10-Q
GEORGE RISK INDUSTRIES, INC. (RSKIA)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended
January 31, 2024
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ______________ to ________________
Commission
File Number: 000-05378
GEORGE
RISK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
| Colorado | 84-0524756 |
|---|---|
| (State<br> of incorporation) | (IRS<br> Employers Identification No.) |
| 802<br> S. Elm St., Kimball, NE | 69145 |
| --- | --- |
| (Address<br> of principal executive offices) | (Zip<br> Code) |
(308) 235-4645
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Class<br> A Common Stock, $0.10 par value | RSKIA | OTC<br> Markets |
| Convertible<br> Preferred Stock, $20 stated value | RSKIA | OTC<br> Markets |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller 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<br> accelerated filer ☐ | Accelerated<br> filer ☐ |
|---|---|
| Non-accelerated<br> filer ☐ | Smaller<br> reporting company ☒ |
| Emerging<br> growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE
ONLY TO CORPORATE ISSUERS:
The
number of shares of the Registrant’s Common Stock outstanding, as of March 15, 2024, was 4,898,830.
GEORGE
RISK INDUSTRIES, INC.
PART
I. FINANCIAL INFORMATION
Item
- Financial Statements
The unaudited financial statements for the three- and nine-month period ended January 31, 2024, are attached hereto.
| 2 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
BALANCE SHEETS
| April<br> 30, 2023 | |||
|---|---|---|---|
| ASSETS | |||
| Current Assets: | |||
| Cash and cash<br> equivalents | 5,371,000 | $ | 4,943,000 |
| Investments and securities | 33,593,000 | 31,363,000 | |
| Accounts receivable: | |||
| Trade, net of allowance<br> for credit losses of 14,864 and 17,922 | 4,059,000 | 3,503,000 | |
| Other | 38,000 | 59,000 | |
| Income tax overpayment | 315,000 | 403,000 | |
| Inventories, net | 12,088,000 | 11,443,000 | |
| Prepaid<br> expenses | 219,000 | 651,000 | |
| Total Current Assets | 55,683,000 | 52,365,000 | |
| Property and Equipment, net, at cost | 1,987,000 | 1,997,000 | |
| Other Assets | |||
| Investment in Limited Land<br> Partnership, at cost | 332,000 | 344,000 | |
| Projects in process | 13,000 | 83,000 | |
| Other | — | 13,000 | |
| Total Other Assets | 345,000 | 440,000 | |
| Intangible Assets, net | 1,058,000 | 1,149,000 | |
| TOTAL ASSETS | 59,073,000 | $ | 55,951,000 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed financial statements.
| 3 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
BALANCE SHEETS
(continued)
| April<br> 30, 2023 | |||||
|---|---|---|---|---|---|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current Liabilities | |||||
| Accounts payable,<br> trade | 382,000 | $ | 546,000 | ||
| Dividends payable | 2,854,000 | 2,565,000 | |||
| Deferred income | 38,000 | 43,000 | |||
| Accrued<br> expenses | 547,000 | 421,000 | |||
| Total Current Liabilities | 3,821,000 | 3,575,000 | |||
| Long-Term Liabilities | |||||
| Deferred<br> income taxes | 2,542,000 | 1,727,000 | |||
| Total Long-Term Liabilities | 2,542,000 | 1,727,000 | |||
| Total Liabilities | 6,363,000 | 5,302,000 | |||
| 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,<br> .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<br> income | (91,000 | ) | (161,000 | ) | |
| Retained earnings | 54,836,000 | 52,481,000 | |||
| Less:<br> treasury stock, 3,604,051 and 3,572,338 shares, at cost | (4,918,000 | ) | (4,554,000 | ) | |
| Total Stockholders’<br> Equity | 52,710,000 | 50,649,000 | |||
| TOTAL LIABILITES AND<br> STOCKHOLDERS’ EQUITY | 59,073,000 | $ | 55,951,000 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed financial statements.
| 4 |
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GEORGE
RISK INDUSTRIES, INC.
CONDENSED
INCOME STATEMENTS
FOR
THE THREE AND NINE MONTHS ENDED JANUARY 31, 2024 AND 2023
(Unaudited)
| Three months | Three months | Nine months | Nine months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | ended | ended | ended | |||||||||
| Jan<br> 31, 2024 | Jan<br> 31, 2023 | Jan<br> 31, 2024 | Jan<br> 31, 2023 | |||||||||
| Net Sales | $ | 5,394,000 | $ | 4,366,000 | $ | 16,175,000 | $ | 15,194,000 | ||||
| Less: Cost of Goods<br> Sold | (2,734,000 | ) | (2,444,000 | ) | (8,145,000 | ) | (8,076,000 | ) | ||||
| Gross Profit | 2,660,000 | 1,922,000 | 8,030,000 | 7,118,000 | ||||||||
| Operating Expenses | ||||||||||||
| General and Administrative | 396,000 | 340,000 | 1,097,000 | 1,028,000 | ||||||||
| Sales | 705,000 | 648,000 | 2,181,000 | 2,136,000 | ||||||||
| Engineering | 41,000 | 34,000 | 78,000 | 76,000 | ||||||||
| Total Operating Expenses | 1,142,000 | 1,022,000 | 3,356,000 | 3,240,000 | ||||||||
| Income From Operations | 1,518,000 | 900,000 | 4,674,000 | 3,878,000 | ||||||||
| Other Income (Expense) | ||||||||||||
| Other | 32,000 | 2,000 | 41,000 | 6,000 | ||||||||
| Dividend and Interest Income | 396,000 | 506,000 | 855,000 | 871,000 | ||||||||
| Unrealized Gain on equity securities | 2,883,000 | 1,224,000 | 2,149,000 | 27,000 | ||||||||
| Gain (Loss) on Sale of<br> Investments | 18,000 | 44,000 | (55,000 | ) | (165,000 | ) | ||||||
| Gain on Sale of Assets | — | — | 8,000 | — | ||||||||
| Total Other Income (Expense) | 3,329,000 | 1,776,000 | 2,998,000 | 739,000 | ||||||||
| Income Before Provisions for Income Taxes | 4,847,000 | 2,676,000 | 7,672,000 | 4,617,000 | ||||||||
| Provisions for Income Taxes: | ||||||||||||
| Current Expense | 474,000 | 341,000 | 1,327,000 | 1,028,000 | ||||||||
| Deferred<br> Tax Expense (Benefit) | 1,134,000 | 326,000 | 787,000 | (78,000 | ) | |||||||
| Total Income Tax Expense | 1,608,000 | 667,000 | 2,114,000 | 950,000 | ||||||||
| Net Income | $ | 3,239,000 | $ | 2,009,000 | $ | 5,558,000 | $ | 3,667,000 | ||||
| Income Per Share of Common Stock | ||||||||||||
| Basic | $ | 0.66 | $ | 0.41 | $ | 1.13 | $ | 0.74 | ||||
| Diluted | $ | 0.66 | $ | 0.41 | $ | 1.13 | $ | 0.74 | ||||
| Weighted Average Number of Common Shares Outstanding | ||||||||||||
| Basic | 4,899,692 | 4,930,800 | 4,918,746 | 4,930,929 | ||||||||
| Diluted | 4,920,192 | 4,951,300 | 4,939,246 | 4,951,429 |
See accompanying notes to the unaudited condensed financial statements.
