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 or other jurisdiction of incorporation or organization)

incorporation)

 

(I.R.S.IRS Employers

Identification No.)

802 South Elm St.  
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 classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.10 par valueRSKIAOTC Markets
Convertible Preferred Stock, $20 stated valueRSKIAOTC 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 4,930,9884,930,543.

 

 

 

 
 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

ITEM 1:Financial Statements

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, 1,000,000 shares authorized, Series 1—noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding  99,000   99,000 
Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and outstanding  850,000   850,000 
Convertible preferred stock, 1,000,000 shares authorized, authorized, Series 1—noncumulative, $20 stated value, 25,000 shares 4,100 issued and outstanding  99,000   99,000 
Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and outstanding  850,000   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, 3,571,893 and 3,571,693 shares, at cost  (4,549,000)  (4,547,000)
Less: treasury stock, 3,572,138 and 3,571,693 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.

 

6
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

7

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

8

 

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.

 

98

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 $0.60 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 $0.50 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 $0.60 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 $0.50 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.

 

10Note 2: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.

11

 

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.

 

12

 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 

13
         
  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

Note 5:Earnings per Share

 

Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are:

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  $.21  $2,009,000   4,930,800  $.41 
Effect of dilutive Convertible Preferred Stock  —   20,500   —   –   20,500   – 
Diluted EPS $1,051,000   4,951,522  $.21  $2,009,000   4,951,300  $.41 

 

  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  $.35 
Effect of dilutive Convertible Preferred Stock  —   20,500   — 
Diluted EPS $1,746,000   4,966,960  $.35 

  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  $.03 
Effect of dilutive Convertible Preferred Stock  –   20,500   – 
Diluted EPS $161,000   4,964,485  $.03 

  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  $.74 
Effect of dilutive Convertible Preferred Stock  –   20,500   – 
Diluted EPS $3,667,000   4,951,429  $.74 

  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  $.73 
Effect of dilutive Convertible Preferred Stock  –   20,500   – 
Diluted EPS $3,595,000   4,965,692  $.72 

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.

 

15

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 1Valuation is based upon quoted prices for identical instruments traded in active markets.

 Level 2Valuation 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 3Valuation 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 8Subsequent Events

 

None

 

17

 17

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

Item 2:Management Discussion and Analysis of Financial Condition and Results of Operations

 

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 JulyJanuary 31, 2022 showed2023, which is a 5.15% increase over13.61% decrease from the corresponding quarter last year. Year-to-date net sales were $15,194,000 at January 31, 2023, which is a 0.38% decrease from the same period in the priorlast year. The Company saw increasedslight reduction in sales resulting primarily from a competitor no longer selling competing productsis due to our general winter and implementing a price increase that became effective on January 1, 2022. Management also believes that salesholiday slowdown and there has been more winter weather than normal. But we continue to grow due tooperate our business with our ongoing commitment to outstanding customer service and our ability to customize products.

 

●Cost of goods sold increased from 46.78%was 55.98% of net sales infor the prior year, to 51.00% inquarter ended January 31, 2023 and was 56.61% for the same quarter last year. Year-to-date cost of goods sold percentages were 53.15% for the current quarter, which is justnine months and 51.85% for the corresponding nine months last year. The current cost of goods sold percentages are right outside of Management’s goal to keepof keeping labor and other manufacturing expenses belowat less than 50%. The increased cost of goods sold percentage is a result for both the quarter and year-to-date results. Management continues to work with and train employees to work more efficiently. Raw material prices have soared over the current fiscal year because of inflation that has afflicted the economy recently. Management has seen significant price increases in raw material and haswages have had to raise wagesbe raised to remain competitive in the job market. Management offset some of these added expenses by implementing a 10% price increase effective January 1, 2023.

