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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended October 31, 2021

 

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 or other jurisdiction of
incorporation or organization)
  (I.R.S. Employers
Identification No.)

 

802 South 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 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

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

 

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

 

  Large 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 December 15, 2021 was 4,943,856.

 

 

 

 
 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The unaudited financial statements for the three-and six-month periods ended October 31, 2021, are attached hereto.

 

2
 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

 

    October 31, 2021     April 30, 2021  
    (unaudited)        
ASSETS                
                 
Current Assets:                
Cash and cash equivalents   $ 6,107,000     $ 7,326,000  
Investments and securities     34,409,000       33,337,000  
Accounts receivable:                
Trade, net of $20,343 and $9,947 doubtful account allowance     3,617,000       3,812,000  
Other     18,000       16,000  
Inventories, net     7,077,000       5,622,000  
Prepaid expenses     561,000       405,000  
Total Current Assets     51,789,000       50,518,000  
                 
Property and Equipment, net, at cost     1,593,000       1,704,000  
                 
Other Assets                
Investment in Limited Land Partnership, at cost     344,000       320,000  
Projects in process     341,000       200,000  
Other     40,000        
Total Other Assets     725,000       520,000  
                 
Intangible Assets, net     1,332,000       1,394,000  
                 
TOTAL ASSETS   $ 55,439,000     $ 54,136,000  

 

See accompanying notes to the unaudited condensed financial statements.

 

3
 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

(continued)

 

    October 31, 2021     April 30, 2021  
    (unaudited)        
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
Current Liabilities                
Accounts payable, trade   $ 294,000     $ 477,000  
Dividends payable     2,297,000       2,080,000  
Accrued expenses:                
Payroll and other expense     355,000       359,000  
Income tax payable     220,000       81,000  
Total Current Liabilities     3,166,000       2,997,000  
                 
Long-Term Liabilities                
Deferred income taxes     2,969,000       2,735,000  
Total Long-Term Liabilities     2,969,000       2,735,000  
                 
Total Liabilities     6,135,000       5,732,000  
                 
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     72,000       108,000  
Retained earnings     50,711,000       49,749,000  
Less: treasury stock, 3,558,425 and 3,556,412 shares, at cost     (4,362,000 )     (4,336,000 )
Total Stockholders’ Equity     49,304,000       48,404,000  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 55,439,000     $ 54,136,000  

 

See accompanying notes to the unaudited condensed financial statements

 

4
 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED INCOME STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2021 AND 2020

(Unaudited)

 

    Three months     Three months     Six months     Six months  
    ended     ended     ended     ended  
    Oct 31, 2021     Oct 31, 2020     Oct 31, 2021     Oct 31, 2020  
Net Sales   $ 5,244,000     $ 4,647,000     $ 10,199,000     $ 8,694,000  
Less: Cost of Goods Sold     (2,729,000 )     (2,294,000 )     (5,047,000 )     (4,245,000 )
Gross Profit     2,515,000       2,353,000       5,152,000       4,449,000  
                                 
Operating Expenses                                
General and Administrative     350,000       364,000       699,000       678,000  
Sales     720,000       604,000       1,460,000       1,171,000  
Engineering     21,000       21,000       39,000       50,000  
Total Operating Expenses     1,091,000       989,000       2,198,000       1,899,000  
                                 
Income From Operations     1,424,000       1,364,000       2,954,000       2,550,000  
                                 
Other Income (Expense)                                
Other     13,000       44,000       13,000       56,000  
Dividend and Interest Income     148,000       134,000       324,000       290,000  
Unrealized Gain (Loss) on Equity Securities     623,000       (115,000 )     1,043,000       1,999,000  
Gain on Investments     79,000       72,000       300,000       44,000  
Gain on Sale of Assets           4,000             4,000  
Total Other Income     863,000       139,000       1,680,000       2,393,000  
                                 
