10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019.

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________ to _________________________________

Commission File Number: 000-55627

US ALLIANCE CORPORATION
(Exact name of registrant as specified in its charter)

KANSAS	26-4824142
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4123 SW Gage Center Drive, Suite 240, Topeka, Kansas	66604
(Address of principal executive offices)	(Zip Code)

(785) 228-0200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☑ Emerging growth company ☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ]Yes [ X ] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock, $0.10 par value

7,700,322 shares outstanding

as of May 8, 2019

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

1

US ALLIANCE CORPORATION
FORM 10-Q
TABLE OF CONTENTS
Part I - Financial Information
Item	Item Description	Page
Item 1	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Comprehensive Loss	4
	Consolidated Statements of Changes in Shareholders' Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4	Controls and Procedures	25
Part II - Other Information
Item	Item Description	Page
Item 1	Legal Proceedings	25
Item 1A	Risk Factors	26
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3	Defaults Upon Senior Securities	26
Item 4	Mine Safety Disclosures	26
Item 5	Other Information	26
Item 6	Exhibits	26
	Signatures	27

2

ITEM 1.      FINANCIAL STATEMENTS

US Alliance Corporation

Consolidated Balance Sheets 

	March 31, 2019			December 31, 2018
	(unaudited)
Assets
Investments:
Available for sale fixed maturity securities (amortized cost: $28,510,195 and $27,957,697 as of March 31, 2019 and December 31, 2018, respectively)	$	28,671,748		$	26,882,239
Available for sale equity securities (cost: $12,269,679 and $12,096,488 as of March 31, 2019 and December 31, 2018, respectively)		11,895,466			10,987,539
Policy loans		57,435			56,539
Total investments		40,624,649			37,926,317
Cash and cash equivalents		2,485,374			2,077,646
Investment income due and accrued		311,398			286,890
Reinsurance related assets		101,315			161,846
Deferred acquisition costs, net		2,769,464			2,757,404
Value of business acquired, net		575,221			580,297
Property, equipment and software, net		51,519			54,078
Goodwill		277,542			277,542
Other assets		389,936			406,969
Total assets	$	47,586,418		$	44,528,989
Liabilities and Shareholders' Equity
Liabilities:
Policy liabilities
Deposit-type contracts	$	17,280,482		$	16,626,218
Policyholder benefit reserves		15,329,070			14,697,519
Dividend accumulation		166,537			176,056
Advance premiums		50,149			56,736
Total policy liabilities		32,826,238			31,556,529
Accounts payable and accrued expenses		323,545			311,082
Other liabilities		25,433			28,712
Total liabilities		33,175,216			31,896,323
Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,693,408 and 7,650,551 shares as of March 31, 2019 and December 31, 2018, respectively		769,342			765,056
Additional paid-in capital		23,142,047			22,989,443
Accumulated deficit		(9,660,296	)		(8,937,404	)
Accumulated other comprehensive income (loss)		160,109			(2,184,429	)
Total shareholders' equity		14,411,202			12,632,666
Total liabilities and shareholders' equity	$	47,586,418		$	44,528,989

See Notes to Consolidated Financial Statements.

3

US Alliance Corporation

Consolidated Statements of Comprehensive Income (Loss)

	Three Months Ended March 31,
	2019		2018
	(unaudited)
Income:
Premium income	$	2,392,976	$	2,432,096
Net investment income		397,646		311,560
Unrealized gain on equity securites		727,203		-
Other income		12,799		9,246
Total income		3,530,624		2,752,902
Expenses:
Death claims		395,667		235,374
Policyholder benefits		1,136,828		1,127,682
Increase in policyholder reserves		680,560		796,636
Commissions, net of deferrals		219,535		152,157
Amortization of deferred acquisition costs		62,902		90,355
Amortization of value of business acquired		5,076		5,076
Salaries & benefits		251,832		274,848
Other operating expenses		402,356		473,532
Total expense		3,154,756		3,155,660
Net lncome (loss)	$	375,868	$	(402,758	)
Net income (loss) per common share, basic and diluted	$	0.05	$	(0.05	)
Unrealized net holding gains (losses) arising during the period		1,245,778		(988,946	)
Cumulative effect, adoption of accounting guidance on equity securities		1,098,760		-
Other comprehensive income (loss)		2,344,538		(988,946	)
Comprehensive income (loss)	$	2,720,406	$	(1,391,704	)

See Notes to Consolidated Financial Statements.

4

US Alliance Corporation

Consolidated Statements of Changes in Shareholders' Equity

Periods Ended March 31, 2019 and 2018 (unaudited)

								Accumulated
	Number of							Other
	Shares of		Common		Additional			Comprehensive			Accumulated
	Common Stock		Stock		Paid-in Capital			Income / (Loss)			Deficit			Total
Balance, December 31, 2017		7,310,939	$	731,095	$	21,280,437		$	405,438		$	(8,481,268	)	$	13,935,702
Common stock issued, $7 per share		46,218		4,622		318,905			-			-			323,527
Costs associated with common stock issued		-		-		(119,716	)		-			-			(119,716	)
Other comprehensive loss		-		-		-			(988,946	)		-			(988,946	)
Net loss		-		-		-			-			(402,758	)		(402,758	)
Balance, March 31, 2018		7,357,157	$	735,717	$	21,479,626		$	(583,508	)	$	(8,884,026	)	$	12,747,809
Balance, December 31, 2018		7,650,551	$	765,056	$	22,989,443		$	(2,184,429	)	$	(8,937,404	)	$	12,632,666
Common stock issued, $7 per share		42,857		4,286		295,713			-			-			299,999
Costs associated with common stock issued		-		-		(143,109	)		-			-			(143,109	)
Cumulative effect, adoption of accounting guidance for equity sercurities		-		-		-			-			(1,098,760	)		(1,098,760	)
Other comprehensive income		-		-		-			2,344,538			-			2,344,538
Net income		-		-		-			-			375,868			375,868
Balance, March 31, 2019		7,693,408	$	769,342	$	23,142,047		$	160,109		$	(9,660,296	)	$	14,411,202

See Notes to Consolidated Financial Statements.

5

US Alliance Corporation

Consolidated Statements of Cash Flows

	Period Ended March 31,
	2019			2018
	(unaudited)
Cash Flows from Operating Activities:
Net income (loss)	$	375,868		$	(402,758	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,559			8,805
Unrealized gain on equity securities		(727,203	)		-
Amortization of investment securities, net		11,881			13,947
Deferred acquisition costs capitalized		(74,962	)		(64,638	)
Deferred acquisition costs amortized		62,903			90,355
Value of business acquired amortized		5,076			5,076
Interest credited on deposit type contracts		160,494			131,779
(Increase) decrease in operating assets:
Investment income due and accrued		(24,508	)		(22,934	)
Reinsurance related assets		60,531			66,976
Other assets		17,033			33,164
Increase (decrease) in operating liabilities:
Policyowner benefit reserves		631,551			736,552
Dividend accumulation		(9,519	)		-
Advance premiums		(6,587	)		58,942
Other liabilities		(3,279	)		6,833
Accounts payable and accrued expenses		12,463			(624	)
Net cash provided by operating activities		494,301			661,475
Cash Flows from Investing Activities:
Available-for-sale securities
Purchase of fixed income investments		(615,289	)		(715,128	)
Purchase of equity investments		(173,630	)		(300,175	)
Proceeds from fixed income sales and repayments		52,582			28,126
Interest on policy loans		(674	)		(619	)
Increase in policy loans		(222	)		1,330
Net cash used in investing activities		(737,233	)		(986,466	)
Cash Flows from Financing Activities:
Receipts on deposit-type contracts		965,438			1,064,900
Withdrawals on deposit-type contracts		(471,668	)		(424,178	)
Proceeds received from issuance of common stock, net of costs of issuance		156,890			203,811
Net cash provided by financing activities		650,660			844,533
Net increase in cash and cash equivalents		407,728			519,542
Cash and Cash Equivalents:
Beginning		2,077,646			651,809
Ending	$	2,485,374		$	1,171,351

See Notes to Consolidated Financial Statements (unaudited).

6

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 1.     Description of Business and Significant Accounting Policies

Description of business: US Alliance Corporation ("USAC") was formed as a Kansas corporation on April 24, 2009 to raise capital to form a new Kansas-based life insurance company. Our offices are located at 4123 SW Gage Center Drive, Suite 240, Topeka, Kansas 66604. Our telephone number is 785-228-0200 and our website address is www.usalliancecorporation.com.

USAC has five wholly-owned operating subsidiaries. US Alliance Life and Security Company ("USALSC") was formed June 9, 2011, to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was formed April 23, 2012, to serve as a marketing resource. US Alliance Investment Corporation ("USAIC") was formed April 23, 2012 to serve as investment manager for USAC. Dakota Capital Life Insurance Company (“DCLIC”) was acquired on August 1, 2017 when USAC merged with Northern Plains Capital Corporation (“NPCC”). US Alliance Life and Security Company - Montana ("USALSC-Montana") was acquired December 14, 2018. Both DCLIC and USALSC-Montana are wholly-owned subsidiaries of USALSC.

The Company terminated its 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 the offering until February 24, 2017 and made additional shares available for purchase. All outstanding warrants expired on April 1, 2016. The Company further extended this offering to February 24, 2019 and subsequently to February 24, 2020. During the 4^th quarter of 2017, the Company began a private placement offering to accredited investors in the state of North Dakota.

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

Our business model also anticipates the acquisition by USAC and/or USALSC of other insurance and insurance related companies, including third-party administrators, marketing organizations, and rights to 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 and Article 10 of Regulation 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 months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ended December 31, 2019 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 report on Form 10-K and amendments thereto for the year ended December 31, 2018.

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.

Area of Operation: USALSC is authorized to operate in the states of Kansas, North Dakota, Missouri, Nebraska and Oklahoma. DCLIC is authorized to operate in the states of North Dakota and South Dakota. USALSC-Montana is authorized to operate in the state of Montana

7

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

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.

