UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

(Mark One)

[X]☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended April 30, 20172022

or

[  ]☐ 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:0-11306

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VALUE LINE, INC.

(Exact name of registrant as specified in its charter)

New York

13-3139843

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

  

551 Fifth Avenue, New York, New York

10176-0001

(Address of principal executive offices)

(Zip Code)

 

Registrant's telephone number, including area code(212) 907-1500

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol

Name of each Exchange on which registered

Common Stock,stock, $0.10 par value per share

VALU

The NASDAQNasdaq Capital Market

(Title of class)

(Name of each exchange on which registered)

 

Securities registered pursuant to Section 12 (g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ]☐ Yes [X]☒ No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [  ]☐ Yes [X]☒ No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the

Securities Exchange Act of 1934 during the preceding 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.  [X]☒ Yes [  ]☐ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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).           [X]☒ Yes [  ]☐ No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.                                      [X]☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitionsdefinition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer [  ]            Accelerated filer [  ]        Non-accelerated filer [X ]          Smaller reporting company [   ]     Emerging growth company  [   ] 

Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☒Smaller reporting company ☐Emerging growth company ☐

 

If an emerging growth company, indicate by check mark ifwhether 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.                                                                                                                               [  ]

☐ Yes ☐ No

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☐ Yes ☒ No

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes [ ]☒ No [X ]

 

The aggregate market value of the registrant's voting and non-voting common stock held by non-affiliates at October 31, 201629, 2021 was $19,367,784.$31,447,614.

 

There were 9,709,3129,474,814 shares of the registrant’s Common Stock outstanding at June 30, 2017.2022.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Portions of the registrant’s Proxy Statement relating to the registrant’s 20172022 Annual Meeting of Shareholders, to be held onSeptember27, 201 October 7,, 2022, are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.

 

 

 

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TABLE OF CONTENTS

 

 

PARTI 

 

Item 1

Business

5

 

Item 1A

Risk Factors

15

 

Item 1B

Unresolved Staff Comments

18

 

Item 2

Properties

18

 

Item 3

Legal Proceedings

19

 

Item 4

Mine Safety Disclosures

19

 

PARTII 

 

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

2019

 

Item 6

Selected Financial Data

22[Reserved]

 
 

Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2321

 

Item 7A

Quantitative and Qualitative Disclosures About Market Risk

4136

 

Item 8

Financial Statements and Supplementary Data

4437

 

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

4638

 

Item 9A

Controls and Procedures

4638

 

Item 9B

Other Information

4739

 

PARTIII 

 

Item 10

Directors, Executive Officers, and Corporate Governance

4840

 

Item 11

Executive Compensation

4941

 

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

5042

 

Item 13

Certain Relationships and Related Transactions and Director Independence

5042

 

Item 14

Principal Accounting Fees and Services

5243

 

PARTIV 

 

Item 15

Exhibits and Financial Statement Schedules

5344

 

Value Line, the Value Line logo, The Most Trusted Name In Investment Research, “Smart research. Smarter investing”, The Value Line Investment Survey, Value Line Select, Timeliness and Safety are trademarks or registered trademarks of Value Line Inc. and/or its affiliates in the United States and other countries. All other trademarks are the property of their respective owners.

 

 

 

Cautionary Statement Regarding Forward-Looking Information

 

This report contains statements that are predictive in nature, depend upon or refer to future events or conditions (including certain projections and business trends) accompanied by such phrases as “believe”, “estimate”, “expect”, “anticipate”, “will”, “intend” and other similar or negative expressions, that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, as amended. Actual results for Value Line, Inc. (“Value Line” or “the Company”) may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the following:

 

●

●maintaining revenue from subscriptions for the Company’s digital and print published products;

maintaining revenue from subscriptions for the Company’s digital and print published products;

●

changes in marketinvestment trends and economic conditions, including global financial issues;

●

protection ofchanges in Federal Reserve policies affecting interest rates and liquidity along with resulting effects on equity markets;

●

protecting intellectual property rights;rights in Company methods and trademarks;

●

protecting confidential information including customer confidential or personal information that we may possess;

●

dependence on non-voting revenues and non-voting revenuesprofits interests in EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”), which serves as the investment advisor to the Value Line Funds and non-voting profits interestsengages in EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”), which serves as the investment advisor to the Value Line Fundsrelated distribution, marketing and engages in related distribution, marketing and administrative services;

●

fluctuations in EAM’s and third party copyright assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors, and the effect thesefactors;

●

possible changes may have onin the valuation of EAM’s intangible assets;assets from time to time;

●

generating future revenues or collection of receivables from significant customers;

●

dependence on key executive and specialist personnel;

●

risks associated with the outsourcing of certain functions, technical facilities, and operations, including in some instances outside the U.S.;

●

competition in the fields of publishing, copyright data and investment management;

●

the impact of government regulationmanagement, along with associated effects on the Company’slevel and EAM’s businesses;structure of prices and fees, and the mix of services delivered;

●

the impact of government regulation on the Company’s and EAM’s businesses;

●

availability of free or low cost investment data through discount brokers or generally over the internet;Internet;

●

military conflicts, civil unrest, and associated travel and supply disruptions and other effects;

●

Russia’s invasion of Ukraine and the impact on inflation;

●

terrorist attacks, cyber attacks cyber attacksand natural disasters;

●

insufficiency in our business continuity plans or systems in the event of anticipated or unpredictable disruption;

●

the coronavirus pandemic, which has drastically affected markets, employment, and natural disasters;other economic conditions, and may have additional unpredictable impacts on employees, suppliers, customers, and operations;

●

other possible epidemics;

●

changes in prices of materials and other inputs and services, such as freight and postage, required by the Company;

●

other risks and uncertainties, including but not limited to the risks described in Item 1A, “Risk Factors” herein;of this Annual Report on Form 10-K for the year ended April 30, 2022; and other risks and uncertainties arising from time to time.

 

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors which may involve external factors over which we may have no control or changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at our discretion, could also have material adverse effects on future results. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the SEC pursuant to the SEC's rules, we have no duty to update these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, current plans, anticipated actions, and future financial conditions and results may differ from those expressed in any forward-looking information contained herein.

 

3

 

Explanatory Notes

 

 

References in this Annual Report on Form 10-K for the fiscal year ending April 30, 2017,2022, to “the Company”, “Value Line”, “we”, “us” and “our” refer to Value Line, Inc. and its consolidated subsidiaries, unless the context otherwise requires. In addition, unless the context otherwise requires, references to:

 

“fiscal 2017”2022” are to the twelve month period from May 1, 20162021 to April 30, 2017;2022;

 

“fiscal 2016”2021” are to the twelve month period from May 1, 20152020 to April 30, 2016;2021;

 

“fiscal 2015”2020” are to the twelve month period from May 1, 20142019 to April 30, 2015;2020;

 

the “Adviser” or “EAM” are to EULAV Asset Management Trust, a Delaware business statutory trust;

 

the “Distributor” or “ES” are to EULAV Securities LLC, a Delaware limited liability company wholly

owned by EAM;

 

“EAM LLC” are to EULAV Asset Management LLC, a Delaware limited liability company and wholly-owned former subsidiary of the Company, which prior to the Restructuring Date, was the adviser to the Value Line Funds;

“ESI” are to EULAV Securities, Inc., a New York corporation and wholly-owned subsidiary of the Company which, prior to the Restructuring Date was the distributor of the Value Line Funds;

the “EAM Declaration of Trust” are to the EAM Declaration of Trust dated December 23, 2010;

 

the “Restructuring Date” are to December 23, 2010, the effective date of the Restructuring Transaction;

the “Restructuring Transaction” are to the restructuring of the Company’s asset management and mutual fund distribution businesses whereby (1) ESI was restructured into ES, (2) the Company transferred 100% of its ownership interest in ES to EAM LLC, (3) EAM LLC was converted into EAM and (4) the capital structure of EAM wasis established so that the Company owns only non-voting revenue and non-voting profits interests of EAM, and each of five individuals Trustees owns a profits interest with 20% of the voting profits interests of EAM;power; and

 

the “Value Line Funds” or the “Funds” are to the Value Line Mutual Funds registered under the Investment Company Act of 1940 for which EAM serves (and, prior to the Restructuring Date, EAM LLC served) as investment adviser.

 

4

 

Part I

Item 1. BUSINESS.

 

Value Line, Inc. is a New York corporation headquartered in New York City and formed in 1982. The Company's core business is producing investment periodicals based onand their underlying research and making available copyright data, including certain Value Line copyrights, Value Line trademarks and Value Line Proprietary Ranking SystemRanks and other proprietary information, to third parties under written agreements for use in third-party managed and marketed investment products and for other purposes. Value Line markets under well-known brands includingValue Line®, the Value Linelogo®,TheValue Line Investment Survey®, Smart Research, Smarter Investing™ Smarter Investing™andThe Most Trusted Name in Investment Research®. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company.Prior to December 23, 2010, (see “Asset Management and Mutual Fund Distribution Businesses” below), the Company provided investment management services to the Value Line Mutual Funds ("Value Line Funds"), institutional and individual accounts and provided distribution, marketing, and administrative services to the Value Line Funds.Since Effective December 23, 2010, EULAV Asset Management Trust (“EAM”) provides thewas established to provide investment management services to the Value Line Funds accounts and provides distribution, marketing, and administrative services to the Value Line Funds. Value Line holds substantial non-voting revenues and non-voting profits interests in EAM.

 

The Company is the successor to substantially all of the operations of Arnold Bernhard & Co, Inc. ("AB&Co."). AB&Co. is the controlling shareholder of the Company and, as of April 30, 2017,2022, owns 88.9%90.79% of the outstanding shares of the common stock of the Company.

 

A. Investment Related Periodicals & Publications

 

The investment periodicals and related publications offered by Value Line Publishing LLC (“VLP”), a wholly-owned entity of the Company, cover a broad spectrum of investments including stocks, mutual funds, ETFs options and convertible securities.options. The Company’s periodicals and related publications and services are of interestmarketed to individual and professional investors, as well as to institutions including municipal and university libraries and investment firms.

 

The services generally fall into four categories:

 

●

Comprehensive reference periodical publications

 

●

Comprehensive referenceTargeted, niche periodical publicationsnewsletters

 

●

Targeted, niche periodical newslettersInvestment analysis software

 

●

Investment analysis software

●

Current and historical financial databases

 

The comprehensive research services (The Value Line Investment Survey, The Value Line Investment Survey - Small and Mid-Cap, The Value Line 600, The Value Line Small & Mid-Cap 300,andThe Value Line Fund Advisor Plus) provide both statistical and text coverage of a large number of investment securities, with an emphasis placed on Value Line’s proprietary research, analysis and statistical ranks.The Value Line Investment Survey is the Company’s flagship service, published each week in print and daily on the web, and covering approximately 1,700 stocks.        web.

 

The niche newsletters (Value Line Select®,Value LineSelect: Select: Dividend Income & Growth, andValue Line Select: ETFs, The Value Line Special Situations Service®), The Value Line M&A Service, The Value Line Climate Change Investing Service, and The Value Line Information You Should Know Wealth Newsletter) provide information on a less comprehensive basis for securities that the Company believes will be of particular interest to subscribers. These services also make use of Value Line’s proprietary statistical ranks and ratings.Value Line Select® is a targeted service with an emphasis on Value Line’s proprietary in-depth research analysis and statistical selections, highlighting monthly a monthly stock with strong return potential and reasonable risk.  Value LineSelect: Select: Dividend Income & Growth represents Value Line's targeted coverage of high dividend yielding stocks.paying stocks with good growth potential. Value Line Select: ETFs recommends a new ETF for purchase each month. The Value Line Special Situations Service provides in-depth research analysis on selected small and mid-cap stocks.

The Value Line M&A Service recommends stocks of companies that Value Line thinks may be acquired by other corporations or private equity firms. The Value Line Climate Change Investing Service recommends stocks that should benefit from addressing the challenge of climate change. The Value Line Information You Should Know Wealth Newsletter provides insightful information on various personal finance topics.

 

5

 

Value Line offers digital versions of most of its products through the Company’s website, www.valueline.com. Subscribers to the print versions have, in some cases, received free access to the corresponding digital versions, although digital subscribers do not receive a free print edition. The most comprehensive of the Company’s online efforts areplatforms is The Value Line Research Centerand its variations,, which allowallows subscribers to access most of the Company’s research and publications at a packaged price via the Internet.

 

Investment analysis software (The Value Line Investment Analyzer) includes data sorting and filtering tools. In addition, for institutional and professional subscribers, VLP offers current and historical financial databases (DataFile, Estimates & Projections, ConvertiblesandMutual Funds) via online.the Internet.

 

The print and digital services include, but are not limited to the following:

 

The Value Line Investment Survey

 

The Value Line Investment Survey is an investment periodical research service providing both timely articles on economic, financial and investment matters and analysis and ranks for equity securities. Two of the evaluations for covered equity securities are "Timeliness™" and "Safety™”.” “Timeliness” Ranks relate to the probable relative price performance of one stock over the next six to twelve months, as compared to the rest of the approximately 1,700 stocks covered.stock coverage universe. Ranks are updated each week and range from Rank 1 for the expected best performing stocks to Rank 5 for the expected poorest performers. "Safety" Ranks are a measure of risk and are based on the issuer's relative Financial Strength and its stock's Price Stability. "Safety" ranges from Rank 1 for the least risky stocks to Rank 5 for the riskiest. VLP employs analysts and statisticians who prepare articles of interest for each periodical and who evaluate stock performance and provide future earnings estimates and quarterly written evaluations with more frequent updates when relevant.The Value Line Investment Survey is comprised of three parts: The "Summary & Index" provides updated Timeliness and Safety Ranks, selected financial data, and "screens" of key financial measures; the "Ratings& Reports" section contains updated reports on about 130120-140 stocks each week; and the “Selection & Opinion” section provides economic commentary and data, general interest articles, and four model portfolios managed by analysts covering a range of investment approaches. A fifth model portfolio, delivered via athe Aggressive Growth portfolio, is included in the weekly “Ratings & Reports”, as well as in the weekly subscriber-only email newsletter, was added to this service in June 2014.newsletter.

The Value Line Investment Survey - Small and Mid-Cap

 

The Value Line Investment Survey - Small and Mid-Cap is an investment research product introduced in 1995 that provides short descriptions of and extensive data for approximately 1,800 small and medium-capitalization stocks, many listed on The NASDAQ Exchange, beyond the approximately 1,700 equity securities of generally larger-capitalization companies covered inThe Value Line Investment Survey. LikeThe Value Line Investment Survey, theSmall and Mid-Cap has its own "Summary & Index" providing updated performance ranks and other data, as well as "screens" of key financial measures and two model portfolios. The "Ratings and Reports" section, providing updated reports on about 140 equity securities each week, has been organized to correspond closely to the industries reviewed inThe Value Line Investment Survey. One unique feature of theSmall and Mid-Cap is The Performance Ranking System, which incorporates manyprint portion of the elementsservice is issued monthly. The 400 stocks of the Value Line Timeliness Ranking System, modifiedSmall & Mid-Cap universe selected for inclusion in the print component of the service are those of most importance to accommodatesubscribers and are mailed to subscribers in updated monthly groups of approximately 130 each. This provides coverage of each of the approximately 1,800 equity securities in400 stocks once per quarter. Each stock is covered 4 times per year – once per quarterly cycle. The Digital component of theSmall and Mid-Cap Survey. service remains unchanged -- updated weekly with the complete stock coverage universe available for review. The Performance Rank is based on facts, such as earnings growth and price momentum, and is designed to predict relative price performance over the next six to twelve months. The principal differences between theSmall and Mid-Cap Survey andThe Value Line Investment Survey are that theSmall and Mid-Cap Survey does not include Value Line’s Timeliness Ranks and price targets, financial forecasts, analyst commentary, or aSelection & Opinion section. These modifications allow VLP to offer this service at a lower price.

 

6

 

The Value Line Fund Advisor Plus

            The Value Line Mutual Fund Ranking System was introduced in 1993. It is the system utilized in theFund Advisor Plus productproduct,, a 48-page newsletter featuring load, no-load, and low-load open-end mutual funds. This product was originally introduced asThe Value Line No-Load Fund Advisor in 1994 and augmented in 2009. Each issue offers strategies for maximizing total return, and highlights of specific mutual funds. It also includes information about retirement planning and industry news. A full statistical review, including latest performance, ranks, and sector weightings, is updated each month on approximately 800 leading load, no-load and low-load funds. Included with this product is online access to Value Line’s database of more than 12,000approximately 20,000 mutual funds, including screening tools and full-page printable reports on each fund. Four model portfolios are also part of the service. One recommends specific U.S. mutual funds from different objective groups, while the other highlights similar exchange traded funds (ETFs). The remaining two highlight mutual funds and ETFs globally. The Value Line Fund Advisor Plus subscribers have access to the entire population of up tocontains data on approximately 20,000 funds.no-load and low-load funds and a digital screener.

 

The Value Line Special Situations Service

 

The Value Line Special Situations Service’s core focus is on smaller companies whose equity securities are perceived by Value Line’s analysts as having exceptional appreciation potential. This publication was introduced in 1951. A second portfolio of stocks for more conservative investors seeking small company exposure was added in 2009.

The Value Line Daily Options Survey

 

          The Value Line Daily Options Surveyis an online onlya daily digital service that evaluates and ranks approximately 200,000500,000 U.S. equity and equity index options. Features include an interactive database, spreadsheet tools, and a weekly email newsletter. This product is only offered as an online subscription due to the volatility in pricing of options.

The Value Line Convertibles Surveysubscription.

 

       Introduced in 1972, this service evaluates and ranks over 550 convertible securities (bonds and preferred stocks) for future market performance. In fiscal 2010,The Value Line Convertibles Survey became an online only service. By moving to online only delivery, all of the service’s subscribers benefit from an enhanced website that includes daily price updates, individual analysis of each security with a printable fact sheet, and a weekly email newsletter alerting subscribers to recent rank changes.

Value Line Select

           Value Line Select, is a monthly stock selection service and was first published in 1998. It focuses each month on a single company that the Value Line Research Department has selected from a group of high-quality companies whose stocks are viewed as having a superior risk/reward ratio. Recommendations are backed by in-depth research and are subject to ongoing monitoring by research personnel.

Value Line Select: Dividend Income&Growth

           Value Line Select: Dividend Income& Growth(formerly Value Line Dividend Select), a monthly stock selection service, was introduced in June 2011. This product focuses on companies with dividend yields greater than the average of all stocks covered by Value Line, with a preference for companies that have consistently increased their dividends above the rate of inflation over the longer term and, based on Value Line analysis, have the financial strength both to support and increase dividend payments in the future.Value Line Select: Dividend Income and Growth is available online and in print.

 

Value Line Select: ETFs

In May 2017, we launched Value Line Select: ETFs, a monthly ETF selection service. This product focuses on ETFs that appear poised to outperform the broader market. The selection process utilizes an industry approach, with the same data-focused analysis that is the hallmark of Value Line.

The New Value Line ETFs Service

In September 2019, we introduced The New Value Line ETFs Service. This online-only product provides data, analysis, and screening capabilities on more than 2,700 publicly traded ETFs. Almost all of the ETFs tracked in the product are ranked by The Value Line ETF Ranking System, a proprietary estimate with the goal of predicting an ETF’s future performance relative to all other ranked ETFs. The screener includes more than 30 fields, and each ETF has its own full PDF report. All data and information can be downloaded, exported, and printed.

7

The Value Line 600

          The Value Line 600 is a monthly publication, which contains full-page research reports on approximately 600 equity securities. Its reports provide information on many actively traded, larger capitalization issues as well as some smaller growth stocks. As a lower priced service, it offers investors who want the same type of analysis provided inThe Value Line Investment Survey, but who do not want or need coverage of all the approximately 1,700 companies covered by that product a suitable alternative. Readers also receive supplemental reports as well as a monthly Index, which includes updated statistics, including proprietary ranks and ratings. A model portfolio,

Value Line Information You Should Know Wealth Newsletter

This is a monthly service that started in January 2020. It is a general interest publication focusing on useful and actionable investing and financial information. It is a succinct 4 page newsletter covering topics such as. “How Can I Avoid Probate? And Should I?”, “How to Handle Your Investments in a Bear Market”. It is available as a print product or as a PDF delivered via email. The newsletter is marketed via a weekly email newsletter, was added to this servicevariety of channels including as an add-on in January 2015.select direct mail campaigns and email.

 


The Value Line Small & Mid-Cap 300 and Investor 900M&A Service

In January 2016,This is a monthly service that was launched in September 2020. The objective of the service is to identify companies that possess characteristics, such as a successful product lineup, market position or important technology that would interest larger corporations or private equity firms. The main feature of the M&A Service consists of a detailed, multipage highlight on a stock that Value Line thinks is a good acquisition candidate. New recommendations are then added to the M&A Model Portfolio. Each month, the service provides updates on all previous recommendations, until we launchedsuggest that subscribers sell their shares.

The Value Line Small & MClimate Change Investing Serviceid-Cap 300.It is

This monthly service was introduced in April 2021. This publication, designed for the climate-conscious, profit-oriented investor, seeks to provide key climate news alongside a monthly publicationmanaged portfolio of twenty stocks, chosen by our analysts, which stand to benefit from responses to climate change. Selections are vetted based not only on time-tested financial measures, but also the potential impact of climate change and details a select group of about 300 of the approximately 1,700 companies that compriseThe Value Line Investment Survey.The 300 company reports included in this service are a smaller selection of the same full-page reportsmeasures taken to combat it on their business. Our selections fall into two main groups: businesses that are publishedfocused on providing environmental solutions, and those that are likely to thrive inThe Value Line Investment Survey. The 300 stocks all have market capitalizations of under $5.0 billion, and most industries are represented by at least two stocks. a changing climate. Every issue features new updates to our portfolio.

 

Although the 300 can be purchased separately, our main goal is to provide this service to currentValue Line 600subscribers, who are predominantly receiving research on only larger cap stocks. Thus, the 300 is a companion service to the 600. When 600 subscribers add the 300 service, they are then subscribed to the printValue Line 900or on the webThe Value Line Investment Survey - Investor 900.In addition to the stock reports, 900 subscribers receive monthly Summary & Index sections, which include updated company statistics, screens, and Supplementary Reports.The online 900 service provides many of our updates on a more timely basis, and two model portfolios are delivered via weekly email newsletters.

Value Line Investment Analyzer

Value Line Investment Analyzer is a powerful menu-driven software program with fast filtering, ranking, reporting and graphing capabilities utilizing more than 230 data fields for various industries and indices and for the approximately 1,700 stocks covered in VLP’s flagship publication,The Value Line Investment Survey.Value Line Investment Analyzer allows subscribers to apply numerous charting and graphing variables for comparative research.  In addition to containing digital replicas of the entireValue Line Investment Survey, theValue Line Investment Analyzer includes 20-minute delayed data updates through its integration with the Value Line databases via the Internet.  The software also includes a portfolio module that lets users create and track their own stock portfolios in depth with up to five years of historical financial data for scrutinizing performance, risk, yield and return. Value Line Investment Analyzer Professional is a more comprehensive product which covers approximately 6,000some 5,500 stocks and allows subscribers to create both standardized and customized screens.

Value Line DataFile Products

          For our institutional customers, Value Line offers both current and historical data for equities, mutual funds and exchange traded funds (“ETFs”), and convertibles. All. Value Line DataFile products are offered in Microsoft Access and ASCII formats via FTP.an FTP site. Below is a listing of the DataFile products:

8

Fundamental DataFile I and II

         Value Line’sLine’s FundamentalDataFile I contains fundamental data (both current and historical) on more than 6,0005,500 publicly traded companies that follow U.S. generally accepted accounting principles (“GAAP”). This data product provides annual data from 1955, quarterly data from 1963, and full quarterly data as reported to the SEC from 1985. Value Line also offers historical data on over 9,500 companies that no longer exist in nearly 100 industries via our “Dead Company” File. TheFundamental DataFile has over 400 annual and over 80 quarterly fields for each of the companies included in the database. DataFile is sold primarily to the institutional and academic markets. Value Line also offers a scaled down DataFile product,Fundamental DataFile II, which includes a limited set of historical fundamental data.

 


Estimates and Projections DataFile

This DataFile offering contains the proprietary estimates and projections from Value Line analysts on approximately 1,700 companies.companies that account for more than 90% of the value of all stocks traded on U.S. exchanges. Data includes earnings, sales, cash flow, book value, margin, and other popular fields. Estimates are for the current year and next year, while projections encompass the three to five year period.

 

Mutual Fund DataFile

The Value LineMutual Fund DataFilecovers approximately 20,000 mutual funds with up to 20 years of historical data with more than 200 data fields. TheMutual Fund DataFile provides monthly pricing, basic fund information, weekly performance data, sector weights, and many other popularimportant mutual fund data fields. This file is available for download from the Internet on aupdated monthly basis.and delivered via FTP.

 

ETF DataFile

This product is an extensive database containing the complete listing of every U.S.-listed ETF and every component and component weight since inception for every ETF on a daily basis. This includes all rebalancing, cash components, excluded assets, and distributions adjusted automatically on a daily basis. The data also includes the total return of the ETF and the total return of the corresponding underlying index on a daily basis. ETFs are added to the database and corresponding data made available usually by the first day of trading.

Convertible DataFile

This database is one of the largest sources of information available on convertible securities. Value Line offers data elements on our universe of more than 600 convertible bonds, preferred stocks, and warrants, with our top 150 fundamental and proprietary data items on each security.

Value Line Research Center

The Value Line Research Center provides on-line access to select Company investment research services covering stocks, mutual funds, options, ETFs, and convertible securities as well as special situationsituations stocks. This service includes full digital subscriptions toThe Value Line Investment Survey, The Value Line Fund Advisor Plus, The Value Line Daily Options Survey, The Value Line Investment Survey -Small and Mid-Cap, The New Value Line Convertibles SurveyETFs Service andThe Value Line Special Situations Service. For our library subscribers, the Research Center also includes the Value Line Climate Change Investing Service. Users can screen more than 250 data fields, create graphs using multiple different variables, and access technical history.The Value Line Research Center has the ability to track model portfolios (large, small and mid-cap) as well as providing ranks and news.

 

Digital ServiceServicess

The Value Line Investment Survey - Smart Investor offers digital access to full page reports, analyst commentary and Value Line proprietary ranks with coverage on approximately 1,700 stocks.stocks that comprise over 90% of the value of all stocks that trade on U.S. exchanges. Online tools include a screener, alerts, watch-lists and charting. Print capabilities are included.

 

The Value Line Investment Survey - Savvy Investoroffers digital access to full page reports and Value Line proprietary ranks on approximately 3,500 stocks.the stocks of both The Investment Survey (Smart Investor) and TheSmall Cap Investor. Online tools include a screener, alerts, watch-lists and charting. Print capabilities are included.

 

The Value Line Investment Survey - Small Cap Investoroffers digital access to full page reports and Value Line proprietary ranks on approximately 1,800 stocks.and short descriptions of and extensive data for small and medium-capitalization stocks generally with market capitalizations under $10 billion. One year of history is included. Online tools include a screener, alerts, watch-lists and charting. Print capabilities are included.

 


The Value Line Investment Survey - Investor 600, equivalent toThe Value Line 600print, offers digital access to full page reports, analyst commentary and Value Line proprietary ranks on approximately 600 selected stocks covering the same variety of industries asThe Value Line Investment Survey. Online tools include a screener, alerts, watch-lists and charting. Print capabilities are included.

 

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Value Line Pro Premiumdigital service includesThe Value Line Investment Survey® andThe Value Line Investment Survey® Survey®— Small & Mid-Capand covers 3,500 stocks.. This equity package monitors companies with market values ranging from $100 million to well over $300 billion,$1 trillion, across nearly 100 industries, representing 95% of daily U.S. trading volume. There are over 300250 data fields that can be screened to help make informed decisions. Features of the service include three years of historical reports and data, customizable modules, alerts and screening.

 

Value Line Pro Basic digital service covershas coverage on stocks that comprise over 90% of the 1,700value of all stocks that trade on U.S. exchanges included inThe Value Line Investment Survey®, drawn from 100 industries, representing 90% of total U.S. trading volume.. There are over 300200 data fields that can be screened to help make informed decisions. Features of the service include three years of historical reports and data, customizable modules, alerts and screening.

 

Value LinePro Elite digital service includesThe Value Line Investment Survey®  andThe Value Line Investment Survey® Survey®— Small & Mid-Cap.Pro Eliteservice package aimed at professional industry includes digital access to full page reports and Value Line proprietary ranks on approximately 3,500 stocks.stocks representing 95% of daily U.S. trading volume. In addition, our database of mostly microcap firms adds approximately 2,500 names, for a total of about 6,000 stocks.more than 2,000 additional names. Five years’ history is included. Online tools include a screener, alerts, watch-lists and charting. Downloading and print capabilities are included. Less expensive variant with fewer features is also available.

 

The Value Line Investment Survey – Library Basic covershas coverage on stocks that comprise over 90% of the 1,700value of all stocks that trade on U.S. exchanges included in The Value Line Investment Survey, drawn from nearly 100 industries, and representing 90% of total U.S. daily trading volume.industries. There are over 340200 data fields that can be applied to help you make more informed decisions. Value Line has led its subscribers towards financial success by satisfying the demand for actionable insights and tools to manage any investment.equity investments.

 

The Value Line Investment Survey– LibraryEliteoffers libraries digital access to full reports, analyst commentary and Value Line proprietary ranks on approximately 3,500 stocks representing 95% of daily U.S. trading volume, along with one year of full-detailfully-detailed history. Online tools include a screener, and charting. Print capabilities are included. A less expensive variant with fewer features is also available.

 

The Value Line Pro Equity Research Center is an equities-only package that includes access to exclusive premium services and provides online access to all of Value Line’s equity products. This service offered both to financial advisers and high-net-worth individuals, includes full online subscriptions toThe Value Line Investment Survey,The Value Line Investment Survey – Small & Mid-Cap,Value Line Select,Value Line Select: Dividend Income and Growth, andThe Value Line Special Situations Service, The Value Line M&A Service, and The Value Line Pro ETF Package. Users can screen more than 250 data fields, create graphs using multiple different variables, and access technical history.  The Value Line Pro Equity Research Center has the ability to track model portfolios (large, small and mid-cap) as well as providing ranks and news.

Value Line Library Research Center

The Value Line Library Research Center provides on-line access to select Company investment research services covering stocks, mutual funds, options, special situations stocks, and climate change investing. This service includes full digital subscriptions to The Value Line Investment Survey, The Value Line Fund Advisor Plus, The Value Line Daily Options Survey, The Value Line Investment Survey - Small and Mid-Cap, The New Value Line ETFs Service, The Value Line Special Situations Service, and The Value Line Climate Change Investing Service. Users can screen more than 250 data fields, create graphs using multiple different variables, and access technical history. Value Line Library Research Center has the ability to track model portfolios (large, small and mid-cap) as well as providing ranks and news.

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Quantitative Strategies

Value Line Quantitative Strategy Portfolios are developed based on our renowned proprietary Ranking Systems for TimelinessTM, Performance and SafetyTM, Financial Strength Ratings, and a comprehensive database of fundamental research and analysis. All of these quantitative investment products have a solid theoretical foundation and have demonstrated superior empirical results. These strategies are available for licensing by Financial Professionals such as RIAs and Portfolio Managers.

 

All the digital services have Charting features, including many options to chart against popular indexes with the ability to save settings and print. All products for financial professionals haveProducts offer an Alerts Hub which allows the user to set up alerts for up to 25 companies, with delivery via text email or Facebook.email.

 

B.B.Copyright Data Fees Programs

 

The Company hasCompany’s available copyright data,services, which include certain proprietary Ranking System informationresults and other proprietary information are made available for use in third party products, such as unit investment trusts, variable annuities, managed accounts and exchange traded funds, which it distributes under copyright data agreements.funds. The sponsors of these products act as wholesalers and distribute the products generally by syndicating them through an extensive network of national and regional brokerage firms. The sponsors of these products will typically receive copyright data for one or more proprietary ranking systems,Proprietary Ranking System results, which may include Value Line Timeliness, Safety, Technical and Performance ranks, as screens for their portfolios. The sponsors are also given permission to associate Value Line’s trademarks with the products. Value Line collects a copyrightfeecopyright fee from each of the product sponsors/managers primarily based upon the market value of assets invested in each product’s portfolio utilizing the Value Line proprietary data. Since these fees are based on the market value of the respective portfolios using the Value Line proprietary data, the payments to Value Line, which are typically received on a quarterly basis, will fluctuate.

 

         


Value Line’s primary copyright data products are structured as ETFs and Unit Investment Trusts, all of which have in common some degree of reliance on the Value Line Ranking System for their portfolio creation. These products are offered and distributed by independent sponsors.

 

C.C.Investment Management Services

 

The Company completed a restructuring of its asset management and mutual fund distribution businesses (the “Restructuring Transaction”) on December 23, 2010 (the “Restructuring Date”) and executed the EAM Declaration of Trust (the “EAM Declaration of Trust”). Pursuant to the EAM Declaration of Trust, the Company receivedreceives an interest in certain revenues of EAM and a portion of the residual profits of EAM but has no voting authority with respect to the election, removal or removalreplacement of the trustees of EAM.

The business of EAM is managed by five individual trustees and a Delaware resident trustee (collectively, the “Trustees”) and by its officers subject to the direction of the Trustees.

 

Collectively, the holders of the voting profits interests in EAM are entitled to receive 50% of the residual profits of the business, subject to temporary adjustments in certain circumstances. Value Line holds a non-voting profits interest representing 50% of residual profits, subject to temporary adjustments in certain circumstances, and has no power to vote for the election, removal or replacement of the trustees of EAM. Value Line also has a non-voting revenues interest in EAM pursuant to which it is entitled to receive a portion of the non-distribution revenues of the business ranging from 41% at non-distribution fee revenue levels of $9 million or less to 55% at such revenue levels of $35 million or more. In the event the business is sold or liquidated, the first $56.1 million of net proceeds (the value of the business at the time the Restructuring Transaction was approved as determined by the directors of Value Line after reviewing a valuation report by the directors’ financial advisors) plus any additional capital contributions (Value Line or any holder of a voting profits interest, at its discretion, may make future contributions to its capital account in EAM), which contributions would increase its capital account but not its percentage interest in operating profits, will be distributed in accordance with capital accounts; 20% of the next $56.1 million will be distributed to the holders of the voting profits interests and 80% to the holder of the non-voting profits interests (currently, Value Line); and the excess will be distributed 45% to the holders of the voting profits interests and 55% to the holder of the non-voting profits interest (Value Line). EAM has elected to be taxed as a pass-through entity similar to a partnership.

