SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-KSB

(Mark One)xANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 2004

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

For the transition period from  to

Commission File Number 333-105923

|FOUNDATION CAPITAL RESOURCES, INC.            
|----------------------------------------------
|(Name of Small Business Issuer in Its Charter)

|Georgia                                                        |  | 58-2557344                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|1430 Lelia Drive, Suite 100
Jackson, Mississippi               |  | 39216                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

| | (601) 321-1800                                   | 
| | ------------------------------------------------ | 
| | (Issuer's Telephone Number,
Including Area Code) | 

Securities Registered under Section 12(b) of the Exchange Act:  None.
Securities Registered under Section 12(g) of the Exchange Act:  None.

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

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. x

The issuer's revenues for its most recent fiscal year were $20,963,204.

State the aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the price at which the common stock was sold, or the average bid and asked price of such common stock, as of a specified date within the past 60 days. Not applicable.

The number of shares outstanding of the issuer's common stock at March 28, 2005, was 29,373,368.46 shares.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (check one):  YES o  NO x

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TABLE OF CONTENTS

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|PART I   |                                                                                                                |     
|ITEM 1.  | DESCRIPTION OF BUSINESS                                                                                        | 3   
|         |                                                                                                                |     
|ITEM 2.  | DESCRIPTION OF PROPERTY                                                                                        | 10  
|         |                                                                                                                |     
|ITEM 3.  | LEGAL PROCEEDINGS                                                                                              | 12  
|         |                                                                                                                |     
|ITEM 4.  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                            | 12  
|         |                                                                                                                |     
|PART II  |                                                                                                                |     
|ITEM 5.  | MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER
MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF
EQUITY SECURITIES | 13  
|         |                                                                                                                |     
|ITEM 6.  | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION                                                      | 15  
|         |                                                                                                                |     
|ITEM 7.  | FINANCIAL STATEMENTS                                                                                           | 29  
|         |                                                                                                                |     
|ITEM 8.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE                           | 54  
|         |                                                                                                                |     
|ITEM 8A. | CONTROLS AND PROCEDURES                                                                                        | 54  
|         |                                                                                                                |     
|ITEM 8B. | OTHER INFORMATION                                                                                              | 54  
|         |                                                                                                                |     
|PART III |                                                                                                                |     
|ITEM 9.  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                             | 54  
|         |                                                                                                                |     
|ITEM 10. | EXECUTIVE COMPENSATION                                                                                         | 58  
|         |                                                                                                                |     
|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED SHAREHOLDER MATTERS                 | 58  
|         |                                                                                                                |     
|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                 | 61  
|         |                                                                                                                |     
|ITEM 13. | EXHIBITS, AND REPORTS ON FORM 8-K                                                                              | 61  
|         |                                                                                                                |     
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                         | 63  

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FORWARD-LOOKING STATEMENTS

This Form 10-KSB contains certain forward-looking statements related to our future results, including certain projections and statements concerning business trends. Assumptions relating to forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, the financial services industry and Foundation Capital Resources, Inc. itself, all of which are difficult or impossible to predict accurately and many of which are beyond our control. When used in this Form 10-KSB, the words "estimate," "project," "intend," "believe," "anticipate," "judgment," "forecast," "is likely," "plan," "predict," "expect" and similar expressions are intended to identify forward-looking statements. We believe that the assumptions underlying the forward-looking statements are reasonable; however, any of the assumptions could prove inaccurate, and we may not realize the results contemplated by the forward-looking statements. Management decisions are subjective in many respects and susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our business strategy or capital expenditure plans that may, in turn, affect our financial position or results of operations. In light of the significant uncertainties inherent in the forward-looking information included in this Form 10-KSB, you should not regard the inclusion of such information as our representation that we will achieve any strategy, objectives, financial results or other plans. The forward-looking statements contained in this Form 10-KSB speak only as of the date of this Form 10-KSB, and we disclaim any obligation to update publicly or revise any of these forward-looking statements.

These and other statements, which are not historical facts, are based largely on management's current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements. These risks and uncertainties include, among others, risks and uncertainties relating to the following factors:

| |  | Our loans are not insured or guaranteed by any federal or state authority or regulatory agency;                                           
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| |   |                                                                                                                                           
| |  | Although they currently are, our lending activities need not be geographically diverse across the United States;                          
| |   |                                                                                                                                           
| |  | Changes in local and national economic conditions, particularly interest rates, interest rate relationships and mortgage prepayment rates;
| |   |                                                                                                                                           
| |  | Demand for products and services;                                                                                                         
| |   |                                                                                                                                           
| |  | The degree of competition for church and nonprofit financing;                                                                             
| |   |                                                                                                                                           
| |  | Changes in borrowers' abilities to repay loans;                                                                                           
| |   |                                                                                                                                           
| |  | Proceeds from the sale of collateral for certain loans may not be sufficient to recover outstanding interest and principal;               
| |   |                                                                                                                                           
| |  | Insurance on our real estate and real estate collateral may not cover all potential losses;                                               
| |   |                                                                                                                                           
| |  | Governmental and regulatory policy changes;                                                                                               
| |   |                                                                                                                                           
| |  | Changes in federal and state income tax laws and regulations, especially those applicable to REITs;                                       
| |   |                                                                                                                                           
| |  | The impact of technological advances and issues;                                                                                          
| |   |                                                                                                                                           
| |  | The outcome of potential future litigation and contingencies;                                                                             
| |   |                                                                                                                                           
| |  | Environmental compliance costs and liabilities;                                                                                           

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| |  | Lack of access to additional funds;                             
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| |   |                                                                 
| |  | Changes in the legal and regulatory environment in our industry;
| |   |                                                                 
| |  | Failure to remain qualified as a REIT.                          

These are representative of the risk factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking statement.

PART I

|ITEM 1. | DESCRIPTION OF BUSINESS
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Overview

Foundation Capital Resources, Inc. ("Foundation Capital," "the Company," "we" or "us"), a Georgia corporation, was formed in June 2000 to engage primarily in the business of providing mortgage financing to churches, colleges, schools and other nonprofit organizations throughout the United States. We currently focus our business activities on working with strategic partners to originate mortgage loans. We also originate mortgage loans, purchase mortgage loans made to churches and other nonprofit organizations, and may invest in mortgage bonds issued by such organizations.

Currently, we originate and purchase construction loans, interim loans and permanent loans with interest rates that are adjustable, generally every three years. Construction loans typically are made to finance the construction of new facilities or the renovation of existing facilities and generally have maturities of 12 to 18 months. Permanent loans are made either upon the completion of construction or for the refinancing of an existing credit facility, and normally have terms of one to 20 years with payments based upon up to a 30-year amortization schedule. Interim loans are made to borrowers with short-term or temporary needs for capital and generally have maturities of nine to 12 months. All loans are either secured by real property or by mortgage bonds issued by the borrower (referred to as "bond collateralized loans"). Generally, we spread our mortgage loans throughout the United States.

We seek to enhance the return on our loans by focusing on the origination of short-term loans (one to three years), medium-term loans (three to ten years) and long-term loans (ten to 20 years), and bond collateralized loans. Origination fees and discount points increase the yield on these loans. Except for our bond collateralized loans, most medium-term loans and long-term loans are subject to rate adjustment by Foundation Capital every three years. We generally retain the right to call the loan if there is a material adverse change that threatens the borrower's ability to repay the loan. We generally charge additional fees for the renewal of loans.

We have developed a loan referral network that we believe is highly effective and mutually beneficial. We have established strategic business relationships with numerous church extension funds and other lending organizations associated with various religious denominations and other nonprofit organizations. These organizations commonly refer loans to us and sometimes participate in loans with us. In addition, Foundation Capital has historically received loan applications from a number of for-profit organizations that specialize in making loans that meet Foundation Capital's loan program profile.

The Company elected to be taxed as a real estate investment trust ("REIT") commencing with its taxable year ended December 31, 2003. The Company believes that it is organized and has operated in a manner so as to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code") and intends to continue to be organized and operate in such a manner. Foundation Capital will not be subject to federal income taxes on the amount of income or gain that is distributed to our shareholders. To qualify as a REIT, we must distribute at least 90 percent of our taxable income to our shareholders and comply

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with various other requirements prescribed by the Internal Revenue Code. The Internal Revenue Code defines a REIT as a corporation, trust or association:

| |  | That is managed by one or more trustees or directors;                                                                                                                                                                                                          
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| |   |                                                                                                                                                                                                                                                                
| |  | That issues transferable shares or transferable certificates to its owners;                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                
| |  | That would be taxable as a regular corporation, but for its election to be taxed as a REIT;                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                
| |  | That is not a financial institution or an insurance company under the Internal Revenue Code;                                                                                                                                                                   
| |   |                                                                                                                                                                                                                                                                
| |  | That is owned by 100 or more persons;                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                
| |  | That has not more than 50 percent in value of its outstanding stock owned, actually or constructively, by 5 or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of each year (the "5/50 Rule"); and
| |   |                                                                                                                                                                                                                                                                
| |  | That meets certain other tests regarding the nature of its income and assets, and the amount of its distributions                                                                                                                                              

In addition, a corporation may not qualify as a REIT unless its taxable year is the calendar year. The Company has a calendar taxable year.

We currently generate income for dividends to our shareholders primarily from the net cash flows from our mortgage loans and the assessment of loan fees. Our net cash flow results primarily from the difference between the interest income on our mortgage loans and mortgage bonds and the costs incurred to acquire and manage these mortgage loans and bonds.

Subject to the supervision of our Board of Directors, the business of Foundation Capital is managed by One Capital Advisors, LLC, a Georgia limited liability company (the "Manager"). See "The Manager" below.

As of December 31, 2004, we had an aggregate principal amount of loans outstanding of $321,926,619, net of allowances and discounts, to churches and other nonprofit organizations.

Merger and the Limited Partnerships

Before December 31, 2003, Foundation Capital was the sole general partner of two Georgia limited liability limited partnerships, Foundation Capital Partners I, LLLP ("FCP I") and Foundation Capital Partners II, LLLP ("FCP II"). FCP I and FCP II were operated as what are commonly called "Down REITs" and were engaged in substantially the same business as Foundation Capital.

On November 19, 2003, Foundation Capital entered into an Agreement and Plan of Merger (the "Merger Agreement") whereby both FCP I and FCP II were to be merged with and into Foundation Capital, effective as of December 31, 2003. On December 3, 2003, at a special meeting of Foundation Capital's shareholders, the Merger Agreement was approved. The mergers of FCP I and FCP II with and into Foundation Capital were effective as of December 31, 2003. Foundation Capital was the surviving entity in these mergers. Foundation Capital now directly conducts all of the activities previously conducted by FCP I and FCP II, and as the surviving entity in the mergers, has succeeded to all of the assets previously held by FCP I and FCP II.

Merger of OCA Fund I

In June 2004, Foundation Capital's Board of Directors and shareholders approved the merger of OCA Fund I, a company related through a common ownership, with Foundation Capital as the surviving corporation. The merger was effective on June 30, 2004, and was consummated through the exchange of 1,893,145 shares of Foundation Capital Common Stock for all of the OCA Fund I capital contributions at the rate of one share of Foundation Capital Common Stock for each $10.00 of capital contribution. The assets and liabilities of OCA

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Fund I were transferred to Foundation Capital at their existing carrying values, as the merger was accounted for as a combination of entities under common control.

Competition and Market

Based upon the most recent information available from sources in the church and nonprofit industry and the United States Census Bureau, it was estimated that in 2000, there were more than 450,000 churches in America, and that in that year, these churches collectively spent nearly $8 billion on religious construction projects. Research by the New York-based Dodge Division of McGraw-Hill Construction reveals that during 2002, church construction expenditures exceeded $21 billion. The market for church financing is both broad and fragmented with no one firm having a dominant position in the marketplace.

The real estate financing industry is generally highly competitive, although competition is somewhat limited in our area of specialization in lending to churches and other nonprofit organizations. We compete with a variety of financial institutions including banks, savings and loan associations, REITs, denominational loan funds, broker-dealers and other financial institutions, many of which have greater resources or lower costs of operations, larger staffs and more extensive operating histories.

We believe, however, that we have important advantages in our area of specialization. Most importantly, the directors, officers and Manager of Foundation Capital have extensive experience in the management and financial operations of churches and other nonprofit organizations. This experience provides us a detailed knowledge and intimate familiarity with the types of organizations that borrow from us. It also provides us an established network of relationships with organizations active in the financing of churches, including church bond broker-dealers and both for-profit and nonprofit mortgage lenders that routinely refer loans to us.

Investment Strategy

Our investment strategy is to create a diversified portfolio of mortgage loans and mortgage bonds of churches and other nonprofit organizations that preserve our capital base and generate income for distribution to our shareholders.

We invest primarily in mortgage loans originated by our strategic partners, loans that we originate, or loans that we acquire from other lenders. We also invest in mortgage bonds and loans secured by mortgage bonds. In addition, we may make other investments consistent with applicable REIT requirements, including real property, commercial or residential mortgages, securities of other REITs and government securities.

As a REIT, Foundation Capital's ability to sell its assets for gain is restricted by the REIT provisions of the Internal Revenue Code.

Operating Restrictions

We currently operate as a REIT and are generally subject to federal income tax only on undistributed income. Qualification as a REIT involves the satisfaction of requirements established under technical provisions of the Internal Revenue Code, for which there are limited judicial and administrative interpretations, and is dependent upon various factual matters and circumstances not entirely within our control. If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. In addition, unless entitled to relief under certain statutory provisions, we would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. Such disqualification would reduce our net earnings available for investment or distributions to shareholders due to the additional tax liability for the year or years involved. In addition, distributions to shareholders would no longer be required to be made. As a REIT, we continue to be subject to certain federal, state and local taxes on our income and property.

The Investment Company Act of 1940 exempts entities that are "primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate." At all times, we

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intend to conduct our business so as not to become regulated as an investment company under the Investment Company Act. Failure to continue to qualify for this exemption could have a material adverse effect on our financial condition and results of operations.

As a REIT, Foundation Capital has adopted compliance guidelines that restrict the acquisition, holding and sale of assets. Prior to the acquisition of any asset, we determine whether the asset will constitute a qualified REIT asset. Substantially all of the assets that we acquire for investment are expected to be qualified REIT assets. We plan to closely monitor our purchases of assets and the income from such assets for compliance with applicable requirements for Foundation Capital's qualification as a REIT and its exemption under the Investment Company Act of 1940.

Any revisions to our operating policies require the approval of the Board of Directors, including a majority of the Independent Directors. As used in this Form 10-KSB, the term "Independent Director" means a director of Foundation Capital who has not been associated within the last two years, directly or indirectly, with the Manager or Sponsor of Foundation Capital, whether by ownership of, ownership interest in, employment by, any material business or professional relationship with, or who serves as an officer or director of, the Manager, Sponsor or an affiliated business entity of the Manager or Sponsor. A director is not considered independent if he or she is serving as a director of more than three corporations organized by the Sponsor. "Independent Director" also means a director who performs no services for Foundation Capital except as director. An indirect relationship includes circumstances in which a member of the immediate family of a director has one of the foregoing relationships with the Manager or the Sponsor of Foundation Capital or the corporation for which he or she serves as director. For purposes of determining whether or not a business or professional relationship is material, the gross revenue derived by the prospective Independent Director from the Sponsor and the Manager and the Affiliates shall be deemed material per se if it exceeds five percent of the prospective Independent Director's annual gross income, derived from all sources during either of the last two years, or net worth on a fair market value basis. The term "Sponsor" means any person directly or indirectly instrumental in organizing, wholly or in part, Foundation Capital, and any Affiliate of any such person. The term Sponsor does not include wholly independent third parties such as attorneys, accountants and underwriters whose only compensation is for professional services. The term "Affiliate" means (1) any person directly or indirectly controlling, controlled by or under common control with another person, (2) any person owning or controlling ten percent or more of the outstanding voting securities or beneficial interests of such other person, (3) any officer, director, trustee, or general partner of such person, and (4) if such other person is an officer, director, trustee or partner of another entity, then the entity for which that person acts in any such capacity.

Except as otherwise restricted, the Board of Directors has the power to modify or alter the operating policies without the consent of shareholders.

Revolving Credit Agreement

On November 4, 2004, Foundation Capital procured a $125 million line of credit with a syndicate of financial institutions, and may draw down on that line of credit from time to time as necessary to maintain Foundation Capital's liquidity (See Item 6. Management's Discussion and Analysis or Plan of Operation, "Revolving Credit Agreement.")

Mortgage Loans

Types of Loans

Foundation Capital primarily originates and purchases the following types of loans made to churches, colleges, schools and other nonprofit organizations:

Construction Loans. Construction loans typically are made to finance the construction of new facilities for worship, education or fellowship activities or for other ministry-related facilities. These loans normally have a maturity of 12 to 18 months. Construction loans may also be made to finance the renovation of existing facilities. Construction loans are typically interest-only on the outstanding balance drawn for construction.

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Interim Loans.Interim loans typically are made to borrowers with short term or temporary needs for capital. Interim loans might be made, for example, to acquire undeveloped real property, to permit a borrower to commence construction while other financing (including a mortgage bond program) is being obtained, or to proceed with capital expenditures prior to receipt of other funds from the sale of property or from pledges by members. These loans generally have maturities of nine to 12 months. An interim loan requires repayment in full (a balloon payment) within a short period of time.

Permanent Loans. Permanent loans are used for the acquisition of property, the purchase of existing facilities or the completion of construction, or for the refinancing of existing loans. Permanent loans may have a maturity of up to 20 years with payments made on up to a 30-year amortization.

Bond Collateralized Loans. In a bond collateralized loan, Foundation Capital makes a loan that is secured by specific mortgage bonds issued by the church or other nonprofit organization that is the borrower. The mortgage collateral for the bonds issued to Foundation Capital therefore also acts as the collateral for the loan. As the borrower pays interest and principal on its bonds, these amounts are applied in payment of interest and principal on the loan.

Line of Credit Loans. Lines of credit loans are typically made to a borrower for temporary working capital to support operations or a capital funds program, and not for permanent financing purposes. Lines of credit loans are issued with a term of not more than one year and may be subject to renewal based on updated loan application information. Each month, the borrower is required to pay interest only on the loan.

Loan Policies

We originate and purchase loans made primarily to churches and other nonprofit organizations for the purchase of land or developed facilities, the construction of new facilities, the renovation of existing facilities or the refinancing of existing indebtedness. Bond collateralized loans are secured by specific mortgage bonds issued by the borrower. Our other loans are primarily secured by a first priority mortgage on real property.

Foundation Capital offers loans with fixed and variable interest rates. The terms offered to borrowers regarding interest rates, maturities, points and fees are determined from time to time based upon current market conditions, the expenses of Foundation Capital, the expenses incurred in arranging the loans and such other factors as we believe are relevant in determining these terms.

We charge each borrower an origination fee and a loan processing fee at the inception of the loan. These fees may be paid in cash or they may be added to the principal of the loan at our discretion. In addition, we may charge an additional fee for each loan renewal with rates varying based upon the then current interest rates, the applicable maturity date and the creditworthiness of the borrower.

Loan payments generally are received monthly. Other repayment schedules, including weekly, quarterly, or semi-annually, may be made available as appropriate. Late payments generally result in a penalty. Current policy permits borrowers to prepay their loans prior to maturity, in whole or in part, without premium or penalty.

Loans are normally limited to no more than 85 percent of the value of the property securing the loan. In some cases, additional pledges or guarantees may be required. An appraisal is normally required for purposes of determining the value of real property, including land and existing or proposed facilities.

Except for our bond collateralized loans, most medium-term loans and long-term loans are subject to rate adjustment by Foundation Capital every three years. If there is a material adverse change that threatens the borrower's ability to repay the loan, Foundation Capital may retain the right to call the loan. We generally charge additional fees for the renewal of any loans.

Our loan underwriting process includes a review and analysis of the history of the borrowing organization, the denominational affiliation (if any), the strength of the organization's leadership, longevity, prior financial performance, financial capability and general creditworthiness. For permanent loans, we

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generally require the borrower to obtain title insurance, real estate surveys, appropriate resolutions of borrowers, appraisals of the property and evidence of fire and extended coverage insurance. Payment and performance bonds are not required on construction loans.

Loan Processing, Underwriting and Servicing

The Manager reviews all mortgage loan applications. Applications normally include the following: (1) a completed application form with all required exhibits; (2) corporate organizational documents including Articles of Incorporation, Bylaws and any applicable governing documents; (3) financial statements in a form acceptable to us; (4) a certified real estate appraisal or opinion of counsel; (5) a survey in a form acceptable to us and certified to us and the borrower; (6) a preliminary title report or title commitment; (7) evidence of all relevant insurance coverages including builders' risk (if applicable); and (8) copies of all material contracts affecting the borrower, including, if applicable, architectural, construction and engineering contracts.

