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, 2004

                                       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
of incorporation or organization)                         Identification Number)

  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, 2004, there were issued and outstanding 531,528 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
<TABLE>
<CAPTION>

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<S>                                                                            <C>
Form 10-QSB Title Page                                                         1

Index                                                                          2

PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements

                  Accountant's Review Report                                   F-1

                  Consolidated Balance Sheets as of March 31, 2004 and 2003    F-2

                  Consolidated Statements of Operations
                  for the Three Months ended March 31, 2004 and 2003           F-3

                  Consolidated Statements of Changes in Shareholders' Equity
                  for the Three Months ended March 31, 2004 and 2003           F-4

                  Consolidated Statements of Cash Flows
                  for the Three Months ended March 31, 2004 and 2003           F-5

                  Notes to Consolidated 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                                 8

         Item 4. Submission of Matters to a Vote of Security Holders           8

         Item 5. Other Information                                             8

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

Signatures                                                                     8

Certifications                                                                 9
</TABLE>


                                                                               2
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

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.

                                                           Quarter-ended
                                                             March 31,
                                                  ------------------------------
                                                      2004              2003
                                                  -----------       -----------
Revenues                                          $ 2,796,253       $ 1,938,482
                                                  -----------       -----------

Investor interest expense                           1,962,490         1,557,317
Loan loss expense                                      20,000               -0-
Marketing expenses                                    204,536           106,487
Salaries, payroll taxes, benefits                     320,220           241,099
Operating expenses                                    158,164           287,511
                                                  -----------       -----------
   Total expenses                                   2,665,410         2,192,414
                                                  -----------       -----------
Operating income (loss)                               130,843          (253,932)
Income tax provision (benefit)                         22,121          (113,946)
                                                  -----------       -----------
   Net income (loss)                              $   108,722       ($  139,986)

Overview of operations.

We have  always  focused  on  serving  only  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  in the past  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.  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, 2003 and March 31, 2004
General.  Assets  increased from $82,958,550 at March 31, 2003 to $94,360,462 at
March 31, 2004 for an increase of $11,401,912 or 14%. This increase was a result
of the  sale  of  Investor  Certificates  and  Mortgage  Participations,  net of
redemptions of $11,205,357  and cash generated from  operations  since March 31,
2003, decreased by dividends paid to shareholders.  With the additional net cash
from these items and from cash already on hand,  we  originated  new real estate
loans and joint venture  investments,  net of principal  payments  received,  of
$12,434,266  and  invested an  additional  $1,275,000  in bond  holdings.  Total
revenue  increased  for the quarter ended March 31, 2004 by $857,771 or 44% from
$1,938,482  in 2003 to  $2,796,253  in 2004.  Net income  (loss) for the quarter
ended March 31, 2004 was $108,722 compared to ($139,986) in 2003.

Total real estate loans and joint venture  investments  outstanding on March 31,
2004 was  $84,090,020  compared to $71,655,754 on March 31, 2003 for an increase
of  $12,434,266  or 17%.  This  increase  was a result  of  sales of  investment
certificates   and  mortgage   participation   agreements   and  the  subsequent
origination or  refinancing of real estate loans and joint venture  investments,
as follows:


                                                                               3
<PAGE>

New loan originations                                              $  3,247,659
Refinances on existing loans, net of principal received              (2,481,955)
New real estate joint venture investments made                       13,917,311
Decrease in existing real estate joint venture investments           (2,248,749)
                                                                   ------------
                                                                   $ 12,434,266
                                                                   ============

All other  assets  composed  primarily  of cash,  bond  holdings,  property  and
equipment,  and  unamortized  debt issue costs were  $10,270,442 as of March 31,
2004.  Principal  and  interest  payable on Investor  Certificates  and Mortgage
Participation ("MP") Agreements increased $11,205,357 or 14% from $79,156,351 as
of March 31, 2003 to  $90,361,708  as of March 31,  2004.  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
will allow us to start selling new Investor  Certificates  in the second quarter
of 2004 and 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 quarter ended
March 31 increased  $839,304  (+45%) from  $1,858,193  in 2003 to  $2,697,497 in
2004. The increase was due to the following items:

Increase in average outstanding principal                               $423,159
   ($84,529,125 - 2004; $68,038,006 - 2003)
Increase in weighted average interest rate                                49,451
   (9.77% - 2004; 9.43% - 2003)
Increase in loan fees recognized                                         366,694
                                                                        --------
                                                                        $839,304
                                                                        ========

The  increase in average  outstanding  principal is due to the addition of 8 new
real  estate  loans and  joint  venture  investments  with  average  outstanding
principal of  $17,164,970,  net of a decrease in existing loan principal (due to
loan pay-offs) with an average net outstanding principal decrease of $673,851.

Loan  participation and other income. For the quarter ended March 31, 2004, loan
participation  and other income increased $18,467 or 23% from $80,289 in 2003 to
$98,756 in 2004. The increase is due to the following:

                                                 2004        2003       Change
                                               --------    --------    --------
Investment income                              $ 91,431    $ 72,453    $ 18,978
Loan participation and other income               7,325       7,836        (511)
                                               --------    --------    --------
   Total                                       $ 98,756    $ 80,289    $ 18,467

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  September,  2003  purchase of new
tax-free bonds, which increased the balance in our bond holdings portfolio.

Investor interest expense. Investor interest expense for the quarter ended March
31, 2004 was  $1,962,490,  an  increase  of  $405,173 or 26%  compared to 2003's
expense of $1,557,317. The increase is due to:

Increase in average outstanding certificate principal, including        $235,310
 interest payable subject to compounding
   ($81,783,612 - 2004; $72,050,983 - 2003)
Change in weighted average interest percentage                            16,008
   (8.90% - 2004; 8.77% - 2003)
Increase in average outstanding Mortgage Participation                   153,755
                                                                        --------
Agreement principal  ($6,150,200 - 2004; $0 - 2003)                     $405,173
                                                                        ========

Loan loss expense and allowance for loan losses.  In the fourth quarter of 2003,
as part of our regular  loan  grading and risk  assessment  process,  we charged
$375,000 to loan loss expense and  increased  our allowance for real estate loan
losses to $375,000  from $0 as of December  31,  2002.  In the first  quarter of
2004, we charged an additional $20,000 to loan loss expense. Prior to the fourth
quarter of 2003, we had never recognized an allowance for loan loss. Even though
we have not incurred a loan  write-off,  we increased our loan loss allowance in
the  fourth  quarter  of 2003  because  of an  increase  in our  family  housing
development loan portfolio's relative credit risk. The increased credit risk was
caused by slower  than  expected  new home sales in the fourth  quarter of 2003,
which is a result of slower than expected growth in the U.S. economy.

