VALUE LINE INC - Annual Report: 2017 (Form 10-K)

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended April 30, 2017

or

[  ] 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)

Registrant's telephone number, including area code (212) 907-1500

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

Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ] Yes [X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [  ] Yes [X] No

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.                               [X] Yes [  ] No

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).            [X] Yes [  ] No

       Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.                                [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 [X ]          Smaller reporting company [   ]       Emerging growth company  [   ] 

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

The aggregate market value of the registrant's voting and non-voting common stock held by non-affiliates at October 31, 2016 was $19,367,784.

There were 9,709,312 shares of the registrant’s Common Stock outstanding at June 30, 2017.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement relating to the registrant’s 2017 Annual Meeting of Shareholders, to be held on September 27, 2017, are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated.

TABLE OF CONTENTS

Value Line, the Value Line logo, The Most Trusted Name In Investment Research, “Smart research. Smarter investing”, The Value Line Investment Survey, Value Line Select, Timeliness and Safety are trademarks or registered trademarks of Value Line Inc. and/or its affiliates in the United States and other countries. All other trademarks are the property of their respective owners.

Cautionary Statement Regarding Forward-Looking Information

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:

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.

Explanatory Notes

References in this Annual Report on Form 10-K for the fiscal year ending April 30, 2017, to “the Company”, “Value Line”, “we”, “us” and “our” refer to Value Line, Inc. and its consolidated subsidiaries, unless the context otherwise requires. In addition, unless the context otherwise requires, references to:

“fiscal 2017” are to the twelve month period from May 1, 2016 to April 30, 2017;

“fiscal 2016” are to the twelve month period from May 1, 2015 to April 30, 2016;

“fiscal 2015” are to the twelve month period from May 1, 2014 to April 30, 2015;

the “Adviser” or “EAM” are to EULAV Asset Management Trust, a Delaware business statutory trust;

the “Distributor” or “ES” are to EULAV Securities LLC, a Delaware limited liability company wholly

owned by EAM;

“EAM LLC” are to EULAV Asset Management LLC, a Delaware limited liability company and wholly-owned former subsidiary of the Company, which prior to the Restructuring Date, was the adviser to the Value Line Funds;

“ESI” are to EULAV Securities, Inc., a New York corporation and wholly-owned subsidiary of the Company which, prior to the Restructuring Date was the distributor of the Value Line Funds;

the “EAM Declaration of Trust” are to the EAM Declaration of Trust dated December 23, 2010;

the “Restructuring Date” are to December 23, 2010, the effective date of the Restructuring Transaction;

the “Restructuring Transaction” are to the restructuring of the Company’s asset management and mutual fund distribution businesses whereby (1) ESI was restructured into ES, (2) the Company transferred 100% of its ownership interest in ES to EAM LLC, (3) EAM LLC was converted into EAM and (4) the capital structure of EAM was established so that the Company owns only non-voting revenue and non-voting profits interests of EAM, and each of five individuals owns 20% of the voting profits interests of EAM; and

the “Value Line Funds” or the “Funds” are to the Value Line Mutual Funds registered under the Investment Company Act of 1940 for which EAM serves (and, prior to the Restructuring Date, EAM LLC served) as investment adviser.

Part I

Item 1. BUSINESS.

Value Line, Inc. is a New York corporation headquartered in New York City and formed in 1982. The Company's core business is producing investment periodicals based on underlying research and making available copyright data, including certain Proprietary Ranking System 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. Prior to December 23, 2010, (see “Asset Management and Mutual Fund Distribution Businesses” below), the Company provided investment management services to the Value Line Mutual Funds ("Value Line Funds"), institutional and individual accounts and provided distribution, marketing, and administrative services to the Value Line Funds. Since December 23, 2010, EULAV Asset Management Trust (“EAM”) provides the investment management services to the Value Line Funds accounts and provides distribution, marketing, and administrative services to the Value Line Funds. Value Line holds substantial non-voting revenues and non-voting profits interests in EAM.

The Company is the successor to substantially all of the operations of Arnold Bernhard & Co, Inc. ("AB&Co."). AB&Co. is the controlling shareholder of the Company and, as of April 30, 2017, owns 88.9% of the outstanding shares of the common stock of the Company.

A. Investment Related Periodicals & Publications

The investment periodicals and related publications offered by Value Line Publishing LLC (“VLP”), a wholly-owned entity of the Company, cover a broad spectrum of investments including stocks, mutual funds, ETFs, options and convertible securities. The Company’s periodicals and related publications and services are of interest to individual and professional investors, as well as to institutions including municipal and university libraries and investment firms.

       The services generally fall into four categories:

The comprehensive research services (The Value Line Investment Survey, The Value Line Investment Survey - Small and Mid-Cap, The Value Line 600, The Value Line Small & Mid-Cap 300, and The Value Line Fund Advisor Plus) provide both statistical and text coverage of a large number of investment securities, with an emphasis placed on Value Line’s proprietary research, analysis and statistical ranks. The Value Line Investment Survey is the Company’s flagship service, published each week in print and daily on the web, and covering approximately 1,700 stocks.        

The niche newsletters (Value Line Select®, Value Line Select: Dividend Income & Growth, and The Value Line Special Situations Service®) provide information on a less comprehensive basis for securities that the Company believes will be of particular interest to subscribers. These services also make use of Value Line’s proprietary statistical ranks and ratings. Value Line Select® is a targeted service with an emphasis on Value Line’s proprietary in-depth research analysis and statistical selections, highlighting a monthly stock with strong return potential and reasonable risk.  Value Line Select: Dividend Income & Growth represents Value Line's targeted coverage of high dividend yielding stocks. The Value Line Special Situations Service provides in-depth research analysis on small and mid-cap stocks.

              Value Line offers digital versions of most of its products through the Company’s website, www.valueline.com. Subscribers to the print versions have, in some cases, received free access to the corresponding digital versions, although digital subscribers do not receive a free print edition. The most comprehensive of the Company’s online efforts are The Value Line Research Center and its variations, which allow subscribers to access most of the Company’s research and publications at a packaged price via the Internet.

Investment analysis software (The Value Line Investment Analyzer) includes data sorting and filtering tools. In addition, for institutional and professional subscribers, VLP offers current and historical financial databases (DataFile, Estimates & Projections, Convertibles and Mutual Funds) via online.

The print and digital services include, but are not limited to the following:

The Value Line Investment Survey

The Value Line Investment Survey is an investment periodical research service providing both timely articles on economic, financial and investment matters and analysis and ranks for equity securities. Two of the evaluations for covered equity securities are "Timeliness™" and "Safety™.” “Timeliness” Ranks relate to the probable relative price performance of one stock over the next six to twelve months, as compared to the rest of the approximately 1,700 stocks covered. Ranks are updated each week and range from Rank 1 for the expected best performing stocks to Rank 5 for the expected poorest performers. "Safety" Ranks are a measure of risk and are based on the issuer's relative Financial Strength and its stock's Price Stability. "Safety" ranges from Rank 1 for the least risky stocks to Rank 5 for the riskiest. VLP employs analysts and statisticians who prepare articles of interest for each periodical and who evaluate stock performance and provide future earnings estimates and quarterly written evaluations with more frequent updates when relevant. The Value Line Investment Survey is comprised of three parts: The "Summary & Index" provides updated Timeliness and Safety Ranks, selected financial data, and "screens" of key financial measures; the "Ratings & Reports" section contains updated reports on about 130 stocks each week; and the “Selection & Opinion” section provides economic commentary and data, general interest articles, and four model portfolios managed by analysts covering a range of investment approaches. A fifth model portfolio, delivered via a weekly email newsletter, was added to this service in June 2014.

The Value Line Investment Survey - Small and Mid-Cap

       The Value Line Investment Survey - Small and Mid-Cap is an investment research product introduced in 1995 that provides short descriptions of and extensive data for approximately 1,800 small and medium-capitalization stocks, many listed on The NASDAQ Exchange, beyond the approximately 1,700 equity securities of generally larger-capitalization companies covered in The Value Line Investment Survey. Like The Value Line Investment Survey, the Small and Mid-Cap has its own "Summary & Index" providing updated performance ranks and other data, as well as "screens" of key financial measures and two model portfolios. The "Ratings and Reports" section, providing updated reports on about 140 equity securities each week, has been organized to correspond closely to the industries reviewed in The Value Line Investment Survey. One unique feature of the Small and Mid-Cap is The Performance Ranking System, which incorporates many of the elements of the Value Line Timeliness Ranking System, modified to accommodate the approximately 1,800 equity securities in the Small and Mid-Cap Survey. The Performance Rank is based on earnings growth and price momentum, and is designed to predict relative price performance over the next six to twelve months. The principal differences between the Small and Mid-Cap Survey and The Value Line Investment Survey are that the Small and Mid-Cap Survey does not include Value Line’s Timeliness Ranks, financial forecasts, analyst commentary, or a Selection & Opinion section. These modifications allow VLP to offer this service at a lower price.

The Value Line Fund Advisor

       The Value Line Mutual Fund Ranking System was introduced in 1993. It is the system utilized in the Fund Advisor product, a 48-page newsletter featuring load, no-load, and low-load open-end mutual funds. This product was originally introduced as The Value Line No-Load Fund Advisor in 1994 and augmented in 2009. Each issue offers strategies for maximizing total return, and highlights of specific mutual funds. It also includes information about retirement planning and industry news. A full statistical review, including latest performance, ranks, and sector weightings, is updated each month on approximately 800 leading load, no-load and low-load funds. Included with this product is online access to Value Line’s database of more than 12,000 mutual funds, including screening tools and full-page printable reports on each fund. Fund Advisor Plus subscribers have access to the entire population of up to approximately 20,000 funds.

The Value Line Special Situations Service

       The Value Line Special Situations Service’s core focus is on smaller companies whose equity securities are perceived by Value Line’s analysts as having exceptional appreciation potential. This publication was introduced in 1951. A second portfolio of stocks for more conservative investors seeking small company exposure was added in 2009.

The Value Line Options Survey

       The Value Line Options Survey is an online only service that evaluates and ranks approximately 200,000 U.S. equity and equity index options. Features include an interactive database, spreadsheet tools, and a weekly email newsletter. This product is only offered as an online subscription due to the volatility in pricing of options.

The Value Line Convertibles Survey

       Introduced in 1972, this service evaluates and ranks over 550 convertible securities (bonds and preferred stocks) for future market performance. In fiscal 2010, The Value Line Convertibles Survey became an online only service. By moving to online only delivery, all of the service’s subscribers benefit from an enhanced website that includes daily price updates, individual analysis of each security with a printable fact sheet, and a weekly email newsletter alerting subscribers to recent rank changes.

Value Line Select

       Value Line Select, is a monthly stock selection service and was first published in 1998. It focuses each month on a single company that the Value Line Research Department has selected from a group of high-quality companies whose stocks are viewed as having a superior risk/reward ratio. Recommendations are backed by in-depth research and are subject to ongoing monitoring by research personnel.

Value Line Select: Dividend Income & Growth

       Value Line Select: Dividend Income & Growth (formerly Value Line Dividend Select), a monthly stock selection service, was introduced in June 2011. This product focuses on companies with dividend yields greater than the average of all stocks covered by Value Line, with a preference for companies that have consistently increased their dividends above the rate of inflation over the longer term and, based on Value Line analysis, have the financial strength both to support and increase dividend payments in the future. Value Line Select: Dividend Income and Growth is available online and in print.

The Value Line 600

       The Value Line 600 is a monthly publication, which contains full-page research reports on approximately 600 equity securities. Its reports provide information on many actively traded, larger capitalization issues as well as some smaller growth stocks. As a lower priced service, it offers investors who want the same type of analysis provided in The Value Line Investment Survey, but who do not want or need coverage of the approximately 1,700 companies covered by that product a suitable alternative. Readers also receive supplemental reports as well as a monthly Index, which includes updated statistics, including proprietary ranks and ratings. A model portfolio, delivered via a weekly email newsletter, was added to this service in January 2015.

The Value Line Small & Mid-Cap 300 and Investor 900

In January 2016, we launched The Value Line Small & Mid-Cap 300. It is a monthly publication and details a select group of about 300 of the approximately 1,700 companies that comprise The Value Line Investment Survey. The 300 company reports included in this service are a smaller selection of the same full-page reports that are published in The Value Line Investment Survey. The 300 stocks all have market capitalizations of under $5.0 billion, and most industries are represented by at least two stocks.

Although the 300 can be purchased separately, our main goal is to provide this service to current Value Line 600 subscribers, who are predominantly receiving research on only larger cap stocks. Thus, the 300 is a companion service to the 600. When 600 subscribers add the 300 service, they are then subscribed to the print Value Line 900 or on the web The Value Line Investment Survey - Investor 900. In addition to the stock reports, 900 subscribers receive monthly Summary & Index sections, which include updated company statistics, screens, and Supplementary Reports. The online 900 service provides many of our updates on a more timely basis, and two model portfolios are delivered via weekly email newsletters.    

 Value Line Investment Analyzer

Value Line Investment Analyzer is a powerful menu-driven software program with fast filtering, ranking, reporting and graphing capabilities utilizing more than 230 data fields for various industries and indices and for the approximately 1,700 stocks covered in VLP’s flagship publication, The Value Line Investment Survey. Value Line Investment Analyzer allows subscribers to apply numerous charting and graphing variables for comparative research.  In addition to containing digital replicas of the entire Value Line Investment Survey, the Value Line Investment Analyzer includes 20-minute delayed data updates through its integration with the Value Line databases via the Internet.  The software also includes a portfolio module that lets users create and track their own stock portfolios in depth with up to five years of historical financial data for scrutinizing performance, risk, yield and return.  Value Line Investment Analyzer Professional is a more comprehensive product which covers approximately 6,000 stocks and allows subscribers to create both standardized and customized screens.

