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 quarterly period ended October 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> or other jurisdiction of incorporation or organization) | (I.R.S.<br> Employers Identification No.) |
| 802 South Elm St.<br><br> <br>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 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (&232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large<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 December 16, 2024 was 4,896,730.
GEORGE
RISK INDUSTRIES, INC.
PART
I. FINANCIAL INFORMATION
Item
- Financial Statements
The unaudited financial statements for the three-and six-month periods ended October 31, 2024, are attached hereto.
| 2 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
BALANCE SHEETS
| April<br> 30, 2024 | |||
|---|---|---|---|
| ASSETS | |||
| Current Assets: | |||
| Cash and cash<br> equivalents | 5,454,000 | $ | 7,112,000 |
| Investments and securities,<br> at fair value | 36,359,000 | 34,488,000 | |
| Accounts receivable: | |||
| Trade, net of allowance<br> for credit losses of 40,845 and 34,256 | 3,915,000 | 3,903,000 | |
| Other | 31,000 | 66,000 | |
| Federal solar tax credit<br> receivable | 2,485,000 | — | |
| Inventories, net | 11,082,000 | 11,558,000 | |
| Prepaid<br> expenses | 339,000 | 315,000 | |
| Total Current Assets | 59,665,000 | 57,442,000 | |
| Property and Equipment, net, at cost | 2,126,000 | 2,003,000 | |
| Other Assets | |||
| Investment in Limited Land<br> Partnership, at cost | 25,000 | 294,000 | |
| Projects<br> in process | 10,000 | 13,000 | |
| Total Other Assets | 35,000 | 307,000 | |
| Intangible Assets, net | 968,000 | 1,028,000 | |
| TOTAL ASSETS | 62,794,000 | $ | 60,780,000 |
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, 2024 | |||||
|---|---|---|---|---|---|
| LIABILITIES AND STOCKHOLDERS’<br> EQUITY | |||||
| Current Liabilities | |||||
| Accounts payable,<br> trade | 259,000 | $ | 291,000 | ||
| Dividends payable | 3,301,000 | 2,853,000 | |||
| Deferred income | 14,000 | 23,000 | |||
| Accrued expenses | 462,000 | 483,000 | |||
| Income tax payable | 170,000 | 105,000 | |||
| Federal solar tax credit<br> payable | 972,000 | — | |||
| Deferred<br> gain on solar tax credit | 142,000 | — | |||
| Total Current Liabilities | 5,320,000 | 3,755,000 | |||
| Long-Term Liabilities | |||||
| Deferred<br> income taxes | 2,660,000 | 2,388,000 | |||
| Total Long-Term Liabilities | 2,660,000 | 2,388,000 | |||
| Total Liabilities | 7,980,000 | 6,143,000 | |||
| Commitments and Contingencies | — | — | |||
| Stockholders’ Equity | |||||
| Convertible preferred stock,<br> 1,000,000 shares authorized, Series 1—noncumulative,<br> 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 | 16,000 | (137,000 | ) | ||
| Retained earnings | 56,860,000 | 56,836,000 | |||
| Less:<br> treasury stock, 3,606,151 and 3,606,151 shares, at cost | (4,945,000 | ) | (4,945,000 | ) | |
| Total Stockholders’<br> Equity | 54,814,000 | 54,637,000 | |||
| TOTAL LIABILITIES AND<br> STOCKHOLDERS’ EQUITY | 62,794,000 | $ | 60,780,000 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed financial statements
| 4 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
INCOME (LOSS) STATEMENTS
FOR
THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2024 AND 2023
(Unaudited)
| Three months | Three months | Six months | Six months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | ended | ended | ended | |||||||||
| Oct<br> 31, 2024 | Oct<br> 31, 2023 | Oct<br> 31, 2024 | Oct<br> 31, 2023 | |||||||||
| Net Sales | $ | 5,613,000 | $ | 6,053,000 | $ | 11,394,000 | $ | 10,781,000 | ||||
| Less: Cost of Goods Sold | (2,899,000 | ) | (2,949,000 | ) | (5,735,000 | ) | (5,411,000 | ) | ||||
| Gross Profit | 2,714,000 | 3,104,000 | 5,659,000 | 5,370,000 | ||||||||
| Operating Expenses | ||||||||||||
| General and Administrative | 417,000 | 333,000 | 755,000 | 702,000 | ||||||||
| Sales | 787,000 | 787,000 | 1,594,000 | 1,476,000 | ||||||||
| Engineering | 27,000 | 16,000 | 54,000 | 37,000 | ||||||||
| Total Operating Expenses | 1,231,000 | 1,136,000 | 2,403,000 | 2,215,000 | ||||||||
| Income From Operations | 1,483,000 | 1,968,000 | 3,256,000 | 3,155,000 | ||||||||
| Other (Expense) | ||||||||||||
| Other | 96,000 | 2,000 | 96,000 | 9,000 | ||||||||
| Dividend and Interest Income | 299,000 | 217,000 | 616,000 | 458,000 | ||||||||
| Unrealized (Loss) on Equity<br> Securities | 66,000 | (2,368,000 | ) | 1,413,000 | (734,000 | ) | ||||||
| Gain (Loss) on Investments | 336,000 | 46,000 | 549,000 | (71,000 | ) | |||||||
| Gain (Loss) on Solar Tax<br> Credit | 373,000 | — | 373,000 | — | ||||||||
| Gain<br> on Sale of Assets | — | — | (2,000 | ) | 8,000 | |||||||
| Total Other Income (Loss) | 1,170,000 | (2,103,000 | ) | 3,045,000 | (330,000 | ) | ||||||
