UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                  Form 10-KSB/A

[X]  Annual report under section 13 or 15(d) of the  Securities  Exchange Act of
     1934 for the fiscal year ended December 31, 2003

                                       or

[ ]  Transition report under section 13 or 15(d) of the securities  exchange act
     of 1934 For the transition period from to

                        Commissions file number 333-93475

                    Cornerstone Ministries Investments, Inc.
                 (Name of small business issuer in its charter)

               Georgia                                    58-2232313
   (State or other  jurisdiction of           (IRS Employer Identification No.)
    incorporation or organization)

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

Issuer's telephone number (678) 455-1100

Securities registered under Section 12(b) of the Exchange Act:   None

Securities  registered under Section 12(g) of the Exchange Act: (Title of class)
Not applicable (Section 15(d) filing)

     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 ___

     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]

     State issuer's revenues for its most recent fiscal year:  $10,923,548

     State the aggregate market value of the voting and non-voting common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a  specified  date within the past 60 days.  As of March 28, 2004 the  aggregate
market value held by  non-affiliates  was  $3,366,071  based upon current public
offering price.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date: 531,528 shares of common stock
as of March 28, 2004.

     Documents  incorporated  by  reference:  Portions  of  Issuer's  Form  SB-2
Registration Statement, No. 333-91564, effective June 28, 2002.

     Transitional Small Business Disclosure Format:  Yes____; No_X_


                                                                               1
<PAGE>


Cornerstone Ministries Investments, Inc.

Form 10-KSB/A Index

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----

<S>                                                                                         <C>
Form 10-KSB/A Title Page                                                                        1
Index                                                                                           2

Part I:
  Item 1. Description of Business                                                               3
  Item 2. Description of Property                                                               8
  Item 3. Legal Proceedings                                                                     8
  Item 4. Submission of Matters to a Vote of Security Holders                                   8

Part II:
  Item 5.  Market for Common Equity and Related Stockholder Matters                             8
  Item 6.  Management's Discussion and Analysis or Plan of Operations                           9
  Item 7.  Financial Statements                                                                16
     Independent Auditor's Report                                                             F-1
     Consolidated Balance Sheets                                                              F-2
     Consolidated Statements of Income                                                        F-3
     Consolidated Statements of Changes in Shareholders' Equity                               F-4
     Consolidated Statements of Cash Flows                                                    F-5
     Notes to Consolidated Financial Statements                                               F-6

  Item 8.  Changes In and Disagreements with Accountants on Accounting                         16
                   and Financial Disclosures.
  Item 8A. Controls and Procedures                                                             16

Part III:
  Item 9.  Directors, Executive Officers, Promoters and Control Persons;                       17
                   Compliance with Section 16(a) of the Exchange Act
  Item 10. Executive Compensation                                                              19
  Item 11. Security Ownership of Certain Beneficial Owners and                                 19
                    and Related Stockholder Matters
  Item 12. Certain Relationships and Related Transactions                                      20
  Item 13. Exhibits and Reports on Form 8-K.                                                   20
  Item 14. Principal Accountant Fees and Services                                              21

Signatures                                                                                     21
Certifications                                                                                 22
Exhibit 21 - Subsidiaries of Issuer                                                            23
Exhibit 99.1 - Certifications Pursuant to Section 906 of the                                   24
                        Sarbanes-Oxley Act of 2002
Exhibit 99.2 - Code of Ethics                                                                  24
</TABLE>

                                                                               2

<PAGE>
                                     Part I

Item 1. Description of Business.

Summary

Our  primary  objective  is to provide  income for our  certificate  holders and
shareholders, by financing the acquisition and development of facilities for use
by churches,  their related ministries and other faith-based  organizations.  We
define  "faith-based"  organizations  as ones  which  have been  formed  and are
operated in furtherance of their sponsors' religious commitments.

Presbyterian  Investors  Fund,  Inc. was  incorporated  as a Georgia  non-profit
corporation in December 1985 and Cornerstone  Ministries  Investments,  Inc. was
formed as a Georgia  for-profit  corporation  on March  18,  1996.  Presbyterian
Investors Fund, Inc. was merged into Cornerstone Ministries Investments, Inc. on
December  29,  2000  and our  corporate  name  was  changed  to  PIF/Cornerstone
Ministries Investments, Inc. The name was changed back to Cornerstone Ministries
Investments, Inc. on February 26, 2003.

We offer development, construction, bridge and interim loans, usually due within
one to three years.  The typical maximum  investment  amount in a church loan is
$1,000,000.  Our largest  loan was  approximately  $12,000,000,  for a community
housing project. The annual interest rate on all loans we made during 2000, 2001
and 2002 was 10%. It is our policy to acquire assets primarily for income. We do
not have any  limits  on the  percentage  of our  assets  that may be in any one
investment  or in any  geographic  area  of  the  United  States.  We  have  not
established  any  maximum  ratio of our total  debt to our  total  shareholders'
equity.  These  policies  would be made by our board of  directors  and could be
changed,  without the vote of share or certificate  owners. A description of our
loan programs follows.

Types of loans we make

We make loans to four  distinct  groups of  borrowers.  These  borrowers  can be
characterized as churches, senior housing facilities, family housing development
projects and daycare/faith-based  schools.  Inherent credit risk is reflected by
the  effective  interest  rate  charged to each  borrower.  In each of the above
borrower  groups,  we charge  10% as an annual  interest  rate.  However,  we do
recognize the risk in each borrower by the amount of  origination  fees charged,
renewal fees charged,  the loan term and any loan  participation  we may have in
the net profit from the  borrower's  sale or  refinancing  of the property.  For
larger loans,  we may elect to partner with other lenders.  Accordingly,  though
each loan may carry identical  interest rates,  the overall risk adjusted return
can be  managed  by fees  charged  and loan  terms and is based on  underwriting
credit  requirements  and  review.  Typically,  church  loans  will  have  a  5%
origination  fee  charged,  have a one year term and may have a 5%  renewal  fee
charged.  Non-church  loans are charged a 10%  origination  fee,  may have terms
beyond one year and may not have a renewal fee charged.

Our fees and interest rates are similar to the costs of specialized construction
and  development  loans or  underwritten  bond issues,  and less than  sub-prime
lenders.  Banks and insurance  companies,  who make loans on similar  properties
that are larger and more fully developed, typically charge lower interest rates.
These  conventional  lenders  typically charge 0.5% to 2.5% origination fees. We
are paid more  because  of our  experience,  advice and  willingness  to finance
organizations in their development stage. Our costs of administering these loans
require  us to charge  higher  loan fees and  interest  rates.  The chart  below
outlines the relative loans outstanding as of December 31, 2003.
<TABLE>
<CAPTION>

                                  Principal              %
           Borrower              Outstanding        Outstanding          Initial                Origination   Renewal
            Type                Dec 31, 2003        Dec 31, 2003          Term*        Rate        Fee*         Fee*
------------------------------ ------------------------------------------------------------------------------------------
<S>                              <C>                   <C>                <C>          <C>          <C>          <C>
Daycare/Schools                       $0                  0%              1 year       10%          10%         None
Churches                         $13,526,028           16.1%              1 year       10%          5%           5%
Senior Housing
 - Loans                         $9,794,001            11.7%              1 year       10%          10%         None
 - Real Estate Joint
Venture
Investments                      $35,732,713           42.5%              1 year       10%          10%         None
Family Housing Development       $25,013,068           29.7%              1 year       10%          10%         None
                               ----------------    -------------
                                 $84,065,810           100.0%
                               ================    =============
<FN>
* Subject to underlying
   credit statistics
</FN>
</TABLE>

                                                                               3

<PAGE>

Senior  housing  loans  classified  in this table as real estate  joint  venture
investments  are loans in which we  participate  in the residual  profits of the
property  and all of the  following  exist at the  inception  of the loan:

o    The borrower does not have a substantial equity investment in the property.
o    We do not have recourse to  substantial  tangible,  saleable  assets of the
     borrower other than the  underlying  collateral of the loan and there is no
     irrevocable letter of credit for a substantial amount of the loan.
o    There is no  take-out  commitment  for the full  amount  of the loan from a
     creditworthy, independent third-party.
o    The facility does not have lease commitments which will provide  sufficient
     cash flow to  service  normal  principal  and  interest  loan  amortization
     payments.

We participate in residual profits through loan participation agreements,  which
enable us to receive  income  from the  borrower  when the  property in which we
provided financing is sold or refinanced to another lender. The participation is
between  25%  and  33%  of the  borrower's  gain.  We  normally  provide  all or
substantially all of the financing (directly or through loan guarantees) for the
acquisition  and development of these  facilities,  which are owed by non-profit
entities.

We  make  three  basic  types  of  loans:  Development  and  acquisition  loans,
construction  loans and  semi-permanent  loans.  The development and acquisition
loans involve the most risk of the borrower's  failure to make timely payment of
interest or for us to lose principal in the event of default. Construction loans
are made when a property is ready to begin  construction  or renovation,  so the
risk is somewhat  less.  Semi-permanent  loans are made on completed  properties
that are being used for their intended  purpose,  so they involve the least risk
to us of the three  categories.  The following table shows the amount of each of
these types of loans in our portfolio at December 31, 2003:

         Type of                  Principal Outstanding     % of principal at
            Loan                  at December 31, 2003        December 31, 2003
            ----                  --------------------        -----------------
Development and acquisition           $12,903,338                   15.3%
Construction                          $25,013,068                   29.8%
Semi-permanent                        $46,149,404                   54.9%
                                      -----------                  -----
                                      $84,065,810                 100.0%
                                      ===========                 ======

The following are further descriptions of each of these three types of loans:

Development  and Acquisition  Loans. We will provide  financing to young growing
churches,  non-profit  owners of senior housing  facilities and other ministries
that we judge to possess  excellent  growth or income potential and which show a
strong ability to repay a loan through their growth or income (as in the case of
senior  housing,  for  instance.)  These  borrowers may lack the history,  size,
equity  or  income  required  by  conventional  lenders  or  bond  underwriters.
Development and acquisition loans may be used to acquire property that is either
developed or to be developed (in conjunction  with a construction  loan provided
by us or another lender).  Each loan is made for one year; however,  these loans
may be renewed,  with or without fees, for a maximum of three years under normal
circumstances.  Normally  these loans are  refinanced  by banks or others before
there is a reduction in principal.  During 2003, 10 loans,  totaling $7,732,060,
were refinanced by commercial bank financing,  church bonds, tax-exempt mortgage
revenue bond issues or other third party financing.

Construction  Loans.  Construction  loans  are  typically  made to  finance  the
construction of new facilities,  renovate  existing  facilities,  and to develop
family  housing  projects.  They normally have a maturity of six months to three
years.  Borrowers  typically pay interest only on the outstanding  balance drawn
for  construction.  We focus  primarily  on loans of less  than  $1,000,000  for
churches and day-care  facilities;  larger loans are required to develop  senior
housing,  family housing projects and student housing.  Our largest loan to date
has been $13 million,  which was for a family  housing  program.  We require the
customary  documentation for construction  loans,  including lien subordinations
and  waivers,  builders  risk  insurance,  budgets  and  assignment  of relevant
contracts to us. We make weekly  disbursements on finished  invoices and require
interim lien waivers on all disbursements.

Semi-permanent  Loans.  These are often called  mini-perms or bridge loans. They
are  for as  long  as  three  years  and  may be  linked  to a  construction  or
development and acquisition loan. Once a property is being used for its intended
purpose,   the  loan  is  converted  from  a  construction  or  acquisition  and
development  loan into a  semi-permanent  loan.  Also,  they are  often  used by
churches and other borrowers who expect to receive  pledges,  grants,  leases or
other  anticipated  income but who are in need of immediate funds. We make these
loans on an annual  renewal basis with an annual  renewal fee of up to 5% of the
outstanding  balance.  The loans are usually repaid by other forms of financing,
such as church bonds or conventional  loans. We will assist the borrower to find
long term financing  through some of the lenders with which we have  established
relationships,  or we will  sell the loan to one of these  lenders.

                                                                               4
<PAGE>

We receive monthly interest  payments on all of our real estate loans and senior
housing loans  classified as real estate joint venture  investments  except when
the terms of a loan allow the borrower to finance  interest  payments.  Interest
payments are financed in the following circumstances:

Family housing development loans may finance monthly interest payments while the
project is in the development and pre-sales phase.  This phase takes from six to
18  months,  depending  on the size of the  project.  We  receive  the  financed
interest as the borrower sells homes in the development.

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

Real estate joint venture loans may finance monthly interest payments during the
construction/renovation  stage of the borrower's operations.  Most of the senior
housing  facilities  are in need of renovation  when purchased by the respective
borrowers.  This phase  takes two to six  months,  depending  on the size of the
renovation  project.  When the  renovations  are  complete  and the  facility is
operational,  the financed  interest is included in the loan's  principal amount
and we start receiving monthly interest payments from the borrower.

Our loan policies

Loan Terms and  Conditions.  Each loan is secured by a first or second  mortgage
lien, a pledge of revenue and, where we determine  necessary,  limited  personal
guarantees  made by members or  principals  of the  borrowers.  We may provide a
fixed or variable rate loan. Our loans on senior housing  facilities may include
a participation feature where there is the possibility of additional income from
the borrower upon the  borrower's  refinancing  of a property or the sale of the
property  acquired  by a borrower  and resold  during the term of our loan.  The
terms and  conditions  offered to borrowers,  including  interest  rates,  fees,
maturities  and  guarantees,  will be based upon current  market  conditions and
factors like our  operating  expenses and the loan's  origination  expenses.  We
charge each borrower an application  fee to offset the cost of loan  origination
and approval,  legal fees and out-of-pocket expenses. We charge a commitment and
closing fee and may also charge a loan  renewal  fee.  These fees may be paid in
cash by the  borrower  or added to the loan  principal,  at our  discretion.  We
generally require the normal protections afforded commercial lenders,  including
title insurance,  real estate surveys,  appropriate resolutions of the borrower,
appraisals  of the  property,  and the issuance of fire and  extended  insurance
coverage.

Loan Guarantees.  Certain real estate joint venture  investments and real estate
acquisition  and  development  loans in which  the  borrower  chooses  to secure
outside financing may require a guarantee from the Company as a condition of the
extension of the loan by the financial institution.  The guarantee is limited to
amounts  under the loans  and only  covers  outstanding  principal  and  accrued
interest and terminates upon maturity and principal  repayment.  At December 31,
2003,  there were three loans with a potential  total of $31,689,000 in which we
have a guarantee.  The total amount  outstanding  and  therefore  guaranteed  at
December 31, 2003 was  $28,007,042.  The guarantees  originated in 2002 and they
will mature in 2004.  All of the loans which have a guarantee are current and no
loan guarantee obligation has been recognized in our financial statements.

