UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended OctoberJuly 31, 2019
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission File Number: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
| Colorado | 84-0524756 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employers Identification No.) |
802 South Elm St. | ||
Kimball, NE | 69145 | |
| (Address of principal executive offices) | (Zip Code) |
(308) 235-4645
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Class A Common Stock, $0.10 par value | RSKIA | OTC Markets | ||
| Convertible Preferred Stock, $20 stated value | RSKIA | OTC Markets |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (&232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] | ||
| Non-accelerated filer [ ] | Smaller reporting company [X] | ||
| Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant’s Common Stock outstanding, as of December 20,September 18, 2019 was 4,950,760.4,952,110.
EXPLANATORY NOTE
This Amendment No. 1 to Form 10-Q, or this Amendment, amends the Quarterly Report on Form 10-Q for the three months ended July 31, 2019 that we originally filed with the Securities and Exchange Commission, or the Commission, on September 18, 2019, or the Original Filing, in connection with our failure to give effect to the phase in of FASB ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) in the financial statements included in the Original Filing.
All amendments and restatements to the financial statements are non-cash in nature.
Restatement
As further discussed in Note 9 to our unaudited financial statements in Part I, Item 1, “Financial Statements” of this Amendment, on March 4, 2020, we concluded that we would restate our previously issued financial statements as of and for the three months ended July 31, 2019, as set forth in the Original Filing in connection with our failure to give effect to the phase in of ASU 2016-01 in the financial statements included in the Original Quarterly Report on Form 10-Q.
Amendment
The purpose of this Amendment is to restate our previously issued unaudited financial statements and related disclosures as of and for the three months ended July 31, 2019 in connection with the application of ASU 2016-01. This Amendment also includes (a) an amended Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to reflect the correction of the error described above.
Except as expressly set forth herein, including in the notes to the unaudited financial statements, this Amendment does not reflect events occurring after the date of the Original Filing or modify or update any of the other disclosures contained therein in any way other than as required to reflect the amendment discussed above. Accordingly, this Amendment should be read in conjunction with the Original Filing and our other filings with the Commission. Information not affected by the restatement is unchanged and reflects disclosures made at the time of the filing of the Original Filing.
Items Amended in this Filing
For reasons discussed above, we are filing this Amendment in order to amend the following items in our Original Filing to the extent necessary to reflect the adjustments discussed above and make corresponding revisions to our financial data cited elsewhere in this Amendment in connection with the application of ASU 2016-01 in this Amendment that was not previously applied:
Part I, Item 1. Financial Statements
Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part I, Item 4. Controls and Procedures
In accordance with applicable Commission rules, this Amendment includes new certifications required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, from our Chief Executive Officer and Chief Financial Officer dated as of the date of filing of this Amendment.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1.ITEM 1: Financial Statements
The unaudited financial statements for the three-and six-month periodsthree-month period ended OctoberJuly 31, 2019 are attached hereto.
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
| October 31, 2019 | April 30, 2019 | |||||||||||||||
| (unaudited) | July 31, 2019 | April 30, 2019 | ||||||||||||||
| (unaudited) | ||||||||||||||||
| ASSETS | ||||||||||||||||
| Current Assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 5,212,000 | $ | 4,873,000 | $ | 5,667,000 | $ | 4,873,000 | ||||||||
| Investments and securities | 27,385,000 | 27,291,000 | ||||||||||||||
| Investments and securities, at fair value | 27,657,000 | 27,291,000 | ||||||||||||||
| Accounts receivable: | ||||||||||||||||
| Trade, net of $4,082 and $9,321 doubtful account allowance | 2,217,000 | 2,696,000 | ||||||||||||||
| Trade, net of $8,764 and $9,321 doubtful account allowance | 2,534,000 | 2,696,000 | ||||||||||||||
| Other | 1,000 | 6,000 | 4,000 | 6,000 | ||||||||||||
| Income tax overpayment | 145,000 | 259,000 | — | 259,000 | ||||||||||||
| Inventories, net | 5,163,000 | 4,583,000 | 4,863,000 | 4,583,000 | ||||||||||||
| Prepaid expenses | 111,000 | 282,000 | 320,000 | 282,000 | ||||||||||||
| Total Current Assets | 40,234,000 | 39,990,000 | 41,045,000 | 39,990,000 | ||||||||||||
| Property and Equipment, net, at cost | 1,041,000 | 984,000 | 1,095,000 | 984,000 | ||||||||||||
| Other Assets | ||||||||||||||||
| Investment in Limited Land Partnership, at cost | 320,000 | 293,000 | 293,000 | 293,000 | ||||||||||||
| Projects in process | 17,000 | 117,000 | 1,000 | 117,000 | ||||||||||||
| Other | 3,000 | 3,000 | 3,000 | 3,000 | ||||||||||||
| Total Other Assets | 340,000 | 413,000 | 297,000 | 413,000 | ||||||||||||
| Intangible Assets, net | 1,578,000 | 1,640,000 | ||||||||||||||
| Intangible assets, net | 1,609,000 | 1,640,000 | ||||||||||||||
| TOTAL ASSETS | $ | 43,193,000 | $ | 43,027,000 | $ | 44,046,000 | $ | 43,027,000 | ||||||||
See accompanying notes to the unaudited condensed financial statements.statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(continued)
| October 31, 2019 | April 30, 2019 | |||||||
| (unaudited) | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable, trade | $ | 170,000 | $ | 206,000 | ||||
| Dividends payable | 1,892,000 | 1,714,000 | ||||||
| Accrued expenses: | ||||||||
| Payroll and other expenses | 367,000 | 356,000 | ||||||
| Total Current Liabilities | 2,429,000 | 2,276,000 | ||||||
| Long-Term Liabilities | ||||||||
| Deferred income taxes | 1,286,000 | 1,198,000 | ||||||
| Total Long-Term Liabilities | 1,286,000 | 1,198,000 | ||||||
| Total Liabilities | 3,715,000 | 3,474,000 | ||||||
| Commitments and Contingencies | — | — | ||||||
| Stockholders’ Equity | ||||||||
| Convertible preferred stock, 1,000,000 shares authorized, Series 1—noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding | 99,000 | 99,000 | ||||||
| Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and outstanding | 850,000 | 850,000 | ||||||
| Additional paid-in capital | 1,934,000 | 1,934,000 | ||||||
| Accumulated other comprehensive income | 2,983,000 | 2,752,000 | ||||||
| Retained earnings | 37,893,000 | 38,145,000 | ||||||
| Less: treasury stock, 3,550,771 and 3,544,271 shares, at cost | (4,281,000 | ) | (4,227,000 | ) | ||||
