UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly periodquarter ended JulyJanuary 31, 20232024

 

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

 

For the transition period from ______________ to ________________

 

Commission File Number: 000-05378

 

GEORGE RISK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

 

Colorado 84-0524756

(State or other jurisdiction of incorporation)

incorporation or organization)

 

(I.R.S.IRS Employers

Identification No.)

 

802 SouthS. Elm St.
, Kimball, NE 69145
(Address of principal executive offices) (Zip Code)

 

(308) 235-4645

(Registrant’s telephone number, including area code)

 

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

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A Common Stock, $0.10 par value RSKIA OTC Markets
Convertible Preferred Stock, $20 stated value RSKIA OTC Markets

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the pastpreceding 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 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, an accelerated filer, a non-accelerated filer, a smallsmaller 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 No☒ ☒

 

APPLICABLE ONLY TO CORPORATE ISSUERSISSUERS:

 

The number of shares of the Registrant’s Common Stock outstanding, as of September 14, 2023March 15, 2024, was 4,927,4084,898,830.

 

 

 

 

 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

ITEM 1:Financial Statements

Item 1. Financial Statements

 

The unaudited financial statements for the three-monththree- and nine-month period ended JulyJanuary 31, 20232024, are attached hereto.

 

2

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

 

 January 31, 2024 April 30, 2023 
 July 31, 2023 April 30, 2023  (unaudited)   
 (unaudited)        
ASSETS                
        
Current Assets:                
Cash and cash equivalents $5,554,000  $4,943,000  $5,371,000  $4,943,000 
Investments and securities, at fair value  32,992,000   31,363,000 
Investments and securities  33,593,000   31,363,000 
Accounts receivable:                
Trade, net of allowance for credit losses of $21,730 and $17,922  3,067,000   3,503,000 
Trade, net of allowance for credit losses of $14,864 and $17,922  4,059,000   3,503,000 
Other  19,000   59,000   38,000   59,000 
Income tax overpayment  99,000   403,000   315,000   403,000 
Inventories, net  11,964,000   11,443,000   12,088,000   11,443,000 
Prepaid expenses  1,208,000   651,000   219,000   651,000 
Total Current Assets  54,903,000   52,365,000   55,683,000   52,365,000 
                
Property and Equipment, net, at cost  2,111,000   1,997,000   1,987,000   1,997,000 
                
Other Assets                
Investment in Limited Land Partnership, at cost  344,000   344,000   332,000   344,000 
Projects in process  20,000   83,000   13,000   83,000 
Other  1,000   13,000   —   13,000 
Total Other Assets  365,000   440,000   345,000   440,000 
                
Intangible assets, net  1,119,000   1,149,000 
Intangible Assets, net  1,058,000   1,149,000 
                
TOTAL ASSETS $58,498,000  $55,951,000  $59,073,000  $55,951,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

3

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

(continued)

 

 January 31, 2024 April 30, 2023 
 July 31, 2023 April 30, 2023  (unaudited)   
 (unaudited)        
LIABILITIES AND STOCKHOLDERS’ EQUITY                
        
Current Liabilities                
Accounts payable, trade $496,000  $546,000  $382,000  $546,000 
Dividends payable  2,563,000   2,565,000   2,854,000   2,565,000 
Deferred income  23,000   43,000   38,000   43,000 
Accrued expenses:        
Payroll and related expenses  439,000   421,000 
Property taxes  4,000   — 
Accrued expenses  547,000   421,000 
Total Current Liabilities  3,525,000   3,575,000   3,821,000   3,575,000 
                
Long-Term Liabilities                
Deferred income taxes  1,995,000   1,727,000   2,542,000   1,727,000 
Total Long-Term Liabilities  1,995,000   1,727,000   2,542,000   1,727,000 
                
Total Liabilities  5,520,000   5,302,000   6,363,000   5,302,000 
                
Commitments and contingencies  —   — 
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   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   850,000   850,000 
Additional paid-in capital  1,934,000   1,934,000   1,934,000   1,934,000 
Accumulated other comprehensive income  (184,000)  (161,000)  (91,000)  (161,000)
Retained earnings  54,855,000   52,481,000   54,836,000   52,481,000 
Less: treasury stock, 3,574,373 and 3,572,338 shares, at cost  (4,576,000)  (4,554,000)
Less: treasury stock, 3,604,051 and 3,572,338 shares, at cost  (4,918,000)  (4,554,000)
Total Stockholders’ Equity  52,978,000   50,649,000   52,710,000   50,649,000 
                
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $58,498,000  $55,951,000 
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY $59,073,000  $55,951,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

4

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED INCOME STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JULYJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

 Three months Three months Nine months Nine months 
 July 31, 2023 July 31, 2022  ended ended ended ended 
      Jan 31, 2024 Jan 31, 2023 Jan 31, 2024 Jan 31, 2023 
Net Sales $4,728,000  $5,210,000  $5,394,000  $4,366,000  $16,175,000  $15,194,000 
Less: Cost of Goods Sold  (2,462,000)  (2,657,000)  (2,734,000)  (2,444,000)  (8,145,000)  (8,076,000)
Gross Profit  2,266,000   2,553,000   2,660,000   1,922,000   8,030,000   7,118,000 
                        
Operating Expenses:        
Operating Expenses                
General and Administrative  368,000   332,000   396,000   340,000   1,097,000   1,028,000 
Sales  689,000   734,000   705,000   648,000   2,181,000   2,136,000 
Engineering  22,000   21,000   41,000   34,000   78,000   76,000 
Total Operating Expenses  1,079,000   1,087,000   1,142,000   1,022,000   3,356,000   3,240,000 
                        
Income From Operations  1,187,000   1,466,000   1,518,000   900,000   4,674,000   3,878,000 
                        
