Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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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 October 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________________________ to __________________________________

Commission File Number: 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

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 November 30, 2023
Common stock, $0.10 par value per share	9,426,983 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 October 31, 2023 and April 30, 2023	3

	Consolidated Condensed Statements of Income for the three and six months ended October 31, 2023 and October 31, 2022	4

	Consolidated Condensed Statements of Comprehensive Income for the three and six months ended October 31, 2023 and October 31, 2022	5

	Consolidated Condensed Statements of Cash Flows for the six months ended October 31, 2023 and October 31, 2022	6

	Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2023 and six months ended October 31, 2023	7

	Consolidated Condensed Statement of Changes in Shareholders’ Equity for the three months ended July 31, 2022 and six months ended October 31, 2022	8

	Notes to Consolidated Condensed Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	35

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
	Signatures	38

Part I - Financial Information

Item 1. Financial Statements

Value Line, Inc.

Consolidated Condensed Balance Sheets

(in thousands, except share amounts)

	October 31,			April 30,
	2023			2023
	(unaudited)
Assets
Current Assets:
Cash and cash equivalents (including short term investments of $3,427 and $7,240, respectively)	$	3,924		$	7,590
Equity securities		13,064			14,546
Available-for-sale Fixed Income securities		42,906			39,928
Accounts receivable, net of allowance for doubtful accounts of $33 and $36, respectively		4,464			2,124
Prepaid and refundable income taxes		185			425
Prepaid expenses and other current assets		1,145			1,463
Total current assets		65,688			66,076

Long term assets:
Investment in EAM Trust		59,119			58,775
Restricted money market investments		305			305
Property and equipment, net		5,132			5,788
Capitalized software and other intangible assets, net		97			132
Total long term assets		64,653			65,000

Total assets	$	130,341		$	131,076

Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	1,032		$	1,263
Accrued salaries		962			961
Dividends payable		2,639			2,642
Accrued taxes on income		-			307
Operating lease obligation-short term		1,253			1,344
Unearned revenue		15,689			16,771
Total current liabilities		21,575			23,288

Long term liabilities:
Unearned revenue		6,268			6,202
Operating lease obligation-long term		4,219			4,784
Deferred income taxes		12,537			13,129
Total long term liabilities		23,024			24,115
Total liabilities		44,599			47,403

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		99,046			95,979
Treasury stock, at cost (573,017 shares and 565,460 shares, respectively)		(15,009	)		(14,671	)
Accumulated other comprehensive income, net of tax		(286	)		374
Total shareholders' equity		85,742			83,673

Total liabilities and shareholders' equity	$	130,341		$	131,076

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						For the Six Months Ended
	October 31,						October 31,
	2023			2022			2023			2022

Revenues:
Investment periodicals and related publications	$	6,398		$	6,612		$	12,855		$	13,203
Copyright fees		3,212			3,454			6,498			6,807
Total publishing revenues		9,610			10,066			19,353			20,010

Expenses:
Advertising and promotion		585			723			1,357			1,544
Salaries and employee benefits		3,697			3,769			7,437			7,816
Production and distribution		1,480			1,243			2,875			2,458
Office and administration		1,174			1,158			2,263			2,463
Total expenses		6,936			6,893			13,932			14,281
Income from operations		2,674			3,173			5,421			5,729

Revenues and profits interests in EAM Trust		2,995			2,816			5,852			5,831
Investment gains/(losses)		(1,079	)		(268	)		(324	)		26
Income before income taxes		4,590			5,721			10,949			11,586
Income tax provision		1,102			1,391			2,602			2,798
Net income	$	3,488		$	4,330		$	8,347		$	8,788

Earnings per share, basic & fully diluted	$	0.37		$	0.46		$	0.89		$	0.93


Weighted average number of common shares		9,429,169			9,467,810			9,430,871			9,475,960

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						For the Six Months Ended
	October 31,						October 31,
	2023			2022			2023			2022


Net income	$	3,488		$	4,330		$	8,347		$	8,788

Other comprehensive income/(loss), net of tax:
Change in unrealized gains/(losses) on
Fixed Income securities, net of tax		(448	)		(3	)		(660	)		2
Other comprehensive income/(loss)		(448	)		(3	)		(660	)		2
Comprehensive income	$	3,040		$	4,327		$	7,687		$	8,790

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 Six Months Ended
	October 31,
	2023			2022
Cash flows from operating activities:
Net income	$	8,347		$	8,788
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		691			672
Investment (gains)/losses		1,478			429
Non-voting revenues interest in EAM Trust		(5,337	)		(5,405	)
Non-voting profits interest in EAM Trust		(515	)		(426	)
Distributions received from EAM Trust		5,508			6,862
Deferred income taxes		(370	)		(59	)
Deferred rent		(656	)		(605	)
Other		(3	)		-
Changes in operating assets and liabilities:
Unearned revenue		(1,016	)		(883	)
Accounts payable & accrued expenses		(231	)		43
Accrued salaries		1			77
Accrued taxes on income		(352	)		(2	)
Prepaid and refundable income taxes		240			(911	)
Prepaid expenses and other current assets		318			(9	)
Accounts receivable		(2,340	)		28
Total adjustments		(2,584	)		(189	)
Net cash provided by operating activities		5,763			8,599

Cash flows from investing activities:
Proceeds from sales of equity securities		999			1,016
Purchases of equity securities		(993	)		(919	)
Purchases of fixed income securities classified as available-for-sale		(23,079	)		(17,479	)
Proceeds from sales of fixed income securities classified as available-for-sale		19,265			-
Acquisition of property and equipment		-			(23	)
Net cash used in investing activities		(3,808	)		(17,405	)

