UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

[X]Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterquarterly period ended JanuaryJuly 31, 20182021

[  ]Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ________________

Commission File Number: 000-05378

GEORGE RISK INDUSTRIES, INC.

(Exact name of small business issuerregistrant as specified in its charter)

Colorado84-0524756

(State or other jurisdiction of incorporation)

incorporation or organization)

(IRSI.R.S. Employers

Identification No.)

802 South Elm St.
Kimball, NE69145
(Address of principal executive offices)(Zip Code)

(308) 235-4645

(308)235-4645

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.10 par valueRSKIAOTC Markets
Convertible Preferred Stock, $20 stated valueRSKIAOTC Markets

Indicate by check mark whether the issuerregistrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ☒ No ☐

Yes [X]No [  ]

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

Yes [  ]No [X]

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

Large accelerated filer [  ]☐Accelerated filer [  ]☐
Non-accelerated filer [  ] ☐Smaller reporting company [X]☒
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 Exchange Act).Yes [  ]☐ No [X] ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares of the Registrant’s Common Stock outstanding, as of March 16, 2018,September 17, 2021 was 4,968,447.4,946,456.

Transitional Small Business Disclosure Format:Yes [X]   No [  ]

 

 

 

GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

Item 1.ITEM 1: Financial Statements

The unaudited financial statements for the three and nine-monththree-month period ended JanuaryJuly 31, 2018,2021 are attached hereto.

2

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

 January 31, 2018 April 30, 2017  July 31, 2021 April 30, 2021 
 (unaudited)    (unaudited)   
ASSETS                
Current Assets:                
Cash and cash equivalents $3,952,000  $6,456,000  $8,331,000  $7,326,000 
Investments and securities  27,496,000   26,382,000 
Investments and securities, at fair value  34,085,000   33,337,000 
Accounts receivable:                
Trade, net of $16,422 and $2,425 doubtful account allowance  2,471,000   1,848,000 
Trade, net of $15,622 and $9,947 doubtful account allowance  3,652,000   3,812,000 
Other  2,000   3,000   13,000   16,000 
Income tax overpayment  474,000   253,000 
Inventories, net  3,594,000   2,304,000   6,166,000   5,622,000 
Prepaid expenses  487,000   193,000   554,000   405,000 
Total Current Assets $38,476,000  $37,439,000   52,801,000   50,518,000 
                
Property and Equipment, net, at cost  948,000   739,000   1,668,000   1,704,000 
                
Other Assets                
Investment in Limited Land Partnership, at cost  273,000   273,000   320,000   320,000 
Projects in process  —   13,000   240,000   200,000 
Other  77,000   —   7,000   — 
Total Other Assets $350,000  $286,000   567,000   520,000 
                
Intangible Assets, net $1,794,000   — 
Intangible assets, net  1,363,000   1,394,000 
                
TOTAL ASSETS $41,568,000  $38,464,000  $56,399,000  $54,136,000 

See accompanying notes to the condensed financial statements.

GEORGE RISK INDUSTRIES, INC.

CONDENSED BALANCE SHEETS

(continued)

  January 31, 2018  April 30, 2017 
  (unaudited)    
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current Liabilities        
Accounts payable, trade $308,000  $69,000 
Dividends payable  1,580,000   1,416,000 
Accrued expenses:        
Payroll and related expenses  178,000   308,000 
Property taxes  3,000   — 
Total Current Liabilities $2,069,000  $1,793,000 
         
Long-Term Liabilities        
Deferred income taxes  1,902,000   906,000 
Total Long-Term Liabilities $1,902,000  $906,000 
         
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   1,736,000 
Accumulated other comprehensive income  2,623,000   1,239,000 
Retained earnings  36,232,000   35,981,000 
Less: treasury stock, 3,533,934 and 3,557,606 shares, at cost  (4,141,000)  (4,140,000)
Total Stockholders’ Equity $37,597,000  $35,765,000 
         
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY $41,568,000  $38,464,000 

See accompanying notes to the condensed financial statements

3

GEORGE RISK INDUSTRIES, INC.

CONDENSED INCOME STATEMENTS (Unaudited)BALANCE SHEETS

  Three months  Nine months  Three months  Nine months 
  ended  ended  ended  ended 
  Jan 31, 2018  Jan 31, 2018  Jan 31, 2017  Jan 31, 2017 
Net Sales $3,260,000  $8,597,000  $2,645,000  $8,194,000 
Less: Cost of Goods Sold  (1,826,000)  (4,337,000)  (1,229,000)  (3,899,000)
Gross Profit $1,434,000  $4,260,000  $1,416,000  $4,295,000 
                 
Operating Expenses                
General and Administrative  313,000   833,000   223,000   664,000 
Sales  512,000   1,371,000   461,000   1,432,000 
Engineering  22,000   69,000   17,000   59,000 
Rent Paid to Related Parties  5,000   14,000   5,000   14,000 
Total Operating Expenses $852,000  $2,287,000  $706,000  $2,169,000 
                 
Income From Operations  582,000   1,973,000   710,000   2,126,000 
                 
Other Income (Expense)                
Other  —   3,000   1,000   11,000 
Dividend and Interest Income  376,000   811,000   332,000   650,000 
Gain (Loss) on Investments  123,000   94,000   51,000   136,000 
Gain (Loss) on Sale of Assets  —   4,000   —   — 
  $499,000  $912,000  $384,000  $797,000 
                 
Income Before Provisions for Income Taxes  1,081,000   2,885,000   1,094,000   2,923,000 
                 
Provisions for Income Taxes:                
Current Expense  281,000   852,000   313,000   896,000 
Deferred Tax Expense (Benefit)  9,000   1,000   (11,000)  (24,000)
Total Income Tax Expense $290,000  $853,000  $302,000  $872,000 
                 
