RSKIA 10-K & 10-Q changes, risk factors and insider trading

George Risk Industries, Inc. (“GRI” or 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, industrialindustrial, and government installations. International sales accounted for approximately 9.7%9.6% of revenues for fiscal year 20252026 and 10.3%9.7% for 2024.2025.

GRI is known for its quality American madeAmerican-made products, top-notch customer serviceservice, and the willingness to work with customers on their special applications.

The Company has substantial marketable securities holdings, and these holdings have a material impact on the financial results. For the year ending April 30, 2025,2026, net other income accounted for 31.55%51.96% of income before income taxes. In comparison, for the year ending April 30, 2024,2025, net other income accounted for 39.08%31.55% of the income before income taxes. Management’s philosophy behindfor having holdings inholding marketable securities is to keep the money working and to gainearn interest on the cash that does not need 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, suchas asevidenced by the October 2017 purchase of substantially all of the assets from Labor Saving Devices, Inc. and Roy Bowling.

Net cash decreased by $1,315,000 during the year ended April 30, 2026, and by $641,000 during the year ended April 30, 2025, compared to an increase of $2,169,000 during the year ended April 30, 2024.2025. Accounts receivable increased by $768,000$375,000 during the current fiscal year compared to a $417,000$768,000 increase in the prior fiscal year. The current fiscal year increase in cash flow from accounts receivable is the result of increased sales, offset by slightly fasterslower collection of accounts receivable . receivable. The average collection time in days for the year ended April 30, 2025,2026, is 6572 days, compared to 6665 days for the year ended April 30, 2024. 2025. As of April 30, 2025,2026, 72.68%75.67% of receivables were aged less than 60 days (“Current”) and 7.65% 5.49% were aged over 90 days. In comparison, 68.12%72.68% of the receivables were considered CurrentCurrent, and 8.53%7.65% were over 90 days past due atas of April 30, 2024.2025.

Inventories decreasedincreased by $1,051,000 for the year ended April 30, 2026, compared to a decrease of $773,000 for the year ended April 30, 2025, compared to an increase of $93,000 for the year ended April 30, 2024.2025. The current current fiscal year decreaseincrease is primarily a result of having lessmore raw materials on hand,hand offsetthat have increased in price due to tariff increases implemented by the US government over the fiscal year, as well as increased raw material and labor costs and increased higher sales.

Prepaid expenses and other assets increased by $196,000$859,000 during the year ended April 30, 2025,2026, compared to aan decreaseincrease of $418,000$196,000 for the prior year. The current fiscal year’s increase is due to having increasedhigher prepayments for raw materials and renewingthe renewal of multi-year subscriptions in the current fiscal year.subscriptions.

The federal solar tax credit receivable represents theadditional remainingand existing federal solar tax credits we will receive from our purchase of transferable transferable tax credits, pursuant to transferability provisions of the Inflation Reduction Act of 2022. Please see Note 1 - Purchase of Transferrable Transferable Tax Credits, to our consolidated financial statements,statements for further information.

For the year ended April 30, 2025,2026, accounts payable increased by $10,000$84,000 compared to aan decreaseincrease of $254,000$10,000 for the year ended April 30, 2024.2025. This difference is primarily a result of timing. Payables are paid within terms and fluctuate primarily based primarily on production inventory needs for production.needs. Accrued expenses increased $34,000$44,000 for the year ended April 30, 2025,2026, compared to the prior year. This is primarily due to a higher year-end payroll accrual as of April 30, 2025,2026, compared to April 30, 2024.2025.

The Company’s income tax payable decreased $80,000$21,000 for the year ended April 30, 2025,2026, compared to ana increasedecrease of $508,000$80,000 for the year ended April 30, 2024.2025. The decrease in the current fiscal year income tax payable is due to the purchase of federal solar tax credits.

The Company spent $396,000$383,000 on purchases of property and equipment purchases during the year ended April 30, 2025,2026, compared to $378,000$396,000 during the year ended April 30, 2024.2025. 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, 2025,2026, was $1,137,000, compared with $980,000 versus $699,000 spent for the year ended April 30, 30, 2024.2025. Net proceeds from the sale of marketable securities were $678,000$25,000 and $527,000$678,000 at April 30, 20252026 and 2024,2025, respectively. The Company Company uses “money manager” accounts for most stock transactions. By doing this, the Company gives an independent third-party firm, 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 value of the investments.

The Company received a cash distribution of $269,000$25,000 from the sale of the investment in the limited land partnership during the year ended April 30, 2025.2026. This was the secondthird and final distribution received from the sale of the limited land partnership. The remainder of the proceeds are contingent on finishing wetland restoration of the land. Please see Note. 1 - Investment in Limited Land Partnership, to our consolidated financial statements for further information.

