, located in Irvine, California, on a
month-to-month agreement at a rate of approximately $3,120 per month.


NOTE M - CONTINGENCIES

At various times during Calendar 2001, TTC sought information from WBG relating
to the technologies pursuant to the License Agreement but did not receive a
response. As a result, TTC sought to invoke the mediation provision of the
License Agreement. WBG declined to engage in mediation. On or about August 15,
2001, TTC commenced an arbitration with the American Arbitration Association in
Los Angeles, California against W. Brandt Goldsworthy & Associates (WBG&A) and
W. B. G., Inc. (WBG), an entity affiliated with WBG&A, seeking to enforce the
License Agreement between TTC and WBG dated May 7, 2001.

On or about August 15, 2001, TTC also filed suit against WBG and WBG&A in the
United States District Court for the Central District of California (Case No.
01-CV-7118). The suit sought (i) specific performance of the License Agreement,
including supplying the requested information and subjecting to arbitration,
(ii) an injunction against WBG and WBG&A licensing the technologies to any other
parties pending resolution of item (i) above, and (iii) damages and costs.

                                       17
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE M - CONTINGENCIES - CONTINUED

In their answers, WBG and WBG&A argued a number of defenses and also asserted
certain counterclaims. One defense raised was that TTC did not have standing or
capacity to sue. WBG and WBG&A contended that Tom Sawyer, the lawyer who
incorporated TTC, was the sole stockholder and director of TTC and that he had
not authorized the filing of the suit. Mr. Sawyer claimed that he purchased all
of the authorized common stock for $24.00. Subsequently and separately, on
October 4, 2001, Mr. Sawyer made a demand to TTC's counsel to dismiss the suit
with prejudice based on his claim that he was the sole stockholder and director
of TTC. In addition, on October 5, 2001, Mr. Sawyer, allegedly on behalf of TTC,
and WBG executed a Mutual Rescission of the License Agreement.

The counterclaims raised by WBG and WBG&A included alleged untrue and misleading
advertising and unfair competition (against TTC and C. William Arrington, an
officer of the Company and TTC) for claiming rights in the technologies and a
claim for declaratory relief (against TTC, Mr. Arrington, Mr. Sawyer and
Composite Power Corporation, a Nevada corporation ("CPC")). On September 24,
1999, a Nevada state court had issued an preliminary injunction against Mr.
Arrington, a former officer and director of CPC, in his individual capacity from
"contacting, soliciting business from or otherwise doing business with any
individuals, entities or financiers connected or related in any way to any of
CPC's projects." WBG&A was mentioned as an entity that had a business
relationship with CPC but the technologies licensed by the License Agreement are
completely unrelated to CPC or any of its projects. Mr. Arrington had signed the
License Agreement on behalf of TTC and WBG and WBG&A contended that Mr.
Arrington's signature violated the preliminary injunction and made the License
Agreement void and illegal. WBG and WBG&A also sought a declaratory judgment
that Mr. Sawyer is the sole director and stockholder of TTC and that the License
Agreement is void and illegal. The preliminary injunction was dissolved by the
Nevada state court on August 31, 2001 and Mr. Arrington was limited only against
doing business with anyone involved in specific CPC projects, none of which
related to TTC, the Company or the License Agreement. Furthermore, that
limitation as well is no longer in effect as the Nevada state court dismissed
all claims against Mr. Arrington with prejudice on January 10, 2002. On February
21,2002, CPC's motion to vacate the judges order of January 10, 2002 was
granted. This reinstated the limited temporary injunction based on " excusable
neglect " by the CPC attorney. A trial date was set for June 24, 2002; however,
on March 18, 2002, CPC's attorney approached Mr. Arrington's counsel with an
offer for settlement. A settlement agreement has been filed with the court for
approval. Court action is expected in May, 2002.

