UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly periodquarter ended JulyJanuary 31, 20222023
☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ | 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: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Colorado | 84-0524756 | |
(State incorporation) | ( Identification No.) |
802 S. Elm St., Kimball, NE | 69145 | |
(Address of principal executive offices) | (Zip Code) |
(308(308)) 235-4645
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A Common Stock, $0.10 par value | RSKIA | OTC Markets | ||
Convertible Preferred Stock, $20 stated value | RSKIA | OTC Markets |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the pastpreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smallsmaller 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. ☐☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERSISSUERS:
The number of shares of the Registrant’s Common Stock outstanding, as of September 20, 2022March 17, 2023, was .
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three-monththree- and nine-month period ended JulyJanuary 31, 20222023, are attached hereto.
2 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
July 31, 2022 | April 30, 2022 | January 31, 2023 | April 30, 2022 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
ASSETS | ||||||||||||||||
Current Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 7,649,000 | $ | 6,078,000 | $ | 5,265,000 | $ | 6,078,000 | ||||||||
Investments and securities, at fair value | 30,827,000 | 30,979,000 | ||||||||||||||
Investments and securities | 31,470,000 | 30,979,000 | ||||||||||||||
Accounts receivable: | ||||||||||||||||
Trade, net of allowance for credit losses of $20,036 and $33,531 | 3,629,000 | 4,114,000 | ||||||||||||||
Trade, net of allowance for credit losses of $26,991 and $33,531, respectively | 3,296,000 | 4,114,000 | ||||||||||||||
Other | 17,000 | 16,000 | 45,000 | 16,000 | ||||||||||||
Income tax overpayment | 201,000 | — | ||||||||||||||
Inventories, net | 8,841,000 | 7,940,000 | 10,303,000 | 7,940,000 | ||||||||||||
Prepaid expenses | 1,091,000 | 1,362,000 | 930,000 | 1,362,000 | ||||||||||||
Total Current Assets | 52,054,000 | 50,489,000 | 51,510,000 | 50,489,000 | ||||||||||||
Property and Equipment, net, at cost | 1,779,000 | 1,782,000 | 1,763,000 | 1,782,000 | ||||||||||||
Other Assets | ||||||||||||||||
Investment in Limited Land Partnership, at cost | 344,000 | 344,000 | 344,000 | 344,000 | ||||||||||||
Projects in process | 92,000 | 83,000 | 91,000 | 83,000 | ||||||||||||
Other | 8,000 | 62,000 | 29,000 | 62,000 | ||||||||||||
Total Other Assets | 444,000 | 489,000 | 464,000 | 489,000 | ||||||||||||
Intangible assets, net | 1,240,000 | 1,271,000 | ||||||||||||||
Intangible Assets, net | 1,179,000 | 1,271,000 | ||||||||||||||
TOTAL ASSETS | $ | 55,517,000 | $ | 54,031,000 | $ | 54,916,000 | $ | 54,031,000 |
See accompanying notes to the unaudited condensed financial statementsstatements.
3 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(continued)
July 31, 2022 | April 30, 2022 | January 31, 2023 | April 30, 2022 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current Liabilities | ||||||||||||||||
Accounts payable, trade | $ | 300,000 | $ | 320,000 | $ | 404,000 | $ | 320,000 | ||||||||
Dividends payable | 2,296,000 | 2,296,000 | 2,565,000 | 2,296,000 | ||||||||||||
Accrued expenses: | ||||||||||||||||
Payroll and related expenses | 471,000 | 354,000 | ||||||||||||||
Property taxes | 4,000 | — | ||||||||||||||
Deferred income | 17,000 | — | ||||||||||||||
Accrued expenses | 521,000 | 354,000 | ||||||||||||||
Income tax payable | 686,000 | 277,000 | — | 277,000 | ||||||||||||
Total Current Liabilities | 3,757,000 | 3,247,000 | 3,507,000 | 3,247,000 | ||||||||||||
Long-Term Liabilities | ||||||||||||||||
Deferred income taxes | 1,810,000 | 1,742,000 | 1,826,000 | 1,742,000 | ||||||||||||
Total Long-Term Liabilities | 1,810,000 | 1,742,000 | 1,826,000 | 1,742,000 | ||||||||||||
Total Liabilities | 5,567,000 | 4,989,000 | 5,333,000 | 4,989,000 | ||||||||||||
Commitments and contingencies | — | — | ||||||||||||||
Commitments and Contingencies | — | — | ||||||||||||||
Stockholders’ Equity | ||||||||||||||||
Convertible preferred stock, | shares authorized, Series 1—noncumulative, $ stated value, shares authorized, issued and outstanding99,000 | 99,000 | ||||||||||||||
Common stock, Class A, $ | par value, shares authorized, shares issued and outstanding850,000 | 850,000 | ||||||||||||||
Convertible preferred stock, | shares authorized, authorized, Series 1—noncumulative, $ stated value, shares issued and outstanding99,000 | 99,000 | ||||||||||||||
Common stock, Class A, $. | par value, shares authorized, shares issued and outstanding850,000 | 850,000 | ||||||||||||||
Additional paid-in capital | 1,934,000 | 1,934,000 | 1,934,000 | 1,934,000 | ||||||||||||
Accumulated other comprehensive income | (117,000 | ) | (137,000 | ) | (139,000 | ) | (137,000 | ) | ||||||||
Retained earnings | 51,733,000 | 50,843,000 | 51,391,000 | 50,843,000 | ||||||||||||
Less: treasury stock, | and shares, at cost(4,549,000 | ) | (4,547,000 | ) | ||||||||||||
Less: treasury stock, | and shares, at cost(4,552,000 | ) | (4,547,000 | ) | ||||||||||||
Total Stockholders’ Equity | 49,950,000 | 49,042,000 | 49,583,000 | 49,042,000 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 55,517,000 | $ | 54,031,000 | ||||||||||||
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY | $ | 54,916,000 | $ | 54,031,000 |
See accompanying notes to the unaudited condensed financial statementsstatements.
