LIFE PARTNERS HOLDINGS INC - FORM 10-Q

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EX-32.1 - LIFE PARTNERS HOLDINGS INC	v207727_ex32-1.htm
EX-31.1 - LIFE PARTNERS HOLDINGS INC	v207727_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended: November 30, 2010

¨ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Commission File Number: 0-7900

LIFE PARTNERS HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

Texas (State of incorporation)	74-2962475 (I.R.S. Employer ID no.)

204 Woodhew Drive Waco, Texas (Address of Principal Executive Offices)	76712 (Zip Code)

Registrant’s telephone number, including area code: 254-751-7797

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

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer x

Non-accelerated filer ¨

(Do not check if a smaller reporting company)

Smaller reporting company ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Shares of Common Stock, $.01 par value, outstanding as of November 30, 2010: 14,915,246 (15,024,354 issued and outstanding less 109,108 treasury shares).

LIFE PARTNERS HOLDINGS, INC.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets – November 30, 2010 and February 28, 2010	3-4

	Consolidated Statements of Income - For the Three and Nine Months Ended November 30, 2010 and 2009	5

	Consolidated Statements of Cash Flows - For the Nine Months Ended November 30, 2010 and 2009	6

	Notes to Consolidated Condensed Financial Statements	7-19

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19-28

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28

Item 4.	Controls and Procedures	28

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 6.	Exhibits	29

Signatures		30

Exhibit Index		31

PART I - FINANCIAL INFORMATION

LIFE PARTNERS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

NOVEMBER 30, 2010 (Unaudited) AND FEBRUARY 28, 2010

ASSETS

	November 30,			February 28,
	2010			2010
CURRENT ASSETS:

Cash and cash equivalents	$	28,610,977		$	22,808,728
Certificate of deposit		100,724			100,534
Investment in securities		5,408,816			4,529,169
Accounts receivable – trade		11,893,089			12,494,404
Accounts receivable – other		52,637			595,025
Notes receivable		581,096			581,096
Income tax receivable		-			152,125
Deferred income taxes		670,236			745,788
Prepaid expenses		138,204			375,587

Total current assets		47,455,779			42,382,456

PROPERTY AND EQUIPMENT:

Land and building		2,312,002			2,274,895
Proprietary software		515,553			511,405
Furniture, fixtures and equipment		1,519,468			1,525,197
Transportation equipment		9,800			9,800

Subtotal		4,356,823			4,321,297

Accumulated depreciation		(1,805,792	)		(1,657,293	)

Net property and equipment		2,551,031			2,664,004

OTHER ASSETS:

Premium advances, net of allowance for uncollectible of $3,128,905 and $3,299,624, respectively		4,899,810			3,549,912
Investments in policies		18,603,572			16,460,353
Investment in life settlements trust		6,249,060			6,456,155
Artifacts and other		834,700			834,700
Deferred income taxes		370,808			379,592
Total other assets		30,957,950			27,680,712

Total assets	$	80,964,760		$	72,727,172

See the accompanying notes to consolidated condensed financial statements.

LIFE PARTNERS HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

NOVEMBER 30, 2010 (Unaudited) AND FEBRUARY 28, 2010

LIABILITIES AND SHAREHOLDERS' EQUITY

	November 30,			February 28,
	2010			2010
CURRENT LIABILITIES:

Accounts payable	$	5,743,050		$	5,514,270
Accrued liabilities		909,386			2,345,276
Dividends payable		3,735,079			3,719,341
Accrued settlement expense		255,587			503,783
Income taxes payable		199,448			-
Deferred policy monitoring fees		954,728			240,950

Total current liabilities		11,797,278			12,323,620

Income taxes payable		385,201			553,896

Total liabilities		12,182,479			12,877,516

SHAREHOLDERS' EQUITY:

Common stock, $0.01 par value 18,750,000 shares authorized; 15,024,354 shares issued and outstanding		150,243			150,243
Additional paid-in capital		11,460,311			11,460,311
Retained earnings		57,735,687			49,874,166
Accumulated comprehensive income, net of taxes		(178,896	)		-
Less: treasury stock - 109,108 shares as of November 30, 2010 and 165,338 as of February 28, 2010		(385,064	)		(1,635,064	)

Total shareholders' equity		68,782,281			59,849,656

Total liabilities and shareholders' equity	$	80,964,760		$	72,727,172

See the accompanying notes to consolidated condensed financial statements.

LIFE PARTNERS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2010 AND 2009

(Unaudited)

	Three Months Ended November 30,				Nine Months Ended November 30,
	2010		2009		2010			2009
REVENUES	$	26,241,865	$	30,967,256	$	83,282,026		$	87,466,426

BROKERAGE FEES		12,109,403		14,503,000		37,758,450			39,514,746

REVENUES, NET OF BROKERAGE FEES		14,132,462		16,464,256		45,523,576			47,951,680

OPERATING AND ADMINISTRATIVE EXPENSES:
General and administrative		2,980,624		2,744,524		9,102,224			9,510,659
Premium advances, net		208,435		471,160		663,521			1,277,885
Settlement costs		205,833		477,821		575,016			1,954,400
Depreciation		71,118		79,935		211,879			234,119

Total operating and administrative expenses		3,466,010		3,773,440		10,552,640			12,977,063

INCOME FROM OPERATIONS		10,666,452		12,690,816		34,970,936			34,974,617

OTHER INCOME (EXPENSES):
Interest and other income		277,966		464,307		575,297			1,750,454
Interest expense		-		-		(1,505	)		(46,988	)
Realized gains (losses) on securities		231,118		-		119,914			-

Total other income and expense		509,084		464,307		693,706			1,703,466

INCOME BEFORE INCOME TAXES		11,175,536		13,155,123		35,664,642			36,678,083

Total income taxes		4,108,138		4,723,199		12,886,281			13,175,675

NET INCOME	$	7,067,398	$	8,431,924	$	22,778,361		$	23,502,408

EARNINGS:

Per share - Basic and diluted	$	0.47	$	0.57	$	1.53		$	1.58

AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Basic and diluted		14,915,246		14,859,016		14,912,588			14,859,016

THE COMPONENTS OF COMPREHENSIVE INCOME:
Net income	$	7,067,398	$	8,431,924	$	22,778,361		$	23,502,408
Unrealized gains (losses) on investment securities, net of taxes		21,402		115,256		(178,896	)		922,028

COMPREHENSIVE INCOME	$	7,088,800	$	8,547,180	$	22,599,465		$	24,424,436

Common share dividends declared	$	0.50	$	0.25	$	1.00		$	0.75

See the accompanying notes to consolidated condensed financial statements.

LIFE PARTNERS HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2010 AND 2009

(Unaudited)

	Nine Months Ended November 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	22,778,361		$	23,502,408
Adjustments to reconcile net income to operating activities:
Depreciation		211,879			234,119
Realized gain on sales of securities		(119,914	)		-
Impairment of investments in policies		111,333			188,125
Earnings on life settlements trust		(104,272	)		(649,027	)
Deferred income taxes		180,666			(450,948	)
(Increase) decrease in operating assets:
Accounts receivable		1,143,697			(2,939,318	)
Note receivable		-			(19,705	)
Prepaid expenses		237,383			64,302
Increase (decrease) in operating liabilities:
Accounts payable		228,779			1,104,203
Accrued liabilities		(185,890	)		815,711
Accrued settlement expense		(248,196	)		134,526
Income taxes payable		182,882			368,802
Deferred policy monitoring fees		713,778			10,900
Net cash provided by operating activities		25,130,486			22,364,098
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in certificate of deposit		(190	)		-
Certificate of deposit maturities		-			2,933,237
Proceeds from sales of marketable securities		9,819,622			-
Purchases of marketable securities		(10,854,577	)		(348,522	)
Premium advances, net		(1,349,898	)		-
Purchases of property and equipment		(98,906	)		(354,741	)
Proceeds from life settlements trust		311,367			101,147
Proceeds from investments in policies		83,469			-
Increase in other assets		-			(3,000	)
Purchases of investment in policies and capitalized premiums		(2,338,021	)		(7,656,105	)
Net cash used in investing activities		(4,427,134	)		(5,327,984	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on notes payable		-			(779,073	)
Dividends paid		(14,901,103	)		(9,509,776	)
Net cash used in financing activities		(14,901,103	)		(10,288,849	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		5,802,249			6,747,265
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		22,808,728			15,261,217
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	28,610,977		$	22,008,482

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	1,505		$	46,988
Income taxes paid	$	13,015,000		$	12,962,000

See accompanying notes to consolidated condensed financial statements.