Value Line DataFile Products

  For our institutional customers, Value Line offers both current and historical data for equities, mutual funds, exchange traded funds (“ETFs”), and convertibles. All Value Line DataFile products are offered in Microsoft Access and ASCII formats via FTP. Below is a listing of the DataFile products:

Fundamental DataFile I and II

       Value Line’s Fundamental DataFile I contains fundamental data (both current and historical) on more than 6,000 publicly traded companies that follow U.S. generally accepted accounting principles (“GAAP”). This data product provides annual data from 1955, quarterly data from 1963, and full quarterly data as reported to the SEC from 1985. Value Line also offers historical data on over 9,500 companies that no longer exist in nearly 100 industries via our “Dead Company” File. The Fundamental DataFile has over 400 annual and over 80 quarterly fields for each of the companies included in the database. DataFile is sold primarily to the institutional and academic markets. Value Line also offers a scaled down DataFile product, Fundamental DataFile II, which includes a limited set of historical fundamental data.

Estimates and Projections DataFile

This DataFile offering contains the proprietary estimates and projections from Value Line analysts on approximately 1,700 companies. Data includes earnings, sales, cash flow, book value, margin, and other popular fields. Estimates are for the current year and next year, while projections encompass the three to five year period.

Mutual Fund DataFile

The Value Line Mutual Fund DataFile covers approximately 20,000 mutual funds with up to 20 years of historical data with more than 200 data fields. The Mutual Fund DataFile provides monthly pricing, basic fund information, weekly performance data, sector weights, and many other popular mutual fund data fields. This file is available for download from the Internet on a monthly basis.

ETF DataFile

This product is an extensive database containing the complete listing of every U.S.-listed ETF and every component and component weight since inception for every ETF on a daily basis. This includes all rebalancing, cash components, excluded assets, and distributions adjusted automatically on a daily basis. The data also includes the total return of the ETF and the total return of the corresponding underlying index on a daily basis. ETFs are added to the database and corresponding data made available usually by the first day of trading.

Convertible DataFile

This database is one of the largest sources of information available on convertible securities. Value Line offers data elements on our universe of more than 600 convertible bonds, preferred stocks, and warrants, with our top 150 fundamental and proprietary data items on each security.

Value Line Research Center

The Value Line Research Center provides on-line access to select Company investment research services covering stocks, mutual funds, options and convertible securities as well as special situation stocks. This service includes full digital subscriptions to The Value Line Investment Survey, The Value Line Fund Advisor Plus, The Value Line Daily Options Survey, The Value Line Investment Survey - Small and Mid-Cap, The Value Line Convertibles Survey and The Value Line Special Situations Service. Users can screen more than 250 data fields, create graphs using multiple different variables, and access technical history. The Value Line Research Center has the ability to track model portfolios, (large, small and mid-cap) as well as providing ranks and news.

Digital Services

The Value Line Investment Survey - Smart Investor offers digital access to full reports, analyst commentary and Value Line proprietary ranks on approximately 1,700 stocks. Online tools include screener, alerts, watch-lists and charting. Print capabilities are included.

The Value Line Investment Survey - Savvy Investor offers digital access to full reports and Value Line proprietary ranks on approximately 3,500 stocks. Online tools include screener, alerts, watch-lists and charting. Print capabilities are included.

The Value Line Investment Survey - Small Cap Investor offers digital access to full reports and Value Line proprietary ranks on approximately 1,800 stocks. One year history is included. Online tools include screener, alerts, watch-lists and charting. Print capabilities are included.

The Value Line Investment Survey - Investor 600, equivalent to The Value Line 600 print, offers digital access to full reports, analyst commentary and Value Line proprietary ranks on approximately 600 selected stocks covering the same variety of industries as The Value Line Investment Survey. Online tools include screener, alerts, watch-lists and charting. Print capabilities are included.

Value Line Pro Premium digital service includes The Value Line Investment Survey® and The Value Line Investment Survey® — Small & Mid-Cap and covers 3,500 stocks. This equity package monitors companies with market values ranging from $100 million to well over $300 billion, across 100 industries, representing 95% of daily U.S. trading volume. There are over 300 data fields that can be screened to help make informed decisions. Features of the service include three years of historical reports and data, customizable modules, alerts and screening.

Value Line Pro Basic digital service covers the 1,700 stocks included in The Value Line Investment Survey®, drawn from 100 industries, representing 90% of total U.S. trading volume. There are over 300 data fields that can be screened to help make informed decisions. Features of the service include three years of historical reports and data, customizable modules, alerts and screening.

Value Line  Pro Elite digital service includes The Value Line Investment Survey®  and The Value Line Investment Survey® — Small & Mid-Cap. Pro Elite service package aimed at professional industry includes digital access to full reports and Value Line proprietary ranks on approximately 3,500 stocks. In addition, our database of mostly microcap firms adds approximately 2,500 names, for a total of about 6,000 stocks. Five years’ history is included. Online tools include screener, alerts, watch-lists and charting. Downloading and print capabilities are included. Less expensive variant with fewer features is also available.

The Value Line Investment Survey – Library Basic covers the 1,700 stocks included in The Value Line Investment Survey, drawn from nearly 100 industries, and representing 90% of total U.S. daily trading volume. There are over 340 data fields that can be applied to help you make more informed decisions. Value Line has led its subscribers towards financial success by satisfying the demand for actionable insights and tools to manage any investment.

The Value Line Investment Survey – Library Elite offers libraries digital access to full reports, analyst commentary and Value Line proprietary ranks on approximately 3,500 stocks, along with one year of full-detail history. Online tools include screener, and charting. Print capabilities are included. A less expensive variant with fewer features is also available.

The Value Line Pro Equity Research Center is an equities-only package that includes access to exclusive premium services and provides online access to all of Value Line’s equity products. This service offered both to financial advisers and high-net-worth individuals, includes full online subscriptions to The Value Line Investment Survey, The Value Line Investment Survey – Small & Mid-Cap, Value Line Select, Value Line Select: Dividend Income and Growth, and The Value Line Special Situations Service. Users can screen more than 250 data fields, create graphs using multiple different variables, and access technical history.  The Value Line Pro Equity Research Center has the ability to track model portfolios, (large, small and mid-cap) as well as providing ranks and news.

All the digital services have Charting features, including many options to chart against popular indexes with the ability to save settings and print. All products for financial professionals have an Alerts Hub which allows the user to set up alerts for up to 25 companies, with delivery via text, email or Facebook.

B. Copyright Data Fees Programs

       The Company has copyright data, which include certain proprietary Ranking System information and other proprietary information made available for use in third party products, such as unit investment trusts, variable annuities, managed accounts and exchange traded funds, which it distributes under copyright data agreements. The sponsors of these products act as wholesalers and distribute the products generally by syndicating them through an extensive network of national and regional brokerage firms. The sponsors of these products will typically receive copyright data for one or more proprietary ranking systems, which may include Value Line Timeliness, Safety, Technical and Performance ranks, as screens for their portfolios. The sponsors are also given permission to associate Value Line’s trademarks with the products. Value Line collects a copyright fee from each of the product sponsors/managers primarily based upon the market value of assets invested in each product’s portfolio utilizing the Value Line proprietary data. Since these fees are based on the market value of the respective portfolios using the Value Line proprietary data, the payments to Value Line, which are typically received on a quarterly basis, will fluctuate.

Value Line’s primary copyright data products are structured as ETFs, Unit Investment Trusts, all of which have in common some degree of reliance on the Value Line Ranking System for their portfolio creation. These products are offered and distributed by independent sponsors.

C. Investment Management Services

The Company completed a restructuring of its asset management and mutual fund distribution businesses (the “Restructuring Transaction”) on December 23, 2010 (the “Restructuring Date”) and executed the EAM Declaration of Trust (the “EAM Declaration of Trust”). Pursuant to the EAM Declaration of Trust, the Company received 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.

The business of EAM is managed by five individual trustees and a Delaware resident trustee (collectively, the “Trustees”) and by its officers subject to the direction of the Trustees.

Collectively, the holders of the voting profits interests in EAM are entitled to receive 50% of the residual profits of the business, subject to temporary adjustments in certain circumstances. Value Line holds a non-voting profits interest representing 50% of residual profits, subject to temporary adjustments in certain circumstances, and has no power to vote for the election, removal or replacement of the trustees of EAM. Value Line also has a non-voting revenues interest in EAM pursuant to which it is entitled to receive a portion of the non-distribution revenues of the business ranging from 41% at non-distribution fee revenue levels of $9 million or less to 55% at such revenue levels of $35 million or more. In the event the business is sold or liquidated, the first $56.1 million of net proceeds (the value of the business at the time the Restructuring Transaction was approved as determined by the directors of Value Line after reviewing a valuation report by the directors’ financial advisors) plus any additional capital contributions (Value Line or any holder of a voting profits interest, at its discretion, may make future contributions to its capital account in EAM), which contributions would increase its capital account but not its percentage interest in operating profits, will be distributed in accordance with capital accounts; 20% of the next $56.1 million will be distributed to the holders of the voting profits interests and 80% to the holder of the non-voting profits interests (currently, Value Line); and the excess will be distributed 45% to the holders of the voting profits interests and 55% to the holder of the non-voting profits interest (Value Line). EAM has elected to be taxed as a pass-through entity similar to a partnership.

Also, in connection with the Restructuring Transaction and pursuant to the EAM Declaration of Trust, Value Line (1) granted each Fund use of the name “Value Line” so long as EAM remains the Fund’s adviser and on the condition that the Fund does not alter its investment objectives or fundamental policies from those in effect on the date of the investment advisory agreement with EAM, provided also that the Funds do not use leverage for investment purposes or engage in short selling or other complex or unusual investment strategies that create a risk profile similar to that of so-called hedge funds, (2) agreed to provide EAM its proprietary Ranking System information without charge or expense on as favorable basis as to Value Line’s best institutional customers and (3) agreed to capitalize the business with $7 million of cash and cash equivalents at inception.

EAM is organized as a Delaware statutory trust and has no fixed term. However, in the event that control of the Company’s majority shareholder changes, or in the event that the majority shareholder no longer beneficially owns 5% or more of the voting securities of the Company, then the Company has the right, but not the obligation, to buy the voting profits interests in EAM at a fair market value to be determined by an independent valuation firm in accordance with the terms of the EAM Declaration of Trust.

Value Line also has certain consent rights with respect to extraordinary events involving EAM, such as a proposed sale of all or a significant part of EAM, material acquisitions, entering into businesses other than asset management and fund distribution, paying compensation in excess of the mandated limit of 22.5%-30% of non-distribution fee revenues (depending on the level of such revenues), declaring voluntary bankruptcy, making material changes in tax or accounting policies or making substantial borrowings, and entering into related party transactions. These rights were established to protect Value Line’s non-voting revenues and non-voting profits interests in EAM.

Until December 23, 2010, the Company, through its wholly-owned subsidiary EAM LLC, was the investment adviser for the Value Line Funds. Since December 23, 2010, EAM has acted as the Adviser to the Value Line Funds.

Until December 23, 2010, the Company through its wholly-owned subsidiary ESI, was the distributor for the Value Line Funds. Since December 23, 2010, EULAV Securities has acted as the Distributor for the Value Line Funds. State Street Bank, an unaffiliated entity, is the custodian of the assets of the Value Line Funds and provides them with fund accounting and administrative services. Shareholder services for the Value Line Funds are provided by Boston Financial Data Services.

On December 23, 2010, the Company deconsolidated its asset management and mutual fund distribution businesses and its interests in these businesses were restructured as non-voting revenues and non-voting profits interests in EAM. Accordingly, the Company no longer reports this operation as a separate business segment, although it still maintains a significant interest in the cash flows generated by this business and will continue to receive ongoing payments in respect of its 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 April 30, 2017, were $2.4 billion, which is $192 million, or 8.6%, above total assets of $2.2 billion in the Value Line Funds managed and/or distributed by EAM at April 30, 2016.

Total net assets of the Value Line Funds at April 30, 2017, were:

Investment management fees and distribution service fees (which we refer to as “12b-1fees”) vary among the Value Line Funds and may be subject to certain limitations. Certain investment strategies among the equity funds include, but are not limited to, reliance on the Value Line Timeliness ™ Ranking System (the “Ranking System”) and/or the Value Line Performance Ranking System in selecting securities for purchase or sale. Each Ranking System seeks to compare the estimated probable market performance of each stock during the next six to twelve months to that of all of the approximately 1,700 or 1,800 (Performance System) stocks under review and ranks stocks on a scale of 1 (highest) to 5 (lowest). All the stocks followed by the Ranking System are listed on U.S. stock exchanges or traded in the U.S. over-the-counter markets. Prospectuses and annual reports for each of the Value Line open end mutual funds are available on the Funds’ website www.vlfunds.com. Each mutual fund may use "Value Line" in its name only to the extent permitted by the terms of the EAM Declaration of Trust.

