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
For the quarterly period ended OctoberJuly 31, 20212022
☐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 | (I.R.S. Employers |
802 South Elm St. | ||
Kimball, NE | 69145 | |
(Address of principal executive offices) | (Zip Code) |
((308)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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (&232.405(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, 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 ☒ | |||
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 ☒
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant’s Common Stock outstanding, as of December 15, 2021September 20, 2022 was .
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ITEM 1: | Financial Statements |
The unaudited financial statements for the three-and six-month periodsthree-month period ended OctoberJuly 31, 2021,2022 are attached hereto.
2 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
October 31, 2021 | April 30, 2021 | July 31, 2022 | April 30, 2022 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
ASSETS | ||||||||||||||||
Current Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 6,107,000 | $ | 7,326,000 | $ | 7,649,000 | $ | 6,078,000 | ||||||||
Investments and securities | 34,409,000 | 33,337,000 | ||||||||||||||
Investments and securities, at fair value | 30,827,000 | 30,979,000 | ||||||||||||||
Accounts receivable: | ||||||||||||||||
Trade, net of $20,343 and $9,947 doubtful account allowance | 3,617,000 | 3,812,000 | ||||||||||||||
Trade, net of allowance for credit losses of $20,036 and $33,531 | 3,629,000 | 4,114,000 | ||||||||||||||
Other | 18,000 | 16,000 | 17,000 | 16,000 | ||||||||||||
Inventories, net | 7,077,000 | 5,622,000 | 8,841,000 | 7,940,000 | ||||||||||||
Prepaid expenses | 561,000 | 405,000 | 1,091,000 | 1,362,000 | ||||||||||||
Total Current Assets | 51,789,000 | 50,518,000 | 52,054,000 | 50,489,000 | ||||||||||||
Property and Equipment, net, at cost | 1,593,000 | 1,704,000 | 1,779,000 | 1,782,000 | ||||||||||||
Other Assets | ||||||||||||||||
Investment in Limited Land Partnership, at cost | 344,000 | 320,000 | 344,000 | 344,000 | ||||||||||||
Projects in process | 341,000 | 200,000 | 92,000 | 83,000 | ||||||||||||
Other | 40,000 | — | 8,000 | 62,000 | ||||||||||||
Total Other Assets | 725,000 | 520,000 | 444,000 | 489,000 | ||||||||||||
Intangible Assets, net | 1,332,000 | 1,394,000 | ||||||||||||||
Intangible assets, net | 1,240,000 | 1,271,000 | ||||||||||||||
TOTAL ASSETS | $ | 55,439,000 | $ | 54,136,000 | $ | 55,517,000 | $ | 54,031,000 |
See accompanying notes to the unaudited condensed financial statements.statements
3 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(continued)
October 31, 2021 | April 30, 2021 | July 31, 2022 | April 30, 2022 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current Liabilities | ||||||||||||||||
Accounts payable, trade | $ | 294,000 | $ | 477,000 | $ | 300,000 | $ | 320,000 | ||||||||
Dividends payable | 2,297,000 | 2,080,000 | 2,296,000 | 2,296,000 | ||||||||||||
Accrued expenses: | ||||||||||||||||
Payroll and other expense | 355,000 | 359,000 | ||||||||||||||
Payroll and related expenses | 471,000 | 354,000 | ||||||||||||||
Property taxes | 4,000 | — | ||||||||||||||
Income tax payable | 220,000 | 81,000 | 686,000 | 277,000 | ||||||||||||
Total Current Liabilities | 3,166,000 | 2,997,000 | 3,757,000 | 3,247,000 | ||||||||||||
Long-Term Liabilities | ||||||||||||||||
Deferred income taxes | 2,969,000 | 2,735,000 | 1,810,000 | 1,742,000 | ||||||||||||
Total Long-Term Liabilities | 2,969,000 | 2,735,000 | 1,810,000 | 1,742,000 | ||||||||||||
Total Liabilities | 6,135,000 | 5,732,000 | 5,567,000 | 4,989,000 | ||||||||||||
Commitments and Contingencies | — | — | ||||||||||||||
Commitments and contingencies | — | — | ||||||||||||||
Stockholders’ Equity | ||||||||||||||||
Convertible preferred stock, | shares authorized, Series 1—noncumulative, $ stated value, shares authorized, issued and outstanding99,000 | 99,000 | 99,000 | 99,000 | ||||||||||||
Common stock, Class A, $ | par value, shares authorized, shares issued and outstanding850,000 | 850,000 | 850,000 | 850,000 | ||||||||||||
Additional paid-in capital | 1,934,000 | 1,934,000 | 1,934,000 | 1,934,000 | ||||||||||||
Accumulated other comprehensive income | 72,000 | 108,000 | (117,000 | ) | (137,000 | ) | ||||||||||
Retained earnings | 50,711,000 | 49,749,000 | 51,733,000 | 50,843,000 | ||||||||||||
Less: treasury stock, | and shares, at cost(4,362,000 | ) | (4,336,000 | ) | ||||||||||||
Less: treasury stock, | and shares, at cost(4,549,000 | ) | (4,547,000 | ) | ||||||||||||
