~~Nine~~Six and Three Months Ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 (unaudited)

~~US Alliance Corporation~~
~~Supplemental Cash Flow Information~~
~~(unaudited)~~

Nine Months Ended September 30,

2017

2016

Supplemental Disclosure of Non-Cash Information

Common stock issued on the acquisition of Northern Plains
$ 3,097,380 $ -
Cost of reinsurance deferred on coinsurance transaction with American Life & Security Corp
$ 2,861,450 $ -

~~Table of Contents~~

US Alliance Corporation

Supplemental Cash Flow Information

	Six Months Ended June 30,
	2022			2021
Supplemental Disclosure of Non-Cash Information
Funds withheld assumed deposits on deposit-type contracts	$	601,270		$	1,409,036
Funds withheld assumed withdrawals on deposit-type contracts		(569,616	)		(889,113	)
Commissions and expense allowances deducted from funds withheld		(950,700	)		(923,920	)

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 1. Description of Business and Significant Accounting Policies

Description of business: US Alliance Corporation ("~~USAlliance" or “the Company”~~USAC") iswas formed as a Kansas corporation ~~located in Topeka, Kansas. The Company was incorporated~~ on April 24, 2009 ~~as a holding company~~to raise capital to form ~~own, operate and manage~~ a new Kansas-based life insurance ~~company~~company. Our offices are located at 1303 SW First American Place, Suite 200, Topeka, Kansas 66604. Our telephone number is 785-228-0200 and ~~its marketing and investment affiliates. On June 9, 2011, the wholly owned subsidiary,~~our website address is www.usalliancecorporation.com.

USAC has five wholly-owned operating subsidiaries. US Alliance Life and Security Company ~~(“USALSC”~~("USALSC") was ~~incorporated. USALSC received its Certificate of Authority from the Kansas Insurance Department (KID) effective January 2, 2012. On~~ incorporated June 9, 2011, to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was incorporated April 23, 2012,to serve as a marketing resource. US Alliance Investment Corporation ~~(“USAIC”~~("USAIC") was incorporated April 23, 2012 to serve as investment manager for USAC and ~~US Alliance Marketing Corporation~~its subsidiaries. Dakota Capital Life Insurance Company (“~~USAMC”~~DCLIC”) ~~were incorporated as wholly-owned subsidiaries of the Company to provide investment management and marketing services. On~~ , was acquired on August 1, 2017 ~~the Company, through its wholly owned subsidiary,~~when USAC merged with Northern Plains Capital Corporation (“~~Northern Plains”~~NPCC”) ~~with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired Dakota Capital Life Insurance Company (“DCLIC”) which became a wholly owned subsidiary of~~. US Alliance Life and Security ~~Company.~~Company - Montana ("USALSC-Montana"), was acquired December 14, 2018. Both DCLIC and USALSC-Montana are wholly-owned subsidiaries of USALSC. Unless the context otherwise indicates, references in this registration statement to "we", "us", "our", or the "Company" refer collectively to USAC and its subsidiaries.

The Company terminatedits initial public offering on February 24, 2013. During the balance of 2013, the Company achieved approval of an array of life insurance and annuity products, began development of various distribution channels and commenced insurance operations and product sales. The Company sold its first insurance product on May 1, 2013. The Company continued to expand its product offerings and distribution channels throughout 2014 and 2015. On February 24, 2015, the Company commenced a warrant exercise offering set to expire on February 24, 2016. On February 24, 2016, the Company extended ~~its current~~the offering until February 24, 2017 and made additional shares available for purchase. All outstanding warrants associated with this offering expired on April 1, 2016. The Company further extended this offering to February 24, ~~2018.~~2023. During the fourth quarter of 2017, the Company began a private placement offering to accredited investors in the state of North Dakota.

USALSC received a Certificate of Authority from the Kansas Insurance Department ("KID") effective January 2, 2012, and sold its first insurance product on May 1, 2013. DCLIC received a Certificate of Authority from the North Dakota Insurance Department ("NDID") effective January 24, 2012.

USALSC and DCLIC seek opportunities to develop and market additional products.

The ~~Company began offering third party administrative (“TPA”) services in 2015. TPA agreements generate service fee income for~~Company’s business model also anticipates the ~~Company. The Company currently has one TPA agreement in place. The Company has been able~~acquisition by USAC and/or USALSC of other insurance and insurance related companies, including third-party administrators, marketing organizations, and rights to ~~perform its TPA services using existing resources.~~other blocks of insurance business through reinsurance or other transactions.

Basis of presentation: The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form ~~10-Q~~10-Q and Article 10 of Regulation ~~S-X.~~S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included.

The results of operation for the three and ~~nine~~six months ended ~~September~~ June 30, ~~2017~~2022 are not necessarily indicative of the results to be expected for the year ended December 31, ~~2017~~ 2022 or for any other interim period or for any other future year. Certain financial information which is normally included in notes to financial statements prepared in accordance with US GAAP, but which are not required for interim reporting purposes, has been condensed or omitted. The accompanying financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in ~~the Company’s~~USAC’s report on Form ~~10-K~~10-K and amendments thereto for the year ended December 31, ~~2016.~~2021.

Principles of consolidation: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated from the consolidated financial statements.

~~Reclassifications:~~ ~~Certain reclassifications of a minor nature have been made to prior-period balances to conform to current-period presentation with no net impact to net loss/income or equity.~~

Area of ~~Operation: USALSC~~Operation: US Alliance Life and Security Company is authorized to operate in the states of Kansas, North Dakota, Missouri, Nebraska, Oklahoma, and ~~Nebraska.~~Wyoming. DCLIC is authorized to operate in the states of North Dakota and South Dakota. USALSC-Montana is authorized to operate in the state of ~~North Dakota.~~Montana.

Reclassifications: Certain reclassifications of a minor nature have been made to prior-year balances to conform to current-year presentation with no net impact to net loss/income or equity.

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Common stock and ~~earnings~~income (loss) per share: The par value for common stock is $0.10 per share with 20,000,000 shares authorized. As of ~~September~~June 30, ~~2017,~~ 2022, and December 31, ~~2016, the company~~2021, USAC had ~~7,296,351~~7,746,922 and ~~5,565,943~~7,745,404 common shares issued and outstanding, respectively.

~~Earnings~~Income (loss) per share attributable to ~~the Company~~’sUSAC’s common stockholders were computed based on the net ~~loss~~income (loss) and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the ~~quarters~~six months ended ~~September~~June 30, ~~2017~~ 2022 and ~~2016~~2021 were ~~6,181,492~~7,746,069 and ~~5,552,227~~7,742,384 shares, respectively. The weighted average number of shares outstanding during the ~~nine~~three months ended ~~September~~June 30, ~~2017~~ 2022 and ~~2016~~2021 were ~~5,698,514~~7,746,755 and ~~5,395,456~~7,743,517 shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net ~~loss~~income (loss) per common share is the same for the ~~quarters~~six and ~~nine~~three months ended ~~September~~June 30, ~~2017~~ 2022 and ~~2016 because all warrants for common shares are anti-dilutive.~~2021.

New accounting standards

~~Revenue from Contracts with Customers~~

In May 2014, the Financial Accounting Standards Board (“FASB”) issued updated guidance to clarify the principles for recognizing revenue. While insurance contracts are not within the scope of this updated guidance, the Company's fee income related to providing services will be subject to this updated guidance. The updated guidance requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services.:

~~The following steps are applied in the updated guidance: (1)~~ identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

~~In July~~ ~~2015, the FASB deferred the effective date of the updated guidance on revenue recognitionby one year to the quarter ending March 31, 2018. The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.~~

~~Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern~~

In August 2014, the FASB issued guidance to address the diversity in practice in determining when there is substantial doubt about an entity's ability to continue as a going concern and when an entity must disclose certain relevant conditions and events. The new guidance requires an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). The new guidance allows the entity to consider the mitigating effects of management's plans that will alleviate the substantial doubt and requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans.

If conditions or events raise substantial doubt that is not alleviated, an entity should disclose that there is substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued), along with the principal conditions or events that raise substantial doubt, management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations and management's plans that are intended to mitigate those conditions.

~~The guidance is effective for annual periods ending after December~~ ~~15, 2016, and interim and annual periods thereafter. The adoption of this guidance did not have a material effect on the Company's results of operations, financial position or liquidity.~~

~~Table of Contents~~

~~US Alliance Corporation~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~Recognition and Measurement of Financial Assets and Financial Liabilities~~

In January 2016, the FASB issued updated guidance regarding financial instruments. This guidance intends to enhance reporting for financial instruments and addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The significant amendments in this update generally require equity investments to be measured at fair value with changes in fair value recognized in net income, require the use of an exit price notion when measuring the fair value of financial instruments for disclosure purposes and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. This guidance also intends to enhance the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments.

This guidance is effective for fiscal years beginning after December 15, 2017. The recognition and measurement provisions of this guidance will be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and early adoption is not permitted. The Company is evaluating this guidance but expects the primary impact will be the recognition of unrealized gains and losses on available-for-sale equity securities in net income. Currently, all unrealized gains and losses on available-for-sale equity securities are recognized in other comprehensive income (loss).

~~The effect of the adoption of this guidance on the Company~~’s results of operations, financial position and liquidity is primarily dependent on the fair value of the available-for-sale equity securities in future periods and the existence of a deferred tax asset related to available-for-sale securities in future periods that have not yet been fully assessed.

Leases

In February2016, the FASB issued updated guidance to require lessees to recognize a right-to-use asset and a lease liability for leases with terms of more than 12 months. The updated guidance retains the two classifications of a lease as either an operating or finance lease (previously referred to as a capital lease). Both lease classifications require the lessee to record the right-to-use asset and the lease liability based upon the present value of cash flows. Finance leases will reflect the financial arrangement by recognizing interest expense on the lease liability separately from the amortization expense of the right-to-use asset. Operating leases will recognize lease expense (with no separate recognition of interest expense) on a straight-line basis over the term of the lease. The accounting by lessors is not significantly changed by the updated guidance. The updated guidance requires expanded qualitative and quantitative disclosures, including additional information about the amounts recorded in the financial statements.

~~The updated guidance is effective for reporting periods beginning after December~~ 15, 2018, and will require that the earliest comparative period presented include the measurement and recognition of existing leases with an adjustment to equity as if the updated guidance had always been applied. Early adoption is permitted. The adoption of this guidance is did not ~~expected to~~ have a material effect on the Company’s results of operations, financial position or ~~liquidity.~~liquidity as the Company does not have any significant leases as a lessee.

~~Contingent Put and Call Options in Debt Instruments~~Income Taxes - Simplifying the Accounting for Income Taxes

In ~~March~~ ~~2016,~~ December 2019, the FASB issued updated guidance ~~clarifying that when a call (put) option in a debt instrument can accelerate~~(Accounting Standards Update 2019-12) for the repayment of principal on the debt instrument, a reporting entity does not need to assess whether the contingent event that triggers the ability to exercise the call (put) option is related to interest rates or credit risk in determining whether the option should be accountedaccounting for ~~separately.~~income taxes. The updated guidance is intended to simplify the accounting for income taxes by removing several exceptions contained in existing guidance and amending other existing guidance to simplify several other income tax accounting matters. The updated guidance was effective for ~~reporting periods beginning~~the quarters ending and after ~~December 15, 2016. Early adoption is permitted.~~ March 31, 2021. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

~~Table of Contents~~

~~US Alliance Corporation~~

~~Notes to Consolidated Financial Statements (unaudited)~~

Measurement of Credit Losses on Financial Instruments

In June2016, the FASB issued updated guidance for the accounting for credit losses for financial instruments. The updated guidance applies a new credit loss model (current expected credit losses or CECL) for determining credit-related impairments for financial instruments measured at amortized cost (e.g. reinsurance recoverables) and requires an entity to estimate the credit losses expected over the life of an exposure or pool of exposures. The estimate of expected credit losses should consider historical information, current information, as well as reasonable and supportable forecasts, including estimates of prepayments. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected.

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The updated guidance iswas effective for reporting periods beginning after December15,2019. Early adoption iswas permitted for reporting periods beginning after December 15,2018. As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after December 15, ~~2018.~~ 2022. The Company will not be able to determine the impact that the updated guidance will have on its results of operations, financial position or liquidity until the updated guidance is adopted.

~~Classification of Certain C~~Targeted Improvements to the Accounting for Long-Duration Contracts~~ash~~ R~~eceipts and~~ ~~Cash P~~~~ayment~~

In ~~August 2016,~~ August 2018, the FASB issued ~~new guidance that clarifies~~ASU 2018-12 “Targeted Improvements to the ~~classification~~Accounting for Long-Duration Contracts.” ASU 2018-12 requires periodic reassessment of ~~certain cash receipts~~actuarial and ~~cash payments~~discount rate assumptions used in the ~~statement~~valuation of ~~cash flows under eight different scenarios including, but not limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds~~policyholder liabilities and deferred acquisition costs arising from the ~~settlement~~issuance of ~~corporate-owned life~~long-duration insurance ~~policies including bank-owned life insurance policies; (iii) distributions received from equity method investees;~~ and ~~(iv) separately identifiable cash flows and application~~reinsurance contracts, with the effects of the ~~predominance principle. This~~changes in cash flow assumptions reflected in earnings and the effects of changes in discount rate assumptions reflected in other comprehensive income. Under current accounting guidance, the actuarial and discount rate assumptions are set at the contract inception date and not subsequently changed, except in limited circumstances. ASU 2018-12 also requires new disclosures and is effective for fiscal years beginning after December 15, ~~2017, and interim periods within those fiscal years. Early~~2023, with early adoption is permitted. ~~The Company is currently~~We are evaluating the ~~impact of~~effect this ~~guidance~~standard will have on ~~its statement of cash flows.~~our Consolidated Financial Statements.

All other new accounting standards and updates of existing standards issued through the date of this filing were considered by management and did not relate to accounting policies and procedures pertinent or material to the Company at this time.

~~Note 2.~~ ~~Acquisitions~~

On August 1, 2017 the Company acquired Northern Plains pursuant to a Plan and Agreement of Merger dated May 23, 2017 (the "Merger Agreement") under which Alliance Merger Sub, Inc. (“Acquisition”), a wholly owned subsidiary of the Company, merged with and into Northern Plains (“Merger”) with Acquisition being the surviving company. Pursuant to the Merger Agreement, the Company exchanged .5841 shares of the Company’s common stock for each share of Northern Plains common stock, or approximately 1,644,458 shares, as consideration for the Merger. Subsequent to the Merger, Acquisition was merged into the Company and the Company contributed its interest in DCLIC to USALSC.

