SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
- -------------------------------------------------------------------------------
[X] Quarterly Report Under Section 13 or
15(d) of the Securities Exchange Act of
1934
For the Quarterly Period Ended September 30, 1998
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
I.R.S. Employer Identification Number 41-1793975
AMERICAN CHURCH MORTGAGE COMPANY
Incorporated Under the Laws of the State of Minnesota
10237 Yellow Circle Drive
Minnetonka, MN 55343
Telephone: (612) 945-9455
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such requirements
for the past 90 days. Yes X No
The number of shares outstanding of the Registrant's stock as of October 31,
1998 was:
999,017 Shares of Common Stock Outstanding
1
<PAGE>
AMERICAN CHURCH MORTGAGE COMPANY
INDEX PAGE
NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets September 30, 1998 and 1997.......................... 3
Statements of Operations
Nine Month Periods Ending September 30, 1998 and 1997... 4
Interim Three Month Periods Ending
September 30, 1998 and 1997...................... 4
Statements of Cash Flows
Nine Months Ended September 30, 1998 and 1997........... 5
Statement of Stockholders Equity.......................... 6
Notes to Financial Statements ............................ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ......................10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.......12
Item 6. Exhibits and Reports on Form 8-K .........................12
Signatures'...............................................12
2
<PAGE>
AMERICAN CHURCH MORTGAGE COMPANY
UNAUDITED BALANCE SHEETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, September 30,
1998 1997
<S> <C> <C>
ASSETS:
CURRENT ASSETS
Cash and Cash Equivalents.............................. $ 1,904,250 $ 99,536
Current Maturities of Loans Receivable................ 244,076 61,543
--------- ---------
Total current Assets: 2,148,326 161,079
LOANS RECEIVABLE, net of current maturities............ 6,764,508 3,184,573
BONDS RECEIVABLE....................................... 134,274 124,668
DEFERRED OFFERING COSTS................................ 665 30,558
DEFERRED TAX ASSET..................................... 33,000 15,000
Organizational Expenses, (net of accumulated
amortization September 30, 1998, $1,315; September
30, 1997, $1,011).................................... 237 540
--------- ----------
Total Assets: $ 9,081,010 $ 3,516,418
========= ==========
LIABILITIES AND SHAREHOLDER'S EQUITY:
CURRENT LIABILITIES:
Accounts Payable....................................... $ 24,820 $ 36,129
Deferred Income........................................ 22,948 11,066
Dividends Payable...................................... 191,298 87,103
--------- ---------
Total current Liabilities:......................... 239,066 134,298
DEFERRED INCOME, net of current deferred Income........ 78,130 36,717
SHAREHOLDER'S EQUITY
Common stock, par value $.01 per share; authorized
30,000,000 shares; issued and outstanding 962,376
as of September 30, 1998, 368,066 shares as of
September 30, 1997................................ 9,624 3,681
Additional Paid in Capital............................. 8,820,204 3,389,106
Accumulated Deficit.................................... (66,014) (47,384)
--------- ---------
Total Shareholders Equity: 8,763,814 3,345,403
--------- ---------
$ 9,081,010 $ 3,516,418
========= =========
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
3
<PAGE>
AMERICAN CHURCH MORTGAGE COMPANY
UNAUDITED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
1998 1997 1998 1997
-------- --------- --------- -------
<S> <C> <C> <C> <C>
REVENUES
Interest Income Loans........................... $ 470,297 $ 230,245 $ 184,643 $ 88,414
Interest Income Other........................... 43,400 17,437 19,553 3,460
Capital Gains Realized.......................... 5,885 3,157 3,372 1,097
Origination Income.............................. 31,126 8,347 16,687 2,824
------- ------- ------- ------
Total Revenues: 550,708 259,186 224,255 95,795
EXPENSES
Professional Fees............................... 7,780 7,862 - 0 - 1,062
Director Fees................................... 2,400 1,600 800 - 0 -
Amortization.................................... 228 228 76 76
Advisory Fees................................... 40,185 4,700 10,558 4,700
Other........................................... 8,437 5,246 2,486 1,108
------- ------- ------- ------
Total Expenses: 59,030 19,636 13,920 6,946
NET OPERATING INCOME (loss).......................... $ 491,678 $ 239,550 $ 210,335 $ 88,849
------- ------- ------- ------
Provision for (Benefit from )
Income Taxes....................................... - 0 - 5,000 - 0 - - 0 -
-------- ------- ------- -------
Net Income (loss).................................... $ 491,678 $ 234,550 $ 210,335 $ 88,849
======= ======== ======= =======
Income (Loss) Per Common Share....................... $ .65 $ .64 $ .23 $ .24
Weighted Average Common Shares
Outstanding.................................... 758,709 364,540 896,182 365,212
Dividends Declared................................... $ 508,673 $ 252,040 $191,298 $ 87,103
