UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
(MarkAmendment No 1
(Mark One)
[
X ]X] QUARTERLY REPORTUNDERPURSUANT TO SECTION 13orOR 15(d) OF THE SECURITIESEX- CHANGEEXCHANGE ACT OF 1934For the
quarterly periodquarter ended January 31,20142020[ ] TRANSITION REPORT
UNDERPURSUANT TO SECTION 13orOR 15(d) OF THE SECURITIESEX- CHANGEEXCHANGE ACT OF 1934For the transition period from
_________________________ to____________________________Commission File Number: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact(Exact name of
small business issuerregistrant as specified in its charter)Colorado 84-0524756 (State of incorporation) (IRS Employers Identification No.) 802 South Elm St. Kimball, NE 69145 (Address of principal executive offices) (Zip Code)
| Colorado | 84-0524756 | |
(State of incorporation) | (IRS Employers Identification No.) |
| 802 S. Elm St., Kimball, NE | 69145 | |
| (Address of principal executive offices) | (Zip Code) |
(308) 235-4645
(Registrant's
(Registrant’s telephone number, including area code)
Check
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 issuerregistrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Yes [X] | No [ ] |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (&232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
| Yes [X] | No [ ] |
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] | ||
| Non-accelerated filer [ ] | Smaller reporting company [X] | ||
| Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ X ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
| Yes [ ] | No [X] |
APPLICABLE ONLY TO CORPORATE ISSUERS
ISSUERS:
The number of shares of the Registrant'sRegistrant’s Common Stock outstanding, as of August 8, 2014March 20, 2020, was 5,029,775.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three and nine month period
ended January 31, 2014, are attached hereto.
Explanatory Note
----------------
4,950,260.
EXPLANATORY NOTE
This Amendment No. 1 to Form 10-Q, or this Amendment, amends the quarterlyQuarterly Report on Form 10-Q of George Risk
Industries, Inc.(GRI), (the "Company") for the quarterthree-and nine months periods ended January 31, 2014
is being2020 that we originally filed with the Securities and Exchange Commission, or the Commission, on March 23, 2020, or the Original Filing, in connection with our failure to amendgive effect to the implementation of FASB ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”) in the prior year financial statements included in the Original Filing.
All amendments and restatements to the financial information containedstatements are non-cash in nature.
Restatement
As further discussed in Note 10 to our unaudited financial statements in Part I, Item 1, “Financial Statements” of this Amendment, on April 1, 2020, we concluded that certain disclosures necessary to fairly explain the changes in the Manage-
ment'sfinancial statements presented were excluded in our previous filings and that we would we would restate our previously issued financial statements for the three-and nine months periods ended January 31, 2019, as set forth in the Original Filing in connection with our failure to give effect to the implementation of ASU 2016-01 in the prior year financial statements included in the Original Quarterly Report on Form 10-Q.
Amendment
The purpose of this Amendment is to restate our previously issued unaudited financial statements and related disclosures for the three-and nine months periods ended January 31, 2019 in connection with the application of ASU 2016-01. This Amendment also includes (a) an amended Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and PlanResults of OperationOperations” to reflect the correction of the error described above.
Except as expressly set forth herein, including in the notes to the unaudited financial statements, this Amendment, along with Amendment #1 (“Amendments”) does not reflect events occurring after the date of the Original Filing or modify or update any of the other disclosures contained therein in any way other than as required to reflect the amendment discussed above. Accordingly, this Amendment should be read in conjunction with the Original Filing and our other filings with the Commission. Information not affected by the restatement is unchanged and reflects disclosures made at the time of the filing of the Original Form 10-Q.
See Note 10 to the financial statements on Form 10-Qincluded in Item 1 for quarter ended January 31, 2014
which was filedadditional information and a reconciliation of the previously reported amounts to the restated amounts.
Items Amended in this Filing
For reasons discussed above, we are filing this Amendment in order to amend the following items in our Original Filing to the extent necessary to reflect the adjustments discussed above and make corresponding revisions to our financial data cited elsewhere in this Amendment in connection with the application of ASU 2016-01 in this Amendment that was not previously applied:
Part I, Item 1. Financial Statements
Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part I, Item 4. Controls and Procedures
In accordance with applicable Commission rules, this Amendment includes new certifications required by Rule 13a-14 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, from our Chief Executive Officer and Exchange Commission ("SEC") on
March 17, 2014Chief Financial Officer dated as of the "Form 10-Q").
In its previously fileddate of filing of this Amendment.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Restated)
The restated unaudited financial statements for the quarter ended January 31,
2014, the Company misstated the deferred taxes due to an error in the cal-
culation. The Company has restated its financial statements for thethree- and nine-month period ended January 31, 2014 to reflect the proper adjustments.
Except as described above, no other parts of the 10-Q2020, are being amended.
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
| January 31, 2020 | April 30, 2019 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,647,000 | $ | 4,873,000 | ||||
| Investments and securities | 28,178,000 | 27,291,000 | ||||||
| Accounts receivable: | ||||||||
| Trade, net of $993 and $9,321 doubtful account allowance | 2,243,000 | 2,696,000 | ||||||
| Other | 4,000 | 6,000 | ||||||
| Income tax overpayment | 117,000 | 259,000 | ||||||
| Inventories, net | 5,046,000 | 4,583,000 | ||||||
| Prepaid expenses | 356,000 | 282,000 | ||||||
| Total Current Assets | 41,591,000 | 39,990,000 | ||||||
| Property and Equipment, net, at cost | 1,284,000 | 984,000 | ||||||
| Other Assets | ||||||||
| Investment in Limited Land Partnership, at cost | 320,000 | 293,000 | ||||||
| Projects in process | — | 117,000 | ||||||
| Other | 3,000 | 3,000 | ||||||
| Total Other Assets | 323,000 | 413,000 | ||||||
| Intangible Assets, net | 1,548,000 | 1,640,000 | ||||||
| TOTAL ASSETS | $ | 44,746,000 | $ | 43,027,000 | ||||
See accompanying notes to the unaudited condensed financial statements.
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(continued)
| January 31, 2020 | April 30, 2019 | |||||||
| (unaudited) | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable, trade | $ | 222,000 | $ | 206,000 | ||||
| Dividends payable | 1,892,000 | 1,714,000 | ||||||
| Accrued expenses | 357,000 | 356,000 | ||||||
| Total Current Liabilities | 2,471,000 | 2,276,000 | ||||||
| Long-Term Liabilities | ||||||||
| Deferred income taxes | 1,423,000 | 1,198,000 | ||||||
| Total Long-Term Liabilities | 1,423,000 | 1,198,000 | ||||||
| Total Liabilities | 3,894,000 | 3,474,000 | ||||||
| Commitments and Contingencies | — | — | ||||||
| Stockholders’ Equity | ||||||||
| Convertible preferred stock, 1,000,000 shares authorized, | ||||||||
| Series 1—noncumulative, $20 stated value, 25,000 shares | ||||||||
| authorized, 4,100 issued and outstanding | 99,000 | 99,000 | ||||||
| Common stock, Class A, $.10 par value, 10,000,000 shares | ||||||||
| authorized, 8,502,881 shares issued and outstanding | 850,000 | 850,000 | ||||||
| Additional paid-in capital | 1,934,000 | 1,934,000 | ||||||
| Accumulated other comprehensive income | 69,000 | 14,000 | ||||||
| Retained earnings | 42,198,000 | 40,883,000 | ||||||
| Less: treasury stock, 3,552,621 and 3,544,271 shares, at cost | (4,298,000 | ) | (4,227,000 | ) | ||||
| Total Stockholders’ Equity | 40,852,000 | 39,553,000 | ||||||
| TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY | $ | 44,746,000 | $ | 43,027,000 | ||||
See accompanying notes to the unaudited condensed financial statements.
statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED INCOME STATEMENTS (Unaudited)
| Three months | Nine months | Three months | Nine months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
| Jan 31, 2020 | Jan 31, 2020 | Jan 31, 2019 | Jan 31, 2019 | |||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| Net Sales | $ | 3,589,000 | $ | 10,852,000 | $ | 3,455,000 | $ | 10,551,000 | ||||||||
| Less: Cost of Goods Sold | (1,832,000 | ) | (5,462,000 | ) | (1,772,000 | ) | (5,467,000 | ) | ||||||||
| Gross Profit | 1,757,000 | 5,390,000 | 1,683,000 | 5,084,000 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| General and Administrative | 302,000 | 928,000 | 294,000 | 911,000 | ||||||||||||
| Sales | 587,000 | 1,698,000 | 531,000 | 1,611,000 | ||||||||||||
| Engineering | 34,000 | 66,000 | 21,000 | 57,000 | ||||||||||||
| Rent Paid to Related Parties | — | 8,000 | 5,000 | 14,000 | ||||||||||||
| Total Operating Expenses | 923,000 | 2,700,000 | 851,000 | 2,593,000 | ||||||||||||
| Income From Operations | 834,000 | 2,690,000 | 832,000 | 2,491,000 | ||||||||||||
| Other Income | ||||||||||||||||
| Other | — | 2,000 | 1,000 | 10,000 | ||||||||||||
| Dividend and Interest Income | 423,000 | 782,000 | 471,000 | 816,000 | ||||||||||||
| Unrealized Gain (Loss) on equity securities | 508,000 | 782,000 | (184,000 | ) | (949,000 | ) | ||||||||||
| Gain on Investments | 78,000 | 137,000 | 169,000 | 74,000 | ||||||||||||
| Gain on Sale of Assets | 5,000 | 5,000 | — | — | ||||||||||||
| 1,014,000 | 1,708,000 | 457,000 | (49,000 | ) | ||||||||||||
| Income Before Provisions for Income Taxes | 1,848,000 | 4,398,000 | 1,289,000 | 2,442,000 | ||||||||||||
| Provisions for Income Taxes: | ||||||||||||||||
| Current Expense | 359,000 | 911,000 | 291,000 | 799,000 | ||||||||||||
| Deferred Tax Expense (Benefit) | 125,000 | 191,000 | (44,000 | ) | (241,000 | ) | ||||||||||
| Total Income Tax Expense | 484,000 | 1,102,000 | 247,000 | 558,000 | ||||||||||||
| Net Income | $ | 1,364,000 | $ | 3,296,000 | $ | 1,042,000 | $ | 1,884,000 | ||||||||
| Income Per Share of Common Stock | ||||||||||||||||
| Basic | $ | 0.28 | $ | 0.67 | $ | 0.21 | $ | 0.38 | ||||||||
| Diluted | $ | 0.27 | $ | 0.66 | $ | 0.21 | $ | 0.38 | ||||||||
| Weighted Average Number of Common | ||||||||||||||||
| Shares Outstanding Basic | 4,950,524 | 4,953,008 | 4,961,018 | 4,963,592 | ||||||||||||
| Diluted | 4,971,024 | 4,973,508 | 4,981,518 | 4,984,092 | ||||||||||||
See accompanying notes to the unaudited condensed financial statements.
statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
| Three months | Nine months | Three months | Nine months | |||||||||||||
| ended | ended | ended | ended | |||||||||||||
| Jan 31, 2020 | Jan 31, 2020 | Jan 31, 2019 | Jan 31, 2019 | |||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| Net Income | $ | 1,364,000 | $ | 3,296,000 | $ | 1,042,000 | $ | 1,884,000 | ||||||||
| Other Comprehensive Income, Net of Tax | ||||||||||||||||
| Unrealized gain (loss) on securities: | ||||||||||||||||
| Unrealized holding gains (losses) arising during period | 27,000 | 77,000 | 56,000 | 221,000 | ||||||||||||
| Income tax benefit (expense) related to other comprehensive income | (8,000 | ) | (22,000 | ) | (16,000 | ) | (64,000 | ) | ||||||||
| Other Comprehensive Income (Loss) | 19,000 | 55,000 | 40,000 | 157,000 | ||||||||||||
| Comprehensive Income (Loss) | $ | 1,383,000 | $ | 3,351,000 | $ | 1,082,000 | $ | 2,041,000 | ||||||||
See accompanying notes to the unaudited condensed financial statements.
statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JANUARY 31, 2020 AND 2019
(Unaudited)
| Preferred Stock | Common Stock Class A | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Balances, October 31, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Dividend declared at $0.40 per common share outstanding | — | — | — | — | ||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||
| Net Income | — | — | — | — | ||||||||||||
| Balances, January 31, 2020 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Preferred Stock | Common Stock Class A | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Balances, October 31, 2018 (Restated) | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||
| Net Income | — | — | — | — | ||||||||||||
| Balances, January 31, 2019 (Restated) | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
See accompanying notes to the unaudited condensed financial statements.
statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JANUARY 31, 2020 AND 2019
(Unaudited)
Accumulated | ||||||||||||||||||||||
| Paid-In | Treasury Stock (Common Class A) | Other Comprehensive | Retained | |||||||||||||||||||
| Capital | Shares | Amount | Income | Earnings | Total | |||||||||||||||||
| $ | 1,934,000 | 3,550,771 | $ | (4,281,000 | ) | $ | 50,000 | $ | 40,834,000 | $ | 39,486,000 | |||||||||||
| — | 1,850 | (17,000 | ) | — | — | (17,000 | ) | |||||||||||||||
| — | — | — | 19,000 | — | 19,000 | |||||||||||||||||
| — | — | — | — | 1,364,000 | 1,364,000 | |||||||||||||||||
| $ | 1,934,000 | 3,552,621 | $ | (4,297,000 | ) | $ | 69,000 | $ | 42,198,000 | $ | 40,852,000 | |||||||||||
Treasury Stock | Accumulated Other | |||||||||||||||||||||
| Paid-In | (Common Class A) | Comprehensive | Retained | |||||||||||||||||||
| Capital | Shares | Amount | Income | Earnings | Total | |||||||||||||||||
| $ | 1,934,000 | 3,541,234 | $ | (4,202,000 | ) | $ | (58,000 | ) | $ | 38,127,000 | $ | 36,750,000 | ||||||||||
| — | 937 | (8,000 | ) | — | — | (8,000 | ) | |||||||||||||||
| — | — | — | 40,000 | — | 40,000 | |||||||||||||||||
| — | — | — | — | 1,042,000 | 1,042,000 | |||||||||||||||||
| $ | 1,934,000 | 3,542,171 | $ | (4,210,000 | ) | $ | (18,000 | ) | $ | 39,169,000 | $ | 37,824,000 | ||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 2020 AND 2019
(Unaudited)
| Preferred Stock | Common Stock Class A | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Balances, April 30, 2019 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||
| Dividend declared at $0.40 per common share outstanding | — | — | — | — | ||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||
| Net Income | — | — | — | — | ||||||||||||
| Balances, January 31, 2020 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Preferred Stock | Common Stock Class A | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Balances, April 30, 2018, as previously reported | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
| Cumulative effect of restatement on prior periods, for adoption of ASU 2016-01 | — | — | — | — | ||||||||||||
| Balance at May 1, 2018 after adoption of ASU 2016-01, as restated | — | — | — | — | ||||||||||||
| Purchases of common stock | — | — | — | — | ||||||||||||
| Dividend declared at $0.38 per common share outstanding | ||||||||||||||||
| Unrealized gain (loss), net of tax effect | — | — | — | — | ||||||||||||
| Net Income | — | — | — | — | ||||||||||||
| Balances, January 31, 2019 (Restated) | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 2020 AND 2019
(Unaudited)
| Accumulated | ||||||||||||||||||||||
| Paid-In | Treasury Stock (Common Class A) | Other Comprehensive | Retained | |||||||||||||||||||
| Capital | Shares | Amount | Income | Earnings | Total | |||||||||||||||||
| $ | 1,934,000 | 3,544,271 | $ | (4,227,000 | ) | $ | 14,000 | $ | 40,883,000 | $ | 39,553,000 | |||||||||||
| — | 8,350 | (71,000 | ) | — | — | (71,000 | ) | |||||||||||||||
| — | — | — | — | (1,981,000 | ) | (1,981,000 | ) | |||||||||||||||
| — | — | — | 55,000 | — | 55,000 | |||||||||||||||||
| — | — | — | — | 3,296,000 | 3,296,000 | |||||||||||||||||
| $ | 1,934,000 | 3,552,621 | $ | (4,298,000 | ) | $ | 69,000 | $ | 42,198,000 | $ | 40,852,000 | |||||||||||
| Accumulated | ||||||||||||||||||||||
| Paid-In | Treasury Stock (Common Class A) | Other Comprehensive | Retained | |||||||||||||||||||
| Capital | Shares | Amount | Income | Earnings | Total | |||||||||||||||||
| $ | 1,934,000 | 3,534,784 | $ | (4,148,000 | ) | $ | 2,249,000 | $ | 36,746,000 | $ | 37,730,000 | |||||||||||
| (2,424,000 | ) | 2,424,000 | ||||||||||||||||||||
| 1,934,000 | 3,534,784 | (4,148,000 | ) | (175,000 | ) | 39,170,000 | 37,730,000 | |||||||||||||||
| — | 7,387 | (62,000 | ) | — | — | (62,000 | ) | |||||||||||||||
| — | — | — | — | (1,885,000 | ) | (1,885,000 | ) | |||||||||||||||
| — | — | — | 157,000 | — | 157,000 | |||||||||||||||||
| — | — | — | — | 1,884,000 | 1,884,000 | |||||||||||||||||
| $ | 1,934,000 | 3,542,171 | $ | (4,210,000 | ) | $ | (18,000 | ) | $ | 39,169,000 | $ | 37,824,000 | ||||||||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENT OF CASH FLOWS (Unaudited)
| Nine months | Nine months | |||||||
| ended | ended | |||||||
| Jan 31, 2020 | Jan 31, 2019 | |||||||
| (Restated) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | $ | 3,296,000 | $ | 1,884,000 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and amortization | 276,000 | 248,000 | ||||||
| (Gain) loss on sale of investments | (178,000 | ) | (142,000 | ) | ||||
| Impairments on investments | 41,000 | 68,000 | ||||||
| Unrealized (gain) loss on equity investments | (782,000 | ) | 949,000 | |||||
| Reserve for bad debts | (6,000 | ) | (3,000 | ) | ||||
| Reserve for obsolete inventory | 42,000 | 12,000 | ||||||
| Deferred income taxes | 191,000 | (241,000 | ) | |||||
| (Gain) loss on sale of assets | (5,000 | ) | — | |||||
| Net book value of assets retired | (17,000 | ) | — | |||||
| Changes in assets and liabilities: | ||||||||
| (Increase) decrease in: | ||||||||
| Accounts receivable | 460,000 | 514,000 | ||||||
| Inventories | (506,000 | ) | (999,000 | ) | ||||
| Prepaid expenses | 43,000 | 164,000 | ||||||
| Other receivables | 2,000 | (2,000 | ) | |||||
| Income tax overpayment | 142,000 | (106,000 | ) | |||||
| Increase (decrease) in: | ||||||||
| Accounts payable | 16,000 | (35,000 | ) | |||||
| Accrued expenses | — | (36,000 | ) | |||||
| Net cash provided by (used in) operating activities | 3,015,000 | 2,275,000 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from sale of assets | 7,000 | — | ||||||
| (Purchase) of property and equipment | (468,000 | ) | (88,000 | ) | ||||
| Proceeds from sale of marketable securities | 760,000 | 761,000 | ||||||
| (Purchase) of marketable securities | (640,000 | ) | (839,000 | ) | ||||
| (Purchase) of long-term investment | (27,000 | ) | — | |||||
| Net cash provided by (used in) investing activities | (368,000 | ) | (166,000 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| (Purchase) of treasury stock | (71,000 | ) | (62,000 | ) | ||||
| Dividends paid | (1,802,000 | ) | (1,752,000 | ) | ||||
| Net cash provided by (used in) financing activities | (1,873,000 | ) | (1,814,000 | ) | ||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 774,000 | 295,000 | ||||||
| Cash and Cash Equivalents, beginning of period | 4,873,000 | 4,294,000 | ||||||
| Cash and Cash Equivalents, end of period | $ | 5,647,000 | $ | 4,589,000 | ||||
| Supplemental Disclosure for Cash Flow Information: | ||||||||
| Cash payments for: | ||||||||
| Income taxes | $ | 870,000 | $ | 900,000 | ||||
| Interest paid | $ | — | $ | 1,000 | ||||
| Cash receipts for: | ||||||||
| Income taxes | $ | 159,000 | $ | — | ||||
See accompanying notes to the unaudited condensed financial statements
GEORGE RISK INDUSTRIES, INC.