| Total Stockholders’ Equity | 39,478,000 | 39,553,000 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 43,193,000 | $ | 43,027,000 | ||||
| July 31, 2019 | April 30, 2019 | |||||||
| (unaudited) | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable, trade | $ | 261,000 | $ | 206,000 | ||||
| Dividends payable | 1,714,000 | 1,714,000 | ||||||
| Accrued expenses: | ||||||||
| Payroll and related expenses | 287,000 | 356,000 | ||||||
| Property taxes | 3,000 | — | ||||||
| Income tax payable | 30,000 | — | ||||||
| Total Current Liabilities | 2,295,000 | 2,276,000 | ||||||
| Long-Term Liabilities | ||||||||
| Deferred income taxes | 1,240,000 | 1,198,000 | ||||||
| Total Long-Term Liabilities | 1,240,000 | 1,198,000 | ||||||
| Total Liabilities | 3,535,000 | 3,474,000 | ||||||
| Commitments and contingencies | — | — | ||||||
| Stockholders’ Equity | ||||||||
| Convertible preferred stock, 1,000,000 shares authorized, Series 1—noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding | 99,000 | 99,000 | ||||||
| Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and outstanding | 850,000 | 850,000 | ||||||
| Additional paid-in capital | 1,934,000 | 1,934,000 | ||||||
| Accumulated other comprehensive income | 49,000 | 14,000 | ||||||
| Retained earnings | 41,859,000 | 40,883,000 | ||||||
| Less: treasury stock, 3,550,571 and 3,544,271 shares, at cost | (4,280,000 | ) | (4,227,000 | ) | ||||
| Total Stockholders’ Equity | 40,511,000 | 39,553,000 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 44,046,000 | $ | 43,027,000 | ||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED INCOME STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED OCTOBERJULY 31, 2019 AND 2018
(Unaudited)
| Three months | Six months | Three months | Six months | |||||||||||||||||||||
| ended | ended | ended | ended | July 31, 2019 | July 31, 2018 | |||||||||||||||||||
| Oct 31, 2019 | Oct 31, 2019 | Oct 31, 2018 | Oct 31, 2018 | |||||||||||||||||||||
| Net Sales | $ | 3,710,000 | $ | 7,263,000 | $ | 3,667,000 | $ | 7,096,000 | $ | 3,552,000 | $ | 3,429,000 | ||||||||||||
| Less: Cost of Goods Sold | (1,860,000 | ) | (3,630,000 | ) | (1,893,000 | ) | (3,695,000 | ) | (1,769,000 | ) | (1,801,000 | ) | ||||||||||||
| Gross Profit | 1,850,000 | 3,633,000 | 1,774,000 | 3,401,000 | 1,783,000 | 1,628,000 | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||
| General and Administrative | 329,000 | 626,000 | 331,000 | 616,000 | 297,000 | 286,000 | ||||||||||||||||||
| Sales | 555,000 | 1,112,000 | 525,000 | 1,080,000 | 557,000 | 555,000 | ||||||||||||||||||
| Engineering | 17,000 | 32,000 | 28,000 | 37,000 | 14,000 | 9,000 | ||||||||||||||||||
| Rent Paid to Related Parties | 3,000 | 8,000 | 4,000 | 9,000 | 5,000 | 5,000 | ||||||||||||||||||
| Total Operating Expenses | 904,000 | 1,778,000 | 888,000 | 1,742,000 | 873,000 | 885,000 | ||||||||||||||||||
| Income From Operations | 946,000 | 1,855,000 | 886,000 | 1,659,000 | 910,000 | 773,000 | ||||||||||||||||||
| Other Income (Expense) | ||||||||||||||||||||||||
| Other | 1,000 | 2,000 | 6,000 | 8,000 | 1,000 | 3,000 | ||||||||||||||||||
| Dividend and Interest Income | 166,000 | 359,000 | 152,000 | 345,000 | 193,000 | 193,000 | ||||||||||||||||||
| Gain (Loss) on Investments | 10,000 | 59,000 | (27,000 | ) | (94,000 | ) | ||||||||||||||||||
| 177,000 | 420,000 | 131,000 | 259,000 | |||||||||||||||||||||
| Unrealized gain (loss) on marketable securities | 145,000 | — | ||||||||||||||||||||||
| Gain (Loss) on Sale of Investments | 49,000 | (68,000 | ) | |||||||||||||||||||||
| Total Other Income | 388,000 | 128,000 | ||||||||||||||||||||||
| Income Before Provisions for Income Taxes | 1,123,000 | 2,275,000 | 1,017,000 | 1,918,000 | 1,298,000 | 901,000 | ||||||||||||||||||
| Provisions for Income Taxes: | ||||||||||||||||||||||||
| Provisions for Income Taxes | ||||||||||||||||||||||||
| Current Expense | (258,000 | ) | (552,000 | ) | (261,000 | ) | (508,000 | ) | 294,000 | 247,000 | ||||||||||||||
| Deferred Tax Benefit (Expense) | (1,000 | ) | 6,000 | 12,000 | (24,000 | ) | ||||||||||||||||||
| Deferred tax expense | 28,000 | 37,000 | ||||||||||||||||||||||
| Total Income Tax Expense | (259,000 | ) | (546,000 | ) | (249,000 | ) | (532,000 | ) | 322,000 | 284,000 | ||||||||||||||
| Net Income | $ | 864,000 | $ | 1,729,000 | $ | 768,000 | $ | 1,386,000 | $ | 976,000 | $ | 617,000 | ||||||||||||
| Income Per Share of Common Stock | ||||||||||||||||||||||||
| Basic | $ | 0.17 | $ | 0.35 | $ | 0.15 | $ | 0.28 | ||||||||||||||||
| Diluted | $ | 0.17 | $ | 0.35 | $ | 0.15 | $ | 0.28 | ||||||||||||||||
| Basic Earnings Per Share of Common Stock | $ | 0.20 | $ | 0.12 | ||||||||||||||||||||
| Diluted Earnings Per Share of Common Stock | $ | 0.20 | $ | 0.12 | ||||||||||||||||||||
| Weighted Average Number of Common | ||||||||||||||||||||||||
| Shares Outstanding | ||||||||||||||||||||||||
| Basic | 4,952,110 | 4,954,250 | 4,962,177 | 4,964,879 | ||||||||||||||||||||
| Diluted | 4,972,610 | 4,974,750 | 4,982,677 | 4,985,379 | ||||||||||||||||||||
| Weighted Average Number of Common Shares Outstanding | 4,956,389 | 4,967,580 | ||||||||||||||||||||||
| Weighted Average Number of Shares Outstanding (Diluted) | 4,976,889 | 4,988,080 | ||||||||||||||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED OCTOBERJULY 31, 2019 AND 2018
(Unaudited)
| Three months | Six months | Three months | Six months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
| Oct 31, 2019 | Oct 31, 2019 | Oct 31, 2018 | Oct 31, 2018 | |||||||||||||
| Net Income | $ | 864,000 | $ | 1,729,000 | $ | 768,000 | $ | 1,386,000 | ||||||||
| Other Comprehensive Income, net of tax | ||||||||||||||||
| Unrealized gain (loss) on securities: | ||||||||||||||||
| Unrealized holding gains (losses) arising during period | 241,000 | 565,000 | (1,245,000 | ) | (638,000 | ) | ||||||||||
| Reclassification adjustment for gains (losses) included in net income | (111,000 | ) | (240,000 | ) | (7,000 | ) | 37,000 | |||||||||
| Income tax benefit (expense) related to other comprehensive income | (37,000 | ) | (94,000 | ) | 361,000 | 173,000 | ||||||||||
| Other Comprehensive Income (Loss) | 93,000 | 231,000 | (891,000 | ) | (428,000 | ) | ||||||||||
| Comprehensive Income (Loss) | $ | 957,000 | $ | 1,960,000 | $ | (123,000 | ) | $ | 958,000 | |||||||
| July 31, 2019 | July 31, 2018 | |||||||
| Net Income | $ | 976,000 | $ | 617,000 | ||||
| Other Comprehensive Income, Net of Tax | ||||||||
| Unrealized gain (loss) on securities: | ||||||||
| Unrealized holding gains arising during period | 49,000 | 607,000 | ||||||
| Reclassification adjustment for gains included in net income | — | 44,000 | ||||||
| Income tax expense related to other comprehensive income | (14,000 | ) | (188,000 | ) | ||||
| Other Comprehensive Income | 35,000 | 463,000 | ||||||
| Comprehensive Income | $ | 1,011,000 | $ | 1,080,000 | ||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSEDSTATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED OCTOBERJULY 31, 2019 ANDand 2018
(Unaudited)
| Preferred Stock | Common Stock Class A | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Balances, July 31, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||