Total Stockholders’ Equity | 49,304,000 | 48,404,000 | 49,950,000 | 49,042,000 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 55,439,000 | $ | 54,136,000 | $ | 55,517,000 | $ | 54,031,000 |
See accompanying notes to the unaudited condensed financial statements
4 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED INCOME STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED OCTOBERJULY 31, 20212022 AND 20202021
(Unaudited)
Three months | Three months | Six months | Six months | |||||||||||||||||||||
ended | ended | ended | ended | July 31, 2022 | July 31, 2021 | |||||||||||||||||||
Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2021 | Oct 31, 2020 | |||||||||||||||||||||
Net Sales | $ | 5,244,000 | $ | 4,647,000 | $ | 10,199,000 | $ | 8,694,000 | $ | 5,210,000 | $ | 4,955,000 | ||||||||||||
Less: Cost of Goods Sold | (2,729,000 | ) | (2,294,000 | ) | (5,047,000 | ) | (4,245,000 | ) | (2,657,000 | ) | (2,318,000 | ) | ||||||||||||
Gross Profit | 2,515,000 | 2,353,000 | 5,152,000 | 4,449,000 | 2,553,000 | 2,637,000 | ||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
General and Administrative | 350,000 | 364,000 | 699,000 | 678,000 | 332,000 | 349,000 | ||||||||||||||||||
Sales | 720,000 | 604,000 | 1,460,000 | 1,171,000 | 734,000 | 740,000 | ||||||||||||||||||
Engineering | 21,000 | 21,000 | 39,000 | 50,000 | 21,000 | 18,000 | ||||||||||||||||||
Total Operating Expenses | 1,091,000 | 989,000 | 2,198,000 | 1,899,000 | 1,087,000 | 1,107,000 | ||||||||||||||||||
Income From Operations | 1,424,000 | 1,364,000 | 2,954,000 | 2,550,000 | 1,466,000 | 1,530,000 | ||||||||||||||||||
Other Income (Expense) | ||||||||||||||||||||||||
Other | 13,000 | 44,000 | 13,000 | 56,000 | 2,000 | 1,000 | ||||||||||||||||||
Dividend and Interest Income | 148,000 | 134,000 | 324,000 | 290,000 | 184,000 | 176,000 | ||||||||||||||||||
Unrealized Gain (Loss) on Equity Securities | 623,000 | (115,000 | ) | 1,043,000 | 1,999,000 | |||||||||||||||||||
Gain on Investments | 79,000 | 72,000 | 300,000 | 44,000 | ||||||||||||||||||||
Gain on Sale of Assets | — | 4,000 | — | 4,000 | ||||||||||||||||||||
Total Other Income | 863,000 | 139,000 | 1,680,000 | 2,393,000 | ||||||||||||||||||||
Unrealized gain (loss) on equity securities | (189,000 | ) | 420,000 | |||||||||||||||||||||
Gain (Loss) on Sale of Investments | (99,000 | ) | 220,000 | |||||||||||||||||||||
Total Other Income (Expense) | (102,000 | ) | 817,000 | |||||||||||||||||||||
Income Before Provisions for Income Taxes | 2,287,000 | 1,503,000 | 4,634,000 | 4,943,000 | 1,364,000 | 2,347,000 | ||||||||||||||||||
Provisions for Income Taxes: | ||||||||||||||||||||||||
Provisions for Income Taxes | ||||||||||||||||||||||||
Current Expense | 454,000 | 682,000 | 952,000 | 1,032,000 | 414,000 | 498,000 | ||||||||||||||||||
Deferred Tax (Benefit) Expense | 145,000 | (39,000 | ) | 248,000 | 559,000 | |||||||||||||||||||
Deferred tax (benefit) expense | (101,000 | ) | 103,000 | |||||||||||||||||||||
Total Income Tax Expense | 599,000 | 643,000 | 1,200,000 | 1,591,000 | 313,000 | 601,000 | ||||||||||||||||||
Net Income | $ | 1,688,000 | $ | 860,000 | $ | 3,434,000 | $ | 3,352,000 | $ | 1,051,000 | $ | 1,746,000 | ||||||||||||
Income Per Share of Common Stock | ||||||||||||||||||||||||
Basic | $ | 0.34 | $ | 0.17 | $ | 0.69 | $ | 0.68 | ||||||||||||||||
Diluted | $ | 0.34 | $ | 0.17 | $ | 0.69 | $ | 0.67 | ||||||||||||||||
Basic Earnings Per Share of Common Stock | $ | 0.21 | $ | 0.35 | ||||||||||||||||||||
Diluted Earnings Per Share of Common Stock | $ | 0.21 | $ | 0.35 | ||||||||||||||||||||
Weighted Average Number of Common Shares Outstanding | 4,931,022 | 4,946,460 | ||||||||||||||||||||||
Basic | 4,945,130 | 4,949,902 | 4,945,795 | 4,949,914 | ||||||||||||||||||||
Diluted | 4,965,630 | 4,970,402 | 4,966,295 | 4,970,414 | ||||||||||||||||||||
Weighted Average Number of Shares Outstanding (Diluted) | 4,951,522 | 4,966,960 |
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 OCTOBERJULY 31, 20212022 AND 20202021
(Unaudited)
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 |
July 31, 2022 | July 31, 2021 | |||||||
Net Income | $ | 1,051,000 | $ | 1,746,000 | ||||
Other Comprehensive Income, Net of Tax | ||||||||
Unrealized gain on debt securities: | ||||||||
Unrealized holding gains arising during period | 29,000 | 11,000 | ||||||
Income tax expense related to other comprehensive income | (9,000 | ) | (4,000 | ) | ||||
Other Comprehensive Income | 20,000 | 7,000 | ||||||
Comprehensive Income | $ | 1,071,000 | $ | 1,753,000 |
See accompanying notes to the unaudited condensed financial statements