The Manager also has the authority to approve completed loan applications within limitations established by the Credit Committee of the Board of Directors. Each loan must meet the standards set forth in Foundation Capital's loan policy guidelines. The Manager, together with our officers and legal counsel, as appropriate, are responsible for the supervision of the loan closing, including the preparation of the loan documents and the forwarding of funds. It is our policy to require the borrower to pay all the expenses of the loan including our legal expenses. These costs are usually deducted from the loan proceeds. To protect against loss of income as a result of the failure of a borrower to close after a loan commitment is issued, we typically require the borrower to pay an application fee that is non-refundable upon the issuance of the loan commitment.

The Manager provides the administration and servicing of our loan portfolio. Among other things, the Manager manages the credit function, monitors the condition of our loan portfolio, manages problem loans, write-offs and foreclosures, and periodically reviews the adequacy of our allowance for loan losses.

Loan Participations

Foundation Capital may sell loan participations to other lenders or investors. In addition, we may acquire participations in loans originated by other lenders, as long as such loans meet our minimum requirements for similar loans.

Mortgage Bonds

Many churches, schools and other nonprofit organizations issue bonds secured primarily by first mortgages on real property. These mortgage bonds typically are issued pursuant to a trust indenture and mature serially over a period of six months to 25 years. The bonds are issued in various denominations (normally $250 or more) and pay either simple or compound interest at varying rates with the earliest maturing bonds normally having the lowest rates. From time to time, Foundation Capital invests in these mortgage bonds if they have maturities and interest rates that are attractive to us. All purchases are made with the intent to hold the bond until maturity and not with a view to resell it.

The Manager

One Capital Advisors, LLC serves as the Manager of Foundation Capital. The Manager is a Georgia limited liability company formed in June 2000 for the purposes of advising Foundation Capital in making mortgage loans to and purchasing mortgage-secured obligations of churches and other nonprofit religious organizations and providing management and administrative services to Foundation Capital. The executive officers of the Manager are Messrs. A. J. Braswell, President and CEO; Barry S. Winford, Senior Vice President - Loan Production; Bobby D. Ray, Senior Vice President, CFO and Treasurer; and Douglas H. Veazey, Senior Vice President - Loan Servicing.

Under the terms of the Management Agreement, the Manager, among other duties, generally has responsibility for the day-to-day operations of Foundation Capital; administers Foundation Capital's

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bookkeeping and accounting functions; serves as Foundation Capital's consultant in connection with policy decisions to be made by the Board of Directors; manages or causes to be managed Foundation Capital's assets; and renders other services as the Board of Directors deems appropriate. The Manager is subject to the supervision of the Board of Directors and has only such functions as are delegated to it.

The Manager bears the expenses incurred by it in connection with performance of its duties under the Management Agreement, including employment expenses of its personnel, rent, telephone, and equipment expenses to the extent such expenses relate to the office maintained by the Manager, and miscellaneous administrative expenses incurred in its performance under the Management Agreement. Foundation Capital bears the expenses for functions not required to be performed by the Manager under the Management Agreement, which generally include capital raising and financing activities, corporate governance matters, audits and other activities.

The current Management Agreement is for a one-year term and was entered into by Foundation Capital in April 2004 with the unanimous approval of the Independent Directors. The Management Agreement may be renewed for successive one-year terms, provided that each one-year renewal term is approved by the Independent Directors. In determining whether to renew the Management Agreement, the Independent Directors are to review the performance of the Manager and consider whether the compensation paid to the Manager is reasonable. Foundation Capital may terminate the Management Agreement for any reason with 60 days' written notice to the Manager upon a vote of a majority of the Independent Directors.

The Manager receives a monthly management fee based upon "Average Invested Assets" (as defined in the Management Agreement) comprised of one-twelfth of 0.3 percent of cash and cash equivalents, plus one-twelfth of 1.25 percent of Average Invested Assets greater than or equal to $100 million.

Under the Management Agreement, the Manager is to reimburse Foundation Capital to the extent that the total Operating Expenses (defined in the Management Agreement and including the Management Fee) paid during the previous calendar year exceed the greater of (1) two percent of the Average Invested Assets of Foundation Capital for that calendar year, or (2) 25 percent of the net income of Foundation Capital for such calendar year, and to the extent that the Board of Directors determines such reimbursement is justified. If Operating Expenses of Foundation Capital are less than the two percent and 25 percent limitations described above in any subsequent calendar year, Foundation Capital is to pay back to the Manager the earlier amount reimbursed by the Manager, to the extent that the payment plus the Operating Expenses for that year do not exceed the two percent and 25 percent limitations described above, and as long as a majority of the Independent Directors determines that the payment will not create cash flow or dividend challenges for Foundation Capital.

Foundation Capital has agreed to reimburse, indemnify and hold the Manager harmless for and from all expenses, losses, damages, liabilities, demands, charges, and claims of any nature arising in respect of or from any acts or omissions of the Manager undertaken in good faith and pursuant to the authority the Management Agreement grants the Manager.

Employees

Foundation Capital has no employees and we do not anticipate having any employees within the next 12 months since our business is operated by the Manager.

Where You Can Find Additional Information

The Company maintains a website at www.foundationcapitalresources.com, and makes available, free of charge, on its website its annual report on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and if any, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission. Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any

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document we file at the SEC's public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms.

Alternatively, at your request, we will provide you, without charge, a copy of any exhibits to this Annual Report on Form 10-KSB. If more information is needed, please call, write or e-mail us at:

Foundation Capital Resources, Inc.
Attn: Mari Irby
1430 Lelia Drive, Suite 100
Jackson, Mississippi 39216
Telephone: (601) 321-1800
Email: mirby@fcrinc.com

|ITEM 2. | DESCRIPTION OF PROPERTY
|------- | -----------------------

The Company has a lease through June 30, 2007 for its corporate headquarters, located at 1430 Lelia Drive, Suite 100, Jackson, Mississippi 39216. The lease provides for annual rent of $109,850. The lease charges are included in the management fees paid to the Manager by Foundation Capital. The Company believes that the leased space is adequately covered by insurance and is adequate to meet the Company's foreseeable operating space needs.

We do not currently hold real property for investment purposes. We do, however, hold real property on a temporary basis taken in foreclosure, or in lieu of foreclosure, to satisfy loans in default as discussed in "Management's Discussion and Analysis or Plan of Operation-Financial Condition." As a REIT, we also may acquire and hold real property for investment purposes in the future. Under current state and federal laws, present and past owners of real property may be exposed to liability for the cost of clean up of contamination on or originating from those properties, even if they are wholly innocent of the actions that caused the contamination. These liabilities can be material and can exceed the value of the contaminated property.

Investment Policies

General

The following is a discussion of our investment policies. The Board of Directors has established these policies and may amend or revise these policies from time to time at its discretion without a vote of the shareholders, except that certain policies with respect to conflicts of interest must be consistent with legal requirements. Foundation Capital acquires interests in real estate primarily for the income generated from such investments and not for possible capital gain.

Acquisition Policies

Foundation Capital may, from time to time, and as funds permit, purchase mortgage loans from nonprofit organizations, banks, mortgage companies, trust companies and other REITs, as well as originating its own loans. Prior to purchasing a loan, Foundation Capital may obtain an appraisal of the fair market value from a qualified independent appraiser selected by a majority of the Independent Directors in order to determine whether the purchase price is fair, competitive and commercially reasonable. In addition, Foundation Capital may, to the extent such purchases are consistent with the requirements of the Internal Revenue Code applicable to REITs, purchase and hold other investments such as mortgage bonds. Foundation Capital only invests in mortgage loans and mortgage bonds that meet the credit and other standards established by the Board of Directors. Foundation Capital may invest in or originate first, second or further subordinated mortgages as long as such mortgages satisfy the restrictions listed below.

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Restrictions on Investments

The investment policies set forth in Foundation Capital's Bylaws were approved by the Board of Directors. In addition to other investment restrictions imposed by the Board of Directors from time to time that are consistent with Foundation Capital's qualification as a REIT, Foundation Capital observes the following restrictions on its investments as set forth in its Bylaws:

| | (1)  | Not more than ten percent of Foundation Capital's total assets are invested in unimproved real property. For purposes of this paragraph, "unimproved real property" means real property which has the following three characteristics: (a) an equity interest in the property was not acquired for the purpose of producing rental or other operating income; (b) there is no development or construction in process on the property; and (c) no development or construction on the property is planned in good faith to begin within one year.                                                                                                                                                                                                                                                                                                                                                                                             
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (2)  | Not more than 20 percent of the dollar value of Foundation Capital's mortgage loans are made to entities other than churches and nonprofit organizations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (3)  | Foundation Capital may not invest in commodities or commodity futures contracts. Such limitation is not intended to apply to future contracts, when used solely for hedging purposes in connection with Foundation Capital's ordinary business of investing in real estate assets and mortgages.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (4)  | Foundation Capital may not make or invest in mortgage loans, including construction loans, on any one property, if the aggregate amount of all mortgage loans outstanding on the property, including the loans of Foundation Capital, would exceed an amount equal to 85 percent of the appraised value of the property as determined by an independent appraisal. However, Foundation Capital may make or invest in mortgage loans on any one property if substantial justification exists because of the presence of other underwriting criteria such as the net worth of the borrower, the credit rating of the borrower based on historical financial performance, or collateral adequate to justify waiver of application of the foregoing requirements; provided, that such loans would in no event exceed the appraised value of the property at the date of the loans.                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (5)  | Foundation Capital may not make or invest in any mortgage loans that are subordinate to any mortgage or equity interest of the Manager, any director or Affiliate thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (6)  | Foundation Capital may not invest in the equity securities of any non-governmental company, including other REITs or limited partnerships, for a period in excess of 18 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (7)  | Foundation Capital may not engage in any short sales of securities or in trading as distinguished from investment activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (8)  | Foundation Capital may not issue redeemable equity securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (9)  | Foundation Capital may not engage in underwriting or the agency distribution of securities issued by others.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (10) | Foundation Capital may not issue options or warrants or similar evidence of a right to buy its securities or to purchase its shares to the Manager, directors, Sponsors, or Affiliates, except on the same terms as such options or warrants (or underlying shares), if any, are sold to the general public. The Company may issue options or warrants to persons not so connected with the Company but only as a part of financing arrangements, but not at exercise prices less than the fair market value of such shares on the date of grant and for consideration that in the judgment of a majority of the Independent Directors, has a market value less than the value of such option on the date of grant. Options or warrants issuable to the Manager, directors, Sponsors, or Affiliates shall not exceed an amount equal to 10 percent of the outstanding shares of the Company on the date of grant of any options or warrants.

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| | (11) | Foundation Capital may not issue debt securities unless the historical debt service coverage for the most recently completed fiscal year as adjusted for known changes, is sufficient to properly service the higher level of debt.                                                                                                                                                                                                                                                        
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (12) | Foundation Capital may not invest in real estate contracts of sale unless such contracts are in recordable form and are appropriately recorded in the chain of title.                                                                                                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (13) | Foundation Capital may not sell (other than in the ordinary course of business on a basis no less favorable to the Company than in an arm's length transaction) any of its assets to the Manager, or the directors or any of their Affiliates.                                                                                                                                                                                                                                             
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (14) | Foundation Capital may not acquire assets from any Manager to the Company or any officer or director of the Company, any Sponsor of any Affiliates thereof, without having first obtained an appraisal of the fair market value of the assets from an independent expert selected by a majority of the Independent Directors. The appraisal shall be maintained in the Company's records for at least five years, and shall be available for inspection and duplication by any shareholder.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (15) | Foundation Capital may not issue its shares on a deferred payment basis or other similar arrangement.                                                                                                                                                                                                                                                                                                                                                                                      

Subject to the above restrictions, a majority of the Independent Directors may alter the investment policies if they determine that such change is in the best interests of Foundation Capital.

Loan Limit Policies

Our current policy limits our loans to any one borrower or related group of borrowers to not more than $5,000,000 without prior approval of the Board of Directors. This policy is subject to change from time to time with the approval of the Board of Directors.

Other Policies

Although we do not currently intend to, we may make acquisitions and investments other than as previously described. Foundation Capital has authority to issue senior securities. Foundation Capital also has authority to offer its shares of Common Stock or other equity or debt securities in exchange for property and to repurchase or otherwise reacquire its Common Stock or any other securities and may engage in such activities in the future. Foundation Capital will not engage in trading, underwriting, or the agency distribution or sale of securities of other companies. At all times, we attempt to make investments in such a manner as to be consistent with the requirements of the Internal Revenue Code applicable to REITs unless, because of the circumstances or changes in the Internal Revenue Code (or the regulations promulgated thereunder), the Board of Directors determines that it is no longer in the best interest of Foundation Capital to continue to be qualified as a REIT. Foundation Capital's policies with respect to such activities may be reviewed and modified from time to time by Foundation Capital's Board of Directors without notice to, or the vote of, the shareholders.

|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

Management is not aware of any pending or threatened litigation against Foundation Capital and Foundation Capital is not a party to any material litigation. From time to time, Foundation Capital is involved in routine legal proceedings incidental to the conduct of its business that arise in the ordinary course of business.

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

None.

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PART II

|ITEM 5. | MARKET FOR COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
|------- | --------------------------------------------------------------------------------------------------------------

Market Information

None of our issued and outstanding shares of Common Stock are admitted for trading to any securities exchange or other public market. There is no established public trading market for our Common Stock.

Shareholders

As of December 31, 2004, there were 115 holders of record of our Common Stock.

Dividends

For the fiscal years ended December 31, 2004 and 2003, Foundation Capital paid dividends of $17,068,391 ($0.64 per share) and $540,185 ($0.58 per share), respectively, to holders of Foundation Capital's Common Stock. Dividends are payable at the discretion of the Board of Directors and depend on the amount of funds available from operations of Foundation Capital, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors that the Board of Directors deems relevant. See "Item 1-Description of Business-Operating Restrictions" for other restrictions that limit, or may in the future limit, Foundation Capital's ability to pay dividends on its Common Stock.

The Company currently pays cash dividends on a quarterly basis. Foundation Capital declared and paid the following dividends for the years ended December 31, 2004 and 2003:

|Record Date        | Dividend Per Share
|------------------ | ------------------
|                   |                   
|2004               |                   
|                   |                   
|December 31, 2004  | $0.16             
|                   |                   
|December 30, 2004  | $0.01             
|                   |                   
|September 30, 2004 | $0.16             
|                   |                   
|June 30, 2004      | $0.14             
|                   |                   
|March 31, 2004     | $0.16             
|                   |                   
|2003               |                   
|                   |                   
|December 31, 2003  | $0.00             
|                   |                   
|September 30, 2003 | $0.16             
|                   |                   
|June 30, 2003      | $0.17             
|                   |                   
|March 31, 2003     | $0.16             

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| | *          Pro Forma excludes common stock converted from Limited Partnership Interests as a result of the merger of FCP I and FCP II with and into Foundation Capital on December 31, 2003.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                             
| | **          Pro Forma excludes common stock converted from LLC member interests as a result of the merger of OCA Fund I into Foundation Capital on June 30, 2004                            
| |                                                                                                                                                                                             
| | ***          Special year end dividend                                                                                                                                                      

To be in compliance with the covenants of our revolving credit agreement with KeyBank National Association, Foundation Capital is not permitted to make distributions that exceed funds available for distribution. To qualify as a REIT, Foundation Capital must distribute at least 90 percent of our taxable income to our shareholders.

Repurchases of Equity Securities

Foundation Capital did not repurchase any of its outstanding equity securities during the fourth quarter of 2004.

Equity Compensation Plans

Foundation Capital does not maintain any equity compensation plans.

Recent Sales of Unregistered Securities

Common Stock. During 2004, a total of 1,644,847.1 shares of Foundation Capital Common Stock were issued pursuant to the reinvestment by existing shareholders of $16,448,471 through Foundation Capital's Dividend Reinvestment Plan. During the three months ended December 31, 2004, a total of 485,780.8 shares of Foundation Capital Common Stock were issued pursuant to the reinvestment of $4,857,808 of dividends by existing shareholders on December 31, 2004 through Foundation Capital's Dividend Reinvestment Plan. These issuances of shares pursuant to the Dividend Reinvestment Plan were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933.

During the fourth quarter of 2004, additional Common Stock was issued as follows:

| | Date             | Number of Shares |  | Amount |           | 
| | ---------------- | ---------------- |  | ------ | --------- | 
| | October 15, 2004 | 13,000           |  | $      | 130,000   | 
| | October 21, 2004 | 652,600          |  |        | 6,526,000 | 
| | Total            | 665,600          |  | $      | 6,656,000 | 

All shares were purchased by existing shareholders and were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933.

Securities Act Exemptions.Recipients of securities in the transactions described above represented their intention to acquire the securities for investment purposes only and not with a view to or for the sale in connection with any distribution of those securities issued in those transactions. All recipients of these securities had adequate access, through their relationships with us or otherwise, to information about us and the shares of Common Stock acquired.

Use of Proceeds from Registered Securities

In November 2003, Foundation Capital began the public offering of up to $55,000,000 of its Redeemable Certificates of Indebtedness (2003 Series A, B, C and D) (collectively, the "Certificates") pursuant

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to a Registration Statement on Form S-11 (SEC File Number 333-105923). A summary of the title of each class of securities, the amount registered, and the aggregate price of the offering amount registered is as follows:

|Title of Each Class of
Securities Registered                                                                                                        | Amount Registered                               | Aggregate Price                                
|--------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | -----------------------------------------------
|                                                                                                                                                    |                                                 |                                                
|Series A Certificate of Indebtedness
Series B Certificate of Indebtedness
Series C Certificate of Indebtedness
Series D Certificate of Indebtedness | $13,750,000
$13,750,000
$13,750,000
$13,750,000 | $13,750,000
$13,750,000
$13,750,000
$13,750,000

The Certificates were offered on a best efforts basis by Rives, Leavell and Company, Inc., an Alabama corporation (the "Underwriter"). As of December 9, 2004, an aggregate total of $4,023,500 in principal amount of Series A Certificates, $226,000 in principal amount of Series B Certificates, $121,000 in principal amount of Series C Certificates and $868,000 in principal amount of Series D Certificates have been sold.

From the effective date of the Registration Statement through December 9, 2004, the date the offering was terminated, Foundation Capital incurred the following expenses:

| | Underwriting commissions | $ | 63,405  | 
| | ------------------------ | - | ------- | 
| | Underwriters' expenses   |   | 770     | 
| | Other expenses           |   | 120,536 | 
| | Total                    | $ | 184,711 | 

The commissions and expenses paid to the Underwriter through June 30, 2004 may be deemed an indirect payment to Mr. Braswell, a director and officer of Foundation Capital, because until June 30, 2004 he was an indirect owner of a 60% interest in the Underwriter. Mr. Braswell sold his interest in the Underwriter on June 30, 2004. All other payments were payments to others. The net offering proceeds to Foundation Capital through December 9, 2004, after deducting the above expenses, were $5,053,789. The net offering proceeds were used by Foundation Capital to fund loans made to other parties.

On November 24, 2004, the Company filed Form S-11/A (Post-Effective Amendment Number 2) with the SEC to remove from registration $49,761,500 (as detailed below) of the above securities that were originally registered. On December 9, 2004, the SEC declared the filing effective. The offering was terminated before the sale of all the securities, as set forth below.

|Title of Each Class of Securities Removed From Registration | Amount Removed From Registration
|----------------------------------------------------------- | --------------------------------
|                                                            |                                 
|Series A Certificates of Indebtedness                       | $9,726,500                      
|                                                            |                                 
|Series B Certificates of Indebtedness                       | $13,524,000                     
|                                                            |                                 
|Series C Certificates of Indebtedness                       | $13,629,000                     
|                                                            |                                 
|Series D Certificates of Indebtedness                       | $12,882,000                     

|ITEM 6. | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|------- | ---------------------------------------------------------

The following Management's Discussion and Analysis or Plan of Operation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See "Forward-Looking Statements" at the beginning of this Form 10-KSB.

The purpose of this discussion is to provide an understanding of our financial results and condition by focusing on changes in certain key items from year to year. Management's Discussion and Analysis (MD&A) begins with an overview of the Company, followed by a review of results of operations and financial condition.

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We also provide some insight into our significant accounting policies and estimates, and other information that we believe you will find useful.

Overview

Foundation Capital Resources, Inc., a Georgia corporation, was formed in June 2000 to engage primarily in the business of providing mortgage financing to churches, colleges, schools and other nonprofit organizations throughout the United States. We currently focus our business activities on working with strategic partners to originate mortgage loans. We also originate mortgage loans, purchase mortgage loans made to churches and other nonprofit organizations, and may invest in mortgage bonds issued by such organizations.

Like many REIT's that are not self-administered, Foundation Capital utilizes a third-party firm, One Capital Advisors, LLC (the "Manager"), to advise Foundation Capital in making mortgage loans to and purchasing mortgage-secured obligations of churches and other nonprofit religious organizations, and to provide management and administrative services. The executive officers of the Jackson, Mississippi-based Manager are Messrs. A. J. Braswell, President and CEO; Barry S. Winford, Senior Vice President - Loan Production; Bobby D. Ray, Senior Vice President, CFO and Treasurer; and Douglas H. Veazey, Senior Vice President - Loan Servicing.

