As filed with the Securities and Exchange Commission on March 28, 2003

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

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[X] Annual  Report Under Section 13 or 15(d) of the  Securities  Exchange Act of
1934 For the Fiscal Year Ended December 31, 2002
       or

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

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                         Commission File Number 33-87570


                        American Church Mortgage Company

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                 (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:      $1,785,443

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, 2003 was: 2,240,983

                      DOCUMENTS INCORPORATED BY REFERENCE:

Definitive  proxy statement for the annual meeting of shareholders to be held on
April 30, 2003.
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<PAGE>






                        AMERICAN CHURCH MORTGAGE COMPANY
                                   FORM 10-KSB


                                     INDEX                                Page
                                                                           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.............................       11

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

Item 7.    Financial Statements:...................................       15

                  Balance Sheets
                  December 31, 2002 and 2001.......................      F-2

                  Statements of Operations
                  Years Ended December 31, 2002 and 2001...........      F-4

                  Statements of Stockholders' Equity
                  December 31, 2002 and 2001.......................      F-5

                  Statements of Cash Flows
                  Years Ended December 31, 2002 and 2001...........      F-6

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

Item 8.    Changes In and Disagreements With
           Accountants on Accounting and Financial Disclosure......       15

                                    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.................................       15

Item 11.   Security Ownership of Certain Beneficial Owners and
           Management.............................................       15

Item 12.   Certain Relationships and Related Transactions.........       15

Item 13.   Exhibits and Reports on Form 8-K.......................       16

Item 14.   Controls and Procedures................................       16


<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 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, 2003, we have made 67
loans to 61 churches in the aggregate  amount of  $25,144,478,  with the average
size being $375,291.  Of the 67 loans we have made, 16 loans totaling $3,387,000
have been repaid early by the  borrowing  churches.  We also own, as of February
28, 2003,  $4,445,860  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,  as well as our  current  public
offering of common stock and secured investor certificates.

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

                                        3

<PAGE>

Securities and Exchange  Commission.  We concluded our second public offering on
January 22, 1999. We sold 799,759 shares during 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  was
conducted  on a  "best-  efforts"  basis  pursuant  to  applicable  rules of the
Securities and Exchange  Commission.  We concluded our third public  offering on
September 23, 2001. A total of 569,207  shares were sold during our third public
offering.

     On April 26, 2002 the Securities and Exchange Commission declared effective
our fourth public  offering of 1,500,000  common shares at a price of $10.00 per
share  ($15,000,000) and $15,000,000 of Secured Investor  Certificates under SEC
file 333- 75836. The Offering is conducted on a "best-efforts" basis pursuant to
applicable rules of the Securities and Exchange  Commission.  As of February 28,
2003,  477,798.5 shares  ($4,777,985)  and $8,215,000 of certificates  have been
sold through American  Investors Group, Inc. to public investors.  This offering
is at  present  on-going  and is  expected  to  terminate  when all  shares  and
certificates being offered are sold.

The Company's Business Activities

     Our  business  is  managed  by  Church  Loan  Advisors,  Inc.,  Minnetonka,
Minnesota  (the  "Advisor").  We have no  employees.  The  Advisor's  affiliate,
American Investors Group, Inc.,  ("American") has been engaged since 1987 in the
business of underwriting first mortgage bonds for churches throughout the United
States. In underwriting church bonds, 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  78 years in this  business.  Since its
inception,  American has underwritten  approximately 192 church bond financings,
in which  approximately  $335,575,000  in first mortgage bonds have been sold to
public investors. The average size of single church bond financings underwritten
by American since its inception is approximately $1,748,000.

     In the course of its business,  American 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 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.  Our  objective  is to provide a
lending  source to this  segment of the  industry-by  capitalizing  on the human
resources  and  experience  available at American  and the  Advisor,  and taking
advantage of the marketing, advertising and general goodwill of American.

Financing Business

     Our primary  business is to make first  mortgage  loans in amounts  ranging
from  $100,000  to  $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

                                        4

<PAGE>

ranging from three to twenty years,  we may  determine to emphasize  longer-term
fixed-rate  loans  in our  discretion,  in  order  to  reduce  the risk to us of
downward interest rate fluctuations.

     Our  lending  and  investing  operations,   including  determination  of  a
prospective borrower's or church bond issuer's financial credit worthiness,  are
made on our behalf by the Advisor.  Employees and agents of the Advisor  conduct
all aspects of our  business,  including (i)  marketing  and  advertising;  (ii)
communication  with prospective  borrowers;  (iii) processing loan applications;
(iv) closing the loans; (v) servicing the loans; (vi) 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.

Current First Mortgage Loan Terms

     We offer prospective borrowers a selection of "Loan Types," which include a
choice of fixed or  variable  rates of interest  indexed to the "prime"  rate of
interest or other generally recognized reference index, and having various terms
to maturity,  origination  fees and other terms and conditions.  The Loan Types,
interest  rates and fees  offered  and  charged by us may from  time-to-time  be
limited,  changed  or  otherwise  unilaterally  amended  by the  Advisor  in its
discretion  as a result of such  factors  (among  others) as (i) balance of Loan
Types in our portfolio;  (ii) competition from other lenders;  (iii) anticipated
need to increase the overall  yield to our mortgage loan  portfolio;  (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>

<S>                                <C>                                      <C>
  Loan Type                          Interest Rate (1)                      Origination Fee (2)
20/25 Year Term (3)                Fixed @ 8.65%/8.75% respectively                    4.0%
20 Year Term (3)                   Variable Annually @ Prime + 2.50%                   3.5%
Renewable Term  (4)                Fixed @:
     3 Year                               7.75%                                        3.5%
     5 Year                               7.95%                                        3.5%
     7 Year                               8.25%                                        3.5%
10 Year                                   8.35%                                        3.5%
Construction 1 Year Term           Fixed @ 9.00%                                       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.  Amortization  terms may vary, as
     may other  loan  terms,  depending  on  individual  loan  negotiations  and
     competitive forces.

