U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)
   [X]             ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

   [ ]           TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to ______________________.

                        Commission File Number 000-25253

                             SUMMIT LIFE CORPORATION
                             -----------------------
                 (Name of small business issuer in its charter)

           OKLAHOMA                                              73-1448244
           --------                                              ----------
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)


3021 Epperly Dr., P.O. Box 15808, Oklahoma City, Oklahoma           73155
---------------------------------------------------------           -----
              (Address of principal executive offices)            (Zip Code)

                    Issuer's telephone number: (405) 677-0781

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

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

                     Common Stock, $.01 par value 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 the past 90
days.

                                 Yes X    No
                                    ---     ---

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation  S-B is not contained in this form, 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. X

     Issuer's revenues for its most recent fiscal year were $609,614.

     The  aggregate  market value of the  registrant's  common  stock,  $.01 par
value,  held by  non-affiliates  of the  registrant  as of  March  27,  2002 was
$1,062,695 based on the closing price of $.90 per share on that date as reported
by the OTC  Bulletin  Board.  As of March  27,  2002,  2,248,605  shares  of the
registrant's  common stock,  $.01 par value,  were issued and  outstanding,  and
422,200  shares of common  stock were  subscribed  and unissued but deemed to be
issued and outstanding.

     Transitional Small Business Disclosure Format (check one): Yes    No X
                                                                   ---   ---

DOCUMENTS  INCORPORATED BY REFERENCE:  Registrant's Proxy Statement for the 2002
Annual Meeting of Stockholders is incorporated by reference in Part III, Items 9
through 12, of this Form 10-KSB.

<PAGE>


                             SUMMIT LIFE CORPORATION
                                   FORM 10-KSB
                   For the Fiscal Year Ended December 31, 2001

                                TABLE OF CONTENTS

Part I.

Item 1.       Description of Business.......................................  1
Item 2.       Description of Property.......................................  10
Item 3.       Legal Proceedings.............................................  11
Item 4.       Submission of Matters to a Vote of Security Holders...........  11

Part II.

Item 5.       Market for Common Equity and Related Stockholder Matters......  11
Item 6.       Management's Discussion and Analysis or Plan of Operation.....  12
Item 7.       Financial Statements..........................................  19
Item 8.       Changes In and Disagreements With Accountants on Accounting
              and Financial Disclosure......................................  19

Part III.

Item 9.       Directors, Executive Officers, Promoters and Control Persons,
              Compliance With Section 16(a) of the Exchange Act.............  21
Item 10.      Executive Compensation........................................  21
Item 11.      Security Ownership of Certain Beneficial Owners
              and Management................................................  21
Item 12.      Certain Relationships and Related Transactions................  21
Item 13.      Exhibits and Reports on Form 8-K..............................  21

Signatures    ..............................................................  23



                                      -i-
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           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     This Annual  Report on Form 10-KSB  includes  "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities  Act"),  and Section 21E of the Securities  Exchange Act of 1934, as
amended.  All statements  other than statements of historical  facts included in
this Report, including,  without limitation,  statements regarding the Company's
future financial position, business strategy, budgets, projected costs and plans
and  objectives  of  Management  for  future  operations,   are  forward-looking
statements. In addition,  forward-looking statements generally can be identified
by the use of  forward-looking  terminology  such as  "may,"  "will,"  "expect,"
"intend,"  "estimate,"  "anticipate"  or "believe"  or the  negative  thereof or
variations  thereon or similar  terminology.  Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance  that such  expectations  will prove to have been correct.
Such  statements  are based upon numerous  assumptions  about future  conditions
which may  ultimately  prove to be inaccurate  and actual events and results may
materially  differ  from  anticipated  results  described  in  such  statements.
Important  factors that could cause actual results to differ materially from the
Company's  expectations  ("cautionary  statements")  include the risks  inherent
generally in the  insurance  and financial  services  industries,  the impact of
competition and product pricing, changing market conditions, the risks disclosed
in the Company's  Annual  Report on Form 10-KSB for the Year Ended  December 31,
2001 under "ITEM 6--Management's  Discussion and Analysis or Plan of Operation,"
and elsewhere in this Report.  All subsequent  written and oral  forward-looking
statements  attributable  to the Company,  or persons acting on its behalf,  are
expressly  qualified  in their  entirety  by these  cautionary  statements.  The
Company assumes no duty to update or revise its forward-looking statements based
on changes in internal estimates or expectations or otherwise.  As a result, the
reader is cautioned not to place reliance on these forward-looking statements.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

     Summit  Life  Corporation,  an  Oklahoma  corporation  formed  in 1994 (the
"Company"),  is an insurance holding company. The Company's primary focus is its
life insurance operations.

     The  Company's  growth  has been  fueled  primarily  through  acquisitions,
starting in 1994 when it acquired an Oklahoma-chartered  life insurance company.
Since then, the Company has acquired three  additional life insurance  companies
in Texas and  Louisiana.  The Company  consolidated  its  operations  in 1999 by
combining  three of the four companies into one company  operating in both Texas
and Oklahoma. The fourth company, which operated in Louisiana,  was also sold in
1999.

     On August 1, 2001,  the Company's  wholly owned  subsidiary,  Great Midwest
Life  Insurance  Company  ("Great  Midwest"),  acquired from  Presidential  Life
Insurance Company of Dallas,  Texas  ("Presidential"),  a block of approximately
1,400 life  insurance  policies  with  estimated  annual  premium  of  $120,000.
Liabilities of $712,000 and assets of $634,392 were transferred to Great Midwest
for a purchase price of $77,608.

     The  Company's  net  premium  revenue  increased  from  $152,624 in 2000 to
$359,533 in 2001,  and the Company  believes  that  continued  internal  growth,
coupled with strategic  acquisitions made available by the current consolidation
of the  insurance  industry,  present the  Company  with good  opportunities  to
achieve its operating strategy. SEE "ITEM 6-MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION."

     The Company's  operating  strategy is to continue to make  acquisitions  of
small,  marginally profitable or unprofitable  insurance companies,  consolidate
and streamline the  administrative  functions of these small companies,  improve


                                       1
<PAGE>

their  investment  yields  through  active  asset  management  in a  centralized
investment operation and eliminate their unprofitable  products and distribution
channels.  The Company believes that it is particularly well suited to make such
acquisitions  and to  capitalize  on the cost  savings  that can be  realized by
consolidating the administrative functions of the acquired companies.

     As of December 31, 2001, the Company had approximately 2,150 life insurance
policies and annuity  contracts  outstanding  and  individual  life insurance in
force of  approximately  $27 million.  As of December 31, 2001,  the Company had
total assets of approximately  $6.84 million and total  shareholders'  equity of
approximately $1.27 million.

     The  Company's  principal  office is located at 3021 Epperly Dr.,  P.O. Box
15808,  Oklahoma  City,  Oklahoma,  73155,  and its  telephone  number  is (405)
677-0781.

History

     The Company was formed in 1994 and, since inception, has acquired four life
insurance  companies  with  operations  in,  variously,   Oklahoma,   Texas  and
Louisiana, and has acquired one block of business. Three of these companies were
combined  in 1999 to form the  Company's  flagship  company,  Great  Midwest,  a
Texas-domiciled  life  insurance  company  operating in Texas and Oklahoma.  The
Louisiana-domiciled  subsidiary  was sold in  December  1999 as a result  of the
Company's decision to concentrate its focus on Oklahoma and Texas.

Recent Events

     The Company began a public offering of 1,000,000 shares of its common stock
in May 2001.  The  offering  was  terminated  March 31, 2002. A total of 445,200
shares of common stock were sold pursuant to the offering..

Operations

Insurance Products

     General

     Through  its  insurance  subsidiary,  the  Company  offers a  portfolio  of
permanent and term life products as well as flexible  premium and single premium
annuities  designed  to  meet  the  needs  of  its  customers  for  supplemental
retirement  income,  estate planning and protection from unexpected  death.  The
target  niche  is  middle-income  individuals,  families  and  small  businesses
throughout  its  marketing  territory.  The  Company's  business  strategy is to
continue to expand its  marketing  territory  through  subsidiary  growth and/or
company  acquisition,  and to increase  shareholder  value by  managing  certain
operating  fundamentals inherent to the insurance business.  The Company intends
to utilize  these  operating  fundamentals  to  differentiate  its  products  by
maintaining  its  position  as a  low-cost  producer  that  provides  high-value
products to its life  insurance  and  annuity  customers,  while also  providing
superior service to both agents and customers.  In addition, the Company intends
to continue to seek new business opportunities through mergers, acquisitions and
strategic alliances.

     The Company has  realized  very low entry costs in its  purchases  of small
insurance  companies.  The Company minimizes operating expenses by centralizing,
standardizing and more efficiently performing many functions common to most life
insurance   companies.   The  operations   performed  by  the  Company   include
underwriting  and policy  administration,  accounting  and financial  reporting,
marketing, regulatory compliance and asset management. The Company believes that
it is currently  utilizing just over 5% of its  information  technology  systems
capability in the administration of these back office operations.



                                       2
<PAGE>

     Factors Affecting Insurance Operations

     The  Company  believes  that its  operating  performance  is  significantly
impacted by four basic elements: mortality, persistency,  operating expenses and
investment  yield.  The Company believes that its results for each of these four
elements for the last several years have been good.

     The Company  believes its  conservative  risk  selection  practices and its
disciplined field underwriting have resulted in the Company realizing  favorable
mortality  experience for the last several years. The Company fully  underwrites
each regular application and has no group underwriting and maintains very little
guaranteed issue business.

     The Company has  consistently  achieved  favorable  persistency on its life
insurance  products (i.e.,  lower lapse rates).  This high  persistency has been
achieved by providing quality service to its policyholders, incentives to agents
by, among other things, grading production bonuses by actual persistency, paying
persistency bonuses,  awarding recognition for both agency and agent persistency
achievements, and monitoring agency persistency on a quarterly and annual basis.
Persistency is the extent to which policies sold remain in force.  Policy lapses
over those actuarially anticipated could have an adverse effect on the financial
performance of the Company.  Policy  acquisition costs are deferred and expensed
over the premium-paying period of a policy. Excess policy lapses, however, cause
the  immediate  expensing or amortizing of deferred  policy  acquisition  costs.
Provided  the Company  maintains  lapse and  surrender  rates within its pricing
assumptions for its insurance  policies,  the Company  believes that the present
lapse and  surrender  rate  should  not have a  material  adverse  effect on the
Company's financial results. For the years ended December 31, 2000 and 2001, the
Company's lapse ratio on ordinary business was 8% and 3%, respectively.

     The Company has  aggressively  managed its cost structure,  while realizing
certain operating  efficiencies from minimal personnel and reduced overall costs
as a result of the  various  acquisitions  it has  effected  since  1994.  Other
factors  contributing  to the Company's  lower cost  structure  include:  a flat
organizational  structure  which allows the Company to be responsive to changing
business  conditions;  the  location of the Company in a  geographic  area which
provides lower cost operations than found in many other areas of the country;  a
well-trained experienced workforce; and efficient use of technology.

     The Company attempts to maintain competitive portfolio yields, while at the
same time  maintaining a  conservative  approach with respect to its  investment
criteria.  Ultimately,  the  Company's  objective  with respect to its insurance
operations is to price each of its products to earn an adequate  margin  between
the  return to the  policyholder  and the  return  earned by the  Company on its
investments.  To the extent that the Company is able to realize higher portfolio
yields on its  investments,  it will be in a position  to offer more  attractive
pricing on its insurance products.

     Fixed Rate Annuities

     Annuities are long term savings vehicles that are  particularly  attractive
to customers  over the age of 50 who are or may be planning for  retirement  and
seek a secure, tax deferred savings product.  The individual annuity business is
a growing  segment of the  savings and  retirement  market and among the fastest
growing  segments of the life insurance  industry.  Annuity  products  currently
enjoy an advantage over certain other  retirement  savings  products because the
payment of federal  income  taxes on interest  credited  on annuity  policies is
deferred during the investment accumulation period.

     Through GMLIC,  the Company  markets,  issues and  administers a variety of
fixed rate deferred  annuity  products,  including  single  premium and flexible
premium  deferred  annuities.  In a fixed rate deferred  annuity,  the insurance
company assumes the risk of interest  fluctuations and pays a minimum fixed rate
of interest,  usually 3% to 4% per year,  with an excess amount payable based on
investment yields of its investment portfolio. Single premium deferred annuities
("SPDAs"),  in general,  are savings vehicles in which the policyholder  makes a
single premium payment to an insurance  company.  The insurance  company credits


                                       3
<PAGE>

the account of the annuitant  with earnings at an interest rate (the  "crediting
rate"),  which is declared by the  insurance  company  from time to time and may
exceed but may not be lower than any contractually  guaranteed minimum crediting
rate. All of the Company's  annuities have a minimum guaranteed  crediting rate.
The Company also offers flexible premium deferred annuities ("FPDAs"). FPDAs are
deferred  annuities  in which the  policyholder  may elect to make more than one
premium payment. The Company currently does not offer variable annuity products.

     The Company periodically establishes an interest-crediting rate for its new
annuity policies.  In determining the Company's  interest  crediting rate on new
policies,   management  considers  the  competitive  position  of  the  Company,
prevailing  market  rates and the  profitability  of the  annuity  product.  The
Company  maintains the initial  crediting rate for a minimum period of one year.
Thereafter,  the  Company  may  adjust  the  crediting  rate at its  discretion,
although  historically  such adjustments have generally been made on a quarterly
basis. In establishing  renewal-crediting rates, the Company primarily considers
the anticipated  yield on its investment  portfolio.  Interest rates credited on
the Company's in force annuity policies ranged from 3.0% to 7.8% at December 31,
2001. All of the Company's  annuity products have minimum  guaranteed  crediting
rates of 3.0% for the life of the policy. At December 31, 2001, more than 98% of
the Company's in force annuity  policies were beyond the initial  crediting rate
period.

     Certain of the Company's annuity policies have a  bonus-crediting  rate for
the first year of the policy,  which typically exceeds the annual crediting rate
by 1% to 3%. The bonus and the base crediting  rates are fully  disclosed in the
annuity contract.  The Company  incorporates a number of features in its annuity
products  designed to reduce the early  withdrawal  or surrender of the policies
and to partially  compensate the Company for lost investment  opportunities  and
costs if policies are withdrawn early. Certain of the Company's deferred annuity
contracts provide for penalty free partial  withdrawals,  typically up to 10% of
the  accumulation  value annually.  Surrender charge periods on annuity policies
currently range from five years to the term of the policy,  with the majority of
such  policies  being issued with a surrender  charge  period of more than seven
years.  The average  length of the surrender  period on the  Company's  deferred
annuity  policies  issued  during  2000 and 2001 was eight  years.  The  initial
surrender  charge  on  annuity  policies  generally  is 8% of  the  premium  and
decreases  over the surrender  charge period (of up to nine years).  At December
31, 2001, 19% of the Company's  annuity  liabilities were subject to a surrender
charge of 5% or more.