Net Income $791,000  $2,032,000  $792,000  $2,051,000 
                 
Cash Dividends                
Common Stock ($0.36 per share) $—  $1,780,000         
Common Stock ($0.35 per share)         $—  $1,758,000 
                 
Income Per Share of Common Stock                
Basic $0.16  $0.41  $0.16  $0.41 
Diluted $0.16  $0.41  $0.16  $0.41 
                 
Weighted Average Number of Common                
Shares Outstanding                
Basic  4,969,013   4,955,725   4,945,972   4,996,453 
Diluted  4,989,513   4,976,225   4,966,472   5,016,953 

(continued)

  July 31, 2021  April 30, 2021 
  (unaudited)    
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current Liabilities        
Accounts payable, trade $241,000  $477,000 
Dividends payable  2,073,000   2,080,000 
Accrued expenses:        
Payroll and related expenses  455,000   359,000 
Property taxes  3,000   — 
Income tax payable  628,000   81,000 
Total Current Liabilities  3,400,000   2,997,000 
         
Long-Term Liabilities        
Deferred income taxes  2,842,000   2,735,000 
Total Long-Term Liabilities  2,842,000   2,735,000 
         
Total Liabilities  6,242,000   5,732,000 
         
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  115,000   108,000 
Retained earnings  51,495,000   49,749,000 
Less: treasury stock, 3,556,425 and 3,556,412 shares, at cost  (4,336,000)  (4,336,000)
Total Stockholders’ Equity  50,157,000   48,404,000 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $56,399,000  $54,136,000 

See accompanying notes to the condensed financial statements

4

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)STATEMENTS

  Three months  Nine months  Three months  Nine months 
  ended  ended  ended  ended 
  Jan 31, 2018  Jan 31, 2018  Jan 31, 2017  Jan 31, 2017 
Net Income $791,000  $2,032,000  $792,000  $2,051,000 
                 
Other Comprehensive Income, Net of Tax                
Unrealized gain (loss) on securities:                
Unrealized holding gains (losses) arising during period  1,247,000   2,585,000   570,000   796,000 
Reclassification adjustment for gains (losses) included in net income  (88,000)  (205,000)  (5,000)  (88,000)
Income tax benefit (expense) related to other comprehensive income  (485,000)  (995,000)  (236,000)  (296,000)
Other Comprehensive Income  674,000   1,385,000   329,000   412,000 
                 
Comprehensive Income $1,465,000  $3,417,000  $1,121,000  $2,463,000 

FOR THE THREE MONTHS ENDED JULY 31, 2021 AND 2020

(Unaudited)

  July 31, 2021  July 31, 2020 
       
Net Sales $4,955,000  $4,047,000 
Less: Cost of Goods Sold  (2,318,000)  (1,952,000)
Gross Profit  2,637,000   2,095,000 
         
Operating Expenses:        
General and Administrative  349,000   313,000 
Sales  740,000   567,000 
Engineering  18,000   29,000 
Total Operating Expenses  1,107,000   909,000 
         
Income From Operations  1,530,000   1,186,000 
         
Other Income (Expense)        
Other  1,000   12,000 
Dividend and Interest Income  176,000   156,000 
Unrealized gain (loss) on equity securities  420,000   2,114,000 
Gain (Loss) on Sale of Investments  220,000   (28,000)
Total Other Income (Expense)  817,000   2,254,000 
         
Income Before Provisions for Income Taxes  2,347,000   3,440,000 
         
Provisions for Income Taxes        
Current Expense  498,000   349,000 
Deferred tax expense  103,000   599,000 
Total Income Tax Expense  601,000   948,000 
         
Net Income $1,746,000  $2,492,000 
         
Basic Earnings Per Share of Common Stock $0.35  $0.50 
Diluted Earnings Per Share of Common Stock $0.35  $0.50 
         
Weighted Average Number of Common Shares Outstanding  4,946,460   4,949,927 
Weighted Average Number of Shares Outstanding (Diluted)  4,966,960   4,970,427 

See accompanying notes to the condensed financial statements

5

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTSTATEMENTS OF CASH FLOWS (Unaudited)COMPREHENSIVE INCOME

  Nine months  Nine months 
  ended  ended 
  Jan 31, 2018  Jan 31, 2017 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net Income $2,032,000  $2,051,000 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  163,000   138,000 
(Gain) loss on sale of investments  (117,000)  (149,000)
Impairments on investments  23,000   13,000 
Reserve for bad debts  13,000   — 
Reserve for obsolete inventory  —   5,000 
Deferred income taxes  1,000   (24,000)
(Gain) loss on sale of assets  (4,000)  — 
Changes in assets and liabilities:        
(Increase) decrease in:        
Accounts receivable  (636,000)  163,000 
Inventories  (1,291,000)  426,000 
Prepaid expenses  (359,000)  (48,000)
Other receivables  2,000   (5,000)
Income tax overpayment  (221,000)  (43,000)
Increase (decrease) in:        
Accounts payable  239,000   20,000 
Accrued expenses  (127,000)  (72,000)
Net cash provided by (used in) operating activities $(282,000) $2,475,000 
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Proceeds from sale of assets  4,000   — 
(Purchase) of property and equipment  (342,000)  (146,000)
Proceeds from sale of marketable securities  2,013,000   586,000 
(Purchase) of marketable securities  (653,000)  (668,000)
(Purchase) of intangible assets  (1,624,000)  — 
(Purchase) of long-term investment  —   (20,000)
Net cash provided by (used in) investing activities $(602,000) $(248,000)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
(Purchase) of treasury stock  (3,000)  (551,000)
Dividends paid  (1,617,000)  (1,596,000)
Net cash provided by (used in) financing activities $(1,620,000) $(2,147,000)
         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $(2,504,000) $80,000 
         
