George Risk Industries 10Q/A 2020 Q2 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

Amendment No. 2

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(Mark One)

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

For the quarterly period ended October 31, 2019

[ ] 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)		(I.R.S. Employers Identification No.)

802 South 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 during the past 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 [X] 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 [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, a small 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 [X]
		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 [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares of the Registrant’s Common Stock outstanding, as of December 20, 2019 was 4,950,760.

EXPLANATORY NOTE

This Amendment No. 2 to Form 10-Q (“Amendment”), amends the Quarterly Report on Form 10-Q for the three-and six months periods ended October 31, 2019 that we originally filed with the Securities and Exchange Commission, or the Commission, on December 20, 2019, or the Original Filing, in connection with our failure to give effect to the implementation of FASB ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) in the financial statements included in the Original Filing.

All amendments and restatements to the financial statements are non-cash in nature.

Restatement

As further discussed in Note 9 to our unaudited financial statements in Part I, Item 1, “Financial Statements” of the Amendment #2, on April 1, 2020, we concluded that certain disclosures necessary to fairly explain the changes in the financial statements presented were excluded in our previous filings and that we would we would restate our previously issued financial statements as of October 31, 2019 and for the three-and six months periods ended October 31, 2018 and 2019, as set forth in the Original Filing in connection with our failure to give effect to the implementation of ASU 2016-01 in the financial statements included in the Original Quarterly Report on Form 10-Q.

Amendment

The purpose of this Amendment is to restate our previously issued unaudited financial statements and related disclosures as of October 31, 2019 and for the three-and six months periods ended October 31, 2018 and 2019 in connection with the application of ASU 2016-01. This Amendment also includes (a) an amended Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to reflect the correction of the error described above.

Except as expressly set forth herein, including in the notes to the unaudited financial statements, this Amendment, along with Amendment #1 (“Amendment”), does not reflect events occurring after the date of the Original Filing or modify or update any of the other disclosures contained therein in any way other than as required to reflect the amendment discussed above. Accordingly, this Amendment should be read in conjunction with the Original Filing and our other filings with the Commission. Information not affected by the restatement is unchanged and reflects disclosures made at the time of the filing of the Original Form 10-Q.

See Note 9 to the financial statements included in Item 1 for additional information and a reconciliation of the previously reported amounts to the restated amounts.

Items Amended in this Filing

For reasons discussed above, we are filing this Amendment in order to amend the following items in our Original Filing to the extent necessary to reflect the adjustments discussed above and make corresponding revisions to our financial data cited elsewhere in this Amendment in connection with the application of ASU 2016-01 in this Amendment that was not previously applied:

Part I, Item 1. Financial Statements

Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Part I, Item 4. Controls and Procedures

In accordance with applicable Commission rules, this Amendment includes new certifications required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, from our Chief Executive Officer and Chief Financial Officer dated as of the date of filing of this Amendment.

GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The restated unaudited financial statements for the three-and six-month periods ended October 31, 2019, are attached hereto.

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

	October 31, 2019		April 30, 2019
	(unaudited)
		(Restated)		(Restated)
ASSETS

Current Assets:
Cash and cash equivalents	$	5,212,000	$	4,873,000
Investments and securities		27,385,000		27,291,000
Accounts receivable:
Trade, net of $4,082 and $9,321 doubtful account allowance		2,217,000		2,696,000
Other		1,000		6,000
Income tax overpayment		145,000		259,000
Inventories, net		5,163,000		4,583,000
Prepaid expenses		111,000		282,000
Total Current Assets		40,234,000		39,990,000

Property and Equipment, net, at cost		1,041,000		984,000

Other Assets
Investment in Limited Land Partnership, at cost		320,000		293,000
Projects in process		17,000		117,000
Other		3,000		3,000
Total Other Assets		340,000		413,000

Intangible Assets, net		1,578,000		1,640,000

TOTAL ASSETS	$	43,193,000	$	43,027,000

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

	October 31, 2019			April 30, 2019
	(unaudited)
	(Restated)			(Restated)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable, trade	$	170,000		$	206,000
Dividends payable		1,892,000			1,714,000
Accrued expenses:
Payroll and other expenses		367,000			356,000
Total Current Liabilities		2,429,000			2,276,000

Long-Term Liabilities
Deferred income taxes		1,278,000			1,198,000
Total Long-Term Liabilities		1,278,000			1,198,000

Total Liabilities		3,707,000			3,474,000

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		50,000			14,000
Retained earnings		40,834,000			40,883,000
Less: treasury stock, 3,550,771 and 3,544,271 shares, at cost		(4,281,000	)		(4,227,000	)
Total Stockholders’ Equity		39,486,000			39,553,000

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	43,193,000		$	43,027,000

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED INCOME STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2019 AND 2018

(Unaudited)

	Three months ended Oct 31, 2019			Six months ended Oct 31, 2019			Three months ended Oct 31, 2018			Six months ended Oct 31, 2018
	(Restated)			(Restated)			(Restated)			(Restated)
Net Sales	$	3,710,000		$	7,263,000		$	3,667,000		$	7,096,000
Less: Cost of Goods Sold		(1,860,000	)		(3,630,000	)		(1,893,000	)		(3,695,000	)
Gross Profit		1,850,000			3,633,000			1,774,000			3,401,000

Operating Expenses
General and Administrative		329,000			626,000			331,000			616,000
Sales		555,000			1,112,000			525,000			1,080,000
Engineering		17,000			32,000			28,000			37,000
Rent Paid to Related Parties		3,000			8,000			4,000			9,000
Total Operating Expenses		904,000			1,778,000			888,000			1,742,000

Income From Operations		946,000			1,855,000			886,000			1,659,000

Other Income (Expense)
Other		1,000			2,000			6,000			8,000
Dividend and Interest Income		166,000			359,000			152,000			345,000
Unrealized Gain (Loss) on Equity Securities		129,000			274,000			(1,197,000	)		(765,000	)
Gain (Loss) on Investments		10,000			59,000			(27,000	)		(94,000	)
Total Other Income (Loss)		306,000			694,000			(1,066,000	)		(506,000	)

Income Before Provisions for Income Taxes		1,252,000			2,549,000			(180,000	)		1,153,000

Provisions for Income Taxes:
Current Expense		258,000			552,000			261,000			508,000
Deferred Tax Expense (Benefit)		37,000			65,000			(357,000	)		(197,000	)
Total Income Tax Expense (Benefit)		295,000			617,000			(96,000	)		311,000

