Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements contained in this section and elsewhere in this Form 10-Q constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, (i) trends affecting our financial condition or results of operations; (ii) our business and growth strategies; (iii) the mortgage loan industry and the financial status of religious organizations; (iv) our financing plans; and other risks detailed in the Company's other periodic reports filed with the Securities and Exchange Commission. The words "believe", "expect", "anticipate", "may", "plan", "should", and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance.

A detailed statement of risks and uncertainties is contained in our reports to the SEC, including, in particular, our Annual Report on Form 10-K for the year ended December 31, 2021 and other public filings and disclosures. Investors and shareholders are urged to read these documents carefully.





Recent Developments

On May 27, 2022, American Church Mortgage Company ("ACMC") entered into an Asset Agreement dated as of May 27, 2022 (the "Asset Sale Agreement") with OSK XII, LLC ("OSK"), a third party not affiliated with ACMC.

Pursuant to the terms of the Asset Sale Agreement, OSK has agreed to acquire from ACMC substantially all of the assets of ACMC, consisting of ACMC's Assets and Bonds (the "Transaction"). As provided in the Asset Sale Agreement, OSK agreed to pay the purchase price of $26,100,000, plus interest due on ACMC's Secured Investor Certificates (the "Purchase Price"), adjusted as follows: (i) less all payments received by ACMC on account of the Loans and the Bonds from March 31, 2022 through the day before the "Closing Date" (defined below), (ii) plus the aggregate amount of asset level expenses set forth on a schedule prepared by ACMC as part of ACMC's confidential schedules delivered to OSK (the "Schedules"). The Asset Sale Agreement provides that at least two days before the Closing Date, OSK must deliver $21,976,500, plus interest from April 1, 2022 to the Closing Date, to an account at Herring Bank, which will be used to redeem ACMC's Secured Investor Certificates. The Transaction closed on June 30, 2022.





Plan of Operation

We were founded in May 1994 and commenced active business operations on April 15, 1996 after the completion of our initial public offering.





Results of Operations

2022 Six Months Ended June 30, 2022 Compared to 2021 Six Months Ended June 30, 2021

Our net loss for the six months ended June 30, 2022 and 2021 was $3,884,079 and $455,986 respectively, on total interest and other income of approximately $1,081,000 and $986,000, respectively. Interest and other income is comprised of interest from loans, interest from bonds, amortization of bond discounts

and amortization of loan origination fees. As of June 30, 2022 we sold all of the assets in our loan and bond portfolio to OSK through an Asset Sale Agreement (see above). The sale of all of our assets resulted in an additional impairment charge contributing to the loss for the six month period ended June 30, 2022.

As of June 30, 2021, our loans receivable have interest rates ranging from 0% to 10.25%, with an average, principal-adjusted interest rate of 7.65%. Our bond portfolio has an average current yield of 6.76% as of June 30, 2021.

Interest expense was approximately $1,353,000 and $822,000 for the six months ended June 30, 2022 and 2021, respectively. The increase in interest expense was largely due to the recognition of all amortized expenses related to our Secured Investor Certificate offerings.

We follow a loan loss allowance policy on our portfolio of loans outstanding. This critical policy requires complex judgments and estimates. We record mortgage loans receivable at their estimated net realizable value, which is the unpaid principal balance less the allowance for mortgage loans. Our loan policy provides an allowance for estimated uncollectible loans based on an evaluation of the current status of the loan portfolio. This policy provides for principal amounts outstanding on a particular loan if cumulative interruptions occur in the normal payment schedule of a loan. Our policy will provide an allowance for the outstanding principal amount of a loan in our portfolio in the amount that is in doubt of being collected. Additionally, no interest income is recognized on impaired loans or loans that are in the foreclosure process.

We will declare a loan to be in default and will place the loan on non-accrual status when the following thresholds have been met: (i) the borrower has missed three consecutive mortgage payments; (ii) the borrower has not communicated to the Company any legitimate reason for delinquency in its payments to the Company and has not arranged for the re-continuance of payments; (iii) lines of communication to the borrower have broken down such that any reasonable prospect of rehabilitating the loan and the return to regular monthly mortgage payments is gone.

Our policies on payments received and interest accrued on non-accrual loans are as follows: (i) We will accept payments on loans that are currently on non-accrual status when a borrower has communicated to us that they intend to meet their mortgage obligations. A payment made on a non-accrual loan is considered a good faith deposit as to the intent to resume their mortgage payment obligation. This good faith deposit is credited back to interest first then principal as stated in the mortgage loan documentation. (ii) A letter outlining the re-payment terms or the restructure terms (if any) of the loan is provided to the borrower. This letter will be signed by the Senior Pastor and all board members of the borrower. This letter resumes the obligation to make payments on non-accrual loans. (iii) The borrower must meet all its payment obligations for the next 120 days without interruption in order to be removed from non-accrual status.

