<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                  FORM 10-K/A
                               (AMENDMENT NO. 1)

<Table>
<C>          <S>
    [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
</Table>

                         COMMISSION FILE NUMBER 0-23637

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

                        GLOBAL PREFERRED HOLDINGS, INC.
             (Exact Name of Registrant as Specified in its Charter)

<Table>
<S>                                            <C>
                   DELAWARE                                      58-2179041
       (State or other Jurisdiction of            (I.R.S. Employer Identification Number)
        Incorporation or Organization)
</Table>

                           11315 JOHNS CREEK PARKWAY
                             DULUTH, GEORGIA 30097
                                 (770) 248-3311
   (Address, Including Zip Code and Telephone Number, Including Area Code, of
                   Registrant's Principal Executive Offices)

         SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:

<Table>
<Caption>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
                     None                                           None
</Table>

         SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:

                         COMMON STOCK, PAR VALUE $.001
                                (Title of class)

                                EXPLANATORY NOTE

     This Amendment No. 1 to Annual Report on Form 10-K/A is being filed to
revise the following items in this Report:

          (1) Discussion of "Future Policy Benefits" in Note 2 to the Global
     Preferred Holdings, Inc. Consolidated Financial Statements;

          (2) Discussion of "Statutory Restrictions" in Note 10 to the Global
     Preferred Holdings, Inc. Consolidated Financial Statements; and

          (3) Part III: Items 10, 11, 12 and 13.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following financial statements are attached hereto commencing on page
F-1.

     - Independent Auditors' Report (December 31, 2000 and 2001)

     - Consolidated Balance Sheets at December 31, 2000 and 2001

     - Consolidated Statements of Income for the years ended December 31, 1999,
       2000 and 2001

     - Consolidated Statements of Stockholders' Equity and Comprehensive Income
       for the years ended December 31, 1999, 2000 and 2001

     - Consolidated Statements of Cash Flows for the years ended December 31,
       1999, 2000 and 2001

     - Notes to Consolidated Financial Statements for the years ended December
       31, 1999, 2000 and 2001

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The directors and executive officers and their ages as of the date of this
report are as follows:

<Table>
<Caption>
NAME                                        AGE                    POSITION
----                                        ---                    --------
<S>                                         <C>   <C>
Edward F. McKernan(3).....................  46    Director, Chief Executive Officer and
                                                  President; President of Global Preferred
                                                  Re
Bradley E. Barks..........................  42    Chief Financial Officer and Senior Vice
                                                  President -- Finance
Caryl P. Shepherd.........................  32    Chief Accounting Officer, Treasurer,
                                                  Controller, Secretary and Vice President;
                                                  Vice President and Treasurer of Global
                                                  Preferred Re
Thomas Bobowski...........................  43    Vice President of Marketing
Joseph F. Barone(1)(2)(3).................  64    Chairman of the Board of Directors
Thomas W. Montgomery(3)...................  53    Director; Director of Global Preferred Re
C. Simon Scupham(1)(2)....................  47    Director; Director of Global Preferred Re
Eugene M. Howerdd, Jr.(2)(3)..............  66    Director
Milan M. Radonich(1)......................  51    Director
</Table>

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

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

(3) Member of the Investment Committee

     The following is additional information concerning each of our executive
officers and directors.

     Edward F. McKernan has served as a Director since August 1997 and as Chief
Financial Officer since December 1997. Mr. McKernan was elected as Chief
Executive Officer in January 2002, as President in December 2000 and as
President of our subsidiary, Global Preferred Re Limited ("Global Preferred Re")
in December 2000. McKernan has served as the Actuary for Global Preferred Re
since April 1996. From August 1995 until December 2000, Mr. McKernan served as
Senior Vice President and as Senior Vice President of Global Preferred Re. From
April 1996 until June 2001, Mr. McKernan was also Senior Vice President and
Actuary of World Marketing Alliance, Inc. ("WMA Agency"). Prior to joining our
company, he was a Senior Manager in the Life Actuarial Consulting Practice of
KPMG LLP from 1993 through 1996. From August 1990 through September 1993, Mr.
McKernan was the Marketing Actuary of U.S. Operations for Seaboard Life
Insurance Company. Prior to his tenure with Seaboard Life, Mr. McKernan was
employed as a consultant associated with Tillinghast, a Towers Perrin company,
an

                                        2
<PAGE>

international actuarial consulting firm. He is a Fellow of the Society of
Actuaries and a Member of the American Academy of Actuaries.

     Bradley E. Barks has served as our Chief Financial Officer and Senior Vice
President -- Finance since March 2002. Prior to joining our company, Mr. Barks
was self-employed as an independent financial and management consultant. From
1990 to 2000, Mr. Barks served as Senior Vice President -- Finance of LifeUSA
Holding, Inc. and its successor company Allianz Life Insurance Company of North
America. Prior to his tenure with LifeUSA, Mr. Barks was employed as a Senior
Consultant for Touche Ross & Co. from 1981 to 1990. Mr. Banks is a certified
public accountant, a Fellow of the Society of Actuaries and a member of the
American Academy of Actuaries.

     Caryl P. Shepherd has served as Chief Accounting Officer since February
2002, as Secretary since December 2001, as Vice President since December 2000,
and as Vice President and Treasurer of Global Preferred Re since December 2000.
Ms. Shepherd joined our company in November 1997 as Controller and was named
Treasurer in December 1997, positions she continues to hold. Ms. Shepherd held
the position of Assistant Secretary from December 2000 until her election as
Secretary. From April 1995 through October 1997, Ms. Shepherd was a Senior
Accountant with Western Reserve. Prior to her tenure with Western Reserve, Ms.
Shepherd was a Senior Auditor for the public accounting firm of Ernst & Young
LLP specializing in life insurance. Ms. Shepherd is a certified public
accountant, a Fellow of the Life Management Institute and a member of the
American Institute of Certified Public Accountants.

     Thomas Bobowski has served as our Vice President of Marketing since March
2002. Prior to joining our company, Mr. Bobowski served as the Vice President of
Business Development for DotPlanet.com, Inc. From 1998 until 1999, Mr. Bobowski
acted as Director of Global Operations for WMA Agency. Prior to his tenure at
WMA Agency, Mr. Bobowski was Vice President of Business Development for The
Midland Life Insurance Company from 1996 to 1998. Mr. Bobowski is a Chartered
Life Underwriter and Certificate Fund Specialist.

     Joseph F. Barone has served as a Director since June 1998 and as Chairman
since January 2002. Since July 1997, Mr. Barone has been Managing Director of
Research for Firemark Investments, a private investment firm. From January 1992
through June 1997, he was a Senior Vice President with Swiss Re Insurance. Prior
to his tenure with Swiss Re, Mr. Barone was a Managing Director of Investment
Banking for the insurance industry at Bear, Stearns & Co., Inc. Mr. Barone is a
Chartered Financial Analyst and a member of the New York Society of Security
Analysts and the Association of Insurance and Financial Analysts.

     Thomas W. Montgomery has served as a Director since March 1995 and a
Director of Global Preferred Re since August 1995. From March 1995 until
December 2001, Mr. Montgomery served as Executive Vice President and Secretary.
Mr. Montgomery served as Executive Vice President of Global Preferred Re from
August 1995 until December 2001. Mr. Montgomery is president of WMA Agency. Mr.
Montgomery serves as a director of World Money Group, Inc., a financial services
holding company. Mr. Montgomery is a certified public accountant, member of the
American Institute of Certified Public Accountants and a member of the Georgia
Society of Certified Public Accountants.

     C. Simon Scupham has served as a Director since April 1996 and as a
Director of Global Preferred Re since August 1995. Since 1991, Mr. Scupham has
been Chairman of CFM Insurance Managers Ltd., a member of the Mutual Risk
Management Ltd. group of companies, which provides professional management
services to international companies operating in Bermuda. Prior to joining CFM,
Mr. Scupham served as the General Manager of Bermuda operations of the Kemper
Group. He is a qualified Chartered Accountant and Associate Fellow of the
Institute of Mathematics and its Applications. Mr. Scupham is also a director of
MRM Global Captive Group and Chairman of Shoreline Mutual Management (Bermuda)
Ltd.

     Eugene M. Howerdd, Jr. has served as a Director since May 2001. Mr. Howerdd
is Chairman and Chief Executive Officer of Howerdd Financial Corporation, a
diversified financial company that he founded in 1989. Prior to 1989, he served
as Chairman of William W. Lowry & Associates, which was acquired by

                                        3
<PAGE>

USF&G Insurance Company. From 1996 through January 2001, Mr. Howerdd also served
as president of WMA Investment Advisors, Inc., a firm offering asset allocation
modeling, portfolio rebalancing and separate account money management.

     Milan M. Radonich has served as a Director since July 2001. Mr. Radonich is
self-employed as an independent consultant. From September 2000 to September
2001, he was Chief Financial Officer of Allied North American Insurance
Brokerage Corp. of New York, an independently owned, multi-line insurance
brokerage firm. Prior to his affiliation with Allied, Mr. Radonich was with
Ernst & Young LLP for 27 years in the insurance industry practice. Mr. Radonich
is a certified public accountant, a Fellow of the Life Management Institute and
serves as Co-Chairman of the Society of Insurance Financial Management's
Accounting Committee. He also holds memberships in the American Institute of
Certified Public Accountants, the FLMI Society of Greater New York, the New York
Area IASA, and the Illinois and New York State Certified Public Accountant
Societies.

ITEM 11.  EXECUTIVE COMPENSATION

     The following table shows compensation we paid to our Chief Executive
Officer and next most highly compensated executive officers for the last three
fiscal years (collectively, the "Named Executive Officers").

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                                                                     LONG-TERM
                                                       ANNUAL COMPENSATION          COMPENSATION
                                                ---------------------------------   ------------
                                                                                     SECURITIES
                                                                      ALL OTHER      UNDERLYING
NAME AND PRINCIPAL                       YEAR    SALARY     BONUS    COMPENSATION     OPTIONS
------------------                       ----   --------   -------   ------------   ------------
<S>                                      <C>    <C>        <C>       <C>            <C>
S. Hubert Humphrey, Jr.(1).............  2001         --        --     $23,616(2)          --
  Former Chief Executive Officer         2000         --        --      48,992(2)     450,000(4)
                                         1999         --        --      48,851(2)          --
Edward F. McKernan.....................  2001   $258,333   $40,000     $33,462(3)          --
  President and Chief Financial Officer  2000    203,347        --      84,948(3)      52,500(4)
                                         1999    181,867        --          --             --
Caryl P. Shepherd......................  2001   $ 85,731   $20,000     $    --             --
  Vice President, Treasurer, Controller  2000     80,300        --          --          3,750(4)
  and Secretary                          1999     77,975        --          --             --
</Table>

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

(1) Mr. Humphrey retired effective December 28, 2001.

(2) Amounts shown represent payments made to entities controlled by Mr. Humphrey
    pursuant to written agreements between these entities and us. These
    payments, while not paid directly to Mr. Humphrey, may be deemed indirect
    compensation to Mr. Humphrey.

(3) Amounts shown represent payments made to Mr. McKernan by WMA Agency, which
    may be deemed to be indirect compensation from us to Mr. McKernan based on
    the common control of Global Preferred and WMA Agency by Mr. Humphrey until
    June 2001.

(4) All of these options were granted under our 1999 Stock Option Plan and by
    their terms expired on January 1, 2002. Accordingly, these options had no
    value as of December 31, 2001.

                                        4
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

     The following table summarizes the value of the outstanding options held by
the Named Executive Officers at December 31, 2001:

<Table>
<Caption>
                                       NUMBER OF SECURITIES UNDERLYING
                                             UNEXERCISED OPTIONS          VALUE OF UNEXERCISED IN-THE-MONEY
                                              AT FISCAL YEAR-END              OPTIONS AT FISCAL YEAR-END
                                       --------------------------------   ----------------------------------
NAME                                   EXERCISABLE    UNEXERCISABLE(1)    EXERCISABLE       UNEXERCISABLE(1)
----                                   ------------   -----------------   -----------       ----------------
<S>                                    <C>            <C>                 <C>               <C>
S. Hubert Humphrey, Jr...............        --            450,000           $ --                 $ --
Edward F. McKernan...................        --             52,500           $ --                 $ --
Caryl P. Shepherd....................        --              3,750           $ --                 $ --
</Table>

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

(1) All of these options were granted under our 1999 Stock Option Plan and by
    their terms expired on January 1, 2002. Accordingly, these options had no
    value as of December 31, 2001.

TERMS OF DIRECTORS

     The board of directors currently consists of six members, each of which are
elected for a one-year term that will expire upon the election and qualification
of successor directors at the next Annual Meeting of stockholders. There are no
family relationships between any of the directors or executive officers.

COMMITTEES OF THE BOARD OF DIRECTORS

     Compensation Committee.  The board of directors has established a
Compensation Committee, composed of independent directors, on which Messrs.
Barone, Howerdd and Scupham serve. The Compensation Committee, reviews and
evaluates the compensation and benefits of all the officers, reviews general
policy matters relating to compensation and benefits of employees, including the
administration of the Stock Incentive Plan and Directors Stock Option Plan, and
makes recommendations concerning these matters to the board of directors.

     Audit Committee.  The board of directors has also established an Audit
Committee, comprised of independent directors, on which Messrs. Barone, Radonich
and Scupham serve. The Audit Committee is responsible for:

     - Engaging independent accountants;

     - Approving independent audit fees;

     - Reviewing quarterly and annual financial statements, audit results and
       reports, including management comments and recommendations thereto;

     - Reviewing our system of controls and policies, including those covering
       conflicts of interest and business ethics;

     - Evaluating reports of actual or threatened litigation; and

     - Considering significant changes in accounting practices; examining
       improprieties or suspected improprieties, with the authority to retain
       outside counsel or experts.

     Investment Committee.  The board of directors has established an investment
committee, comprised of Messrs. Barone, McKernan, Montgomery and Howerdd, to
periodically review the guidelines and investment portfolio and to make
recommendations to the board of directors regarding any changes. Our Treasurer
and Controller, Ms. Shepherd, also participates in an advisory role in meetings
of the Investment Committee. The board of directors reviews our investment
guidelines annually.

                                        5
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     C. Simon Scupham is the Chairman of CFM Insurance Managers Ltd., which acts
as the principal representative for Global Preferred Re in Bermuda.

COMPENSATION OF DIRECTORS

     The non-employee members of the board of directors, Messrs. Barone,
Howerdd, Montgomery, Scupham and Radonich, receive compensation of $1,500 per
quarter for their service on the board of directors. In addition, we pay
non-employee directors $500 for each board meeting or committee meeting
attended. Directors who are employees do not receive any compensation for
services performed in their capacity as directors. We reimburse each director
for reasonable out-of-pocket expenses incurred in attending meetings of the
board of directors and any of its committees.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

     Our certificate of incorporation and bylaws provide that we will indemnify
our directors and officers to the fullest extent permitted by Delaware law. We
believe that the provisions in our certificate of incorporation and bylaws are
necessary to attract and retain qualified persons as directors and officers.

