Note 2 - Acquisitions

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Business Combination Disclosure [Text Block]

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.

The

Merger was accounted for under the acquisition method of accounting, which requires the consideration transferred and all assets and liabilities assumed to be recorded at fair value. The table on the following page summarizes the preliminary fair value of the consideration transferred 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 are related to the fair value of US Alliance common stock issued and the fair value of value of business acquired ("VOBA"). Measurement period adjustments will be applied to the period that the adjustment is identified in our consolidated financial statements

.

VOBA

is being amortized on a straight-line basis over

30

years which approximates the earnings pattern of the related policies.

The following table presents unaudited pro forma consolidated total income and net loss as if the Merger had occurred as of

January 1,

201

6

(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.