UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, DC 20549
                                      FORM 10-Q


       (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                               September 30, 1999

                                   OR

        ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to _____________________________


Commission file number                                                 001-14067

                           LINCOLN HERITAGE CORPORATION
           (Exact name of registrant as specified in its charter)

           Texas                                         36-3427454
 (State or other jurisdiction               (I.R.S. Employer Identification No.)
     of incorporation or
        organization)

                     1250 Capital of TX Hwy, Bldg. 3, Suite 100
                                  Austin, TX 78746
                    (Address of principal executive offices)
                                  (Zip Code)

                             (512) 328-0075
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. |X| Yes |_|No





              Title of class of                           Number of shares
                common stock                outstanding as of  October 31, 1999
        Common stock, $0.01 par value                    4,532,134



<PAGE>

LINCOLN HERITAGE CORPORATION
FORM 10-Q
                                     INDEX


PART I.  FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited).. .............3

        Condensed Consolidated Balance Sheets September 30, 1999 (Unaudited)
        and December 31, 1998..................................................3

        Condensed Consolidated Statements of Operations (Unaudited)Three Months
        and Nine Months Ended September 30, 1999 and 1998......................5

        Condensed Consolidated Statements of Shareholders Equity
        and Comprehensive Income (Unaudited) Nine Months Ended
        September 30, 1999 and 1998............................................6

        Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months
        Ended September 30, 1999 and 1998........ .............................7

        Notes to Condensed Consolidated Financial Statements...................8

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operation..............................................10

        Overview..............................................................10

        Results of Operations.................................................10

        Liquidity and Capital Resources.......................................11

        Factors Affecting the Company's Business and Prospects................13

Item 3. Quantitative and Qualitative Disclosure About Market Risk.............15

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings....................................................16

Item 2.  Changes in Securities and Use of Proceeds............................16

Item 3.  Defaults Upon Senior Securities......................................16

Item 4.  Submission of Matters to a Vote of Security Holders..................16

Item 5.  Other Information....................................................16

Item 6.  Exhibits and Reports on Form 8-K.....................................16

SIGNATURES....................................................................17

EXHIBIT INDEX.................................................................18



<PAGE>
<TABLE>

PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

                                LINCOLN HERITAGE CORPORATION

                            CONDENSED CONSOLIDATED BALANCE SHEETS


<CAPTION>
                                            (Unaudited)
                                           September 30,           December 31,
                                               1999                    1998
                                         ---------------         ---------------

                                 ASSETS
<S>                                       <C>                    <C>

Fixed maturities available-for-sale
  at fair value (amortized cost
  $80,186,103 and $68,201,939,respectively) $  71,076,038         $   65,628,083
Equity securities at fair value
  (amortized cost $6,687,997
   and $7,939,451, respectively)               5,216,974               7,121,000
Policyholder loans                            21,973,465              17,257,122
Cash and cash equivalents                     25,695,254              43,824,537
                                          --------------          --------------
       Total cash and investments            123,961,731             133,830,742

Accrued investment income                        658,919                 463,616
Accounts receivable from related party         1,993,625               1,535,926
Funds withheld by ceding company                 534,362                 526,434
Deferred policy acquisition costs, net        19,750,731              16,881,478
Fixed assets, net                              1,447,980               1,218,352
Cost of policies acquired, net                 3,050,297               3,833,659
Goodwill, net                                  1,358,017               1,413,550
Deferred tax assets, net                       6,037,392               3,364,638
Other assets                                     702,995               1,004,118
                                          --------------          --------------
       Total                              $  159,496,049          $  164,072,513
                                          ==============          ==============
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.