On December 10, 2001, the United States District Court held a hearing on TTC's
request for an preliminary injunction and, subsequently, rejected TTC's request.
With regard to TTC's arbitration demand, arbitrators have been appointed. A
hearing on TTC's petition to enforce the arbitration provisions of the License
Agreement is currently awaiting scheduling. WBG and WBG&A are seeking to have
the court halt the arbitration and instead have all issues settled by the court.

The License Agreement currently is the basis for TTC's rights to the CRAC
technologies. In the event a court or an arbitration panel determines that the
License Agreement is unenforceable in any way, it would have a material adverse
effect on the Company, its business and its prospects regarding CRAC
technologies only.

                                       18
<PAGE>

                 COMPOSITE TECHNOLOGY CORPORATION AND SUBSIDIARY
                    (formerly Eldorado Financial Group, Inc.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE M - CONTINGENCIES - CONTINUED

The petition to compel arbitration has been completely briefed and no hearing
date has been set by the United States District Court as of March 31, 2002 and
subsequent thereto. Management and legal counsel are of the opinion that the
Company and TTC have raised valid claims in its suit and claim for arbitration
and that WBG's and WBG&A's defenses and counterclaims are without merit. TTC
will defend itself and Mr. Arrington, as an officer of TTC, vigorously against
the alleged counterclaims of WBG and WBG&A.

Due to the early nature of the arbitration procedure, the Company anticipates no
material impact to either the results of operations, its financial condition or
liquidity based on the uncertainty of outcome, if any, of existing litigation,
either collectively and/or individually, at this time.

Other than the matter discussed above, the Company is not a party to any other
legal proceedings.







                (Remainder of this page left blank intentionally)

                                       19
<PAGE>

PART I - ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION

(1)    CAUTION REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this quarterly filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.

Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous filings.

Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.

(2)  GENERAL COMMENTS

Composite Technology Corporation (Company) was originally incorporated under the
laws of the State of Florida on February 26, 1980 as Eldorado Gold &
Exploration, Inc. On January 13, 1987, the Company amended its Articles of
Incorporation to change the corporate name to Eldorado Financial Group, Inc. and
modified the Company's capital structure to allow for the issuance of up to
100,000,000 shares of common stock at $0.001 par value per share. On June 27,
2001, the Company changed its State of Incorporation from Florida to Nevada by
means of a merger with and into Eldorado Financial Group, Inc., a Nevada
corporation formed on June 25, 2001 solely for the purpose of effecting the
reincorporation. The Articles of Incorporation and Bylaws of the Nevada
corporation became the Articles of Incorporation and Bylaws of the surviving
corporation. Such Articles of Incorporation did not make any changes to the
capital structure of the Company.

On November 3, 2001, the Company exchanged 60,000,000 shares of restricted,
unregistered common stock for 100.0% of the then issued and outstanding common
stock of Transmission Technology Corporation, a privately- owned Nevada
corporation. Transmission Technology Corporation was incorporated on March 28,
2001 and initially capitalized on April 3, 2001. Transmission Technology
Corporation was formed to own a license agreement related to patent-pending
composite reinforced electrical transmission cable utilizing composite core
materials. Transmission Technology Corporation became a wholly-owned subsidiary
of the Company.

In conjunction with the November 3, 2001 transaction, the Company, in November
2001, changed its corporate name to Composite Technology Corporation and amended
its Articles of Incorporation to allow for the issuance of up to 5,000,000
shares of $0.001 par value Preferred Stock from none previously authorized and
for the issuance of up to 200,000,000 shares of $0.001 par value Common Stock
from the 100,000,000 shares previously authorized.

                                       20
<PAGE>

On December 28, 2001, the Company's Board of Directors elected to change the
fiscal year-end of the Company from December 31 to September 30. Additionally,
the Board of Directors established the initial year-end of September 30 for the
Company's wholly-owned subsidiary, Transmission Technology Corporation. The
accompanying consolidated financial statements reflect this action.

