Note 2 - Investments

6 Months Ended

Oct. 31, 2023

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

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.