NOTES TO RESTATED CONDENSED FINANCIAL STATEMENTS
JANUARY 31, 2014
Note 1 Unaudited Interim Financial Statements
2020
| Note 1: | Unaudited Interim Financial Statements |
The accompanying unaudited 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 prin-
ciples in the United States of America (US GAAP)principles for complete financial statements. TheseIt is suggested that these unaudited condensed financial statements should be read in conjunction with the financial statements and notes containedthereto included in the company'sCompany’s April 30, 2019 annual report on Form 10-K for the year ended April 30, 2013.10-K. In the opinion of manage-
ment,management, all adjustments, consisting only of normal recurring adjustments con-
sideredconsidered 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. We have evaluated subsequent events
through March 17, 2014, the issuance date
Accounting Estimates—The preparation of these financial statements.statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts.
Recently Issued Accounting Pronouncements —In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning May 1, 2019. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) and ASU 2018-20, “Narrow-Scope Improvements for Lessors”. ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. During the first quarter of 2019, the FASB issued ASU 2019-01, Leases (Topic 842) to amend ASU 2016-02. This amendment exempts both lessees and lessors from having to provide certain prior year interim disclosure information in the fiscal year in which a company adopts the new leases standard. The Company has adopted the ASUs in the first quarter of fiscal year 2020 and the Company’s accounting systems have been upgraded to comply with the requirements of the new standard, however, the adoption of ASU 2016-02 did not have anya material recognizable subsequent events.
Restatement - In its previously filedimpact on the Company’s financial statements and related disclosures because leases are not material to the financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the quarter
ended January 31, 2014,timing and includedimpact of adopting the updated provisions.
In August 2018, The FASB issued ASU 2018-14 to improve the effectiveness of disclosures for defined benefit plans under ASC 715-20. The ASU applies to employers that sponsor defined benefit pension or other postretirement plans. The FASB issued ASU 2018-14 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness of disclosures in its quarterly reportthe notes to financial statements. As part of the project, during August 2018, the Board also issued a Concepts Statement, which the FASB used as a basis for amending the disclosure requirements for Subtopic 715-20. The guidance is effective or fiscal years ending after December 15, 2020 and early adoption is permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.
In June 2016, the FASB issued ASU 2016-13 (“ASU 2016-13”), Financial Instruments—Credit Losses. Subsequently, the FASB issued ASU 2019-05, Financial Instruments- Credit Losses (Topic 326): Targeted Transition Relief and codification improvements to Topic 326 in Form 10-Q,ASU 2019-11, ASU 2019-04 and ASU 2018-19. The amendments update guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The ASU is effective for fiscal years beginning after December 15, 2020. Subsequent to September 30, 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company incorrectly calculated deferred income taxes. Accordingly, theis an SRC, implementation is not needed until May 1, 2023. The Company has restated its financial statements for the period ended January 31,
2014. The table below reflectswill continue to evaluate the effect of restatementadopting ASU 2016-13 will have on the Company'sCompany’s financial statements and disclosures.
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 quarter.
identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2020-01 to have a material impact on its condensed financial statements.
Revenue Recognition—In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” or “ASC 606”. ASC 606 and all subsequently issued clarifying ASCs replaced most existing revenue recognition guidance in U.S. GAAP. ASC 606 also required expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the new standard effective November 1, 2019. The effect of this adoption was immaterial to our Financial Statements, and the Company does not expect a material effect to the Financial Statements on an ongoing basis.
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers”. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company applies the following standards and recognizes revenue when (1) it has a firm contract and the parties are committed to perform their respective obligations, (2) the product has been shipped to and accepted by the customer or the service has been provided, (3) the sales price is fixed or determinable and (4) amounts are reasonably assured of collection, including the consideration of the customer’s ability and intention to pay when the amount is due. The Company primarily receives fixed consideration for sales of product. The Company does not have any significant financing components as payment is received at or shortly after the point of sale. Shipping and handling amounts paid by customers are included in revenue. Sales tax and other similar taxes are excluded from revenue.
Revenue is recorded net of provisions for discounts, which are typically agreed to upfront with the customer and do not represent variable consideration. The Company estimates these discounts in the same period that the revenue is recognized for products sales to customers. The amount of revenue recognized represents the amount that will not be subject to a significant future reversal of revenue. All sales to distributors and customers are generally final. In limited instances the Company may accept returned product due to quality. During the current fiscal year, returns have not been material.
The Company’s customers generally pay within 60 days from the receipt of a valid invoice. The Company offers discounts of up to 2% to certain customers for payments made within a specified number of days. These early pay discounts are estimated in the period of sale based on experience with sales to eligible customers. Early pay discounts are recorded as a deduction to the accounts receivable balance presented on the balance sheet.
The Company’s performance obligations are satisfied at the point in time when products are shipped to the customer, which is when the customer has title and the significant risks and rewards of ownership.
| Note 2: | Investments (Restated) |
The Company has investments in publicly traded equity securities, as well
as certaincorporate bonds, state and municipal debt securities. These securities, real estate investment trusts, and money markets and they are class-
ified as available-for-sale securities, and are reportedrecorded at fair value. Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements. Avail-
able-for-saleThe investments in debt securities maturehave maturities between March 2014April 2020 and November 2048.January 2044. The Company uses the average cost method to determine the cost of securities sold and the amount reclassified out of accumulated other
comprehensive income intowith any unrealized gains or losses reported in each respective period’s earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholders'equity. Dividend and interest income are accruedreported as earned.
As of January 31, 2014,2020 and April 30, 2019, investments available-for-sale consisted of the following:
| Investments at | Gross | Gross | ||||||||||||||
| January 31, 2020 | Cost | Unrealized | Unrealized | Fair | ||||||||||||
| Basis | Gains | Losses | Value | |||||||||||||
| Municipal bonds | $ | 5,402,000 | $ | 156,000 | $ | (43,000 | ) | $ | 5,515,000 | |||||||
| Corporate bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | 89,000 | 3,000 | (9,000 | ) | 83,000 | |||||||||||
| Equity securities | 17,167,000 | 4,870,000 | (241,000 | ) | 21,796,000 | |||||||||||
| Money markets and CDs | 758,000 | — | — | 758,000 | ||||||||||||
| Total | $ | 23,442,000 | $ | 5,029,000 | $ | (293,000 | ) | $ | 28,178,000 | |||||||
| Investments at | Gross | Gross | ||||||||||||||
| April 30, 2019 | Cost | Unrealized | Unrealized | Fair | ||||||||||||
| Basis | Gains | Losses | Value | |||||||||||||
| Municipal bonds | $ | 5,459,000 | $ | 79,000 | $ | (55,000 | ) | $ | 5,483,000 | |||||||
| Corporate bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | 89,000 | 1,000 | (6,000 | ) | 84,000 | |||||||||||
| Equity securities | 16,618,000 | 4,143,000 | (296,000 | ) | 20,465,000 | |||||||||||
| Money markets and CDs | 1,233,000 | — | — | 1,233,000 | ||||||||||||
| Total | $ | 23,425,000 | $ | 4,223,000 | $ | (357,000 | ) | $ | 27,291,000 | |||||||
Marketable securities that are equity securities are carried at fair value on the balance sheets with US GAAP,changes in fair value recorded as an unrealized gain or (loss) in the Statements of Operations in the period of the change; and debt securities are carried at fair value on the balance sheets with changes in fair value recorded as unrealized gains or losses in the Statement of Comprehensive Income. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of operations. On May 1. 2018, as a result of the adoption of ASU 2016-01 – Financial Instruments, the Company reclassified $2,424,000 of net unrealized gains on marketable securities, that were formerly classified as available-for-sale securities before the adoption of the new standard, from Accumulated Other Comprehensive Income to Retained Earnings.
