UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

[X]

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2009.

[ ]

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: 0-19704

REGAN HOLDING CORP.

(Exact name of registrant as specified in its charter)

California

68-0211359

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

2090 Marina Avenue, Petaluma, CA

94954

(Address of principal executive offices)

(Zip Code)

707-778-8638

(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.

Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company. See definition of “accelerated filer, large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

As of October 16, 2009, there were 23,525,000 shares of Common Stock-Series A outstanding and 550,000 shares of Common Stock-Series B outstanding.

Explanatory Note

This Amendment No. 1 on Form 10-Q/A amends in full the Quarterly Report on Form 10-Q of Regan Holding Corp. (“the Company, we, our, us”) for the quarter ended June 30, 2009, filed with the Securities and Exchange Commission (the "SEC") on August 14, 2009. The Company is filing this Amendment No. 1 for the purpose stated below:


a)	Management certifications provided pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended, have been modified to remove the title of the certifying individuals from the beginning of the certifications and to include the internal control over financial reporting language as required by Item 601(b)(31)of Regulation S-K.

This Amendment No. 1 does not modify or update any other disclosures set forth in our Form 10-Q filing for the quarter ended June 30, 2009, except as required to reflect the additional information mentioned above. Additionally, this Amendment No. 1 does not update or discuss any other Company developments subsequent to the date of the Form 10-Q filing for the quarter ended June 30, 2009.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

REGAN HOLDING CORP. AND SUBSIDIARIES

Consolidated Balance Sheet


			June 30,		December 31,
			2009		2008
			(Unaudited)
Assets
Cash and cash equivalents		$	427,000	$	628,000
Trading investments			2,006,000		641,000
Accounts receivable, net of allowance of $24,000 and $0, at
	June 30, 2009 and December 31, 2008, respectively		498,000		447,000
Notes receivable, net of allowance of $20,000 at June 30, 2009
	and December 31, 2008, respectively		253,000		175,000
Prepaid expenses and deposits			125,000		146,000
Current assets from discontinued operations			254,000		322,000
	Total current assets		3,563,000		2,359,000
Net fixed assets			594,000		1,655,000
Building lease deposit			1,000,000		1,000,000
Other assets			27,000		32,000
	Total non-current assets		1,621,000		2,687,000
	Total assets	$	5,184,000	$	5,046,000

Liabilities, redeemable common stock, and shareholders' deficit
Liabilities
Accounts payable and accrued liabilities		$	2,697,000	$	3,808,000
Current portion of deferred compensation payable			552,000		1,181,000
Current portion of capital lease liabilities			70,000		69,000
Short-term borrowings			447,000		230,000
Current liabilities from discontinued operations			331,000		398,000
	Total current liabilities		4,097,000		5,686,000
Deferred compensation payable			4,085,000		4,133,000
Deferred gain on sale of building			1,745,000		1,882,000
Capital lease liabilities, less current portion			115,000		64,000
Other liabilities			150,000		134,000
	Total non-current liabilities		6,095,000		6,213,000
	Total liabilities		10,192,000		11,899,000

Redeemable common stock, Series A and B			5,897,000		5,897,000

Shareholders' deficit
Preferred stock, no par value: Authorized: 100,000,000 shares;
	No shares issued or outstanding		-		-
Series A common stock, no par value:
	Authorized: 45,000,000 shares; issued and outstanding: 20,959,000
	shares at June 30, 2009 and December 31, 2008, respectively		3,921,000		3,921,000
Paid-in capital			6,650,000		6,650,000
Accumulated deficit			(21,476,000)		(23,321,000)
	Total shareholders' deficit		(10,905,000)		(12,750,000)
	Total liabilities, redeemable common stock, and shareholders' deficit	$	5,184,000	$	5,046,000

See notes to financial statements

REGAN HOLDING CORP. AND SUBSIDIARIES

Consolidated Statement of Operations

(Unaudited)


