As filed with the Securities and Exchange Commission on March 29, 2001

                       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, 2000

       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 33-87570


                        American Church Mortgage Company

_-------------------------------------------------------------------------------


              (Exact name of small business issuer in its charter)

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

                  I.R.S. Employer Identification No. 41-1793975

     State or other jurisdiction of incorporation or organization: Minnesota

      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 (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 not 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 Form  10-KSB or any
amendment to this Form 10-KSB.[ x ]

State issuer's revenues for its most recent fiscal year:      $1,407,414

State the  aggregate  market value of the voting and  non-voting  common  equity
stock 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
stock, as of a specified date within the past 60 days: _______ Not applicable.

The number of shares outstanding of the issuer's $.01 par value common
stock as of February 28, 2001 was: 1,484,843 -----------

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE
--------------------------------------------------------------------------------







<PAGE>



                        AMERICAN CHURCH MORTGAGE COMPANY
                                   FORM 10-KSB


                                                                            Page
                                      INDEX                                  No.

                                     PART I

Item 1.    Description of Business....................................        3

Item 2.    Description of Property....................................       10

Item 3.    Legal Proceedings..........................................       10

Item 4.    Submission of Matters to a Vote of Security Holders........       10

                                     PART II

Item 5.    Market for Registrant's Common Equity and
           Related Stockholder Matters................................       10

Item 6.    Management's Discussion and Analysis
           or Plan of Operation.......................................       12

Item 7.    Financial Statements:......................................       14

                  Balance Sheet
                  December 31, 2000 and 1999..........................      F-2

                  Statement of Operations
                  Years Ended December 31, 2000 and 1999..............      F-4

                  Statements of Stockholders' Equity
                  December 31, 2000 and 1999..........................      F-5

                  Statements of Cash Flows
                  Years Ended December 31, 2000 and 1999..............      F-6

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

Item 8.    Changes In and Disagreements With
           Accountants on Accounting and Financial Disclosure.........       14

                                    PART III

Item 9.    Directors, Executive Officers, Promoters and Control
           Persons; Compliance With Section 16 (a) of the
           Exchange Act...............................................       15

Item 10.   Executive Compensation.....................................       16

Item 11.   Security Ownership of Certain Beneficial Owners and
           Management.................................................       17

Item 12.   Certain Relationships and Related Transactions.............       17

Item 13.   Exhibits and Reports on Form 8-K...........................       20








<PAGE>
                                     PART I

     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  the on-going  public sale of our shares,  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.

     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 the 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

     Incorporated  as a Minnesota  corporation  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  $1,000,000.  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, 2001, we have made 45
loans to 40 churches in the aggregate  amount of  $15,105,750,  with the average
size  being  $385,683.  Of the 45  loans  we have  made,  eight  loans  totaling
$2,372,000 have been repaid early by the borrowing churches.  We also own, as of
February  28,  2001,  $2,617,000  principal  amount  of  Church  Bonds  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., an NASD member broker-dealer which has served
as underwriter of the three public offerings of our common stock.
Public Offerings

     On July 11, 1995, the Securities and Exchange Commission declared effective
our first public  offering of 2,000,000  common  shares at a price of $10.00 per
share ($20,000,00) under SEC File 33-87570.  We achieved the Minimum Offering of
at least 200,000 shares  ($2,000,000) sold to not less than 100 individuals (the
"Minimum  Offering") on April 15, 1996. Until the Minimum Offering was achieved,
we could not commence our active  business of making mortgage loans to churches.
Consequently, business operations from inception (May 27, 1994) to completion of
the  Minimum   Offering   (April  15,  1996)  were  limited  to  daily  business
organizational efforts, activities relating to the offering, reviewing potential
candidates for church mortgage loans to be made by us once the Minimum  Offering
was achieved,  and  conducting  informational  meetings with brokers and broker-
dealers identified to the Company by the Underwriter--American  Investors Group,
Inc.  ("American"),  an  affiliate  of ours.  We  concluded  our initial  public
offering  on  November 8, 1996.  As of such date we had sold  335,481  shares to
approximately 281 individuals, not including 20,000 shares ($200,000) previously
purchased  by our initial  shareholder  -- DRM  Holdings,  Inc.,  another of our
affiliates.

     On September 26, 1997,  the  Securities  and Exchange  Commission  declared
effective  our second public  offering of 1,500,000  common shares at a price of
$10.00 per share  ($15,000,000)  under SEC File 333-27601.  The Offering was co-
underwritten by American Investors Group, Inc. and LaSalle St. Securities, Inc.,
Chicago,  Illinois  ("LaSalle").  American acted in the capacity of the Managing
Underwriter.  The Offering was conducted on  a"best-efforts"  basis  pursuant to
applicable  rules of the  Securities and Exchange  Commission.  We concluded our
second public  offering on January 22, 1999.  We sold 799,759  shares during our
second public offering.




                                        3

<PAGE>
     On  September  23, 1999 the  Securities  and Exchange  Commission  declared
effective  our third public  offering of 1,500,000  common  shares at a price of
$10.00 per share ($15,000,000)  under SEC File 333-81819.  The Offering is being
conducted  on a  "best-efforts"  basis  pursuant  to  applicable  rules  of  the
Securities and Exchange Commission. As of February 28, 2001, we had sold 280,969
shares,  and had 1,484,843 shares  outstanding and  approximately 771 individual
shareholders.

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., has been engaged since 1987 in the business
     of  underwriting  first mortgage  bonds for churches  throughout the United
     States.  In underwriting  church bonds,  they review  financing  proposals,
     analyze prospective borrowers' financial capability, and structure,  market
     and sell,  mortgage-backed securities which are debt obligations (notes) of
     such borrowers to the investing general public. The shareholders,  officers
     and  directors  of  American  have been  engaged in the  business of church
     financing since 1983, with a combined  experience of approximately 75 years
     in  this  business.   Since  its  inception,   American  has   underwritten
     approximately   172  church  bond   financings,   in  which   approximately
     $270,756,000  million  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 $1,574,163 million.

          In thecourse of its  business,  American has  identified a demand from
     potential borrowers for smaller loans of $100,000 to $1,000,000. Because of
     the regulatory,  administrative expenses and complexity normally associated
     with the bond financing  business,  American  determined  that the economic
     feasibility of bond financing has diminished for financings under $750,000.
     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 not always  favorable  or available to them,  due to the
     historic  reticence  of banks to lend to churches  for other than  economic
     reasons.  The  Company's  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  $1,000,000,  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
     essentially all of 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 20 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 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.  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 years,
we may determine to emphasis 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) shareholder  relations and
(vii) administering our day-to-day  business.  In consideration of its services,
the  Advisor  is  entitled  to  receive  a 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  Advisor's  management  fees are
computed and payable monthly.





                                        4

<PAGE>



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,  the  U.S.  Treasury  10-Year  Notes,  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;  (vi) local and national economic factors;
and (v) actual  experience in borrowers'  demand for the loans. 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 Type we may offer to
prospective borrowing institutions:


<TABLE>

<CAPTION>
            Loan Type                          Interest Rate (1)             Origination Fee (2)
<S>                                <C>                                                 <C>
15 Year Term (3)                   Fixed @ Prime + 2.00%                               4.0%
20 Year Term (3)                   Fixed @ Prime + 2.25%                               4.0%
20 Year Term (3)                   Variable Annually @ Prime + 1.25%                   4.0%
Renewable Term  (4)                Fixed @ Prime plus:
     3 Year                               1.35%                                        4.0%
     5 Year                               1.50%                                        4.0%
     7 Year                               1.65%                                        4.0%
Construction 1 Year Term           Fixed @ Prime + 2.50%                               2.0%
=================================  ========================================= =========================
</TABLE>



     (1)  "Prime"  means  the  prime  rate  of  interest  charged  to  preferred
          customers,  as published by a federally  chartered  bank chosen by our
          Advisor.

     (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.

     (3)  Fully amortized repayment term.

     (4)  Renewable  term  loans  are  repaid  based on a  20-year  amortization
          schedule,  and are  renewable at the  conclusion of their initial term
          for additional like terms up to an aggregated  maximum of 20 years. We
          charge  a fee of 1% to the  borrower  by us  upon  the  date  of  each
          renewal.  If renewed by the  borrower,  the interest  rate is adjusted
          upon renewal to Prime plus a specified  percentage "spread," i.e., one
          and a quarter percent (1.25%).

     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 does, in fact,  negotiate  these
terms and fees with many of its borrowers.

