UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly periodquarter ended OctoberJanuary 31, 20232024

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 orOR 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 SouthS. Elm St.
, Kimball, NE 69145
(Address of principal executive offices) (Zip Code)

 

(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(§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 No☒ ☒

 

APPLICABLE ONLY TO CORPORATE ISSUERSISSUERS:

 

The number of shares of the Registrant’s Common Stock outstanding, as of DecemberMarch 15, 20232024, was 4,900,1304,898,830.

 

 

 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The unaudited financial statements for the three-and six-month periodsthree- and nine-month period ended OctoberJanuary 31, 2023,2024, are attached hereto.

 

2

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

  January 31, 2024  April 30, 2023 
  (unaudited)    
       
ASSETS        
         
Current Assets:        
Cash and cash equivalents $5,371,000  $4,943,000 
Investments and securities  33,593,000   31,363,000 
Accounts receivable:        
Trade, net of allowance for credit losses of $14,864 and $17,922  4,059,000   3,503,000 
Other  38,000   59,000 
Income tax overpayment  315,000   403,000 
Inventories, net  12,088,000   11,443,000 
Prepaid expenses  219,000   651,000 
Total Current Assets  55,683,000   52,365,000 
         
Property and Equipment, net, at cost  1,987,000   1,997,000 
         
Other Assets        
Investment in Limited Land Partnership, at cost  332,000   344,000 
Projects in process  13,000   83,000 
Other  —   13,000 
Total Other Assets  345,000   440,000 
         
Intangible Assets, net  1,058,000   1,149,000 
         
TOTAL ASSETS $59,073,000  $55,951,000 

 

  October 31, 2023  April 30, 2023 
  (unaudited)    
ASSETS      
Current Assets:        
Cash and cash equivalents $3,562,000  $4,943,000 
Investments and securities, at fair value  29,986,000   31,363,000 
Accounts receivable:        
Trade, net of allowance for credit losses of $9,767 and $17,922  4,064,000   3,503,000 
Other  24,000   59,000 
Income tax overpayment  378,000   403,000 
Inventories, net  12,608,000   11,443,000 
Prepaid expenses  126,000   651,000 
Total Current Assets  50,748,000   52,365,000 
         
Property and Equipment, net, at cost  2,060,000   1,997,000 
         
Other Assets        
Investment in Limited Land Partnership, at cost  344,000   344,000 
Projects in process  13,000   83,000 
Other  —   13,000 
Total Other Assets  357,000   440,000 
         
Intangible Assets, net  1,089,000   1,149,000 
         
TOTAL ASSETS $54,254,000  $55,951,000 

See accompanying notes to the unaudited condensed financial statements.

 

3

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

(continued)

 

  October 31, 2023  April 30, 2023 
  (unaudited)    
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current Liabilities        
Accounts payable, trade $223,000  $546,000 
Dividends payable  2,854,000   2,565,000 
Deferred income  17,000   43,000 
Accrued expenses:        
Payroll expense  375,000   421,000 
Total Current Liabilities  3,469,000   3,575,000 
         
Long-Term Liabilities        
Deferred income taxes  1,291,000   1,727,000 
Total Long-Term Liabilities  1,291,000   1,727,000 
         
Total Liabilities  4,760,000   5,302,000 
         
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 
Additional paid-in capital  1,934,000   1,934,000 
Accumulated other comprehensive income  (391,000)  (161,000)
Retained earnings  51,597,000   52,481,000 
Less: treasury stock, 3,576,088 and 3,572,338 shares, at cost  (4,595,000)  (4,554,000)
Total Stockholders’ Equity  49,494,000   50,649,000 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $54,254,000  $55,951,000 

  January 31, 2024  April 30, 2023 
  (unaudited)    
       
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current Liabilities        
Accounts payable, trade $382,000  $546,000 
Dividends payable  2,854,000   2,565,000 
Deferred income  38,000   43,000 
Accrued expenses  547,000   421,000 
Total Current Liabilities  3,821,000   3,575,000 
         
Long-Term Liabilities        
Deferred income taxes  2,542,000   1,727,000 
Total Long-Term Liabilities  2,542,000   1,727,000 
         
Total Liabilities  6,363,000   5,302,000 
         
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 
Additional paid-in capital  1,934,000   1,934,000 
Accumulated other comprehensive income  (91,000)  (161,000)
Retained earnings  54,836,000   52,481,000 
Less: treasury stock, 3,604,051 and 3,572,338 shares, at cost  (4,918,000)  (4,554,000)
Total Stockholders’ Equity  52,710,000   50,649,000 
         
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY $59,073,000  $55,951,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

4

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED INCOME (LOSS) STATEMENTS

FOR THE THREE AND SIXNINE MONTHS ENDED OCTOBERJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

 Three months Three months Six months Six months  Three months Three months Nine months Nine months 
 ended ended ended ended  ended ended ended ended 
 Oct 31, 2023 Oct 31, 2022 Oct 31, 2023 Oct 31, 2022  Jan 31, 2024 Jan 31, 2023 Jan 31, 2024 Jan 31, 2023 
Net Sales $6,053,000  $5,617,000  $10,781,000  $10,827,000  $5,394,000  $4,366,000  $16,175,000  $15,194,000 
Less: Cost of Goods Sold  (2,949,000)  (2,974,000)  (5,411,000)  (5,631,000)  (2,734,000)  (2,444,000)  (8,145,000)  (8,076,000)
Gross Profit  3,104,000   2,643,000   5,370,000   5,196,000   2,660,000   1,922,000   8,030,000   7,118,000 
                                