Income Before Provisions for Income Taxes     2,287,000       1,503,000       4,634,000       4,943,000  
                                 
Provisions for Income Taxes:                                
Current Expense     454,000       682,000       952,000       1,032,000  
Deferred Tax (Benefit) Expense     145,000       (39,000 )     248,000       559,000  
Total Income Tax Expense     599,000       643,000       1,200,000       1,591,000  
                                 
Net Income   $ 1,688,000     $ 860,000     $ 3,434,000     $ 3,352,000  
                                 
Income Per Share of Common Stock                                
Basic   $ 0.34     $ 0.17     $ 0.69     $ 0.68  
Diluted   $ 0.34     $ 0.17     $ 0.69     $ 0.67  
                                 
Weighted Average Number of Common Shares Outstanding                                
Basic     4,945,130       4,949,902       4,945,795       4,949,914  
Diluted     4,965,630       4,970,402       4,966,295       4,970,414  

 

See accompanying notes to the unaudited condensed financial statements

 

5
 

 

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2021 AND 2020

(Unaudited)

 

    Three months     Three months     Six months     Six months  
    ended     ended     ended     ended  
    Oct 31, 2021     Oct 31, 2020     Oct 31, 2021     Oct 31, 2020  
Net Income   $ 1,688,000     $ 860,000     $ 3,434,000     $ 3,352,000  
                                 
Other Comprehensive Income, Net of Tax                                
Unrealized gain (loss) on debt securities:                                
Unrealized holding gains (losses) arising during period     (61,000 )     (20,000 )     (50,000 )     130,000  
Income tax benefit (expense) related to other comprehensive income     18,000       6,000       14,000       (39,000 )
Other Comprehensive Income (Loss)     (43,000 )     (14,000 )     (36,000 )     91,000  
                                 
Comprehensive Income   $ 1,645,000     $ 846,000     $ 3,398,000     $ 3,443,000  

 

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, 2021 AND 2020

(Unaudited)

 

    Shares     Amount     Shares     Amount  
    Preferred Stock    

Common Stock

Class A

 
    Shares     Amount     Shares     Amount  
Balances, July 31, 2020     4,100     $ 99,000       8,502,881     $ 850,000  
                                 
Purchases of common stock                        
                                 
Dividend declared at $0.42 per common share outstanding                        
                                 
Unrealized gain (loss), net of tax effect                        
                                 
Net Income                        
                                 
Balances, October 31, 2020     4,100     $ 99,000       8,502,881     $ 850,000  

 

    Preferred Stock    

Common Stock

Class A

 
    Shares     Amount     Shares     Amount  
Balances, July 31, 2021     4,100     $ 99,000       8,502,881     $ 850,000  
                                 
Purchases of common stock                        
                                 
Dividend declared at $0.50 per common share outstanding                                
                                 
Unrealized gain (loss), net of tax effect                        
                                 
Net Income                        
                                 
Balances, October 31, 2021     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, 2021 AND 2020

(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, 2020 $ 1,934,000       3,552,954     $ (4,301,000 )   $ 101,000     $ 43,498,000     $ 42,181,000  
                                               
Purchases of common stock         75       (1,000 )                 (1,000 )
                                               
Dividend declared at $0.42 per common share outstanding                           (2,079,000 )     (2,079,000 )
                                               
Unrealized gain (loss), net of tax effect                     (14,000 )           (14,000 )
                                               
Net Income                           860,000       860,000  
                                               
Balances, October 31, 2020 $ 1,934,000       3,553,029     $ (4,302,000 )   $ 87,000     $ 42,279,000     $ 40,947,000  

 

  Paid-In    

Treasury Stock

(Common Class A)

    Accumulated Other Comprehensive     Retained        
  Capital     Shares     Amount     Income     Earnings     Total  
Balances, July 31, 2021 $ 1,934,000       3,556,425     $ (4,336,000 )   $ 115,000     $ 51,495,000     $ 50,157,000  
                                               