D. Wholly-Owned Operating Subsidiaries

Wholly-owned operating subsidiaries of the Company as of April 30, 2017 include the following:

E. Trademarks

The Company holds trademark and service mark registrations for various names and logos in multiple countries. Value Line believes that these trademarks and service marks provide significant value to the Company and are an important factor in the marketing of its products and services, as well as in the marketing of the Value Line Funds, now managed by EAM. The Company is utilizing all of its trademarks and service marks, and properly maintaining all registrations.

F. Investments

As of April 30, 2017 and April 30, 2016, the Company held total investment assets (excluding its interests in EAM) with a fair market value of $16,576,000 and $3,637,000, respectively, including equity securities and fixed income securities classified as available-for-sale on the Consolidated Balance Sheets. As of April 30, 2017, the Company held equity securities classified as available-for-sale, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL) and Proshares Trust S&P 500 Dividend (NOBL). As of April 30, 2017, the Company held fixed income securities which consist of certificates of deposits and securities issued by federal, state, and local governments within the United States. As of April 30, 2016, the Company held equity securities classified as available-for-sale, which consisted of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL), Proshares Trust S&P 500 Dividend (NOBL) and First Trust Total US Market Alphadex ETF (TUSA). The Company did not hold any fixed income securities at April 30, 2016.

G. Employees

At April 30, 2017, the Company and its subsidiaries employed 183 people.

 The Company and its affiliates, officers, directors and employees may from time to time own securities which are also held in the portfolios of the Value Line Funds or recommended in the Company's publications. Value Line analysts are not permitted to own securities of the companies they cover. The Company has adopted rules requiring reports of securities transactions by employees for their respective accounts. The Company has also established policies restricting trading in securities whose ranks are about to change in order to avoid possible conflicts of interest.

H. Principal Business Segments

The information with respect to revenues from external customers and profit and loss of the Company's identifiable principal business segments is incorporated herein by reference to Note 17 of the Notes to the Company's Consolidated Financial Statements included in this Form 10-K.

                Prior to December 23, 2010, the Company’s businesses consolidated into two reportable business segments. The investment periodicals and related publications (retail and institutional) and fees from copyright data, including the proprietary Ranking System information and other proprietary information, consolidated into one segment called Publishing, and the investment management services to the Value Line Funds and other managed accounts were consolidated into a second business segment called Investment Management. Subsequent to December 23, 2010, the Publishing segment constitutes the Company’s only reportable business segment.

I. Competition

       The investment information and publishing business conducted by the Company and the investment management business conducted by EAM are very competitive. There are many competing firms and a wide variety of product offerings. Some of the firms in these industries are substantially larger and have greater financial resources than the Company and EAM. The Internet continues to increase the amount of competition in the form of free and paid online investment research. With regard to the investment management business conducted by EAM, the prevalence of broker supermarkets or platforms permitting easy transfer of assets among mutual funds, mutual fund families, and other investment vehicles tends to increase the speed with which shareholders can leave or enter the Value Line Funds based, among other things, on short term fluctuations in performance.

J. Executive Officers of the Registrant

       The following table lists the names, ages (at June 30, 2017), and principal occupations and employment during the past five years of the Company's Executive Officers. All officers are elected to terms of office for one year. Except as noted, each of the following has held an executive position with the companies indicated for at least five years.

WEBSITE ACCESS TO SEC REPORTS

       The Company’s Internet site address is www.valueline.com. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports are made available on the “Corporate Filings” page under the “About Value Line” tab on the Company’s website @www.valueline.com/About/corporate_filings.aspx. free of charge as soon as reasonably practicable after the reports are filed electronically with the SEC. All of the Company’s SEC reports are also available on the SEC Internet site, www.sec.gov.

ITEM 1A. RISK FACTORS  

       In addition to the risks referred to elsewhere in this Form 10-K, the following risks, among others, sometimes may have affected, and in the future could affect, the Company’s businesses, financial condition or results of operations and/or the investment management business conducted by EAM and consequently, the amount of revenue we receive from EAM. The risks described below are not the only ones we face. Additional risks not discussed or not presently known to us or that we currently deem insignificant, may also impact our businesses.

The Company and its subsidiaries are dependent on the efforts of its executives and professional staff. 

       The Company’s future success relies upon its ability to retain and recruit qualified professionals and executives. The Company’s executive officers do not have employment agreements with the Company and the Company does not maintain “key man” insurance policies on any of its executive officers. The loss of the services of key personnel could have an adverse effect on the Company.

A decrease in the revenue generated by EAM’s investment management business could adversely affect the Company’s cash flow and financial condition.

         The Company derives a significant portion of its cash flow from its non-voting revenues and non-voting profits interests in EAM. A decrease in the revenue generated by EAM’s investment management business, whether resulting from performance, competitive, regulatory or other reasons, would reduce the amount of cash flow received by the Company from EAM, which reduction could adversely affect the Company’s cash flow and financial condition.

EAM’s assets under management, which impact EAM’s revenue, and consequently the amount of the cash flow that the Company receives from EAM, are subject to fluctuations based on market conditions and individual fund performance.

       Financial market declines and/or adverse changes in interest rates would generally negatively impact the level of EAM’s assets under management and consequently its revenue and net income. Major sources of investment management revenue for EAM (i.e., investment management and service and distribution fees) are calculated as percentages of assets under management. A decline in securities prices or in the sale of investment products or an increase in fund redemptions would reduce fee income. A prolonged recession or other economic or political events could also adversely impact EAM’s revenue if it led to decreased demand for products, a higher redemption rate, or a decline in securities prices. Good performance of managed assets relative to both competing products and benchmark indices generally assists in both retention and growth of assets, and may result in additional revenues. Conversely, poor performance of managed assets relative to competing products or benchmark indices tends to result in decreased sales and increased redemptions with corresponding decreases in revenues to EAM. Poor performance could therefore reduce the amount of cash flow that the Company receives from EAM, which reduction could adversely affect the Company’s financial condition.

EAM derives all of its investment management fees from the Value Line Funds.

EAM is dependent upon management contracts and service and distribution contracts with the Value Line Funds under which these fees are paid. As required by the Investment Company Act of 1940 (the “1940 Act”), the Trustees/Directors of the Funds, all of whom are independent of the Company and of EAM, have the right to terminate such contracts. If any of these contracts are terminated, not renewed, or amended to reduce fees, EAM’s financial results, and consequently, the amount of cash flow received by the Company from EAM, and the Company’s financial condition, may be adversely affected.

If the Company does not maintain its subscriber base, its operating results could suffer. 

A substantial portion of the Company’s revenue is generated from print and digital subscriptions, which are paid in advance by subscribers. Unearned revenues are accounted for on the Consolidated Balance Sheets of the Company within current and long term liabilities. The backlog of orders is primarily generated through renewals and new subscription marketing efforts as the Company deems appropriate. Future results will depend on the renewal of existing subscribers and obtaining new subscriptions for the investment periodicals and related publications. The availability of competitive information on the Internet at low or no cost has had and may continue have a negative impact on the demand for our products.

The Company believes that the negative trend in retail print subscription revenue experienced in recent years is likely to continue.

During the last several years, the Company has experienced a negative trend in retail print subscription revenue. It is expected that print revenues will continue to decline long term, while the Company emphasizes digital offerings. The Company has established the goal of maintaining competitive digital products and marketing them through traditional and digital channels to retail and institutional customers. However, the Company is not able to predict whether revenues from digital retail publications will grow more than print revenues decline, nor whether its initiatives to increase business in the professional investor market segment will continue to be successful.

Loss of copyright data clients or decline in their customers, or assets managed by third party sponsors could reduce the Company’s revenues.

Copyright data agreements are based on market interest in the respective proprietary information. The Company believes this part of the business is dependent upon the desire of third parties to use the Value Line trademarks and proprietary research for their products, competition and on fluctuations in segments of the equity markets. If the fees from proprietary information decline, the Company’s operating results could suffer.

Failure to protect its intellectual property rights and proprietary information could harm the Company’s ability to compete effectively and could negatively affect operating results.

The Company’s trademarks are important assets to the Company. Although its trademarks are registered in the United States and in certain foreign countries, the Company may not always be successful in asserting global trademark protection. In the event that other parties infringe on its intellectual property rights and it is not successful in defending its intellectual property rights, the result may be a dilution in the value of the Company’s brands in the marketplace. If the value of the Company’s brands becomes diluted, such developments could adversely affect the value that its customers associate with its brands, and thereby negatively impact its sales. Any infringement of our intellectual property rights would also likely result in a commitment of Company resources to protect these rights through litigation or otherwise. In addition, third parties may assert claims against our intellectual property rights and we may not be able successfully to resolve such claims. The Company is utilizing all of its trademarks and properly maintaining registrations for them.

Adverse changes in market and economic conditions could lower demand for the Company’s and EAM’s products and services. 

The Company provides its products and services to individual investors, financial advisors, and institutional clients. Adverse conditions in the financial and securities markets may have an impact on the Company’s subscription revenues, securities income, and copyright data fees which could adversely affect the Company’s results of operations and financial condition. Adverse conditions in the financial and securities markets could also have an adverse effect on EAM’s investment management revenues and reduce the amount of cash flow that the Company receives from EAM, which reduction could adversely affect the Company’s financial condition.

The Company and EAM face significant competition in their respective businesses.

Both the investment information and publishing business conducted by the Company and the investment management business conducted by EAM are very competitive. There are many competing firms and a wide variety of product offerings. Some of the firms in these industries are substantially larger and have greater financial resources than the Company and EAM. With regard to the investment information and publishing business, barriers to entry have been reduced by the minimal cost structure of the Internet and other technologies. With regard to the investment management business, the absence of significant barriers to entry by new investment management firms in the mutual fund industry increases competitive pressure. Competition in the investment management business is based on various factors, including business reputation, investment performance, quality of service, marketing, distribution services offered, the range of products offered and fees charged. Access to mutual fund distribution channels has also become increasingly competitive.

Government regulations, any changes to government regulations, and regulatory proceedings and litigation may adversely impact the business.

Changes in legal, regulatory, accounting, tax and compliance requirements could have an effect on EAM’s operations and results, including but not limited to increased expenses and restraints on marketing certain funds and other investment products. EAM is registered with the SEC under the Investment Advisers Act of 1940 (the “Advisers Act”). The Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary, record keeping, operational and disclosure obligations. ES is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority, also known as “FINRA”. Each Value Line Fund is a registered investment company under the 1940 Act. The 1940 Act requires numerous compliance measures, which must be observed, and involves regulation by the SEC. Each fund and its shareholders may face adverse tax consequences if the Value Line Funds are unable to maintain qualification as registered investment companies under the Internal Revenue Code of 1986, as amended. Those laws and regulations generally grant broad administrative powers to regulatory agencies and bodies such as the SEC and FINRA. If these agencies and bodies believe that EAM, ES or the Value Line Funds have failed to comply with their laws and regulations, these agencies and bodies have the power to impose sanctions. EAM, ES and the Value Line Funds, like other companies, can also face lawsuits by private parties. Regulatory proceedings and lawsuits are subject to uncertainties, and the outcomes are difficult to predict. Changes in laws, regulations or governmental policies, and the costs associated with compliance, could adversely affect the business and operations of the EAM, ES and the Value Line Funds. An adverse resolution of any regulatory proceeding or lawsuit against the EAM or ES could result in substantial costs or reputational harm to them or to the Value Line Funds and have an adverse effect on their respective business and operations. An adverse effect on the business and operations of EAM, ES and/or the Value Line Funds could reduce the amount of cash flow that the Company receives in respect of its non-voting revenues and non-voting profits interests in EAM and, consequently, could adversely affect the Company’s cash flows, results of operations and financial condition.

Terrorist attacks could adversely affect the Company and EAM.

A terrorist attack, including biological or chemical weapons attacks, and the response to such terrorist attacks, could have a significant impact on the New York City area, the local economy, the United States economy, the global economy, and U.S. and/or global financial markets, and could also have a material adverse effect on the Company’s business and on the investment management business conducted by EAM.

Our controlling stockholder exercises voting control over the Company and has the ability to elect or remove from office all of our directors.

As of April 30, 2017, AB&Co., Inc. beneficially owned 88.9% of the outstanding shares of the Company’s voting stock. AB&Co. is therefore able to exercise voting control with respect to all matters requiring stockholder approval, including the election or removal from office of all of our directors.

We are not subject to most of the listing standards that normally apply to companies whose shares are quoted on NASDAQ.

Our shares of common stock are quoted on the NASDAQ Capital Market (“NASDAQ”). Under the NASDAQ listing standards, we are deemed to be a “controlled company” by virtue of the fact that AB&Co. has voting power with respect to more than 50% of our outstanding shares of voting stock. A controlled company is not required to have a majority of its board of directors comprised of independent directors. Director nominees are not required to be selected or recommended for the board’s selection by a majority of independent directors or a nomination committee comprised solely of independent directors, nor do the NASDAQ listing standards require a controlled company to certify the adoption of a formal written charter or board resolution, as applicable, addressing the nominations process. A controlled company is also exempt from NASDAQ’s requirements regarding the determination of officer compensation by a majority of the independent directors or a compensation committee comprised solely of independent directors. Although we currently comply with certain of the NASDAQ listing standards that do not apply to controlled companies, our compliance is voluntary, and there can be no assurance that we will continue to comply with these standards in the future.

We are subject to cyber risks and may incur costs in connection with our efforts to enhance and ensure security from cyber attacks.