Operating Expenses                                
General and Administrative  333,000   357,000   702,000   688,000   396,000   340,000   1,097,000   1,028,000 
Sales  787,000   753,000   1,476,000   1,488,000   705,000   648,000   2,181,000   2,136,000 
Engineering  16,000   20,000   37,000   41,000   41,000   34,000   78,000   76,000 
Total Operating Expenses  1,136,000   1,130,000   2,215,000   2,217,000   1,142,000   1,022,000   3,356,000   3,240,000 
                                
Income From Operations  1,968,000   1,513,000   3,155,000   2,979,000   1,518,000   900,000   4,674,000   3,878,000 
                                
Other (Expense)                
Other Income (Expense)                
Other  2,000   2,000   9,000   4,000   32,000   2,000   41,000   6,000 
Dividend and Interest Income  217,000   181,000   458,000   365,000   396,000   506,000   855,000   871,000 
Unrealized (Loss) on Equity Securities  (2,368,000)  (1,008,000)  (734,000)  (1,197,000)
Gain (Loss) on Investments  46,000   (110,000)  (71,000)  (209,000)
Unrealized Gain on equity securities  2,883,000   1,224,000   2,149,000   27,000 
Gain (Loss) on Sale of Investments  18,000   44,000   (55,000)  (165,000)
Gain on Sale of Assets  —   —   8,000   —   —   —   8,000   — 
Total Other Income (Loss)  (2,103,000)  (935,000)  (330,000)  (1,037,000)
Total Other Income (Expense)  3,329,000   1,776,000   2,998,000   739,000 
                                
Income (Loss) Before Provisions for Income Taxes  (135,000)  578,000   2,825,000   1,942,000 
Income Before Provisions for Income Taxes  4,847,000   2,676,000   7,672,000   4,617,000 
                                
Provisions for Income Taxes:                                
Current Expense  543,000   273,000   853,000   687,000   474,000   341,000   1,327,000   1,028,000 
Deferred Tax (Benefit) Expense  (623,000)  (302,000)  (347,000)  (404,000)
Total Income Tax Expense (Benefit)  (80,000)  (29,000)  506,000   283,000 
Deferred Tax Expense (Benefit)  1,134,000   326,000   787,000   (78,000)
Total Income Tax Expense  1,608,000   667,000   2,114,000   950,000 
                                
Net Income (Loss) $(55,000) $607,000  $2,319,000  $1,659,000 
Net Income $3,239,000  $2,009,000  $5,558,000  $3,667,000 
                                
Income Per Share of Common Stock                                
Basic $(0.01) $0.12  $0.47  $0.34  $0.66  $0.41  $1.13  $0.74 
Diluted $(0.01) $0.12  $0.47  $0.34  $0.66  $0.41  $1.13  $0.74 
                                
Weighted Average Number of Common Shares Outstanding                                
Basic  4,927,571   4,930,964   4,928,273   4,930,993   4,899,692   4,930,800   4,918,746   4,930,929 
Diluted  4,927,571   4,951,464   4,948,773   4,951,493   4,920,192   4,951,300   4,939,246   4,951,429 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

5

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTSSTATEMENT OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND SIXNINE MONTHS ENDED OCTOBERJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

  Three months  Three months  Six months  Six months 
  ended  ended  Ended  ended 
  Oct 31, 2023  Oct 31, 2022  Oct 31, 2023  Oct 31, 2022 
Net Income (Loss) $(55,000) $607,000  $2,319,000  $1,659,000 
                 
Other Comprehensive (Loss), Net of Tax                
Unrealized (loss) on debt securities:                
Unrealized holding (losses) arising during period  (289,000)  (203,000)  (320,000)  (175,000)
Income tax benefit related to other comprehensive income  82,000   57,000   90,000   49,000 
Other Comprehensive (Loss)  (207,000)  (146,000)  (230,000)  (126,000)
                 
Comprehensive Income (Loss) $(262,000) $461,000  $2,089,000  $1,533,000 
  Three months  Three months  Nine months  Nine months 
  ended  ended  ended  ended 
  Jan 31, 2024  Jan 31, 2023  Jan 31, 2024  Jan 31, 2023 
Net Income $3,239,000  $2,009,000  $5,558,000  $3,667,000 
                 
Other Comprehensive Income/(Loss), Net of Tax                
Unrealized gain (loss) on debt securities:                
Unrealized holding gains (losses) arising during period  418,000   173,000   98,000   (1,000)
Income tax (expense) related to other comprehensive income  (118,000)  (49,000)  (28,000)  (1,000)
                 
Other Comprehensive Income (Loss)  300,000   124,000   70,000   (2,000)
                 
Comprehensive Income $3,539,000  $2,133,000  $5,628,000  $3,665,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

6

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBERJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, July 31, 2022  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.60 per common share outstanding  —   —   —   — 
                 
Unrealized (loss), net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, October 31, 2022  4,100  $99,000   8,502,881  $850,000 
  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, October 31, 2023  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of Common Stock  —   —   —   — 
                 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, January 31, 2024  4,100  $99,000   8,502,881  $850,000 

 

  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, July 31, 2023  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.65 per common share outstanding                
                 
Unrealized (loss), net of tax effect  —   —   —   — 
                 
Net (Loss)  —   —   —   — 
                 
Balances, October 31, 2023  4,100  $99,000   8,502,881  $850,000 
  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 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

7

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBERJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

 Capital  Shares  Amount  Income  Earnings  Total 
 Paid-In  Treasury Stock
(Common Class A)		  

Accumulated

Other

Comprehensive

  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, July 31, 2022$1,934,000   3,571,893  $(4,549,000) $(117,000) $51,733,000  $49,950,000 
                        
Purchases of common stock —   70   (1,000)  —   —   (1,000)
                        
Dividend declared at $0.60 per common share outstanding —   —   —   —   (2,958,000)  (2,958,000)
                        