 

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Also, in connection with the Restructuring Transaction and pursuant to the EAM Declaration of Trust, Value Line (1) granted each Fund use of the name “Value Line” so long as EAM remains the Fund’s adviser and on the condition that the Fund does not alter its investment objectives or fundamental policies from those in effect on the date of the investment advisory agreement with EAM, provided also that the Funds do not use leverage for investment purposes or engage in short selling or other complex or unusual investment strategies that create a risk profile similar to that of so-called hedge funds, (2) agreed to provide EAM its proprietary Ranking System information without charge or expense on as favorable basis as to Value Line’s best institutional customers and (3) agreed to capitalize the business with $7 million of cash and cash equivalents at inception.

 

EAM is organized as a Delaware statutory trust and has no fixed term. However, in the event that control of the Company’s majority shareholder changes, or in the event that the majority shareholder no longer beneficially owns 5% or more of the voting securities of the Company, then the Company has the right, but not the obligation, to buy the voting profits interests in EAM at a fair market value to be determined by an independent valuation firm in accordance with the terms of the EAM Declaration of Trust.

 

         


Value Line also has certain consent rights with respect to extraordinary events involving EAM, such as a proposed sale of all or a significant part of EAM, material acquisitions, entering into businesses other than asset management and fund distribution, paying compensation in excess of the mandated limit of 22.5%-30% of non-distribution fee revenues (depending on the level of such revenues), declaring voluntary bankruptcy, making material changes in tax or accounting policies or making substantial borrowings, and entering into related party transactions. These rights were established to protect Value Line’s non-voting revenues and non-voting profits interests in EAM.

 

Until December 23, 2010, the Company, through its wholly-owned subsidiary EAM LLC, was the investment adviser for the Value Line Funds. Since December 23, 2010, EAM has actedacts as the Adviser to the Value Line Funds.

Until December 23, 2010, the Company through its wholly-owned subsidiary ESI, was the distributor for the Value Line Funds. Since December 23, 2010, EULAV Securities has actedacts as the Distributor for the Value Line Funds. State Street Bank, an unaffiliated entity, is the custodian of the assets of the Value Line Funds and provides them with fund accounting and administrative services. Shareholder services for the Value Line Funds are provided by Boston Financial Data Services.SS&C, formerly named DST Asset Manager Solutions.

 

On December 23, 2010, theThe Company deconsolidated its asset management and mutual fund distribution businesses and its interests in these businesses were restructured as non-voting revenues and non-voting profits interests in EAM. Accordingly, the Company no longer reports this operation as a separate business segment, although it still maintains a significant interest in the cash flows generated by this businessEAM and will continue to receive ongoing payments in respect of its non-voting revenues and non-voting profits interests, as discussed below. Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2017,2022, were $2.4$3.36 billion, which is $192 million,$1.6 billion, or 8.6%32.4%, abovebelow total assets of $2.2$4.96 billion in the Value Line Funds managed and/or distributed by EAM at April 30, 2016.2021.          

 

Total net assets of the Value Line Funds at April 30, 2017, were:

Total net assets of the Value Line Funds at April 30, 2022, were:

 
  

($ in thousands)

 
     

Value Line Asset Allocation Fund

 $1,272,552 

Value Line Capital Appreciation Fund

  516,143 

Value Line Mid Cap Focused Fund

  430,815 

Value Line Small Cap Opportunities Fund

  419,373 

Value Line Select Growth Fund

  401,478 

Value Line Larger Companies Focused Fund

  272,529 

Value Line Core Bond Fund

  44,736 
     

Total EAM managed net assets

 $3,357,626 

 

  

($ in thousands)

 
     

Value Line Small Cap Opportunities

 $499,537 

Value Line Income & Growth Fund

  346,296 

Value Line Premier Growth Fund

  330,775 

Value Line Asset Allocation Fund

  310,493 

Value Line Strategic Asset Management Fund

  264,012 

Value Line Larger Companies Focused Fund

  244,278 

Value Line Mid Cap Focused Fund

  145,650 

Value Line Centurion Fund

  138,823 

Value Line Core Bond Fund

  64,506 

Value Line Tax Exempt Fund

  58,353 

Value Line Defensive Strategies Fund

  8,451 

Value Line VIP Equity Advantage Fund

  2,560 
     

Total EAM managed net assets

 $2,413,734 

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Investment management fees and distribution service fees (which we refer to as “12b-1fees”(“12b-1 fees”) vary among the Value Line Funds and may be subject to certain limitations. Certain investment strategies among the equity funds include, but are not limited to, reliance on the Value Line Timeliness ™ Ranking System (the “Ranking System”) and/or the Value Line Performance Ranking System in selecting securities for purchase or sale. Each Ranking System seeks to compare the estimated probable market performance of each stock during the next six to twelve months to that of all of the approximately 1,700 or 1,800 (Performance System) stocks under review in each system and ranks stocks on a scale of 1 (highest) to 5 (lowest). All the stocks followed by the Ranking System are listed on U.S. stock exchanges or traded in the U.S. over-the-counter markets. Prospectuses and annual reports for each of the Value Line open end mutual funds are available on the Funds’ websitewww.vlfunds.com. Each mutual fund may use "Value Line" in its name only to the extent permitted by the terms of the EAM Declaration of Trust.

 

D. Wholly-Owned Operating Subsidiaries

 

Wholly-owned operating subsidiaries of the Company as of April 30, 20172022 include the following:

 

1.

Value Line Publishing LLC (“VLP”) is the publishing unit for the investment related periodical publications and copyright data.copyrights.

 

2.

Vanderbilt Advertising Agency, Inc. places advertising on behalf of the Company's publications.

 

3.

Value Line Distribution Center, Inc. (“VLDC”) provides subscription fulfillment services and subscriber relations services for Value Line’s publications and continues to distribute Value Line’s publications and continues to distribute Value Line’s print publications.

 

E. Trademarks

 

The Company holds trademark and service mark registrations for various names and logos in multiple countries. Value Line believes that these trademarks and service marks provide significant value to the Company and are an important factor in the marketing of its products and services, as well as in the marketing of the Value Line Funds, now managed by EAM. The Company is utilizingmaintains registrations of all of its trademarksactive and service marks, and properly maintaining all registrations.eligible trademarks.

 

F. Investments

 

As of April 30, 20172022 and April 30, 2016,2021, the Company held total investment assets (excluding its interests in EAM) with a fair market value of $16,576,000$28,122,000 and $3,637,000,$26,182,000, respectively, including equity securities and available-for-sale fixed income securities classified as available-for-sale on the Consolidated Balance Sheets. As of April 30, 2017,2022 and April 30, 2021, the Company held equity securities, classified as available-for-sale, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL) and ProsharesProShares Trust S&P 500 Dividend Aristocrats ETF (NOBL)., IShares DJ Select Dividend ETF (DVY) and other Exchange Traded Funds and common stock equity securities. As of April 30, 2017,2022 and April 30, 2021, the Company held fixed income securities whichclassified as available-for-sale, that consist of certificates of deposits and securities issued by federal, state and local governments within the United States. As of April 30, 2016, the Company held equity securities classified as available-for-sale, which consisted of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL), Proshares Trust S&P 500 Dividend (NOBL) and First Trust Total US Market Alphadex ETF (TUSA). The Company did not hold any fixed income securities at April 30, 2016.

G. Employees

 

At April 30, 2017,2022, the Company and its subsidiaries employed 183140 people.

 


The Company and its affiliates, officers, directors and employees may from time to time own securities which are also held in the portfolios of the Value Line Funds or recommended in the Company's publications. Value Line analysts are not permitted to own securities of the companies they cover. The Company has adopted rules requiring reports of securities transactions by employees for their respective accounts. The Company has also established policies restricting trading in securities whose ranks are about to change in order to avoid possible conflicts of interest.

 

H. Principal Business Segments

 

The information with respect to revenues from external customers and profit and loss of the Company's identifiable principal business segments is incorporated herein by reference to Note 1718 of the Notes to the Company's Consolidated Financial Statements included in this Form 10-K.

 

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 Prior to December 23, 2010, the Company’s businesses consolidated into two reportable business segments.

The investment periodicals and related publications (retail and institutional) and fees from copyright data, including the proprietary Ranking System informationValue Line copyrights and Value Line Proprietary Ranks and other proprietary information, consolidated into one segment called Publishing, and the investment management services to the Value Line Funds and other managed accounts were consolidated into a second business segment called Investment Management. Subsequent to December 23, 2010, thePublishing. The Publishing segment constitutes the Company’s only reportable business segment.

 

I. Competition

 

The investment information and publishing business conducted by the Company and the investment management business conducted by EAM are very competitive. There are many competing firms and a wide variety of product offerings. Some of the firms in these industries are substantially larger and have greater financial resources than the Company and EAM. The Internet continues to increase the amount of competition in the form of free and paid online investment research. With regard to the investment management business conducted by EAM, the prevalence of broker supermarkets or platforms permitting easy transfer of assets among mutual funds, mutual fund families, and other investment vehicles tends to increase the speed with which shareholders can leave or enter the Value Line Funds based, among other things, on short termshort-term fluctuations in performance.

 

J. Executive Officers of the Registrant

 

The following table lists the names, ages (at June 30, 2017)2022), and principal occupations and employment during the past five years of the Company's Executive Officers. All officers are elected to terms of office for one year. Except as noted, each of the following has held an executive position with the companies indicated for at least five years.

 

Name

Age

Principal Occupation or Employment

   

Howard A. Brecher

63

68

Chairman and Chief Executive Officer since October 2011; Acting Chairman and Acting Chief Executive Officer from November 2009 to October 2011; Chief Legal Officer; Vice President and Secretary until January 2010; Vice President and Secretary of each of the Value Line Funds from June 2008 to December 2010; Secretary of EAM LLC from February 2009 until December 2010; Director and General Counsel of AB&Co. Mr. Brecher has been an officer of the Company for more than 20 years.

   

Stephen R. Anastasio

5863Vice President since December 2010; Director since DecemberFebruary 2010; DirectorTreasurer since February 2010; Treasurer since 2005. Mr. Anastasio has been an officer of the Company for more than 10 years.


 

WEBSITE ACCESS TO SEC REPORTS

 

The Company’s Internet site address iswww.valueline.com. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports are made available on the “Corporate Filings” page under the “About Value Line” tab on the Company’s website @www.valueline.com/About/corporate_filings.aspx. free of charge as soon as reasonably practicable after the reports are filed electronically with the SEC. All of the Company’s SEC reports are also available on the SEC Internet site,www.sec.gov.

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ITEM 1A. RISK FACTORS

 

In addition to the risks referred to elsewhere in this Form 10-K, the following risks, among others, sometimes may have affected, and in the future could affect, the Company’s businesses, financial condition or results of operations and/or the investment management business conducted by EAM and consequently, the amount of revenue we receive from EAM. The risks described below are not the only ones we face. Additional risks not discussed or not presently known to us or that we currently deem insignificant, may also impact our businesses.

The Company and its subsidiaries are dependent on the efforts of its executives and professional staff.

The Company’s future success relies upon its ability to retain and recruit qualified professionals and executives. The Company’s executive officers do not have employment agreements with the Company and the Company does not maintain “key man” insurance policies on any of its executive officers. The loss of the services of key personnel could have an adverse effect on the Company.

A decrease in the revenue generated by EAM’sEAM’s investment management business could adversely affect the Company’sCompany’s cash flow and financial condition.

The Company derives a significant portion of its cash flow from its non-voting revenues and non-voting profits interests in EAM. A decrease in the revenue generated by EAM’s investment management business, whether resulting from performance, competitive, regulatory or other reasons, would reduce the amount of cash flow received by the Company from EAM, which reduction could adversely affect the Company’s cash flow and financial condition.

 

EAM’EAM’ss assets under management, which impact EAM’sEAM’s revenue, and consequently the amount of the cash flow that the Company receives from EAM, are subject to fluctuations based on market conditions and individual fund performance.

Financial market declines and/or adverse changes in interest rates would generally negatively impact the level of EAM’s assets under management and consequently its revenue and net income. Major sources of investment management revenue for EAM (i.e., investment management and service and distribution fees) are calculated as percentages of assets under management. A decline in securities prices or in the sale of investment products or an increase in fund redemptions would reduce fee income. A prolonged recession or other economic or political events could also adversely impact EAM’s revenue if it led to decreased demand for products, a higher redemption rate, or a decline in securities prices. Good performance of managed assets relative to both competing products and benchmark indices generally assists in both retention and growth of assets, and may result in additional revenues. Conversely, poor performance of managed assets relative to competing products or benchmark indices tends to result in decreased sales and increased redemptions with corresponding decreases in revenues to EAM. Poor performance could therefore reduce the amount of cash flow that the Company receives from EAM, which reduction could adversely affect the Company’s financial condition.

 

EAM derives all of its investment management fees from the Value Line Funds.

EAM is dependent upon management contracts and service and distribution contracts with the Value Line Funds under which these fees are paid. As required by the Investment Company Act of 1940 (the “1940 Act”), the Trustees/Directors of the Funds, all of whom are independent of the Company and EAM (except for the CEO of EAM,EAM), have the right to terminate such contracts. If any of these contracts are terminated, not renewed, or amended to reduce fees, EAM’s financial results, and consequently, the amount of cash flow received by the Company from EAM, and the Company’s financial condition, may be adversely affected.

 

A decrease in the revenue generated by a significant customer could adversely affect the Company’s cash flow and financial condition.


The Company derives a significant portion of its cash flow and publishing revenues from a single significant customer.

 

If the Company does not maintain its subscriber base, its operating results could suffer.

A substantial portion of the Company’s revenue is generated from print and digital subscriptions, which are paid in advance by subscribers. Unearned revenues are accounted for on the Consolidated Balance Sheets of the Company within current and long termlong-term liabilities. The backlog of orders is primarily generated through renewals and new subscription marketing efforts as the Company deems appropriate. Future results will depend on the renewal of existing subscribers and obtaining new subscriptions for the investment periodicals and related publications. The availability of competitive information on the Internet at low or no cost has had and may continue to have a negative impact on the demand for our products.

 

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The Company believes that the negative trend in retail print subscription revenue experienced in recent years is likely to continue.

During the last several years, the Company has experienced a negative trend in retail print subscription revenue. While circulation of some print publications has increased, others have experienced a decline in circulation or in average yearly price realized. It is expected that print revenues will continue to decline long term,long-term, while the Company emphasizes digital offerings. The Company has established the goal of maintaining competitive digital products and marketing them through traditional and digital channels to retail and institutional customers. However, the Company is not able to predict whether revenues from digital retail publications will grow more than print revenues decline, nor whether its initiatives to increase business in the professional investor market segment will continue to be successful.decline.

 

Loss of copyright data clients or decline in their customers, or assets managed by third party sponsors could reduce the Company’sCompany’s revenues.

Copyright data agreements are based on market interest in the respective proprietary information. The Company believes this part of the business is dependent upon the desire of third parties to use the Value Line trademarks and proprietary research for their products, competition and on fluctuations in segments of the equity markets. If the fees from proprietary information decline, the Company’s operating results could suffer.

 

Failure to protect its intellectual property rights and proprietary information could harm the Company’sCompany’s ability to compete effectively and could negatively affect operating results.

The Company’s trademarks are important assets to the Company. Although its trademarks are registered in the United States and in certain foreign countries, the Company may not always be successful in asserting global trademark protection. In the event that other parties infringe on its intellectual property rights and it is not successful in defending its intellectual property rights, the result may be a dilution in the value of the Company’s brands in the marketplace. If the value of the Company’s brands becomes diluted, such developments could adversely affect the value that its customers associate with its brands, and thereby negatively impact its sales. Any infringement of our intellectual property rights would also likely result in a commitment of Company resources to protect these rights through litigation or otherwise. In addition, third parties may assert claims against our intellectual property rights and we may not be able successfully to resolve such claims.Theclaims. The Company is utilizing all of its trademarks and properly maintaining registrations for them.

 

Adverse changes in market and economic conditions could lower demand for the Company’sCompany’s and EAM’sEAM’s products andservices.

The Company provides its products and services to individual investors, financial advisors, and institutional clients. Adverse conditions in the financial and securities markets may have an impact on the Company’s subscription revenues, securities income, and copyright data fees which could adversely affect the Company’s results of operations and financial condition. Adverse conditions in the financial and securities markets could also have an adverse effect on EAM’s investment management revenues and reduce the amount of cash flow that the Company receives from EAM, which reduction could adversely affect the Company’s financial condition.


The Company and EAM face significant competition in their respective businesses.

Both the investment information and publishing business conducted by the Company and the investment management business conducted by EAM are very competitive. There are many competing firms and a wide variety of product offerings. Some of the firms in these industries are substantially larger and have greater financial resources than the Company and EAM. With regard to the investment information and publishing business, barriers to entry have been reduced by the minimal cost structure of the Internet and other technologies. With regard to the investment management business, the absence of significant barriers to entry by new investment management firms in the mutual fund industry increases competitive pressure. Competition in the investment management business is based on various factors, including business reputation, investment performance, quality of service, marketing, distribution services offered, the range of products offered and fees charged. Access to mutual fund distribution channels has also become increasingly competitive.

 

16

Government regulations, any changes to government regulations, and regulatory proceedings and litigation may adversely impact the business.

Changes in legal, regulatory, accounting, tax and compliance requirements could have an effect on EAM’s operations and results, including but not limited to increased expenses and restraints on marketing certain funds and other investment products. EAM is registered with the SEC under the Investment Advisers Act of 1940 (the “Advisers Act”). The Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary, record keeping, operational and disclosure obligations. ES is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority, also known as “FINRA”. Each Value Line Fund is a registered investment company under the 1940 Act. The 1940 Act requires numerous compliance measures, which must be observed, and involves regulation by the SEC. Each fund and its shareholders may face adverse tax consequences if the Value Line Funds are unable to maintain qualification as registered investment companies under the Internal Revenue Code of 1986, as amended. Those laws and regulations generally grant broad administrative powers to regulatory agencies and bodies such as the SEC and FINRA. If these agencies and bodies believe that EAM, ES or the Value Line Funds have failed to comply with their laws and regulations, these agencies and bodies have the power to impose sanctions. EAM, ES and the Value Line Funds, like other companies, can also face lawsuits by private parties. Regulatory proceedings and lawsuits are subject to uncertainties, and the outcomes are difficult to predict. Changes in laws, regulations or governmental policies, and the costs associated with compliance, could adversely affect the business and operations of the EAM, ES and the Value Line Funds. An adverse resolution of any regulatory proceeding or lawsuit against the EAM or ES could result in substantial costs or reputational harm to them or to the Value Line Funds and have an adverse effect on their respective business and operations. An adverse effect on the business and operations of EAM, ES and/or the Value Line Funds could reduce the amount of cash flow that the Company receives in respect of its non-voting revenues and non-voting profits interests in EAM and, consequently, could adversely affect the Company’s cash flows, results of operations and financial condition.

Terrorist attacks could adversely affect the Company and EAM.

A terrorist attack, including biological or chemical weapons attacks, and the response to such terrorist attacks, could have a significant impact on the New York City area, the local economy, the United States economy, the global economy, and U.S. and/or global financial markets, and could also have a material adverse effect on the Company’s business and on the investment management business conducted by EAM.

Future pandemic outbreaks could disrupt the Company’s operations.

A substantial recurrence of infections of the COVID-19 virus or its variants could disrupt Company printing and distribution operations, or supplies of materials and services needed for the print publishing business. While the Company believes that its office, editorial, and administrative operations, and those of its suppliers of data and other services, are adequately backed-up for fully remote operations if needed, likewise a future pandemic outbreak could interfere with the continuity of printing and distribution operations, as well as endangering personnel of the Company and its supply chain partners.

Our controlling stockholder exercises voting control over the Company and has the ability to elect or remove from office all of our directors.

As of April 30, 2017,2022, AB&Co., Inc. beneficially owned 88.9%90.79% of the outstanding shares of the Company’s voting stock. AB&Co. is therefore able to exercise voting control with respect to all matters requiring stockholder approval, including the election or removal from office of all of our directors.

 

We are not subject to most of the listing standards that normally apply to companies whose shares are quoted on NASDAQ.

Our shares of common stock are quoted on the NASDAQ Capital Market (“NASDAQ”). Under the NASDAQ listing standards, we are deemed to be a “controlled company” by virtue of the fact that AB&Co. has voting power with respect to more than 50% of our outstanding shares of voting stock. A controlled company is not required to have a majority of its board of directors comprised of independent directors. Director nominees are not required to be selected or recommended for the board’s selection by a majority of independent directors or a nomination committee comprised solely of independent directors, nor do the NASDAQ listing standards require a controlled company to certify the adoption of a formal written charter or board resolution, as applicable, addressing the nominations process. A controlled company is also exempt from NASDAQ’s requirements regarding the determination of officer compensation by a majority of the independent directors or a compensation committee comprised solely of independent directors. Although we currently comply with certain of the NASDAQ listing standards that do not apply to controlled companies, our compliance is voluntary, and there can be no assurance that we will continue to comply with these standards in the future.

 

17
 

 

WeWe are subject to cyberrisks and may incur costs in connection with our efforts to enhance and ensureensure security from cyber attacks.attacks.

Substantial aspects of our business depend on the secure operation of our computer systems and e-commerce websites. Security breaches could expose us to a risk of loss or misuse of sensitive information, including our own proprietary information and that of our customers and employees.  While we devote substantial resources to maintaining adequate levels of cyber security, our resources and technical sophistication may not be adequate to prevent all of the rapidly evolving types of cyber attacks.  Anticipated attacks and risks may cause us to incur increasing costs for technology, personnel, insurance and services to enhance security or to respond to occurrences. We maintain cyber risk insurance, but this insurance may not be sufficient to cover all of our losses from any possible future breaches of our systems.

Changes to existing accounting pronouncements or taxation rules or practices may affect how we conduct our business and affect our reported results of operations.

New accounting pronouncements or tax rules and varying interpretations of accounting pronouncements or taxation practice have occurred and may occur in the future. A change in accounting pronouncements or interpretations or taxation rules or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. Changes to existing rules and pronouncements, future changes, if any, or the questioning of current practices or interpretations may adversely affect our reported financial results or the way we conduct our business.

 

Item 1B. UNRESOLVED STAFF COMMENTS.

 

None.

 

Item 2. PROPERTIES.

 

The Company leases 24,726 square feet of office space at 551 Fifth Avenue in New York, NY. In addition to the New York office space, the Company leases a warehouse facility with 24,110 square feet in New Jersey. The facility primarily serves the fulfillment and the distribution operations of VLDC for the various Company publications and serves as a disaster recovery site for the Company.

 

In February 2017 the Company's headquarters and offices moved to a new location. On November 30, 2016, Value Line, Inc., received consent from the landlord at 551 Fifth Avenue, New York, NY to the terms of a new sublease agreement between Value Line, Inc. (“Value Line” or “Company”) and ABM Industries, Incorporated (“ABM” or the “Sublandlord”) commencing on December 1, 2016. Pursuant to the agreement Value Line leased from ABM 24,726 square feet ofsof office space located on the second and third floors at 551 Fifth Avenue, New York, NY (“Building” or “Premises”) beginning on December 1, 2016 and ending on November 29, 2027. Base rent under the sublease agreement is $1,126,000 per annum during the first year with an annual increase in base rent of 2.25% scheduled for each subsequent year, payable in equal monthly installments on the first day of each month, subject to customary concessions in the Company’s favor and pass-through of certain increases in utility costs and real estate taxes over the base year. The Company provided a security deposit represented by a letter of credit in the amount of $469,000 which is scheduled to bein October 2016, was reduced to $305,000 on September 30, 2021 and is to be fully refunded after the sublease ends. This Building became the Company’s new corporate office facility. The Company is required to pay for certain operating expenses associated with the Premises as well as utilities supplied to the Premises. The sublease terms provide for a significant decrease (23% initially) in the Company’s annual rental expenditure taking into account free rent for the first six months of the sublease. Sublandlord provided Value Line ana work allowance of $417,000 which is expected to beaccompanied with the six months free rent worth $563,000 was applied against the Company’s costs and expenses relatedobligation to pay rent at our NYC headquarters, delaying the relocation to the new office facility or applied as additional free rent.

actual rent payments until November 2017.

 


18

The Company leased 44,493 square feet of office space at 485 Lexington Avenue in New York, NY from July 2013 to February 2017. Base rent under the Sublease was $1,468,269 per annum, subject to customary concessions in the Company’s favor and pass-through of certain increases in operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $489,423, which was fully returned over the course of the sublease term.

 

On February 29, 2016, the Company’s subsidiary Value Line Distribution Center (“VLDC”)VLDC and Seagis Property Group LP (the “Landlord”) entered into a lease agreement, pursuant to which VLDC has leased 24,110 square feet of warehouse and appurtenant office space located at 205 Chubb Ave., Lyndhurst, NJ (“Warehouse”) beginning on May 1, 2016 and ending on April 30, 2024 (“Lease”). Base rent under the Lease is $192,880 per annum payable in equal monthly installments on the first day of each month, in advance during fiscal 2017 and will gradually increase to $237,218 in fiscal 2024, subject to customary increases based on operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $32,146, which will be fully refunded after the Leaselease term expires. The lease is a net lease requiring the Company to pay for certain operating expenses associated with the Warehouse as well as utilities supplied to the Warehouse.

 

Item 3. LEGAL PROCEEDINGS.

 

None.

 

Item 4. Mine Safety DisclosuresMINE SAFETY DISCLOSURES.

 

Not applicable.

 


Part II

 

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

The Registrant's Common Stock is traded on NASDAQ under the symbol “VALU”. The approximate number of record holders of the Registrant's Common Stock at April 30, 20172022 was 38.30. As of JuneApril 29, 2017,2022, the closing stock price was $18.39.$65.47.

 

The reported high and low prices and the dividends paiddeclared on these shares during the past two fiscal years were as follows:                   

 

Quarter Ended

 

High

  

Low

  

Dividend Declared

Per Share

 
             

April 30, 2017

 $18.36  $16.30  $0.18 

January 31, 2017

 $25.25  $17.38  $0.17 

October 31, 2016

 $19.45  $14.99  $0.17 

July 31, 2016

 $19.15  $14.05  $0.17 
             

April 30, 2016

 $16.39  $16.00  $0.17 

January 31, 2016

 $19.72  $15.61  $0.16 

October 31, 2015

 $16.60  $16.24  $0.16 

July 31, 2015

 $13.63  $13.63  $0.16 
             

Quarter Ended

    High

Low

Regular Dividend

Declared Per Share

        

   

April 30, 2022

$91.72

$52.61

$0.25

January 31, 2022

$61.79

$33.46

$0.22

October 31, 2021

$39.51

$30.44

$0.22

July 31, 2021

$33.77

$28.60

$0.22

    

April 30, 2021

$33.00

$26.53

$0.22

January 31, 2021

$35.95

$25.40

$0.21

October 31, 2020

$31.80

$23.76

$0.21

July 31, 2020

$34.00

$20.46

$0.21

    

 

On July 21, 2017,22, 2022, the Board of Directors of Value Line declared a quarterly dividend of $0.18$0.25 per share to shareholders of record as of July 31, 2017August 1, 2022 to be paid on August 11, 2017.2022.

 

There are no securities of the Company authorized for issuance under equity compensation plans. The Company did not sell any unregistered shares of common stock during the fiscal year ended April 30, 2017.

2022.

 

19

 

Purchases of Equity Securities by the Company

 

The following table provides information with respect to all repurchases of common stock made by or on behalf of the Company during the fiscal quarter ended April 30, 2017.2022. All purchases listed below were made in the open market at prevailing market prices.

 

ISSUER PURCHASES OF EQUITY SECURITIES

ISSUER PURCHASES OF EQUITY SECURITIES

 

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period

 

(a) Total

Number of

Shares (or

Units)

Purchased

  

(b) Average

Price Paid per

Share (or Unit)

  

(c) Total

Number of

Shares (or

Units)

Purchased as

Part of Publicly

Announced

Plans or

Programs

  

(d) Maximum

Number (or

Approximate

Dollar Value) of

Shares (or Units)

that May Yet Be

Purchased Under

the Plans or

Programs(1)

  

(a) Total

Number of

Shares (or

Units)

Purchased

  

(b) Average

Price Paid per

Share (or Unit)

  

(c) Total

Number of

Shares (or

Units)

Purchased as

Part of Publicly

Announced

Plans or

Programs

  

(d) Maximum

Number (or

Approximate

Dollar Value) of

Shares (or Units)

that May Yet Be

Purchased Under

the Plans or

Programs (1)

 

February 1, 2017 through February 28, 2017

  0  $-   0  $669,000 

March 1, 2017 through March 31, 2017

  808   17.25   808   655,000 

April 1, 2017 through April 30, 2017

  2,655   17.25   2,655   609,000 

February 1, 2022 through February 28, 2022

 7,000  $57.62  7,000  $438,000 

March 1, 2022 through March 31, 2022

 435  67.74  435  1,970,000 

April 1, 2022 through April 30, 2022

 11,885  61.35  11,885  1,241,000 

Total

  3,463  $17.25   3,463  $609,000  19,320  $60.14  19,320  $1,241,000 

(1)

On March 14, 2022, the Company's Board of Directors approved a renewal of a share repurchase program authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $2,000,000.

(2)

On May 31, 2022, the Company's Board of Directors approved a renewal of a share repurchase program authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $3,000,000. The repurchases may be made from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block purchases or otherwise. The repurchase program may be suspended or discontinued at any time at the Company’s discretion and has no set price limit and no expiration date.

 

(1)    On September 19, 2012, the Company's Board of Directors approved a share repurchase program, authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $3,000,000. The repurchases will be made from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block purchases or otherwise. The repurchase program may be suspended or discontinued at any time at the Company’s discretion and has no set expiration date. During fiscal 2017,2022, the Company repurchased an aggregate of 44,92453,327 shares of the Company's common stock for $741,000$2,484,000 at an average price of $16.51$46.57 per share under theincluding a repurchase program. During fiscal 2016, the Company repurchasedof an aggregate of 52,90712,320 shares of the Company's common stock for $796,000$759,000 at an average price of $15.03$61.58 per share under the repurchase program. program authorized on March 14, 2022.

During fiscal 2015,2021, the Company repurchased an aggregate of 8,43353,551 shares of the Company's common stock for $122,000$1,526,000 at an average price of $14.47$28.50 per share undershare. During fiscal 2020, the repurchase program.Company repurchased an aggregate of 46,840 shares of the Company's common stock for $1,214,000 at an average price of $25.91 per share.

 

Arnold Bernhard and Co., Inc. may purchase additional shares of common stock of the Company from time to time.

 

20
 

Item 6. SELECTED FINANCIAL DATA.

      

Fiscal Years Ended April 30,

     

($ in thousands, except number of shares and

earnings per share amounts)

 

2017

  

2016

  

2015

  

2014

  

2013

 

Revenues:

                    

Investment periodicals and related publications

 $30,168  $31,925  $32,676  $33,598  $31,940 

Copyright data fees

  4,406   2,621   2,847   2,733   3,900 

Total investment periodicals and related publications

  34,574   34,546   35,523   36,331   35,840 

Gain on sale of operating facility

  8,123   -   -   -   - 
                     

Total revenues

 $42,697  $34,546  $35,523  $36,331  $35,840 

Income from operations

 $7,459  $1,880  $2,399  $2,501  $4,120 

Revenues and profits interests from EAM Trust

 $7,714  $7,651  $7,970  $7,499  $6,260 

Income from securities transactions and other, net

 $312  $477  $126  $178  $126 

Net income

 $10,367  $7,291  $7,292  $6,768  $6,619 

Earnings per share, basic and fully diluted

 $1.07  $0.75  $0.74  $0.69  $0.67 

Total assets

 $87,072  $86,507  $87,421  $86,875  $84,341 

Long term liabilities

 $24,628  $25,609  $26,768  $26,521  $23,962 

Weighted average number of common shares outstanding

  9,721,958   9,781,495   9,813,623   9,839,155   9,888,774 

Cumulative cash dividends declared per share during the fiscal year

 $0.69  $0.65  $0.60  $0.60  $0.60 


 

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help a reader understand Value Line, its operations and business factors. The MD&A should be read in conjunction with Item 1, “Business”, and Item 1A, “Risk Factors”, of Form 10-K, and in conjunction with the consolidated financial statements and the accompanying notes contained in Item 8 of this report.

 

The MD&A includes the following subsections:

 

●

Executive Summary of the Business

 

●

Executive SummaryResults of the BusinessOperations

 

●

Results of OperationsLiquidity and Capital Resources

 

●

Liquidity and Capital ResourcesRecent Accounting Pronouncements

 

●

Recent Accounting Pronouncements

●

Critical Accounting Estimates and Policies

 

Executive Summary of the Business

 

The Company's core business is producing investment periodicals and their underlying research and making available copyright data, including certain proprietary Ranking SystemValue Line copyrights, Value Line trademarks and Value Line Proprietary Ranks and other proprietary information, to third parties under written agreements for use in third-party managed and marketed investment products and for other purposes. Value Line markets under well-known brands includingValue Line®, the Value Linelogo®,TheValue Line Investment Survey®, Smart Research, Smarter Investing™Investing™andThe Most Trusted Name in Investment Research®. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company. Prior to December 23, 2010, (see “Asset Management and Mutual Fund Distribution Businesses” below), the Company provided investment management services to the Value Line® Mutual Funds ("Value Line Funds"), institutional and individual accounts and provided distribution, marketing, and administrative services to the Value Line Funds. Since December 23, 2010, EULAV Asset Management Trust (“EAM”) was established to provide the investment management services to the Value Line Funds, institutional and individual accounts and provide distribution, marketing, and administrative services to the Value Line® Mutual Funds ("Value Line Funds"). The Company maintains a significant investment in EAM from which it receives payments in respect of its non-voting revenues and non-voting profits interests. Pursuant to the EAM Declaration of Trust, the Company granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply the Value Line proprietary Ranking System information to EAM without charge or expense.

 

The Company’s target audiences within the investment research field are individual investors, colleges, libraries, and investment management professionals. Individuals come to Value Line for complete research in one package. Institutional licensees consist of corporations, financial professionals, colleges, and municipal libraries. Libraries and universities offer the Company’s detailed research to their patrons and students. Investment management professionals use the research and historical information in their day-to-day businesses. The Company has a dedicated department that solicits institutional subscriptions.