Substantial aspects of our business depend on the secure operation of our computer systems and e-commerce websites. Security breaches could expose us to a risk of loss or misuse of sensitive information, including our own proprietary information and that of our customers and employees.  While we devote substantial resources to maintaining adequate levels of cyber security, our resources and technical sophistication may not be adequate to prevent all of the rapidly evolving types of cyber attacks.  Anticipated attacks and risks may cause us to incur increasing costs for technology, personnel, insurance and services to enhance security or to respond to occurrences. We maintain cyber risk insurance, but this insurance may not be sufficient to cover all of our losses from any possible future breaches of our systems.

Changes to existing accounting pronouncements or taxation rules or practices may affect how we conduct our business and affect our reported results of operations.

New accounting pronouncements or tax rules and varying interpretations of accounting pronouncements or taxation practice have occurred and may occur in the future. A change in accounting pronouncements or interpretations or taxation rules or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. Changes to existing rules and pronouncements, future changes, if any, or the questioning of current practices or interpretations may adversely affect our reported financial results or the way we conduct our business.

Item 1B. UNRESOLVED STAFF COMMENTS.

None.

Item 2. PROPERTIES.

The Company leases 24,726 square feet of office space at 551 Fifth Avenue in New York, NY. In addition to the New York office space, the Company leases a warehouse facility with 24,110 square feet in New Jersey. The facility primarily serves the fulfillment and the distribution operations of VLDC for the various Company publications and serves as a disaster recovery site for the Company.

In February 2017 the Company's headquarters and offices moved to a new location. On November 30, 2016, Value Line, Inc., received consent from the landlord at 551 Fifth Avenue, New York, NY to the terms of a new sublease agreement between Value Line, Inc. (“Value Line” or “Company”) and ABM Industries, Incorporated (“ABM” or the “Sublandlord”) commencing on December 1, 2016. Pursuant to the agreement Value Line leased from ABM 24,726 square feet of office space located on the second and third floors at 551 Fifth Avenue, New York, NY (“Building” or “Premises”) beginning on December 1, 2016 and ending on November 29, 2027. Base rent under the sublease agreement is $1,126,000 per annum during the first year with an annual increase in base rent of 2.25% scheduled for each subsequent year, payable in equal monthly installments on the first day of each month, subject to customary concessions in the Company’s favor and pass-through of certain increases in utility costs and real estate taxes over the base year. The Company provided a security deposit represented by a letter of credit in the amount of $469,000, which is scheduled to be reduced to $305,000 on September 30, 2021 and fully refunded after the sublease ends. This Building became the Company’s new corporate office facility. The Company is required to pay for certain operating expenses associated with the Premises as well as utilities supplied to the Premises. The sublease terms provide for a significant decrease (23% initially) in the Company’s annual rental expenditure taking into account free rent for the first six months of the sublease. Sublandlord provided Value Line an allowance of $417,000 which is expected to be applied against the Company’s costs and expenses related to the relocation to the new office facility or applied as additional free rent.

The Company leased 44,493 square feet of office space at 485 Lexington Avenue in New York, NY from July 2013 to February 2017. Base rent under the Sublease was $1,468,269 per annum, subject to customary concessions in the Company’s favor and pass-through of certain increases in operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $489,423, which was fully returned over the course of the sublease term.

On February 29, 2016, the Company’s subsidiary Value Line Distribution Center (“VLDC”) and Seagis Property Group LP (the “Landlord”) entered into a lease agreement, pursuant to which VLDC has leased 24,110 square feet of warehouse and appurtenant office space located at 205 Chubb Ave., Lyndhurst, NJ (“Warehouse”) beginning on May 1, 2016 and ending on April 30, 2024 (“Lease”). Base rent under the Lease is $192,880 per annum payable in equal monthly installments on the first day of each month, in advance during fiscal 2017 and will gradually increase to $237,218 in fiscal 2024, subject to customary increases based on operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $32,146, which will be fully refunded after the Lease term expires. The lease is a net lease requiring the Company to pay for certain operating expenses associated with the Warehouse as well as utilities supplied to the Warehouse.

Item 3. LEGAL PROCEEDINGS.

None.

Item 4. Mine Safety Disclosures

Not applicable.

Part II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The Registrant's Common Stock is traded on NASDAQ under the symbol “VALU”. The approximate number of record holders of the Registrant's Common Stock at April 30, 2017 was 38. As of June 29, 2017, the closing stock price was $18.39.

The reported high and low prices and the dividends paid on these shares during the past two fiscal years were as follows:             

On July 21, 2017, the Board of Directors of Value Line declared a quarterly dividend of $0.18 per share to shareholders of record as of July 31, 2017 to be paid on August 11, 2017.

There are no securities of the Company authorized for issuance under equity compensation plans. The Company did not sell any unregistered shares of common stock during the fiscal year ended April 30, 2017.

Purchases of Equity Securities by the Company

The following table provides information with respect to all repurchases of common stock made by or on behalf of the Company during the fiscal quarter ended April 30, 2017. All purchases listed below were made in the open market at prevailing market prices.

(1)    On September 19, 2012, the Company's Board of Directors approved 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 will 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 expiration date. During fiscal 2017, the Company repurchased an aggregate of 44,924 shares of the Company's common stock for $741,000 at an average price of $16.51 per share under the repurchase program. During fiscal 2016, the Company repurchased an aggregate of 52,907 shares of the Company's common stock for $796,000 at an average price of $15.03 per share under the repurchase program. During fiscal 2015, the Company repurchased an aggregate of 8,433 shares of the Company's common stock for $122,000 at an average price of $14.47 per share under the repurchase program.

Arnold Bernhard and Co., Inc. may purchase additional shares of common stock of the Company from time to time.

Item 6. SELECTED FINANCIAL DATA.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help a reader understand Value Line, its operations and business factors. The MD&A should be read in conjunction with Item 1, “Business”, Item 1A, “Risk Factors”, and in conjunction with the consolidated financial statements and the accompanying notes contained in Item 8 of this report.

The MD&A includes the following subsections:

Executive Summary of the Business

The Company's core business is producing investment periodicals and their underlying research and making available copyright data, including certain proprietary Ranking System 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. Prior to December 23, 2010, (see “Asset Management and Mutual Fund Distribution Businesses” below), the Company provided investment management services to the Value Line® Mutual Funds ("Value Line Funds"), institutional and individual accounts and provided distribution, marketing, and administrative services to the Value Line Funds. Since December 23, 2010, 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 non-voting revenues and non-voting profits interests. Pursuant to the EAM Declaration of Trust, the Company granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply the Value Line proprietary Ranking System information to EAM without charge or expense.

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 Company’s move to new headquarters in the third quarter of fiscal 2017 resulted in lower rent expense over the term of the sublease. However, rental expenses during fiscal 2017 included additional three month overlapping rent expense of $86,000 per month for the current office facility and $105,000 for the previously occupied office facility during the period from December 1, 2016 to February 28, 2017. 

Prior to December 23, 2010, the Company’s businesses consolidated into two reportable business segments. The investment periodicals and related publications (retail and institutional) and fees from copyright data including the proprietary Ranking System information and other proprietary information consolidate into one segment called Publishing and the investment management services to the Value Line Funds and other managed accounts were consolidated into a second business segment called Investment Management. Subsequent to December 23, 2010, the Publishing segment constitutes the Company’s only reportable business segment.

Asset Management and Mutual Fund Distribution Businesses

The Company completed the restructuring of its asset management and mutual fund distribution businesses (the “Restructuring Transaction”) on December 23, 2010 (the “Restructuring Date”) and executed the EAM Declaration of Trust (the “EAM Declaration of Trust”). Pursuant to the EAM Declaration of Trust, the Company received 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.

The business of EAM is managed by its trustees each owning 20% of the voting profits 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 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. Value Line’s percent share of EAM’s revenues calculated each fiscal quarter was 49.45%, 49.14%, 49.19% and 49.22% during the first, second, third and fourth quarters of fiscal 2017, respectively, and 50.05%, 50.16%, 50.14% and 49.97% during the first, second, third and fourth quarters of fiscal 2016, respectively.

Pursuant to the EAM Declaration of Trust, the Company granted EAM the right to use the Value Line name for all existing Value Line Funds and agreed to supply the Value Line proprietary Ranking System information to EAM without charge or expense.

Business Environment 

The nation's economy, which has been on an irregular path forward for almost the duration of the eight-year  expansion, faltered anew to start 2017. On point, after a relatively impressive final six months of last year, in which growth averaged close to 3%, seasonal slippage in some business categories, a marked deceleration in consumer spending, a drawdown in private inventories, and a decline in federal government spending combined to hold growth in check during the opening period this year. In all, gross domestic product growth eased off to a  pedestrian 1.4% in the first quarter. 

Encouragingly, though, the advance, albeit still choppy in spots, is generally proceeding at a more reassuring pace, suggesting that growth should average better than 2% during the concluding nine months of this year. Recent data on employment, manufacturing, non-manufacturing, and certain housing categories, for example, give us some cause for optimism going forward. However, just as these variables are improving, we also are seeing some selective slowing in certain consumer areas, and the latest auto sales figures, which were down for June, were hardly cause for generating much optimism. In fact, retail spending, in general, softened last month.      

Meanwhile, as we look further down the road, we are tentatively optimistic on the expectation that we will yet see some movement on the legislative front, as the Trump Administration continues to try and advance critical business friendly proposals, including health care revision and tax reform. Should the respective political parties come together later this year and advance some generally popular proposals, the economy could well get a modest further lift in 2018, bringing GDP growth up past 2.5%. Even without much help on the fiscal side, however, GDP should gain close to 2.5%, or better next year and then sustain a moderate pace of growth out to next decade.

On a less-optimistic note, the global outlook remains unsettled. Heading the list of problems offshore are uncertain trade and political relations with certain international powers, including China and Russia, the continuing volatile nature of oil prices, and the evolving nuclear threat from North Korea.  

Finally, there are questions on the home front. These mostly center on the Federal Reserve's efforts to bring about a more normalized interest-rate structure. The uncertain outcome there, along with the persistence of elevated P/E ratios, are increasing the level of volatility in the financial markets, even as the underlying stock market trends and the basic fundamentals remain positive.  

Results of Operations for Fiscal Years 2017, 2016 and 2015

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

During the twelve months ended April 30, 2017, the Company’s net income of $10,367,000, or $1.07 per share, was $3,076,000 or 42.2% above net income of $7,291,000, or $0.75 per share, for the twelve months ended April 30, 2016. During the twelve months ended April 30, 2017 there were 9,721,958 average common shares outstanding as compared to 9,781,495 average common shares outstanding during the twelve months ended April 30, 2016. Income from operations of $7,459,000 for the twelve months ended April 30, 2017 which included additional depreciation and amortization expense of $806,000 was $5,579,000 above income from operations of $1,880,000 for the twelve months ended April 30, 2016. During the twelve months of fiscal 2017 both net income and income from operations included a pre-tax gain of $8,123,000 from the sale of the Company's operating facility for which it received net proceeds of $11,555,000 on July 29, 2016. The fulfillment and mailing operations housed within the facility were relocated to a nearby area of New Jersey. During the fourth quarter ended April 30, 2017, the Company’s reported loss from operations of $489,000 was the result of an increase in salaries and employee benefits primarily in the Information Technology department related to augmenting the Company’s digital infrastructure and production processes accompanied by increased expenses related to relocating the Company’s New York City office facility.

During the twelve months ended April 30, 2016, the Company’s net income of $7,291,000, or $0.75 per share, was comparable to net income of $7,292,000, or $0.74 per share, for the twelve months ended April 30, 2015. During the twelve months ended April 30, 2016 there were 9,781,495 average common shares outstanding as compared to 9,813,623 average common shares outstanding during the twelve months ended April 30, 2015. Income from operations of $1,880,000 for the twelve months ended April 30, 2016 which included additional depreciation and amortization expense of $1,102,000 was $519,000 below income from operations of $2,399,000 for the twelve months ended April 30, 2015. During the fourth quarter ended April 30, 2016, the Company’s reported loss from operations of $462,000 was the result of the accelerated amortization of the capitalized software development costs.

Total operating revenues  

During the twelve months ended April 30, 2017 total publishing revenues from investment periodicals and related publications excluding copyright data fees were $30,168,000, which is 5.5% below the total publishing revenues excluding copyright data fees of $31,925,000 during the twelve months ended April 30, 2016. During the twelve months ended April 30, 2017, the Company’s decrease in the publishing revenues was partially the result of 52 weeks of print revenues recorded in the twelve months ended April 30, 2017 as compared to 53 weeks recorded in the twelve months ended April 30, 2016. The remaining decrease in print publications revenue is primarily a result of a 6.9% decrease in print circulation at April 30, 2017. Total publishing revenues from investment periodicals and related publications excluding copyright data fees were $32,676,000 during the twelve months ended April 30, 2015.

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     

During the twelve months ended April 30, 2017 new sales of print publications increased as a percent of the total gross print sales as a result of an increase in new print gross sales to Institutions. Conversion and renewal sales of print orders decreased from the prior fiscal year. New sales of digital publications decreased as a percent of the total gross digital sales as a result of a decrease in new digital retail sales orders. Conversion and renewal sales of digital orders increased over the prior fiscal year as a result of increased efforts by our in-house Retail and Institutional Sales departments.

During the twelve months ended April 30, 2016 new sales of print and digital publications decreased as a percent of the total gross print and digital sales as a result of less aggressive promotion to first-time customers at introductory prices. Conversion and renewal sales orders increased over fiscal 2015 outpacing the decrease in new sales orders as a result of increased success by our in-house Retail and Institutional Sales departments.