     Tax Qualified Annuities

     General.  The  Company  also  markets to  employees  of public  schools and
certain  other  tax-exempt   organizations   certain  tax  qualified  retirement
annuities that meet the  requirements of Section 403(b) of the Internal  Revenue
Code of 1986 and are known as "tax  sheltered  annuities" or "403(b)  annuities"
("TSAs").   Teachers,   school  employees  and  employees  of  other  tax-exempt
organizations  purchase TSAs through automatic payroll deductions.  TSA products
tend to be  purchased  by  customers  who are  younger  than  purchasers  of the
Company's  other  annuity  products.  Therefore,  the  Company's  specialty  TSA
products tend to  incorporate  features that are attractive to customers in this
younger age bracket who have longer to  accumulate  before  retirement,  such as
combining  a more  competitive  crediting  interest  rate  offset  with a longer
surrender  charge  period.  The  Company  believes  that the  market for TSAs is
attractive  because TSAs broaden its customer base and provide an ongoing source
of premium  renewals.  Additionally,  because of their tax features and transfer
restrictions,  TSAs are less likely to be surrendered, making them a more stable
and  dependable  source of profits for the  Company.  In  addition to TSAs,  the
Company also sells other tax qualified  retirement  annuities such as Individual
Retirement  Annuities and other Employee  Pension type  programs.  Tax qualified
retirement  annuity values totaled almost $1,100,000 or approximately 27% of the
total annuities sold by the Company since inception.

     Favorable Tax Treatment.  Under the Internal Revenue Code ("Code"),  income
taxes otherwise  payable on investment  earnings are deferred on earnings unpaid
during the accumulation  period of certain life insurance and annuity  policies.
This  favorable  tax  treatment  may  give  the  Company's  annuity  policies  a


                                       4
<PAGE>

competitive  advantage  over other  investment  or savings  vehicles that do not
offer this  benefit.  To the extent that the Code may be revised to eliminate or
reduce the tax-deferred status of life deferred payment annuity products,  or to
establish  a  tax-deferred  status  to any  competing  policies,  the  Company's
competitive advantage may be adversely affected.

     Traditional Life Insurance

     Term Life.  The Company's  subsidiary  offers a low cost 10-year level term
life  insurance  product  with level  premiums  for  periods of ten years and an
annually renewable level term product which provides for increasing  premiums in
five year  durations,  both  utilizing  a low  indeterminate  premium  structure
afforded to it by its primary reinsurance company. The Company generally retains
a small fixed  portion of the insurance  risk,  then sells or cedes a portion of
its  risks  to its  reinsurer,  who in turn  pays  an  additional  allowance  or
commission to the Company.  This allows the Company to transfer a portion of its
risk and continue to grow its premium revenues and surplus.  These term products
are designed for and sold to individuals ages 20 through 60 and terminate at age
70. While term life normally is bought very  inexpensively  by consumers,  it is
also priced by companies using historical data that illustrates certain of these
coverages, when using adequate reinsurance, will not result in adverse claims.

     Whole Life. The Company's  subsidiary  markets low cost guaranteed  premium
products in which premiums are payable for the life of the insured and insurance
protection  (upon  certain  conditions  being met) is afforded for the insured's
lifetime. The premium paid for such whole life policies is generally higher than
the premium for comparable amounts of term insurance in the policy's early years
but is generally lower in the later years of the policy's life. The policyholder
may borrow against the policy,  provided there are sufficient cash values,  at a
rate that is comparable or lower than other  conventional  lending sources.  The
Company  generally  holds all cash  values  and if a death  occurs it pays death
claims then  collects  from the reinsurer to recover the excess of its retention
limits and benefits paid.

     The Company's life insurance  subsidiaries have sold annuity products since
1994. Beginning in January 1999 with the purchase of GMLIC and the consolidation
of the other  subsidiaries,  the life insurance  products of GMLIC were combined
with annuity products from the other  subsidiaries.  GMLIC previously  offered a
graded  benefit life product that was offered on an individual  basis in amounts
of $1,000 to $5,000,  without evidence of  insurability.  Benefits paid are less
than the face amount of the policy  during the first two years,  except in cases
of accidental death.

     Insurance Underwriting

     The Company follows detailed, uniform underwriting practices and procedures
in its  insurance  business  which are designed to assess  risks before  issuing
coverage to  qualified  applicants.  The  Company  contracts  with  professional
underwriters  who  evaluate  policy  applications  on the  basis of  information
provided by applicants and others. Management believes that its actual mortality
results are attributable to, among other things, the geographic  location of its
customer base in rural and suburban  areas (as opposed to urban areas),  as well
as its  consistent  application  of  appropriate  underwriting  criteria  to the
processing of new customer applications.

     Reinsurance

     Consistent with the general  practice of the life insurance  industry,  the
Company's  subsidiary reinsures portions of coverage provided by their insurance
products  with  other  insurance   companies   under   agreements  of  indemnity
reinsurance.

     Indemnity  reinsurance  agreements  are intended to limit a life  insurer's
maximum  loss on a large or  unusually  hazardous  risk or to  obtain a  greater
diversification of risk.  Indemnity  reinsurance does not discharge the original
insurer's primary liability to the insured.  The Company's reinsured business is


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<PAGE>

ceded to numerous  reinsurers,  and the Company believes the assuming  companies
are able to honor all contractual  commitments,  based on the Company's periodic
reviews of their financial  statements,  insurance  industry reports and reports
filed with state insurance departments.

     As of December 31, 2001, the policy risk  retention  limit of the Company's
subsidiary on the life of any one individual did not exceed $5,000;  reinsurance
ceded  by the  Company's  subsidiary  represented  87% of  gross  combined  life
insurance in force.  At December  31, 2001,  the  Company's  largest  reinsurer,
Optimum Re Insurance Company,  reinsured approximately 98% of the $27 million of
the total insurance in force.

Investments

     Investment  activities  are an  integral  part of the  Company's  business;
investment income is a significant component of the Company's revenues. Upon the
purchase by a  policyholder  of an annuity or life  contract  and payment of the
premium,  the policy is issued and delivered to the new policyholder.  The funds
are  then  invested  as the  Company  determines  based  on  certain  guidelines
including  those set by the  National  Association  of  Insurance  Commissioners
("NAIC") as to the percentage of investments that are placed in any one category
of  investments.  The  Company  has  historically  invested  a  majority  of its
available assets in securities that are issued, secured, guaranteed or backed by
federal, state or local governments, their agencies or instrumentalities.

     Profitability is significantly  affected by spreads between interest yields
on  investments  and rates  credited  on  insurance  liabilities.  Although  all
credited  rates on  single  premium  deferred  annuities  and  flexible  premium
deferred annuities may be changed as often as quarterly, after their first year,
changes in credited rates may not be sufficient to maintain targeted  investment
spreads in all economic and market  environments.  In addition,  competition and
other factors,  including the impact of the level of surrenders and withdrawals,
may limit the Company's ability to adjust or maintain  crediting rates at levels
necessary to avoid narrowing of spreads under certain market conditions. For the
year ended December 31, 2001, the average gross yield of the Company's  invested
assets was approximately 6.0% and the average credited rate was 5.0%.

     The Company  balances the duration of its invested assets with the expected
duration of benefit payments arising from insurance liabilities. At December 31,
2001,  the  adjusted   modified  duration  of  debt  securities  and  short-term
investments  was 6.0 years.  At December 31, 2001,  the average  duration of the
Company's insurance liabilities was 7.0 years.

     For  information  regarding  the  composition  and  diversification  of the
investment  portfolio  of the  Company  and its  subsidiary,  see  Note B to the
Company's Consolidated Financial Statements.

Acquisitions and Consolidations

General

     The Company's  operating  strategy is to continue to make  acquisitions  of
small,  marginally profitable or unprofitable  insurance companies,  consolidate
and streamline the  administrative  functions of these small companies,  improve
their  investment  yields  through  active  asset  management  by a  centralized
investment operation and eliminate their unprofitable  products and distribution
channels.  Because of their small size,  such companies are often  overlooked as
potential acquisition candidates by other companies in the industry. The Company
believes that it is particularly  well suited to make such  acquisitions  and to
capitalize  on the  cost  savings  that can be  realized  by  consolidating  the
administrative functions of the acquired companies.


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<PAGE>

Historical Acquisitions

     The   Company's   growth  to  date  has  been  fueled   primarily   through
acquisitions.   Since  1994,  the  Company  has  acquired  four  life  insurance
companies. During 1999, three of these companies were combined, either by merger
or through  transfer of operations,  into Great Midwest,  while a fourth company
was sold.  The Company  intends to  continue  its  strategy of pursuing  similar
acquisitions of blocks of insurance  business and small insurance  companies and
other   insurance-related   opportunities.   Management   believes   that   such
acquisitions  will  continue  to lower  unit costs by  increasing  the number of
policies and the amount of premiums over which fixed expenses are spread.

Targeted Future Acquisitions

     The Company has typically sought companies that are underdeveloped,  overly
burdened with expenses or owned by financially  troubled companies.  The Company
believes that the small insurance  company  marketplace is highly fragmented and
faces numerous hurdles to its survival and growth over the coming years. Some of
those  hurdles  include  technological  obsolescence,  the need  for  additional
capital and  surplus  due to the  changing  regulatory  environment  and lack of
sufficient  exit  strategies for owners of small,  closely-held  companies.  The
Company  believes  these factors have created  acquisition  opportunities  often
overlooked by the large insurance  companies.  The Company intends to capitalize
on these  opportunities as it continues to execute its growth plans. The Company
has no  agreements,  understandings  or  arrangements  with respect to any other
acquisitions at this time.

Employees

     As of December 31, 2001, the Company had five full-time employees,  most of
whom  perform  both  managerial  and  administrative  functions.  The  Company's
employees also perform services for Great Midwest,  which has no employees.  The
Company's  controller  function is outsourced.  It can be  anticipated  that the
Company will have a need for more  employees as the size of its business  grows.
None of the  Company's  employees is  represented  by a labor union.  Management
believes that the Company's relations with its employees are good.

Marketing

     The Company's target markets are individuals in  middle-income  brackets in
addition to small  businesses in the states of Texas and  Oklahoma.  The Company
believes that this market is severely underserved as more major companies target
their  products and agency force toward the upper income and large policy sales.
Many large  companies no longer offer  insurance in face amounts under $100,000.
Although the Company does write multi-million dollar policies,  its average life
policy is approximately $13,000.

     The pricing of the Company's products is generally  determined by reference
to actuarial  calculations and statistical  assumptions  principally relating to
mortality, persistency,  investment yield assumptions, estimates of expenses and
management's judgment as to market and competitive conditions.  The premiums and
deposits received,  together with assumed investment  earnings,  are designed to
cover policy benefits,  expenses and policyowner  dividends plus return a profit
to the Company.  These profits arise from the margin between  mortality  charges
and insurance  benefits paid, the margin between actual  investment  results and
the investment income credited to policies (either directly or through dividends
to policyowners) and the margin between expense charges and actual expenses. The
level of profits also depends on persistency  because policy  acquisition costs,
particularly  agent  commissions,  are  recovered  over the life of the  policy.
Dividends  and  interest  credited  on  policies  may  vary  from  time  to time
reflecting  changes in investment,  mortality,  persistency,  expenses and other
factors.  Interest rate fluctuations have an effect on investment income and may
have an impact on  policyowner  behavior.  Increased  lapses in policies  may be
experienced if the Company does not maintain  interest rates and dividend scales
that are competitive with other products in the marketplace.


                                       7
<PAGE>

     The Company  markets its  products  primarily  through  personal  producing
general agents ("PPGAs") and small independent  property and casualty  agencies.
The PPGAs include the Company's  founders and principal  stockholders,  James L.
Smith and  Charles L.  Smith.  James L. Smith and  Charles L. Smith are the sole
stockholders of the Smith Agency,  which undertakes life insurance and financial
planning  for  estates,  trusts and  corporations.  The Smith  Agency was and is
presently  a general  agent  for  several  insurance  companies,  including  the
Company.  The  Smith  Agency  has  sold a  majority  of the  Company's  deferred
annuities since the Company's inception. Additionally, the companies acquired by
the Company  generally  have in place PPGAs who are  capable  and  qualified  to
generate  the sales  desired by the  Company,  thereby  eliminating  part of the
expense of recruiting and training a new agency force.

Competition

     The life insurance  business is highly competitive and consists of a number
of companies,  many of which have greater financial  resources,  longer business
histories and more diversified lines of insurance products than the Company. The
Company may encounter  increased  competition  from existing  competitors or new
market  entrants,  some of which may be  significantly  larger and have  greater
business  resources.  Companies typically compete for policyholders on the basis
of benefits,  rates,  financial  strength  and customer  service and compete for
agents and brokers on the basis of commissions,  financial strength and customer
service.  The Company,  although smaller than most of its competitors,  provides
competitive  benefits  and  rates.  The  Company  believes  that its  ability to
administer its functions at a lower cost allows it to maintain low internal cost
products.

     The  Company  has  identified  additional  areas  where it has very  little
competition  due to the size of the  Company as well as the size of its  target.
One such area is the  consolidation  field.  The Company's  strategy has been to
consolidate and streamline the administrative  functions of small life insurance
companies.  Most large life  companies  have high  fixed  costs when  performing
acquisitions  restricting  them in the minimum size of purchase they can pursue.
The Company believes that the  consolidation of the industry will continue,  and
the Company intends to participate in the process.

Regulation

     The Company's insurance subsidiary is subject to regulation and supervision
by the states in which it transacts  business.  The laws of these  jurisdictions
generally establish agencies with broad regulatory  authority,  including powers
to: (1) grant and  revoke  licenses  to  transact  business;  (2)  regulate  and
supervise   trade  practices  and  market   conduct;   (3)  establish   guaranty
associations;  (4) license agents; (5) approve policy forms; (6) approve premium
rates for some lines of business;  (7)  establish  reserving  requirements;  (8)
prescribe the form and content of required financial statements and reports; (9)
determine the reasonableness and adequacy of statutory capital and surplus;  and
(10)  regulate  the type and  amount of  permitted  investments.  Because  Great
Midwest is licensed to sell  insurance in Oklahoma  and Texas,  it is subject to
regulation  by the  insurance  regulatory  agencies  of both  states.  SEE "ITEM
6-MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR PLAN OF  OPERATION--Liquidity  and
Capital Resources."

     Most states also have enacted  legislation that regulates insurance holding
company groups,  including acquisitions,  extraordinary  dividends, the terms of
surplus  debentures,  the terms of  affiliate  transactions  and  other  related
matters. Currently, the Company and its insurance subsidiary are registered as a
holding company group pursuant to such legislation in Texas and Oklahoma.

     The federal  government does not directly regulate the insurance  business.
However,  federal  legislation  and  administrative  policies in several  areas,
including pension  regulation,  age and sex  discrimination,  financial services
regulation and federal  taxation,  do affect the insurance  business.  Recently,
increased scrutiny has been placed upon the insurance regulatory framework,  and
a number of state legislatures have considered or enacted legislative  proposals
that alter,  and in many cases  increase,  the  authority  of state  agencies to


                                       8
<PAGE>

regulate   insurance   companies  and  holding  company  groups.   In  addition,
legislation  has been  introduced  from time to time in recent years  which,  if
enacted,  could result in the federal government  assuming a more direct role in
the regulation of the insurance industry.

     State  insurance  regulators  and the  NAIC  are  continually  re-examining
existing laws and regulations and their application to insurance companies. From
time to time the NAIC has adopted,  and  recommended  to the states for adoption
and implementation, several regulatory initiatives designed to decrease the risk
of  insolvency  of insurance  companies in general.  These  initiatives  include
risk-based  capital ("RBC")  requirements  for determining the levels of capital
and surplus an insurer must maintain in relation to its insurance and investment
risks. The NAIC regulatory  initiatives also impose restrictions on an insurance
company's ability to pay dividends to its stockholders. These initiatives may be
adopted by the various states in which the Company's subsidiary is licensed, but
the ultimate content and timing of any statutes and regulations to be adopted by
the states  cannot be determined at this time. It is not possible to predict the
future impact of changing state and federal regulations on the operations of the
Company,  and there can be no assurance that existing insurance related laws and
regulations  will not  become  more  restrictive  in the future or that laws and
regulations enacted in the future will not be more restrictive.