| Dividend declared at $0.40 per common share outstanding | — | — | — | — | ||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||
| Net Income | — | — | — | — | ||||||||||||
| Balances, October 31, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Preferred Stock | Common Stock Class A | Preferred Stock | Common Stock Class A | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
| Balances, July 31, 2018 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||||||||||||||||||
| Balances, April 30, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||||||||||||||||||
| Purchases of common stock | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Dividend declared at $0.38 per common share outstanding | ||||||||||||||||||||||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Net Income | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Balances, October 31, 2018 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||||||||||||||||||
| Balances, July 31, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||||||||||||||||||
| Preferred Stock | Common Stock Class A | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
| Balances, April 30, 2018 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||||||||||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||||||||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||||||||||||||||||
| Net Income | — | — | — | — | ||||||||||||||||||||||||||||
| Balances, July 31, 2018 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSEDSTATEMENTS OF STOCKHOLDERS’ EQUITYEQUITIY
FOR THE THREE MONTHS ENDED OCTOBERJULY 31, 2019 ANDand 2018
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury Stock | Other | |||||||||||||||||||||||||||||||||||||||||||
| Paid-In | Paid-In | Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | Paid-In | (Common Class A) | Comprehensive | Retained | ||||||||||||||||||||||||||||||||||||
| Capital | Capital | Shares | Amount | Income | Earnings | Total | Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||||||||||||||||
| $ | 1,934,000 | 3,550,571 | $ | (4,280,000 | ) | $ | 2,890,000 | $ | 39,011,000 | $ | 40,504,000 | 1,934,000 | 3,544,271 | $ | (4,227,000 | ) | $ | 14,000 | $ | 40,883,000 | $ | 39,553,000 | ||||||||||||||||||||||
| — | 200 | (2,000 | ) | — | — | (2,000 | ) | — | 6,300 | (53,000 | ) | — | — | (53,000 | ) | |||||||||||||||||||||||||||||
| — | — | — | — | (1,981,000 | ) | (1,981,000 | ) | — | — | — | 35,000 | — | 35,000 | |||||||||||||||||||||||||||||||
| — | — | — | 93,000 | — | 93,000 | — | — | — | — | 976,000 | 976,000 | |||||||||||||||||||||||||||||||||
| — | — | — | — | 864,000 | 864,000 | |||||||||||||||||||||||||||||||||||||||
| $ | 1,934,000 | 3,550,771 | $ | (4,282,000 | ) | $ | 2,983,000 | $ | 37,894,000 | $ | 39,478,000 | 1,934,000 | 3,550,571 | $ | (4,280,000 | ) | $ | 49,000 | $ | 41,859,000 | $ | 40,511,000 | ||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury Stock | Other | |||||||||||||||||||||||||||||||||||||||||||
| Paid-In | Paid-In | Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | Paid-In | (Common Class A) | Comprehensive | Retained | ||||||||||||||||||||||||||||||||||||
| Capital | Capital | Shares | Amount | Income | Earnings | Total | Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||||||||||||||||
| $ | 1,934,000 | 3,535,434 | $ | (4,153,000 | ) | $ | 2,712,000 | $ | 37,364,000 | $ | 38,806,000 | 1,934,000 | 3,534,784 | $ | (4,148,000 | ) | $ | 2,249,000 | $ | 36,746,000 | $ | 37,730,000 | ||||||||||||||||||||||
| — | 5,800 | (49,000 | ) | — | — | (49,000 | ) | — | 650 | (5,000 | ) | — | — | (5,000 | ) | |||||||||||||||||||||||||||||
| — | — | — | — | (1,886,000 | ) | (1,886,000 | ) | — | — | — | 463,000 | — | 463,000 | |||||||||||||||||||||||||||||||
| — | — | — | (891,000 | ) | — | (891,000 | ) | — | — | — | — | 617,000 | 617,000 | |||||||||||||||||||||||||||||||
| — | — | — | — | 768,000 | 768,000 | |||||||||||||||||||||||||||||||||||||||
| $ | 1,934,000 | 3,541,234 | $ | (4,202,000 | ) | $ | 1,821,000 | $ | 36,246,000 | $ | 36,748,000 | 1,934,000 | 3,535,434 | $ | (4,153,000 | ) | $ | 2,712,000 | $ | 37,363,000 | $ | 38,805,000 | ||||||||||||||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED OCTOBER 31, 2019 AND 2018
(Unaudited)
| Preferred Stock | Common Stock Class A | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Balances, April 30, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||
| Dividend declared at $0.40 per common share outstanding | — | — | — | — | ||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||
| Net Income | — | — | — | — | ||||||||||||
| Balances, October 31, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Preferred Stock | Common Stock Class A | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Balances, April 30, 2018 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||
| Dividend declared at $0.38 per common share outstanding | ||||||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||
| Net Income | — | — | — | — | ||||||||||||
| Balances, October 31, 2018 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED OCTOBER 31, 2019 AND 2018
(Unaudited)
Paid-In | Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | |||||||||||||||||||
| Capital | Shares | Amount | Income | Earnings | Total | |||||||||||||||||
| $ | 1,934,000 | 3,544,271 | $ | (4,227,000 | ) | $ | 2,752,000 | $ | 38,145,000 | $ | 39,553,000 | |||||||||||
| — | 6,500 | (54,000 | ) | — | — | (54,000 | ) | |||||||||||||||
| — | �� | — | — | — | (1,981,000 | ) | (1,981,000 | ) | ||||||||||||||
| — | — | — | 231,000 | — | 231,000 | |||||||||||||||||
| — | — | — | — | 1,729,000 | 1,729,000 | |||||||||||||||||
| $ | 1,934,000 | 3,550,771 | $ | (4,281,000 | ) | $ | 2,983,000 | $ | 37,893,000 | $ | 39,478,000 | |||||||||||
| Paid-In | Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | |||||||||||||||||||
| Capital | Shares | Amount | Income | Earnings | Total | |||||||||||||||||
| $ | 1,934,000 | 3,534,784 | $ | (4,148,000 | ) | $ | 2,249,000 | $ | 36,746,000 | $ | 37,730,000 | |||||||||||
| — | 6,450 | (54,000 | ) | — | — | (54,000 | ) | |||||||||||||||
| — | — | — | — | (1,886,000 | ) | (1,886,000 | ) | |||||||||||||||
| — | — | — | (428,000 | ) | — | (428,000 | ) | |||||||||||||||
| — | — | — | — | 1,386,000 | 1,386,000 | |||||||||||||||||
| $ | 1,934,000 | 3,541,234 | $ | (4,202,000 | ) | $ | 1,821,000 | $ | 36,246,000 | $ | 36,748,000 | |||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTSOFSTATEMENTS OF CASH FLOWS
FOR THE SIXTHREE MONTHS ENDED OCTOBERJULY 31, 2019 AND 2018
(Unaudited)
| Oct 31, 2019 | Oct 31, 2018 | July 31, 2019 | July 31, 2018 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||
| Net Income | $ | 1,729,000 | $ | 1,386,000 | $ | 976,000 | $ | 617,000 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 183,000 | 167,000 | 89,000 | 83,000 | ||||||||||||
| (Gain) loss on sale of investments | (100,000 | ) | 62,000 | (83,000 | ) | 68,000 | ||||||||||
| Impairments on investments | 41,000 | 32,000 | 34,000 | — | ||||||||||||
| Unrealized (gain) loss on marketable securities | (145,000 | ) | — | |||||||||||||
| Reserve for bad debts | (6,000 | ) | 6,000 | (2,000 | ) | 3,000 | ||||||||||