Other Income (Expense)                        
Other  8,000   2,000   32,000   2,000   41,000   6,000 
Dividend and Interest Income  241,000   184,000   396,000   506,000   855,000   871,000 
Unrealized gain (loss) on equity securities  1,634,000   (189,000)
Gain on sale of asset  8,000   — 
(Loss) on Sale of Investments  (118,000)  (99,000)
Unrealized Gain on equity securities  2,883,000   1,224,000   2,149,000   27,000 
Gain (Loss) on Sale of Investments  18,000   44,000   (55,000)  (165,000)
Gain on Sale of Assets  —   —   8,000   — 
Total Other Income (Expense)  1,773,000   (102,000)  3,329,000   1,776,000   2,998,000   739,000 
                        
Income Before Provisions for Income Taxes  2,960,000   1,364,000   4,847,000   2,676,000   7,672,000   4,617,000 
                        
Provisions for Income Taxes        
Provisions for Income Taxes:                
Current Expense  310,000   414,000   474,000   341,000   1,327,000   1,028,000 
Deferred tax (benefit) expense  276,000   (101,000)
Deferred Tax Expense (Benefit)  1,134,000   326,000   787,000   (78,000)
Total Income Tax Expense  586,000   313,000   1,608,000   667,000   2,114,000   950,000 
                        
Net Income $2,374,000  $1,051,000  $3,239,000  $2,009,000  $5,558,000  $3,667,000 
                        
Basic Earnings Per Share of Common Stock $0.48  $0.21 
Diluted Earnings Per Share of Common Stock $0.48  $0.21 
Income Per Share of Common Stock                
Basic $0.66  $0.41  $1.13  $0.74 
Diluted $0.66  $0.41  $1.13  $0.74 
                        
Weighted Average Number of Common Shares Outstanding  4,928,974   4,931,022                 
Weighted Average Number of Shares Outstanding (Diluted)  4,949,474   4,951,522 
Basic  4,899,692   4,930,800   4,918,746   4,930,929 
Diluted  4,920,192   4,951,300   4,939,246   4,951,429 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

 

5

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

  Three months  Three months  Nine months  Nine months 
  ended  ended  ended  ended 
  Jan 31, 2024  Jan 31, 2023  Jan 31, 2024  Jan 31, 2023 
Net Income $3,239,000  $2,009,000  $5,558,000  $3,667,000 
                 
Other Comprehensive Income/(Loss), Net of Tax                
Unrealized gain (loss) on debt securities:                
Unrealized holding gains (losses) arising during period  418,000   173,000   98,000   (1,000)
Income tax (expense) related to other comprehensive income  (118,000)  (49,000)  (28,000)  (1,000)
                 
Other Comprehensive Income (Loss)  300,000   124,000   70,000   (2,000)
                 
Comprehensive Income $3,539,000  $2,133,000  $5,628,000  $3,665,000 

See accompanying notes to the unaudited condensed financial statements.

6

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOMESTOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JULYJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

  July 31, 2023  July 31, 2022 
       
Net Income $2,374,000  $1,051,000 
         
Other Comprehensive Income, Net of Tax        
Unrealized gain on debt securities:        
Unrealized holding gains (losses) arising during period  (31,000)  29,000 
Income tax (expense) benefit related to other comprehensive income  8,000   (9,000)
Other Comprehensive Income  (23,000)  20,000 
         
Comprehensive Income $2,351,000  $1,071,000 
  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, October 31, 2023  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of Common Stock  —   —   —   — 
                 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, January 31, 2024  4,100  $99,000   8,502,881  $850,000 

  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, October 31, 2022  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, January 31, 2023  4,100  $99,000   8,502,881  $850,000 

 

See accompanying notes to the unaudited condensed financial statements

6

GEORGE RISK INDUSTRIES, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JULY 31, 2023 and 2022

(Unaudited)

  Shares  Amount  Shares  Amount 
  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 

  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, April 30, 2023  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, July 31, 2023  4,100  $99,000   8,502,881  $850,000 

See accompanying notes to the condensed financial statementsstatements.

 

7

GEORGE RISK INDUSTRIES, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITIY

FOR THE THREE MONTHS ENDED JULY 31, 2023 and 2022

(Unaudited)

  Capital  Shares  Amount  Income  Earnings  Total 
           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 (loss), 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 

           Accumulated       
     Treasury Stock  Other       
  Paid-In  (Common Class A)  Comprehensive  Retained    
  Capital  Shares  Amount  Income  Earnings  Total 
Balances, April 30, 2023 $1,934,000   3,572,338  $(4,554,000) $(161,000) $52,481,000  $50,649,000 
                         
Purchases of common stock  —   2,035   (22,000)  —   —   (22,000)
                         
Unrealized gain, net of tax effect  —   —   —   (23,000)  —   (23,000)
Unrealized gain (loss), net of tax effect  —   —   —   (23,000)  —   (23,000)
                         
Net Income  —   —   —   —   2,374,000   2,374,000 
                         
Balances, July 31, 2023 $1,934,000   3,574,373  $(4,576,000) $(184,000) $54,855,000  $52,978,000 

See accompanying notes to the condensed financial statements

8

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JULYJANUARY 31, 20232024 AND 20222023

(Unaudited)

 

  July 31, 2023  July 31, 2022 
Cash Flows from Operating Activities:        
Net Income $2,374,000  $1,051,000 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  117,000   108,000 
(Gain) loss on sale of investments  118,000   99,000 
Unrealized (gain) loss on equity securities  (1,634,000)  189,000 
Provision for credit losses on accounts receivable  4,000   (13,000)
Reserve for obsolete inventory  —   46,000 
Deferred income taxes  276,000   (101,000)
(Gain) on sale of assets  (8,000)  — 
Changes in assets and liabilities:        
(Increase) decrease in:        
Accounts receivable  431,000   499,000 
Inventories  (521,000)  (947,000)
Prepaid expenses and other current assets  (482,000)  317,000 
Other receivables  40,000   (1,000)
Income tax overpayment  304,000   — 
Increase (decrease) in:        
Accounts payable  (50,000)  (21,000)
Accrued expenses and other current liabilities  2,000   121,000 
Income tax payable  —   409,000 
Net cash from operating activities  971,000   1,756,000 
         