Unrealized (loss), net of tax effect —   —   —   (146,000)  —   (146,000)
                        
Net Income —   —   —   —   607,000   607,000 
                        
Balances, October 31, 2022$1,934,000   3,571,963  $(4,550,000) $(263,000) $49,382,000  $47,452,000 

                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 

Capital

  Shares  Amount  Income  Earnings  Total 
Balances, October 31, 2023$1,934,000   3,576,088  $(4,595,000) $(391,000) $51,597,000  $49,494,000 
                        
Purchases of common stock —   27,963   (323,000)  —   —   (323,000)
                       
Unrealized gain, net of tax effect —   —   —   300,000   —   300,000 
                        
Net Income —   —   —   —   3,239,000   3,239,000 
                        
Balances, January 31, 2024$1,934,000   3,604,051  $(4,918,000) $(91,000) $54,836,000  $52,710,000 

 

 Capital  Shares  Amount  Income  Earnings  Total 
 Paid-In  Treasury Stock
(Common Class A)		  

Accumulated

Other

Comprehensive

  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, July 31, 2023$1,934,000   3,574,373  $(4,576,000) $(184,000) $54,855,000  $52,978,000 
                        
Purchases of common stock —   1,715   (19,000)  —   —   (19,000)
                        
Dividend declared at $0.65 per common share outstanding —   —   —   —   (3,203,000)  (3,203,000)
                        
Unrealized (loss), net of tax effect —   —   —   (207,000)  —   (207,000)
                        
Net (Loss) —   —   —   —   (55,000)  (55,000)
                        
Balances, October 31, 2023$1,934,000   3,576,088  $(4,595,000) $(391,000) $51,597,000  $49,494,000 
                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 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 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

8

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIXNINE MONTHS ENDED OCTOBERJANUARY 31, 20232024 AND 20222023

(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 (loss), net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, October 31, 2022  4,100  $99,000   8,502,881  $850,000 
  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, April 30, 2023  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.65 per common share outstanding  —   —   —   — 
                 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, January 31, 2024  4,100  $99,000   8,502,881  $850,000 

 

 Shares Amount Shares Amount  Shares Amount Shares Amount 
 Preferred Stock  

Common Stock

Class A

  Preferred Stock  

Common Stock

Class A

 
 Shares Amount Shares Amount  Shares  Amount  Shares  Amount 
Balances, April 30, 2023  4,100  $99,000   8,502,881  $850,000 
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 $0.65 per common share outstanding  —   —   —   — 
Dividend declared at $0.60 per common share outstanding  —   —   —   — 
                                
Unrealized (loss), net of tax effect  —   —   —   —   —   —   —   — 
                                
Net Income  —   —   —   —   —   —   —   — 
                                
Balances, October 31, 2023  4,100  $99,000   8,502,881  $850,000 
Balances, January 31, 2023  4,100  $99,000   8,502,881  $850,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

9

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIXNINE MONTHS ENDED OCTOBERJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

 Capital  Shares  Amount  Income  Earnings  Total 
 Paid-In  Treasury Stock
(Common Class A)		  

Accumulated

Other

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 provisions related to depreciation —   —   —   —   (161,000)  (161,000)
                        
Purchases of common stock —   270   (3,000)  —   —   (3,000)
                        
Dividend declared at $0.60 per common share outstanding —   —   —   —   (2,959,000)  (2,959,000)
                        
Unrealized (loss), net of tax effect —   —   —   (126,000)  —   (126,000)
                        
Net Income —   —   —   —   1,659,000   1,659,000 
                        
Balances, October 31, 2022$1,934,000   3,571,963  $(4,550,000) $(263,000) $49,382,000  $47,452,000 

                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 

Capital

  Shares  Amount  Income  Earnings  Total 
Balances, April 30, 2023$1,934,000   3,572,338  $(4,554,000) $(161,000) $52,481,000  $50,649,000 
                        
Purchases of common stock —   31,713   (364,000)  —   —   (364,000)
                        
Dividend declared at $0.65 per common share outstanding —   —   —   —   (3,203,000)  (3,203,000)
                        
Unrealized gain, net of tax effect —   —   —   70,000   —   70,000 
                        
Net Income —   —   —   —   5,558,000   5,558,000 
                        
Balances, January 31, 2024$1,934,000   3,604,051  $(4,918,000) $(91,000) $54,836,000  $52,710,000 

 

 Capital  Shares  Amount  Income  Earnings  Total 
 Paid-In  Treasury Stock
(Common Class A)		  

Accumulated

Other

Comprehensive

  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, April 30, 2023$1,934,000   3,572,338  $(4,554,000) $(161,000) $52,481,000  $50,649,000 
                        
Purchases of common stock —   3,750   (41,000)  —   —   (41,000)
                        
Dividend declared at $0.65 per common share outstanding —   —   —   —   (3,203,000)  (3,203,000)
                        
Unrealized (loss), net of tax effect —   —   —   (230,000)  —   (230,000)
                        
Net Income —   —   —   —   2,319,000   2,319,000 
                        
Balances, October 31, 2023$1,934,000   3,576,088  $(4,595,000) $(391,000) $51,597,000  $49,494,000 
                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other 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 
Balance$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 (loss), 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 
Balance$1,934,000   3,572,138  $(4,552,000) $(139,000) $51,391,000  $49,583,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

10

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTSSTATEMENT OF CASH FLOWS

FOR THE SIXNINE MONTHS ENDED OCTOBERJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

