<PAGE>
                                   FORM 10-KSB
(Mark  One)

[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF  1934
            For  the  fiscal  year  ended  December  31,  2001.


[    ]     TRANSITION  REPORT  UNDER  SECTION  13  OR  15(D)  OF  THE SECURITIES
            EXCHANGE  ACT  OF  1934
     For  the  transition  period  from            to
..

                        Commission file number : 0-25679

                     FIRST AMERICAN CAPITAL CORPORATION
              (Name of small business issuer in its charter)

 Kansas                          48-1187574
--------------------------     -----------------------------------------
(State  of  incorporation)    (I.R.S.  Employer  Identification  Number)


1303  SW  First  American  Place  ,  Topeka,  KS  66604
-------------------------------------------------------
(Address  of  principal  executive  offices)

Issuers  telephone  number       (785) 267-7077
                                 ---------------

     Securities registered  under  12(b)  of  the  Act:
                           Title of Each Class
                           -------------------
                                  NONE

     Securities registered under Section  12(g)  of  the  Act:
                           Title of Each Class
                           -------------------
                       Common Stock, $.10 Par Value


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

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

State  issuer  s  revenues  for  its  most  recent  fiscal  year:  $3,219,148

State the aggregate market value of the voting equity held by non-affiliates: Of
the  5,438,985  shares  of common stock of the registrant issued as of March 13,
2002,  4,393,985 shares are held by non-affiliates. Because of the absence of an
established  trading  market  for  the common stock, the registrant is unable to
calculate  the aggregate market value of the voting stock held by non-affiliates
as  of  a  specified  date  within  the  past  60  days.

State the number of shares outstanding of each of the issuer s classes of common
equity,  as  of  the  latest  practicable  date.

Common  Stock,  $.10  Par  Value  -  5,273,985  shares  as  of  March  13, 2002.

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

                                        1
<PAGE>

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

                                TABLE OF CONTENTS

Part  I                                                                   Page
---------                                                               -------
Item  1.     Description  of  Business                                        3
Item  2.     Description  of  Property                                        8
Item  3.     Legal  Proceedings                                               8
Item  4.     Submission  of  Matters  to  a  Vote  of  Security Holders       9

Part  II.
---------
Item  5.     Market  for  Common Equity and Related Stockholder Matters       9
Item  6.     Management  s  Discussion and Analysis or Plan of Operation     10
Item  7.     Financial  Statements     15
Item  8.     Changes  In  and  Disagreements  With Accountants
             on Accounting and Financial  Disclosure                         15

Part  III.
---------
Item  9.     Directors,  Executive  Officers,  Promoters
             and  Control  Persons; Compliance  With  Section
             16(a)  of  the  Exchange  Act                                   15
Item  10.     Executive  Compensation     19
Item  11.    Security  Ownership  of  Certain Beneficial
             Owners and Management                                           20
Item  12.     Certain  Relationships  and  Related  Transactions             21
Item  13.     Exhibits  and  Reports  on  Form  8-K                          22

Signatures                                                                   23
Index  to  exhibits                                                          26


                                    2

<PAGE>

PART  I

Item  1.     Description  of  Business

First  American Capital Corporation (the  Company ) was incorporated on July 10,
1996  for  the purpose of forming, owning and managing life insurance companies.
The  Company  sold  2,120,000  shares  at  $.10  per  share  to  its  organizing
shareholders  in  August  of  1996  for  total  proceeds of $212,000.   Also, in
September,  1996,  the Company sold 600,000 shares of its common stock for $1.00
per share in a separate private placement.  The initial capital was used to fund
the Company s efforts to register a $12,500,000 intra-state public offering with
the  Office of the Kansas Securities Commissioner.  Included in the registration
was  a  10%  over-sale  provision.  On  March  11, 1996 the Office of the Kansas
Securities  Commissioner  declared  the  registration  statement  effective.

On January 11, 1999, the Company completed the intra-state public stock offering
raising  approximately  $13,750,000 of capital which included a 10% over-sale of
$1,250,000.   $3,250,000  of  the  proceeds  of  the  stock  sale  were  used to
capitalize  the life insurance subsidiary, First Life America Corporation ( FLAC
).  The  venture  capital subsidiary, First Capital Venture, Inc., was formed in
October of 1998; however, it has not yet been capitalized.  The remainder of the
proceeds  will  provide  additional capital for the life insurance subsidiary or
for  the  possible acquisition of life insurance or insurance related company(s)
or  provide  working  capital.

First  American  Capital  Corporation

The primary segment of the Company s operations is life insurance and annuities.
Accordingly, a significant portion of revenue will be generated by the Company s
wholly  owned life insurance subsidiary, FLAC.  Additional income is provided in
the  form of investment and rental income.  The Company has contracted with FLAC
to  provide  services  which  are incident to the operations of FLAC.  Under the
terms  of  the contract, FLAC pays the Company service fees based on percentages
of  first  year  and  renewal  premium  income  delivered  by  FLAC.

The Company has contracted with First Alliance Corporation ( FAC ) of Lexington,
Kentucky  to  provide  accounting  services  for  FLAC.  Under  the terms of the
service  agreement,  the  Company  pays  fees based on a percentage of delivered
premiums  of  FLAC.  The  percentages  are  5.5%  for first year premiums; 4% of
second year premiums; 3% of third year premiums;  2% of fourth year premiums; 1%
of  fifth  year  premiums, and 1% for years six through ten for ten pay policies
and  .5%  in  years six through twenty for twenty pay policies.  Pursuant to the
agreement,  the  Company incurred $142,785, $117,246, and $60,531 of fees during
2001,  2000  and  1999, respectively.   FAC is also a shareholder of the Company
(see  Item  11  on  Page  20).

First  Life  America  Corporation

On  October  15,  1997, FLAC received a certificate of authority from the Kansas
Insurance  Department  to  transact  life  and  annuity business in the state of
Kansas.  On  November  19, 1998, life insurance operations commenced.  Under the
provisions  of  Generally  Accepted  Accounting  Principals  (  GAAP ), FLAC has
$4,922,152  of  capital and surplus as of December 31, 2001, and is wholly owned
by  the Company.  FLAC has contracted with the Company for policy administration
and  data  processing  services  as  discussed  below.

Administration

Effective  December  31,  1998,  FLAC  entered into a service agreement with the
Company.  Under  the  terms  of  the  agreement, the Company provides personnel,
facilities, and services incident to the operations of FLAC.  FLAC does not have
any  employees.  Services  performed pursuant to the agreement are underwriting,
claim processing, accounting, policy processing and other services necessary for
FLAC to operate.  The agreement is effective until either party provides 90 days
written  notice  of termination.  Under the agreement, FLAC pays fees based on a
percentage  of  first  year  and  renewal premiums delivered by FLAC.  Delivered
premium  is  defined  as premium received on new written business which has been
underwritten  by  FLAC and the policy accepted by the policy

                                    3
<PAGE>
owner  upon delivery by the agent. The percentages under the contract are 25% of
first  year  life  premiums; 40% of second year life premiums; 30% of third year
life premiums; 20%of fourth year life premiums and 10% of life premiums in years
five  and thereafter. If at any time FLAC s annual premiums on new business were
to  exceed  $5,000,000, the provisions of the agreement will be tolled until the
agreement  has been resubmitted to the Kansas Insurance Department for approval.
FLAC  bears the cost of all direct selling costs which include agent recruiting,
training  and  licensing; agent commissions; any benefits or awards directly for
or  to  agents  or  management  including  any  life  or  health insurance to be
provided;  and  any  taxes  (federal,  state  or county) directly related to the
business  of  FLAC.  Additionally,  FLAC  is  responsible  for  any  reinsurance
premiums;  legal  expenses  related  to  settlement of claims; state examination
fees;  directors  fees  and  directors  liability  insurance;  interest  on
indebtedness;  costs  related  to  mergers  or acquisitions and costs related to
fulfilling  obligations  of  the life insurance and annuity contracts written by
the  agents  of  FLAC.  Pursuant  to  the  terms of the agreement, FLAC incurred
$704,151,  $562,686  and  $275,375  of  service fees during 2001, 2000 and 1999,
respectively.

Effective  January  1,  2002, FLAC entered into a new service agreement with the
Company.  Under  the  terms  of  the  agreement, the Company provides personnel,
facilities, and services incident to the operations of FLAC.  FLAC does not have
any  employees.  Services  performed pursuant to the agreement are underwriting,
claim processing, accounting, policy processing and other services necessary for
FLAC to operate.  The agreement is effective until either party provides 90 days
written  notice  of  termination.  FLAC pays fees equal to the Company's cost of
providing  such  services,  including an appropriate allocation of the Company's
overhead  expenses, in accordance with generally accepted accounting principles.
FLAC  still  bears  the  cost  of  all  direct selling costs which include agent
recruiting,  training  and  licensing; agent commissions; any benefits or awards
directly  for  or to agents or management including any life or health insurance
to be provided; and any taxes (federal, state or county) directly related to the
business  of  FLAC.  Additionally,  FLAC  is  responsible  for  any  reinsurance
premiums;  legal  expenses  related  to  settlement of claims; state examination
fees;  directors  fees  and  directors  liability  insurance;  interest  on
indebtedness;  costs  related  to  mergers  or acquisitions and costs related to
fulfilling  obligations  of  the life insurance and annuity contracts written by
the  agents  of  FLAC.

Actuarial  Services

On  behalf  of  FLAC,  the Company has retained the services of Miller & Newberg
Inc.,  consulting  actuaries  of  Olathe,  Kansas.  Mr. Eric Newberg of Miller &
Newberg  Inc.  has  been  appointed  by the Board of Directors of FLAC to act as
valuation  and  illustration  actuary.  In  recent  years,  the Company has also
retained  actuarial  services of Bruce and Bruce Company of Lake Bluff, Illinois
and  Lewis and Ellis of Overland Park, Kansas in connection with the development
of  the  various  insurance  products  being  marketed  by  FLAC.

Products  of  FLAC

The  various insurance products currently being marketed by FLAC are as follows:

First  American  2000  is  a modified payment whole life insurance policy with a
flexible  premium  deferred  annuity  rider.  A  modified  payment  whole  life
insurance  policy  requires  premium payments to be made for a certain number of
years after which the policyholder is entitled to policy benefits without making
future  payments.  The  product  combines  both  a ten and twenty payment period
based  on  the  issue age of the insured.  Issue ages from age 0 (30 days) to 20
and  66  to  80 are ten pay policies and issue ages from 21 to 65 are twenty pay
policies.  Premium  payments  are  split  between  life  and  annuity  based  on
percentages  established in the product design.  First year premium payments are
allocated  100% to life insurance and renewal payments are split 50% to life and
50%  to annuity.  The product is being sold in premium units with the ability to
purchase  either  fractional  or  multiple  units.  At  the  end of the required
premium  paying  period,  the  policyholder  may  continue  to make full premium
payments  into  the  annuity rider to provide for greater annuity accumulations.

                                    4
<PAGE>

Golden  Eagle  Whole  Life  is  available  on a simplified issue or graded death
benefit  basis.  The  simplified  issue product is issued from age 50 to 85 with
death benefit coverage ranging from a minimum of $2,500 to a maximum of $25,000.
The  graded death benefit product is issued from age 50 to 80 with death benefit
coverage  ranging  from a minimum of $2,000 to a maximum of $10,000.  The policy
includes  a  living benefit rider that pays the actuarial present value of death
benefit  upon  terminal illness or nursing home confinement.  Premiums are level
for  life  and  vary  by  risk  class,  sex  and  issue  age.

First  Step  is  a  juvenile  term product issued from age 0(30 days) to age 15.
Coverage  is sold in units.  One unit, consisting of a single premium payment of
$100  purchases $5,000 of death benefit coverage, while two units, consisting of
a  single  premium  payment  of $200 purchases $10,000 of coverage.  The product
contains  a  conversion  provision  allowing  it to be converted to a whole life
policy  prior  to  age  21.

FLAT  10 (First Life Affordable Term) is a ten year term product issued from age
20  to  70.  It  has  a  re-entry  provision  allowing  the  current  insured to
re-qualify  prior  to each ten year period.  The re-qualification is essentially
re-underwriting including medical exams and inspections to determine if the risk
has  changed  or remained the same.  The policy expires automatically at age 95.

First Guard 10 is a ten year term product renewable to age 70 and convertible to
age  60.  Renewable means the policy is kept inforce as long as the premiums are
paid, but the rates do change each 10 year period.  Convertible means that prior
to  age  60  the policy can be converted to a permanent plan of insurance, whole
life  or universal life, but not term.  The product is issued from age 18 to 60.
The  policy  includes  an  accelerated death benefit rider.  This rider provides
that  in  the event that certain ailments or medical conditions strike, a 25% or
50%  of  the base policy coverage could be paid.  The maximum benefit under this
rider  is  $250,000.  Payment  of  an accelerated benefit does reduce the future
death  benefit.

Product  Marketing  and  Sales

FLAC  is using the same face-to-face marketing techniques for its life insurance
products  as  the Company did for its public stock offering.  The marketing plan
is  designed  in  its  entirety  around  the  Company's  stockholder base, which
provides  an  excellent  referral  system  for  FLAC  product  sales.

After  FLAC  develops  a  substantial  policyholder  base  in Kansas,  marketing
efforts  are  expected  to  expand  into additional states.  This expansion will
depend largely on many factors, one of which is being admitted to do business in
these  states.  As  of  March 15, 2002, approval has been granted to FLAC in the
states  of  Illinois, Kansas, Nebraska, North Dakota, Ohio, Oklahoma, and Texas.
Management  intends  to  file  for  certificates  of  authority in the states of
Florida,  Kentucky,  and  Missouri in the near future.  Due to the uncertainties
involved,  management  cannot  reasonably  estimate  the time frame of marketing
expansion  to  any  of  these  states.

FLAC's  insurance  operations  commenced on November 19, 1998 on a limited basis
for  test  marketing  of  the  initial  insurance product.  Full scale marketing
commenced  on January 11, 1999.  The agency force involved in selling the public
offering  was  licensed  through FLAC to sell the life insurance products.  FLAC
continually  recruits  and  trains  new  agents.

                                   5
<PAGE>

Insurance  Inforce

The  following  table  provides  certain information about FLAC s volume of life
insurance  coverage  inforce  for  each  of  the  last  three  years:

<TABLE>
<CAPTION>

Amounts  of  Insurance(1)
                                   (shown in thousands)

                                  2001       2000       1999
                                 ------     -----       ------
<S>                             <C>        <C>        <C>
Beginning of year               $ 83,277   $ 39,536   $   337

Issued during year                46,962     53,953    39,378

Revived during year                  167        280         -

Lapse, surrender and decreased   (18,104)   (10,492)     (179)
                                --------   ---------  ---------
In-force end of year            $112,302   $ 83,277   $39,536
                                ========   ========   =========
</TABLE>

 (1)  Excludes  accidental  death  benefits  of $31,027, $26,520, and $17,100 in
2001,  2000,  and  1999,  respectively.

