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CHURCH LOANS & INVESTMENTS TRUST

(A Real Estate Investment Trust)

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 – GENERAL

See Summary of Significant Accounting Policies in the Trust’s Annual Report on Form 10-K for a summary of the Trust’s significant accounting policies.

The unaudited condensed consolidated financial statements included herein were prepared from the books of the Trust in accordance with accounting principles generally accepted in the United States and reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results of operations and financial position for the interim periods. Such financial statements generally conform to the presentation reflected in the Trust’s Annual Report to Shareholders. The current interim period reported herein is included in the fiscal year subject to independent audit at the end of that year and is not necessarily an indication of the expected results for the fiscal year.

The consolidated financial statements include the accounts of Church Loans & Investments Trust and its wholly-owned subsidiary, ChurchLoans.com, LLC. All intercompany balances and transactions have been eliminated.

NOTE 2 - WEIGHTED AVERAGE INTEREST RATES

Weighted average interest rates and net interest rate margins at December 31, 2009 and 2008, were as follows:

NOTE 3 - CONTRACTUAL MATURITIES

Scheduled principal payments on mortgage loans, church bonds and interim construction loans and indebtedness (including notes payable) outstanding at December 31, 2009, for the five twelve-month periods subsequent to December 31, 2009, follow:

NOTE 4 - MORTGAGE LOANS, CHURCH BONDS AND INTERIM CONSTRUCTION LOANS

Mortgage loans, church bonds and interim construction loans on which the accrual of interest had been discontinued amounted to $9,271,975 and $6,769,247 at December 31, 2009 and 2008, respectively. If interest on these mortgage loans, church bonds and interim construction loans had been accrued as earned, interest and fees on loans in the accompanying condensed consolidated statements of income would have been increased by approximately $812,000 and $468,000 for the nine-month periods ended December 31, 2009 and 2008, respectively. Interest income actually recognized on such loans during 2009 and 2008 was approximately $169,000 and $176,000, respectively. In addition, impaired loans were approximately $12,330,000 and $12,710,000 at December 31, 2009 and March 31, 2009, respectively.

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CHURCH LOANS & INVESTMENTS TRUST

(A Real Estate Investment Trust)

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 5 – NEW ACCOUNTING PRONOUNCEMENTS

In May 2009, the FASB issued guidance on management’s assessment of subsequent events.  This guidance is directed specifically to management, since management is responsible for preparing an entity’s financial statements. The guidance clarifies that management must evaluate, as of each reporting period, events or transactions that occur after the balance sheet date through the date that the financial statements are issued.  The guidance is effective prospectively for interim and annual financial periods ending after June 15, 2009, and the Company has adopted the provisions for its reporting period ending December 31, 2009.  The adoption of this new guidance did not have a material impact on the Company’s financial condition or results of operations.  Management has evaluated subsequent events up through the date of the filing of this report with the SEC.

In July 2009, the FASB issued guidance providing for the FASB Accounting Standards Codification (the “Codification”) to become the single official source of authoritative GAAP.  The Codification did not change GAAP but reorganizes the literature.  Adoption of the new guidance did not materially impact the Company’s financial statements. 

NOTE 6 – LEGAL CONTINGENCIES

Various legal claims arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Trust's financial statements.

This information is an integral part of the accompanying condensed consolidated financial statements.

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Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS DISCLOSURE

This Annual Report includes forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact made in this discussion are forward-looking, which can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. The forward-looking statements are based upon management’s current plans and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including:

As noted above and in Table 6, we increased the allowance for credit losses during the nine-month period ended December 31, 2009 by $635,000. This increase was offset by a charge off of $450,000 as of December 31, 2009 relating to the loan to Ministerio International, Virginia Gardens, FL (see note (8) to Table 4 above).

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As of December 31, 2009, Church Loans also held church bonds with a carrying value of $58,933 which were in default.

The weighted average interest rate on our loans and church bonds decreased from 7.72% as of December 31, 2008 to 6.88% as of December 31, 2009. This decrease in the weighted average interest rate on our loans limited the increase in interest income which resulted from the increase in performing loans during the nine-month period ended December 31, 2009 as compared to the nine-month period ended December 31, 2008.