Purchases of common stock         2,000       (26,000 )                 (26,000 )
                                               
Dividend declared at $0.50 per common share outstanding                           (2,472,000 )     (2,472,000 )
                                               
Unrealized gain (loss), net of tax effect                     (43,000 )           (43,000 )
                                               
Net Income                           1,688,000       1,688,000  
                                               
Balances, October 31, 2021 $ 1,934,000       3,558,425     $ (4,362,000 )   $ 72,000     $ 50,711,000     $ 49,304,000  

 

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, 2021 AND 2020

(Unaudited)

 

    Shares     Amount     Shares     Amount  
    Preferred Stock    

Common Stock

Class A

 
    Shares     Amount     Shares     Amount  
Balances, April 30, 2020     4,100     $ 99,000       8,502,881     $ 850,000  
                                 
Purchases of common stock                        
                                 
Dividend declared at $0.42 per common share outstanding                        
                                 
Unrealized gain (loss), net of tax effect                        
                                 
Net Income                        
                                 
Balances, October 31, 2020     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 gain (loss), net of tax effect                        
                                 
Net Income                        
                                 
Balances, October 31, 2021     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, 2021 AND 2020

(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, 2020 $ 1,934,000       3,552,954     $ (4,301,000 )   $ (4,000 )   $ 41,006,000     $ 39,584,000  
                                               
Purchases of common stock         75       (1,000 )                 (1,000 )
                                               
Dividend declared at $0.42 per common share outstanding                           (2,079,000 )     (2,079,000 )
                                               
Unrealized gain (loss), net of tax effect                     91,000             91,000  
                                               
Net Income                           3,352,000       3,352,000  
                                               
Balances, October 31, 2020 $ 1,934,000       3,553,029     $ (4,302,000 )   $ 87,000     $ 42,279,000     $ 40,947,000  

  

  Paid-In    

Treasury Stock

(Common Class A)

   

Accumulated

Other

Comprehensive

    Retained        
  Capital     Shares     Amount     Income     Earnings     Total  
Beginning balance $ 1,934,000       3,556,412     $ (4,336,000 )   $ 108,000     $ 49,749,000     $ 48,404,000  
                                               
Purchases of common stock         2,013       (26,000 )                 (26,000 )
                                               
Dividend declared                           (2,472,000 )     (2,472,000 )
                                               
Unrealized gain (loss), net of tax effect                     (36,000 )           (36,000 )
                                               
Net Income                           3,434,000       3,434,000  
                                               
Ending balance $ 1,934,000       3,558,425     $ (4,362,000 )   $ 72,000     $ 50,711,000     $ 49,304,000  

 

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, 2021 AND 2020

(Unaudited)

 

    Oct 31, 2021     Oct 31, 2020  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net Income   $ 3,434,000     $ 3,352,000  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     213,000       189,000  
(Gain) on sale of investments     (300,000 )     (123,000 )
Impairments on investments           79,000  
Unrealized (gain) on equity securities     (1,043,000 )     (1,999,000 )
Reserve for bad debts     10,000       (6,000 )
Reserve for obsolete inventory     73,000       10,000  
Deferred income taxes     248,000       559,000  
(Gain) loss on sale of assets           (4,000 )
Changes in assets and liabilities:                
(Increase) decrease in:                
Accounts receivable     185,000       32,000  
Inventories     (1,528,000 )     (637,000 )
Prepaid expenses and projects in process     (337,000 )     73,000  
Other receivables     (2,000 )     (10,000 )
Increase (decrease) in:                
Accounts payable     (183,000 )     28,000  
Accrued expenses     (4,000 )     (104,000 )
Income tax payable     140,000       376,000  
Net cash from operating activities     906,000       1,815,000  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Proceeds from sale of assets           4,000  
(Purchase) of property and equipment     (40,000 )     (361,000 )
Proceeds from sale of marketable securities     428,000       16,000  
(Purchase) of marketable securities     (208,000 )     (186,000 )
(Purchase) of long-term investment     (24,000 )      
Net cash from investing activities     156,000       (527,000 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
(Purchase) of treasury stock     (26,000 )     (1,000 )
Dividends paid     (2,255,000 )     (1,890,000 )
Net cash from financing activities     (2,281,000 )     (1,891,000 )
                 