 

Payments received for new and renewal subscriptions and the value of receivables for amounts billed to retail and institutional customers are recorded as unearned revenue until the order is fulfilled. As the orders are fulfilled, the Company recognizes revenue in equal installments over the life of the particular subscription. Accordingly, the subscription fees to be earned by fulfilling subscriptions after the date of a particular balance sheet are shown on that balance sheet as unearned revenue within current and long termlong-term liabilities.

 

The Company’s move to new headquarters in the third quarter of fiscal 2017 resulted in lower rent expense over the term of the sublease. However, rental expenses during fiscal 2017 included additional three month overlapping rent expense of $86,000 per month for the current office facility and $105,000 for the previously occupied office facility during the period from December 1, 2016 to February 28, 2017. 


Prior to December 23, 2010, the Company’s businesses consolidated into two reportable business segments. The investment periodicals and related publications (retail and institutional) and fees from copyright data including the proprietary Ranking System informationValue Line copyrights and Value Line Proprietary Ranks and other proprietary information consolidate into one segment called Publishing and the investment management services to the Value Line Funds and other managed accounts were consolidated into a second business segment called Investment Management. Subsequent to December 23, 2010, thePublishing. The Publishing segment constitutes the Company’s only reportable business segment.

 

21

Asset Management and Mutual Fund Distribution Businesses

The Company completed the restructuring of its asset management and mutual fund distribution businesses (the “Restructuring Transaction”) on December 23, 2010 (the “Restructuring Date”) and executed the EAM Declaration of Trust (the “EAM Declaration of Trust”). Pursuant to the EAM Declaration of Trust, the Company receivedmaintains an interest in certain revenues of EAM and a portion of the residual profits of EAM but has no voting authority with respect to the election or removal of the trustees of EAM.EAM or control of its business.

 

The business of EAM is managed by its trustees each owning 20% of the voting profits interest in EAM and by its officers subject to the direction of the trustees. The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances). The Voting Profits Interest Holders will receive the other 50% of residual profits of EAM. Distribution is not less than 90% of EAM’s profits payable each fiscal quarter under the provisions of the EAM Trust Agreement. Value Line’s percent share of EAM’s revenues calculated each fiscal quarter was 49.45%, 49.14%, 49.19% and 49.22% during the first, second, third and fourth quarters of fiscal 2017, respectively, and 50.05%, 50.16%, 50.14% and 49.97% during the first, second, third and fourth quarters of fiscal 2016, respectively.

 

Pursuant to the EAM Declaration of Trust, the Company granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply the Value Line proprietary Ranking System information to EAM without charge or expense.

Business Environment

 

The nation's economy, which has been on an irregular path forward for almost the duration of the eight-yearU.S. business expansion faltered anewappears to start 2017. On point, after a relatively impressive final six months of last year, in which growth averaged close to 3%, seasonal slippage in some business categories, a marked deceleration in consumer spending, a drawdown in private inventories, and a decline in federal government spending combined to hold growth in check during the opening period this year. In all,be slowing at mid-year 2022. The nation’s gross domestic product growth eased off to a  pedestrian 1.4%(GDP) contracted by an estimated annualized rate of 1.6% in the first quarter. calendar quarter, hurt by elevated import growth and lower inventory restocking over the first three months of the year. There are a number of headwinds in place that point to a slower pace of expansion ahead; nor can a recession be ruled out.

 

Encouragingly, though,Persistently high inflation, fueled by disruptions to global commodity prices from the advance, albeit still choppywar in spots,Ukraine, rising labor market wages, and renewed COVID-19 mandated lockdowns in China, is generally proceeding atcontinuing to erode consumer purchasing power. Higher borrowing costs are taking a more reassuring pace, suggesting that growth should average better than 2% duringtoll on demand in the concluding nine monthshousing and homebuilding markets, the second-largest contributor to GDP after the consumer sector.

This changing business climate comes as the Federal Reserve continues to appear committed to aggressively tightening the monetary reins in an effort to slow demand and ultimately combat stubbornly high prices. This more-restrictive monetary policy stance likely includes a number of this year. Recent data on employment, manufacturing, non-manufacturing, and certain housing categories, for example, give us some cause for optimism going forward. However, just as these variables are improving, we also are seeing some selective slowing in certain consumer areas,potential hikes to the benchmark short-term interest rate by year’s end, and the latest auto sales figures, which were down for June, were hardly cause for generating much optimism. In fact, retail spending, in general, softened last month.      Fed will be continuing its monthly reduction of the central bank’s holdings of Treasury bonds and mortgage-backed securities.

 

Meanwhile, as we look further downThe Fed will be challenged with crafting a monetary tightening course that can stabilize prices, part of its dual mandate along with fostering full employment, while producing a “soft landing” for the road, we are tentatively optimistic on the expectation that we will yet see some movement on the legislative front, as the Trump Administration continues to try and advance critical business friendly proposals, including health care revision and tax reform. Should the respective political parties come together later this year and advance some generally popular proposals,economy. Any missteps in policy could potentially push the economy could well getinto a modest further lift in 2018, bringing GDPperiod of recession or stagflation, where high inflation accompanies slowing growth up past 2.5%. Even without much help on the fiscal side, however, GDP should gain close to 2.5%, or better next year and then sustain a moderate pace of growth out to next decade.

rising unemployment.

 

22

 

On a less-optimistic note, the global outlook remains unsettled. Heading the list of problems offshore are uncertain trade and political relations with certain international powers, including China and Russia, the continuing volatile nature of oil prices, and the evolving nuclear threat from North Korea.  

Finally, there are questions on the home front. These mostly center on the Federal Reserve's efforts to bring about a more normalized interest-rate structure. The uncertain outcome there, along with the persistence of elevated P/E ratios, are increasing the level of volatility in the financial markets, even as the underlying stock market trends and the basic fundamentals remain positive.  

Results of Operations for Fiscal Years 2017, 20162022, 2021 and 2015

2020

 

The following table illustrates the Company’s key components of revenues and expenses.

 

 

Fiscal Years Ended April 30,

         
 2017  2016  2015     Change  

Fiscal Years Ended April 30,

 

Change

 

($ in thousands, except earnings per share)

             

'17 vs. '16

  

'16 vs. '15

  

2022

 

2021

 

2020

 

'22 vs. '21

 

'21 vs. '20

 

Income from operations including gain on sale of operating facility in fiscal 2017

 $7,459  $1,880  $2,399   296.8%  -21.6%

Income from operations

 $10,800  $7,535  $9,090  43.3% -17.1%

Gain on forgiveness of SBA loan

 2,331  -  -  n/a  n/a 

Non-voting revenues and non-voting profits interests from EAM Trust

  7,714   7,651   7,970   0.8%  -4.0%  18,041  17,321  12,350  4.2% 40.3%
                    

Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust

 $15,173  $9,531  $10,369   59.2%  -8.1%

Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust and gain on SBA loan forgiveness

 31,172  24,856  21,440  25.4% 15.9%

Operating expenses

  35,238   32,666   33,124   7.9%  -1.4% 29,725  32,857  31,209  -9.5% 5.3%

Income from securities transactions, net

  312   477   126   -34.6%  278.6%

Investment gains

  (534) 5,420  (789) n/a  n/a 

Income before income taxes

 $15,485  $10,008  $10,495   54.7%  -4.6% $30,638  $30,276  $20,651  1.2% 46.6%

Net income

 $10,367  $7,291  $7,292   42.2%  0.0% $23,822  $23,280  $14,943  2.3% 55.8%

Earnings per share

 $1.07  $0.75  $0.74   42.7%  1.4% $2.50  $2.43  $1.55  2.9% 56.8%

 

During thetwelvethe twelve months ended April 30, 2017,2022, the Company’s net income of $10,367,000,$23,822,000, or $1.07$2.50 per share, was $3,076,000 or 42.2%2.3% above net incomeof $7,291,000,income of $23,280,000, or $0.75$2.43 per share, for thetwelvethe twelve months ended April 30, 2016.2021. During thetwelvethe twelve months ended April 30, 2017 there were 9,721,958 average common shares outstanding as compared to9,781,495 average common shares outstanding during thetwelve months ended April 30, 2016.Income2022, the Company’s income from operations of $7,459,000 for thetwelve months ended April 30, 2017 whichincluded additional depreciation and amortization expense of $806,000$10,800,000 was $5,579,00043.3% above income from operations of $1,880,000 for thetwelve$7,535,000 during the twelve months ended April 30, 2016. During2021. For the twelve months of fiscal 2017 both net income and income from operations included a pre-tax gain of $8,123,000 from the sale of the Company's operating facility for which it received net proceeds of $11,555,000 on July 29, 2016. The fulfillment and mailing operations housed within the facility were relocated to a nearby area of New Jersey. During the fourth quarter ended April 30, 2017, the Company’s reported loss from operations of $489,000 was the result of an increase in salaries and employee benefits primarily in the Information Technology department related to augmenting the Company’s digital infrastructure and production processes accompanied by increased expenses related to relocating the Company’s New York City office facility.

During thetwelve months ended April 30, 2016,2022, operating expenses decreased 9.5% below those during the Company’s net income of $7,291,000, or $0.75 per share, was comparable to net incomeof $7,292,000, or $0.74 per share, for thetwelvetwelve months ended April 30, 2015. During thetwelve2021. The largest factors in the increase in net income during the twelve months ended April 30, 2016 there were9,781,495 average common shares outstanding as2022, compared to9,813,623 average common shares outstanding during thetwelve months ended April 30, 2015.Income from operationsto the prior fiscal year, were a gain on forgiveness by the SBA of $1,880,000 for thetwelve months ended April 30, 2016 whichincluded additional depreciation and amortization expense of $1,102,000 was $519,000 below income from operations of $2,399,000 for thetwelve months ended April 30, 2015. During the fourth quarter ended April 30, 2016, the Company’s reported lossPPP loan, an increase in copyright fees, an increase from operations of $462,000 was the result of the accelerated amortization of the capitalized software development costs.


Total operating revenues

  

Fiscal Years Ended April 30,

  

Change

     

($ in thousands)

 

2017

  

2016

  

2015

  

'17 vs. '16

  

'16 vs. '15

 

Investment periodicals and related publications:

                    

Print

 $14,094  $15,659  $16,553   -10.0%  -5.4%

Digital

  16,074   16,266   16,123   -1.2%  0.9%

Total investment periodicals and related publications

  30,168   31,925   32,676   -5.5%  -2.3%

Copyright data fees

  4,406   2,621   2,847   68.1%  -7.9%

Gain on sale of operating facility

  8,123   -   -   n/a   n/a 

Total operating revenues

 $42,697  $34,546  $35,523   23.6%  -2.8%

and profits interests in EAM Trust and well controlled expenses.

 

During the twelve months ended April 30, 2017 total publishing revenues from investment periodicals and related publications excluding copyright data fees2022, there were $30,168,000, which is 5.5% below the total publishing revenues excluding copyright data fees of $31,925,0009,544,421 average common shares outstanding as compared to 9,596,912 average common shares outstanding during the twelve months ended April 30, 2016. 2021.

During the three months ended April 30, 2022, the Company’s net income of $3,807,000, or $0.40 per share, was 37.1% below net income of $6,051,000, or $0.64 per share, for the three months ended April 30, 2021. During the three months ended April 30, 2022, the Company’s income from operations of $2,923,000 was 248.8% above income from operations of $838,000 during the three months ended April 30, 2021 due to an increase in copyright fees and well controlled expenses in the fourth fiscal quarter of 2022.

During the twelve months ended April 30, 2017,2021, the Company’s decrease in the publishing revenuesnet income of $23,280,000, or $2.43 per share, was partially the result55.8% above net income of 52 weeks of print revenues recorded in$14,943,000, or $1.55 per share, for the twelve months ended April 30, 2017 as compared to 53 weeks recorded in2020. During the twelve months ended April 30, 2016. The remaining decrease in print publications revenue is primarily a result2021, the Company’s income from operations of a 6.9% decrease in print circulation at April 30, 2017. Total publishing revenues$7,535,000 was 17.1% below income from investment periodicals and related publications excluding copyright data fees were $32,676,000operations of $9,090,000 during the twelve months ended April 30, 2015.2020. For the twelve months ended April 30, 2021, operating expenses increased 5.3% above those during the twelve months ended April 30, 2020.

During the twelve months ended April 30, 2021, there were 9,596,912 average common shares outstanding as compared to 9,646,885 average common shares outstanding during the twelve months ended April 30, 2020.

During the three months ended April 30, 2021, the Company’s net income of $6,051,000, or $0.64 per share, was 234.9% above net income of $1,807,000, or $0.19 per share, for the three months ended April 30, 2020. During the three months ended April 30, 2021, the Company’s income from operations of $838,000 was 35.9% below income from operations of $1,307,000 during the three months ended April 30, 2020.

23

During the twelve months ended April 30, 2020, the Company’s income from operations of $9,090,000 was $3,677,000 or 67.9% above income from operations of $5,413,000 in the prior fiscal year. During the twelve months ended April 30, 2020, there were 9,646,885 average common shares outstanding as compared to 9,683,771 average common shares outstanding in the prior fiscal year. For the twelve months ended April 30, 2020, operating expenses increased 1.2% above those in the prior fiscal year. During the twelve months ended April 30, 2020, the Company’s net income of $14,943,000, or $1.55 per share, was $2,934,000 or 24.4% above net income of $12,009,000, or $1.24 per share in the prior fiscal year.

During the three months ended April 30, 2020, the Company’s income from operations of $1,307,000 was 34.7% above income from operations of $970,000 during the corresponding three months in the prior fiscal year. During the three months ended April 30, 2020, the Company’s net income of $1,807,000, or $0.19 per share, was 36.2% below net income of $2,833,000, or $0.29 per share in the prior fiscal year.

Total operating revenues

  

Fiscal Years Ended April 30,

  

Change

 

($ in thousands)

 

2022

  

2021

  

2020

  

'22 vs. '21

  

'21 vs. '20

 

Investment periodicals and related publications:

                    

Print

 $11,253  $11,929  $12,351   -5.7%  -3.4%

Digital

  15,892   15,700   15,277   1.2%  2.8%

Total investment periodicals and related publications

  27,145   27,629   27,628   -1.8%  0.0%

Copyright fees

  13,380   12,763   12,671   4.8%  0.7%

Total operating revenues

 $40,525  $40,392  $40,299   0.3%  0.2%

 

Within investment periodicals and related publications, subscription sales orders are derived from print and digital products. The following chart illustrates the changes in the sales orders associated with print and digital subscriptions.

 

Sources of subscription sales

 

  

Fiscal Years Ended April 30,

     
  

2017

  

2016

  

2015

     
  

Print

  

Digital

  

Print

  

Digital

  

Print

  

Digital

 

New Sales

  13.0%  14.6%  12.0%  16.3%  12.4%  18.6%

Conversion and Renewal Sales

  87.0%  85.4%  88.0%  83.7%  87.6%  81.4%

Total Gross Sales

  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%

  Fiscal Years Ended April 30, 
  

2022

  

2021

  

2020

 
  

Print

  

Digital

  

Print

  

Digital

  

Print

  

Digital

 

New Sales

  11.7%  13.0%  14.6%  15.4%  10.0%  15.8%

Renewal Sales

  88.3%  87.0%  85.4%  84.7%  90.0%  84.2%

Total Gross Sales

  100.0%  100.0%  100.0%  100.0%  100.0%  100.0%

 

During the twelve months ended April 30, 20172022, new sales of print publications increased as a percent of the total gross print sales as a result of an increase in new print gross sales to Institutions. Conversion and renewal sales of print orders decreased from the prior fiscal year. New sales of digital publications decreased as a percent of the total gross digital sales as a result of a decrease in new digital retail sales orders. Conversion andversus the prior fiscal year. During the twelve months ended April 30, 2022, renewal sales of print and digital orderspublications increased overas a percent of the total gross sales versus the prior fiscal year as a result of increased efforts by our in-house Retail and Institutional Sales departments.

 


During the twelve months ended April 30, 20162021 new sales of print and digital publications decreasedincreased as a percent of the total gross print andsales versus the prior fiscal year due to an increase in new Telemarketing gross sales of print publications. During the twelve months ended April 30, 2021 renewal sales of digital publications increased as a percent of the total gross digital sales versus the prior fiscal year due to an increase in renewal gross sales of Institutional digital publications as a result of less aggressive promotioncustomer migration to first-time customers at introductory prices. Conversion and renewal sales orders increased over fiscal 2015 outpacing the decrease in new sales orders as a result of increased success by our in-house Retail and Institutional Sales departments.digital services continues gradually.

 

  

As of April 30,

  

Change

 

($ in thousands)

 

2017

  

2016

  

2015

  

'17 vs. '16

  

'16 vs. '15

 

Unearned subscription revenue (current and long term liabilities)

 $25,659  $25,442  $26,047   0.9%  -2.3%
24

  

As of April 30,

  

Change

     

($ in thousands)

 

2022

  

2021

  

2020

  

'22 vs. '21

  

'21 vs. '20

 
                     

Unearned subscription revenue (current and long-term liabilities)

 $23,773  $25,088  $24,738   -5.2%  1.4%

 

Unearned subscription revenue as of April 30, 2017 is almost 1% above April 30, 2016 and is 2.3% below April 30, 2015. A certain amount of variation is to be expected due to the volume of new orders and timing of renewal orders, direct mail campaigns and large Institutional Sales orders.

 

Investment periodicals and related publications revenues

 

Investment periodicals and related publications revenues decreased $1,757,000, or 5.5%, forof $27,145,000 (excluding copyright fees) during the twelve months ended April 30, 2017,2022 were 1.8% below publishing revenues of $27,629,000, which included an extra week of servings for the weekly print products during the twelve months ended April 30, 2021, (decreased 1.1% excluding the extra week of print products servings), as compared to the prior fiscal 2016.year. The Company continued its effortsactivity to attract new subscribers, primarily digital subscriptions through various marketing channels, primarily direct mail, e-mail, and by the efforts of our sales personnel. Total product line circulation at April 30, 20172022, was 7.1%4.7% below total product line circulation at April 30, 2016. The Company has been successful in growing revenues from digitally-delivered investment periodicals within the institutional market. Institutional Sales generated total sales orders of $14,757,000 for2021. During the twelve months ended April 30, 2017 which were $517,000 or 3.6%, above comparable2022, Institutional Sales department generated total sales orders of $14,240,000, for$13,853,000 and the twelve months ended April 30, 2016. This growth continues a positive trend for Institutional Sales, but is not sufficient to wholly offset the lost revenues from retail subscribers.We have also benefited from “converting” some customers from lower cost retail to the more robust professional priced services. The retail telemarketing sales team generated total sales orders of $9,255,000 for$8,292,000.

Total print circulation at April 30, 2022 was 7.6% below the total print circulation at April 30, 2021. During the twelve months ended April 30, 20172022, print publication revenues of $11,253,000, decreased 5.7%, below print publication revenues of $11,929,000, which were 2% aboveincluded the prior fiscal year.

Digital publications revenuesextra week of servings for the weekly print products during the twelve months ended April 30, 2017, were $192,000 or 1.2% below fiscal 2016. Revenues from institutional digital publications increased $123,000 or 1.1%2021, (decreased 4.2% excluding the extra week of print products servings) as compared to the prior fiscal 2016. Digital publications revenues from retail subscribers decreased $316,000 or 6.8% withyear. Total digital circulation decreasing by 7.4% for the twelve months endedat April 30, 2017, as compared2022 was comparable to fiscal 2016.total digital circulation at April 30, 2021. During the twelve months ended April 30, 2017, $157,000 of retail2022, digital revenues of $15,892,000 were converted to higher priced Institutional Sales orders generating $146,000 additional revenues.

Print publicationup 1.2% partially offsetting the decrease in revenues decreased $1,565,000 or 10.0% for the twelve months ended April 30, 2017from print publications, as compared to the prior fiscal 2016. Revenues from institutional print publications increased $152,000 or 7.1% while print publications revenues from retail subscribers decreased $1,717,000 or 12.7% for the twelve months ended April 30, 2017, as compared to fiscal 2016. This includes the effect of 52 weeks of print revenues recorded in the twelve months ended April 30, 2017 as compared to 53 weeks recorded in the twelve months ended April 30, 2016. Total print circulation at April 30, 2017 was 6.9% below total print circulation at April 30, 2016.year.

 

Investment periodicals and related publications revenues decreased $751,000, or 2.3%, forof $27,629,000 (excluding copyright fees) during the twelve months ended April 30, 2016,2021, which included an extra week of servings for the weekly print products were comparable with publishing revenues in the prior fiscal year, (decreased 0.6% excluding the extra week of print products servings) during the twelve months ended April 30, 2021, as compared to the prior fiscal 2015. The Company continued its efforts to attract new subscribers through various marketing channels, primarily direct mail, e-mail, and by the efforts of our sales personnel.year. Total product line circulation at April 30, 20162021, was 3.7% below5.9% above total product line circulation at April 30, 2015. The Company has been successful in growing revenues from digitally-delivered investment periodicals within the institutional market. Institutional Sales generated total sales orders of $14,240,000 for2020, reversing a long term trend. During the twelve months ended April 30, 2016 which were $915,000 or 6.9%, above comparable2021, Institutional Sales department generated total sales orders of $13,325,000,$15,067,000 or 11.1% above the prior fiscal year and the retail telemarketing sales team generated total sales orders of $8,658,000 or 4.0% above the prior fiscal year.

Total print circulation at April 30, 2021 was 6.5% above the total print circulation at April 30, 2020. Print publication revenues of $11,929,000, which included the extra week of servings for the twelve months ended April 30, 2015. This growth continues a positive trend for Institutional Sales, but is not sufficient to wholly offsetweekly print products decreased 3.4%, (4.8% excluding the lost revenues from retail subscribers.We have also benefited from “converting” some customers from lower cost retail to the more robust professional priced services.


Digital publications revenuesextra week of print products servings) during the twelve months ended April 30, 2016, were $143,000 above fiscal 2015. Revenues from institutional digital publications increased $749,000 or 6.9%2021 as compared to the prior fiscal 2015.year. Total digital circulation at April 30, 2021 was 5.1% above total digital circulation at April 30, 2020. Digital revenues of $15,700,000 were up 2.8% offsetting the decrease in revenues from print publications, as compared to the prior fiscal year.

Investment periodicals and related publications revenues from retail subscribersof $27,628,000 (excluding copyright fees), decreased $606,000 or 11.6% with circulation decreasing by 7.2% for4.1% during the twelve months ended April 30, 2016,2020, as compared to the prior fiscal 2015.year. Total product line circulation at April 30, 2020, was 5.4% below total product line circulation in the prior fiscal year. During the twelve months ended April 30, 2016, $191,000 of retail digital revenues were converted to higher priced2020, Institutional Sales department generated total sales orders generating $159,000 additional revenues.of $13,566,000 and the retail telemarketing sales team generated total sales orders of $8,322,000.

 

Print publication revenues of $12,351,000, decreased $894,000 or 5.4% for7.4%, during the twelve months ended April 30, 20162020, as compared to the prior fiscal 2015. Revenues from institutionalyear as a result of a 6.1% decline in total print publications increased $165,000 or 8.4% while printcirculation in fiscal 2020. Total digital circulation at April 30, 2020, was 4.4% below total digital circulation in the prior fiscal year, however, digital publications revenues from retail subscribers decreased $1,059,000 or 7.3% forof $15,277,000 during the twelve months ended April 30, 2016,2020, were only 1.3% below the prior fiscal year, as compared to fiscal 2015. Total print circulation at April 30, 2016 was 2.4% below total print circulation at April 30, 2015 including an increase in the introductory lower-pricedValue Line 600 print product.TheVL 600 was utilized during fiscal 2016 and the latter part of 2015 as a retail lead-generation product. Though revenue from expiring full-pricehigher-priced subscriptions has not been matched by the initial revenue from new promotional retail orders, our retail sales and marketing personnel have made an effort to renew and upgrade the new customers.      were generally retained.

 

The Company has relied more on its personnel selling efforts in both the institutional segment and retail retention and sales, as the ability to obtain orders profitably through traditional direct marketing plateaus. The majority of the Company’s subscribers have traditionally been individual investors who generally receive printed publications via U.S. Mail on a weekly basis. Individual investors interested in digitally-delivered investment information have access to both free and subscription equity research from many sources.Continuing factors that have contributed to the decline in the retail digital investment periodicals and related publications revenues include competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no direct cost to their clients. Further, there appears to be a relative decline in individuals’ interest in holding specific stocks as compared with ETFs, mutual funds and participation in retirement plans. In order to address competition the Company has emphasized its lower-priced “starter” levels of service in attracting new customers. Also many of the professional subscribers to the Company’s digital and print retail products have been successfully converted to a higher priced Institutional product, with the peak impact of such movement behind us. The Company offers quality publications on mutual funds and Exchange Traded Funds, but they have achieved only modest market share.

25

 

Value Line serves primarily individual and professional investors in stocks, who pay primarilymostly on annual subscription plans, for basic services or as much as $100,000 or more annually for comprehensive premium quality research, not obtainable elsewhere. The ongoing goal of adding new subscribers has led us to experiment with varying terms for our reliable, proprietary research includingintroduce publications and packages at a periodrange of intensive promotion of “starter”price points. Further, new services and publications.

new features for existing services are regularly under consideration. Prominently introduced in fiscal 2020 and 2021 were new features in the Copyright data feesValue Line Research Center

, which are The New Value Line ETFs Service, new monthly publication Value Line Information You Should Know Wealth Newsletter, The Value Line proprietary Ranking System informationM & A Service, and our Value Line Climate Change Investing Service.

The Value Line Proprietary Ranks (the “Ranking System”), a component of the Company’s flagship product,The Value Line Investment Survey, is also utilized in the Company’s copyright data business which also offers a number of specialized “models” for stock selection.business. The Ranking System is made available to EAM for specific uses without charge. ForDuring the six month period ended April 28, 2017, the combined Ranking System “Timeliness Rank 1 & 2” stocks’ increase of 13.8% outperformed the S&P 500 Index’s increase of 12.1% during the comparable period. For the twelve month period ended April 28, 2017,30, 2022, the combined Ranking System “Rank 1 & 2” stocks’ increasedecrease of 17.3% outperformed15.3% compared to the S&P 500Russell 2000 Index’s increasedecrease of 15.4%18.9% during the comparable period. During the twelve month period ended April 30, 2021, the combined Ranking System “Rank 1 & 2” stocks’ decrease of 10.3% compared to the Russell 2000 Index’s decrease of 17.8% during the comparable period.

Copyright fees

 

During thetwelve months ended April 30, 2017, copyright data fees of $4,406,000 were 68% abovefiscal 2016. As ofApril 30, 2017, total third party sponsored assets were attributable to three contracts for copyright data representing $3.6 billion in various products, as compared to three contracts for copyright data representing $1.8 billion in assets atApril 30, 2016.During the twelve months ended April 30, 2015,2022, copyright data fees of $13,380,000 were $2,847,000 and total third party sponsored assets were attributable to four contracts for copyright data representing $2.3 billion4.8% above those during the corresponding period in various products, in assets atthe prior fiscal year. During the twelve months ended April 30, 2015.2021, copyright fees of $12,763,000 were 0.7% above those during the corresponding period in the prior fiscal year. During the twelve months ended April 30, 2020, copyright fees of $12,671,000 were 70.4% above those in the prior fiscal year. The Company negotiated in fiscal year 2020 with the sponsor of the largest component (an ETF) in the program, the restructuring of the Company’s asset based fees and overall fees of the ETF in light of the competitive market.

 


The Company believes this part of the business is dependent upon the desire of third parties to use the Value Line trademarks and proprietary research for their products, on competition and on fluctuations in segments of the equity markets. Our quantitative specialists are seeking to develop and confirm reliable models for additional copyright data products, including Ranking System-based concepts as well as other proprietary quantitative models.

Investment management fees and services – (unconsolidated)

 

The Company has a substantial non-voting revenues and non-voting profits interests in EAM, the asset manager to the Value Line Mutual Funds. Accordingly, the Company does not report this operation as a separate business segment, although it maintains a significant interest in the cash flows generated by this business and will receive ongoing payments in respect of its non-voting revenues and non-voting profits interests.

 

Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2017,2022, were $2.4$3.36 billion, which is $192 million,$1.6 billion, or 8.6%32.4%, abovebelow total assets of $2.2$4.96 billion in the Value Line Funds managed and/or distributed by EAM at April 30, 2016, reflecting2021. The decrease in net assets was primarily due to fund shareholder redemptions, closing of two variable annuity funds, and significant market appreciation offset by net redemptions in all but two of the twelve Value Line Funds over the twelve month period April 30, 2017.declines.

 

Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2016,2021, were $2.2$4.96 billion, which is $128 million,$1.4 billion, or 5.4%38.8%, belowabove total assets of $2.4$3.58 billion in the Value Line Funds managed and/or distributed by EAM at April 30, 2015, reflecting market depreciation and the net redemptions over the past twelve months ended April 30, 2016. 2020.

 

Shares of Value Line Strategic Asset Management Trust (“SAM”) and Value Line Centurion Fund (“Centurion”) are within certain variable annuity and variable life insurance contracts issued by The Guardian Insurance & Annuity Company, Inc. (“GIAC”); new contracts of this type are no longer sold. Starting January 2015, the Value Line VIP Equity Advantage Fund was added to the Guardian Pro Series Variable Annuities. The fund is an open end fund that invests primarily in a basket of closed-end funds.

Although sales and inflows for the Value Line Equity Funds during fiscal 2017 are comparable to fiscal 2016 which were up 57% as compared to fiscal 2015, the Value Line Funds continue to experienceexperienced net redemptions and the associated net asset outflows (redemptions less new sales) for the last threein fiscal years.2022 and fiscal 2021.

26

 

The following table shows the change in assets for the past three fiscal years including sales (inflows), redemptions (outflows), dividends and capital gain distributions, and market value changes. Inflows for sales, and outflows for redemptions reflect decisions of individual investors.investors and/or their investment advisors. The table also illustrates the assets within the Value Line Funds broken down into equity funds, variable annuity funds and fixed income funds as of April 30, 2017, 20162022, 2021 and 2015.2020.

 


Asset Flows

                    
                     

For the Years Ended April 30,

 

2022

  

2021

  

2020

  

2022

  

2021

 
              

vs.

  

vs.

 
              

2021

  

2020

 

Value Line equity fund assets (excludes variable annuity)— beginning

 $4,432,630,658  $3,107,549,794  $2,582,416,326   42.6%  20.3%

Sales/inflows

  489,135,580   1,444,784,921   1,516,434,399   -66.1%  -4.7%

Dividends/Capital Gains Reinvested

  350,143,149   245,356,118   206,956,280   42.7%  18.6%

Redemptions/outflows

  (1,228,854,315)  (1,265,805,045)  (1,006,449,848)  -2.9%  25.8%

Dividend and Capital Gain Distributions

  (365,486,450)  (257,754,064)  (214,033,328)  41.8%  20.4%

Market value change

  (364,678,944)  1,158,498,934   22,225,964   -131.5%  5112.4%

Value Line equity fund assets (non-variable annuity)— ending

  3,312,889,678   4,432,630,658   3,107,549,794   -25.3%  42.6%

Variable annuity fund assets — beginning

 $431,605,833  $365,271,893  $402,171,626   18.2%  -9.2%

Sales/inflows

  4,277,236   4,494,490   3,489,595   -4.8%  28.8%

Dividends/Capital Gains Reinvested

  329,335,773   46,943,739   34,384,214   601.6%  36.5%

Redemptions/outflows (1)

  (444,323,548)  (48,782,673)  (50,911,955)  810.8%  -4.2%

Dividend and Capital Gain Distributions

  (329,335,773)  (46,943,739)  (34,384,214)  601.6%  36.5%

Market value change

  8,440,479   110,622,123   10,522,627   -92.4%  951.3%

Variable annuity fund assets — ending

  0   431,605,833   365,271,893   -100.0%  18.2%

Fixed income fund assets — beginning

 $100,536,371  $103,255,601  $106,204,372   -2.6%  -2.8%

Sales/inflows

  2,519,668   2,690,636   5,872,737   -6.4%  -54.2%

Dividends/Capital Gains Reinvested

  1,140,663   1,810,046   2,247,503   -37.0%  -19.5%

Redemptions/outflows (2)

  (52,180,984)  (8,240,615)  (13,556,768)  533.2%  -39.2%

Dividend and Capital Gain Distributions

  (1,219,715)  (2,084,557)  (2,578,873)  -41.5%  -19.2%

Market value change

  (6,059,508)  3,105,260   5,066,630   -295.1%  -38.7%

Fixed income fund assets — ending

  44,736,495   100,536,371   103,255,601   -55.5%  -2.6%

Assets under management — ending

 $3,357,626,173  $4,964,772,862  $3,576,077,288   -32.4%  38.8%

 

Value Line Mutual Funds

(1)

Guardian Insurance redeemed from Value Line Centurion and Value Line Strategic Asset Management on April 29, 2022 and the two funds were closed.

 

(2)

The Value Line Tax Exempt Fund liquidated November 2021. The liquidation of the Tax-Exempt Fund cost $50 million in assets – lost from assets under management, and was an EAM decision not within the list of items requiring consent by the Company under the Declaration of Trust.

 

Total Net Assets

For the Years Ended April 30,

 

2017

  

2016

  

2015

  

2017

  

2016

 
              

vs.

  

vs.