Common stock and earnings (loss) per share: The par value for common stock is $0.10 per share with 20,000,000 shares authorized. As of March 31, 2019, and December 31, 2018, the company had 7,693,408 and 7,650,551 common shares issued and outstanding, respectively.

Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the net loss and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the quarters ended March 31, 2019 and 2018 were 7,664,837 and 7,326,345 shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the quarters ended March 31, 2019 and 2018.

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 recognition by one year to the quarter ending March 31, 2018.  As an emerging growth company, the Company has chosen to defer implementation of this accounting standard until the year ending December 31, 2019 and interim reporting periods beginning after December 31, 2019. The adoption of this guidance is not expected to have a material effect on the Company’s result of operations, financial position or liquidity.

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. As an emerging growth company, the Company elected to defer implementation of this standard to fiscal years beginning after December 15, 2018. The recognition and measurement provisions of this guidance was 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 adoption of this guidance did not have a material effect on the Company’s financial position or liquidity but does create additional volatility when comparing period to period results.

8

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Leases

In February 2016, 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.  As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after December 15, 2019. The adoption of this guidance is not expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Contingent Put and Call Options in Debt Instruments

In March 2016, the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument can accelerate 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 accounted for separately.  The updated guidance is effective for reporting periods beginning after December 15, 2016.  Early adoption is permitted.  As an emerging growth company, the Company elected to defer implementation of this standard to fiscal years beginning after December 15, 2017. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Measurement of Credit Losses on Financial Instruments

In June 2016, 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.

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 is effective for reporting periods beginning after December 15, 2019.  Early adoption is 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, 2020. 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.

9

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Classification of Certain Cash Receipts and Cash Payment

In August 2016, the FASB issued new guidance that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows under eight different scenarios including, but not limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle. This guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. As an emerging growth company, the Company elected to defer implementation of this standard to fiscal years beginning after December 15, 2018. The implementation of this standard did not have a material impact on the Company’s statement of cash flows.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

On December 22, 2017, the U.S. federal government enacted a tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act). In February 2018, FASB issued guidance to address certain issues related to the Tax Cuts and Jobs Act. This new guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or liquidity.

Targeted Improvements to the Accounting for Long-Duration Contracts

In August 2018, the FASB issued ASU 2018-12 “Targeted Improvements to the Accounting for Long-Duration Contracts.” ASU 2018-12 requires periodic reassessment of actuarial and discount rate assumptions used in the valuation of policyholder liabilities and deferred acquisition costs arising from the issuance of long-duration insurance and reinsurance contracts, with the effects of the 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, 2020, with early adoption permitted. We are evaluating the effect this standard will have on 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.

10

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 2.     Investments

The amortized cost and fair value of available for sale and held to maturity investments as of March 31, 2019 and December 31, 2018 is as follows:

	March 31, 2019
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	599,481	$	2,330	$	(12,027	)	$	589,784
Corporate bonds		17,453,101		318,065		(387,999	)		17,383,167
Municipal bonds		6,555,941		257,170		(13,071	)		6,800,040
Redeemable preferred stock		99,560		-		(360	)		99,200
Mortgage backed and asset backed securities		3,802,112		36,697		(39,252	)		3,799,557
Total fixed maturities		28,510,195		614,262		(452,709	)		28,671,748
Equities:
Equities		12,269,679		78,992		(453,205	)		11,895,466
Total available for sale	$	40,779,874	$	693,254	$	(905,914	)	$	40,567,214

	December 31, 2018
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	597,265	$	-	$	(27,325	)	$	569,940
Corporate bonds		16,847,623		43,051		(1,048,313	)		15,842,361
Municipal bonds		6,559,854		118,890		(80,631	)		6,598,113
Redeemable preferred stock		99,560		-		(8,720	)		90,840
Mortgage backed and asset backed securities		3,853,395		11,425		(83,835	)		3,780,985
Total fixed maturities		27,957,697		173,366		(1,248,824	)		26,882,239
Equities:
Equities		12,096,488		31,505		(1,140,454	)		10,987,539
Total available for sale	$	40,054,185	$	204,871	$	(2,389,278	)	$	37,869,778

The amortized cost and fair value of debt securities as of March 31, 2019 and December 31, 2018, 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.

11

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

	As of March 31, 2019				As of December 31, 2018
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
After one year through five years	$	1,573,995	$	1,591,192	$	1,472,228	$	1,462,745
After five years through ten years		2,142,756		2,181,773		2,101,676		2,055,173
More than 10 years		20,891,772		21,000,026		20,430,838		19,492,496
Redeemable preferred stocks		99,560		99,200		99,560		90,840
Mortgage backed and asset backed securities		3,802,112		3,799,557		3,853,395		3,780,985
Total amortized cost and fair value	$	28,510,195	$	28,671,748	$	27,957,697	$	26,882,239

Proceeds from the sale of securities, maturities, and asset paydowns for the first three months of 2019 and 2018 were $52,582 and $28,126 respectively. There were no realized gains and losses related to the sale of securities for the periods ended March 31, 2019 and 2018.

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
March 31, 2019
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	-	$	-		$	267,814	$	(12,027	)	$	267,814	$	(12,027	)
Corporate bonds		811,628		(17,017	)		7,950,659		(370,982	)		8,762,287		(387,999	)
Municipal bonds		-		-			844,658		(13,071	)		844,658		(13,071	)
Redeemable preferred stock		-		-			99,200		(360	)		99,200		(360	)
Mortgage backed and asset backed securities		-		-			2,437,299		(39,252	)		2,437,299		(39,252	)
Total fixed maturities		811,628		(17,017	)		11,599,630		(435,692	)		12,411,258		(452,709	)
Equities:
Equities		1,622,912		(34,956	)		8,745,952		(418,249	)		10,368,864		(453,205	)
Total available for sale	$	2,434,540	$	(51,973	)	$	20,345,582	$	(853,941	)	$	22,780,122	$	(905,914	)

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2018
Available for sale:
Fixed maturities:
US Treasury securities	$	251,206	$	(27,325	)	$	-	$	-		$	251,206	$	(27,325	)
Corporate bonds		11,743,222		(948,539	)		830,239		(99,774	)		12,573,461		(1,048,313	)
Municipal bonds		2,114,260		(51,267	)		859,305		(29,364	)		2,973,565		(80,631	)
Redeemable preferred stock		90,840		(8,720	)		-		-			90,840		(8,720	)
Mortgage backed and asset backed securities		544,714		(6,656	)		2,448,551		(77,179	)		2,993,265		(83,835	)
Total fixed maturities		14,744,242		(1,042,507	)		4,138,095		(206,317	)		18,882,337		(1,248,824	)
Equities:
Equities		3,312,528		(228,148	)		7,440,504		(912,306	)		10,753,032		(1,140,454	)
Total available for sale	$	18,056,770	$	(1,270,655	)	$	11,578,599	$	(1,118,623	)	$	29,635,369	$	(2,389,278	)

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.

12

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

The total number of securities in the investment portfolio in an unrealized loss position as of March 31, 2019 was 87, which represented an unrealized loss of $905,914 of the aggregate carrying value of those securities. The 87 securities breakdown as follows: 53 bonds, 21 mortgage and asset backed securities, 4 preferred stocks, 2 high yield corporate bond funds, 2 preferred stock index funds, 1 senior loan fund, and 4 common stock. The Company determined that no securities were considered to be other-than-temporarily impaired as of March 31, 2019 and December 31, 2018.

Note 3.     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.

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

Investments, available for sale: Fair values of available for sale fixed maturity securities are provided by a third party pricing service. The pricing service uses a variety of sources to determine fair value 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. Fair values for equity securities are also provided by a third party pricing service and are derived from active trading on national market exchanges.

13

US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

Note 3.     Fair Value Measurements (Continued)

The following table presents the amounts of assets measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018:

	March 31, 2019
	Total		Level 1		Level 2		Level 3
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	589,784	$	589,784	$	-	$	-
Corporate bonds		17,383,167		-		17,187,167		196,000
Municipal bonds		6,800,040		-		6,800,040		-
Redeemable preferred stock		99,200		-		99,200		-
Mortgage backed and asset backed securities		3,799,557		-		3,799,557		-
Total fixed maturities		28,671,748		589,784		27,885,964		196,000
Equities:
Equities		11,895,466		11,895,466		-		-
Total	$	40,567,214	$	12,485,250	$	27,885,964	$	196,000

	December 31, 2018
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	569,940	$	569,940	$	-	$	-
Corporate bonds		15,842,361		-		15,642,361		200,000
Municipal bonds		6,598,113		-		6,598,113		-
Redeemable preferred stock		90,840		-		90,840		-
Mortgage backed and asset backed securities		3,780,985		-		3,780,985		-
Total fixed maturities		26,882,239		569,940		26,112,299		200,000
Equities:
Equities		10,987,539		10,987,539		-		-
Total	$	37,869,778	$	11,557,479	$	26,112,299	$	200,000

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: The carrying amounts approximate fair value because of the short maturity of these instruments.

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

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US Alliance Corporation

Notes to Consolidated Financial Statements (unaudited)

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 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 risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The estimated fair values of the Company’s financial assets and liabilities at March 31, 2019 and December 31, 2018 are as follows:

	March 31, 2019				December 31, 2018
	(unaudited)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and cash equivalents	$	2,485,374	$	2,485,374	$	2,077,646	$	2,077,646
Investment income due and accrued		311,398		311,398		286,890		286,890
Investments, at fair value		40,624,649		40,624,649		37,926,317		37,926,317
Total Financial Assets	$	43,421,421	$	43,421,421	$	40,290,853	$	40,290,853
Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	17,280,482	$	16,197,221	$	16,626,218	$	15,361,164
Total Financial Liabilities	$	17,280,482	$	16,197,221	$	16,626,218	$	15,361,164

Note 4.     Income Tax Provision

No income tax expense or (benefit) has been reflected for the quarters ended March 31, 2019 or 2018 due to the lack of taxable net income generated by the Company and 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 $13,178,265 and $12,938,533 as of March 31, 2019 and December 31, 2018, respectively. 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 is offset 100 percent by the valuation allowance.

