valu20210731

valu20210731_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 July 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: 0-11306

VALUE LINE, INC.

(Exact name of registrant as specified in its charter)

New York	13-3139843
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

551 Fifth Avenue, New York, New York	10176-0001
(Address of principal executive offices)	(Zip Code)

(212) 907-1500

(Registrant's telephone number, including area code)

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

Title of each class	Trading symbol	Name of each Exchange on which registered
Common stock, $0.10 par value per share	VALU	The Nasdaq Capital Market

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

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

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

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒

Smaller reporting company ☐ Emerging growth company ☐

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at August 31, 2021
Common stock, $0.10 par value per share	9,557,141 shares

VALUE LINE INC.

TABLE OF CONTENTS

		Page No.
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Condensed Financial Statements

	Consolidated Condensed Balance Sheets as of July 31, 2021 and April 30, 2021	3

	Consolidated Condensed Statements of Income for the three months ended July 31, 2021 and July 31, 2020	4

	Consolidated Condensed Statements of Comprehensive Income for the three months ended July 31, 2021 and July 31, 2020	5

	Consolidated Condensed Statements of Cash Flows for the three months ended July 31, 2021 and July 31, 2020	6

	Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2021	7

	Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2020	8

	Notes to Consolidated Condensed Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 4.	Mine Safety Disclosures	33

Item 5.	Other Information	33

Item 6.	Exhibits	34

	Signatures	35

Part I - Financial Information

Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Balance Sheets

(in thousands, except share amounts)

	July 31,			April 30,
	2021			2021
	(unaudited)
Assets
Current Assets:
Cash and cash equivalents (including short term investments of $24,382 and $18,209, respectively)	$	25,035		$	19,171
Equity securities		25,282			23,582
Available-for-sale Fixed Income securities		597			2,600
Accounts receivable, net of allowance for doubtful accounts of $36 and $36, respectively		1,467			3,985
Prepaid and refundable income taxes		540			616
Prepaid expenses and other current assets		1,187			1,282
Total current assets		54,108			51,236

Long term assets:
Investment in EAM Trust		60,905			60,977
Restricted money market investments		469			469
Property and equipment, net		7,999			8,311
Capitalized software and other intangible assets, net		122			143
Total long term assets		69,495			69,900

Total assets	$	123,603		$	121,136

Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	1,380		$	2,077
Accrued salaries		1,319			1,163
Dividends payable		2,103			2,104
Accrued taxes on income		942			-
Loan obligation-short term		2,331			2,331
Operating lease obligation-short term		1,087			1,087
Unearned revenue		18,202			19,162
Total current liabilities		27,364			27,924

Long term liabilities:
Unearned revenue		5,111			5,926
Operating lease obligation-long term		7,114			7,368
Deferred income taxes		13,374			12,905
Total long term liabilities		25,599			26,199
Total liabilities		52,963			54,123

Shareholders' Equity:
Common stock, $0.10 par value; authorized 30,000,000 shares; issued 10,000,000 shares		1,000			1,000
Additional paid-in capital		991			991
Retained earnings		76,296			72,502
Treasury stock, at cost (442,239 shares and 436,830 shares, respectively)		(7,646	)		(7,483	)
Accumulated other comprehensive income, net of tax		(1	)		3
Total shareholders' equity		70,640			67,013

Total liabilities and shareholders' equity	$	123,603		$	121,136

The accompanying notes are an integral part of these consolidated condensed financial statements.

Part I - Financial Information

Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Statements of Income

(in thousands, except share & per share amounts)

(unaudited)

	For the Three Months Ended
	July 31,
	2021		2020

Revenues:
Investment periodicals and related publications	$	6,947	$	7,092
Copyright fees		3,219		3,236
Total publishing revenues		10,166		10,328

Expenses:
Advertising and promotion		1,047		1,055
Salaries and employee benefits		4,657		4,508
Production and distribution		1,216		1,273
Office and administration		981		1,266
Total expenses		7,901		8,102
Income from operations		2,265		2,226

Revenues and profits interests in EAM Trust		4,805		3,644
Investment gains		394		1,171
Income before income taxes		7,464		7,041
Income tax provision		1,567		1,767
Net income	$	5,897	$	5,274

Earnings per share, basic & fully diluted	$	0.62	$	0.55


Weighted average number of common shares		9,559,992		9,616,721

The accompanying notes are an integral part of these consolidated condensed financial statements.