Cash Flows From Investing Activities:        
Proceeds from sale of assets  8,000   — 
(Purchase) of property and equipment  (201,000)  (74,000)
Proceeds from sale of marketable securities  7,000   2,000 
(Purchase) of marketable securities  (150,000)  (111,000)
Net cash from investing activities  (336,000)  (183,000)
         
Cash Flows From Financing Activities:        
(Purchase) of treasury stock  (22,000)  (2,000)
Dividends paid  (2,000)  — 
Net cash from financing activities  (24,000)  (2,000)
         
Net Change in Cash and Cash Equivalents $611,000  $1,571,000 
         
Cash and Cash Equivalents, beginning of period $4,943,000  $6,078,000 
Cash and Cash Equivalents, end of period $5,554,000  $7,649,000 
         
Supplemental Disclosure for Cash Flow Information:        
Cash payments for:        
Income taxes paid $0  $0 
Interest paid $0  $0 
         
Cash receipts for:        
Income taxes $0  $0 
                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 

Capital

  Shares  Amount  Income  Earnings  Total 
Balances, October 31, 2023$1,934,000   3,576,088  $(4,595,000) $(391,000) $51,597,000  $49,494,000 
                        
Purchases of common stock —   27,963   (323,000)  —   —   (323,000)
                       
Unrealized gain, net of tax effect —   —   —   300,000   —   300,000 
                        
Net Income —   —   —   —   3,239,000   3,239,000 
                        
Balances, January 31, 2024$1,934,000   3,604,051  $(4,918,000) $(91,000) $54,836,000  $52,710,000 

                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, October 31, 2022$

 1,934,000

   3,571,963  $(4,550,000) $(263,000) $49,382,000  $47,452,000 
                        
Purchases of common stock —   175   (2,000)  —   —   (2,000)
                        
Unrealized gain, net of tax effect —   —   —   124,000   —   124,000 
                        
Net Income —   —   —   —   2,009,000   2,009,000 
                        
Balances, January 31, 2023$1,934,000   3,572,138  $(4,552,000) $(139,000) $51,391,000  $49,583,000 

 

See accompanying notes to the unaudited condensed financial statementsstatements.

8

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

  Shares  Amount  Shares  Amount 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, April 30, 2023  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.65 per common share outstanding  —   —   —   — 
                 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, January 31, 2024  4,100  $99,000   8,502,881  $850,000 

  Shares  Amount  Shares  Amount 
  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 provisions related to depreciation  —   —   —   — 
                 
Purchases of common stock  —   —   —   — 
                 
Dividend declared at $0.60 per common share outstanding  —   —   —   — 
                 
Unrealized (loss), net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, January 31, 2023  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 NINE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other Comprehensive  Retained    
 

Capital

  Shares  Amount  Income  Earnings  Total 
Balances, April 30, 2023$1,934,000   3,572,338  $(4,554,000) $(161,000) $52,481,000  $50,649,000 
                        
Purchases of common stock —   31,713   (364,000)  —   —   (364,000)
                        
Dividend declared at $0.65 per common share outstanding —   —   —   —   (3,203,000)  (3,203,000)
                        
Unrealized gain, net of tax effect —   —   —   70,000   —   70,000 
                        
Net Income —   —   —   —   5,558,000   5,558,000 
                        
Balances, January 31, 2024$1,934,000   3,604,051  $(4,918,000) $(91,000) $54,836,000  $52,710,000 

                        
 Paid-In  

Treasury Stock

(Common Class A)

  Accumulated Other 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 
Balance$1,934,000   3,571,693  $(4,547,000) $(137,000) $50,843,000  $49,042,000 
                        
Prior period adjustment for provisions related to depreciation —   —   —   —   (161,000)  (161,000)
                        
Purchases of common stock —   445   (5,000)  —   —   (5,000)
                        
Dividend declared at $0.60 per common share outstanding —   —   —   —   (2,958,000)  (2,958,000)
                        
Unrealized gain (loss), net of tax effect —   —   —   (2,000)  —   (2,000)
                        
Net Income —   —   —   —   3,667,000   3,667,000 
                        
Balances, January 31, 2023$1,934,000   3,572,138  $(4,552,000) $(139,000) $51,391,000  $49,583,000 
Balance$1,934,000   3,572,138  $(4,552,000) $(139,000) $51,391,000  $49,583,000 

See accompanying notes to the unaudited condensed financial statements.

10

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

  Jan 31, 2024  Jan 31, 2023 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net Income $5,558,000  $3,667,000 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  364,000   332,000 
Loss on sale of investments  32,000   165,000 
Impairment on investments  22,000   — 
Unrealized (gain) on equity investments  (2,149,000)  (27,000)
Provision for credit losses on accounts receivable  (3,000)  (6,000)
Reserve for obsolete inventory  (51,000)  81,000 
Deferred income taxes  787,000   (78,000)
(Gain) on sales of assets  (8,000)  — 
Changes in assets and liabilities:        
(Increase) decrease in:        
Accounts receivable  (554,000)  824,000 
Inventories  (594,000)  (2,444,000)
Prepaid expenses  515,000   458,000 
Other receivables  22,000   (29,000)
Income tax overpayment  88,000   (478,000)
Increase (decrease) in:        
Accounts payable  (164,000)  84,000 
Accrued expenses  120,000   184,000 
Net cash from operating activities  3,985,000   2,733,000 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Proceeds from sale of assets  8,000   — 
(Purchase) of property and equipment  (263,000)  (221,000)
Proceeds from sale of marketable securities  520,000   17,000 
(Purchase) of marketable securities  (556,000)  (648,000)
Proceeds from long-term investment  12,000   — 
Net cash from investing activities  (279,000)  (852,000)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
(Purchase) of treasury stock  (364,000)  (5,000)
Dividends paid  (2,914,000)  (2,689,000)
Net cash from financing activities  (3,278,000)  (2,694,000)
         
NET CHANGE IN CASH AND CASH EQUIVALENTS  428,000   (813,000)
         
Cash and Cash Equivalents, beginning of period  4,943,000   6,078,000 
Cash and Cash Equivalents, end of period $5,371,000  $5,265,000 
         
Supplemental Disclosure for Cash Flow Information:        
Cash payments for:        
Income taxes $1,230,000  $1,618,000 
Interest paid $—  $— 
Cash receipts for:        
Income taxes $—  $118,000 

See accompanying notes to the unaudited condensed financial statements.