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
4
<PAGE>
AMERICAN CHURCH MORTGAGE COMPANY
UNAUDITED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
September 30, September 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) $ 491,678 $ 234,550
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Deferred income taxes - 0 - 5,000
Amortization 227 228
Earnings on Bonds (5,885) (3,157)
Change in assets and liabilities:
Increase (Decrease) in accounts payable 8,665 (2,911)
Increase (Decrease) in deferred income 22,650 1,853
----------- ---------
Net cash used in operating activities 517,335 235,563
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in mortgage loans (2,800,000) (626,712)
Collections of mortgage loans 703,724 41,420
Investment in bonds (2,580) (871)
----------- ---------
Net cash used for investing activities (2,098,856) (586,163)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock offering 3,492,293 - 0 -
Dividends Paid (298,337) (162,608)
Net cash from (used for) financing activities 3,193,956 (162,608)
---------- ---------
NET INCREASE (DECREASE) IN CASH 1,612,435 (513,208)
CASH
Beginning of period 291,815 612,744
---------- ----------
End of period $ 1,904,250 $ 99,536
========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH
Financing Activities
Dividends declared but not paid $ 191,298 $ 87,103
Deferred offering costs financed through
accounts payable $ 665 $ 30,558
Dividends reinvested $ 146,937 $ 87,750
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for
Interest - 0 - - 0 -
Income Taxes - 0 - - 0 -
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
5
<PAGE>
AMERICAN CHURCH MORTGAGE COMPANY
UNAUDITED STATEMENT OF STOCKHOLDER'S EQUITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 571,615 $ 5,716 $ 5,184,882 $ (49,019)
Issuance of 390,671 shares of
common stock, net of through
offering costs 390,761 3,908 3,635,322
Net Income 491,678
Dividends declared (508,673)
------- ------ --------- --------
BALANCE, SEPTEMBER 30, 1998 962,376 $ 9,624 $ 8,820,204 $ (66,014)
(unaudited)
</TABLE>
Notes to Financial Statements are an integral part of this Statement.
6
<PAGE>
AMERICAN CHURCH MORTGAGE COMPANY
NOTES TO UNAUDITED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with the instructions for interim statements and, therefore, do not include all
information and disclosures necessary for a fair presentation of results of
operations, financial position, and changes in cash flow in conformity with
generally accepted accounting principles. However, in the opinion of management,
such statements reflect all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial position,
results of operations, and cash flows for the period presented.
The unaudited consolidated financial statements of the Company should be read in
conjunction with its December 31, 1997, audited financial statements included in
the Company's Annual Report on Form 10-KSB, as filed with the Securities and
Exchange Commission for the year ended December 31, 1997.
Nature of Business
American Church Mortgage Company, a Minnesota corporation, was incorporated on
May 27, 1994. The Company was organized to engage in the business of making
mortgage loans to churches an 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 principals. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenues
and expenses. Actual results could differ from those estimates.
Cash
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The Company maintains
some cash in bank deposit accounts which, at times, may exceed federally insured
limits. The Company has not experienced any losses in such accounts.
Marketable Securities
The Company accounts for its debt securities under Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The Company classifies its marketable debt securities as
"held-to-maturity" because it has the intent and ability to hold the securities
to maturity. Securities classified as held-to-maturity are carried at amortized
cost.
Allowance for Loans Receivable
The Company follows a policy of providing an allowance for loans receivable.
However, at September 30, 1998, management believes the loans receivable to be
collectible in all material respects.
Deferred Income
Deferred income represents loan origination fees which are recognized over the
life of the loan as an adjustment to the yield on the loan.
7
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
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. Deferred taxes are recognized for
operating losses that are available to offset future taxable income.
For the fiscal year 1998, the Company will elect to be taxed as a Real Estate
Investment Trust (REIT). Accordingly, the Company will not be subject to Federal
income tax to the extent of distributions to its Shareholders if the Company
meets all the requirements under the REIT provisions of the Internal Revenue
Code.
Income (Loss) Per Common Share
Income (loss) per common share is computed based upon the weighted average
number of common and dilutive common equivalent shares outstanding during the
period. Fully diluted and primary income (loss) per common share are the same
for the periods presented.
