UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

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

For the quarterly period ended October 31, 20202021

☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

For the transition period from ______________ to ________________

Commission File Number: 000-05378

GEORGE RISK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Colorado84-0524756

(State or other jurisdiction of


incorporation or organization)

(I.R.S. Employers


Identification No.)

802 South Elm St.
Kimball, NE69145
(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 valueRSKIAOTC Markets
Convertible Preferred Stock, $20 stated valueRSKIAOTC Markets

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ☒ No ☐

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 ☒ No ☐

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 ☒

Yes [  ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares of the Registrant’s Common Stock outstanding, as of December 15, 20202021 was 4,948,302.4,943,856.

 

 

GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited financial statements for the three-and six-month periods ended October 31, 2020,2021, are attached hereto.

2
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

 October 31, 2020 April 30, 2020 
 (unaudited)    October 31, 2021 April 30, 2021 
      (unaudited)   
ASSETS                
                
Current Assets:                
Cash and cash equivalents $5,855,000  $6,458,000  $6,107,000  $7,326,000 
Investments and securities  27,666,000   25,322,000   34,409,000   33,337,000 
Accounts receivable:                
Trade, net of $1,014 and $7,306 doubtful account allowance  2,938,000   2,964,000 
Trade, net of $20,343 and $9,947 doubtful account allowance  3,617,000   3,812,000 
Other  29,000   18,000   18,000   16,000 
Income tax overpayment  —   56,000 
Inventories, net  5,731,000   5,103,000   7,077,000   5,622,000 
Prepaid expenses  438,000   516,000   561,000   405,000 
Total Current Assets  42,657,000   40,437,000   51,789,000   50,518,000 
                
Property and Equipment, net, at cost  1,699,000   1,465,000   1,593,000   1,704,000 
                
Other Assets                
Investment in Limited Land Partnership, at cost  320,000   320,000   344,000   320,000 
Projects in process  25,000   21,000   341,000   200,000 
Other  2,000   2,000   40,000   — 
Total Other Assets  347,000   343,000   725,000   520,000 
                
Intangible Assets, net  1,455,000   1,517,000   1,332,000   1,394,000 
                
TOTAL ASSETS $46,158,000  $43,762,000  $55,439,000  $54,136,000 

See accompanying notes to the unaudited condensed financial statements.

3
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

  October 31, 2020  April 30, 2020 
  (unaudited)    
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current Liabilities        
Accounts payable, trade $215,000  $187,000 
Dividends payable  2,081,000   1,892,000 
Accrued expenses:        
Payroll and other expense  346,000   450,000 
Income tax payable  321,000   — 
Notes payable  950,000   950,000 
Total Current Liabilities  3,913,000   3,479,000 
         
Long-Term Liabilities        
Deferred income taxes  1,298,000   699,000 
Total Long-Term Liabilities  1,298,000   699,000 
         
Total Liabilities  5,211,000   4,178,000 
         
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  87,000   (4,000)
Retained earnings  42,279,000   41,006,000 
Less: treasury stock, 3,553,029 and 3,552,954 shares, at cost  (4,302,000)  (4,301,000)
Total Stockholders’ Equity  40,947,000   39,584,000 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $46,158,000  $43,762,000 

(continued)

  October 31, 2021  April 30, 2021 
  (unaudited)    
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
Current Liabilities        
Accounts payable, trade $294,000  $477,000 
Dividends payable  2,297,000   2,080,000 
Accrued expenses:        
Payroll and other expense  355,000   359,000 
Income tax payable  220,000   81,000 
Total Current Liabilities  3,166,000   2,997,000 
         
Long-Term Liabilities        
Deferred income taxes  2,969,000   2,735,000 
Total Long-Term Liabilities  2,969,000   2,735,000 
         
Total Liabilities  6,135,000   5,732,000 
         
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  72,000   108,000 
Retained earnings  50,711,000   49,749,000 
Less: treasury stock, 3,558,425 and 3,556,412 shares, at cost  (4,362,000)  (4,336,000)
Total Stockholders’ Equity  49,304,000   48,404,000 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $55,439,000  $54,136,000 

See accompanying notes to the unaudited condensed financial statements

4
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED INCOME STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 20202021 AND 20192020

(Unaudited)

 Three months Six months Three months Six months  Three months Three months Six months Six months 
 ended ended ended ended  ended ended ended ended 
 Oct 31, 2020 Oct 31, 2020 Oct 31, 2019 Oct 31, 2019  Oct 31, 2021 Oct 31, 2020 Oct 31, 2021 Oct 31, 2020 
Net Sales $4,647,000  $8,694,000  $3,710,000  $7,263,000  $5,244,000  $4,647,000  $10,199,000  $8,694,000 
Less: Cost of Goods Sold  (2,294,000)  (4,245,000)  (1,860,000)  (3,630,000)  (2,729,000)  (2,294,000)  (5,047,000)  (4,245,000)
Gross Profit  2,353,000   4,449,000   1,850,000   3,633,000   2,515,000   2,353,000   5,152,000   4,449,000 
                                
Operating Expenses                                
General and Administrative  364,000   678,000   329,000   626,000   350,000   364,000   699,000   678,000 
Sales  604,000   1,171,000   555,000   1,112,000   720,000   604,000   1,460,000   1,171,000 
Engineering  21,000   50,000   17,000   32,000   21,000   21,000   39,000   50,000 
Rent Paid to Related Parties  —   —   3,000   8,000 
Total Operating Expenses  989,000   1,899,000   904,000   1,778,000   1,091,000   989,000   2,198,000   1,899,000 
                                
Income From Operations  1,364,000   2,550,000   946,000   1,855,000   1,424,000   1,364,000   2,954,000   2,550,000 
                                
Other Income (Expense)                                
Other  44,000   56,000   1,000   2,000   13,000   44,000   13,000   56,000 
Dividend and Interest Income  134,000   290,000   166,000   359,000   148,000   134,000   324,000   290,000 
Unrealized Gain (Loss) on Equity Securities  (115,000)  1,999,000   129,000   274,000   623,000   (115,000)  1,043,000   1,999,000 
Gain on Investments  72,000   44,000   10,000   59,000   79,000   72,000   300,000   44,000 
Gain on Sale of Assets  4,000   4,000   —   —   —   4,000   —   4,000 

Total Other Income

  139,000   2,393,000   306,000   694,000   863,000   139,000   1,680,000   2,393,000 
                                
Income Before Provisions for Income Taxes  1,503,000   4,943,000   1,252,000   2,549,000   2,287,000   1,503,000   4,634,000   4,943,000 
                                
