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 September 30, 2005

                                       Or

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

For the transition period from _________ to ____________

                          Commission File No. 333-93475


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


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


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

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

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

Check  whether  the issuer  (1) filed all  reports  required  to be filed by the
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for past 90 days.

                  Yes X                     No__

As of September 30, 2005,  there were issued and  outstanding  861,940 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>

                                                                               Page

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

Index                                                                           2

PART I. FINANCIAL INFORMATION
-----------------------------

         Item 1. Financial Statements

                  Accountant's Review Report                                    F-1

                  Balance Sheets as of September 30, 2005 and 2004              F-2

                  Statements of Operations for the three and nine months
                  ended September 30, 2005 and 2004                             F-3

                  Statements of Changes in Shareholders' Equity
                  for the nine months ended September 30, 2005 and 2004         F-4

                  Statements of Cash Flows for the nine months
                  ended September 30, 2005 and 2004                             F-5

                  Notes to Financial Statements                                 F-6

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

         Item 3. Controls and Procedures                                        8

PART II. OTHER INFORMATION
--------------------------

         Item 1. Legal Proceedings                                              8

         Item 2. Changes in Securities and Use of Proceeds                      9

         Item 3. Defaults on Senior Securities                                  9

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

         Item 5. Other Information                                              10

         Item 6. Exhibits and Reports on Form 8-K                               10

Signatures                                                                      10

Certifications - Exhibits 31.1 and 31.2                                         11
</TABLE>


                                                                               2
<PAGE>

To The Board of Directors
Cornerstone Ministries Investments, Inc.

We have  reviewed  the  accompanying  balance  sheet of  Cornerstone  Ministries
Investments,  Inc. as of  September  30,  2005,  and the related  statements  of
operations,  changes in shareholder's equity, and cash flows for the three-month
and  nine-moth  periods  ending  September  30, 2005.  These  interim  financial
statements are the responsibility of the Company's management.

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

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

The balance sheet of Cornerstone  Ministries  Investments,  Inc. as of September
30, 2004 and the related  statements  of  operations,  changes in  shareholder's
equity,  and  cash  flows  for the  three-month  and  nine-month  periods  ended
September  30, 2004 were  reviewed by another  accountant,  whose  report  dated
October 27, 2004, stated that they were not aware of any material  modifications
that should be made to those  statements  in order for them to be in  conformity
with generally accepted accounting principles.


/s/ Berman Hopkins and Moss, LLP

Winter Park, Florida
November 10, 2005

                                                                             F-1
<PAGE>
CORNERSTONE MINISTRIES INVESTMENTS, INC.
BALANCE SHEETS
As of September 30, 2005 and 2004
<TABLE>
<CAPTION>


                                                                    9/30/2005         9/30/2004
                                                                    ---------         ---------
<S>                                                              <C>                <C>
ASSETS
Cash and cash equivalents                                        $   1,303,288      $   9,257,555
Loans in process                                                       663,344            194,755
Real estate loans, net                                              76,811,109         50,443,720
Real estate joint venture investments, net                          61,591,989         59,470,960
Bond holdings and accrued interest                                   5,187,112          3,985,667
Property and equipment, net                                            775,853            828,241
Refundable income taxes                                                  8,228              5,673
Deferred tax asset                                                      56,585               --
Goodwill                                                               450,997            450,997
Unamortized debt issue costs                                         2,754,780          2,621,638
Real estate held for investment                                        340,000            340,000
Other assets                                                            98,607             57,957
                                                                 -------------      -------------
TOTAL ASSETS                                                     $ 150,041,892      $ 127,657,163
                                                                 =============      =============

LIABILITIES
Investor certificates and accrued interest                       $ 138,996,526      $ 115,051,868
Mortgage participations and accrued interest                         4,952,073          6,212,142
Accounts and other payables                                            137,049            115,894
Loan guarantee obligation                                               71,000            104,000
Building mortgages                                                     583,477            608,540
Capital lease obligation                                                 3,013              9,453
Deferred taxes payable                                                    --              150,729
                                                                 -------------      -------------
TOTAL LIABILITIES                                                  144,743,138        122,252,626
                                                                 -------------      -------------

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;
  861,940 and 853,123 shares issued and outstanding                      8,619              8,531
Paid in capital                                                      5,386,315          5,337,749
Retained earnings (deficit)                                            (96,180)            58,257
                                                                 -------------      -------------
TOTAL SHAREHOLDERS' EQUITY                                           5,298,754          5,404,537
                                                                 -------------      -------------
TOTAL LIABILITIES AND
 SHAREHOLDERS' EQUITY                                            $ 150,041,892      $ 127,657,163
                                                                 =============      =============
</TABLE>

SEE ACCOMPANYING NOTES AND ACCOUNTANTS' REVIEW REPORT

                                                                             F-2


<PAGE>

CORNERSTONE MINISTRIES INVESTMENTS, INC.
STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2005 and 2004

<TABLE>
<CAPTION>
                                                          3 Mo. Ended      3 Mo. Ended       9 Mo. Ended      9 Mo. Ended
                                                           9/30/2005         9/30/2004         9/30/2005        9/30/2004
                                                           ---------         ---------         ---------        ---------
<S>                                                      <C>               <C>               <C>               <C>
REVENUES
Real estate loan and joint venture interest and fees     $  3,466,797      $  3,165,898      $ 10,058,106      $  8,764,245
Loan participation and other income                           162,465           135,706           832,611           346,674
                                                         ------------      ------------      ------------      ------------
TOTAL REVENUES                                              3,629,262         3,301,604        10,890,717         9,110,919
                                                         ------------      ------------      ------------      ------------

EXPENSES
Investor interest expense                                   2,974,148         2,502,518         8,532,551         6,627,673
Loan loss expense                                              25,000            20,000            75,000            50,000
Marketing expenses                                            268,581           274,995           808,542           735,709
Management and advisory fees                                  332,707           269,575         1,034,872           898,671
Operating expenses                                            157,485           198,284           540,684           588,332
                                                         ------------      ------------      ------------      ------------
TOTAL EXPENSES                                              3,757,921         3,265,372        10,991,649         8,900,385
                                                         ------------      ------------      ------------      ------------

Income (loss) before income taxes                            (128,659)           36,232          (100,932)          210,534

Income tax benefit                                            (80,381)          (13,123)         (124,652)           (1,560)
                                                         ------------      ------------      ------------      ------------
NET INCOME (LOSS)                                        $    (48,278)     $     49,355      $     23,720      $    212,094
                                                         ============      ============      ============      ============

Basic and Diluted Earnings (Loss)
 per Common Share                                        $      (0.06)     $       0.06      $       0.03      $       0.31
</TABLE>


SEE ACCOMPANYING NOTES AND ACCOUNTANTS' REVIEW REPORT

                                                                             F-3


<PAGE>

CORNERSTONE MINISTRIES INVESTMENTS, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the nine months ended September 30, 2005 and 2004
<TABLE>
<CAPTION>
                                                                                        RETAINED
                                          COMMON STOCK:      PAID-IN      PREFERRED     EARNINGS    TREASURY      TOTAL
                                        SHARES     AMOUNT    CAPITAL       STOCK      (DEFICIT)      STOCK       EQUITY

<S>                                      <C>       <C>            <C>           <C>            <C>           <C>         <C>
BALANCE, DECEMBER 31, 2003               531,532   $     5,315    $ 3,297,435   $      --      $     1,229   $ (73,248)  $ 3,230,731
Net income                               212,094       212,094
Dividend declared                       (155,066)     (155,066)
Common stock issued                      321,591         3,216      2,087,125     2,090,341
Common stock issuance costs              (46,811)      (46,811)
Treasury stock sold (11,269 shares)       73,248        73,248
                                     -----------   -----------    -----------   -----------    -----------   ---------   -----------

BALANCE, SEPTEMBER 30, 2004              853,123   $     8,531    $ 5,337,749   $      --      $    58,257   $    --     $ 5,404,537
                                     ===========   ===========    ===========   ===========    ===========   =========   ===========

BALANCE, DECEMBER 31, 2004               819,351   $     8,194    $ 5,118,568   $      --      $    91,243   $    --     $ 5,218,005
Net income                                23,720        23,720
Dividend declared                       (211,143)     (211,143)
Common stock issued                       60,812           608        394,670       395,278
Common stock issuance costs               (8,657)       (8,657)
Common stock redeemed                    (18,223)         (183)      (118,266)     (118,449)
                                     -----------   -----------    -----------   -----------    -----------   ---------   -----------
BALANCE, SEPTEMBER 30, 2005              861,940   $     8,619    $ 5,386,315   $      --      $   (96,180)  $    --     $ 5,298,754
                                     ===========   ===========    ===========   ===========    ===========   =========   ===========
</TABLE>

SEE ACCOMPANYING NOTES AND ACCOUNTANTS' REVIEW REPORT

                                                                             F-4

<PAGE>

CORNERSTONE MINISTRIES INVESTMENTS, INC.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2005 and 2004
<TABLE>
<CAPTION>

