What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-16 compared with 2021-11-15 · 491 added, 663 removed, 1435 unchanged (45% of the section changed)

Financial Statements.

Fixed maturity securities, available for sale, at estimated fair value (amortized cost of $ 238,809,528 and $ 265,150,484 for 2021 and 2020)

Fixed maturity securities, available for sale, at estimated fair value

(amortized cost of $ 264,704,239 and $ 236,303,310 for 2022 and 2021)

$ 272,213,552

$ 259,287,603

Equity securities at estimated fair value (cost of $ 8,198,282 and $ 9,698,490 for 2021 and 2020)

Mortgage loans held for investment (net of allowances for loan losses of $ 1,753,853 and $ 2,005,127 for 2021 and 2020)

Real estate held for investment (net of accumulated depreciation of $ 18,908,623 and $ 13,800,973 for 2021 and 2020)

Equity securities at estimated fair value (cost of $ 8,662,438 and

for 2022 and 2021)

Mortgage loans held for investment (net of allowances for loan losses

$ 1,603,676 and $ 1,699,902 for 2022 and 2021)

Real estate held for investment (net of accumulated depreciation of

and $ 17,692,038 for 2022 and 2021)

Real estate held for sale

Other investments and policy loans (net of allowances for doubtful accounts of $ 1,795,037 and $ 1,645,475 for 2021 and 2020)

Other investments and policy loans (net of allowances for doubtful

of $ 1,805,311 and $ 1,686,218 for 2022 and 2021)

Accrued investment income

4 unchanged sentences

Restricted assets (including $ 5,253,218 and $ 5,205,510 for 2022 and 2021 at estimated fair value)

Cemetery perpetual care trust investments (including $ 3,173,658 and $ 2,810,070 for 2021 and 2020 at estimated fair value)

Cemetery perpetual care trust investments (including $ 3,411,104 and

$ 4,087,245 for 2022 and 2021

at estimated fair value)

Receivable from reinsurers

28 unchanged sentences

20,000,000 shares authorized;

issued 17,594,048 shares in 2021 and 16,595,783 shares in 2020

issued 17,693,152 shares

in 2022 and 17,642,722 shares in 2021

non-voting common stock - $ 1.00 par value;

5,000,000 shares authorized;

none issued or outstanding

5,000,000 shares

none issued or

convertible common stock - $ 2.00 par value;

3,000,000 shares authorized;

issued 2,761,909 shares in 2021 and 2,679,603 shares in 2020

3,000,000 shares

issued 2,866,358

shares in 2022 and 2,866,565 shares in 2021

Common Stock, Value

3 unchanged sentences

Treasury stock at cost - 8,079 Class A shares and 96,097 Class C shares in

and 227,852 Class A shares and 10,985 Class C shares in 2020

( 1,127,442 )

and 108,079 Class

A shares and 109,193 Class C shares in 2021

( 1,845,624 )

6 unchanged sentences

CONSOLIDATED STATEMENTS OF EARNINGS

Three Months Ended

Nine Months Ended

Three Months Ended March 31

Mortgage fee income

$ 204,414,276

$ 212,209,718

Insurance premiums and other considerations

1 unchanged sentence

Net mortuary and cemetery sales

Gains (losses) on investments and other assets

Gains on investments and other assets

Total revenues

15 unchanged sentences

( 4,226,340 )

( 10,998,876 )

( 15,965,656 )

Net earnings per Class A Equivalent common share (1)

Net earnings per Class A Equivalent common share-assuming dilution (1)

Net earnings per Class A Equivalent common share- assuming

Weighted-average Class A equivalent common shares outstanding (1)

Weighted-average Class A equivalent common shares outstanding-assuming dilution

earnings per share amounts have been adjusted retroactively for the effect of annual stock dividends.

The weighted-average shares outstanding

includes the weighted-average Class A common shares and the weighted-average Class C common shares determined on an equivalent Class

A common stock basis.

Net earnings per common share represent net earnings per equivalent Class A common share.

Net earnings per share amounts

have been adjusted retroactively for the effect of annual stock dividends.

The weighted-average shares outstanding includes the weighted-average

Class A common shares and the weighted-average Class C common shares determined on an equivalent Class A common stock basis.

per common share represent net earnings per equivalent Class A common share.

accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Nine Months Ended

Three Months Ended March 31

Other comprehensive income:

Unrealized gains (losses) on fixed maturity securities available for sale

Unrealized losses on fixed maturity securities available for sale

$ ( 15,326,903 )

( 6,805,903 )

Unrealized gains (losses) on restricted assets

Unrealized losses on restricted assets

Unrealized losses on cemetery perpetual care trust investments

Foreign currency translation adjustments

Other comprehensive income (loss), before income tax

Other comprehensive loss, before income tax

( 15,436,206 )

( 6,821,693 )

Income tax benefit (expense)

Income tax benefit

Other comprehensive loss, net of income tax

( 12,190,330 )

Other comprehensive income (loss), net of income tax

( 5,388,522 )

Comprehensive income (loss)

$ ( 8,961,612 )

Comprehensive income

accompanying notes to condensed consolidated financial statements (unaudited).

7 unchanged sentences

Treasury Stock

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Class A Common Stock

15 unchanged sentences

Purchase of treasury stock

Stock dividends

Conversion Class C to Class A

3 unchanged sentences

$ 292,300,867

Other comprehensive income

Exercise of stock options

Sale of treasury stock

Purchase of treasury stock

( 2,596,006 )

Stock dividends

( 8,710,354 )

June 30, 2021

$ 168,415,007

$ ( 2,207,608 )

$ 285,848,713

Other comprehensive loss

( 1,125,206 )

Exercise of stock options

Sale of treasury stock

Purchase of treasury stock

Conversion Class C to Class A

Stock dividends

September 30, 2021

$ 179,195,423

$ ( 1,127,442 )

$ 296,716,168

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Class A Common Stock

15 unchanged sentences

Purchase of treasury stock

Stock dividends

Conversion Class C to Class A

3 unchanged sentences

$ 271,867,841

Other comprehensive income

Stock-based compensation expense

Exercise of stock options

Sale of treasury stock

Purchase of treasury stock

Stock dividends

( 3,107,607 )

June 30, 2020

$ 120,126,524

$ ( 1,542,276 )

$ 222,614,226

Beginning balance, value

$ 120,126,524

$ ( 1,542,276 )

$ 222,614,226

Other comprehensive income

Stock-based compensation expense

Sale of treasury stock

Purchase of treasury stock

Stock dividends

Conversion Class C to Class A

September 30, 2020

$ 149,428,819

$ ( 866,330 )

$ 256,045,957

Ending balance, value

$ 149,428,819

$ ( 866,330 )

$ 256,045,957

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30

Three Months Ended March 31

Cash flows from operating activities:

Net cash provided by (used in) operating activities

$ 128,890,897

Net cash provided by operating activities

$ 100,975,851

6 unchanged sentences

( 1,657,160 )

( 6,492,243 )

Sales of equity securities

Net changes in restricted assets

( 2,650,188 )

Net changes in perpetual care trusts

5 unchanged sentences

( 2,865,020 )

( 1,111,360 )

Sales of property and equipment

Sale of property and equipment

Purchases of real estate

12 unchanged sentences

Purchases of treasury stock

( 3,722,157 )

( 1,100,827 )

Repayment of bank loans

( 46,367,270 )

( 251,041,466 )

Proceeds from bank loans

1 unchanged sentence

( 24,430,063 )

Net cash provided by (used in) financing activities

( 60,432,330 )

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

Net cash used in financing activities

( 19,760,407 )

( 54,567,872 )

Net change in cash, cash equivalents, restricted cash and restricted

cash equivalents

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning

Cash, cash equivalents, restricted cash and restricted cash

equivalents at end of period

$ 156,924,145

$ 153,826,163

Supplemental Disclosure of Cash Flow Information:

Cash paid during the year for:

Income taxes (net of refunds)

Non Cash Operating, Investing and Financing Activities:

4 unchanged sentences

Transfer of loans held for sale to mortgage loans held for investment

Right-of-use assets obtained in exchange for finance lease liabilities

NATIONAL FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Reconciliation

1 unchanged sentence

flows is presented in the table below:

Nine Months Ended September 30

Three Months Ended March 31

Cash and cash equivalents

6 unchanged sentences

$ 153,826,163

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

$ 156,924,145

$ 153,826,163

accompanying notes to condensed consolidated financial statements (unaudited).