Commitment fees earned during the nine-month period ended December 31, 2009 were $590,652 as compared to $464,120 for the nine-month period ended December 31, 2008, an increase of $126,532 or 27%.  

Net income for the nine-month period ended December 31, 2009 was $1,919,783 ($.19 per share), a decrease of $1,022,003 (35%) compared to the nine-month period ended December 31, 2008. This decrease was primarily attributable to the decrease in net interest income, the increase in the provision for credit losses and an increase in general and administrative expenses.

Net interest income decreased from $3,724,906 for the nine-month period ended December 31, 2008 to $3,634,370 for the nine-month period ended December 31, 2009, a decrease of $90,536 (2%). This decrease in our net interest income for the nine-month period ended December 31, 2009 as compared to the nine-month period ended December 31, 2008 was the result of an increase in our interest expense which exceeded the increase in our interest income.

Our total liabilities increased from $39,361,500 as of December 31, 2008 to $59,983,291 as of December 31, 2009. The weighted average interest rate on our debt increased from 2.86% as of December 31, 2008 to 3.74% as of December 31, 2009. Our interest expense increased from $988,567 for the nine-month period ended December 31, 2008 to $1,427,123 for the nine-month period ended December 31, 2009, an increase of $438,556 or 44%. This increase is attributable to the increase in debt and the increase in the weighted average interest rate on our debt.

The following table illustrates the average month end liabilities during the nine-month period ended December 31, 2009 as compared to the same period ended December 31, 2008:

Table 7 - Month End Total Liabilities for Each Month in the Nine-month Period Ended December 31, 2009 and December 31, 2008

The following table provides a schedule of maturity dates and the principal amounts maturing for our debt:

Table 8 - Maturity Dates of Month End Liabilities for Each Month in the Nine-month Period Ended December 31, 2009

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General and administrative expenses increased from $746,122 for the nine-month period ended December 31, 2008 to $1,052,730 for the nine-month period ended December 31, 2009, an increase of $306,608 or 41%.  

The increase in general and administrative expenses is primarily attributable to the legal, accounting and expert fees related to the contemplated “going private” transaction, payments characterized as contract labor which are payments under the severance agreement entered into with a former employee, higher payroll expenses and legal fees incurred for collection efforts on past due loans.

Other income decreased from $116,202 for the nine-month period ended December 31, 2008 to $38,843 for the nine-month period ended December 31, 2009, a decrease of $77,359.  

As of December 31, 2009, there were 10,217,094 shares of certificates of beneficial interest outstanding. Net income per share decreased from $.29 per share for the nine-month period ended December 31, 2008 as compared to $.19 per share for the nine-month period ended December 31, 2009. This decrease was attributable to the decrease in our net income discussed above.  

Results of Operations—Three-month period ended December 31, 2009 as compared to three-month period ended December 31, 2008

During the three-month period ended December 31, 2009, interest income and fees increased by $280,652 (18%) over the three-month period ended December 31, 2008.   

The components of our interest income and fees during the three-month period ended December 31, 2009 as compared to the three-month period ended December 31, 2008 are as follows:

Table 9 – Interest Income and Fees

Interest income on mortgage loans increased from $1,096,432 during the three-month period ended December 31, 2008 to $1,195,803 during the three-month period ended December 31, 2009, an increase of $99,371 (9%). Interest income on interim loans increased from $200,201 during the three-month period ended December 31, 2008 to $324,813 for the three-month period ended December 31, 2009, an increase of $124,612 (62%).   

Commitment fees earned during the three-month period ended December 31, 2008 as compared to December 31, 2009 increased from $230,142 to $276,693 an increase of $46,551 or 20%.  

The increase in interest income and fees for the three-month period ended December 31, 2009 as compared to the three-month period ended December 31, 2008 is attributable to the increase in our portfolio of both mortgage loans and interim loans.

Our net income for the three-month period ended December 31, 2009 was $563,194 ($.06 per share), a decrease of $578,963 (51%) as compared to the three-month period ended December 31, 2008. This decrease was attributable to an increase in our interest expense, an increase in the provisions for credit losses and an increase in general and administrative expenses.  