Note 5.   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 May 13, 2019, the date on which the consolidated financial statements were issued.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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” 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, 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”) 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 five wholly-owned subsidiaries: USALSC, a life insurance corporation; DCLIC, a life insurance corporation; USALSC-Montana, a life insurance corporation; USAMC, an insurance marketing corporation; and USAIC, an investment management corporation.

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 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 Dakota Capital Life Insurance Company which 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 two 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, the Company entered into a coinsurance agreement to assume 100% of a certain block of life insurance policies from American Life and Security Company.

Critical Accounting Policies and Estimates

Our 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 quarterly report.

Valuation of Investments

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

16

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 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, our investment manager, provides support to the Company in making these determinations.

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 intend 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. 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) represents the estimated value assigned to purchased companies or insurance in 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’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 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.

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.

17

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.

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.

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 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.

Income Taxes

Deferred tax assets are 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.

Recognition 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.

18

Merger and Acquisition Transactions

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

New Accounting Standards

A detailed discussion of new accounting standards is provided in the Notes to Consolidated Financial Statements beginning on p. 7 of this quarterly report.

Discussion of Consolidated Results of Operations

Revenues. Insurance revenues are primarily generated from premium revenues and investment income. Insurance revenues for the three months ended March 31, 2019 and 2018 are summarized in the table below.

	Three Months Ended March 31,
	2019		2018
Income:
Premium income	$	2,392,976	$	2,432,096
Net investment income		397,646		311,560
Unrealized gain on equity sercurites		727,203		-
Other income		12,799		9,246
Total income	$	3,530,624	$	2,752,902

Our 2019 first quarter revenues grew to $3,530,624, an increase of $777,722 from the 2018 first quarter revenues of $2,752,902. 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.

Premium revenue: Premium revenue for the first three months of 2019 was $2,392,976 compared to $2,432,096 in the first three months of 2018, a decrease of $39,120. Our pre-need revenues were the lowest they have been since the 4^th quarter of 2017. Factors which impact this decline include the weather and a reduction in the average price for a pre-need policy. Even though it is a reduction in revenue, ceded premium increases reflect the growth of our group policy premiums as we focused on small companies to assist them with their employee benefits. Total premiums for the first quarter of 2019 increased by $229,928 or 16.4% when compared to the 4^th quarter of 2018.

Direct, assumed and ceded premiums for the three months ended March 31, 2019 and 2018 are summarized in the following table.

	Periods Ended March 31,
	2019			2018
Direct	$	1,191,780		$	1,139,367
Assumed		1,403,793			1,405,606
Ceded		(202,597	)		(112,877	)
Total	$	2,392,976		$	2,432,096

19

The Company is pursuing new product and distribution opportunities to continue to increase premium production.

Investment income, net of expenses: The components of net investment income for the three months ended March 31, 2019 and 2018 are as follows:

	Period Ended March 31,
	2019			2018
Fixed maturities	$	302,294		$	229,643
Equity securities		114,586			100,705
Cash and short term investments		4,199			747
		421,079			331,095
Less investment expenses		(23,433	)		(19,535	)
	$	397,646		$	311,560

Net investment income for the first three months of 2019 was $397,646, compared to $311,560 in 2018, an increase of $86,086 or 28%. This increase in investment income is primarily a result of increased invested assets as a result of our premium income and annuity deposits, and an improvement in our book yield.

Net realized gains on investments: The Company had no realized gains or losses during the first quarter of 2019 or 2018.

Unrealized gain on equity securities: The Company was required to implement a new accounting standard in the first quarter of 2019 which requires that the unrealized gains and losses on equity securities be reported as income on the Consolidated Statements of Comprehensive Income (Loss). This resulted in a first quarter of 2019 gain of $727,203. This new required line item will introduce significant volatility to our results as short-term fluctuations in the value of our equity securities is required to be a part of the results of our operations.

Other income: Other income for the three months ended March 31, 2019 was $12,799 compared to $9,246 in 2018, an increase of $3,553.

Expenses. Expenses for the three months ended March 31, 2019 and 2018 are summarized in the table below.

	Three Months Ended March 31,
	2019		2018
Expenses:
Death claims	$	395,667	$	235,374
Policyholder benefits		1,136,828		1,127,682
Increase in policyholder reserves		680,560		796,636
Commissions, net of deferrals		219,535		152,157
Amortization of deferred acquisition costs		62,902		90,355
Amortization of value of business acquired		5,076		5,076
Salaries & benefits		251,832		274,848
Other operating expenses		402,356		473,532
Total expense	$	3,154,756	$	3,155,660

20

Death and other benefits: Death benefits were $395,667 in the three months ended March 31, 2019 compared to $235,374 in 2018, an increase of $160,293. This increase is attributable to our growing block of in-force life insurance policies. We expect these claims to grow as we continue to increase the size of our in-force business.

Policyholder benefits: Policyholder benefits were $1,136,828 in the three months ended March 31, 2019 compared to $1,127,682 in 2018, an increase of $9,146. The primary driver of this increase is the growth of interest credited on our annuities.

Increase in policyholder reserves: Policyholder reserves increased $680,560 in the three months ended March 31, 2019, compared to $796,636 in 2018, a decrease of $116,076. The reduction in reserve increase is the result of reduced pre-need sales and the release of reserves to support claim payments.

Commissions, net of deferrals: 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 $219,535 in the three months ended March 31, 2019, compared to $152,157 in 2018, an increase of $67,378. This increase is driven by an increase in group premiums.

Amortization of deferred acquisition costs: The amortization of deferred acquisition costs was $62,902 in the three months ended March 31, 2019, compared to $90,355 in 2018, a decrease of $27,453. The amortization decrease is attributable to a reduction in amortization of pre-need commissions and to reduced margins on our American Life block of policies.

Amortization of value of business acquired: The amortization of value of business acquired (“VOBA”) was $5,076 in the three months ended March 31, 2019 and 2018. Our VOBA balance was established August 1, 2017 with acquisition of DCLIC. VOBA is being amortized straight-line over 30 years.

Salaries and benefits: Salaries and benefits were $251,832 for the three months ended March 31, 2019, compared to $274,848 in 2018, a decrease of $23,016. Staffing costs decreased due to a reduction in the number of employees and a reduction in employee benefit costs.

Other expenses: Other operating expenses were $402,356 in the three months ended March 31, 2019, compared to $473,532 in 2018, a decrease of $71,176. Operating costs were driven lower due to decreased information technology costs and decreased selling and marketing expenses.

Net Income: Our net income was $375,868 in the three months ended March 31, 2019 compared to a net loss of $402,758 in the same period of 2018, an increase of $778,626. Our net income per share increased to $0.05 from a net loss of $0.05 in 2018, basic and diluted. This increase is primarily attributable to income from unrealized gains on our equity securities.

Discussion of Consolidated Balance Sheet

Assets. Assets have increased to $47,586,418 as of March 31, 2019, an increase of $3,057,429 from December 31, 2018. This is primarily the result of the growth of our business and by an increase in the market value of our investments.

Available for sale fixed maturity securities: As of March 31, 2019, we had available for sale fixed maturity assets of $28,671,748, an increase of $1,789,509 from the December 31, 2018 balance of $26,882,239. The increase is driven by the purchase of additional assets and an increase in the market value of these securities.

Available for sale equity securities: As of March 31, 2019, we had available for sale equity assets of $11,895,466, an increase of $907,927 from the December 31, 2018 balance of $10,987,539. This growth is driven by an increase in the market value of our equity securities.

Policy loans: As of March 31, 2019, our policy loans were $57,435, an increase of $896 from the December 31, 2018 balance of $56,539. The increase is the result of normal loan activity.

Cash and cash equivalents: As of March 31, 2019, we had cash and cash equivalent assets of $2,485,374, an increase of $407,728 from the December 31, 2018 balance of $2,077,646. This increase is primarily the result of cash received from premium income.

21

Investment income due and accrued: As of March 31, 2019, our investment income due and accrued was $311,398 compared to $286,890 as of December 31, 2018. This increase is attributable to normal investment activity and the growth of our invested assets.

Reinsurance related assets: As of March 31, 2019, our reinsurance related assets were $101,315, a decrease of $60,531 from the December 31, 2018 balance of $161,846. This decrease was driven by a reduction in the amounts receivable on our reinsurance business.

Deferred acquisition costs, net: As of March 31, 2019, our deferred acquisition costs were $2,769,464, an increase of $12,060 from the December 31, 2018 balance of $2,757,404. The increase is the result of costs deferred on new business offset by amortization of costs deferred on our coinsurance agreement with ALSC.

Value of business acquired, net: As of March 31, 2019, our value of business acquired asset was $575,221, a decrease of $5,076 from the December 31, 2018 balance of $580,297. This asset was established in the third quarter of 2017 as a result of our acquisition of DCLIC. The decrease is the result of amortization of the asset.

Goodwill: As of March 31, 2019, our goodwill was $277,542 and was unchanged from the December 31, 2018 balance. Goodwill was established as a result of our merger with Northern Plains.

Property, equipment and software, net: As of March 31, 2019, our property, equipment and software assets were $51,519, a decrease of $2,559 from the December 31, 2018 balance of $54,078. This decrease is a result of normal amortization during the period.

Other assets: As of March 31, 2019, our other assets were $389,936, a decrease of $17,033 from the December 31, 2018 balance of $406,969. This decrease was the result of a reduction in our pre-paid assets.

Liabilities. Our total liabilities were $33,175,216 as of March 31, 2019, an increase of $1,278,893 from our December 31, 2018 liability of $31,896,323. This increase is driven by an increase in our policyholder liabilities.

Policy liabilities: Our total policy liabilities as of March 31, 2019 were $32,826,238, an increase of $1,269,709 from the December 31, 2018 balance of $31,556,529. This increase is the result new policy sales and the growth of our in-force policies.

Accounts payable and accrued expenses: As of March 31, 2019, our accounts payable and accrued expenses were $323,545, an increase of $12,463 from the December 31, 2018 balance of $311,082. This decrease is the result of normal operating activity.