Cash and Cash Equivalents, beginning of period $6,456,000  $5,918,000 
Cash and Cash Equivalents, end of period $3,952,000  $5,998,000 
         
         
Supplemental Disclosure for Cash Flow Information:        
Cash payments for:        
Income taxes $1,320,000  $1,059,000 
Interest paid $0  $0 
Cash receipts for:        
Income taxes $253,000  $125,000 
         
Supplemental Disclosure of Noncash Investing and Financing Activities:        
Issuance of treasury stock as part of asset acquisition $200,000  $0 

FOR THE THREE MONTHS ENDED JULY 31, 2021 AND 2020

(Unaudited)

  July 31, 2021  July 31, 2020 
       
Net Income $1,746,000  $2,492,000 
         
Other Comprehensive Income, Net of Tax        
Unrealized gain on debt securities:        
Unrealized holding gains arising during period  11,000   149,000 
Income tax expense related to other comprehensive income  (4,000)  (44,000)
Other Comprehensive Income  7,000   105,000 
         
Comprehensive Income $1,753,000  $2,597,000 

See accompanying notes to the condensed financial statements

6

GEORGE RISK INDUSTRIES, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JULY 31, 2021 and 2020

(Unaudited)

                 
  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, April 30, 2020  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
Purchases of common stock, shares  —   —   —   — 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, July 31, 2020  4,100  $99,000   8,502,881  $850,000 

  Preferred Stock  

Common Stock

Class A

 
  Shares  Amount  Shares  Amount 
Balances, April 30, 2021  4,100  $99,000   8,502,881  $850,000 
Balance  4,100  $99,000   8,502,881  $850,000 
                 
Purchases of common stock  —   —   —   — 
                 
Unrealized gain, net of tax effect  —   —   —   — 
                 
Net Income  —   —   —   — 
                 
Balances, July 31, 2021  4,100  $99,000   8,502,881  $850,000 
Balance  4,100  $99,000   8,502,881  $850,000 

See accompanying notes to the condensed financial statements

7

GEORGE RISK INDUSTRIES, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITIY

FOR THE THREE MONTHS ENDED JULY 31, 2021 and 2020

(Unaudited)

          Accumulated       
    Treasury Stock  Other       
 Paid-In  (Common Class A)  Comprehensive  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, April 30, 2020$1,934,000   3,552,954  $(4,301,000) $(4,000) $41,006,000  $39,584,000 
                        
Purchases of common stock —   —   —   —   —   — 
                        
Unrealized gain, net of tax effect —   —   —   105,000   —   105,000 
                        
Net Income —   —   —   —   2,492,000   2,492,000 
                        
Balances, July 31, 2020$1,934,000   3,552,954  $(4,301,000) $101,000  $43,498,000  $42,181,000 

          Accumulated       
    Treasury Stock  Other       
 Paid-In  (Common Class A)  Comprehensive  Retained    
 Capital  Shares  Amount  Income  Earnings  Total 
Balances, April 30, 2021$1,934,000   3,556,412  $(4,336,000) $108,000  $49,749,000  $48,404,000 
Balances$1,934,000   3,556,412  $(4,336,000) $108,000  $49,749,000  $48,404,000 
                        
Purchases of common stock —   13   —   —   —   — 
                        
Unrealized gain, net of tax effect —   —   —   7,000   —   7,000 
                        
Net Income —   —   —   —   1,746,000   1,746,000 
                        
Balances, July 31, 2021  $1,934,000   3,556,425  $(4,336,000) $115,000  $51,495,000  $50,157,000 
Balances  $1,934,000   3,556,425  $(4,336,000) $115,000  $51,495,000  $50,157,000 

See accompanying notes to the condensed financial statements

8

GEORGE RISK INDUSTRIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JULY 31, 2021 AND 2020

(Unaudited)

  July 31, 2021  July 31, 2020 
Cash Flows from Operating Activities:        
Net Income $1,746,000  $2,492,000 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  107,000   86,000 
(Gain) loss on sale of investments  (220,000)  — 
Impairments on investments  —   27,000 
Unrealized (gain) loss on equity securities  (420,000)  (2,114,000)
Reserve for bad debts  6,000   (5,000)
Reserve for obsolete inventory  5,000   1,000 
Deferred income taxes  103,000   599,000 
Changes in assets and liabilities:        
(Increase) decrease in:        
Accounts receivable  154,000   49,000 
Inventories  (549,000)  (405,000)
Prepaid expenses  (196,000)  94,000 
Employee receivables  2,000   (1,000)
Increase (decrease) in:        
Accounts payable  (236,000)  117,000 
Accrued expenses  99,000   (61,000)
Income tax payable  547,000   346,000 
Net cash from operating activities  1,148,000   1,225,000 
         
Cash Flows From Investing Activities:        
(Purchase) of property and equipment  (40,000)  (95,000)
Proceeds from sale of marketable securities  2,000   14,000 
(Purchase) of marketable securities  (98,000)  (111,000)
Net cash from investing activities  (136,000)  (192,000)
         
Cash Flows From Financing Activities:        
Dividends paid  (7,000)  — 
Net cash from financing activities  (7,000)  — 
         
Net Change in Cash and Cash Equivalents $1,005,000  $1,033,000 
         
Cash and Cash Equivalents, beginning of period $7,326,000  $6,458,000 
Cash and Cash Equivalents, end of period $8,331,000  $7,491,000 
         
Supplemental Disclosure for Cash Flow Information:        
Cash payments for:        
Income taxes paid $0  $0 
Interest paid $0  $0 
         
Cash receipts for:        
Income taxes $43,000  $0 

See accompanying notes to the condensed financial statements

9

GEORGE RISK INDUSTRIES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

JANUARYJULY 31, 20182021

Note 1:Unaudited Interim Financial Statements

The accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 20172021 annual report on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Operating results for any quarter are not necessarily indicative of the results for any other quarter or for the full year.