The increase in interest income and fees for the three-month period ended December 31, 2009 as compared to the three-month period ended December 31, 2008 was significantly offset by an increase in interest expense.  Interest

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expense for the three-month period ended December 31, 2008 was $272,110 as compared to $525,726 for the three-month period ended December 31, 2009, an increase of $253,616 or 93%.  

The increase in interest expense was attributable to an increase in debt and higher interest rates on such debt. See Table 7 above for the month-end liabilities for each of the three months during the three-month periods ending December 31, 2009 and 2008, respectively.

The weighted average interest rate on all of our debt for each of the three months during the three-month periods ending December 31, 2009 and 2008 is as follows:

Table 10 – Weighted Average Interest Rates on All Debt for Each of the Months During the Three-Month Period Ending December 31, 2009 and December 31, 2008, Respectively

Therefore, even though interest income increased significantly during the three-month period ended December 31, 2009 as compared to the three-month period ended December 31, 2008, as a result of the significant increase in interest expense, net interest income increased only slightly from $1,288,046 for the three-month period ended December 31, 2008 to $1,315,082 for the three-month period ended December 31, 2009, an increase of $27,036 (2%).  

Other income decreased from $97,076 for the three-month period ended December 31, 2008 to $7,035 for the three-month period ended December 31, 2009, a decrease of $90,041.  Other income from the three-month period ended December 31, 2008 included at $76,076 gain on sale of other real estate owned.

General and administrative expenses increased from $222,565 for the three-month period ended December 31, 2008 to $441,623 for the three-month period ended December 31, 2009, an increase of $219,058 or 98%. This increase is primarily attributable to an increase in payroll, contract labor attributable to severance payments paid to a former employee, legal, accounting and expert fees attributable to the contemplated “going private” transaction and legal fees incurred in collection of defaulted loans.

Net income for the three-month period ended December 31, 2009 was diminished by an addition to the provision for credit losses recognized versus none in the 2008 period.

As of December 31, 2009, 10,217,094 shares of certificates of beneficial interest were outstanding. Net income per share decreased from $.11 per share for the three-month period ended December 31, 2008 to $0.06 per share for the three-month ended December 31, 2009. This decrease was attributable to the decrease in net income discussed above.

Financial Condition—Nine-month period ended December 31, 2009 as compared to year ended March 31, 2009.

Our portfolio of performing mortgage loans and church bonds increased from $55,512,158 as of March 31, 2009 to $60,886,334 as of December 31, 2009. Our portfolio of performing interim loans increased during the nine-month period ended December 31, 2009 from $16,686,014 to $21,029.027. Mortgage loans, interim loans and church bonds, including non-performing mortgage loans, church bonds and interim loans, held by us increased from $78,945,652 as of March 31, 2009 to $91,187,336 as of December 31, 2009, an increase of $12,241,684 (16%).

Nonperforming mortgage loans, church bonds and interim loans increased from $6,747,480 as of March 31, 2009 to $9,271,975 as of December 31, 2009. Total performing mortgage loans, church bonds and interim loans increased from $72,198,172 as of March 31, 2009 to $81,915,361 as of December 31, 2009, an increase of $9,717,189. Consistent with the increase in loans, total assets increased from $78,315,575 as of March 31, 2009 to $90,551,701 as of December 31, 2009, an increase of $12,236,126 (16%). Impaired loans were approximately $12,330,000 at December 31, 2009 as compared to approximately $12,710,000 at March 31, 2009.

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Our liabilities increased from $47,214,845 as of March 31, 2009 to $59,983,291 as of December 31, 2009.

Shareholders’ equity decreased by $532,320 from March 31, 2009 to December 31, 2009. This is attributable to the decrease in undistributed net income from $1,354,929 as of March 31, 2009 to $822,609 as of December 31, 2009. Contributing to this decrease in undistributed net income is the declaration of a dividend of $.18 per share ($1,837,513) as of December 31, 2009.

Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet potential cash requirements, including the repayment of borrowings by us, fund loan commitments, maintain investments and meet our general business expenses and needs. Additionally, to maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT taxable income.

We are engaged primarily in the business of making permanent and interim loans to churches and other non-profit organizations, and to other borrowers, including businesses engaged in the building and operation of assisted living centers. Our assets primarily consist of our loan portfolio, real estate acquired through foreclosure and our office building and facilities.  