Part I - Financial Information

Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Statements of Comprehensive Income

(in thousands)

(unaudited)

	For the Three Months Ended
	July 31,
	2021			2020


Net income	$	5,897		$	5,274

Other comprehensive income/(loss), net of tax:
Change in unrealized gains on Fixed Income securities, net of tax		(4	)		(37	)
Other comprehensive income/(loss)		(4	)		(37	)
Comprehensive income	$	5,893		$	5,237

The accompanying notes are an integral part of these consolidated condensed financial statements.

Part I - Financial Information

Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Statements of Cash Flows

(in thousands)

(unaudited)

	For the Three Months Ended
	July 31,
	2021			2020
Cash flows from operating activities:
Net income	$	5,897		$	5,274

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		333			314
Investment (gains)/losses		(198	)		(995	)
Non-voting revenues interest in EAM Trust		(4,149	)		(3,280	)
Non-voting profits interest in EAM Trust		(656	)		(364	)
Distributions received from EAM Trust		4,877			3,065
Deferred income taxes		(168	)		100
Deferred rent		(254	)		(234	)
Changes in operating assets and liabilities:
Unearned revenue		(1,775	)		(1,394	)
Accounts payable & accrued expenses		(697	)		(566	)
Accrued salaries		156			(86	)
Accrued taxes on income		1,580			725
Prepaid and refundable income taxes		76			-
Prepaid expenses and other current assets		95			8
Accounts receivable		2,518			2,859
Total adjustments		1,738			152
Net cash provided by operating activities		7,635			5,426

Cash flows from investing activities:
Proceeds from sales of equity securities		34			4,637
Purchase of equity securities		(1,536	)		(6,127	)
Purchases of fixed income securities classified as available-for-sale		(498	)		(2,496	)
Proceeds from sales of fixed income securities classified as available-for-sale		2,496			3,464
Acquisition of property and equipment		-			(7	)
Expenditures for capitalized software		-			(82	)
Net cash provided by/(used in) investing activities		496			(611	)

Cash flows from financing activities:
Purchase of treasury stock at cost		(163	)		-
Receivable from clearing broker		-			608
Payable to clearing broker		-			(588	)
Dividends paid		(2,104	)		(2,020	)
Net cash used in financing activities		(2,267	)		(2,000	)
Net change in cash and cash equivalents		5,864			2,815
Cash, cash equivalents and restricted cash at beginning of period		19,640			5,423
Cash, cash equivalents and restricted cash at end of period	$	25,504		$	8,238

The accompanying notes are an integral part of these consolidated condensed financial statements.

Part I - Financial Information
Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Statement of Changes in Shareholders' Equity

For the Three Months Ended July 31, 2021

(in thousands, except share amounts)

(unaudited)

	Common stock				Additional paid-in-		Treasury stock						Retained			Accumulated other comprehensive
	Shares		Amount		capital		Shares			Amount			earnings			income			Total
Balance at April 30, 2021		10,000,000	$	1,000	$	991		(436,830	)	$	(7,483	)	$	72,502		$	3		$	67,013

Net income														5,897						5,897
Change in unrealized gains on Fixed Income securities, net of taxes																	(4	)		(4	)
Purchase of treasury stock								(5,409	)		(163	)								(163	)
Dividends declared														(2,103	)					(2,103	)
Balance at July 31, 2021		10,000,000	$	1,000	$	991		(442,239	)	$	(7,646	)	$	76,296		$	(1	)	$	70,640

Dividends declared per common share were $0.22 for the three months ending July 31, 2021.

The accompanying notes are an integral part of these consolidated condensed financial statements.