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considered necessary for a fair presentation have been included.

Operating results for the three and nine months ended September 30,

2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three months ended March 31, 2022 are not

necessarily indicative of the results that may be expected for the year ending December 31, 2022.

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires

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those used in determining

the value of mortgage loans foreclosed to real estate held for investment or sale;

those used in determining the liability for future

policy benefits;

those used in estimating other than temporary impairments on available for sale securities;

those used in determining

the value of mortgage servicing rights;

the value of mortgage loans foreclosed to real estate held for investment;

those used in determining the liability for future policy

benefits and unearned revenue;

those used in determining the estimated future costs for pre-need sales;

those used in determining the

value of mortgage servicing rights;

those used in determining allowances for loan losses for mortgage loans held for investment;

those used in determining loan loss reserve;

used in determining loan loss reserve;

and those used in determining deferred tax assets and liabilities.

Although some variability

is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects.

Although some variability is

inherent in these estimates, management believes the amounts provided are fairly stated in all material respects.

During 2020, the outbreak of COVID-19 had spread worldwide and was declared a global pandemic by the World Health Organization on March

COVID-19, and its variants, pose a threat to the health and economic well-being of the Company’s employees, customers,

The Company is closely monitoring developments relating to the ongoing COVID-19 pandemic and assessing its impact on the

Company’s business.

The continued uncertainty surrounding the COVID-19 pandemic has had and continues to have a major impact on

the global economy and financial markets.

Governments and businesses have taken numerous measures to try to contain the virus and its

variants, which include the implementation of travel bans, self-imposed quarantine periods, social distancing, and various mask and vaccine

The Company continues to closely monitor developments relating to the ongoing COVID-19 pandemic and assessing its impact

on the Company’s business.

The continued uncertainty surrounding the COVID-19 pandemic has had and continues to have a significant

impact on the global economy and financial markets.

Governments and businesses have taken numerous measures to try to contain the virus

and its variants, which include the implementation of travel bans, self-imposed quarantine periods, social distancing, and various mask

and vaccine mandates.

These measures have disrupted and will continue to disrupt businesses globally.

Governments and central banks have reacted

with significant monetary and fiscal interventions designed to stabilize the economic conditions.

most businesses, COVID-19 has impacted the Company.

However, the Company cannot, with any certainty predict the severity or duration

with which COVID-19 will impact the Company’s business, financial condition, results of operations, and cash flows.

To the extent

the COVID-19 pandemic adversely affects the Company’s business, financial condition, and results of operations, it may also have

the effect of heightening many of the other risks described in this Management’s Discussion and Analysis of Financial Condition

and Results of Operations.

These uncertainties have the potential to negatively affect the risk of credit default for the issuers of

the Company’s fixed maturity debt securities and individual borrowers with mortgage loans held by the Company.

Governments and central banks have

reacted with significant monetary and fiscal interventions designed to stabilize the economic conditions.

most businesses, COVID-19 has impacted the Company, including the temporary adoption of work from home arrangements and a restructuring

of selling techniques for its products and services.

The Company also experienced increased expenses for cleaning services of its offices.

Throughout 2021 and the first quarter 2022, the Company continues to adapt to the impact of COVID-19 and its related economic effects.

The Company cannot, with any certainty predict the severity or duration with which COVID-19 will impact the Company’s business,

financial condition, results of operations, and cash flows.

To the extent the COVID-19 pandemic adversely affects the Company’s

business, financial condition, and results of operations, it may also have the effect of heightening many of the other Company risks.

These uncertainties have the potential to negatively affect the risk of credit default for the issuers of the Company’s fixed maturity

debt securities and individual borrowers with mortgage loans held by the Company.

Company has implemented risk management, business continuity plans and has taken preventive measures and other precautions, including

5 unchanged sentences

Recent Accounting Pronouncements

Standards Adopted in 2020

“Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”

– Issued in August 2018, ASU 2018-13 modifies the disclosure requirements of Topic 820 by removing, modifying or adding certain

Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level

1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant

unobservable inputs for Level 3 fair value measurements.

ASU 2018-13 does not change the fair value measurements already required or

permitted by existing standards.

The Company adopted this standard on January 1, 2020.

The adoption of this standard did not materially

impact the Company’s financial statements.

See Note 8 for the Company’s fair value disclosures.

Standards Issued But Not Yet Adopted

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2016-13 that would make the ASU effective for the Company on January 1, 2023.

is in the process of evaluating the potential impact of this standard, especially as it relates to mortgage loans held for investment.

is in the process of evaluating the potential impact of this standard.

“Financial Services – Insurance (Topic 944):

3 unchanged sentences

the rate used to discount future cash flows.

The ASU will simplify and improve the accounting for certain market-based options or guarantees

associated with deposit or account balance contracts, simplify amortization of deferred acquisition costs while improving and expanding

required disclosures.

The ASU will improve the accounting for certain market-based options or guarantees associated

with deposit or account balance contracts, simplify amortization of deferred acquisition costs while improving and expanding required

In November 2020, the FASB issued an update to ASU No.

2018-12 that made the ASU effective for the Company on January 1,

The Company has engaged an industry software expert and is in the process of implementing this software and other changes to

The Company anticipates that it will be ready by the effective date.

The Company has made progress in the implementation of the new standard, including the involvement of actuaries, accountants, and

systems specialists.

However, the Company has not yet estimated the impact the new guidance will have on the consolidated financial statements.

Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Company’s

3 unchanged sentences

31, 2022 (Unaudited)

Company’s investments as of September 30, 2021 are summarized as follows:

Company’s investments as of March 31, 2022 are summarized as follows:

of Investments

3 unchanged sentences

Estimated Fair Value

September 30, 2021:

March 31, 2022:

Fixed maturity securities, available for sale, at estimated fair value:

1 unchanged sentence

Government agencies

$ ( 740,495 )

Obligations of states and political subdivisions

Corporate securities including public utilities

( 1,505,578 )

Mortgage-backed securities

34 unchanged sentences

$ 847,160,927

$905,700 of Membership stock and $2,199,440 of Activity stock due to short-term borrowings.

Includes $ 937,100 of Membership

stock and $ 1,651,300 of Activity stock due to short-term borrowings.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

28 unchanged sentences

Unamortized deferred loan fees, net

( 1,161,132 )

Allowance for loan losses

1 unchanged sentence

Net discounts

( 1,260,896 )

Total mortgage loans held for investment

15 unchanged sentences

$ 823,555,327

$866,900 of Membership stock and $1,639,700 of Activity stock due to short-term borrowings.

Includes $ 905,700 of Membership stock and $ 1,641,400

of Activity stock due to short-term advances and letters of credit.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

Maturity Securities

following tables summarize unrealized losses on fixed maturity securities available for sale, which were carried at estimated fair value,

at September 30, 2021 and December 31, 2020.

following table summarizes unrealized losses on fixed maturity securities available for sale that were carried at estimated fair value

at March 31, 2022 and at December 31, 2021.

The unrealized losses were primarily related to interest rate fluctuations and uncertainties

1 unchanged sentence

The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:

Schedule of Unrealized Loss on Investments

of Fair Value of Fixed Maturity Securities

Unrealized Losses for Less than Twelve Months

Unrealized Losses for More than Twelve Months

Total Unrealized Loss

At September 30, 2021

Combined Unrealized Loss

Combined Fair Value

At March 31, 2022

Treasury Securities And Obligations of U.S.

Government Agencies

Obligations of States and Political Subdivisions

1 unchanged sentence

Mortgage and other asset-backed securities

Total unrealized losses

At December 31, 2021

2 unchanged sentences

Mortgage and other asset-backed securities

Total unrealized losses

were 51 securities with fair value of 97.4 % of amortized cost at September 30, 2021.

There were 63 securities with fair value of 94.7 %

of amortized cost at December 31, 2020.

No additional credit losses have been recognized for the three and nine months ended September

30, 2021 and 2020.

a quarterly basis, the Company evaluates its fixed maturity securities available for sale.

This evaluation includes a review of current

ratings by the National Association of Insurance Commissions (NAIC).

Securities with a rating of 1 or 2 are considered investment grade.