                                                                               4
<PAGE>
The loan loss  expense  in 2004 was due to an  increase  in the  family  housing
development loan portfolio's outstanding principal.

The  allowance  for  loan  loss  increases  that we made in 2003  and  2004  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, 2004, no loans were considered  impaired.  As of March 31, 2003,
one church loan with a carrying  amount of $134,458 was considered  impaired due
to  non-payment  of  interest.  No specific  impaired  loan loss  allowance  was
recorded because the carrying amount of the loan was less than the present value
of the loan's expected future cash flows.

As of March 31, 2004, allowance for loan losses as a percent of outstanding loan
principal by loan type:

                                             Loan Loss     Outstanding
                                             Allowance      Principal        %
                                             ---------     -----------      ---
Family Housing Development Loans             $395,000      $26,423,822      1.5%
Church Mortgage Loans                           -0-         11,631,542        0%
Senior Housing Mortgage Loans                   -0-          9,135,836        0%
Real Estate Joint Venture Investments           -0-         37,491,355        0%
                                             --------      -----------      ---
  Total                                      $395,000      $84,682,555       .5%

Marketing  expenses.  Total expenses for the marketing of investor  certificates
for the quarter ended March 31, 2004 were $204,536 compared to $106,487 in 2003.
The increase is due to:

                                              2004          2003         Change
                                            --------      --------      --------
Debt issue cost amortization                $162,728      $ 93,681      $ 69,047
Management & Consulting                       19,749          -0-         19,749
Printing                                       7,267         2,162         5,105
Other marketing costs                         14,792        10,644         4,148
                                            --------      --------      --------
       Total                                $204,536      $106,487      $ 98,049

Debt issue cost amortization expense increased due to Investor  Certificates and
Mortgage Participations sold since March 31, 2003. This expense will continue to
increase as new  Investor  Certificates  and Mortgage  Participations  are sold.
Consulting expense is up due to the hiring of a full-time  marketing manager who
is  designing  and  implementing  new  marketing  strategies  for  our  Investor
Certificates, new investments and general corporate programs. Printing costs are
up due to the  printing of  prospectuses  and  marketing  brochures  for our new
certificates, which we will begin to sell in the second quarter of 2004.

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 $1,744,336 and $1,340,094 as of
March 31, 2004 and 2003, respectively.

Operating and personnel expenses.  Personnel expenses (salaries,  payroll taxes,
and  benefits)  for the  quarter  ended March 31  increased  $79,121 or 33% from
$241,099  in 2003  to  $320,220  in  2004.  The  increase  is due to  additional
employees hired to handle the Company's growth in operations.

Starting in July 2003, the Company contracted with Cornerstone  Capital Advisors
("CCA") to provide all administrative  personnel services. The Company is paying
CCA for its expenses  (estimated at $1,200,000  over the next 12 months),  which
are  expected  to be similar to the  expenses  incurred  by the  Company  had it
continued its personnel  support under  previous  arrangements.  There is no fee
schedule  but the Company may elect to pay fees for good  performance,  which if
paid,  would be no more than 10% of the reimbursed  expenses for the previous 12
months.  The Company paid  $324,222 to CCA during the first  quarter of 2004, of
which  $310,472  is included in  personnel  expenses  and $13,750 is included in
marketing  expenses.  Prior to July 1, 2003, the employees were paid directly by
the Company.  On July 1, 2003,  CCA hired all of our employees and has billed us
for the time spent on Company operations.

                                                                               5
<PAGE>

For the quarters ended March 31, 2004 and 2003, operating expenses were as
follows:
                                               2004        2003         Change
                                            ---------    ---------    ---------
a) Trust service/paying agent fees          $  26,303    $  36,445    ($ 10,142)
b) Consulting fees                              6,200       63,200      (57,000)
c) Audit, accounting & tax services            19,872       31,606      (11,734)
d) Employee recruiting costs                      -0-       39,653      (39,653)
e) Depreciation & amortization                 16,020        9,302        6,718
f) Office expenses                             15,467       24,163       (8,696)
g) Legal expenses                              25,286       21,934        3,352
h) Other operating expenses                    49,016       61,208      (12,192)
                                            ---------    ---------    ---------
Total operating expenses                    $ 158,164    $ 287,511    ($129,347)

The changes are due to the following:

     a)   Trust  service/paying  agent  fees  decreased  due  to a  decrease  in
          transaction  activity for our  Investor  Certificates.  The  decreased
          activity was due to not having  certificates  available to sell in the
          first quarter of 2004. Since our  registration  statement was approved
          on March 26,  2004,  we expect the number of  transactions  related to
          Investor  Certificates to increase  substantially for the remainder of
          2004.
     b)   Consulting  fees - In 2003, we hired  financial  consultants to set up
          the mortgage  participation  program,  set-up cash flow and  financing
          models which we are using to manage our cash and loan investments, and
          to  explore  possible  new  industries  and  strategies  for our  loan
          business.  We have not used  consultants for any material  projects in
          2004, which has caused the large decrease in consulting fees.
     c)   Audit,  accounting & tax  services - Decreased  due to the hiring of a
          full-time  accountant  in the middle of 2003 which has  decreased  our
          need for outside accounting services.
     d)   Employee recruiting costs - decreased in 2004 because we are no longer
          using outside recruiting firms to hire our employees.
     e)   Depreciation  &  amortization  - increased  due to the  purchase of an
          office building, office furnishings and computers.
     f)   Office  expenses  - In  February,  2003,  we moved into our new office
          building  and incurred a number of one-time  moving and set-up  costs.
          Since we have  not  incurred  similar  costs  this  year,  our  office
          expenses have decreased significantly in 2004.
     g)   Legal  expenses  -  increased  due  to an  increase  in our  size  and
          complexity of operations.
     h)   Other operating expenses - decreased due to economies of scale that we
          have benefited from as our operations have increased.