Part I - Financial Information

Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Statement of Changes in Shareholders' Equity

For the Three Months Ended July 31, 2020

(in thousands, except share amounts)

(unaudited)

	Common stock				Additional paid-in-		Treasury stock						Retained			Accumulated other comprehensive
	Shares		Amount		capital		Shares			Amount			earnings			income			Total
Balance at April 30, 2020		10,000,000	$	1,000	$	991		(383,279	)	$	(5,957	)	$	57,374		$	131		$	53,539

Net income														5,274						5,274
Change in unrealized gains on Fixed Income securities, net of taxes																	(37	)		(37	)
Dividends declared														(2,020	)					(2,020	)
Balance at July 31, 2020		10,000,000	$	1,000	$	991		(383,279	)	$	(5,957	)	$	60,628		$	94		$	56,756

Dividends declared per common share were $0.21 for the three months ending July 31, 2020.

The accompanying notes are an integral part of these consolidated condensed financial statements.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

July 31, 2021

(Unaudited)

Note 1 - Organization and Summary of Significant Accounting Policies:

Value Line, Inc. ("Value Line" or "VLI", and collectively with its subsidiaries, the “Company”) is incorporated in the State of New York. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company. The Company's core business is producing investment periodicals and their underlying research and making available certain Value Line copyrights, Value Line trademarks and Value Line Proprietary Ranks and other proprietary information, to third parties under written agreements for use in third-party managed and marketed investment products and for other purposes. The Company maintains a significant investment in Eulav Asset Management LLC ("EAM") from which it receives a non-voting revenues interest and a non-voting profits interest. Pursuant to the EAM Declaration of Trust dated as of December 23, 2010 (the "EAM Trust Agreement"), VLI granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply, without charge or expense, the Value Line Proprietary Ranking System information to EAM for use in managing the Value Line Funds. EAM was established to provide investment management services to the Value Line Mutual Funds ("Value Line Funds" or the "Funds").

The Consolidated Condensed Balance Sheets as of July 31, 2021 and April 30, 2021, which have been derived from the unaudited interim Consolidated Condensed Financial Statements and the audited Consolidated Financial Statements, respectively, were prepared following the interim reporting requirements of the Securities and Exchange Commission (“SEC”). In the opinion of management, the accompanying Unaudited Interim Consolidated Condensed Financial Statements contain all adjustments (consisting of normal recurring accruals except as noted below) considered necessary for a fair presentation. This report should be read in conjunction with the audited financial statements and footnotes contained in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021 filed with the SEC on July 29, 2021 (the “Form 10-K”). Results of operations covered by this report may not be indicative of the results of operations for the entire year.

Use of Estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates.

Principles of Consolidation:

The Company follows the guidance in the Financial Accounting Standards Board's ("FASB") Topic 810 “Consolidation” to determine if it should consolidate its investment in a variable interest entity ("VIE"). A VIE is a legal entity in which either (i) equity investors do not have sufficient equity investment at risk to enable the entity to finance its activities independently or (ii) the equity holders at risk lack the obligation to absorb losses, the right to receive residual returns or the right to make decisions about the entity’s activities that most significantly affect the entity's economic performance. A holder of a variable interest in a VIE is required to consolidate the entity if it is determined that it has a controlling financial interest in the VIE and is therefore the primary beneficiary. The determination of a controlling financial interest in a VIE is based on a qualitative assessment to identify the variable interest holder, if any, that has (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) either the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The accounting guidance requires the Company to perform an ongoing assessment of whether the Company is the primary beneficiary of a VIE and the Company has determined it is not the primary beneficiary of a VIE (see Note 3).

In accordance with FASB's Topic 810, the assets, liabilities, and results of operations of subsidiaries in which the Company has a controlling interest have been consolidated. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company holds a significant non-voting revenues interest (excluding distribution revenues) and a significant non-voting profits interest in EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”). The Company relied on the guidance in FASB's ASC Topics 323 and 810 in its determination not to consolidate its investment in EAM and to account for such investment under the equity method of accounting. The Company reports the amount it receives for its non-voting revenues and non-voting profits interests as a separate line item below operating income in the Consolidated Condensed Statements of Income.

Revenue Recognition:

Depending upon the product, subscription fulfillment for Value Line periodicals and related publications is available in print or digitally, via internet access. The length of a subscription varies by product and offer received by the subscriber. Generally, subscriptions are offered as annual subscriptions. Subscription revenues, net of discounts, are recognized ratably on a straight line basis when the product is served to the client over the life of the subscription. Accordingly, the amount of subscription fees to be earned by fulfilling subscriptions after the date of the balance sheets are shown as unearned revenue within current and long-term liabilities.