Other liabilities: As of March 31, 2019, our other liabilities were $25,433, a decrease of $3,279 from the December 31, 2018 balance of $28,712.

Shareholders’ Equity. Our shareholders’ equity was $14,411,202 as of March 31, 2019, an increase of 1,778,536 from our December 31, 2018 shareholders’ equity of $12,632,666. The increase in shareholders’ equity was driven by an increase in other comprehensive income and our net income during the period. Other comprehensive income consists of the unrealized gains and losses on our fixed maturity portfolio.

22

Investments and Cash and Cash Equivalents

Our investment philosophy is reflected by the allocation of our investments. We emphasize investment grade debt securities with smaller holdings in equity securities and other investments. The following table shows the carrying value of our investments by investment category and cash and cash equivalents, and the percentage of each to total invested assets as of March 31, 2019 and December 31, 2018.

	March 31, 2019					December 31, 2018
	Fair		Percent			Fair		Percent
	Value		of Total			Value		of Total
Fixed maturities:	(unaudited)
US Treasury securities	$	589,784		1.4	%	$	569,940		1.4	%
Corporate bonds		17,383,167		40.4	%		15,842,361		39.7	%
Municipal bonds		6,800,040		15.8	%		6,598,113		16.5	%
Redeemable preferred stocks		99,200		0.2	%		90,840		0.2	%
Mortgage backed and asset backed securities		3,799,557		8.8	%		3,780,985		9.5	%
Total fixed maturities		28,671,748		66.6	%		26,882,239		67.3	%
Equities		11,895,466		27.6	%		10,987,539		27.5	%
Cash and cash equivalents		2,485,374		5.8	%		2,077,646		5.2	%
Total	$	43,052,588		100.0	%	$	39,947,424		100.0	%

The total value of our investments and cash and cash equivalents increased to $43,052,588 as of March 31, 2019 from $39,947,424 at December 31, 2018, an increase of $3,105,164. Increases in investments are primarily attributable to premiums and annuity deposits received by USALSC and DCLIC.

The following table shows the distribution of the credit ratings of our portfolio of fixed maturity securities by carrying value as of March 31, 2019 and December 31, 2018.

	March 31, 2019					December 31, 2018
	Fair		Percent			Fair		Percent
	Value		of Total			Value		of Total
	(unaudited)					(unaudited)
AAA and U.S. Government	$	1,219,621		4.3	%	$	1,690,399		6.3	%
AA		8,161,413		28.5	%		7,933,254		29.5	%
A		6,857,328		23.9	%		6,173,746		23.0	%
BBB		11,936,155		41.5	%		10,551,468		39.3	%
BB		301,231		1.1	%		333,372		1.2	%
Not Rated - Private Placement		196,000		0.7	%		200,000		0.7	%
Total	$	28,671,748		100.0	%	$	26,882,239		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, 2018. As of March 31, 2019, 98.2% of all fixed maturity securities were investment grade.

The amortized cost and fair value of debt securities as of March 31, 2019 and December 31, 2018, 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.

23

	As of March 31, 2019				As of December 31, 2018
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
After one year through five years	$	1,573,995	$	1,591,192	$	1,472,228	$	1,462,745
After five years through ten years		2,142,756		2,181,773		2,101,676		2,055,173
More than 10 years		20,891,772		21,000,026		20,430,838		19,492,496
Redeemable preferred stocks		99,560		99,200		99,560		90,840
Mortgage backed and asset backed securities		3,802,112		3,799,557		3,853,395		3,780,985
Total amortized cost and fair value	$	28,510,195	$	28,671,748	$	27,957,697	$	26,882,239

Market Risk of Financial Instruments

We hold a diversified portfolio of investments that primarily includes cash, bonds and equity securities. Each of these investments is subject to market risks that can affect their return and their fair value. A majority of the investments are fixed maturity securities including debt issues 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.

Interest Rate Risk

Interest rate 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 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 obligations and to address reinvestment risk considerations. Due to the composition of our book of insurance business, management believes 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.

Credit 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 and 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.

Liquidity and Capital Resources

Since inception, our operations have been financed primarily through the sale of voting common stock. Our operations have not been profitable and have generated significant operating losses since we were incorporated in 2009.

Premium income, deposits to policyholder account balances, 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.

24

Net cash provided by operating activities was $494,301 for the three months ended March 31, 2019. The primary sources of cash from operating activities were premiums and deposits received from policyholders. The primary uses of cash for operating activities were for payments of commissions to agents and settlement of policy liabilities. Net cash used in investing activities was $737,233. The primary use of cash was the purchase of available for sale securities. Cash provided by financing activities was $650,660. The primary sources of cash were receipts on deposit-type contracts and issuance of common stock.

At March 31, 2019, we had cash and cash equivalents totaling $2,485,374. We believe that our existing cash and cash equivalents and premiums from our insurance operations will be sufficient to fund the anticipated operating expenses and capital expenditures 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.

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 the 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.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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 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’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the three months ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s control over financial reporting.

Part II – Other Information

ITEM 1. LEGAL PROCEEDINGS

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 materially affect our financial position or results of operation.

25

ITEM 1A.   RISK FACTORS

   As a “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.

During the quarter ended March 31, 2019, the Company issued 19,587 shares of common stock, for aggregate consideration of $137,109, pursuant to an offering to residents of the state of Kansas that was registered with the Kansas Securities Commissioner.

The offering of shares in the above described transaction was self-underwritten and sold through agents of the Company licensed to sell securities in Kansas. Proceeds from the sale of common stock were used to finance the growth of the Company’s life insurance subsidiary and to provide working capital for the Company. The offer and sale of common stock was exempt from registration under Section 3(a)11 of the Securities Act of 1933 for securities offered and sold on a wholly intrastate basis. The shares of common stock were sold only to bona fide residents of the state of Kansas.

During the quarter ended March 31, 2019, the Company issued 23,270 shares of common stock, for aggregate consideration of $162,890, pursuant to a private placement offering to residents of the state of North Dakota (the “North Dakota Offering”).  Proceeds from the sale of shares in the North Dakota were used to finance the growth of DCLIC and to provide working capital for the Company. The North Dakota Offering and sales of shares thereunder were not registered with the SEC in reliance on an exemption for registration under Rule 506(b) of Regulation D under this Securities Act of 1933 (“Reg D”).  Shares were sold only to “accredited investors”, as that term is defined in Rule 501 of Reg D, and were not sold by any means of general advertisement or solicitation. 

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

 None

ITEM 4.    MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.    OTHER INFORMATION

None.

ITEM 6. EXHIBITS

3.1	Articles of Incorporation of US Alliance Corporation (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 the 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 as Exhibit 3.1.1
3.1.2	Second Amendment to the 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 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).
3.2.1	Amendment No. 1 to the Bylaws of US Alliance Corporation, filed as Exhibit 3.2.1 to the Company’s Current Report on Form 8-K filed on June 9, 2017 (File No. 000-55627), is incorporated herein by reference as Exhibit 3.1.1
31.1	Certification of Chief Executive Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer of US Alliance Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

26

32.1	Certifications of the Chief Executive Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certifications of the Principal Financial Officer of US Alliance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	XBRL Instance
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation
101.DEF**	XBRL Taxonomy Extension Definition
101.LAB**	XBRL Taxonomy Extension Labels
101.PRE**	XBRL Taxonomy Extention Presentation

**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.

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          

                      (Registrant)

Date

By   /s/ Jack H. Brier                                                                                                       

      Jack H. Brier, President and Chairman

27

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER'S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jack H. Brier, certify that:

1. I have reviewed this quarterly report on Form 10-Q of US Alliance Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Jack H. Brier

Jack H. Brier

President and Chief Executive Officer

Date: May 13, 2019

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeff Brown, certify that:

1. I have reviewed this quarterly report on Form 10-Q of US Alliance Corporation (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Jeff Brown

Jeff Brown

Chief Operating Officer and Vice-President of US Alliance Life and Security Company, a wholly-owned subsidiary of US Alliance Corporation

Date: May 13, 2019

EX-32.1

Exhibit 32.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Alliance Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack H. Brier, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jack H. Brier

Jack H. Brier

President and Chief Executive Officer

Date: May 13, 2019

EX-32.2

Exhibit 32.2

PRINCIPAL FINANCIAL OFFICER’S CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of US Alliance Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeff Brown, Chief Operating Officer and Vice-President of US Alliance Life and Security Company, a wholly-owned subsidiary of US Alliance Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeff Brown

Jeff Brown

Chief Operating Officer and Vice-President of US Alliance Life and Security Company, a wholly-owned subsidiary of US Alliance Corporation

Date: May 13, 2019

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 08, 2019
Document Information [Line Items]
Entity Registrant Name	US Alliance Corp
Entity Central Index Key	0001463913
Trading Symbol	usac
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		7,700,322
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Assets
Available for sale securities	$ 40,567,214	$ 37,869,778
Policy loans	57,435	56,539
Total investments	40,624,649	37,926,317
Cash and cash equivalents	2,485,374	2,077,646
Investment income due and accrued	311,398	286,890
Reinsurance related assets	101,315	161,846
Deferred acquisition costs, net	2,769,464	2,757,404
Value of business acquired, net	575,221	580,297
Property, equipment and software, net	51,519	54,078
Goodwill	277,542	277,542
Other assets	389,936	406,969
Total assets	47,586,418	44,528,989
Liabilities:
Deposit-type contracts	17,280,482	16,626,218
Policyholder benefit reserves	15,329,070	14,697,519
Dividend accumulation	166,537	176,056
Advance premiums	50,149	56,736
Total policy liabilities	32,826,238	31,556,529
Accounts payable and accrued expenses	323,545	311,082
Other liabilities	25,433	28,712
Total liabilities	33,175,216	31,896,323
Shareholders' Equity:
Common stock, $0.10 par value. Authorized 20,000,000 shares; issued and outstanding 7,693,408 and 7,650,551 shares as of March 31, 2019 and December 31, 2018, respectively	769,342	765,056
Additional paid-in capital	23,142,047	22,989,443
Accumulated deficit	(9,660,296)	(8,937,404)
Accumulated other comprehensive income (loss)	160,109	(2,184,429)
Total shareholders' equity	14,411,202	12,632,666
Total liabilities and shareholders' equity	47,586,418	44,528,989
Fixed Maturities [Member]
Assets
Available for sale securities	28,671,748	26,882,239
Equities, Including Equity Securities and Other Equity Investments [Member]
Assets
Available for sale securities	$ 11,895,466	$ 10,987,539