| Reserve for obsolete inventory | 2,000 | 18,000 | 8,000 | 6,000 | ||||||||||||
| Deferred income taxes | (6,000 | ) | 25,000 | 28,000 | 37,000 | |||||||||||
| (Gain) loss on sale of assets | — | (4,000 | ) | |||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||
| (Increase) decrease in: | ||||||||||||||||
| Accounts receivable | 486,000 | 23,000 | 163,000 | 234,000 | ||||||||||||
| Inventories | (583,000 | ) | (435,000 | ) | (288,000 | ) | (389,000 | ) | ||||||||
| Prepaid expenses and projects in process | 271,000 | 168,000 | ||||||||||||||
| Other receivables | 5,000 | (2,000 | ) | |||||||||||||
| Prepaid expenses | 79,000 | 166,000 | ||||||||||||||
| Employee receivables | 2,000 | — | ||||||||||||||
| Income tax overpayment | 114,000 | (97,000 | ) | — | 244,000 | |||||||||||
| Increase (decrease) in: | ||||||||||||||||
| Accounts payable | (36,000 | ) | (189,000 | ) | 55,000 | (7,000 | ) | |||||||||
| Accrued expenses | 11,000 | 8,000 | (66,000 | ) | (172,000 | ) | ||||||||||
| Income tax payable | 289,000 | — | ||||||||||||||
| Net cash provided by operating activities | 2,111,000 | 1,172,000 | 1,139,000 | 890,000 | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Cash Flows From Investing Activities: | ||||||||||||||||
| (Purchase) of property and equipment | (179,000 | ) | — | (169,000 | ) | — | ||||||||||
| Proceeds from sale of marketable securities | 540,000 | 754,000 | 9,000 | 2,000 | ||||||||||||
| (Purchase) of marketable securities | (250,000 | ) | (324,000 | ) | (132,000 | ) | (233,000 | ) | ||||||||
| (Purchase) of long-term investment | (27,000 | ) | — | |||||||||||||
| Net cash provided by investing activities | 84,000 | 430,000 | ||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Net cash (used in) investing activities | (292,000 | ) | (231,000 | ) | ||||||||||||
| Cash Flows From Financing Activities: | ||||||||||||||||
| (Purchase) of treasury stock | (54,000 | ) | (54,000 | ) | (53,000 | ) | (5,000 | ) | ||||||||
| Dividends paid | (1,802,000 | ) | (1,752,000 | ) | — | (1,000 | ) | |||||||||
| Net cash (used in) financing activities | (1,856,000 | ) | (1,806,000 | ) | (53,000 | ) | (6,000 | ) | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 339,000 | (204,000 | ) | |||||||||||||
| Net Increase in Cash and Cash Equivalents | $ | 794,000 | $ | 653,000 | ||||||||||||
| Cash and Cash Equivalents, beginning of period | 4,873,000 | 4,294,000 | $ | 4,873,000 | $ | 4,294,000 | ||||||||||
| Cash and Cash Equivalents, end of period | $ | 5,212,000 | $ | 4,090,000 | $ | 5,667,000 | $ | 4,947,000 | ||||||||
| Supplemental Disclosure for Cash Flow Information: | ||||||||||||||||
| Cash payments for: | ||||||||||||||||
| Income taxes | $ | 605,000 | $ | 600,000 | ||||||||||||
| Income taxes paid | $ | 0 | $ | 0 | ||||||||||||
| Interest paid | $ | — | $ | 1,000 | $ | 0 | $ | 1,000 | ||||||||
| Cash receipts for: | ||||||||||||||||
| Income taxes | $ | 159,000 | $ | — | ||||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
OCTOBERJULY 31, 2019
Note 11: Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2019 annual report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year.
Accounting Estimates—The preparation of these financial statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts.
Recently Issued Accounting Pronouncements — In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning May 1, 2019. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) and ASU 2018-20, “Narrow-Scope Improvements for Lessors”. ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. During the first quarter of 2019, the FASB issued ASU 2019-01, Leases (Topic 842) to amend ASU 2016-02. This amendment exempts both lessees and lessors from having to provide certain prior year interim disclosure information in the fiscal year in which a company adopts the new leases standard. The Company has adopted the ASUs in the first quarter of fiscal year 2020 and the Company’s accounting systems have been upgraded to comply with the requirements of the new standard, however, the adoption of ASU 2016-02 did not have a material impact on the Company’s financial statements and related disclosures because leases are not material to the financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.
In August 2018, The FASB issued ASU 2018-14 to improve the effectiveness of disclosures for defined benefit plans under ASC 715-20. The ASU applies to employers that sponsor defined benefit pension or other postretirement plans. The FASB issued ASU 2018-14 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness of disclosures in the notes to financial statements. As part of the project, during August 2018, the Board also issued a Concepts Statement, which the FASB used as a basis for amending the disclosure requirements for Subtopic 715-20. The guidance is effective or fiscal years ending after December 15, 2020 and early adoption is permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.
In June 2016, the FASB issued ASU 2016-13(“ASU 2016-13”),No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments—Credit Losses. Subsequently,Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” “ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” “Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” and “ASU No. 2019-05, Financial Instruments-Instruments - Credit Losses (Topic 326): Targeted Transition Relief, and codification improvements to Topic 326 in ASU 2019-11, ASU 2019-04 and ASU 2018-19. The amendments update” which provided additional implementation guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach).previously issued ASU. The ASU is effective for fiscal years beginning after December 15, 2020. Subsequent to September 30, 2019, the FASB issuedThe ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since therequires a modified retrospective adoption method. The Company is an SRC, implementation is not needed until May 1, 2023. The Company will continue to evaluatestill evaluating the effectimpact of adopting ASU 2016-13 will haveadoption on the Company’sits financial statements and disclosures.
Note 22: Investments
The Company has investments in publicly traded equity securities, corporate bonds, state and municipal debt securities, real estate investment trusts, certificates of deposit, and money markets funds. Themarkets. Effective with the Company’s adoption of ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, on May 1, 2018, the Company carries all investments in securities are classified as available-for-sale securities and are reported at fair value. Available-for-salevalue, with unrealized gain or loss on equity securities reported through other income. The investments in debt securities maturehave maturities between NovemberSeptember 2019 and September 2042.January 2044. The Company uses the average cost method to determine the cost of securities sold and the amount reclassified out of accumulated other comprehensive income intowith any unrealized gains or losses reported in each respective period’s earnings. Unrealized gains and losses are excluded from earnings and reported separately as a component of stockholders’ equity. Dividend and interest income are reported as earned.
