EDGAR 10-K Filing

Company CIK: 84112
Filing Year: 2023
Filename: 84112_10-K_2023_0001493152-23-026094.json

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ITEM 1. BUSINESS
Item 1 Business
(a) Business Development
George Risk Industries, Inc. (GRI or the Company) was incorporated in 1967 in Colorado. The Company is presently engaged in the design, manufacture, and sale of custom computer keyboards, proximity switches, security alarm components and systems, pool access alarms, EZ Duct wire covers, water sensors, electronic switching devices, high security switches and wire and cable installation tools.
Products, Market, and Distribution
The Company designs, manufactures, and sells computer keyboards, proximity switches, security alarm components and systems, pool access alarms, water sensors, electronic switching devices, high security switches, and wire and cable installation tools. The Security sales division, which concentrates on selling products for security purposes, comprises approximately 96.6% of net revenues and these goods are sold to distributors and alarm dealers/installers.
The security segment has approximately 1,000 current customers. One of the distributors, Ademco, Inc. (previously known as ADI), accounts for approximately 35.8% of the Company’s sales of these products. Anixter, Inc. accounts for another 24.2% of the security segment of the Company sales. The loss of these distributors would be significant to the Company. However, both companies have purchased from the Company for many years and are expected to continue. Also, the Company has a written agreement with Ademco. This agreement was signed in February 2011 and was initiated by the customer. The contents of the agreement include product terms, purchasing, payment terms, term and termination, product marketing, representations and warranties, product support, mutual confidentiality, indemnification and insurance, and general provisions.
The keyboard and proximity switch segment has approximately 300 customers. These products are primarily sold to original equipment manufacturers to their specifications and to distributors of off-the-shelf keyboards of proprietary design.
Competition
The Company has intense competition in the keyboard/proximity and security/burglar alarm lines.
The security/burglar alarm segment has approximately six major competitors. The Company competes well based on price, product design, quality, customization and having products made in the USA.
The competitors in the keyboard/proximity segment are larger companies with automated production facilities. GRI has emphasized small custom order sales that many of its competitors decline or discourage.
Research and Development
The Company performs research and development for its customers when needed and as requested. Costs in connection with such product development have been borne by the customers. Costs associated with the development of new products are expensed as incurred. The Company also does R&D for itself to help in the development of new products.
Employees
GRI has approximately 175 employees.

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ITEM 1A. RISK FACTORS

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ITEM 1B. UNRESOLVED STAFF COMMENTS

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ITEM 2. PROPERTIES
Item 2 Properties
The Company owns the manufacturing and the office facilities that it operates in. Total square footage of the plant in Kimball, Nebraska is approximately 50,000 sq. ft. A 7,500 sq. ft. warehouse for raw material storage was purchased in June 2017 when the Company acquired its cable and wiring segment and another 9,600 sq. ft. building was purchased in April 2020 for additional expansion. Additionally, the Company purchased the 15,000 sq. ft. building that it previously leased from Bonita Risk, which has been used mainly for offices, in November 2019. Bonita Risk is a director of the Company.
The Company also owns a building in Gering, NE that is 7,200 sq. ft. in size. This is used for manufacturing. Currently, there are approximately 34 employees at the Gering site.

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ITEM 3. LEGAL PROCEEDINGS
Item 3 Legal Proceedings
None.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4 Submission of Matters to a Vote of Security Holders
Not applicable.
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5 Market for the Registrant’s Common Equity and Related Stockholders’ Matter
Principal Market
The Company’s Class A Common Stock, which is traded under the ticker symbol RSKIA, is currently quoted on the OTC Bulletin Board by one market maker.
Stock Prices and Dividends Information
Fiscal Year High Low
May 1-July 31 $ 12.24 $ 11.02
August 1-October 31 12.00 9.52
November 1-January 31 11.60 10.35
February 1-April 30 11.69 10.62
Fiscal Year High Low
May 1-July 31 $ 13.05 $ 12.30
August 1-October 31 14.50 12.50
November 1-January 31 15.84 13.20
February 1-April 30 15.50 12.00
On September 30, 2022, a dividend of $.60 per common share was declared for the fiscal year ending April 30, 2023.
For the prior fiscal year, a dividend of $.50 per common share was declared on September 30, 2021.
The number of holders of record of the Company’s Class A Common Stock as of April 30, 2023, was approximately 1,101.
Repurchases of Equity Securities
On September 18, 2008, the Board of Directors approved an authorization for the repurchase of up to 500,000 shares of the Company’s common stock. Purchases can be made in the open market or in privately negotiated transactions. The Board did not specify an expiration date for the authorization.
The following tables show repurchases of GRI’s common stock made on a quarterly basis:
Fiscal Year Number of shares repurchased
May 1-July 31
August 1-October 31
November 1-January 31
February 1-April 30
Fiscal Year Number of shares repurchased
May 1-July 31
August 1-October 31 2,000
November 1-January 31
February 1-April 30 12,568
There are still approximately 225,000 shares available to be repurchased under the current resolution.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6 Selected Financial Data
Not Applicable

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Overview
George Risk Industries, Inc. (GRI) (the “Company”) is a diversified manufacturer of electronic components, encompassing the security industry’s widest variety of door and window contact switches, environmental products, wire and cable installation tools, proximity switches and custom keyboards. The security products division comprises the largest portion of GRI sales and products are sold worldwide through distributors, who in turn sell these products to security installation companies. These products are used for residential, commercial, industrial and government installations. International sales accounted for approximately 11.1% of revenues for fiscal year 2023 and 10.7% for 2022.
GRI is known for its quality American made products, top-notch customer service and the willingness to work with customers on their special applications.
GRI owns and operates its main manufacturing plant and offices in Kimball, Nebraska with a satellite plant 40 miles away in Gering, Nebraska.
The Company has substantial marketable securities holdings and these holdings have a material impact on the financial results. For the fiscal year ending April 30, 2023, the percentage of other income (expense) was a gain of 12.98% of income before income taxes. In comparison, for the year ending April 30, 2022, the percentage of other income (expense) was a loss of 30.11% of the income before income taxes. Management’s philosophy behind having holdings in marketable securities is to keep the money working and to gain interest on the cash that is not needed to be put back into the business. Over the years, the investments have kept the earnings per share up when the results from operations have not fared as well.
Management is always open to the possibility of acquiring a business that would complement our existing operations, which is exactly what took place in October 2017 when the Company purchased substantially all of the assets from Labor Saving Devices, Inc. (“LSDI”) and Roy Bowling (“Bowling”).
There are no known seasonal trends with any of GRI’s products, since the Company mostly sells to distributors and original equipment manufacturers (OEMs). The products are tied to the housing industry and will fluctuate with building trends.
Liquidity and Capital Resources
Operating
Net cash decreased by $1,135,000 during the year ended April 30, 2023 compared to a decrease of $1,248,000 during the year ended April 30, 2022. Accounts receivable decreased by $627,000 during the current year while showing a $326,000 increase in the prior year. The current decrease in cash flow from accounts receivable is the result of a combination of slightly faster collection of accounts receivable and decreased sales. At April 30, 2023, 79.90% of receivables were less than 60 days and 4.95% were over 90 days. In comparison, 75.19% of the receivables were considered current (less than 60 days) and 7.86% of the total were over 90 days past due for the prior year during the same period.
Inventories increased by $3,604,000 in the fiscal year ended April 30, 2023, while the prior year showed an increase of $2,430,000 at year end. The current year increase is a result of having more raw materials on hand since sales had increased previously and having the raw material costing more than before. In turn, with material and labor costs rising, the work in process and finished goods inventories have also increased.
Prepaid expenses decreased by $761,000 while they increased $903,000 in the current and prior year, respectively. The current year decrease is due to not having as many prepayments of raw materials than at year-end last year and not having to renew multi-year subscriptions in the current year.
Income tax overpayment increased by $680,000 for the year ended April 30, 2023, compared to a $196,000 increase in income tax payable for the year ended April 30, 2022. The current increase is largely due to having slightly lower sales and income before tax and not making larger income tax estimates than last year.
For the year ended April 30, 2023, accounts payable increased by $226,000 as compared to a decrease of $157,000 for the same period the year before. The change in cash with regards to accounts payable is largely based on timing. Payables are paid within terms and fluctuate based primarily on inventory needs for production. Accrued expenses increased $111,000 for the year ended April 30, 2023, due to having significantly more accrued customer liability refund calculated compared to the prior year.
Investing
As for investment activities, $548,000 was spent on purchases of property and equipment during the current fiscal year, compared to $390,000 during the year ended April 30, 2022 These capitalized costs mainly consisted of purchases of machinery and equipment and making capital improvements. Additionally, the Company continues to purchase marketable securities, which include municipal bonds and quality stocks. Cash spent on purchases of marketable securities for the year ended April 30, 2023 was $764,000 versus the $787,000 spent for the corresponding period last year. Conversely, net proceeds from the sale of marketable securities were $25,000 and $452,000 at April 30, 2023 and 2022, respectively. The Company uses “money manager” accounts for most stock transactions. By doing this, the Company gives an independent third-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays quarterly service fees based on the value of the investments.