Cash flows from financing activities:
Purchase of treasury stock at cost		(338	)		(3,482	)
Dividends paid		(5,283	)		(4,747	)
Net cash used in financing activities		(5,621	)		(8,229	)
Net change in cash and cash equivalents		(3,666	)		(17,035	)
Cash, cash equivalents and restricted cash at beginning of period		7,895			30,008
Cash, cash equivalents and restricted cash at end of period	$	4,229		$	12,973

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, 2023 and Six Months Ended October 31, 2023

(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, 2023		10,000,000	$	1,000	$	991		(565,460	)	$	(14,671	)	$	95,979		$	374		$	83,673

Net income														4,859						4,859
Change in unrealized gains on Fixed Income securities, net of taxes																	(212	)		(212	)
Purchase of treasury stock								(4,011	)		(188	)								(188	)
Dividends declared														(2,641	)					(2,641	)
Balance at July 31, 2023		10,000,000	$	1,000	$	991		(569,471	)	$	(14,859	)	$	98,197		$	162		$	85,491

Dividends declared per common share were $0.28 for the three months ending July 31, 2023.

	Common stock				Additional paid-in-		Treasury stock						Retained			Accumulated other comprehensive
	Shares		Amount		capital		Shares			Amount			earnings			income			Total
Balance at July 31, 2023		10,000,000	$	1,000	$	991		(569,471	)	$	(14,859	)	$	98,197		$	162		$	85,491

Net income														3,488						3,488
Change in unrealized gains on Fixed Income securities, net of taxes																	(448	)		(448	)
Purchase of treasury stock								(3,546	)		(150	)								(150	)
Dividends declared														(2,639	)					(2,639	)
Balance at October 31, 2023		10,000,000	$	1,000	$	991		(573,017	)	$	(15,009	)	$	99,046		$	(286	)	$	85,742

Dividends declared per common share were $0.56 for the six months ending October 31, 2023.

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, 2022 and Six Months Ended October 31, 2022

(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, 2022		10,000,000	$	1,000	$	991		(490,157	)	$	(9,967	)	$	87,645		$	(24	)	$	79,645

Net income														4,458						4,458
Change in unrealized gains on Fixed Income securities, net of taxes																	5			5
Purchase of treasury stock								(35,029	)		(2,382	)								(2,382	)
Dividends declared														(2,369	)					(2,369	)
Balance at July 31, 2022		10,000,000	$	1,000	$	991		(525,186	)	$	(12,349	)	$	89,734		$	(19	)	$	79,357

Dividends declared per common share were $0.25 for the three months ending July 31, 2022.

	Common stock				Additional paid-in-		Treasury stock						Retained			Accumulated other comprehensive
	Shares		Amount		capital		Shares			Amount			earnings			income			Total
Balance at July 31, 2022		10,000,000	$	1,000	$	991		(525,186	)	$	(12,349	)	$	89,734		$	(19	)	$	79,357

Net income														4,330						4,330
Change in unrealized gains on Fixed Income securities, net of taxes																	(3	)		(3	)
Purchase of treasury stock								(17,314	)		(1,100	)								(1,100	)
Dividends declared														(2,364	)					(2,364	)
Balance at October 31, 2022		10,000,000	$	1,000	$	991		(542,500	)	$	(13,449	)	$	91,700		$	(22	)	$	80,220

Dividends declared per common share were $0.50 for the six months ending October 31, 2022.

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

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(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 October 31, 2023 and April 30, 2023, 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, 2023 filed with the SEC on July 28, 2023 (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.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

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.

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, investments in equities including ETFs and fixed income securities invested primarily in short-term U.S. Treasury bills that 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.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

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 October 31, 2023
($ in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	3,427	$	-	$	-	$	3,427
Equity securities		13,064		-		-		13,064
Available-for-sale fixed income securities		42,406		500		-		42,906
	$	58,897	$	500	$	-	$	59,397

	As of April 30, 2023
($ in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents	$	7,240	$	-	$	-	$	7,240
Equity securities		14,546		-		-		14,546
Available-for-sale fixed income securities		39,178		750		-		39,928
	$	60,964	$	750	$	-	$	61,714

The Company had no other financial instruments such as futures, forwards and swap contracts. For the periods ended October 31, 2023 and April 30, 2023, there were no 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) and 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 October 31, 2023, 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 October 31, 2023 and April 30, 2023, cash equivalents included $3,427,000 and $7,240,000, respectively, for amounts invested in money market mutual funds that invest in short term U.S. government securities or savings accounts located in the United States.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

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.

As of October 31, 2023 and April 30, 2023, 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), ProShares Trust S&P 500 Dividend Aristocrats ETF (NOBL), IShares DJ Select Dividend ETF (DVY) and other Exchange Traded Funds and common stock equity securities was a combined total $10,146,000 and $10,169,000, respectively, and the fair value was $13,064,000 and $14,546,000, respectively.

Proceeds from sales of equity securities during the six months ended October 31, 2023 and October 31, 2022, were $999,000 and $1,016,000, respectively.

The carrying value and fair value of equity securities at October 31, 2023 were as follows:

($ in thousands)		Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
ETFs - equities		$	10,146			$	2,923			$	(5	)		$	13,064

The carrying value and fair value of equity securities at April 30, 2023 were as follows:

($ in thousands)		Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
ETFs - equities		$	10,169			$	4,392			$	(15	)		$	14,546

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(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 six months ended October 31, 2023 and October 31, 2022, were $19,265,000 and $0, respectively. As of October 31, 2023, Accumulated Other Comprehensive Income included unrealized losses of $363,000 net of deferred tax benefits of $77,000. As of April 30, 2023, Accumulated Other Comprehensive Income included unrealized gains of $473,000, net of deferred tax benefits of $99,000.