NET CHANGE IN CASH AND CASH EQUIVALENTS     (1,219,000 )     (603,000 )
                 
Cash and Cash Equivalents, beginning of period     7,326,000       6,458,000  
Cash and Cash Equivalents, end of period   $ 6,107,000     $ 5,855,000  
                 
Supplemental Disclosure for Cash Flow Information:                
Cash payments for:                
Income taxes   $ 860,000     $ 650,000  
Interest paid   $     $  
                 
Cash receipts for:                
Income taxes   $ 43,000     $  

 

See accompanying notes to the unaudited condensed financial statements

 

11
 

 

GEORGE RISK INDUSTRIES, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

OCTOBER 31, 2021

 

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, 2021 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.

 

Recently Issued Accounting Pronouncements — In June 2016 the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which was subsequently amended in February 2020 by ASU 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842).” The amendments introduce an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. The update with amendment is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not believe this new guidance will have a material impact on its financial statements and will implement the disclosures related to this update beginning in 2023.

 

In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. ASU 2020-01 deals with changes in the significant influence of derivative and investments, of which the Company has none and became effective for the Company in the first quarter of 2021. The adoption of this standard did not have any impact on the Company’s condensed financial statements.

 

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

 

12
 

 

Note 2 Investments

 

The Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts, and money markets. The investments in debt securities, which include municipal bonds and bond funds, mature between June 2022 and January 2044. 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, 2021 and April 30, 2021, investments consisted of the following:

 

Investments at         Gross     Gross        
October 31, 2021   Cost     Unrealized     Unrealized     Fair  
    Basis     Gains     Losses     Value  
Municipal bonds   $ 5,790,000     $ 155,000     $ (51,000 )   $ 5,894,000  
REITs     131,000       15,000       (6,000 )     140,000  
Equity securities     17,835,000       10,373,000       (114,000 )     28,094,000  
Money markets and CDs     281,000                   281,000  
Total   $ 24,037,000     $ 10,543,000     $ (171,000 )   $ 34,409,000  

 

Investments at         Gross     Gross        
April 30, 2021   Cost     Unrealized     Unrealized     Fair  
    Basis     Gains     Losses     Value  
Municipal bonds   $ 5,854,000     $ 198,000     $ (43,000 )   $ 6,009,000  
REITs     131,000       11,000       (5,000 )     137,000  
Equity securities     17,199,000       9,294,000       (74,000 )     26,419,000  
Money markets and CDs     772,000                   772,000  
Total   $ 23,956,000     $ 9,503,000     $ (122,000 )   $ 33,337,000  

 

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

 

The Company evaluates all marketable securities for other-than-temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, there were no impairment losses recorded for the quarter and the six months ended October 31, 2021. As for the corresponding periods last year, management recorded an impairment loss of $52,000 for the quarter ended October 31, 2020 and an impairment loss of $79,000 was recorded for the six-months ended October 31, 2020.

 

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, 2021 the Company had sales of equity securities which yielded gross realized gains of $106,000 and gross realized losses of $26,000. For the same period, sales of debt securities did not yield any gross realized gains or losses. As for the six-months ended October 31, 2021 the Company had sales of equity securities which yielded gross realized gains of $343,000 and gross realized losses of $33,000. For the same six-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $10,000 were recorded. During the quarter ending October 31, 2020, the Company recorded gross realized gains and losses on equity securities of $184,000 and $110,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $2,000 were recorded. During the six-months ending October 31, 2020, the Company recorded gross realized gains and losses on equity securities of $286,000 and $236,000, respectively, while sales of debt securities did not yield any gross realized gains, but gross realized losses of $6,000 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, 2021 and April 30, 2021, respectively.