 
              

2016

  

2015

 

Value Line equity fund assets (excludes variable annuity)— beginning (1)

 $1,681,698,049  $1,737,521,140  $1,647,890,976   -3.2%  5.4%

Sales/inflows

  410,927,024   441,634,248   314,912,210   -7.0%  40.2%

Redemptions/outflows

  (384,689,816)  (350,894,662)  (249,287,083)  9.6%  40.8%

Dividend and Capital Gain Distributions

  (97,996,109)  (142,675,717)  (127,174,928)  -31.3%  12.2%

Market value change

  267,090,750   (3,886,961)  151,179,966   6771.5%  -102.6%

Value Line equity fund assets (non-variable annuity)— ending

  1,877,029,899   1,681,698,049   1,737,521,140   11.6%  -3.2%

Variable annuity fund assets — beginning (2)

 $399,566,320  $459,820,828  $488,317,714   -13.1%  -5.8%

Sales/inflows

  35,751,469   26,337,080   45,535,001   35.7%  -42.2%

Redemptions/outflows

  (49,998,352)  (70,599,332)  (74,772,515)  -29.2%  -5.6%

Dividend and Capital Gain Distributions

  (26,230,225)  (18,508,679)  (37,531,133)  41.7%  -50.7%

Market value change

  46,305,950   2,516,423   38,271,762   1740.1%  -93.4%

Variable annuity fund assets — ending

  405,395,163   399,566,320   459,820,828   1.5%  -13.1%

Fixed income fund assets — beginning (3)

 $141,430,806  $153,016,581  $161,786,294   -7.6%  -5.4%

Sales/inflows

  26,354,593   6,109,851   8,609,157   331.3%  -29.0%

Redemptions/outflows

  (33,640,443)  (19,121,358)  (20,089,197)  75.9%  -4.8%

Dividend and Capital Gain Distributions

  (42,068)  202,957   197,218   -120.7%  2.9%

Market value change

  (2,793,571)  1,222,774   2,513,110   -328.5%  -51.3%

Fixed income fund assets — ending

  131,309,317   141,430,806   153,016,581   -7.2%  -7.6%

Assets under management — ending

 $2,413,734,379  $2,222,695,176  $2,350,358,550   8.6%  -5.4%

At April 30, 2015 $45 million of total assets were held in the Daily Income Fund managed by Reich & Tang Asset Management LLC which was liquidated on July 29, 2015. A money market alternative at Federated Government Obligations Fund was offered to Value Line Funds shareholders in fiscal 2017 and fiscal 2016.


EAM has successfully broadened distribution, particularly within the Adviser/Independent Broker Dealer (“IBD”) channel. Assets in that channel are up $120 million or 22% year over year, due to ongoing growth in gross sales and market appreciation. The channel is approximately 71% of gross sales for the year.   Due to stronger gross annual sales than that of the prior year, the Advisor/IBD channel continues to be positive and the leading channel for net sales for the period. The marketing efforts have led to over 3,800 financial advisers (individual reps or RIAs) owning a Value Line fund as of April 30, 2017. The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as Charles Schwab & Co., Inc., Fidelity, Pershing and E-Trade.

 

As of April 30, 2017, all2022 three of six Value Line equity and hybrid mutual funds excluding SAM and Centurion, held an overall four or five star rating by Morningstar, Inc. However, asThe Advisor/Independent Broker Dealer channel has successfully become the largest channel for sales and distribution of April 30, 2017, only two of the six equity and hybrid funds are in the top quartile of their respective peer groups for the one year period, although five of the six funds are in the top quartile for the three year period according to Morningstar. As of April 30, 2016, five of the six equity and hybrid funds were in the top quartile of their respective peer groups for one year and four of the six were in the top quartile for the three year period according to Morningstar.  

Several of the Value Line Funds have received national recognition. The Value Line Small Cap Opportunities Fund is recognized on a select list at Lincoln Financial. Since June 30, 2015 Fidelity added the Value Line Small Cap Opportunities Fund as a Fidelity Fund Pick. The Small Cap Opportunities Fund and the Mid-Cap Focused Fund were named “Category Kings” inThe Wall Street Journalin calendar 2017.The Value Line Income & Growth Fund is a recent year-to-date Category King for balanced funds.In November 2015 four funds: the Small Cap Opportunities Fund, the Larger Companies Focused Fund, the Asset Allocation Fund, and the Income and Growth Fund launched a new Institutional Class of shares. With the creation of institutional shares EAM has the opportunity to place the Value Line Mutual Funds on distribution platforms that offer exclusively those funds shares that have eliminated all 12b-1 fees from their fee structure. Funds.

 

27

EAM Trust - Results of operations before distribution to interest holders

 

The overall resultsgross fees and net income of EAM’s investment management operations during the twelve months ended April 30, 2017,2022, before interest holder distributions, includeincluded total investment management fees earned from the Value Line Funds of $14,701,000,$29,598,000, 12b-1 fees and other fees of $5,822,000$9,310,000 and other incomenet losses of $205,000 which includes dividend, interest and licensing fees income.$20,000. For the same period, total investment management fee waivers were $436,000$547,000 and 12b-1 fee waivers for four Value Line Funds were $923,000.$644,000. During the twelve months ended April 30, 2017,2022, EAM's net income was $1,038,000$4,284,000 after giving effect to Value Line’s non-voting revenues interest of $7,195,000,$15,899,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

 

The overall resultsgross fees and net income of EAM’s investment management operations during the twelve months ended April 30, 2016,2021, before interest holder distributions, includeincluded total investment management fees earned from the Value Line Funds of $14,548,000,$29,022,000, 12b-1 fees and other fees of $5,669,000$9,604,000 and other net lossincome of $14,000 on the investments.$361,000. For the same period, total investment management fee waivers were $262,000$121,000 and 12b-1 fee waivers for fourthree Value Line Funds were $1,071,000. Removing management fee waivers on Asset Allocation Fund and the Core Bond Fund resulted in $30,000 in increased management fees per month.$651,000. During the twelve months ended April 30, 2016,2021, EAM's net income was $880,000$4,262,000 after giving effect to Value Line’s non-voting revenues interest of $7,211,000,$15,190,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest. During the twelve months ended April 30, 2016 EAM compensation and employee benefits expenses increased $173,000 above fiscal 2015 primarily due to the addition of an equity analyst in March 2015 and an increase in incentive compensation and the cost of employee benefits year over year. The equity analyst provides coverage and support to the equity funds and the portfolio managers. 


 

The overall resultsgross fees and net income of EAM’s investment management operations during the twelve months ended April 30, 2015,2020, before interest holder distributions, includeincluded total investment management fees earned from the Value Line Funds of $15,014,000,$21,985,000, 12b-1 fees and other fees of $5,459,000$8,436,000 and other incomenet losses of $34,000.$156,000. For the same period, total investment management fee waivers were $192,000$302,000 and 12b-1 fee waivers for sixthree Value Line Funds were $1,518,000.$667,000. During the twelve months ended April 30, 2015,2020, EAM's net income was $1,248,000$2,332,000 after giving effect to Value Line’s non-voting revenues interest of $7,346,000,$11,184,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

 

As of April 30, 2017, four2022, one of the Value Line Funds have allhas full or a portion of thepartial 12b-1 fees being waived,waivers in place, and one fund has partial investment management fee waivers in place. Although, under the terms of the EAM Declaration of Trust, the Company no longer receivesdoes not receive or sharesshare in the revenues from 12b-1 distribution fees, the Company could benefit from the fee waivers to the extent that the resulting reduction of expense ratios and enhancement of the performance of the Value Line Funds attracts new assets.

 

The Value Line equity and hybrid fundsfunds’ assets represent 78.1%, variable annuity funds issued by GIAC represent 16.8%,98.7% and fixed income fund assets represent 5.1%1.3%, respectively, of total fund assets under management (“AUM”) as of April 30, 2017.2022. At April 30, 2017,2022, equity and hybrid AUM decreased by 25.3% and fixed income AUM decreased by 55.5% as compared to fiscal 2021.

The Value Line equity and hybrid funds’ assets represent 89.1%, variable annuity funds issued by GIAC represent 8.9%, and fixed income fund assets represent 2.0%, respectively, of total fund assets under management (“AUM”) as of April 30, 2021. At April 30, 2021, equity, hybrid and GIAC variable annuities AUM increased by 10.2%40.1% and fixed income AUM decreased by 12.8%2.6% as compared to fiscal 2016.2020.

 

EAM - The Company’sCompany’s non-voting revenues and non-voting profits interests

 

The Company holds non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM's investment management fee revenues from its mutual fund and separate accounts business, and 50% of EAM’s net profits, not less than 90% of which is distributed in cash every fiscal quarter. The applicable recent non-voting revenues interest percentage for the fourth quarter of fiscal 2017 is 49.22%2022 was 54.0%.

28

 

The Company recorded income from its non-voting revenues interest and its non-voting profits interest in EAM as follows:

 

 

Fiscal Years Ended April 30,

  

Change

  

Fiscal Years Ended April 30,

 

Change

 

($ in thousands)

 

2017

  

2016

  

2015

  

'17 vs. '16

  

'16 vs. '15

  

2022

 

2021

 

2020

 

'22 vs. '21

 

'21 vs. '20

 

Non-voting revenues interest

 $7,195  $7,211  $7,346   -0.2%  -1.8% $15,899  $15,190  $11,184  4.7% 35.8%

Non-voting profits interest

  519   440   624   18.0%  -29.5%  2,142  2,131  1,166  0.5% 82.8%
 $7,714  $7,651  $7,970   0.8%  -4.0% $18,041  $17,321  $12,350  4.2% 40.3%

 

During the twelve months ended April 30, 2017 and April 30, 2016, the Company recorded revenues of $7,714,000 and $7,651,000, respectively, consisting of $7,195,000 and $7,211,000, from its non-voting revenues interest in EAM and $519,000 and $440,000, from its non-voting profits interest in EAM without incurring any directly related expenses. During the twelve months ended April 30, 2015, the Company recorded revenues of $7,970,000, consisting of $7,346,000, from its non-voting revenues interest in EAM and $624,000, from its non-voting profits interest in EAM. Operating expenses

 


Operating expenses

  

Fiscal Years Ended April 30,

  

Change

 

($ in thousands)

 

2017

  

2016

  

2015

  

'17 vs. '16

  

'16 vs. '15

 

Advertising and promotion

 $3,473  $3,685  $4,984   -5.8%  -26.1%

Salaries and employee benefits

  17,477   15,702   15,935 �� 11.3%  -1.5%

Production and distribution

  9,063   8,725   7,081   3.9%  23.2%

Office and administration

  5,225   4,554   5,124   14.7%  -11.1%

Total expenses

 $35,238  $32,666  $33,124   7.9%  -1.4%

  

Fiscal Years Ended April 30,

  

Change

 

($ in thousands)

 

2022

  

2021

  

2020

  

'22 vs. '21

  

'21 vs. '20

 

Advertising and promotion

 $3,223  $3,745  $3,350   -13.9%  11.8%

Salaries and employee benefits

  17,323   18,865   18,189   -8.2%  3.7%

Production and distribution

  5,003   5,440   4,945   -8.0%  10.0%

Office and administration

  4,176   4,807   4,725   -13.1%  1.7%

Total expenses

 $29,725  $32,857  $31,209   -9.5%  5.3%

 

Expenses within the Company are categorized into advertising and promotion, salaries and employee benefits, production and distribution, office and administration.

 

Operating expenses of $35,238,000 for the twelve months ended April 30, 2017, increased $2,572,000, or 7.9%, as compared to the twelve months ended April 30, 2016. The increase in expenses in fiscal 2017 resulted primarily fromthe additional depreciation and amortization of $806,000 attributable to additional amortization of internally developed software costs related to the product production cycle for which the upgrade is expected to be completed during fiscal 2018, a $1,035,000 decrease in capitalization of deferred software costs for digital product and database development and an increase in space rental and moving costs (New York City and New Jersey office facilities).

Operating expenses of $32,666,000 for the twelve months ended April 30, 2016, decreased $458,000, or 1.4%, as compared to the twelve months ended April 30, 2015. The decrease in expenses in fiscal 2016 resulted primarily from a $1,445,000 decrease in direct mail expense partially offset bythe additional depreciation and amortization of $1,102,000 related to software development costs previously incurred.

Operating expenses of $33,124,000 for the twelve months ended April 30, 2015, decreased $706,000, or 2.1%, as compared to the twelve months ended April 30, 2014. The decrease in expenses resulted primarily from a $945,000 decrease in rent expense partially offset bythe additional depreciation and amortization of $630,000 related to software development costs previously incurred.

Advertising and promotion

Advertising and promotion expenses of $3,473,000$29,725,000 during the twelve months ended April 30, 2017 decreased $212,000 or 5.8%, as compared to fiscal 2016. The decrease in direct mail expenses of $275,0002022, were 9.5% below those during the twelve months ended April 30, 2017, is mainly attributable to2021 as a reduction in the numberresult of campaigns forTheValue Line Investment Survey andThe Value Line 600, as compared to fiscal 2016 partially offset by an increase in direct marketing forValue Line Select: Dividend Income & Growth, The Value Line Small and Mid-Capand Special Situationscost controls in fiscal 2017. Thereyear 2022. Operating expenses of $7,205,000 during the three months ended April 30, 2022, were four direct mail campaigns forThe Value Line Investment Survey and18.9% below those during the three forThe Value Line 600months ended April 30, 2021.

Operating expenses of $32,857,000 during the twelve months ended April 30, 2017 as compared to five direct mail campaigns forThe Value Line Investment Survey and six forThe Value Line 600in the comparable period ofthe prior fiscal year.During the twelve months ended April 30, 2017 sales commissions increased $96,000 as compared to fiscal 2016. In fiscal 2017 third-party telemarketing expenses decreased $66,000 as a result of eliminating dedicated representative as compared to the prior fiscal year. These decreases2021, were offset by a $59,000 increase in general advertising and trade shows for Institutional Sales department.


Advertising and promotion expenses of $3,685,0005.3% above those during the twelve months ended April 30, 2016 decreased $1,299,000 or 26.1%, as compared to fiscal 2015. The decreases in direct mail2020. Operating expenses of $1,445,000 for$8,886,000 during the twelvethree months ended April 30, 2016, are mainly attributable to a reduction in2021, were 4.6% above those during the numberthree months ended April 30, 2020.

Operating expenses of pieces mailed to prospects forTheValue Line Investment Survey andThe Value Line 600, as compared to fiscal 2015 partially offset by an increase in direct marketing forValue Line Selectand Value Line Select: Dividend Income & Growthin fiscal 2016. There were five direct mail campaigns forThe Value Line Investment Survey$31,209,000 during the twelve months ended April 30, 2016 as compared to ten direct mail campaigns infiscal 2015. The Company also negotiated vendor savings resulting2020, were 1.2% above those in a $157,000 reduction in expenses related to third party inbound telemarketing services and eliminated third party product support, bringing the operations in house.During the twelve months ended April 30, 2016 sales commissions increased $296,000and were associated with a $1,949,000 increase in retail sales orders and a $915,000 increase in Institutional sales orders as compared toprior fiscal 2015.Commissions vary based on the type of customer, size of sale, and whether a sale is new or renewal.year.

 

Advertising and promotion expenses of $4,984,000 during the twelve months ended April 30, 2015 increased $761,000 or 18.0%, as compared to advertising and promotion expenses of $4,223,000 in fiscal 2014, principally due to a $305,000 increase in direct mail costs. The increase in direct mail expenses is attributable to an increase in list costs of 10% resulting from the purchase of more prospect names and the timing of mailing forThe Value Line 600 andThe Value Line Investment Survey with more campaigns in fiscal 2015 than in fiscal 2014. Other increases include a $51,000 increase in third-party client support expenses and a $277,000 increase in sales commissions. In fiscal 2015 in-house telemarketing expenses increased $249,000 and were associated with a $1.7 million increase in retail sales orders during the twelve months ended April 30, 2015. An increase of $144,000 in media and general advertising primarily related to expenses to improve services in retail marketing and brand awareness promotions through newspapers, radio and the internet.

Salaries and employee benefits

 

During the twelve months ended April 30, 2017 salaries2022, advertising and employee benefitspromotion expenses of $17,477,000 increased $1,775,000 or 11.3% above$3,223,000 decreased 13.9% as compared to the prior fiscal 2016 which includedyear.  During the effect oftwelve months ended April 30, 2022, decreases were primarily due to a decreasedecline in the capitalization of internal salariesdirect mail campaigns and benefits expenses for digital project development of $1,035,000lower media marketing and lower institutional sales commissions.  Total sales commissions decreased 8% during the twelve months ended April 30, 2017, as compared to fiscal 2016.  The remaining increases in salaries and employee benefits, primarily in the Information Technology department (“IT”)related to augmenting the Company’s digital infrastructure and production processes and Institutional Sales and Research departments including recruiting fees, were partially offset by decreases in salaries and employee benefits in Human Resources, Advertising and fulfillment and distribution operations at VLDC during the twelve months ended April 30, 2017. 

Salaries and employee benefits of $15,702,000during the twelve months ended April 30, 2016 were $233,000 or 1.5% below fiscal 2015’s primarily as a result of a decrease in salary and employee benefits in Institutional Sales, Information Technology, Advertising and Value Line Distribution Center (“VLDC”) and a restructuring of the incentive compensation program which were partially offset by an increase in Executive, Quantitative Research and Research departments.The capitalization of internal salaries and employee benefits expenses of $1,250,000 for digital project development decreased $442,000 during the twelve months ended April 30, 2016, as compared to fiscal 2015.

Salaries and employee benefits of $15,935,000during the twelve months ended April 30, 2015 were $400,000 or 2.4% below fiscal 2014’s salaries and employee benefits of $16,335,000 primarily as a result of a decrease in administrative and support personnel (in IT, Accounting, Advertising and the IT support at VLDC, the fulfillment operation) partially offset by an increase in theinternal Telemarketing, Research and Institutional Sales departments.The capitalization of internal salaries and employee benefits expenses of $1,692,000 for digital project development increased $96,000 during the twelve months ended April 30, 2015, as compared to fiscal 2014.2022. 

 

During the twelve months ended April 30, 2017, 20162021, advertising and 2015,promotion expenses of $3,745,000 increased 11.8% as compared to the prior fiscal year. During the twelve months ended April 30, 2021, increases were primarily due to advertising expenses and institutional sales promotion. Total sales commissions increased by $110,000 during the twelve months ended April 30, 2021. During the twelve months ended April 30, 2021, Institutional gross sales increased by $1.5 million and the retail telemarketing gross sales orders increased by $336,000 above the prior fiscal year.

29

During the twelve months ended April 30, 2020, advertising and promotion expenses of $3,350,000, decreased 1.6% as compared to the prior fiscal year. During the twelve months ended April 30, 2020, an increase in media marketing expenses and institutional sales promotion was offset by a 15.7% decrease in direct marketing expenses. During the twelve months ended April 30, 2020, sales commissions decreased 3.7% as compared to the prior fiscal year.

Salaries and employee benefits

During the twelve months ended April 30, 2022, salaries and employee benefits of $17,323,000 decreased 8.2% below the prior fiscal year, primarily due to decreases in salaries and employee benefits resulting from a reduced employee headcount in fiscal year 2022 along with a decrease in Profit Sharing employee benefits expense.

During the twelve months ended April 30, 2021, salaries and employee benefits of $18,865,000 increased 3.7% above the prior fiscal year. The increase during the twelve months ended April 30, 2021, was primarily due to increases in Profit Sharing employee benefits expense during fiscal 2021 and increases in salaries and employee benefits.

During the twelve months ended April 30, 2020, salaries and employee benefits of $18,189,000, increased 2.3% above the prior fiscal year due to a 47.0% increase in Profit Sharing employee benefits expense during fiscal 2020 and an increase in independent contractors’ costs over the prior year.

During the twelve months ended April 30, 2022, 2021 and 2020, the Company recorded profit sharing expenses of $345,000, $473,000$557,000, $980,000 and $422,000,$870,000, respectively.

 


Production and distribution

 

During thetwelvethe twelve months ended April 30, 2017,2022, production and distribution expenses of $9,063,000$5,003,000 decreased 8.0% below the prior fiscal year, primarily due to decreases in service mailers and distribution expenses and a decrease in production support of the Company’s website, maintenance of the Company’s publishing and application software and operating systems.

During the twelve months ended April 30, 2021, production and distribution expenses of $5,440,000 increased $338,000 or 3.9% abovefiscal 2016. A major10.0% above the prior fiscal year. The increase of $877,000$440,000 during the twelve months ended April 30, 2021, was attributable to additionalcosts related to production support of the Company’s website, maintenance of the Company’s publishing and application software and operating systems as compared to fiscal 2020.

During the twelve months ended April 30, 2020, production and distribution expenses of $4,945,000, decreased 5.3% below the prior fiscal year. During the twelve months ended April 30, 2020, a 1.8% decrease in overall expenses related to renegotiated production support of the Company’s website, maintenance of the Company’s publishing and application software and operating systems and a 56.3% decrease in amortization of internally developed software costs related to the productdigital security and publication production cycle for which the upgrade is expected to be completed during fiscal 2018. Additional increases in production costs include a $333,000 increase in production support of the Company’s website, upgrade of the Company’s publishing and application operating system and Windows operating systems and framework. A $43,000 increase in outside data services was due to modified delivery of financial product pricing services. These increases in production costs were offset by a $477,000 annual savings resulting from the Company’s transition to an alternative provider of equity data effective January 1, 2016. Service mailers and distribution expenses decreased $251,000 in fiscal 2017 due to switching to United States Postal Service delivery of subscriber binders from a private carrier, consolidating freight carriers and a 6.9% decline in print circulation during thetwelve months ended April 30, 2017software as compared to the prior fiscal year. AlsoIn fiscal 2020, printing and distribution costs decreased 9.8% due to a decline6.1% decrease in print circulation resulted in an $81,000 decrease in paper and printing costs.

Production and distribution expenses of $8,725,000duringduring the twelve months ended April 30, 2016 increased $1,644,000 or 23.2% as compared to fiscal 2015. During thetwelve months ended April 30, 2016, an increase of $1,239,000 of production expenses was attributable to additional accelerated amortization of internally developed software costs related to the cessation of software development for certain data galleries. In addition, the Company continues to amortize capitalized software costs attributable to the upgrade of our fulfillment system, single sign on, website development and new service oriented database production architecture. Third party production and hosting expenses for Company’s print and digital product files for internal use and delivery to the Company’s third party that hosts our digital and mobile version of our equity based product offerings, that began on July 9, 2014 (ten months in fiscal year 2015 and twelve months in fiscal 2016) increased $376,000 during fiscal 2016. Increase in expenses included a cost of $159,000 to host tandem moved to cloud, $163,000 of overlapping costs as the Company transitioned to equity data provided by an alternative vendor effective January 1, 2016 offset by $151,000 savings. Distribution expenses decreased $90,000 in fiscal 2016 due to switching to United States Postal Service delivery from a private carrier.2020.

 

Production and distribution expenses of $7,081,000during the twelve months ended April 30, 2015 increased $679,000 or 10.6% as compared to production and distribution expenses of $6,402,000 in fiscal 2014. During thetwelve months ended April 30, 2015, an increase of $470,000 was attributable to additional amortization of internally developed software costs for the upgrade of our fulfillment system, single sign on, concurrent user software, product and website development and new service oriented production architecture and a $488,000 increase in third party expenses for hosting the Company’s digital version of our equity based product offerings and mobile devices. The increase in expenses was partially offset by a $159,000 decrease in service mailers cost and a $116,000 decrease in paper, printing and mailing costs since the Company renegotiated printing, binder and paper prices with various vendors.

Office and administration

During the twelve months ended April 30, 20172022, office and administrationadministrative expenses of $5,225,000 increased $671,000 or 14.7% abovefiscal 2016. $4,176,000 decreased 13.1% below the prior fiscal year, primarily due to a reversal of selected settlement reserves and favorable settlement of a disputed fee with a contractor and decreases in outside data processing (communication, server hosting backup, antivirus software).

During the twelve months ended April 30, 2016 total increase in2021, office and administration costs included a $60,000 increase in telephone costs attributable to one-time additional circuit installation cost and purchasing additional licenses for remote access to work files, a $105,000 increase in antivirus software licenses and a $101,000 decrease in professional fees. A $409,000 increase in space rental is primarily due to overlapping rent expenses for financial statement purposes related to the Company’s New York City office facility and a $192,000 increase in moving costs (New Jersey and New York City office facilities). Increase in space rental includes $193,000 rent expense for the new New Jersey warehouse partially offset by $186,000 savings in VLDC utilities, depreciation and real estate taxes due to the VLDC building sale in July 2016 and additional three months overlapping rent expense of $86,000 per month for the current office facility and $105,000 for the previously occupied office facility during the period from December 1, 2016 to February 28, 2017 which is being offset by lower rent payments according to the sub-lease agreement with American Building Maintenance (“ABM” or the “Sublandlord”). In accordance with GAAP, we spread the benefit of a free rent period and other concessions over the term of our new NYC sublease, commencing on December 1, 2016. In fact, however, the Company is not paying cash rent for the new New York City office facility from December 2016 through September 2017.

Total office and administrationadministrative expenses of $4,554,000,$4,807,000 increased 1.7% above the prior fiscal year. The increase during the twelve months ended April 30, 2016 decreased $570,000 or 11.1% as compared to2021 was primarily a result of an increase in bank service costs based on higher credit card gross receipts of $13.2 million in fiscal 2015. For2021 which were 18.5% higher than credit card gross receipts of $11.2 million in the prior fiscal year.

30

During the twelve months ended April 30, 2016,2020, office and administrationadministrative expenses included a decrease of $423,000 in disaster recovery site hosting fees that resulted from changing$4,725,000, increased 6.5% above the third party vendor. Additionally, a decrease of $192,000 related to a decline in the cost of maintenance, utilities, insurance expenses, bank fees and Directors’ fees offset by anprior fiscal year. The increase of $201,000 attributable to professional fees, telephone communication costs (primarily sales), and real estate taxes primarily for our NYC office facility.


Total office and administration expenses of $5,124,000,$222,000 during the twelve months ended April 30, 2015 decreased $1,746,000 or 25.4% as compared tooffice and administration expenses2020, was a result of $6,870,000the operating lease amortization expense in fiscal 2014. For2020 due to a change in lease accounting standard ASU 2016-02,"Leases (Topic 842)".

Concentration

During the twelve months ended April 30, 2015, office and administration expenses included2022, 33.0% of total publishing revenues of $40,525,000 were derived from a $945,000 decrease in rental expense at our New York City facility including an additional one time overlapping rentsingle customer. During the twelve months ended April 30, 2021, 31.6% of $771,000 fortotal publishing revenues of $40,392,000 were derived from a single customer. During the previously occupied office facilities during the short term lease extension whichtwelve months ended September 15, 2013,April 30, 2020, 31.4% of total publishing revenues of $40,299,000 were derived from a decline of $109,000 in telephone, utilities and equipment rental expenses, an accelerated write-off of $138,000 of obsolete software and a decrease of $272,000 in website hosting fees that resulted from the termination of a third party vendor. During fiscal 2015 restructuring and settlement costs decreased $205,000 or 73.2%.single customer.

 

Lease Commitments

 

In February 2017 the Company's headquarters and offices moved to a new location. On November 30, 2016, Value Line, Inc., received consent from the landlord at 551 Fifth Avenue, New York, NY to the terms of a new sublease agreement between Value Line, Inc. (“Value Line” or “Company”) and ABM Industries, Incorporated (“ABM” or the “Sublandlord”) commencing on December 1, 2016. Pursuant to the agreement Value Line leased from ABM 24,726 square feet of office space located on the second and third floors at 551 Fifth Avenue, New York, NY (“Building” or “Premises”) beginning on December 1, 2016 and ending on November 29, 2027. Base rent under the sublease agreement is $1,126,000 per annum during the first year with an annual increase in base rent of 2.25% scheduled for each subsequent year, payable in equal monthly installments on the first day of each month, subject to customary concessions in the Company’s favor and pass-through of certain increases in utility costs and real estate taxes over the base year. The Company provided a security deposit represented by a letter of credit in the amount of $469,000 in October 2016, which is scheduled to bewas reduced to $305,000 on September 30,October 3, 2021 and is to be fully refunded after the sublease ends. This Building became the Company’s new corporate office facility. The Company is required to pay for certain operating expenses associated with the Premises as well as utilities supplied to the Premises. The sublease terms provide for a significant decrease (23% initially) in the Company’s annual rental expenditure taking into account free rent for the first six months of the sublease. Sublandlord provided Value Line ana work allowance of $417,000 which is expected to beaccompanied with the six months free rent worth $563,000 was applied against the Company’s costs and expenses relatedobligation to pay rent at our NYC headquarters, delaying the relocation to the new office facility or applied as additional free rent.

The Company leased 44,493 square feet of office space at 485 Lexington Avenue in New York, NY from July 2013 to Februaryactual rent payments until November 2017. Base rent under the Sublease was $1,468,269 per annum, subject to customary concessions in the Company’s favor and pass-through of certain increases in operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $489,423, which was fully returned over the course of the sublease term.

 

On February 29, 2016, the Company’s subsidiary Value Line Distribution Center (“VLDC”)VLDC and Seagis Property Group LP (the “Landlord”) entered into a lease agreement, pursuant to which VLDC has leased 24,110 square feet of warehouse and appurtenant office space located at 205 Chubb Ave., Lyndhurst, NJ (“Warehouse”) beginning on May 1, 2016 and ending on April 30, 2024 (“Lease”). Base rent under the Lease is $192,880 per annum payable in equal monthly installments on the first day of each month, in advance during fiscal 2017 and will gradually increase to $237,218 in fiscal 2024, subject to customary increases based on operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $32,146, which will be fully refunded after the lease term expires. The lease is a net lease requiring the Company to pay for certain operating expenses associated with the Warehouse as well as utilities supplied to the Warehouse.

 

31
 

 

Income from Securities Transactions, netInvestment gains / (losses)

 

  

Fiscal Years Ended April 30,

  

Change

 

($ in thousands)

 

2017

  

2016

  

2015

  

'17 vs. '16

  

'16 vs. '15

 

Dividend income

 $193  $142  $157   35.9%  -9.6%
                     

Interest income

  33   -   3   n/a   -100.0%
                     

Capital gain distributions from ETFs

  39   105   57   -62.9%  84.2%
                     

Capital gain

  -   224   -   -100.0%  n/a 
                     

Other

  47   6   (91)  683.3%  -106.6%
                     

Total income from securities transactions and other, net

 $312  $477  $126   -34.6%  278.6%

  

Fiscal Years Ended April 30,

  

Change

 

($ in thousands)

 

2022

  

2021

  

2020

  

'22 vs. '21

  

'21 vs. '20

 

Dividend income

 $851  $573  $352   48.5%  62.8%

Interest income

  18   137   279   -86.9%  -50.9%

Investment gains/(losses) recognized on sale of equity securities during the period

  (1,568)  835   (1,075)  n/a   n/a 

Unrealized gains/(losses) recognized on equity securities held at the end of the period

  167   3,875   (339)  n/a   n/a 

Other

  (2)  -   (6)  n/a   n/a 

Total investment gains/(losses)

 $(534) $5,420  $(789)  n/a   n/a 

 

During the twelve months ended April 30, 2017 and April 30, 20162022, the Company’s income from securities transactions, net,investment gains, primarily derived from dividend and interest income, was $312,000 and $477,000, respectively. In fiscal 2017 income from securities transactions, net, included capital gain distribution from ETFs of $39,000 which compares to capital gain distribution from ETFs of $105,000 in fiscal 2016.There were no gains orinvestment losses fromrecognized on sales of equity securities proceedsduring the period and unrealized gains recognized on equity securities held at the end of which were $53,000the period in fiscal 2022, resulted in a loss of $534,000. Proceeds from maturities and sales of government debt securities classified as available-for-sale during the twelve months ended April 30, 2017. During the twelve months ended April 30, 2016 sales of equity securities generated proceeds of $10,206,000 and resulted in a $224,000 capital gain.

During the twelve months ended April 30, 20162022 and April 30, 20152021, were $2,496,000 and $14,902,000, respectively. Proceeds from the Company’s income from securities transactions, net, primarily derived from dividend income, realized capital gains from sales of equity securities and capital gain distributions from ETFs was $477,000 and $126,000, respectively. In fiscal 2016 income from securities transactions, net, included capital gain distributions from ETFs of $105,000 which compares to capital gain distributions from ETFs of $57,000 in fiscal 2015.During the twelve months ended April 30, 2016 sales of equity securities resulted in a $224,000 gain. There were no sales, or gains or losses from sales of equity securities during the twelve months ended April 30, 2015.2022 and April 30, 2021 were $12,039,000 and $8,212,000, respectively. There were no capital gain distributions from ETFs in fiscal 2022 or fiscal 2021.

During the twelve months ended April 30, 2021, the Company’s investment gains, primarily derived from dividend and interest income, investment gains recognized on sales of equity securities during the period and unrealized gains recognized on equity securities held at the end of the period in fiscal 2021, was $5,420,000. During the twelve months ended April 30, 2020, the Company’s investment losses, primarily derived from dividend and interest income, investment losses recognized on sales of equity securities during the period and unrealized losses recognized on equity securities held at the end of the period in fiscal 2020, were $789,000. Proceeds from maturities and sales of government debt securities classified as available-for-sale during the twelve months ended April 30, 2021 and April 30, 2020, were $14,902,000 and $8,663,000, respectively. Proceeds from the sales of equity securities during the twelve months ended April 30, 2021 and April 30, 2020 were $8,212,000 and $4,387,000, respectively. There were no capital gain distributions from ETFs in fiscal 2021 or fiscal 2020.

Effective income tax rate

 

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the twelve months ended April 30, 2017, 20162022, April 30, 2021 and 2015April 30, 2020 were 33.05%22.25%, 27.15%23.11% and 30.52%27.64%, respectively. The Company's annualdecrease in the effective tax rate will changeduring for the twelve months ended April 30, 2022 as compared to April 30, 2021, is primarily a result of the non-taxable revenue derived from forgiveness of the PPP loan by the SBA offset by an increase in the state and local income taxes from 2.05% to 3.12% as a result of changes in state and local income tax allocation factors, on deferred taxes in fiscal 2022. The Company's annualized overall effective tax rate fluctuates due to a number of factors, in addition to changes in tax law, including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income,pre-income tax, the Company's geographic profit mix between tax jurisdictions, new tax laws,taxation method adopted by each locality, new interpretations of existing tax laws and rulings and settlements with tax authorities. The fluctuation in the effective income tax rate during fiscal 2017 is primarily attributable to the attribution of 100% of the gain on the sale of the Company's operating facility to one tax jurisdiction. The fluctuation in the effective income tax rate during fiscal 2016 is primarily attributable to effect of the reduction in the allocation factors on the state and local deferred tax liability (primarily the gain on deconsolidation of EAM), reversal of excess income tax accruals established in past years that were resolved upon completion of the prior NYC and IRS audits and an increase in the domestic production tax credits. The fluctuation in the effective income tax rate during fiscal 2015 is primarily attributable to the write-off of the tax bases of goodwill.

 


Liquidity and Capital Resources

 

The Company had working capital, defined as current assets less current liabilities, of $1,548,000$37,580,000 as of April 30, 20172022 and negative working capital of $6,662,000$23,312,000 as of April 30, 2016.2021. These amounts include short termshort-term unearned revenue of $20,188,000$17,688,000 and $20,516,000$19,162,000 reflected in total current liabilities at April 30, 20172022 and April 30, 2016,2021, respectively. Cash and short termshort-term securities were $23,133,000$57,825,000 and $16,759,000$45,353,000 as of April 30, 20172022 and April 30, 2016,2021, respectively.