When a loan is declared in default according to our policy or deemed to be doubtful of collection, the loan committee of our Advisor will direct the staff to charge-off the uncollectable receivables.

Allowance for losses on mortgage loans receivable was $0 as of June 30, 2022 compared to $1,486,434 as of December 31, 2021. We closed-out or provision for losses on loans during the period ended June 30, 2021due to the sale of all loans in our portfolio under the Asset Sale Agreement with OSK compared to $21,042 for the period ended June 30, 2021. At December 31, 2021, we provided approximately $1,486,000 allowance for loan loss reserve for twelve mortgage loans, of which eight were three or more mortgage payments in arrears of which two were declared to be in default.

Our lending practices limit deployment of our capital to churches and other non-profit religious organizations. The total principal amount of our second mortgage loans is limited to 20% of our average invested assets. We do not loan to any borrower who has been in operation for less than two years and the borrower must demonstrate they can service the debt outstanding for the prior three years based on historical

financial statements. We do not loan money based on projections or pledge programs. The loan amount to any borrower cannot exceed 75% loan to appraised value. Typically, we do not loan over 70% loan to value except in extenuating circumstances. In addition, the borrower's long-term debt (including the proposed loan) cannot exceed four times the borrower's gross income for the previous twelve month period.

Historically, loans in our portfolio are outstanding for an average of seven years. Our borrowers are typically small independent churches with little or no borrowing history. Once a church establishes a payment history with us, they look to refinance their loan with a local bank, credit union or other financial institution which is willing to provide financing since the borrower has established a payment history and have demonstrated they can meet their mortgage debt obligations.

Operating expenses for the six months ended June 30, 2022 increased to approximately $2,126,000 compared to $600,000 for the six months ended June 30, 2021. The increase was the result of an increase for additional impairment on our bond portfolio and real estate held for sale.

2022 Second Quarter Compared to 2021 Second Quarter

The Company had a net loss of approximately $3,733,000 for the three months ended June 30, 2022 compared to a net loss of approximately $351,000 for the three months ended June 30, 2021, on total interest and other income of approximately $515,000 and $388,000, respectively. Interest expense was approximately $992,000 and $407,000 for the three months ended June 30, 2022 and 2021, respectively. The decrease in net interest income from the prior three month period was approximately $457,000.

Operating expenses for the three months ended June 30, 2022 increased to approximately $1,826,000 compared to $318,000 at June 30, 2021. The increase in operating expenses was due to an increase in other than temporary impairment on our bond portfolio and real estate held for sale.

Mortgage Loans and Bond Portfolio

No new loans were funded and no bonds were purchased during the six months ended June 30, 2022 and 2021, respectively.

We previously owned $4,321,000 First Mortgage Bonds issued by Greater Travelers Rest ("GTR") located in Decatur, Georgia. The total principal amount of First Mortgage Bonds issued by GTR is $17,390,000. We, along with all other bondholders, have a superior lien over all other creditors. The last correspondence to bondholders was January 22, 2021 in which the trustee agreed to deferment of sinking fund payments since the COVID-19 pandemic caused a significant decrease in giving from the Church membership. The agreement meant that the trustee would not declare an event of default under the terms of the trust indenture as a result of missed sinking fund payments. The trustee and the church entered into a payment plan to get the church current on their sinking fund payments in the first quarter of 2021. If the church keeps with the plan, starting in 2022, the pay-dates should be made on time to the bondholders. We have not been updated as to the status of the payment plan and no interest or principal due to us has been made in 2022. These bonds were sold to OSK in the Asset Sale Agreement.

We previously owned $529,000 First Mortgage Bonds and $497,000 Second Mortgage Bonds issued by Agape Assembly Baptist Church located in Orlando, Florida. The total principal amount of First Mortgage Bonds issued by Agape is $7,200,000, and the total principal amount of Second Mortgage Bonds issued is $715,000. Agape defaulted on its payment obligations to bondholders in September 2010. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the property that secures the First Mortgage Bonds in December 2010. In October 2014, the bondholders of Agape agreed to a modification in the terms of their bonds which resulted in the temporary resumption of