                                                                 2005              2004
                                                                 ----              ----
<S>                                                         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                  $     23,720      $    212,094
Adjustments to reconcile net income to cash
 from operations-
Depreciation and amortization                                    754,166           640,656
Loss on sale of fixed assets                                        --               2,534
Changes in-
Loans in process                                                (632,471)          (76,251)
Accrued bond interest, net                                        15,704            15,666
Accrued real estate loan/joint venture interest and
 deferred loan fees                                           (2,492,041)       (3,205,309)
Allowance for loan losses                                         75,000            50,000
Deferred taxes                                                  (126,942)          (20,714)
Refundable income taxes                                           (8,228)           36,944
Investor and mortgage participation interest payable           3,712,515         2,726,187
Loan guarantee obligations, net of related receivables           (33,000)             --
Accounts and other payables                                     (107,572)          (47,912)
Other assets                                                      69,513           (42,144)
                                                            ------------      ------------
NET CASH PROVIDED BY OPERATIONS                                1,250,364           291,751
                                                            ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate loans made                                       (31,435,690)       (9,100,510)
Real estate loan principal payments received                   9,829,876         7,504,692
Real estate joint venture investments made                    (3,693,644)      (22,443,378)
Real estate joint venture payments received                         --               3,325
Bonds purchased                                               (1,219,290)             --
Bonds redeemed or sold                                            30,600              --
Proceeds from sale of fixed assets                                  --               1,400
Property and equipment purchased                                 (10,917)           (9,915)
                                                            ------------      ------------
NET CASH USED BY INVESTING ACTIVITIES                        (26,499,065)      (24,044,386)
                                                            ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Investor certificates sold                                    16,416,473        31,100,364
Investor certificates redeemed                                (1,753,744)       (3,336,245)
Mortgage participation agreements sold                           150,000            78,250
Mortgage participation agreements redeemed                    (2,400,000)             --
Debt issue costs paid                                           (790,321)       (1,438,822)
Building mortgage proceeds                                          --             440,000
Building mortgage principal payments                             (18,892)          (11,654)
Capital lease principal payments                                  (4,928)           (4,179)
Common stock issued, net of issuance costs                       386,621         2,043,530
Common stock redeemed                                           (118,449)             --
Dividends paid                                                  (477,430)         (324,153)
Treasury stock sold                                                 --              73,248
                                                            ------------      ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                     11,389,330        28,620,339
                                                            ------------      ------------

Net change in cash and cash equivalents                      (13,859,371)        4,867,704
Cash and cash equivalents at beginning of period              15,162,659         4,389,851
                                                            ------------      ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $  1,303,288      $  9,257,555
                                                            ============      ============

Supplemental Information-
  Interest paid during the period                           $  4,854,485      $  3,916,963
  Income taxes paid during the period                       $    105,000      $     62,500
Non-cash transactions-
  Investor certificates matured and re-invested             $    151,412      $  3,309,314
  Loan interest financed and included in loan principal     $    966,935      $  1,186,383
</TABLE>


SEE ACCOMPANYING NOTES AND ACCOUNTANTS' REVIEW REPORT

                                                                             F-5

<PAGE>


                    CORNERSTONE MINISTRIES INVESTMENTS, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

The Company receives monthly interest payments on its real estate loans and real
estate loans classified as real estate joint venture investments except when the
terms of a loan  allow a borrower  to finance  interest  payments.  Interest  is
financed in the following circumstances:

     o    Family housing loans may finance  interest while the project is in the
          development and pre-sales phase,  which normally lasts 12 to 36 months
          depending  on the  size  of the  project.  The  Company  receives  the
          financed interest as the borrower sells homes in the development.

     o    Church  construction  loans may  finance  interest  while  the  church
          building  is under  construction.  This  takes  three to nine  months,
          depending  on  the  size  of  the  building.   When  the  building  is
          operational,  the financed  interest  from the  construction  phase is
          included  in the  loan's  principal  amount  and  the  Company  begins
          receiving monthly interest payments from the borrower.

     o    Senior  housing loans may finance  interest  during the  construction,
          renovation  and lease-up  stages of the  borrower's  operations.  This
          takes two to six months if there is an existing  building and 12 to 24
          months if the  financed  property  is raw land and a new  building  is
          being  constructed.  When the  facility is  operational,  the financed
          interest is included  in the loan's  principal  amount and the Company
          begins receiving monthly interest payments from the borrower.

Real estate 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
residual profits through loan participation agreements, which enable the Company

                                                                             F-6

<PAGE>

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

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

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

The  allowance  for loan  losses for real  estate  loans and real  estate  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. Discounts or premiums related to the purchase of
bonds are amortized as a yield adjustment over the lives of the related bonds.

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

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

                                                                             F-7
<PAGE>

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

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

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

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

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

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

New Accounting Pronouncements:

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

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

                                                                             F-8
<PAGE>

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

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

NOTE 2 - PROPERTY AND EQUIPMENT
At September 30, property and equipment is composed of:

                                          2005               2004
                                          ----               ----

Office Condominiums                     $797,554          $795,034
Office Computers, Furnishings,
   Software & Equipment                  127,385           122,037
Vehicles                                  30,351            30,351
Capital lease - phone system              17,710            17,710
Less: Accumulated Depreciation          (197,147)         (136,891)
                                        --------          --------
Property and equipment, net             $775,853          $828,241

Depreciation exp. - three months        $ 16,130          $ 18,558
Depreciation exp. - nine months         $ 47,284          $ 50,840

NOTE 3 - COMMITMENTS AND RELATED PARTY TRANSACTIONS
Leases:

During 2003, the Company entered into a capital lease for a new telephone system
at the Company's headquarters.  The lease was recorded at the asset's fair value
and is being amortized over three years using the straight-line method. Interest
expense is calculated based on the implied interest rate in the lease. The lease
payment,  including  principal,  interest and sales tax, is $672 per month.  The
carrying  value of the  capitalized  lease  asset was  $2,460  and  $8,363 as of
September 30, 2005 and 2004,  respectively.  Amortization expense was $1,476 for
the three  months and $4,427 for the nine months  ended  September  30, 2005 and
2004.  Interest  expense  was $172 and $432 for the  three  months  and $721 and
$1,469 for the nine months  ended  September  30,  2005 and 2004,  respectively.
Future minimum lease payments as of September 30, 2005:

Year                                     Amount
----                                     ------
2005                                     1,883
2006                                     1,256
                                        ------
 Total                                   3,139
Less interest portion                     (126)
                                        ------
Capital lease obligation                $3,013

Loan Commitments:

The Company makes loan  commitments in connection with certain real estate loans
and joint  venture  investments  that include  funding for project  development,
building construction,  renovations,  lease-up operations, financed interest and
other  amounts  that the  borrower  may draw  upon in  accordance  with the loan
agreement.  For existing loans, the Company has $14,502,987 in approved,  unused
loan  commitments  for real estate  loans and  $5,842,201  for real estate joint
venture  investments  as of September  30, 2005.  The Company also has three new
approved real estate loan  commitments  totaling  $6,900,000 as of September 30,
2005 which the company expects to start funding in the fourth quarter.

                                                                             F-9
<PAGE>

Related Party Transactions:
Cornerstone Capital Advisors, Inc. - Management and Advisory Service Agreement

Effective  July 1, 2003,  the Company  entered  into a  Management  and Advisory
Services  Agreement with Cornerstone  Capital Advisors,  Inc. ("CCA") to provide
loan management,  administration, and accounting; investor relations; marketing;
computer and management information systems administration;  record maintenance;
executive  management;  and bookkeeping and accounting  after June 30, 2003. The
agreement is for  renewable  one year terms and it may be  terminated  by either
party upon 60 days' written  notice.  The Company does not have any employees of
its own  and  CCA is  subject  to the  supervision  of the  Company's  board  of
directors. Two of the Company's directors serve on the CCA board of directors.

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

Effective  August 1, 2004,  the  original  agreement  was  modified  so that the
Company will pay CCA as follows:

     o    Management  Fee - equal  to 10% of the  Company's  revenues  from  all
          sources other than loan fees, loan participations and revenue received
          from CCA plus 30% of loan participation revenue, payable monthly.

     o    Loan  Origination  Fee - equal to 30% of the total loan fee charged by
          the  Company to its  borrowers.  The fee is  generally  paid from loan
          proceeds and reduces deferred loan fees.

For the three and nine  months  ended  September  30,  the  Company  paid CCA as
follows:
<TABLE>
<CAPTION>

                                                 Three Months                    Nine Months
                                             2005           2004             2005             2004
                                             ----           ----             ----             ----
<S>                                        <C>            <C>             <C>              <C>
Management Fees                            $332,707       $324,988        $1,034,872       $984,481
Loan Origination Fees                       268,500        433,500           333,954        433,500
                                           $601,207       $758,488        $1,368,826     $1,417,981
</TABLE>

As of September 30, 2005 and 2004, the Company owed $11,769 and $0, respectively
to CCA under this agreement.

