UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

Commission file number: 333-129919

True North Finance Corporation

(Exact name of small business issuer as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		20-3345780 (I.R.S. Employer Identification No.)

4999 France Avenue South, Suite 248
Minneapolis, Minnesota 55410
(Address of principal executive offices)

Issuer’s Telephone Number: (952) 358-6120

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: The number of shares outstanding of the Registrant’s Series A common stock and Series B common stock as of November 13, 2009, was 1,000,000, and 67,354,092, respectively, and the number of the Registrant’s preferred shares outstanding was 36,643.

Transitional Small Business Disclosure Format (check one): Yes o No þ

 

 

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			3
Balance Sheets			3
Statements of Operations			4
Statements of Stockholders’ Equity (Deficit)			5
Statements of Cash Flow			6
Notes to Financial Statements			7
Item 2. Management’s Discussion and Analysis or Plan of Operation			18
Item 3. Quantitative and Qualitative Disclosures about Market Risk			20
Item 4. Controls and Procedures			20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			21
Item 5. Other Information			21
Item 6. Exhibits			22
SIGNATURES			23
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

BALANCE SHEETS
(Unaudited)

		September 30, 2009				December 31, 2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	98,757			$	—
Interest receivable			319,374				—
Other current assets			750,387				—
Total current assets			1,168,518				—
Property and equipment			69,798				—
Investment in notes receivable, net of allowance of $663,735 as of September 30, 2009			7,730,983				—
Real estate held for sale			104,106,000				—
Other assets			786,346				—
Total assets		$	113,861,645			$	—
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	2,820,836			$	—
Current portion of notes payable			1,713,900				—
Other current payables			2,359,026				—
Total current liabilities			6,893,762				—
LONG TERM LIABILITIES
Notes payable			70,785,923				—
Deferred income taxes			2,738,837
Total liabilities			80,418,522				—
STOCKHOLDERS’ EQUITY
Preferred stock, $1,000 stated value, 50,000 shares authorized; 36,643 shares issued and outstanding			13,140,673				—
Preferred stock receivable 1,170 shares			(419,470	)
Common stock (Series A), $.01 par value, 1,000,000 shares authorized; 1,000,000 shares issued and outstanding			10,000				10,000
Common stock (Series B), $.01 par value, 150,000,000 shares authorized; 67,354,092 and 36,331,993 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively			673,541				363,320
Additional paid-in capital			15,486,644				—
Accumulated (deficit)			(2,642,789	)			(373,320	)
Total True North Finance Corporation stockholders’ equity			26,248,599				—
Noncontrolling interests			7,194,524
Total stockholders’ equity			33,443,123				—
Total liabilities and stockholders’ equity		$	113,861,645			$	—

The accompanying notes are an integral part of these financial statements

STATEMENTS OF OPERATIONS
(Unaudited)

						For the Three				For the Nine
		For the Three				Months Ended				Months Ended				For the Nine
		Months Ended				September 30,				September 30,				Months Ended
		September 30, 2009				2008				2009				September 30, 2008
INTEREST AND FEE INCOME		$	306,132			$	—			$	306,132			$	—
OPERATING EXPENSES
Insurance			8,911								8,911
Payroll			93,076								93,076
Professional fees			91,177								91,177
Interest expense			2,039,456								2,039,456
Provision for doubtful accounts			663,735								663,735
Other			1,758,564								1,758,564
Total operating expenses			4,654,919				—				4,654,919				—
Operating Loss			(4,348,787	)			—				(4,348,787	)			—
OTHER INCOME (EXPENSE)
Other expense			(580,530	)			—				(580,530	)			—
Other income			12,541				—				12,541				—
Deferred income tax benefit			1,748,011				—				1,748,011				—
Net income (loss)			(3,168,765	)			—				(3,168,765	)			—
Net (income) loss attributable to noncontrolling interests			899,296				—				899,296				—
Net income (loss) attributable to True North		$	(2,269,469	)		$	—			$	(2,269,469	)		$	—
Earnings (loss) per share:
Basic and diluted attributable to True North Stockholders		$	(0.09	)		$	—			$	(0.09	)		$	—
Weighted average basic and diluted shares outstanding			68,354,092				37,331,993				47,889,961				37,331,993

The accompanying notes are an integral part of these financial statements

STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the Nine Months Ended September 30, 2009

(Unaudited)

		Common Stock
																		Non-				Additional								Stockholder’s
						Common				Preferred				Preferred				controlling				Paid-in-				Accum.				Equity
		Shares				Stock				Stock				Stock Rec.				interests				Capital				Deficit				(Deficit)
		(000’s)				($000’s)				($000’s)				($000’s)				($000’s)				($000’s)				($000’s)				($000’s)
BALANCES, Dec. 31, 2008			37,332			$	373			$	—			$	—			$	—			$	—			$	(373	)		$	—
Common shares issued in Merger June 30, 2009			31,022				310																15,487								15,797
Preferred shares issued in Merger June 30, 2009 (36,643 shares)											13,140																				13,140
Preferred shares receivable accrued September 30, 2009 (1,170 shares)															(419	)															(419	)
Non-controlling interest acquired in Merger June 30, 2009																			8,981												8,981
Conversion of non-controlling interest into Series 1 Notes Payable in July 2009																			(887	)											(887	)
Net Loss for the nine months ended September 30, 2009																			(899	)							(2,270	)			(3,169	)
BALANCES, Sept. 30, 2009			68,354			$	683			$	13,140			$	(419	)		$	7,195			$	15,487			$	(2,643	)		$	33,443