Income tax  provision  (benefit).  The income tax  provision  (benefit)  for the
quarter ended March 31, 2004 was $22,121, compared to ($113,946) for the quarter
ended March 31, 2003.  The net increase in income taxes is due to an increase in
pre-tax income, partially offset by an increase in tax-exempt bond interest. The
Company's  effective tax provision  (benefit)  rate for the quarters ended March
31, 2004 and 2003 was 16.9% and (44.9%),  respectively.  A reconciliation of the
Company's effective tax provision rate to the federal statutory rate is included
in the attached "Notes to Consolidated Financial Statements" (Note 10).

Dividends. Dividends of $169,087 and $168,640 were declared on December 31, 2003
and 2002,  respectively  and paid  during  the first  quarter  of 2004 and 2003,
respectively.

Liquidity and Capital Resources
Cash flows from  operations.  Net cash provided by the Company's  operations for
the quarter  ended March 31, 2004 was $7,616,  which  compares to $59,846 in net
cash used by operations  for the quarter ended March 31, 2003 for an increase in
net cash  provided by  operations  of  $67,462.  This  difference  was driven by
increases in net income,  depreciation and amortization expense, deferred taxes,
allowance  for loan losses,  and investor  and mortgage  participation  interest
payable,  partially  offset by a decrease in  accounts  and other  payables  and
changes in accrued real estate loan and joint venture interest and deferred loan
fees.

Investor and mortgage  participation  interest payable increased $648,933 in the
first  quarter  of 2004 due to an  increase  in  outstanding  debt  and  because
approximately 25% of the Investor Certificate holders who purchased certificates
in 2003 have  elected to  reinvest  the  interest  due to them each year and not
receive the interest in cash until maturity.

Included  in the 2004 and 2003  changes in accrued  real  estate  loan and joint
venture  interest  and  deferred  loan fee amounts is $397,137  and  $523,508 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
under development or construction. A summary (by loan type) of the amount of net
financed interest for the quarters ended March 31, 2004 and 2003 is as follows:

                                                         2004              2003
                                                       --------         --------
Family Housing Development                             $193,588         $224,671
Church Construction                                      37,514            8,684
Real Estate Joint Venture                               166,035          290,153
                                                       --------         --------
                                                       $397,137         $523,508

                                                                               6
<PAGE>
The amount for 2004  represents  interest  accrued and financed in 2004,  net of
payments  received in 2004 that were financed in previous  years.  2003's amount
represents  interest  accrued and financed in 2003, net of payments  received in
2003 that were financed in previous years.

The 2004  decrease  in family  housing net  financed  interest is due to a major
project in Mableton,  Georgia moving out of the  development  phase and into the
sales phase of the project  offset by five smaller new projects  that are now in
the development phase.

The  decrease in real estate joint  venture net financed  interest is due to the
origination of the  Lewisville,  TX loan in the latter part of 2002. We financed
as part of the loan's principal the first three months' interest in 2003 because
the facility was being renovated.  We have received  monthly  interest  payments
thereafter. The McKinney, TX loan started its development phase and financed its
interest payments during the first quarter of 2004. Since the McKinney,  TX loan
balance is significantly less than the Lewisville, TX loan balance, the financed
interest amount decreased in 2004.  Also, the San Antonio,  TX loan financed one
months'  interest in the first quarter of 2004 while  undergoing  renovations to
its facility.

Cash flows from investing activities.  For the quarter ended March 31, 2004, the
Company used $523,407 in cash from investing  activities  which is a decrease of
$6,820,074  from  $7,343,481  for the quarter ended March 31, 2003. The decrease
was due to the following:

Decrease in real estate loans and joint venture investments made    ($6,270,307)
Increase in real estate loan and joint venture investment
   principal payments received                                          (39,238)
Decrease in bonds redeemed or sold                                       31,250
Decrease in fixed asset and real estate purchases                      (541,779)
                                                                    -----------
                                                                    ($6,820,074)
                                                                    ===========

The decrease in real estate loans and joint venture  investments made in 2004 is
due to fewer sales of investor  certificates  during the quarter ended March 31,
2004 versus the quarter  ended March 31,  2003.  Please refer to the "cash flows
from financing activities" section for additional information on the decrease in
investor certificate sales.

During the  quarter  ended  March 31,  2003,  the  Company  purchased  an office
condominium  for  $532,040  to  house  its  corporate  offices  and  to  provide
additional office space for future growth.

Cash flows from financing activities.  For the quarter ended March 31, 2004, the
Company raised $441,368 from the sale of Mortgage  Participation  Agreements and
the resale of Investor  Certificates that were redeemed early. This represents a
decrease  of  $10,849,307  from new  certificate  sales of  $11,290,675  for the
quarter ended March 31, 2003.  The decrease was due to the sale of all available
registered Investor  Certificates by May, 2003;  therefore,  no new certificates
were  available  to sell  during the first three  months of 2004.  In the second
quarter  of  2003,  the  Company  filed a new  registration  statement  with the
Securities and Exchange  Commission  which was approved on March 26, 2004.  This
will significantly increase our sales of Investor Certificates for the remainder
of 2004.

Investor  Certificates  redeemed  increased  from $556,651 for the quarter ended
March 31, 2003 to $1,424,047 for the quarter ended March 31, 2004. Historically,
over 80% of Investor Certificate maturities are re-invested as new certificates;
however, because the new registration statement with the Securities and Exchange
Commission was not approved until March 26, 2004, all maturities  from the first
quarter of 2004 were paid in cash, which increased 2004's cash redemptions.

We have $8,623,950 in Investor Certificates coming due or redeemable upon demand
in 2004. $6,379,277 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 in 2004.

Among the measures we take to mitigate any demands for cash are:
o    Maintain a minimum cash balance, currently $2,650,000.
o    Have readily marketable loans that can be sold for par or a premium.
o    Ask  investors  about their  intentions at least 30 days before their bonds
     mature.
o    Have a bank willing to extend credit lines if needed.
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.

                                                                               7
<PAGE>
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,
2004,  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

         Not Applicable

Item 2. Changes in Securities

         Not Applicable

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 10, 2004        Cornerstone Ministries Investments, Inc. (Registrant)


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



                                                                               8


<PAGE>
                           ROBERT N. CLEMONS, CPA, PA
                                   PO BOX 1670
                           DELAND, FLORIDA 32721-1670


To The Board of Directors
Cornerstone Ministries Investments, Inc.