<PAGE>
<TABLE>
                             LINCOLN HERITAGE CORPORATION

                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                    (CONTINUED)

<CAPTION>

                                           (Unaudited)
                                          September 30,             December 31,
                                               1999                      1998
                                        ----------------        ----------------

                                 LIABILITIES AND SHAREHOLDERS' EQUITY

<S>                                       <C>                    <C>

Policy liabilities:
    Future policy benefits                $  114,331,574          $  104,201,323
    Policyholder deposits                     39,287,982              47,163,465
    Claims and benefits payable                  500,000                 650,000
    Premiums received in advance                 739,079                 409,937
                                          --------------          --------------
       Total policy liabilities              154,858,635             152,424,725

Income tax payable                                35,800                  49,800
Accounts payable and accrued expenses            280,624                 656,089
Accounts payable to related party                      -                 163,292
Other liabilities                              1,148,322               1,964,045
                                          --------------          --------------
       Total liabilities                     156,323,381             155,257,951

Shareholders' equity:

Preferred stock($.01 par value;
1,000,000 shares authorized,
none issued)                                            -                      -
Common stock  ($.01 par value; 10,000,000
shares authorized, 4,532,134
and 4,520,000 shares issued
and outstanding,respectively)                     45,321                  45,200
Additional paid-in capital                     4,977,732               4,734,350
Retained earnings                              5,214,474               6,273,924
Accumulated other comprehensive loss         (7,064,859)             (2,238,912)
                                         ---------------         ---------------
       Total shareholders' equity              3,172,668               8,814,562
                                          --------------          --------------

       Total                              $  159,496,049          $  164,072,513
                                          ==============          ==============
</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.
<PAGE>
<TABLE>

                             LINCOLN HERITAGE CORPORATION

                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<CAPTION>

                                                       Three Months Ended                  Nine Months Ended
                                                          September 30,                      September 30,
                                                      1999             1998               1999            1998
<S>                                              <C>              C>                <C>              <C>

REVENUES

Life premiums                                    $   12,337,243   $   10,897,591    $  33,357,696    $   31,630,543
Net investment income                                 2,372,410        2,840,302        7,526,920         7,673,251
Realized investment gains (losses), net                (701,693)         442,905          153,002         1,511,108
Other revenue                                            40,674           65,065          173,182           212,931
                                                 --------------   --------------    -------------    --------------
       Total revenues                                14,048,634       14,245,863       41,210,800        41,027,833

BENEFITS AND EXPENSES

Death benefits                                        3,953,820        4,045,996       13,509,901        12,335,933
Surrender benefits                                      114,469        1,088,746        1,003,985         1,567,331
Increase in future policy benefits                    4,781,027        3,974,317       10,130,252        12,382,365
Interest paid on policyholder deposits                  853,317          685,143        1,561,942         1,467,826
Commissions                                           4,913,278        4,875,589       12,755,692        11,811,695
General expenses                                      2,290,050        1,814,236        7,182,262         5,158,001
General expenses reimbursed by related party           (671,173)        (751,854)      (2,063,913)       (2,066,886)
Taxes, licenses and fees                                102,274          243,620          731,583           661,468
Amortization of cost of policies purchased               20,198           49,430          658,362           623,003
Change in deferred acquisition costs, net            (1,890,855)      (1,057,320)      (2,869,253)       (2,206,954)
                                                 ---------------  ---------------   --------------   ---------------
       Total benefits and expenses                   14,466,405       14,967,903       42,600,813        41,733,782

Loss before federal income taxes                       (417,771)        (722,040)      (1,390,013)         (705,949)


Income tax benefit                                            -         (208,743)        (330,563)         (204,019)
                                                 --------------   ---------------   --------------   ---------------

Net loss                                         $     (417,771)  $     (513,297)   $  (1,059,450)   $     (501,930)
                                                 ===============  ===============   ==============   ===============

Basic loss per share                             $        (0.09) $         (0.13)  $        (0.23)   $        (0.13)
                                                 ==============  ================  ==============    ===============

Diluted loss per share                           $        (0.09) $         (0.13)  $        (0.23)   $        (0.13)
                                                 ==============  ================  ==============    ===============

Weighted average shares outstanding:

Basic                                                 4,523,474        4,000,000        4,523,474         4,000,000
Diluted                                               4,523,474        4,000,000        4,523,474         4,000,000


</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.
<PAGE>
<TABLE>


                          LINCOLN HERITAGE CORPORATION

            CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                                   (UNAUDITED)

