U. S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   Form 10-QSB

/X/  QUARTERLY  REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

For the quarterly period ended March 31, 2005

                                       Or

/_/  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

For the transition period from _________ to ____________

                          Commission File No. 333-93475

                    CORNERSTONE MINISTRIES INVESTMENTS, INC.
        (Exact name of small business issuer as specified in its charter)

Georgia                                                               58-2232313
--------------------------------------------------------------------------------
(State or other jurisdiction                (IRS Employer Identification Number)
of incorporation or organization)

  2450 Atlanta Highway, Suite 904, Cumming, GA                             30040
--------------------------------------------------------------------------------
(Address of principal executive office)                               (Zip Code)

Issuer's telephone number, including area code: (678)-455-1100
                                                --------------

--------------------------------------------------------------------------------
Former name, address and former fiscal year, if changed since last report.

Check  whether  the issuer  (1) filed all  reports  required  to be filed by the
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 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 past 90 days.

                  Yes  X                     No
                      ---                       ---

As of March 31, 2005,  there were issued and  outstanding  813,913 shares of the
common stock of the issuer.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]




                                                                               1
<PAGE>
                   Cornerstone Ministries Investments, Inc.

                                      Index

                                                                            Page
                                                                            ----

Form 10-QSB Title Page                                                       1

Index                                                                        2

PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements

                  Accountant's Review Report                                 F-1

                  Balance Sheets as of March 31, 2005 and 2004               F-2

                  Statements of Operations for the three months
                  ended March 31, 2005 and 2004                              F-3

                  Statements of Changes in Shareholders' Equity
                  for the three months ended March 31, 2005 and 2004         F-4

                  Statements of Cash Flows for the three months
                  ended March 31, 2005 and 2004                              F-5

                  Notes to Financial Statements                              F-6

         Item 2. Management's Discussion and Analysis of
                  Financial Condition and Results of Operation               3

         Item 3. Controls and Procedures                                     8

PART II. OTHER INFORMATION

         Item 1. Legal Proceedings                                           8

         Item 2. Changes in Securities and Use of Proceeds                   8

         Item 3. Defaults on Senior Securities                               9

         Item 4. Submission of Matters to a Vote of Security Holders         9

         Item 5. Other Information                                           9

         Item 6. Exhibits and Reports on Form 8-K                            9

Signatures                                                                   9

Certifications                                                               10



                                                                               2
<PAGE>

To The Board of Directors
Cornerstone Ministries Investments, Inc.

We have  reviewed  the  accompanying  balance  sheet of  Cornerstone  Ministries
Investments, Inc. as of March 31, 2005 and the related statements of operations,
changes in  shareholder's  equity,  and cash flows for the  three-month  periods
ending  March 31, 2005 and 2004.  These  interim  financial  statements  are the
responsibility of the Company's management.

We conducted our review in accordance  with the standards of the Public  Company
Accounting  Oversight  Board  (United  States).  A review of  interim  financial
information  consists  principally of applying analytical  procedures and making
inquiries of persons  responsible  for financial and accounting  matters.  It is
substantially  less in scope than an audit in  accordance  with the standards of
the Public Company  Accounting  Oversight  Board,  the objective of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the  accompanying  interim  financial  statements  for  them to be in
conformity with U.S. generally accepted accounting principles.

The financial  statements  for the year ended  December 31, 2004,  including the
balance  sheet as of December  31, 2004 was  audited by us and we  expressed  an
unqualified  opinion on them in our report dated March 17, 2005, but we have not
performed any auditing procedures since that date.


/s/ Robert N. Clemons, CPA, PA

DeLand, Florida
May 9, 2005



                                                                             F-1


<PAGE>
<TABLE>
CORNERSTONE MINISTRIES INVESTMENTS, INC.
BALANCE SHEETS
As of March 31, 2005 and 2004
<CAPTION>
                                                                                                  (Consolidated -
                                                                                                   See Note 17)
                                                                                      3/31/2005      3/31/2004
                                                                                    ------------   ------------
<S>                                                                                 <C>            <C>
ASSETS
Cash and cash equivalents                                                           $ 11,114,985   $  2,654,606
Loans in process                                                                          89,283        170,402
Real estate loans, net                                                                59,520,790     46,939,081
Real estate joint venture investments, net                                            58,661,890     37,150,939
Bond holdings and accrued interest                                                     3,967,583      3,985,667
Property and equipment, net                                                              796,562        860,200
Refundable income taxes                                                                     --           42,617
Goodwill                                                                                 450,997        450,997
Unamortized debt issue costs                                                           2,707,314      1,744,336
Real estate held for investment                                                          340,000        340,000
Other assets                                                                             119,005         21,617
                                                                                    ------------   ------------

TOTAL ASSETS                                                                        $137,768,409   $ 94,360,462
                                                                                    ============   ============


LIABILITIES
Investor certificates and accrued interest                                          $126,611,033   $ 84,149,566
Mortgage participations and accrued interest                                           4,951,948      6,212,142
Accounts and other payables                                                              146,272        232,473
Loan guarantee obligation                                                                131,000           --
Building mortgages                                                                       595,788        177,844
Capital lease obligation                                                                   6,365         12,296
Deferred taxes payable                                                                    56,441        166,257
                                                                                    ------------   ------------

TOTAL LIABILITIES                                                                    132,498,847     90,950,578
                                                                                    ------------   ------------

SHAREHOLDERS' EQUITY
Series A Convertible Preferred Stock, no par
  value; 235,000 shares authorized, no
  shares issued and outstanding                                                             --             --
Common Stock, $0.01 par value; 10 million shares
  authorized; 813,913, 531,528 and 819,351 shares
  issued and outstanding                                                                   8,139          5,315
Paid in capital                                                                        5,083,276      3,297,435
Retained earnings                                                                        178,147        109,951
Treasury stock                                                                              --           (2,817)
                                                                                    ------------   ------------

TOTAL SHAREHOLDERS' EQUITY                                                             5,269,562      3,409,884
                                                                                    ------------   ------------

TOTAL LIABILITIES AND
 SHAREHOLDERS' EQUITY                                                               $137,768,409   $ 94,360,462
                                                                                    ============   ============
<FN>
SEE ACCOMPANYING NOTES                                                                                      F-2
</FN>
</TABLE>
<PAGE>


CORNERSTONE MINISTRIES INVESTMENTS, INC.
STATEMENTS OF OPERATIONS
For the three months ended March 31, 2005 and 2004
                                                                 (Consolidated -
                                                                    See Note 17)
                                                          2005         2004
                                                       ----------   ----------
REVENUES
Real estate loan and joint venture interest and fees   $3,233,140   $2,697,497
Loan participation and other income                       470,921       98,756
                                                       ----------   ----------

TOTAL REVENUES                                          3,704,061    2,796,253
                                                       ----------   ----------

EXPENSES
Investor interest expense                               2,729,419    1,962,490
Loan loss expense                                          25,000       20,000
Marketing expenses                                        287,569      204,536
Salaries, payroll taxes, and benefits                     378,614      320,220
Operating expenses                                        187,962      158,164
                                                       ----------   ----------

TOTAL EXPENSES                                          3,608,564    2,665,410
                                                       ----------   ----------

Income Before Provision For Income Taxes                   95,497      130,843

Income Tax Provision                                        8,593       22,121
                                                       ----------   ----------

NET INCOME                                             $   86,904   $  108,722
                                                       ==========   ==========

Basic and Diluted Earnings
 per Common Share                                      $     0.11   $     0.21



SEE ACCOMPANYING NOTES                                                       F-3


<PAGE>
<TABLE>
CORNERSTONE MINISTRIES INVESTMENTS, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the three months ended March 31, 2005 and 2004

The  statement  for  the  three  months  ended  March  31,  2004  was  part of a
consolidated financial statement - see Note 17.

<CAPTION>
                                               COMMON STOCK:
                                       --------------------------      PAID-IN     PREFERRED    RETAINED    TREASURY       TOTAL
                                          SHARES         AMOUNT        CAPITAL       STOCK      EARNINGS      STOCK        EQUITY
                                       -----------    -----------    -----------    -------   -----------   ---------   -----------
<S>                                        <C>        <C>            <C>            <C>       <C>           <C>         <C>
BALANCE, DECEMBER 31, 2003                 531,528    $     5,315    $ 3,297,435    $    --   $     1,229   $ (73,248)  $ 3,230,731
Net income                                                                                        108,722                   108,722
Common stock issued                           --             --             --                                                 --
Treasury stock sold (10,836 shares)                                                                            70,431        70,431
                                       -----------    -----------    -----------    -------   -----------   ---------   -----------

BALANCE, MARCH 31, 2004                    531,528    $     5,315    $ 3,297,435    $    --   $   109,951   $  (2,817)  $ 3,409,884
                                       ===========    ===========    ===========    =======   ===========   =========   ===========


BALANCE, DECEMBER 31, 2004                 819,351    $     8,194    $ 5,118,568    $    --   $    91,243   $    --     $ 5,218,005
Net income                                                                                         86,904                    86,904
Common stock issued                           --             --             --                                                 --
Common stock redeemed                       (5,438)           (55)       (35,292)                                           (35,347)
                                       -----------    -----------    -----------    -------   -----------   ---------   -----------

BALANCE, MARCH 31, 2005                    813,913    $     8,139    $ 5,083,276    $    --   $   178,147   $    --     $ 5,269,562
                                       ===========    ===========    ===========    =======   ===========   =========   ===========

<FN>
SEE ACCOMPANYING NOTES                                                                                                          F-4
</FN>
</TABLE>
<PAGE>
<TABLE>
CORNERSTONE MINISTRIES INVESTMENTS, INC.
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2005 and 2004
                                                                                                                     (Consolidated -
                                                                                                                       See Note 17)
                                                                                                    2005                  2004
                                                                                                ------------          ------------
<S>                                                                                             <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                                      $     86,904          $    108,722
Adjustments to reconcile net income to cash
 from operations-
Depreciation and amortization                                                                        255,060               178,748
Changes in-
Loans in process                                                                                     (58,410)              (51,898)
Accrued bond interest, net                                                                            28,300                15,666
Accrued real estate loan/joint venture interest and deferred loan fees                            (1,118,297)             (866,232)
Allowance for loan losses                                                                             25,000                20,000
Deferred taxes                                                                                       (13,916)               (5,186)
Investor and mortgage participation interest payable                                               1,111,803               648,933
Loan guarantee obligations, net of related receivables                                                27,000                  --
Accounts and other payables                                                                          (98,349)              (35,333)
Other assets                                                                                          49,508                (5,804)
                                                                                                ------------          ------------

NET CASH PROVIDED BY OPERATIONS                                                                      294,603                 7,616
                                                                                                ------------          ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate loans made                                                                            (7,919,595)           (2,045,317)
Real estate loan principal payments received                                                       3,016,208             3,117,636
Real estate joint venture investments made                                                        (1,499,397)           (1,592,607)
Bonds redeemed or sold                                                                                17,850                  --
Property and equipment purchased                                                                        --                  (3,119)
                                                                                                ------------          ------------