The accompanying notes are an integral part of these financial statements

STATEMENTS OF CASH FLOW
(Unaudited)

		For the Nine				For the Nine
		Months Ended				Months Ended
		Sept. 30, 2009				Sept. 30, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(3,168,765	)		$	—
Adjustments to reconcile net loss to cash flows from operating activities							—
Depreciation			4,387				—
Amortization of debt fees			22,346				—
Amortization of prepaid expenses			1,000				—
Provision for doubtful accounts			663,735
Changes in operating assets and liabilities
Change in interest receivable			152,991				—
Change in prepaid insurance			18,049				—
Change in prepaids and other current assets			(50,938	)			—
Change in accounts payable and accrued liabilities			1,622,576				—
Change in deferred income tax liability			(2,120,011	)			—
Change in accrued interest			280,798				—
Net cash flows used in operating activities			(2,573,832	)			—
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from other investments			765,282				—
Purchase of fixed assets			(20,124	)			—
Cash acquired through Merger transaction			413,526
Net cash flows used in investing activities			1,158,684				—
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Notes Payable — Series A, Series 1, Other			1,651,071				—
Principal payments on capital lease obligations			(2,281	)			—
Principal payments on note payable			(134,885	)			—
Net cash flows from financing activities			1,513,905				—
Net Change in Cash and Cash Equivalents			98,757				—
Cash and Cash Equivalents — Beginning of Period			—				—
Cash and Cash Equivalents — End of Period		$	98,757			$	—
Supplemental disclosure of cash flow information
Cash paid for interest		$	2,304,034			$	—
Cash paid for income taxes		$	—			$	—
Supplemental noncash investing and financing activities:
Assets acquired in Merger		$	115,852,500			$	—
Less liabilities assumed			(77,934,435	)			—
Net assets acquired		$	37,918,065			$	—
Conversion of noncontrolling interest to Notes Payable Series 1		$	886,707			$	—

The accompanying notes are an integral part of these financial statements

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies

     Reference to the Company

References to “we”, “us”, “our”, “True North” or the “Company” in these notes to the consolidated financial statements refer to True North Finance Corporation, a Delaware corporation, and its subsidiaries. On June 22, 2009, CS Financing Corporation changed its name to True North Finance Corporation. As discussed below, the financial statements prior to June 30, 2009 are those of CS Fund General Partner, LLC.

     Reverse Acquisition Accounting

CS Fund General Partner, LLC became a wholly owned subsidiary of True North Finance Corporation pursuant to a merger on June 30, 2009. Under the purchase method of accounting in a business combination effected through an exchange of equity interests, the entity that issues the equity interests is generally the acquiring entity. In some business combinations (commonly referred to as reverse acquisitions), however, the acquired entity issues the equity interests. Statement of Financial Accounting Standard (“SFAS”) No. 141R, “Business Combinations” requires consideration of the facts and circumstances surrounding a business combination that generally involve the relative ownership and control of the entity by each of the parties subsequent to the merger. Based on a review of these factors, the June 2009 merger with CS Fund General Partner, LLC (“the Merger”) was accounted for as a reverse acquisition (i.e. True North Finance Corporation was considered as the acquired company and CS Fund General Partner, LLC was considered as the acquiring company). As a result, True North Finance Corporation’s assets and liabilities as of June 30, 2009, the date of the Merger closing, have been incorporated into CS Fund General Partner, LLC’s balance sheet based on the fair values of the net assets acquired, which equaled the consideration paid for the acquisition. SFAS No. 141R also requires an allocation of the acquisition consideration to individual assets and liabilities including tangible assets, and financial assets. Further, the Company’s operating results (post Merger) include CS Fund General Partner, LLC’s operating results prior to the date of closing and the results of the combined entity following the closing of the Merger. Although CS Fund General Partner, LLC was considered the acquiring entity for accounting purposes, the Merger was structured so that CS Fund General Partner, LLC became a wholly owned subsidiary of True North Finance Corporation.

Also on June 30, 2009, the Company issued 40,000 shares of preferred stock to Capital Solutions Monthly Income Fund, LP. On that same date, Capital Solutions Monthly Income Fund, LP distributed 36,643 shares of the preferred stock to certain limited partners in complete liquidation of their capital accounts. Other limited partners indicated an interest in converting their limited partner interests to Series 1 Notes. Accordingly, they did not receive preferred stock and remained as limited partners on June 30, 2009. These limited partners are reflected on the balance sheet as non-controlling interests. In July 2009, $886,707 of the limited partnership interests was liquidated in exchange for Series 1 Notes. As a result of these transactions, the Company obtained control of Capital Solutions Monthly Income Fund, L.P and True North Finance Corporation.

CS Fund General Partner, LLC is the general partner of Capital Solutions Monthly Income Fund. The investment in Capital Solutions Monthly Income Fund, LP is reflected on the balance sheet as “Non-controlling interest of $7,194,524” as of September 30, 2009.

     Nature of Operations

The Company was incorporated in Delaware on August 19, 2005. The Company primarily finances real estate and other transactions from proceeds of the Company’s offering of Five Year Notes-Series A (the “Notes Offering”).

CS Fund General Partner, LLC, a Delaware Limited Liability Company, was formed on November 24, 2004. CS Fund General Partner, LLC was the general partner of Capital Solutions Monthly Income Fund.