| Income (Loss) Before Provisions for Income<br> Taxes | 2,653,000 | (135,000 | ) | 6,301,000 | 2,825,000 | |||||||
| Provisions for Income Taxes: | ||||||||||||
| Current Expense | 465,000 | 543,000 | 1,169,000 | 853,000 | ||||||||
| Deferred<br> Tax (Benefit) Expense | (27,000 | ) | (623,000 | ) | 212,000 | (347,000 | ) | |||||
| Total<br> Income Tax Expense (Benefit) | 438,000 | (80,000 | ) | 1,381,000 | 506,000 | |||||||
| Net Income (Loss) | $ | 2,215,000 | $ | (55,000 | ) | $ | 4,920,000 | $ | 2,319,000 | |||
| Income Per Share of Common Stock | ||||||||||||
| Basic | $ | 0.45 | $ | (0.01 | ) | $ | 1.00 | $ | 0.47 | |||
| Diluted | $ | 0.45 | $ | (0.01 | ) | $ | 1.00 | $ | 0.47 | |||
| Weighted Average Number of Common | ||||||||||||
| Shares Outstanding | ||||||||||||
| Weighted Average Number of Common Shares Outstanding | ||||||||||||
| Basic | 4,896,730 | 4,927,571 | 4,896,730 | 4,928,273 | ||||||||
| Diluted | 4,917,230 | 4,927,571 | 4,917,230 | 4,948,773 |
See accompanying notes to the unaudited condensed financial statements
| 5 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR
THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2024 AND 2023
(Unaudited)
| Three months | Three months | Six months | Six months | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ended | ended | Ended | ended | |||||||||
| Oct<br> 31, 2024 | Oct<br> 31, 2023 | Oct<br> 31, 2024 | Oct<br> 31, 2023 | |||||||||
| Net Income (Loss) | $ | 2,215,000 | $ | (55,000 | ) | $ | 4,920,000 | $ | 2,319,000 | |||
| Other Comprehensive (Loss), Net of Tax | ||||||||||||
| Unrealized (loss) on debt<br> securities: | ||||||||||||
| Unrealized holding (losses) arising during<br> period | (33,000 | ) | (289,000 | ) | 214,000 | (320,000 | ) | |||||
| Income<br> tax (expense) benefit related to other comprehensive income | 9,000 | 82,000 | (61,000 | ) | 90,000 | |||||||
| Other<br> Comprehensive (Loss) | (24,000 | ) | (207,000 | ) | 153,000 | (230,000 | ) | |||||
| Comprehensive Income<br> (Loss) | $ | 2,191,000 | $ | (262,000 | ) | $ | 5,073,000 | $ | 2,089,000 |
See accompanying notes to the unaudited condensed financial statements
| 6 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2024 AND 2023
(Unaudited)
| Common Stock<br> <br>Class A | |||||||
|---|---|---|---|---|---|---|---|
| Amount | Shares | Amount | |||||
| Balances, July 31, 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 (loss), net of tax effect | — | — | — | — | |||
| Net (Loss) | — | — | — | — | |||
| Balances, October 31,<br> 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
All values are in US Dollars.
| Common Stock<br> <br>Class A | |||||||
|---|---|---|---|---|---|---|---|
| Amount | Shares | Amount | |||||
| Balances, July 31, 2024 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | |
| Purchases of common stock | — | — | — | — | |||
| Dividend declared at 1.00 per common share<br> outstanding | |||||||
| Unrealized (loss), net of tax effect | — | — | — | — | |||
| Net Income | — | — | — | — | |||
| Balances, October 31,<br> 2024 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed financial statements
| 7 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED OCTOBER 31, 2024 AND 2023
(Unaudited)
| Treasury Stock<br> <br>(Common Class A) | Accumulated<br> <br>Other<br> <br>Comprehensive | Retained | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Income | Earnings | Total | |||||||||||
| Balances, July 31, 2023 | 1,934,000 | 3,574,373 | $ | (4,576,000 | ) | $ | (184,000 | ) | $ | 54,855,000 | $ | 52,978,000 | |||
| Purchases of common stock | — | 1,715 | (19,000 | ) | — | — | (19,000 | ) | |||||||
| Dividend declared at 0.65 per common share<br> outstanding | — | — | — | — | (3,203,000 | ) | (3,203,000 | ) | |||||||
| Unrealized (loss), net of tax effect | — | — | — | (207,000 | ) | — | (207,000 | ) | |||||||
| Net (Loss) | — | — | — | — | (55,000 | ) | (55,000 | ) | |||||||
| Balances, October 31,<br> 2023 | 1,934,000 | 3,576,088 | $ | (4,595,000 | ) | $ | (391,000 | ) | $ | 51,597,000 | $ | 49,494,000 |
All values are in US Dollars.
| Treasury Stock<br> <br>(Common Class A) | Accumulated<br> <br>Other<br> <br>Comprehensive | Retained | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares | Amount | Income | Earnings | Total | |||||||||||
| Balances, July 31, 2024 | 1,934,000 | 3,606,151 | $ | (4,945,000 | ) | $ | 40,000 | $ | 59,541,000 | $ | 57,519,000 | ||||
| Purchases of common stock | — | — | — | — | — | — | |||||||||
| Dividend declared at 0.65 per common share outstanding | — | — | — | — | (4,896,000 | ) | (4,896,000 | ) | |||||||
| Unrealized (loss), net of tax effect | — | — | — | (24,000 | ) | — | (24,000 | ) | |||||||
| Net Income | — | — | — | — | 2,215,000 | 2,215,000 | |||||||||
| Balances, October 31,<br> 2024 | 1,934,000 | 3,606,151 | $ | (4,945,000 | ) | $ | 16,000 | $ | 56,860,000 | $ | 54,814,000 |
All values are in US Dollars.
