As filed with the Securities and Exchange Commission on March 29, 2002

                       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, 2001

       or

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

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


                         Commission File Number 33-87570


                        American Church Mortgage Company

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


              (Exact name of small business issuer in its charter)

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

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

     State or other jurisdiction of incorporation or organization: Minnesota

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

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

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure  will be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB.[ x ]

State issuer's revenues for its most recent fiscal year:      $1,525,562

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, 2002 was: 1,774,878 -----------

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





<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............................       10

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

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

                  Balance Sheet
                  December 31, 2001 and 2000......................      F-2

                  Statement of Operations
                  Years Ended December 31, 2001 and 2000..........      F-4

                  Statements of Stockholders' Equity
                  December 31, 2001 and 2000......................      F-5

                  Statements of Cash Flows
                  Years Ended December 31, 2001 and 2000..........      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...........................................       16

Item 10.   Executive Compensation.................................       17

Item 11.   Security Ownership of Certain Beneficial Owners and
           Management.............................................       18

Item 12.   Certain Relationships and Related Transactions.........       19

Item 13.   Exhibits and Reports on Form 8-K.......................       22








<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, 2001, we have made 48
loans to 44 churches in the aggregate  amount of  $17,015,478,  with the average
size  being  $354,489.  Of the 48  loans  we  have  made,  nine  loans  totaling
$3,387,000 have been repaid early by the borrowing churches.  We also own, as of
February  28,  2002,  $3,180,000  principal  amount  of  Church  Bonds  which we
purchased  at a price of par value  ($1,000) or less.  At no time have we paid a
premium for any of the bonds in our  portfolio.  Subject to  supervision  of our
Board of  Directors,  our day to day business  operations  are managed by Church
Loan Advisors,  Inc. (the  "Advisor"),  which provides  investment  advisory and
administrative  services to us. The principals of the Advisor include principals
of American Investors Group, Inc., an NASD member broker-dealer which has served
as underwriter of the three public offerings of our common stock.

Public Offerings

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

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



                                        3

<PAGE>



     On  September  23, 1999 the  Securities  and Exchange  Commission  declared
effective  our third public  offering of 1,500,000  common  shares at a price of
$10.00 per share  ($15,000,000)  under SEC File  333-81819.  The Offering is 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 as of February 28, 2002,
we  had  1,774,878   shares   outstanding  and   approximately   878  individual
shareholders.

The Company's Business Activities

     Our  business  is  managed  by  Church  Loan  Advisors,  Inc.,  Minnetonka,
Minnesota  (the  "Advisor").  We have no  employees.  The  Advisor's  affiliate,
American  Investors Group,  Inc., has been engaged since 1987 in the business of
underwriting first mortgage bonds for churches  throughout the United States. In
underwriting church bonds, they review financing proposals,  analyze prospective
borrowers' financial capability, and structure, market and sell, mortgage-backed
securities which are debt obligations (notes) of such borrowers to the investing
general public.  The shareholders,  officers and directors of American have been
engaged  in the  business  of  church  financing  since  1983,  with a  combined
experience of  approximately  78 years in this  business.  Since its  inception,
American has underwritten  approximately  184 church bond  financings,  in which
approximately  $311,000,000  million in first  mortgage  bonds have been sold to
public investors. The average size of single church bond financings underwritten
by American since its inception is approximately $1,690,000 million.

     In the  course of its  business,  American  has  identified  a demand  from
potential borrowers for smaller loans of $100,000 to $1,000,000.  Because of the
regulatory,  administrative expenses and complexity normally associated with the
bond financing business,  American  determined that the economic  feasibility of
bond financing has diminished for financings  under  $750,000.  As a result,  we
believe  that many  churches  are forced to either  forego the project for which
their  financing  request  was made,  fund their  project  from cash flow over a
period  of time and at  greater  expense,  or seek bank  financing  at terms not
always favorable or available to them, due to the historic reticence of banks to
lend to churches for other than economic reasons.  The Company's objective is to
provide a lending source to this segment of the industry-by  capitalizing on the
human resources and experience available at American and the Advisor, and taking
advantage of the marketing, advertising and general goodwill of American.

Financing Business

     Our primary  business is to make first  mortgage  loans in amounts  ranging
from  $100,000  to  $1,000,000,  to  churches  and  other  non-profit  religious
organizations,  and selecting and investing in mortgage-secured debt instruments
("Church Bonds") issued by churches and other non-profit religious organizations
throughout the United States. We attempt to apply essentially all of our working
capital  (after  adequate  reserves  determined  by the Advisor)  toward  making
mortgage  loans and  investing in Church  Bonds.  We seek to enhance  returns on
investments on such loans by:

o    offering  terms of up to 20 years or more,  generating  the highest  yields
     possible under current market conditions;

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

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

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

     Our  policies  limit  the  amount of  second  mortgage  loans to 20% of the
Company's Average Invested Assets on the date any second mortgage loan is closed
and limit the  amount of  mortgage-secured  debt  securities  to 30% of  Average
Invested Assets on the date of their purchase.  All other mortgage loans made by
us (or  Church  Bonds  purchased  for  investment)  will be  secured  by a first
mortgage  (or deed of trust)  lien in favor of us.  Although  we attempt to make
mortgage loans for various terms  typically  ranging from three to twenty years,
we may determine to 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.




                                        4

<PAGE>



Current First Mortgage Loan Terms

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




<TABLE>
<CAPTION>
            Loan Type                          Interest Rate (1)             Origination Fee (2)

<S>             <C>                                <C>                                 <C>
20/25 Year Term (3)                Fixed @ Prime + 4.50%                               4.0%
20 Year Term (3)                   Variable Annually @ Prime + 2.50%                   3.5%
Renewable Term  (4)                Fixed @ Prime plus:
     3 Year                               3.75%                                        3.5%
     5 Year                               4.00%                                        3.5%
     7 Year                               4.20%                                        3.5%
Construction 1 Year Term           Fixed @ Prime + 5.00%                               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.

(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:

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

o    financial statements in accordance with our Financing Policies;

o    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.


                                        5

<PAGE>



     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 our President.  Our
Advisor may arrange for the  provision of mortgage  title  insurance and for the
services of professional  independent  third-party accountants and appraisers on
behalf of borrowers in order to achieve pricing efficiencies on their behalf and
to assure the efficient delivery of title commitments, preliminary title reports
and  title  policies,  and  financial  statements  and  appraisals  meeting  our
underwriting  criteria.  Our Advisor may arrange for the direct payment for such
professional   services  and  for  the  direct   reimbursement  to  it  of  such
expenditures by borrowers and prospective borrowers. Upon closing and funding of
mortgage  loans, a negotiable  origination  fee based on the original  principal
amount of each loan may be charged, of which one-half is payable to our Advisor,
and the other one-half to us.

 Loan Commitments

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

Loan Portfolio Management

     Our portfolio of mortgage loans and Church Bonds is managed and serviced by
our  Advisor  in  accordance  with  the  Advisory  Agreement.   The  Advisor  is
responsible for all aspects of our mortgage loan business, including closing and
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
$1,000,000 line of credit with Beacon Bank, Shorewood,  Minnesota. Currently, we
have no outstanding  balance against our line of credit as of February 28, 2002.
We may  borrow up to 50% of the  value of our  Average  Invested  Assets to make
loans  regardless of our capacity to (i) sell the Shares on a continuing  basis,
or to (ii)  reposition  assets from the maturity or early  repayment of mortgage
loans  in our  portfolio.  Cash  resources  generally  available  to us  consist
primarily of the net proceeds  from the sale of the Shares,  minus  reserves for
operating expenses,  and bad-debt reserves, as determined by the Advisor. As our
business  develops and over the course of time,  cash resources  available to us
for lending  purposes will include,  in addition to the net proceeds from future
sales of Shares (if any), (i) principal  repayments from borrowers on loans made
by us, (ii)  dividends  reinvested  by our  Shareholders  electing  the Dividend
Reinvestment   Plan,   and  (iii)  funds  borrowed  under  any  line  of  credit
arrangement.