Net Income (Loss)	$	957,000		$	1,932,000		$	(84,000	)	$	842,000

Income (Loss) Per Share of Common Stock
Basic	$	0.19		$	0.39		$	(0.02	)	$	0.17
Diluted	$	0.19		$	0.39		$	(0.02	)	$	0.17

Weighted Average Number of Common Shares Outstanding
Basic		4,952,110			4,954,250			4,962,177			4,964,879
Diluted		4,972,610			4,974,750			4,982,677			4,985,379

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2019 AND 2018

(Unaudited)

	Three months ended Oct 31, 2019		Six months ended Oct 31, 2019			Three months ended Oct 31, 2018			Six months ended Oct 31, 2018
	(Restated)		(Restated)			(Restated)			(Restated)
Net Income (Loss)	$	957,000	$	1,932,000		$	(84,000	)	$	842,000

Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses) arising during period		1,000		50,000			(55,000	)		165,000
Income tax benefit (expense) related to other comprehensive income		—		(14,000	)		15,000			(48,000	)
Other Comprehensive Income (Loss)		1,000		36,000			(40,000	)		117,000

Comprehensive Income (Loss)	$	958,000	$	1,968,000		$	(124,000	)	$	959,000

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBER 31, 2019 AND 2018

(Unaudited)

	Preferred Stock				Common Stock Class A
	Shares		Amount		Shares		Amount
Balances, July 31, 2019 (Restated)		4,100	$	99,000		8,502,881	$	850,000

Purchases of common stock		—		—		—		—

Dividend declared at $0.40 per common share outstanding		—		—		—		—

Unrealized gain (loss), net of tax effect		—		—		—		—

Net Income		—		—		—		—

Balances, October 31, 2019 (Restated)		4,100	$	99,000		8,502,881	$	850,000

	Preferred Stock				Common Stock Class A
	Shares		Amount		Shares		Amount
Balances, July 31, 2018 (Restated)		4,100	$	99,000		8,502,881	$	850,000

Purchases of common stock		—		—		—		—

Dividend declared at $0.38 per common share outstanding

Unrealized gain (loss), net of tax effect		—		—		—		—

Net Income		—		—		—		—

Balances, October 31, 2018 (Restated)		4,100	$	99,000		8,502,881	$	850,000

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBER 31, 2019 AND 2018

(Unaudited)

		Treasury Stock (Common Class A)					Accumulated Other Comprehensive		Retained
Paid-In Capital		Shares		Amount			Income		Earnings			Total
$	1,934,000		3,550,571	$	(4,280,000	)	$	49,000	$	41,859,000		$	40,511,000

	—		200		(1,000	)		—		—			(1,000	)

	—		—		—			—		(1,982,000	)		(1,982,000	)

	—		—		—			1,000		—			1,000

	—		—		—			—		957,000			957,000

$	1,934,000		3,550,771	$	(4,281,000	)	$	50,000	$	40,834,000		$	39,486,000

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

$	1,934,000		3,535,434	$	(4,153,000	)	$	(18,000	)	$	40,095,000		$	38,807,000

	—		5,800		(49,000	)		—			—			(49,000	)

	—		—		—			—			(1,885,000	)		(1,885,000	)

	—		—		—			(40,000	)		—			(40,000	)

	—		—		—			—			(83,000	)		(83,000	)

$	1,934,000		3,541,234	$	(4,202,000	)	$	(58,000	)	$	38,127,000		$	36,750,000

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED OCTOBER 31, 2019 AND 2018

(Unaudited)

	Preferred Stock				Common Stock Class A
	Shares		Amount		Shares		Amount
Balances, April 30, 2019 (Restated)		4,100	$	99,000		8,502,881	$	850,000

Purchases of common stock		—		—		—		—

Dividend declared at $0.40 per common share outstanding		—		—		—		—

Unrealized gain (loss), net of tax effect		—		—		—		—

Net Income		—		—		—		—

Balances, October 31, 2019 (Restated)		4,100	$	99,000		8,502,881	$	850,000

	Preferred Stock				Common Stock Class A
	Shares		Amount		Shares		Amount
Balances, April 30, 2018, as previously reported		4,100	$	99,000		8,502,881	$	850,000

Cumulative effect of restatement on prior periods, for adoption of ASU 2016-01		—		—		—		—

Balance at May 1, 2018 after adoption of ASU 2016-01, as restated

Purchases of common stock		—		—		—		—

Dividend declared at $0.38 per common share outstanding		—		—		—		—

Unrealized gain (loss), net of tax effect		—		—		—		—

Net Income		—		—		—		—

Balances, October 31, 2018 (Restated)		4,100	$	99,000		8,502,881	$	850,000

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED OCTOBER 31, 2019 AND 2018

(Unaudited)

		Treasury Stock (Common Class A)					Accumulated Other Comprehensive		Retained
Paid-In Capital		Shares		Amount			Income		Earnings			Total
$	1,934,000		3,544,271	$	(4,227,000	)	$	14,000	$	40,883,000		$	39,553,000

	—		6,500		(54,000	)		—		—			(54,000	)

	—		—		—			—		(1,981,000	)		(1,981,000	)

	—		—		—			36,000		—			36,000

	—		—		—			—		1,932,000			1,932,000

$	1,934,000		3,550,771	$	(4,281,000	)	$	50,000	$	40,834,000		$	39,486,000

		Treasury Stock (Common Class A)					Accumulated Other Comprehensive			Retained
Paid-In Capital		Shares		Amount			Income			Earnings			Total
$	1,934,000		3,534,784	$	(4,148,000	)	$	2,249,000		$	36,746,000		$	37,730,000

								(2,424,000	)		2,424,000

	1,934,000		3,534,784		(4,148,000	)		(175,000	)		39,170,000			37,730,000

	—		6,450		(54,000	)		—			—			(54,000	)

	—		—		—			—			(1,885,000	)		(1,885,000	)

	—		—		—			117,000			—			117,000

	—		—		—			—			842,000			842,000

$	1,934,000		3,541,234	$	(4,202,000	)	$	(58,000	)	$	38,127,000		$	36,750,000

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTSOF CASH FLOWS

FOR THE SIX MONTHS ENDED OCTOBER 31, 2019 AND 2018

(Unaudited)