1110

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2. Investments

Fixed Maturity

The amortized cost and fair value of available for sale investments as of June 30, 2022 and December 31,2021 is as follows:

	June 30, 2022
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:	*(unaudited)*
Fixed maturities:
US Treasury securities	$	303,451	$	55,858	$	0		$	359,309
Corporate bonds		19,563,739		11,855		(2,344,887	)		17,230,707
Municipal bonds		5,911,439		36,258		(386,509	)		5,561,188
Redeemable preferred stock		4,044,005		0		(495,473	)		3,548,532
Mortgage backed and asset backed securities		6,065,767		1,373		(568,668	)		5,498,472
Total available for sale	$	35,888,401	$	105,344	$	(3,795,537	)	$	32,198,208

	December 31, 2021
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	303,195	$	144,570	$	0		$	447,765
Corporate bonds		19,397,461		2,101,518		(177,700	)		21,321,279
Municipal bonds		6,306,387		671,263		(14,292	)		6,963,358
Redeemable preferred stock		3,612,625		29,995		(21,094	)		3,621,526
Mortgage backed and asset backed securities		5,636,371		22,617		(70,259	)		5,588,729
Total available for sale	$	35,256,039	$	2,969,963	$	(283,345	)	$	37,942,657

The amortized cost and fair value of debt securities as of June 30, 2022 and December 31, 2021, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	As of June 30, 2022				As of December 31, 2021
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:	(unaudited)
One year or less	$	408,288	$	413,641	$	0	$	0
After one year through five years		1,767,797		1,730,772		1,987,421		2,087,132
After five years through ten years		2,434,768		2,401,025		2,540,089		2,865,020
More than 10 years		21,167,776		18,605,766		21,479,533		23,780,250
Redeemable preferred stocks		4,044,005		3,548,532		3,612,625		3,621,526
Mortgage backed and asset backed securities		6,065,767		5,498,472		5,636,371		5,588,729
Total amortized cost and fair value	$	35,888,401	$	32,198,208	$	35,256,039	$	37,942,657

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

~~The~~ ~~Merger was accounted for under~~

Proceeds from the ~~acquisition method~~sale of ~~accounting, which requires~~securities, maturities, and asset paydowns in the ~~consideration transferred~~ six months ended June 30, 2022 and ~~all assets~~2021 were $4,170,514 and ~~liabilities assumed to be recorded at fair value. The table on the following page summarizes the preliminary fair value of the consideration transferred~~$2,910,833, respectively. Realized gains and ~~the preliminary fair value of Northern Plains’ assets acquired and liabilities assumed:~~

Fair value of US Alliance common stock issued as consideration
$ 3,099,165

Preliminary amounts of indentifiable assets acquired and liablities assumed

Investment securities
$ 4,623,449
Cash
1,079,627
VOBA
609,061
Other assets
60,080
Policyholder reserves
(1,277,411 )
Deposit type contracts
(2,029,138 )
Other liabilities
(243,608 )
Total indentifiable net assets
$ 2,822,060
Goodwill
277,105
Total $ 3,099,165

~~The fair value of the~~ US Alliance common stock issued as consideration and the assets acquired and liabilities assumed from our Merger with Northern Plains was based on a preliminary valuation and our estimates and assumptions are subject to change within the measurement period. The primary areas that are not yet finalized arelosses related to the ~~fair value~~sale of ~~US Alliance common stock issued~~securities are summarized as follows:

	Six Months Ended June 30,
	(unaudited)
	2022			2021
Gross gains	$	3,164		$	216,011
Gross losses		(2,541	)		(398	)
Realized gains	$	623		$	215,613

Proceeds from the sale of securities, maturities, and asset paydowns in the ~~fair value of value of business acquired ("VOBA"). Measurement period adjustments will be applied~~three months ended June 30, 2022 and 2021 were $1,128,044 and $2,550,646, respectively. Realized gains and losses related to the ~~period that the adjustment is identified in our consolidated financial statements.~~sale of securities are summarized as follows:

	Three Months Ended June 30,
	(unaudited)
	2022		2021
Gross gains	$	1,264	$	163,220
Gross losses		0		(3	)
Net security losses	$	1,264	$	163,217

~~VOBA~~ ~~is being amortized on a straight-line basis over 30 years which approximates the earnings pattern of the related policies.~~

Gross unrealized losses by duration are summarized as follows:

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
June 30, 2022
Available for sale:	*(unaudited)*
Fixed maturities:
Corporate bonds	$	13,035,236	$	(1,427,669	)	$	2,833,974	$	(917,218	)	$	15,869,210	$	(2,344,887	)
Municipal bonds		4,072,408		(374,802	)		96,376		(11,707	)		4,168,784		(386,509	)
Redeemable preferred stock		3,548,532		(495,473	)		0		0			3,548,532		(495,473	)
Mortgage backed and asset backed securities		4,395,703		(442,709	)		830,312		(125,959	)		5,226,015		(568,668	)
Total fixed maturities	$	25,051,879	$	(2,740,653	)	$	3,760,662	$	(1,054,884	)	$	28,812,541	$	(3,795,537	)

~~The following table presents unaudited pro forma consolidated total income and net loss as if the Merger had occurred as of January 1, 2016 (the earliest date presented).~~

Nine Months Ended September 30,

2017

2016

(unaudited)
Income:

Premium income
$ 9,322,648 $ 5,231,372
Net investment income
544,477 396,697
Net realized gain (loss) on sale of securities
483,130 16,031
Other income
11,594 6,987
Total income
10,361,849 5,651,087

Net Loss
$ (745,970 ) $ (1,508,555 )

Net Loss per share
$ (0.10 ) $ (0.21 )

~~The unaudited pro forma total income and net loss above was adjusted to eliminate the TPA fees paid by~~ Northern Plains to the Company of $31,250 and $50,781 for the nine months ended September 30, 2017 and 2016, respectively; and eliminate the loss of $201,577 for acquisition related expenses that Northern Plains recorded for the nine months ended September 30, 2017 and also includes adjustments for the amortization of VOBA and elimination of DAC amortization for the nine months ending September 30, 2017 and 2016 of $78,379 and $21,498, respectively.

	Less than 12 months					Greater than 12 months				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Loss			Value		Loss		Value		Loss
December 31, 2021
Available for sale:
Fixed maturities:
Corporate bonds	$	4,496,456	$	(177,700	)	$	0	$	0	$	4,496,456	$	(177,700	)
Municipal bonds		927,122		(14,292	)		0		0		927,122		(14,292	)
Redeemable preferred stock		1,394,650		(21,094	)		0		0		1,394,650		(21,094	)
Mortgage backed and asset backed securities		4,386,306		(70,259	)		0		0		4,386,306		(70,259	)
Total fixed maturities	$	11,204,534	$	(283,345	)	$	0	$	0	$	11,204,534	$	(283,345	)

Table

of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

~~Note~~ 3~~. Investments~~

~~The amortized cost and fair value of available for sale and held to maturity investments as of~~ ~~September 30, 2017 and December31, 2016 is as follows:~~

September 30, 2017

Cost or

Gross

Gross

Amortized

Unrealized

Unrealized

Cost

Gains

Losses

Fair Value

(Unaudited)
Available for sale:

Fixed maturities:

US Treasury securities
$ 269,529 $ - $ (29,054 ) $ 240,475
Government agency bonds
299,842 - (539 ) 299,303
Corporate bonds
6,119,784 140,246 (25,617 ) 6,234,413
Municipal bonds
5,570,008 152,099 (19,519 ) 5,702,588
Redeemable preferred stock
99,560 480 - 100,040
Mortgage backed and asset backed securities
2,553,196 38,963 (15,154 ) 2,577,005
Total fixed maturities
14,911,919 331,788 (89,883 ) 15,153,824
Equities:

Equities
7,615,226 114,845 (64,574 ) 7,665,497
Total available for sale
$ 22,527,145 $ 446,633 $ (154,457 ) $ 22,819,321

December 31, 2016

Cost or

Gross

Gross

Amortized

Unrealized

Unrealized

Cost

Gains

Losses

Fair Value

Available for sale:

Fixed maturities:

US Treasury securities
$ 314,992 $ - $ (15,830 ) $ 299,162
Corporate bonds
3,828,418 62,712 (45,234 ) 3,845,896
Municipal bonds
2,841,137 46,883 (38,191 ) 2,849,829
Mortgage backed and asset backed securities
3,333,617 36,870 (45,300 ) 3,325,187
Total fixed maturities
10,318,164 146,465 (144,555 ) 10,320,074
Equities:

Equities
4,723,024 350,981 (131,757 ) 4,942,248
Other equity investments
182,929 23,046 (4,719 ) 201,256
Total equities
4,905,953 374,027 (136,476 ) 5,143,504
Total available for sale
$ 15,224,117 $ 520,492 $ (281,031 ) $ 15,463,578

~~Table of Contents~~

~~US Alliance Corporation~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~The amortized cost and fair value of debt securities as of~~ September 30, 2017, by contractual maturity, are shown in the following table. Equity securities do not have stated maturity dates and therefore are not included in the following maturity summary. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Amortized

September 30, 2017

Cost

Fair Value

(unaudited)
Amounts maturing in:

One year or less
$ 200,568 $ 200,473
After one year through five years
1,932,156 1,933,444
After five years through ten years
2,490,661 2,517,547
More than 10 years
7,635,778 7,825,315
Redeemable preferred stocks
99,560 100,040
Mortgage backed and asset backed securities
2,553,196 2,577,005
Total fixed maturities
$ 14,911,919 $ 15,153,824

~~Proceeds from the sale of securities, maturities, and asset paydowns for the first~~ ~~nine months of 2017 and 2016 were $7,520,945and $764,173, respectively. Realized gains and losses related to the sale of securities are summarized as follows:~~

Nine Months Ended September 30,

(unaudited)

2017

2016

Gross gains
$ 486,523 $ 42,719
Gross losses
(51,131 ) (2,066 )
Net security gains
$ 435,392 $ 40,653

~~Proceeds from the sale of securities, maturities, and asset paydowns for the~~ ~~three months ended September 30, 2017 and 2016 were $4,688,796and $204,422, respectively. Realized gains and losses related to the sale of securities for the three months ended September 30, 2017 and 2016 are summarized as follows:~~

Three Months Ended September 30,

(unaudited)

2017

2016

Gross gains
$ 259,061 $ 29,889
Gross losses
(32,171 ) -
Net security gains
$ 226,890 $ 29,889

~~Table of Contents~~

~~US Alliance Corporation~~

~~Notes to Consolidated Financial Statements (unaudited)~~

~~Gross unrealized losses by duration are summarized as follows:~~

Less than 12 months

Greater than 12 months

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Loss

Value

Loss

Value

Loss

September 30, 2017

Available for sale:

Fixed maturities:

US Treasury securities
$ 240,475 $ (29,054 ) $ - $ - $ 240,475 $ (29,054 )
Government agency bonds
299,303 (539 ) - - 299,303 (539 )
Corporate bonds
1,734,089 (14,488 ) 798,161 (11,129 ) 2,532,250 (25,617 )
Municipal bonds
1,571,608 (18,464 ) 98,945 (1,055 ) 1,670,553 (19,519 )
Mortgage backed and asset backed securities
995,261 (13,137 ) 92,315 (2,017 ) 1,087,576 (15,154 )
Total fixed maturities
4,840,736 (75,682 ) 989,421 (14,201 ) 5,830,157 (89,883 )
Equities:

Equities
1,283,438 (4,999 ) 1,179,505 (59,575 ) 2,462,943 (64,574 )
Total available for sale
$ 6,124,174 $ (80,681 ) $ 2,168,926 $ (73,776 ) $ 8,293,100 $ (154,457 )

Less than 12 months

Greater than 12 months

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Loss

Value

Loss

Value

Loss

December 31, 2016

Available for sale:

Fixed maturities:

US Treasury securities
$ 299,162 $ (15,830 ) $ - $ - $ 299,162 $ (15,830 )
Corporate bonds
1,897,000 (42,994 ) 196,399 (2,240 ) 2,093,399 (45,234 )
Municipal bonds
1,296,688 (38,191 ) - - 1,296,688 (38,191 )
Mortgage backed and asset backed securities
1,700,173 (39,264 ) 134,090 (6,036 ) 1,834,263 (45,300 )
Total fixed maturities
5,193,023 (136,279 ) 330,489 (8,276 ) 5,523,512 (144,555 )
Equities:

Equities
1,007,860 (59,357 ) 1,063,959 (72,400 ) 2,071,819 (131,757 )
Other equity investments
52,840 (4,719 ) - - 52,840 (4,719 )
Total equities
1,060,700 (64,076 ) 1,063,959 (72,400 ) 2,124,659 (136,476 )
Total available for sale
$ 6,253,723 $ (200,355 ) $ 1,394,448 $ (80,676 ) $ 7,648,170 $ (281,031 )

Unrealized losses occur from market price declines that may be due to a number of factors, including economic downturns, changes in interest rates, competitive forces within an industry, issuer specific events, operational difficulties, lawsuits, and market pricing anomalies caused by factors such as temporary lack of liquidity.

The total number of available for sale securities in the investment portfolio in an unrealized loss position as of ~~September~~ June 30, ~~2017~~2022 was ~~71,~~196, which represented an unrealized loss of ~~$154,457~~$3,795,537 of the aggregate carrying value of those securities. The 71 196 securities breakdown as follows: 51118 bonds, 1462 mortgage and asset backed securities, ~~1 common stock, 2 high yield corporate bond funds, 2~~and 16 redeemable preferred ~~stock index funds,~~stock. The total number of available for sale securities in the investment portfolio in an unrealized loss position as of December 31,2021 was 76, which represented an unrealized loss of $283,345 of the aggregate carrying value of those securities. The 76 securities breakdown as follows: 29 bonds, 41 mortgage and ~~1 senior loan fund. The~~asset backed securities, and 6 redeemable preferred stock.The Company determined that no securities were considered to be other-than-temporarily impaired as of ~~September~~ June 30, ~~2017~~2022 and December 31, ~~2016.~~ 2021.

Mortgage Loans on Real Estate

The ~~unrealized gains on~~Company has invested in various mortgage loans through participation agreements with the ~~remainder of the available for sale portfolio~~original issuing entity. The Company’s mortgage loans by property type as of ~~September~~June 30, ~~2017~~2022 and December 31, 2021 are summarized as follows:

	June 30, 2022		December 31, 2021
Commercial mortgage loans by property type	(unaudited)
Condominium	$	1,547,202	$	1,960,547
Multi-property		1,179,501		1,157,950
Multi-family		336,573		534,645
Retail		1,000,000		0
Total commercial mortgages	$	4,063,276	$	3,653,142

The Company utilizes loan-to-value of individual mortgage loans to evaluate the credit quality of its mortgage loan portfolio. The loan-to-value measures the loan's carrying value to its appraised value. The Company’s mortgage loans by loan-to-value ratio as of June 30, 2022 and December 31, 2021 are summarized as follows:

	June 30, 2022		December 31, 2021
Loan to value ratio	(unaudited)
Over 60 to 70%	$	2,547,202	$	1,960,547
Over 40 to 50%		336,573		339,335
Over 30 to 40%		0		195,310
Over 10 to 20%		1,179,501		1,157,950
Total	$	4,063,276	$	3,653,142

The Company’s mortgage loans by maturity date as of June 30, 2022 and December 31, 2021 are summarized as follows:

	June 30, 2022		December 31, 2021
Maturity Date	(unaudited)
One year or less	$	1,547,202	$	2,155,857
After one year through five years		2,516,074		1,497,285
Total	$	4,063,276	$	3,653,142

The Company had 0 mortgage loans that were ~~$446,663.~~ on non-accrued status as of June 30, 2022 and December 31, 2021. The were 0 mortgage loans delinquent on payments due the Company as of June 30, 2022 and December 31, 2021. In addition, the Company did not establish a valuation allowance on any mortgage loans as of June 30, 2022 and December 31, 2021.

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Investment Income, Net of Expenses

The components of net investment income for the six months ended June 30, 2022 and 2021 are as follows:

	Six Months Ended June 30,
	2022			2021
	(unaudited)
Fixed maturities	$	559,262		$	553,641
Mortgages		116,350			189,259
Equity securities		312,498			302,641
Funds withheld		1,621,509			1,649,276
Cash and cash equivalents		5,471			868
		2,615,090			2,695,685
Less investment expenses		(44,403	)		(64,113	)
	$	2,570,687		$	2,631,572

The components of net investment income for the three months ended June 30, 2022 and 2021 are as follows:

	Three Months Ended June 30,
	2022			2021
	(unaudited)
Fixed maturities	$	283,929		$	276,152
Mortgages		88,959		$	116,342
Equity securities		157,824			154,710
Funds withheld		921,201			821,279
Cash and cash equivalents		5,011			560
		1,456,924			1,369,043
Less investment expenses		(37,859	)		(36,463	)
	$	1,419,065		$	1,332,580

Net Investment Gains

Accounting standards require that the unrealized gains and losses on equity securities be reported as income on the consolidated statements of comprehensive loss. For the six months ended June 30, 2022, net investment losses is comprised of $1,463,629 of unrealized losses on our equity portfolio, net realized gains of $623, and a loss on the change in the fair value of our embedded derivative on funds withheld of $691,300. For the six months ended June 30, 2021, net investment gains is comprised of $103,297 of unrealized gains on our equity portfolio, net realized gains of $215,613 and a loss on the change in the fair value of our embedded derivative on funds withheld of $245,120. For the three months ended June 30, 2022, net investment losses is comprised of $1,013,834 of unrealized losses on our equity portfolio, net realized gains of $1,264, and a loss on the change in the fair value of our embedded derivative on funds withheld of $409,083. For the three months ended June 30, 2021, net investment gains is comprised of $70,378 of unrealized gains on our equity portfolio, net realized gains of $163,217 and a loss on the change in the fair value of our embedded derivative on funds withheld of $42,473.