Provisions for Income Taxes:                                
Current Expense  682,000   1,032,000   258,000   552,000   454,000   682,000   952,000   1,032,000 
Deferred Tax (Benefit) Expense  (39,000)  559,000   37,000   65,000   145,000   (39,000)  248,000   559,000 
Total Income Tax Expense  643,000   1,591,000   295,000   617,000   599,000   643,000   1,200,000   1,591,000 
                                
Net Income $860,000  $3,352,000  $957,000  $1,932,000  $1,688,000  $860,000  $3,434,000  $3,352,000 
                                
Income Per Share of Common Stock                                
Basic $0.17  $0.68  $0.19  $0.39  $0.34  $0.17  $0.69  $0.68 
Diluted $0.17  $0.67  $0.19  $0.39  $0.34  $0.17  $0.69  $0.67 
                                
Weighted Average Number of Common Shares Outstanding                                
Basic  4,949,902   4,949,914   4,952,110   4,954,250   4,945,130   4,949,902   4,945,795   4,949,914 
Diluted  4,970,402   4,970,414   4,972,610   4,974,750   4,965,630   4,970,402   4,966,295   4,970,414 

See accompanying notes to the unaudited condensed financial statements

5
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 20202021 AND 20192020

(Unaudited)

  Three months  Six months  Three months  Six months 
  ended  ended  ended  ended 
  Oct 31, 2020  Oct 31, 2020  Oct 31, 2019  Oct 31, 2019 
Net Income $860,000  $3,352,000  $957,000  $1,932,000 
                 
Other Comprehensive Income, Net of Tax                
Unrealized gain (loss) on debt securities:                
Unrealized holding gains (losses) arising during period  (20,000)  130,000   1,000   50,000 
Income tax benefit (expense) related to other comprehensive income  6,000   (39,000)  —   (14,000)
Other Comprehensive Income (Loss)  (14,000)  91,000   1,000   36,000 
                 
Comprehensive Income $846,000  $3,443,000  $958,000  $1,968,000 

  Three months  Three months  Six months  Six months 
  ended  ended  ended  ended 
  Oct 31, 2021  Oct 31, 2020  Oct 31, 2021  Oct 31, 2020 
Net Income $1,688,000  $860,000  $3,434,000  $3,352,000 
                 
Other Comprehensive Income, Net of Tax                
Unrealized gain (loss) on debt securities:                
Unrealized holding gains (losses) arising during period  (61,000)  (20,000)  (50,000)  130,000 
Income tax benefit (expense) related to other comprehensive income  18,000   6,000   14,000   (39,000)
Other Comprehensive Income (Loss)  (43,000)  (14,000)  (36,000)  91,000 
                 
Comprehensive Income $1,645,000  $846,000  $3,398,000  $3,443,000 

See accompanying notes to the unaudited condensed financial statements

6
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBER 31, 20202021 AND 20192020

(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

 
  Shares  Amount  Shares  Amount 
Balances, July 31, 2020  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.42 per common share outstanding                
                 
Unrealized gain (loss), net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, October 31, 2020  4,100  $99,000   8,502,881  $850,000 

  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, July 31, 2020  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.42 per common share outstanding  —   —   —   — 
                 
Unrealized gain (loss), net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, October 31, 2020  4,100  $99,000   8,502,881  $850,000 

  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, July 31, 2021  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.50 per common share outstanding                
                 
Unrealized gain (loss), net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, October 31, 2021  4,100  $99,000   8,502,881  $850,000 

See accompanying notes to the unaudited condensed financial statements

7
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED OCTOBER 31, 20202021 AND 20192020

(Unaudited)

Paid-In

  

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

  

Retained

    
Capital  Shares  Amount  Income  Earnings  Total 
$1,934,000   3,550,571  $(4,280,000) $49,000  $41,859,000  $40,511,000 
                       
 —   200   (1,000)  —   —   (1,000)
                       
 —   —   —   —   (1,982,000)  (1,982,000)
                       
 —   —   —   1,000   —   1,000 
                       
 —   —   —   —   957,000   957,000 
                       
$1,934,000   3,550,771  $(4,281,000) $50,000  $40,834,000  $39,486,000 

Paid-In

  

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

  

Retained

    
Capital  Shares  Amount  Income  Earnings  Total 
$1,934,000   3,552,954  $(4,301,000) $101,000  $43,498,000  $42,181,000 
                       
 —   75   (1,000)  —   —   (1,000)
                       
 —   —   —   —   (2,079,000)  (2,079,000)
                       
 —   —   —   (14,000)  —   (14,000)
                       
 —   —   —   —   860,000   860,000 
                       
$1,934,000   3,553,029  $(4,302,000) $87,000  $42,279,000  $40,947,000 

 Capital  Shares  Amount  Income  Earnings  Total 
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, July 31, 2020$1,934,000   3,552,954  $(4,301,000) $101,000  $43,498,000  $42,181,000 
                        
Purchases of common stock —   75   (1,000)  —   —   (1,000)
                        
Dividend declared at $0.42 per common share outstanding —   —   —   —   (2,079,000)  (2,079,000)
                        
Unrealized gain (loss), net of tax effect —   —   —   (14,000)  —   (14,000)
                        
Net Income —   —   —   —   860,000   860,000 
                        
Balances, October 31, 2020$1,934,000   3,553,029  $(4,302,000) $87,000  $42,279,000  $40,947,000 

 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, July 31, 2021$1,934,000   3,556,425  $(4,336,000) $115,000  $51,495,000  $50,157,000 
                        
Purchases of common stock —   2,000   (26,000)  —   —   (26,000)
                        
Dividend declared at $0.50 per common share outstanding —   —   —   —   (2,472,000)  (2,472,000)
                        
Unrealized gain (loss), net of tax effect —   —   —   (43,000)  —   (43,000)
                        
Net Income —   —   —   —   1,688,000   1,688,000 
                        
Balances, October 31, 2021$1,934,000   3,558,425  $(4,362,000) $72,000  $50,711,000  $49,304,000 

See accompanying notes to the unaudited condensed financial statements

8
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED OCTOBER 31, 20202021 AND 20192020

(Unaudited)

 Preferred Stock  

Common Stock

Class A

  Shares Amount Shares Amount 
 Shares  Amount  Shares  Amount  Preferred Stock  

Common Stock

Class A

 
Balances, April 30, 2019  4,100  $99,000   8,502,881  $850,000 
 Shares Amount Shares Amount 
Balances, April 30, 2020  4,100  $99,000   8,502,881  $850,000 
                                