Cornerstone Capital Advisors, Inc. - Office Lease

Effective  August 1, 2004,  the Company and CCA entered  into a lease  agreement
whereby  CCA  is  leasing  the   Company's   corporate   office   building   and
office/computer equipment in Cumming, GA. The lease payment is $5,000 per month.
The initial lease term ended on August 31, 2005, after which the lease converted
to a  month-to-month  lease. The Company's cost basis in the office building and
office/computer  equipment  is  approximately  $634,000.  For the three and nine
months ended  September  30,  2005,  the Company  received  $15,000 and $45,000,
respectively under the lease agreement.

Cornerstone Direct Public Offerings, LLC

The Company  has  contracted  with  Cornerstone  Direct  Public  Offerings,  LLC
("CDPO") to provide  legal and  administrative  services  for the filing of SB-2
Registration  Statements  with the  Securities  and Exchange  Commission and the
various state regulatory  agencies.  Two of the Company's directors serve on the
board of directors of CDPO's majority owner,  Foundation for Christian Community
Development,  Inc.  The base  service  fee was  $75,000  per  filing  payable in
installments during the filing process.  For future filings, the Company intends
to use CDPO only for the state filing portion of its  registrations,  which will
reduce  CDPO's  service fee.  The new fee schedule has not been  finalized as of
September 30, 2005.

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

                                                                            F-10
<PAGE>

In July,  2004, the Company  entered into a service  agreement with CDPO for the
filing of a new SB-2 Registration Statement (Series F). $75,000 was paid to CDPO
in 2004 under this service  agreement.  In January 2005, the Company amended the
agreement  and paid  $20,000 to CDPO due to an  increase  in the time  needed to
register the securities  with various state  securities  regulators.  No amounts
were owed to CDPO as of September 30, 2005 and 2004.  See Note 12 for additional
disclosures on the Company's registration statements.

NOTE 4 - REAL ESTATE LOANS
At September 30, the Company had Real Estate Loans outstanding as follows:

                                                   2005            2004
                                                   ----            ----

         Family housing development loans      $48,281,461     $31,648,258
         Church mortgage loans                   9,221,703       9,481,638
         Senior housing mortgage loans          19,861,474       9,286,352
                                                ----------       ---------
            Total principal                     77,364,638      50,416,248
            Accrued Interest                       818,374         560,959
            Unearned Loan Fees                    (664,903)       (108,487)
            Allowance for loan losses             (707,000)       (425,000)
                                                ----------       ---------
            Total Real Estate Loans            $76,811,109     $50,443,720

These loans mature as follow:  2005 -  $6,320,591;  2006 -  $62,295,695;  2007 -
$5,852,410;  2008 - $0; 2009 - $590,111; beyond 2009 - $2,305,831. 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 nine months ended  September 30, the net interest  payments
financed were:

                                                       2005          2004
                                                       ----          ----
Current year interest financed                       $863,570     $868,926
Previous years' financed interest received           (270,884)     (27,706)
                                                     --------      -------
Net financed interest                                $592,686     $841,220

On September 30, 2005, the Company had significant credit risk concentrations in
the following states:

Georgia -      $33,308,269
Florida -      $20,106,155
Texas -        $11,318,239
So. Carolina - $11,047,431

Impaired loan disclosures for the nine months ended September 30:

                                                         2005           2004
                                                         ----           ----
Number of impaired loans                                   3             2
Carrying amount                                       $3,157,345    $1,933,751
Weighted average investment - year-to-date            $3,075,826    $1,880,867
Impaired loan interest income - current quarter       $   74,254    $   45,443
Impaired loan interest income - year-to-date          $  220,339    $  135,118

No  allowance  for specific  impaired  loan loss has been  recorded  because the
carrying  amounts of the impaired  loans as of September  30, 2005 and 2004 were
less than the present value of the loans expected future cash flows.

Included in family housing  development  loans on September 30, 2005 is one loan
which the  Company  made to a  borrower  which is  considered  to be a  variable
interest entity ("VIE").  The VIE is not consolidated in the Company's financial
statements  as the  Company's  financial  interest is not expected to absorb the
majority of  expected  losses nor  receive  the  majority  of expected  residual
returns. The Company's loan is a first mortgage loan of $1,483,862 made in June,
2005 to purchase land. The Company's maximum loan commitment is $5,500,000.  The
VIE is structured as a limited  partnership and will develop the property into a
low income housing tax credit apartment facility.

                                                                            F-11
<PAGE>
NOTE 5 - REAL ESTATE JOINT VENTURE INVESTMENTS

As of September 30,  certain of the Company's  mortgage  loans on senior housing
facilities and one family housing development loan are classified as real estate
joint venture investments, as follows:

Location                                              2005           2004
--------                                              ----           ----
McKinney, TX                                     $ 5,712,492     $ 3,981,794
St. Petersburg, FL                                 5,045,334       4,402,891
Lewisville, TX                                    10,617,954      10,656,804
Garland, TX                                        6,526,957       6,385,256
Chattanooga, TN                                    5,700,992       4,883,131
San Antonio, TX                                   12,671,957      11,551,897
Winter Haven, FL                                   5,990,625       5,551,751
Edmond, OK                                         5,481,201      13,098,142
Bryan, TX                                          3,266,317             -0-
                                                  ----------      ----------
Total principal outstanding                       61,013,829      60,511,666
Accrued interest                                     697,012         494,783
Unearned loan fees                                  (118,852)     (1,535,489)
Allowance for loan losses                                -0-             -0-
                                                  ----------      ----------
Real estate joint venture investments, net       $61,591,989     $59,470,960

These loans  mature as follows:  2005 -  $4,822,334;  2006 -  $56,191,495.  Loan
maturity  may be  accelerated  in  accordance  with loan terms,  generally  upon
certain  events  of  default  such  as  non-payment  of  scheduled  payments  or
bankruptcy.

All of the  loans,  except  as noted  below,  are  secured  by  first or  second
mortgages.  Three facilities are partially secured by the respective  non-profit
borrower's 100% ownership  interest in the Limited  Liability  Companies ("LLC")
which own the  properties.  The  facilities  which are owned by the LLC's have a
first  mortgage from an outside lender  securing the property.  The location and
amount of the loans which are secured in this  manner as of  September  30, 2005
are as follows:

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

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

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

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

     In accordance  with loan terms,  the Company  allows  certain  borrowers to
     finance interest payments while their facilities are in the construction or
     renovation phase of operations. For the nine months ended September 30, the
     net interest payments financed were as follows:

                                                     2005         2004
                                                     ----         ----
Current year interest financed                     $374,249     $345,163
Previous years' financed interest received              -0-          -0-
                                                   --------     --------
Net financed interest                              $374,249     $345,163

                                                                            F-12
<PAGE>

The Company  analyzes the underlying  operations and collateral of each facility
in which there is an outstanding loan by requiring independent  appraisals every
12 to 24 months,  reviewing loan balances and comparing them to the  established
loan  budgets,  and by  analyzing  income  and  cash  flow  statements  that are
submitted by the  borrowers.  If it is  determined  that it is probable that the
Company will be unable to collect all amounts due  according to the  contractual
terms  of a loan,  the  loan is  considered  impaired  and a loan  loss  will be
recognized  to the extent the  collateral's  fair value is less than the current
loan carrying amount.  No real estate joint venture  investments were considered
impaired as of September 30, 2005 and 2004.

NOTE 6 - ALLOWANCE FOR LOAN LOSSES

For the nine months ended  September  30, 2005 and 2004, a summary of changes in
the allowance for loan losses by loan type is as follows:
<TABLE>
<CAPTION>
                                                                    Real Estate
                                             Family       Senior   Joint Venture
                                 Church      Housing     Housing    Investments     Total
                                 ------      -------     -------    -----------     -----
<S>                            <C>          <C>          <C>         <C>           <C>
Balance - 12/31/03              $    -0-    $375,000     $    -0-     $    -0-     $375,000
Loan loss expense                    -0-      50,000          -0-          -0-       50,000
Charge-offs                          -0-         -0-          -0-          -0-          -0-
Recoveries                           -0-         -0-          -0-          -0-          -0-
                                --------    --------     --------     --------     --------
Balance -96/30/04               $    -0-    $425,000     $    -0-     $    -0-     $425,000
                                --------    --------

Balance -                       $    -0-    $632,000     $    -0-     $    -0-     $632,000
Loan loss expense                    -0-      75,000          -0-          -0-       75,000
Charge-offs                          -0-         -0-          -0-          -0-          -0-
Recoveries                           -0-         -0-          -0-          -0-          -0-
Balance - 9/30/05                    -0-    $707,000          -0-          -0-     $707,000
</TABLE>

Components of allowance for loan losses at September 30, 2005 and 2004:

                                             2005             2004
                                             ----             ----
Collective loan losses-
  Historical experience                     $    -0-       $    -0-
  Current credit risk assessment             707,000        425,000
                                            --------       --------
  Total collective loan losses               707,000        425,000
Specific impaired loan losses                    -0-            -0-
                                            --------       --------
Total allowance for loan losses             $707,000       $425,000

Loan loss allowance  increases for the three and nine months ended September 30,
2005 and 2004 were due to an increase  in the family  housing  loan  portfolio's
outstanding principal balance.