The Advisory Agreement

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

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

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

                                        6

<PAGE>




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

o    on  our  behalf,  deals  with  borrowers,   lenders,  banks,   consultants,
     accountants, brokers, attorneys, appraisers, insurers and others;

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

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

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

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

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

     Pursuant to the Advisory  Agreement,  the Advisor is required to pay all of
the expenses it incurs in providing  services to us, including,  but not limited
to, personnel expenses, rental and other office expenses, expenses of directors,
officers and  employees of the Advisor  (except  out-of-pocket  expenses of such
persons who are directors or officers of ours that incurred in their  capacities
as our  directors  and  officers),  and all of its  overhead  and  miscellaneous
administrative  expenses  relating to  performance  of its  functions  under the
Advisory  Agreement.  We are required to pay all other  expenses we incur in the
daily operations of our  business-such as the costs and expenses of reporting to
various governmental  agencies and the Shareholders;  the general conduct of our
operations as a mortgage  lender;  fees and expenses of  appraisers,  directors,
auditors, outside legal counsel and transfer agents, and costs directly relating
to closing of loan transactions.

     In the event that our Total Operating  Expenses exceed in any calendar year
the  greater  of (a) 2% of our  Average  Invested  Assets  or (b) 25% of our net
income,  the Advisor is obligated to reimburse us, to the extent of its fees for
such  calendar  year,  for the amount by which the  aggregate  annual  operating
expenses paid or incurred by us exceed the limitation. The Independent Directors
may,  upon a finding  of  unusual  and  non-recurring  factors  which  they deem
sufficient,  determine that a higher level of expenses is justified in any given
year.

     Our bylaws provide that the Independent Directors are to determine at least
annually the  reasonableness of the compensation we pay to our Advisor.  Factors
to be  considered  in reviewing the Advisory Fee include the size of the fees of
the Advisor in relation to the size,  composition and  profitability of our loan
portfolio,  the rates charged by other investment advisors performing comparable
services,  the success of the Advisor in generating  opportunities that meet our
investment objectives, the amount of additional revenues realized by the Advisor
for other  services  performed  for us, the  quality  and extent of service  and
advice  furnished by the Advisor,  the quality of our investments in relation to
investments  generated  by the  Advisor  for its own  account,  if any,  and the
performance of our investments.

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





                                        7

<PAGE>



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 loan  amount  cannot  exceed  75% of the value of the real  estate  and
     improvements  securing each loan,  such value being  determined  based on a
     written appraisal  prepared by an appraiser  acceptable to the Advisor.  On
     loans over  $500,000,  we will require a written  appraisal  certified by a
     member of the Appraisal Institute ("MAI"), or a state- certified appraiser.

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

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

(v)  The borrower must furnish us with financial  statements  (balance sheet and
     income and  expense  statement)  for their last three (3)  complete  fiscal
     years and a current  financial  statement for the period within ninety (90)
     days of the loan closing date. On loans equal to or less than $500,000, the
     last  complete  fiscal year must be reviewed by an  independent  accounting
     firm.  On loans in  excess  of  $500,000,  the last  complete  fiscal  year
     financial statements must be audited by an independent  auditor.  Borrowers
     in  existence  for less than  three  fiscal  years must  provide  financial
     statements since their inception. No loan will be extended to a borrower in
     operation less than two years (24 months)  absent  express  approval by our
     Board of Directors.

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

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

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

(ix) In its discretion,  the Advisor, on our behalf, may require the borrower to
     grant to us a security  interest in all personal property located and to be
     located  upon the  mortgaged  premises  (excluding  property  leased by the
     borrower).

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

Prohibited Investments and Activities

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

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

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


                                        8

<PAGE>

(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.

Competition

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

                                        9

<PAGE>

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 public offerings. The Advisor
is not a registered  investment  advisor under the  Investment  Advisor's Act of
1940, nor are we a registered  investment  company under the Investment  Company
Act of 1940. As of the date of this Report, the Advisor employs 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.  See  Item 11  "Security  Ownership  of
Certain  Beneficial  Owners and Management," and Item 12 "Certain  Relationships
and Related Transactions."

Operations

     Our  operations  currently  are located in the 8,400 square foot offices of
the Advisor's  affiliate,  American  Investors Group,  Inc., 10237 Yellow Circle
Drive, Minnetonka,  Minnesota 55343. These facilities are owned by Yellow Circle
Partners, L.L.P., a partnership owned by Mr. Reinhart ("A Director of ours") and
Mr. Myers. We are not charged any rent for our use of these  facilities,  or for
our use of copying services,  telephones,  facsimile machines,  postage service,
office  supplies  or  employee  services,  since  these costs are covered by the
advisory fee paid to the Advisor.  Beginning  January 1, 2001,  the Advisor pays
rent and other fees to Apostle Holdings, Corp which is owned by Mr. Myers.

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.

     Our annual meeting was held at 10:00 a.m. at our corporate  headquarters on
October 29, 2001.  Shareholders  of record at the close of business on September
24, 2001 were  entitled  to provide  notice of or to vote at the meeting to: (i)
elect six (6) persons to serve as directors  until the next annual  election and
until their  successors  are duly elected and qualified  and; (ii) to ratify the
appointment of Boulay, Heutmaker, Zibell & Co., P.L.L.P. as independent auditors
for the year ending  December 31,  2001.  All votes were tallied and each motion
was voted and passed in our favor.


                                     PART II

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

         Market Information

     As of February 28, 2002,  1,774,878 shares of our common shares were issued
and  outstanding.  Our initial public  offering (SEC file 33-87570)  which began
July 11, 1995 was closed  November 8, 1996 with 335,481 shares having been sold.
On September 26, 1997, the Securities and Exchange Commission declared effective
our second public  offering of 1,500,000  common shares at a price of $10.00 per
share ($15,000,000) under SEC File 33-87570. The Offering was co-underwritten by
American  Investors Group, Inc. and LaSalle St. Securities,  Inc.,  ("LaSalle").
American acted in the capacity of the Managing  Underwriter  and is an affiliate
of ours.  The  Offering  was  conducted  on  a"best-efforts"  basis  pursuant to
applicable  rules of the  Securities and Exchange  Commission.  We concluded our
second public offering on January 22, 1999. We sold 799,759 shares in our second
public offering.

                                       10

<PAGE>

     On September 23, 1999,  the  Securities  and Exchange  Commission  declared
effective  our third public  offering of 1,500,000  common  shares at a price of
$10.00  per share  ($15,000,000)  under SEC File  333-81819.  The  Offering  was
conducted  on a  "best-efforts"  basis  pursuant  to  applicable  rules  of  the
Securities and Exchange  Commission.  We concluded our third public  offering of
September  23,  2001.  A total of 569,207  shares were sold.  As of February 28,
2002, we had 1,774,878 shares outstanding and approximately 878 shareholders.

         Lack of Liquidity and Absence of Public Market Price.