As of OctoberJuly 31, 2019 and April 30, 2019, investments consisted of the following:
| Gross | Gross | Gross | Gross | |||||||||||||||||||||||||||||
| Investments at | Cost | Unrealized | Unrealized | Fair | Cost | Unrealized | Unrealized | Fair | ||||||||||||||||||||||||
| October 31, 2019 | Basis | Gains | Losses | Value | ||||||||||||||||||||||||||||
| July 31, 2019 | Basis | Gains | Losses | Value | ||||||||||||||||||||||||||||
| Municipal bonds | $ | 5,362,000 | 122,000 | (47,000 | ) | 5,437,000 | $ | 5,475,000 | $ | 117,000 | $ | (43,000 | ) | $ | 5,549,000 | |||||||||||||||||
| Corporate bonds | 26,000 | — | — | 26,000 | 26,000 | — | — | 26,000 | ||||||||||||||||||||||||
| REITs | 89,000 | 2,000 | (8,000 | ) | 83,000 | 89,000 | 3,000 | (9,000 | ) | 83,000 | ||||||||||||||||||||||
| Equity securities | 16,943,000 | 4,375,000 | (254,000 | ) | 21,064,000 | �� | 16,729,000 | 4,252,000 | (260,000 | ) | 20,721,000 | |||||||||||||||||||||
| Money markets and CDs | 774,000 | 1,000 | — | 775,000 | 1,278,000 | — | — | 1,278,000 | ||||||||||||||||||||||||
| Total | $ | 23,194,000 | $ | 4,500,000 | $ | (309,000 | ) | $ | 27,385,000 | $ | 23,597,000 | $ | 4,372,000 | $ | (312,000 | ) | $ | 27,657,000 | ||||||||||||||
| Gross | Gross | |||||||||||||||
| Investments at | Cost | Unrealized | Unrealized | Fair | ||||||||||||
| April 30, 2019 | Basis | Gains | Losses | Value | ||||||||||||
| Municipal bonds | $ | 5,459,000 | $ | 79,000 | $ | (55,000 | ) | $ | 5,483,000 | |||||||
| Corporate bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | 89,000 | 1,000 | (6,000 | ) | 84,000 | |||||||||||
| Equity securities | 16,618,000 | 4,143,000 | (296,000 | ) | 20,465,000 | |||||||||||
| Money markets and CDs | 1,233,000 | — | — | 1,233,000 | ||||||||||||
| Total | $ | 23,425,000 | $ | 4,223,000 | $ | (357,000 | ) | $ | 27,291,000 | |||||||
Marketable securities that are equity securities are carried at fair value on the balance sheets with changes in fair value recorded as an unrealized gain or (loss) in the Statements of Operations in the period of the change, and debt securities are carried at fair value on the balance sheet with changes in fair value recorded as unrealized gains or (losses) in the Statement of Comprehensive Income. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of operations. On April 30, 2019, as a result of the adoption of ASU 2016-01 – Financial Instruments, the Company reclassified $2,424,000 of net unrealized gains on marketable securities, that were formerly classified as available-for-sale securities before the adoption of the new standard, from Accumulated Other Comprehensive Income to Retained Earnings.
| Gross | Gross | |||||||||||||||
| Investments at | Cost | Unrealized | Unrealized | Fair | ||||||||||||
| April 30, 2019 | Basis | Gains | Losses | Value | ||||||||||||
| Municipal bonds | $ | 5,459,000 | $ | 79,000 | $ | (55,000 | ) | $ | 5,483,000 | |||||||
| Corporate bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | 89,000 | 1,000 | (6,000 | ) | 84,000 | |||||||||||
| Equity securities | 16,618,000 | 4,143,000 | (296,000 | ) | 20,465,000 | |||||||||||
| Money markets and CDs | 1,233,000 | — | — | 1,233,000 | ||||||||||||
| Total | $ | 23,425,000 | $ | 4,223,000 | $ | (357,000 | ) | $ | 27,291,000 | |||||||
The Company evaluates all marketable securities for other-than-temporaryother-than temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately oneon year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, management recorded an impairment loss of $7,000$34,000 for the quarter and recorded a loss of $41,000 for the six months ended OctoberJuly 31, 2019. As forFor the corresponding periods last year,prior quarter ended July 31, 2018, management recorded andid not need to record any impairment loss of $32,000 for both the quarter and six-months ended October 31, 2018.losses.
The following table shows the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at OctoberJuly 31, 2019 and April 30, 2019, respectively.
Unrealized Loss Breakdown by Investment Type at OctoberJuly 31, 2019
| Less than 12 months | 12 months or greater | Total | Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||||||||||||||||||||||
| Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||||||||||
| Municipal bonds | $ | — | $ | — | $ | 512,000 | $ | (47,000 | ) | $ | 512,000 | $ | (47,000 | ) | $ | — | $ | — | $ | 448,000 | $ | (43,000 | ) | $ | 448,000 | $ | (43,000 | ) | ||||||||||||||||||||
| REITs | — | — | 59,000 | (8,000 | ) | 59,000 | (8,000 | ) | — | — | 30,000 | (9,000 | ) | 30,000 | (9,000 | ) | ||||||||||||||||||||||||||||||||
| Equity securities | 1,214,000 | (66,000 | ) | 1,819,000 | (188,000 | ) | 3,033,000 | (254,000 | ) | 1,975,000 | (147,000 | ) | 729,000 | (113,000 | ) | 2,704,000 | (260,000 | ) | ||||||||||||||||||||||||||||||
| Total | $ | 1,214,000 | $ | (66,000 | ) | $ | 2,390,000 | $ | (243,000 | ) | $ | 3,604,000 | $ | (309,000 | ) | $ | 1,975,000 | $ | (147,000 | ) | $ | 1,207,000 | $ | (165,000 | ) | $ | 3,182,000 | $ | (312,000 | ) | ||||||||||||||||||
Unrealized Loss Breakdown by Investment Type at April 30, 2019
| Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
| Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
| Municipal bonds | $ | 772,000 | $ | (4,000 | ) | $ | 580,000 | $ | (50,000 | ) | $ | 1,352,000 | $ | (54,000 | ) | |||||||||
| REITs | — | — | 32,000 | (6,000 | ) | 32,000 | (6,000 | ) | ||||||||||||||||
| Equity securities | 932,000 | (102,000 | ) | 1,652,000 | (195,000 | ) | 2,584,000 | (297,000 | ) | |||||||||||||||
| Total | $ | 1,704,000 | $ | (106,000 | ) | $ | 2,264,000 | $ | (251,000 | ) | $ | 3,968,000 | $ | (357,000 | ) | |||||||||
Municipal Bonds
The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at OctoberJuly 31, 2019.
Marketable Equity Securities and REITs
The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at OctoberJuly 31, 2019.