The aggregate cost and fair value at October 31, 2023 of fixed income securities classified as available-for-sale were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
($ in thousands)	Historical Cost		Holding Gains		Holding Losses			Fair Value
Maturity
Due within 1 year	$	38,133	$	-	$	(43	)	$	38,090
Due 1 year through 5 years		5,136		-		(320	)		4,816
Total investment in government debt securities	$	43,269	$	-	$	(363	)	$	42,906

The increase in gross unrealized losses of $837,000 on fixed income securities classified as available-for-sale net of deferred income tax benefits of $177,000, was included in Accumulated Other Comprehensive Income on the Consolidated Condensed Balance Sheet as of October 31, 2023.

The aggregate cost and fair value at April 30, 2023 of fixed income securities classified as available-for-sale were as follows:

	Amortized		Gross Unrealized		Gross Unrealized
($ in thousands)	Historical Cost		Holding Gains		Holding Losses			Fair Value
Maturity
Due within 1 year	$	34,384	$	486	$	(5	)	$	34,865
Due within 1 year through 5 years		5,071				(8	)		5,063
Total investment in government debt securities	$	39,455	$	486	$	(13	)	$	39,928

The increase in gross unrealized gains of $503,000 on fixed income securities classified as available-for-sale net of deferred income tax liability of $105,000, was included in Accumulated Other Comprehensive Income on the Consolidated Balance Sheet as of April 30, 2023.

The average yield on the Government debt securities classified as available-for-sale at October 31, 2023 and April 30, 2023 was 3.65% and 2.55%, respectively.

Investment Gains/(Losses):

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

	Three Months Ended October 31,						Six Months Ended October 31,
($ in thousands)	2023			2022			2023			2022
Dividend income	$	133		$	141		$	278		$	254
Interest income		487			158			876			201
Investment gains/(losses) recognized on sales of equity securities during the period		(14	)		3			(3	)		5
Unrealized gains/(losses) recognized on equity securities held at the end of the period		(1,685	)		(577	)		(1,475	)		(434	)
Other		-			7			-			-
Total investment gains/(losses)	$	(1,079	)	$	(268	)	$	(324	)	$	26

Taxable realized gains/(losses) on equity securities sold during fiscal years 2024 and 2023, which are generally the difference between the proceeds from sales and our original cost, were losses of $18,000 in fiscal 2024 and losses of $9,000 in fiscal 2023.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

Investment in Unconsolidated Entities:

Equity Method Investment:

As of October 31, 2023 and April 30, 2023, the Company's investment in EAM Trust on the Consolidated Condensed Balance Sheets was $59,119,000 and $58,775,000, respectively.

The value of VLI’s investment in EAM at October 31, 2023 and April 30, 2023 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.

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 2024 or 2023.

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

	Three Months Ended October 31,						Six Months Ended October 31,
($ in thousands) (unaudited)	2023			2022			2023		2022
Investment management fees earned from the Value Line Funds, net of waivers shown below	$	5,640		$	4,952		$	11,068	$	10,142
12b-1 fees and other fees, net of waivers shown below	$	1,600		$	1,491		$	3,179	$	3,050
Other income	$	(14	)	$	(4	)	$	103	$	4
Investment management fee waivers and reimbursements	$	114		$	49		$	162	$	31
12b-1 fee waivers	$	23		$	27		$	48	$	54
Value Line’s non-voting revenues interest	$	2,721		$	2,623		$	5,337	$	5,405
EAM's net income (1)	$	548		$	386		$	1,030	$	852

(1) Represents EAM's net income, after giving effect to Value Line’s non-voting revenues interest, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

	October 31,			April 30,
($ in thousands)	2023			2023
	(unaudited)
EAM's total assets	$	61,729		$	61,389
EAM's total liabilities (1)		(4,763	)		(4,357	)
EAM's total equity	$	56,966		$	57,032

(1) At October 31, 2023 and April 30, 2023, EAM's total liabilities included a payable to VLI for its accrued non-voting revenues interest and non-voting profits interest of $2,967,000 and $2,601,000, respectively.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

Note 3 - Variable Interest Entity

The Company holds a non-voting revenues interest and a 50% non-voting profits interest in EAM, the adviser to the Value Line asset management and mutual fund distribution businesses. EAM is considered to be a VIE in relation to the Company. The Company makes its determination for consolidation of EAM as a VIE based on a qualitative assessment of the purpose and design of EAM, the terms and characteristics of the variable interests in EAM, and the risks EAM is designed to originate and pass through to holders of variable interests. Other than EAM, the Company does not have an interest in any other VIEs.

The Company has determined that it does not have a controlling financial interest in EAM because it does not have the power to direct the activities of EAM that most significantly impact its economic performance. Value Line does not hold any voting stock of EAM and it does not have any involvement in the day-to-day activities or operations of EAM. Although the EAM Trust Agreement provides Value Line with certain consent rights and contains certain restrictive covenants related to the activities of EAM, these are considered to be protective rights and therefore Value Line does not maintain control over EAM.

In addition, although EAM is expected to be profitable, there is a risk that it could operate at a loss. While all of the profit interest shareholders in EAM are subject to variability based on EAM’s operations risk, Value Line’s non-voting revenues interest in EAM is a preferred interest in the revenues of EAM, rather than a profits interest in EAM, and Value Line accordingly believes it is subject to proportionately less risk than other holders of the profits interests.

The Company has not provided any explicit or implicit financial or other support to EAM other than what was contractually agreed to in the EAM Trust Agreement. Value Line has no obligation to fund EAM in the future and, as a result, has no exposure to loss beyond its initial investment and any undistributed revenues and profits interests retained in EAM. The following table presents the total assets of EAM, the maximum exposure to loss due to involvement with EAM, as well as the value of the assets and liabilities the Company has recorded on its Consolidated Condensed Balance Sheets for its interest in EAM.