Cash used in financing activities consists of declared dividends and the repurchase of the Company’s Class A common Stock. For the year ended April 30, 2025,2026, $4,447,000$4,467,000 was spent on the payment of dividends. The Company declared a dividend of $1.00 per share of common stock on September 30, 2024,2025, for the current fiscal year,year; whileequally, a $0.65$1.00 per share of common stock dividend was declared on September 30, 20232024 and issued in the prior fiscal year. The Company continues to purchase back its Class A common stock when the opportunity arises. For the year ended April 30, 2025,2026, the Company purchased $56,000 of treasury stock and $72,000 of treasury stock and $391,000 was bought backrepurchased for the year ended April 30, 2024.2025. 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.

As of April 30, 2025,2026, working capital showed a year-over -year increase of 4.68%.13.39%. The Company measures liquidity using the quick ratio, which is the ratio of cash, securitiessecurities, and accounts receivablesreceivable to current obligations. The Company’s quick ratio decreased to 11.176 for the year ended April 30, 2026, compared to 11.252 for the year ended April 30, 2025, compared to 12.118 for the year ended April 30, 2024.2025.

GRI completed the year ending April 30, 20252026 with a net profit of 31.65%45.82% of net sales. Net sales for the current fiscal year were $22,538,000,$24,852,000, up 3.54%10.27% over the previous fiscal year. The increase in sales is a result of the Company continuing to provide quality products to our customers and a price increase that was implemented during the 4th quarter of the fiscal year. Cost of goods sold was 51.59%51.92% of net sales for the year ended April 30, 2025,2026, and 50.2%51.59% 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 year. Management strives to be as efficient as possible as wages and material costs continue to increase. Management offset some of these added expenses by implementing a 5% price increase effective FebruaryJanuary 1, 2025,2026. and aThis price increase ofremains 2.5%consistent with the prior year, raising prices 5% that wasbecame effective on January February 1, 2024.2025.

Operating expenses were 20.73%20.05% of net sales for the year ended April 30, 2025,2026, compared to 20.91%20.73% for the year ended April 30, 2024.2025. Management’s Management’s goal is to keep the operating expenses around 25%at or lessbelow 25% of net sales, soand thethis goal has been met for the current fiscal year. Income from operations for the year ended April 30, 20252026 decreasedincreased to $6,238,000,$6,966,000, or 0.81%,11.67%, from the year ended April 30, 2024,2025, which had income from operations of $6,289,000.$6,238,000. This decreaseincrease was primarily due to increased costsales ofand goods,lower slightly offsetoperating by increased sales.expenses.

Net other income for the year ended April 30, 2025,2026, was $2,875,000,$7,535,000, compared to a net other income of $4,034,000$2,875,000 for the year endingended April 30, 2024.2025. Dividend and interest income was $1,410,000$1,608,000 for the current fiscal year, which is up 26.34%14.04% overfrom the $1,116,000 dividend and interest income$1,410,000 for the prior fiscal year. Investments in marketable securities are presented at fair value and aany non-cash unrealized gain or loss is recordedrecognized withinin the statements of operations. As a result, an unrealized loss of $75,000 was recorded for the year ending April 30, 2025, compared to an unrealized gain of $2,771,000$4,517,000 was recorded for the year ending April 30, 2024.2026, compared to an unrealized loss of $75,000 for the year ending April 30, 2025. Net gain on the sale of investments for the current fiscal year was $937,000, which is$898,000, a 533.11%4.16% increasedecrease overfrom the net gain on the sale of investments of $148,000 for theprior prior fiscal year.year’s $937,000.

Net income for the year ended April 30, 20252026, was $7,133,000,$11,388,000, downup 5.62%59.65% from the $7,558,000 net income$7,133,000 for the year ended April 30, 2024. 2025. This reduction escalation is primarily related to the reductiongreater amount in other income, offset by increased sales.income. Basic earnings per common share (“EPS”) for the year ended April 30, 2025,2026, was $1.46 per share,$2.33, and the diluted earnings per common shareEPS for the same period was $1.45.$2.32. Basic and diluted EPS for the year ended April 30, 2024,2025, was $1.54 $1.46 and $1.53$1.45 per share, respectively.

Management is hopeful that sales will continue to increase for the fiscal year ending April 30, 2026.2027. Opportunities for Management include keeping up with business growth and focusingcontinuing to focus on finding ways to get our products out to our customers in a timelier manner. OneSome wayof the ways we are doing accomplishing this isinclude by looking intoexploring more automation.automation and reconfiguring our production floor to improve workflow efficiency. Challenges facing Management include keeping costs down as raw materials and labor costs continue to increase. 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 alwayscontinually researching and developing new products thatto increase will help our sales increasesales, and we are searching forseeking 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 toGiven 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 techniquestechniques, and established customers to deliver new products and increase sales and profits.

