GEORGE RISK INDUSTRIES, INC. 10-Q

Item 1. Financial Statements The unaudited financial statements for the three-and six-month periods ended October 31, 2023, are attached hereto. 2 GEORGE RISK INDUSTRIES, INC. CONDENSED BALANCE SHEETS October 31, 2023 April 30, 2023 (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 3,562,000 $ 4,943,000 Investments and securities, at fair value 29,986,000 31,363,000 Accounts receivable: Trade, net of allowance for credit losses of $ 9,767 and $ 17,922 4,064,000 3,503,000 Other 24,000 59,000 Income tax overpayment 378,000 403,000 Inventories, net 12,608,000 11,443,000 Prepaid expenses 126,000 651,000 Total Current Assets 50,748,000 52,365,000 Property and Equipment, net, at cost 2,060,000 1,997,000 Other Assets Investment in Limited Land Partnership, at cost 344,000 344,000 Projects in process 13,000 83,000 Other — 13,000 Total Other Assets 357,000 440,000 Intangible Assets, net 1,089,000 1,149,000 TOTAL ASSETS $ 54,254,000 $ 55,951,000 See accompanying notes to the unaudited condensed financial statements. 3 GEORGE RISK INDUSTRIES, INC. CONDENSED BALANCE SHEETS (continued) October 31, 2023 April 30, 2023 (unaudited) LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable, trade $ 223,000 $ 546,000 Dividends payable 2,854,000 2,565,000 Deferred income 17,000 43,000 Accrued expenses: Payroll expense 375,000 421,000 Total Current Liabilities 3,469,000 3,575,000 Long-Term Liabilities Deferred income taxes 1,291,000 1,727,000 Total Long-Term Liabilities 1,291,000 1,727,000 Total Liabilities 4,760,000 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 ( 391,000 ) ( 161,000 ) Retained earnings 51,597,000 52,481,000 Less: treasury stock, 3,576,088 and 3,572,338 shares, at cost ( 4,595,000 ) ( 4,554,000 ) Total Stockholders’ Equity 49,494,000 50,649,000 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 54,254,000 $ 55,951,000 See accompanying notes to the unaudited condensed financial statements 4 GEORGE RISK INDUSTRIES, INC. CONDENSED INCOME (LOSS) STATEMENTS FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2023 AND 2022 (Unaudited) Three months Three months Six months Six months ended ended ended ended Oct 31, 2023 Oct 31, 2022 Oct 31, 2023 Oct 31, 2022 Net Sales $ 6,053,000 $ 5,617,000 $ 10,781,000 $ 10,827,000 Less: Cost of Goods Sold ( 2,949,000 ) ( 2,974,000 ) ( 5,411,000 ) ( 5,631,000 ) Gross Profit 3,104,000 2,643,000 5,370,000 5,196,000 Operating Expenses General and Administrative 333,000 357,000 702,000 688,000 Sales 787,000 753,000 1,476,000 1,488,000 Engineering 16,000 20,000 37,000 41,000 Total Operating Expenses 1,136,000 1,130,000 2,215,000 2,217,000 Income From Operations 1,968,000 1,513,000 3,155,000 2,979,000 Other (Expense) Other 2,000 2,000 9,000 4,000 Dividend and Interest Income 217,000 181,000 458,000 365,000 Unrealized (Loss) on Equity Securities ( 2,368,000 ) ( 1,008,000 ) ( 734,000 ) ( 1,197,000 ) Gain (Loss) on Investments 46,000 ( 110,000 ) ( 71,000 ) ( 209,000 ) Gain on Sale of Assets — — 8,000 — Total Other Income (Loss) ( 2,103,000 ) ( 935,000 ) ( 330,000 ) ( 1,037,000 ) Income (Loss) Before Provisions for Income Taxes ( 135,000 ) 578,000 2,825,000 1,942,000 Provisions for Income Taxes: Current Expense 543,000 273,000 853,000 687,000 Deferred Tax (Benefit) Expense ( 623,000 ) ( 302,000 ) ( 347,000 ) ( 404,000 ) Total Income Tax Expense (Benefit) ( 80,000 ) ( 29,000 ) 506,000 283,000 Net Income (Loss) $ ( 55,000 ) $ 607,000 $ 2,319,000 $ 1,659,000 Income Per Share of Common Stock Basic $ ( 0.01 ) $ 0.12 $ 0.47 $ 0.34 Diluted $ ( 0.01 ) $ 0.12 $ 0.47 $ 0.34 Weighted Average Number of Common Shares Outstanding Basic 4,927,571 4,930,964 4,928,273 4,930,993 Diluted 4,927,571 4,951,464 4,948,773 4,951,493 See accompanying notes to the unaudited condensed financial statements 5 GEORGE RISK INDUSTRIES, INC. CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2023 AND 2022 (Unaudited) Three months Three months Six months Six months ended ended Ended ended Oct 31, 2023 Oct 31, 2022 Oct 31, 2023 Oct 31, 2022 Net Income (Loss) $ ( 55,000 ) $ 607,000 $ 2,319,000 $ 1,659,000 Other Comprehensive (Loss), Net of Tax Unrealized (loss) on debt securities: Unrealized holding (losses) arising during period ( 289,000 ) ( 203,000 ) ( 320,000 ) ( 175,000 ) Income tax benefit related to other comprehensive income 82,000 57,000 90,000 49,000 Other Comprehensive (Loss) ( 207,000 ) ( 146,000 ) ( 230,000 ) ( 126,000 ) Comprehensive Income (Loss) $ ( 262,000 ) $ 461,000 $ 2,089,000 $ 1,533,000 See accompanying notes to the unaudited condensed financial statements 6 GEORGE RISK INDUSTRIES, INC. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED OCTOBER 31, 2023 AND 2022 (Unaudited) Shares Amount Shares Amount Preferred Stock Common Stock Class A Shares Amount Shares Amount Balances, July 31, 2022 4,100 $ 99,000 8,502,881 $ 850,000 Purchases of common stock — — — — Dividend declared at $ 0.60 per common share outstanding — — — — Unrealized (loss), net of tax effect — — — — Net Income — — — — Balances, October 31, 2022 4,100 $ 99,000 8,502,881 $ 850,000 Shares Amount Shares Amount Preferred Stock Common Stock Class A Shares Amount Shares Amount Balances, July 31, 2023 4,100 $ 99,000 8,502,881 $ 850,000 Purchases of common stock — — — — Dividend declared at $ 0.65 per common share outstanding Unrealized (loss), net of tax effect — — — — Net (Loss) — — — — Balances, October 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 OCTOBER 31, 2023 AND 2022 (Unaudited) Capital Shares Amount Income Earnings Total Paid-In Treasury Stock (Common Class A) Accumulated Other Comprehensive Retained Capital Shares Amount Income Earnings Total Balances, July 31, 2022 $ 1,934,000 3,571,893 $ ( 4,549,000 ) $ ( 117,000 ) $ 51,733,000 $ 49,950,000 Purchases of common stock — 70 ( 1,000 ) — — ( 1,000 ) Dividend declared at $ 0.60 per common share outstanding — — — — ( 2,958,000 ) ( 2,958,000 ) Unrealized (loss), net of tax effect — — — ( 146,000 ) — ( 146,000 ) Net Income — — — — 607,000 607,000 Balances, October 31, 2022 $ 1,934,000 3,571,963 $ ( 4,550,000 ) $ ( 263,000 ) $ 49,382,000 $ 47,452,000 Capital Shares Amount Income Earnings Total Paid-In Treasury Stock (Common Class A) Accumulated Other Comprehensive Retained Capital Shares Amount Income Earnings Total Balances, July 31, 2023 $ 1,934,000 3,574,373 $ ( 4,576,000 ) $ ( 184,000 ) $ 54,855,000 $ 52,978,000 Purchases of common stock — 1,715 ( 19,000 ) — — ( 19,000 ) Dividend declared at $ 0.65 per common share outstanding — — — — ( 3,203,000 ) ( 3,203,000 ) Unrealized (loss), net of tax effect — — — ( 207,000 ) — ( 207,000 ) Net (Loss) — — — — ( 55,000 ) ( 55,000 ) Balances, October 31, 2023 $ 1,934,000 3,576,088 $ ( 4,595,000 ) $ ( 391,000 ) $ 51,597,000 $ 49,494,000 See accompanying notes to the unaudited condensed financial statements 8 GEORGE RISK INDUSTRIES, INC. CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED OCTOBER 31, 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 (loss), net of tax effect — — — — Net Income — — — — Balances, October 31, 2022 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, 2023 4,100 $ 99,000 8,502,881 $ 850,000 Purchases of common stock — — — — Dividend declared at $ 0.65 per common share outstanding — — — — Unrealized (loss), net of tax effect — — — — Net Income — — — — Balances, October 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 SIX MONTHS ENDED OCTOBER 31, 2023 AND 2022 (Unaudited) Capital Shares Amount Income Earnings Total 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 — 270 ( 3,000 ) — — ( 3,000 ) Dividend declared at $ 0.60 per common share outstanding — — — — ( 2,959,000 ) ( 2,959,000 ) Unrealized (loss), net of tax effect — — — ( 126,000 ) — ( 126,000 ) Net Income — — — — 1,659,000 1,659,000 Balances, October 31, 2022 $ 1,934,000 3,571,963 $ ( 4,550,000 ) $ ( 263,000 ) $ 49,382,000 $ 47,452,000 Capital Shares Amount Income Earnings Total 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 — 3,750 ( 41,000 ) — — ( 41,000 ) Dividend declared at $ 0.65 per common share outstanding — — — — ( 3,203,000 ) ( 3,203,000 ) Unrealized (loss), net of tax effect — — — ( 230,000 ) — ( 230,000 ) Net Income — — — — 2,319,000 2,319,000 Balances, October 31, 2023 $ 1,934,000 3,576,088 $ ( 4,595,000 ) $ ( 391,000 ) $ 51,597,000 $ 49,494,000 See accompanying notes to