Purchases of common stock  —   —   —   —   —   —   —   — 
                                
Dividend declared at $0.40 per common share outstanding  —   —   —   — 
Dividend declared at $0.42 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 
Balances, October 31, 2020  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, April 30, 2020  4,100  $99,000   8,502,881  $850,000 
Balances, April 30, 2021  4,100  $99,000   8,502,881  $850,000 
                                
Purchases of common stock  —   —   —   —   —   —   —   — 
                                
Dividend declared at $0.42 per common share outstanding                
Dividend declared at $0.50 per common share outstanding                
                                
Unrealized gain (loss), net of tax effect  —   —   —   —   —   —   —   — 
                                
Net Income  —   —   —   —   —   —   —   — 
                                
Balances, October 31, 2020  4,100  $99,000   8,502,881  $850,000 
Balances, October 31, 2021  4,100  $99,000   8,502,881  $850,000 

See accompanying notes to the unaudited condensed financial statements

9
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED OCTOBER 31, 20202021 AND 20192020

(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) $14,000  $40,883,000  $39,553,000 
                       
 —   6,500   (54,000)  —   —   (54,000)
                       
 —   —   —   —   (1,981,000)  (1,981,000)
                       
 —   —   —   36,000   —   36,000 
                       
 —   —   —   —   1,932,000   1,932,000 
                       
$1,934,000   3,550,771  $(4,281,000) $50,000  $40,834,000  $39,486,000 

Paid-In

  

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

  

Retained

    
Capital  Shares  Amount  Income  Earnings  Total 
$1,934,000   3,552,954  $(4,301,000) $(4,000) $41,006,000  $39,584,000 
                       
 —   75   (1,000)  —   —   (1,000)
                       
 —   —   —   —   (2,079,000)  (2,079,000)
                       
 —   —   —   91,000   —   91,000 
                       
 —   —   —   —   3,352,000   3,352,000 
                       
$1,934,000   3,553,029  $(4,302,000) $87,000  $42,279,000  $40,947,000 

 Capital  Shares  Amount  Income  Earnings  Total 
 

Paid-In

  

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, April 30, 2020$1,934,000   3,552,954  $(4,301,000) $(4,000) $41,006,000  $39,584,000 
                        
Purchases of common stock —   75   (1,000)  —   —   (1,000)
                        
Dividend declared at $0.42 per common share outstanding —   —   —   —   (2,079,000)  (2,079,000)
                        
Unrealized gain (loss), net of tax effect —   —   —   91,000   —   91,000 
                        
Net Income —   —   —   —   3,352,000   3,352,000 
                        
Balances, October 31, 2020$1,934,000   3,553,029  $(4,302,000) $87,000  $42,279,000  $40,947,000 

 Paid-In  

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Beginning balance$1,934,000   3,556,412  $(4,336,000) $108,000  $49,749,000  $48,404,000 
                        
Purchases of common stock —   2,013   (26,000)  —   —   (26,000)
                        
Dividend declared —   —   —   —   (2,472,000)  (2,472,000)
                        
Unrealized gain (loss), net of tax effect —   —   —   (36,000)  —   (36,000)
                        
Net Income —   —   —   —   3,434,000   3,434,000 
                        
Ending balance$1,934,000   3,558,425  $(4,362,000) $72,000  $50,711,000  $49,304,000 

See accompanying notes to the unaudited condensed financial statements

10
 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTSOFSTATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED OCTOBER 31, 20202021 AND 20192020

(Unaudited)

 Oct 31, 2020 Oct 31, 2019  Oct 31, 2021 Oct 31, 2020 
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net Income $3,352,000  $1,932,000  $3,434,000  $3,352,000 
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization  189,000   183,000   213,000   189,000 
(Gain) loss on sale of investments  (123,000)  (100,000)
(Gain) on sale of investments  (300,000)  (123,000)
Impairments on investments  79,000   41,000   —   79,000 
Unrealized (gain) loss on equity securities  (1,999,000)  (274,000)
Unrealized (gain) on equity securities  (1,043,000)  (1,999,000)
Reserve for bad debts  (6,000)  (6,000)  10,000   (6,000)
Reserve for obsolete inventory  10,000   2,000   73,000   10,000 
Deferred income taxes  559,000   65,000   248,000��  559,000 
(Gain) loss on sale of assets  (4,000)  —   —   (4,000)
Changes in assets and liabilities:                
(Increase) decrease in:                
Accounts receivable  32,000   486,000   185,000   32,000 
Inventories  (637,000)  (583,000)  (1,528,000)  (637,000)
Prepaid expenses and projects in process  73,000   271,000   (337,000)  73,000 
Other receivables  (10,000)  5,000   (2,000)  (10,000)
Income tax overpayment  —   114,000 
Increase (decrease) in:                
Accounts payable  28,000   (36,000)  (183,000)  28,000 
Accrued expenses  (104,000)  11,000   (4,000)  (104,000)
Income tax payable  376,000   —   140,000   376,000 
Net cash from operating activities  1,815,000   2,111,000   906,000   1,815,000 
                
CASH FLOWS FROM INVESTING ACTIVITIES:                
Proceeds from sale of assets  4,000   —   —   4,000 
(Purchase) of property and equipment  (361,000)  (179,000)  (40,000)  (361,000)
Proceeds from sale of marketable securities  16,000   540,000   428,000   16,000 
(Purchase) of marketable securities  (186,000)  (250,000)  (208,000)  (186,000)
(Purchase) of long-term investment  —   (27,000)  (24,000)  — 
Net cash from investing activities  (527,000)  84,000   156,000   (527,000)
        
CASH FLOWS FROM FINANCING ACTIVITIES:                
(Purchase) of treasury stock  (1,000)  (54,000)  (26,000)  (1,000)
Dividends paid  (1,890,000)  (1,802,000)  (2,255,000)  (1,890,000)
Net cash from financing activities  (1,891,000)  (1,856,000)  (2,281,000)  (1,891,000)
                
NET CHANGE IN CASH AND CASH EQUIVALENTS  (603,000)  339,000   (1,219,000)  (603,000)
                
Cash and Cash Equivalents, beginning of period  6,458,000   4,873,000   7,326,000   6,458,000 
Cash and Cash Equivalents, end of period $5,855,000  $5,212,000  $6,107,000  $5,855,000 
                
Supplemental Disclosure for Cash Flow Information:                
Cash payments for:                
Income taxes $650,000  $605,000  $860,000  $650,000 
Interest paid $—  $—  $—  $— 
                