See accompanying notes to the unaudited condensed financial statements
| 8 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE SIX MONTHS ENDED OCTOBER 31, 2024 AND 2023
(Unaudited)
| 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 (loss), net of tax effect | — | — | — | — | |||
| Net Income | — | — | — | — | |||
| Balances, October 31,<br> 2023 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 |
All values are in US Dollars.
| Common Stock<br> <br>Class A | |||||||
|---|---|---|---|---|---|---|---|
| Amount | Shares | Amount | |||||
| Balances, April 30, 2024 | 4,100 | $ | 99,000 | 8,502,881 | $ | 850,000 | |
| Purchases of common stock | — | — | — | — | |||
| Dividend declared at 1.00 per common share<br> outstanding | — | — | — | — | |||
| Unrealized gain, net of tax effect | — | — | — | — | |||
| Net Income | — | — | — | — | |||
| Balances, October 31,<br> 2024 | 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 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR
THE SIX MONTHS ENDED OCTOBER 31, 2024 AND 2023
(Unaudited)
| Treasury Stock<br> <br>(Common Class A) | Accumulated<br> <br>Other<br> <br>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 | — | 3,750 | (41,000 | ) | — | — | (41,000 | ) | |||||||
| Dividend declared at 0.65 per common share outstanding | — | — | — | — | (3,203,000 | ) | (3,203,000 | ) | |||||||
| Unrealized (loss), net of tax effect | — | — | — | (230,000 | ) | — | (230,000 | ) | |||||||
| Net Income | — | — | — | — | 2,319,000 | 2,319,000 | |||||||||
| Balances, October 31,<br> 2023 | 1,934,000 | 3,576,088 | $ | (4,595,000 | ) | $ | (391,000 | ) | $ | 51,597,000 | $ | 49,494,000 |
All values are in US Dollars.
| Paid-In | Treasury Stock<br> <br>(Common Class A) | Accumulated<br> <br>Other<br> <br>Comprehensive | Retained | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capital | Shares | Amount | Income | Earnings | Total | |||||||||||
| Balances, April 30, 2024 | $ | 1,934,000 | 3,606,151 | $ | (4,945,000 | ) | $ | (137,000 | ) | $ | 56,836,000 | $ | 54,637,000 | |||
| Balance | $ | 1,934,000 | 3,606,151 | $ | (4,945,000 | ) | $ | (137,000 | ) | $ | 56,836,000 | $ | 54,637,000 | |||
| Purchases of common stock | — | — | — | — | — | — | ||||||||||
| Dividend declared at common share outstanding | — | — | — | — | (4,896,000 | ) | (4,896,000 | ) | ||||||||
| Unrealized gain, net of tax effect | — | — | — | 153,000 | — | 153,000 | ||||||||||
| Unrealized gain (loss), net of tax<br> effect | — | — | — | 153,000 | — | 153,000 | ||||||||||
| Net Income | — | — | — | — | 4,920,000 | 4,920,000 | ||||||||||
| Net Income (Loss) | — | — | — | — | 4,920,000 | 4,920,000 | ||||||||||
| Balances, October 31,<br> 2024 | $ | 1,934,000 | 3,606,151 | $ | (4,945,000 | ) | $ | 16,000 | $ | 56,860,000 | $ | 54,814,000 | ||||
| Balance | $ | 1,934,000 | 3,606,151 | $ | (4,945,000 | ) | $ | 16,000 | $ | 56,860,000 | $ | 54,814,000 |
See accompanying notes to the unaudited condensed financial statements
| 10 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
CONDENSED
STATEMENTS OF CASH FLOWS
FOR
THE SIX MONTHS ENDED OCTOBER 31, 2024 AND 2023
(Unaudited)
| Oct<br> 31, 2024 | Oct<br> 31, 2023 | |||||
|---|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net Income | $ | 4,920,000 | $ | 2,319,000 | ||
| Adjustments to reconcile<br>net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 243,000 | 241,000 | ||||
| (Gain) loss on sale of<br> investments | (549,000 | ) | 49,000 | |||
| Impairments of investments | — | 22,000 | ||||
| Unrealized (gain) loss<br> on equity securities | (1,413,000 | ) | 734,000 | |||
| Provision for credit losses<br> on accounts receivable | 7,000 | (8,000 | ) | |||
| Reserve for obsolete inventory | 41,000 | (61,000 | ) | |||
| Deferred income taxes | 212,000 | (347,000 | ) | |||
| (Gain) loss on sale of<br> assets | 2,000 | (8,000 | ) | |||
| Changes in assets and liabilities: | ||||||
| (Increase) decrease in: | ||||||
| Accounts receivable | (19,000 | ) | (553,000 | ) | ||
| Inventories | 435,000 | (1,103,000 | ) | |||
| Prepaid expenses and projects<br> in process | (21,000 | ) | 608,000 | |||
| Other receivables | 35,000 | 35,000 | ||||
| Federal solar tax credit<br> receivable | (2,485,000 | ) | — | |||
| Income tax overpayment | — | 25,000 | ||||
| Increase (decrease) in: | ||||||
| Accounts payable | (33,000 | ) | (323,000 | ) | ||
| Federal solar tax credit<br> pmt payable | 972,000 | — | ||||
| Deferred gain on solar<br> tax credit | 142,000 | |||||
| Accrued expenses | (29,000 | ) | (72,000 | ) | ||
| Income<br> tax payable | 65,000 | — | ||||
| Net cash from operating<br> activities | 2,525,000 | 1,558,000 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Proceeds from sale of assets | — | 8,000 | ||||
| (Purchase) of property<br> and equipment | (308,000 | ) | (243,000 | ) | ||
| Proceeds from sale of marketable<br> securities | 665,000 | 524,000 | ||||
| (Purchase) of marketable<br> securities | (361,000 | ) | (273,000 | ) | ||
| Distribution from investment in limited land partnership | 269,000 | — | ||||
| Net cash from investing<br> activities | 265,000 | 16,000 | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| (Purchase) of treasury<br> stock | — | (41,000 | ) | |||
| Dividends<br> paid | (4,448,000 | ) | (2,914,000 | ) | ||
| Net cash from financing<br> activities | (4,448,000 | ) | (2,955,000 | ) | ||
| NET CHANGE IN CASH AND<br> CASH EQUIVALENTS | (1,658,000 | ) | (1,381,000 | ) | ||
| Cash and Cash Equivalents,<br> beginning of period | 7,112,000 | 4,943,000 | ||||