Reinsurance

In  order  to  reduce  the  risk  of  financial exposure to adverse underwriting
results,  insurance  companies  reinsure  a  portion  of their  risks with other
insurance  companies.  FLAC  has  entered  into  agreements  with Business Men's
Assurance  Company  of  America  (  BMA  )  of Kansas City, Missouri, as well as
Optimum  Re Insurance Company of Dallas, Texas, to reinsure portions of the life
insurance  risks  it underwrites.  Pursuant to the terms of the agreements, FLAC
retains  a maximum of $50,000 on any one insured.  Currently, insurance ceded to
Optimum  Re  Insurance  Company  is  limited  to  the 10-year term policies.  At
December  31, 2001, 2000 and 1999, respectively, FLAC had ceded amounts totaling
$31,878,000,  $24,259,688  and  $8,755,634 of ordinary business and $31,027,000,
$26,520,000  and  $17,100,000  of  accidental  death benefit risk.  In the event
that the reinsurance companies are unable to fulfill their obligations under the
reinsurance  agreements,  FLAC remains primarily liable for the entire amount at
risk.  According  to  the  reinsurance  agreements, there are generally no
premiums due on first  year  business.

Underwriting

The life insurance subsidiary follows underwriting procedures designed to assess
and  quantify  insurance  risks  before  issuing  life insurance policies.  Such
procedures require medical examinations (including blood tests, where permitted)
of applicants for policies of life insurance in excess of certain policy limits.
These  requirements  are  graduated according to the applicant's age and vary by
policy  type. The life insurance subsidiary also relies upon medical records and
upon  each  applicant's  written  application  for insurance, which is generally
prepared  under  the  supervision  of  a  trained  agent.


Evaluating  the  impact  of  future Acquired Immune Deficiency Syndrome ("AIDS")
claims  under life insurance policies issued is extremely difficult, in part due
to  the  insufficiency  and conflicting data regarding the number of persons now
infected  with  the  AIDS  virus,  uncertainty as to the speed at which the AIDS
virus has and may spread through the general population, advancements in medical
treatment  options. The life insurance subsidiary has implemented, where legally
permitted,  underwriting  procedures  designed to assist in the detection of the
AIDS  virus  in  applicants.

                                     6
<PAGE>

Investments

During  portions  of 2000 and 1999, the Company and FLAC was under contract with
Advantus Capital Management, Inc. of St. Paul, MN for management of investments.
Fees  were  based  on  the market value of invested assets.  In 2000, management
determined  that  the  contact  with  Advantus Capital Management, Inc. would be
terminated  and  that the Company and FLAC would manage its investment portfolio
internally.

The  Kansas  Insurance  Code restricts the investments of insurance companies by
the  type  of investment, the amount that an insurance company may invest in one
type  of  investment, and the amount that an insurance company may invest in the
securities of any one issuer.  The restrictions of the Kansas Insurance Code are
not  expected  to  have a material effect on the investment return of FLAC.  The
Company is not subject to the limitations which restrict the investments made by
FLAC.  Currently,  investments  are  held  in  both  short-term,  highly  liquid
securities  and  long-term,  higher  yield  securities.

Competition

The  life insurance industry is extremely competitive.  There are a large number
of  insurance  companies  which are substantially larger, have greater financial
resources,  offer  more  diversified  product  lines  and  have  larger  selling
organizations  than  FLAC.  Competition  also  is encountered from the expanding
number  of  banks  and  other  financial  intermediaries  that  offer  competing
products.  FLAC  must  also  compete  with  other insurers to attract and retain
qualified  agents  to  market  FLAC  s  products.

Governmental  Regulation

FLAC is subject to regulation and supervision by the Kansas Insurance Department
(  KID ).  The insurance laws of Kansas give the KID broad regulatory authority,
including  powers  to:  (i) grant and revoke licenses to transact business; (ii)
regulate  and  supervise  trade  practices  and  market conduct; (iii) establish
guaranty  associations;  (iv)  license  agents;  (v)  approve policy forms; (vi)
approve  premium  rates  for  some  lines  of  business; (vii) establish reserve
requirements;  (viii)  prescribe  the  form  and  content  of required financial
statements  and  reports;  (ix)  determine  the  reasonableness  and adequacy of
statutory capital and surplus; and (x) regulate the type and amount of permitted
investments.

Kansas  has  enacted  legislation  which  regulates  insurance  holding  company
systems, including acquisitions, extraordinary dividends, the terms of affiliate
transactions,  and  other related matters.  Currently, the Company and FLAC have
registered  as  a  holding  company  system pursuant to the laws of the state of
Kansas.

Federal  Income  Taxation

The  Life  Insurance  Subsidiary  is  taxed  under  the  life  insurance company
provisions  of the Internal Revenue Code of 1986, as amended (the "Code") .Under
the  Code,  a  life  insurance company's taxable income incorporates all income,
including  life and health premiums, investment income, and certain decreases in
reserves.  The  Code  currently establishes a maximum corporate tax rate of 35%.
The  Code  currently requires capitalization and amortization over a five to ten
year  period of certain policy acquisition costs incurred in connection with the
sale of certain insurance products.  These provisions apply to life, health, and
annuity  business.  Certain  proposals to make additional changes in the federal
income  tax  laws,  including  increasing  marginal  tax  rates, and regulations
affecting  insurance  companies or insurance products, continue to be considered
at  various  times  in  the  United  States Congress and by the Internal Revenue
Service.  The  Company  currently  cannot predict whether any additional changes
will  be adopted in the foreseeable future or, if adopted, whether such measures
will  have  a  material  effect  on  its  operations.

                                        7
<PAGE>

Financial  Information  Relating  to  Industry  Segments

Financial information related to specific segments of the Company s business are
presented  below.  All  sales  of  life  insurance  by  FLAC are to unaffiliated
customers.
<TABLE>
<CAPTION>

                                                Years ended December 31,
                                            --------------------------------
                                             2001          2000          1999
                                          ---------    -----------   ----------
<S>                                      <C>           <C>           <C>
 Revenues
  Life and annuity insurance operations  $ 2,704,352   $ 2,181,628   $ 1,243,323
  Corporate operations                       514,796       482,187       390,954
                                         -----------   -----------   ------------
    Total                                $ 3,219,148   $ 2,663,815   $ 1,634,277


Income/(loss) before income taxes:
  Life and annuity insurance operations  $   532,626   $   537,649   $   418,084
  Corporate operations                      (734,059)     (245,768)     (404,036)
                                         ------------  ------------  ------------
    Total                                $  (201,433)  $   291,881   $    14,048


Depreciation and amortization expense:
  Life and annuity insurance operations  $   459,124   $   565,869   $   234,522
  Corporate operations                        87,698        15,666        14,916
                                         -----------   -----------   ------------
    Total                                $   546,822   $   581,535   $   249,438


Assets:
  Life and annuity insurance operations  $ 8,795,709   $ 6,024,504   $  4,255,380
  Corporate operations                     8,444,254     8,356,250      8,125,955
                                         -----------   -----------   ------------
    Total                                $17,239,963   $14,380,754   $ 12,381,335
</TABLE>


Employees

As  of  December  31,  2001,  the  Company  had  16  full  time and no part time
employees.

Item  2.  Description  of  Property

During  1999, the Company acquired approximately six and one-half acres of land,
located  in  Topeka, KS.   A 20,000 square foot building has been constructed on
approximately  one-half of this land.  On May 1, 2001, the Company relocated its
home  office  to  the  newly  constructed building.  Effective July 1, 2001, the
remaining  12,500  square  feet  of  office  space has been leased.  The Company
intends  to  sell  the  remaining  land  at  an undetermined time in the future.

Item  3.  Legal  Proceedings

There  are  no legal proceedings pending against the Company or its subsidiaries
or  of  which any of their property is the subject.  There are no proceedings in
which  any director, officer, affiliate or shareholder of the Company, or any of
their  associates,  is a party adverse to the Company or any of its subsidiaries
or  has  a  material interest adverse to the Company or any of its subsidiaries.

                                     8
<PAGE>

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

No  matter  was submitted during the forth quarter of the fiscal year covered by
this  Form  10-KSB  to  a  vote  of  the Company s security holders, through the
solicitation  of  proxies  or  otherwise.

PART  II

Item  5.     Market  for  Common  Equity  and  Related  Stockholder  Matters

(a.)     Market  Information

The  Company  s  common  stock became tradeable on October 11, 1999.  The common
stock  is  not  listed  on  any stock exchange.  Trading of the Company s common
stock  is  limited and sporadic and an established public market does not exist.

(b.)     Holders

As  of March 13, 2002, there are approximately 4,950 shareholders of the Company
s  outstanding  common  stock.

(c.)     Dividends

The  Company  has  not  paid any cash dividends since inception (July 10, 1996).
Additionally,  dividends  are  not  anticipated  in  the  foreseeable  future.


                                     9
<PAGE>

Item  6.  Management  s  Discussion  and  Analysis  or  Plan  of  Operation

The  Company  makes  forward-looking statements from time to time and desires to
take advantage of the "safe harbor"  which is afforded such statements under the
Private  Securities  Litigation  Reform Act of 1995 when they are accompanied by
meaningful  cautionary statements identifying important factors that could cause
actual  results  to  differ  materially  from  those  in  the  forward-looking
statements.

The  statements  contained  in  this report, which are not historical facts, are
forward-looking statements that involve risks and uncertainties that could cause
actual  results to differ materially from those set forth in the forward-looking
statements.  Any  projections of financial performances or statements concerning
expectations  as to future developments should not be construed in any manner as
a  guarantee  that such results or developments will, in fact, occur.  There can
be  no  assurance  that  any  forward-looking statement will be realized or that
actual  results  will not be significantly different from that set forth in such
forward-looking  statement.  In  addition  to  the  risks  and  uncertainties of
ordinary  business  operations,  the  forward-looking  statements of the Company
referred  to  above  are  also  subject  to  risks  and  uncertainties.

The  following  discussion  should  be read in conjunction with the consolidated
financial  statements  and  notes  thereto,  beginning  on  page  F-1.

Financial  Position

Significant  changes  in  the  consolidated balance sheets from 2000 to 2001 are
highlighted  below.

Total  assets  increased from $14,380,754 at December 31, 2000 to $17,239,963 at
December  31,  2001.   The  Company's  available-for-sale fixed maturities had a
fair  value of $8,605,901 and amortized cost of $8,313,448 at December 31, 2001.
This  investment portfolio is reported at market value with unrealized gains and
losses,  net  of applicable deferred taxes, reflected as a separate component in
shareholders' equity.  Several of the short-term investments held by the Company
in  2000  were  either  sold  or  matured and the proceeds were used to purchase
investments  in available-for-sale fixed maturity investments with higher yields
during  2001.  This  change  caused  a $2.2 million decrease (48%) in short-term
investments  and  an  increase  of  $2.4  million  (38%)  in the Company's fixed
maturities  portfolio  from  2000  to  2001.

The Company limits credit risk by emphasizing investment grade securities and by
diversifying its investment portfolio among U.S. Government agency and corporate
bonds.  Credit  risk  is  further  minimized  by  investing  in  certificates of
deposit.  As  a  result,  management believes that significant concentrations of
credit  risk  do  not  exist.

In  conjunction  with the construction of a new office building, the Company has
classified  the  unused portion of the land and the related costs to real estate
held  for  investment.  At  December  31,  2001, the balance of this account was
$274,564.

Cash  and  cash  equivalents  decreased  from  $832,485  at December 31, 2000 to
$463,363  at  December  31, 2001.  Refer to the statement of cash flows for uses
and  sources  of  cash  during  2001.

Investments  in  related parties increased $133,776 from $16,800 at December 31,
2000  to  $150,576 at December 31, 2001. This increase is due to the purchase of
investments  in  Arkansas  Security  Capital  Corporation  and  First  Computer
Services,  LLC.   During  2001,  the  Company  purchased,  through  a  private
placement,  250,000  shares  of  common  stock  of  Arkansas  Security  Capital
Corporation  ("ASCC")  of  Springdale,  Arkansas  for  $25,000.  ASCC intends to
register  an  Arkansas  intrastate public offering of $12,500,000.  After ASCC's
private  placement and public offerings are complete, the Company will own 3.05%
of  the  outstanding  common  stock.  These  shares are not registered under the
Securities  Act  of 1933, and are subject to restrictions on transferability and
resales  and  may not be transferred or resold except as permitted under the Act
and  applicable  state  securities  laws,  pursuant to registration or exemption
therefrom.  The  Company  also  purchased  a  50%  interest  in  First  Computer
Services,  LLC  ("FCS").  FCS  owns the computer hardware and software that runs
the  Company's  policy  administration,

                                   10
<PAGE>

underwriting,  claim  processing,  and  accounting  functions.  First  Alliance
Corporation  ("FAC",  another  related party) owns the remaining 50% interest in
FCS.  During  2001,  the  Company  contributed  capital of  $115,195.  The total
investment  in  FCS  is  offset  by the Company's share of the FCS loss, $6,420.

Accounts  receivable  from  affiliate increased $124,881 from $0 at December 31,
2000 to $124,881 at December 31, 2001.    The receivable, which is due from FAC,
is  primarily  attributable  to  the  Company  funding  FAC's investment in FCS.

Deferred  policy  acquisition  costs,  net  of  amortization, increased 52% from
$1,272,554  at  December  31,  2000 to $1,928,820 at December 31, 2001 resulting
from  the capitalization of acquisition expenses related to the increasing sales
of  life  insurance.  These  acquisition  expenses  include  commissions  and
management  fees  incurred  in  the  first  policy  year.

Property  and  equipment  increased  to  $3,060,247  at  December  31, 2001 from
$1,283,522  at  December  31,  2000.
The  increase  is  primarily due to the construction of the Company's new office
building.  Costs  associated with the building have increased $1.7 million since
December 31, 2000.  The remaining increase in property and equipment is a result
of  the  purchase  of  new  office  equipment,  furniture,  and  software.

Liabilities  increased  to  $5,950,041  at  December 31, 2001 from $2,828,180 at
December  31,  2000.  A  significant  portion  of  this  increase is due to life
insurance  related  policy  liabilities.  Policy reserves established due to the
sale  of  life insurance increased approximately $603,159 (66%) between 2000 and
2001.  These  reserves  are  actuarially  determined  based  on  such factors as
insured  age,  life  expectancy,  mortality  and  interest  assumptions.

There  was  an  increase  in  the amount of $937,584 (193%) for annuity contract
liabilities  from  2000 to 2001.  According to the design of FLAC's primary life
insurance  product,  first  year  premiums  payments  are allocated 100% to life
insurance  and  renewal  payments  are split 50% to life and 50% to annuity.  In
2001,  annuity contract liabilities increased as additional policies reached the
second  policy  year  and  the  renewal  policy  base  grew  larger.

Deposits  on  pending  policy applications increased to $172,616 at December 31,
2001 from $76,379 at December 31, 2000.  Deposits on pending policy applications
represent  money  submitted  with  policy  applications  that  have not yet been
approved.  Any  increases  or  decreases in this liability from year to year are
due  to  the  timing  of  approval  and  delivery  of  the  new  business.

Policyholder  premium deposits increased $91,713 (123%) from $76,379 at December
31,  2000  to  $166,182 at December 31, 2000. Premium deposits have grown as the
amount  of  insurance  inforce  has  grown.