          (4)  Renewable  term loans are repaid based on a 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 do, in fact,  negotiate these terms
and fees with many of our 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:

                                        5
<PAGE>

     o    applications  containing key  information  concerning the  prospective
          borrowers;

     o    project description;

     o    financial statements in accordance with our Financing Policies;

     o    corporate records and other organizational documents of the borrower;

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

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

     All  appraisals  and  financial  statements  are  prepared  by  independent
third-party  professionals who we approve based on their experience,  reputation
and education. Completed loan applications,  together with a written summary are
then presented to our Underwriting Committee. Our loan Underwriting Committee is
comprised  of the  Advisor's  President  and  Vice-President  and certain of its
staff. 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 by the borrower 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
recording  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 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
$2,000,000 line of credit with Beacon Bank, Shorewood,  Minnesota. Currently, we
have no outstanding  balance against our line of credit as of February 28, 2003.
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 our common  stock and  Secured
Investor  Certificates,  minus  reserves for  operating  expenses,  and bad-debt
reserves,  as  determined  by the Advisor.  Cash  resources  available to us for
lending purposes  include,  in addition to the net proceeds from future sales of
our common  stock and Secured  Investor  Certificates  (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.

                                        6
<PAGE>
The Advisory Agreement

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

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

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

     o    services all mortgage loans we make;

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

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

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

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

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

     In performing  its services under the Advisory  Agreement,  the Advisor may
use facilities,  personnel and support services of its affiliates. Expenses such
as legal and accounting fees,  stock transfer agent,  registrar and paying agent
fees, proxy  solicitation  expenses,  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 officers
and  employees  of  the  Advisor,  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  unreimbursed  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.

                                        7

<PAGE>

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

Financing Policies

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

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

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

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

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

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

     (vi) The borrower must furnish us with financial  statements (balance sheet
          and income and expense  statement)  for their last three (3)  complete
          fiscal years and a current  financial  statement for the period within
          ninety days of the loan  closing  date.  On loans of $500,000 or less,
          the last  complete  fiscal  year must be  reviewed  by an  independent
          accounting  firm.  On loans in excess of $500,000,  the 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 absent express
          approval by our Board of Directors.

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

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

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

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

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

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

                                        8
<PAGE>

Prohibited Investments and Activities

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

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

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

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

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

     (v)  Investing in equity securities;

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

     (vii) Issuing redeemable equity securities;

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

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

     (x)  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.

                                        9

<PAGE>

Competition

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

     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.  Mr.  Myers is  President  of the Advisor  and  President  of American
Investors Group, Inc., the underwriter of our past and current public offerings.
The Advisor  employs  three  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.

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 David G. Reinhart, a former office and
director of ours.  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.

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.

         None

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

         None

                                       10

<PAGE>

                                     PART II

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



         Outstanding Securities

     As of  February  28,  2003,  2,240,983  shares  of  our  common  stock  and
$8,215,000 of secured  investor  certificates  were issued and  outstanding.  On
April 26, 2002, the Securities and Exchange  Commission  declared  effective our
fourth public offering of 1,500,000 common shares at a price of $10.00 per share
and  $15,000,000 of secured  investor  certificates.  We are currently  offering
common  stock  and  secured  investor   certificates   under  this  registration
statement.

         Lack of Liquidity and Absence of Public Market Price.

     There  is no  market  for our  common  shares.  It is not  expected  that a
material  market for the shares will  develop any time soon.  In  addition,  the
market for REIT  securities  historically  has been less  liquid  than  non-real
estate types of publicly-traded  equity securities.  Because of such illiquidity
and the fact  that the  shares  would be valued  by  market-makers  (if a market
develops)  based on market  forces which  consider  various  factors  beyond our
control,  there can be no  assurance  that the market value of the shares at any
given time would be the same or higher  than the  public  purchase  price of our
shares.  In addition,  the market price,  if 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 quoted
on the National  Association of Securities  Dealers,  Inc.  Automated  Quotation
System ("NASDAQ").  However, we value our shares at $10 per share since this has
been the public  offering price for our shares and the price at which shares are
purchased in our dividend reinvestment program.

         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, 2003, we had 1,038 record holders of our $.01 par common
stock,  including our first Shareholder,  Apostle Holdings Corp. (formerly known
as: 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  years  on our  common  stock as
follows:

<TABLE>
<CAPTION>

     For Quarter                Dollar Amount Distributed                 Annualized Yield Per $10
       Ended:                         Per Share:                              Share Represented:
                                2002               2001                        2002              2001

<S>        <C>                  <C>               <C>                          <C>               <C>
     March 31st                 $.20625           $.2125                       8.25%             8.50%
      June 30th                 $.209375          $.225                        8.375%            9.00%
   September 30th               $.1875            $.20                         7.50%             8.00%
    December 31st               $.165625          $.19375                      6.625%            7.75%
</TABLE>

     As a Real Estate Investment Trust, we make regular quarterly  distributions
to  shareholders.  The amount of distributions to them equal at least 90% 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  until we have
fully invested such funds into loans. We intend to combat to the extent we

                                       11

<PAGE>
can the  possibility  of low yields  during the  periods in which we are selling
shares by (i) collecting from borrowers an origination fee at the time a loan is
made,  (ii) timing our lending  activities  to coincide as much as possible with
sales of our Shares and Certificates, and (iii) investing our undeployed capital
in Permitted  Temporary  Investments that offer the highest yields together with
safety and liquidity.  However,  there can be no assurance that these strategies
will  improve  current  yields to our  Shareholders  in periods of our  business
operations  when  capital  is  being  raised  through  the  sale  of  additional
securities.  In order to qualify for the beneficial tax treatment  afforded real
estate  investment  trusts by the Internal  Revenue Code, we are required to pay
dividends to holders of our Shares in annual amounts which are equal to at least
90% of our "real estate  investment  trust taxable  income." For the fiscal year
ended December 31, 2002 we distributed  substantially  all of our taxable income
to our  Shareholders in the form of quarterly  dividends.  We intend to continue
distributing  virtually  all of such income to our  Shareholders  on a quarterly
basis,  subject to (i) limitations imposed by applicable state law, and (ii) the
factors  identified above. The portion of any dividend that exceeds our earnings
and profits  will be  considered  a return of capital and will not  currently be
subject to federal  income tax to the extent that such dividends do not exceed a
Shareholder's basis in their Shares.