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    written  applications  (and exhibits) signed and  authenticated by the
          prospective borrower in form and substance dictated by us;

     o    financial statements in accordance with our Financing Policies;

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

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



                                        5

<PAGE>
     All  appraisals  and  financial  statements  are  prepared  by  independent
third-party  professionals  who  are  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 our
President. 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  meeting 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 to our Advisor, and the other one-half to us.

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
recordation  of mortgage  loans;  collecting  payments of principal and interest
payments 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  the 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) will be 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
$1,000,000  line of credit  with  Beacon  Bank,  Shorewood,  Minnesota.  We have
borrowed  against our line of credit and had an outstanding  balance of $700,000
as of  February  28,  2001.  We may borrow up to 50% of the value of our Average
Invested Assets to make loans  regardless of our capacity to (i) sell the Shares
on a continuing  basis, or to (ii) reposition  assets from the maturity or early
repayment of mortgage loans in our portfolio. Cash resources generally available
to us consist  primarily of the net proceeds from the sale of the Shares,  minus
reserves for operating  expenses,  and bad-debt  reserves,  as determined by the
Advisor.  As our business  develops and over the course of time,  cash resources
available  to us for  lending  purposes  will  include,  in  addition to the net
proceeds  from future sales of Shares (if any),  (i) principal  repayments  from
borrowers on loans made by us, (ii)  dividends  reinvested  by our  Shareholders
electing the Dividend Reinvestment Plan, and (iii) funds borrowed under any line
of credit arrangement.

The Advisory Agreement

     We have entered into a contract with the Advisor (the "Advisory Agreement")
under which the Advisor will furnish advice and  recommendations  concerning our
business  affairs,   provide  administrative  services  to  us  and  manage  our
day-to-day operations. Among other things, the Advisor:

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

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

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

                                        6

<PAGE>
     o    on our behalf,  deals with  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 as Advisor; and

     o    as  requested  by us, makes  reports to us of its  performance  of the
          foregoing  services  and  furnish's  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 dividend  reinvestment  agent fees 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 directors,
officers and  employees of the Advisor  (except  out-of-pocket  expenses of such
persons who are directors or officers of ours that incurred in their  capacities
as our  directors  and  officers),  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, and costs directly relating
to closing of loan transactions.

     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. 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.  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
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:

                                        7

<PAGE>



     (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 shall be
          limited to 20% of Average  Invested  Assets.  All other  loans will be
          first mortgage loans.

     (ii) 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 loans over $500,000,  we will require a written appraisal
          certified by a member of the Appraisal  Institute ("MAI"), or a state-
          certified appraiser.

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

     (iv) The  borrower's  long-term  debt  (including the proposed loan) cannot
          exceed four (4) times their gross income for the previous  twelve (12)
          months.

     (v)  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 (90) days of the loan closing  date.  On loans equal to or less
          than  $500,000,  the last complete  fiscal year must be reviewed by an
          independent  accounting firm. On loans in excess of $500,000, the last
          complete  fiscal  year  financial  statements  must 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 (24
          months) absent express approval by our Board of Directors.

     (vi) In its  discretion,  the  Advisor,  on our  behalf,  may  require  the
          borrower to arrange for  automatic  electronic  or drafting of monthly
          payments.

     (vii)In its  discretion,  the  Advisor,  on our  behalf,  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.

     (viii) 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.

     (ix) In its  discretion,  the  Advisor,  on our  behalf,  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).

     These Financing Policies are in addition to the prohibited  investments and
activities identified hereinafter 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;


                                        8

<PAGE>



     (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)  Issuing debt securities  unless the debt service coverage for the most
          recently  completed  fiscal year,  as adjusted for known  changes,  is
          sufficient to properly service the higher level of debt;

     (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.

     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.

Competition

     The real estate financing industry generally is highly competitive. We will
compete  within  our  geographic  areas  of  operation  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.

Employees

     We have no employees. Our daily opertions and other material aspects of our
business are managed by 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.


                                        9

<PAGE>



     Subject to the  supervision  of the Board of  Directors,  our  business  is
managed by Church  Loan  Advisors,  Inc.  (the  "Advisor"),  which  provides  us
investment advisory and administrative  services. The Advisor is owned by Philip
J. Myers.  Philip J. Myers is Secretary of the Advisor and President of American
Investors  Group,  Inc., the  underwriter in our current  public  offering.  The
Advisor is not a registered  investment  advisor under the Investment  Advisor's
Act of 1940,  nor are we a registered  investment  company under the  Investment
Company Act of 1940.  As of the date of this  Report,  the Advisor  employs five
persons on a part- time or other basis. The Company does not presently expect to
directly  employ  any  persons  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.  See Item 11 "Security Ownership
of Certain Beneficial Owners and Management," and Item 12 "Certain Relationships
and Related Transactions."

Operations

     Our  operations  currently  are located in the 8,400 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 by Mr. Reinhart and Mr. Myers. We are not
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.  The Advisor  paid rent and other fees to Yellow  Circle  Partners on a
monthly basis in fiscal year 2000.  Beginning  January 1, 2001, the Advisor pays
rent and other fees to Apostle Holdings, Corp.

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.

Item 3.   Legal Proceedings.

     Not applicable.


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

     Not applicable.

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.

         Market Information

     As of February 28, 2001,  1,484,843 shares of our common shares were issued
and  outstanding  in the public,  excluding  20,000  shares owned by our initial
shareholder  DRM Holdings,  Inc. Our initial public offering (SEC file 33-87570)
which began July 11, 1995 was closed November 8, 1996 with 335,481 shares having
been sold.  On  September  26, 1997,  the  Securities  and  Exchange  Commission
declared  effective our second public  offering of 1,500,000  common shares at a
price of $10.00 per share  ($15,000,000)  under SEC File 33-87570.  The Offering
was   co-underwritten   by  American  Investors  Group,  Inc.  and  LaSalle  St.
Securities,  Inc.,  ("LaSalle").  American acted in the capacity of the Managing
Underwriter  and  is an  affiliate  of  ours.  The  Offering  was  conducted  on
a"best-efforts"  basis  pursuant  to  applicable  rules  of the  Securities  and
Exchange  Commission.  We concluded  our second  public  offering on January 22,
1999.  We sold 799,759  shares in our second public  offering.  On September 23,
1999, the Securities and Exchange Commission declared effective our third public
offering of 1,500,000 common shares at a price of $10.00 per share ($15,000,000)
under SEC File 333-81819.  The Offering is being  conducted on a  "best-efforts"
bais pursuant to applicable rules of the Securities and Exchange Commission.  As
of February 28,  2001,  we have sold 280,969  shares and have  1,484,843  shares
outstanding and approximately 771 shareholders.

     Lack of Liquidity and Absence of Public Market Price.

     There  currently  is no market  for our  common  shares and there can be no
assurance that a market will develop.  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.  Further, because of such illiquidity and the
fact

                                       10

<PAGE>
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  any  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  listed  on any  exchange  and is not yet  listed  for
quotation on the National  Association  of Securities  Dealers,  Inc.  Automated
Quotation System ("NASDAQ").

     Repurchase of Our Shares

     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  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.

     Holders of Our Common Shares

     As of February 28, 2001,  we had 771 record  holders of our $.01 par common
stock,  including  our  first  Shareholder,  DRM  Holdings,  Inc.,  a  Minnesota
corporation and affiliate of the Advisor,  which owns 20,000 shares for which it
paid $200,000 ($10.00 per share).

         Dividends

         We paid dividends for the prior fiscal year on our common stock as
follows:

<TABLE>
<CAPTION>

 Distribution Date:         For Quarter Ended:     Dollar Amount Distributed      Annualized Yield Per $10
                                                        Per Share:                     Share Represented:
<S>                         <C>                      <C>                                  <C>
   April 30, 2000             March 31, 2000         $.225                                9.00%
    July 30, 2000             June 30, 2000          $.2125                               8.50%
  October 30, 2000          September 30, 2000       $.1875                               7.50%
  January 30, 2001          December 31, 2000        $.20                                 8.00%
</TABLE>

     As a Real Estate Investment Trust, we make regular quarterly  distributions
to  Shareholders.  The amount of distributions to them equal at least 95% of our
"real estate  investment trust taxable income."  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 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 once we have
fully  invested such funds into loans.  We intend to combat to the extent we can
the  possibility  of low yields during the periods where we're selling shares by
(i) collecting  from borrowers an origination fee at the time a loan is made (of
which one-half of any  origination fee charged in connection with a loan is paid
directly  to the  Advisor as  additional  compensation--the  other  one-half  is
payable to us),  and (ii) timing our lending  activities  to coincide as much as
possible  with sales of our  Shares.  However,  there can be no  assurance  that
either  or  both  of  these  strategies  will  improve  current  yields  to  our
Shareholders in periods of our business  operations when capital is being raised
through  the sale of  additional  common  shares.  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 95% of our "real estate  investment
trust  taxable  income."  For  the  fiscal  year  ended  December  31,  2000  we
distributed  substantially  all of our taxable income to our Shareholders in the
form of quarterly dividends. We intend to continue distributing all or a portion
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.