Unearned subscription revenue as of April 30, 2017 is almost 1% above April 30, 2016 and is 2.3% below April 30, 2015. A certain amount of variation is to be expected due to the volume of new orders and timing of renewal orders, direct mail campaigns and large Institutional Sales orders.

Investment periodicals and related publications revenues

Investment periodicals and related publications revenues decreased $1,757,000, or 5.5%, for the twelve months ended April 30, 2017, as compared to fiscal 2016. The Company continued its efforts to attract new subscribers through various marketing channels, primarily direct mail, e-mail, and by the efforts of our sales personnel. Total product line circulation at April 30, 2017 was 7.1% below total product line circulation at April 30, 2016. The Company has been successful in growing revenues from digitally-delivered investment periodicals within the institutional market. Institutional Sales generated total sales orders of $14,757,000 for the twelve months ended April 30, 2017 which were $517,000 or 3.6%, above comparable total sales orders of $14,240,000, for the twelve months ended April 30, 2016. This growth continues a positive trend for Institutional Sales, but is not sufficient to wholly offset the lost revenues from retail subscribers. We have also benefited from “converting” some customers from lower cost retail to the more robust professional priced services. The retail telemarketing sales team generated total sales orders of $9,255,000 for the twelve months ended April 30, 2017 which were 2% above the prior fiscal year.

Digital publications revenues during the twelve months ended April 30, 2017, were $192,000 or 1.2% below fiscal 2016. Revenues from institutional digital publications increased $123,000 or 1.1% as compared to fiscal 2016. Digital publications revenues from retail subscribers decreased $316,000 or 6.8% with circulation decreasing by 7.4% for the twelve months ended April 30, 2017, as compared to fiscal 2016. During the twelve months ended April 30, 2017, $157,000 of retail digital revenues were converted to higher priced Institutional Sales orders generating $146,000 additional revenues.

Print publication revenues decreased $1,565,000 or 10.0% for the twelve months ended April 30, 2017 as compared to fiscal 2016. Revenues from institutional print publications increased $152,000 or 7.1% while print publications revenues from retail subscribers decreased $1,717,000 or 12.7% for the twelve months ended April 30, 2017, as compared to fiscal 2016. This includes the effect of 52 weeks of print revenues recorded in the twelve months ended April 30, 2017 as compared to 53 weeks recorded in the twelve months ended April 30, 2016. Total print circulation at April 30, 2017 was 6.9% below total print circulation at April 30, 2016.

Investment periodicals and related publications revenues decreased $751,000, or 2.3%, for the twelve months ended April 30, 2016, as compared to fiscal 2015. The Company continued its efforts to attract new subscribers through various marketing channels, primarily direct mail, e-mail, and by the efforts of our sales personnel. Total product line circulation at April 30, 2016 was 3.7% below total product line circulation at April 30, 2015. The Company has been successful in growing revenues from digitally-delivered investment periodicals within the institutional market. Institutional Sales generated total sales orders of $14,240,000 for the twelve months ended April 30, 2016 which were $915,000 or 6.9%, above comparable total sales orders of $13,325,000, for the twelve months ended April 30, 2015. This growth continues a positive trend for Institutional Sales, but is not sufficient to wholly offset the lost revenues from retail subscribers. We have also benefited from “converting” some customers from lower cost retail to the more robust professional priced services.

Digital publications revenues during the twelve months ended April 30, 2016, were $143,000 above fiscal 2015. Revenues from institutional digital publications increased $749,000 or 6.9% as compared to fiscal 2015. Digital publications revenues from retail subscribers decreased $606,000 or 11.6% with circulation decreasing by 7.2% for the twelve months ended April 30, 2016, as compared to fiscal 2015. During the twelve months ended April 30, 2016, $191,000 of retail digital revenues were converted to higher priced Institutional Sales orders generating $159,000 additional revenues.

Print publication revenues decreased $894,000 or 5.4% for the twelve months ended April 30, 2016 as compared to fiscal 2015. Revenues from institutional print publications increased $165,000 or 8.4% while print publications revenues from retail subscribers decreased $1,059,000 or 7.3% for the twelve months ended April 30, 2016, as compared to fiscal 2015. Total print circulation at April 30, 2016 was 2.4% below total print circulation at April 30, 2015 including an increase in the introductory lower-priced Value Line 600 print product. The VL 600 was utilized during fiscal 2016 and the latter part of 2015 as a retail lead-generation product. Though revenue from expiring full-price subscriptions has not been matched by the initial revenue from new promotional retail orders, our retail sales and marketing personnel have made an effort to renew and upgrade the new customers.      

The Company has relied more on its personnel selling efforts in both the institutional segment and retail retention and sales, as the ability to obtain orders profitably through traditional direct marketing plateaus. The majority of the Company’s subscribers have traditionally been individual investors who generally receive printed publications via U.S. Mail on a weekly basis. Individual investors interested in digitally-delivered investment information have access to both free and subscription equity research from many sources. Continuing factors that have contributed to the decline in the retail digital investment periodicals and related publications revenues include competition in the form of free or low cost investment research on the Internet and research provided by brokerage firms at no direct cost to their clients. Further, there appears to be a relative decline in individuals’ interest in holding specific stocks as compared with ETFs, mutual funds and participation in retirement plans. In order to address competition the Company has emphasized its lower-priced “starter” levels of service in attracting new customers. Also many of the professional subscribers to the Company’s digital and print retail products have been successfully converted to a higher priced Institutional product, with the peak impact of such movement behind us. The Company offers quality publications on mutual funds and Exchange Traded Funds, but they have achieved only modest market share.

Value Line serves primarily individual and professional investors in stocks, who pay, primarily on annual subscription plans, for basic services or as much as $100,000 or more annually for comprehensive premium quality research, not obtainable elsewhere. The ongoing goal of adding new subscribers has led us to experiment with varying terms for our reliable, proprietary research including a period of intensive promotion of “starter” services and publications.

Copyright data fees

The Value Line proprietary Ranking System information (the “Ranking System”), a component of the Company’s flagship product, The Value Line Investment Survey, is also utilized in the Company’s copyright data business which also offers a number of specialized “models” for stock selection. The Ranking System is made available to EAM for specific uses without charge. For the six month period ended April 28, 2017, the combined Ranking System “Timeliness Rank 1 & 2” stocks’ increase of 13.8% outperformed the S&P 500 Index’s increase of 12.1% during the comparable period. For the twelve month period ended April 28, 2017, the combined Ranking System “Rank 1 & 2” stocks’ increase of 17.3% outperformed the S&P 500 Index’s increase of 15.4% during the comparable period.

During the twelve months ended April 30, 2017, copyright data fees of $4,406,000 were 68% above fiscal 2016. As of April 30, 2017, total third party sponsored assets were attributable to three contracts for copyright data representing $3.6 billion in various products, as compared to three contracts for copyright data representing $1.8 billion in assets at April 30, 2016. During the twelve months ended April 30, 2015, copyright data fees were $2,847,000 and total third party sponsored assets were attributable to four contracts for copyright data representing $2.3 billion in various products, in assets at April 30, 2015.

The Company believes this part of the business is dependent upon the desire of third parties to use the Value Line trademarks and proprietary research for their products, on competition and on fluctuations in segments of the equity markets. Our quantitative specialists are seeking to develop and confirm reliable models for additional copyright data products, including Ranking System-based concepts as well as other proprietary quantitative models.

Investment management fees and services – (unconsolidated)

The Company has a 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 will receive ongoing payments in respect of its non-voting revenues and non-voting profits interests.

Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2017, were $2.4 billion, which is $192 million, or 8.6%, above total assets of $2.2 billion in the Value Line Funds managed and/or distributed by EAM at April 30, 2016, reflecting market appreciation offset by net redemptions in all but two of the twelve Value Line Funds over the twelve month period April 30, 2017.

Total assets in the Value Line Funds managed and/or distributed by EAM at April 30, 2016, were $2.2 billion, which is $128 million, or 5.4%, below total assets of $2.4 billion in the Value Line Funds managed and/or distributed by EAM at April 30, 2015, reflecting market depreciation and the net redemptions over the past twelve months ended April 30, 2016. 

Shares of Value Line Strategic Asset Management Trust (“SAM”) and Value Line Centurion Fund (“Centurion”) are within certain variable annuity and variable life insurance contracts issued by The Guardian Insurance & Annuity Company, Inc. (“GIAC”); new contracts of this type are no longer sold. Starting January 2015, the Value Line VIP Equity Advantage Fund was added to the Guardian Pro Series Variable Annuities. The fund is an open end fund that invests primarily in a basket of closed-end funds.

Although sales and inflows for the Value Line Equity Funds during fiscal 2017 are comparable to fiscal 2016 which were up 57% as compared to fiscal 2015, the Value Line Funds continue to experience net redemptions and the associated net asset outflows (redemptions less new sales) for the last three fiscal years.

The following table shows the change in assets for the past three fiscal years including sales (inflows), redemptions (outflows), dividends and capital gain distributions, and market value changes. Inflows for sales, and outflows for redemptions reflect decisions of individual investors. The table also illustrates the assets within the Value Line Funds broken down into equity funds, variable annuity funds and fixed income funds as of April 30, 2017, 2016 and 2015.

Value Line Mutual Funds

Total Net Assets 

At April 30, 2015 $45 million of total assets were held in the Daily Income Fund managed by Reich & Tang Asset Management LLC which was liquidated on July 29, 2015. A money market alternative at Federated Government Obligations Fund was offered to Value Line Funds shareholders in fiscal 2017 and fiscal 2016.

EAM has successfully broadened distribution, particularly within the Adviser/Independent Broker Dealer (“IBD”) channel. Assets in that channel are up $120 million or 22% year over year, due to ongoing growth in gross sales and market appreciation. The channel is approximately 71% of gross sales for the year.   Due to stronger gross annual sales than that of the prior year, the Advisor/IBD channel continues to be positive and the leading channel for net sales for the period. The marketing efforts have led to over 3,800 financial advisers (individual reps or RIAs) owning a Value Line fund as of April 30, 2017. The largest distribution channel for the Value Line Funds remains the fund supermarket platforms such as Charles Schwab & Co., Inc., Fidelity, Pershing and E-Trade.

As of April 30, 2017, all six Value Line equity and hybrid mutual funds, excluding SAM and Centurion, held an overall four or five star rating by Morningstar, Inc. However, as of April 30, 2017, only two of the six equity and hybrid funds are in the top quartile of their respective peer groups for the one year period, although five of the six funds are in the top quartile for the three year period according to Morningstar. As of April 30, 2016, five of the six equity and hybrid funds were in the top quartile of their respective peer groups for one year and four of the six were in the top quartile for the three year period according to Morningstar.  

Several of the Value Line Funds have received national recognition. The Value Line Small Cap Opportunities Fund is recognized on a select list at Lincoln Financial. Since June 30, 2015 Fidelity added the Value Line Small Cap Opportunities Fund as a Fidelity Fund Pick. The Small Cap Opportunities Fund and the Mid-Cap Focused Fund were named “Category Kings” in The Wall Street Journal in calendar 2017. The Value Line Income & Growth Fund is a recent year-to-date Category King for balanced funds. In November 2015 four funds: the Small Cap Opportunities Fund, the Larger Companies Focused Fund, the Asset Allocation Fund, and the Income and Growth Fund launched a new Institutional Class of shares. With the creation of institutional shares EAM has the opportunity to place the Value Line Mutual Funds on distribution platforms that offer exclusively those funds shares that have eliminated all 12b-1 fees from their fee structure.  

EAM Trust - Results of operations before distribution to interest holders 

The overall results of EAM’s investment management operations during the twelve months ended April 30, 2017, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $14,701,000, 12b-1 fees and other fees of $5,822,000 and other income of $205,000 which includes dividend, interest and licensing fees income. For the same period, total investment management fee waivers were $436,000 and 12b-1 fee waivers for four Value Line Funds were $923,000. During the twelve months ended April 30, 2017, EAM's net income was $1,038,000 after giving effect to Value Line’s non-voting revenues interest of $7,195,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.   

The overall results of EAM’s investment management operations during the twelve months ended April 30, 2016, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $14,548,000, 12b-1 fees and other fees of $5,669,000 and net loss of $14,000 on the investments. For the same period, total investment management fee waivers were $262,000 and 12b-1 fee waivers for four Value Line Funds were $1,071,000. Removing management fee waivers on Asset Allocation Fund and the Core Bond Fund resulted in $30,000 in increased management fees per month. During the twelve months ended April 30, 2016, EAM's net income was $880,000 after giving effect to Value Line’s non-voting revenues interest of $7,211,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest. During the twelve months ended April 30, 2016 EAM compensation and employee benefits expenses increased $173,000 above fiscal 2015 primarily due to the addition of an equity analyst in March 2015 and an increase in incentive compensation and the cost of employee benefits year over year. The equity analyst provides coverage and support to the equity funds and the portfolio managers. 

The overall results of EAM’s investment management operations during the twelve months ended April 30, 2015, before interest holder distributions, include total investment management fees earned from the Value Line Funds of $15,014,000, 12b-1 fees and other fees of $5,459,000 and other income of $34,000. For the same period, total investment management fee waivers were $192,000 and 12b-1 fee waivers for six Value Line Funds were $1,518,000. During the twelve months ended April 30, 2015, EAM's net income was $1,248,000 after giving effect to Value Line’s non-voting revenues interest of $7,346,000, but before distributions to voting profits interest holders and to the Company in respect of its 50% non-voting profits interest.