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.

Recently Issued Accounting Pronouncements —In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. The objective of this update is to provide a robust framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance. This update is effective in annual reporting periods beginning after December 15, 2017 and the interim periods within that year. The Company is evaluating the impact of this update on the Company’s financial statements.

In February ofJune 2016 the FASB issued ASU 2016-022016-13, “Financial Instruments - Credit Losses (Topic 326),” which was subsequently amended in February 2020 by ASU 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842).” The amendments introduce an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). UnderThe expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the new guidance, lessees willcontractual term. Financial instruments with similar risk characteristics may be required to recognize so-called right-of-use assets and liabilities for most leases having lease terms of 12 months or more. Thisgrouped together when estimating expected credit losses. The update with amendment is effective in annual reporting periodsfor fiscal years beginning after December 31, 2019 and the15, 2022, including interim periods starting thereafter.within those fiscal years. The Company is evaluatingdoes not believe this new guidance will have a material impact on its financial statements and will implement the impact ofdisclosures related to this update on the Company’s financial statements.beginning in 2023.

In February of 2018,January 2020, the FASB issued ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under this update, companies have2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the option to reclassify stranded tax effects caused by US Tax CutsInteractions between Topic 321, Topic 323, and Jobs Act (TCJA) from accumulated other comprehensive income (AOCI) to retained earnings. Under current US GAAP, effects fromTopic 815.” The ASU is based on a change in tax law is recorded as a componentconsensus of the income tax provision relatedEmerging Issues Task Force and is expected to continuing operationsincrease comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. ASU 2020-01 became effective for the Company in the periodfirst quarter of enactment, even if the deferred taxes were established for a financial statement component not part of continuing operations, such as accumulated other comprehensive income (AOCI). Adopting2021. The adoption of this standard will remove tax effects stranded in AOCI by the tax law enactment. Adoption of this ASU is optional. This update is effective in annual reporting periods beginning after December 15, 2018 and the interim periods starting thereafter. The Company is evaluating thedid not have any impact of this update on the Company’s condensed financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.

10

Note 2:Investments

The Company has investments in publicly traded equity securities, corporate bonds, state and municipal debt securities, real estate investment trusts, and money markets funds. markets. The investments in securities are classified as available-for-sale securities and are reported at fair value. Available-for-sale investments in debt securities, which include municipal bonds and bond funds, mature between June 2018November 2021 and November 2048.January 2044. The Company uses the average cost method to determine the cost of equity securities sold andwith any unrealized gains or losses reported in the amount reclassified out of accumulated other comprehensive income intorespective period’s earnings. Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholders’stockholder’s equity. Dividend and interest income are reported as earned.

As of JanuaryJuly 31, 20182021 and April 30, 2017,2021, investments consisted of the following:

Schedule of Investments

   Gross Gross    

 

 

 Gross Gross   
Investments at Cost Unrealized Unrealized Fair  Cost Unrealized Unrealized Fair 
January 31, 2018 Basis Gains Losses Value 
July 31, 2021 Basis Gains Losses Value 
Municipal bonds $5,966,000  $103,000  $(238,000) $5,831,000  $5,861,000  $200,000  $(34,000) $6,027,000 
Corporate bonds $129,000  $2,000  $—  $131,000 
REITs $110,000  $5,000  $(6,000) $109,000   131,000   14,000   (6,000)  139,000 
Equity securities $15,720,000  $4,844,000  $(203,000) $20,361,000   17,492,000   9,730,000   (92,000)  27,130,000 
Money markets and CDs $1,064,000  $—  $—  $1,064,000   789,000   —   —   789,000 
Total $22,989,000  $4,954,000  $(447,000) $27,496,000  $24,273,000  $9,944,000  $(132,000) $34,085,000 

   Gross Gross      Gross Gross   
Investments at Cost Unrealized Unrealized Fair  Cost Unrealized Unrealized Fair 
April 30, 2017 Basis Gains Losses Value 
April 30, 2021 Basis Gains Losses Value 
Municipal bonds $6,045,000  $90,000  $(97,000) $6,038,000  $5,854,000  $198,000  $(43,000) $6,009,000 
Corporate bonds $129,000  $1,000  $—  $130,000 
REITs $64,000  $13,000  $(1,000) $76,000   131,000   11,000   (5,000)  137,000 
Equity securities $15,259,000  $2,441,000  $(319,000) $17,381,000   17,199,000   9,294,000   (74,000)  26,419,000 
Money markets and CDs $2,757,000  $—  $—  $2,757,000   772,000   —   —   772,000 
Total $24,254,000  $2,545,000  $(417,000) $26,382,000  $23,956,000  $9,503,000  $(122,000) $33,337,000 

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 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. As a result of this standard, management did not recordno impairment loss was recorded for the quarter ended July 31, 2021. For the prior quarter ended July 31, 2020, an impairment loss duringof $27,000 was recorded.

11

The Company’s investments are actively traded in the stock and bond markets. Therefore, either a realized gain or loss is recorded when a sale happens. For the quarter ended July 31, 2021 the Company had sales of equity securities which yielded gross realized gains of $238,000 and gross realized losses of $8,000. For the same period, sales of debt securities did not yield any gross realized gains, but did record a lossgross realized losses of $23,000 for$10,000 were recorded. During the nine months ended Januaryquarter ending July 31, 2018. Likewise, for2020, the corresponding periods last year, managementCompany recorded gross realized gains and losses on equity securities of $102,000 and $126,000, respectively, while sales of debt securities did not record ayield any gross realized gains, but gross realized losses of $4,000 were recorded. The gross realized loss fornumbers include the quarter, but did record a $13,000 impairment loss forimpaired figures listed in the nine months ended January 31, 2017.previous paragraph.

