U.S. UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Washington, DC 20549FORM 10–K

Form 10–K

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

For the fiscal year endedApril 30, 20162019

☐[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _________

Commission File Number:000–05378

George Risk Industries, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number(308) 235–4645

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

Securities registered under Section 12(g) of the Act:

Class A Common Stock, $.10 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐[  ] No ☒[X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Sections 15(d) of the Act.

Yes ☐[  ] No ☒[X]

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒[X] No ☐[  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229-405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☐[  ] No ☒[X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229-405 of this chapter) is not contained herein, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10–K or any amendment to this Form 10–K. ☒[X]

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and, “smaller reporting companycompany”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

(Do not check if smaller reporting company)Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐[  ] No ☒[X]

The aggregate market value, as of July 29, 2016,August 6, 2019, of the common stock (based on the average of the bid and asked prices of the shares on the OTCBBOTCM of George Risk Industries, Inc.) held by non-affiliates (assuming, for this purpose, that all directors, officers and owners of 5% or more of the registrant’s common stock are deemed affiliates) was approximately $13,277,116.$16,623,000.

The number of outstanding shares of the common stock as of July 29, 2016August 6, 2019 was 5,021,660.4,952,310.

DOCUMENTS INCORPORATED BY REFERENCE

A material vendor contract with a customer that accounts for a material portion of our sales.

Part I

Preliminary Note Regarding Forward-Looking Statements and Currency Disclosure

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our, or our industry’s, actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We do not intend to update any of the forward-looking statements to conform these statements to actual results except as required by applicable law, including the securities laws of the United States.

Our financial statements are stated in United States dollars, rounded to the nearest thousand, and are prepared in accordance with United States Generally Accepted Accounting Principles.

(a) Business Development

George Risk Industries, Inc. (GRI or the company)Company) was incorporated in 1967 in Colorado. The companyCompany is presently engaged in the design, manufacture, and sale of computer keyboards, push button switches, burglar alarm components and systems, pool alarms, thermostats, EZ Duct wire covers, water sensors and water sensors.wire and cable installation tools.

Products, Market, and Distribution

The companyCompany designs, manufactures, and sells computer keyboards, push-button switches, burglar alarm components and systems, pool alarms, water sensors, and water sensors. Ourwire and cable installation tools. Their Telemark division, which concentrates on selling products for security burglar alarm products comprisepurposes, comprises of approximately 9594 percent of net revenues and are sold through distributors and alarm dealers/installers.

The security segment has approximately 1,000 current customers. One of the distributors, ADI (which is a division of Honeywell International)Ademco, Inc. (previously known as ADI), accounts for approximately 41.341.4 percent of the company’sCompany’s sales of these products. Tri-EdAnixter, Inc. (which finalized the purchased Tri Ed Distribution in 2018) accounts for another 11.810.7 percent of companyCompany sales. Loss of these distributors would be significant to the company.Company. However, both companies have purchased from the companyCompany for many years and are expected to continue. Also, the companyCompany has obtained a written agreement with ADI.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 segment has approximately 800 customers. Keyboard products are sold to original equipment manufacturers to their specifications and to distributors of off-the-shelf keyboards of proprietary design.

Competition

The companyCompany has intense competition in the keyboard and burglar alarm lines.

The burglar alarm segment has approximately eight major competitors. The companyCompany competes well based on price, product design, quality, customization and prompt delivery.

The competitors in the keyboard 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 companyCompany performs research and development for its customers when needed and 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.

Employees

GRI has approximately 145175 employees.

The companyCompany owns the manufacturing and some of the office facilities. Total square footage of the plant in Kimball, Nebraska is approximately 42,50050,000 sq. ft. Additionally, the companyCompany leases 15,000 square feet for $1,535 per month with BonnieBonita Risk. BonnieBonita Risk is a director of the company.Company.

As of October 1, 1996, the companyThe Company also began operatingowns a satellite plantbuilding in Gering, NE. This expansion was done in coordination with Twin Cities Development. The company leased manufacturing facilities until July 2005. During the first quarter of fiscal year end 2006, the company purchased a buildingNE that is 7,200-sq. ft. in size. This is used for manufacturing. Currently, there are 3335 employees at the Gering site.

None.

Not applicable.