                                                                                              Accumulated
<CAPTION>
                                                                             Additional          Other
                                                             Common           Paid-In       Comprehensive       Retained
                                             Total            Stock           Capital           Loss            Earnings
<S>                                     <C>               <C>              <C>               <C>              <C>

Balance, December 31, 1998              $   8,814,562     $      45,200    $   4,734,350     $  (2,238,912)   $   6,273,924


Comprehensive loss, net of tax:

     Net loss                              (1,059,450)                -                -                 -       (1,059,450)
     Change in unrealized losses on
         available-for-sale and equity
         securities, net of applicable
         income tax benefit of $2,486,094  (4,825,947)                -                -        (4,825,947)               -

     Total comprehensive loss              (5,885,397)                -                -                 -                -
                                        --------------

Issuance of shares for stock options           45,503               121           45,382

Effect of stock options granted under stock
     option plans, net of applicable income
     tax effect of $102,000                   198,000                 -          198,000                 -                -
                                         -------------     -------------    ------------    --------------     ------------



Balance, September 30, 1999             $   3,172,668     $      45,321    $   4,977,732     $  (7,064,859)      $5,214,474
                                        =============     =============    =============     ==============      ==========


Balance, December 31, 1997               $  6,882,711     $      10,000    $   2,075,576     $     538,870    $   4,258,265


Comprehensive income, net of tax:

     Net loss                                (501,930)                -                -                 -         (501,930)
     Change in unrealized losses on
         available-for-sale and equity
         securities, net of applicable
         income tax benefit of $1,052,823  (2,043,715)                -                -        (2,043,715)               -
                                           ------------


     Total comprehensive loss              (2,545,645)                -                -                 -                -
                                            -----------

Transfer to common stock in
     connection with stock split and
     stock dividend                                 -            30,000          (30,000)                -                -

Effect of stock options granted under stock
     option plan, net of applicable income
     tax effect of $58,500                    113,560                 -          113,560                 -                -
                                        -------------     -------------    -------------     -------------    -------------

Balance, September 30, 1998             $   4,450,626     $      40,000    $   2,159,136     $  (1,504,845)   $  3,756,335
                                        =============     =============    =============     ==============  =============

</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.
<PAGE>
<TABLE>

                                  LINCOLN HERITAGE CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                   (UNAUDITED)

<CAPTION>
                                              1999                     1998
                                         -------------             -------------
<S>                                      <C>                      <C>

CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                               $  (1,059,450)           $    (501,930)
  Adjustments to reconcile net income to cash
  used in operating activities:
     Realized investment gains                (153,001)              (1,511,108)
     Accretion of discount on investments     (265,077)              (1,170,911)
     Depreciation and amortization             926,630                  809,440
     Deferred income taxes                    (321,060)                (163,096)
     Stock options                             300,000                  172,060
     Accrued investment income                (195,303)                 (74,344)
     Accounts receivable from related parties (457,699)              (1,272,522)
     Funds withheld by ceding company           (7,928)                      -
     Deferred acquisition costs             (2,869,253)              (2,206,954)
     Other assets                              301,123                 (810,946)
     Future policy benefits and
     deposit funds                           2,254,768                3,333,775
     Claims and benefits payable              (150,000)                (300,000)
     Premiums received in advance              329,142                   32,117
     Federal income tax payable                (14,000)              (1,975,165)
     Accounts payable and accrued expenses    (375,465)                 (16,223)
     Accounts payable to related party        (163,292)                 162,327
     Other liabilities                        (690,723)               (122,570)
                                         --------------           --------------
      Net cash used in
          operating activities              (2,610,588)             (5,616,050)
                                         --------------           --------------

CASH FLOWS FROM INVESTING ACTIVITIES

     Proceeds from sales of
       available-for-sale investments       53,429,486              223,824,091
     Purchases of available
       -for-sale investments               (63,513,214)            (230,933,520)
     Policyholder loans, net                (4,716,343)              (3,559,578)
     Purchase of fixed assets                 (442,363)                (607,593)
     Acquisition of subsidiary                       -               (5,066,809)
     Other, net                               (321,764)                (897,133)
                                       ----------------        ----------------
      Net cash used
          in investing activities          (15,564,198)            (17,240,542)
                                       ----------------        ----------------