11

 

GEORGE RISK INDUSTRIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JULYJANUARY 31, 20232024

 

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 unaudited condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2023 annual report on Form 10-K (the “Annual Report”).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 condensed 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 threenine months ended JulyJanuary 31, 2023.

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 — — ThereIn November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures. The new guidance is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are noeffective retrospectively for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the financial statements and related disclosures, which is not expected to be material.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Tax Disclosures (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting pronouncements that are expected to have a significant impactguidance on our financial statements.its Consolidated Financial Statements.

 

1012

 

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 August 2023February 2024 and July 20412041.. 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 JulyJanuary 31, 20232024 and April 30, 2023, investments consisted of the following:

Schedule of Investments

   Gross Gross   
Investments at Cost Unrealized Unrealized Fair 
July 31, 2023 Basis Gains Losses Value 

Investments at

January 31, 2024

 

Cost

Basis

 Gross Unrealized Gains Gross Unrealized Losses 

Fair

Value

 
Municipal bonds $5,363,000  $43,000  $(240,000) $5,166,000  $5,383,000  $45,000  $(162,000) $5,266,000 
REITs  93,000   —   (15,000)  78,000   78,000   —   (8,000)  70,000 
Equity securities  18,677,000   8,299,000   (277,000)  26,699,000   18,977,000   8,876,000   (294,000)  27,559,000 
Money markets and CDs  1,047,000   2,000   —   1,049,000   698,000   —   —   698,000 
Total $25,180,000  $8,344,000  $(532,000) $32,992,000  $25,136,000  $8,921,000  $(464,000) $33,593,000 

 

   Gross Gross   
Investments at Cost Unrealized Unrealized Fair 
April 30, 2023 Basis Gains Losses Value 

Investments at

April 30, 2023

 

Cost

Basis

 Gross Unrealized Gains Gross Unrealized Losses 

Fair

Value

 
Municipal bonds $5,396,000  $46,000  $(230,000) $5,212,000  $5,396,000  $46,000  $(230,000) $5,212,000 
REITs  93,000   —   (22,000)  71,000   93,000   —   (22,000)  71,000 
Equity securities  18,605,000   6,915,000   (501,000)  25,019,000   18,605,000   6,915,000   (501,000)  25,019,000 
Money markets and CDs  1,060,000   1,000   —   1,061,000   1,060,000   1,000   —   1,061,000 
Total $25,154,000  $6,962,000  $(753,000) $31,363,000  $25,154,000  $6,962,000  $(753,000) $31,363,000 

 

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 loss waslosses recorded for the quarters ended JulyJanuary 31, 2024 and 2023, and 2022, respectively. As for the year-to-date numbers, management recorded an impairment loss of $22,000 for the nine-month period ended January 31, 2024, while there were no impairment losses recorded for the nine-month period ended January 31, 2023.

 

1113

 

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.occurs. For the quarter ended JulyJanuary 31, 2023,2024 the Company had sales of equity securities which yielded gross realized gains of $105,000116,000 and gross realized losses of $218,00084,000. For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $5,00014,000 were recorded. As for the nine-months ended January 31, 2024 the Company had sales of equity securities which yielded gross realized gains of $329,000 and gross realized losses of $362,000. For the same nine-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $22,000 were recorded. During the quarter ending JulyJanuary 31, 2022,2023, the Company recorded gross realized gains and losses on equity securities of $197,000118,000 and $267,00069,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $29,0005,000 were recorded. During the nine-month period ending January 31, 2023, the Company recorded gross realized gains and losses on equity securities of $403,000 and $522,000, respectively. For the same nine-month period last year, sales of debt securities did not yield any gross realized gains, but gross realized losses of $46,000 were recorded. The gross realized loss numbers include would include the impaired figures listed in the previous paragraph if there happened to be any.paragraph.

 

The following table showstables show 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 JulyJanuary 31, 20232024 and April 30, 2023, respectively.

 

Unrealized Loss Breakdown by Investment Type at JulyJanuary 31, 20232024 

Schedule of Unrealized Loss Breakdown by Investment

                                     
 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 $1,480,000  $(29,000) $3,176,000  $(211,000) $4,656,000  $(240,000) $816,000  $(10,000) $2,767,000  $(153,000) $3,583,000  $(163,000)
REITs  41,000   (4,000)  37,000   (11,000)  78,000   (15,000)  3,000   (1,000)  67,000   (6,000)  70,000   (7,000)
Equity securities  3,455,000   (66,000)  1,517,000   (211,000)  4,972,000   (277,000)  1,251,000   (85,000)  1,366,000   (209,000)  2,617,000   (294,000)
Total $4,976,000  $(99,000) $4,730,000  $(433,000) $9,706,000  $(532,000) $2,070,000  $(96,000) $4,200,000  $(368,000) $6,270,000  $(464,000)

 

Unrealized Loss Breakdown by Investment Type at April 30, 2023

 

                   
  Less than 12 months  12 months or greater  Total 
Description Fair Value  Unrealized Loss  Fair Value  Unrealized Loss  Fair Value  Unrealized Loss 
Municipal bonds $868,000  $(6,000) $3,769,000  $(224,000) $4,637,000  $(230,000)
REITs  36,000   (9,000)  35,000   (13,000)  71,000   (22,000)
Equity securities  3,048,000   (140,000)  2,209,000   (361,000)  5,257,000   (501,000)
Total $3,952,000  $(155,000) $6,013,000  $(598,000) $9,965,000  $(753,000)

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 JulyJanuary 31, 20232024 and April 31,30, 2023.