			For the Three Months Ended				For the Six Months Ended
			June 30,				June 30,
			2009		2008		2009		2008
Revenue
	Marketing allowances and commission overrides	$	5,199,000	$	1,599,000	$	8,174,000	$	3,362,000
	Trailing commissions		8,000		250,000		182,000		955,000
	Sale of Legacy TM, LP Class B interest		-		-		-		6,500,000
	Other revenue		686,000		971,000		1,733,000		2,013,000
	Total revenue		5,893,000		2,820,000		10,089,000		12,830,000

Expenses
	Selling, general and administrative		4,103,000		3,807,000		6,460,000		7,787,000
	Depreciation and amortization		352,000		972,000		1,190,000		1,997,000
	Other		127,000		293,000		306,000		598,000
	Total expenses		4,582,000		5,072,000		7,956,000		10,382,000

Operating income (loss)			1,311,000		(2,252,000)		2,133,000		2,448,000

Other income
	Investment income, net		7,000		282,000		13,000		321,000
	Interest expense		(19,000)		(72,000)		(23,000)		(382,000)
	Total other (expense) income, net		(12,000)		210,000		(10,000)		(61,000)

Income before income taxes			1,299,000		(2,042,000)		2,123,000		2,387,000
Provision for (benefit from) income taxes			145,000		(36,000)		215,000		101,000

Income (loss) from continuing operations			1,154,000		(2,006,000)		1,908,000		2,286,000

Discontinued operations
	Loss from operation of discontinued
	segments: Legacy Financial Services, Values
	Financial Network, and prospectdigital		(29,000)		(191,000)		(73,000)		(329,000)
	(Benefit from) provision for income taxes		(4,000)		(2,000)		(10,000)		3,000

Loss from discontinued operations			(25,000)		(189,000)		(63,000)		(332,000)

Net income (loss) available for common shareholders		$	1,129,000	$	(2,195,000)	$	1,845,000	$	1,954,000

Basic net income per share:
	Income (loss) from continuing operations	$	0.05	$	(0.08)	$	0.08	$	0.09
	Net income (loss) available for common shareholders	$	0.05	$	(0.09)	$	0.08	$	0.08

Diluted net income per share:
	Income (loss) from continuing operations	$	0.05	$	(0.08)	$	$ 0.08	$	0.09
	Net income (loss) available for common shareholders	$	0.05	$	(0.09)	$	$ 0.08	$	0.08

Shares used in per share computation:
	Basic		24,076,000		24,076,000		24,076,000		24,076,000
	Diluted		24,076,000		24,076,000		24,076,000		24,076,000

See notes to financial statements

REGAN HOLDING CORP. AND SUBSIDIARIES
Consolidated Statement of Shareholders’ Deficit
(Unaudited)



		Series A Common Stock				Paid-in		Accumulated
		Shares		Amount		Capital		Deficit		Total

Balance December 31, 2008		20,959,000	$	3,921,000	$	6,650,000	$	(23,321,000)	$	(12,750,000)

	Net income							1,845,000		1,845,000

Balance June 30, 2009 (unaudited)		20,959,000	$	3,921,000	$	6,650,000	$	(21,476,000)	$	(10,905,000)

See notes to financial statements

REGAN HOLDING CORP. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)


			For the Six Months Ended
			June 30,
			2009		2008
Cash flows from operating activities:
Net income		$	1,845,000	$	1,954,000
Adjustments to reconcile net income:
	Depreciation and amortization		1,190,000		1,997,000
	Gain on sale of building		-		(214,000)
	Amortization of deferred gain on sale of building		(137,000)		(138,000)
	Increase (decrease) in allowance for doubtful accounts		24,000		(5,000)
	Losses on trading securities, net		-		645,000
Changes in operating assets and libilities
	(Purchases) sales of trading securities, net		(1,365,000)		50,000
	Accounts receivable		(75,000)		556,000
	Prepaid expenses and deposits		21,000		70,000
	Accounts payable and accrued liabilities		(1,111,000)		497,000
	Deferred compensation payable		(116,000)		(785,000)
	Other operating assets and liabilities		21,000		220,000
	Current assets and liabilities of discontinued operations		1,000		(154,000)
	Net cash provided by operating activities:		298,000		4,693,000

