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

                                   FORM 10-KSB



[X]  Annual Report Under Section 13 or 15(d) of the  Securities  Exchange Act of
     1934 For the Fiscal Year Ended December 31, 2007

       or

[    ] Transition  Report Under Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 For the Transition Period from __________ to __________.



                        Commission File Number 000-25919

                        American Church Mortgage Company

              Incorporated Under the Laws of the State of Minnesota
                  I.R.S. Employer Identification No.41-1793975

                            10237 Yellow Circle Drive
                              Minnetonka, MN 55343
                            Telephone: (952) 945-9455

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

Securities registered under Section 12(g) of the Exchange Act: Common Stock $.01
par value

Check whether the issuer is not required to file reports  pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this From  10-KSB or any
amendment to this Form 10-KSB [X]

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

              Revenues for its most recent fiscal year: $3,947,690

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified date within the past 60 days: Not applicable.

The number of shares outstanding of the issuer's common stock as of February 29,
2008 was:

                  2,493,595 Shares of Common Stock Outstanding

                      DOCUMENTS INCORPORATED BY REFERENCE:

     Definitive proxy statement for the annual meeting of shareholders to be
                        held on or about June 11, 2008.

    Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
-------------------------------------------------------------------------------



<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY
                                   FORM 10-KSB

<TABLE>
<CAPTION>

                                      INDEX
                                                                                                       Page
                                                                                                        No.

                                     PART I

<S>           <C>                                                                                       <C>
Item 1.       Description of Business............................................................        3

Item 2.       Description of Property............................................................       15

Item 3.       Legal Proceedings..................................................................       15

Item 4.       Submission of Matters to a Vote of Security Holders................................       16

                                     PART II

Item 5.       Market for Common Equity and Related Stockholder Matters,
              and Small Business Issuer Purchases of Equity Securities...........................       16

Item 6.       Management's Discussion and Analysis
              or Plan of Operation...............................................................       17

Item 7.       Financial Statements:..............................................................       21

                  Report of Independent Registered Public Accounting Firm........................      F-1

                  Balance Sheets
                  December 31, 2007 and 2006.....................................................      F-2

                  Statements of Operations
                  Years Ended December 31, 2007 and 2006.........................................      F-4

                  Statements of Stockholders' Equity
                  December 31, 2007 and 2006.....................................................      F-5

                  Statements of Cash Flows
                  Years Ended December 31, 2007 and 2006.........................................      F-6

                  Notes to Financial Statements..................................................      F-8

Item 8.       Changes In and Disagreements With
              Accountants on Accounting and Financial Disclosure.................................       21

Item 8A(T).   Controls and Procedures............................................................       21

Item 8B.      Other Information..................................................................       22

                                    PART III

Item 9.       Directors, Executive Officers, Promoters, Control Persons,
              and Corporate Governance; Compliance With Section 16 (a)
              of the Exchange Act................................................................       22

Item 10.      Executive Compensation.............................................................       22

Item 11.      Security Ownership of Certain Beneficial Owners and
              Management and Related Stockholder Matters.........................................       22

Item 12.      Certain Relationships and Related Transactions, and Director Independence..........       22

Item 13.      Exhibits...........................................................................       23

Item 14.          Principal Accountant Fees and Services.........................................       23
</TABLE>

<PAGE>

                                     PART I



<PAGE>



     In connection with the "safe harbor"  provisions of the Private  Securities
Litigation  Reform  Act of  1995,  readers  of this  document  and any  document
incorporated by reference  herein,  are advised that this document and documents
incorporated  by  reference  into  this  document  contain  both  statements  of
historical facts and forward looking statements.  Forward looking statements are
subject to certain risks and uncertainties,  which could cause actual results to
differ  materially  from those  indicated  by the  forward  looking  statements.
Examples  of forward  looking  statements  include,  but are not  limited to (i)
projections  of  revenues,  income or loss,  earning or loss per share,  capital
expenditures,  dividends,  capital  structure and other  financial  items;  (ii)
statements  of  plans  and  objectives  of ours or our  management  or  Board of
Directors,  including  any  public  sale  of our  securities,  or  estimates  or
predictions  of actions by borrowers,  competitors  or  regulatory  authorities;
(iii)  statements  of  future  economic  performance;  and  (iv)  statements  of
assumptions underlying other statements and statements about our business.

     This document and documents  incorporated by reference herein also identify
important  factors which could cause actual  results to differ  materially  from
those indicated by forward  looking  statements.  These risks and  uncertainties
include,  among other  things,  interest  rate  fluctuations  as they effect the
relative  yield of our loan portfolio and our ability to compete in making loans
to borrowers;  payment default on loans made by us, which could adversely affect
our  ability  to  make  distributions  to  our  shareholders;   the  actions  of
competitors;  the effects of government regulation;  and other factors which are
described herein and/or in documents incorporated by reference herein, including
the risks described at the end of Item 1.

     The  cautionary   statements  made  pursuant  to  the  Private   Litigation
Securities  Reform Act of 1995 above and elsewhere by us should not be construed
as exhaustive or as any admission  regarding the adequacy of disclosures made by
us prior to the  effective  date of such Act.  Matters  which are the subject of
forward  looking  statements are beyond our ability to control and in many cases
we cannot  predict what factors  would cause results to differ  materially  from
those indicated by the forward looking statements.

Item 1. Description of Business

General

     We are a Minnesota corporation  incorporated on May 27, 1994. We operate as
a Real Estate  Investment  Trust  ("REIT")  and are  engaged in the  business of
making mortgage loans to churches and other non-profit  religious  organizations
throughout the United States. The principal amount of loans we offer ranges from
$100,000 to  $2,000,000.  We may also  invest up to 30% of our Average  Invested
Assets in mortgage secured debt securities  (bonds) issued by churches and other
non-profit religious organizations.  Between the date upon which we began active
business  operations  (April 15, 1996),  and February 28, 2008, we have made 166
loans to 139 churches in the aggregate  amount of $85,501,427,  with the average
principal amount of such loans being $515,069. Of the 166 loans we have made, 76
loans totaling $34,818,158 have been repaid early by the borrowing churches.  We
also own, as of February 28, 2008,  $11,511,000 principal amount of Church Bonds
(hereinafter  defined),  which we purchased at a price of par value  ($1,000) or
less.  At no time have we paid a premium for any of the bonds in our  portfolio.
Subject  to  supervision  of our  Board of  Directors,  our day to day  business
operations  are managed by Church Loan  Advisors,  Inc. (the  "Advisor"),  which
provides investment  advisory and administrative  services to us. The principals
of the Advisor include  principals of American  Investors  Group,  Inc., a FINRA
member  broker-dealer which has served as underwriter of the public offerings of
our  common  stock,  as  well  as  our  public  offerings  of  secured  investor
certificates.

Public Offerings

     On  October  7,  2004  the  Securities  and  Exchange  Commission  declared
effective our fifth public  offering of  $23,000,000  worth of secured  investor
certificates  under SEC file  333-75836.  The Company  concluded the Offering on
October 7, 2006. The Offering was conducted on a  "best-efforts"  basis pursuant
to applicable rules of the Securities and Exchange Commission. $14,860,000 worth
of certificates were sold through our advisor's  affiliate,  American  Investors
Group, Inc., to public investors.

The Company's Business Activities

     Our  business  is  managed  by  Church  Loan  Advisors,  Inc.,  Minnetonka,
Minnesota  (the  "Advisor").  We have no  employees.  The  Advisor's  affiliate,
American Investors Group, Inc.,  ("American") has been engaged since 1987 in the
business of underwriting first mortgage bonds for churches throughout the United
States.  In underwriting  church bonds,  American reviews  financing  proposals,
analyzes prospective  borrowers' financial capability,  and structures,  markets
and sells, mortgage-backed securities which are debt obligations (bonds) of such
borrowers to the investing  general  public.  Since its inception,  American has
underwritten  approximately 228 church bond financings,  in which  approximately
$469,820,000  in first  mortgage bonds have been sold to public  investors.  The
average size of single church bond financings underwritten by American since its
inception is approximately $2,061,000.


                                       3
<PAGE>


     In the course of its business,  American identified a demand from potential
borrowers  for  smaller  loans  of  $100,000  to  $2,000,000.   Because  of  the
regulatory,  administrative expenses and complexity normally associated with the
bond financing business,  American  determined that the economic  feasibility of
bond financing  diminished  for financings  under  $1,000,000.  As a result,  we
believe  that many  churches  are forced to either  forego the project for which
their  financing  request  was made,  fund their  project  from cash flow over a
period of time and at greater expense,  or seek bank financing at terms that are
not always  favorable or available to them,  due to the historic  reluctance  of
banks to lend to churches for other than economic  reasons.  Our objective is to
provide a lending source to this segment of the industry-by  capitalizing on the
human resources and experience available at American and the Advisor, and taking
advantage  of the  marketing,  advertising  and general  goodwill  of  American.
Financing Business

     Our primary  business is to make first  mortgage  loans in amounts  ranging
from  $100,000  to  $2,000,000,  to  churches  and  other  non-profit  religious
organizations,  and selecting and investing in mortgage-secured debt instruments
("Church Bonds") issued by churches and other non-profit religious organizations
throughout  the United  States.  We attempt to apply our working  capital (after
adequate  reserves  determined by the Advisor)  toward making mortgage loans and
investing in Church Bonds.  We seek to enhance  returns on  investments  on such
loans by:

     o    offering  terms  of up to 30 years or  more,  generating  the  highest
          yields possible under current market conditions;

     o    seeking  origination  fees (i.e.  "points")  from the  borrower at the
          outset of a loan and upon any renewal of a loan;

     o    making a limited amount of higher-interest  rate second mortgage loans
          to qualified borrowers; and

     o    purchasing a limited amount of mortgage-secured debt securities having
          various  maturities issued by churches and other non-profit  religious
          organizations.

     Our  policies  limit  the  amount of  second  mortgage  loans to 20% of the
Company's Average Invested Assets  (hereinafter  defined) on the date any second
mortgage loan is closed and limit the amount of mortgage-secured debt securities
to 30% of Average Invested Assets on the date of their purchase.

     "Average  Invested  Assets" for any period is defined as the average of the
aggregated  book value of the assets of the  corporation  invested,  directly or
indirectly,  in loans (or interests in loans) secured by real estate,  and first
mortgage bonds,  before reserves for  depreciation or bad debts or other similar
non-cash  reserves  computed  by taking the average of such values at the end of
each calendar month during such period.

     All  other  mortgage  loans  made  by us (or  Church  Bonds  purchased  for
investment) will be secured by a first mortgage (or deed of trust) lien in favor
of us.  Although we attempt to make mortgage  loans for various terms  typically
ranging  from  three  to  twenty-five  years,  we  may  determine  to  emphasize
longer-term  fixed-rate loans in our discretion,  in order to reduce the risk to
us of downward interest rate fluctuations.

     Our  lending  and  investing  operations,   including  determination  of  a
prospective borrower's or church bond issuer's financial credit worthiness,  are
made on our behalf by the Advisor.  Employees and agents of the Advisor  conduct
all aspects of our  business,  including (i)  marketing  and  advertising;  (ii)
communication  with prospective  borrowers;  (iii) processing loan applications;
(iv) closing the loans; (v) servicing the loans; (vi) enforcing the terms of our
loans;  (vii)  shareholder  relations and (viii)  administering  our  day-to-day
business.  For its services, the Advisor is entitled to receive a management fee
equal to 1 1/4% annually of the Company's Average Invested Assets, plus one-half
of any  origination  fee charged to  borrowers  on mortgage  loans we make.  The
management fee is reduced to 1% on assets from $35 million to $50 million and to
..75% on assets over $50 million.  The Advisor's management fees are computed and
payable monthly.

Current First Mortgage Loan Terms

     We offer prospective borrowers a selection of "Loan Types," which include a
choice of fixed or  variable  rates of interest  indexed to the "prime"  rate of
interest or other generally recognized reference index, and having various terms
to maturity,  origination  fees and other terms and conditions.  The Loan Types,
interest  rates and fees  offered  and  charged by us may from  time-to-time  be
limited,  changed  or  otherwise  unilaterally  amended  by the  Advisor  in its
discretion  as a result of such  factors  (among  others) as (i) balance of Loan
Types in our portfolio;  (ii) competition from other lenders;  (iii) anticipated
need to increase the overall  yield to our mortgage loan  portfolio;  (iv) local
and national  economic  factors;  (v) actual experience in borrowers' demand for
the loans; and (vi) available funds. In addition,  we may make mortgage loans on
terms other than those identified in our list of Loan Types.  Subject to change,
modification or elimination at our complete discretion,  the following is a list
of the  currently  available  Loan Types we may offer to  prospective  borrowing
institutions:


                                       4

<PAGE>

<TABLE>
<CAPTION>

              ================================== ======================================= =======================

                          Loan Type                        Interest Rate (1)             Origination Fee (2)
              ---------------------------------- --------------------------------------- -----------------------

<S>           <C>                                <C>                                     <C>
              30 Year Term (3)                   Fixed @ 8.25%                                    3.5%
              ---------------------------------- --------------------------------------- -----------------------

              30 Year Term (3)                   Variable Annually @ 10-year T + 400              2.0%
                                                 basis points
              ---------------------------------- --------------------------------------- -----------------------

              Renewable Term 5 Year    (4)       Fixed @: 7.75%                                   2.5%

              ================================== ======================================= =======================
</TABLE>


     (1)  "10-year  T"  means  the rate of  interest  paid to  investors  on the
          10-year  notes issued by the U.S.  Treasury,  as published by the Wall
          Street Journal, CNBC cable network or other sources deemed reliable by
          the Company.

     (2)  Origination  fees are based on the  original  principal  amount of the
          loan  and are  collected  from the  borrower  at the  origination  and
          renewal  of  loans,  one-half  of which  is  payable  directly  to the
          Advisor.  Origination  fees are often  subject  to  negotiations  with
          borrowers and thus, may be less than these amounts.

     (3)  Fully amortized  repayment term.  Amortization  terms may vary, as may
          other loan  terms,  depending  on  individual  loan  negotiations  and
          competitive forces.

     (4)  Renewable  term  loans  are  repaid  based on a  30-year  amortization
          schedule,  and are  renewable at the  conclusion of their initial term
          for additional like terms up to an aggregated  maximum of 30 years. We
          charge  a fee of 1/2% to the  borrower  upon  each  renewal  date.  If
          renewed by the borrower,  the interest rate is adjusted to the 10-year
          T plus a specified basis point "spread," i.e., 450 basis points.

     The above table describes  certain  material terms of Loan Types,  interest
rates and fees currently offered and charged by us. The table does not, however,
purport to identify all possible Loan Types,  terms, rates, and fees that we may
offer  from  time-to-time.  We may  determine  at any time to  modify  the terms
identified  above and/or offer loan terms  different than any of the Loan Types,
interest rates and fees identified above and do, in fact,  negotiate these terms
and fees with  certain of our  borrowers.  In  practice,  loan terms vary widely
depending  upon  quality  of the  prospective  borrowers,  our  working  capital
situation,  presence or absence of competitive influences on specific loans, and
general economic conditions.

Mortgage Loan Processing and Underwriting

     Mortgage  loan  applications  are prepared  and  verified by our  Advisor's
personnel in our Loan  Origination  and  Underwriting  Department.  Verification
procedures are designed to assure a borrower's qualification under our Financing
Policies  which are  specifically  identified  herein and  include,  among other
things, obtaining:

     o    applications  containing key  information  concerning the  prospective
          borrowers;

     o    project description;

     o    financial statements in accordance with our Financing Policies;

     o    corporate records and other organizational documents of the borrower;

     o    preliminary  title report or commitment for mortgagee title insurance;
          and

     o    a real estate appraisal in accordance with the Financing Policies.

     All  appraisals  and  financial  statements  are  prepared  by  independent
third-party  professionals who we approve based on their experience,  reputation
and education. Completed loan applications,  together with a written summary are
then presented to our Underwriting Committee. Our loan Underwriting Committee is
comprised of the Advisor's  President and  Vice-President and certain members of
its staff including  staff members of American.  Our Advisor may arrange for the
provision  of mortgage  title  insurance  and for the  services of  professional
independent  third-party  accountants  and  appraisers on behalf of borrowers in
order  to  achieve  pricing  efficiencies  on their  behalf  and to  assure  the
efficient  delivery of title  commitments,  preliminary  title reports and title
policies,   and  financial  statements  and  appraisals  meet  our  underwriting
criteria.  Our Advisor may arrange for the direct payment for such  professional
services  and  for  the  direct  reimbursement  to it of  such  expenditures  by
borrowers and prospective borrowers. Upon closing and funding of mortgage loans,
a negotiable origination fee based on the original principal amount of each loan
may be charged, of which one-half is payable by the borrower to our Advisor, and
the other one-half to us.