6 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED OCTOBERJULY 31, 2022 and 2021 AND 2020
(Unaudited)
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, April 30, 2021 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Unrealized gain, net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, July 31, 2021 | 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 |
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, April 30, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Prior period adjustment for tax provisions related to depreciation | — | — | — | — | ||||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Unrealized gain, net of tax effect | — | — | — | — | ||||||||||||
Net Income | — | — | — | — | ||||||||||||
Balances, July 31, 2022 | 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’ EQUITYEQUITIY
FOR THE THREE MONTHS ENDED OCTOBERJULY 31, 2022 and 2021 AND 2020
(Unaudited)
Accumulated | |||||||||||||||||||||||
Treasury Stock | Other | ||||||||||||||||||||||
Paid-In | (Common Class A) | Comprehensive | Retained | ||||||||||||||||||||
Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, April 30, 2021 | $ | 1,934,000 | 3,556,412 | $ | (4,336,000 | ) | $ | 108,000 | $ | 49,749,000 | $ | 48,404,000 | |||||||||||
Purchases of common stock | — | 13 | — | — | — | — | |||||||||||||||||
Unrealized gain (loss), net of tax effect | — | — | — | 7,000 | — | 7,000 | |||||||||||||||||
Net Income | — | — | — | — | 1,746,000 | 1,746,000 | |||||||||||||||||
Balances, July 31, 2021 | $ | 1,934,000 | 3,556,425 | $ | (4,336,000 | ) | $ | 115,000 | $ | 51,495,000 | $ | 50,157,000 |
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 |
Accumulated | |||||||||||||||||||||||
Treasury Stock | Other | ||||||||||||||||||||||
Paid-In | (Common Class A) | Comprehensive | Retained | ||||||||||||||||||||
Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, April 30, 2022 | $ | 1,934,000 | 3,571,693 | $ | (4,547,000 | ) | $ | (137,000 | ) | $ | 50,843,000 | $ | 49,042,000 | ||||||||||
Prior period adjustment for tax provisions related to depreciation | — | — | — | — | (161,000 | ) | (161,000 | ) | |||||||||||||||
Purchases of common stock | — | 200 | (2,000 | ) | — | — | (2,000 | ) | |||||||||||||||
Unrealized gain, net of tax effect | — | — | — | 20,000 | — | 20,000 | |||||||||||||||||
Net Income | — | — | — | — | 1,051,000 | 1,051,000 | |||||||||||||||||
Balances, July 31, 2022 | $ | 1,934,000 | 3,571,893 | $ | (4,549,000 | ) | $ | (117,000 | ) | $ | 51,733,000 | $ | 49,950,000 |
See accompanying notes to the unaudited condensed financial statements
8 |
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITYCASH FLOWS
FOR THE SIXTHREE MONTHS ENDED OCTOBERJULY 31, 20212022 AND 20202021
(Unaudited)
Shares | Amount | Shares | Amount | |||||||||||||
Preferred Stock | Common Stock Class A | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Balances, April 30, 2020 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
Purchases of common stock | — | — | — | — | ||||||||||||
Dividend declared at $0.42 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, April 30, 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 |
July 31, 2022 | July 31, 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Income | $ | 1,051,000 | $ | 1,746,000 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 108,000 | 107,000 | ||||||
(Gain) loss on sale of investments | 99,000 | (220,000 | ) | |||||
Unrealized (gain) loss on equity securities | 189,000 | (420,000 | ) | |||||
Provision for credit losses on accounts receivable | (13,000 | ) | 6,000 | |||||
Reserve for obsolete inventory | 46,000 | 5,000 | ||||||
Deferred income taxes | (101,000 | ) | 103,000 | |||||
Changes in assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Accounts receivable | 499,000 | 154,000 | ||||||
Inventories | (947,000 | ) | (549,000 | ) | ||||
Prepaid expenses | 317,000 | (196,000 | ) | |||||
Employee receivables | (1,000 | ) | 2,000 | |||||
Increase (decrease) in: | ||||||||
Accounts payable | (21,000 | ) | (236,000 | ) | ||||
Accrued expenses | 121,000 | 99,000 | ||||||
Income tax payable | 409,000 | 547,000 | ||||||
Net cash from operating activities | 1,756,000 | 1,148,000 | ||||||
Cash Flows From Investing Activities: | ||||||||
(Purchase) of property and equipment | (74,000 | ) | (40,000 | ) | ||||
Proceeds from sale of marketable securities | 2,000 | 2,000 | ||||||
(Purchase) of marketable securities | (111,000 | ) | (98,000 | ) | ||||
Net cash from investing activities | (183,000 | ) | (136,000 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
(Purchase) of treasury stock | (2,000 | ) | — | |||||
Dividends paid | — | (7,000 | ) | |||||