NET CASH USED BY INVESTING ACTIVITIES                                                             (6,384,934)             (523,407)
                                                                                                ------------          ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Investor certificates sold                                                                         5,392,064               363,118
Investor certificates redeemed                                                                      (514,241)           (1,424,047)
Mortgage participation agreements sold                                                               150,000                78,250
Mortgage participation agreements redeemed                                                        (2,400,000)                 --
Debt issue costs paid                                                                               (275,375)             (134,433)
Building mortgage principal payments                                                                  (6,581)               (2,350)
Capital lease principal payments                                                                      (1,576)               (1,336)
Common stock redeemed                                                                                (35,347)                 --
Dividends paid                                                                                      (266,287)             (169,087)
Treasury stock sold                                                                                     --                  70,431
                                                                                                ------------          ------------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                                                   2,042,657            (1,219,454)
                                                                                                ------------          ------------

Net change in cash and cash equivalents                                                           (4,047,674)           (1,735,245)
Cash and cash equivalents at beginning of period                                                  15,162,659             4,389,851
                                                                                                ------------          ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                      $ 11,114,985          $  2,654,606
                                                                                                ============          ============

Supplemental Information-
  Interest paid during the period                                                               $  1,628,506          $  1,311,493
  Income taxes paid during the period                                                           $    105,000          $     62,500
Non-cash transactions-
  Investor certificates matured and re-invested                                                 $    126,412          $       --
  Loan interest financed and included in loan principal                                         $    441,150          $    397,137

<FN>
SEE ACCOMPANYING NOTES                                                                                                          F-5
</FN>
</TABLE>


<PAGE>
                    CORNERSTONE MINISTRIES INVESTMENTS, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The  accompanying  financial  statements  include the  accounts  of  Cornerstone
Ministries  Investments,   Inc.  ("the  Company").   Previously,  the  Company's
financial  statements  included the accounts of two  wholly-owned  subsidiaries,
Wellstone  Communities,  Inc. and Wellstone Financial Group, LLC. In June, 2004,
the Company dissolved both subsidiaries. See Note 17 for additional disclosures.

The Company originates and purchases mortgage loans,  substantially all of which
are made to  faith-based  organizations.  The Company  offers  specialized  loan
programs for churches,  non-profit  sponsors of senior  housing  facilities  and
either  non-profit or for-profit  sponsors of affordable  and low income housing
projects. The Company also invests in other real estate projects for the purpose
of selling at a profit, or leasing. Substantially all of the Company's loans and
investments are in projects located in the Southeastern United States.

Cash and cash equivalents include checking accounts and short-term  certificates
with original maturities of 90 days or less.

Real estate  loans and senior  housing  loans  classified  as real estate  joint
venture  investments  include unpaid principal and accrued interest balances net
of deferred loan fees and unearned discounts, less an allowance for loan losses.
Interest  income is recognized  monthly on the accrual basis in accordance  with
loan terms.  Interest  income is  recognized  on the cash basis for loans with a
recorded  impairment loss (other than restructured loans) and the possibility of
future loss considered  remote. If the possibility of future loss is not remote,
then interest  income is not  recognized  and interest  payments are credited to
outstanding loan principal.  Loan origination fees are deferred and amortized as
a yield  adjustment  over the lives of the  related  loans  using  the  interest
method. Amortization of deferred loan fees is discontinued when a loan is placed
on non-accrual status. Interest income and loan fees recognized from real estate
loans  and  senior  housing  loans  classified  as  real  estate  joint  venture
investments  are  reported as "Real estate loan and joint  venture  interest and
fees" in the accompanying Statements of Operations.

The Company  receives  monthly  interest  payments on its real estate  loans and
senior  housing  loans  (classified  as real estate joint  venture  investments)
except when the terms of a loan allow a borrower to finance  interest  payments.
Interest is financed in the following circumstances:
o     Family  housing  loans may  finance  interest  while the project is in the
      development  and pre-sales  phase,  which  normally  lasts 12 to 36 months
      depending  on the size of the project.  The Company  receives the financed
      interest as the borrower sells homes in the development.
o     Church  construction  loans may finance interest while the church building
      is under construction.  This takes three to nine months,  depending on the
      size of the  building.  When the  building is  operational,  the  financed
      interest from the  construction  phase is included in the loan's principal
      amount and the Company begins receiving monthly interest payments from the
      borrower.
o     Senior  housing  loans  may  finance  interest  during  the  construction,
      renovation and lease-up  stages of the borrower's  operations.  This takes
      two to six months if there is an existing  building and 12 to 24 months if
      the financed property is raw land and a new building is being constructed.
      When the facility is operational, the financed interest is included in the
      loan's principal amount and the Company begins receiving  monthly interest
      payments from the borrower.

Senior housing loans are classified as real estate joint venture  investments if
the  Company  participates  in a  property's  residual  profits  and  all of the
following exist at the inception of the loan:
o    The  borrower  has title but not a  substantial  equity  investment  in the
     property.
o    The Company does not have recourse to substantial tangible, saleable assets
     of the borrower other than the underlying  collateral of the loan and there
     is no irrevocable letter of credit for a substantial amount of the loan.
o    There is no  take-out  commitment  for the full  amount  of the loan from a
     creditworthy, independent third-party.
o    The facility does not have lease commitments which will  provide sufficient
     cash flow to service normal principal and interest loan amortization.

The Company normally  provides all or substantially all of the funding (directly
or  through  loan  guarantees)  for the  acquisition  and  development  of these
facilities,  which are owned by non-profit entities. The Company participates in

                                                                             F-6
<PAGE>

residual profits through loan participation agreements, which enable the Company
to receive  income  from the  borrower  when the  property  in which the Company
provided  financing is sold or refinanced with another lender. The participation
is between 25% and 33% of the  borrower's  gain.  Loan  participation  income is
recognized  when the borrower's sale or refinancing is completed and the Company
receives cash from the borrower.

Loans in process are amounts  advanced or expended on behalf of borrowers  prior
to  completion  of the loan  documentation.  Interest  is not  accrued  on these
amounts until the loan  documentation is complete and the borrower  acknowledges
the debt and associated  interest.  Substantially all of these  expenditures are
converted to loans within one year or less.

Unamortized  debt issue costs include the costs and commissions  associated with
issuing Investor Certificates and Mortgage Participation Agreements. These costs
are being  amortized on a  straight-line  basis over the term of the  associated
debt, principally five years.

The  allowance  for loan losses for real estate loans and senior  housing  loans
classified  as real estate joint  venture  investments  is maintained at a level
which, in management's judgment, is adequate to absorb credit losses inherent in
the loan portfolio. The amount of the allowance is determined in accordance with
SFAS No. 5  (collective  loan losses) and SFAS No. 114  (specific  impaired loan
losses).  A collective  loan loss is recognized  when the  characteristics  of a
group of loans  indicate  that it is probable that a loss exists even though the
loss  cannot be  identified  with a  specific  loan.  The  collective  loan loss
allowance  amount  is based on  observable  data  that  management  believes  is
reflective  of the  underlying  credit  losses  inherent in the  portfolio.  The
components of this  evaluation  include trends in the Company's  historical loss
experience,  changes in credit risk and credit quality,  credit  concentrations,
economic  conditions,  collateral  values,  and  other  risks  inherent  in  the
portfolio. Specific impaired loan loss allowances are made when it is determined
that a loan is impaired and the loan's carrying amount exceeds the present value
of  estimated  future  cash  flows,  or,  if the loan is  considered  collateral
dependant,  the loan's collateral value. A loan is considered  impaired if it is
probable that the Company will be unable to collect all amounts due according to
the contractual terms of the loan agreement.  Although management uses available
information to recognize losses on loans,  because of  uncertainties  associated
with local  economic  conditions,  collateral  values,  and future cash flows on
impaired loans, it is reasonably  possible that a material change could occur in
the  allowance  for loan  losses in the near  term.  However,  the amount of the
change  that is  reasonably  possible  cannot be  estimated.  The  allowance  is
increased  by a  provision  for loan loss and  reduced  by  charge-offs,  net of
recoveries.  Changes in the allowance  relating to specific  impaired  loans are
charged or credited to loan loss expense.  Loans are  charged-off  to the extent
the loan's carrying  amount exceeds the net realizable  value of the collateral,
with the charge-off  occurring when it is likely that the loan is  uncollectible
and foreclosure will occur.

Bond holdings consist of tax-free local government  securities and church bonds.
The Company accounts for these investments  using SFAS No. 115,  "Accounting for
Certain Investments in Debt and Equity Securities",  and classifies the bonds as
"available for sale" securities. The bonds are recorded at cost and adjusted for
unrealized  holding  gains and losses.  Temporary  unrealized  holding gains and
losses  are  reported,  net  of  deferred  taxes,  as a  separate  component  of
shareholder's equity until realized.  If an unrealized holding loss is judged to
be other than temporary,  the cost basis of the security is written down to fair
value and included in earnings.

Property  and  equipment  are  valued at cost when  purchased.  Depreciation  is
provided on the  straight-line  method over the  estimated  useful  lives of the
assets,  which are three to five years for  furnishings  and  equipment,  and 40
years for office buildings.

Real estate held for investment includes land which the Company owns and intends
to hold as an investment  for more than one year.  The assets are carried at the
lesser  of cost or fair  value as  required  by SFAS No.  144,  "Accounting  for
Impairment or Disposal of Long-Lived  Assets".  Impairment losses are recognized
when  the  carrying  amount  of a  long-lived  asset  is  determined  not  to be
recoverable and the carrying amount exceeds fair value.  Profit from real estate
sales is  recognized  when the  collectibility  of the sales price is reasonably
assured and the Company is not obligated to perform significant activities after
the sale to earn the profit. If either of these conditions  exists,  all or part
of the profit is deferred and recognized  using the  installment  sale method or
cost recovery method as prescribed by SFAS No. 66, "Accounting for Sales of Real
Estate".

                                                                             F-7
<PAGE>

Interest  on  Investor  Certificates  is  accrued  from  the  date of  issuance.
Certificate  holders  choose,  at the time of purchase,  to have  interest  paid
semi-annually or upon redemption.  Investors  holding five year  certificates in
multiples of $10,000 may receive interest monthly. Unpaid interest is compounded
semi-annually. Interest on Mortgage Participation Agreements is accrued from the
date of issuance and is paid monthly.

Mortgage  Participation  Agreements are accounted for as secured borrowings with
pledges of collateral  because the  agreements  do not meet the  definition of a
sale of a financial  asset under SFAS No. 140,  "Accounting  for  Transfers  and
Servicing of Financial Assets and Extinguishments of Liabilities".

The Company is guarantor on certain loans secured by senior  housing  facilities
which are owned by non-profit entities. Loan guarantees that originated prior to
January 1, 2003 have no obligation recognized in the financial  statements.  For
loan  guarantees that were originated or modified on or after January 1, 2003, a
loan guarantee  obligation is recognized based on the loan guarantees  estimated
fair  value.  The  Company  charges  the  loan  guarantee's  fair  value  to the
respective  borrower  as  compensation  for the  Company's  risk and  payment is
expected  within 30 days of the loan  guarantee's  origination  or  modification
date.  Unpaid  amounts are  classified as "Loan  guarantee  receivables"  in the
accompanying balance sheets. Loan guarantee  obligations are analyzed at the end
of each quarter and if the fair value of the loan  guarantee has  declined,  the
carrying amount of the obligation is reduced and credited to earnings.