			Value Line
($ in thousands)	VIE Assets		Investment in EAM Trust (1)		Liabilities		Maximum Exposure to Loss
As of October 31, 2023 (unaudited)	$	61,729	$	59,119	$	-	$	59,119
As of April 30, 2023	$	61,389	$	58,775	$	-	$	58,775

(1) Reported within Long-Term Assets on the Consolidated Condensed Balance Sheets.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

Note 4 - Supplementary Cash Flows Information:

Reconciliation of Cash, Cash Equivalents, and Restricted Cash:

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Condensed Statement of Cash Flows that sum to the total of the same such amounts shown in the Consolidated Condensed Statement of Cash Flows.

	Six Months Ended October 31,
($ in thousands)	2023		2022
Cash and cash equivalents	$	3,924	$	12,668
Restricted cash		305		305
Total cash, cash equivalents, and restricted cash shown in the Consolidated Condensed Statement of Cash Flows	$	4,229	$	12,973

Income Tax Payments:

The Company made income tax payments as follows:

	Six Months Ended October 31,
($ in thousands)	2023		2022
State and local income tax payments	$	497	$	650
Federal income tax payments	$	2,900	$	3,127

Note 5 - Employees' Profit Sharing and Savings Plan:

Substantially all employees of the Company and its subsidiaries are members of the Value Line, Inc. Profit Sharing and Savings Plan (the "Plan"). In general, this is a qualified, contributory plan which provides for a discretionary annual Company contribution. For the six months ended October 31, 2023 and October 31, 2022, the estimated profit sharing plan contributions, which are included as expenses in salaries and employee benefits in the Consolidated Condensed Statements of Income, were $191,000 and $213,000 in fiscal 2024 and fiscal 2023, respectively.

Note 6 - Comprehensive Income:

The FASB's ASC Comprehensive Income topic requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that otherwise would not be recognized in the calculation of net income.

As of October 31, 2023 and October 31, 2022 the Company held fixed income securities consisting of certificates of deposits and securities issued by federal, state, and local governments within the United States that are classified as securities available-for-sale on the Consolidated Condensed Balance Sheets. The change in valuation of fixed income securities, net of deferred income taxes, has been recorded in Accumulated Other Comprehensive Income in the Company's Consolidated Condensed Balance Sheets.

The components of comprehensive income included in the Consolidated Condensed Statements of Income and Changes in Shareholders' Equity for the six months ended October 31, 2023 are as follows:

($ in thousands)	Amount Before Tax			Tax (Expense) / Benefit		Amount Net of Tax
Change in unrealized gains/(losses) on available-for-sale fixed income securities	$	(837	)	$	177	$	(660	)
	$	(837	)	$	177	$	(660	)

The components of comprehensive income included in the Consolidated Condensed Statements of Income and Changes in Shareholders' Equity for the six months ended October 31, 2022 are as follows:

($ in thousands)	Amount Before Tax		Tax (Expense) / Benefit			Amount Net of Tax
Change in unrealized gains/(losses) on available-for-sale fixed income securities	$	3	$	(1	)	$	2
	$	3	$	(1	)	$	2

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

Note 7 - Related Party Transactions:

Investment Management (overview):

The Company has substantial non-voting revenues and non-voting profits interests in EAM, the asset manager to the Value Line Mutual Funds. Accordingly, the Company does not report this operation as a separate business segment, although it maintains a significant interest in the cash flows generated by this business and receives non-voting revenues and non-voting profits interests, as discussed below.

Total assets in the Value Line Funds managed and/or distributed by EAM at October 31, 2023, were $3.31 billion, 14.5% above total assets of $2.89 billion in the Value Line Funds managed and/or distributed by EAM at October 31, 2022.

The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive quarterly distributions in a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances). The Voting Profits Interest Holders receive the other 50% of residual profits of EAM. Distribution is not less than 90% of EAM’s profits payable each fiscal quarter under the provisions of the EAM Trust Agreement.

EAM Trust - VLI's non-voting revenues and non-voting profits interests:

The Company holds non-voting revenues and non-voting profits interests in EAM which entitle the Company to receive from EAM an amount ranging from 41% to 55% of EAM's investment management fee revenues from its mutual fund and separate accounts business. EAM currently has no separately managed account fees. The Company recorded income from its non-voting revenues interest and its non-voting profits interests in EAM as follows:

	Three Months Ended October 31,				Six Months Ended October 31,
($ in thousands)	2023		2022		2023		2022
Non-voting revenues interest in EAM	$	2,721	$	2,623	$	5,337	$	5,405
Non-voting profits interest in EAM		274		193		515		426
	$	2,995	$	2,816	$	5,852	$	5,831

At October 31, 2023, the Company's investment in EAM includes a receivable of $2,967,000 representing the quarterly distribution of the non-voting revenues share and non-voting profits share. That amount was subsequently paid to the Company.

Transactions with Parent:

During the six months ended October 31, 2023 and October 31, 2022, the Company was reimbursed $170,000 and $170,000, respectively, for payments it made on behalf of and for services the Company provided to the Parent Company, Arnold Bernhard and Co., Inc. ("Parent"). There were no receivables from the Parent on the Consolidated Condensed Balance Sheets at October 31, 2023 and April 30, 2023.

The Company is a party to a tax-sharing arrangement with the Parent which allocates the tax liabilities of the two Companies between them. The Company made federal tax payments of $2,900,000 and $3,127,000 to the Parent during the six months ended October 31, 2023 and October 31, 2022, respectively.

As of October 31, 2023, the Parent owned 91.59% of the outstanding shares of common stock of the Company.