 

Unrealized Loss Breakdown by Investment Type at October 31, 2021

 

Description   Less than 12 months, Fair Value     Less than 12 months, Unrealized Loss     12 months or greater, Fair Value     12 months or greater, Unrealized Loss     Total, Fair Value     Total, Unrealized Loss  
    Less than 12 months     12 months or greater     Total  
Description   Fair Value     Unrealized Loss     Fair Value     Unrealized Loss     Fair Value     Unrealized Loss  
Municipal bonds   $ 699,000     $ (17,000 )   $ 305,000     $ (34,000 )   $ 1,004,000     $ (51,000 )
REITs                 23,000       (6,000 )     23,000       (6,000 )
Equity securities     739,000       (61,000 )     316,000       (53,000 )     1,055,000       (114,000 )
Total   $ 1,438,000     $ (78,000 )   $ 644,000     $ (93,000 )   $ 2,082,000     $ (171,000 )

  

Unrealized Loss Breakdown by Investment Type at April 30, 2021

 

Description   Less than 12 months, Fair Value     Less than 12 months, Unrealized Loss     12 months or greater, Fair Value     12 months or greater, Unrealized Loss     Total, Fair Value     Total, Unrealized Loss  
    Less than 12 months     12 months or greater     Total  
Description   Fair Value     Unrealized Loss     Fair Value     Unrealized Loss     Fair Value     Unrealized Loss  
Municipal bonds   $ 390,000     $ (6,000 )   $ 365,000     $ (37,000 )   $ 755,000     $ (43,000 )
REITs                 23,000       (5,000 )     23,000       (5,000 )
Equity securities     340,000       (35,000 )     377,000       (39,000 )     717,000       (74,000 )
Total   $ 730,000     $ (41,000 )   $ 765,000     $ (81,000 )   $ 1,495,000     $ (122,000 )

 

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, 2021.

 

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, 2021.

 

14
 

 

Note 3 Inventories

 

Inventories at October 31, 2021 and April 30, 2021 consisted of the following:

 

    October 31,     April 30,  
    2021     2021  
             
Raw materials   $ 5,703,000     $ 4,399,000  
Work in process     657,000       457,000  
Finished goods     965,000       768,000  
Inventory in transit           173,000  
Inventory gross     7,325,000       5,797,000  
Less: allowance for obsolete inventory     (248,000 )     (175,000 )
Inventories, net   $ 7,077,000     $ 5,622,000  

 

Note 4 Business Segments

 

The following is financial information relating to industry segments:

 

    Three months     Three months     Six months     Six months  
    ended     ended     ended     ended  
    Oct 31, 2021     Oct 31, 2020     Oct 31, 2021     Oct 31, 2020  
Net revenue:                                
 Security alarm products   $ 4,546,000     $ 3,632,000     $ 8,803,000     $ 6,962,000  
 Cable & wiring tools     518,000       620,000       1,056,000       1,019,000  
 Other products     180,000       395,000       340,000       713,000  
Total net revenue   $ 5,244,000     $ 4,647,000     $ 10,199,000     $ 8,694,000  
                                 
Income from operations:                                
 Security alarm products   $ 1,229,000     $ 1,092,000     $ 2,550,000     $ 2,042,000  
 Cable & wiring tools     147,000       160,000       306,000       299,000  
 Other products     48,000       112,000       98,000       209,000  
Total income from operations   $ 1,424,000     $ 1,364,000     $ 2,954,000     $ 2,550,000  
                                 