Our operating expenses are comprised of the maintenance of our office building, the payment of the salaries of our management and support staff, office expenses, fees paid to the Board of Trust Managers, and the payment for legal and accounting services. Substantially all of our assets are invested in the permanent and interim loans. Our only potential liquidity problems relate to the timely and proper repayment of the leveraged funds we have borrowed to make loans in excess of our capital and the ability to fund outstanding loan commitments which totaled approximately $7,247,455 at December 31, 2009.  

Our primary sources of funds for liquidity consist of cash reserves, net cash provided by operations, payments received from the loans comprising our loan portfolio, and funds available through debt financing, including our line of credit agreement with the Amarillo National Bank.

Our level of liquidity based upon cash and cash equivalents increased by $15,356 during the nine-month period ended December 31, 2009 leaving us with cash and cash equivalents of $131,050 as of December 31, 2009. During this same period, we invested $32,249,952 in mortgage and interim construction loans using net cash provided by operating activities in the amount of $2,370,498, principal payments received on our loan portfolio in the amount of $19,723,080, and $35,320,683 in borrowing on master notes and our line of credit. The total liquidity available to invest in mortgage and interim construction loans was reduced by $613,026 paid in cash dividends during the nine-month period ended December 31, 2009 and the reduction in our borrowings on our bank line of credit and Master Note agreements in the amount of $24,535,927.

Our primary debt obligations consist of our bank line of credit owing to Amarillo National Bank and Master Note Agreements with various persons. Pursuant to our January 31, 2009 loan agreement with the bank, we have a $49,000,000 line of credit for a term of three years, maturing January 31, 2012.  This agreement was increased to $60,000,000 effective January 1, 2010 and the term lengthened to December 31, 2012

As of December 31, 2009, our total liabilities outstanding were $59,983,291.  The amount owing on the line of credit as of December 31, 2009 was $36,671,700. It is anticipated that the line of credit will be renewed at the expiration of its three-year term. In the event that the bank elects not to renew the line of credit, we may, under the terms of the loan agreement, retire the line of credit over a period of time, not to exceed five years, equal to the weighted average remaining term of a pool of our real estate lien notes which would be pledged to secure the remaining balance of the bank line of credit.

As of December 31, 2009, pursuant to the credit agreement with Amarillo National Bank dated January 31, 2009, Church Loans has one note owing to Amarillo National Bank. The interest rate on this credit facility adjusts in accordance with the lesser of the 30-day, 90-day or 180-day London Interbank Offered Rates (“LIBOR”) plus 2.50% or the J.P. Morgan Chase & Co. prime rate as selected on the applicable adjustment dates by Church Loans and with an interest rate floor of 4%. As of December 31, 2009, the balance owing on this note was $36,671,000. The note owing to Amarillo National Bank made pursuant to a Loan Agreement was entered into with the bank effective January 31, 2009 (“the 2009 Loan Agreement”) for a term of three years ending January 31, 2012. The rate of interest owing on the obligation owing to the bank as of December 31, 2009 was 4.0%, not including the non-use fee.

The amounts owing to Amarillo National Bank are secured by the portfolio of loans held by Church Loans.  Church Loans may borrow up to $49,000,000 pursuant to the 2009 Loan Agreement subject to a borrowing base calculation

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limit equal to 85% of the principal balance outstanding of the performing mortgage loans and church bonds held by Church Loans and 50% of the principal balance outstanding of the performing interim loans held by Church Loans. Pursuant to that borrowing base calculation, Church Loans, as of December 31, 2009, could borrow up to the entire $49,000,000 line of credit.  

Pursuant to the loan agreement with Amarillo National Bank, we must also maintain stockholder’s equity of not less than $18,000,000, our total indebtedness shall not exceed 250% of our stockholder’s equity and the ratio of earnings before deduction of interest and taxes as compared to interest expense shall not be less than 1.2. As of December 31, 2009, we were in compliance with these requirements.