Copyright fees are derived from providing certain Value Line trademarks and the Value Line Proprietary Ranks to third parties under written agreements for use in selecting securities for third party marketed products, including unit investment trusts, annuities and exchange traded funds ("ETFs"). The Company earns asset-based copyright fees upon delivery of the product to the customer as specified in the individual agreements. Revenue is recognized monthly and received either quarterly or in advance over the term of the agreement and, because it is asset-based, will fluctuate as the market value of the underlying portfolio increases or decreases in value.

Investment in Unconsolidated Entities:

The Company accounts for its investment in its unconsolidated entity, EAM, using the equity method of accounting in accordance with FASB’s ASC 323. The equity method is an appropriate means of recognizing increases or decreases measured by GAAP in the economic resources underlying the investments. Under the equity method, an investor recognizes its share of the earnings or losses of an investee in the periods for which they are reported by the investee in its financial statements rather than in the period in which an investee declares a dividend or distribution. An investor adjusts the carrying amount of an investment for its share of the earnings or losses recognized by the investee.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

July 31, 2021

(Unaudited)

The Company’s “interests” in EAM, the investment adviser to and the sole member of the distributor of the Value Line Funds, consist of a "non-voting revenues interest" and a "non-voting profits interest" in EAM as defined in the EAM Trust Agreement. The non-voting revenues interest entitles the Company to receive a range of 41% to 55% of EAM’s adjusted gross revenues, excluding EULAV Securities' distribution revenues (“Revenues Interest”). The non-voting profits interest entitles the Company to receive 50% of EAM's profits, subject to certain limited adjustments as defined in the EAM Trust Agreement (“Profits Interest”). The Revenues Interest and at least 90% of the Profits Interest are to be distributed each quarter to all interest holders of EAM, including Value Line. The Company's Revenues Interest in EAM excludes participation in the service and distribution fees of EAM's subsidiary EULAV Securities. The Company reflects its non-voting revenues and non-voting profits interests in EAM as non-operating income under the equity method of accounting. Although the Company does not have control over the operating and financial policies of EAM, pursuant to the EAM Trust Agreement, the Company has a contractual right to receive its share of EAM's revenues and profits.

Valuation of Securities:

The Company's securities classified as cash equivalents, equity securities and available-for-sale fixed income securities consist of shares of money market funds that invest primarily in short-term U.S. Government securities and investments in equities including ETFs and are valued in accordance with the requirements of the Fair Value Measurements Topic of the FASB's ASC 820. The securities classified as equity securities reflected in the Consolidated Condensed Balance Sheets are valued at market and unrealized gains and losses are recorded in the Consolidated Condensed Statements of Income per FASB Accounting Standards Update No. 2016-01 ("ASU 2016-01"). The securities classified as available-for-sale fixed income securities reflected in the Consolidated Condensed Balance Sheets are valued at market and unrealized gains and losses, net of applicable taxes, are reported as a separate component of shareholders' equity. Investment gains and losses on sales of the equity securities are the difference between proceeds from sales and the fair value of the equity securities sold at the beginning of the period or the purchase date, if later. Investment gains and losses on sales of the available-for-sale fixed income securities are the difference between proceeds from sales and the cost of the securities. Investment gains and losses on sales of the securities are recorded in earnings as of the trade date and are determined on the identified cost method.

The Company classifies its equity securities and available-for-sale fixed income securities as current assets to properly reflect its liquidity and to recognize the fact that it has liquid assets available-for-sale should the need arise.

Market valuations of securities listed on a securities exchange and ETF shares are based on the closing sales prices on the last business day of each month. The market value of the Company's fixed maturity U.S. Government debt securities is determined utilizing publicly quoted market prices. Cash equivalents consist of investments in money market funds that invest primarily in U.S. Government securities valued in accordance with rule 2a-7 under the 1940 Act.