Financing
Cash used in financing activities consists of two items. First, for the year ended April 30, 2023, $2,689,000 was spent on the payment of dividends. The Company declared a dividend of $0.60 per share of common stock on September 30, 2022 for the current fiscal year, while a $0.50 per share of common stock dividend was declared on September 30, 2021 and issued in the prior fiscal year. Second, the Company continues to purchase back its Class A common stock when the opportunity arises. For the year ended April 30, 2023, the Company purchased $7,000 of treasury stock and $211,000 was bought back for the year ended April 30, 2022. In an effort to repurchase its Class A Common Stock, the Company has been actively searching for stockholders that have been “lost” over the years.
At April 30, 2023, working capital increased 3.28% in comparison to the previous fiscal year. The Company measures liquidity using the quick ratio, which is the ratio of cash, securities and accounts receivables to current obligations. The Company’s quick ratio decreased to 14.648 for the year ended April 30, 2023 compared to 15.549 for the year ended April 30, 2022.
Results of Operations
GRI completed the fiscal year ending April 30, 2023 with a net profit of 23.81% of net sales. Net sales were at $19,979,000, down 3.65% over the previous fiscal year. The decrease in sales is a result of a slowing economy which has seen inflation grow to some of its highest levels in the last 15 years. Cost of goods sold was 53.08% of net sales for the year ended April 30, 2023 and 51.70% for the same period last year. Management aims to keep the cost of goods sold percentage within 50% and was just slightly over that percentage for the current fiscal year. Management strives to be as efficient as possible since wages and material costs continue to increase, due to the increased inflation in our economy. Management offset some of these added expenses by implementing a 10% price increase effective January 1, 2023.
Operating expenses were 21.59% of net sales for the year ended April 30, 2023 as compared to 21.06% for the corresponding period last year. Management’s goal is to keep the operating expenses around 30% or less of net sales, so the goal has been met for the current fiscal year. Income from operations for the year ended April 30, 2023 was at $5,060,000, which is a 10.41% decrease from the corresponding period last year, which had income from operations of $5,648,000.
Other income and expense results for the fiscal year ended April 30, 2023 produced a gain of $755,000. This is in comparison to a loss of $1,307,000 for the fiscal year ending April 30, 2022. Dividend and interest income was $1,068,000, which is up 3.99% over the prior year. Dividend and interest income at April 30, 2022 was $1,027,000. Investments in marketable securities are presented at fair value and an unrealized gain or loss is recorded within the statements of operations, a non-cash entry. As a result, an unrealized loss of $31,000 was recorded for the fiscal year ended April 30, 2023 and an unrealized loss of $2,764,000 was recorded for the prior year ended April 30, 2022. Net loss on the sale of investments for the current fiscal year was $291,000, which is a 170.29% decrease over the net gain on the sale of investments of $414,000 for the fiscal year ending April 30, 2022.
Net income for the year ended April 30, 2023 was $4,757,000, which is up 33.40% from the prior year, which produced net income of $3,566,000. Basic and diluted earnings per common share (“EPS”) for the year ended April 30, 2023 was $0.96 per share. Basic and diluted EPS for the year ended April 30, 2022 was $0.72 per share.
Management is hopeful that sales will increase for the fiscal year ending April 30, 2024. Opportunities for Management include focusing on finding ways to get our products out to our customers in a timelier manner. One way we are doing this is by looking into more automation. Challenges facing Management include obtaining certain raw materials and the increased costs of most raw materials because of inflation. The Company also struggles to get enough workers to fill production needs. Our Security sales division, which is our largest sales generator, is directly tied to the housing industry and we normally experience the same fluctuations. We are always researching and developing new products that will help our sales increase. There were a few new or improved products that were successfully launched in fiscal year 2023, and we are confident that more new products will be released soon, and we are searching for products that complement our current offerings. Management is always open to the possibility of acquiring a business or product line that would complement our existing operations. Due to the Company’s strong cash position, management believes this could be achieved without the need for outside financing. The intent is to utilize the equipment, marketing techniques and established customers to deliver new products and increase sales and profits.
New product development
The GRI Engineering department continues to develop enhancements to our existing products as well as to develop new products that will continue to secure our position in the industry.
Explosion proof contacts that will be UL listed for hazardous locations are in development. There has been demand from our customers for this type of high security magnetic reed switch.
The Company is developing magnetic contacts which are listed under UL 634 Level 2. These sensors are for high security applications such as government buildings, military use, nuclear facilities, and financial institutions.
Research is being done on updating our small profile glass break detector, in addition to looking at development of programmable temperature and humidity sensors with built-in hysteresis.
Wireless technology is a main area of focus for product development. We are considering adding wireless technology to some of our current products. A wireless contact switch is in the final stages of development. Also, we are working on wireless versions of monitoring devices which include glass break detection, tilt sensing and environmental monitoring. A redesign of our brass water valve shut-off system is near completion.
Critical Accounting Policies
The discussion and analysis of the financial condition and results of operations are based upon the financial statements, which have been prepared in conformity with generally accepted accounting principles in the United States. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses reported in those financial statements. These judgments can be subjective and complex, and consequently actual results could differ from those estimates. The most critical accounting policies relate to accounts receivable; marketable securities; inventory; income taxes; and segment reporting.
Accounts receivable-Accounts receivable are customer obligations due under normal trade terms. The Company sells its products to security alarm distributors, alarm installers, and original equipment manufacturers. Management performs continuing credit evaluations of its customers’ financial condition and the Company generally does not require collateral.
The Company records an allowance for credit losses based on an analysis of specifically identified customer balances. The Company has a limited number of customers with individually large amounts due at any given date. Any unanticipated change in any one of these customers’ credit worthiness or other matters affecting the collectability of amounts due from such customers could have a material effect on the results of operations in the period in which such changes or events occur. After all attempts to collect a receivable have failed, the receivable is written off.
Marketable securities-The Company has investments in publicly traded equity securities, state and municipal debt securities, and real-estate investment trusts (REITs). The investments in securities are reported at fair value. The Company uses the average cost method to determine the cost of securities sold and any unrealized gains or losses on equity securities are reported in the respective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity. Dividend and interest income are reported as earned.
In accordance with the Generally Accepted Accounting Principles in the United States (US GAAP), the Company evaluates all marketable securities for other-than temporary declines in fair value. When the cost basis exceeds the fair market value for approximately one year, management evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized loss position. When it is determined that a security will likely remain impaired, a recognized loss is booked and the investment is written down to its new fair value. The investments are periodically evaluated to determine if impairment changes are required.
Inventories-Inventories are valued at the lower of cost or net realizable value. Costs are determined using the average cost-pricing method. The Company uses actual costs to price its manufactured inventories, approximating average costs. The reported net value of inventory includes finished saleable products, work-in-process and raw materials that will be sold or used in future periods. Inventory costs include raw materials, direct labor and overhead. The Company’s overhead expenses are applied, based in part, upon estimates of the proportion of those expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products. These proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and approximations and actual results could differ from those estimates.
In addition, the Company records an inventory obsolescence reserve, which represents the cost of the inventory that has had no movement in over two years. There is inherent professional judgment and subjectivity made by management in determining the estimated obsolescence percentage. In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events.
Income Taxes-US GAAP requires use of the assets and liability method; whereby current and deferred tax assets and liabilities are determined based on tax rates and laws enacted as of the balance sheet date. Deferred tax expense represents the change in the deferred tax asset/liability balances.
Segment Reporting and Related Information-The Company designates the internal organization that is used by management for allocating resources and assessing performance as the source of the Company’s reportable segments. US GAAP also requires disclosures about products and services, geographic area, and major customers.
Related Party Transactions - One of the directors of the board, Joel Wiens, is the principal shareholder of FirsTier Bank. FirsTier Bank is the financial institution the Company uses for its day-to-day banking operations. Year end balances of accounts held at this bank are $4,637,000 for the year ended April 30, 2023 and $5,058,000 for the year ended April 30, 2022. The Company also received interest income from FirsTier Bank in the amount of approximately $102,700 for the fiscal year ended April 30, 2023 and approximately $58,800 was received for the fiscal year ended April 30, 2022.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8 Financial Statements
George Risk Industries, Inc.
Page
Report of Independent Registered Public Accounting Firm
Balance Sheets-April 30, 2023 and 2022
Statements of Income For the Years Ended April 30, 2023 and 2022
Statements of Comprehensive Income For the Years Ended April 30, 2023 and 2022
Statements of Changes in Stockholders’ Equity For the Years Ended April 30, 2023 and 2022
Statements of Cash Flows For the Years Ended April 30, 2023 and 2022
Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of George Risk Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of George Risk Industries, Inc. (the Company) as of April 30, 2023 and 2022, and the related statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the two-year period ended April 30, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended April 30, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Critical Audit Matter - Revenue Recognition - Refer to Note 1 of the Financial Statements
Critical Audit Matter Description
The Company primarily generates revenue through non-complex sales transactions that require limited judgement. However, there are instances in which revenue contracts contain complexities that are subject to critical judgment around when the performance obligation is satisfied. These specific elements of revenue are variable considerations, returns and allowances.