 

18

 

●Operating expenses decreased by $20,000 when comparing$27,000 for the current year quarter and they decreased by $6,000 for the nine-months ended January 31, 2023 as compared to the same quarter for the priorcorresponding periods last year. When comparing percentages in relation to net sales, the operating expenses decreased to 20.86% for the quarter ended JulyJanuary 31, 2022 as compared to 22.34%2023 was 23.41% of net sales while it was 20.76% of net sales for the correspondingsame quarter lastthe prior year. The dollar amount decrease isFor year-to-date numbers, operating expense were 21.32% and 21.28% of net sales for the result of decreased generalnine months ended January 31, 2023 and administration personnel.2022, respectively. The Company maintainedhas been able to keep the ratio of operating expenses to net sales at less than 30%, which of net sales for many years now; however, the actual dollar amount increase is in line with historical ratios.due to increased commission amounts, related to increased sales, and additional labor costs related wage increases.

 

●Income from operations for the quarter ended JulyJanuary 31, 20222023 was at $1,466,000, which is$900,000, a 4.18%21.33% decrease from the corresponding quarter last year, which had income from operations of $1,530,000.$1,144,000. Income from operations for the nine months ended January 31, 2023 was $3,878,000, which is a 5.37% decrease from the corresponding nine months last year, which had income from operations of $4,098,000.

 

●Other income and expenses showed a $102,000 loss for the quarter ended JulyJanuary 31, 2022 as compared to2023 shows income of $1,775,000, which is a $817,000 gain for$2,860,000 increase from the quarter ended July 31, 2021. For the three months ended July 31, 2022, $189,000 of unrealized losses from equity securities were recorded, compared to $420,000 of unrealized gains from equity securities recorded for the three months ended July 31, 2021. The remainder of the decrease is primarily due to losses on sales of investments.
●The Company’s provision for income taxes showed a decrease of $288,000 from $601,000 in the quarter ended July 31, 2021 to $313,000 for the quarter ended July 31, 2022. This decrease is primarily due to decreased deferred taxes resulting from unrealized losses on equity securities for the current quarter.
●In turn, net income for the quarter ended July 31, 2022 was $1,051,000, a 39.81% decrease from the corresponding quarter last year, which showedhad an expense amount of $1,085,000. Comparatively, there is an increase of $144,000 in other income for the year-to-date numbers. Most of the activity in these accounts consists of investment interest, dividends, real gains or losses on sale of investments, and unrealized gains or losses on equity securities. The main reason for the increase in the current quarter and year-to-date numbers is unrealized gain and loss on equity securities. The Company is at the mercy of the stock market when it comes to these figures and market has seen a recovery since the COVID-19 pandemic and other economic factors.

●Overall, net income of $1,746,000.for the quarter ended January 31, 2023 was up $1,848,000, or 1147.83%, from the same quarter last year. Similarly, net income for the nine-month period ended January 31, 2023 was up $72,000, or 2%, from the same period in the prior year.

 

●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 JulyJanuary 31, 2022 were $0.21$0.03 per common share and $0.35$0.73 per common share, for the quarter ended July 31, 2021.respectively.

 

Liquidity and capital resources

 

Operating

Operating
●Net cash increased $1,571,000decreased $813,000 during the quarternine months ended JulyJanuary 31, 20222023 as compared to an increasea decrease of $1,005,000$938,000 during the corresponding quarterperiod last year. The details are listed below.

 

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●Accounts receivable decreased $499,000$824,000 for the quarter ending Julynine months ended January 31, 20222023 compared with a $154,000$91,000 decrease for the same quarterperiod last year. The biggercurrent year decrease in accounts receivable is directly attributable to an increasea result of a slight decline in sales and customers being able to pay timelier.  Management is always working with customers to collect onslower collections of accounts and to keep past due accounts to a minimum.receivable. An analysis of accounts receivable shows that 5.24% of the balance wasthere were 7.02% that were over 90 days at JulyJanuary 31, 2022.2023.

 

●Inventories increased $947,000$2,444,000 during the current quarter asnine-month period compared to a $549,000an increase of $1,465,000 last year. The larger increase in the current year is primarily due to increases in the fact that the Company is continuing to buycost of raw materials and having more raw materials dueon hand to increased orders and that the prices of raw material and labor costs continue to increase.not run into shortages like what has happened recently.