     We have also entered into agreements to indemnify our directors and certain
of our officers to the fullest extent permitted under Delaware law. In these
agreements, we have agreed to defend, hold harmless and indemnify our directors
and certain of our officers against any obligation to pay a judgment, penalty,
fine, expenses and settlement amounts in connection with any action, suit or
proceeding brought by reason of the fact that he or she is a director or
officer, as the case may be, or is serving, at our request, as a director,
officer, employee, agent or consultant of another entity. No indemnification
will be provided for any misappropriation of any business opportunity, any act
or omission involving intentional misconduct or a knowing violation of law, any
transaction from which an improper personal benefit was received and other types
of liability under Delaware law. Further, we will pay expenses incurred by
directors and officers in defending any covered action, suit or proceeding in
advance of the final disposition of such action, suit or proceeding.

     Effective as of April 22, 2002, we have purchased directors' and officers'
liability insurance in the aggregate primary limit of $10.0 million, and a $15.0
million excess policy.

STOCK OPTIONS

     1999 Stock Option Plan.  Our 1999 Stock Option Plan became effective on
June 15, 1999. The aggregate number of shares of common stock reserved for
issuance under the 1999 Stock Option Plan was 700,000 shares. The 1999 Stock
Option Plan required that we raise additional capital on or before December 31,
1999 in order for any options granted under the plan to be exercisable, however,
we raised no new capital prior to that date and the outstanding options could
not, by their terms, be exercised. On May 12, 2000, we approved an amendment to
the 1999 Stock Option Plan extending the deadline for receipt of additional
capital to January 1, 2002. The exercise price of each option granted under the
1999 Stock Option Plan was $10 per share, as adjusted for our three-for-two
stock split in 2001. We did not raise the required minimum amount of additional
capital by January 1, 2002 and as of that date the outstanding options granted
under the 1999 Stock Option Plan could no longer be exercised. The board of
directors terminated the 1999 Stock Option Plan in February 2002.

     Global Preferred Holdings, Inc. Stock Incentive Plan.  Our Stock Incentive
Plan became effective on January 9, 2002. The aggregate number of shares of
common stock reserved for issuance under the Stock Incentive Plan is 1.5 million
shares. The purpose of the Stock Incentive Plan is to provide incentives for
employees of Global Preferred and Global Preferred Re to promote our success,
thereby benefiting stockholders and aligning the economic interests of the
participants with those of the stockholders. Awards granted under the Stock
Incentive Plan may be stock appreciation rights, restricted stock, options
intended to qualify as "incentive stock options" or nonqualified stock options.

                                        6
<PAGE>

     No shares of common stock have been issued upon exercise of options granted
under the Stock Incentive Plan. The Compensation Committee of the board of
directors has approved the grant of options for an aggregate of 215,000 shares
of common stock to be granted to certain employees upon the completion of an
underwritten registered offering of our common stock, at an exercise price equal
to the initial public offering price.

     Global Preferred Holdings, Inc. Directors Stock Option Plan.  Our Directors
Stock Option Plan became effective January 9, 2002. The aggregate number of
shares of common stock reserved for issuance under the Directors Stock Option
Plan is 280,000 shares. After the effective date of an underwritten registered
offering of our common stock, we intend to grant options to purchase shares of
common stock at a price equal to the initial public offering price to each of
our five non-employee directors pursuant to the Directors Stock Option Plan.
Upon completion of such underwritten offering, the following options will be
granted to our non-employee directors at an exercise price equal to the initial
public offering price:

<Table>
<S>                                             <C>
Thomas W. Montgomery                            35,000 shares
Joseph F. Barone                                30,000 shares
C. Simon Scupham                                20,000 shares
Eugene M. Howerdd, Jr.                          10,000 shares
Milan M. Radonich                               10,000 shares
</Table>

     Other Options.  Effective December 28, 2001, S. Hubert Humphrey, Jr.
retired from his positions as a Director and Chairman of our Board of Directors
and as our Chief Executive Officer. He also retired from his positions with
Global Preferred Re as a Director, Chairman of the Board of Directors and Chief
Executive Officer. In recognition of Mr. Humphrey's years of service, we agreed
to grant to Mr. Humphrey options to purchase 100,000 shares of common stock upon
successful completion of a firm commitment, underwritten registered public
offering of the common stock by December 31, 2003. The options are exercisable
for a period of five years from the date of grant at an exercise price equal to
the initial offering price of shares sold in the underwritten offering.

EMPLOYMENT AGREEMENTS

     Edward F. McKernan is employed by us pursuant to a written employment
agreement. Mr. McKernan's employment agreement has an initial term of three
years beginning January 1, 2002 and is automatically renewed for additional
one-year periods unless either party provides written notice of termination at
least 60 days in advance of the expiration date of the current term. Mr.
McKernan will receive a base salary of $325,000 for the year ended December 31,
2002, plus options to purchase 75,000 shares of common stock, to be granted upon
completion of an underwritten registered public offering of our common stock.
Mr. McKernan is eligible for an annual bonus in an amount to be determined by
the board of directors. If, within 90 days of a change of control of Global
Preferred, Mr. McKernan resigns for good reason, as defined in the agreement, or
is terminated without cause, we will pay him an amount equal to 35 months of his
then-current base salary over a twelve month period or in one lump sum payment.
Upon Mr. McKernan's resignation for good reason or termination not for cause
unrelated to a change of control, we will pay his base salary for the greater of
twelve months or the number of months remaining on his employment agreement, not
to exceed 24 months. Mr. McKernan's employment agreement includes
post-employment restrictive covenants not to solicit our customers or recruit
our employees.

     Bradley E. Barks is employed by us pursuant to a written employment
agreement. Mr. Barks' employment agreement has an initial term from March 4,
2002 through February 28, 2003 and is renewable by agreement of the parties for
additional one-year periods. Mr. Barks will receive a base salary of $250,000
for the initial term, plus options to purchase 20,000 shares of common stock, to
be granted upon completion of an underwritten registered public offering of our
common stock. Global Preferred paid Mr. Barks a signing bonus of $9,200 and has
agreed to pay $59,450 towards Mr. Barks' relocation expenses and up to six
months of actual rental costs for temporary housing prior to his relocation. Mr.
Barks is eligible for an annual bonus in an amount to be determined by the board
of directors. If Mr. Barks resigns

                                        7
<PAGE>

for good reason, as defined in the agreement, or is terminated without cause, we
will pay him an amount equal to three months of his base salary if he is
terminated prior to completion of an underwritten offering or twelve months of
his then-current base salary if he is terminated after completion of an
underwritten offering. Mr. Barks' employment agreement includes post-employment
restrictive covenants not to solicit our customers or recruit our employees.

     Caryl P. Shepherd is employed by us pursuant to a written employment
agreement. Ms. Shepherd's employment agreement has an initial term from February
1, 2002 through January 31, 2003 and is renewable by agreement of the parties
for additional one-year periods. Ms. Shepherd will receive a base salary of
$100,000 for the initial term, plus options to purchase 30,000 shares of common
stock to be granted upon completion of an underwritten registered public
offering of our common stock. Ms. Shepherd is eligible for an annual bonus in an
amount to be determined by the board of directors. Upon Ms. Shepherd's
resignation for good reason, as defined in the agreement, or termination not for
cause, we will pay her base salary for twelve months. Ms. Shepherd's employment
agreement includes post-employment restrictive covenants not to solicit our
customers or recruit our employees.

     Thomas Bobowski is employed by us pursuant to a written employment
agreement. Mr. Bobowski's employment agreement has an initial term from March 4,
2002 through February 28, 2003 and is renewable by agreement of the parties for
additional one-year periods. Mr. Bobowski will receive a base salary of $122,000
for the initial term, plus options to purchase 12,500 shares of common stock to
be granted upon completion of an underwritten registered public offering of our
common stock. Mr. Bobowski is eligible for an annual bonus in an amount to be
determined by the board of directors. Upon Mr. Bobowski's resignation for good
reason, as defined in the agreement, or termination not for cause, we will pay
his base salary for three months. For each month of Mr. Bobowski's employment
over three months, his separation payment upon resignation for good reason or
termination without cause will be increased by one month, with a maximum payment
equal to twelve months his base salary. Mr. Bobowski employment agreement
includes post-employment restrictive covenants not to solicit our customers or
recruit our employees.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the ownership
of our common stock, as of March 31, 2002, by each of our directors, each of our
executive officers named in the summary compensation table, each person known to
us to own beneficially more than 5% of our outstanding common stock and all of
our directors and executive officers as a group.

<Table>
<Caption>
                                                                  NUMBER OF
                                                             SHARES BENEFICIALLY   PERCENTAGE OF SHARES
NAME                                                              OWNED(1)             OUTSTANDING
----                                                         -------------------   --------------------
<S>                                                          <C>                   <C>
S. Hubert Humphrey, Jr.(2).................................       1,028,091                24.2%
Monte Holm(3)..............................................         327,969                 7.9%
Money Services, Inc.(4)....................................         312,750                 7.0%
Richard L. Thawley(5)......................................         305,632                 7.4%
Thomas W. Montgomery(6)....................................          54,862                 1.3%
Joseph F. Barone(7)........................................          30,000                   *
C. Simon Scupham(8)........................................          20,000                   *
Eugene M. Howerdd, Jr.(9)..................................          10,000                   *
Milan M. Radonich(10)......................................          10,000                   *
Edward F. McKernan.........................................           7,500                   *
Caryl P. Shepherd..........................................              --                   *
All directors and executive officers as a group (9
  persons)(11).............................................         132,362                 3.1%
</Table>

                                        8
<PAGE>

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

  *  Less than one percent

 (1) For purposes of calculating the percentage beneficially owned, the number
     of shares deemed outstanding as of March 31, 2002 includes: (a) 4,141,684
     shares of common stock outstanding as of March 31, 2002; and (b) shares
     issuable pursuant to options held by the respective person or group which
     may be exercised within 60 days following March 31, 2002 ("Presently
     Exercisable Options"). Beneficial ownership is determined in accordance
     with the rules of the Securities and Exchange Commission that deem shares
     to be beneficially owned by any person or group who has or shares voting
     and investment power with respect to such shares. Presently Exercisable
     Options are deemed to be outstanding and beneficially owned by the person
     or group holding such options for the purpose of computing the percentage
     ownership of such person or group but are not treated as outstanding for
     the purpose of computing the percentage ownership of any other person or
     group.

 (2) This number includes: (a) 78,092 shares of common stock for which WMA
     Agency (of which Mr. Humphrey is the principal stockholder) holds voting
     proxies; and (b) options to purchase 100,000 shares of common stock
     exercisable within 60 days subject to the successful completion of an
     underwritten registered public offering of our common stock by December 31,
     2003. Mr. Humphrey's business address is 3975 Johns Creek Ct., Suite 100,
     Suwanee, Georgia 30024.

 (3) This number includes (a) 60,000 shares held jointly with Mr. Holm's wife;
     (b) 2,250 shares held jointly with Mr. Steve Marx; and (c) 165,000 shares
     held in seven trusts created by Mr. Holm and his wife. Mr. Holm's business
     address is 312 W. Mesquite Blvd., Suite 11, Las Vegas, Nevada 89102.

 (4) This number includes 312,750 shares of common stock issuable on conversion
     of a $5.0 million convertible promissory note held by Money Services, Inc.
     that is immediately convertible. Money Services, Inc. is a wholly owned
     subsidiary of AEGON USA, Inc., with an address of 4333 Edgewood Road, N.E.,
     Cedar Rapids, Iowa 52499. AEGON USA, Inc. is a subsidiary of AEGON N.V., an
     international insurance holding company that is publicly traded on the New
     York Stock Exchange.

 (5) This number includes (a) 137,700 shares owned by two trusts for the benefit
     of Mr. Thawley and his wife and (b) 30,000 shares owned by Mr. Thawley's
     children. Mr. Thawley's business address is 1110 W. Kettleman Lane, Suite
     24, Lodi, California 95240.

 (6) This number includes options to purchase 35,000 shares of common stock
     exercisable within 60 days, subject to the successful completion of an
     underwritten registered public offering of our common stock by December 31,
     2003.

 (7) This number includes options to purchase 30,000 shares of common stock
     exercisable within 60 days, subject to the successful completion of an
     underwritten registered public offering of our common stock by December 31,
     2003.

 (8) This number includes options to purchase 20,000 shares of common stock
     exercisable within 60 days, subject to the successful completion of an
     underwritten registered public offering of our common stock by December 31,
     2003.

 (9) This number includes options to purchase 10,000 shares of common stock
     exercisable within 60 days, subject to the successful completion of an
     underwritten registered public offering of our common stock by December 31,
     2003.

(10) This number includes options to purchase 10,000 shares of common stock
     exercisable within 60 days, subject to the successful completion of an
     underwritten registered public offering of our common stock by December 31,
     2003.

(11) This number includes options to purchase 105,000 shares of common stock
     exercisable within 60 days, subject to the successful completion of an
     underwritten registered public offering of our common stock by December 31,
     2003.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The following sections discuss various transactions and relationships
between us and parties affiliated or related to us. We believe that each of our
transactions with related parties are on terms as favorable to us as could have
been obtained from unrelated third parties.

                                        9
<PAGE>

AGREEMENTS WITH MONEY SERVICES, INC. AND ITS AFFILIATES

     We issued a $5.0 million convertible note, due July 29, 2004, to Money
Services, Inc., a subsidiary of AEGON USA, Inc. The note bears simple interest
at a rate of 7.5% per year and is currently convertible into 312,750 shares of
our common stock. If Money Services were to convert the note, it would own
approximately 7% of our outstanding common stock. We have the option to redeem
the note, in whole or in part, between July 29, 2002 and July 29, 2004. To
redeem the note before maturity, we must pay all principal, plus interest
accrued from the date of the note through the redemption date at a higher
effective interest rate of 9% per annum.

     We have four separate reinsurance agreements with Western Reserve Assurance
Co. of Ohio ("Western Reserve") that cover policies on Western Reserve variable
universal life and variable annuity policies issued on or after various dates
after January 1, 1992 which were sold by the agents of World Financial Group,
Inc. and its predecessor, WMA Agency. Also in June 2001, we entered into the
First Right Agreement with Western Reserve. The First Right Agreement provides
us the right to reinsure certain policies issued by Western Reserve or its U.S.
affiliates which are sold by agents associated with World Financial Group.

     We entered into a agreement with World Financial Group which requires that
World Financial Group will use its commercially reasonable efforts to assist us
in attaining the opportunity to reinsure all insurance products sold by its
agents for insurance companies with which it has selling agreements, other than
Western Reserve and Western Reserve's affiliates.

     The life insurance companies with which we have reinsurance agreements pay
commissions to the agents of World Financial Group for sales of life insurance
and annuity contracts reinsured by us. As a result of such relationships, the
interests of World Financial Group may conflict with our interests in
negotiating reinsurance agreements.

     We are currently tenants-at-will in approximately 2,100 square feet of
office space in Duluth, Georgia. Western Reserve is the landlord on the space
that we occupy. As tenants-at-will our landlord is required by law to provide us
60-days notice to vacate. Our monthly rent is $3,482, plus our proportionate
share of the taxes.