32

 

The Company’s cash and cash equivalents include $6,066,000$28,965,000 and $12,037,000$18,209,000 at April 30, 20172022 and April 30, 2016,2021, respectively, invested primarily in commercial banks and in Money Market Funds at brokers, which operate under Rule 2a-7 of the 1940 Act and invest primarily in short termshort-term U.S. government securities.

 

Cash from operating activities

The Company had cash outflowsinflows from operating activities of $3,678,000$24,646,000 during the twelve months ended April 30, 20172022, compared to cash inflows from operations of $2,004,000$16,410,000 and $1,407,000$13,745,000 during the twelve months ended April 30, 20162021 and 2015,2020, respectively. The increase in cash outflows of $5,682,000 from fiscal 2016 to fiscal 2017 resulted from the payment of additional income taxes of $3,279,000, primarily attributable to the sale of the Company’s VLDC operating facility and the timing of payments of invoices and prepayments to vendors. The increase in cash flows from fiscal 20152021 to fiscal 2016 was2022 is primarily attributable to higher pre-tax income and an increase in cash receipts from EAM and the timing of vendor payments,receipts from copyright programs. The increase in cash flows from fiscal 2020 to fiscal 2021 is primarily attributable to higher net income and an increase in earnings before non-cash items that resultedcash receipts from cost controls offset by a decrease in unearned incomeEAM and the timing of receipts from the receipt of prepaid subscription orders in fiscal 2016.copyright programs.

Cash from investing activities

The Company’s cash inflowsoutflows from investing activities of $4,470,000$3,389,000 during the twelve months ended April 30, 20172022, compared to cash inflows from investing activities of $12,207,000$7,381,000 and $4,689,000cash outflows of $8,657,000 for the twelve months ended April 30, 20162021 and April 30, 2015,2020, respectively. Cash outflows for the twelve months ended April 30, 2022, were primarily due to the Company’s decision to invest in additional fixed income securities in fiscal 2022. Cash inflows for the twelve months ended April 30, 2017 were lower than in fiscal 2016 primarily due to investing $13,228,000 in fixed income and equity securities from the net proceeds of $11,555,000 from the sale of the Company’s operating facility as compared to $3,854,000 invested in equity securities from the $10,206,000 of proceeds from sales of securities classified as available for sale during fiscal 2016. Additionally, the Company invested $469,000 in a bank money market fund and pledged this investment to represent cash securing a Bank Letter of Credit issued to the sublandlord as a security deposit for the Company's new leased corporate office facility.Cash inflows for the twelve months ended April 30, 20162021, were higher than in fiscal 20152020 primarily due to the Company’s decision not to sell its inverse equity ETFreinvest proceeds in fixed income securities and lower its overall equity securities investment position and the decrease in the capitalized software project costs during fiscal 2016.2021.

 

Cash from financing activities

 

During the twelve months ended April 30, 2017,2022, the Company’s cash outflows from financing activities were $7,357,000$10,889,000 and compared to cash outflows from financing activities of $6,963,000$9,574,000 and $6,010,000$6,627,000 for the twelve months ended April 30, 20162021 and 2015,2020, respectively. Cash outflows for financing activities included $741,000, $796,000$2,484,000, $1,526,000 and $122,000$1,214,000 for the repurchase of 44,92453,327 shares, 52,90753,551 shares and 8,43346,840 shares of the Company’s common stock under the September 19, 2012April 2020, July 2021 and March 2022 board approved common stock repurchase program,programs, during fiscal years 2017, 20162022, 2021 and 2015,2020, respectively. During fiscal 2020, the Company applied for and received an SBA loan under the Paycheck Protection Program in the amount of $2,331,000. The obligation to repay the SBA loan under the Paycheck Protection Program was forgiven during fiscal 2022. Quarterly regular dividend payments of $0.17$0.22 per share during fiscal 20172022 aggregated $6,616,000.$8,405,000. Quarterly regular dividend payments of $0.15$0.21 per share during the first quarter and $0.16fiscal 2021 aggregated $8,068,000. Quarterly regular dividend payments of $0.20 per share during the latter three quarters in fiscal 20162020 aggregated $6,167,000 as compared to quarterly dividend payments of $0.15 per share totaling $5,888,000 in fiscal 2015.$7,724,000.

 

At April 30, 20172022 there were 9,711,6659,509,843 common shares outstanding as compared to 9,756,5899,563,170 common shares outstanding at April 30, 2016.2021. The Company expects financing activities to continue to include use of cash for dividend payments for the foreseeable future.


 

Management believes that the Company’s cash and other liquid asset resources used in its business together with the proceeds from the SBA loan and the future cash flows from operations and from the Company’s non-voting revenues and non-voting profits interests in EAM will be sufficient to finance current and forecasted liquidity needs for the next twelve months.months and beyond next year. Management does not anticipate making any additional borrowings during the next twelve months. As of April 30, 2017,2022, retained earnings and liquid assets were $39,186,000$87,645,000 and $23,133,000,$57,825,000, respectively. As of April 30, 2021, retained earnings and liquid assets were $72,502,000 and $45,353,000, respectively.

 

Seasonality

 

Our publishing revenues are comprised of subscriptions which are generally annual subscriptions. Our cash flows from operating activities are minimally seasonal in nature, primarily due to the timing of customer payments made for orders and subscription renewals.

33

Recent Accounting Pronouncements

 

RecentIn December 2019, the Financial Accounting Pronouncements

In November 2015, the FASBStandards Board (“FASB”) issued ASU 2015-17,2019-12, “Income Taxes (Topic740): Simplifying the Accounting for Income Taxes” as part of its initiative to reduce complexity in the accounting standards. The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes (Topic 740):Balance Sheet Classificationin an interim period and the recognition of Deferred Taxes.Under existing standards, deferred taxes for each tax-paying jurisdiction are presented as a net current asset or liability and net long-term asset or liability. To simplify presentation, the new guidance will require that all deferred tax assets and liabilities, along with related valuation allowances, be classified as long-term on the balance sheet. As a result, each tax-paying jurisdiction will now only have one net long-term asset or liability. The new guidance does not change the existing requirement that prohibits offsetting deferred tax liabilities from one jurisdiction against deferredfor outside basis differences. The standard also clarifies and simplifies other aspects of the accounting for income taxes including interim-period accounting for enacted changes in tax assets of another jurisdiction. ASU 2015-17 islaws. The Company adopted this guidance effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, which will be our fiscal year 2018 beginning May 1, 2017. Due to the full valuation allowance on our U.S. deferred tax assets, we do not expect the2021. The adoption of ASU 2015-17 tothis standard did not have a material impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02"). The core principle of Topic 842 requires that a lessee should recognize the assets and liabilities on the balance sheet and disclose key information about leasing arrangements. The amendments in ASU 2016-2 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The guidance is required to be adopted at the earliest period presented using a modified retrospective approach. The Company is in the process of evaluating the impact of this standard on the consolidatedCompany’s financial statements.

 

In August, 2016,On June 21, 2018, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (United States Supreme Court reversed the 1992 ruling in Quill, which protected firms delivering items by common carrier into a consensusstate where it had no physical presence from having to collect sales tax in such state. The Company has integrated the effects of the Emerging Issues Task Force) ( “ASU 2016-15”). The amendments in ASU 2016-15 address eight specific cash flow issuesvarious state laws into its operations and applycontinues to all entities that are required to present a statement of cash flows under ASC Topic 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption during an interim period. The Company is in the process of evaluating the impact of this standard on the consolidated financial statements.do so.

 

Critical Accounting Estimates and Policies

 

The Company prepares its consolidated financial statements in accordance with Generally Accepted Accounting Principles as in effect in the United States (U.S. “GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent, and the Company evaluates its estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies reflect the significant judgments and estimates used in the preparation of its Consolidated Financial Statements:

 

 

●

Revenue recognition

●Valuation of EAM

Income taxes

●

Valuation of EAM

Revenue Recognition

The majority of the Company’s revenues come from the sale of print and digital subscriptions and fees for copyright proprietary information. The Company recognizes subscription revenue, net of discounts, in equal amounts over the term of the subscription, which generally ranges from three months to one year or longer, varying based on the product or service. Copyright data fees are calculated monthly based on market fluctuation and billed quarterly. The Company believes that the estimates related to revenue recognition are critical accounting estimates, and to the extent that there are material differences between its determination of revenues and actual results, its financial condition or results of operations may be affected.

Income Taxes

The Company’s effective annual income tax expense rate is based on the U.S. federal and state and local jurisdiction tax rates on income and losses that are part of its Consolidated Financial Statements. Tax-planning opportunities, non-taxable income, expenses that are not deductible in the Company’s tax returns, and the blend of business income, including income derived from the Company’s non-voting revenue and non-voting profits interests in EAM and income from securities transactions, will impact the effective tax rate in the jurisdictions in which the Company operates. Significant judgment is required in evaluating the Company’s tax positions.

 

34

 

Tax law requires items to be included in the tax return at different times from when these items are reflected in the Company’s Consolidated Financial Statements. As a result, the effective tax rate reflected in the Company’s Consolidated Financial Statements is different from the tax rate reported on the Company’s tax returns (the Company’s cash tax rate). These differences reverse over time, such as depreciation and amortization expenses. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax basis of assets and liabilities.

As of April 30, 2017 and 2016, the Company had $348,000 and $432,000, respectively, of deferred tax assets. In assessing the Company’s deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilized in the Company’s tax filings.

 In assessing the need for a valuation allowance, the Company considers both positive and negative evidence, including tax-planning strategies, projected future taxable income, and recent financial performance. If after future assessments of the realizability of the deferred tax assets the Company determines a lesser allowance is required, the Company would record a reduction to the income tax expense and to the valuation allowance in the period this determination was made. This would cause the Company’s income tax expense, effective tax rate, and net income to fluctuate.

In addition, the Company establishes reserves at the time that it determines that it is more likely than not that it will need to pay additional taxes related to certain matters. The Company adjusts these reserves, including any impact of the related interest and penalties, in light of changing facts and circumstances such as the progress of a tax audit. A number of years may elapse before a particular matter for which the Company has established a reserve is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. Such liabilities are recorded as income taxes payable in the Company’s Consolidated Balance Sheets. The settlement of any particular issue would usually require the use of cash. Favorable resolutions of tax matters for which the Company has previously established reserves are recognized as a reduction to the Company’s income tax expense when the amounts involved become known.

Assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns requires judgment. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations, or cash flows.

Investment in EAM Trust

The Company accounts for its investment in EAM using the equity method of accounting. The value of its investment in EAM is the fair value of the contributed capital at inception, plus the Company’s share of non-voting revenues and non-voting profits from EAM, less distributions received from EAM. The Company evaluates its investment in EAM on a regular basis for other-than-temporary impairment, which requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances that impact the fair value of the investment.

 

Should the fair value of the investment fall below its carrying value, the Company will determine whether the investment is other-than-temporarily impaired, which includes assessing the severity and duration of the impairment and the likelihood of recovery. If the investment is considered to be other-than-temporarily impaired, the Company will write down the investment to its fair value. Since the inception of EAM, the Company has not recognized any other-than-temporary impairment in the investment.

 


Off-Balance Sheet ArrangementsContractual Obligations

 

We are not a party to any off-balance sheet arrangements, other than operating leaseslease contracts which will result in cash payments to landlords in future periods. Operating lease liabilities are included in our Consolidated Balance Sheets. Estimated payments of these liabilities in each of the next five fiscal years and a secured Letter of Credit (“LOC”)thereafter are (in thousands): $1,597 in the amount of $469,000 issued as a security deposit for the Company’s office facility entered into2023; $1,634 in the ordinary course of business. The LOC is secured by arestricted Money Market Investment of similar amount.2024; $1,429 in 2025; $1,461 in 2026; $1,493 in 2027 and $882 thereafter totaling $8,496.

 

Contractual Obligations

Below is a summary of certain contractual obligations of the Company as of April 30, 2017 ($ in thousands):

  

Payments due by period

         

Contractual Obligations

 

Total

  

Less than 1

year

  

1-3 years

  

3-5 years

  

More than 5

years

 

Long Term Debt Obligations

  -   -   -   -   - 

Capital Lease Obligations

  -   -   -   -   - 

Operating Lease Obligations

  15,023   824   2,765   3,405   8,029 

Purchase Obligations

  -   -   -   -   - 

Total

 $15,023  $824  $2,765  $3,405  $8,029 
35

 

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Market Risk Disclosures

 

The Company’s Consolidated Balance Sheet includes a substantial amount of assets whose fair values are subject to market risks. The Company’s market risks are primarily associated with interest rates and equity price risk. The following sections address the significant market risks associated with the Company’s investment activities.

 

Interest Rate Risk

 

The Company’s strategy has been to acquire debt securities with low credit risk. Despite this strategy management recognizes and accepts the possibility that losses may occur. To limit the price fluctuation in these securities from interest rate changes, the Company’s management invests primarily in short-term obligations maturing within one year.

 

The fair values of the Company’s fixed maturity investments will fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments. Additionally, fair values of interest rate sensitive instruments may be affected by prepayment options, relative values of alternative investments, and other general market conditions.

 

Fixed income securities consist of certificates of deposits and securities issued by federal, state and local governments within the United States. As of April 30, 20172022 the aggregate cost and fair value of fixed income securities classified as available-for-sale were $7,484,000$10,505,000 and $7,479,000,$10,475,000, respectively. There were noAs of April 30, 2021 the aggregate cost and fair value of fixed income securities atclassified as available-for-sale were $2,596,000 and $2,600,000, respectively.

There was no interest rate risk in fixed income investments in securities with fixed maturities as of April 30, 2016.

The following table summarizes2022 or April 30, 2021 since the estimated effects of hypothetical increases and decreases in interest rates on assets that are subject to interest rate risk. It is assumed that the changes occur immediately and uniformly to each category of instrument containing interest rate risks. The hypothetical changes in market interest rates do not reflect what could be deemed best or worst case scenarios. Variations in market interest rates could produce significant changes in the timing of repayments due to prepayment options available. For these reasons, actual results might differ from those reflected in the table.short-term obligations were maturing within one year.


Fixed Income Securities

  

Estimated Fair Value after

 
  

Hypothetical Change in Interest Rates

 
  

(in thousands)

 
                     
  

(bp = basis points)

 
                     
      6 mos.  

6 mos. 

  1 yr.   1 yr. 
                 
  

Fair

  

50bp 

  50bp   100bp  

100bp

 
  

Value 

  

increase 

  

decrease 

  

increase 

  

decrease

 
                     
As of April 30, 2017                    
Investments in securities with fixed maturities $7,479  $7,473  $7,504  $7,473   n/a 

 

Management regularly monitors the maturity structure of the Company’s investments in debt securities in order to maintain an acceptable price risk associated with changes in interest rates.

 

Equity Price Risk

 

Equity Price Risk

The carrying values of investments subject to equity price risks are based on quoted market prices as of the balance sheet dates. Market prices are subject to fluctuation and, consequently, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic characteristics of the issuer, the relative price of alternative investments and general market conditions. Furthermore, amounts realized in the sale of a particular security may be affected by the relative quantity of the security being sold.

 

The Company’s equity investment strategy has been to acquire equity securities across a diversity of industry group.groups. The portfolio consists of ETFs held for dividend yield that attempt to replicate the performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions. In order to maintain liquidity in these securities, the Company’s policy has been to invest in and hold in its portfolio, no more than 5% of the approximate average daily trading volume in any one issue.

 

As of April 30, 2017,2022 and April 30, 2021, the aggregate cost of the equity securities, classified as available-for-sale, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL) and ProsharesProShares Trust S&P 500 Dividend Aristocrats ETF (NOBL), IShares DJ Select Dividend ETF (DVY) and other Exchange Traded Funds and common stock equity securities was $8,385,000a combined total $13,318,000 and $19,105,000, respectively, and the fair value was $9,097,000. As of April 30, 2016, the aggregate cost of the equity securities classified as available-for-sale, which consisted of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL), Proshares Trust S&P 500 Dividend (NOBL)$17,647,000 and First Trust Total US Market Alphadex ETF (TUSA) was $3,445,000 and the fair value was $3,637,000. During the second quarter ended October 31, 2015, the Company made a decision to reduce its dividend paying ETF position and liquidate its non dividend paying inverse ETF positions.$23,582,000, respectively.

 

36

 

Equity Securities

       

Estimated Fair

Value after

  

Hypothetical

Percentage

Increase

 
      

Hypothetical

 

Hypothetical

  

(Decrease) in

 

($ in thousands)

  

Fair Value

 

Price Change

 

Change in Prices

  

Shareholders’

Equity

 

As of April 30, 2017

Equity Securities and ETFs held for dividend yield

 $9,097 

30% increase

 $11,826   4.69%
      

30% decrease

 $6,368   -4.69%

Equity Securities

       

Estimated Fair

Value after

  

Hypothetical

Percentage

Increase

 
      

Hypothetical

 

Hypothetical

  

 (Decrease) in

 

($ in thousands)

  

Fair Value

 

Price Change

 

Change in Prices

  

Shareholders’

Equity

 

As of April 30, 2016

Equity Securities and ETFs held for dividend yield

 $3,637 

30% increase

 $4,728   2.05%
      

30% decrease

 $2,546   -2.05%


Equity Securities

       

Estimated Fair Value after

  

Hypothetical Percentage

 
      

Hypothetical

 

Hypothetical

  

Increase (Decrease) in

 

($ in thousands)

  

Fair Value

 

Price Change

 

Change in Prices

  

Shareholders’ Equity

 

As of April 30, 2022

Equity Securities and ETFs held for dividend yield

 $17,647 

30% increase

 $22,942   4.92%
      

30% decrease

 $12,353   -4.92%
               
               

Equity Securities

       

Estimated Fair Value after

  

Hypothetical Percentage

 
      

Hypothetical

 

Hypothetical

  

Increase (Decrease) in

 

($ in thousands)

  

Fair Value

 

Price Change

 

Change in Prices

  

Shareholders’ Equity

 

As of April 30, 2021

Equity Securities and ETFs held for dividend yield

 $23,582 

30% increase

 $30,657   7.81%
      

30% decrease

 $16,507   -7.81%
               

 

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

 

The following consolidated financial statements of the registrant and its subsidiaries are included as a part of this Form 10-K:

 

 Page Number
  

Report of independent auditors (PCAOB  ID No. 921)

5748

Consolidated balance sheets at April 30, 20172022 and 20162021

58 50

Consolidated statements of income for the fiscal years ended April 30, 2017, 20162022, 2021 and 20152020

59

51

Consolidated Statementsstatements of Comprehensive Incomecomprehensive income for the fiscal years ended April 30, 2017, 20162022, 2021 and 20152020

60

52

Consolidated statements of cash flows for the fiscal years ended April 30, 2017, 20162022, 2021 and 20152020              

61

53

Consolidated statement of changes in shareholders’ equity for the fiscal years ended April 30, 2017, 20162022, 2021 and 20152020

62

54

Notes to the consolidated financial statements

6355

 


37

Quarterly Results (Unaudited)

($ in thousands, except per share amounts)

  

Net

Revenues

  

Income/

(Loss) from

Operations

  

Revenues

and Profits

Interests in

EAM Trust

  

Income/

(Loss) From

Securities

Trans. and

Other, net

  

Net Income

  

Earnings

Per Share

 
                         

2017, by Quarter

                        

First *

 $16,644  $8,137  $1,916  $33  $6,358  $0.65 

Second

  8,650   23   1,932   61   1,480   0.15 

Third

  8,647   (212)  1,934   132   1,445   0.15 

Fourth *

  8,756   (489)  1,932   86   1,084   0.12 

Total

 $42,697  $7,459  $7,714  $312  $10,367  $1.07 
                         

2016, by Quarter

                        

First

 $8,832  $959  $2,042  $51  $2,119  $0.22 

Second

  8,637   826   1,940   31   1,992   0.20 

Third

  8,599   557   1,919   133   1,913   0.20 

Fourth **

  8,478   (462)  1,750   262   1,267   0.13 

Total

 $34,546  $1,880  $7,651  $477  $7,291  $0.75 
                         

2015, by Quarter

                        

First

 $9,070  $1,062  $2,022  $41  $2,036  $0.21 

Second

  9,261   1,046   1,949   66   1,982   0.20 

Third

  8,863   851   2,024   96   2,177   0.22 

Fourth ***

  8,329   (560)  1,975   (77)  1,097   0.11 

Total

 $35,523  $2,399  $7,970  $126  $7,292  $0.74 

* During the first quarter of fiscal 2017 both net income and income from operations included a pre-tax gain of $8,123,000 from the sale of the Company's operating facility for which it received gross proceeds of $12,300,000 on July 29, 2016. During the fourth quarter ended April 30, 2017, the Company’s reported loss from operations of $489,000 was the result of an increase in salaries and employee benefits primarily in the Information Technology department related to augmenting the Company’s digital infrastructure and production processes, a decrease in the capitalization of internal salaries and benefits expenses for digital project development accompanied by increased expenses related to relocating the Company’s New York City office facility. 

** During the fourth quarter ended April 30, 2016, the Company’s loss from operations of $462,000 was the result of accelerated amortization related to the cessation of software development for certain data galleries.

*** During the fourth quarter ended April 30, 2015, the Company’s loss from operations of $560,000 was the result of 12 weeks of print revenues recorded in the fourth quarter of fiscal 2015 as compared to 13 weeks recorded in the fourth quarter of fiscal 2014, accelerated write-off of $138,000 related to obsolete software and an additional direct mail campaign in the fourth quarter of fiscal 2015.

 

 

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE.

 

None.

 

Item 9A. CONTROLS AND PROCEDURES.

 

(a)

(a)  Evaluation of Disclosure Controls and Procedures.

 

The Company's Chief Executive Officer and Vice President & Treasurer carried out an evaluation of the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) or 15d-15(e)) as of April 30, 2017,2022, as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15. The Company’s Chief Executive Officer and Vice President & Treasurer are engaged in a comprehensive effort to review, evaluate and improve the Company's controls; however, management does not expect that the Company's disclosure controls or its internal controls over financial reporting can prevent all possible errors and fraud.

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Vice President & Treasurer, as appropriate, to allow timely decisions regarding required disclosure.

 

The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Vice President & Treasurer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

 

This Form 10-K does not include an attestation report of the Company's registered public accounting firm regarding the Company’s internal control over financial reporting. Under applicable SEC rules, no such attestation report by the Company's registered public accounting firm is required.

 

Changes in Internal Controls

 

In the course of the evaluation of disclosure controls and procedures, the Chief Executive Officer and Vice President & Treasurer considered certain internal control areas in which the Company has made and is continuing to make changes to improve and enhance controls. Based upon that evaluation, the Chief Executive Officer and Vice President & Treasurer of the Company concluded that there were no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the fourth quarter of fiscal 20172022 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

 

(b)

(b)     Management’s Annual Report on Internal Control over Financial Reporting.

 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, and effected by the board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP including those policies and procedures that: (i)(I) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company, and (iii) 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.

 

38
 

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

 

Under the supervision and with the participation of management, including the Chief Executive Officer and the Vice President & Treasurer, acting as Principal Financial Officer, the Company has assessed the effectiveness of its internal control over financial reporting as of April 30, 2017.2022. In making this assessment, management used the criteria described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment and those criteria, management concluded that the Company did maintain effective internal control over financial reporting as of April 30, 2017.2022.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in the Company’s internal control systems over financial reporting during the fourth quarter of fiscal 20172022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company administrative and finance personnel have been operating on a near-fully remote basis during the entirety of the fiscal year ended April 30, 2022 as a result of pandemic restrictions and precautions. The internal control systems have remained intact.

 

 

Item 9B. OTHER INFORMATION.

 

None.

 

39
 

 

Part III

 

Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

 

Director


(a) Names of Directors, Age as of June 30, 20172022 and Principal Occupation

Since

Stephen R. Anastasio* (63). Vice President of the Company since December 2010; Treasurer since September 2005 and Director
Since since February 2010. Mr. Anastasio has been employed by Value Line, Inc. for more than 30 years. In addition to his current roles with the Company, he has served as Chief Financial Officer, Treasurer, Chief Accounting Officer and Corporate Controller of the Company. Mr. Anastasio is a graduate of Fairleigh Dickinson University and is a Certified Public Accountant.

2010

Mary Bernstein* (72). Director of Accounting of the Company since 2010; Accounting Manager of the Company from 2000 to 2010. Mrs. Bernstein holds an MBA Degree in accounting from Baruch College of CUNY and is a Certified Public Accountant. Mrs. Bernstein has been employed by Value Line, Inc. for more than 25 years. She intends to retire as an employee on July 31, 2022.

2010

Howard A. Brecher* (63)(68). Chairman and Chief Executive Officer of the Company since October 2011; Acting Chairman and Acting Chief Executive Officer of the Company from November 2009 until October 2011; Chief Legal Officer; Vice President and SecretaryOfficer of the Company from prior to 2005 until January 2010;to the present; Vice President and Secretary of the Value Line Funds from June 2008 until December 2010; Secretary of EAM LLC from February 2009 until December 2010; Director and General Counsel of AB&Co., Inc. sincefrom prior to 2005.2005 to the present.

1992

Mr. Brecher has been an officer of the Company for more than 2025 years. In addition to his current roles with the Company, he has also served as Secretary of the Company and as a senior officer of significant affiliates of the Company. Mr. Brecher is a graduate of Harvard College, Harvard Business School and Harvard Law School. He also holds a Master’s Degree in tax law from New York University.

1992

Stephen P. Davis (65)(70). Retired Deputy Commissioner, New York City Police Department (“NYPD”), since January, 2014.from 2014 to 2018. Managing Member, Davis Investigative Group, LLC from 2001 to 2013.2013, and since April, 2018. Mr. Davis servesserved as a senior appointed official in the NYPD from which he retired in 1992 as a uniformed senior officer. He has successfully managed his own business servicingserving the financial services industry and other clients for more than 1115 years.

2010

Alfred R. Fiore (61)(66). Retired Chief of Police, Westport, CT.CT from 2004 to 2011. Mr. Fiore served as the senior official of a municipal department with both executive and budget responsibilities. He was Chief of Police, Westport, CT from 2004 to 2011for seven years and was a member of that Police Department for more than 33 years.

2010

Glenn J. Muenzer (60)(64). Special Agent (Retired), Federal Bureau of Investigation (the “FBI”) from 1991 to 2012. Mr. Muenzer is an accomplished law enforcement professional with extensive law enforcement and financial investigative experience. Prior to joining the FBI, Mr. Muenzer was Vice President and Manager of Internal Audit at Thomson McKinnon Securities, Inc.; Assistant Vice President of Internal Audit at EF Hutton; Senior Auditor with Deloitte. Mr. Muenzer is a Certified Public Accountant and Certified in Financial Forensics.

2012

Stephen R. Anastasio* (58). Vice President of the Company since December 2010; Treasurer since September 2005 and Director since February 2010. Mr. Anastasio has been employed by Value Line, Inc. for more than 25 years. In addition to his current roles with the Company, he has served as Chief Financial Officer, Treasurer, Chief Accounting Officer and Corporate Controller of the Company. Mr. Anastasio is a graduate of Fairleigh Dickinson University and is a Certified Public Accountant.

2010

Mary Bernstein* (67). Director of Accounting of the Company since 2010; Accounting Manager of the Company from 2000 to 2010. Mrs. Bernstein holds an MBA Degree in accounting from Baruch College of CUNY and is a Certified Public Accountant. Mrs. Bernstein has been employed by Value Line, Inc. for more than 20 years.

2010

 

* Member of the Executive Committee of the Board of Directors.

Except as noted, the directors have held their respective positions for at least five years. Information about the experience, qualifications, attributes and skills of the directors is incorporated by reference from the section entitled "Director Qualifications" in the Company's Proxy Statement for the 20172022 Annual Meeting of Shareholders.

 

(b)

(b)

The information pertaining to executive officers of the Company is set forth in Part I, Item I, subsection J under the caption "Executive Officers of the Company is set forth in Part I, Item I, subsection J under the caption "Executive OfficersRegistrant" of the Registrant" of this Form 10-K.

 

40

 

Audit Committee

 

The Company has a standing Audit Committee performing the functions described in Section 3(a) (58) (A) of the Securities Exchange Act of 1934, the members of which are: Mr. Glenn Muenzer, Mr. Stephen Davis, and Mr. Alfred Fiore. Mr. Muenzer, a qualified financial expert, was elected Chairman of the Audit Committee in 2012. The Board of Directors have determined that Mr. Muenzer is an “audit committee financial expert” (as defined in the rules and regulations of the SEC). The Board of Directors believes that the experience and financial sophistication of the members of the Audit Committee are sufficient to permit the members of the Audit Committee to fulfill the duties and responsibilities of the Audit Committee. All members of the Audit Committee meet the NASDAQ’s financial sophistication requirements for audit committee members.

 

Code of Ethics

 

The Company’s Code of Business Conduct and Ethics that applies to its principal executive officer, principal financial officer, all other officers, and all other employees is available on the Company’s website atwww.valueline.com/at www.valueline.com/About/Code of Ethics.aspx.Ethics.aspx.

 

Procedures for Shareholders to Nominate Directors

 

There have been no material changes to the procedures by which shareholders of the Company may recommend nominees to the Company's Board of Directors.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC on Forms 3, 4 and 5. Executive officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Forms 3, 4 and 5 they file.

 

Based on the Company's review of the copies of such forms that it has received and written representations from certain reporting persons confirming that they were not required to file Forms 5 for the fiscal year ended April 30, 2017,2022, the Company believes that all its executive officers, directors and greater than ten percent shareholders complied with applicable SEC filing requirements during fiscal 2017.2022.

 

 

Item 11. EXECUTIVE COMPENSATION.

 

The information required in response to this Item 11, Executive Compensation, is incorporated by reference from the section entitled “Compensation of Directors and Executive Officers” in the Company’s Proxy Statement for the 20172022 Annual Meeting of Shareholders.

 

41

 

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS.

 

The following table sets forth information as of April 30, 20172022 as to shares of the Company's Common Stock held by persons known to the Company to be the beneficial owners of more than 5% of the Company's Common Stock.

 

Name and Address of

Beneficial Owner

 

Number of Shares

Beneficially Owned

  

Percentage of Shares

Beneficially Owned

 

Number of Shares

Beneficially Owned

Percentage of Shares

Beneficially Owned

Arnold Bernhard & Co., Inc.*

  8,633,733   88.9%

8,633,733

90.79%

551 Fifth Avenue

          

New York, NY 10176

          

 

*All of the outstanding voting stock of Arnold Bernhard & Co., Inc. is owned by Jean B. Buttner.

 

The following table sets forth information as of AprilJune 30, 2017,2022, with respect to shares of the Company's Common Stock owned by each director of the Company, by each executive officer listed in the Summary Compensation Table and by all executive officers and directors as a group.

 

Name and Address of Beneficial Owner

 

Number of Shares

Beneficially Owned

  

Percentage of Shares

Beneficially Owned

Name and Address of Beneficial Owner

Stephen R. Anastasio

600*

Mary Bernstein

200* 

Howard A. Brecher

  1,2001,600   * 

Stephen R. AnastasioP. Davis

  500200*

Alfred R. Fiore

400   * 

Glenn J. Muenzer

  300   * 

Stephen P. Davis

200 *

Alfred R. Fiore

300 *

Mary Bernstein

200 *

All directors and executive officers as a group(group

3,300*

(6 persons)

  2,700    * 

 

* Less than one percent

 

Securities Authorized for Issuance under Equity Compensation Plans

 

There are no securities of the Company authorized for issuance under equity compensation plans.

 

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

 

AB&Co., which owns 88.9%90.79% of the outstanding shares of the Company’s common stock as of April 30, 2017,2022, utilizes the services of officers and employees of the Company to the extent necessary to conduct its business. The Company and AB&Co. allocate costs for office space, equipment and supplies and shared staff pursuant to a servicing and reimbursement agreement. During the fiscal years ended April 30, 20172022 and April 30, 2016,2021, the Company was reimbursed $383,000$385,000 and $164,000,$408,000, respectively for payments it made on behalf of and services it provided to AB&Co. There were no receivables due from the Parent at April 30, 20172022 or April 30, 2016.2021. In addition, a tax-sharing arrangement allocates the tax liabilities of the two companies between them. The Company is included in the consolidated federal income tax return filed by AB&Co. The Company pays to AB&Co. an amount equal to the Company's liability as if it filed a separate federal income tax return. For the years ended April 30, 20172022 and 2016,2021, the Company made payments to AB&Co. for federal income taxes amounting to $6,824,000$5,400,000 and $3,545,000,$7,154,000, respectively.

 


As a result of the completion of the Restructuring Transaction on December 23, 2010, the Company no longer receives investment management or distribution services revenues from the Value Line Mutual Funds.

Since December 23, 2010, the Company no longer engages, through subsidiaries, in the investment management or mutual fund distribution businesses. The Company does holdholds non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM's investment management fee revenues from its mutual fundthe Value Line Mutual Funds and separate accounts business, and 50% of EAM’s net profits. EAM currently has no separately managed account clients.

42

 

During the twelve months ended April 30, 20172022 and April 30, 2016,2021, the Company recorded revenuesincome of $7,714,000$18,041,000 and $7,651,000,$17,321,000, respectively, consisting of $7,195,000$15,899,000 and $7,211,000,$15,190,000, from its non-voting revenues interest in EAM and $519,000$2,142,000 and $440,000,$2,131,000, from its non-voting profits interest in EAM without incurring any directly related expenses.

During the twelve months ended April 30, 2015,2020, the Company recorded revenuesincome of $7,970,000,$12,350,000, consisting of $7,346,000,$11,184,000, from its non-voting revenues interest in EAM and $624,000,$1,166,000, from its non-voting profits interest in EAM. EAM without incurring any directly related expenses.

 

Included in the Company’s Investment in EAM Trust are receivables due from EAM of $1,919,000$3,657,000 and $1,750,000$4,664,000 at April 30, 20172022 and April 30, 2016,2021, respectively, for the unpaid portion of Value Line’s non-voting revenues and non-voting profits interests. The non-voting revenues and non-voting profits interests due from EAM are payable to Value Line quarterly under the provisions of the EAM Declaration of Trust.