CASH FLOWS FROM FINANCING ACTIVITIES

     Issuance of shares for
          stock options                         45,503                        -
                                          -------------            -------------
     Net cash provided by
          financing activities                  45,503                        -
                                          -------------            -------------

NET DECREASE IN CASH AND                    (18,129,283)            (22,856,592)
     CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS,
     BEGINNING OF PERIOD                     43,824,537               62,667,707
                                          -------------            -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD  $  25,695,254           $  39,811,115
                                          =============           =============

SUPPLEMENTAL CASH FLOW INFORMATION
     Federal income taxes paid            $         -             $   1,975,165
                                          =============           =============

</TABLE>
              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

<PAGE>




                          LINCOLN HERITAGE CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 -- BASIS OF PRESENTATION

     The accompanying  condensed  consolidated  financial statements include the
accounts of Lincoln  Heritage  Corporation  (the  "Company")  and its direct and
indirect wholly owned subsidiaries: Memorial Service Life Insurance Company, New
Life  Insurance  Company,  and Lincoln  Memorial Life Insurance  Company.  These
condensed  consolidated  financial  statements  have been prepared in accordance
with generally  accepted  accounting  principles  ("GAAP") for interim financial
information and the  instructions to Form 10-Q and Rule 10-01 of Regulation S-X,
which differ from  statutory  accounting  practices  prescribed  or permitted by
regulatory authorities.  Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial  statements.  All  intercompany  accounts and  transactions  have been
eliminated in consolidation. Certain prior period amounts have been reclassified
to conform with the current period presentation.

     The  accompanying  condensed  consolidated  financial  statements and notes
thereto as of September 30, 1999 are unaudited and should be read in conjunction
with the Company's audited financial statements included in the Company's Annual
Report  filed with the  Securities  and Exchange  Commission  for the year ended
December  31, 1998.  The  unaudited  interim  condensed  consolidated  financial
statements  have been  prepared  on the same  basis as the  annual  consolidated
financial statements and, in the opinion of management, reflect all adjustments,
which include only normal recurring adjustments, necessary to present fairly the
Company's  financial  position,  results  of  operations  and  cash  flows as of
September  30, 1999 and for the three and nine months ended  September  30, 1999
and  1998,  respectively.  The  results  for the  three  and nine  months  ended
September 30, 1999 are not necessarily  indicative of the results to be expected
for the year ending December 31, 1999.

NOTE 2 -- STOCK SPLITS AND EARNINGS PER SHARE

     On April 6, 1998, the Company effected a 3.2-for-1 stock split, in the form
of a stock dividend, and on August 18, 1998, the Company declared and paid a 25%
stock dividend.  The earnings per share of the Company for all periods presented
have been computed as if these stock splits and dividends occurred at January 1,
1998. The diluted earnings per share is computed using the treasury stock method
unless the effect is anti-dilutive.

NOTE 3 -- INVESTMENTS

     In the nine-month  period ended September 30, 1999, the Company  recognized
losses for declines in market value associated with the Company's  investment in
Autobond  Acceptance  Corporation  ("Autobond").  Management  believes  that the
decline in market value is other than  temporary  and due to reasons  other than
market  fluctuations and has recognized  losses of $578,000 and $3.2 million for
the three-month and nine-month  periods ended September 30, 1999,  respectively.
These  recognized  losses reduce the Company's  total  investment in Autobond to
$98,000 as of September 30, 1999.