both principal and interest payments to both the first and second mortgage bond holders. Both the First Mortgage Bonds and Second Mortgage Bonds were modified to a fully amortized fixed rate, quarterly interest payment of 6.25% with a new maturity date of September 2037 for all the issued and outstanding bonds. We, along with all other bondholders, have a superior lien over all other creditors. The Church subsequently defaulted on their modification agreement in 2016 and no interest payments were made to bondholders during the year ended December 31, 2021 or 2020. However, the trustee made a distribution to bondholders during 2017 of $18.75 per $1,000 bond as a repayment of principal only, effectively reducing the outstanding balance of each $1,000 bond to approximately $826. The trustee again initiated foreclosure action against the Church and prevailed in its pursuit to foreclose on the Church's property on November 1, 2019. However, on the eve of the foreclosure sale, the Church again filed for bankruptcy protection. In October 2020, bondholders were asked by the trustee to accept or reject a plan of reorganization. The trustee is recommending bondholders accept the reorganization plan. We accepted the reorganization plan. Acceptance of the plan by bondholders could result in a return of approximately 67% of the original principal investment outstanding. As of June 30, 2022, we have not been updated as to the status of the reorganization plan. These bonds were sold to OSK in the Asset Sale Agreement.

We previously owned $900,000 First Mortgage Bonds issued by Soul Reapers Worship Center International located in Raleigh, North Carolina. The total principal amount of First Mortgage Bonds issued by Soul Reapers is $1,920,000. The Church has failed to make payments as required under the terms of the Trust Indenture. As a Bondholder, we expected to receive interest and principal payment(s) on time and according to the terms of the Bonds. We did not receive any quarterly interest payments from the issuer for the period ended June 30, 2022. These bonds were sold to OSK in the Asset Sale Agreement.





Real Estate Held for Sale

We record real estate held for sale at the estimated fair value, which is net of the expected expenses related to the sale of the real estate. We recorded an additional $0 and $100,000 impairment on our real estate held for sale for the six month period ended June 30, 2022 and 2021, respectively. We sold our real estate held for sale to OSK in the Asset Sale Agreement.





Dividends

We have elected to operate as a real estate investment trust (REIT), therefore we are required, among other things, to distribute to shareholders at least 90% of "Taxable Income" in order to maintain our REIT status. The dividends declared and paid to shareholders may include cash from origination fees even though they are not recognized as income in their entirety for the period under generally accepted accounting principles in the United States. We did not earn any origination fees for the six months ended June 30, 2022 and 2021, respectively.

We did not pay any dividends for the period ended June 30, 2022.

We paid a dividend of $.01 for each share held of record on April 28, 2021. The dividend, which was paid April 30, 2021, represents a 0.40% annual rate of return on each share of common stock owned, assuming a purchase price of $10 per share.

On June 27, 2022 the sale was approved by shareholders, the timing of any distributions to ACMC's shareholders depends on, among other factors, the timing of ACMC performing all of its obligations and requirements after the closing of the Sale and payment of any applicable liabilities and obligations.

The shareholders approved the Sale, subject to the satisfaction of the liabilities of ACMC, the Board intends, although there can be no assurance, to provide for an initial distribution of between $4.6 million

and $4.8 million in the aggregate, or approximately $2.75 to $2.89 per share of ACMC's common stock. The Board anticipates that an initial distribution will be made during the third quarter of 2022 and that a second distribution may be made at a later date prior the end of the calendar year.

Liquidity and Capital Resources

During the six months ended June 30, 2022, total assets decreased by approximately $25,789,000 due primarily to the sale of all our assets to OSK in the Asset Sales Agreement. Liabilities decreased by for the same reason, due to a pay-off of all our secured investor certificates outstanding and our line of credit outstanding.

For the six months ended June 30, 2022, net cash provided by operating activities increased to approximately $7,825,000 from $30,000 from the comparative period ended June 30, 2021, primarily due to the sale of all assets and an increase in losses on operations.

For the six months ended June 30, 2022, net cash provided by investing activities was approximately $33,477,000 compared to $2,055,000 from the comparative six months ended June 30, 2021, due to an sale of all asset from our mortgage loans and bond portfolio.

For the six months ended June 30, 2022, net cash (used for) financing activities increased to approximately $(22,579,000) from $(2,110,000) for the comparative six months ended June 30, 2021, primarily due to the pay-down on our Secured Investor Certificates.





Critical Accounting Estimates

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

The difficulty in applying these policies arises from the assumptions, estimates and judgments that have to be made currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations as well as management intentions. As the difficulty increases, the level of precision decreases, meaning that actual results can and probably will be different from those currently estimated.

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 realizability of the mortgage loans receivable and the valuation of the bond portfolio and real estate held for sale. It is at least reasonably possible that these estimates could change in the near term and that the effect of the change, if any, may be material to the financial statements.

We estimate the value of real estate we hold pending re-sale based on a number of factors. We look at the current condition of the property as well as current market conditions in determining a fair value, which will determine the listing price of each property. Each property is valued based on its current listing price less any anticipated selling costs, including for example, realtor commissions. Since churches are single use facilities the listing price of the property may be lower than the total amount owed to us. The fair value of the real estate held for sale includes estimates of expenses related to the sale of the real estate.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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