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

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,  2002 our total  assets  increased  by
$12,552,647  due  primarily  to sale of our common  stock and  secured  investor
certificates in our fourth "best efforts" public offering. Our total liabilities
increased by $8,828,631  due  primarily to the issuance of our secured  investor
certificates.

         Results of Operations - 2002

     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  December  31,  2002.  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 December 31, 2002 was $.165625
representing an annualized  yield of 6.625%.  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 December 31, 2002 shareholders of record was significantly lower
than the average dividend amount due directly to large cash balances we received
from our fourth public offering of stock and secured  investor  certificates 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.

     Our total  assets  increased  from  $16,683,091  at  December  31,  2001 to
$29,235,738  at December 31, 2002.  The primary reason for the increase in total
assets from December 31, 2001 through December 31, 2002 was a result of the sale
and issuance of our common stock and secured investor  certificates  pursuant to
our fourth  public  offering,  the  proceeds of which were (and  continue to be)
deployed into new mortgage loans.  Shareholders' Equity rose from $16,073,295 at
December 31, 2001 to $19,797,311 at December 31, 2002 for the same reasons.  Our
liabilities for both periods are largely  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.  Our primary  liability at December 31, 2002 is our long term
note payable,  which is the sum of the secured investor  certificates sold under
our fourth public offering.

     Our Board of  Directors  declared  dividends  of $.20625  for each share of
record on March 31,  2002,  $.209375  for each shares held of record on June 30,
2002,  $.1875 for each shares held of record September 30, 2001 and $.165625 for
each share held of record on December 31, 2002. Based on the four quarters ended
March 31, 2002, June 30, 2002, September 30, 2002 and December

                                       12

<PAGE>
31, 2002, the dividends paid  represented  an 8.25%,  8.375%,  7.50% and 6.625 %
annualized yield to shareholders,  respectively, for an effective overall annual
yield of 7.70% in 2002. In 2002, an especially in the last quarter of 2002,  our
dividend  yield was  significantly  lower than in prior  periods.  This decrease
results  primarily  from the large cash  balances we  received  from our current
public offering or common stock and Secured  Investor  Certificates,  which were
held in money  market  instruments  pending  deployment  in new  loans.  Because
interest earned in our money market account is substantially lower than interest
earned on our mortgage  loans,  interest  income earned on a per share basis was
lower than in prior periods.

         Results of Operations - 2001

     Net income for our fiscal year ended  December 31, 2001 was  $1,278,010  on
total  revenues  of  $1,525,562  compared  to  $1,140,253  on total  revenues of
$1,407,414 for the year ended December 31, 2000.  Interest  income earned on the
Company's  portfolio  of loans was  $1,195,464  for the year ended  December 31,
2001,  compared to $1,160,113  for 2000.  This increase was due to the fact that
five new loans were originated in fiscal year ended December 31, 2001.  Excluded
from  revenue for the year ended  December  31,  2001 is $74,112 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 90% of "Taxable  Income," the  dividends  declared and
paid to our  Shareholders  for the quarters ended March 31, 2001, June 30, 2001,
September 30, 2001 and December 31, 2001 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, 2001 were  $220,717
compared to $201,879 for our fiscal year ended December 31, 2000.

     Our Board of  Directors  declared  quarterly  dividends  of $.2125 for each
share held of record on March 31, 2001,  $.225 per share held of record June 30,
2001,  $.20 per share held of record  September 30, 2001,  and $.19375 per share
held of record on December 31, 2001.  Based on the four  quarters of  operations
for the quarters  ended March 31, 2001,  June 30, 2001,  September 30, 2001, and
December 31, 2001,  the dividends  paid  represented a 8.50%,  9.00%,  8.00% and
7.75%  annualized yield to Shareholders  respectively  for an effective  overall
annual dividend yield of 8.3125% in 2001.

         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.

     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 $2,000,000 secured line of credit with Beacon Bank,  Shorewood,
Minnesota.  As of February 28, 2003 we have no outstanding  balance  against our
line of credit.  This  credit  line is secured  by the pledge of  $2,401,000  in
principal amount of our Church Bonds.  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
(currently  our rate at which we can borrow  funds is prime  interest  rate plus
1/2%).  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"
any future borrowings on our line of credit by (i) selling additional securities
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.

     On April 26, 2002 the Securities and Exchange Commission declared effective
our registration statement to sell to the public $1,500,000 shares of our common
stock at $10 per share  ($15,000,000)  and to sell to the public  $15,000,000 of
debt  securities,  which we call  "Secured  Investor  Certificates."  Our future
capital needs are expected to be met by (i) our pending  public  offering;  (ii)
the repayment of existing loans; (iii) dividend reinvestment by our shareholders
under our  dividend  reinvestment  plan;  and (iv)  borrowing  under our line of
credit.

     We may borrow  funds up to an amount  that  equals 50% of our net  invested
assets.  The objective of our current  offering of shares and certificates is to
raise  intermediate  term funds that we can deploy  into new loans at rates that
provide a  positive  spread.  This  additional  loan  development  will  further
diversify  our  loan  portfolio  while  generating  origination  income  to  the
advantage to our shareholders.  The cost of this capital is expected to be lower
than if borrowed directly from banks at variable rates of interest.

                                       13

<PAGE>
Loan Loss Reserve Policy

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

     We have two  first  mortgage  loans  that are  three  or more  payments  in
arrears.  The first loan has an outstanding  balance of approximately  $235,000.
The church has missed three consecutive mortgage payments in 2002 and has missed
one mortgage  payment in 2003. We have reserved for this loan and are continuing
to work with the church to bring its  payments  current.  We have  notified  the
church if any future mortgage  payments are not met we will engage legal counsel
to foreclose on the church's property.  The second loan is a first mortgage loan
with an outstanding  balance of $182,000.  The church,  located in Battle Creek,
Michigan,  has not made a monthly  mortgage  payment since June of 2002. We have
engaged legal counsel and are currently  foreclosing  on the church's  property.
The church  congregation  has disbanded  and the church's  property is currently
unoccupied.  We plan to take  possession of the church and list the property for
sale through a local realtor.