Note 3. Derivative Instruments

Types of Derivatives used by the Company

The Company’s derivatives consists solely of embedded derivatives on funds withheld on coinsurance assets.

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Summary of Derivative Positions

The fair value of the Company’s derivative financial instruments on the consolidated balance sheets is as follows:

June 30, 2022

December 31, 2021

Derivative

Balance

Asset

Liability

Asset

Liability

Reported In

Derivatives:

(unaudited)

Embedded derivatives:

Funds withheld embedded derivative

146,532

544,768

Funds withheld

The following table shows the change in the fair value of the derivative financial instruments in the consolidated statements of comprehensive income:

	Six Months Ending			Six Months Ending			Balance
	June 30, 2022			June 30, 2021			Reported In
Derivatives:	*(unaudited)*			*(unaudited)*
Embedded derivatives:
Change in funds withheld embedded derivative	$	(691,300	)	$	(245,120	)	Net investment losses

4.Note 4.Fair Value Measurements

The fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability in an orderly transaction occurring in the principal market (or most advantageous market in the absence of a principal market) for such asset or liability. In estimating fair value, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. Such valuation techniques are consistently applied. Inputs to valuation techniques include the assumptions that market participants would use in pricing an asset or liability. The Company uses a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

●

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement rate.

●

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The Company’s Level 2 assets and liabilities include fixed maturity securities with quoted prices that are traded less frequently than exchange-traded instruments or assets and liabilities whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes U.S. Government and agency mortgage-backed debt securities and corporate debt securities.

●

Level 3 inputs are unobservable for the asset or liability and reflect an ~~entity~~’sentity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Investments, available for sale: ~~Investments in securities that are classified as~~Fair values of available for sale fixed maturity securities are ~~recorded at~~provided by a third party pricing service. The pricing service uses a variety of sources to determine fair value ~~utilizing Level 1 and Level 2 measurements.~~of securities. The Company’s fixed maturity securities are highly liquid, which allows for a high percentage of the portfolio to be priced through pricing sources.

Equity securities: Fair values for equity securities are also provided by a third party pricing service and are derived from active trading on national market exchanges.

Embedded derivative: The fair value of embedded derivatives associated with funds withheld reinsurance treaty is determined upon a total return swap technique with reference to the fair value of the investments held by the ceding company that support the Company’s funds withheld asset with an adjustment for a credit valuation adjustment. The fair value of the underlying assets is generally based upon market observable inputs with industry standard valuation techniques. The valuation also requires certain significant inputs, which are generally not observable and accordingly, the valuation is considered level 3 in the fair value hierarchy. The Company’s utilization of a credit-valuation adjustment did not have a material effect on the change in fair value of the embedded derivative for the three and six months ended June 30, 2022 and 2021.

1615

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The ~~following~~ table below presents the amounts of assets measured at fair value on a recurring basis as of ~~September~~June 30, ~~2017~~ 2022 and December 31, ~~2016:~~2021:

	September 30, 2017								June 30, 2022
	Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3
	(unaudited)								(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	240,475	$	240,475	$	-	$	-	$	359,309		$	0	$	359,309	$	0
Government agency bonds		299,303		-		299,303		-
Corporate bonds		6,234,413		-		6,234,413		-		17,230,707			0		17,049,107		181,600
Municipal bonds		5,702,588		-		5,702,588		-		5,561,188			0		5,561,188		0
Redeemable preferred stock		100,040		-		100,040		-		3,548,532			0		3,548,532		0
Mortgage backed and asset backed securities		2,577,005		-		2,577,005		-		5,498,472			0		5,498,472		0
Total fixed maturities		15,153,824		240,475		14,913,349		-		32,198,208			0		32,016,608		181,600
Equities:
Equities		7,665,497		7,665,497		-		-
Common stock										6,298,209			6,204,809		93,400		0
Preferred stock										1,465,856			0		1,465,856		0
Total equities										7,764,065			6,204,809		1,559,256		0
Funds withheld embedded derivative										(146,532	)		0		0		(146,532	)
Total	$	22,819,321	$	7,905,972	$	14,913,349	$	-	$	39,815,741		$	6,204,809	$	33,575,864	$	35,068

	December 31, 2016								December 31, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Available for sale:

Fixed maturities:
US Treasury securities	$	299,162	$	299,162	$	-	$	-	$	447,765	$	0	$	447,765	$	0
Corporate bonds		3,845,896		-		3,845,896		-		21,321,279		0		21,139,679		181,600
Municipal bonds		2,849,829		-		2,849,829		-		6,963,358		0		6,963,358		0
Redeemable preferred stock										3,621,526		0		3,621,526		0
Mortgage backed and asset backed securities		3,325,187		-		3,325,187		-		5,588,729		0		5,588,729		0
Total fixed maturities		10,320,074		299,162		10,020,912		-		37,942,657		0		37,761,057		181,600
Equities:
Equities		4,942,248		4,942,248		-		-
Other equity investments		201,256		201,256		-		-
Common stock										7,319,584		7,226,584		93,000		0
Preferred stock										1,837,609		0		1,837,609		0
Total equities		5,143,504		5,143,504		-		-		9,157,193		7,226,584		1,930,609		0
Funds withheld embedded derivative										544,768		0		0		544,768
Total	$	15,463,578	$	5,442,666	$	10,020,912	$	-	$	47,644,618	$	7,226,584	$	39,691,666	$	726,368

The reconciliations for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:

For the Six Months Ended June 30, 2022	Corporate		Funds
	Bonds		Withheld
Fair value, beginning of period	$	181,600	$	544,768
Investment related losses		0		(691,300	)
Fair value, end of period	$	181,600	$	(146,532	)

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

For the Three Months Ended June 30, 2022	Corporate		Funds
	Bonds		Withheld
Fair value, beginning of period	$	181,600	$	262,551
Investment related gains (losses), net		0		(409,083	)
Fair value, end of period	$	181,600	$	(146,532	)

The Company discloses the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The ~~estimated fair value approximates carrying value for accrued interest. The~~ methodologies for other financial assets and financial liabilities are discussed below:

Cash and cash equivalents~~, investment~~: The carrying amounts approximate fair value because of the short maturity of these instruments.

Investment income due and ~~accrued, and policy~~accrued: The carrying amounts approximate fair value because of the short maturity of these instruments.

Mortgage loans on real estate: Mortgage loans are carried at their unpaid principal value as that is considered the fair market values for these loans.

Funds withheld: The carrying value of funds withheld at interest approximates fair value as funds are specifically identified in the agreement. The fair value of the specified funds is based on the fair value of the underlying assets that are held by the ceding company. The ceding company uses a variety of sources and pricing methodologies, which are not transparent to the Company and may include significant unobservable inputs to value the securities held in distinct portfolios, therefore the valuation of these ~~financial instruments~~funds withheld assets are considered Level 3 in the fair value hierarchy.

Policy loans: Policy loans are stated at unpaid principal balances. As these loans are fully collateralized by the cash surrender value of the underlying insurance policies, the carrying value of the policy loans approximates their fair ~~values. Cash and cash equivalents are included in Level 1 of the fair value hierarchy due to their highly liquid nature.~~value.

Federal Home Loan Bank Advances: FHLB advances are stated at the outstanding principal balances and the carrying value approximates fair value.

Policyholder deposits in deposit-type contracts: The fair value for policyholder deposits in deposit-type insurance contracts (accumulation annuities) is calculated using a discounted cash flow approach. Cash flows are projected using actuarial assumptions and discounted to the valuation date using ~~the~~ risk-free rates adjusted for credit risk

and the nonperformance risk of the liabilities.

Table of ~~Contents~~Con

tents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The estimated fair values of the ~~Company~~’sCompany’s financial assets and liabilities at ~~September~~June 30, ~~2017~~ 2022 and December 31, ~~2016~~ 2021 are as follows:

	September 30, 2017				December 31, 2016
									June 30, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value		(unaudited)
	(unaudited)								Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	11,015,077	$	11,015,077	$	3,145,745	$	3,145,745	$	9,472,845	$	9,472,845	$	9,472,845	$	0	$	0
Mortgage loans on real estate										4,063,276		4,063,276		0		0		4,063,276
Investment income due and accrued		124,745		124,745		100,713		100,713		567,974		567,974		0		0		567,974
Funds withheld										49,828,005		49,681,473		0		0		49,681,473
Policy loans		33,376		33,376		-		-		49,645		49,645		0		0		49,645
Investments, at fair value		22,819,321		22,819,321		15,463,578		15,463,578
Total Financial Assets	$	33,992,519	$	33,992,519	$	18,710,036	$	18,710,036
Total Financial Assets (excluding available for sale investments)									$	63,981,745	$	63,835,213	$	9,472,845	$	0	$	54,362,368

Financial Liabilities:
Federal Home Loan Bank advance									$	1,000,000	$	1,000,000	$	0	$	0	$	1,000,000
Policyholder deposits in deposit-type contracts	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086		78,769,056		71,117,548		0		0		71,117,548
Total Financial Liabilities	$	12,749,556	$	11,950,167	$	3,398,170	$	3,260,086	$	79,769,056	$	72,117,548	$	0	$	0	$	72,117,548

	December 31, 2021
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	7,955,348	$	7,955,348	$	7,955,348	$	0	$	0
Mortgage loans on real estate		3,653,142		3,653,142		0		0		3,653,142
Investment income due and accrued		698,504		698,504		0		0		698,504
Funds withheld		48,474,206		49,018,974		0		0		49,018,974
Policy loans		173,341		173,341		0		0		173,341
Total Financial Assets (excluding available for sale investments)	$	60,954,541	$	61,499,309	$	7,955,348	$	0	$	53,543,961

Financial Liabilities:
Federal Home Loan Bank advance	$	2,000,000	$	2,000,000	$	0	$	0	$	2,000,000
Policyholder deposits in deposit-type contracts		75,567,873		78,359,733		0		0		78,359,733
Total Financial Liabilities	$	77,567,873	$	80,359,733	$	0	$	0	$	80,359,733

Note 5.5. Income Tax Provision

NoNaN income tax expense or (benefit) has been reflected for the ~~quarters~~six and three months ended ~~September~~ June 30, ~~2017~~2022 and ~~2016~~2021 due to the lack of taxable net income generated by the Company and a change in the ~~100%~~ valuation allowance pertaining to the deferred tax asset. ~~The difference between the reported amount of income tax expense and the amount expected based upon statutory rates is primarily due to the increase in the valuation allowance on deferred taxes.~~

The net operating loss carryforwards for the Company are ~~$6,500,000 and $5,050,176~~$9,198,976 as of ~~September 30, 2017 and~~ December 31, ~~2016, respectively. The September 30, 2017 net operating loss carryforward is~~2021 and estimated to be $9,500,000 as ~~the impact~~ of ~~the Merger with Northern Plains has not been finalized.~~June 30,2022. The components of the deferred tax assets and liabilities due to book and tax differences are the following: fixed asset depreciation, net operating loss carryforward, net unrealized gains (losses) on investment securities, policyowner benefit reserves and deferred acquisition costs. The ~~net~~ deferred tax asset net of valuation allowance is ~~offset 100 percent by the valuation allowance.~~

~~Note~~ 6.~~Warrants~~

~~The Company conducted its public stock offering through the sale~~$1,560,767 as of ~~units. Each unit was sold for $1,000~~both June 30,2022 and consisted of 200 shares of common stock and a warrant to purchase an additional 200 shares of common stock at $6.00 per share. The warrants were originally scheduled to expire, if not exercised, on February 24, 2016. The board of directors of the Company extended the warrant expiration date to April 1, 2016. As of December 31, 2014 warrant-holders had the right to purchase 2,532,400 shares of common stock. On February 24, 2015, the Company registered a warrant exercise offering with the Kansas Securities Commissioner. During 2015, warrant-holders exercised warrants for the purchase of 944,845 shares of common stock. As of December 31, 2015 warrant-holders had the right to purchase 1,587,555 shares of common stock. During 2016, warrant-holders exercised their rights to purchase an additional 372,003 shares of common stock.

Management engaged the services of an experienced valuation firm to value the warrants as of February 24, 2013. The valuation performed valued the warrants to be worth $0.01 per share of common stock and management has allocated this amount from additional paid-in capital to the outstanding warrants. As the warrants have been exercised, the value allocated to the warrants exercised has been restored to additional paid-in capital. The value of outstanding warrants was reduced to zero at March 31, 2016. 2021.

Table of Contents

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 7.6.Subsequent Events

All of the effects of subsequent events that provide additional evidence about conditions that existed at the balance sheet date, including the estimates inherent in the process of preparing the consolidated financial statements, are recognized in the consolidated financial statements. The Company does not recognize subsequent events that provide evidence about conditions that did not exist at the balance sheet date but arose after, but before the consolidated financial statements are issued. In some cases, unrecognized subsequent events are disclosed to keep the consolidated financial statements from being misleading.

The Company has evaluated subsequent events through ~~November 13, 2017,~~ August 11, 2022, the date on which the consolidated financial statements were issued.

Table of Contents

I~~TEM~~ITEM 2. MANAGEMENT’MS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ANAGEMENT’S~~ D~~ISCUSSION AND~~ A~~NALYSIS~~OF F~~INANCIAL~~ C~~ONDITION~~~~AND~~ R~~ESULTS~~OF O~~PERATIONS~~

The following discussion should be read in conjunction with our ~~condensed~~ consolidated financial statements and notes thereto included in this Form 10-Q. In connection with, and because we desire to take advantage of, the ~~“safe harbor”~~“safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, including those relating to the COVID-19 pandemic, and many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

Overview

~~US Alliance Corporation (“USAC”)~~USAC was formed as a Kansas corporation on April 24, 2009 for the purpose of raising capital to form a new Kansas-based life insurance company. We presently conduct our business through our ~~four~~five wholly-owned subsidiaries: ~~US Alliance Life and Security Company ("USALSC"),~~USALSC, a life insurance corporation; ~~Dakota Capital Life Insurance Corporation ("DCLIC"),~~DCLIC, a life insurance corporation; ~~US Alliance Marketing Corporation ("USAMC"),~~USALSC-Montana, a life insurance corporation; USAMC, an insurance marketing corporation; and ~~US Alliance Investment Corporation ("USAIC"),~~USAIC, an investment management corporation. Unless the context indicates otherwise, references herein to the "Company" refer to USAC and its consolidated subsidiaries.

On January 2, 2012, USALSC was issued a Certificate of Authority to conduct life insurance business in the State of Kansas. We began third party administrative services in 2015.

On August 1, 2017, the Company ~~throught its wholly owned subsidiary,~~ merged with Northern Plains Capital Corporation (“~~Northern Plains”)~~ with the Company being the ultimate surviving entity. As a result of this merger, the Company acquired ~~DCLIC,~~Dakota Capital Life Insurance Company which ~~subsequently~~ became a wholly owned subsidiary of USALSC.

On December 14, 2018, the Company acquired Great Western Life Insurance Company. Great Western Life Insurance Company was renamed US Alliance Life and Security Company – Montana and is a subsidiary of USALSC.