 Oct 31, 2023 Oct 31, 2022  Jan 31, 2024 Jan 31, 2023 
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net Income $2,319,000  $1,659,000  $5,558,000  $3,667,000 
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization  241,000   219,000   364,000   332,000 
Loss on sale of investments  49,000   209,000   32,000   165,000 
Impairments of investments  22,000   — 
Unrealized loss on equity securities  734,000   1,197,000 
Impairment on investments  22,000   — 
Unrealized (gain) on equity investments  (2,149,000)  (27,000)
Provision for credit losses on accounts receivable  (8,000)  (9,000)  (3,000)  (6,000)
Reserve for obsolete inventory  (61,000)  52,000   (51,000)  81,000 
Deferred income taxes  (347,000)  (405,000)  787,000   (78,000)
(Gain) on sale of assets  (8,000)  — 
(Gain) on sales of assets  (8,000)  — 
Changes in assets and liabilities:                
(Increase) decrease in:                
Accounts receivable  (553,000)  75,000   (554,000)  824,000 
Inventories  (1,103,000)  (1,755,000)  (594,000)  (2,444,000)
Prepaid expenses and projects in process  608,000   798,000 
Prepaid expenses  515,000   458,000 
Other receivables  35,000   (18,000)  22,000   (29,000)
Income tax overpayment  25,000   (364,000)  88,000   (478,000)
Increase (decrease) in:                
Accounts payable  (323,000)  (80,000)  (164,000)  84,000 
Accrued expenses  (72,000)  48,000   120,000   184,000 
Net cash from operating activities  1,558,000   1,626,000   3,985,000   2,733,000 
                
CASH FLOWS FROM INVESTING ACTIVITIES:                
Proceeds from sale of assets  8,000   —   8,000   — 
(Purchase) of property and equipment  (243,000)  (209,000)  (263,000)  (221,000)
Proceeds from sale of marketable securities  524,000   14,000   520,000   17,000 
(Purchase) of marketable securities  (273,000)  (224,000)  (556,000)  (648,000)
Proceeds from long-term investment  12,000   — 
Net cash from investing activities  16,000   (419,000)  (279,000)  (852,000)
                
CASH FLOWS FROM FINANCING ACTIVITIES:                
(Purchase) of treasury stock  (41,000)  (3,000)  (364,000)  (5,000)
Dividends paid  (2,914,000)  (2,689,000)  (2,914,000)  (2,689,000)
Net cash from financing activities  (2,955,000)  (2,692,000)  (3,278,000)  (2,694,000)
                
NET CHANGE IN CASH AND CASH EQUIVALENTS  (1,381,000)  (1,485,000)  428,000   (813,000)
                
Cash and Cash Equivalents, beginning of period  4,943,000   6,078,000   4,943,000   6,078,000 
Cash and Cash Equivalents, end of period $3,562,000  $4,593,000  $5,371,000  $5,265,000 
                
Supplemental Disclosure for Cash Flow Information:                
Cash payments for:                
Income taxes $820,000  $1,165,000  $1,230,000  $1,618,000 
Interest paid $—  $—  $—  $— 
        
Cash receipts for:                
Income taxes $—  $118,000  $—  $118,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

11

 

GEORGE RISK INDUSTRIES, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

OCTOBERJANUARY 31, 20232024

 

Note 11: 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, 2023 annual report on Form 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 sixnine months ended OctoberJanuary 31, 2023.

 

Recently Issued Accounting Pronouncements — In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements. The new guidance clarifies or improves disclosure and presentation requirements on a variety of topics in the codification. The amendments will align the requirements in the FASB Accounting Standard Codification with the SEC’s regulations. The amendments are effective prospectively on the date each individual amendment is effectively removed from Regulation S-X or Regulation S-K. The Company is in the process of evaluating the impact that the adoption of this ASU will have on the financial statements and related disclosures, which is not expected to be material.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures. The new guidance is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective retrospectively for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the financial statements and related disclosures, which is not expected to be material.

 

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Tax Disclosures (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

12

 

Note 22: 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 February 2024 and July 20412041.. 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 OctoberJanuary 31, 20232024 and April 30, 2023, investments consisted of the following:

Schedule of Investments

   Gross Gross   
Investments at Cost Unrealized Unrealized Fair 
October 31, 2023 Basis Gains Losses Value 

Investments at

January 31, 2024

 

Cost

Basis

 Gross Unrealized Gains Gross Unrealized Losses 

Fair

Value

 
Municipal bonds $5,357,000  $21,000  $(372,000) $5,006,000  $5,383,000  $45,000  $(162,000) $5,266,000 
REITs  79,000   —   (12,000)  67,000   78,000   —   (8,000)  70,000 
Equity securities  18,810,000   6,321,000   (803,000)  24,328,000   18,977,000   8,876,000   (294,000)  27,559,000 
Money markets and CDs  585,000   —   —   585,000   698,000   —   —   698,000 
Total $24,831,000  $6,342,000  $(1,187,000) $29,986,000  $25,136,000  $8,921,000  $(464,000) $33,593,000 

 

   Gross Gross   
Investments at Cost Unrealized Unrealized Fair 
April 30, 2023 Basis Gains Losses Value 

Investments at

April 30, 2023

 

Cost

Basis

 Gross Unrealized Gains Gross Unrealized Losses 

Fair

Value

 
Municipal bonds $5,396,000  $46,000  $(230,000) $5,212,000  $5,396,000  $46,000  $(230,000) $5,212,000 
REITs  93,000   —   (22,000)  71,000   93,000   —   (22,000)  71,000 
Equity securities  18,605,000   6,915,000   (501,000)  25,019,000   18,605,000   6,915,000   (501,000)  25,019,000 
Money markets and CDs  1,060,000   1,000   —   1,061,000   1,060,000   1,000   —   1,061,000 
Total $25,154,000  $6,962,000  $(753,000) $31,363,000  $25,154,000  $6,962,000  $(753,000) $31,363,000 

 

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-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 losses recorded for the quarters ended January 31, 2024 and 2023, respectively. As for the year-to-date numbers, management recorded an impairment loss of $22,000 for the quarter and six-monthnine-month period ended OctoberJanuary 31, 2023,2024, while there were no impairment losses recorded for either of the quarter or the six monthsnine-month period ended OctoberJanuary 31, 2022.2023.