Listed below is our current loan loss reserve policy:

<TABLE>
<CAPTION>

Incident   Percentage of Loan                      Status of Loan
              Reserved
========  ===================== ================================================
<S>       <C>                    <C>
1.          None                 Loan is  current,  no  interruption  in  payments
                                 during  history  of  the  loan,  ("interruption"  means
                                 receipt by us more than 30 days after scheduled payment
                                 date).

2.          None                 Loan current, previous interruptions experienced, but none in the last six month period.

3.          None                 Loan current, previous interruptions experienced, but none in the last 90 day period.

4.          1.00%                Loan serviced regularly, but 2 or 3 payments cumulative in arrears.  Delinquency notice been sent.

5.          2.00%                Loan serviced regularly, but 4 or 5 payments cumulative in arrears.

6.          5.00%                Loan more than 5 payments cumulative in arrears, loan servicing intermittent during the last 90
                                 days. Ability of obligor to continue to service the loan at scheduled levels in doubt.
                                 Restructuring contemplated or imminent.

7.         The Greater Of: (i)    Loan is declared to be in default.  Foreclosure proceeding underway or imminent.  Reserve amount
           Accumulate reserve     dependent on value of collateral.  All expenses related to enforcing loan agreements are expensed.
           during default period
           equal to principal
           loan balance in excess
           of 65% of original
           collateral value; or
           (ii)1% of the remaining
           principal balance each
           quarter during which
           the default remains in
           effect
</TABLE>

Loan loss reserves are recorded on a quarterly basis.

         Critical Accounting Policies and Estimates

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

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

                                       14

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

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

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

                                    PART III


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

     The  information  set forth under the  captions  "Nominees,"  "How does the
Board operate?" and "Section 16(a) beneficial ownership reporting compliance" in
the definitive proxy statement for the annual meeting of shareholders to be held
on April 30, 2003, to be filed with the Securities and Exchange Commission on or
before April 1, 2003, is incorporated by this reference.

Item 10.  Executive Compensation

     The   information   set  forth  under  the  caption   "How  are   directors
compensated?"  in the  definitive  proxy  statement  for the  annual  meeting of
shareholders  to be held on April 30, 2003, to be filed with the  Securities and
Exchange  Commission  on or  before  April  1,  2003,  is  incorporated  by this
reference.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The information set forth under the caption "Security  Ownership of Certain
Beneficial  Owners and  Management"  in the definitive  proxy  statement for the
annual  meeting of  shareholders  to be held on April 30, 2003, to be filed with
the  Securities  and  Exchange  Commission  on  or  before  April  1,  2003,  is
incorporated by this reference.

Item 12.  Certain Relationships and Related Transactions

     The  information  set forth under the caption  "Certain  Relationships  and
Related Party  Transactions"  in the definitive  proxy  statement for the annual
meeting  of  shareholders  to be held on April 30,  2003,  to be filed  with the
Securities and Exchange  Commission on or before April 1, 2003, is  incorporated
by this reference.

                                       15

<PAGE>

Item 13.       Exhibits and Reports on Form 8-K

(a) Exhibits
<TABLE>
<CAPTION>

Exhibit Title
 No.

<S>     <C>                                                                             <C>
3.1     Amended and Restated Articles of Incorporation                                  3

3.2     Second Amended and Restated Bylaws                                              4

4.1     Specimen Common Stock Certificate                                               3

4.2     Trust Indenture between the Company and The Herring National Bank               2

10.1    Amended and Restated  REIT  Advisory  Agreement  Betw and Church Loan           4
        Advisory, Inc.

10.2    Amendment  No. 1 to  Advisory  Agreement  Between  the                          1
        Church Loan Advisors, Inc.

10.3    Dividend  Reinvestment  Plan                                                    1

10.4    Line of Credit Agreement with Beacon Bank dated March 18, 2002                  2

10.5    $2,000,000 Promissory Note and Combined Security between the Company and        2
        Beacon Bank dated March 18, 2002

10.7    Security Agreement between the Company and The Herring National Bank            2
        as Trustee

99.1    Certification Pursuant to Section 906 of Sarbanes Oxley Act                     5
</TABLE>

     (1)  Incorporated   herein  by  reference  to  th  Company's   Registration
          Statement on Form S-11 filed June 29, 1999.

     (2)  Incorporated   herein  by  reference  to  th  Company's   Registration
          Statement on Form S-11/A filed April 26, 2002.

     (3)  Incorporated   herein  by  reference  to  th  Company's   Registration
          Statement on Form 8-A filed April 30, 1999. (4) Incorporated herein by
          reference to the Company's  Registration  Statement on Form S-11 filed
          December 21, 2001.

(b) Reports on Form 8-K

     The Company filed form 8-K on December 16, 2002  notifying  the  Securities
     and Exchange Commissio that the we intend to delay our annual meeting until
     April 2003.

Item 14. Controls and Procedures

     Within the 90 days prior to the date of this Annual  Report on Form 10-KSB,
we evaluated  the  effectiveness  of our  "disclosure  controls and  procedures"
(Disclosure  Controls),  and our "internal controls and procedures for financial
reporting" (Internal Controls).

     In evaluating our Disclosure  Controls and Internal  Controls,  our CEO and
CFO noted that our advisor, Church Loan Advisors,  Inc., maintains our books and
records.  An  administrator  employed by the advisor is responsible for original
entries in our financial records and for reconciling our records with statements
received from our bank. The chief operating  officer of the advisor oversees the
activities of the advisor's  administrator.  The chief operating  officer of the
advisor  reports  directly to our CEO and CFO, Philip J. Myers. We originate all
mortgage  loans in our  portfolio.  Legal  documentation  of our  mortgage  loan
portfolio is prepared under the direct supervision of our CEO.