Life Partners Holdings, Inc.

Notes to Consolidated Condensed Financial Statements

November 30, 2010

(Unaudited)

(1) DESCRIPTION OF BUSINESS

Life Partners Holdings, Inc. (“We” or “Life Partners”) is a specialty financial services company and the parent company of Life Partners, Inc. (“LPI”). LPI is the oldest and one of the most active companies in the United States engaged in the secondary market for life insurance known generally as “life settlements”. LPI facilitates the sale of life insurance policies between the sellers and purchasers, but does not take possession or control of the policies. The purchasers acquire the life insurance policies at a discount to their face value for investment purposes.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation. The accompanying consolidated condensed financial statements include the accounts of Life Partners and its wholly owned subsidiary, LPI. All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period in the normal course of business. Actual results inevitably will differ from those estimates and such differences may be material to the financial statements.

These Consolidated Condensed Financial Statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), and reflect all adjustments that 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 adjustments 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 we believe 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 our most recent Annual Report on Form 10-K.

Reclassifications. Certain prior period amounts have been reclassified to conform to the current year’s presentation. Investment in securities is shown as a current asset as opposed to the prior period when it was classified as a long-term asset. This change was made to reflect management’s short-term holding strategy. State income tax expense is shown on the statements of income in all periods as deducted from pre-tax earnings to arrive at net income. State income tax expense in previous periods was part of general and administrative expense. Payments for state income taxes are now presented as a component of income taxes paid on the Statements of Cash Flows. These reclassifications had no impact on our results of operation or financial condition. It is management’s opinion that all adjustments necessary for a fair statement of the results for the interim period have been made and that all adjustments are of a normal recurring nature.

We follow accounting standards set by the Financial Accounting Standards Board (the “FASB”). The FASB sets the GAAP that we follow to ensure we consistently report our financial condition, results of operations and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification Topic 105 (the “ASC”). In June 2009, the FASB approved the FASB ASC, which, as of July 1, 2009, became the single source of authoritative, nongovernmental GAAP. The ASC was not intended to change GAAP. Rather, the ASC reorganizes all previous GAAP pronouncements into accounting topics, and displays all topics using a consistent structure. All existing standards that were used to create the ASC are now superseded, aside from those issued by the SEC, replacing the previous references to specific Statements of Financial Accounting Standards with numbers used in the ASC’s structural organization. All guidance in the ASC has an equal level of authority. The ASC is effective for financial statements that cover interim and annual periods ended after September 15, 2009. There was no impact on our financial position, results of operations or cash flows as a result of the adoption of ASC.

ASC 320, Investments – Debt and Equity Securities – Debt and Equity Securities, amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of the other-than-temporary impairments on debt and equity securities in the financial statements. Adoption of ASC 320 and ASC 958-320 during Fiscal 2010 had no impact on our financial condition, results of operations or cash flows.

ASC 810, Consolidation, among other things, provides guidance and establishes amended accounting and reporting standards for a parent company’s non-controlling interest in a subsidiary. ASC 810 was adopted on March 1, 2009, and had no impact on our financial condition, results of operations or cash flows.

ASC 820, Fair Value Measurements and Disclosures, addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Effective March 1, 2008, management adopted ASC 820 with the exception of certain non-financial assets and non-financial liabilities that were specifically deferred. In April 2009, the FASB issued ASC 820-10, which provides additional guidance for estimating fair value in accordance with ASC 820, when the volume and level of activity for the asset or liability have significantly decreased. In August 2009, the FASB further clarified ASC 820-10, Measuring Liabilities at Fair Value, which applies to all entities that measure liabilities at fair value within the scope of Topic 820 and provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more other valuation techniques. We have no liabilities that are traded or exchanged, requiring measurement at fair value. ASC 820 also includes guidance on identifying circumstances that indicate a transaction is not orderly. In such circumstances, the ASC specifies that a valuation technique should be applied that uses either the quote of the liability when traded as an asset, the quoted prices for similar liabilities or similar liabilities when traded as assets, or another valuation technique consistent with existing fair value measurement guidance. Adoption of ASC 820 during our Fiscal 2010 had no impact on our financial condition, results of operations or cash flows. ASU 2010-06 – Improving Disclosures about Fair Value Measurements, amended ASC 820 to clarify certain existing fair value disclosures and requires a number of additional disclosures. The guidance in ASU 2010-06 clarified that disclosures should be presented separately for each class of assets and liabilities measured at fair value and provided guidance on how to determine the appropriate classes of assets and liabilities to be presented. ASU 2010-06 also clarified the requirements for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. ASU 2010-06 introduced new requirements to disclose the amounts (on a gross basis) and reason for any significant transfers between Levels 1, 2, and 3 of the fair value hierarchy and present information regarding the purchases, sales, issuances and settlements of Level 3 assets and liabilities on a gross basis. With the exception of the requirement to present changes in Level 3 measurements on a gross basis, which is delayed until 2011, the guidance in ASU 2010-06 became effective for reporting periods beginning after December 15, 2009. Adoption of ASU 2010-06 on March 1, 2010, had no impact on our financial condition, results of operations or cash flows.

ASC 825, Financial Instruments, directs that entities include disclosures about the fair value of financial instruments whenever it issues summarized financial information for interim reporting periods. Entities are to disclose in the body or in the accompanying notes of their summarized financial information the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position. Adopted on March 1, 2009, ASC 825 had no impact on our financial condition, results of operations or cash flows.

In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which amends ASC 855, “Subsequent Events”. This ASU, which was effective immediately, removes the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated. We adopted this standard in the first quarter of Fiscal 2010. The adoption of this standard did not have a material impact on our financial condition, results of operations or cash flows.

(3) CASH AND CASH EQUIVALENTS

For purposes of the balance sheets and statements of cash flows, we consider all highly liquid investments available for current use with an original maturity of three months or less to be cash equivalents. The average balance of our operating checking account balance is generally in excess of $250,000. The Federal Deposit Insurance Corporation (“FDIC”) currently insures all bank accounts up to $250,000, with unlimited coverage on non-interest-bearing accounts. The amount of our cash accounts in excess of the FDIC insurance limit at November 30, 2010, and February 28, 2010, was $26,649,910 and $17,866,367, respectively. Amounts in interest-bearing accounts in excess of $250,000, with the exception of amounts in FDIC sweep accounts, are at risk to the extent that their balances exceed FDIC coverage. Money market investments generally do not have FDIC protection. We believe we have mitigated our exposure to loss with deposits in a combination of five smaller, community banks and four of the largest national financial institutions.

(4) CERTIFICATES OF DEPOSIT

A certificate of deposit with an original maturity of greater than three months, but less than a year, is held in one banking institution. The certificate of deposit was not in excess of the FDIC insurance limit at November 30, 2010, and February 28, 2010.

(5) ACCOUNTS RECEIVABLE – TRADE

The amounts shown on the balance sheet termed Accounts Receivable – Trade are amounts reflecting settlement transactions that have closed, and revenue has been recognized, before the final funds are received to settle the transactions. We also sometimes make non-interest-bearing advances to facilitate a settlement transaction. We collect the advances generally within 30 days after the transactions close, and we receive payment before any of the parties involved in the transaction receive funds. Our business model does not use leverage, which minimizes issues of collectability or adverse effects due to the credit environment. The receivable amounts at November 30, 2010, and February 28, 2010, were $11,893,089 and $12,494,404, respectively.

(6) ACCOUNTS RECEIVABLE – OTHER

The amounts shown on the balance sheet at November 30, 2010, termed Accounts Receivable – Other, is composed of $31,158 due us from maturities of policies and loans of $21,479 to various employees for a total of $52,637. The amount for February 28, 2010, is composed of $574,288 due us from maturities of policies, loans of $18,115 to various employees, and $2,622 for an equipment financing loan for a total of $595,025. We consider all receivables to be current and collectible.