The Company evaluates all marketable securities for other-than temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an other-
than-temporary“other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, management diddo not record anyan impairment lossesloss for the quarter, ended January 31, 2014, but did record im-
pairment lossesan impairment loss of $18,000$41,000 for the nine months ended January 31, 2014. Like-
wise, as for2020. For the corresponding periods last year, management did not recordrecorded an impairment lossesloss of $36,000 for the quarter, ended Janaury 31, 2013, but did record
impairment lossesand recorded a loss of $20,000$68,000 for the nine months ended January 31, 2013.
2019.
The following table showstables show the investments with gross unrealized losses that are not deemed to be other-than-temporarily impaired,“other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at January 31, 2014.
Unrealized Loss Breakdown by Investment Type at January 31, 2020
| Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
| Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
| Municipal bonds | $ | — | $ | — | $ | 401,000 | $ | (43,000 | ) | $ | 401,000 | $ | (43,000 | ) | ||||||||||
| REITs | — | — | 57,000 | (9,000 | ) | 57,000 | (9,000 | ) | ||||||||||||||||
| Equity securities | 445,000 | (48,000 | ) | 1,930,000 | (193,000 | ) | 2,375,000 | (241,000 | ) | |||||||||||||||
| Total | $ | 445,000 | $ | (48,000 | ) | $ | 2,388,000 | $ | (245,000 | ) | $ | 2,833,000 | $ | (293,000 | ) | |||||||||
Unrealized Loss Breakdown by Investment Type at April 30, 2019
| Less than 12 months | 12 months or greater | Total | ||||||||||||||||||||||
| Description | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
| Municipal bonds | $ | 772,000 | $ | (4,000 | ) | $ | 580,000 | $ | (50,000 | ) | $ | 1,352,000 | $ | (54,000 | ) | |||||||||
| REITs | — | — | 32,000 | (6,000 | ) | 32,000 | (6,000 | ) | ||||||||||||||||
| Equity securities | 932,000 | (102,000 | ) | 1,652,000 | (195,000 | ) | 2,584,000 | (297,000 | ) | |||||||||||||||
| Total | $ | 1,704,000 | $ | (106,000 | ) | $ | 2,264,000 | $ | (251,000 | ) | $ | 3,968,000 | $ | (357,000 | ) | |||||||||
Municipal Bonds
---------------
The unrealized losses on the Company'sCompany’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these invest-
mentsinvestments 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 January 31, 2014.
Corporate Bonds
---------------
The Company's unrealized loss on investments in corporate bonds relates to
one bond. The contractual term of this investment does not permit the issuer
to settle the security at a price less than the amortized cost of the invest-
ment. Because the Company has the ability to hold this investment until a
recovery of fair value, which may be maturity, the Company does not consider
this investment to be other-than-temporarily impaired at January 31, 2014.
2020.
Marketable Equity Securities ----------------------------
and REITs
The Company'sCompany’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'smanagement’s plan to hold ontoon to these investments for an extended period, the Company does not consider these investments to be other-
than-temporarilyother-than-temporarily impaired at January 31, 2014.
Note 3 2020.
| Note 3: | Inventories |
Inventories Atat January 31, 2014, inventories2020 and April 30, 2019 consisted of the following:
<TABLE>
| January 31, | April 30, | |||||||
| 2020 | 2019 | |||||||
| Raw materials | $ | 4,102,000 | $ | 3,644,000 | ||||
| Work in process | 468,000 | 389,000 | ||||||
| Finished goods | 609,000 | 641,000 | ||||||
| 5,179,000 | 4,674,000 | |||||||
| Less: allowance for obsolete inventory | (133,000 | ) | (91,000 | ) | ||||
| Totals | $ | 5,046,000 | $ | 4,583,000 | ||||
| Note 4: | Business Segments |
The following is financial information relating to industry segments:
| Three months | Nine months | Three months | Nine months | |||||||||||||
| ended | ended | Ended | ended | |||||||||||||
| Jan 31, 2020 | Jan 31, 2020 | Jan 31, 2019 | Jan 31, 2019 | |||||||||||||
| Net revenue: | ||||||||||||||||
| Security alarm products | $ | 2,909,000 | $ | 8,700,000 | $ | 2,735,000 | $ | 8,103,000 | ||||||||
| Cable & wiring tools | 547,000 | 1,680,000 | 576,000 | 1,929,000 | ||||||||||||
| Other products | 133,000 | 472,000 | 144,000 | 519,000 | ||||||||||||
| Total net revenue | $ | 3,589,000 | $ | 10,852,000 | $ | 3,455,000 | $ | 10,551,000 | ||||||||
| Income from operations: | ||||||||||||||||
| Security alarm products | $ | 669,000 | $ | 2,156,000 | $ | 659,000 | $ | 1,972,000 | ||||||||
| Cable & wiring tools | 129,000 | 417,000 | 138,000 | 415,000 | ||||||||||||
| Other products | 36,000 | 117,000 | 35,000 | 104,000 | ||||||||||||
| Total income from operations | $ | 834,000 | $ | 2,690,000 | $ | 832,000 | $ | 2,491,000 | ||||||||
| Depreciation and amortization: | ||||||||||||||||
| Security alarm products | $ | (22,000 | ) | $ | 72,000 | $ | 37,000 | $ | 57,000 | |||||||
| Cable & wiring tools | 31,000 | 92,000 | 30,000 | 92,000 | ||||||||||||
| Other products | 34,000 | 50,000 | — | 55,000 | ||||||||||||
| Corporate general | 50,000 | 62,000 | 14,000 | 44,000 | ||||||||||||
| Total depreciation and amortization | $ | 93,000 | $ | 276,000 | $ | 81,000 | $ | 248,000 | ||||||||
| Capital expenditures: | ||||||||||||||||
| Security alarm products | $ | — | $ | 178,000 | $ | 35,000 | $ | 35,000 | ||||||||
| Cable & wiring tools | — | — | — | — | ||||||||||||
| Other products | 18,000 | 18,000 | 37,000 | 37,000 | ||||||||||||
| Corporate general | 272,000 | 272,000 | 16,000 | 16,000 | ||||||||||||
| Total capital expenditures | $ | 290,000 | $ | 468,000 | $ | 88,000 | $ | 88,000 | ||||||||
| January 31, 2020 | April 30, 2019 | |||||||
| Identifiable assets: | ||||||||
| Security alarm products | $ | 6,478,000 | $ | 6,179,000 | ||||
| Cable & wiring tools | 2,676,000 | 2,713,000 | ||||||
| Other products | 733,000 | 842,000 | ||||||
| Corporate general | 34,859,000 | 33,293,000 | ||||||
| Total assets | $ | 44,746,000 | $ | 43,027,000 |
| Note 5: | Earnings per Share (Restated) |
Restated basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are:
| For the three months ended January 31, 2020 | ||||||||||||
| Income | Shares | Per-share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net Income | $ | 1,364,000 | ||||||||||
| Basic EPS | $ | 1,364,000 | 4,950,524 | $ | 0.28 | |||||||
| Effect of dilutive securities: | ||||||||||||
| Convertible preferred stock | — | 20,500 | ||||||||||
| Diluted EPS | $ | 1,364,000 | 4,971,024 | $ | 0.27 | |||||||
| For the nine months ended January 31, 2020 | ||||||||||||
| Income | Shares | Per-share | ||||||||||
| (Numerator) | (Denominator) | Amount | ||||||||||
| Net Income | $ | 3,296,000 | ||||||||||
| Basic EPS | $ | 3,296,000 | 4,953,008 | $ | 0.67 | |||||||
| Effect of dilutive securities: | ||||||||||||
| Convertible preferred stock | — | 20,500 | ||||||||||
| Diluted EPS | $ | 3,296,000 | 4,973,508 | $ | 0.66 | |||||||
| For the Three Months Ended January 31, | ||||||||||||
Originally Filed 2019 | Adjustment 2019 | Restated 2019 | ||||||||||
| Numerator | ||||||||||||
| Net income | $ | 1,173,000 | $ | (131,000 | ) | $ | 1,042,000 | |||||
| Denominator | ||||||||||||
| Weighted average common shares outstanding, basic | 4,961,018 | — | 4,961,018 | |||||||||
| Convertible Preferred Stock | 20,500 | — | 20,500 | |||||||||
| Weighted average common shares outstanding, diluted | 4,981,518 | — | 4,981,518 | |||||||||
| Net Income per share - Basic | $ | 0.24 | $ | (0.03 | ) | $ | 0.21 | |||||
| Income per shares - Diluted | $ | 0.24 | $ | (0.03 | ) | $ | 0.21 | |||||
| For the Nine Months Ended January 31, | ||||||||||||
Originally Filed 2019 | Adjustment 2019 | Restated 2019 | ||||||||||
| Numerator | ||||||||||||
| Net income | $ | 2,559,000 | $ | (675,000 | ) | $ | 1,884,000 | |||||
| Denominator | ||||||||||||
| Weighted average common shares outstanding, basic | 4,963,592 | — | 4,963,592 | |||||||||
| Convertible Preferred Stock | 20,500 | — | 20,500 | |||||||||
| Weighted average common shares outstanding, diluted | 4,984,092 | — | 4,984,092 | |||||||||
| Net Income per share - Basic | $ | 0.52 | $ | (0.14 | ) | $ | 0.38 | |||||
| Income per shares - Diluted | $ | 0.51 | $ | (0.13 | ) | $ | 0.38 | |||||
| Note 6: | Retirement Benefit Plan |
On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the "Plan"“Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the corporation. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. Matching contributions by the Company of approximately $14,000 and $2,000 were paid during both the quarterquarters ending January 31, 20142020 and $3,000 were paid during the corresponding quarter the
prior fiscal year.2019, respectively. Likewise, the Company paid matching contributions of approximately $7,000$23,000 during the nine-month period ending January 31, 20142020 and $9,000$7,000 during the nine-monthcorresponding period ending January 31, 2013. There were
no discretionary contributions paid during either the quarters or nine-month
periods ending January 31, 2014 and 2013, respectively.