     In accordance with Securities and Exchange Commission requirements, the CEO
and CFO notes that,  since the date of the  Controls  Evaluation  to the date of
this Annual Report,  there have been no significant changes in Internal Controls
or in other factors that could significantly affect Internal Controls, including
any  corrective  actions with regard to  significant  deficiencies  and material
weaknesses.

     Based upon the  Controls  Evaluation,  our CEO and CFO  concluded  that our
Disclosure Controls are effective to ensure that material  information  relating
to the company is made known to management and the advisor and that our Internal
Controls  are  effective  to provide  reasonable  assurance  that our  financial
statements are fairly presented in conformity with generally accepted accounting
principles.


                                       16

<PAGE>



--------------------------------------------------------------------------------
                                   SIGNATURES

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

                                               AMERICAN CHURCH MORTGAGE COMPANY
Dated: March 28,2003                           By:/s/ Philip J.Myers
                                               Philip J. Myers, 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/ Philip J. Myers                           Date: 03/28/03
        Philip J. Myers
          President, Treasurer and Director

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

By: /s/ John M. Clarey                            Date: 03/28/02
        John M. Clarey, Director

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

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


I, Philip J. Myers, certify that:

     1.   I have  reviewed  this annual  report on Form 10-K of American  Church
          Mortgage Company;

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

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

     4.   The  registrant's  other  certifying  officers and are responsible for
          establishing  and  maintainin  disclosure  controls and procedures (as
          defined in Exchange Act Rule 13a-14 and 15d-14) for the registrant and
          we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the  registrant  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this repor (the "Evaluation Date"); and

          c)   presented in this report our conclusions  about the effectiveness
               of the disclosure controls and procedures based on our evaluation
               as of the Evaluation Date;

                                       17

<PAGE>

          5.   The registrant's  other  certifying  officers and have disclosed,
               based on our most recent evaluation, to the registrant's auditors
               and the audit  committee o  registrant's  board of directors  (or
               persons performing the equivalent function):

               a)   all  significant  deficiencies in the design or operation of
                    internal   controls   which  could   adversely   affect  the
                    registrant's  ability  to  record,  process,  summarize  and
                    report   financia   data   and  have   identified   for  the
                    registrant's  auditors any material  weaknesses  in internal
                    controls; and

               b)   any fraud, whether or not material, that involves management
                    or  other  employees  who  have a  significant  role  in the
                    registrant's internal controls; and

          6.   The registrant's other certifying  officers and have indicated in
               this  report  whether  or not there were  significant  changes in
               internal  controls or in other  factor  that could  significantly
               affect  internal  controls  subsequent  to the  date of our  most
               recent  evaluation,  including any corrective actions with regard
               to significant deficiencies and material weaknesses.


Date: March 28, 2003                          /s/ Philip J. Myers
                                                  Philip J. Myers
                                                  Chief Executive Officer and
                                                 (Principal Executive Officer)
                                                  Chief Financial Officer
                                                 (Principal Accounting Officer)

                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>

Exhibit Title
 No.

<S>     <C>                                                                             <C>
3.1     Amended and Restated Articles of Incorporation                                  3

3.2     Second Amended and Restated Bylaws                                              4

4.1     Specimen Common Stock Certificate                                               3

4.2     Trust Indenture between the Company and The Herring National Bank               2

10.1    Amended and Restated  REIT  Advisory  Agreement  Betw and Church Loan           4
        Advisory, Inc.

10.2    Amendment  No. 1 to  Advisory  Agreement  Between  the                          1
        Church Loan Advisors, Inc.

10.3    Dividend  Reinvestment  Plan                                                    1

10.4    Line of Credit Agreement with Beacon Bank dated March 18, 2002                  2

10.5    $2,000,000 Promissory Note and Combined Security between the Company and        2
        Beacon Bank dated March 18, 2002

10.7    Security Agreement between the Company and The Herring National Bank            2
        as Trustee

99.1    Certification Pursuant to Section 906 of Sarbanes Oxley Act                     5
</TABLE>

     (1)  Incorporated   herein  by  reference  to  th  Company's   Registration
          Statement on Form S-11 filed June 29, 1999.

     (2)  Incorporated   herein  by  reference  to  th  Company's   Registration
          Statement on Form S-11/A filed April 26, 2002.

     (3)  Incorporated   herein  by  reference  to  th  Company's   Registration
          Statement on Form 8-A filed April 30, 1999. (4) Incorporated herein by
          reference to the Company's  Registration  Statement on Form S-11 filed
          December 21, 2001.

                                       18

<PAGE>


                        American Church Mortgage Company
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of American  Church  Mortgage  Company (the
"Company") on Form 10-KSB for the period ending  December 31, 2002 as filed with
the  Securities  an Exchange  Commission  on the date hereof (the  "Report"),  I
Philip J. Myers,  Chief  Executive  Officer and Chief  Financial  Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:


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

(2) The  information  contained in the Report fairly  presents,  in all material
respects, the financial condition and results of operations of the Company as of
December 31, 2002 (the last date of the period covered by the Report).



                                                    /s/ Philip J. Myers
                                                    Philip J. Myers
                                                    Chief Executive Officer and
                                                    Chief Financial Officer
                                                    March 28, 2003

                                       19
<PAGE>














                        AMERICAN CHURCH MORTGAGE COMPANY

                              Minnetonka, Minnesota

                              Financial Statements

                           December 31, 2002 and 2001































<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,  2002  and  2001  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 auditing 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, 2002 and 2001,  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.