 

19

●For the quarter ended July 31, 2022 there wasPrepaid expenses saw a $317,000$458,000 decrease in prepaid expenses compared to an increase of $196,000 for the quarter ended July 31, 2021. The current decrease isnine months, primarily due to having inventory and machinery delivered during the quarter;current nine-month period; therefore, having less money in prepayments of raw materials on the books. The prior nine months showed a $1,089,000 increase in prepaid expenses.

●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 a decrease of $21,000an $84,000 increase for the quartercurrent nine-month period ended JulyJanuary 31, 20222023 compared to a $176,000 decrease of $236,000 for the same quarterprior nine-month period. The company strives to pay all invoices within terms, and the year before. The variance in increases is primarily due to the timing differences of when product is received. Management strives to pay all payables within terms, unless there is a problem with the merchandise.receipt of products and payment of invoices.

 

●Accrued expenses increased $121,000$184,000 for the current quarter asnine-month period compared to a $99,000$130,000 increase for the quarternine-month period ended JulyJanuary 31, 2021.2022. The difference in the amounts is primarily due to timing of when payroll periods end and increases in sales commissions andincreased wages.

 

Investing

●Income tax payableAs for our investment activities, the quarter ended July 31, 2022 increased $409,000, compared to a $547,000 increase for the quarter ended July 31, 2021. The current smaller increase is due to smaller tax estimates in relation to the decreased income amount. Also, the corporate income tax rate in Nebraska decreased to 7.5% from 7.81%Company spent approximately $221,000 on acquisitions of property and equipment for the current fiscal year.nine-month period, in comparison with the corresponding nine months last year, where there was activity of $164,000.
Investing

 

●The Company purchased $74,000 of property and equipment duringAdditionally, the current fiscal quarter. In comparison, $40,000 was spent on purchases of property and equipment during the corresponding quarter last year.
●The Company continues to purchase marketable securities, which include municipal bonds and quality stocks. CashDuring the nine-month period ended January 31, 2023 the buy/sell activity in the investment accounts was continued as usual. Net cash spent on purchases of marketable securities for the quarternine-month period ended JulyJanuary 31, 20222023 was $111,000$648,000 compared to $98,000$640,000 spent duringin the quarter ended July 31, 2021. We continueprior nine-month period. The Company continues to use “money manager” accounts for most stock transactions. By doing this, the Company gives an independent third partythird-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays a quarterly service feesfee based on the value of the investments.
Financing

 

Financing

●The Company continues to purchase back common stock when the opportunity arises. For the quarternine-month period ended JulyJanuary 31, 20222023, the Company bought back $2,000purchased $5,000 worth of treasury stock, but forstock. This is in comparison to $35,000 spent in the quarter ended July 31, 2021,same nine months period the Company did not buyback any treasury stock.prior year.

 

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 locations are in development.locations. There has been demand from our customers for this type of high security magnetic reed switch.
●An updated version of the pool access alarm (PAA) has met electrical listing testing (ETL) approval and production has started. This next-generation model combines our battery operated DPA series with our hard wired 289 series. A variety of installation options will be available through jumper pin settings such as instant alarm and a seven second delay.

 

●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
 21

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

Item 3.Quantitative and Qualitative Disclosures About Market Risk

 

This disclosure does not apply.Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable

Item 4.Controls and Procedures

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

Item 1. Legal Proceedings

 

Not applicable

 

Item 1A. Risk Factors

Not applicable.

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

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.

 

PeriodNumber of shares repurchased
May 1, 2022 – May 31, 2022 100Number of shares repurchased
JuneNovember 1, 2022 – JuneNovember 30, 2022100
July 1, 2022 – July 31, 2022 -0-
December 1, 2022 – December 31, 2022175
January 1, 2023 – January 31, 2023-0-

Item 3.Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities

 

Not applicable

Item 4.Mine Safety Disclosures

Item 4. Mine Safety Disclosures

 

Not applicable

Item 5.Other Information

Item 5. Other Information

 

Not applicable

Item 6.Exhibits

 

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.
101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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 September 20, 2022March 17, 2023By:/s/ Stephanie M. Risk-McElroy
  

Stephanie M. Risk-McElroy

  President, Chief Executive Officer, Chief Financial Officer
and Chairman of the Board

 

24