 

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 JulyJanuary 31, 20232024 and April 30, 2023.

12

 

Note 3: Inventories

 

Inventories at JulyJanuary 31, 20232024 and April 30, 2023 consisted of the following:

Schedule of Inventories

  January 31,  April 30, 
  2024  2023 
       
Raw materials $10,603,000  $9,886,000 
Work in process  777,000   678,000 
Finished goods  1,046,000   1,267,000 
Inventory gross  12,426,000   11,831,000 
Less: allowance for obsolete inventory  (338,000)  (388,000)
Inventories, net $12,088,000  $11,443,000 

 

  July 31,  April 30, 
  2023  2023 
       
Raw materials $10,271,000  $9,886,000 
Work in process  758,000   678,000 
Finished goods  1,323,000   1,267,000 
Inventory gross  12,352,000   11,831,000 
Less: allowance for obsolete inventory  (388,000)  (388,000)
Inventories, net $11,964,000  $11,443,000 
14

 

Note 4: Business Segments

 

The following is financial information relating to industry segments:

Schedule of Financial Information Relating to Industry Segments

 2023  2022  Three months Three months Nine months Nine months 
 July 31,  ended ended ended ended 
 2023  2022  Jan 31, 2024 Jan 31, 2023 Jan 31, 2024 Jan 31, 2023 
Net revenue:                        
Security alarm products $4,241,000  $4,502,000  $4,939,000  $3,712,000  $14,627,000  $13,079,000 
Cable & wiring tools  328,000   484,000   332,000   486,000   1,117,000   1,561,000 
Other products  159,000   224,000   123,000   168,000   431,000   554,000 
Total net revenue $4,728,000  $5,210,000  $5,394,000  $4,366,000  $16,175,000  $15,194,000 
                        
Income from operations:                        
Security alarm products $1,065,000  $1,267,000  $1,373,000  $774,000  $4,226,000  $3,339,000 
Cable & wiring tools  82,000   136,000   105,000   93,000   323,000   398,000 
Other products  40,000   63,000   40,000   33,000   125,000   141,000 
Total income from operations $1,187,000  $1,466,000  $1,518,000  $900,000  $4,674,000  $3,878,000 
                        
Depreciation and amortization:                        
Security alarm products $49,000  $48,000  $55,000  $48,000  $146,000  $143,000 
Cable & wiring tools  30,000   30,000   30,000   30,000   91,000   92,000 
Other products  24,000   18,000   24,000   21,000   61,000   57,000 
Corporate general  14,000   12,000   14,000   14,000   66,000   40,000 
Total depreciation and amortization $117,000  $108,000  $123,000  $113,000  $364,000  $332,000 
                        
Capital expenditures:                        
Security alarm products $201,000  $74,000  $—  $—  $224,000  $74,000 
Cable & wiring tools  —   —   —   —   —   — 
Other products  —   —   20,000   12,000   20,000   147,000 
Corporate general  —   —   —   —   19,000   — 
Total capital expenditures $201,000  $74,000  $20,000  $12,000  $263,000  $221,000 

 

 July 31, 2023 April 30, 2023  January 31, 2024 April 30, 2023 
Identifiable assets:                
Security alarm products $14,850,000  $14,251,000  $15,880,000  $14,251,000 
Cable & wiring tools  2,161,000   2,548,000   2,173,000   2,548,000 
Other products  952,000   981,000   850,000   981,000 
Corporate general  40,535,000   38,171,000   40,170,000   38,171,000 
Total assets $58,498,000  $55,951,000  $59,073,000  $55,951,000 

 

1315

 

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 July 31, 2023  For the three months ended January 31, 2024 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator)  (Denominator)  Amount  (Numerator)  (Denominator)  Amount 
Net income $2,374,000          $3,239,000         
Basic EPS $2,374,000   4,928,974  $.48  $3,239,000   4,899,692  $.66 
Effect of dilutive Convertible Preferred Stock  —   20,500   —   –   20,500   — 
Diluted EPS $2,374,000   4,949,474  $.48  $3,239,000   4,920,192  $.66 

 

 For the three months ended July 31, 2022  For the three months ended January 31, 2023 
 Income Shares Per-Share  Income Shares Per-Share 
 (Numerator)  (Denominator)  Amount  (Numerator)  (Denominator)  Amount 
Net income $1,051,000          $2,009,000         
Basic EPS $1,051,000   4,931,022  $.21  $2,009,000   4,930,800  $.41 
Effect of dilutive Convertible Preferred Stock  —   20,500   —   –   20,500       — 
Diluted EPS $1,051,000   4,951,522  $.21  $2,009,000   4,951,300  $.41 

  For the nine months ended January 31, 2024 
  Income  Shares  Per-Share 
  (Numerator)  (Denominator)  Amount 
Net income $5,558,000         
Basic EPS $5,558,000   4,918,746  $1.13 
Effect of dilutive Convertible Preferred Stock  –   20,500        — 
Diluted EPS $5,558,000   4,939,246  $1.13 

  For the nine months ended January 31, 2023 
  Income  Shares  Per-Share 
  (Numerator)  (Denominator)  Amount 
Net income $3,667,000         
Basic EPS $3,667,000   4,930,929  $.74 
Effect of dilutive Convertible Preferred Stock  –   20,500        — 
Diluted EPS $3,667,000   4,951,429  $.74 

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% 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 $15,000 and $16,00014,000 were paid induring each quarter ending January 31, 2024 and 2023, respectively. Likewise, the Company paid matching contributions of the quartersapproximately $45,000 and $43,000 during each nine-month period ending JulyJanuary 31, 20232024 and 2022,2023, respectively.