As of April 30, 2017, four of the Value Line Funds have all or a portion of the 12b-1 fees being waived, and one fund has partial investment management fee waivers in place. Although, under the terms of the EAM Declaration of Trust, the Company no longer receives or shares in the revenues from 12b-1 distribution fees, the Company could benefit from the fee waivers to the extent that the resulting reduction of expense ratios and enhancement of the performance of the Value Line Funds attracts new assets.

The Value Line equity and hybrid funds assets represent 78.1%, variable annuity funds issued by GIAC represent 16.8%, and fixed income fund assets represent 5.1%, respectively, of total fund assets under management (“AUM”) as of April 30, 2017. At April 30, 2017, equity, hybrid and GIAC variable annuities AUM increased by 10.2% and fixed income AUM decreased by 12.8% as compared to fiscal 2016.

EAM - The Company’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, and 50% of EAM’s net profits, not less than 90% of which is distributed in cash every fiscal quarter. The applicable recent non-voting revenues interest percentage for fourth quarter of fiscal 2017 is 49.22%.

The Company recorded income from its non-voting revenues interest and its non-voting profits interest in EAM as follows: 

During the twelve months ended April 30, 2017 and April 30, 2016, the Company recorded revenues of $7,714,000 and $7,651,000, respectively, consisting of $7,195,000 and $7,211,000, from its non-voting revenues interest in EAM and $519,000 and $440,000, from its non-voting profits interest in EAM without incurring any directly related expenses. During the twelve months ended April 30, 2015, the Company recorded revenues of $7,970,000, consisting of $7,346,000, from its non-voting revenues interest in EAM and $624,000, from its non-voting profits interest in EAM. 

Operating expenses

Expenses within the Company are categorized into advertising and promotion, salaries and employee benefits, production and distribution, office and administration.

Operating expenses of $35,238,000 for the twelve months ended April 30, 2017, increased $2,572,000, or 7.9%, as compared to the twelve months ended April 30, 2016. The increase in expenses in fiscal 2017 resulted primarily from the additional depreciation and amortization of $806,000 attributable to additional amortization of internally developed software costs related to the product production cycle for which the upgrade is expected to be completed during fiscal 2018, a $1,035,000 decrease in capitalization of deferred software costs for digital product and database development and an increase in space rental and moving costs (New York City and New Jersey office facilities).

Operating expenses of $32,666,000 for the twelve months ended April 30, 2016, decreased $458,000, or 1.4%, as compared to the twelve months ended April 30, 2015. The decrease in expenses in fiscal 2016 resulted primarily from a $1,445,000 decrease in direct mail expense partially offset by the additional depreciation and amortization of $1,102,000 related to software development costs previously incurred.

Operating expenses of $33,124,000 for the twelve months ended April 30, 2015, decreased $706,000, or 2.1%, as compared to the twelve months ended April 30, 2014. The decrease in expenses resulted primarily from a $945,000 decrease in rent expense partially offset by the additional depreciation and amortization of $630,000 related to software development costs previously incurred.

Advertising and promotion

Advertising and promotion expenses of $3,473,000 during the twelve months ended April 30, 2017 decreased $212,000 or 5.8%, as compared to fiscal 2016. The decrease in direct mail expenses of $275,000 during the twelve months ended April 30, 2017, is mainly attributable to a reduction in the number of campaigns for The Value Line Investment Survey and The Value Line 600, as compared to fiscal 2016 partially offset by an increase in direct marketing for Value Line Select: Dividend Income & Growth, The Value Line Small and Mid-Cap and Special Situations in fiscal 2017. There were four direct mail campaigns for The Value Line Investment Survey and three for The Value Line 600 during the twelve months ended April 30, 2017 as compared to five direct mail campaigns for The Value Line Investment Survey and six for The Value Line 600 in the comparable period of the prior fiscal year. During the twelve months ended April 30, 2017 sales commissions increased $96,000 as compared to fiscal 2016. In fiscal 2017 third-party telemarketing expenses decreased $66,000 as a result of eliminating dedicated representative as compared to the prior fiscal year. These decreases were offset by a $59,000 increase in general advertising and trade shows for Institutional Sales department.

Advertising and promotion expenses of $3,685,000 during the twelve months ended April 30, 2016 decreased $1,299,000 or 26.1%, as compared to fiscal 2015. The decreases in direct mail expenses of $1,445,000 for the twelve months ended April 30, 2016, are mainly attributable to a reduction in the number of pieces mailed to prospects for The Value Line Investment Survey and The Value Line 600, as compared to fiscal 2015 partially offset by an increase in direct marketing for Value Line Select and Value Line Select: Dividend Income & Growth in fiscal 2016. There were five direct mail campaigns for The Value Line Investment Survey during the twelve months ended April 30, 2016 as compared to ten direct mail campaigns in fiscal 2015. The Company also negotiated vendor savings resulting in a $157,000 reduction in expenses related to third party inbound telemarketing services and eliminated third party product support, bringing the operations in house. During the twelve months ended April 30, 2016 sales commissions increased $296,000 and were associated with a $1,949,000 increase in retail sales orders and a $915,000 increase in Institutional sales orders as compared to fiscal 2015. Commissions vary based on the type of customer, size of sale, and whether a sale is new or renewal.

Advertising and promotion expenses of $4,984,000 during the twelve months ended April 30, 2015 increased $761,000 or 18.0%, as compared to advertising and promotion expenses of $4,223,000 in fiscal 2014, principally due to a $305,000 increase in direct mail costs. The increase in direct mail expenses is attributable to an increase in list costs of 10% resulting from the purchase of more prospect names and the timing of mailing for The Value Line 600 and The Value Line Investment Survey with more campaigns in fiscal 2015 than in fiscal 2014. Other increases include a $51,000 increase in third-party client support expenses and a $277,000 increase in sales commissions. In fiscal 2015 in-house telemarketing expenses increased $249,000 and were associated with a $1.7 million increase in retail sales orders during the twelve months ended April 30, 2015. An increase of $144,000 in media and general advertising primarily related to expenses to improve services in retail marketing and brand awareness promotions through newspapers, radio and the internet.

Salaries and employee benefits

During the twelve months ended April 30, 2017 salaries and employee benefits of $17,477,000 increased $1,775,000 or 11.3% above fiscal 2016 which included the effect of a decrease in the capitalization of internal salaries and benefits expenses for digital project development of $1,035,000 during the twelve months ended April 30, 2017, as compared to fiscal 2016.  The remaining increases in salaries and employee benefits, primarily in the Information Technology department (“IT”) related to augmenting the Company’s digital infrastructure and production processes and Institutional Sales and Research departments including recruiting fees, were partially offset by decreases in salaries and employee benefits in Human Resources, Advertising and fulfillment and distribution operations at VLDC during the twelve months ended April 30, 2017. 

Salaries and employee benefits of $15,702,000 during the twelve months ended April 30, 2016 were $233,000 or 1.5% below fiscal 2015’s primarily as a result of a decrease in salary and employee benefits in Institutional Sales, Information Technology, Advertising and Value Line Distribution Center (“VLDC”) and a restructuring of the incentive compensation program which were partially offset by an increase in Executive, Quantitative Research and Research departments. The capitalization of internal salaries and employee benefits expenses of $1,250,000 for digital project development decreased $442,000 during the twelve months ended April 30, 2016, as compared to fiscal 2015.

Salaries and employee benefits of $15,935,000 during the twelve months ended April 30, 2015 were $400,000 or 2.4% below fiscal 2014’s salaries and employee benefits of $16,335,000 primarily as a result of a decrease in administrative and support personnel (in IT, Accounting, Advertising and the IT support at VLDC, the fulfillment operation) partially offset by an increase in the internal Telemarketing, Research and Institutional Sales departments. The capitalization of internal salaries and employee benefits expenses of $1,692,000 for digital project development increased $96,000 during the twelve months ended April 30, 2015, as compared to fiscal 2014.

During the twelve months ended April 30, 2017, 2016 and 2015, the Company recorded profit sharing expenses of $345,000, $473,000 and $422,000, respectively.

Production and distribution

During the twelve months ended April 30, 2017, production and distribution expenses of $9,063,000 increased $338,000 or 3.9% above fiscal 2016. A major increase of $877,000 was attributable to additional amortization of internally developed software costs related to the product production cycle for which the upgrade is expected to be completed during fiscal 2018. Additional increases in production costs include a $333,000 increase in production support of the Company’s website, upgrade of the Company’s publishing and application operating system and Windows operating systems and framework. A $43,000 increase in outside data services was due to modified delivery of financial product pricing services. These increases in production costs were offset by a $477,000 annual savings resulting from the Company’s transition to an alternative provider of equity data effective January 1, 2016. Service mailers and distribution expenses decreased $251,000 in fiscal 2017 due to switching to United States Postal Service delivery of subscriber binders from a private carrier, consolidating freight carriers and a 6.9% decline in print circulation during the twelve months ended April 30, 2017 as compared to the prior fiscal year. Also a decline in print circulation resulted in an $81,000 decrease in paper and printing costs.

Production and distribution expenses of $8,725,000 during the twelve months ended April 30, 2016 increased $1,644,000 or 23.2% as compared to fiscal 2015. During the twelve months ended April 30, 2016, an increase of $1,239,000 of production expenses was attributable to additional accelerated amortization of internally developed software costs related to the cessation of software development for certain data galleries. In addition, the Company continues to amortize capitalized software costs attributable to the upgrade of our fulfillment system, single sign on, website development and new service oriented database production architecture. Third party production and hosting expenses for Company’s print and digital product files for internal use and delivery to the Company’s third party that hosts our digital and mobile version of our equity based product offerings, that began on July 9, 2014 (ten months in fiscal year 2015 and twelve months in fiscal 2016) increased $376,000 during fiscal 2016. Increase in expenses included a cost of $159,000 to host tandem moved to cloud, $163,000 of overlapping costs as the Company transitioned to equity data provided by an alternative vendor effective January 1, 2016 offset by $151,000 savings. Distribution expenses decreased $90,000 in fiscal 2016 due to switching to United States Postal Service delivery from a private carrier.

Production and distribution expenses of $7,081,000 during the twelve months ended April 30, 2015 increased $679,000 or 10.6% as compared to production and distribution expenses of $6,402,000 in fiscal 2014. During the twelve months ended April 30, 2015, an increase of $470,000 was attributable to additional amortization of internally developed software costs for the upgrade of our fulfillment system, single sign on, concurrent user software, product and website development and new service oriented production architecture and a $488,000 increase in third party expenses for hosting the Company’s digital version of our equity based product offerings and mobile devices. The increase in expenses was partially offset by a $159,000 decrease in service mailers cost and a $116,000 decrease in paper, printing and mailing costs since the Company renegotiated printing, binder and paper prices with various vendors.

Office and administration

During the twelve months ended April 30, 2017 office and administration expenses of $5,225,000 increased $671,000 or 14.7% above fiscal 2016. During the twelve months ended April 30, 2016 total increase in office and administration costs included a $60,000 increase in telephone costs attributable to one-time additional circuit installation cost and purchasing additional licenses for remote access to work files, a $105,000 increase in antivirus software licenses and a $101,000 decrease in professional fees. A $409,000 increase in space rental is primarily due to overlapping rent expenses for financial statement purposes related to the Company’s New York City office facility and a $192,000 increase in moving costs (New Jersey and New York City office facilities). Increase in space rental includes $193,000 rent expense for the new New Jersey warehouse partially offset by $186,000 savings in VLDC utilities, depreciation and real estate taxes due to the VLDC building sale in July 2016 and additional three months overlapping rent expense of $86,000 per month for the current office facility and $105,000 for the previously occupied office facility during the period from December 1, 2016 to February 28, 2017 which is being offset by lower rent payments according to the sub-lease agreement with American Building Maintenance (“ABM” or the “Sublandlord”). In accordance with GAAP, we spread the benefit of a free rent period and other concessions over the term of our new NYC sublease, commencing on December 1, 2016. In fact, however, the Company is not paying cash rent for the new New York City office facility from December 2016 through September 2017.

Total office and administration expenses of $4,554,000, during the twelve months ended April 30, 2016 decreased $570,000 or 11.1% as compared to fiscal 2015. For the twelve months ended April 30, 2016, office and administration expenses included a decrease of $423,000 in disaster recovery site hosting fees that resulted from changing the third party vendor. Additionally, a decrease of $192,000 related to a decline in the cost of maintenance, utilities, insurance expenses, bank fees and Directors’ fees offset by an increase of $201,000 attributable to professional fees, telephone communication costs (primarily sales), and real estate taxes primarily for our NYC office facility.

Total office and administration expenses of $5,124,000, during the twelve months ended April 30, 2015 decreased $1,746,000 or 25.4% as compared to office and administration expenses of $6,870,000 in fiscal 2014. For the twelve months ended April 30, 2015, office and administration expenses included a $945,000 decrease in rental expense at our New York City facility including an additional one time overlapping rent of $771,000 for the previously occupied office facilities during the short term lease extension which ended September 15, 2013, a decline of $109,000 in telephone, utilities and equipment rental expenses, an accelerated write-off of $138,000 of obsolete software and a decrease of $272,000 in website hosting fees that resulted from the termination of a third party vendor. During fiscal 2015 restructuring and settlement costs decreased $205,000 or 73.2%.