| 5 |
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GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENT OF COMPREHENSIVE INCOME
FOR
THE THREE AND NINE MONTHS ENDED JANUARY 31, 2024 AND 2023
(Unaudited)
| Three months | Three months | Nine months | Nine months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | ended | ended | ended | |||||||||
| Jan<br> 31, 2024 | Jan<br> 31, 2023 | Jan<br> 31, 2024 | Jan<br> 31, 2023 | |||||||||
| Net Income | $ | 3,239,000 | $ | 2,009,000 | $ | 5,558,000 | $ | 3,667,000 | ||||
| Other Comprehensive Income/(Loss), Net of Tax | ||||||||||||
| Unrealized gain (loss)<br> on debt securities: | ||||||||||||
| Unrealized holding gains (losses) arising<br> during period | 418,000 | 173,000 | 98,000 | (1,000 | ) | |||||||
| Income<br> tax (expense) related to other comprehensive income | (118,000 | ) | (49,000 | ) | (28,000 | ) | (1,000 | ) | ||||
| Other<br> Comprehensive Income (Loss) | 300,000 | 124,000 | 70,000 | (2,000 | ) | |||||||
| Comprehensive Income | $ | 3,539,000 | $ | 2,133,000 | $ | 5,628,000 | $ | 3,665,000 |
See accompanying notes to the unaudited condensed financial statements.
| 6 |
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GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED JANUARY 31, 2024 AND 2023
(Unaudited)
| Shares | Amount | Shares | Amount | |||||
|---|---|---|---|---|---|---|---|---|
| Preferred<br> Stock | Common Stock<br> <br>Class A | |||||||
| Shares | Amount | Shares | Amount | |||||
| Balances, October 31, 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||
| Purchases of Common Stock | — | — | — | — | ||||
| Unrealized gain, net of tax effect | — | — | — | — | ||||
| Net Income | — | — | — | — | ||||
| Balances, January 31,<br> 2024 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||
| Shares | Amount | Shares | Amount | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Preferred<br> Stock | Common Stock<br> <br>Class A | |||||||
| Shares | Amount | Shares | Amount | |||||
| Balances, October 31, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | ||
| Purchases of common stock | — | — | — | — | ||||
| Unrealized gain, net of tax effect | — | — | — | — | ||||
| Net Income | — | — | — | — | ||||
| Balances, January 31,<br> 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
See accompanying notes to the unaudited condensed financial statements.
| 7 |
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GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED JANUARY 31, 2024 AND 2023
(Unaudited)
| Paid-In | Treasury Stock<br><br> <br>(Common Class A) | Accumulated<br> Other Comprehensive | Retained | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital | Shares | Amount | Income | Earnings | Total | ||||||||||
| Balances, October<br> 31, 2023 | $ | 1,934,000 | 3,576,088 | $ | (4,595,000 | ) | $ | (391,000 | ) | $ | 51,597,000 | $ | 49,494,000 | ||
| Purchases of common stock | — | 27,963 | (323,000 | ) | — | — | (323,000 | ) | |||||||
| Unrealized gain, net of tax effect | — | — | — | 300,000 | — | 300,000 | |||||||||
| Net Income | — | — | — | — | 3,239,000 | 3,239,000 | |||||||||
| Balances, January 31, 2024 | $ | 1,934,000 | 3,604,051 | $ | (4,918,000 | ) | $ | (91,000 | ) | $ | 54,836,000 | $ | 52,710,000 | ||
| Paid-In | Treasury Stock<br><br> <br>(Common Class A) | Accumulated<br> Other Comprehensive | Retained | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Capital | Shares | Amount | Income | Earnings | Total | ||||||||||
| Balances, October 31, 2022 | $ | 1,934,000 | 3,571,963 | $ | (4,550,000 | ) | $ | (263,000 | ) | $ | 49,382,000 | $ | 47,452,000 | ||
| Purchases of common stock | — | 175 | (2,000 | ) | — | — | (2,000 | ) | |||||||
| Unrealized gain, net of tax effect | — | — | — | 124,000 | — | 124,000 | |||||||||
| Net Income | — | — | — | — | 2,009,000 | 2,009,000 | |||||||||
| Balances, January 31, 2023 | $ | 1,934,000 | 3,572,138 | $ | (4,552,000 | ) | $ | (139,000 | ) | $ | 51,391,000 | $ | 49,583,000 |
See accompanying notes to the unaudited condensed financial statements.