Income taxes are provided  for the tax effects of  transactions  reported in the
financial  statements  and consist of taxes  currently due plus  deferred  taxes
related  primarily  to the  difference  between  the methods of  accounting  for
depreciation,  amortization,  start-up  costs,  allowance  for loan losses,  and
installment sales for financial and tax-reporting  purposes.  The deferred taxes
represent the estimated future tax consequences of those differences, which will
be either taxable or deductible when the assets and liabilities are recovered or
settled.  Accelerated  depreciation methods and shorter asset lives are used for
tax reporting,  and straight-line  depreciation is used for financial  statement
reporting.  The Company  calculates  deferred taxes under the provisions of SFAS
No. 109 which provides for deferred tax assets and  liabilities to be carried on
the balance sheet at current tax rates.

Management   uses  estimates  and   assumptions  in  preparing  these  financial
statements in accordance  with generally  accepted  accounting  principles.  The
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent  assets and liabilities,  and reported revenues and
expenses. Actual amounts may vary from the estimates that are used.

Basic  earnings  per common share are  calculated  by dividing net income by the
weighted average number of common shares  outstanding  during the year.  Diluted
earnings  per  common  share  are  calculated  by  adjusting   weighted  average
outstanding shares,  assuming  conversion of all potentially  dilutive shares of
Series A Convertible Preferred Stock.

New Accounting Pronouncements:
In December  2004,  the FASB issued SFAS No.  123R,  Share-Based  Payment  (SFAS
123R).   This  standard   amends  SFAS  No.  123,   Accounting  for  Stock-Based
Compensation,  and supercedes APB Opinion No. 25, Accounting for Stock Issued to
Employees,  and its related implementation  guidance.  SFAS 123R establishes the
accounting for grants of stock options and other transactions in which an entity
exchanges its equity instruments for goods or services.  SFAS 123R requires that
companies  use a fair value  method to value  stock  options and  recognize  the
related  compensation  expense in net earnings.  The provisions of SFAS 123R are
effective for the first reporting period beginning after June 15, 2005, although
earlier  application  is encouraged.  The Company does not have any  share-based
payment  obligations and does not expect this  pronouncement  to have a material
effect on our financial position or results of operations.

In March 2004, the FASB's Emerging Issues Task Force (EITF)  finalized Issue No.
03-1,  The Meaning of  Other-Than-Temporary  Impairment  and Its  Application to
Certain Investments (EITF 03-1). The FASB has delayed the implementation of EITF
03-1  and has  begun  a new  project  to  address  the  issues  associated  with
other-than-temporary  impairment of debt and equity  securities.  The outcome of
this new project and its impact on the Company's  financial  position or results
of operations  cannot be  determined  at this time.


                                                                             F-8
<PAGE>

In January 2003, the FASB issued  Interpretation No. 46 (FIN 46),  Consolidation
of Variable  Interest  Entities  (VIEs),  an  interpretation  of ARB (Accounting
Research  Bulletin) No. 51. In December 2003, the FASB issued a revised  version
of FIN 46 (FIN 46R),  which  delayed the  effective  date of FIN 46 for all VIEs
until March 2004. This interpretation  requires the consolidation of entities in
which an enterprise absorbs a majority of the entity's expected losses, receives
a majority of the expected  residual  gains,  or both, as a result of ownership,
contractual or other financial  interests in the entity. FIN 46R and its various
interpretations have not materially impacted the Company's financial position or
results of operations.

Recently,  the  FASB has been  very  active,  issuing  a  number  of  accounting
pronouncements  with various effective dates. These  pronouncements,  which were
not discussed above, do not have a material effect on our financial statements.

NOTE 2 - PROPERTY AND EQUIPMENT At March 31,  property and equipment is composed
of:

                                                       2005              2004
                                                    ---------         ---------
Office Condominiums                                 $ 795,034         $ 792,659
Office Computers, Furnishings,
   Software & Equipment                               122,037           123,596
Vehicles                                               30,351            37,730
Capital lease - phone system                           17,710            17,710
Less: Accumulated Depreciation                       (168,570)         (111,495)
                                                    ---------         ---------
Property and equipment, net                         $ 796,562         $ 860,200

Depreciation expense                                $  14,183         $  16,020

NOTE 3 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
Leases:
During 2003, the Company entered into a capital lease for a new telephone system
at the Company's headquarters.  The lease was recorded at the asset's fair value
and is being amortized over three years using the straight-line method. Interest
expense is calculated based on the implied interest rate in the lease. The lease
payment,  including  principal,  interest and sales tax, is $672 per month.  The
carrying value of the capitalized lease asset was $5,411 and $11,315 as of March
31, 2005 and 2004, respectively.  Amortization expense was $1,476 and $1,476 and
interest expense was $307 and $546 for the three months ended March 31, 2005 and
2004, respectively. Future minimum lease payments as of March 31, 2005:

Year                                    Amount
----                                    ------
2005                                     5,648
2006                                     1,256
                                        ------
 Total                                   6,904
Less interest portion                     (539)
                                        ------
Capital lease obligation                $6,365
                                        ======

Loan Commitments:
The Company makes loan  commitments in connection with certain real estate loans
and joint  venture  investments  that include  funding for project  development,
building construction,  renovations,  lease-up operations, financed interest and
other  amounts  that the  borrower  may draw  upon in  accordance  with the loan
agreement.  For existing loans,  the Company has $5,853,596 in approved,  unused
loan  commitments  for real estate  loans and  $3,967,377  for real estate joint
venture  investments as of March 31, 2005. The Company also has one new approved
real  estate  loan  commitment  for  $1,300,000  as of March 31,  2005 which the
company expects to fund in April, 2005.

Related Party Transactions:
Cornerstone Capital Advisors, Inc. - Management and Advisory Service Agreement
Effective  July 1, 2003,  the Company  entered  into a  Management  and Advisory
Services  Agreement with Cornerstone  Capital Advisors,  Inc. ("CCA") to provide
loan management,  administration, and accounting; investor relations; marketing;


                                                                             F-9
<PAGE>

computer and management information systems administration;  record maintenance;
executive  management;  and bookkeeping and accounting  after June 30, 2003. The
agreement is for  renewable  one year terms and it may be  terminated  by either
party upon 60 days' written  notice.  The Company does not have any employees of
its own  and  CCA is  subject  to the  supervision  of the  Company's  board  of
directors. Two of the Company's directors serve on the CCA board of directors.

From July 1, 2003 until July 31, 2004,  the  agreement  obligated the Company to
reimburse  actual  expenses  incurred  by CCA.  Also,  CCA was  eligible to earn
incentive compensation of up to 10% of the actual expenses billed to the Company
for the prior 12 months. The base for the incentive  compensation included being
current on all bond  interest and other  obligations,  and that the common stock
shareholders have received  dividends equal to an annual rate of at least 10% on
the  price  paid  in a  public  offering  for  all  the  time  the  shares  were
outstanding.   Factors  above  the  base  and  the  exact  amount  of  incentive
compensation  were determined by the board of director's  judgment on the extent
to which CCA's services contributed to the results.

Effective  August 1, 2004,  the  original  agreement  was  modified  so that the
Company  will  pay  CCA as  follows:
o    Management  Fee - equal to 10% of the  Company's  revenues from all sources
     other than loan fees,  loan  participations  and revenue  received from CCA
     plus 30% of loan participation revenue. This fee is payable monthly.
o    Loan  Origination  Fee - equal to 30% of the total loan fee  charged by the
     Company to its borrowers.  The fee is generally paid from loan proceeds and
     reduces deferred loan fees.

For the three months ended March 31, the Company paid CCA as follows:

                                                       2005               2004
                                                     --------           --------
Management Fees                                      $378,614           $324,222
Loan Origination Fees                                     -0-                -0-
                                                     --------           --------
                                                     $378,614           $324,222
                                                     ========           ========

As of March 31,  2005 and 2004,  the  Company  owed no  amounts to CCA under the
terms of this  agreement.  Also,  as of March 31,  2005,  the  Company  was owed
$72,649 by CCA which represents  future management fees advanced by the Company.
The advance accrues interest at 10% per annum. The advance is included in "other
assets" in the accompanying balance sheets.

Cornerstone Capital Advisors, Inc. - Office Lease
Effective  August 1, 2004,  the Company and CCA entered  into a lease  agreement
whereby  CCA  is  leasing  the   Company's   corporate   office   building   and
office/computer equipment in Cumming, GA. The lease payment is $5,000 per month.
The  initial  lease term ends on August  31,  2005,  after  which time the lease
converts to a month-to-month lease unless CCA notifies the Company of its intent
not to  renew  within  30 days  from  the end of the  initial  lease  term.  The
Company's  cost basis in the office  building and  office/computer  equipment is
approximately  $626,000.  For the three months ended March 31, 2005, the Company
received $15,000 under the lease agreement.

Cornerstone Direct Public Offerings, LLC
The Company contracts with Cornerstone Direct Public Offerings,  LLC ("CDPO") to
provide legal and  administrative  services for the filing of SB-2  Registration
Statements  with the  Securities and Exchange  Commission.  Two of the Company's
directors serve on the board of directors of CDPO's majority owner,  Cornerstone
Group  Holdings,  Inc.  The  service  fee  is  $75,000  per  filing  payable  in
installments during the filing process.

During  2003,  the Company  entered into a service  agreement  with CDPO for the
filing of a SB-2  Registration  Statement.  The initial  $75,000 fee was paid in
2003. In January,  2004, the Company  amended the service  agreement and paid an
additional  $25,000  to CDPO for cost  over-runs  related  to the length of time
needed for the Company's registration statement to become effective.

In July,  2004, the Company  entered into a service  agreement with CDPO for the
filing of a new SB-2  Registration  Statement.  $75,000 was paid to CDPO in 2004


                                                                            F-10
<PAGE>

under this service agreement. In January 2005, the Company amended the agreement
and paid  $20,000 to CDPO due to an increase in the time needed to register  the
securities  with various state  securities  regulators.  No amounts were owed to
CDPO as of March 31, 2005 and 2004.  See Note 12 for  additional  disclosures on
the Company's registration statements.

NOTE 4 - REAL ESTATE LOANS
At March 31, the Company had Real Estate Loans outstanding as follows:

                                                    2005               2004
                                                ------------       ------------
Family housing development loans                $ 36,714,920       $ 26,423,822
Church mortgage loans                              9,169,099         11,631,542
Senior housing mortgage loans                     13,792,638          9,135,836
                                                ------------       ------------
   Total principal                                59,676,657         47,191,200
   Accrued Interest                                  600,391            385,143
   Unearned Loan Fees                                (99,258)          (242,262)
   Allowance for loan losses                        (657,000)          (395,000)
                                                ------------       ------------
   Total Real Estate Loans                      $ 59,520,790       $ 46,939,081
                                                ============       ============

These loans mature as follow: 2005 - $35,353,782; 2006 - $21,412,541; 2007 - $0;
2008 - $0;  2009 - $601,720;  beyond 2009 -  $2,308,614.  Loan  maturity  may be
accelerated  in accordance  with loan terms,  generally  upon certain  events of
default such as non-payment of scheduled payments or bankruptcy.