The Fair Value Measurements Topic of FASB's ASC defines fair value as the price that the Company would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. The Fair Value Measurements Topic established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the information that market participants would use in pricing the asset or liability, including assumptions about risk. Examples of risks include those inherent in a particular valuation technique used to measure fair value such as the risk inherent in the inputs to the valuation technique. Inputs are classified as observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the factors market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

Level 1 – quoted prices in active markets for identical investments

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)

The following summarizes the levels of fair value measurements of the Company’s investments:

	As of July 31, 2021
($ in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	24,382	$	-	$	-	$	24,382
Equity securities		25,282		-		-		25,282
Available-for-sale fixed income securities		597		-		-		597
	$	50,261	$	-	$	-	$	50,261

	As of April 30, 2021
($ in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	18,209	$	-	$	-	$	18,209
Equity securities		23,582		-		-		23,582
Available-for-sale fixed income securities		2,600		-		-		2,600
	$	44,391	$	-	$	-	$	44,391

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

July 31, 2021

(Unaudited)

The Company had no other financial instruments such as futures, forwards and swap contracts. For the periods ended July 31, 2021 and April 30, 2021, there were no Level 2 nor Level 3 investments. The Company does not have any liabilities that are subject to fair value measurement.

Advertising expenses:

The Company expenses advertising costs as incurred.

Income Taxes:

The Company computes its income tax provision in accordance with the Income Tax Topic of the FASB's ASC. Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been reflected in the Consolidated Condensed Financial Statements. Deferred tax liabilities and assets are determined based on the differences between the book values and the tax bases of particular assets and liabilities, using tax rates currently in effect for the years in which the differences are expected to reverse. The Company adopted the provisions of ASU 2015-17, Income taxes (Topic 740) during the first quarter of fiscal 2018 and now classifies all deferred taxes as long-term liabilities on the Consolidated Condensed Balance Sheets.

The Income Tax Topic of the FASB's ASC establishes for all entities, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. As of July 31, 2021, management has reviewed the tax positions for the years still subject to tax audit under the statute of limitations, evaluated the implications, and determined that there is no material impact to the Company's financial statements.

Earnings per share:

Earnings per share are based on the weighted average number of shares of common stock and common stock equivalents outstanding during each period. Any shares that are reacquired during the period are weighted for the portion of the period that they are outstanding. The Company does not have any potentially dilutive common shares from outstanding stock options, warrants, restricted stock, or restricted stock units.

Cash and Cash Equivalents:

For purposes of the Consolidated Condensed Statements of Cash Flows, the Company considers all cash held at banks and short term liquid investments with an original maturity of less than three months to be cash and cash equivalents. As of July 31, 2021 and April 30, 2021, cash equivalents included $24,382,000 and $18,209,000, respectively, for amounts invested in money market mutual funds that invest in short term U.S. government securities.

Note 2 - Investments:

Investments held by the Company and its subsidiaries are classified as equity securities and available-for-sale fixed income securities in accordance with FASB's ASC 321, Investments - Equity Securities and with FASB's ASC 320, Investments - Debt Securities. All of the Company's securities were readily marketable or had a maturity of twelve months or less and are classified as current assets on the Consolidated Condensed Balance Sheets.

Equity Securities:

Equity securities on the Consolidated Condensed Balance Sheets, consist of ETFs held for dividend yield that attempt to replicate the performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions.

As of July 31, 2021 and April 30, 2021, the aggregate cost of the equity securities, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), Invesco Financial Preferred ETF (PGF), ProShares Trust S&P 500 Dividend Aristocrats ETF (NOBL), iShares Preferred & Income Securities ETF (PFF), and other Exchange Traded Funds and common stock equity securities was a combined total $20,609,000 and $19,105,000, respectively, and the fair value was $25,282,000 and $23,582,000, respectively.

Proceeds from sales of equity securities during the three months ended July 31, 2021 and July 31, 2020, were $34,000 and $4,637,000, respectively.

The carrying value and fair value of equity securities at July 31, 2021 were as follows:

($ in thousands)

Cost

Gross Unrealized

Gains

Gross Unrealized

Losses

Fair Value

ETFs - equities

20,609

4,793

(120

)

25,282

The carrying value and fair value of equity securities at April 30, 2021 were as follows:

($ in thousands)

Cost

Gross Unrealized

Gains

Gross Unrealized

Losses

Fair Value

ETFs - equities

19,105

4,532

(55

)

23,582

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

July 31, 2021

(Unaudited)

Government Debt Securities (Fixed Income Securities):

Fixed income securities consist of certificates of deposits and securities issued by federal, state and local governments within the United States.