The acquisition of Transmission Technology Corporation, on November 3, 2001, by
the Company effected a change in control and was accounted for as a" reverse
acquisition" whereby Transmission Technology Corporation is the accounting
acquiror for financial statement purposes. Accordingly, for all financial
statement presentations for periods subsequent to the September 30, 2001
year-end date, the financial statements of the Company reflect the historical
financial statements of Transmission Technology Corporation from its inception
on March 28, 2001 and the operations of the Company subsequent to September 30,
2001.

(3)  RESULTS OF OPERATIONS

The Company had no revenue for the six and three months ended March 31, 2002 and
was in existence for only 3 days through March 31, 2001. The Company's initial
capitalization occurred early in April 2001.

General and administrative expenses for the six months ended March 31, 2002 were
approximately $1,751,949, including approximately $1,083,000 in non-cash charges
for consulting and legal services which were paid with common stock issued
pursuant to a Form S-8 Registration Statement filed with the U. S. Securities
and Exchange Commission on February 27, 2002. Legal and professional fees
associated with the reverse acquisition of Transmission Technology Corporation,
regulatory reporting thereof and subsequent financial consulting and legal
services composed approximately $1,474,000 (85.11%) of the total year-to-date
expenses. Accrued officer compensation of approximately $121,000 (6.90%) and
travel expenses of approximately $74,300 (4.24%) composed other key expenditures
for the six months ended March 31, 2002.

(4)  PLAN OF OPERATION

Summary
-------

We plan to subcontract a limited production of composite core and the helical
winding of aluminum conductors so that a significant demonstration test in an
operating transmission line can be commenced during the summer of 2002. We
expect that the planned test will be conducted by a major American utility
company along with a consortium of approximately 10 to 15 other utility
companies and the Electric Power Research Institute. The test will be closely
monitored for three months after which time we anticipate receiving orders from
utility companies, although the demonstration will continue for at least three
years. By June 30, 2002, we plan to finalize the design and produce a working
prototype of the specialized production line capable of economically
manufacturing high strength composite core. We are presently negotiating various
possible strategic relationships, including joint ventures with conventional
Aluminum Conductor Steel Reinforced (ACSR) cable manufacturers, in which we will
either sell our composite core, license or sell our production equipment, or
enter into an agreement with respect to the production of cable using our
composite core. The equipment can be used for other types of high strength
composite production with various modifications in the event that there is any
delay in the acceptance of the composite reinforced cable. We intend to
establish an equipment and product prototype development facility in Southern
California. We plan to continue negotiating joint ventures for the production of
our products in other countries, including China, Brazil and Mexico.

Product Research and Development
--------------------------------

We believe research and development activities are important to our success.
Over the next 12 calendar months, we anticipate completing various other
composite reinforced cable designs and the development of the hardware required
to splice, terminate, and extend the cable. Domestic and international patent
applications will be prepared and filed as we proceed using strategies designed
for maximum protection of the Company's intellectual properties. Additionally,
we plan to design, seek patents for, and produce prototypes of proprietary
composite structures. We plan to complete a unique prototype production
equipment line that will allow for the production of several types of products,
which will allow us to expand to different products.

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<PAGE>

Acquisition of Plant and Equipment
----------------------------------

We do not own any real estate or significant equipment. We do anticipate the
need for prototype equipment and product manufacturing capability in the near
future and are actively searching for facilities. The precise space requirements
are being finalized since we anticipate the requirement for prototype equipment
development to occur by June 30, 2002.

Personnel
---------

We currently have three full time employees; Benton H Wilcoxon, C. William
Arrington, and Robert Nikoley. Due to limited resources, we have not been able
to pay salaries to date. However, salaries are being accrued at a monthly rate
of $5,000 since April 1, 2001 for each of Mr. Wilcoxon and Mr. Arrington.

Numerous technical skills will be required to bring our products to market.
Recruiting efforts have begun and will continue in the near future. Independent
consultants, accountants and attorneys have been retained in the past and will
continue to be used extensively in the future.

(5)  LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2002, the Company had working capital of approximately $(257,000)
as compared to working capital of approximately $57,000 at the most recent
fiscal year-end of September 30, 2001.