The Company assumes business under three reinsurance treaties. On January 1, 2013, the Company entered into an agreement to assume 20% of a certain block of health insurance policies from Unified Life Insurance Company. On September 30, 2017, USALSC entered into an agreement (the "2017 ALSC Agreement") with American Life & Security Company ("ALSC") to assume 100% of a certain block of life insurance policies from ALSC. On April 15, 2020, with an effective date of January 1, 2020, USALSC entered into an agreement (the "2020 ALSC Agreement") with ALSC to assume a quota share percentage of a block of annuity policies. As of December 31, 2020, USALSC had assumed $50.1 million in annuity deposits under the 2020 ALSC Agreement. Effective December 31, 2020, DCIC entered into an agreement (teh ("ALSC 2020 Assumption Agreement") with ALSC, which provided for ALSC to recapture all reserves previously ceded to USALSC with respect to a portion of the 2017 ALSC Agreement. USALSC and ALSC agreed that the commuted business shall be discharged by USALSC’s transfer of invested assets and cash in the amount of $9,181,100. As part of the transaction the Company released $10,972,785 in reserve liabilities and $1,146,156 of deferred acquisition costs, resulting in a commutation gain of $543,794, which was recorded in other income for the year ended December 31, 2020.

Critical Accounting Policies and Estimates

Our ~~accounting~~accounting and reporting policies are in accordance with GAAP. Preparation of the consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The following is an explanation of our accounting policies and the estimates considered most significant by management. These accounting policies inherently require significant judgment and assumptions and actual operating results could differ significantly from management’s estimates determined using these policies. We believe the following accounting policies, judgments and estimates are the most critical to the understanding of our results of operations and financial position. A detailed discussion of significant accounting policies is provided in this report in the Notes to Consolidated Financial Statements included with this ~~Registration Statement.~~quarterly report.

Table of Contents

Valuation of Investments

The Company's principal investments are in fixed maturity, mortgages, and equity securities. Fixed maturity ~~and equity~~ securities, classified as available for sale, are carried at their fair value in the consolidated ba~~lance~~balance sheets, with unrealized gains or losses recorded in comprehensive ~~income (loss).~~income. Our fixed income investment manager utilizes external independent third-party pricing services to determine the fair values of investment securities available for sale. Equity securities are carried at fair value in the consolidated balance sheets with unrealized gains or losses recorded in net income (loss).

We have a policy and process in place to identify securities that could potentially have an impairment that is other-than-temporary. The assessment of whether impairments have occurred is based on a case-by-case evaluation of underlying reasons for the de~~cline~~decline in fair value. We consider severity of impairment, duration of impairment, forecasted recovery period, industry outlook, financial condition of the issuer, issuer credit ratings and whether we intend to sell a security, or it is more likely than not that we would be required to sell a security, prior to the recovery of the amortized cost. New England Asset Management ("NEAM") and 1505 Capital, our investment managers, provide support to the Company in making these determinations.

~~Table of Contents~~

The recognition of other-than-temporary impairment losses on debt securities is dependent on the facts and circumstances related to the specific security. If we ~~inten~~dintend to sell a security or it is more likely than not that we would be required to sell a security prior to recovery of the amortized cost, the difference between amortized cost and fair value is recognized in the income statement as an other-than-temporary impairment. Our membership in the Federal Home Loan Bank ("FHLB") provides additional liquidity which further reduces the likelihood that we would be required to sell a security prior to recovery. As it relates to debt securities, if we do not expect to recover the amortized basis, do not plan to sell the security and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, the other-than-temporary impairment would be recognized. We would recognize the credit loss portion through earnings in the income statement and the noncredit loss portion in accumulated other comprehensive loss.

Deferred Acquisition Costs

Incremental direct costs, net of amounts ceded to reinsurers, that result directly from and are essential to a product sale and would not have been incurred by us had the sale not occurred, are capitalized, to the extent recoverable, and amortized over the life of the premiums produced. Recoverability of deferred acquisition costs is evaluated periodically by comparing the current estimate of the present value of expected pretax future profits to the unamortized asset balance. If this current estimate is less than the existing balance, the difference is charged to expense.

Value of Business Acquired

Value of business acquired ~~(VOBA)~~("VOBA") represents the estimated value assigned to purchased companies or insurance inin- force of the assumed policy obligations at the date of acquisition of a block of policies. At least annually, a review is performed of the models and the assumptions used to develop expected future profits, based upon ~~management~~’smanagement’s current view of future events. VOBA is reviewed on an ongoing basis to determine that the unamortized portion does not exceed the expected recoverable amounts. Management’s view primarily reflects our experience but can also reflect emerging trends within the industry. Short-term deviations in experience affect the amortization of VOBA in the period, but do not necessarily indicate that a change to the long-term assumptions of future experience is warranted. If it is determined that it is appropriate to change the assumptions related to future experience, then an unlocking adjustment is recognized for the block of business being evaluated. Certain assumptions, such as interest spreads and surrender rates, may be interrelated. As such, unlocking adjustments often reflect revisions to multiple assumptions. The VOBA balance is immediately impacted by any assumption changes, with the change reflected through the statements of comprehensive ~~income~~loss as an unlocking adjustment in the amount of VOBA amortized. These adjustments can be positive or negative with adjustments reducing amortization limited to amounts previously deferred plus interest accrued through the date of the adjustment.

Table of Contents

In addition, we may consider refinements in estimates due to improved capabilities resulting from administrative or actuarial system upgrades. We consider such enhancements to determine whether and to what extent they are associated with prior periods or simply improvements in the projection of future expected gross profits due to improved functionality. To the extent they represent such improvements, these items are applied to the appropriate financial statement line items in a manner similar to unlocking adjustments.

VOBA is also reviewed on an ongoing basis to determine that the unamortized portion does not exceed the expected recoverable amounts. If it is determined from emerging experience that the premium margins or gross profits are less than the unamortized value of business acquired, then the asset will be adjusted downward with the adjustment recorded as an expense in the current period.

Goodwill

Goodwill represents the excess of the amounts paid to acquire subsidiaries and other businesses over the fair value of their net assets at the date of acquisition. Goodwill is tested for impairment at least annually in the fourth quarter or more frequently if events or circumstances change that would indicate that a triggering event has occurred.

~~Table of Contents~~

We assess the recoverability of indefinite-lived intangible assets at least annually or whenever events or circumstances suggest that the carrying value of an identifiable indefinite-lived intangible asset may exceed the sum of the future discounted cash flows expected to result from its use and eventual disposition. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired ~~asset~~.asset.

Reinsurance

In the normal course of business, we seek to limit aggregate and single exposure to losses on risk by purchasing reinsurance. The amounts reported in the consolidated balance sheets as reinsurance recoverable include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on insurance liabilities that have not yet been paid. Reinsurance recoverable on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities are reported gross of reinsurance recoverable. Management believes the recoverables are appropriately established. We diversify our credit risks related to reinsurance ceded. Reinsurance premiums are generally reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish our primary liability under the policies written. We regularly evaluate the financial condition of our reinsurers including their activities with respect to claim settlement practices and commutations, and establish allowances for uncollectible reinsurance recoverable as appropriate.

Future Policy Benefits

We establish liabilities for amounts payable under insurance policies, including traditional life insurance and annuities. Generally, amounts are payable over an extended period of time. Liabilities for future p~~olicy~~policy benefits of traditional life insurance have been computed by using a net level premium method based upon estimates at the time of issue for investment yields, mortality and withdrawals. These estimates include provisions for experience less favorable than initially expected. Mortality assumptions are based on industry experience expressed as a percentage of standard mortality tables. Such liabilities are reviewed quarterly by an independent consulting actuary.

Table of Contents

Income Taxes

Deferred tax assets are ~~recorded~~recorded based on the differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. The principal assets and liabilities giving rise to such differences are investments, insurance reserves, and deferred acquisition costs. A deferred tax asset valuation allowance is established when there is uncertainty that such assets would be realized. We have no uncertain tax positions ~~that~~ we believe are more-likely-than-not that the benefit will not to be realized.

~~Recogniti~~onRecognition of Revenues

Revenues on traditional life insurance products consist of direct and assumed premiums reported as earned when due.

Amounts received as payment for annuities are recognized as deposits to policyholder account balances and included in future insurance policy benefits. Revenues from these contracts are comprised of investment earnings of the deposits, which are recognized over the period of the contracts, and included in revenue. Deposits are shown as a financing activity in the Consolidated Statements of Cash Flows.

Embedded Derivatives

The Company has entered into coinsurance funds withheld arrangement with ALSC which contains an embedded derivative. Under ASC 815, the Company assesses whether the embedded derivative is clearly and closely related to the host contract. The Company bifurcates embedded derivatives from the host instrument for measurement purposes when the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument. Embedded derivatives, which are reported with the host instrument on the consolidated balance sheets in funds withheld under coinsurance agreement, are reported at fair value with changes in fair value recognized in the consolidated statements of comprehensive loss in net investment losses.

~~Merger~~Funds Withheld under Coinsurance Agreement

Funds withheld under coinsurance agreement represent amounts contractually withheld by a ceding company in accordance with the 2020 ALSC Agreement. For agreements written on a coinsurance funds withheld basis, assets that support the net statutory reserves or as defined by the treaty, are withheld and legally owned by the ceding company. Interest is recorded in net investment income, net of related expenses, in the consolidated statements of comprehensive loss. Funds withheld under coinsurance agreement are presented net of the embedded derivative, discussed above. Under the terms of the 2020 ALSC Agreement, the Company may assume custody of the assets in the funds withheld account once the Company attains its "Qualified Institutional Buyer" designation (as that term is defined in Rule 144A under the Securities Act of 1933, as amended), which will occur in the third quarter of 2022. The Company will record the funds withheld assets at fair value on the date of transfer, which will eliminate the embedded derivative component associated with the 2020 ALSC Agreement.

Mortgage Loans on Real Estate

Mortgage loans on real estate are carried at unpaid principal balances, net of any unamortized premium or discount and valuation allowances. Interest income is accrued on the principal amount of the mortgage loans based on its contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. The Company accrues interest on loans until probable that the Company will not receive interest or the loan is 90 days past due. Interest income, amortization of premiums, accretion of discounts and prepayment fees are reported in investment income, net of related expenses in the consolidated statements of comprehensive income (loss).

A mortgage loan is considered to be impaired when, based on the current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the mortgage agreement.

Table of Contents

Valuation allowances on mortgage loans are established based upon inherent losses expected by management to be realized in connection with future dispositions or settlement of mortgage loans, including foreclosures. The Company establishes valuation allowances for estimated impairments on an individual loan basis as of the balance sheet date. Such valuation allowances are based on the excess carrying value of the loan over the present value of expected future cash flows discounted at the loan’s original effective interest rate, the value of the loan’s collateral if the loan is in the process of foreclosure or is otherwise collateral-dependent, or the loan’s market value if the loan is being sold. These evaluations are revised as conditions change and new information becomes available. In addition to historical experience, management considers qualitative factors that include the impact of changing macro-economic conditions, which may not be currently reflected in the loan portfolio performance, and the quality of the loan portfolio.

Any interest accrued or received on the net carrying amount of the impaired loan will be included in investment income or applied to the principal of the loan, depending on the assessment of the collectability of the loan. Mortgage loans deemed to be uncollectible or that have been foreclosed are charged off against the valuation allowances and subsequent recoveries, if any, are credited to the valuation allowances. Changes in valuation allowances are reported in net investment gains (losses) on the consolidated statements of comprehensive income (loss).

The Company evaluates whether a mortgage loan modification represents a troubled debt restructuring. In a troubled debt restructuring, the Company grants concessions related to the borrower’s financial difficulties. Generally, the types of concessions include: reduction of the contractual interest rate, extension of the maturity date at an interest rate lower than current market interest rates and/or a reduction of accrued interest. The Company considers the amount, timing and extent of the concession granted in determining any impairment or changes in the specific valuation allowance recorded in connection with the troubled debt restructuring. Through the continuous monitoring process, the Company may have recorded a specific valuation allowance prior to when the mortgage loan is modified in a troubled debt restructuring. Accordingly, the carrying value (after specific valuation allowance) before and after modification through a troubled debt restructuring may not change significantly, or may increase if the expected recovery is higher than the pre-modification recovery assessment.

Mergers and Acquisitions

On May 23, 2017, the Company entered into a definitive merger agreement with Northern ~~Plains.~~Plains Capital Corporation. The ~~Merger~~merger transaction closed on July 31, 2017. ~~Northern Plains~~NPCC shareholders received .5841 shares of US Alliance Corporation stock for each share of ~~Northern Plains~~NPCC stock owned. USAC issued 1,644,458 shares of common stock to holders of ~~Northern Plains shares in consideration for the Merger.~~NPCC shares.

On October 11, 2018, the Company entered into a stock purchase agreement with Great Western Insurance Company to acquire Great Western Life Insurance Company. The transaction closed on December 14, 2018. USALSC paid $500,000 to acquire all of the outstanding shares of GWLIC.

Effective December 31, 2020, DCLIC acquired a block of life insurance policies according to the terms of the 2020 ALSC Assumption Agreement. The Company acquired fixed maturity securities and cash of $9,181,100, assumed liabilities of $10,972,785 and recorded VOBA of $2,163,542.

New Accounting Standards

A detailed discussion of new accounting standards is provided in the Notes to Consolidated Financial ~~Statemen~~tsStatements beginning on p. 89 of this quarterly report.

2224

Table of Contents

Discussion of Consolidated Results of Operations

~~Revenues~~.Total Income. Insurance revenues are primarily generated from premium revenues and investment income. Total income~~. Insurance revenues~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016 are~~2021 is summarized in the table below.

	Nine Months Ended September 30,
	2017		2016		Six Months Ended June 30,
	(unaudited)				2022			2021
Income:					(unaudited)
Premium income	$	8,902,208	$	4,721,091	$	6,726,209		$	6,352,098
Net investment income		485,147		320,491		2,570,687			2,631,572
Net realized gain (loss) on sale of securities		435,392		40,653
Net investment gains (losses)						(2,154,307	)		73,790
Other income		40,656		57,468		160,186			157,402
Total income	$	9,863,403	$	5,139,703	$	7,302,775		$	9,214,862

~~Insurance revenues~~Our 2022 first six months total income decreased to $7,302,775, a decrease of $1,912,087 or 21% from the 2021 first six months total income of $9,214,862. The Company was required to implement a new accounting standard in 2019 which results in unrealized gains and losses on equity securities being included in total income. This standard continues to result in increased volatility in total income and is the driver of the reduced first six months total income.

Total income for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016 are~~2021 is summarized in the table below.

Three Months Ended September 30,

2017

2016

(unaudited)
Income:

Premium income
$ 5,169,638 $ 1,490,255
Net investment income
189,028 116,780
Net realized gain (loss) on sale of securities
226,890 29,889
Other income
1,201 21,878
Total income
$ 5,586,757 $ 1,658,802

Three Months Ended June 30,

2022

2021

Income:

(unaudited)

Premium income
$ 3,363,953 $ 3,304,921
Net investment income
1,419,065 1,332,580
Net investment gains (losses)
(1,421,654 ) 191,122
Other income
80,621 77,974
Total income
$ 3,441,985 $ 4,906,597
Our 2022 second quarter total income decreased to $3,441,985 from $4,906,597, a decrease of $1,464,612 or 30%. The decrease is driven by net investment losses recognized during the period.

Premium ~~revenue:~~income: Premium ~~revenue~~income for the first ~~nine~~six months of ~~2017~~2022 was ~~$8,902,208~~$6,726,209 compared to ~~$4,721,091~~$6,352,098 in the first ~~nine~~six months of ~~2016,~~2021, an increase of $4,181,117. USALSC entered into a coinsurance transaction with American Life and Security Corporation (“ALSC”) effective September 30, 2017. This agreement resulted in the immediate recognition of $3,854,902 of assumed premiums and is the primary driver of the$374,111 or 6%. The increase was driven by an increase in direct single and recurring premiums. Although it is a reduction in revenue, ceded premium increases reflect the growth of our group policy premiums as we focus on small companies to assist them with their employee benefits.

