SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (D) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): January 25, 2000
Life Partners Holdings, Inc. (formerly known as I.G.E., Inc.)
(Exact name of registrant as specified in its charter)
Texas 0-7900 14-2488828
------------ --------------- ---------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
6614 Sanger, Waco, Texas 76710
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (254) 751-9700
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<PAGE>
Item 5. Other Events.
(i) I.G.E., Inc. (IGE), a Massachusetts corporation, announces a share
exchange acquisition of Life Partners, Inc.(LPI), a privately held Texas
corporation. Under the terms of the share exchange, IGE acquired 100% of the
common stock of LPI while the shareholders of LPI were issued 9,500,000 shares
or 95% of IGE's authorized shares. An LPI shareholder contributed 3,000,000
shares back to IGE, which shares are to be reserved for future distribution to
employees and consultants. The transaction makes LPI a wholly owned subsidiary
of IGE. Shareholders of both companies approved the plan of exchange at special
shareholder meetings held on January 18, 2000 for LPI and January 19, 2000 for
IGE.
As of January 19, 2000, Pardo Family Holdings, LTD., owned 5,525,000 shares or
78.9% of IGE's 7,000,000 shares of common stock outstanding, after taking into
consideration the shares contribution described above. There are no other
shareholders owning 5% or more of the outstanding stock as of the date of this
acquisition.
(ii) A copy of the press release announcing the share exchange is filed
herewith. See Exhibit 5.1.
(iii) In connection with the LPI acquisition, I.G.E., Inc. has also
amended its articles of organization to change its name from I.G.E., Inc. to
Life Partners Holdings, Inc.
Item 7. Financial statements, Pro forma Financial Information and Exhibits.
Exhibit 7.1 Balance Sheet for fiscal year ended September 30, 1999.
Exhibit 7.2 Statements of Operations for fiscal years ended September 30,
1999 and September 30, 1998.
Exhibit 7.3 Pro forma Balance Sheet and Statements of Income for the nine
months ended November 30, 1999. Forthcoming in next sixty
days.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Life Partners Holdings, Inc.
Dated: January 26, 2000 By: /s/ Brian D. Pardo
----------------------
Brian D. Pardo
President and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit 5.1 Press Release
Part I. Financial Information
Exhibit 7.0 Auditors Report
Exhibit 7.1 Balance Sheets
(September 30, 1999)
Exhibit 7.2 Statements of Operations
(Fiscal years ended September 30, 1999 and 1998)
Exhibit 7.3 Statements of Cash Flows
(Fiscal years ended September 30, 1999 and 1998)
Exhibit 7.4 Notes to Audited Financial Statements
<PAGE>
EXHIBIT 5.1
Life Partners, Inc. Acquired by I.G.E., Inc.
Parent Changes Name to Life Partners Holdings, Inc.
For Immediate Release
Contact John McLemore
254-751-9700
[email protected]
Waco, TX - January 24, 2000. I.G.E., Inc. (IGE), a Massachusetts corporation,
announced today a share exchange acquisition of Life Partners, Inc.(LPI), a
privately held Texas corporation. Under the terms of the share exchange, IGE
acquired 100% of the common stock of LPI while the shareholders of LPI were
issued 95% of IGE's authorized shares. The transaction makes LPI a wholly owned
subsidiary of IGE. Shareholders of both companies approved the plan of exchange
at special shareholder meetings held on January 18, 2000 for LPI and January 19,
2000 for IGE.
In connection with the share exchange, IGE has changed its name to Life
Partners Holdings, Inc.
<PAGE>
EXHIBIT 7.0
Independent Auditors' Report
To the Board of Directors
Life Partners, Inc.
We have audited the accompanying balance sheet of LIFE PARTNERS, INC. as of
September 30, 1999, and the related statements of income, retained earnings, and
cash flows for the years ended September 30, 1999 and 1998. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides 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 Life Partners, Inc. as of
September 30, 1999, and the results of its operations and its cash flows for the
years ended September 30, 1999 and 1998, in conformity with generally accepted
accounting principles.
Gray and Northcutt, Inc.
November 4, 1999
<PAGE>
EXHIBIT 7.1
LIFE PARTNERS, INC.