Depreciation and amortization:                                
 Security alarm products   $ 39,000     $ 39,000     $ 74,000     $ 61,000  
 Cable & wiring tools     31,000       31,000       62,000       61,000  
 Other products     19,000       14,000       42,000       27,000  
 Corporate general     16,000       19,000       35,000       40,000  
Total depreciation and amortization   $ 105,000     $ 103,000     $ 213,000     $ 189,000  
                                 
Capital expenditures:                                
 Security alarm products   $     $ 149,000     $ 40,000     $ 242,000  
 Cable & wiring tools                        
 Other products           111,000             113,000  
 Corporate general           6,000             6,000  
Total capital expenditures   $     $ 266,000     $ 40,000     $ 361,000  

  

    October 31, 2021     April 30, 2021  
Identifiable assets:                
Security alarm products   $ 10,169,000     $ 8,955,000  
Cable & wiring tools     2,439,000       2,534,000  
Other products     666,000       667,000  
Corporate general     42,165,000       41,980,000  
Total assets   $ 55,439,000     $ 54,136,000  

 

15
 

 

Note 5 Earnings per Share

 

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

 

    For the three months ended October 31, 2021  
    Income     Shares     Per-Share  
    (Numerator)     (Denominator)     Amount  
Net income   $ 1,688,000                  
Basic EPS   $ 1,688,000       4,945,130     $ .34  
Effect of dilutive Convertible Preferred Stock           20,500        
Diluted EPS   $ 1,688,000       4,965,630     $ .34  

  

    For the three months ended October 31, 2020  
    Income     Shares     Per-Share  
    (Numerator)     (Denominator)     Amount  
Net income   $ 860,000                  
Basic EPS   $ 860,000       4,949,902     $ .17  
Effect of dilutive Convertible Preferred Stock           20,500        
Diluted EPS   $ 860,000       4,970,402     $ .17  

  

    For the six months ended October 31, 2021  
    Income     Shares     Per-Share  
    (Numerator)     (Denominator)     Amount  
Net income   $ 3,434,000                  
Basic EPS   $ 3,434,000       4,945,795     $ .69  
Effect of dilutive Convertible Preferred Stock           20,500        
Diluted EPS   $ 3,434,000       4,966,295     $ .69  

  

    For the six months ended October 31, 2020  
    Income     Shares     Per-Share  
    (Numerator)     (Denominator)     Amount  
Net income   $ 3,352,000                  
Basic EPS   $ 3,352,000       4,949,914     $ .68  
Effect of dilutive Convertible Preferred Stock           20,500        
Diluted EPS   $ 3,352,000       4,970,414     $ .67  

 

16
 

 

Note 6 Retirement Benefit Plan

 

On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the “Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the Company. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is funded by voluntary pre-tax and Roth (taxable) contributions from eligible employees who may contribute a percentage of their eligible compensation, limited and subject to statutory limits. Employees are eligible to participate in the Plan when they have attained the age of 21 and completed one thousand hours of service in any plan year with the Company. Upon leaving the Company, each participant is 100% vested with respect to the participants’ contributions while the Company’s matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions by the Company of approximately $15,000 and $16,000 were paid during each quarter ending October 31, 2021 and 2020, respectively. Likewise, the Company paid matching contributions of approximately $33,000 and $29,000 during each six-month period ending October 31, 2021 and 2020, 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 October 31, 2021, 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.

 

17
 

 

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.

  Level 1     Level 2     Level 3     Total  
    Assets Measured at Fair Value on a Recurring Basis as of
October 31, 2021
 
  Level 1     Level 2     Level 3     Total  
Assets:                                
 Municipal Bonds   $     $ 5,894,000     $     $ 5,894,000  
 REITs           140,000             140,000  
 Equity Securities     28,094,000                   28,094,000  
 Money Markets and CDs     281,000                   281,000  
Total fair value of assets measured on a recurring basis   $ 28,375,000     $ 6,034,000     $     $ 34,409,000  

  

  Level 1     Level 2     Level 3     Total  
    Assets Measured at Fair Value on a Recurring Basis as of
April 30, 2021
 
    Level 1     Level 2     Level 3     Total  
Assets:                                
 Municipal Bonds   $     $ 6,009,000     $     $ 6,009,000  
 REITs           137,000             137,000  
 Equity Securities     26,419,000                   26,419,000  
 Money Markets and CDs     772,000                   772,000  
Total fair value of assets measured on a recurring basis   $ 27,191,000     $ 6,146,000     $     $ 33,337,000  

  

Note 8 Subsequent Events

 

None

 

18
 

  

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

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

 

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, 2021.