| Cash and Cash Equivalents,<br> end of period | $ | 5,454,000 | $ | 3,562,000 | ||
| Supplemental Disclosure for Cash Flow Information: | ||||||
| Cash payments for: | ||||||
| Income taxes | $ | 225,000 | $ | 820,000 | ||
| Interest paid | $ | 1,000 | $ | — | ||
| Cash receipts for: | ||||||
| Income taxes | $ | 19,000 | $ | — |
See accompanying notes to the unaudited condensed financial statements
| 11 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
OCTOBER
31, 2024
| Note<br>1 | Unaudited Interim<br>Financial Statements |
|---|
The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2024 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 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 consolidated financial statements are disclosed in our Annual Report, and there have been no changes to the Company’s significant accounting policies during the six months ended October 31, 2024.
Purchaseof Transferrable Tax Credits – In September 2024, pursuant to transferability provisions of the Inflation Reduction Act of 2022, the Company executed an agreement to purchase a tax credit of $3,431,000 created by solar energy projects qualifying under Internal Revenue Code Section 48 (the “Solar Tax Credit”) in exchange for consideration of $2,917,000, resulting in a total gain on federal Solar Tax Credit of $373,000. This tax credit is available to offset income tax expense for the Company’s 2025 fiscal year.
During
the three months ended October 31, 2024, the Company paid cash of $1,945,000 for this purchase and applied $947,000 of the tax credit towards income tax expense for the first six months of fiscal year 2025. As of October 31, 2024, the remaining Solar Tax Credit of $2,485,000 is shown as a receivable, and the remaining consideration of $972,000 is shown as a current liability, on our condensed balance sheet. This liability was paid in November 2024.
For
the three and six months ended October 31, 2024, a gain on Solar Tax Credit of $373,000 has been recognized in our condensed statements of operations, and a deferred gain on solar tax credit remains as a current liability on our condensed balance sheet as of October 31, 2024.
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 has evaluated the impact that the adoption of this ASU will have to the financial statements and related disclosures and expects to have significant changes to the disclosures regarding segments. The Company plans to adopt this ASU beginning with its fiscal year beginning May 1, 2025.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures(Subtopic 220-40) Disaggregation of Income Statement Expenses, which requires public business entities to disclose additional information about certain expenses in the notes to the financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.
| 12 |
| --- | | Note<br>2 | Investments | | --- | --- |
The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets. The investments in debt securities, which include municipal bonds and bond funds, mature between August 2025 and December 2050. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.
As of October 31, 2024 and April 30, 2024, investments consisted of the following:
Schedule of Investments
| Gross | Gross | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Investments at | Cost | Unrealized | Unrealized | Fair | |||||
| October 31,<br> 2024 | Basis | Gains | Losses | Value | |||||
| Municipal bonds | $ | 7,325,000 | $ | 170,000 | $ | (78,000 | ) | $ | 7,417,000 |
| REITs | 74,000 | — | (6,000 | ) | 68,000 | ||||
| Equity securities | 17,428,000 | 10,703,000 | (149,000 | ) | 27,982,000 | ||||
| Money markets and CDs | 892,000 | — | — | 892,000 | |||||
| Total | $ | 25,719,000 | $ | 10,873,000 | $ | (233,000 | ) | $ | 36,359,000 |
| Gross | Gross | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Investments at | Cost | Unrealized | Unrealized | Fair | |||||
| April 30,<br> 2024 | Basis | Gains | Losses | Value | |||||
| Municipal bonds | $ | 7,057,000 | $ | 28,000 | $ | (100,000 | ) | $ | 6,985,000 |
| REITs | 74,000 | — | (8,000 | ) | 66,000 | ||||
| Equity securities | 17,408,000 | 9,303,000 | (209,000 | ) | 26,502,000 | ||||
| Money markets and CDs | 935,000 | 1,000 | — | 935,000 | |||||
| Total | $ | 25,474,000 | $ | 9,331,000 | $ | (317,000 | ) | $ | 34,488,000 |
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 either of the quarter or the six months ended October 31, 2024, while management recorded an impairment loss of $22,000 for the quarter and six-month period ended October 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 happens. For the quarter ended October 31, 2024 the Company had sales of equity securities which yielded gross realized gains of $378,000 and gross realized losses of $35,000. For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $7,000 were recorded. As for the six-months ended October 31, 2024 the Company had sales of equity securities which yielded gross realized gains of $646,000 and gross realized losses of $83,000. For the same six-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $14,000 were recorded. During the quarter ending October 31, 2023, the Company recorded gross realized gains and losses on equity securities of $108,000 and $60,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $2,000 were recorded. During the six-months ending October 31, 2023, the Company recorded gross realized gains and losses on equity securities of $214,000 and $278,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $7,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph.