14

 

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-term nature. The fair value of our investments is determined utilizing market-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 JulyJanuary 31, 20232024 and April 30, 2023, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities. TheOur marketable securities are valued using third-party broker statements. The value of the majority of securitiesinvestments 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 setstables set 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.

17

Schedule of Assets Measured at Fair Value on Recurring Basis

15
  Level 1  Level 2  Level 3  Total 
  Assets Measured at Fair Value on a Recurring Basis as of
January 31, 2024		 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $—  $5,266,000  $—  $5,266,000 
REITs  —   70,000   —   70,000 
Equity Securities  27,559,000   —   —   27,559,000 
Money Markets  698,000   —   —   698,000 
Total fair value of assets measured on a recurring basis $28,257,000  $5,336,000  $—  $33,593,000 

 

  Level 1  Level 2  Level 3  Total 
  

Assets Measured at Fair Value on a Recurring Basis as of

July 31, 2023

 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $—  $5,166,000  $—  $5,166,000 
REITs  —   78,000   —   78,000 
Equity Securities  26,699,000   —   —   26,699,000 
Money Markets and CDs  1,049,000   —   —   1,049,000 
Total fair value of assets measured on a recurring basis $27,748,000  $5,244,000  $—  $32,992,000 

 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, 2023

  Assets Measured at Fair Value on a Recurring Basis as of
April 30, 2023		 
 Level 1 Level 2 Level 3 Total  Level 1 Level 2 Level 3 Total 
Assets:                                
Municipal Bonds $—  $5,212,000  $—  $5,212,000  $—  $5,212,000  $—  $5,212,000 
REITs  —   71,000   —   71,000   —   71,000   —   71,000 
Equity Securities  25,019,000   —   —   25,019,000   25,019,000   —   —   25,019,000 
Money Markets and CDs  1,061,000   —   —   1,061,000 
Money Markets  1,061,000   —   —   1,061,000 
Total fair value of assets measured on a recurring basis $26,080,000  $5,283,000  $—  $31,363,000  $26,080,000  $5,283,000  $—  $31,363,000 

 

Note 8: 8 Subsequent Events

 

None

 

1618

 

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 Operations19

 

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 currentnew information becomes available in the future.

 

The following discussion should be read in conjunction with the attached unaudited condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2023.

 

Executive Summary

 

The Company’s performance remained steady duringin operations has seen a tick upward through the quarter ended July 31, 2023 as compared to the quarter ended July 31, 2022. Although sales have decreased when comparing to the same quarter last year, overall net income is up because unrealized gains on investments are showing gains inthree quarters of the current fiscal year with the third quarter while fordipping slightly in sales over the samesecond quarter last year both of those categories were loss amounts. Also, gross profit and income from operations are lower when comparing to the same quarter lastcurrent fiscal year. This is because ofmainly due to the increased costs of raw materials and labor. The decline in salesfact that our business is a result of a slowing economy which has seen inflation climbtied to some of its highest levels in 15 years and, in turn, impacts the housing market whichand the Company is directly tied to, negatively. The Company still haswinter months usually show a considerable back-order log and there have been times that certain raw materials have not been available.slowdown. Opportunities include focusing on rampingkeeping up production to meet customer’s needswith business growth and finding ways to get productour products out to themour customers in a timely manner, which includestimelier manner. One way we are doing this is by looking into more automation, andautomation. We also continue to continue lookinglook at businesses that might be a good fit to purchase. We also havecontinue to work on new products that are scheduled to enter the marketplace by the end of the calendar year.will be a good fit for our industry and business. Challenges in the coming months include continuing to get productgetting products out to customers in a timely manner, and dealing with the ongoing effect of the COVID-19 pandemic restrictions, and inflation. Possible ongoing effects of 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 efficiently as possible with the hopes of getting the facilities running leaner and more profitable than ever before.

 

Results of Operations

 

 ●Net sales were $5,394,000 for the quarter ended JulyJanuary 31, 2023 showed2024, which is a 9.25% decrease over23.55% increase from the corresponding quarter last year. Year-to-date net sales were $16,175,000 at January 31, 2024, which is a 6.46% increase from the same period in the priorlast year. The Company saw decreasedimprovement in sales resulting primarily fromis a weakenedresult of the economy which has constrainedrebounding and having the housing market,ability to get goods built and inflation. Management also believes that sales stay at a consistent rate dueshipped to our customers. We continue to operate our business with our ongoing commitment to outstanding customer service and our ability to customize products.

20

 ●TheCost of goods sold was 50.69% of net sales for the quarter ended January 31, 2024 and was 55.98% for the same quarter last year. Year-to-date cost of goods sold percentage increased from 51.00% of sales in the prior year, to 52.07% inpercentages were 50.36% for the current quarter, which isnine months and 53.15% for the corresponding nine months last year. The current cost of goods sold percentages have dropped to be just outside of Management’s goal to keepof keeping labor and other manufacturing expenses belowat less than 50%. The increased cost of goods sold percentage is a result of inflation that has afflicted for both the economy recently.quarter and year-to-date results. Management has seen significant price increases in rawcontinues to work with and train employees to work more efficiently. Raw material and has hadprices have come down during the current fiscal year as compared to raisethe previous fiscal year, but wages continue to rise to remain competitive in the job market. Management offset some of these added expenses by implementing a 2.5% price increase effective January 1, 2024.