                                       11

<PAGE>

     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.

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

     During our year ended  December  31,  2000 our total  assets  increased  by
$1,422,158 due primarily to sale of our common stock in our third "best efforts"
public offerings.  Our total  liabilities  increased by $61,065 due primarily to
deferred income, dividends declared but not yet paid as of December 31, 2000.

     Results of Operations-1996-1997

     We began active business operations on or about April 15, 1996,  therefore,
results of operations  through December 31, 1996 are reflective of approximately
255 days of  operations.  Between the date upon which we began  active  business
operations  and  December  31,  1996,  we made  loans to seven  churches  in the
aggregate  amount of $2,802,000,  with an average loan size being  $400,000.  We
also  purchased in the  secondary  market for $46,412  (which  includes  $407 in
accrued  interest) First Mortgage Church Bonds in the face amount of $50,000 and
purchased  for  $72,800  Second  Mortgage  Church  Bonds in the face  amount  of
$100,000.

     We completed  our first full fiscal year of  operations  December 31, 1997.
During  that  fiscal  year we funded  five more first  mortgage  loans and three
second mortgage loans to churches for an aggregate amount of $2,665,712,  and we
purchased  $2,000 principal amount of First Mortgage Church Bonds for a purchase
price of $871.

     Results of Operations - 1998

     During our fiscal  year ended  December  31,  1998 we funded six more first
mortgage loans and two second  mortgage  loans totaling  $1,793,750 and $355,000
respectively.  We also  purchased  $925,300  principal  amount of First Mortgage
Church  Bonds for a purchase  price of  $922,445.  During  this year,  two first
mortgage loans and one second mortgage loan in the aggregate amounts of $730,000
and $350,000  respectively,  were repaid early.  We also had two First  Mortgage
Church Bonds called for  redemption  (early  repayment).  The face amount of the
combined bonds was $33,000, our original aggregate purchase price was $29,225.

     Results of Operations -1999

     During our fiscal  year ended  December  31, 1999 we funded  fourteen  more
first  mortgage  loans  and  one  second  mortgage  loan  to  churches  totaling
$5,696,000 and $235,000  respectively.  We also purchased  $1,382,000  principal
amount of First Mortgage  Church Bonds for a purchase  price of $1,375,478.  ___
During this year, three first mortgage loans and one second mortgage loan in the
aggregate amounts of $952,000 and $100,000  respectively,  were repaid early. We
also sold $246,000  First  Mortgage  Church Bonds for $244,170 and sold our only
Second Mortgage Church Bond for $100,000. We had two First Mortgage Church Bonds
called for redemption (early  repayment).  The face amount of the combined bonds
was $12,000.

     Results of Operations-2000

     Net income for our fiscal year ended  December 31, 2000 was  $1,140,253  on
total  revenues  of  $1,407,414  compared  to  $971,879  on  total  revenues  of
$1,109,436 for the year ended December 31, 1999.  Interest  income earned on the
Company's  portfolio  of loans was  $1,160,113  for the year ended  December 31,
2000, compared to $848,346 for 1999. This increase was due to the fact that five
new loans were originated in fiscal year ended December 31, 2000.  Excluded from
revenue for the year ended December 31, 2000 is $49,856 of  origination  income,
or "points," we received.  Recognition  of  origination  income under  generally
accepted accounting  principles ("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 real estate investment
trust requires, among other things, the distribution to Shareholders of at least
95% of "Taxable Income," the dividends declared and paid to our

                                       12

<PAGE>
     Shareholders  for the  quarters  ended  March  31,  2000,  June  30,  2000,
September 30, 2000 and December 31, 2000 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, 2000 was  $267,161
compared to $157,557 for our fiscal year ended December 31, 1999.  This increase
was due  primarily to an increase in interest  expense on our line of credit and
fees paid to our advisor.

     Our Board of Directors declared quarterly dividends of $.225 for each share
held of record on March 31, 2000, $.2125 per share held of record June 30, 2000,
$.1875 per share held of record  September 30, 2000,  and $.20 per share held of
record on December 31, 2000.  Based on the four quarters of  operations  for the
quarters ended March 31, 2000,  June 30, 2000,  September 30, 2000, and December
31,  2000,  the  dividends  paid  represented  a 9.00%,  8.50%,  7.50% and 8.00%
annualized yield to Shareholders  respectively  for an effective  overall annual
dividend yield of 8.25% in 2000.

     Since our inception,  we have  experienced our highest  quarterly  dividend
payment for the quarter  ended  December  31,  1997 and  experienced  our lowest
quarterly  dividend  payment for the quarter  ended March 31, 1999 and September
30, 2000. The quarterly  dividend paid for each share held of record on December
31, 1997 was $.25625 per share  representing an annualized yield of 10.25%.  The
quarterly  dividend  payment for each share held of record on March 31, 1999 and
September 30, 2000 was $.1875  representing  an annualized  yield of 7.50%.  The
dividend payment for December 31, 1997 was significantly higher than the average
dividend amount due to the large number of loans funded during the quarter. 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  "GAAP".  By way of further
comparison,  the dividend payment made to March 30, 1999  shareholders of record
was  significantly  lower than the average dividend amount due directly to large
cash  balances  we received  form our second  stock  offering  and held in money
market instruments pending deployment in new loans to churches. Because interest
earned in our money market account is  substantially  lower than interest earned
on our mortgage  loans,  interest income earned was lower than is anticipated to
be earned once the offering  proceeds  are fully  deployed  into new loans.  The
dividend payment made to September 30, 2000 shareholders was significantly lower
than the  average  dividend  amount  due  directly  to the fact  that we did not
originate  any new  loans in the  quarter,  therefore,  we did not  receive  any
origination income within the quarter.

     Our total  assets  increased  from  $12,915,590  at  December  31,  1999 to
$14,337,748  at December 31, 2000.  The primary reason for the increase in total
assets from December 31, 1999 through December 31, 2000 was a result of the sale
and issuance of our common  stock  pursuant to our third  public  offering,  the
proceeds of which were (and  continue to be) deployed  into new mortgage  loans.
Shareholders'  Equity rose from  $11,953,319 at December 31, 1999 to $13,314,410
at December 31, 2000 for the same reasons.  Our liabilities for both periods are
primarily  comprised of a "Deferred  Income"  item,  reflecting  our practice of
recognizing  our  origination  income  --  fees  charged  to  borrowers  at  the
commencement  of its  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.  The  December  31, 2000  balance  sheet also  reflected  a liability  of
$399,653  representing  the  balance as of such date on our line of credit  with
Beacon Bank.

     We began the sale of shares in our third public  offering on September  22,
1999 and have sold 280,969  shares  representing  $2,809,690  as of February 28,
2001. During the two-month period ended February 28, 2001 our total assets again
increased by $245,762 due primarily to the  continued  public sale of our common
stock. All loans made by us range in interest rate charged to the borrowers from
9.50% to 12.00%.  Many of our loans  have  repayment  schedules  of up to twenty
years, but may be prepaid at any time without penalty.  As of February 28, 2001,
the average,  principal-adjusted interest rate on our loan portfolio was 10.41%.
Our portfolio of Church Bonds has an average current yield of 8.94%.

     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 the net proceeds from the
sale of the  shares,  and (ii)  implementation  of our  business  plan of making
mortgage loans to churches and other  non-profit  religious  organizations.  Our
principal expenses are advisory fees, legal and accounting fees,  communications
costs with our  Shareholders,  and the  expenses  of our stock  transfer  agent,
registrar and dividend reinvestment agent.

     Our future capital needs are expected to be met by (i)  additional  sale of
our shares to the public (ii)  prepayment,  repayment at maturity and renewal of
mortgage  loans  made by us,  and (iii)  borrowed  funds.  We  believe  that the
"rolling" effect of mortgage loans maturing,  together with dividends reinvested
under our Dividend  Reinvestment  Plan,  will provide a  supplemental  source of
capital  to fund our  business  operations  in future  years.  Nevertheless,  we
believe that it may be desirable, if not necessary, to sell additional shares of
common  stock in order to  enhance  our  capacity  to make  mortgage  loans on a
continuous  basis.  There can be no assurance  that the we will be able to raise
additional capital on terms acceptable for such purposes.