4 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED INCOME STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JULYJANUARY 31, 20222023 AND 20212022
(Unaudited)
Three months | Three months | Nine months | Nine months | |||||||||||||||||||||
July 31, 2022 | July 31, 2021 | ended | ended | ended | ended | |||||||||||||||||||
Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2023 | Jan 31, 2022 | |||||||||||||||||||||
Net Sales | $ | 5,210,000 | $ | 4,955,000 | $ | 4,366,000 | $ | 5,054,000 | $ | 15,194,000 | $ | 15,252,000 | ||||||||||||
Less: Cost of Goods Sold | (2,657,000 | ) | (2,318,000 | ) | (2,444,000 | ) | (2,861,000 | ) | (8,076,000 | ) | (7,908,000 | ) | ||||||||||||
Gross Profit | 2,553,000 | 2,637,000 | 1,922,000 | 2,193,000 | 7,118,000 | 7,344,000 | ||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||
General and Administrative | 332,000 | 349,000 | 340,000 | 371,000 | 1,028,000 | 1,070,000 | ||||||||||||||||||
Sales | 734,000 | 740,000 | 648,000 | 649,000 | 2,136,000 | 2,109,000 | ||||||||||||||||||
Engineering | 21,000 | 18,000 | 34,000 | 29,000 | 76,000 | 67,000 | ||||||||||||||||||
Total Operating Expenses | 1,087,000 | 1,107,000 | 1,022,000 | 1,049,000 | 3,240,000 | 3,246,000 | ||||||||||||||||||
Income From Operations | 1,466,000 | 1,530,000 | 900,000 | 1,144,000 | 3,878,000 | 4,098,000 | ||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
Other | 2,000 | 1,000 | 1,000 | 1,000 | 6,000 | 15,000 | ||||||||||||||||||
Dividend and Interest Income | 184,000 | 176,000 | 506,000 | 552,000 | 871,000 | 876,000 | ||||||||||||||||||
Unrealized gain (loss) on equity securities | (189,000 | ) | 420,000 | |||||||||||||||||||||
Unrealized Gain (Loss) on equity securities | 1,224,000 | (1,729,000 | ) | 27,000 | (687,000 | ) | ||||||||||||||||||
Gain (Loss) on Sale of Investments | (99,000 | ) | 220,000 | 44,000 | 91,000 | (165,000 | ) | 391,000 | ||||||||||||||||
Total Other Income (Expense) | (102,000 | ) | 817,000 | 1,776,000 | (1,085,000 | ) | 739,000 | 595,000 | ||||||||||||||||
Income Before Provisions for Income Taxes | 1,364,000 | 2,347,000 | 2,675,000 | 59,000 | 4,617,000 | 4,693,000 | ||||||||||||||||||
Provisions for Income Taxes | ||||||||||||||||||||||||
Provisions for Income Taxes: | ||||||||||||||||||||||||
Current Expense | 414,000 | 498,000 | 341,000 | 455,000 | 1,028,000 | 1,407,000 | ||||||||||||||||||
Deferred tax (benefit) expense | (101,000 | ) | 103,000 | |||||||||||||||||||||
Total Income Tax Expense | 313,000 | 601,000 | ||||||||||||||||||||||
Deferred Tax Expense (Benefit) | 326,000 | (557,000 | ) | (78,000 | ) | (309,000 | ) | |||||||||||||||||
Total Income Tax Expense (Benefit) | 667,000 | (102,000 | ) | 950,000 | 1,098,000 | |||||||||||||||||||
Net Income | $ | 1,051,000 | $ | 1,746,000 | $ | 2,009,000 | $ | 161,000 | $ | 3,667,000 | $ | 3,595,000 | ||||||||||||
Basic Earnings Per Share of Common Stock | $ | 0.21 | $ | 0.35 | ||||||||||||||||||||
Diluted Earnings Per Share of Common Stock | $ | 0.21 | $ | 0.35 | ||||||||||||||||||||
Income Per Share of Common Stock | ||||||||||||||||||||||||
Basic | $ | 0.41 | $ | 0.03 | $ | 0.74 | $ | 0.73 | ||||||||||||||||
Diluted | $ | 0.41 | $ | 0.03 | $ | 0.74 | $ | 0.72 | ||||||||||||||||
Weighted Average Number of Common Shares Outstanding | 4,931,022 | 4,946,460 | ||||||||||||||||||||||
Weighted Average Number of Shares Outstanding (Diluted) | 4,951,522 | 4,966,960 | ||||||||||||||||||||||
Basic | 4,930,800 | 4,943,985 | 4,930,929 | 4,945,192 | ||||||||||||||||||||
Diluted | 4,951,300 | 4,964,485 | 4,951,429 | 4,965,692 |
See accompanying notes to the unaudited condensed financial statementsstatements.
5 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2023 AND 2022
(Unaudited)
Three months | Three months | Nine months | Nine months | |||||||||||||
ended | ended | ended | ended | |||||||||||||
Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2023 | Jan 31, 2022 | |||||||||||||
Net Income | $ | 2,009,000 | $ | 161,000 | $ | 3,667,000 | $ | 3,595,000 | ||||||||
Other Comprehensive Income/(Loss), Net of Tax | ||||||||||||||||
Unrealized gain (loss) on debt securities: | ||||||||||||||||
Unrealized holding gains (losses) arising during period | 173,000 | (94,000 | ) | (1,000 | ) | (144,000 | ) | |||||||||
Income tax benefit (expense) related to other comprehensive income | (49,000 | ) | 27,000 | (1,000 | ) | 41,000 | ||||||||||
Other Comprehensive Income (Loss) | 124,000 | (67,000 | ) | (2,000 | ) | (103,000 | ) | |||||||||
Comprehensive Income | $ | 2,133,000 | $ | 94,000 | $ | 3,665,000 | $ | 3,492,000 |
See accompanying notes to the unaudited condensed financial statements.
6 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOMESTOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JULYJANUARY 31, 20222023 AND 20212022
(Unaudited)
July 31, 2022 | July 31, 2021 | |||||||
Net Income | $ | 1,051,000 | $ | 1,746,000 | ||||
Other Comprehensive Income, Net of Tax | ||||||||
Unrealized gain on debt securities: | ||||||||
Unrealized holding gains arising during period | 29,000 | 11,000 | ||||||
Income tax expense related to other comprehensive income | (9,000 | ) | (4,000 | ) | ||||
Other Comprehensive Income | 20,000 | 7,000 | ||||||
Comprehensive Income | $ | 1,071,000 | $ | 1,753,000 |
Shares | Amount | Shares | Amount | |||||||||||||
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, October 31, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Purchases of Common Stock | — | — | — | — | ||||||||||||
Unrealized gain, net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, January 31, 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, October 31, 2021 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Unrealized gain, net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, January 31, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
See accompanying notes to the unaudited condensed financial statementsstatements.
