UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarterly period ended: August 31, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of
Commission File Number: 0-7900
LIFE PARTNERS HOLDINGS, INC.
----------------------------
(Name of small business issuer in its charter)
Massachusetts 74-2962475
------------------------ ------------------------
(State of incorporation) (I.R.S. employer ID no.)
204 Woodhew, Waco, Texas 76712
--------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
Issuer's telephone number, including area code: 254-751-7797
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 at least the past 90
days.
Yes [X] No [ ]
Shares of Common Stock, $.01 par value, outstanding as of October 12, 2000:
10,000,000
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
LIFE PARTNERS HOLDINGS, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheet - August 31, 2000
Consolidated Condensed Statements of Income - For the Three
and Six Months Ended August 31, 2000 and 1999
Consolidated Condensed Statements of Stockholders Equity -
For the Six Months Ended August 31, 2000 and 1999
Consolidated Condensed Statements of Cash Flows - For the Six
Months Ended August 31, 2000 and 1999
Notes to Consolidated Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of the Security Holders
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
LIFE PARTNERS HOLDINGS, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements - August 31, 2000 and 1999
Forming a part of Form 10-QSB Quarterly Report to the
Securities and Exchange Commission
This quarterly report on Form 10-QSB should be read in conjunction with Life
Partners Holdings, Inc.'s Annual Report on Form 10-KSB for the year ended
February 29, 2000.
<PAGE>
LIFE PARTNERS HOLDINGS, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
AUGUST 31, 2000
(UNAUDITED)
Page 1 of 2
ASSETS
<TABLE>
CURRENT ASSETS:
<S> <C>
Cash $ 259,007
Accounts receivable - trade 10,113
Due from officers and shareholders 38,910
Current portion - long-term notes receivable 3,419
Prepaid expenses 9,302
------------
Total current assets 320,751
------------
PROPERTY AND EQUIPMENT:
Land and building 803,328
Machinery and equipment 45,885
Transportation equipment 173,775
------------
1,022,988
Accumulated depreciation (137,503)
-----------
885,485
-----------
OTHER ASSETS:
Notes receivable, net of current portion, shown above,
and allowance for bad debt of $40,798 4,843
Other 10,429
-----------
15,272
-----------
Total Assets $ 1,221,508
===========
</TABLE>
See accompanying notes.
<PAGE>
LIFE PARTNERS HOLDINGS, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
AUGUST 31, 2000
(UNAUDITED)
Page 2 of 2
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
CURRENT LIABILITIES:
<S> <C>
Accounts payable $ 86,987
Notes payable to related parties 170,000
Curent portion of long-term debt 21,682
Income tax payable 89,540
Accrued liabilities 46,260
-----------
Total current liabilities 414,469
-----------
LONG-TERM DEBT, net of current portion shown above 615,058
-----------
CONTINGENCIES -
-----------
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value, 10,000,000 shares
authorized; 10,000,000 shares issued and
outstanding 100,000
Additional paid-in capital 4,705,817
Accumulated deficit (4,613,836)
Less: Treasury stock - 1,887,228 shares -
-----------
Total Stockholders' Equity 191,981
-----------
Total Liabilities and Stockholders' Equity $ 1,221,508
===========
</TABLE>
See accompanying notes.