Based on the terms of the loans, the Company allows borrowers with loans related
to certain family  housing and church  properties to finance  interest  payments
while  the  properties  are  in  the  development  and  construction   phase  of
operations.  For the three  months  ended  March 31, the net  interest  payments
financed were:

                                                         2005           2004
                                                       ---------      ---------
Current year interest financed                         $ 312,903      $ 234,197
Previous years' financed interest received               (48,855)        (3,095)
                                                       ---------      ---------
Net financed interest                                  $ 264,048      $ 231,102
                                                       =========      =========

On March 31, 2005, the Company had significant credit risk concentrations in the
following states:

Georgia  - $ 27,786,158
Florida  - $ 14,037,320
Texas    - $ 10,557,078

Impaired loan disclosures for the three months ended March 31:

                                                               2005        2004
                                                             --------     ------
Number of impaired loans                                          1          0
Carrying amount at year end                                  $269,324       N/A
Weighted average investment - year-to-date                   $266,308       N/A
Impaired loan interest income                                $  6,033       N/A

No  allowance  for specific  impaired  loan loss has been  recorded  because the
carrying  amount of the  impaired  loan as of March  31,  2005 was less than the
present value of the loan's expected future cash flows.

NOTE 5 - REAL ESTATE JOINT VENTURE INVESTMENTS
As of March 31,  certain  of the  Company's  mortgage  loans on  senior  housing
facilities are classified as real estate joint venture investments, as follows:

                                                                            F-11
<PAGE>

Location                                              2005             2004
--------                                          ------------     ------------
McKinney, TX                                      $  4,138,210     $  3,192,665
St. Petersburg, FL                                   4,810,334        3,832,820
Lewisville, TX                                      10,617,954       10,473,304
Garland, TX                                          6,511,957        6,075,255
Chattanooga, TN                                      5,666,188        3,995,123
San Antonio, TX                                     12,322,872        9,922,188
Winter Haven, FL                                     5,942,402              -0-
Bryan, TX                                            3,266,317              -0-
Edmond, OK                                           5,346,201              -0-
                                                  ------------     ------------
Total principal outstanding                         58,622,435       37,491,355
Accrued interest                                       539,269          315,491
Unearned loan fees                                    (499,814)        (655,907)
Allowance for loan losses                                  -0-              -0-
                                                  ------------     ------------
Real estate joint venture investments, net        $ 58,661,890     $ 37,150,939
                                                  ============     ============

These loans  mature as follows:  2005 -  $54,484,225;  2006 -  $4,138,210.  Loan
maturity  may be  accelerated  in  accordance  with loan terms,  generally  upon
certain  events  of  default  such  as  non-payment  of  scheduled  payments  or
bankruptcy.

All of the  loans,  except  as noted  below,  are  secured  by  first or  second
mortgages.  Three facilities are partially secured by the respective  non-profit
borrower's 100% ownership  interest in the Limited  Liability  Companies ("LLC")
which own the  properties.  The  facilities  which are owned by the LLC's have a
first  mortgage from an outside lender  securing the property.  The location and
amount of the loans which are secured in this manner as of March 31, 2005 are as
follows:

Lewisville, TX - $ 9,284,620
Bryan, TX      - $ 1,932,984
Edmond, OK     - $ 3,337,251
                 -----------
Total            $14,554,855
                 ===========

The  Company  participates  in the  residual  profits of the real  estate  joint
venture  investments  through loan  participation  agreements,  which enable the
Company to receive  income from a borrower  when a property in which the Company
provided  financing is sold or refinanced with another lender. The participation
percentage for each property varies between 25% and 33% of the borrower's gain.

In March, 2005, the Company received $257,000 in loan participation  income from
a borrower as a result of the borrower's  sale of a senior  housing  facility in
which the Company held a real estate joint venture investment.

All  loans  accrue  interest  at  10%  per  year  and  except  as  noted  below,
`interest-only'  payments are received monthly.  The original loan terms are for
one year with two, one year  extensions  at the  Company's  option.  The Company
charges a 10% loan  origination fee which is financed and included in the loan's
principal balance.

In accordance with loan terms,  the Company allows certain  borrowers to finance
interest  payments while their  facilities are in the construction or renovation
phase of  operations.  For the three  months  ended  March 31, the net  interest
payments financed were as follows:
                                                            2005          2004
                                                          --------      --------
Current year interest financed                            $177,102      $166,035
Previous years' financed interest received                     -0-           -0-
                                                          --------      --------
Net financed interest                                     $177,402      $166,035
                                                          ========      ========

The Company  analyzes the underlying  operations and collateral of each facility
in which there is an outstanding loan by requiring independent  appraisals every
12 to 24 months,  reviewing loan balances and comparing them to the  established
loan  budgets,  and by  analyzing  income  and  cash  flow  statements  that are
submitted by the  borrowers.  If it is  determined  that it is probable that the
Company will be unable to collect all amounts due  according to the  contractual
terms  of a loan,  the  loan is  considered  impaired  and a loan  loss  will be
recognized  to the extent the  collateral's  fair value is less than the current
loan carrying amount.  No real estate joint venture  investments were considered
impaired as of March 31, 2005 and 2004.


                                                                            F-12
<PAGE>

NOTE 6 - ALLOWANCE FOR LOAN LOSSES
For the three  months ended March 31, 2005 and 2004, a summary of changes in the
allowance for loan losses by loan type is as follows:

<TABLE>
<CAPTION>
                                                                               Real Estate
                                                Family           Senior       Joint Venture
                                 Church         Housing         Housing        Investments          Total
                                ----------    ------------    -----------     --------------     -------------
<S>                              <C>            <C>             <C>              <C>               <C>
Balance - 12/31/03               $  -0-         $375,000        $   -0-          $   -0-           $375,000
Loan loss expense                   -0-           20,000            -0-              -0-             20,000
Charge-offs                         -0-              -0-            -0-              -0-               -0-
Recoveries                          -0-              -0-            -0-              -0-               -0-
                                ----------    ------------    -----------     --------------     -------------
Balance - 3/31/04                $  -0-         $395,000        $   -0-          $   -0-           $395,000
                                ----------    ------------    -----------     --------------     -------------

Balance -  12/31/04              $  -0-         $632,000        $   -0-          $   -0-           $632,000
Loan loss expense                   -0-           25,000            -0-              -0-             25,000
Charge-offs                         -0-              -0-            -0-              -0-               -0-
Recoveries                          -0-              -0-            -0-              -0-               -0-
Balance - 3/31/05                   -0-              -0-            -0-              -0-               -0-
                                ----------    ------------    -----------     --------------     -------------
                                 $  -0-         $657,000            -0-              -0-           $657,000
                                ----------    ------------    -----------     --------------     -------------
</TABLE>

Components of allowance for loan losses at March 31, 2005 and 2004:

                                                          2005            2004
                                                        --------        --------
Collective loan losses-
  Historical experience                                 $    -0-        $    -0-
  Current credit risk assessment                         657,000         395,000
                                                        --------        --------
  Total collective loan losses                           657,000         395,000
Specific impaired loan losses                                -0-             -0-
                                                        --------        --------
Total allowance for loan losses                         $657,000        $395,000
                                                        ========        ========

For the three months ended March 31, 2005 and 2004, the Company  charged $25,000
and $20,000,  respectively to loan loss expense due to an increase in the family
housing loan portfolio's outstanding principal balance.

From April 1, 2004 through  December 31, 2004, the Company  charged  $237,000 to
loan loss expense. This charge was due to an increase in the family housing loan
portfolio's  outstanding  loan  principal,  slower than  expected new home sales
volumes at three  projects,  and an  increase in the time that it has taken four
projects to finish the development phase and start selling homes.  These factors
have  increased the family housing loan  portfolio's  credit risk as compared to
prior years.

The  Company  has  never  incurred  a loan  charge-off;  therefore,  there is no
collective loan loss allowance related to the Company's historical experience.

NOTE 7 - GOODWILL
The Company adopted SFAS 142 "Goodwill and Other  Intangible  Assets"  effective
January  1,  2002.  Goodwill  associated  with  the  Company's   acquisition  of
Presbyterian  Investor's Fund, Inc. is carried at $450,997 and is not subject to
further amortization.  Goodwill is tested for impairment at the end of each year
using the present  value of expected  future  cash flows to  determine  its fair
value.  At March 31, 2005 and 2004,  Goodwill's fair value exceeded its carrying
value;  therefore,  no  provision  for  impairment  loss has been  recorded.  No
goodwill was acquired or sold in 2004 or 2005.

NOTE 8 - UNAMORTIZED DEBT ISSUE COSTS
Unamortized  debt issue costs  consist of legal,  accounting,  and filing  costs
incurred to register the  Company's  debt  securities  and  commissions  paid or
accrued  on the  sale  of  debt  securities.  These  costs  are  amortized  on a
straight-line  basis over the period the associated  securities are outstanding,
generally five years.  At March 31, 2005,  unamortized  debt issue costs consist
of:

                                                                            F-13
<PAGE>


Costs incurred to register debt securities                          $   733,214
Commissions paid on the sale of debt securities                       4,089,644
Less: Accumulated Amortization                                       (2,115,544)
                                                                    -----------
                                                                    $ 2,707,314
                                                                    ===========

Amortization  expense was $239,817 and $162,728 for the three months ended March
31, 2005 and 2004,  respectively,  and is included in marketing  expenses in the
accompanying  Statements of Operations.  Estimated  amortization expense for the
next five years:

4/2005 - 3/2006 - $ 840.041          4/2008 - 3/2009 - $377,562
4/2006 - 3/2007 - $ 762,123          4/2009 - 3/2010 - $132,928
4/2007 - 3/2008 - $594,660

NOTE 9 - BOND HOLDINGS
Bond holdings at March 31 consist of-                    2005           2004
                                                     -----------    -----------
St. Lucie Co., FL Subordinated Revenue Bonds:
         Maturity  7/1/2036                          $ 2,325,000    $ 2,325,000
         Maturity 10/1/2036                            2,700,000      2,700,000
Undivided 50% interest sold to investor               (2,512,500)    (2,512,500)
                                                     -----------    -----------
Net investment in St.Lucie Co., FL bonds               2,512,500      2,512,500
                                                     -----------    -----------
Largo, FL Subordinated Revenue bonds:
            Matures 10/1/2033                          2,465,000      2,500,000
Undivided interest sold to investors                  (1,207,850)    (1,225,000)
                                                     -----------    -----------
Net investment in Largo, FL bonds                      1,257,150      1,275,000
                                                     -----------    -----------
Cost and fair value of bond holdings                   3,769,650      3,787,500
Accrued interest receivable                              197,933        198,197
                                                     -----------    -----------
                                                     $ 3,967,583    $ 3,985,667
                                                     ===========    ===========

The bonds are not traded on an exchange; however, management estimates, based on
discounted expected cash flows, that the fair value of the individual securities
approximates  their original cost.  Accordingly,  no unrealized holding gains or
losses have been recorded for the three months ended March 31, 2005 and 2004.

Net  proceeds  from the partial  maturity  of bonds were  $17,850 and $0 for the
three months ended March 31, 2005 and 2004,  respectively.  No realized gains or
losses were recognized.  The Company uses the specific  identification method to
determine realized gains and losses.

Tax-free  interest  income was $81,914 and  $83,056 for the three  months  ended
March 31, 2005 and 2004, respectively.