Direct, assumed and ceded premiums for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are summarized in the following table.

Nine Months Ended September 30,

Six Months Ended June 30,

2017

2016

2022

2021

(unaudited)

(unaudited)

Direct
$ 2,422,907 $ 2,048,060 $ 4,795,093 $ 4,498,017
Assumed
6,639,092 2,770,010 2,522,928 2,372,355
Ceded
(159,791 ) (96,979 ) (591,812 ) (518,274 )
Total
$ 8,902,208 $ 4,721,091 $ 6,726,209 $ 6,352,098

~~Premium revenue~~The Company continuously searches for ~~the~~ ~~third quarter of 2017 was $5,169,638 compared~~new product and distribution opportunities to ~~$1,490,255 in 2016, an~~continue to increase ~~of $3,679,383. This growth is primarily attributable to the coinsurance transaction with ALSC.~~premium production on both a direct and assumed basis.

2325
Table of Contents
Premium income for the second quarter of 2022 was $3,363,953 compared to $3,304,921 in the second quarter of 2021, an increase of $59,032 or 2%. The increase was driven by an increase in direct single and recurring premiums. Though it is a reduction in revenue, ceded premium increases reflect the growth of our group policy premiums as we focus on small companies to assist them with their employee benefits.

Direct, assumed and ceded premiums for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are summarized in the following table.

Three Months ended September 30,

2017

2016

(unaudited)

Direct
$ 931,463 $ 747,100
Assumed
4,323,692 778,281
Ceded
(85,517 ) (35,126 )
Total
$ 5,169,638 $ 1,490,255

~~The Company is pursuing new product and distribution opportunities to increase premium~~ ~~production. The acquisition of DCLIC and the reinsurance agreement with ALSC are both expected to increase future premiums.~~

Three Months ended June 30,

2022

2021

(unaudited)

Direct
$ 2,418,559 $ 2,374,338
Assumed
1,235,113 1,174,607
Ceded
(289,719 ) (244,024 )
Total
$ 3,363,953 $ 3,304,921

Investment income, net of expenses: The components of net investment income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are as follows:

Nine Months Ended September 30,

Six Months Ended June 30,

2017

2016

2022

2021

(unaudited)

(unaudited)

Fixed maturities
$ 306,614 $ 225,790 $ 559,262 $ 553,641
Mortgages
116,350 189,259
Equity securities
213,920 126,571 312,498 302,641
Cash and short term investments
3,730 1,527
Funds withheld
1,621,509 1,649,276
Cash and cash equivalents
5,471 868
524,264 353,888 2,615,090 2,695,685
Less investment expenses
(39,117 ) (33,397 ) (44,403 ) (64,113 )
$ 485,147 $ 320,491 $ 2,570,687 $ 2,631,572

Net investment income for the first ~~nine~~six months of ~~2017~~2022 was ~~$485,147,~~$2,570,687, compared to ~~$320,491~~$2,631,572 in ~~2016, an increase~~2021, a decrease of ~~$164,656.~~$60,885 or 2%. This ~~increase~~decrease in investment income is primarily a result of ~~increased invested assets as a result of our premium~~decreased mortgage income ~~and the Merger with Northern Plains, as well as an improvement in our book yield.~~.

The components ofof net investment income for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are as follows:

Three Months Ended September 30,

Three Months Ended June 30,

2017

2016

2022

2021

(unaudited)

(unaudited)

Fixed maturities
$ 114,132 $ 80,174 $ 283,929 $ 276,152
Mortgages
88,959 $ 116,342
Equity securities
91,228 48,130 157,824 154,710
Cash and short term investments
2,238 761
Funds withheld
921,201 821,279
Cash and cash equivalents
5,011 560
207,598 129,065 1,456,924 1,369,043
Less investment expenses
(18,570 ) (12,285 ) (37,859 ) (36,463 )
$ 189,028 $ 116,780 $ 1,419,065 $ 1,332,580

Net investment income for the second quarter of ~~2017~~2022 was ~~$189,028,~~$1,419,065, compared to ~~$116,780~~$1,332,580 in ~~2016,~~2021, an increase of ~~$72,248. This increase in investment income is a result of increased invested assets as a result of our premium income and the Merger with Northern Plains as well as an improvement in our book yield.~~$86,485 or 6%.

24
26
Table of Contents

Net ~~realized~~investments gains ~~on investments:~~(losses): Net ~~realized gains on investments~~investment losses for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 were ~~$435,392,~~$2,154,307, compared to gains of ~~$40,653~~$73,790 for the same period in ~~2016,~~2021, an increase of ~~$394,739.~~$2,228,097. The increase in ~~realized gains~~net investment losses is attributable to ~~the repositioning of an~~unrealized losses on our equity portfolio ~~from a market return focus to an income focus. Additionally, during~~and funds withheld account. Net investment losses for the ~~third quarter we reduced~~six months ended June 30, 2022 were comprised of $2,154,930 of unrealized losses in our equity ~~exposure~~portfolio and funds withheld asset and realized gains of $623. Net investment gains for the six months ended June 30, 2021 were comprised of $141,823 of unrealized losses in ~~order to facilitate~~ our ~~coinsurance transaction with ALSC.~~equity portfolio and funds withheld asset and realized gains of $215,613. Realized gains and losses related to the sale of securities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are summarized as follows:

Nine Months Ended September 30,

Six Months Ended June 30,

(unaudited)

(unaudited)

2017

2016

2022

2021

Gross gains
$ 486,523 $ 42,719 $ 3,164 $ 216,011
Gross losses
(51,131 ) (2,066 ) (2,541 ) (398 )
Net security gains
$ 435,392 $ 40,653
Realized gains
$ 623 $ 215,613

Net ~~realized~~ ~~gains on investments~~investment losses for the ~~third quarter of 2017~~three months ended June 30, 2022 were ~~$226,890~~$1,421,654, compared to gains of ~~$29,889~~$191,122 for the same period in ~~2016.~~2021, an increase of $1,612,776. The increase in net investment losses is attributable to unrealized losses on our equity portfolio and funds withheld account. Net investment losses for the three months ended June 30, 2022 were comprised of $1,422,918 of unrealized losses in our equity portfolio and funds withheld asset and realized gains of $1,264. Net investment gains for the three months ended June 30, 2021 were comprised of $27,906 of unrealized gains in our equity portfolio and funds withheld asset and realized gains of $163,217. Realized gains and losses related to the sale of securities for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are summarized as follows:

Three Months Ended September 30,

Six Months Ended June 30,

(unaudited)

(unaudited)

2017

2016

2022

2021

Gross gains
$ 259,061 $ 29,889 $ 1,264 $ 163,220
Gross losses
(32,171 ) - - (3 )
Net security gains
$ 226,890 $ 29,889
Net security losses
$ 1,264 $ 163,217

Other income: Other income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was ~~$40,656~~$160,186 compared to ~~$57,468~~$157,402 in ~~2016, a decrease~~the same period in 2021, an increase of ~~$16,812. This decrease is due to the acquisition of DCLIC who was previously a third party administration client.~~
$2,784. Other income for the ~~third quarter of 2017~~three months ended June 30, 2022 was ~~$1,201~~$80,621 compared to ~~$21,878~~$77,974 in ~~2016, a decrease~~the same period in 2021, an increase of ~~$20,677. This decrease is due to the acquisition of DCLIC who was previously a third party administration client.~~$2,647.

Expenses. Expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are summarized in the table below.

Nine Months Ended September 30,

2017

2016

Six Months Ended June 30,

(unaudited)
2022

2021

Expenses:

(unaudited)

Death claims
$ 624,864 $ 355,151 $ 1,525,175 $ 1,101,796
Policyholder benefits
2,609,324 2,520,956 3,613,384 3,448,788
Increase in policyholder reserves
5,205,124 1,473,287 2,143,630 2,332,241
Commissions, net of deferrals
362,585 315,550 392,215 373,461
Amortization of deferred acquisition costs
136,709 128,540 581,904 554,865
Amortization of value of business acquired
3,384 - 46,210 46,210
Salaries & benefits
627,286 564,410 684,320 538,195
Other operating expenses
887,230 902,598 1,038,613 940,820
Total expense
$ 10,456,506 $ 6,260,492 $ 10,025,451 $ 9,336,376

25
27
Table of Contents

Expenses for the three months ended ~~September~~June 30, ~~2017~~2022 and ~~2016~~2021 are summarized in the table below.

Three Months Ended September 30,

2017

2016

(unaudited)
Expenses:

Death claims
$ 152,234 $ 119,700
Policyholder benefits
479,965 715,171
Increase in policyholder reserves
4,357,257 556,685
Commissions, net of deferrals
97,151 88,952
Amortization of deferred acquisition costs
52,484 39,441
Amortization of value of business acquired
3,384 -
Salaries & benefits
244,143 171,226
Other operating expenses
278,795 321,925
Total expense
$ 5,665,413 $ 2,013,100

Three Months Ended June 30,

2022

2021

Expenses:

(unaudited)

Death claims
$ 727,887 $ 530,632
Policyholder benefits
1,953,399 1,745,769
Increase in policyholder reserves
947,280 1,145,738
Commissions, net of deferrals
201,881 194,253
Amortization of deferred acquisition costs
306,206 284,808
Amortization of value of business acquired
23,105 23,105
Salaries & benefits
360,261 282,167
Other operating expenses
497,211 485,422
Total expense
$ 5,017,230 $ 4,691,894

Death ~~and other benefits:~~claims: Death benefits were ~~$624,864~~$1,525,175 in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared to ~~$355,151 in 2016,~~$1,101,796 for 2021, an increase of ~~$269,713.~~$423,379 or 38%. This increase is attributable to ~~the growth of~~ our ~~in-force~~growing block of in-force pre-need life insurance ~~policies. The majority of death claims paid from inception have been on pre-need policies.~~policies and to increased group life claims. We expect these claims to grow as we continue to increase the size of our in-force ~~pre-need~~ business. The COVID-19 pandemic has increased mortality rates for the entire United States population.

Death benefits were $~~152,234 for~~$727,887 in the three months ended ~~September~~June 30, ~~2017,~~2022 compared to ~~$119,700~~$530,632 for ~~the same period in 2016,~~2021, an increase of ~~$32,534.~~$197,255 or 37%. This increase is attributable to ~~the growth of~~ our ~~in-force~~growing block of in-force pre-need life insurance ~~policies.~~policies and to increased group life claims. We expect these claims to grow as we continue to increase the size of our in-force ~~life~~ business. The COVID-19 pandemic has increased mortality rates for the entire United States population.

Policyholder benefits: Policyholder benefits were ~~$2,609,324~~$3,613,384 in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared to ~~$2,520,956~~$3,448,788 in ~~2016,~~the same period in 2021, an increase of ~~$88,368.~~$164,596 or 5%. The primary driver of this increase is ~~the growth of our assumed business with ULIC and is more than offset by the~~ increased ~~premiums associated with this block of assumed policies.~~surrender benefit payments.

Policyholder benefits were $~~479,965 during~~$1,953,399 in the ~~third quarter of 2017,~~three months ended June 30, 2022 compared to ~~$715,171~~$1,745,769 in the ~~third quarter~~same period in 2021, an increase of ~~2016, a decrease of $235,206.~~$207,630 or 12%. The primary driver of this ~~decrease~~increase is ~~reduced benefits payments on our assumed business with ULIC.~~increased surrender benefit payments.

Increase in policyholder reserves: ~~Policyholder reserves increased $5,205,124 in the nine months ended September 30, 2017, compared to $1,473,287 in 2016, an increase of $3,731,837.~~ The increase in policyholder reserves ~~is driven~~decreased to $2,143,630 in the six months ended June 30, 2022, compared to $2,332,241 in 2021, a decrease of $188,611 or 8%. The growth in reserves was offset by ~~an assumed reserve increase of $3,824,902 associated with our reinsurance transaction with ALSC.~~increased pre-need claims which reduce reserves.

~~Policyholder reserves increased by $4,357,257 in the third quarter of 2017, compared to $556,685 in the third quarter of 2016, an increase of $3,800,572.~~ The increase in policyholder reserves ~~is driven~~decreased to $947,280 in the three months ended June 30, 2022, compared to $1,145,738 in 2021, a decrease of $198,458 or 17%. The growth in reserves was offset by ~~an assumed reserve increase of $3,824,902 associated with our reinsurance transaction with ALSC.~~increased pre-need claims which reduce reserves.

Commissions, net of deferrals: The Company pays commissions to the ceding company on a block of assumed ~~policies.~~policies as well as commissions to agents on directly written business. Commissions, net of deferrals, were ~~$362,585~~$392,215 in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, compared to ~~$315,550~~$373,461 in ~~2016,~~2021, an increase of ~~$47,035.~~$18,754 or 5%. This increase is due to an increase in ~~assumed~~ premiums.

The Company pays commissions to the ceding company on a block of assumed policies as well as commissions to agents on directly written business. Commissions, net of deferrals, were $~~97,151~~$201,881 in the ~~third quarter of 2017,~~three months ended June 30, 2022, compared to ~~$88,952~~$194,253 in ~~the third quarter of 2016,~~2021, an increase of ~~$8,199.~~$7,628 or 4%. This increase is ~~driven by~~due to an increase in ~~non-deferred commissions on direct written~~ premiums.

Amortization of deferred acquisition costs: The amortization of deferred acquisition costs ("DAC") was ~~$136,709~~$581,904 in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, compared to ~~$128,540~~$554,865 in ~~2016,~~2021, an increase of ~~$8,169.~~ $27,039 or 5%. The increase is driven by the normal amortization pattern of our deferred acquisition cost asset.
The amortization of DAC was $306,206 in the three months ended June 30, 2022, compared to $284,808 in 2021, an increase of $21,398 or 8%. The increase is ~~attributable to~~driven by the ~~growth~~normal amortization pattern of our ~~DAC asset and product margins.~~deferred acquisition cost asset.

2628
Table of Contents
~~The amortization of deferred acquisition costs was $~~52,484 in the third quarter of 2017, compared to $39,441 in the third quarter of 2016, an increase of $13,043. The amortization increase is attributable to the growth of our DAC asset and product margins.

Amortization of value of business ~~acquired~~:acquired: The amortization of ~~value of business acquired~~VOBA was ~~$3,384~~$46,210 in the ~~nine~~six months ended ~~September 30, 2017. Our initial~~June 30, 2022 and 2021. In 2021, we began to amortize VOBA ~~balance was established August 1, 2017~~associated with DCLIC’s acquisition of ~~DCLIC.~~policies from ALSC. VOBA is being amortized straight-line over 30 years.
The amortization of VOBA was $23,105 in the three months ended June 30, 2022 and 2021.

Salaries and benefits: Salaries and benefits were ~~$627,286~~$684,320 for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, compared to ~~$564,410~~$538,195 in ~~2016,~~2021, an increase of ~~$62,876. Staffing~~$146,125 or 27%. The increase was driven by increased employee compensation costs ~~have increased due to~~and additional ~~employees acquired with the Northern Plains Merger.~~team members.

Salaries and benefits were $~~244,143 in~~$360,261 for the ~~third quarter of 2017,~~three months ended June 30, 2022, compared to ~~$171,226~~$282,167 in ~~the third quarter of 2016,~~2021, an increase of ~~$72,917. Staffing~~$78,094 or 28%. The increase was driven by increased employee compensation costs ~~have increased due to~~and additional ~~employees acquired with the Northern Plains Merger.~~team members.
Other expenses:Other operating expenses were ~~$887,230~~$1,038,613 in the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, compared to ~~$902,598~~$940,820 in ~~2017, a decrease~~2021, an increase of ~~$15,368. Operating costs have remained in line with the prior period.~~$97,793 or 10%. The increase was driven by increased premium tax and information technology expenses.

Other operating expenses were $~~278,795 during~~$497,211 in the ~~third quarter of 2017,~~three months ended June 30, 2022, compared to ~~$321,925~~$485,422 in ~~the third quarter~~2021, an increase of ~~2016, a decrease of $43,130.~~
$11,789 or 2%. The increase was driven by increased information technology expenses.