At December 31, 2009, loans to us under Master Note Agreements, which are in effect demand notes, totaled $20,991,192.  As of December 31, 2009, Church Loans had 86 Master Note Agreements with 38 different unrelated parties.  The rate of interest on these Master Notes is at the Wall Street Journal prime rate of interest less 1.25% with an interest rate floor of 3% effective as of February 1, 2009. As of December 31, 2009, the rate of interest on these Master Notes was 3.00%. All of these Master Notes are due on demand except that without the consent of Church Loans a noteholder may not demand payment of more than $250,000 during any 30 day period. These Master Notes are unsecured.

The loan agreement with Amarillo National Bank does provide that it is an event of default under such agreement if Church Loans defaults in the payment of any other indebtedness. Therefore, a default by Church Loans in the payment or performance of a Master Note would be a technical event of default in Church Loans’ agreement with the bank.

In the past, we have utilized our bank line of credit and the principal paid to us upon our outstanding loan portfolio in order to meet our maturing obligations.

Although our cash and cash equivalents as of December 31, 2009 were only $131,050, the balance which could be borrowed by us upon our bank line of credit as of December 31, 2009 was $12,328,300. The principal payments scheduled to be received on our loan portfolio for the fiscal year ending December 31, 2010 are $27,461,475. Assuming all of these scheduled principal payments are received, these payments, together with the balance available to us on our bank line of credit, would not provide us with sufficient funds to meet our maturing obligations and fund loan commitments without the necessity of borrowing funds from other sources. Based upon our success in obtaining borrowings in the past, we are confident that, should it be necessary, we will be able to obtain additional bank financing in the future in sufficient amounts for us to timely meet all of our obligations.

Should all the scheduled principal payments upon loans not be received, and should we be unable to borrow against our line of credit, and should borrowings from other sources not be available, it would be necessary to sell a portion of our mortgage loan portfolio in order to meet all of our financial obligations.  At December 31, 2009, the principal balance of our loan and church bond portfolio was $91,187,336, net of unamortized purchase discounts and deferred commitment fees. The weighted average interest rate on loans and church bonds was 6.88% per annum. In view of the normal marketability of conventional loans, we might be required to discount a majority of these loans in order for them to be attractive for purchase. The principal amount of these loans if discounted to yield a weighted average interest rate of 8%, 10% and 12% would be $78,421,113, $62,736,890, and $52,280,742, respectively. There is no assurance that we would be able to sell all, or a portion of, our portfolio of loans, in which event, it would be necessary to secure a loan, or loans, from a lender in order to meet our financial obligations. There is no assurance that we would be able to secure a loan in such instance. We have sold only one of our loans in our mortgage loan portfolio and, therefore, have limited experience in this area. Furthermore, if required to discount our loans in excess of 10.5%, then we would not realize sufficient funds from the sale of the loans to retire all of our debt.

Principal payments scheduled to be received upon our permanent loan portfolio during the twelve-month period ending December 31, 2010, if not used to fund new loan commitments, would be used to reduce our outstanding indebtedness. Should we use the payments of principal which shall be received upon our loan portfolio to reduce our outstanding indebtedness, our interest expense will decrease. In such instance, whether the decrease in the interest income will exceed, or be less than, the decrease in the interest expense will largely be dependent upon the prime rate of interest prevailing at such time due to the fact that the interest to be earned upon our mortgage loan portfolio is generally based upon a fixed rate of interest or a variable rate of interest that periodically reprices, while the interest to be paid upon our outstanding debts is directly, or indirectly, tied to the prime rate of interest charged by major banks.

Pursuant to the loan agreement with the bank, we have pledged all of our mortgage loans, church bonds and interim construction loans to the bank to secure the line of credit. The amount owing on the line of credit must not exceed an amount equal to 85% of the outstanding principal amount of the performing mortgage loans and church bonds and 50% of the outstanding principal amount of the performing interim construction loans. Applying that borrowing limit to

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our loan portfolio as of December 31, 2009, we can borrow up to the entire $49,000,000 line of credit limit. However, during the term of the loan agreement, we would not have the right to sell our loans, without the bank’s consent, since all of our loans have been pledged to the bank to secure the line of credit. Therefore, under our loan agreement, it will be very difficult, if not impossible, to sell our loans to meet our financial obligations.

Cash flows from operating activities consist primarily of net income. The primary components of net income are interest income and expense. Interest income should continue to be the main source of cash provided by operating activities; however, the availability of this cash flow is dependent upon the ability of the borrowers to repay loans. Cash provided by operating activities has been and is expected to be a relatively stable source of cash flow.