Part II

Principal Market

The company’sCompany’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

On September 30, 2015,2018, a dividend of $.34$.38 per common share was declared for the fiscal year ended April 30, 2016.2019.

For the prior fiscal year, a dividend of $0.32$.36 per common share was declared on September 30, 2014.2017.

The number of holders of record of the company’sCompany’s Class A Common Stock as of April 30, 2016,2019, was approximately 1,200.1,140.

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’sCompany’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:

There are still approximately 183,000254,000 shares available to be repurchased under the current resolution.

As a smaller reporting company, we are not required to respond to this item.

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 6.4%11.4% of revenues for fiscal year 20162019 and 6.0%13.0% for 2015.2018.

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 companyCompany has substantial marketable securities holdings and these holding have a material impact on the financial results. For the fiscal year ending April 30, 2016,2019, other income accounted for 22.12%23.97% of income before income taxes. In comparison, other income accounted for 24.14%29.72% of the income before income taxes for the year ending April 30, 2015.2018. Management’s philosophy behind having holdings in marketable securities is to keep the money working and gaining interest on the cash that is not needed to be put back into the business. And 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. This would probably not require any outside financing. The intent would be to utilizeoperations, which is exactly what took place in October 2017 when the equipment, marketing techniquesCompany purchased substantially all of the assets from Labor Saving Devices, Inc. (“LSDI”) and established customers to increase sales and profits.Roy Bowling (“Bowling”).

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

Liquidity and Capital Resources

Operating

Net cash increased $227,000by $579,000 during the year ended April 30, 20162019 compared to a decrease of $181,000$2,162,000 during the year ended April 30, 2015.2018. Accounts receivable decreased $98,000increased by $155,000 during the current year and showedwhile showing a $31,000 decrease$701,000 increase in the prior year. The larger decreasecurrent smaller increase in cash flow from accounts receivable is result of collecting on accounts at a reflection of decreased sales and that customers are taking slightly longer to pay us.faster pace than last year. At April 30, 2016, 72.45%2019, 72.17% of receivables were less than 4560 days and less than 1%5.87% were over 90 days. In comparison, 75.01%71.05% of the receivables were considered current (less than 4560 days) and less than 1%10.81% of the total were over 90 days past due for the prior year during the same period.

Inventories increased by $695,000$1,316,000 in fiscal year ended April 30, 20162019 while the prior year showed a decreasean increase of $74,000$980,000 at year end. The current year increase is a result of a decreasehaving inventory available in sales. The company tendsrelation to buy many of its most commonly used raw materials on an annual basis and the decreaseincrease in sales leaves the company with more inventory.sales.

Prepaid expenses decreased by $40,000$207,000 while they increased $403,000 in the current and prior year, respectively. The decrease in the current year is due not having as many prepayments of raw materials at year end and alsonot having to renew multi-year subscriptions.

Income tax overpayments decreased $24,000by $489,000 for the year ended April 30, 2015. The bigger2019. This decrease is due to renewing contracts (i.e. computer software support) for multiple years to get a better price overall.

Income tax overpayment decreased forin the current year ended April 30, 2016, down $335,000 from the prior year. The lower overpayment is a result of payinghaving more accuratesales and income in comparison to the calculated income tax estimates.

For the year ended April 30, 2016,2019, accounts payable decreased by $79,000$130,000 as compared to a decreasean increase of $1,000$268,000 for the same period the year before. The change in cash inwith 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 decreased $14,000increased $15,000 for the year ended April 30, 2016, primarily2019, due to an increase in commissions over the timing of having a whole payroll period to accrue on the books.prior year.

Investing

As for our investment activities, $276,000$154,000 was spent on purchases of property and equipment during the current fiscal year, compared to $186,000$533,000 during the year ended April 30, 2015. The largest dollar amount purchased was a2018. Most of these capitalized costs were purchases of new ERP computer system in the 4^th quarter. Management is hopeful that this investment will enhance productivitymachinery and communication throughout the organization.equipment. 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, 20162019 was $864,000 and $986,000 was$942,000 versus the $767,000 spent for the corresponding period last year. Conversely, net proceeds from the sale of marketable securities for the year endedwere $766,000 and $2,033,000 at April 30, 2016 were $64,0002019 and $33,000 for the same period last year. We use2018, respectively. The Company uses “money manager” accounts for most stock transactions. By doing this, the Company gives an independent third partythird-party firm, who are experts in this field, permission to buy and sell stocks at will. The Company pays a quarterly service feefees based on the value of the investments.