Consideration in contracts with customers is variable due to anticipated reductions such as discounts, rebates, and allowances. Accordingly, revenues are recorded net of estimated variable consideration, returns and allowances, based on known or expected values.
This matter was considered a critical audit matter as there is a high degree of auditor effort in performing procedures and evaluation of audit evidence related to contractual terms in customer arrangements to determine the amounts of consideration.
How the Critical Audit Matter was Addressed in the Audit
Our principal procedures related to the Company’s revenue recognition for these specific elements are the following:
● We evaluated management’s significant accounting policies related to various elements of revenue recognition.
● We performed analytical procedures to test the reasonableness of recorded balances.
● For a sample of transactions, we inspected source documents, including customer contracts or purchase orders, third-party shipping information, invoices, and relevant communication.
● Evaluated contractual terms in customer arrangements that impact management determination of the variable consideration related to the productions and related recognition of revenue on a sample basis.
Critical Audit Matter - Valuation of Investments - Refer to Note 1 and Note 3 of the Financial Statements
Critical Audit Matter Description
The company has investments in publicly traded equity securities, state and municipal debt securities, REITS, and money markets and they are recorded at fair value. Some of these investments are Level 2 investments and can be hard to value. In addition, as the securities held at fair value, management must assess securities that are in a significant unrealized loss position for other than temporary impairment. For these securities, management must make difficult and subjective judgements about the ability of the issuer to be able to meet its obligations under terms of the security. These judgements can have a significant impact on the Company’s reported earnings if they should prove to be significantly inaccurate.
How the Critical Audit Matter was Addressed in the Audit
Our principal procedures related to the Company’s process for debt securities valuations as well as the process for equity securities other than temporary impairment evaluation included are the following:
● We evaluated management’s significant accounting policies related to the identification of other than temporary impairment.
● Valuation specialists, with specialized skills and knowledge, were involved in the assessment of the fair values for a sample of Level 2 investments.
● We performed testing over a sample of securities to determine if conclusions reached by management regarding other than temporary impairment were appropriate.
/s/ Haynie and Company
We have served as the Company’s auditor since 1992.
Littleton, CO
Firm ID 457
July 31, 2023
George Risk Industries, Inc.
Balance Sheets
As of April 30, 2023 and 2022
ASSETS
Current Assets:
Cash and cash equivalents $ 4,943,000 $ 6,078,000
Investments and securities 31,363,000 30,979,000
Accounts receivable:
Trade, net of allowance for credit losses of $17,922 and $33,531 for 2023 and 2022, respectively 3,503,000 4,114,000
Other 59,000 16,000
Income tax overpayment 403,000 -
Inventories, net 11,443,000 7,940,000
Prepaid expenses 651,000 1,362,000
Total Current Assets 52,365,000 50,489,000
Property and Equipment, at cost, net 1,997,000 1,782,000
Other Assets
Investment in Limited Land Partnership, at cost 344,000 344,000
Projects in process 83,000 83,000
Other 13,000 62,000
Total Other Assets 440,000 489,000
Intangible Assets, net 1,149,000 1,271,000
TOTAL ASSETS $ 55,951,000 $ 54,031,000
The accompanying notes are an integral part of these financial statements.
George Risk Industries, Inc.
Balance Sheets (Continued)
As of April 30, 2023 and 2022
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable, trade $ 546,000 $ 320,000
Dividends payable 2,565,000 2,296,000
Deferred income 43,000 -
Accrued expenses 421,000 354,000
Income tax payable - 277,000
Total Current Liabilities 3,575,000 3,247,000
Long-Term Liabilities
Deferred income taxes 1,727,000 1,742,000
Total Long-Term Liabilities 1,727,000 1,742,000
Total Liabilities 5,302,000 4,989,000
Commitments and Contingencies - -
Stockholders’ Equity
Convertible preferred stock, 1,000,000 shares authorized, Series 1-noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,934,000 1,934,000
Accumulated other comprehensive income (loss) (161,000 ) (137,000 )
Retained earnings 52,481,000 50,843,000
Less: treasury stock, 3,572,338 and 3,571,693 shares, at cost (4,554,000 ) (4,547,000 )
Total Stockholders’ Equity 50,649,000 49,042,000
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY $ 55,951,000 $ 54,031,000
The accompanying notes are an integral part of these financial statements.
George Risk Industries, Inc.
Income Statements
For the years ended April 30, 2023 and 2022
Year ended Year ended
April 30, 2023 April 30, 2022
Net Sales $ 19,979,000 $ 20,735,000
Less: Cost of Goods Sold (10,605,000 ) (10,720,000 )
Gross Profit 9,374,000 10,015,000
Operating Expenses:
General and Administrative 1,380,000 1,426,000
Selling 2,836,000 2,857,000
Engineering 98,000 84,000
Total Operating Expenses 4,314,000 4,367,000
Income From Operations 5,060,000 5,648,000
Other Income (Expense)
Other Income 6,000 16,000
Dividend and Interest Income 1,068,000 1,027,000
Unrealized (Loss) on Equity Securities (31,000 ) (2,764,000 )
Gain (Loss) on Sale of Investment (291,000 ) 414,000
Gain on Sale of Assets 3,000 -
Total Other Income (Expense) 755,000 (1,307,000 )
Income Before Provisions for Income Taxes 5,815,000 4,341,000
Provisions for Income Taxes
Current Expense 1,226,000 1,669,000
Deferred tax (benefit) (168,000 ) (894,000 )
Total Income Tax Expense 1,058,000 775,000
Net Income $ 4,757,000 $ 3,566,000
Earnings Per Share of Common Stock
Basic $ 0.96 $ 0.72
Diluted $ 0.96 $ 0.72
Weighted Average Number of Common Shares Outstanding (Basic) 4,930,835 4,941,825
Weighted Average Number of Common Shares Outstanding (Diluted) 4,951,335 4,962,325
The accompanying notes are an integral part of these financial statements.
George Risk Industries, Inc.
Statements of Comprehensive Income
For the years ended April 30, 2023 and 2022
Year ended Year ended
April 30, 2023 April 30, 2022
Net Income $ 4,757,000 $ 3,566,000
Other Comprehensive (Loss), Net of Tax
Unrealized (loss) on debt securities:
Unrealized holding (losses) arising during period (33,000 ) (344,000 )
Income tax benefit related to other comprehensive income 9,000 99,000
Other Comprehensive (Loss) (24,000 ) (245,000 )
Comprehensive Income $ 4,733,000 $ 3,321,000
The accompanying notes are an integral part of these financial statements.
George Risk Industries, Inc.
Statements of Stockholders’ Equity
For the Years Ended April 30, 2023 and 2022
Preferred Stock Common Stock
Class A
Shares Amount Shares Amount
Balances, April 30, 2021 4,100 $ 99,000 8,502,881 $ 850,000
Purchases of common stock - - - -
Dividend declared at $0.50 per common share outstanding - - - -
Unrealized gain (loss), net of tax effect - - - -
Net Income - - - -
Balances, April 30, 2022 4,100 99,000 8,502,881 850,000
Balances 4,100 99,000 8,502,881 850,000
Prior period adjustment for provisions related to depreciation - - - -
Purchases of common stock - - - -
Dividend declared at $0.60 per common share outstanding
Unrealized gain (loss), net of tax effect - - - -
Net Income - - - -
Balance, April 30, 2023 4,100 $ 99,000 8,502,881 $ 850,000
Balance 4,100 $ 99,000 8,502,881 $ 850,000
The accompanying notes are an integral part of these financial statements.
George Risk Industries, Inc.
Statements of Stockholders’ Equity
For the Years Ended April 30, 2023 and 2022
Paid-In
Treasury Stock (Common Class A) Accumulated Other
Comprehensive
Retained
Capital
Shares Amount
Income (Loss)
Earnings
Total
Balances, April 30, 2021 $ 1,934,000 3,556,412 $ (4,336,000 ) $ 108,000 $ 49,749,000 $ 48,404,000
Purchases of common stock - 15,281 (211,000 ) - - (211,000 )
Dividend declared at $0.50 per common share outstanding - - - - (2,472,000 ) (2,472,000 )
Unrealized gain (loss), net of tax effect - - - (245,000 ) - (245,000 )
Net Income - - - - 3,566,000 3,566,000
Balances, April 30, 2022 1,934,000 3,571,693 (4,547,000 ) (137,000 ) 50,843,000 49,042,000
Balances 1,934,000 3,571,693 (4,547,000 ) (137,000 ) 50,843,000 49,042,000
Prior period adjustment for provisions related to depreciation - - - - (161,000 ) (161,000 )
Purchases of common stock - (7,000 ) - - (7,000 )
Dividend declared at $0.60 per common share outstanding - - - - (2,958,000 ) (2,958,000 )
Unrealized gain (loss), net of tax effect - - - (24,000 ) - (24,000 )
Net Income - - - - 4,757,000 4,757,000
Balance, April 30, 2023 $ 1,934,000 3,572,338 $ (4,554,000 ) $ (161,000 ) $ 52,481,000 $ 50,649,000
Balance $ 1,934,000 3,572,338 $ (4,554,000 ) $ (161,000 ) $ 52,481,000 $ 50,649,000
The accompanying notes are an integral part of these financial statements.
