LIABILITIES Accounts payable $ 344,071 $ 170,738 Accrued liabilities 2,605,854 2,032,387 Income taxes payable 389,561 -- -------------- -------------- Total Current Liabilities 3,339,486 2,203,125 -------------- --------------
The Company has also entered into Insurance Processing Agreements (the "Processing Agreements") with the Carriers pursuant to which the Company provides clerical, administrative and accounting services with respect to the Policies. Such services include billing, collecting and remitting cash on the Policies. However, all cash receipts are deposited into accounts maintained by the Carriers upon receipt by the Company and all cash remitted is paid from accounts maintained by the Carriers. For providing such services, the Company is paid on a per transaction basis with the amount of the fee depending on the type of policy.
In May 1995, the Company formed Legacy Financial Services, Inc. ("LFS"), a wholly-owned broker-dealer subsidiary. LFS has been approved by the National Association of Securities Dealers and the Securities and Exchange Commission to engage in the offering and sale of variable annuity and life insurance products, mutual funds and debt and equity securities (collectively, the "Products") on a fully disclosed basis. LFS has entered into agreements (the "Agreements") with various entities licensed to sell the Products. The Agreements grant LFS the non-exclusive right to solicit sales of the Products through its network of independent representatives and to provide certain marketing and administrative services in order to facilitate sales of the Products. Under the Agreements, the Company is compensated based upon pre-determined percentages of production. The Agreements may be terminated by any party upon 30 days written notice. Sales of the Products pursuant to the Agreements began during the first quarter of 1996.
Certain 1996 and 1995 balances have been reclassified to conform with the 1997 presentation. Such reclassifications had no effect on net income or shareholders' equity.
In August, 1997, the Company's shareholders voted to approve the Regan Holding Corp. 1998 Stock Option Plan, which authorizes the Company to grant stock options to employees and directors (the "Employee Option Plan"). The Employee Option Plan is administered by two committees (the " Committees") which are appointed by the Company's Board of Directors. 1,500,000 shares of the Company's Series A Common Stock were reserved by shareholders for granting under the Employee Option Plan. On January 1, 1998 (the "Employee Grant Date"), 1,476,000 options were granted to employees pursuant to the Employee Option Plan (the "Employee Options"). The Employee Options vest evenly over four years following the Employee Grant Date. Once vested, the Employee Options become exercisable at the estimated fair market value of $.73 per share. Any unexercised Employee Options expire ten years after the Employee Grant Date. The Employee Options qualify as "Incentive Stock Options," as defined by the Internal Revenue Code. The impact of the Employee Options on the Company's 1998 Financial Statements will be accounted for in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," and is not expected to be material.