The following tables showtable 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 JanuaryJuly 31, 20182021 and April 30, 2017,2021, respectively.

Unrealized Loss Breakdown by Investment Type at JanuaryJuly 31, 20182021

Schedule of Unrealized Loss Breakdown by Investment

 Less than 12 months 12 months or greater Total  Less than 12 months 12 months or greater Total 
Description Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss  Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss 
Municipal bonds $702,000  $(152,000) $1,674,000  $(86,000) $2,376,000  $(238,000) $355,000  $(5,000) $279,000  $(29,000) $634,000  $(34,000)
REITs $56,000  $(5,000) $27,000  $(1,000) $83,000  $(6,000)  —   —   22,000   (6,000)  22,000   (6,000)
Equity securities $534,000  $(35,000) $590,000  $(168,000) $1,124,000  $(203,000)  526,000   (35,000)  499,000   (57,000)  1,025,000   (92,000)
Total $1,292,000  $(192,000) $2,291,000  $(255,000) $3,583,000  $(447,000) $881,000  $(40,000) $800,000  $(92,000) $1,681,000  $(132,000)

Unrealized Loss Breakdown by Investment Type at April 30, 20172021

 Less than 12 months 12 months or greater Total  Less than 12 months 12 months or greater Total 
Description Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss  Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss 
Municipal bonds $1,420,000  $(19,000) $1,292,000  $(78,000) $2,712,000  $(97,000) $390,000  $(6,000) $365,000  $(37,000) $755,000  $(43,000)
REITs $—  $—  $27,000  $(1,000) $27,000  $(1,000)  —   —   23,000   (5,000)  23,000   (5,000)
Equity securities $983,000  $(92,000) $1,689,000  $(227,000) $2,672,000  $(319,000)  340,000   (35,000)  377,000   (39,000)  717,000   (74,000)
Total $2,403,000  $(111,000) $3,008,000  $(306,000) $5,411,000  $(417,000) $730,000  $(41,000) $765,000  $(81,000) $1,495,000  $(122,000)

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, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at JanuaryJuly 31, 2018.2021.

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. The individual holdings have been evaluated, and due to management’s plan to hold on to these investments for an extended period, the Company does not consider these investments to be other-than-temporarily impaired at JanuaryJuly 31, 20182021.

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Note 3:Inventories

Inventories at JanuaryJuly 31, 20182021 and April 30, 20172021 consisted of the following:

Schedule of Inventories

  July 31,  April 30, 
  2021  2021 
       
Raw materials $5,030,000  $4,399,000 
Work in process  574,000   457,000 
Finished goods  742,000   768,000 
Inventory in transit  —   173,000 
Inventory gross  6,346,000   5,797,000 
Less: allowance for obsolete inventory  (180,000)  (175,000)
Inventories, net $6,166,000  $5,622,000 

13

 

  January 31,  April 30, 
  2018  2017 
       
Raw materials $2,704,000  $1,579,000 
Work in process  348,000   442,000 
Finished goods  615,000   356,000 
   3,667,000   2,377,000 
Less: allowance for obsolete inventory  (73,000)  (73,000)
Totals $3,594,000  $2,304,000 

Note 4:Asset Purchase

In October 2017, George Risk Industries, Inc. (the “Company”) purchased assets from Labor Saving Devices, Inc. (“LSDI”). The purchase price for the assets consisted of $3,000,000 in cash and 24,097 shares of the Company’s Class A common stock (valued at $200,000, or approximately $8.30 per share). An initial payment of $1,000,000 in cash was made at closing, with the remaining $2,000,000 in cash paid in November 2017.

The value of the assets purchased as described above at January 31, 2018 consisted of the following:

Type of Assets Beginning Balance  Amortization  Total Assets, Net 
Inventory $1,366,000   —  $1,366,000 
Fixed Assets $10,000   —  $10,000 
Non-compete agreement $10,000   —  $10,000 
Intangible assets $1,814,000  $(30,000) $1,784,000 
Total $3,200,000  $(30,000) $3,170,000 

Since the asset purchase took place in October 2017, there was no value to these assets at April 30, 2017.

Note 5:4:Business Segments

The following is financial information relating to industry segments:

Schedule of Financial Information Relating to Industry Segments

  July 31, 
  2021  2020 
Net revenue:        
Security alarm products $4,257,000  $3,114,000 
Cable & wiring tools  538,000   800,000 
Other products  160,000   133,000 
Total net revenue $4,955,000  $4,047,000 
         
Income from operations:        
Security alarm products $1,315,000  $912,000 
Cable & wiring tools  166,000   235,000 
Other products  49,000   39,000 
Total income from operations $1,530,000  $1,186,000 
         
Depreciation and amortization:        
Security alarm products $35,000  $22,000 
Cable & wiring tools  31,000   31,000 
Other products  22,000   12,000 
Corporate general  19,000   21,000 
Total depreciation and amortization $107,000  $86,000 
         
Capital expenditures:        
Security alarm products $40,000  $93,000 
Cable & wiring tools  —   — 
Other products  —   2,000 
Corporate general  —   — 
Total capital expenditures $40,000  $95,000 

  July 31, 2021  April 30, 2021 
Identifiable assets:        
Security alarm products $9,415,000  $8,955,000 
Cable & wiring tools  2,428,000   2,534,000 
Other products  646,000   667,000 
Corporate general  43,910,000   41,980,000 
Total assets $56,399,000  $54,136,000 

14

 

