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Church Bond Risks

Church Bonds, like any other investment, contain risks that are important to consider before you invest. The North American Securities Administrator's Association ("NASAA") is an organization represented by the state securities administrators or departments in the 50 states of America. In 2002, NASAA issued a Statement of Policy for Church Bonds covering guidelines for issuing Church Bonds that includes the basic risk factors required to be disclosed in any Church Bond offering document or prospectus. Please bear in mind each Church Bond offering is unique and, more often than not, contain additional risks not mentioned here. Please read any prospectus carefully before investing.

Can Church Bonds Be Sold Prior to Maturity

To purchase Church Bonds from clients prior to maturity into our inventory, we are required to maintain higher cash reserves than firms who cannot offer this service. Although we have provided this service to clients for years and intend to continue, we are not market-makers and may discontinue this service at anytime without notice. We always advise our clients to purchase Church Bonds with the intent of holding them until maturity. However, many times unforeseen events occur in our lives forcing us to sell some investments to raise cash.* At Great Nation, we understand.

Risk Factors

Source of Repayment

There is no assurance the membership of a Church will increase or remain stable, or that the per capita contributions of its members will increase or remain stable. The receipts of a Church and, accordingly its ability to repay the principal and interest upon the bonds, is primarily dependent upon the weekly contributions of Church members and friends. Due to population shifts, an unexpected departure of the pastor and/or other factors, there is no assurance that these contributions will continue in sufficient amounts for a Church to repay the principal and interest upon the bonds when due. In such an event, it would be necessary for a Church to either (a) increase its revenues, or (b) decrease its expenditures which may require the discontinuation of some of its ministries. There is no assurance a Church would be able to increase its revenues.

Dependence Upon Pastor

The intention of the Senior Pastor is to remain with the Church indefinitely. However, should the Senior Pastor leave the Church, it could affect attendance and/or the revenues of the Church, making it difficult to meet all expenses and programs currently financed including the payment of principal and interest upon the bonds offered.

Financial Statements

Audited financial statements are audited by an independent Certified Public Accountant ("CPA") in accordance with accounting principles generally accepted in the United States of America. Reviewed financial statements are reviewed by an independent CPA from records maintained on the accrual basis. Consequently, certain revenues are recognized when earned rather than when received and certain expenses and purchases of assets are recognized when the obligation is incurred. Financial statements prepared on this basis of accounting are intended to present financial position and results of operations in accordance with accounting principles generally accepted in the United States of America, though there can be no assurance that such financial statements are presented fairly in conformity with generally accepted accounting principals. Financial statements that have been reviewed or compiled are not subjected to all the tests and verifications generally conducted in connection with an audit; consequently, no opinion or other assurance of accuracy is given by the independent CPA in connection with such statements.

Security Upon the Bonds

The total value of the security for payment of bonds of an offering is based primarily upon a Market Value appraisal of the land, improvements and/or proposed improvements as shown under "Security for Payment of Bonds" in the prospectus. In the event of default, due to the special or single purpose use of the property securing the payment of the bonds, there is no assurance that the facilities and land could be sold for the value(s) stated.

Additional Indebtedness

As provided in the Trust Indenture, a Church may attempt to obtain additional loans, including short-term interim loans from a third party lender or lenders, or a church may issue additional bonds ("Additional Debt"). See "Additional Bond Issues/Additional Indebtedness" in the prospectus. In such case, the Additional Debt may be secured by a mortgage lien against the property of the Church on an equal basis with bonds issued by a Church. Should a Church obtain additional loans, such loans may have an adverse effect on the Church's ability to repay the bonds.

Bonds Subject to Early Redemption

Bonds are subject to early redemption before maturity by the Church. The principal or face amount of any bond may be redeemed in whole or in increments of $250. Any accrued interest attributable to the bonds being redeemed shall also be paid on the date of redemption. Early redemption by a Church could affect the yield represented. Investors may request additional information from the Dealer.

Bond Sales

Bond offerings are made to the public through Dealer's registered representatives. Accordingly, the sale of all bonds offered may be dependent upon the efforts and ability of the Dealer which, in turn, is dependent upon the financial condition and continued regulatory compliance of the Dealer. Should Dealer fail to be able to successfully complete the sale of all the bonds offered, the Church would not receive proceeds from the offering sufficient to complete the undertakings as set forth under "The Purpose of the Offering and Use of Proceeds" in the prospectus.

Marketability of Bonds / Secondary Church Bond Transactions

A Church is under no obligation to redeem any bond before maturity. Church bonds are classified as non-marketable securities by the Securities and Exchange Commission ("SEC") under SEC rule 15c3-1(c)(2)(vii). However Dealer, as principal for its own account and not as a market maker, intends to conduct secondary church bond transactions for investors wishing to sell their bond prior to maturity. As a general rule, such quotation shall be marked-down five percent (5%) of the current value of the bond. Such mark-down could be higher or lower, depending upon market conditions, at the sole determination of Dealer. The current value of the bond could be materially, substantially and adversely affected depending upon prevailing market interest rates applicable to church bonds, availability of the payment history of the Church, material adverse changes in the Church's operations, or other factors at the time of the transaction. In the event of a bond traded "in default", the mark-down would be material and substantial. Dealer is under no obligation to purchase any bond offered for sale by an investor. Therefore, investors should only purchase bonds with the intent to hold them until the stated maturity.

Taxes on Bond Interest

Interest income on Church Bonds is subject to income taxes whether paid or accrued. Purchasers of bonds should consult their own tax advisors with respect to the particular consequences of holding the bonds including the applicability and effect of any state, local or federal tax laws to which they might be subject. See "Certain Tax Aspects" in the prospectus for more information. Purchase of Church Bonds cannot be claimed as a charitable deduction.

Exemption from Registration

Church Bond offerings are made in reliance upon an exemption from registration provided by Section 3(a)4 of the Securities Act of 1933, as amended, and similar exemptions from registration provided for under applicable states' securities laws. Churches normally do not receive an opinion of counsel regarding the availability of such exemptions. If it is subsequently determined than any such exemptions are not available for any reason, substantial liability could accrue to a Church, its officers and directors for securities law registration violations which, in turn, could have a substantial adverse effect upon the ability of a Church to repay the principal and interest on the bonds.

Mitigating Circumstances

There may be factors which could reduce; (1) the ability of a Church to complete the offering, (2) the ability of a Church to pay the interest and principal upon the bonds, or (3) the value of the property securing the payment upon the bonds. Potential mitigating circumstances include, but are not limited to, changing economic patterns of the community, population change, possible strikes or acts of nature, possible delays in completion of construction due to shortages of materials, delays in obtaining necessary building permits, environmental regulations or fuel or energy shortages.