Net cash from financing activities | (2,000 | ) | (7,000 | ) | ||||
Net Change in Cash and Cash Equivalents | $ | 1,571,000 | $ | 1,005,000 | ||||
Cash and Cash Equivalents, beginning of period | $ | 6,078,000 | $ | 7,326,000 | ||||
Cash and Cash Equivalents, end of period | $ | 7,649,000 | $ | 8,331,000 | ||||
Supplemental Disclosure for Cash Flow Information: | ||||||||
Cash payments for: | ||||||||
Income taxes paid | $ | 0 | $ | 0 | ||||
Interest paid | $ | 0 | $ | 0 | ||||
Cash receipts for: | ||||||||
Income taxes | $ | 0 | $ | 43,000 |
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, 2021 AND 2020
(Unaudited)
Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Paid-In | Treasury Stock (Common Class A) | Accumulated Other Comprehensive | Retained | ||||||||||||||||||||
Capital | Shares | Amount | Income | Earnings | Total | ||||||||||||||||||
Balances, April 30, 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
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2021 AND 2020
(Unaudited)
Oct 31, 2021 | Oct 31, 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income | $ | 3,434,000 | $ | 3,352,000 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 213,000 | 189,000 | ||||||
(Gain) on sale of investments | (300,000 | ) | (123,000 | ) | ||||
Impairments on investments | — | 79,000 | ||||||
Unrealized (gain) on equity securities | (1,043,000 | ) | (1,999,000 | ) | ||||
Reserve for bad debts | 10,000 | (6,000 | ) | |||||
Reserve for obsolete inventory | 73,000 | 10,000 | ||||||
Deferred income taxes | 248,000 | �� | 559,000 | |||||
(Gain) loss on sale of assets | — | (4,000 | ) | |||||
Changes in assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Accounts receivable | 185,000 | 32,000 | ||||||
Inventories | (1,528,000 | ) | (637,000 | ) | ||||
Prepaid expenses and projects in process | (337,000 | ) | 73,000 | |||||
Other receivables | (2,000 | ) | (10,000 | ) | ||||
Increase (decrease) in: | ||||||||
Accounts payable | (183,000 | ) | 28,000 | |||||
Accrued expenses | (4,000 | ) | (104,000 | ) | ||||
Income tax payable | 140,000 | 376,000 | ||||||
Net cash from operating activities | 906,000 | 1,815,000 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Proceeds from sale of assets | — | 4,000 | ||||||
(Purchase) of property and equipment | (40,000 | ) | (361,000 | ) | ||||
Proceeds from sale of marketable securities | 428,000 | 16,000 | ||||||
(Purchase) of marketable securities | (208,000 | ) | (186,000 | ) | ||||
(Purchase) of long-term investment | (24,000 | ) | — | |||||
Net cash from investing activities | 156,000 | (527,000 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
(Purchase) of treasury stock | (26,000 | ) | (1,000 | ) | ||||
Dividends paid | (2,255,000 | ) | (1,890,000 | ) | ||||
Net cash from financing activities | (2,281,000 | ) | (1,891,000 | ) | ||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (1,219,000 | ) | (603,000 | ) | ||||
Cash and Cash Equivalents, beginning of period | 7,326,000 | 6,458,000 | ||||||
Cash and Cash Equivalents, end of period | $ | 6,107,000 | $ | 5,855,000 | ||||
Supplemental Disclosure for Cash Flow Information: | ||||||||
Cash payments for: | ||||||||
Income taxes | $ | 860,000 | $ | 650,000 | ||||
Interest paid | $ | — | $ | — | ||||
Cash receipts for: | ||||||||
Income taxes | $ | 43,000 | $ | — |
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
OCTOBERJULY 31, 20212022
Note 1 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, 20212022 annual report on Form 10-K.10-K (the “Annual Report”). 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.
Significant Accounting Policies — The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in our Annual Report, and there have been no changes to the Company’s significant accounting policies during the three months ended July 31, 2022.
Prior Period Financial Statement Adjustment – In connection with the preparation of our financial statements, we identified an immaterial misstatement to our financial statements in the Company’s Annual Report. The misstatement is related to a difference in deferred taxes on depreciation for a few years and up through the year ended April 30, 2022. In accordance with Staff Accounting Bulletins No. 99 (“SAB No. 99”) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” we evaluated the misstatement and determined that the related impact was not consequential to our financial statements for any annual or interim period for fiscal 2022, any other prior period, nor would the cumulative impact of correcting the misstatement be consequential to our results of operations and equity for the fiscal and interim periods of 2023.