     After its acquisition of certain of the assets of WMA Agency, World
Financial Group continued to provide the services which WMA Agency provided to
us under the Corporate Services Agreement described under "Relationship with our
Former Chairman" below. We incurred $22,882 of costs for these services from
World Financial Group for the year ended December 31, 2001. Effective January 1,
2002, World Financial Group provides these services to us as invoiced on a
monthly basis.

     Each of World Financial Group, Inc. and Western Reserve are subsidiaries of
AEGON USA, Inc. and therefore are entities related to Money Services due to the
common ownership. Due to the relationships among us, World Financial Group,
Western Reserve, Money Services and AEGON USA, conflicts of interest may arise
with respect to existing and future business dealings, including:

     - The terms of World Financial Group's selling agreements (including
       commission arrangements) and our reinsurance relationships with life
       insurance companies;

     - Agreements among us, World Financial Group, Western Reserve, Money
       Services, AEGON USA and their affiliates;

     - Potential acquisitions of properties or businesses;

     - Potential divestitures of properties or businesses; and

     - The issuance of additional securities by us.

                                        10
<PAGE>

MANAGEMENT AGREEMENT

     Global Preferred has an insurance management agreement with CFM Insurance
Managers Ltd., a member of the Mutual Risk Management Ltd. group of companies,
which provides professional insurance management services to companies operating
in Bermuda. C. Simon Scupham, a director of our company and of Global Preferred
Re, is the Chairman of CFM. Pursuant to this agreement, CFM acts as the managing
agent and principal representative under the Bermuda Insurance Act 1978 for
Global Preferred Re. This agreement is for an unlimited duration, but may be
terminated by either party upon three months prior written notice or upon 30
days prior written notice under specified circumstances. We paid annual fees of
$60,000 during 1999, 2000 and 2001 to CFM pursuant to the management agreement.

RELATIONSHIP WITH OUR FORMER CHAIRMAN

     S. Hubert Humphrey, Jr. owns more than 20% of our outstanding capital stock
and, until December 28, 2001, served as a director, Chairman of our board of
directors and Chief Executive Officer and as a director, Chairman of the board
of directors and Chief Executive Officer of Global Preferred Re. Effective
December 28, 2001, Mr. Humphrey retired from our board of directors and all of
the positions he held with us and with Global Preferred Re. In recognition of
Mr. Humphrey's years of service, we agreed to grant to Mr. Humphrey, upon
successful completion of an underwritten registered public offering of our
common stock, options to purchase 100,000 shares of common stock. The options
are exercisable for a period of five years from the date of grant, at an
exercise price equal to the initial offering price of shares sold in an
underwritten offering. Mr. Humphrey controls WMA Agency and WMA Securities.

     Effective April 1, 1998, we entered into a Corporate Services Agreement
with WMA Agency to provide to us corporate services and supplies for a fixed
monthly fee of $2,250, adjustable annually. These services included our computer
network system, facilities maintenance, security, mail services, utilities,
postage, telephone and copier service. We incurred $48,851, $48,922 and $23,616
of costs for these services from WMA Agency for the years ended December 31,
1999, 2000 and 2001, respectively.

     In June 1998, we entered into a Directed Reinsurance Agreement with WMA
Agency, under which WMA Agency agreed to use its best efforts to cause any life
insurance company with which it had selling agreements to enter reinsurance
agreements with us. In 1999, we amended the agreement to provide, among other
things, that we would issue, for no monetary consideration, warrants to
individuals designated by WMA Agency to purchase 300,000 shares of the common
stock. These warrants were ultimately issued to key management personnel of WMA
Agency. As subsequently amended, the warrants were contingent upon our raising
additional capital by January 1, 2002. We raised no new capital by January 1,
2002 and the warrants expired. No shares of our common stock were issued under
these warrants.

     In January 1998, we entered into a Sublease Agreement with WMA Agency for
our office space in Duluth, Georgia. The sublease was on a triple-net basis for
an initial term through January 2008. The annual base rent until January 2003
was $18,675. The sublease was terminated in June 2001 in conjunction with the
purchase by World Financial Group of assets of WMA Agency.

                                        11
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 of 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, in the City of Duluth,
State of Georgia, on April 30, 2002.

                                          GLOBAL PREFERRED HOLDINGS, INC.

                                          By:    /s/ EDWARD F. MCKERNAN
                                            ------------------------------------
                                                     Edward F. McKernan
                                               President and Chief Executive
                                                           Officer

Dated: April 30, 2002

                                        12
<PAGE>

                        GLOBAL PREFERRED HOLDINGS, INC.

                         INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
                                                               PAGE
                                                               ----
<S>                                                            <C>
FINANCIAL STATEMENTS:
Independent Auditors' Report................................    F-2
Consolidated Balance Sheets as of December 31, 2000 and
  2001......................................................    F-3
Consolidated Statements of Income for the Years Ended
  December 31, 1999, 2000 and 2001..........................    F-4
Consolidated Statements of Stockholders' Equity and
  Comprehensive Income for the Years Ended December 31,
  1999, 2000 and 2001.......................................    F-5
Consolidated Statements of Cash Flows for the Years Ended
  December 31, 1999, 2000 and 2001..........................    F-6
Notes to Consolidated Financial Statements..................    F-7
</Table>

                                       F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Global Preferred Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of Global Preferred
Holdings, Inc. and subsidiaries (formerly known as The WMA Corporation) as of
December 31, 2000 and 2001, and the related consolidated statements of income,
stockholders' equity and comprehensive income and cash flows for each of the
years in the three-year period ended December 31, 2001. These consolidated
financial statements are the responsibility of Global Preferred's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the 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 audits provide 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 Global Preferred
Holdings, Inc. and subsidiaries as of December 31, 2000 and 2001, and the
results of their operations and their cash flows, for each of the years in the
three-year period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America.

KPMG LLP
Atlanta, Georgia
March 8, 2002

                                       F-2
<PAGE>

                        GLOBAL PREFERRED HOLDINGS, INC.
                          Consolidated Balance Sheets

<Table>
<Caption>
                                                              YEARS ENDED DECEMBER 31,
                                                              -------------------------
                                                                 2000          2001
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           Assets
Fixed maturity securities -- available for sale (amortized
  cost of $5,817,900 and $11,480,749 for 2000 and 2001,
  respectively).............................................  $ 5,912,379   $12,214,279
Cash and cash equivalents...................................    4,259,153     8,062,110
Investment income due and accrued...........................      113,558       172,055
Reinsurance balances receivable.............................    2,632,949     2,842,908
Reinsured policy loans......................................      867,023     1,013,629
Deferred acquisition costs..................................   42,752,339    42,800,269
Prepaid expenses............................................       31,210       659,538
Fixed assets (net of accumulated depreciation of $102,992
  and $147,750 for 2000 and 2001, respectively).............       48,806        88,114
                                                              -----------   -----------
          Total assets......................................  $56,617,417   $67,852,902
                                                              ===========   ===========
            Liabilities and Stockholders' Equity
Liabilities:
  Future policy benefits....................................  $ 8,025,748   $11,911,532
  Reinsurance balances payable..............................      388,016       188,818
  Accrued expenses and accounts payable.....................      140,118       544,683
  Accrued interest payable..................................      161,356       158,219
  Dividend payable..........................................       12,245            --
  Current income tax payable................................      405,431       413,299
  Short term debt...........................................      277,285            --
  Long term debt............................................    5,000,000     5,000,000
  Deferred tax liability....................................    5,618,285     7,667,767
                                                              -----------   -----------
          Total liabilities.................................   20,028,484    25,884,318
                                                              -----------   -----------
Stockholders' equity:
  Preferred stock, par value $2.00, 10,000,000 shares
     authorized; Series A Preferred Stock, 1,000,000 shares
     authorized; 266,047 shares issued for 2000 and 2001....      532,094       532,094
  Common stock, par value $.001, 50,000,000 shares
     authorized; 2,500,000 shares and 3,750,000 shares
     issued for 2000 and 2001, respectively.................        2,500         3,750
  Additional paid-in capital................................   22,795,581    22,794,331
  Accumulated other comprehensive income....................       62,357       246,531
  Retained earnings.........................................   13,246,301    18,441,145
  Treasury stock, at cost (7,485 shares and 7,390 shares for
     2000 and 2001, respectively)...........................      (49,900)      (49,267)
                                                              -----------   -----------
          Total stockholders' equity........................   36,588,933    41,968,584
                                                              -----------   -----------
Total liabilities and stockholders' equity..................  $56,617,417   $67,852,902
                                                              ===========   ===========
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>

                        GLOBAL PREFERRED HOLDINGS, INC.
                       Consolidated Statements of Income

<Table>
<Caption>
                                                               YEARS ENDED DECEMBER 31,
                                                        ---------------------------------------
                                                           1999          2000          2001
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
Revenues:
  Premiums............................................  $ 9,692,649   $16,618,927   $19,240,551
  Reinsured policy revenues...........................   13,505,823    12,893,664    11,237,610
  Net investment income...............................      349,683       527,613       810,544
  Net realized gain (loss) on investments.............      (66,000)        2,606        44,807
  Loss on recapture of business.......................     (822,814)           --            --
                                                        -----------   -----------   -----------
     Total revenue....................................   22,659,341    30,042,810    31,333,512
                                                        -----------   -----------   -----------
Benefits and expenses:
  Benefits, claims and settlement expenses............    4,511,469     7,559,164     6,292,392
  Change in future policy benefits....................      313,679     2,052,733     2,411,335
  Reinsurance expense allowances, net.................    5,362,263     7,539,492     8,501,197
  Amortization of deferred acquisition costs..........    3,789,318     4,016,629     3,944,660
  Operating expenses..................................      983,148     1,256,080     1,951,634
  Interest expense....................................    1,153,958       665,119       378,145
                                                        -----------   -----------   -----------
     Total benefits and expenses......................   16,113,835    23,089,217    23,479,363
                                                        -----------   -----------   -----------
     Income before income tax.........................    6,545,506     6,953,593     7,854,149
  Income tax expense..................................   (2,225,472)   (1,820,717)   (2,391,568)
                                                        -----------   -----------   -----------
     Net income.......................................  $ 4,320,034   $ 5,132,876   $ 5,462,581
                                                        -----------   -----------   -----------
  Preferred dividends.................................           --       155,198       267,104
                                                        -----------   -----------   -----------
     Net income available to common stockholders......  $ 4,320,034   $ 4,977,678   $ 5,195,477
                                                        ===========   ===========   ===========
Basic earnings per share..............................  $      1.15   $      1.33   $      1.39
                                                        ===========   ===========   ===========
Diluted earnings per share............................  $      1.15   $      1.30   $      1.32
                                                        ===========   ===========   ===========
Weighted average common shares outstanding............    3,742,610     3,742,610     3,742,610
                                                        ===========   ===========   ===========
Total weighted average common and common equivalent
  shares outstanding..................................    3,742,610     3,943,897     4,141,684
                                                        ===========   ===========   ===========
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>

                        GLOBAL PREFERRED HOLDINGS, INC.
    Consolidated Statements of Stockholders' Equity and Comprehensive Income
                 Years ended December 31, 1999, 2000, and 2001
<Table>
<Caption>
                                                                                                  ACCUMULATED
                                     NUMBER OF               NUMBER OF             ADDITIONAL        OTHER
                                     PREFERRED   PREFERRED    COMMON     COMMON      PAID-IN     COMPREHENSIVE    RETAINED
                                      SHARES       STOCK      SHARES      STOCK      CAPITAL     INCOME (LOSS)    EARNINGS
                                     ---------   ---------   ---------   -------   -----------   -------------   -----------
<S>                                  <C>         <C>         <C>         <C>       <C>           <C>             <C>
Balance, January 1, 1999...........        --    $     --    2,500,000   $2,500    $20,228,973     $ 242,977     $ 3,948,589
  Comprehensive income.............
  Net income.......................                                                                                4,320,034
Other comprehensive loss, net of
  tax..............................        --          --           --       --             --      (285,529)             --
                                      -------    --------    ---------   ------    -----------     ---------     -----------
  Total comprehensive income.......
Balance, December 31, 1999.........        --          --    2,500,000    2,500     20,228,973       (42,552)      8,268,623

  Comprehensive income
  Net income.......................                                                                                5,132,876
Other comprehensive income, net of
  tax..............................                                                                  104,909
  Total comprehensive income.......
Preferred stock issued.............   266,047     532,094                            2,566,608
Preferred dividends................        --          --           --       --             --            --        (155,198)
                                      -------    --------    ---------   ------    -----------     ---------     -----------
Balance, December 31, 2000.........   266,047     532,094    2,500,000    2,500     22,795,581        62,357     $13,246,301

  Comprehensive income
  Net income.......................                                                                                5,462,581
    Other comprehensive income, net
      of tax.......................                                                                  184,174
  Total comprehensive income.......
Three-for-two stock split..........                          1,250,000    1,250         (1,250)
Preferred dividends................                                                                                 (267,104)
Treasury stock reissued (95
  shares)..........................        --          --           --       --             --            --            (633)
                                      -------    --------    ---------   ------    -----------     ---------     -----------
Balance, December 31, 2001.........   266,047    $532,094    3,750,000   $3,750    $22,794,331     $ 246,531     $18,441,145
                                      =======    ========    =========   ======    ===========     =========     ===========

<Caption>

                                                   TOTAL
                                     TREASURY   STOCKHOLDERS   COMPREHENSIVE
                                      STOCK        EQUITY         INCOME
                                     --------   ------------   -------------
<S>                                  <C>        <C>            <C>
Balance, January 1, 1999...........  $(49,900)  $24,373,139
  Comprehensive income.............
  Net income.......................               4,320,034     $4,320,034
Other comprehensive loss, net of
  tax..............................        --      (285,529)      (285,529)
                                     --------   -----------     ----------
  Total comprehensive income.......                             $4,034,505
                                                                ==========
Balance, December 31, 1999.........   (49,900)   28,407,644
  Comprehensive income
  Net income.......................               5,132,876     $5,132,876
Other comprehensive income, net of
  tax..............................                 104,909        104,909
                                                                ----------
  Total comprehensive income.......                             $5,237,785
                                                                ==========
Preferred stock issued.............               3,098,702
Preferred dividends................        --      (155,198)
                                     --------   -----------
Balance, December 31, 2000.........   (49,900)  $36,588,933
  Comprehensive income
  Net income.......................               5,462,581     $5,462,581
    Other comprehensive income, net
      of tax.......................                 184,174        184,174
                                                                ----------
  Total comprehensive income.......                             $5,646,755
                                                                ==========
Three-for-two stock split..........
Preferred dividends................                (267,104)
Treasury stock reissued (95
  shares)..........................       633            --
                                     --------   -----------
Balance, December 31, 2001.........  $(49,267)  $41,968,584
                                     ========   ===========
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>

                        GLOBAL PREFERRED HOLDINGS, INC.
                     Consolidated Statements of Cash Flows