                                       13
<PAGE>



     In addition,  we are able to borrow funds in an amount not to exceed 50% of
our Average  Invested  Assets in order to  increase  our  lending  capacity.  We
currently have a $1,000,000 secured line of credit with Beacon Bank,  Shorewood,
Minnesota. As of February 28, 2001 we have borrowed $700,000 against our line of
credit.  This credit line is secured by the pledge of  $1,000,000  in  principal
amount of our Church Bonds.  We are charged  interest on the line of credit at a
rate of the prime-interest rate, plus 1.00%. We have borrowed funds at a rate as
low as 9.00% and as high as 10.50% (our current borrowing rate). Interest on our
line of credit is payable to Beacon Bank 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. However,  there can be no assurance that we can loan funds out
at rates  higher than the rate at which we borrow the funds.  We  anticipate  to
"pay-down"  our line of credit by (i)  selling  additional  shares in our public
offering; (ii) applying the proceeds from principal payments on our current loan
portfolio payments and any loan re- payments;  and (iii) use the proceeds raised
in our  dividend  reinvestment  program.  Increases  or  decreases  in the prime
lending rate 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.

Item 7.  Financial Statements.

     Financial  Statements  required by this item can be found beginning on page
F-1 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






                   (Balance of Page Intentionally Left Blank)

                                       14

<PAGE>
                                    PART III

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

     (a) Our  Directors  are  elected  for a term  expiring  at the next  annual
Shareholder's  meeting and serve for one-year  terms and until their  successors
are duly elected and qualified.  Our officers serve at the discretion of the our
Board of  Directors.  Among other  requirements,  in order to maintain  its REIT
status,  a majority of the our Directors  must be  "independent."  Our executive
officers and Directors are as follows:

<TABLE>
<CAPTION>
            Name                 Age       Office                                        Director Since

<S>                               <C>      <C>                                                <C>
   David G. Reinhart              48       President, Treasurer and Director                  1994
   V. James Davis                 56       Vice-President, Secretary and Director             1994
   Kirbyjon H. Caldwell           48       Independent Director                               1994
   Robert O. Naegele, Jr.         60       Independent Director                               1994
   Dennis J. Doyle                49       Independent Director                               1994
   John M. Clarey                 59       Independent Director                               1994
</TABLE>


     David G.  Reinhart,  has been a Director  of ours since our  inception.  He
served  as our  President  and  Treasurer  since  January  19,  1999.  He became
President  of Miller & Schroeder  Financial,  Inc.,  Minneapolis,  Minnesota  on
December 29, 2000. He previously served as our Vice-President and Secretary from
our inception until January 19, 1999. He also served as Chairman of the Board of
Directors  of American  Investors  Group,  Inc.,  a Director  and Officer of the
Advisor, and President,  director and shareholder of DRM Holdings, Inc. ("DRM"),
the parent  corporation of American until January 2001. Mr.  Reinhart has served
as legal counsel to banks,  trust  companies and  broker-dealers  in the area of
church  financings  since  approximately  March 1984. He was employed in the St.
Paul,  Minnesota  law firm of Reinhart Law Offices,  P. A. from November 1985 to
February  1987,  and from  July  1983 to  November  1985 he was  employed  as an
Associate  Attorney  with  the law firm of  Robins,  Kaplan,  Miller  &  Ciresi,
Minneapolis,  Minnesota.  Mr.  Reinhart  received his Juris Doctor  degree,  cum
laude, in May 1979, from Hamline  University School of Law, St. Paul,  Minnesota
and received his Bachelor of Science degree in May 1976, from Northern  Michigan
University,  Marquette, Michigan. Mr. Reinhart has practiced law in the areas of
corporate  finance  and  general  business  law  since  1979  and has  developed
expertise in the area of church  financing.  He is employed from time-to-time as
Adjunct Professor of Law, Hamline University School of Law.

     V. James Davis,  has been a Director of ours since our  inception,  and has
served as our  Vice-President and Secretary since January 19, 1999. He served as
our  President and Treasurer  since our inception  until January 19, 1999.  From
November  1986 to October 1996 he served as President and a Director of American
Investors Group,  Inc. Prior to November,  1986, he was employed as President of
Keenan & Clarey,  Inc.,  Minneapolis,  Minnesota,  a church bond underwriter and
broker-dealer, where he also served as Financial and Operations Principal and as
a  Director.  From  January  1976 to March  1984,  Mr.  Davis  was  employed  as
Administrative  Vice-President,  and  Financial  and  Operations  Principal,  by
Offerman & Co.,  Inc.,  Minneapolis,  Minnesota,  a national  broker-dealer  and
originator  of  corporate  bond  financing  projects.  Mr. Davis has been in the
securities business since 1970 and was previously employed with other securities
firms in Appleton,  Wisconsin  and  Rockford,  Illinois.  He holds a Bachelor of
Science  degree in Liberal Arts from the  University  of  Wisconsin  -Whitewater
(1967) and completed course work at St. Joseph College, Rensselaer, Indiana. Mr.
Davis holds a General  Operations  Principal license and a Financial  Operations
Principal license with the National Association of Securities Dealers, Inc.

     Kirbyjon H. Caldwell, has served as an Independent Director since September
1994. He currently is Senior Pastor of Windsor Village United  Methodist  Church
and St. John's United Methodist Church in Houston, Texas, in which capacities he
has served since January 1982 and September  1992,  respectively.  Membership in
both churches is approximately 7,500 combined and their ministries reach a broad
segment of the Houston  region.  Kirbyjon  Caldwell  received his B.A. degree in
Economics from Carlton College (1975),  an M.B.A. in Finance from the University
of  Pennsylvania's  Wharton  School  (1977),  and his Masters in  Theology  from
Southern  Methodist  University School of Theology (1981). He is a member of the
Boards  of  Directors  of  Texas  Commerce  Bank  (Houston),   Hermann  Hospital
(Houston),  Greater Houston Partnership, The United Way of The Texas Gulf Coast,
and the American  Cancer  Society.  He is also the founder and member of several
foundations and other community development organizations.

     Robert O. Naegele,  Jr., has served as an  Independent  Director  September
1994. Mr. Naegele's  professional  background includes advertising,  real estate
development,  and consumer products,  with a special interest in entrepreneurial
ventures  and  small  developing  companies.  Most  recently,  he led a group of
investors to apply for, and receive an NHL  Expansion  Franchise,  the Minnesota
Wild,  to begin play in a new arena in St. Paul,  Minnesota,  in the Fall of the
year 2000. Mr. Naegele and his wife,  Ellis,  lived in Minneapolis  through 1993
and now reside in Naples, Florida.

                                       15

<PAGE>

     Dennis J. Doyle,  has served as an  Independent  Director  since  September
1994. He is the majority  shareholder and co-founder of Welsh  Companies,  Inc.,
Minneapolis,  Minnesota--a full-service real estate company involved in property
management,  brokerage,  investment  sales,  construction  and  residential  and
commercial development. Welsh Companies was co-founded by Mr. Doyle in 1980, and
has five  regional  offices and 220  employees.  Mr.  Doyle is the  recipient of
numerous civic awards  relating to his business  skills.  He also is a member of
the Board of  Directors of HEART (a  non-profit  organization),  The  Children's
Theater (Minneapolis) and Grow Biz International,  a publicly-owned  company. He
is also a member of the Board of Advisors of the Minnesota Real Estate  Journal,
and a member  of the  International  Commercial  Realty  Services  ("ICRS")  and
National Association of Office and Industrial Parks ("NAIOP").

     John M. Clarey, has served as an Independent Director since September 1994.
Since January 1992, he has been employed as Executive Vice President of Miller &
Schroeder  Financial,  Inc., a Minneapolis,  Minnesota based investment  banking
firm and NASD-member  broker-dealer.  From February 1991 through  December 1991,
Mr.  Clarey was a general  partner  of the  Clarepoint  Partners,  LP, a private
venture  capital firm,  of which he was one of the  founders.  From July 1989 to
February  1991,  he was a Senior Vice  President  of Miller,  Johnson and Kuehn,
Inc., a  Minneapolis-based  broker-dealer.  From November 1980 to July 1989, Mr.
Clarey  served as  President  and Chief  Executive  Officer of  Allison-Williams
Company, a  Minneapolis-based  investment banking firm specializing in municipal
and corporate finance.  From September 1965 to November 1970, he was employed as
Executive Vice President of Keenan & Clarey,  Inc., a Minneapolis  broker-dealer
specializing  in  structuring  and  development  of  corporate  debt  issues and
financings for churches and other non-profit corporations.  During his career in
the  securities  and finance  industry,  Mr.  Clarey has been active as a senior
officer and director of local,  regional,  and national  trade and  professional
associations  and has served as a  volunteer  officer  and  director  of various
charitable  organizations.  He graduated from Marquette  University,  Milwaukee,
Wisconsin (1963) with a B.A. in economics.