(7) NOTES RECEIVABLE

The amounts shown on the balance sheet termed Notes Receivable represent a note, including interest at 5%, with a non-related partnership originally dated January 8, 2008, and renewed with a guaranty and security agreement on January 23, 2009. The original due date was February 28, 2009. This note is substantially collateralized and we instituted collection proceedings, which resulted in an agreed final judgment being entered against the debtor on April 7, 2010, for the full amount of the note plus accrued interest, attorney’s fees, costs, all taxable costs of court and post judgment interest at the highest rate allowable by law. Our counsel in this matter is seeking collection of this judgment and is investigating the available collateral to foreclose upon to satisfy the judgment. We believe we will collect the full amount, including accrued interest, in the near term. The amount, including accrued interest, at November 30, 2010, and February 28, 2010, was $581,096.

(8) PREMIUM ADVANCES

We make advances on policy premiums to maintain certain policies. When the future premium amounts in escrow are exhausted, purchasers are contractually obligated to pay the additional policy premiums. In some instances, purchasers have failed to pay the premiums and we have acquired the policy or advanced the premiums to maintain the policies. While we have no contractual or other legal obligation to do so, and do not do so in every instance, we have made premium advances as an accommodation based on our assumptions that we will ultimately recoup the advances. Although we expect ultimate repayment, we make estimates of the collectability of these premium advances.

The table below shows the changes in the premium advances account.

Premium advance balance at February 28, 2010	$	6,849,536
Advances		854,401
Reimbursements		(253,314	)
Premium advance balance at May 31, 2010		7,450,623
Advances		394,426
Reimbursements		(471,761	)
Premium advance balance at August 31, 2010		7,373,288
Advances		1,001,356
Reimbursements		(345,929	)
Premium advance balance at November 30, 2010		8,028,715
Allowance for doubtful accounts		(3,128,905	)
Net premium advance balance at November 30, 2010	$	4,899,810

(9) INVESTMENTS IN SECURITIES

Securities investments not classified as either held-to-maturity or trading securities are classified as available-for-sale securities. Our securities investments consist of common stocks, municipal and corporate bonds, and commodity, index and foreign currency funds and are classified as available-for-sale securities.

The table below shows the cost and estimated fair value of the investment securities classified as available-for-sale as of November 30, 2010, and February 28, 2010:

	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal and corporate bonds	$	4,735,374	$	-	$	(122,932	)	$	4,612,442
U.S. common stocks		596,651		-		(115,844	)		480,807
Commodity, index and foreign currency funds		352,015		-		( 36,448	)		315,567
Total at November 30, 2010	$	5,684,040	$	-	$	(275,224	)	$	5,408,816
U.S. common stocks and funds	$	4,529,169	$	-	$	-		$	4,529,169
Total at February 28, 2010	$	4,529,169	$	-	$	-		$	4,529,169

The current unrealized loss is considered temporary in nature and the securities are recorded at fair value in Investment in Securities on the balance sheet, with the change in fair value during the current period included in equity through Other Comprehensive Income. As of February 28, 2010, we concluded that, based on the length of time the securities were in a loss position, some reductions in dividend rates, and the fact that we intended to sell the securities after year end, the unrealized loss was no longer temporary in nature and an impairment in the amount of the unrealized losses was recorded in earnings during the year ended February 28, 2010. The basis on which the amount reclassified out of other comprehensive income and into earnings was determined using specific identification. Our investments in securities held at February 28, 2010, were sold in the quarter ended May 31, 2010, and the proceeds were invested in the investments noted in the table.

(10) INVESTMENT IN POLICIES

From time to time, we purchase interests in policies to hold for investment purposes. ASC 325-30, Investments in Insurance Contracts, provides that a purchaser may elect to account for its investments in life settlement contracts based on the initial investment at the purchase price plus all initial direct costs. Continuing costs (e.g., policy premiums, statutory interest, and direct external costs, if any) to keep the policy in force are capitalized. We have historically elected to use the investment method, and refer to the recorded amount as the carrying value of the policies.

The table below describes the Investment in Policies account at November 30, 2010.

Policies With Remaining Life Expectancy (in years)	Number of Interests in Life Settlement Contracts		Carrying Value		Face Value
0-1		170	$	4,289,527	$	6,853,676
1-2		46		1,051,435		2,128,103
2-3		11		228,798		414,115
3-4		1		10,204		20,000
4-5		-		-		-
Thereafter		1		5,789		26,000

Policies With Extended Life Expectancy
Viaticals	797		7,200,172		11,615,454
Life settlements	259		5,817,647		8,605,697
	1,056		13,017,819		20,221,151
Total of all policies	1,285	$	18,603,572	$	29,663,045

Before fiscal 2004, our business model focused on viatical settlements, in which the insured is terminally ill. At that time, most viaticals involved insureds with HIV. Subsequent advances in medical science and health care greatly extended the life expectancies of these insureds, and we and the industry switched to life settlements. Our current business model, since fiscal 2004, has focused on facilitating the purchase of life settlements for our clients. The bulk of policies that we own that have exceeded life expectancy are viaticals.

Remaining life expectancy is based on original life expectancy estimates and is not an indication of expected maturity. Actual maturity dates in any category may vary significantly (either earlier or later) from the remaining life expectancies reported above. Policies with an extended life expectancy are those policies whose initial estimated life expectancy has been exceeded as of the end of the reporting period.

We evaluate the carrying value of our investment in owned policies on a regular basis, and adjust our total basis in the policies using new or updated information that affects our assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, discount rates and potential return. We recognize impairment on individual policies if the expected discounted cash flows are less than the carrying amount of the investment, plus anticipated undiscounted future premiums and capitalizable direct external costs, if any. Impairment of policies is generally caused by the insured significantly exceeding the estimate of the original life expectancy, which causes the original policy costs and projected future premiums to exceed the estimated maturity value. We recorded $111,333 and $188,125 of impairment for the nine months ended November 30, 2010 and 2009, respectively. The fair value of the impaired policies at November 30, 2010, and February 28, 2010, was $713,534 and $576,148, respectively.

Estimated premiums to be paid for each of the five succeeding fiscal years to keep the policies in force as of November 30, 2010, are as follows.

Year 1	$	524,740
Year 2		433,201
Year 3		387,673
Year 4		342,254
Year 5		90,418
Thereafter		13,860
Total estimated premiums	$	1,792,146

The majority of our Investment in Policies was purchased as part of settlement agreements and purchases from existing clients, which we refer to as tertiary purchases. We do not currently have a strategy of buying large amounts of policies for investment purposes, but we expect to continue to make purchases as they may be presented to us and if the purchases can be made with benefit to both parties. Since the purchases for our own account are motivated by settlements and tertiary purchases, the supply of available policies in the secondary market does not affect our purchases. The risks that we might experience as a result of investing in policies are an unknown remaining life expectancy, a change in credit worthiness of the policy issuer, funds needed to maintain the asset until maturity and changes in discount rates.

(11) INVESTMENT IN LIFE SETTLEMENTS TRUST

The amount shown on the balance sheet termed “Investment in Life Settlements Trust” is an investment in an unaffiliated corporation, Life Assets Trust, S.A., (the “Trust”) created for the acquisition of life settlements. As of November 30, 2010, and February 28, 2010, we owned 19.9% of the trust, carried at $6.2 and $6.5 million, respectively, and accounted for on the equity method of accounting. At November 30, 2010, the Trust owned a portfolio of 266 life insurance settlements with a face value of $689 million, of which LPI supplied settlements with a face value of approximately $278 million. We anticipate the policies will mature over the next few years, although we cannot determine the exact time of the policy maturities and the distribution of the underlying assets. The Trust experienced maturities during the quarters ended May 31, 2010, and November 30, 2010, and we were paid $311,367 from these maturities. We have considered any potential impairment to the investment and believe no impairment to the investment value is warranted.

