Note 5 - Variable Interest Entity

12 Months Ended

Apr. 30, 2020

Notes to Financial Statements

Variable Interest Entity [Text Block]

Note 

5

- Variable Interest Entity:

The Company retained a non-voting revenues interest and a

50%

non-voting profits interest in EAM, which was formed, as a result of the Restructuring Transaction on

December 23, 2010,

to carry on the asset management and mutual fund distribution businesses formerly conducted by the Company. EAM is considered to be a VIE in relation to the Company. The Company makes its determination for consolidation of EAM as a VIE based on a qualitative assessment of the purpose and design of EAM, the terms and characteristics of the variable interests in EAM, and the risks EAM is designed to originate and pass through to holders of variable interests. Other than EAM, the Company does

not

have an interest in any other VIEs.

The Company has determined that it does

not

have a controlling financial interest in EAM because it does

not

have the power to direct the activities of EAM that most significantly impact its economic performance. Value Line does

not

hold any voting stock of EAM and it does

not

have any involvement in the day-to-day activities or operations of EAM. Although the EAM Trust Agreement provides Value Line with certain consent rights and contains certain restrictive covenants related to the activities of EAM, these are considered to be protective rights and therefore Value Line does

not

maintain control over EAM.

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

The Company has

not

provided any explicit or implicit financial or other support to EAM other than what was contractually agreed to in the EAM Trust Agreement. Value Line has

no

obligation to fund EAM in the future and, as a result, has

no

exposure to loss beyond its initial investment and any undistributed revenues and profits interests retained in EAM. The following table presents the total assets of EAM, the maximum exposure to loss due to involvement with EAM, as well as the value of the assets and liabilities the Company has recorded on its Consolidated Balance Sheets for its interest in EAM.

			Value Line
($ in thousands)	VIE Assets		Investment in EAM Trust (1)		Liabilities		Maximum Exposure to Loss
As of April 30, 2020	$	61,335	$	59,165	$	-	$	59,165
As of April 30, 2019	$	60,683	$	58,625	$	-	$	58,625

(

1

) Reported within Long-Term Assets on Consolidated Balance Sheets.