Cash flows from investing activities:
(Sales) purchases of fixed assets			(45,000)		3,250,000
Issuances of notes receivable, net			(78,000)		(20,000)
Decrease in temporarily restricted cash			-		453,000
	Net cash (used in) provided by investing activities:		(123,000)		3,683,000

Cash flows from financing activities:
Proceeds from loans payable			-		184,000
Payments of capital lease obligations and notes payable			(376,000)		(8,589,000)
	Net cash used in financing activities:		(376,000)		(8,405,000)

Net decrease in cash and cash equivalents			(201,000)		(29,000)
Cash and cash equivalents, beginning of period			628,000		152,000
Cash and cash equivalents, end of period		$	427,000	$	123,000

Supplemental cash flow disclosures:
	Income taxes paid	$	228,000	$	8,000
	Interest paid	$	26,000	$	357,000
Supplemental non-cash investing and financing activities:
	Equipment obtained under capital lease agreements	$	84,000	$	-
	Conversion of a deferred compensation liability to a short-term
	borrowing	$	561,000	$	-

See notes to financial statements

REGAN HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)

Basis of Presentation

The accompanying Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America and include the accounts of Regan Holding Corp. (the “Company”) and its wholly owned subsidiaries. All intercompany transactions have been eliminated.

The Consolidated Financial Statements are unaudited but reflect all adjustments, consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the Company’s consolidated financial position and results of operations. The results for the six months ended June 30, 2009, are not necessarily indicative of the results to be expected for the entire year. These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report for the year ended December 31, 2008, as filed on Forms 10-K and 10-K/A with the Securities and Exchange Commission on March 31, 2009, and April 30, 2009, respectively.

Discontinued operations and other certain accounts of the prior year financial statements presented were reclassed for comparative purposes to conform to current year discontinued operations and other certain accounts in accordance with generally accepted accounting principles.

Net Income per Share


			For the Three Months Ended				For the Six Months Ended
			June 30,				June 30,
			2009		2008		2009		2008

Income (loss) from continuing operations		$	1,154,000	$	(2,006,000)	$	1,908,000	$	2,286,000
	Loss from discontinued operations		(25,000)		(189,000)		(63,000)		(332,000)
Net income (loss) available for common shareholders		$	1,129,000	$	(2,195,000)	$	1,845,000	$	1,954,000

Weighted average shares used to compute basic net
	income per share		24,076,000		24,076,000		24,076,000		24,076,000
Effect of dilutive securities—employee and
	producer stock options		-		-		-		-
Weighted average shares used to compute diluted
	net income per share		24,076,000		24,076,000		24,076,000		24,076,000

Basic net income (loss) per share:
	Income (loss) from continuing operations	$	0.05	$	(0.08)	$	0.08	$	0.09
	Net income (loss) available for common shareholders	$	0.05	$	(0.09)	$	0.08	$	0.08

Diluted net income per share:
	Income (loss) from continuing operations	$	0.05	$	(0.08)	$	0.08	$	0.09
	Net income (loss) available for common shareholders	$	0.05	$	(0.09)	$	0.08	$	0.08

Outstanding and exercisable options to purchase 1.9 million and 2.4 million shares of the Company’s common stock were excluded from the computation of diluted net income per share during the periods ended June 30, 2009 and 2008, respectively, as the options were not “in-the-money”.

Sale of Assets

On March 26, 2008, the Company entered into an agreement to exchange its asset based trailing commissions (“trail commissions”) to Legacy TM for a limited partnership interest in Legacy TM (the “Partnership”). Subsequently, the company sold a portion of its limited partnership interest – Class B interest – for $6.5 million in cash and retained an interest in the limited partnership – Class A interest. The transaction closed on March 26, 2008. The Class A limited partnership interest in the Partnership, retained by Legacy Marketing, includes the beneficial interest in 33 1/3% of the trail commission revenue received on those policies in effect on or prior to the closing date for the one year period subsequent to the closing date and all revenue associated with policies that become effective after the closing date. The Company’s limited partnership interest is unencumbered. Lynda Pitts, Chief Executive Officer, and R. Preston Pitts, President, Chief Operating Officer and Chief Financial Officer of the Company, each of whom is also a director of the Company, are the general partners of the Partnership and together own all of the Class B interests in the Partnership.