During the first quarter of Fiscal 2002, the Company sold a combination of
preferred and common stock for gross proceeds of approximately $210,000, which
was used to support operations and working capital needs.

Between January 3, 2002 and January 28, 2002, an affiliated entity, Red Guard
Industries, Inc,. made four short- term working capital loans to the Company
aggregating $62,000. Each respective loan is for six months (maturing from July
3, 2002 to July 28, 2002), is unsecured and bears interest at 10 1/2% per annum.

We plan to obtain capital through loans or equity offerings in order to have the
funds required to complete the implementation of our plan of operation. We
currently have no material commitments for capital expenditures.

We anticipate receiving orders for our products beginning in approximately
September 2002. Prior to that, we will be dependent on the receipt of additional
financing from third parties. If such financing is not available, we may be
required to discontinue operations.

We expect to recover some equipment development costs through the sale of
equipment to production joint ventures, although there can be no assurance that
we will sell any such equipment or enter into any such joint ventures.

It may be necessary for management and/or significant stockholders to obtain or
provide additional working capital necessary to support and preserve the
integrity of the corporate entity. However, there is no legal obligation for
either management or significant stockholders to provide additional future
funding.

                                       22
<PAGE>

PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

   See Notes to Consolidated Financial Statements

ITEM 2 - CHANGES IN SECURITIES

   On October 30, 2001, the Company issued an aggregate 79,402 equivalent
   post-acquisition shares of restricted, unregistered common stock to Holland &
   Knight, LLP, its corporate law firm, at an agreed-upon value of approximately
   $300,000 as a retainer for future legal services to be provided during a
   one-year period from October 30, 2001. The retainer shares shall vest against
   normal monthly billings from the law firm to the Company using the
   agreed-upon valuation of $3.78 per share, regardless of the open market price
   of the Company's common stock during the billing month. If the aggregate
   market value of the 79,402 shares are worth less than $450,000 in the open
   market at the average mean of the bid and ask price for the shares during the
   one- month period just preceding the first anniversary of the retainer
   agreement (October 30, 2002) then the law firm will have 15 days to make a
   written election to either a) exercise a downward adjustment in the
   agreed-upon price of $3.78 to an amount of not less than $1.89 per share,
   which would cause the Company to issue up to an additional 79,402 equivalent
   post-acquisition shares to the law firm or b) put all 79,402 shares back to
   the Company and require payment in cash for the legal services provided
   during the initial term of the agreement. During January 2002, the Company
   and the law firm agreed to rescind this transaction and the 79,402 shares
   were returned to the Company. All future transactions between the Company and
   the law firm will be conducted on a cash transaction basis.

   On February 27, 2002, the Company filed a Registration Statement Under The
   Securities Act of 1933 on Form S-8 to register an aggregate 9,000,000 shares
   of common stock pursuant to the 2002 Non-Qualified Stock Compensation Plan.

   On February 28, 2002, the Company issued 650,000 shares of common stock
   pursuant to the 2002 Non-Qualified Stock Compensation Plan to Rocci Howe and
   Rick Weed for professional legal and consulting services. These transactions
   were valued at an aggregate $1,202,500 (or $1.85 per share) which
   approximated the closing quoted price of the Company's equivalent common
   stock on the date of the transaction.

   On March 14, 2002, the Company issued 75,000 shares of common stock pursuant
   to the 2002 Non-Qualified Stock Compensation Plan to Dominic Magliariditti
   for professional consulting services. This transaction was valued at an
   aggregate $86,250 (or $1.15 per share) which approximated the closing quoted
   price of the Company's equivalent common stock on the date of the
   transaction.

   On March 29, 2002, the Company issued 600,000 shares of common stock pursuant
   to the 2002 Non-Qualified Stock Compensation Plan to Mike McIntosh for
   professional consulting services. This transaction was valued at an aggregate
   $330,000 (or $0.55 per share) which approximated the closing quoted price of
   the Company's equivalent common stock on the date of the transaction.