Capital Solutions Monthly Income Fund, L.P. (the Partnership), a Delaware limited partnership, was formed on November 4, 2004. The Partnership was originally formed to achieve advantageous rates of return through purchasing secured, but subordinated, notes relating to the financing for residential and commercial real estate development, construction and investment property. In June of 2008, the Partnership foreclosed on assets secured by the outstanding notes. The Partnership continues to own real estate for the purpose of investment and development.

NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies (cont.)

     Consolidated Financial Statements

In the consolidated financial statements and the notes thereto, all references to historical information, balances and results of operations are related to CS Fund General Partner LLC as the predecessor company pursuant to reverse acquisition accounting rules. Although pre-merger True North Finance Corporation was an operating company since 2006, under reverse acquisition accounting rules, the merged Company’s consolidated financial statements reflect our results as an operating company since January 1, 2008. Accordingly, the Company’s operating results (post-Merger) include the operating results of CS Fund General Partner LLC prior to the date of the Merger and the results of the combined entity following the closing of the Merger.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Certain amounts previously reported have been reclassified to conform to the current year presentation.

     Condensed Financial Statements

The accompanying condensed unaudited financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by U.S. generally accepted accounting principles for annual reports. This quarterly report should be read in conjunction with the financial statements included in the Company’s report on Form 10-K filed on March 31, 2009 with the U.S. Securities and Exchange Commission for the year ended December 31, 2008 and Form 8-K filed on July 9, 2009, Form 8-K/A filed on September 16, 2009 and Form 8-K/A filed on September 28, 2009.

     Management Estimates

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

     Cash and Cash Equivalents

Cash and cash equivalents include interest-bearing and non-interest-bearing bank deposits, money market accounts, short-term certificates of deposit with original maturities of three months or less, and short-term instruments with a liquidation provision of one month or less.

     Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets, generally three to seven years. Amortization on capital leases is over the lesser of the estimated useful life or the term of the lease. Expenditures for repairs and maintenance are charged to operations as incurred. We periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. We use an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies (cont.)

     Revenue Recognition

Interest is recognized as revenue when earned according to the terms of the loans, using the effective interest method. We do not accrue interest income on loans once they are determined to be non-performing. A loan is considered non-performing: (1) when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement; or (2) when the payment of interest is 90 days past due.

Cash receipts will be allocated to interest income, except when such payments are specifically designated by the terms of the loan as principal reduction or when management does not believe our investment in the loan is fully recoverable.

     Investments in Real Estate Loans

We may from time to time acquire or sell investments in real estate loans from or to our manager or other related parties pursuant to the terms of our Management Agreement without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans we make and the similarity of interest rates in loans we normally would invest in, the fair value of a loan typically approximates its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party.

Investments in real estate loans are generally secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. We have also made loans that defer interest and principal until maturity. We have both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate.

Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated, when new appraisals are received, to reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower.

     Allowance for Loan Losses

We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment. Management’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded as a charge-off or a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are added back to the allowance and included as income.

Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property.

Additional facts and circumstances may be discovered as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. Circumstances that may cause significant changes in our estimated allowance include, but are not limited to:

NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies (cont.)

	•		Changes in the level and trends relating to non-performing receivables including past due interest payments and past due principal payments;
	•		Declines in real estate market conditions, which can cause a decrease in expected market value;
	•		Discovery of undisclosed lines (including but not limited to, community improvement bonds, easements and delinquent property taxes);
	•		Lack of progress on real estate developments after we advance funds. We will customarily monitor progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances;
	•		Unanticipated legal or business issues that may arise subsequent to loan origination or loan advances or upon the sale of foreclosed property; and
	•		Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the current value of the property.

The Company considers a loan to be impaired when based on current information and events, it is probable that Company will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest or principal is 90 days past due.

     Fair Value Disclosures

As of September 30, 2009, we had no assets or liabilities utilizing Level 1 or Level 2 inputs and assets and liabilities utilizing Level 3 inputs included investments in real estate loans, unsecured borrowings.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, our degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability will be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value.

Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use prices and inputs that are current as of the measurement date, including during periods of market dislocation, such as the recent illiquidity in the auction rate securities market. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition may cause our financial instruments to be reclassified from Level 1 to Level 2 or Level 3 and/or vice versa.

Our valuation techniques will be consistent with at least one of the three possible approaches: the market approach, income approach and/or cost approach. Our Level 1 inputs are based on the market approach and consist primarily of quoted prices for identical items on active securities exchanges. Our Level 2 inputs are primarily based on the market approach of quoted prices in active markets or current transactions in inactive markets for the same or similar collateral that do not require significant adjustment based on unobservable inputs. Our Level 3 inputs are primarily based on the income and cost approaches, specifically, discounted cash flow analyses, which utilize significant inputs based on our estimates and assumptions.

The following table presents the valuation of our financial assets and liabilities as of September 30, 2009, measured at fair value on a recurring basis by input levels:

NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies (cont.)