Note 7 Fair Value Measurements
prior fiscal year.
| Note 7: | Fair Value Measurements |
Generally accepted accounting principles in the United States of America (US GAAP) defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements)measurement) and the lowest priority to un-
observableunobservable 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 in-
struments traded in active markets.
Level 2 - Valuation is based upon quoted prices for similar in-
struments in active markets, quoted prices for identical
or similar instruments in markets that are not active,
and model-based valuation techniques for which all sig-
nificant 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.
| 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 January 31, 2014,2020, our investments consisted of money markets, certificates of deposit, publicly traded equity securities, a corporate bondreal estate investment trusts (REITS) as well as certain state and municipal debtvsecurities.debt securities and corporate bonds. Our marketable securities are valued using third-party broker statements. The value of the majority of the 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 tables 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.
| Assets Measured at Fair Value on a Recurring Basis as of January 31, 2020 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Municipal Bonds | $ | — | $ | 5,515,000 | $ | — | $ | 5,515,000 | ||||||||
| Corporate Bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | — | 83,000 | — | 83,000 | ||||||||||||
| Equity Securities | 21,796,000 | — | — | 21,796,000 | ||||||||||||
| Money Markets and CDs | 758,000 | — | — | 758,000 | ||||||||||||
| Total fair value of assets measured on a recurring basis | $ | 22,580,000 | $ | 5,598,000 | $ | — | $ | 28,178,000 | ||||||||
| Assets Measured at Fair Value on a Recurring Basis as of April 30, 2019 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Municipal Bonds | $ | — | $ | 5,483,000 | $ | — | $ | 5,483,000 | ||||||||
| Corporate Bonds | 26,000 | — | — | 26,000 | ||||||||||||
| REITs | — | 84,000 | — | 84,000 | ||||||||||||
| Equity Securities | 20,465,000 | — | — | 20,465,000 | ||||||||||||
| Money Markets and CDs | 1,233,000 | — | — | 1,233,000 | ||||||||||||
| Total fair value of assets measured on a recurring basis | $ | 21,724,000 | $ | 5,567,000 | $ | — | $ | 27,291,000 | ||||||||
| Note 8: | Related Party Transactions |
The Company purchased a building that it previously leased from Bonita Risk. Bonita Risk is a director and an employee of the Company and is the majority holder of George Risk Industries, Inc. stock. This building contains the Company’s sales and accounting departments, maintenance department, engineering department and some production facilities. The purchase price of the building was $200,000 and the transaction happened during the Company’s third fiscal quarter.
| Note 9: | Subsequent Events |
During and subsequent to the third quarter of the current fiscal year, the world has been impacted by the spread of the coronavirus (COVID-19). It has created significant economic uncertainty and volatility. The extent to which the coronavirus pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; the effect on our clients and client demand for our services and solutions; our ability to sell and provide our services and solutions, including as a result of travel restrictions and people working from home; the ability of our clients to pay for our services and solutions; and any closures of our and our clients’ offices and facilities. Any of these events could materially adversely affect our business, financial condition, results of operations and/or stock price.
The Company manufactures and supplies “essential” products and services to many critical industries, so our production facilities will continue to operate. The health and safety of our employees and their families remains our top priority. Therefore, we have implemented many Center of Disease Control protocols to keep them safe while the Company continues to produce products and provide service to our customers. While we are operating in a rapidly changing environment, we also continue to hear positive news from our raw material suppliers.
| Note 10 | Correction of |
Subsequent Events
None
This restatement includes i) recording a one-time adjustment to retained earnings to reclassify the accumulated other comprehensive loss related to unrealized gains on equity securities as of May 1, 2018 and ii) recording an unrealized gain on marketable securities representing the value change in the equities for the three and nine months ended January 31, 2019.
No entries to correct for this restatement have any impact on our cash position, liquidity, or operations.
The tables below reflect the effect of restatement on the Company’s financial statements for the three and nine month periods ending January 31, 2019:
| For the Three Months Ended January 31, 2019 | ||||||||||||
| Original | Adjustment | As Restated | ||||||||||
| Income Statement | ||||||||||||
| Unrealized Gain (Loss) on Equity Securities | $ | — | $ | (184,000 | ) | $ | (184,000 | ) | ||||
| Total Other Income (Expense) | $ | 641,000 | $ | (184,000 | ) | $ | 457,000 | |||||
| Income Before Provisions for Income Taxes | 1,473,000 | (184,000 | ) | 1,289,000 | ||||||||
| Deferred tax expense (benefit) | 9,000 | (53,000 | ) | (44,000 | ) | |||||||
| Total Income Tax Expense | 300,000 | (53,000 | ) | 247,000 | ||||||||
| Net Income | $ | 1,173,000 | $ | (131,000 | ) | $ | 1,042,000 | |||||
| Earnings Per Share of Common Stock | $ | 0.24 | $ | (0.03 | ) | $ | 0.21 | |||||
| Basic | $ | 0.24 | $ | (0.03 | ) | $ | 0.21 | |||||
| Diluted | ||||||||||||
| For the Nine Months Ended January 31, 2019 | ||||||||||||
| Original | Adjustment | As Restated | ||||||||||
| Income Statement | ||||||||||||
| Unrealized Gain (Loss) on Equity Securities | $ | — | $ | (949,000 | ) | $ | (949,000 | ) | ||||
| Total Other Income (Expense) | $ | 900,000 | $ | (949,000 | ) | $ | (49,000 | ) | ||||
| Income Before Provisions for Income Taxes | 3,391,000 | (949,000 | ) | 2,442,000 | ||||||||
| Deferred tax expense (benefit) | 33,000 | (274,000 | ) | (241,000 | ) | |||||||
| Total Income Tax Expense | 832,000 | (274,000 | ) | 558,000 | ||||||||
| Net Income | $ | 2,559,000 | $ | (675,000 | ) | $ | 1,884,000 | |||||
| Earnings Per Share of Common Stock | $ | 0.52 | $ | (0.14 | ) | $ | 0.38 | |||||
| Basic | $ | 0.51 | $ | (0.13 | ) | $ | 0.38 | |||||
| Diluted | ||||||||||||
| For the Three Months Ended January 31, 2019 | ||||||||||||
| Original | Adjustment | As Restated | ||||||||||
| Statement of Comprehensive Income | ||||||||||||
| Net Income | $ | 1,173,000 | $ | (131,000 | ) | $ | 1,042,000 | |||||
| Other Comprehensive Income, net of Tax | ||||||||||||
| Unrealized gain (loss) on securities Unrealized holding gains arising during period | 43,000 | 13,000 | 56,000 | |||||||||
| Less: reclassification adjustment for (gains) losses included in net income | (171,000 | ) | 171,000 | — | ||||||||
| Income tax expense related to other comprehensive income | 37,000 | (53,000 | ) | (16,000 | ) | |||||||
| Other Comprehensive Income (Loss) | $ | (91,000 | ) | $ | 131,000 | $ | 40,000 | |||||
| Comprehensive Income | $ | 1,082,000 | $ | — | $ | 1,082,000 | ||||||
| For the Nine Months Ended January 31, 2019 | ||||||||||||
| Original | Adjustment | As Restated | ||||||||||
| Statement of Comprehensive Income | ||||||||||||
| Net Income | $ | 2,559,000 | $ | (675,000 | ) | $ | 1,884,000 | |||||
| Other Comprehensive Income, net of Tax | ||||||||||||
| Unrealized gain (loss) on securities Unrealized holding gains arising during period | (595,000 | ) | 816,000 | 221,000 | ||||||||
| Less: reclassification adjustment for (gains) losses included in net income | (134,000 | ) | 134,000 | — | ||||||||
| Income tax expense related to other comprehensive income | 210,000 | (274,000 | ) | (64,000 | ) | |||||||
| Other Comprehensive Income (Loss) | $ | (519,000 | ) | $ | 676,000 | $ | 157,000 | |||||
| Comprehensive Income | $ | 2,040,000 | $ | 1,000 | $ | 2,041,000 | ||||||
| Original | Adjustment | As Restated | ||||||||||
| Statement of Stockholders’ Equity | ||||||||||||
| Balance, October 31, 2018 | $ | 36,748,000 | $ | 2,000 | $ | 36,750,000 | ||||||
| Purchase of common stock | (8,000 | ) | — | (8,000 | ) | |||||||
| Unrealized gain (loss), net of tax effect | (91,000 | ) | 131,000 | 40,000 | ||||||||
| Net Income | 1,173,000 | (131,000 | ) | 1,042,000 | ||||||||
| Balance, January 31, 2019 | $ | 37,822,000 | $ | 2,000 | $ | 37,824,000 | ||||||
| Original | Adjustment | As Restated | ||||||||||
| Statement of Stockholders’ Equity | ||||||||||||
| Balance, April 30, 2018 | $ | 37,730,000 | $ | — | $ | 37,730,000 | ||||||
| Purchase of common stock | (62,000 | ) | — | (62,000 | ) | |||||||
| Dividend declared at $0.38 per common share outstanding | (1,886,000 | ) | 1,000 | (1,885,000 | ) | |||||||
| Impact of adoption of ASU 2016-01 | — | — | — | |||||||||
| Unrealized gain (loss), net of tax effect | (519,000 | ) | 676,000 | 157,000 | ||||||||
| Net Income | 2,559,000 | (675,000 | ) | 1,884,000 | ||||||||
| Balance, January 31, 2019 | $ | 37,822,000 | $ | 2,000 | $ | 37,824,000 | ||||||
| For the Nine Months Ended January 31, 2019 | ||||||||||||
| Original | Adjustment | As Restated | ||||||||||
| Statement of Cash Flows | ||||||||||||
| Cash Flows From Operating Activities | ||||||||||||
| Net Income | $ | 2,559,000 | $ | (675,000 | ) | $ | 1,884,000 | |||||