 

13

 

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 OctoberJanuary 31, 20232024 the Company had sales of equity securities which yielded gross realized gains of $108,000116,000 and gross realized losses of $60,00084,000. For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $2,00014,000 were recorded. As for the six-monthsnine-months ended OctoberJanuary 31, 20232024 the Company had sales of equity securities which yielded gross realized gains of $214,000329,000 and gross realized losses of $278,000362,000. For the same six-monthnine-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $7,00022,000 were recorded. During the quarter ending OctoberJanuary 31, 2022,2023, the Company recorded gross realized gains and losses on equity securities of $89,000118,000 and $187,00069,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $12,0005,000 were recorded. During the six-monthsnine-month period ending OctoberJanuary 31, 2022,2023, the Company recorded gross realized gains and losses on equity securities of $285,000403,000 and $453,000522,000, respectively, whilerespectively. For the same nine-month period last year, sales of debt securities did not yield any gross realized gains, but gross realized losses of $41,00046,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph.

 

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 OctoberJanuary 31, 20232024 and April 30, 2023, respectively.

 

Unrealized Loss Breakdown by Investment Type at OctoberJanuary 31, 20232024 

Schedule of Unrealized Loss Breakdown by Investment

                          
 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 $1,389,000  $(71,000) $3,453,000  $(301,000) $4,842,000  $(372,000) $816,000  $(10,000) $2,767,000  $(153,000) $3,583,000  $(163,000)
REITs  —   —   61,000   (12,000)  61,000   (12,000)  3,000   (1,000)  67,000   (6,000)  70,000   (7,000)
Equity securities  4,395,000   (350,000)  2,806,000   (453,000)  7,201,000   (803,000)  1,251,000   (85,000)  1,366,000   (209,000)  2,617,000   (294,000)
Total $5,784,000  $(421,000) $6,320,000  $(766,000) $12,104,000  $(1,187,000) $2,070,000  $(96,000) $4,200,000  $(368,000) $6,270,000  $(464,000)

 

Unrealized Loss Breakdown by Investment Type at April 30, 2023

 

                   
  Less than 12 months  12 months or greater  Total 
Description Fair Value  Unrealized Loss  Fair Value  Unrealized Loss  Fair Value  Unrealized Loss 
Municipal bonds $868,000  $(6,000) $3,769,000  $(224,000) $4,637,000  $(230,000)
REITs  36,000   (9,000)  35,000   (13,000)  71,000   (22,000)
Equity securities  3,048,000   (140,000)  2,209,000   (361,000)  5,257,000   (501,000)
Total $3,952,000  $(155,000) $6,013,000  $(598,000) $9,965,000  $(753,000)

 

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 OctoberJanuary 31, 20232024 and April 30, 2023.

 

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 OctoberJanuary 31, 20232024 and April 30, 2023.

 

Note 33: Inventories

 

Inventories at OctoberJanuary 31, 20232024 and April 30, 2023 consisted of the following:

Schedule of Inventories

 October 31, April 30,  January 31, April 30, 
 2023 2023  2024 2023 
          
Raw materials $11,161,000  $9,886,000  $10,603,000  $9,886,000 
Work in process  719,000   678,000   777,000   678,000 
Finished Goods  1,055,000   1,267,000 
Finished goods  1,046,000   1,267,000 
Inventory gross  12,935,000   11,831,000   12,426,000   11,831,000 
Less: allowance for obsolete inventory  (327,000)  (388,000)  (338,000)  (388,000)
Inventories, net $12,608,000  $11,443,000  $12,088,000  $11,443,000 

 

14

 

Note 44: Business Segments

 

The following is financial information relating to industry segments:

Schedule of Financial Information Relating to Industry Segments

 Three months Three months Six months Six months  Three months Three months Nine months Nine months 
 ended ended ended ended  ended ended ended ended 
 Oct 31, 2023 Oct 31, 2022 Oct 31, 2023 Oct 31, 2022  Jan 31, 2024 Jan 31, 2023 Jan 31, 2024 Jan 31, 2023 
Net revenue:                                
Security alarm products $5,445,000  $4,864,000  $9,687,000  $9,367,000  $4,939,000  $3,712,000  $14,627,000  $13,079,000 
Cable & wiring tools  457,000   591,000   785,000   1,074,000   332,000   486,000   1,117,000   1,561,000 
Other products  151,000   162,000   309,000   386,000   123,000   168,000   431,000   554,000 
Total net revenue $6,053,000  $5,617,000  $10,781,000  $10,827,000  $5,394,000  $4,366,000  $16,175,000  $15,194,000 
                                
Income from operations:                                
Security alarm products $1,769,000  $1,309,000  $2,835,000  $2,577,000  $1,373,000  $774,000  $4,226,000  $3,339,000 
Cable & wiring tools  143,000   150,000   230,000   296,000   105,000   93,000   323,000   398,000 
Other products  56,000   54,000   90,000   106,000   40,000   33,000   125,000   141,000 
Total income from operations $1,968,000  $1,513,000  $3,155,000  $2,979,000  $1,518,000  $900,000  $4,674,000  $3,878,000 
                                