7 |
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JULY 31, 2022 and 2021
(Unaudited)
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, April 30, 2021 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Unrealized gain, net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, July 31, 2021 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, April 30, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Prior period adjustment for tax provisions related to depreciation | — | — | — | — | ||||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Unrealized gain, net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, July 31, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
See accompanying notes to the condensed financial statements
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITIY
FOR THE THREE MONTHS ENDED JULY 31, 2022 and 2021
(Unaudited)
Accumulated | |||||||||||||||||||||||
Treasury Stock | Other | ||||||||||||||||||||||
Paid-In | (Common Class A) | Comprehensive | Retained | ||||||||||||||||||||
Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, April 30, 2021 | $ | 1,934,000 | 3,556,412 | $ | (4,336,000 | ) | $ | 108,000 | $ | 49,749,000 | $ | 48,404,000 | |||||||||||
Purchases of common stock | — | 13 | — | — | — | — | |||||||||||||||||
Unrealized gain (loss), net of tax effect | — | — | — | 7,000 | — | 7,000 | |||||||||||||||||
Net Income | — | — | — | — | 1,746,000 | 1,746,000 | |||||||||||||||||
Balances, July 31, 2021 | $ | 1,934,000 | 3,556,425 | $ | (4,336,000 | ) | $ | 115,000 | $ | 51,495,000 | $ | 50,157,000 |
Accumulated | |||||||||||||||||||||||
Treasury Stock | Other | ||||||||||||||||||||||
Paid-In | (Common Class A) | Comprehensive | Retained | ||||||||||||||||||||
Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, April 30, 2022 | $ | 1,934,000 | 3,571,693 | $ | (4,547,000 | ) | $ | (137,000 | ) | $ | 50,843,000 | $ | 49,042,000 | ||||||||||
Prior period adjustment for tax provisions related to depreciation | — | — | — | — | (161,000 | ) | (161,000 | ) | |||||||||||||||
Purchases of common stock | — | 200 | (2,000 | ) | — | — | (2,000 | ) | |||||||||||||||
Unrealized gain, net of tax effect | — | — | — | 20,000 | — | 20,000 | |||||||||||||||||
Net Income | — | — | — | — | 1,051,000 | 1,051,000 | |||||||||||||||||
Balances, July 31, 2022 | $ | 1,934,000 | 3,571,893 | $ | (4,549,000 | ) | $ | (117,000 | ) | $ | 51,733,000 | $ | 49,950,000 |
See accompanying notes to the condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JULYJANUARY 31, 20222023 AND 20212022
(Unaudited)
July 31, 2022 | July 31, 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Income | $ | 1,051,000 | $ | 1,746,000 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 108,000 | 107,000 | ||||||
(Gain) loss on sale of investments | 99,000 | (220,000 | ) | |||||
Unrealized (gain) loss on equity securities | 189,000 | (420,000 | ) | |||||
Provision for credit losses on accounts receivable | (13,000 | ) | 6,000 | |||||
Reserve for obsolete inventory | 46,000 | 5,000 | ||||||
Deferred income taxes | (101,000 | ) | 103,000 | |||||
Changes in assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Accounts receivable | 499,000 | 154,000 | ||||||
Inventories | (947,000 | ) | (549,000 | ) | ||||
Prepaid expenses | 317,000 | (196,000 | ) | |||||
Employee receivables | (1,000 | ) | 2,000 | |||||
Increase (decrease) in: | ||||||||
Accounts payable | (21,000 | ) | (236,000 | ) | ||||
Accrued expenses | 121,000 | 99,000 | ||||||
Income tax payable | 409,000 | 547,000 | ||||||
Net cash from operating activities | 1,756,000 | 1,148,000 | ||||||
Cash Flows From Investing Activities: | ||||||||
(Purchase) of property and equipment | (74,000 | ) | (40,000 | ) | ||||
Proceeds from sale of marketable securities | 2,000 | 2,000 | ||||||
(Purchase) of marketable securities | (111,000 | ) | (98,000 | ) | ||||
Net cash from investing activities | (183,000 | ) | (136,000 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
(Purchase) of treasury stock | (2,000 | ) | — | |||||
Dividends paid | — | (7,000 | ) | |||||
Net cash from financing activities | (2,000 | ) | (7,000 | ) | ||||
Net Change in Cash and Cash Equivalents | $ | 1,571,000 | $ | 1,005,000 | ||||
Cash and Cash Equivalents, beginning of period | $ | 6,078,000 | $ | 7,326,000 | ||||
Cash and Cash Equivalents, end of period | $ | 7,649,000 | $ | 8,331,000 | ||||
Supplemental Disclosure for Cash Flow Information: | ||||||||
Cash payments for: | ||||||||
Income taxes paid | $ | 0 | $ | 0 | ||||
Interest paid | $ | 0 | $ | 0 | ||||
Cash receipts for: | ||||||||
Income taxes | $ | 0 | $ | 43,000 |
Paid-In Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | |||||||||||||||||||||
Paid-In Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, October 31, 2022 | $ | 1,934,000 | 3,571,963 | $ | (4,550,000 | ) | $ | (263,000 | ) | $ | 49,382,000 | $ | 47,452,000 | ||||||||||
Purchases of Common Stock | — | 175 | (2,000 | ) | — | — | (2,000 | ) | |||||||||||||||
Unrealized gain, net of tax effect | — | — | — | 124,000 | — | 124,000 | |||||||||||||||||
Net Income | — | — | — | — | 2,009,000 | 2,009,000 | |||||||||||||||||
Balances, January 31, 2023 | $ | 1,934,000 | 3,572,138 | $ | (4,552,000 | ) | $ | (139,000 | ) | $ | 51,391,000 | $ | 49,583,000 |
Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | |||||||||||||||||||||
Paid-In Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, October 31, 2021 | $ | 1,934,000 | 3,558,425 | $ | (4,362,000 | ) | $ | 72,000 | $ | 50,711,000 | $ | 49,304,000 | |||||||||||
Purchases of Common Stock | — | 700 | (9,000 | ) | — | — | (9,000 | ) | |||||||||||||||
Unrealized gain, net of tax effect | — | — | — | (67,000 | ) | — | (67,000 | ) | |||||||||||||||
Net Income | — | — | — | — | 161,000 | 161,000 | |||||||||||||||||
Balances, January 31, 2022 | $ | 1,934,000 | 3,559,125 | $ | (4,371,000 | ) | $ | 5,000 | $ | 50,872,000 | $ | 49,389,000 |
See accompanying notes to the unaudited condensed financial statementsstatements.
8 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 2023 AND 2022
(Unaudited)
Shares | Amount | Shares | Amount | |||||||||||||
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, April 30, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Prior period adjustment for provisions related to depreciation | — | — | — | — | ||||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Dividend declared at $ | per common share outstanding— | — | — | — | ||||||||||||
Unrealized gain, net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, January 31, 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, April 30, 2021 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Dividend declared at $ | per common share outstanding— | — | — | — | ||||||||||||
Unrealized (loss), net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, January 31, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
See accompanying notes to the unaudited condensed financial statements.