The Company elected to be taxed as a REIT commencing with its taxable year ended December 31, 2003. The Company believes that it is organized and has operated in a manner so as to qualify as a REIT under the Internal Revenue Code and intends to continue to be organized and operate in such a manner. Foundation Capital will not be subject to federal income taxes on the amount of income or gain that is distributed to our shareholders. To qualify as a REIT, we must distribute at least 90 percent of our taxable income to our shareholders and comply with various other requirements prescribed by the Internal Revenue Code.

During 2004, Foundation Capital originated and purchased $180,879,844 in loans, as compared to $158,902,851 of loans originated and purchased in 2003. Foundation Capital closed $166,405,582 in loans during 2004. To be successful, management believes Foundation Capital will need to remain competitive in the church lending marketplace in terms of the loan rates charged to borrowers. Foundation Capital has developed a network for loan referrals through relationships with a number of loan funds associated with denominational and nonprofit organizations. These loan funds have in the past referred loans to and participated in loans with Foundation Capital, and management expects this to continue in 2005. In addition, Foundation Capital has historically received loan applications from a number of for-profit organizations that specialize in making loans that meet Foundation Capital's loan program profile.

From time to time, the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") provides guidance for businesses and financial markets in terms of interest rate projections. Based on Federal Reserve Board guidance provided in late 2004 and early 2005, management believes that interest rates may gradually trend upward in 2005 and perhaps 2006. Foundation Capital will closely monitor interest rate and inflation trends in managing its business, as well as the general guidance provided from time to time by the Federal Reserve Board.

The table below provides quarterly information regarding the Company's interest income, interest expense, net interest income, average yield on distributions, average cash balances, net loans receivable balances and loans originated and purchased.

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|For the Quarter
Ended  | Interest
Income | Interest
Expense | Net
Interest
Income | Average
Yield on
Distributions | Average
Cash and
Cash
Equivalents | Loans
Receivable,
Net | Loans
Originated
and
Purchased
|---------------------- | --------------- | ---------------- | ------------------- | ------------------------------ | --------------------------------- | --------------------- | ------------------------------
|(Dollars in thousands)
|December 31, 2004      | $5,752          | $240             | $5,512              | 6.75%                          | $4,984                            | $321,927              | $64,187                       
|                       |                 |                  |                     |                                |                                   |                       |                               
|September 30, 2004     | $5,386          | $72              | $5,313              | 6.29%                          | $3,263                            | $271,722              | $32,203                       
|                       |                 |                  |                     |                                |                                   |                       |                               
|June 30, 2004          | $5,034          | $50              | $4,984              | 6.22%                          | $4,660                            | $259,062              | $43,723                       
|                       |                 |                  |                     |                                |                                   |                       |                               
|March 31, 2004         | $4,484          | $30              | $4,454              | 6.39%                          | $5,248                            | $235,017              | $40,767                       
|                       |                 |                  |                     |                                |                                   |                       |                               
|December 31, 2003      | $3,931          | $1               | $3,930              | 6.08%                          | $2,789                            | $223,242              | $66,885                       

Critical Accounting Policies

This Management's Discussion and Analysis or Plan of Operation is based on Foundation Capital's financial statements and the notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. On an ongoing basis, management evaluates its estimates and judgments.

Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There can be no assurance that actual results will not differ from those estimates. If actual results are different than management's judgments and estimates, Foundation Capital's financial results could change, and such change could be material to Foundation Capital.

Material estimates and judgments that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the carrying amount of foreclosed assets held for sale. In connection with the determination of the allowance for loan losses and carrying amount of foreclosed assets held for sale, management obtains independent appraisals for significant properties.

Foundation Capital has identified the following critical accounting policies and significant estimates and judgments as critical to its business operations and the understanding of its results of operations. For a detailed discussion on the application of these significant estimates and judgments and our accounting policies, see Note 1 to the Consolidated Financial Statements.

The following listing is not intended to be a comprehensive list of all of our estimates and judgments or accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management's judgment in their application. There are also areas in which management's judgment in selecting any available alternative would not produce a materially different result. See our audited Consolidated Financial Statements and notes thereto which contain accounting policies and other disclosures required by accounting principles generally accepted in the United States of America.

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Loans Receivable

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for any charge-offs, the allowance for loan losses, any deferred fees or costs on originated loans and unamortized premiums or discounts on loans collateralized by mortgage bonds.

Discounts and premiums on loans collateralized by mortgage bonds are amortized to income using the interest method over the remaining period to maturity.

Interest on loans receivable is included in income when earned on the accrual basis. The accrual of interest is discontinued when, in the opinion of management, the full and timely collection of principal and interest is in doubt. Previously accrued interest is reversed if deemed uncollectible by management. Interest is recognized for impaired loans only upon receipt, and only after all principal amounts are current according to the contractual terms of the loan agreement.

Allowance for Loan Losses

The allowance for loan losses is based upon risks inherent in the loan portfolio and is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

A loan is considered impaired when, based on current information and events, it is probable that Foundation Capital will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a case-by-case basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent.

Loans not evaluated for impairment on an individual basis are collectively evaluated for impairment, and losses are estimated based on management's evaluation of the portfolio and consideration of other factors, such as past due trends, historical charge-off ratios of entities with similar loan portfolio characteristics and other factors.

Foreclosed Assets Held for Sale

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less costs to sell. Revenue and expenses from operations of and changes in the valuation allowance related to foreclosed assets are included in net income.

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Sources and Uses of Cash

Foundation Capital has received the majority of its equity capital from nonprofit foundations and associations affiliated with church groups. Since June 2000, the majority of Foundation Capital's equity capital has come from one group of investors. As of December 31, 2004, shareholder's equity totaled $292,786,685.

During 2004, Foundation Capital originated and purchased $180,879,844 in loans to churches, colleges, schools and other nonprofit organizations. As of December 31, 2004, Foundation Capital's net loans receivable balance totaled $321,926,619, as compared to $223,241,868 as of December 31, 2003.

On July 27, 2004, Foundation Capital procured a $5 million line of credit with a financial institution and may draw down on that line of credit from time to time as necessary to maintain Foundation Capital's liquidity. At December 31, 2004, this line of credit was fully available to Foundation Capital.

In the second quarter of 2004, a $2 million line of credit was procured from another financial institution. This line of credit was cancelled in the third quarter of 2004.

On November 4, 2004, Foundation Capital procured a $125 million line of credit with a syndicate of financial institutions, and may draw down on that line of credit from time to time as necessary to maintain Foundation Capital's liquidity (See "Management's Discussion and Analysis or Plan of Operation--Revolving Credit Agreement.")

Financial Condition

During 2004, total assets grew $104,514,616 or 44.0 percent, from $237,395,584 as of December 31, 2003 to $341,910,200 as of December 31, 2004, with loans receivable, net accounting for approximately 94 percent of that increase. As of December 31, 2004, Foundation Capital had $293,231,685 in Common Stock outstanding, as compared to $237,041,755 at December 31, 2003.

Loans Receivable, Net

|                      | December 31,
2004 |  | December 31,
2003 (Restated) |  | Change      |  | Percent
Change
|--------------------- | ----------------- |  | ---------------------------- |  | ----------- |  | --------------
|                      |                   |  |                              |  |             |  |               
|Loans Receivable, Net | $321,926,619      |  | $223,241,868                 |  | $98,684,751 |  | 44.2%         

The increase of $98,684,751 in net loans receivable during 2004 was primarily due to an increase in loans originated and purchased of $180,879,844, less $77,471,530 in principal payments, and $4,978,345 in proceeds from the sale of loans.

Common Stock

|             | December 31,
2004 |  | December 31,
2003 (Restated) |  | Change      |  | Percent
Change
|------------ | ----------------- |  | ---------------------------- |  | ----------- |  | --------------
|             |                   |  |                              |  |             |  |               
|Common Stock | $293,231,685      |  | $237,041,755                 |  | $56,189,930 |  | 23.7%         

The increase of $56,189,930 in Common Stock during 2004 was due to additional investments made in Foundation Capital Common Stock and reinvestment of dividends under the Dividend Reinvestment Plan.

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Retained Earnings (Deficit)

|                            | December 31,
2004 |  | December 31,
2003 (Restated) |  | Change      |  | Percent
Change
|--------------------------- | ----------------- |  | ---------------------------- |  | ----------- |  | --------------
|                            |                   |  |                              |  |             |  |               
|Retained Earnings (deficit) | $ (285,000)       |  | $   --                       |  | $ (285,000) |  | N/A           

The decrease of $285,000 in retained earnings during 2004 resulted from Foundation Capital's declaration of a special $285,000 dividend in December 2004. This dividend was declared in keeping with applicable REIT and Internal Revenue Service regulations in order to appropriately distribute taxable income to shareholders.

Cash and Cash Equivalents

|                          | December 31,
2004 |  | December 31,
2003 (Restated) |  | Change     |  | Percent
Change
|------------------------- | ----------------- |  | ---------------------------- |  | ---------- |  | --------------
|                          |                   |  |                              |  |            |  |               
|Cash and Cash Equivalents | $5,127,655        |  | $3,019,897                   |  | $2,107,758 |  | 69.8%         

The increase of $2,107,758 in cash and cash equivalents during 2004 was the result of Foundation Capital's efforts to maintain an appropriate and adequate cash balance. Foundation Capital attempts to use most of its available cash to originate loans and therefore earn an improved rate of return.

Allowance for Loan Losses and Unamortized Discounts

|                                                        | December 31,
2004 |  | December 31,
2003 (Restated) |  | Change     |  | Percent
Change
|------------------------------------------------------- | ----------------- |  | ---------------------------- |  | ---------- |  | --------------
|Allowance for Loan Losses 
   and Unamortized Discounts | $5,259,947        |  | $3,686,412                   |  | $1,573,535 |  | 42.7%         

The increase in allowance for loan losses and unamortized discounts during 2004 was due to a $1,503,017 increase in unamortized discounts and a provision for loan losses of $70,518.

Delinquent Loans and Foreclosed Assets Held for Sale

At December 31, 2004, Foundation Capital had six loans outstanding (as detailed below) that were either delinquent greater than 90 days or had resulted in foreclosures.

|  | Date of Loan  | Foreclosure Date | Amount     | Recorded As                         
|- | ------------- | ---------------- | ---------- | ------------------------------------
|  |               |                  |            |                                     
| | November 2000 | March 2003       | $2,712,597 | Foreclosed Assets Held For Sale, Net

This property is currently leased to a church and related school other than the original borrower under a one-year lease pursuant to which Foundation Capital collects monthly rent of $18,000. This provides Foundation Capital with revenue in an annual amount of approximately 7.96 percent of the recorded asset value of the property. Discussions with potential new owners of the property are continuing both as to the ultimate sale of the property as well as to continue the lease of the property for an additional year.

| | February 2003 | Not Applicable | $2,586,188 | Loans Receivable, Net
(delinquent and non-accruing)
|- | ------------- | -------------- | ---------- | ---------------------------------------------------

In late 2003, the borrower church experienced difficulties that ultimately resulted in the termination of the pastor's employment. On several occasions representatives from the Company met with the new

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pastor and church leaders to develop an action plan to address the delinquency. Foundation Capital is negotiating with a real estate company to list, lease and manage the property. It is anticipated that the property will be sold in two pieces (retail shops and former cinema). The cinema piece also contains 14 acres of land which may be sold separately. In the meantime, Foundation Capital management is in discussions with legal counsel concerning the best course of action regarding this matter.

|  | Date of Loan | Foreclosure Date | Amount     | Recorded As                                        
|- | ------------ | ---------------- | ---------- | ---------------------------------------------------
|  |              |                  |            |                                                    
| | July 2001    | Not Applicable   | $1,500,000 | Loans Receivable, Net
(delinquent and non-accruing)

This is a bond collateralized loan made in connection with the construction of a new student dormitory at a church seminary. Soon after the building was completed and students occupied the facility, several students became ill with various upper-respiratory symptoms attributed to toxic mold. The students were removed from the facility and a lawsuit was filed against the contractor and subcontractors by the church seminary. The church seminary has been unable to meet its debt obligation to Foundation Capital due to the loss of revenue associated with dormitory rent, plus the added expense it has incurred for subsidizing off-campus housing for its students. Reliance Trust Company, acting as indenture trustee for the bond holders, has had extensive contact with the church seminary and its attorneys, and has hired legal counsel to represent the bond holders. The matter is pending.

| | July 2003 | April 2004 | $364,456 | Foreclosed Assets Held For Sale, Net
|- | --------- | ---------- | -------- | ------------------------------------

Foundation Capital auctioned this property on March 17, 2005 for $250,000, resulting in a loss of $114,456 in March of 2005.

| | July 2002 | December 2004 | $746,501 | Foreclosed Assets Held For Sale, Net
|- | --------- | ------------- | -------- | ------------------------------------

Foundation Capital auctioned this property on March 18, 2005 for $725,000, resulting in a loss of $21,501.24 in March of 2005.

Balances Due To/From Affiliates

Foundation Capital had $0 due from affiliates at December 31, 2004, compared to $434,985 at December 31, 2003. This December 31, 2003 balance resulted from amounts due from the Manager in connection with payments received by the Manager from borrowers on behalf of Foundation Capital. Prior to 2004, in performing its loan servicing responsibilities, payments from borrowers were initially made to the Manager and were then remitted to Foundation Capital. Borrowers now make loan payments directly to Foundation Capital.

Under its servicing relationship, the Manager is entitled to service fees for late payments, NSF checks and participated loans in addition to management fees. Foundation Capital had $35,835 due to the Manager at December 31, 2004, related to service fees collected by Foundation Capital from borrowers. This amount was remitted by Foundation Capital to the Manager in early January 2005.

Results of Operations

Fiscal Year Ended December 31, 2004 Compared to Restated Fiscal Year Ended December 31, 2003

During 2004, Foundation Capital's net income totaled $16,783,391, as compared to 2003 net income of $759,323. This increase in net income was primarily due to a $7,742,625 increase in interest income, partially offset by a $1,649,560 increase in other expense. Minority interest of $10,023,340 was recorded in 2003, but was not recorded in 2004, as a result of the December 31, 2003 merger of FCP I and FCP II into Foundation Capital.

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Interest Income

|                | 2004        |  | 2003 (Restated) |  | Change     |  | Percent
Change
|--------------- | ----------- |  | --------------- |  | ---------- |  | --------------
|                |             |  |                 |  |            |  |               
|Interest Income | $20,656,026 |  | $12,913,401     |  | $7,742,625 |  | 60.0%         

The increase in interest income during 2004 was primarily due to a greater amount of loans receivable that were outstanding during 2004, as compared to 2003. During 2004, Foundation Capital originated and purchased loans totaling $180,879,844 compared to $158,902,851 of loans that were originated and purchased in 2003. The balance of net loans receivable was $321,926,619 at December 31, 2004, compared to $223,241,868 at December 31, 2003, a 44.2 percent increase.

Other Expense

|              | 2004       |  | 2003 (Restated) |  | Change     |  | Percent
Change
|------------- | ---------- |  | --------------- |  | ---------- |  | --------------
|              |            |  |                 |  |            |  |               
|Other Expense | $3,716,332 |  | $2,066,772      |  | $1,649,560 |  | 79.8%         

The components of the increase in other expense were:

| |                                                       | 2004       |   | 2003
(Restated) |   | Change     |  
| | ----------------------------------------------------- | ---------- | - | --------------- | - | ---------- | -
| |                                                       |            |   |                 |   |            |  
| | Management Fees                                       | $3,364,861 |   | $2,007,661      |   | $1,357,200 |  
| | Loan Origination Fees (Expense
   Reduction)          | (774,058   | ) | (740,009        | ) | (34,049    | )
| | Accounting, Audit, Outside Services
   and Legal Fees | 449,734    |   | 300,925         |   | 148,809    |  
| | Loan Referral and Servicing Fees                      | 230,634    |   | 327,785         |   | (97,151    | )
| | Debt Certificate-Related 
   Expenses                 | 202,691    |   | 23,453          |   | 179,238    |  
| | Insurance Expense                                     | 91,174     |   | 84,608          |   | 6,566      |  
| | Line of Credit-Related Expenses                       | 67,588     |   | -               |   | 67,588     |  
| | Other                                                 | 83,708     |   | 62,349          |   | 21,359     |  
| | Total                                                 | $3,716,332 |   | $2,066,772      |   | $1,649,560 |  

The increase in management fees was due primarily to an increase in invested assets during 2004. Management fees paid by Foundation Capital to the Manager are equal to 0.3 percent of cash and cash equivalents, plus 1.25 percent of the balance of Average Invested Assets (as defined in the Management Agreement between Foundation Capital and the Manager). The decreases in loan referral and servicing fees were primarily due to the decrease in fees paid directly for outside referrals during 2004 as compared to 2003. The increase in accounting, audit, outside services and legal fees was due primarily to the merger of OCA Fund I into Foundation Capital and marketing expenses that occurred in 2004 that did not occur in 2003. The increase in debt certificate-related expenses resulted from the amortization of related deferred costs.

Merger of OCA Fund I

In June 2004, Foundation Capital's Board of Directors and shareholders approved the merger of OCA Fund I, a company related through a common ownership, with Foundation Capital as the surviving corporation. The merger was effective on June 30, 2004, and was consummated through the exchange of 1,893,145 shares of

---

Foundation Capital Common Stock for all of the OCA Fund I capital contributions at the rate of one share of Foundation Capital Common Stock for each $10.00 of capital contribution. The assets and liabilities of OCA Fund I were transferred to Foundation Capital at their existing carrying values, as the merger was accounted for as a combination of entities under common control. The 2004 financial statements include the results of operations of OCA Fund I as though the merger occurred on January 1, 2004. The 2003 financial statements were restated to include the OCA Fund I financial position as of December 31, 2003, and the results of operations and its cash flows for the twelve month period ended December 31, 2003.

Restated Fiscal Year Ended December 31, 2003 Compared to Fiscal Year Ended December 31, 2002

During 2003, Foundation Capital's restated net income totaled $759,323, as compared to the 2002 net loss of $20,072. This increase in net income was primarily due to a $4,361,743 increase in interest income, partially offset by a $3,085,323 increase in limited partnership and minority interest expense and an $847,809 increase in other expenses.

Interest Income

|                | 2003 (Restated) |  | 2002       |  | Change     |  | Percent
Change
|--------------- | --------------- |  | ---------- |  | ---------- |  | --------------
|                |                 |  |            |  |            |  |               
|Interest Income | $12,913,401     |  | $8,089,301 |  | $4,824,100 |  | 59.6%         

The increase in interest income during 2003 was primarily due to a greater amount of loans receivable that were outstanding during 2003, as compared to 2002. During 2003, Foundation Capital originated and purchased loans totaling $158,902,851 compared to $78,933,100 of loans that were originated and purchased in 2002. The balance of net loans receivable was $223,241,868 at December 31, 2003, compared to $121,559,762 at December 31, 2002, an 83.6 percent increase.

Other Expense

|              | 2003 (Restated) |  | 2002       |  | Change   |  | Percent
Change
|------------- | --------------- |  | ---------- |  | -------- |  | --------------
|              |                 |  |            |  |          |  |               
|Other Expense | $2,066,772      |  | $1,184,851 |  | $881,921 |  | 74.4%         

The components of the increase in other expense were:

| |                                                       | 2003
(Restated) |   | 2002       |   | Change   |  
| | ----------------------------------------------------- | --------------- | - | ---------- | - | -------- | -
| |                                                       |                 |   |            |   |          |  
| | Management Fees                                       | $2,007,661      |   | $1,334,795 |   | $672,866 |  
| | Loan Origination Fees (Expense
   Reduction)          | (740,009        | ) | (457,966   | ) | (282,043 | )
| | Accounting, Audit, Outside Services
   and Legal Fees | 300,925         |   | 106,730    |   | 194,195  |  
| | Loan Referral and Servicing Fees                      | 327,785         |   | 71,665     |   | 256,120  |  
| | Insurance Expense                                     | 84,608          |   | 56,503     |   | 28,105   |  
| | Debt Certificate-Related 
   Expenses                 | 23,453          |   | -          |   | 23,453   |  
| | Other                                                 | 62,349          |   | 73,124     |   | (10,775  | )
| | Total                                                 | $2,066,772      |   | $1,184,851 |   | $881,921 |  

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The increase in management fees was due primarily to an increase in invested assets during 2003. Management fees paid by Foundation Capital to the Manager are equal to 0.3 percent of cash and cash equivalents, plus 1.25 percent of the balance of Average Invested Assets (as defined in the Management Agreement between Foundation Capital and the Manager). The increases in loan origination fees and loan referral fees were primarily due to the increase in new loans closed during 2003 as compared to 2002. The increase in accounting, audit and legal fees was due primarily to the mergers of FCP I and FCP II into Foundation Capital and due to an increased number of regulatory filings. The increase in debt certificate-related expenses resulted from the amortization of related deferred costs.

Liquidity and Capital Resources

As discussed above, Foundation Capital provides financing to churches, colleges, schools and other nonprofit organizations primarily by originating and purchasing mortgage loans to such organizations and investing in mortgage bonds issued by such organizations. Foundation Capital expects the cash to be generated from the mortgage loans made and acquired by Foundation Capital to be adequate to pay its operating expenses and provide distributions to shareholders. Management is not aware of any known trends or uncertainties, other than national economic conditions, which have had or which may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income from the origination or acquisition of mortgage loans.