Securities with ratings of 3 to 5 are considered non-investment grade and are evaluated for impairment.

Securities with a rating of 6

are automatically determined to be impaired and are written down.

The evaluation involves an analysis of the securities in relation to

historical values, interest payment history, projected earnings and revenue growth rates as well as a review of the reason for a downgrade

in the NAIC rating.

Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely

make interest and principal payments in accordance with the terms of the financial instrument.

If it is unlikely that the security will

meet contractual obligations, the loss is considered to be other than temporary, the security is written down to the new anticipated

market value and an impairment loss is recognized.

were 180 securities with fair value of 96.5 % of amortized cost at March 31, 2022.

There were 55 securities with fair value of 97.3 % of

amortized cost at December 31, 2021.

No additional credit losses have been recognized for the three months ended March 31, 2022 and 2021,

since the increase in unrealized losses is primarily a result of the recent rise in interest rates.

a quarterly basis, the Company evaluates its fixed maturity securities classified as available for sale.

This evaluation includes a review

of current ratings by the National Association of Insurance Commissions (“NAIC”).

Securities with a rating of 1 or 2 are

considered investment grade and are not reviewed for impairment, unless current market or recent company news could lead to a credit

Securities with ratings of 3 to 5 are evaluated for impairment.

Securities with a rating of 6 are automatically determined

to be impaired and are written down.

The evaluation involves an analysis of the securities in relation to historical values, interest

payment history, projected earnings and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating.

on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal

payments in accordance with the terms of the financial instrument.

If it is unlikely that the security will meet contractual obligations,

the loss is considered to be other than temporary, the security is written down to the new anticipated market value and an impairment

loss is recognized.

fair values of fixed maturity securities are based on quoted market prices, when available.

8 unchanged sentences

following table presents a rollforward of the Company’s cumulative other than temporary credit impairments (“OTTI”)

recognized in earnings on fixed maturity securities available for sale for the nine months ended September 30:

Schedule of Earnings on Fixed Maturity Securities

recognized in earnings on fixed maturity securities available for sale.

of Earnings on Fixed Maturity Securities

Balance of credit-related OTTI at January 1

5 unchanged sentences

Securities due to an increase in expected cash flows

Balance of credit-related OTTI at September 30

amortized cost and estimated fair value of fixed maturity securities available for sale at September 30, 2021, by contractual maturity,

are shown below.

Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay

obligations with or without call or prepayment penalties.

Balance of credit-related OTTI at March 31

following table presents the amortized cost and estimated fair value of fixed maturity securities available for sale at March 31, 2022,

by contractual maturity.

Expected maturities may differ from contractual maturities because certain borrowers may have the right to call

or prepay obligations with or without call or prepayment penalties.

of Investments Classified by Contractual Maturity Date

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Company is a member of the Federal Home Loan Bank of Des Moines and Dallas (“FHLB”).

The Company has pledged a total of $ 29,552,638 ,

par value, of United States Treasury and various Ginnie Mae fixed maturity securities with the FHLB at September 30, 2021.

These securities

are used as collateral on any cash borrowings from the FHLB.

As of September 30, 2021, the Company owed $ 14,443,758 to the FHLB and its

estimated remaining maximum borrowing capacity was $ 13,787,339 .

The Company pledged a total of $ 56,741,531 ,

at estimated fair value, of fixed maturity securities with the FHLB at March 31, 2022.

These securities are used as collateral on any

cash borrowings from the FHLB.

As of March 31, 2022, the Company owed $- 0 - to the FHLB and its estimated maximum borrowing capacity was

$ 52,059,046 .

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

Related Earnings

Company’s net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities, and

other than temporary impairments are summarized as follows:

following table presents the net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities,

and other than temporary impairments from investments and other assets.

of Gain (Loss) on Investments

Three Months Ended

Nine Months Ended

Three Months Ended March 31

Fixed maturity securities:

7 unchanged sentences

Gross realized losses

( 1,297,086 )

( 1,784,419 )

$ ( 173,461 )

net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined

using the specific identification method.

regarding sales of fixed maturity securities available for sale is summarized as follows:

Schedule of Major Categories of Net Investment Income

Three Months Ended

Nine Months Ended

regarding sales of fixed maturity securities available for sale is presented as follows.

Schedule of Major

Categories of Net Investment Income

Three Months Ended March 31

Proceeds from sales

1 unchanged sentence

Gross realized losses

categories of net investment income are as follows:

Three Months Ended

Nine Months Ended

Fixed maturity securities

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Investments (Continued)

categories of net investment income were as follows:

Three Months Ended March 31

Fixed maturity securities available for sale

Equity securities

Mortgage loans held for investment

Real estate held for investment and sale

Insurance assignments

5 unchanged sentences

( 3,417,082 )

( 9,587,806 )

( 10,021,552 )

Net investment income

investment income includes income earned by the restricted assets cemeteries and mortuaries of $ 778,892 and $ 129,347 for the three months

ended September 30, 2021 and 2020, respectively, and $ 1,130,771 and $ 380,079 for the nine months ended September 30, 2021 and 2020, respectively.

investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $ 476,708 and $ 161,211 for the three

months ended March 31, 2022 and 2021, respectively.

investment income on real estate consists primarily of rental revenue.

1 unchanged sentence

expenses relating to investment activities.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

3) Investments (Continued)

on deposit with regulatory authorities as required by law amounted to $ 10,168,666 at September 30, 2021 and $ 9,684,409 at December 31,

These restricted securities are included in various assets under investments on the accompanying condensed consolidated balance

on deposit with regulatory authorities as required by law amounted to $ 10,169,064 at March 31, 2022 and $ 10,168,853 at December 31, 2021

(December 31, 2021 amount corrected from that previously reported due to a typographical error).

These restricted securities are included

in various assets under investments on the accompanying condensed consolidated balance sheets.

were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses on

equity securities and fixed maturity securities) at September 30, 2021, other than investments issued or guaranteed by the United States

equity securities and fixed maturity securities) at March 31, 2022, other than investments issued or guaranteed by the United States

Estate Held for Investment and Held for Sale

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and population and in assets that provide operational efficiencies.

Company currently owns and operates 12 commercial properties in 5 states.

These properties include office buildings, a funeral home,

flex office space, and includes the redevelopment and expansion of its corporate campus (“Center 53”) in Salt Lake City,

The Company also holds undeveloped land that may be used for future commercial developments.

The Company uses bank debt in strategic

cases to leverage established yields or to acquire a higher quality or different class of asset.

aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $ 124,940,289 and $ 71,517,902 as

of September 30, 2021 and December 31, 2020, respectively.

The associated bank loan carrying values totaled $ 75,989,280 and $ 46,153,283

as of September 30, 2021 and December 31, 2020, respectively.

the three months ended September 30, 2021 and 2020, the Company recorded impairment losses on commercial real estate held for sale of

$- 0 - and $ 800,000 , respectively.

During the nine months ended September 30, 2021 and 2020, the Company recorded impairment losses on

commercial real estate held for sale of $ 28,378 and $ 846,980 , respectively.

These impairment losses relate to an office building and

a funeral home held by the life insurance segment.

Impairment losses are included in gains (losses) on investment and other assets on

the condensed consolidated statements of earnings.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Investments (Continued)

following is a summary of the Company’s commercial real estate held for investment for the periods presented:

Company currently owns and operates 11 commercial properties in 5 states.

These properties include office buildings, flex office space,

and includes the redevelopment and expansion of its corporate campus (“Center53”) in Salt Lake City, Utah.

The Company uses

bank debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset.

aggregated net ending balance of commercial real estate that serves as collateral for bank loans was $ 137,775,232 and $ 134,251,205 as

of March 31, 2022 and December 31, 2021, respectively.

The associated bank loan carrying values totaled $ 92,644,180 and $ 85,663,148 as

of March 31, 2022 and December 31, 2021, respectively.

the three months ended March 31, 2022 and 2021, the Company did not record any impairment losses on commercial real estate held for investment

or held for sale.

Impairment losses, if any, are included in gains (losses) on investment and other assets on the condensed consolidated

statements of earnings.