Cash receipts for:                
Income taxes $—  $159,000  $43,000  $— 

See accompanying notes to the unaudited condensed financial statements

11
 

GEORGE RISK INDUSTRIES, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

OCTOBER 31, 20202021

Note 1 Unaudited Interim Financial Statements

The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 20202021 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 June 2016 the FASB issued ASU No. 2016-13, “Financial Instruments –- Credit Losses (Topic 326),”(Topic 326): which was subsequently amended in February 2020 by ASU 2020-02, Measurement of“Financial Instruments - Credit Losses on Financial Instruments(Topic 326) and Leases (Topic 842).””, which requires entities to use a forward looking approach The amendments introduce an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including trade receivables.certain off-balance sheet financial instruments (e.g., loan commitments). The FASB has subsequently issued updates toexpected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the standard to provide additional clarification on specific topics. Topic 326contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. The update with amendment is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2019. We have applied this guidance, as of May 1, 2020, using a modified-retrospective approach. The application of this guidance did not require a cumulative effect adjustment to retained earnings and did not have a material effect on our 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, and2022, including interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. We appliedyears. The Company does not believe this new guidance as of May 1, 2020. The application of this guidance did notwill have a material effectimpact on our disclosures.its financial statements and will implement the disclosures related to this update beginning in 2023.

In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendmentsASU 2020-01 deals with changes in the ASU aresignificant influence of derivative and investments, of which the Company has none and became effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted.the Company in the first quarter of 2021. The Company does not expect the adoption of ASU 2020-01 tothis standard did not have a materialany impact on itsthe Company’s condensed financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.

12
 

Note 2 Investments

The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets. The investments in debt securities, which include municipal bonds and bond funds, mature between April 2021June 2022 and January 2044. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.

As of October 31, 20202021 and April 30, 2020,2021, investments consisted of the following:

Schedule of Investments

Investments at   Gross Gross   
October 31, 2021 Cost Unrealized Unrealized Fair 
   Gross Gross    Basis Gains Losses Value 
Investments at Cost Unrealized Unrealized Fair 
October 31, 2020 Basis Gains Losses Value 
Municipal bonds $5,308,000  $163,000  $(41,000) $5,430,000  $5,790,000  $155,000  $(51,000) $5,894,000 
REITs  112,000   —   (41,000)  71,000   131,000   15,000   (6,000)  140,000 
Equity securities  17,326,000   4,946,000   (684,000)  21,588,000   17,835,000   10,373,000   (114,000)  28,094,000 
Money markets and CDs  577,000   —   —   577,000   281,000   —   —   281,000 
Total $23,323,000  $5,109,000  $(766,000) $27,666,000  $24,037,000  $10,543,000  $(171,000) $34,409,000 

Investments at   Gross Gross   
April 30, 2021 Cost Unrealized Unrealized Fair 
   Gross Gross    Basis Gains Losses Value 
Investments at Cost Unrealized Unrealized Fair 
April 30, 2020 Basis Gains Losses Value 
Municipal bonds $5,271,000  $80,000  $(89,000) $5,262,000  $5,854,000  $198,000  $(43,000) $6,009,000 
Corporate bonds  26,000   —   —   26,000 
REITs  112,000   —   (44,000)  68,000   131,000   11,000   (5,000)  137,000 
Equity securities  17,119,000   3,446,000   (1,180,000)  19,385,000   17,199,000   9,294,000   (74,000)  26,419,000 
Money markets and CDs  581,000   —   —   581,000   772,000   —   —   772,000 
Total $23,109,000  $3,526,000  $(1,313,000) $25,322,000  $23,956,000  $9,503,000  $(122,000) $33,337,000 

Marketable securities that are classified as equity securities are carried at fair value on the balance sheets with changes in fair value recorded as an unrealized gain or (loss) in the statements of income in the period of the change. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of income.

The Company evaluates all marketable securities for other-than-temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, managementthere were no impairment losses recorded an impairment loss of $52,000 for the quarter and recorded a loss of $79,000 for the six months ended October 31, 2020.2021. As for the corresponding periods last year, management recorded an impairment loss of $7,000$52,000 for the quarter ended October 31, 20192020 and an impairment loss of $41,000$79,000 was recorded for the six-months ended October 31, 2019.2020.

13
 

The Company’s investments are actively traded in the stock and bond markets. Therefore, either a realized gain or loss is recorded when a sale happens. For the quarter ended October 31, 20202021 the Company had sales of equity securities which yielded gross realized gains of $184,000$106,000 and gross realized losses of $110,000.$26,000. For the same period, sales of debt securities did not0t yield any gross realized gains but gross realized losses of $2,000 were recorded.or losses. As for the six-months ended October 31, 20202021 the Company had sales of equity securities which yielded gross realized gains of $286,000$343,000 and gross realized losses of $236,000.$33,000. For the same six-month period, sales of debt securities did not0t yield any gross realized gains, but gross realized losses of $6,000$10,000 were recorded. During the quarter ending October 31, 2019,2020, the Company recorded gross realized gains and losses on equity securities of $67,000$184,000 and $57,000,$110,000, respectively, while sales of debt securities did not0t yield any gross realized gains, or losses.but gross realized losses of $2,000 were recorded. During the six-months ending October 31, 2019,2020, the Company recorded gross realized gains and losses on equity securities of $220,000$286,000 and $161,000,$236,000, respectively, as well aswhile sales of debt securities did 0t yield any gross realized gains, andbut gross realized losses on debt securities of $3,000 and $3,000, respectively.$6,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph.

The following table shows the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at October 31, 20202021 and April 30, 2020,2021, respectively.

Schedule of Unrealized Loss Breakdown by Investment

Unrealized Loss Breakdown by Investment Type at October 31, 20202021

Description Less than 12 months, Fair Value Less than 12 months, Unrealized Loss 12 months or greater, Fair Value 12 months or greater, Unrealized Loss Total, Fair Value Total, Unrealized Loss 
 Less than 12 months 12 months or greater Total  Less than 12 months 12 months or greater Total 
Description Fair Value 

Unrealized

Loss

 Fair Value 

Unrealized

Loss

 Fair Value 

Unrealized

Loss

  Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss 
Municipal bonds $93,000  $(1,000) $333,000  $(40,000) $426,000  $(41,000) $699,000  $(17,000) $305,000  $(34,000) $1,004,000  $(51,000)
REITs  28,000   (17,000)  43,000   (24,000)  71,000   (41,000)  —   —   23,000   (6,000)  23,000   (6,000)
Equity securities  4,218,000   (569,000)  1,747,000   (115,000)  5,965,000   (684,000)  739,000   (61,000)  316,000   (53,000)  1,055,000   (114,000)
Total $4,339,000  $(587,000) $2,123,000  $(179,000) $6,462,000  $(766,000) $1,438,000  $(78,000) $644,000  $(93,000) $2,082,000  $(171,000)