	Oct 31, 2019			Oct 31, 2018
	(Restated)			(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	1,932,000		$	842,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		183,000			167,000
(Gain) loss on sale of investments		(100,000	)		62,000
Impairments on investments		41,000			32,000
Unrealized (gain) loss on equity securities		(274,000	)		765,000
Reserve for bad debts		(6,000	)		6,000
Reserve for obsolete inventory		2,000			19,000
Deferred income taxes		65,000			(197,000	)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		486,000			23,000
Inventories		(583,000	)		(435,000	)
Prepaid expenses and projects in process		271,000			168,000
Other receivables		5,000			(2,000	)
Income tax over payment		114,000			(97,000	)
Increase (decrease) in:
Accounts payable		(36,000	)		(189,000	)
Accrued expenses		11,000			8,000
Net cash provided by operating activities		2,111,000			1,172,000

CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) of property and equipment		(179,000	)		—
Proceeds from sale of marketable securities		540,000			754,000
(Purchase) of marketable securities		(250,000	)		(324,000	)
(Purchase) of long-term investment		(27,000	)		—
Net cash provided by investing activities		84,000			430,000
CASH FLOWS FROM FINANCING ACTIVITIES:
(Purchase) of treasury stock		(54,000	)		(54,000	)
Dividends paid		(1,802,000	)		(1,752,000	)
Net cash (used in) financing activities		(1,856,000	)		(1,806,000	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		339,000			(204,000	)

Cash and Cash Equivalents, beginning of period		4,873,000			4,294,000
Cash and Cash Equivalents, end of period	$	5,212,000		$	4,090,000

Supplemental Disclosure for Cash Flow Information:
Cash payments for:
Income taxes	$	605,000		$	600,000
Interest paid	$	—		$	1,000

Cash receipts for:
Income taxes	$	159,000		$	—

See accompanying notes to the unaudited condensed financial statements

GEORGE RISK INDUSTRIES, INC.

NOTES TO RESTATED UNAUDITED CONDENSED FINANCIAL STATEMENTS

OCTOBER 31, 2019

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 condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2019 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 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.

Recently Issued Accounting Pronouncements — In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning May 1, 2019. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) and ASU 2018-20, “Narrow-Scope Improvements for Lessors”. ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. During the first quarter of 2019, the FASB issued ASU 2019-01, Leases (Topic 842) to amend ASU 2016-02. This amendment exempts both lessees and lessors from having to provide certain prior year interim disclosure information in the fiscal year in which a company adopts the new leases standard. The Company has adopted the ASUs in the first quarter of fiscal year 2020 and the Company’s accounting systems have been upgraded to comply with the requirements of the new standard, however, the adoption of ASU 2016-02 did not have a material impact on the Company’s financial statements and related disclosures because leases are not material to the financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.

In August 2018, The FASB issued ASU 2018-14 to improve the effectiveness of disclosures for defined benefit plans under ASC 715-20. The ASU applies to employers that sponsor defined benefit pension or other postretirement plans. The FASB issued ASU 2018-14 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness of disclosures in the notes to financial statements. As part of the project, during August 2018, the Board also issued a Concepts Statement, which the FASB used as a basis for amending the disclosure requirements for Subtopic 715-20. The guidance is effective or fiscal years ending after December 15, 2020 and early adoption is permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.

In June 2016, the FASB issued ASU 2016-13(“ASU 2016-13”), Financial Instruments—Credit Losses. Subsequently, the FASB issued ASU 2019-05, Financial Instruments- Credit Losses (Topic 326): Targeted Transition Relief and codification improvements to Topic 326 in ASU 2019-11, ASU 2019-04 and ASU 2018-19. The amendments update guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The ASU is effective for fiscal years beginning after December 15, 2020. Subsequent to September 30, 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation is not needed until May 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company’s financial statements and disclosures.

Note 2 Investments (Restated)

The Company has investments in publicly traded equity securities, corporate bonds, state and municipal debt securities, real estate investment trusts, and money markets and they are recorded at fair value. The investments in debt securities have maturities between November 2019 and September 2042. The Company uses the average cost method to determine the cost of securities sold with any unrealized gains or losses reported in each respective period’s earnings. Dividend and interest income are reported as earned.

As of October 31, 2019 and April 30, 2019, investments consisted of the following:

			Gross		Gross
Investments at	Cost		Unrealized		Unrealized			Fair
October 31, 2019	Basis		Gains		Losses			Value
Municipal bonds	$	5,362,000		122,000		(47,000	)		5,437,000
Corporate bonds		26,000		—		—			26,000
REITs		89,000		2,000		(8,000	)		83,000
Equity securities		16,943,000		4,375,000		(254,000	)		21,064,000
Money markets and CDs		774,000		1,000		—			775,000
Total	$	23,194,000	$	4,500,000	$	(309,000	)	$	27,385,000

			Gross		Gross
Investments at	Cost		Unrealized		Unrealized			Fair
April 30, 2019	Basis		Gains		Losses			Value
Municipal bonds	$	5,459,000	$	79,000	$	(55,000	)	$	5,483,000
Corporate bonds		26,000		—		—			26,000
REITs		89,000		1,000		(6,000	)		84,000
Equity securities		16,618,000		4,143,000		(296,000	)		20,465,000
Money markets and CDs		1,233,000		—		—			1,233,000
Total	$	23,425,000	$	4,223,000	$	(357,000	)	$	27,291,000

Marketable securities that are 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 Operations in the period of the change; and debt securities are carried at fair value on the balance sheets with changes in fair value recorded as unrealized gains or losses in the Statement of Comprehensive Income. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of operations. On May 1. 2018, as a result of the adoption of ASU 2016-01 – Financial Instruments, the Company reclassified $2,424,000 of net unrealized gains on marketable securities, that were formerly classified as available-for-sale securities before the adoption of the new standard, from Accumulated Other Comprehensive Income to Retained Earnings.

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, management recorded an impairment loss of $7,000 for the quarter, and recorded a loss of $41,000 for the six months ended October 31, 2019. As for the corresponding periods last year, management recorded an impairment loss of $32,000 for both the quarter and six-months ended October 31, 2018.

The following table shows 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 October 31, 2019 and April 30, 2019, respectively.