Recently Issued Accounting Pronouncements — In June 2016 the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which was subsequently amended in February 2020 by ASU 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842).” 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 certain off-balance sheet financial instruments (e.g., loan commitments). The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual 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 beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not believe this new guidance will have a material impact on 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. ASU 2020-01 deals with changes in the significant influence of derivative and investments, of which the Company has none and became effective for the Company in the first quarter of 2021. The adoption of this standard did not have any impact on the Company’s condensed financial statements.
There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.
Note 2 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 JuneAugust 2022 and January 2044.September 2042. 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 OctoberJuly 31, 20212022 and April 30, 2021,2022, investments consisted of the following:
Schedule of Investments
Gross | Gross | |||||||||||||||||||||||||||||||
Investments at | Gross | Gross | Cost | Unrealized | Unrealized | Fair | ||||||||||||||||||||||||||
October 31, 2021 | Cost | Unrealized | Unrealized | Fair | ||||||||||||||||||||||||||||
Basis | Gains | Losses | Value | |||||||||||||||||||||||||||||
July 31, 2022 | Basis | Gains | Losses | Value | ||||||||||||||||||||||||||||
Municipal bonds | $ | 5,790,000 | $ | 155,000 | $ | (51,000 | ) | $ | 5,894,000 | $ | 5,538,000 | $ | 53,000 | $ | (212,000 | ) | $ | 5,379,000 | ||||||||||||||
REITs | 131,000 | 15,000 | (6,000 | ) | 140,000 | 93,000 | 2,000 | (4,000 | ) | 91,000 | ||||||||||||||||||||||
Equity securities | 17,835,000 | 10,373,000 | (114,000 | ) | 28,094,000 | 18,251,000 | 6,715,000 | (443,000 | ) | 24,523,000 | ||||||||||||||||||||||
Money markets and CDs | 281,000 | — | — | 281,000 | 834,000 | — | — | 834,000 | ||||||||||||||||||||||||
Total | $ | 24,037,000 | $ | 10,543,000 | $ | (171,000 | ) | $ | 34,409,000 | $ | 24,716,000 | $ | 6,770,000 | $ | (659,000 | ) | $ | 30,827,000 |
Gross | Gross | |||||||||||||||||||||||||||||||
Investments at | Gross | Gross | Cost | Unrealized | Unrealized | Fair | ||||||||||||||||||||||||||
April 30, 2021 | Cost | Unrealized | Unrealized | Fair | ||||||||||||||||||||||||||||
Basis | Gains | Losses | Value | |||||||||||||||||||||||||||||
April 30, 2022 | Basis | Gains | Losses | Value | ||||||||||||||||||||||||||||
Municipal bonds | $ | 5,854,000 | $ | 198,000 | $ | (43,000 | ) | $ | 6,009,000 | $ | 5,625,000 | $ | 41,000 | $ | (229,000 | ) | $ | 5,437,000 | ||||||||||||||
REITs | 131,000 | 11,000 | (5,000 | ) | 137,000 | 131,000 | 16,000 | (3,000 | ) | 144,000 | ||||||||||||||||||||||
Equity securities | 17,199,000 | 9,294,000 | (74,000 | ) | 26,419,000 | 18,322,000 | 6,921,000 | (473,000 | ) | 24,770,000 | ||||||||||||||||||||||
Money markets and CDs | 772,000 | — | — | 772,000 | 628,000 | — | — | 628,000 | ||||||||||||||||||||||||
Total | $ | 23,956,000 | $ | 9,503,000 | $ | (122,000 | ) | $ | 33,337,000 | $ | 24,706,000 | $ | 6,978,000 | $ | (705,000 | ) | $ | 30,979,000 |
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-temporaryother-than temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, there were no impairment losses recorded for the quarter and the six months ended October 31, 2021. As for the corresponding periods last year, management recorded an impairment loss of $52,000 for the quarter ended October 31, 2020 and an impairment loss of $79,000 was recorded for the six-monthsquarters ended OctoberJuly 31, 2020.2022 and 2021, respectively.
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 OctoberJuly 31, 20212022 the Company had sales of equity securities which yielded gross realized gains of $106,000197,000 and gross realized losses of $26,000267,000. For the same period, sales of debt securities did 0not yield any gross realized gains, or losses. As for the six-months ended October 31, 2021 the Company had sales of equity securities which yielded gross realized gains of $343,000 andbut gross realized losses of $33,00029,000. For were recorded. During the same six-month period,quarter ending July 31, 2021, the Company recorded gross realized gains and losses on equity securities of $238,000 and $8,000, respectively, while sales of debt securities did 0not yield any gross realized gains, but gross realized losses of $10,000 were recorded. During the quarter ending October 31, 2020, the Company recorded gross realized gains and losses on equity securities of $184,000 and $110,000, respectively, while sales of debt securities did 0t yield any gross realized gains, but gross realized losses of $2,000 were recorded. During the six-months ending October 31, 2020, the Company recorded gross realized gains and losses on equity securities of $286,000 and $236,000, respectively, while sales of debt securities did 0t yield any gross realized gains, but gross realized losses of $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 OctoberJuly 31, 20212022 and April 30, 2021,2022, respectively.