The GRI engineering department continues to develop enhancements to our existing products as well asand to develop new products that will continue tohelp secure our position in the industry.

Research is being doneunderway on programmable temperature and humidity sensors with built-in hysteresis, a miniature profileminiature-profile overhead door contact based on our popular 4532 series, and a brass water valve shut-off system.

Production has begun on a couple of newly developed products. First, there are magnetic contacts which are listed under UL 634 Level 2. These sensors will require additional UL testing and are used in high security applications such as government buildings, military use, nuclear facilities, and financial institutions. Secondly, we have updated our small profile glass break detectordetector, and,and thirdly, anwe expansionhave ofexpanded the GR3045 panic switch to include single-pull, double-throw (SPDT) versions, latching and non-latchingnon-latching, with LED indicator lights.

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 sensingsensing, and environmental monitoring.

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;receivable, marketable securities;securities, inventory, and inventory; income taxes.

The Company records an allowance for credit losses based on an analysis of specifically identified customer balances. The Company has a limited number of customerscustomers, each with individually large amounts due aton any given date. Any unanticipated change in any one of these customers’ credit worthinesscreditworthiness 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’sstockholders’ 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 temporaryother-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 impairmentimpairment, 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 recorded 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 approximationsapproximations, 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 hadnot nomoved movement infor over two years. There is inherent professional judgment and subjectivity made by management in determining the estimated obsolescence percentage. 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;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 .balances.

Related Party Transactions — One of the directors of the board, Joel Wiens, iswas the principal shareholder of FirsTier Bank. After his death on March 8, 2026, this ownership transferred to his two sons, Tim and Tom Wiens. FirsTier Bank is the financial institution the Company uses for its day-to-day banking operations. The year endyear-end balances of accounts held at this bank were $5,340,000$4,193,000 and $6,712,000 $5,340,000 for the years ended April 30, 20252026 and 2024,2025, respectively. The Company also received interest income from FirsTier Bank in the amount of approximately $215,000$154,000 for the year ended April 30, 2025,2026, and approximately $170,000$215,000 was received for the year ended April 30, 2024.2025.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q,10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “projectproject,” or “continue,” and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if newcurrent information becomes available in the future.

The following discussion should be read in conjunction with the attached unaudited condensed financial statements,statements and with the Company’s audited audited financial statements and discussion for the fiscal year ended April 30, 2025.2026.

The Company’s performance inimproved during the quarter ended July 31, 2026, as compared to the quarter ended July 31, 2025. Sales and income from operations hasincreased, remainedwhile consistentoverall acrossnet income decreased compared to the threesame quartersquarter oflast year. Unrealized gains on investments were lower in the current fiscal year, with sales in the third quarter slightly lower than those in the secondsame quarter of the currentprior fiscalyear, year.resulting Thisin dipa isdecrease mainlyin dueoverall net income. The Company has a back-order log, but management has seen improvement in this area and continues to ourwork businesstowards diminishing that number. During beingthe tiedcurrent quarter, despite tariffs, the economy remains strong, helping to thedrive housingour market and the winter months usually see a slowdown.profitability. Opportunities include keepingramping up with business growth and finding waysproduction to getmeet ourcustomers’ productsneeds, topotentially ourthrough customersincreased inautomation a timelier manner. One way we are doing this is byand exploring morepotential automation and reconfiguring our production floor to improve workflow efficiency.acquisitions. We continue to look at businesses that might be a good fit to purchase andalso continue to work on new products that will be a good fit for our industry and business. Challenges in the coming months include gettingcontinuing to deliver products out to customers in a timely mannermanner, addressing the continuing impact of tariffs, and managingpurchasing raw materials at prices that will maintain the ongoingCompany’s effects of tariffs and increased material and labor costs.profitability. Management continues to work to keep operations flowing as efficiently as possible with the hopeshope of getting the facilities running leaner and more profitable than ever before.

In addition to researching and developing new products, management is always open to acquiring a business or product line that would complement our existing operations. Given the Company’s strong cash position, management believes this could be achieved without outside financing. The intent is to leverage the equipment, marketing techniques, and established customerscustomer base to deliver new products and increase sales and and profits.

There are no known seasonal trends inwith any of GRI’s products, assince we sell to distributors and OEM manufacturers. Our products are tied tied to the housing industry and will fluctuate with building trends.