   On March 31, 2002, the Company granted an aggregate 5,200,000 options to
   purchase an equivalent number of shares of common stock registered pursuant
   to the Company's Registration Statement on Form S-8 to Rick Weed, Mike
   McIntosh, Dominic Magliariditti, George Korzeniowski, Rocci Howe and Clem
   Hiel. The options vest on various schedules, as noted in each respective
   consulting agreement, and are exercisable at prices between $0.40 and $2.00
   per share. The options expire at various periods between March 31, 2003 and
   December 31, 2011.

                                       23
<PAGE>

ITEM 3 - DEFAULTS ON SENIOR SECURITIES

   As of the date of this filing, the Company is delinquent in making the
   required payment of accrued dividends on its issued and outstanding Series A
   10% Cumulative Convertible Preferred Stock (Series A Stock) and Series B 10%
   Cumulative Convertible Preferred Stock (Series B Stock).

   In the event the Company does not pay any required dividends by 365 days
   after the due date thereof, the number of directors on TTC's Board of
   Directors will be increased by one and the holders of the respective Series A
   Stock Series B Stock who have not received such dividends for such period may
   elect the extra director. Upon the payment of the dividends, the term of the
   extra director will automatically end and the Board will return to its prior
   size.

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

   None

ITEM 5 - OTHER INFORMATION

"Penny Stock Rules"
-------------------

   So long as the trading price of our Common Stock is below $5.00 per share,
   the open market trading of our Common Stock will be subject to the "penny
   stock" rules. The "penny stock rules" impose additional sales practice
   requirements on broker-dealers who sell securities to persons other than
   established customers and accredited investors (generally those with assets
   in excess of $1,000,000 or annual income exceeding $200,000 or $300,000
   together with their spouse). For transactions covered by these rules, the
   broker-dealer must make a special suitability determination for the purchase
   of securities and have received the purchaser's written consent to the
   transaction before the purchase. Additionally, for any transaction involving
   a penny stock, unless exempt, the broker-dealer must deliver, before the
   transaction, a disclosure schedule prescribed by the Securities and Exchange
   Commission relating to the penny stock market. The broker-dealer also must
   disclose the commissions payable to both the broker-dealer and the registered
   representative and current quotations for the securities. Finally, monthly
   statements must be sent disclosing recent price information on the limited
   market in penny stocks. These additional burdens imposed on broker-dealers
   may restrict the ability of broker-dealers to sell the Common Stock and may
   affect a shareholder's ability to resell the Common Stock.

   Stockholders should be aware that, according to Securities and Exchange
   Commission Release No. 34-29093, the market for penny stocks has suffered in
   recent years from patterns of fraud and abuse. Such patterns include (i)
   control of the market for the security by one or a few broker-dealers that
   are often related to the promoter or issuer; (ii) manipulation of prices
   through prearranged matching of purchases and sales and false and misleading
   press releases; (iii) boiler room practices involving high-pressure sales
   tactics and unrealistic price projections by inexperienced sales persons;
   (iv) excessive and undisclosed bid-ask differential and markups by selling
   broker- dealers; and (v) the wholesale dumping of the same securities by
   promoters and broker-dealers after prices have been manipulated to a desired
   level, along with the resulting inevitable collapse of those prices and with
   consequent investor losses. Our management is aware of the abuses that have
   occurred historically in the penny stock market. Although we do not expect to
   be in a position to dictate the behavior of the market or of broker- dealers
   who participate in the market, management will strive within the confines of
   practical limitations to prevent the described patterns from being
   established with respect to our securities.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

   Exhibits
     None

   Reports on Form 8-K
     None

                                       24
<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                COMPOSITE TECHNOLOGY CORPORATION


Dated: May 17, 2002                               /s/ Benton H Wilcoxon
       ------------                             --------------------------------
                                                               Benton H Wilcoxon
                                                             President, Director
                                                                   and Secretary

Dated: May 17, 2002                                  /s/ Robert Nikoley
       ------------                             --------------------------------
                                                                  Robert Nikoley
                                                         Chief Financial Officer


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