-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pchf4o/1D/GH8wtV9gghLfJdH74m9tYtRUh7zYt9CKFhEaGfwd8LYCWPCt11IzaJ Wsvos7rrYAvUjqJCCjmFyw== 0001140361-07-005990.txt : 20070319 0001140361-07-005990.hdr.sgml : 20070319 20070319165247 ACCESSION NUMBER: 0001140361-07-005990 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20061229 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070319 DATE AS OF CHANGE: 20070319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINANCIAL INDUSTRIES CORP CENTRAL INDEX KEY: 0000035733 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 742126975 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-04690 FILM NUMBER: 07703892 BUSINESS ADDRESS: STREET 1: LEGAL DEPARTMENT STREET 2: 6500 RIVER PLACE BLVD., BUILDING ONE CITY: AUSTIN STATE: TX ZIP: 78730 BUSINESS PHONE: 512 404-5000 MAIL ADDRESS: STREET 1: 6500 RIVER PLACE BLVD., BUILDING ONE STREET 2: LEGAL DEPARTMENT CITY: AUSTIN STATE: TX ZIP: 78730 FORMER COMPANY: FORMER CONFORMED NAME: GOLDEN UNITED INVESTMENT CO STOCK PLAN DATE OF NAME CHANGE: 19731128 FORMER COMPANY: FORMER CONFORMED NAME: ILEX CORP DATE OF NAME CHANGE: 19730801 FORMER COMPANY: FORMER CONFORMED NAME: GOLDEN UNITED INVESTMENT CO DATE OF NAME CHANGE: 19730801 8-K/A 1 form8-ka.htm SALE OF FAMILY LIFE 8-K/A 12-29-2006 Sale of Family Life 8-K/A 12-29-2006
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 29, 2006

Financial Industries Corporation
(Exact Name of Registrant as Specified in Charter)

Texas
  
0-4690
  
74-2126975
(State or Other Jurisdiction of Incorporation)
  
(Commission File Number)
  
(IRS Employer Identification No.)

6500 River Place Boulevard, Building I, Austin, Texas
78730
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number (including area code): (512) 404-5000

N/A
(Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

£
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

£
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

£
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

£
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

Item 2.01 Completion of Acquisition or Disposition of Assets

On December 29, 2006, Financial Industries Corporation (“FIC,” or the “Company”) completed the sale of its wholly owned subsidiary, Family Life Insurance Company (“Family Life”), to The Manhattan Life Insurance Company (“Manhattan Life”) for $28.0 million in cash, subject to certain post-closing adjustments.

Prior to the sale, the Company had transitioned the exclusive agents of Family Life to the new “Family Sales Division” of Investors Life Insurance Company of North America (“Investors Life”), FIC’s remaining insurance subsidiary. Similar to the sales and marketing approaches historically used within Family Life, the new Family Sales Division of Investors Life focuses on both the mortgage protection and final expense markets using leads provided through third-party vendors. At December 31, 2006, the Company had 135 of these exclusive agents. In connection with the sale of Family Life, Investors Life entered into a coinsurance agreement with Family Life pursuant to which Investors Life will cede to Family Life (now a wholly-owned subsidiary of Manhattan Life) 35% of the face amount of mortgage protection term policies written in its Family Sales Division during the five-year period beginning April 1, 2007 and ending March 31, 2012. Such business will be administered by Investors Life, and Investors Life will receive allowances for its expenses on the portion of the business that is ceded.

Prior to the sale, Investors Life co-insured certain universal life insurance and annuity contracts written by Family Life under reinsurance treaties between the companies. Effective September 30, 2006, Family Life and Investors Life executed recapture agreements related to these reinsurance treaties effectively terminating these treaties and removing Investors Life from any liability for life insurance and annuity contracts written by Family Life.

Prior to closing of the sale, Family Life owned 648,640 shares of FIC common stock. Such shares are reflected as common treasury stock in the accompanying historical unaudited condensed consolidated financial statements. In conjunction with this transaction, the Company acquired from Family Life 324,320 of these shares and the remaining 324,320 shares remained with Family Life at the time of sale. Also, prior to the closing of the sale, the Family Life Pension Plan, along with its assets and liabilities, was transferred from Family Life to its upstream parent company, Family Life Corporation (“FLC”). FLC is wholly owned by FIC and all current and future obligations of the Family Life Pension Plan are the responsibility of FLC.