We have reviewed the  accompanying  consolidated  balance  sheets of Cornerstone
Ministries  Investments,  Inc. and  Subsidiaries as of March 31, 2004, March 31,
2003 and December 31, 2003 and the related statements of operations,  changes in
shareholder's equity, and cash flows for the three month periods ended March 31,
2004 and 2003 in accordance  with  Statements on Standards  for  Accounting  and
Review   Services  issued  by  the  American   Institute  of  Certified   Public
Accountants.  All  information  included in these  financial  statements  is the
representation of the management of Cornerstone Ministries Investments, Inc.

A review consists  principally of inquiries of Company  personnel and analytical
procedures  applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, 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  financial statements and supplementary  information
in  order  for  them to be in  conformity  with  generally  accepted  accounting
principles.

The financial  statements  for the year ended  December 31, 2003,  including the
balance  sheet as of December  31, 2003 was  audited by us and we  expressed  an
unqualified  opinion on them in our report dated March 18, 2004, but we have not
performed any auditing procedures since that date.


/s/ Robert N. Clemons, CPA, PA
------------------------------
DeLand, Florida
April 29, 2004

<PAGE>
<TABLE>
<CAPTION>
CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 2004, March 31, 2003 and December 31, 2003

                                                                                Unaudited           Unaudited             Audited
                                                                                3/31/2004           3/31/2003           12/31/2003
                                                                               ------------        ------------        ------------
<S>                                                                            <C>                 <C>                 <C>
ASSETS
Cash and cash equivalents                                                      $  2,654,606        $  4,159,125        $  4,389,851
Loans in process                                                                    170,402           1,042,325             118,504
Real estate loans, net                                                           46,939,081          46,173,377          47,877,277
Real estate joint venture investments, net                                       37,150,939          25,482,377          34,846,223
Bond holdings and accrued interest                                                3,985,667           2,629,250           4,001,333
Property and equipment, net                                                         860,200             877,349             873,101
Refundable income taxes                                                              42,617                --                42,617
Deferred tax asset, net                                                                --               387,915                --
Goodwill                                                                            450,997             450,997             450,997
Unamortized debt issue costs                                                      1,744,336           1,340,094           1,772,631
Real estate held for investment                                                     340,000             340,000             340,000
Other assets                                                                         21,617              75,741              15,813
                                                                               ------------        ------------        ------------

TOTAL ASSETS                                                                   $ 94,360,462        $ 82,958,550        $ 94,728,347
                                                                               ============        ============        ============


LIABILITIES
Investor certificates and accrued interest                                     $ 84,149,566        $ 79,156,351        $ 84,562,645
Mortgage participations and accrued interest                                      6,212,142                --             6,132,809
Accounts and other payables                                                         232,473             667,849             267,806
Common dividends payable                                                               --                  --               169,087
Building mortgage                                                                   177,844             186,863             180,194
Capital lease obligation                                                             12,296                --                13,632
Deferred taxes payable                                                              166,257                --               171,443
                                                                               ------------        ------------        ------------

TOTAL LIABILITIES                                                                90,950,578          80,011,063          91,497,616
                                                                               ------------        ------------        ------------

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;
  531,528, 531,135 and 531,528 shares issued and outstanding                          5,315               5,311               5,315
Paid in capital                                                                   3,297,435           3,294,889           3,297,435
Retained earnings (deficit)                                                         109,951            (279,465)              1,229
Treasury stock                                                                       (2,817)            (73,248)            (73,248)
                                                                               ------------        ------------        ------------

TOTAL SHAREHOLDERS' EQUITY                                                        3,409,884           2,947,487           3,230,731
                                                                               ------------        ------------        ------------

TOTAL LIABILITIES AND
 SHAREHOLDERS' EQUITY                                                          $ 94,360,462        $ 82,958,550        $ 94,728,347
                                                                               ============        ============        ============
<FN>
SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REVIEW REPORT                                                                            F-2
</FN>
</TABLE>

<PAGE>
<TABLE>
CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 2004 and 2003
<CAPTION>
                                                                        2004               2003
                                                                    -----------         -----------
<S>                                                                 <C>                 <C>
REVENUES
Real estate loan and joint venture interest and fees                $ 2,697,497         $ 1,858,193
Loan participation and other income                                      98,756              80,289
                                                                    -----------         -----------

TOTAL REVENUES                                                        2,796,253           1,938,482
                                                                    -----------         -----------

EXPENSES
Investor interest expense                                             1,962,490           1,557,317
Loan loss expense                                                        20,000                --
Marketing expenses                                                      204,536             106,487
Salaries, payroll taxes, and benefits                                   320,220             241,099
Operating expenses                                                      158,164             287,511
                                                                    -----------         -----------

TOTAL EXPENSES                                                        2,665,410           2,192,414
                                                                    -----------         -----------

Income (Loss) Before Provision For Income Taxes                         130,843            (253,932)

Income Tax Provision (Benefit)                                           22,121            (113,946)
                                                                    -----------         -----------

NET INCOME (LOSS)                                                   $   108,722         $  (139,986)
                                                                    ===========         ===========

Basic and Diluted Earnings (Loss)
 per Common Share                                                   $      0.21         $     (0.26)
<FN>
SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REVIEW REPORT                                           F-3
</FN>
</TABLE>

<PAGE>

<TABLE>
CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the three months ended March 31, 2004 and 2003
<CAPTION>
                                                                                 RETAINED
                                  COMMON STOCK:        PAID-IN      PREFERRED    EARNINGS         TREASURY STOCK:         TOTAL
                                SHARES     AMOUNT      CAPITAL        STOCK      (DEFICIT)     SHARES       STOCK         EQUITY
                               --------   --------   -----------   ----------   ----------   ----------   ----------   -----------
<S>                            <C>         <C>       <C>            <C>         <C>          <C>         <C>           <C>
BALANCE, DECEMBER 31, 2002     530,943     $5,309    $3,293,641     $    --     $(139,479)               $     --      $3,159,471
Net income (loss)                                                                (139,986)                               (139,986)
Common stock issued                192          2         1,248                                                             1,250
Treasury stock acquired                                                                        (11,269)     (73,248)      (73,248)
                               --------   --------   -----------   ----------   ----------   ----------   ----------   -----------

BALANCE, MARCH 31, 2003        531,135     $5,311    $3,294,889    $     --     $ (279,465)    (11,269)   $ (73,248)   $2,947,487
                               ========   ========   ===========   ==========   ==========   ==========   ==========   ===========