 

The Company has adopted a written Related Party Transactions Policy as part of its Code of Business Conduct and Ethics.  This policy requires that any related party transaction which would be required to be disclosed under Item 404(a) of Regulation S-K must be approved or ratified by the Audit Committee of the Board of Directors.  Transactions covered for the fiscal year ended April 30, 20172022 include the matters described in the preceding paragraphs of this Item 13.

 

Director Independence

 

The information required with respect to director independence and related matters are incorporated by reference from the section entitled “Compensation of Directors and Executive Officers” in the Company’s Proxy Statement for the 20172022 Annual Meeting of Shareholders.


 

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

Audit and Non-Audit Fees

 

The following table illustrates the fees paid tobilled by the Company’s independent auditor, Horowitz & Ullmann P.C., for services provided:

 

 

Fiscal Years Ended April 30,

  

Fiscal Years Ended April 30,

 
 

2017

  

2016

  

2015

  

2022

 

2021

 

2020

 

Audit fees

 $148,600  $148,000  $144,850  $159,470  $155,400  $155,750 

Audit-related fees

  26,345   31,700   6,625  11,310  9,375  12,320 

Tax related fees

  185,630   137,395   105,568   177,315  171,700  124,395 

Total

 $360,575  $317,095  $257,043  $348,095  $336,475  $292,465 

 

In the above table, in accordance with the SEC's definitions and rules, “audit fees” are fees the Company paidbilled by Horowitz & Ullmann, P.C. for professional services for the audit of the Company's consolidated financial statements for the fiscal years ended April 30, 20172022, 2021 and 20162020 included in Form 10-K and the review of consolidated condensed financial statements and included in Form 10-Qs and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company's consolidated financial statements; and “tax fees” are fees for tax compliance, tax advice and tax planning.

 

43

Audit Committee Pre-Approval Policies and ProceduresProcedures.

 

The Audit Committee of the Company's Board of Directors approves all services provided by Horowitz & Ullmann, P.C., prior to the provision of those services. The Audit Committee has not adopted any specific pre-approval policies and procedures.

 


 

Part IV

 

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

(a)

(1)

Financial Statements - See Part II Item 8.

All other Schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(b)

Exhibits

 

3.1

All other Schedules are omitted because they are not applicable orCertificate of Incorporation of the required informationCompany, as amended through April 7, 1983, is shown inincorporated by reference to Exhibit 3.1 to the financial statements or notes thereto.Registration Statement on Form S-1 of Value Line, Inc. filed with the SEC on April 7, 1983.

 

(b)

Exhibits

3.1

Certificate of Incorporation of the Company, as amended through April 7, 1983, is incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of Value Line, Inc. filed with the SEC on April 7, 1983.

 

3.2

Certificate of Amendment of Certificate of Incorporation dated October 24, 1989 is incorporated by reference to Exhibit 3.2 to the Amended Annual Report on Form 10-K/A for the year ended April 30, 2008 filed with the SEC on June 5,8, 2009.

 

 

3.3

By-laws of the Company, as amended through January 18, 1996, are incorporated by reference to Exhibit 3.199. (A) 3 to the Amended Quarterly Report on Form 10-Q/A for the quarter ended January 31, 1996 filed with the SEC on March 19, 1996.

 

 

10.1

Form of tax allocation arrangement between the Company and AB&Co., Inc. is incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 of Value Line, Inc. filed with the SEC on April 7, 1983.

 

 

10.2

Form of Servicing and Reimbursement Agreement between the Company and AB&Co. Inc., dated as of November 1, 1982, is incorporated by reference to Exhibit 10.9 to the Registration Statement on Form S-1 of Value Line, Inc. filed with the SEC on April 7, 1983.

10.3(a)

Lease, dated as of June 4, 1993, for the Company’s premises at 220 East 42nd Street, New York, NY, is incorporated by reference to Exhibit 10.1310.9 to the Annual ReportRegistration Statement on Form 10-K for the year ended April 30, 1994S-1 of Value Line, Inc. filed with the SEC on June 17, 1994.April 7, 1983.

 

10.3(b)

Amendment to Lease, dated September 14, 2000, is incorporated by reference to Exhibit 10.14 to the Amended Annual Report on Form 10-K/A for the year ended April 30, 2001 filed with the SEC on August 17, 2001.

10.3(c)

Amendment to Lease, dated April 23, 2007, is incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K for the year ended April 30, 2007 filed with the SEC on July 20, 2007.

 

10.4

Form of indemnification agreement, dated July 13, 2010, by and between the Company and each of Howard A. Brecher, Stephen Davis, Alfred Fiore, William E. Reed, Mitchell E. Appel, Stephen R. Anastasio and Thomas T. Sarkany is incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K for the year ended April 30, 2010 filed with the SEC on July 16, 2010.

 

 

10.5

EULAV Asset Management Declaration of Trust dated as of December 23, 2010 is incorporated by reference to Exhibit 10.1610 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2011 filed with the SEC on March 24, 2011.

 

 

10.6(a)

Agreement of Sublease, dated as of February 7, 2013, for the Company’s premises at 485 Lexington Ave., New York, NY, is incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 filed with the SEC on March 13, 2013.

 

44

 

10.6(b)

Lease Modification, dated as of February 7, 2013, is incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2013 filed with the SEC on March 13, 2013.

 

 

10.7

Agreement of Lease, dated as of February 29, 2016, between the Company’s subsidiary, VLDC and SPG 205 Chubb Ave., Lyndhurst, NJ, is incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended January 31, 2016 filed with the SEC on March 11, 2016.

 

10.8

Agreement of Sublease, dated as of October 3, 2016, possession commencing December 1, 2016 forThe Company’s premises at 551 Fifth Ave., New York, NY and Consent of Landlord datedNovemberdated November 30, 2016,is incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form10-QForm 10-Q for the quarter ended October 31, 2016 filed with the SEC on December 13, 2016.

 

 

14.1

Code of Business Conduct and Ethics is incorporated by reference to Exhibit 14.1 to the QuarterlyAnnual Report on Form 10-Q10-K for the quarterfiscal year ended January 31, 2011April 30, 2021 filed with the SEC on March 24, 2011.July 29, 2021.

 

 

2121.1

List of subsidiaries of Value Line, Inc.*

 

 

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 

 

31.2

Certification of Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 

 

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Annual Report on Form 10-K.*

 

 

32.2

Certification of the Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Annual Report on Form 10-K.*

 

 

99.1

EULAV Asset Management Audited Consolidated Financial Statements as of April 30, 2016.2022. Separate financial statements of subsidiaries not consolidated and fifty percent or less owned persons.*

 

* Filed herewith.

 

 

101.INS

 

101.SCH

 

101.CAL

 

101.DEF

 

101.LAB

 

101.PRE

Inline XBRL Instance Document

 

Inline XBRL Taxonomy Extension Schema Document

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

 

45

 

SIGNATURES

 

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

 

VALUE LINE, INC.

(Registrant)

 

VALUE LINE, INC.

(Registrant)

By:

/s/ Howard A. Brecher                  
  

By:

/s/ Howard A. Brecher

Howard A. Brecher

Chairman & Chief Executive Officer

(Principal Executive Officer)

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

 

 

By:

/s/ Howard A. Brecher                  

Howard A. Brecher

Chairman & Chief Executive Officer and Director

(Principal Executive Officer)

 

By:/s/ Stephen R. Anastasio        
  (Principal Executive Officer)
By:/s/

Stephen R. Anastasio

Stephen R. Anastasio

Vice President & Treasurer and Director

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

Dated: July 25, 201726, 2022

 

46

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned on behalf of the Registrant as Directors of the Registrant.

 

 

 

 

/s/Glenn J. Muenzer

Glenn Muenzer

Director

 

                   

/s/ Stephen P. Davis                             

Stephen Davis                                     

Director                           

 

 

/s/ Alfred R. Fiore                                           

Alfred Fiore

Director

 

 

/s/ Mary Bernstein                            

Mary Bernstein         

Director

 

 

                  

 

 

Dated: July 25, 2017

26, 2022

 

47

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Shareholders and
Board of Directors and
Stockholders of Value Line, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Value Line, Inc. and Subsidiaries (the “Company”) as of April 30, 20172022 and 2016,2021, and the related consolidated statements of income, comprehensive income, stockholders’changes in shareholders’ equity, and cash flows for each of the three years in the period ended April 30, 2017. The2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management is responsible for these financial statements.management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The companyCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits, we are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

 

48

In our opinion,

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the financial statements referred to above present fairly, in all material respects,current period audit of the consolidated financial positionstatements that was communicated or required to be communicated to the audit committee and that (i) relates to the accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgements. The communication of Value Line, Inc.critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Investment in Unconsolidated Entity

As described in note 4 to the consolidated financial statements, the Company uses the equity method of accounting to report its investment in its unconsolidated entity. As of April 30, 2017, and 2016,2022, the carrying value of the investment was $59,971,000. On an annual basis, management performs an impairment assessment to ensure that the carrying value of the investment in its unconsolidated entity is properly reflected.

The principal considerations for our determination that performing procedures relating to such assessment is a critical audit matter are that there were significant judgements made by management in estimating the fair value of the investment and the consolidatedfact that management utilized a specialist to assist in its determination of fair value. This in turn led to a high degree of auditor judgement, subjectivity, and audit effort in evaluating management’s estimation of the fair value of the investment in its unconsolidated entity, including management’s assessment of the unconsolidated entity’s financial condition and results of its operationsoperations.

Addressing the matter involved performing procedures and its cash flowsevaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, reviewing management’s process for eachestimating the fair value of the three yearsinvestment in its unconsolidated entity, evaluating the appropriateness of the valuation model, testing the completeness and accuracy of data used in the period ended April 30, 2017 in conformity with accounting principles generally accepted inmodel, and evaluating the United States of America.significant assumptions used by management.

 

/s/ Horowitz & Ullmann, P.C.

 

We have served as the Company’s auditor since 1996.

New York, NY

July 25, 201726, 2022

 

49

 

Part II

 Item 8.

 

Part II

Item 8.

Value Line, Inc.

Consolidated Balance Sheets

(in thousands, except share amounts)

 

  

April 30,

  

April 30,

 
  

2022

  

2021

 
         

Assets

        

Current Assets:

        

Cash and cash equivalents (including short term investments of $28,965 and $18,209, respectively)

 $29,703  $19,171 

Equity securities

  17,647   23,582 

Available-for-sale Fixed Income securities

  10,475   2,600 

Accounts receivable, net of allowance for doubtful accounts of $31 and $36, respectively

  1,677   3,985 

Prepaid and refundable income taxes

  588   616 

Prepaid expenses and other current assets

  1,248   1,282 

Total current assets

  61,338   51,236 
         

Long term assets:

        

Investment in EAM Trust

  59,971   60,977 

Restricted money market investments

  305   469 

Property and equipment, net

  7,058   8,311 

Capitalized software and other intangible assets, net

  71   143 

Total long term assets

  67,405   69,900 
         

Total assets

 $128,743  $121,136 
         

Liabilities and Shareholders' Equity

        

Current Liabilities:

        

Accounts payable and accrued liabilities

 $1,314  $2,077 

Accrued salaries

  1,137   1,163 

Dividends payable

  2,378   2,104 

Accrued taxes on income

  2   0 

Loan obligation-short term

  0   2,331 

Operating lease obligation-short term

  1,239   1,087 

Unearned revenue

  17,688   19,162 

Total current liabilities

  23,758   27,924 
         

Long term liabilities:

        

Unearned revenue

  6,085   5,926 

Operating lease obligation-long term

  6,129   7,368 

Deferred income taxes

  13,126   12,905 

Total long term liabilities

  25,340   26,199 

Total liabilities

  49,098   54,123 
         

Shareholders' Equity:

        

Common stock, $0.10 par value; authorized 30,000,000 shares; issued 10,000,000 shares

  1,000   1,000 

Additional paid-in capital

  991   991 

Retained earnings

  87,645   72,502 

Treasury stock, at cost (490,157 shares and 436,830 shares, respectively)

  (9,967)  (7,483)

Accumulated other comprehensive income, net of tax

  (24)  3 

Total shareholders' equity

  79,645   67,013 
         

Total liabilities and shareholders' equity

 $128,743  $121,136 

See independent auditor's report and accompanying notes to the consolidated financial statements.

50

Part II

 Item 8.

Value Line, Inc.

Consolidated Statements of Income

(in thousands, except share & per share amounts)

  

For the Fiscal Years Ended

 
  

April 30,

 
  

2022

  

2021

  

2020

 
             

Revenues:

            

Investment periodicals and related publications

 $27,145  $27,629  $27,628 

Copyright fees

  13,380   12,763   12,671 

Total publishing revenues

  40,525   40,392   40,299 
             

Expenses:

            

Advertising and promotion

  3,223   3,745   3,350 

Salaries and employee benefits

  17,323   18,865   18,189 

Production and distribution

  5,003   5,440   4,945 

Office and administration

  4,176   4,807   4,725 

Total expenses

  29,725   32,857   31,209 

Income from operations

  10,800   7,535   9,090 
             

Gain on forgiveness of SBA loan

  2,331   0   0 
             

Revenues interest in EAM Trust

  15,899   15,190   11,184 

Profits interest in EAM Trust

  2,142   2,131   1,166 

Investment gains/(losses)

  (534)  5,420   (789)

Income before income taxes

  30,638   30,276   20,651 

Income tax provision

  6,816   6,996   5,708 

Net income

 $23,822  $23,280  $14,943 
             

Earnings per share, basic & fully diluted

 $2.50  $2.43  $1.55 
             
             

Weighted average number of common shares

  9,544,421   9,596,912   9,646,885 

See independent auditor's report and accompanying notes to the consolidated financial statements.

51

Part II

 Item 8.

Value Line, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

  

For the Fiscal Years Ended

 
  

April 30,

 
  

2022

  

2021

  

2020

 
             
             

Net income

 $23,822  $23,280  $14,943 
             

Other comprehensive income/(loss), net of tax:

            

Change in unrealized gains on Fixed Income securities, net of taxes

  (27)  (128)  97 

Other comprehensive income/(loss)

  (27)  (128)  97 

Comprehensive income

 $23,795  $23,152  $15,040 

See independent auditor's report and accompanying notes to the consolidated financial statements.

52

Part II

 Item 8.

Value Line, Inc.

Consolidated Statements of Cash Flows

(in thousands)

  

For the Fiscal Years Ended

 
  

April 30,

 
  

2022

  

2021

  

2020

 

Cash flows from operating activities:

            

Net income

 $23,822  $23,280  $14,943 

Adjustments to reconcile net income to net cash provided by operating activities:

            

Depreciation and amortization

  1,336   1,293   266 

Investment (gains)/losses

  1,402   (4,710)  1,414 

Non-voting profits interest in EAM Trust

  (2,142)  (2,131)  (1,166)

Non-voting revenues interest in EAM Trust

  (15,899)  (15,190)  (11,184)

Revenues distribution received from EAM Trust

  16,608   13,907   10,588 

Profits distributions received from EAM Trust

  2,439   1,602   1,222 

Full forgiveness of SBA, PPP loan

  (2,331)  0   0 

Deferred rent

  (1,087)  (962)  99 

Deferred income taxes

  (89)  543   154 

Changes in operating assets and liabilities:

            

Unearned revenue

  (1,315)  350   (745)

Accounts payable & accrued expenses

  (763)  21   (12)

Accrued salaries

  (26)  18   (66)

Accrued taxes on income

  321   (1,487)  898 

Prepaid and refundable income taxes

  28   (616)  254 

Prepaid expenses and other current assets

  34   39   14 

Accounts receivable

  2,308   453   (2,934)

Total adjustments

  824   (6,870)  (1,198)

Net cash provided by operating activities

  24,646   16,410   13,745 
             

Cash flows from investing activities:

            

Purchases/sales of securities classified as available-for-sale:

            

Proceeds from sales of equity securities

  12,039   8,212   4,387 

Purchases of equity securities

  (7,508)  (12,958)  (9,302)

Proceeds from sales of Fixed Income securities

  2,496   14,902   8,663 

Purchases of Fixed Income securities

  (10,405)  (2,597)  (12,403)

Acquisition of property and equipment

  (11)  (33)  (2)

Expenditures for capitalized software

  0   (145)  0 

Net cash provided by/(used in) investing activities

  (3,389)  7,381   (8,657)
             

Cash flows from financing activities:

            

Purchase of treasury stock at cost

  (2,484)  (1,526)  (1,214)

Proceeds from SBA loan

  0   0   2,331 

Receivable from clearing broker

  0   608   (608)

Payable to clearing broker

  0   (588)  588 

Dividends paid

  (8,405)  (8,068)  (7,724)

Net cash used in financing activities

  (10,889)  (9,574)  (6,627)

Net change in cash and cash equivalents

  10,368   14,217   (1,539)

Cash, cash equivalents and restricted cash at beginning of year

  19,640   5,423   6,962 

Cash, cash equivalents and restricted cash at end of year

 $30,008  $19,640  $5,423 

See independent auditor's report and accompanying notes to the consolidated financial statements.

53

Part II

 Item 8.

Value Line, Inc.

Consolidated Statements of Changes in Shareholders' Equity

For the Fiscal Years Ended April 30, 2022, 2021 and 2020

(in thousands, except share amounts)

  Common stock  

Additional paid-in

  Treasury Stock  

Retained

  

Accumulated Other Comprehensive

     
  

Shares

  

Amount

  

capital

  

Shares

  

Amount

  

earnings

  

income

  

Total

 

Balance as of April 30, 2019

  10,000,000  $1,000  $991   (336,439) $(4,743) $50,242  $34  $47,524 
                                 

Net income

                      14,943       14,943 

Change in unrealized gains on

                                

Fixed Income securities, net of taxes

                          97   97 

Purchase of treasury stock

              (46,840)  (1,214)          (1,214)

Dividends declared

                      (7,811)      (7,811)

Balance as of April 30, 2020

  10,000,000  $1,000  $991   (383,279) $(5,957) $57,374  $131  $53,539 

Dividends declared per share were $0.20 for each of the three months ended July 31, 2019, October 31, 2019 and January 31, 2020 and $0.21 for the three months ended April 30, 2020.

  

Common stock

  

Additional paid-in

  

Treasury Stock

  

Retained

  

Accumulated Other Comprehensive

     
  

Shares

  

Amount

  

capital

  

Shares

  

Amount

  

earnings

  

income

  

Total

 

Balance as of April 30, 2020

  10,000,000  $1,000  $991   (383,279) $(5,957) $57,374  $131  $53,539 
                                 

Net income

                      23,280       23,280 

Change in unrealized gains on

                                

Fixed Income securities, net of taxes

                          (128)  (128)

Purchase of treasury stock

              (53,551)  (1,526)          (1,526)

Dividends declared

                      (8,152)      (8,152)

Balance as of April 30, 2021

  10,000,000  $1,000  $991   (436,830) $(7,483) $72,502  $3  $67,013 

Dividends declared per share were $0.21 for each of the three months ended July 31, 2020, October 31, 2020 and January 31, 2021 and $0.22 for the three months ended April 30, 2021.

  

Common stock

  

Additional paid-in

  

Treasury Stock

  

Retained

  

Accumulated Other Comprehensive

     
  

Shares

  

Amount

  

capital

  

Shares

  

Amount

  

earnings

  

income

  

Total

 

Balance as of April 30, 2021

  10,000,000  $1,000  $991   (436,830) $(7,483) $72,502  $3  $67,013 
                                 

Net income

                      23,822       23,822 

Change in unrealized gains on

                                

Fixed Income securities, net of taxes

                          (27)  (27)

Purchase of treasury stock

              (53,327)  (2,484)          (2,484)

Dividends declared

                      (8,679)      (8,679)

Balance as of April 30, 2022

  10,000,000  $1,000  $991   (490,157) $(9,967) $87,645  $(24) $79,645 

Dividends declared per share were $0.22 for each of the three months ended July 31, 2021, October 31, 2021 and January 31, 2022 and $0.25 for the three months ended April 30, 2022.

See independent auditor's report and accompanying notes to the consolidated financial statements.

54
Value Line, Inc.

Consolidated Balance Sheets

(in thousands, except share amounts)

  

April 30,

  

April 30,

 
  

2017

  

2016

 
         

Assets

        

Current Assets:

        

Cash and cash equivalents (including short terminvestments of $6,066 and $12,037, respectively)

 $6,557  $13,122 

Securities available-for-sale

  16,576   3,637 

Accounts receivable, net of allowance for doubtfulaccounts of $20 and $22, respectively

  1,018   1,254 

Prepaid and refundable income taxes

  72   126 

Prepaid expenses and other current assets

  1,567   1,381 

Deferred income taxes

  348   432 

Total current assets

  26,138   19,952 
         

Long term assets:

        

Investment in EAM Trust

  58,223   57,942 

Restricted money market investments

  469   - 

Property and equipment, net

  1,239   3,621 

Capitalized software and other intangible assets, net

  1,003   4,992 

Total long term assets

  60,934   66,555 
         

Total assets

 $87,072  $86,507 
         

Liabilities and Shareholders' Equity

        

Current Liabilities:

        

Accounts payable and accrued liabilities

 $1,257  $2,669 

Accrued salaries

  1,285   1,066 

Dividends payable

  1,748   1,659 

Accrued taxes on income

  112   388 

Unearned revenue

  20,188   20,516 

Total current liabilities

  24,590   26,298 
         

Long term liabilities:

        

Unearned revenue

  5,471   4,926 

Deferred charges

  432   - 

Deferred income taxes

  18,725   20,683 

Total long term liabilities

  24,628   25,609 

Total liabilities

  49,218   51,907 
         

Shareholders' Equity:

        

Common stock, $0.10 par value; authorized 30,000,000shares; issued 10,000,000 shares

  1,000   1,000 

Additional paid-in capital

  991   991 

Retained earnings

  39,186   35,524 

Treasury stock, at cost (288,335 sharesand 243,411 shares, respectively)

  (3,781)  (3,040)

Accumulated other comprehensive income, net of tax

  458   125 

Total shareholders' equity

  37,854   34,600 
         

Total liabilities and shareholders' equity

 $87,072  $86,507 

See independent auditor's report and accompanying notes to the consolidated financial statements.


Part II

Item 8.

Value Line, Inc.

Consolidated Statements of Income

(in thousands, except share & per share amounts)

  

For the Fiscal Years Ended

 
  

April 30,

 
  

2017

  

2016

  

2015

 
             

Revenues:

            

Investment periodicals and related publications

 $30,168  $31,925  $32,676 

Copyright data fees

  4,406   2,621   2,847 

Total publishing revenues

  34,574   34,546   35,523 

Gain on sale of operating facility

  8,123   -   - 

Total revenues

  42,697   34,546   35,523 
             

Expenses:

            

Advertising and promotion

  3,473   3,685   4,984 

Salaries and employee benefits

  17,477   15,702   15,935 

Production and distribution

  9,063   8,725   7,081 

Office and administration

  5,225   4,554   5,124 

Total expenses

  35,238   32,666   33,124 

Income from operations

  7,459   1,880   2,399 
             

Revenues interest in EAM Trust

  7,195   7,211   7,346 

Profits interest in EAM Trust

  519   440   624 

Income from securities transactions, net

  312   477   126 

Income before income taxes

  15,485   10,008   10,495 

Income tax provision

  5,118   2,717   3,203 

Net income

 $10,367  $7,291  $7,292 
             

Earnings per share, basic & fully diluted

 $1.07  $0.75  $0.74 
             
             

Weighted average number of common shares

  9,721,958   9,781,495   9,813,623 

See independent auditor's report and accompanying notes to the consolidated financial statements.


Part II

Item 8.

Value Line, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

  

For the Fiscal Years Ended

 
  

April 30,

 
  

2017

  

2016

  

2015

 
             

Net income

 $10,367  $7,291  $7,292 
             

Other comprehensive income/(loss), net of tax:

            

Change in unrealized gains on securities, net of taxes

  333   20   (141)

Other comprehensive income/(loss)

  333   20   (141)

Comprehensive income

 $10,700  $7,311  $7,151 

See independent auditor's report and accompanying notes to the consolidated financial statements.


Part II

Item 8.

Value Line, Inc.

Consolidated Statements of Cash Flows

(in thousands)

  

For the Fiscal Years Ended

 
  

April 30,

 
  

2017

  

2016

  

2015

 

Cash flows from operating activities:

            

Net income

 $10,367  $7,291  $7,292 

Adjustments to reconcile net income to net cash (used in)/provided by operating activities:

            

Depreciation and amortization

  4,623   3,817   2,715 

Non-voting revenues interest in EAM Trust

  (7,195)  (7,211)  (7,346)

Non-voting profits interest in EAM Trust

  (519)  (440)  (624)

Realized gain on sales of operating facilty

  (8,123)  -   - 

Realized gain on sales of equity securities

  -   (329)  - 

Deferred rent

  265   (200)  (200)

Deferred income taxes

  (1,711)  (1,301)  (237)

Other, net

  (60)  -   - 

Changes in operating assets and liabilities:

            

Unearned revenue

  217   (605)  923 

Accounts payable & accrued expenses

  (1,245)  915   (642)

Accrued salaries

  219   (153)  (130)

Accrued taxes on income

  (620)  (2)  (249)

Prepaid and refundable income taxes

  54   (12)  61 

Prepaid expenses and other current assets

  (186)  79   47 

Accounts receivable

  236   155   (203)

Total adjustments

  (14,045)  (5,287)  (5,885)

Net cash (used in)/provided by operating activities

  (3,678)  2,004   1,407 
             

Cash flows from investing activities:

            

Purchases/sales of securities classified as available-for-sale:

            

Proceeds from sales of equity securities

  53   10,206   57 

Purchases of equity securities

  (4,993)  (3,854)  (656)

Proceeds from sales of fixed income securities

  750   -   - 

Purchases of fixed income securities

  (8,235)  -   - 

Revenues distribution received from EAM Trust

  7,053   7,372   7,238 

Profits distributions received from EAM Trust

  440   445   594 

Net proceeds from sale of operating facility

  11,555   -   - 

Restricted money market investment

  (469)  -   - 

Acquisition of property and equipment

  (1,276)  (227)  (120)

Expenditures for capitalized software

  (408)  (1,735)  (2,424)

Net cash provided by investing activities

  4,470   12,207   4,689 
             

Cash flows from financing activities:

            

Purchase of treasury stock at cost

  (741)  (796)  (122)

Dividends paid

  (6,616)  (6,167)  (5,888)

Net cash used for financing activities

  (7,357)  (6,963)  (6,010)

Net change in cash and cash equivalents

  (6,565)  7,248   86 

Cash and cash equivalents at beginning of year

  13,122   5,874   5,788 

Cash and cash equivalents at end of year

 $6,557  $13,122  $5,874 

See independent auditor's report and accompanying notes to the consolidated financial statements.


Part II

Item 8.

Value Line, Inc.

Consolidated Statements of Changes in Shareholders' Equity

For the Fiscal Years Ended April 30, 2017, 2016 and 2015

(in thousands, except share amounts)

  

Common stock

  

Additional

paid-in

  

Treasury Stock

  

Retained

  

Accumulated Other Comprehensive

     
  

Shares

  

Amount

  

capital

  

Shares

  

Amount

  

earnings

  

income

  

Total

 

Balance as of April 30, 2014

  10,000,000  $1,000  $991   (182,071) $(2,122) $33,183  $246  $33,298 
                                 

Net income

                      7,292       7,292 

Change in unrealized gains onsecurities, net of taxes

                          (141)  (141)

Purchase of treasury stock

              (8,433)  (122)          (122)

Dividends declared

                      (5,888)      (5,888)

Balance as of April 30, 2015

  10,000,000  $1,000  $991   (190,504) $(2,244) $34,587  $105  $34,439 

Dividends declared per share were $0.15 for each of the three months ending July 31, 2014, October 31, 2014, January 31, 2015 and April 30, 2015.

  

Common stock

  

Additional paid-in

  

Treasury Stock

  

Retained

  

Accumulated Other Comprehensive

     
  

Shares

  

Amount

  

capital

  

Shares

  

Amount

  

earnings

  

income

  

Total

 

Balance as of April 30, 2015

  10,000,000  $1,000  $991   (190,504) $(2,244) $34,587  $105  $34,439 
                                 

Net income

                      7,291       7,291 

Change in unrealized gains onsecurities, net of taxes

                          20   20 

Purchase of treasury stock

              (52,907)  (796)          (796)

Dividends declared

                      (6,354)      (6,354)

Balance as of April 30, 2016

  10,000,000  $1,000  $991   (243,411) $(3,040) $35,524  $125  $34,600 

Dividends declared per share were $0.16 for each of the three months ending July 31, 2015, October 31, 2015 and January 31, 2016 and $0.17 for the three monthsended April 30, 2016.

  

Common stock

  

Additional

paid-in

  

Treasury Stock

  

Retained

  

Accumulated Other Comprehensive

     
  

Shares

  

Amount

  

capital

  

Shares

  

Amount

  

earnings

  

income

  

Total

 

Balance as of April 30, 2016

  10,000,000  $1,000  $991   (243,411) $(3,040) $35,524  $125  $34,600 
                                 

Net income

                      10,367       10,367 

Change in unrealized gains onsecurities, net of taxes

                          333   333 

Purchase of treasury stock

              (44,924)  (741)          (741)

Dividends declared

                      (6,705)      (6,705)

Balance as of April 30, 2017

  10,000,000  $1,000  $991   (288,335) $(3,781) $39,186  $458  $37,854 

Dividends declared per share were $0.17 for each of the three months ending July 31, 2016, October 31, 2016 and January 31, 2017 and $0.18 for the three monthsended April 30, 2017.

See independent auditor's report and accompanying notes to the consolidated financial statements.


Value Line, Inc.

Notes to Consolidated Financial Statements

 

Note 1-Organization1-Organization and Summary of Significant Accounting Policies:

 

Value Line, Inc. ("Value Line" or "VLI", and collectively with its subsidiaries, the “Company”) is incorporated in the State of New York.  The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company.  The Company's primarycore business is producing investment periodicals and related publicationstheir underlying research and making available copyright data including certain Value Line copyrights, Value Line trademarks and Value Line Proprietary Ranking SystemRanks and other proprietary information, to third parties under written agreements for use in third party-party managed and marketed investment products.products and for other purposes.  The Company maintains a significant investment in the Eulav Asset Management LLC ("EAM")  from which it receivedreceives a non-voting revenues interest  and a non-voting profits interest. EAM was established to provide investment management services to the Value Line Mutual Funds ("Value Line Funds" or the "Funds").

Prior to December 23, 2010 (the "Restructuring Date"), VLI, through its direct subsidiary EULAV Asset Management LLC ("EAM LLC"), provided investment management services to the Value Line Funds, institutions and individual accounts, and, through EAM LLC's subsidiary EULAV Securities, Inc. ("ESI"), provided distribution, marketing, and administrative services to the Value Line Funds. On December 23, 2010, the Company deconsolidated the asset management and mutual fund distribution subsidiaries and exchanged its controlling interest in these subsidiaries for a non-voting revenues interest and a non-voting profits interest in EULAV Asset Management Trust, a Delaware business statutory trust ("EAM" or "EAM Trust"), the successor to EAM LLC and the sole member of EULAV Securities LLC ("ES"), the successor to ESI, (the "Restructuring Transaction").  Pursuant to the EAM Declaration of Trust dated as of December 23, 2010 (the(the "EAM Trust Agreement"), VLI granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply, without charge or expense, the Value Line Proprietary Ranking System information to EAM for use in managing the Value Line Funds.  EAM was established to provide investment management services to the Value Line Mutual Funds ("Value Line Funds" or the "Funds").

 

Use of Estimates:

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.

 

Principles of Consolidation:

 

The Company follows the guidance in the Financial Accounting Standards Board's ("FASB") Topic 810 “Consolidation” to determine if it should consolidate its investment in a variable interest entity ("VIE"). A VIE is a legal entity in which either (i) equity investors do not have sufficient equity investment at risk to enable the entity to finance its activities independently or (ii) the equity holders at risk lack the obligation to absorb losses, the right to receive residual returns or the right to make decisions about the entity’s activities that most significantly affect the entity's economic performance.  A holder of a variable interest in a VIE is required to consolidate the entity if it is determined that it has a controlling financial interest in the VIE and is therefore the primary beneficiary.  The determination of a controlling financial interest in a VIE is based on a qualitative assessment to identify the variable interest holder, if any, that has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) either the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE.  The accounting guidance requires the Company to perform an ongoing assessment of whether the Company is the primary beneficiary of a VIE and the Company has determined it is not the primary beneficiary of a VIE (see Note 5)5).

 

In accordance with FASB's Topic 810, the assets, liabilities, and results of operations of subsidiaries in which the Company has a controlling interest have been consolidated.  All significant intercompany accounts and transactions have been eliminated in consolidation.  On December 23, 2010, theThe Company completed the Restructuring Transaction and deconsolidated the related affiliates in accordance with FASB's Topic 810. As part of the Restructuring Transaction, the Company receivedholds a significant non-voting revenues interest (excluding distribution revenues) and a significant non-voting profits interest in the new entity, EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”).  The Company relied on the guidance in FASB's ASC Topics 323 and 810 in its determination not to consolidate its investment in EAM and to account for such investment under the equity method of accounting. The Company reports the amount it receives for its non-voting revenues and non-voting profits interests as a separate line item below operating income in the Consolidated Statements of Income.

 

Revenue Recognition:

 

Depending upon the product, subscription fulfillment for Value Line periodicals and related publications is available in print or digitally, via internet access.  The length of a subscription varies by product and offer received by the subscriber.  Generally, subscriptions are offered as annual subscriptions.subscriptions with the majority of subscriptions paid in advance.  Subscription revenues, net of discounts, are recognized ratably on a straight line basis when the product is served to the client over the life of the subscription.  Accordingly, the amount of subscription fees to be earned by fulfilling subscriptions after the date of the balance sheets are shown as unearned revenue within current and long termlong-term liabilities.

 

Copyright data revenuesfees are derived from providing certain Value Line trademarks and the Value Line Proprietary Ranking System informationRanks to third parties under written agreements for use in selecting securities for third party marketed products, including unit investment trusts, annuities and exchange traded funds ("ETFs").  The Company earns asset-based copyright data fees upon delivery of the product to the customer as specified in the individual agreements.  Revenue is recognized monthly and received either quarterly or in advance over the term of the agreement and, because it is asset-based, will fluctuate as the market value of the underlying portfolio increases or decreases in value.

 

EAM earns investment management fees from the Value Line Funds.  The management fees and average daily net assets for the Value Line Funds are calculated by State Street Bank, which serves as the fund accountant, fund administrator, and custodian of the Value Line Funds.

