PROSPECTUS SUPPLEMENT Filed pursuant to Rule 424(b)(3) (TO PROSPECTUS DATED MAY 14, 2001) Registration No. 333-55722 SUMMIT LIFE CORPORATION 200,000 Minimum, 1,000,000 Maximum Shares of Common Stock Offering Price $1.00 Per Share This Prospectus Supplement supplements our Prospectus dated May 14, 2001. Accordingly, you should read this Prospectus Supplement in conjunction with the Prospectus. Capitalized terms used in this Prospectus Supplement have the meanings specified in the Prospectus. (continued on following page) ------------------------------------ Neither the Securities and Exchange Commission nor any state commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. ------------------------------------ The date of this Prospectus Supplement is August 7, 2001 On August 1, 2001, we filed with the Securities and Exchange Commission certain financial information as of and for the period ended June 30, 2001, the material portions of which are set forth below. Summary Financial Data Operating Data The following table sets forth selected information regarding operating results for the periods indicated. Six Months Ended Year Ended December 31, June 30, ----------------------- ----------------------- 1999 2000 2000 2001 -------- -------- -------- -------- (in thousands) Statement of Operations Data: Revenues $ 813 $ 571 $ 382 $ 496 Benefits, losses and expenses 1,704 975 469 588 Net Loss (884) (404) (87) (91) Balance Sheet Data As of June 30, 2001 -------------------------------------------------- As Adjusted (1) ------------------------------------ Actual Minimum Offering Maximum Offering ------ ---------------- ---------------- (in thousands) Balance Sheet Data: Cash and cash equivalents $1,535 $1,695 $2,259 Total assets 6,349 6,509 7,073 Total liabilities 5,257 5,257 5,080 Stockholders' equity 1,092 1,252 1,993 ------------------------- (1) Gives effect to the sale of the minimum and maximum number of shares of common stock offered hereby, and the application of the estimated proceeds therefrom. See "USE OF PROCEEDS" and "CAPITALIZATION" in our prospectus dated May 14, 2001. S-2 Results of Operations This prospectus supplement includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate" or "believe" or the negative thereof or variations thereon or similar terminology. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Such statements are based upon numerous assumptions about future conditions which may ultimately prove to be inaccurate and actual events and results may materially differ from anticipated results described in such statements. Important factors that could cause actual results to differ materially from our expectations include the risks inherent generally in the insurance and financial services industries, the impact of competition and product pricing, changing market conditions, the risks disclosed in our annual report on Form 10-KSB for the year ended December 31, 2000 under "Item 6--Management's Discussion and Analysis or Plan of Operation," as well as the risks disclosed in our prospectus dated May 14, 2001, of which this prospectus supplement is a part. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. We assume no duty to update or revise our forward-looking statements based on changes in internal estimates or expectations or otherwise. As a result, the reader is cautioned not to place reliance on these forward-looking statements. Three Months Ended June 30, 2001 Compared to Three Months ended June 30, 2000 Revenue. Total revenues increased 100% from $219,248 to $439,046 for the three months ended June 30, 2000 and June 30, 2001, respectively. Revenues attributable to life insurance increased 422% from $32,607 to $170,247 for the three months ended June 30, 2001, compared to the same period ended June 30, 2000. The increase was due primarily to the continued sale of insurance contracts. Investment income increased 206% from $90,083 for the three months ended June 30, 2000 to $276,191 for the three months ended June 30, 2001, primarily as a result of the sale of a communications tower lease for $186,000. Net losses on trading securities of $17,431 were reported for June 30, 2001. We began trading securities in the fourth quarter of 2000 and are required to report unrealized gains and losses in operations. The realized gain or loss for each trading security may differ materially depending on the date of sale, the underlying performance of the represented company and other market conditions. Other income decreased