<PAGE>


                          LINCOLN HERITAGE CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


         The  amortized  cost and  estimated  fair value of fixed  maturity  and
equity securities available-for-sale as of September 30, 1999 were as follows:
<TABLE>
<CAPTION>

                                          Gross         Gross        Estimated
                          Amortized     Unrealized    Unrealized        Fair
                           Cost           Gains        Losses           Value
<S>                      <C>            <C>         <C>           <C>

Fixed maturity securities:
    Corporate bonds       $ 15,035,512   $ 191,075  $(1,367,906)   $ 13,858,681
    Mortgage backed
      securities            48,755,173      72,493   (6,483,011)     42,344,655
    U.S. Government         16,395,418     118,653   (1,641,369)     14,872,702
                          ------------   ---------  ------------   -------------
 Total fixed maturity
      securities            80,186,103     382,221   (9,492,286)     71,076,038

Equity securities            6,687,997     86,935    (1,557,958)      5,216,974
                           -----------   ----------  ------------   ------------

       Total              $ 86,874,100   $ 469,156  $(11,050,244)   $ 76,293,012
                          ============   ========== ==============  ============

</TABLE>

NOTE 4 --SUBSEQUENT EVENTS

     On October 15, 1999, the Company purchased all of the outstanding shares of
capital stock of Funeral  Security Life  Insurance  Company  ("FSLife") for $5.0
million. As of such date, FSLife had approximately $31 million in assets and $30
million in liabilities. The acquisition will be accounted for using the purchase
method.

     On October  28,  1999,  the  Company  completed  the sale of its  insurance
subsidiary,  New Life  Insurance  Company  ("New  Life")  for  approximately  $5
million.  Since all of the  business of New Life is  reinsured by another of the
Company's insurance subsidiaries, the sale of New Life is not expected to have a
material  adverse  effect  on  the  Company's  financial  position,  results  of
operations or cash flows.

<PAGE>


     Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operation

Overview

     The Company is a holding  company for operating  subsidiaries  that consist
primarily of life insurance  companies.  The life insurance  companies primarily
write policies sold by the Company's affiliate,  National Prearranged  Services,
Inc. ("NPS"), in connection with NPS's sale of prearranged funeral contracts.

     The  Company's  revenues are derived  primarily  from premiums on insurance
policies generated by NPS. In the event of a decline in NPS's preneed sales, the
Company's  future  revenue  growth  could be impacted  if the Company  could not
replace the NPS sales  force with its own or another  marketing  entity's  sales
force on a cost-effective or timely basis.

     The Company's  expenses  consist  principally  of benefits paid or accrued,
commissions  on the  sale of  policies  and  general  and  administrative  costs
associated with life insurance company operations.  The Company anticipates that
benefit costs and commissions  will continue to increase as the Company executes
its growth plans.

     The  Company's  insurance  subsidiaries  are  subject  to a high  degree of
regulation from various state insurance administrators.  Such regulation governs
(among  other  things):  investment  policies;   financial  reporting;   capital
adequacy;  terms of policies;  and the ability of the Company's  subsidiaries to
pay dividends and management fees to the Company. In addition,  NPS's activities
in selling  prearranged  funeral contracts are highly regulated in the states in
which NPS does business.  These  regulatory  aspects and future changes  therein
could materially affect the Company's financial position,  results of operations
or cash flows.

     The  Company's  strategy  is to increase  shareholder  value by growing its
insurance  business  through:  (i)  selected   acquisitions  of  life  insurance
companies and in-force life insurance policies and annuities; and (ii) increases
in life insurance policies arising out of prearranged  funeral contracts sold by
NPS. The  Company's  ability to acquire  such  companies  and  policies  will be
dependent  upon (among  other  things) its ability to  identify,  negotiate  and
complete  transactions  of favorable  terms,  arrange  necessary  financing  and
integrate   and  manage  the   acquisitions,   including   preserving   customer
relationships.  There can be no  assurance  that the Company  will  successfully
execute its strategy

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 1999 and 1998

     Premium income increased  approximately  $1.4 million and $1.7 million,  or
13% and 5%, in the three-month and nine-month  periods ended September 30, 1999,
respectively,  compared to the  corresponding  periods of 1998. The increase for
the three-month and nine-month  periods  reflected  higher overall volume of new
policies  issued  for both  limited  pay and  single pay  policies  compared  to
corresponding periods in 1998.

<PAGE>


     Net investment income decreased approximately $468,000 and $146,000, or 16%
and 2%, in the  three-month  and  nine-month  periods ended  September 30, 1999,
respectively, compared to the corresponding periods of 1998. The decrease in the
three-month  period was due to changes in the portfolio mix of investments  away
from high yield bonds to more convertible bonds.