<PAGE>
LIFE PARTNERS HOLDINGS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
AUGUST 31, AUGUST 31,
------------------------ ------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES $1,183,304 $1,321,645 $2,957,377 $2,402,653
BROKERAGE FEES 525,741 815,471 1,433,009 1,542,032
---------- ---------- ---------- ----------
REVENUES, NET OF
BROKERAGE FEES 657,563 506,174 1,524,368 860,621
---------- ---------- ---------- ----------
OPERATING AND ADMINISTRATIVE
EXPENSES:
General and
administrative 659,479 462,102 1,270,206 933,311
Depreciation 12,440 2,719 18,427 4,764
--------- ---------- ---------- ----------
671,919 464,821 1,288,633 938,075
--------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS (14,356) 41,353 235,735 (77,454)
--------- ---------- ---------- ----------
OTHER INCOME (EXPENSES):
Interest and other income 34,886 109,303 71,618 137,405
Interest expense (12,576) (7,656) (13,308) (7,656)
--------- ---------- ---------- ----------
22,310 101,647 58,310 129,749
--------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
INCOME TAXES 7,954 143,000 294,045 52,295
--------- ---------- ---------- ----------
INCOME TAXES
Current tax expense - - 104,127 -
--------- ---------- ---------- ----------
- - 104,127 -
--------- ---------- ---------- -----------
NET INCOME (LOSS) $ 7,954 $ 143,000 $ 189,918 $ 52,295
========== ========== ========== ===========
PER SHARE EARNINGS OF
COMMON STOCK AMOUNTS $ 0.00 $ 0.01 $ 0.02 $ 0.01
========== ========== ========== ============
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING 10,000,000 9,930,000 10,000,000 9,930,000
========== ========== ========== ===========
</TABLE>
See accompanying notes.
<PAGE>
LIFE PARTNERS HOLDINGS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 189,918 $ 52,295
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities -
Depreciation 18,427 4,764
(Increase) decrease in accounts receivable (21,002) 4,913
(Increase)in prepaid expenses (4,135) -
(Increase) decrease in other assets (3,000) (42)
Increase (Decrease) in accounts payable 6,741 -
Increase in income taxes payable 26,040 -
(Decrease) in accrued liabilities (66,744) (81,096)
-------- ---------
Net cash provided by (used in)
operating activities 146,245 (19,166)
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (809,753) (1,396)
-------- ----------
Net cash used in investing activities (809,753) (1,396)
-------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances on notes payable 806,740 90,456
-------- ----------
Net cash used in financing activities 806,740 90,456
-------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 143,232 69,894
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 115,775 171,153
-------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 259,007 $ 241,047
======== ========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid, net of capitalized amounts $ 13,308 $ 7,656
======== ========
Income taxes paid $ 71,267 $ -
======== ========
</TABLE>
See accompanying notes.
<PAGE>
LIFE PARTNERS HOLDINGS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2000
(UNAUDITED)
These consolidated condensed financial statements have been prepared by Life
Partners Holdings, Inc. (the "Company") without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission, and reflect all
adjustments which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods, on a basis consistent with the
annual audited financial statements. All such adjustment are of a normal
recurring nature. Certain information, accounting policies, and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the financial statements and information presented not
misleading. These financial statements should be read in conjunction with the
financial statements and the summary of significant accounting policies and
notes thereto included in the Company's most recent annual report on Form
10-KSB.
(1) DESCRIPTION OF BUSINESS
Life Partners Holdings, Inc. (the "Company") formerly IGE, Inc. was
organized under the laws of the Commonwealth of Massachusetts in 1971,
but had been dormant and without operations since 1985. On January 18,
2000, the shareholders of Life Partners Holdings, Inc. and Life Partners,
Inc. (LPI) entered into a share exchange agreement whereby LPI became a
wholly-owned operating subsidiary of the Company. On January 20, 2000, the
Company acquired all of the outstanding stock of Extended Life Services,
Inc. for $500.
The Company's subsidiaries are as follows:
LPI is a viatical settlement company established in 1991 and
incorporated in State of Texas for the purpose of assisting persons in
facilitating the purchase of the life insurance policies of terminally
ill persons at a discount to their face value.
Extended Life Services, Inc. was established in 1998 and incorporated
in the State of Texas to engage in senior life settlement transactions
by assisting elderly individuals to reallocate their assets from
insurance policies into assets used for long-term care coverage,
annuities, investments, etc.
(2) NOTE PAYABLE
The Company has non-interest bearing notes payable due to related
parties. The notes are due June 2001.