     Administration  of the day-to-day  operations of the Company is provided by
the Advisor under the Advisory Agreement. We currently have no employees and the
Company's  officers  receive  no  compensation  for their  services,  other than
through  their  interests  in the Advisor and  affiliates  of the  Company.  Our
officers have no employment  contracts with us or the Advisor and are considered
employees "at will." We believe that,  because of the depth of management of the
Advisor  and  its  Affiliates,  the  loss of one or more  key  employees  of the
Advisor,  or one or more of our  officers,  would  not have a  material  adverse
effect  upon our  operations.  As  required  by our  bylaws,  a majority  of the
Directors are Independent Directors in that they are otherwise unaffiliated with
and do not  receive  compensation  from us  (other  than in  their  capacity  as
Directors) or from the Advisor or American.

     Our Directors are  responsible  for considering and approving our policies.
They  meet as often and  devote  such time to our  business  as their  oversight
duties may require.  Pursuant to our bylaws, the Independent  Directors have the
responsibility  of evaluating the capability and  performance of the Advisor and
determining that the compensation being paid to the Advisor by us is reasonable.

     Directors and officers are  permitted to engage in other  activities of the
type  conducted by us, and neither our Articles of  Incorporation  or bylaws nor
any policy of ours restricts  officers or Directors from  conducting,  for their
own account or on behalf of others, business activities of the type conducted by
us.

     The Directors and officers are nevertheless not relieved of their duties of
loyalty to us and our  Shareholders.  The Directors may be removed by a majority
vote of all Shares  outstanding  and  entitled to vote at any annual  meeting or
special meeting called for such purpose.

Item 10.    Executive Compensation.

     Our two executive  officers do not receive  compensation  from us, however,
Mr. Davis and Mr. Reinhart each owned a one-third  interest in the Advisor until
May 15,  2000.  On May 15,  2000,  the  Advisor  was sold to Miller &  Schroeder
Financial,  Inc.,  (Miller &  Schroeder)  a  Minneapolis,  Minnesota  securities
broker-dealer. The Advisor was re-purchased by Philip J. Myers, President of the
Advisor,  on  December  29,  2000 from  Miller &  Schroeder.  Mr.  Davis and Mr.
Reinhart no longer  have any  ownership  in the  advisor.  The Advisor  receives
Advisory  Fees under the terms of its  Advisory  Agreement  with us. See Item 12
Certain Relationships and Related Transactions.

     We  currently  pay each  Independent  Director a fee of $500 for each board
meeting ($200 for telephonic meetings), limited to $2,500 per year. In addition,
we reimburse  Directors for travel  expenses  incurred in connection  with their
duties as our Directors.  We also have adopted a Stock Option Plan for Directors
and the Advisor,  under which each  Director  and the  Advisor's  president  are
granted  annually options to purchase 3,000 Shares each of our common stock at a
price equal to the fair market value at the date of the grant.





                                       16

<PAGE>
Warrants and Options

     On September 30, 1994,  the Board of Directors  adopted a Stock Option Plan
for  Directors  and the Advisor (the "Option  Plan") to be  administered  by our
Directors,  which  provides for a grant of an option to purchase 3,000 shares of
$.01 par value Common Stock, subject to certain adjustments,  to a Director upon
his or her  appointment  or election and upon each  re-election  (directors  are
elected  annually) or to the Advisor upon the  Advisor's  appointment  or annual
re-appointment. The purchase price of the Common Stock granted under each option
shall be the fair market  value,  as defined in the Option Plan, at the time the
option is granted.  On November 15, 1996,  1997,  1998,  1999 and 2000 we issued
options  under the Option Plan to each of our six directors and the President of
the Advisor,  to purchase 3,000 shares each.  Options currently  outstanding are
105,000  shares at a price of $10 per  share.  These  options  vest and are thus
exercisable on or after  November 15, 1996 and expire  November 15, 2001 through
November 15, 2005.

     We may grant  full-time  employees and our existing  directors and officers
and the Advisor  warrants,  options,  stock  purchase  rights,  incentive  stock
options or similar  arrangements  to  purchase  shares of our Common  Stock.  In
accordance  with  applicable  state law,  we have  agreed to limit the number of
options or warrants  issuable to the Advisor,  Affiliates or any Director to ten
percent  of the  outstanding  Shares of the  Company on the date of grant of any
options or warrants.  The  purchase  price of shares  issuable  pursuant to such
warrants or options  will not be less than the fair market  value at the time of
the grant.

     We may refuse to allow the  exercise of a warrant  into Common Stock if the
effect of such  exercise or  conversion  would,  in the opinion of our  counsel,
disqualify or jeopardize our status as a real estate  investment trust under the
Internal Revenue Code.

Item 11.      Security Ownership of Certain Beneficial Owners and Management.

     The  following  table sets forth as of  February  28,  2001,  the number of
shares  beneficially  owned by each director and by all  executive  officers and
Directors as a group,  and the beneficial owner of 5% or more of our outstanding
stock . Unless  otherwise noted,  each of the following  persons has sole voting
and  investment  power  with  respect to the  Shares  set forth  opposite  their
respective names.

<TABLE>
<CAPTION>
                                                       Number of Shares            Percent
     Name of Beneficial Owner (1)                    Beneficially Owned (2)        Of Class
     ----------------------------                    ----------------------       ----------
<S>                                                          <C>                     <C>
        Robert O. Naegele, Jr......................          5,000                   .34%
        V. James Davis.............................          2,530                   .17%
        Kirbyjon H. Caldwell.......................           ----                  ----
        Dennis J. Doyle............................           ----                  ----
        John M. Clarey.............................           ----                  ----
        All Executive Officers and Directors
             as a Group (five individuals).........          7,530                  .51%
------------------------------------------------
</TABLE>

     (1)  The  address  for  the   Directors  is  10237  Yellow   Circle  Drive,
          Minnetonka, Minnesota 55343.

     (2)  Excludes 15,000 Shares (105,000 shares in the aggregate) which each of
          our  Directors  and the  President  of the  Advisor  have an option to
          purchase  pursuant  to the Stock  Option  Plan for  Directors  and the
          Advisor. Options to purchase 84,000 Shares are currently exercisable

     Item 12. Certain Relationships and Related Transactions.


The Advisor

     Subject to the  supervision  of the Board of  Directors,  our  business  is
managed by the Advisor,  which provides  investment  advisory and administrative
services. The Advisor is a wholly-owned subsidiary of Apostle Holdings Corp. Mr.
Philip J. Myers owns all outstanding common stock of Apostle Holdings,  Corp. As
of the date of this Report, the Advisor employed,  directly or otherwise,  three
persons on a part-time basis, including Philip J. Myers, our President and Scott
J. Marquis,  our Vice  President.  Apostle  Holdings Corp.  also owns all of the
outstanding stock of American  Investors Group,  Inc., of which Mssrs. Myers and
Marquis are President and Chief Operating Officer respectively.

     Pursuant  to the  Advisory  Agreement,  we  must  pay the  Advisor  certain
advisory  fees and expenses,  as defined in the agreement and remit  one-half of
any  origination fee collected from a borrower in connection with mortgage loans
made or renewed by us.




                                       17

<PAGE>

American Investors Group, Inc.