(12) INCOME TAXES

Income tax expense was made up of the following components:

	Nine Months Ended November 30,
	2010		2009
Federal income taxes	$	12,592,597	$	13,330,802
Deferred tax expense (benefit)		180,666		(450,948	)
State income taxes		113,018		295,821
Total income tax expense	$	12,886,281	$	13,175,675

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

	November 30, 2010			Feb. 28, 2010
Deferred tax assets:
Premium advances allowance	$	1,095,117		$	1,154,865
Investment in securities		-			638,177
Deferred policy monitoring fees		334,157			-
State taxes		258,532			286,150
Policy impairments		190,759			196,487
Unrealized loss on investment securities		96,329			-
Contingency costs		89,455			569,129
Compensated absences		43,550			34,098
Loss on investment in trust		-			22,444
Capital loss carryover		638,177			-
Valuation allowance		(569,329	)		(611,298	)
Net deferred tax assets		2,176,747			2,290,052

Deferred tax liabilities:
Settlement costs		(945,259	)		(945,258	)
Depreciation		(166,341	)		(207,456	)
Gain on investment in trust		(13,340	)		-
Prepaid expenses		(10,763	)		(11,958	)
Net deferred tax liabilities		(1,135,703	)		(1,164,672	)
Total deferred tax asset, net	$	1,041,044		$	1,125,380

Summary of deferred tax assets:
Current	$	670,236		$	745,788
Non-current		370,808			379,592
Total deferred tax asset, net	$	1,041,044		$	1,125,380

In Fiscal 2010, we recorded a valuation allowance of $611,298 for capital losses resulting from other-than-temporary impairments. This amount represents capital losses that we were not able to deduct until we had corresponding capital gains to apply the losses against. In fiscal 2011, we had capital gains of $119,914. This reduced the valuation allowance to $569,329 at November 30, 2010.

With few exceptions, we are no longer subject to U.S. federal, state or local examinations by tax authorities for fiscal years 2006 and prior.

Accounting for Uncertainty in Income Taxes. In June 2006, the FASB issued guidance contained in ASC 740, Income Taxes (formerly FIN 48). The guidance is intended to clarify the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes the recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Under ASC 740, evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

At February 28, 2010, we determined that it is more likely than not that we will be assessed additional Texas Margin Tax for non-deductibility of certain payments in past and current periods included in our calculation of the Texas Margin Tax taxable basis. At November 30, 2010, the amount accrued for this uncertain tax position was $123,374. At February 28, 2010, the amount accrued for this uncertain tax position including estimated interest and penalties of $21,932, was $402,104.

The year ended February 28, 2010, was the first period with such a tax position. A reconciliation of the beginning and ending amount of unrecognized tax expense for the current period is as follows.

Balance at February 28, 2010	$	402,104
Reductions based on tax positions related to the current period		(278,730	)
Balance at November 30, 2010	$	123,374

(13)	COMPREHENSIVE INCOME PER SHARE, SHAREHOLDERS’ EQUITY, STOCK TRANSACTIONS AND COMMON STOCK OPTIONS

Comprehensive income for the three months ended November 30, 2010 and 2009, was $7,088,801 and $8,547,180, respectively. Basic and diluted earnings per share for comprehensive income for the three months ended November 30, 2010 and 2009, net of tax, were $0.48 and $0.58, respectively. Comprehensive income for the nine months ended November 30, 2010 and 2009, was $22,599,466 and $24,424,436, respectively. Basic and diluted earnings per share for comprehensive income for the nine months ended November 30, 2010 and 2009, net of tax, were $1.52 and $1.64, respectively.

Dividends. We declared and paid dividends in the amounts as set forth in the following table for the nine month periods ended November 30, 2009 and 2010:

Date Declared	Date Paid	Dividend Amount
05/07/09	06/15/09	$	0.07
05/14/09	06/15/09	$	0.25
07/27/09	09/15/09	$	0.25
10/26/09	12/15/09	$	0.25
04/26/10	06/15/10	$	0.25
08/06/10	09/15/10	$	0.25
09/03/10	10/29/10	$	0.25
10/21/10	12/15/10	$	0.25

(14)	FAIR VALUE MEASUREMENTS

In February 2008, the FASB agreed to defer the effective date of ASC 820 for one year for certain nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We adopted ASC 820 as to these items effective March 1, 2009. Examples of these items include:

Nonfinancial assets and nonfinancial liabilities that initially are measured at fair value in a business combination or other new basis event, but are not measured at fair value in subsequent periods;

Asset retirement obligations that are measured at fair value at initial recognition, but are not measured at fair value in subsequent periods; or

Nonfinancial liabilities for exit or disposal activities that are measured at fair value at initial recognition, but are not measured at fair value in subsequent periods.

We determined the fair values of our financial instruments based on the fair value hierarchy established in ASC 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard defines fair value, describes three levels of inputs that may be used to measure fair value, and expands disclosures about fair value measurements.

The term inputs refers to the assumptions that market participants use in pricing the asset or liability. ASC 820 distinguishes between observable inputs and unobservable inputs. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect an entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. ASC 820 indicates that valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in valuation techniques and creates the following three broad levels, with Level 1 being the highest priority:

Level 1 inputs: Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date (e.g., equity securities traded on the New York Stock Exchange).

Level 2 inputs: Level 2 inputs are from other-than-quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted market prices of similar assets or liabilities in active markets, or quoted market prices for identical or similar assets or liabilities in markets that are not active).

Level 3 inputs: Level 3 inputs are unobservable (e.g., a company’s own data) and should be used to measure fair value to the extent that observable inputs are not available.

Following is a table of Investment in Securities measured at fair value on a recurring basis as of November 30, 2010, and February 28, 2010, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

Description	Level 1: Quoted Prices in Active Markets for Identical Assets		Level 2: Significant Other Observable Inputs		Level 3: Significant Unobservable Inputs		Total
Municipal and corporate bonds	$	-	$	4,612,442	$	-	$	4,612,442
U.S. common stocks		480,807		-		-		480,807
Commodity, index and foreign currency funds		315,567	-		-			315,567
Total at November 30, 2010	$	796,374	$	4,612,442	$	-	$	5,408,816
U.S. common stocks and funds	$	4,529,169	-		-		$	4,529,169
Total at Feb. 28, 2010	$	4,529,169	$	-	$	-	$	4,529,169

Our financial assets and liabilities are cash and cash equivalents, certificates of deposit, accounts receivable, a note receivable, investments in securities, investments in policies, investment in a life settlements trust, accounts payable and accrued liabilities. The recorded values of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, and accrued liabilities approximate their fair values based on their short-term nature and are discussed in Notes 3 through 6. The recorded value of the note receivable is the original note amount plus accrued interest. The note’s fair value is not readily determinable; it is discussed in Note 7. The recorded value of investments in securities is based on fair value and is discussed in Note 9. The investment in the Trust is accounted for using the equity method of accounting, and is recorded at our investment account balance. The investment’s fair value is not readily determinable; it is discussed in Note 11.

The carrying value of our investments in policies totaled $18,603,572, which includes $571,203 of capitalized premiums, and has an estimated fair value, net of the present value of estimated premiums, of $19,549,272. Fair value of the investment in policies was determined using unobservable Level 3 inputs and was calculated by performing a net present value calculation of the face amount of the life policies less premiums for the total portfolio. The unobservable Level 3 inputs use new or updated information that affects our assumptions about remaining life expectancy, credit worthiness of the policy issuer, funds needed to maintain the asset until maturity, and discount rates. The investments in policies are discussed more fully in Note 10. A progression of the Level 3 inputs is shown in the table below:

Balance at February 28, 2010	$	-
Transfers from Level 2		18,866,580
Purchases of policies		2,074,540
Maturities of policies		(83,469	)
Change in unrealized gains		(1,308,379	)
Estimated Fair Value at November 30, 2010	$	19,549,272

In April 2009, the FASB issued ASC 820-10, Fair Value Measurements and Disclosures, which provides additional guidance for estimating fair value in accordance with ASC 820 when the volume and level of activity for the asset or liability have significantly decreased. ASC 820-10 also includes guidance on identifying circumstances that indicate a transaction is not orderly. ASC 820-10 has had no impact on our financial condition, results of operations or cash flows.

(15)	CONTINGENCIES

We are involved in various claims, suits, assessments, regulatory investigations, and legal proceedings that arise from time-to-time in the ordinary course of our business.

LPI is aware of certain instances wherein the insurance companies denied payment on policies in which LPI arranged the settlement with purchasers. Most of these denials are related to unforeseeable reductions in face value. Face value of the policies in question total $196,546 and our estimated liability is recorded in accrued liabilities at November 30, 2010. We did not accrue any additional liability in the quarter ended November 30, 2010. During the nine months ended November 30, 2010, we accrued an additional $41,000 for future claims that might arise in relation to these policies. During the three and nine months ended November 30, 2010, we paid $192,547 and $289,196 of settlements, respectively, which had been accrued in the current and previous periods.