<Table>
<Caption>
                                                                      YEARS ENDED DECEMBER 31,
                                                              ----------------------------------------
                                                                  1999          2000          2001
                                                              ------------   -----------   -----------
<S>                                                           <C>            <C>           <C>
Cash flows from operating activities:
  Net income................................................  $  4,320,034   $ 5,132,876   $ 5,462,581
  Adjustments to reconcile net income to net cash provided
    by (used in) operating activities:
    Amortization and depreciation...........................     3,924,990     4,064,604     3,989,418
    Deferred tax expense....................................     2,225,472     1,304,642     1,954,605
    Net realized (gain) loss on investments.................        66,000        (2,606)      (44,807)
    Loss on recapture of business...........................       822,814            --            --
  Change in:
    Investment income due and accrued.......................       116,753       (94,115)      (58,497)
    Reinsurance balances receivable.........................    (1,944,005)      352,989      (209,959)
    Reinsured policy loans..................................      (283,265)     (580,060)     (146,606)
    Deferred acquisition costs..............................   (36,612,052)   (7,018,868)   (3,992,590)
    Prepaid expenses........................................      (130,148)      315,684      (628,328)
    Other assets............................................       183,317            --            --
    Future policy benefits..................................     2,651,956     3,530,962     3,885,784
    Reinsurance balances payable............................    13,398,265      (328,314)     (199,198)
    Accrued expenses and accounts payable...................       (16,090)      (20,022)      404,565
    Accrued interest payable................................       564,690      (504,433)       (3,137)
    Current income tax payable..............................            --       405,431         7,868
                                                              ------------   -----------   -----------
      Net cash provided by (used in) operating activities...   (10,711,269)    6,558,770    10,421,699
                                                              ------------   -----------   -----------
Cash flows from investing activities:
  Proceeds from sale of available for sale securities.......     6,924,903       194,856     1,674,272
  Proceeds from maturities and principal payments on
    mortgage-backed securities of available for sale
    securities..............................................       391,924       127,730       474,925
  Purchase of available-for-sale securities.................            --    (4,019,176)   (8,127,239)
  Purchase of fixed assets..................................       (50,880)       (8,449)      (84,066)
                                                              ------------   -----------   -----------
      Net cash provided by (used in) investing activities...     7,265,947    (3,705,039)   (6,062,108)
                                                              ------------   -----------   -----------
Cash flows from financing activities:
  Issuance of preferred stock...............................            --     3,098,702            --
  Preferred dividends.......................................            --      (142,953)     (279,349)
  Purchase of treasury stock and warrants...................            --            --            --
  Proceeds from short term debt.............................            --            --      (277,285)
  Proceeds from (repayment of) long term debt...............     5,000,000    (5,026,277)           --
  Decrease in principal due on short term debt..............    (4,696,438)           --            --
                                                              ------------   -----------   -----------
      Net cash provided by (used in) financing activities...       303,562    (2,070,528)     (556,634)
                                                              ------------   -----------   -----------
      Net increase (decrease) in cash and cash
        equivalents.........................................    (3,141,760)      783,203     3,802,957
Cash and cash equivalents at beginning of period............     6,617,710     3,475,950     4,259,153
                                                              ------------   -----------   -----------
Cash and cash equivalents at end of period..................  $  3,475,950   $ 4,259,153   $ 8,062,110
                                                              ============   ===========   ===========
Supplemental disclosure of cash flow information:
  Interest paid.............................................  $         --   $ 1,169,552   $   381,282
                                                              ============   ===========   ===========
  Income taxes paid.........................................  $         --   $   110,644   $   429,095
                                                              ============   ===========   ===========
  Change in preferred dividend accrual......................  $         --   $    12,245   $   (12,245)
                                                              ============   ===========   ===========
  Recapture of reinsurance business:
    Reduction of deferred acquisition costs.................  $ 20,610,500            --            --
    Reduction of reinsured policy loans.....................        41,804            --            --
    Increase in reinsurance balances receivable.............      (940,898)           --            --
    Reduction of future policy benefits.....................      (781,190)           --            --
    Reduction of reinsurance balances payable...............   (18,107,402)           --            --
                                                              ------------   -----------   -----------
    Loss on recapture of business...........................  $    822,814            --            --
                                                              ============   ===========   ===========
  Non-cash financing activities:
    Treasury shares issued for stock split fractional
      shares................................................            --            --            95
                                                              ============   ===========   ===========
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-6
<PAGE>

                        GLOBAL PREFERRED HOLDINGS, INC.
                   Notes to Consolidated Financial Statements
                        December 31, 1999, 2000 and 2001

1.  ORGANIZATION

     Global Preferred Holdings, Inc. (formerly known as The WMA Corporation) was
formed March 9, 1995 as an insurance holding company.

     The consolidated financial statements include the assets, liabilities, and
results of operations of Global Preferred Holdings, Inc. ("Global Preferred")
and its wholly-owned subsidiary, Global Preferred Re Limited (formerly known as
WMA Life Insurance Company Limited), a Bermuda company registered as a long-term
insurer under the Bermuda Insurance Act 1978 ("Global Preferred Re" together
with Global Preferred shall be referred to collectively as "Global Preferred"
unless the context otherwise requires or otherwise as expressly stated).

     Global Preferred, through its subsidiary, Global Preferred Re, provides
reinsurance for variable universal life insurance and variable annuity products.
Historically, Global Preferred's reinsurance business has been based on its
relationship with the independent agents of World Financial Group, Inc., which
is an independent marketing organization ("IMO") that markets the products
Global Preferred Re currently reinsures. World Financial Group is an indirect
subsidiary of AEGON USA, Inc. An independent marketing organization is an
organization of independent agents that contracts with one or more insurance
companies to distribute and market securities and insurance products. The
foundation for Global Preferred's relationship with the agents associated with
World Financial Group is the equity participation that many of them have in
Global Preferred.

     Reinsurance is an arrangement under which an insurance company (the
"reinsurer") agrees to indemnify another insurance company (the "ceding life
company") for all or a portion of the insurance risks underwritten by the ceding
life company. The reinsurer, in turn, assumes a portion of the underwritten risk
in exchange for a portion of the premium collected. Global Preferred currently
assumes portions of mortality and other risks relating to variable universal
life insurance and variable annuity policies in order to share in the net
profits generated through the sale of such policies by the independent
registered agents associated with World Financial Group.

     To date, all life insurance and annuity policies reinsured by Global
Preferred have been sold by the agents associated with World Financial Group
who, until June 2001, were associated with World Marketing Alliance, Inc. ("WMA
Agency"). In June 2001, World Financial Group acquired certain assets of WMA
Agency. As a result of the acquisition, substantially all of the agents became
associated with World Financial Group. Global Preferred has been informed that
World Group Securities, Inc., the broker-dealer affiliated with World Financial
Group, is in the process of obtaining approval for the transfer of the
securities licenses of agents from WMA Securities, Inc., the broker-dealer
affiliated with WMA Agency. Global Preferred understands that the formation of
World Group Securities and its business plan have been approved by the National
Association of Securities Dealers and World Group Securities is awaiting state
regulatory approvals.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Consolidation and Basis of Presentation.  The consolidated financial
statements of Global Preferred have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the reported amounts of revenues
and expenses during the reporting period. Accounts that Global Preferred deems
to be sensitive to changes in estimates include deferred acquisition costs and
future policy benefits. In all instances, actual results could differ from
estimates.

                                       F-7
<PAGE>

     The accompanying financial statements consolidate the accounts of Global
Preferred and its subsidiary. All significant inter-company balances and
transactions have been eliminated.

     Investments.  Global Preferred classifies all fixed maturity securities and
equity securities as "available for sale" and accordingly, such securities are
reported at fair value. Fixed maturity securities available for sale are so
classified based upon the possibility that such securities could be sold prior
to maturity if that action enables Global Preferred to execute its investment
philosophy and appropriately match investment results to operating and liquidity
needs. Unrealized gains and losses on marketable equity securities and fixed
maturity securities available for sale, less applicable deferred income taxes,
are reported as a separate component of accumulated other comprehensive income
within stockholders' equity.

     Global Preferred's policy is to reflect an other-than-temporary impairment
in securities when the fair value of these securities is lower than the cost
basis for an extended period of time. Any such impairment identified would
result in a write-down of the cost basis of the individual security to its fair
value to establish a new cost basis and to reflect a realized capital loss in
the consolidated statements of income. No impairments in value have occurred
which would require Global Preferred to make such an adjustment.

     Investment income is recognized as it accrues or is legally due. Income on
mortgage-backed securities includes amortization and accretion of purchase
premiums and discounts using a method that approximates a level yield, taking
into consideration assumed prepayment patterns. The retrospective adjustment
method is used to adjust for prepayment activity. Realized gains and losses on
investments using the specific identification method are included in income.

     Fair Value Disclosure.  The carrying values of cash and cash equivalents,
reinsurance receivables and payables, short-term debt, accrued expenses and
accounts payable approximate their fair values due to the short-term nature of
these accounts. Taking into consideration the basis of reinsurance under the
reinsurance agreements, the carrying value of future policy benefits
approximates its fair value. See Note 3 for fair value information covering
Global Preferred's investment portfolio.

     Cash and Cash Equivalents.  Cash and cash equivalents include cash on hand
and on deposit purchased with an original maturity of three months or less.

     Deferred Acquisition Costs.  Costs of acquiring new business, which vary
with and are primarily related to the production of new business, have been
deferred to the extent that such costs are deemed recoverable from future
revenues. Such costs include reinsurance commission and expense allowances paid
to ceding life companies, and certain other underwriting costs, including
actuarial, legal and accounting fees. Deferred acquisition costs are amortized
over the lives of the underlying policies with regard to the terms of the
reinsurance agreement.

     On those policies reinsured under a monthly renewable term agreement,
deferred acquisition costs are amortized in proportion to the premium revenue
related to the mortality risk reinsured. Such premium revenue is estimated using
the same assumptions used for computing liabilities for future policy benefits.
Such assumptions include estimates of expected investment yields, mortality,
persistency and expenses applicable at the time the policies are reinsured.
Original assumptions on monthly renewable term business continue to be used in
subsequent accounting periods to determine changes in the deferred acquisition
costs unless a premium deficiency exists. Under the renewable term agreements,
the rate of amortization depends on the approach utilized, static or dynamic.
Under the static approach, the amortization is in proportion to the ratio of
premiums collected during the then current period to total anticipated premiums.
Often the static approach is used in the first policy year or until the business
is sufficiently large to warrant the complexity of the dynamic approach. Under
the dynamic approach, the amortization under the static approach is adjusted to
reflect actual persistency of the insurance in effect. Currently, we use the
dynamic amortization approach for all our policies reinsured under our renewable
term agreements.

     For policies reinsured under a coinsurance or modified coinsurance
agreement, deferred acquisition costs are amortized in proportion to the
expected gross profits associated with mortality charges, investment margins,
surrender charges and expense loads reinsured. Management periodically reviews
                                       F-8
<PAGE>

Global Preferred's assumptions concerning future experience with regard to
mortality, persistency, investment yields and expenses in determining its
estimates of future gross profits. Upon adoption of any change in assumptions
used with regard to future experience, the amortization of Global Preferred's
deferred acquisition costs will be recalculated and will be reflected during the
then current accounting period.

     Reinsurance Expense Allowances.  Allowances generally represent a
percentage of each reinsurance premium that is paid or allowed by Global
Preferred to the ceding life company for each policy reinsured in recognition of
commissions and other expenses associated with the reinsured policies. These
other expenses relate to costs associated with underwriting, marketing, policy
issue and maintenance. The reinsurance expense allowances represent Global
Preferred's share of acquisition and maintenance expenses incurred by the ceding
life company that are attributable to the risks reinsured. Allowances are shown
net of amounts deferred as policy acquisition costs.

     Fixed Assets.  Fixed assets are stated at cost less accumulated
depreciation. Depreciation is calculated on the straight-line basis over the
estimated useful lives of the related assets, which range from three to seven
years.

     Future Policy Benefits.  Liabilities for future benefits on life policies
are established in an amount believed to be adequate to meet the estimated
future obligations on policies in force. Liabilities for future policy benefits
under long-term life insurance policies have been computed based on estimates of
investment yields, mortality and withdrawal rates expected at the time the
policies are reinsured, and other assumptions including estimates for incurred
but not reported claims. These assumptions include a margin for adverse
deviation and vary with the characteristics of the plan of insurance, year of
issue, age of insured and other appropriate factors. The assumptions for
estimated investment yields are based upon various factors including then
current yields on Global Preferred's investment portfolio and market rates for
new investments. Interest rates used in estimating future policy benefits range
from 5.5% to 7.0%. The mortality and withdrawal assumptions are based on Global
Preferred's experience, industry experience and industry standards. Policy and
contract reserves are included in future policy benefits on the consolidated
balance sheets.

     Liabilities for future policy benefits under the coinsurance and modified
coinsurance agreements equal reinsured policy account balances on the underlying
variable universal life policies and variable annuity contracts. With regard to
the separate account benefits reinsured on a modified coinsurance basis, Global
Preferred records such liabilities as an offset to related assets as its
intentions and rights under the agreements with the ceding life companies meet
the appropriate conditions governing rights of setoff. The nature of separate
account benefits do not permit Global Preferred to reinsure those benefits on a
coinsurance basis. Global Preferred currently reinsures the fixed account
portion of variable annuity contracts and variable universal life policies only
on a coinsurance basis and, accordingly, the liabilities for that portion of the
reinsurance are recorded as future policy benefits.

     Income Taxes.  Global Preferred uses the asset and liability method to
record deferred income taxes. Accordingly, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, using an effective federal tax rate
of 34%. Statement of Financial Accounting Standards (SFAS) No. 109, Accounting
for Income Taxes specifically excludes recognition of the "small life insurance
company deduction" available under Section 806 of the Internal Revenue Code for
qualifying life insurance companies. This special deduction can reduce the
effective federal income tax rate from 34% to less than 20% depending upon the
amount of taxable income. Consequently, the effective tax rate on Global
Preferred's earnings may ultimately prove to be less than the deferred income
tax liabilities and related expenses determined under SFAS No. 109, at December
31, 2001.

     Recognition of Revenues and Related Expenses.  Reinsurance premiums
received under the monthly renewable term agreements are recognized as revenue
over the premium paying periods of the reinsured policies. Benefits and expenses
are associated with earned premiums so that profits are recognized over the life
of the related contract. This association is accomplished through the provision
for future policy benefits
                                       F-9
<PAGE>

and the amortization of deferred acquisition costs. Other revenue consists of
non-recurring items other than reinsurance premiums or investment earnings and
is recognized upon completion of the related earnings process.

     Reinsured Policy Revenues.  Reinsured policy revenues are recognized as
earned and represent the policy mortality and expense charges, cost of insurance
charges net of retrocession reinsurance premiums, policy administration charges,
asset-based allowances and deferred sales charges that have been assessed
against the reinsured policy account balances under the coinsurance and modified
coinsurance agreements, as they relate to variable universal life and variable
annuity contracts.

