UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

            [X] Annual Report Pursuant to Section 13 or 15 (d) of the
                        Securities Exchange Act of 1934

                  For the fiscal year ended: February 28, 2002

                                       or

          [ ] 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.
                 (Name of small business issuer in its charter)

               Massachusetts                                 74-29624 75
          (State of incorporation)                     (I.R.S. Employer ID no.)
               204 Woodhew
               Waco, Texas                                      76712
(Address of Principal Executive Offices)                      (Zip Code)

          Issuer's telephone number, including area code: 254-751-7797

        Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock (par value $0.01 per share)
                                (Title of Class)

Check  whether  the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for  such shorter period that the Registrant was required to file such reports),
and  (2)  has  been subject to such filing requirements for at least the past 90
days.  Yes  [X]  No  [  ]

Check  if  there  is  no disclosure of delinquent filers pursuant to Item 405 of
Regulation  S-B  contained  herein,  and  will  not be contained, to the best of
Registrant's   knowledge,   in   definitive   proxy  or  information  statements
incorporated  by  reference  in Part III of this Form 10-KSB or any amendment to
this  Form  10-KSB.  [  ]

Revenues of issuer for year ended  February 28, 2002:  $4,557,524.00.

Aggregate  market  value  of  voting  stock held by non-affiliates as of May 23,
2002:  $17,187,044

Shares  of  Common  Stock,  $.01  par  value,  outstanding  as  of May 23, 2002:
9,629,676

                      DOCUMENTS INCORPORATED BY REFERENCE

The  Company's  definitive proxy statement in connection with the Annual Meeting
of  Shareholders  to be filed with the Commission pursuant to Regulation 14A, is
incorporated  by  reference  into  Part  III  of  this  report.


<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.

                         2002 Form 10-KSB Annual Report
                                Table of Contents

Item                                                                   Page  No.

                                     Part I

       Special  Note  Regarding  Forward-Looking  Statements                   3
1.     Description  of  Business                                               3
2.     Description  of  Properties                                            18
3.     Legal  Proceedings                                                     19
4.     Submission of Matters to a Vote of Security Holders                    20

                                    Part II

5.     Market for Our Common Stock and Related Shareholder Matters            20
6.     Management's  Discussion  and  Analysis or Plan of Operation           21
7.     Financial  Statements  and  Notes  Thereto                             24
8.     Changes in and Disagreements with Accountants on Accounting
       and Financial Disclosures                                              24

                                    Part III
9.     Directors, Executive Officers, Promoters and Control
       Persons; Compliance with  Section  16(A)  of  the
       Exchange  Act                                                          24
10.    Executive  Compensation                                                24
11.    Security  Ownership  of  Certain  Beneficial  Owners
       and  Management                                                        24
12.    Certain  Relationships  and  Related  Transactions                     24
13.    Exhibits  and  Reports  on  Form  8-K                                  24
       Signatures                                                             25







                                        2
<PAGE>
                                     PART I

Special  Note  Regarding  Forward-Looking  Statements

     Certain  statements  in  this  annual  report on Form 10-KSB concerning our
business  prospects  or  future  financial  performance;  anticipated  revenues,
expenses, profitability or other financial items, growth in the viatical or life
settlement  markets  or  our  projected  sales  in such markets, developments in
industry  regulations   and  the  application   of  such  regulations,  and  our
strategies,  plans  and  objectives, together with other statements that are not
historical facts, are "forward-looking statements" as that term is defined under
the  Federal securities laws.  All of these forward-looking statements are based
on  information  available to us on the date hereof, and we assume no obligation
to  update  any  such  forward-looking  statements.  Forward-looking  statements
involved  a  number of risks, uncertainties and other factors, which could cause
actual  results  to  differ  materially  from  those  stated in such statements.
Factors  that could cause or contribute to such differences include, but are not
limited  to,  those discussed in this annual report on Form 10-KSB, particularly
in  the  sections  entitled  "ITEM  1  -  Business - 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.

Item  1.  Description  of  Business

The  Company

     General.  Life  Partners  Holdings,  Inc.  ("We",  the  "Company"  or "Life
Partners")  is  the  parent  company of Life Partners, Inc. ("LPI") and Extended
Life Services, Inc. ("ELSI").  LPI is the oldest and one of the largest viatical
settlement  companies  in  the  United  States.  To  supplement  LPI's  viatical
business,  we  acquired ELSI in January 2000 to engage in senior life settlement
transactions,  a  strongly  emerging  market  similar to our viatical settlement
business.

     Our  Viatical  Settlement  Business.  LPI  was incorporated in 1991 and has
conducted business under the registered service mark "Life Partners" since 1992.
To  date,  our revenues have been principally derived from fees for facilitating
the purchase of viatical settlement contracts. A viatical settlement is the sale
of  a  life  insurance  policy  by  a terminally ill person to another party. By
selling the policy, the insured (a viator) receives an immediate cash payment to
use as he or she wishes. The purchaser takes an ownership interest in the policy
at  a discount to its face value and receives the death benefit under the policy
when  the  viator  dies.

     As  a  leader  in  the viatical settlement industry for over  a  decade, we
match  viators   with  viatical  settlement   purchasers.  We  facilitate  these
transactions  by  identifying,  examining and purchasing viatical settlements as
agent  for  the  purchasers.  LPI locates potential viators through a network of
viatical brokers and through referrals and Internet and print media advertising.

                                        3
<PAGE>
Brokers  are typically compensated based on a percentage of the face amount of a
viator's  policy,  which  is  paid  upon  the  closing  of a settlement. We have
long-term  relationships  with most of the country's viatical settlement brokers
and believe that these brokers adhere to applicable regulatory requirements when
conducting  their  business.  In the fiscal year ended February 28, 2002, broker
referrals  accounted  for  64% of our viatical settlement business, of which 35%
was  from  two  brokers.  We  do  not consider ourselves dependent on any single
broker  for  referrals.

     Purchasers generally come to us through a network of financial planners. We
develop this network through referrals and have long-standing relationships with
most  of  the  financial  planners.  Although  these  financial  planners can be
compensated through fee-based consultations paid by the purchaser, we compensate
most of the financial planners based on the amount invested. The compensation of
financial planners may consist of cash paid on settlement, and in certain cases,
through  a  stock  option plan provided by us based on the volume of a financial
planner's  activity.

     To  purchase a viatical settlement, a prospective purchaser first submits a
purchaser  application  which   contains  name   and  address   and  affirmative
representations  establishing  the  purchaser  as  an  accredited  investor.   A
purchaser  will  also  submit  an agency agreement and special power of attorney
which  appoints  us  as  a  limited  agent of the purchaser to act on his or her
behalf  in  purchasing  a  viatical  settlement. Unless specifically waived by a
purchaser,  the  agency  agreement limits our authority to policies issued by an
insurance carrier having an A.M. Best rating of A- or better, to policies beyond
their  contestable  period  (generally  two  years  or  older),  and to insureds
diagnosed  as  terminally ill and having a probable life expectancy of 48 months
or  less.  We  issue  each  financial  planner  a user identification number and
password  which  allows  access  to  our  restricted website containing lists of
available  policies and medical case histories (with the viator's name and other
identifying  information  redacted)  We  also  make  available to each financial
planner  standard  disclosures  discussing  the  nature  and  risks  of viatical
settlement  purchases.  A purchaser can then, in consultation with his financial
planner  or  other professionals available to them, select one or more policies,
specify  the  portion  of  the  policy or policies to be purchased (to diversify
their  positions,  purchasers  generally buy fractional interests in one or more
policies  and  not  an  entire  policy),  and  submit electronically or by fax a
reservation form. At the same time, the purchaser mails or wires the acquisition
price  to  the escrow agent and mails or faxes a policy funding agreement to us.
The  policy funding agreement identifies the policy or policies to be purchased,
the  acquisition  price,  the  administrative  services provided, and the escrow
arrangements  for receipt and disbursement of funds. In essence, we act upon the
instructions  of  the  purchasers  as  their  purchasing  agent.

     For  the  protection of the viator's ownership interest and the purchaser's
monetary  interest,  the  viatical settlements are closed through an independent
escrow  agent,   Sterling  Trust  Co.  ("Sterling"),  which  is  a  wholly-owned
subsidiary  of  Matrix  Bancorp,  Inc. (Nasdaq NMS: MTXC). Sterling will close a
purchase when it receives from purchasers executed policy funding agreements and
the acquisition price for a policy, it verifies that the policy is in full force
and  effect  and  that  no  security interest has attached to the policy, and it
receives  from  the  viator  a  transfer of policy ownership acknowledged by the

                                        4
<PAGE>
insurance  company.  Sterling  then pays the viator the offer price (net of fees
and  costs).  After  the closing, we send confirmation of the transaction to the
purchaser  as  well  as  a  copy  of  the  assignment  documents.

     After  closing  the  viatical  settlement,  we  generally hold title to the
policy  as  nominee  for  the purchaser. Responsibility for policy premium costs
passes  to the purchaser, who typically funds the premium costs through deposits
with  Sterling.  A  viator's  personal  information  is protected by regulations
promulgated  by  the  Texas  Department of Insurance. A purchaser will receive a
copy  of the policy and the transfer of ownership (which has the viator named as
the  insured),  but  will  not  receive  viator  contact  information,  which is
available  only  to licensed viatical companies (like Life Partners). We monitor
the  viators' health status and notify Sterling upon their death. We also notify
purchasers  in  instances in which the premium escrow account has been exhausted
so that the purchaser can replenish the account to keep the policy from lapsing.

     We  pioneered  the  foregoing  transaction  design,  which  is used by most
viatical  settlement  companies today. Since our formation, we have participated
in  the  purchase  of  viatical  settlements  totaling over $351 million in face
amount  of  policies.

     The  following  table  shows the number of viatical settlement contracts we
have  transacted,  the  aggregate  face  values  and  purchase  prices  of those
contracts,  and the revenues we derived, for our fiscal years ended February 28,
2000,  February  29,  2001  and  February  28,  2002:

<TABLE>
<CAPTION>
                                                  2000       2001        2002
                                                -------     ------     -------
<S>                                             <C>         <C>        <C>
Number of viatical settlements                      257        125         172

Face value of policies (in '000's)              $20,030     $9,264     $12,499

Acquisition costs (in '000's)(1)                $14,507     $6,630      $8,370

Revenues derived (in '000's) (2)                $ 2,254     $1,807      $2,241
------------------------
</TABLE>

     (1)  Acquisition  costs  include  amounts paid to viators, the fees we have
          received  and the  fees paid  to the  escrow agent  and to originating
          financial planners.
     (2)  The  revenues  derived  are exclusive of referring broker commissions.

     The  Viatical  Market  and Competition. The market for viatical settlements
started  in the early 1990's with the beginning of the AIDS epidemic and rapidly
grew  to a market estimated at $1.2 billion in 1999. In recent years, the market
has  stabilized  due  to  a  number of factors. Factors moderating market growth
include  an  increase  in the life expectancy of persons living with AIDS due to
improved  medical  treatments,  changes  in  insurance policies that provide for
pre-death  cash  benefits and the increase of government regulation with respect
to  viatical  settlements.

     Despite  these  factors,  we  believe  the  viatical settlement market will
continue  to  increase  due  to a number of contravening factors. First, we have
noted  a marked increase in investor demand for viatical settlements. We believe
this  is due, in part, to the volatility of the stock market and lower yields of

----------------------------

     1  As indicated in a 1999 report by  Conning & Co. based on the face  value
        of policies sold.

                                        5
<PAGE>
interest  bearing  instruments. In addition, while newer medical treatments have
improved  the longevity and quality of life of some, the treatments appear to be
of  limited  efficacy  and  do  not  promise  the  ability  to  cure  or suspend
indefinitely  the effects of the terminal illness AIDS. The decline in the rates
of  AIDS  incidence  has  reversed and new cases in the year 2001 are up 8% from
2000  according to preliminary numbers from the U.S. Centers for Disease Control
("CDC") released in January 2002. According to CNN and MSNBC news stories issued
on  August 13, 2001, the CDC reports the number of deaths from AIDS has remained
steady since 1998 after a rapid decline in the mid 1990's which may suggest that
the  benefits  of  newer  treatments  have been largely realized. In addition, a
study  released  on  December  18, 2001 at the American Society for Microbiology
revealed  that,  out of the 1,647 people nationwide who tested positive for HIV,
over half had developed a resistance to at least one drug used for the treatment
of  AIDS.  The number of people living with AIDS increased 9.5% between 1997 and
1998, 9.0% between 1998 and 1999, and 7.9% between 1999 and 2000, as reported by
the  U.S.  Department  of  Health  and  Human Services. Over 90% of the viatical
settlements  we  facilitate are with viators living with AIDS. We have responded
to  the  effects  of  the newer medical treatments by adjusting our underwriting
standards  upwards  and  reducing  the  offer  prices  to  viators.