Depreciation and amortization:                                
Security alarm products $42,000  $47,000  $91,000  $95,000  $55,000  $48,000  $146,000  $143,000 
Cable & wiring tools  30,000   31,000   60,000   62,000   30,000   30,000   91,000   92,000 
Other products  13,000   18,000   37,000   36,000   24,000   21,000   61,000   57,000 
Corporate general  39,000   15,000   53,000   26,000   14,000   14,000   66,000   40,000 
Total depreciation and amortization $124,000  $111,000  $241,000  $219,000  $123,000  $113,000  $364,000  $332,000 
                                
Capital expenditures:                                
Security alarm products $23,000  $—  $224,000  $74,000  $—  $—  $224,000  $74,000 
Cable & wiring tools  —   —   —   —   —   —   —   — 
Other products  —   135,000   —   135,000   20,000   12,000   20,000   147,000 
Corporate general  19,000   —   19,000   —   —   —   19,000   — 
Total capital expenditures $42,000  $135,000  $243,000  $209,000  $20,000  $12,000  $263,000  $221,000 

 

 October 31, 2023 April 30, 2023  January 31, 2024 April 30, 2023 
Identifiable assets:                
Security alarm products $16,314,000  $14,251,000  $15,880,000  $14,251,000 
Cable & wiring tools  2,302,000   2,548,000   2,173,000   2,548,000 
Other products  900,000   981,000   850,000   981,000 
Corporate general  34,738,000   38,171,000   40,170,000   38,171,000 
Total assets $54,254,000  $55,951,000  $59,073,000  $55,951,000 

 

15

 

Note 55: Earnings per Share

Net Income (Loss) Per Share

Basic income (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive. The dilutive common shares for the three months ended October 31, 2023 are not included in the computation of diluted earnings per share because to do so would be anti-dilutive. As of October 31, 2023 there were 20,500 potentially dilutive shares.

 

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 October 31, 2023  For the three months ended January 31, 2024 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator) (Denominator) Amount  (Numerator)  (Denominator)  Amount 
Net income $(55,000)         $3,239,000         
Basic EPS $(55,000)  4,927,571  $(.01) $3,239,000   4,899,692  $.66 
Effect of dilutive Convertible Preferred Stock  –   20,500   — 
Diluted EPS $(55,000)  4,927,571  $(.01) $3,239,000   4,920,192  $.66 

 

 For the three months ended October 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 $607,000          $2,009,000         
Basic EPS $607,000   4,930,964  $.12  $2,009,000   4,930,800  $.41 
Effect of dilutive Convertible Preferred Stock  —   20,500   —   –   20,500       — 
Diluted EPS $607,000   4,951,464  $.12  $2,009,000   4,951,300  $.41 

 

 For the six months ended October 31, 2023  For the nine months ended January 31, 2024 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator) (Denominator) Amount  (Numerator)  (Denominator)  Amount 
Net income $2,319,000          $5,558,000         
Basic EPS $2,319,000   4,928,273  $.47  $5,558,000   4,918,746  $1.13 
Effect of dilutive Convertible Preferred Stock  —   20,500   —   –   20,500        — 
Diluted EPS $2,319,000   4,948,773  $.47  $5,558,000   4,939,246  $1.13 

 

 For the six months ended October 31, 2022  For the nine months ended January 31, 2023 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator) (Denominator) Amount  (Numerator)  (Denominator)  Amount 
Net income $1,659,000         $3,667,000         
Basic EPS $1,659,000   4,930,993  $.34  $3,667,000   4,930,929  $.74 
Effect of dilutive Convertible Preferred Stock  —   20,500   —   –   20,500        — 
Diluted EPS $1,659,000   4,951,493  $.34  $3,667,000   4,951,429  $.74 

 

16

 

Note 66: 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 $14,00015,000 and $13,00014,000 were paid during each quarter ending OctoberJanuary 31, 20232024 and 2022,2023, respectively. Likewise, the Company paid matching contributions of approximately $45,000 and $29,00043,000 during each of six-month periodsnine-month period ending OctoberJanuary 31, 2024 and 2023, and 2022.respectively.

 

Note 77: 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-term nature. The fair value of our investments is determined utilizing market-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 2Level 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 3Level 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 OctoberJanuary 31, 20232024 and April 30, 2023, 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.

17

Schedule of Assets Measured at Fair Value on Recurring Basis

 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
October 31, 2023		  Assets Measured at Fair Value on a Recurring Basis as of
January 31, 2024		 
 Level 1 Level 2 Level 3 Total  Level 1 Level 2 Level 3 Total 
Assets:                         
Municipal Bonds $—  $5,006,000  $—  $5,006,000  $—  $5,266,000  $—  $5,266,000 
REITs  —   67,000   —   67,000   —   70,000   —   70,000 
Equity Securities  24,328,000   —   —   24,328,000   27,559,000   —   —   27,559,000 
Money Markets and CDs  585,000   —   —   585,000 
Money Markets  698,000   —   —   698,000 
Total fair value of assets measured on a recurring basis $24,913,000  $5,073,000  $—  $29,986,000  $28,257,000  $5,336,000  $—  $33,593,000 

 

 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, 2023		  Assets Measured at Fair Value on a Recurring Basis as of
April 30, 2023		 
 Level 1 Level 2 Level 3 Total  Level 1 Level 2 Level 3 Total 
Assets:                         
Municipal Bonds $—  $5,212,000  $—  $5,212,000  $—  $5,212,000  $—  $5,212,000 
REITs  —   71,000   —   71,000   —   71,000   —   71,000 
Equity Securities  25,019,000   —   —   25,019,000   25,019,000   —   —   25,019,000 
Money Markets and CDs  1,061,000   —   —   1,061,000 
Money Markets  1,061,000   —   —   1,061,000 
Total fair value of assets measured on a recurring basis $26,080,000  $5,283,000  $—  $31,363,000  $26,080,000  $5,283,000  $—  $31,363,000 

 

Note 8 Subsequent Events

 

None

 

1718

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

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

 

1819

 

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 new 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, 2023.