                                       5
<PAGE>

 Loan Commitments

     Subsequent to approval by our Underwriting Committee,  and prior to funding
a  loan,  we may  issue  a  loan  commitment  to  qualified  applicants.  A loan
commitment  deposit may be required  from the  borrowing  church to commence the
loan preparation  procedure.  These deposits are directly applied by the Advisor
to engage  accountants and appraisers to prepare their respective reports on the
Church.   Commitments  may  indicate,  among  other  things,  the  loan  amount,
origination  fees,  closing  costs,  underwriting  expenses  (if  any),  funding
conditions,  approval  expiration  dates  and  interest  rate and  other  terms.
Commitments  generally set forth a "prevailing" interest rate that is subject to
change in accordance with market interest rate fluctuations until the final loan
closing  documents  are prepared,  at which time we commit to a stated  interest
rate. In certain cases we may establish ("lock in") interest rate commitments up
to sixty  (60) days from the  commitment  to  closing;  however,  interest  rate
commitments  beyond sixty days will not normally be issued  unless we receive an
appropriate  fee premium based upon our assessment of the risk associated with a
longer period.

Loan Portfolio Management

     Our portfolio of mortgage loans and Church Bonds is managed and serviced by
our  Advisor  in  accordance  with  the  Advisory  Agreement.   The  Advisor  is
responsible for all aspects of our mortgage loan business, including closing and
recording  of mortgage  loans;  collecting  payments of  principal  and interest
regularly  and upon the maturity of a loan;  enforcing  loan  payments and other
lender's   requirements;   periodic  review  of  each  mortgage  loan  file  and
determination  of its reserve  classification;  and  exercising  our remedies in
connection  with any  defaulted  or  non-performing  loans.  Fees  and  costs of
attorneys,  insurance,  bonds and other direct  expenses  incurred in connection
with the exercise of such  remedies  are our  responsibility.  We may,  however,
recoup these expenses from the borrower in the process of pursuing our remedies.
The Advisor will not receive any additional  compensation for services  rendered
in connection  with loan  portfolio  management  or  exercising  remedies on our
behalf in the event of a loan default.

Loan Funding and Bank Borrowing

     Our  mortgage  loans (and our  purchases  of Church  Bonds) are funded with
available cash resources and, at the discretion of the Advisor,  with borrowings
under a line of credit with a commercial lender or bank.

     We currently  have a  $15,000,000  revolving  credit  facility with KeyBank
National  Association,  Cleveland,  Ohio.  As of December 31,  2007,  we have an
outstanding  balance of $3,350,000 against our line of credit. On July 26, 2007,
we entered into the revolving credit facility and a related promissory note with
KeyBank.  Approximately  $2,800,000 was drawn on the credit facility at closing.
Of that  amount,  $1,956,000  was used to redeem  certain  Series A 2002 secured
investor certificates,  and approximately $650,000 was used to pay off and close
our  previous  line of credit  with  Beacon  Bank.  Borrowings  under the credit
facility are based upon a borrowing base calculation and are available to us for
use in  connection  with  our  working  capital  and  general  corporate  needs.
Additionally,  under certain circumstances,  total availability under the credit
facility  can be  increased to $25 million.  The  revolving  credit  facility is
secured by a first priority security interest in substantially all of our assets
other  than  collateral  pledged  to secure  our  Series A and  Series B secured
investor certificates.

     Advances  under  the  credit  facility  and  related  promissory  note bear
interest at either  KeyBank's  base rate plus an  applicable  margin or at LIBOR
plus an  applicable  margin,  at the  Company's  option.  These rates  adjust as
provided in the credit  agreement for the credit  facility,  but at December 31,
2007, the effective rate was 6.56%. The applicable  margin is indexed based upon
the Company's financial performance.  The Company may prepay loans under certain
circumstances, which include restrictions on notice, timing and amount.

     The credit agreement for the credit facility contains customary affirmative
and  negative   covenants.   The  financial  covenants  include  borrowing  base
restrictions,  a maximum  indebtedness  to  assets  ratio,  a minimum  cash flow
coverage ratio, a minimum tangible net worth ratio, and a maximum non-performing
assets ratio. The creation of indebtedness outside the credit facility, creation
of liens, making of certain investments,  sale of assets, and incurrence of debt
are all either  limited or require  prior  approval  from KeyBank or the lenders
under the credit facility.  The credit agreement also contains  customary events
of default such as nonpayment,  bankruptcy, and change in control, which if they
occur may constitute an event of default.


     Currently,  we may  borrow up to 300% of our  shareholder's  equity (in the
absence  of  a  satisfactory  showing  that  a  higher  level  of  borrowing  is
appropriate;  any excess in borrowing over such 300% level must be approved by a
majority of the Independent  Directors and disclosed to shareholders in the next
quarterly  report  along  with  justification  for such  excess)  to make  loans
regardless of our capacity to (i) sell our securities on a continuing  basis, or
to (ii) reposition assets from the maturity or early repayment of mortgage loans
in our secured investor certificates, minus reserves for operating expenses, and
bad-debt reserves,  as determined by the Advisor. Cash resources available to us
for lending  purposes  include,  in addition to the net proceeds from any future
sales of our common stock, secured investor  certificates (if any) or other debt
securities, (i) principal repayments from borrowers on loans made by us and (ii)
funds borrowed under any line of credit arrangement.

                                       6
<PAGE>


The Advisory Agreement

     We have entered into a contract with the Advisor (the "Advisory Agreement")
under which the Advisor  furnishes  advice and  recommendations  concerning  our
business  affairs,  provides  administrative  services  to us  and  manages  our
day-to-day operations.  We have no employees. All of our personnel needs are met
through the  personnel and  expertise of the Advisor and its  affiliates.  Among
other things, the Advisor:

     o    serves as our mortgage loan underwriter and advisor in connection with
          our primary business of making loans to churches;

     o    advises  and  selects  Church  Bonds  to be  purchased  and  held  for
          investment by us;

     o    services all mortgage loans we make;

     o    provides  marketing and  advertising and generates loan leads directly
          and through its affiliates;

     o    deals   with   regulatory   agencies,   borrowers,   lenders,   banks,
          consultants, accountants, brokers, attorneys, appraisers, insurers and
          others;

     o    supervises the preparation, filing and distribution of tax returns and
          reports to governmental  agencies and to shareholders  and acts on our
          behalf in connection with shareholder relations;

     o    provides office space and personnel as required for the performance of
          the foregoing services; and

     o    as  requested  by us, makes  reports to us of its  performance  of the
          foregoing  services  and  furnishes  advice and  recommendations  with
          respect to other aspects of our business.

     In performing  its services under the Advisory  Agreement,  the Advisor may
use facilities,  personnel and support services of its affiliates. Expenses such
as legal and accounting fees,  stock transfer agent,  registrar and paying agent
fees and proxy  solicitation  expenses  are direct  expenses of ours and are not
provided for by the Advisor as part of its services.

     The Advisory  Agreement is renewable  annually by us for one-year  periods,
subject to our determination, including a majority of the Independent Directors,
that the Advisor's  performance has been  satisfactory and that the compensation
paid the Advisor has been  reasonable.  We may terminate the Advisory  Agreement
with  or  without  cause  upon 60  days  written  notice  to the  Advisor.  Upon
termination of the Advisory  Agreement by either party,  the Advisor may require
us to  change  our name to a name  that does not  contain  the word  "American,"
"America"  or the  name of the  Advisor  or any  approximation  or  abbreviation
thereof, and that is sufficiently dissimilar to the word "America" or "American"
or  the  name  of  the  Advisor  as  to  be  unlikely  to  cause   confusion  or
identification  with either the  Advisor or any person or entity  using the word
"American" or "America" in its name. Our Board of Directors shall determine that
any successor Advisor possess sufficient  qualifications to perform the advisory
function for us and justify the  compensation  provided for in its contract with
us.

     Pursuant to the Advisory  Agreement,  the Advisor is required to pay all of
the expenses it incurs in providing  services to us, including,  but not limited
to, personnel expenses,  rental and other office expenses,  expenses of officers
and  employees  of the  Advisor,  including  travel and all of its  overhead and
miscellaneous  administrative  expenses relating to performance of its functions
under the Advisory Agreement. We are required to pay all other expenses we incur
in the daily  operations  of our  business-such  as the costs  and  expenses  of
reporting to various  governmental  agencies and the  shareholders;  the general
conduct of our operations as a mortgage lender; fees and expenses of appraisers,
directors,  auditors,  outside legal counsel and transfer agents,  directors and
officers liability insurance  premiums,  unreimbursed costs directly relating to
closing of loan  transactions,  and costs  relating to the  enforcement  of loan
agreements and/or foreclosure proceedings.

     In the event that our Total Operating  Expenses exceed in any calendar year
the  greater  of (a) 2% of our  Average  Invested  Assets  or (b) 25% of our net
income,  the Advisor is obligated to reimburse us, to the extent of its fees for
such  calendar  year,  for the amount by which the  aggregate  annual  operating
expenses paid or incurred by us exceed the limitation.  Total operating expenses
as  defined in the  Advisory  Agreement  exclude  expenses  of raising  capital,
interest payments, taxes, non-cash expenditures (including,  but not limited to,
depreciation,  amortization and bad debt reserves),  incentive fees and property
operation and disposition  costs. The Independent  Directors may, upon a finding
of unusual and non-recurring factors which they deem sufficient,  determine that
a higher level of expenses is justified in any given year.

     Our bylaws provide that the Independent Directors are to determine at least
annually  the  reasonableness  of the  compensation  we pay to our  Advisor.  On
January 24, 2007, our Directors reviewed and unanimously approved renewal of the
Advisory  Agreement for another year.  Factors to be considered in reviewing the
Advisory  Fee  include  the size of the fees of the  Advisor in  relation to the
size, composition and profitability of our loan portfolio,  the rates charged by
other investment advisors performing comparable

                                       7
<PAGE>

services,  the success of the Advisor in generating  opportunities that meet our
investment objectives, the amount of additional revenues realized by the Advisor
for other  services  performed  for us, the  quality  and extent of service  and
advice  furnished by the Advisor,  the quality of our investments in relation to
investments  generated  by the  Advisor  for its own  account,  if any,  and the
performance of our investments.

     The Advisory  Agreement  provides for  indemnification by us of the Advisor
and each of its directors,  officers and employees  against expense or liability
arising out of such person's  activities in rendering  services to us,  provided
that the conduct  against which the claim is made was determined by such person,
in good faith,  to be in our best interests and was not the result of negligence
or misconduct.

Financing Policies

     Our business of mortgage lending to churches and other non-profit religious
organizations  is  managed  in  accordance  with and  subject  to the  policies,
guidelines,  restrictions and limitations  identified herein (collectively,  the
"Financing  Policy").  The intent of the Financing Policy is to identify for our
shareholders  not only the general  business in which we are  involved,  but the
parameters of our lending business. These policies may not be changed (except in
certain  immaterial  respects  by majority  approval of the Board of  Directors)
without the approval of a majority of the Independent Directors, and the holders
of a majority of our outstanding shares at a duly held meeting for that purpose:

     (i)  Loans  made by us will be  limited to  churches  and other  non-profit
          religious  organizations,  and will be secured by mortgages. The total
          principal  amount of all second mortgage loans that we fund is limited
          to 20% of  Average  Invested  Assets.  All other  loans  will be first
          mortgage loans.

     (ii) The total  principal  amount of  mortgage-secured  debt  securities we
          purchase from churches and other non-profit religious organizations is
          limited to 30% of our Average Invested Assets.

     (iii) The loan amount cannot exceed 75% of the value of the real estate and
          improvements  securing each loan, such value being determined based on
          a  written  appraisal  prepared  by an  appraiser  acceptable  to  the
          Advisor.  On all loans, we will require a written appraisal  certified
          by a member of the Appraisal  Institute ("MAI"),  or a state-certified
          appraiser.

     (iv) An ALTA (American Land Title Association) or equivalent Mortgage Title
          Policy must be furnished  to us by the borrower  insuring our mortgage
          interest.

     (v)  The  borrower's  long-term  debt  (including the proposed loan) cannot
          exceed  four times  their gross  income for the  previous  twelve (12)
          months.

     (vi) The borrower must furnish us with financial  statements (balance sheet
          and income and expense  statement)  for their last three (3)  complete
          fiscal years and a current  financial  statement for the period within
          ninety days of the loan  closing  date.  On loans of $500,000 or less,
          the last  complete  fiscal  year must be  reviewed  by an  independent
          accounting  firm.  On loans in excess of  $500,000,  the  Advisor  may
          require that the last  complete  fiscal year  financial  statements be
          audited by an  independent  auditor.  Borrowers in existence  for less
          than three fiscal years must provide financial  statements since their
          inception.  No loan will be extended to a borrower in  operation  less
          than two years absent express approval by our Board of Directors.

     (vii) The Advisor typically  requires the borrower to arrange for automatic
          electronic payment or drafting of monthly payments.

     (viii) The Advisor may require (i) key-man  life  insurance  on the life of
          the senior  pastor of a church;  (ii)  personal  guarantees  of church
          members and/or affiliates;  and (iii) other security  enhancements for
          our benefit.

     (ix) The  borrower  must agree to provide to us annual  reports  (including
          financial  statements)  within  120  days  of  each  fiscal  year  end
          beginning  with the fiscal year end next  following the funding of the
          loan.

     (x)  The  Advisor  may  require  the  borrower  to grant  to us a  security
          interest in all personal  property  located and to be located upon the
          mortgaged premises (excluding property leased by the borrower).

     (xi) We  require  borrowers  to  maintain a general  perils  and  liability
          coverage  insurance  policy naming us as the  loss-payee in connection
          with  damage or  destruction  to the  property of the  borrower  which
          typically includes  weather-related damage, fire, vandalism and theft.
          Our  Advisor may require  the  borrower to provide  flood,  earthquake
          and/or other special coverage.

                                       8

<PAGE>

     These Financing Policies are in addition to the prohibited  investments and
activities identified below and which are set forth in our Bylaws.

Prohibited Investments and Activities

     Our Bylaws impose certain  prohibitions  and restrictions on our investment
practices and lending activities, including prohibitions against:

     (i)  Investing  more  than  10% of our  total  assets  in  unimproved  real
          property or mortgage loans on unimproved real property;

     (ii) Investing in commodities  or commodity  futures  contracts  other than
          "interest rate futures" contracts intended only for hedging purposes;

     (iii) Investing in mortgage loans (including construction loans) on any one
          property  which in the aggregate  with all other mortgage loans on the
          property  would  exceed  75% of the  appraised  value of the  property
          unless  substantial  justification  exists  because of the presence of
          other underwriting criteria;

     (iv) Investing in mortgage  loans that are  subordinate  to any mortgage or
          equity  interest  of the  Advisor  or the  Directors  or any of  their
          Affiliates;

     (v)  Investing in equity securities;

     (vi) Engaging  in  any  short  sales  of  securities  or  in  trading,   as
          distinguished from investment activities;

     (vii) Issuing redeemable equity securities;

     (viii) Engaging in  underwriting  or the agency  distribution of securities
          issued by others;

     (ix) Issuing  options or  warrants  to  purchase  our shares at an exercise
          price less than the fair market value of the shares on the date of the
          issuance or if the issuance  thereof would exceed 10% in the aggregate
          of our outstanding shares;

     (x)  The aggregate  borrowings of the  corporation,  secured and unsecured,
          must be  reasonable  in  relation to the  Shareholder's  Equity of the
          corporation and must be reviewed by the Independent Directors at least
          quarterly.  The maximum amount of such  borrowings can not exceed 300%
          of Shareholder's  Equity in the absence of a satisfactory showing that
          a higher level of borrowing  is  appropriate.  Any excess in borrowing
          over such 300% level must be  approved  by a majority  of  Independent
          Directors and disclosed to shareholders  in the next quarterly  report
          along with justification for such excess;

     (xi) Investing in real estate  contracts of sale unless such  contracts are
          in  recordable  form and are  appropriately  recorded  in the chain of
          title;

     (xii) Selling or  leasing  to the  Advisor,  a  Director  or any  Affiliate
          thereof  unless  approved by a majority of our Directors  (including a
          majority  of  our  Independent  Directors),   who  are  not  otherwise
          interested in such transaction, as being fair and reasonable to us;

     (xiii) Acquiring  property  from any Advisor or Director,  or any Affiliate
          thereof,  unless a majority of our Directors  (including a majority of
          our  Independent  Directors) who are not otherwise  interested in such
          transaction  approve the  transaction as being fair and reasonable and
          at a price  to us which is no  greater  than the cost of the  asset to
          such Advisor, Director or any Affiliate thereof, or if the price to us
          is in excess of such cost,  that  substantial  justification  for such
          excess  exists and such  excess is  reasonable.  In no event shall the
          cost of such asset exceed its current appraised value;

     (xiv) Investing or making  mortgage  loans unless a mortgagee's  or owner's
          title  insurance  policy  or  commitment  as to  the  priority  of the
          mortgage or condition of title is obtained; or

     (xv) Issuing   shares  on  a  deferred   payment  basis  or  other  similar
          arrangement.