     In  response  to  the  development  of  viatical settlements, the insurance
industry  has  responded  with  policy features offering various pre-death, cash
benefits  (sometimes  called  accelerated  death  benefits). While in some cases
accelerated  death  benefits  may  compete  with viatical settlements, we do not
expect  that  the  availability  of  accelerated  death  benefits  to affect the
viatical  market  significantly  at  this  time. The availability of accelerated
death  benefits  is  generally  more  restricted  than viatical settlements. For
example,  policies  often  limit  such  benefits  to  persons  who  have  a life
expectancy  of  less than one year, in contrast to viatical settlements that are
usually  available  to  persons  with  remaining life expectancies of up to four
years.  Viatical  settlements  generally offer viators greater amounts than they
would receive under accelerated death benefit provisions. An insurance company's
willingness  to offer a competitive accelerated death benefit, and the amount of
such  benefit,  may  be affected by imputed policy lapse rates. The availability
and amount of an accelerated death benefit negatively impacts lapse rates, which
could  increase  policy  rates.  The  competition for new policies limits policy
rates  and  may,  indirectly,  limit  the availability and amount of accelerated
death  benefits.

     The  viatical  market  has been negatively affected by some companies using
illegal  or questionable business practices. In response to these abuses and the
accompanying  adverse  publicity,  government  regulators  -  particularly state
insurance  regulators  -  have  adopted  regulations  requiring the licensing of
viatical  brokers  and  settlement companies, mandated disclosures to viators or
purchasers or both, and instituting periodic reporting requirements, and setting
forth prohibited business practices. We believe these regulations have generally
had  a  positive  effect  on  the  industry and on our ability to compete in the
viatical  marketplace.  We  are  licensed  as a viatical company in the State of
Texas  and  information  about  us  is available through the Texas Department of
Insurance.

     The  foregoing  developments  -  improved  AIDS  treatments,  the insurance
industry's  addition  of  pre-death cash benefits, and the increasing government
regulation  -  have  decreased the number of viatical settlement companies, both

                                        6
<PAGE>
those  purchasing  for  their own accounts and those, like us, who act as agents
for  our  purchasers.  Industry  trade  groups  estimate  the number of viatical
companies  actively purchasing for their own account or as agents for purchasers
at  about  14  and the number of viatical brokers at about 40. Most of these are
companies or brokers with small operations and limited capital. While we believe
we  are the largest viatical settlement company (based on face value of policies
settled),  the  viatical  market  is  active  and we will continue to experience
competition  for  new  viators and with respect to the prices we pay viators and
referring  financial  planners,  and  the  prices  we set for the acquisition of
policies.  We  believe the overall market for viatical settlements will continue
at its present level (estimated to be a total of $1.25 billion) and perhaps show
some  increases. In light of our experience in the market, our purchaser network
and  continued  regulatory pressure within the industry (from which we benefit),
we  believe  our  market  share   for  viatical  settlements  will  increase  to
approximately  $25  million in face amount for the fiscal year 2003. In our last
fiscal  year,  we  handled  over  $12  million  in  face  amount.

     Our view of the viatical market has changed in the past year. We are seeing
significant  interest  in  viatical  settlements  as  an  alternative investment
following  the  losses  that  many  investors  incurred  in the stock market and
particularly  the  technology  sector.  Complicating  economic  concerns was the
terrorist  attack  on  the United States on September 11, 2001 and the threat of
similar  attacks  in  the  future.  We  believe the general economic uncertainty
fostered  by  these  circumstances  has  led  many investors to seek alternative
investment  strategies  that  diversify  their portfolios and avoid economically
sensitive  investments.  Viatical  settlements  provide  diversification and are
largely  immune  from  economic  downturns.  We  believe that interest from both
individual and institutional investors will continue to grow steadily throughout
the  next  fiscal  year.

     Our  New  Senior  Life Settlement Business. As a supplement to our viatical
settlement  business,  we  remain  committed  to  the  development  of the newly
emerging  senior life settlement business. A senior life settlement differs from
a viatical settlement in that the insured in a life settlement is not terminally
ill,  is  65 years of age or older, with a life expectancy of ten years or less.
Senior  life  settlements  appeal  to  persons  who purchased life insurance for
income  protection  or  estate planning, but no longer need the insurance due to
growth  in  their  investment  portfolios or other changes in circumstances. The
settlements  also  appeal  to  persons who want to make immediate gifts to their
beneficiaries.  In  these  instances,  the  insured may feel the insurance is no
longer  needed.

     Senior  life settlements offer several benefits. The insured that sells the
policy  receives  a cash settlement for a policy he or she believes is redundant
and  carries  a  benefit  that he or she will never realize personally. A seller
avoids  the  liability  of  future  premiums. Because the policy stays in effect
rather  than  lapsing, the life insurance agent who sold the policy continues to
receive compensation as premiums are paid. The agent may also be the originating
settlement  producer  who  is compensated for the settlement by us. Further, the
agent  may  earn  additional  compensation from the reinvestment of the seller's
cash  settlement  in  other insurance or investment products, such as annuities.

     Since  sellers who participate in a senior life settlement have much longer
life  expectancies  than  viators  (who  are terminally ill), the amount paid to
sellers  is  less  than  in  a  viatical settlement - typically 5% to 15% of the
policy face value. Policies accepted by us for senior life settlements generally

                                        7
<PAGE>
must  have  a  face value of at least $500,000. In determining the price we will
offer  a  senior  life  seller,  we  will  examine  the  policy  terms to ensure
enforceability  and  transferability  and  consider  the type of policy (such as
term,  universal  or  variable  life)  and  future  premium payments. Our policy
analysis department will calculate the seller's remaining life expectancy, based
on  his  or  her  age  and  sex  and  whether  the seller uses tobacco products.

     As  in our viatical business, we will use a network of referring insurance,
legal  and  financial professionals to originate potential sellers. Some of this
network  is already in place. We can further develop this network through direct
contact  with  managing  general insurance agents as well as other insurance and
financial  professional  contacts  as well as by word-of-mouth contacts. We will
also  use  print media advertising and our Internet website to attract qualified
policies  for  purchase.

      Since  senior  life  settlements  are   long-term  investments  (typically
averaging  8  to 10 years), we believe the predominant purchasers of senior life
settlements  will  be  institutional  investors   seeking  long-term,  portfolio
diversity.  These  settlements  represent  an investment alternative since their
yields  are  not dependent upon the domestic and global debt markets or interest
rate  fluctuations.

     We  entered the market for "senior life settlements" in 1997 under contract
with ELSI. On behalf of ELSI, we originated, reviewed and underwrote almost $600
million  in face value of senior life settlements in 1997. In underwriting these
policies,  we quantified premium and life expectancy risks, but did not purchase
any of the policies for our own account or assume any risk associated therewith.
We  later  acquired  ELSI  as  a wholly-owned subsidiary to focus on this market
which  Conning & Co., an independent industry analyst, estimates to be in excess
of  $100  billion  in  face  amount.

     Because  we  believe  the predominant purchasers of senior life settlements
will  be  institutional  investors, we have sought to develop funding mechanisms
appropriate  for institutional investors. We believe the most likely mechanism -
or  purchasing  platform  -  will  be a securitization of senior life settlement
pools  sold  through  investment  banks  as bonds to institutional investors. To
interact with the investment banks and institutional investors, we have retained
an  executive  experienced  in  the  capital  markets. We began discussions with
various  established  investment  banks  back  in  March,  2000  to assist us in
developing  and  selling   the  securitized   senior  life  pools.   From  these
discussions, we have signed letters of intent with two firms for the development
of  a  purchasing  platform (but not for the underwriting). One of these letters
     has  since  expired  and  has  been  replaced  by an institutional referral
     agreement.  The remaining letter is with an internationally recognized, New
     York-based  investment  firm.  We  believe  that  our institutional funding
     division  will have the capacity to place in excess of $4.0 billion in face
     amount  per  year  with  institutional  investors  through direct purchases
     and/or  securitizations  of  bond  portfolios.

     We  believe the market for senior life settlements shows great promise, but
its  development  depends on the creation of reliable funding sources. A May 15,
2002  article  in the Wall Street Journal noted that at least two companies have
purchased  or  are expected to purchase $600 million in senior life policies. We
believe that these purchasers are large insurance companies that have employed a
"buy  and  hold" strategy for these policies. While beneficial to the purchasing

                                        8
<PAGE>
institution  as  an investment strategy, we believe that piecemeal institutional
purchases will not facilitate a full and complete development of the senior life
market.  Potential  settlers  and policy originators will not view the market as
viable  without  a  ready  funding source. We would like to develop a purchasing
platform  based  on the securitization of senior life pools and have taken steps
to  develop  such  a platform. Securitizing these pools would create marketable,
investment-grade  bonds  and a reliable and repeatable funding source for senior
life  settlements.

     The  completion  of  a  purchasing platform has taken longer than expected.
Believing  that  a  platform  was  imminent,  about  a year ago we began seeking
policies  and  expanding  our  referral  network.  We were at the time receiving
senior  life  settlement  applications  of  approximately $10.0 million per day.
Without  a  purchasing  platform, we were unable to close on these applications.
The  delay  in  completing  a purchasing platform may be attributable to several
factors.  We  believe  the  primary  reason  for  the  delay  is the lack of any
precedent  for   securitizing  senior  life  settlements   and  the  design  and
establishment  of  a  suitable purchasing platform has required extensive review
and  consideration by the institutions with whom we deal. Another reason lies in
the  difficulty  in  obtaining  reinsurance  that  is  typically  used  in
securitizations  to  enhance  the  credit.

     Because  we  lack a purchasing platform, we have not aggressively sought to
expand our network or originate policies (although we have accepted and continue
to  accept  policy  presentations  averaging  $10  million  per month). Once the
platform  is  in  place,  we  intend to expand the referral network and seek out
qualified  policies.  Our  ability to reach our goal of $1.0 billion dollars per
quarter  of  face  value  of  policies  is  dependent upon the ratio of policies
presented  to  those  which  pass  our  policy  analysis standards, the ratio of
sellers  that  accept  our  offer  price  and  the  ratio of policies ultimately
accepted  for  purchase  by  the  institution.

     We  intend to use procedures to facilitate senior life settlements that are
substantially similar to the procedures we use in viatical settlements. Sterling
Trust will act as escrow agent and will confirm receipt of the acquisition funds
and  all  necessary agreements and authorizations, and verify that the policy is
fully  paid  and  that  no  security  interest has attached. When Sterling Trust
completes these tasks, it will distribute funds to the seller and to us and send
a  purchase confirmation to the purchaser. Unlike with viatical settlements, the
purchasing  institutions  will  generally hold title to the policies and perform
all  post-sale services, such as the payment of premiums and mortality tracking.
We  can  perform  post-sale  services  upon  request.

     We  are hopeful that a suitable purchasing platform will be in place and we
can  begin purchasing life settlement policies as early as the second quarter of
the  2003  fiscal year. We believe that securitized senior life settlements will
become  an  emerging  asset  class  that  is  widely utilized by institutions as
collateral  for  securitized  transactions.  Should  this  occur, we stand in an
excellent  position  to capitalize on the use of senior life settlements in this
way.

     The  Senior  Life  Market  and  Competition.  The  market  for  senior life
settlements is new, first appearing in 1997. Despite its newness, Conning & Co.,
an  independent  industry analyst, has estimated the total face amount of senior
life  settlements purchased in 1998 at $0.5 billion and the potential market for

                                        9
<PAGE>
senior  life  settlements  at  over $100 billion. The attraction for senior life
brokers  and  settlement companies lies in the potential size of the market. The
market is expected to grow given predicted increases in the aging population and
their  greater  economic  wealth.

     Most  of  the  senior  life settlement purchases are presently conducted by
fewer  than  ten companies. Of these, we believe two are purchasing on behalf of
large  insurance companies. One financial institution which had made substantial
purchases  in  the market last year has ceased any further purchases and appears
to  be  holding  its  current  portfolio. We will depend upon outside sources of
capital for growth in this market. If we are unable to obtain outside sources of
capital,  it  could  significantly affect our ability to compete in this market.

     Other  factors  may influence the growth of the senior life market. To meet
the  needs  of  institutional purchasers and the need for substantial amounts of
capital to service the market, settlement companies may need to reduce the risks
of  senior  life  settlements, especially those associated with "life extension"
risks.  One  way  to  reduce  this risk is to reinsure the life extension risks.
Other  companies  have  explored  reinsurance  possibilities   for  senior  life
settlements.  If  viable  reinsurance  programs evolve to reduce life expectancy
risk,  we  expect  to  see  other  senior life settlement companies securitizing
blocks  of  senior  life settlements, which should increase capital availability
and  assist  in  the  development of the senior life market in general, but will
also  potentially  increase  competition.

Industry  Regulation  and  Taxation

     General.  When  the viatical market first arose, it was sparsely regulated.
Due  in part to abuses within the industry, which were well-publicized, both the
federal  government  and  various  states  moved  to  regulate the market in the
mid-1990's.  The  regulations  generally  took  two  forms.  One sought to apply
consumer  protection-type  regulations  to  the  market.  This  application  was
designed  to  protect  both  viators  and  purchasers.  Another  sought to apply
securities  regulations to the market, which was designed to protect purchasers.
Various states have also used their insurance regulations to attack instances of
insurance  fraud  within  the  industry.