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

Minneapolis, Minnesota
February 28, 2003


<PAGE>







                        AMERICAN CHURCH MORTGAGE COMPANY

                                  Balance Sheet




<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------------------
                                                                                                   December 31
--------------------------------------------------------------------------------------------------------------------------
ASSETS                                                                                   2002                   2001

Current Assets
<S>                                                                                  <C>                  <C>
    Cash and equivalents                                                             $  7,852,220         $  1,256,556
    Accounts receivable                                                                    63,602               58,008
    Interest receivable                                                                    94,385               66,236
    Current maturities of mortgage loans receivable, net of
          allowance of $112,111 and $11,111 at
          December 31, 2002 and 2001                                                      290,759              298,921
    Current maturities of bond portfolio                                                   47,000              144,000
    Deferred equity offering costs                                                                              28,293
                                                                                      -----------            ---------
            Total current assets                                                        8,347,966            1,852,014


Mortgage Loans Receivable, net of current maturities                                   16,140,961           11,724,272

Deferred Investors Saver Certificates Offering Costs,
    net of accumulated amortization of $29,875 and  $0 at
    December 31, 2002 and 2001                                                            377,174               28,294

Bond Portfolio, net of current maturities                                               4,309,637            3,018,511


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

            Total assets                                                              $29,235,738          $16,683,091
                                                                                       ==========           ==========
</TABLE>

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

                                      F-3
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                                  Balance Sheet




<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
                                                                                                     December 31
------------------------------------------------------------------------------------------------------------------------
        LIABILITIES AND STOCKHOLDERS' EQUITY                                                  2002                2001

Current Liabilities
<S>                                                                                   <C>               <C>
    Accounts payable                                                                  $       39,690    $         4,350
    Mortgage loan commitment                                                               1,243,827
    Deferred income                                                                           18,247             17,039
    Dividends payable                                                                        361,941            344,504
                                                                                           ---------         ----------
            Total current liabilities                                                      1,663,705            365,893


Deferred Income, net of current maturities                                                   346,722            243,903


Investors Saver Certificates                                                               7,428,000


Stockholders' Equity
    Common stock, par value $.01 per share
        Authorized, 30,000,000 shares
        Issued and outstanding, 2,205,568 at December 31, 2002
            and 1,769,774 shares at December 31, 2001                                         22,056             17,698
    Additional paid-in capital                                                            20,182,798         16,256,712
    Accumulated deficit                                                                     (407,543)          (201,115)
                                                                                          ----------         ----------
            Total stockholders' equity                                                    19,797,311         16,073,295
                                                                                          ----------         ----------

            Total liabilities and equity                                                 $29,235,738        $16,683,091
                                                                                          ==========         ==========
</TABLE>

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

                                      F-4
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                             Statement of Operations




<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------
                                                                                         Years Ended December 31
-------------------------------------------------------------------------------------------------------------------------
                                                                                           2002                 2001

<S>                                                                                      <C>                <C>
Interest Income                                                                          $1,785,443         $1,525,562

Operating Expenses                                                                          482,785            220,717
                                                                                         ----------         ----------

Operating Income                                                                          1,302,658          1,304,845

Other Income (Expense)
    Interest expense                                                                        (12,717)           (26,835)

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

Net Income                                                                               $1,289,941         $1,278,010
                                                                                          =========          =========

Basic and Diluted Income Per Common Share                                                $      .66         $      .80
                                                                                          =========          =========

Weighted Average Common Shares Outstanding                                                1,964,428          1,593,568
                                                                                          =========          =========


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

                                      F-5

<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                        Statement of Stockholders' Equity




<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
                                                                                      Additional
                                                          Common Stock                 Paid-In            Accumulated
                                                        Shares       Amount            Capital              Deficit
------------------------------------------------------------------------------------------------------------------------
<S>               <C> <C>                              <C>           <C>               <C>                <C>
Balance, December 31, 2000                             1,469,817     $14,698           $13,454,746        ($  155,034)

    Issuance of 325,651 shares of
        common stock, net of offering
        costs                                            325,651       3,256             3,058,649

    Redemption of 25,694 shares of
        common stock                                     (25,694)       (256)             (256,683)

    Net income                                                                                              1,278,010

    Dividends declared                                                                                     (1,324,091)
                                                    ------------    --------         -------------          ---------

Balance, December 31, 2001                             1,769,774      17,698            16,256,712           (201,115)

    Issuance of 464,544 shares of
        common stock, net of offering
        costs                                            464,544       4,645             4,194,541

    Redemption of 28,750 shares of
        common stock                                      (28,750)      (287)             (268,455)

    Net income                                                                                              1,289,941

    Dividends declared                                                                                     (1,496,369)
                                                    ------------    --------         -------------          ---------

Balance, December 31, 2002                             2,205,568     $22,056           $20,182,798       ($   407,543)
                                                       =========      ======            ==========         ==========
</TABLE>


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

                                      F-6
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                             Statement of Cash Flows

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                         Years Ended December 31
---------------------------------------------------------------------------------------------------------------------------
                                                                                         2002                   2001

Cash Flows from Operating Activities
<S>                                                                                    <C>                  <C>
    Net income                                                                         $1,289,941           $1,278,010
    Adjustments to reconcile net income to net cash
        from operating activities:
        Provision for losses on mortgage loans receivable                                 101,000               11,111
        Amortization of deferred bond offering costs                                       29,875
        Deferred income                                                                   104,027               47,883
        Change in assets and liabilities
            Accounts receivable                                                            (5,594)             (48,116)
            Interest receivable                                                           (28,149)             (50,585)
            Prepaid expenses                                                                                     9,110
            Accounts payable                                                               35,340              (76,425)
            Management fees payable                                                                            (36,222)
                                                                                        ---------            ----------
            Net cash from operating activities                                          1,526,440            1,134,766

Cash Flows from Investing Activities
    Investment in mortgage loans receivable                                            (5,261,000)          (1,248,000)
    Collections of mortgage loans receivable                                            1,995,300              953,745
    Investment in bond portfolio                                                       (2,048,000)          (1,905,605)
    Proceeds from bond portfolio called/sold                                              853,874            1,033,056
                                                                                        ---------            ---------
            Net cash used for investing activities                                     (4,459,826)          (1,166,804)

Cash Flows from Financing Activities
    Proceeds from investors saver certificates                                          7,428,000
    Net payments on note payable, line of credit                                                              (399,653)
    Proceeds from stock offering, net of offering costs                                 4,199,186            3,061,905
    Payments for deferred saver certificate offering costs                               (378,755)             (28,294)
    Deferred equity offering costs                                                         28,293              (28,293)
    Stock redemptions                                                                    (268,742)            (256,940)
    Dividends paid                                                                     (1,478,932)          (1,273,215)
                                                                                        ---------            ---------
            Net cash from financing activities                                          9,529,050            1,075,510
                                                                                        ---------            ---------