In  accordance  with  existing  reinsurance  agreements,  FLAC generally pays no
reinsurance  premiums  on first year individual business.  However, SFAS No. 113
requires  the  unpaid  premium  to  be  recognized  as  a first year expense and
amortized  over  the  estimated  life of the reinsurance policies.  FLAC records
this  unpaid  premium as "reinsurance premiums payable" in the balance sheet and
as  "reinsurance  premiums  ceded"  in  the  income  statement.  The  change  in
reinsurance  premiums  payable  between  2000  and  2001  was  minimal.

On  July  20,  2001,  the Company entered into a $2 million promissory note with
Columbian  Bank  and  Trust  Company.  The  note matures on July 15, 2016 with a
stated  interest  rate  of the 5-year T-Bill (currently 4.400%) plus a margin of
2.600  percentage points.  The note was made to finance the new office building,
which  serves  as collateral for the note.  The company has incurred interest of
$93,634  related  to  this  note  during  2001.

Federal  income  taxes  payable  increased to $533,793 at December 31, 2001 from
$361,403  at  December 31, 2000.  Federal income taxes payable are primarily due
to  deferred  taxes  established  based  on  timing  differences  between income
recognized  for financial statements and taxable income for the Internal Revenue
Service.  These  deferred  taxes  are  based  on  the  operations of FLAC and on
unrealized  gains  of  fixed  maturities.

                                   11
<PAGE>

Results  of  Operations

Significant  components  of  revenues  include  life  insurance premiums, net of
reinsurance, and net investment income. The following table provides information
concerning  net  premium income for the years ended December 31, 2001, 2000, and
1999:
<TABLE>
<CAPTION>
                                              2001         2000         1999
                                             ------       ------       ------
<S>                                     <C>          <C>          <C>
Modified payment whole life insurance:
        First year                         $1,365,755   $1,419,335   $1,086,234
        Renewal                             1,034,091      560,747       16,551
        Single Premium                         30,386
Term insurance:
        First year                             11,814        8,993            -
        Renewal                                 8,871            -            -
   Reinsurance premiums assumed                    15            -            -
                                            ----------   ----------   ----------
Gross premium income                        2,450,932    1,989,075    1,102,785
Reinsurance premiums ceded                    (78,203)     (54,162)     (12,498)
                                           ===========  ===========  ===========
Net premium income                         $2,372,729   $1,934,913   $1,090,287
</TABLE>

Net premium income increased $437,816 (23%) from 2000 to 2001 and $844,626 (77%)
from  1999 to 2000.  The increases in net premium income are primarily driven by
significant  increases in total renewal year premiums during both 2001 and 2000.
Total  renewal year whole life premiums increased $473,344 from 2000 to 2001 and
$544,196  from  1999  to  2000.  The  increases  in  renewal  year  premiums are
consistent  with the growing nature of the Company.  Other significant increases
in  the  components  comprising net premium income include a $30,386 increase in
single premiums from 2000 to 2001 and increases in reinsurance premiums ceded of
$24,041  (44%)  from  2000  to  2001 and  $41,664 (333%) from 1999 to 2000.  The
increase  in  single  premiums  is attributable to the rollout of the First Step
product.  First Step is currently the only single premium product being marketed
by  the  Company.  Reinsurance  premiums  ceded  reflect  premiums paid to other
companies  to reinsure a portion of the risk associated with life policies.  The
increase in reinsurance premiums ceded each year is consistent with the increase
in  gross  premiums.

Net  investment  income  increased  $1,658 (1%) from 2000 to 2001  and  $155,255
(29%)  from  1999  to  2000.  During  1999 and 2000, short-term investments were
converted  to investments in available-for-sale fixed maturity investments, with
higher  yields.  The  invested asset mix, combined with a growing invested asset
base  each  year,  resulted  in  increased income from investments for the years
ended  December  31,  2001  and  2000.

Rental  income  increased  from $0 in 2000 and 1999 to $106,963 in 2001.  Rental
income  is earned by leasing approximately 12,500 square feet of office space in
the  home office building.  The Company has executed a five year lease (expiring
on  July 1, 2006) on 10,000 square feet of the office space. The remaining 2,500
square  feet  is  leased  on  a  month-to-month  basis.

Benefits  and  expenses  totaled  $3,240,581,  $2,371,934 and $1,620,229 for the
years  ended December 31, 2001, 2000 and 1999, respectively.   Included in total
benefits  and  expenses  were policy reserve increases of $603,159, $545,337 and
$368,804 during 2001, 2000, and 1999, respectively.  Life insurance reserves are
actuarially  determined  based  on such factors as insured age, life expectancy,
mortality  and  interest  assumptions.  As  more  life  insurance is written and
existing  policies  reach  additional  durations,  it  is  reasonable for policy
reserves  to  continue  to  increase.

                                  12
<PAGE>

Interest  credited  on  annuity balances totaled $78,989, $21,683 and $3,236 for
the  years  ended  December 31, 2001, 2000 and 1999, respectively. The increases
during  2001 and 2000 ($57,306 and $18,447, respectively) are primarily a result
of  the  increase in annuity fund balances.  Both interest credited on annuities
and  annuity  fund  balances  have  increased as a result of the increase in the
number  of  policies  inforce  (2,933,  1,797  and  867  in 2001, 2000 and 1999,
respectively).

Commission  expense  was  $849,576,  $863,159  and  $631,929 for the years ended
December 31, 2001, 2000, and 1999, respectively.  Commission expense is based on
a  percentage of premium and is determined in the product design.  Additionally,
higher  percentage  commissions  are  paid  for first year business than renewal
year.  The  increases  and/or  decreases  in  commission  expenses  are directly
related  to  the  increases and/or decreases in first year premium income during
each  respective  period.

Acquisition costs which are related to the sale of insurance are capitalized and
amortized  over  the  premium  paying  period of the associated policies.  These
costs include commissions and management fees incurred in the first policy year.
During  2001,  2000 and 1999, $1,115,390, $1,158,212 and $901,613, respectively,
of  these  costs  had been capitalized as deferred policy acquisition costs. The
related  amortization  for  the  same  periods  totaled $459,124,  $565,869, and
$234,522,  respectively.

Salaries,  wages  and  employee  benefits  increased  from  $682,458  in 2000 to
$1,020,655  in  2001.  This  increase  is due primarily to a 45% increase in the
number  of  persons  employed  by  the  Company.

Administrative  fees  -related  party  are  paid  to  First Alliance Corporation
("FAC"),  a  shareholder  of the Company, for accounting services.  During 2001,
2000  and  1999, respectively, these fees totaled $142,785, $117,246 and $60,531
and  were  calculated  based on a percentage of FLAC's premium income collected.
The  increase  in  administrative  fees  during  2001  ($25,539 or 22%) and 2000
($56,715  or 94%) correlates with the increase in premium income during the same
time  periods.

Other operating costs and expenses totaled $1,235,769, $690,841 and $525,556 for
the  years  ended December 31, 2001, 2000, and 1999, respectively. The increases
in  both  years  are  consistent  with  the  growing  nature  of  the  Company.
Significant  components  of  the $544,928 increase from 2000 to 2001 include the
following:  interest  expense  ($95K), travel related expense ($85K), electronic
data  processing  expense  ($80K),  depreciation  ($70K),  advertising  ($70K),
building  operations  expense  ($40K),  product  development  ($30K), recruiting
($20K)  and insurance ($10K).  The increases in interest, depreciation, building
operations  and  insurance expenses are a result of the new home office building
in  Topeka,  KS.

Liquidity  and  Capital  Resources

During the years ended December 31, 2001, 2000, and 1999, the Company maintained
liquid  assets sufficient to meet operating demands, while continuing to utilize
excess  liquidity  for  fixed maturity investments.  Net cash provided (used) by
operating  activities  during  the  years ended December 31, 2001, 2000 and 1999
totaled  $(226,170),  $98,435  and  $(109,199)  respectively.

FLAC  generally  receives  adequate  cash  flow  from  premium  collections  and
investment  income  to  meet  the  obligations  of  its  insurance  operations.
Insurance policy liabilities are primarily long-term and generally are paid from
future  cash  flows.  A significant portion of the Company's invested assets are
readily  marketable  and  highly  liquid.

                                     13
<PAGE>

Cash  collected  from  deposits  on  annuity  contracts and policyholder premium
deposits  are  recorded  as cash flows from financing activities.  A significant
portion  of  the  Company's  invested  assets  are readily marketable and highly
liquid.

The  Company  has  been constructing a building to be used as the Company's home
office.   The  Company  occupied  the  new building on May 1, 2001.  The Company
entered  into  a  note payable with Columbian Bank for $2,000,000 to finance the
project.  To  obtain  this  financing, the building and property were pledged as
collateral  on  the  note.  Cash  flows  used on the real estate project for the
years  ended  December  31, 2001 and 2000 totaled approximately $1.6 million and
$900,000,  respectively.


                                       14
<PAGE>

Item  7.  Financial  Statements

The  consolidated  financial  statements  and related notes are included in this
report  beginning  on  page  F-1.

Item  8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting and
Financial  Disclosure

NONE


PART  III


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

The  current  Executive  Officers  and  Directors of the Company are as follows:


Name                         Age              Position                   Term
=================           =====    ========================          =========
Michael  N.  Fink             46     Chairman  of  the  Board          One  Year

Rickie  D.  Meyer             50     President  and  Director          One  Year

Phillip  M.  Donnelly         50     Secretary/Treasurer
                                     /Vice President and Director      One  Year

Danny  N.  Biggs              65     Director                          One  Year

Paul  E.  Burke,  Jr.         68     Director                          One  Year

Edward  C.  Carter            59     Director                          One  Year

Kenneth  L.  Frahm            55     Director                          One  Year

John  W.  Hadl                62     Director                          One  Year

Stephen  J.  Irsik  Jr.       55     Director                          One  Year

John  G.  Montgomery          62     Director                          One  Year

Harland  E.  Priddle          71     Director                          One  Year

Gary  E.  Yager               47     Director                          One  Year

The Directors serve until their successors are elected and qualified.  Directors
will  be  elected annually by the stockholders.  The Executive Officers serve at
the  discretion  of  the  Board  of  Directors.  The  President,  Secretary  and
Treasurer  are  elected  at  the  annual  meeting  of the Board, while the other
officers  are  elected  by  the  Board  from  time  to  time  as the Board deems
advisable.  The  Executive  Officers  and Directors also hold the same positions
for  the  Company's  subsidiaries.  The  following is a brief description of the
previous  business  background  of  the  Executive  Officers  and  Directors:

                                       15
<PAGE>

Michael  N.  Fink:  Mr. Fink has twenty-one years of experience in the insurance
industry,  primarily  in  sales  management.  From 1981 to 1984, Mr. Fink was an
agent,  District Director, and Regional Director with Liberty American Assurance
Company  in  Lincoln,  Nebraska.  In 1984, Mr. Fink transferred to an affiliated
company,  Future  Security  Life,  in Austin, Texas, where he served as Regional
Director  and  Agency  Director  until  1988.  In  March  1988,  Mr. Fink became
affiliated  with  United  Income,  Inc. and United Security Assurance Company as
Agency Director and Assistant to the President.  In June 1993, Mr. Fink left the
United Companies and became President of First Alliance Corporation and its life
insurance  and  venture  capital  companies.

Rickie  D.  Meyer:  Mr.  Meyer  has  twenty years of experience in the insurance
industry,  primarily  in  sales  management.  From May 1982 to October 1984, Mr.
Meyer was a life insurance agent, District Director and Executive Sales Director
with  Liberty American Assurance Company in Lincoln, Nebraska.  In October 1984,
Mr.  Meyer  transferred  to an affiliated company to become Agency Director.  In
1985,  Mr.  Meyer  left  Liberty  American to become an organizer and Zone Sales
Director  for United Trust, Inc. in Springfield, Illinois.  In January 1988, Mr.
Meyer  transferred  to  Columbus,  Ohio  to assist in the organization of United
Income, Inc. and served as Zone Sales Manager.  While with United Income, he was
promoted to Training Director in 1991 and to Agency Director in 1993.  Mr. Meyer
left  the  United  Companies  in  January  1996  to  form  the  Company.

Phillip  M.  Donnelly:   Mr.  Donnelly has twenty-two years of experience in the
insurance  industry,  primarily  in  the  areas  of  financial  and  operations
administration.  He  served  as  Treasurer  and  Chief  Financial Officer of the
Cimarron  Life  Insurance  Company  from  1974  to 1986.  In 1986,  Mr. Donnelly
returned  to  college and received his M.B.A. in Accounting from Fort Hays State
University  in 1988.   In 1989, Mr. Donnelly became affiliated with The Franklin
Life  Insurance  Company  of Springfield, Illinois, where he served as Assistant
Vice  President  in  charge  of purchasing, budgeting, forecasting and strategic
planning  until his departure in 1997.  He then returned to Kansas and worked as
a  Financial  Manager for Cargill Corporation until 1999.  In 1999, Mr. Donnelly
joined  First  American  Capital  Corporation  and  became  Vice  President/
Secretary/Treasurer  and  Director  in  2000.

Danny  N.  Biggs:  Mr.  Biggs is Vice-President, Partner, General Superintendent
and  Director of Pickrell Drilling Company, Inc., Mobile Drilling Company, Inc.,
Central  Dirt  Service, Inc., and Pickrell Acquisitions, Inc. and also a Partner
in Kelly Petroleum.  Mr. Biggs is a past President of the Kansas Independent Oil
&  Gas Association ("KIOGA") and is currently a member and director of KIOGA and
director and president of Kansas Oil & Gas Hall of Fame & Museum Foundation.  He
is a member of the Great Bend Chamber of Commerce, American Petroleum Institute,
Interstate  Oil & Gas Compact Commission Crude Oil Policy Committee, Association
of  Energy  Service  Companies  and  the  Independent  Petroleum  Association of
America.  He  served  as  Chairman  of  the  Mid-America  Oil  &  Gas Technology
Exposition,  Vision  2000  Area  Relations/Image  Committee,  KIOGA  Membership
Committee  and  general  Chairman  of  the 1992 KIOGA Convention.  Mr. Biggs was
recently  inducted  into  the  Kansas  Oil  &  Gas  Hall of Fame.   Mr. Biggs is
actively  involved in numerous other business, civic and religious organizations
including  prior  service  as  an  Elder  in  the  Presbyterian  Church.

Paul  E.  Burke,  Jr.:  Mr.  Burke  is the President of Issues Management Group,
Inc., a public relations and governmental affairs consulting company.  Mr. Burke
served  as  a  member  of  the Kansas State Senate from 1975 to January 1997 and
served  as  the  President of the Senate from 1989 until his retirement in 1997.
During  his  tenure  in  the  Kansas Senate, Mr. Burke served as Chairman of the
Organization,  Calendar  and  Rules,  Legislative  Coordinating  Council  and
Interstate  Cooperation  Committees.  Mr.  Burke  was  a  majority leader of the
Senate  from 1985 to 1988.  Mr. Burke has served in numerous national, state and
local  leadership  positions  including  past  positions  as  a  member  of  the
President's  Advisory Commission on Intergovernmental Relations.  He is also the
former  owner  of WEBBCO, Inc., an industrial engineering and equipment company.
Mr.  Burke  received  his  Bachelor  of  Science  degree  in  business  from the
University  of  Kansas  in  1956.