From July 1, 2004 through  December 31, 2004,  the Company  charged  $207,000 to
loan loss expense. This charge was due to an increase in the family housing loan
portfolio's  outstanding  loan  principal,  slower than  expected new home sales
volumes at three  projects,  and an  increase in the time that it has taken four
projects to finish the development phase and start selling homes.  These factors
have  increased the family housing loan  portfolio's  credit risk as compared to
prior years.

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

NOTE 7 - GOODWILL

The Company adopted SFAS 142 "Goodwill and Other  Intangible  Assets"  effective
January  1,  2002.  Goodwill  associated  with  the  Company's   acquisition  of
Presbyterian  Investor's Fund, Inc. is carried at $450,997 and is not subject to
further amortization.  Goodwill is tested for impairment at the end of each year
using the present  value of expected  future  cash flows to  determine  its fair
value.  At  December  31,  2004 and 2003,  Goodwill's  fair value  exceeded  its
carrying value;  therefore,  no provision for impairment loss has been recorded.
No goodwill was acquired or sold in 2004 or 2005.

                                                                            F-13
<PAGE>

NOTE 8 - UNAMORTIZED DEBT ISSUE COSTS

Unamortized  debt issue costs  consist of legal,  accounting,  and filing  costs
incurred to register the  Company's  debt  securities  and  commissions  paid or
accrued  on the  sale  of  debt  securities.  These  costs  are  amortized  on a
straight-line  basis over the period the associated  securities are outstanding,
generally  five years.  At  September  30,  2005,  unamortized  debt issue costs
consist of:

Costs incurred to register debt securities            $   780,966
Commissions paid on the sale of debt securities         4,556,423
Less: Accumulated Amortization                         (2,582,609)
                                                       ----------
                                                       $2,754,780

Amortization expense was $242,933 and $223,454 for the three months and $706,881
and  $589,815  for  the  nine  months  ended   September   30,  2005  and  2004,
respectively,  and  is  included  in  marketing  expenses  in  the  accompanying
Statements  of  Operations.  Estimated  amortization  expense  for the next five
years:

10/2005 - 9/2006 - $916,993                 10/2008 - 9/2009 - $376,233
10/2006 - 9/2007 - $805,361                 10/2009 - 9/2010 - $135,295
10/2007 - 9/2008 - $520,898

NOTE 9 - BOND HOLDINGS
Bond holdings at September 30 consist of-               2005            2004
                                                        ----            ----
St. Lucie Co., FL Subordinated Revenue Bonds:
         Maturity   7/1/2036                        $2,325,000       $2,325,000
         Maturity 10/1/2036                          2,700,000        2,700,000
Undivided 50% interest sold to investor             (2,512,500)      (2,512,500)
                                                    ----------       ----------
Net investment in St.Lucie Co., FL bonds             2,512,500        2,512,500
                                                    ----------       ----------
Largo, FL Subordinated Revenue bonds:
            Matures 10/1/2033                        2,440,000        2,500,000
Undivided interest sold to investors                (1,195,600)      (1,225,000)
                                                    ----------       ----------
Net investment in Largo, FL bonds                    1,244,400        1,275,000
                                                    ----------       ----------
Church Bonds                                         1,219,683              -0-
                                                    ----------       ----------
Total bond holdings                                  4,976,583        3,787,500

Accrued interest receivable                            210,529          198,167
                                                    ----------       ----------
Bond holdings & accrued interest                    $5,187,112       $3,985,667

The bonds are not traded on an exchange; however, management estimates, based on
discounted expected cash flows, that the fair value of the individual securities
approximates their carrying amount.  Accordingly, no unrealized holding gains or
losses have been recorded for the three and nine months ended September 30, 2005
and 2004.

Net proceeds from the partial maturity of bonds were $30,600 and $0 for the nine
months ended September, 2005 and 2004, respectively. No realized gains or losses
were  recognized.  The  Company  uses  the  specific  identification  method  to
determine realized gains and losses.

Tax-free  interest  income was  $95,213  and  $82,500  for the three  months and
$259,270 and $248,056  for the nine months  ended  September  30, 2005 and 2004,
respectively.

NOTE 10 - INCOME TAXES

The net  deferred  tax asset  (liability)  in the  accompanying  balance  sheets
includes the following components as of September 30:

                                            2005                 2004
                                            ----                 ----
Deferred tax assets                       $407,188            $217,033
Deferred tax liabilities                  (350,603)           (367,762)
                                          --------            --------
Net deferred tax asset (liability)        $ 56,585           ($150,729)


                                                                            F-14
<PAGE>
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 September 30, 2005 and
2004.

Components  of the Company's  income tax  provision  (benefit) for the three and
nine months ended September 30:

                                 Three Months                  Nine Months
                             2005           2004           2005          2004
                           --------      --------       ---------     --------
    Current:    Federal    $    -0-      $ (4,689)      $     -0-     $  8,987
                State        (4,450)        2,538           2,290       10,167
    Deferred:   Federal    ( 74,113)       (9,911)       (121,816)     (18,741)
                State        (1,818)       (1,061)         (5,126)      (1,973)
                           --------      --------       ---------     --------
                           $(80,381)     $(13,123)      $(124,652)    $ (1,560)


Reconciliation of the Company's income tax provision (benefit) rate to statutory
federal rates for the three and nine months ended September 30:
<TABLE>
<CAPTION>
                                                 Three Months           Nine Months
                                               2005         2004       2005       2004
                                              ------       ------     -------      -----
<S>                                           <C>           <C>        <C>         <C>
Statutory federal rate                        (35.0%)       35.0%      (35.0%)     35.0%
Effect of graduated federal rates               1.0%        (1.0%)       1.0%      (1.0%)
State taxes, net of federal benefit            (3.7%)        3.7%       (3.7%)      3.7%
Effect of tax-free bond interest income       (25.9%)      (77.4%)     (87.3%)    (40.0%)
Other, net                                      1.1%         3.5%        1.5%       1.6%
                                              -----        -----      ------       ----
Effective tax provision (benefit) rate        (62.5%)      (36.2%)    (123.5%)     (0.7%)
</TABLE>

NOTE 11 - CASH CONCENTRATION RISK

A cash  concentration  risk arises when the Company has more cash in a financial
institution than is covered by federal deposit insurance. At September 30, 2005,
the Company had cash in excess of insured limits totaling $1,142,849.

NOTE 12 - INVESTOR CERTIFICATES

The Company has three types of certificates outstanding:

Access  certificates have no stated maturity and are due on demand.  The minimum
investment  amount is $100.  The  interest  rate is  determined  by the Board of
Directors  each quarter.  The directors may change the rate between  quarters if
market conditions warrant such a change. The current interest rate is 4%.

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

Five year certificates have a five year maturity and a $500 minimum  investment.
The  interest  rate is 9% for  certificates  sold  prior to 2004 and  8.25%  for
certificates (Series E and F) sold in 2004 and 2005.

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 September 30:

                                                                            F-15
<PAGE>

Years to Maturity                   2005                       2004
-----------------              ------------               ------------
On demand & 1 year             $ 22,656,748               $ 12,102,147
2                                26,447,434                 10,803,667
3                                26,364,802                 27,329,873
4                                30,532,001                 26,425,074
5+                               20,636,387                 30,983,200
                               ------------               ------------
Total Principal                $126,637,372               $107,643,961


At September 30, 2005 and 2004,  accrued  interest  payable was  $12,359,154 and
$7,407,907, respectively.

Interest rates for certificates outstanding at September 30, 2005 are:

4.00% -   $1,528,670       8.00% -   $ 2,925,651     9.00% -   $63,609,340
6.25% -   $1,551,434       8.25% -   $51,168,388
6.75% -   $2,726,560       8.50% -   $ 3,127,329

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

On August 27, 2004, the Company filed a Form SB-2  Registration  Statement under
the Securities  Act of 1933 with the Securities and Exchange  Commission to sell
up to $20,000,000 of its Series F Investor Certificates along with $9,750,000 of
its Common Stock.  The Securities and Exchange  Commission  notified the Company
that it would not complete a full review of the  registration  statement and the
registration statement became effective on November 1, 2004. The Company started
to sell securities  registered in this statement in January,  2005. For the nine
months ended  September  30,  2005,  the Company  sold  $16,362,535  in Series F
Investor  Certificates  and $395,278 in Common Stock (60,812 shares at $6.50 per
share).

The Company expects to file a new registration statement with the Securities and
Exchange  Commission  during  the  fourth  quarter  of 2005  with  approximately
$60,000,000 in Series G Investor Certificates  available for issuance. The terms
of the Investor Certificates will be similar to the Series E and F certificates.