 

Executive Summary

 

The Company’s performance continues to grow through the first half of the current fiscal year with the second quarter showing a slight decline over the first quarter of the current fiscal year. This is mainly due the inability to obtain all the raw materials that are needed to complete the manufacture of our products and keeping employees staffed at our locations. The state of Nebraska, where we are located, has recently issued news that it has one of the lowest unemployment rates in the country. 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. Opportunities include keeping up with the business growth, finding ways to get our products out to our customers in a timelier manner, 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. 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 $5,244,000 for the quarter ended October 31, 2021, which is a 12.85% increase from the corresponding quarter last year. Year-to-date net sales were $10,199,000 at October 31, 2021, which is a 17.31% increase from the same period last year. The increases in sales are primarily a result of a competitor no longer selling competing products and having the ability to continue to work through the COVID-19 pandemic. 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 52.04% of net sales for the quarter ended October 31, 2021 and was 49.37% for the same quarter last year. Year-to-date cost of goods sold percentages were 49.49% for the current six months and 48.83% for the corresponding six 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 but reached that goal for year-to-date results. Management continues to work with and train employees to work more efficiently and they also work at getting the best price for raw materials. Also, a significant wage increase went into effect for the company at the beginning of the second quarter of the current fiscal year.
     
  Operating expenses were up $102,000 for the quarter and were up $299,000 for the six-months ended October 31, 2021 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, 2021 was 20.80% of net sales while it was 21.28% of net sales for the same quarter the prior year. For year-to-date numbers, operating expense were 21.55% and 21.84% of net sales for the six months ended October 31, 2021 and 2020, 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 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, 2021 was at $1,424,000, which is a 4.40% increase from the corresponding quarter last year, which had income from operations of $1,364,000. Income from operations for the six months ended October 31, 2021 was at $2,954,000, which is a 15.84% increase from the corresponding six months last year, which had income from operations of $2,550,000.
     
  Other income and expenses are up when comparing the current quarter to the same quarter the prior year, with an increase of $724,000 in the current quarter. Conversely, other income and expenses are down by $713,000 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 increase in the current quarter as opposed to the decrease for the year-to-date numbers is the unrealized gain and loss on equity securities. The Company is at the mercy of the stock market when it comes to these figures and the COVID-19 pandemic influenced these numbers.
     
  Overall, net income for the quarter ended October 31, 2021 was up $828,000, or 96.28%, from the same quarter last year. Similarly, net income for the six-month period ended October 31, 2021 was up $82,000, or 2.45%, from the same period in the prior year.
     
  Earnings per common share for quarter ended October 31, 2021 were $0.34 per share and $0.69 per share for the year-to-date numbers. EPS for the quarter and six months ended October 31, 2020 were $0.17 per share and $0.68 per share, respectively.

 

Liquidity and capital resources

 

Operating

 

  Net cash decreased $1,219,000 during the six months ended October 31, 2021 as compared to a decrease of $603,000 during the corresponding period last year.

 

20
 

 

  Accounts receivable decreased $185,000 for the six months ended October 31, 2021 compared with a $32,000 decrease for the same period last year. The bigger current year decrease is a result of improved sales while collections on accounts receivable have declined over the last year. An analysis of accounts receivable shows that 4.84% of the receivables were over 90 days at October 31, 2021, while only 0.27% were over 90 days for the same period last year.
     