As for other investment activities, a net amount of $12,000 was spent on other assets manufactured for the year ended April 30, 2016, while $15,000 was capitalized on these activities during the prior year.

Financing

Cash used in financing activities consists of two items. First, for the year ended April 30, 2016, $1,553,0002019, $1,752,000 was spent on the issuancepayment of dividends. The companyCompany declared a dividend of $0.34$0.38 per share of common stock on September 30, 20152018 for the current year, while a $0.32$0.36 per share of common stock dividend was declared on September 30, 20142017 was issued in the prior year. Furthermore, the Company continues to purchase back its common stock when the opportunity arises. For the year ended April 30, 2016,2019, the Company purchased $27,000$79,000 of treasury stock and $33,000$10,000 was bought back for the year ended April 30, 2015.2018. We have been actively searching for stockholders that have been “lost” over the years. The payment of dividends over the last elevenfourteen fiscal years has also prompted many stockholders and/or their relatives and descendants to sell back their stock to the Company.

At April 30, 2019, working capital increased 6.096% 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 increased to 15.316 for the year ended April 30, 2019 compared to 14.703 for the year ended April 30, 2018.

Results of Operations

GRI completed the fiscal year ending April 30, 20162019 with a net profit of 27.46%23.25% of net sales. Net sales were at $11,240,000, down 5.57%$14,126,000, up 18.397% over the previous year. The slight decreaseincrease in sales is a combined result of overall economic concerns that have impactedhaving a whole year of a new product line to sell (our cable and wiring tools product line) and continued growth with the country and some increased competition that has come into the industry.legacy product lines. Cost of goods sold was 44.28%51.86% of net sales for the year ended April 30, 20162019 and 45.92%52.94% for the same period last year. Management continuesManagement’s goal is to keep labor and other manufacturing expenses in check, therefore keeping the cost of goods sold percentage of less than 50%, but since wages and other expenses have increased while the Company’s prices haven’t increased to customers is the reason why the cost of goods percentage is just below the desired range of 45 to 50%.past Management’s goal.

Operating expenses were 25.81%24.73% of net sales for the year ended April 30, 20162019 as compared to 24.22%26.18% 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, 20162019 was at $3,362,000,$3,306,000, which is a 5.4% decrease32.66% increase from the corresponding period last year, which had income from operations of $3,554,000.$2,492,000.

Other income and expense results for the fiscal year ended April 30, 20162019 produced a gain of $955,000.$1,042,000. This is in comparison to a gain of $1,131,000$1,054,000 for the fiscal year ended April 30, 2015.2018. Dividend and interest income was $867,000,$981,000, which is up 5.73%2.19% over the prior year. Dividend and interest income at April 30, 20152018 was $820,000.$960,000. Net gainsgain on the sale of investments for the current fiscal year were $72,000,was $61,000, which is a 76.32%69.5% decrease over the prior year. Net gainsgain on the sale of investments for the fiscal year ending April 30, 2015 were $304,000.2018 was $200,000.

Net income for the year ended April 30, 20162019 was $3,086,000,$3,284,000, which is down 2.09%up 28.99% from the prior year, which produced a net income of $3,152,000.$2,546,000. Basic and diluted earnings per common share (EPS) for the year ended April 30, 20162019 was $0.61$0.66 per share. Basic EPSand diluted earnings per common share (EPS) for the year ended April 30, 20152018 was $0.63$0.51 per share.

Management is hopeful that sales will stay steadycontinue to increase for the fiscal year ending April 30, 2017. The company’s main2020. With the purchase of the assets from Labor Saving Devices, Inc., the Company has seen an overall increase in sales, and we have also seen growth in our existing product lines as well. Our Security sales division, of products that are sold (security switches) arewhich is our largest sales generator, is directly tied to the housing industry. And sinceindustry and we normally experience the housing industry’s performance has improved, the company’s sales have also improved in relation to the economy.same fluctuations. We are always researching and developing new products that will help our sales increase. While weonly a few new or improved products were not successful in launching the anticipated new productssuccessfully launched in fiscal year 2016,2019, we are confident that more new products will be released soon, and we are searching for products that complement our current offerings.