     Earnings Per Share.  Basic earnings per share is computed based on the
weighted-average number of common shares outstanding during the period, in
accordance with SFAS No. 128, Earnings Per Share. Shares of convertible
preferred stock issued in June and July 2000 are included in the calculations of
total weighted-average common and common equivalent shares outstanding. The
dilution effect on earnings per share from the issuance of convertible preferred
stock is shown on the consolidated statements of income.

     Common Stock.  On July 12, 2001, the board of directors declared a
three-for-two stock split in the form of a stock dividend, consisting of 1.25
million shares, payable to stockholders of record at the close of business on
August 24, 2001. The stock split was distributed on September 7, 2001.
Fractional shares were adjusted up to the next share using shares of treasury
stock. 95 treasury shares were issued for the fractional shares. Share and
per-share amounts have been retroactively adjusted to reflect the stock split on
the consolidated statements of income.

     Stock Compensation Plans.  Global Preferred applies Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations, in accounting for stock-based compensation plans. Global
Preferred has adopted the disclosure-only provisions of SFAS No. 123, Accounting
for Stock-Based Compensation.

     Recent Accounting Pronouncements.  SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended and interpreted establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities on the balance sheet and measure those instruments at fair value.
The accounting for changes in the fair value of a derivative will be included in
either earnings or other comprehensive income depending on the intended use of
the derivative instrument. The provisions of SFAS No. 133 did not have any
impact on Global Preferred's financial statements.

     In September 2000, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities -- a replacement of FASB Statement No. 125. This
statement revises the standards for accounting for securitizations and other
transfers of financial assets and collateral and requires certain disclosures,
not previously required under SFAS No. 125. The provisions of SFAS No. 140 did
not have any impact on Global Preferred's financial statements.

     FASB issued four new accounting standards in 2001. SFAS No. 141, SFAS No.
142, SFAS No. 143 and SFAS No. 144 primarily address the accounting for
goodwill, business combinations, and the impairment and disposition of
long-lived assets. The adoption of these standards in 2002 is not expected to
have a material impact on Global Preferred's financial statements.

     Reclassification.  Global Preferred has reclassified the presentation of
certain 1999 and 2000 information to conform to the 2001 presentation.

                                       F-10
<PAGE>

3.  INVESTMENTS

     Major categories of net investment income consist of the following:

<Table>
<Caption>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       2000       2001
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Fixed maturity securities...................................  $361,830   $365,536   $718,583
Cash and cash equivalents...................................    59,431    230,200    147,447
                                                              --------   --------   --------
                                                               421,261    595,736    866,030
Investment expenses.........................................   (71,578)   (68,123)   (55,486)
                                                              --------   --------   --------
Net investment income.......................................  $349,683   $527,613   $810,544
                                                              ========   ========   ========
</Table>

     The amortized cost, unrealized gains and losses, and estimated fair values
of fixed maturity securities at December 31, 2000 and 2001 are as follows:

<Table>
<Caption>
                                     AMORTIZED    UNREALIZED   UNREALIZED
                                       COST         GAINS        LOSSES     FAIR VALUE
                                    -----------   ----------   ----------   -----------
<S>                                 <C>           <C>          <C>          <C>
               2000
Fixed maturity securities,
  available for sale:
U.S. Government and government
  agencies........................  $        --    $     --     $    --     $        --
Corporate.........................    3,929,520      83,240       8,060       4,004,700
Asset-backed securities...........      874,058       7,799       1,400         880,457
Mortgage-backed securities........    1,014,322      17,284       4,384       1,027,222
                                    -----------    --------     -------     -----------
  Total...........................  $ 5,817,900    $108,323     $13,844     $ 5,912,379
                                    ===========    ========     =======     ===========
               2001
Fixed maturity securities,
  available for sale:
U.S. Government and government
  agencies........................  $   209,704    $  6,604     $    --     $   216,308
Corporate.........................    7,158,877     279,551       3,930       7,434,498
Asset-backed securities...........    1,611,012      50,444          --       1,661,456
Mortgage-backed securities........    2,861,156      41,194         333       2,902,017
                                    -----------    --------     -------     -----------
  Total...........................  $11,840,749    $377,793     $ 4,263     $12,214,279
                                    ===========    ========     =======     ===========
</Table>

     There were no investments in any entity in excess of 10% of stockholders'
equity at December 31, 2001. Fixed maturity securities are valued based upon
quoted market prices.

     At December 31, 2001, the contractual maturities of investments in fixed
maturity securities were as follows:

<Table>
<Caption>
                                                  AMORTIZED COST   FAIR VALUE
                                                  --------------   -----------
<S>                                               <C>              <C>
Available for sale:
Due in one year or less.........................   $   598,405     $   615,406
Due after one year through five years...........     6,570,310       6,825,383
Due after five years through ten years..........       199,866         210,017
Asset-backed securities.........................     1,611,012       1,661,456
Mortgage-backed securities......................     2,861,156       2,902,017
                                                   -----------     -----------
  Total.........................................   $11,840,749     $12,214,279
                                                   ===========     ===========
</Table>

     Expected maturities will differ from contractual maturities because some
issuers have the right to call or prepay obligations with or without call or
prepayment penalties.

                                       F-11
<PAGE>

     Proceeds from sales of fixed maturity securities for the years ended
December 31, 1999, 2000 and 2001, were $6,924,903, $194,856 and $1,674,272,
respectively. Components of realized gains and losses are summarized in the
following table:

<Table>
<Caption>
                                                            1999      2000     2001
                                                          --------   ------   -------
<S>                                                       <C>        <C>      <C>
Fixed maturity securities:
Gross realized gains....................................  $ 27,267   $2,606   $47,180
Gross realized losses...................................   (93,267)      --    (2,373)
                                                          --------   ------   -------
  Net realized gain (loss) on investments...............  $(66,000)  $2,606   $44,807
                                                          ========   ======   =======
</Table>

     Changes in net unrealized gains (losses) were $(432,622), $158,953 and
$279,051 for the years ended December 31, 1999, 2000 and 2001, respectively.

4.  RECAPTURE OF BUSINESS

     In the first quarter of 1999, Global Preferred negotiated amendments to its
coinsurance and modified coinsurance agreements with Western Reserve Assurance
Co. of Ohio ("Western Reserve") in contemplation of completing a private
offering of Global Preferred's stock begun in 1998. The amendments provided
that: (1) Global Preferred could defer payment to Western Reserve of reinsurance
expense allowances on new policies reinsured in 1999, until the earlier of the
completion of its stock offering, or December 31, 1999; (2) a reinsurance fee at
an effective rate of 9% per year accrued on the deferred payments; and (3)
Western Reserve could recapture the reinsurance on the policies issued during
1999 if the expense allowances were not paid by December 31, 1999. As
contemplated by the new amendments, payment by Global Preferred to Western
Reserve of a portion of the reinsurance expense allowances on policies issued in
1999 was deferred pending the completion of Global Preferred's capital raising
efforts in 1999. When the funding had not been completed by September 30, 1999,
the reinsurance of all Financial Freedom Builder variable universal life
policies and riders and 75% of the Freedom Wealth Creator variable annuity
policies issued from January 1, 1999 through September 30, 1999 that had been
entered into on a coinsurance and modified coinsurance basis was recaptured.
These recapture rights exercised by Western Reserve in 1999 were created
specifically to address the possibility that Global Preferred would not complete
its contemplated capital raising in 1999. Concurrent with the recapture, Global
Preferred began reinsuring, on a monthly renewable term basis, 20% of the
Financial Freedom Builder variable universal life policies and riders issued by
Western Reserve on or after January 1, 1999. Additionally, Global Preferred
further amended its reinsurance agreements to reduce its quota share percentage
on the reinsurance of the Western Reserve variable annuity business for 1999 and
thereafter. However, Global Preferred retained the right to convert its monthly
renewable term reinsurance of the variable universal life business to a
coinsurance and modified coinsurance basis for all policies issued from January
1999 through March 2003 and the right to increase its quota share percentage of
the reinsurance of Western Reserve variable annuity business.

     The general terms of Global Preferred's reinsurance agreements, including
its agreements with Western Reserve, include only limited rights to recapture
such as: after the passage of stated periods (ten years or more) from the policy
issue date, upon determination, relative to some products, that the total volume
of policies reinsured for the product is below a minimum threshold, upon default
by Global Preferred and upon the insolvency of Global Preferred. Oftentimes, if
a reinsurance agreement provides for early recapture based on criteria such as
low product sales volume, then there may be a recapture allowance paid to the
reinsurer to compensate for lost future revenues and profits associated with the
recaptured policies. Receipt of the recapture allowance would result in an
increase in revenues for the period. Similarly, any associated unamortized
deferred acquisition cost would be written off in the same reporting period. The
net effect of these amounts would then result in either a gain or a loss
associated with the recaptured policies.

     The recapture of business during 1999 resulted in a loss of $822,814. Of
the $822,814 loss, $556,304 related to the variable universal life coinsurance
and modified coinsurance business, and is composed of

                                       F-12
<PAGE>

$14.3 million in gross revenues due to Global Preferred for recapture
allowances, net of $14.9 million in expenses from the amortization of the
related deferred acquisition costs, and the release of the related policy
reserve and reinsurance expense allowance accruals. The remaining loss of
$266,510, related to the variable annuity coinsurance and modified coinsurance
business, is composed of $5.7 million in gross revenues from recapture
allowances, net of $5.9 million in expenses from the amortization of the related
deferred acquisition costs.

     The loss on recapture of business included a reinsurance fee relating to
the deferral of financial settlements due to Western Reserve during the period
in which Global Preferred reinsured the underlying business. Such reinsurance
fee in the amount of $722,858 was effectively offset by interest in the amount
of $390,761 due to Global Preferred for amounts previously remitted to Western
Reserve on business subsequently recaptured.

5.  POLICY LIABILITIES

     Changes in the liability for unpaid policy claims are summarized as follows
for the years ended December 31:

<Table>
<Caption>
                                                         YEARS ENDED DECEMBER 31,
                                                   ------------------------------------
                                                      1999         2000         2001
                                                   ----------   ----------   ----------
<S>                                                <C>          <C>          <C>
Unpaid life claims -- January 1 .................  $1,109,567   $1,590,232   $2,119,151
                                                   ----------   ----------   ----------
Add claims incurred during the year related to:
  Current year...................................   4,030,903    7,118,899    6,577,441
  Prior years....................................     174,000      290,248       32,000
                                                   ----------   ----------   ----------
          Total incurred(1)......................   4,204,903    7,409,147    6,609,441
                                                   ----------   ----------   ----------
Less claims paid during the year:
  On claims incurred during current year.........   3,236,049    6,150,172    6,068,109
  On claims incurred during prior years..........     488,189      730,056    1,122,098
                                                   ----------   ----------   ----------
          Total paid.............................   3,724,238    6,880,228    7,190,207
                                                   ----------   ----------   ----------
Unpaid life claims -- December 31................  $1,590,232   $2,119,151   $1,538,385
                                                   ==========   ==========   ==========
</Table>

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

(1) Total incurred plus the change in the experience refund for the year equals
the amount shown on the consolidated statements of income on line titled
"Benefits, claims and settlement expenses."

6.  REINSURANCE

     As of December 31, 2001, Global Preferred has seven reinsurance contracts
and one retrocession agreement in place. All policies reinsured under the
reinsurance agreements are self-administered by the ceding life companies. The
ceding life companies provide Global Preferred with all information necessary
for processing the reinsurance, including claims. On June 25, 2001, Global
Preferred entered into a new reinsurance agreement with Pacific Life Insurance
Company. The new agreement provides monthly renewable term reinsurance for
certain individual life plans, including Pacific Life's Select Exec II variable
universal life insurance policies, issued on or after January 1, 2001, which are
sold by the registered agents associated with World Financial Group.

     Pursuant to agreements with Western Reserve, Global Preferred has the
contractual right to prospectively increase the reinsurance percentages, up to a
maximum ranging from 40% to 50%, on Western Reserve's Freedom Wealth Creator and
Freedom Premier variable annuity policies which were issued from January 1, 1999
through December 31, 2002 and reinsured by Global Preferred. In order to
exercise this contractual right, Global Preferred must demonstrate "sufficient
capacity," which is defined as having unassigned invested securities and
anticipated cash flows in a sufficient amount to meet expected reinsurance
settlements for the ensuing two calendar years with regard to the increased
reinsurance. The

                                       F-13
<PAGE>

right to increase the reinsurance percentage for the variable annuity
coinsurance and modified coinsurance expires on December 31, 2002.

     Pursuant to agreements with Western Reserve, Global Preferred also has the
contractual right to convert its monthly renewable term reinsurance of the
Financial Freedom Builder variable universal life policies and riders issued by
Western Reserve from January 1, 1999 through March 31, 2003, to coinsurance and
modified coinsurance, provided Global Preferred demonstrates sufficient
capacity. The right to convert the monthly renewable term reinsurance to
coinsurance and modified coinsurance expires on March 31, 2003.

     In 1998, Global Preferred entered into an agreement with WMA Agency under
which WMA Agency agreed to use its best efforts to encourage life insurance
companies to reinsure policies sold by its agents with Global Preferred. In
conjunction with the acquisition of WMA Agency's assets, World Financial Group
assumed this best efforts agreement between Global Preferred and WMA Agency,
with certain amendments. Under the amended agreement, World Financial Group
will, for a period extending through June 8, 2008, use commercially reasonable
efforts to assist Global Preferred in attaining the opportunity to reinsure all
insurance products sold by its agents for insurance companies with which World
Financial Group has selling agreements, other than Western Reserve and Western
Reserve's affiliates. Additionally, the agreement provides that World Financial
Group will use commercially reasonable efforts to cooperate with Global
Preferred in its negotiations to establish reinsurance relationships with life
insurance companies and provide certain benefits to the companies that reinsure
their business through Global Preferred.

     In June 2001, Global Preferred entered into the First Right Agreement with
Western Reserve that provides Global Preferred Re a first right to reinsure
certain new products issued by Western Reserve or its U.S. affiliates that are
sold by agents associated with World Financial Group. Global Preferred has the
right, subject to minimum sales volume thresholds, to reinsure up to 20% of all
single life variable universal life products introduced for sale after July 1,
2001 on a coinsurance and modified coinsurance basis for all policies issued
through March 31, 2003 and on a monthly renewable term basis for all policies
issued through March 31, 2006. Global Preferred also has the right to reinsure
between 40% and 50% of all variable annuity products introduced after December
31, 2000 and issued through December 31, 2002, depending upon the volume of
direct written variable annuity premiums issued by Western Reserve or its U.S.
affiliates in the previous calendar year. These rights automatically extend for
one-year renewal periods unless either party gives notice of termination 180
days prior to the expiration of the applicable initial or renewal term. Global
Preferred's decisions to reinsure these products will be made from time to time
during the term of the First Right Agreement and such decisions will be based on
a number of relevant factors, including the attractiveness of the reinsurance
rates prescribed by the agreement, the volume of business and Global Preferred's
available capital capacity.