17

 

 ●Operating expenses decreasedincreased by $8,000 when comparing$120,000 for the current year quarter and they increased by $116,000 for the nine-months ended January 31, 2024 as compared to the same quarter for the priorcorresponding periods last year. When comparing percentages in relation to net sales, the operating expenses increased to 22.82% for the quarter ended JulyJanuary 31, 2023 as compared to 20.86%2024 was 21.17% of net sales while it was 23.41% of net sales for the correspondingsame quarter lastthe prior year. The dollar amount decrease isFor year-to-date numbers, operating expenses were 20.75% and 21.32% of net sales for the result of decreased sales commissions.nine months ended January 31, 2024 and 2023, respectively. The Company maintainedhas been able to keep the ratio of operating expenses to net sales at less than 30%, which of net sales for many years now; however, the actual dollar amount increase is in line with historical ratios.due to increased commission amounts, related to increased sales, and additional labor costs related to wage increases.
   
 ●Income from operations for the quarter ended JulyJanuary 31, 20232024 was at $1,187,000, which is$1,518,000, a 19.03% decrease68.67% increase from the corresponding quarter last year, which had income from operations of $1,466,000.$900,000. Income from operations for the nine months ended January 31, 2024 was $4,674,000, which is a 20.53% increase from the corresponding nine months last year, which had income from operations of $3,878,000.
   
 ●Other income and expenses showed a $1,773,000 gain for the quarter ended JulyJanuary 31, 2023 as compared to2024 shows income of $3,329,000, which is a $102,000 loss$1,553,000 increase from the corresponding quarter last year, which had an income amount of $1,776,000. Comparatively, there is an increase of $2,259,000 in other income for the quarter ended July 31, 2022. Foryear-to-date numbers. Most of the three months ended July 31, 2023, $1,634,000activity in these accounts consists of investment interest, dividends, real gains or losses on sale of investments, and unrealized gains fromor losses on equity securities were recorded, compared to $189,000 of unrealized losses from equity securities recordedsecurities. The main reason for the three months ended July 31, 2022.increase in the current quarter and year-to-date numbers is unrealized gain and loss on equity securities. The remainderCompany is at the mercy of the increase is primarily duestock market when it comes to dividendthese figures, the stock market has seen an upturn recently with decreased inflation and interest income paid on investments.improvement in the economy.
   
 ●The Company’s provision for income taxes showed an increase of $273,000 from $313,000 in the quarter ended July 31, 2022 to $586,000 for the quarter ended July 31, 2023. This increase is primarily due to increased deferred taxes resulting from unrealized gains on equity securities for the current quarter.
●In turn,Overall, net income for the quarter ended JulyJanuary 31, 20232024 was $2,374,000, a 125.88% increaseup $1,230,000, or 61.22%, from the correspondingsame quarter last year, which showedyear. Similarly, net income of $1,051,000.for the nine-month period ended January 31, 2024 was up $1,891,000, or 51.57%, from the same period in the prior year.
   
 ●Earnings per share for the quarter ended July 31, 2023 were $0.48 per common share and $0.21 per common share for the quarter ended JulyJanuary 31, 2022.2024 were $0.66 per share and $1.13 per share for the year-to-date numbers. EPS for the quarter and nine months ended January 31, 2023 were $0.41 per share and $0.74 per share, respectively.

 

21

Liquidity and capital resources

 

Operating

●Net cash increased $428,000 during the nine months ended January 31, 2024 as compared to a decrease of $813,000 during the corresponding period last year.
Operating●Accounts receivable increased $554,000 for the nine months ended January 31, 2024 compared with a $824,000 decrease for the same period last year. The current year increase is a direct result of the increased sales, while there has been a slight uptick in collections of accounts receivable. An analysis of accounts receivable shows that 9.62% of the receivables were over 90 days at January 31, 2024.
   
 ●Net cashInventories increased $611,000$594,000 during the quarter ended July 31, 2023 ascurrent nine-month period compared to an increase of $1,571,000 during the corresponding quarter last year. The details are listed below.
●Accounts receivable, net decreased $431,000 for the quarter ending July 31, 2023 compared with a $499,000 decrease for the same quarter$2,444,000 last year. The smaller decreaseincrease in accounts receivablethe current year is directly attributabledue to a decreasenot having as many raw materials on hand since sales have increased. Management has also seen slight decreases in sales and customers being ableraw material prices during the current year as compared to pay in a slightly timelier manner. Management is always working with customers to collect on accounts and to keep past due accounts to a minimum. An analysis of accounts receivable shows that 5.14% of the balance was over 90 days at Julynine-month period ending January 31, 2023.
   
 ●Inventories increased $521,000Prepaid expenses saw a $515,000 decrease for the current nine months, primarily due to having inventory and machinery delivered during the current quarter as compared to a $947,000 increase last year. The smaller increase is primarily due to the fact that the Company has slowed down on buying raw materials due to decreased orders and that the prices of raw materials have leveled out while labor costs continue to increase.

18

●For the quarter ended July 31, 2023, there was a $482,000 increase in prepaid expenses and other current assets compared to a decrease of $317,000 for the quarter ended July 31, 2022. The current increase is due to having to prepay for inventory during the quarter;nine-month period; therefore, having moreless money in prepayments of raw materials on the books. The prior nine-month period showed a $458,000 decrease in prepaid expenses.
   
 ●Income tax overpayment decreased $88,000 for the quarter ended July 31, 2023 decreased $304,000,current nine-month period, compared to a $409,000 decreasehaving an increase of $478,000 in income tax payableoverpayment for the quarternine-months ended JulyJanuary 31, 2022.2023. The current decrease is due to decreased income. Also, the corporatehaving to our income tax rate in Nebraska decreased to 7.25% from 7.5% for the current fiscal year.estimates be more aligned with our net income.
   
 ●Accounts payable shows a $164,000 decrease of $50,000 for the quartercurrent nine-month period ended JulyJanuary 31, 20232024 compared to a decrease of $21,000an $84,000 increase for the same quarterprior nine-month period. The company strives to pay all invoices within terms, and the year before. The variance is primarily due to the timing differences of when product is received. Management strives to pay all payables within terms, unless there is a problem with the merchandise.receipt of products and payment of invoices.
   