     There  currently  is no market  for our  common  shares and there can be no
assurance that a market will develop.  It is not expected that a material market
for the shares will  develop  any time soon.  In  addition,  the market for REIT
securities  historically  has been less liquid  than  non-real  estate  types of
publicly-traded equity securities.  Further, because of such illiquidity and the
fact that the shares  would be valued by  market-makers  (if a market  develops)
based on market forces which consider various factors beyond our control,  there
can be no assurance  that the market value of the shares at any given time would
be the same or higher than the public purchase price of our shares. In addition,
the market  price,  if any  develops,  could  decline  if the yields  from other
competitive  investments  exceed the actual  dividends paid by us on our shares.
Our  common  stock is not  listed  on any  exchange  and is not yet  listed  for
quotation on the National  Association  of Securities  Dealers,  Inc.  Automated
Quotation System ("NASDAQ"). 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 plan.

         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, 2002,  we had 878 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 year on our common stock as
follows:


<TABLE>
<CAPTION>
     For Quarter              Dollar Amount Distributed                     Annualized Yield Per $10
       Ended:                          Per Share:                               Share Represented:
                                2001               2000                        2001              2000
<S>        <C>                  <C>               <C>                          <C>               <C>
     March 31st                 $.2125            $.225                        8.50%             9.00%
      June 30th                 $.225             $.2125                       9.00%             8.50%
   September 30th               $.20              $.1875                       8.00%             7.50%
    December 31st               $.19375           $.20                         7.75%             8.00%
</TABLE>

     As a Real Estate Investment Trust, we make regular quarterly  distributions
to  Shareholders.  The amount of distributions to them equal at least 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 once 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 where we're selling
shares by (i) collecting from borrowers an origination fee at the time a loan is
made (of which one-half of any origination fee charged in connection with a loan
is paid directly to the Advisor as additional  compensation--the  other one-half
is payable to us), and (ii) timing our lending activities to coincide as much as
possible  with sales of our  Shares.  However,  there can be no  assurance  that
either  or  both  of  these  strategies  will  improve  current  yields  to  our
Shareholders in periods of our business  operations when capital is being raised
through  the sale of  additional  common  shares.  In order to  qualify  for the
beneficial tax treatment  afforded real estate investment trusts by the Internal
Revenue  Code,  we are  required  to pay  dividends  to holders of our Shares in
annual  amounts  which are equal to at least 90% of our "real estate  investment
trust  taxable  income."  For  the  fiscal  year  ended  December  31,  2001  we
distributed  substantially  all of our taxable income to our Shareholders in the
form of quarterly dividends. We intend to continue distributing all or a portion
of  such  income  to our  Shareholders  on a  quarterly  basis,  subject  to (i)
limitations  imposed by  applicable  state law, and (ii) the factors  identified
above. The portion of any dividend that exceeds our earnings and profits will be
considered  a return of  capital  and will not  currently  be subject to federal
income tax to the extent that such dividends do not exceed a Shareholder's basis
in their Shares.

     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,  2001 our total  assets  increased  by
$2,345,343 due primarily to sale of our common stock in our third "best efforts"
public offerings.  Our total liabilities  decreased by $413,542 due primarily to
the "pay-down" of our line of credit.

         Results of Operations-1996-1997

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

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

         Results of Operations - 1998

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

         Results of Operations -1999

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

                                      12

<PAGE>
        Results of Operations -2000

     During our fiscal  year ended  December  31,  2000 we funded four new first
mortgage loans and one second mortgage loan to churches totaling  $1,575,000 and
$100,000  respectively.  We also purchased  $250,000  principal  amount of First
Mortgage  Church  bonds at par. We had two First  Mortgage  Church  Bonds mature
during fiscal year ended December 31, 2001. The face amount of the two bonds was
$17,000.

         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.

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

     Our total  assets  increased  from  $14,337,748  at  December  31,  2000 to
$16,683,091  at December 31, 2001.  The primary reason for the increase in total
assets from December 31, 2000 through December 31, 2001 was a result of the sale
and issuance of our common  stock  pursuant to our third  public  offering,  the
proceeds of which were (and  continue to be) deployed  into new mortgage  loans.
Shareholders'  Equity rose from  $13,314,410 at December 31, 2000 to $16,073,295
at December 31, 2001 for the same reasons.  Our liabilities for both periods are
primarily  comprised of a "Deferred  Income"  item,  reflecting  our practice of
recognizing  our  origination  income  --  fees  charged  to  borrowers  at  the
commencement  of its  loans  -- over  the life of each  loan.  Another  material
liability  for both  periods  includes  dividends  declared as of the end of the
period  reported  on, but which are not paid  until the 30th day of the  ensuing
month.

     We began the sale of shares in our third public  offering on September  22,
1999 and concluded  our third public  offering on September 23, 2001. A total of
569,207  shares  were sold in our third  public  offering.  All loans made by us
range in interest  rate charged to the borrowers  from 9.50% to 12.00%.  Many of
our loans  have  repayment  schedules  of up to twenty  five  years,  but may be
prepaid at any time  without  penalty.  As of February  28,  2002,  the average,
principal-adjusted interest rate on our loan portfolio was 10.31%. Our portfolio
of Church Bonds has an average current yield of 9.43%.





                                       13

<PAGE>



Liquidity and Capital Resources

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

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

     In addition,  we are able to borrow funds in an amount not to exceed 50% of
our Average  Invested  Assets in order to  increase  our  lending  capacity.  We
currently have a $1,000,000 secured line of credit with Beacon Bank,  Shorewood,
Minnesota.  As of February 28, 2002 we have no outstanding  balance  against our
line of credit.  This  credit  line is secured  by the pledge of  $1,200,000  in
principal amount of our Church Bonds. We have borrowed funds at a rate as low as
9.00% and as high as 10.50%. 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 shares in our public offering; (ii)
applying  the proceeds  from  principal  payments on our current loan  portfolio
payments  and any loan  re-payments;  and (iii) use the  proceeds  raised in our
dividend reinvestment program.  Increases or decreases in the prime lending rate
as well as the increase or decrease in the rate of interest charged on our loans
has and  likely  will  continue  to  impact  interest  income  we will earn and,
accordingly, influence dividends declared by our Board of Directors.

     We have filed with the  Securities  and Exchange  Commission a 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.
Our future capital needs are to be met by (i) our pending public offering;  (ii)
the  repayment  of  existing  loans;  and  (iii)  dividend  reinvestment  by our
shareholders  under  our  dividend  reinvestment  plan.  In  addition,  we  have
established  and  intend to  maintain  available  to us a line of credit  with a
regional bank,  currently in the amount of $1,000,000.  This facility enables us
to fund  loans as they are ready to close and to  purchase  bonds at a  discount
when available  without  waiting for additional  capital from other sources.  As
additional  capital  becomes  available,  any  balance  on this  line of  credit
historically  has been paid off. We pay interest on these  temporarily  borrowed
funds at an annual  rate of  interest  equal to prime plus  one-half  percentage
point.

     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.

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  one loan in  default  at this  time,  with a  remaining  principal
balance of  approximately  $270,000.  The borrowing church has also defaulted on
its first mortgage loan of $1,151,000.  Our loan is secured by a second mortgage
on the church  premises,  which was  appraised  at  $2,375,000  in 1997 upon its
completion.  The first mortgage holder is pursuing  foreclosure on the property.
Unless  the  debt is  restructured,  we will be  faced  with  potential  loss of
principal on this loan or the  requirement  of paying off the first  mortgage to
protect our second mortgage.  If the property is foreclosed upon and sold by the
first mortgagee,  our security interest in the property will be extinguished and
the loss of our loan balance would most likely occur. We are gradually reserving
for some loss on this  loan,  however,  we believe  it  remains  likely  that an
overall  restructuring  of both the first and second  mortgage loans will occur,
mitigating our loss on this loan



                                       14

<PAGE>



Listed below is our current loan loss reserve policy:


<TABLE>
<CAPTION>
  Incident      Percentage of Loan               Status of Loan
                     Reserved
<S>           <C>                    <C>
============= ====================== ===============================================================================================
1.            None                   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
              during default period  expensed.
              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>
Management, on an ongoing basis, determines if additional amounts in excess of
our current policy are required. Loan loss reserves are recorded on a quarterly
basis.