Note 33: Inventories
Inventories at OctoberJuly 31, 2019 and April 30, 2019 consisted of the following:
| October 31, 2019 | April 30, 2019 | July 31, 2019 | April 30, 2019 | |||||||||||||
| Raw materials | $ | 4,131,000 | $ | 3,644,000 | $ | 3,878,000 | $ | 3,644,000 | ||||||||
| Work in process | 458,000 | 389,000 | 368,000 | 389,000 | ||||||||||||
| Finished goods | 667,000 | 641,000 | 715,000 | 641,000 | ||||||||||||
| 5,256,000 | 4,674,000 | 4,961,000 | 4,674,000 | |||||||||||||
| Less: allowance for obsolete inventory | (93,000 | ) | (91,000 | ) | (98,000 | ) | (91,000 | ) | ||||||||
| Inventories, net | $ | 5,163,000 | $ | 4,583,000 | $ | 4,863,000 | $ | 4,583,000 | ||||||||
Note 44: Business Segments
The following is financial information relating to industry segments:
| Three months ended | Six months ended | Three months ended | Six months ended | |||||||||||||
| Oct 31, 2019 | Oct 31, 2019 | Oct 31, 2018 | Oct 31, 2018 | |||||||||||||
| Net revenue: | ||||||||||||||||
| Security alarm products | $ | 2,985,000 | $ | 5,852,000 | $ | 2,852,000 | $ | 5,371,000 | ||||||||
| Cable & wiring tools | 571,000 | 1,071,000 | 649,000 | 1,351,000 | ||||||||||||
| Other products | 154,000 | 340,000 | 166,000 | 374,000 | ||||||||||||
| Total net revenue | $ | 3,710,000 | $ | 7,263,000 | $ | 3,667,000 | $ | 7,096,000 | ||||||||
| Income from operations: | ||||||||||||||||
| Security alarm products | $ | 762,000 | $ | 1,495,000 | $ | 689,000 | $ | 1,291,000 | ||||||||
| Cable & wiring tools | 140,000 | 273,000 | 157,000 | 293,000 | ||||||||||||
| Other products | 44,000 | 87,000 | 40,000 | 75,000 | ||||||||||||
| Total income from operations | $ | 946,000 | $ | 1,855,000 | $ | 886,000 | $ | 1,659,000 | ||||||||
| Depreciation and amortization: | ||||||||||||||||
| Security alarm products | $ | 71,000 | $ | 94,000 | $ | 10,000 | $ | 20,000 | ||||||||
| Cable & wiring tools | 31,000 | 62,000 | 31,000 | 62,000 | ||||||||||||
| Other products | (4,000 | ) | 16,000 | 28,000 | 55,000 | |||||||||||
| Corporate general | (4,000 | ) | 11,000 | 15,000 | 30,000 | |||||||||||
| Total depreciation and amortization | $ | 94,000 | $ | 183,000 | $ | 84,000 | $ | 167,000 | ||||||||
| Capital expenditures: | ||||||||||||||||
| Security alarm products | $ | 10,000 | $ | 179,000 | $ | — | $ | — | ||||||||
| Cable & wiring tools | — | — | — | — | ||||||||||||
| Other products | — | — | — | — | ||||||||||||
| Corporate general | — | — | — | — | ||||||||||||
| Total capital expenditures | $ | 10,000 | $ | 179,000 | $ | — | $ | — | ||||||||
| July 31, | ||||||||
| 2019 | 2018 | |||||||
| Net revenue: | ||||||||
| Security alarm products | $ | 2,830,000 | $ | 2,150,000 | ||||
| Cable & wiring tools | 536,000 | 679,000 | ||||||
| Other products | 186,000 | 600,000 | ||||||
| Total net revenue | $ | 3,552,000 | $ | 3,429,000 | ||||
| Income from operations: | ||||||||
| Security alarm products | $ | 725,000 | $ | 485,000 | ||||
| Cable & wiring tools | 137,000 | 153,000 | ||||||
| Other products | 48,000 | 135,000 | ||||||
| Total income from operations | $ | 910,000 | $ | 773,000 | ||||
| Depreciation and amortization: | ||||||||
| Security alarm products | $ | 23,000 | $ | 10,000 | ||||
| Cable & wiring tools | 31,000 | 31,000 | ||||||
| Other products | 20,000 | 27,000 | ||||||
| Corporate general | 15,000 | 15,000 | ||||||
| Total depreciation and amortization | $ | 89,000 | $ | 83,000 | ||||
| Capital expenditures: | ||||||||
| Security alarm products | $ | 169,000 | $ | — | ||||
| Cable & wiring tools | — | — | ||||||
| Other products | — | — | ||||||
| Corporate general | — | — | ||||||
| Total capital expenditures | $ | 169,000 | $ | — | ||||
| October 31, 2019 | April 30, 2019 | |||||||||||||||
| Identifiable assets: | July 31, 2019 | April 30, 2019 | ||||||||||||||
| Security alarm products | $ | 6,351,000 | $ | 6,179,000 | $ | 6,369,000 | $ | 6,179,000 | ||||||||
| Cable & wiring tools | 2,666,000 | 2,713,000 | 2,725,000 | 2,713,000 | ||||||||||||
| Other products | 835,000 | 842,000 | 864,000 | 842,000 | ||||||||||||
| Corporate general | 33,341,000 | 33,293,000 | 34,088,000 | 33,293,000 | ||||||||||||
| Total assets | $ | 43,193,000 | $ | 43,027,000 | $ | 44,046,000 | $ | 43,027,000 | ||||||||
Note 55: Earnings per Share
Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are:
| For the three months ended October 31, 2019 | ||||||||||||
| Income | Shares | Per-share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net Income | $ | 864,000 | ||||||||||
| Basic EPS | $ | 864,000 | 4,952,110 | $ | .1745 | |||||||
| Effect of dilutive securities: | ||||||||||||
| Convertible preferred stock | 0 | 20,500 | (.0007 | ) | ||||||||
| Diluted EPS | $ | 864,000 | 4,972,610 | $ | .1738 | |||||||
| For the three months ended July 31, 2019 | ||||||||||||
| Income | Shares | Per-Share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net income | $ | 976,000 | ||||||||||
| Basic EPS | $ | 976,000 | 4,956,389 | $ | .1969 | |||||||
| Effect of dilutive Convertible Preferred Stock | – | 20,500 | (.0008 | ) | ||||||||
| Diluted EPS | $ | 976,000 | 4,976,889 | $ | .1961 | |||||||
| For the six months ended October 31, 2019 | ||||||||||||
| Income | Shares | Per-share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net Income | $ | 1,729,000 | ||||||||||
| Basic EPS | $ | 1,729,000 | 4,954,250 | $ | .3490 | |||||||
| Effect of dilutive securities: | ||||||||||||
| Convertible preferred stock | 0 | 20,500 | (.0014 | ) | ||||||||
| Diluted EPS | $ | 1,729,000 | 4,974,750 | $ | .3476 | |||||||
| For the three months ended October 31, 2018 | ||||||||||||
| Income | Shares | Per-share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net Income | $ | 768,000 | ||||||||||
| Basic EPS | $ | 768,000 | 4,962,177 | $ | .1548 | |||||||
| Effect of dilutive securities: | ||||||||||||
| Convertible preferred stock | 0 | 20,500 | (.0007 | ) | ||||||||
| Diluted EPS | $ | 768,000 | 4,982,677 | $ | .1541 | |||||||
| For the six months ended October 31, 2018 | ||||||||||||
| Income | Shares | Per-share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net Income | $ | 1,386,000 | ||||||||||
| Basic EPS | $ | 1,386,000 | 4,964,879 | $ | .2792 | |||||||
| Effect of dilutive securities: | ||||||||||||
| Convertible preferred stock | 0 | 20,500 | (.0012 | ) | ||||||||
| Diluted EPS | $ | 1,386,000 | 4,985,379 | $ | .2780 | |||||||
| For the three months ended July 31, 2018 | ||||||||||||
| Income | Shares | Per-Share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net income | $ | 617,000 | ||||||||||
| Basic EPS | $ | 617,000 | 4,967,580 | $ | .1242 | |||||||
| Effect of dilutive Convertible Preferred Stock | – | 20,500 | (.0005 | ) | ||||||||
| Diluted EPS | $ | 617,000 | 4,988,080 | $ | .1237 | |||||||
Note 66: Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the “Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the corporation. The Plan is intended to be qualified under Section 401(k)401 (k) of the Internal Revenue Code of 1986, as amended. Matching contributions by the Company of approximately $7,000 and $3,000$2,000 were paid during eachboth the quarter ending OctoberJuly 31, 2019 and 2018, respectively. Likewise, the Company paid matching contributions of approximately $9,000 and $5,000 during each six-month period ending October 31, 2019 and 2018, respectively.