Unrealized Loss Breakdown by Investment Type at April 30, 20202021

Description Less than 12 months, Fair Value Less than 12 months, Unrealized Loss 12 months or greater, Fair Value 12 months or greater, Unrealized Loss Total, Fair Value Total, Unrealized Loss 
 Less than 12 months 12 months or greater Total  Less than 12 months 12 months or greater Total 
Description Fair Value 

Unrealized

Loss

 Fair Value 

Unrealized

Loss

 Fair Value 

Unrealized

Loss

  Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss 
Municipal bonds $2,203,000  $(42,000) $484,000  $(47,000) $2,687,000  $(89,000) $390,000  $(6,000) $365,000  $(37,000) $755,000  $(43,000)
REITs  43,000   (30,000)  24,000   (14,000)  67,000   (44000)  —   —   23,000   (5,000)  23,000   (5,000)
Equity securities  5,496,000   (866,000)  1,651,000   (314,000)  7,147,000   (1,180,000)  340,000   (35,000)  377,000   (39,000)  717,000   (74,000)
Total $7,742,000  $(938,000) $2,159,000  $(375,000) $9,901,000  $(1,313,000) $730,000  $(41,000) $765,000  $(81,000) $1,495,000  $(122,000)

 

Municipal Bonds

The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at October 31, 2020.2021.

Marketable Equity Securities and REITs

The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at October 31, 2020.2021.

14
 

Note 3 Inventories

Inventories at October 31, 20202021 and April 30, 20202021 consisted of the following:

Schedule of Inventories

  October 31,  April 30, 
  2020  2020 
       
Raw materials $4,784,000  $4,233,000 
Work in process  478,000   402,000 
Finished goods  617,000   606,000 
   5,879,000   5,241,000 
Less: allowance for obsolete inventory  (148,000)  (138,000)
Inventories, net $5,731,000  $5,103,000 

  October 31,  April 30, 
  2021  2021 
       
Raw materials $5,703,000  $4,399,000 
Work in process  657,000   457,000 
Finished goods  965,000   768,000 
Inventory in transit  —   173,000 
Inventory gross  7,325,000   5,797,000 
Less: allowance for obsolete inventory  (248,000)  (175,000)
Inventories, net $7,077,000  $5,622,000 

 

Note 4 Business Segments

The following is financial information relating to industry segments:

Schedule of Financial Information Relating to Industry Segments

 Three months Six months Three months Six months  Three months Three months Six months Six months 
 ended ended ended ended  ended ended ended ended 
 Oct 31, 2020 Oct 31, 2020 Oct 31, 2019 Oct 31, 2019  Oct 31, 2021 Oct 31, 2020 Oct 31, 2021 Oct 31, 2020 
Net revenue:                                
Security alarm products $3,632,000  $6,962,000  $2,985,000  $5,852,000  $4,546,000  $3,632,000  $8,803,000  $6,962,000 
Cable & wiring tools  620,000   1,019,000   571,000   1,071,000   518,000   620,000   1,056,000   1,019,000 
Other products  395,000   713,000   154,000   340,000   180,000   395,000   340,000   713,000 
Total net revenue $4,647,000  $8,694,000  $3,710,000  $7,263,000  $5,244,000  $4,647,000  $10,199,000  $8,694,000 
                                
Income from operations:                                
Security alarm products $1,092,000  $2,042,000  $762,000  $1,495,000  $1,229,000  $1,092,000  $2,550,000  $2,042,000 
Cable & wiring tools  160,000   299,000   140,000   273,000   147,000   160,000   306,000   299,000 
Other products  112,000   209,000   44,000   87,000   48,000   112,000   98,000   209,000 
Total income from operations $1,364,000  $2,550,000  $946,000  $1,855,000  $1,424,000  $1,364,000  $2,954,000  $2,550,000 
                                
Depreciation and amortization:                                
Security alarm products $39,000  $61,000  $71,000  $94,000  $39,000  $39,000  $74,000  $61,000 
Cable & wiring tools  31,000   61,000   31,000   62,000   31,000   31,000   62,000   61,000 
Other products  14,000   27,000   (4,000)  16,000   19,000   14,000   42,000   27,000 
Corporate general  19,000   40,000   (4,000)  11,000   16,000   19,000   35,000   40,000 
Total depreciation and amortization $103,000  $189,000  $94,000  $183,000  $105,000  $103,000  $213,000  $189,000 
                                
Capital expenditures:                                
Security alarm products $149,000  $242,000  $10,000  $179,000  $—  $149,000  $40,000  $242,000 
Cable & wiring tools  —   —   —   —   —   —   —   — 
Other products  111,000   113,000   —   —   —   111,000   —   113,000 
Corporate general  6,000   6,000   —   —   —   6,000   —   6,000 
Total capital expenditures $266,000  $361,000  $10,000  $179,000  $—  $266,000  $40,000  $361,000 

 October 31, 2020 April 30, 2020  October 31, 2021 April 30, 2021 
Identifiable assets:                
Security alarm products $7,849,000  $7,150,000  $10,169,000  $8,955,000 
Cable & wiring tools  2,586,000   2,684,000   2,439,000   2,534,000 
Other products  967,000   724,000   666,000   667,000 
Corporate general  34,756,000   33,204,000   42,165,000   41,980,000 
Total assets $46,158,000  $43,762,000  $55,439,000  $54,136,000 

15
 

Note 5 Earnings per Share

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

Schedule of Basic and Diluted Earnings per Share

 For the three months ended October 31, 2020  For the three months ended October 31, 2021 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator) (Denominator) Amount  (Numerator)  (Denominator)  Amount 
Net income $860,000          $1,688,000         
Basic EPS $860,000   4,949,902  $.17  $1,688,000   4,945,130  $.34 
Effect of dilutive Convertible Preferred Stock  –   20,500   --   –   20,500   — 
Diluted EPS $860,000   4,970,402  $.17  $1,688,000   4,965,630  $.34 

 For the six months ended October 31, 2020  For the three months ended October 31, 2020 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator) (Denominator) Amount  (Numerator)  (Denominator)  Amount 
Net income $3,352,000          $860,000         
Basic EPS $3,352,000   4,949,914  $.68  $860,000   4,949,902  $.17 
Effect of dilutive Convertible Preferred Stock  –   20,500   --   –   20,500   — 
Diluted EPS $3,352,000   4,970,414  $.67  $860,000   4,970,402  $.17 