                                       16
<PAGE>

Edward C. Carter:  Mr. Carter is an entrepreneur and real estate developer.  Mr.
Carter  is  a  retired senior executive (1963-1992) with the Kansas Southwestern
Bell  Telephone  Company.  He  served  in  numerous  senior  executive positions
including  Division  Manager  Regulatory  Relations,  Regional  Vice  President
Southwestern  Bell  Telecom,  a  start up company serving a four state area, and
Kansas  Director  of  Marketing  and District Manager Residence Service Centers.
Mr.  Carter  served as City Commissioner and Mayor of Lawrence, Kansas from 1977
to 1981.  He was a director and President  of Lawrence, Kansas Rotary Club, past
Executive Board Member of the Kansas State Chamber of Commerce, past Chairman of
the Douglas County United Fund and Director and President of Junior Achievement.
He  is  a  Co-Recipient  of  the  Outstanding Kansan Award for Civic Service and
received  the  Lifetime  Meritorious  Achievement  Award  from  Pittsburgh State
University  in  2001.  Mr.  Carter  was a member and All Conference guard on the
Pittsburgh  State  University  National Championship Football Team.  He received
his  B.A.  in  Business Administration from Pittsburgh State University in 1963.


Kenneth  L.  Frahm:    Mr.  Frahm  has been a self-employed farmer since 1975.He
currently  owns  1,200 acres of irrigated corn and dryland wheat production land
and  is  a member of a family partnership which produces over 500,000 bushels of
corn and wheat annually on 6,500 acres of western Kansas farm land.  Mr. Frahm's
operating  entities include Allied Family Farm and Grain Management, Inc.  He is
past President of the Kansas Development Finance Authority.  He is past Chairman
of  21st  Century Grain Processing Cooperative, and a former member of the Board
of  Directors  of  Bank IV Community Bank in Colby.  In addition, Mr. Frahm is a
member  of  the  Kansas  Farm  Service  Agency  State  Committee appointed by US
Agriculture Secretary Ann Veneman.  He is a member of the Agricultural Use Value
Committee  of  the  Kansas  Department of Revenue, a past member of the Board of
Directors  of  the  Kansas  Area United Methodist Foundation and Chairman of its
Investment  Committee, Past President and Paul Harris Fellow of Rotary, a member
of  the  Kansas  Farm  Bureau, Kansas Livestock Association, Kansas Corn Growers
Association,  Kansas Association of Wheat Growers and the Kansas Water Resources
Association.  Mr.  Frahm  is  married  to  Sheila  Frahm, a former Kansas United
States  Senator  and  has  three  daughters.  Mr.  Frahm  received  his  B.A. in
Economics  in 1968 from Fort Hays Kansas State College and his M.B.A. in Finance
in  1969  from  the  University  of  Texas  at  Austin

John  W. Hadl:  Mr. Hadl is an Associate Athletics Director at the University of
Kansas  in  Lawrence,  Kansas,  and he also heads the Williams Educational Fund,
which  provides  scholarship  assistance to more than 400 male and female Kansas
University  student-athletes.  With  a  membership  of  over  3,500  donors, the
Williams  Fund  raised  in excess of $3 million last year to pay the scholarship
expenses  of  student-athletes.  Prior  to  becoming  the  Associate  Athletics
Director, Mr. Hadl served as an Assistant Athletic Director and member of the KU
football  coaching  staff.  Mr.  Hadl  was a three year letterman at KU, earning
All-American  honors  at  two different positions-as a halfback in 1960 and as a
quarterback  in  1961.  He  was  All-Conference  three times.  After his college
career,  Mr.  Hadl,  went on to play professional football for 18 seasons in the
AFL,  NFL with San Diego, Los Angeles, Green Bay and Houston.  He was NFL Man of
the  Year in 1971 and the NFL's Most Valuable Player in 1973.  He played in four
AFL  All-Star games, three title games and led the league in passing in 1968 and
in  1971.  In  December of 1994, Mr. Hadl was inducted into the College Football
Hall  of  Fame.

Stephen  J.  Irsik  Jr.:  Stephen J. Irsik, Jr.:  Mr. Irsik is one of the owners
of a multi faceted agri-business centered in western Kansas.  The business deals
with  identity  preserved  grain  production, angus beef and the dairy industry.
Mr.  Irsik  is  one  of  the  owners  of  Irsik & Doll Company, a grain storage,
merchandising and full feeding cattle operation with facilities across the State
of  Kansas.  Mr.  Irsik is serving his 16th  year on the Gray County Commission.
He currently serves on the 21 Century Alliance Board, 21Century Grain Processing
board  and Home National Bank Board of Garden City, Ks.  Mr. Irsik has served as
a  past  Board  member of the Southwest Kansas Irrigation Association, Upper Ark
Basin  Advisory  committee  and  Ground  Water  Management  District #3. He is a
graduate  of  Kansas  State  University  and  a veteran of the United States Air
Force.

                                    17
<PAGE>

John  G.  Montgomery:  Mr.  Montgomery  is  the  President  of  Montgomery
Communications,  Inc. of Junction City, Kansas.  He is a newspaper publisher and
TV  station  owner.    His  current business affiliations include Directorship's
with  First  National Bank, Junction City.  He is also President of the Junction
City  Housing  and  Development  Corporation.  From  1964  to  1973  he  was the
Assistant to the President at the San Francisco Newspaper Printing Company.  Mr.
Montgomery  is  a  member  of  the InterAmerican Press Association, Inland Daily
Press  Association and the Kansas Press Association.  He was Civilian Aid to the
Secretary of the Army of Kansas from 1979-1981 and has again served in that role
since  1995.  He  has extensive state government service including Past Chairman
of  the Kansas Board of Regents, Past member of the Washburn University Board of
Regents,  Kansas,  Inc.  -  Science  and Technology Council, and 1986 Democratic
nominee  for  Lieutenant Governor.  His considerable civic involvement, in part,
includes being past President of the Junction City Chamber of Commerce, Director
and  past  President  of  the United Way, past Board member of the Boy Scouts of
America,  Coronado  Council,  past  Director of the YMCA, Trustee of the William
Allen  White  Foundation, Co-chair of Economic Lifelines, Board member of Kansas
Wildscape  and  the  Kansas 4-H and a member of the Rotary Club.  Mr. Montgomery
has  received  the  1975  Jaycees  Outstanding  Young  Man of Kansas Award, 1975
Junction  City  Jaycees  Distinguished  Service Award  and the Department of the
Army,  Patriotic Civilian Service Award.  He graduated from the Philips Academy,
Andover,  Massachusetts,  in 1958, Yale University in 1962, receiving a Bachelor
of  Arts Degree, and from Stanford University in 1964, where he received his MBA
Degree.

Harland  E.  Priddle:  Mr.  Priddle  is  President  of  Priddle  & Associates, a
business  consulting  firm  specializing  in  business  and economic development
consulting.  Mr.  Priddle  is  the  former  Kansas  Secretary  of  Agriculture
(1982-1986)  and  served  as the first Kansas Secretary of Commerce (1987-1991).
As  the first Secretary of Commerce, he was directly involved in the creation of
such  programs as Kansas, Inc., Kansas Technology Enterprise Corporation, Kansas
Development  Finance  Authority  and  the  Kansas  Venture Capital Corp.  He was
candidate  for  Lt.  Governor  of  Kansas  in  1986 and 1990.  He was the Deputy
Director of the White House Communications Agency for the President for a period
of  four  years  (1970-1974)  where  he  provided  support  and  accompanied the
President  on  approximately  200  Presidential  trips. Mr. Priddle was the Vice
President  for  Marketing and Customer Services for the Hutchinson National Bank
from  1978  to 1981.  He retired from the United States Air Force in 1974, after
22  years,  with  the  rank  of  Colonel. While in the Air Force, he received 17
military  decorations  including  the  Bronze Star and two Legions of Merit.  He
received  a  BS  in  Agriculture  from  Kansas  State  University  in  1952

Gary  E.  Yager:  Mr.  Yager  recently became Executive Vice President and Chief
Executive  Officer  and  Senior  Lender of the Columbian Bank of Topeka, Kansas.
From  October  1986  to  December  1995,  Mr.  Yager  served  as either the Vice
President  and  Branch Manager or the Vice President of Commercial Loans for the
Commerce  Bank  and  Trust  of  Topeka, Kansas.  From 1976 to 1986, he served in
various  management  positions  with  Bank  IV  of  Topeka  including  Assistant
Vice-President  of  Correspondent  Banking  and  Branch  Manager.  Mr.  Yager is
currently  a  member  of  the  Board  of Directors of the Young Bank Officers of
Kansas,  Topeka-Shawnee  County  Certified Development Corporation, Contemporary
Housing  Alternatives  of  Topeka,  and  Quail Unlimited.  He is a member of the
Topeka  Chamber  of  Commerce,  former  member  of the Board of Directors of the
Topeka  Family  Service  and  Guidance  Center,  and  former  advisor  of Junior
Achievement.  He  is  a  past  member  of the Topeka Active 20-30 Club, where he
served  in  numerous  leadership  roles  including President and Treasurer.  Mr.
Yager received his BA degree in Business Administration from Washburn University
of  Topeka  in  1976.
                                     18
<PAGE>

Item  10.    Executive  Compensation

The  following  table  sets  forth  amounts  earned  by  executive  officers  as
compensation  over  the  past  three  years:
<TABLE>
<CAPTION>

                                         Annual     Compensation
                             ---------------------------------------------------
                                                       Other Annual  All Other
                                    Salary   Bonus     Compensation  Compensation
Name and Principal Position   Year   ($)    ($)(1)     ($)(2)
===========================   ===== ======= ========  ============== ============
<S>                           <C>   <C>      <C>      <C>            <C>
Rickie D. Meyer               2001  96,271   79,080     5,983             -
President and Director        2000  93,000   80,309         -             -
                              1999  90,485  124,255         -             -

Michael N. Fink               2001  77,017   63,264     2,792             -
Chairman and Director         2000  74,330   64,247         -             -
                              1999  72,388   43,405         -             -

Phillip M. Donnelly           2001  72,838   19,783         -             -
Treasurer / Secretary         2000  67,408         -      400             -
and Director                  1999  30,639      601         -             -
</TABLE>
(1) Includes  incentive  compensation pursuant to the Executive Employment
    Agreement, based  on  premiums
(2) Other  Annual  Compensation consists  of  automobile  allowances and
    personal disability and life insurance premiums. The  aggregate
    cost to the Company of such personal benefits did not exceed the
    lesser of $50,000 or 10% of the annual salaries received by the above
    individuals.

Compensation  of  Directors

As  an annual retainer fee for directors who are not officers of the Company, an
attendance  fee  pool was established.  This pool consists of 1% of the premiums
delivered  in  each calendar year and is paid to each board member on a pro-rata
basis  determined  by his attendance of board meetings.  This fee was payable in
cash  for  2000  and  2001.In  addition,  each Director is paid $750 per regular
meeting  attended for the Company and its subsidiaries, $75 per telephonic board
meeting,  and  $250 per committee meeting.  During 2001, there were four regular
and  two  telephonic  Board of Directors meetings.  In addition, there were four
audit  committee,  investment  committee  and  compensation  committee meetings.

Executive  Employment  Agreements

The  Company has entered into Executive Employment Agreements with Messrs. Fink,
Meyer  and  Donnelly.  The  employment agreements for Messrs. Fink and Meyer are
for  a  term of four years beginning November 1, 1998.  The employment agreement
for  Mr. Donnelly is for a term of two years beginning November 1, 2000.  Annual
compensation  under  the  agreements is $72,000, $90,000 and $70,000 for Messrs.
Fink,  Meyer  and  Donnelly,  respectively.  Included  in  these agreements is a
clause  that  requires  the  salaries to be adjusted annually to reflect current
cost  of living.  Incentive compensation is earned based on percentages of first
year  life  and  renewal premiums of FLAC's First America 2000 product.  Messrs.
Fink,  Meyer and Donnelly devote 25%, 100% and 100% of their time, respectively,
to  the  operations  of  the  Company.

                                       19
<PAGE>

Item  11.  Security  Ownership  of  Certain  Beneficial  Owners  and  Management

The  following  table  sets  forth  information  as of March 13, 2002, regarding
ownership  of  Common  Stock of the Company by (i) the only persons known by the
Company  to  own  beneficially  more  than  5%  thereof;  (ii)  the  directors
individually;  and  (iii)  all  officers  and  directors  as  a  group.


                                     Class            Amount and       Percent
Name and Address of                   of              Nature of          of
Beneficial Owner                     Stock        Beneficial Ownership  Class
==========================          =======      ===================== ========
Michael  N.  Fink
2581  Walnut  Grove  Lane
Lexington, KY 40509                  Common               125,000          2.4%

Rickie  D.  Meyer
3513  SW  Alameda  Dr.
Topeka, KS 66614                     Common               526,000          9.9%

Danny  N.  Biggs
2601  Canterbury
Great Bend, KS 67530                 Common                50,000             *

Paul  E.  Burke,  Jr.
2009  Camelback  Drive
Lawrence, KS 66047                   Common                50,000             *

Edward  C.  Carter
4100  Wimbledon  Drive
Lawrence, KS 66047                   Common                60,000 (1)      1.1%

Kenneth  L.  Frahm
Box  849
Colby, KS 67701                      Common                40,000             *

Stephen  J.  Irsik,  Jr.
05405  Six  Road
Ingalls, KS 67853                    Common                69,000          1.3%

John  G.  Montgomery
510  Redbud  Lane
Junction City, KS 66441              Common                45,000             *

Harland  E.  Priddle
8214  South  Haven  Rd.
Burrton, KS 67020                    Common                40,000             *

Gary  E.  Yager
3521  SW  Lincolnshire
Topeka, KS 66614                     Common                40,000             *

                                       20
<PAGE>

                                    Class          Amount and           Percent
Name and Address of                  of            Nature of             of
Beneficial Owner                    Stock        Beneficial Ownership   Class
===================                ==========   ====================   ========

First  Alliance  Corporation
2285  Executive  Drive
Suite  308
Lexington, KY 40505                  Common               525,000 (2)       9.9%
                                                       ----------         ------
All Directors and Officers as a Group                   1,045,000          19.8%


*Indicates  less  than  1%  ownership.

(1) Excludes  20,000  shares  held by Becky Carter, Mr. Carter's wife, as to
    which  Mr.  Carter  disclaims  beneficial  ownership.

(2) FAC  is  a  financial  services  holding  company  based  in  Lexington,
    Kentucky,  which  wholly  owns  life insurance and venture capital
    subsidiaries. Messrs.  Fink  is  an  officer  and  director  of  FAC.

Item  12.    Certain  Relationships  and  Related  Transactions

Messrs. Michael Fink and Rick Meyer and First Alliance Corporation are promoters
of the Company.  Collectively, they hold 1,176,000 shares of Common Stock in the
Company  for  which  they  paid  aggregate consideration of $117,600 or $.10 per
share.