At April 30, 2016, working capital increased 1.15% in comparison Management is always open to the previous fiscal year.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 company measures liquidity usingintent is to utilize the quick ratio, which is the ratio of cash, securitiesequipment, marketing techniques and accounts receivablesestablished customers to current obligations. The company’s quick ratio increased to 19.114 for the year ended April 30, 2016 compared to 13.897 for the year ended April 30, 2015, reflecting a strong position in ability to meet capital needs as they arise.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.

A new face plate for our pool alarms is nearing completion. The innovative design is slim in style and will also allow the homeowner to change the plate to match their décor.

An updated version of the pool access alarm is currently going through electrical listing testing. This next-generation model combines our battery operated DPA series with our hard wired 289 series. A variety of installation options will be available through jumper pin settings.

Engineering continues to work on a high security switch. A triple biased high security switch design nearly complete and an adjustable magnet design was completed for recessed mounting applications.

Wireless technology is a main area of focus for product development. We are looking into 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 our Pool Alarm and environmental sensors that will be easy to install in current construction. We are also concentrating on making products compatible with Wi-Fi, smartphone technology and the increasing popular Z-Wave standard for wireless home automation.

A modification toThere have been several new products that have been introduced for our overhead door switch has been developed. This modification will be a “universal fit” that allows an installer to replace an existing switch without having to drill new holes into the cement or adjust the location.cable and wiring tools segment. They are listed below:

Black Light Rod Kits; these Fiberfuse™ rod kits are vibrant green in daylight, invisible in the dark, yet glow brilliantly under a black light flashlight. These kits are available in two popular sizes; 30’ & 36’. Used for surveillance wiring by security companies, private detectives and government agencies for top secret and covert installations.

New custom length power transfer devices (PTDC) areAuto Noodle with Retriever Loop; the Auto Noodle is a coated, pliable 24” long noodle with an attachable, flexible loop perfect for tying wires to push or pull through difficult and hard to reach areas such as engines, dashboards, under seats, etc. The other end has a strong neodymium magnet which comes in the works.handy for picking up dropped screws, bolts and even tools. The PTDC series will offer a secure way to channel electrical wiring from a door frame to a doorAuto Noodle is great for coach builders, recreational vehicles, agricultural equipment, trailers and are used for powering exit bars, locks, electrical strikes, etc. We plan to offer two different models for different sizes of wire to be pulled through the custom length armored cable.much more.

We continue to work on high security switches. We have a triple biased high security switch design nearly completereconfigured and an adjustable magnet design was completed for recessed mounting applications.

The case for the CC-15 is complete and now needs to be send to U.L. for approval. This advancement will allow us to manufacturereintroduced several different versions, including a 15-amp version that would automatically turn on a whole room of lights and a 220-volt version for international markets. 12 and 24-volt versions are also being developed in response to many requests to turn on LED lighting.

Our molding department is working on several new molds for enhancements to our EZ Duct connectors and 29-series switch. The new version of the raceway line will be U.L. listed for fire ratingpopular Labor Saving Device’s Tool Kits; the Basic Installer Apprentice Kit, the All-Tool Mate Standard Threaded Tool Kit and high voltage. Another product near completionthe Roy Rods All-Tool Mate Master Tool Kit which is quick connect compared to the threaded. These kits contain a variety of must have LSDI products including Fiberfuse ™ rods, drill bits, soldering kits and tools in the molding department is a new face plate for the pool alarms. The new design is slimmer and will allow the homeowner to change the plate to match their décor.

We continue to research the possibilities of fuel level sensing and how that may also serve other agricultural based needs. Several companies from around the world have been looking for ways to secure fuel tanks and trucks. Our emphasis would be in ways to safely monitor fuel levels and report tampering.convenient carrying case.

Critical Accounting Policies

The discussion and analysis of ourthe financial condition and results of operations are based upon ourthe consolidated financial statements, which have been prepared in conformity with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to makethe 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. OurThe 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 companyCompany 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 companyCompany generally does not require collateral.