     Pursuant to the Underwriting  Agreement in connection with our third public
offering which commenced September 23, 1999 the underwriter  (American) has been
paid selling commissions equal to $165,987 as of February 28, 2001. We have also
paid  approximately  $35,175  non-accountable  expenses of the  underwriter.  In
addition,  we agreed to indemnify  them, as  underwriters  against certain civil
liabilities,  including liabilities under the Securities Act of 1933. The public
offering price of the Shares was determined by  negotiations  between us and the
underwriter  based  on  the  price  paid  ($10.00  per  share)  by  the  initial
shareholder  and  shareholders  who  purchased  shares in our  prior two  public
offerings.  The  following  table sets forth the name and  positions  of certain
officers and all directors of American:

        Name                                                   Position

   Philip J. Myers                            President, Secretary and Director
   Scott J. Marquis                          Chief Financial & Operating Officer


     In the course of our business,  we have purchased and expect to continue to
purchase,  church bonds being  underwritten  and sold by  American.  Although we
would not pay any  commissions,  American  would benefit from such purchase as a
result of  commissions  paid to it by the issuer of such  bonds.  American  also
would  benefit  from  mark-ups on bonds  bought from it and mark- downs on bonds
sold through it by us on the  secondary  market.  Church bonds  purchased in the
secondary market, if any, will be purchased at the best price available, subject
to customary  markups (or in the case of sales --  markdowns),  on terms no less
favorable  than those  applied to other  customers  of  American,  and would not
exceed  industry  standards  or in any  event  (in  the  case  of  mark-ups  and
mark-downs  on secondary  bond sales and  purchases)  exceed five percent of the
principal  amount of bonds  purchased or sold. It is our policy not to invest in
excess of 30% of our Average Invested Assets in Church Bonds.

Church Loan Advisors, Inc.

     Our Advisor,  Church Loan Advisors,  Inc., is a Minnesota  corporation (the
"Advisor").  The Advisor was organized on May 27, 1994 to engage in the business
of rendering  lending and advisory  services solely to us, and to administer our
business  affairs and  operations.  The  Advisor's  offices are located at 10237
Yellow Circle Drive, Minnetonka, Minnesota 55343.

     The following  table sets forth the names and positions of the officers and
directors of the Advisor:

      Name                                               Position

  Philip J. Myers                             President, Treasurer and Director
  Scott J. Marquis                            Vice President, Secretary

     Philip J.  Myers,  age 44, is  President,  Treasurer  and a Director of the
Advisor,  having  served  in such  capacities  since its  inception.  He is also
currently employed full-time as President,  Secretary and a Director of American
Investors Group,  Inc. Mr. Myers earned his Bachelor of Arts degree in Political
Science  in 1977 from the State  University  of New York at  Binghamton  and his
Juris Doctor Degree from the State  University of New York at Buffalo  School of
Law in 1980.  From 1980 until 1982,  Mr.  Myers  served as an attorney  with the
Division of Market Regulation of the U.S.  Securities and Exchange Commission in
Washington,  D.C.  and,  from 1982 to 1984,  as an attorney with the Division of
Enforcement  of the Securities  and Exchange  Commission in San Francisco.  From
August  1984 to  January  1986,  he was  employed  as an  attorney  with the San
Francisco  law firm of  Wilson,  Ryan and  Compilongo  where he  specialized  in
corporate finance,  securities and broker-dealer  matters.  From January 1986 to
January 1989 when he became affiliated with American  Investors Group, Inc., Mr.
Myers was  engaged as Senior  Vice-President  and General  Counsel of  Financial
Planners Equity  Corporation  ("FPEC"),  a 400 broker securities dealer formerly
located in Marin County,  California. He is a member of the New York, California
(inactive  status) and  Minnesota  Bar  Associations,  and a registered  General
Securities Principal.

     Scott J. Marquis,  age 43, is Vice-President  and Secretary of the Advisor,
having served in such  capacities  since December 13, 1994. He is also currently
employed  full-time  as Chief  Financial  and  Operations  Officer  of  American
Investors Group,  Inc., where he has been employed since February 1987. Prior to
his employment with American Investors Group, Inc., Mr. Marquis was employed for
approximately  seven  years  with the  Minneapolis-based  broker-dealer,  Piper,
Jaffray  Companies,  in  the  capacity  of  supervisor  of its  trade  clearance
department.  Mr.  Marquis  is a  licensed  financial  principal  and  registered
representative of American Investors Group, Inc., and holds his Series 7, 63 and
27 licenses from the National Association of Securities Dealers, Inc.




                                       18

<PAGE>



     The Advisory  Agreement.  We have entered into a contract  with the Advisor
(the  "Advisory  Agreement")  under which the Advisor  will  furnish  advice and
recommendations  concerning our affairs, provides administrative services to us,
and manages  our  day-to-day  affairs.  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 dividend reinvestment agent
fees are our direct  expenses 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 a determination,  including a majority of the Independent  Directors,
that the Advisor's  performance has been  satisfactory and that the compensation
paid by us to the Advisor has been  reasonable.  We may  terminate  the Advisory
Agreement with or without cause on 60 days written notice.  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,  however,  we may  continue  to use the word  "church"  in our  name.  Our
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 us services  including,  but not limited to,
personnel  expenses,  rental and other office  expenses,  expenses of directors,
officers and  employees of the Advisor  (except  out-of-pocket  expenses of such
persons  who  are our  directors  or  officers),  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,
including the costs and expenses of reporting to various  governmental  agencies
and our Shareholders and of conducting our operations as a mortgage lender, fees
and expenses of  appraisers,  directors,  auditors,  outside  legal  counsel and
transfer agents, and costs directly relating to closing of loan transactions.

     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. 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  which we pay to the
Advisor. 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 our
profitability,  the  rates  charged  by  other  investment  advisors  performing
comparable 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,  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.

























                                       19

<PAGE>


<TABLE>

<CAPTION>
Item 13.        Exhibits and Reports on Form 8-K

         (a)    Exhibits

<S>             <C>
                3.1      Articles of Incorporation*
                3.2      By-Laws*
                4        Specimen Certificate*
                10.1     Advisory Agreement*
                10.2     Dividend Reinvestment Plan of Company*
                10.3     Stock Option Plan for Directors and Advisor (with Exhibits)*
                10.4     Gemisys Corporation Agreement to act as Transfer Agent, Registrar &
                           Dividend Reinvestment Agent*
                10.5     Advisory Agreement between Registrant and Church Loan Advisors, Inc.*
                EX-27    Financial Data Schedule*

</TABLE>
     *    Incorporated  herein by  reference  to the  Registrant's  Registration
          Statement on Form S-11 (Commission File No. 333-81819 ).

         (b)    Reports on Form 8-K

                No reports on Form 8-K were filed during the last quarter of the
period covered by this report.

                                       20

<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 29, 2001

                           By:   /s/ David G. Reinhart
                           -------------------------------------
                           David G. Reinhart, President, Treasurer
                          (Chief Executive Officer and Chief Accounting 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/ David G. Reinhart
         -------------------------------
         David G. Reinhart
         President , Treasurer and a Director

By:       /s/ V. James Davis
         --------------------------------
         V. James Davis
         Vice-President, Secretary  and a Director

By:       /s/ Dennis J. Doyle                             Date:       03/29/01
         ----------------------------------------                ---------------
         Dennis J. Doyle, Director

By:      /s/  John M. Clarey                             Date:       03/29/01
         ----------------------------------------                ---------------
         John M. Clarey, Director

By:      /s/ Robert O. Naegele, Jr.                      Date:       03/29/01
         -------------------------------------                   ---------------
         Robert O. Naegele, Jr.,  Director

By:      /s/ Kirbyjon H. Caldwell                        Date:       03/29/01
         --------------------------------------                  ---------------
         Kirbyjon H. Caldwell, Director




















                                       21

<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                              Minnetonka, Minnesota

                              Financial Statements

                           December 31, 2000 and 1999





<PAGE>













                         REPORT OF INDEPENDENT AUDITORS



Board of Directors
American Church Mortgage Company
Minnetonka, Minnesota

We have  audited the  accompanying  balance  sheet of American  Church  Mortgage
Company  as of  December  31,  2000  and  1999  and the  related  statements  of
operations,  stockholders' equity and cash flows for the years then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of American  Church  Mortgage
Company as of December 31, 2000 and 1999,  and the results of its operations and
its  cash  flows  for the  years  then  ended,  in  conformity  with  accounting
principles generally accepted in the United States of America.