Company’s commercial real estate held for investment is summarized as follows:

of Commercial Real Estate Investment

1 unchanged sentence

Total Square Footage

September 30 2021

December 31 2021

September 30 2021

December 31 2021

1 unchanged sentence

$ 155,393,335

$ 143,003,658

$ 106,840,710

Includes Center53 phase 1 completed and phase 2, which is currently

under construction.

following is a summary of the Company’s commercial real estate held for sale for the periods presented:

Includes Center53 phase 1 and phase 2

Company’s commercial real estate held for sale is summarized as follows:

Net Ending Balance

Total Square Footage

commercial pad

December 31 2021

Mississippi (1)

Approximately 93 acres of undeveloped land

properties are all actively being marketed with the assistance of commercial real estate brokers in the markets where the properties

5 unchanged sentences

The Company also invests in residential subdivision land developments.

Company established Security National Real Estate Services (“SNRE”) to manage the residential portfolio.

SNRE cultivates

and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across

net ending balance of foreclosed residential real estate included in residential real estate held for investment and sale is $ 1,190,602

and $ 4,327,079 as of September 30, 2021 and December 31, 2020, respectively.

the three months ended September 30, 2021 and 2020 the Company did no t record any impairment losses on residential real estate held for

investment or held for sale.

During the nine months ended September 30, 2021 and 2020 the Company recorded impairment losses on residential

real estate held for investment of $- 0 - and $ 43,394 , respectively.

Impairment losses, if any, are included in gains (losses) on investment

and other assets on the condensed consolidated statements of earnings.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Investments (Continued)

following is a summary of the Company’s residential real estate held for investment for the periods presented:

Company established Security National Real Estate Services (“SNRE”) to manage the residential portfolio.

SNRE cultivates

and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across

net ending balance of foreclosed residential real estate included in residential real estate held for investment and sale is $ 210,963

and $ 1,190,602 as of March 31, 2022 and December 31, 2021, respectively.

the three months ended March 31, 2022 and 2021 the Company recorded impairment losses on residential real estate held for sale of $ 94,400

and $- 0 -, respectively.

Impairment losses are included in gains (losses) on investment and other assets on the condensed consolidated

statements of earnings.

Company’s residential real estate held for investment is summarized as follows:

of Residential Real Estate Investment

Net Ending Balance

December 31 2021

Washington (2)

subdivision land developments

residential lots

information regarding the Company’s subdivision land developments in Utah is summarized as follows:

Lots available for sale

Includes subdivision land developments

Improved residential lots

following table presents additional information regarding the Company’s subdivision land developments in Utah.

December 31 2021

Lots developed

Lots to be developed

Ending Balance

following is a summary of the Company’s residential real estate held for sale for the periods presented:

Company’s residential real estate held for sale is summarized as follows:

December 31 2021

Net Ending Balance

December 31 2021

Washington (1)

Real estate held for

Improved residential lots

properties are all actively being marketed with the assistance of residential real estate brokers in the markets where the properties

The Company expects these properties to sell within the coming 12 months.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Investments (Continued)

Estate Owned and Occupied by the Company

primary business units of the Company occupy a portion of the real estate owned by the Company.

As of September 30, 2021, real estate

owned and occupied by the Company is summarized as follows:

As of March 31, 2022, real estate owned

and occupied by the Company is summarized as follows:

of Real Estate Owned and Occupied by the Company

Business Segment

Approximate Square

Approximate Square Footage

Square Footage Occupied by the Company

Election Rd., Draper, UT

Corporate Offices, Life Insurance and

Cemetery/Mortuary Operations

5201 Green Street, Salt Lake City, UT (1)

Life Insurance and Mortgage Operations

433 West Ascension Way, Salt Lake City, UT - Center53 Building 2

Corporate Offices, Life Insurance, Cemetery/Mortuary Operations, and Mortgage Operations

1044 River Oaks Dr., Flowood, MS

8 unchanged sentences

Life Insurance Sales

Included in property and equipment on the condensed consolidated

Included in property and equipment on the consolidated

balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

3) Investments (Continued)

Loans Held for Investment

8 unchanged sentences

of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors

At September 30,2021, the Company had 62 % , 13 % , 5 % , 4 % , 2 % , 2 % and 2 % of its mortgage loans from borrowers located in the

states of Utah, Florida, Texas, Nevada, Arizona, Hawaii, and Louisiana, respectively.

At December 31, 2020, the Company had 57 % , 13 % ,

9 % , 4 % , 3 % and 3 % of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada and Arizona,

respectively.

At March 31, 2022, the Company had 75 %, 6 %, 4 %, 4 %, 3 % and 3 % of its mortgage loans from borrowers located in the states

of Utah, Florida, Texas, Nevada, California, and Arizona, respectively.

At December 31, 2021, the Company had 70 %, 7 %, 5 %, 4 %, 4 % and

2 % of its mortgage loans from borrowers located in the states of Utah, Florida, California, Texas, Nevada and Arizona, respectively.

loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, charge-offs, premiums, discounts

17 unchanged sentences

of loans that are determined to be impaired.

Upon determining impairment, the Company establishes an individual impairment allowance

based upon an assessment of the fair value of the underlying collateral.

In addition, when a mortgage loan is past due more than 90 days,

the Company does not accrue any interest income.

When a loan becomes delinquent, the Company proceeds to foreclose on the real estate

and all expenses for foreclosure are expensed as incurred.

Once foreclosed, an adjustment for the lower of cost or fair value is made,

if necessary, and the amount is classified as real estate held for investment or held for sale.

As a practical expedient, upon determining impairment, the Company establishes an individual

impairment allowance based upon an assessment of the fair value of the underlying collateral.

In addition, when a mortgage loan is past

due more than 90 days, the Company does not accrue any interest income.

When a loan becomes delinquent, the Company proceeds to foreclose

on the real estate and all expenses for foreclosure are expensed as incurred.

Once foreclosed, an adjustment for the lower of cost or

fair value is made, if necessary, and the amount is classified as real estate held for investment or held for sale.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Investments (Continued)

allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the

12 unchanged sentences

— Secured by family dwelling units.

These loans are secured by first mortgages on the unit, which are generally the primary

residence of the borrower, generally at a loan-to-value ratio (“LTV”) of 80% or less.

These loans are secured by first and second mortgages on the unit.

The borrower’s

ability to repay is sensitive to the life events and general economic condition of the region.

Where loan to values exceed 80%, the loan

is generally guaranteed by private mortgage insurance, FHA or VA.

construction (including land acquisition and development) – Underwritten in accordance with the Company’s underwriting

15 unchanged sentences

Company establishes a valuation allowance for credit losses in its mortgage loans held for investment portfolio.

The following is a summary

of the allowance for loan losses as a contra-asset account for the periods presented:

Schedule of Allowance for Loan Losses as Contra-Asset Account

The following table

presents the valuation allowance for loan losses as a contra-asset account.

of Allowance for Loan Losses as Contra- Asset Account

Residential Construction

September 30, 2021

March 31, 2022

Allowance for credit losses:

Beginning balance - January 1, 2022

Ending balance - September 30, 2021

Ending balance - March 31, 2022

Ending balance:

3 unchanged sentences

Mortgage loans:

Ending balance – September 30, 2021

Ending balance - March 31, 2022

$ 193,151,868

24 unchanged sentences

$ 276,062,489 (1)

Amount corrected from that previously reported due to

a typographical error.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Investments (Continued)

following is a summary of the aging of mortgage loans held for investment for the periods presented:

following table presents the aging of mortgage loans held for investment.

Schedule of Aging of Mortgage Loans

September 30, 2021

March 31, 2022

30-59 Days Past Due

24 unchanged sentences

Unamortized deferred loan fees, net

( 1,161,132 )

Unamortized discounts, net

( 1,260,896 )

Net Mortgage Loans

1 unchanged sentence

$ 277,306,046

income is not recognized on loans past due greater than 90 days or in foreclosure.

Interest income is not recognized

on loans past due greater than 90 days or in foreclosure.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

7 unchanged sentences

and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting

period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:

period and the average recorded investment and interest income recognized during the time the loans were impaired are summarized as follows:

Schedule of Impaired Mortgage Loans

4 unchanged sentences

Interest Income Recognized

September 30, 2021

March 31, 2022

With no related allowance recorded:

19 unchanged sentences

loans as loans 90 days or greater delinquent or on non-accrual status.