  Three months  Nine months  Three months  Nine months 
  ended  ended  ended  ended 
  Jan 31, 2018  Jan 31, 2018  Jan 31, 2017  Jan 31, 2017 
Net revenue:                
Security alarm products $2,715,000  $6,683,000  $2,214,000  $6,955,000 
Other products  545,000   1,914,000   431,000   1,239,000 
Total net revenue $3,260,000  $8,597,000  $2,645,000  $8,194,000 
                 
Income from operations:                
Security alarm products  452,000   1,534,000   603,000   1,805,000 
Other products  130,000   439,000   107,000   321,000 
Total income from operations $582,000  $1,973,000  $710,000  $2,126,000 
                 
Depreciation and amortization:                
Security alarm products  10,000   28,000   7,000   29,000 
Other products  52,000   94,000   27,000   80,000 
Corporate general  15,000   41,000   13,000   29,000 
Total depreciation and amortization $77,000  $163,000  $47,000  $138,000 
                 
Capital expenditures:                
Security alarm products  —   260,000   —   — 
Other products  —   —   16,000   130,000 
Corporate general  16,000   81,000   10,000   16,000 
Total capital expenditures $16,000  $341,000  $26,000  $146,000 

  January 31, 2018  April 30, 2017 
Identifiable assets:        
Security alarm products  4,424,000   3,180,000 
Other products  2,371,000   1,517,000 
Corporate general  34,773,000   33,767,000 
Total assets $41,568,000  $38,464,000 
         

Note 6:5: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

  For the three months ended January 31, 2018 
  Income  Shares  Per-share 
  (Numerator)  (Denominator)  Amount 
Net Income $791,000         
             
Basic EPS $791,000   4,969,013  $0.1592 
Effect of dilutive securities:            
Convertible preferred stock  0   20,500     
Diluted EPS $791,000   4,989,513  $0.1585 
  For the three months ended July 31, 2021 
  Income  Shares  Per-Share 
  (Numerator)  (Denominator)  Amount 
Net income $1,746,000         
Basic EPS $1,746,000   4,946,460  $.35 
Effect of dilutive Convertible Preferred Stock  –   20,500   — 
Diluted EPS $1,746,000   4,966,960  $.35 

  For the nine months ended January 31, 2018 
  Income  Shares  Per-share 
  (Numerator)  (Denominator)  Amount 
Net Income $2,032,000         
             
Basic EPS $2,032,000   4,955,725  $0.4100 
Effect of dilutive securities:            
Convertible preferred stock  0   20,500     
Diluted EPS $2,032,000   4,976,225  $0.4083 

  For the three months ended January 31, 2017 
  Income  Shares  Per-share 
  (Numerator)  (Denominator)  Amount 
Net Income $792,000         
             
Basic EPS $792,000   4,945,972  $0.1601 
Effect of dilutive securities:            
Convertible preferred stock  0   20,500     
Diluted EPS $792,000   4,966,472  $0.1595 
  For the nine months ended January 31, 2017 
  Income  Shares  Per-share 
  (Numerator)  (Denominator)  Amount 
Net Income $2,051,000         
Basic EPS $2,051,000   4,996,453  $0.4105 
Effect of dilutive securities:            
Convertible preferred stock  0   20,500     
Diluted EPS $2,051,000   5,016,953  $0.4088 
  For the three months ended July 31, 2020 
  Income  Shares  Per-Share 
  (Numerator)  (Denominator)  Amount 
Net income $2,492,000         
Basic EPS $2,492,000   4,949,927  $.50 
Effect of dilutive Convertible Preferred Stock  –   20,500   — 
Diluted EPS $2,492,000   4,970,427  $.50 

Note 7:6: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 corporation.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 by the Company of approximately $2,000$17,000 and $13,000 were paid during bothin each of the quarters ending JanuaryJuly 31, 20182021 and 2017,2020 respectively. Likewise, the Company paid matching contributions of approximately $8,000 during the nine-month period ending January 31, 2018 and $7,000 during the corresponding period the prior fiscal year.

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Note 8: 7:Fair Value Measurements

Generally accepted accounting principles inThe carrying value of the United States of America (US GAAP) definesCompany’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair value asdue 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 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The levels of the fair value hierarchy under US GAAP are described below:

Level 1Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2Valuation 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 3Valuation 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 JanuaryJuly 31, 2018,2021, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts (REITS)(REITs) as well as certain state and municipal debt securities and corporate bonds. Oursecurities. The marketable securities are valued using third-party broker statements. The value of the investmentsmajority of securities is derived from quoted market information. The inputs to the valuation are generally 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 settable sets 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.

  

Assets Measured at Fair Value on a Recurring Basis as of

January 31, 2018

 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $-  $5,831,000  $-  $5,831,000 
Corporate Bonds $131,000  $-  $-  $131,000 
REITs $-  $109,000  $-  $109,000 
Equity Securities $20,361,000  $-  $-  $20,361,000 
Money Markets and CDs $1,064,000  $-  $-  $1,064,000 
Total fair value of assets measured on a recurring basis $21,556,000  $5,940,000  $-  $27,496,000 

16

 

  

Assets Measured at Fair Value on a Recurring Basis as of

April 30, 2017

 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $—  $6,038,000  $—  $6,038,000 
Corporate Bonds $130,000  $—  $—  $130,000 
REITs $—  $76,000  $—  $76,000 
Equity Securities $17,381,000  $—  $—  $17,381,000 
Money Markets and CDs $2,757,000  $—  $—  $2,757,000 
Total fair value of assets measured on a recurring basis $20,268,000  $6,114,000  $—  $26,382,000 

Schedule of Assets Measured at Fair Value on Recurring Basis

  

Assets Measured at Fair Value on a Recurring Basis as of

July 31, 2021

 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $—  $6,027,000  $—  $6,027,000 
REITs  —   139,000   —   139,000 
Equity Securities  27,130,000   —   —   27,130,000 
Money Markets and CDs  789,000   —   —   789,000 
Total fair value of assets measured on a recurring basis $27,919,000  $6,166,000  $—  $34,085,000 