Foundation Capital's income from the mortgage loans made or purchased and bond interest income provides cash flow, which Foundation Capital uses to make new mortgage loans or fund dividends to shareholders. Nevertheless, we intend to seek additional debt or equity financing to enhance our capacity to make mortgage loans on a continuous basis. There can be no assurance that we will be able to raise additional capital on favorable terms.

Revolving Credit Agreement

On November 4, 2004, Foundation Capital entered into a Revolving Credit Agreement (the "Agreement") with KeyBank National Association, Wells Fargo Foothill, Inc., Harris Trust and Savings Bank, Bank Midwest, N.A., Southwest Bank of Texas, N. A., and such other lending institutions as might later become parties to the Agreement pursuant to Section 18 of the Agreement (collectively, the "Banks"), KeyBank National Association ("KeyBank") as Agent for the Banks and Wells Fargo Foothill, Inc. as Syndication Agent for the Banks. Through the Agreement, and subject to the terms and conditions of the Agreement, the Banks have made available to Foundation Capital a four-year revolving credit facility of up to $125,000,000.

There are two types of loans available through the revolving credit facility: Base Rate Loans and LIBOR Rate Loans. Base Rate Loans are to be in a minimum aggregate amount of $1,000,000 or an integral multiple of $100,000 in excess thereof, with an interest rate tied to the greater of the prime rate or one half of one percent (0.5%) above the Federal Funds Effective Rate as set forth in the Agreement. LIBOR Rate Loans are to be in a minimum aggregate amount of $2,000,000 or an integral multiple of $100,000 in excess thereof, with an interest rate tied to the LIBOR as set forth in the Agreement. There are to be no more than six LIBOR Rate Loans outstanding at any one time. The Agreement provides a mechanism by which Foundation Capital may elect to convert any of its outstanding loans from one type to the other.

Foundation Capital is to pay an unused facility fee due quarterly and calculated based on the ratio of the average daily amount of borrowing under the credit facility during each quarter to the sum of the commitment of the Banks ($125,000,000 as of the date of the Agreement). If this facility usage ratio is 50 percent or less, the facility fee is 0.30 percent per annum of the average unused portion of the credit facility. Otherwise, the fee is 0.15 percent per annum.

Foundation Capital may use the proceeds of the loans provided through the revolving credit facility solely for the purposes set forth in the Agreement, including, among others, to make Qualifying Mortgage Loans (as defined), to repay outstanding Indebtedness (as defined) and for working capital (subject to limitations set forth in the Agreement).

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The Agreement contains representations and warranties and affirmative and negative covenants, including, but not limited to, the following financial covenants:

| | (a) | Foundation Capital will not permit the Outstanding Loans (as defined) as of the date of determination to exceed the Borrowing Base (as defined) as determined as of the same date;                                                                                                                                                                 
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (b) | Foundation Capital will not, as of the end of any fiscal quarter of Foundation Capital, permit Borrowing Base Adjusted EBITDA (as defined) for the period covered by the four previous consecutive fiscal quarters (treated as a single accounting period) to be less than 2.25 times the Facility Interest Expense (as defined) for such period;  
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (c) | Foundation Capital will maintain certain limits on the percentages of the Borrowing Base (as defined) that may be accounted for by certain Qualifying Mortgage Loans (as defined);                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (d) | Foundation Capital will not at any time permit the ratio of Consolidated Total Liabilities (as defined) to Consolidated Total Adjusted Asset Value (as defined) to exceed .50 to 1;                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (e) | Foundation Capital will not, as of the end of any fiscal quarter of Foundation Capital, permit its Adjusted EBITDA (as defined) for the period covered by the four previous consecutive fiscal quarters (treated as a single accounting period) to be less than 2.25 times the Interest Expense (as defined) of Foundation Capital for such period;
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (f) | Foundation Capital will not permit its Consolidated Tangible Net Worth (as defined) to be less than $250,000,000 plus seventy-five percent of any Net Offering Proceeds (as defined) received by Foundation Capital after the date of the Agreement;                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (g) | Foundation Capital will not permit the aggregate outstanding principal balances of all Non-Performing Assets (as defined) to exceed an amount equal to fifteen percent of the sum of its Consolidated Tangible Net Worth plus Actual Loan Loss Reserve Balance (as defined).                                                                       

The Agreement limits the amount of other permitted indebtedness of Foundation Capital. Among other limitations, the indebtedness under Foundation Capital's Debt Certificates now outstanding or issued in the future may not exceed $30,000,000; Foundation Capital's line of credit with another bank may not exceed $5,000,000; and Foundation Capital's combined indebtedness under these Debt Certificates and this other line of credit may not exceed $30,000,000.

The Agreement requires Foundation Capital to, within three months after the date of the Agreement, obtain and maintain an Interest Rate Contract (as defined) satisfactory to KeyBank as Agent on at least $50,000,000 of the loans extended to Foundation Capital by the Banks under the Agreement for a period of two years. On February 2, 2005, Foundation Capital entered into this Interest Rate Contract by purchasing an interest rate cap. Before the end of that two-year period, Foundation Capital is to enter into one or more new Interest Rate Contracts (as defined) satisfactory to KeyBank as Agent that provide interest rate protection for at least 50 percent of the sum of the commitments of the Banks to make or maintain loans to Foundation Capital under the Agreement and that shall remain in place until the Maturity Date (as defined).

The Agreement provides that Foundation Capital will maintain with KeyBank, as Agent, a Lockbox (as defined), governed by a Lockbox Agreement (as defined) pursuant to which the gross interest income and fees received by Foundation Capital for any period, as well as other payments on the Mortgage Loans (as defined), are to be deposited by the Mortgage Loan Obligors (as defined) into the Lockbox. If an Event of Default (as defined) occurs, KeyBank as Agent is to do any or all of the following: (i) exercise exclusive dominion and control over the funds deposited in the Lockbox, (ii) have collections sent to the Lockbox redirected pursuant to its instruction, (iii) apply the balance in the Lockbox against the Obligations (as defined) in such order and manner as KeyBank as Agent deems desirable, and (iv) take any or all other actions KeyBank as Agent is permitted to take as set forth in the Agreement. KeyBank as Agent is to have a first priority perfected security interest in the Lockbox.

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Foundation Capital's Obligations (as defined) are to be secured by a perfected first priority lien or security interest to be held by KeyBank as Agent for the benefit of the Banks in substantially all mortgage loans and certain other assets of Foundation Capital, but excluding mortgage loans securing repayment of the other permitted indebtedness. The Agreement restricts Foundation Capital's ability to further encumber its assets.

The Agreement contains customary events of default. If an event of default occurs and is continuing, Foundation Capital might be required to repay all amounts outstanding under the revolving credit facility.

The revolving credit facility expires on November 8, 2008, and all outstanding loans under the credit facility, along with all accrued and unpaid interest thereon, become immediately due and payable.

The description set forth herein of the terms and conditions of the Agreement is qualified in its entirety by reference to the full text of such Agreement, which was filed as an exhibit to Form 10-QSB for the period ended September 30, 2004.

Foundation Capital plans to draw down on the lines of credit from time to time as necessary to maintain Foundation Capital's liquidity.

During 2004, Foundation Capital's operating activities provided approximately $15 million of cash for operations. Financing activities contributed cash in a net amount of approximately $86 million. The Company used the total of these amounts (approximately $101 million) in its net investing activities totaling approximately $99 million, plus increased its cash balance by approximately $2 million.

|                                                       | 2004        |  | 2003 (Restated) |  | Change      |  | Percent
Change
|------------------------------------------------------ | ----------- |  | --------------- |  | ----------- |  | --------------
|                                                       |             |  |                 |  |             |  |               
|Net Cash Provided by/(Used
   in) Operating Activities | $15,054,443 |  | ($589,951)      |  | $15,644,394 |  | 2,651.8%      

The components of the increase in cash provided by/(used in) operating activities were:

| |                                                                       | 2004 |            | 2003
(Restated) |   | Change   |  
| | --------------------------------------------------------------------- | ---- | ---------- | --------------- | - | -------- | -
| | Net Income                                                            | $    | 16,783,391 |                 | $ | 759,323  |  
| | Interest Receivable                                                   |      | (1,395,789 | )               |   | (588,241 | )
| | Accretion of Discounts on
   Loans and Held-to-Maturity
   Securities |      | (729,995   | )               |   | (571,151 | )
| | Due from Affiliates                                                   |      | 470,820    |                 |   | (310,693 | )
| | Amortization of Deferred Debt
   Offering Costs                       |      | 193,771    |                 |   | 20,373   |  
| | Amortization of Deferred
   Origination Fees                          |      | (165,398   | )               |   | (85,708  | )
| | Other Assets                                                          |      | (136,196   | )               |   | (12,346  | )
| | Gain on Sale of Foreclosed Assets                                     |      | (121,348   | )               |   | -        |  
| | Provision for Loan Losses                                             |      | 70,518     |                 |   | 172,114  |  
| | Amortization of Deferred Line of
   Credit Costs                      |      | 67,588     |                 |   | -        |  
| | Accounts Payable and Accrued
   Expenses                              |      | 17,081     |                 |   | 26,378   |  
| | Total                                                                 | $    | 15,054,443 |                 | $ | (589,951 | )

The increase of $807,548 in interest receivable is primarily due to the increase in loans receivable, net throughout 2004. The increase in the accretion of discounts on loans and held-to-maturity securities of

---

$158,844 resulted from the increase in the loans originated in 2004, as compared to 2003. The increase of $79,690 in the amortization of deferred origination fees resulted from additional loans made in 2004 that had deferred origination fees. During 2004, Foundation Capital recorded a provision for loan losses totaling $70,518, as compared to a loan loss provision of $172,114 recorded during 2003.

The decrease of $781,513 in amounts due from affiliates resulted from changes in previous practices whereby in 2003 the Manager received payments from borrowers on behalf of Foundation Capital. In performing its loan servicing responsibilities, payments from borrowers were initially made to the Manager and were then appropriately remitted to Foundation Capital. In the third quarter of 2004, Foundation Capital began receiving these payments directly.

|                                         | 2004          |  | 2003 (Restated) |  | Change     |  | Percent
Change
|---------------------------------------- | ------------- |  | --------------- |  | ---------- |  | --------------
|Net Cash Used in
   Investing Activities | $(98,891,755) |  | ($106,036,569)  |  | $7,144,814 |  | (6.7%)        

The components of the decrease in cash used in investing activities were:

| |                                              | 2004 |              | 2003 (Restated) |   | Change       |  
| | -------------------------------------------- | ---- | ------------ | --------------- | - | ------------ | -
| | New Loans Originated and Purchased           | $    | (180,879,844 | )               | $ | (158,902,851 | )
| | Proceeds from Principal Payments
   on Loans |      | 76,947,122   |                 |   | 50,155,160   |  
| | Proceeds from Sales of Mortgage
   Loans     |      | 4,978,345    |                 |   | 4,288,423    |  
| | Proceeds from Sales of Foreclosed
   Assets  |      | 645,756      |                 |   | -            |  
| | Maturities of Held-To-Maturity
   Securities |      | 51,330       |                 |   | 152,156      |  
| | Purchases of Held-To-Maturity
   Securities  |      | (634,464     | )               |   | (1,729,457   | )
| | Total                                        | $    | (98,891,755  | )               | $ | (106,036,569 | )

During 2004, Foundation Capital originated $21,976,993 more in loans than were originated during 2003, as loan demand continues to be strong. Proceeds from principal payments totaled $26,791,962 more during 2004 than in 2003. In 2004, the proceeds received from the sale of loans totaled $4,978,345, as compared to $4,288,423 in 2003. Proceeds from sales of foreclosed assets totaled $645,756 in 2004, compared to $0 in 2003. Maturities of held-to-maturity securities totaled $51,330 during 2004, compared to $152,156 during 2003. Purchases of held-to-maturity securities totaled $634,464 during 2004, a decrease of $1,094,993, as compared to $1,729,457 in 2003.

|                                             | 2004        |  | 2003 (Restated) |  | Change        |  | Percent
Change
|-------------------------------------------- | ----------- |  | --------------- |  | ------------- |  | --------------
|Net Cash Provided by
   Financing Activities | $85,945,070 |  | $103,240,014    |  | ($17,294,944) |  | (16.8%)       

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The components of the decrease in cash provided by financing activities were:

|                                               | 2004 |            | 2003
(Restated) |   | Change      |  
|---------------------------------------------- | ---- | ---------- | --------------- | - | ----------- | -
|Proceeds from Borrowing on Line of Credit      | $    | 43,587,500 |                 | $ | -           |  
|Proceeds from Issuance of Common Stock         |      | 39,645,393 |                 |   | 18,915,994  |  
|Proceeds from Issuance of Debt Certificates    |      | 4,967,500  |                 |   | 271,000     |  
|Costs Related to Establishing Lines of Credit  |      | (1,634,886 | )               |   | -           |  
|Dividends Paid, Net of Dividend Reinvestment   |      | (522,085   | )               |   | (450,205    | )
|Costs Related to Issuance of Debt Certificates |      | (98,352    | )               |   | (469,383    | )
|Increase in Minority Interest                  |      | -          |                 |   | 84,974,608  |  
|Payments for Retirement of Preferred Stock     |      | -          |                 |   | (2,000      | )
|Total                                          | $    | 85,945,070 |                 | $ | 103,240,014 |  

In 2004, $39,645,393 of common stock and $4,967,500 of debt certificates were issued and $43,587,500 was drawn against a line of credit with a financial institution, beginning in the fourth quarter. These funds were used to fund loans to customers. The 2004 decrease in net minority interest contributions resulted primarily from the merger of FCP I and FCP II into Foundation Capital. As discussed previously, in December 2003, all of the limited partnership interests were converted into shares of Common Stock of Foundation Capital in connection with the merger.

Commitments to extend credit are agreements to lend to a borrower as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each borrower's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies, but typically includes real property owned by churches and other nonprofit organizations.

At December 31, 2004 and December 31, 2003, Foundation Capital had outstanding commitments to make loans aggregating $62,697,821 and $58,263,965, respectively, all at fixed rates of interest, extending over varying periods of time with the majority to be disbursed within a one-year period.

At December 31, 2004, Foundation Capital had drawn $43,587,500 against its lines of credit.

At December 31, 2004, Foundation Capital had the following obligations related to outstanding debt certificates and lines of credit:

| | Maturity |  | Amount |           
| | -------- |  | ------ | ----------
| | 2006     |  | $      | 4,023,500 
| | 2008     |  |        | 43,813,500
| | 2010     |  |        | 121,000   
| | 2013     |  |        | 868,000   
| |          |  | $      | 48,826,000

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|ITEM 7. | FINANCIAL STATEMENTS
|------- | --------------------

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Shareholders
Foundation Capital Resources, Inc. 
Jackson, Mississippi

We have audited the accompanying consolidated balance sheets of Foundation Capital Resources, Inc. ("Foundation Capital") as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders' equity and cash flows for each of the two years in the period ended December 31, 2004. These financial statements are the responsibility of Foundation Capital's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Foundation Capital Resources, Inc. as of December 31, 2004 and 2003, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

| | /s/BKD, LLP
| | -----------

Springfield, Missouri
January 28, 2005

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Foundation Capital Resources, Inc.Consolidated Balance Sheets
December 31, 2004 and 2003 Restated

|                                                                                                                                                                                                  | 2004 |             | 2003
(Restated) |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ----------- | --------------- | -
|Assets                                                                                                                                                                                            |      |             |                 |  
|Cash and cash equivalents                                                                                                                                                                         | $    | 5,127,655   |                 | $
|Due from affiliates                                                                                                                                                                               |      | -           |                 |  
|Interest receivable                                                                                                                                                                               |      | 3,464,722   |                 |  
|Loans receivable, net of allowance for loan losses, unamortized
        discounts, and deferred origination fees of $6,176,629 and $4,370,727
        at December 31, 2004 and 2003, respectively |      | 321,926,619 |                 |  
|Held-to-maturity securities                                                                                                                                                                       |      | 5,109,798   |                 |  
|Foreclosed assets held for sale, net                                                                                                                                                              |      | 3,823,554   |                 |  
|Deferred debt offering costs                                                                                                                                                                      |      | 671,404     |                 |  
|Deferred lines of credit costs                                                                                                                                                                    |      | 1,567,299   |                 |  
|Other                                                                                                                                                                                             |      | 219,149     |                 |  
|                                                                                                                                                                                                  |      |             |                 |  
|Total assets                                                                                                                                                                                      | $    | 341,910,200 |                 | $
|                                                                                                                                                                                                  |      |             |                 |  
|Liabilities and Shareholders' Equity                                                                                                                                                              |      |             |                 |  
|                                                                                                                                                                                                  |      |             |                 |  
|Liabilities                                                                                                                                                                                       |      |             |                 |  
|Due to affiliates                                                                                                                                                                                 | $    | 35,835      |                 | $
|Accounts payable and accrued expenses                                                                                                                                                             |      | 261,680     |                 |  
|Lines of credit                                                                                                                                                                                   |      | 43,587,500  |                 |  
|Debt certificates                                                                                                                                                                                 |      | 5,238,500   |                 |  
|                                                                                                                                                                                                  |      |             |                 |  
|Total liabilities                                                                                                                                                                                 |      | 49,123,515  |                 |  
|                                                                                                                                                                                                  |      |             |                 |  
|                                                                                                                                                                                                  |      |             |                 |  
|Shareholders' Equity                                                                                                                                                                              |      |             |                 |  
|                                                                                                                                                                                                  |      |             |                 |  
|Common Stock; $10 par value; authorized 50,000,000 shares; issued
        and outstanding December 31, 2004 - 29,323,168.5 shares,
        December 31, 2003 - 23,704,175.5 shares                |      | 293,231,685 |                 |  
|Additional paid-in capital (deficit)                                                                                                                                                              |      | (160,000    | )               |  
|Retained earnings (deficit)                                                                                                                                                                       |      | (285,000    | )               |  
|                                                                                                                                                                                                  |      |             |                 |  
|Total shareholders' equity                                                                                                                                                                        |      | 292,786,685 |                 |  
|                                                                                                                                                                                                  |      |             |                 |  
|Total liabilities and shareholders' equity                                                                                                                                                        | $    | 341,910,200 |                 | $

See Notes to Consolidated Financial Statements

---



Foundation Capital Resources, Inc.Consolidated Statements of Income
Years Ended December 31, 2004 and 2003 Restated

|                                                    | 2004 |            | 2003 (Restated) |  
|--------------------------------------------------- | ---- | ---------- | --------------- | -
|Interest Income                                     |      |            |                 |  
|Loans                                               | $    | 20,185,637 |                 | $
|Held-to-maturity securities                         |      | 381,910    |                 |  
|Deposits with banks                                 |      | 88,479     |                 |  
|                                                    |      | 20,656,026 |                 |  
|                                                    |      |            |                 |  
|Interest Expense                                    |      |            |                 |  
|Debt certificates                                   |      | 209,342    |                 |  
|Lines of credit                                     |      | 183,621    |                 |  
|                                                    |      | 392,963    |                 |  
|                                                    |      |            |                 |  
|Net Interest Income                                 |      | 20,263,063 |                 |  
|                                                    |      |            |                 |  
|Provision for Loan Losses                           |      | 70,518     |                 |  
|                                                    |      |            |                 |  
|Net Interest Income After Provision for Loan Losses |      | 20,192,545 |                 |  
|                                                    |      |            |                 |  
|Other Income                                        |      |            |                 |  
|Gain on sale of foreclosed assets                   |      | 121,348    |                 |  
|Other                                               |      | 185,830    |                 |  
|                                                    |      | 307,178    |                 |  
|                                                    |      |            |                 |  
|Other Expense                                       |      |            |                 |  
|Management fees                                     |      | 3,364,861  |                 |  
|Other                                               |      | 351,471    |                 |  
|                                                    |      | 3,716,332  |                 |  
|                                                    |      |            |                 |  
|Income Before Minority Interest                     |      | 16,783,391 |                 |  
|                                                    |      |            |                 |  
|Minority Interest                                   |      | -          |                 |  
|                                                    |      |            |                 |  
|Net Income                                          | $    | 16,783,391 |                 | $
|                                                    |      |            |                 |  
|Basic and Diluted Earnings Per Common Share         | $    | 0.63       |                 | $

See Notes to Consolidated Financial Statements

---



Foundation Capital Resources, Inc.Consolidated Statements of Shareholders' Equity
Years Ended December 31, 2004 and 2003 Restated

|                                                                                     | Class I
Preferred
Stock |        | Common
Stock |   | Additional
Paid-in
Capital
(Deficit) |  | Retained
Earnings
(Deficit) |          | Total |  
|------------------------------------------------------------------------------------ | ----------------------- | ------ | ------------ | - | ------------------------------------ |  | --------------------------- | -------- | ----- | -
|                                                                                     |                         |        |              |   |                                      |  |                             |          |       |  
|Balance, December 31, 2002                                                           | $                       | 2,000  |              | $ | 1,408,173                            |  | $                           | (160,000 | )     | $
|                                                                                     |                         |        |              |   |                                      |  |                             |          |       |  
|Net income                                                                           |                         | -      |              |   | -                                    |  |                             | -        |       |  
|Retirement of Class I preferred
  stock, 200 shares                                  |                         | (2,000 | )            |   | -                                    |  |                             | -        |       |  
|Issuance of common stock,
  1,891,599.4 shares                                       |                         | -      |              |   | 18,915,994                           |  |                             | -        |       |  
|Conversion of Limited Partnership
  Interests to common stock,
  21,662,750.3 shares |                         | -      |              |   | 216,627,503                          |  |                             | -        |       |  
|Dividends reinvested in common
  stock, 9,008.5 shares                               |                         | -      |              |   | 90,085                               |  |                             | -        |       |  
|Dividends on common stock,
  $0.58 per share                                         |                         | -      |              |   | -                                    |  |                             | -        |       |  
|                                                                                     |                         |        |              |   |                                      |  |                             |          |       |  
|Balance, December 31, 2003
(Restated)                                                |                         | -      |              |   | 237,041,755                          |  |                             | (160,000 | )     |  
|                                                                                     |                         |        |              |   |                                      |  |                             |          |       |  
|Net income                                                                           |                         | -      |              |   | -                                    |  |                             | -        |       |  
|Issuance of common stock,
  3,974,145.9 shares                                       |                         | -      |              |   | 39,741,459                           |  |                             | -        |       |  
|Dividends reinvested in common
  stock, 1,644,847.1 shares                           |                         | -      |              |   | 16,448,471                           |  |                             | -        |       |  
|Dividends on common stock,
  $0.64 per share                                         |                         | -      |              |   | -                                    |  |                             | -        |       |  
|                                                                                     |                         |        |              |   |                                      |  |                             |          |       |  
|Balance, December 31, 2004                                                           | $                       | -      |              | $ | 293,231,685                          |  | $                           | (160,000 | )     | $

See Notes to Consolidated Financial Statements

---



Foundation Capital Resources, Inc.Consolidated Statements of Cash Flows
Years Ended December 31, 2004 and 2003 Restated

|                                                            | 2004 |              | 2003 (Restated) |  
|----------------------------------------------------------- | ---- | ------------ | --------------- | -
|Operating Activities                                        |      |              |                 |  
|Net income                                                  | $    | 16,783,391   |                 | $
|Items not requiring (providing) cash                        |      |              |                 |  
|Provision for loan losses                                   |      | 70,518       |                 |  
|Accretion of discounts on loans                             |      | (726,449     | )               |  
|Accretion of discounts on held-to-maturity securities       |      | (3,546       | )               |  
|Amortization of deferred origination fees                   |      | (165,398     | )               |  
|Amortization of deferred debt offering costs                |      | 193,771      |                 |  
|Amortization of deferred line of credit costs               |      | 67,588       |                 |  
|Gain on sale of foreclosed assets                           |      | (121,348     | )               |  
|Changes in                                                  |      |              |                 |  
|Due from affiliates                                         |      | 470,820      |                 |  
|Interest receivable                                         |      | (1,395,789   | )               |  
|Other assets                                                |      | (136,196     | )               |  
|Accounts payable and accrued expenses                       |      | 17,081       |                 |  
|Net cash provided by/(used in) operating activities         |      | 15,054,443   |                 |  
|                                                            |      |              |                 |  
|Investing Activities                                        |      |              |                 |  
|Origination and purchase of loans                           |      | (180,879,844 | )               |  
|Proceeds from principal payments on loans                   |      | 76,947,122   |                 |  
|Proceeds from sale of mortgage loans                        |      | 4,978,345    |                 |  
|Proceeds from sale of foreclosed assets                     |      | 645,756      |                 |  
|Purchases of held-to-maturity securities                    |      | (634,464     | )               |  
|Maturities of held-to-maturity securities                   |      | 51,330       |                 |  
|Net cash used in investing activities                       |      | (98,891,755  | )               |  
|                                                            |      |              |                 |  
|Financing Activities                                        |      |              |                 |  
|Proceeds from issuance of common stock                      |      | 39,645,393   |                 |  
|Proceeds from issuance of debt certificates                 |      | 4,967,500    |                 |  
|Proceeds from lines of credit                               |      | 43,587,500   |                 |  
|Payments for retirement of preferred stock                  |      | -            |                 |  
|Payment of costs related to issuance of debt certificates   |      | (98,352      | )               |  
|Payment of costs related to establishing lines of credit    |      | (1,634,886   | )               |  
|Dividends paid, net of dividend reinvestment                |      | (522,085     | )               |  
|Increase in minority interest                               |      | -            |                 |  
|Net cash provided by financing activities                   |      | 85,945,070   |                 |  
|                                                            |      |              |                 |  
|Increase/(Decrease) in Cash and Cash Equivalents            |      | 2,107,758    |                 |  
|                                                            |      |              |                 |  
|Cash and Cash Equivalents, Beginning of Year                |      | 3,019,897    |                 |  
|                                                            |      |              |                 |  
|Cash and Cash Equivalents, End of Year                      | $    | 5,127,655    |                 | $
|                                                            |      |              |                 |  
|Supplemental Cash Flows Information                         |      |              |                 |  
|Debt offering costs in accrued expenses                     | $    | -            |                 | $
|Real estate acquired in foreclosure                         | $    | 1,110,957    |                 | $
|Real estate sold in foreclosure                             | $    | (544,409     | )               | $
|Conversion of limited partnership interests to common stock | $    | -            |                 | $
|Dividends reinvested in common stock                        | $    | 16,448,471   |                 | $
|Dividends declared not paid                                 | $    | 10,152       |                 | $

See Notes to Consolidated Financial Statements

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

|Note 1: | Nature of Operations and Summary of Significant Accounting Policies
|------- | -------------------------------------------------------------------

Nature of Operations

Foundation Capital Resources, Inc. (Foundation Capital) was formed as a Georgia corporation to invest primarily in the work of churches and other nonprofit organizations by making mortgage loans to such entities and to acquire indebtedness secured by mortgages issued by such entities. Foundation Capital elected to file as a real estate investment trust (REIT) under the requirements of the Internal Revenue Code of 1986 and will be treated as a REIT for tax purposes beginning with the year ended December 31, 2003.

Principles of Consolidation

Foundation Capital Partners I, LLLP and Foundation Capital Partners II, LLLP, (collectively the "Limited Partnerships") were merged into Foundation Capital effective December 31, 2003, through an exchange of common stock for the respective limited partnership interests as discussed in Note 6. All significant interentity accounts and transactions were eliminated in consolidation.

Merger of OCA Fund I

In June 2004, Foundation Capital's Board of Directors and shareholders approved the merger of OCA Fund I, a company related through a common ownership, with Foundation Capital as the surviving corporation. The merger was effective on June 30, 2004, and was consummated through the exchange of 1,893,145 shares of Foundation Capital common stock for all of the OCA Fund I capital contributions at the rate of one share of Foundation Capital common stock for each $10.00 of capital contribution. The assets and liabilities of OCA Fund I were transferred to Foundation Capital at their existing carrying values, as the merger was accounted for as a combination of entities under common control. The 2004 financial statements include the results of operations of OCA Fund I as though the merger occurred on January 1, 2004. The 2003 financial statements were restated to include the OCA Fund I financial position as of December 31, 2003, and the results of its operations and its cash flows for the twelve month period ended December 31, 2003.

Below is a reconciliation of Foundation Capital's previously reported balance sheet as of December 31, 2003 and statements of income for the year ended December 31, 2003 to the restated statements.

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

Consolidated Balance Sheet Reconciliation

|                                     |                                                                                                                        |   | Previously
Stated
12/31/2003 |   |   | OCA Fund I
12/31/03 |   |   | Restated
12/31/03 |  
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------- | - | ---------------------------- | - | - | ------------------- | - | - | ----------------- | -
|Assets                               |                                                                                                                        |   |                              |   |   |                     |   |   |                  
|                                     | Cash and cash equivalents                                                                                              | $ | 2,920,458                    |   | $ | 99,439              |   | $ | 3,019,897         |  
|                                     | Due from affiliates                                                                                                    |   | 431,917                      |   |   | 3,068               |   |   | 434,985           |  
|                                     | Interest receivable                                                                                                    |   | 1,929,754                    |   |   | 139,179             |   |   | 2,068,933         |  
|                                     | Loans receivable, net of allowance
     for loan losses, unamortized
     discounts and deferred
     origination fees |   | 205,487,230                  |   |   | 17,784,665          |   |   | 223,241,868       |  
|                                     | Held-to-maturity securities                                                                                            |   | 3,773,119                    |   |   | 750,000             |   |   | 4,523,119         |  
|                                     | Foreclosed assets held for sale, net                                                                                   |   | 3,257,006                    |   |   | -                   |   |   | 3,257,006         |  
|                                     | Deferred debt offering costs                                                                                           |   | 766,823                      |   |   | -                   |   |   | 766,823           |  
|                                     | Other                                                                                                                  |   | 82,953                       |   |   | -                   |   |   | 82,953            |  
|                                     | Total assets                                                                                                           | $ | 218,649,233                  |   | $ | 18,746,351          |   | $ | 237,395,584       |  
|                                     |                                                                                                                        |   |                              |   |   |                     |   |   |                   |  
|Liabilities and Shareholders' Equity |                                                                                                                        |   |                              |   |   |                     |   |   |                  
|                                     | Liabilities                                                                                                            |   |                              |   |   |                     |   |   |                   |  
|                                     | Due to affiliates                                                                                                      | $ | 171,144                      |   | $ | (171,144            | ) | $ | -                 |  
|                                     | Accounts payable and
     accrued expenses                                                                             |   | 241,328                      |   |   | 1,501               |   |   | 242,829           |  
|                                     | Debt certificates                                                                                                      |   | 271,000                      |   |   | -                   |   |   | 271,000           |  
|                                     | Total liabilities                                                                                                      |   | 683,472                      |   |   | (169,643            | ) |   | 513,829           |  
|                                     |                                                                                                                        |   |                              |   |   |                     |   |   |                   |  
|                                     | Shareholders' Equity                                                                                                   |   |                              |   |   |                     |   |   |                   |  
|                                     | Common stock; $10 par
     value; authorized
     50,000,000 shares                                                    |   | 218,125,761                  |   |   | 18,915,994          |   |   | 237,041,755       |  
|                                     | Additional paid-in capital
      (deficit)                                                                             |   | (160,000                     | ) |   | -                   |   |   | (160,000          | )
|                                     | Retained earnings                                                                                                      |   | -                            |   |   | -                   |   |   | -                 |  
|                                     | Total shareholders'
     equity                                                                                        |   | 217,965,761                  |   |   | 18,915,994          |   |   | 236,881,755       |  
|                                     |                                                                                                                        |   |                              |   |   |                     |   |   |                   |  
|                                     | Total liabilities and
     Shareholders' equity                                                                        | $ | 218,649,233                  |   | $ | 18,746,351          |   | $ | 237,395,584       |  

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

Consolidated Statement of Income Reconciliation

|                                                     |                             |            | Previously
Stated
12/31/2003 |         | OCA Fund I
12/31/03 |            | Restated
12/31/03
|---------------------------------------------------- | --------------------------- | ---------- | ---------------------------- | ------- | ------------------- | ---------- | -----------------
|Interest Income                                      |                             |            |                              |         |                     |           
|                                                     | Loans                       | $          | 12,044,390                   | $       | 454,842             | $          | 12,499,232       
|                                                     | Held-to-maturity securities |            | 348,420                      |         | 1,000               |            | 349,420          
|                                                     | Deposits with banks         |            | 58,234                       |         | 6,515               |            | 64,749           
|                                                     |                             |            | 12,451,044                   |         | 462,357             |            | 12,913,401       
|Interest Expense                                     |                             |            |                              |         |                     |           
|                                                     | Debt certificates           |            | 852                          |         | -                   |            | 852              
|                                                     |                             |            |                              |         |                     |            |                  
|Net Interest Income                                  |                             | 12,450,192 |                              | 462,357 |                     | 12,912,549
|                                                     |                             |            |                              |         |                     |           
|Provision for Loan Losses                            |                             | 164,021    |                              | 8,093   |                     | 172,114   
|                                                     |                             |            |                              |         |                     |           
|Interest Income After Provision for
     Loan Losses |                             | 12,286,171 |                              | 454,264 |                     | 12,740,435
|                                                     |                             |            |                              |         |                     |           
|Other Income                                         |                             | 109,000    |                              | -       |                     | 109,000   
|                                                     |                             | 12,395,171 |                              | 454,264 |                     | 12,849,435
|                                                     |                             |            |                              |         |                     |           
|Other Expense                                        |                             | 2,032,660  |                              | 34,112  |                     | 2,066,772 
|                                                     |                             |            |                              |         |                     |           
|Income Before Minority Interest                      |                             | 10,362,511 |                              | 420,152 |                     | 10,782,663
|                                                     |                             |            |                              |         |                     |           
|Minority Interest                                    |                             | 10,023,340 |                              | -       |                     | 10,023,340
|                                                     |                             |            |                              |         |                     |           
|Net Income                                           | $                           | 339,171    | $                            | 420,152 | $                   | 759,323   

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and valuation of foreclosed assets held for sale. In connection with the determination of the allowance for loan losses and valuation of foreclosed assets held for sale, management obtains independent appraisals for significant properties.

Cash Equivalents

Foundation Capital considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2004 and 2003, cash equivalents consisted of a money market fund.

Securities

Held-to-maturity securities, which include any security for which Foundation Capital has the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the level-yield method over the period to maturity. All of Foundation Capital's securities are classified as held-to-maturity.

Interest on investments in debt securities is included in income when earned on the accrual basis. The accrual of interest is discontinued when, in the opinion of management, the full timely collection of principal and interest is in doubt. Previously accrued interest may also be reversed if deemed uncollectible by management.

Capital Stock

Under its Articles of Incorporation, which were revised December 3, 2003, Foundation Capital may issue up to 80,000,000 shares of capital stock. Of these total shares, 10,000,000 shares are designated as Preferred Stock, 50,000,000 shares are designated as Common Stock and 20,000,000 shares are designated as Excess Stock.

Holders of Common Stock are entitled to one vote for each share owned.

Under the revised Articles of Incorporation, Preferred Stock may be issued from time to time by the Board of Directors as shares of one or more series. Holders of Preferred Stock are entitled to voting powers, preferences, conversions and other rights as set forth and adopted by the Board of Directors. At December 31, 2004, there was no Preferred Stock issued or outstanding.

At December 31, 2002, holders of Class I Preferred Stock were entitled to vote on matters only if their 7.25 percent dividends were in arrears for one year or longer. Class I Preferred Stock could be redeemed at the option of Foundation Capital at a price per share equal to $10 per share plus any accumulated dividends. The redemption option was exercised by the Company during 2003.

Holders of shares of Excess Stock are not entitled to vote on any matters (except as required by law) and shall have no rights to receive notice of any meetings (except as required by law).

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

The additional paid-in capital deficit relates to costs incurred in connection with the raising of equity from private placement offerings.

Dividend Rights

The holders of shares of Preferred Stock and Common Stock shall be entitled to receive, when, as and if declared by the Board of Directors of Foundation Capital, cash dividends at the following rates and in the following order of preference and priority:

| | (i)  | Under the revised Articles of Incorporation, holders of shares of Preferred Stock, if issued, would be entitled to dividends as set forth by the Board of Directors at the time such issue is made;
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                    
| | (ii) | Holders of shares of Common Stock shall receive cash dividends at an amount periodically determined by the Board of Directors                                                                      

Holders of shares of Excess Stock shall not be entitled to any dividends.

Holders of shares of Preferred Stock that was retired in 2003 received any cash dividends due on a cumulative basis at a rate of seven and 25/100s percent (7.25 percent) of par value per share per annum.

Loans Receivable

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balances adjusted for any charge-offs, the allowance for loan losses, any deferred fees or costs on originated loans and unamortized premiums or discounts on loans collateralized by mortgage bonds. Interest income is reported on the interest method and includes amortization of net deferred loan fees over the loan term. Generally, loans are placed on nonaccrual status at ninety days past due and interest may be reversed and considered a loss, unless the loan is well secured and in the process of collection.

Discounts and premiums on loans collateralized by mortgage bonds are amortized to income using the interest method over the remaining period to contractual maturity.

Loans receivable primarily represent loans made by Foundation Capital to churches and affiliated entities and are generally secured by mortgages on the properties and/or bonds issued by the entity which are secured by the properties.

Allowance for Loan Losses and Unamortized Discounts

The allowance for loan losses is based upon the risks inherent in the loan portfolio and is established through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

A loan is considered impaired when, based on current information and events, it is probable that Foundation Capital will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a case-by-case basis by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent.

Loans not evaluated for impairment on an individual basis are collectively evaluated for impairment, and losses are estimated based on management's evaluation of the portfolio and considering other factors such as past due trends, historical charge-off ratios of entities with similar loan portfolio characteristics and other factors.

Minority Interest

Foundation Capital was the sole general partner of the Limited Partnerships until the limited partners, Foundation Capital's Board of Directors and shareholders approved the merger of the Limited Partnerships into Foundation Capital effective December 31, 2003. The merger resulted in the dissolution of the Limited Partnerships with Foundation Capital as the surviving corporation.

Income Taxes

Effective with the year ended December 31, 2003, Foundation Capital elected to be treated as a real estate investment trust (REIT) under the provisions of the Internal Revenue Code and corresponding provisions of state law. The Company expects to operate in a manner that will enable it to continue to be treated as a REIT for income tax purposes. As such, no provision for income taxes has been made in the accompanying consolidated financial statements for 2004 and 2003.

Earnings Per Common Share

Earnings per common share have been computed based upon the weighted average common shares outstanding during each year. Because there are no potentially dilutive shares outstanding, diluted earnings per share is the same as basic earnings per share.

Dividends Per Common Share

Dividends per common share have been calculated by dividing total dividends on common stock by the weighted average number of common shares outstanding during each year.

Segment Information

Foundation Capital's principal business is making mortgage loans to churches and other nonprofit organizations. The lending operation is Foundation Capital's only reportable segment. The lending segment is principally engaged in the business of originating loans secured by mortgages on church properties and/or mortgage bonds issued by the borrower which are secured by the properties. These loans have been funded primarily through investments by former limited partners that are currently shareholders of Foundation

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

Capital. Selected information is not presented separately for Foundation Capital's reportable segment, as there is no material difference between that information and the corresponding information in the consolidated financial statements.

New Accounting Pronouncements

In December 2004, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 03-3, "Accounting for Certain Loans of Debt Securities Acquired in a Transfer" ("SOP 03-3"). This SOP effectively replaces Practice Bulletin 6. SOP 03-3 requires loans acquired in a transfer to be accounted for at fair value. No allowance for loan losses or other valuation allowance is permitted at the time of acquisition. Valuation allowances should reflect only losses incurred after the acquisition. The difference between cash flows expected at acquisition and the investment in the loan should be recognized as interest income over the life of the loan. SOP 03-3 is required to be adopted for fiscal years beginning after December 15, 2004, although early adoption is permitted. The application of SOP 03-3 is not expected to have a material impact on Foundation Capital's consolidated financial statements.

|Note 2: | Securities
|------- | ----------

The amortized cost and approximate fair values of securities classified as held to maturity are as follows:

|               | December 31, 2004
|-------------- | -----------------
|               | Amortized
Cost   
|               |                  
|Mortgage bonds | $                

|               | December 31, 2003
|-------------- | -----------------
|               | Amortized
Cost   
|               |                  
|Mortgage bonds | $                

Maturities of held-to-maturity debt investments at December 31, 2004:

|                             | Amortized
Cost |           | Approximate
Fair Value |  
|---------------------------- | -------------- | --------- | ---------------------- | -
|                             |                |           |                        |  
|After one through five years | $              | 750,000   |                        | $
|After five through ten years |                | 670,023   |                        |  
|After ten years              |                | 3,689,775 |                        |  
|                             | $              | 5,109,798 |                        | $

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

|Note 3: | Loans Receivable and Allowance for Loan Losses
|------- | ----------------------------------------------

Categories of loans at December 31 include:

|                               | 2004 |             | 2003 Restated |  
|------------------------------ | ---- | ----------- | ------------- | -
|                               |      |             |               |  
|Mortgage loans                 | $    | 93,342,119  |               | $
|Bond collateralized loans      |      | 161,514,249 |               |  
|Construction loans             |      | 70,337,546  |               |  
|Other                          |      | 2,909,334   |               |  
|                               |      |             |               |  
|Total loans receivable         | $    | 328,103,248 |               | $
|                               |      |             |               |  
|Less                           |      |             |               |  
|Allowance for loan losses      |      | 578,914     |               |  
|Unamortized discounts          |      | 4,681,033   |               |  
|Deferred origination fees, net |      | 916,682     |               |  
|                               |      |             |               |  
|                               |      | 6,176, 629  |               |  
|                               |      |             |               |  
|                               | $    | 321,926,619 |               | $

Activity in the allowance for loan losses is summarized as follows:

|                           | 2004 |         | 2003 Restated |  
|-------------------------- | ---- | ------- | ------------- | -
|                           |      |         |               |  
|Balance, beginning of year | $    | 508,396 |               | $
|Provision for loan losses  |      | 70,518  |               |  
|                           |      |         |               |  
|Balance, end of year       | $    | 578,914 |               | $

For the years ended December 31, 2004 and 2003, Foundation Capital did not have any loan charge-offs.

As of December 31, 2004 and 2003, the recorded investment in impaired loans approximated $4,086,000 and $2,584,000, respectively, all of which is subject to allowance for losses on loans. The average recorded investment in impaired loans during 2004 and 2003 was approximately $4,602,000 and $1,449,000, respectively. Interest income on these impaired loans of $56,465 and $216,524 was recognized on an accrual basis during 2004 and 2003, respectively. Interest received on these impaired loans on the cash basis was approximately $4,500 and $0 during 2004 and 2003, respectively.

At December 31, 2004 and 2003, accruing loans delinquent 90 days or more totaled $0 and $1,084,432, respectively. Nonaccruing loans at December 31, 2004 and 2003, totaled $4,086,188 and $1,500,000, respectively.

|Note 4: | Debt Certificates
|------- | -----------------

During 2003, Foundation Capital commenced a public offering of up to $55,000,000 of collateralized debt certificates with terms varying from three to ten years with interest at rates ranging from 4.35 percent to 6.20 percent. These debt certificates are collateralized by specific loans held in Foundation Capital's portfolio.

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

As of December 31, 2004, debt certificate obligations totaling $5,238,500 were outstanding with the following maturities:

| | 2006 | $ | 4,023,500 | 
| | ---- | - | --------- | 
| | 2008 |   | 226,000   | 
| | 2010 |   | 121,000   | 
| | 2013 |   | 868,000   | 
| |      | $ | 5,238,500 | 

On November 24, 2004, the Company filed Form S-11/A (Post-Effective Amendment Number 2) with the SEC to remove $49,761,500 (as detailed below) of the above securities that were originally registered. On December 9, 2004, the SEC declared the filing effective.

| | Title of Each Class of Securities Removed From
Registration | Amount Removed From Registration
| | ----------------------------------------------------------- | --------------------------------
| |                                                             |                                 
| | Series A Certificates of Indebtedness                       | $                               
| |                                                             |                                 
| | Series B Certificates of Indebtedness                       | $                               
| |                                                             |                                 
| | Series C Certificates of Indebtedness                       | $                               
| |                                                             |                                 
| | Series D Certificates of Indebtedness                       | $                               

|Note 5: | Lines of Credit
|------- | ---------------

On July 27, 2004, Foundation Capital procured a $5 million line of credit with a financial institution and may draw down on that line of credit from time to time as necessary, to maintain Foundation Capital's liquidity. At December 31, 2004, this line of credit was fully available to Foundation Capital.

On November 4, 2004, Foundation Capital entered into a Revolving Credit Agreement (the "Agreement") with KeyBank National Association, Wells Fargo Foothill, Inc., Harris Trust and Savings Bank, Bank Midwest, N.A., Southwest Bank of Texas, N. A., and such other lending institutions as might later become parties to the Agreement pursuant to Section 18 of the Agreement (collectively, the "Banks"), KeyBank National Association ("KeyBank") as Agent for the Banks and Wells Fargo Foothill, Inc. as Syndication Agent for the Banks. Through the Agreement, and subject to the terms and conditions of the Agreement, the Banks have made available to Foundation Capital a four year revolving credit facility of up to $125,000,000.

At December 31, 2004, $43,587,500 had been borrowed against this line. The line is collateralized by substantially all of the Company's assets, with the exclusion of $30,000,000 used to collateralize other indebtedness. Interest varies with the bank's prime and/or LIBOR rate, and is payable monthly.

There are two types of loans available through the revolving credit facility: Base Rate Loans and LIBOR Rate Loans. Base Rate Loans are to be in a minimum aggregate amount of $1,000,000 or an integral multiple of $100,000 in excess thereof, with an interest rate tied to the greater of the prime rate or one half of one percent (0.5%) above the Federal Funds Effective Rate as set forth in the Agreement. LIBOR Rate Loans are to be in a minimum aggregate amount of $2,000,000 or an integral multiple of $100,000 in excess thereof, with an interest rate tied to the LIBOR as set forth in the Agreement. There are to be no more than six

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

LIBOR Rate Loans outstanding at any one time. The Agreement provides a mechanism by which Foundation Capital may elect to convert any of its outstanding loans from one type to the other.

Foundation Capital is to pay an unused facility fee due quarterly and calculated based on the ratio of the average daily amount of borrowing under the credit facility during each quarter to the sum of the commitment of the Banks ($125,000,000 as of the date of the Agreement). If this facility usage ratio is 50 percent or less, the facility fee is 0.30 percent per annum of the average unused portion of the credit facility. Otherwise, the fee is 0.15 percent per annum.

Foundation Capital may use the proceeds of the loans provided through the revolving credit facility solely for the purposes set forth in the Agreement, including, among others, to make Qualifying Mortgage Loans (as defined), to repay outstanding Indebtedness (as defined) and for working capital (subject to limitations set forth in the Agreement).

The Agreement contains representations and warranties and affirmative and negative covenants, including, but not limited to, the following financial covenants:

| | (a) | Foundation Capital will not permit the Outstanding Loans (as defined) as of the date of determination to exceed the Borrowing Base (as defined) as determined as of the same date;                                                                                                                                                                 
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (b) | Foundation Capital will not, as of the end of any fiscal quarter of Foundation Capital, permit Borrowing Base Adjusted EBITDA (as defined) for the period covered by the four previous consecutive fiscal quarters (treated as a single accounting period) to be less than 2.25 times the Facility Interest Expense (as defined) for such period;  
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (c) | Foundation Capital will maintain certain limits on the percentages of the Borrowing Base (as defined) that may be accounted for by certain Qualifying Mortgage Loans (as defined);                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (d) | Foundation Capital will not at any time permit the ratio of Consolidated Total Liabilities (as defined) to Consolidated Total Adjusted Asset Value (as defined) to exceed .50 to 1;                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (e) | Foundation Capital will not, as of the end of any fiscal quarter of Foundation Capital, permit its Adjusted EBITDA (as defined) for the period covered by the four previous consecutive fiscal quarters (treated as a single accounting period) to be less than 2.25 times the Interest Expense (as defined) of Foundation Capital for such period;
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (f) | Foundation Capital will not permit its Consolidated Tangible Net Worth (as defined) to be less than $250,000,000 plus seventy-five percent of any Net Offering Proceeds (as defined) received by Foundation Capital after the date of the Agreement;                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                    
| | (g) | Foundation Capital will not permit the aggregate outstanding principal balances of all Non-Performing Assets (as defined) to exceed an amount equal to fifteen percent of the sum of its Consolidated Tangible Net Worth plus Actual Loan Loss Reserve Balance (as defined).                                                                       

The Agreement limits the amount of other permitted indebtedness of Foundation Capital. Among other limitations, the indebtedness under Foundation Capital's Debt Certificates now outstanding or issued in the future may not exceed $30,000,000; Foundation Capital's line of credit with another bank may not exceed $5,000,000; and Foundation Capital's combined indebtedness under these Debt Certificates and this other line of credit may not exceed $30,000,000.

The Agreement requires Foundation Capital to, within three months after the date of the Agreement, obtain and maintain an Interest Rate Contract (as defined) satisfactory to KeyBank as Agent on at least $50,000,000 of the loans extended to Foundation Capital by the Banks under the Agreement for a period of two years. On

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

February 2, 2005, Foundation Capital entered into this Interest Rate Contract by purchasing an interest rate cap. Before the end of that two-year period, Foundation Capital is to enter into one or more new Interest Rate Contracts (as defined) satisfactory to KeyBank as Agent that provide interest rate protection for at least 50 percent of the sum of the commitments of the Banks to make or maintain loans to Foundation Capital under the Agreement and that shall remain in place until the Maturity Date (as defined).

The Agreement provides that Foundation Capital will maintain with KeyBank, as Agent, a Lockbox (as defined), governed by a Lockbox Agreement (as defined) pursuant to which the gross interest income and fees received by Foundation Capital for any period, as well as other payments on the Mortgage Loans (as defined), are to be deposited by the Mortgage Loan Obligors (as defined) into the Lockbox. If an Event of Default (as defined) occurs, KeyBank as Agent is to do any or all of the following: (i) exercise exclusive dominion and control over the funds deposited in the Lockbox, (ii) have collections sent to the Lockbox redirected pursuant to its instruction, (iii) apply the balance in the Lockbox against the Obligations (as defined) in such order and manner as KeyBank as Agent deems desirable, and (iv) take any or all other actions KeyBank as Agent is permitted to take as set forth in the Agreement. KeyBank as Agent is to have a first priority perfected security interest in the Lockbox.

Foundation Capital's Obligations (as defined) are to be secured by a perfected first priority lien or security interest to be held by KeyBank as Agent for the benefit of the Banks in substantially all mortgage loans and certain other assets of Foundation Capital, but excluding mortgage loans securing repayment of the other permitted indebtedness. The Agreement restricts Foundation Capital's ability to further encumber its assets.

The Agreement contains customary events of default. If an event of default occurs and is continuing, Foundation Capital might be required to repay all amounts outstanding under the revolving credit facility.

The revolving credit facility expires on November 8, 2008, and all outstanding loans under the credit facility, along with all accrued and unpaid interest thereon, become immediately due and payable.

|Note 6: | Minority Interest and Merger of Limited Partnerships
|------- | ----------------------------------------------------

During 2003, the limited partners of the Limited Partnerships and Foundation Capital's Board of Directors and shareholders approved the merger of the Limited Partnerships with and into Foundation Capital with Foundation Capital as the surviving corporation. The merger was effective on December 31, 2003, and was consummated through the exchange of Foundation Capital common stock for all of the units in the Limited Partnerships at a rate of one share of Foundation Capital common stock for each unit. The assets and liabilities of the Limited Partnerships were transferred to Foundation Capital at their existing carrying values.

Prior to the merger, Foundation Capital was the general partner of each of the Limited Partnerships. The Limited Partnership agreements stated that the limited partners could not voluntarily withdraw from the partnerships and could not take part in the management of the business, transact business for the partnerships or have the power to sign for or bind the partnerships to any agreement or document, as these powers belonged only to the general partner. Additionally, the limited partners could sell their interests in the Limited Partnerships only with the general partner's permission. The Limited Partnership Minority Interest activity for 2003 is summarized as follows:

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

Foundation Capital Partners I, LLLP

| |                                                               | 2003 |              |   | 
| | ------------------------------------------------------------- | ---- | ------------ | - | 
| |                                                               |      |              |   | 
| | Balance, beginning of year                                    | $    | 60,095,131   |   | 
| | Cash contributions                                            |      | 64,590,268   |   | 
| | Exchange of limited partnership interests for
   common stock |      | (129,568,404 | ) | 
| | Allocation of earnings                                        |      | 4,883,005    |   | 
| |                                                               |      |              |   | 
| | Balance, end of year                                          |      | -            |   | 

Foundation Capital Partners II, LLLP

| |                                                               | 2003 |             |   | 
| | ------------------------------------------------------------- | ---- | ----------- | - | 
| |                                                               |      |             |   | 
| | Balance, beginning of year                                    | $    | 71,557,764  |   | 
| | Cash contributions                                            |      | 10,361,000  |   | 
| | Exchange of limited partnership interests for
   common stock |      | (87,059,099 | ) | 
| | Allocation of earnings                                        |      | 5,140,335   |   | 
| |                                                               |      |             |   | 
| | Balance, end of year                                          |      | -           |   | 
| |                                                               |      |             |   | 
| | Limited partnership minority interest                         | $    | -           |   | 

|Note 7: | Income Taxes
|------- | ------------

The provision for income taxes includes these components:

|                               | 2004 |   | 2003 (Restated) |  
|------------------------------ | ---- | - | --------------- | -
|                               |      |   |                 |  
|Income taxes currently payable | $    | - |                 | $

A reconciliation of income tax expense at the statutory rate to Foundation Capital's actual income tax expense is shown below:

|                                                                                                                                      | 2004 |            | 2003 (Restated) |  
|------------------------------------------------------------------------------------------------------------------------------------- | ---- | ---------- | --------------- | -
|                                                                                                                                      |      |            |                 |  
|Computed at the statutory rate                                                                                                        | $    | 5,605,604  |                 | $
|Increase (decrease) resulting from                                                                                                    |      |            |                 |  
|Limited partnership preferred payments and
             minority share of net income or loss taxable to
             limited partners |      | -          |                 |  
|Payment of dividends to shareholders                                                                                                  |      | (5,713,904 | )               |  
|Other                                                                                                                                 |      | 108,300    |                 |  
|                                                                                                                                      |      |            |                 |  
|Actual income tax expense                                                                                                             | $    | -          |                 | $

Foundation Capital elected to be treated as a REIT for federal income tax purposes beginning with the year ended December 31, 2003. As such, it generally will not be subject to federal income tax on the amount of its taxable income or gain that is distributed as dividends to shareholders.

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

|Note 8: | Management Services and Related Party Transactions
|------- | --------------------------------------------------

Foundation Capital does not have any employees and instead has contracted with an entity owned by its President to manage the operations of Foundation Capital. Foundation Capital recognized $3,364,861 and $2,007,661 of expense related to these arrangements during the years ended December 31, 2004 and 2003, respectively. Amounts due from the management company at December 31, 2004 and 2003, totaled $0 and $434,985, respectively, and were for payments from borrowers received on behalf of Foundation Capital. Amounts due to the management company at December 31, 2004 and 2003, totaled $35,835 and $0, respectively, and were for servicing fees received on behalf of the Manager.

The limited partnership interests described in Note 6 were primarily held by the Assemblies of God Financial Services Group or entities managed by Assemblies of God Financial Services Group (AGFSG). As discussed in Note 6, the limited partnership interests were exchanged for Foundation Capital common stock on December 31, 2003. Consequently, AGFSG or entities managed by AGFSG hold approximately 99.7 percent of Foundation Capital's common stock at December 31, 2004.

Foundation Capital has on occasion sold participations in loans originated by it to AGFSG. At December 31, 2004 and 2003, the balance of participation loans sold to AGSFG was $3,922,645 and $4,113,929, respectively.

Of the $5,238,500 in debt certificates outstanding at December 31, 2004, as discussed in Note 4, $127,000 was held by the chief executive officer and certain board members of Foundation Capital.

|Note 9: | Disclosures About Fair Value of Financial Instruments
|------- | -----------------------------------------------------

The following table presents estimated fair values of Foundation Capital's financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which method involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, Foundation Capital does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.

|                            | December 31, 2004 |             | December 31, 2003 (Restated)
|--------------------------- | ----------------- | ----------- | ----------------------------
|                            | Carrying
Amount   |             | Fair Value                  
|Financial assets            |                   |             |                             
|Cash and cash equivalents   | $                 | 5,127,655   |                             
|Interest receivable         |                   | 3,464,722   |                             
|Loans receivable            |                   | 321,926,619 |                             
|Held-to-maturity securities |                   | 5,109,798   |                             
|                            |                   |             |                             
|Financial liabilities       |                   |             |                             
|Debt certificates           | $                 | 5,238,500   |                             
|Lines of credit             |                   | 43,587,500  |                             

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

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

Cash and Cash Equivalents

The carrying amount approximates fair value.

Loans and Interest Receivable

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. The carrying amount of interest receivable approximates its fair value.

Securities

The fair value of securities is estimated by discounting the future cash flows using the current rates at which similar securities could be purchased with similar credit rating and for the same remaining maturities.

Debt Certificates and Lines of Credit

Rates currently available to Foundation Capital for debt with similar terms and remaining maturities are used to estimate fair value of the debt certificates. The carrying amount approximates fair value for lines of credit.

|Note 10: | Commitments and Credit Risk
|-------- | ---------------------------

Commitments to Originate Loans

Commitments to originate loans are agreements to lend to a borrower as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each borrower's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's credit evaluation of the counterparty. Collateral held varies, but typically includes real estate owned by churches and nonprofit organizations.

Foundation Capital had outstanding commitments to originate loans aggregating approximately $62,698,000 and $58,264,000, all at fixed rates of interest, at December 31, 2004 and 2003, respectively. The commitments extended over varying periods of time with the majority to be disbursed within a one-year period.

Loans Receivable

Foundation Capital extends credit for real estate mortgage loans and bond collateralized loans primarily to churches and other nonprofit organizations. Foundation Capital evaluates creditworthiness on a case-by-case basis and generally requires collateral in the form of first mortgages on the related property, or that the bonds collateralizing the loans are secured by first mortgages on the related property. The loans are expected to be repaid from operations of and/or contributions to the borrowers. Foundation Capital also controls credit risk through regular evaluations and monitoring procedures.

At December 31, 2004, there were no loans that had a principal balance in excess of five percent of total assets. At December 31, 2003, there was one outstanding loan that had a principal balance in excess of five percent of total assets. This loan comprised approximately six percent of total assets.

---



Foundation Capital Resources, Inc.Notes to Consolidated Financial Statements
December 31, 2004 and 2003

At December 31, 2004 and 2003, loans to borrowers in the state of California totaled approximately 15 percent and 26 percent, respectively, of the gross loan portfolio; in the state of Texas totaled approximately 15 percent and 7 percent, respectively, of the gross loan portfolio; in the state of New York totaled approximately 11 percent and 8 percent, respectively, of the gross loan portfolio; and in the state of Michigan totaled approximately 11 percent and 1 percent, respectively, of the gross loan portfolio.

|Note 11: | Earnings Per Share
|-------- | ------------------

Earnings per share was computed as follows:

| | Year Ended December 31, 2004            |            
| | --------------------------------------- | -----------
| |                                         | Income     
| |                                         |            
| | Net income                              | $16,783,391
| | Basic and diluted earnings per share    |            
| | Income allocable to common shareholders | $16,783,391

| | Year Ended December 31, 2003 (Restated) |              
| | --------------------------------------- | -------------
| |                                         | Income       
| |                                         |              
| | Net Income                              | $    759,323 
| | Basic and diluted income per share      |              
| | Income allocable to common shareholders | $     759,323

|Note 12: | Significant Estimates and Concentrations
|-------- | ----------------------------------------

Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for loan losses are reflected in Notes 1and3. Current vulnerabilities due to certain concentrations of credit risk are discussed in Note 10.

---



Report on Independent Registered Public Accounting Firm on
Financial Statement Schedules

Board of Directors
Foundation Capital Resources, Inc. 
Jackson, Mississippi

Our audits were made for the purpose of forming an opinion on the basic financial statement taken as a whole. The nature of our audit procedures is more fully described in our report on the basic financial statements. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

| | /s/BKD, LLP
| | -----------

Springfield, Missouri
January 28, 2005

---



Foundation Capital Resources, Inc.Mortgage Loans on Real Estate
December 31, 2004

|Column A                               |  |                 |  | Column B      |   | Column C            |  | Column D               |  | Column E    |  | Column F                |            | Column G                    |   | Column H                          
|-------------------------------------- |  | --------------- |  | ------------- | - | ------------------- |  | ---------------------- |  | ----------- |  | ----------------------- | ---------- | --------------------------- | - | ----------------------------------
|                                       |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Range of
Carrying Amounts
of Mortgages |  | Number
of
Loans |  | Interest
Rate |   | Final
Maturity
Date |  | Periodic
Payment
Terms |  | Prior
Liens |  | Face
Amount
of
Mortgage |            | Carrying
Amount of
Mortgage |   | Principal
Amount
of Loans
Impaired
|                                       |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Mortgage loans                         |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $10,143,476 (3)              |  | 66              |  | 6.75 - 8.75   | % | Various             |  | N/A                    |  | N/A         |  |                         | N/A        |                             | $ | 80,398,144                        
|Loan in Rancho Cucamonga, CA           |  | 1               |  | 7.79          |   | 10/26/2029          |  | Level Pay              |  | N/A         |  | $                       | 12,943,975 |                             |   | 12,943,975                        
|                                       |  | 67              |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | 93,342,119                        
|                                       |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Bond collateralized loans              |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $10,143,476 (3)              |  | 110             |  | 4.40 - 9.50   |   | Various             |  | N/A                    |  | N/A         |  |                         | N/A        |                             |   | 134,470,872                       
|Loan in Arlington, TX                  |  | 1               |  | 8.18          |   | 8/18/2022           |  | Level Pay              |  | N/A         |  |                         | 10,739,670 |                             |   | 10,739,670                        
|Loan in Brooklyn, NY                   |  | 1               |  | 7.27          |   | 5/5/2020            |  | Level Pay              |  | N/A         |  |                         | 16,303,707 |                             |   | 16,303,707                        
|                                       |  | 112             |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | 161,514,249                       
|                                       |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Construction loans                     |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $10,143,476 (3)              |  | 34              |  | 6.95 - 9.00   |   | Various             |  | Various                |  | N/A         |  |                         | N/A        |                             |   | 70,337,546                        
|                                       |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Other loans                            |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $10,143,476 (3)              |  | 11              |  | 6.41 - 9.25   |   | Various             |  | Various                |  | N/A         |  |                         | 2,909,334  |                             |   | 2,909,334                         
|                                       |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Unamortized discount                   |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | (4,681,033                        
|Allowance for loan losses (2)          |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | (578,914                          
|Deferred origination fees              |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | (916,682                          
|                                       |  |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|                                       |  | 224             |  |               |   |                     |  |                        |  |             |  |                         |            |                             | $ | 321,926,619                       

---



Foundation Capital Resources, Inc.Mortgage Loans on Real Estate
December 31, 2004

Notes

(1) Reconciliation of the carrying amounts of loans

|Balance at January 1, 2004                                   |   |             |   | $ | 223,241,868
|------------------------------------------------------------ | - | ----------- | - | - | -----------
|Additions during 2004                                        |   |             |   |   |            
|Loan originations and purchases of bond collateralized loans | $ | 77,472,134  |   |   |            
|Loan originations and purchases of mortgage loans            |   | 103,407,710 |   |   |            
|Accretion of discounts                                       |   | 726,449     |   |   |            
|                                                             |   |             |   |   | 181,606,293
|Deductions during 2004                                       |   |             |   |   |            
|Collections of principal                                     |   | 82,449,875  |   |   |            
|Provision for losses                                         |   | 70,518      |   |   |            
|Loans transferred to foreclosed assets held for sale         |   | 1,110,957   |   |   |            
|Foreclosed assets sold                                       |   | (544,409    | ) |   |            
|Other                                                        |   | (165,399    | ) |   |            
|                                                             |   |             |   |   | 82,921,542 
|                                                             |   |             |   |   |            
|Balance at December 31, 2004                                 |   |             |   | $ | 321,926,619

|(2) | The provision for losses is based on management's assessment of various factors.                       
|--- | -------------------------------------------------------------------------------------------------------
|(3) | $10,143,476 is 3 percent of the total amount of loans at December 31, 2004.                            
|(4) | The geographic distribution of Foundation Capital's loan portfolio at December 31, 2004, is as follows:

|State or Territory                   |  | Number of Loans |  | Carrying Amount |  
|------------------------------------ |  | --------------- |  | --------------- | -
|                                     |  |                 |  |                 |  
|Alabama                              |  | 5               |  |                 | $
|Arizona                              |  | 26              |  |                 |  
|California                           |  | 31              |  |                 |  
|Florida                              |  | 13              |  |                 |  
|Georgia                              |  | 7               |  |                 |  
|Michigan                             |  | 11              |  |                 |  
|North Carolina                       |  | 16              |  |                 |  
|New Jersey                           |  | 6               |  |                 |  
|New York                             |  | 13              |  |                 |  
|Pennsylvania                         |  | 6               |  |                 |  
|Texas                                |  | 23              |  |                 |  
|Washington                           |  | 13              |  |                 |  
|Other states, less than 5 loans each |  | 54              |  |                 |  
|Subtotal                             |  |                 |  |                 | $
|                                     |  |                 |  |                 |  
|Unamortized discount                 |  | -               |  |                 |  
|Allowance for loan losses            |  | -               |  |                 |  
|Deferred origination fees            |  | -               |  |                 |  
|                                     |  |                 |  |                 |  
|Total                                |  | 224             |  |                 | $

---



Foundation Capital Resources, Inc.Mortgage Loans on Real Estate
December 31, 2003 Restated

|Column A                               |                 |  | Column B      |   | Column C            |  | Column D               |  | Column E    |  | Column F                |            | Column G                    |   | Column H                          
|-------------------------------------- | --------------- |  | ------------- | - | ------------------- |  | ---------------------- |  | ----------- |  | ----------------------- | ---------- | --------------------------- | - | ----------------------------------
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Range of
Carrying Amounts
of Mortgages | Number
of
Loans |  | Interest
Rate |   | Final
Maturity
Date |  | Periodic
Payment
Terms |  | Prior
Liens |  | Face
Amount of
Mortgage |            | Carrying
Amount of
Mortgage |   | Principal
Amount
of Loans
Impaired
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Mortgage loans                         |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $6,979,406 (3)               | 58              |  | 6.65 - 10.95  | % | Various             |  | N/A                    |  | N/A         |  |                         | N/A        |                             | $ | 44,536,918                        
|Loan in Rancho Cucamonga, CA           | 1               |  | 7.58          |   | 7/11/2028           |  | Level Pay              |  | N/A         |  | $                       | 9,926,427  |                             |   | 9,926,427                         
|Loan in Seattle, WA                    | 1               |  | 7.95          |   | 12/1/04             |  | Level Pay              |  | N/A         |  |                         | 7,344,000  |                             |   | 7,344,000                         
|                                       | 60              |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | 61,807,345                        
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Bond collateralized loans              |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $6,949,406 (3)               | 88              |  | 5.52 - 9.26   |   | Various             |  | N/A                    |  | N/A         |  |                         | N/A        |                             |   | 74,161,486                        
|Loan in Brooklyn, NY                   | 1               |  | 7.45          |   | 11/5/2028           |  | Level Pay              |  | N/A         |  |                         | 15,047,648 |                             |   | 15,047,648                        
|Loan in Surprise, AZ                   | 1               |  | 7.57          |   | 11/15/2022          |  | Level Pay              |  | N/A         |  |                         | 8,698,854  |                             |   | 8,698,854                         
|                                       | 90              |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | 97,907,988                        
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Construction loans                     |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $6,979,406 (3)               | 25              |  | 7.50 - 8.75   |   | Various             |  | Various                |  | N/A         |  |                         | N/A        |                             |   | 45,988,641                        
|Loan in Anaheim, CA                    | 1               |  | 9.00          |   | 12/1/2034           |  | Various                |  | N/A         |  |                         | 10,426,464 |                             |   | 10,426,464                        
|Loan in Post Falls, ID                 | 1               |  | 9.30          |   | 1/1/2008            |  | Various                |  | N/A         |  |                         | 7,766,715  |                             |   | 7,766,715                         
|                                       | 27              |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | 64,181,820                        
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Other loans                            |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Less than $6,979,406 (3)               | 11              |  | 6.50 - 9.25   |   | Various             |  | Various                |  | N/A         |  |                         | 3,715,442  |                             |   | 3,715,442                         
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|Unamortized discount                   |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | (3,178,016                        
|Allowance for loan losses (2)          |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | (508,396                          
|Deferred origination fees              |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   | (684,315                          
|                                       |                 |  |               |   |                     |  |                        |  |             |  |                         |            |                             |   |                                   
|                                       | 188             |  |               |   |                     |  |                        |  |             |  |                         |            |                             | $ | 223,241,868                       

---



Foundation Capital Resources, Inc.Mortgage Loans on Real Estate
December 31, 2003 Restated

Notes

(1) Reconciliation of the carrying amounts of loans

|Balance at January 1, 2003                                   |   |             |   | $ | 121,559,762
|------------------------------------------------------------ | - | ----------- | - | - | -----------
|Additions during 2003                                        |   |             |   |   |            
|Loan originations and purchases of bond collateralized loans | $ | 48,677,144  |   |   |            
|Loan originations and purchases of mortgage loans            |   | 110,225,707 |   |   |            
|Accretion of discounts                                       |   | 566,250     |   |   |            
|                                                             |   |             |   |   | 159,469,101
|Deductions during 2003                                       |   |             |   |   |            
|Collections of principal                                     |   | 54,443,583  |   |   |            
|Provision for losses                                         |   | 172,114     |   |   |            
|Loans transferred to foreclosed assets held for sale         |   | 3,257,006   |   |   |            
|Other                                                        |   | (85,708     | ) |   |            
|                                                             |   |             |   |   | 57,786,995 
|                                                             |   |             |   |   |            
|Balance at December 31, 2003                                 |   |             |   | $ | 223,241,868

|(2) | The provision for losses is based on management's assessment of various factors.                       
|--- | -------------------------------------------------------------------------------------------------------
|(3) | $6,979,406 is 3 percent of the total amount of loans at December 31, 2003.                             
|(4) | The geographic distribution of Foundation Capital's loan portfolio at December 31, 2003, is as follows:

|State or Territory                   |  | Number of Loans |  | Carrying Amount |  
|------------------------------------ |  | --------------- |  | --------------- | -
|                                     |  |                 |  |                 |  
|Arizona                              |  | 20              |  |                 | $
|California                           |  | 31              |  |                 |  
|Colorado                             |  | 6               |  |                 |  
|Florida                              |  | 13              |  |                 |  
|Georgia                              |  | 8               |  |                 |  
|North Carolina                       |  | 17              |  |                 |  
|New Jersey                           |  | 7               |  |                 |  
|New York                             |  | 6               |  |                 |  
|Pennsylvania                         |  | 5               |  |                 |  
|Texas                                |  | 17              |  |                 |  
|Washington                           |  | 20              |  |                 |  
|Other states, less than 5 loans each |  | 38              |  |                 |  
|Subtotal                             |  |                 |  |                 | $
|                                     |  |                 |  |                 |  
|Unamortized discount                 |  | -               |  |                 |  
|Allowance for loan losses            |  | -               |  |                 |  
|Deferred origination fees            |  | -               |  |                 |  
|                                     |  |                 |  |                 |  
|Total                                |  | 188             |  |                 | $

---



|ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.

|ITEM 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on and as of the time of that evaluation, management, including our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report, for gathering, analyzing and disclosing the information that we are required to disclose in the reports we file under the Securities Exchange Act of 1934, within the time periods specified in the SEC's rules and forms. Management, including our Chief Executive Officer and our Chief Financial Officer, also concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to Foundation Capital required to be included in our periodic SEC filings. There was no change in Foundation Capital's internal control over financial reporting that occurred during the three months ended December 31, 2004 that has materially affected, or is reasonably likely to materially affect, Foundation Capital's internal control over financial reporting.

|ITEM 8B. | Other information
|-------- | -----------------

None.

PART III

|ITEM 9. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|------- | --------------------------------------------------

The Board of Directors is currently comprised of seven individuals whose terms of office expire in April 2005. Executive officers of Foundation Capital serve at the pleasure of the Board of Directors. All directors, with the exception of Mr. Braswell and Mr. Roberts, are considered Independent Directors who are not employed by and have no direct affiliation with Foundation Capital. The following table sets forth certain information concerning the Board of Directors and executive officers of Foundation Capital.

Directors:

|Name                                                                      | Age | Position                                        | Year First
Elected as a
Director | 
|------------------------------------------------------------------------- | --- | ----------------------------------------------- | -------------------------------- | 
|A. J. Braswell
P.O. Box 20749
St. Simons Island, Georgia 31522            | 63  | President, Chief Executive Officer
and Director | 2000                             | 
|                                                                          |     |                                                 |                                  | 
|Susan S. Eames
1222 16th Avenue South
Suite 21
Nashville, Tennessee 37212 | 59  | Independent Director                            | 2003                             | 
|                                                                          |     |                                                 |                                  | 
|James R. Fischer
2 Mayon Point
Callawassie Island, SC 29909               | 59  | Independent Director                            | 2004                             | 

---



|Name                                                                      | Age | Position                                                     | Year First
Elected as a
Director | 
|------------------------------------------------------------------------- | --- | ------------------------------------------------------------ | -------------------------------- | 
|Dr. K. Milton Higgins
945 West Alamos
Fresno, California 93705            | 68  | Independent Director                                         | 2000                             | 
|                                                                          |     |                                                              |                                  | 
|Terri P. Hudson
214 Winsmere Way
Ridgeland, MS 39157                      | 46  | Independent Director                                         | 2004                             | 
|                                                                          |     |                                                              |                                  | 
|David B. Parker
P.O. Box 12609
Oklahoma City, Oklahoma 73157              | 50  | Independent Director                                         | 2003                             | 
|                                                                          |     |                                                              |                                  | 
|James LeRoy Roberts
1812 Hunting Ridge Road
Raleigh, North Carolina 27615 | 67  | Director                                                     | 2000                             | 
|                                                                          |     |                                                              |                                  | 
|Wayne Shirley
6201 104th Avenue, N.E.
Kirkland, Washington 98033          | 61  | Independent Director                                         | 2000                             | 
|                                                                          |     |                                                              |                                  | 
|Executive Officers:                                                       |     |                                                              |                                  | 
|                                                                          |     |                                                              |                                  | 
|Bobby D. Ray
1430 Lelia Drive
Jackson, Mississippi 39216                  | 51  | Senior Vice President, Chief
Financial Officer and Treasurer |                                  | 
|                                                                          |     |                                                              |                                  | 
|Douglas H. Veazey
1430 Lelia Drive
Jackson, Mississippi 39216             | 57  | Senior Vice President - Loan
Servicing                       |                                  | 
|                                                                          |     |                                                              |                                  | 
|Barry S. Winford
1430 Lelia Drive
Jackson, Mississippi 39216              | 39  | Senior Vice President                                        |                                  | 

Information regarding the business background and experience of Foundation Capital's directors and executive officers follows:

Directors:

A.J. Braswell serves as the President, Chief Executive Officer and a director of Foundation Capital. Mr. Braswell attended Augusta College and Southern Technical Institute and majored in electrical engineering technology. For approximately 12 years, Mr. Braswell worked in the area of telecommunications engineering technology for Western Electric and for Collins Radio Company. In 1975, Mr. Braswell acquired the predecessor of Reliance Trust Company. Thereafter, Mr. Braswell transformed Reliance Trust Company into a state-chartered bank and trust company specializing in (1) trust and fiduciary services to churches issuing bonds, (2) services to church loan funds, and (3) personal and corporate trusts, asset management and retirement plan administration. In 1996, Mr. Braswell sold his ownership interest in Reliance Trust Company. From 1996 to December 30, 2001, Mr. Braswell served as Managing Principal of Reliance Institutional Capital, Inc. (formerly known as Reliance Financial Corporation) in order to focus on maintaining its existing church and nonprofit business and on developing additional business for Reliance. Since December 30, 2001, Mr. Braswell has not been employed by Reliance or any of its Affiliates. Mr. Braswell is the former Chairman of the Board of the Christian Stewardship Association,

---

and is a director of World Serve International and the former Secretary and Treasurer for the National Association of Church and Institutional Financing Organizations. Mr. Braswell also serves as the President, Chief Executive Officer and owner of the Manager.

Susan S. Eames serves as a director of Foundation Capital. Ms. Eames received a Bachelor of Science degree in Business Administration from Regis College. From 1986 to 1990, Ms. Eames was Regional Manager for Team Resources, Inc., and provided executive search and selection counsel to not-for-profit organizations and Christian ministries, as well as to for-profit companies. In 1990, Ms. Eames founded The Cedarwood Group, an executive recruiting and placement firm that serves publishing companies, faith-based entities and educational institutions.  Ms. Eames currently serves as President of The Cedarwood Group. Ms. Eames is a member of the Board of Directors of Christianity Today International and the Christian Stewardship Association.

James R. Fischer serves as a director and Chairman of the Executive Committee of Foundation Capital Resources, Inc. Mr. Fischer is currently a real estate investor and a member of and a Bible teacher at the Baptist Church of Beaufort, South Carolina. Mr. Fischer is a former director and past president of the Supervisory Board of Reliance Credit Union.

Dr. K. Milton Higgins serves as a director of Foundation Capital. Dr. Higgins received a Bachelor of Arts degree from Baylor University, a Bachelor of Divinity degree from Golden Gate Baptist Seminary and a Doctor of Ministry degree. Dr. Higgins served as the Executive Vice President of California Baptist Foundation from 1991 to 1996. Dr. Higgins currently serves as the President and Chief Executive Officer of California Baptist Foundation, where he has served in such capacity since 1997, and is a member of the Annuity Board of the Southern Baptist Convention d/b/a Guidestone Financial Resources of the Southern Baptist Convention.

Terri P. Hudson serves as a director of Foundation Capital. Ms. Hudson received a Bachelor of Business Administration degree with an emphasis in Accounting, and a Masters degree in Accounting from the University of Mississippi. Ms. Hudson is a certified public accountant, a certified internal auditor, and a certified information systems auditor. From 1986 thorough 2001, Ms. Hudson served in several financial positions with SkyTel Communications, Inc., culminating in the position of Chief Financial Officer and Senior Vice President of Business Development. Ms. Hudson currently serves as Chief Financial Officer and Deputy Director of the Mississippi Development Agency, the economic development agency for the State of Mississippi.

David B. Parker serves as a director of Foundation Capital. Mr. Parker received a Bachelor of Science degree in Computer Science with a minor in Business from the University of Central Oklahoma. Since 1996, Mr. Parker has served as Vice President of the Extension Loan Fund, Inc. of the International Pentecostal Holiness Church. He is directly responsible for management of investments, loan activities, and investor activities. Mr. Parker has also served as a Secretary and Treasurer for his church and as a member of the Planning and Budgetary Committee of the International Pentecostal Holiness Church.

James LeRoy Roberts serves as a director of Foundation Capital. Mr. Roberts received a Bachelor of Arts degree from Southwest Missouri State University. Mr. Roberts has served two terms as President of the National Association of Church and Institutional Financing Organization, Inc., and has participated in the placement of over $300 million in church loans. From 1979 until 2002, Mr. Roberts was the President of American Funding, Inc., a North Carolina corporation engaged in the business of underwriting church bond offerings. Mr. Roberts has been a frequent lecturer, speaker and workshop facilitator at church finance and building conferences, and owns Roberts Financial Associates, LLC.

Wayne Shirley serves as a director of Foundation Capital. Mr. Shirley attended Northwest College and Southern California College. Since 1975, Mr. Shirley has worked in the areas of real estate sales and mortgage insurance. Mr. Shirley is currently President at Home Mortgage Corporation and Vice President of One Source Funding Corporation. Prior to joining Home Mortgage, Mr. Shirley was a Vice President and sales manager for Washington Mutual Bank where he began working in 1992. Mr. Shirley has also worked with Freddie Mac as an account manager where he marketed loan products and Freddie Mac purchase certificates to banks, savings and loans and mortgage companies in the northwest and Northern California. Mr. Shirley is currently the Secretary of the Northwest College Foundation Board and is a member of the Board of Directors of Foundation Ministries Loan Fund.

---



Executive Officers:

Bobby D. Ray serves as Senior Vice President, Chief Financial Officer and Treasurer of Foundation Capital and joined Foundation Capital in 2002. Mr. Ray received a Bachelor of Science degree in Accounting from Mississippi State University. From 1995 to 2002, Mr. Ray served as director of Accounting for SkyTel Communications, Inc. Mr. Ray is a member of the American Institute of Certified Public Accountants and the Mississippi Society of Certified Public Accountants. Mr. Ray is also a Senior Vice President and Chief Financial Officer of the Manager.

Douglas H. Veazey serves as Senior Vice President--Loan Servicing of Foundation Capital and joined Foundation Capital in 2002. Mr. Veazey received a Bachelor of Science degree from Mississippi State University. Prior to joining Foundation Capital, Mr. Veazey was a Financial Services Representative for Cendant Mortgage Corporation where he was responsible for mortgage loan originations. From 2000 to 2002, Mr. Veazey was Director of Finance for the Mississippi Commission For International Cultural Exchange, Inc., where his responsibilities included accounting, budget, personnel and payroll issues and internal and external reporting. From 1992 to 1999, Mr. Veazey was Chief Financial Officer of First American National Bank - Mortgage Division. Mr. Veazey is also a Senior Vice President of the Manager.

Barry S. Winford serves as Senior Vice President of Foundation Capital and joined Foundation Capital in 2000. Mr. Winford received a Bachelor of Business Administration degree from Mississippi State University. Mr. Winford has worked in the field of real estate finance since 1992 as a Commercial Real Estate Lender with Deposit Guaranty National Bank in Jackson, Mississippi and Compass Bancshares headquartered in Birmingham, Alabama. From 1996 to 2000, Mr. Winford served as a Commercial Mortgage Banker for Capital Advisors based in Charlotte, North Carolina. Mr. Winford is also a Senior Vice President of the Manager.

Committees of the Board of Directors

Audit Committee. The Board has established an Audit Committee that currently is comprised of Terri P. Hudson, Chairman, Dr. K. Milton Higgins, James R. Fischer, and David B. Parker, all of whom are "independent" as defined by Rule 4200(a)(15) of the National Association of Securities Dealers. The Audit Committee engages the independent public accountants, reviews with the independent public accountants the results of the audit, approves professional services provided by the independent public accountants, reviews the independence of the independent public accountants, considers the range of audit and non-audit fees, reviews the adequacy of Foundation Capital's internal accounting controls, monitors management's efforts to correct deficiencies described in an audit and communicates risk management concerns to the Board of Directors. The Board of Directors has determined that Ms. Hudson qualifies as an audit committee financial expert as defined by the SEC.

Executive Committee. The Board has established an Executive Committee consisting of four independent directors. The Executive Committee is comprised of James R. Fischer, Chairman, Susan S. Eames, Dr. K. Milton Higgins, and Wayne Shirley. The Executive Committee acquires, disposes of and finances investments for Foundation Capital, executes contracts and agreements, including those related to the lending of money by Foundation Capital, establishes or approves policies and procedures required for the daily operation of Foundation Capital, monitors the status of all threatened or pending litigation, coordinates the work of all other committees of the Board of Directors and generally exercises all other powers of the Board of Directors, except as prohibited by law.

Credit Committee. The Board has established a Credit Committee consisting of four directors, including two independent directors. The Credit Committee is comprised of James LeRoy Roberts, Chairman, A. J. Braswell, Susan S. Eames and Wayne Shirley. The Credit Committee reviews Foundation Capital's lending policies and monitors compliance with such policies, verifies that management follows appropriate procedures to recognize adverse lending trends and takes corrective actions to maintain an adequate allowance for loan losses, determines that risk controls are in place governing compliance with loan related, or other applicable, laws and regulations, evaluates credit applications and assists with credit decisions to the extent that proposed loans exceed the approval level of Foundation Capital's officers established by Foundation Capital's policies and procedures.

Corporate Governance Committee. The Board has established a Corporate Governance Committee consisting of four directors, including two independent directors. The Corporate Governance Committee is

---

comprised of A. J. Braswell, Chairman, Terri P. Hudson, David B. Parker, and James LeRoy Roberts. The Corporate Governance Committee provides assistance to the Board of Directors in fulfilling its responsibility to the shareholders under applicable rules and regulations relating to the Company's corporate governance. The Committee identifies and recommends for nomination or selection by the Board of Directors individuals qualified to become Board members for each vacancy that occurs and for each election of directors at an annual meeting of the shareholders. The Committee may also develop, recommend, and, as necessary, update corporate governance principles applicable to the Company.

In addition to Board Committees, administrative committees may be established from time to time in accordance with Foundation Capital's policies and procedures. Administrative committees shall administer the business of Foundation Capital and carry out the policies of the Board of Directors. Administrative committees shall consist of members of the Board of Directors and officers of Foundation Capital and such other individuals as the Board of Directors shall determine.

Meetings of Directors

The Board of Directors meets on a semi-annual basis to review the performance of Foundation Capital, its borrowings and other matters. The Audit Committee meets quarterly to review and discuss financial reports and filings made with the Securities and Exchange Commission.

Section 16(a) Beneficial Ownership Reporting Compliance

Directors, executive officers and greater than ten percent shareholders are not subject to Section 16 of the Securities Exchange Act of 1934 with respect to Foundation Capital Common Stock.

Code of Ethics

Foundation Capital has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and other executive officers. The text of our Code of Ethics is available on our website, www.foundationcapitalresources.com. Foundation Capital intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of the Code of Ethics by posting such information on its website at www.foundationcapitalresources.com.

|ITEM 10. | EXECUTIVE COMPENSATION
|-------- | ----------------------

Foundation Capital's executive officers do not receive compensation from Foundation Capital. However, Foundation Capital's Chief Executive Officer directly owns the Manager. The Manager receives management fees under the terms of its Management Agreement with Foundation Capital. See "Item 12-Certain Relationships and Related Transactions."

Compensation of Directors

During 2004, Foundation Capital paid $1,500 to each of its Board members for each Board meeting he or she attended. In addition, each member of the Audit Committee was paid $500 for each Audit Committee meeting in which he or she participated not held in conjunction with a Board meeting. Foundation Capital reimburses members of the Board of Directors for travel expenses incurred in connection with their activities on behalf of Foundation Capital.

|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED SHAREHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

Foundation Capital does not have any equity compensation plans.

The following table provides information concerning beneficial ownership of our Common Stock as of December 31, 2004, by each shareholder that we know owns more than five percent of our outstanding Common Stock:

---



|Name and Address of
Beneficial Owner           |  | Amount and Nature of
Beneficial Ownership
of Common Stock |     | Percent of Class (1)
|---------------------------------------------- |  | --------------------------------------------------------- | --- | --------------------
|                                               |  |                                                           |     |                     
|Assemblies of God Loan Fund (2)                |  | 1,989,670.03                                              | (3) |                     
|                                               |  |                                                           |     |                     
|Assemblies of God Financial
Services Group (2) |  | 29,237,602.81                                             | (3) |                     
|                                               |  |                                                           |     |                     
|Assemblies of God Foundation(2)                |  | 5,768,953.89                                              | (3) |                     
|                                               |  |                                                           |     |                     
|Ministers Benefit Association (2)              |  | 12,042,094.32                                             | (3) |                     
|                                               |  |                                                           |     |                     
|Foundation Ministries Loan Fund (2)            |  | 9,402,952.90                                              | (3) |                     

|(1) | For purposes of calculating the percentage beneficially owned, the number of shares of Common Stock deemed outstanding consists of 29,323,168.5 shares. Beneficial ownership is determined in accordance with the rules of the U.S. Securities and Exchange Commission that deem shares to be beneficially owned by any person or group who has or shares voting or investment power with respect to such shares.                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The address for all of these entities is 1661 North Boonville Avenue Suite B, Springfield, MO 65803.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | Shares shown as held by Assemblies of God Financial Services Group includes 33,931.67 shares of Foundation Capital's Common Stock held by Assemblies of God Financial Services Group, 1,989,670.03 shares of Foundation Capital's Common Stock held by Assemblies of God Loan Fund, 5,768,953.89 shares of Foundation Capital's Common Stock held by Assemblies of God Foundation, 12,042,094.32 shares of Foundation Capital's Common Stock held by Ministers Benefit Association, and 9,402,952.90 shares of Foundation Capital's Common Stock held by Foundation Ministries Loan Fund. Shares held by the latter four entities are counted twice in this table.

The following table provides information concerning beneficial ownership of our Common Stock as of December 31, 2004, by each of our named executive officers; each of our current dierctors; and all of our current directors and executive officers as a group:

|Name and Address of
Beneficial Owner |  | Amount and Nature of
Beneficial Ownership
of Common Stock |     | Percent of Class (1)
|------------------------------------ |  | --------------------------------------------------------- | --- | --------------------
|                                     |  |                                                           |     |                     
|A. J. Braswell                       |  | 3,510.07                                                  | (2) |                     
|P.O. Box 20749                       |  |                                                           |     |                     
|St. Simons Island, Georgia 31522     |  |                                                           |     |                     
|                                     |  |                                                           |     |                     
|Susan S. Eames                       |  | -                                                         |     |                     
|1222 16th Avenue South, Suite 21     |  |                                                           |     |                     
|Nashville, Tennessee 37212           |  |                                                           |     |                     
|                                     |  |                                                           |     |                     
|James R. Fischer                     |  | -                                                         |     |                     
|2 Mayon Point                        |  |                                                           |     |                     
|Callawassie Island, SC 29909         |  |                                                           |     |                     
|                                     |  |                                                           |     |                     
|Dr. K. Milton Higgins                |  | 2,742.89                                                  | (3) |                     
|945 West Alamos                      |  |                                                           |     |                     
|Fresno, California 93705             |  |                                                           |     |                     

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|Terri P. Hudson                                              |  | -         |          |  | *
|------------------------------------------------------------ |  | --------- | -------- |  | -
|214 Winsmere Way                                             |  |           |          |  |  
|Ridgeland, MS 39157                                          |  |           |          |  |  
|                                                             |  |           |          |  |  
|David B. Parker                                              |  | -         |          |  | *
|P.O. Box 12609                                               |  |           |          |  |  
|Oklahoma City, Oklahoma 73157                                |  |           |          |  |  
|                                                             |  |           |          |  |  
|James LeRoy Roberts                                          |  | 3,312.35  | (4)      |  | *
|1812 Hunting Ridge Road                                      |  |           |          |  |  
|Raleigh, North Carolina 27615                                |  |           |          |  |  
|                                                             |  |           |          |  |  
|Wayne Shirley                                                |  | 12.14     | (5)      |  | *
|6201 104th Avenue, N.E.                                      |  |           |          |  |  
|Kirkland, Washington 98033                                   |  |           |          |  |  
|                                                             |  |           |          |  |  
|Bobby D. Ray                                                 |  | 662.03    | (6), (7) |  | *
|1430 Lelia Drive, Suite 100                                  |  |           |          |  |  
|Jackson, Mississippi 39216                                   |  |           |          |  |  
|                                                             |  |           |          |  |  
|Douglas H. Veazey                                            |  | 636.20    | (6)      |  | *
|1430 Lelia Drive, Suite 100                                  |  |           |          |  |  
|Jackson, Mississippi 39216                                   |  |           |          |  |  
|                                                             |  |           |          |  |  
|Barry S. Winford                                             |  | 666.66    | (6), (8) |  | *
|1430 Lelia Drive, Suite 100                                  |  |           |          |  |  
|Jackson, Mississippi 39216                                   |  |           |          |  |  
|                                                             |  |           |          |  |  
|All directors and executive officers
as a group (11 persons) |  | 11,542.34 |          |  | *

|*   | Indicates less than one percent ownership.                                                                                                                                                                                                                                                                                                                                                                                   
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For purposes of calculating the percentage beneficially owned, the number of shares of Common Stock deemed outstanding consists of 29,323,168.5 shares. Beneficial ownership is determined in accordance with the rules of the U.S. Securities and Exchange Commission that deem shares to be beneficially owned by any person or group who has or shares voting or investment power with respect to such shares.            
|(2) | Includes 105.09 shares of Foundation Capital's Common Stock owned by Mr. Braswell and 636.20 shares of Foundation Capital's Common Stock held by the Manager. Mr. Braswell, as owner of the Manager, may be deemed to be the beneficial owner of the Manager's shares. Does not include 24.32 shares of Foundation Capital's Common Stock held by Mr. Braswell's wife, Phyllis Braswell.                                     
|(3) | Includes 242.89 shares of Foundation Capital's Common Stock owned by Dr. Higgins and 2,500 shares of Foundation Capital's Common Stock held by California Baptist Foundation. Dr. Higgins, as an officer of the California Baptist Foundation, may be deemed to beneficially own California Baptist's shares. Does not include 242.89 shares of Foundation Capital's Common Stock held by Dr. Higgins' wife, Jarrene Higgins.
|(4) | Does not include 3,312.35 shares of Foundation Capital's Common Stock held by Mr. Roberts' wife, Jeanine Roberts.                                                                                                                                                                                                                                                                                                            
|(5) | Does not include 12.14 shares of Foundation Capital's Common Stock held by Mr. Shirley's wife, Sheri Shirley.                                                                                                                                                                                                                                                                                                                
|(6) | Includes 636.20 shares of Foundation Capital's Common Stock held by the Manager. Mr. Ray, Mr. Veazey and Mr. Winford, as officers of the Manager, may be deemed to beneficially own the Manager's shares.                                                                                                                                                                                                                    
|(7) | Does not include 25.83 shares of Foundation Capital's Common Stock held by Mr. Ray's wife, Ginger Ray.                                                                                                                                                                                                                                                                                                                       
|(8) | Includes 30.46 shares of Foundation Capital's Common Stock owned by Mr. Winford. Does not include 30.35 shares of Foundation Capital's Common Stock held by Mr. Winford's wife, Christine Winford, or 30.35 shares of Foundation Capital's Common Stock held by each of Mr. Winford's daughters, Aiden Winford and Brittan Winford.                                                                                          

---



|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

The Manager receives a monthly management fee based upon "Average Invested Assets" (as defined in the Management Agreement) comprised of one-twelfth of 0.3 percent of cash and cash equivalents, plus one-twelfth of 1.25 percent of Average Invested Assets greater than or equal to $100 million. In 2004 and 2003, the Manager received management fees totaling $3,364,861.25 and $2,007,661.14, respectively.

Under the Management Agreement, the Manager is to reimburse Foundation Capital to the extent that the total Operating Expenses (defined in the Management Agreement and including the Management Fee) paid during the previous calendar year exceed the greater of (1) two percent of the Average Invested Assets of Foundation Capital for that calendar year, or (2) 25 percent of the net income of Foundation Capital for such calendar year, and to the extent that the Board of Directors determines such reimbursement is justified. If Operating Expenses of Foundation Capital are less than the two percent and twenty-five percent limitations described above in any subsequent calendar year, Foundation Capital is to pay back to the Manager the earlier amount reimbursed by the Manager, to the extent that the payment plus the Operating Expenses for that year do not exceed the two percent and twenty-five percent limitations described above, and as long as a majority of the Independent Directors determine that the payment will not create cash flow or dividend challenges for Foundation Capital.

Under its servicing relationship, the Manager is entitled to service fees from the borrower for late payments, NSF checks and participated loans, in addition to management fees received from Foundation Capital. In 2004 and 2003, such service fees paid to the Manager totaled $41,895.79 and $25,971.22, respectively.

Foundation Capital paid Rives, Leavell and Company, (the Underwriter), commissions based on the gross amount of the debt certificates it sold on Foundation Capital's behalf in Foundation Capital's debt certificate offering. Prior to June 30, 2004, the Underwriter and Manager were under common ownership and control. During 2003 and 2004, Foundation Capital paid $63,405 in commissions to the Underwriter in connection with this offering.

AGFSG beneficially owns approximately 99.7 percent of Foundation Capital's Common Stock. From time to time loans are referred to Foundation Capital by AGFSG. Total referral fees paid to AGFSG and affiliates by Foundation Capital in connection with loan referrals in 2004 and 2003 totaled $19,620 and $116,333 respectively.

In approving any transaction or series of transactions between Foundation Capital and a direct or indirect owner or an Affiliate, a majority of the Board of Directors not otherwise interested in such a transaction, including a majority of the Independent Directors, must determine that the transaction is fair, competitive, and commercially reasonable and no less favorable to Foundation Capital than transactions between unaffiliated parties under the same circumstances.

Foundation Capital anticipates that certain broker-dealers, denominational entities and others referring loans to Foundation Capital may also invest in Foundation Capital's capital stock or debt certificates. Such persons or institutions may also sell loans to Foundation Capital, underwrite mortgage bonds which serve as security for loans made by Foundation Capital, or underwrite mortgage bonds which are purchased by Foundation Capital.

Some of our investments are based upon referrals from organizations that may have board members who are executive officers or directors of Foundation Capital.

|ITEM 13. | EXHIBITS
|-------- | --------

Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10-KSB.

|Exhibit
Number |  | Description                                                               
|-------------- |  | --------------------------------------------------------------------------
|3.1*           |  | Third Amended and Restated Articles of Incorporation of Foundation Capital
|3.2#           |  | Bylaws of Foundation Capital                                              

---



|4.1#   |  | Second Amended and Restated Indenture between Foundation Capital and Reliance Trust Company                   
|------ |  | --------------------------------------------------------------------------------------------------------------
|4.2*   |  | First Amendment to Second Amended and Restated Indenture between Foundation Capital and Reliance Trust Company
|10.1#  |  | Proceeds Escrow Agreement                                                                                     
|10.2#  |  | Amended and Restated REIT Management Agreement between Foundation Capital and One Capital Advisors, LLC       
|10.3  |  | Form of Collateral Assignment Agreement                                                                       
|10.4#  |  | Termination of Loan Servicing Agreement                                                                       
|10.5** |  | Revolving Credit Agreement                                                                                    
|24.1   |  | Powers of Attorney                                                                                            
|31.1   |  | Certification of Chief Executive Officer                                                                      
|31.2   |  | Certification of Chief Financial Officer                                                                      
|32     |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350             

|  | Incorporated herein by reference to Foundation Capital's Registration Statement on Form S-11 (Commission File No. 333-81298).                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|#  | Incorporated herein by reference to Foundation Capital's Registration Statement on Form S-11 (Commission File No. 333-105923)                                  
|*  | Incorporated herein by reference to Post-effective Amendment No. 1 to Foundation Capital's Registration Statement on Form S-11 (Commission File No. 333-105923)
|** | Incorporated herein by reference to the Quarterly Report on Form 10-QSB filed on September 30, 2004.                                                           

---



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

Fees of BKD, LLP

The aggregate fees billed by BKD, LLP to Foundation Capital and its subsidiaries for the years ended December 31, 2004 and December 31, 2003 are as follows:

|                       | 2005 |        | 2004 |  
|---------------------- | ---- | ------ | ---- | -
|Audit Fees (1)         | $    | 72,500 |      | $
|Audit-Related Fees (2) |      | 14,155 |      |  
|Tax Fees (3)           |      | 9,495  |      |  
|All Other Fees         |      | -      |      |  
|Total Fees             | $    | 96,150 |      | $

|(1) |  | Audit services consist of the annual audit, reviews of quarterly Form 10-QSB reports and related consultations.                                                   
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                   
|(2) |  | Audit-related fees consist principally of other regulatory filings including registration statements, amendments thereto, and consultations on accounting matters.
|    |  |                                                                                                                                                                   
|(3) |  | Permissible tax services include tax compliance, tax planning and tax advice that do not impair the independence of the auditors                                  

Audit Committee Pre-Approval Policies

It is the practice of Foundation Capital for all services provided by BKD, LLP to be approved in advance by the audit committee of the Board of Directors. At its April 2004 meeting the Audit Committee adopted a policy to provide pre-approval of certain services that may be provided by the auditors.

Under rules issued by the SEC, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that the provision of such services does not impair the auditor's independence. Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.

The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will periodically revise the list of pre-approved services, based on subsequent determinations.

The Audit Committee may delegate pre-approval authority to one or more of its members. The Audit Committee does not delegate its responsibilities to pre-approve services performed by the independent auditor to management.

The annual Audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. The Audit Committee may grant pre-approval for other Audit services, which are those services that only the independent auditor reasonably can provide.

The Audit Committee believes that the independent auditor can provide Tax services to the Company such as tax compliance, tax planning and tax advice without impairing the auditor's independence. However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations.

Pre-approval fee levels for all services to be provided by the independent auditor will be established periodically by the Audit Committee.

---



SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, Foundation Capital has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | FOUNDATION CAPITAL RESOURCES, INC.
| | ----------------------------------
| |                                   
| | By:                               
| |                                   

Date:  March 30, 2005

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of Foundation Capital and in the capacities and on the dates indicated.

|Signature                |                                | Title                                                                         |          | Date          
|------------------------ | ------------------------------ | ----------------------------------------------------------------------------- | -------- | --------------
|                         |                                |                                                                               |          |               
|/s/ A.J. Braswell        |                                | President, Chief Executive Officer
(Principal Executive Officer) and
Director |          | March 30, 2005
|A.J. Braswell            |                                |                                                                               |         
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ Bobby D. Ray         |                                | Chief Financial Officer
(Principal Financial Officer )                        |          | March 30, 2005
|Bobby D. Ray             |                                |                                                                               |         
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ James LeRoy Roberts* |                                | Director                                                                      |          | March 30, 2005
|James LeRoy Roberts      |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ Wayne Shirley*       |                                | Director                                                                      |          | March 30, 2005
|Wayne Shirley            |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ K. Milton Higgins*   |                                | Director                                                                      |          | March 30, 2005
|K. Milton Higgins        |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ James R. Fischer*    |                                | Director                                                                      |          | March 30, 2005
|James R. Fischer         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ Terri P. Hudson*     |                                | Director                                                                      |          | March 30, 2005
|Terri P. Hudson          |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ Susan Eames*         |                                | Director                                                                      |          | March 30, 2005
|Susan Eames              |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|/s/ David B. Parker*     |                                | Director                                                                      |          | March 30, 2005
|David B. Parker          |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|                         |                                |                                                                               |          |               
|*By:                     | /s/ Bobby D. Ray               |                                                                               | Director |               
|                         | Bobby D. Ray, Attorney-in-Fact |                                                                               |          |               

---

EXHIBIT INDEX

|Exhibit
Number |  | Description                                                                                                   
|-------------- |  | --------------------------------------------------------------------------------------------------------------
|3.1*           |  | Third Amended and Restated Articles of Incorporation of Foundation Capital                                    
|3.2#           |  | Bylaws of Foundation Capital                                                                                  
|4.1#           |  | Second Amended and Restated Indenture between Foundation Capital and Reliance Trust Company                   
|4.2*           |  | First Amendment to Second Amended and Restated Indenture between Foundation Capital and Reliance Trust Company
|10.1#          |  | Proceeds Escrow Agreement                                                                                     
|10.2#          |  | Amended and Restated REIT Management Agreement between Foundation Capital and One Capital Advisors, LLC       
|10.3          |  | Form of Collateral Assignment Agreement                                                                       
|10.4#          |  | Termination of Loan Servicing Agreement                                                                       
|10.5**         |  | Revolving Credit Agreement                                                                                    
|24.1           |  | Powers of Attorney                                                                                            
|31.1           |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002            
|31.2           |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002            
|32             |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. § 1350             

|  | Incorporated herein by reference to Foundation Capital's Registration Statement on Form S-11 (Commission File No. 333-81298).                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|#  | Incorporated herein by reference to Foundation Capital's Registration Statement on Form S-11 (Commission File No. 333-105923)                                  
|*  | Incorporated herein by reference to Post-effective Amendment No. 1 to Foundation Capital's Registration Statement on Form S-11 (Commission File No. 333-105923)
|** | Incorporated herein by reference to the Quarterly Report on Form 10-QSB filed on September 30, 2004