George Risk Industries, Inc.
Statements of Cash Flows
Year ended Year ended
April 30, 2023 April 30, 2022
Cash Flows From Operating Activities:
Net Income $ 4,757,000 $ 3,566,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 445,000 435,000
Realized (gain) loss on sale of investments 224,000 (414,000 )
Impairment on investments 67,000 -
Unrealized loss on equity securities 31,000 2,764,000
Provision for credit losses on accounts receivable (16,000 ) 24,000
Reserve for obsolete inventory 100,000 113,000
(Gain) on sale of assets (3,000 ) -
Deferred income taxes (167,000 ) (894,000 )
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 627,000 (326,000 )
Inventories (3,604,000 ) (2,430,000 )
Prepaid expenses 761,000 (903,000 )
Other receivables (43,000 ) -
Income tax overpayment (680,000 ) -
Increase (decrease) in:
Accounts payable 226,000 (157,000 )
Accrued expenses 111,000 (5,000 )
Income tax payable - 196,000
Net cash from operating activities 2,836,000 1,969,000
Cash Flows From Investing Activities:
Proceeds from sale of assets 12,000 -
(Purchase) of property and equipment (548,000 ) (390,000 )
Proceeds from sale of marketable securities 25,000 452,000
(Purchase) of marketable securities (764,000 ) (787,000 )
(Purchase) of long-term investment - (24,000 )
Net cash from investing activities (1,275,000 ) (749,000 )
Cash Flows From Financing Activities:
(Purchase) of treasury stock (7,000 ) (211,000 )
Dividends paid (2,689,000 ) (2,257,000 )
Net cash from financing activities (2,696,000 ) (2,468,000 )
Net Change in Cash and Cash Equivalents (1,135,000 ) (1,248,000 )
Cash and Cash Equivalents, beginning of year 6,078,000 7,326,000
Cash and Cash Equivalents, end of year $ 4,943,000 $ 6,078,000
Supplemental Disclosure for Cash Flow Information:
Cash payments for:
Income taxes paid $ 2,070,000 $ 1,575,000
Interest expense - -
Cash receipts for:
Income taxes $ 176,000 $ 114,000
The accompanying notes are an integral part of these financial statements.
George Risk Industries, Inc.
Notes to Financial Statements
April 30, 2023
1. Nature of Business and Summary of Significant Accounting Policies
George Risk Industries, Inc. (GRI or the Company) was incorporated in 1967 in Colorado. The Company is presently engaged in the design, manufacture, and sale of custom computer keyboards, proximity switches, security alarm components and systems, pool access alarms, EZ Duct wire covers, water sensors, electronic switching devices, high security switches, and wire and cable installation tools.
Nature of Business - The Company is engaged in the design, manufacture, and marketing of custom computer keyboards, proximity sensors, security alarm components, pool access alarms, liquid detection sensors, raceway wire covers, wire and cable installation tools and various other sensors and devices.
Cash and Cash Equivalents - The Company considers all investments with a maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.
Accounts Receivable and Allowance for Estimated Credit Losses - Accounts receivable are customer obligations due under normal trade terms. The Company sells its products to security alarm distributors, alarm installers, and original equipment manufacturers. The Company extends credit to its customers based on their credit worthiness and performs continuing credit evaluations of its customers’ financial condition. If the Company believes the extension of credit is not advisable, other payment methods such as prepayments are required. Balances deemed uncollectible by the Company are written off against our allowance for credit loss accounts.
The Company maintains an allowance for estimated credit losses related to accounts receivable for future expected credit losses resulting from the inability or unwillingness of our customers to make required payments. We estimate our allowance for credit losses based on relevant information such as historical experience, current conditions, and future expectation of specifically identified customer balances. This allowance is adjusted as appropriate to reflect current conditions. The Company has recorded an allowance for estimated credit losses of $17,922 for the year ended April 30, 2023 and $33,531 for the year ended April 30, 2022 For the fiscal year ended April 30, 2023, the provision for credit losses on accounts receivable was a credit of $17,171 compared to an expense of $24,199 for the fiscal year ended April 30, 2022.
Concentrations of Credit Risk - The Company has a limited number of customers with individually substantial amounts due at any given date. Any unanticipated change in any one of these customers’ credit worthiness or other matters affecting the collectability of amounts due from such customers could have a material effect on the results of operations in the period in which such changes or events occur.
Inventories - Inventories are stated at the lower of cost or net realized value. Cost is determined using the average cost-pricing method. The Company uses actual costs to price its manufactured inventories, approximating average costs.
1. Nature of Business and Summary of Significant Accounting Policies, continued
Property and Equipment - Property and equipment are recorded at cost. Depreciation is calculated based on the following estimated useful lives using the straight-line method:
Schedule of Property and Equipment
Classification Useful Life
in Years
Cost
Cost
Dies, jigs, and molds 3-7 $ 1,871,000 $ 1,855,000
Machinery and equipment 5-10 2,632,000 2,224,000
Furniture and fixtures 5-10 222,000 222,000
Improvements 5-32 605,000 541,000
Buildings 20-39 1,151,000 1,151,000
Automotive 3-5 126,000 110,000
Software 2-5 425,000 425,000
Land N/A 80,000 80,000
Total
7,112,000 6,608,000
Property and equipment, gross
7,112,000 6,608,000
Accumulated depreciation
(5,115,000 ) (4,826,000 )
Property and equipment, net
$ 1,997,000 $ 1,782,000
Depreciation expense of $323,000 and $312,000 was charged to operations for the years ended April 30, 2023 and 2022, respectively.
Maintenance and repairs are charged to expense as incurred, and expenditures for major improvements are capitalized. When assets are retired or otherwise disposed of, the property accounts are relieved of costs and accumulated depreciation and any resulting gain or loss is credited or charged to operations.
Investment in Limited Land Partnership - In November 2002, the Company purchased 6.67% of a prime 22-acre land parcel for development in Winter Park-Grand County, CO for investment purposes for a total of $200,000. The goal was to hold the property for resale(s) in 2-5 years, but many efforts to sell the property have not materialized. Over the years, there has been a total of $144,000 of additional contributions to aid in improvements and recurring expenses such as debt service, utilities, taxes, maintenance, insurance, and professional fees. Management has evaluated this investment and does not believe there is any impairment and that the full cost will be recovered when sold.
Intangible Assets - Intangible assets are amortized on a straight-line basis over their estimated useful lives, unless it is determined their lives to be indefinite. The intangible asset currently being amortized is intellectual property with a useful life of 15 years. As of April 30, 2023 the Company had $1,149,000 of net intangible asset costs, while the net intangible assets costs at April 30, 2022 were $1,271,000. Amortization expense was $122,000 for the year ended April 30, 2023 and $123,000 for the year ended April 30, 2022, respectively.
1. Nature of Business and Summary of Significant Accounting Policies, continued
As of April 30, 2023, future amortization of intangible assets is expected as follows:
Schedule of Future Amortization of Intangible Assets
Fiscal year end Amortization amount
$ 121,000
$ 121,000
$ 121,000
$ 121,000
$ 121,000
Thereafter $ 544,000
Total $ 1,149,000
Basic and Diluted Earnings per Share - The Company computes earnings per share in accordance with Accounting Standards Codification (“ASC”) 260-10-45 Earnings per Share, which requires presentation of both basic and diluted earnings per share on the face of the statement of income. Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings per share excludes all potential common shares if their effect is anti-dilutive.
Advertising - Advertising costs are expensed as incurred and are included in selling expenses. Advertising expense amounted to $105,000 and $162,000 for the years ended April 30, 2023 and 2022, respectively.
Income Taxes - Deferred tax assets and liabilities are recorded for the future consequences of events that have been recognized in the Company’s financial statements or tax returns. Measurement of the deferred tax items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and tax bases of the Company’s assets or liabilities result in a deferred tax asset, we evaluate the probability of realizing the future benefits comprising that asset and record a valuation allowance if considered necessary.
Accounting standards prescribe a recognition threshold and a measurement attribute for the financial statement recognition and measurement of the positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. A “more likely than not” tax position is measured as the largest amount of benefit that is greater than a fifty percent likelihood of being realized upon ultimate settlement, or else a full reserve is established against the tax asset or a liability is recorded. The Internal Revenue Service (“IRS”) may generally access additional income tax records for the most recent three years. This would generally prevent the IRS from opening an examination for years ending on or before April 30, 2019. However, there are exceptions that can extend the statute of limitations to six years, and in some cases, prevent the statute of limitations from ever expiring. Interest and penalties accrued on uncertain tax positions are recorded as income tax expense.