 

Executive Summary

 

The Company’s performance in operations has remained steadyseen a tick upward through the first halfthree quarters of the current fiscal year with the secondthird quarter showing an increasedipping slightly in sales over the firstsecond quarter of the current fiscal year. This is mainly due to having the ability to obtain raw materialsfact that are needed to complete the manufacture of our products and keeping employees staffed at our locations. Additionally, the Company’s products are traditionallybusiness is tied to the housing market and with that market remaining strong, it in turn helps the Company’s sales grow. As far as overall company performance, the net income is up when comparing the current six-month period to the prior six-month period. Management continues to keep manufacturing and operating expenses in check and the current year realized and unrealized gains (losses) on investments are showing fewer losses than for the same periods last year.winter months usually show a slowdown. Opportunities include keeping up with the business growth and finding ways to get our products out to our customers in a timelier manner, which includesmanner. 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 havecontinue to work on new products that are expected to hit the marketplace by the end of the fiscal year.will be a good fit for our industry and business. Challenges in the coming months include continuing to get productgetting products 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 $6,053,000$5,394,000 for the quarter ended OctoberJanuary 31, 2023,2024, which is a 7.76%23.55% increase from the corresponding quarter last year. Year-to-date net sales were $10,781,000$16,175,000 at OctoberJanuary 31, 2023,2024, which is a 0.42% decrease6.46% increase from the same period last year. The increaseimprovement in sales in the current quarter is a result of the economy rebounding in the second half of the calendar year and having management figuring out more efficient waysthe ability to get products outgoods built and shipped to our customers. Also, theWe continue to operate our business with our ongoing commitment towardsto outstanding customer service and customization of products are a few of the many reasons sales continueour ability to grow.customize products.

 

1920

●Cost of goods sold was 48.72%50.69% of net sales for the quarter ended OctoberJanuary 31, 20232024 and was 52.95%55.98% for the same quarter last year. Year-to-date cost of goods sold percentages were 50.19%50.36% for the current sixnine months and 52.01%53.15% for the corresponding sixnine months last year. The current cost of goods sold percentage goalspercentages have dropped to be just outside of Management’s goal of keeping labor and other manufacturing expenses at less than 50% have been met for both the quarter and are just slightly over for year-to-date results. The decreased costManagement continues to work with and train employees to work more efficiently. Raw material prices have come down during the current fiscal year as compared to the previous fiscal year, but wages continue to rise to remain competitive in the job market. Management offset some of goods sold percentages arethese added expenses by implementing a result of the economy gaining stability recently and Management finding ways to be more efficient.2.5% price increase effective January 1, 2024.

 

●Operating expenses were up $6,000increased by $120,000 for the quarter and were down $2,000they increased by $116,000 for the six-monthsnine-months ended OctoberJanuary 31, 20232024 as compared to the corresponding periods last year. But whenWhen comparing percentages in relation to net sales, the operating expenses for the quarter ended OctoberJanuary 31, 20232024 was 18.77%21.17% of net sales while it was 20.12%23.41% of net sales for the same quarter the prior year. For year-to-date numbers, operating expenseexpenses were 20.55%20.75% and 20.48%21.32% of net sales for the sixnine months ended OctoberJanuary 31, 20232024 and 2022,2023, respectively. The Company has been able to keep the operating expenses at less than 25%30% of net sales for many years now; however, the actual dollar amount increase is because ofdue to increased commission amounts, (sincerelated to increased sales, have increased) and additional labor costs forrelated to wage increases.

 

●Income from operations for the quarter ended OctoberJanuary 31, 20232024 was at $1,968,000, which is$1,518,000, a 30.07%68.67% increase from the corresponding quarter last year, which had income from operations of $1,513,000.$900,000. Income from operations for the sixnine months ended OctoberJanuary 31, 20232024 was at $3,155,000,$4,674,000, which is a 5.91%20.53% increase from the corresponding sixnine months last year, which had income from operations of $2,979,000.$3,878,000.

 

●Other income and expenses are down when comparingfor the current quarter toended January 31, 2024 shows income of $3,329,000, which is a $1,553,000 increase from the samecorresponding quarter last year, which had an income amount of the prior year, with a decrease$1,776,000. Comparatively, there is an increase of $1,168,000$2,259,000 in the current quarter. Comparably, other income and expenses are up by $707,000 when comparingfor the current six-month period to the prior six-month period.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 lossesincrease in the current quarter and year-to-date numbers are theis unrealized gain and loss on equity securities numbers.securities. The Company is at the mercy of the stock market when it comes to these figures, andthe stock market has seen an upturn recently with decreased inflation and improvement in the current state of the economy has influenced these numbers.economy.

 

●Overall, net income for the quarter ended OctoberJanuary 31, 20232024 was down $662,000,up $1,230,000, or 109.06%61.22%, overfrom the same quarter last year. Conversely,Similarly, net income for the six-monthnine-month period ended OctoberJanuary 31, 20232024 was up $660,000,$1,891,000, or 39.78%51.57%, overfrom the same period in the prior year.

 

●Earnings per common share for the quarter ended OctoberJanuary 31, 20232024 were ($0.01)$0.66 per share and $0.47$1.13 per share for the year-to-date numbers. EPS for the quarter and sixnine months ended OctoberJanuary 31, 20222023 were $0.12$0.41 per share and $0.34$0.74 per share, respectively.

 

2021

Liquidity and capital resources

 

Operating

 

●Net cash decreased $1,381,000increased $428,000 during the sixnine months ended OctoberJanuary 31, 20232024 as compared to a decrease of $1,485,000$813,000 during the corresponding period last year.

