CHRISTIAN FREEDOM INTERNATIONAL, INC.

Financial Statements For The Years Ended December 31, 2009 and 2008
and Independent Auditors’ Report
Dated April 8, 2010

HENDERSHOT, BURKHARDT & REED

CERTIFIED PULIC ACCOUNTANTS
7525 PRESIDENTIAL LANE, MANASSAS, VA 20109
TEL (703) 361-1592 FAX (703) 361-0836
 Christian Freedom International, Inc.
Table of Contents

Independent Auditors’ Report 1

Statements of Financial Position as of December 31, 2009 and 2008 2

Statement of Activities for the Year Ended December 31, 2009 3

Statement of Activities for the Year Ended December 31, 2008 4

Statements of Cash Flows for the Years Ended December 31, 2009 and 2008 5

Statement of Functional Expenses for the Year Ended December 31, 2009 6

Statement of Functional Expenses for the Year Ended December 31, 2008 7

Notes to the Financial Statements 8-10

i
 HENDERSHOT, BURKHARDT & REED
CERTIFIED PULIC ACCOUNTANTS
7525 PRESIDENTIAL LANE, MANASSAS, VA 20109
TEL (703) 361-1592 FAX (703) 361-0836

Independent Auditors’ Report

Board of Directors
Christian Freedom International, Inc.
Sault Sainte Marie, MI

We have audited the accompanying statements of financial position of Christian Freedom

International, Inc. (“the Organization”) as of December 31, 2009 and 2008, and the related
statements of activities, functional expenses, and cash flows for the years then ended. These
financial statements are the responsibility of the Organization’s management. Our responsibility
is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Christian Freedom International, Inc. at December 31, 2009 and 2008,
and its changes in its net assets and its cash flows for the years then ended in conformity with
generally accepted accounting principles of the United States of America.

Hendershot, Burkhardt & Reed, CPAs

April 8, 2010

1
 CHRISTIAN FREEDOM INTERNATIONAL, INC.
Statements of Financial Position
As of December 31, 2009 and 2008

2009 2008
ASSETS

Current Assets
Cash and Cash Equivalents $ 100,700 $ 102,704
Marketable Securities 342 825
Contributions Receivable, net of allowance 75,302 132,202
Prepaid Expenses and Other Assets 1,009 9,874
Research and Development Coffee - 5,000
Inventory 59,326 57,995
Total Current Assets 236,679 308,600

Fixed Assets
Furniture and Equipment 237,753 223,689
Vehicle 50,418 50,418
Building and Building Improvements 578,958 574,876
Motel and Improvements 277,517 147,000
Vocational Center 64,296 64,296
Leasehold Improvements - 15,969
Less: Accumulated Depreciation (269,229) (196,042)
Total Fixed Assets 939,713 880,206

Long Term Contribution Receivable, net 60,021 67,327

Total Assets $ 1,236,413 $ 1,256,133

LIABILITIES AND NET ASSETS

Liabilities

Current Liabilities
Accounts Payable and Accrued Expenses $ 83,210 $ 97,691
Notes Payable - Current 32,887 19,025
Total Current Liabilities 116,097 116,716

Long Term Liabilities

Notes Payable 554,409 617,305
Total Long-term Liabilities 554,409 617,305

Total Liabilities 670,506 734,021

Net Assets

Unrestricted Net Assets 372,067 35,159

Temporarily Restricted Net Assets 193,840 486,953
Total Net Assets 565,907 522,112

Total Liabilities and Equity $ 1,236,413 $ 1,256,133

See the accompanying Independent Auditors' Report and notes to the financial statements
2
 CHRISTIAN FREEDOM INTERNATIONAL, INC.
Statement of Activities
For the Year Ended December 31, 2009

Temporarily
Unrestricted Restricted Total

Revenues and Gains

Contributions $ 925,699 $ 101,823 $ 1,027,522

Micro Enterprise Sales 55,151 - 55,151
Motel Income 37,718 - 37,718
Miscellaneous Income 1,064 - 1,064
Unrealized Gain / (Loss) on Investment (483) - (483)
Gain / (Loss) on Sale of Asset (2,217) - (2,217)
Net Assets Released from Restrictions 394,936 (394,936) -

Total Revenues 1,411,868 (293,113) 1,118,755

Cost of Goods Sold 30,636 - 30,636

Gross Revenues 1,381,232 (293,113) 1,088,119

Expenses

Program Services 885,007 - 885,007

General and Administrative Expenses 123,099 - 123,099
Fundraising Expenses 36,218 - 36,218

Total Expenses 1,044,324 - 1,044,324

Change in Net Assets 336,908 (293,113) 43,795

Net Assets, Beginning of Year 35,159 486,953 522,112

Net Assets, End of Year $ 372,067 $ 193,840 $ 565,907

See the accompanying Independent Auditors' Report and notes to the financial statements
3
 CHRISTIAN FREEDOM INTERNATIONAL, INC.
Statement of Activities
For the Year Ended December 31, 2008

Temporarily
Unrestricted Restricted Total

Revenues and Gains

Contributions $ 859,421 $ 486,953 $ 1,346,374

Micro Enterprise Sales 64,919 - 64,919
Dividend and Interest Income 667 - 667
Miscellaneous Income 7,510 - 7,510
Net Assets Released from Restrictions 281,398 (281,398) -