The following table shows the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at October 31, 2024 and April 30, 2024, respectively.
Unrealized
Loss Breakdown by Investment Type at October 31, 2024
Schedule of Unrealized Loss Breakdown by Investment Type
| Debt securities, unrealized loss, less than 12 months | Debt securities, unrealized loss, less than 12 months, accumulated loss | Debt securities, unrealized loss, 12 months or greater | Debt securities, unrealized loss, 12 months or greater, accumulated loss | Debt securities, unrealized loss fair value | Debt securities, unrealized loss fair value, accumulated loss | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | $ | 273,000 | $ | (5,000 | ) | $ | 993,000 | $ | (73,000 | ) | $ | 1,266,000 | $ | (78,000 | ) |
| REITs | — | — | 40,000 | (6,000 | ) | 40,000 | (6,000 | ) | |||||||
| Equity securities | 670,000 | (57,000 | ) | 488,000 | (92,000 | ) | 1,158,000 | (149,000 | ) | ||||||
| Total | $ | 943,000 | $ | (62,000 | ) | $ | 1,521,000 | $ | (171,000 | ) | $ | 2,464,000 | $ | (233,000 | ) |
Unrealized
Loss Breakdown by Investment Type at April 30, 2024
| Debt securities, unrealized loss, less than 12 months | Debt securities, unrealized loss, less than 12 months, accumulated loss | Debt securities, unrealized loss, 12 months or greater | Debt securities, unrealized loss, 12 months or greater, accumulated loss | Debt securities, unrealized loss fair value | Debt securities, unrealized loss fair value, accumulated loss | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | $ | 5,897,000 | $ | (20,000 | ) | $ | 773,000 | $ | (80,000 | ) | $ | 6,670,000 | $ | (100,000 | ) |
| REITs | — | — | 66,000 | (8,000 | ) | 66,000 | (8,000 | ) | |||||||
| Equity securities | 2,255,000 | (72,000 | ) | 766,000 | (137,000 | ) | 3,021,000 | (209,000 | ) | ||||||
| Total | $ | 8,152,000 | $ | (92,000 | ) | $ | 1,605,000 | $ | (225,000 | ) | $ | 9,757,000 | $ | (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 October 31, 2024 and April 30, 2024.
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 October 31, 2024 and April 30, 2024.
| 14 |
| --- |
| Note<br>3 | Inventories |
|---|
Inventories at October 31, 2024 and April 30, 2024 consisted of the following:
Schedule of Inventories
| October 31, | April 30, | |||||
|---|---|---|---|---|---|---|
| 2024 | 2024 | |||||
| Raw materials | $ | 9,507,000 | $ | 10,130,000 | ||
| Work in process | 782,000 | 753,000 | ||||
| Finished Goods | 1,201,000 | 1,042,000 | ||||
| Inventory, gross | 11,490,000 | 11,925,000 | ||||
| Less: allowance for obsolete<br> inventory | (408,000 | ) | (367,000 | ) | ||
| Inventories, net | $ | 11,082,000 | $ | 11,558,000 | ||
| Note<br>4 | Business Segments | |||||
| --- | --- |
The following is financial information relating to industry segments:
Schedule of Financial Information Relating to Industry Segments
| Three months | Three months | Six months | Six months | |||||
|---|---|---|---|---|---|---|---|---|
| ended | ended | ended | ended | |||||
| Oct<br> 31, 2024 | Oct<br> 31, 2023 | Oct<br> 31, 2024 | Oct<br> 31, 2023 | |||||
| Net revenue: | ||||||||
| Security alarm<br> products | $ | 5,051,000 | $ | 5,445,000 | $ | 10,236,000 | $ | 9,687,000 |
| Cable & wiring tools | 385,000 | 457,000 | 757,000 | 785,000 | ||||
| Other<br> products | 177,000 | 151,000 | 401,000 | 309,000 | ||||
| Total net revenue | $ | 5,613,000 | $ | 6,053,000 | $ | 11,394,000 | $ | 10,781,000 |
| Income from operations: | ||||||||
| Security alarm products | $ | 1,334,000 | $ | 1,769,000 | $ | 2,930,000 | $ | 2,835,000 |
| Cable & wiring tools | 102,000 | 143,000 | 223,000 | 230,000 | ||||
| Other<br> products | 47,000 | 56,000 | 103,000 | 90,000 | ||||
| Total income from operations | $ | 1,483,000 | $ | 1,968,000 | $ | 3,256,000 | $ | 3,155,000 |
| Depreciation and amortization: | ||||||||
| Security alarm products | $ | 50,000 | $ | 42,000 | $ | 108,000 | $ | 91,000 |
| Cable & wiring tools | 30,000 | 30,000 | 60,000 | 60,000 | ||||
| Other products | 25,000 | 13,000 | 49,000 | 37,000 | ||||
| Corporate<br> general | 13,000 | 39,000 | 26,000 | 53,000 | ||||
| Total depreciation and<br> amortization | $ | 118,000 | $ | 124,000 | $ | 243,000 | $ | 241,000 |
| Capital expenditures: | ||||||||
| Security alarm products | $ | 45,000 | $ | 23,000 | $ | 145,000 | $ | 224,000 |
| Cable & wiring tools | — | — | — | — | ||||
| Other products | 16,000 | — | 21,000 | — | ||||
| Corporate<br> general | 142,000 | 19,000 | 142,000 | 19,000 | ||||
| Total capital expenditures | $ | 203,000 | $ | 42,000 | $ | 308,000 | $ | 243,000 |
| October<br> 31, 2024 | April<br> 30, 2024 | |||||||
| --- | --- | --- | --- | --- | ||||
| Identifiable assets: | ||||||||
| Security alarm<br> products | $ | 14,804,000 | $ | 15,263,000 | ||||
| Cable & wiring tools | 1,996,000 | 2,082,000 | ||||||
| Other products | 878,000 | 859,000 | ||||||
| Corporate<br> general | 45,116,000 | 42,576,000 | ||||||
| Total assets | $ | 62,794,000 | $ | 60,780,000 |
| 15 |
| --- | | Note 5 | Earnings per Share | | --- | --- |
NetIncome (Loss) Per Share
Basic
income (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive. The dilutive common shares for the three months ended October 31, 2023 are not included in the computation of diluted earnings per share because to do so would be anti-dilutive. As of October 31, 2024 there were 20,500 potentially dilutive shares.
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 October 31, 2024 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Income | Shares | Per-Share | ||||||
| (Numerator) | (Denominator) | Amount | ||||||
| Net income | $ | 2,215,000 | ||||||
| Basic EPS | $ | 2,215,000 | 4,896,730 | $ | .45 | |||
| Effect of dilutive Convertible<br> Preferred Stock | — | 20,500 | — | |||||
| Diluted<br> EPS | $ | 2,215,000 | 4,917,230 | $ | .45 | |||
| For<br> the three months ended October 31, 2023 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Income | Shares | Per-Share | ||||||
| (Numerator) | (Denominator) | Amount | ||||||
| Net income | $ | (55,000 | ) | |||||
| Basic EPS | $ | (55,000 | ) | 4,927,571 | $ | (.01 | ) | |
| Diluted<br> EPS | $ | (55,000 | ) | 4,927,571 | $ | (.01 | ) | |
| For<br> the six months ended October 31, 2024 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| Income | Shares | Per-Share | ||||||
| (Numerator) | (Denominator) | Amount | ||||||
| Net income | $ | 4,920,000 | ||||||
| Basic EPS | $ | 4,920,000 | 4,896,730 | $ | 1.00 | |||
| Effect of dilutive Convertible<br> Preferred Stock | — | 20,500 | — | |||||
| Diluted<br> EPS | $ | 4,920,000 | 4,917,230 | $ | 1.00 | |||
| For<br> the six months ended October 31, 2023 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | ||
| Income | Shares | Per-Share | ||||||
| (Numerator) | (Denominator) | Amount | ||||||
| Net income | $ | 2,319,000 | ||||||
| Basic EPS | $ | 2,319,000 | 4,928,273 | $ | .47 | |||
| Effect of dilutive Convertible<br> Preferred Stock | — | 20,500 | — | |||||
| Diluted<br> EPS | $ | 2,319,000 | 4,948,773 | $ | .47 |
| 16 |
| --- | | Note<br>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 $13,000 and $14,000 were paid during each quarter ending October 31, 2024 and 2023, respectively. Likewise, the Company paid matching contributions of approximately $
29,000
during each of six-month periods ending October 31, 2024 and 2023.
| Note<br>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. |
| 17 |
| --- |
Investmentsand Marketable Securities
As of October 31, 2024 and April 30, 2024, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities. The marketable securities are valued using third-party broker statements. The value of the majority of securities is derived from quoted market information. The inputs to the valuation are generally classified as Level 1 given the active market for these securities, however, if an active market does not exist, which is the case for municipal bonds and REITs, the inputs are recorded as Level 2.
FairValue Hierarchy
The following table sets forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy. As required by US GAAP, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Schedule of Assets Measured at Fair Value on Recurring Basis
| Assets<br> Measured at Fair Value on a Recurring Basis as of <br>October 31, 2024 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Level<br> 1 | Level<br> 2 | Level<br> 3 | Total | |||||
| Assets: | ||||||||
| Municipal Bonds | $ | — | $ | 7,417,000 | $ | — | $ | 7,417,000 |
| REITs | — | 68,000 | — | 68,000 | ||||
| Equity Securities | 27,982,000 | — | — | 27,982,000 | ||||
| Money<br> Markets and CDs | 892,000 | — | — | 892,000 | ||||
| Total fair value of<br> assets measured on a recurring basis | $ | 28,874,000 | $ | 7,485,000 | $ | — | $ | 36,359,000 |
| Assets<br> Measured at Fair Value on a Recurring Basis as of <br>April 30, 2024 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Level<br> 1 | Level<br> 2 | Level<br> 3 | Total | |||||
| Assets: | ||||||||
| Municipal Bonds | $ | — | $ | 6,985,000 | $ | — | $ | 6,985,000 |
| REITs | — | 66,000 | — | 66,000 | ||||
| Equity Securities | 26,502,000 | — | — | 26,502,000 | ||||
| Money<br> Markets and CDs | 935,000 | — | — | 935,000 | ||||
| Total fair value of<br> assets measured on a recurring basis | $ | 27,437,000 | $ | 7,051,000 | $ | — | $ | 34,488,000 |
| Note<br>8 | Subsequent Events | |||||||
| --- | --- |
None
| 18 |
| --- |
GEORGE
RISK INDUSTRIES, INC.