A special committee of the Board of Directors of the Company comprising the independent directors, Ute Scott-Smith, J. Daniel Speight, Jr. and Donald Ratajczak, approved the amount of consideration. In connection with the committee’s deliberations the Company obtained a fairness opinion from an independent third party stating that the total value of the transaction to the Company was within an acceptable range of estimated fair values of the future trail commission cash flows. A portion of the proceeds was used to pay the $6 million note payable to Washington National Insurance Company and interest accrued thereon. The remainder of the proceeds is available for general corporate purposes.

On May 23, 2008, the Company sold its office building in Rome, Georgia for $3.5 million for a gain of $214,000. Proceeds from the sale of the building were used to repay the mortgage on the property, the outstanding balance of which was $2.6 million.

Income Taxes

The rate of provision for income taxes for the six months ended June 30, 2009 and 2008 differs from the federal and state statutory rate primarily due to the expected utilization of federal net operating loss carryforwards.

Short-term Borrowings

On September 8, 2008, the Company entered into a Line of Credit Promissory Note with Lynda Pitts, Chief Executive Officer and Preston Pitts, Chief Operating Officer and Chief Financial Officer of the Company of which $225,000 has been advanced. Interest on the unpaid principal accrues monthly at a rate of 6% per annum. Principal and interest are due upon demand. As of June 30, 2009, the note plus accrued interest was paid in full.

On June 19, 2009, the Company entered into a Promissory Note with an unrelated third-party for $561,000. Interest on the unpaid principal accrues daily at a rate of 7% per annum with payments of principal to be made in installments as follows:

June 19, 2009

$125,000

July 15, 2009

$75,000

October 15, 2009

$75,000

January 15, 2010

$75,000

The unpaid balance plus accrued interest is due on April 15, 2010. In addition, this note is secured by certain asset-based trail commissions.

Fair Value Measurements

Effective January 1, 2008, the Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements”, for our financial assets and liabilities. Effective January 1, 2009, the Company adopted the provisions of SFAS No. 157 for non-financial assets and liabilities measured on a recurring basis. The adoption of SFAS No. 157 had no material effect on our financial position or results of operations. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

The fair-value hierarchy established in SFAS No. 157 prioritizes the inputs used in valuation techniques into three levels as follows:

Level 1

Observable inputs – quoted prices in active markets for identical assets and liabilities;

Level 2

Observable inputs other than the quoted prices in active markets for identical assets and liabilities – such as quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, or other inputs that are observable or can be corroborated by observable market data;

Level 3

Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions.

The Company had trading securities which was valued at $2 million using level 1 inputs at June 30, 2009. The Company had a deferred compensation liability which was valued at $4.6 million using level 2 inputs at June 30, 2009. At December 31, 2008, the Company had trading securities and a deferred compensation liability which were valued at $641,000 and $5.3 million, respectively, using level 1 inputs.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements contained in this document, including Management’s Discussion and Analysis of Financial Condition and Results of Operations that are not historical facts, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of Regan Holding Corp. and its businesses to be materially different from those expressed or implied by such forward-looking statements. These risks, uncertainties and factors include, among other things, the following: general market conditions and the changing interest rate environment; the interruption, deterioration, or termination of our relationships with the insurance carriers who provide our products or the agents who market and sell them; the ability to develop and market new products to keep up with the evolving industry in which we operate; increased governmental regulation, especially regulations affecting insurance, reinsurance, and holding companies; the ability to attract and retain talented and productive personnel; the ability to effectively fund our working capital requirements; the risk of substantial litigation or insurance claims; and other factors referred to in Management’s Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the year ended December 31, 2008.

Regan Holding Corp. assumes no obligation to update forward-looking statements to reflect actual results or changes in or additions to the factors affecting such forward-looking statements.

Recent Industry Developments

During the past few years, several proposals relating to our business have been made by federal and state agencies and legislative bodies and securities and insurance self-regulatory organizations. As discussed below, a few of these proposals have become effective, and others may be made or adopted.