Net ~~Loss:~~loss: Our net loss was ~~$593,103~~$2,722,676 in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 compared to a net loss of ~~$1,120,789~~$121,514 in ~~the same period~~2021, an increase of 2016, a decrease of $527,686. This decrease is primarily attributable to our increased realized gains as well as growing product margins. Our net loss per share decreased to $0.10 from $0.21 in 2016, basic and diluted.
~~Our net loss was $~~78,656 for the third quarter of 2017, compared to $354,298 for the same period in 2016, a decrease of $275,642. This decrease is primarily attributable to increased realized gains as well as improved product margins.$2,601,162 or 2041%. Our net loss per share was ~~$0.01~~$0.35 compared to a net loss per share of $0.02 in ~~the third quarter of 2017,~~2021, basic and ~~diluted, compared to $0.06 net~~diluted. Of the Company's $0.35 loss per share in the ~~second quarter~~first six months of ~~2016.~~2022, $0.28 was attributable to unrealized losses on our equity portfolio and funds withheld asset. Our net loss was $1,575,245 in the three months ended June 30, 2022 compared to net income of $214,703 in 2021, an increase of $1,789,948. Our net loss per share was $0.20 compared to a net income per share of $0.03 in 2021, basic and diluted.

Discussion of Consolidated Balance Sheet

Assets. Assets have ~~increased~~decreased to ~~$38,746,049~~$116,931,820 as of ~~September~~June 30, ~~2017, an increase~~2022, a decrease of ~~$19,554,060~~$4,553,014 or 4% from December 31, ~~2016.~~2021. This is primarily the result of a decrease of $6,376,810 in the ~~Merger with Northern Plains and~~market value of our ~~coinsurance agreement with ALSC.~~fixed maturity securities.

Available for sale fixed ma~~turity~~maturity securities: As of ~~September~~June 30, ~~2017,~~2022, we had available for sale fixed maturity assets of ~~$15,153,824, an increase~~$32,198,208, a decrease of ~~$4,833,750~~$5,744,449 or 15% from the December 31, ~~2016~~2021 balance of ~~$10,320,074. This growth~~$37,942,657. The decrease is driven by a decrease of $6,376,810 in the market value of these securities. Assuming we hold our ~~Merger~~fixed maturity securities to maturity, as we intend to do, any changes in market value is temporary. Compliance with ~~Northern Plains~~GAAP accounting rules requires that these temporary changes be reflected in our asset values and ~~our premium income.~~shareholders equity.

~~Available for sale~~ ~~equity~~Equity securities, at fair value: As of ~~September~~June 30, ~~2017,~~2022, we had available for sale equity assets of ~~$7,665,497, an increase~~$7,764,065, a decrease of ~~$2,521,993~~$1,393,128 or 15% from the December 31, ~~2016~~2021 balance of ~~$5,143,504.~~$9,157,193. This decrease is the result of a decline of $1,463,629 in the fair value of these securities. Changes in the fair value of our equity securities are reflected in our asset values and in net income.
Mortgage loans on real estate: As of June 30, 2022, we had mortgage loans on real estate of $4,063,276 an increase of $410,134 or 11% from the December 31, 2021 balance of $3,653,142. The increase is the result of the acquisition of new mortgage loan participations.
Funds withheld under coinsurance agreement, at fair value: As of June 30, 2022, we had funds withheld assets of $49,681,473, an increase of $662,499 or 1% from the December 31, 2021 balance of $49,018,974. The growth represents investment returns in the funds withheld account.
Policy loans: As of June 30, 2022, our policy loans were $49,645, a decrease of $123,696 or 71% from the December 31, 2021 balance of $173,341. The decrease is ~~driven by~~a result of automatic premium loans being repaid.
29
Table of Contents
Real estate, net of depreciation: As of June 30, 2022, we had real estate assets of $1,388,427 related to the purchase of our ~~Merger with Northern Plains and our premium income.~~home office building, a decrease of $14,710 from the December 31, 2021 balance of $1,403,137. The decrease is the result of depreciation.

Cash and cash equivalents: As of ~~September~~June 30, ~~2017,~~2022, we had cash and cash equivalent assets of ~~$11,015,077,~~$9,472,845, an increase of ~~$7,869,332~~$1,517,497 or 19% from the December 31, ~~2016~~2021 balance of ~~$3,145,745.~~$7,955,348. This increase ~~is primarily~~was the result of cash ~~received upon entering~~being prepared for deployment into ~~our coinsurance agreement with ALSC.~~invested assets.

Investment income due and accrued: As of ~~September~~June 30, ~~2017,~~2022, our investment income due and accrued was ~~$124,745~~$567,974 compared to ~~$100,713~~$698,504 as of December 31, ~~2016.~~2021, a decrease of $130,530 or 19%. This ~~increase~~decrease is attributable to ~~normal~~ investment ~~activity and the growth of our invested assets.~~activity.

Reinsurance related assets: As of ~~September~~June 30, ~~2017, our~~2022, we had no reinsurance related assets ~~were $315,702, an increase~~compared to $3,438 as of ~~$284,312 from the~~ December 31, ~~2016 balance of $31,390.~~2021. This ~~increase was driven by a $264,311 receivable from ALSC related to our coinsurance transaction.~~
27
~~Table of Contents~~
~~Policy loans:~~ ~~As of September 30, our policy loans were $33,376. All of our policy loans were~~decrease is the result of amounts due to and from ALSC under our ~~coinsurance agreement with~~2020 ALSC ~~and we had no policy loans prior to this transaction.~~agreement.

Deferred acquisition costs, net: As of ~~September~~June 30, ~~2017,~~2022, our deferred acquisition costs were ~~$3,083,154, an increase~~$6,002,490 compared to $6,354,875 as of ~~$2,929,362 from the~~ December 31, ~~2016 balance~~2021, a decrease of ~~$153,792.~~$352,385 or 6%. The ~~growth~~decrease is the ~~result~~amortization of ~~the cost of reinsurance deferred on~~DAC related to our ~~coinsurance agreement with~~2020 ALSC ~~in the amount of $2,861,450.~~agreement.

Value of business acquired, net: As of ~~September~~June 30, ~~2017~~2022 our ~~value of business acquired~~VOBA asset was ~~$605,677. This asset was established in~~$2,564,603 compared to $2,610,813 as of December 31, 2021, a decrease of $46,210 or 2%. The decrease is the ~~third quarter of 2017 as a~~ result of amortization of VOBA.
Property, equipment and software, net: As of June 30, 2022 our ~~acquisition~~property, equipment and software assets were $141,491, an increase of ~~DCLIC.~~$48,706 from the December 31, 2021 balance of $92,785. This is the result of new purchases offset by amortization of these assets.

Goodwill: As of ~~September~~June 30, ~~2017,~~2022 and December 31, 2021, our goodwill was $277,542. Goodwill was established as a result of our merger with ~~Northern Plains and we had~~NPCC. We have determined that there has been no ~~previous~~impairment to our goodwill ~~balances.~~balance.

~~Property, equipment~~Deferred tax asset, net of valuation allowance: The Company had a net deferred tax asset of $1,560,767 as of June 30, 2022 and ~~software, net: As of September 30, 2017 our property, equipment and software assets were $229,939, a decrease of $14,910 from the~~ December 31, ~~2016 balance~~2021. No change in the net deferred tax asset was recorded in the first six months of ~~$244,849. This decrease is a result of normal amortization during the period. We did purchase additional office furniture and equipment in 2017.~~2022.

Other assets: As of ~~September~~June 30, ~~2017,~~2022, our other assets were ~~$241,517,~~$1,199,014, an increase of ~~$189,595~~$616,696 or 106% from the December 31, ~~2016~~2021 balance of ~~$51,922.~~$582,318. This increase was ~~the result of a receivable related to the recovery of merger related expenses~~driven by an increase in pre-paid assets and ~~pre-paid insurance.~~federal income tax receivable.

Liabilities. Our total liabilities were ~~$24,429,841~~$108,442,577 as of ~~September~~June 30, ~~2017,~~2022, an increase of ~~$16,618,835~~$4,539,499 or 4% from our December 31, ~~2016 liability~~2021 liabilities of ~~$7,811,006.~~$103,903,078. This increase is driven by growth in our policy liabilities.

Policy liabilities: Our total policy liabilities as of ~~September~~June 30, ~~2017~~2022 were ~~$23,802,957,~~$106,384,466 compared to $101,026,942 as of December 31, 2021, an increase of ~~$16,062,718 from the December 31, 2016 balance of $7,740,239.~~$5,357,524 or 5%. This increase is the result of ~~our acquisition of DCLIC, our coinsurance agreement with ALSC, new policy sales and~~ the growth of our in-force ~~policies.~~business.

Accounts payable and accrued expenses: As of ~~September~~June 30, ~~2017,~~2022, our accounts payable and accrued expenses were ~~$75,399,~~$223,458 compared to $689,065 as of December 31, 2021, a decrease of $465,607 or 68%. The decrease is driven by the payment of federal income taxes payable.
Federal Home Loan Bank advance: As of June 30, 2022 the Company has outstanding advances of $1,000,000 with the Federal Home Loan Bank of Topeka compared to outstanding advances of $2,000,000 as of December 31, 2021. This decrease is the the result of the Company's repayment f two $500,000 advances during the second quarter.
Other liabilities: As of June 30, 2022, our other liabilities were $834,653, an increase of ~~$8,927~~$647,582 from the December 31, ~~2016~~2021 balance of ~~$66,472.~~$187,071. The ~~growth~~increase is the result of ~~expenses accrued related~~amounts due to ~~our Merger with Northern Plains.~~reinsurers.

~~Shareholders~~’Shareholders’ Equity. Our shareholders’ equity was ~~$14,316,208~~$8,489,243 as of ~~September~~June 30, ~~2017, an increase~~2022, a decrease of ~~$2,935,225~~$9,092,513 from our December 31, ~~2016~~2021 shareholders’ equity of ~~$11,380,983.~~$17,581,756. The ~~growth~~reduction in shareholders’ equity was driven by ~~our Merger with Northern Plains, the issuance of new shares of stock, and the growth of accumulated~~a decrease in other comprehensive ~~income. This was partially offset~~income (loss) and by our net ~~loss during~~loss. Other comprehensive income (loss) consists of the ~~period.~~unrealized gains and losses on our fixed maturity portfolio. For the six months ended June 30, 2022, the unrealized losses in our fixed maturity portfolio totaled $6,376,810. The decrease in other comprehensive income (loss) is the result of higher interest rates which decreases the market value of our fixed maturity securities.

28
30
Table of Contents

Investments and Cash and Cash Equivalents

Our ~~overall~~ investment philosophy is reflected inby the allocation of our investments. We emphasize investment grade debt securities with smaller holdings in equity securities, mortgages and other investments. The following table shows the carrying value of our ~~investments~~investments by investment category and cash and cash equivalents, and the percentage of each to total invested assets as of ~~September~~June 30, ~~2017~~2022 and December ~~30, 2016.~~31, 2021.

September 30, 2017

December 31, 2016

Fair

Percent

Fair

Percent

Value

of Total

Value

of Total

(unaudited)
Fixed maturities:

US Treasury securities
$ 240,475 0.7 % $ 299,162 1.6 %
Government agency bonds
299,303 0.9 % - 0.0 %
Corporate bonds
6,234,413 18.4 % 3,845,896 20.7 %
Municipal bonds
5,702,588 16.9 % 2,849,829 15.3 %
Redeemable preferred stocks
100,040 0.3 % - 0.0 %
Mortgage backed and asset backed securities
2,577,005 7.6 % 3,325,187 17.9 %
Total fixed maturities
15,153,824 44.8 % 10,320,074 55.5 %
Equities:

Equities
7,665,497 22.6 % 4,942,248 26.5 %
Other equity investments
- 0.0 % 201,256 1.1 %
Total equities
7,665,497 22.6 % 5,143,504 27.6 %
Cash and cash equivalents
11,015,077 32.6 % 3,145,745 16.9 %
Total
$ 33,834,398 100.0 % $ 18,609,323 100.0 %

June 30, 2022

December 31, 2021

Fair

Percent

Fair

Percent

Value

of Total

Value

of Total

Fixed maturities:

(unaudited)

US Treasury securities
$ 359,309 0.3 % $ 447,765 0.4 %
Corporate bonds
17,230,707 16.5 % 21,321,279 19.6 %
Municipal bonds
5,561,188 5.3 % 6,963,358 6.4 %
Redeemable preferred stocks
3,548,532 3.4 % 3,621,526 3.3 %
Mortgage backed and asset backed securities
5,498,472 5.3 % 5,588,729 5.1 %
Total fixed maturities
32,198,208 30.8 % 37,942,657 34.8 %
Mortgage loans
4,063,276 3.9 % 3,653,142 3.3 %
Equities:

Common stock
6,298,209 6.0 % 7,319,584 6.7 %
Preferred stock
1,465,856 1.4 % 1,837,609 1.7 %
Total equities
7,764,065 7.4 % 9,157,193 8.4 %
Funds withheld
49,681,473 47.5 % 49,018,974 44.9 %
Real estate, net of depreciation
1,388,427 1.3 % 1,403,137 1.3 %
Cash and cash equivalents
9,472,845 9.1 % 7,955,348 7.3 %
Total
$ 104,568,294 100.0 % $ 109,130,451 100.0 %

The total value of our investments and cash and cash equivalents ~~increased~~decreased to ~~$33,834,398~~$104,568,294 as of ~~September~~June 30, ~~2017~~2022 from ~~$18,609,323~~$109,130,451 at December 31, ~~2016, an increase~~2021, a decrease of ~~$15,225,075. Increases~~$4,562,157. Decreases in investments are primarily attributable to a reduction in the market value of our ~~Merger with Northern Plains, our coinsurance agreement with American Life & Security Corporation, and premiums and annuity deposits received by USALSC and DCLIC.~~fixed maturity securities.

The following table shows the ~~distribution~~distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016.~~2021.