9 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 2023 AND 2022
(Unaudited)
Paid-In Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | |||||||||||||||||||||
Paid-In Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, April 30, 2022 | $ | 1,934,000 | 3,571,693 | $ | (4,547,000 | ) | $ | (137,000 | ) | $ | 50,843,000 | $ | 49,042,000 | ||||||||||
Prior period adjustment for provisions related to depreciation | — | — | — | — | (161,000 | ) | (161,000 | ) | |||||||||||||||
Purchases of common stock | — | 445 | (5,000 | ) | — | — | (5,000 | ) | |||||||||||||||
Dividend declared at $per common share outstanding | — | — | — | — | (2,958,000 | ) | (2,958,000 | ) | |||||||||||||||
Unrealized gain, net of tax effect | — | — | — | (2,000 | ) | — | (2,000 | ) | |||||||||||||||
Net Income | — | — | — | — | 3,667,000 | 3,667,000 | |||||||||||||||||
Balances, January 31, 2023 | $ | 1,934,000 | 3,572,138 | $ | (4,552,000 | ) | $ | (139,000 | ) | $ | 51,391,000 | $ | 49,583,000 |
Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | |||||||||||||||||||||
Paid-In Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, April 30, 2021 | $ | 1,934,000 | 3,556,412 | $ | (4,336,000 | ) | $ | 108,000 | $ | 49,749,000 | $ | 48,404,000 | |||||||||||
Purchases of common stock | — | 2,713 | (35,000 | ) | — | — | (35,000 | ) | |||||||||||||||
Dividend declared at $per common share outstanding | — | — | — | — | (2,472,000 | ) | (2,472,000 | ) | |||||||||||||||
Unrealized (loss), net of tax effect | — | — | — | (103,000 | ) | — | (103,000 | ) | |||||||||||||||
Net Income | — | — | — | — | 3,595,000 | 3,595,000 | |||||||||||||||||
Balances, January 31, 2022 | $ | 1,934,000 | 3,559,125 | $ | (4,371,000 | ) | $ | 5,000 | $ | 50,872,000 | $ | 49,389,000 |
See accompanying notes to the unaudited condensed financial statements.
10 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 31, 2023 AND 2022
(Unaudited)
Jan 31, 2023 | Jan 31, 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income | $ | 3,667,000 | $ | 3,595,000 | ||||
Adjustments to reconcile net income to net cash | ||||||||
provided by operating activities: | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 332,000 | 319,000 | ||||||
(Gain) loss on sale of investments | 165,000 | (391,000 | ) | |||||
Unrealized (gain) loss on equity investments | (27,000 | ) | 686,000 | |||||
Provision for credit losses on accounts receivable | (6,000 | ) | 16,000 | |||||
Reserve for obsolete inventory | 81,000 | 229,000 | ||||||
Deferred income taxes | (78,000 | ) | (310,000 | ) | ||||
Changes in assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Accounts receivable | 824,000 | 91,000 | ||||||
Inventories | (2,444,000 | ) | (1,465,000 | ) | ||||
Prepaid expenses | 458,000 | (1,089,000 | ) | |||||
Other receivables | (29,000 | ) | — | |||||
Income tax overpayment | (478,000 | ) | — | |||||
Increase (decrease) in: | ||||||||
Accounts payable | 84,000 | (176,000 | ) | |||||
Accrued expenses | 184,000 | 130,000 | ||||||
Income tax payable | — | 163,000 | ||||||
Net cash from operating activities | 2,733,000 | 1,798,000 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
(Purchase) of property and equipment | (221,000 | ) | (164,000 | ) | ||||
Proceeds from sale of marketable securities | 17,000 | 383,000 | ||||||
(Purchase) of marketable securities | (648,000 | ) | (640,000 | ) | ||||
(Purchase) of long-term investment | — | (24,000 | ) | |||||
Net cash from investing activities | (852,000 | ) | (445,000 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
(Purchase) of treasury stock | (5,000 | ) | (35,000 | ) | ||||
Dividends paid | (2,689,000 | ) | (2,256,000 | ) | ||||
Net cash from financing activities | (2,694,000 | ) | (2,291,000 | ) | ||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (813,000 | ) | (938,000 | ) | ||||
Cash and Cash Equivalents, beginning of period | 6,078,000 | 7,326,000 | ||||||
Cash and Cash Equivalents, end of period | $ | 5,265,000 | $ | 6,388,000 | ||||
Supplemental Disclosure for Cash Flow Information: | ||||||||
Cash payments for: | ||||||||
Income taxes | $ | 1,618,000 | $ | 1,290,000 | ||||
Interest paid | $ | — | $ | — | ||||
Cash receipts for: | ||||||||
Income taxes | $ | 118,000 | $ | — |
See accompanying notes to the unaudited condensed financial statements.
11 |
GEORGE RISK INDUSTRIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULYJANUARY 31, 20222023
Note 1:Unaudited Interim Financial Statements
Note 1: | Unaudited Interim Financial Statements |
The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these unaudited condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2022 annual report on Form 10-K (the “Annual Report”).10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year.
Accounting Estimates—The preparation of these condensed financial statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts.
Significant Accounting Policies — The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in our Annual Report, and there have been no changes to the Company’s significant accounting policies during the threenine months ended JulyJanuary 31, 2022.
Prior Period Financial Statement Adjustment – In connection with the preparation of our financial statements, we identified an immaterial misstatement to our financial statements in the Company’s Annual Report. The misstatement is related to a difference in deferred taxes on depreciation for a few years and up through the year ended April 30, 2022. In accordance with Staff Accounting Bulletins No. 99 (“SAB No. 99”) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” we evaluated the misstatement and determined that the related impact was not consequential to our financial statements for any annual or interim period for fiscal 2022, any other prior period, nor would the cumulative impact of correcting the misstatement be consequential to our results of operations and equity for the fiscal and interim periods of 2023.
Recently Issued Accounting Pronouncements — There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.
Investments |
Note 2:Investments
The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets. The investments in debt securities, which include municipal bonds and bond funds, mature between August 20222023 and September 20422042.. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.