     We do not invest in the  securities  of other  issuers  for the  purpose of
exercising control, to engage in the purchase and sale of investments other than
as described in this Report, to offer securities in exchange for property unless
deemed prudent by a majority of the Directors,  to issue senior securities or to
make loans to other  persons  except in the  ordinary  course of our business as
described herein.

                                       9
<PAGE>

     We will not make loans to or borrow from, or enter into any contract, joint
venture or transaction  with,  any of our Directors or officers,  the Advisor or
any  Affiliate  of any of the  foregoing  unless a  majority  of our  Directors,
including a majority of our Independent  Directors,  approves the transaction as
fair and reasonable to us and the transaction is on terms and conditions no less
favorable  to us than those  available  from  unaffiliated  third  parties.  Any
investment  by us in any  property,  mortgage  or  other  real  estate  interest
pursuant to a transaction  with the Advisor or any Directors or officers thereof
will be based upon an appraisal of the  underlying  property from an independent
qualified  appraiser selected by the Independent  Directors and will not be made
at a price greater than fair market value as determined by such appraisal.

Under Performing and Non-Performing Loans

     As of  December  31,  2007,  we have four  first  mortgage  loans  totaling
approximately  $1,156,000 that are three or more monthly payments in arrears. We
may incur a loss if these  borrowers are unable to bring their payments  current
and we are  compelled  to  foreclose  on their  properties.  We may be unable to
dispose  of the  foreclosed  properties  on terms  that  enable us to recoup our
expenses and outstanding balances. We have initiated foreclosure  proceedings on
three of these loans and expect to take  possession  of these  churches and list
their  properties  for sale.  In  addition,  we have  foreclosed  and have taken
possession  of five  properties  with total loan balances  outstanding  totaling
approximately $2,202,000 and have listed four of the properties for sale through
local  realtors.  We have an earnest money deposit on the fifth property and are
awaiting an updated  certificate of occupancy from the city in order to transfer
the property. One of the properties was acquired through foreclosure proceedings
in 2007.  The fair value of the  properties was $1,566,561 at December 31, 2007.
Competition

     The  business of making loans to churches  and other  non-profit  religious
organizations is highly competitive. We compete with a wide variety of investors
and other lenders,  including banks,  savings and loan  associations,  insurance
companies,  pension funds and fraternal  organizations which may have investment
objectives  similar  to our own.  A number  of these  competitors  have  greater
financial resources, larger staffs and longer operating histories than we do. We
compete  principally by limiting our business "niche" to lending to churches and
other non-profit  religious  organizations,  offering loans with competitive and
flexible  terms,  and  emphasizing  our  expertise in the  specialized  industry
segment  of  lending  to  churches  and  other  religious   organizations.   Our
competitive "specialty" is in offering fixed-rate, long-term loans, which few of
our competitors make available to churches.

Employees

     We have no employees.  Our daily  operations and other material  aspects of
our business are managed by Church Loan  Advisors,  Inc.  (the  "Advisor")  on a
"turn-key"  basis using  employees  of the  Advisor  and/or its  Affiliates.  At
present,  certain  officers  and  directors  of  American  and the  Advisor  are
providing  services to us at no charge and which will not be reimbursed to them.
These services  include,  among others,  legal and analytic services relating to
the execution of our business plan, development and preparation of reports to be
filed under the Securities  Exchange Act, and  utilization of proprietary  forms
and  documents   utilized  by  the  Advisor  in  connection  with  our  business
operations.

     Subject to the  supervision  of the Board of  Directors,  our  business  is
managed by the Advisor, which provides us investment advisory and administrative
services.  Philip  J.  Myers,  our  Chief  Executive  Officer,  Treasurer  and a
Director, is President of the Advisor and President of American Investors Group,
Inc., the  underwriter of our past public  offerings.  The Advisor employs three
people on a part-time or other basis.  The Company does not presently  expect to
directly   employ  anyone  in  the   foreseeable   future,   since  all  of  our
administrative  functions and operations are contracted for through the Advisor.
However,  legal,  accounting  and certain  other  services are provided to us by
outside professionals and paid by us directly.

Operations

     Our  operations  currently  are located in the 8,200 square foot offices of
the Advisor's  affiliate,  American  Investors Group,  Inc., 10237 Yellow Circle
Drive, Minnetonka,  Minnesota 55343. These facilities are owned by Yellow Circle
Partners,  L.L.P.,  a  partnership  owned in part by Philip J. Myers,  our Chief
Executive Officer,  Treasurer and a Director.  We are not separately charged any
rent  for our use of  these  facilities,  or for  our use of  copying  services,
telephones,  facsimile  machines,  postage service,  office supplies or employee
services, since these costs are covered by the advisory fee paid to the Advisor.
However, we do pay postage service for costs associated with the distribution of
dividends and proxy materials to our shareholders.

                                       10
<PAGE>

Risk Factors

Risks Related to Mortgage Lending

     We Are Subject to the Risks  Generally  Associated  with Mortgage  Lending.
Mortgage  lending involves various risks,  many of which are  unpredictable  and
beyond our control and  foresight.  It is not possible to identify all potential
risks  associated  with  mortgage  lending.   Some  of  the  more  common  risks
encountered may be summarized as follows:


<TABLE>
<CAPTION>
<S>                                                  <C>
o  low demand for mortgage loans                     o   availability of alternative financing
                                                         and competitive conditions
o  interest rate fluctuations
                                                     o   factors affecting specific borrowers
o  changes in the level of consumer confidence
                                                     o   losses associated with default,
o  availability of credit-worthy borrowers               foreclosure of a mortgage, and sale of the
                                                         mortgaged property
o  national and local economic conditions
                                                     o   state and federal laws and regulations
o  demographic and population patterns
                                                     o   bankruptcy or insolvency of a borrower
o  zoning regulations
                                                     o   financial industry market risk
o  taxes and tax law changes
</TABLE>

     Second Mortgage Loans Pose Additional  Risks. Our financing  policies allow
us to make second  mortgage  loans.  The principal  amount of such loans may not
exceed 20% of our Average  Invested  Assets.  Second  mortgage loans entail more
risk than first mortgage loans,  as foreclosure of senior  indebtedness or liens
could require us to pay the senior debt or risk losing our mortgage,  or reduced
collateral value may reduce or eliminate our security.

     Fixed and Variable-Rate  Debt Can Result in Yield  Fluctuations.  Fixed and
variable-rate  debt obligations  carry certain risks. A general rise in interest
rates could make the yield on a particular  mortgage loan lower than  prevailing
rates.  This could negatively affect our value and consequently the value of our
shares and  certificates.  Neither we nor our  advisor  can  predict  changes in
interest  rates.  We will attempt to reduce this risk by maintaining  medium and
longer-term  mortgage  loans  and  through  offering  adjustable  rate  loans to
borrowers.  We do not intend to borrow funds or sell certificates if the cost of
such borrowing exceeds the income we believe we can earn from lending the funds.
The  average  holding  period of our debt is less  than  three  years  which has
mitigated this risk in yield fluctuations.

     The Mortgage Banking Industry Is Highly Competitive. We compete with a wide
variety of lenders,  including banks,  savings and loan associations,  insurance
companies,  pension funds and fraternal  organizations  for mortgage loans. Many
competitors have greater financial resources, larger staffs and longer operating
histories  than we have, and thus may be a more  attractive  lender to potential
borrowers.  We intend to compete by limiting our business  "niche" to lending to
churches  and other  non-profit  religious  organizations,  offering  loans with
competitive and flexible terms, and emphasizing our expertise in the specialized
industry  segment  of  lending  to  churches  and  other  non-profit   religious
organizations.

     Fluctuations  in  Interest  Rates May Affect Our  Ability to  Generate  New
Loans.  Prevailing market interest rates impact borrower decisions to obtain new
loans or to refinance existing loans, possibly having a negative effect upon our
ability to originate mortgage loans. If interest rates decrease and the economic
advantages of refinancing  mortgage loans increase,  then  prepayments of higher
interest  mortgage  loans in our portfolio  would likely reduce our  portfolio's
overall rate of return (yield).

We Are Subject to the Risks  Associated with  Fluctuations in National and Local
Economic  Conditions.  The  mortgage  lending  industry is subject to  increased
credit risks and rates of foreclosures during economic  downturns.  In addition,
because we provide  mortgages to churches and other religious  organizations who
generally  receive  financing through  charitable  contributions,  our financial
results are subject to fluctuations based on a lack of consumer  confidence or a
severe or  prolonged  national or regional  recession.  As a result of these and
other  circumstances,  our potential  borrowers may decide to defer or terminate
plans for financing their  properties  decreasing  demand for mortgage loans. In
addition,  during such economic  times we may be unable to locate  credit-worthy
borrowers.

     Our Business May Be Adversely Affected If Our Borrowers Become Insolvent or
Bankrupt or Cease Using the Financed Facilities.  If any of our borrowers become
insolvent or bankrupt,  the borrower's mortgage payments will be delayed and may
cease  entirely.  We may be forced to  foreclose  on the mortgage and take legal
title to the real  estate  and incur  expenses  related to the  foreclosure  and
disposition  of the property.  The sale of church  property can take longer than
typical  commercial  or  residential  real estate  because of its "special  use"
nature.  We have  experienced  extended  offering periods for properties we hold
through  foreclosure.  This has, and we expect  will,  compel us to discount our
asking prices and/or our actual sale prices to liquidate foreclosed properties.

                                       11

Risks Related to Mortgage Lending to Churches

     Churches  Rely  on  Member  Contributions  to  Repay  Our  Loans.  Churches
typically rely on member  contributions  for their primary source of income.  As
such,  member  contributions are the primary source used to repay our loans. The
membership  of a church or the per capita  contributions  of its members may not
increase  or remain  constant  after a loan is funded.  A decrease in a church's
income  could  result  in its  temporary  or  continued  inability  to  pay  its
obligation  to us,  which may affect our ability to pay  dividends on our common
stock or pay interest or principal due on the  certificates.  We have no control
over the financial performance of a borrowing church after a loan is funded.

     Churches Depend Upon Their Senior Pastors. A church's senior pastor usually
plays an important role in the management, leadership and continued viability of
that  church.  A senior  pastor's  absence,  resignation  or death  could have a
negative  impact on a church's  operations,  and thus its  continued  ability to
generate revenues sufficient to service its obligations to us.

     The Limited Use Nature of Church  Facilities  Can Limit the Resale Value of
Our Mortgage  Collateral.  Our loans are secured  principally by first mortgages
upon the  real  estate  and  improvements  owned  or to be  owned  by  borrowing
churches.   Although  we  will  require  an  appraisal  of  the  premises  as  a
pre-condition  to making a loan, the appraised  value of the premises  cannot be
relied upon as being the actual  amount  which might be obtained in the event we
need to foreclose after a default by the borrower.  The actual liquidation value
of church,  school or other  institutional  premises could be adversely affected
by, among other factors:  (i) its limited use nature;  (ii) the  availability on
the market of similar properties;  (iii) the availability and cost of financing,
rehabilitation or renovation to prospective  buyers; (iv) the length of time the
seller is willing to hold the property on the market; or (v) the availability in
the area of the mortgaged  property of  congregations or other buyers willing to
pay the fair value for a church facility. This factor may influence our decision
to restructure the terms of a non-performing loan rather than foreclosing on the
church property.

     Expenses of Foreclosure  May Prevent Us From Recovering the Full Value of a
Loan.  If we  foreclose  on a mortgage  and take legal title to a church's  real
estate,  real estate  taxes could be levied and  assessed  against the  property
until sold since the property  would no longer be owned by a non-profit  entity.
The  property  may also  incur  operating  expenses  pending  its sale,  such as
property insurance, utilities, security, repairs and maintenance. These expenses
would be our financial  responsibility,  and could be substantial in relation to
our prior loan if we cannot readily dispose of the property. Such expenses could
prevent us from recovering the full value of a loan in the event of foreclosure.

Risks Related to Us

     Our Failure to Qualify as a Real Estate  Investment  Trust Could Reduce the
Funds We Have Available For Investment.  We operate as a real estate  investment
trust ("REIT").  As a REIT, we are allowed a deduction for dividends paid to our
shareholders in computing our taxable income.  Thus, only our  shareholders  are
taxed on our taxable  income that we distribute.  This  treatment  substantially
eliminates  the "double  taxation"  of earnings to which most  corporations  and
their shareholders are subject. Qualification as a REIT involves the application
of highly technical and complex Internal Revenue Code provisions.

     To qualify and  maintain our status as a REIT,  we must meet certain  share
ownership,  income,  asset and  distribution  tests on a  continuing  basis.  No
assurance can be given that we will satisfy  these tests at all times.  Further,
the requirements for a REIT may substantially affect day-to-day  decision-making
by our advisor.  Our advisor may be forced to take action it would not otherwise
take or refrain  from action  which might  otherwise  be  desirable  in order to
maintain our REIT status.

     If we fail to  qualify  as a REIT in any  taxable  year,  then we  would be
subject to federal income tax on our taxable income at regular  corporate  rates
and not be allowed a deduction for  distributions to  shareholders.  We would be
disqualified  from treatment as a REIT for the four taxable years  following the
year of losing  our REIT  status.  We intend to  continue  to operate as a REIT.
However, future economic, market, legal, tax or other consequences may cause our
board of directors to revoke the REIT election.  The payment of taxes  resulting
from our  disqualification  as a REIT or  revocation of REIT status would reduce
the funds available for distribution to shareholders or for investment.  Because
interest paid to certificate  holders will be a deductible  business  expense to
us, loss of our REIT  status  would not  necessarily  impede our ability to make
interest payments to holders of certificates.

     Conflicts of Interest  Arise From Our  Relationship  with Our Advisor.  The
terms of transactions  involving our formation and the formation of our Advisor,
and our  contractual  relationship  with our  Advisor,  were not  negotiated  at
arm's-length.  Our non-independent  directors and officers may have conflicts of
interest in enforcing  agreements  between us and our Advisor.  Future  business
arrangements and agreements between us and our Advisor and their affiliates must
be approved by our board of directors,  including a majority of our  independent
directors.

                                       12

<PAGE>

Risks Related to the Shares

     There Is No  Public  Market  for Our  Shares.  There is no  market  for our
shares. It is unlikely that a market will develop. There are no current plans to
list on any exchange or qualify our shares for quotation on NASDAQ. In addition,
the market for REIT  securities  historically  has been less  liquid  than other
types of publicly-traded equity securities.

     There Are Restrictions on Certain Transfers of Our Shares.  Our articles of
incorporation  and bylaws  prohibit a transfer of shares to any person who, as a
result,  would  beneficially  own  shares in  excess of 9.8% of the  outstanding
capital stock and allow us to redeem shares held by any person in excess of 9.8%
of the outstanding  capital stock.  These  provisions may reduce market activity
for the shares and the  opportunity  for  shareholders  to receive a premium for
their shares.

     Fluctuations  in  Interest  Rates  May  Cause  the  Value of Our  Shares to
Fluctuate.  Prevailing market interest rates impact borrower decisions to obtain
new loans or to refinance existing loans, possibly having a negative effect upon
our ability to originate  mortgage  loans.  Fluctuations  in interest  rates may
cause the value of the shares to  fluctuate  unpredictably.  If  interest  rates
decrease and the economic  advantages of refinancing  mortgage  loans  increase,
then prepayments of higher interest mortgage loans in our portfolio would likely
reduce the portfolio's overall rate of return (yield).