     Global Preferred has a pool retrocession agreement with four reinsurance
companies, whereby Global Preferred retrocedes, or reinsures, standard mortality
risks in excess of $100,000 per life to the pool. The retrocession agreement
serves to reduce the impact of fluctuations in death claims from period to
period and limits Global Preferred's exposure on any one policy reinsured. This
retrocession reinsurance agreement does not relieve Global Preferred from its
obligations to ceding life companies. Failure of retrocessionaires to honor
their obligations could result in losses to Global Preferred; consequently,
allowances are established for amounts deemed uncollectible. Currently, no
amounts are deemed uncollectible.

                                       F-14
<PAGE>

     The net effect of all reinsurance agreements on premiums and policy
revenues is as follows:

<Table>
<Caption>
                                                       YEARS ENDED DECEMBER 31,
                                                ---------------------------------------
                                                   1999          2000          2001
                                                -----------   -----------   -----------
<S>                                             <C>           <C>           <C>
Reinsurance assumed...........................  $23,435,657   $29,977,786   $30,993,041
Reinsurance ceded.............................     (237,185)     (465,195)     (514,880)
                                                -----------   -----------   -----------
Net premiums and policy revenues..............  $23,198,472   $29,512,591   $30,478,161
                                                ===========   ===========   ===========
</Table>

     The net effect of all reinsurance agreements on benefits, claims and
settlement expenses is as follows:

<Table>
<Caption>
                                                         YEARS ENDED DECEMBER 31,
                                                   ------------------------------------
                                                      1999         2000         2001
                                                   ----------   ----------   ----------
<S>                                                <C>          <C>          <C>
Reinsurance assumed..............................  $4,511,469   $7,705,566   $6,299,510
Reinsurance ceded................................          --     (146,402)      (7,118)
                                                   ----------   ----------   ----------
Net benefits, claims and settlement expenses.....  $4,511,469   $7,559,164   $6,292,392
                                                   ==========   ==========   ==========
</Table>

     The impact of reinsurance on life insurance in force is as follows (in
millions):

<Table>
<Caption>
LIFE INSURANCE IN FORCE                            DIRECT   ASSUMED   CEDED    NET
-----------------------                            ------   -------   -----   ------
<S>                                                <C>      <C>       <C>     <C>
December 31, 1999................................     --    $8,030    $122    $7,908
December 31, 2000................................     --    $9,378    $169    $9,209
December 31, 2001................................     --    $9,082    $156    $8,926
</Table>

7.  DEFERRED ACQUISITION COSTS

     The amount of policy acquisition costs deferred and amortized is as
follows:

<Table>
<Caption>
                                                     YEARS ENDED DECEMBER 31,
                                                     -------------------------
                                                        2000          2001
                                                     -----------   -----------
<S>                                                  <C>           <C>
Beginning of year..................................  $39,750,100   $42,752,339
  Capitalized......................................    7,018,868     3,992,590
  Amortized........................................   (4,016,629)   (3,944,660)
                                                     -----------   -----------
End of year........................................  $42,752,339   $42,800,269
                                                     ===========   ===========
</Table>

     Retrocession premiums are offset against reinsured policy revenues and
premiums for the respective issue years. Consequently, retrocession premiums,
benefit claims and allowances lose their identity in calculating estimated gross
profits as used in amortizing capitalized acquisition costs. As such, there are
no separate, reportable deferred acquisition costs or associated amortization.

8.  INCOME TAX

     Under current Bermuda law, Global Preferred Re is not required to pay taxes
in Bermuda on either income or capital gains. Global Preferred Re has received
an assurance from the Minister of Finance in Bermuda under the Exempted
Undertaking Tax Protection Act 1966 of Bermuda that if any legislation is
enacted in Bermuda that would impose tax on profits or income, or on any capital
asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of any such tax will not be applicable to
Global Preferred Re or to any of Global Preferred's operations or shares,
debentures or other obligations until March 28, 2016.

     Effective January 1, 1996, Global Preferred Re made an irrevocable election
to be treated as a domestic insurance company for United States Federal income
tax purposes under section 953(d) of the Internal Revenue Code of 1986, as
amended (the "Code"). As a result of this "domestic" election, Global Preferred
Re is subject to U.S. taxation on its worldwide income as if it were a U.S.
corporation. Global

                                       F-15
<PAGE>

Preferred determines its income tax expense and liability in accordance with
SFAS No. 109, Accounting for Income Taxes.

     Total income taxes (benefit) for the years ended December 31, 1999, 2000
and 2001 were allocated as follows:

<Table>
<Caption>
                                                         YEARS ENDED DECEMBER 31,
                                                   ------------------------------------
                                                      1999         2000         2001
                                                   ----------   ----------   ----------
<S>                                                <C>          <C>          <C>
Tax attributable to:
Income from continuing operations................  $2,225,472   $1,820,717   $2,391,568
                                                   ----------   ----------   ----------
Unrealized gains (losses) on securities available
  for sale.......................................  $ (147,093)  $   54,044   $   94,877
                                                   ==========   ==========   ==========
</Table>

     The federal income tax expense from continuing operations for the years
ended December 31, 1999, 2000, and 2001 is as follows:

<Table>
<Caption>
                                                         YEARS ENDED DECEMBER 31,
                                                   ------------------------------------
                                                      1999         2000         2001
                                                   ----------   ----------   ----------
<S>                                                <C>          <C>          <C>
Current..........................................  $       --   $  516,075   $  436,963
Deferred.........................................   2,225,472    1,304,642    1,954,605
                                                   ----------   ----------   ----------
     Total.......................................  $2,225,472   $1,820,717   $2,391,568
                                                   ==========   ==========   ==========
</Table>

     The income tax expense from continuing operations for the years ended
December 31, 1999, 2000 and 2001 differed from the amounts computed by applying
the U.S. federal income tax rate of 34% to income before income taxes as a
result of the following:

<Table>
<Caption>
                                                         YEARS ENDED DECEMBER 31,
                                                   ------------------------------------
                                                      1999         2000         2001
                                                   ----------   ----------   ----------
<S>                                                <C>          <C>          <C>
Computed expected tax expense....................  $2,225,472   $2,364,222   $2,670,411
Small life insurance company deduction...........          --     (605,880)    (269,976)
Other, net.......................................          --       62,375       (8,867)
                                                   ----------   ----------   ----------
     Total.......................................  $2,225,472   $1,820,717   $2,391,568
                                                   ==========   ==========   ==========
</Table>

     During 2000 and 2001, Global Preferred Re was able to benefit from the
"small life insurance company deduction" available under Section 806 of the Code
and the "alternative minimum tax" treatment available under Section 55 of the
Code at rates less than 34%.

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying values of assets and liabilities for financial reporting
purposes and federal income tax purposes. The net deferred tax liability at
December 31, 2000 and 2001 is composed of the following amounts:

<Table>
<Caption>
                                                        2000          2001
                                                     -----------   -----------
<S>                                                  <C>           <C>
Deferred tax assets:
Alternative minimum tax credit.....................  $    35,646   $     8,597
Capital losses realized in excess of gains.........       20,535         7,247
Reserve differences................................    8,262,095     6,139,342
Net operating loss carry-forward...................      779,960     1,030,018
DAC tax capitalized................................           --       258,252
Other..............................................       81,506        29,216
                                                     -----------   -----------
     Gross deferred tax assets.....................    9,179,742     7,472,672
                                                     -----------   -----------
</Table>

                                       F-16
<PAGE>

<Table>
<Caption>
                                                        2000          2001
                                                     -----------   -----------
<S>                                                  <C>           <C>
Deferred tax liabilities:
Policy benefit reserves............................      230,110       461,348
Deferred acquisition costs.........................   14,535,795    14,552,091
Unrealized gain on securities held for sale........       32,122       127,000
                                                     -----------   -----------
     Gross deferred tax liabilities................   14,798,027    15,140,439
                                                     -----------   -----------
     Net deferred tax liabilities..................  $ 5,618,285   $ 7,667,767
                                                     ===========   ===========
</Table>

     There were no valuation allowances for deferred tax assets as of December
31, 2000 and 2001 since it is management's belief that it is more likely than
not that the deferred tax assets will be realized. This assessment is made based
on the scheduled reversal of deferred tax liabilities, projected future taxable
income, and tax planning strategies. At December 31, 2001, Global Preferred had
net operating loss carry-forwards for income tax purposes of $3,029,000, which
begin to expire in 2018.

     Global Preferred Re does not have a policyholder surplus account.
Therefore, Global Preferred Re is not subject to the potential addition to
federal income tax imposed by Section 815 of the Code.

9.  RELATED PARTY TRANSACTIONS

     Global Preferred issued a $5.0 million convertible note, due July 29, 2004,
to Money Services, Inc., a subsidiary of AEGON USA, Inc. The note bears simple
interest at a rate of 7.5% per year and is currently convertible into 312,750
shares of Global Preferred common stock. If Money Services were to convert the
note, it would own approximately 8% of Global Preferred's outstanding common
stock as of December 31, 2001.

     Each of World Financial Group and Western Reserve are subsidiaries of AEGON
USA, Inc. and therefore are entities related to Money Services due to the common
ownership.

     Global Preferred entered into an agreement with World Financial Group,
which requires that World Financial Group will use its commercially reasonable
efforts to assist Global Preferred in attaining the opportunity to reinsure all
insurance products sold by its agents for insurance companies with which World
Financial Group has selling agreements, other than Western Reserve and Western
Reserve's affiliates.

     Global Preferred is a tenant-at-will in approximately 2,100 square feet of
office space in Duluth, Georgia. Western Reserve is the landlord on the space
that Global Preferred occupies. Global Preferred's monthly rent is $3,482, plus
its proportionate share of the taxes.

     After its acquisition of certain of the assets of WMA Agency, World
Financial Group continued to provide the services that WMA Agency provided to
Global Preferred under the Corporate Services Agreement described below. Global
Preferred incurred $22,882 of costs for these services from World Financial
Group for the year ended December 31, 2001.

     Global Preferred has four separate reinsurance agreements with Western
Reserve that cover policies on Western Reserve variable universal life and
variable annuity policies issued on or after various dates after January 1, 1992
which were sold by the agents of World Financial Group and its predecessor. Also
in June 2001, Global Preferred entered into the First Right Agreement with
Western Reserve. The First Right Agreement provides Global Preferred the right
to reinsure certain policies issued by Western Reserve or its U.S. affiliates
which are sold by agents associated with World Financial Group.

     In 1995, Global Preferred Re entered into an agreement with CFM Insurance
Managers, Ltd. ("CFM"), a member of the Mutual Risk Management Ltd. group of
companies, which provides professional insurance management services to
international companies operating in Bermuda. C. Simon Scupham, a director of
Global Preferred and of Global Preferred Re, is the Chairman of CFM. Pursuant to
this agreement, CFM acts as the managing agent and the Principal Representative
for Global Preferred Re in Bermuda. This agreement is for an unlimited duration,
but may be terminated by either party upon three months prior written notice or
upon 30 days prior written notice under specified circumstances.

                                       F-17
<PAGE>

Global Preferred paid $60,000 in fees during each of the years ended December
31, 1999, 2000 and 2001 pursuant to the agreement with CFM.

     Prior to December 28, 2001, S. Hubert Humphrey, Jr. served as a director,
Chairman of the Board and Chief Executive Officer of Global Preferred and of
Global Preferred Re. Effective December 28, 2001, Mr. Humphrey retired from
Global Preferred's and Global Preferred Re's boards of directors and all of the
positions he held with Global Preferred and with Global Preferred Re. As of
December 31, 2001, Mr. Humphrey was the beneficial owner of 22.7% of Global
Preferred's outstanding common stock. Mr. Humphrey controls WMA Agency and WMA
Securities. Global Preferred agreed to grant to Mr. Humphrey, upon successful
completion of a firm commitment, underwritten registered public offering,
options to purchase 100,000 shares of Global Preferred common stock. The options
are exercisable for a period of five years from the date of grant, at an
exercise price equal to the initial offering price of shares sold in the
underwritten offering.

     Effective April 1, 1998, Global Preferred entered into a Corporate Services
Agreement with WMA Agency to provide to Global Preferred corporate services and
supplies for a fixed monthly fee of $2,250, adjustable annually. These services
included computer network system, facilities maintenance, security, mail
services, utilities, postage, telephone and copier service. Global Preferred
incurred $48,851, $48,922 and $23,616 of costs for these services from WMA
Agency for the years ended December 31, 1999, 2000 and 2001, respectively.

     In June 1998, Global Preferred entered into a Directed Reinsurance
Agreement with WMA Agency, under which WMA Agency agreed to use its best efforts
to cause any life insurance company with which it had selling agreements to
enter reinsurance agreements with Global Preferred. In 1999, the parties amended
the agreement to provide, among other things, that Global Preferred would issue,
for no monetary consideration, warrants to individuals designated by WMA Agency
to purchase 300,000 shares of Global Preferred common stock. These warrants were
ultimately issued to key management personnel of WMA Agency. As subsequently
amended, the warrants were contingent upon Global Preferred raising additional
capital by January 1, 2002. Global Preferred raised no new capital by January 1,
2002 and the warrants expired. No shares of common stock were issued under these
warrants.

     In June 1998, Global Preferred entered into a Sublease Agreement with WMA
Agency for office space in Duluth, Georgia. The sublease was on a triple-net
basis for an initial term through January 2008. The annual base rent until
January 2003 was $18,675. The sublease was terminated in June 2001 in
conjunction with the purchase by World Financial Group of assets of WMA Agency.

10.  STATUTORY RESTRICTIONS

     Global Preferred Re is a Bermuda company registered as a long-term insurer
under the Bermuda Insurance Act 1978 (the "Insurance Act") and as such is
subject to the restrictions of the Insurance Act. The Insurance Act requires
that Global Preferred Re maintain a solvency margin, defined as the excess of
statutory assets over statutory liabilities, of at least $250,000. Statutory
assets and liabilities refer to those assets and liabilities recorded on the
statutory balance sheet required by the Insurance Act. As of December 31, 2001,
Global Preferred Re had total statutory capital and surplus, the excess of
statutory assets over statutory liabilities, as determined under the Insurance
Act, of $9.6 million.

     Global Preferred relies, and will continue to rely, primarily on funds
retained at the holding company level, dividends and other permitted payments,
such as debt service payments, from Global Preferred Re to meet ongoing cash
requirements. The payment of dividends by Global Preferred Re to Global
Preferred is subject to Bermuda law and regulations. Under the Insurance Act,
Global Preferred Re must maintain long-term assets with a value of at least
$250,000 more than its long-term liabilities and is prohibited from declaring or
paying dividends that would result in noncompliance if, among other things, it
has reasonable grounds for believing that after making such a payment, it would
not be able to pay its liabilities as they become due. During 2001, Global
Preferred Re paid no dividends to Global Preferred.

                                       F-18
<PAGE>

11.  COMMITMENTS AND CONTINGENT LIABILITIES

     From time to time Global Preferred may be subject to litigation and
arbitration in the normal course of business. Management does not believe that
Global Preferred is a party to any such pending litigation or arbitration that
would have a material adverse effect on its financial position or future
operations.