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Available for sale securities, amortized cost	$ 40,779,874	$ 40,054,185
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	7,693,408	7,650,551
Common stock, shares outstanding (in shares)	7,693,408	7,650,551
Fixed Maturities [Member]
Available for sale securities, amortized cost	$ 28,510,195	$ 27,957,697
Equities, Including Equity Securities and Other Equity Investments [Member]
Available for sale securities, amortized cost	$ 12,269,679	$ 12,096,488

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income:
Premium income	$ 2,392,976	$ 2,432,096
Net investment income	397,646	311,560
Unrealized gain on equity securites	727,203	0
Other income	12,799	9,246
Total income	3,530,624	2,752,902
Expenses:
Death claims	395,667	235,374
Policyholder benefits	1,136,828	1,127,682
Increase in policyholder reserves	680,560	796,636
Commissions, net of deferrals	219,535	152,157
Amortization of deferred acquisition costs	62,902	90,355
Amortization of value of business acquired	5,076	5,076
Salaries & benefits	251,832	274,848
Other operating expenses	402,356	473,532
Total expense	3,154,756	3,155,660
Net lncome (loss)	$ 375,868	$ (402,758)
Net income (loss) per common share, basic and diluted (in dollars per share)	$ 0.05	$ (0.05)
Unrealized net holding gains (losses) arising during the period	$ 1,245,778	$ (988,946)
Cumulative effect, adoption of accounting guidance on equity securities	1,098,760	0
Other comprehensive income (loss)	2,344,538	(988,946)
Comprehensive income (loss)	$ 2,720,406	$ (1,391,704)

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2017	7,310,939
Balance at Dec. 31, 2017	$ 731,095	$ 21,280,437	$ 405,438	$ (8,481,268)	$ 13,935,702
Common stock issued, $7 per share (in shares)	46,218
Common stock issued, $7 per share	$ 4,622	318,905			323,527
Costs associated with common stock issued		(119,716)			(119,716)
Other comprehensive loss			(988,946)		(988,946)
Net income (loss)				(402,758)	(402,758)
Balance (in shares) at Mar. 31, 2018	7,357,157
Balance at Mar. 31, 2018	$ 735,717	21,479,626	(583,508)	(8,884,026)	12,747,809
Cumulative effect, adoption of accounting guidance for equity sercurities					0
Balance (in shares) at Dec. 31, 2018	7,650,551
Balance at Dec. 31, 2018	$ 765,056	22,989,443	(2,184,429)	(8,937,404)	12,632,666
Common stock issued, $7 per share (in shares)	42,857
Common stock issued, $7 per share	$ 4,286	295,713			299,999
Costs associated with common stock issued		(143,109)			(143,109)
Other comprehensive loss			2,344,538		2,344,538
Net income (loss)				375,868	375,868
Balance (in shares) at Mar. 31, 2019	7,693,408
Balance at Mar. 31, 2019	$ 769,342	23,142,047	160,109	(9,660,296)	14,411,202
Cumulative effect, adoption of accounting guidance for equity sercurities				$ (1,098,760)	$ (1,098,760)

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2019	Mar. 31, 2018
Common Stock [Member]
Common stock, price per share (in dollars per share)	$ 7	$ 7

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash Flows from Operating Activities:
Net income (loss)	$ 375,868	$ (402,758)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	2,559	8,805
Unrealized gain on equity securities	(727,203)	0
Unrealized gain on equity securities		0
Amortization of investment securities, net	11,881	13,947
Deferred acquisition costs capitalized	(74,962)	(64,638)
Deferred acquisition costs amortized	62,903	90,355
Value of business acquired amortized	5,076	5,076
Interest credited on deposit type contracts	160,494	131,779
(Increase) decrease in operating assets:
Investment income due and accrued	(24,508)	(22,934)
Reinsurance related assets	60,531	66,976
Other assets	17,033	33,164
Increase (decrease) in operating liabilities:
Policyowner benefit reserves	631,551	736,552
Dividend accumulation	(9,519)
Advance premiums	(6,587)	58,942
Other liabilities	(3,279)	6,833
Accounts payable and accrued expenses	12,463	(624)
Net cash provided by operating activities	494,301	661,475
Cash Flows from Investing Activities:
Purchase of fixed income investments	(615,289)	(715,128)
Purchase of equity investments	(173,630)	(300,175)
Proceeds from fixed income sales and repayments	52,582	28,126
Interest on policy loans	(674)	(619)
Increase in policy loans	(222)	1,330
Net cash used in investing activities	(737,233)	(986,466)
Cash Flows from Financing Activities:
Receipts on deposit-type contracts	965,438	1,064,900
Withdrawals on deposit-type contracts	(471,668)	(424,178)
Proceeds received from issuance of common stock, net of costs of issuance	156,890	203,811
Net cash provided by financing activities	650,660	844,533
Net increase in cash and cash equivalents	407,728	519,542
Cash and Cash Equivalents:
Beginning	2,077,646	651,809
Ending	$ 2,485,374	$ 1,171,351

XML

Note 1 - Description of Business and Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Business Description and Accounting Policies [Text Block]

Note

1.

     Description of Business and Significant Accounting Policies

Description of business

: US Alliance Corporation ("USAC") was formed as a Kansas corporation on

April 24, 2009

to raise capital to form a new Kansas-based life insurance company. Our offices are located at

4123

SW Gage Center Drive, Suite

240,

Topeka, Kansas

66604.

Our telephone number is

785

-

228

-

0200

and our website address is

www.usalliancecorporation.com

.

USAC has

five

wholly-owned operating subsidiaries. US Alliance Life and Security Company ("USALSC") was formed

June 9, 2011,

to serve as our life insurance company. US Alliance Marketing Corporation ("USAMC") was formed

April 23, 2012,

to serve as a marketing resource. US Alliance Investment Corporation ("USAIC") was formed

April 23, 2012

to serve as investment manager for USAC. Dakota Capital Life Insurance Company (“DCLIC”) was acquired on

August 1, 2017

when USAC merged with Northern Plains Capital Corporation (“NPCC”). US Alliance Life and Security Company - Montana ("USALSC-Montana") was acquired

December 14, 2018.

Both DCLIC and USALSC-Montana are wholly-owned subsidiaries of USALSC.

The Company terminated its 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 the offering until

February 24, 2017

and made additional shares available for purchase. All outstanding warrants expired on

April 1, 2016.

The Company further extended this offering to

February 24, 2019

and subsequently to

February 24, 2020.

During the

4

th

quarter of

2017,

the Company began a private placement offering to accredited investors in the state of North Dakota.

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

Our business model also anticipates the acquisition by USAC and/or USALSC of other insurance and insurance related companies, including

third

-party administrators, marketing organizations, and rights to 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 and Article

10

of Regulation 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

months ended

March 31, 2019

are

not

necessarily indicative of the results to be expected for the year ended

December 31, 2019

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 report on Form

10

-K and amendments thereto for the year ended

December 31, 2018.

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.

Area of Operation:

USALSC is authorized to operate in the states of Kansas, North Dakota, Missouri, Nebraska and Oklahoma. DCLIC is authorized to operate in the states of North Dakota and South Dakota. USALSC-Montana is authorized to operate in the state of 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.

Common stock and earnings (loss) per share:

The par value for common stock is

$0.10

per share with

20,000,000

shares authorized. As of

March 31, 2019,

and

December 31, 2018,

the company had

7,693,408

and

7,650,551

common shares issued and outstanding, respectively.

Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the net loss and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the quarters ended

March 31, 2019

and

2018

were

7,664,837

and

7,326,345

shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the quarters ended

March 31, 2019

and

2018.

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.

  As an emerging growth company, the Company has chosen to defer implementation of this accounting standard until the year ending

December 31, 2019

and interim reporting periods beginning after

December 31, 2019.

The adoption of this guidance is

not

expected to have a material effect on the Company’s result of operations, financial position or liquidity.

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.

As an emerging growth company, the Company elected to defer implementation of this standard to fiscal years beginning after

December 15, 2018.

The recognition and measurement provisions of this guidance was 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 adoption of this guidance did

not

have a material effect on the Company’s financial position or liquidity but does create additional volatility when comparing period to period results.

Leases

In

February 

2016,

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.  As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after

December 15, 2019.

The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Contingent Put and Call Options in Debt Instruments

In

March 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument can accelerate 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 accounted for separately.  The updated guidance is effective for reporting periods beginning after

December 

15,

2016.

  Early adoption is permitted.  As an emerging growth company, the Company elected to defer implementation of this standard to fiscal years beginning after

December 15, 2017.

The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Measurement of Credit Losses on Financial Instruments

In

June 

2016,

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.

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 is effective for reporting periods beginning after

December 

15,

2019.

  Early adoption is 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, 2020.

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

ash

R

eceipts and

Cash P

ayment

In

August 2016,

the FASB issued new guidance that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows under

eight

different scenarios including, but

not

limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle. This guidance is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted. As an emerging growth company, the Company elected to defer implementation of this standard to fiscal years beginning after

December 15, 2018.

The implementation of this standard did

not

have a material impact on the Company’s statement of cash flows.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

On

December 22, 2017,

the U.S. federal government enacted a tax bill,

H.R.1,

An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year

2018

(Tax Cuts and Jobs Act). In

February 2018,

FASB issued guidance to address certain issues related to the Tax Cuts and Jobs Act. This new guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. This guidance is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Targeted Improvements to the Accounting for Long-Duration Contracts

In

August 2018,

the FASB issued ASU

2018

-

12

“Targeted Improvements to the Accounting for Long-Duration Contracts.” ASU

2018

-

12

requires periodic reassessment of actuarial and discount rate assumptions used in the valuation of policyholder liabilities and deferred acquisition costs arising from the issuance of long-duration insurance and reinsurance contracts, with the effects of the 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, 2020,

with early adoption permitted. We are evaluating the effect this standard will have on 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.