 

The Value Line Funds are open-end management companies registered under the Investment Company Act of 1940 (the "1940"1940 Act").  Shareholder transactions for the Value Line Funds are processed each business day by the third party transfer agent of the Funds.  Shares can be redeemed without advance notice upon request of the shareowners each day that the New York Stock Exchange is open.

 

55
 

Value Line, Inc.

Notes to Consolidated Financial Statements

Investment in Unconsolidated Entities:

 

The Company accounts for its investment in its unconsolidated entity, EAM, using the equity method of accounting in accordance with FASB’s ASC 323.  The equity method is an appropriate means of recognizing increases or decreases measured by GAAP in the economic resources underlying the investments.  Under the equity method, an investor recognizes its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend or distribution. An investor adjusts the carrying amount of an investment for its share of the earnings or losses recognized by the investee.

 

The Company’s “interests” in EAM, the investment adviser to and the sole member of the distributor of the Value Line Funds, consist of a "non-voting revenues interest" and a "non-voting profits interest" in EAM as defined in the EAM Trust Agreement.  The non-voting revenues interest entitles the Company to receive a range of 41% to 55%, based on the amount of EAM’s adjusted gross revenues, excluding EULAV Securities' distribution revenues (“Revenues Interest”).  The non-voting profits interest entitles the Company to receive 50% of EAM's profits, subject to certain limited adjustments as defined in the EAM Trust Agreement (“Profits Interest”).  The Revenues Interest and at least 90% of the Profits Interest are to be distributed each quarter to all interest holders of EAM, including Value Line. Subsequent to the Restructuring Date, theThe Company's Revenues Interest in EAM excludes participation in the service and distribution fees of EAM's subsidiary EULAV Securities.  The Company reflects its non-voting revenues and non-voting profits interests in EAM as non-operating income under the equity method of accounting subsequent to the Restructuring Transaction.accounting. Although the Company does not have control over the operating and financial policies of EAM, pursuant to the EAM Trust Agreement, the Company has a contractual right to receive its share of EAM's revenues and profits.

 

Recent Accounting Pronouncements:

 

In November 2015, December 2019, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU 2015-17,2019-12, “Income Taxes (Topic740): Simplifying the Accounting for Income Taxes” as part of its initiative to reduce complexity in the accounting standards.  The standard eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes (Topic 740): Balance Sheet Classificationin an interim period and the recognition of Deferred Taxes. Under existing standards, deferred taxes for each tax-paying jurisdiction are presented as a net current asset or liability and net long-term asset or liability. To simplify presentation, the new guidance will require that all deferred tax assets and liabilities, along with related valuation allowances, be classified as long-term on the balance sheet. As a result, each tax-paying jurisdiction will now only have one net long-term asset or liability. The new guidance does not change the existing requirement that prohibits offsetting deferred tax liabilities from one jurisdiction against deferredfor outside basis differences. The standard also clarifies and simplifies other aspects of the accounting for income taxes including interim-period accounting for enacted changes in tax assets of another jurisdiction. ASU 2015-17 islaws. The Company adopted this guidance effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, which will be our fiscal year 2018 beginning May 1, 2017. Due to the full valuation allowance on our U.S. deferred tax assets, we do not expect the2021.  The adoption of ASU 2015-17 tothis standard did not have a material impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02"). The core principle of Topic 842 requires that a lessee should recognize the assets and liabilities on the balance sheet and disclose key information about leasing arrangements. The amendments in ASU 2016-2 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The guidance is required to be adopted at the earliest period presented using a modified retrospective approach. The Company is in the process of evaluating the impact of this standard on the consolidatedCompany’s financial statements.

 

In August, 2016, On June 21, 2018, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (United States Supreme Court reversed the 1992 ruling in Quill, which protected firms delivering items by common carrier into a consensusstate where it had no physical presence from having to collect sales tax in such state.  The Company has  integrated the effects of the Emerging Issues Task Force) ( “ASU 2016-15”). The amendments in ASU 2016-15 address eight specific cash flow issuesvarious state laws into its operations and applycontinues to all entities that are required to present a statement of cash flows under ASC Topic 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption during an interim period. The Company is in the process of evaluating the impact of this standard on the consolidated financial statements.do so.

 

Valuation of Securities:

 

The Company's securities classified as cash equivalents, equity securities and available-for-sale fixed income securities consist of shares of money market funds that invest primarily in short-term U.S. Government securities and investments in equities including ETFs and are valued in accordance with the requirements of the Fair Value Measurements Topic of the FASB's ASC 820.  The securities classified as equity securities reflected in the Consolidated Balance Sheets are valued at market and unrealized gains and losses are recorded in the Consolidated Statements of Income per FASB Accounting Standards Update No.2016-01 ("ASU 2016-01").  The securities classified as available-for-sale  fixed income securities reflected in the Consolidated Balance Sheets are valued at market and unrealized gains and losses, net of applicable taxes, are reported as a separate component of shareholders' equity. RealizedInvestment gains and losses on sales of the equity securities classified asare the difference between proceeds from sales and the fair value of the equity securities sold at the beginning of the period or the purchase date, if later.  Investment gains and losses on sales of the available-for-sale fixed income securities are the difference between proceeds from sales and the cost of the securities.  Investment gains and losses on sales of the securities are recorded in earnings as of the trade date and are determined on the identified cost method.

 

The Company classifies its equity securities and available-for-sale fixed income securities as current assets to properly reflect its liquidity and to recognize the fact that it has liquid assets available-for-sale should the need arise.

 

Market valuations of securities listed on a securities exchange and ETF shares are based on the closing sales prices on the last business day of each month. The market value of the Company's fixed maturity U.S. Government debt securities is determined utilizing publicly quoted market prices.  Cash equivalents consist of investments in money market funds that invest primarily in U.S. Government securities valued in accordance with rule 2a-72a-7 under the 1940 Act.

 

56
Value Line, Inc.
Notes to Consolidated Financial Statements

The Fair Value Measurements Topic of FASB's ASC defines fair value as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. The  Fair Value Measurements Topic established a three-tierthree-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the information that market participants would use in pricing the asset or liability, including assumptions about risk. Examples of risks include those inherent in a particular valuation technique used to measure fair value such as the risk inherent in the inputs to the valuation technique. Inputs are classified as observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the factors market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

 


Value Line, Inc.

Notes to Consolidated Financial Statements

The three-tierthree-tier hierarchy of inputs is summarized in the three broad levels listed below.

 

Level 1 – quoted prices in active markets for identical investments

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)

 

The following summarizes the levels of fair value measurements of the Company’s investments:

 

 As of April 30, 2017  As of April 30, 2022 

($ in thousands)

 

Level 1

  

Level 2

  

Level 3

  

Total

  

Level 1

 

Level 2

 

Level 3

 

Total

 

Cash equivalents

 $6,066  $-  $-  $6,066  $28,965  $0  $0  $28,965 

Securities available-for-sale

  16,576   -   -   16,576 

Equity securities

 17,647  0  0  17,647 

Available-for-sale fixed income securities

  10,475  0  0  10,475 
 $22,642  $-  $-  $22,642  $57,087  $0  $0  $57,087 

 

 As of April 30, 2016  

As of April 30, 2021

 

($ in thousands)

 

Level 1

  

Level 2

  

Level 3

  

Total

  

Level 1

 

Level 2

 

Level 3

 

Total

 

Cash equivalents

 $12,037  $-  $-  $12,037  $18,209  $0  $0  $18,209 

Securities available-for-sale

  3,637   -   -   3,637 

Equity securities

 23,582  0  0  23,582 

Available-for-sale fixed income securities

  2,600  0  0  2,600 
 $15,674  $-  $-  $15,674  $44,391  $0  $0  $44,391 

 

The Company had no other financial instruments such as futures, forwards and swap contracts. For the periods ended April 30, 2017 2022 and April 30, 2016, 2021, there were no Level 2 nor Level 3 investments. The Company does not have any liabilities subject to fair value measurement.

 

Advertising expenses:

 

The Company expenses advertising costs as incurred.

 

Income Taxes:

 

The Company computes its income tax provision in accordance with the Income Tax Topic of the FASB's ASC.  Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the Consolidated  Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities, using tax rates currently in effect for the years in which the differences are expected to reverse.  The Company adopted the provisions of ASU 2015-17, Income taxes (Topic 740) and classifies all deferred taxes as long-term liabilities on the Consolidated Balance Sheets.

 

The Income Tax Topic of the FASB's ASC establishes for all entities, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures.  As of April 30, 2017, 2022, management has reviewed the tax positions for the years still subject to tax audit under the statute of limitations, evaluated the implications, and determined that there is no material impact to the Company's financial statements.

 

Earnings per share:

 

Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during each period. Any shares that are reacquired during the period are weighted for the portion of the period that they are outstanding.  The Company does not have any potentially dilutive common shares from outstanding stock options, warrants, restricted stock, or restricted stock units.

 

57
Value Line, Inc.
Notes to Consolidated Financial Statements

Cash and Cash Equivalents:

 

For purposes of the Consolidated Statements of Cash Flows, the Company considers all cash held at banks and short termshort-term liquid investments with an original maturity of less than three months to be cash and cash equivalents. As of April 30, 2017 2022 and April 30, 2016, 2021, cash equivalents included $6,066,000$28,965,000 and $12,037,000,$18,209,000, respectively, for amounts invested in  money market mutual funds that invest in short termshort-term U.S. government securities.

Note 2-Supplementary Cash Flow Information:

Note 2 - Supplementary Cash Flow Information:

Reconciliation of Cash, Cash Equivalents, and Restricted Cash:

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Statement of Cash Flows that sum to the total of the same such amounts shown in the Consolidated Statement of Cash Flows.

 

  Fiscal Years Ended April 30, 

($ in thousands)

 

2017

  

2016

  

2015

 

State and local income tax payments

 $560  $188  $238 

Federal income tax payments to the Parent

 $6,824  $3,545  $3,366 
  Fiscal Years Ended April 30, 

($ in thousands)

 

2022

  

2021

  

2020

 

Cash and cash equivalents

 $29,703  $19,171  $4,954 

Restricted cash

 $305  $469  $469 

Total cash, cash equivalents, and restricted cash shown in the Consolidated Statement of Cash Flows

 $30,008  $19,640  $5,423 

 

Income Tax Payments:

The Company made income tax payments as follows:

  Fiscal Years Ended April 30, 

($ in thousands)

 

2022

  

2021

  

2020

 

State and local income tax payments

 $894  $1,406  $1,105 

Federal income tax payments to the Parent

 $5,400  $7,154  $3,325 

See Note 3-Related

See Note 3 - Related Party Transactions for tax amounts associated with Arnold Bernhard and Co., Inc. (“AB&Co.” or the "Parent").

Note 3 - Related Party Transactions:

Investment Management (overview):

The Company has substantial non-voting revenues and non-voting profits interests in EAM, the asset manager to the Value Line Mutual Funds.  Accordingly, the Company does not reports this operation as a separate business segment, although it maintains a significant interest in the cash flows generated by this business and receives non-voting revenues and non-voting profits interests, as discussed below. 

Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2022, were $3.36 billion, which is $1.6 billion, or 32.4%, below total assets of $4.96 billion in the Value Line Funds managed and/or distributed by EAM at April 30, 2021.  

The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive quarterly distributions in a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances).  The Voting Profits Interest Holders will receive the other 50% of residual profits of EAM.  Distribution is not less than 90% of EAM’s profits payable each fiscal quarter under the provisions of the EAM Trust Agreement.   Value Line’s percent share of EAM’s revenues is calculated each fiscal quarter.  The applicable recent non-voting revenues interest percentage for the fourth quarter of fiscal 2022 was 54.0%.

The non-voting revenues and 90% of the Company's non-voting profits interests due from EAM to the Company are payable each fiscal quarter under the provisions of the EAM Trust Agreement.  The distributable amounts earned through the balance sheet date, which is included in the Investment in EAM Trust on the Consolidated Balance Sheets, and not yet paid, were $3,657,000 and $4,664,000 at April 30, 2022 and April 30, 2021, respectively.  

EAM Trust - VLI's non-voting revenues and non-voting profits interests:

The Company holds non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM's investment management fee revenues from its mutual fund and separate accounts business.  EAM currently has no separately managed account clients.  The Company recorded income from its non-voting revenues interest and its non-voting profits interests in EAM as follows:   

  Fiscal Years Ended April 30, 

($ in thousands)

 

2022

  

2021

  

2020

 

Non-voting revenues interest in EAM

 $15,899  $15,190  $11,184 

Non-voting profits interest in EAM

  2,142   2,131   1,166 
  $18,041  $17,321  $12,350 

 

58

Value Line, Inc.

Notes to Consolidated Financial Statements

Transactions with Parent:

During the fiscal years ended April 30, 2022 and April 30, 2021, the Company was reimbursed $385,000 and $408,000, respectively for payments it made on behalf of and for services it provided to AB&Co.   There were 0 receivables due from the Parent at April 30, 2022 or April 30, 2021. 

The Company is a party to a tax-sharing arrangement with the Parent which allocates the tax liabilities of the two Companies between them.  For the years ended April 30, 2022, 2021, and 2020, the Company made  payments to the Parent for federal income tax amounting to $5,400,000, $7,154,000 and $3,325,000, respectively.

From time to time, the Parent has purchased additional shares of common stock of the Company in the market when and as the Parent has determined it to be appropriate.  The Parent may make additional purchases of common stock of the Company from time to time in the future. As of April 30, 2022, the Parent owned 90.79% of the outstanding shares of common stock of the Company.

 

Note 3-Related Party Transactions:

Note 4 - Investments:

Investments held by the Company and its subsidiaries are classified as  equity securities and available-for-sale fixed income securities in accordance with FASB's ASC 321, Investments - Equity Securities and with FASB's ASC 320, Investments - Debt Securities.  All of the Company's securities were readily marketable or had a maturity of twelve months or less and are classified as current assets on the Consolidated Balance Sheets.

Equity Securities:

Equity securities on the Consolidated Balance Sheets, consist of ETFs held for dividend yield that attempt to replicate the performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions.  

As of April 30, 2022 and April 30, 2021, the aggregate cost of the equity securities, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), ProShares Trust S&P 500 Dividend Aristocrats ETF (NOBL), IShares DJ Select Dividend ETF (DVY) and other Exchange Traded Funds and common stock equity securities was a combined total $13,318,000 and $19,105,000, respectively, and the fair value was $17,647,000 and $23,582,000, respectively.   

The carrying value and fair value of equity securities at April 30, 2022 were as follows:

 

Investment Management (overview):

On December 23, 2010, the Company deconsolidated its asset management and mutual fund distribution businesses and its interest in these businesses was restructured as a non-voting revenues and non-voting profits interests in EAM. Accordingly, the Company no longer reports this operation as a separate business segment, although it still maintains a significant interest in the cash flows generated by this business and will receive non-voting revenues and non-voting profits interests going forward, as discussed below. 

($ in thousands)

 

Cost

  

Gross Unrealized

Gains

  

Gross Unrealized

Losses

  

Fair Value

 

ETFs - equities

 $13,318  $4,348  $(19) $17,647 

 

Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2017, were $2.4 billion, which is $192 million, or 8.6%, above total assets of $2.2 billion in the Value Line Funds managed by EAM at April 30, 2016.

The carrying value and fair value of equity securities at April 30, 2021 were as follows:

 

Starting January 2015, the Value Line VIP Equity Advantage Fund was added to the Guardian Pro Series Variable Annuities. The fund is an open end fund that invests primarily in a basket of closed-end funds.

($ in thousands)

 

Cost

  

Gross Unrealized

Gains

  

Gross Unrealized

Losses

  

Fair Value

 

ETFs - equities

 $19,105  $4,532  $(55) $23,582 

 

The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive quarterly distributions in a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business and at least 90% of the Company's 50% interest in the residual profits of EAM which are payable each fiscal quarter under the provisions of the EAM Trust Agreement. Value Line’s percent share of EAM’s revenues calculated each fiscal quarter was 49.45%, 49.14%, 49.19% and 49.22% during the first, second, third and fourth quarters of fiscal 2017, respectively, and 50.05%, 50.16%, 50.14% and 49.97% during the first, second, third and fourth quarters of fiscal 2016, respectively.

Government Debt Securities (Fixed Income Securities):

 

The non-voting revenues and 90% of the Company's non-voting profits interests due from EAM to the Company are payable each fiscal quarter under the provisions of the EAM Trust Agreement. The distributable amounts earned through the balance sheet date, which is included in the Investment in EAM Trust on the Consolidated Balance Sheets, and not yet paid, were $1,919,000 and $1,750,000 at April 30, 2017 and April 30, 2016, respectively.

Fixed income securities consist of securities issued by federal, state and local governments within the United States.     

Proceeds from maturities and sales of government debt securities classified as available-for-sale during the twelve months ended April 30, 2022 and April 30, 2021, were $2,496,000 and $14,902,000, respectively.  As of April 30, 2022, Accumulated Other Comprehensive Income included unrealized  losses of $30,000, net of deferred tax benefit of $6,000.  As of April 30, 2021, Accumulated Other Comprehensive Income included unrealized  gains of $4,000, net of deferred taxes of $1,000. 

The aggregate cost and fair value at April 30, 2022 of fixed income securities classified as available-for-sale were as follows:

 

EAM Trust - VLI's non-voting revenues and non-voting profits interests:

The Company holds non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM's investment management fee revenues from its mutual fund and separate accounts business. EAM currently has no separately managed account clients. The Company recorded income from its non-voting revenues interest and its non-voting profits interests in EAM as follows:

  

Amortized

  

Gross Unrealized

     

($ in thousands)

 

Historical Cost

  

Holding Losses

  

Fair Value

 

Maturity

            

Due within 1 year

 $10,505  $(30) $10,475 

Total investment in government debt securities

 $10,505  $(30) $10,475 

 

  Fiscal Years Ended April 30, 

($ in thousands)

 

2017

  

2016

  

2015

 

Non-voting revenues interest in EAM

 $7,195  $7,211  $7,346 

Non-voting profits interest in EAM

  519   440   624 
  $7,714  $7,651  $7,970 

Transactions with Parent:

During the fiscal years ended April 30, 2017 and April 30, 2016, the Company was reimbursed $383,000 and $164,000, respectively for payments it made on behalf of and services it provided to AB&Co. There were no receivables due from the Parent at April 30, 2017 or April 30, 2016.

The Company is a party to a tax-sharing arrangement with the Parent which allocates the tax liabilities of the two Companies between them. For the years ended April 30, 2017, 2016, and 2015, the Company made payments to the Parent for federal income tax amounting to $6,824,000, $3,545,000, and $3,366,000, respectively.

From time to time, the Parent has purchased additional shares of common stock of the Company in the market when and as the Parent has determined it to be appropriate. The Parent may make additional purchases of common stock of the Company from time to time in the future. As of April 30, 2017, the Parent owned 88.9% of the outstanding shares of common stock of the Company.

Note 4-Investments:

Securities Available-for-Sale:

Investments held by the Company and its subsidiaries are classified as securities available-for-sale in accordance with FASB's ASC 320, Investments - Debt and Equity Securities. All of the Company's securities classified as available-for-sale were readily marketable or had a maturity of twelve months or less and are classified as current assets on the Consolidated Balance Sheets.

Equity Securities:

Equity securities classified as available-for-sale on the Consolidated Balance Sheets, consist of ETFs held for dividend yield that attempt to replicate the performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions.

The increase in gross unrealized  losses of $34,000 on fixed income securities classified as available-for-sale net of deferred income tax benefit of $7,000, was included in Accumulated Other Comprehensive Income on the Consolidated Balance Sheet as of April 30, 2022.  

 

59

Value Line, Inc.

Notes to Consolidated Financial Statements

The aggregate cost and fair value at April 30, 2021 of fixed income securities classified as available-for-sale were as follows:

 

As of April 30, 2017, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL) and Proshares Trust S&P 500 Dividend (NOBL) was $8,385,000 and the fair value was $9,097,000. As of April 30, 2016, the aggregate cost of the equity securities classified as available-for-sale, which consisted of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL), Proshares Trust S&P 500 Dividend (NOBL) and First Trust Total US Market Alphadex ETF (TUSA) was $3,445,000 and the fair value was $3,637,000.During the second quarter ended October 31, 2015, the Company made a decision to reduce its dividend paying ETF position and liquidate its non dividend paying inverse ETF positions. The liquidated portfolio of investments generated an annual dividend return averaging 3% annually during the years it was held.

  

Amortized

  

Gross Unrealized

     

($ in thousands)

 

Historical Cost

  

Holding Gains

  

Fair Value

 

Maturity

            

Due within 1 year

 $2,596  $4  $2,600 

Total investment in government debt securities

 $2,596  $4  $2,600 

 

Proceeds from sales of equity securities classified as available-for-sale during the twelve months ended April 30, 2017 were $53,000 and capital gain distributions of $39,000 were reclassified from Accumulated Other Comprehensive Income in the Consolidated Balance Sheet to the Consolidated Statement of Income. There was no gain or loss on sales of equity securities classified as available-for-sale during fiscal 2017. The increase in gross unrealized gains on equity securities classified as available-for-sale of $520,000, net of deferred taxes of $183,000 was included in Shareholders' Equity at April 30, 2017. Proceeds from sales of equity securities classified as available-for-sale during the twelve months ended April 30, 2016 were $10,206,000 and the related capital gains of $224,000 and capital gain distributions of $105,000 were reclassified from Accumulated Other Comprehensive Income in the Consolidated Balance Sheet to the Consolidated Statement of Income. The increase in gross unrealized gains on equity securities classified as available-for-sale of $29,000, net of deferred taxes of $9,000 was included in Shareholders' Equity at April 30, 2016. There were capital gain distributions from certain ETFs of $39,000 and $105,000, respectively, during fiscal years 2017 and 2016. 

The decrease in gross unrealized  gains of $173,000 on fixed income securities classified as available-for-sale net of deferred income taxes of $45,000, was included in Accumulated Other Comprehensive Income on the Consolidated Balance Sheet as of April 30, 2021.  

The average yield on the Government debt securities classified as available-for-sale at April 30, 2022 and April 30, 2021 was 0.6% and 1.4%, respectively.

Investment Gains/(Losses):

Investment gains/(losses) were comprised of the following:

 

The carrying value and fair value of securities available-for-sale at April 30, 2017 were as follows:

  Fiscal Years Ended April 30, 

($ in thousands)

 

2022

  

2021

  

2020

 

Dividend income

 $851  $573  $352 

Interest income

  18   137   279 

Investment gains/(losses) recognized on sales of equity securities during the period

  (1,568)  835   (1,075)

Unrealized gains/(losses) recognized on equity securities held at the end of the period

  167   3,875   (339)

Other

  (2)  0   (6)

Total investment gains/(losses)

 $(534) $5,420  $(789)

 

($ in thousands)

 

Cost

  

Gross Unrealized Gains

  

Gross Unrealized Losses

  

Fair Value

 

ETFs - equities

 $8,385  $712  $-  $9,097 

The carrying value and fair value of securities available-for-sale at April 30, 2016 were as follows:

($ in thousands)

 

Cost

  

Gross Unrealized Gains

  

Gross Unrealized Losses

  

Fair Value

 

ETFs - equities

 $3,445  $194  $(2) $3,637 

Government Debt Securities (Fixed Income Securities):

Fixed income securities consist of certificates of deposits and securities issued by federal, state, and local governments within the United States. The aggregate cost and fair value at April 30, 2017 of fixed income securities classified as available-for-sale were as follows: 

  

Amortized

  

Gross Unrealized

  

Gross Unrealized

     

($ in thousands)

 

Historical Cost

  

Holding Gains

  

Holding Losses

  

Fair Value

 

Maturity

                

Due within 1 year

 $4,384  $4  $(3) $4,385 

Due 1 year through 5 years

  3,100   -   (6)  3,094 

Total investment in government debt securities

 $7,484  $4  $(9) $7,479 

The increase in gross unrealized losses of $5,000 on fixed income securities classified as available-for-sale net of deferred income tax of $1,000, was included in Accumulated Other Comprehensive Income on the Consolidated Balance Sheet as of April 30, 2017.

The average yield on the Government debt securities classified as available-for-sale at April 30, 2017 was 0.40%.

There were no fixed income securities at April 30, 2016. There were no sales or proceeds from maturities and sales of government debt securities classified as available-for-sale during the fiscal years ended April 30, 2016.

Income from Securities Transactions:

Income from securities transactions was comprised of the following: 

  Fiscal Years Ended April 30, 

($ in thousands)

 

2017

  

2016

  

2015

 

Dividend income

 $193  $142  $157 

Interest income

  33   -   3 

Capital gain distribution from ETFs (1)

  39   105   57 

Capital gains (2)

  -   224   - 

Other

  47   6   (91)

Total income from securities transactions and other, net

 $312  $477  $126 

(1) Capital gain distributions of $39,000, $105,000 and $57,000 were reclassified from Accumulated Other Comprehensive Income in the Consolidated Balance Sheets to the Consolidated Statements of Income in fiscal 2017, 2016 and 2015, respectively.

(2) Capital gains of $224,000 were reclassified from Accumulated Other Comprehensive Income in the Consolidated Balance Sheets to the Consolidated Statements of Income in fiscal 2016.

Proceeds from sales of equity securities during the twelve months ended April 30, 2022 and April 30, 2021 were $12,039,000 and $8,212,000, respectively.  Taxable realized gains/(losses) on equity securities sold during fiscal years 2022 and 2021, which are generally the difference between the proceeds from sales and our original cost, were losses of $1,254,000 in fiscal 2022 and gains of $1,481,000 in fiscal 2021.

Investment in Unconsolidated Entities:

Equity Method Investment:

As of April 30, 2022 and April 30, 2021, the Company's investment in EAM Trust, on the Consolidated Balance Sheets was $59,971,000 and $60,977,000, respectively.

The value of VLI’s investment in EAM at April 30, 2022 and April 30, 2021 reflects the fair value of contributed capital of $55,805,000 at inception, which included $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI's share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Balance Sheets.

It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding. 

The Company monitors its Investment in EAM Trust for impairment to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment.  Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital and regulatory requirements.  EAM did not record any impairment losses for its assets during the fiscal years 2022 or 2021.

 

60

Value Line, Inc.

Notes to Consolidated Financial Statements

The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:

 

The changes in the value of equity and fixed income securities investments are recorded in Other Comprehensive Income in the Consolidated Financial Statements. Realized gains and losses are recorded on the trade date in the Consolidated Statements of Income when securities are sold, mature or are redeemed. As of April 30, 2017 and April 30, 2016, gross unrealized gains of $515,000 and $192,000, net of deferred taxes of $182,000 and $68,000, respectively, are recorded in Accumulated Other Comprehensive Income in the Consolidated Balance Sheets.

  Fiscal Years Ended April 30, 

($ in thousands)

 

2022

  

2021

  

2020

 

Investment management fees earned from the Value Line Funds, net of waivers shown below

 $29,598  $29,022  $21,985 

12b-1 fees and other fees, net of waivers shown below

 $9,310  $9,604  $8,436 

Other income/(losses)

 $(20) $361  $(156)

Investment management fee waivers and reimbursements

 $547  $121  $302 

12b-1 fee waivers

 $644  $651  $667 

Value Line’s non-voting revenues interest

 $15,899  $15,190  $11,184 

EAM's net income (1)

 $4,284  $4,262  $2,332 

 

Investment in Unconsolidated Entities:

Equity Method Investment:

As of April 30, 2017 and April 30, 2016, the Company's investment in EAM Trust, on the Consolidated Balance Sheets was $58,223,000 and $57,942,000, respectively.

(1) Represents EAM's net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest. 

 

The value of VLI’s investment in EAM at April 30, 2017 and April 30, 2016 reflects the fair value of contributed capital of $55,805,000 at inception, which included $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI's share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Balance Sheets.

  

Fiscal Years Ended April 30,

 

($ in thousands)

 

2022

  

2021

 

EAM's total assets

 $63,592  $64,197 

EAM's total liabilities (1)

  (6,282)  (6,870)

EAM's total equity

 $57,310  $57,327 

 

It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding.

(1) At April 30, 2022 and 2021, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $3,657,000 and $4,664,000, respectively.

 

The Company monitors its Investment in EAM Trust for impairment

Note5 - Variable Interest Entity:

The Company holds a  non-voting revenues interest and a 50% non-voting profits interest in EAM, the adviser to the Value Line asset management and mutual fund distribution businesses.  EAM is considered to be a VIE in relation to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital and regulatory requirements. EAM did not record any impairment losses for its assets during the fiscal years 2017 or 2016.

The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:

  Fiscal Years Ended April 30, 

($ in thousands)

 

2017

  

2016

  

2015

 

Investment management fees earned from the Value Line Funds, net of waivers shown below

 $14,701  $14,548  $15,014 

12b-1 fees and other fees, net of waivers shown below

 $5,822  $5,669  $5,459 

Other income/(loss)

 $205  $(14) $34 

Investment management fee waivers and reimbursements (1)

 $436  $262  $192 

12b-1 fee waivers (1)

 $923  $1,071  $1,518 

Value Line’s non-voting revenues interest

 $7,195  $7,211  $7,346 

EAM's net income (2)

 $1,038  $880  $1,248 

(1) During fiscal 2017, 2016 and 2015 investment management fee waivers and reimbursements primarily related to one Value Line Mutual Fund and the 12b-1 fee waivers related to four of the Value Line Mutual Funds, respectively.

(2) Represents EAM's net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.  

  

Fiscal Years Ended April 30,

 

($ in thousands)

 

2017

  

2016

 

EAM's total assets

 $60,432  $60,292 

EAM's total liabilities (1)

  (2,931)  (3,021)

EAM's total equity

 $57,501  $57,271 

(1) At April 30, 2017 and 2016, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues and non-voting profits interests of $1,919,000 and $1,750,000, respectively.

Note 5-Variable Interest Entity:

The Company retained a non-voting revenues interest and a 50% non-voting profits interest in EAM, which was formed, as a result of the Restructuring Transaction on December 23, 2010, to carry on the asset management and mutual fund distribution businesses formerly conducted by the Company. EAM is considered to be a VIE.  The Company makes its determination for consolidation of EAM as a VIE based on a qualitative assessment of the purpose and design of EAM, the terms and characteristics of the variable interests in EAM, and the risks EAM is designed to originate and pass through to holders of variable interests.  Other than EAM, the Company does not have an interest in any other VIEs.

The Company has determined that it does not have a controlling financial interest in EAM because it does not have the power to direct the activities of EAM that most significantly impact its economic performance. Value Line does not hold any voting stock of EAM and it does not have any involvement in the day-to-day activities or operations of EAM. Although the EAM Trust Agreement provides Value Line with certain consent rights and contains certain restrictive covenants related to the activities of EAM, these are considered to be protective rights and therefore Value Line does not have an interest in any other VIEs.

The Company has determined that it does not have a controlling financial interest in EAM because it does not have the power to direct the activities of EAM that most significantly impact its economic performance.  Value Line does not hold any voting stock of EAM and it does not have any involvement in the day-to-day activities or operations of EAM.  Although the EAM Trust Agreement provides Value Line with certain consent rights and contains certain restrictive covenants related to the activities of EAM, these are considered to be protective rights and therefore Value Line does not maintain control over EAM.

In addition, although EAM is expected to be profitable, there is a risk that it could operate at a loss.   While all of the profit interest shareholders in EAM are subject to variability based on EAM’s operations risk, Value Line’s non-voting revenues interest in EAM is a preferred interest in the revenues of EAM, rather than a profits interest in EAM, and Value Line accordingly believes it is subject to proportionately less risk than other holders of the profits interests.

The Company has not provided any explicit or implicit financial or other support to EAM other than what was contractually agreed to in the EAM Trust Agreement.  Value Line has no obligation to fund EAM in the future and, as a result, has no exposure to loss beyond its initial investment and any undistributed revenues and profits interests retained in EAM.  The following table presents the total assets of EAM, the maximum exposure to loss due to involvement with EAM, as well as the value of the assets and liabilities the Company has recorded on its Consolidated Balance Sheets for its interest in EAM.

      

Value Line

 

($ in thousands)

 

VIE Assets

  

Investment in EAM

Trust (1)

  

Liabilities

  

Maximum

Exposure to

Loss

 

As of April 30, 2022

 $63,592  $59,971  $0  $59,971 

As of April 30, 2021

 $64,197  $60,977  $0  $60,977 

(1)  Reported within Long-Term Assets on Consolidated Balance Sheets.

 

61

Value Line, Inc.

Notes to Consolidated Financial Statements

 

In addition, although EAM is expected to be profitable, there is a risk that it could operate at a loss. While all of the profit interest shareholders in EAM are subject to variability based on EAM’s operations risk, Value Line’s non-voting revenues interest in EAM is a preferred interest in the revenues of EAM, rather than a profits interest in EAM, and Value Line accordingly believes it is subject to proportionately less risk than other holders of the profits interests.

Note 6 - Property and Equipment:

Property and equipment are carried at cost.  Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, or in the case of leasehold improvements, over the remaining terms of the leases.  For income tax purposes, depreciation of furniture and equipment is computed using accelerated methods and buildings and leasehold improvements are depreciated over prescribed extended tax lives. Property and equipment, net, on the Consolidated Balance Sheets was comprised of the following:

 

The Company has not provided any explicit or implicit financial or other support to EAM other than what was contractually agreed to in the EAM Trust Agreement. Value Line has no obligation to fund EAM in the future and, as a result, has no exposure to loss beyond its initial investment and any undistributed revenues and profits interests retained in EAM. The following table presents the total assets of EAM, the maximum exposure to loss due to involvement with EAM, as well as the value of the assets and liabilities the Company has recorded on its Consolidated Balance Sheets for its interest in EAM.

  

As of April 30,

 

($ in thousands)

 

2022

  

2021

 
         

Building and leasehold improvements

 $1,013  $1,013 

Operating lease - right-of-use asset

  6,442   7,522 

Furniture and equipment

  4,091   4,080 
   11,546   12,615 

Accumulated depreciation and amortization

  (4,488)  (4,304)

Total property and equipment, net

 $7,058  $8,311 

 

     

Value Line

 

($ in thousands)

 

VIE Assets

  

Investment in

EAM Trust (1)

  

Liabilities

  

Maximum Exposure to Loss

 

As of April 30, 2017

 $60,432  $58,223  $-  $58,223 

As of April 30, 2016

 $60,292  $57,942  $-  $57,942 

Note 7 - Federal, State and Local Income Taxes:

In accordance with the requirements of the Income Tax Topic of the FASB's ASC, the Company's provision for income taxes includes the following:

 

(1) Reported within Long Term Assets on Consolidated Balance Sheets.