Company’s performing and non-performing mortgage loans held for investment were as follows:

Company’s performing and non-performing mortgage loans held for investment are summarized as follows:

Schedule of Credit Risk of Mortgage Loans Based on Performance Status

Residential Construction

March 31, 2022

December 31, 2021

March 31, 2022

December 31, 2021

March 31, 2022

December 31, 2021

March 31, 2022

December 31, 2021

$ 193,151,868

14 unchanged sentences

Accrual of interest resumes if a loan is brought current.

Interest not accrued on these loans totals approximately $ 265,000 and $ 491,000 as of September 30, 2021 and December 31, 2020, respectively.

following is a summary of mortgage loans held for investment on a non-accrual status for the periods presented.

Schedule of Mortgage loans on a Nonaccrual Status

September 30 2021

December 31 2020

Residential construction

Interest not accrued on these loans totals approximately $ 254,000 and $ 236,000 as of March 31, 2022 and December 31, 2021, respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

8 unchanged sentences

condensed consolidated financial statements for additional disclosures regarding loans held for sale.

following is a summary of the aggregate fair value and the aggregate unpaid principal balance of loans held for sale for the periods

of Aggregate fair value - Loans Held for Sale

September 30 2021

December 31 2020

following table presents the aggregate fair value and the aggregate unpaid principal balance of loans held for sale.

Summary of Aggregate fair value - Loans Held for Sale

As of December 31 2021

Aggregate fair value

5 unchanged sentences

of mortgage loans held for sale.

categories of mortgage fee income for loans held for sale are as follows:

categories of mortgage fee income for loans held for sale are summarized as follows:

Schedule of Mortgage Fee Income for Loans Held for Sale

Three Months Ended September 30

Nine Months Ended September 30

Three Months Ended March 31

Interest income

3 unchanged sentences

( 2,746,565 )

Provision for loan loss reserve

( 6,945,882 )

( 1,701,700 )

( 3,489,982 )

Provision for loan loss reserve

Mortgage fee income

$ 204,414,276

$ 212,209,718

a repurchase demand corresponding to a mortgage loan previously held for sale and sold to a third-party investor is received from a third-party

11 unchanged sentences

to the investor.

following is a summary of the loan loss reserve that is included in other liabilities and accrued expenses:

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Loans Held for Sale (Continued)

loan loss reserve, which is included in other liabilities and accrued expenses, is summarized as follows:

Summary of Loan Loss Reserve Included in Other Liabilities and Accrued Expenses

September 30 2021

December 31 2020

As of March 31

As of December 31

Balance, beginning of period

Provision on current loan originations (1)

Additional provision for loan loss reserve

Charge-offs, net of recaptured amounts

( 20,347,709 )

( 4,906,914 )

Balance, end of period

in mortgage fee income

Included in mortgage fee

Company maintains reserves for estimated losses on current production volumes.

For the nine months ended September 30, 2021, $ 1,701,700

in reserves were added.

The Company currently adds reserves a rate of 3.0 basis points per loan, the equivalent of $ 300 per $ 1,000,000

in loans originated.

This is a decrease over the nine months ended September 30, 2020, when reserves were added at a rate of 8.9 basis

points per loan originated, the equivalent of $ 890 per $ 1,000,000 in loans originated.

The Company also increased its loan loss reserve

for the year ended December 31, 2020 by an additional $ 16,506,030 to account for changes in estimates specific to settlements of loan

See Note 11 for additional information regarding mortgage loan loss settlements and charge-offs.

The unique nature of COVID-19

creates significant difficulty for forecasting potential future losses.

The Company will continue to monitor data and economic conditions

in order to maintain adequate loss reserves on current production.

Thus, the Company believes that the final loan loss reserve as of

September 30, 2021, represents its best estimate for adequate loss reserves on loans sold.

For the three months ended March 31, 2022, $ 306,026 in

reserves were added at a rate of 2.9 basis points per loan, the equivalent of $ 290 per $ 1,000,000 in loans originated.

This is a decrease

over the three months ended March 31, 2021, when reserves of $ 660,663 were added at a rate of 4.5 basis points per loan originated, the

equivalent of $ 450 per $ 1,000,000 in loans originated.

The unique nature of COVID-19 creates significant difficulty for forecasting potential

future losses.

The Company will continue to monitor data and economic conditions in order to maintain adequate loss reserves on current

Thus, the Company believes that the final loan loss reserve as of March 31, 2022, represents its best estimate for adequate

loss reserves on loans sold.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

Compensation expense for options

issued of $- 0 - and $ 104,562 has been recognized for these plans for the three months ended September 30, 2021 and 2020, respectively,

and $ 39,153 and $ 271,959 has been recognized for these plans for the nine months ended September 30, 2021 and 2020, respectively.

of September 30, 2021, the total unrecognized compensation expense related to the options issued was $ 0 .

issued of $ 271,747 and $ 39,153 has been recognized for these plans for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, the total unrecognized compensation expense related to the options issued was $ 610,889 .

fair value of each option granted is estimated on the date of grant using the Black Scholes Option Pricing Model.

5 unchanged sentences

the expected life of the options is based upon the Federal Reserve Board’s daily interest rates in effect at the time of the grant.

summary of the status of the Company’s stock compensation plans as of September 30, 2021, and the changes during the nine months

ended September 30, 2021, are presented below:

Schedule of stock inventive plan changes

summary of the status of the Company’s stock compensation plans as of March 31, 2022, and the changes during the three months ended

March 31, 2022, are presented below:

Schedule of Activity of Stock Option Plans

Class A Shares

4 unchanged sentences

Adjustment for effect of stock dividends

Outstanding at September 30, 2021

As of September 30, 2021:

Outstanding at March 31, 2022

As of March 31, 2022:

Options exercisable

As of September 30, 2021:

As of March 31, 2022:

Available options for future grant

Weighted average contractual term of options outstanding at September 30, 2021

Weighted average contractual term of options exercisable at September 30, 2021

Aggregated intrinsic value of options outstanding at September 30, 2021 (1)

Aggregated intrinsic value of options exercisable at September 30, 2021 (1)

Company used a stock price of $ 8.23 as of September 30, 2021 to derive intrinsic value.

Weighted average contractual term of options outstanding at March 31, 2022

Weighted average contractual term of options exercisable at March 31, 2022

Aggregated intrinsic value of options outstanding at March 31, 2022 (1)

Aggregated intrinsic value of options exercisable at March 31, 2022 (1)

The Company used a stock price of $ 10.00 as of March

31, 2022 to derive intrinsic value.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Stock Compensation Plans (Continued)

summary of the status of the Company’s stock compensation plans as of September 30, 2020, and the changes during the nine months

ended September 30, 2020, are presented below:

summary of the status of the Company’s stock compensation plans as of March 31, 2021, and the changes during the three months ended

March 31, 2021, are presented below:

Class A Shares

4 unchanged sentences

Adjustment for effect of stock dividends

Outstanding at September 30, 2020

As of September 30, 2020:

Outstanding at March 31, 2021

As of March 31, 2021:

Options exercisable

As of September 30, 2020:

As of March 31, 2021:

Available options for future grant

Weighted average contractual term of options outstanding at September 30, 2020

Weighted average contractual term of options exercisable at September 30, 2020

Aggregated intrinsic value of options outstanding at September 30, 2020 (1)

Aggregated intrinsic value of options exercisable at September 30, 2020 (1)

The Company used a stock price of $ 6.40 as of September 30,

Weighted average contractual term of options outstanding at March 31, 2021

Weighted average contractual term of options exercisable at March 31, 2021

Aggregated intrinsic value of options outstanding at March 31, 2021 (1)

Aggregated intrinsic value of options exercisable at March 31, 2021 (1)

The Company used a stock price of $ 9.35 as of March 31,

2021 to derive intrinsic value.

total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on

the exercise date) of stock options exercised during the nine months September 30, 2021 and 2020 was $ 591,603 and $ 191,309 , respectively.

the exercise date) of stock options exercised during the three months March 31, 2022 and 2021 was $ 395,831 and $ 139,035 , respectively.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Earnings Per Share

basic and diluted earnings per share amounts were calculated as follows:

per share amounts have been retroactively adjusted for the effect of annual stock dividends.

In accordance with GAAP, the basic and diluted

earnings per share amounts were calculated as follows:

Schedule of Earnings Per Share, Basic and Diluted

Three Months Ended September 30

Nine Months Ended September 30

Three Months Ended

Basic weighted-average shares outstanding

4 unchanged sentences

Diluted net earnings per share

earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends.