Schedule of Unrealized Loss Breakdown by Investment
Unrealized Loss Breakdown by Investment Type at OctoberJuly 31, 20212022
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, 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 | $ | 699,000 | $ | (17,000 | ) | $ | 305,000 | $ | (34,000 | ) | $ | 1,004,000 | $ | (51,000 | ) | $ | 4,265,000 | $ | (157,000 | ) | $ | 363,000 | $ | (55,000 | ) | $ | 4,628,000 | $ | (212,000 | ) | ||||||||||||||||||
REITs | — | — | 23,000 | (6,000 | ) | 23,000 | (6,000 | ) | 17,000 | (2,000 | ) | 27,000 | (2,000 | ) | 44,000 | (4,000 | ) | |||||||||||||||||||||||||||||||
Equity securities | 739,000 | (61,000 | ) | 316,000 | (53,000 | ) | 1,055,000 | (114,000 | ) | 4,112,000 | (412,000 | ) | 185,000 | (31,000 | ) | 4,297,000 | (443,000 | ) | ||||||||||||||||||||||||||||||
Total | $ | 1,438,000 | $ | (78,000 | ) | $ | 644,000 | $ | (93,000 | ) | $ | 2,082,000 | $ | (171,000 | ) | $ | 8,394,000 | $ | (571,000 | ) | $ | 575,000 | $ | (88,000 | ) | $ | 8,969,000 | $ | (659,000 | ) |
Unrealized Loss Breakdown by Investment Type at April 30, 20212022
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, 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 | $ | 390,000 | $ | (6,000 | ) | $ | 365,000 | $ | (37,000 | ) | $ | 755,000 | $ | (43,000 | ) | $ | 4,420,000 | $ | (142,000 | ) | $ | 539,000 | $ | (87,000 | ) | $ | 4,959,000 | $ | (229,000 | ) | ||||||||||||||||||
REITs | — | — | 23,000 | (5,000 | ) | 23,000 | (5,000 | ) | 18,000 | (1,000 | ) | 26,000 | (2,000 | ) | 44,000 | (3,000 | ) | |||||||||||||||||||||||||||||||
Equity securities | 340,000 | (35,000 | ) | 377,000 | (39,000 | ) | 717,000 | (74,000 | ) | 4,157,000 | (424,000 | ) | 274,000 | (49,000 | ) | 4,431,000 | (473,000 | ) | ||||||||||||||||||||||||||||||
Total | $ | 730,000 | $ | (41,000 | ) | $ | 765,000 | $ | (81,000 | ) | $ | 1,495,000 | $ | (122,000 | ) | $ | 8,595,000 | $ | (567,000 | ) | $ | 839,000 | $ | (138,000 | ) | $ | 9,434,000 | $ | (705,000 | ) |
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, 2021.2022 and April 31, 2022.
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, 2021.2022 and April 30, 2022.
Note 3 3:Inventories
Inventories at OctoberJuly 31, 20212022 and April 30, 20212022 consisted of the following:
Schedule of Inventories
July 31, | April 30, | |||||||
2022 | 2022 | |||||||
Raw materials | $ | 7,430,000 | $ | 6,772,000 | ||||
Work in process | 727,000 | 618,000 | ||||||
Inventory in transit | 1,018,000 | 838,000 | ||||||
Inventory gross | 9,175,000 | 8,228,000 | ||||||
Less: allowance for obsolete inventory | (334,000 | ) | (288,000 | ) | ||||
Inventories, net | $ | 8,841,000 | $ | 7,940,000 |
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 |
13 |
Note 4 4:Business Segments
The following is financial information relating to industry segments:
Schedule of Financial Information Relating to Industry Segments
Three months | Three months | Six months | Six months | 2022 | 2021 | |||||||||||||||||||
ended | ended | ended | ended | July 31, | ||||||||||||||||||||
Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2021 | Oct 31, 2020 | 2022 | 2021 | |||||||||||||||||||
Net revenue: | ||||||||||||||||||||||||
Security alarm products | $ | 4,546,000 | $ | 3,632,000 | $ | 8,803,000 | $ | 6,962,000 | $ | 4,502,000 | $ | 4,257,000 | ||||||||||||
Cable & wiring tools | 518,000 | 620,000 | 1,056,000 | 1,019,000 | 484,000 | 538,000 | ||||||||||||||||||
Other products | 180,000 | 395,000 | 340,000 | 713,000 | 224,000 | 160,000 | ||||||||||||||||||
Total net revenue | $ | 5,244,000 | $ | 4,647,000 | $ | 10,199,000 | $ | 8,694,000 | $ | 5,210,000 | $ | 4,955,000 | ||||||||||||
Income from operations: | ||||||||||||||||||||||||
Security alarm products | $ | 1,229,000 | $ | 1,092,000 | $ | 2,550,000 | $ | 2,042,000 | $ | 1,267,000 | $ | 1,315,000 | ||||||||||||
Cable & wiring tools | 147,000 | 160,000 | 306,000 | 299,000 | 136,000 | 166,000 | ||||||||||||||||||
Other products | 48,000 | 112,000 | 98,000 | 209,000 | 63,000 | 49,000 | ||||||||||||||||||