NOTE 13 - MORTGAGE PARTICIPATION AGREEMENTS

In 2003, the Company began selling Mortgage Participation ("MP") Agreements. The
MP Agreements  have not been  registered  and  therefore,  are only available to
accredited  investors.  The agreements  are  collateralized  by specific  senior
housing  loans owned by the Company and entitle the investor to a  proportionate
share of the interest earned on the collateral.  Interest is paid monthly to the
MP  investors  after the  Company  receives  interest  payments  on the  related
collateralized  loans.  The agreements have no stated  maturity date.  Principal
payments  are  made  when  the  Company  receives   principal  payments  on  the
collateralized  loans.  Losses that the Company may incur on the  collateralized
loans are shared  pro-rata  with the MP Agreement  holders.  The Company has the
right but not the  obligation to redeem the MP  Agreements  at any time.  The MP
Agreement  investors do not have the right to sell or repledge their interest in
the  underlying  collateral.  Interest  expense  related  to MP  Agreements  was
$122,812  and  $154,063  for the three  months and $380,246 and $461,880 for the
nine months ended September 30, 2005 and 2004, respectively.


                                                                            F-16
<PAGE>

MP Agreement  principal and interest  outstanding  and related  collateral as of
September 30, 2005:
<TABLE>
<CAPTION>

                                                              MP Amount     Total Collateral
                                                             Outstanding    Carrying Amount
                                                             -----------    ---------------
<S>                                                          <C>              <C>
Winter Haven, FL senior housing loan; matures 5/1/06
   with a one year extension at the Company's option         $1,516,000       $6,039,863
Garland, TX senior housing loan; matures 4/1/06
   with a one year extension at the Company's option          3,396,500       $6,564,510
                                                             ----------
Total principal outstanding                                   4,912,500
Accrued interest payable                                         39,573
                                                             ----------
                                                             $4,952,073
</TABLE>

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

NOTE 14 - LOAN GUARANTEES

The Company is guarantor on two loans secured by senior housing facilities owned
by unrelated non-profit entities.  Certain real estate joint venture investments
and real estate  acquisition and development loans in which the borrower chooses
to secure  outside  financing may require the Company to guarantee the loan as a
condition  of the  extension  of the  loan  by the  financial  institution.  The
guarantee is solely  limited to amounts drawn under credit  facilities  and only
covers  outstanding  principal and accrued interest and terminates upon maturity
and principal repayment. Only upon an uncured payment default and upon demand by
the  financial  institution  would the Company be required to perform  under its
guarantee  obligations.  The Company's recourse would be limited to repossession
of the  underlying  collateral and subsequent  resale of the  facilities.  As of
September 30, 2005,  all loans which had a guarantee were current based on their
loan terms. Loan guarantees as of September 30, 2005:
<TABLE>
<CAPTION>

                         Renewal/                                         Current         Loan
                       Origination       Maturity        Maximum         Principal      Guarantee
Location                   Date            Date         Guarantee       Outstanding    Obligation
--------                   ----            ----         ---------       -----------    ----------
<S>                      <C>             <C>          <C>              <C>             <C>
Palm Bay, FL             12/31/02        12/31/05      13,800,000       12,824,462          -0-
St. Petersburg, FL       12/18/04        12/18/05       7,347,300        7,026,290       71,000
                                                      -----------      -----------      -------
                                                      $21,147,300      $19,850,752      $71,000
</TABLE>

In February  and April of 2005,  the Company  originated  loans on a facility in
Fort  Pierce,  FL which  paid off two loans  with an  outside  bank in which the
Company had a loan guarantee.  The $104,000  estimated fair value of the related
loan guarantees was credited to earnings in 2005.
<TABLE>
<CAPTION>

NOTE 15 - BUILDING MORTGAGES
Building mortgages outstanding at September 30:                           2005        2004
                                                                         -------    -------
<S>                                                                     <C>        <C>
Fidelity Bank - collateralized by rental office building                $163,073   $173,073
   Interest rate - 6.25%; monthly principal and interest payment
   of $1,723; matures March 1, 2006, at which time a balloon
   payment of $159,573 is due.
Fidelity Bank - collateralized by corporate office building              420,404    435,467
                                                                         -------    -------
   Interest rate equal to "prime + 1.5%", currently 8.0%; monthly
   principal & interest payment of $4,196; matures Sept. 1, 2009,
   at which time a balloon payment of $340,543 is due.
Total principal outstanding                                             $583,477   $608,540

Interest expense for the three months ended September 30                 $11,441   $  6,191
Interest expense for the nine months ended September 30                  $32,482   $ 13,847
Total carrying value of the mortgage's collateral                       $731,575   $743,167
</TABLE>

Estimated  annual principal  payments:  2005 - $7,754;  2006 - $179,609;  2007 -
$19,680; 2008 - $21,050; 2009 - $355,384.

NOTE 16 - SERIES A CONVERTIBLE PREFERRED STOCK

In 2001, the Company  amended its Articles of  Incorporation  to provide for the
issuance of up to 235,000 shares of Series A Convertible  Preferred  Stock.  The
shares do not accrue  dividends  unless such dividends are declared by the Board


                                                                            F-17
<PAGE>

of Directors.  The shares entitle the preferred shareholder to have one vote per
share,  presently equal to the voting rights of Common shareholders.  Each share
is  convertible,  after 3  years,  into  shares  of  Common  Stock  based  on an
adjustable formula.

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

NOTE 17 - DISSOLUTION OF SUBSIDIARIES

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

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

NOTE 18 - EARNINGS PER SHARE

Basic  earnings per share for the three and nine months ended  September 30 have
been calculated as follows:

                                                     Three Months  Nine Months
                                                     ------------  -----------
2004              Net Income                           $ 49,355     $212,094
----              Average Common Shares Outstanding     846,114      678,455
                  Earnings per Common Share            $   0.06     $   0.31
2005              Net Income (Loss)                    $(48,278)    $ 23,720
----              Average Common Shares Outstanding     844,269      826,794
                  Earnings (Loss) per Common Share     $  (0.06)    $   0.03

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

NOTE 19 - MAJOR CUSTOMERS

The  Company  recorded  more than 10% of its total  revenue  for the nine months
ended September 30, 2005 from the following customers:
<TABLE>
<CAPTION>

                                   Amount      %        Description of Revenue Received
                                   ------     ---       -------------------------------
<S>                              <C>          <C>       <C>
Senior Housing Services, Inc.    $4,634,911   42.5%     Interest and fees from real estate joint
                                                          venture investments
Wellstone Housing, LLC            2,167,498   19.9%     Interest and fees from family housing
                                                          development loans
Sage Living Centers, Inc.         1,247,734   11.5%     Interest and fees from real estate joint
                                 ----------   -----       venture investments
                                 $8,050,143   73.9%
</TABLE>


                                                                            F-18
<PAGE>

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

On January 1, 2005, Senior Housing Services,  Inc formed a single member Limited
Liability Company (Wellstone Housing,  LLC) and purchased the assets and assumed
all of Wellstone Housing Corporation's liabilities, which included the Company's
real estate loans.  The total  combined  revenue  received  from Senior  Housing
Services,  Inc. and Wellstone  Housing,  LLC for the nine months ended September
30, 2005 was $6,802,409 or 62.4% of the Company's total revenue.

NOTE 20 - FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial instruments:

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

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

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

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

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

The estimated  fair values of the Company's  financial  instruments at September
30, 2005 are:

                                    Carrying Amount          Fair Value
                                    ---------------          ----------
Financial assets:
  Cash and cash equivalents          $  1,303,288          $  1,303,288
  Bond holdings                      $  4,976,583          $  4,976,583
Financial liabilities:
  Investor certificates              $126,637,372          $126,637,372
  Mortgage participations            $  4,912,500          $  4,912,500
  Building mortgages                 $    583,477          $    583,477
  Capital lease obligation           $      3,013          $      3,103
  Loan guarantee obligations         $     71,000          $     71,000


                                      F-19

<PAGE>

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

Selected financial data.

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

                                               Nine months ended
                                                 September 30,
                                            2005               2004
                                         ----------         ---------

Revenues                                $10,890,717        $9,110,919
                                         ----------         ---------
Investor interest expense                 8,532,551         6,627,673
Loan loss expense                            75,000            50,000
Marketing expenses                          808,542           735,709
Management/advisory fees                  1,034,872           898,671
Operating expenses                          540,684           588,332
                                         ----------         ---------
Total expenses                           10,991,649         8,900,385
                                         ----------         ---------
Operating income                           (100,932)          210,534
Income tax benefit                         (124,652)           (1,560)
                                         ----------         ---------
Net income                              $    23,720        $  212,094

Overview of operations.