BALANCE, DECEMBER 31, 2003     531,528     $5,315    $3,297,435    $     --       $ 1,229      (11,269)   $ (73,248)   $3,230,731
Net income (loss)                                                                 108,722                                 108,722
Common stock issued                  -          -             -                                                                 -
Treasury stock sold                                                                             10,836       70,431        70,431
                               --------   --------   -----------   ----------   ----------   ----------   ----------   -----------

BALANCE, MARCH 31, 2004        531,528     $5,315    $3,297,435    $     --      $109,951         (433)    $ (2,817)   $3,409,884
                               ========   ========   ===========   ==========   ==========   ==========   ==========   ===========

<FN>
SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REVIEW REPORT                                                                          F-4
</FN>
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2004 and 2003

                                                                                2004                2003
                                                                            ------------       ------------
<S>                                                                         <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                           $    108,722       $   (139,986)
Adjustments to reconcile net income (loss) to
 cash from operations-
Depreciation and amortization                                                    178,748            102,491
Changes in-
Loans in process                                                                 (51,898)          (433,305)
Accrued bond interest, net                                                        15,666             14,312
Accrued real estate loan/joint venture interest and deferred loan fees          (866,232)          (318,873)
Allowance for loan losses                                                         20,000               --
Deferred taxes                                                                    (5,186)          (113,682)
Investor and mortgage participation interest payable                             648,933            444,945
Accounts and other payables                                                      (35,333)           442,729
Other assets                                                                      (5,804)           (58,477)
                                                                            ------------       ------------

NET CASH PROVIDED (USED) BY OPERATIONS                                             7,616            (59,846)
                                                                            ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate loans made                                                        (2,045,317)        (9,186,543)
Real estate loan principal payments received                                   3,117,636          3,078,398
Real estate joint venture investments made                                    (1,592,607)          (721,688)
Bonds redeemed or sold                                                              --               31,250
Property and equipment purchased                                                  (3,119)          (544,898)
                                                                            ------------       ------------

NET CASH USED BY INVESTING ACTIVITIES                                           (523,407)        (7,343,481)
                                                                            ------------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Investor certificates sold                                                       363,118         11,290,675
Investor certificates redeemed                                                (1,424,047)          (556,651)
Mortgage participation agreements sold                                            78,250               --
Debt issue costs paid                                                           (134,433)          (429,070)
Building mortgage principal payments                                              (2,350)            (2,363)
Capital lease principal payments                                                  (1,336)              --
Common stock issued                                                                 --                1,250
Dividends paid                                                                  (169,087)          (168,640)
Treasury stock sold (acquired)                                                    70,431            (73,248)
                                                                            ------------       ------------

NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES                              (1,219,454)        10,061,953
                                                                            ------------       ------------

Net change in cash and cash equivalents                                       (1,735,245)         2,658,626
Cash and cash equivalents at beginning of period                               4,389,851          1,500,499
                                                                            ------------       ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $  2,654,606       $  4,159,125
                                                                            ============       ============

Supplemental Information-
  Interest paid during the period                                           $  1,311,493       $  1,122,675
  Income taxes paid during the period                                       $     62,500       $       --
Non-cash transactions-
  Investor certificates matured and re-invested                             $       --         $    995,206
  Loan interest financed and included in loan principal                     $    397,137       $    523,508
<FN>
SEE ACCOMPANYING NOTES AND ACCOUNTANT'S REVIEW REPORT                                                   F-5
</FN>
</TABLE>

<PAGE>

             CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The  accompanying  Consolidated  Financial  Statements  include the  accounts of
Cornerstone  Ministries  Investments,  Inc.,  Wellstone  Communities,  Inc.  and
Wellstone  Financial  Group,  LLC  (collectively  "The  Company").  The  Company
originates and purchases mortgage loans made to faith-based  organizations.  The
Company offers specialized  programs for churches and for non-profit sponsors of
senior  housing and  affordable  housing  programs.  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 Southeast and Southwestern United States.

Cash and cash  equivalents  include bank accounts and investments  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 is  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 Consolidated Statements of Income.

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 six to 18 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  stage of the borrower's operations. This takes two
     to six months,  depending on the size of the project.  When the facility is
     operational,  the financed interest from the construction/renovation  stage
     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
the residual profits of these properties 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 payment from the borrower.

                                                                             F-6
<PAGE>
Loansin 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".

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.

                                                                             F-7
<PAGE>
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".

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.

Basic earnings  (loss) per common share are calculated by dividing net income or
net loss 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.

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 the reported revenues
and expenses. Actual results could vary from the estimates that are used.

Certain report classifications used in prior year financial statements have been
reclassified to conform to current year presentation.

New Accounting Pronouncements:
In January 2003, the FASB issued  Interpretation No. 46 (FIN 46),  Consolidation
of Variable Interest  Entities,  an  interpretation of ARB (Accounting  Research
Bulletin) No. 51. This interpretation  requires the consolidation of entities in
which an enterprise absorbs a majority of the entities 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.  In October 2003, the
FASB delayed the effective date of FIN 46 for variable interest entities (VIE's)
or potential VIE's created before February 2003. In December,  the FASB issued a
revised  version of FIN 46, which delayed the  effective  date of FIN 46 for all
VIE's until March 2004. FIN 46 and its various  interpretations are not expected
to have a material  impact on the  Company's  financial  position  or results of
operations.

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation  -  Transition  and  Disclosure.  This  standard,  which amends the
transition and disclosure  issues associated with SFAS No. 123, became effective
for the years ending after December 31, 2002. The  requirements of this standard
do not impact the Company's financial position or results of operations.

During  the  last  three  years,  the FASB has  issued  a number  of  accounting
pronouncements   with  various   effective   dates:   SFAS  No.  141,   Business
Combinations;  SFAS No. 142, Goodwill and Other Intangible Assets; SFAS No. 143,
Accounting for Asset Retirement  Obligations;  SFAS No. 144,  Accounting for the
Impairment or Disposal of Long-Lived  Assets;  SFAS No. 145,  Rescission of SFAS
No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections; SFAS No.
146, Accounting for Costs Associated with Exit or Disposal Activities;  SFAS No.
147, Acquisition of Certain Financial Institutions - an Amendment of SFAS No. 72
and 144 and FASB  Interpretation  No. 9; SFAS No. 149, Amendment of SFAS No. 133
on Derivative  Instruments and Hedging Activities;  SFAS No. 150, Accounting for
Certain  Financial  Instruments  with  Characteristics  of both  Liabilities and
Equity;  and  Interpretation  No.  45,  Guarantor's  Accounting  and  Disclosure
Requirements for Guarantees,  Including  Indirect  Guarantees of Indebtedness of
Others.  These  pronouncements  do not have a material  effect of the  Company's
financial statements.