the unaudited condensed financial statements 10 GEORGE RISK INDUSTRIES, INC. CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED OCTOBER 31, 2023 AND 2022 (Unaudited) Oct 31, 2023 Oct 31, 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 2,319,000 $ 1,659,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 241,000 219,000 Loss on sale of investments 49,000 209,000 Impairments of investments 22,000 — Unrealized loss on equity securities 734,000 1,197,000 Provision for credit losses on accounts receivable ( 8,000 ) ( 9,000 ) Reserve for obsolete inventory ( 61,000 ) 52,000 Deferred income taxes ( 347,000 ) ( 405,000 ) (Gain) on sale of assets ( 8,000 ) — Changes in assets and liabilities: (Increase) decrease in: Accounts receivable ( 553,000 ) 75,000 Inventories ( 1,103,000 ) ( 1,755,000 ) Prepaid expenses and projects in process 608,000 798,000 Other receivables 35,000 ( 18,000 ) Income tax overpayment 25,000 ( 364,000 ) Increase (decrease) in: Accounts payable ( 323,000 ) ( 80,000 ) Accrued expenses ( 72,000 ) 48,000 Net cash from operating activities 1,558,000 1,626,000 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets 8,000 — (Purchase) of property and equipment ( 243,000 ) ( 209,000 ) Proceeds from sale of marketable securities 524,000 14,000 (Purchase) of marketable securities ( 273,000 ) ( 224,000 ) Net cash from investing activities 16,000 ( 419,000 ) CASH FLOWS FROM FINANCING ACTIVITIES: (Purchase) of treasury stock ( 41,000 ) ( 3,000 ) Dividends paid ( 2,914,000 ) ( 2,689,000 ) Net cash from financing activities ( 2,955,000 ) ( 2,692,000 ) NET CHANGE IN CASH AND CASH EQUIVALENTS ( 1,381,000 ) ( 1,485,000 ) Cash and Cash Equivalents, beginning of period 4,943,000 6,078,000 Cash and Cash Equivalents, end of period $ 3,562,000 $ 4,593,000 Supplemental Disclosure for Cash Flow Information: Cash payments for: Income taxes $ 820,000 $ 1,165,000 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 UNAUDITED CONDENSED FINANCIAL STATEMENTS OCTOBER 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 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 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 consolidated financial statements are disclosed in our Annual Report, and there have been no changes to the Company’s significant accounting policies during the six months ended October 31, 2023. Recently Issued Accounting Pronouncements — In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements . The new guidance clarifies or improves disclosure and presentation requirements on a variety of topics in the codification. The amendments will align the requirements in the FASB Accounting Standard Codification with the SEC’s regulations. The amendments are effective prospectively on the date each individual amendment is effectively removed from Regulation S-X or Regulation S-K. The Company is in the process of evaluating the impact that the adoption of this ASU will have on the financial statements and related disclosures, which is not expected to be material. 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. 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 October 31, 2023 and April 30, 2023, investments consisted of the following: Schedule of Investments Gross Gross Investments at Cost Unrealized Unrealized Fair October 31, 2023 Basis Gains Losses Value Municipal bonds $ 5,357,000 $ 21,000 $ ( 372,000 ) $ 5,006,000 REITs 79,000 — ( 12,000 ) 67,000 Equity securities 18,810,000 6,321,000 ( 803,000 ) 24,328,000 Money markets and CDs 585,000 — — 585,000 Total $ 24,831,000 $ 6,342,000 $ ( 1,187,000 ) $ 29,986,000 Gross Gross Investments at Cost Unrealized Unrealized Fair April 30, 2023 Basis Gains Losses 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, management recorded an impairment loss of $ 22,000 for the quarter and six-month period ended October 31, 2023, while there were no impairment losses recorded for either of the quarter or the six months ended October 31, 2022. 