September 30, 2017

December 31, 2016

Fair

Percent

Fair

Percent

Value

of Total

Value

of Total

(unaudited)

(audited)

AAA and U.S. Government
$ 903,776 6.0 % $ 1,080,028 10.5 %
AA
6,643,397 43.8 % 4,887,863 47.3 %
A
3,845,353 25.4 % 1,961,311 19.0 %
BBB
3,554,606 23.5 % 2,194,473 21.3 %
BB
206,692 1.3 % 196,399 1.9 %
Total
$ 15,153,824 100.0 % $ 10,320,074 100.0 %
~~Reflecting the high quality of securities maintained by us,~~ ~~98.1% of all fixed maturity securities were investment grade as of December 31, 2016. As of September 30, 2017, 98.7% of all fixed maturity securities were investment grade.~~

June 30, 2022

December 31, 2021

Fair

Percent

Fair

Percent

Value

of Total

Value

of Total

(unaudited)

AAA and U.S. Government
$ 789,876 2.5 % $ 914,862 2.4 %
AA
8,122,869 25.2 % 9,999,588 26.4 %
A
7,036,252 21.9 % 8,140,616 21.5 %
BBB
13,658,063 42.3 % 15,719,874 41.3 %
BB
2,405,634 7.5 % 2,986,117 7.9 %
B
3,914 0.0 % - 0.0 %
Not Rated - Private Placement
181,600 0.6 % 181,600 0.5 %
Total
$ 32,198,208 100.0 % $ 37,942,657 100.0 %

2931
Table of Contents

The amortized cost and fair value of debt securities as of ~~September~~June 30, ~~2017~~2022 and December 31, ~~2016,~~2021, by contractual maturity, are shown below. Equity securities do not have stated maturity dates and therefore are not included in the following maturity summary. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

As of September 30, 2017

As of December 31, 2016

Amortized Cost

Fair Value

Amortized Cost

Fair Value

As of June 30, 2022

As of December 31, 2021

(unaudited)
Amortized Cost

Fair Value

Amortized Cost

Fair Value

Amounts maturing in:

(unaudited)

One year or less
$ 200,568 $ 200,473 $ 49,915 $ 49,931 $ 408,288 $ 413,641 $ - $ -
After one year through five years
1,932,156 1,933,444 1,819,437 1,809,470 1,767,797 1,730,772 1,987,421 2,087,132
After five years through ten years
2,490,661 2,517,547 1,646,576 1,643,823 2,434,768 2,401,025 2,540,089 2,865,020
More than 10 years
7,635,778 7,825,315 3,468,619 3,491,663 21,167,776 18,605,766 21,479,533 23,780,250
Redeemable preferred stocks
99,560 100,040 - - 4,044,005 3,548,532 3,612,625 3,621,526
Mortgage backed and asset backed securities
2,553,196 2,577,005 3,333,617 3,325,187 6,065,767 5,498,472 5,636,371 5,588,729
$ 14,911,919 $ 15,153,824 $ 10,318,164 $ 10,320,074
Total amortized cost and fair value
$ 35,888,401 $ 32,198,208 $ 35,256,039 $ 37,942,657

Market Risk of Financial Instruments

We hold a diversified portfolio of investments that primarily includes cash, bonds, equity securities, mortgage loans, and ~~equity securities.~~funds withheld under the 2020 ALSC Agreement. Each of these investments is subject to market risks that can affect their return and their fair value. A ~~majority~~significant percentage of the investments are fixed maturity securities including debt ~~issues~~issuances of corporations, US Treasury securities, or securities issued by government agencies. The primary market risks affecting the investment portfolio are interest rate risk, credit risk, and equity risk. The Company's investment portfolio, including the creditworthiness and valuation of investment assets, as well as availability of new investments may be adversely affected as a result of market developments related to the COVID-19 pandemic and uncertainty regarding its ultimate severity and duration.

Interest Rate Risk

Interest raterate risk arises from the price sensitivity of investments to changes in interest rates. Interest represents the greatest portion of an investment's return for most fixed maturity securities in stable interest rate environments. The changes in the fair value of such investments are inversely related to changes in market interest rates. As interest rates fall, the interest and dividend streams of existing fixed-rate investments become more valuable and fair values rise. As interest rates rise, the opposite effect occurs.

We ~~attempt~~work to mitigate our exposure to adverse interest rate movements through laddering the maturities of the fixed maturity investments and through maintaining cash and other short term investments to assure sufficient liquidity to meet our o~~bligations~~obligations and to address reinvestment risk considerations. Due to the composition of our book of insurance business, ~~management believes~~we believe it is unlikely that we would encounter large surrender activity due to an interest rate increase that would force the disposal of fixed maturities at a loss.

Additionally, USALSC is a member of the FHLB of Topeka, which provides access to liquidity and further reduces the likelihood of disposing of fixed maturities at a loss.
Credit Risk~~Risk~~

We are exposed to credit risk through counterparties and within the investment portfolio. Credit risk relates to the uncertainty associated with an obligor's ability to make timely payments of principal andand interest in accordance with the contractual terms of an instrument or contract. We manage our credit risk through established investment policies and guidelines which address the quality of creditors and counterparties, concentration limits, diversification practices and acceptable risk levels. These policies and guidelines are regularly reviewed and approved by senior management and USAC's Board of Directors.

32
Table of Contents
Liquidity and Capital Resources

~~Since inception, our~~The impact of COVID-19 on the Company is evolving, and its future effects are not yet quantified. The Company continues to monitor the effects and risks of COVID-19 to assess its impact on the Company's business, sales, financial condition, results of operations, liquidity and capital position. Death claims have ~~been financed primarily~~ ~~through~~increased by 38% from the ~~sale~~prior year, but it is currently impossible quantify the amount of ~~voting common stock. Our operations have~~such increase that can be attributed to COVID-19 deaths and deaths not ~~been profitable and have generated significant operating losses since we were incorporated in 2009.~~directly attributable to COVID-19.

~~Aside from raising capital, which has funded the vast majority of our operations, premium income,~~Premium income, deposits to policyholder account balances, ~~and~~ investment income, and capital raising are the primary sources of funds while withdrawals of policyholder account balances, investment purchases, policy benefits in the form of claims, and operating expenses are the primary uses of funds. To ensure we will be able to pay future commitments, the funds received as premium payments and deposits are invested in primarily fixed income securities. Funds are invested with the intent that the income from investments, plus proceeds from maturities, will in the future meet our ongoing cash flow needs. The approach of matching asset and liability durations and yields requires an appropriate mix of investments. Our investments consist primarily of marketable debt securities that could be readily converted to cash for liquidity needs. Cash flow projections and cash flow tests under various market interest scenarios are also performed annually to assist in evaluating liquidity needs and adequacy.
30
~~Table~~ As a member of ~~Contents~~
the Federal Home Loan Bank, USALSC has immediate access to additional cash liquidity, if needed.

Net cash provided by operating activities was ~~$287,047~~$1,301,269 for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2022. The primary sources of cash from operating activities were premiums ~~and deposits~~ received from ~~policyholders.~~policyholders as well as investment income. The primary uses of cash for operating activities were for payments of commissions to agents and settlement of policy liabilities. Net cash ~~provided by~~used in investing activities was ~~$6,185,465.~~$1,127,725. The primary ~~source~~use of cash was ~~from our coinsurance agreement with ALSC, sales~~the purchase of ~~available for sale securities~~fixed maturity, mortgage loan, and ~~the sale of the short-term~~equity investments. ~~Offsetting this source of cash was our purchases of investments in available-for-sale securities.~~ Cash provided by financing activities was ~~$1,396,820.~~$1,343,953. The primary sources of cash were receipts on deposit-type ~~contracts and issuance of common stock.~~contracts.

At ~~September~~June 30, ~~2017,~~2022, we had cash and cash equivalents totaling ~~$11,015,077.~~$9,472,845. We believe that our existing cash and cash equivalents ~~will be~~are sufficient to fund the anticipated operating expenses and capital expenditures ~~through at least 2018.~~for the foreseeable future. We have based this estimate upon assumptions that may prove to be wrong and we could use our capital resources sooner than we currently expect. The growth of USALSC and DCLIC, our insurance ~~subsidiary~~subsidiaries, is uncertain and ~~will~~may require additional capital ~~if it continues~~as they continue to grow.

Impact of Inflation

Insurance premiums are established before the amount of losses, or the extent to which inflation may affect such losses and expenses, are known. We attempt, in establishing premiums, to anticipate thethe potential impact of inflation. If, for competitive reasons, premiums cannot be increased to anticipate inflation, this cost would be absorbed by us. Inflation also affects the rate of investment return on the investment portfolio with a corresponding effect on investment income.

~~Off-Balance Sheet Arrangements~~
~~We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.~~

I~~TEM~~3. ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company”, the Company isdoes not ~~required to~~ provide disclosure pursuant to this item.

I~~TEM~~4. ITEM 4.    CONTROLS AND PROCEDURES

We have established disclosure controls and procedures to ensure, among other things, material information relating to our Company, including our consolidated subsidiaries, is made known to our officers who certify our financial reports and to the other m~~embers~~members of our senior management and the Board of Directors.

As required by Exchange Act Rule 13a-15(b), management of the Company, including the Chief Executive Officer and the ~~Executive~~ Vice President ~~of US Alliance Life and Security Company~~ conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e). Based upon an evaluation at the end of the period, the Chief Executive Officer and the ~~Executive~~ Vice President ~~of US Alliance Life and Security Company~~ concluded that the disclosure controls and procedures are effective in timely alerting them to material information relating to us and our consolidated subsidiaries required to be disclosed in our periodic reports under the exchange act.

There were no changes to the ~~Company~~’sCompany’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the ~~nine~~six and three months ended ~~September~~June 30, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s control over financial reporting.

3133
Table of Contents

Part II – Other Information

I~~TEM~~ITEM 1. LEGAL PROCEEDINGSL~~EGAL~~ P~~ROCEEDINGS~~

We are involved in litigation incidental to our operations from time to time. We are not presently a party to any legal proceedings other than litigation arising in the ordinary course of business, and we are not aware of any claims that could ~~material~~lymaterially affect our financial position or results of operation.

I~~TEM~~ITEM 1A. RISK FACTORSR~~ISK~~ F~~ACTORS~~

As a “~~smaller~~“smaller reporting company”, the Company is not required to provide disclosure pursuant to this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF ~~PROCEEDS~~PROCEEDS..

During the quarter ended ~~September~~June 30, ~~2017,~~2022, the Company ~~issued 27,830~~did not issue any shares of common stock ~~for aggregate consideration of $194,810,~~ pursuant to an offering to residents of the state of Kansas that was registered with the Kansas Securities Commissioner.

~~The~~During the quarter ended June 30, 2022, the Company issued 250 shares of common stock, for aggregate consideration of $1,750, pursuant to a private placement offering ~~of shares in the above –described transaction was self-underwritten and sold through agents~~to residents of the ~~Company licensed to sell securities in Kansas.~~state of North Dakota (the “North Dakota Offering”). Proceeds from the sale of ~~common stock~~shares in the North Dakota were used to finance the growth of ~~the Company’s life insurance subsidiary~~DCLIC and to provide working capital for the Company. The ~~offer~~North Dakota Offering and ~~sale~~sales of ~~common stock was exempt from~~shares thereunder were not registered with the SEC in reliance on an exemption for registration under ~~Section 3(a)11~~Rule 506(b) of ~~the~~Regulation D under this Securities Act of 1933 ~~for securities offered and sold on a wholly intrastate basis. The shares of common stock were~~(“Reg D”). Shares are sold only to ~~bona fide residents~~“accredited investors”, as that term is defined in Rule 501 of ~~the state~~Reg D, and were not sold by any means of ~~Kansas.~~general advertisement or solicitation.

I~~TEM~~ITEM 3.   DDEFAULTS UPON SENIOR SECURITIES~~EFAULTS~~ U~~PON~~ S~~ENIOR~~ S~~ECURITIES~~

None

I~~TEM~~ITEM 4. MINE SAFETY DISCLOSURES M~~INE~~ S~~AFETY~~ D~~ISCLOSURES~~

Not Applicable

I~~TEM~~ITEM 5. OTHER INFORMATION O~~THER~~ I~~NFORMATION~~

None.

34
Table of Contents
I~~TEM 6.~~
E~~XHIBITS~~ITEM 6.
~~2.1~~
~~Plan and Agreement of Merger dated May 23, 2017 among North Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.1 to the Company’s Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is incorporated herein by reference as Exhibit 2.1.~~
~~2.2~~
~~Amendment No 1 to Plan and Agreement of Merger dated May 23, 2017 among North Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.2 to the Company’s Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is incorporated herein by reference as Exhibit 2.2.~~
~~3.1~~
EXHIBITS
3.1
Articles of Incorporation of US Alliance Corporation (~~filed~~(filed as Exhibit 3.1 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1)
3.1.1
First Amendment to Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.1 to the Company's Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference a Exhibit 3.1.1.
3.1.2
Second Amendment to Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.2 to the Company's Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.2.
3.2
Bylaws of US Alliance Corporation (~~filed~~(filed as Exhibit 3.2 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.2).
~~4.1~~
3.2.1
~~Form of Warrant~~Amendment No. 1. to ~~Purchase Common Shares~~the bylaws of US Alliance (Corporation, filed as Exhibit ~~4.1~~3.2 to the ~~Company’s Registration Statement~~Company's Current Report on Form 108-K filed on ~~May 2, 2016~~June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~4.1)~~3.2.1.
~~10.1~~ ~~Co-Insurance Agreement dated September 30, 2017 by and between US Alliance Life & Security Company and American Life & Security Company of Nebraska.~~

~~31.1~~
31.1*
Certification of Chief Executive Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
~~Table of Contents~~
~~31.2~~
31.2*
Certification of Principal Financial Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
~~32.1~~
32.1*
Certifications of the Chief Executive Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~32.2*
Certifications of the Principal Financial Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101~~.INS*101.INS**
~~XLRB~~Inline XBRL Instance

101.SCH**
~~XLRB~~Inline XBRL Taxonomy Extension Schema

101.CAL**
~~XLRB~~Inline XBRL Taxonomy Extension Calculation

101.DEF**
~~XLRB~~Inline XBRL Taxonomy Extension Definition

101.LAB**
~~XLRB~~Inline XBRL Taxonomy Extension Labels

101.PRE**
~~XLRB~~Inline XBRL Taxonomy Extention Presentation
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

**~~XLRB~~XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

* Filed herewith

35
Table of Contents

~~SIGNATURES~~SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized

US Alliance ~~Corporation~~
Corporation
(Registrant)

~~Date~~
Date August 11, 2022

By /s/ Jack H. Brier

Jack H. Brier, President and Chairman

33
36

~~KANSAS~~Kansas		26-4824142
(State or other jurisdiction of i~~ncorporation~~incorporation or organization)		(I.R.S. Employer Identification No.)

~~4123~~1303 SW ~~Gage Center Drive,~~First American Pl, Suite ~~240,~~200, Topeka, Kansas		66604
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	~~[ ]~~☐	Accelerated filer	~~[ ]~~
~~Non-accelerated filer~~☐	~~[ ]~~ Non-accelerated filer	~~(Do not check if a smaller reporting company)~~☐
		Smaller reporting company	~~[X]~~☑
		Emerging growth company	~~[X ]~~☑


Item	Item Description	Page
Item 1	Financial Statements	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Comprehensive ~~Loss~~Income (Loss)	4

	Consolidated Statements of Changes in Shareholders' Equity	5

	Consolidated Statements of Cash Flows	6

	~~Supplemental Cash Flow Disclosure~~	7

	Notes to Consolidated Financial Statements	8

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3	Quantitative and Qualitative Disclosures About Market Risk	3133

Item 4	Controls and Procedures	31 33

Part II - Other Information

Item	Item Description	Page
Item 1	Legal Proceedings	3234

Item 1A	Risk Factors	3234

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	3234

Item 3	Defaults Upon Senior Securities	32 34

Item 4	Mine Safety Disclosures	3234

Item 5	Other Information	3234

Item 6	Exhibits	32 35

	Signatures	3336

								Accumulated
	Number of							Other
	Shares of		Common		Additional			Comprehensive			Accumulated
	Common Stock		Stock		Paid-in Capital			Income / (Loss)			Deficit			Total
Balance, December 31, 2020		7,741,487	$	774,150	$	23,063,273		$	3,564,875		$	(8,997,507	)	$	18,404,791
Common stock issued, $7 per share		3,917		391		27,028			0			0			27,419
Costs associated with common stock issued		-		0		(92,157	)		0			0			(92,157	)
Other comprehensive loss		-		0		0			(899,223	)		0			(899,223	)
Net loss		-		0		0			0			(121,514	)		(121,514	)
Balance, June 30, 2021		7,745,404	$	774,541	$	22,998,144		$	2,665,652		$	(9,119,021	)	$	17,319,316

Balance, December 31, 2021		7,745,404	$	774,541	$	22,948,637		$	2,521,730		$	(8,663,152	)	$	17,581,756
Common stock issued, $7 per share		1,518		152		10,474			0			0			10,626
Costs associated with common stock issued		-		0		(3,653	)		0			0			(3,653	)
Other comprehensive loss		-		0		0			(6,376,810	)		0			(6,376,810	)
Net loss		-		0		0			0			(2,722,676	)		(2,722,676	)
Balance, June 30, 2022		7,746,922	$	774,693	$	22,955,458		$	(3,855,080	)	$	(11,385,828	)	$	8,489,243