     Net realized investment gains decreased approximately $1.1 million and $1.4
million,  or 258% and 90%,  in the  three-month  and  nine-month  periods  ended
September  30, 1999,  respectively,  versus the  corresponding  periods of 1998.
Losses  of  approximately  $574,000  and  $3.2  million  were  incurred  for the
three-month  and  nine-month  periods ended  September  30, 1999,  respectively,
reflecting management's recognition of a decline in market value associated with
the Company's  investment in Autobond.  Management believes that the decline was
other than temporary and due to reasons other than market  fluctuations  and has
recognized losses  sufficient to reduce the Company's  investment in Autobond to
its current market value of $98,000 as of September 30, 1999.

     Benefits  increased  approximately  $91,000 and decreased $1.5 million,  or
less than 1% and 6%, in the three-month  and nine-month  periods ended September
30,  1999,  respectively,  compared to the  corresponding  periods of 1998.  The
decrease  in the  nine-month  period  was due to  higher  overall  volume of new
policies issued during the nine-month period ended September 30, 1999.

     Commissions increased  approximately $38,000 and $944,000, or 1% and 8%, in
the three-month and nine-month  periods ended September 30, 1999,  respectively,
compared to the  corresponding  periods of 1998. These changes were attributable
to higher sales volumes and mix of policies sold.

     General  expenses,  net of  expenses  reimbursed,  increased  approximately
$556,000 and $2.0 million,  or 52% and 66%, in the  three-month  and  nine-month
periods ended September 30, 1999,  respectively,  compared to the  corresponding
periods of 1998.  These  increases were  attributable  to higher  administrative
expenses as a result of increased sales volumes, support for increased levels of
acquisition activities and regulatory reporting requirements,  and approximately
$330,000  related to the  forfeiture of deposits and other  expenses  associated
with the Company's withdrawal of its proposal to acquire Harbourton Reassurance,
Inc.

     The change in deferred acquisition costs increased  approximately  $834,000
and $662,000 for the  three-month  and  nine-month  periods ended  September 30,
1999, respectively,  compared to the corresponding periods of 1998. The increase
for  the  three-month  and  nine-month  periods  was  due  to  higher  rates  of
capitalization  of the costs of acquiring  new business due to higher  volume of
new business.

Liquidity and Capital Resources

     The Company's  insurance  subsidiaries  generally generate  sufficient cash
receipts from premium collections and investment income to satisfy the Company's
obligations.  The  Company  believes  that  the  investment  portfolios  of  its
insurance  subsidiaries  provide sufficient liquidity to meet its operating cash
requirements.


<PAGE>


         The Company's cash  requirements for 1999 and in the future will depend
upon mortality experience,  acquisitions,  timing of expansion plans and capital
expenditures.  The Company  believes that  anticipated  revenue from  operations
should  be  adequate  for the  Company's  working  capital  requirements  of its
existing  business over the next twelve months.  In the event that the Company's
plans or assumptions change, or if its resources available to meet unanticipated
changes in business conditions prove to be insufficient to fund operations,  the
Company could be required to seek  additional  financing  prior to that time. On
October 15, 1999, the Company  completed its  acquisition of all the outstanding
shares of Funeral Security Life Insurance Company ("FSLife") for $5 million. The
purchase  was funded  from  existing  working  capital.  On October 28, 1999 the
Company sold its insurance  subsidiary,  New Life, for  approximately $5 million
and  realized  net  proceeds of  approximately  $1.4 million over the net assets
sold.

         Total cash and investments  decreased  approximately  $9.9 million from
$133.8  million at December 31, 1998 to $124.0  million at  September  30, 1999.
Changes  in  the  separate  components  of  investment  assets  were  due to the
portfolio mix of the Company's  investment  assets and changes in the fair value
of actively managed fixed maturity and equity securities.

         Receivables from related parties increased  approximately $458,000 from
$1.5  million at December  31, 1998 to $1.9  million at  September  30, 1999 due
primarily to premiums on new business.