    Consumer  Protection  Licensing.  The  consumer protection-type regulations
arose  largely  from the draft of a model law and regulations promulgated by the
National  Association of Insurance Commissioners (NAIC). At least 35 states have
now  adopted  some  version  of  this  model  law  or another form of regulation
governing  viatical  settlement  companies  in  some  way.  These laws generally
require  the licensing of viatical providers and brokers, require the filing and
approval  of  viatical settlement agreements and disclosure statements, describe
the  content  of  disclosures  that  must be made to potential viators, describe
various  periodic  reporting  requirements for viatical settlement companies and
prohibit  certain  business  practices  deemed  to  be  abusive.

     Licensing  in  Texas. We are licensed by the Texas Department of Insurance.
Under  the  Texas  requirements, we must file our transaction documents with the
state for approval, make certain disclosures to viators, offer a 15 day right of
rescission  to  the  viator, and file certain annual reports with the state. The
regulations  also  prohibits  unfair  business  practices.  Because  all  of our
transactions  occur  in

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<PAGE>
Texas,  the  Department  of Insurance has jurisdiction to investigate complaints
from  any  viator,  irrespective  of  the  state  in  which  that  viator lives.

     In  1999, Texas became the first state to regulate life settlements as well
as  viatical  settlements.  The  Texas regulatory scheme for life settlements is
similar to the regulatory scheme applicable to viatical settlements. It requires
licensing  of  providers  and brokers, implements various reporting requirements
and  mandates  required disclosures. Life Partners is licensed with the State of
Texas  as  a  life  settlement  company.

     Securities  Regulations.   Despite   the   apparent   success  of  consumer
protection-type  laws  in  regulating the viatical industry, some states and the
Securities  and Exchange Commission have attempted to treat viatical settlements
as  securities  under  federal  or  state  securities  laws.   Whether  viatical
settlements will be regulated as securities and the effect of such regulation on
the  market  is  uncertain. Such regulation will not significantly affect senior
life  settlements  involving   institutional   purchasers,  either   because  of
exemptions  from registration available in institutional transactions or because
the  settlements  collateralize  bond transactions that are registered or exempt
from  registration.

     In  1994,  we  were  sued by the SEC, which asserted that we were violating
Federal  securities  laws  by  selling  interests in life insurance policies. In
1996,  we  received  a favorable decision from the U.S. Court of Appeals for the
District  of  Columbia, which ruled that our sales were not securities under the
Federal securities laws. The SEC's request for rehearing was denied. The SEC did
not  appeal  the  decision  to  the  U.S  Supreme  Court  and the SEC's case was
dismissed  with  prejudice  in 1997. In early 1999, the California Department of
Securities  issued  a  cease  and  desist  order  against  us  based  on similar
assertions.  At  our challenge, however, the order was immediately lifted and we
continue  to  facilitate  viatical   settlements  with  purchasers  residing  in
California.

     At  least  11  states  have  either amended their securities laws to define
viatical  settlements  as  securities  or asserted that viatical settlements are
securities and announced their intention to regulate the offer and sale viatical
settlements.  To  avoid  these  developments,  we  do  not  perform services for
investors  in  these  states,  unless  it  is  for  an  entity that has properly
registered  the  viatical  settlements as securities or complies with a state or
federal  exemption to that state's securities laws. Federal and state securities
laws  provide  private remedies, which permit individuals to sue under such laws
if  they  can  establish  that the settlements are securities.  We have recently
encountered  one such action.  Having successfully defended an action by the SEC
alleging  the  settlements  were  securities, we believe that we will prevail in
suits  alleging  the sale of "securities", but can not give assurance that state
regulators  or  private  individuals will not file these types of actions in the
future.  See  Item  3.  Legal  Proceedings.

     We believe that a combination of consumer protection-type laws and existing
insurance  regulations  provide  an  appropriate framework for regulation of the
industry.  The  widespread  application of securities laws would, as a practical
matter,  prevent  us  and  other  viatical  settlement  companies from marketing
settlements with little or no benefit to purchasers.  Each of our purchasers has
represented  themselves to be sophisticated individuals who have little need for
the  protections  afforded  by the securities laws.  At this point, the possible

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<PAGE>
application  of  such  laws  has  not  had  an  adverse,  material effect on our
business,  but  we  can  not  give  assurance  that  our  business  would not be
materially  and  adversely  impacted  by  a  securities-based  action.

     Insurance Regulation. As a senior life settlement company and as a viatical
settlement  company,  we  facilitate the transfer of ownership in life insurance
policies,  but  do  not  participate  in  the  issuance  of policies. We are not
required to be licensed as an insurance company or an insurance professional. We
do, however, deal with insurance companies and professionals in our business and
are indirectly affected by the regulations covering them. The insurance industry
is  highly  regulated, and these regulations affect us in numerous ways. We must
understand  the regulations as they apply to policy terms and provisions and the
entitlement  to,  and  collectibility  of,  policy  benefits.  We  rely upon the
protections  against fraudulent conduct that these regulations offer and we rely
upon  the  licensing  of  companies  and  individuals  with whom we do business.

     Taxation.  In  1996,  Congress  passed the Health Insurance Portability and
Accountability  Act.  This  act  exempts  from  taxation  proceeds received in a
viatical  settlement  paid  to  terminally  ill  viators  (those  having  a life
expectancy  of  24  months  or  less) and chronically ill viators (those who are
incapable  of  at least two daily-living activities, such as eating and bathing,
and  require  supervision).  The  tax  exemption  applies  only  if the viatical
settlement  company  is licensed in the state in which the viator resides, or if
the  viator  resides in a state that does not license viatical companies, if the
viatical  company  can  certify  that it complies with the model act provisions.
Because  we  are  licensed in Texas, we believe that, under 1996 act, qualifying
viators will not be subject to federal income tax from viatical settlements that
we  facilitate. Since most states follow the Federal income tax definitions, the
receipt of settlement proceeds is generally exempt for state income tax purposes
also.

     The  act  does  not  exempt the receipt of senior life settlement proceeds.
Senior  life  settlement proceeds would typically be taxed as ordinary income to
the  extent  that  the proceeds exceed the premiums paid.

Employees

     As  of  February  28,  2002,  we  had 24 direct employees, none of whom are
represented  by  a  labor  union,  as  well  as  over 1,000 licensees who act as
independent  contractors  and  refer  clients to us for the purchase of viatical
settlements.  We  continuously  review benefits and other matters of interest to
our  employees  and  consider  our  employee  relations  to  be  satisfactory.

More  about  Life  Partners

     The  Company  is the successor to IGE, Inc., a publicly held, Massachusetts
corporation that was formed in 1971, but had been dormant and without operations
since 1985.  On January 21, 2000, IGE, Inc. acquired LPI in a share exchange and
its  name  was  then changed to Life Partners Holdings, Inc.  Before January 21,
2000,  we  were a privately held corporation.  Our executive offices are located
at 204 Woodhew, Waco, Texas 76712 and our telephone number is 254-751-7797.  Our
websites  are  www.lifepartnersinc.com  and  www.lpi-investments.com.

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RISK  FACTORS

     Please  remember  to  be  cautious  in  reading forward-looking statements.

Important  Factors  regarding  Forward-Looking  Statements.

     In  addition  to other information in this annual report on Form 10-KSB and
in  the  documents we are incorporating by reference, the following risk factors
should  be  carefully  considered in evaluating us and our business because such
factors  significantly  affect  or  could  significantly  affect  our  business,
operating  results  or  financial  condition.  This annual report on Form 10-KSB
contains  forward-looking  statements  that  have  been  made  pursuant  to  the
provisions  of  the  Private  Securities  Litigation Reform Act of 1995.  Actual
results  could  differ  materially  from  those projected in the forward-looking
statements as a result of the risk factors set forth below and elsewhere in this
annual  report  on  Form  10-KSB.

We  Are  Operating  In  Markets  That  May  Change  Dramatically

     We  are  operating  in the viatical and senior life settlement markets. The
viatical  settlement  market  is  just  over  a decade old. While the market saw
tremendous  growth  in  its initial years, the market growth in recent years has
moderated.  The  senior  life settlement market is less than five years old. How
and  to  what extent it will develop is uncertain. While the potential market is
estimated  at  over $100 billion, our ability to originate, underwrite and place
senior  life  settlements  has  yet  to  be  tested  in  large  numbers.

     The  development  of  the senior life settlement market will depend heavily
upon  the   entry   of   institutional  purchasers.    Whether  we  can  attract
institutional purchasers will depend on our ability to convince these purchasers
that we can originate sufficient numbers of sellers and that our policy analysis
and  pricing  practices are sound.  The market may also depend on the ability of
purchasers  to  insure against "extended life" risks (the risk that sellers will
live  longer than predicted).  The ability to insure against extended life risks
is  still undeveloped at this time.  We have been unsuccessful over the past two
years  in  securing  such  reinsurance,  which  has  delayed  development  of  a
purchasing  platform.  We  have  allied  ourselves  with  an  international, New
York-based  investment bank to assist us in developing a purchasing platform and
we  are  hopeful  that  this  alliance  will  aid  in  securing  reinsurance.

     While  we are among the most experienced and largest companies within these
markets,  our  prospects  must be considered in light of the risks, expenses and
difficulties  encountered  by  those  attempting  to operate in rapidly evolving
markets.  We  cannot  assure  you  that  we will be successful in addressing the
risks we face.  The failure to do so could have a material adverse effect on our
business,  financial  condition  and  results  of  future  operations.

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<PAGE>
Our  Operating Results In One Or More Future Periods Are Likely To Fluctuate And
May  Fail  To  Meet  Expectations.

     Our  operating  results  in the viatical market have fluctuated in the past
and  may fluctuate significantly in the future depending on purchaser demand for
viatical  settlements.  Our  operating  results  in  the  senior life settlement
market  may fluctuate significantly depending on our ability to develop this new
market.  Because  of  these or other factors, our operating results may, in some
future  period, fall below market expectations.  In such event, the market price
of  our securities might fall.  Moreover, fluctuations in our viatical operating
results  may  also  result  in volatility in the market price of our securities.

Our  Success  Depends  On Maintaining Relationships Within Our Referral Networks

     In  the  viatical market, we rely primarily upon brokers to refer potential
viators to us and upon financial planners, known as licensees, to refer viatical
purchasers  to  us.  These  relationships are essential to our operations and we
must  maintain  these  relationships  to  be  successful.  We  do not have fixed
contractual  arrangements  with  the  brokers or financial planners and they are
free  to  do  business  with our competitors.  In addition, the pool of viatical
brokers and referring financial planners is relatively small, which can increase
our  reliance  on  our  existing  relationships.

     In  the  senior   life  market,   we  will   rely  primarily  on  insurance
professionals,  known  as  producers, to refer potential sellers to us. We would
typically  compensate  these professional upon closing. Our ability to build and
maintain these relationships will depend upon our closing rates and the level of
compensation  we pay to the referring professional. The compensation paid to the
referring  professional  will  affect  the  offer  price  to  the seller and the
compensation  we  receive. We must balance these interests successfully to build
our  referring  network  and  attain greater profitability. Although we have not
purchased  any  senior  life settlement policies to date, we have maintained our
relationship   with  our  producer  network  and  do   not  believe  that  these
relationships  have  suffered  any  significant  damage  due  to  the  delay  in
initiating  purchases.

Our  Success  In  The Senior Life Settlement Market Will Depend On Institutional
Sources  Of  Capital

     We  entered  the senior life market at its inception in 1997 under contract
for ELSI.  On behalf of ELSI, we originated, reviewed and underwrote almost $600
million in face value of senior life settlements in 1997.  In underwriting these
policies,  we quantified premium and life expectancy risks, but did not purchase
any  of  the  policies  for  our  own  account  or  assumed  any risk associated
therewith.  Since  1997,  we have shifted our corporate focus to the senior life
market  by  soliciting  senior  life  sellers,  creating  a senior life referral
network,  and  establishing  a  division dedicated exclusively to attracting and
interacting with large financial institutions.  To date, we have not consummated
any  of  these  senior  life  settlements  through  this  mechanism.

     In dealing with senior life settlements, we intend to work with one or more
entities  which  will  "securitize"  the settlements by pooling large amounts of
senior  life  settlements,  which  will  collateralize   bonds  to  be  sold  to
institutional  investors. Our approach depends substantially upon our ability to

                                       14
<PAGE>
develop  a  suitable  purchase  platform  and secure one or more underwriters to
market  the  bonds and the development of an institutional market for the bonds.
While  we  have conducted extensive discussions with several investment firms to
lead  a  bond  issue and have signed letters of intent with two firms, we do not
have a firm commitment for a bond offering to date. To our knowledge, no one has
successfully  conducted  a  bond  offering securitizing senior life settlements.
While  we  believe  the senior life settlements are well suited for this use and
have devoted substantial resources to pursuit of this approach, we cannot assure
you  that  an  underwriter  will commit to the bond issue or that the bond issue
will  create  sufficient  institutional  interest.