Loan underwriting requirements

Mortgage loan  applications  submitted to our  underwriting  staff will normally
include  (i) a  completed  application  on our form,  or  substantially  similar
information on a form acceptable to us, (ii) corporate organizational documents,
(iii)  financial  statements  including  pro forma  financial  statements,  (iv)
certified real estate appraisal,  (v) a real estate survey certified to us, (vi)
preliminary title report,  (vii) market and feasibility  reports, if applicable,
(viii)  copies of  relevant  insurance  coverage,  (ix)  copies of all  material
contracts and leases and (x) environmental report or affidavit.

Our loan  standards  used in  evaluating  the loan  requests are based upon both
objective and subjective  criteria and may vary depending upon the nature of the
borrower.  For church loans we examine:

o    Membership trends and growth potential
o    Historical financial performance and patterns
o    Value of real estate involved and other collateral

For non-church loans we will review:

o    Proposed business plan and management
o    Markets and demographics
o    Current and projected earnings and cash flow
o    Current and future value of real estate and other collateral

                                                                               5

<PAGE>

For our senior housing loans, we also look to the pro-forma  financial condition
upon  stabilization  of  operations  and  require  third party  appraisers  with
specialized  knowledge of these types of projects and property. We apply loan to
value and coverage ratios consistent with other commercial lenders. Additionally
we will require  survey,  title  reports and  insurance,  property and liability
insurance and full  environmental  reports.  If necessary,  we will also require
market studies and other demographic information.

Completed  applications  and  supporting  material  are  submitted  to the  loan
committee of our Board of  Directors,  which has  authority to approve  loans of
$500,000 or less. Loans or investments over this amount must be submitted to the
full  board  for  approval.  The  loan  committee  consists  of at  least  three
directors,  not including  any  directors  who are also our  officers.  The loan
committee  determines  the  creditworthiness  of the  borrower  and oversees the
rates,  terms and conditions of the loan.  Upon approval of a loan  application,
our loan staff will work with its  officers and legal  counsel to supervise  the
loan closing.  It is our policy to require  borrowers to pay all expenses of the
loan including our legal expenses.  These expenses are usually deducted from the
loan proceeds.

Many of the  non-profit  organizations  that we loan to have little or no assets
with which they can provide additional guarantees,  collateral or equity for the
project. We will seek to obtain additional guarantees from the principals of the
church or organization,  or from an affiliated organization that can provide the
additional  security or collateral.  For the return of our  investment,  we rely
primarily  on the  value of the  property  to be  acquired  and  developed,  the
feasibility  of the project and the expertise and knowledge of the developer and
manager.  We will not invest in a project  developed by a for-profit  developer,
unless a suitable non-profit lessee/purchaser has been qualified by the board of
directors and signed a letter of inducement or intent.

Loan investments we have made

This chart  shows the number and amount of new loans we have made in each of the
last seven years:

                                      Number   of                   Amount of
         Year                         loans made                    loans made
         ----                         ----------                    ----------
         1997                              16                      $ 7,532,000
         1998                              10                      $ 7,446,100
         1999                              17                      $12,953,200
         2000                              10                      $11,041,500
         2001                              11                      $14,029,191
         2002                              16                      $30,383,224
         2003                              10                      $14,622,943

Each of our loans has a date when the full principal amount becomes due, or when
we may call the loan for repayment.  These are the number and amount of our loan
investments,  at December 31, 2003,  which become due or callable in 2004 and in
later years:
                                     Number of loans              Principal
        Year                          due or callable           due or callable
        ----                          ---------------           ---------------
        2004                                35                   $79,031,740
        2005                                -0-                      -0-
        2006                                -0-                      -0-
        2007                                -0-                      -0-
        2008                                 1                       106,497
        2009/thereafter                      8                     4,927,573
        Total                               44                   $84,065,810

Loan management

We monitor each loan closely.  A loan becomes  delinquent when a payment default
remains  uncured after 15 days.  Any  delinquency is addressed  immediately  and
involves  sending a legal notice  requiring  strict  performance  under the loan
documents  and outlines all the remedies  available to us should the default not
be cured within the period required by the loan documents.  In addition to these
legal steps, we work closely with each borrower. We may make personal visits and
prepare to take all legal  remedies  available to us through the loan  documents
and the laws of the appropriate state.

                                                                               6

<PAGE>

A loan is considered impaired if either of the following occurs:
o    We  determine  that it is  probable  that we will be unable to collect  all
     amounts due according to the contractual terms of the loan agreement.
o    A loan is restructured  due to the financial  condition of the borrower and
     the  interest  rate is reduced  below what we would  normally  charge for a
     similar loan.

A specific  impaired loan loss allowance is recognized  when an impaired  loan's
carrying  amount exceeds the present value of expected  future cash flows or the
collateral's  net  realizable  value  if  the  loan  is  considered   collateral
dependent.  We would  place a loan on  non-accrual  status if a loan is 180 days
past due under the terms of the loan  agreement and we have  determined  that an
allowance for impairment  loss should be recognized on the loan. In our history,
we have had two loan  delinquencies of more than 6 months. At December 31, 2003,
one loan is past due more  than 180  days;  however,  we have not  placed  it on
non-accrual  status because the underlying  collateral is significantly  greater
than the outstanding  loan amount and we believe that we will receive the entire
outstanding  loan amount.  No  allowance  for  specific  impaired  loan loss was
recognized.  While we have never had to charge off a loan as  uncollectible,  we
would do so upon the borrower filing bankruptcy or when other collection methods
have been exhausted and foreclosure is likely.  The charge-off would be equal to
the amount in which the loan's carrying amount exceeds the net realizable  value
of the collateral.

In addition to allowances for loan losses related to specific impaired loans, we
review our loan portfolio for  collective  loan losses as prescribed by SFAS No.
5. A collective loan loss is recognized when the  characteristics  of a group of
loans  indicate  that it is  probable  that a loss  exists  even though the loss
cannot be identified  with a specific loan.  The collective  loan loss allowance
amount is based on observable data that management believes is reflective of the
underlying  credit losses that are inherent in the portfolio.  The components of
this  evaluation  include trends in our historical loss  experience,  changes in
credit risk and credit  quality,  credit  concentrations,  economic  conditions,
collateral  values and other risks  inherent in the  portfolio.  We conduct this
review  quarterly and changes in our allowance for loan losses are made based on
the results of these reviews.

Subsidiaries

Wellstone Communities, Inc.

In 2002 and 2003,  we invested a total of  $1,362,500  in Wellstone  Communities
Inc., a Georgia  corporation  we formed on November 20, 2002. As of December 31,
2003, we own all 136,250 shares of its common stock;  therefore,  it is included
in our Consolidated  Financial Statements.  Wellstone Communities Inc. purchased
two of our church loans in January, 2003, at prices equal to their $591,003 loan
balances and made a $400,000 loan in December 2002.  Before we sold these loans,
information  about them was reviewed by our independent  directors,  who have no
affiliation with Wellstone  Communities Inc. and who have no financial  interest
in  the  transactions.   The  independent  directors  who  reviewed  making  and
purchasing these loans were Taylor McGown, Henry Darden and Irving Wicker.

We had two major  purposes in creating and  investing  in Wellstone  Communities
Inc. The first was to provide  preferred  stock investors with income from loans
secured by residential and supportive  communities.  The residential communities
are expected to include senior housing,  moderate-income  multi-family  housing,
moderate-income   single  family   housing  and  student   housing.   Supportive
communities  would be daycare  centers,  private  schools,  charter  schools and
church  buildings  that can also  house a school,  daycare  or other  supportive
community.  We founded Wellstone Communities Inc. to offer convertible preferred
stock to  investors  and use the  proceeds  to invest in loans that not only pay
interest but may also provide Wellstone  Communities Inc. a participation in any
gains upon sale or refinancing the property.

Our other  purpose for  starting  Wellstone  Communities  Inc. was to acquire or
start a federally chartered bank. Cornerstone Ministries Investments, Inc. could
not own a bank itself,  because the level of debt in our capital structure would
be a barrier.  Bank  regulators  restrict  the amount of debt that bank  holding
companies may incur.  Originally,  we expected  Wellstone  Communities,  Inc. to
begin, in 2004, a public offering of $50,000,000 in shares of its  participating
convertible  preferred stock, at $10 per share.  However, we have concluded that
the proposed  financial  structure  in the  offering may not be the  appropriate
structure necessary to meet our goals;  therefore, we have temporarily suspended
the  offering so we can analyze our  options and  possibly  make  changes to the
equity structure of the offering. This decision will be made sometime in 2004.

                                                                               7

<PAGE>
Wellstone Financial Group, LLC

During 2001, we formed Wellstone  Financial Group, LLC. At formation,  we issued
500 shares of our Series A Convertible  Preferred  Stock (valued at $500,000) to
Wellstone  Financial  Group,  LLC, in exchange for a 100% interest in its equity
and profits. Wellstone Financial Group is included in our consolidated financial
statement  and these shares have been  eliminated  in  consolidation.  Wellstone
Financial Group assists  non-profit  entities secure financing from banks,  bond
underwriters  and  other  sources  for  retirement,   childcare,   churches  and
church-related facilities. It receives consulting fees for completed financings.
Wellstone  Financial Group had no revenues in 2003 and we plan to dissolve it in
2004 and cancel the preferred  stock it owns. It has not been able to retain the
type of  specialized  employees  necessary  to  develop  its  operations  into a
long-term profitable venture.

Item 2. Description of Property.

In February  2003,  we moved our growing  staff into a 4,400  square foot office
building in Cumming, Georgia. We paid cash of $532,040 to purchase the building.
We own two nearby office condominiums,  on which there is a mortgage loan with a
$180,194  balance as of December 31, 2003.  They are leased to another  company,
for $2,400 a month. In our management's  opinion,  the properties are adequately
insured.

Item 3. Legal Proceedings.

We are not a party to any pending legal proceeding. We are not aware that any of
the  properties  covered by our mortgage  loans is subject to any pending  legal
proceeding  or that  any  governmental  authority  is  contemplating  any  legal
proceeding involving us or any of those properties.

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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year covered by this report,  through the  solicitation of
proxies or otherwise.

                                     Part II

Item 5. Market for Common Equity and Related Stockholder Matters.

a) Items required by Item 201 and Item 701 of Regulation S-B:
o    The  Issuer's  common  stock  is not  approved  for  listing  on any  stock
     exchanges. There has not yet been any public trading in the Issuer's common
     stock. In 2003, the issuer sold 585 shares of its common stock at $6.50 per
     share to members of the Issuer's  Board of Directors.  We relied on Section
     4(2) of the Securities Act for exemption of registration on these sales.
o    The Issuer has no outstanding options,  warrants or securities  convertible
     into common stock as of December 31,  2003.  There are an aggregate  82,899
     shares of the Issuer's  common stock owned by its  directors  and executive
     officers and any shareholder it knows to beneficially own 5% or more of the
     outstanding  shares of its common  stock.  These shares could be sold under
     Rule 144.  The  Issuer  has not agreed to  register  any  shares  under the
     Securities Act for sale by security holders.
o    The Issuer has filed a Form SB-2 Registration Statement (No. 333-104810) in
     which the Issuer proposes to publicly offer 1,750,000  shares of its common
     stock at the same $6.50 price per share as in its initial public  offering.
     There is no public  trading  and  therefore  no market  price of the common
     stock that could be affected.
o    There are 660 holders of record of the Issuer's common stock.
o    For the last two  fiscal  years,  the  Issuer  has  paid  semi-annual  cash
     dividends  on its common  stock,  at annual rates of 10% on the $6.50 share
     price.  Earnings are the only restriction that may limit the ability to pay
     dividends in the future.

b) The Issuer is not required to furnish the information pursuant to Rule 463 of
the Securities Act of 1933.

c) No repurchases were made in the fourth quarter of 2003.

                                                                               8

<PAGE>


Item 6. Management's Discussion and Analysis or Plan of Operation.

Selected financial data.

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

                                                       Year ended
                                                      December 31,
                                            2003          2002          2001
                                        -----------   -----------   -----------
Revenues                                 $10,923,548   $ 6,909,340   $ 4,362,214
                                         -----------   -----------   -----------

Investor interest expense                  7,246,202     4,154,997     2,726,524
Loan loss expense                            375,000           -0-           -0-
Marketing expenses                           630,508       494,042       229,154
Salaries, payroll taxes, benefits          1,013,730       674,384       470,469
Operating expenses                         1,091,962       849,105       631,458
                                         -----------   -----------   -----------
   Total expenses                         10,357,402     6,172,528     4,057,605
                                         -----------   -----------   -----------
Operating income                             566,146       736,812       304,609
Income tax provision                          87,266       124,204        57,489
                                         -----------   -----------   -----------
   Net income                            $   478,880   $   612,608   $   247,120

Overview of operations.

We have  always  focused  on  serving  only  faith-based  organizations,  mostly
churches  and their  related  schools.  We also offer  specialized  programs for
church and other non-profit  sponsors of senior housing and  affordable/moderate
income  housing  programs.  Nearly  all of our  earnings  in the past  came from
financing  church  facilities.  During  the last  quarter  of 2000,  we began to
realize  revenues  from  investment  in senior  and  affordable/moderate  income
housing  projects.  We generate  revenue from:

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

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

Participating loans (all related to senior housing facilities) are classified as
real estate  joint  venture  investments  if all of the  following  exist at the
inception  of the  loan:

o    The borrower does not have a substantial equity investment in the property.
o    The Company does not have recourse to substantial tangible, saleable assets
     of the borrower other than the underlying  collateral of the loan and there
     is no irrevocable letter of credit for a substantial amount of the loan.
o    There is no  take-out  commitment  for the full  amount  of the loan from a
     creditworthy, independent third-party.
o    The facility does not have lease commitments which will provide  sufficient
     cash flow to service normal principal and interest loan amortization.

Comparison of Periods Ended December 31, 2002 and December 31, 2003

General.  Assets  increased from $71,776,839 at December 31, 2002 to $94,728,347
at December 31, 2003 for an increase of $22,951,508 or 32%. This increase was as
a result of the sale of Investor  Certificates  and Mortgage  Participations  of
$20,104,324  and  cash  provided  by  operations  of  $3,130,394,  decreased  by
dividends paid to common  shareholders.  With the additional  cash received from
the sale of Investor Certificates and Mortgage Participations and from operating
activities,  we originated new real estate loans and joint venture  investments,
net of  principal  payments  received,  of  $17,968,802,  purchased a new office
building for $532,040,  and invested an additional  $1,216,250 in bond holdings.
Total revenue  increased  for the year ended  December 31, 2003 by $4,014,208 or

                                                                               9
<PAGE>


58% from  $6,909,340  in 2002 to  $10,923,548  in 2003.  Net income for the year
ended December 31, 2003 was $478,880 compared to $612,608 in 2002.