     Deferred policy acquisition costs, net increased approximately $2.9 million
from $16.9  million at December 31, 1998 to $19.8  million at September 30, 1999
due primarily to increases in new policies issued and in-force.

         Cost of policies acquired,  net, decreased  approximately $783,000 from
$3.8 million at December  31, 1998 to $3.0 million at September  30, 1999 due to
amortization of costs.

         Deferred  taxes,  net  increased  $2.6  million  from $3.4  million  at
December  31,  1998 to $6.0  million  due to  primarily  to  deferred  taxes  on
unrealized losses on investments.

         Other  assets  decreased  approximately  $301,000  from $1.0 million at
December 31, 1998 to $703,000 at  September  30, 1999 due to the  forfeiture  of
deposits and other  expenses  associated  with the  Company's  withdrawal  of it
proposal to acquire Harbourton Reassurance, Inc.

         Policyholder  deposits decreased  approximately $7.9 million from $47.2
million  at  December  31,  1998  to  $39.3   million  at  September  30,  1999.
Policyholder deposits are comprised primarily of blocks of annuities acquired in
prior years.  The decrease was due  primarily to  surrenders of policies and the
absence of the issuance of new annuity policies.

         Other liabilities decreased approximately $816,000 from $2.0 million at
December  31, 1998 to $1.1 million at  September  30, 1999 due  primarily to the
application of unapplied customer payments to policies.


<PAGE>


Factors Affecting the Company's Business and Prospects

Seasonality

         Historically,  the Company's revenues and operating results have varied
from quarter to quarter and are expected to continue to fluctuate in the future.
These  fluctuations  have been due to a number of  factors,  including  a higher
mortality rate of the Company's  insureds  during the winter  months.


Interest Rate Changes

         The Company's  investment  portfolio primarily consists of fixed income
investments.  Available-for-sale  investments  are recorded at fair market value
with an offsetting  adjustment for the unrealized investment gains and losses to
shareholders' equity. As a result of rising interest rates during the past year,
the  Company  has  experienced  declines  in the  market  value  of its  overall
investment balances and shareholders' equity.  However, the investment yields on
the Company's  existing fixed income investments are not affected for changes in
market  interest  rates.  Similarly,  the  capital  adequacy  of  the  Company's
insurance subsidiaries for regulatory purposes is not affected by the changes in
market values of the fixed income  portfolios.  Consistent  with its  investment
strategy,  the Company holds its  investments in fixed income  securities  until
maturity or sells such investments when deemed advantageous, including to pursue
opportunities for investment gains.

Year 2000 Issues

         Many current installed computer systems and software products are coded
to accept  only  two-digit  entries in the date code  field and cannot  reliably
distinguish  dates  beginning  on January  1, 2000 from dates  prior to the year
2000. Many companies'  software and computer  systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000.

         Company Readiness

          The Company's  information  technology personnel recently assessed the
Company's  readiness to manage Year 2000 issues.  This  included a review of all
current  computer  systems in use, as well as  communications  with  significant
vendors and other third  parties to determine  the extent to which the Company's
operations are  vulnerable to third  parties'  failure to correct their own Year
2000  issues.  Based  on the  overall  assessment  performed,  the  Company  has
determined that it will not need to  significantly  modify or replace any of its
current  systems in order to comply with Year 2000 issues.  In  addition,  based
upon  communications  with  significant  vendors  and other third  parties,  the
Company is not aware of any  material  impact on their  systems  relating to the
transition to the Year 2000. However,  the Company has no means of ensuring that
these  entities  will be Year 2000  ready.  The  inability  of third  parties to
complete their Year 2000 programs in a timely manner could materially impact the
Company. The effect of non-compliant third parties is not determinable.

         Year 2000 Costs

         The  Company's  total  costs of Year 2000  efforts  to date and  future
anticipated costs have not been and are not expected to be material.