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

     o    interest on loans

     o    origination and renewal fees on loans

     o    loan participation income

     o    interest on securities

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 7% 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 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  September 30, 2004 and September 30, 2005

General.   Assets   increased  from   $127,657,163  at  September  30,  2004  to
$150,041,892  at September 30, 2005 for an increase of  $22,384,729 or 18%. This
increase  is a  result  of  the  sale  of  Investor  Certificates  and  Mortgage
Participations,  net of redemptions of $22,684,589. With the additional net cash
from these items and from cash already on hand, we invested in real estate loans
and  joint  venture  investments,   net  of  principal  payments  received,   of
$28,488,418.  Total  revenue  increased  for the  three  and nine  months  ended
September 30, 2005 by $327,658 or 10% and  $1,779,798  or 19% to $3,629,262  and
$10,890,717, respectively. Net income (loss) for the three and nine months ended
September 30, 2005 was  ($48,278) and $23,720  compared to $49,355 and $212,094,
respectively for the same periods ended September 30, 2004.

Total real estate loans and joint venture  investments  outstanding on September
30, 2005 was $138,403,098  compared to $109,914,680 on September 30, 2004 for an
increase  of  $28,488,418  or 26%.  This  increase  is due to sales of  Investor
Certificates   and  Mortgage   Participation   Agreements   and  the  subsequent
origination or  refinancing of real estate loans and joint venture  investments,
as follows:


                                                                               3
<PAGE>

New real estate loan originations                                  $ 22,213,597
Increase in existing loans, net of principal received                 4,153,792
New real estate joint venture investments made                        3,266,317
Decrease in existing real estate joint venture investments           (1,145,288)
                                                                   -------------
                                                                   $ 28,488,418

All other  assets  composed  primarily  of cash,  bond  holdings,  property  and
equipment, and unamortized debt issue costs were $11,638,794 as of September 30,
2005.

Our cash balance  decreased  $7,954,267 from $9,257,555 on September 30, 2004 to
$1,303,288  on September  30, 2005. In 2004,  our Series E  certificates  became
effective in March and because we had no  certificates  available for almost one
year,  when Series E became  effective,  we sold  approximately  $31,000,000  in
certificates  during the second and third  quarters  of 2004.  We were unable to
reinvest all of these  proceeds by September 30 as it normally takes two to four
months to  reinvest  the cash  into  real  estate  loans.  In 2005,  we have had
certificates  available  for sale all year,  which makes it easier to manage our
cash levels and reinvest proceeds from our certificate sales.

Principal   and  interest   payable  on  Investor   Certificates   and  Mortgage
Participation ("MP") Agreements  increased  $22,684,589 or 19% from $121,264,010
as of September 30, 2004 to  $143,948,599 as of September 30, 2005. In 2003, the
Company  filed  a  registration  statement  with  the  Securities  and  Exchange
Commission to sell up to $40,000,000  in additional  Investor  Certificates  and
$11,375,000 in Common Stock.  The  registration  statement was approved on March
26, 2004 which  allowed us to start  selling new  Investor  Certificates  in the
second quarter of 2004. Also, another registration statement was filed in August
2004 and became effective in November 2004 which allows us to sell an additional
$20,000,000  in Investor  Certificates  and  $9,750,000 in Common  Stock.  These
registrations   have  allowed  us  to  continue  the  substantial   increase  in
outstanding  certificates and the subsequent investment in new real estate loans
and joint venture investments.

Real estate loan and joint venture interest and fees earned. Interest income and
fees from real estate loans and joint venture investments for the three and nine
months ended September 30 is as follows:

                               2005          2004         Increase         %
                               ----          ----         --------        ---
Three months               $ 3,466,797    $3,165,898     $  300,899      9.5%
Nine months                $10,058,106    $8,764,245     $1,293,861     14.8%

The increase was due to the following:

<TABLE>
<CAPTION>
                                                                  Three Months     Nine Months
                                                                  ------------     -----------
<S>                                                                <C>             <C>
Increase in average outstanding principal                          $ 728,722       $2,349,701
 (Three Months: $131,322,111 - 2005; $101,418,710 - 2004)
 (Nine Months: $124,158,063 - 2005; $91,891,257 - 2004)
Change in weighted average interest rate                             (76,689)         (82,475)
 (Three Months: 9.61% - 2005; 9.91% - 2004)
 (Nine Months: 9.74% - 2005; 9.86% - 2004)
Change in loan fees recognized                                      (351,134)        (973,365)
                                                                    --------         --------
                                                                   $ 300,899       $1,293,861
</TABLE>

The increase in average outstanding principal is due to the addition of nine new
real estate loans and joint venture  investments with  outstanding  principal of
$25,479,914  and  increases in the weighted  average  principal  outstanding  on
existing loans of $4,423,487. Loan fees recognized decreased because three large
loans which we originated in late 2003 and the first half of 2004 had their loan
fees fully recognized by early 2005, thus decreasing  2005's revenue as compared
to 2004. Two of our new loans that we originated in early 2005 did not have loan
fees charged so we were not able to replace all of this revenue during the first
half of 2005.  Since late June 2005,  we charged  over  $700,000 in new loan and
renewal fees to our various  borrowers which should increase our recognized loan
fees in the fourth quarter and the first half of 2006.

Loan  participation  and  other  income.  For the three  and nine  months  ended
September 30, 2005, loan participation and other income increased as follows:
<TABLE>
<CAPTION>

                                                    Three Months                               Nine Months
                                     ---------------------------------------       ----------------------------------
                                       2005           2004           Change          2005         2004        Change
                                       ----           ----           ------          ----         ----        ------
<S>                                  <C>            <C>             <C>            <C>          <C>         <C>
Investment income                    $140,025       $120,815        $ 19,210       $404,234     $317,071    $ 87,163
Loan participation & other             22,440         14,891           7,549        428,377       29,603     398,774
                                     --------       --------        --------       --------     --------    --------
   Total                             $162,465       $135,706        $ 26,759       $832,611     $346,674    $485,937
</TABLE>

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,  church  bonds and from  interest  income on the  Company's
excess cash.

                                                                               4
<PAGE>

The increase in investment income for the three months ended September 30 is due
to Church bonds  purchased  during the third  quarter of 2005  ($13,155)  and an
increase in short-term interest rates ($6,055) during 2005. The increase for the
nine  months  ended  September  30 is due to the church  bonds,  an  increase in
short-term  interest rates and an increase in the Company's  average excess cash
balance on hand.

For the three months ended September 30, the increase in loan  participation and
other  income  was due to a  $5,000  increase  in  rent  revenue  received  from
Cornerstone  Capital Advisors for their rent of the corporate office building in
Cumming,  GA and a $2,500  loss from a fixed  asset  sale in 2004.  For the nine
months ended September 30, the increase is due to $257,000 in loan participation
revenue received in March, 2005, $104,000 in loan guarantee revenue (see Note 14
of the  "Notes to  Financial  Statements"  for  additional  disclosures  on loan
guarantees)  and a $35,000  increase in rent revenue  received from  Cornerstone
Capital Advisors.  See page F-10 for additional  information about the rent that
we receive from Cornerstone Capital Advisors.

Investor  interest  expense.  Investor  interest  expense for the three and nine
months  ended  September  30,  2005 was  $2,974,148  and  $8,532,551,  which are
increases of $471,630 (19%) and $1,904,878 (29%), respectively compared to 2004.
The increases are due to:
<TABLE>
<CAPTION>

                                                                        Three Months   Nine Months
                                                                        ------------   -----------
<S>                                                                       <C>          <C>
Increase in average outstanding certificate principal, including
 interest payable subject to compounding                                  $ 521,528    $2,070,408
  (Three Months: $130,298,477 - 2005; $106,559,739 - 2004)
  (Nine Months: $124,900,475 - 2005; $93,218,234 - 2004)
Change in weighted average interest percentage                             (18,648)       (83,896)
  (Three Months: 8.75% - 2005; 8.82% - 2004)
  (Nine Months: 8.70% - 2005; 8.82% - 2004)
Decrease in average outstanding Mortgage Participation principal
  (Three Months: $4,912,500 - 2005; $6,162,500 - 2004)
  (Nine Months; $5,069,947 - 2005; $6,158,400 - 2004)                      (31,250)    $  (81,634)
                                                                         ---------     ----------
                                                                         $ 471,630     $1,904,878
</TABLE>

Loan loss expense and allowance for loan losses.  We charged $25,000 and $20,000
for the three months and $75,000 and $50,000 for the nine months ended September
30, 2005 and 2004,  respectively to loan loss expense. These charges were due to
increases  in  the  family  housing  development  loan  portfolio's  outstanding
principal.

The total  allowance  for loan losses  increased  from $425,000 on September 30,
2004 to $707,000 on September 30, 2005.  This increase is due to: 1) an increase
in  the  family  housing  development  loan  portfolio's  outstanding  principal
($130,000), and 2) slower than expected new home sales volumes at three projects
and an  increase  in the time  that it has taken  four  projects  to finish  the
development  phase  and start  selling  homes  ($152,000).  These  factors  have
increased the family housing  development loan portfolio's  relative credit risk
as compared to 2004, thus  necessitating  the increase in our allowance for loan
loss balance over the last 12 months.