The companyCompany records an allowance for doubtful accounts based on an analysis of specifically identified customer balances. The companyCompany 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, corporate bonds and REITs.real-estate investment trusts (REITs). The investments in securities are classified as available-for-sale securities and are reported at fair value. The Company uses the average cost method to determine the cost of securities sold and the amount reclassified out of accumulated other comprehensive income into earnings. Unrealized gains and losses 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 position. When it is determined that a security will probably 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 market value. Costs are determined using the average cost-pricing method. The companyCompany uses standard 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 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— The Company leases a building from BonnieBonita Risk. KenBonita Risk was the Chairman of the Board and President and CEO of the company until his death in February 2013. Bonnie Risk is Ken’s wife and is a director and an employee of the company.Company and is the majority holder of George Risk Industries, Inc. stock. This building contains the Company’s sales and accounting departments, maintenance department, engineering department and some production facilities. This lease requires a minimum payment of $1,535 on a month-to-month basis. The total lease expense for this arrangement was $18,420 for each of the fiscal years ended April 30, 20162019 and 2015.2018.

One of the directors of the board, Joel Wiens, is the principal shareholder of FirsTier Bank. FirsTier Bank is the financial institution the companyCompany uses for its day to day banking operations. Year end balances of accounts held at this bank are $4,304,000$4,224,000 for the year ended April 30, 20162019 and $4,647,000$3,819,000 for the year ended April 30, 2015.2018. The Company also received interest income from FirsTier Bank in the amount of approximately $1,500$63,400 for each of the yearsfiscal year ended April 30, 20162019 and 2015.approximately $33,200 was received for the fiscal year ended April 30, 2018.

Index to Financial Statements

George Risk Industries, Inc.

Report of Independent Registered Public Accounting Firm

Board of Directors

George Risk Industries, Inc.

Kimball, Nebraska

Opinion of the Financial Statements

We have audited the accompanying balance sheets of George Risk Industries, Inc. (the Company) as of April 30, 20162019 and 2015,2018, and the related statements of income, comprehensive income, stockholders’stockholders�� equity, and cash flows for each of the years in the two-year period ended April 30, 2016. George Risk Industries, Inc.’s management is responsible2019, 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, 2019 and 2018, and the results of its operations and its cash flows for thesethe years ended April 30, 2019 and 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements.statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe 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 Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The companyCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits, we are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

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 supportingregarding the amounts and disclosures in the financial statements, assessingstatements. 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 statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of George Risk Industries, Inc. as of April 30, 2016 and 2015, and the results of its operations and its cash flows for each of the years in the two-year period ended April 30, 2016, in conformity with accounting principles generally accepted in the United States of America.

/s/ Haynie & Company

Littleton, Colorado

August 10, 2016

George Risk Industries, Inc.

Balance Sheets

As of April 30, 20162019 and 20152018

The accompanying notes are an integral part of these financial statements.

George Risk Industries, Inc.

Balance Sheets
(Continued)

As of April 30, 20162019 and 20152018

The accompanying notes are an integral part of these financial statements.

George Risk Industries, Inc.

The accompanying notes are an integral part of these financial statements.

George Risk Industries, Inc.

The accompanying notes are an integral part of these financial statements.

George Risk Industries, Inc.

The accompanying notes are an integral part of these financial statements.

George Risk Industries, Inc.

The accompanying notes are an integral part of these financial statements.

George Risk Industries, Inc.

The accompanying notes are an integral part of these financial statements.

George Risk Industries, Inc.

April 30, 2019

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 computer keyboards, push button switches, burglar alarm components and systems, pool alarms, EZ Duct wire covers, water sensors and wire and cable installation tools.

Nature of Business—The Company is engaged in the design, manufacture, and marketing of custom computer keyboards, push-button switches, proximity sensors, security alarm components, pool alarms, liquid detection sensors, raceway wire covers, wire and hydro sensors.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 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.

Allowance for Doubtful Accounts—Accounts receivable are customer obligations due under normal trade terms. The companyCompany sells its products to security alarm distributors, alarm installers, and original equipment manufacturers. The companyCompany performs continuing credit evaluations of its customers’ financial condition and the companyCompany generally does not require collateral.

The companyCompany records an allowance for doubtful accounts based on an analysis of specifically identified customer balances. The companyCompany has a limited number of customers with individually largesubstantial 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. The companyCompany has recorded an allowance for doubtful accounts of $74$9,321 for the year ended April 30, 20162019 and $160$6,651 for the year ended April 30, 2015.2018. For the fiscal year ended April 30, 2016,2019, bad debt expense was a net credit of $2,489 due to bad debt recoveries during the year.$3,807. For the fiscal year ended April 30, 2015,2018, bad debt expense was a net credit of $3,727.$3,345.