<PAGE>


         Risks Associated with the Company's Year 2000 Issues

         The Company expects its internal  systems to be Year 2000 compliant and
believes that the worst case  scenario  would result from vendors or other third
parties failing to achieve Year 2000 compliance.  Due to the general uncertainty
inherent  in the Year 2000  problem,  the  Company  cannot  predict  whether the
consequence  of Year 2000  failures will have a material  adverse  effect on the
Company's business, financial condition or results of operations. However, based
on  the  Company's  assessment  of its  internal  systems,  communications  with
significant  vendors and other third  parties,  the Company does not expect Year
2000 problems to result in a material adverse effect on the Company's  financial
position,  results of operations or cash flows. In the event significant vendors
are not Year 2000  compliant,  the Company  will have a backup  power supply and
internal resources to address Year 2000 problems.

Forward-Looking Statements

         This report contains  forward-looking  statements within the meaning of
the "safe harbor" provisions of the Private Securities  Litigation Reform Act of
1995. Such forward-looking  statements are based on the beliefs of the Company's
management as well as on assumptions made by and information currently available
to the Company at the time such  statements  were made.  The Company can give no
assurance that the  expectations  indicated by such  forward-looking  statements
will be realized. If any of management's  assumptions should prove incorrect, or
if any of the  risks  and  uncertainties  underlying  such  expectations  should
materialize,  the  Company's  actual  results may differ  materially  from those
indicated by the forward-looking statements.

         The  following  factors that are not within the  Company's  control and
that may have a direct bearing on operating results include, but are not limited
to: (i) general  economic  conditions  and other factors,  including  prevailing
interest rate levels and stock market performance,  which may affect the ability
of the  Company  to  sell  its  products,  the  market  value  of the  Company's
investments and the lapse rate and profitability of the Company's policies; (ii)
the Company's ability to achieve anticipated levels of operational  efficiencies
at  recently   acquired   companies,   as  well  as  through  other  cost-saving
initiatives; (iii) mortality,  morbidity, and other factors which may affect the
profitability of the Company's insurance  products;  (iv) changes in the federal
income tax laws and  regulations  which may affect the cost of or demand for the
Company's  products;  (v)  increasing  competition  in the sale of the Company's
products;  (vi)  regulatory  changes or  actions,  including  those  relating to
regulation of financial  services  affecting (among other things) bank sales and
underwriting of insurance  products,  regulation of the sale,  underwriting  and
pricing  of  insurance  products;  (vii)  the  availability  and terms of future
acquisitions;  (viii)  unanticipated events associated with Year 2000 compliance
relating to work on  development  or  modification  to  computer  systems and to
software,  including work  performed by suppliers or vendors;  and (ix) the risk
factors  or  uncertainties  listed  in the  Company's  other  filings  with  the
Securities and Exchange Commission.

         Additionally,  the  Company  may  not  be  successful  in  identifying,
acquiring,   and  integrating  possible   acquisitions,   implementing  improved
management and accounting information systems and controls, and may be dependent
upon  additional  capital  for  future  growth.  There  may be other  risks  and
uncertainties that management is not able to predict.

         When  used  in  this  report,   the  words   "anticipate,"   "believe,"
"estimate," "expect," "intends," and similar expressions,  as they relate to the
Company are intended to identify forward-looking statements,  although there may
be certain forward-looking statements not accompanied by such expressions.

         Lincoln   Heritage   Corporation  is  an  insurance   holding   company
headquartered  in Austin,  TX,  and is not  affiliated  in any way with  Lincoln
Heritage Life Insurance Company headquartered in Phoenix, AZ.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

         There have been no material  changes from the  information  provided in
the Company's Annual Report on Form 10-K for the year ended December 31,1998.



<PAGE>




PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         Not applicable.

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable

Item 3.  Defaults Upon Senior Securities

         Not applicable.

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

         Not applicable.

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits:
                  See Exhibit Index attached hereto.

         (b)      Reports on Form 8-K:
                  None.


<PAGE>




                                                    SIGNATURES

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



                                         LINCOLN HERITAGE CORPORATION
                                                 (Registrant)


 November 15, 1999                  By:          /s/ Clifton Mitchell
                                        President and Chief Executive Officer
                                   (Principal Financial and Accounting Officer)

<PAGE>



                                  EXHIBIT INDEX

Ex. No.   Description

27.1      Financial Data Schedule for the Nine Months ended September 30, 1999.