Net Increase in Cash and Equivalents                                                    6,595,664            1,043,472

Cash and Equivalents - Beginning of Year                                                1,256,556              213,084
                                                                                        ---------           ----------

Cash and Equivalents - End of Year                                                     $7,852,220           $1,256,556

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

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

                                      F-7

<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                       Statement of Cash Flows - Continued




<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Years Ended December 31
------------------------------------------------------------------------------------------------------------------------
                                                                                         2002                     2001

Supplemental Schedule of Noncash Financing and
    Investing Activities
    Offering costs reclassified and charged to additional
<S>                                                                                   <C>                     <C>
        paid-in capital                                                                $  182,628              $ 42,443
                                                                                        =========               =======
    Dividends payable                                                                  $  361,941              $344,504
                                                                                        =========               =======
    Mortgage loan commitment                                                           $1,243,827
                                                                                        =========

Supplemental Cash Flow Information
    Cash paid during the year for
        Interest                                                                       $  131,367              $ 26,835
                                                                                        =========               =======
</TABLE>

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

                                      F-8
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2002 and 2001





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.

Accounting Estimates

Management   uses  estimates  and   assumptions  in  preparing  these  financial
statements in accordance with generally accepted  accounting  principles.  Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent  assets and liabilities,  and the reported revenues
and  expenses.  Actual  results  could  differ  from those  estimates.  The most
sensitive  estimates  relate  to the  allowance  for  mortgage  loans,  and  the
valuation of the bond portfolio.

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, 2002 and 2001, such
investments  were  $1,852,548  and $940,000,  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 2002, the Company sold $497,000 of its bonds at par, to
an affiliate of the Advisor. During 2001, the Company sold $716,000 of its bonds
at par or above cost, to an affiliate of the Advisor (see Note 5). There were no
losses on the sale of the bonds in 2002 or 2001.

                                      F-9

<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2002 and 2001





Allowance for Mortgage Loans Receivable

The Company  records its loans at their  estimated  net  realizable  value.  The
Company's loan policy  provides an allowance for estimated  uncollectible  loans
based on its evaluation of the current status of its loan portfolio. This policy
reserves for principal  amounts  outstanding on a particular  loan if cumulative
interruptions occur in the normal payment schedule of a loan. The Company policy
will reserve for the  outstanding  principal  amount of a loan in the  Company's
portfolio  if the  amount  is in  doubt  of being  collected.  Additionally,  no
interest  income is  recognized  on impaired  loans.  At December 31, 2002,  the
Company  reserved  $112,111  for two  mortgage  loans  which  are  three or more
mortgage  payments  in  arrears,  one  of  which  is in  the  process  of  being
foreclosed.  At December 31, 2001, the Company reserved $11,111 for one mortgage
loan in arrears. The total impaired loans were $228,441 and $277,787 at December
31, 2002 and 2001, respectively.

Deferred Offering Costs

Deferred equity offering costs are charged to  stockholders'  equity when equity
subscriptions are received.

Deferred investors saver certificates offering costs are amortized over the term
of the  certificates  using the  straight  line method  which  approximates  the
effective interest method.

Revenue Recognition

Interest  income on mortgage loans is recognized as earned.  Interest  income on
the bond portfolio is recognized on the interest payable 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.

Dividend Re-investment Plan

Dividends  re-invested  to purchase  common stock were $217,419 and $202,095 for
the years ended December 31, 2002 and 2001, respectively.

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.

                                      F-10

<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2002 and 2001





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.

2.  MORTGAGE LOANS AND BOND PORTFOLIO

At December 31, 2002, the Company had first mortgage loans  receivable  totaling
$16,543,831.  The loans bear interest ranging from 8.50% to 12.00%.  At December
31, 2001, the Company had first mortgage loans receivable  totaling  $12,034,304
which bore  interest  ranging from 9.50% to 12.00%.  Included in mortgage  loans
receivable is $1,243,827,  representing  loans which were closed in 2002 and the
proceeds disbursed in 2003.

The Company  also had a portfolio  of secured  church bonds at December 31, 2002
and 2001, which are carried at cost plus amortized  interest  income.  The bonds
pay either  semi-annual or quarterly  interest ranging from 6.00% to 10.50%. The
combined principal of $4,395,000 at December 31, 2002 is due at various maturity
dates  between  February  15, 2003 and June 15,  2021.  Six and four bond issues
comprised 86% and 87% of the Company's  bond  portfolio at December 31, 2002 and
2001, respectively.

The maturity schedule for mortgage loans and bonds receivable as of December 31,
2002 is as follows:
<TABLE>
<CAPTION>

                                                                     Mortgage Loans          Bond Portfolio

<S>        <C>                                                      <C>                      <C>
           2003                                                     $     402,870            $     47,000
           2004                                                           437,041                  70,000
           2005                                                           482,933                 100,000
           2006                                                           532,986                  65,000
           2007                                                           588,272                 107,000
           Thereafter                                                  14,099,729               4,006,000
                                                                       ----------               ---------
                                                                       16,543,831               4,395,000
           Less loan loss reserves                                       (112,111)
           Less Discount from par                                                                 (38,363)
                                                                     ------------             -----------

                       Totals                                         $16,431,720              $4,356,637

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

                                      F-11

<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2002 and 2001


3.  INVESTORS SAVER CERTIFICATES

Investors  savers  certificates  (see  Note  7) are  collateralized  by  certain
mortgage loans receivable of approximately  the same value as the  certificates.
Additionally,  the Company incurred  deferred offering costs related to the debt
offering.  The  maturity  schedule  for the  investors  saver  certificates  and
deferred offering costs at December 31, 2002 is as follows:

<TABLE>
<CAPTION>
                                                                     Investor Saver               Deferred
                                                                      Certificates             Offering Costs
-------------------------------------------------------------------------------------------------------------

<S>        <C>                                                        <C>                       <C>
           2003                                                                                 $  78,033
           2004                                                       $   684,000                  72,652
           2005                                                         1,005,000                  62,983
           2006                                                           987,000                  52,825
           2007                                                           887,000                  44,677
           Thereafter                                                   3,865,000                  66,004
                                                                        ---------                --------

                                                                       $7,428,000                $377,174
                                                                        =========                 =======
</TABLE>
Interest  expense related to these  Certificates for the year ended December 31,
2002 is $118,650 and is included in operating expenses.