For the nine months September 30,

2021 and 2020, there were - 0 - and - 0 - of anti-dilutive employee stock option shares, respectively, that were not included in the computation

of diluted net earnings per common share as their effect would be anti-dilutive.

Basic and diluted earnings per share amounts are the

same for each class of common stock.

following table summarizes the activity in shares of capital stock for the periods presented:

Schedule of Activity of Stock Option Plans

the three months March 31, 2022 and 2021, there were no anti-dilutive employee stock option shares.

Basic and diluted earnings per share

amounts are the same for each class of common stock.

following table summarizes the activity in shares of capital stock.

Summary of Activities in Shares of Capital Stock

Outstanding shares at December 31, 2020

Exercise of stock options

Stock dividends

Conversion of Class C to Class A

Outstanding shares at September 30, 2020

Outstanding shares at March 31, 2021

Outstanding shares at December 31, 2021

Exercise of stock options

Stock dividends

Conversion of Class C to Class A

Outstanding shares at September 30, 2021

Outstanding shares at March 31, 2022

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2022 (Unaudited)

Business Segment Information

Segment Information

of Products and Services by Segment

24 unchanged sentences

Business Segment Information (Continued)

of Revenues and Expenses by Reportable Segment

Schedule of Revenues and Expenses by Reportable Segment

Life Insurance

For the Three Months Ended

September 30, 2021

Revenues from external customers

$ 119,509,131

Intersegment revenues

( 1,989,458 )

Segment profit before income taxes

Life Insurance

For the Three Months Ended

September 30, 2020

Revenues from external customers

$ 101,447,531

$ 146,204,565

Intersegment revenues

( 3,200,822 )

Segment profit before income taxes

For the Nine Months Ended

September 30, 2021

March 31, 2022

Revenues from external customers

$ 102,425,907

$ 216,764,653

$ 358,918,052

Intersegment revenues

8 unchanged sentences

1,519,803,792

For the Nine Months Ended

September 30, 2020

For the Three Months Ended

March 31, 2021

Revenues from external customers

$ 122,658,606

$ 219,403,866

$ 344,475,256

Intersegment revenues

19 unchanged sentences

value measurements are classified under the following hierarchy:

Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities

in an active market that the Company can access.

Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or

liabilities in an active market that the Company can access.

Financial assets and financial liabilities whose values are based on the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in non-active markets;

Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are

both unobservable and significant to the overall fair value measurement.

These inputs may reflect the Company’s estimates of the

assumptions that market participants would use in valuing the financial assets and financial liabilities.

prices for similar assets or liabilities in active markets;

prices for identical or similar assets or liabilities in non-active markets;

models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.

Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that

are both unobservable and significant to the overall fair value measurement.

These inputs may reflect the Company’s estimates

of the assumptions that market participants would use in valuing the financial assets and financial liabilities.

Company utilizes a combination of third-party valuation service providers, brokers, and internal valuation models to determine fair value.

4 unchanged sentences

For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing

services, or in the case of private placements (considered Level 3 investments), are estimated by discounting expected future cash flows

using a current market value applicable to the coupon rate, credit and maturity of the investments.

services, or in the case of private placements (considered Level 3 financial assets), are estimated by discounting expected future cash

flows using a current market value applicable to the coupon rate, credit and maturity of the investments.

The fair values for equity securities are based on quoted market prices.

13 unchanged sentences

The fair values for call and put options are based on quoted market prices.

Additionally,

there were no transfers between Level 1 and Level 2 in the fair value hierarchy.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

8 unchanged sentences

When a quoted market price is not readily available, the Company uses the market price from its last sale of similar

Fair value is often difficult to determine and may contain significant unobservable inputs.

Commitments and Forward Sale Commitments :

36 unchanged sentences

The Company also

considers area comparables and property condition when determining fair value.

considers area comparable properties and property condition when determining fair value.

addition to this analysis performed by the Company, the Company depreciates Real Estate Held for Investment.

5 unchanged sentences

in the sale transaction.

See Note 12 for more information regarding MSRs.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by

their classification in the condensed consolidated balance sheet at September 30, 2021.

of Fair Value Assets and Liabilities Measured on a Recurring Basis

their classification in the condensed consolidated balance sheet at March 31, 2022.

Schedule of Fair Value Assets and Liabilities Measured on a Recurring Basis

Quoted Prices in Active Markets for Identical Assets

20 unchanged sentences

Derivatives - loan commitments (4)

Total liabilities accounted for at fair value on a recurring basis

( 1,591,817 )

maturity securities available for sale

in other assets on the consolidated balance sheets

in other liabilities and accrued expenses on the consolidated balance sheets

Total liabilities accounted for at fair value

on a recurring basis

$ ( 1,645,297 )

$ ( 1,591,817 )

Fixed maturity securities available for sale

Equity securities

Included in other assets on the consolidated balance sheets

Included in other liabilities and accrued expenses on the consolidated

balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

4 unchanged sentences

their classification in the condensed consolidated balance sheet at December 31, 2021.

Prices in Active Markets for Identical Assets

Observable Inputs

Unobservable Inputs

accounted for at fair value on a recurring basis

maturity securities available for sale

held for sale

perpetual care trust investments (1)

perpetual care trust investments (2)

- loan commitments (3)

Quoted Prices in Active Markets for Identical Assets

Significant Observable Inputs

Significant Unobservable Inputs

Assets accounted for at fair value on a recurring basis

accounted for at fair value on a recurring basis

- call options (4)

- loan commitments (4)

liabilities accounted for at fair value on a recurring basis

maturity securities available for sale

in other assets on the consolidated balance sheets

in other liabilities and accrued expenses on the consolidated balance sheets

Fixed maturity securities available for sale

$ 259,287,603

$ 257,264,255

Equity securities

Loans held for sale

Restricted assets (1)

Restricted assets (2)

Cemetery perpetual care trust investments (1) (1)

Cemetery perpetual care trust investments (2) (2)

Derivatives - loan commitments (3)

Total assets accounted for at fair value on a

recurring basis

$ 591,517,009

$ 259,650,708

$ 313,363,585

Liabilities accounted for at fair value on a

recurring basis

Derivatives - call options (4)

Derivatives - put options (4)

Derivatives - loan commitments (4)

( 1,547,895 )

Total liabilities accounted for at fair value

on a recurring basis

$ ( 1,603,324 )

$ ( 1,547,895 )

Fixed maturity securities available for sale

Equity securities

Included in other assets on the consolidated balance sheets

Included in other liabilities and accrued expenses on the consolidated

balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

1 unchanged sentence

31, 2022 (Unaudited)

Fair Value of Financial Instruments (Continued)

Level 3 assets and liabilities measured at fair value on a recurring basis as of September 30, 2021, the significant unobservable inputs

Value of Financial Instruments (Continued)

Level 3 assets and liabilities measured at fair value on a recurring basis as of March 31, 2022, the significant unobservable inputs

used in the fair value measurements were as follows:

32 unchanged sentences

Fair Value of Financial Instruments (Continued)

is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the

three months ending March 31, 2022:

Schedule of Changes in the Consolidated Balance Sheet Line Items Measured Using Level 3 Inputs

1 unchanged sentence

Loans Held for Sale

Fixed Maturity Securities

Available for Sale

Balance - December 31, 2020

$ 422,772,418

Originations and purchases

4,243,072,600

Sales, maturities and paydowns

( 4,484,170,804 )

Transfer to mortgage loans held for investment

Total gains (losses):

Included in earnings

( 549,093 )(1)

131,183,580 (1)

Included in other comprehensive income

Balance – September 30, 2021

$ 312,655,843

a component of Mortgage fee income on the condensed consolidated statements of earnings

a component of Net investment income on the condensed consolidated statements of earnings

is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

Net Loan Commitments

Loans Held for Sale

Fixed Maturity Securities Available for Sale

5 unchanged sentences

( 1,132,085,830 )

( 1,031,500 )

Transfer to mortgage loans held for investment

( 9,170,610 )

Total gains (losses):