We  Must  Develop  Our  Senior  Life  Referral  Network

     An  impediment  to our expansion in the senior life settlement market could
be  the  difficulty  in  identifying  a large volume of potential sellers. These
sellers  are typically affluent persons over the age of 70 and not terminally or
chronically  ill. The target market is relatively narrow and advertising methods
such  as  direct  mailings  or  print  media  advertising  are  not likely to be
cost-effective.  We  believe  the  best  way  to  reach this market is generally
through  life  insurance  professionals   and,  to  a  lesser   extent,  through
professionals  engaged  in  estate  planning, such as attorneys, accountants and
financial  planners. Our business plan focuses on insurance professionals and we
intend  to  rapidly  expand  our referring network of insurance professionals to
build  our  senior  life  market. When we obtain a purchase platform to fund the
senior life settlements, we will expand our network through direct solicitation,
calls  to managing general insurance agents, and by word-of-mouth contacts. To a
lesser   extent,  we  will  also  use  advertising  in  estate   planning  trade
publications  and  our  Internet  website. This is a new market and building our
referral  network  will depend on our ability to educate insurance professionals
about  the  benefits  of senior life settlements to potential sellers and to the
professionals  themselves.   While  we  believe  we  have  been   successful  in
publicizing  the benefits of viatical settlements, we cannot assure you that our
past  successes  will  carry  over into this new market. Our business, financial
condition  and  results  of operations could be materially adversely affected to
the  extent  we  fail  to  expand  the  referral  network.

We  Depend  On Growth In Both The Viatical Settlement Market And The Senior Life
Settlement  Market

     We  believe  the  viatical market is growing and will provide a stable base
for  our operations.   Large scale growth, however, will likely depend on growth
in  the  senior  life  settlement market.  The senior life market is new and its
growth  uncertain.  The  senior life market may fail to grow due to a variety of
factors,  including:

     -  the  inability  to  locate  sufficient  numbers  of senior life sellers;

     -  the  inability  to  convince potential sellers of the benefits of senior
        life settlements;

     -  the  inability  to  attract  institutional  purchasers;

     -  the  failure  to  develop adequate financial risk management mechanisms,
        such  as  reinsurance  or  hedging   arrangements,  to  mitigate   "life
        extension" risks,

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<PAGE>
     -  competition  from life insurance companies offering comparable products;

     -  the  occurrence  of  illegal  or abusive business practices resulting in
        negative  publicity  about  the  market;  and

     -  the  adoption  of  burdensome  governmental  regulation.

     In  addition,  the  senior  life  market  may  evolve  in  ways we have not
anticipated  and  we  may  be  unable  to  respond in a timely or cost-effective
manner.  If the senior life market fails to grow, or fails to grow as quickly as
we have anticipated, our business, financial condition and results of operations
would  be materially adversely affected as it relates to our large scale growth.

Our  Purchasers  Depend On Our Abilities To Predict Life Expectancies; If We Are
Not  Accurate,  We  Will  Lose  Purchasers;  We  Must  Purchase In Large Numbers

     A  purchaser's  investment return from a viatical or senior life settlement
depends  primarily  on the demise of the insured.  We price settlements based on
the anticipated life expectancy of an insured.  Life expectancies are determined
from medical and actuarial data based on the historical experiences of similarly
situated persons.  The data is necessarily based on averages involving mortality
and  morbidity  statistics  and  the laws of large numbers.  It is impossible to
predict any one insured's life expectancy exactly.  To mitigate the risk that an
insured  will  outlive his or her predicted life expectancy, viatical settlement
purchasers  must  be  able  to bear a non-liquid investment for an indeterminate
period  of  time.  Additionally, purchasers of senior life settlements must have
the  potential  to buy such policies in large numbers in order to mitigate risk.

     If  we underestimate the average life expectancies, our purchasers will not
realize the returns they seek and will invest their funds elsewhere. Our ability
to  accurately  predict  life  expectancies  is affected by a number of factors,
including:

     -  the  accuracy  of  our  actuarial  and other historical data, which must
        sufficiently  account  for  factors including  an insured's age, medical
        condition, life  habits (such  as  smoking),  and  geographic  location;

     -  our  ability  to  anticipate  and adjust for trends, such as advances in
        medical  treatments,  that  affect  life  expectancy  data;  and

     -  our  ability to  balance competing  interests when  pricing settlements,
        such  as  the  amounts  paid  to  viators  or  senior life  sellers, the
        acquisition costs  paid  by  purchasers,  and  the  compensation paid to
        ourselves and our referral networks.

     To  foster  the  integrity of our pricing systems, we use both in-house and
outside  experts,  including  a medical doctor and published actuarial data.  We
cannot  assure  you  that, despite our experience in settlement pricing, we will
not  err  in  underestimating  average life expectancies.  If we do so, we could
lose  purchasers and the loss of purchasers could have a material adverse effect
on  our  business,  financial  condition  and  results  of  operations.

                                       16
<PAGE>
Government  Regulation  Could  Negatively  Impact  Our  Business

     We  are licensed in the State of Texas as a viatical settlement company and
as  a  senior life settlement company.  The Texas licensing laws and regulations
are  based  in  part  on a model law and regulations promulgated by the National
Association  of  Insurance  Commissioners.  At  least  35  other states have now
adopted  some  version of this model law or another form of regulation governing
viatical  settlement  companies  in  some way.  These laws generally require the
licensing of viatical providers and brokers, requires the filing and approval of
viatical  settlement  agreements  and  disclosure  statements, and describes the
content of disclosures that must be made to potential viators, describes various
periodic  reporting requirements for viatical settlement companies and prohibits
certain  business  practices  deemed  to  be  abusive.

     The Federal Securities and Exchange Commission and certain states have also
attempted  to regulate the industry through the application of federal and state
securities  laws.  In  a  suit filed against us, the SEC's attempts to apply the
securities  laws  were rebuffed by the U.S. Court of Appeals for the District of
Columbia,  which  ruled  that  our  transactions  were  not securities under the
federal  securities  laws.  Based  on  this ruling, the SEC has discontinued any
further attempts to apply the federal securities laws to viatical settlements as
transacted  by  us.  The Court of Appeals decision was based on federal law and,
while  persuasive  authority, is not binding upon the states. At least 11 states
have  either amended their state statutes to include viatical settlements in the
definition  of  a  "security"  or indicated that they may apply their securities
laws  to  include  viatical  settlements.  In  addition,  both federal and state
securities  laws provide private remedies, which permit individuals to sue under
such  laws  if  they  can establish that the settlements are securities. We have
recently  encountered  one  such  action.  To our knowledge, no state or private
individual  has  yet  attempted  to  apply  its  securities  laws to senior life
settlements, but such application is possible and could occur in the future. See
Item  3.  Legal  Proceedings.

     While  we  welcome  reasonable  regulation  of the viatical and senior life
markets and believe that such regulation will benefit these markets, attempts to
regulate  these  markets  through  application of their securities laws - either
through  actions by state agencies or private individuals - may adversely affect
the  markets.  We  cannot  assure  you  that  we  will  not encounter regulatory
difficulties  in  the future, some of which could have a material adverse effect
on  our  business.  In addition, government regulation could affect our referral
networks  or  settlement purchasers, which could in turn have a material adverse
effect  on  our  business.

Our  Chairman  And Chief Executive Officer Beneficially Owns 54.2% Of Our Common
Stock  And,  As  A  Result,  Can Exercise Significant Influence Over Our Company

     Mr.  Brian  D.  Pardo, our Chairman and Chief Executive Officer, is defined
under  SEC  regulations  as the beneficial owner of approximately  54.2% of  our
common  stock  and  exercises  voting power by proxy from The Pardo Family Trust
over 56.28% of the common stock (since we cannot vote the 370,324 shares held in
our  treasury).  He  will  be able to control most matters requiring approval by
our  shareholders,   including   the  election  of  directors  and  approval  of

                                       17
<PAGE>
significant  corporate  transactions.  This  concentration of ownership may also
have  the effect of delaying or preventing a change in control of Life Partners,
which  in  turn  could have a material adverse effect on the market price of our
common  stock  or  prevent  our  shareholders  from realizing a premium over the
market  price  for  their  shares  of  common  stock.

Our  Stock  Is  Thinly  Traded  And  The  Stock  Price  May  Be  Volatile

     Our  common  stock  is  traded on the Nasdaq OTC Bulletin Board, which is a
quotation  service  facilitating  trades  in over-the-counter equity securities.
The  OTC  Bulletin  Board  is  generally the market for any security that is not
listed  or traded on Nasdaq or a national securities exchange.  The OTC Bulletin
Board  does  not provide the same qualitative standards available with Nasdaq or
the national securities exchanges, order execution is manually processed, and as
a  result  the  trading  and  pricing of these securities is not as efficient as
Nasdaq or the national securities exchanges.  Our share price during the 90 days
ended  May  23,  2002,  has  averaged  about $5.44 per share, giving us a market
capitalization  of  approximately $52 million.  Our total share volume for April
2002  was  approximately  56,400  shares.  The  trading volumes are thin and the
market  presently  offers  shareholders  little  or  no  liquidity.

     Our share prices may be volatile due to actual or anticipated variations in
our  quarterly  operating  results, positive or negative developments within the
industry  or  the  general  economy,  and  positive  or  negative  announcements
regarding  material  developments in our business. We cannot assure you that the
market  for  our shares will be sufficient to permit you to sell our shares when
you  want  at  the  prices  you  want.

We Have Sold Stock In Private Offerings Under Registration Exemptions In Federal
And  State  Securities  Laws;  Compliance  With  Regulatory  Requirements May Be
Subjective

     Between  September  2000  and  December  2001,  we sold 1,256,127 shares of
common stock and 51,220 warrants to purchase common stock for $6,548,783, net of
offering  costs  of  $376,775, or an average price of $5.51 per share (excluding
any  warrant  value).  The  sales  occurred in six separate transactions, two of
which involved a private placement of shares and warrants followed by additional
shares and warrants issued in related rescission offer, and another two of which
involved  the conversion of existing indebtedness. In each case, we issued these
shares  and  warrants in reliance upon the private offering exemptions under the
Act  and  under  applicable  state  securities  laws.  While  we believe we have
satisfied  all  applicable  legal  requirements,  the  availability of a private
offering exemption is conditioned upon certain requirements that are subjective,
such  as  our reliance upon investor representations of financial and investment
suitability, our reliance upon the activities of selling brokers, and the degree
of required disclosures. Because of the subjective nature of these requirements,
we  cannot  be  certain that we have satisfied all applicable legal requirements
for  the  private  offering  exemptions.

Item  2.  Description  of  Properties

     Our  corporate  offices  are located at 204 Woodhew in Waco, Texas.  We own
1.068  acres  at  this  location and our offices occupy the entire 12,012 square
foot  office  building,  which  was built on the lot in 1986.  We pay a mortgage

                                       18
<PAGE>
payment  of  $6,638.46  per  month  on  this property.  The note carries a fixed
interest  rate  of  9.25%  with  a  full  amortization  period  of  15  years.

Item  3.  Legal  Proceedings

     On September 28, 2000, LPI was named as defendant in a suit entitled Bobbie
J.  Griffitts v. Life Partners, Inc., Cause No. 2000-3235-1 in the 19th Judicial
District  Court  of  McLennan  County  claiming  the  Company violated the Texas
Securities Act by not complying with the registration requirements of the Act in
connection with viatical settlement contracts it arranged. On July 31, 2001, the
Court  ruled  that  LPI's  viatical  settlement transactions were not securities
under  Texas  law  and  that  LPI is not required to register them as securities
prior to sale. In making its' ruling, the Court awarded summary judgment against
the  Plaintiff  in  this  action  dismissing  the  case  entirely. Plaintiff has
appealed  this decision to the Court of Appeals for the Tenth District of Texas,
Case  No.  10-01-271-CV  and  briefs  have been filed by both Plaintiff and LPI.
Management  is  committed  to  vigorously defending this action and believes the
Appellate Court will uphold the decision of the District Court in dismissing the
case.  However,  it  should  be  noted  that  the  outcome  of any litigation is
unpredictable  and  we  cannot  assure  you  that  we  will  ultimately prevail.

     LPI  is  the defendant in an action styled State of Texas v. Life Partners,
Inc.,  filed  in  the  250th  District  Court  of Travis County, Texas, Case No.
GV100564.  Plaintiff  alleges  that  LPI  failed  to  disclose  to purchasers of
viatical  settlements  prior  to 1997 that the purchasers could incur additional
carrying  costs  in  the  form of premium payments if viators lived beyond their
projected  life  expectancies.  Plaintiff claims that the nondisclosure violates
the  Texas  Deceptive  Trade  Practices Act (the "DTPA") and seeks an injunction
against  future  violations,  civil  penalties,  and restitution to the affected
individuals. We have met with Plaintiff to discuss resolution of the matter, but
the  results  of  such  meetings  have  been  inconclusive.  To  date,  only one
deposition  has  been  taken  and  we  have cooperated on an informal basis with
requests  for  information.  There has been no other activity in this matter. We
believe  that  we  have not violated the DTPA and that the applicable statute of
limitations  would  preclude  most  of  possible  claims.