4.  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 5) 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
99,000  shares  at a price  of $10 per  share at  December  31,  2002 and  2001,
respectively.  The options were exercisable  November 15, 1996 and incrementally
at one year  intervals  after the date of grant and  expire  November  15,  2002
through  November 15, 2006.  No options were  exercised as of December 31, 2002.
The Stock  Option Plan was  terminated  by the  Company's  Board of Directors in
January  2003 and all  outstanding  stock  options  were  cancelled,  subject to
approval by the Company's  shareholders.  No options were  exercised  during the
Plan's existence.

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,  as  amended,  are not
material to its financial statements.


                                      F-12

<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2002 and 2001

5.  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  $291,000 and $199,000  during 2002 and
2001, respectively.

The Advisor and the Company are  related  through  common  ownership  and common
management. See Notes 1 and 7 for additional transactions.

6.  INCOME TAXES

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 90% of its
taxable  income.  In 2002,  the  Company  had pretax  income of  $1,289,941  and
distributions  to shareholders  in the form of dividends  during the tax year of
$1,496,369.  The expected tax expense to the Company,  pre-dividends  would have
been  $438,580.  In 2001,  the  Company  had  pretax  income  subject  to tax of
$1,278,010 and distributions to shareholders in the form of dividends during the
tax year of $1,324,091. The expected tax expense to the Company,  pre-dividends,
would have been $434,523 in 2001.

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

                                                    2002                 2001
                                                    ----                 ----

     Expected tax expense                         $438,580            $434,523
     Benefit of REIT distributions                (508,289)           (453,909)
     Valuation allowance                            69,709              19,386
                                                  --------            --------
            Totals                                $    -              $    -
                                                  ========             =======


                                      F-13

<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                         Notes for Financial Statements

                           December 31, 2002 and 2001





The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>

                                                                                    2002                2001
                                                                                    ----                ----

<S>                                                                                <C>                <C>
         Loan origination fees                                                     $124,089           $88,720
         Loan loss allowance                                                         38,118             3,778
         Valuation allowance                                                       (102,207)          (32,498)
                                                                                    -------            ------

                                                                                  $  60,000           $60,000
                                                                                   ========            ======

The total deferred tax assets are as follows:

                                                                                    2002                 2001
                                                                                    ----                 ----

         Deferred tax assets                                                       $162,207           $92,498
         Deferred tax asset valuation allowance                                    (102,207)          (32,498)
                                                                                    -------            ------

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

The change in the valuation allowance was $69,709 and $19,386 for 2002 and 2001,
respectively.

7.  PUBLIC OFFERINGS OF THE COMPANY

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  1,500,000  shares  of its  common  stock at a price of $10 per
share.  The offering was  underwritten  by an  underwriter  (an affiliate of the
Advisor) on a "best efforts"  basis,  and no minimum sale of stock was required.
The stock sale commenced on September 23, 1999 and concluded September 23, 2001.
A total of 569,207 shares were sold during the Company's third public offering.

In December 2001, the Company filed a Registration Statement with the Securities
and Exchange Commission for a fourth public offering of its common stock and its
first public  offering of debt  securities,  which the  Securities  and Exchange
Commission  declared effective April 26, 2002. The Company is offering 1,500,000
shares of its common stock at a price of $10 per share and $15,000,000 principal
amount of its Series "A" secured  investor  certificates.  The  certificates pay
quarterly  interest with two,  three,  four, five and seven year maturities with
interest rates ranging from 5.00% to 7.00%. Certificates may be purchased in any
multiple of $1,000.  The offering is being  underwritten  by American  Investors
Group,  Inc. (an  affiliate of the Advisor) on a "best  efforts"  basis,  and no
minimum sale of stock or certificates will be required.  As of December 31, 2002
the Company has sold  452,424  shares and  $7,428,000  of its Series "A" secured
investor certificates.

                                      F-14
<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                         Notes for Financial Statements

                           December 31, 2002 and 2001





Pursuant  to the  terms of the  Underwriting  Agreement,  the  Company  incurred
expense to the managing underwriter and participating broker-dealers commissions
and non-reimbursable expenses of approximately $669,579 and $217,000 during 2002
and 2001, respectively, in connection with these last two public offerings.

8.  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, 2002 and 2001:

<TABLE>
<CAPTION>
                                                              2002                               2001
                                                     Carrying            Fair           Carrying               Fair
                                                      Amount            Value            Amount                Value
       ---------------------------------------------------------------------------------------------------------------

<S>                                               <C>                <C>               <C>                <C>
      Cash and equivalents                        $  7,852,220       $  7,852,220      $  1,256,556       $  1,256,556
      Accounts receivable                               63,602             63,602            58,008             58,008
      Interest receivable                               94,385             94,385            66,236             66,236
      Mortgage loans receivable                     16,431,720         16,431,720        12,023,193         12,023,193
      Bond portfolio                                 4,356,637          4,356,637         3,162,511          3,162,511
      Investors saver certificates                   7,428,000          7,428,000
</TABLE>

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.

9.  LINE OF CREDIT

The Company  obtained a $1,000,000 line of credit with its bank on July 22, 1999
which  was  increased  to  $2,000,000  on March 18,  2002,  subject  to  certain
borrowing base limitations,  through August 1, 2003. Interest is charged at 1/2%
over the prime rate  totaling  4.75% and 5.25% at  December  31,  2002 and 2001,
respectively. The line of credit is collateralized by the mortgage secured bonds
held by the Company.  There was no balance  outstanding at December 31, 2002 and
2001. Interest expense related to the line of credit was $12,717 and $26,835 for
December 31, 2002 and 2001, respectively.

                                      F-15