  

Fiscal Years Ended April 30,

 

($ in thousands)

 

2022

  

2021

  

2020

 

Current tax expense:

            

Federal

 $5,625  $5,407  $4,201 

State and local

  1,280   1,046   1,353 

Current tax expense

  6,905   6,453   5,554 

Deferred tax expense (benefit):

            

Federal

  239   859   (174)

State and local

  (328)  (316)  328 

Deferred tax expense (benefit):

  (89)  543   154 

Income tax provision

 $6,816  $6,996  $5,708 

 

Note 6-Property and Equipment:

Property and equipment are carried at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, or in the case of leasehold improvements, over the remaining terms of the leases. For income tax purposes, depreciation of furniture and equipment is computed using accelerated methods and buildings and leasehold improvements are depreciated over prescribed extended tax lives. Property and equipment, net, on the Consolidated Sheets was comprised of the following:

  

As of April 30,

 

($ in thousands)

 

2017

  

2016

 
         

Land

 $-  $726 

Building and leasehold improvements

  789   5,190 

Furniture and equipment

  3,865   4,156 
   4,654   10,072 

Accumulated depreciation and amortization

  (3,415)  (6,451)

Total property and equipment, net

 $1,239  $3,621 

Note 7-Federal, State and Local Income Taxes:

In accordance with the requirements of the Income Tax Topic of the FASB's ASC, the Company's provision for income taxes includes the following:

  

Fiscal Years Ended April 30,

 

($ in thousands)

 

2017

  

2016

  

2015

 

Current tax expense (benefit):

            

Federal

 $6,360  $3,799  $3,197 

State and local

  469   219   243 
   6,829   4,018   3,440 

Deferred tax expense (benefit):

            

Federal

  (1,299)  (839)  (83)

State and local

  (412)  (462)  (154)
   (1,711)  (1,301)  (237)

Income tax provision:

 $5,118  $2,717  $3,203 

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act (the "Tax Act"), was enacted.  The Tax Act lowered the U.S. federal income tax rate ("Federal Tax Rate") from 35% to 21% effective January 1, 2018.  Accordingly, the Company computes Federal income tax expense using the Federal Tax Rate of 21% in fiscal year 2019 and each year thereafter.  

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the twelve months ended April 30, 2022, April 30, 2021 and April 30, 2020 were 22.25%, 23.11% and 27.64%, respectively.   The decrease in the effective tax rate during for the twelve months ended April 30, 2022 as compared to April 30, 2021, is primarily a result of the non-taxable revenue derived from forgiveness of the PPP loan by the SBA (see note 19) offset by an increase in the state and local income taxes from 2.05% to 3.12% as a result of changes in state and local income tax allocation factors, on deferred taxes in fiscal 2022.  The Company's annualized overall effective tax rate fluctuates due to a number of factors, in addition to changes in tax law, including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-income tax, the Company's geographic profit mix between tax jurisdictions, taxation method adopted by each locality, new interpretations of existing tax laws and rulings and settlements with tax authorities.   

 

62

Value Line, Inc.

Notes to Consolidated Financial Statements

Deferred income taxes, a liability, are provided for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities.  The tax effect of temporary differences giving rise to the Company's long-term deferred tax liability are as follows:

 

Deferred income taxes are provided for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The tax effect of temporary differences giving rise to the Company's deferred tax asset and deferred tax liability are as follows:

  

Fiscal Years Ended April 30,

 

($ in thousands)

 

2022

  

2021

 

Federal tax liability (benefit):

        

Deferred gain on deconsolidation of EAM

 $10,669  $10,669 

Deferred non-cash post-employment compensation

  (372)  (372)

Depreciation and amortization

  77   108 

Unrealized gain on securities held for sale

  909   941 

Right of Use Asset

  (188)  (196)

Deferred charges

  (154)  (186)

Other

  (300)  (218)

Total federal tax liability

  10,641   10,746 
         

State and local tax liabilities (benefits):

        

Deferred gain on deconsolidation of EAM

  2,131   1,807 

Deferred non-cash post-employment compensation

  (74)  (63)

Depreciation and amortization

  180   18 

Unrealized gain on securities held for sale

  194   159 

Other

  54   238 

Total state and local tax liabilities

  2,485   2,159 

Deferred tax liability, long-term

 $13,126  $12,905 

 

  

Fiscal Years Ended April 30,

 

($ in thousands)

 

2017

  

2016

 

Federal tax benefit (liability):

        

Unrealized gains on securities available-for-sale

 $(249) $(68)

Capital loss carryforward

  -   86 

Operating lease exit obligation

  151   58 

Deferred professional fees

  17   77 

Deferred charges

  402   250 

Total federal tax benefit

  321   403 
         

State and local tax benefits:

        

Other - deferred charges

  28   29 

Total state and local tax benefits

  28   29 

Deferred tax asset, short term

 $349  $432 

The tax effect of temporary differences giving rise to the Company's long-term deferred tax liability is primarily a result of the federal, state and local taxes related to the $50,805,000 gain from deconsolidation of the Company's asset management and mutual fund distribution subsidiaries, partially offset by the long-term tax benefit related to the non-cash post-employment compensation of $1,770,000 granted to VLI's former employee.  

The Company uses the effective income tax rate determined to provide for income taxes on a year-to-date basis and reflects the tax effect of any tax law changes and certain other discrete events in the period in which they occur.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pre-tax income as a result of the following:

 

  

Fiscal Years Ended April 30,

 

($ in thousands)

 

2017

  

2016

 

Federal tax liability (benefit):

        

Deferred gain on deconsolidation of EAM

 $17,742  $17,679 

Deferred non-cash post-employment compensation

  (619)  (619)

Depreciation and amortization

  454   1,812 

Other

  (45)  8 

Total federal tax liability

  17,532   18,880 
         

State and local tax liabilities (benefits):

        

Deferred gain on deconsolidation of EAM

  1,206   1,704 

Deferred non-cash post-employment compensation

  (42)  (60)

Depreciation and amortization

  31   174 

Deferred professional fees

  (2)  (15)

Total state and local tax liabilities

  1,193   1,803 

Deferred tax liability, long term

 $18,725  $20,683 
  

Fiscal Years Ended April 30,

 
  

2022

  

2021

  

2020

 

U.S. statutory federal tax rate

  21.00%  21.00%  21.00%

Increase (decrease) in tax rate from:

            

State and local income taxes, net of federal income tax benefit

  3.12%  2.05%  6.30%

Nontaxable SBA loan forgiveness

  (1.60%)  0   0 

Effect of dividends received deductions

  (0.29%)  (0.31%)  (0.24%)

Other, net

  0.02%  0.37%  0.58%

Effective income tax rate

  22.25%  23.11%  27.64%

 

The tax effect of temporary differences giving rise to the Company's long term deferred tax liability is primarily a result of the federal, state, and local taxes related to the $50,510,000 gain from deconsolidation of the Company's asset management and mutual fund distribution subsidiaries, partially offset by the long term tax benefit related to the non-cash post-employment compensation of $1,770,000 granted to VLI's former employee.

The Company believes that, as of April 30, 2022, there were no material uncertain tax positions that would require disclosure under GAAP.

The Company is included in the consolidated federal income tax return of the Parent.  The Company has a tax sharing agreement which requires it to make tax payments to the Parent equal to the Company's liability/(benefit) as if it filed a separate return.  Beginning with the fiscal year ended April 30, 2017, the Company files combined income tax returns with the Parent on a unitary basis in certain states as a result of changes in state tax regulations.  

The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years ended 2019 through 2021, are subject to examination by the tax authorities, generally for three years after they are filed with the tax authorities. The Company is presently engaged in a New York City tax audit for the fiscal years ended April 30, 2017 through 2019 and does not expect it to have a material effect on the financial statements.  

 

The Company uses the effective income tax rate determined to provide for income taxes on a year-to-date basis and reflects the tax effect of any tax law changes and certain other discrete events in the period in which they occur.

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the twelve months ended April 30, 2017, 2016 and 2015 were 33.05%, 27.15% and 30.52%, respectively. The Company's annual effective tax rate will change due to a number of factors including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company's geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax laws and rulings and settlements with tax authorities. The fluctuation in the effective income tax rate during fiscal 2017 is primarily attributable to the attribution of 100% of the gain on the sale of the Company's operating facility to one tax jurisdiction. The fluctuation in the effective income tax rate during fiscal 2016 is primarily attributable to the effect of the reduction in the allocation factors on the state and local deferred tax liability (primarily the gain on deconsolidation of EAM), reversal of excess income tax accruals established in past years that were resolved upon completion of the prior NYC and IRS audits and an increase in the domestic production tax credits. The fluctuation in the effective income tax rate during fiscal 2015 is primarily attributable to the write-off of the tax bases of goodwill.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following:

  

Fiscal Years Ended April 30,

 
  

2017

  

2016

  

2015

 

U.S. statutory federal rate

  35.00%  35.00%  35.00%

Increase (decrease) in tax rate from:

            

State and local income taxes, net of federal income tax benefit

  -0.88%  -3.39%  -0.15%

Effect of dividends received deductions

  -0.33%  -0.41%  -0.40%

Write off goodwill

  -   -   -1.62%

Domestic production tax credit

  -0.17%  -0.33%  -0.44%

Other, net

  -0.57%  -3.72%  -1.87%

Effective income tax rate

  33.05%  27.15%  30.52%

Note 8 - Employees' Profit Sharing and Savings Plan:

Substantially all employees of the Company and its subsidiaries are members of the Value Line, Inc. Profit Sharing and Savings Plan (the "Plan").  In general, this is a qualified, contributory plan which provides for a discretionary annual Company contribution which is determined by a formula based on the salaries of eligible employees and the amount of consolidated net operating income as defined in the Plan. For the fiscal years ended April 30, 2022, 2021 and 2020, the estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Statements of Income, was $557,000, $980,000 and $870,000, respectively.  

 

63

Value Line, Inc.

Notes to Consolidated Financial Statements

 

The Company believes that, as of April 30, 2017, there were no material uncertain tax positions that would require disclosure under GAAP.

The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing agreement which requires it to make tax payments to the Parent equal to the Company's liability/(benefit) as if it filed a separate return. Beginning with the fiscal year ended April 30, 2017, the Company will file combined income tax returns with the Parent on a unitary basis in certain states as a result of changes in state tax regulations. The Company does not anticipate any significant tax implications from the change to unitary state tax filing.

The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years ended 2013 through 2016, are subject to examination by the tax authorities, generally for three years after they are filed with the tax authorities. The Company favorably concluded certain tax audits during the third quarter of fiscal 2016 that provided the recognition of tax benefits resulting from a favorable outcome. The Company is presently engaged in a federal tax audit for the fiscal year ended April 30, 2015 and a state tax audit for that period, but does not expect them to have a material effect on the financial statements.

Note 8-Employees' Profit Sharing and Savings Plan:

Substantially all employees of the Company and its subsidiaries are members

Note 9 - Lease Commitments:

On November 30, 2016, Value Line, Inc., received consent from the landlord at 551 Fifth Avenue, New York, NY to the terms of a new sublease agreement between Value Line, Inc.  and ABM Industries, Incorporated (“ABM” or the “Sublandlord”) commencing on December 1, 2016.  Pursuant to the agreement Value Line leased from ABM 24,726 square feet of office space located on the second and third floors at 551 Fifth Avenue, New York, NY (“Building” or “Premises”) beginning on December 1, 2016 and ending on November 29, 2027.  Base rent under the sublease agreement is $1,126,000 per annum during the first year with an annual increase in base rent of 2.25% scheduled for each subsequent year, payable in equal monthly installments on the first day of each month, subject to customary concessions in the Company’s favor and pass-through of certain increases in utility costs and real estate taxes over the base year.  The Company provided a security deposit represented by a letter of credit in the amount of $469,000 in October 2016, which was reduced to $305,000 on October 3, 2021 and is to be fully refunded after the sublease ends.  This Building became the Company’s new corporate office facility.  The Company is required to pay for certain operating expenses associated with the Premises as well as utilities supplied to the Premises.  The sublease terms provide for a significant decrease (23% initially) in the Company’s annual rental expenditure taking into account free rent for the firstsix months of the sublease.  Sublandlord provided Value Line a work allowance of $417,000 which accompanied with the six months free rent worth $563,000 was applied against the Company’s obligation to pay rent at our NYC headquarters, delaying the actual rent payments until November 2017.

On February 29,2016, the Company’s subsidiary VLDC and Seagis Property Group LP (the “Landlord”) entered into a lease agreement, pursuant to which VLDC has leased 24,110 square feet of warehouse and appurtenant office space located at 205 Chubb Ave., Lyndhurst, NJ (“Warehouse”) beginning on May 1, 2016 and ending on April 30, 2024 (“Lease”).  Base rent under the Lease is $192,880 per annum payable in equal monthly installments on the first day of each month, in advance during fiscal 2017 and will gradually increase to $237,218 in fiscal 2024, subject to customary increases based on operating costs and real estate taxes.  The Company provided a security deposit in cash in the amount of $32,146, which will be fully refunded after the lease term expires.  The lease is a net lease requiring the Company to pay for certain operating expenses associated with the Warehouse as well as utilities supplied to the Warehouse.

In February 2016, the FASB issued ASU No.2016-02, “Leases (Topic 842)”.  This ASU requires that, for leases longer than one year, a lessee recognizes in the statements of financial position a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. It also requires that for finance leases, a lessee recognizes interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. The firm adopted this ASU in May 2019 under a modified retrospective approach. 

The Company adopted ASU 2016-02 using a modified retrospective transition approach as of the Effective Date as permitted by the amendments in ASU 2018-11, which provides an alternative modified retrospective transition method. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. May 1, 2019). The Company has elected to employ the transitionary relief offered by the FASB and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.  

The Company leases office space in New York, NY and a warehouse and appurtenant office space in Lyndhurst, NJ. The Company has evaluated these leases and determined that they are operating leases under the definitions of the guidance of ASU 2016-02.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the net present value of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the net present value of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.

On May 1, 2019, the Company recorded a right-of-use asset in the amount of $9,575,000, which represents the lease liability of $10,340,000 adjusted for previously recorded unamortized lease incentives in the amount of $765,000. The right-of-use asset will be amortized over the remaining lease term in the amount equal to the difference between the calculated straight-line expense of the total lease payments less the monthly interest calculated on the remaining lease liability. As of April 30, 2022, the Company had a long-term lease asset of $6,442,000 recorded in property and equipment in its consolidated balance sheets.

The Company recognizes lease expense, calculated as the remaining cost of the lease allocated over the remaining lease term on a straight-line basis. Lease expense are presented as part of continuing operations in the consolidated statements of income. For the twelve months ended April 30, 2022, the Company recognized $1,499,000 in lease expense.

For the twelve months ended April 30, 2022, the Company paid $1,506,000 in rent relating to the leases. As a payment arising from an operating lease, the $1,506,000 will be classified within operating activities in the consolidated statements of cash flows.

64
Value Line, Inc. Profit Sharing and Savings Plan (the "Plan"). In general, this is a qualified, contributory plan which provides for a discretionary annual Company contribution which is determined by a formula based on the salaries of eligible employees and the amount of consolidated net operating income as defined in the Plan. For the fiscal years ended April 30, 2017, 2016 and 2015, the estimated profit sharing plan contribution, which is included as an expense in salaries and employee benefits in the Consolidated Statements of Income, was $345,000, $473,000 and $422,000, respectively. During fiscal 2017 the U.S. Department of Labor Employee Benefits Security Administration examined the Plan for the period May 1, 2010 through March 17, 2016. As a result of the examination, the Plan sponsor decided to reimburse the Plan in the amount of $277,000 during fiscal 2017. The reimbursement was for fees received indirectly by the Plan sponsor from EAM, related to the Plan assets invested in the Value Line Mutual Funds, subsequent to Value Line's divestiture of its asset management and advisory business on December 23, 2010. Prior to then, Value Line received fees under a class exemption for certain transactions between investment companies and employee benefit plans. After the corporate restructuring, the fee payments may no longer have qualified under the exemption, and therefore, Value Line decided to pay the fees that it previously collected indirectly from EAM back to the Plan.

Note 9-Lease Commitments:

In February 2017 the Company's headquarters and offices moved to a new location. On November 30, 2016, Value Line, Inc., received consent from the landlord at 551 Fifth Avenue, New York, NY to the terms of a new sublease agreement between Value Line, Inc. (“Value Line” or “Company”) and ABM Industries, Incorporated (“ABM” or the “Sublandlord”) commencing on December 1, 2016. Pursuant to the agreement Value Line leased from ABM 24,726 square feet of office space located on the second and third floors at 551 Fifth Avenue, New York, NY (“Building” or “Premises”) beginning on December 1, 2016 and ending on November 29, 2027. Base rent under the sublease agreement is $1,126,000 per annum during the first year with an annual increase in base rent of 2.25% scheduled for each subsequent year, payable in equal monthly installments on the first day of each month, subject to customary concessions in the Company’s favor and pass-through of certain increases in utility costs and real estate taxes over the base year. The Company provided a security deposit represented by a letter of credit in the amount of $469,000, which is scheduled to be reduced to $305,000 on September 30, 2021 and fully refunded after the sublease ends. This Building became the Company’s new corporate office facility. The Company is required to pay for certain operating expenses associated with the Premises as well as utilities supplied to the Premises. The sublease terms provide for a significant decrease (23% initially) in the Company’s annual rental expenditure taking into account free rent for the first six months of the sublease. Sublandlord provided Value Line an allowance of $417,000 which is expected to be applied against the Company’s costs and expenses related to the relocation to the new office facility or applied as additional free rent.

On February 29, 2016, the Company’s subsidiary Value Line Distribution Center (“VLDC”) and Seagis Property Group LP (the “Landlord”) entered into a lease agreement, pursuant to which VLDC has leased 24,110 square feet of warehouse and appurtenant office space located at 205 Chubb Ave., Lyndhurst, NJ (“Warehouse”) beginning on May 1, 2016 and ending on April 30, 2024 (“Lease”). Base rent under the Lease is $192,880 per annum payable in equal monthly installments on the first day of each month, in advance during fiscal 2017 and will gradually increase to $237,218 in fiscal 2024, subject to customary increases based on operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $32,146, which will be fully refunded after the Lease term expires. The lease is a net lease requiring the Company to pay for certain operating expenses associated with the Warehouse as well as utilities supplied to the Warehouse.

The total amount of the base rent payments is being charged to expense on the straight-line method over the term of the lease.

Future minimum payments, exclusive of potential increases in real estate taxes and operating cost escalations, under operating leases for office space, with remaining terms of one year or more, are as follows:

Fiscal Years Ended April 30,

 

($ in thousands)

 
     

2018

  824 

2019

  1,366 

2020

  1,399 

2021

  1,432 

2022 and thereafter

  10,002 
  $15,023 

For the fiscal years ended April 30, 2017, 2016 and 2015, rental expenses were $1,677,000, $1,268,000 and $1,268,000, respectively. The rental expenses during fiscal 2017 included additional three month overlapping rent expense of $86,000 per month for the current office facility and $105,000 for the previously occupied office facility during the period from December 1, 2016 to February 28, 2017 which is being offset by lower rent payments according to the sub-lease agreement with American Building Maintenance (“ABM” or the “Sublandlord”).


Value Line, Inc.

Notes to Consolidated Financial Statements

The Company’s leases generally do not provide an implicit interest rate, and therefore the Company estimated an incremental borrowing rate, or IBR, as of the commencement date, to determine the present value of its operating lease liabilities. The IBR is defined under ASC 842 as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The following table reconciles the undiscounted future minimum lease payments to the total operating lease liabilities recognized on the consolidated balance sheet as of April 30, 2022:

 

Fiscal years ended April 30,

 

(in thousands)

 

2023

  1,597 

2024

  1,634 

2025

  1,429 

2026

  1,461 

2027

  1,493 

Thereafter

  882 

Total undiscounted future minimum lease payments

  8,496 

Less: difference between undiscounted lease payments & the present value of future lease payments

  1,128 

Total operating lease liabilities

 $7,368 

 

Note 10-Disclosure of Credit Risk of Financial Instruments with Off-Balance Sheet Risk:

For the fiscal years ended April 30, 2022, 2021 and 2020, rental expenses were $1,499,000 each year.  

 

Other than EAM and the Value Line Funds as explained in Note 3 - Related Party Transactions, no single customer accounted for a significant portion of the Company's sales in fiscal 2017, 2016 or 2015, nor its accounts receivable as of April 30, 2017 or 2016.

Note 10 - Disclosure of Credit Risk of Financial Instruments with Off-Balance Sheet Risk:

Other than EAM and the Value Line Funds as explained in Note 3 - Related Party Transactions, a single customer accounted for a significant portion of the Company's sales in fiscal 2022,2021 or 2020, and its accounts receivable as of April 30, 2022 or 2021.  During the twelve months ended April 30, 2022, 2021 and 2020, 33.0%, 31.6% and 31.4%, respectively, of total publishing revenues were derived from a single customer as explained in Note 16 - Concentration.

 

Note 11-Comprehensive Income:

Note 11 - Comprehensive Income:

The FASB's ASC Comprehensive Income topic requires the reporting of comprehensive income in addition to net income from operations.  Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that otherwise would not be recognized in the calculation of net income.

As of April 30, 2022 and April 30, 2021 the Company held fixed income securities consisting of securities issued by federal, state, and local governments within the United States that are classified as securities available-for-sale on the Consolidated Balance Sheets. The change in valuation of fixed income securities, net of deferred income taxes, has been recorded in Accumulated Other Comprehensive Income in the Company's Consolidated Balance Sheets. 

The components of comprehensive income that are included in the Consolidated  Statement of Changes in Shareholders' Equity for the twelve months ending April 30, 2022 are as follows:

 

The FASB's ASC Comprehensive Income topic requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that otherwise would not be recognized in the calculation of net income.

  

Fiscal Year Ended April 30, 2022

 

($ in thousands)

 

Amount Before

Tax

  

Tax

(Expense) /

Benefit

  

Amount Net

of Tax

 

Change in unrealized gains on available-for-sale fixed income securities

 $(34) $7  $(27)
  $(34) $7  $(27)

 

As of April 30, 2017 and April 30, 2016, the Company held equity securities consisting primarily of ETFs with high relative dividend yields that are classified as securities available-for-sale on the Consolidated Balance Sheets. As of April 30, 2017 the Company held fixed income securities consisting of certificates of deposits and securities issued by federal, state, and local governments within the United States that are classified as securities available-for-sale on the Consolidated Balance Sheets. The change in valuation of these securities, net of deferred income taxes, has been recorded in accumulated other comprehensive income in the Company's Consolidated Balance Sheets.

The components of comprehensive income that are included in the Consolidated  Statement of Changes in Shareholders' Equity for the twelve months ending April 30, 2021 are as follows:

 

The components of comprehensive income that are included in the Consolidated Statement of Changes in Shareholders' Equity for the twelve months ending April 30, 2017 are as follows:

  

Fiscal Year Ended April 30, 2021

 

($ in thousands)

 

Amount Before

Tax

  

Tax

(Expense) /

Benefit

  

Amount Net

of Tax

 

Change in unrealized gains on available-for-sale fixed income securities

 $(173) $45  $(128)
  $(173) $45  $(128)

 

  

Fiscal Year Ended April 30, 2017

 

($ in thousands)

 

Amount Before

Tax

  

Tax Expense/

(Benefit)

  

Amount Net of

Tax

 

Change in unrealized gains on securities

 $476  $(168) $308 

Less: Gains realized in net income

  39   (14)  25 
  $515  $(182) $333 

The components of comprehensive income that are included in the Consolidated  Statement of Changes in Shareholders' Equity for the twelve months ending April 30, 2020 are as follows:

 

The components of comprehensive income that are included in the Consolidated Statement of Changes in Shareholders' Equity for the twelve months ending April 30, 2016 are as follows:

  

Fiscal Year Ended April 30, 2016

 

($ in thousands)

 

Amount Before

Tax

  

Tax Expense/

(Benefit)

  

Amount Net of

Tax

 

Change in unrealized gains on securities

 $(300) $106  $(194)

Less: Gains realized in net income

  329   (115)  214 
  $29  $(9) $20 

The components of comprehensive income that are included in the Consolidated Statement of Changes in Shareholders' Equity for the twelve months ending April 30, 2015 are as follows:

  

Fiscal Year Ended April 30, 2015

 

($ in thousands)

 

Amount Before

Tax

  

Tax Expense/

(Benefit)

  

Amount Net of

Tax

 

Change in unrealized gains on securities

 $(274) $96  $(178)

Less: Gains realized in net income

  57   (20)  37 
  $(217) $76  $(141)

Note 12-Accounting for the Costs of Computer Software Developed for Internal Use:

The Company has adopted the provisions of the Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software Developed for Internal Use". SOP 98-1 requires companies to capitalize as long-lived assets many of the costs associated with developing or obtaining software for internal use and amortize those costs over the software's estimated useful life in a systematic and rational manner.

The Company capitalized $407,000 and $1,681,000 related to the development of software for internal use for the twelve months ended April 30, 2017 and 2016, respectively. Total capitalized software includes $215,000 and $1,250,000 of internal costs to develop software and $192,000 and $431,000 of third party programmers' costs for the years ended April 30, 2017 and April 30, 2016, respectively. Such costs are capitalized and amortized over the expected useful life of the asset which is 3 to 5 years. Total amortization expenses for the years ended April 30, 2017, 2016 and 2015 were $4,397,000, $3,520,000, and $2,421,000, respectively. Amortization expense in fiscal 2017 included an increase of $877,000 of production expenses primarily attributable to additional amortization of internally developed software costs related to the product production cycle that is expected to be upgraded during fiscal 2018.

  

Fiscal Year Ended April 30, 2020

 

($ in thousands)

 

Amount Before

Tax

  

Tax

(Expense) /

Benefit

  

Amount Net

of Tax

 

Change in unrealized gains on available-for-sale fixed income securities

 $134  $(37) $97 
  $134  $(37) $97 

 

65

Value Line, Inc.

Notes to Consolidated Financial Statements

 

Note 13-Treasury Stock and Repurchase Program:

Note 12 - Accounting for the Costs of Computer Software Developed for Internal Use:

The Company has adopted the provisions of the Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software Developed for Internal Use".  SOP 98-1 requires companies to capitalize as long-lived assets many of the costs associated with developing or purchasing software for internal use and amortize those costs over the software's estimated useful life in a systematic and rational manner.  Such costs, when incurred, are capitalized and amortized over the expected useful life of the asset, normally 3 to 5 years. 

During the twelve months ended April 30, 2021, the Company capitalized  $145,000 related to the third party programmers' costs. The Company  did not incur and did not capitalize expenditures related to third party programmers' costs during the twelve months ended April 30, 2022 and April 30, 2020.  Total amortization expenses for the years ended April 30, 2022, 2021 and 2020 were $73,000, $70,000 and $65,000, respectively.  

 

On September 19, 2012,

Note 13 - Treasury Stock and Repurchase Program:

On March 14, 2022, the Company's Board of Directors approved a share repurchase program authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $3,000,000. The repurchases may be made from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block purchases or otherwise. The repurchase program authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $2,000,000.  

On May 31, 2022, the Company's Board of Directors approved a renewal of a share repurchase program authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $3,000,000. The repurchases may be made from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block purchases or otherwise. The repurchase program may be suspended or discontinued at any time at the Company’s discretion and has no set expiration date. 

Treasury stock, at cost, consists of the following:

 

Treasury stock, at cost, consists of the following:

($ in thousands except for cost per share)

 

Shares

  

Cost Assigned

  

Average Cost per

Share

  

Aggregate Purchase Price Remaining under the

Program

 

Balance as of April 30, 2019

  336,439  $4,743  $14.10  $1,438 

Purchases effected in open market

  46,840  $1,214  $25.91  $- 

Balance as of April 30, 2020

  383,279  $5,957  $15.54  $2,000 

Purchases effected in open market (1)

  53,551  $1,526  $28.50  $- 

Balance as of April 30, 2021

  436,830  $7,483  $17.13  $474 

Purchases effected in open market (2)

  53,327  $2,484  $46.58  $- 

Balance as of April 30, 2022

  490,157  $9,967  $20.33  $1,241 

 

($ in thousands except for cost per share)

 

Shares

  

Cost Assigned

  

Average Cost per Share

  

Aggregate Purchase Price Remaining Under the Program

 

Balance as of April 30, 2014 (1)

  182,071  $2,122  $11.65  $2,268 

Purchases effected in open market (2)

  8,433  $122  $14.47  $2,146 

Balance as of April 30, 2015

  190,504  $2,244  $11.78  $2,146 

Purchases effected in open market (2)

  52,907  $796  $15.05  $1,350 

Balance as of April 30, 2016

  243,411  $3,040  $12.49  $1,350 

Purchases effected in open market (2)

  44,924  $741  $16.51  $609 

Balance as of April 30, 2017

  288,335  $3,781  $13.11  $609 

(1)  Were acquired during the $2 million repurchase program authorized in April 2020.  

(2)  Were acquired during the $2 million repurchase program authorized in July 2021 and the $2 million repurchase program authorized in March 2022. 

 

(1) Includes 85,219 shares with a total average cost of $1,036,000 that were acquired during the former repurchase program, which was authorized in January 2011 and expired in January 2012; 18,400 shares were acquired prior to the repurchase program authorized in January 2011.

Note 14 - Copyright Fees:

During the twelve months ended April 30, 2022, copyright fees of $13,380,000 were 4.8% above fiscal 2021. During the twelve months ended April 30, 2021, copyright fees of $12,763,000 were 0.7% above fiscal 2020.  During the twelve months ended April 30, 2020, copyright fees of $12,671,000 were 70.4% above the prior fiscal year.  As of April 30, 2022, total third party sponsored assets were $12.4 billion, as compared to $11.6 billion in assets at April 30, 2021.  

 

(2) Were acquired during the $3 million repurchase program authorized in September 2012.

Note 15 - Restricted Cash and Deposits:

Restricted Money Market Investment in the noncurrent assets on the Consolidated Condensed Balance Sheet at April 30, 2022, includes $305,000, which represents cash invested in a bank money market fund securing a letter of credit ("LOC") in the amount of $305,000 issued to the sublandlord as a security deposit for the Company's New York City leased corporate office facility.  According to the sublease agreement the LOC and restricted cash were reduced from $469,000 to $305,000 in the third quarter of fiscal year 2022.

 

Note 14-Copyright Data Fees:

Note 16 - Concentration:

During the twelve months ended April 30, 2022, 33.0% of total publishing revenues of $40,525,000 were derived from a single customer.  During the twelve months ended April 30, 2021, 31.6% of total publishing revenues of $40,392,000 were derived from a single customer. 

 

During the twelve months ended April 30, 2017, copyright data fees of $4,406,000 were 68% above fiscal 2016. As of April 30, 2017, total third party sponsored assets were attributable to three contracts for copyright data representing $3.6 billion in various products, as compared to three contracts for copyright data representing $1.8 billion in assets at April 30, 2016. 

Note 15 - Restricted Cash and Deposits:

Note 17 - Concentration of Credit Risk:

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.  At April 30, 2022 and 2021, the Company had $1,978,000 and $2,742,000, respectively, in excess of the FDIC insured limit.  Management has concluded the excess does not represent a material risk, based on the creditworthiness  of the counter parties.

 

Restricted Money Market Investment in the noncurrent assets on the Consolidated Condensed Balance Sheet at April 30, 2017, includes $469,000, which represents cash invested in a bank money market fund securing a letter of credit ("LOC") in the amount of $469,000 issued to the sublandlord as a security deposit for the Company's new leased corporate office facility.

Note 16 - Gain on Sale of Operating Facility:

On July 29, 2016,

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Value Line, closed the sale of its 85,000 sq ft distribution, fulfillment and warehouse operating facility located at 125 East Union Avenue, East Rutherford, NJ, received net proceeds of $11,555,000 and reported an incrementInc.
Notes to net profits after tax during the first quarter of fiscal 2017 of approximately $5.28 million. The distribution, fulfillment and warehouse operations were relocated to an alternative 24,110 sq ft leased facility (See Note 9).   

Consolidated Financial Statements

 

Note 17-Business Segments:

Note 18 - Business Segments:

The Publishing business segment, the Company's only reportable segment subsequent to December 23, 2010, produces investment periodicals and related publications (retail and institutional) in both print and digital form, and includes Value Line copyrights and Value Line Proprietary Ranks and other proprietary information. 

As described in Note 1 - Organization and Summary of Significant Accounting Policies, the Company deconsolidated its investment management business on December 23, 2010 and therefore no longer reports the investment management operation as a separate business unit.  Although VLI continues to receive significant cash flows from these operations through its non-controlling investment in EAM, it no longer considers this to be a reportable business segment due to its lack of control over the operating and financial policies of EAM.

 

Prior to December 23, 2010, (the Restructuring Transaction date), the Company operated two reportable business segments: (1) Publishing and (2) Investment Management. The Publishing segment, the Company's only reportable segment subsequent to the Restructuring Transaction date, produces investment periodicals and related publications (retail and institutional) in both print and digital form, and includes copyright data fees for the Value Line Proprietary Ranking System information and other proprietary information.

Note 19 - Paycheck Protection Program Loan:

Shortly after declaration of the COVID-19 pandemic and "lockdowns" of numerous non-essential businesses, the Company in April of 2020 executed a note and received a loan (the "PPP Loan") from JP Morgan Chase Bank under the Paycheck Protection Program ("PPP") which was established under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and was administered by the U.S. Small Business Administration ("SBA").  The proceeds from the PPP Loan were used in accordance with the terms of the CARES Act program.

Under the terms of the CARES Act, Borrowers could apply for and be granted forgiveness for all or a portion of the PPP Loan.  Such forgiveness is determined, subject to limitations, based on the use of loan proceeds in accordance with the terms of the CARES Act.  The Company was granted total loan forgiveness of $2,331,365 by the SBA during the second quarter of fiscal 2022.  Accrued interest was also forgiven.

 

As more fully described in Note 1 - Organization and Summary of Significant Accounting Policies, the Company deconsolidated its investment management business on December 23, 2010 and therefore no longer reports the investment management operation as a separate business unit. Although VLI continues to receive significant cash flows from these operations through its non-controlling investment in EAM, it no longer considers this to be a reportable business segment due to its lack of control over the operating and financial policies of EAM.

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