10-Q 1 form10-q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarter ended January 31, 2024

 

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

 

For the transition period from ______________ to ________________

 

Commission File Number: 000-05378

 

GEORGE RISK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

 

Colorado   84-0524756
(State of incorporation)   (IRS Employers Identification No.)

 

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

 

(308) 235-4645

(Registrant’s telephone number, including area code)

 

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

 

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

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer ☐ Accelerated filer ☐
  Non-accelerated filer Smaller reporting company
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

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

 

 

 

 

 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The unaudited financial statements for the three- and nine-month period ended January 31, 2024, are attached hereto.

 

2

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

 

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

 

See accompanying notes to the unaudited condensed financial statements.

 

3

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

(continued)

 

   January 31, 2024   April 30, 2023 
   (unaudited)     
         
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities          
Accounts payable, trade  $382,000   $546,000 
Dividends payable   2,854,000    2,565,000 
Deferred income   38,000    43,000 
Accrued expenses   547,000    421,000 
Total Current Liabilities   3,821,000    3,575,000 
           
Long-Term Liabilities          
Deferred income taxes   2,542,000    1,727,000 
Total Long-Term Liabilities   2,542,000    1,727,000 
           
Total Liabilities   6,363,000    5,302,000 
           
Commitments and Contingencies        
           
Stockholders’ Equity          
Convertible preferred stock, 1,000,000 shares authorized, Series 1—noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding   99,000    99,000 
Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and outstanding   850,000    850,000 
Additional paid-in capital   1,934,000    1,934,000 
Accumulated other comprehensive income   (91,000)   (161,000)
Retained earnings   54,836,000    52,481,000 
Less: treasury stock, 3,604,051 and 3,572,338 shares, at cost   (4,918,000)   (4,554,000)
Total Stockholders’ Equity   52,710,000    50,649,000 
           
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY  $59,073,000   $55,951,000 

 

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, 2024 AND 2023

(Unaudited)

 

   Three months   Three months   Nine months   Nine months 
   ended   ended   ended   ended 
   Jan 31, 2024   Jan 31, 2023   Jan 31, 2024   Jan 31, 2023 
Net Sales  $5,394,000   $4,366,000   $16,175,000   $15,194,000 
Less: Cost of Goods Sold   (2,734,000)   (2,444,000)   (8,145,000)   (8,076,000)
Gross Profit   2,660,000    1,922,000    8,030,000    7,118,000 
                     
Operating Expenses                    
General and Administrative   396,000    340,000    1,097,000    1,028,000 
Sales   705,000    648,000    2,181,000    2,136,000 
Engineering   41,000    34,000    78,000    76,000 
Total Operating Expenses   1,142,000    1,022,000    3,356,000    3,240,000 
                     
Income From Operations   1,518,000    900,000    4,674,000    3,878,000 
                     
Other Income (Expense)                    
Other   32,000    2,000    41,000    6,000 
Dividend and Interest Income   396,000    506,000    855,000    871,000 
Unrealized Gain on equity securities   2,883,000    1,224,000    2,149,000    27,000 
Gain (Loss) on Sale of Investments   18,000    44,000    (55,000)   (165,000)
Gain on Sale of Assets           8,000     
Total Other Income (Expense)   3,329,000    1,776,000    2,998,000    739,000 
                     
Income Before Provisions for Income Taxes   4,847,000    2,676,000    7,672,000    4,617,000 
                     
Provisions for Income Taxes:                    
Current Expense   474,000    341,000    1,327,000    1,028,000 
Deferred Tax Expense (Benefit)   1,134,000    326,000    787,000    (78,000)
Total Income Tax Expense   1,608,000    667,000    2,114,000    950,000 
                     
Net Income  $3,239,000   $2,009,000   $5,558,000   $3,667,000 
                     
Income Per Share of Common Stock                    
Basic  $0.66   $0.41   $1.13   $0.74 
Diluted  $0.66   $0.41   $1.13   $0.74 
                     
Weighted Average Number of Common Shares Outstanding                    
Basic   4,899,692    4,930,800    4,918,746    4,930,929 
Diluted   4,920,192    4,951,300    4,939,246    4,951,429 

 

See accompanying notes to the unaudited condensed financial statements.

 

5

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

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

(Unaudited)

 

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

 

See accompanying notes to the unaudited condensed financial statements.

 

6

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

 

   Shares   Amount   Shares   Amount 
   Preferred Stock  

Common Stock

Class A

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

 

   Shares   Amount   Shares   Amount 
   Preferred Stock  

Common Stock

Class A

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

 

See accompanying notes to the unaudited condensed financial statements.

 

7

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

 

                              
  Paid-In  

Treasury Stock

(Common Class A)

   Accumulated Other Comprehensive   Retained     
 

Capital

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

 

                              
  Paid-In  

Treasury Stock

(Common Class A)

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

 1,934,000

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

 

See accompanying notes to the unaudited condensed financial statements.

 

8

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

 

   Shares   Amount   Shares   Amount 
   Preferred Stock  

Common Stock

Class A

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

 

   Shares   Amount   Shares   Amount 
   Preferred Stock  

Common Stock

Class A

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

 

See accompanying notes to the unaudited condensed financial statements.