  

Assets Measured at Fair Value on a Recurring Basis as of

April 30, 2021

 
  Level 1  Level 2  Level 3  Total 
Assets:                
Municipal Bonds $—  $6,009,000  $—  $6,009,000 
REITs  —   137,000   —   137,000 
Equity Securities  26,419,000   —   —   26,419,000 
Money Markets and CDs  772,000   —   —   772,000 
Total fair value of assets measured on a recurring basis $27,191,000  $6,146,000  $—  $33,337,000 

Note 8Subsequent Events

None

17

 

Note 9: Subsequent Events

None

GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

Item 2.2: Management Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This Quarterly Report on Form 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,” “project” 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 condensed consolidated financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2017.2021.

Executive Summary

The Company’s performance has remained steady during the quarter ended July 31, 2021 as compared to the quarter ended July 31, 2020. Although sales have increased when comparing to the same quarter last year, overall net income is down because unrealized gains on investments aren’t as big as they were for the same quarter last year. The uptick in sales is direct result of the closure of a competitor at the end of calendar year 2019 and having the ability to continue working through the three quarters, with increased sales, being offset by increased cost of sales, and greatly improved investment returns. This is due to the continuation of our quality USA made products with the ability for customization, our notable customer service, and the purchaseCOVID-19 pandemic. As a result of the assets of Labor Saving Devices, Inc. New challengesincreased demand, the Company is experiencing a sizable back order log; however, management has endured overbeen able to increase inventory. Management now intends to focus on ramping up production to meet customer’s needs in a timely manner. Opportunities include continuing to learn and grow with our computer system and to continue looking at businesses that might be a good fit to purchase. We also have new products that are scheduled to enter the ninemarketplace by the end of the calendar year. Challenges in the coming months of this fiscal year include the continuation of training of our new software system, learning and incorporating the Labor Saving Devicescontinuing to get product line,out to customers in a timely manner and dealing with some shortagesCOVID-19 pandemic restrictions. Possible COVID-19 challenges include, but are not limited to, price increases and/or delays in the supply chain, reduced sales, workforce interruptions, and defectseconomic conditions impacting the stock market. Management continues to work at keeping operations flowing as efficient as possible with the hopes of raw materials.getting the facilities running leaner and more profitable than ever before.

Results of Operations

●Net sales were $3,260,000 for the quarter ended JanuaryJuly 31, 2018, which is2021 showed a 23.25%22.44% increase from the corresponding quarter last year. Year-to-date net sales were $8,597,000 at January 31, 2018, which is a 4.92% increase fromover the same period lastin the prior year. A significant part of growth inThe Company saw increased sales isresulting primarily from a direct result of the asset purchase of Labor Saving Devicescompetitor no longer selling competing products and having a new product linethe ability to sell as a result ofcontinue to work through the purchase. Also,COVID-19 pandemic. Management also believes that sales continue to grow due to our ongoing commitment to outstanding customer service and customization of products are a few of the many reasons sales remained steady over the years.our ability to customize products.
●Cost of goods sold was 56.0%decreased from 48.23% of net sales forin the quarter ended January 31, 2018 and was 46.4% for the same quarter last year. Year-to-date cost of goods sold percentages were 50.4% forprior year, to 46.78% in the current nine months and 47.6% for the corresponding nine months last year,quarter, which is just slightly overinside of Management’s goal to keep labor and other manufacturing expenses within the targetrange of less than45 to 50% for both the quarter and year-to-date results. There were some added expenses that were incurred with the purchase of Labor Saving Devices that happened during this quarter but they were “one time” expenses management expects the. The decreased cost of goods sold percentage to fall to return to normalis a reflection of training initiatives resulting in the future.more efficient production.

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●
●Operating expenses increased by $146,000$198,000 when comparing the current year quarter to the same quarter for the prior year; however, the percentage of net sales decreased to 22.34% for the quarter and also increased by $118,000ended July 31, 2020 compared to 22.46% for the nine-months ended January 31, 2018 as comparedcorresponding quarter last year. The dollar amount increase is the result of increased personnel and commission expense related to the corresponding periods last year. These increased costs are primarily dueincrease in net sales; however, the Company maintained the ratio of operating expenses to increased new product development, increased commissions, and additional training and maintenance fees on our new computer softwarenet sales at less than 30%, which is in line with historical ratios.
●
●Income from operations for the quarter ended JanuaryJuly 31, 20182021 was at $582,000$1,530,000, which is an 18.02% decreasea 29.01% increase from the corresponding quarter last year, which had income from operations of $710,000. Income from operations for the nine months ended January 31, 2018 was at $1,973,000, which is a 7.20% decrease from the corresponding nine months last year, which had income from operations of $2,126,000.$1,186,000.
●Other income and expenses are up when comparingshowed a $817,000 gain for the quarter ended July 31, 2021 as compared to a $2,254,000 gain for the quarter ended July 31, 2020. For the three months ended July 31, 2021, $420,000 of unrealized gains from equity securities were recorded, compared to the current quarter$2,114,000 of unrealized gains from equity securities recorded for the three months ended July 31, 2020. The remainder of the increase is primarily due to dividend and nine-month periods the prior year, with an increaseinterest income and gains on sales of $115,000investments.
●The Company’s provision for income taxes showed a decrease of $347,000 from $948,000 in the current quarter and an increase of $115,000ended July 31, 2020 to $601,000 for the quarter ended July 31, 2021. This decrease is primarily due to decreased deferred taxes resulting from a much smaller unrealized gain for the current year-to-date. The majority of activity in these accounts consists of investment interest, dividends, and gain or loss on sale of investments. With the continued growth in the performance of the stock market, decisions were made to sell holdings and take the realized gain and dividends and interest payments exceeded expectations and many of our holdings had additional and increased dividend payouts.quarter.
●Overall,In turn, net income for the quarter ended JanuaryJuly 31, 20182021 was down $1,000, or 0.13%,$1,746,000, a 29.94% decrease from the samecorresponding quarter last year. Similarly,year, which showed net income of $2,492,000.
●Earnings per share for the nine-month periodquarter ended JanuaryJuly 31, 2018 was down $19,000, or 0.93%, from the same period in the prior year.
●Earnings2021 were $0.35 per common share and $0.50 per common share for the quarter ended JanuaryJuly 31, 2018 were $0.16 per share and $0.41 per share for the year-to-date numbers. EPS for the quarter and nine months ended January 31, 2017 were also $0.16 per share and $0.41 per share, respectively.2020.