Note 8 - Federal, State and Local Income Taxes:

In accordance with the requirements of the Income Tax Topic of the FASB's ASC, the Company's provision for income taxes includes the following:

	Three Months Ended October 31,						Six Months Ended October 31,
($ in thousands)	2023			2022			2023			2022
Current tax expense:
Federal	$	1,253		$	1,252		$	2,462		$	2,390
State and local		259			110			510			467
Current tax expense		1,512			1,362			2,972			2,857
Deferred tax expense (benefit):
Federal		(346	)		(11	)		(306	)		(99	)
State and local		(64	)		40			(64	)		40
Deferred tax expense (benefit):		(410	)		29			(370	)		(59	)
Income tax provision	$	1,102		$	1,391		$	2,602		$	2,798

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act (the "Tax Act"), was enacted. The Tax Act lowered the U.S. federal income tax rate ("Federal Tax Rate") from 35% to 21% effective January 1, 2018. Accordingly, the Company computes Federal income tax expense using the Federal Tax Rate of 21% in fiscal year 2019 and each year thereafter.

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the six months ended October 31, 2023 and October 31, 2022 were 23.76% and 24.15%, respectively. The lower effective tax rate during six months ended October 31, 2023 as compared to October 31, 2022, is primarily a result of a decrease in the state and local income tax rate to 3.03% from 3.37% due to changes in state and local income tax allocations. The Company's annualized overall effective tax rate fluctuates due to a number of factors, in addition to changes in tax law, including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-income tax, the Company's geographic profit mix between tax jurisdictions, taxation method adopted by each locality, new interpretations of existing tax laws and rulings and settlements with tax authorities.

Deferred income taxes, a liability, are provided for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The tax effect of temporary differences giving rise to the Company's long-term deferred tax liability are as follows:

	October 31,			April 30,
($ in thousands)	2023			2023
Federal tax liability (benefit):
Deferred gain on deconsolidation of EAM	$	10,669		$	10,669
Deferred non-cash post-employment compensation		(372	)		(372	)
Depreciation and amortization		53			59
Unrealized gain/(loss) on fixed income securities held for sale		(76	)		99
Unrealized gain on equity securities		613			919
Right of Use Asset		(161	)		(174	)
Deferred charges		(144	)		(136	)
Other		(433	)		(432	)
Total federal tax liability		10,149			10,632

State and local tax liabilities (benefits):
Deferred gain on deconsolidation of EAM		1,935			2,062
Deferred non-cash post-employment compensation		(67	)		(72	)
Depreciation and amortization		10			125
Unrealized gain/(loss) on fixed income securities held for sale		(13	)		19
Unrealized gain on equity securities		111			178
Other		412			185
Total state and local tax liabilities		2,388			2,497
Deferred tax liability, long-term	$	12,537		$	13,129

At the end of each interim reporting period, the Company estimates the effective income tax rate to apply for the full fiscal year. The Company uses the effective income tax rate determined to provide for income taxes on a year-to-date basis and reflects the tax effect of any tax law changes and certain other discrete events in the period in which they occur.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory income tax rate to pretax income as a result of the following:

	Six months Ended October 31,
	2023			2022
U.S. statutory federal tax rate		21.00	%		21.00	%
Increase (decrease) in tax rate from:
State and local income taxes, net of federal income tax benefit		3.03	%		3.37	%
Effect of dividends received deductions		(0.25	)%		(0.23	)%
Other, net		(0.02	)%		0.01	%
Effective income tax rate		23.76	%		24.15	%

The Company believes that, as of October 31, 2023, there were no material uncertain tax positions that would require disclosure under GAAP.

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

The Company is included in the consolidated federal income tax return of the Parent. The Company has a tax sharing agreement which requires it to make tax payments to the Parent equal to the Company's liability/(benefit) as if it filed a separate return. Beginning with the fiscal year ended April 30, 2017, the Company files combined income tax returns with the Parent on a unitary basis in certain states.

The Company’s federal income tax returns (included in the Parent’s consolidated returns) and state and city tax returns for fiscal years ended 2020 through 2022, are subject to examination by the tax authorities, generally for three years after they are filed with the tax authorities.

Note 9 - Property and Equipment:

Property and equipment are carried at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the assets, or in the case of leasehold improvements, over the remaining terms of the leases. For income tax purposes, depreciation of furniture and equipment is computed using accelerated methods and buildings and leasehold improvements are depreciated over prescribed extended tax lives. Property and equipment, net, on the Consolidated Condensed Balance Sheets was comprised of the following:

	October 31,			April 30,
($ in thousands)	2023			2023
Building and leasehold improvements	$	1,013		$	1,013
Operating lease - right-of-use asset		4,704			5,300
Furniture and equipment		4,089			4,079
		9,806			10,392
Accumulated depreciation and amortization		(4,674	)		(4,604	)
Total property and equipment, net	$	5,132		$	5,788

Note 10 - Accounting for the Costs of Computer Software Developed for Internal Use:

The Company has adopted the provisions of the Statement of Position 98-1 (SOP 98-1), "Accounting for the Costs of Computer Software Developed for Internal Use". SOP 98-1 requires companies to capitalize as long-lived assets many of the costs associated with developing or purchasing software for internal use and amortize those costs over the software's estimated useful life in a systematic and rational manner. Such costs, when incurred, are capitalized and amortized over the expected useful life of the asset, normally 3 to 5 years. Total amortization expenses during the six months ended October 31, 2023 and October 31, 2022, were $35,000 and $24,000, respectively.

During the six months ended October 31, 2023 and October 31, 2022, the Company did not incur and did not capitalize expenditures related to third party programmers' costs nor internal costs to develope software for internal use.

Note 11 - Treasury Stock and Repurchase Program:

During October 2022, the Company's Board of Directors approved a renewal of a share repurchase program authorizing the repurchase of shares of the Company’s common stock up to an aggregate purchase price of $3,000,000. The repurchases may be made from time to time on the open market at prevailing market prices, in negotiated transactions off the market, in block purchases or otherwise. The repurchase program may be suspended or discontinued at any time at the Company’s discretion and has no set price limit and no expiration date.