 

9

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

 

                              
  Paid-In  

Treasury Stock

(Common Class A)

   Accumulated Other Comprehensive   Retained     
 

Capital

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

 

                              
  Paid-In  

Treasury Stock

(Common Class A)

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

 

See accompanying notes to the unaudited condensed financial statements.

 

10

 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2024 AND 2023

(Unaudited)

 

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

 

See accompanying notes to the unaudited condensed financial statements.

 

11

 

 

GEORGE RISK INDUSTRIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JANUARY 31, 2024

 

Note 1: Unaudited Interim Financial Statements

 

The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these unaudited condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2023 annual report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year.

 

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 PoliciesThe 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.

 

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

 

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

 

12

 

 

Note 2: Investments

 

The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets. The investments in debt securities, which include municipal bonds and bond funds, mature between February 2024 and July 2041. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.

 

As of January 31, 2024 and April 30, 2023, investments consisted of the following: 

 

Investments at

January 31, 2024

 

Cost

Basis

   Gross Unrealized Gains   Gross Unrealized Losses  

Fair

Value

 
Municipal bonds  $5,383,000   $45,000   $(162,000)  $5,266,000 
REITs   78,000        (8,000)   70,000 
Equity securities   18,977,000    8,876,000    (294,000)   27,559,000 
Money markets and CDs   698,000            698,000 
Total  $25,136,000   $8,921,000   $(464,000)  $33,593,000 

 

Investments at

April 30, 2023

 

Cost

Basis

   Gross Unrealized Gains   Gross Unrealized Losses  

Fair

Value

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

 

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

 

The Company evaluates all marketable securities for other-than-temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, there were no impairment losses recorded for the quarters ended January 31, 2024 and 2023, respectively. As for the year-to-date numbers, management recorded an impairment loss of $22,000 for the nine-month period ended January 31, 2024, while there were no impairment losses recorded for the nine-month period ended January 31, 2023.

 

13

 

 

The Company’s investments are actively traded in the stock and bond markets. Therefore, either a realized gain or loss is recorded when a sale occurs. For the quarter ended January 31, 2024 the Company had sales of equity securities which yielded gross realized gains of $116,000 and gross realized losses of $84,000. For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $14,000 were recorded. As for the nine-months ended January 31, 2024 the Company had sales of equity securities which yielded gross realized gains of $329,000 and gross realized losses of $362,000. For the same nine-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $22,000 were recorded. During the quarter ending January 31, 2023, the Company recorded gross realized gains and losses on equity securities of $118,000 and $69,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $5,000 were recorded. During the nine-month period ending January 31, 2023, the Company recorded gross realized gains and losses on equity securities of $403,000 and $522,000, respectively. For the same nine-month period last year, sales of debt securities did not yield any gross realized gains, but gross realized losses of $46,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph.

 

The following tables show the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at January 31, 2024 and April 30, 2023, respectively.

 

Unrealized Loss Breakdown by Investment Type at January 31, 2024 

 

                         
   Less than 12 months   12 months or greater   Total 
Description  Fair Value   Unrealized Loss   Fair Value   Unrealized Loss   Fair Value   Unrealized Loss 
Municipal bonds  $816,000   $(10,000)  $2,767,000   $(153,000)  $3,583,000   $(163,000)
REITs   3,000    (1,000)   67,000    (6,000)   70,000    (7,000)
Equity securities   1,251,000    (85,000)   1,366,000    (209,000)   2,617,000    (294,000)
Total  $2,070,000   $(96,000)  $4,200,000   $(368,000)  $6,270,000   $(464,000)

 

Unrealized Loss Breakdown by Investment Type at April 30, 2023

 

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

 

Municipal Bonds

 

The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at January 31, 2024 and April 30, 2023.

 

Marketable Equity Securities and REITs

 

The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at January 31, 2024 and April 30, 2023.

 

Note 3: Inventories

 

Inventories at January 31, 2024 and April 30, 2023 consisted of the following: 

 

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

 

14

 

 

Note 4: Business Segments

 

The following is financial information relating to industry segments:

 

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

 

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

 

15

 

 

Note 5: Earnings per Share

 

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

 

   For the three months ended January 31, 2024 
   Income   Shares   Per-Share 
   (Numerator)   (Denominator)   Amount 
Net income  $3,239,000           
Basic EPS  $3,239,000    4,899,692   $.66 
Effect of dilutive Convertible Preferred Stock       20,500     
Diluted EPS  $3,239,000    4,920,192   $.66 

 

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

 

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

 

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

 

16

 

 

Note 6: Retirement Benefit Plan

 

On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the “Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the Company. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is funded by voluntary pre-tax and Roth (taxable) contributions from eligible employees who may contribute a percentage of their eligible compensation, limited and subject to statutory limits. Employees are eligible to participate in the Plan when they have attained the age of 21 and completed one thousand hours of service in any plan year with the Company. Upon leaving the Company, each participant is 100% vested with respect to the participants’ contributions while the Company’s matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions by the Company of approximately $15,000 and $14,000 were paid during each quarter ending January 31, 2024 and 2023, respectively. Likewise, the Company paid matching contributions of approximately $45,000 and $43,000 during each nine-month period ending January 31, 2024 and 2023, respectively.

 

Note 7: Fair Value Measurements

 

The carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short-term nature. The fair value of our investments is determined utilizing market-based information. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.

 

US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The levels of the fair value hierarchy under US GAAP are described below:

 

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