We record provisions in the Consolidated Condensed Financial Statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. Except as discussed elsewhere in this note: (i) management has not concluded that it is probable that a loss has been incurred in any pending litigation; or (ii) management is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome of any pending litigation; and (iii) accordingly, management has not provided any amounts in the Consolidated Condensed Financial Statements for unfavorable outcomes, if any.

While we do not expect that the ultimate outcomes in these proceedings or matters, individually or collectively, will have a material adverse effect on our business, financial position, results of operations, or cash flows, the results and timing of the ultimate resolutions of these various proceedings and matters are inherently unpredictable. Whether the outcome of any claim, suit, assessment, regulatory investigation, or legal proceeding, individually or collectively, could have a material effect on our business, financial condition, results of operations, or cash flows, will depend on a number of variables, including the nature, timing, and amount of any associated expenses and amounts paid in settlement or damages, or the results of regulatory action that might limit markets or increase compliance costs.

On April 12, 2010, we entered into a settlement agreement with Maxim Group, LLC, an investment firm, to settle all claims in a civil action filed in 2007. Under the settlement, we agreed to deliver to Maxim 56,230 shares of our common stock, which were held in treasury, valued for settlement purposes at $22.23 per share, or $1.25 million. The cost of this settlement was accrued in our consolidated financial statements as of February 28, 2010, and had no effect on our cash position as of February 28, 2010, or November 30, 2010. The shares were issued to Maxim on April 13, 2010.

On April 24, 2001, the state of Texas initiated a suit against LPI for alleged violations of the Texas Deceptive Trade Practices Act (“DTPA”). The State claimed that the contracts LPI used with purchasers before 1998 did not clearly state that the purchasers were responsible for paying premiums to keep life insurance policies purchased in force and that LPI had violated the DTPA by requesting premiums from purchasers. LPI contended that the purchasers of the policy interests were responsible to pay premiums, as they were the owners of the policies. The trial court issued a summary judgment in favor of LPI, which was appealed by the State. After a lengthy appeals process, the matter was remanded back to the trial court and the LPI and the State agreed to settle the matter by entering into an Assurance of Voluntary Compliance (“AVC”) agreement, which was filed with the court on April 1, 2010. Under the AVC, both parties stipulate that the action relates only to certain contracts used with Texas purchasers before 1998. The AVC further stipulates that the Attorney General did not allege that LPI miscalculated escrow accounts or that it committed any crime, fraud, misappropriation or malfeasance regarding escrow accounts. Under the terms of the AVC, LPI agreed not to request any further premium payments from the Texas purchasers identified in the AVC, to pay future premiums on their behalf, estimated at $32,162 annually, and to pay settlement costs totaling $300,000. This amount was accrued in our consolidated financial statements as of February 28, 2010. By entering into the AVC, both parties agree to release and discharge each other from any and all claims for damages or other relief arising out of the action and we consider this matter to be completely resolved and settled. Substantially all of the $300,000 was paid during the quarter ended May 31, 2010.

On May 6, 2010, we settled an administrative case with the Virginia State Corporation Commission, which provides for a “safe harbor” of procedures and disclosures that will permit us to accept Virginia residents as purchasers within a clearly defined regulatory structure. The estimated cost of this settlement of $170,000 was accrued in our consolidated financial statements as of February 28, 2010, and was paid during the quarter ended May 31, 2010.

(16) DEFINED CONTRIBUTION PLAN

All employees are eligible to participate in our 401(k) retirement plan once they have met specified employment and age requirements. The 401(k) has a matching feature whereby we will make an annual matching contribution to each participant’s plan account equal to 100% of the lesser of the participant’s contribution to the plan for the year or 4% of the participant’s eligible compensation for that year. For the nine months ended November 30, 2010 and 2009, contribution expense for our matching contributions to the 401(k) plan was $116,975 and $73,882, respectively.

(17) RELATED PARTY TRANSACTION

We operate under an agreement with ESP Communications, Inc. (“ESP”), which is owned by the spouse of our Chief Executive Officer. Under the agreement, ESP performs certain post-settlement services for us, which include periodic contact with insureds and their health care providers, monthly record checks to determine an insured’s status, and working with the outside escrow agent in the filing of death claims. Either party may cancel the agreement with a 30-day written notice. We currently pay ESP $7,500 on a semi-monthly basis for its services. We recorded management services expense concerning this agreement with ESP of $135,000 in each of the nine months ended November 30, 2010 and 2009.

We periodically use an aircraft owned by our Chairman and CEO, and reimburse him for the incremental costs of our use, as described in applicable Federal Aviation Administration regulations (FAA Part 91, subpart F). For the nine months ended November 30, 2010 and 2009, the aircraft costs were $143,786 and $262,462, respectively.

(18) SUBSEQUENT EVENTS

On November 22, 2010, the Board of Directors authorized a 5-for-4 stock split payable in the form of a dividend. The dividend was paid on December 31, 2010, to shareholders of record on December 21, 2010, and the stock began trading on a post-split basis on January 3, 2011. The number of shares outstanding and per share amounts in this Report are not adjusted to reflect the stock split. The stock split had no impact on our financial results for the period.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note: Certain statements in this quarterly report on Form 10-Q concerning our business prospects or future financial performance, anticipated revenues, expenses, profitability or other financial items, estimates as to size, growth in or projected revenues from the life settlement market, developments in industry regulations and the application of such regulations, expected outcomes of pending or potential litigation and regulatory actions, 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. You should carefully review the risks described herein and in other documents we file from time to time with the Securities and Exchange Commission, (“SEC”), including our Annual Report on Form 10-K for the year ended February 28, 2010 (“Fiscal 2010”), particularly in the sections entitled “Item 1A – Risk Factors” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations”. We do 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.

Critical Accounting Estimates, Assumptions and Policies

Our discussion and analysis of financial condition and results of operations are based on our consolidated condensed financial statements that were prepared in accordance with accounting principles generally accepted in the United States of America. To guide our preparation, we follow accounting policies, some of which represent critical accounting policies as defined by the SEC. The SEC defines critical accounting policies as those that are both most important to the portrayal of a company’s financial condition and results and require management’s most difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates involve significant judgments, assumptions and estimates by management that may have a material impact on the carrying value of certain assets and liabilities, disclosures of contingent liabilities, and the reported amounts of income and expenses during the reporting period that management considers critical accounting estimates. The judgments, assumptions and estimates used by management are based on historical experience, management’s experience, knowledge of the accounts and other factors that are believed to be reasonable. Because of the nature of the judgments and assumptions made by management, actual results may differ materially from these judgments and estimates, which could have a material impact on the carrying values of assets and liabilities and the results of our operations. Areas affected by our estimates and assumptions are identified below.

We recognize revenue upon the receipt of executed contracts and assignment documents, and when the sellers have obligated themselves to transfer title of policies. We defer specific costs associated with the monitoring services provided subsequent to the settlement date.

ASC 325-30, Investments in Insurance Contracts, states that an investor may elect to account for its investments in life settlement contracts using either the investment method or the fair value method. The election is to be made on an instrument-by instrument basis and is irrevocable. Under the investment method, an investor is to recognize the initial investment at the purchase price plus all initial direct costs. Continuing costs (e.g., policy premiums and direct external costs, if any) to keep the policy in force are to be capitalized. Under the fair value method, an investor recognizes the initial investment at the purchase price. In subsequent periods, the investor re-measures the investment at fair value in its entirety at each reporting period and recognizes change in fair value earnings (or other performance indicators for entities that do not report earnings) in the period in which the changes occur. We value all of our investments in life settlement contracts using the investment method. As of November 30, 2010, and February 28, 2010, the total of our investment in life settlements held for our own account was valued at $18,603,572 and $16,460,353, respectively.

We establish litigation and policy analysis loss reserves based on our best estimates as to the ultimate outcome of contingent liabilities. This reserve analysis is necessary to properly match current expenses to currently recognized revenues and to recognize that there is a certain amount of liability associated with litigation and policy losses. Through this reserve, we recognize the estimated cost to settle pending litigation as an expense. These estimates are reviewed on a quarterly basis and adjusted to management’s best estimate of the anticipated liability on a case-by-case basis. A high degree of judgment is required in determining these estimated reserve amounts since the outcomes are affected by numerous factors, many of which are beyond our control. As a result, there is a risk that the estimates of future litigation and policy analysis loss costs could differ from our currently estimated amounts. Any difference between estimates and actual final outcomes are not expected to have a material impact on our financial statements.