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

As of September  30, 2005,  three church loans with a total  carrying  amount of
$3,157,345 were considered impaired.  As of September 30, 2004, two church loans
with a carrying amount of $1,933,751 were considered impaired. It is likely that
we will foreclose on one of the church loans  ($281,591  carrying  value) within
the next six months.  No specific impaired loan loss allowance has been recorded
because  the  carrying  amounts of the  impaired  loans are less than the loan's
collateral or the present value of the loans expected future cash flows.

As of September 30, 2005,  allowance for loan losses as a percent of outstanding
loan principal by loan type:

                                             Loan Loss     Outstanding
                                             Allowance      Principal       %
                                             ---------      ---------      ---
Family Housing Development Loans           $ 707,000      $ 48,281,461     1.5%
Church Mortgage Loans                           -0-          9,221,703       0%
Senior Housing Mortgage Loans                   -0-         19,861,474       0%
Real Estate Joint Venture Investments           -0-         61,013,829       0%
                                           ---------      ------------     ---
  Total                                    $ 707,000      $138,378,467      .5%

Marketing  expenses.  Total expenses for the marketing of Investor  Certificates
for the three and nine  months  ended  September  30,  2005  were  $268,581  and
$808,542  compared to $274,995 and  $735,709  for the same periods in 2004.  The
changes are due to:


                                                                               5
<PAGE>
<TABLE>
<CAPTION>

                                                   Three Months                 Nine Months
                                      2005        2004       Change         2005         2004       Change
                                      ----        ----       ------         ----         ----       ------
<S>                                <C>          <C>         <C>           <C>          <C>         <C>
Debt issue cost amortization       $242,517     $223,454    $19,063       $705,634     $589,815    $115,819
Other marketing costs                26,064       51,541    (25,477)       102,908      145,894     (42,986)
                                   --------     --------    -------       --------     --------    --------
                                   $268,581     $274,995    $(6,414)      $808,542     $735,709    $ 72,833

</TABLE>

Selling  commissions  paid to brokers  for  selling  Investor  Certificates  and
Mortgage Participations and costs incurred to register Investor Certificates are
paid in cash and charged as an expense  over the term of the related  debt.  The
unamortized  balance  is  classified  as  an  asset  on  the  balance  sheet  as
"Unamortized debt issue costs".  The balance was $2,754,780 and $2,621,638 as of
September 30, 2005 and 2004, respectively.

The  increases  in debt issue cost  amortization  for the three and nine  months
ended  September  30  are  due  to  an  increase  in  the  outstanding  Investor
Certificates  outstanding  at September  30, 2005.  Other  marketing  costs have
decreased  because  we are not using  marketing  consultants  in 2005 to help us
design programs to sell our Investor Certificates.

Operating and  management  expenses.  Management  and advisory  expenses for the
three and nine months ended  September 30 increased  $63,132  (23%) and $136,201
(15%) from  $269,575 and $898,671 in 2004 to $332,707  and  $1,034,872  in 2005,
respectively. The increases are due to the Company's growth in revenues in 2005.

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

Effective  August 1, 2004,  the original  agreement was modified so that we will
pay CCA as follows:

     o    A monthly management fee equal to 10% of our revenues from all sources
          other than loan fees, loan participation revenue, and revenue received
          from CCA plus 30% of loan participation revenue.

     o    A loan  origination fee equal to 30% of the total loan fees charged by
          the  Company to its  borrowers.  The fee is  generally  paid from loan
          proceeds and reduces  deferred loan fees that we will  recognize  over
          the life of the loan.

Please  see  Note  3 of the  "Notes  to  Financial  Statements"  for  additional
information  about our  agreement  with CCA and for amounts that we have paid to
CCA for the three and nine month periods ended September 30, 2005 and 2004.

For the three and nine  months  ended  September  30,  2005 and 2004,  operating
expenses were as follows:

                              2005          2004           Change
                              ----          ----           ------
Three Months Ended          $157,485      $198,284       ($40,799)
Nine Months Ended           $540,684      $588,332       ($47,648)

For the three and nine months ended  September  30, 2005 and 2004 the  decreases
are due to:

                                   Three Months         Nine Months
                                   ------------         -----------
Consulting Expenses                 ($45,471)            ($98,717)
Legal Expenses                        22,373              101,248
Appraisal Costs                        2,500              (23,707)
Office expenses                          328              (21,424)
Other                                (20,529)              (5,048)
                                    --------             --------
                                    ($40,799)            ($47,648)

Consulting  expenses  decreased because in 2004, we used consultants to identify
new  markets  for  us in  the  African-American  church  community  and  in  the
low-income  apartment  housing  market.  We have  not used  consultants  for any
material projects in 2005. Legal costs have increased as a result of the ongoing
legal  proceedings  concerning the Chicago Stock  Exchange.  Please see Part II,
Item 1 for additional  information on this issue.  Appraisal  costs for the nine
months ended  September 30 decreased  because in the second  quarter of 2004, we
ordered new  appraisals on a number of  properties  which serve as collateral on
senior housing and church loans. We have ordered only two new appraisals in 2005
both of which were  completed  in the third  quarter and  resulted in the $2,500
increase for the three months ended  September 30. Office  expenses for the nine
months  ended  September  30  decreased  due to the  change  we  made in the CCA
contract on August 1, 2004.  When the new contract was put in place,  CCA became
responsible for paying the normal office operating costs that we had been paying
prior to that date which reduced our 2005 operating costs. Other costs decreased
due to travel costs decreasing in both periods presented.


                                                                               6
<PAGE>

Income tax provision (benefit). The income tax provision (benefit) for the three
and  nine  months  ended  September  30,  2005  was  ($80,381)  and  ($124,652),
respectively  compared to  ($13,123)  and  ($1,560),  respectively  for the same
periods ended  September 30. 2004.  The net decrease in income taxes is due to a
decrease in pre-tax  income.  The Company's  effective  tax  provision  rate was
(62.5%) and (36.2%) for the three  months and  (123.5%)  and (0.7%) for the nine
months ended September 30, 2005 and 2004, respectively.  A reconciliation of the
Company's effective tax provision rate to the federal statutory rate is included
in the attached "Notes to Financial Statements" (Note 10).

Dividends.  Dividends of $211,143 and $155,066  were paid in July 2005 and 2004,
respectively.

Liquidity and Capital Resources

Cash flows from  operations.  Net cash provided by the Company's  operations for
the nine months ended  September 30, 2005 and 2004 was  $1,250,364 and $291,751,
respectively.  The increase in 2005 was due to an increase in  depreciation  and
amortization  expense,  an increase  in accrued  investor  certificate  interest
payable, an increase in cash received from loan fees and interest and a decrease
in other assets, partially offset by decreases in net income, accounts and other
payables, deferred taxes and an increase in loans in progress.

Investor and mortgage participation interest payable increased $3,712,515 in the
first nine  months of 2005 due to an increase  in  outstanding  debt (20% of the
increase)  and because  approximately  25% to 30% of the investors who purchased
certificates  in 2004 and 2005 have elected to reinvest the interest due to them
and not receive the interest in cash until maturity.

Included  in the 2005 and 2004  changes in accrued  real  estate  loan and joint
venture  interest and deferred  loan fee amounts is $966,935 and  $1,186,383  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 nine months ended  September  30, 2005 and 2004 is as
follows:

                                        2005           2004
                                        ----           ----
Family Housing Development            $571,721     $  802,756
Church Construction                     20,965         38,464
Real Estate Joint Venture              374,249        345,163
                                      --------     ----------
                                      $966,935     $1,186,383

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

The decrease in the family housing net financed  interest in 2005 as compared to
2004 is due to three projects going from their development phase into their sale
phase and thus  they are  paying  interest  to us as they  sell  homes.  The net
financed  interest  will most likely  increase from its current level because of
three new loans  originated in the third quarter of 2005 which are just starting
the  development  phase of their  operations.  These loans  total  approximately
$8,500,000.

The  Real  Estate  Joint  Venture  financed  interest  in  2005 is for a loan in
McKinney,  TX  ($282,316)  and  for a loan in  Chattanooga,  TN  ($91,933).  The
McKinney,  TX loan is  collateralized  by raw land which is being  developed for
family  housing.  We have been  financing  the interest on this loan since June,
2003. Our other Real Estate Joint Venture Investment loans are collateralized by
senior  housing  facilities  that were already in place when we  originated  the
loans and they only needed to be remodeled.  Therefore,  the period in which the
interest is being  financed on the  McKinney  loan is much longer than the other
Real Estate Joint  Venture  Investment  loans.  Normally,  we finance two to six
months' of interest on senior housing loans.  We anticipate,  due to the size of
the McKinney project, that we will finance interest for another 14 to 18 months.
The Chattanooga, TN loan completed its remodeling in 2004 and its lease-up phase
has taken longer than anticipated; therefore, we capitalized some of their first
quarter  interest in 2005.  We are  analyzing  and watching this loan closely to
ensure that the stabilized value of the property is greater than the loan amount
and that we do not have any collectibility issues with this loan.