 

●Accounts receivable increased $553,000$554,000 for the sixnine months ended OctoberJanuary 31, 20232024 compared with a $75,000$824,000 decrease for the same period last year. The current year increase is a direct result of improvedthe increased sales, during the second quarter and havingwhile there has been a slight declineuptick in collections of accounts receivable over the last year.receivable. An analysis of accounts receivable shows that 6.71%9.62% of the receivables were over 90 days at OctoberJanuary 31, 2023, while 5.02% were over 90 days for the same period last year.2024.

 

●Inventories increased $1,103,000$594,000 during the current six-monthnine-month period as compared to a $1,755,000an increase of $2,444,000 last year. The smaller increase in the current year is primarily due to not buyinghaving as many raw materials as management did during the prior six-month period.on hand since sales have increased. Management has also seen slight decreases in raw material prices during the current year as compared to the six-monthsnine-month period ending OctoberJanuary 31, 2022.2023.

 

●Prepaid expenses saw a $608,000$515,000 decrease for the current sixnine months, primarily due to having inventory and machinery delivered during the current six-monthnine-month period; therefore, having less money in prepayments of raw materials on the books. The prior year six monthsnine-month period showed a $798,000$458,000 decrease in prepaid expenses.

 

●Income tax overpayment decreased $25,000$88,000 for the current six-monthnine-month period, compared to having an increase of $364,000$478,000 in income tax payableoverpayment for the six-monthsnine-months ended OctoberJanuary 31, 2022. Part of the2023. The current decrease is due to having the corporateto our income tax rate in Nebraska decrease to 7.25% from 7.5% for the current fiscal year.estimates be more aligned with our net income.

 

●Accounts payable shows a $164,000 decrease for the current six-monthnine-month period of $323,000 as it shows a decreaseended January 31, 2024 compared to an $84,000 increase for the prior six-month periods of $80,000.nine-month period. The company strives to pay all invoices within terms, and the variance is primarily due to the timing of receipt of products and payment of invoices.

 

●Accrued expenses decreased $72,000increased $120,000 for the current six-monthnine-month period as compared to a $48,000$184,000 increase for the six-monthnine-month period ended OctoberJanuary 31, 2022.2023. The difference in the amounts is primarily due to timing issues.

 

Investing

 

●As for our investment activities, the Company purchased $243,000spent approximately $263,000 on acquisitions of property and equipment duringfor the current six-month period. Innine-month period, in comparison $209,000 was spent on purchases of property and equipment duringwith the corresponding sixnine months last year.year, where there was activity of $221,000.

 

●TheAdditionally, the Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the six-monthnine-month period ended OctoberJanuary 31, 2023 there was quite a bit of2024 the buy/sell activity in the investment accounts.accounts continued as usual. Net cash spent on purchases of marketable securities for the six-monthnine-month period ended OctoberJanuary 31, 20232024 was $273,000$556,000 compared to $224,000$648,000 spent in the prior six-monthnine-month period. We continueThe Company continues to use “money manager” accounts for most stock transactions. By doing this, the Company gives an independent third-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays a quarterly service fee based on the value of the investments.

 

2122

 

Financing

 

●The Company continues to purchase back its common stock when the opportunity arises. For the six-monthnine-month period ended OctoberJanuary 31, 2023,2024, the Company purchased $41,000$364,000 worth of treasury stock,stock. This is in comparison to $3,000 repurchased$5,000 spent in the corresponding six-monthsame nine-month period lastthe prior year.

 

●The company paid out dividends of $2,914,000 during the nine months ending January 31, 2024. These dividends were paid during the second quarter. The company declared a dividend of $0.65 per share of common stock on September 30, 2023 whichand these dividends were paid by October 31, 2023. As for the prior year numbers, dividends paid was paid out during$2,689,000 for the second quarter. This is an increase to thenine months ending January 31, 2023. A dividend of $0.60 whichper common share was declared and paid during the second fiscal quarter last year.

 

New Product Development

 

The Company and its engineering department continue to develop enhancements to product lines, develop new products thatwhich 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.

 

●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.

 

●Research is being done on updating our small profile glass break detector, in addition to looking at the development of programmable temperature and humidity sensors with built-in hysteresis.

 

●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.

 

2223

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

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 OctoberJanuary 31, 2023.2024. 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, ,2023,2023, 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. A part-time Controller was hired in March 2023, but 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.

 

Despite the material weaknesses in financial reporting noted above, we believe that our 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.

 

We will continue to follow the standards for the Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:

 

●Pertain to the maintenance of records in reasonable detail that fairly reflect the transactions and dispositions of the Company’s assets;

 

●Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and

 

●Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Changes in Internal Control over Financial Reporting

 

Other than those mentioned above, there were no changes in our internal control over financial reporting during the fiscal quarter ended OctoberJanuary 31, 20232024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

2324

 

GEORGE RISK INDUSTRIES, INC.

 

Part 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 and issuance of common stock for the secondthird quarter of fiscal year 2024.

 

Period Number of shares repurchased/(issued)repurchased
AugustNovember 1, 2023 – AugustNovember 30, 202326,663
December 1, 2023 – December 31, 2023 -0-
SeptemberJanuary 1, 20232024 – September 30, 2023January 31, 2024 1,100
October 1, 2023 – October 31, 20236151,300

 

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.
   
101. INS Inline XBRL Instance Document
   
101. SCH Inline XBRL Taxonomy Extension Schema Document
   
101. CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
101. DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101. LAB Inline XBRL Taxonomy Extension Label Linkbase Document
   
101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
104101. Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2425

 

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 15, 2024(Registrant)

Date December 15, 2023By:/s/ Stephanie M. Risk-McElroy
  Stephanie M. Risk-McElroy
  President, Chief Executive Officer, Chief Financial Officer, and Chairman of the Board

 

2526