(3) LONG-TERM DEBT
The Company has a 9.25% note payable to a financial institution payable in
monthly installments of $6,638, including interest through June 2015. The
note is secured by an office building.
Maturities of long-term debt for each of the next five years and
thereafter are as follows:
<TABLE>
<CAPTION>
Fiscal Year
Ended August 31, Amount
---------------- ------
<S> <C>
2001 $ 21,682
2002 23,775
2003 26,070
2004 28,586
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2005 31,345
Thereafter 505,282
----------
$ 636,740
==========
</TABLE>
(4) LEASES
The Company leases various equipment under noncancelable operating leases
expiring in various years through 2004.
Minimum future rental payments under noncancelable operating leases having
remaining terms in excess of one year as of August 31, 2000 for each of
the next five years and in the aggregate are:
<TABLE>
<CAPTION>
Twelve months ending August 31, Amount
------------------------------- ------
<S> <C>
2001 $ 70,380
2002 6,708
2003 3,912
2004 -
2005 -
----------
Total minimum future rental payments $ 81,000
==========
</TABLE>
Rental expense consisted of minimum lease payments of $80,612 and $83,307
for the six months ended August 31, 2000 and 1999, 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.
(5) INCOME TAXES
As of February 29, 2000, the Company has unused charitable contribution
deduction carryforwards of approximately $218,320.
These charitable contributions carryforward will expire as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended
February 28, Amount
----------------- ------
<S> <C>
2001 $ 129,110
2002 15,312
2003 36,239
2004 37,659
-----------
$ 218,320
===========
</TABLE>
Temporary timing differences between the reporting of income and expenses
for financial and income tax reporting purposes give rise at February 29,
2000, to a deferred tax asset of approximately $53,800, which was fully
reserved as of that date.
Following are the components of this deferred tax asset as of February 29,
2000:
<TABLE>
<S> <C>
Charitable deduction carryforwards $ 74,200
Excess tax over financial accounting
depreciation (20,400)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Net deferred tax asset 53,800
Less valuation allowance (53,800)
-------
Deferred tax asset net of valuation allowance $ -
=======
</TABLE>
The difference between the Company's effective income tax rate and the
United States statutory rate is reconciled below for the three months
ended August 31, 2000:
<TABLE>
<CAPTION>
2000
----
<S> <C>
United States statutory rate 34.0%
State of Texas statutory rate 4.5%
-----
Expected combined rate 38.5%
Benefit of utilization of charitable
contribution carryforward (3.1%)
-----
Combined effective tax rate 35.4%
=====
</TABLE>
(6) OMNIBUS EQUITY COMPENSATION PLAN
The Company has adopted an Omnibus Equity Compensation Plan. This plan
allows the company to issue up to 3,000,000 shares of its treasury stock
to its employees and agents at prices and terms to be determined by the
Company on the date of issuance.
As of August 31, 2000, the Company had issued 1,112,772 shares under this
plan for which it received notes receivable totaling $9,078 and recognized
compensation expense of $2,500.
(7) RELATED PARTY TRANSACTIONS
The Company currently operates under an agreement with ESP 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 August cancel the agreement with a thirty day written notice.
The Company currently pays ESP $10,000 on a monthly basis for its
services. The Company recorded management services expense concerning this
agreement with ESP of approximately $73,500 and $52,500 for the six months
ended August 31, 2000 and 1999, respectively.
(8) EARNINGS (LOSS) PER SHARE
Basic earnings per share amounts are computed based on the weighted
average number of shares outstanding on that date during the applicable
periods. The number of shares used in the computations were 10,000,000 in
2000 and 9,930,000 in 1999.
Diluted earnings per share was not computed as of August 31, 2000 as all
stock options and shares held for issuance in connection with the licensee
stock reward program were held as treasury stock and were considered
outstanding for purposes of the computation of basic earnings per share.