Unrealized Loss Breakdown by Investment Type at October 31, 2019

	Less than 12 months					12 months or greater					Total
Description	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds	$	—	$	—		$	512,000	$	(47,000	)	$	512,000	$	(47,000	)
REITs		—		—			59,000		(8,000	)		59,000		(8,000	)
Equity securities		1,214,000		(66,000	)		1,819,000		(188,000	)		3,033,000		(254,000	)
Total	$	1,214,000	$	(66,000	)	$	2,390,000	$	(243,000	)	$	3,604,000	$	(309,000	)

Unrealized Loss Breakdown by Investment Type at April 30, 2019

	Less than 12 months					12 months or greater					Total
Description	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Municipal bonds	$	772,000	$	(4,000	)	$	580,000	$	(50,000	)	$	1,352,000	$	(54,000	)
REITs		—		—			32,000		(6,000	)		32,000		(6,000	)
Equity securities		932,000		(102,000	)		1,652,000		(195,000	)		2,584,000		(297,000	)
Total	$	1,704,000	$	(106,000	)	$	2,264,000	$	(251,000	)	$	3,968,000	$	(357,000	)

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 October 31, 2019.

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 October 31, 2019.

Note 3 Inventories

Inventories at October 31, 2019 and April 30, 2019 consisted of the following:

	October 31, 2019			April 30, 2019

Raw materials	$	4,131,000		$	3,644,000
Work in process		458,000			389,000
Finished goods		667,000			641,000
		5,256,000			4,674,000
Less: allowance for obsolete inventory		(93,000	)		(91,000	)
Inventories, net	$	5,163,000		$	4,583,000

Note 4 Business Segments

The following is financial information relating to industry segments:

	Three months			Six months		Three months		Six months
	ended			ended		ended		ended
	Oct 31, 2019			Oct 31, 2019		Oct 31, 2018		Oct 31, 2018
Net revenue:
Security alarm products	$	2,985,000		$	5,852,000	$	2,852,000	$	5,371,000
Cable & wiring tools		571,000			1,071,000		649,000		1,351,000
Other products		154,000			340,000		166,000		374,000
Total net revenue	$	3,710,000		$	7,263,000	$	3,667,000	$	7,096,000

Income from operations:
Security alarm products	$	762,000		$	1,495,000	$	689,000	$	1,291,000
Cable & wiring tools		140,000			273,000		157,000		293,000
Other products		44,000			87,000		40,000		75,000
Total income from operations	$	946,000		$	1,855,000	$	886,000	$	1,659,000

Depreciation and amortization:
Security alarm products	$	71,000		$	94,000	$	10,000	$	20,000
Cable & wiring tools		31,000			62,000		31,000		62,000
Other products		(4,000	)		16,000		28,000		55,000
Corporate general		(4,000	)		11,000		15,000		30,000
Total depreciation and amortization	$	94,000		$	183,000	$	84,000	$	167,000

Capital expenditures:
Security alarm products	$	10,000		$	179,000	$	—	$	—
Cable & wiring tools		—			—		—		—
Other products		—			—		—		—
Corporate general		—			—		—		—
Total capital expenditures	$	10,000		$	179,000	$	—	$	—

	October 31, 2019		April 30, 2019
Identifiable assets:
Security alarm products	$	6,351,000	$	6,179,000
Cable & wiring tools		2,666,000		2,713,000
Other products		835,000		842,000
Corporate general		33,341,000		33,293,000
Total assets	$	43,193,000	$	43,027,000

Note 5 Earnings per Share (Restated)

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

	For the Three Months Ended October 31,
	Originally Filed 2019		Adjustment 2019		Restated 2019
Numerator
Net income	$	864,000	$	93,000	$	957,000

Denominator
Weighted average common shares outstanding, basic		4,952,110		—		4,952,110
Convertible Preferred Stock		20,500		—		20,500
Weighted average common shares outstanding, diluted		4,972,610		—		4,972,610
Net Income per share - Basic	$	0.17	$	0.02	$	0.19
Income per shares - Diluted	$	0.17	$	0.02	$	0.19

	For the Six Months Ended October 31,
	Originally Filed 2019		Adjustment 2019		Restated 2019
Numerator
Net income	$	1,729,000	$	203,000	$	1,932,000

Denominator
Weighted average common shares outstanding, basic		4,954,250		—		4,964,250
Convertible Preferred Stock		20,500		—		20,500
Weighted average common shares outstanding, diluted		4,974,750		—		4,974,750
Net Income per share - Basic	$	0.35	$	0.04	$	0.39
Income per shares - Diluted	$	0.35	$	0.04	$	0.39

	For the Three Months Ended October 31,
	Originally Filed 2018		Adjustment 2018			Restated 2018
Numerator
Net income	$	768,000	$	(852,000	)	$	(84,000	)

Denominator
Weighted average common shares outstanding, basic		4,962,177		—			4,962,177
Convertible Preferred Stock		20,500		—			20,500
Weighted average common shares outstanding, diluted		4,982,677		—			4,982,677
Net Income per share - Basic	$	0.15	$	(0.17	)	$	(0.02	)
Income per shares - Diluted	$	0.15	$	(0.17	)	$	(0.02	)

	For the Six Months Ended October 31,
	Originally Filed 2018		Adjustment 2018			Restated 2018
Numerator
Net income	$	1,386,000	$	(544,000	)	$	842,000

Denominator
Weighted average common shares outstanding, basic		4,964,879		—			4,964,879
Convertible Preferred Stock		20,500		—			20,500
Weighted average common shares outstanding, diluted		4,985,379		—			4,985,379
Net Income per share - Basic	$	0.28	$	(0.11	)	$	0.17
Income per shares - Diluted	$	0.28	$	(0.11	)	$	0.17

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 corporation. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. Matching contributions by the Company of approximately $7,000 and $3,000 were paid during each quarter ending October 31, 2019 and 2018, respectively. Likewise, the Company paid matching contributions of approximately $9,000 and $5,000 during each six-month period ending October 31, 2019 and 2018, respectively.

Note 7 Fair Value Measurements

Generally accepted accounting principles in the United States of America (US GAAP) defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The levels of the fair value hierarchy under US GAAP are described below:

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

	Level 2	Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

	Level 3	Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Investments and Marketable Securities

As of October 31, 2019, our investments consisted of money markets, certificates of deposits (CDs), publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities and corporate bonds. Our marketable securities are valued using third-party broker statements. The value of the investments 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 sets 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.