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





















                                       15

<PAGE>



                                    PART III


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


     Directors are elected for a term expiring at the next annual meeting of our
shareholders  and serve for one-year  terms and until their  successors are duly
elected and  qualified.  Annual  shareholder  meetings are typically held in the
third quarter of each fiscal year. Officers serve at the discretion of the Board
of Directors. Among other requirements,  in order to maintain our REIT status, a
majority of our directors  must be  "independent."  Our  executive  officers and
directors are as follows:



<TABLE>
<CAPTION>
            Name                    Age                           Office                          Director Since
            ----

<S>                                  <C>                                                               <C>
Philip J. Myers                      45        President, Treasurer, Secretary and Director            2001
David G. Reinhart                    49        Director                                                1994
Kirbyjon H. Caldwell                 49        Independent Director                                    1994
Robert O. Naegele, Jr.               61        Independent Director                                    1994
Dennis J. Doyle                      50        Independent Director                                    1994
John M. Clarey                       60        Independent Director                                    1994
----------------------------- ---------------- --------------------------------------------- ------------------------
</TABLE>

     Philip J. Myers has been our  President  since April 2001 and a director of
ACMC since October 2001. He is also President, Treasurer, sole shareholder and a
director of our advisor,  Church Loan Advisors,  Inc. and President,  Secretary,
and a director of the underwriter, American Investors Group, Inc. and its parent
company,  Apostle Holdings Corp. Mr. Myers earned his bachelor of arts degree in
political  science in 1977 from the State  University  of New York at Binghamton
and his juris  doctor  degree from the State  University  of New York at Buffalo
School of Law in 1980. From 1980 to 1982, Mr. Myers served as an attorney in the
Division of Market Regulation of the U.S.  Securities and Exchange Commission in
Washington,  D.C.  and,  from 1982 to 1984,  as an attorney with the Division of
Enforcement  of the Securities  and Exchange  Commission in San Francisco.  From
August,  1984 to January  1986,  he was  employed  as an  attorney  with the San
Francisco  law firm of  Wilson,  Ryan and  Compilongo  where he  specialized  in
corporate finance,  securities and broker-dealer  matters.  From January 1986 to
January 1989, Mr. Myers was engaged as Senior Vice-President and General Counsel
of  Financial  Planners  Equity  Corporation,  a 400  broker  securities  dealer
formerly located in Marin County, California. He became affiliated with American
Investors  Group,  Inc.  in 1989.  He is a member  of the New  York,  California
(inactive status) and Minnesota State Bar Associations.  Mr. Myers holds General
Securities  Representative  and General  Securities  Principal licenses with the
National Association of Securities Dealers, Inc.

     David G.  Reinhart  has been a  director  of ACMC since our  inception.  He
served as our President and Treasurer  from January 19, 1999 to January 1, 2001.
He served as our Vice President and Secretary  since our inception until January
19, 1999. He is currently the President of Miller & Schroeder  Financial,  Inc.,
Minneapolis, Minnesota. Mr. Reinhart formerly was a partial owner of our advisor
and the  underwriter.  Mr. Reinhart has served as legal counsel to banks,  trust
companies  and  broker-dealers  in the area of church  financings  and otherwise
since approximately March 1984. He was employed in the St. Paul firm of Reinhart
Law  Offices,  P.A.  from  November  1985 to  February  1987.  From July 1983 to
November  1985 he was  employed as an  Associate  Attorney  with the law firm of
Robins, Kaplan, Miller & Ciresi,  Minneapolis,  Minnesota. Mr. Reinhart received
his juris doctor degree,  cum laude, in May 1979, from Hamline University School
of Law, St. Paul,  Minnesota and received his Bachelor of Science  degree in May
1976, from Northern Michigan University,  Marquette,  Michigan. Mr. Reinhart has
practiced law in the areas of corporate  finance and general  business law since
1979 and has developed expertise in the area of church financing. He is employed
from time to time as Adjunct Professor of Law, Hamline University School of Law.

     Kirbyjon H. Caldwell,  has served as an independent  director of ACMC since
September  1994. He has been Senior Pastor of Windsor  Village United  Methodist
Church in Houston,  Texas since January 1982. The membership of Windsor  Village
is approximately 14,400. Mr. Caldwell received his B.A. degree in Economics from
Carlton   College   (1975),   an  M.B.A.  in  Finance  from  the  University  of
Pennsylvania's  Wharton School (1977), and his Masters in Theology from Southern
Methodist  University School of Theology (1981). He is a member of the Boards of
Directors of JP Morgan Chase--Texas,  Continental Airlines,  National Children's
Defense Fund,  Baylor College of Medicine,  Greater Houston  Partnership and the
American  Cancer  Society.  He  is  also  the  founder  and  member  of  several
foundations and other community development organizations.

     Robert  O.  Naegele,  Jr.  has  served  as an  independent  director  since
September 1994. Mr. Naegele's professional background includes advertising, real
estate   development  and  consumer   products,   with  a  special  interest  in
entrepreneurial ventures and small developing companies. Most recently, he led a
group of  investors to apply for, and receive an NHL  expansion  franchise,  the
Minnesota  Wild,  which  began  play in the  Xcel  Energy  Center  in St.  Paul,
Minnesota, in October 2000.

                                       16
<PAGE>

     Dennis J. Doyle has served as an independent director since September 1994.
He is  the  majority  shareholder  and  co-founder  of  Welsh  Companies,  Inc.,
Minneapolis,  Minnesota, a full-service real estate company involved in property
management,   brokerage,   investment   sales,   construction   and   commercial
development.  Welsh  Companies was co-founded by Mr. Doyle in 1980, and has over
350 employees.  Mr. Doyle is the recipient of numerous civic awards  relating to
his  business  skills.  He also is a member of the post  board of  directors  of
Rottlund Homes and Hope For the City.

     John M. Clarey has served as an independent  director since September 1994.
Since May 2001,  Mr.  Clarey  has been an  independent  private  investor.  From
January 1992 until May 2001, he was employed in high level management  positions
at Miller & Schroeder Financial, Inc., a Minneapolis, Minnesota based investment
banking firm, and NASD-member broker-dealer. From February 1991 through December
1991,  Mr. Clarey was a general  partner of Clarepoint  Partners,  LP, a private
venture  capital firm,  of which he was one of the  founders.  From July 1989 to
February  1991,  he was a Senior  Vice  President  of  Miller,  Johnson & Kuehn,
Incorporated,  a  Minneapolis-based  investment  banking  firm  specializing  in
municipal and corporate  finance.  From  September 1965 to November 1970, he was
employed as Executive  Vice  President of Keenan & Clarey,  Inc., a  Minneapolis
broker-dealer  specializing  in  structuring  and  development of corporate debt
issues and financings for churches and other non-profit corporations. During his
career in the securities and finance  industry,  Mr. Clarey has been active as a
senior  officer  and  director  of  local,  regional,  and  national  trade  and
professional  associations and has served as a volunteer officer and director of
various  charitable  organizations.  He  graduated  from  Marquette  University,
Milwaukee, Wisconsin (1963) with a B.A. in economics.