 For the three months ended October 31, 2019  For the six months ended October 31, 2021 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator) (Denominator) Amount  (Numerator)  (Denominator)  Amount 
Net income $957,000          $3,434,000         
Basic EPS $957,000   4,952,110  $.19  $3,434,000   4,945,795  $.69 
Effect of dilutive Convertible Preferred Stock  –   20,500   --   –   20,500   — 
Diluted EPS $957,000   4,972,610  $.19  $3,434,000   4,966,295  $.69 

 For the six months ended October 31, 2019  For the six months ended October 31, 2020 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator) (Denominator) Amount  (Numerator)  (Denominator)  Amount 
Net income $1,932,000          $3,352,000         
Basic EPS $1,932,000   4,954,250  $.39  $3,352,000   4,949,914  $.68 
Effect of dilutive Convertible Preferred Stock  –   20,500   --   –   20,500   — 
Diluted EPS $1,932,000   4,974,750  $.39  $3,352,000   4,970,414  $.67 

16

Note 6 Retirement Benefit Plan

On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the “Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the Company. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is funded by voluntary pre-tax and Roth (taxable) contributions from eligible employees who may contribute a percentage of their eligible compensation, limited and subject to statutory limits. Employees are eligible to participate in the Plan when they have attained the age of 21 and completed one thousand hours of service in any plan year with the Company. Upon leaving the Company, each participant is 100%100% vested with respect to the participants’ contributions while the Company’s matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions by the Company of approximately $16,000$15,000 and $7,000$16,000 were paid during each quarter ending October 31, 20202021 and 2019,2020, respectively. Likewise, the Company paid matching contributions of approximately $29,000$33,000 and $9,000$29,000 during each six-month period ending October 31, 2021 and 2020, and 2019, respectively.

 

Note 7 Fair Value Measurements

The carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short termshort-term nature. The fair value of our investments is determined utilizing market basedmarket-based information. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

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

Level 1Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Investments and Marketable Securities

As of October 31, 2020,2021, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities. The marketable securities are valued using third-party broker statements. The value of the majority of securities 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, 2020		 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $—  $5,430,000  $—  $5,430,000 
REITs  —   71,000   —   71,000 
Equity Securities  21,588,000   —   —   21,588,000 
Money Markets and CDs  577,000   —   —   577,000 
Total fair value of assets measured on a recurring basis $22,165,000  $5,501,000  $—  $27,666,000 

  Assets Measured at Fair Value on a Recurring Basis as of
April 30, 2020		 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $—  $5,262,000  $—  $5,262,000 
Corporate Bonds  26,000   —   —   26,000 
REITs  —   68,000   —   68,000 
Equity Securities  19,385,000   —   —   19,385,000 
Money Markets and CDs  581,000   —   —   581,000 
Total fair value of assets measured on a recurring basis $19,992,000  $5,330,000  $—  $25,322,000 

Note 8 Notes Payable

On April 15, 2020, the Company received loan proceedsSchedule of approximately $950,000 (the “PPP Loan”) from FirsTier Bank, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The PPP Loan, which was in the form of a Note dated April 15, 2020 issued to the Company, maturesAssets Measured at Fair Value on April 15, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 15, 2020. If the Company submits a loan forgiveness application within ten months of the completion of the Covered Period, it will not be required to make any payments until the forgiveness amount is remitted to the lender by Small Business Administration (“SBA”). Interest accrues during the time between the disbursement of the loan and the SBA remittance of the forgiveness amount. The Company is responsible for paying the accrued interest only on the amount of the loan that is not forgiven. The lender is responsible for notifying the Company of remittance of the forgiveness amount by the SBA and, if applicable, the date on which the Company’s first payment of the remaining balance is due. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on certain other debt obligations. The Company used the entire PPP Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On December 3, 2020, the Company received notice from the lender that the entire amount of the PPP loan was forgiven.Recurring Basis

 Level 1  Level 2  Level 3  Total 
  Assets Measured at Fair Value on a Recurring Basis as of
October 31, 2021		 
 Level 1  Level 2  Level 3  Total 
Assets:                
 Municipal Bonds $—  $5,894,000  $—  $5,894,000 
 REITs  —   140,000   —   140,000 
 Equity Securities  28,094,000   —   —   28,094,000 
 Money Markets and CDs  281,000   —   —   281,000 
Total fair value of assets measured on a recurring basis $28,375,000  $6,034,000  $—  $34,409,000 

 Level 1  Level 2  Level 3  Total 
  Assets Measured at Fair Value on a Recurring Basis as of
April 30, 2021		 
  Level 1  Level 2  Level 3  Total 
Assets:                
 Municipal Bonds $—  $6,009,000  $—  $6,009,000 
 REITs  —   137,000   —   137,000 
 Equity Securities  26,419,000   —   —   26,419,000 
 Money Markets and CDs  772,000   —   —   772,000 
Total fair value of assets measured on a recurring basis $27,191,000  $6,146,000  $—  $33,337,000 

Note 9 8 Subsequent Events

As stated above, the Company received notification on December 3, 2020 from its lender of the Paycheck Protection Program (“PPP”) loan that the full amount of the loan was forgiven.None

18
 

GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

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

 

MANAGEMENT DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

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

 

The following discussion should be read in conjunction with the attached condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2020.2021.

Executive Summary

The Company’s performance continues to improvegrow through the first half of the current fiscal year with the second quarter showing growtha slight decline over the first quarter of the current fiscal year. This is mainly due the closureinability to obtain all the raw materials that are needed to complete the manufacture of a competitorour products and keeping employees staffed at the end of calendar year 2019 and having the ability to continue to work through the COVID-19 pandemic.our locations. The state of Nebraska, where we are located, has kept businesses open duringrecently issued news that it has one of the pandemic.lowest unemployment rates in the country. Additionally, the Company’s products are traditionally tied to the housing market and with that market remaining strong, it in turn helps the Company’s sales grow. Opportunities include keeping up with the business growth, finding ways to get our products out to our customers in a timelier manner, and to continue looking at businesses that might be a good fit to purchase. We also have new products that haveare expected to hit the marketplace and a couple more that are scheduled to be introduced by the end of the fiscal year. Challenges in the coming months include continuing to get product out to customers in a timely manner and dealing with the COVID-19 pandemic restrictions. Possible COVID-19 challenges include, but are not limited to, price increases and/or delays in the supply chain, reduced sales, workforce interruptions, and economic conditions impacting the stock market. Management continues to work at keeping operations flowing as efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever before.