13 The Company’s investments are actively traded in the stock and bond markets. Therefore, either a realized gain or loss is recorded when a sale happens. For the quarter ended October 31, 2023 the Company had sales of equity securities which yielded gross realized gains of $ 108,000 and gross realized losses of $ 60,000 . For the same period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $ 2,000 were recorded. As for the six-months ended October 31, 2023 the Company had sales of equity securities which yielded gross realized gains of $ 214,000 and gross realized losses of $ 278,000 . For the same six-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $ 7,000 were recorded. During the quarter ending October 31, 2022, the Company recorded gross realized gains and losses on equity securities of $ 89,000 and $ 187,000 , respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $ 12,000 were recorded. During the six-months ending October 31, 2022, the Company recorded gross realized gains and losses on equity securities of $ 285,000 and $ 453,000 , respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $ 41,000 were recorded. The gross realized loss numbers include the impaired figures listed in the previous paragraph. The following table shows the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at October 31, 2023 and April 30, 2023, respectively. Unrealized Loss Breakdown by Investment Type at October 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 $ 1,389,000 $ ( 71,000 ) $ 3,453,000 $ ( 301,000 ) $ 4,842,000 $ ( 372,000 ) REITs — — 61,000 ( 12,000 ) 61,000 ( 12,000 ) Equity securities 4,395,000 ( 350,000 ) 2,806,000 ( 453,000 ) 7,201,000 ( 803,000 ) Total $ 5,784,000 $ ( 421,000 ) $ 6,320,000 $ ( 766,000 ) $ 12,104,000 $ ( 1,187,000 ) 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 October 31, 2023 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 October 31, 2023 and April 30, 2023. Note 3 Inventories Inventories at October 31, 2023 and April 30, 2023 consisted of the following: Schedule of Inventories October 31, April 30, 2023 2023 Raw materials $ 11,161,000 $ 9,886,000 Work in process 719,000 678,000 Finished Goods 1,055,000 1,267,000 Inventory gross 12,935,000 11,831,000 Less: allowance for obsolete inventory ( 327,000 ) ( 388,000 ) Inventories, net $ 12,608,000 $ 11,443,000 14 Note 4 Business Segments The following is financial information relating to industry segments: Schedule of Financial Information Relating to Industry Segments Three months Three months Six months Six months ended ended ended ended Oct 31, 2023 Oct 31, 2022 Oct 31, 2023 Oct 31, 2022 Net revenue: Security alarm products $ 5,445,000 $ 4,864,000 $ 9,687,000 $ 9,367,000 Cable & wiring tools 457,000 591,000 785,000 1,074,000 Other products 151,000 162,000 309,000 386,000 Total net revenue $ 6,053,000 $ 5,617,000 $ 10,781,000 $ 10,827,000 Income from operations: Security alarm products $ 1,769,000 $ 1,309,000 $ 2,835,000 $ 2,577,000 Cable & wiring tools 143,000 150,000 230,000 296,000 Other products 56,000 54,000 90,000 106,000 Total income from operations $ 1,968,000 $ 1,513,000 $ 3,155,000 $ 2,979,000 Depreciation and amortization: Security alarm products $ 42,000 $ 47,000 $ 91,000 $ 95,000 Cable & wiring tools 30,000 31,000 60,000 62,000 Other products 13,000 18,000 37,000 36,000 Corporate general 39,000 15,000 53,000 26,000 Total depreciation and amortization $ 124,000 $ 111,000 $ 241,000 $ 219,000 Capital expenditures: Security alarm products $ 23,000 $ — $ 224,000 $ 74,000 Cable & wiring tools — — — — Other products — 135,000 — 135,000 Corporate general 19,000 — 19,000 — Total capital expenditures $ 42,000 $ 135,000 $ 243,000 $ 209,000 October 31, 2023 April 30, 2023 Identifiable assets: Security alarm products $ 16,314,000 $ 14,251,000 Cable & wiring tools 2,302,000 2,548,000 Other products 900,000 981,000 Corporate general 34,738,000 38,171,000 Total assets $ 54,254,000 $ 55,951,000 15 Note 5 Earnings per Share Net Income (Loss) Per Share Basic income (loss) per share of common stock attributable to common stockholders is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share of common stock attributable to common stockholders when their effect is dilutive. The dilutive common shares for the three months ended October 31, 2023 are not included in the computation of diluted earnings per share because to do so would be anti-dilutive. As of October 31, 2023 there were 20,500 potentially dilutive shares. Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are: Schedule of Basic and Diluted Earnings Per Share For the three months ended October 31, 2023 Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ ( 55,000 ) Basic EPS $ ( 55,000 ) 4,927,571 $ ( .01 ) Diluted EPS $ ( 55,000 ) 4,927,571 $ ( .01 ) For the three months ended October 31, 2022 Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 607,000 Basic EPS $ 607,000 4,930,964 $ .12 Effect of dilutive Convertible Preferred Stock — 20,500 — Diluted EPS $ 607,000 4,951,464 $ .12 For the six months ended October 31, 2023 Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 2,319,000 Basic EPS $ 2,319,000 4,928,273 $ .47 Effect of dilutive Convertible Preferred Stock — 20,500 — Diluted EPS $ 2,319,000 4,948,773 $ .47 For the six months ended October 31, 2022 Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 1,659,000 Basic EPS $ 1,659,000 4,930,993 $ .34 Effect of dilutive Convertible Preferred Stock — 20,500 — Diluted EPS $ 1,659,000 4,951,493 $ .34 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 $ 14,000 and $ 13,000 were paid during each quarter ending October 31, 2023 and 2022, respectively. Likewise, the Company paid matching contributions of approximately $ 29,000 during each of six-month periods ending October 31, 2023 and 2022. 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 October 31, 2023 and April 30, 2023, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITs) as well as certain state and municipal debt securities. The marketable securities are valued using third-party broker statements. The value of the majority of securities is derived from quoted market information. The inputs to the valuation are generally classified as Level 1 given the active market for these securities, however, if an active market does not exist, which is the case for municipal bonds and REITs, the inputs are recorded as Level 2. Fair Value Hierarchy The following table sets forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy. As required by US GAAP, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Schedule of Assets Measured at Fair Value on Recurring Basis Level 1 Level 2 Level 3 Total Assets Measured at Fair Value on a Recurring Basis as of October 31, 2023 Level 1 Level 2 Level 3 Total Assets: Municipal Bonds $ — $ 5,006,000 $ — $ 5,006,000 REITs — 67,000 — 67,000 Equity Securities 24,328,000 — — 24,328,000 Money Markets and CDs 585,000 — — 585,000 Total fair value of assets measured on a recurring basis $ 24,913,000 $ 5,073,000 $ — $ 29,986,000 Level 1 Level 2 Level 3 Total Assets Measured at Fair Value on a Recurring Basis as of April 30, 2023 Level 1 Level 2 Level 3 Total Assets: Municipal Bonds $ — $ 5,212,000 $ — $ 5,212,000 REITs — 71,000 — 71,000 Equity Securities 25,019,000 — — 25,019,000 Money Markets and CDs 1,061,000 — — 1,061,000 Total fair value of assets measured on a recurring basis $ 26,080,000 $ 5,283,000 $ — $ 31,363,000 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 18 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 condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2023. Executive Summary The Company’s performance has remained steady through the first half of the current fiscal year with the second quarter showing an increase in sales over the first quarter of the current fiscal year. This is mainly due to having the ability to obtain raw materials that are needed to complete the manufacture of our products and keeping employees staffed at our locations. Additionally, the Company’s products are traditionally tied to the housing market and with that market remaining strong, it in turn helps the Company’s sales grow. As far as overall company performance, the net income is up when comparing the current six-month period to the prior six-month period. Management continues to keep manufacturing and operating expenses in check and the current year realized and unrealized gains (losses) on investments are showing fewer losses than for the same periods last year. Opportunities include keeping up with the