Cash flows from investing  activities.  For the nine months ended  September 30,
2005, the Company used $26,499,065 in cash from investing activities which is an
increase of $2,454,679 from  $24,044,386 for the nine months ended September 30,
2004. The increase was due to an increase in real estate and joint venture loans
made net of  principal  payments  received  of  $1,263,587  and the  purchase of
$1,219,290  in church  bonds  during 2005.  These  increases  were offset by the
receipt  of $30,600  in bond  principal  payments  in 2005  versus no  principal
payments received in 2004.

It is possible  that in December,  2005,  two of our major  borrowers  will sell
their interests in as many as nine senior housing  facilities.  If this happens,
approximately  $23,000,000  in senior  housing real estate loans and real estate
joint  venture  investment  principal  would be received by us as payment on our
existing loans and investments.  We are actively seeking  alternative  loans and
investments in which to invest these proceeds in anticipation of this deal being
finalized.

                                       7
<PAGE>

Cash flows from financing  activities.  For the nine months ended  September 30,
2005, the Company raised $16,566,473 from the sale of Investor  Certificates and
Mortgage  Participation  Agreements.  This  represents a decrease of $14,612,141
from new Investor  Certificate and Mortgage  Participation  sales of $31,178,614
for the nine months ended September 30, 2004. When Series E became  effective in
March,  2004, we started selling new  certificates  for the first time in almost
one year.  Because of the long period of time with no certificates  for sale, we
experienced  a huge  demand  in the first few  months  that  Series E was on the
market in 2004,  selling over  $31,000,000 in Series E certificates  in only six
months.  Now that we have had certificates on the market for 18 straight months,
the demand has  decreased to a steady and more  manageable  level as compared to
2004.

Investor  Certificates  redeemed for cash decreased from $3,336,245 for the nine
months  ended  September  30,  2004 to  $1,753,744  for the  nine  months  ended
September  30, 2005.  This  decrease is due to a larger  amount of maturities in
2004  versus  2005.  Also,  in the first  three  months  of 2004,  we had no new
Investor  Certificates  in which  maturing  certificates  could  be  reinvested;
therefore,  all of 2004's  maturities  during the first three months of the year
were paid in cash.

We have  $22,656,748  in Investor  Certificates  coming due or  redeemable  upon
demand  in the next 12  months.  $10,318,973  of this  amount  is for  graduated
certificates,  which allow an investor to redeem their  certificate each year on
the anniversary  date of the purchase.  Based on our historical  experience,  we
expect that less than 20% of the  graduated  certificates  will be redeemed  for
cash during the next 12 months. Also, $10,797,105 in five-year bonds will mature
in March, 2006.

We are in the process of filing a new registration statement with the Securities
and Exchange  Commission  with  approximately  $60,000,000  in Series G Investor
Certificates  available  for issuance  with terms  similar to our Series E and F
certificates.  If approved,  we will offer these new  certificates  to investors
with maturing  certificates as a way for them to continue their  investment with
us. Our historical  experience indicates that over 75% of the maturities will be
reinvested into new Investor  Certificates,  but there is no guarantee that this
will happen or that there will be certificates available to reinvest in. We will
ensure that we have enough cash available to handle these maturities.

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

     o    Maintain a minimum cash balance, normally no less than $3,000,000.

     o    Have readily marketable loans that can be sold for par or a premium.

     o    Ask  investors  their  intentions  at least 30 days before their bonds
          mature.

     o    Have a bank willing to extend credit lines if needed.

     o    Spread maturity dates throughout the year.

     o    Limit  each  investor  to  not  more  than  $500,000  maturing  in any
          three-month period.

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

Item 3. Controls and Procedures

The principal executive officer and the principal financial officer of the small
business issuer, Cornerstone Ministries Investments, Inc., have, as of September
30,  2005,  evaluated  the  small  business  issuer's  disclosure  controls  and
procedures,  as defined by Sections  13a-14(c) and  15d-14(c) of the  Securities
Exchange Act of 1934. Based on their evaluation,  they have concluded that those
disclosure  controls and procedures are designed and implemented  effectively to
ensure that information required to be disclosed by the small business issuer in
the  reports  that it files or submits  under that Act is  recorded,  processed,
summarized and reported,  within the time periods  specified in the Commission's
rules and forms.

Part II. Other Information

Item 1. Legal Proceedings

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

On  December 3, 2004,  a letter from the  Exchange  denied our  application  for
listing  and said  that it had not  previously  approved  our  common  stock for
listing.  However,  on February 4, 2005, a second  letter from the Exchange said
that,  upon review,  the Exchange had  apparently  approved our common stock for
listing subject to the completion of an offering that would meet the


                                                                               8
<PAGE>

Exchange's  numerical  standards  for  shareowners'  equity,  number  of  public
shareholders  and publicly held shares. A March 1, 2005  clarification  from the
Exchange  said it agrees  that our  status was not  inconsistent  with its being
"approved  for listing  upon notice of  issuance,"  the  language  used in state
exemption  laws.  Our  common  stock will not be listed on the  Exchange  in the
future.

Based upon the  Exchange's  position in its December 3, 2004 letter,  securities
regulators  for  several  states  each  raised the issue of whether we  lawfully
offered and sold securities without  registration in those states and/or whether
our prospectuses and publicly-filed reports were false and misleading,  in their
reference to Exchange approval for listing. While we do not believe that we have
violated any  securities  laws in connection  with our previous  reliance on the
Exchange  exemption,  we have  elected to settle any  related  state  regulatory
actions where the cost of such settlements are likely to be  significantly  less
than the cost of litigation in each state. Previously in the "Legal Proceedings"
section of our 10-QSB  dated August 15, 2005,  we discussed  the final  outcomes
relating  to the  Chicago  Exchange  exemption  issue  for the  states of Texas,
Michigan, and Minnesota.

On August 25, 2005, at the informal request of Maine's Office of Securities,  we
made rescission offers to investors in Maine. In October 2005, at the request of
the  Tennessee  Department of Commerce and Insurance  Securities  Division,  and
because the Tennessee  Securities  Division believed four shareholders  received
incorrect prospectuses when buying our registered common stock we redeemed eight
shares of our common stock owned by these four Tennessee shareholders.

On August 11, 2005,  the Ohio Division of Securities  sent us a draft of a Cease
and  Desist  Order,  the terms of which did not  require us to pay fines or give
rescission offers. We agreed to the Cease and Desist Order, and on September 12,
2005,  the Ohio  Division  of  Securities  issued  the Cease and  Desist  Order.
According to the terms of the Order,  we are ordered to refrain from offering to
sell unregistered securities in Ohio unless a proper exemption from registration
exists.

On  September  20,  2005 we entered  into a Consent  Agreement  with the Indiana
Securities Division, the terms of which required us to give rescission offers to
Indiana  investors,  pay a $600  investigation  expense  cost,  and refrain from
violating provisions of the Indiana Securities Act in the future.

On March 10, 2005,  we attempted to register our Series F Bonds and Common Stock
in New Jersey, by filing a registration  statement with the New Jersey Bureau of
Securities.  Because  our initial  prospectus  for the Series F Bonds and Common
Stock  included the  incorrect  statement  that the  Company's  common stock was
approved for listing on the Chicago  Exchange  upon notice of issuance,  the New
Jersey  Bureau  of  Securities  denied  the  effectiveness  of our  registration
statement  by issuing a Stop Order on  October  5, 2005.  According  to the Stop
Order we are  prohibited  from  selling  Series F Bonds and Common  Stock in the
state of New Jersey.

On October 27, 2005,  the Colorado  Division of Securities  sent us a draft of a
Stipulation for Consent and Desist Order, the terms of which would require us to
make rescission offers to certain Colorado  investors.  We have decided to agree
to the terms of this particular  Stipulation  for Consent and Desist Order,  and
upon the expected  execution of the  Stipulation for Consent and Desist Order by
both the Colorado  Division of  Securities  and us, we will make the  rescission
offers contemplated in the Order.

Since  February  2005,  we have  been  discussing  our  previous  offers to sell
securities in Kansas with the Kansas Office of the Securities Commissioner,  and
on August 24, 2005, the Kansas Office of the Securities  Commissioner  requested
that we provide  them with  additional  information  relating to these offers to
sell. On September  12, 2005,  we provided the Kansas  Office of the  Securities
Commissioner  with the  requested  additional  materials and while we are unsure
whether Kansas plans to issue any formal Order,  we have been informed that they
will respond to our September 12, 2005 correspondence by year's end.

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

Item 2. Changes in Securities

         Not Applicable


Item 3. Defaults upon Senior Securities

         Not Applicable

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

         Not Applicable


                                       9
<PAGE>

Item 5. Other Information

         Not Applicable

Item 6. Exhibits and Reports on Form 8-K

(a)  (1)  Exhibit  32.1 & 32.2,  Certifications  pursuant  to Section 906 of the
     Sarbanes-Oxley Act of 2002.

     (2)  Exhibit 15, Letter on un-audited 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: November 11, 2005            Cornerstone Ministries Investments, Inc.
                                    (Registrant)


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


                                       10