     Most states have enacted legislation or adopted administrative  regulations
which  affect  the  acquisition  of control of  insurance  companies  as well as
transactions  between  insurance  companies and persons  controlling  them.  The
nature and extent of such  legislation and regulations vary from state to state.
Most states, however, require administrative approval of: (1) the acquisition of
10  percent  or  more  of  the  outstanding   shares  of  an  insurance  company
incorporated  in the state;  or (2) the acquisition of 10 percent or more of the
outstanding stock of an insurance holding company whose insurance  subsidiary is
incorporated  in the state.  The  acquisition  of 10  percent of such  shares is
generally  deemed to be the  acquisition  of control for purposes of the holding
company  statutes.  It  requires  not only the  filing of  detailed  information
concerning  the  acquiring  parties  and the plan of  acquisition,  but also the
receipt of administrative approval prior to the acquisition.  In many states, an
insurance  authority  may  find  that  control  does  not,  in  fact,  exist  in
circumstances  in which a person owns or controls 10 percent or a greater amount
of securities.

     Under  the  solvency  or  guaranty  laws of most  states  in which  they do
business,  the Company's insurance subsidiary may be required to pay assessments
(up to certain  prescribed limits) to fund policyowner losses or the liabilities
of insolvent or  rehabilitated  insurance  companies.  These  assessments may be
deferred  or  forgiven  under  most  guaranty  laws if they  would  threaten  an
insurer's  financial  strength.  In certain  instances,  the  assessments may be
offset against future premium  taxes.  The Company's  subsidiaries  historically
have not been  required  to pay  assessments  in any  significant  amounts.  The
likelihood and amount of any future assessments cannot be estimated, as they are
beyond the control of the Company.

     As  part  of  their  routine  regulatory   oversight   process,   insurance
departments  conduct periodic  detailed  examinations of the books,  records and
accounts of insurance companies  domiciled in their states.  Texas conducts such
examinations on a three to five year cycle under  guidelines  promulgated by the
NAIC. The Company  incurred  examination  expenses in 2001 for an examination of
Great Midwest in the amount of $16,110. See Note I to the Company's Consolidated
Financial Statements.

Federal Income Taxation

     The  annuity  and  life  insurance  products  marketed  and  issued  by the
Company's  subsidiary  generally  provide  the  policyowner  with an income  tax
advantage,  as compared to other savings  investments  such as  certificates  of
deposit  and bonds,  in that  income  taxation  on the  increase in value of the
product is  deferred  until  receipt  by the  policyowner.  With  other  savings
investments, the increase in value is taxed as earned. Annuity benefits and life
insurance  benefits  which  accrue  prior to the  death of the  policyowner  are
generally  not taxed until paid.  Life  insurance  death  benefits are generally
exempt from income tax, but not estate tax. Also, benefits received on immediate
annuities  (other than structured  settlements) are recognized as taxable income


                                       9
<PAGE>

ratably as opposed to the economic  accrual  methods,  which tend to  accelerate
taxable income into earlier years and which are required for other  investments.
The tax advantage  for annuities and life  insurance is provided in the Internal
Revenue Code ("the  Code"),  and is  generally  followed in all states and other
United  States  taxing  jurisdictions.  Accordingly,  it is subject to change by
Congress and the legislatures of the respective taxing jurisdictions.

     The  Company's  insurance  company  subsidiary  is  taxed  under  the  life
insurance  company  provisions  of the Code.  Provisions  in the Code  require a
portion of the expenses  incurred in selling  insurance  products to be deducted
over a period of years, as opposed to immediate  deduction in the year incurred.
This  provision  increases  the tax for  statutory  accounting  purposes,  which
reduces  statutory  surplus  and,  accordingly,  decreases  the  amount  of cash
dividends that may be paid by the life insurance subsidiary.  Great Midwest also
qualifies  under the small life  insurance  company rules for taxation which may
further reduce taxes.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company's  administrative,  marketing and production facilities consist
of approximately  3,000 square feet at a single location in Del City,  Oklahoma.
The Company owns and occupies  this  facility  and owns the  approximate  30,000
square feet of raw land  adjacent to the  property.  This  facility will provide
room for possible  expansion,  which will likely be utilized within the next few
years.

     The  Company has leased  2,400  square  feet of space  within the  internal
boundaries of its property to Nextel  Westcorp,  Inc., on which space the lessee
has erected a  communications  tower.  Terms of the lease  agreement (the "Lease
Agreement"),  which was entered into in March 2001, provide for monthly payments
to the Company of  approximately  $1,300 per month during the initial  five-year
term of the lease.  The lease is  renewable at the option of the lessee for five
additional  five-year terms. If all renewals are exercised,  the Company expects
to receive over $600,000 over the life of the agreement.

     On March 6, 2001, the Company sold the Lease Agreement.  In connection with
the sale,  the Company had a  disagreement  with Grant  Thornton  LLP,  its then
auditors, regarding the Company's proposed accounting treatment of the sale. SEE
"ITEM 8 - CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE," and Note H of the Notes to the Financial Statements." The
Company  interpreted  certain  provisions  relating to  Statement  of  Financial
Accounting  Standards ("FAS") 13 to allow the recording of a gain on the sale of
the  Lease  Agreement  as of the  effective  date of the sale in the  amount  of
$186,000  because the Company did not retain any  ownership in the lease revenue
stream and the buyer had no recourse  against  the Company if the lease  revenue
stream  did  not  continue.  Grant  Thornton  LLP's  review  of the  transaction
indicated that the Lease  Agreement was an operating  lease and that pursuant to
FAS 13 paragraph 22, the sale or assignment by the lessor of lease  payments due
under an operating lease should be accounted for as a borrowing.  As such, Grant
Thornton LLP recommended that the Company record the sale of the Lease Agreement
as a borrowing as of the effective date of the sale. The effect on the Company's
first quarter  financial  statements  was to eliminate  $186,000 from income and
record a like amount as a liability.

     During the Company's  discussions  with Grant Thornton LLP, the Company was
informed of certain  requirements that had to be satisfied in order for the gain
on the sale of the Lease  Agreement to be recognized as income.  Pursuant to the
information provided by Grant Thornton LLP, the Company subsequently  structured
the transaction to meet the  requirements  necessary for the gain on the sale of
the Lease  Agreement to be recognized as income and the Company  recorded a gain
of $186,000 in June 2001. The effect on the Company's  financial  statements was
to delay  recording  $186,000  of income  from the first  quarter of 2001 to the
second quarter of 2001.


                                       10
<PAGE>

     As a result  of events  subsequent  to the sale,  the  Company  came to the
conclusion  that the tower property and lease were more  attractive  investments
than when they were sold by the Company.  Accordingly, on December 17, 2001, the
Company  repurchased the property,  together with the underlying  communications
tower lease, for $213,500. SEE "ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF  OPERATION--Liquidity  and Capital Resources" and Note H of the Notes to
the Financial Statements.

ITEM 3.  LEGAL PROCEEDINGS

     The Company is involved from time to time in various legal  proceedings and
claims incident to the normal conduct of its business. The Company believes that
such legal  proceedings and claims,  individually and in the aggregate,  are not
likely to have a material  adverse effect on its financial  condition or results
of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters  were  submitted to a vote of the  security  holders  during the
fourth quarter of the fiscal year covered by this report.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Trading Market

     There is  currently a limited  market for the common  stock of the Company.
The common stock began  trading on the OTC  Bulletin  Board on October 27, 1999,
under  the  symbol  SUMC.  The  following  table  sets  forth,  for the  periods
indicated,  the high and low bid prices of the Company's common stock during the
periods indicated, as reported by the OTC Bulletin Board:

                                           2000                       2001
                                 -----------------------    --------------------
                                    High         Low            High        Low
                                 -----------  ----------    ----------- --------
First Quarter...................   $ 5.00       $ 2.00         $ .53       $ .25
Second Quarter..................   $ 2.50       $ 1.50         $1.05       $ .10
Third Quarter...................   $ 1.75       $  .44         $ .80       $ .75
Fourth Quarter..................   $  .56       $  .27         $ .90       $ .10

     OTC Bulletin Board quotations reflect  interdealer  prices,  without retail
mark-up, mark-down or commission and may not represent actual transactions.  The
Company  intends  to make  application  to list the  common  stock on the Nasdaq
SmallCap Market when it qualifies for listing.

Number of stockholders

     As of the close of business on March 27, 2002,  2,248,605  shares of common
stock  were  issued  and  outstanding,  422,200  shares  of  common  stock  were
subscribed and unissued but deemed to be issued and outstanding, 5,000 shares of
Series A preferred  stock were  issued and  outstanding  and  350,000  shares of
Series B preferred  stock were issued and  outstanding.  Great  Midwest has been
issued 19,000 shares of common stock, but such shares are not taken into account
when determining the number of shares of common stock that are  outstanding.  At
such date, there were  approximately  1,429 stockholders of record of the common
stock.


                                       11
<PAGE>

Dividend Policy

     To date,  the Company has declared no cash  dividends on its common  stock,
and does not expect to pay cash dividends in the near term. The Company  intends
to retain  future  earnings,  if any, to provide  funds for  operations  and the
continued expansion of its business.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The following  discussion and analysis reviews the Company's operations for
the years ended December 31, 2001 and 2000. Certain statements contained in this
discussion  are not  based on  historical  facts,  but are based  upon  numerous
assumptions  about future conditions that may ultimately prove to be inaccurate,
and actual events and results may differ  materially  from  anticipated  results
described in such statements.  The Company's  ability to achieve such results is
subject to certain risks and uncertainties  such as those inherent  generally in
the insurance  industry,  the impact of competition,  changing market conditions
and  other  risks.  The  following  discussion  and  analysis  should be read in
conjunction  with the financial  statements of the Company and the notes related
thereto included elsewhere in this Report.

     Currently,  the  Company's  only  business  segment  is its life  insurance
operations.  However,  in the past the  Company  has also  provided  residential
mortgage  loan  processing  services to  individuals  and  financing  to medical
accounts receivable factoring entities.

Operating Data

     The following  table sets forth selected  information  regarding  operating
results for the periods indicated:

                                                       Year Ended December 31,
                                                          2001          2000
                                                       ----------    ----------
                                                        (dollars in thousands)
     Statement of Operations Data:
              Revenues                                 $      610    $      571
              Benefits and expenses                           933           975
                                                       ----------    ----------
                       Net loss                        $     (324)   $     (404)
                                                       ==========    ==========

     Balance Sheet Data:
              Cash and cash equivalents                $    1,661    $    1,436
              Total assets                             $    6,629    $    6,163
              Total liabilities                        $    5,572    $    5,187
              Stockholders equity                      $    1,057    $      975

Results of Operations

     Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

     Assets/Liabilities/Stockholders'  Equity.  Total assets were  $6,629,095 at
December 31, 2001,  compared to  $6,162,682 at December 31, 2000, an increase of
8%.  The  increase  was due to the  acquisition  of the  Presidential  block  of
policies during 2001. See "ITEM 1. DESCRIPTION OF BUSINESS-General."

     Total liabilities  (primarily  insurance  reserves for future  policyholder
benefits)  were  $5,572,208  at December 31,  2001,  compared to  $5,187,382  at
December  31, 2000,  an increase of 7%. The  increase  was due  primarily to the
Presidential  acquisition,  but was offset in part by  repayment of a portion of
the Company's outstanding debt.


                                       12
<PAGE>

     Total stockholders' equity was $1,056,887 at December 31, 2001, compared to
$975,300 at December 31, 2000, an increase of 8%. The increase was primarily due
to the sale of the  Company's  common  stock  pursuant to the  Company's  public
offering, which became effective in May 2001. The offering, which was terminated
effective March 31, 2002, resulted in the sale of 445,200 shares of common stock
for gross aggregate proceeds of $445,200.

     The  average  rate of  return  on  investments,  including  cash  and  cash
equivalents,  was  approximately  6.1% for 2001 and  6.5% for  2000,  while  the
average rate credited to policyowner  accounts was approximately  5.0% and 5.2%,
respectively.

     Revenue.  Revenues  attributable  to life  insurance  increased  136%  from
$152,624 to $359,533 for the year ended December 31, 2001,  compared to the year
ended  December  31,  2000.  The  increase  was  due to the  acquisition  of the
Presidential block in August 2001 as well as the Company's  increased success in
marketing.  The  Company  appointed  a new  marketing  director in late 2000 and
appointed 40 new agents during 2001 which led to a  significant  increase in new
business written for the Company.

     Investment  income decreased 10%, from $377,184 for the year ended December
31, 2000 to $338,670 for the year ended December 31, 2001, primarily as a result
of a series of interest rate reductions during the year by the Federal Reserve.

     Net losses on trading  securities of $139,527,  mainly  unrealized  holding
losses,  were  reported  for the period  ended  December 31, 2001 as compared to
losses on trading securities of $159,755 for the period ended December 31, 2000.
The Company  recovered more than $38,000 in losses during the fourth quarter and
anticipates  continued  recovery in the valuation of its equity  portfolio.  The
Company began trading  securities in the fourth  quarter of 2000 and is required
to report  unrealized gains and losses in operations.  The realized gain or loss
for each trading security may differ  materially  depending on the date of sale,
the  underlying   performance  of  the  represented  company  and  other  market
conditions.

     Other income  decreased  46%, from $109,025 for the year ended December 31,
2000 to $58,730 for the year ended December 31, 2001, primarily as a result of a
gain on the sale of real estate which was  recognized  during the second quarter
of 2000.

     Costs and Expenses.  Total expenses  decreased 4% from $975,178 to $933,818
for the years ended December 31, 2000 and December 31, 2001, respectively.  Such
decrease was primarily  attributable to management's cost containment  programs,
which reduced general,  administrative  and other operating  expenses by $69,000
during the year 2001.

     Policy benefits  increased 48% from $96,397 to $142,413 for the years ended
December 31, 2000 and December 31, 2001, respectively, due to the acquisition of
Presidential  policies,  which  tripled the number of  policies  serviced by the
Company.  Change in policy reserves,  interest expenses and expenses  associated
with taxes,  licenses and fees all  decreased  slightly  during 2001 compared to
2000 while  depreciation  and  amortization  increased  slightly  to reflect the
amortization  of the  goodwill  associated  with the  Presidential  acquisition.
Management believes the Presidential  purchase has been successfully  integrated
into Great Midwest's  operations and will contribute toward the profitability of
the Company.

     Losses.  The Company  reported a net loss for the year ended  December  31,
2001 of $324,204, compared to a net loss for the year ended December 31, 2000 of
$404,421,  a 20%  decrease.  This was due, in part, to  management's  efforts to
increase  premium  revenues  through  both  the  Presidential   acquisition  and
increased  marketing  activities  and to  continued  cost  containment  measures
instituted  two years ago. The Company's  loss per share  decreased to $0.15 per
share for the year ended  December  31,  2001,  compared  to a loss of $0.20 per
share for the year ended December 31, 2000.