(9) CONTINGENCIES
During the year ended February 29, 2000, 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
August 31, 2000. In the opinion of management, no other legal matters will
have a material impact on the Company's financial statements.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Position and Results
of Operations
Statements in this quarterly report on Form 10-QSB concerning our
business prospects or future financial performance; anticipated revenues,
expenses, profitability or other financial items, growth in the viatical or life
settlement markets or our projected sales in such markets; developments in
industry regulations and the application of such regulations, and our
strategies, plans and objectives, together with other statements that are not
historical facts, are forward-looking statements" as that term is defined under
the federal securities laws. All of these forward looking statements are based
on information available to us on the date hereof, and we assume no obligation
to update any such forward-looking statements. Forward-looking statements
involved a number of risks, uncertainties and other factors which could cause
actual results to differ materially from those stated in such statements. Life
Partners does not undertake any obligation to release publicly any revisions to
such forward-looking statements to reflect events or uncertainties after the
date hereof or reflect the occurrence of unanticipated events.
The following discussion is intended to assist in understanding of the
Company's financial position as of August 31, 2000, and its results of
operations for the three and six month periods ended August 31, 2000 and 1999.
The financial statements and notes included in this report contain additional
information and should be referred to in conjunction with this discussion. It is
presumed that the readers have read or have access to Life Partners Holdings,
Inc.'s annual report on Form 10-KSB for the year ended February 29, 2000.
The Company
General. Life Partners Holdings, Inc. ("We", the "Company" or "Life
Partners") is the parent company of Life Partners, Inc. ("LPI") and Extended
Life Services, Inc. ("ELSI"). LPI is the oldest and one of the largest viatical
settlement companies in the United States. To supplement LPI's viatical
business, we acquired ELSI in January 2000 to engage in senior life settlement
transactions, a strongly emerging market similar to our viatical settlement
business.
Our Viatical Settlement Business. LPI was incorporated in 1991 and has
conducted business under the registered service mark "Life Partners" since 1992.
To date, our revenues have been principally derived from fees for facilitating
the purchase of viatical settlement contracts. A viatical settlement is the sale
of a life insurance policy covering a person who is terminally ill. By selling
the policy, the insured (a viator) receives an immediate cash payment to use as
he or she wishes. The purchaser takes an ownership interest in the policy at a
discount to its face value and receives the death benefit under the policy when
the viator dies.
The following table shows the number of settlement contracts we have
transacted, the aggregate face values and purchase prices of those contracts,
and the revenues we derived, for the three and six months periods ended August
31, 1999 and 2000:
<TABLE>
Period Ended Period Ended
August 31, 1999 August 31, 2000
------------------------ ------------------------
Three Months Six Months Three Months Six Months
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Number of settlements 67 132 47 102
Face value of policies
(in `000's) $ 5,239 $ 9,802 $ 3,442 $ 7,905
Average revenue per
settlement $19,726 $18,202 $25,177 $28,994
Net revenues derived
(in `000's) (1) $ 506 $ 861 $ 657 $ 1,524
</TABLE>
---------------
(1) The revenues derived are exclusive of referring broker commissions.
<PAGE>
Our New Senior Life Settlement Business. To supplement our viatical
settlement operations, we entered the market for "senior life settlements" in
1997 under contract with ELSI. We later acquired ELSI as a wholly owned
subsidiary to focus on this market which Conning & Co., an independent industry
analyst, estimates to be in excess of $100 billion in face amount. On behalf of
ELSI, we originated, reviewed and underwrote almost $600 million in face value
of senior life settlements in 1997. In underwriting these policies, we
quantified premium and life expectancy risks, but did not purchase any of the
policies for our own account or assume any risk associated therewith. A senior
life settlement differs from a viatical settlement in that the insured in a life
settlement is not terminally ill, is 65 years of age or older, and has a life
expectancy of between two and twelve years. Senior life settlements appeal to
persons who purchased life insurance for income protection or estate planning,
but no longer need the insurance due to growth in their investment portfolios or
other changes in circumstances. The settlements also appeal to persons who want
to make immediate gifts to their beneficiaries. In these instances, the insured
may feel the insurance is no longer needed.