Certain significant aspects of Family Life related contracts and expenses are described below:
 
·
In June 2004, FIC established an insurance services subsidiary, FIC Insurance Services, L.P. FIC Insurance Services provided management, operating and administrative services to both Family Life and Investors Life, on a fee basis. The agreement between Family Life and FIC Insurance Services was terminated upon sale of Family Life.
 
·
Lease costs associated with the Company’s occupancy in the River Place Pointe office complex were shared by Family Life and Investors Life under a contractual agreement. This agreement was terminated upon the sale and Family Life did not retain any liability for leased facilities.
 
·
Certain other expenses were shared by Family Life and Investors Life, prior and subsequent to the establishment of FIC Insurance Services in June 2004, under other contractual cost sharing agreements. These cost sharing agreements were terminated upon the sale of Family Life.
 
·
No employees of the Company are now employed by Family Life or Manhattan Life.
 
·
Equipment and software owned by Family Life was retained by the Company.

During the first quarter of 2007, the Company has provided administrative services to Family Life pursuant to an administrative services agreement which is cancellable by either party with 30-days notice. The Company currently expects that it will provide such services until March 31, 2007, generating other revenues totaling approximately $800,000.

Item 9.01 Financial Statements and Exhibits

(a) Not Applicable.

(b) Pro forma financial information:

The following unaudited pro forma consolidated financial information is being filed herewith:
 
·
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2005.
 
·
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2005.
 
·
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

2

The unaudited pro forma condensed consolidated balance sheet presents the financial position of the Company as of December 31, 2005, assuming the sale of Family Life occurred on that date.

The unaudited pro forma condensed consolidated statement of operations presents the financial results from continuing operations of the Company for the year ended December 31, 2005, assuming the sale had occurred on January 1, 2005, as required by Rule 11-2 of Regulation S-X.

The unaudited pro forma condensed consolidated financial statements are based on estimates and assumptions. The Company believes that the assumptions and estimates used in the preparation of the unaudited pro forma condensed consolidated financial statements are reasonable. These estimates and assumptions have been made solely for the purposes of developing these unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that actually would have been realized had Family Life been sold as of the period indicated, nor is it necessarily indicative of the Company’s future financial position or results of operations.

The unaudited pro forma condensed financial information should be read in conjunction with the historical consolidated financial statements of the Company, including the notes thereto.

Forward-Looking Statements

Except for historical factual information set forth in this Form 8-K, the statements, analyses, and other information contained herein relating to trends in our operations and financial results, the markets for our products, future results, the future development of our business, and the contingencies and uncertainties to which we may be subject, as well as other statements including words such as “anticipate,” “believe,” “plan,” “budget,” “could,” “designed,” “estimate,” “expect,” “intend,” “forecast,” “predict,” “project,” “may,” “might,” “should” and other similar expressions constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Such statements are made based upon management’s current expectations and beliefs concerning financial results and economic conditions and are subject to known and unknown risks, uncertainties and other factors contemplated by the forward-looking statements. These factors include, among other things: (1) general economic conditions and other factors, including prevailing interest rate levels and stock market performance, which may affect FIC’s ability to sell its products, the market value of FIC’s investments and the lapse rate and profitability of policies; (2) FIC’s ability to achieve anticipated levels of operational efficiencies and cost-saving initiatives; (3) customer response to new products, distribution channels and marketing initiatives; (4) mortality, morbidity and other factors that may affect the profitability of FIC’s insurance products; (5) FIC’s ability to develop and maintain effective risk management policies and procedures and to maintain adequate reserves for future policy benefits and claims; (6) changes in the federal income tax laws and regulations that may affect the relative tax advantages of some of FIC’s products; (7) increasing competition in the sale of insurance products; (8) the effect of regulation and regulatory changes or actions, including those relating to regulation of insurance products and insurance companies; (9) ratings assigned to FIC’s insurance subsidiary by independent rating organizations such as A.M. Best Company, which FIC believes are particularly important to the sale of accumulation-type products; (10) the performance of our investment portfolios; (11) the effect of changes in standards of accounting; (12) the effects and results of litigation; (13) business risks and factors described in FIC’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, including, but not limited to, Item 1 - Description of the Business, Item 3 - Legal Proceedings, and Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (14) other factors discussed in the Company’s other filings with the SEC, which are available free of charge on the SEC’s website at www.sec.gov. You should read carefully the above factors and all of the other information contained in this report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. There can be no assurance that other factors not currently anticipated by management will not also materially and adversely affect our results of operations. Each forward-looking statement speaks only as of the date of the particular statement and the Company undertakes no obligation to update or revise any forward-looking statement. 