Inventories—Inventories are stated at the lower of cost or market. Cost is determined using the average cost-pricing method. The companyCompany uses standard costs to price its manufactured inventories approximating average costs.

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:

Depreciation expense of $182,000$231,000 and $149,000$195,000 was charged to operations for the years ended April 30, 20162019 and 2015,2018, 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.

Advertising—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 have been a total of $93,000 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 two intangible assets currently being amortized are (1) a non-compete agreement with a useful live of 5 years and (2) intellectual property with a useful live of 15 years. As of April 30, 2019, the Company had $1,640,000 of net intangible asset costs, while the net intangible assets costs at April 30, 2018 were $1,763,000. Amortization expense was $123,000 for the year ended April 30, 2019 and $61,000 for the year ended April 30, 2018.

As of April 30, 2019, future amortization of intangible assets is expected as follows:

Basic and Diluted Earnings per Share —The Company computes earnings per share in accordance with 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 operations. 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. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings per share are equal.

Advertising —Advertising costs are expensed as incurred and are included in selling expenses. Advertising expense amounted to $289,000$245,000 and $257,000$213,000 for the years ended April 30, 20162019 and 2015,2018, respectively.

Income Taxes—US GAAP requires use of the liability method, whereby current and deferred Deferred tax assets and liabilities are determined based onrecorded for the future consequences of events that have been recognized in the Company’s financial statements or tax rates and laws enacted asreturns. Measurement of the balance sheet date. Deferred tax expense represents the change in the deferred tax asset/liability balances.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.

The flow-through method of accountingAccounting standards prescribe a recognition threshold and a measurement attribute for tax credits has been adopted by the company. Such credits are reflected as a reductionfinancial statement recognition and measurement of the provision forpositions 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. Interest and penalties accrued on uncertain tax positions are recorded as income taxes in the year in which they become available.

Net Income Per Common Share—Net income per common share is based on the weighted average number of common shares outstanding during each fiscal year. The dilutive effect of convertible preferred stock is reflected in diluted earnings per share by application of the if-converted method. Under this method, preferred dividends applicable to convertible preferred stock are added to the numerator and convertible preferred stock is assumed to have been converted at the beginning of the period.tax expense.

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—Financial Certain financial instruments consistare 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 andflows. Other financial instruments, including cash equivalents, marketable securities, accounts receivablecertain investments and accounts payable.short-term debt, are recorded at cost, which approximates fair value. The carryingfair values of theselong-term debt and financial instruments approximate fair value due to their short-term nature.are disclosed in Note 11.

Revenue Recognition—Revenue Effective May 1, 2018, the Company adopted Accounting Standards Codification (“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 risks and benefits in ownership are transferred, which normally occurs at the time of shipment of products.product is shipped. The Company recognizes product returns as they receive them.

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, 2016,2019, the Company operated in twothree 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.

Reclassifications—Certain reclassifications have been made to conform to the current year presentation. The total net income and equity are unchanged due those reclassifications.

Recently Issued Accounting Pronouncements —In May 2014, the FASB issued Accounting Standards Update No.ASU 2014-09, on Revenue from Contracts with Customers. The objectiveupdated guidance modifies the guidance companies use to recognize revenue from contracts with customers for transfers of this update is to providegoods or services and transfers of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance also requires new qualitative and quantitative disclosures, including information about contract balances and performance obligations. In July 2015, the FASB approved a robust framework for addressing revenue recognition issues and, upon itsone-year deferral of the effective date, replaces almost all existing revenue recognition guidance. Thisdate. Accordingly, the update is effective for the Company in the first quarter of fiscal 2019 with retrospective application to prior periods presented or as a cumulative effect adjustment in the period of adoption. In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).” This new guidance provides additional implementation guidance on how an entity should identify the unit of accounting for the principal versus agent evaluations. In May 2016, the FASB issued 2016 ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” This new ASU provides more specific guidance on certain aspects of Topic 606. The Company has analyzed the effect of the standard from its revenue streams to evaluate the impact of the new standard on revenue contracts. This included reviewing current accounting policies and practices to identify potential differences that would result from applying the requirements under the new standard. Most of the Company’s services are primarily short-term in nature, and the assessment was the adoption of the new revenue recognition standard will not have a material impact on its financial statements. The Company adopted the standard in the first quarter of fiscal 2019.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which provides guidance for accounting for leases. ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine whether the lease expense is recognized based on an effective interest rate method or on a straight-line basis over the term of the lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 is effective for the Company beginning May 1, 2019. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”) and ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) and ASU 2018-20, “Narrow-Scope Improvements for Lessors”. ASU 2018-10 provides certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2018-11 also allows lessors to not separate non-lease components from the associated lease component if certain conditions are met. During the first quarter of 2019, the FASB issued ASU 2019-01, Leases (Topic 842) to amend ASU 2016-02. This amendment exempts both lessees and lessors from having to provide certain prior year interim disclosure information in the fiscal year in which a company adopts the new leases standard. The Company will adopt the ASUs in the first quarter of fiscal 2020 and the Company’s accounting systems will be upgraded to comply with the requirements of the new standard, however, the adoption of ASU 2016-02 is not anticipated to have a material impact on the Company’s financial statements and related disclosures.