We make estimates of the collectability of accounts and notes receivable. The accounts associated with these areas are critical to recognizing the correct amount of revenue in the proper period. We have not experienced any material changes in our estimates of collectability versus actual results in the current or prior periods.

We review the carrying value of the property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment includes current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, there were no asset impairments during the nine months ended November 30, 2010, or the year ended February 28, 2010.

We evaluate the useful lives of our property and equipment to assure that an adequate amount of depreciation is being charged to operations. Useful lives are based generally on specific knowledge of an asset’s life in combination with the Internal Revenue Service rules and guidelines for depreciable lives for specific types of assets.

We make advances on policy premiums to maintain certain policies. In a typical life settlement, policy premiums for the insured’s projected life expectancy are added to the purchase price and those future premium amounts are set aside in an escrow account to pay future premiums. When the future premium amounts are exhausted, purchasers are contractually obligated to pay the additional policy premiums. In some instances, purchasers have failed to pay the premiums and we have acquired the policy or advanced the premiums to maintain the policies. While we have no contractual or other legal obligation to do so, and do not do so in every instance, we have made premium advances as an accommodation to certain purchasers based on our assumptions that we will ultimately recoup the advances. While some purchasers repay the advances directly, reimbursements of these premiums will come most likely as a priority payment from the policy proceeds when an insured dies.

We make estimates of the collectability of these premium advances. Until Fiscal 2010, due to the uncertainty of the outcome of a relevant court case, we were unable to estimate the amount of any future advances we may elect to make or the timing of the amount of reimbursements we were likely to receive. Within Fiscal 2010, issues were resolved that enabled us to better estimate the collectability of premium advances. An agreement with the state of Texas allowed us to specifically identify a class of purchasers for whom we made premium advances, and which, under the terms of the agreement, will be uncollectible. Our historical success of collecting premium advances has enabled us to build a body of evidence by which we can demonstrate full collectability of the remaining balance of advanced premiums. To date, we have ultimately been fully reimbursed when we have made an advance and the policy has matured. As a result, we eliminated $3.5 million of the allowance on the advanced premiums account in the fourth quarter of Fiscal 2010. We record invoiced premiums as an increase to premium advances, and reduce the account for payments and other adjustments. We establish an allowance against the premium advance account for certain Texas purchasers based on the date of the contract issuance.

We evaluate the carrying value of our investment in owned policies. We adjust our total basis in the policies (original cost plus capitalized premiums) based on assumptions made about remaining life expectancy, funds needed to maintain the asset until maturity, discount rates and potential return. This evaluation provides us with any impairment of individual policies and also provides us with an estimate of fair value.

We are required to estimate our income taxes. This process involves estimating our current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and, to the extent we believe that recovery is not likely, we establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we include a tax provision or reduce our tax benefit in the statements of income. We use our judgment to determine our provision or benefit for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets.

We cannot predict what future laws and regulations might be passed that could have a material effect on our results of operations. We assess the impact of significant changes in laws and regulations on a regular basis and update the assumptions and estimates used to prepare our financial statements when we deem it necessary.

We have not made any material changes to our critical accounting estimates or assumptions or the judgments affecting the application of those estimates or assumptions.

New Accounting Pronouncements

We follow accounting standards set by the Financial Accounting Standards Board (the “FASB”). The FASB sets the accounting principles generally accepted in the United States (“GAAP”) that we follow to ensure we consistently report our financial condition, results of operations and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification Topic 105 (the “ASC”). In June 2009, the FASB approved the FASB ASC, which, as of July 1, 2009, became the single source of authoritative, nongovernmental GAAP. The ASC was not intended to change GAAP. Rather, the ASC reorganizes all previous GAAP pronouncements into accounting topics, and displays all topics using a consistent structure. All existing standards that were used to create the ASC are now superseded, aside from those issued by the SEC, replacing the previous references to specific Statements of Financial Accounting Standards with numbers used in the ASC’s structural organization. All guidance in the ASC has an equal level of authority. The ASC is effective for financial statements that cover interim and annual periods ended after September 15, 2009. There was no impact on our financial position, results of operations or cash flows as a result of the adoption of ASC.

ASC 320, Investments – Debt and Equity Securities – Debt and Equity Securities, amends the other-than-temporary impairment guidance in GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of the other-than-temporary impairments on debt and equity securities in the financial statements. Adoption of ASC 320 during Fiscal 2010 had no impact on our financial condition, results of operations or cash flows.

ASU 2010-06, Improving Disclosures about Fair Value Measurements, amended ASC 820 to clarify certain existing fair value disclosures and requires a number of additional disclosures. The guidance in ASU 2010-06 clarified that disclosures should be presented separately for each class of assets and liabilities measured at fair value and provided guidance on how to determine the appropriate classes of assets and liabilities to be presented. ASU 2010-06 also clarified the requirements for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. ASU 2010-06 introduced new requirements to disclose the amounts (on a gross basis) and reason for any significant transfers between Levels 1, 2, and 3 of the fair value hierarchy and present information regarding the purchases, sales, issuances and settlements of Level 3 assets and liabilities on a gross basis. With the exception of the requirement to present changes in Level 3 measurements on a gross basis, which is delayed until 2011, the guidance in ASU 2010-06 became effective for reporting periods beginning after December 15, 2009. Adoption of ASU 2010-06 on March 1, 2010, had no impact on our financial condition, results of operations or cash flows.

Life Partners

General. Life Partners Holdings, Inc. (“We” or “Life Partners”) is a financial services company and the parent company of Life Partners, Inc. (“LPI”). LPI is the oldest and one of the most active companies in the United States engaged in the secondary market for life insurance known generally as “life settlements”. LPI performs services to transact policies between the seller and buyer of life insurance policies, without taking title or control of the policies. These financial transactions involve the purchase of life insurance policies at a discount to their face value for investment purposes.

The Secondary Market for Life Insurance Policies. LPI was incorporated in 1991 and has conducted business under the registered service mark “Life Partners” since 1992. Our operating revenues are derived from fees for facilitating life settlement transactions. Life settlement transactions involve the sale of an existing life insurance policy to another party. By selling the policy, the policyholder 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 insured dies.

We are a financial services company providing purchasing services for life settlements to our client base. We do this by matching life settlors with purchasers. We facilitate these transactions by identifying, examining, and purchasing the policies as agent for the purchasers. To meet market demand and maximize our value to our clients, we have made significant investments in proprietary software and processes that enable us to facilitate a higher volume of transactions while maintaining our quality controls. Since our inception, we have facilitated over 126,000 purchaser transactions associated with the purchase of over 6,400 policies totaling over $2.7 billion in face value.

The following table shows the number of settlement contracts we have transacted, the aggregate face values of those contracts, and the revenues we derived, for the three and nine months ended November 30, 2010 and 2009:

	Three Months				Nine Months
	2010		2009		2010		2009
Number of settlements		44		52		132		156
Face value of policies	$	153,525,000	$	162,131,377	$	401,076,170	$	447,336,819
Average revenue per settlement	$	596,406	$	595,524	$	630,924	$	560,682
Net revenues derived*	$	14,132,462	$	16,464,256	$	45,523,576	$	47,951,680

* Net revenues derived are exclusive of brokerage and referral fees.

Comparison of the Three Months Ended November 30, 2010 and 2009

We reported net income of $7,067,398 for the three months ended November 30, 2010 (the “Third Quarter of this year”), compared to net income of $8,431,924 for the three months ended November 30, 2009 (the “Third Quarter of last year”). Our lower net income resulted primarily from a 15.3% decrease in gross revenue, resulting in a 14.2% decline in net revenue. Net income in the Third Quarter of this year was aided by an 8.1% decrease in total expenses primarily resulting from a reduction in settlement costs and net premium advances. The number of life settlement transactions we brokered decreased from 52 to 44, while the average revenue per settlement was relatively unchanged, from $595,524 in the Third Quarter of last year to $596,406 in the Third Quarter of this year, continuing a trend of fewer transactions, but at higher face values per settlement and a higher revenue, net of brokerage fees, per transaction.

Revenues: Revenues decreased 15.3%, or $4,725,391, from $30,967,256 in the Third Quarter of last year to $26,241,865 in the Third Quarter of this year. Total brokerage and referral fees decreased by $2,393,597, resulting in a 14.2% decrease in the net revenues derived.