Treasury stock, at cost, consists of the following:

(in thousands except for shares and cost per share)	Shares		Cost Assigned		Average Cost per Share		Aggregate Purchase Price Remaining Under the Program
Balance as of July 31, 2023		569,471	$	14,859	$	26.09	$	1,546
Purchases effected in open market during the months ended:
August 31, 2023		413		20		48.47		1,526
September 30, 2023		1,324		63		47.43		1,463
October 31, 2023		1,809		67		37.33		1,396
Balance as of October 31, 2023		573,017	$	15,009	$	26.19	$	1,396

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

Note 12 - Lease Commitments:

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This ASU requires that, for leases longer than one year, a lessee recognizes in the statements of financial position a right-of-use asset, representing the right to use the underlying asset for the lease term, and a lease liability, representing the liability to make lease payments. It also requires that for finance leases, a lessee recognizes interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a combined expense. The firm adopted this ASU in May 2019 under a modified retrospective approach.

The Company adopted ASU 2016-02 using a modified retrospective transition approach as of the Effective Date as permitted by the amendments in ASU 2018-11, which provides an alternative modified retrospective transition method. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e. May 1, 2019). The Company has elected to employ the transitionary relief offered by the FASB and, therefore, has not reassessed (1) whether existing or expired contracts contain a lease, (2) lease classification for existing or expired leases or (3) the accounting for initial direct costs that were previously capitalized.

The Company leases office space in New York, NY and a warehouse and appurtenant office space in Lyndhurst, NJ. The Company has evaluated these leases and determined that they are operating leases under the definitions of the guidance of ASU 2016-02.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received.

On May 1, 2019, the Company recorded a right-of-use asset in the amount of $9,575,000, which represents the lease liability of $10,340,000 adjusted for previously recorded unamortized lease incentives in the amount of $765,000. The right-of-use asset is amortized over the remaining lease term in the amount equal to the difference between the calculated straight-line expense of the total lease payments less the monthly interest calculated on the remaining lease liability. As of October 31, 2023, the Company had a long-term lease asset of $4,704,000 recorded in property and equipment in its Consolidated Condensed Balance Sheets.

The Company recognizes lease expense, calculated as the remaining cost of the lease allocated over the remaining lease term on a straight-line basis. Lease expense is presented as part of continuing operations in the consolidated condensed statements of income. The Company recognized $750,000 in lease expenses in both fiscal years 2024 and 2023 during the six months ended October 31, 2023 and October 31, 2022, respectively.

For the six months ended October 31, 2023, the Company paid $810,000 in rent relating to the leases. As a payment arising from an operating lease, the $810,000 is classified within operating activities in the consolidated condensed statements of cash flows.

The Company’s leases generally do not provide an implicit interest rate, and therefore the Company estimated an incremental borrowing rate, or IBR, as of the commencement date, to determine the present value of its operating lease liabilities. The IBR is defined under ASC 842 as the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The following table reconciles the undiscounted future minimum lease payments to the total operating lease liabilities recognized on the Consolidated Condensed Balance Sheet as of October 31, 2023:

Fiscal years ended October 31,	($ in thousands)
2024*	$	824
2025		1,429
2026		1,461
2027		1,493
2028		883
Total undiscounted future minimum lease payments		6,090
Less: difference between undiscounted lease payments & the present value of future lease payments		618
Total operating lease liabilities	$	5,472

* Excludes the six months ended October 31, 2023

Value Line, Inc.

Notes to Consolidated Condensed Financial Statements

October 31, 2023

(Unaudited)

Note 13 - Restricted Cash and Deposits:

Restricted Money Market Investment in the noncurrent assets on the Consolidated Condensed Balance Sheet at October 31, 2023, includes $305,000, which represents cash invested in a bank money market fund securing a letter of credit ("LOC") in the amount of $305,000 issued to the sublandlord as a security deposit for the Company's New York City leased corporate office facility. According to the sublease agreement the LOC and restricted cash were reduced from $469,000 to $305,000 in the third quarter of fiscal year 2022.

Note 14 - Concentration:

During the six months ended October 31, 2023, 33.6% of total publishing revenues of $19,353,000 were derived from a single customer.

Note 15 - Concentration of Credit Risk:

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of October 31, 2023 and October 31, 2022, the Company had $2,237,000 and $4,183,000, respectively, in excess of the FDIC insured limit. Management has concluded the excess does not represent a material risk, based on the creditworthiness of the counter parties.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Statement Regarding Forward-Looking Information

In this report, “Value Line,” “we,” “us,” “our” refers to Value Line, Inc. and “the Company” refers to Value Line and its subsidiaries unless the context otherwise requires.

This report contains statements that are predictive in nature, depend upon or refer to future events or conditions (including certain projections and business trends) accompanied by such phrases as “believe”, “estimate”, “expect”, “anticipate”, “will”, “intend” and other similar or negative expressions, that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, as amended. Actual results for Value Line, Inc. (“Value Line” or “the Company”) may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the following:

●

maintaining revenue from subscriptions for the Company’s digital and print published products;

●

changes in investment trends and economic conditions, including global financial issues;

●

changes in Federal Reserve policies affecting interest rates and liquidity along with resulting effects on equity markets;

●

stability of the banking system, including the success of U.S. government policies and actions in regard to banks with liquidity or capital issues, along with the associated impact on equity markets;

●

continuation of orderly markets for equities and corporate and governmental debt securities;

●

problems protecting intellectual property rights in Company methods and trademarks;

●

protecting confidential information including customer confidential or personal information that we may possess;

●

dependence on non-voting revenues and non-voting profits interests in EULAV Asset Management, a Delaware statutory trust (“EAM” or “EAM Trust”), which serves as the investment advisor to the Value Line Funds and engages in related distribution, marketing and administrative services;

●

fluctuations in EAM’s and third party copyright assets under management due to broadly based changes in the values of equity and debt securities, redemptions by investors and other factors;