| 8 |
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GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023
(Unaudited)
| Amount | Shares | Amount | |||||
|---|---|---|---|---|---|---|---|
| Common Stock<br> <br>Class A | |||||||
| Amount | Shares | Amount | |||||
| Balances, April 30, 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | |
| Purchases of common stock | — | — | — | — | |||
| Dividend declared at 0.65 per common share<br> outstanding | — | — | — | — | |||
| Unrealized gain, net of tax effect | — | — | — | — | |||
| Net Income | — | — | — | — | |||
| Balances, January 31,<br> 2024 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
All values are in US Dollars.
| Amount | Shares | Amount | |||||
|---|---|---|---|---|---|---|---|
| Common Stock<br> <br>Class A | |||||||
| Amount | Shares | Amount | |||||
| Balances, April<br> 30, 2022 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | |
| Prior period adjustment for provisions related<br> to depreciation | — | — | — | — | |||
| Purchases of common stock | — | — | — | — | |||
| Dividend declared at 0.60<br> per common share outstanding | — | — | — | — | |||
| Unrealized (loss), net of<br> tax effect | — | — | — | — | |||
| Net<br> Income | — | — | — | — | |||
| Balances,<br> January 31, 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed financial statements.
| 9 |
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GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023
(Unaudited)
| Treasury Stock<br> <br>(Common Class A) | Accumulated<br> Other Comprehensive | Retained | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Income | Earnings | Total | |||||||||||
| Balances, April 30, 2023 | 1,934,000 | 3,572,338 | $ | (4,554,000 | ) | $ | (161,000 | ) | $ | 52,481,000 | $ | 50,649,000 | |||
| Purchases of common stock | — | 31,713 | (364,000 | ) | — | — | (364,000 | ) | |||||||
| Dividend declared at 0.65 per common share outstanding | — | — | — | — | (3,203,000 | ) | (3,203,000 | ) | |||||||
| Unrealized gain, net of tax effect | — | — | — | 70,000 | — | 70,000 | |||||||||
| Net Income | — | — | — | — | 5,558,000 | 5,558,000 | |||||||||
| Balances, January 31, 2024 | 1,934,000 | 3,604,051 | $ | (4,918,000 | ) | $ | (91,000 | ) | $ | 54,836,000 | $ | 52,710,000 |
All values are in US Dollars.
| Treasury Stock<br> <br>(Common Class A) | Accumulated<br> Other Comprehensive | Retained | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Income | Earnings | Total | |||||||||||
| Balances, April 30, 2022 | 1,934,000 | 3,571,693 | $ | (4,547,000 | ) | $ | (137,000 | ) | $ | 50,843,000 | $ | 49,042,000 | |||
| Balance | 1,934,000 | 3,571,693 | $ | (4,547,000 | ) | $ | (137,000 | ) | $ | 50,843,000 | $ | 49,042,000 | |||
| Prior period adjustment for provisions related to depreciation | — | — | — | — | (161,000 | ) | (161,000 | ) | |||||||
| Purchases of common stock | — | 445 | (5,000 | ) | — | — | (5,000 | ) | |||||||
| Dividend declared at 0.60 per common share outstanding | — | — | — | — | (2,958,000 | ) | (2,958,000 | ) | |||||||
| Unrealized gain<br> (loss), net of tax effect | — | — | — | (2,000 | ) | — | (2,000 | ) | |||||||
| Net Income | — | — | — | — | 3,667,000 | 3,667,000 | |||||||||
| Balances, January 31, 2023 | 1,934,000 | 3,572,138 | $ | (4,552,000 | ) | $ | (139,000 | ) | $ | 51,391,000 | $ | 49,583,000 | |||
| Balance | 1,934,000 | 3,572,138 | $ | (4,552,000 | ) | $ | (139,000 | ) | $ | 51,391,000 | $ | 49,583,000 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed financial statements.
| 10 |
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GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENT OF CASH FLOWS
FOR
THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023
(Unaudited)
| Jan<br> 31, 2024 | Jan<br> 31, 2023 | |||||
|---|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net Income | $ | 5,558,000 | $ | 3,667,000 | ||
| Adjustments to reconcile<br> net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 364,000 | 332,000 | ||||
| Loss on sale of investments | 32,000 | 165,000 | ||||
| Impairment on investments | 22,000 | — | ||||
| Unrealized (gain) on equity<br> investments | (2,149,000 | ) | (27,000 | ) | ||
| Provision for credit losses<br> on accounts receivable | (3,000 | ) | (6,000 | ) | ||
| Reserve for obsolete inventory | (51,000 | ) | 81,000 | |||
| Deferred income taxes | 787,000 | (78,000 | ) | |||
| (Gain) on sales of assets | (8,000 | ) | — | |||
| Changes in assets and liabilities: | ||||||
| (Increase) decrease in: | ||||||
| Accounts receivable | (554,000 | ) | 824,000 | |||
| Inventories | (594,000 | ) | (2,444,000 | ) | ||
| Prepaid expenses | 515,000 | 458,000 | ||||
| Other receivables | 22,000 | (29,000 | ) | |||
| Income tax overpayment | 88,000 | (478,000 | ) | |||
| Increase (decrease) in: | ||||||
| Accounts payable | (164,000 | ) | 84,000 | |||
| Accrued expenses | 120,000 | 184,000 | ||||
| Net cash from operating<br> activities | 3,985,000 | 2,733,000 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Proceeds from sale of assets | 8,000 | — | ||||
| (Purchase) of property<br> and equipment | (263,000 | ) | (221,000 | ) | ||
| Proceeds from sale of marketable<br> securities | 520,000 | 17,000 | ||||
| (Purchase) of marketable<br> securities | (556,000 | ) | (648,000 | ) | ||
| Proceeds<br> from long-term investment | 12,000 | — | ||||
| Net cash from investing<br> activities | (279,000 | ) | (852,000 | ) | ||
| CASH FLOWS FROM FINANCING<br> ACTIVITIES: | ||||||
| (Purchase) of treasury<br> stock | (364,000 | ) | (5,000 | ) | ||
| Dividends<br> paid | (2,914,000 | ) | (2,689,000 | ) | ||
| Net cash from financing<br> activities | (3,278,000 | ) | (2,694,000 | ) | ||
| NET CHANGE IN CASH AND<br> CASH EQUIVALENTS | 428,000 | (813,000 | ) | |||
| Cash and Cash Equivalents,<br> beginning of period | 4,943,000 | 6,078,000 | ||||
| Cash and Cash Equivalents,<br> end of period | $ | 5,371,000 | $ | 5,265,000 | ||
| Supplemental Disclosure for Cash Flow Information: | ||||||
| Cash payments for: | ||||||
| Income<br> taxes | $ | 1,230,000 | $ | 1,618,000 | ||
| Interest<br> paid | $ | — | $ | — | ||
| Cash receipts for: | ||||||
| Income<br> taxes | $ | — | $ | 118,000 |
See accompanying notes to the unaudited condensed financial statements.
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GEORGE
RISK INDUSTRIES, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JANUARY
31, 2024
Note 1: Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these unaudited condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2023 annual report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year.
AccountingEstimates — The preparation of these condensed financial statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts.
SignificantAccounting Policies — The significant accounting policies used in preparation of these condensed financial statements are disclosed in our Annual Report, and there have been no changes to the Company’s significant accounting policies during the nine months ended January 31, 2023.
RecentlyIssued Accounting Pronouncements — In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic280): Improvementsto Reportable Segment Disclosures. The new guidance is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective retrospectively for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the financial statements and related disclosures, which is not expected to be material.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Tax Disclosures (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.
| 12 |
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Note 2: Investments
The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets. The investments in debt securities, which include municipal bonds and bond funds, mature between February 2024 and July 2041. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.
As of January 31, 2024 and April 30, 2023, investments consisted of the following:
Schedule of Investments
| Investments at<br><br> <br>January 31, 2024 | Cost<br><br> <br>Basis | Gross<br> Unrealized Gains | Gross<br> Unrealized Losses | Fair<br><br> <br>Value | |||||
|---|---|---|---|---|---|---|---|---|---|
| Municipal bonds | $ | 5,383,000 | $ | 45,000 | $ | (162,000 | ) | $ | 5,266,000 |
| REITs | 78,000 | — | (8,000 | ) | 70,000 | ||||
| Equity securities | 18,977,000 | 8,876,000 | (294,000 | ) | 27,559,000 | ||||
| Money markets and CDs | 698,000 | — | — | 698,000 | |||||
| Total | $ | 25,136,000 | $ | 8,921,000 | $ | (464,000 | ) | $ | 33,593,000 |
| Investments at<br><br> <br>April 30, 2023 | Cost<br><br> <br>Basis | Gross<br> Unrealized Gains | Gross<br> Unrealized Losses | Fair<br><br> <br>Value | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Municipal bonds | $ | 5,396,000 | $ | 46,000 | $ | (230,000 | ) | $ | 5,212,000 |
| REITs | 93,000 | — | (22,000 | ) | 71,000 | ||||
| Equity securities | 18,605,000 | 6,915,000 | (501,000 | ) | 25,019,000 | ||||
| Money markets and CDs | 1,060,000 | 1,000 | — | 1,061,000 | |||||
| Total | $ | 25,154,000 | $ | 6,962,000 | $ | (753,000 | ) | $ | 31,363,000 |
Marketable securities that are classified as equity securities are carried at fair value on the balance sheets with changes in fair value recorded as an unrealized gain or (loss) in the statements of income in the period of the change. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of income.
The
Company evaluates all marketable securities for other-than-temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, there were no impairment losses recorded for the quarters ended January 31, 2024 and 2023, respectively. As for the year-to-date numbers, management recorded an impairment loss of $22,000 for the nine-month period ended January 31, 2024, while there were no impairment losses recorded for the nine-month period ended January 31, 2023.
| 13 |
| --- |
The
Company’s investments are actively traded in the stock and bond markets. Therefore, either a realized gain or loss is recorded when a sale occurs. For the quarter ended January 31, 2024 the Company had sales of equity securities which yielded gross realized gains of $116,000 and gross realized losses of $84,000. For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $14,000 were recorded. As for the nine-months ended January 31, 2024 the Company had sales of equity securities which yielded gross realized gains of $329,000 and gross realized losses of $362,000. For the same nine-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $22,000 were recorded. During the quarter ending January 31, 2023, the Company recorded gross realized gains and losses on equity securities of $118,000 and $69,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $5,000 were recorded. During the nine-month period ending January 31, 2023, the Company recorded gross realized gains and losses on equity securities of $403,000 and $522,000, respectively. For the same nine-month period last year, sales of debt securities did not yield any gross realized gains, but gross realized losses of $46,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph.
The following tables show the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at January 31, 2024 and April 30, 2023, respectively.
Unrealized
Loss Breakdown by Investment Type at January 31, 2024
Schedule of Unrealized Loss Breakdown by Investment
| Less<br> than 12 months | 12<br> months or greater | Total | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Description | Fair<br> Value | Unrealized<br> Loss | Fair<br> Value | Unrealized<br> Loss | Fair<br> Value | Unrealized<br> Loss | |||||||||
| Municipal bonds | $ | 816,000 | $ | (10,000 | ) | $ | 2,767,000 | $ | (153,000 | ) | $ | 3,583,000 | $ | (163,000 | ) |
| REITs | 3,000 | (1,000 | ) | 67,000 | (6,000 | ) | 70,000 | (7,000 | ) | ||||||
| Equity securities | 1,251,000 | (85,000 | ) | 1,366,000 | (209,000 | ) | 2,617,000 | (294,000 | ) | ||||||
| Total | $ | 2,070,000 | $ | (96,000 | ) | $ | 4,200,000 | $ | (368,000 | ) | $ | 6,270,000 | $ | (464,000 | ) |
Unrealized
Loss Breakdown by Investment Type at April 30, 2023
| Less<br> than 12 months | 12<br> months or greater | Total | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Description | Fair<br> Value | Unrealized<br> Loss | Fair<br> Value | Unrealized<br> Loss | Fair<br> Value | Unrealized<br> Loss | |||||||||
| Municipal bonds | $ | 868,000 | $ | (6,000 | ) | $ | 3,769,000 | $ | (224,000 | ) | $ | 4,637,000 | $ | (230,000 | ) |
| REITs | 36,000 | (9,000 | ) | 35,000 | (13,000 | ) | 71,000 | (22,000 | ) | ||||||
| Equity securities | 3,048,000 | (140,000 | ) | 2,209,000 | (361,000 | ) | 5,257,000 | (501,000 | ) | ||||||
| Total | $ | 3,952,000 | $ | (155,000 | ) | $ | 6,013,000 | $ | (598,000 | ) | $ | 9,965,000 | $ | (753,000 | ) |
MunicipalBonds
The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at January 31, 2024 and April 30, 2023.
MarketableEquity Securities and REITs
The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at January 31, 2024 and April 30, 2023.
Note 3: Inventories
Inventories at January 31, 2024 and April 30, 2023 consisted of the following:
Schedule of Inventories
| January 31, | April 30, | |||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| Raw materials | $ | 10,603,000 | $ | 9,886,000 | ||
| Work in process | 777,000 | 678,000 | ||||
| Finished goods | 1,046,000 | 1,267,000 | ||||
| Inventory gross | 12,426,000 | 11,831,000 | ||||
| Less: allowance for<br> obsolete inventory | (338,000 | ) | (388,000 | ) | ||
| Inventories, net | $ | 12,088,000 | $ | 11,443,000 |
| 14 |
| --- |
Note 4: Business Segments
The following is financial information relating to industry segments:
Schedule of Financial Information Relating to Industry Segments
| Three months | Three months | Nine months | Nine months | |||||
|---|---|---|---|---|---|---|---|---|
| ended | ended | ended | ended | |||||
| Jan<br> 31, 2024 | Jan<br> 31, 2023 | Jan<br> 31, 2024 | Jan<br> 31, 2023 | |||||
| Net revenue: | ||||||||
| Security alarm<br> products | $ | 4,939,000 | $ | 3,712,000 | $ | 14,627,000 | $ | 13,079,000 |
| Cable & wiring tools | 332,000 | 486,000 | 1,117,000 | 1,561,000 | ||||
| Other<br> products | 123,000 | 168,000 | 431,000 | 554,000 | ||||
| Total<br> net revenue | $ | 5,394,000 | $ | 4,366,000 | $ | 16,175,000 | $ | 15,194,000 |
| Income from operations: | ||||||||
| Security alarm products | $ | 1,373,000 | $ | 774,000 | $ | 4,226,000 | $ | 3,339,000 |
| Cable & wiring tools | 105,000 | 93,000 | 323,000 | 398,000 | ||||
| Other<br> products | 40,000 | 33,000 | 125,000 | 141,000 | ||||
| Total<br> income from operations | $ | 1,518,000 | $ | 900,000 | $ | 4,674,000 | $ | 3,878,000 |
| Depreciation and amortization: | ||||||||
| Security alarm products | $ | 55,000 | $ | 48,000 | $ | 146,000 | $ | 143,000 |
| Cable & wiring tools | 30,000 | 30,000 | 91,000 | 92,000 | ||||
| Other products | 24,000 | 21,000 | 61,000 | 57,000 | ||||
| Corporate<br> general | 14,000 | 14,000 | 66,000 | 40,000 | ||||
| Total depreciation and<br> amortization | $ | 123,000 | $ | 113,000 | $ | 364,000 | $ | 332,000 |
| Capital expenditures: | ||||||||
| Security alarm products | $ | — | $ | — | $ | 224,000 | $ | 74,000 |
| Cable & wiring tools | — | — | — | — | ||||
| Other products | 20,000 | 12,000 | 20,000 | 147,000 | ||||
| Corporate<br> general | — | — | 19,000 | — | ||||
| Total capital expenditures | $ | 20,000 | $ | 12,000 | $ | 263,000 | $ | 221,000 |
| January<br> 31, 2024 | April<br> 30, 2023 | |||||||
| --- | --- | --- | --- | --- | ||||
| Identifiable assets: | ||||||||
| Security alarm<br> products | $ | 15,880,000 | $ | 14,251,000 | ||||
| Cable & wiring tools | 2,173,000 | 2,548,000 | ||||||
| Other products | 850,000 | 981,000 | ||||||
| Corporate<br> general | 40,170,000 | 38,171,000 | ||||||
| Total assets | $ | 59,073,000 | $ | 55,951,000 |
| 15 |
| --- |
Note 5: Earnings per Share
Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are:
Schedule of Basic and Diluted Earnings Per Share
| For<br> the three months ended January 31, 2024 | ||||||
|---|---|---|---|---|---|---|
| Income | Shares | Per-Share | ||||
| (Numerator) | (Denominator) | Amount | ||||
| Net income | $ | 3,239,000 | ||||
| Basic EPS | $ | 3,239,000 | 4,899,692 | $ | .66 | |
| Effect of dilutive<br> Convertible Preferred Stock | – | 20,500 | — | |||
| Diluted<br> EPS | $ | 3,239,000 | 4,920,192 | $ | .66 | |
| For<br> the three months ended January 31, 2023 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Income | Shares | Per-Share | ||||
| (Numerator) | (Denominator) | Amount | ||||
| Net income | $ | 2,009,000 | ||||
| Basic EPS | $ | 2,009,000 | 4,930,800 | $ | .41 | |
| Effect of dilutive<br> Convertible Preferred Stock | – | 20,500 | — | |||
| Diluted<br> EPS | $ | 2,009,000 | 4,951,300 | $ | .41 | |
| For<br> the nine months ended January 31, 2024 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Income | Shares | Per-Share | ||||
| (Numerator) | (Denominator) | Amount | ||||
| Net income | $ | 5,558,000 | ||||
| Basic EPS | $ | 5,558,000 | 4,918,746 | $ | 1.13 | |
| Effect of dilutive<br> Convertible Preferred Stock | – | 20,500 | — | |||
| Diluted<br> EPS | $ | 5,558,000 | 4,939,246 | $ | 1.13 | |
| For<br> the nine months ended January 31, 2023 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Income | Shares | Per-Share | ||||
| (Numerator) | (Denominator) | Amount | ||||
| Net income | $ | 3,667,000 | ||||
| Basic EPS | $ | 3,667,000 | 4,930,929 | $ | .74 | |
| Effect of dilutive<br> Convertible Preferred Stock | – | 20,500 | — | |||
| Diluted<br> EPS | $ | 3,667,000 | 4,951,429 | $ | .74 |
| 16 |
| --- |
Note 6: Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the “Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the Company. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is funded by voluntary pre-tax and Roth (taxable) contributions from eligible employees who may contribute a percentage of their eligible compensation, limited and subject to statutory limits. Employees are eligible to participate in the Plan when they have attained the age of 21 and completed one thousand hours of service in any plan year with the Company. Upon leaving the Company, each participant is 100% vested with respect to the participants’ contributions while the Company’s matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions by the Company of approximately $15,000 and $14,000 were paid during each quarter ending January 31, 2024 and 2023, respectively. Likewise, the Company paid matching contributions of approximately $45,000 and $43,000 during each nine-month period ending January 31, 2024 and 2023, respectively.
Note 7: Fair Value Measurements
The carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short-term nature. The fair value of our investments is determined utilizing market-based information. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The levels of the fair value hierarchy under US GAAP are described below:
| Level<br> 1 | Valuation<br> is based upon quoted prices for identical instruments traded in active markets. |
|---|---|
| Level<br> 2 | Valuation<br> is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets<br> that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. |
| Level<br> 3 | Valuation<br> is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions<br> reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques<br> include use of option pricing models, discounted cash flow models and similar techniques. |
Investmentsand Marketable Securities
As of January 31, 2024 and April 30, 2023, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities. Our marketable securities are valued using third-party broker statements. The value of the investments is derived from quoted market information. The inputs to the valuation are generally classified as Level 1 given the active market for these securities, however, if an active market does not exist, which is the case for municipal bonds and REITs, the inputs are recorded as Level 2.
FairValue 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.
| 17 |
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Schedule of Assets Measured at Fair Value on Recurring Basis
| Level<br> 1 | Level<br> 2 | Level<br> 3 | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Assets<br> Measured at Fair Value on a Recurring Basis as of <br>January 31, 2024 | ||||||||
| Level<br> 1 | Level<br> 2 | Level<br> 3 | Total | |||||
| Assets: | ||||||||
| Municipal<br> Bonds | $ | — | $ | 5,266,000 | $ | — | $ | 5,266,000 |
| REITs | — | 70,000 | — | 70,000 | ||||
| Equity<br> Securities | 27,559,000 | — | — | 27,559,000 | ||||
| Money<br> Markets | 698,000 | — | — | 698,000 | ||||
| Total fair value of<br> assets measured on a recurring basis | $ | 28,257,000 | $ | 5,336,000 | $ | — | $ | 33,593,000 |
| Level<br> 1 | Level<br> 2 | Level<br> 3 | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Assets<br> Measured at Fair Value on a Recurring Basis as of <br>April 30, 2023 | ||||||||
| Level<br> 1 | Level<br> 2 | Level<br> 3 | Total | |||||
| Assets: | ||||||||
| Municipal<br> Bonds | $ | — | $ | 5,212,000 | $ | — | $ | 5,212,000 |
| REITs | — | 71,000 | — | 71,000 | ||||
| Equity<br> Securities | 25,019,000 | — | — | 25,019,000 | ||||
| Money<br> Markets | 1,061,000 | — | — | 1,061,000 | ||||
| Total fair value of<br> assets measured on a recurring basis | $ | 26,080,000 | $ | 5,283,000 | $ | — | $ | 31,363,000 |
Note 8 Subsequent Events
None
| 18 |
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GEORGE
RISK INDUSTRIES, INC.
PART
I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations
| 19 |
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MANAGEMENT
DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
ThisQuarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, asamended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subjectto the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemedto 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 undertakeno obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially fromthose anticipated in these forward-looking statements, even if new information becomes available in the future.
Thefollowing discussion should be read in conjunction with the attached unaudited condensed financial statements, and with the Company’saudited financial statements and discussion for the fiscal year ended April 30, 2023.
ExecutiveSummary
The Company’s performance in operations has seen a tick upward through the three quarters of the current fiscal year with the third quarter dipping slightly in sales over the second quarter of the current fiscal year. This is mainly due to the fact that our business is tied to the housing market and the winter months usually show a slowdown. Opportunities include keeping up with business growth and finding ways to get our products out to our customers in a timelier manner. One way we are doing this is by looking into more automation. We also continue to look at businesses that might be a good fit to purchase. We also continue to work on new products that will be a good fit for our industry and business. Challenges in the coming months include getting products out to customers in a timely manner, dealing with the COVID-19 pandemic restrictions, and inflation. Possible COVID-19 challenges include, but are not limited to, price increases and/or delays in the supply chain, reduced sales, workforce interruptions, and economic conditions impacting the stock market. Management continues to work at keeping operations flowing as efficiently as possible with the hopes of getting the facilities running leaner and more profitable than ever before.
Results of Operations
| ● | Net<br> sales were $5,394,000 for the quarter ended January 31, 2024, which is a 23.55% increase from the corresponding quarter last year.<br> Year-to-date net sales were $16,175,000 at January 31, 2024, which is a 6.46% increase from the same period last year. The improvement<br> in sales is a result of the economy rebounding and having the ability to get goods built and shipped to our customers. We continue<br> to operate our business with our ongoing commitment to outstanding customer service and our ability to customize products. |
|---|
| 20 |
| --- | | ● | Cost<br> of goods sold was 50.69% of net sales for the quarter ended January 31, 2024 and was 55.98% for the same quarter last year. Year-to-date<br> cost of goods sold percentages were 50.36% for the current nine months and 53.15% for the corresponding nine months last year. The<br> current cost of goods sold percentages have dropped to be just outside of Management’s goal of keeping labor and other manufacturing<br> expenses at less than 50% for both the quarter and year-to-date results. Management continues to work with and train employees to<br> work more efficiently. Raw material prices have come down during the current fiscal year as compared to the previous fiscal year,<br> but wages continue to rise to remain competitive in the job market. Management offset some of these added expenses by implementing<br> a 2.5% price increase effective January 1, 2024. | | --- | --- | | ● | Operating<br> expenses increased by $120,000 for the quarter and they increased by $116,000 for the nine-months ended January 31, 2024 as compared<br> to the corresponding periods last year. When comparing percentages in relation to net sales, the operating expenses for the quarter<br> ended January 31, 2024 was 21.17% of net sales while it was 23.41% of net sales for the same quarter the prior year. For year-to-date<br> numbers, operating expenses were 20.75% and 21.32% of net sales for the nine months ended January 31, 2024 and 2023, respectively.<br> The Company has been able to keep the operating expenses at less than 30% of net sales for many years now; however, the actual dollar<br> amount increase is due to increased commission amounts, related to increased sales, and additional labor costs related to wage increases. | | --- | --- | | ● | Income<br> from operations for the quarter ended January 31, 2024 was $1,518,000, a 68.67% increase from the corresponding quarter last year,<br> which had income from operations of $900,000. Income from operations for the nine months ended January 31, 2024 was $4,674,000, which<br> is a 20.53% increase from the corresponding nine months last year, which had income from operations of $3,878,000. | | ● | Other<br> income and expenses for the quarter ended January 31, 2024 shows income of $3,329,000, which is a $1,553,000 increase from the corresponding<br> quarter last year, which had an income amount of $1,776,000. Comparatively, there is an increase of $2,259,000 in other income for<br> the year-to-date numbers. Most of the activity in these accounts consists of investment interest, dividends, real gains or losses<br> on sale of investments, and unrealized gains or losses on equity securities. The main reason for the increase in the current quarter<br> and year-to-date numbers is unrealized gain and loss on equity securities. The Company is at the mercy of the stock market when it<br> comes to these figures, the stock market has seen an upturn recently with decreased inflation and improvement in the economy. | | ● | Overall,<br> net income for the quarter ended January 31, 2024 was up $1,230,000, or 61.22%, from the same quarter last year. Similarly, net income<br> for the nine-month period ended January 31, 2024 was up $1,891,000, or 51.57%, from the same period in the prior year. | | ● | Earnings<br> per common share for the quarter ended January 31, 2024 were $0.66 per share and $1.13 per share for the year-to-date numbers. EPS<br> for the quarter and nine months ended January 31, 2023 were $0.41 per share and $0.74 per share, respectively. |
| 21 |
| --- |
Liquidity and capital resources
Operating
| ● | Net<br> cash increased $428,000 during the nine months ended January 31, 2024 as compared to a decrease of $813,000 during the corresponding<br> period last year. |
|---|---|
| ● | Accounts<br> receivable increased $554,000 for the nine months ended January 31, 2024 compared with a $824,000 decrease for the same period last<br> year. The current year increase is a direct result of the increased sales, while there has been a slight uptick in collections of<br> accounts receivable. An analysis of accounts receivable shows that 9.62% of the receivables were over 90 days at January 31, 2024. |
| ● | Inventories<br> increased $594,000 during the current nine-month period compared to an increase of $2,444,000 last year. The smaller increase in<br> the current year is due to not having as many raw materials on hand since sales have increased. Management has also seen slight decreases<br> in raw material prices during the current year as compared to the nine-month period ending January 31, 2023. |
| ● | Prepaid<br> expenses saw a $515,000 decrease for the current nine months, primarily due to having inventory and machinery delivered during the<br> current nine-month period; therefore, having less money in prepayments of raw materials on the books. The prior nine-month period<br> showed a $458,000 decrease in prepaid expenses. |
| ● | Income<br> tax overpayment decreased $88,000 for the current nine-month period, compared to having an increase of $478,000 in income tax overpayment<br> for the nine-months ended January 31, 2023. The current decrease is due to having to our income tax estimates be more aligned with<br> our net income. |
| ● | Accounts<br> payable shows a $164,000 decrease for the current nine-month period ended January 31, 2024 compared to an $84,000 increase for the<br> prior nine-month period. The company strives to pay all invoices within terms, and the variance is primarily due to the timing of<br> receipt of products and payment of invoices. |
| ● | Accrued<br> expenses increased $120,000 for the current nine-month period compared to a $184,000 increase for the nine-month period ended January<br> 31, 2023. The difference in the amounts is primarily due to timing issues. |
Investing
| ● | As<br> for our investment activities, the Company spent approximately $263,000 on acquisitions of property and equipment for the current<br> nine-month period, in comparison with the corresponding nine months last year, where there was activity of $221,000. |
|---|---|
| ● | Additionally,<br> the Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the nine-month<br> period ended January 31, 2024 the buy/sell activity in the investment accounts continued as usual. Net cash spent on purchases of<br> marketable securities for the nine-month period ended January 31, 2024 was $556,000 compared to $648,000 spent in the prior nine-month<br> period. The Company continues to use “money manager” accounts for most stock transactions. By doing this, the Company<br> gives an independent third-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays<br> a quarterly service fee based on the value of the investments. |
| 22 |
| --- |
Financing
| ● | The<br> Company continues to purchase back common stock when the opportunity arises. For the nine-month period ended January 31, 2024, the<br> Company purchased $364,000 worth of treasury stock. This is in comparison to $5,000 spent in the same nine-month period the prior<br> year. |
|---|---|