                                                                             F-8
<PAGE>
NOTE 2 - PROPERTY AND EQUIPMENT
At March 31, property and equipment is composed of:

                                       2004            2003
                                    ---------       ---------
Office Condominiums                 $ 792,659       $ 792,659
Office Computers, Furnishings,
   Software & Equipment               123,596          88,570
Vehicles                               37,730          37,730
Capital lease - phone system           17,710             -0-
Less: Accumulated Depreciation       (111,495)        (41,610)
                                    ---------       ---------
Property and equipment, net         $ 860,200       $ 877,349

Depreciation expense                $  16,020       $   9,302

NOTE 3 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
Leases:

During the second quarter of 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.  Amortization  expense  was $1,476 and  interest
expense was $546 for the quarter  ended March 31, 2004.  Future  yearly  minimum
lease payments as of March 31, 2004:

Year                            Amount
----                            ------
2004                          $  5,648
2005                             7,531
2006                             1,256
                              --------
 Total                          14,435
Less interest portion           (2,139)
                              --------
Capital lease obligation      $ 12,296

Related Party Transactions:
Effective July 1, 2003, the Company entered into a Personnel  Services Agreement
with  Cornerstone  Capital  Advisors,  Inc.  ("CCA") to provide loan management,
administration,  and accounting;  investor  relations;  marketing;  computer and
management   information  systems   administration;   record  maintenance;   and
bookkeeping and accounting  after June 30, 2003. The Company is obligated to pay
directly  or  reimburse  actual  expenses to be billed  bi-weekly.  CCA can earn
incentive compensation of up to 10% of the actual expenses billed to the Company
for the prior 12 months. The base for good performance includes 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 will be determined
by the Board of Director's  judgment on the extent to which CCA's  services have
contributed to the results. 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
Board of  Directors.  Two of the  Company's  directors  serve on CCA's  Board of
Directors.  For the quarter  ended March 31, 2004,  the Company paid $324,222 to
CCA for personnel services.

During 2003,  the Company  entered  into a service  agreement  with  Cornerstone
Direct  Public  Offerings,  LLC  ("CDPO")  to provide  legal and  administrative
services for the Company's filing of two SB-2  Registration  Statements with the
Securities  and Exchange  Commission  (see Note 12 for further  details on these
filings).  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.  All
amounts  due under  these  agreements  were paid in 2003.  In 2004,  Cornerstone
Ministries  Investments,   Inc.  amended  its  service  agreement  and  paid  an
additional $25,000 to CDPO for cost over-runs related to the length of time that
it has taken for the registration statement to become effective.

                                                                             F-9
<PAGE>

NOTE 4 - REAL ESTATE LOANS
At March 31, the Company had Real  Estate  Loans on church and other  non-profit
properties as follows:

                                          2004               2003
                                      ------------       ------------
Family housing development loans      $ 26,423,822       $ 20,459,136
Church mortgage loans                   11,631,542         15,225,367
Senior housing mortgage loans            9,135,836         10,215,455
                                      ------------       ------------
   Total principal                      47,191,200         45,899,958
   Accrued Interest                        385,143            360,062
   Unearned Loan Fees                     (242,262)           (86,643)
   Allowance for loan losses              (395,000)               -0-
                                      ------------       ------------
   Total Real Estate Loans            $ 46,939,081       $ 46,173,377

These loans mature as follow: 2004 - $28,573,125; 2005 - $14,055,200; 2006 - $0;
2007 - $0;  2008 - $106,497;  beyond 2008 -  $4,456,378.  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 quarters ended March 31, the net interest payments financed
were:

                                                   2004            2003
                                                ---------       ---------
Current year interest financed                  $ 234,197       $ 233,355
Previous years' financed interest received         (3,095)            -0-
                                                ---------       ---------
Net financed interest                           $ 231,102       $ 233,355

On March 31, 2004, the Company had significant credit risk concentrations in the
following states:

Georgia       $23,516,903
Florida       $ 9,380,265
Texas         $ 6,112,986

Impaired loan disclosures for the quarter ended March 31 are as follows:

                                                              2004         2003
                                                             -------    --------
Number of impaired loans                                       -0-             1
Carrying amount at March 31                                   $-0-      $134,458
Weighted average investment - current quarter                 $-0-      $133,044
Interest income from impaired loans - current quarter         $-0-      $  2,832

No  allowance  for specific  impaired  loan loss has been  recorded  because the
carrying  amount of the  impaired  loan as of March  31,  2003 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:

Location                                            2004               2003
--------                                        ------------       ------------
McKinney, TX                                    $  3,192,665       $  2,807,482
Largo, FL                                                -0-          5,166,623
St. Petersburg, FL                                 3,832,820          4,295,910
Lewisville, TX                                    10,473,304          9,122,111
Garland, TX                                        6,075,255          4,303,800
Chattanooga, TN                                    3,995,123                -0-
San Antonio, TX                                    9,922,188                -0-
                                                ------------       ------------
Total principal outstanding                       37,491,355         25,695,926
Accrued interest                                     315,491            213,118
     Unearned loan fees                             (655,907)          (426,667)

Allowance for loan losses                                -0-                -0-
                                                ------------       ------------
Real estate joint venture investments, net      $ 37,150,939       $ 25,482,377

                                                                            F-10
<PAGE>
All of the loans mature in 2004.  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.

The Company  participates in the residual  profits of these  properties  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.

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 quarters ended March 31, the net interest payments
financed were as follows:

                                                           2004           2003
                                                        --------        --------
Current year interest financed                          $166,035        $290,153
Previous years' financed interest received                   -0-             -0-
                                                        --------        --------
Net financed interest                                   $166,035        $290,153

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 18 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, 2004 and 2003.