                                       13
<PAGE>

Liquidity and Capital Resources

     Liquidity

     The principal  requirements  for liquidity in connection with the Company's
operations are in contractual  obligations to policyowners  and annuitants.  The
Company's  contractual  obligations  include  payments  of  surrender  benefits,
contract withdrawals, claims under outstanding insurance policies and annuities,
and policy loans.  Payment of surrender benefits is a function of "persistency",
which  is  the  extent  to  which  insurance  policies  are  maintained  by  the
policyowner.  Policyowners,  at times,  do not pay premiums,  thus causing their
policies to lapse,  or  policyowners  may choose to surrender their policies for
their  cash  surrender  value.  If  actual  experience  of a policy  or block of
policies is different from the initial or acquisition date  assumptions,  a gain
or loss could result.  Depending on the nature of the underlying policy, a lapse
or  surrender  may  result in  surrender  charge  revenue or  surrender  benefit
expense. Such amounts may be less than, or greater than, unamortized acquisition
expenses  and/or  the  related  policy  reserves;  accordingly,  current  period
earnings  may either  increase  or  decrease.  Additionally,  policy  lapses and
surrenders  may  result  in lost  future  revenues  and  possible  profitability
associated with the policy.

     Capital Resources

     On January 13, 1999, the Company  acquired 100% of the  outstanding  common
stock of Great Midwest, a Texas-chartered life insurance company. The total cost
of the acquisition was  approximately  $939,000.  Of the purchase price, cash of
$607,000  was paid to seven of eight  stockholders  with the eighth  stockholder
receiving a promissory note for a principal amount of $332,000, payable in three
equal  annual  installments  at an  annual  interest  rate  of 6% on the  unpaid
principal balance. The Company partially funded the cash portion of the purchase
price with a $350,000  loan from a bank.  The loan accrued  interest at an index
rate plus .5%, payable monthly, and originally matured on July 9, 1999, at which
time the  Company  paid  $100,000 of the  principal  amount owed and renewed the
balance for a six-month  term maturing  January 9, 2000. The balance of the loan
was paid December 31, 1999 using  operating  cash flow and the proceeds from the
sale of Benefit  Capital Life Insurance  Company.  During 2001, the Company paid
the last of the three installments due on the promissory note held by the former
stockholder.

     On August 1, 2001, Great Midwest  acquired a block of  approximately  1,400
life  insurance  policies.  Reserves  of $712,000  and assets of  $634,392  were
transferred to Great Midwest for a purchase  price of $77,608.  The purchase was
funded with cash flow from operations.  The purchase increased policies serviced
over 200% and in-force life insurance by $14.8 million, or 106%.

     On September  28, 2001,  the investor who had  subscribed  for an aggregate
1,000,000  shares of the  Company's  Series B  preferred  stock did not make the
final  payment  due with  respect  to his  subscription.  Under the terms of his
subscription  agreement,  pursuant to which the investor was deemed to have been
issued  only that  number of shares  that were  fully  paid,  a total of 350,000
shares of Series B preferred  stock was deemed to be sold, and the  subscription
receivable of $650,000 was canceled.

     The Company has made and intends to make ongoing expenditures in connection
with its subsidiary's marketing programs.  Historically,  the Company has funded
these expenditures from cash flow from operations.

     In preparing its financial statements for the 2001 fiscal year, the Company
requested a review by the Securities and Exchange  Commission (the "SEC") of its
accounting  treatment of the sale of certain real estate subject to an operating
lease,  reported  during the second  quarter  of 2001,  as well as its  proposed
accounting treatment of the December 2001 repurchase of such property. SEE "ITEM
2-DESCRIPTION  OF PROPERTY" for a description  of the property and  accompanying
lease,  "ITEM 8- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE," and Note H of the Notes to the Financial Statements. As a


                                       14
<PAGE>

result of its  discussion  with the SEC,  the  Company  decided to  reverse  the
$186,000 of income  reported on the sale of real estate  subject to an operating
lease previously reported in the second quarter of 2001.

     Great Midwest intends to request from state  insurance  regulators a review
and approval of the  accounting  treatment  used by the company in its statutory
financial statements.  Should the regulators require restatement,  Great Midwest
may  fail to meet  the  minimum  capital  and  surplus  required  by  applicable
statutes. In such event, the Company has the option of requesting an increase to
the  valuation  of  the  property   based  on  independent   appraisals   and/or
contributing  additional  funds as  surplus  to the  subsidiary  to comply  with
statutory  capital and surplus  requirement.  The  Company  believes  that if an
additional  capital  contribution  is  required,  it will be able to obtain  the
necessary capital.

     The Company  believes  that  anticipated  cash from  continuing  operations
should be sufficient to fund its  operations  and the annual 10% dividend on the
Series A Preferred  Stock for at least the next twelve  months.  The Company may
not, however,  generate  sufficient cash flow for these purposes.  The Company's
ability to fund its  operations  and to make  scheduled  dividend  payments will
depend on its future  performance,  which,  to a certain  extent,  is subject to
general  economic,  financial,  competitive,  legislative,  regulatory and other
factors  that are beyond its control.  The risk  factors to which the  Company's
operations are subject include the following:

Business Outlook and Risk Factors

     The Company's future  operating  results may be affected by various trends,
developments and factors that the Company must  successfully  manage in order to
achieve favorable operating results. In addition, there are trends, developments
and factors  beyond the  Company's  control that may affect its  operations.  In
accordance with the provisions of the Private  Securities  Litigation Reform Act
of 1995, the  cautionary  statements and risk factors set forth below and in the
Company's  other filings with the Securities and Exchange  Commission,  identify
important  trends,  factors and currently  known  developments  that could cause
actual results to differ materially from those in any forward-looking statements
contained in this Report and in any written or oral  statements  of the Company.
Forward-looking  statements in this Report include revenue, expense and earnings
analysis  for the  remainder  of 2002  as  well  as the  Company's  expectations
relating to its business strategy. Risk factors include the following:

     The Company operates in a highly  competitive  industry,  which could limit
     its ability to gain or maintain its position.

     The  Company  is in direct  competition  with a large  number of  insurance
companies,  many of which offer a greater  number of products  through a greater
number of agents and have greater resources than the Company.  In addition,  the
Company may be subject,  from time to time, to new  competition  resulting  from
additional  private  insurance  carriers  introducing  products similar to those
offered by it. Moreover,  as a result of recent federal legislation,  commercial
banks,  insurance  companies,  and  investment  banks may now combine,  provided
certain  requirements  are  satisfied,  and the  Company  expects  to  encounter
increased   competition  from  these  providers  of  financial  services.   This
competitive   environment  could  result  in  lower  premiums,   less  favorable
underwriting terms and conditions, loss of sales and reduced profitability.

     Over  the past  three  fiscal  years,  substantially  all of the  Company's
premiums  were from sales of  policies  in  Oklahoma  and Texas.  The  Company's
ability to compete  successfully  may suffer from  competitive  changes in these
particular markets.

     The  Company's  lack of a rating  could  adversely  affect  its  ability to
compete.

     Ratings of insurance  companies are typical within the industry.  Increased
public and regulatory  concerns  regarding the financial  stability of insurance
companies have resulted in  policyholders  placing greater emphasis upon company


                                       15
<PAGE>

ratings and have created some measure of  competitive  advantage  for  insurance
carriers with higher  ratings.  Rating  organizations  assign ratings based upon
several  factors.  While  most of the  considered  factors  relate  to the rated
company,  some  of  the  factors  relate  to  general  economic  conditions  and
circumstances  outside the rated  company's  control.  As of March 29, 2002, the
Company has not been rated by any rating organization. The absence of any rating
could  adversely  affect the  Company's  ability to sell its  products or retain
existing  business,  as  well  as in  its  ability  to  compete  for  attractive
acquisition opportunities.

     The Company may not be able to compete  successfully  if it cannot  recruit
and retain insurance agents.

     The Company  continuously  recruits and trains independent agents to market
and sell its  products.  The  Company may not be able to continue to attract and
retain  independent  agents  to sell its  products.  The  Company  also  engages
marketing  general  agents from time to time to recruit  independent  agents and
develop networks of agents in various states. The Company's business and ability
to compete may suffer from the inability to recruit and retain  insurance agents
and from the loss of services provided by its marketing agents.

     The Company's policy claims fluctuate from year to year, and future benefit
payments may exceed reserves.

     The Company's  results may fluctuate from year to year due to  fluctuations
in policy claims  received by its life insurance  subsidiary.  Great Midwest has
established  reserves for claims and future  policy  benefits  based on accepted
actuarial practices.  By care in underwriting new policies and sharing risk with
reinsurance  companies,  Great  Midwest has attempted to limit the risk that its
actual  payments  of death and other  benefits  will  exceed its  reserves.  The
reserves are,  however,  only actuarial  estimates and it is possible that Great
Midwest's  claims  experience  could  be  worse  than  anticipated,  so that its
reserves may prove to be insufficient.  If this were to happen,  it could result
in increased operating losses.

     The Company could be forced to sell illiquid investments at a loss to cover
policyholder withdrawals.

     Many of the  products  offered by Great  Midwest  allow  policyholders  and
contractholders  to  withdraw  their funds under  defined  circumstances.  Great
Midwest manages its liabilities and configures its investment portfolio so as to
provide and  maintain  sufficient  liquidity to support  anticipated  withdrawal
demands,   contract  benefits  and  maturities.   While  Great  Midwest  owns  a
significant  amount of  liquid  assets,  a certain  portion  of its  assets  are
relatively illiquid. Unanticipated withdrawal or surrender activity could, under
some  circumstances,  compel  Great  Midwest to dispose  of  illiquid  assets on
unfavorable terms, which could have an adverse effect on the Company.

     Interest-rate fluctuations could negatively affect our spread income.

     Significant  changes in interest  rates expose  insurance  companies to the
risk of not earning  anticipated  spreads  between the  interest  rate earned on
investments and the credited interest rates paid on outstanding  policies.  Both
rising and declining  interest rates can negatively  affect the Company's spread
income.  While the Company  develops and  maintains  asset/liability  management
programs and procedures  designed to preserve spread income in rising or falling
interest rate  environments,  changes in interest rates could  adversely  affect
such spreads.

     Lower  interest rates may result in lower sales of certain of the Company's
insurance  and  investment  products.  In  addition,  certain  of the  Company's
insurance products guarantee a minimum credited interest rate.


                                       16
<PAGE>

         The Company's insurance subsidiary is highly regulated, and government
regulation may affect profitability or market value.

     The Company's insurance  subsidiary is subject to government  regulation in
each of the states in which it conducts  business.  Such regulation is vested in
state agencies  having broad  administrative  power dealing with many aspects of
the insurance business,  which may include premium rates,  marketing  practices,
advertising, policy forms, and capital adequacy, and is concerned primarily with
the  protection  of  policyholders  rather than share  owners.  Changes in these
regulations could affect the Company's  profitability or the market value of its
shares.

     The Company's  insurance  subsidiary  acts as a fiduciary and is subject to
regulation by the United States  Department of Labor when providing a variety of
products  and  services to employee  benefit  plans  governed by the  Employment
Retirement  Income  Security  Act,  or ERISA.  Severe  penalties  are imposed on
insurers  that breach their  fiduciary  duties to the plans under ERISA.  If the
Company  were fined or a penalty was  imposed on the  Company by a  governmental
agency  having  jurisdiction  over it, the Company  might not have the financial
resources to pay the fine or penalty.

     The  Company  cannot  predict  the  effect of recent  insurance  regulatory
changes.

     The National  Association  of  Insurance  Commissioners,  or the NAIC,  has
adopted the  Codification of Statutory  Accounting  Principles  ("Codification")
effective on January 1, 2001. The Company has determined that the primary effect
of Codification is that goodwill can now be recorded as an admitted asset on its
subsidiary's statutory financial statements.

     A tax law change could  adversely  affect the Company's  ability to compete
with non-insurance products.

     Under the Internal  Revenue Code of 1986, as amended (the  "Code"),  income
tax payable by  policyholders  on  investment  earnings  is deferred  during the
accumulation  period of  certain  life  insurance  and  annuity  products.  This
favorable tax treatment may give certain of the Company's products a competitive
advantage  over other  non-insurance  products.  To the extent  that the Code is
revised  to  reduce  the  tax-deferred  status  of life  insurance  and  annuity
products, or to increase the tax-deferred status of competing products, all life
insurance companies,  including Great Midwest,  would be adversely affected with
respect to their ability to sell such products, and, depending on grandfathering
provisions,  the  surrenders of existing  annuity  contracts and life  insurance
policies. In addition, life insurance products are often used to fund estate tax
obligations.  If the estate tax were  eliminated,  the demand for  certain  life
insurance products could be adversely affected.  The Company cannot predict what
tax initiatives may be enacted which could adversely affect us.

     The Company's investments are subject to risks.

     The  Company's  invested  assets are subject to  customary  risks of credit
defaults and changes in market  values.  The value of the  Company's  investment
portfolio  depends in part on the financial  condition of the companies in which
it has made investments. Factors that may affect the overall market value of the
Company's  invested  assets  include  interest  rate  levels,  financial  market
performance,   and  general   economic   conditions,   as  well  as   particular
circumstances affecting the businesses of individual companies.

     The Company's growth from acquisitions involves risks.

     The  Company's  acquisitions  have  benefited  it in part by allowing it to
enter new  markets  and to position  the  Company to realize  certain  operating
efficiencies  associated  with  economies of scale.  There can be no  assurance,
however,  that the Company will realize the anticipated  financial  results from
its acquisitions or that suitable  acquisitions,  presenting  opportunities  for
continued  growth and operating  efficiencies,  or capital to fund  acquisitions
will continue to be available to it.


                                       17
<PAGE>

     The Company is dependent on the performance of others.

     The Company's  results may be affected by the performance of others because
the Company has entered into various  arrangements  involving other parties. For
instance,   many  of  the  Company's  products  are  sold  through   independent
distribution channels.  Additionally,  a portion of the Company's life insurance
sales comes from arrangements with unrelated  marketing  organizations.  As with
all financial services  companies,  the Company's ability to conduct business is
dependent upon consumer confidence in the industry and its products.  Actions of
competitors,  and  financial  difficulties  of other  companies in the industry,
could undermine consumer confidence and adversely affect the Company's business.

     A decline  in the  Company's  stock  price may limit our  ability  to raise
capital.

     During 2000 and 2001,  many  financial  services  companies,  including the
Company,  experienced  a decrease  in the market  price of their  common  stock.
Although the Company believes it has sufficient,  internally generated cash flow
to fund its day-to-day operations,  a lower stock price may limit its ability to
raise capital to fund other growth opportunities and acquisitions.  In fact, the
lower stock prices  suffered by the  Company's  stock during 2001 had an adverse
effect on its ability to fully sell all 1,000,000  shares  offered in its public
offering that commenced in May 2001.

     The Company's reinsurance program involves risks.

     Great Midwest is able to assume  insurance risks beyond the level which its
capital and surplus would support by transferring  substantial  portions of such
risks to other, larger insurers through reinsurance contracts. These reinsurance
arrangements,  which are the usual  practice in the  insurance  industry,  leave
Great Midwest exposed to two risks:

     --   The credit  risk,  which  exists  because  reinsurance  does not fully
          relieve Great Midwest of its liability to its insureds for the portion
          of the risks ceded to  reinsurers.  Although  Great Midwest places its
          reinsurance  with reinsurers it believes to be financially  stable,  a
          reinsurer's  subsequent insolvency or inability to make payments under
          the terms of a  reinsurance  treaty  could have a  materially  adverse
          effect on our financial condition.