On December 18, 2008, the Securities and Exchange Commission (“SEC”) adopted Rule 151A which, if it becomes effective in its current form, would require certain fixed indexed annuity sales to be registered with the SEC by January 12, 2011. In addition, under the rule registered fixed indexed annuities would only be able to be sold by Financial Industry Regulatory Authority (“FINRA”) registered broker-dealers and representatives. As a result, fixed indexed annuity sales would be subject to regulation and oversight by both the SEC and FINRA. In response to the rule's adoption, a coalition of insurance companies and insurance marketing organizations have filed suit to block the implementation of the rule. In addition, on February 17, 2009 the National Association of Insurance Commissioners (“NAIC”) and NCOIL (the association of state insurance regulators and a group representing state legislators) filed a petition with the U.S. Court of Appeals for the District of Columbia Circuit to block implementation of the rule. On July 21, 2009 the U.S. Court of Appeals ruled that the SEC has the authority to classify indexed annuities as securities but that the SEC failed to properly consider the effect of the rule upon efficiency, competition, and capital formation. If the SEC can satisfy the court’s order and Rule 151A becomes effective in 2011 in the form originally adopted, we could be adversely impacted as we would have to expand our distribution capabilities into broker dealers.

FINRA has issued guidance to its members indicating that broker-dealers regulated by FINRA have certain responsibilities with respect to the offer and sale of equity-indexed annuities, including an obligation to determine the suitability of such products for their customers, regardless of whether equity-indexed annuities are deemed to be securities. In addition, some state insurance regulators are considering whether additional suitability and disclosure regulations should be implemented with respect to all sales of fixed annuities, particularly with respect to senior citizens.

Also, in recent years, the existing U.S. insurance and financial regulatory frameworks have come under scrutiny. Some state legislatures have considered laws that may alter or increase state regulation of insurance, reinsurance, and holding companies. Moreover, the NAIC and state insurance regulators regularly re-examine existing laws and regulations, often focusing on modifications to holding company regulations, interpretations of existing laws and the development of new laws pertaining to fixed annuities. Further, new accounting and actuarial proposals, including principles-based reserving, may be proposed and adopted. Changes in these laws and regulations or their interpretation could have a material adverse effect on our financial condition and results of operations.

Our core business consists of selling fixed annuity products, on behalf of insurance carriers, through a network of independent insurance producers (“Producers”). If the initiatives undertaken by the SEC, FINRA or state insurance regulators with respect to equity indexed or other fixed annuities were to result in new legislation or regulation, the demand for fixed annuities products, our business and those of our Producers could be adversely affected and could have a material adverse effect on the insurance industry in general or on our financial condition and results of operations.

In addition, the U.S. Congress is again considering legislation that would impose certain national uniform standards on insurance companies, establish an optional federal charter system for insurance companies and repeal the McCarran-Ferguson antitrust exemption for the business of insurance, any of which could have a significant impact on our business. If such laws or regulations are adopted, they could have a material adverse effect on our financial condition and results of operations.

Results of Operations

We had consolidated income from continuing operations, before income taxes, of $2.1 million during the six months ended June 30, 2009, compared to $2.4 million during the same period of 2008. Our revenue was $5.9 million during the three months ended June 30, 2009, compared to $2.8 million during the same period of 2008. The $3.1 million (111%) increase was primarily due to a $3.6 million increase in marketing allowance and commission overrides, offset in part by a $242,000 decrease in trailing commissions and a $285,000 decrease in other revenue. Our revenue was $10.1 million during the six months ended June 30, 2009, compared to $12.8 million during the same period of 2008. The $2.7 million (21%) decrease was primarily due to a one-time $6.5 million gain on the sale of the Limited Partnership Class B shares in Legacy TM, LP, which occurred in 2008, a $773,000 decrease in trailing commissions, and a $280,000 decrease in other revenue, offset in part by a $4.8 million increase in marketing allowances and commission overrides.

Marketing allowances and commission overrides increased $3.6 million (225%) during the three months ended June 30, 2009 and $4.8 million (143%) during the six months ended June 30, 2009, compared to the same periods in 2008, primarily due to increased sales of products.