NOTE 10 - INCOME TAXES
The net  deferred  tax  (liability)  asset in the  accompanying  balance  sheets
includes the following components as of March 31:

                                                       2005             2004
                                                     ---------        ---------
Deferred tax assets                                  $ 306,456        $ 203,196
Deferred tax liabilities                              (362,897)        (369,453)
                                                     ---------        ---------
Net deferred tax (liability) asset                   ($ 56,441)       ($166,257)
                                                     =========        =========

The deferred tax  liabilities  result from the use of  accelerated  depreciation
methods for property and equipment and from using the installment method for tax
accounting.  The deferred tax assets result from tax versus financial  reporting
differences in accounting for allowance for loan losses and from  differences in
the  amortization of debt issue and start-up costs.  The Company  estimates that
future  taxable  income will be  sufficient  to realize the deferred tax assets;
therefore,  no  valuation  allowance  was  provided for as of March 31, 2005 and
2004.


                                                                            F-14
<PAGE>

Components of the Company's income tax provision  (benefit) for the three months
ended March 31:

                                                     2005                2004
                                                   --------            --------
Current:  Federal                                  $ 17,550            $ 21,835
          State                                       4,959               5,472
Deferred: Federal                                   (12,564)             (4,699)
          State                                      (1,352)               (487)
                                                   --------            --------
                                                   $  8,593            $ 22,121
                                                   ========            ========

Reconciliation of the Company's income tax provision (benefit) rate to statutory
federal rates for the three months ended March 31:

                                                          2005           2004
                                                         ------         ------
Statutory federal rate                                     35.0%          35.0%
Effect of graduated federal rates                          (1.0%)         (1.0%)
State taxes, net of federal benefit                         3.7%           3.7%
Effect of tax-free bond interest income                   (29.2%)        (21.6%)
Other, net                                                   .5%            .8%
                                                          -----          -----
Effective tax provision rate                                9.0%          16.9%

Current  income  taxes  payable were $11,991 and $1,480 as of March 31, 2005 and
2004,  respectively  and is included in  "accounts  and other  payables"  in the
accompanying balance sheets.

NOTE 11 - CASH CONCENTRATION RISK & RESTRICTED CASH
A cash  concentration  risk arises when the Company has more cash in a financial
institution than is covered by federal deposit insurance. At March 31, 2005, the
Company had cash in excess of insured limits totaling $10,746,272.

Included  in cash  and  cash  equivalents  as of  March  31,  2005  and  2004 is
restricted cash, as follows:

                                                             2005         2004
                                                           --------     --------
Investor Certificate trustee agreements                    $260,635     $256,980
Mortgage loan compensating balance agreement                427,649          -0-
                                                           --------     --------
                                                           $688,284     $256,980
                                                           ========     ========

Regions Bank is the trustee for certain of the Company's Investor  Certificates.
Under the terms of the  agreements,  the  Company  agreed to place  cash into an
account which cannot be used in the Company's  operations as long as the trustee
agreements are in place. The trustee agreements are for renewable one-year terms
and the Company can  terminate  the  agreements  at any time.  In May,  2005 the
Company  terminated  the  agreements and is using a new trustee for its Investor
Certificates who does not require the Company to have restricted cash on hand as
part of the trustee agreements.

In connection with the Company's mortgage loan on its corporate office building,
the lender  requires  that the Company keep an amount on deposit with the lender
that is at least equal to the amount of principal  outstanding  on the loan. The
maturity  date  of the  loan  is  September  1,  2009.  Please  see  Note 15 for
additional disclosures related to the mortgage loan.

The Company has an agreement with a financial institution to invest excess funds
overnight in a Eurodollar  account.  Investment  positions are settled daily and
related interest earnings are included in loan participation and other income in
the Statement of Operations. As the investment meets the Company's definition of
cash and cash  equivalents  it is  carried as such in the  accompanying  Balance
Sheets.

NOTE 12 - INVESTOR CERTIFICATES
The Company has three types of certificates outstanding:
Access  certificates have no stated maturity and are due on demand.  The minimum
investment  amount is $100.  The  interest  rate is  determined  by the Board of
Directors  each quarter.  The directors may change the rate between  quarters if
market  conditions  warrant  such a change.  The  current  interest  rate is 4%.


                                                                            F-15
<PAGE>

Graduated  certificates  can be  redeemed  yearly  and have a five year  maximum
maturity.  The minimum  investment  amount is $500.  The interest rate increases
based  on  the  length  of  time  that  the  certificate  is  outstanding.   For
certificates sold prior to 2004 the rate starts at 7% and increases .5% for each
year the certificate is outstanding with a 9% maximum rate. Certificates (Series
E and F) sold after 2003 have an initial interest rate of 6.25% and increase .5%
for each year the  certificate is outstanding  with an 8.25% maximum rate.

Five year certificates have a five year maturity and a $500 minimum  investment.
The  interest  rate is 9% for  certificates  sold  prior to 2004 and  8.25%  for
certificates (Series E and F) sold after 2003.

The certificates are not  collateralized and no sinking fund is required to fund
redemptions at maturity.  All of the certificates  have been registered with the
Securities and Exchange Commission under the Securities Act of 1933.
Five year schedule of principal maturities for certificates outstanding at March
31:

Years to Maturity                           2005                       2004
-----------------                       ------------               ------------
On demand & 1 year                       $22,634,834                $ 8,623,950
2                                         14,624,585                  4,862,922
3                                         30,664,131                 10,803,667
4                                          7,738,300                 35,705,732
5+                                        41,190,616                 18,172,001
                                        ------------               ------------
Total Principal                         $116,852,466               $ 78,168,272
                                        ============               ============


At March  31,  2005 and  2004,  accrued  interest  payable  was  $9,758,567  and
Years to Maturity

Interest rates for certificates outstanding at March 31, 2005 are:

4.00% -   $1,731,323       8.00% -    $ 4,198,095        9.00% -   $63,830,683
6.25% -   $4,003,167       8.25% -    $41,190,616
7.50% -   $  501,653       8.50% -    $ 1,396,929

On April 29, 2003 the Company filed a Form SB-2 Registration Statement under the
Securities Act of 1933 with the Securities and Exchange Commission to sell up to
$40,000,000 of its Series E Investor  Certificates along with $11,375,000 of its
Common Stock.  The  Registration  Statement was approved by the  Securities  and
Exchange  Commission on March 26, 2004.  From April 2004 through  December 2004,
the Company issued $39,931,209 in Series E Investor  Certificates and $2,129,341
in Common Stock (327,591 shares at $6.50 per share).

On August 27, 2004, the Company filed a Form SB-2  Registration  Statement under
the Securities  Act of 1933 with the Securities and Exchange  Commission to sell
up to $20,000,000 of its Series F Investor Certificates along with $9,750,000 of
its Common Stock.  The Securities and Exchange  Commission  notified the Company
that it would not  complete a full  review of the  registration  statement.  The
registration  statement  became  effective  on  November 1, 2004 and the Company
started to sell  securities  registered in this statement in January,  2005. For
the three months ended March 31, 2005,  the Company sold  $5,393,127 in Series F
Investor Certificates and no Common Stock.

NOTE 13 - MORTGAGE PARTICIPATION AGREEMENTS
In 2003, the Company began selling Mortgage Participation ("MP") Agreements. The
MP Agreements  have not been  registered  and  therefore,  are only available to
accredited  investors.  The agreements  are  collateralized  by specific  senior
housing  loans owned by the Company and entitle the investor to a  proportionate
share of the interest earned on the collateral.  Interest is paid monthly to the
MP  investors  after the  Company  receives  interest  payments  on the  related
collateralized  loans.  The agreements have no stated  maturity date.  Principal
payments  are  made  when  the  Company  receives   principal  payments  on  the
collateralized  loans.  Losses that the Company may incur on the  collateralized
loans are shared  pro-rata  with the MP Agreement  holders.  The Company has the
right but not the  obligation to redeem the MP  Agreements  at any time.  The MP
Agreement  investors do not have the right to sell or repledge their interest in
the  underlying  collateral.  Interest  expense  related  to MP  Agreements  was
$134,630 and  $153,755  for the three  months ended  December 31, 2005 and 2004,
respectively.  MP  Agreement  principal  and  interest  outstanding  and related
collateral as of March 31, 2005:


                                                                            F-16
<PAGE>
<TABLE>
<CAPTION>
                                                              MP Amount               Total Collateral
                                                              Outstanding              Carrying Amount
                                                              -----------              ---------------
<S>                                                           <C>                        <C>
Winter Haven, FL senior housing loan; matures 5/1/05
   with two year extensions at the Company's option           $1,516,000                 $5,967,872
Garland, TX senior housing loan; matures 12/1/05
   with a one year extension at the Company's option           3,396,500                 $6,508,222
                                                              ----------
Total principal outstanding                                    4,912,500
Accrued interest payable                                          39,441
                                                              -----------
                                                              $4,951,948
                                                              ==========
</TABLE>

The loans which  collateralize  the MP Agreements  are classified as real estate
joint venture investments in the accompanying balance sheets. The total carrying
amount is equal to the loan's outstanding principal, plus accrued interest, less
deferred loan fees.

NOTE 14 - LOAN GUARANTEES
The Company is guarantor  on three loans  secured by senior  housing  facilities
owned by  unrelated  non-profit  entities.  Certain  real estate  joint  venture
investments  and real  estate  acquisition  and  development  loans in which the
borrower  chooses  to secure  outside  financing  may  require  the  Company  to
guarantee  the loan as a condition of the extension of the loan by the financial
institution.  The  guarantee  is solely  limited to amounts  drawn under  credit
facilities  and only  covers  outstanding  principal  and accrued  interest  and
terminates upon maturity and principal  repayment.  Only upon an uncured payment
default  and upon  demand by the  financial  institution  would the  Company  be
required to perform under its  guarantee  obligations.  The  Company's  recourse
would be limited to  repossession  of the  underlying  collateral and subsequent
resale of the facilities.  As of March 31, 2005, all loans which had a guarantee
were current based on their loan terms. Loan guarantees as of March 31, 2005:

<TABLE>
<CAPTION>
                                                Renewal/                                               Current               Loan
                                              Origination       Maturity           Maximum            Principal           Guarantee
Location                                         Date             Date            Guarantee          Outstanding          Obligation
--------                                       --------         ---------        -----------         -----------         -----------
<S>                                            <C>  <C>         <C>  <C>         <C>                 <C>                 <C>
Fort Pierce, FL                                5/31/04          4/15/05          $ 6,000,000         $ 6,000,000         $    60,000
Palm Bay, FL                                   12/31/02         12/31/05          13,800,000          12,650,181                 -0-
St. Petersburg, FL                             12/18/04         12/18/05           7,347,300           7,074,440              71,000
                                                                                 -----------         -----------         -----------
                                                                                 $27,147,300         $25,724,621         $   131,000
                                                                                 ===========         ===========         ===========
</TABLE>

In February 2005, the Company originated a loan on a facility in Fort Pierce, FL
which  paid off a loan  with an  outside  bank in which the  Company  had a loan
guarantee.  The $44,000  estimated  fair value of the  guarantee was credited to
earnings in the first quarter of 2005.