PART
I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations
| 19 |
| --- |
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 condensed financial statements, and with the Company’s auditedfinancial statements and discussion for the fiscal year ended April 30, 2024.
ExecutiveSummary
The Company’s performance remained steady through the first half of the current fiscal year with the second quarter showing a decrease in sales over the first quarter of the current fiscal year. This is mainly due to not having a few vital raw materials that are needed to complete the manufacture of our products. Also, management is not seeing as many high dollar orders as there were in the first quarter This is because production has caught up on back orders and, since we are tied to the housing market, there almost always is a decline from the first to second quarter and inflation is still very high. As far as overall company performance, the net income is up when comparing the current six-month period to the prior six-month period. Management continues to keep manufacturing and operating expenses in check and the current year realized and unrealized gains on investments have increased over the same periods last year. Opportunities include keeping up with the business growth, finding ways to get our products out to our customers in a timelier manner, which includes looking into more automation, and to continue looking at businesses that might be a good fit to purchase. We also continue to work on new products that will be fit for our industry and business. Challenges in the coming months include continuing to get product out to customers in a timely manner and dealing with ongoing effects of inflation. Management continues to work at keeping operations flowing as efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever before.
Results of Operations
| ● | Net<br> sales were $5,613,000 for the quarter ended October 31, 2024, which is a 7.27% decrease from the corresponding quarter last year.<br> Year-to-date net sales were $11,394,000 at October 31, 2024, which is a 5.69% increase from the same period last year. The decrease<br> in sales in the current quarter is a result of the business getting caught up on back orders and seeing the lingering results of<br> inflation having smaller orders coming in. But management believes the ongoing commitment towards outstanding customer service and<br> customization of products are just a few of the many reasons sales continue to grow. |
|---|
| 20 |
| --- | | ● | Cost<br> of goods sold was 51.65% of net sales for the quarter ended October 31, 2024 and was 48.72% for the same quarter last year. Year-to-date<br> cost of goods sold percentages were 50.33% for the current six months and 50.19% for the corresponding six months last year. The<br> current cost of goods sold percentage goals of keeping labor and other manufacturing expenses at less than 50% are just slightly<br> over for the quarter and year-to-date results. The increased cost of goods sold percentages are a result of increased wages and some<br> increased material costs as management continues to work on finding ways to be more efficient. | | --- | --- | | ● | Operating<br> expenses were up $95,000 for the quarter and were up $188,000 for the six-months ended October 31, 2024 as compared to the corresponding<br> periods last year. When comparing percentages in relation to net sales, the operating expenses for the quarter ended October 31,<br> 2024 was 21.93% of net sales while it was 18.77% of net sales for the same quarter the prior year. For year-to-date numbers, operating<br> expense were 21.09% and 20.55% of net sales for the six months ended October 31, 2024 and 2023, respectively. The Company has been<br> able to keep the operating expenses at less than 25% of net sales for many years now; however, the actual dollar amount increase<br> is because of increased commission amounts (since sales have increased) and additional labor costs for wage increases. | | ● | Income<br> from operations for the quarter ended October 31, 2024 was at $1,483,000, which is a 24.64% decrease from the corresponding quarter<br> last year, which had income from operations of $1,968,000. Income from operations for the six months ended October 31, 2024 was at<br> $3,256,000, which is a 3.20% increase from the corresponding six months last year, which had income from operations of $3,155,000. | | ● | Other<br> income and expenses are up when comparing the current quarter to the same quarter of the prior year, with an increase of $3,273,000<br> in the current quarter. Comparably, other income and expenses are up by $3,375,000 when comparing the current six-month period to<br> the prior six-month period. 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 gains in the current quarter<br> and year-to-date numbers are the unrealized gain and loss on equity securities numbers. The stock market influences these figures,<br> and the current state of the economy has been performing well. | | ● | Overall,<br> net income for the quarter ended October 31, 2024 was up $2,270,000, or 4,127.27%, over the same quarter last year. Conversely, net<br> income for the six-month period ended October 31, 2024 was up $2,601,000, or 112.16%, over the same period in the prior year. | | ● | Earnings<br> per common share for the quarter ended October 31, 2024 were $0.45 per share and $1.00 per share for the year-to-date numbers. EPS<br> for the quarter and six months ended October 31, 2023 were ($0.01) per share and $0.47 per share, respectively. |
| 21 |
| --- |
Liquidity and capital resources
Operating
| ● | Net<br> cash decreased $1,658,000 during the six months ended October 31, 2024 compared to a decrease of $1,381,000 during the corresponding<br> period last year. |
|---|---|
| ● | Accounts<br> receivable increased $19,000 for the six months ended October 31, 2024 compared with a $553,000 increase for the same period last<br> year. The smaller current year increase is a result of improved collection on accounts receivable. An analysis of accounts receivable<br> shows that 6.69% of the receivables were over 90 days at October 31, 2024, while 6.71% were over 90 days for the same period last<br> year. |
| ● | Inventories<br> decreased $435,000 during the current six-month period compared to a $1,103,000 increase last year. The decrease in the current year<br> is primarily due to fewer purchases of raw materials compared to the prior six-month period. |
| ● | Prepaid<br> expenses and other current assets increased $21,000 for the current six months, primarily due to increased prepayments on inventory<br> during the current six-month period. The prior year six months showed a $608,000 decrease in prepaid expenses. |
| ● | The<br> federal solar tax credit receivable represents the remaining federal solar tax credits we will receive from our purchase of transferrable<br> tax credits, pursuant to transferability provisions of the Inflation Reduction Act of 2022. |
| ● | Accounts<br> payable decreased $33,000 for the current six-month period compared to a decrease of $323,000 for the prior six-month period. The<br> company strives to pay all invoices within terms, and the variance is primarily due to the timing of receipt of products and payment<br> of invoices. |
| ● | The<br> federal solar tax credit payment payable represents the remaining liability for the purchase of transferrable tax credits. This amount<br> was paid in November 2024. |