As of JulyJanuary 31, 20222023 and April 30, 2022, investments consisted of the following:
Schedule of Investments
Gross | Gross | |||||||||||||||||||||||||||||||
Investments at | Cost | Unrealized | Unrealized | Fair | Cost | Gross | Gross | |||||||||||||||||||||||||
July 31, 2022 | Basis | Gains | Losses | Value | ||||||||||||||||||||||||||||
January 31, 2023 | Basis | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||
Municipal bonds | $ | 5,538,000 | $ | 53,000 | $ | (212,000 | ) | $ | 5,379,000 | $ | 5,586,000 | $ | 48,000 | $ | (237,000 | ) | $ | 5,397,000 | ||||||||||||||
REITs | 93,000 | 2,000 | (4,000 | ) | 91,000 | 93,000 | — | (12,000 | ) | 81,000 | ||||||||||||||||||||||
Equity securities | 18,251,000 | 6,715,000 | (443,000 | ) | 24,523,000 | 18,545,000 | 7,032,000 | (533,000 | ) | 25,044,000 | ||||||||||||||||||||||
Money markets and CDs | 834,000 | — | — | 834,000 | 948,000 | — | — | 948,000 | ||||||||||||||||||||||||
Total | $ | 24,716,000 | $ | 6,770,000 | $ | (659,000 | ) | $ | 30,827,000 | $ | 25,172,000 | $ | 7,080,000 | $ | (782,000 | ) | $ | 31,470,000 |
Gross | Gross | |||||||||||||||||||||||||||||||
Investments at | Cost | Unrealized | Unrealized | Fair | Cost | Gross | Gross | |||||||||||||||||||||||||
April 30, 2022 | Basis | Gains | Losses | Value | Basis | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||||
Municipal bonds | $ | 5,625,000 | $ | 41,000 | $ | (229,000 | ) | $ | 5,437,000 | $ | 5,625,000 | $ | 41,000 | $ | (229,000 | ) | $ | 5,437,000 | ||||||||||||||
REITs | 131,000 | 16,000 | (3,000 | ) | 144,000 | 131,000 | 16,000 | (3,000 | ) | 144,000 | ||||||||||||||||||||||
Equity securities | 18,322,000 | 6,921,000 | (473,000 | ) | 24,770,000 | 18,322,000 | 6,921,000 | (473,000 | ) | 24,770,000 | ||||||||||||||||||||||
Money markets and CDs | 628,000 | — | — | 628,000 | 628,000 | — | — | 628,000 | ||||||||||||||||||||||||
Total | $ | 24,706,000 | $ | 6,978,000 | $ | (705,000 | ) | $ | 30,979,000 | $ | 24,706,000 | $ | 6,978,000 | $ | (705,000 | ) | $ | 30,979,000 |
Marketable securities that are classified as equity securities are carried at fair value on the balance sheets with changes in fair value recorded as an unrealized gain or (loss) in the statements of income in the period of the change. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of income.
The Company evaluates all marketable securities for other-than temporaryother-than-temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, there were no impairment loss waslosses recorded for either of the quartersquarter or the nine months ended JulyJanuary 31, 20222023 and 2021, respectively.2022.
The Company’s investments are actively traded in the stock and bond markets. Therefore, either a realized gain or loss is recorded when a sale happens.occurs. For the quarter ended JulyJanuary 31, 20222023 the Company had sales of equity securities which yielded gross realized gains of $197,000118,000 and gross realized losses of $267,00069,000. For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $29,0005,000 were recorded. As for the nine-months ended January 31, 2023 the Company had sales of equity securities which yielded gross realized gains of $403,000 and gross realized losses of $522,000. For the same nine-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $46,000 were recorded. During the quarter ending JulyJanuary 31, 2021,2022, the Company recorded gross realized gains and losses on equity securities of $238,000121,000 and $8,00027,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $10,0003,000 were recorded. During the nine-months ending January 31, 2022, the Company recorded gross realized gains and losses on equity securities of $465,000 and $61,000, respectively. For the same nine-month period last year, sales of debt securities did not yield any gross realized gains, but gross realized losses of $13,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph.
12 |
The following table showstables show the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at JulyJanuary 31, 20222023 and April 30, 2022, respectively.
Schedule of Unrealized Loss Breakdown by Investment
Unrealized Loss Breakdown by Investment Type at JulyJanuary 31, 20222023
Schedule of Unrealized Loss Breakdown by Investment
Less than 12 months, Fair Value | Less than 12 months, Unrealized Loss | 12 months or greater, Fair Value | 12 months or greater, Unrealized Loss | Total, Fair Value | Total, Unrealized Loss | |||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||||||||||||||||||||||
Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||||||||||
Municipal bonds | $ | 4,265,000 | $ | (157,000 | ) | $ | 363,000 | $ | (55,000 | ) | $ | 4,628,000 | $ | (212,000 | ) | $ | 2,967,000 | $ | (86,000 | ) | $ | 1,780,000 | $ | (151,000 | ) | $ | 4,747,000 | $ | (237,000 | ) | ||||||||||||||||||
REITs | 17,000 | (2,000 | ) | 27,000 | (2,000 | ) | 44,000 | (4,000 | ) | 55,000 | (9,000 | ) | 25,000 | (3,000 | ) | 80,000 | (12,000 | ) | ||||||||||||||||||||||||||||||
Equity securities | 4,112,000 | (412,000 | ) | 185,000 | (31,000 | ) | 4,297,000 | (443,000 | ) | 4,808,000 | (478,000 | ) | 409,000 | (55,000 | ) | 5,217,000 | (533,000 | ) | ||||||||||||||||||||||||||||||
Total | $ | 8,394,000 | $ | (571,000 | ) | $ | 575,000 | $ | (88,000 | ) | $ | 8,969,000 | $ | (659,000 | ) | $ | 7,830,000 | $ | (573,000 | ) | $ | 2,214,000 | $ | (209,000 | ) | $ | 10,044,000 | $ | (782,000 | ) |
Unrealized Loss Breakdown by Investment Type at April 30, 2022
Less than 12 months, Fair Value | Less than 12 months, Unrealized Loss | 12 months or greater, Fair Value | 12 months or greater, Unrealized Loss | Total, Fair Value | Total, Unrealized Loss | |||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or greater | Total | Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||||||||||||||||||||||
Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||||||||||
Municipal bonds | $ | 4,420,000 | $ | (142,000 | ) | $ | 539,000 | $ | (87,000 | ) | $ | 4,959,000 | $ | (229,000 | ) | $ | 4,420,000 | $ | (142,000 | ) | $ | 539,000 | $ | (87,000 | ) | $ | 4,959,000 | $ | (229,000 | ) | ||||||||||||||||||
REITs | 18,000 | (1,000 | ) | 26,000 | (2,000 | ) | 44,000 | (3,000 | ) | 18,000 | (1,000 | ) | 26,000 | (2,000 | ) | 44,000 | (3,000 | ) | ||||||||||||||||||||||||||||||
Equity securities | 4,157,000 | (424,000 | ) | 274,000 | (49,000 | ) | 4,431,000 | (473,000 | ) | 4,157,000 | (424,000 | ) | 274,000 | (49,000 | ) | 4,431,000 | (473,000 | ) | ||||||||||||||||||||||||||||||
Total | $ | 8,595,000 | $ | (567,000 | ) | $ | 839,000 | $ | (138,000 | ) | $ | 9,434,000 | $ | (705,000 | ) | $ | 8,595,000 | $ | (567,000 | ) | $ | 839,000 | $ | (138,000 | ) | $ | 9,434,000 | $ | (705,000 | ) |
Municipal Bonds
The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at JulyJanuary 31, 20222023 and April 31,30, 2022.