     Our advisor manages our day-to-day operations under the advisory agreement.
We have no employees.  Our officers  receive no compensation for their services,
other than  through  their  interests  in our  advisor and our  affiliates.  Our
officers have no employment  contracts with us or our advisor and are considered
employees  of the  advisor  "at will." We believe  that  because of the depth of
management  of our  advisor  and its  affiliates  the  loss  of one or more  key
employees  of our  advisor,  or one or more of our  officers,  would  not have a
material  adverse  effect upon our  operations.  As  required  by our bylaws,  a
majority of our directors are  independent  directors in that they are otherwise
unaffiliated  with and do not receive  compensation from us (other than in their
capacity as directors) or from our advisor or the underwriter.

     Our directors are  responsible  for considering and approving our policies.
Directors meet as often and devote such time to our business as their  oversight
duties may require.  Pursuant to our bylaws, the independent  directors have the
responsibility  of evaluating the capability and  performance of our advisor and
determining  that the  compensation we pay to our advisor is reasonable.  During
2001, our directors held four meetings.

     Neither our  articles of  incorporation  or bylaws nor any of our  policies
restrict  officers or directors from  conducting,  for their own account,  or on
behalf of others, business activities of the type we conduct.

     Directors  and  officers  have  a  duty  to us and  our  shareholders.  Our
directors  may be  removed  by a majority  vote of all  shares  outstanding  and
entitled  to vote at any  annual  meeting  or  special  meeting  called for such
purpose.

Item 10.  Executive Compensation

         Officers are not compensated other than through their interest in our
advisor.

     We currently pay each of our  independent  directors a fee of $500 for each
board meeting  ($200 for  telephonic  meetings),  limited to $2,500 per year. We
reimburse directors for travel expenses incurred in connection with their duties
as directors.  In 2000, our  independent  directors (four in number) were paid a
total of $3,200 in  director's  fees.  We have  adopted a Stock  Option Plan for
Directors  and our  advisor's  President,  under  which  each  director  and our
advisor's  President are granted  annually options to purchase 3,000 shares each
of our common stock at a price equal to the fair market value at the date of the
grant. If not exercised, the options expire five years from the date of grant.

Fiduciary Responsibility of Board of Directors and Indemnification

     The  board of  directors  and our  advisor  are  accountable  to us and our
shareholders  as  fiduciaries.  Consequently,  they must exercise good faith and
integrity  in handling  our  affairs.  Similarly,  our  advisor has  contractual
obligations  to us which  it must  discharge  with the  utmost  good  faith  and
integrity.

     Our  articles  require  us to  indemnify  and pay or  reimburse  reasonable
expenses to any  individual  who is our present or former  director,  advisor or
affiliate,  provided  that:  (i) the  director,  advisor  or  affiliate  seeking
indemnification has determined,  in good faith, that the course of conduct which
caused  the loss or  liability  was in our  best  interest;  (ii) the  director,
advisor  or  affiliate  seeking  indemnification  was  acting  on our  behalf or
performing  services on our  behalf;  (iii) such  liability  or loss was not the
result of negligence or misconduct on the part of the indemnified party,  except
that in the event the indemnified party is or was an independent director,  such
liability or loss shall not have been the result of gross  negligence or willful
misconduct;  and (iv) such  indemnification  or agreement to be held harmless is
recoverable only out of our assets and not from our shareholders directly.

                                       17

<PAGE>

     We may advance amounts to persons entitled to indemnification for legal and
other expenses and costs incurred as a result of legal action instituted against
or involving such person if: (i) the legal action relates to the  performance of
duties or services by the indemnified party for or on our behalf; (ii) the legal
action is  initiated  by a third  party who is not a  shareholder,  or the legal
action is initiated by  shareholder  acting in his or her capacity as such and a
court  specifically  approves such advancement;  and (iii) the indemnified party
receiving such advances  undertakes,  in writing,  to repay the advanced  funds,
with interest at the rate we determined,  in cases in which such party would not
be entitled to indemnification.

     Subject to the limitations  described  above, we have the power to purchase
and  maintain  insurance  on  behalf of an  indemnified  party.  We may  procure
insurance  covering  our  liability  for  indemnification.  The  indemnification
permitted by our Articles is more restrictive than permitted under the Minnesota
Business Corporation Act.

Warrants and Options

     In 1994,  the Board of Directors  adopted a Stock Option Plan for Directors
and the advisor to be administered by our directors,  which provides for a grant
of an option to purchase 3,000 shares of $.01 par value common stock, subject to
certain  adjustments,  to a director upon his or her appointment or election and
upon each  re-election  (directors are elected  annually) or to our advisor upon
our advisor's  appointment or annual  re-appointment.  The purchase price of the
common stock granted  under each option is the fair market value,  as defined in
the Option  Plan,  at the time the option is granted.  On November  15th of each
year,  1994 through 2001 we issued  options to each of our six  directors  which
includes  the  president  of our  advisor,  to  purchase  3,000  shares each (an
aggregate of 147,000 shares) at a price of $10 per share.  Of these,  options to
purchase 48,000 shares have expired. These options vested or vest one year after
their  grant date and expire  five years  after  their  grant  date.  Options to
purchase 99,000 shares are currently exercisable.

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

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth as of February 28, 2002, certain information
regarding beneficial ownership of our shares, as adjusted to give effect to the:
issuance of the shares offered hereby,  by (i) each person known by us to be the
beneficial  owner  of 5% or more of the  outstanding  shares;  (ii)  each of our
directors and executive officers; and (iii) all of our directors and officers as
a group. The percentage of shares  outstanding  before and after the Offering is
calculated separately for each person and excludes shares issuable upon exercise
of options.  Unless  otherwise  noted,  each of the  following  persons has sole
voting and investment  power with respect to the shares set forth opposite their
respective names.


<TABLE>
<CAPTION>
                                                    Number of Shares              Percentage of Outstanding
Name of Beneficial Owner (1)                       Beneficially Owned                      Shares

<S>                                                   <C>    <C> <C>                        <C>
 Philip J. Myers                                      35,000 (2) (3)                        1.97%
 David G. Reinhart                                    15,000 (2)                            0.85%
 Robert O. Naegele, Jr.                               22,033 (2)                            1.30%
 Kirbyjon H. Caldwell                                 15,000 (2)                            0.85%
 Dennis J. Doyle                                      15,000 (2)                            0.85%
 John M. Clarey                                       15,000 (2)                            0.85%
 All Executive Officers and Directors as             117,033 (2)                            6.67%
 a Group (6 individuals)
------------------------------------------ ----------------------------------- -------------------------------
</TABLE>

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

(2)  Includes  15,000 shares (90,000 shares in the aggregate)  which each of our
     directors  has an option to purchase  pursuant to the Stock Option Plan for
     Directors and our advisor.

(3)  Includes 20,000 shares owned of record by Apostle Holdings Corp.





                                       18

<PAGE>



 Item 12.  Certain Relationships and Related Transactions

     Our advisor,  Church Loan Advisors,  Inc.,  manages our business subject to
the  supervision  of our  board  of  directors.  Our  advisor  provides  us with
investment advisory and administrative  services. Our advisor is owned by Philip
J.  Myers.  Mr.  Myers is also the sole  shareholder,  officer  and  director of
Apostle  Holdings  Corp.,   which  owns  American  Investors  Group,  Inc.  (the
underwriter  of this  offering).  Our advisor  employs,  among  others,  two key
persons on a part-time basis,  including Philip J. Myers, President and Scott J.
Marquis, Vice President. Our advisor, on our behalf, regularly uses the services
of personnel  employed by American Investors Group, Inc. We incur no direct cost
for such services, except for the advisory fee we pay to our advisor.

 Transactions With Our Advisor.