3 unchanged sentences

Included in other comprehensive income

Balance - September 30, 2020

Balance - March 31, 2022

$ 234,012,872

3 unchanged sentences

statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

Fair Value of Financial Instruments (Continued)

is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

Net Loan Commitments

Loans Held for Sale

Fixed Maturity Securities Available for Sale

Balance - June 30, 2021

$ 296,728,086

Originations and purchases

1,432,842,093

Sales, maturities and paydowns

( 1,459,143,727 )

Transfer to mortgage loans held for investment

Total gains (losses):

Included in earnings

( 380,696 )(1)

Included in other comprehensive income

Balance - September 30, 2021

$ 312,655,843

a component of Mortgage fee income on the condensed consolidated statements of earnings

a component of Net investment income on the condensed consolidated statements of earnings

is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the periods presented:

following table is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs for the

three months ending March 31, 2021:

Net Loan Commitments

1 unchanged sentence

Fixed Maturity Securities Available for Sale

Balance - June 30, 2020

Balance - December 31, 2020

$ 422,772,418

7 unchanged sentences

46,498,954 (1)

61,900,085 (1)

Included in other comprehensive income

Balance - September 30, 2020

Balance - March 31, 2021

$ 304,030,372

a component of Mortgage fee income on the condensed consolidated statements of earnings

a component of Net investment income on the condensed consolidated statements of earnings

As a component of Mortgage fee income on the condensed consolidated

statements of earnings

As a component of Net investment income on the condensed consolidated

statements of earnings

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

2 unchanged sentences

Fair Value of Financial Instruments (Continued)

following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

by their classification in the condensed consolidated balance sheet at September 30, 2021.

following table summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

by their classification in the condensed consolidated balance sheet at March 31, 2022.

of Fair Value Assets Measured on a Nonrecurring Basis

6 unchanged sentences

Total assets accounted for at fair value on a nonrecurring basis

following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

following table summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis

by their classification in the condensed consolidated balance sheet at December 31, 2021.

17 unchanged sentences

Therefore, for substantially all financial instruments, the fair value estimates presented herein are not

necessarily indicative of the amounts the Company could have realized in a sales transaction at September 30, 2021 and December 31, 2020.

necessarily indicative of the amounts the Company could have realized in a sales transaction at March 31, 2022 and December 31, 2021.

carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy,

are summarized as follows as of September 30, 2021:

are summarized as follows as of March 31, 2022:

Schedule of Financial Instruments Carried at Other Than Fair Value

23 unchanged sentences

( 116,276,319 )

in other investments and policy loans

loans held for investment

in future policy benefits and unpaid claims

Included in other investments and policy loans on the condensed

consolidated balance sheets

Mortgage loans held for investment

Included in future policy benefits and unpaid claims on the

condensed consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Fair Value of Financial Instruments (Continued)

carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy,

3 unchanged sentences

Mortgage loans held for investment

$ 100,384,283

Residential construction

19 unchanged sentences

( 116,215,717 )

in other investments and policy loans on the condensed consolidated balance sheets

loans held for investment

in future policy benefits and unpaid claims on the condensed consolidated balance sheets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

Fair Value of Financial Instruments (Continued)

Included in other investments and policy loans on the consolidated

balance sheets

Mortgage loans held for investment

Included in future policy benefits and unpaid claims on the

consolidated balance sheets

methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of these financial instruments are

7 unchanged sentences

are evaluated individually for impairment.

– The estimated fair value is determined through a combination of discounted cash flows(estimating expected future cash flows of

payments and discounting them using current interest rates from single family mortgages) and considering pricing of similar loans that

were sold recently.

– The estimated fair value is determined through a combination of discounted cash flows (estimating expected future cash flows

of payments and discounting them using current interest rates from single family mortgages) and considering pricing of similar loans

that were sold recently.

Construction – These loans are primarily short in maturity.

7 unchanged sentences

condensed consolidated balance sheet for these financial instruments approximate their fair values.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Fair Value of Financial Instruments (Continued)

and Other Loans Payable :

25 unchanged sentences

overall economy

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

Derivative Instruments

19 unchanged sentences

the most current data.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Derivative Instruments (Continued)

Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted

mortgage-backed securities (“MBS”) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the

probability that the mortgage loan will fund within the terms of the commitment.

The change in fair value of the underlying mortgage

loan is measured from the date the loan commitment is issued and is shown net of expenses.

Following issuance, the value of a loan commitment

can be either positive or negative depending upon the change in value of the underlying mortgage loans.

probability that the mortgage loan will fund within the terms of the commitment net of estimated commission expense.

The change in fair

value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of related expenses.

issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage

Fallout rates and other factors from the Company’s recent historical data are used to estimate the quantity and value of

mortgage loans that will fund within the terms of the commitments.

Sale Commitments

7 unchanged sentences

expenses on the condensed consolidated balance sheets.

and Put Options

and Put Options Derivatives

Company uses a strategy of selling “out of the money” call options on its equity securities as a source of revenue.

17 unchanged sentences

and accrued expenses on the condensed consolidated balance sheets.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

10) Derivative

Instruments (Continued)

following table shows the notional amount and fair value of derivatives as of September 30, 2021 and December 31, 2020.

following table shows the fair value and notional amounts of derivative instruments.

Schedule of Derivative Assets at Fair Value

Fair Values and Notional Values of Derivative Instruments

September 30, 2021

March 31, 2022

December 31, 2021

Balance Sheet Location

Balance Sheet

Notional Amount

13 unchanged sentences

$ 863,914,367

following table shows the gains and losses on derivatives for the periods presented.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Derivative Instruments (Continued)

following table presents the gains (losses) on derivatives.

There were no gains or losses reclassified from accumulated other comprehensive

income into income or gains or losses recognized in income on derivatives ineffective portion or any amounts excluded from effective

Schedule of Gains and Losses on Derivatives

Net Amount Gain (Loss)

Three Months Ended September 30

Nine Months Ended September 30

Three Months Ended March 31

Classification

1 unchanged sentence

Mortgage fee income

$ ( 380,696 )

$ ( 549,093 )

Call and put options

Gains on investments and other assets

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

Reinsurance, Commitments and Contingencies

7 unchanged sentences

current practice of property preservation allow it to estimate its potential losses on loans sold.

The estimated liability for indemnification

losses is included in other liabilities and accrued expenses and, as of September 30, 2021 and December 31, 2020, the balances were $ 2,408,233

and $ 20,583,618 , respectively.

The Company believes that the final loan loss reserve as of September 30, 2021, represents its best estimate

for adequate loss reserves on loans sold.

Loan Loss Litigation

Agreement and Mutual Release with Lehman Brothers Holdings Inc.

2004 to early 2008, SecurityNational Mortgage Company (“SecurityNational Mortgage”), a wholly owned subsidiary of the Company,

originated “limited documentation” or “reduced documentation” loans which were sold to certain affiliates of

Lehman Brothers Holdings Inc.

(“Lehman Holdings”).

Certain of these loans became the subject of disputes between SecurityNational

Mortgage and Lehman Holdings and certain Lehman Holdings affiliates.

Lehman Holdings filed a Petition for Relief under Chapter 11 of

the United States Bankruptcy Code in 2008.

In May of 2011, SecurityNational Mortgage filed a complaint in U.S.

District Court against

certain Lehman Holdings affiliates.

In June of 2011, Lehman Holdings filed a complaint in Federal District Court against SecurityNational

Mortgage, both of which were later resolved.

In 2016, certain other pending loan disputes between SecurityNational Mortgage and Lehman

Holdings became the subject of an unsuccessful, non-binding alternate dispute resolution mediation proceeding.

in 2016, Lehman Holdings filed an adversary proceeding complaint against approximately 150 mortgage loan originators, including SecurityNational

Mortgage, in the U.S.

Bankruptcy Court of the Southern District of New York, which included seeking damages relating to the alleged obligations

of the defendants under indemnification provisions of alleged agreements, in amounts to be determined at trial, including interest, attorneys’

fees and costs incurred by Lehman Holdings in enforcing the obligations of the defendants.

The complaint was later amended with the latest

amended complaint filed against SecurityNational Mortgage on December 27, 2016, seeking damages to be determined at trial, including

interest, attorneys’ fees and costs.

This complaint involved approximately 135 mortgage loans, there being millions of dollars

allegedly in dispute.

These claims against SecurityNational Mortgage were asserted as a result of Lehman Holdings’ earlier settlements

with the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Corporation (“Freddie Mac”).