     --   The  amount  and cost of  reinsurance  available  to Great  Midwest is
          subject,  in large part, to prevailing  market  conditions  beyond its
          control.  Non-renewal  or  cancellation  of a reinsurance  arrangement
          affects only new business and the reinsurer remains liable on business
          reinsured prior to non-renewal or cancellation.  If Great Midwest were
          to be unable to  maintain  or replace its  reinsurance  facilities  on
          acceptable terms upon their expiration and were unwilling or unable to
          bear the  associated  increase in exposure on new  business,  it would
          have to reduce the amount of its new business.

     The  Company  is  dependent  on  dividends  and  management  fees  from its
     insurance subsidiary, Great Midwest, to fund its operations.

     The Company's  ability to fund its operations is affected by the ability of
its insurance  company  subsidiary,  Great  Midwest,  to declare and  distribute
dividends to the Company as its sole  shareholder,  as well as on its ability to
pay the Company  management  fees for the  administrative  services  the Company
provides to it. Insurance company subsidiaries like Great Midwest are subject to
various state  statutory and  regulatory  restrictions,  applicable to insurance
companies generally, that limit the amount of cash dividends, loans and advances
that those subsidiaries may pay to their parent companies. Under Texas insurance
laws,  our principal  operating  subsidiary,  Great  Midwest,  generally may pay
dividends to us only out of its unassigned surplus as reflected in its statutory
financial statements filed in that state. In addition, the Texas Commissioner of
Insurance must approve,  or not disapprove within 30 days of notice,  payment of
an "extraordinary" dividend from Great Midwest. Under Texas insurance laws, that


                                       18
<PAGE>

term  generally  refers to a dividend that exceeds,  together with all dividends
paid by Great Midwest within the previous 12 months, the greater of:

     --   10% of Great Midwest's  statutory capital and surplus at the preceding
          December 31; or

     --   the net gain from  operations of Great Midwest for the 12 months ended
          on such December 31.

     It is possible that more stringent  restrictions  will be adopted from time
to  time,  which  could  have  the  effect,  under  certain  circumstances,   of
significantly  reducing dividends or other amounts payable to the Company by its
insurance  subsidiary  without  affirmative  prior  approval by state  insurance
regulatory authorities.

     In the event of the insolvency, liquidation, reorganization, dissolution or
other winding-up of an insurance subsidiary of the Company, all creditors of the
subsidiary,  including holders of life insurance policies,  would be entitled to
payment in full out of the assets of such  subsidiary  before  the  Company,  as
shareholder, would be entitled to any payment.

ITEM 7.  FINANCIAL STATEMENTS

The  consolidated  financial  statements  of the  Company  are  incorporated  by
reference from pages F-1 through F-22 of the attached Appendix,  and include the
following:

     Consolidated   Financial   Statements  of  Summit  Life   Corporation   and
     Subsidiaries

     (1)  Report of Independent Certified Public Accountants (Gary Skibicki CPA,
          P.C.);
     (2)  Report of Independent  Certified  Public  Accountants  (Grant Thornton
          LLP);
     (3)  Consolidated Balance Sheets as of December 31, 2001 and 2000;
     (4)  Consolidated  Statements  of Operations  for Years Ended  December 31,
          2001 and 2000;
     (5)  Consolidated   Statement  of  Stockholders'  Equity  for  Years  Ended
          December 31, 2001 and 2000;
     (6)  Consolidated  Statements  of Cash Flows for Years Ended  December  31,
          2001 and 2000; and
     (7)  Notes to Consolidated Financial Statements.

ITEM  8. CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     As of June 29,  2001,  the  Company's  Board of Directors  dismissed  Grant
Thornton  LLP  as the  Company's  independent  accountants  and  appointed  Gary
Skibicki CPA, P.C. as the Company's independent accountants.

     The reports of Grant Thornton LLP on the Company's  consolidated  financial
statements  as of and for the years  ended  December  31,  2000 and 1999 did not
contain any adverse  opinion or  disclaimer of opinion,  and neither  report was
qualified or modified as to uncertainty, audit scope or accounting principles.

     The  decision to change  independent  accountants  was  recommended  by the
Company's Audit  Committee,  and approved by the Company's Board of Directors on
June 29, 2001.

     During  the two most  recent  fiscal  years  and  through  the date of this
report,  the  Company has not had any  disagreements  with Grant  Thornton  LLP,
except  as set  forth  below in this  paragraph,  on any  matter  of  accounting
principles or practices,  financial  statement  disclosure or auditing  scope or
procedure,  which disagreement(s),  if not resolved to the satisfaction of Grant
Thornton LLP would have caused Grant Thornton LLP to make  reference  thereto in
their report on the  consolidated  financial  statements of the Company for such
periods.  During the two most recent  fiscal  years and through the date of this
report,  the Company has had one disagreement  with Grant Thornton LLP regarding


                                       19
<PAGE>

the Company recording a gain on the March 6, 2001, sale of a communications site
lease agreement (the "Lease  Agreement").  SEE "ITEM 2-DESCRIPTION OF PROPERTY."
The Company  interpreted  certain provisions  relating to Statement of Financial
Accounting  Standards ("FAS") 13 to allow the recording of a gain on the sale of
the  Lease  Agreement  as of the  effective  date of the sale in the  amount  of
$186,000  because the Company did not retain any  ownership in the lease revenue
stream and the buyer had no recourse  against  the Company if the lease  revenue
stream  did  not  continue.  Grant  Thornton  LLP's  review  of the  transaction
indicated that the Lease  Agreement was an operating  lease and that pursuant to
FAS 13 paragraph 22, the sale or assignment by the lessor of lease  payments due
under an operating lease should be accounted for as a borrowing.  As such, Grant
Thornton LLP recommended that the Company record the sale of the Lease Agreement
as a borrowing as of the effective date of the sale.

     The Company's  Audit  Committee was informed of the  disagreement by letter
from Grant Thornton LLP. After considerable discussion, the Company accepted the
recommendations  of Grant  Thornton  LLP and did not  record  the gain as of the
effective  date of the sale of the Lease  Agreement.  The matter was resolved to
the satisfaction of Grant Thornton LLP. The discussions  between the Company and
Grant Thornton LLP covered the accounting  principles and literature  related to
the  different  types of  leases  and  revenue  recognition.  The  effect on the
Company's  first quarter  financial  statements  was to eliminate  $186,000 from
income and record a like amount as a liability.

     The  Company,   during  the  course  of  evaluating  Grant  Thornton  LLP's
recommendation,  discussed  the  recording  of the gain on the sale of the Lease
Agreement with Gary Skibicki CPA, P.C. The  discussions  between the Company and
Gary Skibicki CPA, P.C. covered the accounting principles and literature related
to the  different  types of leases and revenue  recognition.  Gary Skibicki CPA,
P.C.  concurred  with the  recommendations  of Grant  Thornton LLP regarding the
manner in which the sale should be recorded  and, as stated  above,  the Company
did record the sale of the Lease Agreement as a borrowing in accordance with the
recommendations of Grant Thornton LLP. The Company authorized Grant Thornton LLP
to respond fully to inquiries of Gary Skibicki CPA, P.C.,  regarding the subject
matter of the disagreement.

     The Company has requested  Gary Skibicki CPA, P.C. to review the disclosure
required by this Item 8 and Gary  Skibicki  CPA,  P.C.  has informed the Company
that it concurs with the disclosure as set forth in this Item 8 concerning  Gary
Skibicki CPA, P.C.

     Other than the disagreement set forth above,  during the Company's two most
recent fiscal years and through the date of this report, the Company has not had
any reportable  events as defined in Item 304 (a) (l) (iv) of Regulation S-B and
there has not been a  transaction  similar  to the sale of the  Lease  Agreement
during the two most recent fiscal years or the subsequent interim period.

     The  Company  requested  that Grant  Thornton  LLP furnish it with a letter
addressed to the Securities and Exchange  Commission  stating  whether it agrees
with the above statements.  A copy of the letter dated July 13, 2001 is filed as
Exhibit 16 to Form 8-K/A filed on July 13, 2001.


                                       20
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

     The information required will be contained in the Company's Proxy Statement
for the 2002  Annual  Meeting  of  Stockholders  and is  incorporated  herein by
reference.

ITEM 10. EXECUTIVE COMPENSATION

     The information required will be contained in the Company's Proxy Statement
for the 2002  Annual  Meeting  of  Stockholders  and is  incorporated  herein by
reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required will be contained in the Company's Proxy Statement
for the 2002  Annual  Meeting  of  Stockholders  and is  incorporated  herein by
reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required will be contained in the Company's Proxy Statement
for the 2002  Annual  Meeting  of  Stockholders  and is  incorporated  herein by
reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this report:

          (1)  Financial  Statements  are  attached  hereto  as  Appendix  A and
included herein on pages F-1 through F-22.

          (2)  The exhibits set forth on the  following  Exhibit Index are filed
with this Report or are incorporated by reference as set forth therein.



<PAGE>


       Exhibit
       Number                          Name of Exhibit
       -------                         ---------------

         3.1*     First Amended and Restated Certificate of Incorporation (filed
                  as Exhibit 3.1 to the Company's Registration Statement on Form
                  SB-2,  file  number  333-65097  and  incorporated   herein  by
                  reference).

         3.2*     First Amended and Restated Bylaws (filed as Exhibit 3.2 to the
                  Company's  Registration  Statement  on Form SB-2,  file number
                  333-65097 and incorporated herein by reference).

         4.1*     Specimen Certificate of the common stock (filed as Exhibit 4.1
                  to the  Company's  Registration  Statement on Form SB-2,  file
                  number 333-65097 and incorporated herein by reference).

         4.2*     See  Articles  V  and  X  of  the  Company's   Certificate  of
                  Incorporation and Article VI of the Company's Bylaws (filed as
                  Exhibit 4.2 to the  Company's  Registration  Statement on Form
                  SB-2,  file  number  333-65097  and  incorporated   herein  by
                  reference).

         4.3*     Specimen Certificate of the Series A Preferred Stock (filed as
                  Exhibit 4.1 to the Company's  Quarterly  Report on Form 10-QSB
                  for the Quarter ended June 30, 1999 and incorporated herein by
                  reference).


                                       21
<PAGE>

         4.4*     Certificate of Designation of Series A Preferred  Stock (filed
                  as  Exhibit  4.2 to the  Company's  Quarterly  Report  on Form
                  10-QSB for the Quarter  ended June 30,  1999 and  incorporated
                  herein by reference).

         4.5*     Certificate of  Designation of Series B Convertible  Preferred
                  Stock (filed as Exhibit 4.1 to the Company's  Quarterly Report
                  on Form 10-QSB for the Quarter  ended  September  30, 2000 and
                  incorporated herein by reference).

         10.1*    Employment  Agreement  by and between the Company and James L.
                  Smith  (filed as Exhibit  10.1 to the  Company's  Registration
                  Statement on Form SB-2, file number 333-65097 and incorporated
                  herein by reference).

         10.2*    Employment Agreement by and between the Company and Charles L.
                  Smith  (filed as Exhibit  10.2 to the  Company's  Registration
                  Statement on Form SB-2, file number 333-65097 and incorporated
                  herein by reference).

         10.3*    Stock Purchase  Agreement by and between the Company and BCLIC
                  (filed as Exhibit 10.3 to the Company's Registration Statement
                  on Form SB-2, file number 333-65097 and incorporated herein by
                  reference).

         10.4*    Stock Purchase Agreement between the Company and Orville Homer
                  Miller  et  al.  (filed  as  Exhibit  10.4  to  the  Company's
                  Registration Statement on Form SB-2, file number 333-65097 and
                  incorporated herein by reference).

         10.5*    Stock  Purchase  Agreement  between  Summit Life  Corporation,
                  Seller,  and First Alliance  Insurance  Company,  Buyer, dated
                  November  10,  1999  (filed as  Exhibit  2.1 to the  Company's
                  Current  Report  on Form  8-K  filed  November  24,  1999  and
                  incorporated herein by reference).

         10.6*    Escrow  Agreement  between  the Company and UMB Bank (filed as
                  Exhibit 10.5 to the Company's  Registration  Statement on Form
                  SB-2,  file  number  333-55722  and  incorporated   herein  by
                  reference).

         10.7*    Designated  Agency Officer Agreement (filed as Exhibit 10.7 to
                  the Company's Registration Statement on Form SB-2, file number
                  333-65097 and incorporated herein by reference).

         10.8     Communications  Site  Lease  Agreement  dated  March  6,  2001
                  between the Company and Nextel West Corp.  and Amendment No. 1
                  thereto.

         16*      Letter to SEC from  Grant  Thornton  LLP dated  July 13,  2001
                  (filed as Exhibit 2.1 to the Company's  Current Report on Form
                  8-K filed July 13, 2001 and incorporated herein by reference).


         21.1*    List of  subsidiaries  (filed as Exhibit 21.1 to the Company's
                  Annual  Report on Form 10-KSB for the year ended  December 31,
                  2000 and incorporated herein by reference).

         *        Previously filed.

                  (b)      There was no Form 8-K filed by the Company during the
                           fourth quarter of 2001.



                                       22
<PAGE>

                                   SIGNATURES

     In  accordance  with  the  requirements  of  Section  13 or  15(d)  of  the
Securities  Exchange Act of 1934,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

April 10, 2002                                    SUMMIT LIFE CORPORATION
                                                  an Oklahoma corporation

                                                  By:  /s/ Charles L. Smith
                                                     ---------------------------
                                                     Charles L. Smith, President

     Pursuant to the  requirement of the Securities  Exchange Act of 1934,  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 AND TITLE                                    DATE
                     --------------                                    ----
/s/ James L. Smith                                                April 10, 2002
-----------------------------------------------
James L. Smith,
         Chairman of the Board of Directors
         Chief Executive Officer and Secretary
         (Principal Executive Officer)


/s/ Charles L. Smith                                              April 10, 2002
-----------------------------------------------
Charles L. Smith,
         President, Chief Operating Officer and
         Director
         (Principal Executive Officer)


/s/ Quinton Hiebert                                               April 10, 2002
-----------------------------------------------
Quinton Hiebert,
         Controller
         (Principal Accounting Officer)


/s/ Gary L. Ellis                                                 April 10, 2002
-----------------------------------------------
Gary L. Ellis,
         Director


/s/ M. Dean Brown                                                 April 10, 2002
-----------------------------------------------
M. Dean Brown,
         Director


/s/ Thomas D. Sanders                                             April 10, 2002
-----------------------------------------------
Thomas D. Sanders,
         Director


                                       23
<PAGE>

                                INDEX TO EXHIBITS

       Exhibit
       Number                          Name of Exhibit
       -------                         ---------------

         3.1*     First Amended and Restated Certificate of Incorporation (filed
                  as Exhibit 3.1 to the Company's Registration Statement on Form
                  SB-2,  file  number  333-65097  and  incorporated   herein  by
                  reference).

         3.2*     First Amended and Restated Bylaws (filed as Exhibit 3.2 to the
                  Company's  Registration  Statement  on Form SB-2,  file number
                  333-65097 and incorporated herein by reference).

         4.1*     Specimen Certificate of the common stock (filed as Exhibit 4.1
                  to the  Company's  Registration  Statement on Form SB-2,  file
                  number 333-65097 and incorporated herein by reference).

         4.2*     See  Articles  V  and  X  of  the  Company's   Certificate  of
                  Incorporation and Article VI of the Company's Bylaws (filed as
                  Exhibit 4.2 to the  Company's  Registration  Statement on Form
                  SB-2,  file  number  333-65097  and  incorporated   herein  by
                  reference).