     We  pay  our  advisor  advisory  fees  and  expenses  and  one-half  of any
origination fee collected from a borrower. For the year ended December 31, 2001,
we paid to our advisor  total  advisory  fees in the amount of $162,131  and our
advisor received loan origination fee income of $37,297. In 2000, we paid to our
advisor total advisory fees in the amount of $154,389,  and our advisor received
loan  origination  fee  income  of  $21,250.  We  believe  that the terms of the
advisory agreement are no less favorable to us had we entered into the agreement
with an independent third party as advisor.

 American Investors Group, Inc.

     Pursuant to the Underwriting  Agreement in connection with our third public
offering which commenced  September 23, 1999 and concluded  September  September
23,  2001 the  underwriter  (American)  was paid  selling  commissions  totaling
$338,678.  We have also paid approximately $73,720  non-accountable  expenses of
the  underwriter.  In addition,  we agreed to indemnify  them,  as  underwriters
against certain civil  liabilities,  including  liabilities under the Securities
Act of  1933.  The  public  offering  price  of the  Shares  was  determined  by
negotiations  between us and the underwriter based on the price paid ($10.00 per
share) by the initial  shareholder and  shareholders who purchased shares in our
prior  two  public  offerings.  The  following  table  sets  forth  the name and
positions of certain officers and all directors of American:


<TABLE>
<CAPTION>
             Name                       Position

<S>                             <C>
 Philip J. Myers                President, Secretary and Director
 Scott J. Marquis               Chief Financial and Operating Officer
------------------------------ ---------------------------------------------
</TABLE>

     In the  course  of  our  business,  we  may  purchase  church  bonds  being
underwritten and sold by American Investors Group, Inc., ("American").  Although
we would not pay any commissions, American will benefit from such purchases as a
result of commissions  paid to it by the issuer of the bonds.  American also may
benefit  from  mark-ups on bonds we buy from it and mark- downs on bonds we sell
through it on the secondary market. We will purchase church bonds for investment
purposes only, and only at the public offering  price.  Church bonds we purchase
in the secondary  market, if any, will be purchased at the best price available,
subject to customary markups (or in the case of sales - markdowns),  on terms no
less favorable than those applied to other customers of American.  Principals of
ours and our advisor may receive a benefit in connection with such  transactions
due to their  affiliation with the  underwriter.  Other than with respect to the
purchase  and sale of church bonds for our  portfolio in the ordinary  course of
business,  all future  transactions  between us and our officers,  directors and
affiliates  will be approved,  in advance,  by a majority of our independent and
disinterested directors.

 Church Loan Advisors, Inc.

     Church Loan Advisors,  Inc. renders lending and advisory services to us and
administers  our business  affairs and  operations.  Our  advisor's  offices are
located at 10237 Yellow Circle Drive, Minnetonka, Minnesota 55343.

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

<TABLE>
<CAPTION>
             Name               Position

<S>                             <C>
 Philip J. Myers                President
 Scott J. Marquis               Vice President, Secretary
------------------------------ ---------------------------------------------
</TABLE>

     Scott J. Marquis,  age 44, is Vice-President  and Secretary of our advisor,
having served in such  capacities  since December 13, 1994. He is also currently
employed  full-time as Chief Financial and Operating Officer of the underwriter,
American  Investors Group, Inc., where he has been employed since February 1987.
Prior to his employment  with American  Investors  Group,  Inc., Mr. Marquis was
employed for approximately seven years with the Minneapolis-based broker dealer,
Piper Jaffray Companies in various capacities within its operations  department.
Mr.  Marquis  attended the University of Minnesota,  Minneapolis,  Minnesota and
served

                                       19

<PAGE>

     in the  United  States  Coast  Guard  Reserve.  Mr.  Marquis  is a licensed
financial  principal and registered  representative of American Investors Group,
Inc.,  holds his Series 7, 63 and 27 licenses from the National  Association  of
Securities Dealers, Inc., and holds a Minnesota  life/accident/health  insurance
license.

     See "Directors,  Executive  Officers,  Promoters and Control Persons" for a
description of the positions and business experience of Philip J. Myers.

 The Advisory Agreement

     We have entered into an advisory agreement with our advisor under which our
advisor  provides advice and  recommendations  concerning our business  affairs,
provides us with administrative services and manages our day-to-day affairs. Our
advisor provides us with the following services:

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

     ;    advises  and  selects  church  bonds for us to  purchase  and hold for
          investment

     ;    services  all  mortgage  loans that we make ; provides  marketing  and
          advertising   and  generates  loan  leads  directly  and  through  its
          affiliates

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

     ;    supervises the preparation, filing and distribution of tax returns and
          reports to governmental agencies, prepares reports to shareholders and
          acts on our behalf in connection with shareholder relations ; provides
          office space, personnel, supplies, equipment an communications

     ;    reports to us on its performance of the foregoing services

     ;    furnishes advice and recommendations  with respect to other aspects of
          our business.

     The advisory  agreement expires annually.  We expect to renew the agreement
annually, subject to our determination,  including a majority of the independent
directors,  that our advisor's  performance has been  satisfactory  and that the
compensation we have paid to our advisor has been  reasonable.  We may terminate
the advisory  agreement  with or without cause on 60 days written  notice.  Upon
termination of the advisory  agreement by either party,  our advisor may require
us to  change  our name to a name  that does not  contain  the word  "American,"
"America"  or the  name of our  advisor  or any  approximation  or  abbreviation
thereof, and that is sufficiently dissimilar to the word "America" or "American"
or  the  name  of  our  advisor  as  to  be  unlikely  to  cause   confusion  or
identification  with either our  advisor or any person or entity  using the word
"American" or "America" in its name. We may continue to use the word "Church" in
our name.  Our directors will  determine  that any successor  advisor  possesses
sufficient  qualifications  to perform the advisory  function for us and justify
the compensation provided for in its contract with us.

     Our advisor's  compensation under the advisory agreement is set forth under
"Transactions  with our  Advisor."  Our  advisor is  required  to pay all of the
expenses it incurs in providing services to us, including,  personnel  expenses,
rental and other  office  expenses,  expenses of officers  and  employees of our
advisor,  and all of its  overhead  and  miscellaneous  administrative  expenses
relating to performance of its functions  under the advisory  agreement.  We pay
other expenses,  including  expenses of reporting to  governmental  agencies and
shareholders,  fees and expenses of  appraisers,  directors,  auditors,  outside
legal  counsel and transfer  agents,  and costs  directly  incurred  relating to
closing of loan transactions and to enforcing loan agreements.

     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,  our  advisor  must  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 exceeds 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.

     Our bylaws require the independent directors to determine at least annually
the  reasonableness  of the compensation we pay to our advisor.  Our independent
directors  originally  approved the Amended and Restated Advisory  Agreement and
the Amended and Restated  Bylaws on May 19, 1995 and most  recently  approved on
January 18,  2001 the renewal of the  Restated  Advisory  Agreement  for another
year.  Factors  considered in reviewing the advisory fee include the size of the
fees of our 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 our advisor in generating opportunities that
meet our investment  objectives,  the amount of additional  revenues realized by
our  advisor  for other  services  performed  for us, the  quality and extent of
service and advice  furnished by our advisor,  the quality of our investments in
relation to  investments  generated by our advisor for its own account,  if any,
and the performance of our investments.

                                       20

<PAGE>



     The advisory agreement requires us to indemnify our 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 interest and was not the result of negligence or misconduct.

