LAS VEGAS, NV--(Marketwire - August 20, 2007) - The following is a shareholder letter from Shearson (OTCBB: SFNN) CEO Michael Barron:

As your CEO and fellow shareholder I wanted to personally thank you for your support during such difficult times in our industry. As many of you know, the mortgage industry has been enduring severe financial pressure and record numbers of borrowers and lenders are feeling the credit crunch. Since January over 110 mortgage banking companies, many much larger than Shearson, have gone out of business. Many others are still in trouble as the sub-prime credit squeeze continues. National news coverage indicates the concern all the way up to the President who recently addressed this in his national press conference. We have also been affected by this industry-wide issue and I would like to explain what Shearson has been doing to survive when others have not.

In January 2007, just after we posted record profits for 2006 of $2.8 million, the sub-prime market began to come apart. Borrowers began to default on their loans and lenders were forced to use their capital to repurchase these loans. Once this began, other credit guidelines on relatively safe loans such as "Alt A" began to tighten which began to affect Shearson. We saw this beginning in March and soon realized our banking operations would be affected and "bankable" loans were going to dry up. This came after we had invested significant resources into our banking infrastructure as we were poised to make 2007 our breakout year. Those plans were quickly scratched as New Century, the nation's largest sub-prime lender with a $3 billion market cap, went out of business. Others followed ( We made the decision to cut back our banking operations and limit the scope of loan products we would carry on our warehouse lines. We reduced our warehouse lines from over $50 million down to $20 million. We lost about $50 million from our pipeline in Alt A loans due to other investors going out of business and loan products no longer existing. The industry's warehouse lenders felt the crunch also as their clients began to file for bankruptcy. Their response was to tighten the credit for warehouse lines by charging 2% up front to put loans on the line. This made it uneconomic for us to bank and by May we cut our banking staff in our Irvine facility to just a skeletal operation.

By making the cuts as quickly as we did, we were able to reduce our expenses by 50% and I believe this is why we are still here today. We stayed ahead of the revenue reduction which also declined by 50%. Our staff has from time to time gone without a salary and in fact our employees have actually loaned the company funds on a short-term basis from time to time just to get through the interim cash flow issues associated with such a crisis. We have had our head down saving the company. Although there are many challenges ahead, we are in a better position to manage them now.

Shearson never had a portfolio of sub-prime loans and thus does not have lingering repurchase issues. We have redirected our loan origination resources into the loan resolution business and now have begun to refinance loans for several major Wall Street investors who hold large portfolios of loans. We have oriented our loan production to be strictly brokerage at this time until the mortgage banking credit environment settles down. We have maintained our approvals with warehouse lenders and investors and are approved by over 100 different lenders today. Shearson is licensed in 22 states as we reduced this to just states we actually do business in regularly. We are a retail production shop and not wholesale which improves cash flow as we pay our agents when we get paid and no longer need to front their commissions. We believe we have done what we should have to stabilize the business and create an excellent opportunity to resolve loan problems for others. There is always opportunity from adversity and we at Shearson believe that opportunity is present in the current market.

We are planning to continue with our strategy of acquisition and we hope to attract new investors into the stock as we continue to rebuild the company and tell our story.


Michael A. Barron

Contact Information: CONTACT: Shearson Financial Network Las Vegas, Nevada Michael Barron 702-868-7922