		Fair Value Measurements at Reporting Date Using
		Quoted Prices in
		Active Markets				Significant Other				Significant								Carrying Value on
		For Identical				Observable				Unobservable Inputs				Balance at				Balance Sheet at
		Assets (Level 1)				Inputs (Level 2)				(Level 3)				09/30/2009				09/30/2009
Assets
Investment in real estate held for sale		$	—			$	—			$	104,106,000			$	104,106,000			$	104,106,000
Investments in notes receivable		$	—			$	—			$	7,730,983			$	7,730,983			$	7,730,983
Liabilities
Notes payable		$	—			$	—			$	72,499,823			$	72,499,823			$	72,499,823

The following table presents the changes in our financial assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) from June 30, 2009 to September 30, 2009:

		Assets
		Investment in				Investment in notes
		real estate held for sale				receivable
Balance on June 30, 2009		$	104,106,000			$	9,159,999
Change in temporary valuation adjustment included in net loss
Increase in allowance for loan losses			—				(663,735	)
Purchase and additions of assets			—				—
Sales, pay downs and reduction of assets
Proceeds from investments			—				(765,282	)
Transfer to Level 1			—				—
Transfer to Level 2			—				—
Balance on September 30, 2009, net of temporary valuation adjustment		$	104,106,000			$	7,730,983

		Liabilities
		Notes Payable
Balance on June 30, 2009		$	68,448,021
Increase in Series 1 Notes Payable			3,954,128
Increase in Bond Payable			200,000
Principal payments on notes payable			(142,326	)
Transfer to Level 1			—
Transfer to Level 2			—
Balance on September 30, 2009, net of temporary valuation adjustment		$	72,499,823

NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies (cont.)

     Stock Based Compensation

The Company applies Generally Accepted Accounting Principles (“GAAP”) for all compensation related to stock, options, or warrants. GAAP requires the recognition of compensation cost using a fair value based method whereby compensation is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

     Real Estate Held for Sale

Real estate held for sale includes real estate acquired through purchases and foreclosure and will be carried at the lower of the recorded amount, inclusive of any senior indebtedness, or the property’s estimated fair value, less estimated costs to sell, with fair value based upon appraisals and knowledge of local market conditions. The carrying values of real estate held for sale are assessed on a regular basis from updated appraisals, comparable sales values or purchase offers.

Management classifies real estate held for sale when the following criteria are met:

	•		Management commits to a plan to sell the properties;
	•		The property is available for immediate sale in its present condition subject only to the terms that are usual and customary;
	•		An active program to locate a buyer and other actions required to complete a sale have been initiated;
	•		The sale of the property is probable;
	•		The property is being actively marketed for sale at a reasonable price;
	•		Withdrawal or significant modification of the sale is not likely.

Our investments in real estate held for sale are accounted for at the lower of cost or fair value less costs to sell with fair value based on appraisals and knowledge of local market conditions.

     Classification of Operating Results from Real Estate Held for Sale

FAS 144 generally requires operating results from long lived assets held for sale to be classified as discontinued operations as a separately stated component of net income. Our operations related to real estate held for sale are separately identified in the accompanying consolidated statements of income.

     Income Taxes

The Company accounts for its income taxes in accordance with GAAP, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company accounts for uncertainty in tax positions in accordance with GAAP which requires the recognition of a tax position when it is more likely than not that the tax position will be sustained upon examination by relevant taxing authorities, based on the technical merits of the position.

     Earnings Per Share

Basic earnings per common shares (“EPS”) is calculated by dividing net income available to common stockholders by the weighted average number of shares outstanding during the period. For periods prior to the Merger, to determine the weighted average number of shares outstanding, the number of True North Finance Corporation common shares issued for outstanding CS Fund General Partner, LLC member shares was equated to member shares issued and outstanding during prior periods.

NOTE 1 — Nature of Operations and Summary of Significant Accounting Policies (cont.)

     Recent accounting policies

In June 2009, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Codification (the “Codification”). Effective July 1, 2009, the Codification is the single source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. We adopted the Codification during the third quarter of 2009 and the adoption did not materially impact our financial statements, however our references to accounting literature within our notes to the condensed consolidated financial statements have been revised to conform to the Codification classification.

In June 2009, the FASB issued Statement of Financial Accounting Standards (“FAS”) 166, “ Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140 “ (“FAS 166”), which is not yet included in the Codification. FAS 166 modifies the financial components approach, removes the concept of a qualifying special purpose entity, and clarifies and amends the derecognition criteria for determining whether a transfer of a financial asset or portion of a financial asset qualifies for sale accounting. FAS 166 also requires expanded disclosures regarding transferred assets and how they affect the reporting entity. FAS 166 is effective for us beginning January 1, 2010. We do not expect the adoption of FAS 166 to have a material effect on our financial statements.

In June 2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46R” (“FAS 167”), which is not yet included in the Codification. FAS 167 changes the consolidation analysis for VIEs and requires a qualitative analysis to determine the primary beneficiary of the VIE. The determination of the primary beneficiary of a VIE is based on whether the entity has the power to direct matters which most significantly impact the activities of the VIE and has the obligation to absorb losses, or the right to receive benefits, of the VIE which could potentially be significant to the VIE. FAS 167 requires an ongoing reconsideration of the primary beneficiary and also amends the events triggering a reassessment of whether an entity is a VIE. FAS 167 requires additional disclosures for VIEs, including disclosures about a reporting entity’s involvement with VIEs, how a reporting entity’s involvement with a VIE affects the reporting entity’s financial statements, and significant judgments and assumptions made by the reporting entity to determine whether it must consolidate the VIE. FAS 167 is effective for us beginning January 1, 2010. We are currently evaluating the effects, if any, this statement may have on our financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which provides alternatives to measuring the fair value of liabilities when a quoted price for an identical liability traded in an active market does not exist. The alternatives include using the quoted price for the identical liability when traded as an asset or the quoted price of a similar liability or of a similar liability when traded as an asset, in addition to valuation techniques based on the amount an entity would pay to transfer the identical liability (or receive to enter into an identical liability). The amended guidance is effective for us beginning October 1, 2009, and we do not expect the effects to have a material impact on our financial statements.