     On  September  20,  2001,  we  received  notice  from  the Internal Revenue
Service  for  a  proposed  tax adjustment to LPI's taxable income  for the years
ended  September  30, 1993, 1994 and 1995. The proposed tax deficiencies totaled
$1,775,624  plus  proposed  penalties totaling $351,125.  Interest and penalties
could  be  added  to  any  portion  of  this assessment that is upheld.  We have
challenged  this  assessment  in  a petition filed on November 29, 2001 with the
United Stated Tax Court entitled Life Partners, Inc. v. Commissioner of Internal
Revenue,  Case  No. 13516-01.   Our  legal  counsel  and  we are assessing LPI's
liability, if any, in connections with this proposed assessment. We believe that
LPI has substantial support for its position and that the ultimate liability, if
any,  will  be substantially less that the proposed assessment. We have not been
able to determine the amount, if any, of liability that should be accrued on our
books  in connection with this proposed tax adjustment, therefore no accrual has
been  recorded  as  of  February  28,  2002.

                                       19
<PAGE>
     We  are  also  subject  to  legal  proceedings  in  the  ordinary course of
business,  none  of  which,  either individually or collectively, we believe are
material  to  our  business  operations,  financial  condition,  or  results  of
operations.

Item  4.  Submission  of  Matters  To  a  Vote  of  Security  Holders

     No  matter  was  submitted  during  the  fourth  quarter of the fiscal year
covered  by  this  Annual  Report  to  a vote of the Company's security holders.

                                    PART II

Item  5.  Market  for  Our  Common  Stock  and  Related  Shareholder  Matters

     Market  Information.   On  May  23,  2002,  there  were  approximately  143
shareholders  of  record  of our Common Stock.  Most of our common stock is held
beneficially  by  broker/dealers.  We  believe that there are approximately  400
beneficial  owners of shares of our common stock who hold in street name through
brokers.

     The  following  table  sets  forth  the high and low closing bid prices per
share  of  our  common  stock for each full quarterly period during the two most
recent  fiscal  years,  as reported by the Nasdaq OTC Bulletin Board. Bid prices
for  the  Nasdaq  OTC Bulletin Board reflect inter-dealer prices, do not include
retail  mark-ups,  mark-downs  and  commissions,  and do not necessarily reflect
actual  transactions.

<TABLE>
<CAPTION>
                                      Year  Ended              Year  Ended
                                   February 29, 2001        February 28, 2002
                                   -----------------        -----------------
                                   High          Low        High          Low
                                   ----          ---        ----          ---
<S>                               <C>          <C>         <C>           <C>
                First quarter     $32.00       $11.00      $11.00        $3.20

                Second quarter    $24.50       $15.75      $14.00        $7.25

                Third quarter     $18.50       $12.38      $11.00        $4.40

                Fourth quarter    $12.25        $6.50       $6.85        $3.40
</TABLE>

     On  May  23,  2002, the last reported sale price of our common stock on the
Nasdaq  OTC  Bulletin  Board  was  $4.00  per  share.

     Dividends.  On  February  7,  2002,  the  Board  of  Directors   authorized
Management to declare  a 2.5 cent per share cash dividend per quarter if, in the
opinion  of  management,  such  a declaration will not adversely affect our cash
position.  The  Company  declared  a  2.5  cent per share dividend in the fourth
quarter  of  fiscal  year  2002 and has declared a similar dividend in the first
quarter  of  fiscal  year  2003.  There  are  no contractual restrictions on the
Company's  present or future ability to pay dividends. Future dividend policy is
subject  to  the  discretion  of  the Board of Directors and is dependent upon a
number  of  factors,  including  future  earnings,  capital requirements and the
financial  condition  of  the  Company.

                                       20
<PAGE>
Item  6.  Management's  Discussion  and  Analysis  or  plan  of  Operation

     Special  Note:  Certain  statements  set  forth  below  under  this caption
constitute  "forward-looking  statements"  within the meaning of the Reform Act.
See  "Special  Note Regarding Forward-Looking Statements" for additional factors
relating  to  such  statements.

     The  following  discussion  and analysis should be read in conjunction with
the  Company's  Consolidated  Financial  Statements  and Notes thereto appearing
elsewhere  in  this  Report.

Comparison  of  Years  Ended  February  28,  2002  and  February  28,  2001

     The Company reported a net loss of  $(988,517) for  the year ended February
28, 2002 as compared to a net loss of $(841,555) for the year ended February 28,
2001.  This  increase  in  net  loss  is attributable primarily to the following
factors:  (1)  a $680,571 charge to accrued contingency cost in 2002 as compared
to  $450,000 in 2001, (2) a charge of $143,750 related to a change in accounting
principles regarding income recognition, offset in part by (3) a 24% increase in
revenues  net  of  brokerage  fees.

     Revenues  -  Revenues  increased  by $1,151,773 or 34% in  2002 as compared
with  2001 from $3,405,751 in 2001 to $4,557,524 in 2002.  This increase was due
to  (1)  a  38% increase in the number of settlements offset in part by (2) a 3%
decrease  in the average revenues per settlement from $27,246 in 2001 to $26,496
in  2002.  We  were  able  to increase our market share in 2002 due to increased
client  interest in viatical settlements.  We believe this interest increased in
part  due  to  the volatility of the stock markets and investors' desire to move
risk  capital  into  alternative  investment  vehicles.  Because  the  return on
viatical settlements is not affected by stock market volatility, we believe this
desire  has  resulted  in  an  increased  investment  in  viatical  settlements.

     Brokerage and Referral Fees - Brokerage and  Referral fees increased by 45%
from  $1,598,615  in 2001 to $2,316,141 in 2002.  This increase was due to (1) a
38%  increase  in the number of settlements and (2) a 5% increase in the average
brokerage  and  referral  fees per settlement from $12,789 in 2001 to $13,466 in
2002.  Brokerage  fees  increased  primarily  due  to  the larger face values of
policies  presented during the period. The broker's fee is derived from the face
value  of  each  policy  presented.  Referral  fees  increased  due  to  greater
purchaser  interest  in  viatical  settlements and increased transaction volume.

     General  and Administrative Expenses - General and  administrative expenses
remained  near  the  same in 2002 as in 2001 with an increase of  .05% or $1,214
from  $2,459,217  in  2001  to  $2,460,431  in  2002.

                                       21
<PAGE>
     Depreciation  Expense  -  Depreciation  expense  increased by 20% or $8,632
from  $43,752 in 2001 to $52,384 in 2002 due primarily to recording a full years
depreciation  on  the Company's office building in 2002 as compared to only nine
months  depreciation  in  2001.

     Interest  and  Other  Income  - Interest and  other income decreased by 41%
from  $325,998  in  2001  to  $192,956  in  2002, due primarily to a decrease in
interest  rates  combined  with  a  decrease  in  the amount of premium advances
returned  to  the  Company  during  2002.

     Accrued  Contingency  Costs - The Company  maintains a reserve to cover the
anticipated  cost  to  settle  known  underwriting deficiencies and other claims
against  the  Company.  Additions  to  this reserve increased by 51% or $230,571
from  $450,000  in  2001 to $680,571 in 2002.  This increase is due primarily to
certain  anomalous  underwriting  deficiencies   related  to   suicide  clauses.
Management has revised its underwriting standards for such policies and does not
anticipate underwriting losses arising from similar circumstances in the future.

     Interest  Expense  -  Interest expense increased by $9,512  from $48,964 in
2001 to $58,476 in 2002.  This increase is due primarily to the loan on the land
and  building  which  was  outstanding  only  nine  months  in  2001.

     Income Taxes - The Company was unable to effectively utilize  the carryback
of  its net operating losses in 2001 for which it has accrued a $27,244 benefit.
This  accrued  benefit  was  charged  to  income  tax  expense  during  2002.

     Cumulative  Effect  of  Change in Accounting Principles - During  2002, the
Company  changed  its  method  of  income recognition to defer income related to
certain minor administrative functions provided by the Company subsequent to the
investors' settlement date.  This change in accounting methods resulted in a one
time  charge  against operations in the amount of $143,750.  The proforma effect
of  this  change  did  not  have  a material effect on either 2001 or 2002's net
losses.

Liquidity  and  Capital  Resources

     Operating  Activities - Net cash flows used in operating activities for the
fiscal  year ended February 28, 2002 was $(205,876) compared with net cash flows
used in operating activities of $(667,324) during the fiscal year ended February
28,  2001.   This  increase  in  cash  flows   from  operating  activities   was
attributable  primarily  to the following factors:  (1) net losses of $(988,517)
for  the  fiscal  year  ended  February  28,  2002,  (2) an increase in accounts

                                       22
<PAGE>
receivable  of  $22,698,  (3) an increase in prepaid expenses of $121,689, (4) a
decrease  in  other  assets  of  $81,188, (5) an increase in accounts payable of
$80,620,  and  (6)  an  increase  in  accrued liabilities of $665,132.  Based on
projections  of  continued  stock   market  volatility   which  makes   viatical
settlements  more  attractive  as an alternative investment vehicle as well as a
substantial  increase  in viatical settlement transactions by foreign investors,
we  anticipate  a substantial increase in net cash flow from viatical settlement
activities compared with last year.  We believe domestic investors will continue
to  remain interested in viatical settlements in order to diversify a portion of
their  investment  portfolios  from   economically  sensitive  instruments  into
viatical  settlements.  Foreign investors have been drawn to us because we are a
leader  in  the  viatical settlement industry and are attracted to a U.S. dollar
denominated  investment  which  is  unaffected  by  stock  market  volatility or
interest  rates.  Revenues  from  our  viatical  operation  are  in  addition to
anticipated   revenues  from   operating  activities  related   to  senior  life
settlements.

     Since  our  announcement on March 12, 2002 of an agreement for the purchase
of  life settlements for an internationally recognized New York based investment
banking  firm,  we  have  are  continuing  to  work  with the firm regarding the
structuring  of  the  most  suitable  purchase  platform  for  the  ongoing  and
continuous  purchase  of life settlements. We have been advised by the firm that
it  remains  positive  that  a  suitable  purchase platform will be successfully
structured  and  we  anticipate  completing the purchase of one or more pools of
senior  life  settlement  policies to be used in an asset backed security by the
end  of  the  fiscal  year  2003.

     Investing  Activities  - During the fiscal year ended February 28, 2002, we
invested  $30,408  in  equipment.

     Financing  Activities  - During the fiscal year ended February 28, 2002, we
generated  $4,449,299 in cash flows from financing activities.  The company sold
common stock for $4,740,229.  The company also received loan advances of $4,702.
These  sources  of  funds  from  financing  activities  were  offset  in part by
acquisition of treasury stock in the amount of $28,789, payment on notes payable
of  $22,609,  and  dividends  declared  of  $244,234.

     Our  business  strategy  is  to  increase  our  cash  flow  generated  from
operations  by  increasing  revenues  from both our viatical and life settlement
lines  of  business  while  controlling  brokerage  and  general  administrative
expenses.

Capital  Requirements  and  Resources

     At  February  28,  2002  the  Company  had  a  working  capital  balance of
$3,389,981.

                                       23
<PAGE>
Management anticipates returning the company to a profitable level of operations
during  fiscal  2003.  Our  working  capital is more than sufficient to meet our
anticipated  operating  needs  over  the next 24 months even without any revenue
from  viatical  or  life  settlement  transaction  fees.

Item  7.  Financial  Statements  and  Supplementary  Data

     The  Company's  audited  financial  statements, together with the report of
auditors,  are  included  in  the  report  after  the  signature  page.

Item  8.  Changes  In  and  Disagreements  With  Accountants  on  Accounting and
Financial  Disclosure

     Not  applicable.

                                    PART III

Item  9.  Directors,  Executive  Officers,  Promoters  and  Control  Persons;
Compliance  With  Section  16(a)  of  the  Exchange  Act

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  10.  Executive  Compensation

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  11.  Security  Ownership  Of  Certain  Beneficial  Owners  And Management

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  12.  Certain  Relationships  And  Related  Transactions

     The information required in response to this Item is incorporated herein by
reference  to  the Company's proxy statement to be filed with the Securities and
Exchange  Commission  pursuant  to Regulation 14A, not later than 120 days after
the  end  of  the  fiscal  year  covered  by  this  report.

Item  13.  Exhibits  And  Reports  On  Form  8-K

(a)  Exhibits

                                       24
<PAGE>
Exhibit  No.  10.2  is  a  management  contract  or  compensatory  plans  or
arrangements.