     Global Preferred has obtained letters of credit in favor of unaffiliated
insurance companies with whom Global Preferred has reinsurance agreements. The
posting of a letter of credit allows the ceding life company to take statutory
reserve credit for reinsurance ceded, which would otherwise not be available as
Global Preferred Re is not a licensed reinsurer by the ceding life company's
state of domicile. At December 31, 2001, the outstanding letters of credit
totaled $8.85 million. The letters of credit were issued by Global Preferred's
custodian and secured by Global Preferred's investments held by the custodian.

     Prior to June 2001, Global Preferred subleased office space in Duluth,
Georgia from WMA Agency. The sublease was terminated in June 2001 in conjunction
with World Financial Group's purchase of WMA Agency's assets. Since the
termination of the lease, Global Preferred has been a tenant-at-will in
approximately 2,100 square feet of the same office space in Duluth, Georgia.

     Global Preferred does not own or lease any other properties.

12.  SHORT-TERM AND LONG-TERM DEBT

     At December 31, 2000 and 2001, short-term and long-term debt were as
follows, in summary:

<Table>
<Caption>
                                                                 2000         2001
                                                              ----------   ----------
<S>                                                           <C>          <C>
Line of credit - short term.................................  $  277,285   $       --
Line of credit - long term..................................          --           --
  Convertible Term Note - 7.5% interest, principal and
    interest due at July 29, 2004...........................   5,000,000    5,000,000
                                                              ----------   ----------
         Total short and long-term debt.....................   5,277,285    5,000,000
Less anticipated current maturity of line of credit.........     277,285           --
                                                              ----------   ----------
         Total long-term debt...............................  $5,000,000   $5,000,000
                                                              ==========   ==========
</Table>

     In July 1999, Global Preferred issued a $5 million, five-year convertible
term note to Money Services, Inc. due on July 29, 2004. Money Services is a
subsidiary of AEGON USA, Inc. Proceeds of this note were used to reduce a
portion of the outstanding principal balance on a line of credit with Money
Services from $10 million to $5 million. Interest is payable at 7.5% per annum
(except in the event of redemption), on the 29th of each succeeding January and
July through and including July 29, 2004. Money Services has the right to
convert the outstanding principal balance of this note into shares of Global
Preferred's common stock at any time. Upon conversion, Money Services will
receive 6.25 shares of common stock for each $100 of the outstanding principal
amount of the note, which reflects our three-for-two stock split in 2001. Global
Preferred has the option to redeem the note, in whole or in part, between July
29, 2002 and July 29, 2004. To redeem the note before maturity, Global Preferred
must pay all principal, plus interest accrued from the date of the note through
the redemption date at a higher effective interest rate of 9% per annum. As of
December 31, 2001, Global Preferred had an outstanding principal balance on the
note of $5 million and accrued interest of $158,000.

     Global Preferred also had a $5 million line of credit with Money Services
which was paid in full on February 15, 2001 together with the related accrued
interest. Principal payments totaled $277,285 during 2001.

                                       F-19
<PAGE>

13.  COMPREHENSIVE INCOME

     The following table sets forth the amounts of other comprehensive income
(loss) along with the related tax effects allocated to other comprehensive
income (loss) for the years ended December 31, 1999, 2000, and 2001:

<Table>
<Caption>
                                                                             TAX
                                                             BEFORE-TAX   (EXPENSE)   NET-OF-TAX
                                                               AMOUNT      BENEFIT      AMOUNT
                                                             ----------   ---------   ----------
<S>                                                          <C>          <C>         <C>
                           1999
Net unrealized holding losses arising during period........  $(366,622)   $124,653    $(241,969)
Plus: reclassification adjustment for losses realized in
  net income...............................................    (66,000)     22,440      (43,560)
                                                             ---------    ---------   ---------
Other comprehensive loss...................................  $(432,622)   $147,093    $(285,529)
                                                             =========    =========   =========
                           2000
Net unrealized holding gains arising during period.........  $ 161,559    $(54,930)   $ 106,629
Less: reclassification adjustment for gains realized in net
  income...................................................      2,606        (886)       1,720
                                                             ---------    ---------   ---------
Other comprehensive income.................................  $ 158,953    $(54,044)   $ 104,909
                                                             =========    =========   =========
                           2001
Net unrealized holding gains arising during period.........  $ 323,858    $(110,111)  $ 213,747
Less: reclassification adjustment for gains realized in net
  income...................................................     44,807     (15,234)      29,573
                                                             ---------    ---------   ---------
Other comprehensive income.................................  $ 279,051    $(94,877)   $ 184,174
                                                             =========    =========   =========
</Table>

14.  SEGMENT REPORTING

     We have defined our reportable segments based on the nature of the
reinsurance agreements and the accounting treatment used for the various
reinsurance agreements. Based on this definition, we have identified two
reportable segments: non-universal life-type agreements and universal life-type
agreements (as each is referenced in SFAS No. 97, Accounting and Reporting by
Insurance Enterprises for Certain Long-duration Contracts and for Realized Gains
and Losses from the Sale of Investments, paragraphs 44 and 45). Global Preferred
reinsures certain variable universal life policies on a renewable term basis,
which are reported below as Non-Universal Life-Type Agreements and, as such,
revenues therefrom are classified as premiums revenue. Renewable term
reinsurance involves the reinsurance of mortality risk whereby premiums are not
directly related to the premium rates on the original plan of insurance and the
ceding life company is liable for the total net amount of risk of the policies
reinsured. Global Preferred's renewable term agreements are accounted for under
SFAS No. 60 accounting principles. Global Preferred reinsures variable annuity
policies and certain other variable universal life policies on a coinsurance and
modified coinsurance basis, which are reported below as Universal Life-Type
Agreements and, as such, revenues therefrom are classified as reinsured policy
revenues. Coinsurance involves the reinsurance of mortality and investment risks
on the same basis as that of the underlying policies. The ceding life companies
and Global Preferred share in these risks on a pro rata basis. Global
Preferred's existing coinsurance and modified coinsurance agreements are
accounted for under SFAS No. 97 accounting principles.

     Items not directly related to the business segments and unallocated
corporate items (i.e., other income, interest expense on corporate debt and
unallocated operating expenses) are shown separately, consistent with Global
Preferred's internal measurement process. Segment assets reported include those
assets directly attributable to the reinsurance agreements such as reinsurance
balances receivable, deferred acquisition costs, policy loans, prepaid expenses,
invested assets and cash. Cash and invested assets are allocated to the
agreements based upon statutory reserves, the letters of credit posted in
support of the

                                       F-20
<PAGE>

statutory reserves held, and allocated surplus which is consistent with Global
Preferred's internal measurement process.

<Table>
<Caption>
SEGMENT REPORTING
YEAR ENDED DECEMBER 31                                                          1999
----------------------                                        -----------------------------------------
                                                                NON-
                                                              UNIVERSAL   UNIVERSAL
                                                              LIFE-TYPE   LIFE-TYPE    OTHER     TOTAL
(Dollars in thousands)                                        ---------   ---------   -------   -------
<S>                                                           <C>         <C>         <C>       <C>
Premiums....................................................   $9,693      $    --    $    --   $ 9,693
Reinsured policy revenues...................................       --       13,506         --    13,506
Benefits, claims and settlement expenses....................    3,215        1,610         --     4,825
Reinsurance expense allowances, net.........................    2,775        2,588         --     5,363
Amortization of deferred acquisition cost...................      171        3,618         --     3,789
Loss on recapture of business...............................       --          823         --       823
                                                               ------      -------    -------   -------
Underwriting profit.........................................    3,532        4,867         --     8,399
Net investment income.......................................      118          132        100       350
Net realized loss on investments............................       --           --        (66)      (66)
Other expenses..............................................       22          422      1,693     2,137
                                                               ------      -------    -------   -------
Segment operating income (loss) before income tax...........    3,628        4,577     (1,659)    6,546
Income tax expense (benefit)................................    1,234        1,556       (564)    2,226
                                                               ------      -------    -------   -------
Segment net income (loss)...................................   $2,394      $ 3,021    $(1,095)  $ 4,320
                                                               ------      -------    -------   -------
Preferred dividends.........................................       --           --         --        --
                                                               ------      -------    -------   -------
Segment net income (loss) available to common
  stockholders..............................................   $2,394      $ 3,021    $(1,095)  $ 4,320
                                                               ======      =======    =======   =======
Segment assets..............................................   $7,762      $40,220    $ 1,026   $49,008
                                                               ======      =======    =======   =======
</Table>

<Table>
<Caption>
SEGMENT REPORTING
YEAR ENDED DECEMBER 31                                                          2000
----------------------                                        -----------------------------------------
                                                                NON-
                                                              UNIVERSAL   UNIVERSAL
                                                              LIFE-TYPE   LIFE-TYPE    OTHER     TOTAL
(Dollars in thousands)                                        ---------   ---------   -------   -------
<S>                                                           <C>         <C>         <C>       <C>
Premiums....................................................   $16,619     $    --    $    --   $16,619
Reinsured policy revenues...................................        --      12,894         --    12,894
Benefits, claims and settlement expenses....................     8,658         954         --     9,612
Reinsurance expense allowances, net.........................     5,711       1,829         --     7,540
Amortization of deferred acquisition cost...................       116       3,901         --     4,017
                                                               -------     -------    -------   -------
Underwriting profit.........................................     2,134       6,210         --     8,344
Net investment income.......................................       213         171        144       528
Net realized gain on investments............................        --          --          3         3
Other expenses..............................................       150         184      1,588     1,922
                                                               -------     -------    -------   -------
Segment operating income (loss) before income tax...........     2,197       6,197     (1,441)    6,953
Income tax expense (benefit)................................       589       1,659       (428)    1,820
                                                               -------     -------    -------   -------
Segment net income (loss)...................................   $ 1,608     $ 4,538    $(1,013)  $ 5,133
                                                               -------     -------    -------   -------
Preferred dividends.........................................        --          --        155       155
                                                               -------     -------    -------   -------
Segment net income (loss) available to common
  stockholders..............................................   $ 1,608     $ 4,538    $(1,168)  $ 4,978
                                                               =======     =======    =======   =======
Segment assets..............................................   $ 9,279     $44,688    $ 2,650   $56,617
                                                               =======     =======    =======   =======
</Table>

                                       F-21
<PAGE>

<Table>
<Caption>
SEGMENT REPORTING
YEAR ENDED DECEMBER 31                                                          2001
----------------------                                        -----------------------------------------
                                                                NON-
                                                              UNIVERSAL   UNIVERSAL
                                                              LIFE-TYPE   LIFE-TYPE    OTHER     TOTAL
(Dollars in thousands)                                        ---------   ---------   -------   -------
<S>                                                           <C>         <C>         <C>       <C>
Premiums....................................................   $19,240     $    --    $    --   $19,240
Reinsured policy revenues...................................        --      11,238         --    11,238
Benefits, claims and settlement expenses....................     7,833         871         --     8,704
Reinsurance expense allowances, net.........................     6,859       1,642         --     8,501
Amortization of deferred acquisition cost...................       197       3,748         --     3,945
                                                               -------     -------    -------   -------
Underwriting profit.........................................     4,351       4,977         --     9,328
Net investment income.......................................       215         230        366       811
Net realized gain on investments............................        --          --         45        45
Other expenses..............................................       123         216      1,991     2,330
                                                               -------     -------    -------   -------
Segment operating income (loss) before income tax...........     4,443       4,991     (1,580)    7,854
Income tax expense (benefit)................................     1,353       1,520       (481)    2,392
                                                               -------     -------    -------   -------
Segment net income (loss)...................................   $ 3,090     $ 3,471    $(1,099)  $ 5,462
                                                               -------     -------    -------   -------
Preferred dividends.........................................        --          --        267       267
                                                               -------     -------    -------   -------
Segment net income (loss) available to common
  stockholders..............................................   $ 3,090     $ 3,471    $(1,366)  $ 5,195
                                                               =======     =======    =======   =======
Segment assets..............................................   $ 8,615     $46,748    $12,490   $67,853
                                                               =======     =======    =======   =======
</Table>

     During 1999, 2000, and 2001, the percentages of total premiums and
reinsured policy revenues that relate to Western Reserve were 87%, 88% and 89%,
respectively. The percentages of the total underwriting profit that relates to
Western Reserve for 1999, 2000 and 2001 were 83%, 83% and 86%, respectively.

     Global Preferred estimates that approximately 43% of variable universal
life premiums and 22% of variable annuity premiums, written through Western
Reserve and sold by agents associated with World Financial Group, originated in
California.

15.  CAPITAL INFUSION

     During 1999, Global Preferred conducted a private placement offering of up
to 1,000,000 shares of Series A Preferred Stock to a limited number of
individual investors that qualified as "accredited investors" within the meaning
of Rule 501 of Regulation D under the Securities Act of 1933. The Series A
Preferred Stock was designated non-voting and unregistered with a par value of
$2.00 per share. The Series A Preferred Stock had a liquidation preference equal
to $2.00 per share in the event of any liquidation, dissolution, or winding up
of the affairs of Global Preferred. The terms of the Series A Preferred Stock
provided for automatic conversion into common stock upon the earlier of (i) the
closing of any Qualifying Sale of shares of common stock or (ii) January 1,
2002. A Qualifying Sale was defined as net proceeds to Global Preferred of at
least $10 million from the sale of its shares of common stock.

     In August 2000, Global Preferred closed its offering of the Series A
Preferred Stock, which resulted in approximately $4 million of gross proceeds to
Global Preferred. Global Preferred issued 266,047 shares of Series A Preferred
Stock to the investors in this offering. The net proceeds were loaned to Global
Preferred Re, which were applied toward repayment of the line of credit with
Money Services. On December 15, 2001, Global Preferred paid a 7% annual dividend
to the preferred stockholders in the amount of $279,349.

16.  STOCK OPTIONS AND WARRANTS

Stock Options

     1999 Stock Option Plan.  The 1999 Stock Option Plan became effective on
June 15, 1999. The aggregate number of shares of common stock reserved for
issuance under the 1999 Stock Option Plan was 700,000 shares. The exercise price
of each option granted under the 1999 Stock Option Plan was $10 per share, as
adjusted for Global Preferred's three-for-two stock split in 2001. The 1999
Stock Option Plan

                                       F-22
<PAGE>

required that Global Preferred raise additional capital on or before December
31, 1999 in order for any options to be exercisable, however, Global Preferred
raised no new capital prior to that date and the outstanding options could not,
by their terms, be exercised. On May 12, 2000, the board of directors approved
an amendment to the 1999 Stock Option Plan extending the deadline for receipt of
a minimum of $15 million of additional capital from the sale of stock to January
1, 2002.

     Other Options.  In connection with S. Hubert Humphrey, Jr.'s retirement in
December 2001, Global Preferred agreed to grant to Mr. Humphrey options to
purchase 100,000 shares of common stock upon successful completion of a firm
commitment, underwritten registered public offering of common stock by December
31, 2003. The options are exercisable for a period of five years from the date
of grant, at an exercise price equal to the initial offering price of shares
sold in the underwritten offering.