     Interest  Payments to Certificate  Holders May Reduce Dividend  Payments on
Our  Shares.  We  attempt  to deploy  our  capital  into new loans at rates that
provide a positive interest rate spread. This spread, however, may be materially
and  adversely  affected  by changes in  prevailing  interest  rates which would
reduce our net income.  If this occurs,  we may not have  sufficient  net income
after paying interest on the certificates to maintain  dividends to shareholders
at the levels paid in the past or even to pay  dividends  at all.  In  addition,
because dividends are directly affected by the yields generated on the Company's
portfolio  of  loans  and  bonds,  shareholders  dividends  can be  expected  to
fluctuate significantly with interest rates generally.

Risks Related to the Certificates

     We May Incur More Indebtedness. We may incur additional indebtedness in the
future. We may assign or pledge some of our mortgage-secured promissory notes or
other  collateral in connection  with  incurring this  additional  indebtedness.
Under  our  Bylaws,  as  amended,  we may incur  indebtedness  up to 300% of our
shareholder's  equity,  the level  permitted  under  North  American  Securities
Administrators   Association   ("NASAA")   guidelines,   in  the  absence  of  a
satisfactory showing that a higher level of borrowing is appropriate; any excess
in  borrowing  over  such 300%  level  must be  approved  by a  majority  of the
Independent Directors and disclosed to shareholders in the next quarterly report
along with justification for such excess.

     There Are Potential Adverse Effects Associated With Lending Borrowed Funds.
We have  deployed the proceeds  from the sale of secured  investor  certificates
into loans to churches and other  non-profit  religious  organizations.  We have
also used our line of credit with KeyBank,  Cleveland,  Ohio, from time to time,
to fund  loans,  and intend to use our line of credit in this way in the future.
Lending borrowed funds is subject to greater risks than in unleveraged  lending.
The profit we realize from lending  borrowed funds is largely  determined by the
difference, or "spread," between the interest rates we pay on the borrowed funds
and the interest  rates that our  borrowers pay us. Our spread may be materially
and adversely affected by changes in prevailing interest rates. Furthermore, the
financing  costs  associated  with  lending  borrowed  funds could  decrease the
effective  spread in lending  borrowed funds,  which could adversely  affect our
ability to pay interest on and repay the certificates as they mature.

     There Is No Public Market for the Certificates.  There is no market for the
certificates.  It is unlikely that a market will  develop.  There are no current
plans to list the  certificates on any exchange or for a broker-dealer to make a
market  in the  certificates.  In  addition,  the  market  for  REIT  securities
historically  has  been  less  liquid  than  the  markets  for  other  types  of
publicly-traded securities.

     There Is No  Sinking  Fund,  Insurance  or  Guarantee  Associated  With the
Certificates.  We do not contribute funds to a separate account,  commonly known
as a sinking  fund,  to repay  principal  or interest on the  certificates  upon
maturity or default. Our certificates are not certificates of deposit or similar
obligations  of, or  guaranteed  by, any  depository  institution.  Further,  no
governmental or other entity insures or guarantees  payment on the  certificates
if we do  not  have  enough  funds  to  make  principal  or  interest  payments.
Therefore,  holders  of our  certificates  have  to  rely  on our  revenue  from
operations,  along  with  the  security  provided  by  the  collateral  for  the
certificates, for repayment of principal and interest on the certificates.

     The Collateral for the Certificates May Not Be Adequate If We Default.  The
certificates must at all times be secured by  mortgage-secured  promissory notes
and church bonds having an outstanding  principal balance equal to at least 100%
of the outstanding  principal balance of the certificates.  If we default in the
repayment of the certificates,  or another event of default occurs,  the trustee
will not be able to foreclose on the mortgages securing the promissory notes and
bonds in order to obtain funds to repay certificate holders. Rather, the trustee
will need to look to the revenue stream associated with our borrowers'  payments
on or repayment of the promissory  notes and bonds or revenue  derived from sale
of the promissory notes or bonds to repay  certificate  holders.  If the trustee
chooses to rely on revenues received from our borrowers, certificate holders may
face a delay in payment on  certificates  in the event of default,  as borrowers
will repay their  obligations to us in accordance  with  amortization  schedules
associated

                                       13
<PAGE>

with their  promissory notes or bonds. If the trustee chooses to sell promissory
notes or bonds in the event of our default,  the proceeds from the sales may not
be  sufficient  to  repay  our  obligations  on  all  outstanding  or  defaulted
certificates.

     The  Certificates  Are  Not  Negotiable  Instruments  and  Are  Subject  to
Restrictions on Transfer.  The certificates are not negotiable debt instruments.
Rights of record  ownership of the certificates may be transferred only with our
Advisor's  prior  written  consent.  Certificate  holders are not able to freely
transfer the certificates.

     We Are  Obligated  To Redeem  Certificates  Only In Limited  Circumstances.
Certificate  holders  have no  right to  require  us to  prepay  or  redeem  any
certificate  prior to its  maturity  date,  except in the case of death or if we
replace our current Advisor. Further, even in the event of death, we will not be
required  to  redeem  certificates  if we have  redeemed  at  least  $25,000  of
principal  amount of certificates for the benefit of estates during the calendar
quarter.  There is no present intention to redeem certificates prior to maturity
except in the case of death of a certificate holder.

     We May Not Have  Sufficient  Available  Cash to Redeem  Certificates  If We
Terminate Our Advisory  Agreement With Our Current Advisor.  We will be required
to offer to redeem all  outstanding  certificates  if we terminate  our advisory
agreement with Church Loan Advisors,  Inc., our current Advisor, for any reason.
If the holders of a significant principal amount of certificates request that we
redeem their certificates,  we may be required to sell a portion of our mortgage
loan and church bond portfolio to satisfy the redemption requests. Any such sale
could be at a discount to the  recorded  value of the  mortgage  loans and bonds
being  sold.  Further,  if we are  unable to sell  loans or church  bonds in our
portfolio, we may be unable to satisfy the redemption obligations.

     The Indenture Contains Limited Protection For Holders of Certificates.  The
indenture  governing the  certificates  contains only limited  events of default
other than our failure to pay  principal  and  interest on the  certificates  on
time. Further, the indenture provides for only limited protection for holders of
certificates upon a consolidation or merger between us and another entity or the
sale or transfer of all or substantially all of our assets. If we default in the
repayment of the certificates under the indenture, certificate holders will have
to rely on the trustee to exercise  any  remedies on their  behalf.  Certificate
holders will not be able to seek remedies against us directly.

Risks Related to Management

     We Are Dependent Upon Our Advisor. Our Advisor, Church Loan Advisors, Inc.,
manages us and selects our  investments  subject to general  supervision  by our
Board of Directors and compliance with our lending policies.  We depend upon our
Advisor and its  personnel  for most  aspects of our  business  operations.  Our
success  depends  on the  success  of our  Advisor  in  locating  borrowers  and
negotiating loans upon terms favorable to us. Among others, our Advisor performs
the following services for us:
<TABLE>
<CAPTION>

<S>                                                          <C>
o mortgage loan marketing and procurement                    o  managing relationships with our accountants and attorneys
o bond portfolio selection and investment                    o  corporate management
o mortgage loan underwriting                                 o  bookkeeping
o mortgage loan servicing                                    o  reporting to state, federal, tax and other
o money management                                              authorities
o developing and maintaining business relationships          o  reports to shareholders and shareholder relations
o maintaining "goodwill"                                     o  loan enforcement and collections
</TABLE>

     Our  shareholders'  right to participate in management is generally limited
to the election of directors.  Certificate  holders have no right to participate
in our management. Certificate holders must be willing to entrust our management
to our Advisor and our Board of Directors.

     We Have Conflicts of Interest with Our Advisor and Affiliates. Affiliations
and conflicts of interests  exist among our officers and directors and the owner
and  officers  and  directors  of our  Advisor and  affiliates.  Our Advisor and
affiliates  are both  controlled by our Chief  Executive  Officer and President,
Philip  Myers.  Our  President and the officers and directors of our Advisor are
involved  in the church  financing  business  through  their  affiliations  with
American Investors Group, Inc.  ("American").  American  originates,  offers and
sells first  mortgage  bonds for churches.  We may purchase first mortgage bonds
issued by churches  through  American in its  capacity  as  underwriter  for the
issuing church,  or as broker or dealer on the secondary  market. In such event,
American  would  receive  commissions  (paid by the issuing  church) on original
issue bonds, or "mark-ups" in connection with any secondary transactions.  If we
sell church bonds in our portfolio,  the bonds will be sold through American. We
would pay American  commissions in connection with such transactions,  but in no
event, in excess of those normally charged to customers.

     Our Bylaws limit the amount of all commissions, mark-downs or mark-ups paid
to American.  Our business dealings with our Advisor and its affiliates  outside
of the ordinary  course of our  activities are subject to approval by a majority
of our Board of Directors, including a majority of our Independent Directors.

                                       14

<PAGE>

     Generally, mortgage loans we originate are smaller than the bond financings
originated by American.  However,  there may be circumstances  where our Advisor
and American could recommend either type of financing to a prospective borrower.
The decisions of our Advisor and American could affect the credit quality of our
portfolio.

     Redemption  Obligations Relating to the Certificates May Affect Our Ability
to Replace our Advisor.  We will be required to offer to redeem all  outstanding
certificates  if we terminate our advisory  agreement with Church Loan Advisors,
Inc. Our  independent  directors are required to review and approve the advisory
agreement with our Advisor on an annual basis. The redemption provision relating
to the  certificates  may have the effect of reducing our ability to replace our
current Advisor.

Risks Related to Environmental Laws

     We May Face Liability Under  Environmental  Laws. Under federal,  state and
local laws and  regulations,  a secured  lender  (like us) may be liable,  under
certain  limited  circumstances,  for the costs of  removal  or  remediation  of
certain  hazardous or toxic  substances  and other costs  (including  government
fines and injuries to persons and adjacent  property).  Liability may be imposed
whether or not the owner or lender knew of, or was responsible for, the presence
of  hazardous  or toxic  substances.  The costs of  remediation  or  removal  of
hazardous or toxic substances, or of fines for personal or property damages, may
be  substantial  and  material  to our  business  operations.  The  presence  of
hazardous  or toxic  substances,  or the  failure  to  promptly  remediate  such
substances,  may adversely  affect our ability to resell real estate  collateral
after  foreclosure or could cause us to forego  foreclosure.  This is a changing
area of the law.  The  courts  have  found  both in  favor  and  against  lender
liability in this area under various factual scenarios.

     The   Collateral   For  Our  Loans  and  Our  Lenders  May  Be  Subject  to
Environmental  Claims. If there are environmental  problems  associated with the
real estate  securing any of our loans,  the  associated  remediation or removal
requirements  imposed by federal,  state and local laws could affect our ability
to realize  value on our  collateral  or our  borrowers'  ability to repay their
loans.

Item 2.   Description of Property

     Our  operations  are located in the leased  offices of  American  Investors
Group, Inc., in Minnetonka,  Minnesota.  It is expected that for the foreseeable
future our  operations  will  continue  to be housed in these or similar  leased
premises along with American's  operations and those of the Advisor.  We are not
directly  charged for rent,  nor do we incur other costs relating to such leased
space, since the Advisor is including this expense in the Advisory Fee.

Properties We Own

     Foreclosure  of a $216,000 loan was completed on a church located in Battle
Creek,  Michigan in May 2004.  The church  congregation  has  disbanded  and the
church's  property is  currently  unoccupied.  We have taken  possession  of the
church and have listed the property for sale through a local realtor.

     Foreclosure  of a $339,000 loan was completed on a church located in Tyler,
Texas in June 2005.  The church  congregation  has  disbanded  and the  church's
property is currently  unoccupied.  We have taken  possession  of the church and
have listed the property for sale through a local realtor.

     Foreclosure  of a  $401,000  loan  was  completed  on a church  located  in
Cleveland,  Ohio in December 2005. The church congregation has disbanded and the
church's property is currently unoccupied.  We took possession of the church and
listed the property for sale through a local  realtor.  The sale of the property
was completed on January 18, 2008.  The property sold for $215,000.  We received
approximately  $182,000  from the sale of the property  after  closing costs and
realtor fees. We will realize on taxable loss on the property  totaling $221,000
in 2008.

     Foreclosure of a $420,000 loan was completed on a church located in Dayton,
Ohio in August  2006.  The church  congregation  is now  meeting in a  different
location and the church property is currently unoccupied.  The Company has taken
possession  of the church and has listed the  property  for sale through a local
realtor.

     Foreclosure  of a $826,000 loan was also completed on a building owned by a
church in Dallas,  Texas in March 2007. The Company has taken  possession of the
building  and has an earnest  money  deposit  from a buyer.  We are  awaiting an
updated  certificate of occupancy from the county,  which is required before the
transfer of the property can occur.

Item 3.   Legal Proceedings.

     There are presently no legal actions against us or our advisor,  pending or
threatened.  However, a borrower church located in Coupland,  Texas defaulted on
its  loan  and we  foreclosed  upon and  sold  the  church's  property  in 2007.
Additionally,  we filed a civil lawsuit against the construction  contractor for
that church to recover the construction  proceeds.  The lawsuit alleges a scheme
by the  contractor  to defraud our  borrower  and us of  approximately  $800,000
through the use of falsified construction documents. In addition to our lawsuit,
the  contractor  has been indicted by a Texas grand jury and has been  arrested.
The contractor is begin arraigned on criminal charges soon.

                                       15

<PAGE>

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

          None.

                                     PART II

Item 5.  Market for Common Equity and Related  Stockholder Matters and Small
         Business Issuer Purchases of Equity Securities.

Outstanding Securities

     As of  February  29,  2008,  2,493,595  shares  of  our  common  stock  and
$22,831,000 of secured investor certificates were issued and outstanding. We did
not sell any securities in 2007.

Holders of Our Common Shares

     As of February 29, 2008, we had 1,043 record holders of our $.01 par common
stock.

Lack of Liquidity and Absence of Public Market Price.

     There  is no  market  for our  common  shares.  It is not  expected  that a
material  market for the shares will  develop any time soon.  In  addition,  the
market for REIT  securities  historically  has been less  liquid  than  non-real
estate types of publicly-traded  equity securities.  Because of such illiquidity
and the fact  that the  shares  would be valued  by  market-makers  (if a market
develops)  based on market  forces which  consider  various  factors  beyond our
control,  there can be no  assurance  that the market value of the shares at any
given time would be the same or higher  than the  public  purchase  price of our
shares.  In addition,  the market price, if a market develops,  could decline if
the yields from other competitive  investments  exceed the actual dividends paid
by us on our shares.  Our common stock is not currently  listed or traded on any
exchange or market and is not quoted on the National  Association  of Securities
Dealers,  Inc.  Automated  Quotation  System  ("NASDAQ").   "Pink  Sheet"  price
quotations  for our stock under the symbol "ACMC" were made at certain  isolated
times  during 2007 by other  broker-dealers  at prices as low as $4.45 per share
and as high as $7.80 per share.

Repurchase of Our Shares

     Although our shares of common stock are not redeemable by us, we may at our
complete  discretion,  repurchase  shares offered to us from time to time by our
shareholders.  In such  event,  we may pay  whatever  price  the  Advisor  deems
appropriate  and   reasonable,   and  any  such  shares   repurchased   will  be
re-designated  as  "unissued,"  will no longer be  entitled to  distribution  of
dividends and will cease to have voting rights. The Company's board of directors
has authorized the repurchase of shares subject to  availability  of capital and
generally  limited  to prices at which no  dilution  of equity  (book  value) is
experienced by remaining  shareholders.  We did not repurchase any shares during
fiscal year 2007.