Newly Issued Accounting Standards
In June 1997, Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" was approved for issuance. The Company will adopt this
Statement in fiscal 1998. The effect of this Statement has not been determined,
however, the impact on the Company's financial position and results of
operations is not expected to be material.
2. MORTGAGE AND BONDS RECEIVABLE
At September 30, 1998, the Company had funded seven first mortgage loans and two
second mortgage loan to churches for an aggregate amount of $2,800,000. The
first mortgage loans made by the Company range in interest rates charged to the
borrowers from 9.75% for annually adjustable 20 year amortized loans to 11.25%
for 15 year fixed interest rate loans. The second mortgage loan made by the
Company bears interest at the rate of 15% (adjusting to 12% upon occurrence of a
continency). The maturity schedule for those loans as of September 30, 1998 is
as follows:
<TABLE>
<CAPTION>
<S> <C>
1998 $ 36,614
1999 256,824
2000 174,835
2001 194,919
2002 217,315
Thereafter 6,128,077
---------
Total $7,008,584
</TABLE>
The Company also has five bonds receivable, which are carried at cost plus
amortized interest income. The bonds pay quarterly interest ranging from 7.75%
to 10.70%. The combined principal of $157,000 is due at various maturity dates
between June 1, 1999 and January 1, 2012.
3. STOCK OPTION PLAN
The Company has adopted a Stock Option Plan granting each member of the Board of
Directors and the president of the Advisor (Note 5) an option to purchase 3,000
shares of common stock annually upon their re-election. The purchase price of
the stock will be the fair market value at the grant date. On November 15, 1994,
the Company granted options to purchase an aggregate of 21,000 shares of common
stock at $10 per share. These options became exercisable November 15, 1995 and
expire November 15, 1999. No options have been exercised as of September 30,
1998.
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.
8
<PAGE>
4. TRANSACTIONS WITH AFFILIATES
The Company has an Advisory Agreement with Church Loan Advisors, Inc. (Advisor).
The Advisor is responsible for the day-to-day operations of the Company and
provides administrative services and personnel.
Upon non-renewal or termination of the Advisory Agreement, the Company maybe
required to pay the Advisor a termination fee equal to two percent of the value
of the average invested assets of the Company as of the date of termination,
subject to limitations set forth in 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
paid $40,185 in advisory fees and $53,775 in origination fees from January 1
through September 30, 1998.
The Advisor and the Company are related through common ownership and common
management.
5. PUBLIC OFFERING OF THE COMPANY'S COMMON STOCK
The Company filed a Registration Statement with the Securities and Exchange
Commission for a public offering of its common stock in 1997. The Company
offered to sell 1,500,000 shares of its common stock at a price of $10 per
share. The offering was underwritten by a managing underwriter (an affiliate of
the Advisor) and a co-underwriter on a "best efforts basis, and no minimum sale
of stock was required. The stock sale commenced on September 26, 1997 and will
continue through January of 1999.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments, none of which
are held for trading purposes, are as follows at September 30, 1998 and 1997:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998 1997
------------------------ --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
Cash and equivalents $ 1,904,250 $ 1,904,250 $ 99,536 $ 99,536
Loans receivable 7,008,584 7,008,854 3,246,116 3,246,116
Bonds receivable 134,274 134,274 124,668 124,668
</TABLE>
The carrying value of cash and equivalents approximates fair value. The fair
value of the loans receivable and the bonds receivable are estimated by
discounting future cash flows using current discount rates that reflect the
risks associated with similar types of loans.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
AMERICAN CHURCH MORTGAGE COMPANY
PLAN OF OPERATION
The Company was founded in May 1994, began a "best efforts" offering of its
common stock on July 11, 1995, and commenced active business operations on April
15, 1996 after completion of the "Minimum Amount" in its initial public offering
(described below). Consequently, for the years ended December 31, 1994 and 1995,
the Company had no operating revenues, and expenses were limited to
organizational and offering-related costs.
On July 11, 1995, the Securities and Exchange Commission declared effective
the Company's offering of 2,000,000 common shares at a price of $10.00 per
share. The Company 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, the Company could not
commence its 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 the Company once the Minimum Offering was achieved,
and conducting informational meetings with brokers and broker-dealers identified
to the Company by the Dealer/Manager-- American, an affiliate of the Company.
The Company concluded its initial public offering on November 8, 1996. As of
such date, the Company had sold 335,481 shares to approximately 281 individuals,
not including 20,000 shares ($200,000) previously purchased by the Company's
initial shareholder -- DRM Holdings, Inc.