A  portion of the Company s short-term investments consisting of certificates of
deposit are purchased through Columbian Bank.  Mr. Gary Yager, a Director of the
Company,  is  the  Chief  Executive  Officer  of  this  bank.

A  note  payable,  secured  by  the  main  office  building was obtained through
Columbian  Bank.  As noted above,  Mr. Gary Yager, a Director of the Company, is
the  Chief  Executive  Officer  of  this  bank.

The Company has contracted with First Alliance Corporation ( FAC ) of Lexington,
Kentucky  to  provide  accounting  services for FLAC and the Company.  Under the
terms  of  the management agreement, the Company pays fees based on a percentage
of  delivered  premiums  of  FLAC.  The  percentages  are  5.5%  for  first year
premiums;  4%  of  second year premiums; 3% of third year premiums; 2% of fourth
year  premiums;  1% of fifth year premiums; 1% for years six through ten for ten
year  policies  and  .5%  in  years six through twenty for twenty year policies.
Pursuant  to the agreement, the Company incurred $142,785, $117,246, and $60,531
of  fees during 2001, 2000, and 1999, respectively.  FAC owns approximately 9.9%
of  the  Company  s  outstanding  common  stock  as  of  December  31,  2001.


                                   21
<PAGE>

Item  13.  Exhibits  and  Reports  on  Form  8-K

(a) The  following  documents  are  filed  as  part  of  this  Form  10-KSB:

(1)Financial Statements are attached and included
   herein on pages F-1 through f-26

(2)   The  exhibits  listed  in  the  Index  to
      Exhibits appearing on Page 26.

(b)     Reports  on  Form  8-K.
        None



                                      22
<PAGE>

                                  SIGNATURES
                                 -----------

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


FIRST  AMERICAN  CAPITAL  CORPORATION


By__/S/Rickie  D.  Meyer___ __________________________________ Date  3/26/2002
     Rickie  D.  Meyer,  President/Director




                                     23
<PAGE>

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

By___/S/ Rickie  D.  Meyer____________________________________ Date  3/26/2002
     Rickie  D.  Meyer,  President/Director


By___/S/Phillip  M.  Donnelly_________________________________ Date  3/26/2002
     Phillip  M.  Donnelly,  Secretary/Treasurer/Vice  President/Director


By___/S/Michael  N.  Fink______________________      _________ Date  3/26/2002
     Michael  N.  Fink,  Chairman/Director


By_ /S/Daniel  N.  Biggs______________________________________ Date  3/26/2002
     Daniel  N.  Biggs, Director


By__/S/Harland  E.  Priddle___________________________________ Date  3/26/2002
     Harland  E.  Priddle, Director


By_ /S/Paul  E.  Burke  Jr_____________________________________ Date  3/26/2002
     Paul  E.  Burke  Jr,  Director


By_ /S/Stephen  J.  Irsik  Jr_________________________________ Date  3/26/2002
     Stephen  J.  Irsik  Jr,  Director


                                    24
<PAGE>




By__/S/John  G.  Montgomery___________________________________ Date  3/26/2002
     John  G.  Montgomery,  Director


By__/S/Gary  E.  Yager________________________________________ Date  3/26/2002
     Gary  E.  Yager,  Director



                                       25
<PAGE>

INDEX  TO  EXHIBITS

(Item  13(a))

The documents listed in the following table are filed as Exhibits in response to
Item  13(a).  Exhibits  listed  that  are not filed herewith are incorporated by
reference.

Exhibit  No.     Description
----------       ---------------------------
3.1              Articles  of  Incorporation  (1)

3.2              By-laws (2)

4                Instruments  defining  the  rights  of  security  holders,
                 including  indentures  (1)

10               Material  Contracts  (1)

                      (a) Lease
                      (b) Advisory  Board  Contract
                      (c) Service  agreement  between  First  Life  America
                          Corporation and First  American  Capital  Corporation
                      (d) Service  agreement  between  First  American  Capital
                          Corporation and  First  Alliance  Corporation
                      (e) Management  employment  agreements
                      (f) Reinsurance  agreement  with  BMA

11               Statement  re  computation  of  per  share  earnings  (3)

21               Subsidiaries


(1) Filed  as  an  Exhibit  to the Registrant s amended Form 10-SB, filed on
    August  13,  1999,  and  incorporated herein  by  reference.

(2) Filed  as  an  Exhibit  to the Registrants Form 10-kSB, filed on
    March 26, 2001,  and  incorporated herein  by  reference.

(3) Note  2  in  Notes to Consolidated Financial Statements included in this
    Report  on  Page  F-10.

                                       26
<PAGE>

                                   EXHIBIT 21
               SUBSIDIARIES OF FIRST AMERICAN CAPITAL CORPORATION



Name                                 Jurisdiction  of  Incorporation
---------------------------          -------------------------------

First  Life  America  Corporation    Kansas
First  Capital  Venture, Inc.        Kansas


                                      27
<PAGE>



                             FIRST AMERICAN CAPITAL CORPORATION

                         INDEX  TO  CONSOLIDATED  FINANCIAL  STATEMENTS





                                                                       Page
Consolidated  Financial  Statements                                   Numbers
-----------------------------------                                   -------

Independent  Auditors  Report                                             F-2

Consolidated  Balance  Sheets  as  of  December  31,  2001  and  2000     F-3

Consolidated Statements of Operations for the years ended
December  31,  2001,  2000  and  1999                                     F-5

Consolidated Statements of Changes in Shareholders Equity
for  the  years ended  December  31,  2001,  2000,  and  1999             F-6

Consolidated Statements of Cash Flows for the years ended
December  31,  2001,  2000,  and  1999.                                   F-8

Notes  to  Consolidated Financial Statements                              F-10


                                       F-1
<PAGE>

Independent  Auditors  Report



Board  of  Directors  and  Shareholders
First  American  Capital  Corporation


We  have  audited the accompanying consolidated balance sheets of First American
Capital  Corporation  (a  Kansas  corporation) and subsidiary as of December 31,
2001 and 2000, and the related consolidated statements of operations, changes in
shareholders  equity,  and  cash flows for each of the three years in the period
ended  December  31, 2001.  These financial statements are the responsibility of
the  Company s management.  Our responsibility is to express an opinion on these
financial  statements  based  on  our  audits.

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

     In  our opinion, the financial statements referred to above present fairly,
in  all material respects, the consolidated financial position of First American
Capital  Corporation  and  subsidiary  as of December 31, 2001 and 2000, and the
consolidated  results  of  their operations and cash flows for each of the three
years  in  the  period  ended  December  31, 2001, in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.



/s/  KERBER,  ECK  &  BRAECKEL  LLP


Springfield,  Illinois
March  20,  2002

                                      F-2
<PAGE>

                       FIRST AMERICAN CAPITAL CORPORATION

                        CONSOLIDATED  BALANCE  SHEETS

<TABLE>
<CAPTION>


                                                               December 31,   December 31,
ASSETS                                                             2001           2000
------                                                         -----------   -------------
<S>                                                            <C>            <C>
Investments:
      Securities available for sale, at fair value:
            Fixed maturities (amortized cost, $8,313,448
            in 2001 and $6,023,296 in 2000)                    $   8,605,901  $   6,241,820
      Policy loans                                                    33,178          5,990
      Notes receivable (net of valuation allowance
            of $4,406 in 2001 and $18,414 in 2000)                         -         30,262
      Real estate held for investment                                274,564              -
      Short-term investments                                       2,286,095      4,437,280
Total investments                                                 11,199,738     10,715,352

Cash and cash equivalents                                            463,363        832,485
Investments in related parties                                       150,576         16,800
Accrued investment income                                            181,719        148,487
Accounts receivable                                                  104,447         93,167
Accounts receivable from affiliate                                   124,881              -
Deferred policy acquisition costs (net of accumulated
     amortization of $1,259,744 in 2001 and $800,619 in 2000)      1,928,820      1,272,554
Property and equipment (net of accumulated depreciation
     of $129,977 in 2001 and $42,860 in 2000)                      3,060,347      1,283,522
Other assets                                                          26,072         18,387
                                                               -------------  --------------
Total assets                                                   $  17,239,963  $  14,380,754
                                                               =============  ==============
</TABLE>
                                      F-3
<PAGE>

                       FIRST  AMERICAN  CAPITAL  CORPORATION

                      CONSOLIDATED  BALANCE  SHEETS  (continued)
<TABLE>
<CAPTION>
                                                                   December 31,    December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY                                   2001            2000
                                                                  -------------   --------------
<S>                                                               <C>            <C>
Policy and contract liabilities:
     Annuity contract liabilities                                 $   1,424,118   $     486,533
     Life policy reserves                                             1,522,794         919,635
     Liability for policy claims                                              -          22,306
     Policyholder premium deposits                                      166,182          74,469
     Deposits on pending policy applications                            172,616          76,379
     Reinsurance premiums payable                                        32,142          28,561
Total policy and contract liabilities                                 3,317,852       1,607,883

Commissions, salaries, wages and benefits payable                        84,038         114,018
Other liabilities                                                        28,395          28,811
Note payable                                                          1,967,328         698,018
Accounts payable to affiliate                                            18,022          18,047
Federal income taxes payable:
     Current                                                                613               -
     Deferred                                                           533,793         361,403
                                                                   ------------   --------------
Total liabilities                                                     5,950,041       2,828,180



Shareholders' equity:
Common stock, $.10 par value, 8,000,000 shares authorized;              543,899         541,886
     5,438,985 shares issued and 5,273,985 shares outstanding
     in 2001; and 5,418,860 shares issued and 5,303,860 shares
     outstanding in 2000;
Additional paid in capital                                           12,328,617      12,230,005
Retained earnings - deficit                                          (1,529,613)     (1,176,785)
Accumulated other comprehensive income                                  191,277         144,226
Less: treasury shares held at cost (165,000 shares in 2001; and
    115,000 shares in 2000)                                            (244,258)       (186,758)
                                                                  --------------  --------------
Total shareholders' equity                                           11,289,922      11,552,574
                                                                  -------------   --------------
Total liabilities and shareholders' equity                        $  17,239,963   $  14,380,754
                                                                  =============   ==============
</TABLE>
See  notes  to  consolidated  financial  statements.

                                      F-4
<PAGE>



                                FIRST AMERICAN CAPITAL CORPORATION

                              CONSOLIDATED  STATEMENTS  OF  OPERATIONS

<TABLE>
<CAPTION>
                                                                 Year ended December 31,
                                                        ---------------------------------------
                                                           2001          2000         1999
                                                        -----------   -----------   -----------
<S>                                                      <C>           <C>           <C>
Revenues
  Gross premium income                                   $ 2,450,932   $ 1,989,075   $1,102,785
  Reinsurance premiums ceded                                 (78,203)      (54,162)     (12,498)
      Net premium income                                   2,372,729     1,934,913    1,090,287
  Net investment income                                      700,903       699,245      543,990
  Net realized gain on disposal of assets                     24,584          (908)           -
  Rental income                                              106,963        30,565            -
  Other income                                                13,969             -            -
                                                         -----------    ----------   -----------
    Total revenue                                          3,219,148     2,663,815    1,634,277

Benefits and expenses
  Increase in policy reserves                                603,159       545,337      368,804
  Policyholder surrender values                               46,754        14,887           54
  Interest credited on annuities and
    premium deposits                                          78,989        21,683        3,236
  Death claims                                                47,250        22,306            -
  Commissions                                                849,576       863,159      631,929
  Policy acquisition costs deferred                       (1,115,390)   (1,158,212)    (901,613)
  Amortization of deferred policy acquisition costs          459,124       565,869      234,522
  Salaries, wages, and employee benefits                   1,020,655       682,458      672,289
  Miscellaneous taxes                                         51,910         6,360       24,921
  Administrative fees - related party                        142,785       117,246       60,531
  Other operating costs and expenses                       1,235,769       690,841      525,556
                                                          ----------    ---------    -----------
    Total benefits and expenses                            3,420,581     2,371,934    1,620,229
                                                          ----------    ----------   -----------
Income (loss) before income tax expense                     (201,433)      291,881       14,048

Income tax expense                                           151,395       136,742      154,652
                                                         ------------  ----------    -----------
Net income (loss)                                        $  (352,828)  $   155,139   $ (140,604)

Net income (loss) per common
  share - basic and diluted                              $     (0.07)  $      0.03   $    (0.03)
</TABLE>

See  notes  to  consolidated  financial  statements.

                                      F-5
<PAGE>

                       FIRST AMERICAN CAPITAL CORPORATION

                        CONSOLIDATED  STATEMENTS  OF
                        CHANGES  IN  SHAREHOLDERS  EQUITY
<TABLE>
<CAPTION>
                                                                 Years ended December 31,
                                                           ------------------------------------

                                                              2001          2000         1999
                                                          -----------   -----------   ---------
<S>                                                       <C>           <C>           <C>
PREFERRED STOCK:
  Balance, beginning of year                            $         -   $         -   $ 2,707,530
    Sale of shares in public offering (8,394 shares
       in 1999)                                                   -             -        41,970
    Conversion of preferred to common shares (549,740
        preferred shares to 2,198,960 common shares)              -             -    (2,748,700)
    Call of preferred stock                                       -             -          (800)
                                                        -----------   -----------   ------------
  Balance, end of year                                            -             -             0


COMMON STOCK:
  Balance, beginning of year                                541,886       546,886       326,150
    Sale of shares in public offering (8,394 shares
        in 1999)                                                  -             -           840
    Conversion of preferred to common                             -             -       219,896
    Common shares retired                                         -        (5,000)            -
    Common shares issued (20,125 shares in 2001)              2,013             -             -
                                                           --------      ---------     ---------
  Balance, end of year                                      543,899       541,886       546,886

ADDITIONAL PAID-IN CAPITAL:
  Balance, beginning of year                             12,230,005    12,230,005     9,600,478
    Sale of shares in public offering (8,394 shares
        in 1999)                                                  -             -       167,041
    Conversion of preferred to common                             -             -     2,528,804
    Call of preferred stock                                       -             -        (3,184)
    Cost of public offering                                       -             -       (63,134)
    Common shares issued (20,125 shares in 2001)             98,612             -             -
                                                         ----------    ---------     -----------
  Balance, end of year                                   12,328,617    12,230,005    12,230,005
</TABLE>

                                    F-6
<PAGE>


                                 FIRST AMERICAN CAPITAL CORPORATION

                                  CONSOLIDATED STATEMENTS OF
                              CHANGES IN SHAREHOLDERS  EQUITY (continued)
<TABLE>
<CAPTION>
                                                              Years ended December 31,
                                                       ----------------------------------------
                                                            2001          2000          1999
                                                        -----------   -----------   -----------
<S>                                                     <C>           <C>           <C>
RETAINED EARNINGS-DEFICIT:
  Balance, beginning of year                            $(1,176,785)  $(1,331,924)  $(1,191,320)
    Net income (loss)                                      (352,828)      155,139      (140,604)
                                                        ------------  ------------  ------------
  Balance, end of year                                   (1,529,613)   (1,176,785)   (1,331,924)

ACCUMULATED OTHER COMPREHENSIVE INCOME:
  Balance, beginning of year                                144,226       (23,803)            -
    Net unrealized gain (loss)
    on available-for-sale securities                         47,051       168,029       (23,803)
                                                            -------       -------       --------
  Balance, end of year                                      191,277       144,226       (23,803)