1. Nature of Business and Summary of Significant Accounting Policies, continued
It has been determined that the Company does not have uncertain tax positions on its tax returns for the years 2022, 2021, and prior. Based on evaluation of the 2023 transactions and events, the Company does not have any material uncertain tax positions that require measurement.
Accounting Estimates - The preparation of these financial statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts.
Fair Value of Financial Instruments - Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows. Other financial instruments, including cash equivalents, certain investments and short-term debt, are recorded at cost, which approximates fair value. The fair values of long-term debt and financial instruments are disclosed in Note 11.
Investments - The accounting policies for the Company’s principal investments are as follows: Debt Securities and Equity Securities: Effective May 1, 2018, the Company adopted Accounting Standards Update 2016-01 “Financial Instruments-Overall (ASC Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. As a result, the Company measures its equity securities at fair value and recognizes any changes in fair value in net income. Prior to adoption, equity securities were designated as available-for-sale and reported at fair value with unrealized capital gains (losses) recorded in Accumulated other comprehensive income (loss) (“AOCI”). The Company’s debt securities are currently designated as available-for-sale. Available-for-sale securities are reported at fair value and unrealized capital gains (losses) on these securities are recorded directly in AOCI and presented, net of related changes, in deferred income taxes. Purchases and sales of debt securities and equity securities are recorded on the trade date. Investment gains and losses on sales of securities are generally determined on a first-in-first-out (“FIFO”) basis.
The Company evaluates all marketable securities for other-than temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required.
Revenue Recognition -The Company accounts for revenue using the guidance provided by ASC 606, “Revenue from Contracts with Customers.” The Company recognizes product revenue using a five-step approach to determine the amount and timing of revenue to be recognized. The five-step approach requires (1) identifying the contract with the customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when performance obligations are satisfied. The Company recognizes revenue for product sales upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery or that services have been rendered. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Payments received from customers in advance of product shipment or revenue recognition are treated as deferred revenues and recognized when the product is shipped.
1. Nature of Business and Summary of Significant Accounting Policies, continued
Variable Consideration - The Company measures revenue as the amount of consideration for which it expects to be entitled in exchange for transferring goods. Certain customers may receive cash and/or non-cash incentives such as cash rebates, customer discounts (such as volume or trade discounts), which are accounted for as variable consideration. In some cases, the Company must apply judgment, including contractual rates and historical payment trends, when estimating variable consideration.
Product Returns - In the normal course of business, the Company may allow customers to return product per the provisions in a sale agreement. Estimated product returns are recorded as a reduction in reported revenues with offsetting entries recorded in the balance sheet quarterly based upon historical product return experience, adjusted for known trends, to arrive at the amount of consideration expected to receive.
Product Warranties - In the normal course of business, the Company offers warranties for a variety of its products. The specific terms and conditions of the warranties vary depending upon the specific product and markets in which the products were sold. The Company accrues for the estimated cost of product warranty at the time of sale based on historical experience.
Shipping and Handling Costs - The Company considers all shipping and handling to be fulfillment activities and not a separate performance obligation. Shipping and handling costs are recorded as cost of sales.
Research and Development Costs - Generally, costs related to the research, design, and development of products are charged to engineering expense as incurred. Certain research and development costs are recognized under assets in the balance sheet.
Comprehensive Income - US GAAP requires disclosure of total non-stockholder changes in equity in interim periods and additional disclosures of the components of non-stockholder changes in equity on an annual basis. Total non-stockholder changes in equity include all changes in equity during a period except those resulting from fiscal investments by and distributions to stockholders.
Segment Reporting and Related Information - The Company designates the internal organization that is used by management for allocating resources and assessing performance as the source of the Company’s reportable segments. US GAAP also requires disclosures about products and services, geographic area and major customers. At April 30, 2023, the Company operated in three segments organized by security line products, cable and wiring tools (Labor Saving Devices - LSDI) products, and all other products. See Note 9 for further segment information disclosures.
Prior Period Financial Statement Adjustment - In connection with the preparation of our financial statements, we identified an immaterial misstatement to our financial statements in the Company’s fiscal year end 2022 Annual Report. The misstatement is related to a difference in deferred taxes on depreciation for a few years and up through the year ended April 30, 2022. In accordance with Staff Accounting Bulletins No. 99 (“SAB No. 99”) Topic 1.M, “Materiality” and SAB No. 99 Topic 1.N “Considering the Effects of Misstatements when Quantifying Misstatements in the Current Year Financial Statements,” we evaluated the misstatement and determined that the related impact was not consequential to our financial statements for any annual or interim period for fiscal 2022, any other prior period, nor would the cumulative impact of correcting the misstatement be consequential to our results of operations and equity for the fiscal and interim periods of 2023.
Recently Issued Accounting Pronouncements - There are no new accounting pronouncements that are expected to have a significant impact on our financial statements.
Subsequent Events - Management has evaluated all events or transactions that occurred after April 30, 2023 and through the date of this report. During this period, the Company received news about its investment in the limited land partnership. The sale of this property (called Idlewild) closed on June 30, 2023. Disbursement of the sale proceeds are contingent on finishing wetland restoration of the land. The limited land partnership intends to start making periodic distributions of the net proceeds of the sale in January 2024.
2. Inventories
Inventories at April 30, 2023 and 2022, consisted of the following:
Schedule of Inventories
Raw materials $ 9,886,000 $ 6,772,000
Work in process 678,000 618,000
Finished goods 1,267,000 838,000
Inventory gross 11,831,000 8,228,000
Less: allowance for obsolete inventory (388,000 ) (288,000 )
Inventories, net $ 11,443,000 $ 7,940,000
3. Investments
The Company has investments in publicly traded equity securities, state and municipal debt securities, REITs, and money markets and they are recorded at fair value. The investments in debt securities, which include municipal bonds and bond funds, mature between August 2023 and September 2042. The Company uses the average cost method to determine the cost of equity securities sold with any unrealized gains or losses reported in the respective period’s earnings. Dividend and interest income are reported as earned.
As of April 30, 2023 and 2022, investments consisted of the following:
Schedule of Investments
Gross Gross
Investments at Cost Unrealized Unrealized Reported
April 30, Basis Gains Losses Value
Municipal bonds $ 5,396,000 $ 46,000 $ (230,000 ) $ 5,212,000
REITs $ 93,000 $ - $ (22,000 ) $ 71,000
Equity securities $ 18,605,000 $ 6,915,000 $ (501,000 ) $ 25,019,000
Money Markets and CDs $ 1,060,000 $ 1,000 $ - $ 1,061,000
Total $ 25,154,000 $ 6,962,000 $ (753,000 ) $ 31,363,000
Gross Gross
Investments at Cost Unrealized Unrealized Reported
April 30, Basis Gains Losses Value
Municipal bonds $ 5,625,000 $ 41,000 $ (229,000 ) $ 5,437,000
REITs $ 131,000 $ 16,000 $ (3,000 ) $ 144,000
Equity securities $ 18,322,000 $ 6,921,000 $ (473,000 ) $ 24,770,000
Money Markets and CDs $ 628,000 $ - $ - $ 628,000
Total $ 24,706,000 $ 6,978,000 $ (705,000 ) $ 30,979,000
Marketable securities that are classified as equity securities are carried at fair value on the balance sheets with changes in fair value recorded as an unrealized gain or (loss) in the statements of income in the period of the change. Upon the disposition of a marketable security, the Company records a realized gain or (loss) on the Company’s statements of income.
The Company evaluates all investments for other-than temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When other than a temporary decline is identified, the Company will decrease the cost of the investment to the new fair value and recognize a loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, management recorded an impairment loss of $67,000 for the year ended April 30, 2023, but did not have to record any impairment losses for the year ended April 30, 2022.
The Company’s investments are actively traded in the stock and bond markets. Therefore, there is either a realized gain or loss that is recorded when a sale happens. For the fiscal year ended April 30, 2023 the Company had sales of equity securities which yielded gross realized gains of $512,000 and gross realized losses of $740,000. For the same period, there were not any sales of debt securities for gross realized gains, but sales of debt securities yielded gross realized losses of $63,000. Conversely, the Company recorded gross realized gains on equity securities of $661,000 and gross realized losses of $221,000 for the fiscal year ending April 30, 2022. As for debt securities, there were not any sales of debt securities for gross realized gains, but sales of debt securities yielded gross realized losses of $26,000 for the fiscal year ending April 30, 2022. The gross realized loss numbers include the impaired figures listed in the previous paragraph. Additionally, proceeds from sales of securities available for sale were $25,000 for the fiscal year ended April 30, 2023 and were $452,000 for the prior fiscal year.
3. Investments, continued
The following table shows the investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at April 30, 2023 and 2022.