BALANCE SHEET
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS:
<S> <C>
Cash $ 359,132
Accounts receivable-
Employees 15,560
Other 25,000
Current portion - Long-term notes receivable 10,893
Prepaid expenses 5,167
---------
Total current assets 415,752
---------
PROPERTY AND EQUIPMENT:
Machinery and equipment 31,667
Transportation equipment 173,775
---------
205,442
Accumulated depreciation (109,197)
---------
96,245
---------
OTHER ASSETS:
Notes receivable, net of current portion, shown above,
and allowance for bad debt of $4,245 30,293
Deposits 3,770
Other 4,645
---------
38,708
---------
$ 550,705
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,379
Due to related party 4,005
Income tax payable 63,500
Reserve for lawsuits 93,090
Accrued liabilities 92,519
---------
Total current liabilities 259,493
---------
LONG-TERM LIABILITIES:
Long-term debt (Note 2) 350,000
---------
CONTINGENCIES: (Note 6) -
---------
STOCKHOLDERS' EQUITY:
Common stock, no par value, 100,000 shares
authorized; 100,000 shares issued and
outstanding at September 30, 1999 1,000
Accumulated deficit (59,788)
---------
(58,788)
---------
$ 550,705
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EXHIBIT 7.2
LIFE PARTNERS, INC.
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
REVENUES:
Fees $6,276,066 $4,817,746
---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and benefits 1,110,684 1,040,164
Brokerage fees 3,683,076 2,888,595
Medical underwriting 182,616 156,948
Depreciation 27,725 24,772
Other 973,242 943,281
---------- ----------
5,977,343 5,053,760
---------- ----------
INCOME (LOSS) FROM OPERATIONS 298,723 (236,014)
---------- ----------
OTHER INCOME (EXPENSES):
Interest income 155,468 168,982
Interest expense (18,375) (18,927)
---------- ----------
137,093 150,055
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES 435,816 (85,959)
---------- ----------
INCOME TAXES
Current tax expense 63,500 -
---------- ----------
63,500 -
---------- ----------
NET INCOME (LOSS) 372,316 (85,959)
ACCUMULATED DEFICIT, BEGINNING OF YEAR (432,104) (346,145)
---------- ----------
ACCUMULATED DEFICIT, END OF YEAR $ (59,788) $ (432,104)
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EXHIBIT 7.3
LIFE PARTNERS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 372,316 $ (85,959)
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities -
Depreciation 27,725 24,772
Income taxes 63,500 -
(Increase) Decrease in accounts receivable 74,071 6,416
(Increase) Decrease in prepaid insurance
and inventories (176) 408
(Increase) Decrease in other assets (1,974) 155,137
(Decrease) in accounts payable (4,885) 15,268
(Decrease) in accrued liabilities (296,818) (81,358)
---------- ----------
Net cash provided by(used in)operating activities 233,759 34,684
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (13,418) (11,917)
---------- ----------
Net cash used in investing activities (13,418) (11,917)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (91,400) -
---------- ----------
Net cash used in financing activities (91,400) -
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 128,941 22,767
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 230,191 207,424
---------- ----------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 359,132 $ 230,191
========== ==========
CASH PAID FOR INTEREST AND INCOME TAXES ARE AS FOLLOWS:
Interest, net of capitalized amounts $ 18,375 $ 18,927
---------- ----------
Income taxes $ - $ -
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
EXHIBIT 7.4
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Life Partners, Inc. (LPI) ("the Company") is a viatical
settlement company established in 1991 and incorporated in Texas for the
purpose of assisting persons in facilitating the purchase of the life
insurance policies of terminally persons at a discount to their face
value.
Cash and Cash Equivalents - For purposes of the statement of cash flows,
the Company considers all short-term debt securities purchased with a
maturity of three months or less to be cash equivalents. The balance of
the Company's general checking account was in excess of $100,000 as of
September 30, 1999 and the account's average account balance is generally
in excess of $100,000. The Federal Deposit Insurance Corporation insures
all bank accounts up to $100,000. Management believes its exposure to loss
is minimal considering only the amounts in excess of $100,000 are at risk
and the depository bank is a well established national bank and one of the
nation's largest financial institutions.
Depreciation - The Company's property and equipment are depreciated over
their useful lives using the straight-line method.
Income Taxes - Income tax expense includes federal income and Texas
franchise taxes currently payable. Deferred timing differences between the
reporting of income and expenses for financial and income tax reporting
purposes are reported as deferred tax assets, net of valuation allowances,
or as deferred tax liabilities depending on the cumulative effect of all
timing differences.
Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported and contingent
assets and liabilities disclosed in the financial statements and
accompanying notes. Actual results inevitably will differ from those
estimates and such differences may be material to the financial
statements.
Liquidation of LPI Entertainment, Inc. - On September 7, 1999, the Company
liquidated LPI Entertainment, Inc. ("Entertainment"), its wholly owned
subsidiary. Entertainment's only remaining asset was a motor home with a
cost basis of $173,775, which was transferred to the Company at its net
book value. Entertainment had been inactive since 1995. No gain or loss
was recognized for financial reporting purposes on this liquidation.