NOTE 2 — Business Combination

In June of 2009 a definitive merger agreement was entered into by True North Finance Corporation and CS Fund General Partner, LLC. The merger was completed on June 30, 2009. Pursuant to the terms of the Merger, the equity holder of CS Fund General Partner, LLC (Transactional Finance, LLC) acquired 37,331,993 shares of common stock constituting 70% of voting control of True North Finance Corporation. CS Fund General Partner, LLC is the general partner of Capital Solutions Monthly Income Fund, L.P. Also on June 30, 2009 True North Finance Corporation issued 40,000 shares of Preferred stock to Capital Solutions Monthly Income Fund, L.P. in exchange for limited partner interest. 36,643 shares of preferred stock was simultaneously distributed by Capital Solutions Monthly Income Fund, LP to its limited partners in complete liquidation of their capital accounts.

Certain limited partners indicated an interest in converting their limited partner interests to Series 1 Notes. Accordingly, they did not receive preferred stock and remained as limited partners on June 30, 2009. They are reflected on the balance sheet as non-controlling interests. As of September 30, 2009, certain limited partners had not completed the conversion of their limited partner interests to Series 1 Notes. These partners are reflected on the balance sheet as “non-controlling interests” totaling $7,194,524 as of September 30, 2009. As a result of these transactions, the Company controls of Capital Solutions Monthly Income Fund, L.P and True North Finance Corporation.

NOTE 2 — Business Combination (cont.)

As a result of accounting for the Merger as a reverse acquisition, True North Finance Corporation’s assets and liabilities and Capital Solutions Monthly Income Fund, L.P.’s assets and liabilities as of June 30, 2009, the closing date of the Merger, have been incorporated into CS Fund General Partner, LLC’s balance sheet based on the fair values of the net assets acquired, which equaled the consideration paid for the acquisition. SFAS No 141R requires an allocation of the acquisition consideration to the individual assets and liabilities. Further, the Company’s operating results (post-Merger) include CS Fund General Partner, LLC operating results prior to the date of the closing and the results of the combined entity following the closing of the Merger. Although CS Fund General Partner, LLC was considered the acquiring entity for accounting purposes, the Merger was structured so that CS Fund General Partner, LLC became a wholly owned subsidiary of True North Finance Corporation.

Assets and liabilities acquired in the Merger are summarized as follows:

•

True North Finance Corporation

	•		Notes receivable — $2,068,485 and accrued interest of $349,273 in connection with loans issued in 2008 and 2009 secured by real estate located in California near San Francisco.
	•		Real estate located in Maricopa County, AZ (79 acres) valued at $22,500,000. This property is subject to a mortgage of $7,000,000 which matures on August 1, 2012 and bears an interest rate of 10%.
	•		Real estate located in Lloyd Harbor, NY (16 acres) valued at $16,750,000. This property is subject to a mortgage of $4,000,000 which matures on June 16, 2013 and bears an interest rate of 10%.
	•		Five Year Notes-Series A (“Notes”) issued pursuant to a registration statement on Form S-1 (the “Registration Statement”). The Notes issued bear interest at a fixed rate (calculated based upon a 360-day year) of ten percent (10%). Interest is payable monthly with the first interest payment commencing thirty (30) days from issuance. Total Notes liability acquired was $9,930,000.

•

Capital Solutions Monthly Income Fund, L.P.

	•		Cash of approximately $400,000.
	•		Various real estate investments located in the Midwestern United States valued at $7,926,000.
	•		Various real estate investments located in Florida valued at $56,939,107. The real estate acquired is subject to senior debt of $21,687,766.
	•		Investment in notes receivable equal to $6,944,514 (unsecured).
	•		Deposits in escrow and other receivables of $759,890.

NOTE 2 — Business Combination (cont.)

The following table summarizes the acquisition purchase price and the tentative allocation to the assets acquired and liabilities assumed in connection with the acquisitions:

		True North				Capital Solutions
		Financing				Monthly Income
		Corporation				Fund, LP				Total
Current assets
Cash and cash equivalents		$	3,516			$	410,010			$	413,526
Accounts receivable			—				15,307				15,307
Inventories			—				22,418				22,418
Accrued interest receivables			349,273				123,000				472,273
Other current assets			26,734				—				26,734
Total current assets		$	379,523			$	570,735			$	950,258
Other assets
Property plant and equipment (net)			26,061				28,000				54,061
Investments in note receivable			2,068,486				5,641,514				7,710,000
Investments in real estate			39,250,000				67,334,997				106,584,997
Other assets			553,184				—				553,184
Total other assets		$	41,897,731			$	73,004,511			$	114,902,242
Total assets acquired		$	42,277,254			$	73,575,246			$	115,852,500
Current liabilites			469,282				2,411,721				2,881,003
Long term liabilities			25,887,606				49,165,826				75,053,432
Total liabilities assumed		$	26,356,888			$	51,577,547			$	77,934,435
Total (assets in excess of liabilities)										$	37,918,065

A reconciliation of consideration paid to the allocation of the purchase price to specific assets and liabilities is as follows:

Fair value of outstanding preferred stock issued		$	13,140,673
Fair value of outstanding common stock issued			15,796,865
Non-controlling interests			8,980,527
		$	37,918,065