During the periods presented, demand for our services declined. We believe demand for our services comes in part from the desire to diversify investment portfolios and avoid economically sensitive investments. Returns on life settlements are based on the face value of life insurance policies, which are purchased at a discount to face value and adjusted for projected future premiums and the projected holding period of the policy to maturity. For this reason, life settlement returns are not correlated to traditional equity and debt markets and commodity investments. We do not currently have enough information to indicate definitively the reason for the reduction in demand or to determine whether this reduction is a trend. It is possible that the demand decline results from a shift of a portion of investment capital to more traditional investment markets because of recent improvements in those markets. It is also possible that the continued uncertainty with regard to the economy has resulted in investors retaining a larger portion of their investment capital in cash and cash equivalents.

The industry generally has experienced a decline in activity. We have countered the decline by seeking attractive policies with higher face values. This move has largely allowed us to maintain profitability through higher margins per settlement with fewer policies. We believe there is a growing awareness of the secondary market for insurance policies among potential sellers, especially for those with higher face value policies. Whether this growing awareness will continue to expand the supply of eligible and financially attractive policies is, however, uncertain.

We believe the life settlement industry generally is experiencing lower demand. As we face these fluctuations in demand and supply, we believe that our business model, which utilizes a broad purchaser base, is better suited to weather the fluctuations than the single or preferred-client business model, which is used by most of our competitors. We also believe that our large network of brokers and licensees will assist us in finding attractive policies and suitable purchasers for those policies.

Brokerage and Referral Fees: Brokerage and referral fees decreased 16.5%, or $2,393,597, from $14,503,000 in the Third Quarter of last year to $12,109,403 in the Third Quarter of this year, primarily as a result of lower revenues and number of transactions. Brokerage and referral fees as a percentage of gross revenue were relatively unchanged from 46.8% in the Third Quarter of last year to 46.2% in the Third Quarter of this year. In the Third Quarter of this year, broker referrals accounted for 100% of the total face value of policies transacted, which is unchanged from the Third Quarter of last year. For the Third Quarter of this year, two brokers accounted for more than 10% of the face value of all completed transactions and constituted 32.6% of the total face value of completed transactions. For the Third Quarter of last year, two brokers accounted for more than 10% of the face value of all completed transactions, and constituted 23.5% of the total face value of completed transactions. The increase in concentration for the Third Quarter of this year counters an earlier trend toward lesser concentration. We will continue to monitor supply concentration and its possible effects on brokerage and referral fees.

Brokerage and referral fees generally increase or decrease with revenues, the face values of policies transacted, and the volume of transactions, although the exact ratio of fees may vary. Brokers may adjust their fees with the individual policyholders whom they represent. In some instances, several brokers may compete for representation of the same seller, which may result in lower broker fees. Referral fees also vary depending on factors such as varying contractual obligations, market demand for a particular kind of policy or life expectancy category and individual agreements between clients and their referring financial planners. No broker fees are paid when a life settlor presents a policy to us directly.

Expenses: General and administrative expenses increased by 8.6%, or $236,100, from $2,744,524 in the Third Quarter of last year to $2,980,624 in the Third Quarter of this year. The increase is primarily due to a $196,188 increase in legal fees and $118,923 increase in other outside services. The current period saw our legal expenses return to historic levels, compared with a very low level of activity in the previous period. We expect this higher level of legal expenses to continue throughout the remainder of this fiscal year. The only significant decrease in general and administrative expenses during the Third Quarter of this year was the $105,750 decrease in executive bonuses. Executive bonuses are calculated based on quarterly pre-tax earnings, which were lower. There were no other significant expense changes.

During the Third Quarter of this year and last year, we made premium advances of $1,001,356 and $621,590, respectively, and were reimbursed $345,929 and $150,430, respectively. In a typical life settlement, policy premiums for the insured’s projected life expectancy are added to the purchase price and those future premium amounts are set aside in an escrow account maintained by an unrelated third party to pay future premiums. When the future premium amounts are exhausted, purchasers are contractually obligated to pay the additional policy premiums. In some instances, purchasers have failed to pay the premiums and we have acquired the policy or advanced the premiums to maintain the policies. While we have no contractual or other legal obligation to do so, and do not do so in every instance, we have made premium advances as an accommodation to certain purchasers based on our assumptions that we will ultimately recoup the advances. While some purchasers repay the advances directly, reimbursements of these premiums will come most likely as a priority payment from the policy proceeds when an insured dies.

Total other income increased $44,777 from $464,307 in the Third Quarter of last year to $509,084 in the Third Quarter of this year, primarily due to realized gains on sales of securities. Although cash holdings were significantly higher than a year ago, interest rates continued to decline, which resulted in slightly lower interest income in the Third Quarter of this year. This year also saw fewer policies maturing and income from the Investment in Trust.

Income Taxes: Income tax expense decreased 13.0%, from $4,723,199 in the Third Quarter of last year to $4,108,138 in the Third Quarter of this year. This decrease is primarily a result of lower taxable income. The effective tax rate was 36.8% and 35.9% for the three months ended November 30, 2010 and 2009, respectively.

Comparison of the Nine Months Ended November 30, 2010 and 2009

We reported net income of $22,778,361 for the nine months ended November 30, 2010 (“the First Nine Months of this year”), compared to net income of $23,502,408 for the nine months ended November 30, 2009 (“the First Nine Months of last year”). Our lower net income resulted primarily from a 4.8% decrease in total revenues. Net income benefited from a 70.6% decline in settlement costs. The First Nine Months of last year included a $770,000 settlement with the state of Florida and a $500,000 settlement to reimburse investors for a policy that did not pay out. Net income was also increased with a 48.1% decline in net premium advances and a 4.3% decrease in general and administrative expenses. The positive effect of the declines in these expense levels were reduced by the $1,175,157 decrease in interest and dividend income. The number of settlements transacted decreased from 156 to 132 and the average revenue per settlement increased by 12.5%, increasing from $560,682 in the First Nine Months of last year to $630,924 in the First Nine Months of this year.

Revenues: Revenues declined 4.8%, decreasing by $4,184,400 from $87,466,426 in the First Nine Months of last year to $83,282,026 in the First Nine Months of this year. We are continuing a trend toward transactions with larger face amounts. The decrease in revenue, in conjunction with a similar decrease in brokerage and licensee fees, resulted in a 5.1% decrease in the net revenues derived.

During the periods presented, demand for our services declined. Since the attraction of life settlements is due partially to its lack of correlation with traditional investment markets and its benefits in diversifying investment portfolios, it is possible that the demand decline results from a strengthening in the traditional investment markets as the economy improves. The industry generally has experienced a decline in the supply of policies. We have countered the decline by seeking policies with higher face values. This move has largely allowed us to maintain profitability through higher margins per settlement with fewer policies. While we expect the supply of policies to stabilize with an increased awareness of the secondary market for life insurance policies, whether the supply will do so is uncertain.

Brokerage and Referral Fees: Brokerage and referral fees decreased 4.4%, or $1,756,296, from $39,514,746 in the First Nine Months of last year to $37,758,450 in the First Nine Months of this year. Brokerage and referral fees as a percentage of gross revenue increased slightly from 45.2% in the First Nine Months of last year to 45.3% in the First Nine Months of this year. The decrease resulted primarily from changes in licensee and broker fees. Licensee fees increased $2,460,894 primarily due to a promotional bonus in place in the current period. Brokerage fees decreased $3,655,146 as more policies were presented directly to us. In the First Nine Months of this year, broker referrals accounted for 99.9% of the total face value of policies transacted compared with 99.1% of the policies transacted in the First Nine Months of last year. For the First Nine Months of this year, two brokers accounted for more than 10% of the face value of all completed transactions and constituted 31.4% of the total face value of completed transactions. For the First Nine Months of last year, one broker accounted for more than 10% of the face value of all completed transactions and constituted 15.8% of completed transactions. The increase in concentration for the First Nine Months of this year counters an earlier trend toward lesser concentration. We will continue to monitor supply concentration and its possible effects on brokerage and referral fees.

Brokerage and referral fees generally increase or decrease with revenues, the face values of policies transacted and the volume of transactions, although the exact ratio may vary according to a number of factors. Brokers may adjust their fees with the individual policyholders whom they represent. In some instances, several brokers may compete for representation of the same seller, which may result in lower broker fees. Referral fees also vary depending on factors such as varying contractual obligations, market demand for a particular kind of policy or life expectancy category and individual agreements between clients and their referring financial planners. No broker fees are paid when a life settlor is not represented by a broker and the life settlor presents a policy to us directly.