TREASURY STOCK:
  Balance, beginning of year                               (186,758)       (2,000)       (2,000)
    Purchase of 95,000 common shares at $1.94 per share           -      (184,758)            -
    Purchase of 50,000 common shares at $1.15 per share     (57,500)            -             -
                                                           ---------     ---------       -------
  Balance, end of year                                     (244,258)     (186,758)       (2,000)
                                                        ------------  ------------  ------------
Total shareholder' equity                               $11,289,922   $11,552,574   $11,419,164
                                                        ============  ===========   ============


DISCLOSURE OF RECLASSIFICATION AMOUNT:

Unrealized holding gains (loss) arising during period   $    64,463   $   166,604   $   (23,803)
Less: reclassification adjustment for (gains) loss
  in net income                                             (17,412)        1,425             -
                                                        ------------  -----------   ------------
Net unrealized gains (loss) on securities               $    47,051   $   168,029   $   (23,803)
</TABLE>

See  notes  to  consolidated  financial  statements


                                      F-7
<PAGE>
                       FIRST AMERICAN CAPITAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                              Years ended December 31,
                                                       ----------------------------------------
                                                          2001          2000          1999
                                                       -----------   -----------  -------------
<S>                                                    <C>           <C>           <C>
OPERATING ACTIVITIES:
Net income (loss)                                       $  (352,828)  $   155,139   $  (140,604)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
     Interest credited on annuities and premium deposits     82,838        21,683         3,236
     Net realized investment (gains) losses                 (25,618)          908             -
     Provision for depreciation and amortization             87,698        15,666        14,916
     Amortization of premium and accretion of discount on
          fixed maturity and short-term investments          (6,033)      (12,159)         (131)
     Interest credited to certificates of deposit balances  (47,909)      (84,612)            -
     Realized net (gain) loss on disposal of assets           1,034        (2,236)            -
     Provision for deferred federal income taxes            143,692       126,978       155,850
     Other                                                        -        (5,000)            -
     Increase in accrued investment income                  (33,232)      (37,135)      (57,908)
     (Increase) decrease  in accounts receivable            (11,280)       43,397       (81,979)
     Increase in accounts receivable from affiliate        (124,881)            -             -
     Increase in deferred policy acquisition costs, net    (656,266)     (592,343)     (667,092)
     Increase in policy loans                               (27,188)       (5,990)            -
     (Increase) decrease  in other assets                    (7,685)        3,085        (8,294)
     Increase in policy reserves                            603,159       545,337       368,804
     Increase (decrease) in liability for policy claims     (22,306)       22,306             -
     Increase (decrease) in deposits on pending
     policy applications                                     96,237      (145,034)      211,859
     Increase in reinsurance premiums payable                 3,581        16,716        11,845
     Increase (decrease) in commissions, salaries,
     wages and benefits payable                             (29,980)       46,212        64,974
     Increase (decrease) in accounts payable to affiliate       (25)        8,887        (5,969)
     Increase (decrease) in other liabilities               100,822       (23,370)       21,294
                                                          ------------  ------------  ----------
Net cash provided by (used in) operating activities     $  (226,170)  $    98,435   $  (109,199)




                                     F-8
<PAGE>

                                                                   Years ended December 31,
                                                        ----------------------------------------
                                                            2001          2000          1999
                                                        -----------   -----------   ------------
INVESTING ACTIVITIES:
     Purchase of available-for-sale fixed maturities    $(4,537,224)  $(3,543,284)  $(2,667,036)
     Sale of available-for-sale fixed maturities          2,014,503       198,000             -
     Additions to property and equipment, net            (1,865,557)     (939,585)     (340,778)
     Purchase of real estate held for investment           (274,564)            -             -
     Purchase of investments in affiliates                 (133,776)      (16,800)            -
     Changes in notes receivable, net                        30,262       (30,262)            -
     Short-term investments disposed, net                 2,465,136     3,297,120     3,068,879
                                                        -----------   -----------   -----------
Net cash provided by (used in) investing activities      (2,301,220)   (1,034,811)       61,065

FINANCING ACTIVITIES:
     Proceeds from public stock offering                          -             -       209,851
     Call of preferred stock                                      -             -        (3,984)
     Cost of stock offerings                                      -             -       (63,134)
     Proceeds from note payable                           1,301,982       698,018             -
     Payments on note payable                               (32,672)            -             -
     Deposits on annuity contracts, net                     862,297       457,424        11,227
     Purchase of treasury stock                             (57,500)     (184,758)            -
     Policyholder premium deposits, net                      84,161         4,292        63,140
                                                         ----------     --------      ---------
Net cash provided by financing activities                 2,158,268       974,976       217,100
                                                         ----------     --------      ---------
Increase (decrease) in cash and cash equivalents           (369,122)       38,600       168,966

Cash and cash equivalents, beginning of period              832,485       793,885       624,919
                                                         ----------   ------------  ------------
Cash and cash equivalents, end of period                 $  463,363   $   832,485   $   793,885
                                                         ===========   ===========   ===========
</TABLE>
See  notes  to  consolidated  financial  statements

                                      F-9
<PAGE>

                       FIRST AMERICAN CAPITAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                       FIRST AMERICAN CAPITAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.     NATURE  OF  OPERATIONS

First  American Capital Corporation (the  Company ) was incorporated on July 10,
1996  for  the  primary  purpose  of forming, owning and managing life insurance
companies.  On  March  11, 1997, the Company s registration statement filed with
the  Office  of the Kansas Securities Commissioner for a $12,500,000 intra-state
public  stock  offering,  which included a 10%  over-sale  provision (additional
sales of $1,250,000), was declared effective.  The  Company completed its public
stock  offering  on  January  11,  1999,  raising  total capital of $13,750,000.

The  Company  has  a  wholly-owned  insurance  subsidiary,  First  Life  America
Corporation  (  FLAC  ), which is domiciled in Kansas.  FLAC was incorporated on
July  15, 1997 and capitalized with $1,200,000.  On October 15, 1997, the Kansas
Insurance  Department  (  KID  )  granted  FLAC a Certificate of Authority.   On
December  10,  1998,  the Company provided FLAC with an additional $1,800,000 of
capital.  In  2000  and 2001, the Company contributed an additional $250,000 and
$450,000 of capital, respectively.  This has resulted in total capitalization of
$3,700,000.  Insurance  operations commenced on November 19, 1998.  Prior to the
commencement  of  insurance  operations,  the  Company  was in the developmental
stage.

The  various insurance products currently being marketed by FLAC are as follows:

First  American  2000  is  a modified payment whole life insurance policy with a
flexible  premium  deferred  annuity  rider.  A  modified  payment  whole  life
insurance  policy  requires  premium payments to be made for a certain number of
years after which the policyholder is entitled to policy benefits without making
future  payments.  The  product  combines  both  a ten and twenty payment period
based  on  the  issue age of the insured.  Issue ages from age 0 (30 days) to 20
and  66  to  80 are ten pay policies and issue ages from 21 to 65 are twenty pay
policies.  Premium  payments  are  split  between  life  and  annuity  based  on
percentages  established in the product design.  First year premium payments are
allocated  100% to life insurance and renewal payments are split 50% to life and
50%  to annuity.  The product is being sold in premium units with the ability to
purchase  either  fractional  or  multiple  units.  At  the  end of the required
premium  paying  period,  the  policyholder  may  continue  to make full premium
payments  into  the  annuity rider to provide for greater annuity accumulations.

Golden  Eagle  Whole  Life  is  available  on a simplified issue or graded death
benefit  basis.  The  simplified  issue product is issued from age 50 to 85 with
death benefit coverage ranging from a minimum of $2,500 to a maximum of $25,000.
The  graded death benefit product is issued from age 50 to 80 with death benefit
coverage  ranging  from a minimum of $2,000 to a maximum of $10,000.  The policy
includes  a  living benefit rider that pays the actuarial present value of death
benefit  upon  terminal illness or nursing home confinement.  Premiums are level
for  life  and  vary  by  risk  class,  sex  and  issue  age.

First  Step  is  a  juvenile  term product issued from age 0(30 days) to age 15.
Coverage  is sold in units.  One unit, consisting of a single premium payment of
$100  purchases $5,000 of death benefit coverage, while two units, consisting of
a  single  premium  payment  of $200 purchases $10,000 of coverage.  The product
contains  a  conversion  provision  allowing  it to be converted to a whole life
policy  prior  to  age  21.

FLAT  10 (First Life Affordable Term) is a ten year term product issued from age
20  to  70.  It  has  a  re-entry  provision  allowing  the  current  insured to
re-qualify  prior  to each ten year period.  The re-qualification is essentially
re-underwriting including medical exams and inspections to determine if the risk
has  changed  or remained the same.  The policy expires automatically at age 95.


                                   F-10
<PAGE>


1.     NATURE  OF  OPERATIONS  (CONTINUED)

First Guard 10 is a ten year term product renewable to age 70 and convertible to
age  60.  Renewable means the policy is kept inforce as long as the premiums are
paid, but the rates do change each 10 year period.  Convertible means that prior
to  age  60  the policy can be converted to a permanent plan of insurance, whole
life  or universal life, but not term.  The product is issued from age 18 to 60.
The  policy  includes  an  accelerated death benefit rider.  This rider provides
that  in  the event that certain ailments or medical conditions strike, a 25% or
50%  of  the base policy coverage could be paid.  The maximum benefit under this
rider  is  $250,000.  Payment  of  an accelerated benefit does reduce the future
death  benefit.

The  Company  formed  First  Capital  Venture  Inc.  ( FCVI ), a venture capital
subsidiary  in  October  of  1998.  FCVI  has  yet  to  be  capitalized.

The  Company  helped  form  First  Computer  Services,  LLC.  ("FCS"),  a Kansas
partnership  in  June of 2001.  FCS owns the computer hardware and software that
runs  the  Company's  policy administration, underwriting, claim processing, and
accounting  functions.  During  December  of  2001,  FCS  was  capitalized  with
$230,389,  of  which  50%  was  contributed  by  the  Company.


2.     SIGNIFICANT  ACCOUNTING  POLICIES

Basis  of  Presentation

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance with accounting principles generally accepted in the United States of
America  (  GAAP  ),  which for FLAC, differ from statutory accounting practices
prescribed  or  permitted  by  the  KID.

Certain  amounts  from  prior  years  have been reclassified to conform with the
current  year  s  presentation.  These  reclassifications  had  no  effect  on
previously  reported  net  income  or  shareholders  equity.

Principles  of  Consolidation

The  accompanying  consolidated  financial  statements  include the accounts and
operations  of  the Company and its subsidiary, FLAC.  All intercompany accounts
and  transactions  are  eliminated  in  consolidation.

Management  s  Estimates

The  preparation  of  financial statements in conformity with generally accepted
accounting  principles  requires  management  to  make estimates and assumptions
that affect amounts reported in the financial statements and accompanying notes.
As  more  information  becomes  known,  actual  results  could differ from those
estimates.

                                      F-11
<PAGE>

2.     SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Investments

The  Company  classifies  all  of  its  fixed  maturity  investments  as
available-for-sale.  Available-for-sale  fixed  maturities  are  carried at fair
value  with  unrealized  gains  and losses, net of applicable taxes, reported in
other  comprehensive income.  Policy loans are carried at unpaid balances.  Cash
equivalents consist of highly liquid investments with maturities of three months
or  less at the date of purchase and are carried at cost which approximates fair
value.  Notes  receivable  are  reported  at  unpaid  principal  balance, net of
allowance  for  uncollectible  amounts.  Short-term  investments  consist  of
investments with original maturities of three months to one year and are carried
at  cost  which  approximates fair value.  Realized gains and losses on sales of
investments  are  recognized in operations on the specific identification basis.
Interest  earned  on  investments  is  included  in  net  investment  income.
Investments  in  related  parties  are  reported  at  cost  (see  Note  5).

Property  and  Equipment

Property  and  equipment,  including  the home office building (see Note 6), are
carried  at  cost  less  accumulated  depreciation.  Accumulated depreciation on
equipment  is  calculated  using  the  200%  declining  balance  method over the
estimated  useful  life  of  the respective assets.  Accumulated depreciation on
equipment  at  December 31, 2001 and 2000, respectively, is $79,723 and $42,860.
Accumulated  depreciation  on  the  office  building  and  land  improvements is
calculated  using  the  straight-line  method.  Accumulated  depreciation of the
office  building  and  land  improvements  at  December  31,  2001  is  $50,254.

Office  Lease

The  Company  is  currently  located in the new office building at 1303 SW First
American  Place,  Topeka, Kansas 66604.  During 2001, the Company terminated the
previous  office lease.  Rent expense incurred under this previous agreement for
the  years  ended December 31, 2001, 2000 and 1999 totaled $16,995, $37,788, and
$33,517,  respectively.

Deferred  Policy  Acquisition  Costs

Commissions  and  other  costs of acquiring life insurance, which vary with, and
are  primarily  related to, the production of new business have been deferred to
the  extent  recoverable  from  future  policy  revenues and gross profits.  The
acquisition  costs  are  being  amortized  over the premium paying period of the
related  policies  using  assumptions  consistent  with  those used in computing
policy  reserves.


Life  Policy  Reserves

The  liabilities  for  future  policy  benefits  on the Company s life insurance
products  are  computed using the net level premium method and assumptions as to
investment  yields,  mortality,  withdrawals  and other assumptions, modified as
necessary  to  reflect anticipated trends and to include provisions for possible
unfavorable  deviations.  The  assumptions  utilized  were  7.25% for investment
yields, 1975-1980 select and ultimate tables for mortality, and Linton BA tables
for  withdrawal  rates.

                                      F-12
<PAGE>

2.     SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Annuity  Contract  Liabilities

Annuity contract liabilities are computed using the retrospective deposit method
and consist of policy account balances before deduction surrender charges, which
accrue  to the benefit of policyholders.  Premiums received on annuity contracts
are  recognized  as  an  increase  in  a  liability  rather than premium income.
Interest  credited  on  annuity  contracts  is  recognized  as  an  expense.

Liability  for  Policy  Claims

Policy  claim  liabilities  are  based  on  reported  death  claims.

Policyholder  Premium  Deposits

Policyholder  premium  deposits  represent  premiums received for the payment of
future  premiums  on  existing  policyholder contracts.  Interest is credited on
these  deposits  at  the  rate of 6%.  The premium deposits are recognized as an
increase  in  a  liability rather than premium income.  Interest credited on the
premium  deposits  is  recognized  as  an  expense.

Premiums

Life  insurance premiums for limited payment contracts are recorded according to
Statement  of  Financial  Accounting  Standard  ( 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.   Any gross premium in
excess  of  net  premium  is  deferred  and  recognized  in income in a constant
relationship  with  insurance  in  force.

Federal  Income  Taxes

The  Company uses the liability method of accounting for income taxes.  Deferred
income  taxes are provided for cumulative temporary differences between balances
of  assets  and  liabilities  determined  under  generally  accepted  accounting
principles  and  balances  determined  for  tax  reporting  purposes.

