GEORGE RISK INDUSTRIES, INC. 10-Q

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, 2023 ☐ 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 17, 2023, was 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 $ 5,265,000 $ 6,078,000 Investments and securities 31,470,000 30,979,000 Accounts receivable: Trade, net of allowance for credit losses of $ 26,991 and $ 33,531 , respectively 3,296,000 4,114,000 Other 45,000 16,000 Income tax overpayment 201,000 — Inventories, net 10,303,000 7,940,000 Prepaid expenses 930,000 1,362,000 Total Current Assets 51,510,000 50,489,000 Property and Equipment, net, at cost 1,763,000 1,782,000 Other Assets Investment in Limited Land Partnership, at cost 344,000 344,000 Projects in process 91,000 83,000 Other 29,000 62,000 Total Other Assets 464,000 489,000 Intangible Assets, net 1,179,000 1,271,000 TOTAL ASSETS $ 54,916,000 $ 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 $ 404,000 $ 320,000 Dividends payable 2,565,000 2,296,000 Deferred income 17,000 — Accrued expenses 521,000 354,000 Income tax payable — 277,000 Total Current Liabilities 3,507,000 3,247,000 Long-Term Liabilities Deferred income taxes 1,826,000 1,742,000 Total Long-Term Liabilities 1,826,000 1,742,000 Total Liabilities 5,333,000 4,989,000 Commitments and Contingencies — — Stockholders’ Equity Convertible preferred stock, 1,000,000 shares authorized, authorized, Series 1—noncumulative, $ 20 stated value, 25,000 shares 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 ( 139,000 ) ( 137,000 ) Retained earnings 51,391,000 50,843,000 Less: treasury stock, 3,572,138 and 3,571,693 shares, at cost ( 4,552,000 ) ( 4,547,000 ) Total Stockholders’ Equity 49,583,000 49,042,000 TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY $ 54,916,000 $ 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 $ 4,366,000 $ 5,054,000 $ 15,194,000 $ 15,252,000 Less: Cost of Goods Sold ( 2,444,000 ) ( 2,861,000 ) ( 8,076,000 ) ( 7,908,000 ) Gross Profit 1,922,000 2,193,000 7,118,000 7,344,000 Operating Expenses General and Administrative 340,000 371,000 1,028,000 1,070,000 Sales 648,000 649,000 2,136,000 2,109,000 Engineering 34,000 29,000 76,000 67,000 Total Operating Expenses 1,022,000 1,049,000 3,240,000 3,246,000 Income From Operations 900,000 1,144,000 3,878,000 4,098,000 Other Income (Expense) Other 1,000 1,000 6,000 15,000 Dividend and Interest Income 506,000 552,000 871,000 876,000 Unrealized Gain (Loss) on equity securities 1,224,000 ( 1,729,000 ) 27,000 ( 687,000 ) Gain (Loss) on Sale of Investments 44,000 91,000 ( 165,000 ) 391,000 Total Other Income (Expense) 1,776,000 ( 1,085,000 ) 739,000 595,000 Income Before Provisions for Income Taxes 2,675,000 59,000 4,617,000 4,693,000 Provisions for Income Taxes: Current Expense 341,000 455,000 1,028,000 1,407,000 Deferred Tax Expense (Benefit) 326,000 ( 557,000 ) ( 78,000 ) ( 309,000 ) Total Income Tax Expense (Benefit) 667,000 ( 102,000 ) 950,000 1,098,000 Net Income $ 2,009,000 $ 161,000 $ 3,667,000 $ 3,595,000 Income Per Share of Common Stock Basic $ 0.41 $ 0.03 $ 0.74 $ 0.73 Diluted $ 0.41 $ 0.03 $ 0.74 $ 0.72 Weighted Average Number of Common Shares Outstanding Basic 4,930,800 4,943,985 4,930,929 4,945,192 Diluted 4,951,300 4,964,485 4,951,429 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 $ 2,009,000 $ 161,000 $ 3,667,000 $ 3,595,000 Other Comprehensive Income/(Loss), Net of Tax Unrealized gain (loss) on debt securities: Unrealized holding gains (losses) arising during period 173,000 ( 94,000 ) ( 1,000 ) ( 144,000 ) Income tax benefit (expense) related