Warrants

     In June 1998, Global Preferred entered into a Directed Reinsurance
Agreement with WMA Agency, under which WMA Agency agreed to use its best efforts
to cause any life insurance company with which it had selling agreements to
enter reinsurance agreements with Global Preferred. In 1999, the board of
directors approved an amendment to the agreement to provide, among other things,
that Global Preferred would issue, for no monetary consideration, warrants to
individuals designated by WMA Agency to purchase 300,000 shares of Global
Preferred's common stock. These warrants were ultimately issued to key
management personnel of WMA Agency. As subsequently amended, the warrants were
contingent upon Global Preferred raising a minimum of $15 million of additional
capital from the sale of stock prior to January 1, 2002. As amended, these
warrants had an exercise price of $10 per share, as adjusted for Global
Preferred's three-for-two stock split in 2001.

     Such options and warrants have been considered for purposes of stock
compensation expense under SFAS No. 123, Accounting for Stock-Based
Compensation, Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees and FASB Interpretation No. 44, Accounting for Certain
Transactions involving Stock Compensation. However, since no shares can be
issued upon exercising the options or warrants until the amount of capital
raised by Global Preferred from the sale of stock prior to January 1, 2002 is
equal to or greater than $15 million, there is no compensation expense reflected
in the accompanying financial statements. Additionally, the amount of
compensation expense is indeterminable as the amount of options and warrants
vary with the amount of capital raised.

17.  SUBSEQUENT EVENTS

     1999 Stock Option Plan and Warrants.  Global Preferred did not raise the
minimum of $15 million of additional capital from the sale of stock by January
1, 2002 and as of that date the outstanding options granted under the 1999 Stock
Option Plan could no longer be exercised, the board of directors terminated the
1999 Stock Option Plan in February 2002. Additionally, since Global Preferred
did not raise the minimum amount of additional capital by January 1, 2002, the
warrants issued to the management personnel of WMA Agency expired. No shares of
common stock were issued under the warrants.

     Preferred Stock Conversion.  On January 1, 2002, 266,047 shares of Series A
Preferred Stock issued were automatically converted into 399,074 shares of
common stock. The conversion reflected the three-for-two stock split effective
in September 2001.

     Stock Incentive Plan.  Global Preferred's Stock Incentive Plan became
effective on January 9, 2002. The aggregate number of shares of common stock
reserved for issuance under the Stock Incentive Plan is 1.5 million shares.
Awards granted under the Stock Incentive Plan may be stock appreciation rights,
restricted stock, options intended to qualify as "incentive stock options" or
nonqualified stock options. No shares of common stock have been issued upon
exercise of options granted under the Stock Incentive Plan. The Compensation
Committee of the board of directors has approved the grant of options to
purchase an aggregate of 215,000 shares of common stock to certain employees to
be granted upon completion of an initial public offering, at an exercise price
equal to the initial public offering price.

                                       F-23
<PAGE>

     Directors Stock Option Plan.  Global Preferred's Directors Stock Option
Plan became effective January 9, 2002. The aggregate number of shares of common
stock reserved for issuance under the Directors Stock Option Plan is 280,000
shares. Upon completion of an initial public offering prior to December 31,
2003, options to purchase 105,000 shares will be granted to Global Preferred's
five non-employee directors under the Directors Stock Option Plan and options to
purchase 100,000 shares will be granted outside of the Directors Stock Option
Plan to a retired director. Each of these options will have an exercise price
equal to the initial public offering price. Global Preferred has estimated that
if the initial public offering is completed prior to December 31, 2003, then the
resulting compensation charge from the grants of these options to current and
retired directors will be between $335,000 and $980,000, depending upon numerous
variables, including the exercise price of the options, the estimated effective
life of the options and the volatility of the stock (estimated in part by
reference to the stock performance of comparable companies).

     Employment Agreements.  Global Preferred's executive officers, Edward F.
McKernan, Bradley E. Barks, Caryl P. Shepherd and Thomas Bobowski, are employed
pursuant to written employment agreements.

     Mr. McKernan, President and Chief Executive Officer, has an initial
employment agreement term of three years beginning January 1, 2002 and is
automatically renewed for additional one-year periods unless either party
provides written notice of termination at least 60 days in advance of the
expiration date of the current term. Mr. McKernan will receive a base salary of
$325,000 for the year ended December 31, 2002, plus options to purchase 75,000
shares of common stock, to be granted upon completion of an initial public
offering. If, within 90 days of a change of control of Global Preferred, Mr.
McKernan resigns for good reason, as defined in the agreement, or is terminated
without cause, Global Preferred will pay him an amount equal to 35 months of his
then-current base salary over a 12 month period or in one lump sum payment. Upon
Mr. McKernan's resignation for good reason or termination not for cause
unrelated to a change of control, Global Preferred will pay his base salary for
the greater of 12 months or the number of months remaining on his employment
agreement, not to exceed 24 months.

     Mr. Barks, Chief Financial Officer and Senior Vice President -- Finance,
has an initial employment agreement term from March 4, 2002 through February 28,
2003, which is renewable by agreement of the parties for additional one-year
periods. Mr. Barks will receive a base salary of $250,000 for the initial term,
plus options to purchase 20,000 shares of common stock, to be granted upon
completion of an initial public offering. Global Preferred paid Mr. Barks a
signing bonus of $9,200 and has agreed to pay $59,450 towards Mr. Barks'
relocation expenses and up to six months of actual rental costs for temporary
housing prior to his relocation. If Mr. Barks resigns for good reason, as
defined in the agreement, or is terminated without cause, Global Preferred will
pay him an amount equal to three months of his base salary if he is terminated
prior to completion of an initial public offering, or twelve months of his
then-current base salary if he is terminated after completion of an initial
public offering.

     Ms. Shepherd, Chief Accounting Officer, Treasurer, Controller, Secretary
and Vice President, has an initial employment agreement term from February 1,
2002 through January 31, 2003, which is renewable by agreement of the parties
for additional one-year periods. Ms. Shepherd will receive a base salary of
$100,000 for the initial term, plus options to purchase 30,000 shares of common
stock, to be granted upon completion of an initial public offering. Upon Ms.
Shepherd's resignation for good reason, as defined in the agreement, or
termination not for cause, Global Preferred will pay her base salary for twelve
months.

     Mr. Bobowski, Vice President of Marketing, has an initial employment
agreement term from March 4, 2002 through February 28, 2003, which is renewable
by agreement of the parties for additional one-year periods. Mr. Bobowski will
receive a base salary of $122,000 for the initial term, plus options to purchase
12,500 shares of common stock to be granted upon completion of an initial public
offering. Upon Mr. Bobowski's resignation for good reason, as defined in the
agreement, or termination not for cause, Global Preferred will pay his base
salary for three months. For each month of Mr. Bobowski's employment over three
months, his separation payment upon resignation for good reason or termination
without cause will be increased by one month, with a maximum payment equal to
twelve months of his base salary.

                                       F-24
<PAGE>

     Mr. McKernan, Mr. Barks, Ms. Shepherd and Mr. Bobowski are eligible for an
annual bonus in an amount to be determined by the board of directors. Mr.
McKernan, Mr. Barks, Ms. Shepherd and Mr. Bobowski's employment agreements
include post-employment restrictive covenants not to solicit Global Preferred's
customers or recruit Global Preferred's employees.

     Registration Statement.  On February 22, 2002, Global Preferred filed a
registration statement with the Securities and Exchange Commission for an
initial public offering of common stock at a proposed maximum aggregate offering
price of $131,100,000.

                                       F-25
<PAGE>

18. PARENT COMPANY FINANCIAL INFORMATION.

                                 BALANCE SHEETS
                                (PARENT COMPANY)
                           DECEMBER 31, 2000 AND 2001

<Table>
<Caption>
                                                                 2000          2001
                                                              -----------   -----------
<S>                                                           <C>           <C>
                           Assets
Investment in common stock of subsidiary(1).................  $14,260,526   $14,260,526
Fixed maturity securities -- available for sale (amortized
  cost of $0 and
  $2,241,534 for 2000 and 2001, respectively)...............           --     2,296,563
Cash and cash equivalents...................................      443,277     1,374,016
Investment income due and accrued...........................        2,876        42,192
Investment income due and accrued -- intercompany(1)........      305,330       201,219
Intercompany receivables(1).................................    2,573,807       155,118
Note receivable -- intercompany(1)..........................    8,100,029     6,087,550
Prepaid expenses............................................       28,472       654,699
Current income tax receivable...............................           --         1,875
Fixed assets (net of accumulated depreciation of $102,992
  and $147,750 for
  2000 and 2001, respectively)..............................       48,806        88,114
Deferred tax benefit........................................      792,271     1,047,737
                                                              -----------   -----------
          Total assets......................................  $26,555,394   $26,209,609
                                                              ===========   ===========
            Liabilities and Stockholders' Equity
Liabilities:
  Accrued expenses and accounts payable.....................  $    79,102   $   530,880
  Accrued interest payable..................................      158,219       158,219
  Dividend payable..........................................       12,245            --
  Current income tax payable................................        7,306            --
  Long term debt............................................    5,000,000     5,000,000
                                                              -----------   -----------
          Total liabilities.................................    5,256,872     5,689,099
                                                              -----------   -----------
Stockholders' equity:
  Preferred stock, par value $2.00, 10,000,000 shares
     authorized; Series A Preferred Stock, 1,000,000 shares
     authorized; 266,047 shares issued for 2000 and 2001....      532,094       532,094
  Common stock, par value $.001, 50,000,000 shares
     authorized; 2,500,000 shares
     and 3,750,000 shares issued for 2000 and 2001,
     respectively...........................................        2,500         3,750
  Additional paid-in capital................................   22,795,581    22,794,331
  Accumulated other comprehensive income....................           --        36,319
  Retained earnings.........................................   (1,981,753)   (2,796,717)
  Treasury stock, at cost (7,485 shares and 7,390 shares for
     2000 and 2001, respectively)...........................      (49,900)      (49,267)
                                                              -----------   -----------
          Total stockholders' equity........................   21,298,522    20,520,510
                                                              -----------   -----------
Total liabilities and stockholders' equity..................  $26,555,394   $26,209,609
                                                              ===========   ===========
</Table>

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

(1) Eliminated on consolidation

                                       F-26
<PAGE>

                              STATEMENTS OF INCOME
                             (PARENT COMPANY ONLY)
                  YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

<Table>
<Caption>
                                                             1999          2000         2001
                                                          -----------   ----------   ----------
<S>                                                       <C>           <C>          <C>
Revenues:
  Net investment income.................................  $    27,450   $   85,053   $  133,575
  Net realized gain (loss) on investments...............       (2,997)          --        4,904
  Intercompany interest income(1).......................           --      613,298      674,298
  Gain (loss) on dissolution of subsidiary..............       (5,266)          --           --
                                                          -----------   ----------   ----------
          Total revenue.................................       19,187      698,351      812,777
                                                          -----------   ----------   ----------
Benefits and expenses:
  Operating expenses....................................      855,627       99,752    1,259,273
  Interest expense......................................      868,252      375,000      375,000
                                                          -----------   ----------   ----------
     Total benefits and expenses........................    1,723,879      474,752    1,634,273
                                                          -----------   ----------   ----------
     Income before income tax and equity in
       undistributed net income of subsidiaries.........   (1,704,692)     223,599     (821,496)
  Income tax benefit (expense)..........................      579,595     (120,224)     274,269
                                                          -----------   ----------   ----------
     Income before equity in undistributed net income of
       subsidiaries.....................................  $(1,125,097)  $  103,375   $ (547,227)
  Equity in earnings of subsidiaries....................    5,445,131    5,029,501    6,009,808
                                                          -----------   ----------   ----------
  Net income............................................    4,320,034    5,132,876    5,462,581
  Preferred dividends...................................           --      155,198      267,104
                                                          -----------   ----------   ----------
  Net income available to common stockholders...........  $ 4,320,034   $4,977,678   $5,195,477
                                                          ===========   ==========   ==========
</Table>

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

(1) Eliminated on consolidation

                                       F-27
<PAGE>

                            STATEMENTS OF CASH FLOWS
                             (PARENT COMPANY ONLY)
                  YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001

<Table>
<Caption>
                                                             1999            2000           2001
                                                          -----------    ------------    -----------
<S>                                                       <C>            <C>             <C>
Cash flows from operating activities:
  Net income............................................    4,320,034       5,132,876      5,462,581
  Less equity in earnings of subsidiaries...............   (5,445,131)     (5,029,501)    (6,009,808)
                                                          -----------    ------------    -----------
  Income before equity in undistributed net income of
    subsidiaries........................................  $(1,125,097)   $    103,375    $  (547,227)
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
    Amortization and depreciation.......................      108,597          47,975         44,758
    Deferred tax expense (benefit)......................     (579,595)        112,918       (274,176)
    Net realized (gain) loss on investments.............        2,997              --         (4,905)
  Change in:
    Investment income due and accrued...................       13,880          (2,876)       (39,316)
    Investment income due and
       accrued -- intercompany(1).......................           --        (305,330)       104,111
    Intercompany receivables(1).........................      (44,089)     (2,563,711)     2,418,689
    Prepaid expenses....................................     (139,698)        317,297       (626,227)
    Current income tax receivable.......................           --              --         (1,875)
    Other receivables...................................      171,375              --             --
    Accrued expenses and accounts payable...............      (42,196)        (22,574)       451,778
    Accrued interest payable............................      564,690        (507,570)            --
    Current income tax payable..........................           --           7,306         (7,306)
                                                          -----------    ------------    -----------
       Net cash provided by (used in) operating
         activities.....................................   (1,069,136)     (2,813,190)     1,518,304
                                                          -----------    ------------    -----------
Cash flows from investing activities:
  Dividend received from subsidiary(1)..................           --       3,400,000             --
  Return of capital from subsidiary(1)..................           --      10,000,000             --
  Investment in subsidiary(1)...........................       11,544              --             --
  Proceeds from sale of available for sale securities...      618,080              --        439,955
  Purchase of available-for-sale securities.............           --              --     (2,676,584)
  Purchase of fixed assets..............................      (50,880)         (8,449)       (84,066)
                                                          -----------    ------------    -----------
       Net cash provided by (used in) investing
         activities.....................................      578,744      13,391,551     (2,320,695)
                                                          -----------    ------------    -----------
Cash flows from financing activities:
  Issuance of preferred stock...........................           --       3,098,702             --
  Preferred dividends...................................           --        (142,953)      (279,349)
  Proceeds from (repayment of) long term debt...........      303,562      (5,303,562)            --
  Issuance (repayment) of notes
    receivable -- intercompany(1).......................           --      (8,100,029)     2,012,479
                                                          -----------    ------------    -----------
       Net cash provided by (used in) financing
         activities.....................................      303,562     (10,447,842)     1,733,130
                                                          -----------    ------------    -----------
       Net increase (decrease) in cash and cash
         equivalents....................................     (186,830)        130,519        930,739
Cash and cash equivalents at beginning of period........      499,588         312,758        443,277
                                                          -----------    ------------    -----------
Cash and cash equivalents at end of period..............  $   312,758    $    443,277    $ 1,374,016
                                                          ===========    ============    ===========
</Table>

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

(1) Eliminated on consolidation

                                       F-28