                                                    Certified Public Accountants

Minneapolis, Minnesota
February 13, 2001



                                       F-1


<PAGE>



                        AMERICAN CHURCH MORTGAGE COMPANY

                                  Balance Sheet

<TABLE>
<CAPTION>
                                                                                                December 31
                      ASSETS                                                              2000                   1999

<S>                                                                             <C>                    <C>
Current Assets

    Cash and equivalents                                                        $        213,084       $        382,765

    Accounts receivable                                                                    9,892                  5,782
    Interest receivable                                                                   15,651
    Current maturities of mortgage loans receivable                                      276,565                218,398
    Current maturities of bond portfolio                                                  27,000                 17,000
    Prepaids                                                                               9,110                  2,917
                                                                                  --------------         --------------
            Total current assets                                                         551,302                626,862

Mortgage Loans Receivable, net of current maturities                                  11,463,484             10,189,529

Bond Portfolio, net of current maturities                                              2,262,962              2,039,199

Deferred Tax Asset                                                                        60,000                 60,000
                                                                                   -------------          -------------

            Total assets                                                             $14,337,748            $12,915,590
                                                                                      ==========             ==========
</TABLE>


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

                                       F-2


<PAGE>



                                             AMERICAN CHURCH MORTGAGE COMPANY

                                                      Balance Sheet

<TABLE>
<CAPTION>
                                                                                                 December 31

        LIABILITIES AND STOCKHOLDERS' EQUITY                                                 2000                  1999


Current Liabilities

<S>                                                                                 <C>                 <C>
    Note payable, line of credit                                                    $        399,653    $        500,000
    Accounts payable                                                                          80,775
    Management fee payable                                                                    36,222
    Deferred income                                                                           21,174              23,078
    Dividends payable                                                                        293,629             274,280
                                                                                        ------------        ------------
            Total current liabilities                                                        831,453             797,358


Deferred Income, net of current maturities                                                   191,885             164,913


Stockholders' Equity

    Common stock, par value $.01 per share
        Authorized, 30,000,000 shares

        Issued and outstanding, 1,469,817 at December 31, 2000
            and 1,322,289 shares at December 31, 1999                                         14,698              13,223
    Additional paid-in capital                                                            13,454,746          12,070,410
    Accumulated deficit                                                                     (155,034)           (130,314)
                                                                                         -----------         -----------
            Total stockholders' equity                                                    13,314,410          11,953,319
                                                                                          ----------          ----------

            Total liabilities and equity                                                 $14,337,748         $12,915,590
                                                                                          ==========          ==========
</TABLE>


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

                                       F-3


<PAGE>



                                             AMERICAN CHURCH MORTGAGE COMPANY

                                                 Statement of Operations

<TABLE>
<CAPTION>
                                                                                          Years Ended December 31
                                                                                          2000                  1999

<S>                                                                                     <C>                  <C>
Interest Income                                                                         $1,407,414           $1,109,436


Operating Expenses                                                                         267,161              157,557
                                                                                        ----------           ----------

Operating Income                                                                         1,140,253              951,879

Benefit from Income Taxes                                                                     -                 (20,000)
                                                                                        ----------            ---------

Net Income                                                                              $1,140,253           $  971,879
                                                                                         =========            =========

Basic and Diluted Income Per Common Share                                               $      .81           $      .81
                                                                                         =========            =========

Weighted Average Common Shares Outstanding                                               1,414,275            1,203,954
                                                                                         =========            =========
</TABLE>


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

                                       F-4


<PAGE>



                        AMERICAN CHURCH MORTGAGE COMPANY

                        Statement of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                                Additional
                                                     Common Stock                 Paid-In            Accumulated
                                                  -------------------             Capital              Deficit
                                                   Shares        Amount


<S>                                               <C>            <C>           <C>                   <C>
Balance, December 31, 1998                        1,087,646      $10,876       $ 9,973,200           ($   77,692)

    Issuance of 234,643 shares of
        common stock, net of
        offering costs                              234,643        2,347         2,097,210

    Net income                                                                                           971,879

    Dividends declared                                                                                (1,024,501)
                                                 ---------       -------        ----------             ---------

Balance, December 31, 1999                       1,322,289        13,223        12,070,410              (130,314)


    Issuance of 169,868  shares of
        common stock, net of offering
        costs                                      169,868         1,698         1,607,513


    Redemption of 22,340 shares of
        common stock                              (22,340)          (223)         (223,177)


    Net income                                                                                          1,140,253


    Dividends declared                                                                                 (1,164,973)
                                                                                                        ---------


Balance, December 31, 2000                      1,469,817        $14,698       $13,454,746           ($   155,034)
                                                =========         ======        ==========             ==========
</TABLE>


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

                                       F-5


<PAGE>



                                             AMERICAN CHURCH MORTGAGE COMPANY

                                                 Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                            Years Ended December 31
                                                                                         2000                     1999


Cash Flows from Operating Activities

<S>                                                                                   <C>                   <C>
    Net income                                                                        $1,140,253            $   971,879
    Adjustments to reconcile net income to net cash
        from operating activities:
        Deferred income taxes                                                                                   (20,000)
        Amortization                                                                                                161
        Change in assets and liabilities
            Accounts receivable                                                           (4,110)                22,995
            Interest receivable                                                          (15,651)
            Prepaids                                                                      (6,193)                (2,917)
            Accounts payable                                                              80,775                (12,759)
            Management fees payable                                                       36,222
            Deferred income                                                               25,068                 73,811
                                                                                     -----------             -----------
            Net cash from operating activities                                         1,256,364              1,033,170

Cash Flows from Investing Activities

    Investment in mortgage loans receivable                                           (1,675,000)            (5,931,000)
    Collections of mortgage loans receivable                                             342,878              1,754,935
    Investment in bond portfolio                                                        (250,763)            (1,368,392)

    Proceeds from bond portfolio called/sold                                              17,000                336,190
                                                                                     -----------              ---------
            Net cash used for investing activities                                    (1,565,885)            (5,208,267)

Cash Flows from Financing Activities

    Net borrowings (payments) on note payable, line of credit                           (100,347)               500,000
    Proceeds from stock offering, net of offering costs                                1,609,211              2,102,209
    Redemptions                                                                         (223,400)                (2,652)

    Dividends paid                                                                    (1,145,624)              (983,225)
                                                                                       ---------              ---------
            Net cash from financing activities                                           139,840              1,616,332
                                                                                       ---------              ---------

Net Decrease in Cash and Equivalents                                                    (169,681)            (2,558,765)

Cash and Equivalents - Beginning of Year                                                 382,765              2,941,530
                                                                                      ----------             ----------

Cash and Equivalents - End of Year                                                   $   213,084            $   382,765
                                                                                      ==========             ==========

</TABLE>
                                                      - Continued -
Notes to Financial Statements are an integral part of this Statement.

                                       F-6


<PAGE>



                                             AMERICAN CHURCH MORTGAGE COMPANY

                                           Statement of Cash Flows - Continued

<TABLE>
<CAPTION>
                                                                                           Years Ended December 31
                                                                                          2000                    1999


Supplemental Schedule of Noncash Financing and
    Investing Activities

    Offering costs reclassified to additional
<S>                                                                                     <C>                  <C>
        paid-in capital                                                                 $  20,702            $   122,664
                                                                                         ========             ==========
    Dividends payable                                                                    $293,629            $   274,280
                                                                                          =======             ==========

Supplemental Cash Flow Information
    Cash paid during the year for
        Interest                                                                        $  65,282            $     8,180
                                                                                         ========             ==========
        Income taxes                                                                    $     -              $        -
                                                                                         ========             ==========
</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, 2000 and 1999





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  that it  establishes  for  individual
organizations.  Loans  have been  made to  churches  located  in 15 states as of
December 31, 2000.

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.

Cash

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

The Company maintains its 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, 2000 and 1999, such
investments  were  $100,000  and  $300,000  respectively.  The  Company  has not
experienced any losses in such accounts.

Bond Portfolio

The Company accounts for its 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 their cost approximates
their fair value.  During 1999,  the Company sold  $195,000 of its bonds at par,
which was the same as amortized  cost,  to an affiliate of the Advisor (see Note
4). There were no gains or losses on the sale.

                                       F-8


<PAGE>



                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2000 and 1999



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Allowance for Mortgage Loans Receivable

The Company  follows a policy of  providing  an  allowance  for  mortgage  loans
receivable.  However,  at December  31, 2000 and 1999,  management  believes the
mortgage  loans  receivable  to be  collectible  in all material  respects,  and
therefore, no allowance is presently provided.

Revenue Recognition

Interest  income on mortgage loans is recognized as earned.  Interest  income on
the bond portfolio is recognized as the ex-dividend date.

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

Income taxes are provided  for the tax effects of  transactions  reported in the
financial  statements  and consist of taxes  currently due plus  deferred  taxes
related  primarily to differences in recognition of income from loan origination
fees for financial and income tax reporting.

The Company has elected to be taxed as a Real Estate  Investment  Trust  (REIT).
Accordingly, the Company will not be subject to Federal income tax to the extent
of  distributions  to its shareholders 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.  Stock  options had no effect on the  weighted  average  number of shares
outstanding.