XML

Note 2 - Investments

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Investment [Text Block]

Note

2

.     Investments

The amortized cost and fair value of available for sale and held to maturity investments as of

March 31, 2019

and

December

31,

2018

is as follows:

	March 31, 2019
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	599,481	$	2,330	$	(12,027	)	$	589,784
Corporate bonds		17,453,101		318,065		(387,999	)		17,383,167
Municipal bonds		6,555,941		257,170		(13,071	)		6,800,040
Redeemable preferred stock		99,560		-		(360	)		99,200
Mortgage backed and asset backed securities		3,802,112		36,697		(39,252	)		3,799,557
Total fixed maturities		28,510,195		614,262		(452,709	)		28,671,748
Equities:
Equities		12,269,679		78,992		(453,205	)		11,895,466
Total available for sale	$	40,779,874	$	693,254	$	(905,914	)	$	40,567,214

	December 31, 2018
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	597,265	$	-	$	(27,325	)	$	569,940
Corporate bonds		16,847,623		43,051		(1,048,313	)		15,842,361
Municipal bonds		6,559,854		118,890		(80,631	)		6,598,113
Redeemable preferred stock		99,560		-		(8,720	)		90,840
Mortgage backed and asset backed securities		3,853,395		11,425		(83,835	)		3,780,985
Total fixed maturities		27,957,697		173,366		(1,248,824	)		26,882,239
Equities:
Equities		12,096,488		31,505		(1,140,454	)		10,987,539
Total available for sale	$	40,054,185	$	204,871	$	(2,389,278	)	$	37,869,778

The amortized cost and fair value of debt securities as of

March 31, 2019

and

December 31, 2018,

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.

	As of March 31, 2019				As of December 31, 2018
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
After one year through five years	$	1,573,995	$	1,591,192	$	1,472,228	$	1,462,745
After five years through ten years		2,142,756		2,181,773		2,101,676		2,055,173
More than 10 years		20,891,772		21,000,026		20,430,838		19,492,496
Redeemable preferred stocks		99,560		99,200		99,560		90,840
Mortgage backed and asset backed securities		3,802,112		3,799,557		3,853,395		3,780,985
Total amortized cost and fair value	$	28,510,195	$	28,671,748	$	27,957,697	$	26,882,239

Proceeds from the sale of securities, maturities, and asset paydowns for the

first

three

months of

2019

and

2018

were

$52,582

and

$28,126

respectively. There were

no

realized gains and losses related to the sale of securities for the periods ended

March 31, 2019

and

2018.

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
March 31, 2019
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	-	$	-		$	267,814	$	(12,027	)	$	267,814	$	(12,027	)
Corporate bonds		811,628		(17,017	)		7,950,659		(370,982	)		8,762,287		(387,999	)
Municipal bonds		-		-			844,658		(13,071	)		844,658		(13,071	)
Redeemable preferred stock		-		-			99,200		(360	)		99,200		(360	)
Mortgage backed and asset backed securities		-		-			2,437,299		(39,252	)		2,437,299		(39,252	)
Total fixed maturities		811,628		(17,017	)		11,599,630		(435,692	)		12,411,258		(452,709	)
Equities:
Equities		1,622,912		(34,956	)		8,745,952		(418,249	)		10,368,864		(453,205	)
Total available for sale	$	2,434,540	$	(51,973	)	$	20,345,582	$	(853,941	)	$	22,780,122	$	(905,914	)

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2018
Available for sale:
Fixed maturities:
US Treasury securities	$	251,206	$	(27,325	)	$	-	$	-		$	251,206	$	(27,325	)
Corporate bonds		11,743,222		(948,539	)		830,239		(99,774	)		12,573,461		(1,048,313	)
Municipal bonds		2,114,260		(51,267	)		859,305		(29,364	)		2,973,565		(80,631	)
Redeemable preferred stock		90,840		(8,720	)		-		-			90,840		(8,720	)
Mortgage backed and asset backed securities		544,714		(6,656	)		2,448,551		(77,179	)		2,993,265		(83,835	)
Total fixed maturities		14,744,242		(1,042,507	)		4,138,095		(206,317	)		18,882,337		(1,248,824	)
Equities:
Equities		3,312,528		(228,148	)		7,440,504		(912,306	)		10,753,032		(1,140,454	)
Total available for sale	$	18,056,770	$	(1,270,655	)	$	11,578,599	$	(1,118,623	)	$	29,635,369	$	(2,389,278	)

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 securities in the investment portfolio in an unrealized loss position as of

March 

31,

2019

was

87,

which represented an unrealized loss of

$905,914

of the aggregate carrying value of those securities. The

87

securities breakdown as follows:

53

bonds,

21

mortgage and asset backed securities,

4

preferred stocks,

2

high yield corporate bond funds,

2

preferred stock index funds,

1

senior loan fund, and

4

common stock. The Company determined that

no

securities were considered to be other-than-temporarily impaired as of

March 31, 2019

and

December 31, 2018.

XML

Note 3 - Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note

3

.

     

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.

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

Investments, available for sale

: Fair values of available for sale fixed maturity securities are provided by a

third

party pricing service. The pricing service uses a variety of sources to determine fair value 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. Fair values for equity securities are also provided by a

third

party pricing service and are derived from active trading on national market exchanges.

The following table presents the amounts of assets measured at fair value on a recurring basis as of

March 31, 2019

and

December 31, 2018:

	March 31, 2019
	Total		Level 1		Level 2		Level 3
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	589,784	$	589,784	$	-	$	-
Corporate bonds		17,383,167		-		17,187,167		196,000
Municipal bonds		6,800,040		-		6,800,040		-
Redeemable preferred stock		99,200		-		99,200		-
Mortgage backed and asset backed securities		3,799,557		-		3,799,557		-
Total fixed maturities		28,671,748		589,784		27,885,964		196,000
Equities:
Equities		11,895,466		11,895,466		-		-
Total	$	40,567,214	$	12,485,250	$	27,885,964	$	196,000

	December 31, 2018
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	569,940	$	569,940	$	-	$	-
Corporate bonds		15,842,361		-		15,642,361		200,000
Municipal bonds		6,598,113		-		6,598,113		-
Redeemable preferred stock		90,840		-		90,840		-
Mortgage backed and asset backed securities		3,780,985		-		3,780,985		-
Total fixed maturities		26,882,239		569,940		26,112,299		200,000
Equities:
Equities		10,987,539		10,987,539		-		-
Total	$	37,869,778	$	11,557,479	$	26,112,299	$	200,000

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

: The carrying amounts approximate fair value because of the short maturity of these instruments.

Investment income due and accrued:

 The carrying amounts approximate fair value because of the short maturity of these instruments.

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 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 risk-free rates adjusted for credit risk and the nonperformance risk of the liabilities.

The estimated fair values of the Company’s financial assets and liabilities at

March 31, 2019

and

December 31, 2018

are as follows:

	March 31, 2019				December 31, 2018
	(unaudited)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and cash equivalents	$	2,485,374	$	2,485,374	$	2,077,646	$	2,077,646
Investment income due and accrued		311,398		311,398		286,890		286,890
Investments, at fair value		40,624,649		40,624,649		37,926,317		37,926,317
Total Financial Assets	$	43,421,421	$	43,421,421	$	40,290,853	$	40,290,853
Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	17,280,482	$	16,197,221	$	16,626,218	$	15,361,164
Total Financial Liabilities	$	17,280,482	$	16,197,221	$	16,626,218	$	15,361,164

XML

Note 4 - Income Tax Provision

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

4

.     Income Tax Provision

No

income tax expense or (benefit) has been reflected for the quarters ended

March 31, 2019

or

2018

due to the lack of taxable net income generated by the Company and 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

$13,178,265

 and

$12,938,533

as of

March 31, 2019

and

December 31, 2018,

respectively. 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 is offset

100

percent by the valuation allowance.

XML

Note 5 - Subsequent Events

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

Note

5

.

   

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

May 13, 2019,

the date on which the consolidated financial statements were issued.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

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 and Article

10

of Regulation 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

months ended

March 31, 2019

are

not

necessarily indicative of the results to be expected for the year ended

December 31, 2019

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 report on Form

10

-K and amendments thereto for the year ended

December 31, 2018.

Consolidation, Policy [Policy Text Block]

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.

Area of Operation, Policy [Policy Text Block]

Area of Operation:

USALSC is authorized to operate in the states of Kansas, North Dakota, Missouri, Nebraska and Oklahoma. DCLIC is authorized to operate in the states of North Dakota and South Dakota. USALSC-Montana is authorized to operate in the state of Montana

Reclassification, Policy [Policy Text Block]

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.

Earnings Per Share, Policy [Policy Text Block]

Common stock and earnings (loss) per share:

The par value for common stock is

$0.10

per share with

20,000,000

shares authorized. As of

March 31, 2019,

and

December 31, 2018,

the company had

7,693,408

and

7,650,551

common shares issued and outstanding, respectively.

Earnings (loss) per share attributable to the Company’s common stockholders were computed based on the net loss and the weighted average number of shares outstanding during each year. The weighted average number of shares outstanding during the quarters ended

March 31, 2019

and

2018

were

7,664,837

and

7,326,345

shares, respectively. Potential common shares are excluded from the computation when their effect is anti-dilutive. Basic and diluted net loss per common share is the same for the quarters ended

March 31, 2019

and

2018.

New Accounting Pronouncements, Policy [Policy Text Block]

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.

  As an emerging growth company, the Company has chosen to defer implementation of this accounting standard until the year ending

December 31, 2019.

The adoption of this guidance is

not

expected to have a material effect on the Company’s result of operations, financial position or liquidity.

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.

As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after

December 15, 2018.

The recognition and measurement provisions of this guidance was 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 adoption of this guidance did

not

have a material effect on the Company’s financial position or liquidity but does create additional volatility when comparing period to period results.

Leases

In

February 

2016,

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.  As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after

December 15, 2019.