     Our bylaws  provide that the  Independent  Directors are to  determine,  at
least  annually,  the  reasonableness  of the  compensation  which we pay to the
Advisor. Factors to be considered in reviewing the Advisory Fee include the size
of the  fees  of the  Advisor  in  relation  to the  size,  composition  and our
profitability,  the  rates  charged  by  other  investment  advisors  performing
comparable services, the success of the Advisor in generating opportunities that
meet our investment  objectives,  the amount of additional  revenues realized by
the Advisor for other services performed,  the quality and extent of service and
advice  furnished by the Advisor,  the quality of our investments in relation to
investments  generated  by the  Advisor  for its own  account,  if any,  and the
performance of our investments.

                                       21

<PAGE>



     Item 13.  Exhibits  and Reports on Form 8-K

(a) Exhibits

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

     *    Incorporated  herein by  reference  to the  Registrant's  Registration
          Statement on Form S-11 (Commission File No. 333-8181 ).

(b) Reports on Form 8-K

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

                                       22

<PAGE>




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


                                   SIGNATURES

     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,  2002              By: /s/ Philip J. Myers
                                          Philip J. Myers, President, Treasurer
                                         (Chief ExecutiveOfficer 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: 03/28/02
        Philip J. Myers
        President, Treasurer and Director

By: /s/ David  G.  Reinhart             Date:  03/28/02
        David G. Reinhart, Director

By: /s/ Dennis J. Doyle                 Date:  03/28/02
        Dennis J. Doyle, Director

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

By: /s/ Robert O. Naegele, Jr.          Date:  03/28/02
        Robert O. Naegele, Jr., Director

By: /s/ Kirbyjon H. Caldwell             Date:  03/28/02
        Kirbyjon H. Caldwell, Director




















                                       23

<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,  2001  and  2000  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, 2001 and 2000,  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 20, 2002


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                                  Balance Sheet





<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                                December 31
           ASSETS                                                                         2001                   2000
------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                 <C>                  <C>
Current Assets
    Cash and equivalents                                                             $  1,256,556        $     213,084
    Accounts receivable                                                                    58,008                9,892
    Interest receivable                                                                    66,236               15,651
    Current maturities of mortgage loans receivable                                       298,921              276,565
    Current maturities of bond portfolio                                                  144,000               27,000
    Deferred equity offering costs                                                         28,293
    Prepaids                                                                                                     9,110
                                                                                       ----------          -----------
            Total current assets                                                        1,852,014              551,302

Mortgage Loans Receivable, net of current maturities                                   11,724,272           11,463,484

Deferred Bond Offering Costs                                                               28,294

Bond Portfolio, net of current maturities                                               3,018,511            2,262,962

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

            Total assets                                                              $16,683,091          $14,337,748
                                                                                       ==========           ==========
</TABLE>

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


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                                  Balance Sheet




<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------
                                                                                                 December 31
        LIABILITIES AND STOCKHOLDERS' EQUITY                                                 2001                  2000
------------------------------------------------------------------------------------------------------------------------------


Current Liabilities
<S>                                                                                     <C>               <C>
    Note payable, line of credit                                                                          $     399,653
    Accounts payable                                                                    $      4,350             80,775
    Management fee payable                                                                                       36,222
    Deferred income                                                                           17,039             21,174
    Dividends payable                                                                        344,504            293,629
                                                                                        ------------       ------------
            Total current liabilities                                                        365,893            831,453

Deferred Income, net of current maturities                                                   243,903            191,885


Stockholders' Equity
    Common stock, par value $.01 per share
        Authorized, 30,000,000 shares
        Issued and outstanding, 1,769,774 at December 31, 2001
            and 1,469,817 shares at December 31, 2000                                         17,698             14,698
    Additional paid-in capital                                                            16,256,712         13,454,746
    Accumulated deficit                                                                     (201,115)          (155,034)
                                                                                          ----------       ------------
            Total stockholders' equity                                                    16,073,295         13,314,410
                                                                                          ----------         ----------

            Total liabilities and equity                                                 $16,683,091        $14,337,748
                                                                                          ==========         ==========
</TABLE>

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


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                             Statement of Operations




<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                             Years Ended December 31
                                                                                            2001                 2000
------------------------------------------------------------------------------------------------------------------------------



<S>                                                                                      <C>                <C>
Interest Income                                                                          $1,525,562         $1,407,414

Operating Expenses                                                                          220,717            201,879
                                                                                          ---------          ---------

Operating Income                                                                          1,304,845          1,205,535

Other Income (Expense)
    Interest expense                                                                        (26,835)           (65,282)

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

Net Income                                                                               $1,278,010         $1,140,253
                                                                                          =========          =========

Basic and Diluted Income Per Common Share                                                $      .80         $      .81
                                                                                          =========          =========

Weighted Average Common Shares Outstanding                                                1,593,568          1,414,275
                                                                                          =========          =========
</TABLE>


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


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

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

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

    Net income                                                                                              1,140,253

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

Balance, December 31, 2000                             1,469,817      14,698            13,454,746           (155,034)

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


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


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                             Statement of Cash Flows




<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------
                                                                                          Years Ended December 31
                                                                                        2001                     2000
------------------------------------------------------------------------------------------------------------------------------


Cash Flows from Operating Activities
<S>                                                                                    <C>                  <C>
    Net income                                                                         $1,278,010           $1,140,253
    Adjustments to reconcile net income to net cash
        from operating activities:
        Provision for losses on mortgage loans receivable                                  11,111
        Change in assets and liabilities
            Accounts receivable                                                           (48,116)              (4,110)
            Interest receivable                                                           (50,585)             (15,651)
            Prepaids                                                                        9,110               (6,193)
            Accounts payable                                                              (76,425)              80,775
            Management fees payable                                                       (36,222)              36,222
            Deferred income                                                                47,883               25,068
                                                                                        ---------            ---------
            Net cash from operating activities                                          1,134,766            1,256,364

Cash Flows from Investing Activities
    Investment in mortgage loans receivable                                            (1,248,000)          (1,675,000)
    Collections of mortgage loans receivable                                              953,745              342,878
    Investment in bond portfolio                                                       (1,905,605)            (250,763)
    Proceeds from bond portfolio called/sold                                           1,033,056                17,000
                                                                                       ----------            ---------
            Net cash used for investing activities                                     (1,166,804)          (1,565,885)

Cash Flows from Financing Activities
    Net payments on note payable, line of credit                                         (399,653)            (100,347)
    Proceeds from stock offering, net of offering costs                                 3,061,905            1,609,211
    Payments for deferred bond offering costs                                             (28,294)
    Deferred equity offering costs                                                        (28,293)
    Redemptions                                                                          (256,940)            (223,400)
    Dividends paid                                                                     (1,273,215)          (1,145,624)
                                                                                        ---------            ---------
            Net cash from financing activities                                          1,075,510              139,840
                                                                                        ---------           ----------

Net Increase (Decrease) in Cash and Equivalents                                         1,043,472             (169,681)

Cash and Equivalents - Beginning of Year                                                  213,084              382,765
                                                                                       ----------           ----------

Cash and Equivalents - End of Year                                                     $1,256,556          $   213,084
                                                                                        =========           ==========
</TABLE>

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


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                       Statement of Cash Flows - Continued




<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                          Years  Ended December 31
                                                                                         2001                    2000
------------------------------------------------------------------------------------------------------------------------------



Supplemental Schedule of Noncash Financing and
    Investing Activities
    Offering costs reclassified and charged to additional
<S>                                                                                     <C>                   <C>
        paid-in capital                                                                 $  42,443             $  20,702
                                                                                         ========              ========
    Dividends payable                                                                    $344,504              $293,629
                                                                                          =======               =======

Supplemental Cash Flow Information
    Cash paid during the year for
        Interest                                                                        $  26,835             $  65,282
                                                                                         ========              ========
</TABLE>

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


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2001 and 2000





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, 2001 and 2000, such
investments  were  $940,000  and  $100,000  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 2001, the Company sold $716,000 of its bonds at par or
above cost, to an affiliate of the Advisor (see Note 4). There were no losses on
the sale of the bonds.


