Unaudited Interim Financial Statements

6 Months Ended

Oct. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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, 2024 annual report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year.

Accounting Estimates—The preparation of these financial statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts.

Significant Accounting Policies — The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in our Annual Report, and there have been no changes to the Company’s significant accounting policies during the six months ended October 31, 2024.

Purchase of Transferrable Tax Credits – In September 2024, pursuant to transferability provisions of the Inflation Reduction Act of 2022, the Company executed an agreement to purchase a tax credit of $3,431,000 created by solar energy projects qualifying under Internal Revenue Code Section 48 (the “Solar Tax Credit”) in exchange for consideration of $2,917,000, resulting in a total gain on federal Solar Tax Credit of $373,000. This tax credit is available to offset income tax expense for the Company’s 2025 fiscal year.

During the three months ended October 31, 2024, the Company paid cash of $1,945,000 for this purchase and applied $947,000 of the tax credit towards income tax expense for the first six months of fiscal year 2025. As of October 31, 2024, the remaining Solar Tax Credit of $2,485,000 is shown as a receivable, and the remaining consideration of $972,000 is shown as a current liability, on our condensed balance sheet. This liability was paid in November 2024.

For the three and six months ended October 31, 2024, a gain on Solar Tax Credit of $373,000 has been recognized in our condensed statements of operations, and a deferred gain on solar tax credit remains as a current liability on our condensed balance sheet as of October 31, 2024.

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

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Tax Disclosures (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company has evaluated the impact that the adoption of this ASU will have to the financial statements and related disclosures and expects to have significant changes to the disclosures regarding segments. The Company plans to adopt this ASU beginning with its fiscal year beginning May 1, 2025.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses, which requires public business entities to disclose additional information about certain expenses in the notes to the financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

GEORGE RISK INDUSTRIES, INC. 10-Q