| Adjustment to reconcile net income to net cash provided operating activities | ||||||||||||
| Unrealized (gain) loss on equity securities | — | 949,000 | 949,000 | |||||||||
| Deferred income taxes | 33,000 | (274,000 | ) | (241,000 | ) | |||||||
| Net cash provided by (used in) operating activities | $ | 2,275,000 | $ | — | $ | 2,275,000 | ||||||
| For the Three Months Ended January 31, | ||||||||||||
| Originally Filed 2019 | Adjustment 2019 | Restated 2019 | ||||||||||
| Numerator | ||||||||||||
| Net income | $ | 1,173,000 | $ | (131,000 | ) | $ | 1,042,000 | |||||
| Denominator | ||||||||||||
| Weighted average common shares outstanding, basic | 4,961,018 | — | 4,961,018 | |||||||||
| Convertible Preferred Stock | 20,500 | — | 20,500 | |||||||||
| Weighted average common shares outstanding, diluted | 4,981,518 | — | 4,981,518 | |||||||||
| Net Income per share - Basic | $ | 0.24 | $ | (0.03 | ) | $ | 0.21 | |||||
| Income per shares - Diluted | $ | 0.24 | $ | (0.03 | ) | $ | 0.21 | |||||
| For the Nine Months Ended January 31, | ||||||||||||
| Originally Filed 2019 | Adjustment 2019 | Restated 2019 | ||||||||||
| Numerator | ||||||||||||
| Net income | $ | 2,559,000 | $ | (675,000 | ) | $ | 1,884,000 | |||||
| Denominator | ||||||||||||
| Weighted average common shares outstanding, basic | 4,963,592 | — | 4,963,592 | |||||||||
| Convertible Preferred Stock | 20,500 | — | 20,500 | |||||||||
| Weighted average common shares outstanding, diluted | 4,984,092 | — | 4,984,092 | |||||||||
| Net Income per share - Basic | $ | 0.52 | $ | (0.14 | ) | $ | 0.38 | |||||
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (RESTATED)
This Quarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project” or “continue,” and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
The following discussion should be read in conjunction with the attached con-
densed consolidatedunaudited condensed financial statements, and with the George Risk
Industries'Company’s audited financial statements and discussion for the fiscal year ended April 30, 2013.
Liquidity2019.
Executive Summary
The Company’s performance has stayed steady through the three quarters, with a slight increase in sales, managing cost of sales numbers, and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash increased $315,000strong investment returns. This is due to the continuation of our quality USA made products with the ability for customization, our notable customer service, and the purchase of the assets of Labor Saving Devices, Inc. Opportunities include gaining business from a competitor that is getting out of the security switch business and to continue looking at businesses that might be a good fit to purchase. New challenges the Company has endured over the nine months ended January 31, 2014,
while, for the same period lastof this fiscal year net cash decreased $1,207,000.
Accounts receivable decreased $224,000 for the current nine months and in-
creased $2,000 for the same period last year. The decrease in cash flow for
accounts receivable for the current period is a reflection of being ableinclude continuing to collect on accountsget product out to customers in a timelier manner and collecting on past due items.
At January 31, 2014, 70.16% ofto fill the receivables were considered current (less
than 45 days) and 0.6% of the total were over 90 days past due. For com-
parison, 71.09% of the receivables were current and 0.32% were past 90 days
at January 31, 2013. Inventories increased $67,000 for the current nine
months, and decreased $35,000 forstockroom with inventory to get back to shipping out core products the same period last year. The current in-
crease is due today. Also, the increase in sales and the pricesprice of raw materials rising
slightly. Changes in prepaid expenses in regards to cash flowhas increased by
$160,000 and decreased by $71,000 forwith the nine-month periods ending January
31, 2014 and 2013, respectively. The large increase is due to prepaymentexecution of inventory from overseas and down payments on molds being developed for the
Company. Income tax overpayment decreased $72,000 for the nine months ending
January 31, 2014, while it increased $407,000 for the corresponding period
last year. Management had to increase income tax estimates since the prior
year taxes were underpaid and the prior year refund was received.
For the nine months ended January 31, 2014, accounts payable increased
$36,000, and decreased $10,000 for the same period ended January 31, 2013.
The change in cash in regards to accounts payable can vary. It really de-
pends on the time of the month the invoices are due, since the company pays
all its invoices within the terms. Accrued expenses decreased $53,000 for
the nine months ended January 31, 2014, and these expenses increased $106,000
for the corresponding nine months last year. The current decrease is a re-
sult of when the payroll pay date landed this year. There were nine less
days being accrued this year.
Investing
---------
As for our investment activities, the Company has spent approximately $47,000
on acquisitions of property and equipment for the current nine-month period
and $95,000 was spent during the nine months ended January 31, 2013. The
Company has also received proceeds of $127,000 from the sale of an asset.
The airplane that was ownedtariffs by the Company was sold duringUS government and other factors. The COVID-19 virus is also a concern for management as availability to get raw materials may be hampered by the second quarter
of the current fiscal year. Additionally, the Companypandemic. But management continues to purchase
marketable securities, which include corporatework at keeping operations flowing as efficient as possible with the hopes of getting the facilities running leaner and municipal bondsmore profitable than ever before.
Results of Operations
| ● | Net sales were $3,589,000 for the quarter ended January 31, 2020, which is a 3.88% increase from the corresponding quarter last year. Year-to-date net sales were $10,852,000 at January 31, 2020, which is a 2.85% increase from the same period last year. The steady growth in sales is due to our ongoing commitment to outstanding customer service and our ability to customize products. The Company is also seeing growth since a major competitor closed its doors at the end of 2019. | |
| ● | Cost of goods sold was 51.04% of net sales for the quarter ended January 31, 2020 and was 51.29% for the same quarter last year. Year-to-date cost of goods sold percentages were 50.33% for the current nine months and 51.81% for the corresponding nine months last year, which is just slightly over the target of less than 50% for both the quarter and year-to-date results. Management has seen increases in labor and materials costs and initiated a price increase that started in January 2020. |
| ● | Operating expenses increased by $72,000 for the quarter as they increased by $107,000 for the nine-months ended January 31, 2020 as compared to the corresponding periods last year. These increased costs are primarily due to increased commissions and wages for raises and the hiring of more employees. | |
| ● | Income from operations for the quarter ended January 31, 2020 was at $834,000 which is a .24% increase from the corresponding quarter last year, which had income from operations of $832,000. Income from operations for the nine months ended January 31, 2020 was at $2,690,000, which is a 7.99% increase from the corresponding nine months last year, which had income from operations of $2,491,000. | |
| ● | Other income and expenses are up $557,000 when comparing to the current quarter to the same quarter last year. Comparatively, there is an increase of $1,757,000 in other income and expenses for the year-to-date numbers. Investments in marketable securities are presented at fair value and an unrealized gain or loss is recorded within the statements of operations, a non-cash entry, at each period beginning May 1, 2018 and previously recorded unrealized gain or loss in other comprehensive income (loss). For the nine months ended January 31, 2020 an unrealized gain was recorded, a non-cash entry, on marketable securities of $782,000. For the nine months ended January 31, 2019 an unrealized loss of $949,000 was recorded. The remainder of the increase is primarily due to increased dividend and interest income and taking gains on the sale of investments. | |
| ● | Overall, net income for the quarter ended January 31, 2020 was up $322,000, or 30.90%, from the same quarter last year. Similarly, net income for the nine-month period ended January 31, 2020 was up $1,412,000, or 74.95%, from the same period in the prior year. | |
| ● | Earnings per common share for quarter and nine months ended January 31, 2020 were $0.28 per share and $0.67 per share, respectively. EPS for the quarter and nine months ended January 31, 2019 were $0.21 per share and $0.38 per share, respectively. |
Liquidity and quality stocks. Cash spent on purchases of marketable securities for the
nine months ended January 31, 2014 was $415,000 and $604,000 was spent for
the corresponding period last year. In addition, proceeds from the sale of
marketable securities for the nine months ended January 31, 2014 were $4,000
and $79,000 for the same period last year. We use "money manager" accounts
for most stock transactions. By doing this, the Company gives an independent
third party firm, who are experts in this field, permission to buy and sell
stocks at will. The Company pays a quarterly service fee based on the value
of the investments.
capital resources
Operating
| ● | Net cash increased $774,000 during the nine months ended January 31, 2020 as compared to an increase of $295,000 during the corresponding period last year. | |
| ● | Accounts receivable decreased $460,000 for the nine months ended January 31, 2020 compared with a $514,000 decrease for the same period last year. The current year decrease is a result of improved sales and collections of accounts receivable improved over last year. An analysis of accounts receivable shows that there were only 0.30% that were over 90 days at January 31, 2020. | |
| ● | Inventories increased $506,000 during the current nine-month period as compared to an increase of $999,000 last year. The smaller increase in the current year is primarily due to increased sales, not having a stockpile of finished goods, and some issues with getting some vital raw materials in a timely manner. | |
| ● | Prepaid expenses saw a $43,000 decrease for the current nine months, primarily due to inventory being delivered that had been paid for in advance. The prior nine months showed a $164,000 decrease in prepaid expenses. | |
| ● | Income tax overpayment for the nine months ended January 31, 2020 decreased $142,000, as the overpayment showed an increase of $106,000 for the same period the prior year. The main reason for the current decrease is that the Company has generated additional income without the need to increase income tax estimates. | |
| ● | Accounts payable shows a $16,000 increase for the current nine-month period ended January 31, 2020 as compared to a $35,000 decrease for the prior nine-month period. The company strives to pay all invoices within terms, and the variance in increases is primarily due to the timing of receipt of products and payment of invoices. | |
| ● | Accrued expenses did not have any cash flow change for the current nine-month period as compared to a $36,000 decrease for the nine-month period ended January 31, 2019. |
Investing
| ● | As for our investment activities, the Company spent approximately $468,000 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 $88,000. | |
| ● | Additionally, the Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the nine-month period ended January 31, 2020 there was quite a bit of buy/sell activity in the investment accounts. Net cash spent on purchases of marketable securities for the nine-month period ended January 31, 2020 was $640,000 compared to $839,000 spent in the prior 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 fee based on the value of the investments. |
Financing
---------
During the nine months ending Janaury 31, 2014, the Company spent $1,373,000
for the payment of dividends during the second quarter. The company declared
a dividend of $0.30 per share of common stock on September 30, 2013 and these
dividends were paid by October 31, 2013. As for the prior year numbers, cash
used for the payment of dividends was $2,290,000 for the nine months ending
January 31, 2013. Two dividends of $0.28 and $0.22 per common share were de-
clared and paid during the second and third quarters last fiscal year,
respectively. Furthermore, the Company continues to purchase back its common
stock when the opportunity arises. For the nine months ended January 31,
2014, the Company purchased $29,000 worth of treasury stock and $36,000 worth
was bought back for the nine months ended January 31, 2013. We have been
actively searching for stockholders that have been "lost" over the years.
The payment of dividends over the last nine fiscal years has also prompted
many stockholders and/or their relatives and descendants to sell back their
stock to the Company.
| ● | The Company continues to purchase back common stock when the opportunity arises. For the nine-month period ended January 31, 2020, the Company purchased $71,000 worth of treasury stock. This is in comparison to $62,000 spent in the same nine months period the prior year. | |
| ● | The company paid out dividends of $1,802,000 during the nine months ending January 31, 2020. These dividends were paid during the second quarter. The company declared a dividend of $0.40 per share of common stock on September 30, 2019 and these dividends were paid by October 31, 2019. As for the prior year numbers, dividends paid was $1,752,000 for the nine months ending January 31, 2019. A dividend of $0.38 per common share was declared and paid during the second fiscal quarter last year. |
The following is a list of ratios to help analyze George Risk Industries'Industries’ performance:
| As of | ||||||||
| January 31, 2020 | January 31, 2019 | |||||||
| Working capital (current assets – current liabilities) | $ | 39,119,000 | $ | 35,493,000 | ||||
| Current ratio (current assets / current liabilities) | 16.831 | 16.299 | ||||||
| Quick ratio ((cash + investments + AR) / current liabilities) | 14.597 | 13.963 | ||||||
New Product Development
The Company and its engineering department continue to develop enhancements to product lines, develop new products which complement existing products, and look for the quarter ended January 31, 2014, which is a
2.78% decrease from the corresponding quarter last year. Year-to-date net
sales at January 31, 2014 were $8,070,000, which is a 5.32% increase from the
same period last year. The Company's products that are tiedwell suited to the housing marketour distribution network and the slight gain in sales is a result of the Company focusing on gaining
market sharemanufacturing capabilities. Items currently in the industry. The Company is accomplishing this by having
excellent customer servicedevelopment process include:
| ● | A new face plate for our pool alarms is nearing completion. The innovative design is slim in style and will also allow the homeowner to change the plate to match their décor. | |
| ● | An updated version of the pool access alarm is currently going through electrical listing testing. This next-generation model combines our battery operated DPA series with our hard wired 289 series. A variety of installation options will be available through jumper pin settings. | |
| ● | We continue our work on high security switches. We have a triple biased high security switch design and an adjustable magnet design was completed for recessed mounting applications. This is ready to be sent to in for electrical listing testing. | |
| ● | We have introduced the GR1840 Oval Metal Door Channel Magnet. This is a direct replacement for the obsolete Interlogix magnet. This magnet fits into the top channel of a metal door and does not require drilling into the door core. We have also paired this with several of our ¾” and 1” steel door contacts. | |
| ● | Wireless technology is a main area of focus for product development. We are considering adding wireless technology to some of our current products. A wireless contact switch is in the final stages of development. Also, we are working on wireless versions of our pool access alarm and environmental sensors that will be easy to install in current construction. We are also concentrating on making products compatible with Wi-Fi, smartphone technology and the increasing popular Z-Wave standard for wireless home automation. | |
| ● | We are ready to launch a new Labor Saving Device’s product. It is a 12” adjustable hole cutter which compliments the popular 10” hole cutter. Using a standard drill, this tool allows you to drill various size holes in the ceiling for speakers and canned lights. The dust bin, which buts against the ceiling, keeps the ceiling material and dust enclosed making for a clean, time saving installation. | |
| ● | Another LSDI product is new lighted Bullnose tip in a variety of colors (red, green and blue) to go along with the standard clear lights. These colored lights are placed on FiberFuse wire running rods which allows for easy location of the rod ends in dark places such as attics and crawlspaces. The rods can be color coded for wire paths running into different rooms. Larger batteries add to the longevity of these new lights. |
Other Information
In addition to researching and being willing to make many customized parts.
Cost of goods sold was 47.14% of net sales for the quarter ended January 31,
2014 and 40.42% for the same quarter last year. Year-to-date cost of goods
sold percentages were 46.6% for the current nine months and 47.98% for the
corresponding nine months last year. Management continues to keep labor and
other manufacturing expenses down and strives to stay in the desired cost of
goods sold percentage range of 45 to 50%.
Operating expenses were 27.38% of net sales for the quarter ended January 31,
2014 as compared to 26.42% for the corresponding quarter last year. Year-to-
date operating expenses were 24.26% of net sales for the nine months ended
January 31, 2014, while they were 26.23% for the same period last year.
Having relatively the same percentages for operating expenses shows thatdeveloping new products, management has a good grip on spending habits. Income from operations for
the quarter ended January 31, 2014 was at $632,000, which is a 25.3% decrease
from the corresponding quarter last year, which had income from operations of
$846,000. Income from operations for the nine months ended January 31, 2014
was at $2,351,000, which is an 18.98% increase from the corresponding nine
months last year, which had income from operations of $1,976,000.
Other income and expenses showed gains of $260,000 and $836,000 for the
quarter and nine months ended January 31, 2014. The other income and expense
numbers for last year also showed gains of $293,000 for the quarter and
$622,000 for the nine-months ending January 31, 2013. Dividend and interest
income was down 6.72% for the quarter and was down 12.56% for the current
nine-month period when comparing to the same time periods last year. During
the current quarter, there was a $38,000 gain on investments recorded and a
gain of $176,000 for the current year to date figures. Management did not
write down any investments during the quarters ending January 31, 2014 and
2013, respectively.