●

possible changes in the valuation of EAM’s intangible assets from time to time;

●

possible changes in future revenues or collection of receivables from significant customers;

●

dependence on key executive and specialist personnel;

●

risks associated with the outsourcing of certain functions, technical facilities, and operations, including in some instances outside the U.S.;

●

competition in the fields of publishing, copyright and investment management, along with associated effects on the level and structure of prices and fees, and the mix of services delivered;

●

the impact of government regulation on the Company’s and EAM’s businesses;

●

the availability of free or low cost investment data through discount brokers or generally over the internet;

●

the economic and other impacts of global political and military conflicts;

●

continued availability of generally dependable energy supplies in the geographic areas in which the company and certain suppliers operate;

●

terrorist attacks, cyber attacks and natural disasters;

●

insufficiency in our business continuity plans or systems in the event of anticipated or unpredictable disruption;

●

the coronavirus pandemic, which has drastically affected markets, employment, and other economic conditions, and may have additional unpredictable impacts on employees, suppliers, customers, and operations;

●

other possible epidemics;

●

changes in prices and availability of materials and other inputs and services, such as freight and postage, required by the Company;

●

other risks and uncertainties, including but not limited to the risks described in Part I, Item 1A, herein, “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended April 30, 2023 and in Part II, Item 1A of this Quarterly Report on Form 10-Q for the period ended October 31, 2023; and other risks and uncertainties arising from time to time.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors which may involve external factors over which we may have no control or changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at our discretion, could also have material adverse effects on future results. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the SEC pursuant to the SEC's rules, we have no duty to update these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, current plans, anticipated actions, and future financial conditions and results may differ from those expressed in any forward-looking information contained herein.

Executive Summary of the Business

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. Value Line markets under well-known brands including Value Line®, the Value Line logo®, The Value Line Investment Survey®, Smart Research, Smarter Investing™ and The Most Trusted Name in Investment Research®. The name "Value Line" as used to describe the Company, its products, and its subsidiaries, is a registered trademark of the Company. EULAV Asset Management Trust (“EAM”) was established to provide the investment management services to the Value Line Funds, institutional and individual accounts and provide distribution, marketing, and administrative services to the Value Line® Mutual Funds ("Value Line Funds"). The Company maintains a significant investment in EAM from which it receives payments in respect of its non-voting revenues and non-voting profits interests.

The Company’s target audiences within the investment research field are individual investors, colleges, libraries, and investment management professionals. Individuals come to Value Line for complete research in one package. Institutional licensees consist of corporations, financial professionals, colleges, and municipal libraries. Libraries and universities offer the Company’s detailed research to their patrons and students. Investment management professionals use the research and historical information in their day-to-day businesses. The Company has a dedicated department that solicits institutional subscriptions.

Payments received for new and renewal subscriptions and the value of receivables for amounts billed to retail and institutional customers are recorded as unearned revenue until the order is fulfilled. As the orders are fulfilled, the Company recognizes revenue in equal installments over the life of the particular subscription. Accordingly, the subscription fees to be earned by fulfilling subscriptions after the date of a particular balance sheet are shown on that balance sheet as unearned revenue within current and long-term liabilities.

The investment periodicals and related publications (retail and institutional) and Value Line copyrights and Value Line Proprietary Ranks and other proprietary information consolidate into one segment called Publishing. The Publishing segment constitutes the Company’s only reportable business segment.

Asset Management and Mutual Fund Distribution Businesses

Pursuant to the EAM Declaration of Trust, the Company maintains an interest in certain revenues of EAM and a portion of the residual profits of EAM but has no voting authority with respect to the election or removal of the trustees of EAM or control of its business.

The business of EAM is managed by its trustees each owning 20% of the voting interest in EAM and by its officers subject to the direction of the trustees. The Company’s non-voting revenues and non-voting profits interests in EAM entitle it to receive a range of 41% to 55% of EAM’s revenues (excluding distribution revenues) from EAM’s mutual fund and separate account business distributed quarterly and 50% of the residual profits of EAM (subject to temporary increase in certain limited circumstances). The Voting Profits Interest Holders will receive the other 50% of residual profits of EAM. Distribution is not less than 90% of EAM’s profits payable each fiscal quarter under the provisions of the EAM Trust Agreement.

Business Environment

The U.S. economy has performed much better than expected during calendar 2023. The year started with talks of the possibility of at least a mild recession during the 12-month period, with restrictive monetary policies leading to a decrease in demand for goods and services. That scenario, however, did not materialize, as the continued strength of the U.S. consumer sector, buoyed by savings built up during the COVID-19 pandemic and a strong labor market, drove growth throughout the year. This expansion culminated with an annualized 5.2% increase in the gross domestic product (GDP) during the third quarter. That advance came on the heels of solid March- and June-quarter gains of 2.0% and 2.1%, respectively.

The strong GDP showing came at a time when the Federal Reserve, in an attempt to tame inflation, is likely in the final stretch of its most restrictive monetary policy course in 40 years. In total, the central bank hiked the benchmark short-term interest rate 11 times since early 2022, with the hawkish stance raising the federal funds rate from near-zero in the spring of 2022 to a range of 5.25% to 5.50% as of the November, 2023 Federal Open Market Committee (FOMC) meeting. There were signs that inflation eased further over the late summer and early fall, with both consumer and producer price growth well off their multi-decade highs established in 2021. This, along with a notable pullback in the October Personal Consumption Expenditures (PCE) Price Index, which is the most closely monitored assessment of the current U.S. inflation situation by the Federal Reserve, has raised sentiment that the lead bank may be done increasing the federal funds rate. However, senior officials as recently as the November FOMC meeting have given no indications that they will reverse monetary course in the near future.