Comparison Of The Three Months Ended August 31, 2000 And 1999
The Company reported net income of $7,954 for the three months ended
August 31, 2000, as compared to net income of $143,000 for the three months
ended August 31, 1999. This decrease in net income is attributable primarily to
the following factors: (1) a 43% increase in general and administrative costs
and (2) a 30% decrease in the number of settlements, offset in part by (3) a 28%
increase in the average revenue per settlement and (4) a 36% decrease in
brokerage fees paid.
Revenues - Revenues decreased by $138,341 or 10% from $1,321,645 in 1999
to $1,183,304 for the same period in 2000. This decrease was due primarily due
to a 30% decrease in the number of cases settled from 67 in 1999 to 47 in 2000,
offset in part by a 28% increase in the average revenue per settlement from
$19,726 in 1999 to $25,177 in 2000. The decrease in the number of settlements
was due to management's efforts to be more selective in the cases it selected
for settlement.
Brokerage Fees - Brokerage fees decreased 36% or $289,730 from $815,471
in 1999 to $525,741 in 2000. This decrease is due primarily to a 30% decrease in
the number of cases settled combined with an 8% decrease in the average
brokerage fees per settlement from $12,171 in 1999 to $11,185 in 2000.
General and Administrative Expenses - General and Administrative
expenses increased by 43% or $197,377 from $462,102 in 1999 to $659,479 in 2000.
This increase was due primarily to increases in operational costs related to
commencing activity in the senior life settlement market and relating to the
relocation of the Company's headquarters from rented property to an office
building which it purchased.
Depreciation Expense - Depreciation expense increased from $2,719 in
1999 to $12,440 for the comparable three month period in 2000. This increase is
due primarily to the purchase of an office building by the Company in 2000.
During 1999, the Company was renting office space.
Interest and Other Income - Interest and other income decreased by 68%
or $74,417 from $109,303 in 1999 to $34,886 in 2000. This decrease was due
primarily to the collections in 1999 of reimbursements for an unusually large
number of premiums advances which had previously been charged to expense.
Interest Expense - Interest Expense increased from $7,656 in 1999 to
$12,576 for the same three month period in 2000. This increase is due primarily
to the addition of debt associated with the acquisition of the Company's office
building.
Income Taxes - No income tax expense was reported in either year, due to
(1) the utilization of loss carryforwards to offset the income tax liability in
1999 and (2) the over accrual of the 2000 income tax liability during the first
quarter of 2000.
<PAGE>
Comparison Of The Six Months Ended August 31, 2000 And 1999
The Company reported net income of $189,918 for the six months ended
August 31, 2000, as compared to net income of $52,295 for the six months ended
August 31, 1999. This increase in net income is attributable primarily to the
following factors: (1) a 59% increase in the average revenues per settlement
offset in part by, (2) a 36% increase in general and administrative costs and by
(3) an 23% decrease in the number of cases settled.
Revenues - Revenues increased by $554,724 or 23% from $2,402,653 in 1999
to $2,957,377 for the same period in 2000. This increase was due primarily due
to a 59% increase in the average revenue per settlement from $18,202 in 1999 to
$28,994 in 2000 offset in part by a 23% decrease in the number of settlements
from 132 in 1999 to 102 for the comparable six month period in 2000. The
decrease in the number of settlements was due to management's efforts to be more
selective in the cases it selected for settlement.
Brokerage Fees - Brokerage fees decreased 7% or $109,023 from $1,542,032
in 1999 to $1,433,009 in 2000. This decrease is due to (1) a 23% decrease in the
number of cases settled combined with (2) a 20% increase in the average
brokerage fees per settlement from $11,682 in 1999 to $14,049 for the comparable
six month period in 2000. The increase in average brokerage fees per settlement
is due primarily to the 59% increase in average settlement revenues per closing.