from $91,750 for the three months ended June 30, 2000 to $9,522 for the three months ended June 30, 2001. A one time gain of $67,592 from the sale of real estate was recognized in the second quarter of 2000. Costs and Expenses. Total expenses increased 82% from $207,874 to $379,480 for the three months ended June 30, 2000 and 2001, respectively. Such increase was primarily attributable to reserve increases associated with our writing of new business. Policy benefits decreased slightly from $26,883 to $22,211 for the comparable periods. Policy reserves increased $150,907 for the comparable periods. Depreciation and amortization increased from $12,301 to $28,528 for the three months ended March 31, 2000 and 2001, respectively, as we continued to amortize the block of business acquired with Great Midwest Life Insurance Company. General expenses increased 8% from $120,539 to $130,069 for the comparable periods. S-3 Income/Loss. We reported net income for the three months ended June 30, 2001 of $47,066, compared to a net loss for the three months ended June 30, 2000 of $1,126. We continued to increase revenues from life insurance and held operating costs steady during the quarter. We reported net income per share of $0.02 per share for the three months ended June 31, 2001, compared to a net loss of $0.00 per share for the three months ended June 30, 2000. Six Months Ended June 30, 2001 Compared to Six Months ended June 30, 2000 Revenue. Total revenues increased 30% from $382,052 to $496,368 for the six months ended June 30, 2000 and June 30, 2001, respectively. Revenues attributable to life insurance increased 227% from $61,878 to $202,265 for the six months ended June 30, 2001, compared to the same period ended June 30, 2000. The increase was due primarily to the continued sale of insurance products. Investment income increased 84% from $193,588 for the six months ended June 30, 2000 to $356,289 for the three months ended June 30, 2001, primarily as a result of the sale of a communications tower lease for $186,000. Net losses on trading securities of $73,862 were reported for the period ended June 30, 2001. We began trading securities in the fourth quarter of 2000 and are required to report unrealized gains and losses in operations. The realized gain or loss for each trading security may differ materially depending on the date of sale, the underlying performance of the represented company and other market conditions. Other income decreased from $97,055 for the six months ended June 30, 2000 to $18,506 for the six months ended June 30, 2001. A one time gain of $67,592 from the sale of real estate was recognized in the second quarter of 2000. Costs and Expenses. Total expenses increased 25% from $469,003 to $587,743 for the six months ended June 30, 2000 and 2001, respectively. Such increase was primarily attributable to reserve increases associated with our writing of new business. Policy benefits decreased from $60,550 to $57,900 for the comparable periods. Policy reserves increased $133,949 for the comparable periods. Depreciation and amortization increased from $30,367 to $57,485 for the six months ended June 30, 2000 and 2001, respectively, as we continued to amortize the block of business acquired with Great Midwest Life Insurance Company. General expenses decreased 13% from $257,165 to $223,169 for the comparable periods as a result of management cost containment programs. Loss. We reported a net loss for the six months ended June 30, 2001 of $91,375, compared to a net loss for the six months ended June 30, 2000 of $86,951. We continued to increase revenues from life insurance and held operating costs steady during the quarter. We reported a net loss per share of $0.05 per share for the six months ended June 31, 2001, compared to a net loss of $0.05 per share for the three months ended June 30, 2000. Liquidity and Capital Resources Total assets were $6,349,059 at June 30, 2001, compared to $6,162,682 at December 31, 2000, an increase of 3.0%. The increase was due to the receipt of new annuity deposits. Total liabilities, primarily insurance reserves for future policyholder benefits, were $5,257,232 at June 30, 2001, compared to $5,187,382 at December 31, 2000, an increase of 1%. The increase was due primarily to new annuity deposits. S-4 Total stockholders' equity was $1,091,827 at June 30, 2001, compared to $975,300 at December 31, 2001, an increase of 12%. The increase was attributable to the sale of 200,200 shares of common stock, sold pursuant to a public offering of our stock. The principal requirements for liquidity in connection with our operations are our contractual obligations to policyholders and annuitants. Our contractual obligations include payments of surrender benefits, contract withdrawals, policy loans and claims under outstanding insurance policies and annuities. Payment of surrender benefits is a function of "persistency," which is the extent to which insurance policies are maintained by the policyholder. Policyholders sometimes do not pay premiums, thus causing their policies to lapse, or policyholders may choose to surrender their policies for their cash surrender value. If actual experience of a policy or block of policies is different from the initial or acquisition date assumptions, a gain or loss could result. Depending on the nature of the underlying policy, a lapse or surrender may result in surrender charge revenue or surrender benefit expense. Such amounts may be less than, or greater than, unamortized acquisition expenses and/or the related policy reserves; accordingly, current period earnings may either increase or decrease. Additionally, policy lapses and surrenders may result in lost future revenues and profits associated with those policies that are lapsed or surrendered. Although we currently have a $200,000 bank line of credit, we fund most of our activity directly from cash flow from operations and cash flow from financing activities, which includes deposits to policyholders' account balances. The line of credit extends to July 2002, with amounts borrowed thereunder bearing interest at prime plus .5%. At June 30, 2001 and as of the date of this Report, $200,000 was outstanding under the line of credit. On January 13, 1999, we acquired 100% of the outstanding common stock of Great Midwest Life Insurance Company, a Texas-chartered life insurance company. The total cost of the acquisition was approximately $939,000. Of the purchase price, cash of $607,000 was paid to seven of eight stockholders with the eighth stockholder receiving a promissory note for a principal amount of $332,000, payable in three equal annual installments at an annual interest rate of 6% on the unpaid principal balance. We partially funded the cash portion of the purchase price with a $350,000 loan from a bank. The loan accrued interest at an index rate plus .5%, payable monthly, and originally matured on July 9, 1999, at which time we paid $100,000 of the principal amount owed and renewed the balance for a six-month term maturing January 9, 2000. The balance of the loan was paid December 31, 1999 using operating cash flow and the proceeds from the sale of Benefit Capital Life Insurance Company, our wholly owned subsidiary. In addition, during the three months ended June 30, 2001, we paid the last of the three installments on the promissory note held by a former stockholder of Great Midwest. We have made and intend to make substantial expenditures in connection with our subsidiary's acquisition and marketing programs. Historically, we have funded these expenditures from cash flow from operations. We believe that the liquidity resulting from the sale of our common stock, together with anticipated cash from continuing operations, should be sufficient to fund our operations and to make required payments under our credit facility and the annual 10% dividend on the Series A Preferred Stock, for at least the next 12 months. We may not, however, generate sufficient cash flow for these purposes or to repay the note at maturity. Our ability to fund operations and to make scheduled principal and interest payments will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Recent Events On August 1, 2001, our wholly owned subsidiary, Great Midwest Life Insurance Company acquired through an assumption reinsurance agreement 100% of the inforce life insurance business of Presidential Life Insurance Company of Dallas, Texas, for a net cash purchase price of approximately $165,000. The acquired business consists primarily of individual life insurance business with policy reserves and annual premium of approximately $780,000 and $120,000, respectively. S-5 Submission of Matters to Vote of Security Holders We held our annual stockholders' meeting on May 10, 2001. Two proposals were voted on by the stockholders: 1) election of directors, and 2) ratification of the appointment of Grant Thornton LLP as independent auditors. All proposals were approved by a majority of the votes cast at the meeting as follows: (a) Two directors were elected to serve a three-year term. James L. Smith and M. Dean Brown were each elected as a Class 2 director for a term expiring at the 2004 annual meeting: James L. Brown: M. Dean Brown: 1,812,377 shares voted in favor 1,812,377 shares voted in favor 857 shares withheld 857 shares withheld Charles L. Smith and Thomas D. Sanders, who are Class 1 directors with terms expiring at the 2002 annual meeting, and Gary L. Ellis, a Class 3 director whose term expires at the 2003 annual meeting, were not up for reelection and continued on as directors. (b) Ratification of the appointment of Grant Thornton LLP as independent auditors: In favor: 1,053,911 Against: 753,117 Abstain: 6,206 Financial Statements Our unaudited consolidated financial statements as of and for the period ended June 30, 2001 are provided on pages S-7 through S-11. S-6 Summit Life Corporation and Subsidiaries Consolidated Balance Sheets ASSETS June 30, December 31, 2001 2000 ------------ ------------ (Unaudited) INVESTMENTS Debt securities-held to maturity $ 328,075 $ 328,075 Debt securities-available for sale 2,482,137 2,426,607 Equity securities-trading 212,424 113,643 Equity securities-available for sale 12,500 8,915 Equity securities-other 66,788 63,663 Mortgages 716,175 734,220 Notes receivable 200,624 207,658 Short-term investments 0 0 Policy loans 32,823 33,382 Investment in limited partnerships 58,122 57,300 ------------ ------------ 4,109,668 3,973,463 CASH AND CASH EQUIVALENTS 1,535,080 1,436,338 RECEIVABLES Accrued investment income 42,707 41,984 Advances to affiliates 10,300 9,928 ------------ ------------ 53,007 51,912 PROPERTY AND EQUIPMENT-AT COST Building and improvements 129,419 129,419 Furniture and equipment 116,570 116,570 Automobiles 22,015 22,015 ------------ ------------ 268,004 268,004 Less accumulated depreciation (116,478) (102,638) ------------ ------------ 151,526 165,366 Land 56,000 56,000 ------------ ------------ 207,526 221,366 OTHER ASSETS Cost in excess of net assets of businesses acquired, less accumulated amortization 37,500 40,000 Deferred policy acquisition costs 49,527 57,527 Value of purchased insurance business 286,851 321,851 Deferred income taxes 37,241 37,241 Other 32,659 22,984 ------------ ------------ 443,778 479,603 ------------ ------------ $ 6,349,059 $ 6,162,682 ============ ============ The accompanying notes are an integral part of these interim financial statements S-7 Summit Life Corporation and Subsidiaries Consolidated Balance Sheets LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 2001 2000 ------------ ------------ (Unaudited) LIABILITIES Policy reserves and policyholder funds $ 4,829,773 $ 4,708,295 Unpaid claims 18,779 175,951 Accounts payable 82,066 39,458 Accrued liabilities 13,549 15,424 Notes payable 313,065 248,254 Other liabilities 0 0 ------------ ------------ 5,257,232 5,187,382 STOCKHOLDERS' EQUITY Common stock, $.01 par value 24,678 22,676 Preferred stock, series A, $.001 par value, stated at liquidation value 500,000 500,000 Preferred stock, series B, $1.00 par value 350,000 350,000 Preferred stock, series B subscribed 650,000 650,000 Additional paid-in capital 3,121,794 2,923,596 Common stock of parent held by subsidiary (95,000) (95,000) Accumulated other comprehensive income (loss) Unrealized appreciation (depreciation) of available 12,820 (19,882) for sale securities Accumulated deficit (2,822,465) (2,706,090) Less preferred stock subscriptions receivable (650,000) (650,000) ------------ ------------ 1,091,827 975,300 ------------ ------------ $ 6,349,059 $ 6,162,682 ============ ============ The accompanying notes are an integral part of these interim financial statements S-8 Summit Life Corporation and Subsidiaries Consolidated Statements of Operation (Unaudited) Three Months Ended Six Months Ended June 30, June 30, -------------------------- -------------------------- 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Revenues Insurance premiums $ 177,170 $ 43,488 $ 220,985 $ 82,305 Reinsurance premium ceded (6,923) (10,881) (18,720) (20,427) ----------- ----------- ----------- Net premium income 170,247 32,607 202,265 61,878 Investment activity Investment income 276,191 90,083 356,289 193,588 Net realized gains on sale of available for sale securities 517 4,808 (6,830) 29,531 Net losses on trading securities (17,431) -- (73,862) -- Other 9,522 91,750 18,506 97,055 ----------- ----------- ----------- ----------- 439,046 219,248 496,368 382,052 Benefits, losses and expenses Policy benefits 22,211 26,883 57,900 60,550 Change in policy reserves 189,697 38,790 228,620 94,671 Interest expense 5,375 4,678 10,201 13,248 Taxes, licenses and fees 3,600 4,683 10,368 13,002 Depreciation and amortization 28,528 12,301 57,485 30,367 General, administrative and other operating expenses 130,069 120,539 223,169 257,165 ----------- ----------- ----------- ----------- 379,480 207,874 587,743 469,003 ----------- ----------- ----------- ----------- Earnings (Loss) before income taxes 59,566 11,374 (91,375) (86,951) Income tax provision -- -- -- -- ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) $ 59,566 $ 11,374 $ (91,375) $ (86,951) Preferred Stock Dividend Requirement 12,500 12,500 25,000 25,000 ----------- ----------- ----------- ----------- NET EARNINGS (LOSS) APPLICABLE TO COMMON SHARES $ 47,066 $ (1,126) $ (116,375) $ (111,951) =========== =========== =========== =========== Earnings (Loss) per common share - Basic and diluted $ 0.02 $ 0.00 $ (0.05) $ (0.05) =========== =========== =========== =========== Weighted average outstanding common shares, basic and diluted 2,259,605 2,248,605 2,254,105 2,248,605 =========== =========== =========== =========== The accompanying notes are an integral part of these interim financial statements S-9 Summit Life Corporation and Subsidiaries Consolidated Statement of Stockholders' Equity Six Months Ended June 30, 2001 (Unaudited) Common Stock Preferred Stock "A" Preferred Stock "B" ------------ ------------------- ------------------- Shares Liquid- Shares Liquid- Shares Par Out- ation Out- ation Total Issued Value standing Value standing Value ------------ ------------ ------------ ------------ ------------ ------------ ------------ Balance at January 1, 2001 $ 975,300 2,267,605 $ 22,676 5,000 $ 500,000 350,000 $ 350,000 Issuance of common stock 200,200 200,200 2,002 -- -- -- -- Dividends on preferred stock (25,000) -- -- -- -- -- -- Issuance of Series B preferred -- -- -- -- -- -- -- Comprehensive income Net income (loss) (91,375) -- -- -- -- -- -- Other comprehensive inc (loss) Unrealized gain on 32,702 -- -- -- -- -- -- investments ------------ Comprehensive inc (loss) (58,673) ------------ ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2001 $ 1,091,827 2,467,805 $ 24,678 5,000 $ 500,000 350,000 $ 350,000 ============ ============ ============ ============ ============ ============ ============ Common Accumulated Stock of Other Preferred Additional Parent Held Comprehensive Preferred stock Paid-in by Income stock subscriptions Accumulated Capital Subsidiary (Loss) subscribed receivable Deficit ------------ ------------ ------------ ------------ ------------ ------------ Balance at January 1, 2001 $ 2,923,596 $ (95,000) $ (19,882) $ 650,000 ($ 650,000) $ (2,706,090) Issuance of common stock 198,198 -- -- -- -- -- Dividends on preferred stock -- -- -- -- -- (25,000) Issuance of Series B preferred -- -- -- -- -- -- Comprehensive income Net income (loss) -- -- -- -- -- (91,375) Other comprehensive inc (loss) Unrealized gain on -- -- 32,702 -- -- -- investments Comprehensive inc (loss) ------------ ------------ ------------ ------------ ------------ ------------ Balance at June 30, 2001 $ 3,121,794 $ (95,000) $ 12,820 $ 650,000 ($ 650,000) $ (2,822,465) ============ ============ ============ ============ ============ ============ The accompanying notes are an integral part of these interim financial statements S-10 Summit Life Corporation and Subsidiaries Condensed Consolidated Statement of Cash Flows (Unaudited) Six Months Ended June 30, -------------------------- 2001 2000 ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents Net cash provided by (used in) operating activities $ (70,722) $ (167,400) Net cash provided by (used in) investing activities (5,359) 1,803,225 Net cash provided by (used in) financing activities 174,823 (316,617) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 98,742 1,319,208 Cash and cash equivalents at the beginning of the period 1,436,338 935,746 ----------- ----------- Cash and cash equivalents at the end of the period $ 1,535,080 $ 2,254,954 =========== =========== NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month and six month periods ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. For further information, refer to the consolidated annual financial statements and footnotes thereto for the year ended December 31, 2000. The accompanying notes are an integral part of these interim financial statements S-11