The adoption of this guidance is

not

expected to have a material effect on the Company’s results of operations, financial position or liquidity.

Contingent Put and Call Options in Debt Instruments

In

March 

2016,

the FASB issued updated guidance clarifying that when a call (put) option in a debt instrument can accelerate 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 accounted for separately.  The updated guidance is effective for reporting periods beginning after

December 

15,

2016.

  Early adoption is permitted.  As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after

December 15, 2017.

The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Measurement of Credit Losses on Financial Instruments

In

June 

2016,

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.

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 is effective for reporting periods beginning after

December 

15,

2019.

  Early adoption is 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, 2020.

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

ash

R

eceipts and

Cash P

ayment

In

August 2016,

the FASB issued new guidance that clarifies the classification of certain cash receipts and cash payments in the statement of cash flows under

eight

different scenarios including, but

not

limited to: (i) debt prepayment or debt extinguishment costs; (ii) proceeds from the settlement of corporate-owned life insurance policies including bank-owned life insurance policies; (iii) distributions received from equity method investees; and (iv) separately identifiable cash flows and application of the predominance principle. This guidance is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted. As an emerging growth company, the Company has elected to defer implementation of this standard to fiscal years beginning after

December 15, 2018.

The implementation of this standard did

not

have a material impact on the Company’s statement of cash flows.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

On

December 22, 2017,

the U.S. federal government enacted a tax bill,

H.R.1,

An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year

2018

(Tax Cuts and Jobs Act). In

February 2018,

FASB issued guidance to address certain issues related to the Tax Cuts and Jobs Act. This new guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. This guidance is effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance did

not

have a material effect on the Company’s results of operations, financial position or liquidity.

Targeted Improvements to the Accounting for Long-Duration Contracts

In

August 2018,

the FASB issued ASU

2018

-

12

“Targeted Improvements to the Accounting for Long-Duration Contracts.” ASU

2018

-

12

requires periodic reassessment of actuarial and discount rate assumptions used in the valuation of policyholder liabilities and deferred acquisition costs arising from the issuance of long-duration insurance and reinsurance contracts, with the effects of the 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, 2020,

with early adoption permitted. We are evaluating the effect this standard will have on 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.

XML

Note 2 - Investments (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Available-for-sale Securities [Table Text Block]

	March 31, 2019
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	599,481	$	2,330	$	(12,027	)	$	589,784
Corporate bonds		17,453,101		318,065		(387,999	)		17,383,167
Municipal bonds		6,555,941		257,170		(13,071	)		6,800,040
Redeemable preferred stock		99,560		-		(360	)		99,200
Mortgage backed and asset backed securities		3,802,112		36,697		(39,252	)		3,799,557
Total fixed maturities		28,510,195		614,262		(452,709	)		28,671,748
Equities:
Equities		12,269,679		78,992		(453,205	)		11,895,466
Total available for sale	$	40,779,874	$	693,254	$	(905,914	)	$	40,567,214

	December 31, 2018
	Cost or		Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
Available for sale:
Fixed maturities:
US Treasury securities	$	597,265	$	-	$	(27,325	)	$	569,940
Corporate bonds		16,847,623		43,051		(1,048,313	)		15,842,361
Municipal bonds		6,559,854		118,890		(80,631	)		6,598,113
Redeemable preferred stock		99,560		-		(8,720	)		90,840
Mortgage backed and asset backed securities		3,853,395		11,425		(83,835	)		3,780,985
Total fixed maturities		27,957,697		173,366		(1,248,824	)		26,882,239
Equities:
Equities		12,096,488		31,505		(1,140,454	)		10,987,539
Total available for sale	$	40,054,185	$	204,871	$	(2,389,278	)	$	37,869,778

Investments Classified by Contractual Maturity Date [Table Text Block]

	As of March 31, 2019				As of December 31, 2018
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Amounts maturing in:
After one year through five years	$	1,573,995	$	1,591,192	$	1,472,228	$	1,462,745
After five years through ten years		2,142,756		2,181,773		2,101,676		2,055,173
More than 10 years		20,891,772		21,000,026		20,430,838		19,492,496
Redeemable preferred stocks		99,560		99,200		99,560		90,840
Mortgage backed and asset backed securities		3,802,112		3,799,557		3,853,395		3,780,985
Total amortized cost and fair value	$	28,510,195	$	28,671,748	$	27,957,697	$	26,882,239

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block]

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
March 31, 2019
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	-	$	-		$	267,814	$	(12,027	)	$	267,814	$	(12,027	)
Corporate bonds		811,628		(17,017	)		7,950,659		(370,982	)		8,762,287		(387,999	)
Municipal bonds		-		-			844,658		(13,071	)		844,658		(13,071	)
Redeemable preferred stock		-		-			99,200		(360	)		99,200		(360	)
Mortgage backed and asset backed securities		-		-			2,437,299		(39,252	)		2,437,299		(39,252	)
Total fixed maturities		811,628		(17,017	)		11,599,630		(435,692	)		12,411,258		(452,709	)
Equities:
Equities		1,622,912		(34,956	)		8,745,952		(418,249	)		10,368,864		(453,205	)
Total available for sale	$	2,434,540	$	(51,973	)	$	20,345,582	$	(853,941	)	$	22,780,122	$	(905,914	)

	Less than 12 months					Greater than 12 months					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
December 31, 2018
Available for sale:
Fixed maturities:
US Treasury securities	$	251,206	$	(27,325	)	$	-	$	-		$	251,206	$	(27,325	)
Corporate bonds		11,743,222		(948,539	)		830,239		(99,774	)		12,573,461		(1,048,313	)
Municipal bonds		2,114,260		(51,267	)		859,305		(29,364	)		2,973,565		(80,631	)
Redeemable preferred stock		90,840		(8,720	)		-		-			90,840		(8,720	)
Mortgage backed and asset backed securities		544,714		(6,656	)		2,448,551		(77,179	)		2,993,265		(83,835	)
Total fixed maturities		14,744,242		(1,042,507	)		4,138,095		(206,317	)		18,882,337		(1,248,824	)
Equities:
Equities		3,312,528		(228,148	)		7,440,504		(912,306	)		10,753,032		(1,140,454	)
Total available for sale	$	18,056,770	$	(1,270,655	)	$	11,578,599	$	(1,118,623	)	$	29,635,369	$	(2,389,278	)

XML

Note 3 - Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	March 31, 2019
	Total		Level 1		Level 2		Level 3
	(unaudited)
Available for sale:
Fixed maturities:
US Treasury securities	$	589,784	$	589,784	$	-	$	-
Corporate bonds		17,383,167		-		17,187,167		196,000
Municipal bonds		6,800,040		-		6,800,040		-
Redeemable preferred stock		99,200		-		99,200		-
Mortgage backed and asset backed securities		3,799,557		-		3,799,557		-
Total fixed maturities		28,671,748		589,784		27,885,964		196,000
Equities:
Equities		11,895,466		11,895,466		-		-
Total	$	40,567,214	$	12,485,250	$	27,885,964	$	196,000

	December 31, 2018
	Total		Level 1		Level 2		Level 3
Available for sale:
Fixed maturities:
US Treasury securities	$	569,940	$	569,940	$	-	$	-
Corporate bonds		15,842,361		-		15,642,361		200,000
Municipal bonds		6,598,113		-		6,598,113		-
Redeemable preferred stock		90,840		-		90,840		-
Mortgage backed and asset backed securities		3,780,985		-		3,780,985		-
Total fixed maturities		26,882,239		569,940		26,112,299		200,000
Equities:
Equities		10,987,539		10,987,539		-		-
Total	$	37,869,778	$	11,557,479	$	26,112,299	$	200,000

Fair Value, by Balance Sheet Grouping [Table Text Block]

	March 31, 2019				December 31, 2018
	(unaudited)
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial Assets:
Cash and cash equivalents	$	2,485,374	$	2,485,374	$	2,077,646	$	2,077,646
Investment income due and accrued		311,398		311,398		286,890		286,890
Investments, at fair value		40,624,649		40,624,649		37,926,317		37,926,317
Total Financial Assets	$	43,421,421	$	43,421,421	$	40,290,853	$	40,290,853
Financial Liabilities:
Policyholder deposits in deposit-type contracts	$	17,280,482	$	16,197,221	$	16,626,218	$	15,361,164
Total Financial Liabilities	$	17,280,482	$	16,197,221	$	16,626,218	$	15,361,164

XML

Note 1 - Description of Business and Significant Accounting Policies (Details Textual)	3 Months Ended
	Mar. 31, 2019 $ / shares shares	Mar. 31, 2018 shares	Dec. 31, 2018 $ / shares shares
Number of Wholly-Owned Operating Subsidiaries	5
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.10		$ 0.10
Common Stock, Shares Authorized	20,000,000		20,000,000
Common Stock, Shares, Issued, Total	7,693,408		7,650,551
Weighted Average Number of Shares Outstanding, Basic and Diluted	7,664,837	7,326,345
Common Stock, Shares, Outstanding, Ending Balance	7,693,408		7,650,551

XML

Note 2 - Investments (Details Textual)	3 Months Ended		12 Months Ended
	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Proceeds from Sale, Maturity and Collection of Investments, Total	$ 52,582	$ 28,126
Debt and Equity Securities, Realized Gain (Loss), Total	$ 0	$ 0
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	87
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax, Total	$ 905,914		$ 2,389,278
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities, Total	$ 0		$ 0
Fixed Income Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	53
Collateralized Mortgage Backed Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	21
Preferred Stock [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	4
Corporate Debt Securities [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	2
Preferred Stock Index Fund [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	2
Senior Loan Fund [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	1
Common Stock [Member]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Total	4