Total real estate loans and joint venture  investments  outstanding  on December
31, 2003 was  $82,723,500  compared to  $64,754,698  on December 31, 2002 for an
increase  of  $17,968,802  or 28%.  This  increase  was a  result  of  sales  of
investment certificates and mortgage participation agreements and the subsequent
origination or  refinancing of real estate loans and joint venture  investments,
as follows:

New loan originations                                              $  3,375,747

Refinances on existing loans, net of principal received               4,363,037
New real estate joint venture investments made                       11,247,196
Decrease in existing real estate joint venture investments           (1,017,178)
                                                                   ------------
                                                                   $ 17,968,802
                                                                   ============

All other  assets  composed  primarily  of cash,  bond  holdings,  property  and
equipment,  and unamortized debt issue costs were $12,004,847 as of December 31,
2003.  Principal  and  interest  payable on Investor  Certificates  and Mortgage
Participation ("MP") Agreements increased $22,775,072 or 34% from $67,920,382 as
of December 31, 2002 to  $90,695,454  as of December  31, 2003.  The Company has
filed a registration  statement  with the Securities and Exchange  Commission to
sell up to $40,000,000 in additional  Investor  Certificates  and $11,375,000 in
Common Stock,  which if approved,  should continue the  substantial  increase in
outstanding certificates and the investment in new loans.

Real estate loan and joint venture interest and fees earned. Interest income and
fees from real estate loans and joint venture investments  increased  $3,300,956
(+55%) from  $6,018,879 in 2002 to  $9,319,835 in 2003.  The increase was due to
the following items:

Increase in average outstanding principal                           $ 3,179,019
   ($76,076,836 - 2003; $42,683,771 - 2002)
Decrease in weighted average interest rate                             (119,514)
   (9.52% - 2003; 9.80% - 2002)
Increase in loan fees recognized                                        241,451
                                                                    -----------
                                                                    $ 3,300,956
                                                                    ===========

The increase in average  outstanding  principal is due to the addition of 10 new
real  estate  loans  and  joint  venture  investments  in 2003 and with  average
outstanding  principal of $8,043,100 and the refinancing of existing real estate
loans and joint  venture  investments  with  average  outstanding  principal  of
$6,411,469. Also, the 16 new loans from 2002 were outstanding all of 2003 versus
only part of 2002, increasing average outstanding principal by $18,938,496.

Loan  participation and other income. For the year ended December 31, 2003, loan
participation  and other income increased  $713,252 or 80% from $890,461 in 2002
to $1,603,713 in 2003. The increase is due to the following:


                                               2003         2002       Change
                                           ----------   ----------   ----------
Investment income                          $  350,071   $  502,842   ($ 152,771)
Loan participation and other income         1,253,642      387,619      866,023
                                           ----------   ----------   ----------
   Total                                   $1,603,713   $  890,461   $  713,252
                                           ==========   ==========   ==========

The Company's  investment income is from the purchase of bonds used as permanent
financing for projects the Company funded during their  development  and initial
operations and from interest  income on the Company's  excess cash. The decrease
in  investment  income is due to the September 30, 2002 sale of an undivided 50%
interest in the Company's St. Lucie Co., FL bonds for $2,512,500.  In September,
2003,  the  Company  purchased  $2,500,000  in bonds,  which will  cause  future
investment income to increase substantially compared to its current level.

Loan  participation and other income increased in 2003 due to cash received from
a borrower upon the sale of the borrower's  senior housing facility in Largo, FL
in which the Company held a  participating  loan which was  classified as a real
estate joint venture investment.

Investor interest expense. Investor interest expense for the year ended December
31, 2003 was  $7,246,202,  an increase of  $3,091,205  or 74% compared to 2002's
expense of $4,154,997. The increase is due to:

                                                                              10
<PAGE>

Increase in average outstanding principal, including                  $2,755,102
 interest payable subject to compounding
   ($79,210,846 - 2003; $47,687,944 - 2002)
Change in weighted average interest percentage                            10,111
   (8.74% - 2003; 8.71% - 2002)
Increase in average outstanding Mortgage Participation                   325,992
                                                                      ----------
Agreement principal                                                   $3,091,205
   ($3,259,920 - 2003; $0 - 2002)

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

The  allowance  for loan loss  increase  that we made in 2003 is classified as a
collective loan loss  allowance.  A collective loan loss allowance is recognized
when the characteristics of a group of loans indicate that it is probable that a
loss exists even though the loss cannot be identified  with a specific loan. The
allowance for loan losses is reviewed  quarterly and increases or decreases will
be made based on the results of these reviews.

As of December 31, 2003, one church loan with a carrying  amount of $242,621 was
considered  impaired due to non-payment of interest.  No specific  impaired loan
loss allowance was recorded because the carrying amount of the loan is less than
the  present  value of  expected  future  cash  flows  or the fair  value of the
collateral  on the loan.  No loans were  considered  impaired as of December 31,
2002.

As of December 31, 2003,  allowance for loan losses as a percent of  outstanding
loan principal by loan type:

                                           Loan Loss      Outstanding
                                           Allowance       Principal         %
                                           --------       -----------      ----
Family Housing Development Loans           $375,000       $25,013,068      1.5%
Church Mortgage Loans                           -0-        13,526,028        0%
Senior Housing Mortgage Loans                   -0-         9,794,001        0%
Real Estate Joint Venture Investments           -0-        35,732,713        0%
                                           --------       -----------      ----
  Total                                    $375,000       $84,065,810        .4%
                                           ========       ===========      ====

Marketing  expenses.  Total expenses for the marketing of investor  certificates
for the year ended December 31, 2003 were $630,508 compared to $494,042 in 2002.
The increase is due to:

                                             2003          2003        Change
                                          ---------     ---------     ---------
Debt issue cost amortization              $ 510,924     $ 345,191     $ 165,733
Compliance and registration                  26,016         3,968        22,048
Promotion                                    22,938        62,044       (39,106)
expense
Other marketing costs                        70,630        82,839       (12,209)
                                          ---------     ---------     ---------
       Total                              $ 630,508     $ 494,042     $ 136,466
                                          =========     =========     =========

Debt issue cost amortization expense increased due to investor  certificates and
mortgage participations sold since December 31, 2002. This expense will continue
to increase as new investor  certificates are sold.  Compliance and registration
costs are up due to expenses incurred on the current registration statement that
we have filed with the Securities and Exchange  Commission.  Promotion  expenses
and other marketing costs are down because we have had no investor  certificates
to sell since May, 2003.

Selling commissions paid to brokers for selling investor  certificates and costs
incurred to register  investor  certificates  are paid in cash and charged as an
expense over the term of the related  certificates.  The unamortized  balance is

                                                                              11
<PAGE>

classified as an asset on the Balance Sheet as  "Unamortized  debt issue costs".
The balance was  $1,772,631  and  $1,004,705  as of December  31, 2003 and 2002,
respectively.

Operating and personnel expenses.  Personnel expenses (salaries,  payroll taxes,
and benefits)  increased  $339,346 or 50% from $674,384 in 2002 to $1,013,730 in
2003. The increase is due to additional  employees hired to handle the Company's
growth in operations.

Starting in July 2003, the Company contracted with Cornerstone  Capital Advisors
("CCA") to provide all administrative  personnel services. The Company is paying
CCA for its expenses  (estimated at $1,100,000  over the next 12 months),  which
are  expected  to be similar to the  expenses  incurred  by the  Company  had it
continued its personnel  support under  previous  arrangements.  There is no fee
schedule  but the Company may elect to pay fees for good  performance,  which if
paid,  would be no more than 10% of the reimbursed  expenses for the previous 12
months.  The  Company  paid  $318,619 to CCA during  2003,  which is included in
2003's  personnel  expenses.  In  addition,  the  Board  of  Directors  approved
incentive  compensation  of $23,440  to CCA for its  performance  in 2003.  This
amount was accrued as a liability  and charged to personnel  expense in 2003 and
paid in 2004.  Prior to July 1, 2003,  the  employees  were paid directly by the
Company. On July 1, 2003, CCA hired all of our administrative  employees and has
billed us for the time spent on Company operations.

For the years ended  December  31,  2003 and 2002,  operating  expenses  were as
follows:

                                              2003         2002       Change
                                           ----------   ----------   ----------
a) Trust service/paying agent fees         $  162,566   $  129,046   $   33,520
b) Consulting fees                            142,794       30,403      112,391
c) Audit, accounting & tax services           102,846       85,725       17,121
d) Legal fees                                  99,186       60,201       38,985
e) Employee recruiting costs                   46,335          -0-       46,335
f) Depreciation & amortization                 56,695       20,628       36,067
g) Subsidiary registration costs              113,473          -0-      113,473
h) Broker-dealer start-up costs                   -0-      129,885     (129,885)
i) Other operating expenses                   368,067      393,217      (25,150)
                                           ----------   ----------   ----------
Total operating expenses                   $1,091,962   $  849,105   $  242,857
                                           ==========   ==========   ==========

The changes are due to the following:
a)   Trust   service/paying   agent  fees  increased  due  to  the  increase  in
     outstanding investor certificates.
b)   Consulting  fees  -  hired   financial   consultants  to  set  up  mortgage
     participation  program,  set-up cash flow and financing models which we are
     using to manage our cash and loan investments,  and to explore possible new
     industries and strategies for our loan business. This expense will decrease
     in future  periods as we do not expect to need this level of  consulting in
     the foreseeable future.
c)   Audit,  accounting  & tax  services  -  $8,155  is due to an  audit  of our
     subsidiary,  Wellstone  Communities,  which was  completed as part of their
     SB-2 filing with the  Securities  and Exchange  Commission  (see Note 12 on
     page F-15 of the financial  statements for further details on this filing).
     The  remainder  is due to the  increase in the size and  complexity  of our
     operations, which has increased the audit and quarterly review fees charged
     by our CPA.
d)   Legal fees increased as a result of our growth in operations  (50%) and due
     to work related to the set-up of the mortgage participation program (50%).
e)   Employee  recruiting  costs -  increased  due to the  hiring of  additional
     employees needed to handle our growth.
f)   Depreciation & amortization - increased due to the purchase of a new office
     building and computers in 2003.
g)   Subsidiary  registration  costs - in the fourth quarter of 2003, we decided
     to suspend Wellstone  Communities,  Inc's (WCI) registration  statement and
     not go forward with the filing. We spent $113,473 on this filing, which was
     charged to operating  expense.  Originally,  WCI had planned to issue up to
     $50,000,000  in  preferred  stock to expand  its  operations  and  possibly
     purchase a bank.  It was  determined  that this may not feasible  given the
     structure  that we  were  using;  therefore,  we  decided  to  suspend  the
     registration process.
h)   Broker-dealer  start-up  costs - in 2002,  we spent  $129,885  to  set-up a
     broker-dealer  subsidiary.  We terminated the effort when we concluded that
     under the rules of the National Association of Securities Dealers, it would
     not be feasible for a subsidiary to market our own securities.
i)   Other operating expenses - decreased due to economies of scale that we have
     benefited from as our operations have increased.

                                                                              12
<PAGE>

Income tax  provision.  The income tax provision for the year ended December 31,
2003 was $87,266, compared to $124,204 for the year ended December 31, 2002. The
decrease was due to a decrease in pre-tax income, partially offset by a decrease
in tax-exempt  bond  interest.  The  Company's  effective tax rate for the years
ended  December  31,  2003  and  2002  was  15.4%  and  16.9%,  respectively.  A
reconciliation  of the Company's  effective  tax  provision  rate to the federal
statutory  rate is included in the  attached  "Notes to  Consolidated  Financial
Statements" (Note 10).

Dividends.  Dividends of $338,172 and $363,371  were  declared in 2003 and 2002,
respectively.  The Company does not intend to declare future dividends that will
create negative retained earnings.

Liquidity and Capital Resources

Cash flows from  operations.  Net cash provided by the Company's  operations for
the year ended  December 31, 2003 was  $3,130,394,  which compares to $79,684 in
net cash used by operations for the year ended December 31, 2002 for an increase
in net cash provided by operations of $3,210,078.  This difference was driven by
increases in depreciation and amortization  expense,  deferred taxes,  allowance
for loan  losses,  and investor and  mortgage  participation  interest  payable,
partially  offset by a decrease in net income and changes in accrued real estate
loan and joint venture interest and deferred loan fees.

Investor and mortgage  participation  interest payable  increased  $2,613,748 in
2003 due to an increase in outstanding debt and because approximately 25% of the
Investor  Certificate  holders who purchased  certificates in 2002 and 2003 have
elected to  reinvest  the  interest  due to them each year and not  receive  the
interest in cash until maturity.

Included  in the 2003 and 2002  changes in accrued  real  estate  loan and joint
venture  interest  and  deferred  loan fee amounts is $797,589  and  $675,019 in
interest  which was  financed  as part of loan  principal.  We  receive  monthly
interest  payments  on our loans  except  when the terms of certain  loans allow
borrowers to finance  interest  payments  while the  collateralized  property is
under development or construction. A summary (by loan type) of the amount of net
financed interest for the years ended December 31, 2003 and 2002 is as follows:

                                                         2003             2002
                                                       --------         --------
Family Housing Development                             $339,820         $572,662
Church Construction                                       8,684           65,009
Real Estate Joint Venture                               449,085           37,348
                                                       --------         --------
                                                       $797,589         $675,019
                                                       ========         ========

The amount for 2003  represents  interest  accrued and financed in 2003,  net of
payments  received in 2003 that were financed in previous  years.  2002's amount
represents  interest  accrued and financed in 2002, net of payments  received in
2002 that were financed in previous years.

The 2003  decrease  in family  housing net  financed  interest is due to a major
project in Mableton,  Georgia moving out of the  development  phase and into the
sales phase of the project  offset by four smaller new projects  that are now in
the development phase.

The  increase in real estate joint  venture net financed  interest is due to the
origination  of the  Lewisville,  Texas  loan in the  latter  part of  2002.  We
financed as part of the loan's principal the first four months' interest in 2003
(approximately  $295,000)  because the  facility  was being  renovated.  We have
received  monthly  interest  payments  thereafter.   Also,  another  project  in
McKinney,  TX started to finance interest payments in the fourth quarter of 2003
because they are now in the development phase of operations.