Dividends

     We paid  dividends on our common stock for the fiscal years ended  December
31, 2007 and 2006 as follows:
<TABLE>
<CAPTION>

========================================================================================================
 For Quarter Ended:            Dollar Amount Distributed                Annualized Yield Per $10
                                       Per Share:                           Share Represented:
--------------------------------------------------------------------------------------------------------
                              2007                  2006                2007               2006


--------------------------------------------------------------------------------------------------------
<S>        <C>               <C>                   <C>                  <C>                <C>
     March 31st              $.1625                $.1375               6.50%              5.50%
--------------------------------------------------------------------------------------------------------
      June 30th               $.025                $.1375               1.00%              5.50%
--------------------------------------------------------------------------------------------------------
   September 30th             $.025               $.153125              1.00%             6.125%
--------------------------------------------------------------------------------------------------------
    December 31st             $.050               $.159375              2.00%             6.375%
--------------------------------------------------------------------------------------------------------
       Totals:               $.2625                $.5875              2.625%             5.875%
========================================================================================================
</TABLE>

     As a Real Estate Investment Trust, we make regular quarterly  distributions
to shareholders.  The amount of distributions to our shareholders  must equal at
least 90% of our "real estate  investment  trust taxable income" in order for us
to retain REIT status.  Shareholder  distributions  are  estimated for our first
three  quarters  each fiscal year and adjusted  annually  based upon our audited
year-end  financial report.  Cash available for distribution to our shareholders
is derived primarily from the interest portion of monthly

                                       16
<PAGE>

mortgage  payments  we receive  from  churches  borrowing  money  from us,  from
origination  and other fees paid to us by borrowers in connection  with loans we
make,  interest income from  mortgage-backed  securities  issued by churches and
other non-profit religious organizations purchased and held by us for investment
purposes,  and  earnings on any  permitted  temporary  investments  made us. All
dividends  are paid by us at the  discretion  of the Board of Directors and will
depend upon our earnings and  financial  condition,  maintenance  of real estate
investment  trust  status,   funds  available  for   distribution,   results  of
operations,  economic  conditions,  and  such  other  factors  as our  Board  of
Directors deems relevant.

     During any period  where our shares of common  stock are being  offered and
sold and the proceeds therefrom  accumulated for the purpose of funding loans to
be made  by us,  the  relative  yield  generated  by such  capital,  and,  thus,
dividends (if any) to  shareholders,  could be less than expected  until we have
fully  invested  such funds  into  loans.  We seek to address  this issue by (i)
collecting  from borrowers an origination  fee at the time a loan is made,  (ii)
timing our lending  activities to coincide as much as possible with sales of our
securities,  and (iii) investing our undeployed  capital in permitted  temporary
investments  that offer the highest  yields  together with safety and liquidity.
However,  there can be no assurance that these  strategies  will improve current
yields to our shareholders. In order to qualify for the beneficial tax treatment
afforded  real estate  investment  trusts by the Internal  Revenue  Code, we are
required to pay  dividends to holders of our shares in annual  amounts which are
equal to at least 90% of our "real estate  investment trust taxable income." For
the fiscal year ended December 31, 2007, we distributed substantially all of our
taxable income to our shareholders in the form of quarterly dividends. We intend
to continue  distributing  virtually all of such income to our shareholders on a
quarterly basis, subject to (i) limitations imposed by applicable state law, and
(ii) the factors  identified above. The portion of any dividend that exceeds our
earnings  and  profits  will be  considered  a return  of  capital  and will not
currently be subject to federal  income tax to the extent that such dividends do
not exceed a shareholder's basis in their shares.

     Funds available to us from the repayment of principal  (whether at maturity
or  otherwise)  of loans  made by us, or from sale or other  disposition  of any
properties  or any of our other  investments,  may be  reinvested  in additional
loans to churches,  invested in mortgage-backed securities issued by churches or
other non-profit  organizations,  or in permitted temporary investments,  rather
than  distributed  to the  shareholders.  We can pass  through the capital  gain
character  of any  income  generated  by  computing  its net  capital  gains and
designating a like amount of our  distribution  to our  shareholders as "capital
gain  dividends." The  distribution  requirement to maintain  qualification as a
real estate investment trust does not require distribution of net capital gains,
if generated. Thus, if we have a choice of whether to distribute any such gains,
undistributed  net  capital  gains (if any) will be  taxable to us. The Board of
Directors,  including a majority of the  Independent  Directors,  will determine
whether and to what extent the proceeds of any  disposition  of property will be
distributed to our shareholders.

Equity Compensation Plans

     We do not have any equity  compensation plans under which equity securities
of the Company are authorized for issuance.

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

     The following  discussion regarding our financial statements should be read
in conjunction with the financial  statements and notes thereto included in this
Report beginning at page F-1.

Financial Condition

     Our total  assets  decreased  from  $49,983,605  at  December  31,  2006 to
$48,282,799 at December 31, 2007 and increased from  $49,699,203 at December 31,
2005 to $49,983,605 at December 31, 2006. The primary reason for the decrease in
total assets from December 31, 2005 through  December 31, 2007 was a decrease in
mortgage  loans  receivable  due to the  payoff of loans.  Shareholders'  Equity
increased  from  $21,054,962 at December 31, 2006 to $21,253,580 at December 31,
2007  primarily  due to  continual  profitable  operations  and a  reduction  in
dividend  payments.  Our primary  liabilities at December 31, 2007 and 2006 were
our  secured  investor  certificates,  which were  $22,831,000  and  $26,638,000
respectively,  and our line of  credit,  which was  $3,350,000  and  $1,166,000,
respectively.  An additional  significant liability for both periods was largely
comprised of a "Deferred  Income" item,  reflecting  our practice of recognizing
our origination income -- fees charged to borrowers at the commencement of their
loans -- over the life of each loan. Another material liability for both periods
includes  dividends  declared as of the end of the period reported on, but which
are not paid until the 30th day of the ensuing month.

Results of Operations

     Since we began active  business  operations on April 15, 1996, we have paid
46  consecutive  quarterly  dividend  payments to  shareholders.  These dividend
payments have resulted in an average annual return of 7.482% to shareholders who
purchased  shares in our public  offerings  at $10 per share.  Each loan  funded
during the  quarter  generates  origination  income  which is due and payable to
shareholders as taxable income even though origination income was not recognized
in its entirety for the period under generally  accepted  accounting  principles
("GAAP").  We anticipate  distributing  all of our taxable  income (100%) in the
form of dividends to our shareholders in the foreseeable  future to maintain our
REIT status and to provide a reliable income source to our shareholders.


                                       17

<PAGE>

     Net income under GAAP  accounting  for our year ended December 31, 2007 was
$853,190 on total revenues of $3,947,690 compared to net income of $1,154,168 on
total revenues of $3,927,765 for the year ended December 31, 2006. This decrease
in net  income  was  primarily  due to  increased  loan  loss  and  real  estate
impairment reserves. We disposed of two properties in 2007 and one in January of
2008. We believe due to a general economic downturn in the economy, along with a
depressed  real estate  market,  the  availability  of qualified  buyers for our
current foreclosed  properties has been reduced since no viable offers have been
made.  We expect to foreclose on three  additional  properties  in 2008 and will
incur  costs to secure and prepare  these  properties  for sale.  We exhaust all
options available to us to before  proceeding to foreclosure.  We do not foresee
any additional increase in foreclosures other than these three churches.

     Interest  income earned on the Company's  portfolio of loans was $3,022,695
for the year ended  December 31, 2007,  compared to  $2,854,477  for 2006.  This
increase in interest income was due to the fact that 8 new loans were originated
in the fiscal year ended  December 31, 2007.  Excluded from revenue for the year
ended  December  31, 2007 is $107,369 of  origination  income,  or  "points," we
received. Recognition of origination income under GAAP must be deferred over the
expected life of each loan. However, under tax principles, origination income is
recognized  in the period  received.  Accordingly,  because our status as a REIT
requires,  among other things,  the distribution to shareholders of at least 90%
of taxable income,  the dividends  declared and paid to our shareholders for the
quarters  ended March 31, 2007,  June 30, 2007,  September 30, 2007 and December
31, 2007 included  origination  income even though it was not  recognized in its
entirety as income for the period under GAAP.

     Our  operating  expenses  for our fiscal year ended  December 31, 2007 were
$1,315,785  compared to $1,048,611  for our fiscal year ended December 31, 2006.
This increase in operating expenses was primarily a result of provisions related
to mortgage and bond  receivables as well as costs  associated  with  foreclosed
properties.

     Our Board of  Directors  declared  dividends  of $.1625  for each  share of
record on March 31, 2007,  $.025 for each share held of record on June 30, 2007,
$.025 for each share held of record  September 30, 2007 and $.050 for each share
held of record on December 31, 2007. Based on the quarters ended March 31, 2007,
June 30, 2007,  September  30, 2007 and December 31, 2007,  the  dividends  paid
represented a 6.50%,  1.00%,  1.00% and 2.00 % annualized yield to shareholders,
respectively,  for an effective overall annual yield of 2.625% in 2007. In 2007,
and  especially in the second,  third and fourth  quarters of 2007, our dividend
yield was  significantly  lower than in prior  periods.  This decrease  resulted
directly from the loss related to the sale of  foreclosed  property in Coupland,
Texas.  In addition,  58% of dividends paid to  shareholders in 2007 was taxable
ordinary dividends,  while 42% of the dividends paid to shareholders in 2007 was
return of capital and is reported as non-dividend distributions.

     The  Company  expects  dividends  to be paid in 2008 will  return to normal
historical  payout  levels prior to 2007.  Revenues  should  increase as we fund
additional  loans  through our line of credit and we do not expect a substantial
increase in our loan loss or real estate impairment reserves.

Liquidity and Capital Resources

     Our revenue is derived  principally from interest income,  and secondarily,
from origination fees and renewal fees generated by mortgage loans that we make.
We also earn income  through  interest on funds that are invested  pending their
use in funding mortgage loans or distributions of dividends to our shareholders,
and on income  generated  on church  bonds we may  purchase and own. We generate
revenue  through (i) permitted  temporary  investments  of cash, and (ii) making
mortgage loans to churches and other  non-profit  religious  organizations.  Our
principal  expenses are advisory fees,  legal and auditing fees,  communications
costs  with our  shareholders,  and the  expenses  of our  transfer  agents  and
registrar.

     Our loan  portfolio  consists  primarily of long term fixed rate loans.  We
currently do not have any short term variable  rate loans or renewable  loans in
our  portfolio.  Historically,  loans in our  portfolio are  outstanding  for an
average of just under three years. Our borrowers are typically small independent
churches  with  little or no  borrowing  history.  Once a church  establishes  a
payment  history with us, they look to re-finance  their loan with a local bank,
credit union or other financial  institution who is willing to provide financing
since the borrower has established a payment history and have  demonstrated they
can meet their mortgage debt obligations.

     Currently, our bond portfolio comprises 25% of our assets under management.
The total principal amount of mortgage- secured debt securities we purchase from
churches and other non-profit  religious  organizations is limited to 30% of our
Average Invested Assets.  The total principal amount  outstanding is $11,392,790
as of December 31, 2007. We earned approximately  $763,000 on our bond portfolio
in 2007.  Prior to 2007 we did not  experience  any loss of income from our bond
portfolio.

     We  currently  own  $2,035,000  First  Mortgage  Bonds  issued by St. Agnes
Missionary Baptist Church. St. Agnes has defaulted on its payment obligations to
bondholders.   The  church  subsequently   commenced  a  Chapter  11  bankruptcy
reorganization  proceeding in November 2007.  The Company,  along with all other
bondholders,  has a superior lien over all other  creditors.  We did not receive
our  August or  November  2007  interest  payments  from St.  Agnes.  We are not
accruing any missed interest payments from the bonds which totaled approximately
$34,000 for both August and November  2007.  We foresee that we will not receive
any interest  payments  from St. Agnes  through the first half of 2008.  We have
reserved  $100,000  against the  principal  balance of the bonds at December 31,
2007.

                                       18
<PAGE>


     The church has listed all three of its properties for sale for an aggregate
price of $19,166,668.  The bondholders are currently owed $13,027,000  excluding
any accrued interest, fees or expenses. Herring Bank, Amarillo, Texas is trustee
for the first  mortgage  bondholders.  Herring  Bank and its legal  counsel  are
monitoring  the  bankruptcy  process  and will  advise the  bondholder's  of the
church's  re-organization  plans once they are made  available.  Once additional
information  regarding  the Church's  reorganization  plan is provided,  we will
determine  whether an additional  valuation  adjustment for the bond  investment
should be recorded.

     In  addition,  we are  able to  borrow  funds  in an  amount  up to 300% of
shareholder's  equity (in the absence of a  satisfactory  showing  that a higher
level of borrowing is appropriate;  any excess in borrowing over such 300% level
must be approved by a majority of the  Independent  Directors  and  disclosed to
shareholders  in the next  quarterly  report along with  justification  for such
excess)  in  order  to  increase  our  lending  capacity.  We  currently  have a
$15,000,000 secured revolving credit facility with KeyBank National Association,
Cleveland,  Ohio.  As of  December  31, 2007 we have an  outstanding  balance of
$3,350,000 against our line of credit. This credit line is secured by the pledge
of  approximately  $7,334,000 in principal amount of our first mortgage loans in
addition to any new mortgage loans funded with proceeds from the line.  Interest
on our line of credit is payable to KeyBank on a monthly basis.  We believe that
the rate at which we lend funds will  always be higher than the cost at which we
borrow the funds  (currently  our rate at which we can borrow  funds  under this
line of credit is 90-day LIBOR  interest  rate plus 1.50% and base rate loans at
..25% over prime rate).

     Based  on  the  Company's  borrowing  base  adjusted  leverage  ratio  this
applicable margin can be adjusted,  on any date of determination,  either upward
or downward based on the following schedule:
<TABLE>
<CAPTION>
       ==================================================================================================================
               Total Leverage Ratio:          Per Annum Percentage for LIBOR Rate   Per Annum Percentage for Base Rate
                                                             Loans:                               Loans:
       ------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                                   <C>
       Greater than or equal to 60%                          1.875%                                0.50%

       ------------------------------------------------------------------------------------------------------------------

       Less  than  60%  but  greater  than or                1.50%                                 0.25%
       equal to 55%
       ------------------------------------------------------------------------------------------------------------------
       Less than 55%                                         1.35%                                 0.00%

       ==================================================================================================================
</TABLE>

The total leverage  ratio is determined by dividing  total  liabilities by total
adjusted tangible asset value.

     However,  there can be no  assurance  that we can always  lend funds out at
rates  higher  than the rate at which we borrow the  funds.  When we do carry an
outstanding  balance  on this line of credit we plan to  "pay-down"  any  future
borrowings  on  our  line  of  credit  by  (i)   negotiating   a  larger,   more
cost-advantageous  line of  credit  with  another  bank  and (ii)  applying  the
proceeds from principal  payments on our current loan portfolio payments and any
loan  re-payments.  Increases or decreases in the lending  rates  charged by our
bank sources as well as the increase or decrease in the rate of interest charged
on our loans has and likely will continue to impact interest income we will earn
and, accordingly, influence dividends declared by our Board of Directors.

     Our  future  capital  needs are  expected  to be met by (i)  future  public
offerings of our shares and/or our certificates;  (ii) the repayment of existing
loans and bonds and (iii) borrowing under our existing line of credit.

Loan Loss Reserve Policy

     We follow a loan loss reserve policy on our portfolio of loans outstanding.
This critical policy requires complex  judgements and the need to make estimates
of future  events,  which may or may not  materialize  as  planned.  This policy
reserves for principal  amounts  outstanding on a particular  loan if cumulative
interruptions  occur in the normal  payment  schedule of a loan. Our policy will
reserve for the outstanding  principal  amount of a loan in our portfolio if the
amount is in doubt of being collected. At December 31, 2007, we reserved $72,056
against fourteen mortgage loans.

     As of December 31, 2007, we had four first mortgage loans that are three or
more  payments  in  arrears.  Three of the  loans  are in the  process  of being
foreclosed. The first loan has an outstanding balance of approximately $385,000.
The church  missed one  mortgage  payment in 2006 and ten  mortgage  payments in
2007.  We plan to take  possession  of this property in May 2008 and list it for
sale through a local realtor.

     The second loan has an outstanding balance of approximately  $238,000.  The
church  missed five  mortgage  payments  in 2007.  We obtained a deed in lieu of
foreclosure  from the church and have  recorded the deed in the county where the
church  resides.  The church has listed the property for sale,  and if it is not
sold by May 15,  2008,  we will take  possession  and list it for sale through a
local realtor.

                                       19

<PAGE>

     The third loan has an outstanding  balance of approximately  $383,000.  The
church  missed six  mortgage  payments in 2007.  We  initiated  the  foreclosure
process,  but on the day on which  we were to take  possession  through  Sheriff
Sale,  the  church  filed  bankruptcy.  Our  attorney  is in  contact  with  the
bankruptcy trustee, and we are awaiting the outcome of this process.

     The fourth loan has an outstanding balance of approximately  $150,000.  The
church missed one payment in 2006 and two payments in 2007. The church submitted
a repayment plan which was accepted. We are monitoring the payment process. This
is the smallest loan in our loan portfolio.