         4.3*     Specimen Certificate of the Series A Preferred Stock (filed as
                  Exhibit 4.1 to the Company's  Quarterly  Report on Form 10-QSB
                  for the Quarter ended June 30, 1999 and incorporated herein by
                  reference).

         4.4*     Certificate of Designation of Series A Preferred  Stock (filed
                  as  Exhibit  4.2 to the  Company's  Quarterly  Report  on Form
                  10-QSB for the Quarter  ended June 30,  1999 and  incorporated
                  herein by reference).

         4.5*     Certificate of  Designation of Series B Convertible  Preferred
                  Stock (filed as Exhibit 4.1 to the Company's  Quarterly Report
                  on Form 10-QSB for the Quarter  ended  September  30, 2000 and
                  incorporated herein by reference).

         10.1*    Employment  Agreement  by and between the Company and James L.
                  Smith  (filed as Exhibit  10.1 to the  Company's  Registration
                  Statement on Form SB-2, file number 333-65097 and incorporated
                  herein by reference).

         10.2*    Employment Agreement by and between the Company and Charles L.
                  Smith  (filed as Exhibit  10.2 to the  Company's  Registration
                  Statement on Form SB-2, file number 333-65097 and incorporated
                  herein by reference).

         10.3*    Stock Purchase  Agreement by and between the Company and BCLIC
                  (filed as Exhibit 10.3 to the Company's Registration Statement
                  on Form SB-2, file number 333-65097 and incorporated herein by
                  reference).

         10.4*    Stock Purchase Agreement between the Company and Orville Homer
                  Miller  et  al.  (filed  as  Exhibit  10.4  to  the  Company's
                  Registration Statement on Form SB-2, file number 333-65097 and
                  incorporated herein by reference).

         10.5*    Stock  Purchase  Agreement  between  Summit Life  Corporation,
                  Seller,  and First Alliance  Insurance  Company,  Buyer, dated
                  November  10,  1999  (filed as  Exhibit  2.1 to the  Company's
                  Current  Report  on Form  8-K  filed  November  24,  1999  and
                  incorporated herein by reference).

         10.6*    Escrow  Agreement  between  the Company and UMB Bank (filed as
                  Exhibit 10.5 to the Company's  Registration  Statement on Form
                  SB-2,  file  number  333-55722  and  incorporated   herein  by
                  reference).

                                       24

<PAGE>


         10.7*    Designated  Agency Officer Agreement (filed as Exhibit 10.7 to
                  the Company's Registration Statement on Form SB-2, file number
                  333-65097 and incorporated herein by reference).

         10.8     Communications  Site  Lease  Agreement  dated  March  6,  2001
                  between the Company and Nextel West Corp.  and Amendment No. 1
                  thereto.

         16*      Letter to SEC from  Grant  Thornton  LLP dated  July 13,  2001
                  (filed as Exhibit 2.1 to the Company's  Current Report on Form
                  8-K filed July 13, 2001 and incorporated herein by reference).


         21.1*    List of  subsidiaries  (filed as Exhibit 21.1 to the Company's
                  Annual  Report on Form 10-KSB for the year ended  December 31,
                  2000 and incorporated herein by reference).

         *        Previously filed.

                                       25

<PAGE>

                                   APPENDIX A



                        Consolidated Financial Statements

                        Summit Life Corporation and Subsidiaries

                        Years ended December 31, 2001 and 2000
                        with Reports of Independent Auditors


<PAGE>

                    Summit Life Corporation and Subsidiaries

                        Consolidated Financial Statements

                     Years ended December 31, 2001 and 2000




                                    Contents

Reports of Independent Certified Public Accountants..........................F-1

Consolidated Financial Statements:
   Consolidated Balance Sheets...............................................F-3
   Consolidated Statements of Operations.....................................F-5
   Consolidated Statement of Stockholders' Equity............................F-6
   Consolidated Statements of Cash Flows.....................................F-7
   Notes to Consolidated Financial Statements................................F-9




<PAGE>

                Report of Independent Certified Public Accountant
                -------------------------------------------------


Board of Directors
Summit Life Corporation

I have  audited  the  accompanying  consolidated  balance  sheet of Summit  Life
Corporation  and its  Subsidiary,  as of  December  31,  2001,  and the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  My  responsibility  is to  express  an  opinion on these
financial statements based on my audit.

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

In my opinion,  the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Summit
Life  Corporation  and  its  Subsidiary,  as  of  December  31,  2001,  and  the
consolidated  results of their operations and their  consolidated cash flows for
the year then ended in conformity with accounting  principles generally accepted
in the United States of America.






GARY SKIBICKI
CERTIFIED PUBLIC ACCOUNTANT



                                      F-1

<PAGE>

Oklahoma City, Oklahoma
March 11, 2002





               Report of Independent Certified Public Accountants
               --------------------------------------------------


Board of Directors
Summit Life Corporation

We have  audited  the  accompanying  consolidated  balance  sheet of Summit Life
Corporation  and   Subsidiaries  as  of  December  31,  2000,  and  the  related
consolidated statements of operations,  stockholders' equity, and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  Summit  Life
Corporation  and  Subsidiaries as of December 31, 2000, and the results of their
operations  and their  cash  flows for the year then  ended in  conformity  with
accounting principles generally accepted in the United States of America.




GRANT THORNTON LLP

Oklahoma City, Oklahoma
February 21, 2001


                                      F-2
<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                  December 31,


         ASSETS                                                  2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
INVESTMENTS
    Debt and equity securities                                $2,903,470   $2,939,740
    Notes receivable                                             992,033      941,878
    Policy loans                                                 113,865       33,382
    Investments in limited partnerships                           30,800       57,300
                                                              ----------   ----------
                                                               4,040,168    3,972,300

CASH AND CASH EQUIVALENTS                                      1,661,410    1,436,338

RECEIVABLES
    Accrued investment income                                     54,993       41,984
    Other                                                         37,583        9,928
                                                              ----------   ----------
                                                                  92,576       51,912

PROPERTY AND EQUIPMENT - AT COST
    Building and improvements                                    129,419      129,419
    Furniture and equipment                                      119,198      116,570
    Automobiles                                                   22,015       22,015
                                                              ----------   ----------
                                                                 270,632      268,004
       Less accumulated depreciation                             130,870      102,638
                                                              ----------   ----------
                                                                 139,762      165,366
    Land                                                          56,000       56,000
                                                              ----------   ----------
                                                                 195,762      221,366

OTHER ASSETS
    Cost in excess of net assets of business acquired, less
       accumulated amortization of $15,000 in 2001 and
       $10,000 in 2000                                            35,000       40,000
    Deferred policy acquisition costs                            107,765       57,527
    Value  of  purchased  insurance  business,  less
       accumulated  amortization  of  $145,364 in 2001
       and $101,872 in 2000                                      355,966      321,851
    Deferred income taxes                                         37,240       37,241
    Public offering costs                                         56,653         --
    Other                                                         46,555       24,147
                                                              ----------   ----------
                                                                 639,179      480,766
                                                              ----------   ----------

                                                              $6,629,095   $6,162,682
                                                              ==========   ==========
</TABLE>


        The accompanying notes are an integral part of these statements

                                       F-3

<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

                     CONSOLIDATED BALANCE SHEETS - CONTINUED

                                  December 31,


         LIABILITIES AND STOCKHOLDERS' EQUITY                       2001           2000
                                                                -----------    -----------
<S>                                                             <C>            <C>
LIABILITIES
    Policy reserves and policyholder funds                      $ 5,364,682    $ 4,708,295
    Unpaid claims                                                    24,971        175,951
    accounts payable                                                 63,116         39,458
    accrued and other liabilities                                     8,233         15,424
    Notes payable                                                   111,206        248,254
                                                                -----------    -----------

                                                                  5,572,208      5,187,382

COMMITMENTS AND CONTINGENCIES                                          --             --

STOCKHOLDERS' EQUITY
    Common stock, $.01 par value - authorized,                    5,000,000
       shares;  issued 2,267,605 shares                              22,676         22,676
    Common stock subscribed                                         422,200           --
    Series A cumulative  nonvoting  preferred  stock,$.001
       par value - authorized, issued, and outstanding,
       5,000 shares; stated at liquidation value                    500,000        500,000
    Series B noncumulative,  nonvoting, convertible
       preferred stock, $.001 par value - authorized,
       1,000,000   shares;  issued    350,000anding,
       shares;stated at liquidation value                           350,000        350,000
    Additional paid-in capital                                    2,923,596      2,923,596
    Common stock of parent held by subsidiary - 19,000
       shares                                                       (95,000)       (95,000)
    Series B convertible preferred stock subscribed                    --          650,000
    Accumulated other comprehensive income (loss)                    13,709        (19,882)
    Accumulated deficit                                          (3,080,294)    (2,706,090)
                                                                -----------    -----------
                                                                  1,056,887      1,625,300
       Less stock subscriptions receivable                             --          650,000
                                                                -----------    -----------
                                                                  1,056,887        975,300
                                                                -----------    -----------

                                                                $ 6,629,095    $ 6,162,682
                                                                ===========    ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       F-4


<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             Year ended December 31,


                                                                               2001           2000
                                                                           -----------    -----------
<S>                                                                        <C>            <C>
Revenues
    Insurance premiums and other considerations, net of reinsurance        $   359,533    $   152,624
    Investment income                                                          338,670        377,184
    Net realized gains (losses) on sale of available for sale securities        (7,792)        91,679
    Net losses on trading securities                                          (139,527)      (159,755)
    Other                                                                       58,730        109,025
                                                                           -----------    -----------
                                                                               609,614        570,757

Benefits, losses, and expenses
    Policy benefits                                                            142,413         96,397
    Increase in policy reserves                                                220,251        235,033
    Interest                                                                    13,658         22,838
    Taxes, licenses, and fees                                                   35,290         43,071
    Depreciation and amortization                                              101,312         93,431
    General, administrative, and other operating                               420,894        484,408
                                                                           -----------    -----------
                                                                               933,818        975,178
                                                                           -----------    -----------

                  Loss before income taxes                                    (324,204)      (404,421)

Provisions for income taxes                                                       --             --
                                                                           -----------    -----------

                  Net loss                                                    (324,204)      (404,421)

Preferred stock dividends                                                       50,000         50,000
                                                                           -----------    -----------

                  NET LOSS TO COMMON STOCKHOLDERS                          $  (374,204)   $  (454,421)
                                                                           ===========    ===========

Basic and diluted net loss per common share                                $      (.15)   $      (.20)
                                                                           ===========    ===========

Weighted average outstanding common shares, basic and diluted                2,419,037      2,248,605
                                                                           ===========    ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       F-5

<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                     Years ended December 31, 2001 and 2000



                                                                                     Series A cumulative      Series B convertible
                                                                Common stock           preferred stock          preferred stock
                                                           ----------------------  -------------------------   ---------------------
                                                             Shares        Par       Shares     Liquidation     Shares   Liquidation
                                                  Total      issued       value      issued        value        issued       value
                                               ----------  ----------  ----------  ----------   -----------   ----------  ----------
<S>                                            <C>         <C>         <C>         <C>          <C>           <C>         <C>
Balance at January 1, 2000                     $1,016,038   2,267,605  $   22,676       5,000   $   500,000         --    $     --

Sale of preferred stock                           350,000        --          --          --            --        350,000     350,000

Dividends on Series A preferred stock             (50,000)       --          --          --            --           --          --

Comprehensive loss
   Net loss                                      (404,421)       --          --          --            --           --          --
   Other comprehensive income
      Unrealized gain on investments, net          63,683
                                               ----------
              Comprehensive loss                 (340,738)
                                               ----------  ----------  ----------  ----------   -----------   ----------  ----------


Balance at December 31, 2000                      975,300   2,267,605      22,676       5,000       500,000      350,000     350,000

Common stock subscribed, not issued               422,200        --          --          --            --           --          --

Cancellation of preferred stock subscription         --          --          --          --            --           --          --

Dividends on Series A preferred stock             (50,000)       --          --          --            --           --          --

Comprehensive loss
   Net loss                                      (324,204)       --          --          --            --           --          --
   Other comprehensive income
      Unrealized gain on investments, net          33,591
                                               ----------
              Comprehensive loss                 (290,613)
                                               ----------  ----------  ----------  ----------   -----------   ----------  ----------


Balance at December 31, 2001                   $1,056,887   2,267,605  $   22,676       5,000   $   500,000     350,000   $  350,000
                                               ==========  ==========  ==========  ==========   ===========   ==========  ==========

        The accompanying notes are an integral part of these statements.

                                       F-6


<PAGE>

                    Summit Life Corporation and Subsidiaries

           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - CONTINUED

                     Years ended December 31, 2001 and 2000



                                                             Common
                                                            stock of               Accumulated
                                               Additional    parent                   other                     Stock
                                                paid-in     held by      Stock    Comprehensive Accumulated  subscription
                                                capital    subsidiary  subscribed Income (loss)   deficit     receivable
                                               ----------  ----------  ----------  ----------   -----------   ----------


Balance at January 1, 2000                     $2,923,596  $  (95,000) $     --    $  (83,565)  $(2,251,669)  $     --

Sale of preferred stock                              --          --       650,000                               (650,000)

Dividends on Series A preferred stock                --          --          --          --         (50,000)        --

Comprehensive loss
   Net loss                                          --          --          --          --        (404,421)        --
   Other comprehensive income
      Unrealized gain on investments, net                                              63,683

              Comprehensive loss
                                               ----------  ----------  ----------  ----------   -----------   ----------


Balance at December 31, 2000                    2,923,596     (95,000)    650,000     (19,882)   (2,706,090)    (650,000)

Common stock subscribed, not issued                  --          --       422,200        --

Cancellation of preferred stock subscripti           --          --      (650,000)       --            --        650,000

Dividends on Series A preferred stock                --          --          --          --         (50,000)        --

Comprehensive loss
   Net loss                                          --          --          --          --        (324,204)        --
   Other comprehensive income
      Unrealized gain on investments, net                                              33,591

              Comprehensive loss
                                               ----------  ----------  ----------  ----------   -----------   ----------


Balance at December 31, 2001                   $2,923,596  $  (95,000) $  422,200  $   13,709   $(3,080,294)  $     --
                                               ==========  ==========  ==========  ==========   ===========   ==========

</TABLE>

        The accompanying notes are an integral part of these statements.