| ● | The<br> company paid out dividends of $2,914,000 during the nine months ending January 31, 2024. These dividends were paid during the second<br> quarter. The company declared a dividend of $0.65 per share of common stock on September 30, 2023 and these dividends were paid by<br> October 31, 2023. As for the prior year numbers, dividends paid was $2,689,000 for the nine months ending January 31, 2023. A dividend<br> of $0.60 per common share was declared and paid during the second fiscal quarter last year. |
| --- | --- |
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 products that are well suited to our distribution network and manufacturing capabilities. Items currently in the development process include:
| ● | Explosion<br> proof contacts that will be UL listed for hazardous locations. There has been demand from our customers for this type of high security<br> magnetic reed switch. |
|---|---|
| ● | The<br> Company is developing magnetic contacts which are listed under UL 634 Level 2. These sensors are for high security applications such<br> as government buildings, military use, nuclear facilities, and financial institutions. |
| ● | Research<br> is being done on updating our small profile glass break detector, in addition to looking at the development of programmable temperature<br> and humidity sensors with built-in hysteresis. |
| ● | Wireless<br> technology is a main area of focus for product development. We are considering adding wireless technology to some of our current<br> products. A wireless contact switch is in the final stages of development. Also, we are working on wireless versions of monitoring<br> devices which include glass break detection, tilt sensing and environmental monitoring. A redesign of our brass water valve shut-off<br> system is near completion. |
Other Information
In addition to researching and developing new products, management is always open to the possibility of acquiring a business or product line that would complement our existing operations. Due to the Company’s strong cash position, management believes this could be achieved without the need for outside financing. The intent is to utilize the equipment, marketing techniques and established customers to deliver new products and increase sales and profits.
There are no known seasonal trends with any of GRI’s products since we sell to distributors and OEM manufacturers. Our products are tied to the housing industry and will fluctuate with building trends.
| 23 |
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GEORGE
RISK INDUSTRIES, INC.
PART
I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable
Item 4. Controls and Procedures
Our management, under the supervision and with the participation of our chief executive officer (also working as our chief financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of January 31, 2024. Based on that evaluation, management concluded that the disclosure controls and procedures employed at the Company were not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
In our annual report filed on Report 10-K for the year ended April 30, 2023, management identified the following material weakness in our internal control over financial reporting:
| ● | The<br> small size of our Company limits our ability to achieve the desired level of separation of duties for proper internal controls and<br> financial reporting, particularly as it relates to financial reporting to assure material disclosures or implementation of newly<br> issued accounting standards are included. A secondary review over annual and quarterly filings does occur with an outside party.<br> A part-time Controller was hired in March 2023, but the current CEO and CFO roles are being fulfilled by the same individual. We<br> do not have an audit committee. We do not believe we have met the full requirement for separation of duties for financial reporting<br> purposes. |
|---|
Despite the material weaknesses in financial reporting noted above, we believe that our financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.
We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation, and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.
We will continue to follow the standards for the Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:
| ● | Pertain<br> to the maintenance of records in reasonable detail that fairly reflect the transactions and dispositions of the Company’s assets; |
|---|---|
| ● | Provide<br> reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance<br> with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations<br> of management and the Board of Directors; and |
| ● | Provide<br> reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s<br> assets that could have a material effect on the financial statements. |
| --- | --- |
Changesin Internal Control over Financial Reporting
Other than those mentioned above, there were no changes in our internal control over financial reporting during the fiscal quarter ended January 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 24 |
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GEORGE
RISK INDUSTRIES, INC.
Part
II. OTHER INFORMATION
Item
- Legal Proceedings
Not applicable
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company’s repurchase of common stock for the third quarter of fiscal year 2024.
| Period | Number<br> of shares repurchased |
|---|---|
| November<br> 1, 2023 – November 30, 2023 | 26,663 |
| December<br> 1, 2023 – December 31, 2023 | -0- |
| January<br> 1, 2024 – January 31, 2024 | 1,300 |
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits
| Exhibit<br> No. | Description |
|---|---|
| 31.1 | Certification<br> of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 302 of the Sarbanes-Oxley Act<br> of 2002. |
| 32.1 | Certification<br> of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 906 of the Sarbanes-Oxley Act<br> of 2002. |
| 101. | INS<br> Inline XBRL Instance Document |
| 101. | SCH<br> Inline XBRL Taxonomy Extension Schema Document |
| 101. | CAL<br> Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101. | DEF<br> Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101. | LAB<br> Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101. | PRE<br> Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 101. | Cover<br> Page Interactive Data File (embedded within the Inline XBRL document) |
| 25 |
| --- |
SIGNATURES
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.<br><br> <br>(Registrant) | ||
|---|---|---|
| Date March 15, 2024 | By: | /s/ Stephanie M. Risk-McElroy |
| Stephanie<br> M. Risk-McElroy | ||
| President,<br> Chief Executive Officer, Chief Financial Officer, and Chairman of the Board |
| 26 |
| --- |
Exhibit31.1
CERTIFICATIONPURSUANT TO
RULES13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
ASADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Stephanie M. Risk-McElroy, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of George Risk Industries, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 15, 2024
| By: | /s/ Stephanie M. Risk-McElroy |
|---|---|
| Stephanie<br> M. Risk-McElroy | |
| Chief<br> Executive Officer and Chief Financial Officer |
Exhibit32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Stephanie M. Risk-McElroy, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report of George Risk Industries, Inc. on Form 10-Q dated January 31, 2024 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of George Risk Industries, Inc.
| Date: March 15, 2024 | By: | /s/ Stephanie M. Risk-McElroy |
|---|---|---|
| Stephanie<br> M. Risk-McElroy | ||
| President<br> and Chief Executive and Financial Officer |