General and Administrative Expenses - General and Administrative
expenses increased by 36% or $336,895 from $933,311 in 1999 to $1,270,206 in
2000. This increase was due primarily to increases in operational costs related
to commencing activity in the senior life settlement market.
Depreciation Expense - Depreciation expense increased from $4,764 in
1999 to $18,427 for the comparable six month period in 2000. This increase is
due primarily to the purchase of an office building by the Company in 2000.
During 1999, the Company was renting office space.
Interest and Other Income - Interest and other income decreased by 48%
or $65,787 from $137,405 in 1999 to $71,618 in 2000. This decrease was due
primarily to the collections in 1999 of reimbursements for an unusually large
number of premiums advances which had previously been charged to expense.
Interest Expense - Interest Expense increased from $7,656 in 1999 to
$13,308 for the same six month period in 2000. This increase is due primarily to
the addition of debt associated with the acquisition of the Company's office
building.
Income Tax Expense - During the fist six months of 2000 the Company
recognized current income tax expense of $107,308. No income tax expense was
recognized in the comparable period of 1999 due to the effect of offsetting net
operating losses carryfoward against 1999 taxable income.
Liquidity And Capital Resources
Operating Activities
Net cash flows provided by operating activities for the six months ended
August 31, 2000 was $146,245 compared with net cash flows used in operating
activities of $19,166 for the six months ended August 31, 1999. This increase in
cash flows from operating activities was attributable primarily to net income of
$186,918.
The Company's strategy is to increase cash flows generated from
operations by increasing revenues while controlling brokerage and general and
administrative expenses. The Company also intends to commence investing directly
in viatical and senior life settlement policies on its own behalf.
<PAGE>
Capital Requirements And Resources
At August 31, 2000 the Company had working capital deficit of $93,718.
Management believes future viatical settlement operations will generate
sufficient profits and cash flows to meet the Company's anticipated working
capital needs for this business segment. Management anticipates investing
directly in senior life policies in the future. Outside funding will be required
to develop this business segment.
The Company has acquired land and an office building for $800,000. It
has obtained a loan from Bank of America to finance $640,000 of this acquisition
with the balance of $160,000 coming from operating cash flows.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on September
28, 2000. At the Annual Meeting:
1. The following persons were elected as Directors of the Company for
a one year term.
<TABLE>
<CAPTION>
Name Votes for Votes Withheld Abstentions
---- --------- -------------- -----------
<S> <C> <C> <C>
Brian D. Pardo 7,776,085 0 0
R. Scott Peden 7,776,085 0 0
Brian C. Kelly 7,776,085 0 0
</TABLE>
2. The Life Partners Omnibus Equity Compensation Plan was approved by
the shareholders by a vote of 6,909,068 for and 110 against with 0 abstentions
and broker non-votes.
3. The shareholders approved an amendment to the Articles of
Organization to increase in the number of authorized shares from 10,000,000
shares to 30,000,000 shares by a vote of 7,775,015 for to 65 against, with
0 abstentions and broker non-votes.
4. The appointment of Gray & Northcutt, Inc. as independent auditors
for the Company for the fiscal year ending February 28, 2001, was ratified by
the shareholders by a voite of 7,769,286 for and 5 votes against, with 5,789
abstentions and broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10. Material contract - Purchase of property
(b) Reports on Form 8-K:
No reports were filed during the three months.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
October 13, 2000 Life Partners Holdings, Inc.
By:/s/Brian D. Pardo
-------------------------------------
Brian D. Pardo
President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Name Title Date
---- ----- ----
/s/Brian D. Pardo President, Principal Executive October 13, 2000
-----------------
Officer, and Director
/s/Jacquelyn Davis Chief Financial Officer and October 13, 2000
------------------
Treasurer
/s/R. Scott Peden Corporate Clerk (Secretary), October 13, 2000
------------------
Director