                                  EXHIBIT INDEX
                             DESCRIPTION OF EXHIBIT

      Number                       Description
      ------                       -----------

       3.1     Articles  of  Incorporation,  dated  May  20,  1971  (1)
       3.2     Bylaws  (1)
       4.1     Form  of  stock  certificate  for  our  common  stock  (1)
      10.1     Share  exchange  agreement  between  I.G.E.,  Inc.  and  us dated
               January 18, 2000  (1)
      10.2     LPHI  Licensee  Incentive  Stock  Reward  Plan  (1)
      21       Subsidiaries  of  the  Issuer


     (1)  These  exhibits  were  filed  with the Company's Annual Report on Form
     10-KSB  for  the  year  ended  February  29,  2000, and are incorporated by
     reference  herein.

(b)  Reports  on  Form  8-K:

     We  filed  no  Form  8-K's  during  the  quarter  ended  February 28, 2002.


















                                       25
<PAGE>

                                   SIGNATURES

     In  accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                               Life  Partners  Holdings,  Inc.

May  28,  2002                                 By: /s/Brian  D.  Pardo
                                                   -----------------------------
                                                   Brian D. Pardo
                                                   President  and  Chief
                                                     Executive  Officer


     In  accordance  with the Exchange Act, this report has been signed below by
the  following  persons on behalf of the registrant and in the capacities and on
the  dates  indicated.


         Name                           Title                         Date
/s/Brian  D. Pardo            President, Principal Executive
                                Officer, and Director              May 28,  2002

/s/Jacquelyn  Davis           Treasurer                            May 28,  2002

/s/ R. Scott  Peden           Corporate  Clerk
                                (Secretary),  Director             May 28,  2002






















                                       26
<PAGE>







                          LIFE PARTNERS HOLDINGS, INC.


                        CONSOLIDATED FINANCIAL STATEMENTS


                     YEARS ENDED FEBRUARY 28, 2002 AND 2001





                                TABLE OF CONTENTS




INDEPENDENT  AUDITORS'  REPORT  ON  FINANCIAL  STATEMENTS                   F-1

FINANCIAL  STATEMENTS

  Consolidated  Balance  Sheet                                              F-2

  Consolidated  Statements  of  Operations                                  F-4

  Consolidated  Statements  of  Shareholders'  Equity                       F-5

  Consolidated  Statements  of  Cash  Flows                                 F-6

  Notes  to  Consolidated  Financial  Statements                            F-8








<PAGE>





Independent  Auditors'  Report



To  the  Board  of  Directors
Life  Partners  Holdings,  Inc.

We  have  audited  the  accompanying consolidated balance sheet of LIFE PARTNERS
HOLDINGS,  INC. as of February 28, 2002, and the related consolidated statements
of operations, shareholders' equity, and cash flows for the years ended February
28,  2002  and  2001.  These  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is  to  express an opinion on these
financial  statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audits  to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

As  discussed  in  Note  6, on September 20, 2001, Life Partners, Inc., a wholly
owned subsidiary of Life Partners Holdings, Inc. received a notice of deficiency
from the Internal Revenue Service for the fiscal years ended September 30, 1993,
1994  and  1995  in  the  amount of $1,755,624 plus penalties of $351,124 and an
unspecified  amount  of  interest.   Management  is  vigorously  defending  Life
Partners, Inc. against this claim and has filed a suit in tax court denying this
liability.  The Company's legal counsel has advised the Company that it may have
some liability in connection with this claim by the Internal Revenue Service but
is unable to provide an estimate as to what this liability might be. Because the
Company  is  unable  to estimate its liability in connection with this claim, no
liability  related  to  this  claim has been recorded in the Company's financial
statements  as  of  February 28, 2002. Settlement of this claim will result in a
reduction  in  net income in the period in which the liability can be reasonably
estimated.

In our opinion the financial statements referred to in the first paragraph above
present  fairly,  in  all  material  respects,  the  financial  position of Life
Partners  Holdings,  Inc.  as  of  February  28,  2002,  and  the results of its
operations and its cash flows for the years ended February 28, 2002 and 2001, in
conformity with accounting principles generally accepted in the United States of
America.

As  discussed in Note 3, the Company changed its method of reporting revenues to
take  into  consideration  certain  nominal  services  performed  by the Company
subsequent to closing of the viatical settlement.  The cumulative effect of this
change in accounting methods resulted in a one-time charge of $143,750, which is
reflected  in  the  financial  statements  at  February  28,  2002.


May  3,  2002

                                      F-1
<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET
                                FEBRUARY 28, 2002
                                  PAGE 1 OF 2


                                     ASSETS
<TABLE>
<CAPTION>

CURRENT  ASSETS:
<S>                                                                <C>
  Cash                                                             $  4,525,292
  Accrued  interest  receivable                                          25,314
  Current  portion  -  long-term  notes  receivable                       3,419
  Prepaid  expenses                                                     130,599
                                                                   ------------
      Total  current  assets                                          4,684,624
                                                                   ------------

PROPERTY  AND  EQUIPMENT:
  Land  and  building                                                   803,328
  Machinery  and equipment                                               80,730
  Transportation  equipment                                             173,775
                                                                   ------------

                                                                      1,057,833
  Accumulated depreciation                                             (215,211)
                                                                   ------------
                                                                        842,622
                                                                   ------------

OTHER  ASSETS:
  Notes  receivable,  net  of  current  portion  shown  above               570
  Advances of premiums, net of reserve for uncollectable
    advances of  $358,811                                                     -
  Other                                                                   9,258
                                                                   ------------

                                                                          9,828
                                                                   ------------
                                                                   $  5,537,074
                                                                   ============
</TABLE>




                See accompanying notes to financial statements.

                                      F-2
<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET
                                FEBRUARY 28, 2002
                                  PAGE 2 OF 2


                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CURRENT  LIABILITIES:
<S>                                                                <C>
  Accounts  payable                                                $    124,320
  Current  portion  of  long-term  debt                                  26,200
  Accrued  contingencies                                                956,347
  Accrued  liabilities                                                  187,776
                                                                   ------------

      Total  current  liabilities                                     1,294,643
                                                                   ------------

LONG-TERM DEBT, NET OF CURRENT PORTION SHOWN ABOVE                      582,711
                                                                   ------------

SHAREHOLDERS'  EQUITY:
  Common  stock,  $0.01  par  value,  10,000,000  shares
    authorized;  10,000,000  shares  issued                             100,000
  Additional  paid-in  capital                                       11,254,600
  Accumulated  deficit                                               (6,878,060)
  Less:  Notes  receivable  issued  for  common  stock                 (479,045)
  Less:  Treasury  stock  -  370,324  shares                           (337,775)
                                                                   ------------

                                                                      3,659,720
                                                                   ------------

                                                                   $  5,537,074
                                                                   ============
</TABLE>








                See accompanying notes to financial statements.

                                      F-3
<PAGE>
                              LIFE PARTNERS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED FEBRUARY 28, 2002 AND 2001

<TABLE>
<CAPTION>
                                                         2002           2001
                                                    ------------   ------------
<S>                                                 <C>            <C>
REVENUES                                            $  4,557,524   $  3,405,751

BROKERAGE  AND  REFERRAL  FEES                         2,316,141      1,598,615
                                                    ------------   ------------

REVENUES,  NET  OF  BROKERAGE  FEES                    2,241,383      1,807,136
                                                    ------------   ------------

OPERATING  AND  ADMINISTRATIVE  EXPENSES:
  General  and  administrative                         2,460,431      2,459,217
  Depreciation                                            52,384         43,752
                                                    ------------   ------------

                                                       2,512,815      2,502,969
                                                    ------------   ------------

(LOSS)  FROM  OPERATIONS                                (271,432)      (695,833)
                                                    ------------   ------------

OTHER  INCOME  (EXPENSES):
  Interest  and  other  income                           192,956        325,998
  Accrued  contingency  costs                           (680,571)      (450,000)
  Interest  expense                                      (58,476)       (48,964)
                                                    ------------   ------------

                                                        (546,091)      (172,966)
                                                    ------------   ------------

(LOSS)  BEFORE  INCOME  TAXES                           (817,523)      (868,799)
                                                    ------------   ------------

INCOME  TAXES:
  Current tax expense (benefit)                           27,244        (27,244)
                                                    ------------   ------------

                                                          27,244        (27,244)
                                                    ------------   ------------

(LOSS)  BEFORE  CUMULATIVE  EFFECT
  FOR  CHANGE  IN  ACCOUNTING  PRINICIPLE               (844,767)      (841,555)

CUMULATIVE  EFFECT  OF  ACCOUNTING  CHANGE
  ON  YEARS  PRIOR  TO  2002                            (143,750)             -
                                                    ------------   ------------

NET  (LOSS)                                         $   (988,517)  $   (841,555)
                                                    ============   ============

BASIC  EARNINGS  PER  SHARE:
  (Loss)  before cumulative effect of
    accounting change                               $      (0.09)  $      (0.10)
  Cumulative  effect  of  accounting  change               (0.02)             -
                                                    ------------   ------------

  Net  (loss)                                       $      (0.11)  $      (0.10)
                                                    ============   ============

AVERAGE  COMMON  AND  COMMON
  EQUIVALENT  SHARES  OUTSTANDING                      9,367,142      8,412,100
                                                    ============   ============
</TABLE>


                See accompanying notes to financial statements.

                                      F-4
<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 FOR THE YEARS ENDED FEBRUARY 28, 2002 AND 2001

<TABLE>
<CAPTION>
                                  Common Stock
                              --------------------
                                Number     $0.010    Additional                                Treasury Stock          Total
                                                                                            ---------------------
                                  of         par      Paid-In    Accumulated     Note       Number of               Shareholders'
                                Shares     Value      Capital      Deficit     Receivable      Shares      Amount      Equity
                              ----------  --------  -----------  ------------  ----------   ----------   ---------  -------------
Balance,
<S>                           <C>         <C>       <C>          <C>            <C>          <C>         <C>        <C>
  February  29,  2000         10,000,000  $100,000  $ 4,705,817  $(4,803,754)   $       -    1,604,644   $       -  $     2,063

Treasury  stock  issued
  for  notes  payable                  -         -      420,000            -            -     (44,481)           -      420,000
Contribution of stock by               -         -            -            -            -      75,000            -            -
  employees
Treasury stock sold for cash           -         -      933,513            -            -     (93,783)           -      933,513
Treasury  stock  purchased             -         -            -            -            -      19,401     (308,986)    (308,986)
Treasury  stock  sold  for
  note  receivable                     -         -      300,041            -      (300,041)   (41,385)           -            -
Return  of  stock  to
  employees                            -         -            -            -             -    (75,000)           -            -
Issuance of additonal shares
  of treasury stock for
  adjustments to purchase
  price                                -          -           -            -             -    (34,245)           -            -
Net  loss  for  the
  year  ended
  February  28,2001                    -          -           -     (841,555)            -          -            -     (841,555)
                              ----------  --------  -----------  ------------  ----------   ----------   ---------  -------------

Balance,
  February 28, 2001           10,000,000    100,000   6,359,371   (5,645,309)     (300,041) 1,410,151     (308,986)     205,035

Treasury stock sold for cash           -          -   4,740,229            -             - (1,017,778)           -    4,740,229
Repurchases of common stock            -          -           -            -             -      2,406      (28,789)     (28,789)
Issuance of additonal shares
  of treasury stock for
  adjustments to purchase
  price                                -          -           -            -             -     (4,455)           -            -
Treasury stock sold for
  note  receivable                     -          -     155,000            -      (155,000)   (20,000)           -            -
Additional principal on
  renewed note  receivable             -          -           -            -       (24,004)         -            -      (24,004)
Dividends                              -          -           -      (244,234)           -          -            -     (244,234)
Net loss for the
 year  ended
 February  28,2002                     -          -           -      (988,517)           -          -            -     (988,517)
                              ----------  --------  -----------  ------------  ----------   ----------   ---------  -------------

Balance,
  February 28, 2002           10,000,000   $100,000 $11,254,600   $(6,878,060)   $(479,045)   370,324  $  (337,775)  $3,659,720
                              ==========   ======== ===========   ===========    =========    =======   ==========   ==========
</TABLE>



                See accompanying notes to financial statements.