<PAGE>

                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2001 and 2000





1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Allowance for Mortgage Loans Receivable

     The Company  follows a policy of providing an allowance for mortgage  loans
receivable.  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.
Additionally,  no interest  income is recognized on impaired  loans. At December
31, 2001,  the Company  reserved  $11,111 for one mortgage  loan which is twelve
mortgage payments in arrears. No revenue amount was deemed necessary at December
31, 2000.

Deferred Offering Costs

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

     Deferred bond offering costs are amortized over the term of the bonds 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.

Income Taxes

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

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




<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2001 and 2000





1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Income Per Common Share

     No adjustments were made to income for the purpose of calculating  earnings
per share.  Stock options had no effect on the weighted average number of shares
outstanding.

Recently Issued Accounting Standards

     The Financial  Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 143, Accounting for Asset Retirement  Obligations (SFAS
143) and Statement of Financial Accounting Standards No. 144, Accounting for the
Impairment  or  Disposal  of  Long-Lived  Assets  (SFAS  144).  SFAS 143 will be
applicable in the year ended  December 31, 2003.  SFAS 144 will be applicable in
the year ended December 31, 2002. Management is currently evaluating the impact,
if any, of SFAS 143 and SFAS 144 on its financial statements.

2.  MORTGAGE LOANS AND BOND PORTFOLIO

     At December  31,  2001,  the Company had first  mortgage  loans  receivable
totaling  $12,034,304.  The loans bear interest ranging from 9.50% to 12.00%. At
December 31, 2000,  the Company had first  mortgage  loans  receivable  totaling
$11,740,049 which bore interest ranging from 9.50% to 12.00%.

     The Company  also had a portfolio  of secured  church bonds at December 31,
2001 and 2000,  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  $3,180,000  at December 31, 2001 is due at various
maturity  dates  between  February 1, 2002 and June 15,  2021.  Four bond issues
comprised 87% of our bond portfolio at December 31, 2001 and December 31, 2000.




<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2001 and 2000





2.  MORTGAGE LOANS AND BOND PORTFOLIO - Continued

The maturity schedule for mortgage loans and bonds receivable as of December 31,
2001 is as follows:

<TABLE>
<CAPTION>
                                                                       Mortgage Loans       Bond Portfolio

<S>        <C>                                                      <C>                       <C>
           2002                                                     $     298,921             $   144,000
           2003                                                           365,509                  57,000
           2004                                                           329,592                 119,000
           2005                                                           428,948                  90,000
           2006                                                           442,631                  57,000
           Thereafter                                                  10,168,703               2,713,000
                                                                       ----------               ---------
                                                                       12,034,304               3,180,000
           Less loan loss reserves                                        (11,111)
           Less Discount from par                                                                 (17,489)
                                                                     ------------             -----------

                       Totals                                         $12,023,193              $3,162,511
                                                                       ==========               =========
</TABLE>

3.  STOCK OPTION PLAN

     The Company  adopted a Stock Option Plan  granting each member of the Board
of Directors  and the  president  of the Advisor  (Note 4) an option to purchase
3,000 shares of common stock annually upon their re-election. The purchase price
of the stock is the fair market value at the grant date. Options outstanding are
99,000 and 102,000  shares at a price of $10 per share at December  31, 2001 and
2000,   respectively.   The  options  are  exercisable  November  15,  1996  and
incrementally  at one year intervals after the date of grant and expire November
15, 2001 through November 15, 2006. No options were exercised as of December 31,
2001.

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

4.  TRANSACTIONS WITH AFFILIATES

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

<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2001 and 2000





4.  TRANSACTIONS WITH AFFILIATES - Continued

     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  $199,000 and $176,000  during 2001 and
2000, respectively.

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

5.  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 2001, the Company had pretax income of $1,278,010
and  distributions  to shareholders in the form of dividends during the tax year
of $1,324,090. The expected tax expense to the Company, pre-dividends would have
been  $434,523.  In 2000,  the  Company  had  pretax  income  subject  to tax of
$1,140,253 and distributions to shareholders in the form of dividends during the
tax year of $1,164,973. The expected tax expense to the Company,  pre-dividends,
would have been $387,686 in 2000.

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

<TABLE>
<CAPTION>

                                                                                   2001                 2000

<S>                                                                              <C>                 <C>
         Expected tax expense                                                    $434,523            $387,686
         Benefit of REIT distributions                                           (450,190)           (400,798)
         Valuation allowance                                                       15,667              13,112
                                                                                  -------              ------

                     Totals                                                      $   -               $    -
                                                                                  =======              ======
</TABLE>


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                          Notes to Financial Statements

                           December 31, 2001 and 2000





5.  INCOME TAXES - Continued

The components of deferred income taxes are as follows:

<TABLE>
<CAPTION>
<S>                                                                                  <C>                 <C>
                                                                                     2001                2000
                                                                                     ----                ----

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

The total deferred tax assets are as follows:

2001                 2000
                     ----

         Deferred tax assets                                                        $88,779           $73,112
         Deferred tax asset valuation allowance                                     (28,779)          (13,112)
                                                                                     ------            ------

                     Net deferred tax asset                                         $60,000           $60,000

                                                                                     ======            ======
</TABLE>
The change in the valuation allowance was $15,667 and $13,112 for 2001 and 2000,
respectively.

6.  PUBLIC OFFERINGS OF THE COMPANY'S COMMON STOCK

     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  is not yet
effective.  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.  Certificates may be purchased in any multiple of
$1,000.  The offering is being  underwritten  by an underwriter (an affiliate of
the  Advisor)  on a "best  efforts"  basis,  and no  minimum  sale of  stock  or
certificates will be required.


<PAGE>


                        AMERICAN CHURCH MORTGAGE COMPANY

                         Notes for Financial Statements

                           December 31, 2001 and 2000


6.  PUBLIC OFFERINGS OF THE COMPANY'S COMMON STOCK - Continued

     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 $217,000 and $94,000 during 2001
and 2000, respectively, in connection with these last two public offerings.

7.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The estimated fair value of the Company's  financial  instruments,  none of
which are held for trading  purposes,  are as follows at  December  31, 2001 and
2000:

<TABLE>
<CAPTION>
                                                                2001                                   2000
                                                     Carrying            Fair            Carrying              Fair
                                                       Amount            Value            Amount               Value
                                                    -------------------------------------------------------------------
<S>                                               <C>                <C>              <C>                <C>
      Cash and equivalents                        $  1,256,556       $  1,256,556     $     213,084      $     213,084
      Accounts receivable                               58,008             58,008             9,892              9,892
      Interest receivable                               66,236             66,236            15,651             15,651
      Mortgage loans receivable                     12,023,193         12,023,193        11,740,049         11,740,049
      Bond portfolio                                 3,162,511          3,162,511         2,289,962          2,289,962
</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.

8.  LINE OF CREDIT

     The Company  obtained a $1,000,000 line of credit with its bank on July 22,
1999,  subject to certain  borrowing base  limitations,  through August 1, 2002.
Interest  is charged at one-half  percent  over the bank's  prime rate  totaling
5.25% and 9.5% at December 31, 2001 and 2000,  respectively.  The line of credit
is collateralized by the mortgage secured bonds held by the Company. Outstanding
borrowings were $0 and $399,653 at December 31, 2001 and 2000, respectively.

<PAGE>
















                        AMERICAN CHURCH MORTGAGE COMPANY

                              Minnetonka, Minnesota

                              Financial Statements

                           December 31, 2001 and 2000