The following represents the unaudited proforma combined results of operations of the Merger as if the Merger had occurred as of January 1, 2008:

		For the Three				For the Three				For the Nine				For the Nine
		Months Ended				Months Ended				Months Ended				Months Ended
		September 30,				September 30,				September 30,				September 30,
		2009				2008				2009				2008
Unaudited proforma information:
Revenue			306,132				75,637				605,595				3,093,885
Net income (loss)			(2,572,016	)			(2,440,087	)			(7,323,914	)			(4,599,800	)
Basic and diluted earnings per share			(0.05	)			(0.01	)			(0.10	)			(0.06	)
Weighted average basic and diluted shares outstanding			47,899,961				47,899,961				47,899,961				47,899,961

NOTE 3 — Stockholders’ Equity

Preferred Stock

On June 30, 2009 the Board of Directors authorized the issuance of 40,000 shares of preferred stock, stated value $1,000 per share to Capital Solutions Monthly Income Fund, L.P.

Common Stock

In June of 2009 the company increased the authorized shares of common stock (referred to as Series B) from 70,000,000 to 150,000,000 and issued 36,331,993 to Transactional Finance, LLC in connection with the Merger. Total shares issued and outstanding of the Series B common stock is 67,354,092 as of September 30, 2009.

In June of 2009 the authorized and issued 1,000,000 shares of Series A common stock to Transactional Finance, LLC in connection with the Merger. The Series A common stock has a priority voting position. As a result of the issuance of the Series B and Series A common stock in June of 2009, Transactional Finance, LLC has voting control of 70% of the Company. For periods prior to the Merger, to determine the weighted average number of shares outstanding, the number of True North Finance Corporation common shares issued for outstanding CS Fund General Partner, LLC member shares was equated to member shares issued and outstanding during prior periods.

NOTE 4 — Notes Payable

The Company’s notes payable as of September 30, 2009 are summarized as follows:

						As of
		As of June 30,				September						Interest
Description		2009				30, 2009				Matures		Rate
Five Year Notes-Series A issued in 2006, 2007, and 2008 (unsecured) interest paid monthlly		$	9,930,000			$	10,130,000			2011 - 2013		10%
Series 1 Four Year Notes issued in 2009 (unsecured) interest paid monthly			27,478,060				31,432,188			2013		10%
Note Payable issued in 2009 secured by Arizona real estate, interest paid monthly			7,000,000				7,000,000			2013		10%
Note Payable issued in 2009 secured by New York real estate, interest paid monthly			4,000,000				4,000,000			2012		10%
Senior Debt secured by real estate foreclosed in 2008, interest paid monthly or quarterly			20,078,486				19,936,829			2011 - 2013		8% - 13%
Other Notes Payable			1,475				806			2010		15%
Total Notes Payable		$	68,488,021			$	72,499,823

NOTE 5 — Commitments and Contingencies

The Company has no pending litigation. The Fund has been and is currently subject to various legal proceedings that arise in the ordinary course of business of owning distressed real estate and operating a limited partnership. At this time we cannot predict the timing or outcome of the legal proceedings.

By Order dated October 2, 2009, a district court judge for the Fourth Judicial District, Minnesota, confirmed an arbitration award in favor of Charles T. Thompson, as Trustee for the Charles T. Thompson Revocable Trust dated December 27, 2000 as amended and against Capital Solutions Monthly Income Fund, L.P. in the amount of $1,000,000. As a result of this action the Company has accrued a loss of $580,530 and a receivable in our preferred stock of $419,470.

NOTE 6 — Subsequent Events

Events Subsequent to September 30, 2009 through November 16, 2009

On October 28, 2009, the Company entered into an agreement with Real Equity Solutions (RES) to settle the Company’s notes receivable (secured by the Prentiss properties in San Francisco California) from RES in exchange for cash totaling $750,000 in three payments as follows:

	1.		$225,000 On November 1, 2009 (Received)
	2.		$200,000 On December 10, 2009
	3.		$325,000 On January 15, 2010

As a result, the Company recognized a loss as of September 30, 2009 for the notes receivable and interest receivable in connection with this transaction in the amount of $953,766.

Item 2.		Management’s Discussion and Analysis or Plan of Operation.

Some of the statements in this Quarterly Report on Form 10-Q, including, but not limited to this Management’s Discussion and Analysis or Plan of Operation, contain forward-looking statements regarding the Company’s business, financial condition, and results of operations and prospects that are based on the Company’s current expectations, estimates and projections. In addition, other written or oral statements which constitute forward-looking statements may be made by the Company or on the Company’s behalf. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “would” or variations of such words and similar expressions are intended to identify such forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements are not guarantees of future performance, and are inherently subject to risks and uncertainties that are difficult to predict. As a result, actual outcomes and results may differ materially from the outcomes and results discussed in or anticipated by the forward-looking statements. All such statements are therefore qualified in their entirety by reference to the factors specifically addressed in the section entitled “Factors That May Affect Future Results of Operations” in the Company’s Annual Report on Form 10-K. New risks can arise and it is not possible for management to predict all such risks, nor can management assess the impact of all such risks to the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. The Company undertakes no obligation to revise or update publicly any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q, other than as required by law.