                                       F-6

<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,


                                                                                               2001           2000
                                                                                           -----------    -----------
<S>                                                                                        <C>            <C>
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities
    Net loss                                                                               $  (324,204)   $  (404,421)
    Adjustments to reconcile net loss to net cash used in operating activities
       Depreciation and amortization                                                            75,133         86,627
       Deferral of policy acquisition costs                                                    (60,323)       (22,105)
       Amortization of deferred policy acquisition costs                                        26,179          6,804
       Interest credited to policyholder account balances                                      183,144        211,030
       Gain on sale of investment securities, other than trading                                  --          (91,679)
       Gain on sale of assets                                                                     --          (83,805)
       Other                                                                                   (23,608)        26,604
       (Increase) decrease in
           Trading securities                                                                 (139,527)      (113,643)
           Accrued investment income                                                           (13,009)        43,769
           Other receivables                                                                   (27,655)         4,808
           Other assets                                                                        (22,408)        (5,449)
       Increase (decrease) in
           Policy reserves                                                                     (81,491)         6,880
           Unpaid claims                                                                      (150,980)        68,951
           Accounts payable                                                                     23,658        (47,311)
           Accrued and other liabilities                                                        (7,191)       (13,289)
                                                                                           -----------    -----------

                  Net cash used in operating activities                                       (542,282)      (326,229)

Cash flows from investing activities
    Purchases of investment securities, other than trading                                    (897,584)    (3,728,505)
    Proceeds from disposition or maturities of investment securities, other than trading     1,231,025      5,808,035
    Net investment in limited partnerships                                                      26,500        (57,300)
    Issuance of notes receivable                                                              (250,000)      (517,000)
    Payments received on notes receivable                                                      199,845         49,297
    Increase (decrease) in policy loans                                                         80,483          4,565
    Purchase of property and equipment                                                          (2,628)        (2,100)
    Proceeds from sale of assets                                                                16,713          8,491
                                                                                           -----------    -----------

                     Net cash provided by investing activities                                 404,354      1,565,483

Cash flows from financing activities
    Deposits to policyholder account balances                                                  166,783        166,857
    Withdrawals from policyholder account balances                                            (415,675)    (1,012,443)
    Payments on notes payable                                                                 (475,395)      (213,965)
    Payments on advances from affiliates                                                          --          (11,138)
    Proceeds from issuance of notes payable                                                    338,347         20,000
    Proceeds from acquisition of business                                                      433,392           --
    Proceeds from sale of common and preferred stock                                           422,200        350,000
    Dividends paid on preferred stock                                                          (50,000)       (37,973)
    Public offering costs                                                                      (56,652)          --
                                                                                           -----------    -----------

                  Net cash provided by (used in) financing activities                          363,000       (738,662)
                                                                                           -----------    -----------

                  NET INCREASE IN CASH
                     AND CASH EQUIVALENTS                                                      225,072        500,592

Cash and cash equivalents at beginning of year                                               1,436,338        935,746
                                                                                           -----------    -----------

Cash and cash equivalents at end of year                                                   $ 1,661,410    $ 1,436,338
                                                                                           ===========    ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       F-7
<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                             Year ended December 31,


                                                                      2001          2000
                                                                  -----------   -----------
<S>                                                               <C>           <C>
Cash paid (received) during the year for:
-----------------------------------------

    Interest                                                      $    13,658   $    32,000
    Income taxes                                                  $      --     $      --


Noncash investing and financing activities:
-------------------------------------------

    Notes receivable acquired on sale of investment real estate   $      --     $    94,000


</TABLE>





        The accompanying notes are an integral part of these statements.

                                       F-8

<PAGE>
                    Summit Life Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES

     1.   Basis of Consolidation and Nature of Operations
          -----------------------------------------------
Summit Life Corporation  ("SLC") is an Oklahoma  corporation  chartered on April
12, 1994 that primarily  markets life insurance and annuity policies through its
wholly  owned  insurance  subsidiary,   Great  Midwest  Life  Insurance  Company
("GMLIC"),  a Texas  corporation  acquired on January 13, 1999. The consolidated
financial  statements  include the accounts of each of these  corporations  with
inter-company transactions and balances eliminated.

SLC is a holding  company and manages its  operations  as well as GMLIC's  which
primarily  include  marketing/servicing  life insurance and annuity  products in
Texas and  Oklahoma.  GMLIC is required to maintain an  investment  portfolio to
cover potential  claims plus preserve a minimum $800,000  statutory  capital and
surplus and for management services paid SLC a fee of $95,379 in 2001.

     2.   Use of Estimates
          ----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect financial statements and disclosures;  accordingly,  actual results could
differ from those estimates.

     3.   Cash and Cash Equivalents
          -------------------------

Cash  equivalents  include  time  deposits  and  certificates  of  deposit  with
maturities when acquired of three months or less and money market funds.

The Company maintains its cash and cash equivalents in accounts which may not be
federally  insured.  The company has not experienced any losses in such accounts
and  believes  it is not  exposed  to any  significant  credit  risks  on  these
accounts.

     4.   Investments
          -----------

The Company  accounts for certain  investments in debt and equity  securities as
follow:

     *    Debt  securities  that the Company has the positive intent and ability
          to hold to maturity are classified as held-to-maturity  securities and
          reported at amortized cost.

     *    Debt and equity  securities  that are bought and held  principally for
          the  purpose  of selling  in the near term are  classified  as trading
          securities  and  reported at fair  value,  with  unrealized  gains and
          losses included in earnings.

                                       F-9

<PAGE>

                    Summit Life Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000


NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)


     *    Debt and equity  securities  not classified as either held to maturity
          securities or trading securities are classified as  available-for-sale
          securities  and  reported at fair  value,  with  unrealized  gains and
          losses excluded from earnings and reported in a separate  component of
          shareholder equity as other comprehensive income (loss).

For individual  securities  classified as available-for-sale or held to maturity
non  temporary  declines in  specifically  identified  securities  below cost or
amortized  cost result in  write-downs  included  in  operations.  The  specific
identification method is followed for determining the cost of securities sold.

Notes  receivable  and policy  loans are stated at the total of unpaid  balances
less estimated uncollectible amounts.

Investments  in limited  partnerships  are accounted  for on the equity  method.
Accordingly,  the  Company's  share of the  partnerships  earnings or losses are
included in the consolidated operating statement with corresponding  adjustments
made to the carrying amounts on the balance sheet.

Investments in real estate are carried at depreciated cost.

     5.   Property and Equipment
          ----------------------

Depreciation  is allocated  to assets over  estimated  economic  lives using the
straight-line  method.  Estimates  of  economic  lives  range from five to forty
years.

Investment  and operating  assets are reviewed for impairment  whenever  events,
circumstances  or changes in market  value  indicate  that the related  carrying
amount(s) may not be  recoverable.  Any required  write-downs are based upon the
current fair value of the asset.


                                      F-10

<PAGE>

                    Summit Life Corporation and Subsidiaries


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)

     6.   Cost in Excess of Net Assets of Business Acquired
          -------------------------------------------------

Cost in excess of net assets of business  acquired is amortized over 10 years on
a  straight-line  basis.  In 1999  Great  Midwest  Life  Insurance  Company  was
purchased  with a  $50,000  commission  being  amortized  at  $5,000  per  year.
Management   reviews   acquisition,   amortization  and  valuation  amounts  for
impairment by evaluating  future  benefits of the net income earned to determine
whether impairment has occurred.

     7.   Income Taxes
          ------------

SLC and its subsidiary file separate income tax returns,  Forms 1120 and 1120L ,
respectively.

The Company  recognizes  current tax expense based on estimated taxes payable or
refundable on current year tax returns.

Deferred tax  liabilities or assets are recognized for the estimated  future tax
effects   attributable  to  temporary   differences  and  carry  forwards.   The
measurement of deferred tax assets is based on provisions of enacted law and are
reduced by the amount of any tax benefits that, based on available  evidence may
not be realized.

     8.   Deferred Policy Acquisition Costs
          ---------------------------------

Deferred  acquisition  costs are those  costs  that vary with and are  primarily
related to the acquisition of new and renewal insurance  contracts.  The Company
considers commissions and other costs such as underwriting and medical exam fees
that are principally related to insurance contracts issued or renewed during the
year as acquisition  costs.  Acquisition  costs are capitalized and amortized to
operating  expenses  in  proportion  to  premium  revenue  recognized  over  the
estimated  lives  of  the  policies.   Deferred  policy  acquisition  costs  for
investment  products,  mainly single premium deferred  annuities,  are amortized
with interest in proportion to the value of expected gross profits as determined
by estimated  investment yields,  mortality,  surrender expenses and persistency
experience over the lives of the policies. Deferred policy acquisition costs are
examined  periodically  to insure that the  unamortized  balance does not exceed
amounts  expected to be recovered from future  profits.  Acquisition  costs that
vary in a constant relationship to premiums or insurance in force, are recurring
in nature or  incurred  in level  amounts  from  period to period are charged to
expense in that period.


                                      F-11


<PAGE>

                    Summit Life Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)

     9.   Value of Purchased Insurance Business
          -------------------------------------

Value of purchased  insurance  business  represents the  actuarially  determined
present  value of  estimated  net cash  flows  embedded  in  existing  insurance
contracts when acquired.  The company estimates that insurance contracts have an
average  economic  life of twenty years and  purchased  insurance  contracts are
amortized  over that time period in  proportion  to the expected  decline in net
cash flows of that year.  Interest is  calculated on  unamortized  values at the
annual rate of 6.5%. At December 31, 2001,  approximately 13% of the unamortized
value of purchased insurance business is expected to be amortized in each of the
next five years, based on current conditions and assumptions as to future events
on acquired policies in force.

A summary  of the value of  purchased  insurance  business  for the years  ended
December 31:

                                                  2001         2000
                                                         ---------    ---------
     Balance, beginning of year                          $ 321,851    $ 370,758
     6.5% on Unamortized Balance                            20,920       24,099
     Amortization on Beginning Balance                     (62,649)     (73,006)
     Cost of Acquired Policies From
         Presidential Life Insurance Co.-2001               77,608         --
     Presidential Amortization (5 Months)                   (1,764)        --
                                                         ---------    ---------
     Balance, end of year                                $ 355,966    $ 321,851
                                                         ---------    ---------

     10.  Revenues, Policy Reserves and Policyholder Funds
          ------------------------------------------------

Premiums received on deferred annuities and annuities without life contingencies
are recorded as liabilities  (deposits) into policyholder account balances.  The
Company earns revenues from these contracts primarily from surrender charges and
administrative  fees.  Premiums for life  insurance  products and annuities with
life contingencies  including annuities with life contingency settlement options
are recognized when due.

Policyholder  account balances include amounts received from  policyholders plus
interest  credited  less  withdrawals  and  administrative  fees deducted by the
Company.  The  liabilities  for future policy  benefits for annuities  with life
contingencies  are actuarially  computed at the present value of future benefits
which includes investment yields and mortality assumptions.

Policy  reserves for life  insurance  contracts are computed based on mortality,
morbidity, withdrawals,  investment yields and prior company experience or other
contingencies  that  could  unfavorably  increase  reserves.   Reserve  interest
assumptions range from 3.0% to 5.5%. Policy reserves for life insurance products
are the same for financial  and statutory  reporting  purposes.  Life  insurance
benefit  claims are charged to operating  expenses in the period that the claims
are incurred.  All life insurance related benefits,  claims, losses and expenses
are reported net of reinsurance ceded.


                                      F-12
<PAGE>

                    Summit Life Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE A - NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
(CONTINUED)

     11.  Earnings (Loss) Per Share Common
          --------------------------------

Earnings  (loss) per common share is computed  based upon net  earnings  (loss),
after deduction of preferred stock  dividends,  divided by the weighted  average
number of common shares  outstanding during each period. For both 2001 and 2000,
Series B convertible  preferred stock (see Note D) is antidilutive and therefore
basic and diluted  loss per common  share are the same.  Additionally,  in 2001,
$422,000  was  received  for  common  stock  sold in the  public  offering  that
commenced  in May 2001,  but the shares for which  have not been  issued.  It is
reported as common stock subscribed.

     12.  Other Comprehensive Income (Loss)
          ---------------------------------

Accumulated other comprehensive  income (loss) consists solely of net unrealized
investment gains (losses).

Unrealized  gain (loss) on  investments  consists of the following for the years
ended December 31:

                                                             2001         2000
                                                         ----------------------
Beginning Other Comprehensive Income (Loss)              $ (19,882)   $ (83,565)
                                                         ----------------------
Unrealized Appreciation Of Securities                       33,591      155,362
         Less reclassification for gains included
         in net loss                                                    (91,679)
                                                         ----------------------
Change During the Year                                      33,591       63,683
                                                         ----------------------
Accumulated Other Comprehensive Income (Loss)            $  13,709    $ (19,882)
                                                         ----------------------

NOTE B - INVESTMENTS

Investments in securities are summarized as follows for December 31, 2001:

                                  COST/        GROSS         GROSS
                                AMORTIZED   UNREALIZED    UNREALIZED   ESTIMATED
TYPE OF INVESTMENT                COST         GAINS        LOSSES    FAIR VALUE
--------------------------------------------------------------------------------

Debt Securities -
     Held to Maturity         $  279,871   $   13,115   $     --      $  292,986
Debt Securities -
     Available For Sale
     US Treasury & Other
     US Govt. Agencies         2,018,884       17,682         --       2,036,566
Industrial and
     Miscellaneous               148,036         --         (3,973)      144,063
                              --------------------------------------------------
Total Debt Securities
     Available For Sale       $2,166,920   $   17,682   $   (3,973)   $2,180,629
                              ==================================================
Equity Securities -
     Available For Sale       $  292,451         --     $   (1,105)   $  291,346
Equity Securities -
     Other                    $   66,788         --           --      $   66,788


                                      F-13

<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE B - INVESTMENTS (CONTINUED)

Investments in securities are summarized as follows for December 31, 2000:

                                       COST/          GROSS         GROSS
                                     AMORTIZED      UNREALIZED    UNREALIZED    ESTIMATED
TYPE OF INVESTMENT                     COST            GAINS        LOSSES      FAIR VALUE
------------------------------------------------------------------------------------------
<S>                                 <C>           <C>          <C>              <C>
Debt Securities -
     Held to Maturity
     U.S. Treasury & Other
     U.S. Govt. Agencies            $   177,788   $    14,312   $               $   192,100
     Mortgage-backed securities         150,287          --             (662)       149,625
                                    -------------------------------------------------------
                                    $   328,075   $    14,312    $      (662)   $   341,725
                                    =======================================================
Debt Securities -
     Available For Sale
     Mortgage-backed                $ 2,158,672   $    11,576    $   (12,657)   $ 2,157,591
     Industrial and Miscellaneous       281,732          --          (12,716)       269,016
                                    -------------------------------------------------------

                                    $ 2,440,404   $    11,576    $   (25,373)   $ 2,426,607
                                    =======================================================
Equity Securities -
     Available For Sale             $    15,000   $      --      $    (6,085)   $     8,915
                                    =======================================================
Equity Securities-
     Trading                                                                    $   113,643
                                                                                ===========
Equity Securities -
     Other                          $    62,500
                                    ===========
</TABLE>


Equity Securities - Other - consists of First Alliance  Corporation (FAC) common
stock carried at cost, plus stock dividends received.  Through December 30, 2000
this stock is  restricted  as to sale or transfer  and FAC retained the right of
first refusal to purchase the shares  through  December 30, 2001.  From issuance
through 2001, fair market value has not been readily determinable.

The amortized cost and estimated fair values of debt securities,  by contractual
maturity,  at December 31, 2001, are  summarized  below.  Actual  maturities may
differ from contractual  maturities because borrowers may have the right to call
or prepay indebtedness without prepayment penalties.

                            Held to Maturity         Available for Sale
                       --------------------------  -------------------------
                         Amortized     Estimated     Amortized    Estimated
                           Cost        Fair Value       Cost      Fair Value
                       -----------------------------------------------------
Due Six to Ten Years   $     --       $     --     $     --       $     --

Due after Ten Years       178,566        187,906         --             --

Mortgage Backed
Securities                101,305        105,080    2,018,884      2,036,566
                       -----------------------------------------------------

Total                  $  279,871     $  292,986   $2,018,884     $2,036,566
                       -----------------------------------------------------

                                      F-14
<PAGE>

                    Summit Life Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE B - INVESTMENTS (CONTINUED)

Proceeds  from  sales  of   available-for-sale   securities  were  approximately
$1,231,000 for 2001 and $3,609,000 for 2000.  Gross gains of $4,310 for 2001 and
$146,958  for 2000 and  gross  losses of $0 for 2001 and  $55,279  for 2000 were
realized on those sales.