	Assets Measured at Fair Value on a Recurring Basis as of October 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Municipal Bonds	$	—	$	5,437,000	$	—	$	5,437,000
Corporate Bonds		26,000		—		—		26,000
REITs		—		83,000		—		83,000
Equity Securities		21,064,000		—		—		21,064,000
Money Markets and CDs		775,000		—		—		775,000
Total fair value of assets measured on a recurring basis	$	21,865,000	$	5,520,000	$	—	$	27,385,000

	Assets Measured at Fair Value on a Recurring Basis as of April 30, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Municipal Bonds	$	—	$	5,483,000	$	—	$	5,483,000
Corporate Bonds		26,000		—		—		26,000
REITs		—		84,000		—		84,000
Equity Securities		20,465,000		—		—		20,465,000
Money Markets and CDs		1,233,000		—		—		1,233,000
Total fair value of assets measured on a recurring basis	$	21,724,000	$	5,567,000	$	—	$	27,291,000

Note 8 Subsequent Events

In an update to related party transactions, the Company finalized the purchase of the building that it had previously leased from Bonita Risk on November 22, 2019. Bonita Risk is a director and an employee of the Company and is the majority holder of George Risk Industries, Inc. stock. This building contains the Company’s sales and accounting departments, maintenance department, engineering department and some production facilities. Prior to the purchase, the lease required a minimum payment of $1,535 on a month-to-month basis. The purchase price of the building was $200,000, which was approximately the assessed value of the building at the time of purchase.

Note 9 Correction of Previously Issued Financial Statements

Subsequent to the issuance of its Quarterly Report on SEC Form 10-Q for the three-and six months periods ended October 31, 2019, the Company discovered an error due to missing a change in accounting related to other comprehensive income (loss) as reflected in the implementation of ASU 2016-01, which became effective for the Company on May 1, 2018. Under the new guidance in ASU 2016-01 the Company should record unrealized gains and losses in the value of the equity securities it owns in the statements of operations, whereas, under previous guidance (and in the Original Form 10-Q) those unrealized gains and losses were recorded as accumulated other comprehensive income (loss).

This restatement includes i) recording a one-time adjustment to retained earnings to reclassify the accumulated other comprehensive loss related to unrealized gains on equity securities as of May 1, 2018 and ii) recording unrealized gains on marketable securities representing the value change in the equities for the three-and six months periods ended October 31, 2019 and 2018.

No entries to correct for this restatement have any impact on our cash position, liquidity, or operations.

The tables below reflect the effect of restatement on the Company’s financial statements for the three and six month periods ending October 31, 2019 and 2018:

	As of October 31, 2019
	Original		Adjustment			As Restated
Balance Sheet
Deferred Income Taxes	$	1,286,000	$	(8,000	)	$	1,278,000
Total Liabilities	$	3,715,000	$	(8,000	)	$	3,707,000

Accumulated other comprehensive income		2,983,000		(2,933,000	)		50,000
Retained Earnings		37,893,000		2,941,000			40,834,000
Total stockholder’s Equity	$	39,478,000	$	8,000		$	39,486,000

Total liabilities and stockholder’s Equity	$	43,193,000	$	—		$	43,193,000

	As of October 31, 2018
	Original		Adjustment			As Restated

Balance Sheet
Accumulated other comprehensive income	$	1,821,000	$	(1,879,000	)	$	(58,000	)
Retained Earnings		36,246,000		1,881,000			38,127,000

Total Stockholder’s Equity	$	36,748,000	$	2,000		$	36,750,000

	For the Three Months Ended October 31, 2019
	Original		Adjustment		As Restated
Income Statement
Unrealized Gain (Loss) on Equity Securities	$	—	$	129,000	$	129,000
Total Other Income (Expense)		177,000		129,000		306,000

Income Before Provisions for Income Taxes		1,123,000		129,000		1,252,000

Provisions for Income Taxes
Deferred tax expense (benefit)		1,000		36,000		37,000
Total Income Tax Expense		259,000		36,000		295,000

Net Income	$	864,000	$	93,000	$	957,000

Earnings Per Share of Common Stock	$	0.17	$	0.02	$	0.19
Basic	$	0.17	$	0.02	$	0.19
Diluted

	For the Six Months Ended October 31, 2019
	Original			Adjustment		As Restated
Income Statement
Unrealized Gain (Loss) on Equity Securities	$	—		$	274,000	$	274,000
Total Other Income (Expense)	$	420,000		$	274,000	$	694,000

Income Before Provisions for Income Taxes		2,275,000			274,000		2,549,000

Deferred tax expense (benefit)		(6,000	)		71,000		65,000
Total Income Tax Expense		546,000			71,000		617,000

Net Income	$	1,729,000		$	203,000	$	1,932,000

Earnings Per Share of Common Stock	$	0.35		$	0.04	$	0.39
Basic	$	0.35		$	0.04	$	0.39
Diluted

	For the Three Months Ended October 31, 2018
	Original			Adjustment			As Restated
Income Statement

Unrealized Gain (Loss) on Equity Securities	$	—		$	(1,197,000	)	$	(1,197,000	)
Total Other Income (Expense)	$	131,000		$	(1,197,000	)	$	(1,066,000	)

Income Before Provisions for Income Taxes		1,017,000			(1,197,000	)		(180,000	)

Deferred tax expense (benefit)		(12,000	)		(345,000	)		(357,000	)
Total Income Tax Expense		249,000			(345,000	)		(96,000	)

Net Income	$	768,000		$	(852,000	)	$	(84,000	)

Earnings Per Share of Common Stock	$	0.15		$	(0.17	)	$	(0.02	)
Basic	$	0.15		$	(0.17	)	$	(0.02	)
Diluted

	For the Six Months Ended October 31, 2018
	Original		Adjustment			As Restated
Income Statement

Unrealized Gain (Loss) on Equity Securities	$	—	$	(765,000	)	$	(765,000	)
Total Other Income (Expense)	$	259,000	$	(765,000	)	$	(506,000	)

Income Before Provisions for Income Taxes		1,918,000		(765,000	)		1,153,000

Deferred tax expense (benefit)		24,000		(221,000	)		(197,000	)
Total Income Tax Expense		532,000		(221,000	)		311,000

Net Income	$	1,386,000	$	(544,000	)	$	842,000

Earnings Per Share of Common Stock	$	0.28	$	(0.11	)	$	0.17
Basic	$	0.28	$	(0.11	)	$	0.17
Diluted