     Overview

     Despite our operating history, we are an early stage finance company focused on the financing of completed, or nearly completed, transactions. We invest primarily by making short- and medium-term (twelve to thirty-six month) loans, and, on occasion, acquiring investments for re-sale. We intend to pursue finance and investment opportunities in the following markets; opportunistic equity, trade finance, distressed sellers, bridge finance and real estate finance (referred to in the aggregate as “Diversified Markets”). We raise capital to make investments in the Diversified Markets by making public offerings of our Notes. We acquired a substantial portion of our assets as a result of the acquisition of the general partner of Capital Solutions Monthly Income fund, L.P. (“Fund”) and other real estate purchases in June of 2009.

     Our business strategy is to make loans on conservatively underwritten and completed, or nearly completed, transactions and to secure our loans by first- and second-priority mortgages or other UCC security interests, including the equity of entities that own the subject transaction and the personal guarantees of the underlying principals. We will initially focus our lending on transactions originating in the Midwest where the chosen Diversified Market niche values are less vulnerable to large or unpredictable market swings and the networks of our management team will provide a competitive advantage.

     We plan to invest for our own account directly on our balance sheet. We seek to generate revenue and profits by making loans and purchasing investments at yields higher than the interest rates we must pay on our Notes and other debt. We seek to obtain effective interest yield spread between 400 and 800 basis points above the interest rate we pay on our Notes and other debt. This interest yield spread will consist of interest on the loan plus points and other fees. The income from this interest spread is used to pay our expenses, which includes distribution expenses on our Notes as well as our operating expenses.

     Our Investment Committee will be responsible for constantly monitoring the Diversified Markets. These duties include establishing and removing Diversified Markets as well as allocating newly raised capital across the Diversified Markets based on market conditions, capacity, and forecasted success. Capital will be deployed in the Diversified Markets through small “investment pods” each managed by a separate investment pod manager. An “investment pod” is a name used to describe a separately managed pool of internal capital. All investment pod managers will be recruited and approved by the Investment Committee and Board. Each investment pod will generally be limited to approximately 20 million dollars in investments and the investment pod managers will manage their investments from origination through servicing to collection. The Investment Committee, however, will have the authority to ultimately fund an investment pod in an appropriate amount.

     Liquidity

     We anticipate loan repayments and asset sales of approximately $1,000,000 scheduled to be paid in 2009 and early 2010 will provide adequate liquidity to fund the Company’s operations over the first two quarters of 2010. Thereafter, to the extent we are successful in selling Notes, and historically we have not been, we expect that the primary source of our liquidity will come from interest and fees earned on our loans and other investments made with the proceeds from Note sales. Nevertheless, some short-term liquidity may be provided by the net proceeds from the sale of the Notes. Although not contractually bound to do so, we also anticipate using some of the net proceeds from the sale of the Notes to inject capital into the Fund. The Fund requires approximately $1,000,000 per month to service the senior creditors on its real estate assets, its unsecured debt and otherwise meet working capital

demands. To the extent the Fund fails to service such debts, it will lose substantially all of the value in its assets. The Fund’s only liquidity will come from the ultimate disposition of its real estate assets. It’s not anticipated that the Fund will liquidate any significant asset in the ordinary course at fair market value prior to a significant recovery in the real estate and credit markets.

     Capital Resources and Results of Operation

     Our current capital resources have been provided primarily by the net proceeds of our Notes and the notes sold by the Fund. To date, our material commitments include payments to existing Note holders, providing additional capital to the Fund and administrative personnel. These expenses will be paid from cash flow from operations or from the net proceeds of the offering. We believe we have identified prospects to purchase several investments sufficient to meet these obligations for the remainder of 2009. We are still seeking additional capital to better capitalize our business and will re-commence selling Notes, which, in turn, will generate cash to fund our finance operations thereby producing net income and additional revenue. We currently have limited revenue from operations and in all likelihood will be required to make future expenditures in connection with our distribution efforts along with general and administrative expenses before we will earn any material revenue.

     Capital Raising Challenges

     We have been selling our Notes on a continuous basis under our shelf registration statement on Form S-1 through registered broker-dealers. We suspended offering the Notes on November 13, 2008, and plan to recommence such offering in the 4^th quarter of 2009. The Company currently does not have any placement agreements with any broker-dealer and intends on initially offering the Notes itself.

     Dependence on One or a Few Major Borrowers

     As of September 30, 2009, our investment portfolio is concentrated in a handful of assets. Until we can create a sizeable investment portfolio spread out amongst numerous investment pods and assets, our investments will be relatively concentrated. This concentration is a result of the slower than anticipated sale of Notes.

     Off-Balance Sheet Arrangements

     The Company does not have any off-balance sheet arrangements, as defined in Item 303(c)(1) of Regulation S-B promulgated under the Securities Act.

     Contractual Obligations

     The Company signed an employment agreement with Mr. Christopher Clouser on August 1, 2009, which entitles him to base compensation at a rate of $350,000 per annum and options on up to 11,476,094 Series B Common Shares which are 50% vested. The agreement required the base compensation to be increased by a minimum of $50,000 per annum commencing on the agreement’s first anniversary. To the extent the Company is unable to secure an additional $250,000,000 in debt or equity financing by the agreement’s first anniversary, the base compensation shall be reduced by 5% for each $10,000,000 the Company is short of $250,000,000 up to 50%. The remaining options vest upon the Company receiving $200,000,000 in new debt or equity financing.

     Critical Accounting Estimates

     Revenue Recognition

     Interest is recognized as revenue when earned according to the terms of the loans, using the effective interest method. We do not accrue interest income on loans once they are determined to be non-performing. A loan is considered non-performing: (1) when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement; or (2) when the payment of interest is 90 days past due. Cash receipts will be allocated to interest income, except when such payments are specifically designated by the terms of the loan as principal reduction or when management does not believe our investment in the loan is fully recoverable.