Summarized  un-audited  financial  information  for individual real estate joint
venture investments which are greater than 10% of the Company's total assets:
<TABLE>
<CAPTION>
Lewisville, TX senior housing facility-
Balance Sheet (as of December 31, 2003):          Income Statement (for the year ended December 31, 2003):
<S>                              <C>                          <C>                     <C>
  Current assets                 $     39,200                 Total revenues          $2,905,894
  Fixed and other assets         $  9,479,433                 Net loss                 ($757,795)
  Current liabilities            $    204,400
  Non-current liabilities        $10,286,004
</TABLE>

NOTE 6 - ALLOWANCE FOR LOAN LOSSES
Prior to the fourth  quarter of 2003, the Company had no allowance for loan loss
activity.  For the  quarter  ended March 31,  2004,  a summary of changes in the
allowance for loan losses by loan type was:

                                                                            F-11
<PAGE>

<TABLE>
<CAPTION>
                                                                               Real Estate
                                                Family           Senior       Joint Venture
                                 Church         Housing         Housing        Investments          Total
                                ----------    ------------    -----------     --------------     -------------
<S>                             <C>              <C>             <C>                <C>             <C>
Balance - beginning of year     $  -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 - end of quarter        $  -0-           $395,000        $   -0-            $    -0-        $395,000
</TABLE>

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

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

In the fourth quarter of 2003, as part of the Company's regular loan grading and
risk  assessment  process,  it was  determined  that  the  family  housing  loan
portfolio's credit risk had increased over historical levels.  This increase was
caused by slower than  expected new home sales.  The slow down in new home sales
is due to slower than  expected  growth in the U.S.  economy.  This  increase in
credit  risk  resulted in a $375,000  charge to loan loss  expense in the fourth
quarter of 2003. In the first quarter of 2004, the Company charged an additional
$20,000 to loan loss  expense  due to an  increase  in the family  housing  loan
portfolio's  outstanding  loan principal.  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  uses SFAS 142  "Goodwill  and Other  Intangible  Assets".  Goodwill
associated with the Company's acquisition of Presbyterian  Investor's Fund, Inc.
during the fourth  quarter of 2000, 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  December  31,  2003 and 2002,  goodwill's  fair value  exceeded  its
carrying value;  therefore,  no provision for impairment loss has been recorded.
No goodwill was  acquired or sold in either of the  quarters  presented in these
Consolidated Financial Statements.

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  debt  is  outstanding,
generally five years.  At March 31, 2004,  unamortized  debt issue costs consist
of:

Costs incurred to register debt securities           $   594,371
Commissions paid on the sale of debt securities        2,364,982
Less: Accumulated Amortization                        (1,215,017)
                                                     -----------
                                                      $1,744,336

Amortization  expense was $162,728 and $93,681 for the quarters  ended March 31,
2004 and 2003,  respectively,  and is  included  in  marketing  expenses  in the
accompanying Consolidated Statements of Income.

Estimated amortization expense for the next five years:

4/2004 - 3/2005   $621,930          4/2007 - 3/2008   $239,624
4/2005 - 3/2006   $442,100          4/2008 - 3/2009   $ 32,708
4/2006 - 3/2007   $407,974

                                                                            F-12
<PAGE>

NOTE 9 - BOND HOLDINGS
Bond holdings at March 31 consist of-                  2004            2003
                                                   -----------      -----------
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                        2,500,000              -0-

Undivided interest sold to investors                (1,225,000)             -0-
                                                   -----------      -----------
Net investment in Largo, FL bonds                    1,275,000              -0-
                                                   -----------      -----------
Local Church Bonds, maturing 2002 & 2003                   -0-           27,500
                                                   -----------      -----------
Cost and fair value of bond holdings                 3,787,500        2,540,000

Accrued interest receivable                            198,197           89,250
                                                   -----------      -----------
                                                   $ 3,985,667      $ 2,629,250


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 in 2004 or 2003.

Proceeds  from the maturity of bonds were $0 and $31,250 for the quarters  ended
March  31,  2004 and  2003,  respectively.  No  realized  gains or  losses  were
recognized  in either  quarter.  The Company  uses the  specific  identification
method to determine realized gains and losses.

Tax-free  interest  income was $83,056 and $55,982 for the quarters  ended March
31, 2004 and 2003, respectively.

NOTE 10 - INCOME TAXES

The net deferred tax (liability) asset in the accompanying Consolidated Balance
Sheets includes the following components as of March 31:

                                                       2004              2003
                                                    ---------         ---------
Deferred tax assets                                 $ 203,196         $ 400,162
Deferred tax liabilities                             (369,453)          (12,247)
                                                    ---------         ---------
Net deferred tax (liability) asset                  ($166,257)        $ 387,915

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, 2004 and
2003.

During the third quarter of 2003,  the Company's  request with the Department of
the Treasury to change its tax  accounting  method for loan fees to  approximate
its book treatment  under SFAS Nos. 65 and 91 was approved.  As a result of this
change,  the Company was able to request  refunds from its 2000 and 2001 federal
and state tax returns totaling  $286,953,  of which $244,336 was received in the
fourth  quarter of 2003.  The  remaining  requested  refund amount of $42,617 is
classified as refundable income taxes in the accompanying  Consolidated  Balance
Sheets.  In  addition,  the amended tax returns  created a $481,154  federal net
operating loss carryforward and an $82,025 state net operating loss carryforward
that the Company used to reduce its 2003 income tax liability.

Components of the income tax provision (benefit) for the quarters ended March
31:

                                      2004             2003
                                    ---------       ---------
            Current:   Federal      $  21,835       ($  8,993)
                        State           5,472          (1,834)
            Deferred:  Federal         (4,699)        (87,651)
                        State            (487)        (15,468)
                                    ---------       ---------
                                    $  22,121       ($113,946)

                                                                            F-13
<PAGE>
Reconciliation of the Company's income tax provision (benefit) rate to statutory
federal rates for the quarters ended March 31:

                                                2004          2003
                                               ------        ------
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         (21.6%)        (7.5%)
Other, net                                         .8%           .3%
                                               ------        ------
Effective tax provision (benefit) rate           16.9%        (44.9%)

NOTE 11 - CASH CONCENTRATION
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, 2004, the
Company had cash in excess of insured limits totaling $2,287,565.

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 5%.  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.  Currently,  the rate starts at 7% and increases .5%
for each year the  certificate is outstanding  with a 9% maximum rate. Five year
certificates  have a five  year  maturity  and a $500  minimum  investment.  The
interest rate is 9%.