Net income for the quarter ended January 31, 2014 was $563,000, which is a
28.74% decrease from the corresponding quarter last year, which showed a net
gain of $790,000. Net income for the nine months ended January 31, 2014 was
$2,221,000, a 22.1% increase from the same period last year. Net income for
the nine months ended January 31, 2013 was $1,819,000. Earnings per common
share for the quarter ended January 31, 2014 was $0.11 per share and $0.44
per share for the year-to-date numbers. EPS for the quarter and nine months
ended January 31, 2013 was $0.16 per share and $0.36 per share, respectively.
New product information
~~~~~~~~~~~~~~~~~~~~~~~
Due to obsolete component parts, our pool alarm will have to be redesigned.
This will require mold changes that are nearing completion. Management is
working with a consultant who is helping with the development of a wireless
pool alarm.
Molding is working on a CC-15 case for our Current Controller. This will
allow us to manufacture a couple of different versions: a 15-amp version that
would automatically turn on a whole room of lights and a 220-volt version for
international markets.
Molding is developing a new design for the cover of our 29-Series terminal
switch.
Progress continues on the fuel level monitor. Several security companies
from around the world have told us fuel theft is a major problem and they are
looking for something that will tie into their security system if fuel tanks
or trucks are tampered with.
Engineering continues working on a Sprinkler Controller. This is a ground
sensor that can be installed with a sprinkler system. The controller will
monitor the amount of water in the soil and prevent the sprinkler system from
watering if the soil has enough moisture.
Recently issued accounting pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There are no new accounting pronouncements that significantly affect the
Company.
Other Information
~~~~~~~~~~~~~~~~~
Management is always open to the possibility to acquireof acquiring a business or product line that would complement our existing operations. This would require noDue 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 ourGRI’s products, since we sell to distributors and OEM manufacturers. TheOur products are tied to the housing industry and will fluctuate with building trends.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning November 1, 2019. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”). ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. The Company adopted the ASUs in the first quarter of 2019 and the Company’s accounting systems will be upgraded to comply with the requirements of the new standard, however, the adoption of ASU 2016-02 will not have a material impact on the Company’s financial statements and related disclosures.
In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income (loss) are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income (loss) to retained earnings (accumulated deficit) for stranded income tax effects resulting from the Tax Cuts and Jobs Act (the Tax Act). The amendments in this ASU also require certain disclosures about stranded income tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted. The Company has not yet adopted ASU 2018-02 and is currently evaluating the potential impact of adopting the applicable guidance on the Company’s financial statements and related disclosures.
In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). ASU 2018-09 provides amendments to a wide variety of topics in the FASB’s Accounting Standards Codification, which applies to all reporting entities within the scope of the affected accounting guidance. The transition and effective date guidance are based on the facts and circumstances of each amendment. Some of the amendments in ASU 2018-09 do not require transition guidance and were effective upon issuance of ASU 2018-09. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018. We are currently evaluating the potential impact of adopting the applicable guidance; however we do not believe that the adoption of ASU 2018-09 will have a material impact on the Company’s financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.
In August 2018, The FASB issued ASU 2018-14 to improve the effectiveness of disclosures for defined benefit plans under ASC 715-20. The ASU applies to employers that sponsor defined benefit pension or other postretirement plans. The FASB issued ASU 2018-14 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness of disclosures in the notes to financial statements. As part of the project, during August 2018, the Board also issued a Concepts Statement, which the FASB used as a basis for amending the disclosure requirements for Subtopic 715-20. The guidance is effective for fiscal years ending after December 15, 2020, and early adoption is permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.
In June 2016, the FASB issued ASU 2016-13(“ASU 2016-13”), Financial Instruments—Credit Losses. Subsequently, the FASB issued ASU 2019-05, Financial Instruments- Credit Losses (Topic 326): Targeted Transition Relief and codification improvements to Topic 326 in ASU 2019-11, ASU 2019-04 and ASU 2018-19. The amendments update guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The ASU is effective for fiscal years beginning after December 15, 2020. Subsequent to September 30, 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Loss (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date for public filers that are considered small reporting companies (“SRC”) as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Since the Company is an SRC, implementation is not needed until May 1, 2023. The Company will continue to evaluate the effect of adopting ASU 2016-13 will have on the Company’s financial statements and disclosures.
In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. For public business entities, the amendments in the ASU are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2020-01 to have a material impact on its condensed financial statements.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable
Item 4. Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officermanagement, under the supervision and with the participation of our chief executive officer (also working as our Chief Financial Officer)chief financial officer), after evaluatingevaluated the effectiveness of the Company's "disclosure controlsdesign and procedures" (as defined in the Securities Exchange Act of 1934 (Exchange Act)
Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this
quarterly report, has concluded that our disclosure controls and procedures
are effective based on their evaluation of these controls and procedures re-
quired by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A. Controls and Procedures
Evaluation of disclosure controls and procedures:
-------------------------------------------------
Based on her evaluationoperation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of January 31, 2014,2020. Based on that evaluation, our president and chief executive officer (also working as our chief financial officer) has concluded that ourthe disclosure controls and procedures areemployed at the Company were not effective suchto provide reasonable assurance that the information required to be disclosed by us in the re-
portsreports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, pro-
cessed,processed, summarized and reported within the time periods specified in the Sec-
urities and Exchange Commission'sSEC rules and (ii) accumulatedforms.
We continue to operate with a limited number of accounting and communicatedfinancial personnel. A new accounting professional was hired in 2018 to our management,fill the Controller position. Continued training will be required to fulfill disclosure control and procedure responsibilities, including our chief executive officer, as appropriate to
allowreview procedures for key accounting schedules and timely decisions regarding disclosure. Aand proper documentation of material transactions and agreements. Until sufficient training has taken place for this new Controller, we believe this control system cannot provide
absolute assurance, however, that the objectives of the control systems are
met, and no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within a company have been de-
tected.
Internaldeficiency represents material weaknesses in internal control over financial reporting:
------------------------------------------
The Company's management is responsiblereporting.
Despite the material weaknesses in financial reporting noted above, we believe that our condensed financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for establishing and maintaining
adequatethe periods presented in all material respects.
We are committed to the establishment of effective internal controls over financial reporting for the Company. Due to
limited resources, Management conducted an evaluationand will place emphasis on quarterly and year-end closing procedures, timely documentation and internal review of internal controls
based on criteria establishedaccounting 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 - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO"). The results of this evaluation determined thatOver Financial Reporting
There was no change in our in-
ternal control over financial reporting was ineffective as of January 31,
2014, due to a material weakness. A material weakness in internal control over financial reporting during the fiscal quarter ended January 31, 2020 that has materially affected, or is defined as a deficiency, or a combination of
deficiencies, inreasonably likely to materially affect, our internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the Company's
annual or interim financial statements will not be prevented or detected on a
timely basis. A significant deficiency is a deficiency, or a combination of
deficiencies, in internal control over financial reporting that is less
severe than a material weakness, yet important enough to merit attention by
those responsible for oversight of our financial reporting.
Management's assessment identified the following material weakness in in-
ternal control over financial reporting:
* The small size of our Company limits our ability to achieve the
desired level of separation of internal controls and financial re-
porting, particularly as it relates to financial reporting and
deferred taxes. Due to the passing of our CEO, the current CEO and
CFO roles are being fulfilled by the same individual. We do not
have an audit committee. Until such time as the Company is able to
hire a Controller, we do not believe we meet the full requirement
for separation for financial reporting purposes.
As a result of the material weakness in internal control over financial re-
porting described above, the Company's management has concluded that, as of
January 31, 2014, the Company's internal control over financial reporting was
not effective based on the criteria in Internal Control - Integrated Frame-
work issued by the COSO.
To date, the Company has not been able hire a controller. 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
accurately 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 de-
tection of unauthorized acquisition, use, or disposition of the
Company's assets that could have a material effect on the financial
statements.
Due to the passing of the CEO during the fiscal year 2013, our internal con-
trol structure has changed such that there is no separation of duties for
financial reporting and deferred taxes, as discussed above.
This quarterly report does not include an attestation report of the Corpor-
ation's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by
the Corporation's registered public accounting firm pursuant to Section
404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permits the Cor-
poration to provide only the management's report in this quarterly report.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company'sCompany’s repurchase of common stock for the third quarter of fiscal year 2014.
2020.
| Period | Number of shares repurchased | |||||
| November 1, | 1,350 | |||||
| December 1, | 200 | |||||
| January 1, | 300 | |||||
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Mine Safety Disclosures
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits
Exhibit No. Description
----------- -----------
31.1 Certification of the Chief Executive Officer (Principal
Financial and Accouting 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.
.
SIGNATURES
In accordance with
Pursuant 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)
Date 08-08-2014 By: /s/ Stephanie M. Risk-McElroy
Stephanie M. Risk-McElroy
President, Chief Financial Officer and Chairman
of the Board
| George Risk Industries, Inc. | |||
| (Registrant) | |||
| Date | May 22, 2020 | By: | /s/ Stephanie M. Risk-McElroy |
| Stephanie M. Risk-McElroy | |||
| President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board | |||