     Investments in Real Estate Loans

     We may from time to time acquire or sell investments in real estate loans from or to our manager or other related parties pursuant to the terms of our Management Agreement without a premium. The primary purpose is to either free up capital to provide liquidity for various reasons, such as loan diversification, or place excess capital in investments to maximize the use of our capital. Selling or buying loans allows us to diversify our loan portfolio within these parameters. Due to the short-term nature of the loans we make and the similarity of interest rates in loans we normally would invest in, the fair value of a loan typically approximates

its carrying value. Accordingly, discounts or premiums typically do not apply upon sales of loans and therefore, generally no gain or loss is recorded on these transactions, regardless of whether to a related or unrelated party.

     Investments in real estate loans are generally secured by deeds of trust or mortgages. Generally, our real estate loans require interest only payments with a balloon payment of the principal at maturity. We have also made loans that defer interest and principal until maturity. We have both the intent and ability to hold real estate loans until maturity and therefore, real estate loans are classified and accounted for as held for investment and are carried at amortized cost. Loans sold to or purchased from affiliates are accounted for at the principal balance and no gain or loss is recognized by us or any affiliate.

     Loan-to-value ratios are initially based on appraisals obtained at the time of loan origination and are updated, when new appraisals are received, to reflect subsequent changes in value estimates. Such appraisals are generally dated within 12 months of the date of loan origination and may be commissioned by the borrower.

     Allowance for Loan Losses

     We maintain an allowance for loan losses on our investments in real estate loans for estimated credit impairment. Management’s estimate of losses is based on a number of factors including the types and dollar amounts of loans in the portfolio, adverse situations that may affect the borrower’s ability to repay, prevailing economic conditions and the underlying collateral securing the loan. Additions to the allowance are provided through a charge to earnings and are based on an assessment of certain factors, which may indicate estimated losses on the loans. Actual losses on loans are recorded as a charge-off or a reduction to the allowance for loan losses. Generally, subsequent recoveries of amounts previously charged off are added back to the allowance and included as income.

     Estimating allowances for loan losses requires significant judgment about the underlying collateral, including liquidation value, condition of the collateral, competency and cooperation of the related borrower and specific legal issues that affect loan collections or taking possession of the property.

     Additional facts and circumstances may be discovered as we continue our efforts in the collection and foreclosure processes. This additional information often causes management to reassess its estimates. Circumstances that may cause significant changes in our estimated allowance include, but are not limited to:

	•		Changes in the level and trends relating to non-performing receivables including past due interest payments and past due principal payments;
	•		Declines in real estate market conditions, which can cause a decrease in expected market value;
	•		Discovery of undisclosed lines (including but not limited to, community improvement bonds, easements and delinquent property taxes);
	•		Lack of progress on real estate developments after we advance funds. We will customarily monitor progress of real estate developments and approve loan advances. After further inspection of the related property, progress on construction occasionally does not substantiate an increase in value to support the related loan advances
	•		Unanticipated legal or business issues that may arise subsequent to loan origination or loan advances or upon the sale of foreclosed property
	•		Appraisals, which are only opinions of value at the time of the appraisal, may not accurately reflect the current value of the property.

     The Company considers a loan to be impaired when based on current information and events, it is probable that Company will be unable to collect all amounts due according to the contractual terms of the loan agreement or when the payment of interest or principal is 90 days past due.

Item 3.		Quantitative and Qualitative Disclosures about Market Risk.

     Disclosure not required as a result of the Company’s status as a smaller reporting company.

Item 4.		Controls and Procedures.

     Evaluation of disclosure controls and procedures.

     As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer. Based upon that evaluation,

our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act.

     Changes in internal controls over financial reporting.

     There were no changes in our internal controls that materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1.		Legal Proceedings.

     The Company has no pending litigation. The Fund has been and is currently subject to various legal proceedings that arise in the ordinary course of business of owning distressed real estate and operating a limited partnership. At this time we cannot predict the timing or outcome of the legal proceedings. By Order dated October 2, 2009, a district court judge for the Fourth Judicial District, Minnesota, confirmed an arbitration award in favor of Charles T. Thompson, as Trustee for the Charles T. Thompson Revocable Trust dated December 27, 2000 as amended and against Capital Solutions Monthly Income Fund, L.P. in the amount of $1,000,000. The Fund will appeal this ruling.

Item 5.		Other Information.

     On November 6, 2009, the Board of Directors elected Christopher E. Clouser, John O. Klinkenberg, Timothy R. Redpath, Constantine “Deno” Macricostas, Mannie Jackson, Richard B. Hirst, Douglas A. Lennick and Philip A. Jones as directors.

Item 6.		Exhibits

Index to Exhibits

Exhibit
Number		Exhibit		Method of Filing
31.1		Rule 13a-14(a)/15d-14(a) Certifications: Certification of Chief Executive Officer pursuant to Rule 15d.		Filed herewith.
31.2		Rule 13a-14(a)/15d-14(a) Certifications: Certification of Chief Financial Officer pursuant to Rule 15d.		Filed herewith.
32.1		Section 1350 Certifications of Chapter 63 of Title 18 of the United States Code.		Filed herewith.
32.2		Section 1350 Certifications of Chapter 63 of Title 18 of the United States Code.		Filed herewith.

SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.