Marketable Equity Securities and REITs
The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at JulyJanuary 31, 20222023 and April 30, 2022.
13 |
Note 3:Inventories
Note 3: | Inventories |
Inventories at JulyJanuary 31, 20222023 and April 30, 2022 consisted of the following:
Schedule of Inventories
July 31, | April 30, | |||||||
2022 | 2022 | |||||||
Raw materials | $ | 7,430,000 | $ | 6,772,000 | ||||
Work in process | 727,000 | 618,000 | ||||||
Inventory in transit | 1,018,000 | 838,000 | ||||||
Inventory gross | 9,175,000 | 8,228,000 | ||||||
Less: allowance for obsolete inventory | (334,000 | ) | (288,000 | ) | ||||
Inventories, net | $ | 8,841,000 | $ | 7,940,000 |
January 31, | April 30, | |||||||
2023 | 2022 | |||||||
Raw materials | $ | 8,926,000 | $ | 6,772,000 | ||||
Work in process | 616,000 | 618,000 | ||||||
Finished goods | 1,130,000 | 838,000 | ||||||
Inventory gross | 10,672,000 | 8,228,000 | ||||||
Less: allowance for obsolete inventory | (369,000 | ) | (288,000 | ) | ||||
Inventories, net | $ | 10,303,000 | $ | 7,940,000 |
Note 4:Business Segments
Note4: | Business Segments |
The following is financial information relating to industry segments:
Schedule of Financial Information Relating to Industry Segments
Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2023 | Jan 31, 2022 | |||||||||||||||||||||
2022 | 2021 | Three months | Three months | Nine months | Nine months | |||||||||||||||||||
July 31, | ended | ended | ended | ended | ||||||||||||||||||||
2022 | 2021 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2023 | Jan 31, 2022 | |||||||||||||||||||
Net revenue: | ||||||||||||||||||||||||
Security alarm products | $ | 4,502,000 | $ | 4,257,000 | $ | 3,712,000 | $ | 4,377,000 | $ | 13,079,000 | $ | 13,180,000 | ||||||||||||
Cable & wiring tools | 484,000 | 538,000 | 486,000 | 498,000 | 1,561,000 | 1,553,000 | ||||||||||||||||||
Other products | 224,000 | 160,000 | 168,000 | 179,000 | 554,000 | 519,000 | ||||||||||||||||||
Total net revenue | $ | 5,210,000 | $ | 4,955,000 | $ | 4,366,000 | $ | 5,054,000 | $ | 15,194,000 | $ | 15,252,000 | ||||||||||||
Income from operations: | ||||||||||||||||||||||||
Security alarm products | $ | 1,267,000 | $ | 1,315,000 | $ | 774,000 | $ | 988,000 | $ | 3,339,000 | $ | 3,541,000 | ||||||||||||
Cable & wiring tools | 136,000 | 166,000 | 93,000 | 117,000 | 398,000 | 418,000 | ||||||||||||||||||
Other products | 63,000 | 49,000 | 33,000 | 39,000 | 141,000 | 139,000 | ||||||||||||||||||
Total income from operations | $ | 1,466,000 | $ | 1,530,000 | $ | 900,000 | $ | 1,144,000 | $ | 3,878,000 | $ | 4,098,000 | ||||||||||||
Depreciation and amortization: | ||||||||||||||||||||||||
Security alarm products | $ | 48,000 | $ | 35,000 | $ | 48,000 | $ | 42,000 | $ | 143,000 | $ | 117,000 | ||||||||||||
Cable & wiring tools | 30,000 | 31,000 | 30,000 | 31,000 | 92,000 | 92,000 | ||||||||||||||||||
Other products | 18,000 | 22,000 | 21,000 | 18,000 | 57,000 | 60,000 | ||||||||||||||||||
Corporate general | 12,000 | 19,000 | 14,000 | 15,000 | 40,000 | 50,000 | ||||||||||||||||||
Total depreciation and amortization | $ | 108,000 | $ | 107,000 | $ | 113,000 | $ | 106,000 | $ | 332,000 | $ | 319,000 | ||||||||||||
Capital expenditures: | ||||||||||||||||||||||||
Security alarm products | $ | 74,000 | $ | 40,000 | $ | — | $ | 113,000 | $ | 74,000 | $ | 153,000 | ||||||||||||
Cable & wiring tools | — | — | — | — | — | — | ||||||||||||||||||
Other products | — | — | 12,000 | 11,000 | 147,000 | 11,000 | ||||||||||||||||||
Corporate general | — | — | — | — | — | — | ||||||||||||||||||
Total capital expenditures | $ | 74,000 | $ | 40,000 | $ | 12,000 | $ | 124,000 | $ | 221,000 | $ | 164,000 |
July 31, 2022 | April 30, 2022 | |||||||
Identifiable assets: | ||||||||
Security alarm products | $ | 11,975,000 | $ | 11,537,000 | ||||
Cable & wiring tools | 2,397,000 | 2,509,000 | ||||||
Other products | 803,000 | 732,000 | ||||||
Corporate general | 40,342,000 | 39,253,000 | ||||||
Total assets | $ | 55,517,000 | $ | 54,031,000 |
January 31, 2023 | April 30, 2022 | |||||||
Identifiable assets: | ||||||||
Security alarm products | $ | 12,811,000 | $ | 11,537,000 | ||||
Cable & wiring tools | 2,576,000 | 2,509,000 | ||||||
Other products | 870,000 | 732,000 | ||||||
Corporate general | 38,659,000 | 39,253,000 | ||||||
Total assets | $ | 54,916,000 | $ | 54,031,000 |
14 |
Note 5: | Earnings per Share |
Schedule of Basic and Diluted Earnings Per Share
For the three months ended July 31, 2022 | For the three months ended January 31, 2023 | |||||||||||||||||||||||
Income | Shares | Per-Share | Income | Shares | Per-Share | |||||||||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
Net income | $ | 1,051,000 | $ | 2,009,000 | ||||||||||||||||||||
Basic EPS | $ | 1,051,000 | 4,931,022 | $ | $ | 2,009,000 | 4,930,800 | $ | ||||||||||||||||
Effect of dilutive Convertible Preferred Stock | — | 20,500 | — | – | 20,500 | – | ||||||||||||||||||
Diluted EPS | $ | 1,051,000 | 4,951,522 | $ | $ | 2,009,000 | 4,951,300 | $ |
For the three months ended July 31, 2021 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 1,746,000 | ||||||||||
Basic EPS | $ | 1,746,000 | 4,946,460 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | — | 20,500 | — | |||||||||
Diluted EPS | $ | 1,746,000 | 4,966,960 | $ |
For the three months ended January 31, 2022 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 161,000 | ||||||||||
Basic EPS | $ | 161,000 | 4,943,985 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | – | 20,500 | – | |||||||||
Diluted EPS | $ | 161,000 | 4,964,485 | $ |
For the nine months ended January 31, 2023 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 3,667,000 | ||||||||||
Basic EPS | $ | 3,667,000 | 4,930,929 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | – | 20,500 | – | |||||||||
Diluted EPS | $ | 3,667,000 | 4,951,429 | $ |
For the nine months ended January 31, 2022 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 3,595,000 | ||||||||||
Basic EPS | $ | 3,595,000 | 4,945,192 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | – | 20,500 | – | |||||||||
Diluted EPS | $ | 3,595,000 | 4,965,692 | $ |
15 |
Note 6:Retirement Benefit Plan
Note 6: | Retirement Benefit Plan |