Note 77: Fair Value Measurements
Generally accepted accounting principles in the United States of America (US GAAP) defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The levels of the fair value hierarchy under US GAAP are described below:
| Level 1 | Valuation is based upon quoted prices for identical instruments traded in active markets. | |
| Level 2 | Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |
| Level 3 | Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. |
Investments and Marketable Securities
As of OctoberJuly 31, 2019, our investments consisted of money markets, certificates of deposits (CDs), publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities and corporate bonds. Our marketable securities are valued using third-party broker statements. The value of the investments is derived from quoted market information. The inputs to the valuation are generally classified as Level 1 given the active market for these securities, however, if an active market does not exist, which is the case for municipal bonds and REITs, the inputs are recorded as Level 2.
Fair Value Hierarchy
The following table sets forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy. As required by US GAAP, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
| Assets Measured at Fair Value on a Recurring Basis as of October 31, 2019 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Municipal Bonds | $ | — | $ | 5,437,000 | $ | — | $ | 5,437,000 | ||||||||
| Corporate Bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | — | 83,000 | — | 83,000 | ||||||||||||
| Equity Securities | 21,064,000 | — | — | 21,064,000 | ||||||||||||
| Money Markets and CDs | 775,000 | — | — | 775,000 | ||||||||||||
| Total fair value of assets measured on a recurring basis | $ | 21,865,000 | $ | 5,520,000 | $ | — | $ | 27,385,000 | ||||||||
| Assets Measured at Fair Value on a Recurring Basis as of July 31, 2019 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Municipal Bonds | $ | — | $ | 5,549,000 | $ | — | $ | 5,549,000 | ||||||||
| Corporate Bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | — | 83,000 | — | 83,000 | ||||||||||||
| Equity Securities | 20,721,000 | — | — | 20,721,000 | ||||||||||||
| Money Markets and CDs | 1,278,000 | — | — | 1,278,000 | ||||||||||||
| Total fair value of assets measured on a recurring basis | $ | 22,025,000 | $ | 5,632,000 | $ | — | $ | 27,657,000 | ||||||||
| Assets Measured at Fair Value on a Recurring Basis as of April 30, 2019 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Municipal Bonds | $ | — | $ | 5,483,000 | $ | — | $ | 5,483,000 | ||||||||
| Corporate Bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | — | 84,000 | — | 84,000 | ||||||||||||
| Equity Securities | 20,465,000 | — | — | 20,465,000 | ||||||||||||
| Money Markets and CDs | 1,233,000 | — | — | 1,233,000 | ||||||||||||
| Total fair value of assets measured on a recurring basis | $ | 21,724,000 | $ | 5,567,000 | $ | — | $ | 27,291,000 | ||||||||
Note 8 Subsequent Events
In an updateNone
Note 9 Correction of Previously Issued Financial Statements
Subsequent to related party transactions,the issuance of its Quarterly Report on SEC Form 10-Q for the three months ended July 31, 2019, the Company finalizeddiscovered an error due to missing a change in accounting related to other comprehensive income (loss) as reflected in the purchasephase in of the building that it had previously leased from Bonita Risk on November 22, 2019. Bonita Risk is a director and an employee ofASU 2016-01, which became effective for the Company on May 1, 2018. Under the new guidance in ASU 2016-01 the Company should record unrealized gains and islosses in the majority holder of George Risk Industries, Inc. stock. This building contains the Company’s sales and accounting departments, maintenance department, engineering department and some production facilities. Prior to the purchase, the lease required a minimum payment of $1,535 on a month-to-month basis. The purchase price of the building was $200,000, which was approximately the assessed value of the building atequity securities it owns in the timestatements of purchase.operations, whereas, under previous guidance (and in the Original Form 10-Q) those unrealized gains and losses were recorded as accumulated other comprehensive income (loss).
This restatement includes i) recording a one-time adjustment to retained earnings to reclassify the accumulated other comprehensive loss related to unrealized gains on equity securities as of April 30, 2019 and ii) recording an unrealized gain on marketable securities representing the value change in the equities for the three months ended July 31, 2019.
No entries to correct for this restatement have any impact on our cash position, liquidity, or operations.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2.2: Management Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q,10-Q/A, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project” or “continue,” and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if newcurrent information becomes available in the future.
The following discussion should be read in conjunction with the attached condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2019.
Executive Summary
The Company’s performance continues to improvehas increased through the first half of the current fiscal year with the first and second quarters presenting almost identical numbers. This is duequarter in comparison to the continuation of our quality USA made products with the ability for customization, our notable customer service, and the purchase of the assets of Labor Saving Devices, Inc. Additionally, the Company’s products are traditionally tiedprior quarter last year. In comparison to the housing marketmost recent prior quarter, performance has stayed steady with similar sales figures. The main difference between this year’s quarter and withlast year’s quarter is that market remaining strong, itthe Company doesn’t have a big back order log and is able to get inventory in turn helps the Company’s sales grow.stockroom which allows the Company to ship products out on timely basis. Opportunities include gaining business from a competitor that is getting out of the security switch businesscontinuing to learn and grow with our computer system and to continue looking at businesses that might be a good fit to purchase. Also, we have new products that are scheduled to enter the marketplace by the end of the calendar year. Challenges in the coming months include continuing to get product out to customers in a timely manner and to fill the stockroomtimelier manner. Raw material prices are also a concern with inventory to get back to shipping out core products the same day. Also, there have been some shortages of raw materials and prices of raw materials have increased with the execution of tariffs being levied by the US government.government and other factors. Management continues to work at keeping operations flowing as efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever before.