	For the Three Months Ended October 31, 2019
	Original			Adjustment			As Restated
Statement of Comprehensive Income
Net Income	$	864,000		$	93,000		$	957,000

Other Comprehensive Income, net of Tax
Unrealized gain (loss) on securities
Unrealized holding gains (losses) arising during period		241,000			(240,000	)		1,000
Less: reclassification adjustment for (gains) losses included in net income		(111,000	)		111,000			—
Income tax expense (benefit) related to other comprehensive income		(37,000	)		37,000			—
Other Comprehensive Income (Loss)	$	93,000		$	(92,000	)	$	1,000

Comprehensive Income	$	957,000		$	1,000		$	958,000

	For the Six Months Ended October 31, 2019
	Original			Adjustment			As Restated
Statement of Comprehensive Income
Net Income	$	1,729,000		$	203,000		$	1,932,000

Other Comprehensive Income, net of Tax
Unrealized gain (loss) on securities
Unrealized holding gains arising during period		565,000			(515,000	)		50,000
Less: reclassification adjustment for (gains) losses included in net income		(240,000	)		240,000			—
Income tax expense related to other comprehensive income		(94,000	)		80,000			(14,000	)
Other Comprehensive Income (Loss)	$	231,000		$	(195,000	)	$	36,000

Comprehensive Income	$	1,960,000		$	8,000		$	1,968,000

	For the Three Months Ended October 31, 2018
	Original			Adjustment			As Restated
Statement of Comprehensive Income
Net Income (Loss)	$	768,000		$	(852,000	)	$	(84,000	)

Other Comprehensive Income (Loss), net of Tax
Unrealized gain (loss) on securities
Unrealized holding gains (Loss) arising during period		(1,245,000	)		1,190,000			(55,000	)
Less: reclassification adjustment for (gains) losses included in net income		(7,000	)		7,000			—

Income tax expense related to other comprehensive income		361,000			(346,000	)		15,000
Other Comprehensive Income (Loss)	$	(891,000	)	$	851,000		$	(40,000	)

Comprehensive Loss	$	(123,000	)	$	(1,000	)	$	(124,000	)

	For the Six Months Ended October 31, 2018
	Original			Adjustment			As Restated
Statement of Comprehensive Income
Net Income	$	1,386,000		$	(544,000	)	$	842,000

Other Comprehensive Income, net of Tax
Unrealized gain (loss) on securities
Unrealized holding gains arising during period		(638,000	)		803,000			165,000
Less: reclassification adjustment for (gains) losses included in net income		37,000			(37,000	)		—
Income tax expense related to other comprehensive income		173,000			(221,000	)		(48,000	)
Other Comprehensive Income (Loss)	$	(428,000	)	$	545,000		$	117,000

Comprehensive Income (Loss)	$	958,000		$	1,000		$	959,000

	Original			Adjustment			As Restated
Statement of Stockholders’ Equity
Balance, July 31, 2019	$	40,504,000		$	7,000		$	40,511,000
Purchase of common stock		(2,000	)		1,000			(1,000	)
Dividend declared at $0.40 per common share outstanding		(1,981,000	)		(1,000	)		(1,982,000	)
Unrealized gain (loss), net of tax effect		93,000			(92,000	)		1,000
Net Income		864,000			93,000			957,000
Balance, October 31, 2019	$	39,478,000		$	8,000		$	39,486,000

	Original			Adjustment			As Restated
Statement of Stockholders’ Equity
Balance, July 31, 2018	$	38,806,000		$	1,000		$	38,807,000
Purchase of common stock		(49,000	)		—			(49,000	)
Dividend declared at $0.38 per common share outstanding		(1,886,000	)		1,000			(1,885,000	)
Unrealized gain (loss), net of tax effect		(891,000	)		851,000			(40,000	)
Net Income		768,000			(851,000	)		(83,000	)
Balance, October 31, 2018	$	36,748,000		$	2,000		$	36,750,000

	Original			Adjustment			As Restated
Statement of Stockholders’ Equity
Balance, April 30, 2019	$	39,553,000		$	—		$	39,553,000
Purchase of common stock		(54,000	)		—			(54,000	)
Dividend declared at $0.40 per common share outstanding		(1,981,000	)		—			(1,981,000	)
Unrealized gain (loss), net of tax effect		231,000			(195,000	)		36,000
Net Income		1,729,000			203,000			1,932,000
Balance, October 31, 2019	$	39,478,000		$	8,000		$	39,486,000

	Original			Adjustment			As Restated
Statement of Stockholders’ Equity
Balance, April 30, 2018	$	37,730,000		$	—		$	37,730,000
Purchase of common stock		(54,000	)		—			(54,000	)
Dividend declared at $0.38 per common share outstanding		(1,886,000	)		1,000			(1,885,000	)
Unrealized gain (loss), net of tax effect		(428,000	)		545,000			117,000
Net Income		1,386,000			(544,000	)		842,000
Balance, October 31, 2018	$	36,748,000		$	2,000		$	36,750,000

	For the Six Months Ended October 31, 2019
	Original			Adjustment			As Restated
Statement of Cash Flows
Cash Flows From Operating Activities
Net Income	$	1,729,000		$	203,000		$	1,932,000
Adjustment to reconcile net income to net cash provided operating activities
Unrealized (gain) loss on equity securities		—			(274,000	)		(274,000	)
Deferred income taxes		(6,000	)		71,000			65,000
Net cash provided by (used in) operating activities	$	2,111,000		$	—		$	2,111,000

	For the Six Months Ended October 31, 2018
	Original		Adjustment			As Restated
Statement of Cash Flows
Cash Flows From Operating Activities
Net Income	$	1,386,000	$	(544,000	)	$	842,000
Adjustment to reconcile net income to net cash provided operating activities
Unrealized (gain) loss on equity securities		—		765,000			765,000
Deferred income taxes		25,000		(222,000	)		(197,000	)
Net cash provided by (used in) operating activities	$	1,172,000	$	—		$	1,172,000

	For the Three Months Ended October 31,
	Originally Filed 2019		Adjustment 2019		Restated 2019
Numerator
Net income	$	864,000	$	93,000	$	957,000