3

FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2005
(In thousands, except share data)

   
Financial Industries Historical
  
Family Life
  
 Pro forma Adjustments
  
Pro forma
  
ASSETS
                      
                       
Investments:
                      
Fixed maturity securities available for sale, at fair value (amortized cost of $535,529 at December 31, 2005)
  
$
593,752
  
$
68,543
              
$
525,209
  
Equity securities, at fair value (cost of $6,338 at December 31, 2005)
    
10,907
   
6,459
   
(b
)
  
4,428
   
8,876
 
Policy loans
    
37,637
   
4,701
               
32,936
 
Real estate held for sale
   
130
   
-
               
130
 
Short-term investments
    
1,204
   
-
         
 
    
1,204
 
Total investments
    
643,630
   
79,703
         
4,428
   
568,355
 
                                 
Cash and cash equivalents
    
63,581
   
26,675
   
(a
)
  
27,467
   
62,168
 
                (b )   
(2,205
)
      
Deferred policy acquisition costs
    
50,805
   
39,134
               
11,671
 
Present value of future profits of acquired business
    
15,865
   
6,858
               
9,007
 
Agency advances and other receivables, net of allowance for doubtful accounts of $36 at December 31, 2005
   
8,188
   
5,302
               
2,886
 
Reinsurance receivables
    
38,108
   
2,870
               
35,238
 
Accrued investment income
    
7,165
   
907
               
6,258
 
Due premiums
    
2,048
   
1,781
               
267
 
Property and equipment, net
    
1,033
   
92
   
(c
)
  
92
   
1,033
 
Other assets
    
2,088
   
359
               
1,729
 
Separate account assets
    
342,911
   
-
         
 
    
342,911
 
                                 
Total assets
  
$
1,175,422
  
$
163,681
        
$
29,782
  
$
1,041,523
  
 
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

4

FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET - CONTINUED
DECEMBER 31, 2005
(In thousands, except share data)

   
Financial Industries Historical
  
Family Life
  
 Pro forma Adjustments
  
Pro forma
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                      
                       
Liabilities:
                      
Policy liabilities and contractholder deposit funds:
                      
Contractholder deposit funds
  
$
542,181
  
$
59,114
              
$
483,067
  
Future policy benefits
    
155,970
   
35,583
               
120,387
 
Other policy claims and benefits payable
    
11,456
   
3,879
               
7,577
 
Notes payable
    
15,000
   
-
               
15,000
 
Deferred federal income taxes
    
687
   
5,393
   
(a
)
  
1,597
   
(3,811
)
 
                 (b )   
(702
)
      
Other liabilities
    
25,146
   
3,078
   
(a
)
  
1,400
   
23,468
 
                                 
Separate account liabilities
    
342,911
   
-
               
342,911
 
Total liabilities
    
1,093,351
   
107,047
         
2,295
   
988,599
 
                                 
Commitments and contingencies
                               
                                 
Shareholders’ equity:
                                
Common stock, $.20 par value; 12,516,841 shares issued in 2005; 10,173,208 shares outstanding in 2005
    
2,504
   
-
               
2,504
 
Additional paid-in capital
    
70,377
   
-
   
(b
)
  
(508
)
  
69,869
 
Accumulated other comprehensive income (loss)
    
(10,339
)
  
(546
)
  
(b
)
  
(1,363
)
  
(11,156
)
Retained earnings
    
42,485
   
-
   
(a
)
  
(30,611
)
  
11,874
 
Common treasury stock, at cost; 2,343,633 in 2005
    
(22,956
)
  
-
   
(b
)
  
2,789
   
(20,167
)
Total shareholders’ equity
    
82,071
   
(546
)
        
(29,693
)
  
52,924
 
                                 
Total liabilities and shareholders’ equity
  
$
1,175,422
  
$
106,501
        
$
(27,398
)
$
1,041,523
  

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

5

FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
(In thousands, except per share amounts)

   
Financial Industries Historical
  
Family Life
  
 Pro forma Adjustments
  
Pro forma
  
                       
Revenues:
                      