Total income from operations | $ | 1,424,000 | $ | 1,364,000 | $ | 2,954,000 | $ | 2,550,000 | $ | 1,466,000 | $ | 1,530,000 | ||||||||||||
Depreciation and amortization: | ||||||||||||||||||||||||
Security alarm products | $ | 39,000 | $ | 39,000 | $ | 74,000 | $ | 61,000 | $ | 48,000 | $ | 35,000 | ||||||||||||
Cable & wiring tools | 31,000 | 31,000 | 62,000 | 61,000 | 30,000 | 31,000 | ||||||||||||||||||
Other products | 19,000 | 14,000 | 42,000 | 27,000 | 18,000 | 22,000 | ||||||||||||||||||
Corporate general | 16,000 | 19,000 | 35,000 | 40,000 | 12,000 | 19,000 | ||||||||||||||||||
Total depreciation and amortization | $ | 105,000 | $ | 103,000 | $ | 213,000 | $ | 189,000 | $ | 108,000 | $ | 107,000 | ||||||||||||
Capital expenditures: | ||||||||||||||||||||||||
Security alarm products | $ | — | $ | 149,000 | $ | 40,000 | $ | 242,000 | $ | 74,000 | $ | 40,000 | ||||||||||||
Cable & wiring tools | — | — | — | — | — | — | ||||||||||||||||||
Other products | — | 111,000 | — | 113,000 | — | — | ||||||||||||||||||
Corporate general | — | 6,000 | — | 6,000 | — | — | ||||||||||||||||||
Total capital expenditures | $ | — | $ | 266,000 | $ | 40,000 | $ | 361,000 | $ | 74,000 | $ | 40,000 |
October 31, 2021 | April 30, 2021 | July 31, 2022 | April 30, 2022 | |||||||||||||
Identifiable assets: | ||||||||||||||||
Security alarm products | $ | 10,169,000 | $ | 8,955,000 | $ | 11,975,000 | $ | 11,537,000 | ||||||||
Cable & wiring tools | 2,439,000 | 2,534,000 | 2,397,000 | 2,509,000 | ||||||||||||
Other products | 666,000 | 667,000 | 803,000 | 732,000 | ||||||||||||
Corporate general | 42,165,000 | 41,980,000 | 40,342,000 | 39,253,000 | ||||||||||||
Total assets | $ | 55,439,000 | $ | 54,136,000 | $ | 55,517,000 | $ | 54,031,000 |
Schedule of Basic and Diluted Earnings perPer Share
For the three months ended October 31, 2021 | For the three months ended July 31, 2022 | |||||||||||||||||||||||
Income | Shares | Per-Share | Income | Shares | Per-Share | |||||||||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||||||||
Net income | $ | 1,688,000 | $ | 1,051,000 | ||||||||||||||||||||
Basic EPS | $ | 1,688,000 | 4,945,130 | $ | $ | 1,051,000 | 4,931,022 | $ | ||||||||||||||||
Effect of dilutive Convertible Preferred Stock | – | 20,500 | — | — | 20,500 | — | ||||||||||||||||||
Diluted EPS | $ | 1,688,000 | 4,965,630 | $ | $ | 1,051,000 | 4,951,522 | $ |
For the three months ended October 31, 2020 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 860,000 | ||||||||||
Basic EPS | $ | 860,000 | 4,949,902 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | – | 20,500 | — | |||||||||
Diluted EPS | $ | 860,000 | 4,970,402 | $ |
For the six months ended October 31, 2021 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 3,434,000 | ||||||||||
Basic EPS | $ | 3,434,000 | 4,945,795 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | – | 20,500 | — | |||||||||
Diluted EPS | $ | 3,434,000 | 4,966,295 | $ |
For the six months ended October 31, 2020 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 3,352,000 | ||||||||||
Basic EPS | $ | 3,352,000 | 4,949,914 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | – | 20,500 | — | |||||||||
Diluted EPS | $ | 3,352,000 | 4,970,414 | $ |
For the three months ended July 31, 2021 | ||||||||||||
Income | Shares | Per-Share | ||||||||||
(Numerator) | (Denominator) | Amount | ||||||||||
Net income | $ | 1,746,000 | ||||||||||
Basic EPS | $ | 1,746,000 | 4,946,460 | $ | ||||||||
Effect of dilutive Convertible Preferred Stock | — | 20,500 | — | |||||||||
Diluted EPS | $ | 1,746,000 | 4,966,960 | $ |
Note 6 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.Company. Upon leaving the Company, each participant is 100% vested with respect to the participants’ contributions while the Company’s matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions by the Company of approximately $15,00016,000 and $16,00017,000 were paid duringin each quarterof the quarters ending OctoberJuly 31, 20212022 and 2020, respectively. Likewise, the Company paid matching contributions of approximately $33,000 and $29,000 during each six-month period ending October 31, 2021 and 2020, respectively.