Unrealized Loss Breakdown by Investment Type at April 30, 2023
Schedule of Unrealized Loss Breakdown by Investment
Less than 12 months months or greater Total
Description Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
Municipal bonds $ 868,000 $ (6,000 ) $ 3,769,000 $ (224,000 ) $ 4,637,000 $ (230,000 )
REITs $ 36,000 $ (9,000 ) $ 35,000 $ (13,000 ) $ 71,000 $ (22,000 )
Equity securities $ 3,048,000 $ (140,000 ) $ 2,209,000 $ (361,000 ) $ 5,257,000 $ (501,000 )
Total $ 3,952,000 $ (155,000 ) $ 6,013,000 $ (598,000 ) $ 9,965,000 $ (753,000 )
Unrealized Loss Breakdown by Investment Type at April 30, 2022
Less than 12 months months or greater Total
Description Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
Municipal bonds $ 4,420,000 $ (142,000 ) $ 539,000 $ (87,000 ) $ 4,959,000 $ (229,000 )
REITs $ 18,000 $ (1,000 ) $ 26,000 $ (2,000 ) $ 44,000 $ (3,000 )
Equity securities $ 4,157,000 $ (424,000 ) $ 274,000 $ (49,000 ) $ 4,431,000 $ (473,000 )
Total $ 8,595,000 $ (567,000 ) $ 839,000 $ (138,000 ) $ 9,434,000 $ (705,000 )
Municipal Bonds
The unrealized losses on the Company’s investments in municipal bonds were caused by interest rate increases. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company has the ability to hold these investments until a recovery of fair value occurs, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at April 30, 2023 and 2022.
Marketable Equity Securities and REITs
The Company’s investments in marketable equity securities and REITs consist of a wide variety of companies. Investments in these companies include growth, growth income, and foreign investment objectives. Management has evaluated the individual holdings and does not consider these investments to be other-than-temporarily impaired at April 30, 2023 and 2022.
4. Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc. Retirement Savings Plan (the “Plan”). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the Company. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is funded by voluntary pre-tax and Roth (taxable) contributions from eligible employees who may contribute a percentage of their eligible compensation, limited and subject to statutory limits. Employees are eligible to participate in the Plan when they have attained the age of 21 and completed one thousand hours of service in any plan year with the Company. Upon leaving the Company, each participant is 100% vested with respect to the participants’ contributions while the Company’s matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions of approximately $58,000 and $63,000 were paid in each of the fiscal years ending April 30, 2023 and 2022, respectively.
5. Stockholders’ Equity
Preferred Stock-Each share of the Series #1 preferred stock is convertible at the option of the holder into five shares of Class A common stock and is also redeemable at the option of the board of directors at $20 per share. The holders of the convertible preferred stock shall be entitled to a dividend at a rate up to $1 per share annually, payable quarterly as declared by the board of directors. No dividends were declared or paid during the two years ended April 30, 2023 and 2022.
Convertible preferred stock without par value may be issued from time to time as determined by the board of directors. Shares of different series shall be of equal rank but may vary as to terms and conditions.
Class A Common Stock-The holders of the Class A common stock are entitled to receive dividends as declared by the board of directors. No dividends may be paid on the Class A common stock until the holders of the Series #1 preferred stock have been paid. A dividend for the four prior quarters and provision has been made for the full dividend in the current fiscal year.
During the fiscal year ended April 30, 2023, the Company purchased 645 shares of Class A common stock. This was initiated by stockholders contacting the Company.
Stock Transfer Agent-The Company does not have an independent stock transfer agent. The Company maintains all stock records.
6. Earnings Per Share
Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented are:
Schedule of Basic and Diluted Earnings Per Share
April 30, 2023
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net income $ 4,757,000
Basic EPS $ 4,757,000 4,930,835 $ 0.96
Effect of dilutive Convertible Preferred Stock - 20,500 -
Diluted EPS $ 4,757,000 4,951,335 $ 0.96
April 30, 2022
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net income $ 3,566,000
Basic EPS $ 3,566,000 4,941,825 $ 0.72
Effect of dilutive Convertible Preferred Stock - 20,500 -
Diluted EPS $ 3,566,000 4,962,325 $ 0.72
7. Commitments, Contingencies, and Related Party Transactions
One of the directors of the board, Joel Wiens, is the principal shareholder of FirsTier Bank. FirsTier Bank is the financial institution the Company uses for its day-to-day banking operations. Year end balances of accounts held at this bank are $4,637,000 for the year ended April 30, 2023 and $5,058,000 for the year ended April 30, 2022. The Company also received interest income from FirsTier Bank in the amount of approximately $102,700 for the year ended April 30, 2023 and $58,800 for the year ended April 30, 2022.
From time to time, the Company may be involved in litigation in the ordinary course of business. The Company is not currently involved in any litigation that we believe could have a material adverse effect on its financial condition or results of operations.
8. Income Taxes
The Company utilizes the liability method of accounting for income taxes. The liability method measures the expected income tax impact of future income and deductions implicit in the Balance Sheets. The income tax provision for the fiscal year ended April 30, 2023 and 2022 consisted of the following:
Schedule of Income Tax Provision
Year Ended April 30,
Current:
Federal $ 1,051,000 1,202,000
State 175,000 467,000
Deferred:
Federal (108,000 ) (652,000 )
State (60,000 ) (242,000 )
Total income tax provision $ 1,058,000 $ 775,000
Reconciliation of income taxes with Federal and State taxable income:
Schedule of Reconciliation of Income Taxes with Federal and State Taxable Income
Income before income taxes $ 5,815,000 $ 4,341,000
State income tax deduction (351,000 ) (477,000 )
Interest and dividend income (511,000 ) (524,000 )
Nondeductible expenses and timing differences (11,000 ) 3,120,000
Taxable income $ 4,942,000 $ 6,460,000
The following schedule reconciles the provision for income taxes to the amount computed by applying the statutory rate to income before income taxes:
Schedule of Statutory Rate to Income Before Income Taxes
Income tax provision at statutory rate $ 1,657,000 $ 1,251,000
Increase (decrease) income taxes resulting from:
State income taxes (100,000 ) (138,000 )
Interest and dividend income (146,000 ) (151,000 )
Deferred taxes (168,000 ) (894,000 )
Other temporary and permanent differences (185,000 ) 707,000
Income tax expense $ 1,058,000 $ 775,000
Federal tax rate 21.00 % 21.00 %
State tax rate 7.50 % 7.81 %
Blended statutory rate 28.50 % 28.81 %
Deferred tax assets (liabilities) consist of the following components at April 30, 2023 and 2022:
Summary of Deferred Tax Assets (Liabilities)
Deferred tax assets (liabilities):
Depreciation $ (276,000 ) $ (67,000 )
Capitalized R&D expense 165,000 $ -
Inventory valuation 111,000 83,000
Allowance for doubtful accounts 5,000 10,000
Accrued vacation 37,000 39,000
Accumulated unrealized (gain)/loss on investments (1,769,000 ) (1,807,000 )
Net deferred tax assets (liabilities) $ (1,727,000 ) $ (1,742,000 )
9. Business Segments
The following is financial information relating to industry segments:
Schedule of Financial Information Relating to Industry Segments
Quarter ended Year ended Year ended
April 30, April 30, April 30,
(Unaudited)
Net revenue:
Security alarm products $ 4,349,000 $ 17,428,000 $ 17,833,000
Cable & wiring tools 309,000 1,870,000 2,130,000
Other products 127,000 681,000 772,000
Total net revenue $ 4,785,000 $ 19,979,000 $ 20,735,000
Income from operations:
Security alarm products 1,031,000 4,414,000 4,858,000
Cable & wiring tools 111,000 474,000 580,000
Other products 40,000 172,000 210,000
Total income from operations $ 1,182,000 $ 5,060,000 $ 5,648,000
Depreciation and amortization:
Security alarm products 47,000 194,000 173,000
Cable & wiring tools 30,000 122,000 123,000
Other products 24,000 81,000 78,000
Corporate general 13,000 48,000 62,000
Total depreciation and amortization $ 114,000 $ 445,000 $ 436,000
Capital expenditures:
Security alarm products 162,000 237,000 366,000
Cable & wiring tools - - -
Other products 122,000 268,000 11,000
Corporate general 43,000 43,000 13,000
Total capital expenditures $ 327,000 $ 548,000 $ 390,000
April 30, 2023 April 30, 2022
Identifiable assets:
Security alarm products 14,251,000 11,537,000
Cable & wiring tools 2,548,000 2,509,000
Other products 981,000 732,000
Corporate general 38,171,000 39,253,000
Total assets $ 55,951,000 $ 54,031,000
10. Concentrations
The Company maintains the majority of its cash balance in a financial institution in Kimball, Nebraska. Accounts at this institution are insured by the Federal Deposit Insurance Corporation for up to $250,000. For the years ended April 30, 2023 and 2022, the Company had uninsured balances of $4,530,000, and $5,256,000, respectively. Management believes that this financial institution is financially sound and the risk of loss is minimal.