On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the “Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the Company. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is funded by voluntary pre-tax and Roth (taxable) contributions from eligible employees who may contribute a percentage of their eligible compensation, limited and subject to statutory limits. Employees are eligible to participate in the Plan when they have attained the age of 21 and completed one thousand hours of service in any plan year with the CompanyCompany.. Upon leaving the Company, each participant is 100% vested with respect to the participants’ contributions while the Company’s matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions by the Company of approximately $16,00014,000 and $17,00016,000 were paid induring each quarter ending January 31, 2023 and 2022, respectively. Likewise, the Company paid matching contributions of the quartersapproximately $43,000 and $48,000 during each nine-month period ending JulyJanuary 31, 2023 and 2022, and 2021 respectively.
Note 7:Fair Value Measurements
Note 7: | Fair Value Measurements |
The carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short termshort-term nature. The fair value of our investments is determined utilizing market basedmarket-based information. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The levels of the fair value hierarchy under US GAAP are described below:
Level 1 | Valuation is based upon quoted prices for identical instruments traded in active markets. | |
Level 2 | Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |
Level 3 | Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. |
Investments and Marketable Securities
As of JulyJanuary 31, 20222023 and April 30, 2022, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities. TheOur marketable securities are valued using third-party broker statements. The value of the majority of securitiesinvestments is derived from quoted market information. The inputs to the valuation are generally classified as Level 1 given the active market for these securities, however, if an active market does not exist, which is the case for municipal bonds and REITs, the inputs are recorded as Level 2.
Fair Value Hierarchy
The following table setstables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy. As required by US GAAP, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Schedule of Assets Measured at Fair Value on Recurring Basis
16 |
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis as of July 31, 2022 | Assets Measured at Fair Value on a Recurring Basis as of January 31, 2023 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Municipal Bonds | $ | — | $ | 5,379,000 | $ | — | $ | 5,379,000 | $ | — | $ | 5,397,000 | $ | — | $ | 5,397,000 | ||||||||||||||||
REITs | — | 91,000 | — | 91,000 | — | 81,000 | — | 81,000 | ||||||||||||||||||||||||
Equity Securities | 24,523,000 | — | — | 24,523,000 | 25,044,000 | — | — | 25,044,000 | ||||||||||||||||||||||||
Money Markets and CDs | 834,000 | — | — | 834,000 | ||||||||||||||||||||||||||||
Money Markets | 948,000 | — | — | 948,000 | ||||||||||||||||||||||||||||
Total fair value of assets measured on a recurring basis | $ | 25,357,000 | $ | 5,470,000 | $ | — | $ | 30,827,000 | $ | 25,992,000 | $ | 5,478,000 | $ | — | $ | 31,470,000 |
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis as of April 30, 2022 | Assets Measured at Fair Value on a Recurring Basis as of April 30, 2022 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Municipal Bonds | $ | — | $ | 5,437,000 | $ | — | $ | 5,437,000 | $ | — | $ | 5,437,000 | $ | — | $ | 5,437,000 | ||||||||||||||||
REITs | — | 144,000 | — | 144,000 | — | 144,000 | — | 144,000 | ||||||||||||||||||||||||
Equity Securities | 24,770,000 | — | — | 24,770,000 | 24,770,000 | — | — | 24,770,000 | ||||||||||||||||||||||||
Money Markets and CDs | 628,000 | — | — | 628,000 | ||||||||||||||||||||||||||||
Money Markets | 628,000 | — | — | 628,000 | ||||||||||||||||||||||||||||
Total fair value of assets measured on a recurring basis | $ | 25,398,000 | $ | 5,581,000 | $ | — | $ | 30,979,000 | $ | 25,398,000 | $ | 5,581,000 | $ | — | $ | 30,979,000 |
Note 8: Subsequent Events
Note 8 | Subsequent Events |
None
17 |
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project” or “continue,” and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if currentnew information becomes available in the future.
The following discussion should be read in conjunction with the attached unaudited condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2022.
Executive Summary
The Company’s performance remained steady duringin operations stayed consistent through the quarter ended July 31, 2022 as compared to the quarter ended July 31, 2021. Although sales have increased when comparing to the same quarter last year, overall net income is down because realized and unrealized gains on investments are showing losses inthree quarters of the current fiscal year with the third quarter while fordipping slightly in sales over the samesecond quarter last year both of those categories were income amounts. Also, gross profit and income from operations are lower when comparing to the same quarter lastcurrent fiscal year. This is because of increased cost of raw materials and labor. The uptick in sales is mainly due the fact that our business is tied to the housing market and the winter months usually show a price increase that implemented in January 2022. This was done to offsetslowdown and the increases in raw materialcolder and labor costs that the Company has incurred to continue to do business. The Company is still feeling the increased demand of having one of our major competitors close its doors at the end of calendar year 2019. The Company still has a considerable back-order log and theresnowier than normal weather has been times that certain raw materials have not been available.keeping employees away from our locations at times. Opportunities include focusing on rampingkeeping up production to meet customer’s needswith the business growth and finding ways to get productour products out to themour customers in a timely manner, which includestimelier manner. One way we are doing this is by looking into more automation, andautomation. We also continue to continue lookinglook at businesses that might be a good fit to purchase. We also have new products that are scheduled to enter the marketplacebe introduced by the end of the calendarfiscal year. Challenges in the coming months include continuing to get product out to customers in a timely manner and dealing with the COVID-19 pandemic restrictions and inflation. Possible COVID-19 challenges include, but are not limited to, price increases and/or delays in the supply chain, reduced sales, workforce interruptions, and economic conditions impacting the stock market. Management continues to work at keeping operations flowing as efficientefficiently as possible with the hopes of getting the facilities running leaner and more profitable than ever before.