Results of Operations

●Net sales were $4,647,000$5,244,000 for the quarter ended October 31, 2020,2021, which is a 25.26%12.85% increase from the corresponding quarter last year. Year-to-date net sales were $8,694,000$10,199,000 at October 31, 2020,2021, which is a 19.70%17.31% increase from the same period last year. The increases in sales are primarily a result of a competitor no longer selling competing products as discussed above. Other thanand having the loss of a competitor,ability to continue to work through the Company does not believe COVID-19 has had a significant effect on our net revenue and we do not expect it to have a significant effect going forward.pandemic. Also, the ongoing commitment towards outstanding customer service and customization of products are a few of the many reasons sales continue to grow.

 

 

●●Cost of goods sold was 49.37%52.04% of net sales for the quarter ended October 31, 20202021 and was 50.13%49.37% for the same quarter last year. Year-to-date cost of goods sold percentages were 48.83%49.49% for the current six months and 49.98%48.83% for the corresponding six months last year. The current cost of goods sold percentages are right atoutside of Management’s goal of keeping labor and other manufacturing expenses at less than 50% for both the quarter andbut reached that goal for year-to-date results. Management continues to work with and train employees to work more efficiently and they also work at getting the best price for raw materials. Also, a significant wage increase went into effect for the company at the beginning of the second quarter of the current fiscal year.

●
●Operating expenses were up $85,000$102,000 for the quarter and were up $121,000$299,000 for the six-months ended October 31, 20202021 as compared to the corresponding periods last year. But when comparing percentages in relation to net sales, the operating expenses for the quarter ended October 31, 20202021 was 21.28%20.80% of net sales while it was 24.37%21.28% of net sales for the same quarter the prior year. For year-to-date numbers, operating expense were 21.84%21.55% and 24.48%21.84% of net sales for the six months ended October 31, 20202021 and 2019,2020, respectively. The Company has been able to keep the operating expenses at less than 30% of net sales for many years now; however, the actual dollar amount increase is because of increased commission amounts (since sales have increased) and additional labor costs for hiring new employees and wage increases.

●
●Income from operations for the quarter ended October 31, 20202021 was at $1,364,000,$1,424,000, which is a 44.19%4.40% increase from the corresponding quarter last year, which had income from operations of $946,000.$1,364,000. Income from operations for the six months ended October 31, 20202021 was at $2,550,000,$2,954,000, which is a 37.47%15.84% increase from the corresponding six months last year, which had income from operations of $1,855,000.$2,550,000.

●
●Other income and expenses are downup when comparing the current quarter to the same quarter the prior quarter,year, with a decreasean increase of $167,000$724,000 in the current quarter. Conversely, other income and expenses are updown by $1,699,000$713,000 when comparing the current six-month period to the prior six-month period. Most of the activity in these accounts consists of investment interest, dividends, real gains or losses on sale of investments, and unrealized gains or losses on equity securities. The main reason for the decreaseincrease in the current quarter as opposed to the increasedecrease for the year-to-date numbers is the unrealized gain and loss on equity securities. The Company is at the mercy of the stock market when it comes to these figures and the COVID-19 pandemic influenced these numbers.

●
●Overall, net income for the quarter ended October 31, 20202021 was down $97,000,up $828,000, or 10.14%96.28%, from the same quarter last year. Conversely,Similarly, net income for the six-month period ended October 31, 20202021 was up $1,420,000,$82,000, or 73.5%2.45%, from the same period in the prior year.

●
●Earnings per common share for quarter ended October 31, 20202021 were $0.17$0.34 per share and $0.68$0.69 per share for the year-to-date numbers. EPS for the quarter and six months ended October 31, 20192020 were $0.19$0.17 per share and $0.39$0.68 per share, respectively.

Liquidity and capital resources

Operating

 ●Net cash decreased $603,000$1,219,000 during the six months ended October 31, 20202021 as compared to an increasea decrease of $339,000$603,000 during the corresponding period last year.

20
 

●Accounts receivable decreased $32,000$185,000 for the six months ended October 31, 20202021 compared with a $486,000$32,000 decrease for the same period last year. The smallerbigger current year decrease is a result of improved sales andwhile collections on accounts receivable have improveddeclined over the last year. An analysis of accounts receivable shows that there were only 0.27% that4.84% of the receivables were over 90 days at October 31, 2020.2021, while only 0.27% were over 90 days for the same period last year.
 
 ●Inventories increased $637,000$1,528,000 during the current six-month period as compared to a $583,000$637,000 increase last year. The bigger increase in the current year is primarily due to being prepared for the increase we have seen in sales. In addition, the Company is keeping more inventory on hand to reduce the likelihood of running into a shortage on some major raw materials, such as we have experienced last year.in the past.
 
●Prepaid expenses saw a $73,000 decrease$337,000 increase for the current six months, primarily due to less prepaymenthaving more prepayments of raw materials. Lead times and costs have risen on raw materials, and running through some of our prepaid agreements without needingmaking it a challenge to renew them.obtain. The prior year six months showed a $271,000 increase$73,000 decrease in prepaid expenses.
 
 ●Accounts payable shows an increasea decrease for the current six-month period of $28,000$183,000 while it shows a decreasean increase for the prior six-month periods of $36,000.$28,000. The company strives to pay all invoices within terms, and the variance in the decreases is primarily due to the timing of receipt of products and payment of invoices.
 
 ●Accrued expenses decreased $104,000$4,000 for the current six-month period as compared to an $11,000 increasea $104,000 decrease for the six-month period ended October 31, 2019.2020. The difference in the amounts is primarily due to timing issues.
 
●Income tax payable increased $376,000$140,000 for the current six-month period, compared to having a decreasean increase of $376,000 in income tax overpayment for the six-months ended October 31, 2019.2020. The current increase is largely due to having increased sales and income and not having income tax estimates large enough. Also, since the Company was notified that the PPP loan was forgiven, the forgiveness amount was included in the income tax expense calculation.

Investing

 ●As for our investment activities, the Company purchased $361,000$40,000 of property and equipment during the current six-month period. In comparison, $179,000$361,000 was spent on purchases of property and equipment during the corresponding six months last year.

 ●
●The Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the six-month period ended October 31, 20202021 there was quite a bit of buy/sell activity in the investment accounts. Net cash spent on purchases of marketable securities for the six-month period ended October 31, 20202021 was $186,000$208,000 compared to $250,000$186,000 spent in the prior six-month period. We continue to use “money manager” accounts for most stock transactions. By doing this, the Company gives an independent third-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays a quarterly service fee based on the value of the investments. The COVID-19 pandemic has had a negative impact on the performance of the stock market, which has affected the real and unrealized gains/losses. Management believes that more realized losses were recorded when investments were sold and more write downs had to be recorded.