Results of Operations
| ● | Net sales | |
| ● | Cost of goods sold |
| ● | Operating expenses |
| ● | Income from operations for the quarter ended | |
| ● | Other income and expenses showed a $388,000 gain for the quarter ended July 31, 2019 as compared to a $128,000 gain for the quarter ended July 31, 2018. Investments in marketable securities are | |
| ● | ||
| ● | In turn, net income for the quarter ended | |
| ● | Earnings per share for the quarter ended July 31, 2019 were $0.20 per common share and $0.12 per common share for the quarter ended |
Liquidity and capital resources
Operating
| ● | Net cash increased | |
| ● | Accounts receivable decreased | |
| ● | Inventories increased | |
| ● | ||
| ● | Accounts payable shows an increase of $55,000 for the quarter ended July 31, 2019 compared to a decrease of $7,000 for the same quarter the year before, primarily due to timing issues. Management strives to pay all payables within terms, unless there is a problem with the merchandise. | |
| ● | Accrued expenses decreased $66,000 for the current quarter as compared to a $172,000 decrease for the | |
| ● | Income tax payable for the quarter ended July 31, 2019 increased $289,000, while there was a $244,000 decrease towards income tax overpayment for the |
Investing
| ● | As for our investment activities, the Company purchased | |
| ● | Additionally, the Company continues to purchase marketable securities, which include municipal bonds and quality stocks. |
Financing
| ● | ||
The following is a list of ratios to help analyze George Risk Industries’ performance:
| As of | ||||||||
| October 31, 2019 | October 31, 2018 | |||||||
| Working capital | ||||||||
| (current assets – current liabilities) | $ | 37,805,000 | $ | 34,508,000 | ||||
| Current ratio | ||||||||
| (current assets / current liabilities) | 16.564 | 16.614 | ||||||
| Quick ratio | ||||||||
| ((cash + investments + AR) / current liabilities) | 14.333 | 14.401 | ||||||
| Qtr ended | Qtr ended | |||||||
| July 31, 2019 | July 31, 2018 | |||||||
Working capital (current assets – current liabilities) | $ | 38,750,000 | $ | 36,894,000 | ||||
Current ratio (current assets / current liabilities) | 17.882 | 18.760 | ||||||
Quick ratio ((cash + investments + AR) / current liabilities) | 15.622 | 16.567 | ||||||
New Product Development
The Company and itsits’ engineering department continueperpetually work to develop enhancements to current product lines, develop new products thatwhich complement existing products, and look for products that are well suited to our distribution network and manufacturing capabilities. Items currently in various stages of the development process include:
| ● | A new face plate for our pool alarms is nearing completion. The innovative design is slim in style and will also allow the homeowner to change the plate to match their décor. | |
| ● | ||
| ● | ||
| ● | ||
| Wireless technology is a main area of focus for product development. We are | ||
| ● | We are ready to launch a new |
Other Information
In addition to researching and developing new products, management is always open to the possibility of acquiring a business or product line that would complement our existing operations. Due to the Company’s strong cash position, management believes this could be achieved without the need for outside financing. The intent is to utilize the equipment, marketing techniques and established customers to deliver new products and increase sales and profits.
There are no known seasonal trends with any of GRI’s products, since we sell to distributors and OEM manufacturers. Our products are tied to the housing industry and will fluctuate with building trends.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning NovemberMay 1, 2019. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) and ASU 2018-20, “Narrow-Scope Improvements for Lessors”. ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. During the first quarter of 2019, the FASB issued ASU 2019-01, Leases (Topic 842) to amend ASU 2016-02. This amendment exempts both lessees and lessors from having to provide certain prior year interim disclosure information in the fiscal year in which a company adopts the new leases standard. The Company has adopted the ASUs in the first quarter of 2019fiscal 2020 and the Company’s accounting systems will behave been upgraded to comply with the requirements of the new standard, however, the adoption of ASU 2016-02 willdid not have a material impact on the Company’s financial statements and related disclosures.
In February 2018,disclosures because leases are not material to the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income (loss) are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income (loss) to retained earnings (accumulated deficit) for stranded income tax effects resulting from the Tax Cuts and Jobs Act (the Tax Act). The amendments in this ASU also require certain disclosures about stranded income tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted. The Company has not yet adopted ASU 2018-02 and is currently evaluating the potential impact of adopting the applicable guidance on the Company’s financial statements and related disclosures.
In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). ASU 2018-09 provides amendments to a wide variety of topics in the FASB’s Accounting Standards Codification, which applies to all reporting entities within the scope of the affected accounting guidance. The transition and effective date guidance are based on the facts and circumstances of each amendment. Some of the amendments in ASU 2018-09 do not require transition guidance and were effective upon issuance of ASU 2018-09. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018. We are currently evaluating the potential impact of adopting the applicable guidance, however we do not believe that the adoption of ASU 2018-09 will have a material impact on the Company’s financial statements and related disclosures.statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.
In August 2018, The FASB issued ASU 2018-14 to improve the effectiveness of disclosures for defined benefit plans under ASC 715-20. The ASU applies to employers that sponsor defined benefit pension or other postretirement plans. The FASB issued ASU 2018-14 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness of disclosures in the notes to financial statements. As part of the project, during August 2018, the Board also issued a Concepts Statement, which the FASB used as a basis for amending the disclosure requirements for Subtopic 715-20. The guidance is effective foror fiscal years ending after December 15, 2020 and early adoption is permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.
In June 2016, the FASB issued ASU 2016-13(“ASU 2016-13”),No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments—Credit Losses. Subsequently,Instruments,” which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” “ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” “Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” and “ASU No. 2019-05, Financial Instruments-Instruments - Credit Losses (Topic 326): Targeted Transition Relief, and codification improvements to Topic 326 in ASU 2019-11, ASU 2019-04 and ASU 2018-19. The amendments update” which provided additional implementation guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach).previously issued ASU. The ASU is effective for fiscal years beginning after December 15, 2020. Subsequent to September 30, 2019, the FASB issuedThe ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since therequires a modified retrospective adoption method. The Company is an SRC, implementation is not needed until May 1, 2023. The Company will continue to evaluatestill evaluating the effectimpact of adopting ASU 2016-13 will haveadoption on the Company’sits financial statements and disclosures.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures aboutAbout Market Risk
Not applicableThis disclosure does not apply.
Item 4. Controls and Procedures
Our management, under the supervision and with the participation of our chief executive officer (also working as our chief financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of OctoberJuly 31, 2019. Based on that evaluation, our chief executive officer (also working as our chief financial officer) concluded that the disclosure controls and procedures employed at the Company were not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
We continue to operate with a limited number of accounting and financial personnel. A new accounting professional was hired in 2018 to fill the Controller position. Continued trainingTraining will be required to fulfill disclosure control and procedure responsibilities, including review procedures for key accounting schedules and timely and proper documentation of material transactions and agreements. Until sufficient training has taken place for this new Controller, we believe this control deficiency represents material weaknesses in internal control over financial reporting.
Despite the material weaknesses in financial reporting noted above, we believe that our consolidatedrestated financial statements included in this restated report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.
We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.
Changes in Internal Control overOver Financial Reporting
There was no change in our internal control over financial reporting during the fiscal quarter ended OctoberJuly 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
GEORGE RISK INDUSTRIES, INC.
PartPART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company’s repurchase and issuance of common stock for the secondfirst quarter of fiscal year 2020.
| Period | Number of shares | |
| -0- | ||
| 300 | ||
| July 1, 2019 – July 31, 2019 |
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
George Risk Industries, Inc. | ||
| (Registrant) | ||
| Date | By: | /s/ Stephanie M. Risk-McElroy |
| Stephanie M. Risk-McElroy | ||
| President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board | ||