Lease Commitments

In February 2017 the Company's headquarters and offices moved to a new location. On November 30, 2016, Value Line, Inc., received consent from the landlord at 551 Fifth Avenue, New York, NY to the terms of a new sublease agreement between Value Line, Inc. (“Value Line” or “Company”) and ABM Industries, Incorporated (“ABM” or the “Sublandlord”) commencing on December 1, 2016. Pursuant to the agreement Value Line leased from ABM 24,726 square feet of office space located on the second and third floors at 551 Fifth Avenue, New York, NY (“Building” or “Premises”) beginning on December 1, 2016 and ending on November 29, 2027. Base rent under the sublease agreement is $1,126,000 per annum during the first year with an annual increase in base rent of 2.25% scheduled for each subsequent year, payable in equal monthly installments on the first day of each month, subject to customary concessions in the Company’s favor and pass-through of certain increases in utility costs and real estate taxes over the base year. The Company provided a security deposit represented by a letter of credit in the amount of $469,000, which is scheduled to be reduced to $305,000 on September 30, 2021 and fully refunded after the sublease ends. This Building became the Company’s new corporate office facility. The Company is required to pay for certain operating expenses associated with the Premises as well as utilities supplied to the Premises. The sublease terms provide for a significant decrease (23% initially) in the Company’s annual rental expenditure taking into account free rent for the first six months of the sublease. Sublandlord provided Value Line an allowance of $417,000 which is expected to be applied against the Company’s costs and expenses related to the relocation to the new office facility or applied as additional free rent.

The Company leased 44,493 square feet of office space at 485 Lexington Avenue in New York, NY from July 2013 to February 2017. Base rent under the Sublease was $1,468,269 per annum, subject to customary concessions in the Company’s favor and pass-through of certain increases in operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $489,423, which was fully returned over the course of the sublease term.

On February 29, 2016, the Company’s subsidiary Value Line Distribution Center (“VLDC”) and Seagis Property Group LP (the “Landlord”) entered into a lease agreement, pursuant to which VLDC has leased 24,110 square feet of warehouse and appurtenant office space located at 205 Chubb Ave., Lyndhurst, NJ (“Warehouse”) beginning on May 1, 2016 and ending on April 30, 2024 (“Lease”). Base rent under the Lease is $192,880 per annum payable in equal monthly installments on the first day of each month, in advance during fiscal 2017 and will gradually increase to $237,218 in fiscal 2024, subject to customary increases based on operating costs and real estate taxes. The Company provided a security deposit in cash in the amount of $32,146, which will be fully refunded after the lease term expires. The lease is a net lease requiring the Company to pay for certain operating expenses associated with the Warehouse as well as utilities supplied to the Warehouse.

Income from Securities Transactions, net

During the twelve months ended April 30, 2017 and April 30, 2016 the Company’s income from securities transactions, net, primarily derived from dividend income, was $312,000 and $477,000, respectively. In fiscal 2017 income from securities transactions, net, included capital gain distribution from ETFs of $39,000 which compares to capital gain distribution from ETFs of $105,000 in fiscal 2016. There were no gains or losses from sales of equity securities, proceeds of which were $53,000 during the twelve months ended April 30, 2017. During the twelve months ended April 30, 2016 sales of equity securities generated proceeds of $10,206,000 and resulted in a $224,000 capital gain.

During the twelve months ended April 30, 2016 and April 30, 2015 the Company’s income from securities transactions, net, primarily derived from dividend income, realized capital gains from sales of equity securities and capital gain distributions from ETFs was $477,000 and $126,000, respectively. In fiscal 2016 income from securities transactions, net, included capital gain distributions from ETFs of $105,000 which compares to capital gain distributions from ETFs of $57,000 in fiscal 2015. During the twelve months ended April 30, 2016 sales of equity securities resulted in a $224,000 gain. There were no sales, or gains or losses from sales, of equity securities during the twelve months ended April 30, 2015.

Effective income tax rate

The overall effective income tax rates, as a percentage of pre-tax ordinary income for the twelve months ended April 30, 2017, 2016 and 2015 were 33.05%, 27.15% and 30.52%, respectively. The Company's annual effective tax rate will change due to a number of factors including but not limited to an increase or decrease in the ratio of items that do not have tax consequences to pre-tax income, the Company's geographic profit mix between tax jurisdictions, new tax laws, new interpretations of existing tax laws and rulings and settlements with tax authorities. The fluctuation in the effective income tax rate during fiscal 2017 is primarily attributable to the attribution of 100% of the gain on the sale of the Company's operating facility to one tax jurisdiction. The fluctuation in the effective income tax rate during fiscal 2016 is primarily attributable to effect of the reduction in the allocation factors on the state and local deferred tax liability (primarily the gain on deconsolidation of EAM), reversal of excess income tax accruals established in past years that were resolved upon completion of the prior NYC and IRS audits and an increase in the domestic production tax credits. The fluctuation in the effective income tax rate during fiscal 2015 is primarily attributable to the write-off of the tax bases of goodwill.

Liquidity and Capital Resources

The Company had working capital, defined as current assets less current liabilities, of $1,548,000 as of April 30, 2017 and negative working capital of $6,662,000 as of April 30, 2016. These amounts include short term unearned revenue of $20,188,000 and $20,516,000 reflected in total current liabilities at April 30, 2017 and April 30, 2016, respectively. Cash and short term securities were $23,133,000 and $16,759,000 as of April 30, 2017 and April 30, 2016, respectively.

The Company’s cash and cash equivalents include $6,066,000 and $12,037,000 at April 30, 2017 and April 30, 2016, respectively, invested primarily in commercial banks and in Money Market Funds at brokers, which operate under Rule 2a-7 of the 1940 Act and invest primarily in short term U.S. government securities.

Cash from operating activities

The Company had cash outflows from operating activities of $3,678,000 during the twelve months ended April 30, 2017 compared to cash inflows from operations of $2,004,000 and $1,407,000 during the twelve months ended April 30, 2016 and 2015, respectively. The increase in cash outflows of $5,682,000 from fiscal 2016 to fiscal 2017 resulted from the payment of additional income taxes of $3,279,000, primarily attributable to the sale of the Company’s VLDC operating facility and the timing of payments of invoices and prepayments to vendors. The increase in cash flows from fiscal 2015 to fiscal 2016 was primarily attributable to the timing of vendor payments, an increase in earnings before non-cash items that resulted from cost controls offset by a decrease in unearned income from the receipt of prepaid subscription orders in fiscal 2016.

Cash from investing activities

The Company’s cash inflows from investing activities of $4,470,000 during the twelve months ended April 30, 2017 compared to cash inflows from investing activities of $12,207,000 and $4,689,000 for the twelve months ended April 30, 2016 and April 30, 2015, respectively. Cash inflows for the twelve months ended April 30, 2017 were lower than in fiscal 2016 primarily due to investing $13,228,000 in fixed income and equity securities from the net proceeds of $11,555,000 from the sale of the Company’s operating facility as compared to $3,854,000 invested in equity securities from the $10,206,000 of proceeds from sales of securities classified as available for sale during fiscal 2016. Additionally, the Company invested $469,000 in a bank money market fund and pledged this investment to represent cash securing a Bank Letter of Credit issued to the sublandlord as a security deposit for the Company's new leased corporate office facility. Cash inflows for the twelve months ended April 30, 2016 were higher than in fiscal 2015 due to the Company’s decision to sell its inverse equity ETF securities and lower its overall equity securities investment position and the decrease in the capitalized software project costs during fiscal 2016.

Cash from financing activities

During the twelve months ended April 30, 2017, the Company’s cash outflows from financing activities were $7,357,000 and compared to cash outflows from financing activities of $6,963,000 and $6,010,000 for the twelve months ended April 30, 2016 and 2015, respectively. Cash outflows for financing activities included $741,000, $796,000 and $122,000 for the repurchase of 44,924 shares, 52,907 shares and 8,433 shares of the Company’s common stock under the September 19, 2012 board approved common stock repurchase program, during fiscal years 2017, 2016 and 2015, respectively. Quarterly dividend payments of $0.17 per share during fiscal 2017 aggregated $6,616,000. Quarterly dividend payments of $0.15 per share during the first quarter and $0.16 per share during the latter three quarters in fiscal 2016 aggregated $6,167,000 as compared to quarterly dividend payments of $0.15 per share totaling $5,888,000 in fiscal 2015.

At April 30, 2017 there were 9,711,665 common shares outstanding as compared to 9,756,589 common shares outstanding at April 30, 2016. The Company expects financing activities to continue to include use of cash for dividend payments for the foreseeable future.    

Management believes that the Company’s cash and other liquid asset resources used in its business together with the future cash flows from operations and from the Company’s non-voting revenues and non-voting profits interests in EAM will be sufficient to finance current and forecasted liquidity needs for the next twelve months. Management does not anticipate making any borrowings during the next twelve months. As of April 30, 2017, retained earnings and liquid assets were $39,186,000 and $23,133,000, respectively.

Seasonality

Our publishing revenues are comprised of subscriptions which are generally annual subscriptions. Our cash flows from operating activities are minimally seasonal in nature, primarily due to the timing of customer payments made for orders and subscription renewals. 

Recent Accounting Pronouncements 

In November 2015, the FASB issued ASU 2015-17, Income taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Under existing standards, deferred taxes for each tax-paying jurisdiction are presented as a net current asset or liability and net long-term asset or liability. To simplify presentation, the new guidance will require that all deferred tax assets and liabilities, along with related valuation allowances, be classified as long-term on the balance sheet. As a result, each tax-paying jurisdiction will now only have one net long-term asset or liability. The new guidance does not change the existing requirement that prohibits offsetting deferred tax liabilities from one jurisdiction against deferred tax assets of another jurisdiction. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, which will be our fiscal year 2018 beginning May 1, 2017. Due to the full valuation allowance on our U.S. deferred tax assets, we do not expect the adoption of ASU 2015-17 to have a material impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02"). The core principle of Topic 842 requires that a lessee should recognize the assets and liabilities on the balance sheet and disclose key information about leasing arrangements. The amendments in ASU 2016-2 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The guidance is required to be adopted at the earliest period presented using a modified retrospective approach. The Company is in the process of evaluating the impact of this standard on the consolidated financial statements.

In August, 2016, the FASB issued Accounting Standards Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments ( a consensus of the Emerging Issues Task Force) ( “ASU 2016-15”). The amendments in ASU 2016-15 address eight specific cash flow issues and apply to all entities that are required to present a statement of cash flows under ASC Topic 230, Statement of Cash Flows. The amendments in ASU 2016-15 are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption during an interim period. The Company is in the process of evaluating the impact of this standard on the consolidated financial statements.

Critical Accounting Estimates and Policies

The Company prepares its consolidated financial statements in accordance with Generally Accepted Accounting Principles as in effect in the United States (U.S. “GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent, and the Company evaluates its estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions. The Company believes the following critical accounting policies reflect the significant judgments and estimates used in the preparation of its Consolidated Financial Statements:

Revenue Recognition

The majority of the Company’s revenues come from the sale of print and digital subscriptions and fees for copyright proprietary information. The Company recognizes subscription revenue, net of discounts, in equal amounts over the term of the subscription, which generally ranges from three months to one year or longer, varying based on the product or service. Copyright data fees are calculated monthly based on market fluctuation and billed quarterly. The Company believes that the estimates related to revenue recognition are critical accounting estimates, and to the extent that there are material differences between its determination of revenues and actual results, its financial condition or results of operations may be affected.

Income Taxes

The Company’s effective annual income tax expense rate is based on the U.S. federal and state and local jurisdiction tax rates on income and losses that are part of its Consolidated Financial Statements. Tax-planning opportunities, non-taxable income, expenses that are not deductible in the Company’s tax returns, and the blend of business income, including income derived from the Company’s non-voting revenue and non-voting profits interests in EAM and income from securities transactions, will impact the effective tax rate in the jurisdictions in which the Company operates. Significant judgment is required in evaluating the Company’s tax positions.

Tax law requires items to be included in the tax return at different times from when these items are reflected in the Company’s Consolidated Financial Statements. As a result, the effective tax rate reflected in the Company’s Consolidated Financial Statements is different from the tax rate reported on the Company’s tax returns (the Company’s cash tax rate). These differences reverse over time, such as depreciation and amortization expenses. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax basis of assets and liabilities.

As of April 30, 2017 and 2016, the Company had $348,000 and $432,000, respectively, of deferred tax assets. In assessing the Company’s deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilized in the Company’s tax filings.

 In assessing the need for a valuation allowance, the Company considers both positive and negative evidence, including tax-planning strategies, projected future taxable income, and recent financial performance. If after future assessments of the realizability of the deferred tax assets the Company determines a lesser allowance is required, the Company would record a reduction to the income tax expense and to the valuation allowance in the period this determination was made. This would cause the Company’s income tax expense, effective tax rate, and net income to fluctuate.

In addition, the Company establishes reserves at the time that it determines that it is more likely than not that it will need to pay additional taxes related to certain matters. The Company adjusts these reserves, including any impact of the related interest and penalties, in light of changing facts and circumstances such as the progress of a tax audit. A number of years may elapse before a particular matter for which the Company has established a reserve is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction. Such liabilities are recorded as income taxes payable in the Company’s Consolidated Balance Sheets. The settlement of any particular issue would usually require the use of cash. Favorable resolutions of tax matters for which the Company has previously established reserves are recognized as a reduction to the Company’s income tax expense when the amounts involved become known.

Assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns requires judgment. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations, or cash flows.