     We  presently  expect our loan loss  reserves  to be  adequate to cover all
losses. Listed below is our current loan loss reserve policy:
<TABLE>
<CAPTION>

===============================================================================================================================
Incident      Percentage of Loan    Status of Loan
              Reserved
===============================================================================================================================
-------------------------------------------------------------------------------------------------------------------------------
<S>           <C>                   <C>
1.            None                  Loan is current, no interruption in
                                    payments during history of the loan,
                                    ("interruption" means receipt by us more
                                    than 30 days after scheduled payment date).
-------------------------------------------------------------------------------------------------------------------------------
2.            None                  Loan current, previous interruptions
                                    experienced, but none in the last six month
                                    period. Applies to restructured loans or
                                    loans given forebearance.
-------------------------------------------------------------------------------------------------------------------------------
3.            None                  Loan current, previous interruptions experienced, but none in the last 90 day period.
-------------------------------------------------------------------------------------------------------------------------------
4.            1.00%                 Loan serviced  regularly,  but 1 to 3 payments  cumulative in arrears.  Delinquency notice
                                    been sent.
-------------------------------------------------------------------------------------------------------------------------------
5.            2.00%                 Loan serviced regularly, but 4 or 5 payments cumulative in arrears.
-------------------------------------------------------------------------------------------------------------------------------
6.            5.00%                 Loan more than 5 payments  cumulative in arrears,  loan servicing  intermittent during the
                                    last 90 days.  Ability of obligor to continue to service the loan at  scheduled  levels in
                                    doubt.  Restructuring contemplated or imminent.
-------------------------------------------------------------------------------------------------------------------------------
7.            The greater of: (i)   Loan is declared to be in default. Foreclosure
              accumulated reserve   proceeding underway or imminent. Reserve
              during default        amount dependent on value of collateral. All expenses related to
              period equal to       enforcing loan  agreements are expensed.
              principal loan
              balance in excess of
              65% of original
              collateral value; or
              (ii) 1% of the
              remaining principal
              balance each quarter
              during which the
              default remains in
              effect.
===============================================================================================================================
</TABLE>

     The Company's  Advisor,  on an ongoing basis,  will review reserve  amounts
under the policy stated above and determine the need, if any, to reserve amounts
in excess of its current policy. Any additional reserve amounts will be equal to
or greater than its current reserve policy. Loan loss reserves are recorded on a
quarterly basis.

Bond Loss Policy

     Bond loss  reserves  are  estimated by  management  and are  determined  by
reviewing:  (i) payment history, (ii) our experience with defaulted bond issues,
(iii) the issuers payment history as well as (iv) historical trends.

Critical Accounting Policies and Estimates

     Preparation of our financial statements requires estimates and judgments to
be made that affect the amounts of assets,  liabilities,  revenues  and expenses
reported.  Such decisions  include the selection of the  appropriate  accounting
principles  to be  applied  and the  assumptions  on  which  to base  accounting
estimates.  We evaluate  these  estimates  based on assumptions we believe to be
reasonable under the circumstances.

     The  difficulty in applying  these  policies  arises from the  assumptions,
estimates and judgments  that have to be made  currently  about matters that are
inherently uncertain, such as future economic conditions,  operating results and
valuations as well as

                                       20

<PAGE>

management  intentions.  As the  difficulty  increases,  the level of  precision
decreases,  meaning that actual  results can and probably will be different from
those currently estimated.

     Of our  significant  accounting  policies  described  in the  notes  to our
financial  statements included herewith,  we believe that the estimation of fair
value of our mortgage loans receivable and bond portfolio involves a high degree
of judgment.  We estimate the fair value of our mortgage loans  receivable to be
the same as the carrying value because of the substantial  activity/turnover  in
this  portfolio.  We do not consider the  availability of a market for a loan in
estimating  fair  value at this  time.  We  estimate  the fair value of the bond
portfolio to be the same as the carrying value, because there is no ready public
market for these  bonds and the bonds are  callable  at anytime by the issuer at
par. We do not consider  future cash flows,  the interest rate or the yield rate
of a loan or bond in estimating fair value. In addition,  the loan and bond loss
policy, previously discussed, is a critical accounting policy.

     Recognition  of  origination  income under "GAAP" must be deferred over the
expected life of each loan. However, under tax principles, origination income is
recognized  in the period  received.  Accordingly,  because our status as a REIT
requires,  among other things,  the distribution to shareholders of at least 90%
of taxable income, the dividends declared and paid to our shareholders  included
origination  income even though it was not  recognized in its entirety as income
for the period under GAAP.

     We estimate the value of real estate we hold pending re-sale on a number of
factors.  We look at the current  condition  of the  property as well as current
market  conditions in  determining a fair value.  Since  churches are single use
facilities  the listing price of the property may be lower than the total amount
owed to us. Attorney fees,  taxes,  utilities along with real estate  commission
fees will also reduce the amount we collect  from the sale of a property we have
acquired through foreclosure. The fair value of the real estate held for re-sale
includes estimates of expenses related to the sale of the real estate.

Item 7.  Financial Statements.

     Financial  Statements  required  by this  item can be  found  at pages  F-1
through F-15 of this Form-10KSB and are deemed incorporated herein by reference.

Item 8. Changes in and  Disagreements  With  Accountants  on Accounting and
        Financial Disclosure.

         None.

Item 8A(T). Controls and Procedures.

     (a)   Management's   Annual  Report  on  Internal  Control  Over  Financial
Reporting. The management of American Church Mortgage Company is responsible for
establishing  and  maintaining  an  adequate  system of  internal  control  over
financial  reporting  (as defined in  Exchange  Act Rule  13a-15(f)).  Under the
supervision and with the participation of our senior  management,  consisting of
Philip J. Myers,  our chief executive  officer and chief financial  officer,  we
conducted an evaluation of the  effectiveness of the design and operation of our
disclosure controls and procedures,  as defined in Rules 13a-15(e) and 15d-15(e)
under the  Securities  Exchange  Act of 1934,  as amended,  as of the end of the
period covered by this report (the "Evaluation Date"). Based on this evaluation,
our chief executive  officer and chief financial  officer  concluded,  as of the
Evaluation  Date, that our disclosure  controls and procedures are not effective
as a result of limited  resources  and limited  segregation  of duties such that
financial  information  required to be disclosed in our  Securities and Exchange
Commission ("SEC") reports (i) is recorded,  processed,  summarized and reported
within  the  time  periods  specified  in SEC  rules  and  forms,  and  (ii)  is
accumulated and  communicated  to our management,  including our chief executive
officer and chief financial  officer,  as appropriate to allow timely  decisions
regarding  required  disclosure.  More  specifically,  the Company has a limited
number of personnel in the finance and accounting functions. Were there a larger
staff,  it would be possible to provide for greater  segregation of duties which
would  permit  checks and  balances  and  reviews  that would  improve  internal
control.  Management  recognizes  that this is a material  weakness.  A material
weakness is a deficiency,  or combination of  deficiencies,  in internal control
over financial  reporting,  such that there is a reasonable  possibility  that a
material  misstatement of the Company's annual or interim  financial  statements
will not be prevented or detected in a timely basis.

     Our internal  control  over  financial  reporting is a process  designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes of accounting
principles  generally  accepted in the United  States.  Because of its  inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements.  Therefore,  even those  systems  determined  to be effective can
provide only  reasonable  assurance of achieving  their control  objectives.  In
evaluating the  effectiveness of our internal control over financial  reporting,
our  management  used the  criteria  set forth by the  Committee  of  Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control - Integrated
Framework.  This annual  report does not  include an  attestation  report of our
registered  public  accounting  firm regarding  internal  control over financial
reporting.  Management's report was not subject to attestation by our registered
public  accounting  firm  pursuant  to  temporary  rules of the  Securities  and
Exchange  Commission that permit us to provide only management's  report in this
annual report.

                                       21
<PAGE>

     Our independent registered public accountants have reported to our Board of
Directors certain matters of involving internal controls that they considered to
be a material  weakness on the Evaluation Date,  under standards  established by
the American  Institute of Certified Public  Accountants.  The material weakness
relates to the limited segregation of duties.

     (b) Changes in Internal  Control over  Financial  Reporting.  There were no
changes  in our  internal  control  over  financial  reporting,  except  for the
material  weakness  identified  above  related to limited  resources and limited
segregation  of duties,  that  occurred  during the last  fiscal  quarter of the
period  covered by this report that have  materially  affected or are reasonably
likely to materially affect our internal control over financial reporting.

Item 8B. Other Information

         Not Applicable.
                                    PART III


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

     The  information  required  by Item 9 will  be  included  in the  Company's
definitive  proxy statement for the annual meeting of shareholders to be held on
or about June 11, 2008, to be filed with the Securities and Exchange  Commission
not later than 120 days after the end of the fiscal year  covered by this report
and is incorporated herein by reference.

     The  Company  has not  adopted a Code of  Business  Conduct and Ethics that
applies  to  all  directors,  officers  and  employees  of  the  Company.  Since
inception,  the Company has not had employees and the Company's  activities have
been  directed by the Advisor.  In addition,  the  Company's  and the  Advisor's
activities  have  been  governed  by the  Company's  by-laws  and  the  Advisory
Agreement.  Both of these documents  comply with the NASAA REIT Guidelines which
include  substantive  limitations on, among other things,  conflicts of interest
and related party transactions.

Item 10.  Executive Compensation

     The  information  required  by Item 10 will be  included  in the  Company's
definitive  proxy statement for the annual meeting of shareholders to be held on
or about June 11, 2008, to be filed with the Securities and Exchange  Commission
no later than 120 days after the end of the fiscal  year  covered by this report
under the caption "How are directors compensated?" and is incorporated herein by
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The  information  required  by Item 11 will be  included  in the  Company's
definitive  proxy statement for the annual meeting of shareholders to be held on
or about June 11, 2008, to be filed with the Securities and Exchange  Commission
no later than 120 days after the end of the fiscal  year  covered by this report
under  the  caption  "Security   Ownership  of  Certain  Beneficial  Owners  and
Management" and is incorporated herein by reference.


Item 12.  Certain Relationships and Related Transactions

     The  information  required  by Item 12 will be  included  in the  Company's
definitive  proxy statement for the annual meeting of shareholders to be held on
or about June 11, 2008, to be filed with the Securities and Exchange  Commission
not later than 120 days after the end of the fiscal year  covered by this report
under the caption "Certain  Relationships and Related Party Transactions" and is
incorporated herein by reference.


                                       22

<PAGE>

<TABLE>
<CAPTION>
Item 13.   Exhibits

        Exhibit
        No.                                                            Title


<S>     <C>                                                                                                                     <C>
        3.1            Amended and Restated Articles of Incorporation                                                           1

        3.2            Third Amended and Restated Bylaws                                                                        2

        4.1            Specimen Common Stock Certificate                                                                        1

        4.2            Trust Indenture between the Company and The Herring National Bank dated April 26, 2002                   3

        4.3            Supplemental Trust Indenture between the Company and The Herring National Bank dated September 28,       4
                       2004

        4.4            First Supplemental Indenture to 2002 Indenture dated July 2, 2007                                        2

        4.5            First Supplemental Indenture to 2004 Indenture dated July 2, 2007                                        2

        10.1           Amended and Restated REIT Advisory Agreement with Church Loan Advisors, Inc. dated January 22, 2004      5

        10.2           Line of Credit Agreement with Beacon Bank dated March 18, 2002                                           3

        10.3           $2,000,000 Promissory Note and Combined Security Agreement between the Company and Beacon Bank dated     3
                       March 18, 2002

        10.4           Security Agreement between the Company and The Herring National Bank, as Trustee dated April 26, 2002    3

        10.5           Supplemental Security Agreement between the Company and The Herring National Bank, as Trustee dated      4
                       September 28, 2004

        10.6           Revolving Credit Agreement by and among the Company and KeyBank National Association, dated July 26,     5
                       2007

        10.7           Key Bank Promissory Note dated July 26, 2007                                                             5

        10.8           Security Agreement with KeyBank dated July 26, 2007                                                      5

        10.9           Collateral Assignment of Documents Rights and Claims dated July 26, 2007                                 5

        31.1           Certification Pursuant to Section 302 of Sarbanes Oxley Act of 2002                                      6

        31.2           Certification Pursuant to 19 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes     6
                       Oxley Act of 2002
</TABLE>


     (1)  Incorporated  herein  by  reference  to  the  Company's   Registration
          Statement on Form 8-A, filed April 30, 1999.
     (2)  Incorporated  herein by reference to the Company's  Current  Report on
          Form 8-K, filed July 3, 2007.
     (3)  Incorporated  herein  by  reference  to  the  Company's   Registration
          Statement on Form S-11/A, filed April 26, 2002.
     (4)  Incorporated  herein  by  reference  to  the  Company's   Registration
          Statement on Form S-11/A, filed September 29, 2004.
     (5)  Incorporated  herein by reference to the Company's  Current  Report on
          Form 8-K/A, filed August 1, 2007.
     (6)  Filed herewith.

         Item 14. Principal Accountants Fees and Services

     The  information  required  by Item 14 will be  included  in the  Company's
definitive  proxy statement for the annual meeting of shareholders to be held on
or about June 11, 2008, to be filed with the Securities and Exchange  Commission
not later than 120 days after the end of the fiscal year  covered by this report
and is incorporated herein by reference.


                                       23
<PAGE>


         SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned,  thereunto
duly authorized.


                               AMERICAN CHURCH MORTGAGE COMPANY

Dated: March 28, 2008          By:   /s/Philip J. Myers
                               ------------------------------------
                               Philip J. Myers, President, Treasurer
                               Chief Executive Officer, President and Treasurer
                               Principal Executive Officer and Principal
                                Financial Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated.

  By:     /s/ Philip J. Myers                            Date:     03/28/08
         ----------------------------------                    ----------------
         Philip J. Myers
         President, Treasurer and Director

  By:     /s/ Dennis J. Doyle                            Date:     03/28/08
         ----------------------------------                     ---------------
         Dennis J. Doyle, Director

  By:    /s/ Michael G. Holmquist                        Date:     03/28/08
         -----------------------------------                    ---------------
         Michael G. Holmquist, Director

  By:    /s/ Robert O. Naegele, Jr.                      Date:     03/28/08
         -----------------------------------                    ---------------
         Robert O. Naegele, Jr.,  Director

  By:    /s/ Kirbyjon H. Caldwell                        Date:     03/28/08
         -----------------------------------                    ---------------
         Kirbyjon H. Caldwell, Director


                                       24
<PAGE>


                                                                    Exhibit 31.1
CERTIFICATION

         I, Philip J. Myers, certify that:

     1.   I have  reviewed  this Form  10-KSB of the Company for the fiscal year
          ended December 31, 2007:

     2.   Based on my  knowledge,  this  report  does  not  contain  any  untrue
          statements  of a  material  fact  or omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements we made, not  misleading  with respect to
          the period covered by this report;

     3.   Based on my knowledge,  the financial  statements and other  financial
          information  included in this report  fairly  present in all  material
          respects the financial condition, results of operations and cash flows
          of the Company as of and for, the periods presented in this report:

     4.   I am responsible for establishing and maintaining  disclosure controls
          and  procedures  (as  defined  in  Exchange  Act Rules  13a-15(e)  and
          15d-15(e)) and internal controls over financial  reporting (as defined
          in Exchange Act Rules  13a-15(f)  and  15d-15(f))  for the Company and
          have:

          (a)  Designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under  my
               supervision,  to ensure that material information relating to the
               Company, including its consolidated  subsidiaries,  is made known
               to me by others within those  entities,  particularly  during the
               period in which this report is being prepared:

          (b)  Designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under my supervision,  to provide  reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;

          (c)  Evaluated  the  effectiveness  of  the  small  business  issuer's
               disclosure  controls and  procedures and presented in this report
               my conclusions about the effectiveness of the disclosure controls
               and  procedures,  as of the  end of the  period  covered  by this
               report based on such evaluation; and

          (d)  Disclosed  in this  report any change in the  Company's  internal
               control  over  financial   reporting  that  occurred  during  the
               Company's   most  recent  fiscal   quarter  that  has  materially
               affected,  or is  reasonably  likely to  materially  affect,  the
               Company's internal control over financial reporting, and

     5.   I have  disclosed,  based on my most  recent  evaluation  of  internal
          controls over financial  reporting,  to the Company's auditors and the
          audit  committee  of the  Company's  board of  directors  (or  persons
          performing the equivalent functions):

          (a)  All  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal controls over financial reporting
               which  are  reasonably  likely  to  adversely  affect  the  small
               business  issuer's  ability to  record,  process,  summarize  and
               report financial information; and

          (b)  any fraud,  whether or not material,  that involves management or
               other employees who have a significant role in the small business
               issuer's internal control over financial reporting.