Cash flows from investing activities.  The Company used $18,646,233 in cash from
investing activities which is a decrease of $12,151,423 from $30,797,656 for the
year ended December 31, 2002. The decrease was due to the following:

<TABLE>
<CAPTION>
<S>                                                                  <C>
Decrease in real estate loans and joint venture  investments  made   ($ 6,940,993)
Increase in real estate loan and joint venture investment
   principal payments received                                         (9,536,881)
Increase in bonds purchased                                             2,500,000
Decrease in bonds redeemed or sold                                      1,317,500
Increase in fixed asset and real estate purchases                         508,951
                                                                     ------------
                                                                     ($12,151,423)
                                                                     ============
</TABLE>

                                                                              13
<PAGE>

The decrease in real estate loans and joint venture  investments made in 2003 is
due to fewer sales of investor certificates in 2003 versus 2002. Please refer to
the "cash flows from financing activities" section for additional information on
the decrease in investor certificate sales.

The  increase in principal  payments  received in 2003 was due to the pay-off of
the Largo, Florida senior housing real estate joint venture investment and large
pay-downs  on a senior  housing loan in Palm Bay,  Florida and a senior  housing
real estate joint venture investment in St. Petersburg, Florida.

The Company currently has commitments and applications  sufficient to invest its
excess cash on hand.

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

Cash flows from financing activities.  For the year ended December 31, 2003, the
Company  raised  $20,104,324  from the  sale of new  Investor  Certificates  and
Mortgage Participation Agreements,  net of redemptions on existing certificates.
This  represents  a  decrease  of  $10,499,848  from  net  certificate  sales of
$30,604,172  for the year ended  December 31, 2002.  The decrease was due to the
sale of all available registered Investor  Certificates by May, 2003; therefore,
no certificates were available to sell during the last seven months of 2003. The
Company has filed a new registration  statement with the Securities and Exchange
Commission which, if approved,  will significantly  increase our future sales of
Investor Certificates. The percentage of Investor Certificates and MP Agreements
redeemed for cash compared to Investor  Certificates  and MP Agreements sold for
the years ended  December  31,  2003 and 2002 was 17.3% and 7.5%,  respectively.
Historically,  over 80% of Investor Certificate  maturities are re-issued as new
certificates;  however, until the new registration statement with the Securities
and Exchange  Commission is approved and we have new  certificates to issue, all
maturities will be paid in cash, which increased the percentage for 2003.

We have $9,672,380 in Investor Certificates coming due or redeemable upon demand
in 2004 that could be reinvested in new  certificates  or paid, at the option of
the  investor.  Our rate of  reinvestment  was over 80% from 1986 through  2002,
which  included  periods of higher  interest  rates  than those now  prevailing.
During  2003,  the  reinvestment  rate  dropped  to 47%  due to the  sale of all
available  Investor  Certificates in May, 2003. All  certificates  which matured
after that date were  redeemed in cash because the owners could not purchase new
certificates. We expect the historical reinvestment rate to continue if approval
of the present  offering is received by the Securities and Exchange  Commission,
even if there are  increases  in the current low interest  rates on  government,
bank and corporate debt.

Among the  measures we take to  mitigate  any demands for cash are:
o    Maintain a minimum cash balance, currently $4,000,000.
o    Have readily marketable loans that can be sold for par or a premium.
o    Asking investors about their intentions at least 30 days before their bonds
     mature.
o    Have a bank willing to extend credit lines if needed.
o    Spread maturity dates throughout the year.
o    Limit each investor to not more than $500,000  maturing in any  three-month
     period.

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

Comparison of years ending December 31, 2001 and December 31, 2002

General.  Assets increased from $41,041,001 at the end of 2001 to $71,776,839 at
the end of 2002 as a result of the sale of our certificates.  Total revenues for
2001 were $4,362,214 and were $6,909,340 for 2002. Net income for these periods,
before dividends but after taxes, was $247,120 for 2001 and $612,608 for 2002.

Our investments in real estate loans and joint venture  investments  outstanding
were  $30,429,046 on December 31, 2001 and $64,754,698 on December 31, 2002. Our
other assets at the end of 2002 included  $2,734,162 in bond holdings (including
accrued   interest)  and   $1,500,499  in  cash.  The  amount  of  our  investor
certificates  and accrued  interest  increased from  $37,643,733 at December 31,
2001 to $67,920,382 a year later.

                                                                              14
<PAGE>

Real  estate  loan and joint  venture  interest  and fees  earned.  We  received
$6,018,879 in loan interest and fees earned during 2002,  compared to $3,868,429
in 2001, for an increase of $2,150,450,  or 56%. This increase  resulted from 16
new real estate loans and joint venture  investments  originated in 2002,  for a
total of  $30,383,224,  and a $3,707,726  increase in funding of existing loans.
The increase is the result of  additional  loans being made during the course of
the year out of increased funds arising from the sale of certificates,  and from
refinancing of existing loans by third parties.  The weighted  average  interest
rate on the loan  balances at December  31, 2002 was 9.46%  compared to 9.30% at
December 31, 2001. This increase  resulted from a higher  proportion of our loan
portfolio being in senior housing loans, which earn a higher origination fee.

Loan  participation  and other income.  We own two office  condominiums that are
leased to others.  We have disposed of all but one of the investment  properties
we had acquired before the year 2000. None of our  participating  loans had sold
property  during  the  course  of the two  years.  Most of our  other  income is
interest from our purchase of bonds used as permanent  financing for projects we
had funded during their development and initial operations.  We owned $2,571,250
of bonds at December 31, 2002 and $5,172,500 at December 31, 2001.

Investor interest expense.  Interest expense increased $1,428,473,  or 52%, from
$2,726,524  in 2001 to  $4,154,997  in 2002.  The  increase in interest  expense
resulted  from  the  sale  of  $30,604,172  of  Investor  Certificates,  net  of
redemptions during 2002. The weighted average interest rate for all the investor
certificates  at December  31, 2002 was 8.60%  compared to 8.74% at December 31,
2001. The decrease was  attributable to the favorable  certificate mix of 5%, 7%
and 9% rates.

Marketing  expenses.  Total expenses for marketing our certificates in 2002 were
$494,042  versus  $229,154 in 2001.  The  increase is due to an increase in debt
issue  cost  amortization  of  $215,246,  an  increase  in legal and  consulting
expenses of  $53,465,  and a decrease in other  marketing  costs of $3,823.  The
increases  were due to an 80% increase in investor  certificates  outstanding at
the end of 2002 versus  2001.  Although  our  expenses  increased  in 2002,  our
marketing  expenses as a percent of new certificates sold decreased from 2.3% in
2001 to 1.5% in 2002.

Selling commissions paid to brokers for selling investor  certificates and costs
incurred to register  investor  certificates  are paid in cash and charged as an
expense over the term of the related  certificates,  generally  five years.  The
unamortized  balance  is  classified  as  an  asset  on  the  Balance  Sheet  as
"Unamortized  debt issue costs".  The balance was  $1,004,705 and $576,470 as of
December 31, 2002 and 2001,  respectively.  Debt issue cost amortization expense
was  $345,191 and  $129,945  for 2002 and 2001,  respectively.  We have not paid
significant  amounts  for  marketing  our  lending  capabilities  because of the
continuing requests for financing with which we have been approached.

Operating and personnel expenses.  Personnel expenses (salaries,  payroll taxes,
and  benefits)  were  $674,384  in 2002,  which was  $203,915  or 43.3% over the
$470,469  in  expenses  for 2001.  This  increase  was due to the hiring of five
additional employees which were needed to handle the Company's growth. Also, the
Company  increased its contribution to the profit sharing plan by $22,459 due to
increased  profits and  additional  employees in 2002 versus  2001.  Starting in
2003, the Company has contracted with  Cornerstone  Capital  Advisors ("CCA") to
provide all  administrative  services.  The Company will  reimburse  CCA for its
expenses (estimated at $750,000 over the next 12 months),  which are expected to
be similar to the  expenses  incurred  had the Company  elected to continue  its
administrative support under current arrangements.

Operating expenses increased $217,647 or 34.5% from $631,458 to $849,105 for the
years ended  December  31, 2001 and 2002,  respectively.  The increase is due to
higher  occupancy  expenses  related to the increased number of employees and an
increase in  record-keeping  and trustee  services for our securities.  Also, in
2002,  we took steps  toward  creating  a  registered  securities  broker-dealer
subsidiary to market our securities.  We terminated the effort when we concluded
that, under rules of the National  Association of Securities  Dealers,  it would
not be  feasible  for a  subsidiary  to market our own  securities.  We incurred
start-up  expenses of $129,885  related to this  effort,  which are  included in
operating expenses for 2002.

Income tax provision. Income tax expense for the period ending December 31, 2002
was $124,204  compared to an expense of $57,489 for the period  ending  December
31, 2001. This change resulted from an increase in the Company's  pre-tax income
in 2002,  partially offset by a $263,455 increase ($407,903 in 2002 and $144,448
in 2001) in tax-exempt bond interest income. The effective tax rate for 2002 was
16.9%,  compared to 18.9% for 2001. A reconciliation of the Company's  effective
tax rate to the federal statutory rate is as follows:

                                                                              15
<PAGE>

                                           2001       2002
                                          -----      -----
Statutory federal rate                     35.0%      35.0%
Effect of graduated federal rates          (3.9%)     (1.0%)
State taxes, net of federal  benefit        3.7%       3.7%
Effect on tax-exempt bond interest        (16.1%)    (20.6%)
Other, net                                   .2%       (.2%)
                                          -----      -----
Effective tax rate                         18.9%      16.9%

Dividends.  We paid $363,371 in dividends on our common stock during 2002 versus
$360,735 in 2001.

Liquidity and Capital Resources
Cash flows from  operations.  Net cash used by  operations  was $79,684 in 2002,
while cash  provided by operations  was $710,523 in 2001.  This decrease in cash
provided  by  operations  is due to changes in  investor  interest  payable  and
accrued real estate loan and joint  venture  interest  and  deferred  loan fees,
partially  offset by  increases  in net income,  depreciation  and  amortization
expense and an increase in accounts and other payables.

The change in  investor  interest  payable  was due to an  increase  in investor
certificate redemptions in 2002. Redemptions increased interest payments because
approximately  25% of our investors elected to reinvest the interest due to them
each year and not receive the interest in cash until maturity or redemption. The
change in accrued real estate and joint venture  interest and deferred loan fees
is due to the  increase  in real  estate  loans  and joint  venture  investments
outstanding at the end of 2002 versus 2001.

Cash  flows  from  investing  activities.   We  used  $30,797,656  in  investing
activities in 2002, up from $8,841,521 for the year-earlier period. The increase
resulted  primarily  from  approximately  $15 million more real estate loans and
joint venture investments made in 2002, approximately $15 million more principal
payments  received in 2001, offset by the purchase of bonds in 2001 and the sale
of bonds in 2002. We currently have commitments and  applications  sufficient to
invest the cash on hand.  At December  31,  2002,  we had  requests for loans of
approximately  $1.3 million for  churches,  $1.2 million for senior  housing and
$3.5 million for low to moderate income housing.

Cash flows from financings activities.  During 2002, $30,604,172 was raised from
the sale of new  certificates,  after  subtracting  the  amount  of  outstanding
securities  redeemed.  The net new capital raised from certificate sales in 2001
was  $9,121,904.  This  increase is due to higher than  expected  demand for our
Series D Investor Certificates which became available in May, 2002.

Item 7. Financial Statements.

For the  information  required  by this item,  please see  Financial  Statements
beginning on page F-1.

Item  8.  Changes  In and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

There were no changes in or  disagreements  with the Issuer's  certified  public
accountants.

Item 8A. Controls and Procedures.

(a)  Evaluation of Disclosure  Controls and Procedures.  The Company maintains a
     system of "disclosure  controls and procedures" (as defined in Rules 13a --
     15 and 15d -- 15 under the  Securities  Exchange  Act of 1934)  designed to
     provide  reasonable  assurance  as to  the  reliability  of  the  financial
     statements  and other  disclosures  included in this report,  as well as to
     safeguard assets from unauthorized use or disposition.  The Company's Chief
     Executive  Officer and Chief Financial  Officer evaluated the effectiveness
     of the  Company's  disclosure  controls  within 90 days prior to the filing
     date of this  report.  Based  upon that  evaluation,  the  Chief  Executive
     Officer and Chief Financial Officer concluded that the Company's disclosure
     controls and  procedures  are effective in alerting them in a timely manner
     of material  information  required to be included in the Company's periodic
     Securities and Exchange Commission filings.

(b)  Changes in Internal  Controls.  Since the  evaluation  date, no significant
     changes were made to the Company's  internal controls or other factors that
     could significantly affect these controls.

                                                                              16
<PAGE>

                                    Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.

Our board of directors is elected by our shareholders.  The board is responsible
for  setting  policies  and  for  hiring  and  retaining  management.   This  is
information about our directors and officers.

Name, residence address          Age                   Responsibility
-----------------------          ---                   --------------

Cecil A Brooks                   72          Director, Chairman of the
10206 Big Canoe                              Board, President, CEO
Jasper, GA 30143

John T. Ottinger                 49          Director, Vice President, COO,
923 Spring Glen Place                        Secretary and Treasurer
Suwanee, GA 30024

Taylor McGown                    66          Director, Vice Chairman,
10741 Big Canoe                              Member of the Loan committee
Jasper, GA  30143

Henry Darden                     71          Director, Member of the
614 Beverly Dr.                              Audit Committee
Brandon, FL  33510

Irving B. Wicker                 78          Director, Member of the
132 Eswick Drive                             Audit Committee
Prattville, AL 36067

Directors are elected for three-year terms. Messrs. McGown and Wicker will serve
until the annual meeting in 2004, Messrs.  Ottinger and Brooks until the meeting
in 2005 and Mr. Darden until the 2006 meeting.

Cecil A.  Brooks has served in these  capacities  since  Cornerstone  Ministries
Investments,  Inc. was founded.  He graduated  from Mercer  University  in 1952.
After a varied career in sales and  management,  including real estate sales and
development, he graduated from Reformed Seminary in 1975. He served as pastor of
Trinity  Presbyterian  Church in Miami,  Florida  and on the staff of Mission to
North America of the Presbyterian Church of America from 1983 to 1994.
He formed the Investors Fund for Building and  Development  (the  predecessor to
Presbyterian  Investors  Fund,  Inc.) in 1985 and served as  President  from its
inception to its merger with us. Mr. Brooks has served on the boards of a number
of non-profit  organizations concerned with foreign missions and housing for the
elderly.  Mr.  Brooks  has over 17 years  experience  in all areas of the church
mortgage  lending and development  business.  Mr. Brooks has also worked closely
with church bond  underwriters and  broker-dealers in the church lending market.
He has been a director since 1985.