On September 26, 1997, the Securities and Exchange Commission declared
effective the Company's secondary 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 is
currently being co-underwritten by American Investors Group, Inc. ("American")
and LaSalle St. Securities, Inc., ("LaSalle"). American is the Managing
Underwriter and is an affiliate of the Company. This Offering is being conducted
on a"best-efforts" basis pursuant to applicable rules of the Securities and
Exchange Commission and will terminate no later than 365 days from September 26,
1997, subject to extension by mutual agreement of the Company and the Managing
Underwriter for an additional 120 days, or until completion of the sale of all
Shares, whichever first occurs. The Company reserves the right to terminate this
Offering at any time. As of October 31, 1998 the Company has sold 999,017 shares
of its common stock.
Between the date upon which the Company began active business operations
(April 15, 1996), and as of the date of this Report, the Company has made loans
to twenty four churches in the aggregate amount of $7,801,000, with the average
size being $325,041. The Company has also purchased in the secondary market for
$57,846 (which includes $407 in accrued interest) first mortgage church bonds in
the face amount of $65,300 and $72,805 second mortgage church bonds in the face
amount of $100,000. Funding of additional first mortgage loans is expected to
continue on an on-going basis as the Company's investable assets become
available through (i) the sale of additional shares in its current public
offering; (ii) prepayment and repayment at maturity of existing loans; (iv)
borrowed funds; and (v) dividends reinvested under the Company's Dividend
Reinvestment Plan. As of the date of this report, one first mortgage loan and
one second mortgage loan have been repaid. The loan amounts were $270,000 and
$350,000 respectively. In addition, one first mortgage church bond has been
called for redemption effective July 20, 1998. The total principal amount of the
bond was $8,300.
RESULTS OF OPERATIONS
During the nine month period ended September 30, 1998 total assets of the
Company increased by $3,717,614 due primarily to sale of the Company's common
stock. Total liabilities increased by $182,360 due to deferred income and
dividends declared but not yet paid as of September 30, 1998. During the nine
month period ending September 30, 1998 the Company funded six additional first
mortgage loans and two second mortgage loans to churches for an aggregate amount
of $2,095,000 and $570,000 respectively. In addition, the Company purchased
$13,300 principal amount of first mortgage church bonds for a purchase price of
$10,975. All loans made by the Company range in interest rate charged to the
borrowers from 9.75% for annually adjustable, 20 year amortized loans, 11.25%
for fixed 15 year amortized loans to 12.00% for a 2-year interim loan. As of
September 30, 1998, the average, principal-adjusted interest rate on the
Company's portfolio of loans was 10.91%. The Company's portfolio of bonds has an
average current yield of 11.11% .
10
<PAGE>
Net operating income for the Company's nine and three month periods ended
September 30, 1998 was $491,678 and $210,335 respectively. Total revenues for
the six and three month periods ending September 30, 1998 was $550,708 and
$259,186 respectively. Interest income earned on the Company's portfolio of
loans was $470,297 and $230,245 for the six month and three month periods ended
September 30, 1998 respectively.
Excluded from revenue for the nine month period ended September 30, 1998
is $39,286 of origination income, or "points," received by the Company,
recognition of which 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 the status of the Company as a real estate investment trust
requires, among other things, the distribution to shareholders of at least 95%
of "Taxable Income," the dividends declared and paid to Shareholders for the
quarter ended September 30, 1998 included origination income even though it is
not recognized in its entirety for the period under GAAP.
The Company's Board of Directors declared a dividend of $.2125 for each
share held of record on September 30, 1998. During the Company's public
offering, dividends are computed and paid to each Shareholder based on the
number of days during a quarter that the Shareholder owned his or her shares.
The dividend, which was paid October 31, 1998 represents a 8.50% annual rate of
return on each share of common stock owned and purchased for $10 per share.
Total assets of the Company for the three month period ended September 30,
1998 increased $936,855 to $9,081,010 primarily as a result of the sale and
issuance of the Company's common stock pursuant to its current public offering,
the proceeds of which were deployed into two new mortgage loans. Shareholders'
Equity rose $1,330,246 to $8,763,814 for the same reason. Company liabilities at
the end of the nine month period ended September 30, 1998 are primarily
comprised of a "Deferred Income", reflecting the practice of the Company of
recognizing its origination income -- fees charged to borrowers at the
commencement of its loans -- over the life of each loan and dividends declared
as of September 30, 1998 but not yet paid.