Some states are moving to license life settlement brokerage activity, which may result in the capping of fees or greater disclosure of fees, either of which could tend to lower our fees.

Expenses: General and administrative expenses decreased 4.2%, or $408,435, from $9,510,659 in the First Nine Months of last year to $9,102,224 in the First Nine Months of this year. This decrease was due to lower executive bonuses of $363,051, investor relations fees of $200,893 and aircraft expenses of $118,676. These decreases were countered with an increase in donations of $190,568.

During the First Nine Months of this year and last year, we made premium advances of $2,250,183 and $1,734,760, respectively, and were reimbursed $1,061,004 and $456,875, respectively. In the typical life settlement, policy premiums for the insured’s projected life expectancy are added to the purchase price and reserved to pay future premiums. When the premium reserve is exhausted, purchasers are contractually obligated to pay policy premiums. In some instances, purchasers have failed to pay the premiums and we have acquired the policies or advanced the premiums to maintain the policies. While we have no contractual or other legal obligation to do so, and do not do so in every instance, we have made premium advances as an accommodation to certain purchasers based on our assumptions that we will ultimately recoup the advances. While some purchasers repay the advances directly, reimbursements these premiums will come most likely as a priority payment from the policy proceeds when an insured dies.

Other income and expense decreased from $1,703,466 of income in the First Nine Months of last year to $693,706 in the First Nine Months of this year primarily due to reduced interest and dividend income in the current year and the $426,783 gain in the prior year that resulted from converting the investment in a partnership to an investment in a life settlements trust as well as lower gains from maturities of owned policies. There was a $119,914 gain realized on sales of securities in the current year.

Income Taxes: Income tax expense decreased $289,394, or 2.2%, from $13,175,675 in the First Nine Months of last year to $12,886,281 in the First Nine Months of this year. This increase is primarily a result of lower taxable income and deferred tax assets reversing and becoming an expense, while in the previous period they were a benefit. The effective tax rate was 36.1% and 35.9% for the nine months ended November 30, 2010 and 2009, respectively.

Contractual Obligations

We lease office equipment under non-cancelable operating leases expiring in various years through 2015. The following table summarizes our outstanding lease commitments as of November 30, 2010:

Year 1	$	62,056
Year 2		27,187
Year 3		25,095
Year 4		21,155
Year 5		11,122
Thereafter		-
Total Lease Commitments	$	146,615

Liquidity and Capital Resources

Operating Activities: Net cash flows provided by operating activities for the First Nine Months of this year were $25,130,486. Sources of cash flow resulted primarily from net income of $22,778,361, a $1,143,697 decrease in accounts receivable as we collected more closing funds before the end of the period and a $713,778 increase in deferred policy monitoring fees. Uses of cash were minor with the biggest uses being a $248,196 reduction in accrued settlements, as previously accrued settlements were paid, and a $185,890 reduction in other accrued liabilities. Net cash flows provided by operating activities for the First Nine Months of last year were $22,364,098. The cash flows from operating activities for last year resulted primarily from net income of $23,502,408, an increase in accounts payable of $1,104,203 due to accrued commissions and an increase in accrued liabilities of $815,711, less $649,027 earnings from the investment in the life settlements trust, and a $450,948 increase in deferred income taxes.

Investing Activities: Net cash flows used in investing activities were $4,427,134 during the First Nine Months of this year. This amount consists of $9,819,622 proceeds from sales of marketable securities, $311,367 from maturities within the life settlements trust and $83,469 from maturities of owned policies, less $10,854,577 for purchases of marketable securities, $2,338,021 for the purchase of policies for investment purposes, net premium advances of $1,349,898, $98,906 for purchases of property and equipment and $190 from the earnings on a certificate of deposit. In comparison, in the First Nine Months of last year, we used $5,327,984 for investing activities. Of these cash flows, $2,933,237 came from maturities of certificates of deposit and $101,147 from maturities within the life settlements trust, less $7,656,105 for the purchase of policies for investment purposes, $354,741 for purchases of property and equipment and $348,522 for purchases of marketable securities.

Financing Activities: We used $14,901,103 for financing activities during the First Nine Months of this year to pay dividends. We used $10,288,849 of net cash in financing activities in the First Nine Months of last year to pay dividends of $9,509,776 and make payments of $779,073 to retire all long-term debt.

Working Capital and Capital Availability: As of November 30, 2010, we had working capital of $35,658,501. We believe future income from operating activities will generate sufficient profits and cash flows to meet our anticipated working capital needs.

Outlook

We continue to produce strong financial results, although our growth rate has declined. We believe our company and our industry are fundamentally sound and well positioned to deal with the current uncertainty in the financial and capital markets. Our life settlements are not correlated to the financial or commodities markets, which increases their appeal in uncertain times. Further, we have an adequate amount of cash and cash equivalents. We carry no debt and do not rely on leverage in our capital structure. We do rely, however, upon the availability of investment capital. Our experience during the First Nine Months of this year indicates that investment capital remains available and will continue to be placed in life settlements. We believe this is due to the fact that returns in life settlements are relatively attractive and not correlated to the performance of the financial markets.

Our operating strategy is to increase cash flows generated from operations by increasing revenues, while controlling brokerage, settlement and general and administrative expenses. We believe that domestic and international demand for life settlements will continue to grow as the prospects for economic conditions remain uncertain and purchasers look for alternative investments. We continue efforts to attract institutional clients. On the supply side, we are increasing our advertising and professional awareness marketing to potential sellers of policies and to strengthen our broker network.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet arrangements or transactions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our risk exposure in the financial markets consists of exposure to interest rate changes and changes in the fair values of our investments. Our risk exposure to changes in interest rates relates primarily to our investment portfolio. We invest our excess cash in depository accounts with financial institutions and in income and equity-oriented investment funds. We attempt to protect and preserve our invested funds by limiting default, market, and reinvestment risk through portfolio diversification and review of the financial stability of the institutions with which we deposit funds. We do not hold derivative financial instruments or financial instruments such as credit default swaps, auction rate securities, mortgage-backed securities or collateralized debt obligations in our investment portfolio.

Investments in both fixed-rate and floating-rate interest earning instruments carry a degree of interest rate risk. Because our business strategy does not rely on generating material returns from our investment portfolio or cash holdings, we do not expect our market risk exposure on our interest-bearing assets to materially impact our operating results.

Fixed-rate securities may have their fair value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fluctuate due to changes in interest rates. We may suffer losses in principal if forced to sell securities that have declined in fair value due to negative market fluctuations although it is not expected that this potential loss would have a material impact on our financial condition, results of operations or cash flows.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. With the participation of our Chief Executive Officer and Chief Accounting Officer, we have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Report. Based upon such evaluation, our Chief Executive Officer and Chief Accounting Officer have concluded that, as of the end of such periods, our disclosure controls and procedures were effective in ensuring that (i) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal controls over financial reporting during the quarter or nine months ended November 30, 2010, that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, we are involved in various claims, suits, assessments, regulatory investigations, and legal proceedings that arise from time-to-time. We are not currently a party to any litigation or regulatory action that we believe could reasonably be expected to have a material adverse effect on our financial position, results of operations or cash flows.

ITEM 1A.

RISK FACTORS

See “Risk Factors” in our Annual Report on Form 10-K for the year ended February 28, 2010, for a detailed discussion of the risk factors affecting us.

ITEM 6.

EXHIBITS

31.1 Rule 13a-14(a) Certifications

32.1 Section 1350 Certification

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: January 10, 2011
	Life Partners Holdings, Inc.
	By: /s/ Brian D. Pardo
	Brian D. Pardo
	President and Chief Executive Officer
	(Signing on behalf of the registrant and as principal executive officer)

	By: /s/ David M. Martin
	David M. Martin
	Chief Financial Officer and Principal Financial and Accounting Officer

EXHIBIT INDEX

DESCRIPTION OF EXHIBITS

Number	Description	Page

31.1	Rule 13a-14(a) Certifications	32-33
32.1	Section 1350 Certification	34

LIFE PARTNERS HOLDINGS INC - FORM 10-Q - January 10, 2011

Attached files

LIFE PARTNERS HOLDINGS INC Reports