Financing

 ●On April 15, 2020, the Company received loan proceeds of approximately $950,000 from FirsTier Bank, pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act, which was enacted March 27, 2020. Please refer to Note 8 for more information about the loan. In accordance with the terms of the loan, the Company used the proceeds for qualified operating expenses. As of December 3, 2020, the liability of this loan has been completely forgiven.
●The Company continues to purchase back its common stock when the opportunity arises. For the six-month period ended October 31, 2020,2021, the Company purchased $1,000$26,000 worth of treasury stock, in comparison to $54,000$1,000 repurchased in the corresponding six-month period last year.

 ●
●The company declared a dividend of $0.42$0.50 per share of common stock on September 30, 2020,2021, which was paid out during the second quarter. This is a slightan increase to the dividend of $0.40,$0.42, which was declared and paid during the second fiscal quarter last year.

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

 As of  As of 
 October 31, 2020 October 31, 2019  October 31, 2021 October 31, 2020 
Working capital
(current assets – current liabilities)		 $38,744,000  $37,805,000  $48,623,000  $38,744,000 
Current ratio
(current assets / current liabilities)		  10.901   16.564   16.358   10.901 
Quick ratio
((cash + investments + AR) / current liabilities)		  9.317   14.333   13.940   9.317 

New Product Development

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

●Explosion proof contacts that will be UL listed for hazardous locations. There has been demand from our customers for this type of high security magnetic reed switch.

●
●An updated version of the pool access alarm (PAA) has met electrical listing testing (ETL) approval and we are currently waiting on component parts to begin production and field testing.has started. This next-generation model combines our battery operated DPA series with our hard wired 289 series. A variety of installation options will be available through jumper pin settings.settings such as instant alarm and seven second delay.

●
●Wireless technology is a main area of focus for product development. We are considering adding wireless technology to some of our current products. A wireless contact switch is in the final stages of development. Also, we are working on wireless versions of our pool access alarm and environmental sensors that will be easy to install in current construction. WeA redesign of our brass water valve shut-off system is near completion.
●The Company is developing magnetic contacts which are also concentrating on making products compatible with Wi-Fi, smartphone technology and the increasing popular Z-Wave standardlisted under UL 634 Level 2. These sensors are for wireless home automation.

●In the high security realm, the Company has introduced the 2707 Series which is a triple high biased magnetic reed contact and available in SPDT and DPDT models. These contacts are resistant to magnetic tamper and defeat. They are used in applications such as airports, biotechnology labs, manufacturing plants, banks,government buildings, military bases,use, nuclear facilities, and energy-generation facilities.financial institutions.

●The 3045 Panic Switch contains screw terminals and uses an actuating lever which can be triggered with only the tip of the finger. It can be installed under a counter or desk or any similar place. The 3045CT uses 12’ extreme temperature rated wire for installation in refrigerators and freezers. Both models have a latching LED indicating when the switch is activated and automatically resets when the lever is closed and is fully re-armed. Latching LED and UL Listed versions will follow.

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.

22

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 June 2016 the FASB issued ASU No. 2016-13, “Financial Instruments –- Credit Losses (Topic 326),”(Topic 326): which was subsequently amended in February 2020 by ASU 2020-02, Measurement of“Financial Instruments - Credit Losses on Financial Instruments(Topic 326) and Leases (Topic 842).””, which requires entities to use a forward looking approach The amendments introduce an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including trade receivables.certain off-balance sheet financial instruments (e.g., loan commitments). The FASB has subsequently issued updates toexpected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the standard to provide additional clarification on specific topics. Topic 326contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. The update with amendment is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2019. We have applied this guidance, as of May 1, 2020, using a modified-retrospective approach. The application of this guidance did not require a cumulative effect adjustment to retained earnings and did not have a material effect on our 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, and2022, including interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. We appliedyears. The Company does not believe this new guidance as of May 1, 2020. The application of this guidance did notwill have a material effectimpact on our disclosures.its financial statements and will implement the disclosures related to this update beginning in 2023.

In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendmentsASU 2020-01 deals with changes in the ASU aresignificant influence of derivative and investments, of which the Company has none and became effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted.the Company in the first quarter of 2021. The Company does not expect the adoption of ASU 2020-01 tothis standard did not have a materialany impact on itsthe Company’s condensed financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.

23
 

GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable

Item 4. Controls and Procedures

Our management, under the supervision and with the participation of our chief executive officer (also working as our chief financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 31, 2020.2021. Based on that evaluation, management concluded that the disclosure controls and procedures employed at the Company were not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

In our annual report filed on Report 10-K for the year ended April 30 ,2020,,2021, management identified the following material weakness in our internal control over financial reporting:

●The small size of our Company limits our ability to achieve the desired level of separation of duties for proper internal controls and financial reporting, particularly as it relates to financial reporting to assure material disclosures or implementation of newly issued accounting standards are included. A secondary review over annual and quarterly filings does not occur.occur with an outside party. Due to the departure of the Controller, the current CEO and CFO roles are being fulfilled by the same individual. We do not have an audit committee. We do not believe we have met the full requirement for separation of duties for financial reporting purposes.

DuringWe continue to operate with a limited number of accounting and financial personnel. For the quarter ending October 31, 2020,2021 the Company did not have a Controller, was hired by the Company in September 2020.but management is looking to fill this position as soon as possible. Training will be required to fulfill disclosure control and procedure responsibilities, including review procedures for key accounting schedules and timely and proper documentation of material transactions and agreements. Until sufficient training has taken place for this new Controller, we believe this control deficiency represents material weaknesses in internal control over financial reporting. To mitigate the effects of the material weakness identified in our annual report, the Company contracted with an outside CPA to perform a secondary review of our quarterly report filed on Form 10-Q.

Despite the material weaknesses in financial reporting noted above, we believe that our consolidated financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.

We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.

Changes in Internal Control over Financial Reporting

Other than those mentioned above, there were no changes in our internal control over financial reporting during the fiscal quarter ended October 31, 20202021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

24
 

GEORGE RISK INDUSTRIES, INC.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 1A. Risk Factors

Not applicable.

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

The following table provides information relating to the Company’s repurchase and issuance of common stock for the second quarter of fiscal year 2021.2022.

Period Number of shares repurchased/(issued)
August 1, 20202021 – August 31, 20202021 -0-
September 1, 20202021 – September 30, 20202021 -0-2,000
October 1, 20202021 – October 31, 20202021 75-0-

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit No. Description
31.1 Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1 Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 906 of the Sarbanes-Oxley Act of 2002.

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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)

DateGeorge Risk Industries, Inc.
(Registrant)
DateDecember 15, 20202021By:/s/ Stephanie M. Risk-McElroy
Stephanie M. Risk-McElroy
President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board

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