Trailing commissions decreased $242,000 (97%) during the three months ended June 30, 2009 and $773,000 (81%) during the six months ended June 30, 2009, compared to the same periods in 2008, due to a decline in inforce policies and the exchange of trail commission rights for a limited partnership interest. The limited partnership interest representing the Class B shares was subsequently sold for $6.5 million in March 2008.

During the three and six months ended June 30, 2009 and 2008, Legacy Marketing sold products primarily on behalf of four unaffiliated insurance carriers: Investors Insurance Corp., American National Insurance Company (“American National”), Washington National Insurance Company (“Washington National”), and Old Mutual Insurance Company (“Old Mutual”). As indicated below, sales of these carriers’ products generated a significant portion of our total marketing allowance and commission override revenue:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2009	2008	2009	2008
Investors Insurance Corp	76%	33%	69%	29%
American National	8%	18%	10%	19%
Washington National	5%	27%	7%	24%
Old Mutual	1%	10%	2%	10%

Other revenue decreased $285,000 (29%) during the three months ended June 30, 2009 and $280,000 (14%) during the six months ended June 30, 2009, compared to the same periods in 2008, primarily due to a reduction of expense reimbursements under a contractual arrangement with Perot Systems, which in March 2008, assumed certain of our administrative service functions.

Selling, general and administrative expenses increased $296,000 (8%) during the three months ended June 30, 2009, compared to the same period in 2008, primarily due to a $492,000 increase in deferred compensation as a result of the fluctuation in market value on previously recognized liabilities under our deferred compensation plans. In addition, there was a $328,000 increase in sales promotion and support, offset in part by a $375,000 decrease in salaries and related benefits as a result of reduced headcount, $51,000 decrease in professional fees, $28,000 decrease in travel and entertainment, $27,000 decrease in occupancy expense, $27,000 decrease in insurance expense, and $15,000 decrease in office supplies. The $1.3 million (17%) decrease during the six months ended June 30, 2009, compared to the same period in 2008, was primarily due to an $875,000 decrease in salaries and related benefits expense as a result of reduced headcount, a $213,000 decrease in sales promotion and support, and a $121,000 decrease in occupancy expense. The reduction in headcount during the three and six months ended June 30, 2009 and occupancy expense for the six months ended June 30, 2009 was primarily due to the transfer of our policy administration function to Perot Systems. The fluctuation in sales and promotional support during the three and six months ended June 30, 2009, was primarily due to changes in estimates for certain sales and promotional related accrued liabilities.

Depreciation expense decreased $620,000 (64%) during the three months ended June 30, 2009 and $807,000 (40%) during the six months ended June 30, 2009, compared to the same periods ended 2008, is consistent with an increased average age of in-service assets, as well as with an overall reduction in fixed assets.

The rate of provision for income taxes for the three and six months ended June 30, 2009 and 2008 differs from the federal and state statutory rate primarily due to the expected utilization of federal net operating loss carryforwards.

Liquidity and Capital Resources

Our net cash provided by or used in operating activities generally follows the trend in our revenue and operating results. Our net cash provided by operating activities in the six months ended June 30, 2009 was $298,000 which was consistent with our operating revenues offset by cash transferred to our investment account and the reduction of our current liabilities. Net cash provided by operations during the same period of 2008 was $4.7 million and was primarily due to the $6.5 million gain on the sale of the Limited Partnership Class B shares in Legacy TM, LP, offset in part by a decline in cash-based operating results.

Net cash used in investing activities in the six months ended June 30, 2009 of $123,000 consisted of purchases of fixed assets and repayment of notes receivable. Additions to fixed assets during the period included cash purchases of $45,000 primarily related to internal use software capitalizations. Net cash provided by investing activities during the same period of 2008 was $3.7 million and was primarily due to the $3.5 million sale of our Rome, Georgia building in May 2008 and the use of temporarily restricted cash to fund various arbitration settlements associated with our discontinued broker dealer operation, offset in part by repayment of notes receivable.