                                      F-5
<PAGE>

                          LIFE PARTNERS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED FEBRUARY 28, 2002 AND 2001
                                  PAGE 1 OF 2


<TABLE>
<CAPTION>
                                                         2002           2001
                                                    ------------   ------------
CASH  FLOWS  FROM  OPERATING  ACTIVITIES:
<S>                                                 <C>            <C>
  Net  (loss)                                       $   (988,517)  $   (841,555)
  Adjustments  to  reconcile  net  (loss)  to
    net  cash  used  in  operating  activities  -
      Depreciation                                        52,384         43,752
      (Increase)  in accounts receivable                 (22,698)        (3,660)
      (Increase) decrease in prepaid income taxes         47,704        (58,119)
      (Increase)  in  prepaid  expenses                 (121,689)             -
      (Increase) decrease in other assets                 81,188        (73,683)
      Increase  (decrease)  in  accounts  payable         80,620        (36,546)
      (Decrease)  in  income  taxes  payable                   -        (63,500)
      Increase  in  accrued  liabilities                 665,132        365,987
                                                    ------------   ------------

    Net  cash  used in operating activities             (205,876)      (667,324)
                                                    ------------   ------------

CASH  FLOWS  FROM  INVESTING  ACTIVITIES:
  Purchases  of  property  and  equipment                (30,408)      (174,191)
                                                    ------------   ------------

    Net  cash  used  in  investing  activities           (30,408)      (174,191)
                                                    ------------   ------------

CASH  FLOWS  FROM  FINANCING  ACTIVITIES:
  Advances  on  notes  payable                             4,702        426,672
  Payments  on  notes  payable                           (22,609)       (13,182)
  Purchases  of  treasury  stock                         (28,789)      (308,986)
  Proceeds  from  issuance  of common stock            4,740,229        933,513
  Dividends                                             (244,234)             -
                                                    ------------   ------------

    Net  cash  provided  by  financing  activities     4,449,299      1,038,017
                                                    ------------   ------------

NET  INCREASE  (DECREASE)  IN  CASH  AND
  CASH  EQUIVALENTS                                    4,213,015        196,502

CASH  AND  CASH  EQUIVALENTS,
  BEGINNING  OF  YEAR                                    312,277        115,775
                                                    ------------   ------------

CASH  AND  CASH  EQUIVALENTS,
  END  OF  YEAR                                     $  4,525,292   $    312,277
                                                    ============   ============
</TABLE>

                See accompanying notes to financial statements.

                                      F-6
<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED FEBRUARY 28, 2002 AND 2001
                                  PAGE 2 OF 2


<TABLE>
<CAPTION>
                                                         2002           2001
                                                    ------------   ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<S>                                                 <C>            <C>
  Interest expense                                  $     58,476   $     48,964
                                                    ============   ============
</TABLE>


SUPPLEMENTAL  DISCLOSURE  OF  NON-CASH  TRANSACTIONS:
  During  June  2000,  the  Company acquired land  and an  office  building  for
  $803,328 in exchange for  a  mortgage  of  $640,000  and  cash  of  $163,328.

  During  November 2000,  the Company  exchanged 11,148 shares  of its  treasury
  stock  for  notes  payable  totaling  $170,000.

  During  December 2000, the  Company exchanged  41,385 shares  of its  treasury
  stock  for  a  note  receivable  in  the  amount  of  $300,041.

  During  February  2001,  the  Company  converted  a  note  payable  due  to  a
  corporation of $250,000 to 33,333 shares of its common stock which the Company
  previously  held as  treasury  stock  resulting  in additional paid-in capital
  of $250,000.

  During  August  2001,  the Company  exchanged 20,000  shares of  its  treasury
  stock  for a  note  receivable  in  the  amount  of  $155,000.












                See accompanying notes to financial statements.

                                      F-7
<PAGE>
                          LIFE PARTNERS HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                FEBRUARY 28, 2002



(1)  DESCRIPTION  OF  BUSINESS

     Life  Partners  Holdings,  Inc.  (the  "Company")  formerly  IGE,  Inc. was
     organized  under the laws of the Commonwealth of Massachusetts in 1971, but
     had  been  dormant  and without operations since 1985. On January 18, 2000,
     the  shareholders  of  Life Partners Holdings, Inc. and Life Partners, Inc.
     (LPI)  entered  into a share exchange agreement whereby LPI became a wholly
     owned  operating  subsidiary  of  the  Company.

     The  Company's  subsidiaries  are  as  follows:

          LPI  is  a  viatical  settlement  company  established  in   1991  and
          incorporated in State of Texas for the purpose of assisting persons in
          facilitating the purchase of the life insurance policies of terminally
          ill  persons  at  a  discount  to  their  face  value.

          Extended  Life Services, Inc. was established in 1998 and incorporated
          in the State of Texas to engage in senior life settlement transactions
          by  assisting  elderly  individuals  to  reallocate  their assets from
          insurance  policies  into  assets  used  for  long-term care coverage,
          annuities,  investments,  etc.


(2)  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     The  following  is a summary of significant accounting policies followed by
     the Company:

          Cash  and  Cash  Equivalents  -  For purposes of the statement of cash
          flows,  the Company considers all short-term debt securities purchased
          with  a  maturity  of three months or less to be cash equivalents. The
          average  balance  of the Company's general checking account balance is
          generally  in  excess  of  $100,000.  The  Federal  Deposit  Insurance
          Corporation  insures  all  bank  accounts  up  to $100,000. Management
          believes  its exposure to loss is minimal considering only the amounts
          in  excess  of  $100,000 are at risk and the depository bank is a well
          established  national  bank  and one of the nation's largest financial
          institutions.

          Consolidation  -  The  consolidated  financial  statements include the
          accounts  of  the  Company  and  its  wholly  owned  subsidiaries,  as
          described  in Note 1 above. All significant inter-company accounts and
          transactions  have  been  eliminated  in  consolidation.

          Revenue  Recognition  - Prior to fiscal 2002, revenues were recognized
          as  of  the  settlement  date  of  the viatical purchase by investors.
          During  2002,  the  Company  changed its method of recording income to
          defer  $100 per settlement to cover minor monitoring services provided
          subsequent  to  the settlement date and to amortize this deferred cost
          over  the  anticipated life expectancy of the insureds. See Note 3 for
          further  details.  During the fiscal years ended February 28, 2002 and
          2001,   all   settlement   revenues  were   generated  from   viatical
          settlements.  No  settlement  revenues were generated from senior life
          settlements  during  these  years.

          Investment  in  Life Insurance Policies - In accordance with Financial
          Standards  Board  Technical Bulletin 85-4 "Accounting for Purchases of
          Life  Insurance", the Company reduces its investment in life insurance
          policies  to  their  cash surrender value with any differences between
          cost  and  cash  surrender value being charged to expense. At February
          28, 2002, the Company held investments in life insurance policies with
          face  value  amounts  totaling  $642,999  on  which it had reduced the
          carrying  value  to  $880.

          Property  and  Equipment  -  The  Company's property and equipment are
          depreciated  over  their  useful lives using the straight-line method.
          The  useful  lives of property and equipment for purposes of computing

                                      F-8
<PAGE>

          depreciation  are:
<TABLE>
<CAPTION>
<S>                                            <C>
               Building                            30  years
               Machinery  and  equipment            5  years
               Transportation  equipment       5 to 9  years
</TABLE>

          Impairment  of  Long-lived  Assets  -  The  Company  accounts  for the
          impairment  and  disposition  of  long-lived assets in accordance with
          SFAS  No.  121, "Accounting for the Impairment of Long-lived Assets to
          be  Disposed  of"  (FAS  121).  In accordance with FAS 121, long-lived
          assets to be held are reviewed for events or changes in circumstances,
          which indicate that their carrying value may not be recoverable. As of
          February  28,  2002,  no  impairment  has  been  indicated.

          Income  Taxes - Timing differences between the reporting of income and
          expenses  for financial and income tax reporting purposes are reported
          as  deferred  tax  assets, net of valuation allowances, or as deferred
          tax  liabilities  depending  on  the  cumulative  effect of all timing
          differences.  See  Note  6  for  further  details.

          Use  of  estimates  -  The  preparation  of  financial  statements  in
          conformity  with  generally  accepted  accounting  principles requires
          management  to  make estimates and assumptions that affect the amounts
          reported  and  contingent  assets  and  liabilities  disclosed  in the
          financial statements and accompanying notes. Actual results inevitably
          will  differ from those estimates and such differences may be material
          to  the  financial  statements.

          Earnings  (Loss)  Per  Share   -   Basic  earnings  (loss)  per  share
          computations  are  calculated on the weighted-average of common shares
          and  common  share equivalents outstanding during the year, reduced by
          the  treasury  stock. Common stock options and warrants are considered
          to  be  common  share  equivalents  and  are used to calculate diluted
          earnings  per common and common share equivalents except when they are
          anti-dilutive.


(3)  CHANGE  IN  ACCOUNTING  PRINCIPLE

     During  the year ended February 28, 2002, the Company changed its method of
     reporting  revenues  to  take  into  consideration certain nominal services
     performed  by the Company subsequent to closing of the viatical settlement.
     These  services  although  not  called for in the policy funding agreements
     entail  monitoring  the  insureds  progress and notifying the holder of the
     policy  when the insured dies. The Company has elected to change its policy
     funding  agreement  to  specify  that this service will be performed and to
     charge an up front fee for this service of $100 per policy. The fee will be
     deferred  and  amortized  over the life expectancy of the insured. Prior to
     this  change,  all  revenues  were  recognized  on the closing date for the
     acquisitions  of  the  policies  by  investors.  Management  has elected to
     record  the  cumulative  effect  of  this  change  as  if  the  Company had
     always  charged  for  this service. The cumulative effect of this change in
     accounting  method  (assuming  the  Company  had   charged  this  fee  from
     inception) resulted in a one-time charge of $143,750, which is reflected in
     the  financial statements at February 28, 2002. Proforma numbers reflecting
     the  effect  of this change as if the Company had reported earnings in this
     manner  were  not  included  as  the  effects would have been immaterial to
     earnings  during  the  years  ended  February  28,  2002  and  2001.


(4)  LEASES

     The  Company leases various equipment under non-cancelable operating leases
     expiring  in  various  years  through  2004.

     Minimum future rental payments under non-cancelable operating leases having
     remaining  terms  in excess of one year as of February 28, 2002 for each of
     the  next  five  years  and  in  the  aggregate  are:

<TABLE>
<CAPTION>
           Twelve  months  ending  February  28,        Amount
           -------------------------------------        ------
<S>                                                     <C>
                 2003                                   $6,708
                 2004                                      559
                 2005                                        -
</TABLE>

                                      F-9
<PAGE>
<TABLE>
<CAPTION>
<S>                                                     <C>
                 2006                                        -
                 2007                                        -
                                                        ------
                 Total  minimum  future
                   rental  payments                     $7,267
                                                        ======
</TABLE>

     Rental  expense consisted of minimum lease payments of $26,020 and $153,010
     for  the  years ended February 28, 2002 and 2001, respectively. Included in
     rental  expense  for  the  fiscal  year ended February 28, 2001 is $101,650
     relating to the Company's office lease, which expired December 2000 and was
     not  renewed  as  the  Company  now  owns  an  office  building.

     Certain  operating  leases  provide  for  renewal  and/or purchase options.
     Generally,  purchase  options  are at prices representing the expected fair
     market  value  of the property at the expiration of the lease term. Renewal
     options  are  for  periods  of one year at the rental rate specified in the
     lease.


(5)  LONG-TERM  DEBT

     As  of  February  28,  2002,  the Company had the following long-term debt:

<TABLE>
<CAPTION>
                                                     Current     Long-Term
                                                     -------     ---------
          9.25% note payable to a bank, due in
          installments of $6,638 through June 2015,
<S>                                                  <C>         <C>
          secured  by  land  and  office  building   $24,896     $580,098

          25%  capital  lease  payable
          to  finance  company,  due  in
          monthly  installments  of
          $86  through  November
          2004,  secured  by  equipment                  589          998

          25%  capital  lease  payable
          to  finance  company,  due  in
          monthly  installments  of
          $102  through  October  2004,
          secured  by  equipment                         714        1,615
                                                     -------     --------
                                                     $26,200     $582,711
                                                     =======     ========
</TABLE>

     Maturities  on  long-term  debt  for  each  of  the  next  five  years  and
     thereafter are as  follows:

<TABLE>
<CAPTION>
                                        Amount
                                      ---------
<S>                                   <C>
          2003                        $  26,200
          2004                           28,969
          2005                           30,877
          2006                           32,823
          2007                           35,992
          Thereafter                    454,050
                                      ---------

                                      $ 608,911
                                      =========
</TABLE>


(6)  INCOME  TAXES

     As  of  February  28,  2002, the Company has unused charitable contribution
     deduction  carryforwards  of   approximately  $87,898.    These  charitable
     contributions  carryforwards  will  expire  as  follows:

                                      F-10
<PAGE>
<TABLE>
<CAPTION>
          Fiscal  Year  Ended
             February  28,                  Amount
             -------------                  ------
<S>                                        <C>
                 2003                      $36,239
                 2004                       37,659
                 2005                          330
                 2006                        7,865
                 2007                        5,805
                                           -------

                                           $87,898
                                           =======
</TABLE>

     Temporary  timing  differences between the reporting of income and expenses
     for  financial  and  income  tax  reporting  purposes at February 28, 2002,
     result  in  a  deferred tax asset of approximately $22,900, which was fully
     reserved  as  of  that  date.