NOTE 15 - BUILDING MORTGAGES
<TABLE>
<CAPTION>
Building mortgages outstanding at March 31:                                                                 2005              2004
                                                                                                          --------          --------
<S>                                                                                                       <C>               <C>
Fidelity Bank - collateralized by rental office building                                                  $168,139          $177,844
   Interest rate equal to "prime + 1.5%", currently 7%; monthly principal &
   interest payment of $1,723; matures March 1, 2006, at which time a balloon
   payment of $159,573 is due
Fidelity Bank - collateralized by corporate office building                                                427,649               -0-
                                                                                                          --------          --------
   Interest rate equal to "prime + 1.5%", currently 7%; monthly principal &
   interest payment of $3,818; matures Sept. 1, 2009, at which time a balloon
   payment of $340,543 is due
Total principal outstanding at March 31                                                                   $595,788          $177,844

Interest expense for the three months ended March 31                                                      $ 10,167          $  3,853
Total carrying value of the mortgage's collateral                                                         $738,483          $232,931
</TABLE>

Estimated annual principal  payments:  2005 - $20,065;  2006 - $179,609;  2007 -
$19,680; 2008 - $21,050; 2009 - $355,384.

                                                                            F-17
<PAGE>

NOTE 16 - SERIES A CONVERTIBLE PREFERRED STOCK
In 2001, the Company  amended its Articles of  Incorporation  to provide for the
issuance of up to 235,000 shares of Series A Convertible  Preferred  Stock.  The
shares do not accrue  dividends  unless such dividends are declared by the Board
of Directors.  The shares entitle the preferred shareholder to have one vote per
share,  presently equal to the voting rights of Common shareholders.  Each share
is  convertible,  after 3  years,  into  shares  of  Common  Stock  based  on an
adjustable formula.

During 2001, as part of the Company's  formation and initial  capitalization  of
Wellstone  Financial  Group,  LLC ("WFG"),  500 preferred shares with a value of
$500,000 were issued to WFG in return for a 100%  ownership  interest in WFG. In
June 2004,  WFG was  dissolved and all of the  outstanding  Series A Convertible
Preferred  Stock was redeemed from WFG in exchange for the  Company's  ownership
interest in WFG. See Note 17 for additional disclosures on this transaction.

NOTE 17 - DISSOLUTION OF SUBSIDIARIES
In June 2004, the Company's board of directors approved an agreement to dissolve
Wellstone Financial Group, LLC ("WFG"), a 100%-owned subsidiary. In exchange for
the  Company's  ownership  interest  in WFG,  the  Company  redeemed  all of the
Company's Series A Preferred Stock owned by WFG. The fair value of the Preferred
Stock  and the  Company's  ownership  interest  in WFG were  both  estimated  at
$500,000;  therefore,  no cash was  exchanged.  As of June 30,  2004,  WFG is no
longer included in the Company's  financial  statements.  The transaction had no
effect on the Company's assets, liabilities, net income and earning per share of
common stock.  WFG was  dissolved  because the Company has been unable to retain
the type of specialized  employees  necessary to develop WFG's operations into a
long-term profitable venture.

In June 2004, the Company's board of directors approved an agreement to dissolve
Wellstone  Communities,  Inc.  ("WCI"),  a  100%-owned  subsidiary.  The Company
received all of WCI's  assets in exchange  for its 136,250  shares of WCI Common
Stock. The fair value of this transaction was $1,265,268.  WCI's assets included
$1,046,340  in cash and a real estate  mortgage  loan with a carrying  amount of
$218,928.  The transaction had no effect on the Company's  assets,  liabilities,
net income,  and earnings per common share.  WCI filed a Form SB-2  Registration
Statement in 2003 and planned to issue preferred stock to expand its specialized
loan  operations  and possibly  purchase a bank.  WCI was dissolved  because the
Company  determined that it was not feasible to go forward with the registration
statement given the proposed financial structure.

NOTE 18 - EARNINGS PER SHARE
Basic  earnings  per  share  for the  three  months  ended  March  31 have  been
calculated as follows:

2004              Net Income                                           $108,722
----              Average Common Shares Outstanding                     531,095
                  Earnings per Common Share                               $0.21
2005              Net Income                                            $86,904
----              Average Common Shares Outstanding                     815,812
                  Earnings per Common Share                               $0.11

Diluted  earnings  per share are the same as basic  earnings  per share  because
there are no shares of Series A Convertible  Preferred Stock outstanding.  Other
than the Series A Convertible  Preferred Stock,  there are no other  potentially
dilutive securities, stock options or warrants outstanding.

NOTE 19 - MAJOR CUSTOMERS
The Company  received  more than 10% of its total  revenue for the three  months
ended March 31, 2005 from the following customers:

<TABLE>
<CAPTION>

                                     Amount         %       Description of Revenue Received
                                     ------      ------     -------------------------------
<S>                                <C>            <C>       <C>
Senior Housing Services, Inc.      $1,625,590     43.9%     Interest and fees from real estate joint
                                                              venture investments
Wellstone Housing, LLC                680,401     18.4%     Interest and fees from family housing
                                                              development loans
Sage Living Centers, Inc.             565,013     15.2%     Interest and fees from real estate joint
                                   ----------    -----         venture investments
                                   $2,871,004    77.5%
                                   ==========    ====
</TABLE>

                                                                            F-18
<PAGE>

The major customers are not related parties.  Neither  organization  directly or
indirectly  controls,  is  controlled  by,  or is under  common  control  of the
Company. There is not common ownership interest,  officers, or directors and the
Company  does not have  the  power to  direct  or  significantly  influence  the
management or operating policies of these customers.

On January 1, 2005, Senior Housing Services,  Inc formed a single member Limited
Liability Company (Wellstone Housing,  LLC) and purchased the assets and assumed
all of Wellstone Housing Corporation's liabilities, which included the Company's
real estate loans.  The total  combined  revenue  received  from Senior  Housing
Services,  Inc.  and  Wellstone  Housing,  LLC was  $2,305,991  or  62.3% of the
Company's total revenue.

NOTE 20 - FINANCIAL INSTRUMENTS
The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments:

Cash and cash equivalents - Fair value approximates their carrying amount due to
the initial maturities of the instruments being three months or less.

Bond holdings - These bonds are not traded on an exchange; therefore, fair value
is estimated  based on the present  value of expected  future cash flows,  which
approximates their carrying amount.

Investor  certificates  and  mortgage  participations  - Fair value is estimated
based on the present  value of expected  future cash flows,  which  approximates
their carrying amount.

Building  mortgages  and  capital  lease  obligation  - Fair value  approximates
carrying  value since stated rates are similar to rates  currently  available to
the Company for debt with similar terms and remaining maturities.

Loan  guarantee  obligations - Fair value  approximates  the  risk-factored  net
present  value of  possible  future  cash  flows  related to the  specific  loan
guarantee obligation.

The estimated  fair values of the Company's  financial  instruments at March 31,
2005 are:

                                                Carrying Amount      Fair Value
                                                 ------------       ------------
Financial assets:
  Cash and cash equivalents                      $ 11,114,985       $ 11,114,985
  Bond holdings                                  $  3,769,650       $  3,769,650
Financial liabilities:
  Investor certificates                          $116,852,466       $116,852,466
  Mortgage participations                        $  4,912,500       $  4,912,500
  Building mortgages                             $    595,788       $    595,788
  Capital lease obligation                       $      6,365       $      6,365
  Loan guarantee obligations                     $    131,000       $    131,000



                                                                            F-19

<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operation.

Selected financial data.
Please read the following  selected  financial data in conjunction with the rest
of this "Management's Discussion and Analysis or Plan of Operation" and with our
financial statements and related notes in this filing.

                                                          Three months ended
                                                              March 31,
                                                     ---------------------------
                                                        2005             2004
                                                     ----------       ----------
Revenues                                             $3,704,061       $2,796,253
                                                     ----------       ----------

Investor interest expense                             2,729,419        1,962,490
Loan loss expense                                        25,000           20,000
Marketing expenses                                      287,569          204,536
Salaries, payroll taxes, benefits                       378,614          320,220
Operating expenses                                      187,962          158,164
                                                     ----------       ----------
Total expenses                                        3,608,564        2,665,410
                                                     ----------       ----------
Operating income                                         95,497          130,843
Income tax provision                                      8,593           22,121
                                                     ----------       ----------
Net income                                           $   86,904       $  108,722
                                                     ==========       ==========

Overview of operations
We have always focused on serving faith-based organizations, mostly churches and
their related schools.  We also offer specialized  programs for church and other
non-profit  sponsors of senior  housing and  affordable/moderate  income housing
programs.  Nearly all of our earnings prior to 2001 came from  financing  church
facilities.  During the last quarter of 2000, we began to realize  revenues from
investment in senior and affordable/moderate income housing projects. During the
last  quarter  of 2004,  we  began  to make  loans  to  for-profit  sponsors  of
affordable  and  low-income  housing  projects.  Less than 2% of our  assets are
invested with  for-profit  sponsors and even though this percentage may increase
in the future,  it will remain a small part of our loan  portfolio.  We generate
revenue from:

o    interest on loans
o    origination and renewal fees on loans
o    loan participation income
o    interest on securities
o    consulting fees

We currently charge a 5% to 10% fee on new loans, based upon expected terms, and
renewal fees of as much as 5% of the  outstanding  balance of the renewing loan.
Our interest  rate on all new loans is currently  from 9% to 10%. Some loans are
participating  loans,  which enable us to receive  income from the borrower when
the borrower sells or refinances  (with another lender) the property in which we
provided the financing.  The participation percentage varies between 25% and 33%
of the borrower's gain.

Participating loans (all related to senior housing facilities) are classified as
real estate  joint  venture  investments  if all of the  following  exist at the
inception  of the  loan:
o    The borrower does not have a substantial equity investment in the property.
o    The Company does not have recourse to substantial tangible, saleable assets
     of the borrower other than the underlying  collateral of the loan and there
     is no irrevocable letter of credit for a substantial amount of the loan.
o    There is no  take-out  commitment  for the full  amount  of the loan from a
     creditworthy,  independent third-party.
o    The facility does not have lease commitments which will provide  sufficient
     cash flow to service normal principal and interest loan amortization.

Comparison of Periods Ended March 31, 2004 and March 31, 2005
General.  Assets increased from $94,360,462 at March 31, 2004 to $137,768,409 at
March 31, 2005 for an increase of  $43,407,947 or 46%. This increase is a result
of the  sale  of  Investor  Certificates  and  Mortgage  Participations,  net of
redemptions of $41,201,273 and new common stock issuances, net of retirements of
$1,788,665.  With the additional net cash from these items and from cash already
on hand, we invested in real estate loans and joint venture investments,  net of
principal  payments  received,  of $34,092,660.  Total revenue increased for the
three months ended March 31, 2005 by $907,808 or 32% from  $2,796,253 in 2004 to
$3,704,061  in 2005.  Net income for the three  months  ended March 31, 2005 was
$86,904 compared to $108,722 for the same period ended March 31, 2004.

Total real estate loans and joint venture  investments  outstanding on March 31,
2005 was $118,182,680  compared to $84,090,020 on March 31, 2004 for an increase
of  $34,092,660  or 41%. This increase is due to sales of Investor  Certificates
and  Mortgage  Participation   Agreements  and  the  subsequent  origination  or
refinancing of real estate loans and joint venture investments, as follows:

                                                                               3
<PAGE>

New real estate loan originations                                    $ 7,089,641
Increase in existing loans, net of principal received                  5,492,068
New real estate joint venture investments made                        14,554,920
Increase in existing real estate joint venture investments             6,956,031
                                                                     -----------
                                                                     $34,092,660
                                                                     ===========

All other  assets  composed  primarily  of cash,  bond  holdings,  property  and
equipment,  and  unamortized  debt issue costs were  $19,585,729 as of March 31,
2005.