Net cash used in financing activities in the six months ended June 30, 2009 of $376,000 consisted of repayments on capital equipment lease obligations and short-term borrowings Net cash used in financing activities in the same period of 2008 was $8.4 million and was primarily due to paying the entire outstanding balance of a $6 million note payable and the $2.6 million mortgage payable on the Rome, Georgia building.

Although only $298,000 in cash was provided by operating activities in the six months ended June 30, 2009, we did generate income from continuing operations for the period of $1.9 million and invested $1.8 million. Thus, we do not anticipate a cash shortfall to occur. In the event that a cash shortfall does occur, we believe that adequate financing could be obtained to meet our cash flow needs. However, there can be no assurances that such financing would be available on favorable terms.

Recent Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. The statement amends SFAS No. 133 to enhance the disclosure requirement of derivative and hedging activities by providing adequate information on how such activities impact an entity’s financial position, financial performance, and cash flow. This is intended to improve the transparency of financial reporting related to derivative and hedging activities. Our adoption of SFAS No. 161 was effective beginning January 1, 2009, and did not have a material effect on our results of operations and financial condition.

In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts, an interpretation of SFAS No. 60, Accounting and Reporting by Insurance Enterprises. The statement helps resolve diversity resulting in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred. In addition, the Statement clarifies the financial reporting requirements under SFAS No. 60 of financial guarantee insurance contracts for better comparability. Our adoption of SFAS No. 163 was effective January 1, 2009, and did not have a material effect on our results of operations and financial condition.

In May 2009, The FASB issued SFAS No. 165, Subsequent Events. The statement establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It alerts all users of financial statements that an entity has not evaluated subsequent events after that date in the set of interim and annual financial statements being presented. Our adoption of this statement was effective beginning June 15, 2009 and did not have a material effect on our results of operations and financial condition.

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets- an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets and the effects the transfer will have on its financial position, performance, and cash flows. This statement is effective for financial statements issued for interim and annual reporting beginning after November 15, 2009. Adoption of SFAS No. 166 is not expected to have a material effect on our results of operations and financial condition.

In June 2009, the FASB issued SFAS No. 168, FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. This statement replaces FASB SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, which identified the sources of and framework for accounting principles used in preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP). The FASB Accounting Standards CodificationTM (Codification) will become the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. This Statement is to modify the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. On the effective date of this statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. Adoption of SFAS No. 168 is not expected to have a material effect on our results of operations and financial condition.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk, interest rate risk, credit risk, or equity price risk since December 31, 2008. Please see our Annual Report on Form 10-K for the year ended December 31, 2008, for more information concerning Quantitative and Qualitative Disclosures About Market Risk.

Item 4(T). Controls and Procedures

Disclosure Controls and Procedures

As of June 30, 2009, we performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to provide reasonable assurance that the material financial and non-financial information required to be disclosed in our quarterly report and filed with SEC is recorded, processed, summarized and reported timely within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on our evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934, as amended) as of June 30, 2009, are effective at such reasonable assurance level. There can be no absolute assurance that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the desired control objectives.

Changes in Internal Control Over Financial Reporting

During the most recent fiscal quarter, there have not been any significant changes in our internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

From time to time, we are involved in various claims and legal proceedings arising in the ordinary course of business. Although it is difficult to predict the ultimate outcome of these cases, we believe the outcome will not have a material adverse effect on our financial condition, cash flows or results of operations.

Item 1A. Risk Factors

There have been no material changes to our risk factors from those reported in our Annual Report on Form 10-K for the year ended December 31, 2008.

Item 6.

Exhibits

10.1

Marketing Agreement, effective June 5, 2002, between Investors Insurance Corporation and Legacy Marketing Group. (1)

31.1

Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act.

31.2

Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

_____________________

(1)

Incorporated herein by reference to the Company’s registration statement on Form S-2 (post-effective amendment no. 5) dated July 23, 2004.

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.


	REGAN HOLDING CORP.


Date: October 16, 2009	Signature: /s/ R. Preston Pitts
	R. Preston Pitts
	President, Chief Operating Officer and Chief Financial Officer

INDEX TO EXHIBITS

Number

Description

31.1

Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act.

31.2

Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

REGAN HOLDING CORP 10-Q/A