Proceeds from maturities and sales of government debt securities classified as available-for-sale during the three months ended July 31, 2021 and July 31, 2020, were $2,496,000 and $3,464,000, respectively. As of July, 2021, Accumulated Other Comprehensive Income included unrealized losses of $500, net of deferred tax benefit of $100. As of April 30, 2021, Accumulated Other Comprehensive Income included unrealized gains of $4,000, net of deferred taxes of $1,000.

The aggregate cost and fair value at July 31, 2021 of fixed income securities classified as available-for-sale were as follows:

	Amortized		Gross Unrealized
($ in thousands)	Historical Cost		Holding Gains		Fair Value
Maturity
Due within 1 year	$	597	$	-	$	597
Total investment in government debt securities	$	597	$	-	$	597

The increase in gross unrealized losses of $4,000 on fixed income securities classified as available-for-sale net of deferred income taxes of $1,000, was included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet as of July 31, 2021.

The aggregate cost and fair value at April 30, 2021 of fixed income securities classified as available-for-sale were as follows:

	Amortized		Gross Unrealized
($ in thousands)	Historical Cost		Holding Gains		Fair Value
Maturity
Due within 1 year	$	2,596	$	4	$	2,600
Total investment in government debt securities	$	2,596	$	4	$	2,600

The decrease in gross unrealized gains of $173,000 on fixed income securities classified as available-for-sale net of deferred income taxes of $45,000, was included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet as of April 30, 2021.

The average yield on the Government debt securities classified as available-for-sale at July 31, 2021 and April 30, 2021 was 0.32% and 1.4%, respectively.

Investment Gains/(Losses):

Investment gains/(losses) were comprised of the following:

	Three Months Ended July 31,
($ in thousands)	2021			2020
Dividend income	$	196		$	121
Interest income		1			56
Investment gains recognized on sales of equity securities during the period		-			300
Unrealized gains recognized on equity securities held at the end of the period		198			695
Other		(1	)		(1	)
Total investment gains/(losses)	$	394		$	1,171

Taxable realized gains on equity securities sold during fiscal years 2022 and 2021, which are generally the difference between the proceeds from sales and our original cost, were gains of $2,000 in fiscal 2022 and gains of $783,000 in fiscal 2021.

Investment in Unconsolidated Entities:

Equity Method Investment:

As of July 31, 2021 and April 30, 2021, the Company's investment in EAM Trust on the Consolidated Condensed Balance Sheets was $60,905,000 and $60,977,000, respectively.

The value of VLI’s investment in EAM at July 31, 2021 and April 30, 2021 reflects the fair value of contributed capital of $55,805,000 at inception which included $5,820,000 of cash and liquid securities in excess of working capital requirements contributed to EAM’s capital account by VLI, plus VLI's share of non-voting revenues and non-voting profits from EAM less distributions, made quarterly to VLI by EAM, during the period subsequent to its initial investment through the dates of the Consolidated Condensed Balance Sheets.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

July 31, 2021

(Unaudited)

It is anticipated that EAM will have sufficient liquidity and earn enough profit to conduct its current and future operations so the management of EAM will not need additional funding.

The Company monitors its Investment in EAM Trust for impairment to determine whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Impairment indicators include, but are not limited to the following: (a) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of the industry in which the investee operates, or (d) factors that raise significant concerns about the investee’s ability to continue as a going concern such as negative cash flows, working capital deficiencies, or noncompliance with statutory capital and regulatory requirements. EAM did not record any impairment losses for its assets during the fiscal years 2022 or 2021.

The components of EAM’s investment management operations, provided to the Company by EAM, were as follows:

	Three Months Ended July 31,
($ in thousands) (unaudited)	2021		2020
Investment management fees earned from the Value Line Funds, net of waivers shown below	$	7,757	$	6,310
12b-1 fees and other fees, net of waivers shown below	$	2,454	$	2,301
Other income	$	72	$	110
Investment management fee waivers and reimbursements	$	107	$	43
12b-1 fee waivers

SEC Form 10-Q filed by Value Line, Inc.