Management also has cash funds with Wells Fargo Bank with uninsured balances of $56,000 and $769,000 for the years ending April 30, 2023 and 2022, respectively. Management believes that this financial institution is financially sound and the risk of loss is minimal.
The Company has sales to a security alarm distributor representing 36% of total sales for the year ended April 30, 2023 and 35% of total sales for the year ended April 30, 2022. This distributor accounted for 44% and 50% of accounts receivable at April 30, 2023 and 2022, respectively.
Security switch sales made up 87% of total sales for the fiscal year ending April 30, 2023 and 86% of total sales for the fiscal year ending April 30, 2022.
11. Fair Value Measurements
The carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short-term nature. The fair value of our investments is determined utilizing market-based information. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The levels of the fair value hierarchy under US GAAP are described below:
Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
Investments and Marketable Securities
As of April 30, 2023 and 2022, The Company’s investments consisted of money markets, publicly traded equity securities, REITs as well as certain state and municipal bonds. The marketable securities are valued using third-party broker statements. The value of the majority of securities is derived from quoted market information. The inputs to the valuation are classified as Level 1 given the active market for these securities; however, if an active market does not exist, which is the case for municipal bonds and REITs; the inputs are recorded as Level 2.
Fair Value Hierarchy
The following tables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy. As required by US GAAP, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Schedule of Assets Measured at Fair Value on Recurring Basis
Level Level Level Total
Assets Measured at Fair Value on a Recurring
Basis as of April 30, 2023
Level Level Level Total
Assets:
Municipal Bonds - $ 5,212,000 - $ 5,212,000
REITs - $ 71,000 - $ 71,000
Equity Securities $ 25,019,000 - - $ 25,019,000
Money Markets and CDs $ 1,061,000 - - $ 1,061,000
Total fair value of assets measured on a recurring basis $ 26,080,000 $ 5,283,000 - $ 31,363,000
Level Level Level Total
Assets Measured at Fair Value on a Recurring
Basis as of April 30, 2022
Level Level Level Total
Assets:
Municipal Bonds - $ 5,437,000 - $ 5,437,000
REITs - $ 144,000 - $ 144,000
Equity Securities $ 24,770,000 - - $ 24,770,000
Money Markets and CDs $ 628,000 - - $ 628,000
Total fair value of assets measured on a recurring basis $ 25,398,000 $ 5,581,000 - $ 30,979,000

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9 Disagreements on Accounting and Financial Disclosures
There were no disagreements with accountants on accounting and financial disclosure.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A Controls and Procedures
Evaluation of disclosure controls and procedures:
Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of April 30, 2023 our president and chief executive officer (also working as our chief financial officer) has concluded that our disclosure controls and procedures are effective such that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and (ii) accumulated and communicated to our management, including our chief executive officer (also working as our chief financial officer), as appropriate to allow timely decisions regarding disclosure. A control system cannot provide absolute assurance, however, that the objectives of the control systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Internal control over financial reporting:
The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting for the Company. Due to limited resources, Management conducted an evaluation of internal controls based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The results of this evaluation determined that our internal control over financial reporting was ineffective for the years ended of April 30, 2023 and 2022, due to a material weakness. A material weakness in internal control over financial reporting is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.
Management’s assessment identified the following material weakness in internal control over financial reporting:
● The small size of our Company limits our ability to achieve the desired level of separation of duties for proper internal controls and financial reporting, particularly as it relates to financial reporting to assure material disclosures or implementation of newly issued accounting standards are included. A secondary review over annual and quarterly filings does occur with an outside party. A part-time Controller was hired in March 2023, but the current CEO and CFO roles are being fulfilled by the same individual. We do not have an audit committee. We do not believe we have met the full requirement for separation of duties for financial reporting purposes.
Because of the material weakness in internal control over financial reporting described above, the Company’s management has concluded that, as of April 30, 2023 and 2022, the Company’s internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by the COSO.
We will continue to follow the standards for the Public Company Accounting Oversight Board (United States) for internal control over financial reporting to include procedures that:
● Pertain to the maintenance of records in reasonable detail that fairly reflect the transactions and dispositions of the Company’s assets;
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and
● 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.
This annual report does not include an attestation report of the Corporation’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Corporation’s independent registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permit the Corporation to provide only the management’s report in this annual report.

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ITEM 9B. OTHER INFORMATION
Item 9B Other Information
None.
Part III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10 Directors and Executive Officers of the Registrant
(a & b) Identification of Directors and Executive Officers
All the executive officers of the corporation serve at the pleasure of the board of directors and do not have fixed terms.
The following information as of April 30, 2023, is furnished with respect to each director and executive officer:
Name
Principal Occupation or Employment
Age
Director or
Officer Since
Stephanie M. Risk-McElroy
Chairman of the Board, Chief Executive
Officer, and Chief Financial Officer
August 8,1999
Sharon Westby
Secretary/Treasurer
June 16, 2006
Donna Debowey
Director, retired GRI plant manager
July 12, 2005
Joel H. Wiens
Director, FirsTier Banks
September 6, 2007
Bonita P. Risk
Director, Stock Transfer Agent at GRI
March 15, 2013
Jerry Knutsen
Director, retired business owner
August 29, 2016
The following director compensation table is furnished with respect to each director that served during the year ended April 30, 2023:
Name Director’s Fees Paid Stock Awards Option Awards Non-equity incentive plan compen-sation Non-qualified deferred compensation earnings Total
Stephanie Risk-McElroy (1) - - - - - -
Sharon Westby (1) - - - - - -
Donna Debowey (2) $ 200 - - - - $ 200
Joel H. Wiens (2) - - - - - -
Bonita P. Risk (1) - - - - - -
Jerry Knutsen $ 200 - - - - $ 200
The inside directors (1), or employees of the Company, do not receive additional compensation for their services. Outside directors (2) are paid $200 per meeting for their services.
(c) Identification of Certain Significant Employees
None.
(d) Family Relationships
Stephanie Risk-McElroy and Bonita P. Risk have a daughter - mother relationship.
(e) Business Experience of Directors and Executive Officers
Stephanie Risk-McElroy, Chairman of the Board, Chief Executive Officer, and Chief Financial Officer, has over twenty-nine years of experience in the accounting field. Mrs. Risk-McElroy graduated from Hastings College with a degree in Accounting. Stephanie worked for Platte Valley Sales from May 1990 until January 1997 as a staff accountant. In 1997, she pursued her career with an accounting manager position at Kershner’s Auto Korner in Hastings, NE. She joined the accounting staff at GRI in 1999 and then was promoted to CFO upon retirement of the prior CFO. Upon the death of her father, Ken R. Risk, in February 2013, she was appointed to the position of Chairman of the Board and Chief Executive Officer.
Mrs. Risk-McElroy serves on the Board of Directors of GRI, as a direct link to the financial condition of the Company. She and her staff oversee all the accounting obligations of the Company. She has knowledge and experience in business outside of the Company that makes her an asset to the Board. And as President of the Company, she oversees all of the day-to-day operations as well.
Sharon Westby, the Corporate Secretary, worked at GRI right after high school for a couple of years as the personal secretary to the Founder of the Company, George Risk, who was President and CEO. Before she returned to the Company in 1982, Sharon was a Clerk Steno 1 at Jackson County Welfare in Kansas City, MO, worked in medical records at the Kimball County Hospital in Kimball, NE, and also managed motels in Texas and Nebraska. She is the Executive Assistant to the President and CEO and Sales Administrator of the Keyboard and Switch division of GRI.
Mrs. Westby continues in her position on the Board of Directors at GRI with over 37 years of experience with the Company. She has seen the Company through many years of ups and downs, has broad knowledge of her product line and is very customer oriented in trying to sell her products to the “non-security use” industry.
Donna Debowey, Director, worked in various retail stores and restaurants until she started at GRI in 1968. She started on the production line, but quickly worked her way up the ranks. She has been a Production Line Supervisor, Director of Quality Control and was named Plant Manager and Senior Vice President in 1998. She held that position until her retirement in 2003.
Mrs. Debowey made the transition from employee of GRI to a member of the Board of Directors with no hesitation after her retirement. She brings her 50+ years of experience in the industry to the table and has a vested interest in seeing the continued success of the Company that she helped to build.
Joel H. Wiens, Director, is an entrepreneur with many business interests. He is a director and principal shareholder of FirsTier Banks Nebraska/Wyoming, director of FirsTier II BanCorporation (which owns FirsTier Bank Nebraska/Wyoming), Chairman of Rite-A-Way Industries (lodging and hospitality industries), real estate investments, and ranching and livestock.
Mr. Wiens took his place on the Board of Directors when his predecessor Mike Nelson, (who is affiliated with Mr. Wiens’ financial institutions) retired from the Board to take another position within the banks and moved away. Joel’s knowledge and experience in business and industry span 60+ years and serves as a valuable asset to GRI.