Results of Operations
● | Net sales were $4,366,000 for the quarter ended | |
● | Cost of goods sold |
18 |
● | Operating expenses decreased by | |
● | Income from operations for the quarter ended | |
● | Other income and expenses | |
● | Overall, net income | |
● | Earnings per common share for quarter ended January 31, 2023 were $0.41 per share and $0.74 per share for the year-to-date numbers. EPS for the quarter and nine months ended |
Liquidity and capital resources
Operating
● | Net cash | |
19 |
● | Accounts receivable decreased | |
● | Inventories increased |
● |
● | Income tax overpayment increased $478,000 for the current nine-month period, compared to having a decrease of $163,000 in income tax payable for the nine-months ended January 31, 2022. The current increase is due to having to pay additional income tax that was due for the prior fiscal year during the current period. | ||
● | Accounts payable shows | |
● | Accrued expenses increased | |
Investing
● | ||
● | ||
Financing
● | The Company continues to purchase back common stock when the opportunity arises. For the |
20 |
● | The company paid out dividends of $2,689,000 during the nine months ending January 31, 2023. These dividends were paid during the second quarter. The company declared a dividend of $0.60 per share of common stock on September 30, 2022 and these dividends were paid by October 31, 2022. As for the prior year numbers, dividends paid was $2,256,000 for the nine months ending January 31, 2022. A dividend of $0.50 per common share was declared and paid during the second fiscal quarter last year. |
In conjunction with the Company’s Condensed Financial Statements, we have provided theThe following is a list of ratios to help analyze George Risk Industries’ performance:
Qtr ended | Qtr ended | As of | ||||||||||||||
July 31, 2022 | July 31, 2021 | January 31, 2023 | �� | January 31, 2022 | ||||||||||||
Working capital (current assets – current liabilities) | $ | 48,297,000 | $ | 49,401,000 | $ | 48,003,000 | $ | 48,186,000 | ||||||||
Current ratio (current assets / current liabilities) | 13.855 | 15.529 | 14.688 | 15.470 | ||||||||||||
Quick ratio ((cash + current investments + AR) / current liabilities) | 11.207 | 13.549 | ||||||||||||||
Quick ratio ((cash + investments + AR) / current liabilities) | 11.415 | 12.987 |
New Product Development
The Company and its’its engineering department perpetually workcontinue to develop enhancements to current product lines, develop new products which complement existing products, and look for products that are well suited to our distribution network and manufacturing capabilities. Items currently in various stages of the development process include:
● | Explosion proof contacts that will be UL listed for hazardous | |
● | The Company is developing magnetic contacts which are listed under UL 634 Level 2. These sensors are for high security applications such as government buildings, military use, nuclear facilities, and financial institutions. | |
● | Wireless technology is a main area of focus for product development. We are considering adding wireless technology to some of our current products. A wireless contact switch is in the final stages of development. Also, we are working on wireless versions of monitoring devices which include glass break detection, tilt sensing and environmental monitoring. A redesign of our brass water valve shut-off system is near completion. |
Other Information
In addition to researching and developing new products, management is always open to the possibility of acquiring a business or product line that would complement our existing operations. Due to the Company’s strong cash position, management believes this could be achieved without the need for outside financing. The intent is to utilize the equipment, marketing techniques and established customers to deliver new products and increase sales and profits.
There are no known seasonal trends with any of GRI’s products since we sell to distributors and OEM manufacturers. Our products are tied to the housing industry and will fluctuate with building trends.
21 |
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
This disclosure does not apply.Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable
Item 4. Controls and Procedures
Our management, under the supervision and with the participation of our chief executive officer (also working as our chief financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of JulyJanuary 31, 2022.2023. Based on that evaluation, management concluded that the disclosure controls and procedures employed at the Company were not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms.
In our annual report filed on Report 10-K for the year ended April 30, 2022, management identified the following material weakness in our internal control over financial reporting:
● | The small size of our Company limits our ability to achieve the desired level of separation of duties for proper internal controls and financial reporting, particularly as it relates to financial reporting to assure material disclosures or implementation of newly issued accounting standards are included. A secondary review over annual and quarterly filings does occur with an outside party. Due to the departure of the Controller, the current CEO and CFO roles are being fulfilled by the same individual. We do not have an audit committee. We do not believe we have met the full requirement for separation of duties for financial reporting purposes. |
We continue to operate with a limited number of accounting and financial personnel. For the quarter ending JulyJanuary 31, 2022,2023, the Company did not have a Controller, but management is looking to fill this position as soon as possible. Training will be required to fulfill disclosure control and procedure responsibilities, including review procedures for key accounting schedules and timely and proper documentation of material transactions and agreements. Until sufficient training has taken place for this new Controller, we believe this control deficiency represents material weaknesses in internal control over financial reporting. To mitigate the effects of the material weakness identified in our annual report, the Company contracted with an outside CPA to perform a secondary review of our quarterly report filed on Form 10-Q.
Despite the material weaknesses in financial reporting noted above, we believe that our condensed financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.
We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation, and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.
Changes in Internal Control Overover Financial Reporting
Other than those mentioned above, there were no changes in our internal control over financial reporting during the fiscal quarter ended JulyJanuary 31, 20222023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
22 |
GEORGE RISK INDUSTRIES, INC.
PARTPart II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company’s repurchase of common stock for the firstthird quarter of fiscal year 2023.
Period | ||
-0- | ||
December 1, 2022 – December 31, 2022 | 175 | |
January 1, 2023 – January 31, 2023 | -0- |
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits
Exhibit No. | Description | ||
31.1 | Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1 | Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 906 of the Sarbanes-Oxley Act of 2002. | ||
23 |
SIGNATURES
In accordance withPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
George Risk Industries, Inc. | |||
(Registrant) | |||
Date | March 17, 2023 | By: | /s/ Stephanie M. Risk-McElroy |
Stephanie M. Risk-McElroy | |||
President, Chief Executive Officer, Chief Financial Officer | |||
and Chairman of the Board |
24 |