John T. Ottinger, Jr. has served as Vice President and Secretary/Treasurer since
Cornerstone Ministries  Investments,  Inc. was founded. Mr. Ottinger is also our
Chief  Financial  Officer  and became our Chief  Operating  Officer in 2000.  He
graduated  from the  University of Delaware in 1976 and spent eight years in the
lodging industry.  Mr. Ottinger has served as pastor of an established church as
well as  organizing  pastor  in  North  Carolina.  He  joined  the  Presbyterian
Investors  Fund,  Inc.  staff in 1985.  Mr.  Ottinger  has 17 years of extensive
experience in church lending. He has been a director since 1996.

Taylor  McGown  has served as a  director  since  1985.  He  graduated  from the
University  of Memphis in 1976 and  received a Master of  Divinity  degree  from
Reformed  Theological Seminary in 1979. Mr. McGown served a number of pastorates
in a variety of capacities  as well as serving as Director of Palmer  Children's
Home. He is currently a self employed  registered  representative and investment
advisor. He was a registered  representative and investment  consultant with IFG
in Atlanta, Georgia from 1996 until 2002.

                                                                              17
<PAGE>

Henry  Darden has served as a director  since  1992.  He  received a Bachelor of
Science degree in forestry management from the University of Georgia in 1955 and
an AA in real  estate  from  the  City  College  of  Chicago  in  1970.  He is a
Distinguished Graduate of the Industrial College of the Armed Forces. Mr. Darden
retired in 1982 as a Lieutenant  Colonel with the United States Air Force. Since
then, he has been a self-employed financial and tax consultant.

Irving B. Wicker has served as a director  since  1990.  He  graduated  from the
University  of  Maryland  in 1959 and  received  a Masters  Degree  from  George
Washington University in 1963. He retired in 1969 as a Lieutenant Colonel in the
United States Air Force.  Mr. Wicker was  self-employed  as a real estate broker
and financial planner from 1969 until he retired in 2000.

Independent directors

Decisions involving Cornerstone Capital Advisors,  Inc. or Wellstone Communities
Inc. require the approval of a majority of the independent directors, as well as
a majority of the full board.  We define an  independent  director as one who is
not an officer or director of Cornerstone  Capital  Advisors,  Inc. or Wellstone
Communities Inc., nor a ten-percent or more owner of either of them. We consider
Messrs. McGown, Darden and Wicker to be independent directors.  We will maintain
at least two independent directors on our board.

Committees

Audit Committee.  Two independent directors,  Messrs. Darden and Wicker, are the
audit committee.  The audit committee will make  recommendations  concerning the
engagement of independent public  accountants,  review their  independence,  the
services  they  provide  and the  results  of the  audit  engagement.  The audit
committee  will also consider the range of audit and  non-audit  fees and review
the adequacy of our internal accounting controls.  We plan to appoint, by May of
2004, a director  and audit  committee  member who is a  "financial  expert," as
defined by regulations adopted under the Sarbanes-Oxley Act of 2002.

Loan and Investment  Committee.  The board has established a loan and investment
committee consisting of Messrs. Brooks, Ottinger, Darden and McGown and having a
quorum of three  members.  The  committee  will review and may approve loans and
investments  of up to $500,000 on behalf of the board,  in  accordance  with the
loan and  investment  policies  as adopted and amended by the board from time to
time. Any individual loans or investments in excess of the committee's authority
will be subject to approval by the entire board.

Meetings and compensation of directors

The  directors  meet at least  annually  and more  often as  needed.  The  audit
committee meets at least once annually.  The loan and investment committee meets
as required. Directors receive $250 for each conference call board and committee
meeting  they  attend  and $500  for  each  face-to-face  meeting  attended.  We
reimburse them for travel expenses to attend meetings.

Indemnification of directors and officers and limitation of their liability

Officers or directors are not liable to Cornerstone Ministries Investments, Inc.
or its  shareowners,  under Georgia law, if they acted in a manner they believed
in good faith to be in or not  opposed to  Cornerstone  Ministries  Investments,
Inc.'s best  interests.  They are not liable in any criminal  proceeding if they
had no reasonable  cause to believe their conduct was unlawful.  As permitted by
Georgia law, we will indemnify our officers and directors  against liability and
their  defense  costs in any  proceeding  in which they have been  successful or
where the directors who are not involved determine that the applicable  standard
of conduct has been met. We will pay reasonable  expenses,  including attorneys'
fees, incurred by directors or officers in advance of the final disposition of a
proceeding,  if they furnish written  affirmation of good faith belief that they
have met the applicable standard of conduct,  together with a written promise to
repay any advances if it is determined they are not entitled to indemnification.
Insofar as indemnification  for liabilities arising under the federal Securities
Act of 1933 (the "Act") may be permitted to directors,  officers and controlling
persons of the small business  issuer pursuant to the foregoing  provisions,  or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
expressed  in the Act and  is,  therefore,  unenforceable.  We  carry  insurance
against the liability of our officers and directors.

Code of Ethics

The  registrant  has  adopted a code of ethics  that  applies  to its  principal
executive officer,  principal financial officer, principal accounting officer or

                                                                              18

<PAGE>

controller,  or persons performing similar functions. A copy is attached to this
report as  exhibit  99.2.  The  registrant  will  furnish a copy to any  person,
without  charge,  upon request made to the  registrant at 2450 Atlanta  Highway,
Suite 904, Cumming, GA 30040.

Section 16(a) Beneficial Ownership Reporting Compliance

No directors, officers or beneficial owners of more than 10% of the registrant's
Common Stock was  required to file  reports as required by section  16(a) of the
Exchange Act during the two most recent fiscal years.

Item 10. Executive Compensation.

This summary compensation table shows all compensation paid to our two executive
officers during 2002 and 2003:
<TABLE>
<CAPTION>

                                                                                 Annual compensation
                                                                                 -------------------
         Name and principal position                                              Year       Salary
         ---------------------------                                              ----       ------
<S>                                                                               <C>       <C>
         Cecil A. Brooks, Chairman of the Board, President and CEO                2002      $150,000
                                                                                  2003       200,000
         John T. Ottinger, Vice president, Secretary, Treasurer and COO           2002       100,000
                                                                                  2003       150,000
</TABLE>

Their  services  for  2004  will  be  included  in the  administrative  services
agreement  with  Cornerstone  Capital  Advisors,  Inc.  Neither  we nor CCA have
employment agreements with them or any other employees.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The  following  table  shows the  beneficial  ownership  of our common  stock on
December 31, 2003,  for shares owned by:

(i)   each of our directors and executive officers,

(ii)  each shareowner we know to own  beneficially 5% or more of the outstanding
      shares of our common stock and

(iii) all  directors  and officers as a group.

We believe that the beneficial owners of the common stock listed below, based on
information  they  furnished,  have sole  investment and voting power over their
shares, subject to community property laws where applicable.

<TABLE>
<CAPTION>
Name and address of                     Number of Shares       Percentage of  Total Common
Beneficial Owner                        Beneficially Owned     Stock Beneficially Owned
----------------                        ------------------     ------------------------
<S>                                         <C>                         <C>
Cecil A. Brooks                              1,953                      *
10206 Big Canoe
Jasper, GA 30143
John T. Ottinger                             6,918                      1.3%
923 Spring Glen Place
Suwanee, GA 30024
Taylor McGown
10741 Big Canoe                              1,800                      *
Jasper, GA 30143
Irving B. Wicker                             2,000                      *
132 Eswick Drive
Prattville, AL 36067
Henry Darden                                 1,000                      *
614 Beverly Dr
Brandon, FL 33510
Church Growth Foundation, Inc.              69,228                      13.0%
635 Willowbrook Run
Alpharetta, GA 300022
All directors and executive officers        13,671                      2.6%
as a group (5 Persons)
<FN>
* less than one percent.
</FN>
</TABLE>

                                                                              19
<PAGE>
Item 12. Certain Relationships and Related Transactions.

We caused  Wellstone  Communities  Inc. to be incorporated on November 20, 2002,
for the purpose of its initially being a wholly-owned subsidiary and then for it
to raise capital from the sale of preferred  stock and to invest that capital in
ways not  feasible  for us,  that is, in loans  that  could  participate  in the
borrower's  gain on resale or  refinance  and in owning a bank.  On  December 4,
2002, we purchased 38,000 shares of Wellstone Communities Inc.'s common stock in
exchange  for  $380,000.  We paid for the  shares by  funding  a loan  Wellstone
Communities  Inc. had made that day. With this  transaction,  we became owner of
100% of Wellstone  Communities  Inc.'s  common  stock.  Under  federal and state
securities laws, we would be defined as Wellstone Communities Inc.'s "promoter."
On December 31, 2002 we purchased 2,000 shares of Wellstone  Communities  Inc.'s
common stock,  for $20,000 cash. On January 23, 2003 we purchased  60,000 shares
of Wellstone  Communities  Inc.'s common stock,  for $600,000  cash. The $10 per
share price for common stock was agreed to by our directors and the directors of
Wellstone  Communities  Inc. On January 23, 2003, we sold two loans to Wellstone
Communities  Inc. for a total of $591,003,  which was the  principal  balance on
those  loans at the  purchase  date.  We had made the loans in January and March
2002. In October of 2003, we purchased an additional  36,250 shares of Wellstone
Communities' common stock for $362,500.

On July 1, 2003,  we entered  into an  administrative  services  agreement  with
Cornerstone Capital Advisors,  Inc. ("CCA") for it to provide our administrative
services. We will pay Cornerstone Capital Advisors, Inc. expense reimbursements,
estimated  at  $1,100,000  in  the  next  12  months,   and  may  pay  incentive
compensation  for  good  performance,  which  will  be no more  than  10% of the
expenses  reimbursed.  The agreement is for renewable  one-year terms and may be
terminated by either party upon 60 days' written notice. Our two officers, Cecil
A. Brooks and John T.  Ottinger,  are also officers and directors of Cornerstone
Capital Advisors,  Inc. We paid CCA $318,619 under this agreement in 2003. Also,
the Board of Directors  approved  incentive  compensation  of $23,440 to CCA for
good  performance in 2003. This amount was accrued as a liability and charged to
earnings in 2003 and paid in 2004.

On February 12, 2003, we engaged  Cornerstone  Direct Public  Offerings,  LLC to
provide legal and  administrative  services for our SB-2 Registration  Statement
filing with the Securities and Exchange Commission. The service fee was $75,000.
Two of our  directors'  serve on the Board of  Directors of  Cornerstone  Direct
Public Offerings'  majority owner,  Cornerstone Group Holdings,  Inc.  Wellstone
Communities,  Inc. engaged  Cornerstone  Direct Public Offerings LLC on the same
terms for its proposed offering of preferred stock.

All material affiliated transactions and loans are made or entered into on terms
that  are  no  less  favorable  to us  than  those  that  can be  obtained  from
unaffiliated third parties and must be approved by a majority of our independent
directors who do not have an interest in the  transactions  and who were offered
access, at our expense,  to our lawyer or independent  legal counsel.  We do not
make loans to our officers or directors.

Item 13. Exhibits and Reports on Form 8-K.

   (a) (Item 601 of Regulation S-B)

    Exhibit
     Number                                    Description
     ------                                    -----------
      1.1         Sales Agency  Agreement  with Huntleigh  Securities  Corp. and
                  Medallion  Equities,  Inc.  (Incorporated  by  reference  from
                  Exhibit 1.1 of  Pre-Effective  Amendment No. 2 to Registrant's
                  Registration  Statement  on form SB-2,  No.  333-93475,  filed
                  April 26, 2000.)
      1.2         Certificate of  Indebtedness  Purchase  Agreement,  for direct
                  sales  by  the  Registrant  (Incorporated  by  reference  from
                  Exhibit 1.2 of the  Issuer's  Registration  Statement  on form
                  SB-2, No. 333-91564, filed June 28, 2002.)
      3.1         Amended  and  Restated   Articles  of   Incorporation  of  the
                  Registrant  (Incorporated  by  reference  from  Exhibit 3.1 of
                  Registrant's   Registration   Statement  on  Form  SB-2,   No.
                  333-93475, filed January 14, 2000.)
      3.2         Amended and Restated  By-laws of the Registrant  (Incorporated
                  by  reference  from Exhibit 3.2 of  Registrant's  Registration
                  Statement  on Form SB-2,  No.  333-93475,  filed  January  14,
                  2000.)
      4.1         Article III.A., page 1 of the Amended and Restated Articles of
                  Incorporation  and Article  III of the  Amended  and  Restated
                  By-laws (Reference is made to Exhibits 3.1 and 3.2)
      4.2         Form of Graduated Rate Redeemable  Certificate of Indebtedness
                  (Incorporated  by reference  from Exhibit 3.2 of  Registrant's
                  Registration  Statement  on Form SB-2,  No.  333-70474,  filed
                  September 28, 2001)

                                                                              20
<PAGE>

      4.3         Form of  Seven  Day  Redeemable  Certificate  of  Indebtedness
                  (Incorporated  by reference  from Exhibit 3.2 of  Registrant's
                  Registration  Statement  on Form SB-2,  No.  333-70474,  filed
                  September 28, 2001)
      4.4         Form of five-year term certificates (Incorporated by reference
                  from  Exhibit 4.4 of the  Issuer's  Registration  Statement on
                  form SB-2, No. 333-91564, filed June 28, 2002.)
      4.5         Trust   Indenture   for  Series  B  and  C   Certificates   of
                  Indebtedness  (Incorporated  by reference  from Exhibit 4.4 of
                  Registrant's   Registration   Statement  on  Form  SB-2,   No.
                  333-93475, filed January 14, 2000.)
      4.6         Trust Indenture  dated June 14, 2002 Registrant  (Incorporated
                  by reference  from  Exhibit 4.8 of the  Issuer's  Registration
                  Statement on form SB-2, No. 333-91564, filed June 28, 2002.)
      21          Subsidiaries of the Issuer
      24          Power of Attorney  (included in the Signatures section of this
                  report)
      99.1        Certifications  pursuant to Section 906 of the  Sarbanes-Oxley
                  Act of 2002
      99.2        Code of Ethics

   (b) No report on Form 8-K was filed  during  the last  quarter  of the period
covered by this report.

Item 14.  Principal Accountant Fees and Services.

The Board of  Directors  selected  Robert N.  Clemons  CPA,  PA, an  independent
certified public  accounting  firm, as the auditors of the financial  statements
for the  fiscal  year  ended  December  31,  2003.  No member of this firm has a
financial  interest  in  Cornerstone  Ministries  Investments,  Inc.  All of the
services  described  below were approved by our audit committee and the Board of
Directors.

Audit  Fees.  Fees for  services  rendered in  connection  with the audit of our
annual financial statements,  the review of financial statements included in our
Form 10-QSB's and for services that are normally  provided by the  accountant in
connection  with statutory and  regulatory  filings were $67,724 and $31,090 for
the years ended December 31, 2003 and 2002, respectively.

Tax Fees.  Fees for tax services,  including  preparation of our tax returns and
tax-related matters were $4,500 and $4,656 for the years ended December 31, 2003
and 2002, respectively.

All Other Fees. Fees for the  preparation  and review the financial  sections of
our Form SB-2  Registration  Statements  were $34,146 and $0 for the years ended
December 31, 2003 and 2002, respectively.

All  hours  expended  on the  accountant's  engagement  to audit  our  financial
statements  were  attributed  to work  performed by Robert N. Clemons CPA,  PA's
full-time, permanent employees.

                                                                             21

<PAGE>
                                   SIGNATURES

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

                             CORNERSTONE MINISTRIES INVESTMENTS, INC. (Issuer)

                             By _S/Cecil A. Brooks              March 28, 2004
                                 -------------------------
                                 Cecil A. Brooks, Chief Executive Officer

Each person whose  signature  appears below  appoints  Cecil A. Brooks,  John T.
Ottinger,  or either of them,  his or her  attorney-in-fact,  with full power of
substitution and  resubstitution,  to sign any and all amendments to this report
on Form 10-KSB of Cornerstone  Ministries  Investments,  Inc., and to file them,
with all their  exhibits and other related  documents,  with the  Securities and
Exchange  Commission,  ratifying and confirming all that their  attorney-in-fact
and agent or his or her substitute or substitutes may lawfully do or cause to be
done by virtue of this appointment.

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


<TABLE>
<CAPTION>
                  Signature                                   Title                                       Date
                  ---------                                   -----                                       ----
<S>                                               <C>                                             <C>
S/Cecil A. Brooks                                 Chief Executive Officer, President and          March 28, 2004
-----------------------------------               Chairman of the Board of Directors
   Cecil A. Brooks

S/John T. Ottinger                                Vice President, Chief Operating Officer,        March 28, 2004
-----------------------------------               Chief Financial Officer, Secretary, Treasurer
   John T. Ottinger                               and Director
                                                  (Principal financial and accounting officer)


*S/Taylor McGown                                  Director                                        March 28, 2004
-----------------------------------
   Taylor McGown

*S/Jayme Sickert                                  Director                                        March 28, 2004
-----------------------------------
   Jayme Sickert

*S/Henry Darden                                   Director                                        March 28, 2004
-----------------------------------
   Henry Darden

*S/Irving B. Wicker                               Director                                        March 28, 2004
-----------------------------------
   Irving B. Wicker

By: *S/Cecil A. Brooks                          , attorney-in-fact                                March 28, 2004
    -------------------------------------------
      Cecil A. Brooks
</TABLE>

                                                                              22

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

To The Board of Directors
Cornerstone Ministries Investments, Inc.

                          Independent Auditor's Report

We have audited the  accompanying  consolidated  balance  sheets of  Cornerstone
Ministries Investments, Inc. & Subsidiaries as of December 31, 2003, 2002 & 2001
and the related  consolidated  statements  of income,  changes in  stockholder's
equity and cash flows for the years then  ended.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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  audit  provides  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  Cornerstone
Ministries Investments, Inc. & Subsidiaries as of December 31, 2003, 2002 & 2001
and the results of their operations,  changes in their stockholder's  equity and
their cash flows for the year then ended in conformity  with generally  accepted
accounting principles.



S/ Robert N. Clemons, CPA, PA
DeLand, Florida
March 18, 2004

                                                                             F-1

<PAGE>

CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
                                                                         2003             2002              2001
                                                                     --------------   --------------   ---------------
ASSETS
<S>                                                                    <C>              <C>               <C>
Cash and cash equivalents                                              $ 4,389,851      $ 1,500,499       $ 2,907,457
Loans in process                                                           118,504          359,020           454,584
Real estate loans, net                                                  47,877,277       40,138,493        22,209,156
Real estate joint venture investments, net                              34,846,223       24,616,205         8,219,890
Bond holdings and accrued interest                                       4,001,333        2,734,162         5,320,114
Property and equipment, net                                                873,101          320,337           266,655
Refundable income taxes                                                     42,617                -                 -
Deferred tax asset, net                                                          -          274,233           243,478
Goodwill                                                                   450,997          450,997           450,997
Unamortized debt issue costs                                             1,772,631        1,004,705           576,470
Real estate held for investment                                            340,000          340,000           331,513
Other assets                                                                15,813           38,188            60,687
                                                                     --------------   --------------   ---------------
TOTAL ASSETS                                                          $ 94,728,347     $ 71,776,839      $ 41,041,001
                                                                     ==============   ==============   ===============


LIABILITIES
Investor certificates and accrued interest                            $ 84,562,645     $ 67,920,382      $ 37,643,733
Mortgage participations and accrued interest                             6,132,809                -                 -
Accounts and other payables                                                267,806          339,120           132,178
Common dividends payable                                                   169,087          168,640           171,834
Building mortgage                                                          180,194          189,226           197,194
Capital lease obligation                                                    13,632                -                 -
Deferred taxes payable                                                     171,443                -                 -
                                                                     --------------   --------------   ---------------
TOTAL LIABILITIES                                                       91,497,616       68,617,368        38,144,939
                                                                     --------------   --------------   ---------------

SHAREHOLDERS' EQUITY
Series A Convertible Preferred Stock, no par
  value; 235,000 shares authorized, no
  shares issued and outstanding                                                  -                -                 -
Common Stock, $0.01 par value; 10 million shares
  authorized; 531,528, 530,943 and 528,721 shares
  issued and outstanding                                                     5,315            5,309             5,287
Paid in capital                                                          3,297,435        3,293,641         3,279,491
Retained earnings (deficit)                                                  1,229         (139,479)         (388,716)
Treasury stock                                                             (73,248)               -                 -
                                                                     --------------   --------------   ---------------

TOTAL SHAREHOLDERS' EQUITY                                               3,230,731        3,159,471         2,896,062
                                                                     --------------   --------------   ---------------

TOTAL LIABILITIES AND
 SHAREHOLDERS' EQUITY                                                 $ 94,728,347     $ 71,776,839      $ 41,041,001
                                                                     ==============   ==============   ===============

</TABLE>


SEE ACCOMPANYING NOTES                                                       F-2
<PAGE>
CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>

                                                                         2003              2002             2001
                                                                     --------------   ---------------   --------------
<S>                                                                    <C>               <C>              <C>
REVENUES
Real estate loan and joint venture interest and fees                   $ 9,319,835       $ 6,018,879      $ 3,868,429
Loan participation and other income                                      1,603,713           890,461          493,785
                                                                     --------------   ---------------   --------------

TOTAL REVENUES                                                          10,923,548         6,909,340        4,362,214
                                                                     --------------   ---------------   --------------

EXPENSES
Investor interest expense                                                7,246,202         4,154,997        2,726,524
Loan loss expense                                                          375,000                 -                -
Marketing expenses                                                         630,508           494,042          229,154
Salaries, payroll taxes, and benefits                                    1,013,730           674,384          470,469
Operating expenses                                                       1,091,962           849,105          631,458
                                                                     --------------   ---------------   --------------

TOTAL EXPENSES                                                          10,357,402         6,172,528        4,057,605
                                                                     --------------   ---------------   --------------

Income Before Provision For Income Taxes                                   566,146           736,812          304,609

Income Tax Provision                                                        87,266           124,204           57,489
                                                                     --------------   ---------------   --------------

NET INCOME                                                               $ 478,880         $ 612,608        $ 247,120
                                                                     ==============   ===============   ==============

Basic and Diluted Earnings
 per Common Share                                                           $ 0.92            $ 1.16           $ 0.51


</TABLE>



SEE ACCOMPANYING NOTES                                                       F-3
<PAGE>
CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the years ended December 31, 2003, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                      RETAINED
                                          COMMON STOCK:      PAID-IN     PREFERRED     EARNINGS    TREASURY      TOTAL
                                        SHARES     AMOUNT    CAPITAL       STOCK      (DEFICIT)      STOCK       EQUITY

<S>                                    <C>         <C>      <C>                 <C>   <C>                 <C>   <C>
BALANCE, DECEMBER 31, 2000             397,227     $3,972   $2,426,103          $ -   $ (275,101)         $ -   $2,154,974
Net income                                                                               247,120                   247,120
Common stock issued                    131,494      1,315      853,388                                             854,703
Dividends declared                                                                      (360,735)                 (360,735)
                                       --------  ---------  -----------  -----------  -----------  ----------- ------------

BALANCE, DECEMBER 31, 2001             528,721     $5,287   $3,279,491          $ -   $ (388,716)         $ -   $2,896,062
Net income                                                                               612,608                   612,608
Common stock issued                      2,222         22       14,150                                              14,172
Dividends declared                                                                      (363,371)                 (363,371)
                                       --------  ---------  -----------  -----------  -----------  ----------- ------------

BALANCE, DECEMBER 31, 2002             530,943     $5,309   $3,293,641          $ -   $ (139,479)         $ -   $3,159,471
Net income                                                                               478,880                   478,880
Common stock issued                        585          6        3,794                                               3,800
Dividends declared                                                                      (338,172)                 (338,172)
Treasury stock acquired (11,269 shares)                                                               (73,248)     (73,248)
                                       --------  ---------  -----------  -----------  -----------  ----------- ------------

BALANCE, DECEMBER 31, 2003             531,528     $5,315   $3,297,435          $ -      $ 1,229    $ (73,248)  $3,230,731
                                       ========  =========  ===========  ===========  ===========  =========== ============
</TABLE>

SEE ACCOMPANYING NOTES                                                       F-4
<PAGE>
CORNERSTONE MINISTRIES INVESTMENTS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2003, 2002 and 2001
<TABLE>
<CAPTION>
                                                                                        2003              2002              2001
                                                                                   ------------      ------------      ------------
<S>                                                                                <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                         $    478,880      $    612,608      $    247,120
Adjustments to reconcile net income to cash
 from operations-
Depreciation and amortization                                                           567,619           365,819           142,116
Changes in-
Loans in process                                                                        240,516          (154,436)         (387,499)
Accrued bond interest, net                                                              (50,921)          (15,298)             --
Accrued real estate loan/joint venture interest and deferred loan fees               (1,505,568)         (759,540)          101,449
Allowance for loan losses                                                               375,000              --                --
Deferred taxes                                                                          445,676           (30,755)          (99,368)
Refundable income taxes                                                                 (42,617)             --                --
Investor and mortgage participation interest payable                                  2,613,748          (327,523)          825,088
Accounts and other payables                                                             (14,314)          206,942           (64,234)
Other assets                                                                             22,375            22,499           (54,149)
                                                                                   ------------      ------------      ------------

NET CASH PROVIDED (USED) BY OPERATIONS                                                3,130,394           (79,684)          710,523
                                                                                   ------------      ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate loans made                                                              (16,377,539)      (18,785,460)      (15,158,994)
Real estate loan principal payments received                                          8,166,950         1,462,869        19,545,760
Real estate joint venture investments made                                          (14,180,666)      (18,713,738)       (8,168,373)
Real estate joint venture investment principal payments received                      5,553,021         2,720,221              --
Bonds purchased                                                                      (2,500,000)             --          (5,025,000)
Bonds redeemed or sold                                                                1,283,750         2,601,250           126,000
Property and equipment purchased                                                       (591,749)          (74,311)         (124,900)
Real estate costs capitalized                                                              --              (8,487)          (36,014)
                                                                                   ------------      ------------      ------------

NET CASH USED BY INVESTING ACTIVITIES                                               (18,646,233)      (30,797,656)       (8,841,521)
                                                                                   ------------      ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Investor certificates sold                                                           18,444,677        33,099,017         9,888,651
Investor certificates redeemed                                                       (4,208,816)       (2,494,845)         (766,747)
Bond fund redemptions                                                                      --                --            (474,145)
Mortgage participation agreements sold                                                5,868,463              --                --
Debt issue costs paid                                                                (1,278,850)         (795,928)         (304,412)
Building mortgage principal payments                                                     (9,032)           (7,968)             --
Capital lease principal payments                                                         (4,078)             --                --
Common stock issued                                                                       3,800            14,172           854,703
Dividends paid                                                                         (337,725)         (344,066)         (340,875)
Treasury stock acquired                                                                 (73,248)             --                --
                                                                                   ------------      ------------      ------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                            18,405,191        29,470,382         8,857,175
                                                                                   ------------      ------------      ------------

Net change in cash and cash equivalents                                               2,889,352        (1,406,958)          726,177
Cash and cash equivalents at beginning of period                                      1,500,499         2,907,457         2,181,280
                                                                                   ------------      ------------      ------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                         $  4,389,851      $  1,500,499      $  2,907,457
                                                                                   ============      ============      ============

Supplemental Information-
  Interest paid during the period                                                  $  4,643,972      $  4,499,470      $  1,916,134
  Income taxes paid during the period                                              $       --        $       --        $    234,460
Non-cash transactions-
  Fixed asset lease financing                                                      $     17,710      $       --        $       --
  Investor certificates matured and re-invested                                    $  3,800,364      $ 13,926,147      $  4,025,418
  Loan interest financed and included in loan principal                            $    797,589      $    675,019      $       --
</TABLE>

SEE ACCOMPANYING NOTES                                                       F-5

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The  accompanying  Consolidated  Financial  Statements  include the  accounts of
Cornerstone  Ministries  Investments,  Inc.,  Wellstone  Communities,  Inc.  and
Wellstone  Financial  Group,  LLC  (collectively  "The  Company").  The  Company
originates and purchases mortgage loans made to faith-based  organizations.  The
Company offers  specialized  programs for churches,  not-for-profit  sponsors of
senior  housing and  affordable  housing  programs.  The Company also invests in
other real estate  projects for the purpose of selling at a profit,  or leasing.
Substantially all of the Company's loans and investments are in projects located
in the Southeastern  United States.  On February 12, 2003 the Board of Directors
approved  amending  the  Articles of  Incorporation  and changed the name of the
Company from  "PIF/Cornerstone  Ministries  Investments,  Inc." to  "Cornerstone
Ministries Investments, Inc."

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

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

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

o     Family  housing  loans may  finance  interest  while the project is in the
      development  and pre-sales  phase,  which  normally lasts six to 18 months
      depending  on the size of the project.  The Company  receives the financed
      interest as the borrower sells homes in the development.
o     Church  construction  loans may finance interest while the church building
      is under construction.  This takes three to nine months,  depending on the
      size of the  building.  When the  building is  operational,  the  financed
      interest from the  construction  phase is included in the loan's principal
      amount and the Company begins receiving monthly interest payments from the
      borrower.
o     Senior    housing    loans    may    finance     interest    during    the
      construction/renovation stage of the borrower's operations. This takes two
      to six months,  depending on the size of the project. When the facility is
      operational, the financed interest from the construction/renovation  stage
      is  included  in the  loan's  principal  amount  and  the  Company  begins
      receiving monthly interest payments from the borrower.

Senior housing loans are classified as real estate joint venture  investments if
the  Company  participates  in a  property's  residual  profits  and  all of the
following exist at the inception of the loan:

o     The  borrower has title but not a  substantial  equity  investment  in the
      property.
o     The Company  does not have  recourse  to  substantial  tangible,  saleable
      assets of the borrower  other than the  underlying  collateral of the loan
      and there is no irrevocable  letter of credit for a substantial  amount of
      the loan.
o     There is no  take-out  commitment  for the full  amount of the loan from a
      creditworthy, independent third-party.
o     The facility does not have lease commitments which will provide sufficient
      cash flow to service normal principal and interest loan amortization.

The Company normally  provides all or substantially all of the funding (directly
or  through  loan  guarantees)  for the  acquisition  and  development  of these
facilities,  which are owned by non-profit entities. The Company participates in
the residual profits of these properties through loan participation  agreements,
which enable the Company to receive  income from the borrower  when the property
in which the Company  provided  financing  is sold or  refinanced  with  another

                                                                             F-6
<PAGE>

lender.  The  participation  is between 25% and 33% of the borrower's gain. Loan
participation  income is recognized  when the borrower's  sale or refinancing is
completed and the Company receives cash from the borrower.

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

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

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

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

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

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

                                                                             F-7

<PAGE>

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

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

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

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

New Accounting Pronouncements:

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

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

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

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

                                                                             F-8
<PAGE>

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

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

                                             2003          2002          2001
                                          ---------     ---------     ---------
Office Condominiums                       $ 792,659     $ 252,922     $ 252,922
Office Computers, Furnishings,
   Software & Equipment                     120,477        68,465        20,535
Vehicles                                     37,730        37,730        11,350
Capital lease - phone system                 17,710           -0-           -0-
Less: Accumulated Depreciation              (95,475)      (38,780)      (18,152)
                                          ---------     ---------     ---------
Property and equipment, net               $ 873,101     $ 320,337     $ 266,655

Depreciation expense                      $  56,695     $  20,628     $  12,171
                                          =========     =========     =========

NOTE 3 - COMMITMENTS AND RELATED PARTY TRANSACTIONS

Leases:

During 2003, the Company entered into a capital lease for a new telephone system
at the Company's headquarters.  The lease was recorded at the asset's fair value
and is being amortized over three years using the straight-line method. Interest
expense is calculated based on the implied interest rate in the lease. The lease
payment,  including  principal,  interest  and  sales  tax,  is $672 per  month.
Amortization  expense  was $4,919 and  interest  expense was $2,198 for the year
ended December 31, 2003. Future yearly minimum lease payments as of December 31,
2003:

Year                                    Amount
----                                    ------
2004                                   $ 7,531
2005                                     7,531
2006                                     1,256
                                         -----
 Total                                  16,318
Less interest portion                   (2,686)
                                        -------
Capital lease obligation               $13,632
                                       =======

Related Party Transactions:

Effective July 1, 2003, the Company entered into a Personnel  Services Agreement
with  Cornerstone  Capital  Advisors,  Inc.  ("CCA") to provide loan management,
administration,  and accounting;  investor  relations;  marketing;  computer and
management   information  systems   administration;   record  maintenance;   and
bookkeeping and accounting  after June 30, 2003. The Company is obligated to pay
directly  or  reimburse  actual  expenses to be billed  bi-weekly.  CCA can earn
incentive compensation of up to 10% of the actual expenses billed to the Company
for the prior 12 months. The base for good performance includes being current on
all bond interest and other obligations,  and that the common stock shareholders
have  received  dividends  equal to an annual  rate of at least 10% on the price
paid in a public offering for all the time the shares were outstanding.  Factors
above the base and the exact amount of incentive compensation will be determined
by the Board of Director's  judgment on the extent to which CCA's  services have
contributed to the results. The agreement is for renewable one-year terms and it
may be terminated by either party upon 60 days' written notice.  After 2003, the
Company  will not have any  employees  of its own and  accordingly,  CCA will be
subject  to the  supervision  of the Board of  Directors.  Two of the  Company's
directors  serve on CCA's Board of  Directors.  For the year ended  December 31,
2003, the Company paid $318,619 to CCA for personnel services. In addition,  the
Company's Board of Directors approved  incentive  compensation of $23,440 to CCA
for its  performance in 2003. This amount was accrued as a liability and charged
to earnings  in 2003 and paid in 2004.  Both of these  amounts  are  included in
salaries,   payroll  taxes,  and  benefits  in  the  accompanying   Consolidated
Statements of Income.

                                                                             F-9
<PAGE>

During 2003,  the Company  entered  into a service  agreement  with  Cornerstone
Direct  Public  Offerings,  LLC  ("CDPO")  to provide  legal and  administrative
services for the Company's filing of two SB-2  Registration  Statements with the
Securities  and Exchange  Commission  (see Note 12 for further  details on these
filings).  Two of the  Company's  directors  serve on the Board of  Directors of
CDPO's  majority  owner,  Cornerstone  Group  Holdings,  Inc. The service fee is
$75,000 per filing payable in installments  during the filing  process.  For the
year ended December 31, 2003, the Company paid $150,000 to CDPO.

NOTE 4 - REAL ESTATE LOANS

At December 31, the Company had Real Estate Loans on church and other non-profit
properties as follows:

                                       2003            2002            2001
                                   ------------    ------------    ------------
Family housing development loans   $ 25,013,068    $ 16,258,934    $  5,339,528
Church mortgage loans                13,526,028      15,491,592      13,734,934
Senior housing mortgage loans         9,794,001       7,767,779       2,483,581
                                   ------------    ------------    ------------
   Total principal                   48,333,097      39,518,305      21,558,043
   Accrued Interest                     255,994         759,338         868,413

   Unearned Loan Fees                  (336,814)       (139,150)       (217,300)
   Allowance for loan losses           (375,000)            -0-             -0-
                                   ------------    ------------    ------------
   Total Real Estate Loans         $ 47,877,277    $ 40,138,493    $ 22,209,156
                                   ============    ============    ============

These loans mature as follow:  2004 - $43,299,027;  2005 - $0; 2006 - $0; 2007 -
$0; 2008 - $106,497; beyond 2008 - $4,927,573.  Loan maturity may be accelerated
in accordance with loan terms,  generally upon certain events of default such as
non-payment of scheduled payments or bankruptcy.

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

                                                     2003         2002   2001
                                                   ---------    ---------   ----
Current year interest financed                     $ 805,525    $ 637,671   -0-
Previous years' financed interest received          (457,021)         -0-   -0-
                                                   ---------    ---------   ----
Net financed interest                              $ 348,504    $ 637,671   -0-
                                                   =========    =========   ====

On December 31, 2003, the Company had significant credit risk  concentrations in
the following states:

Georgia  - $ 23,103,988
Florida  - $ 10,025,640
Texas    - $  5,281,465

As of December 31, 2003, one loan with a total  carrying  amount of $242,621 was
considered impaired due to non-payment of interest.  No allowance for impairment
loss has been recorded  because the carrying amount of the loan is less than the
present  value of  expected  future  cash flows or the fair value of the related
collateral  on the loan.  No loans were  considered  impaired as of December 31,
2002 and 2001.  The weighted  average  investment in impaired loans for the year
ended  December 31, 2003 was $237,130.  Interest  income  recognized on impaired
loans was $19,166 for the year ended December 31, 2003.

NOTE 5 - REAL ESTATE JOINT VENTURE INVESTMENTS

As of December 31,  certain of the Company's  mortgage  loans on senior  housing
facilities are classified as real estate joint venture investments, as follows:

                                                                            F-10

<PAGE>

<TABLE>
<CAPTION>

Location                                          2003            2002            2001
                                             ------------    ------------    ------------
<S>                                          <C>             <C>             <C>
McKinney, TX                                 $  3,109,337    $  2,467,482    $  1,281,919
Largo, FL                                             -0-       5,295,454       2,422,454
St. Petersburg, FL                              3,684,620       4,223,000         4,989,0
Lewisville, TX                                 10,286,004       8,756,513             -0-
Garland, TX                                     5,905,556       4,231,789             -0-
Chattanooga, TN                                 3,637,623             -0-             -0-
San Antonio, TX                                 9,109,573             -0-             -0-
                                             ------------    ------------    ------------
Total principal outstanding                    35,732,713      24,974,238       8,693,373
Accrued interest                                  301,565         281,134          51,517
Unearned loan fees                             (1,188,055)       (639,167)       (525,000)
Allowance for loan losses                             -0-             -0-             -0-
                                             ------------    ------------    ------------
Real estate joint venture investments, net   $ 34,846,223    $ 24,616,205    $  8,219,890
</TABLE>


All of the loans mature in 2004.  Loan maturity may be accelerated in accordance
with loan terms, generally upon certain events of default such as non-payment of
scheduled payments or bankruptcy.

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

In September, 2003, the Company received $1,220,277 in loan participation income
from a borrower as a result of the borrower's sale of a senior housing  facility
in  Largo,  Florida  in which  the  Company  held a real  estate  joint  venture
investment.

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

In accordance with loan terms,  the Company allows certain  borrowers to finance
interest  payments while their  facilities are in the construction or renovation
phase of operations.  For the years ended December 31, the net interest payments
financed were as follows:
                                                      2003        2002      2001
                                                    --------    --------    ----
Current year interest financed                      $449,085    $ 37,348    -0-
Previous years' financed interest received               -0-         -0-    -0-
                                                    --------    --------    ----
Net financed interest                               $449,085    $ 37,348    -0-

The Company  analyzes the underlying  operations and collateral of each facility
in which there is an outstanding loan by requiring independent  appraisals every
12 to 18 months,  reviewing loan balances and comparing them to the  established
loan  budgets,  and by  analyzing  income  and  cash  flow  statements  that are
submitted by the  borrowers.  If it is  determined  that it is probable that the
Company will be unable to collect all amounts due  according to the  contractual
terms  of a loan,  the  loan is  considered  impaired  and a loan  loss  will be
recognized  to the extent the  collateral's  fair value is less than the current
loan carrying amount.  No real estate joint venture  investments were considered
impaired as of December 31, 2003, 2002 and 2001.

Summarized  un-audited  financial  information  for individual real estate joint
venture investments which are greater than 10% of the Company's total assets:

<TABLE>
<CAPTION>
Lewisville, TX senior housing facility-
Balance Sheet (as of December 31, 2003):                         Income Statement (for the year ended December 31, 2003):
<S>                                      <C>                             <C>                          <C>
  Current assets                         $     39,200                    Total revenues               $2,905,894
  Fixed and other assets                 $  9,479,433                    Net loss                      ($757,795)
  Current liabilities                    $    204,400
  Non-current liabilities                $10,286,004
</TABLE>

                                                                            F-11
<PAGE>

NOTE 6 - ALLOWANCE FOR LOAN LOSSES

Prior to 2003, the Company had no allowance for loan loss activity. For the year
ended  December 31, 2003, a summary of changes in the  allowance for loan losses
by loan type was:
<TABLE>
<CAPTION>
                                                                               Real Estate
                                                Family           Senior       Joint Venture
                                 Church         Housing         Housing        Investments          Total
                                 ------         -------         -------        -----------          -----
<S>                             <C>            <C>                <C>               <C>           <C>
Balance - beginning of year     $  -0-         $    -0-           $  -0-            $ -0-         $  -0-
Loan loss expense                  -0-          375,000              -0-              -0-          375,000
Charge-offs                        -0-               -0-             -0-              -0-            -0-
Recoveries                         -0-               -0-             -0-              -0-            -0-
                                ----------    ------------    -----------     --------------     -------------
Balance - end of year           $  -0-         $375,000           $  -0-            $ -0-         $375,000

</TABLE>

Components of allowance for loan losses at December 31, 2003:
Collective loan losses-
  Historical experience                   $        -0-
  Current credit risk assessment               375,000
                                          ------------
  Total collective loan losses                 375,000
Specific impaired loan losses                      -0-
                                          ------------
Total allowance for loan losses           $    375,000
                                          ============

In the fourth quarter of 2003, as part of the Company's regular loan grading and
risk  assessment  process,  it was  determined  that  the  family  housing  loan
portfolio's credit risk had increased over historical levels.  This increase was
caused by slower than  expected new home sales.  The slow down in new home sales
is due to slower than expected growth in the U.S. economy. The Company has never
incurred  a  loan  charge-off;  therefore,  there  is no  collective  loan  loss
allowance related to the Company's historical experience.

NOTE 7 - GOODWILL

The Company adopted SFAS 142 "Goodwill and Other  Intangible  Assets"  effective
January  1,  2002.  Goodwill  associated  with  the  Company's   acquisition  of
Presbyterian  Investor's Fund, Inc. is carried at $450,997 and is not subject to
further amortization.  Goodwill is tested for impairment at the end of each year
using the present  value of expected  future  cash flows to  determine  its fair
value. At December 31, 2003,  2002 and 2001,  Goodwill's fair value exceeded its
carrying value;  therefore,  no provision for impairment loss has been recorded.
No  goodwill  was  acquired  or  sold in any of the  years  presented  in  these
Consolidated Financial Statements.

NOTE 8 - UNAMORTIZED DEBT ISSUE COSTS

Unamortized  debt issue costs  consist of legal,  accounting,  and filing  costs
incurred to register the  Company's  debt  securities  and  commissions  paid or
accrued  on the  sale  of  debt  securities.  These  costs  are  amortized  on a
straight-line  basis over the period the associated  securities are outstanding,
generally five years. At December 31, 2003, unamortized debt issue costs consist
of:

Costs incurred to register debt securities           $   561,993
Commissions paid on the sale of debt securities        2,262,926
Less: Accumulated Amortization                        (1,052,288)
                                                     -----------
                                                     $ 1,772,631
                                                     ===========

Amortization  expense was $510,924,  $345,191,  and $129,945 for the years ended
December 31,  2003,  2002 and 2001,  respectively,  and is included in marketing
expenses in the accompanying Consolidated Statements of Income.

Estimated amortization expense for the next five years:

2004 - $589,382            2007 - $294,752
2005 - $441,854            2008 - $ 50,138
2006 - $396,505


                                                                            F-12
<PAGE>

NOTE 9 - BOND HOLDINGS

<TABLE>
<CAPTION>
Bond holdings at year-end consist of-                     2003              2002                2001
                                                         ------            ------              ------
<S>                                                      <C>              <C>                 <C>
St. Lucie Co., FL Subordinated Revenue Bonds:
         Maturity   7/1/2036                            $2,325,000        $2,325,000         $2,325,000
         Maturity 10/1/2036                              2,700,000         2,700,000          2,700,000
Undivided 50% interest sold to investor                 (2,512,500)       (2,512,500)              -0-
                                                        -----------      -----------        ------------
Net investment in St.Lucie Co., FL bonds                 2,512,500        2,512,500           5,025,000
                                                        -----------      -----------        ------------
Largo, FL Subordinated Revenue bonds:
            Matures 10/1/2033                            2,500,000              -0-                -0-
Undivided interest sold to investors                    (1,225,000)             -0-                -0-
                                                        -----------      -----------        ------------
Net investment in Largo, FL bonds                        1,275,000              -0-                -0-
                                                        -----------      -----------        ------------
Local Church Bonds, maturing 2002 & 2003                       -0-            58,750            147,500
Cost and fair value of bond holdings                     3,787,500         2,571,250          5,172,500
Accrued interest receivable                                213,833           162,912            147,614
                                                        -----------      -----------        ------------
                                                        $4,001,333        $2,734,162         $5,320,114
                                                        ==========        ==========         ==========
</TABLE>

The bonds are not traded on an exchange; however, management estimates, based on
discounted expected cash flows, that the fair value of the individual securities
approximates  their original cost.  Accordingly,  no unrealized holding gains or
losses have been recorded in 2003, 2002, or 2001.

Proceeds  from the sale of  undivided  interests  and the maturity of bonds were
$1,283,750, $2,601,250 and $126,000 for the years ending December 31, 2003, 2002
and 2001, respectively. No realized gains or losses were recognized in any year.
The Company uses the specific  identification method to determine realized gains
and losses.

In 2002, an opportunity to utilize a major investor's funds resulted in the sale
of an  undivided  50%  interest  in the St.  Lucie  County,  Florida  bonds  for
$2,512,500.  The Company  reinvested  the funds from this sale in a loan,  which
management believes will provide greater long-term returns than the bonds. Since
these  bonds were  classified  as "held to  maturity"  securities,  and the sale
occurred for reasons not allowed under SFAS No. 115, all of the  Company's  bond
holdings with a cost of $5,110,500 were  transferred  from "held to maturity" to
"available  for sale"  securities.  No realized or  unrealized  holding gains or
losses were recognized as, when transferred,  the cost of the bonds approximated
their fair value.  The Company is  classifying  all future  bonds  purchased  as
"available for sale" securities.

Tax-free interest income was $274,095, $407,903 and $144,448 for the years ended
December 31, 2003, 2002 and 2001, respectively.

NOTE 10 - INCOME TAXES

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

                                              2003         2002         2001
                                            ---------    ---------    ---------
Deferred tax assets                         $ 196,917    $ 286,787    $ 277,419
Deferred tax liabilities                     (368,360)     (12,554)     (33,941)
                                            ---------    ---------    ---------
Net deferred tax (liability) asset          ($171,443)   $ 274,233    $ 243,478
                                            =========    =========    =========

The deferred tax  liabilities  result from the use of  accelerated  depreciation
methods for property and equipment and from using the installment method for tax
accounting.  The deferred tax assets result from tax versus financial  reporting
differences in accounting for allowance for loan losses and from  differences in
the  amortization of debt issue and start-up costs.  The Company  estimates that
future  taxable  income will be  sufficient  to realize the deferred tax assets;
therefore,  no  valuation  allowance  was  provided for as of December 31, 2003,
2002, and 2001.

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

                                                                            F-13
<PAGE>

Components  of the income tax  provision
(benefit) for the years ended December 31:

                                            2003             2002         2001
                                         ----------      ---------      --------
         Current:   Federal              ($332,464)      $ 108,308      $ 33,122
                     State                 (25,946)         19,240        13,249
         Deferred:  Federal                404,711          (2,840)        9,450
                     State                  40,965            (504)       1,668
                                         ----------      ---------      --------
                                          $ 87,266       $ 124,204      $ 57,489

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

                                                 2003        2002        2001
                                                ------      ------      ------
Statutory federal rate                            35.0%       35.0%       35.0%
Effect of graduated federal rates                 (3.1%)      (1.0%)      (3.9%)
State taxes, net of federal benefit                3.7%        3.7%        3.7%
Effect of tax-free bond interest income          (16.5%)     (20.6%)     (16.1%)
Other, net                                        (3.7%)       (.2%)        .2%
                                                ------      ------      ------
Effective tax provision (benefit) rate            15.4%       16.9%       18.9%

NOTE 11 - CASH CONCENTRATION

A cash  concentration  risk arises when the Company has more cash in a financial
institution than is covered by federal deposit insurance.  At December 31, 2003,
the Company had cash in excess of insured limits totaling $3,933,278.

NOTE 12 - INVESTOR CERTIFICATES

The Company has three types of certificates outstanding:

Access  certificates have no stated maturity and are due on demand.  The minimum
investment  amount is $100.  The  interest  rate is  determined  by the Board of
Directors  each quarter.  The directors may change the rate between  quarters if
market  conditions  warrant  such a change.  The  current  interest  rate is 5%.

Graduated  certificates  can be  redeemed  yearly  and have a five year  maximum
maturity.  The minimum  investment  amount is $500.  The interest rate increases
based on the length of time that the certificate is outstanding.  Currently, the
rate starts at 7% and increases .5% for each year the certificate is outstanding
with a 9% maximum rate.

Five year certificates have a five year maturity and a $500 minimum  investment.
The interest rate is 9%.

The certificates are not  collateralized and no sinking fund is required to fund
redemptions at maturity.  All of the certificates  have been registered with the
Securities and Exchange Commission under the Securities Act of 1933.

Five year  schedule of principal  maturities  for  certificates  outstanding  at
December 31:

Years to Maturity            2003                  2002                2001
------------------        ----------            ----------           ---------
On demand & 1 year        $9,672,380          $ 12,588,839         $ 8,886,314
2                          4,862,922               838,115           5,015,552
3                         10,803,667             4,938,456           2,955,225
4                         35,717,731            10,941,275           7,929,711
5+                        18,172,501            35,902,441           9,818,153
                          ----------            ----------           ---------
Total Principal          $79,229,201          $ 65,209,126        $ 34,604,955
                         ===========          ============        ============


                                                                            F-14

At December 31, 2003, 2002 and 2001,  accrued  interest  payable was $5,333,444,
$2,711,256  and  $3,038,778,   respectively.  Interest  rates  for  certificates
outstanding at December 31, 2003 are:

5.0%              $ 2,409,368
7.0%                3,123,843
7.5%                4,078,804
8.0%                  388,319
9.0%               69,228,867

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

On April 29, 2003 the Company filed a Form SB-2 Registration Statement under the
Securities Act of 1933 with the Securities and Exchange Commission to sell up to
$40,000,000 of its  Certificates of Indebtedness  along with  $11,375,000 of its
Common Stock.  The  Registration  Statement is still in review by the Securities
and Exchange Commission staff.

NOTE 13 - MORTGAGE PARTICIPATION AGREEMENTS

In 2003, the Company began selling Mortgage Participation ("MP") Agreements. The
MP Agreements  have not been  registered  and  therefore,  are only available to
accredited  investors.  The agreements  are  collateralized  by specific  senior
housing  loans owned by the Company and entitle the investor to a  proportionate
share of the interest earned on the collateral.  Interest is paid monthly to the
MP  investor  after the  Company  receives  interest  payments  on  related  the
collateralized  loans.  The agreements have no stated  maturity date.  Principal
payments  are  made  when  the  Company  receives   principal  payments  on  the
collateralized  loans.  Losses that the Company may incur on the  collateralized
loans are shared  pro-rata  with the MP Agreement  holders.  The Company has the
right but not the  obligation to redeem the MP  Agreements  at any time.  The MP
Agreement  investors do not have the right to sell or repledge their interest in
the  underlying  collateral.  Interest  expense  related  to MP  Agreements  was
$325,992  for the year ended  December  31, 2003.  MP  Agreement  principal  and
interest outstanding and related collateral as of December 31, 2003:

<TABLE>
<CAPTION>

                                                              MP Amount               Total Collateral
                                                             Outstanding              Carrying Amount
                                                             -----------              ---------------
<S>                                                           <C>                          <C>
Lewisville, TX senior housing loan; matures 10/1/04
   with a one year extension at the Company's option          $3,687,750                   $10,032,824
Garland, TX senior housing loan; matures 12/1/04
   with a one year extension at the Company's option           2,396,500                   $ 5,795,349
                                                             -----------
Total principal outstanding                                    6,084,250
Accrued interest payable                                          48,559
                                                             -----------
                                                              $6,132,809
                                                              ==========
</TABLE>

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

NOTE 14 - LOAN GUARANTEES

At December 31, 2003 the Company was guarantor of $31,689,000 of potential loans
secured by  retirement  facilities  owned by non-profit  entities.  Certain real
estate joint venture  investments  and real estate  acquisition  and development
loans in which the borrower  chooses to secure  outside  financing may require a
Company  guarantee as a condition of the  extension of the loan by the financial
institution.  The  guarantee  is solely  limited to amounts  drawn under  credit
facilities  and only  covers  outstanding  principal  and accrued  interest  and
terminates upon maturity and principal  repayment.  At December 31, 2003, actual
amounts drawn and therefore guaranteed to a commercial bank totaled $28,007,042.
The guaranteed  loans mature between May 31 and November 18, 2004.  Only upon an
uncured payment default and upon demand by the financial  institution  would the
Company be required to perform  under its guarantee  obligations.  The Company's
recourse  would be limited to  repossession  of the  underlying  collateral  and
subsequent resale of the facilities. All of the loan guarantees originated prior
to December 31, 2002.  As of December 31, 2003,  all loans which had a guarantee
were  current  and no loan  guarantee  obligation  has  been  recognized  in the
financial statements.

                                                                            F-15
<PAGE>
NOTE 15 - PROFIT SHARING PLAN

During 2001,  the Company  established a Profit  Sharing Plan for its employees.
The Plan allows for entry into the plan after one year of service, and immediate
vesting  of  contributed  amounts.  All  contributions  are  to be  made  at the
discretion  of the Company  after  approval by the Board of  Directors.  For the
years ended December 31, 2003,  2002, and 2001 the Company elected to contribute
$65,220, $63,150 and $40,691, respectively.

NOTE 16 - BUILDING MORTGAGE

In  connection  with the  acquisition  of office space,  the Company  obtained a
mortgage  and pledged  the real  estate as  collateral.  The  mortgage  requires
monthly  principal and interest  payments of $2,068 with an annual interest rate
of 8.5%.  The loan matures on March 1, 2006, at which time a balloon  payment of
$158,637 will be required.  Estimated annual principle payments:  2004 - $9,861;
2005 - $10,733; 2006 - $159,600.

NOTE 17 - SERIES A CONVERTIBLE PREFERRED STOCK

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

During 2001, as part of the Company's  formation and initial  capitalization  of
Wellstone  Financial  Group,  LLC ("WFG"),  500 preferred shares with a value of
$500,000  were  issued to WFG in return for a 100%  ownership  interest  in WFG.
Since WFG is included in these  consolidated  financial  statements,  the shares
have been  eliminated  in  consolidation.  If the shares were  converted  at the
balance sheet date herein,  an additional 76,923 shares of Common Stock could be
issued; however, those shares would be eliminated in consolidation.

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

NOTE 18 - EARNINGS PER SHARE

Basic earnings per share have been calculated as follows:

2001              Net Income                           $247,120
----              Average Common Shares Outstanding     487,769
                  Earnings per Common Share               $0.51
2002              Net Income                           $612,608
----              Average Common Shares Outstanding     529,833
                  Earnings per Common Share               $1.16
2003              Net Income                           $478,880
----              Average Common Shares Outstanding     521,782
                  Earnings per Common Share               $0.92

Diluted  earnings  per share are the same as basic  earnings  per share  because
there are no shares of Series A Convertible  Preferred Stock  outstanding  after
elimination of the shares owned by Wellstone  Financial Group, LLC (a 100% owned
subsidiary) in these consolidated financial statements.  Other than the Series A
Convertible Preferred Stock, there are no other potentially dilutive securities,
stock options or warrants outstanding.

                                                                            F-16
<PAGE>
NOTE 19 - MAJOR CUSTOMERS

The  Company  received  more than 10% of its total  revenue  for the year  ended
December 31, 2003 from the following customers:

<TABLE>
<CAPTION>
                                  Amount        %        Description of Revenue Received
                                  ------        -        -------------------------------
<S>                              <C>          <C>       <C>
Senior Housing Services, Inc.    $5,596,744   51.2%     Interest, fees, and loan participation income
                                                        from real estate joint venture investments
Wellstone Housing Corp.           1,934,416   17.7%     Interest and fees from family housing
                                -----------   -----     development loans
                                 $7,531,160   68.9%
</TABLE>

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

NOTE 20 - MATERIAL FOURTH QUARTER CHARGE

During the fourth quarter of 2003, the Company  increased its allowance for loan
losses and charged  $375,000 to loan loss  expense.  This charge  decreased  net
income after taxes by $233,475  and earnings per common share by $.45.  Prior to
this quarter, the Company had never recognized an allowance for loan loss.

Refer to Note 1 for the Company's accounting policy regarding allowance for loan
losses and Note 6 for additional  disclosures related to allowance for loan loss
activity in 2003.

NOTE 21 - FINANCIAL INSTRUMENTS

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

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

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

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

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

The estimated fair values of the Company's financial instruments at December 31,
2003 are:

                                                Carrying Amount       Fair Value
                                                ---------------       ----------
Financial assets:
  Cash and cash equivalents                       $ 4,389,851        $ 4,389,851
  Bond holdings                                   $ 3,787,500        $ 3,787,500
Financial liabilities:
  Investor certificates                           $79,229,201        $79,229,201
  Mortgage participations                         $ 6,084,250        $ 6,084,250
  Building mortgage                               $   180,194        $   180,194
  Capital lease obligation                        $    13,632        $    13,632

                                                                            F-17