Premiums, net
  
$
23,101
  
$
18,081
              
$
5,020
  
Earned insurance charges
    
40,021
   
7,218
               
32,803
 
Net investment income
   
31,147
   
5,154
   
(a
)
  
1,177
   
27,308
 
 
                 (d )   
138
       
Real estate income, net
    
575
   
-
               
575
 
Net realized gains on real estate
    
9,243
   
-
               
9,243
 
Net realized gains (losses) on fixed maturities and other investments
    
(386
)
  
245
               
(631
)
Other
    
2,714
   
9
               
2,705
 
Total revenues
    
106,415
   
30,707
         
1,315
   
77,023
 
                                 
Benefits and expenses:
                                
Policyholder benefits and expenses
    
40,422
   
10,714
               
29,708
 
Interest expense on contractholder deposit funds
    
22,132
   
3,551
               
18,581
 
Amortization of deferred policy acquisition costs
    
9,995
   
8,391
               
1,604
 
Amortization of present value of future profits of acquired business
    
2,711
   
1,565
               
1,146
 
Operating expenses
    
30,120
   
12,151
   
(e
)
  
4,735
   
22,704
 
Interest expense
    
1,147
   
-
               
1,147
 
Total benefits and expenses
    
106,527
   
36,372
         
4,735
   
74,890
 
                                 
Gain (loss) from continuing operations before Federal income taxes
    
(112
)
  
(5,665
)
        
(3,420
)
  
2,133
 
                                 
Federal income tax expense (benefit)
    
53
   
(1,920
)
  
(f
)
  
(1,354
)
  
619
 
                                 
Gain (loss) from continuing operations
 
$
(165
)
$
(3,745
)
      
$
(2,066
)
$
1,514
  
Basic and diluted loss per share from continuing operations
  
$
(0.02
)
                  
$
0.15
  
                                 
Weighted average common shares and common share equivalents
    
9,821
                     
10,145
 
 
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

6

FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

On December 29, 2006, Financial Industries Corporation (“FIC,” or the “Company”) completed the sale of its wholly owned subsidiary, Family Life Insurance Company (“Family Life”), to The Manhattan Life Insurance Company (“Manhattan Life”) for $28.0 million in cash, subject to certain post-closing adjustments.

The unaudited pro forma condensed consolidated balance sheet presents the financial position of FIC as of December 31, 2005 assuming the sale of Family Life occurred on that date. Such pro forma information is based on FIC’s historical consolidated balance sheet included in the Company’s Form 10-K at December 31, 2005 giving effect to the following adjustments: 1) elimination of the separate company assets and liabilities of Family Life adjusted for (i) the reinsurance recapture with Investors Life, (ii) elimination of net pension liability retained by the Company, and (iii) push down of parent company present value of future profits of acquired business, 2) providing for the net proceeds of the sale, 3) reflecting transfers of certain of Family Life’s separate assets to the Company, prior to, and in conjunction with the sale.

The unaudited pro forma condensed consolidated statement of operations presents the financial results from continuing operations of the Company for the year ended December 31, 2005 assuming the sale had occurred on January 1, 2005, as required by Rule 11-2 of Regulation S-X. Such pro forma information is based on FIC’s historical consolidated statement of operations included in the Company’s Form 10-K for the year ending December 31, 2005 giving effect to the following adjustments: 1) elimination of the separate company revenues and expenses of Family Life adjusted for (i) the reinsurance recapture with Investors Life, (ii) elimination of pension expense, and (iii) push down of parent company amortization of present value of future profits of acquired business, 2) providing for investment income on the net proceeds of the sale and cash exchanged in conjunction with the transfer of certain of Family Life’s separate assets, and 3) allocated shared expenses.

The following is a summary of the estimated results of the sale of Family Life (in thousands):

Cash proceeds from sale
  
$
28,000
  
Less expenses, primarily professional fees
    
(533
)
         
Net proceeds from sale
  
$
27,467
  
         
Allocation of net proceeds:
        
Sale of Family Life, excluding FIC common stock
 
$
25,002
  
Sale of 324,320 shares of FIC common stock at $7.60
    
2,465
 
         
   
$
27,467
  
Net proceeds allocated to sale of Family Life, excluding FIC common stock
  
$
25,002
  
Less:
       
Carrying value of Family Life, net of adjustments for transferred assets and liabilities, and FIC common stock
    
(52,616
)
Deferred liability for reinsurance agreement with Manhattan Life
    
(1,400
)
         
Estimated loss on sale before income tax
    
(29,014
)
Estimated income taxes, including adjustments associated with the exclusion of Family Life from the FIC consolidated tax return
    
1,597
 
         
Estimated loss on sale
  
$
(30,611
)
 
7

FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Note 2 - Pro Forma Adjustments

(a) Reflects the net cash proceeds of the sale, estimated investment income on cash from the sale and related transfers, and the estimated loss on the sale as summarized above.