Denominator
Weighted average common shares outstanding, basic		4,952,110		—		4,952,110
Convertible Preferred Stock		20,500		—		20,500
Weighted average common shares outstanding, diluted		4,972,610		—		4,972,610
Net Income per share - Basic	$	0.17	$	0.02	$	0.19
Income per shares - Diluted	$	0.17	$	0.02	$	0.19

	For the Six Months Ended October 31,
	Originally Filed 2019		Adjustment 2019		Restated 2019
Numerator
Net income	$	1,729,000	$	203,000	$	1,932,000

Denominator
Weighted average common shares outstanding, basic		4,954,250		—		4,964,250
Convertible Preferred Stock		20,500		—		20,500
Weighted average common shares outstanding, diluted		4,974,750		—		4,974,750
Net Income per share - Basic	$	0.35	$	0.04	$	0.39
Income per shares - Diluted	$	0.35	$	0.04	$	0.39

	For the Three Months Ended October 31,
	Originally Filed 2018		Adjustment 2018			Restated 2018
Numerator
Net income	$	768,000	$	(852,000	)	$	(84,000	)

Denominator
Weighted average common shares outstanding, basic		4,962,177		—			4,962,177
Convertible Preferred Stock		20,500		—			20,500
Weighted average common shares outstanding, diluted		4,982,677		—			4,982,677
Net Income per share - Basic	$	0.15	$	(0.17	)	$	(0.02	)
Income per shares - Diluted	$	0.15	$	(0.17	)	$	(0.02	)

	For the Six Months Ended October 31,
	Originally Filed 2018		Adjustment 2018			Restated 2018
Numerator
Net income	$	1,386,000	$	(544,000	)	$	842,000

Denominator
Weighted average common shares outstanding, basic		4,964,879		—			4,964,879
Convertible Preferred Stock		20,500		—			20,500
Weighted average common shares outstanding, diluted		4,985,379		—			4,985,379
Net Income per share - Basic	$	0.28	$	(0.11	)	$	0.17
Income per shares - Diluted	$	0.28	$	(0.11	)	$	0.17

GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

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

MANAGEMENT DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project” or “continue,” and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

The following discussion should be read in conjunction with the attached condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2019.

Executive Summary

The Company’s performance continues to improve through the first half of the current fiscal year with the first and second quarters presenting almost identical numbers. This is due to the continuation of our quality USA made products with the ability for customization, our notable customer service, and the purchase of the assets of Labor Saving Devices, Inc. Additionally, the Company’s products are traditionally tied to the housing market and with that market remaining strong, it in turn helps the Company’s sales grow. Opportunities include gaining business from a competitor that is getting out of the security switch business and to continue looking at businesses that might be a good fit to purchase. Challenges in the coming months include continuing to get product out to customers in a timely manner and to fill the stockroom with inventory to get back to shipping out core products the same day. Also, there have been some shortages of raw materials and prices of raw materials have increased with the execution of tariffs by the US government. Management continues to work at keeping operations flowing as efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever before.

Results of Operations

	●	Net sales were $3,710,000 for the quarter ended October 31, 2019, which is an 1.17% increase from the corresponding quarter last year. Year-to-date net sales were $7,263,000 at October 31, 2019, which is a 2.35% increase from the same period last year. The increases in sales shows the stability of the Company and loyalty of its customer base. The ongoing commitment towards outstanding customer service and customization of products are a few of the many reasons sales continue to grow. Also, new sales have emerged since GRI acquired the assets of Labor Saving Devices. The Company has been selling this product line for a couple of years now, which has been a factor in the increased sales.

	●	Cost of goods sold was 50.13% of net sales for the quarter ended October 31, 2019 and was 51.62% for the same quarter last year. Year-to-date cost of goods sold percentages were 49.98% for the current six months and 52.07% for the corresponding six months last year. The current cost of goods sold percentages are right at Management’s goal of keeping labor and other manufacturing expenses at less than 50% for both the quarter and year-to-date results. Labor costs have decreased because Management has been working with and training employees to work more efficiently.

	●	Operating expenses were up $16,000 for the quarter and were up $36,000 for the six-months ended October 31, 2019 as compared to the corresponding periods last year. But when comparing percentages in relation to net sales, the operating expenses for the quarter ended October 31, 2019 was 24.37% of net sales while it was 24.22% of net sales for the same quarter the prior year. For year-to-date numbers, operating expense were 24.48% and 24.55% of net sales for the six months ended October 31, 2019 and 2018, respectively. The Company has been able to keep the operating expenses at less than 30% of net sales for many years now; however, the actual dollar amount increase is because of increased commission amounts (since sales have increased) and additional labor costs for hiring new employees and wage increases.

	●	Income from operations for the quarter ended October 31, 2019 was at $946,000, which is a 6.77% increase from the corresponding quarter last year, which had income from operations of $886,000. Income from operations for the six months ended October 31, 2019 was at $1,855,000, which is a 11.81% increase from the corresponding six months last year, which had income from operations of $1,659,000.

	●	Other income and expenses showed a $306,000 gain for the quarter ended October 31, 2019 as compared to a $1,066,000 loss for the quarter ended October 31, 2018. Investments in marketable securities are presented at fair value and an unrealized gain or loss is recorded within the statements of operations, a non-cash entry, at each period beginning May 1, 2018 and previously recorded unrealized gain or loss in other comprehensive income (loss). For the six months ended October 31, 2019 an unrealized gain was recorded, a non-cash entry, on marketable securities of $274,000. For the six months ended October 31, 2018 an unrealized loss of $765,000 was recorded. The remainder of the increase is primarily due to increased dividend and interest income and taking gains on the sale of investments

	●	Overall, net income for the quarter ended October 31, 2019 was up $1,041,000, or 1,239.29%, from the same quarter last year. Similarly, net income for the six-month period ended October 31, 2019 was up $1,090,000, or 129.45%, from the same period in the prior year.

	●	Earnings per common share for quarter ended October 31, 2019 were $0.19 per share and $0.39 per share for the year-to-date numbers. EPS for the quarter and six months ended October 31, 2018 were ($0.02) per share and $0.17 per share, respectively.

Liquidity and capital resources

Operating

	●	Net cash increased $339,000 during the six months ended October 31, 2019 as compared to a decrease of $204,000 during the corresponding period last year.

	●	Accounts receivable decreased $486,000 for the six months ended October 31, 2019 compared with a $23,000 decrease for the same period last year. The current year decrease is a result of improved sales and collections on accounts receivable have improved over the last year. An analysis of accounts shows that there were only 0.02% that were over 90 days at October 31, 2019.