XML

Note 2 - Investments - Amortized Cost and Fair Value of Available-for-sale and Held-to-maturity Investments (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Cost or Amortized Cost	$ 40,779,874	$ 40,054,185
Gross Unrealized Gains	693,254	204,871
Gross Unrealized Losses	(905,914)	(2,389,278)
Investments in available-for-sale securities, at fair value	40,567,214	37,869,778
Fixed Maturities [Member]
Cost or Amortized Cost	28,510,195	27,957,697
Gross Unrealized Gains	614,262	173,366
Gross Unrealized Losses	(452,709)	(1,248,824)
Investments in available-for-sale securities, at fair value	28,671,748	26,882,239
Equity Securities [Member]
Cost or Amortized Cost	12,269,679	12,096,488
Gross Unrealized Gains	78,992	31,505
Gross Unrealized Losses	(453,205)	(1,140,454)
Investments in available-for-sale securities, at fair value	11,895,466	10,987,539
US Treasury Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	599,481	597,265
Gross Unrealized Gains	2,330
Gross Unrealized Losses	(12,027)	(27,325)
Investments in available-for-sale securities, at fair value	589,784	569,940
Corporate Debt Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	17,453,101	16,847,623
Gross Unrealized Gains	318,065	43,051
Gross Unrealized Losses	(387,999)	(1,048,313)
Investments in available-for-sale securities, at fair value	17,383,167	15,842,361
US States and Political Subdivisions Debt Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	6,555,941	6,559,854
Gross Unrealized Gains	257,170	118,890
Gross Unrealized Losses	(13,071)	(80,631)
Investments in available-for-sale securities, at fair value	6,800,040	6,598,113
Redeemable Preferred Stock [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	99,560	99,560
Gross Unrealized Gains
Gross Unrealized Losses	(360)	(8,720)
Investments in available-for-sale securities, at fair value	99,200	90,840
Collateralized Mortgage Backed Securities [Member] | Fixed Maturities [Member]
Cost or Amortized Cost	3,802,112	3,853,395
Gross Unrealized Gains	36,697	11,425
Gross Unrealized Losses	(39,252)	(83,835)
Investments in available-for-sale securities, at fair value	$ 3,799,557	$ 3,780,985

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Note 2 - Investments - Amortized Cost and Fair Value of Debt Securities By Contractual Maturity (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
After one year through five years, amortized cost	$ 1,573,995	$ 1,472,228
After one year through five years, fair value	1,591,192	1,462,745
After five years through ten years, amortized cost	2,142,756	2,101,676
After five years through ten years, fair value	2,181,773	2,055,173
More than 10 years, amortized cost	20,891,772	20,430,838
More than 10 years, fair value	21,000,026	19,492,496
Total amortized cost and fair value	28,510,195	27,957,697
Total amortized cost and fair value	28,671,748	26,882,239
Redeemable Preferred Stock [Member]
Debt securities, amortized cost	99,560	99,560
Debt securities, fair value	99,200	90,840
Collateralized Mortgage Backed Securities [Member]
Debt securities, amortized cost	3,802,112	3,853,395
Debt securities, fair value	$ 3,799,557	$ 3,780,985

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Note 2 - Investments - Gross Unrealized Losses (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale securities, less than 12 months, fair value	$ 2,434,540	$ 18,056,770
Available-for-sale securities, less than 12 months, unrealized loss	(51,973)	(1,270,655)
Available-for-sale securities, greater than 12 months, fair value	20,345,582	11,578,599
Available-for-sale securities, greater than 12 months, unrealized loss	(853,941)	(1,118,623)
Available-for-sale securities, fair value	22,780,122	29,635,369
Available-for-sale securities, unrealized loss	(905,914)	(2,389,278)
Fixed Maturities [Member]
Available-for-sale securities, less than 12 months, fair value	811,628	14,744,242
Available-for-sale securities, less than 12 months, unrealized loss	(17,017)	(1,042,507)
Available-for-sale securities, greater than 12 months, fair value	11,599,630	4,138,095
Available-for-sale securities, greater than 12 months, unrealized loss	(435,692)	(206,317)
Available-for-sale securities, fair value	12,411,258	18,882,337
Available-for-sale securities, unrealized loss	(452,709)	(1,248,824)
Fixed Maturities [Member] | US Treasury Securities [Member]
Available-for-sale securities, less than 12 months, fair value		251,206
Available-for-sale securities, less than 12 months, unrealized loss		(27,325)
Available-for-sale securities, greater than 12 months, fair value	267,814
Available-for-sale securities, greater than 12 months, unrealized loss	(12,027)
Available-for-sale securities, fair value	267,814	251,206
Available-for-sale securities, unrealized loss	(12,027)	(27,325)
Fixed Maturities [Member] | Corporate Debt Securities [Member]
Available-for-sale securities, less than 12 months, fair value	811,628	11,743,222
Available-for-sale securities, less than 12 months, unrealized loss	(17,017)	(948,539)
Available-for-sale securities, greater than 12 months, fair value	7,950,659	830,239
Available-for-sale securities, greater than 12 months, unrealized loss	(370,982)	(99,774)
Available-for-sale securities, fair value	8,762,287	12,573,461
Available-for-sale securities, unrealized loss	(387,999)	(1,048,313)
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Available-for-sale securities, less than 12 months, fair value		2,114,260
Available-for-sale securities, less than 12 months, unrealized loss		(51,267)
Available-for-sale securities, greater than 12 months, fair value	844,658	859,305
Available-for-sale securities, greater than 12 months, unrealized loss	(13,071)	(29,364)
Available-for-sale securities, fair value	844,658	2,973,565
Available-for-sale securities, unrealized loss	(13,071)	(80,631)
Fixed Maturities [Member] | Redeemable Preferred Stock [Member]
Available-for-sale securities, less than 12 months, fair value		90,840
Available-for-sale securities, less than 12 months, unrealized loss		(8,720)
Available-for-sale securities, greater than 12 months, fair value	99,200
Available-for-sale securities, greater than 12 months, unrealized loss	(360)
Available-for-sale securities, fair value	99,200	90,840
Available-for-sale securities, unrealized loss	(360)	(8,720)
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member]
Available-for-sale securities, less than 12 months, fair value		544,714
Available-for-sale securities, less than 12 months, unrealized loss		(6,656)
Available-for-sale securities, greater than 12 months, fair value	2,437,299	2,448,551
Available-for-sale securities, greater than 12 months, unrealized loss	(39,252)	(77,179)
Available-for-sale securities, fair value	2,437,299	2,993,265
Available-for-sale securities, unrealized loss	(39,252)	(83,835)
Equity Securities [Member]
Available-for-sale securities, less than 12 months, fair value	1,622,912	3,312,528
Available-for-sale securities, less than 12 months, unrealized loss	(34,956)	(228,148)
Available-for-sale securities, greater than 12 months, fair value	8,745,952	7,440,504
Available-for-sale securities, greater than 12 months, unrealized loss	(418,249)	(912,306)
Available-for-sale securities, fair value	10,368,864	10,753,032
Available-for-sale securities, unrealized loss	$ (453,205)	$ (1,140,454)

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Note 3 - Fair Value Measurements - Assets Measured at Fair Value on a Recurring Basis (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Investments in available-for-sale securities, at fair value	$ 40,567,214	$ 37,869,778
Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	40,567,214	37,869,778
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value	12,485,250	11,557,479
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value	27,885,964	26,112,299
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value	196,000	200,000
Fixed Maturities [Member]
Investments in available-for-sale securities, at fair value	28,671,748	26,882,239
Fixed Maturities [Member] | Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	28,671,748	26,882,239
Fixed Maturities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value	589,784	569,940
Fixed Maturities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value	27,885,964	26,112,299
Fixed Maturities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value	196,000	200,000
Fixed Maturities [Member] | US Treasury Securities [Member]
Investments in available-for-sale securities, at fair value	589,784	569,940
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	589,784	569,940
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value	589,784	569,940
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | US Treasury Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | Corporate Debt Securities [Member]
Investments in available-for-sale securities, at fair value	17,383,167	15,842,361
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	17,383,167	15,842,361
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value	17,187,167	15,642,361
Fixed Maturities [Member] | Corporate Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value	196,000	200,000
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member]
Investments in available-for-sale securities, at fair value	6,800,040	6,598,113
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	6,800,040	6,598,113
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value	6,800,040	6,598,113
Fixed Maturities [Member] | US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | Redeemable Preferred Stock [Member]
Investments in available-for-sale securities, at fair value	99,200	90,840
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	99,200	90,840
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value	99,200	90,840
Fixed Maturities [Member] | Redeemable Preferred Stock [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member]
Investments in available-for-sale securities, at fair value	3,799,557	3,780,985
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	3,799,557	3,780,985
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value	3,799,557	3,780,985
Fixed Maturities [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value
Equity Securities [Member]
Investments in available-for-sale securities, at fair value	11,895,466	10,987,539
Equity Securities [Member] | Fair Value, Recurring [Member]
Investments in available-for-sale securities, at fair value	11,895,466	10,987,539
Equity Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Investments in available-for-sale securities, at fair value	11,895,466	10,987,539
Equity Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Investments in available-for-sale securities, at fair value
Equity Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Investments in available-for-sale securities, at fair value

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Note 3 - Fair Value Measurements - Estimated Fair Values of the Company's Financial Assets and Liabilities (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Reported Value Measurement [Member]
Financial Assets:
Cash and cash equivalents	$ 2,485,374	$ 2,077,646
Investment income due and accrued	311,398	286,890
Investments, at fair value	40,624,649	37,926,317
Total Financial Assets	43,421,421	40,290,853
Financial Liabilities:
Policyholder deposits in deposit-type contracts	17,280,482	16,626,218
Total Financial Liabilities	17,280,482	16,626,218
Estimate of Fair Value Measurement [Member]
Financial Assets:
Cash and cash equivalents	2,485,374	2,077,646
Investment income due and accrued	311,398	286,890
Investments, at fair value	40,624,649	37,926,317
Total Financial Assets	43,421,421	40,290,853
Financial Liabilities:
Policyholder deposits in deposit-type contracts	16,197,221	15,361,164
Total Financial Liabilities	$ 16,197,221	$ 15,361,164

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Note 4 - Income Tax Provision (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Income Tax Expense (Benefit), Total	$ 0	$ 0
Deferred Tax Assets, Valuation Allowance, Percentage	100.00%	100.00%
Operating Loss Carryforwards, Total	$ 13,178,265		$ 12,938,533