business growth, finding ways to get our products out to our customers in a timelier manner, which includes looking into more automation, and to continue looking at businesses that might be a good fit to purchase. We also have new products that are expected to hit the marketplace 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 efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever before. Results of Operations ● Net sales were $6,053,000 for the quarter ended October 31, 2023, which is a 7.76% increase from the corresponding quarter last year. Year-to-date net sales were $10,781,000 at October 31, 2023, which is a 0.42% decrease from the same period last year. The increase in sales in the current quarter is a result of the economy rebounding in the second half of the calendar year and having management figuring out more efficient ways to get products out to our customers. Also, the ongoing commitment towards outstanding customer service and customization of products are a few of the many reasons sales continue to grow. 19 ● Cost of goods sold was 48.72% of net sales for the quarter ended October 31, 2023 and was 52.95% for the same quarter last year. Year-to-date cost of goods sold percentages were 50.19% for the current six months and 52.01% for the corresponding six months last year. The current cost of goods sold percentage goals of keeping labor and other manufacturing expenses at less than 50% have been met for the quarter and are just slightly over for year-to-date results. The decreased cost of goods sold percentages are a result of the economy gaining stability recently and Management finding ways to be more efficient. ● Operating expenses were up $6,000 for the quarter and were down $2,000 for the six-months ended October 31, 2023 as compared to the corresponding periods last year. But when comparing percentages in relation to net sales, the operating expenses for the quarter ended October 31, 2023 was 18.77% of net sales while it was 20.12% of net sales for the same quarter the prior year. For year-to-date numbers, operating expense were 20.55% and 20.48% of net sales for the six months ended October 31, 2023 and 2022, respectively. The Company has been able to keep the operating expenses at less than 25% of net sales for many years now; however, the actual dollar amount increase is because of increased commission amounts (since sales have increased) and additional labor costs for wage increases. ● Income from operations for the quarter ended October 31, 2023 was at $1,968,000, which is a 30.07% increase from the corresponding quarter last year, which had income from operations of $1,513,000. Income from operations for the six months ended October 31, 2023 was at $3,155,000, which is a 5.91% increase from the corresponding six months last year, which had income from operations of $2,979,000. ● Other income and expenses are down when comparing the current quarter to the same quarter of the prior year, with a decrease of $1,168,000 in the current quarter. Comparably, other income and expenses are up by $707,000 when comparing the current six-month period to the prior six-month period. 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 losses in the current quarter and year-to-date numbers are the unrealized gain and loss on equity securities numbers. The Company is at the mercy of the stock market when it comes to these figures and inflation and the current state of the economy has influenced these numbers. ● Overall, net income for the quarter ended October 31, 2023 was down $662,000, or 109.06%, over the same quarter last year. Conversely, net income for the six-month period ended October 31, 2023 was up $660,000, or 39.78%, over the same period in the prior year. ● Earnings per common share for the quarter ended October 31, 2023 were ($0.01) per share and $0.47 per share for the year-to-date numbers. EPS for the quarter and six months ended October 31, 2022 were $0.12 per share and $0.34 per share, respectively. 20 Liquidity and capital resources Operating ● Net cash decreased $1,381,000 during the six months ended October 31, 2023 as compared to a decrease of $1,485,000 during the corresponding period last year. ● Accounts receivable increased $553,000 for the six months ended October 31, 2023 compared with a $75,000 decrease for the same period last year. The current year increase is a result of improved sales during the second quarter and having a slight decline in collections of accounts receivable over the last year. An analysis of accounts receivable shows that 6.71% of the receivables were over 90 days at October 31, 2023, while 5.02% were over 90 days for the same period last year. ● Inventories increased $1,103,000 during the current six-month period as compared to a $1,755,000 increase last year. The smaller increase in the current year is primarily due to not buying as many raw materials as management did during the prior six-month period. Management has also seen slight decreases in raw material prices during the current year as compared to the six-months period ending October 31, 2022. ● Prepaid expenses saw a $608,000 decrease for the current six months, primarily due to having inventory delivered during the current six-month period; therefore, having less money in prepayments of raw materials on the books. The prior year six months showed a $798,000 decrease in prepaid expenses. ● Income tax overpayment decreased $25,000 for the current six-month period, compared to having an increase of $364,000 in income tax payable for the six-months ended October 31, 2022. Part of the current decrease is due to having the corporate income tax rate in Nebraska decrease to 7.25% from 7.5% for the current fiscal year. ● Accounts payable shows a decrease for the current six-month period of $323,000 as it shows a decrease for the prior six-month periods of $80,000. The company strives to pay all invoices within terms, and the variance is primarily due to the timing of receipt of products and payment of invoices. ● Accrued expenses decreased $72,000 for the current six-month period as compared to a $48,000 increase for the six-month period ended October 31, 2022. The difference in the amounts is primarily due to timing issues. Investing ● As for our investment activities, the Company purchased $243,000 of property and equipment during the current six-month period. In comparison, $209,000 was spent on purchases of property and equipment during the corresponding six months last year. ● The Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the six-month period ended October 31, 2023 there was quite a bit of buy/sell activity in the investment accounts. Net cash spent on purchases of marketable securities for the six-month period ended October 31, 2023 was $273,000 compared to $224,000 spent in the prior six-month period. We continue 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. 21 Financing ● The Company continues to purchase back its common stock when the opportunity arises. For the six-month period ended October 31, 2023, the Company purchased $41,000 worth of treasury stock, in comparison to $3,000 repurchased in the corresponding six-month period last year. ● The company declared a dividend of $0.65 per share of common stock on September 30, 2023, which was paid out during the second quarter. This is an increase to the dividend of $0.60, which was declared and paid during the second fiscal quarter last year. New Product Development The Company and its engineering department continue to develop enhancements to product lines, develop new products that complement existing products, and look for products that are well suited to our distribution network and manufacturing capabilities. Items currently in various stages of the development process include: ● Explosion proof contacts that will be UL listed for hazardous locations are in development. 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. ● Research is being done on updating our small profile glass break detector, in addition to looking at the development of programmable temperature and humidity sensors with built-in hysteresis. ● 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. 22 GEORGE RISK INDUSTRIES, INC. PART I. FINANCIAL INFORMATION Item 3. Quantitative and Qualitative Disclosures about Market Risk Not applicable