2018, Lehman Holdings filed a separate adversary proceeding complaint against SecurityNational Mortgage.

This adversary proceeding allegedly

involved approximately 577 mortgage loans relative to private securitization trusts (“RMBS Loans”) and millions of dollars

Thereafter, Lehman Holdings made a filing that effectively reduced the number of RMBS Loans to 248.

This proceeding was in

addition to the above-referenced proceeding involving the Fannie Mae and Freddie Mac mortgage loans.

As with the above-referenced proceeding,

damages were sought including interest, costs, and attorneys’ fees.

SecurityNational

Mortgage, as well as other defendants, have been involved in written discovery, and production of documents relative to the cases, and

the filing of motions.

The deposition phase of the cases was yet to begin, as well as the later expert witness phase.

Those phases would

require substantial expenditures of legal fees and costs.

February 1, 2021, SecurityNational Mortgage executed a settlement agreement with Lehman Holdings in relation to these two adversary proceedings

wherein all mortgage loan related claims were resolved, thereby ending all liabilities asserted by Lehman Holdings and conclusively ending

all proceedings between SecurityNational Mortgage and Lehman Holdings.

The full amount of SecurityNational Mortgage’s settlement

payment was accounted for in the Company’s loan loss reserve as of December 31, 2020 and was paid during the first quarter 2021.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

Reinsurance, Commitments and Contingencies (Continued)

See Note 4 to the condensed consolidated

financial statements for additional information about the Company’s loan loss reserve.

Covenants for Mortgage Warehouse Lines of Credit

21 unchanged sentences

rights) of at least $ 1.00 on a rolling twelve months.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

31, 2022 (Unaudited)

Reinsurance, Commitments and Contingencies (Continued)

Company through its subsidiary SecurityNational Mortgage, has a line of credit with U.S Bank.

3 unchanged sentences

rate plus 2.0% and matures on June 4, 2022 .

The Company is required to comply with covenants for adjusted tangible net worth, unrestricted

cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights) of at least

$ 1.00 on a rolling twelve months.

Company, through its subsidiary EverLEND Mortgage, has a line of credit with Texas Capital Bank N.A.

This agreement with the bank allows

EverLEND Mortgage to borrow up to $ 5,000,000 for the sole purpose of funding mortgage loans.

The agreement charges interest at the 1-Month

LIBOR rate plus 2.5% and matures on August 18, 2022 .

The Company is required to comply with covenants for adjusted tangible net worth,

unrestricted cash balance, and minimum combined pre-tax income (excluding any changes in the fair value of mortgage servicing rights)

of at least $ 1.00 on a rolling four-quarter basis.

Company is required to comply with covenants for adjusted tangible net worth, unrestricted cash balance, and minimum combined pre-tax

income (excluding any changes in the fair value of mortgage servicing rights) of at least $ 1.00 on a rolling twelve months.

agreements for warehouse lines include cross default provisions in that a covenant violation under one agreement constitutes a covenant

violation under the other agreement.

As of September 30, 2021, the Company was in compliance with all debt covenants.

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

to Condensed Consolidated Financial Statements

30, 2021 (Unaudited)

Reinsurance, Commitments and Contingencies (Continued)

As of March 31, 2022, the Company was in compliance with all debt covenants.

Contingencies and Commitments

1 unchanged sentence

and development.

As of September 30, 2021, the Company’s commitments were approximately $ 318,081,000 for these loans, of which

As of March 31, 2022, the Company’s commitments were approximately $ 335,619,000 for these loans, of which $ 196,848,609

had been funded.

The Company will advance funds once the work has been completed and an independent inspection is made.

The maximum loan commitment ranges between 50 % and 80 % of appraised value.

The Company receives fees and interest for these loans and

the interest rate is generally fixed 5.25 % to 8.00 % per annum.

The maximum loan

commitment ranges between 50 % and 80 % of appraised value.

The Company receives fees and interest for these loans and the interest rate

is generally fixed 5.25 % to 8.00 % per annum.

Maturities range between six and eighteen months.

37 unchanged sentences

that stratum to its estimated recoverable value is charged to the valuation allowance.

following is a summary of the MSR activity for the periods presented.

of Mortgage Servicing Rights

As of September 30

following table presents the MSR activity.

Schedule of Mortgage Servicing Rights

As of March 31

As of December 31

5 unchanged sentences

( 14,851,880 )

Application of valuation allowance to write down MSRs with other than temporary

Application of valuation allowance to write down MSRs

with other than temporary impairment

Balance before valuation allowance at end of period

1 unchanged sentence

Balance at beginning of year

Application of valuation allowance to write down MSRs with other than temporary

Application of valuation allowance to write down MSRs

with other than temporary impairment

Balance at end of period

1 unchanged sentence

Estimated fair value of MSRs at end of period

in other expenses on the condensed consolidated statements of earnings

Included in other expenses on the condensed consolidated statements

NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

3 unchanged sentences

following table summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost.

This projection

was developed using the assumptions made by management in its March 31, 2022 valuation of MSRs.

The assumptions underlying the following

estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization

levels to change over time.

Therefore, the following estimates will change in a manner and amount not presently determinable by management.

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights

4 unchanged sentences

Three Months Ended

Nine Months Ended

Contractual servicing fees

following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio for the periods presented:

following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio.

Summary of Unpaid Principal Balances of the Servicing Portfolio

As of September 30 2021

As of March 31

As of December 31

3 unchanged sentences

following key assumptions were used in determining MSR value:

of Assumptions Used in Determining MSR Value

September 30, 2021

Schedule of Assumptions Used in Determining MSR Value

March 31, 2022

December 31, 2021

2 unchanged sentences

31, 2022 (Unaudited)

Company’s overall effective tax rate for the three months ended September 30, 2021 and 2020 was 23.7 % and 24.0 % , respectively,

which resulted in a provision for income taxes of $ 3,352,663 and $ 9,279,162 , respectively.

The Company’s overall effective tax

rate for the nine months ended September 30, 2021 and 2020 was 24.3 % and 23.6 % , respectively, which resulted in a provision for income

taxes of $ 10,998,876 and $ 15,965,656 , respectively.

The Company’s effective tax rates differ from the U.S.

federal statutory rate

of 21 % partially due to its provision for state income taxes.

The effective tax rate in the current period decreased when compared to

the prior year period partly due to the Company’s provision for state income taxes.

Company’s overall effective tax rate for the three months ended March 31, 2022 and 2021 was 27.3 % and 25.8 %, respectively, which

resulted in a provision for income taxes of $ 1,214,798 and $ 4,226,340 , respectively.

The Company’s effective tax rates differ from

federal statutory rate of 21 % partially due to its provision for state income taxes.

The increase in the effective tax rate

when compared to the prior year is partially due to a larger increase to the valuation allowance in the current period when compared

to the prior period year.

income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete

19 unchanged sentences

When specialty merchandise is ordered, it can take time to manufacture and deliver the product.

deferred until the at-need merchandise is delivered to the Company.

deferred until the at-need merchandise is received.

Pre-need Land Revenue :

16 unchanged sentences

opening and closing balances of the Company’s receivables, contract assets and contract liabilities are as follows:

of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities

Schedule of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities

Contract Balances

12 unchanged sentences

Increase/(decrease)

in Receivables, net on the condensed consolidated balance sheets

amount of revenue recognized and included in the opening contract liability balance for the three months ended September 30, 2021 and

2020 was $ 1,143,745 and $ 1,427,418 , respectively, and for the nine months ended September 30, 2021 and 2020 was $ 3,588,682 and $ 3,258,824 ,

Included in Receivables, net on the condensed consolidated balance sheets

amount of revenue recognized and included in the opening contract liability balance for the three months ended March 31, 2022 and 2021

was $ 1,064,104 and $ 1,135,001 , respectively.

difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results

1 unchanged sentence

Disaggregation

following table disaggregates revenue for the Company’s cemetery and mortuary contracts for the periods presented:

following table disaggregates revenue for the Company’s cemetery and mortuary contracts.

Schedule of Revenues of the Cemetery and Mortuary Contracts

Three Months Ended

Ended September 30

Major goods/service lines

8 unchanged sentences

Three Months Ended

Nine Months Ended

Net mortuary and cemetery sales

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements