Statutory Financial Data (Unaudited)

12 Months Ended

May 31, 2014

Statutory Financial Data (Unaudited)

Statutory Financial Data (Unaudited)

Note O-Statutory Financial Data (Unaudited)

The Company’s insurance subsidiary files calendar year financial statements prepared in accordance with statutory accounting practices prescribed or permitted by regulatory authorities. The principal differences between statutory financial statements and financial statements prepared in accordance with generally accepted accounting principles are that statutory financial statements do not reflect deferred policy acquisition costs and certain assets are non-admitted.

Statutory surplus as of May 31, 2014 and 2013 and net income for the Company’s insurance subsidiary for the calendar year ended December 31, 2013 and 2012 and five-month periods ended May 31, 2014 and 2013 are as follows:

Statutory Surplus	May 31, 2014	$	5,905,066
Statutory Surplus	May 31, 2013	$	5,804,785
Net Income	Calendar year 2013	$	198,375
Net Income	Calendar year 2012	$	350,214
Net Income	Five-month period 2014	$	36,583
Net Income	Five-month period 2013	$	75,003

Statutory surplus exceeds the West Virginia state law minimum capital requirements of $2.0 million.

Under the West Virginia insurance code, ordinary dividends to stockholders are allowed to be paid only from that part of the insurance subsidiary’s (FSC’s) available surplus funds which constitutes realized net profits from the business and whereby all such dividends or distributions made within the preceding twelve months do not exceed the lesser of 10% of FSC’s surplus as regards to policyholders as of December 31^st of the preceding year-end or net income from operations from the previous two calendar years, not including capital gains. Any payment of extraordinary dividends requires prior approval from the WV state insurance commissioner.

On March 26, 2012 the Commissioner of the State of West Virginia (WVOIC) terminated in its entirety the Amended Consent Order of June 7, 2007 and terminated the restrictive conditions of the Consent Order issued December 23, 2005 which approved acquisition of FSC by the Company. Among other consequences, removal of these restrictions allowed dividends to be declared by and paid from FSC to the Company. Dividends in the amounts of $198,000 and $590,000 were declared and paid for the twelve month periods ending May 31, 2014 and May 31, 2013.

The dividends for 2013 were deemed by the WVOIC to contain $85,140 in extraordinary dividends. As a result of the extraordinary dividends, the insurance subsidiary (FSC) was fined $20,000 and the $85,140 was returned to FSC. The return of dividends was recorded as a capital contribution to FSC.