As noted, the main cog in this year’s economic growth was the U.S. consumer, who was emboldened by a tight labor market over the course of 2023. For much of the year, the pace of spending far outstripped personal income. This vibrant spending, which included a notable shift to services-oriented sectors, has kept the possibility of a recession at bay, but has also come at the result of a sizable increase in consumer debt.

Looking forward, it still remains to be seen how much longer Americans can keep up that spending pace. A number of retailers noted during third-quarter earnings season that they are seeing signs of individuals and families changing their spending habits, focusing more on essential items than those deemed to be more discretionary in nature. Durable goods orders, which include big-ticket items that have a lifespan of more than three years, fell sharply in October. On the positive side, salaries, as measured by the average hourly wage, increased at a faster rate than both consumer and producer prices this fall, which likely gave a boost to the consumer’s purchasing power during the final quarter of 2023 and the all-important holiday shopping season for the retailers.

In conclusion, the Federal Reserve’s aggressive monetary tightening course has clearly made a dent in inflation, but senior officials at the central bank have vowed to keep short-term interest rates higher for longer and wait to see what the full effects of this restrictive monetary policy course on price growth and the overall economy. The current business environment has held up fairly well, with profit growth of around 4% for the S&P 500 companies during the third quarter. This marked the first period of year-over-year earnings expansion since the third quarter of 2022. That said, some concerns still persist. The higher lending rates have taken a toll on business investment and this may have an impact on economic growth down the line. There also are signs that the higher-rate environment has had a negative impact on the financial performances of the banking, insurance, and commercial real estate industries.

From a stock-market perspective, the price-to-earnings ratio of the S&P 500 companies stood above 18.5 times following the conclusion of the third-quarter earnings season, which exceeded the 10-year average for the Index. This high valuation may leave equities vulnerable to some possible selling on any disappointing news from the economic, earnings, or geopolitical fronts.

Results of Operations for the Three and Six Months Ended October 31, 2023 and 2022

The following table illustrates the Company’s key components of revenues and expenses.

	Three Months Ended October 31,									Six Months Ended October 31,
($ in thousands, except earnings per share)	2023			2022			Change			2023			2022		Change
Income from operations	$	2,674		$	3,173			-15.7	%	$	5,421		$	5,729		-5.4	%
Non-voting revenues and non-voting profits interests from EAM Trust		2,995			2,816			6.4	%		5,852			5,831		0.4	%
Income from operations plus non-voting revenues and non-voting profits interests from EAM Trust	$	5,669		$	5,989			-5.3	%	$	11,273		$	11,560		-2.5	%
Operating expenses	$	6,936		$	6,893			0.6	%	$	13,932		$	14,281		-2.4	%
Investment gains/(losses)	$	(1,079	)	$	(268	)		-		$	(324	)	$	26		-1346.2	%
Income before income taxes	$	4,590		$	5,721			-19.8	%	$	10,949		$	11,586		-5.5	%
Net income	$	3,488		$	4,330			-19.4	%	$	8,347		$	8,788		-5.0	%
Earnings per share	$	0.37		$	0.46			-19.6	%	$	0.89		$	0.93		-4.3	%

During the six months ended October 31, 2023, the Company’s net income of $8,347,000, or $0.89 per share, was 5.0% below net income of $8,788,000, or $0.93 per share, for the six months ended October 31, 2022. During the six months ended October 31, 2023, the Company’s income from operations of $5,421,000 was 5.4% below income from operations of $5,729,000 during the six months ended October 31, 2022. For the six months ended October 31, 2023, operating expenses decreased 2.4% below those during the six months ended October 31, 2022.

During the three months ended October 31, 2023, the Company’s net income of $3,488,000, or $0.37 per share, was 19.4% below net income of $4,330,000, or $0.46 per share, for the three months ended October 31, 2022. During the three months ended October 31, 2023, the Company’s income from operations of $2,674,000 was 15.7% below income from operations of $3,173,000 during the three months ended October 31, 2022. For the three months ended October 31, 2023, operating expenses increased slight above those during the three months ended October 31, 2022.

During the six months ended October 31, 2023, there were 9,430,871 average common shares outstanding as compared to 9,475,960 average common shares outstanding during the six months ended October 31, 2022.

Total operating revenues

	Three Months Ended October 31,							Six Months Ended October 31,
($ in thousands)	2023		2022		Change			2023		2022		Change
Investment periodicals and related publications:
Print	$	2,327	$	2,513		-7.4	%	$	4,709	$	5,071		-7.1	%
Digital		4,071		4,099		-0.7	%		8,146		8,132		0.2	%
Total investment periodicals and related publications		6,398		6,612		-3.2	%		12,855		13,203		-2.6	%
Copyright fees		3,212		3,454		-7.0	%		6,498		6,807		-4.5	%
Total publishing revenues	$	9,610	$	10,066		-4.5	%	$	19,353	$	20,010		-3.3	%

Within investment periodicals and related publications, subscription sales orders are derived from print and digital products. The following chart illustrates the changes in the sales orders associated with print and digital subscriptions.

Sources of subscription sales

	Three Months Ended October 31,												Six Months Ended October 31,
	2023						2022						2023						2022
	Print			Digital			Print			Digital			Print			Digital			Print			Digital

New Sales		10.6	%		8.6	%		8.1	%		13.9	%		12.2	%		10.7	%		10.3	%		13.7	%
Renewal & Conversion Sales		89.4	%		91.4	%		91.9	%		86.1	%		87.8	%		89.3	%		89.7	%		86.3	%
Total Gross Sales		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%

During the six months ended October 31, 2023, new sales of print publications increased while conversion and renewal sales orders decreased from the prior fiscal year. New sales of digital publications decreased while conversion and renewal sales orders increased from the prior fiscal year.

As of

October 31,

As of

April 30,

As of

October 31,

Change

($ in thousands)

2023

2022

October-23

vs. Apr-23

October-23

vs. October-22

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