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income (loss) are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income (loss) to retained earnings (accumulated deficit) for stranded income tax effects resulting from the Tax Cuts and Jobs Act (the Tax Act). The amendments in this ASU also require certain disclosures about stranded income tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted. The Company has not yet adopted ASU 2018-02 and is currently evaluating the potential impact of adopting the applicable guidance on the Company’s financial statements and related disclosures.

In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). ASU 2018-09 provides amendments to a wide variety of topics in the FASB’s Accounting Standards Codification, which applies to all reporting entities within the scope of the affected accounting guidance. The transition and effective date guidance are based on the facts and circumstances of each amendment. Some of the amendments in ASU 2018-09 do not require transition guidance and were effective upon issuance of ASU 2018-09. However, many of the amendments do have transition guidance with effective dates for annual reporting periods beginning after December 15, 2017 and the interim periods within that year.2018. The Company is currently evaluating the potential impact of this updateadopting the applicable guidance; however the Company does not believe that the adoption of ASU 2018-09 will have a material impact on the Company’s financial statements.statements and related disclosures.

In January 2015,August 2018, the FASB issued Accounting Standards Update No. 2015-04, “Requirement that All Deferred Income Tax Assets and Liabilities Be Presented as Non-Current in a Classified Balance Sheet”ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820). The objective of this update is to require deferred tax liabilities and assets be classified entirely as non-current in a classified balance sheet. This updateupdated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective in annual reportingfor fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 and the interim periods within that year.2019. Early adoption is permitted for any removed or modified disclosures. The Company is evaluatingcurrently assessing the timing and impact of this update onadopting the Company’s financial statements.updated provisions.

In FebruaryAugust 2018, The FASB issued ASU 2018-14 to improve the effectiveness of disclosures for defined benefit plans under ASC 715-20. The ASU applies to employers that sponsor defined benefit pension or other postretirement plans. The FASB issued ASU 2018-14 as part of its disclosure framework project, which has an objective and primary focus to improve the effectiveness of disclosures in the notes to financial statements. As part of the project, during August 2018, the Board also issued a Concepts Statement, which the FASB used as a basis for amending the disclosure requirements for Subtopic 715-20. The guidance is effective or fiscal years ending after December 15, 2020 and early adoption is permitted. The Company is currently assessing the timing and impact of adopting the updated provisions.

In June 2016, the FASB issued ASU 2016-02Leases. UnderNo. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which requires the newCompany to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. In November 2018, April 2019 and May 2019, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” “ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses,” “Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” and “ASU No. 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief,” which provided additional implementation guidance lessees will be required to recognize so-called right-of-use assets and liabilities for most leases having lease terms of 12 months or more. This updateon the previously issued ASU. The ASU is effective in annual reporting periodsfor fiscal years beginning after December 31, 2019 and the interim periods starting thereafter.15, 2020. The ASU requires a modified retrospective adoption method. The Company is still evaluating the impact of this updateadoption on its financial statements and disclosures.

Subsequent Events – Management has evaluated all events or transactions that occurred after April 30, 2019 through August 13, 2019 the Company’sreport date of the financial statements. During this period, the Company did not have any material recognizable subsequent events.

Inventories at April 30, 20162019 and 2015,2018, consisted of the following: