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George Risk Industries, Inc. – ‘10-Q’ for 1/31/23

On:  Friday, 3/17/23, at 3:01pm ET   ·   For:  1/31/23   ·   Accession #:  1493152-23-8067   ·   File #:  0-05378

Previous ‘10-Q’:  ‘10-Q’ on 12/15/22 for 10/31/22   ·   Next:  ‘10-Q’ on 9/14/23 for 7/31/23   ·   Latest:  ‘10-Q’ on 3/15/24 for 1/31/24

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/17/23  George Risk Industries, Inc.      10-Q        1/31/23   42:3.8M                                   M2 Compliance LLC/FA

Quarterly Report   —   Form 10-Q

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML    828K 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     17K 
 3: EX-32.1     Certification -- §906 - SOA'02                      HTML     14K 
 9: R1          Cover                                               HTML     66K 
10: R2          Condensed Balance Sheets                            HTML    137K 
11: R3          Condensed Balance Sheets (Parenthetical)            HTML     36K 
12: R4          Condensed Income Statements (Unaudited)             HTML    105K 
13: R5          Condensed Statement of Comprehensive Income         HTML     40K 
                (Unaudited)                                                      
14: R6          Condensed Statements of Stockholders' Equity        HTML     59K 
                (Unaudited)                                                      
15: R7          Condensed Statements of Stockholders' Equity        HTML     15K 
                (Unaudited) (Parenthetical)                                      
16: R8          Condensed Statement of Cash Flows (Unaudited)       HTML    101K 
17: R9          Unaudited Interim Financial Statements              HTML     19K 
18: R10         Investments                                         HTML     87K 
19: R11         Inventories                                         HTML     23K 
20: R12         Business Segments                                   HTML     84K 
21: R13         Earnings per Share                                  HTML     66K 
22: R14         Retirement Benefit Plan                             HTML     23K 
23: R15         Fair Value Measurements                             HTML     62K 
24: R16         Subsequent Events                                   HTML     16K 
25: R17         Investments (Tables)                                HTML     73K 
26: R18         Inventories (Tables)                                HTML     23K 
27: R19         Business Segments (Tables)                          HTML     80K 
28: R20         Earnings per Share (Tables)                         HTML     64K 
29: R21         Fair Value Measurements (Tables)                    HTML     55K 
30: R22         Schedule of Investments (Details)                   HTML     35K 
31: R23         Schedule of Unrealized Loss Breakdown by            HTML     42K 
                Investment (Details)                                             
32: R24         Investments (Details Narrative)                     HTML     26K 
33: R25         Schedule of Inventories (Details)                   HTML     26K 
34: R26         Schedule of Financial Information Relating to       HTML     53K 
                Industry Segments (Details)                                      
35: R27         Schedule of Basic and Diluted Earnings Per Share    HTML     59K 
                (Details)                                                        
36: R28         Retirement Benefit Plan (Details Narrative)         HTML     21K 
37: R29         Schedule of Assets Measured at Fair Value on        HTML     47K 
                Recurring Basis (Details)                                        
40: XML         IDEA XML File -- Filing Summary                      XML     68K 
38: XML         XBRL Instance -- form10-q_htm                        XML   1.07M 
39: EXCEL       IDEA Workbook of Financial Reports                  XLSX     59K 
 5: EX-101.CAL  XBRL Calculations -- rskia-20230131_cal              XML    127K 
 6: EX-101.DEF  XBRL Definitions -- rskia-20230131_def               XML    202K 
 7: EX-101.LAB  XBRL Labels -- rskia-20230131_lab                    XML    542K 
 8: EX-101.PRE  XBRL Presentations -- rskia-20230131_pre             XML    379K 
 4: EX-101.SCH  XBRL Schema -- rskia-20230131                        XSD     62K 
41: JSON        XBRL Instance as JSON Data -- MetaLinks              246±   349K 
42: ZIP         XBRL Zipped Folder -- 0001493152-23-008067-xbrl      Zip    131K

‘10-Q’   —   Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM  i 10-Q

 

(Mark One)

 

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

 

For the quarter ended  i January 31, 2023

 

 i ☐ 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:  i 000-05378

 

 i GEORGE RISK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

 

 i Colorado    i 84-0524756

(State of

incorporation)

  

(IRS Employers

Identification No.)

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

 

 i (308)  i 235-4645

(Registrant’s telephone number, including area code)

 

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

 

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

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the 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.  i 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).  i 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 accelerated filer ☐   Accelerated filer ☐
 i Non-accelerated filer ☐   Smaller reporting company  i ☒
    Emerging growth company  i ☐

 

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 ☐  i No ☒

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

The number of shares of the Registrant’s Common Stock outstanding, as of March 17, 2023, was  i 4,930,543.

 

 

 

  

 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The unaudited financial statements for the three- and nine-month period ended January 31, 2023, are attached hereto.

 

 2 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

 

   January 31, 2023   April 30, 2022 
   (unaudited)     
ASSETS          
           
Current Assets:          
Cash and cash equivalents  $ i 5,265,000   $ i 6,078,000 
Investments and securities    i 31,470,000     i 30,979,000 
Accounts receivable:          
Trade, net of allowance for credit losses of $ i 26,991 and $ i 33,531, respectively    i 3,296,000     i 4,114,000 
Other    i 45,000     i 16,000 
Income tax overpayment    i 201,000    — 
Inventories, net    i 10,303,000     i 7,940,000 
Prepaid expenses    i 930,000     i 1,362,000 
Total Current Assets    i 51,510,000     i 50,489,000 
           
Property and Equipment, net, at cost    i 1,763,000     i 1,782,000 
           
Other Assets          
Investment in Limited Land Partnership, at cost    i 344,000     i 344,000 
Projects in process    i 91,000     i 83,000 
Other    i 29,000     i 62,000 
Total Other Assets    i 464,000     i 489,000 
           
Intangible Assets, net    i 1,179,000     i 1,271,000 
           
TOTAL ASSETS  $ i 54,916,000   $ i 54,031,000 

 

See accompanying notes to the unaudited condensed financial statements.

 

 3 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

(continued)

 

   January 31, 2023   April 30, 2022 
   (unaudited)     
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current Liabilities          
Accounts payable, trade  $ i 404,000   $ i 320,000 
Dividends payable    i 2,565,000     i 2,296,000 
Deferred income    i 17,000    — 
Accrued expenses    i 521,000     i 354,000 
Income tax payable   —     i 277,000 
Total Current Liabilities    i 3,507,000     i 3,247,000 
           
Long-Term Liabilities          
Deferred income taxes    i 1,826,000     i 1,742,000 
Total Long-Term Liabilities    i 1,826,000     i 1,742,000 
           
Total Liabilities    i 5,333,000     i 4,989,000 
           
Commitments and Contingencies   —    — 
           
Stockholders’ Equity          
Convertible preferred stock,  i  i 1,000,000 /  shares authorized, authorized, Series 1—noncumulative, $ i  i 20 /  stated value,  i  i 25,000 /  shares  i  i  i  i 4,100 /  /  /  issued and outstanding    i 99,000     i 99,000 
Common stock, Class A, $. i  i 10 /  par value,  i  i 10,000,000 /  shares authorized,  i  i  i  i 8,502,881 /  /  /  shares issued and outstanding    i 850,000     i 850,000 
Additional paid-in capital    i 1,934,000     i 1,934,000 
Accumulated other comprehensive income   ( i 139,000)   ( i 137,000)
Retained earnings    i 51,391,000     i 50,843,000 
Less: treasury stock,  i 3,572,138 and  i 3,571,693 shares, at cost   ( i 4,552,000)   ( i 4,547,000)
Total Stockholders’ Equity    i 49,583,000     i 49,042,000 
           
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY  $ i 54,916,000   $ i 54,031,000 

 

See accompanying notes to the unaudited condensed financial statements.

 

 4 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED INCOME STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2023 AND 2022

(Unaudited)

 

   Three months   Three months   Nine months   Nine months 
   ended   ended   ended   ended 
   Jan 31, 2023   Jan 31, 2022   Jan 31, 2023   Jan 31, 2022 
Net Sales  $ i 4,366,000   $ i 5,054,000   $ i 15,194,000   $ i 15,252,000 
Less: Cost of Goods Sold   ( i 2,444,000)   ( i 2,861,000)   ( i 8,076,000)   ( i 7,908,000)
Gross Profit    i 1,922,000     i 2,193,000     i 7,118,000     i 7,344,000 
                     
Operating Expenses                    
General and Administrative    i 340,000     i 371,000     i 1,028,000     i 1,070,000 
Sales    i 648,000     i 649,000     i 2,136,000     i 2,109,000 
Engineering    i 34,000     i 29,000     i 76,000     i 67,000 
Total Operating Expenses    i 1,022,000     i 1,049,000     i 3,240,000     i 3,246,000 
                     
Income From Operations    i 900,000     i 1,144,000     i 3,878,000     i 4,098,000 
                     
Other Income (Expense)                    
Other    i 1,000     i 1,000     i 6,000     i 15,000 
Dividend and Interest Income    i 506,000     i 552,000     i 871,000     i 876,000 
Unrealized Gain (Loss) on equity securities    i 1,224,000    ( i 1,729,000)    i 27,000    ( i 687,000)
Gain (Loss) on Sale of Investments    i 44,000     i 91,000    ( i 165,000)    i 391,000 
Total Other Income (Expense)    i 1,776,000    ( i 1,085,000)    i 739,000     i 595,000 
                     
Income Before Provisions for Income Taxes    i 2,675,000     i 59,000     i 4,617,000     i 4,693,000 
                     
Provisions for Income Taxes:                    
Current Expense    i 341,000     i 455,000     i 1,028,000     i 1,407,000 
Deferred Tax Expense (Benefit)    i 326,000    ( i 557,000)   ( i 78,000)   ( i 309,000)
Total Income Tax Expense (Benefit)    i 667,000    ( i 102,000)    i 950,000     i 1,098,000 
                     
Net Income  $ i 2,009,000   $ i 161,000   $ i 3,667,000   $ i 3,595,000 
                     
Income Per Share of Common Stock                    
Basic  $ i 0.41   $ i 0.03   $ i 0.74   $ i 0.73 
Diluted  $ i 0.41   $ i 0.03   $ i 0.74   $ i 0.72 
                     
Weighted Average Number of Common Shares Outstanding                    
Basic    i 4,930,800     i 4,943,985     i 4,930,929     i 4,945,192 
Diluted    i 4,951,300     i 4,964,485     i 4,951,429     i 4,965,692 

 

See accompanying notes to the unaudited condensed financial statements.

 

 5 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2023 AND 2022

(Unaudited)

 

   Three months   Three months   Nine months   Nine months 
   ended   ended   ended   ended 
   Jan 31, 2023   Jan 31, 2022   Jan 31, 2023   Jan 31, 2022 
Net Income  $ i 2,009,000   $ i 161,000   $ i 3,667,000   $ i 3,595,000 
                     
Other Comprehensive Income/(Loss), Net of Tax                    
Unrealized gain (loss) on debt securities:                    
Unrealized holding gains (losses) arising during period    i 173,000    ( i 94,000)   ( i 1,000)   ( i 144,000)
Income tax benefit (expense) related to other comprehensive income   ( i 49,000)    i 27,000    ( i 1,000)    i 41,000 
                     
Other Comprehensive Income (Loss)    i 124,000    ( i 67,000)   ( i 2,000)   ( i 103,000)
                     
Comprehensive Income  $ i 2,133,000   $ i 94,000   $ i 3,665,000   $ i 3,492,000 

 

See accompanying notes to the unaudited condensed financial statements.

 

 6 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2023 AND 2022

(Unaudited)

 

   Shares   Amount   Shares   Amount 
   Preferred Stock  

Common Stock Class A

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

 

   Preferred Stock   

Common Stock Class A

 
   Shares   Amount   Shares   Amount 
Balances, October 31, 2021    i 4,100   $ i 99,000     i 8,502,881   $ i 850,000 
                     
Purchases of common stock   —    —    —    — 
                     
Unrealized gain, net of tax effect   —    —    —    — 
                     
Net Income   —    —    —    — 
                     
Balances, January 31, 2022    i 4,100   $ i 99,000     i 8,502,881   $ i 850,000 

 

See accompanying notes to the unaudited condensed financial statements.

 

 7 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2023 AND 2022

(Unaudited)

 

  Paid-In Capital   Shares   Amount   Income   Earnings   Total 
     

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

  

Retained

     
  Paid-In Capital   Shares   Amount   Income   Earnings   Total 
Balances, October 31, 2022 $ i 1,934,000     i 3,571,963   $( i 4,550,000)  $( i 263,000)  $ i 49,382,000   $ i 47,452,000 
Purchases of Common Stock  —     i 175    ( i 2,000)   —    —    ( i 2,000)
                              
Unrealized gain, net of tax effect  —    —    —     i 124,000    —     i 124,000 
                              
Net Income  —    —    —    —     i 2,009,000     i 2,009,000 
                              
Balances, January 31, 2023 $ i 1,934,000     i 3,572,138   $( i 4,552,000)  $( i 139,000)  $ i 51,391,000   $ i 49,583,000 

 

     

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

   Retained     
  Paid-In Capital   Shares   Amount   Income   Earnings   Total 
Balances, October 31, 2021 $ i 1,934,000     i 3,558,425   $( i 4,362,000)  $ i 72,000   $ i 50,711,000   $ i 49,304,000 
Purchases of Common Stock  —     i 700    ( i 9,000)   —    —    ( i 9,000)
                              
Unrealized gain, net of tax effect  —    —    —    ( i 67,000)   —    ( i 67,000)
                              
Net Income  —    —    —    —     i 161,000     i 161,000 
                              
Balances, January 31, 2022 $ i 1,934,000     i 3,559,125   $( i 4,371,000)  $ i 5,000   $ i 50,872,000   $ i 49,389,000 

 

See accompanying notes to the unaudited condensed financial statements.

 

 8 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED JANUARY 31, 2023 AND 2022

(Unaudited)

 

   Shares   Amount   Shares   Amount 
   Preferred Stock  

Common Stock Class A

 
   Shares   Amount   Shares   Amount 
Balances, April 30, 2022    i 4,100   $ i 99,000     i 8,502,881   $ i 850,000 
                     
Prior period adjustment for provisions related to depreciation   —    —    —    — 
                     
Purchases of common stock   —    —    —    — 
                     
Dividend declared at $ i 0.60 per common share outstanding   —    —    —    — 
                     
Unrealized gain, net of tax effect   —    —    —    — 
                     
Net Income   —    —    —    — 
                     
Balances, January 31, 2023    i 4,100   $ i 99,000     i 8,502,881   $ i 850,000 

 

   Preferred Stock  

Common Stock Class A

 
   Shares   Amount   Shares   Amount 
Balances, April 30, 2021    i 4,100   $ i 99,000     i 8,502,881   $ i 850,000 
                     
Purchases of common stock   —    —    —    — 
                     
Dividend declared at $ i 0.50 per common share outstanding   —    —    —    — 
                     
Unrealized (loss), net of tax effect   —    —    —    — 
                     
Net Income   —    —    —    — 
                     
Balances, January 31, 2022    i 4,100   $ i 99,000     i 8,502,881   $ i 850,000 

 

See accompanying notes to the unaudited condensed financial statements.

 

 9 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED JANUARY 31, 2023 AND 2022

(Unaudited)

 

 

Paid-In Capital

   Shares   Amount  

Income

  

Earnings

   Total 
     

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

   Retained     
 

Paid-In Capital

   Shares   Amount  

Income

  

Earnings

   Total 
Balances, April 30, 2022 $ i 1,934,000     i 3,571,693   $( i 4,547,000)  $( i 137,000)  $ i 50,843,000   $ i 49,042,000 
Prior period adjustment for provisions related to depreciation  —    —    —    —    ( i 161,000)   ( i 161,000)
                              
Purchases of common stock  —     i 445    ( i 5,000)   —    —    ( i 5,000)
                              
Dividend declared at $ i 0.60 per common share outstanding  —    —    —    —    ( i 2,958,000)   ( i 2,958,000)
                              
Unrealized gain, net of tax effect  —    —    —    ( i 2,000)   —    ( i 2,000)
                              
Net Income  —    —    —    —     i 3,667,000     i 3,667,000 
                              
Balances, January 31, 2023 $ i 1,934,000     i 3,572,138   $( i 4,552,000)  $( i 139,000)  $ i 51,391,000   $ i 49,583,000 

 

     

Treasury Stock

(Common Class A)

  

Accumulated

Other

Comprehensive

   Retained     
 

Paid-In Capital

   Shares   Amount  

Income

  

Earnings

   Total 
Balances, April 30, 2021 $ i 1,934,000     i 3,556,412   $( i 4,336,000)  $ i 108,000   $ i 49,749,000   $ i 48,404,000 
Purchases of common stock  —     i 2,713    ( i 35,000)   —    —    ( i 35,000)
                              
Dividend declared at $ i 0.50 per common share outstanding  —    —    —    —    ( i 2,472,000)   ( i 2,472,000)
                              
Unrealized (loss), net of tax effect  —    —    —    ( i 103,000)   —    ( i 103,000)
                              
Net Income  —    —    —    —     i 3,595,000     i 3,595,000 
                              
Balances, January 31, 2022 $ i 1,934,000     i 3,559,125   $( i 4,371,000)  $ i 5,000   $ i 50,872,000   $ i 49,389,000 

 

See accompanying notes to the unaudited condensed financial statements.

 

 10 

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2023 AND 2022

(Unaudited)

 

   Jan 31, 2023   Jan 31, 2022 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Income  $ i 3,667,000   $ i 3,595,000 
Adjustments to reconcile net income to net cash          
provided by operating activities:          
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization    i 332,000     i 319,000 
(Gain) loss on sale of investments    i 165,000    ( i 391,000)
Unrealized (gain) loss on equity investments   ( i 27,000)    i 686,000 
Provision for credit losses on accounts receivable   ( i 6,000)    i 16,000 
Reserve for obsolete inventory    i 81,000     i 229,000 
Deferred income taxes   ( i 78,000)   ( i 310,000)
Changes in assets and liabilities:          
(Increase) decrease in:          
Accounts receivable    i 824,000     i 91,000 
Inventories   ( i 2,444,000)   ( i 1,465,000)
Prepaid expenses    i 458,000    ( i 1,089,000)
Other receivables   ( i 29,000)   — 
Income tax overpayment   ( i 478,000)   — 
Increase (decrease) in:          
Accounts payable    i 84,000    ( i 176,000)
Accrued expenses    i 184,000     i 130,000 
Income tax payable   —     i 163,000 
Net cash from operating activities    i 2,733,000     i 1,798,000 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
(Purchase) of property and equipment   ( i 221,000)   ( i 164,000)
Proceeds from sale of marketable securities    i 17,000     i 383,000 
(Purchase) of marketable securities   ( i 648,000)   ( i 640,000)
(Purchase) of long-term investment   —    ( i 24,000)
Net cash from investing activities   ( i 852,000)   ( i 445,000)
CASH FLOWS FROM FINANCING ACTIVITIES:          
(Purchase) of treasury stock   ( i 5,000)   ( i 35,000)
Dividends paid   ( i 2,689,000)   ( i 2,256,000)
Net cash from financing activities   ( i 2,694,000)   ( i 2,291,000)
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   ( i 813,000)   ( i 938,000)
           
Cash and Cash Equivalents, beginning of period    i 6,078,000     i 7,326,000 
Cash and Cash Equivalents, end of period  $ i 5,265,000   $ i 6,388,000 
           
Supplemental Disclosure for Cash Flow Information:          
Cash payments for:          
Income taxes  $ i 1,618,000   $ i 1,290,000 
Interest paid  $—   $— 
Cash receipts for:          
Income taxes  $ i 118,000   $— 

 

See accompanying notes to the unaudited condensed financial statements.

 

 11 

 

 

GEORGE RISK INDUSTRIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JANUARY 31, 2023

 i 

 

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, 2022 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.

 

Accounting Estimates — The preparation of these condensed financial statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts.

 

Significant Accounting Policies — The significant accounting policies used in preparation of these condensed 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.

 

There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.

 i 

 

Note 2: Investments

 

The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets.  i The investments in debt securities, which include municipal bonds and bond funds, mature between August 2023 and September 2042. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.

 

 i 

As of January 31, 2023 and April 30, 2022, investments consisted of the following:

Schedule of Investments 

Investments at  Cost   Gross   Gross     
January 31, 2023  Basis  

Unrealized Gains

  

Unrealized Losses

  

Fair Value

 
Municipal bonds  $ i 5,586,000   $ i 48,000   $( i 237,000)  $ i 5,397,000 
REITs    i 93,000    —    ( i 12,000)    i 81,000 
Equity securities    i 18,545,000     i 7,032,000    ( i 533,000)    i 25,044,000 
Money markets and CDs    i 948,000    —    —     i 948,000 
Total  $ i 25,172,000   $ i 7,080,000   $( i 782,000)  $ i 31,470,000 

 

Investments at  Cost   Gross   Gross     
April 30, 2022  Basis  

Unrealized Gains

  

Unrealized Losses

  

Fair Value

 
Municipal bonds  $ i 5,625,000   $ i 41,000   $( i 229,000)  $ i 5,437,000 
REITs    i 131,000     i 16,000    ( i 3,000)    i 144,000 
Equity securities    i 18,322,000     i 6,921,000    ( i 473,000)    i 24,770,000 
Money markets and CDs    i 628,000    —    —     i 628,000 
Total  $ i 24,706,000   $ i 6,978,000   $( i 705,000)  $ i 30,979,000 
 / 

 

Marketable securities that are classified as equity securities are carried at fair value on the balance sheets with changes in fair value recorded as an unrealized gain or (loss) in the statements of income in the period of the change. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of income.

 

The Company evaluates all marketable securities for other-than-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 nine months ended January 31, 2023 and 2022.

 

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, 2023 the Company had sales of equity securities which yielded gross realized gains of $ i 118,000 and gross realized losses of $ i 69,000. For the same period, sales of debt securities did  i not yield any gross realized gains, but gross realized losses of $ i 5,000 were recorded. As for the nine-months ended January 31, 2023 the Company had sales of equity securities which yielded gross realized gains of $ i 403,000 and gross realized losses of $ i 522,000. For the same nine-month period, sales of debt securities did  i not yield any gross realized gains, but gross realized losses of $ i 46,000 were recorded. During the quarter ending January 31, 2022, the Company recorded gross realized gains and losses on equity securities of $ i 121,000 and $ i 27,000, respectively, while sales of debt securities did  i not yield any gross realized gains, but gross realized losses of $ i 3,000 were recorded. During the nine-months ending January 31, 2022, the Company recorded gross realized gains and losses on equity securities of $ i 465,000 and $ i 61,000, respectively. For the same nine-month period last year, sales of debt securities did  i not yield any gross realized gains, but gross realized losses of $ i 13,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph.

 

 12 

 

 

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, 2023 and April 30, 2022, respectively.

 

 i 

Unrealized Loss Breakdown by Investment Type at January 31, 2023

Schedule of Unrealized Loss Breakdown by Investment 

                               
   Less than 12 months   12 months or greater   Total 
Description 

Fair

Value

   Unrealized Loss  

Fair

Value

  

Unrealized

Loss

  

Fair

Value

   Unrealized Loss 
Municipal bonds  $ i 2,967,000   $( i 86,000)  $ i 1,780,000   $( i 151,000)  $ i 4,747,000   $( i 237,000)
REITs    i 55,000    ( i 9,000)    i 25,000    ( i 3,000)    i 80,000    ( i 12,000)
Equity securities    i 4,808,000    ( i 478,000)    i 409,000    ( i 55,000)    i 5,217,000    ( i 533,000)
Total  $ i 7,830,000   $( i 573,000)  $ i 2,214,000   $( i 209,000)  $ i 10,044,000   $( i 782,000)

 

Unrealized Loss Breakdown by Investment Type at April 30, 2022

 

                               
   Less than 12 months   12 months or greater   Total 
Description 

Fair

Value

   Unrealized Loss   Fair Value   Unrealized Loss  

Fair

Value

   Unrealized Loss 
Municipal bonds  $ i 4,420,000   $( i 142,000)  $ i 539,000   $( i 87,000)  $ i 4,959,000   $( i 229,000)
REITs    i 18,000    ( i 1,000)    i 26,000    ( i 2,000)    i 44,000    ( i 3,000)
Equity securities    i 4,157,000    ( i 424,000)    i 274,000    ( i 49,000)    i 4,431,000    ( i 473,000)
Total  $ i 8,595,000   $( i 567,000)  $ i 839,000   $( i 138,000)  $ i 9,434,000   $( i 705,000)
 / 

 

Municipal Bonds

 

The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at January 31, 2023 and April 30, 2022.

 

Marketable Equity Securities and REITs

 

The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at January 31, 2023 and April 30, 2022.

 

 13 

 

 /  i 

 

Note 3: Inventories

 

 i 

Inventories at January 31, 2023 and April 30, 2022 consisted of the following:

Schedule of Inventories 

           
   January 31,   April 30, 
   2023   2022 
         
Raw materials  $ i 8,926,000   $ i 6,772,000 
Work in process    i 616,000     i 618,000 
Finished goods    i 1,130,000     i 838,000 
Inventory gross    i 10,672,000     i 8,228,000 
Less: allowance for obsolete inventory   ( i 369,000)   ( i 288,000)
Inventories, net  $ i 10,303,000   $ i 7,940,000 
 / 

 

 /  i 

 

Note 4: Business Segments

 

 i 

The following is financial information relating to industry segments:

Schedule of Financial Information Relating to Industry Segments 

   Jan 31, 2023   Jan 31, 2022   Jan 31, 2023   Jan 31, 2022 
   Three months   Three months   Nine months   Nine months 
   ended   ended   ended   ended 
   Jan 31, 2023   Jan 31, 2022   Jan 31, 2023   Jan 31, 2022 
Net revenue:                    
Security alarm products  $ i 3,712,000   $ i 4,377,000   $ i 13,079,000   $ i 13,180,000 
Cable & wiring tools    i 486,000     i 498,000     i 1,561,000     i 1,553,000 
Other products    i 168,000     i 179,000     i 554,000     i 519,000 
Total net revenue  $ i 4,366,000   $ i 5,054,000   $ i 15,194,000   $ i 15,252,000 
                     
Income from operations:                    
Security alarm products  $ i 774,000   $ i 988,000   $ i 3,339,000   $ i 3,541,000 
Cable & wiring tools    i 93,000     i 117,000     i 398,000     i 418,000 
Other products    i 33,000     i 39,000     i 141,000     i 139,000 
Total income from operations  $ i 900,000   $ i 1,144,000   $ i 3,878,000   $ i 4,098,000 
                     
Depreciation and amortization:                    
Security alarm products  $ i 48,000   $ i 42,000   $ i 143,000   $ i 117,000 
Cable & wiring tools    i 30,000     i 31,000     i 92,000     i 92,000 
Other products    i 21,000     i 18,000     i 57,000     i 60,000 
Corporate general    i 14,000     i 15,000     i 40,000     i 50,000 
Total depreciation and amortization  $ i 113,000   $ i 106,000   $ i 332,000   $ i 319,000 
                     
Capital expenditures:                    
Security alarm products  $—   $ i 113,000   $ i 74,000   $ i 153,000 
Cable & wiring tools   —    —    —    — 
Other products    i 12,000     i 11,000     i 147,000     i 11,000 
Corporate general   —    —    —    — 
Total capital expenditures  $ i 12,000   $ i 124,000   $ i 221,000   $ i 164,000 

 

   January 31, 2023   April 30, 2022 
Identifiable assets:          
Security alarm products  $ i 12,811,000   $ i 11,537,000 
Cable & wiring tools    i 2,576,000     i 2,509,000 
Other products    i 870,000     i 732,000 
Corporate general    i 38,659,000     i 39,253,000 
Total assets  $ i 54,916,000   $ i 54,031,000 
 / 

 

 14 

 

 /  i 

 

Note 5: Earnings per Share

 

 i 

Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are:

Schedule of Basic and Diluted Earnings Per Share 

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

 

   For the three months ended January 31, 2022 
   Income   Shares   Per-Share 
   (Numerator)   (Denominator)   Amount 
Net income  $ i 161,000                     
Basic EPS  $ i 161,000     i 4,943,985   $ i .03 
Effect of dilutive Convertible Preferred Stock   –     i 20,500    – 
Diluted EPS  $ i 161,000     i 4,964,485   $ i .03 

 

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

 

   For the nine months ended January 31, 2022 
   Income   Shares   Per-Share 
   (Numerator)   (Denominator)   Amount 
Net income  $ i 3,595,000                      
Basic EPS  $ i 3,595,000     i 4,945,192   $ i .73 
Effect of dilutive Convertible Preferred Stock   –     i 20,500    – 
Diluted EPS  $ i 3,595,000     i 4,965,692   $ i .72 
 / 

 

 

 15 

 

 /  i 

 

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.  i 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  i 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 $ i 14,000 and $ i 16,000 were paid during each quarter ending January 31, 2023 and 2022, respectively. Likewise, the Company paid matching contributions of approximately $ i 43,000 and $ i 48,000 during each nine-month period ending January 31, 2023 and 2022, respectively.

 /  i 

 

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 1 Valuation is based upon quoted prices for identical instruments traded in active markets.

 

  Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

 

  Level 3 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

 

Investments and Marketable Securities

 

As of January 31, 2023 and April 30, 2022, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities. 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.

 

Fair Value Hierarchy

 

 i 

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.

Schedule of Assets Measured at Fair Value on Recurring Basis 

 16 

 

 

   Level 1   Level 2   Level 3   Total 
   Assets Measured at Fair Value on a Recurring Basis as of
January 31, 2023		 
   Level 1   Level 2   Level 3   Total 
Assets:                    
Municipal Bonds  $—   $ i 5,397,000   $—   $ i 5,397,000 
REITs   —     i 81,000    —     i 81,000 
Equity Securities    i 25,044,000    —    —     i 25,044,000 
Money Markets    i 948,000    —    —     i 948,000 
Total fair value of assets measured on a recurring basis  $ i 25,992,000   $ i 5,478,000   $—   $ i 31,470,000 

 

   Level 1   Level 2   Level 3   Total 
   Assets Measured at Fair Value on a Recurring Basis as of
April 30, 2022		 
   Level 1   Level 2   Level 3   Total 
Assets:                    
Municipal Bonds  $—   $ i 5,437,000   $—   $ i 5,437,000 
REITs   —     i 144,000    —     i 144,000 
Equity Securities    i 24,770,000    —    —     i 24,770,000 
Money Markets    i 628,000    —    —     i 628,000 
Total fair value of assets measured on a recurring basis  $ i 25,398,000   $ i 5,581,000   $—   $ i 30,979,000 

 / 

 

 /  i 

 

Note 8 Subsequent Events

 

None

 

 17 

 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations

 

MANAGEMENT DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

This Quarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project” or “continue,” and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

 

The following discussion should be read in conjunction with the attached unaudited condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2022.

 

Executive Summary

 

The Company’s performance in operations stayed consistent 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 the fact that our business is tied to the housing market and the winter months usually show a slowdown and the colder and snowier than normal weather has been keeping employees away from our locations at times. Opportunities include keeping up with the 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 have new products that are scheduled to be introduced by the end of the fiscal year. Challenges in the coming months include continuing to get product out to customers in a timely manner and dealing with the COVID-19 pandemic restrictions 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 sales were $4,366,000 for the quarter ended January 31, 2023, which is a 13.61% decrease from the corresponding quarter last year. Year-to-date net sales were $15,194,000 at January 31, 2023, which is a 0.38% decrease from the same period last year. The slight reduction in sales is due to our general winter and holiday slowdown and there has been more winter weather than normal. But we continue to operate our business with our ongoing commitment to outstanding customer service and our ability to customize products.

 

●Cost of goods sold was 55.98% of net sales for the quarter ended January 31, 2023 and was 56.61% for the same quarter last year. Year-to-date cost of goods sold percentages were 53.15% for the current nine months and 51.85% for the corresponding nine months last year. The current cost of goods sold percentages are right outside of Management’s goal of keeping labor and other manufacturing expenses at less than 50% for both the quarter and year-to-date results. Management continues to work with and train employees to work more efficiently. Raw material prices have soared over the current fiscal year because of inflation and wages have had to be raised to remain competitive in the job market. Management offset some of these added expenses by implementing a 10% price increase effective January 1, 2023.

 

 18 

 

 

●Operating expenses decreased by $27,000 for the quarter and they decreased by $6,000 for the nine-months ended January 31, 2023 as compared to the corresponding periods last year. When comparing percentages in relation to net sales, the operating expenses for the quarter ended January 31, 2023 was 23.41% of net sales while it was 20.76% of net sales for the same quarter the prior year. For year-to-date numbers, operating expense were 21.32% and 21.28% of net sales for the nine months ended January 31, 2023 and 2022, respectively. 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 amount increase is due to increased commission amounts, related to increased sales, and additional labor costs related wage increases.

 

●Income from operations for the quarter ended January 31, 2023 was $900,000, a 21.33% decrease from the corresponding quarter last year, which had income from operations of $1,144,000. Income from operations for the nine months ended January 31, 2023 was $3,878,000, which is a 5.37% decrease from the corresponding nine months last year, which had income from operations of $4,098,000.

 

●Other income and expenses for the quarter ended January 31, 2023 shows income of $1,775,000, which is a $2,860,000 increase from the from the corresponding quarter last year, which had an expense amount of $1,085,000. Comparatively, there is an increase of $144,000 in other income for the year-to-date numbers. Most of the activity in these accounts consists of investment interest, dividends, real gains or losses on sale of investments, and unrealized gains or losses on equity securities. The main reason for the increase in the current quarter 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 comes to these figures and market has seen a recovery since the COVID-19 pandemic and other economic factors.

 

●Overall, net income for the quarter ended January 31, 2023 was up $1,848,000, or 1147.83%, from the same quarter last year. Similarly, net income for the nine-month period ended January 31, 2023 was up $72,000, or 2%, from the same period in the prior year.

 

●Earnings per common share for quarter ended January 31, 2023 were $0.41 per share and $0.74 per share for the year-to-date numbers. EPS for the quarter and nine months ended January 31, 2022 were $0.03 per share and $0.73 per share, respectively.

 

Liquidity and capital resources

 

Operating

 

●Net cash decreased $813,000 during the nine months ended January 31, 2023 as compared to a decrease of $938,000 during the corresponding period last year.

 

 19 

 

 

●Accounts receivable decreased $824,000 for the nine months ended January 31, 2023 compared with a $91,000 decrease for the same period last year. The current year decrease is a result of a slight decline in sales and slower collections of accounts receivable. An analysis of accounts receivable shows that there were 7.02% that were over 90 days at January 31, 2023.

 

●Inventories increased $2,444,000 during the current nine-month period compared to an increase of $1,465,000 last year. The larger increase in the current year is due to increases in the cost of raw materials and having more raw materials on hand to not run into shortages like what has happened recently.

 

●Prepaid expenses saw a $458,000 decrease for the current nine months, primarily due to having inventory and machinery delivered during the current nine-month period; therefore, having less money in prepayments of raw materials on the books. The prior nine months showed a $1,089,000 increase in prepaid expenses.

 

●Income tax overpayment increased $478,000 for the current nine-month period, compared to having a decrease of $163,000 in income tax payable for the nine-months ended January 31, 2022. The current increase is due to having to pay additional income tax that was due for the prior fiscal year during the current period.

 

●Accounts payable shows an $84,000 increase for the current nine-month period ended January 31, 2023 compared to a $176,000 decrease for the prior nine-month period. The company strives to pay all invoices within terms, and the variance in increases is primarily due to the timing of receipt of products and payment of invoices.

 

●Accrued expenses increased $184,000 for the current nine-month period compared to a $130,000 increase for the nine-month period ended January 31, 2022. The difference in the amounts is primarily due to increased wages.

 

Investing

 

●As for our investment activities, the Company spent approximately $221,000 on acquisitions of property and equipment for the current nine-month period, in comparison with the corresponding nine months last year, where there was activity of $164,000.

 

●Additionally, the Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the nine-month period ended January 31, 2023 the buy/sell activity in the investment accounts was continued as usual. Net cash spent on purchases of marketable securities for the nine-month period ended January 31, 2023 was $648,000 compared to $640,000 spent in the prior nine-month period. The Company continues to use “money manager” accounts for most stock transactions. By doing this, the Company gives an independent third-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays a quarterly service fee based on the value of the investments.

 

Financing

 

●The Company continues to purchase back common stock when the opportunity arises. For the nine-month period ended January 31, 2023, the Company purchased $5,000 worth of treasury stock. This is in comparison to $35,000 spent in the same nine months period the prior year.

 

 20 

 

 

●The company paid out dividends of $2,689,000 during the nine months ending January 31, 2023. These dividends were paid during the second quarter. The company declared a dividend of $0.60 per share of common stock on September 30, 2022 and these dividends were paid by October 31, 2022. As for the prior year numbers, dividends paid was $2,256,000 for the nine months ending January 31, 2022. A dividend of $0.50 per common share was declared and paid during the second fiscal quarter last year.

 

The following is a list of ratios to help analyze George Risk Industries’ performance:

 

   As of 
   January 31, 2023   January 31, 2022 
Working capital
(current assets – current liabilities)		  $48,003,000   $48,186,000 
Current ratio
(current assets / current liabilities)		   14.688    15.470 
Quick ratio
((cash + investments + AR) / current liabilities)		   11.415    12.987 

 

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 proof contacts that will be UL listed for hazardous locations. There has been demand from our customers for this type of high security magnetic reed switch.

 

●The Company is developing magnetic contacts which are listed under UL 634 Level 2. These sensors are for high security applications such as government buildings, military use, nuclear facilities, and financial institutions.

 

●Wireless technology is a main area of focus for product development. We are considering adding wireless technology to some of our current products. A wireless contact switch is in the final stages of development. Also, we are working on wireless versions of monitoring devices which include glass break detection, tilt sensing and environmental monitoring. A redesign of our brass water valve shut-off system is near completion.

 

Other Information

 

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

 

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

 

 21 

 

 

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, 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, 2022, management identified the following material weakness in our internal control over financial reporting:

 

●The small size of our Company limits our ability to achieve the desired level of separation of duties for proper internal controls and financial reporting, particularly as it relates to financial reporting to assure material disclosures or implementation of newly issued accounting standards are included. A secondary review over annual and quarterly filings does occur with an outside party. Due to the departure of the Controller, the current CEO and CFO roles are being fulfilled by the same individual. We do not have an audit committee. We do not believe we have met the full requirement for separation of duties for financial reporting purposes.

 

We continue to operate with a limited number of accounting and financial personnel. For the quarter ending January 31, 2023, the Company did not have a Controller, but management is looking to fill this position as soon as possible. Training will be required to fulfill disclosure control and procedure responsibilities, including review procedures for key accounting schedules and timely and proper documentation of material transactions and agreements. Until sufficient training has taken place for this new Controller, we believe this control deficiency represents material weaknesses in internal control over financial reporting. To mitigate the effects of the material weakness identified in our annual report, the Company contracted with an outside CPA to perform a secondary review of our quarterly report filed on Form 10-Q.

 

Despite the material weaknesses in financial reporting noted above, we believe that our condensed financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.

 

We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation, and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.

 

Changes in Internal Control 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, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 22 

 

 

GEORGE RISK INDUSTRIES, INC.

 

Part II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Not applicable

 

Item 1A. Risk Factors

 

Not applicable.

 

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

 

The following table provides information relating to the Company’s repurchase of common stock for the third quarter of fiscal year 2023.

 

Period   Number of shares repurchased
November 1, 2022 – November 30, 2022   -0-
December 1, 2022 – December 31, 2022   175
January 1, 2023 – January 31, 2023   -0-

 

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 No.  Description
 31.1  Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1  Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 906 of the Sarbanes-Oxley Act of 2002.

 

 23 

 

 

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.
      (Registrant)
       
Date March 17, 2023 By: /s/ Stephanie M. Risk-McElroy
     

Stephanie M. Risk-McElroy

      President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board

 

 24 

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
4/30/23
Filed on:3/17/23
For Period end:1/31/23
1/1/23
12/31/22
12/1/22
11/30/22
11/1/22
10/31/2210-Q
9/30/22
4/30/2210-K,  NT 10-K
1/31/2210-Q
10/31/2110-Q
4/30/2110-K,  NT 10-K
1/1/98
 List all Filings 
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