	June 30, 2022			December 31, 2021
Assets	*(unaudited)*
Investments:
Available for sale fixed maturity securities (amortized cost: $35,888,401 and $35,256,039 as of June 30, 2022 and December 31, 2021, respectively)	$	32,198,208		$	37,942,657
Equity securities, at fair value		7,764,065			9,157,193
Mortgage loans on real estate		4,063,276			3,653,142
Funds withheld under coinsurance agreement, at fair value		49,681,473			49,018,974
Policy loans		49,645			173,341
Real estate, net of depreciation		1,388,427			1,403,137
Total investments		95,145,094			101,348,444

Cash and cash equivalents		9,472,845			7,955,348
Investment income due and accrued		567,974			698,504
Reinsurance related assets		0			3,438
Deferred acquisition costs, net		6,002,490			6,354,875
Value of business acquired, net		2,564,603			2,610,813
Property, equipment and software, net		141,491			92,785
Goodwill		277,542			277,542
Deferred tax asset, net of valuation allowance		1,560,767			1,560,767
Other assets		1,199,014			582,318
Total assets	$	116,931,820		$	121,484,834


Liabilities and Shareholders' Equity
Liabilities:
Policy liabilities
Deposit-type contracts	$	78,769,056		$	75,567,873
Policyholder benefit reserves		27,357,838			25,204,578
Dividend accumulation		119,761			118,262
Advance premiums		137,811			136,229
Total policy liabilities		106,384,466			101,026,942

Accounts payable and accrued expenses		223,458			689,065
Federal Home Loan Bank advance		1,000,000			2,000,000
Other liabilities		834,653			187,071
Total liabilities		108,442,577			103,903,078

Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,746,922 and 7,745,404 shares as of June 30, 2022 and December 31, 2021, respectively		774,693			774,541
Additional paid-in capital		22,955,458			22,948,637
Accumulated deficit		(11,385,828	)		(8,663,152	)
Accumulated other comprehensive income (loss)		(3,855,080	)		2,521,730
Total shareholders' equity		8,489,243			17,581,756

Total liabilities and shareholders' equity	$	116,931,820		$	121,484,834

	Nine Months Ended September 30,						Three Months Ended September 30,
	2017			2016			2017			2016			Six Months Ended June 30,						Three Months Ended June 30,
	(unaudited)						(unaudited)						2022			2021			2022			2021
Income:													*(unaudited)*						*(unaudited)*
Premium income	$	8,902,208		$	4,721,091		$	5,169,638		$	1,490,255		$	6,726,209		$	6,352,098		$	3,363,953		$	3,304,921
Net investment income		485,147			320,491			189,028			116,780			2,570,687			2,631,572			1,419,065			1,332,580
Net realized gain on sale of securities		435,392			40,653			226,890			29,889
Net investment gains (losses)														(2,154,307	)		73,790			(1,421,654	)		191,122
Other income		40,656			57,468			1,201			21,878			160,186			157,402			80,621			77,974
Total income		9,863,403			5,139,703			5,586,757			1,658,802			7,302,775			9,214,862			3,441,985			4,906,597

Expenses:
Death claims		624,864			355,151			152,234			119,700			1,525,175			1,101,796			727,887			530,632
Policyholder benefits		2,609,324			2,520,956			479,965			715,171			3,613,384			3,448,788			1,953,399			1,745,769
Increase in policyholder reserves		5,205,124			1,473,287			4,357,257			556,685			2,143,630			2,332,241			947,280			1,145,738
Commissions, net of deferrals		362,585			315,550			97,151			88,952			392,215			373,461			201,881			194,253
Amortization of deferred acquisition costs		136,709			128,540			52,484			39,441			581,904			554,865			306,206			284,808
Amortization of value of business acquired		3,384			-			3,384			-			46,210			46,210			23,105			23,105
Salaries & benefits		627,286			564,410			244,143			171,226			684,320			538,195			360,261			282,167
Other operating expenses		887,230			902,598			278,795			321,925			1,038,613			940,820			497,211			485,422
Total expense		10,456,506			6,260,492			5,665,413			2,013,100			10,025,451			9,336,376			5,017,230			4,691,894

Net loss	$	(593,103	)	$	(1,120,789	)	$	(78,656	)	$	(354,298	)
Net income (loss)													$	(2,722,676	)	$	(121,514	)	$	(1,575,245	)	$	214,703

Net loss per common share, basic and diluted	$	(0.10	)	$	(0.21	)	$	(0.01	)	$	(0.06	)
Net income (loss) per common share, basic and diluted													$	(0.35	)	$	(0.02	)	$	(0.20	)	$	0.03

Unrealized net holding gains arising during the period		488,085			855,203			19,839			168,793
Reclassification adjustment for (gains) losses included in net loss		(435,392	)		(40,653	)		(226,890	)		(29,889	)

Unrealized net holding gains (losses) arising during the period, net of tax														(6,376,041	)		(786,174	)		(3,157,631	)		1,493,525
Reclassification adjustment for gains included in net income (loss)														(769	)		(113,049	)		(1,118	)		(126,899	)

Other comprehensive income (loss)		52,693			814,550			(207,051	)		138,904			(6,376,810	)		(899,223	)		(3,158,749	)		1,366,626

Comprehensive loss	$	(540,410	)	$	(306,239	)	$	(285,707	)	$	(215,394	)
Comprehensive income (loss)													$	(9,099,486	)	$	(1,020,737	)	$	(4,733,994	)	$	1,581,329

														Common			Accumulated																Accumulated
	Number of										Common			Stock			Other									Number of							Other
	Shares of		Common		Additional			Outstanding			Stock			Subscription			Comprehensive			Accumulated						Shares of		Common		Additional			Comprehensive			Accumulated
	Common Stock		Stock		Paid-in Capital			Warrants			Subscribed			Receivable			Income / (Loss)			Deficit			Total			Common Stock		Stock		Paid-in Capital			Income / (Loss)			Deficit			Total
Balance, December 31, 2015		5,177,245	$	517,725	$	17,018,285		$	15,876		$	13,799		$	(827,952	)	$	(100,477	)	$	(6,146,463	)	$	10,490,793
Common stock issued upon exercise of warrants, $6.00 per share		372,003		37,200		2,210,694			(15,876	)		-			-			-			-			2,232,018
Common stock issued, $7 per share		4,886		489		33,713			-			-			-			-			-			34,202
Balance, March 31, 2021																											7,742,573	$	774,258	$	23,023,211		$	1,299,026		$	(9,333,724	)	$	15,762,771
Common stock issued, $7 per share																											2,831		283		19,534			0			0			19,817
Costs associated with common stock issued		-		-		(482,385	)		-			-			-			-			-			(482,385	)		-		0		(44,601	)		0			0			(44,601	)
Common stock subscribed		-		-		(814,153	)		-			(13,799	)		827,952			-			-			-
Other comprehensive income		-		-		-			-			-			-			814,550			-			814,550			-		0		0			1,366,626			0			1,366,626
Net income																											-		0		0			0			214,703			214,703
Balance, June 30, 2021																											7,745,404	$	774,541	$	22,998,144		$	2,665,652		$	(9,119,021	)	$	17,319,316

Balance, March 31, 2022																											7,746,672	$	774,668	$	22,955,681		$	(696,331	)	$	(9,810,583	)	$	13,223,435
Common stock issued, $7 per share																											250		25		1,725			0			0			1,750
Costs associated with common stock issued																											-		0		(1,948	)		0			0			(1,948	)
Other comprehensive loss																											-		0		0			(3,158,749	)		0			(3,158,749	)
Net loss		-		-		-			-			-			-			-			(1,120,789	)		(1,120,789	)		-		0		0			0			(1,575,245	)		(1,575,245	)
Balance, September 30, 2016		5,554,134	$	555,414	$	17,966,154		$	-		$	-		$	-		$	714,073		$	(7,267,252	)	$	11,968,389

Balance, December 31, 2016		5,565,943	$	556,595	$	18,017,163		$	-		$	-		$	-		$	239,461		$	(7,432,236	)	$	11,380,983
Common stock issued, $7 per share		85,950		8,595		593,055			-			-			-			-			-			601,650
Costs associated with common stock issued		-		-		(223,394	)		-			-			-			-			-			(223,394	)
Common stock issued, Northern Plains Capital Corporation merger		1,644,458		164,446		2,932,934																		3,097,380
Other comprehensive income		-		-		-			-			-			-			52,693			-			52,693
Net loss		-		-		-			-			-			-			-			(593,103	)		(593,103	)
Balance, September 30, 2017		7,296,351	$	729,636	$	21,319,758		$	-		$	-		$	-		$	292,154		$	(8,025,339	)	$	14,316,209
Balance, June 30, 2022																											7,746,922	$	774,693	$	22,955,458		$	(3,855,080	)	$	(11,385,828	)	$	8,489,243

Fair value of US Alliance common stock issued as consideration	$	3,099,165

Preliminary amounts of indentifiable assets acquired and liablities assumed
Investment securities	$	4,623,449
Cash		1,079,627
VOBA		609,061
Other assets		60,080
Policyholder reserves		(1,277,411	)
Deposit type contracts		(2,029,138	)
Other liabilities		(243,608	)
Total indentifiable net assets	$	2,822,060
Goodwill		277,105
Total	$	3,099,165

	Amortized
September 30, 2017	Cost		Fair Value
	(unaudited)
Amounts maturing in:
One year or less	$	200,568	$	200,473
After one year through five years		1,932,156		1,933,444
After five years through ten years		2,490,661		2,517,547
More than 10 years		7,635,778		7,825,315
Redeemable preferred stocks		99,560		100,040
Mortgage backed and asset backed securities		2,553,196		2,577,005
Total fixed maturities	$	14,911,919	$	15,153,824

	Three Months ended September 30,
	2017			2016
	(unaudited)
Direct	$	931,463		$	747,100
Assumed		4,323,692			778,281
Ceded		(85,517	)		(35,126	)
Total	$	5,169,638		$	1,490,255

	Three Months ended June 30,
	2022			2021
	(unaudited)
Direct	$	2,418,559		$	2,374,338
Assumed		1,235,113			1,174,607
Ceded		(289,719	)		(244,024	)
Total	$	3,363,953		$	3,304,921

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2022			2021
	(unaudited)						(unaudited)
Fixed maturities	$	306,614		$	225,790		$	559,262		$	553,641
Mortgages								116,350			189,259
Equity securities		213,920			126,571			312,498			302,641
Cash and short term investments		3,730			1,527
Funds withheld								1,621,509			1,649,276
Cash and cash equivalents								5,471			868
		524,264			353,888			2,615,090			2,695,685
Less investment expenses		(39,117	)		(33,397	)		(44,403	)		(64,113	)
	$	485,147		$	320,491		$	2,570,687		$	2,631,572

	Three Months Ended September 30,						Three Months Ended June 30,
	2017			2016			2022			2021
	(unaudited)						(unaudited)
Fixed maturities	$	114,132		$	80,174		$	283,929		$	276,152
Mortgages								88,959		$	116,342
Equity securities		91,228			48,130			157,824			154,710
Cash and short term investments		2,238			761
Funds withheld								921,201			821,279
Cash and cash equivalents								5,011			560
		207,598			129,065			1,456,924			1,369,043
Less investment expenses		(18,570	)		(12,285	)		(37,859	)		(36,463	)
	$	189,028		$	116,780		$	1,419,065		$	1,332,580

	September 30, 2017					December 31, 2016
	Fair		Percent			Fair		Percent
	Value		of Total			Value		of Total
	(unaudited)
Fixed maturities:
US Treasury securities	$	240,475		0.7	%	$	299,162		1.6	%
Government agency bonds		299,303		0.9	%		-		0.0	%
Corporate bonds		6,234,413		18.4	%		3,845,896		20.7	%
Municipal bonds		5,702,588		16.9	%		2,849,829		15.3	%
Redeemable preferred stocks		100,040		0.3	%		-		0.0	%
Mortgage backed and asset backed securities		2,577,005		7.6	%		3,325,187		17.9	%
Total fixed maturities		15,153,824		44.8	%		10,320,074		55.5	%
Equities:
Equities		7,665,497		22.6	%		4,942,248		26.5	%
Other equity investments		-		0.0	%		201,256		1.1	%
Total equities		7,665,497		22.6	%		5,143,504		27.6	%
Cash and cash equivalents		11,015,077		32.6	%		3,145,745		16.9	%
Total	$	33,834,398		100.0	%	$	18,609,323		100.0	%

	As of September 30, 2017				As of December 31, 2016
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		As of June 30, 2022				As of December 31, 2021
	(unaudited)								Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:									(unaudited)
One year or less	$	200,568	$	200,473	$	49,915	$	49,931	$	408,288	$	413,641	$	-	$	-
After one year through five years		1,932,156		1,933,444		1,819,437		1,809,470		1,767,797		1,730,772		1,987,421		2,087,132
After five years through ten years		2,490,661		2,517,547		1,646,576		1,643,823		2,434,768		2,401,025		2,540,089		2,865,020
More than 10 years		7,635,778		7,825,315		3,468,619		3,491,663		21,167,776		18,605,766		21,479,533		23,780,250
Redeemable preferred stocks		99,560		100,040		-		-		4,044,005		3,548,532		3,612,625		3,621,526
Mortgage backed and asset backed securities		2,553,196		2,577,005		3,333,617		3,325,187		6,065,767		5,498,472		5,636,371		5,588,729
	$	14,911,919	$	15,153,824	$	10,318,164	$	10,320,074
Total amortized cost and fair value									$	35,888,401	$	32,198,208	$	35,256,039	$	37,942,657

I~~TEM 6.~~		E~~XHIBITS~~ITEM 6.

~~2.1~~		~~Plan and Agreement of Merger dated May 23, 2017 among North Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.1 to the Company’s Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is incorporated herein by reference as Exhibit 2.1.~~

~~2.2~~		~~Amendment No 1 to Plan and Agreement of Merger dated May 23, 2017 among North Plains Capital Corporation, US Alliance Corporation and Acquisition Merger Sub, Inc., filed as Exhibit 2.2 to the Company’s Registration Statement on Form S-4 filed on June 1, 2017 (File No. 333-218389), is incorporated herein by reference as Exhibit 2.2.~~

~~3.1~~	EXHIBITS

3.1	Articles of Incorporation of US Alliance Corporation (~~filed~~(filed as Exhibit 3.1 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1)

3.1.1	First Amendment to Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.1 to the Company's Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference a Exhibit 3.1.1.

3.1.2	Second Amendment to Articles of Incorporation of US Alliance Corporation, filed as Exhibit 3.1.2 to the Company's Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.2.

3.2		Bylaws of US Alliance Corporation (~~filed~~(filed as Exhibit 3.2 to the Company’s Registration Statement on Form 10 filed on May 2, 2016 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.2).

~~4.1~~	3.2.1	~~Form of Warrant~~Amendment No. 1. to ~~Purchase Common Shares~~the bylaws of US Alliance (Corporation, filed as Exhibit ~~4.1~~3.2 to the ~~Company’s Registration Statement~~Company's Current Report on Form 108-K filed on ~~May 2, 2016~~June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit ~~4.1)~~3.2.1.

~~10.1~~		~~Co-Insurance Agreement dated September 30, 2017 by and between US Alliance Life & Security Company and American Life & Security Company of Nebraska.~~

~~31.1~~	31.1*	Certification of Chief Executive Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


~~31.2~~	31.2*		Certification of Principal Financial Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~	32.1*		Certifications of the Chief Executive Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~32.2*			Certifications of the Principal Financial Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~101~~.INS101.INS*		~~XLRB~~Inline XBRL Instance

101.SCH**		~~XLRB~~Inline XBRL Taxonomy Extension Schema

101.CAL**		~~XLRB~~Inline XBRL Taxonomy Extension Calculation

101.DEF**		~~XLRB~~Inline XBRL Taxonomy Extension Definition

101.LAB**		~~XLRB~~Inline XBRL Taxonomy Extension Labels

101.PRE**		~~XLRB~~Inline XBRL Taxonomy Extention Presentation

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		US Alliance ~~Corporation~~
		Corporation
		(Registrant)

~~Date~~
	Date	August 11, 2022

By	/s/ Jack H. Brier

	Jack H. Brier, President and Chairman