to other comprehensive income ( 49,000 ) 27,000 ( 1,000 ) 41,000 Other Comprehensive Income (Loss) 124,000 ( 67,000 ) ( 2,000 ) ( 103,000 ) Comprehensive Income $ 2,133,000 $ 94,000 $ 3,665,000 $ 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 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 Preferred Stock Common Stock Class A Shares Amount Shares Amount Balances, October 31, 2021 4,100 $ 99,000 8,502,881 $ 850,000 Purchases of common stock — — — — Unrealized gain, net of tax effect — — — — Net Income — — — — Balances, January 31, 2022 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, 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 $ 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 Treasury Stock (Common Class A) Accumulated Other Comprehensive Retained Paid-In Capital Shares Amount Income Earnings Total Balances, October 31, 2021 $ 1,934,000 3,558,425 $ ( 4,362,000 ) $ 72,000 $ 50,711,000 $ 49,304,000 Purchases of Common Stock — 700 ( 9,000 ) — — ( 9,000 ) Unrealized gain, net of tax effect — — — ( 67,000 ) — ( 67,000 ) Net Income — — — — 161,000 161,000 Balances, January 31, 2022 $ 1,934,000 3,559,125 $ ( 4,371,000 ) $ 5,000 $ 50,872,000 $ 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 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 gain, net of tax effect — — — — Net Income — — — — Balances, January 31, 2023 4,100 $ 99,000 8,502,881 $ 850,000 Preferred Stock Common Stock Class A Shares Amount Shares Amount Balances, April 30, 2021 4,100 $ 99,000 8,502,881 $ 850,000 Purchases of common stock — — — — Dividend declared at $ 0.50 per common share outstanding — — — — Unrealized (loss), net of tax effect — — — — Net Income — — — — Balances, January 31, 2022 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, 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 $ 1,934,000 3,571,693 $ ( 4,547,000 ) $ ( 137,000 ) $ 50,843,000 $ 49,042,000 Prior period adjustment for provisions related to depreciation — — — — ( 161,000 ) ( 161,000 ) Purchases of common stock — 445 ( 5,000 ) — — ( 5,000 ) Dividend declared at $ 0.60 per common share outstanding — — — — ( 2,958,000 ) ( 2,958,000 ) Unrealized gain, 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 Treasury Stock (Common Class A) Accumulated Other Comprehensive Retained Paid-In Capital Shares Amount Income Earnings Total Balances, April 30, 2021 $ 1,934,000 3,556,412 $ ( 4,336,000 ) $ 108,000 $ 49,749,000 $ 48,404,000 Purchases of common stock — 2,713 ( 35,000 ) — — ( 35,000 ) Dividend declared at $ 0.50 per common share outstanding — — — — ( 2,472,000 ) ( 2,472,000 ) Unrealized (loss), net of tax effect — — — ( 103,000 ) — ( 103,000 ) Net Income — — — — 3,595,000 3,595,000 Balances, January 31, 2022 $ 1,934,000 3,559,125 $ ( 4,371,000 ) $ 5,000 $ 50,872,000 $ 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 $ 3,667,000 $ 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 332,000 319,000 (Gain) loss on sale of investments 165,000 ( 391,000 ) Unrealized (gain) loss on equity investments ( 27,000 ) 686,000 Provision for credit losses on accounts receivable ( 6,000 ) 16,000 Reserve for obsolete inventory 81,000 229,000 Deferred income taxes ( 78,000 ) ( 310,000 ) Changes in assets and liabilities: (Increase) decrease in: Accounts receivable 824,000 91,000 Inventories ( 2,444,000 ) ( 1,465,000 ) Prepaid expenses 458,000 ( 1,089,000 ) Other receivables ( 29,000 ) — Income tax overpayment ( 478,000 ) — Increase (decrease) in: Accounts payable 84,000 ( 176,000 ) Accrued expenses 184,000 130,000 Income tax payable — 163,000 Net cash from operating activities 2,733,000 1,798,000 CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) of property and equipment ( 221,000 ) ( 164,000 ) Proceeds from sale of marketable securities 17,000 383,000 (Purchase) of marketable securities ( 648,000 ) ( 640,000 ) (Purchase) of long-term investment — ( 24,000 ) Net cash from investing activities ( 852,000 ) ( 445,000 ) CASH FLOWS FROM FINANCING ACTIVITIES: (Purchase) of treasury stock ( 5,000 ) ( 35,000 ) Dividends paid ( 2,689,000 ) ( 2,256,000 ) Net cash from financing activities ( 2,694,000 ) ( 2,291,000 ) NET CHANGE IN CASH AND CASH EQUIVALENTS ( 813,000 ) ( 938,000 ) Cash and Cash Equivalents, beginning of period 6,078,000 7,326,000 Cash and Cash Equivalents, end of period $ 5,265,000 $ 6,388,000 Supplemental Disclosure for Cash Flow Information: Cash payments for: Income taxes $ 1,618,000 $ 1,290,000 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, 2023 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. 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 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. 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 $ 5,586,000 $ 48,000 $ ( 237,000 ) $ 5,397,000 REITs 93,000 — ( 12,000 ) 81,000 Equity securities 18,545,000 7,032,000 ( 533,000 ) 25,044,000 Money markets and CDs 948,000 — — 948,000 Total $ 25,172,000 $ 7,080,000 $ ( 782,000 ) $ 31,470,000 Investments at Cost Gross Gross April 30, 2022 Basis Unrealized Gains Unrealized Losses Fair Value Municipal bonds $ 5,625,000 $ 41,000 $ ( 229,000 ) $ 5,437,000 REITs 131,000 16,000 ( 3,000 ) 144,000 Equity securities 18,322,000 6,921,000 ( 473,000 ) 24,770,000 Money markets and CDs 628,000 — — 628,000 Total $ 24,706,000 $ 6,978,000 $ ( 705,000 ) $ 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 $ 118,000 and gross realized losses of $ 69,000 . For the same period, sales of debt securities did no t yield any gross realized gains, but gross realized losses of $ 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 $ 403,000 and gross realized losses of $ 522,000 . For the same nine-month period, sales of debt securities did no t yield any gross realized gains, but gross realized losses of $ 46,000 were recorded. During the quarter ending January 31, 2022, the Company recorded gross realized gains and losses on equity securities of $ 121,000 and $ 27,000 , respectively, while sales of debt securities did no t yield any gross realized gains, but gross realized losses of $ 3,000 were recorded. During the nine-months ending January 31, 2022, the Company recorded gross realized gains and losses on equity securities of $ 465,000 and $ 61,000 , respectively. For the same nine-month period last year, sales of debt securities did no t yield any gross realized gains, but gross realized losses of $ 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. 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 $ 2,967,000 $ ( 86,000 ) $ 1,780,000 $ ( 151,000 ) $ 4,747,000 $ ( 237,000 ) REITs 55,000 ( 9,000 ) 25,000 ( 3,000 ) 80,000 ( 12,000 ) Equity securities 4,808,000 ( 478,000 ) 409,000 ( 55,000 ) 5,217,000 ( 533,000 ) Total $ 7,830,000 $ ( 573,000 ) $ 2,214,000 $ ( 209,000 ) $ 10,044,000 $ ( 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 $ 4,420,000 $ ( 142,000 ) $ 539,000 $ ( 87,000 ) $ 4,959,000 $ ( 229,000 ) REITs 18,000 ( 1,000 ) 26,000 ( 2,000 ) 44,000 ( 3,000 ) Equity securities 4,157,000 ( 424,000 ) 274,000 ( 49,000 ) 4,431,000 ( 473,000 ) Total $ 8,595,000 $ ( 567,000 ) $ 839,000 $ ( 138,000 ) $ 9,434,000 $ ( 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 Note 3: Inventories Inventories at January 31, 2023 and April 30, 2022 consisted of the following: Schedule of Inventories January 31, April 30, 2023 2022 Raw materials $ 8,926,000 $ 6,772,000 Work in process 616,000 618,000 Finished goods 1,130,000 838,000 Inventory gross 10,672,000 8,228,000 Less: allowance for obsolete inventory ( 369,000 ) ( 288,000 ) Inventories, net $ 10,303,000 $ 7,940,000 Note 4: Business Segments 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 $ 3,712,000 $ 4,377,000 $ 13,079,000 $ 13,180,000 Cable & wiring tools 486,000 498,000 1,561,000 1,553,000 Other products 168,000 179,000 554,000 519,000 Total net revenue $ 4,366,000 $ 5,054,000 $ 15,194,000 $ 15,252,000 Income from operations: Security alarm products $ 774,000 $ 988,000 $ 3,339,000 $ 3,541,000 Cable & wiring tools 93,000 117,000 398,000 418,000 Other products 33,000 39,000 141,000 139,000 Total income from operations $ 900,000 $ 1,144,000 $ 3,878,000 $ 4,098,000 Depreciation and amortization: Security alarm products $ 48,000 $ 42,000 $ 143,000 $ 117,000 Cable & wiring tools 30,000 31,000 92,000 92,000 Other products 21,000 18,000 57,000 60,000 Corporate general 14,000 15,000 40,000 50,000 Total depreciation and amortization $ 113,000 $ 106,000 $ 332,000 $ 319,000 Capital expenditures: Security alarm products $ — $ 113,000 $ 74,000 $ 153,000 Cable & wiring tools — — — — Other products 12,000 11,000 147,000 11,000 Corporate general — — — — Total capital expenditures $ 12,000 $ 124,000 $ 221,000 $ 164,000 January 31, 2023 April 30, 2022 Identifiable assets: Security alarm products $ 12,811,000 $ 11,537,000 Cable & wiring tools 2,576,000 2,509,000 Other products 870,000 732,000 Corporate general 38,659,000 39,253,000 Total assets $ 54,916,000 $ 54,031,000 14 Note 5: Earnings per Share Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are: Schedule of Basic and Diluted Earnings Per Share For 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 three months ended January 31, 2022 Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 161,000 Basic EPS $ 161,000 4,943,985 $ .03 Effect of dilutive Convertible Preferred Stock – 20,500 – Diluted EPS $ 161,000 4,964,485 $ .03 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 For the nine months ended January 31, 2022 Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 3,595,000 Basic EPS $ 3,595,000 4,945,192 $ .73 Effect of dilutive Convertible Preferred Stock – 20,500 – Diluted EPS $ 3,595,000 4,965,692 $ .72 15 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 $ 14,000 and $ 16,000 were paid during each quarter ending January 31, 2023 and 2022, respectively. Likewise, the Company paid matching contributions of approximately $ 43,000 and $ 48,000 during each nine-month period ending January 31, 2023 and 2022, 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. 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 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 $ — $ 5,397,000 $ — $ 5,397,000 REITs — 81,000 — 81,000 Equity Securities 25,044,000 — — 25,044,000 Money Markets 948,000 — — 948,000 Total fair value of assets measured on a recurring basis $ 25,992,000 $ 5,478,000 $ — $ 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 $ — $ 5,437,000 $ — $ 5,437,000 REITs — 144,000 — 144,000 Equity Securities 24,770,000 — — 24,770,000 Money Markets 628,000 — — 628,000 Total fair value of assets measured on a recurring basis $ 25,398,000 $ 5,581,000 $ — $ 30,979,000 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