Dated: March 28, 2008

                              By:  /s/  Philip J. Myers
                              -----------------------------------
                              Philip J. Myers
                              Chief Executive Officer, President and Treasurer
                              (Principal   Executive  Officer   and   Principal
                               Financial Officer)



                                       25
<PAGE>


                                                                    Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                              18 U.S.C. SECTION1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Annual Report of American  Church  Mortgage  Company
(the  "Company")  on Form 10-KSB for the fiscal year ended  December 31, 2007 as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"), the undersigned,  in the capacities and on the dates indicated below,
hereby  certifies  pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to
Section of the Sarbanes-Oxley Act of 2002, that to his knowledge:


     1.   The Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     2.   The  information  contained  in the  Report  fairly  presents,  in all
          material respects, the financial condition and results of operation of
          the Company.

Dated: March 28, 2008          By:    /s/ Philip J. Myers
       --------------          -----------------------------------
                               Chief Executive Officer, President and Treasurer
                               (Principal Executive   Officer   and   Principal
                               Financial Officer)

<PAGE>











                        AMERICAN CHURCH MORTGAGE COMPANY

                              Minnetonka, Minnesota

                              Financial Statements

                           December 31, 2007 and 2006


<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
American Church Mortgage Company
Minnetonka, Minnesota

We have audited the  accompanying  balance  sheets of American  Church  Mortgage
Company  as of  December  31,  2007  and  2006  and the  related  statements  of
operations,  stockholders'  equity,  and cash  flows for the years  then  ended.
American Church Mortgage Company's management is responsible for these financial
statements.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   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 American  Church  Mortgage
Company as of December  31, 2007 and 2006,  and the results of their  operations
and their cash flows for the years then ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.


                                    /s/ Boulay, Heutmaker, Zibell & Co.,P.L.L.P.
                                        Certified Public Accountants

Minneapolis, Minnesota
March 28, 2008


                                      F-1
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                                 Balance Sheets




<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                  December 31
                      ASSETS                                                              2007                  2006
-----------------------------------------------------------------------------------------------------------------------------------

Current Assets
<S>                                                                                 <C>                     <C>
    Cash and equivalents                                                            $     285,118           $  232,258
    Accounts receivable                                                                   112,546              136,709
    Interest receivable                                                                   151,105              164,923
    Current maturities of mortgage loans receivable, net of
          allowance of $72,056 and $97,262 at
          December 31, 2007 and 2006, respectively                                        907,812            3,073,619
    Current maturities of bond portfolio                                                   41,000               79,000
    Prepaid expenses                                                                        7,072                8,372
                                                                                     ------------         ------------
            Total current assets                                                        1,504,653            3,694,881


Mortgage Loans Receivable, net of current maturities                                   33,061,115           34,779,117

Real Estate Held for Sale, net of impairment reserve of                                 1,566,561            1,125,190
    $635,286 and $1,196,168 at December 31, 2007 and
    2006, respectively

Deferred Secured Investor Certificates Offering Costs,
    net of accumulated amortization of $871,437 and
    $706,022 at December 31, 2007 and 2006, respectively                                  700,479              852,720

Deferred Line of Credit Costs, net of accumulated
    amortization of $36,652 at December 31, 2007                                          227,278                    -

Bond Portfolio, net of current maturities and allowance
    of $100,000 at December 31, 2007                                                   11,222,713            9,471,697

Other                                                                                            -              60,000
                                                                                       ----------           ----------

            Total assets                                                              $48,282,799          $49,983,605
                                                                                       ==========           ==========
</TABLE>


Notes to Financial Statements are an integral part of this Statement.

                                      F-2
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                                 Balance Sheets

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                                December 31
       LIABILITIES AND STOCKHOLDERS' EQUITY                                                  2007                2006
-----------------------------------------------------------------------------------------------------------------------------------

Current Liabilities
<S>                                                                                    <C>                <C>
    Current maturities of secured investor certificates                                $   2,197,000      $   3,169,000
    Line of credit                                                                         3,350,000          1,166,000
    Accounts payable                                                                          28,941             21,796
    Accounts payable - related party                                                        -                     4,515
    Accrued expenses                                                                          18,022           -
    Building funds payable                                                                    50,000             27,000
    Current maturities of deferred income                                                     30,412             62,023
    Dividends payable                                                                        124,680            397,418
                                                                                          ----------         ----------
            Total current liabilities                                                      5,799,055          4,847,752


Deferred Income, net of current maturities                                                   596,164            611,891


Secured Investor Certificates, Series A                                                    6,008,000          8,807,000
Secured Investor Certificates, Series B                                                   14,626,000         14,662,000

Stockholders' Equity
    Common stock, par value $.01 per share
        Authorized, 30,000,000 shares
        Issued and outstanding, 2,493,595 at December 31, 2007
            and 2006                                                                          24,936             24,936
    Additional paid-in capital                                                            22,927,644         22,927,644
    Accumulated deficit                                                                   (1,699,000)        (1,897,618)
                                                                                         -----------        -----------
            Total stockholders' equity                                                    21,253,580         21,054,962
                                                                                          ----------         ----------
            Total liabilities and equity                                                 $48,282,799        $49,983,605
                                                                                          ==========         ==========
</TABLE>

Notes to Financial Statements are an integral part of this Statement.


                                      F-3
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                            Statements of Operations


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                            Years Ended December 31
                                                                                           2007                2006
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                      <C>                <C>
Interest Income                                                                          $3,947,690         $3,927,765

Operating Expenses

  Other operating expenses                                                                  965,322            834,764
  Provision for losses on mortgage loans receivable                                          33,101              8,682
  Provision for losses on bonds                                                             100,000             -
  Real estate impairment loss                                                               217,362            205,165
                                                                                          ---------          ---------

     Total operating expenses                                                             1,315,785          1,048,611
                                                                                          ---------          ---------

Operating Income                                                                          2,691,905          2,879,154

Other Expense
    Interest expense                                                                      1,778,715          1,724,986

Income Taxes                                                                                  -                 -
                                                                                          ---------          ---------

Net Income                                                                             $    853,190        $ 1,154,168
                                                                                         ==========          =========

Basic and Diluted Income Per Common Share                                              $        .34        $       .46
                                                                                         ==========          =========

Weighted Average Common Shares Outstanding                                                2,493,595          2,536,351
                                                                                         ==========         ==========
</TABLE>


Notes to Financial Statements are an integral part of this Statement.


                                      F-4
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                       Statements of Stockholders' Equity


<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                      Additional
                                                           Common Stock                 Paid-In            Accumulated
                                                         Shares      Amount             Capital              Deficit
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                                    <C>           <C>               <C>               <C>
Balance, December 31, 2005                             2,551,568     $25,516           $23,416,468       ($ 1,566,511)

    Repurchase of 57,973 shares of
         common stock                                    (57,973)       (580)             (488,824)

    Net income                                                                                              1,154,168

    Dividends declared                                                                                     (1,485,275)
                                                       ---------      ------            ----------          ---------

Balance, December 31, 2006                             2,493,595     $24,936           $22,927,644       ($ 1,897,618)

    Net income                                                                                                853,190

   Dividends declared                                                                                        (654,572)
                                                      ---------       ------          ----------              -------
Balance, December 31, 2007                            2,493,595      $24,936         $22,927,644          ($1,699,000)
                                                      =========       ======          ==========            =========
</TABLE>






Notes to Financial Statements are an integral part of this Statement.

                                      F-5
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                           Statements of Cash Flows


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                            Years Ended December 31
                                                                                          2007                  2006
-----------------------------------------------------------------------------------------------------------------------------------

Cash Flows from Operating Activities
<S>                                                                                   <C>                <C>
    Net income                                                                        $   853,190        $   1,154,168
    Adjustments to reconcile net income to net cash
        from operating activities:
        Impairment loss on real estate                                                    217,362              205,165
        Provision for losses on mortgage loans receivable                                  33,101                8,682
        Provision for losses on bond portfolio                                            100,000                  -
        Amortization of deferred costs                                                    202,067              199,373
        Other                                                                              60,000                  -
        Change in assets and liabilities
            Accounts receivable                                                            24,163              (27,267)
            Interest receivable                                                            13,818              (26,781)
            Prepaid expenses                                                                1,300               (8,372)
            Accounts payable                                                                2,630                6,971
            Accrued expenses                                                               18,022                  -

            Deferred income                                                               (47,338)             117,312
                                                                                     -------------         -----------
            Net cash from operating activities                                          1,478,315            1,629,251

Cash Flows from Investing Activities
    Investment in mortgage loans                                                       (6,807,144)         (19,699,820)
    Collections of mortgage loans                                                       9,891,776            9,944,751
    Investments in bonds                                                               (2,533,620)            (306,850)
    Proceeds from bond portfolio                                                          720,604              658,020
                                                                                        ---------            ----------
            Net cash from (used for) investing activities                               1,271,616           (9,403,899)

Cash Flows from Financing Activities

    Proceeds from sale of property                                                        130,343                    -
    Payments on line of credit, net                                                        61,185            1,166,000
    Proceeds from secured investor certificates                                                 -            3,369,000
    Payments on secured investor certificate maturities                                (1,851,000)          (1,770,000)
    Payments for deferred costs                                                          (110,289)            (177,987)
    Stock redemptions                                                                           -             (489,404)
    Dividends paid                                                                       (927,310)          (1,454,646)
                                                                                     ------------          -----------
            Net cash (used for) from financing activities                              (2,697,071)             642,963
                                                                                      ------------        ------------

Net Increase (Decrease) in Cash and Equivalents                                            52,860           (7,131,685)

Cash and Equivalents - Beginning of Year                                                  232,258            7,363,943
                                                                                     ------------          -----------

Cash and Equivalents - End of Year                                                   $    285,118        $     232,258
                                                                                      ===========         ============
</TABLE>


                                  - Continued -

Notes to Financial Statements are an integral part of this Statement.

                                      F-6
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                      Statements of Cash Flows - Continued




<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                                                                                           Years Ended December 31
                                                                                            2007                2006
-----------------------------------------------------------------------------------------------------------------------------------



Supplemental Schedule of Noncash Financing and
    Investing Activities

<S>                                                                                      <C>                <C>
     Dividends payable                                                                   $   124,680        $   397,418
                                                                                          ==========         ==========

     Reclassification of mortgage and accounts receivable to
        real estate held for sale                                                        $   789,076        $   573,108
                                                                                          ==========         ----------

    Mortgage loans closed but not paid                                                   $    50,000       $     27,000
                                                                                          ==========         ==========

    Line of credit borrowings for deferred costs                                         $   166,815       $         -
                                                                                          ==========         ==========

    Line of credit borrowings used for payment of
        secured investor certificates                                                     $1,956,000         $      -
                                                                                           =========          =========



Supplemental Cash Flow Information
    Cash paid during the year for
        Interest                                                                          $1,760,693         $1,724,986
                                                                                           =========          =========
</TABLE>

Notes to Financial Statements are an integral part of this Statement.

                                      F-7
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

American Church Mortgage Company, a Minnesota  corporation,  was incorporated on
May 27, 1994.  The Company was organized to engage  primarily in the business of
making  mortgage loans to churches and other nonprofit  religious  organizations
throughout the United States, on terms established for individual organizations.

Accounting Estimates

Management   uses  estimates  and   assumptions  in  preparing  these  financial
statements in accordance with generally accepted  accounting  principles.  Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent  assets and liabilities,  and the reported revenues
and  expenses.  Actual  results  could  differ  from those  estimates.  The most
sensitive estimates relate to the allowance for mortgage loans, real estate held
for sale and the  valuation  of the bond  portfolio.  It is at least  reasonably
possible that these  estimates could change in the near term and that the effect
of the change, if any, may be material to the financial statements.

Cash and Equivalents

The  Company  considers  all  highly  liquid  debt  instruments  purchased  with
maturities of three months or less to be cash equivalents.

The Company maintains accounts primarily at two financial institutions. At times
throughout  the year,  the Company's  cash and  equivalents  balances may exceed
amounts  insured by the Federal  Deposit  Insurance  Corporation.  Cash in money
market  funds is not  Federally  insured.  At December  31, 2007 and 2006,  such
investments  were  $5,000  and  $15,403,   respectively.  The  Company  has  not
experienced any losses in such accounts.

Bond Portfolio

The Company accounts for the bond portfolio under Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The
Company    classifies    its   bond   portfolio   as    "available-for    sale."
Available-for-sale  bonds are  carried at fair value.  Although no ready  public
market for these bonds exists,  management  believes that cost approximates fair
value, since the bonds are callable at any time by the issuer at par.


                                      F-8
<PAGE>




                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006


Allowance for Mortgage Loans Receivable

The Company records loans  receivable at their  estimated net realizable  value.
The Company's  loan policy  provides an allowance  for  estimated  uncollectible
loans based on an evaluation of the current status of the loan  portfolio.  This
policy  reserves for  principal  amounts  outstanding  on a  particular  loan if
cumulative  interruptions  occur in the normal  payment  schedule of a loan. The
Company reserves for the outstanding principal amount of a loan in the Company's
portfolio  if the amount is in doubt of  collection.  Additionally,  no interest
income is recognized on impaired loans that are in the foreclosure  process.  At
December 31, 2007, the Company reserved $72,056 for fourteen  mortgage loans, of
which four are three or more  mortgage  payments in arrears.  Three of the loans
are in the  foreclosure  process,  of  which  one has  declared  bankruptcy.  At
December 31, 2006,  the Company  reserved  $97,262 for twelve  mortgage loans of
which one was four  mortgage  payments  in  arrears  and was in the  foreclosure
process.

The total impaired loans, which are loans that are in the foreclosure process or
are no longer  performing,  were  approximately  $1,156,000  and  $1,164,000  at
December 31, 2007 and 2006, respectively.

Real Estate Held for Sale

Foreclosure  was completed on a church  located in Battle Creek,  Michigan.  The
church congregation  disbanded and the church property is currently  unoccupied.
The  Company  owns and has taken  possession  of the  church  and has listed the
property for sale through a local realtor.

Foreclosure was also completed on a church located in Tyler,  Texas.  The church
congregation  is now meeting in a different  location and the church property is
currently  unoccupied.  The Company owns and has taken  possession of the church
and has listed the property for sale through a local realtor.

A deed in lieu of  foreclosure  was received from a church located in Cleveland,
Ohio. The Company took possession of the church and listed the property for sale
through a local  realtor.  The sale of the property was completed on January 18,
2008.  The property  sold for  approximately  $215,000 and the Company  received
approximately  $182,000  from the sale of the property  after  closing costs and
realtor fees. The Company  subsequently  realized a tax  deductible  loss on the
property totaling approximately $221,000.

Foreclosure  was  completed  on a church  located  in Dayton,  Ohio.  The church
congregation  is now meeting in a different  location and the church property is
currently  unoccupied.  The Company took possession of the church and listed the
property for sale through a local realtor.

Foreclosure was also completed on a church located in Dallas, Texas. The Company
took possession of the property.  The Company  received an earnest money deposit
from a buyer who is  currently  in the  process of  obtaining a  certificate  of
occupancy.  When the  certificate  of  occupancy  is  obtained,  the sale of the
property will be completed.


                                      F-9

<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006

The Company  recorded the real estate held for sale at fair value,  which is net
of the expected expenses related to the sale of the real estate.

Carrying Value of Long-lived Assets

The Company  tests  long-lived  assets or asset groups for  recoverability  when
events or changes in circumstances  indicate that the carrying amount may not be
recoverable.  Circumstances  which could trigger a review  include,  but are not
limited to: significant decreases in the market price of the asset;  significant
adverse changes in the business climate or legal factors;  accumulation of costs
significantly in excess of the amount originally expected for the acquisition or
construction of the asset; current period cash flow or operating losses combined
with a history of losses or a forecast of continuing  losses associated with the
use of the asset;  and current  expectation that the asset will more likely than
not be sold or disposed significantly before the end of estimated useful life.