(b) Reflects the purchase of 324,320 shares of FIC common stock by the Company from Family Life for $2.2 million and the sale of 324,320 shares of FIC common stock in conjunction with the sale of Family Life.

(c) Reflects the net book value of Family Life’s equipment and software retained by the Company.

(d) Reflects the elimination of the FIC Insurance Services investment fee, net of actual allocated costs.

(e) Reflects the summary posting of the pro forma adjustments related to operating expenses as described in Note 4.

(f) Reflects income tax estimated on pro forma adjustments.

Note 3 - Family Life Sales Division

Prior to the sale, the Company had transitioned the exclusive agents of Family Life to the new “Family Sales Division” of Investors Life Insurance Company of North America (“Investors Life”), FIC’s remaining insurance subsidiary. Similar to the sales and marketing approaches historically used within Family Life, the Family Sales Division of Investors Life focuses on both the mortgage protection and final expense markets using leads provided through third-party vendors. At December 31, 2006, the Company had 135 of these exclusive agents. The costs associated with these sales activities in 2005 resided with Family Life and were directly related to the production of its new business. These costs are generally capitalized and amortized as deferred policy acquisition costs in the Company’s consolidated financial statements. No pro forma adjustments were made to provide for anticipated new business from the Family Sales Division of Investors Life (certain of which will pertain to the coinsurance agreement with Family Life as described below) or the costs of that division, which will remain with the Company.

In connection with the sale of Family Life, Investors Life entered into a reinsurance agreement with Family Life pursuant to which Investors Life will cede to Family Life (now a wholly-owned subsidiary of Manhattan Life) 35% of the face amount of mortgage protection term policies written in its Family Sales Division during the five-year period beginning April 1, 2007 and ending March 31, 2012. Such business will be administered by Investors Life, and Investors Life will receive allowances for its expenses on the portion of the business that is ceded. As described above, no pro forma adjustment was made to provide for anticipated new business from the Family Sales Division of Investors Life to which this coinsurance agreement would pertain.

Note 4 - Allocated Shared Expenses

FIC Insurance Services, L.P., a wholly-owned subsidiary of the Company, provided management, operating and administrative services to both Family Life and Investors Life, on a fee basis. Lease costs associated with the Company’s occupancy in River Place Pointe were shared by Family Life and Investors Life under a contractual agreement. Certain other expenses were shared by Family Life and Investors Life, prior and subsequent to the establishment of FIC Insurance Services in June 2004, under other contractual sharing agreements. These allocated shared costs are eliminated from the Company’s continuing operations by the removal of Family Life’s separate company expenses. However, the sale of Family Life will not result in the elimination of certain shared expenses that had been allocated to Family Life.

Certain allocated shared expenses are largely variable and are reasonably assumed to be eliminated with the sale of Family Life. However, certain allocated shared expenses, such as personnel and leased premises, are not eliminated by the sale of Family Life. Accordingly, a pro forma adjustment was made to provide for expenses previously allocated to Family Life which will continue as part of the Company’s ongoing operations as described below:

8

FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

(In thousands)
      
       
FIC Insurances Services personnel costs
  
$
3,505
  
Leased premises
    
548
 
Office expenses, including depreciation and rents
    
682
 
         
   
$
4,735
  

Note 5 - Administrative Services Agreement

During the first quarter of 2007, the Company has provided administrative services to Family Life under an administrative services agreement which is cancellable by either party with 30-days notice. The Company currently expects that it will provide such services until March 31, 2007, generating other revenues totaling approximately $800,000. No pro forma adjustments were made to provide for revenues associated with this agreement.

9

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: March 19, 2007
FINANCIAL INDUSTRIES CORPORATION 
   
 
By:
 /s/ Vincent L. Kasch
   
Vincent L. Kasch
   
Chief Financial Officer
 
 
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