(2) LONG-TERM DEBT
At September 30, 1999, the Company had a $350,000 note payable to
Descartes, Inc. Although the funds were advanced directly to Life
Partners, Inc., the actual signors on the note were the Company's
president individually and ESP Communications, Inc., an affiliated
company.
This note bears interest at the rate of 5.25% per annum and is due in full
with interest on or before November 19, 2001. This note is collateralized
by the real and personal property of ESP Communications, Inc.
On September 29, 1999, Descartes, Ltd. Offered to convert this debt into
70,000 shares of common stock in Life Partners, Inc. This offer is
contingent upon Life Partners, Inc. or its successor becoming a public
company. In connection with this offer, Descartes suspended all payments
on this debt until conversion or 18 months whichever comes first.
(3) LEASES
The Company leases office space and various equipment under noncancelable
operating leases expiring in various years through 2003.
Minimum future rental payments under noncancelable operating leases having
remaining terms in excess of one year as of September 30, 1999 for each of
the next five years and in the aggregate are:
Year ended September 30, 2000 $160,371
Year ended September 30, 2001 57,503
Year ended September 30, 2002 6,708
Year ended September 30, 2003 3,913
--------
Total minimum future rental payments $228,495
========
Rental expense consisted of minimum lease payments of $189,725 and
$174,108 for the years ended September 30, 1999 and 1998, respectively.
Certain operating leases provide for renewal, and/or purchase options.
Generally, purchase options are at prices representing the expected fair
market value of the property at the expiration of the lease term. Renewal
options are for periods of one year at the rental rate specified in the
lease.
(4) INCOME TAXES
As of September 30, 1999, the Company has unused charitable contribution
deduction carryforwards of approximately $563,830.
These charitable contributions carryforward will expire as follows:
Fiscal Year Ended
September 30, Amount
----------------- --------
2000 $332,976
2001 129,110
2002 15,312
2003 36,239
2004 50,193
--------
$563,830
========
Temporary timing differences between the reporting of income and expenses
for financial and income tax reporting purposes give rise at September 30,
1999, to a deferred tax asset of approximately $173,000, which was fully
reserved as of that date.
Following are the components of this deferred tax asset as of
September 30, 1999:
Charitable deduction carryforwards $192,000
Excess tax over financial accounting
Depreciation (19,000)
--------
Net deferred tax asset 173,000
Less valuation allowance (173,000)
--------
Deferred tax asset net of valuation
allowance $ 0
========
The Company's effective income tax rate for the fiscal year ended
September 30, 1999, is lower than what would be expected if the federal
statutory rate were applied to income from continuing operations primarily
due to the utilization of the Company's remaining net operating loss
carryforward to partially offset current year taxable income.
(5) RELATED PARTY TRANSACTIONS
The Company currently operates under an agreement with EPS Communications,
Inc. (ESP) which is owned by the wife of the Company's president. Under
the agreement, ESP performs specified administrative duties on behalf of
the Company concerning post-viaticator contact. In addition, ESP also
provides facilities and various administrative personnel for the Company.
Either party may cancel the agreement with a thirty day written notice.
The Company currently pays ESP $7,000 on a monthly basis for its services.
The Company recorded management services expense concerning this agreement
with ESP of approximately $94,500 and $96,000 for the year ended September
30, 1999 and 1998, respectively.
In addition, EPS has pledged any and all of its real and personal property
as collateral for the Company' long term debt. The debt, which had a
principal balance of $350,000 as of September 30, 1999, matures on
November 19, 2001. See Note 2 above for further details.
(6) CONTINGENCIES
During the year ended September 30, 1999, the Company entered into
settlements in connection with three lawsuits. These settlements have
been recorded as accrued reserves on the Company's financial statements as
of September 30, 1999. In the opinion of management, no other legal
matters will have a material impact on the Company's financial statements.
On August 25, 1999, the Company memorialized its intent with I.G.E.,
Inc. ("IGE"), whereby IGE agreed to acquire substantially all of the
Company's assets, but none of its liabilities in exchange for 9,500,000
share of IGE common stock. IGE is a publicly held company, which has
not conducted any business within the last five years. After this
proposed acquisition, Life Partners, Inc. would own 95% of IGE's
outstanding stock. This transaction was to take place within ninety days
of the signing of this letter of intent. As of November 4, 1999, the date
of this report, the transaction had not been completed pending the
completion of the Company's audit of its financial statements.