Recently Issued Accounting Standards

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities  (subsequently
amended  by  SFAS  No.  138).  This  Statement   requires  companies  to  record
derivatives  on the  balance  sheet as assets and  liabilities  measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies  for hedge  accounting.  In June 1999,  the FASB  issued SFAS No. 137,
delaying  the  effective  date of SFAS No.  133 for one year,  to  fiscal  years
beginning  after June 15, 2000.  The Company has not yet  determined the effects
SFAS  No.  133  will  have  on its  financial  position  or the  results  of its
operations.

                                       F-9


<PAGE>



                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2000 and 1999





2.  MORTGAGE LOANS AND BOND PORTFOLIO

At December 31, 2000, the Company had first mortgage loans  receivable  totaling
$11,740,049.  The loans bear interest ranging from 9.50% to 12.00%.  At December
31, 1999, the Company had first mortgage loans receivable  totaling  $10,407,927
which bore interest ranging from 9.55% to 12.00%.

The Company  also had a portfolio  of secured  church bonds at December 31, 2000
and 1999, which are carried at cost plus amortized  interest  income.  The bonds
pay either  semi-annual or quarterly  interest ranging from 5.75% to 10.50%. The
combined principal of $2,289,962 at December 31, 2000 is due at various maturity
dates between  February 1, 2001 and February 1, 2019. Four bond issues comprised
87% of the total  bond  portfolio  at  December  31,  2000.  Three  bond  issues
comprised 85% of the total bond portfolio at December 31, 1999.

The maturity schedule for mortgage loans and bonds receivable as of December 31,
2000 is as follows:

<TABLE>
<CAPTION>
                                                            Mortgage Loans       Bond Portfolio

<S>                                                      <C>                       <C>
2001                                                     $    276,565              $    27,000
2002                                                          309,578                   68,000
2003                                                          343,893                   37,000
2004                                                          382,029                  110,000
2005                                                          364,461                   60,000

Thereafter                                                 10,063,523                1,987,962
                                                           ----------                ---------


            Totals                                        $11,740,049               $2,289,962
                                                           ==========                =========
</TABLE>

3.  STOCK OPTION PLAN

The Company  adopted a Stock  Option Plan  granting  each member of the Board of
Directors and the president of the Advisor (Note 4) an option to purchase  3,000
shares of common stock  annually upon their  re-election.  The purchase price of
the stock is the fair market value at the grant date.  Options  outstanding  are
105,000  shares at a price of $10 per share at December  31, 2000 and 1999.  The
options  are  exercisable  November  15,  1996  and  incrementally  at one  year
intervals after the date of grant and expire November 15, 2001 through  November
15, 2005. No options were exercised as of December 31, 2000.

                                      F-10


<PAGE>



                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2000 and 1999





3.  STOCK OPTION PLAN - Continued

The Company has chosen to account for stock  based  compensation  in  accordance
with APB Opinion 25.  Management  believes that the disclosure  requirements  of
Statement  of  Financial  Accounting  Standards  No. 123 are not material to its
financial statements.

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 percent of average invested assets (generally
defined as the  average of the  aggregate  book value of the assets  invested in
securities and equity  interests in and loans secured by real estate),  which is
payable on a monthly  basis.  The  Advisor  will also  receive  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 has expensed Advisor management
and  origination  fees of  approximately  $176,000 and $231,000  during 2000 and
1999, respectively. The Advisor waived origination fees of $12,250 and $0 during
2000 and 1999, respectively.

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

5.  INCOME TAXES

The income tax benefit consists of the following components:

                                                         2000            1999
                                                         ----            ----


Current                                                $   -          $    -

Deferred                                                   -           (20,000)
                                                         ----           ------

            Total tax benefit                         $    -          ($20,000)
                                                         ====          =======




                                      F-11


<PAGE>



                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2000 and 1999





5.  INCOME TAXES - Continued

As discussed in Note 1, a REIT is subject to taxation to the extent that taxable
income exceeds dividend distributions to its shareholders.  In order to maintain
its status as a REIT,  the Company is required to distribute at least 95% of its
taxable  income.  In 2000,  the  Company  had pretax  income of  $1,140,253  and
distributions  to shareholders  in the form of dividends  during the tax year of
$1,164,973.  The expected tax expense to the Company,  pre-dividends  would have
been $387,686. In 1999, the Company had pretax income subject to tax of $951,879
and  distributions  to shareholders in the form of dividends during the tax year
of  $1,024,501.  The expected tax expense to the Company,  pre-dividends,  would
have been $323,639.

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

<TABLE>
<CAPTION>
                                                                       2000               1999
                                                                       ----               ----


<S>                                                                  <C>                <C>
Expected tax expense (benefit)                                       $387,686           $323,639

Benefit of REIT distributions                                        (400,798)          (343,639)

Valuation allowance                                                    13,112
                                                                      -------            -------

            Totals                                                   $    -           ($  20,000)
                                                                      =======           ========

The components of deferred income taxes are as follows:

                                                                       2000               1999
                                                                       ----               ----


Loan origination fees                                                 $60,000            $60,000
                                                                       ======             ======

The total deferred tax assets are as follows:

                                                                       2000               1999
                                                                       ----               ----


Deferred tax assets                                                   $73,112            $60,000

Deferred tax asset valuation allowance                                (13,112)
                                                                       ------             ------


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

The change in the  valuation  allowance  was  $13,112  and $0 for 2000 and 1999,
respectively.

                                      F-12


<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2000 and 1999


6.  PUBLIC OFFERINGS OF THE COMPANY'S COMMON STOCK

The  Company  filed a second  Registration  Statement  with the  Securities  and
Exchange  Commission  for a public  offering  of its common  stock in 1997.  The
Company  offered to sell 1,500,000  shares of its common stock at a price of $10
per share. The offering was underwritten by a managing underwriter (an affiliate
of the Advisor) and a  co-underwriter  on a "best efforts" basis, and no minimum
sale of stock was required.  The stock sale  commenced on September 26, 1997 and
concluded on January 22, 1999. A total of 799,759 shares were sold

The Company filed a  Registration  Statement  with the  Securities  and Exchange
Commission  for a third public  offering of its common stock in August 1999. The
Company  offered to sell 1,500,000  shares of its common stock at a price of $10
per share. The offering is being underwritten by an underwriter (an affiliate of
the  Advisor)  on a "best  efforts"  basis,  and no  minimum  sale of  stock  is
required.  The stock sale  commenced on  September  23, 1999. A total of 119,663
shares were sold through December 31, 1999.

During 2000, the Company filed a Registration  Statement with the Securities and
Exchange  Commission  to extend its third  public  offering of its common  stock
through September 23, 2001. A total of 269,286 shares were sold through December
31, 2000.

Pursuant  to the terms of the  Underwriting  Agreements,  the  Company  paid the
managing   underwriter   and   participating   broker-dealers   commissions  and
non-reimbursable  expenses of approximately $94,000 and $170,000 during 2000 and
1999, respectively, in connection with these last two public offerings.

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, 2000 and 1999:

<TABLE>
<CAPTION>
                                                          2000                                   1999
                                            --------------------------------        --------------------------------
                                               Carrying              Fair             Carrying             Fair
                                                 Amount              Value             Amount             Value
                                              ----------        -------------        ----------       --------------


<S>                                        <C>                 <C>                 <C>               <C>
Cash and equivalents                       $     213,084       $     213,084       $     382,765     $     382,765

Accounts receivable                                9,892               9,892               5,782             5,782
Interest receivable                               15,651              15,651
Mortgage loans receivable                     11,740,049          11,740,049          10,407,927        10,407,927
Bond portfolio                                 2,289,962           2,289,962           2,056,199         2,056,199
</TABLE>












                                      F-13


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                         Notes for Financial Statements

                           December 31, 2000 and 1999





7.  FAIR VALUE OF FINANCIAL INSTRUMENTS - Continued

The carrying value of cash and  equivalents  approximates  fair value.  The fair
value of the mortgage  loans  receivable and the bond portfolio are estimated by
discounting  future cash flows using  current  discount  rates that  reflect the
risks associated with similar types of loans.

8.  LINE OF CREDIT

The Company obtained a $1,000,000 line of credit with its bank on July 22, 1999,
subject to certain borrowing base limitations,  through August 1, 2001. Interest
is charged at 1% over the prime rate  totaling 10% and 9.5% at December 31, 2000
and 1999,  respectively.  The line of credit is  collateralized  by the mortgage
secured  bonds held by the Company.  Outstanding  borrowings  were  $399,653 and
$500,000 at December 31, 2000 and 1999, respectively.

                                      F-14


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