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                2004                         2003
-----------------             -----------                 ------------
On demand & 1 year            $ 8,623,950                 $  6,757,563
2                               4,862,922                      812,814
3                              10,803,667                    4,931,264
4                              35,705,732                   11,274,694
5+                             18,172,001                   52,166,816
                              -----------                 ------------
Total Principal               $78,168,272                 $ 75,943,151

At March  31,  2004 and  2003,  accrued  interest  payable  was  $5,981,294  and
$3,213,200,  respectively.  Interest rates for certificates outstanding at March
31, 2004 are:

  5.0%    $ 2,244,673
  7.0%        887,579
  7.5%      4,409,490
  8.0%      1,410,162
  9.0%     69,216,368

On February 21, 2003,  Wellstone  Communities,  Inc., a wholly owned subsidiary,
filed a Form SB-2  Registration  Statement under the Securities Act of 1933 with
the Securities and Exchange Commission to sell up to $50,000,000 of its Series A
Preferred Stock. In December,  2003, the Company's Board of Directors decided to
temporarily  suspend the offering and not go forward with the registration.  The
Company  spent  $113,473 on  registration  costs in 2003,  which were charged to
earnings in the fourth quarter of 2003.

On April 29, 2003  Cornerstone  Ministries  Investments,  Inc. 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 Certificates  of
Indebtedness  along with  $11,375,000  of its  Common  Stock.  The  Registration

                                                                            F-14
<PAGE>

Statement was approved by the  Securities  and Exchange  Commission on March 26,
2004.  The Company will begin  issuing new Investor  Certificates  and shares of
Common Stock in the second quarter of 2004.

NOTE 13 - MORTGAGE PARTICIPATION AGREEMENTS
In the second quarter of 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  investor  after the  Company  receives  interest  payments on
related the  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
$153,755  for the quarter  ended March 31,  2004.  MP  Agreement  principal  and
interest  outstanding  and related  collateral  as of March 31, 2004:
<TABLE>
<CAPTION>

                                                           MP Amount     Total Collateral
                                                          Outstanding     Carrying Amount
                                                          -----------     ---------------
<S>                                                       <C>              <C>
Lewisville, TX senior housing loan; matures 10/1/04
   with a one year extension at the Company's option      $ 3,766,000      $10,334,786
Garland, TX senior housing loan; matures 12/1/04
   with a one year extension at the Company's option        2,396,500      $ 6,010,411
                                                          -----------
Total principal outstanding                                 6,162,500
Accrued interest payable                                       49,642
                                                          -----------
                                                          $ 6,212,142
</TABLE>

The loans which  collateralize  the MP agreements  are classified as real estate
joint venture investments in the accompanying  Consolidated  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
At March 31, 2004 the Company was guarantor of  $31,689,000  of potential  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 a Company  guarantee 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.  At March 31, 2004,  actual
amounts drawn and therefore guaranteed to a commercial bank totaled $29,314,485.
The guaranteed  loans mature between May 31 and November 18, 2004.  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. All of the loan guarantees originated prior
to December 31, 2002. As of March 31, 2004, all loans which had a guarantee were
current and no loan guarantee  obligation  has been  recognized in the financial
statements.

NOTE 15 - PROFIT SHARING PLAN
During 2001,  the Company  established a profit  sharing plan for its employees.
The plan allows for entry into the plan after one year of service, and immediate
vesting  of  contributed  amounts.  All  contributions  are  to be  made  at the
discretion  of the Company  after  approval by the Board of  Directors.  For the
quarters  ended  March  31,  2004 and  2003,  the  Company  has not  elected  to
contribute to the plan.

NOTE 16 - BUILDING MORTGAGE
In  connection  with the  acquisition  of office space,  the Company  obtained a
mortgage  and pledged  the real  estate as  collateral.  The  mortgage  requires
monthly  principal and interest  payments of $2,068 with an annual interest rate
of 8.5%.  The loan matures on March 1, 2006, at which time a balloon  payment of
$158,637 will be required.  Estimated annual principle payments:  2004 - $7,473;
2005 - $10,733; 2006 - $159,638.

                                                                            F-15
<PAGE>

NOTE 17 - 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.
Since WFG is included in these  consolidated  financial  statements,  the shares
have been  eliminated  in  consolidation.  If the shares were  converted  at the
balance sheet date herein,  an additional 76,923 shares of Common Stock could be
issued; however, those shares would be eliminated in consolidation.

In the fourth quarter of 2003, the Company's Board of Directors  approved a plan
to dissolve WFG and redeem all of the outstanding Series A Convertible Preferred
Stock from WFG in exchange for the Company's ownership interest in WFG. The fair
value of the  Preferred  Stock and the Company's  ownership  interest in WFG are
both estimated at $500,000; therefore, no cash will be exchanged. After the plan
is  consummated,  WFG will no longer be included in the  Company's  Consolidated
Financial  Statements.  The  transaction  will not have a material affect on the
Company's financial position as WFG had no assets or liabilities as of March 31,
2004 and no revenue during the quarters ended March 31, 2004 or 2003.

NOTE 18 - EARNINGS PER SHARE
Basic  earnings  (loss)  per share  for the  quarters  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
2003              Net Loss                                       ($139,968)
                  Average Common Shares Outstanding                531,040
                  Loss per Common Share                             ($0.26)

Diluted  earnings  per share are the same as basic  earnings  per share  because
there are no shares of Series A Convertible  Preferred Stock  outstanding  after
elimination of the shares owned by Wellstone  Financial Group, LLC (a 100% owned
subsidiary) in these consolidated financial statements.  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 quarter ended
March 31, 2004 from the following customers:
<TABLE>
<CAPTION>
                                  Amount        %       Description of Revenue Received
                               ------------   -----     -------------------------------
<S>                              <C>          <C>       <C>
Senior Housing Services, Inc.    $1,224,742   43.3%     Interest and fees from real estate joint venture investments

Wellstone Housing Corp.             511,744   18.1%     Interest and fees from family housing  development loans
                               ------------   -----
                                 $1,736,486   61.4%
</TABLE>

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.



                                                                            F-16
<PAGE>

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  mortgage  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.

The estimated  fair values of the Company's  financial  instruments at March 31,
2004 are:

                                              Carrying Amount         Fair Value
                                              ---------------         ----------
Financial assets:
  Cash and cash equivalents                     $ 2,654,606          $ 2,654,606
  Bond holdings                                 $ 3,787,500          $ 3,787,500
Financial liabilities:
  Investor certificates                         $78,168,272          $78,168,272
  Mortgage participations                       $ 6,162,500          $ 6,162,500
  Building mortgage                             $   177,844          $   177,844
  Capital lease obligation                      $    12,296          $    12,296



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