Total Revenues 1,213,915 205,555 1,419,470

Cost of Goods Sold 27,579 - 27,579

Gross Revenues 1,186,336 205,555 1,391,891

Expenses

Program Services 896,947 - 896,947

General and Administrative Expenses 304,625 - 304,625
Fundraising Expenses 66,043 - 66,043

Total Expenses 1,267,615 - 1,267,615

Change in Net Assets (81,279) 205,555 124,276

Net Assets, Beginning of Year 116,438 281,398 397,836

Net Assets, End of Year $ 35,159 $ 486,953 $ 522,112

See the accompanying Independent Auditors' Report and notes to the financial statements
4
 CHRISTIAN FREEDOM INTERNATIONAL, INC.
Statements of Cash Flows
For the Years Ended December 31, 2009 and 2008

2009 2008
CASH FLOW FROM OPERATING ACTIVITIES

Change in Net Assets $ 43,795 $ 124,276

Adjustments to reconcile change in net cash

provided/(used) by operating activities:
Depreciation 86,937 46,877
Unrealized (Gains)/Losses on Investments 483 -
Loss on Disposal of Assets 2,217 -
(Increase)/Decrease in Contributions Receivables 64,207 (15,686)
(Increase)/Decrease in Prepaid Expenses and Deposits 8,866 (7,643)
(Increase)/Decrease in Research and Development Coffee 5,000 (5,000)
(Increase)/Decrease in Inventory (1,331) (17,862)
Increase/(Decrease) in Accounts Payable and Accrued Expenses (14,481) (121,999)

Net cash provided/(used) by operating activities 195,693 2,963

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (148,663) (286,126)

Net cash provided/(used) by investing activities (148,663) (286,126)

CASH FLOW FROM FINANCING ACTIVITIES

Increase/(Decrease) in Notes Payable (49,034) 276,330

Net cash provided/(used) by financing activities (49,034) 276,330

Net Increase/(Decrease) in Cash and Cash Equivalents (2,004) (6,833)

Cash and Cash Equivalents at Beginning of Year 102,704 109,537

Cash and Cash Equivalents at End of Year $ 100,700 $ 102,704

See the accompanying Independent Auditors' Report and notes to the financial statements
5
 CHRISTIAN FREEDOM INTERNATIONAL, INC.
Statement of Functional Expenses
For the Year Ended December 31, 2009

General and
Program Administrative Fundraising Total

Salaries and Wages $ 268,691 $ 21,212 $ 4,714 $ 294,617

Mission Support 163,068 - - 163,068
Depreciation 77,374 7,824 1,739 86,937
Printing and Publications 62,468 1,623 17,037 81,128
Travel 55,493 - - 55,493
Interest and Finance Expense - 44,462 - 44,462
Motel Expense 39,036 - - 39,036
Employee Benefits 30,696 3,104 690 34,490
Postage and Shipping 24,325 568 5,919 30,812
Professional Fees 14,202 15,337 210 29,749
Utilities 24,201 1,607 357 26,165
Office Expense 24,112 1,079 239 25,430
Consulting 19,561 5,133 711 25,405
Miscellaneous 13,421 8,269 104 21,794
Payroll Taxes 18,304 1,324 294 19,922
Insurance 10,453 1,057 235 11,745
Equipment Rental and Maintenance 9,839 949 211 10,999
Advertising 10,308 97 22 10,427
Computer Software 8,057 810 180 9,047
Bank Service Charges 825 7,441 - 8,266
Licenses and Taxes 502 1,003 3,512 5,017
Website 4,311 23 4 4,338
Dues and Subscriptions 2,321 112 25 2,458
Press Releases 1,764 - - 1,764
Rent 1,675 65 15 1,755

Total Expenses $ 885,007 $ 123,099 $ 36,218 $ 1,044,324

See the accompanying Independent Auditors' Report and notes to the financial statements
6
 CHRISTIAN FREEDOM INTERNATIONAL, INC.
Statement of Functional Expenses
For the Year Ended December 31, 2008

General and
Program Administrative Fundraising Total

Salaries and Wages $ 222,094 $ 78,309 $ 14,176 $ 314,579

Mission Support 232,906 - - 232,906
Printing and Publications 113,960 17,240 17,216 148,416
Travel 63,455 23,260 - 86,715
Professional Fees 21,887 44,847 - 66,734
Employee Benefits 46,402 16,360 2,962 65,724
Grants & Other Assistance 60,586 - - 60,586
Postage and Shipping 35,620 5,306 11,235 52,161
Depreciation 33,170 11,265 2,442 46,877
Interest Expense - 40,934 - 40,934
Payroll Taxes 19,077 6,726 1,218 27,021
Occupancy 18,778 5,851 1,269 25,898
Bank Service Charges - 19,531 - 19,531
Office Expenses 6,233 11,941 272 18,446
Supplies 2,295 6,475 7,630 16,400
Equipment Rental and Maintenance 8,616 1,754 2,995 13,365
Advertising 8,422 1,560 78 10,060
Licenses and Taxes 447 1,673 4,087 6,207
Website 739 4,648 305 5,692
Insurance 2,145 728 158 3,031
Moving Expense - 2,700 - 2,700
Miscellaneous 115 2,027 - 2,142
Dues and Subscriptions - 1,490 - 1,490

Total Expenses $ 896,947 $ 304,625 $ 66,043 $ 1,267,615

See the accompanying Independent Auditors' Report and notes to the financial statements
7