Investment in EAM Trust

The Company accounts for its investment in EAM using the equity method of accounting. The value of its investment in EAM is the fair value of the contributed capital at inception, plus the Company’s share of non-voting revenues and non-voting profits from EAM, less distributions received from EAM. The Company evaluates its investment in EAM on a regular basis for other-than-temporary impairment, which requires significant judgment and includes quantitative and qualitative analysis of identified events or circumstances that impact the fair value of the investment.

Should the fair value of the investment fall below its carrying value, the Company will determine whether the investment is other-than-temporarily impaired, which includes assessing the severity and duration of the impairment and the likelihood of recovery. If the investment is considered to be other-than-temporarily impaired, the Company will write down the investment to its fair value. Since the inception of EAM, the Company has not recognized any other-than-temporary impairment in the investment.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, other than operating leases and a secured Letter of Credit (“LOC”) in the amount of $469,000 issued as a security deposit for the Company’s office facility entered into in the ordinary course of business. The LOC is secured by a restricted Money Market Investment of similar amount.

Contractual Obligations

Below is a summary of certain contractual obligations of the Company as of April 30, 2017 ($ in thousands):

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk Disclosures

The Company’s Consolidated Balance Sheet includes a substantial amount of assets whose fair values are subject to market risks. The Company’s market risks are primarily associated with interest rates and equity price risk. The following sections address the significant market risks associated with the Company’s investment activities.

Interest Rate Risk

The Company’s strategy has been to acquire debt securities with low credit risk. Despite this strategy management recognizes and accepts the possibility that losses may occur. To limit the price fluctuation in these securities from interest rate changes, the Company’s management invests primarily in short-term obligations maturing within one year.

The fair values of the Company’s fixed maturity investments will fluctuate in response to changes in market interest rates. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of those instruments. Additionally, fair values of interest rate sensitive instruments may be affected by prepayment options, relative values of alternative investments, and other general market conditions.

Fixed income securities consist of certificates of deposits and securities issued by federal, state, and local governments within the United States. As of April 30, 2017 the aggregate cost and fair value of fixed income securities classified as available-for-sale were $7,484,000 and $7,479,000, respectively. There were no fixed income securities at April 30, 2016.

The following table summarizes the estimated effects of hypothetical increases and decreases in interest rates on assets that are subject to interest rate risk. It is assumed that the changes occur immediately and uniformly to each category of instrument containing interest rate risks. The hypothetical changes in market interest rates do not reflect what could be deemed best or worst case scenarios. Variations in market interest rates could produce significant changes in the timing of repayments due to prepayment options available. For these reasons, actual results might differ from those reflected in the table.

Fixed Income Securities

Management regularly monitors the maturity structure of the Company’s investments in debt securities in order to maintain an acceptable price risk associated with changes in interest rates.

Equity Price Risk

 The carrying values of investments subject to equity price risks are based on quoted market prices as of the balance sheet dates. Market prices are subject to fluctuation and, consequently, the amount realized in the subsequent sale of an investment may significantly differ from the reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic characteristics of the issuer, the relative price of alternative investments and general market conditions. Furthermore, amounts realized in the sale of a particular security may be affected by the relative quantity of the security being sold.

The Company’s equity investment strategy has been to acquire equity securities across a diversity of industry group. The portfolio consists of ETFs held for dividend yield that attempt to replicate the performance of certain equity indexes and ETFs that hold preferred shares primarily of financial institutions. In order to maintain liquidity in these securities, the Company’s policy has been to invest in and hold in its portfolio, no more than 5% of the approximate average daily trading volume in any one issue.

As of April 30, 2017, the aggregate cost of the equity securities classified as available-for-sale, which consist of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL) and Proshares Trust S&P 500 Dividend (NOBL) was $8,385,000 and the fair value was $9,097,000. As of April 30, 2016, the aggregate cost of the equity securities classified as available-for-sale, which consisted of investments in the SPDR Series Trust S&P Dividend ETF (SDY), First Trust Value Line Dividend Index ETF (FVD), PowerShares Financial Preferred ETF (PGF), Select Utilities Select Sector SPDR ETF (XLU), First Trust Value Line 100 ETF (FVL), Proshares Trust S&P 500 Dividend (NOBL) and First Trust Total US Market Alphadex ETF (TUSA) was $3,445,000 and the fair value was $3,637,000. During the second quarter ended October 31, 2015, the Company made a decision to reduce its dividend paying ETF position and liquidate its non dividend paying inverse ETF positions.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

       The following consolidated financial statements of the registrant and its subsidiaries are included as a part of this Form 10-K:

Quarterly Results (Unaudited)

($ in thousands, except per share amounts)

* During the first quarter of fiscal 2017 both net income and income from operations included a pre-tax gain of $8,123,000 from the sale of the Company's operating facility for which it received gross proceeds of $12,300,000 on July 29, 2016. During the fourth quarter ended April 30, 2017, the Company’s reported loss from operations of $489,000 was the result of an increase in salaries and employee benefits primarily in the Information Technology department related to augmenting the Company’s digital infrastructure and production processes, a decrease in the capitalization of internal salaries and benefits expenses for digital project development accompanied by increased expenses related to relocating the Company’s New York City office facility. 

** During the fourth quarter ended April 30, 2016, the Company’s loss from operations of $462,000 was the result of accelerated amortization related to the cessation of software development for certain data galleries.

*** During the fourth quarter ended April 30, 2015, the Company’s loss from operations of $560,000 was the result of 12 weeks of print revenues recorded in the fourth quarter of fiscal 2015 as compared to 13 weeks recorded in the fourth quarter of fiscal 2014, accelerated write-off of $138,000 related to obsolete software and an additional direct mail campaign in the fourth quarter of fiscal 2015.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

             ACCOUNTING AND FINANCIAL DISCLOSURE.

       None.

Item 9A. CONTROLS AND PROCEDURES.

(a)  Evaluation of Disclosure Controls and Procedures.

The Company's Chief Executive Officer and Vice President & Treasurer carried out an evaluation of the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15(e) or 15d-15(e)) as of April 30, 2017, as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15. The Company’s Chief Executive Officer and Vice President & Treasurer are engaged in a comprehensive effort to review, evaluate and improve the Company's controls; however, management does not expect that the Company's disclosure controls or its internal controls over financial reporting can prevent all possible errors and fraud.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Vice President & Treasurer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and, the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Vice President & Treasurer have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

This Form 10-K does not include an attestation report of the Company's registered public accounting firm regarding the Company’s internal control over financial reporting. Under applicable SEC rules, no such attestation report by the Company's registered public accounting firm is required.

Changes in Internal Controls

In the course of the evaluation of disclosure controls and procedures, the Chief Executive Officer and Vice President & Treasurer considered certain internal control areas in which the Company has made and is continuing to make changes to improve and enhance controls. Based upon that evaluation, the Chief Executive Officer and Vice President & Treasurer of the Company concluded that there were no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the fourth quarter of fiscal 2017 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

(b)     Management’s Annual Report on Internal Control over Financial Reporting.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, and effected by the board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Under the supervision and with the participation of management, including the Chief Executive Officer and the Vice President & Treasurer, acting as Principal Financial Officer, the Company has assessed the effectiveness of its internal control over financial reporting as of April 30, 2017. In making this assessment, management used the criteria described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment and those criteria, management concluded that the Company did maintain effective internal control over financial reporting as of April 30, 2017.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the fourth quarter of fiscal 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. OTHER INFORMATION.

None.

Part III

Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.

* Member of the Executive Committee of the Board of Directors.

Except as noted, the directors have held their respective positions for at least five years. Information about the experience, qualifications, attributes and skills of the directors is incorporated by reference from the section entitled "Director Qualifications" in the Company's Proxy Statement for the 2017 Annual Meeting of Shareholders.

Audit Committee

The Company has a standing Audit Committee performing the functions described in Section 3(a) (58) (A) of the Securities Exchange Act of 1934, the members of which are: Mr. Glenn Muenzer, Mr. Stephen Davis, and Mr. Alfred Fiore. Mr. Muenzer, a qualified financial expert, was elected Chairman of the Audit Committee in 2012. The Board of Directors have determined that Mr. Muenzer is an “audit committee financial expert” (as defined in the rules and regulations of the SEC). The Board of Directors believes that the experience and financial sophistication of the members of the Audit Committee are sufficient to permit the members of the Audit Committee to fulfill the duties and responsibilities of the Audit Committee. All members of the Audit Committee meet the NASDAQ’s financial sophistication requirements for audit committee members.

Code of Ethics

The Company’s Code of Business Conduct and Ethics that applies to its principal executive officer, principal financial officer, all other officers, and all other employees is available on the Company’s website at www.valueline.com/About/Code of Ethics.aspx.

Procedures for Shareholders to Nominate Directors

There have been no material changes to the procedures by which shareholders of the Company may recommend nominees to the Company's Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC on Forms 3, 4 and 5. Executive officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Forms 3, 4 and 5 they file.

Based on the Company's review of the copies of such forms that it has received and written representations from certain reporting persons confirming that they were not required to file Forms 5 for the fiscal year ended April 30, 2017, the Company believes that all its executive officers, directors and greater than ten percent shareholders complied with applicable SEC filing requirements during fiscal 2017.

Item 11. EXECUTIVE COMPENSATION.

The information required in response to this Item 11, Executive Compensation, is incorporated by reference from the section entitled “Compensation of Directors and Executive Officers” in the Company’s Proxy Statement for the 2017 Annual Meeting of Shareholders.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS.

The following table sets forth information as of April 30, 2017 as to shares of the Company's Common Stock held by persons known to the Company to be the beneficial owners of more than 5% of the Company's Common Stock.

*All of the outstanding voting stock of Arnold Bernhard & Co., Inc. is owned by Jean B. Buttner.

The following table sets forth information as of April 30, 2017, with respect to shares of the Company's Common Stock owned by each director of the Company, by each executive officer listed in the Summary Compensation Table and by all executive officers and directors as a group.

* Less than one percent

Securities Authorized for Issuance under Equity Compensation Plans

There are no securities of the Company authorized for issuance under equity compensation plans.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

AB&Co., which owns 88.9% of the outstanding shares of the Company’s common stock as of April 30, 2017, utilizes the services of officers and employees of the Company to the extent necessary to conduct its business. The Company and AB&Co. allocate costs for office space, equipment and supplies and shared staff pursuant to a servicing and reimbursement agreement. During the fiscal years ended April 30, 2017 and April 30, 2016, the Company was reimbursed $383,000 and $164,000, respectively for payments it made on behalf of and services it provided to AB&Co. There were no receivables due from the Parent at April 30, 2017 or April 30, 2016. In addition, a tax-sharing arrangement allocates the tax liabilities of the two companies between them. The Company is included in the consolidated federal income tax return filed by AB&Co. The Company pays to AB&Co. an amount equal to the Company's liability as if it filed a separate federal income tax return. For the years ended April 30, 2017 and 2016, the Company made payments to AB&Co. for federal income taxes amounting to $6,824,000 and $3,545,000, respectively.

As a result of the completion of the Restructuring Transaction on December 23, 2010, the Company no longer receives investment management or distribution services revenues from the Value Line Mutual Funds.

Since December 23, 2010, the Company no longer engages, through subsidiaries, in the investment management or mutual fund distribution businesses. The Company does hold 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, and 50% of EAM’s net profits. EAM currently has no separately managed account clients.

During the twelve months ended April 30, 2017 and April 30, 2016, the Company recorded revenues of $7,714,000 and $7,651,000, respectively, consisting of $7,195,000 and $7,211,000, from its non-voting revenues interest in EAM and $519,000 and $440,000, from its non-voting profits interest in EAM without incurring any directly related expenses. During the twelve months ended April 30, 2015, the Company recorded revenues of $7,970,000, consisting of $7,346,000, from its non-voting revenues interest in EAM and $624,000, from its non-voting profits interest in EAM.  

Included in the Company’s Investment in EAM Trust are receivables due from EAM of $1,919,000 and $1,750,000 at April 30, 2017 and April 30, 2016, respectively, for the unpaid portion of Value Line’s non-voting revenues and non-voting profits interests. The non-voting revenues and non-voting profits interests due from EAM are payable to Value Line quarterly under the provisions of the EAM Declaration of Trust.   

The Company has adopted a written Related Party Transactions Policy as part of its Code of Business Conduct and Ethics.  This policy requires that any related party transaction which would be required to be disclosed under Item 404(a) of Regulation S-K must be approved or ratified by the Audit Committee of the Board of Directors.  Transactions covered for the fiscal year ended April 30, 2017 include the matters described in the preceding paragraphs of this Item 13.

Director Independence

The information required with respect to director independence and related matters are incorporated by reference from the section entitled “Compensation of Directors and Executive Officers” in the Company’s Proxy Statement for the 2017 Annual Meeting of Shareholders.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit and Non-Audit Fees

The following table illustrates the fees paid to the Company’s independent auditor, Horowitz & Ullmann P.C., for services provided:         

In the above table, in accordance with the SEC's definitions and rules, “audit fees” are fees the Company paid Horowitz & Ullmann, P.C. for professional services for the audit of the Company's consolidated financial statements for the fiscal years ended April 30, 2017 and 2016 included in Form 10-K and the review of consolidated condensed financial statements and included in Form 10-Qs and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; “audit-related fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company's consolidated financial statements; and “tax fees” are fees for tax compliance, tax advice and tax planning.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee of the Company's Board of Directors approves all services provided by Horowitz & Ullmann, P.C., prior to the provision of those services. The Audit Committee has not adopted any specific pre-approval policies and procedures.

Part IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.