 ●Accrued expenses and other current liabilities increased $2,000$120,000 for the current quarter asnine-month period compared to a $121,000$184,000 increase for the quarternine-month period ended JulyJanuary 31, 2022.2023. The difference in the amounts is primarily due to timing of when payroll periods end and decreases in sales commissions.issues.

Investing

 ●
InvestingAs for our investment activities, the Company spent approximately $263,000 on acquisitions of property and equipment for the current nine-month period, in comparison with the corresponding nine months last year, where there was activity of $221,000.
   
 ●The Company purchased $201,000 of property and equipment duringAdditionally, the current fiscal quarter. In comparison, $74,000 was spent on purchases of property and equipment during the corresponding quarter last year.
●The Company continues to purchase marketable securities, which include municipal bonds and quality stocks. CashDuring the nine-month period ended January 31, 2024 the buy/sell activity in the investment accounts continued as usual. Net cash spent on purchases of marketable securities for the quarternine-month period ended JulyJanuary 31, 20232024 was $150,000$556,000 compared to $111,000$648,000 spent duringin the quarter ended July 31, 2022. We continueprior nine-month period. The Company continues 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 feesfee based on the value of the investments.

22
Financing

Financing

 ●The Company continues to purchase back common stock when the opportunity arises. For the quarternine-month period ended JulyJanuary 31, 20232024, the Company bought back $22,000purchased $364,000 worth of treasury stock and $2,000 was bought back duringstock. This is in comparison to $5,000 spent in the quarter ended July 31, 2022.same nine-month period the prior year.

 

19●The company paid out dividends of $2,914,000 during the nine months ending January 31, 2024. These dividends were paid during the second quarter. The company declared a dividend of $0.65 per share of common stock on September 30, 2023 and these dividends were paid by October 31, 2023. As for the prior year numbers, dividends paid was $2,689,000 for the nine months ending January 31, 2023. A dividend of $0.60 per common share was declared and paid during the second fiscal quarter last year.

In conjunction with the Company’s Condensed Financial Statements, we have provided the following list of ratios to help analyze George Risk Industries’ performance:

  Qtr ended  Qtr ended 
  July 31, 2023  July 31, 2022 
Working capital
(current assets – current liabilities)		 $51,378,000  $48,297,000 
Current ratio
(current assets / current liabilities)		  15.575   13.855 
Quick ratio
((cash + current investments + AR) / current liabilities)		  11.805   11.207 

 

New Product Development

 

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

 

 ●Explosion proof contacts that will be UL listed for hazardous locations are in development.locations. There has been demand from our customers for this type of high security magnetic reed switch.
   
 ●The Company is developing magnetic contacts which are listed under UL 634 Level 2. These sensors are for high security applications such as government buildings, military use, nuclear facilities, and financial institutions.
   
 ●Research is being done on updating our small profile glass break detector, in addition to looking at the development of programmable temperature and humidity sensors with built-in hysteresis.
   
 ●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 monitoring devices which include glass break detection, tilt sensing and environmental monitoring. A redesign of our brass water valve shut-off system is near completion.

 

Other Information

 

In addition to researching and developing new products, management is always open to the possibility of acquiring a business or product line that would complement our existing operations. Due to the Company’s strong cash position, management believes this could be achieved without the need for outside financing. The intent is to utilize the equipment, marketing techniques and established customers to deliver new products and increase sales and profits.

 

There are no known seasonal trends with any of GRI’s products since we sell to distributors and OEM manufacturers. Our products are tied to the housing industry and will fluctuate with building trends.

 

2023

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

Item 3.Quantitative and Qualitative Disclosures About Market Risk

 

This disclosure does not apply.Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable

Item 4.Controls and Procedures

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 JulyJanuary 31, 2023.2024. 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, 2023, 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 occur with an outside party. A part-time Controller was hired in March 2023, but 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.

 

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.

 

We will continue to follow the standards for the Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:

 

 ●Pertain to the maintenance of records in reasonable detail that fairly reflect the transactions and dispositions of the Company’s assets;
 
●Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and

 ●Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

 

Changes in Internal Control Overover Financial Reporting

 

Other than those mentioned above, there were no changes in our internal control over financial reporting during the fiscal quarter ended JulyJanuary 31, 20232024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

2124

 

GEORGE RISK INDUSTRIES, INC.

 

PARTPart II. OTHER INFORMATION

Item 1.Legal Proceedings

Item 1. Legal Proceedings

 

Not applicable

 

Item 1A. Risk Factors

Not applicable.

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

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

 

The following table provides information relating to the Company’s repurchase of common stock for the firstthird quarter of fiscal year 2024.

 

PeriodNumber of shares repurchased
MayNovember 1, 2023 – MayNovember 30, 202326,663
December 1, 2023 – December 31, 20231,135-0-
JuneJanuary 1, 20232024 – June 30, 2023January 31, 2024400
July 1, 2023 – July 31, 20235001,300

Item 3.Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities

 

Not applicable

Item 4.Mine Safety Disclosures

Item 4. Mine Safety Disclosures

 

Not applicable

Item 5.Other Information

Item 5. Other Information

 

Not applicable

Item 6.Exhibits

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.
   
101.INS101. INS Inline XBRL Instance Document
   
101.SCH101. SCH Inline XBRL Taxonomy Extension Schema Document
   
101.CAL101. CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF101. DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB101. LAB Inline XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE101. PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
104101. Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2225

 

SIGNATURES

 

In accordance withPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

George Risk Industries, Inc.

(Registrant)

(Registrant)
Date September 14, 2023March 15, 2024By:/s/ Stephanie M. Risk-McElroy
  Stephanie M. Risk-McElroy
  President, Chief Executive Officer, Chief Financial Officer,
and Chairman of the Board

 

2326