Reinsurance

Estimated reinsurance receivables are reported as assets and are recognized in a
manner  consistent  with  the  liabilities  related  to the underlying reinsured
contracts,  in  accordance  with  SFAS  No.  113,  Accounting  and Reporting for
Reinsurance  of  Short-Duration  and  Long-Duration  Contracts.

                                      F-13
<PAGE>

2.     SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Common  Stock  and  Preferred  Stock

The  common  stock is fully-paid and non-assessable with dividend rights subject
to  the  prior rights of the holders of preferred stock (prior to its conversion
to  common stock) and has full voting rights.  The preferred stock had no voting
rights,  had  a par and liquidation value of $5.00 per share of which dividends,
if  and  when declared, were to  be paid at the rate of 6% of the par value, and
was  convertible  into  four  shares  of  common  stock until July 11, 1999 (see
conversion  of  preferred  stock  and  call  of  preferred  stock).

Conversion  of  Preferred  Stock

The  public offering was sold in units consisting of one share of common and one
share of preferred stock.  Each preferred share was convertible into four shares
of  common  stock.  Pursuant  to  the  terms  of  the Subscription Agreements, a
subscriber  could  elect,  at  the  time of the sale, to convert their shares of
preferred  stock  to shares of common stock upon issuance of stock certificates.
The  subscriber  was allowed to revoke this conversion during a six month period
starting  on the date the offering was completed.  The offering was completed on
January  11, 1999 and conversions were allowed until July 11, 1999.  On July 11,
1999,  substantially all of the preferred shareholders converted their preferred
shares  to  common  shares.

Call  of  Preferred  Stock

Before  July  11,  1999,  subscribers  owning a total of 160 shares of preferred
stock  revoked the conversion election (discussed above).  On December 10, 1999,
the  Company  called  those 160 shares of preferred stock at $5.00 per preferred
share.

Net  Earnings  (Loss)  Per  Common  Share

Net  income  (loss) per common share for basic and diluted earnings per share is
based  upon the weighted average number of common shares outstanding during each
year.  The  weighted average outstanding common shares was 5,294,418, 5,387,767,
and  3,046,043  for  the  years  ended  December  31,  2001,  2000  and  1999,
respectively.

Comprehensive  Income

SFAS  No.  130  requires  unrealized  gains  and  losses  on  the  Company  s
available-for-sale  securities  to  be  included  in other comprehensive income.


                                      F-14
<PAGE>

3.  INVESTMENTS

The amortized cost and fair value of investments in fixed maturities at December
31,  2001  and  2000  are  summarized  as  follows:

<TABLE>
<CAPTION>


                                            Gross        Gross
                              Amortized   Unrealized   Unrealized      Fair
'December 31, 2001:              Cost        Gains       Losses       Value
-------------------           ----------  -----------  -----------  ----------
<S>                           <C>         <C>          <C>          <C>
U.S. Government Agency        $3,879,669  $   112,151  $     3,171  $3,988,649
Corporate bonds                4,343,779      195,249       11,776   4,527,252
Certificates of Deposit           90,000            -            -      90,000
                              ----------  -----------  -----------  ----------
Total                         $8,313,448  $   307,400  $    14,947  $8,605,901


December 31, 2000:
U.S. Government Agency        $2,898,553  $    84,248  $         -  $2,982,801
Corporate bonds                2,764,743      136,665        2,389   2,899,019
Certificates of Deposit          360,000            -            -     360,000
                              ----------  -----------  -----------  ----------
Total                         $6,023,296  $   220,913  $     2,389  $6,241,820
</TABLE>

The  amortized  cost and fair value of fixed maturities at December 31, 2001, by
contractual  maturity,  are  shown  below.  Actual  maturities  may  differ from
contractual  maturities  because certain borrowers may have the right to call or
prepay  obligations.
<TABLE>
<CAPTION>
                                        Amortized Cost   Fair Value
                                        --------------   -----------
<S>                                     <C>              <C>
Due in one year or less                 $             -  $         -
Due after one year through five years         3,860,963    4,129,653
Due after five years through ten years        4,452,485    4,476,248
                                        ---------------  -----------
                                        $     8,313,448  $ 8,605,901
</TABLE>
The  fair  values for investments in fixed maturities are based on quoted market
prices.

Included in investments are securities which have a fair value of $2,291,249 and
$1,785,831  at  December  31,  2001 and 2000, respectively, which are on deposit
with  various  state  insurance  departments.



                                    F-15
<PAGE>

3.  INVESTMENTS  (CONTINUED)

During  2001,  the  Company  had  gross  realized  investment gains of  $26,746.
Investment  gains  were $1,251 and $0 during 2000 and 1999, respectively.  Gross
realized investment losses totaled $2,162, $2,159 and $0 in 2001, 2000 and 1999,
respectively.   These  realized  gains and losses during 2001 were the result of
the  sale  of  available  for  sale  fixed  maturity  investments.

During  July of 2000, advances to agents in the amount of $60,053 were converted
to  notes receivable to be collected over a three year period with a 9.5% annual
interest  rate.  These  notes  included  $41,054  of  balances  due  from agents
previously  deemed  to  be  uncollectible  and  expensed  in  prior  years.  A
corresponding  allowance  for bad debts of $41,054 was established.  During 2001
and  2000,  payments of $44,270 and $0, respectively were received on the notes.
Notes  receivable,  net  of the valuation allowance of $4,406, is $0 at December
31,  2001.

The  carrying value of short-term investments approximates their fair value.  At
December  31,  2001  and  2000  the  fair  value  of  short-term investments was
$2,286,095  and  $4,437,280,  respectively.

Interest  income  consists of interest earned on notes receivable, policy loans,
available-for-sale  securities  and  short-term  investments,  which  include
certificates  of  deposit.

Following  are  the  components  of  net  investment  income for the years ended
December  31,  2001,  2000  and  1999:

<TABLE>
<CAPTION>
                                      Years ended December 31,
                                  -------------------------------
                                    2001       2000       1999
                                  --------   --------   ---------
<S>                               <C>        <C>        <C>
Fixed maturities                  $482,201   $324,086   $ 18,079
Notes receivables                    3,065      2,581          -
Short-term and other investments   218,936    388,667    530,723
Gross investment income            704,202    715,334    548,802
Investment expenses                 (3,299)   (16,089)    (4,812)
                                  --------   --------   ---------
Net investment income             $700,903   $699,245   $543,990
</TABLE>

4.  CONCENTRATIONS  OF  CREDIT  RISK

Credit  risk  is  limited  by  emphasizing  investment  grade  securities and by
diversifying  the  investment  portfolio  among  U.S.  Government  Agency  and
Corporate  bonds.  Credit risk is further minimized by investing in certificates
of  deposit.  Certain  certificates  of  deposit  and  cash  balances exceed the
maximum  insurance  protection  of  $100,000  provided  by  the  Federal Deposit
Insurance  Corporation ( FDIC ).  However, both certificates of deposit balances
and  cash  balances  exceeding  this  maximum  are  protected through additional
insurance.  The  Company  has  not  experienced  any losses in such accounts and
believes  it  is  not  exposed  to  any significant credit risk on cash and cash
equivalents.

                                      F-16
<PAGE>

5.  INVESTMENTS  IN  RELATED  PARTIES

On  June  20,  2000, the Company purchased, through a private placement, 168,000
shares  of  the  common  stock  of  Mid-Atlantic  Capital Corporation ("MCC") of
Charleston,  West  Virginia  for  $16,800.  At December 31, 2001, MCC had raised
$850,000  from  the  sale of private placement shares and $1,120,100 from public
offering  shares.  MCC has registered a West Virginia intrastate public offering
of  $12,000,000.  After  MCC's  private  placement  and  public  offerings  are
complete,  the  Company  will  own 3.05% of the outstanding common stock.  These
shares  are  not registered under the Securities Act of 1933, and are subject to
restrictions on transferability and resales and may not be transferred or resold
except as permitted under the Act and applicable state securities laws, pursuant
to  registration  or exemption therefrom.  Michael N. Fink, who is the Company's
Chairman  of  the  Board, will also serve as a Co-Chairman of the Board for MCC.

On  August 16, 2001, the Company purchased, through a private placement, 250,000
shares  of the common stock of Arkansas Security Capital Corporation ("ASCC") of
Springdale,  Arkansas  for  $25,000.  At  December  31,  2001,  ASCC  had raised
$239,000  from  the  sale of private placement shares. ASCC will conduct another
private  placement of $600,000 in March of 2002.  ASCC then plans to register an
Arkansas  intrastate  public  offering  of  $12,000,000.  These  shares  are not
registered  under the Securities Act of 1933, and are subject to restrictions on
transferability  and  resales  and  may  not  be transferred or resold except as
permitted  under  the  Act  and  applicable  state  securities laws, pursuant to
registration  or  exemption  therefrom.  Rickie  D.  Meyer, who is the Company's
President,  will  also  serve  as  a  Co-Chairman  of  the  Board  for  ASCC.

During  2001,  the  Company purchased a 50% interest in First Computer Services,
LLC  ("FCS").  FCS  owns  the  computer  hardware  and  software that operates a
Company  policy  administration,  underwriting, claim processing, and accounting
system.  The  company  uses  the  equity  method to account for this investment,
which  is  owned  jointly  by the Company and First Alliance Corporation.  As of
December  31, 2001, the carrying value of the FCS investment was $108,776.  This
amount  represents  an initial investment of $115,195 reduced by a net operating
loss  of  $6,419.  Selected  financial  data  for  FCS  is  listed  below.
<TABLE>
<CAPTION>
<S>                                 <C>
     Total Assets:                  $217,552
     Total Liabilities:                    -
     Total Liabilities and Equity:   217,552
                                    ---------
     Loss from Operations:           (12,838)
</TABLE>

6.  PROPERTY  AND  EQUIPMENT

During  1999, the Company acquired approximately six and one-half acres of land,
located in Topeka, Kansas for $325,169.  A  20,000 square foot building has been
constructed  on  approximately one-half of this land.  Costs incurred to date at
December 31, 2001 totaled $2,963,004, of which $357,675 was related to land cost
and  preparation,  and  $2,605,329  was  related to building construction.  Also
included  in  total  property  of  $2,963,004 is $37,810 of capitalized interest
costs  incurred  on  the  construction loan.   An additional $274,564 related to
land  cost  and  preparation  has  been  reclassified  to  real  estate held for
investment.

                                      F-17
<PAGE>

6.  PROPERTY  AND  EQUIPMENT  (CONTINUED)

On  May  1, 2001, the Company relocated its home office to the newly constructed
building.  Effective  July 1, 2001 , 10,000 square feet of office space has been
leased  for  five  years.  The remaining 2,500 square feet that is available for
lease  is  being  leased  on  a  month-to-month  basis.

The components of property and equipment as of December 31, 2001 and 2000 are as
follows:
<TABLE>
<CAPTION>
                                         2001         2000
                                      -----------  -----------
<S>                                   <C>          <C>
     Property (home office building)  $2,963,004   $1,247,740
     Less: Accumulated depreciation      (50,254)           -
     Net Property                      2,912,750    1,247,740

     Equipment                           227,320       78,642
     Less: Accumulated depreciation      (79,723)     (42,860)
     Net equipment                       147,597       35,782
                                      -----------  -----------
     Property and equipment, net      $3,060,347   $1,283,522
</TABLE>

7.  FEDERAL  INCOME  TAXES

The  Company  does  not file a consolidated federal income tax return with FLAC.
FLAC  is  taxed as a life insurance company under the provisions of the Internal
Revenue  Code  and must file a separate tax return for its initial five years of
existence.  Federal  income  tax  expense for the years ended December 31, 2001,
2000,  and  1999  consisted  of  the  following:
<TABLE>
<CAPTION>
                                                            Years ended December 31,
                                                          -----------------------------
                                                            2001      2000      1999
                                                          --------  --------  ---------
<S>                                                       <C>       <C>       <C>
             Current                                      $  7,703  $  9,764  $ (1,198)
             Deferred                                      143,692   126,978   155,850
                                                          --------  --------  ---------
             Federal income tax expense                   $151,395  $136,742  $154,652
</TABLE>



                                    F-18
<PAGE>

Federal  income  tax  expense  differs  from the amount computed by applying the
statutory  federal  income  tax  rate of 35% in 2001 and 34% in 2000 and 1999 as
follows:
<TABLE>
<CAPTION>
                                                            Years ended December 31,
                                                        ------------------------------
                                                          2001       2000       1999
                                                        ---------  ---------  --------
<S>                                                     <C>        <C>        <C>
Federal income tax expense (benefit) at statutory rate  $(70,502)  $ 99,240   $  4,776
Small life insurance company deduction                   (29,936)   (30,118)         -
Increase in valuation allowance                          254,674     83,561    187,869
Surtax exemptions                                         (9,650)   (10,315)         -
Other                                                      6,809     (5,626)   (37,993)
                                                        ---------  ---------  ---------
Federal income tax expense                              $151,395   $136,742   $154,652
</TABLE>

Deferred  federal  income  taxes  reflect  the  impact  of temporary differences
between  the  amount  of assets and liabilities for financial reporting purposes
and  such  amounts  as  measured  by  tax  laws  and  regulations.  Significant
components  of  the  Company  s  net  deferred  tax  liability  are  as follows:

<TABLE>
<CAPTION>

                                                              December 31,
                                                        -----------------------
                                                           2001         2000
                                                        -----------  ----------
<S>                                                     <C>          <C>
Deferred tax liability:
  Due and deferred premiums                             $   19,488   $  15,936
  Deferred policy acquisition costs                        554,006     362,525
  Net unrealized investment gains                          102,996      74,298
                                                        ----------   ----------
Total deferred tax liability                               676,490     452,759

Deferred tax asset:
  Policy reserves                                          131,447      82,446
  Reinsurance premiums                                      11,250       8,910
  Net operating loss carry forward                         889,591     634,917
  Alternative minimum tax credit carry forward               1,198       1,198
Total deferred tax asset                                 1,033,486     727,471
Valuation allowance                                       (890,789)   (636,115)
                                                        -----------  ----------
Net deferred tax asset                                     142,697      91,356
                                                        ----------   ----------
Net deferred tax liability                              $  533,793   $ 361,403
                                                        ==========   ==========
</TABLE>

The  Company  has  net operating loss carry forwards of approximately $2,541,589
expiring  in 2011 through 2021.  These net operating loss carry forwards are not
available  to offset FLAC income.  FLAC has alternative minimum tax credit carry
forwards  of  $1,198,  which have no expiration date.  Federal income taxes paid
were  $20,000  in  1999.  There  were  no  taxes  paid  in  2001  and  2000.

                                      F-19
<PAGE>

8.  NOTE  PAYABLE

On  July 20, 2001, the Company borrowed $2 million from Columbian Bank and Trust
Company  secured by its home office building (See Note 6).  The note will mature
on  July  15, 2016.  The note is payable in 120 monthly payments of $18,000 each
and  59 monthly payments of $18,444 each and a final payment of the balance due.
The  lender  may,  when  an  increase  occurs in the interest rate, increase the
amount  of  the  monthly  payment  or  increase the number of payments required.
Interest  is  payable monthly based on the 5-year T-Bill rate (4.40% at the date
of the loan) plus a margin of 2.60 percentage points.  The interest rate will be
recomputed at the end of 5 years and 10 years based on the current 5-year T-Bill
rate  at  that  time.  The  company has paid interest of $93,634 related to this
note  during  2001.
Required  future  principle  payments  are  as  follows:
<TABLE>
<CAPTION>
          Principal
            Year        Payment
         -----------   ---------
<S>      <C>           <C>
         2002             78,484
         2003             84,257
         2004             90,086
         2005             97,081
         2006            104,223
   Thereafter          1,513,197
                      ----------
        Total          1,967,328
</TABLE>

9.  SHAREHOLDERS  EQUITY  AND  STATUTORY  ACCOUNTING  PRACTICES

FLAC  prepares  its  statutory-basis  financial  statements  in  accordance with
statutory  accounting  practices  (  SAP  )  prescribed or permitted by the KID.
Currently,   prescribed  statutory  accounting practices include state insurance
laws,  regulations,  and  general  administrative rules, as well as the National
Association  of  Insurance  Commissioners  (  NAIC  )  Accounting  Practices and
Procedures  Manual  and  a  variety  of  other  NAIC  publications.   Permitted
statutory  accounting  practices encompass all accounting practices that are not
prescribed;  such  practices  may  differ  from  state to state, may differ from
company  to  company within a state, and may change in the future.  During 1998,
the  NAIC  adopted  codified  statutory  accounting principles ( Codification ).
Codification  replaced  the  NAIC Accounting Practices and Procedures Manual and
was  effective  January 1, 2001.  The impact of Codification was not material to
FLAC  s  statutory-basis  financial  statements.

                                      F-20
<PAGE>

Net  income  for  2001,  2000,  and 1999 and capital and surplus at December 31,
2001, 2000, and 1999 for the Company s insurance operations as reported in these
financial  statements  prepared  in  accordance with GAAP as compared to amounts
reported  in  accordance  with  SAP  prescribed  or  permitted by the KID are as
follows:
<TABLE>
<CAPTION>
                                         GAAP                      SAP
                              ------------------------   ------------------------
                               Net Income   Capital and  Net Income   Capital and
                               (loss)       Surplus      (loss)        Surplus
                              -----------  ------------  ----------    ----------
<S>                            <C>        <C>            <C>           <C>
2001                           381,230    4,922,152      17,465        3,698,742

2000                           400,907    4,046,552      68,787        3,252,279

1999                           263,432    3,317,886     (100,572)      2,880,773
</TABLE>

Principal  differences  between  GAAP and SAP include: a) costs of acquiring new
policies are deferred and amortized for GAAP; b) benefit reserves are calculated
using  more realistic investment, mortality and withdrawal assumptions for GAAP;
c)  statutory  asset  valuation  reserves  are  not  required  for GAAP;  and d)
available-for-sale  fixed  maturity  investments are reported at fair value with
unrealized  gains  and  losses  reported as a separate component of shareholders
equity  for  GAAP.

Statutory  restrictions  limit the amount of dividends which may be paid by FLAC
to  the  Company.  Generally,  dividends during any year may not be paid without
prior  regulatory  approval,  in  excess  of  the lesser of (a) 10% of statutory
shareholders  surplus  as  of  the  preceding  December 31, or (b) statutory net
operating  income  for  the preceding year.  In addition, FLAC must maintain the
minimum  statutory  capital and surplus, $1,200,000, required for life insurance
companies  domiciled  in  Kansas.

The  KID  imposes  on  insurance  enterprises minimum risk-based capital ( RBC )
requirements  that were developed by the NAIC.  The formulas for determining the
amount  of  RBC  specify  various weighing factors that are applied to financial
balances  or  various  levels of activity based on the perceived degree of risk.
Regulatory  compliance  is  determined by ratio (the  Ratio ) of the enterprises
regulatory  total  adjusted  capital,  as defined by the NAIC, to its authorized
control  level  RBC, as defined by the NAIC.  Enterprises below specific trigger
points  or  ratios  are classified within certain levels, each of which requires
specified  corrective action.  FLAC has a ratio that is in excess of the minimum
RBC  requirements;  accordingly,  FLAC  meets  the  RBC  requirements.


                                  F-21
<PAGE>

10.  REINSURANCE

In  order  to  reduce  the  risk  of  financial exposure to adverse underwriting
results,  insurance  companies  reinsure  a  portion  of  their risks with other
insurance  companies.  FLAC  has  entered  into  agreements  with Business Men's
Assurance  Company  of  America  (  BMA  )  of Kansas City, Missouri, as well as
Optimum  Re Insurance Company of Dallas, Texas, to reinsure portions of the life
insurance  risks  it underwrites.  Pursuant to the terms of the agreements, FLAC
retains  a maximum of $50,000 on any one insured.  Currently, insurance ceded to
Optimum  Re  Insurance  Company  is  limited  to  the 10-year term policies.  At
December  31, 2001, 2000 and 1999, respectively, FLAC had ceded amounts totaling
$31,878,00,  $24,259,688  and  $8,755,634  of ordinary business and $31,027,000,
$26,520,000  and  $17,100,000  of  accidental  death  benefit  risk

Pursuant  to  the  terms  of  the  agreement  with  BMA,  FLAC generally pays no
reinsurance  premiums  on  first year individual business. However, SFAS No. 113
requires  the  unpaid  premium  to  be  recognized  as  a first year expense and
amortized over the estimated life of the reinsurance policies. FLAC records this
unpaid premium as Reinsurance premiums payable in the accompanying balance sheet
and  recognized  as  Reinsurance  premiums  ceded  in  the  accompanying  income
statement.  At  December 31, 2001 and 2000, respectively, the unpaid reinsurance
premiums net of amortization totaled $32,142 and $28,561. To the extent that the
reinsurance  companies  are  unable  to  fulfill  their  obligations  under  the
reinsurance  agreements,  FLAC remains primarily liable for the entire amount at
risk.  During  2001, 2000 and 1999, respectively, FLAC paid $73,492, $37,446 and
$653  of  reinsurance  premiums.

11.  RELATED  PARTY  TRANSACTIONS

Effective  December  31, 1998, the Company entered into a service agreement with
FLAC to provide personnel, facilities, and services to FLAC.  The services to be
performed  pursuant to the service agreement are underwriting, claim processing,
accounting,  processing  and servicing of policies, and other services necessary
to  facilitate  FLAC  s business.  The agreement is in effect until either party
provides  ninety  days written notice of termination.  Under the agreement, FLAC
pays monthly fees based on life premiums delivered by FLAC.  The percentages are
25%  of first year life premiums; 40% of second year life premiums; 30% of third
year life premiums, 20% of fourth year life premiums and 10% of life premiums in
years  five  and thereafter.  FLAC retains general insurance expenses related to
its sales agency, such as agent training and licensing, agency meeting expenses,
and  agent s health insurance.  Pursuant to the terms of the agreement, FLAC had
incurred  expenses  of  $704,151,  $562,686  and  $275,375  for  the years ended
December  31,  2001,  2000  and  1999,  respectively.

Effective  January  1,  2002, FLAC entered into a new service agreement with the
Company.  Under  the  terms  of  the  agreement, the Company provides personnel,
facilities, and services incident to the operations of FLAC.  FLAC does not have
any  employees.  Services  performed pursuant to the agreement are underwriting,
claim processing, accounting, policy processing and other services necessary for
FLAC to operate.  The agreement is effective until either party provides 90 days
written  notice  of  termination.  FLAC pays fees equal to the Company's cost pf
providing  such  services,  including an appropriate allocation of the Company's
overhead  expenses,  in  accordance  with  generally  accepted  accounting
principles FLAC  still  bears  all  direct  selling  costs  which  include agent
recruiting,  training  and  licensing; agent commissions; any benefits or awards
directly for or to agents or management including the cost of any life or health
insurance;  and  any  taxes  (federal,  state or county) directly related to the
business  of  FLAC.  Additionally,  FLAC  is  responsible  for  any  reinsurance
premiums;  legal  expenses  related  to  settlement of claims; state examination
fees;  directors  fees  and  directors  liability  insurance;  interest  on
indebtedness;

                                      F-22
<PAGE>

11.  RELATED  PARTY  TRANSACTIONS  (CONTINUED)

costs  related  to  mergers  or  acquisitions  and  costs  related to fulfilling
obligations of the life insurance and annuity contracts written by the agents of
FLAC.

The Company has contracted with First Alliance Corporation ( FAC ) of Lexington,
Kentucky  to  provide  underwriting  and  accounting  services  for FLAC and the
Company.  Under  the  terms  of  the management agreement, the Company pays fees
based  on  a percentage of delivered premiums of FLAC.  The percentages are 5.5%
for  first year premiums; 4% of second year premiums; 3% of third year premiums;
2%  of  fourth  year  premiums,  1% of fifth year premiums, and 1% for years six
through ten for ten year policies and .5% in years six through twenty for twenty
year  policies.  Pursuant  to  the  agreement,  the  Company  incurred $142,785,
$117,246,  and  $60,531 of fees during 2001, 2000, and 1999, respectively.   FAC
is  also  a  shareholder  of  the  Company.

During  2001,  the  Company purchased a 50% interest in First Computer Services,
LLC  ("FCS").  FCS  owns  the  computer  hardware  and  software that operates a
Company  policy  administration,  underwriting, claim processing, and accounting
system.  Rick  Meyer  and  Mike  Donnelly,  officers  of  the  Company, are also
officers  of FCS. The Company's initial investment in FCS was $115,195. FAC owns
the  remaining  50%  of FCS.  Refer to Note 5 for further information on the FCS
investment.

12.  FAIR  VALUES  OF  FINANCIAL  INSTRUMENTS

The  fair  values of financial instruments, and the methods and assumptions used
in  estimating  their  fair  values,  are  as  follows:

Fixed  Maturities

Fixed  maturities  are  carried  at  fair value in the accompanying consolidated
balance  sheets.  The  fair value of fixed maturities are based on quoted market
prices.  At  December  31,  2001 and 2000, respectively, the fair value of fixed
maturities  was  $8,605,901  and  $6,241,820,  respectively.

Short-term  Investments

The  carrying value of short-term investments approximates their fair value.  At
December  31,  2001  and  2000  the  fair  value  of  short-term investments was
$2,286,095  and  $4,437,280,  respectively.

Cash  and  Cash  Equivalents

The  carrying values of cash and cash equivalents approximate their fair values.
At  December  31, 2001 and 2000, the fair value of cash and cash equivalents was
$463,363  and  $832,485,  respectively.

Policy  Loans

The  carrying  value of policy loans approximates their fair value.  At December
31,  2001  and  2000,  the  fair  value of policy loans was $33,178 and  $5,990,
respectively.

                                      F-23
<PAGE>

Investments  in  Related  Parties

The  Company  holds  investments  in related parties of  $150,576 and $16,800 at
December  31,  2001  and  2000,  respectively.   Of  these  amounts, $41,800 and
$16,800 represent organizer shares purchased in the initial private placement of
the  respective  entity  at  December  31,  2001  and 2000, respectively . These
investments  are  restricted  under  Rule  144  of the Act.  There are no quoted
market  prices  for these investments.  These investments are carried at cost in
the  accompanying  consolidated  balance  sheets.

The  remaining $108,776 at December 31, 2001 represents the Company's investment
in  First Computer Servcies, LLC ("FCS").  The company uses the equity method to
account  for  this  investment.  Refer  to  Note  5  for  more  information.

Notes  Receivable

The  carrying  value  of  notes  receivable  approximates  their fair value.  At
December  31,  2001  and  2000,  the  fair  value of notes receivable was $0 and
$30,262,  respectively.

13.  COMPREHENSIVE  INCOME

In  1998,  the Financial Accounting and Standards Board SFAS No. 130,  Reporting
Comprehensive Income.   SFAS 130 requires the detail of comprehensive income for
the  reporting  period  be disclosed in the financial statements.  Comprehensive
income  consists  of  net  income  or  loss  for the current period adjusted for
income,  expenses  gains and losses that are reported as a separate component of
shareholders  equity  rather than in the statement of operations.  The financial
statements  have  been  prepared  in  accordance  with  SFAS  130.

The components of comprehensive income (loss) along with the related tax effects
are  presented  for  2001,  2000,  and  1999.
<TABLE>
<CAPTION>

                                                          2001       2000        1999
                                                       ---------  ---------  -----------
<S>                                                    <C>         <C>        <C>
Unrealized gain on available-for-sale securities:
  Unrealized holding gain (loss) during the period     $  75,751   $254,589   $ (36,065)
  Tax benefit (expense)                                  (28,700)   (86,560)     12,262
                                                       ----------  ---------  ----------
Other comprehensive income                             $  47,051   $168,029   $ (23,803)


Net income (loss)                                      $(352,828)  $155,139   $(140,604)
  Other comprehensive income (loss) net of
    tax effect:
    Unrealized investment gain (loss)                     47,051    168,029     (23,803)
                                                       ----------  --------  -----------
Comprehensive income (loss)                            $(305,778)  $323,168   $(164,407)

Net income (loss) per common share-basic and diluted   $   (0.06)  $   0.06   $   (0.03)
</TABLE>


                                   F-24
<PAGE>

14.  SEGMENT  INFORMATION

SFAS  No.  131,  Disclosures  about  Segments  of  an  Enterprise  and  Related
Information,  become  effective  for  1998 and superseded SFAS No. 14.  SFAS No.
131  requires  a  management  approach  (how management internally evaluates the
operating  performance  of  its  business units) in the presentation of business
segments.  The  segment  data  that follows has been prepared in accordance with
SFAS  No.  131.  The  operations  of  the Company and its subsidiaries have been
classified  into  two  operating segments as follows: life and annuity insurance
operations  and  corporate  operations.  Segment  information as of December 31,
2001,  2000  and  1999  and  for  the  years  then  ended  is  as  follows:
<TABLE>
<CAPTION>
                                                       Years ended December 31,
                                               ----------------------------------------
                                                   2001          2000          1999
                                               -----------  ------------  -------------
<S>                                             <C>           <C>           <C>
Revenues
  Life and annuity insurance operations         $ 2,704,352   $ 2,181,628   $ 1,243,323
  Corporate operations                              514,796       482,187       390,954
                                                -----------   -----------   ------------
    Total                                       $ 3,219,148   $ 2,663,815   $ 1,634,277


Income/(loss) before income taxes:
  Life and annuity insurance operations         $   532,626   $   537,649   $   418,084
  Corporate operations                             (734,059)     (245,768)     (404,036)
                                                ------------  ------------  ------------
    Total                                       $  (201,433)  $   291,881   $    14,048


Depreciation and amortization expense:
  Life and annuity insurance operations         $   459,124   $   565,869   $   234,522
  Corporate operations                               87,698        15,666        14,916
                                                -----------   -----------   ------------
    Total                                       $   546,822   $   581,535   $   249,438


Assets:
  Life and annuity insurance operations         $ 8,795,709   $ 6,024,504   $ 4,255,380
  Corporate operations                            8,444,254     8,356,250     8,125,955
                                                ----------    -----------   ------------
    Total                                       $17,239,963   $14,380,754   $12,381,335
                                                ===========   ===========   ============
</TABLE>


                                  F-25
<PAGE>