Bonita P. Risk, Director, attended Wayne State College, in Wayne, Nebraska. Upon returning back home to Columbus, NE, she worked in factory positions. Upon her marriage to Ken Risk, she became a homemaker, raising 3 children and working at several sales positions. In 1981, she and Ken started Platte Valley Sales in Hastings, Nebraska, and her expertise was in accounting and sales. For 8 years, she ran the Hastings business while Ken devoted his time to both GRI in Kimball and Platte Valley Sales in Hastings. Ken and Bonita moved to Kimball in 1997. In 1998, she began at GRI in sales support. She continues in sales support and became the Company stock transfer agent in 2004 upon the retirement of Eileen Risk and is an assistant to the chief financial officer.
Jerry Knutsen, Director, has lived in Kimball, Nebraska most of his life. He left the community for a few years to attend the University of Nebraska at Lincoln. Before his retirement, Jerry owned and operated several businesses over his career, including Knutsen Oil, Inc., Marv’s LP Gas, Inc., and Jerry Knutsen, Inc., and he co-owned Kimball Ford-Lincoln-Mercury. He served 24 years and held several positions on the school board in Kimball, NE. Mr. Knutsen is a past member and president of The Nebraska Propane Gas Association and The Nebraska Petroleum Marketers & Convenience Store Association. Other boards he is presently serving on include the Kimball Schools Foundation Board of Directors and Kimball Health Services Board of Trustees.
(f) Involvement in Certain Legal Proceedings
None.
(g) Promoters and Control Persons
None.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.
Based solely on our review of copies of the Section 16(a) reports filed for the fiscal year ended April 30, 2023, we believe that all filing requirements applicable to our officers, directors, and greater than 10% beneficial owners were complied with.
Code of Ethics and Code of Business Conduct
The Company does not have a written code of ethics at this time. The Company is a small business and employees know that the President of the Company must approve all material business. The Company also has checks and balances to make sure that there is not any fraud or illegal activities taking place.
Corporate Governance
Nominating and Compensation Committees
We do not have standing nominating or compensation committees, or committees performing similar functions. Our Board of Directors believes that it is not necessary to have a standing compensation committee at this time because our Board of Directors adequately performs the functions of such committee.
Our Board of Directors also is of the view that it is appropriate for us not to have a standing nominating committee because our Board of Directors has performed and will perform adequately the functions of a nominating committee. Our Board of Directors has not adopted a charter for the nomination committee. There have not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. Our Board of Directors does not believe that a defined policy with regard to the consideration of candidates recommended by stockholders is necessary at this time because we believe that, given the early stages of our development, a specific nominating policy would be premature and of little assistance until our business operations are at a more advanced level.
Audit Committee
We do not have a standing audit committee at the present time. Our Board of Directors has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 401(h) of Regulation S-K, nor do we have a board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
Other Committees
All proceedings of our Board of Directors for the year ended April 30, 2023 were conducted by resolutions consented to in writing by our directors and filed with the minutes of the proceedings of the Board of Directors. Our Company currently does not have any committees.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11 Executive Compensation
The following table sets forth certain information regarding the compensation paid to or accrued by the Company to executive officers for services rendered in all capacities during each of the Company’s fiscal years ended April 30, 2023 and 2022.
Name and principal position Year Salary Bonus Stock Awards Option Awards Non-Equity Incentive Plan Compen-sation Change in Pension Value and Non-qualified Deferred Compen-sation Earnings All Other Compen-sation Total
Bonita Risk, Director, $ 42,000 $ - - - - - $ 132,000 $ 174,000
Shareholder, Employee $ 41,000 $ - - - - - $ 148,000 $ 189,000
Stephanie Risk-McElroy, $ 104,000 $ - - - - - $ 56,000 $ 160,000
CEO/CFO, Director, Shareholder $ 103,000 $ - - - - - $ 49,000 $ 152,000
Scott McMurray, Director of Sales $ 55,000 $ - - - - - $ 83,000 $ 138,000
$ 53,000 $ - - - - - $ 86,000 $ 139,000
Bonita Risk, Stephanie Risk-McElroy, and Scott McMurray receive a base salary and bonus/commission based on a percentage of sales for the year.
There were no other officers compensated in excess of $100,000 for the fiscal years ended April 30, 2023 and 2022.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12 Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding our Common Stock beneficially owned as of April 30, 2023 for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding Common Stock, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. In general, a person is deemed to be a beneficial owner of a security if that person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days. Shares of Common Stock subject to options, warrants or convertible securities exercisable or convertible within 60 days are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person. Percentages are determined based on 4,930,543 shares of Common Stock of the Company issued and outstanding and less treasury shares as of April 30, 2023. To the best of our knowledge, subject to community and marital property laws, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted.
Name and Address of Beneficial Owner (1) Number of Shares of Common Stock (2) % of Class of Stock Outstanding (3)
Executive Officers and Directors:
Bonita Risk - Director 2,947,128 59.77 %
The above director has beneficial ownership over the Kenneth Risk Trust that owns 2,187,056 shares, Bonita Risk Family Irrevocable Trust that owns 732,470 shares, and 27,602 shares owned personally. As a result, combined, they have voting and shared dispositive control.
Stephanie M. Risk-McElroy Chairman, CEO, & CFO 1,775 Less than 1 %
Donna Debowey - Director Less than 1 %
Daniel Douglas - Vice President, Materials Less than 1 %
All Officers and Directors as a group 2,949,653 59.82 %
(1) Unless otherwise indicated, the address of the named beneficial owner is George Risk Industries, Inc., 802 S. Elm St., Kimball, NE 69145.
(2) Security ownership information for named beneficial owners (other than executive officers and directors of the Company) is taken from statements filed with the Securities and Exchange Commission pursuant to information made known by the Company and from the Company’s transfer agent.
(3) Based on the net shares outstanding as of April 30, 2023. This consists of Common Shares issued and outstanding (8,502,881) less treasury shares (3,572,338).
Changes in Control
We are not aware of any arrangements, including any pledge by any person of our securities, the operation of which may result in a change in control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13 Certain Relationships and Related Party Transactions
During each of three years ended April 30, 2023, 2022, and 2021, the Company executed transactions with related entities and individuals. Each of the transactions was in terms at least as favorable as could be obtained from unrelated third parties.
Related Party
Bank Balances
Joel Wiens, Director $ 4,636,584 $ 5,058,307 $ 6,885,460
Interest Income
Joel Wiens, Director $ 102,713 $ 58,751 $ 54,761

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14 Principal Accountant Fees and Services
1) Audit Fees
For each of the last two fiscal years the Company incurred aggregate fees and expenses for professional services rendered by our principal accountants for the audit of our annual financial statements and review of our financial statements for Form 10-Q. The amounts are listed below:
FYE 2023 $ 78,000 Haynie & Company
$ 1,763 Carey Schroeder, CPA
FYE 2022 $ 61,060 Haynie & Company
2) Audit-Related Fees
The Company incurred aggregate fees and expenses for professional services rendered by our principal accountants for the audit of the Company’s employee benefit plan. The amounts are listed below:
FYE 2023 $ 10,500 Haynie & Company
FYE 2022 $ 8,000 Haynie & Company
3) Tax Fees
The Company incurred aggregate fees or expenses for professional services rendered by tax accountants for tax compliance, tax advice, and tax planning for the last two fiscal years.
FYE 2023 $ 6,000 Tax Resources Group, Inc.
$ 4,900 Tax Resources Group, Inc.
FYE 2022 $ 4,875 Tax Resources Group, Inc .
4) All Other Fees
The Company incurred aggregate fees and expenses for professional services rendered by our principal accountants for restatement of some of the Company’s 10-Qs and 10-K. The amounts are listed below:
FYE 2023 None
FYE 2022 None
5) The Board of Directors considered whether, and determined that, the auditor’s provisions of non-audit services were compatible with maintaining the auditor’s independence. All the services described above were approved by the Board of Directors pursuant to its policies and procedures.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15 Exhibits and Reports on Form 8-K
3.(1).a
Articles of Incorporation-Filed as Exhibit 5 to the Registrant’s Form 10-K for the fiscal year ended April 10, 1970, and incorporated by reference herein
3.(i).b
Certificate of Amendment to the Articles of Incorporation of the Registrant-Filed as Exhibit 1.2 to the Registrant’s Form 10-K for the fiscal year ended April 30, 1971, and incorporated by reference herein
3.(ii).c
By-laws-Filed as Exhibit 1.3 to the Registrant’s Form 10-K for the fiscal year ended April 10, 1971, and incorporated by reference herein
10.1
Vendor agreement dated as of February 16, 2011 between Honeywell International, Inc., acting through the ADI business of its Security Group (“ADI”) and George Risk Industries, Inc. - Filed as Exhibit 10.1 to the Registrant’s Form 10-K for the fiscal year ended April 30, 2012, and incorporated by reference herein. *
31.1
Certification pursuant to Rule 13a-14(a) of the Chief Executive Officer (Principal Financial and Accounting Officer)
32.1
Certification pursuant to 18 U.S.C. 1350 of the Chief Executive Officer (Principal Financial and Accounting Officer)
* Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 under the Securities Exchange Act of 1934.