Recoverability  is assessed  based on the carrying  amount of the asset and fair
value which is generally  determined based on the sum of the  undiscounted  cash
flows expected to result from the use and the eventual disposal of the asset, as
well  as  specific  appraisal  in  certain  instances.  An  impairment  loss  is
recognized when the carrying amount is not recoverable and exceeds fair value.

Deferred Loan Costs

Deferred  loan costs are  amortized  over the  respective  terms of the  secured
investor  certificates  and the line of credit  using the  straight-line  method
which approximates the effective interest method.

Revenue Recognition

Interest  income on  mortgage  loans and the bond  portfolio  is  recognized  as
earned.  Deferred income  represents loan origination fees, which are recognized
over the life of the loan as an adjustment to the yield on the loan.

Income Taxes

The  Company  elected  to be taxed as a Real  Estate  Investment  Trust  (REIT).
Accordingly,  the Company is not subject to Federal  income tax to the extent of
distributions  to its  stockholders  if the Company  meets all the  requirements
under the REIT provisions of the Internal Revenue Code.

Income Per Common Share

No adjustments  were made to income for the purpose of calculating  earnings per
share, as there were no potential dilutive shares outstanding.



                                      F-10


<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006

Recently Issued Accounting Pronouncements

In September  2006,  the  Financial  Accounting  Standards  Board (FASB)  issued
Statement  of  Financial  Accounting  Standards  No. 157 (SFAS 157),  Fair Value
Measurements. SFAS 157 defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. The statement
is effective for (1) financial  assets and  liabilities in financial  statements
issued for fiscal years  beginning  after November 15, 2007, and interim periods
within those fiscal years and (2) certain  non-financial  assets and liabilities
in financial  statements  issued for fiscal years  beginning  after November 15,
2008, and interim  periods within those fiscal years.  The Company is evaluating
the effect,  if any,  that the  adoption of SFAS 157 will have on its results of
operations, financial position, and the related disclosures.

In February 2007, the FASB issued  Statement of Financial  Accounting  Standards
No. 159,  (SFAS 159),  The Fair Value Option for Financial  Assets and Financial
Liabilities - Including an amendment of FASB Statement No. 115  (Accounting  for
Certain Investments in Debt and Equity Securities).  SFAS 159 provides companies
with an option to report selected financial assets and liabilities at fair value
and is effective for fiscal years  beginning  after November 15, 2007 with early
adoption  permitted.  The Company is  evaluating  the effect,  if any,  that the
adoption of SFAS 159 will have on its results of operations, financial position,
and the related disclosures.

Repurchase of Common Stock

Although  our common  shares are not  redeemable  by us, we may, at our complete
discretion,   repurchase  shares  offered  to  us  from  time  to  time  by  our
shareholders.  In such event,  we may pay whatever  price Church Loan  Advisors,
Inc., the "Advisor" to the Company,  deems  appropriate and reasonable,  and any
such shares  repurchased  will be re-designated as "unissued," will no longer be
entitled to  distribution  of  dividends  and will cease to have voting  rights.
Shares  that may be  purchased  are not  part of a  publicly  announced  plan to
repurchase  shares nor does the Company plan or anticipate any stock  repurchase
plans.

2.  MORTGAGE LOANS AND BOND PORTFOLIO

At December 31, 2007, the Company had first mortgage loans  receivable  totaling
$34,040,983.  The loans bear  interest  ranging from 7.50% to 12.00% at December
31, 2007. At December 31, 2006, the Company had first mortgage loans  receivable
totaling $37,949,998 that bore interest ranging from 7.75% to 12.00%.


                                      F-11

<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006


The Company  also had a portfolio  of secured  church bonds at December 31, 2007
and 2006,  which are  carried  at cost plus  amortized  interest  income,  which
approximates  fair value since the bonds are  callable at any time by the issuer
at par.  The bonds pay either  semi-annual  or quarterly  interest  ranging from
4.50% to 12.00%.  The combined  principal of $11,392,790 at December 31, 2007 is
due at various  maturity  dates between  February 1, 2008 and November 15, 2037.
Eight bond issues  comprised 85% of the Company's bond portfolio at December 31,
2007. Six bond issues  comprised 85% of the Company's bond portfolio at December
31, 2006. The Company recorded an allowance of $100,000 at December 31, 2007 for
one bond series that is in default. This bond series is approximately 18% of the
bond  portfolio  at December 31, 2007.  The Company had  maturities  of bonds of
approximately $730,000 and $658,000 in 2007 and 2006, respectively.  The Company
purchased  approximately  $2,534,000  and  $307,000  of bonds in 2007 and  2006,
respectively.

The contractual  maturity  schedule for mortgage loans and the bond portfolio as
of December 31, 2007, is as follows:
<TABLE>
<CAPTION>

                                                                     Mortgage Loans       Bond Portfolio

<S>        <C>                                                      <C>                    <C>
           2008                                                     $     979,868          $       41,000
           2009                                                           788,205                  52,000
           2010                                                         1,292,126                 164,000
           2011                                                           922,221                 516,000
           2012                                                           998,478                 346,000
           Thereafter                                                  29,060,085              10,273,790
                                                                       ----------              ----------
                                                                       34,040,983              11,392,790
           Less loan loss and bond reserves                               (72,056)               (100,000)
           Less discount from par                                                                 (29,077)
                                                                     ------------             -----------

                       Totals                                         $33,968,927             $11,263,713
                                                                       ==========              ==========
</TABLE>

The Company  currently owns $2,035,000  First Mortgage Bonds issued by St. Agnes
Missionary  Baptist Church.  St. Agnes  defaulted on its payment  obligations to
bondholders.   The  church  subsequently   commenced  a  Chapter  11  bankruptcy
reorganization  proceeding  regarding  three  properties in November  2007.  The
Company,  along with all other  bondholders,  has a superior lien over all other
creditors.  No accrual for interest receivable from the bonds is recorded by the
Company.

The church listed all three of its properties for sale for an aggregate price of
$19,166,668.  The  bondholders  are  currently  owed  $13,027,000  excluding any
accrued interest, fees or expenses. Herring Bank, Amarillo, Texas is trustee for
the  first  mortgage  bondholders.  Herring  Bank  and  its  legal  counsel  are
monitoring  the  bankruptcy  process  and will  advise  the  bondholders  of the
church's  re-organization  plans  when  made  available.  The  Company  reserved
$100,000  for the  bonds at  December  31,  2007.  When  additional  information
regarding  the  Church's  reorganization  plan is  provided,  the  Company  will
determine  whether an additional  valuation  adjustment for the bond  investment
should be recorded.


                                      F-12
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006

3.  SECURED INVESTOR CERTIFICATES

Secured  investor  certificates  (see  Note  6) are  collateralized  by  certain
mortgage  loans  receivable or secured  church bonds of  approximately  the same
value as the certificates.  Additionally, the Company incurred deferred offering
costs  related to the debt  offerings.  The  maturity  schedule  for the secured
investor certificates at December 31, 2007 is as follows:

<TABLE>
<CAPTION>
                                                                   Secured Investor
                                                                     Certificates
                                                                  --------------------

<S>        <C>                                                      <C>
           2008                                                     $    2,197,000
           2009                                                          4,024,000
           2010                                                          1,145,000
           2011                                                            680,000
           2012                                                          1,167,000
           Thereafter                                                   13,618,000
                                                                       -----------

                      Totals                                           $22,831,000
                                                                        ==========
</TABLE>

Interest expense related to these  Certificates for the years ended December 31,
2007 and 2006,  respectively,  is approximately  $1,657,000 and $1,724,000.  The
weighted  average interest rate on the certificates was 7.34% and 7.33% for 2007
and 2006, respectfully.

4.  TRANSACTIONS WITH AFFILIATES

The  Company  has  an  Advisory  Agreement  with  Church  Loan  Advisors,  Inc.,
Minnetonka, Minnesota ("Advisor"). The Advisor is responsible for the day-to-day
operations of the Company and provides office space, administrative services and
personnel.

Under the terms of the  Advisory  Agreement,  the  Company  pays the  Advisor an
annual  base  management  fee of 1.25% of  average  invested  assets  (generally
defined as the  average of the  aggregate  book value of the assets  invested in
first mortgage bonds and loans secured by real estate) up to $35 million,  1.00%
of assets from $35 million to $50 million,  and 0.75% on assets in excess of $50
million, which is payable on a monthly basis. The Advisor also receives one-half
of the  origination  fees paid by a mortgage loan borrower in connection  with a
mortgage  loan  made  or  renewed  by the  Company.  The  Company  paid  Advisor
management and origination  fees of  approximately  $487,000 and $573,000 during
2007 and 2006, respectively.  At December 31, 2006, the Company had a payable of
approximately $5,000 due to the Advisor.

The Advisor and the Company are  related  through  common  ownership  and common
management. See Notes 1 and 6 for additional transactions.


                                      F-13

<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006


5.  INCOME TAXES

As discussed in Note 1, a REIT is subject to taxation to the extent that taxable
income exceeds  dividend  distributions  to  shareholders.  In order to maintain
status as a REIT,  the  Company is required  to  distribute  at least 90% of its
taxable  income.  In 2007,  the  Company  had  pretax  income  of  $853,190  and
distributions  to shareholders  in the form of dividends  during the tax year of
$654,572. The expected tax expense to the Company, pre-dividends would have been
$290,085. In 2006, the Company had pretax income $1,154,168 and distributions to
shareholders  in the form of dividends  during the tax year of  $1,485,275.  The
expected tax expense to the Company, pre-dividends,  would have been $392,417 in
2006. The Company paid out 100% of taxable income in dividends in 2007 and 2006.

The following  reconciles the income tax provision  with the expected  provision
obtained by applying statutory rates to pretax income:

<TABLE>
<CAPTION>

                                                                                     2007             2006


<S>                                                                                <C>               <C>
         Expected tax expense                                                      $290,085          $392,417
         Realized Tax Loss                                                         (284,427)             -
         Benefit of REIT distributions                                             (129,118)         (504,994)
         Valuation allowance                                                         63,460           112,577
                                                                                    -------           -------

                     Total provision                                               $( 60,000)        $   -
                                                                                     =======          =======

The components of deferred income taxes are as follows:
                                                                                     2007               2006

         Loan origination fees                                                     $213,036          $229,131
         Loan loss allowance                                                         58,499            33,069
         Real-estate impairment                                                     215,997           406,697
         Valuation allowance                                                       (487,532)         (608,897)
                                                                                   --------          --------

                  Total deferred income tax                                        $   -            $  60,000
                                                                                    =======          ========

The total deferred tax assets are as follows:
                                                                                    2007               2006

         Deferred tax assets                                                       $487,532          $668,897
         Deferred tax asset valuation allowance                                    (487,532)         (608,897)
                                                                                    -------           -------

                     Net deferred tax asset                                        $   -             $ 60,000
                                                                                    =======           =======
</TABLE>


The change in the valuation allowance was approximately $63,000 and $113,000 for
2007 and 2006, respectively.


                                      F-14



<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006


6.  PUBLIC OFFERINGS OF THE COMPANY

In July 2004, the Company filed a Registration Statement with the Securities and
Exchange  Commission for a second public offering of debt securities,  which the
Securities  and Exchange  Commission  declared  effective  October 7, 2004.  The
Company  concluded  the  offering  on  October  7,  2006.  The  Company  offered
$23,000,000  principal  amount of its  Series B secured  investor  certificates.
Certificates  could be purchased in any multiple of $1,000.  We sold $14,860,000
of secured investor certificates during the offering.

Pursuant  to the  terms of the  Underwriting  Agreement,  the  Company  incurred
commissions and non-reimbursable expenses and paid approximately $173,000 during
2006 in connection with these public  offerings to the managing  underwriter and
participating broker-dealers .

7.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of the Company's financial  instruments,  none of which
are held for trading purposes, are as follows at December 31, 2007 and 2006:

<TABLE>
<CAPTION>
                                                                2007                                   2006
                                                  -----------------------------------    ------------------------------
                                                      Carrying            Fair             Carrying            Fair
                                                       Amount             Value             Amount             Value
                                                     ----------        -------------      ----------       ------------

<S>                                              <C>                <C>                  <C>                <C>
      Cash and equivalents                       $     285,118      $     285,118        $  232,258         $  232,258
      Accounts receivable                              112,546            112,546           136,709            136,709
      Interest receivable                              151,105            151,105           164,923            164,923
      Mortgage loans receivable                     33,968,927         33,968,927        37,852,736         37,852,736
      Bond portfolio                                11,263,713         11,263,713         9,550,697          9,550,697
      Secured investor certificates                 22,831,000         22,831,000        26,638,000         26,638,000
</TABLE>

The carrying value of cash and equivalents approximates fair value. The carrying
value of the mortgage loans  receivable  approximates  fair value because of the
substantial  turnover and activity in this portfolio.  The carrying value of the
bond portfolio  approximates  amortized cost since our bonds are callable at any
time  by  the  issuer  at  par.  The  carrying  value  of the  secured  investor
certificates  approximates  fair value  because the interest  rates at which the
certificates have been sold have not changed significantly in the past year.



                                      F-15


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2007 and 2006



8.  LINE OF CREDIT

The Company obtained a $1,000,000 line of credit with its bank on July 22, 1999,
which was  increased to $2,000,000 on March 18, 2002 and increased to $3,000,000
on February 13, 2007,  subject to certain  borrowing base  limitations,  through
August 1, 2007. Interest was charged at 0.50% over the prime rate, which totaled
8.75% at December 31,  2007.  The line of credit was fully paid on July 26, 2007
by the KeyBank  facility  discussed  below,  leaving no balance  outstanding  at
December 31, 2007.  There was  interest  expense in the amount of  approximately
$41,000 related to the line of credit for December 31, 2007.

On July 26, 2007, the Company  entered into a three-year,  adjustable  rate, $15
million revolving credit facility with KeyBank National Association. There was a
balance of  $3,350,000  outstanding  at December  31,  2007.  There was interest
expense in the amount of  approximately  $86,000  related  to the  facility  for
December  31,  2007.  Interest  is charged at the LIBOR rate plus an  applicable
margin,  which was 1.50% at December 31, 2007. The total interest rate was 6.56%
at December 31, 2007. The applicable  margin is indexed based upon the Company's
financial performance as described below.

The Credit Agreement contains customary affirmative and negative covenants.  The
financial covenants include borrowing base restrictions,  a maximum indebtedness
to assets ratio,  a minimum cash flow  coverage  ratio,  a minimum  tangible net
worth  ratio,  and a  maximum  non-performing  assets  ratio.  The  creation  of
indebtedness  outside the credit facility,  creation of liens, making of certain
investments,  sale of assets,  and  incurrence of debt are all either limited or
require prior  approval from KeyBank or the lenders under the Credit  Agreement.
The  Credit  Agreement  also  contains  customary  events  of  default  such  as
nonpayment,  bankruptcy,  and  change  in  control,  which  if  they  occur  may
constitute an event of default. Additionally, under certain circumstances, total
availability  under the credit  facility can be  increased  to $25 million.  The
revolving  credit facility is secured by a first priority  security  interest in
substantially  all of the  Company's  assets  other than  collateral  pledged to
secure the Company's Series "A" and Series "B" secured investor certificates

The  Company's  applicable  margin rate is currently  1.50% over LIBOR for LIBOR
rate loans and 0.25% over prime rate for base rate loans. Based on the Company's
borrowing base adjusted  leverage ratio this applicable  margin can be adjusted,
on any date of  determination,  either upward or downward based on the following
schedule:
<TABLE>
<CAPTION>

   -------------------------------------- ------------------------------------ --------------------------------------
           Total Leverage Ratio:            Per Annum Percentage for LIBOR      Per Annum Percentage for Base Rate
                                                         Loans                                 Loans
   -------------------------------------- ------------------------------------ --------------------------------------
   -------------------------------------- ------------------------------------ --------------------------------------
<S>                         <C>                         <C>                                    <C>
   Greater than or equal to 60%                         1.875%                                 0.50%
   -------------------------------------- ------------------------------------ --------------------------------------
   -------------------------------------- ------------------------------------ --------------------------------------
   Less  than  60% but  greater  than or                 1.50%                                 0.25%
   equal to 55%
   -------------------------------------- ------------------------------------ --------------------------------------
   -------------------------------------- ------------------------------------ --------------------------------------
   Less than 55%                                         1.35%                                 0.00%
   -------------------------------------- ------------------------------------ --------------------------------------
</TABLE>

The total leverage  ratio is determined by dividing  total  liabilities by total
adjusted tangible asset value.