  Inventories increased $1,528,000 during the current six-month period as compared to a $637,000 increase last year. The bigger increase in the current year is primarily due to being prepared for the increase we have seen in sales. In addition, the Company is keeping more inventory on hand to reduce the likelihood of running into a shortage on some major raw materials, as we have experienced in the past.
     
  Prepaid expenses saw a $337,000 increase for the current six months, primarily due to having more prepayments of raw materials. Lead times and costs have risen on raw materials, making it a challenge to obtain. The prior year six months showed a $73,000 decrease in prepaid expenses.
     
  Accounts payable shows a decrease for the current six-month period of $183,000 while it shows an increase for the prior six-month periods of $28,000. 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 $4,000 for the current six-month period as compared to a $104,000 decrease for the six-month period ended October 31, 2020. The difference in the amounts is primarily due to timing issues.
     
  Income tax payable increased $140,000 for the current six-month period, compared to having an increase of $376,000 in income tax overpayment for the six-months ended October 31, 2020. The current increase is largely due to having increased sales and income and not having income tax estimates large enough.

 

Investing

 

  As for our investment activities, the Company purchased $40,000 of property and equipment during the current six-month period. In comparison, $361,000 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, 2021 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, 2021 was $208,000 compared to $186,000 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.

 

Financing

 

  The Company continues to purchase back its common stock when the opportunity arises. For the six-month period ended October 31, 2021, the Company purchased $26,000 worth of treasury stock, in comparison to $1,000 repurchased in the corresponding six-month period last year.

 

21
 

 

  The company declared a dividend of $0.50 per share of common stock on September 30, 2021, which was paid out during the second quarter. This is an increase to the dividend of $0.42, which 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  
    October 31, 2021     October 31, 2020  
Working capital
(current assets – current liabilities)
  $ 48,623,000     $ 38,744,000  
Current ratio
(current assets / current liabilities)
    16.358       10.901  
Quick ratio
((cash + investments + AR) / current liabilities)
    13.940       9.317  

  

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 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.
     
  An updated version of the pool access alarm (PAA) has met electrical listing testing (ETL) approval and production has started. This next-generation model combines our battery operated DPA series with our hard wired 289 series. A variety of installation options will be available through jumper pin settings such as instant alarm and seven second delay.
     
  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 our pool access alarm and environmental sensors that will be easy to install in current construction. A redesign of our brass water valve shut-off system is near completion.
     
  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.

  

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.

 

22
 

 

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.

 

Recently Issued Accounting Pronouncements

 

In June 2016 the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which was subsequently amended in February 2020 by ASU 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842).” The amendments introduce an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. The update with amendment is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not believe this new guidance will have a material impact on its financial statements and will implement the disclosures related to this update beginning in 2023.

 

In January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. ASU 2020-01 deals with changes in the significant influence of derivative and investments, of which the Company has none and became effective for the Company in the first quarter of 2021. The adoption of this standard did not have any impact on the Company’s condensed financial statements.

 

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

 

23
 

 

GEORGE RISK INDUSTRIES, INC.

 

PART I. FINANCIAL INFORMATION

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable

 

Item 4. Controls and Procedures

 

Our management, under the supervision and with the participation of our chief executive officer (also working as our chief financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 31, 2021. 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 ,2021, 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 October 31, 2021 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 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 October 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

24
 

 

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 and issuance of common stock for the second quarter of fiscal year 2022.

 

Period   Number of shares repurchased/(issued)
August 1, 2021 – August 31, 2021   -0-
September 1, 2021 – September 30, 2021   2,000
October 1, 2021 – October 31, 2021   -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.

 

25
 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

George Risk Industries, Inc.

(Registrant)

  

Date December 15, 2021 By: /s/ Stephanie M. Risk-McElroy
      Stephanie M. Risk-McElroy
      President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board

  

26
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