Our cash  balance  increased  $8,460,379  from  $2,654,606  on March 31, 2004 to
$11,114,985  on March 31,  2005.  This  increase  is due to the large  amount of
Investor  Certificates sold from May 2004 to March 2005. There is normally a lag
of two to four  months  between  the  receipt of cash from  these  sales and the
investment in new real estate loans and joint venture investments. We expect our
cash on hand to decrease  from its current  level  before the end of the current
year as we are  able to find  suitable  real  estate  loans  and  joint  venture
investments to invest our cash.

Principal   and  interest   payable  on  Investor   Certificates   and  Mortgage
Participation ("MP") Agreements increased $41,201,273 or 46% from $90,361,708 as
of March 31, 2004 to  $131,562,981  as of March 31, 2005.  In 2003,  the Company
filed a registration  statement  with the Securities and Exchange  Commission to
sell up to $40,000,000 in additional  Investor  Certificates  and $11,375,000 in
Common Stock.  The  registration  statement was approved on March 26, 2004 which
allowed us to start selling new Investor  Certificates  in the second quarter of
2004. Also, another  registration  statement was filed in August 2004 and became
effective in November 2004 which allows us to sell an additional  $20,000,000 in
Investor  Certificates and $9,750,000 in Common Stock. These  registrations have
allowed us to continue the substantial increase in outstanding  certificates and
the   subsequent   investment  in  new  real  estate  loans  and  joint  venture
investments.

Real estate loan and joint venture interest and fees earned. Interest income and
fees from real estate loans and joint venture  investments  for the three months
ended March 31 is as follows:

<TABLE>
<CAPTION>

                                                            2005            2004         Increase       %
                                                            ----            ----         --------      ---
<S>                                                      <C>             <C>            <C>            <C>
                                                         $3,233,140      $2,697,497     $ 535,643      20%

The increase was due to the following:

Increase in average outstanding principal                                               $ 734,663
   ($115,392,648 - 2005; $84,529,125 - 2004)
Increase in weighted average interest rate                                                 27,095
   (9.90% - 2005; 9.77% - 2004)
Change in loan fees recognized                                                           (226,115)
                                                                                        ---------
                                                                                        $ 535,643
                                                                                        =========
</TABLE>

The  increase in average  outstanding  principal is due to the addition of 8 new
real estate loans and joint venture  investments with  outstanding  principal of
$21,644,561  and  increases in the weighted  average  principal  outstanding  on
existing loans of $9,218,962.

Loan  participation and other income. For the three months ended March 31, 2005,
loan participation and other income increased as follows:

                                              2005          2004         Change
                                            --------      --------      --------
Investment income                           $147,184      $ 91,431      $ 55,753
Loan participation & other                   323,737         7,325       316,412
                                            --------      --------      --------
   Total                                    $470,921      $ 98,756      $372,165
                                            ========      ========      ========

The Company's  investment  income is from the purchase of tax-free bonds used as
permanent financing for projects the Company funded during their development and
initial  operations and from interest  income on the Company's  excess cash. The
increase in  investment  income is due to the increase in the  Company's  excess
cash in 2005 versus 2004.

Loan   participation   and  other  income  increased  due  to  a  $257,000  loan
participation  gain recorded in March,  2005,  $44,000 in loan guarantee revenue
recognized in February, 2005 (see Note 14 of the "Notes to Financial Statements"
for  additional  disclosures  on loan  guarantees)  and $15,000 in rent  revenue
received  from  Cornerstone  Capital  Advisors  for their rent of the  corporate
office building in Cumming, GA.

Investor interest expense.  Investor interest expense for the three months ended
March 31, 2005 was $2,729,418,  an increase of $766,926 or 39% compared to 2004.
The increase is due to:


                                                                               4
<PAGE>

Increase in average outstanding certificate principal, including      $ 821,040
 interest payable subject to compounding

   ($119,663,241 - 2005; $81,783,612 - 2004)
 Change in weighted average interest percentage                         (34,989)
   (8.67% - 2005; 8.90% - 2004)
Decrease in average outstanding Mortgage Participation principal
   ($5,385,200 - 2005; $6,150,200 - 2004)                               (19,125)
                                                                      ---------
                                                                      $ 766,926
                                                                      =========

Loan loss  expense and  allowance  for loan  losses.  For the three months ended
March 31, 2005 and 2004, we charged  $25,000 and $20,000,  respectively  to loan
loss  expense.  These  charges  were  due to  increases  in the  family  housing
development loan portfolio's outstanding principal.

The total allowance for loan losses increased from $395,000 on March 31, 2004 to
$657,000  on March 31,  2005.  This  increase  is due to: 1) an  increase in the
family housing development loan portfolio's  outstanding  principal  ($100,000),
and 2) slower than  expected  new home sales  volumes at three  projects  and an
increase in the time that it has taken four  projects to finish the  development
phase and start  selling  homes  ($162,000).  These  factors have  increased the
family housing development loan portfolio's  relative credit risk as compared to
2004,  thus  necessitating  the increase in our  allowance for loan loss balance
over the last 12 months.

The  allowance  for  loan  loss  increases  that we made in 2004  and  2005  are
classified as collective loan loss allowances.  A collective loan loss allowance
is recognized when the  characteristics  of a group of loans indicate that it is
probable  that a loss exists even  though the loss cannot be  identified  with a
specific loan. The allowance for loan losses is reviewed quarterly and increases
or decreases will be made based on the results of these reviews.

As of March 31,  2005,  one church loan with a carrying  amount of $269,324  was
considered impaired. As of March 31, 2004, no loans were considered impaired. No
specific  impaired loan loss  allowance  has been recorded  because the carrying
amount of the impaired  loan is less than the loan's  collateral  or the present
value of the loan's expected future cash flows.

As of March 31, 2005, allowance for loan losses as a percent of outstanding loan
principal by loan type:

<TABLE>
<CAPTION>
                                           Loan Loss       Outstanding
                                           Allowance        Principal        %
                                           ---------      ------------      ---
<S>                                        <C>            <C>               <C>
Family Housing Development Loans           $ 657,000      $ 36,714,920      1.8%
Church Mortgage Loans                          -0-           9,169,099        0%
Senior Housing Mortgage Loans                  -0-          13,792,638        0%
Real Estate Joint Venture Investments          -0-          58,622,435        0%
                                           ---------      ------------      ---
  Total                                    $ 657,000      $118,299,092       .6%
                                           =========      ============      ===
</TABLE>

Marketing  expenses.  Total expenses for the marketing of Investor  Certificates
for the three months ended March 31, 2005 were $287,569 compared to $204,536 for
the same period in 2004. The increase is due to:

                                              2005          2004         Change
                                            --------      --------      --------
Debt issue cost amortization                $239,401      $162,728      $ 76,673
Other marketing costs                         48,168        41,808         6,360
                                            --------      --------      --------
                                            $287,569      $204,536      $ 83,033
                                            ========      ========      ========

Debt issue cost amortization expense increased due to Investor  Certificates and
Mortgage  Participations  sold since May,  2004.  This expense will  continue to
increase as new  Investor  Certificates  and Mortgage  Participations  are sold.
Other marketing costs increased due to higher compliance and registration  costs
which were caused by the increase in Investor Certificates outstanding.

Selling  commissions  paid to brokers  for  selling  Investor  Certificates  and
Mortgage Participations and costs incurred to register Investor Certificates are
paid in cash and charged as an expense  over the term of the related  debt.  The
unamortized  balance  is  classified  as  an  asset  on  the  balance  sheet  as
"Unamortized debt issue costs".  The balance was $2,707,314 and $1,744,336 as of
March 31, 2005 and 2004, respectively.

Operating and personnel expenses.  Personnel expenses (salaries,  payroll taxes,
and benefits) for the three months ended March 31 increased  $58,394 or 18% from
$320,220  in 2004 to  $378,614 in 2005.  The  increase  is due to the  Company's
growth in operations. Prior to July 1, 2003, employees were paid directly by the
Company. On July 1, 2003,  Cornerstone Capital Advisors ("CCA") hired all of our
employees and has billed us according to the management  and advisory  agreement
that is now in place.

                                                                               5
<PAGE>

Starting  in  July  2003,  the  Company  contracted  with  CCA  to  provide  all
administrative and executive  personnel  services.  From July 1, 2003 until July
31, 2004, the agreement  obligated us to reimburse  actual expenses  incurred by
CCA. Also, CCA was eligible to receive  incentive  compensation  of up to 10% of
actual expenses billed to us for the prior 12 months.

Effective  August 1, 2004,  the original  agreement was modified so that we will
pay CCA as follows:
o    A monthly  management  fee equal to 10% of our  revenues  from all  sources
     other than loan fees, loan participation revenue, and revenue received from
     CCA plus 30% of loan participation revenue.
o    A loan  origination  fee equal to 30% of the total loan fees charged by the
     Company to its borrowers.  The fee is generally paid from loan proceeds and
     reduces  deferred  loan  fees that we will  recognize  over the life of the
     loan.

Please  see  Note  3 of the  "Notes  to  Financial  Statements"  for  additional
information  about our  agreement  with CCA and for amounts that we have paid to
CCA for three month periods ended March 31, 2005 and 2004.

For the  three months ended March 31, 2005 and 2004,  operating expenses were as
follows:

                                                 2005        2004       Change
                                               --------    --------    --------
a) Trust service/paying agent fees             $ 30,950    $ 26,304    $  4,646
b) Audit, accounting & tax services              19,974      19,872         102
c) Depreciation & amortization                   15,658      16,020        (452)
d) Office expenses                                7,123      20,800     (13,677)
e) Legal expenses                                61,839      25,287      36,552
f) Insurance                                      9,484      13,689      (4,205)
g) Other operating expenses                      43,024      36,192       6,832
                                               --------    --------    --------
Total operating expenses                       $187,962    $158,164    $ 29,798
                                               ========    ========    ========

The changes are due to the following:
     a)  Trust  service/paying  agent fees -  increased  due to the  increase in
         Investor Certificates outstanding.
     b)  Audit,  accounting & tax services - no material change in services were
         needed.
     c)  Depreciation &  amortization  - No material fixed asset  purchases were
         made since March 2004; therefore, depreciation and amortization expense
         stayed basically the same as last year.
     d)  Office  expenses - The decrease is due to the change in our  management
         contract with CCA. Prior to August,  2004, CMI was  responsible for all
         office costs at our corporate  offices.  In August 2004,  the agreement
         was changed and as part of the agreement,  CCA is now  responsible  for
         the ongoing  operating  costs of the  office.  Please see Note 3 of the
         "Notes to Financial  Statements" for additional  information  about our
         management agreement with CCA.
     e)  Legal  expenses - Increased due to additional  legal fees incurred as a
         result of the ongoing  legal  proceeding  concerning  the Chicago Stock
         Exchange. Please see Part II, Item 1 for additional information.
     f)  Insurance -  decreased  due to lower  premiums on director  and officer
         insurance  and  property  and casualty  insurance.
     g)  Other operating  expenses - increased due to the cost of the March 2005
         board  meeting.  In 2004,  the first board  meeting of the year was not
         held until the second quarter so no meeting costs were incurred.