Net losses on trading securities totaled $139,527 for 2001 and $118,763 for 2000
and related to trading securities held at December 31 of each respective year.

For 2000,  gross  losses of  $18,789  were  included  in net  losses on  trading
securities  as a result of transfers of securities  from the  available-for-sale
category to the trading category.


                                      F-15
<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE B - INVESTMENTS (CONTINUED)

Notes receivable consist of the following at December 31:

                            Original      Pct                              2001           2000
Type of Loan     Date        Amount       Int     Term       Status       Balance        Balance
------------     ----       --------      ---     ----       ------       -------        -------
<S>              <C>        <C>           <C>     <C>        <C>          <C>            <C>
Secured
Real Estate    1/5/98       $240,000      8.00%   10 Yrs     Current      $167,870       $188,478

Secured
Real Estate    7/30/98        59,200      9.75%   10 Yrs     Current        38,495         46,322

Secured
Real Estate     4/29/00       47,000      6.50%   30 Yrs     Current        46,152         46,698

Secured
Real Estate     4/29/00       47,000      6.50%   30 Yrs     Current        46,152         46,698

Secured
Real Estate    11/10/00       42,000      7.00%   10 Yrs     Current        38,733         41,757

Secured
Real Estate     7/11/00      225,000      7.50%   18 Mos     Current       225,000        225,000

Secured
Real Estate     2/1/00       100,000      6.25%   10 Yrs     Current       100,000        100,000

Secured
Real Estate      1/5/98       50,000      8.00%   10 Yrs     Current        34,973         39,266

Unsecured
Individual     11/1/00        41,345      7.00%    4 Yrs     Current        32,065         41,345

Unsecured
Corporate       3/30/01       12,594      8.00%    1 Yr      Current        12,593         12,593

Unsecured
Corporate       12/5/01      100,000      5.75%    1 Yr      Current       100,000           --

Unsecured
Corporate       8/23/01      150,000      7.00%    1 Yr      Current       150,000        150,000
                             -------

Other                                                                         --            3,721
                                                                          =======================

                        $1,114,139                                         $992,033      $941,878
                        ==========                                        ========================
</TABLE>

                                      F-16

<PAGE>

                    Summit Life Corporation and Subsidiaries


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE C - NOTE PAYABLE

Note payables consisted of the following at December 31:
                                                                2001       2000
                                                             -------------------
-Uncollateralized Loan From Shareholder                      $ 79,000   $   --
-Uncollateralized Loan From Corporation                        27,998       --
-Bank line of credit, interest payable quarterly
  (10.0% at December 31, 2000), due July 1, 2001;
  guaranteed by certain officers and directors                   --      130,000
-Note payable to corporation, interest payable at
  6%, due with annual principal installments of
  approximately $111,000 through June 1, 2001                    --      110,602
-Six and 95/100% note payable to bank, payable
  in $337 monthly installments through
  January 2003 collateralized by vehicle                        4,208      7,652
                                                             -------------------

                  Total Note Payables                        $111,206   $248,254
                                                             ===================

         NOTE D - STOCKHOLDERS EQUITY

On April 23, 1999,  non-voting  Series A Cumulative  Preferred Stock was created
with 5,000 shares  issued and  outstanding  on December  31, 2001.  The Series A
Preferred  Stock  has  liquidation   priority  ($100  per  share  plus  dividend
arrearages, if any) over common stock upon dissolution.

On September 29, 2000,  Series B Convertible  Preferred  Stock was created.  The
Series B Preferred  Stock is  noncumulative,  non voting and is convertible on a
one-to-one  basis into shares of common stock at the option of the holders after
March 31,  2003.  The  Series B  Preferred  Stock is senior to common  stock and
junior to Series A Preferred  Stock in dividend  priority.  At December 31, 2001
there were 350,000 shares of Series B Preferred outstanding and upon liquidation
is ranked  equivalent  to Series A Preferred  Stock as to per share  liquidation
value ($1.00 per share) and unpaid dividends.


         NOTE E - INCOME TAXES

The Company's  net operating  loss  carryforwards  for tax purposes  which begin
expiring in 2010 are as follows:


                               2001         2000
                            -----------------------
     SLC                    $1,834,653   $1,595,000
     GMLIC                      75,605      329,000
                            -----------------------
                            $1,910,258   $1,924,000
                            =======================


                                      F-17
<PAGE>

                    Summit Life Corporation and Subsidiaries


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE E - INCOME TAXES (CONTINUED)

SLC and GMLIC file separate tax returns,  Form 1120 and Form 1120L respectively.
In 2000 SLC reported a taxable loss while GMLIC incurred  taxable income and the
same will occur in 2001 which  causes  SLC's loss  carryforward  to increase and
GMLIC's to decrease.  The primary  operating  income of SLC is a management  fee
paid by GMLIC which requires prior approval from the Texas Insurance  Department
to increase which makes it uncertain that all of the $1,834,653 will be used.

The  components of net deferred tax assets and changes in the related  valuation
allowance are as follows:

                                                            2001         2000
                                                         ----------------------
Deferred Tax Assets
  Net Operating Loss Carryforwards                       $ 288,600    $ 284,002
  Capital Loss Carryforward                                 63,650       63,501
  Policy Reserves and Policyholder Funds                     7,397       14,835
  Other                                                      1,167       18,170
  Valuation Allowance for Deferred Taxes                  (263,258)    (293,666)
                                                         ----------------------
                                                            97,556       86,842
                                                         ----------------------
Deferred Tax Liabilities
  Value of Purchased Insurance Business                    (54,445)     (43,772)
  Depreciation                                                (832)      (2,182)
  Other                                                     (5,039)      (3,647)
                                                         ----------------------
                                                           (60,316)     (49,601)
                                                         ----------------------

Net Deferred Tax Asset                                   $  37,240    $  37,241
                                                         ======================

Increase (Decrease) in Valuation Allowance               $ (30,408)   $  64,147
                                                         ======================

A  reconciliation  of income tax benefit at the statutory  rate to the Company's
effective rate at December 31 is as follows:

                                                         2001              2000
                                                         ----------------------
Expected Statutory Rate                                   34%               34%
Small Life Insurance Company Deduction (60%)             (20)               (20)
Net Effect Tax Loss Carryforwards                        (14)               (17)
Other                                                     --                  3
                                                         ----------------------
Effective Tax Rate                                         0%                0%
                                                         ======================


                                      F-18

<PAGE>

                    Summit Life Corporation and Subsidiaries


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE F - RELATED PARTY TRANSACTIONS

From time to time,  the Company  makes  advances to and receives  advances  from
affiliates, generally officers and stockholders. Such advances have no specified
repayment terms but are generally short-term in nature.


NOTE G - COMMITMENTS AND CONTINGENCIES

Under its annuity  contracts,  the Company is  committed  to credit  interest on
policyholder account balances at guaranteed rates. During the first policy year,
the  guaranteed  rates  range up to 7.8%.  After  the  first  year,  the  lowest
guaranteed rate is 3%.

Most  states  have  established   guaranty  fund  associations  to  ensure  that
policyholders receive the benefit of the insurance products they have purchased.
The guaranty funds receive their funding through  assessments to companies which
write  business  in the  respective  states.  The  Company  is  liable  for such
mandatory assessments upon notification by the states; however, such assessments
may be partially recovered through a reduction in future premium taxes.

Certain  investments  with carrying values of $279,871 and $277,979 were pledged
to regulatory authorities in accordance with regulatory requirements at December
31, 2001 and 2000, respectively.

The Company leases certain  equipment used in operations and storage space. Rent
expense  under  these  leases  for 2001  and 2000  totaled  $1,560  and  $1,851,
respectively and was paid on a month to month basis.

The Company is  involved in various  legal  actions  relating to its  operation.
Management  believes that losses,  if any, arising from such actions will not be
material to the Company's consolidated financial statements.


NOTE H - STATUTORY CAPITAL AND SURPLUS

SLC's  insurance  company  subsidiary  prepares  its  statutory-basis  financial
statements in accordance  with accounting  practices  prescribed or permitted by
the domiciliary state insurance  department.  "Prescribed"  statutory accounting
practices include state laws, regulations,  and general administrative rules, as
well as a variety of  publications  of the  National  Association  of  Insurance
Commissioners  (NAIC).  "Permitted" statutory accounting practices encompass all
accounting  practices  that are not  prescribed;  such practices may differ from
state to state,  may differ  from  company to  company  within a state,  and may

                                      F-19

<PAGE>

                    Summit Life Corporation and Subsidiaries


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE H - CAPITAL AND SURPLUS (CONTINUED)

change in the  future.  The NAIC has  approved  the  Codification  of  Statutory
Accounting  Practices  effective on January 1, 2001.  The Company has determined
that the primary effect of  Codification is that goodwill can now be recorded as
an admitted asset on its subsidiary's statutory financial statements.

GMLIC  is  required  to  maintain  statutory  capital  and  surplus  of at least
$800,000.  GMLIC's  statutory  capital and surplus,  as reported at December 31,
2001, was $853,192.  Failure to meet the capital requirements could expose GMLIC
to regulatory  actions that may include  restrictions  on operations and growth,
among other things.  GMLIC cannot declare  dividends which exceed the greater of
10% of  statutory  capital  and  surplus  or the  gain  from  operations  of the
preceding  12 months  without  the prior  consent of the Texas  Commissioner  of
Insurance.  The maximum dividend which may be paid in 2002 without prior consent
is $53,192.

As a part of the  regulatory  process,  SLC requested a review by the Securities
and Exchange Commission (the "SEC") of its accounting  treatment of the sale and
repurchase of real estate subject to an operating lease.  After review,  the SEC
advised SLC that,  although SLC's proposed  accounting  treatment was consistent
with the  literal  application  of  applicable  accounting  principles,  the SEC
requested  that SLC restate  certain items  relating to the  transactions.  This
reversed  income  reported  on the sale of real estate  subject to an  operating
lease of $186,000 previously reported in the second quarter of 2001.

The transactions also affect the statutory financial  statements prepared by the
subsidiary  company  and  GMLIC  will  request  a  review  and  approval  of its
accounting  treatment by the Texas  Department of Insurance.  GMLIC believes its
presentation  complies with statutory  rules and  regulations as outlined in the
NAIC's  Accounting  Practices  and  Procedures  Manual and  adopted by the Texas
Department of Insurance.

If the Texas Department of Insurance  requests that GMLIC restate all or part of
the tranactions,  in such event,  GMLIC may fail to meet the minimum capital and
surplus  required by Texas  statutes.  The Company has the option of  requesting
approval of the  Commissioner to increase the valuation of the property based on
independent  appraisals and/or  contributing  additional funds as surplus to the
subsidiary to comply with the statutes.

NOTE I - REGULATORY MATTERS

At periodic  intervals,  the domiciliary  state insurance  department  routinely
examines the insurance company  subsidiaries'  statutory financial statements as
part of their legally prescribed  oversight of the insurance industry.  Based on
these examinations,  the regulators can direct that the subsidiaries'  statutory
financial statements be adjusted in accordance with their findings.

                                      F-20
<PAGE>

                    Summit Life Corporation and Subsidiaries


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

NOTE J - REINSURANCE

The Company  reinsures  that portion of insurance risk which is in excess of its
retention  limits,  generally under yearly  renewable term contracts.  Retention
limits range up to $5,000 on life policies.  Reinsurance premiums are recognized
as a reduction of insurance  premiums and other  considerations  over the policy
term and totaled $47,000 for 2001 and $37,000 for 2000.

Reinsurance does not discharge or diminish the primary  liability of the Company
on the risks reinsured;  however,  it does serve to limit the Company's  maximum
loss on risks.  The Company would be liable for the  reinsurance  risks ceded to
other  companies  in the  event  that  reinsurers  were  unable  to  meet  their
obligations.

At December 31, 2001, reinsurance recoverables on policy claims were $25,000 and
was received  January 2002. No  recoverable  was due the Company at December 31,
2000.

NOTE K - EMPLOYMENT AGREEMENTS

The Company  has  employment  agreements  with its Chief  Executive  Officer and
President,  both Company stockholders.  The employment agreements provide, among
other things, for terms through March 2003, base and maximum salaries, increases
to base salaries  subject to Board of Director  approval,  annual  bonuses,  and
benefits.

The agreements may be terminated by mutual  consent,  by the Company at its sole
discretion  without  cause,  or by the  Company for cause,  as  defined.  If the
agreements are terminated for cause, as defined,  severance  payments of $50,000
are payable to each employee.  If the  agreements are terminated  without cause,
severance  payments to each employee  will be  equivalent to the maximum  salary
over the term of the agreements less amounts  previously paid, but not less than
$360,000 for the President and $450,000 for the Chief Executive Officer.

NOTE L - FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  methods and  assumptions  were used to estimate the fair value of
each  class  of  financial  instruments  as  of  December  31,  2001  and  2000,
respectively.  Such  information,  which  pertains  to the  Company's  financial
instruments,  does not purport to represent  the aggregate net fair value of the
Company.  The  carrying  amounts  in the  table  are the  amounts  at which  the
financial instruments are reported in the consolidated financial statements.

Except as identified,  all of the Company's  financial  instruments are held for
purposes other than trading.  The fair values of debt and equity  securities are
estimated  based on quoted market prices for those or similar  investments.  The
carrying  value of certain notes  receivable and policy loans  approximate  fair


                                      F-21
<PAGE>
<TABLE>
<CAPTION>

                    Summit Life Corporation and Subsidiaries


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 2001 AND 2000

value due to nominal interest rate changes subsequent to issuance.  The carrying
amounts of cash,  cash  equivalents,  short-term  investments,  and  receivables
approximate fair values because of the short maturity of those assets.  Net cash
surrender value is used in determining  the fair value of investment  contracts.
Estimated  fair value of notes payable is the  discounted  amount of future cash
flows using the  Company's  current  incremental  rate of borrowing  for similar
liabilities.


NOTE L - FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

                                                   2001                      2000
                                          CARRYING      FAIR        CARRYING      FAIR
                                           AMOUNT       VALUE        AMOUNT       VALUE
FINANCIAL ASSETS                         ----------   ----------   ----------   ----------
<S>                                      <C>          <C>          <C>          <C>
Debt Securities - Held to Maturity       $  279,871   $  279,871   $  328,075   $  341,725
Debt Securities - Available For Sale      2,180,629    2,180,629    2,426,607    2,426,607
Equity Securities - Available For Sale      291,248      291,248        8,915        8,915
Equity Securities - Trading                  84,934       84,934      113,643      113,643
Equity Securities - Other                    66,788            *       62,500            *
Notes Receivable                            992,033      937,389      941,878      887,308
Policy Loans                                113,865      113,865       33,382       33,382
Cash And Cash Equivalents                 1,661,410    1,661,410    1,436,338    1,436,388
Receivables                                  92,576       92,576       51,912       51,912

FINANCIAL LIABILITIES
Policy Holder Account
Balances - Investment Contracts          $4,063,756   $3,933,403   $4,256,203   $4,101,159
Notes Payable                               111,206      111,206      248,254      248,254
</TABLE>


     *    Market prices for First Alliance  Corporation are not quoted on public
          exchanges. See Note B - Investments.


NOTE M - BUSINESS ACQUISITIONS

In August  2001 the  Company  acquired  100% of the life  insurance  business of
Presidential  Life  Insurance  Company  in  Dallas,   Texas.  The  cost  of  the
acquisition was approximately $78,000 paid in cash.

                                      F-22