Cash flows from investing activities results primarily from investment in and payments received on mortgage and interim construction loans and church bonds.

Cash flows from financing activities relate primarily to the borrowings and payments on notes payable and the line of credit. Borrowings are made as funds are needed to make loans or as current obligations become due. Based upon our success to obtain borrowings in the past, we are confident that we will be able to obtain borrowings in the future in sufficient amounts, along with payments to be received on loans, to timely meet our obligations.

Inflation

At December 31, 2009, the weighted average interest rate on our mortgage loan and church bond portfolio was 6.88% per annum while the weighted average interest rate upon all our borrowings was 3.74% per annum resulting in a net interest rate margin of 3.14%. By comparison, as of December 31, 2008, the weighted average interest rate on our mortgage loan and church bond portfolio was 7.72% per annum while the weighted average interest rate on our borrowings was 2.86% per annum resulting in a net interest rate margin of 4.86% per annum. Therefore, our net interest rate margin has decreased by 172 basis points as of December 31, 2009 as compared to December 31, 2008. Although a majority of the loans constituting our loan portfolio have been made at rates of interest that generally reprice either daily, annually, or otherwise periodically, a portion of the loans constituting our loan portfolio have been made at fixed rates of interest and therefore are not subject to being increased or decreased during the term of the loan. All of our indebtedness is either directly or indirectly tied to the prime rate of interest charged by major banking institutions and, therefore, is subject to fluctuation.  

During periods of inflation, the prime rate of interest charged by major banking institutions, as well as the interest rate or cost of borrowing money from any lender, generally increases. Consequently, during an inflationary period our interest expense would increase. Since our interest income would not increase as rapidly, an increase in the interest expense would decrease our net income. However, interest income should subsequently increase as variable rate loans reprice.  

Should the amount of our loans and the amount of our indebtedness remain constant, and should the weighted average interest rate upon the indebtedness increase to approximately 10.5% per annum, interest income and interest expense would be substantially equal.  

Under the terms of the loan agreement with Amarillo National Bank, the interest rate on our line of credit adjusts in accordance with the lesser of the 30-day, 90-day or 180-day London Interbank Offered Rates (“LIBOR”) or the J.P. Morgan Chase & Co. prime rate, subject to an interest rate floor of 4%. The interest rate on our Master Note Agreements adjusts as and when the Prime Rate as published by the Wall Street Journal changes subject to a floor of 3%. Most of our loans are made on interest rates that are tied to the Prime Rate as published by the Wall Street Journal or a similar index used by major U.S. banking institutions. Therefore, our cost of funds should be tied to an index that is equal to or less than the index used to price our loan portfolio.

The loan agreement with Amarillo National Bank effective January 31, 2009 changed the index on the rate we pay on the line of credit from, at our option, either LIBOR plus 2.5% or the J. P. Morgan Chase prime rate. These indices are higher than under the previous loan agreement.  Additionally, the new loan agreement provides for an interest rate floor of 4% and a commitment fee equal to .25% of the average quarterly unadvanced portion of the loan commitment.  

Finally, effective February 1, 2009, we agreed to also place an interest rate floor of 3% on our Master Note Agreements. The interest rate floor on the Master Note Agreements was instituted in order to encourage the maintenance of this source of funds.

Off-Balance Sheet Arrangements  

We have no off-balance sheet arrangements or commitments other than our normal loan commitments.

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New Accounting Standards

We do not believe the adoption of any recently issued pronouncements by the Financial Accounting Standards Board will have a significant impact on our financial statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not required.

Item 4T.  Controls and Procedures.

We performed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 or 15d-15 as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures, as defined by Exchange Act Rules 13a-15(e) or 15d-15(e), were effective.  

Changes in Internal Control over Financial Reporting

There has not been any change in our internal control over financial reporting during our fiscal quarter ending December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1.  Legal Proceedings.

None

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.  Defaults Upon Senior Securities.

None

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

None

Item 5. Other Information.

None

Item 6. Exhibits

The Exhibits listed on the accompanying Index to Exhibits are filed as a part of this Quarterly Report.

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