     Following  are the components of this deferred tax asset as of February 28,
     2002  :

<TABLE>
<CAPTION>
<S>                                                <C>
          Charitable  deduction  carryforwards     $  29,885
          Net  operating  loss  carryforward         271,320
          Excess tax over financial accounting
            Depreciation                              (6,988)
                                                   ---------

          Net  deferred  tax  asset                  294,217
          Less  valuation  allowance                (294,217)
                                                   ---------
          Deferred  tax  asset,
            net  of  valuation  allowance          $       -
                                                   =========
</TABLE>

     The  Company  has  an  available  tax  net  operating loss carry forward of
     approximately  $798,000  as  of  February  28, 2002. This carryforward will
     begin  to  expire  in  the  year  2020.

     The  difference  between  the  Company's  effective income tax rate and the
     United  States  statutory rate and the State of Texas franchise tax rate is
     reconciled  below  for  the  years  ended  February  28,  2002  and  2001:

<TABLE>
<CAPTION>
                                               2002     2001
                                               ----     ----
<S>                                            <C>      <C>
       United  States  statutory  rate         0.0%     0.0%
       State  of  Texas  statutory  rate       0.0%     0.0%
                                               ----     ----

       Expected  combined  rate                0.0%     0.0%
       Change  in  estimate  of  net
         operating loss  carryback             3.3%     0.0%
       Benefit  of  utilization  of
         net operating loss carryforward       0.0%    (3.1)%
                                               ----     ----

       Combined  effective  tax  rate          3.3%    (3.1)%
                                               ====     ====
</TABLE>

     On  September  20,  2001,  LPI  received  a  notice  of deficiency from the
     Internal  Revenue  Service  for  the fiscal years ended September 30, 1993,
     1994 and 1995 in the amount of $1,755,624 plus penalties of $351,124 and an
     unspecified  amount  of  interest.  Management  is vigorously defending the
     Company  against  this claim and has filed a suit in tax court denying this
     liability.  The Company's legal counsel has advised the Company that is has
     some  liability  in  connection  with  this  claim  by the Internal revenue
     Service  but  they  are  unable  to  provide  an  estimate  as to what this
     liability  might  be.  Because  the  Company  was  unable  to  estimate its
     liability in connection with this claim, no liability related to this claim
     has  been recorded in the Company's financial statements as of February 28,
     2002.


(7)  STOCK  TRANSACTIONS  AND  COMMON  STOCK  OPTIONS

     During  September  of  2000, three of the Company's employees contributed a
     total  of  75,000  shares  of  common  stock  back  to  the  Company for no

                                      F-11
<PAGE>
     consideration. These shares were contributed back to the Company so that it
     would  have  shares  available  to  be  issued under the terms of a private
     placement  memorandum  dated  September  8,  2000.

     On  March  1, 2001, the board of directors authorized the reissuance of the
     above-described  75,000  shares  of  common  stock back to the contributing
     employees.  For  financial  reporting  purposes,  this stock was treated as
     returned  to  the  employees  as  of  February  28,  2001.

     Under  the terms of the September 8, 2000 private placement memorandum, the
     Company could sell up to 1,000,000 units at $20 per unit, each of which was
     composed of a share of restricted common stock and one-half of a warrant to
     purchase  common  stock.  Each  full warrant is exercisable for a period of
     three  years  at  an  exercise price of $25 per share. To place the private
     offering,  the  Company  contracted  with  a  registered broker-dealer. The
     Company  sold  37,583  units between September of 2000 and January 28, 2001
     for  $541,667.

     Attorneys  have  advised the Company that it appears that the sales may not
     have  conformed  to  the legal requirements for private offerings under the
     Securities  Act  of  1933 (the "Act") and applicable state securities laws,
     resulting  in  possible  violations  under  the  Act  and  applicable state
     securities  laws.   These  possible  violations  could   have  resulted  in
     rescission of these sales by the investors and other possible penalties. To
     address  these  possible violations, management took the following actions:

          1.  On  January  29,  2001,  management issued a new private placement
          memorandum,  which  it believes conforms to the legal requirements for
          private  offerings under the Act and applicable state securities laws.
          Under  the revised offering terms, the Company can offer up to 266,668
          units  at  $7.50  per  unit, each of which is composed of one share of
          restricted  common  stock and one-half of a warrant to purchase common
          stock. Each full warrant is exercisable for a period of three years at
          an  exercise  price  of  $9.38  per  share.

          2.  Management  offered  to rescind each of the sales issued under the
          terms  of  the  September  8, 2000 private placement memorandum. As of
          May  3,  2002,  the date of this report, investors representing 37,183
          units  purchased  under  the  terms  of  the September 8, 2000 private
          placement  memorandum  have  elected  to waive their rights to rescind
          these  purchases in  exchange  for  applying  the  purchase  price  to
          the  terms  of the January 29, 2001 private placement memorandum. This
          resulted  in  the  issuance  of  an additional 34,245 shares of common
          stock  and 17,123 warrants. The February 28, 2001 financial statements
          were  adjusted  to  reflect these additional shares as issued from the
          Company's  treasury  stock.

     Commencing  in  October  2000  through December 2000, the Company purchased
     19,401  shares  of  its own common stock in market transactions for a total
     consideration of  $308,986.

     During  November  2000,  the Company converted two notes payable to related
     parties totaling $170,000 for the issuance of 11,148 shares of its treasury
     stock.

     On  December  26,  2000,  the  Company issued 41,385 shares of its treasury
     stock  to  a  corporation in exchange for a one-year note receivable in the
     amount  of $300,041. This note bears interest at the rate of 9.5% per annum
     and  is  personally  guaranteed  by  certain  individuals.   For  financial
     reporting  purposes,  this  note  has  been reflected as a reduction in the
     Company's  shareholders'  equity  section  similar  to a stock subscription
     receivable.

     During  February  2001,  the  Company converted a note payable to a related
     party  totaling  $250,000  to  33,333  shares  of  its  treasury  stock.

     During  February  of  2001,  the  Company issued an additional 56,200 units
     under  the  terms  of the January 29, 2001 private placement memorandum for
     $391,995,  net  of  brokerage  commissions  of  $29,505.

     On  May  24,  2001,  the Company entered into a series of private placement
     transactions  resulting  in  the  sale of 1,000,000 shares of the Company's
     treasury  stock  at  $5.00  per  share.  The Company's net proceeds totaled
     $4,650,000.

     During May, 2001, the Company issued 17,778 shares of its treasury stock in
     settlement  of  a claim against the Company. This transaction was valued at
     80,000  for  financial  reporting  purposes.

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<PAGE>
     On  August 23, 2001, the Company issued 20,000 shares of its treasury stock
     to  an  individual in exchange for a one-year note receivable in the amount
     of  $155,000.  This  note bears interest at the rate of 6.5% per annum. For
     financial  reporting  purposes, this note has been reflected as a reduction
     in  the   Company's  shareholders'   equity  section  similar  to  a  stock
     subscription  receivable.

     During the year ended February 28, 2002, the Company purchased 2,406 shares
     of  its  common  stock  for  $28,789.

     As  of  February  28, 2002, the Company had 248,220 warrants outstanding at
     exercise prices ranging from $7.25 to $9.375 per warrant for one share each
     of  the Company's treasury stock. These warrants will expire in three years
     commencing  in  2003.

     On  February  11,  2002,  the  Company  declared  a $0.025 per common share
     dividend.  The  dividend  was  paid  on  February  28,  2002.


(8)  RELATED  PARTY  TRANSACTIONS

     The  Company currently operates under an agreement with ESP Communications,
     Inc.  (ESP),  which  is owned by the wife of the Company's president. Under
     the  agreement,  ESP  performs specified administrative duties on behalf of
     the  Company.  Either  party  may  cancel  the  agreement with a thirty day
     written  notice.  The  Company  currently pays ESP $5,000 on a semi-monthly
     basis  for  its  services. The Company recorded management services expense
     concerning  this  agreement with ESP of approximately $115,000 and $133,500
     for  the years ended February 28, 2002 and February 28, 2001, respectively.


(9)  EARNINGS  (LOSS)  PER  SHARE

     Basic earnings per share amounts are computed based on the weighted average
     number  of  shares outstanding during the applicable periods. The number of
     shares  used  in  the  computations were 9,367,142 in 2002 and 8,412,100 in
     2001.

     Diluted  earnings  per  share  was not computed as of February 28, 2002 and
     February  28,  2001  as  taking into consideration the options and warrants
     outstanding  would  have  been  anti-dilutive  to  earnings  per  share.


(10) CONTINGENCIES

     LPI  was  named  as  defendant  in  a  suit  claiming it violated the Texas
     Securities  Act  by not complying with the registration requirements of the
     Act  in  connection  with viatical settlement contracts it has arranged. On
     July  31,  2001,  the  McLennan County District Court for the 19th Judicial
     District ruled that the Company's viatical settlement transactions were not
     securities under Texas law and that the Company is not required to register
     them  as securities prior to sale. In making it's ruling, the Court awarded
     summary  judgment  against the Plaintiff in this action dismissing the case
     entirely.  Plaintiff  has  appealed  this decision. LPI has not accrued any
     liability  in  connection  with  this  suit  as  of  February  28,  2002.

     On  May  31,  2001,  LPI  was  named  as defendant in a suit brought by the
     State  of  Texas.  Plaintiff  alleges  that  LPI   failed  to  disclose  to
     purchasers  of  viatical  settlements  prior  to  1997  that the purchasers
     could  incur  additional  carrying costs in the form of premium payments if
     viators  lived  beyond  their projected life expectancies. Plaintiff claims
     that  the  nondisclosure  violates  the Texas Deceptive Trade Practices Act
     (the  "DTPA")  and  seeks  an  injunction  against future violations, civil
     penalties, and restitution to the affected individuals. The Company has met
     with the plaintiff to discuss resolution of this matter, but the results of
     that  meeting  were  not  conclusive.  Management  believes that it did not
     violate  the  DTPA  and  that  the  applicable statute of limitations would
     preclude  most  of the possible claims. The Company's primary legal counsel
     in  this  case  has  informed  the  Company that they do not anticipate the
     settlement  costs  in  this  case  to  exceed $400,000. The Company accrued
     $450,000 for the settlement of this case in fiscal 2001. No reductions were
     taken  against  this  reserve  in  fiscal  2002.

                                      F-13
<PAGE>
     Subsequent to year-end, the Company settled three pending suits for a total
     of  $76,000.

     LPI  was  named  a  party  in  a  suit  alleging defamatory statements in a
     political  newsletter,  which  plaintiffs allege was controlled by LPI. The
     court  has  granted  a take-nothing interlocutory judgment in favor of LPI.
     No  liability  has been accrued in connection with this suit as of February
     28, 2002.

     LPI  has  been  named  in  a  suit  alleging  fraud arising from a viatical
     purchase.  The case is currently being mediated. LPI has accrued $35,000 as
     of  February  28,  2002  in  connection  with  the settlement of this case.

     The  Company  has been named as a defendant in a suit brought by two former
     employees  who  alleged  that  they  were entitled to certain stock options
     representing  a  total  of  30,000  shares  of  the Company's common stock.
     These  stock  options  were  allegedly  issued  to  them  by  the Company's
     principal  shareholder  and  were to have had an exercise price of $.01 per
     share.  Plaintiffs  allege  that the Company was not willing to issue these
     options  resulting  in  losses of approximately $357,000 in actual damages.
     Plaintiffs  are  also  asking  for exemplary damages. Management denies any
     liability  in  this  suit  and  plans  to pursue its defense vigorously. No
     liability  has been accrued in connection with this suit as of February 28,
     2002.

     LPI  is  aware  of  seven  instances wherein the insurance companies denied
     payment  on  policies  in  which it arranged the settlement with investors.
     Most  of  these  denials  related  to  suicide  clauses. Face amount of the
     policies  in question total $796,500. During the fiscal year ended February
     28,  2002,  the  Company  paid  $53,119  to these investors and has accrued
     another  $361,327  for  future  claims  that might arise on these policies.

     On  September  20,  2001,  the  Company  received  notice from the Internal
     Revenue  Service  of  a proposed tax adjustment to LPI's taxable income for
     the  years  ended  September  30,  1993,  1994  and  1995. The proposed tax
     deficiencies  totaled $1,755,624 plus proposed penalties totaling $351,124.
     LPI would also be liable for interest due on any portion of this assessment
     that  is  upheld.

     LPI has filed a tax court petition in response to this proposed assessment.
     The  Company's legal counsel in this matter is not able to make an estimate
     as  to  the  amount  of LPI's liability in this matter. Management believes
     that  it  has  substantial  support  for its position and that the ultimate
     liability  will be substantially less than the proposed assessment. Because
     the Company has not been able to quantify it liability with regards to this
     proposed  assessment,  no  loss  accrual  was  recorded  on  the  financial
     statements  as  of  February  28,  2002.


(11) SUBSEQUENT  EVENTS

     On March 12, 2002 the Company entered into an agreement with Bear, Sterns &
     Co  and Sarco Holdings to develop a capital markets product backed directly
     or  indirectly by pools of qualifying senior life insurance settlements the
     Company  owns  or  originates.
















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