| ● | The<br> deferred gain on solar tax credit represents the portion of the gain on the purchase of federal solar tax credits that has not yet<br> been recognized. This will be recognized as more of the federal solar tax credits are applied to income tax payable. |
| ● | Accrued<br> expenses decreased $29,000 for the current six-month period compared to a $72,000 decrease for the six-month period ended October<br> 31, 2023. The difference in the amounts is primarily due to timing issues. |
| ● | Income<br> tax payable increased $65,000 for the current six-month period, compared to having a decrease of $25,000 in income tax receivable<br> for the six-months ended October 31, 2023. The current year income tax payable increase is a result of increased income. |
Investing
| ● | As<br> for our investment activities, the Company purchased $308,000 of property and equipment during the current six-month period. In comparison,<br> $243,000 was spent on purchases of property and equipment during the corresponding six months last year. |
|---|---|
| ● | The<br> Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the six-month period<br> ended October 31, 2024 there was quite a bit of buy/sell activity in the investment accounts. Net cash used to purchase marketable<br> securities for the six-month period ended October 31, 2024 was $361,000 compared to $273,000 cash used in the prior six-month period.<br> We continue to use “money manager” accounts for most stock transactions. By doing this, the Company gives an independent<br> third-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays a quarterly service<br> fee based on the value of the investments. |
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| --- | | ● | The<br> Company received a cash distribution of $269,000 from the investment in the limited land partnership during the six-month period<br> ending October 31, 2024. This was the second distribution received from the sale of the limited land partnership and the rest of<br> the proceeds are contingent on finishing wetland restoration of the land. | | --- | --- |
Financing
| ● | The<br> Company continues to purchase back its common stock when the opportunity arises. For the six-month period ended October 31, 2024,<br> the Company did not purchase any treasury stock, compared to $41,000 repurchased in the corresponding six-month period last year. |
|---|---|
| ● | The<br> company declared a dividend of $1.00 per share of common stock on September 30, 2024, which was paid out during the second quarter.<br> This is an increase to the dividend of $0.65, which 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 that complement existing products, and look for products that are well suited to our distribution network and manufacturing capabilities. Items currently in various stages of the development process include:
| ● | Explosion<br> proof contacts that will be UL listed for hazardous locations are in development. There has been demand from our customers for this<br> type of high security 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. An expansion of the GR3045 panic switch is in the works to include single pull, double<br> throw (SPDT) versions, latching, and non-latching with LED indicator lights. A miniature profile overhead door contact based on the<br> popular 4532 is also in development. |
| ● | 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.
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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 October 31, 2023. 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, 2024, 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. We have hired a Controller, and a secondary review of annual and quarterly filings does<br> occur with an outside CPA. However, the current CEO and CFO roles are being fulfilled by the same individual and we do not have an<br> audit committee. We do not believe we have met the full requirement for separation of duties for financial reporting purposes. |
|---|
Despite the material weaknesses in financial reporting noted above, we believe that our financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.
We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation, and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.
We will continue to follow the standards for the Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:
| ● | Pertain<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 October 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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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 and issuance of common stock for the second quarter of fiscal year 2025.
| Period | Number<br> of shares repurchased/(issued) |
|---|---|
| August 1, 2024 – August 31, 2024 | -0- |
| September 1, 2024 – September 30, 2024 | -0- |
| October 1, 2024 – October 31, 2024 | -0- |
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Not applicable
| 25 |
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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 | Inline<br> XBRL Instance Document |
| 101.SCH | Inline<br> XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline<br> XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline<br> XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline<br> XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline<br> XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover<br> Page Interactive Data File (embedded within the Inline XBRL document) |
| 26 |
| --- |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| George Risk Industries, Inc.<br><br> <br>(Registrant) | ||
|---|---|---|
| Date<br> December 16, 2024 | By: | /s/<br> Stephanie M. Risk-McElroy |
| --- | --- | --- |
| Stephanie<br> M. Risk-McElroy | ||
| President,<br> Chief Executive Officer, Chief Financial Officer | ||
| and<br> Chairman of the Board |
| 27 |
| --- |
Exhibit31.1
CERTIFICATIONOF STEPHANIE M. RISK-MCELROY, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER, PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGEACT OF 1934SECTION 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 small business issuer as of, and for, the periods presented in this report;
(4) The small business issuer’s other certifying officer and I are 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 small business issuer 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 small business issuer 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 small business issuer’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 small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s first fiscal quarter in the case of this quarterly report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
(5) The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’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 small business issuer’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 small business issuer’s internal control over financial reporting.
Date: December 16, 2024
| By: | /s/<br> Stephanie M. Risk-McElroy |
|---|---|
| Stephanie<br> M. Risk-McElroy | |
| Chief<br> Executive Officer and Chief Financial Officer |
Exhibit32.1
CERTIFICATIONOF CHIEF EXECUTIVE AND FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT 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 October 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:<br> December 16, 2024 | By: | /s/<br> Stephanie M. Risk-McElroy |
|---|---|---|
| Stephanie<br> M. Risk-McElroy | ||
| President<br>and Chief Executive and Financial Officer |