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Note 7 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 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, 2021,2022 and April 30, 2022, 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.
Schedule of Assets Measured at Fair Value on 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 |
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Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis as of April 30, 2021 | Assets Measured at Fair Value on a Recurring Basis as of July 31, 2022 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Municipal Bonds | $ | — | $ | 6,009,000 | $ | — | $ | 6,009,000 | $ | — | $ | 5,379,000 | $ | — | $ | 5,379,000 | ||||||||||||||||
REITs | — | 137,000 | — | 137,000 | — | 91,000 | — | 91,000 | ||||||||||||||||||||||||
Equity Securities | 26,419,000 | — | — | 26,419,000 | 24,523,000 | — | — | 24,523,000 | ||||||||||||||||||||||||
Money Markets and CDs | 772,000 | — | — | 772,000 | 834,000 | — | — | 834,000 | ||||||||||||||||||||||||
Total fair value of assets measured on a recurring basis | $ | 27,191,000 | $ | 6,146,000 | $ | — | $ | 33,337,000 | $ | 25,357,000 | $ | 5,470,000 | $ | — | $ | 30,827,000 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets Measured at Fair Value on a Recurring Basis as of April 30, 2022 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Municipal Bonds | $ | — | $ | 5,437,000 | $ | — | $ | 5,437,000 | ||||||||
REITs | — | 144,000 | — | 144,000 | ||||||||||||
Equity Securities | 24,770,000 | — | — | 24,770,000 | ||||||||||||
Money Markets and CDs | 628,000 | — | — | 628,000 | ||||||||||||
Total fair value of assets measured on a recurring basis | $ | 25,398,000 | $ | 5,581,000 | $ | — | $ | 30,979,000 |
Note 88: Subsequent Events
None
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2: | Management Discussion and Analysis of Financial Condition and Results of Operations |
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 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, 2021.2022.
Executive Summary
The Company’s performance continuesremained steady during the quarter ended July 31, 2022 as compared to grow through the first half ofquarter ended July 31, 2021. Although sales have increased when comparing to the same quarter last year, overall net income is down because realized and unrealized gains on investments are showing losses in the current fiscalquarter, while for the same quarter last year withboth of those categories were income amounts. Also, gross profit and income from operations are lower when comparing to the secondsame quarter showing a slight decline over the first quarter of the current fiscallast year. This is because of increased cost of raw materials and labor. The uptick in sales is mainly due to a price increase that implemented in January 2022. This was done to offset the inabilityincreases in raw material and labor costs that the Company has incurred to obtain allcontinue to do business. The Company is still feeling the increased demand of having one of our major competitors close its doors at the end of calendar year 2019. The Company still has a considerable back-order log and there has been times that certain raw materials that are needed to complete the manufacture of our products and keeping employees staffed at our locations. The state of Nebraska, where we are located, has recently issued news that it has one of the 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.have not been available. Opportunities include keepingfocusing on ramping up with the business growth, finding waysproduction to meet customer’s needs to get our products outproduct to our customersthem in a timeliertimely manner, which includes looking into more automation, and to continue looking at businesses that might be a good fit to purchase. We also have new products that are expectedscheduled to hitenter the marketplace by the end of the fiscalcalendar 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.restrictions and inflation. Possible COVID-19 challenges include, but are not limited to, price increases and/or delays in the supply chain, reduced sales, workforce interruptions, and economic conditions impacting the stock market. Management continues to work at keeping operations flowing as 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 |
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● | Operating expenses | |
● | Income from operations for the quarter ended | |
● | Other income and expenses | |
● | ||
● | In turn, net income for the quarter ended July 31, 2022 was $1,051,000, a 39.81% decrease from the corresponding quarter last year, which showed net income of $1,746,000. | |
● | Earnings per share for the quarter ended July 31, 2022 were $0.21 per common share and $0.35 per common share for the quarter ended |
Liquidity and capital resources
Operating
Operating | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Financing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In conjunction with the Company’s Condensed Financial Statements, we have provided the following
New Product Development
The Company and
Other Information
In addition to researching
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.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
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
In our annual report filed on Report 10-K for the year ended April 30,
We continue to operate with a limited number of accounting and financial personnel. For the quarter ending
Despite the material weaknesses in financial reporting noted above, we believe that our financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.
We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.
Changes in Internal Control
Other than those mentioned above, there were no changes in our internal control over financial reporting during the fiscal quarter ended
GEORGE RISK INDUSTRIES, INC.
Not applicable
The following table provides information relating to the Company’s repurchase
Not applicable
Not applicable
Not applicable
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.
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