Income tax provision.  The income tax provision for the three months ended March
31, 2005 was $8,593  compared  to $22,121  for the same  period  ended March 31.
2004.  The net decrease in income taxes is due to a decrease in pre-tax  income.
The  Company's  effective  tax  provision  rate was 9.0% and 16.9% for the three
months  ended March 31, 2005 and 2004,  respectively.  A  reconciliation  of the
Company's effective tax provision rate to the federal statutory rate is included
in the attached "Notes to Financial Statements" (Note 10).

Dividends.  No dividends  were declared  during the three months ended March 31,
2005 or 2004.

Liquidity and Capital Resources
Cash flows from  operations.  Net cash provided by the Company's  operations for
the  three  months  ended  March  31,  2005 and 2004 was  $294,603  and  $7,616,
respectively.  This  increase  was  due  to  an  increase  in  depreciation  and
amortization  expense,  loan  guarantee  payments  received,  other assets,  and
accrued investor certificate interest payable,  partially offset by decreases in
net income,  accounts and other  payables,  and cash received from loan fees and
loan interest.

Investor and mortgage participation interest payable increased $1,111,803 in the
first three  months of 2005 due to an increase in  outstanding  debt and because
approximately  25% to 30% of the  Investor  Certificate  holders  who  purchased
certificates  in 2004 and 2005 have elected to reinvest the interest due to them
each year and not receive the interest in cash until maturity.

Included  in the 2005 and 2004  changes in accrued  real  estate  loan and joint
venture  interest  and  deferred  loan fee amounts is $441,150  and  $397,137 in
interest  which was  financed  as part of loan  principal.  We  receive  monthly
interest  payments  on our loans  except  when the terms of certain  loans allow
borrowers  to  finance  interest payments  while the  collateralized property is


                                                                               6
<PAGE>

under development or construction. A summary (by loan type) of the amount of net
financed  interest  for the three  months  ended  March 31,  2005 and 2004 is as
follows:

                                                       2005               2004
                                                    ---------          ---------
Family Housing Development                          $ 265,821          $ 193,588
Church Construction                                    (1,773)            37,514
Real Estate Joint Venture                             177,102            166,035
                                                    ---------          ---------
                                                    $ 441,150          $ 397,137
                                                    =========          =========

The amount for 2005  represents  interest  accrued and financed in 2005,  net of
payments  received in 2005 that were financed in previous  years.  2004's amount
represents  interest  accrued and financed in 2004, net of payments  received in
2004 that were financed in previous years.

The increase in the family housing net financed  interest in 2005 as compared to
2004 is due to: 1) increased  loan balances on eight  projects  which are now in
the development phase and are financing their monthly  interest,  and 2) one new
loan  addition  since  March  31,  2004  which  is in the  development  phase of
construction.  Although the amount of financed interest from these projects will
remain  fairly high  (currently  $90,000 to $100,000  per month),  the amount of
interest financed should decline starting in the third or fourth quarter of 2005
because three or four of these  projects  should be going into their sales phase
and we will begin to receive interest payments in cash.

The  Real  Estate  Joint  Venture  financed  interest  in  2005 is for a loan in
McKinney,  TX  ($85,169)  and  for a loan  in  Chattanooga,  TN  ($91,933).  The
McKinney,  TX loan is  collateralized  by raw land which is being  developed for
senior  housing.  We have been  financing  the interest on this loan since June,
2003. Our other Real Estate Joint Venture Investment loans are collateralized by
existing facilities that only needed to be remodeled.  Therefore,  the period in
which the interest is being  financed on the  McKinney  loan is much longer than
the other Real Estate Joint Venture Investment loans.  Normally,  we finance two
to six months' of interest on senior  housing loans.  We anticipate,  due to the
size of the McKinney  project that we will finance interest for another 12 to 24
months.  The  Chattanooga,  TN loan  completed  its  remodeling  in 2004 and its
lease-up phase has taken longer than anticipated; therefore, we have capitalized
their  interest in 2005.  We are  analyzing  and  watching  this loan closely to
ensure that the stabilized value of the property is greater than the loan amount
and that we do not have any collectibility issues with this loan.

Cash flows from investing activities. For the three months ended March 31, 2005,
the  Company  used  $6,384,934  in cash from  investing  activities  which is an
increase of $5,861,527  from $523,407 for the three months ended March 31, 2004.
The increase was due to an increase in real estate and joint  venture loans made
in 2005. In the first quarter of 2004 we had no Investor Certificates  available
for sale so we were unable to originate loans at the same rate that we have been
able to since April 2004.

Cash flows from financing activities. For the three months ended March 31, 2005,
the  Company  raised  $5,542,064  from the  sale of  Investor  Certificates  and
Mortgage  Participation  Agreements.  This  represents an increase of $5,100,696
from new Investor  Certificate and Mortgage  Participation sales of $441,368 for
the three months ended March 31, 2004. In 2004,  we had no  registered  Investor
Certificates  for sale during the first  three  months of the year and were only
able to re-sell existing  certificates that investors wanted to redeem early. We
have been able to sell new  Investor  Certificates  since  April  2004 which has
caused the increase over last year.

Investor  Certificates redeemed for cash decreased from $1,424,047 for the three
months  ended March 31, 2004 to $514,241  for the three  months  ended March 31,
2005. This decrease is due to a larger amount of maturities in 2004 versus 2005.
Also,  in  2004,  we  had  no  new  Investor   Certificates  in  which  maturing
certificates could be reinvested;  therefore, all of 2004's maturities were paid
in cash.

We have  $22,634,834  in Investor  Certificates  coming due or  redeemable  upon
demand  in the next 12  months.  $10,099,844  of this  amount  is for  graduated
certificates,  which allow an investor to redeem their  certificate each year on
the anniversary  date of the purchase.  Based on our historical  experience,  we
expect that less than 20% of the  graduated  certificates  will be redeemed  for
cash during the next 12 months. Also, $10,803,668 in five-year bonds will mature
in  March,  2006.  Our  historical  experience  indicates  that  over 75% of the
maturities  will be reinvested into new Investor  Certificates,  but there is no
guarantee  that  this will  happen.  We will  ensure  that we have  enough  cash
available to handle these maturities.

Among the measures we take to mitigate any demands for cash are:

o    Maintain a minimum cash balance, normally no less than $3,000,000.
o    Have readily marketable loans that can be sold for par or a premium.
o    Ask investors their intentions at least 30 days before their bonds mature.
o    Have a bank willing to extend credit lines if needed.


                                                                               7

<PAGE>
o    Spread maturity dates throughout the year.
o    Limit each investor to not more than $500,000  maturing in any  three-month
     period.

We  believe  that  cash on hand,  cash  generated  by  operations  and  expected
refinancing  and  pay-offs of existing  loans,  will be  sufficient  to meet our
financing  and capital  needs for the coming year.  The amount and timing of our
future capital  requirements  will depend on factors such as the origination and
funding  of new  investments,  any  opportunities  for  acquisitions  of related
businesses and the overall  success of our marketing  efforts for  certificates,
shares and any other securities.

Item 3. Controls and Procedures

The principal executive officer and the principal financial officer of the small
business issuer, Cornerstone Ministries Investments, Inc., have, as of March 31,
2005,  evaluated the small business issuer's disclosure controls and procedures,
as defined by Sections 13a-14(c) and 15d-14(c) of the Securities Exchange Act of
1934.  Based on their  evaluation,  they have  concluded  that those  disclosure
controls and procedures are designed and implemented  effectively to ensure that
information required to be disclosed by the small business issuer in the reports
that it files or submits under that Act is recorded,  processed,  summarized and
reported, within the time periods specified in the Commission's rules and forms.


Part II. Other Information

Item 1. Legal Proceedings

The laws in many states provide an exemption from  registration for offerings of
securities  approved for listing on the Chicago Stock Exchange (the "Exchange").
Since April 2000, we have  considered  our  securities to have been approved for
listing on the  Exchange.  Prospectuses  for our public  offerings  of bonds and
common stock, and our publicly-filed  reports, have included statements that our
common stock was approved for listing on the Chicago Stock Exchange.

On  December 3, 2004,  a letter from the  Exchange  denied our  application  for
listing  and said  that it had not  previously  approved  our  common  stock for
listing.  However,  on February 4, 2005, a second  letter from the Exchange said
that,  upon review,  the Exchange had  apparently  approved our common stock for
listing  subject to the completion of an offering that would meet the Exchange's
numerical standards for shareowners'  equity,  number of public shareholders and
publicly held shares.  A March 1, 2005  clarification  from the Exchange said it
agrees that our status was not inconsistent with its being "approved for listing
upon notice of issuance," the language used in state  exemption laws. Our common
stock will not be listed on the Exchange in the future.

Based upon the  Exchange's  position in its December 3, 2004 letter,  securities
regulators  for  several  states  each  raised the issue of whether we  lawfully
offered and sold securities without  registration in those states and/or whether
our prospectuses and publicly-filed reports were false and misleading,  in their
reference to Exchange approval for listing. Michigan's Commissioner of Financial
and Insurance  Services  issued Orders of Denial  related to our  application to
register our Series F offering in that state and initiated an  enforcement  case
with a Notice of Opportunity to Show Compliance,  to which we have responded. We
disagree with the actions taken by Michigan and have  administratively  appealed
its decisions.

On February 4, 2005, the Texas State  Securities Board told us that, by February
11, 2005, either we sign an Agreed Cease and Desist Order and pay a $20,000 fine
or it would obtain an emergency  administrative  cease and desist order, without
our being  represented.  We chose to sign the  order  and we paid the fine.  The
order is that we "immediately  cease and desist from engaging in conduct that is
materially misleading or is otherwise likely to deceive the public in connection
with the  offer for sale of any  security  in  Texas."  On April  26,  2005,  we
consented to entry of a Cease and Desist Order by the Minnesota  Commissioner of
Commerce  that we cease and desist  from  offering  and  selling  securities  in
Minnesota  until we are in  compliance  with  Minnesota  statutes  and until the
Commissioner's  further  order.  We  also  agreed  to  redeem  all  certificates
purchased by Minnesota residents and to pay an $8,000 civil penalty.

As of May 11,  2005,  we are not aware that any other state has  instituted  any
formal  proceedings  on this or any other issue related to any of our securities
offerings and we are not a party to any other pending legal proceedings.  We are
not aware that any of the properties covered by our mortgage loans is subject to
any pending legal proceedings or that any government  authority is contemplating
any  legal  proceedings  involving  us or any of those  properties,  other  than
described above.

Item 2. Changes in Securities

         Not Applicable

                                                                               8

<PAGE>

Item 3. Defaults upon Senior Securities

         Not Applicable

Item 4. Submission of Matters to a Vote of Securities Holders

         Not Applicable

Item 5. Other Information

         Not Applicable

Item 6. Exhibits and Reports on Form 8-K

(a)  (1)  Exhibit   99.1,   Certifications   pursuant  to  Section  906  of  the
          Sarbanes-Oxley  Act of 2002.

     (2)  Exhibit 15, Letter on un-audited  interim financial information.

(b)  No reports on Form 8-K were filed  during the quarter for which this report
     is filed.

Signatures

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

Dated: May 11, 2005        Cornerstone Ministries Investments, Inc. (Registrant)


                           By: S/John T. Ottinger
                               -------------------------------------------------
                                 John T. Ottinger
                                 Vice President and Chief Financial Officer


                                                                               9