LIQUIDITY AND CAPITAL RESOURCES
The Company's revenue is derived principally from interest income, and
secondarily, origination fees and renewal fees generated by mortgage loans made
by it. The Company also earns income through interest on funds that are invested
pending their use in funding mortgage loans or distributions of dividends to its
Shareholders, and on income generated on church bonds it may purchase and own.
The Company generates revenue through (i) permitted temporary investments of the
net proceeds from the sale of the shares, and (ii) implementation of its
business plan of making mortgage loans to churches and other non-profit
religious organizations. The principal expenses of the Company will be Advisory
Fees, legal and accounting fees, communications costs with its Shareholders, and
the expenses of its stock transfer agent, registrar and dividend reinvestment
agent.
The Company's future capital needs are expected to be met by (i) additional
sale of its shares to the public (ii) prepayment, repayment at maturity and
renewal of mortgage loans made by the Company, and (iii) borrowed funds. The
Company believes that the "rolling" effect of mortgage loans maturing, together
with dividends reinvested under the Company's Dividend Reinvestment Plan, will
provide a supplemental source of capital to fund its business operations in
future years. Nevertheless, the Company believes that it may be desirable, if
not necessary, to sell additional shares of common stock, in order to enhance
its capacity to make mortgage loans on a continuous basis. There can be no
assurance that the Company will be able to raise additional capital on terms
acceptable for such purposes. Although the Company may borrow funds in an amount
not to exceed 50% of its Average Invested Assets in order to increase its
lending capacity, it has no present intention of doing so, nor has it secured a
source for such borrowing.
ear 2000 Issue
The "Year 2000 Issue" is a data management problem that may have
significant financial consequences for some companies. Many computer programs
use only two digits to identify the year in the date field. As a result, those
programs cannot distinguish between the year 2000 and the year 1900. On January
1, 2000, these programs may inaccurately process data, or in worst case
scenario, stop processing entirely. Although the Company does rely on computer
based financial software to process its books and records, the software utilized
by the Company will not impact the Company financially, if at all, with respect
to the "Year 2000 Issue." The financial software utilized by the Company
requires that the date field be completed in its entirety. For
11
<PAGE>
example: the year "1900" must be entered as "1900" and the year "2000" must
be entered as "2000". Therefore, a date cannot be entered as "00" causing
problems in many programs as to what year "00" is representing, either "1900" or
"2000." The Company utilizes window-based "off-the-shelf" software to process
its books and records. "Off-the-shelf" software implies its public use and
availability. It can be purchased at most computer or retail stores, at minimal
cost, it is easy to learn to use and can be replaced inexpensively if a "Year
2000 Issue", or other factors unique to the Company's needs, becomes
problematic. Finally, "off-the-shelf" software is continually being upgraded by
the software manufacturer and the "Year 2000 Issue" has been addressed by many
of these companies, including the Company's current software product, in the
form of new upgrades or new versions of the software. Companies most affected by
the "Year 2000 Issue" are primarily large companies with assets and resources
substantially greater than the Company's which utilize customized software
residing on large "main-frame" systems to meet specific needs of their company
or industry. Finally, the Company utilizes the services of Gemisys Corporation,
of Englewood, Colorado for its shareholder services, transfer agent and dividend
and proxy disbursement agent. Gemisys has stated that its current "Universe"
platform has been programmed so that any date in the system as "00" (e.g.,
2/1/00) will be interpreted as the year 2000, not 1900. This is due to the fact
that Gemisys uses an "internal date" that correlates to the actual date. These
"internal dates" are in sequential order and not repeated. This includes any
data conversions to Gemisys's system. The Company as well as its shareholder
services agent have addressed the "Year 2000 Issue" and have determined this
issue will not affect its continuing operations.
12
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the quarter
ended September 30, 1998.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits filed with Form 10-QSB
None
b) Reports on Form 8-k
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: January 5, 1999
AMERICAN CHURCH MORTGAGE COMPANY
By: /s/ V. James Davis
V. James Davis
Chief Executive Officer, Treasurer
(and Chief Financial Officer)
By: /s/ David G. Reinhart
David G. Reinhart
Vice President and Secretary
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,904,250
<SECURITIES> 134,274
<RECEIVABLES> 7,008,584
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,148,326
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,081,010
<CURRENT-LIABILITIES> 239,066
<BONDS> 0
0
0
<COMMON> 9,624
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,081,010
<SALES> 0
<TOTAL-REVENUES> 224,255
<CGS> 0
<TOTAL-COSTS> 13,920
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 210,335
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 210,335
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