	●	Inventories increased $583,000 during the current six-month period as compared to a $435,000 increase last year. The bigger increase in the current year is primarily due to increased sales and being able to have inventory on hand to get product out to customers in a timely manner.

	●	Prepaid expenses saw a $271,000 decrease for the current six months, primarily due to inventory being delivered that had to be paid for in advance. The prior six months showed a $168,000 increase in prepaid expenses.
	●	Income tax overpayment for the period ended October 31, 2019 decreased $114,000, while there was an increase of $97,000 for the same period the prior year. The current decrease is due to making an educated evaluation of the Company’s income tax estimates.
	●	Accounts payable shows decreases for the current and prior six-month periods of $36,000 and $189,000, respectively. The company strives to pay all invoices within terms, and the variance in the decreases is primarily due to the timing of receipt of products and payment of invoices.
	●	Accrued expenses increased $11,000 for the current six-month period as compared to a $8,000 increase for the six-month period ended October 31, 2018. The current year increase is due to increased wages and commissions.

Investing

	●	As for our investment activities, the Company purchased $179,000 of property and equipment during the current six-month period. In comparison with the corresponding six months last year, the Company did not buy any fixed assets.

	●	Additionally, the Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the six-month period ended October 31, 2019 there was quite a bit of buy/sell activity in the investment accounts. Net cash spent on purchases of marketable securities for the six-month period ended October 31, 2019 was $250,000 compared to $324,000 spent in the prior six-month period. We continue 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.

Financing

	●	The Company continues to purchase back its common stock when the opportunity arises. For the six-month period ended October 31, 2019, the Company purchased $54,000 worth of treasury stock, in comparison to $54,000 repurchased in the corresponding six-month period last year.

	●	The company declared a dividend of $0.40 per share of common stock on September 30, 2019, which was paid out during the second quarter. This is a slight increase to the dividend of $0.38, which was declared and paid during the second fiscal quarter last year.

The following is a list of ratios to help analyze George Risk Industries’ performance:

	As of
	October 31, 2019		October 31, 2018
Working capital
(current assets – current liabilities)	$	37,805,000	$	34,508,000
Current ratio
(current assets / current liabilities)		16.564		16.614
Quick ratio
((cash + investments + AR) / current liabilities)		14.333		14.401

New Product Development

The Company and its engineering department continue to develop enhancements to product lines, develop new products that complement existing products, and look for products that are well suited to our distribution network and manufacturing capabilities. Items currently in the development process include:

	●	A new face plate for our pool alarms is nearing completion. The innovative design is slim in style and will also allow the homeowner to change the plate to match their décor.

	●	An updated version of the pool access alarm is currently going through electrical listing testing. 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.

	●	We continue to work on high security switches. We have a triple biased high security switch design nearly complete and an adjustable magnet design was completed for recessed mounting applications.

	●	Tool and die is currently working on a mold for a new version of the channel magnet. These magnets fit into the top channel of steel doors; no drilling of the recessed magnet required.

	●	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 our Pool Alarm and environmental sensors that will be easy to install in current construction. We are also concentrating on making products compatible with Wi-Fi, smartphone technology and the increasing popular Z-Wave standard for wireless home automation.

	●	We are ready to launch a new Labor Saving Devices product. It is a 12” adjustable hole cutter which complements our popular 10” hole cutter. Using a standard drill, this tool allows you to drill various size holes in the ceiling for speakers and canned lights. The dust bin which, sits against the ceiling, keeps the ceiling material and dust enclosed making for a clean, time saving installation.

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.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning November 1, 2019. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”). ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. The Company adopted the ASUs in the first quarter of 2019 and the Company’s accounting systems will be upgraded to comply with the requirements of the new standard, however, the adoption of ASU 2016-02 will not have a material impact on the Company’s financial statements and related disclosures.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income (loss) are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income (loss) to retained earnings (accumulated deficit) for stranded income tax effects resulting from the Tax Cuts and Jobs Act (the Tax Act). The amendments in this ASU also require certain disclosures about stranded income tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted. The Company has not yet adopted ASU 2018-02 and is currently evaluating the potential impact of adopting the applicable guidance on the Company’s financial statements and related disclosures.

In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). ASU 2018-09 provides amendments to a wide variety of topics in the FASB’s Accounting Standards Codification, which applies to all reporting entities within the scope of the affected accounting guidance. The transition and effective date guidance are based on the facts and circumstances of each amendment. Some of the amendments in ASU 2018-09 do not require transition guidance and were effective upon issuance of ASU 2018-09. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018. We are currently evaluating the potential impact of adopting the applicable guidance, however we do not believe that the adoption of ASU 2018-09 will have a material impact on the Company’s financial statements and related disclosures.

In August 2018, The FASB issued ASU 2018-14 to improve the effectiveness of disclosures for defined benefit plans under ASC 715-20. The ASU applies to employers that sponsor defined benefit pension or other postretirement plans. The FASB issued ASU 2018-14 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness of disclosures in the notes to financial statements. As part of the project, during August 2018, the Board also issued a Concepts Statement, which the FASB used as a basis for amending the disclosure requirements for Subtopic 715-20. The guidance is effective for fiscal years ending after December 15, 2020, and early adoption is permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.

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 October 31, 2019. Based on that evaluation, our chief executive officer (also working as our chief financial officer) 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.

We continue to operate with a limited number of accounting and financial personnel. A new accounting professional was hired in 2018 to fill the Controller position. Continued 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.

Despite the material weaknesses in financial reporting noted above, we believe that our restated financial statements included in this restated 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 over Financial Reporting

There was no change in our internal control over financial reporting during the fiscal quarter ended October 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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 second quarter of fiscal year 2020.

Period		Number of shares repurchased/(issued)
August 1, 2019 – August 31, 2019		200
September 1, 2019 – September 30, 2019		-0-
October 1, 2019 – October 31, 2019		-0-

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

	Exhibit No.		Description

	31.1		Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1		Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	George Risk Industries, Inc.
	(Registrant)

Date May 22, 2020	By:	/s/ Stephanie M. Risk-McElroy
		Stephanie M. Risk-McElroy
		President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board

George Risk Industries (RSKIA) 10-Q/A2020 Q2 Quarterly report (amended)