Liquidity and capital resources

Operating

●Operating
●Net cash decreased $2,504,000increased $1,005,000 during the nine monthsquarter ended JanuaryJuly 31, 20182021 as compared to an increase of $80,000$1,033,000 during the corresponding periodquarter last year. This
●Accounts receivable decreased $154,000 for the quarter ending July 31, 2021 compared with a $49,000 decrease for the same quarter last year. The bigger decrease in accounts receivable is directly attributable to an increase in sales and customers being able to pay timely as the COVID-19 pandemic has become a part of our everyday life. Management still has the ability to collect on accounts and to keep past due accounts to a minimum. An analysis of accounts shows that there were only 3.26% that were over 90 days at July 31, 2021.
●Inventories increased $549,000 during the current quarter as compared to a $405,000 increase last year. The larger increase is primarily due to the asset purchasefact that the Company is continuing to buy more raw materials due to increased orders and that the prices of Labor Saving Devices, Inc., whichraw materials continue to increase.

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●For the quarter ended July 31, 2021 there was done without outside financing.a $196,000 increase in prepaid expenses compared to a decrease of $94,000 for the quarter ended July 31, 2020. The current increase is due to more prepayments of raw materials. Lead times and costs have risen on raw materials, making it a challenge to obtain these raw materials.
●Accounts receivable increased $636,000payable shows a decrease of $236,000 for the nine monthsquarter ended JanuaryJuly 31, 20182021 compared with a $163,000 decreaseto an increase of $117,000 for the same period last year.quarter the year before. The current year increasevariance is a result of improved sales and collections on accounts receivable taking a bit longer than normal. Management believes that approximately $16,000 of accounts over 90 days have a possibility of being uncollectible.
●Inventories increased $1,291,000 during the current nine-month period as compared to an decrease of $426,000 last year, primarily due to the inventory purchased from Labor Saving Devices.
●Prepaid expenses saw a $359,000 increase for the current nine months, primarily due to the prepaymenttiming differences of inventory the Company purchases. Likewise, the prior nine months showed a $48,000 increase in prepaid expenses.
●Income tax overpayment for the nine months ended January 31, 2018 increased $221,000, as the overpayment also showed an increase of $43,000 for the same period the prior year. The main reason for the current increasewhen product is that the Company expects to generate additional income with the asset acquisition that happened earlier this fiscal year.
●Accounts payable shows increases for both nine-month periods at $239,000 and $20,000, respectively. The companyreceived. Management strives to pay all invoicespayables within terms, andunless there is a problem with the variancemerchandise.
●Accrued expenses increased $99,000 for the current quarter as compared to a $61,000 decrease for the quarter ended July 31, 2020. The difference in increasesthe amounts is primarily due to the timing of receipt of products and payment of invoices.when payroll periods end.
●Accrued expenses decreased $127,000Income tax payable for the current nine-month period asquarter ended July 31, 2021 increased $547,000, compared to a $72,000 decrease$346,000 increase for the nine-month periodquarter ended JanuaryJuly 31, 2017.2020. The current increase is due to larger tax estimates in relation to increased income.

Investing

●As for our investment activities, the
Investing
●The Company spent approximately $342,000 on acquisitionspurchased $40,000 of property and equipment forduring the current nine-month period, infiscal quarter. In comparison, with$95,000 was spent on purchases of property and equipment during the corresponding nine monthsquarter last year, where there was activity of $146,000.year.
●As a result of the asset acquisition of Labor Saving Devices, Inc. (“LSDI”), a net amount of $1,624,000 of intangible assets were bought, along with inventory and fixed assets. Since the acquisition took place in the current year, there was no cash towards this item for the same reporting period last year.
●Additionally, theThe Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the nine-month period ended January 31, 2018 there was quite a bit of buy/sell activity in the investment accounts. Net cashCash spent on purchases of marketable securities for the nine-month periodquarter ended JanuaryJuly 31, 20182021 was $653,000$98,000 compared to $668,000$111,000 spent induring the prior nine-month period.quarter ended July 31, 2020. We continue to use “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.

Financing

●
Financing
●The Company continues to purchase back common stock when the opportunity arises. Forarises, but for the nine-month periodquarter ended JanuaryJuly 31, 2018,2021 and 2020, respectively, the Company purchased $3,000 worth ofdid not buyback any treasury stock. This is in comparison to $551,000 spent in the same nine months period the prior year.
●The company paid out dividends of $1,617,000 during the nine months ending January 31, 2018. These dividends were paid during the second quarter. The company declared a dividend of $0.36 per share of common stock on September 30, 2017 and these dividends were paid by October 31, 2017. As for the prior year numbers, dividend paid was $1,596,000 for the nine months ending January 31, 2017. A dividend of $0.35 per common share was declared and paid during the second fiscal quarter last year.

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TheIn conjunction with the Company’s Condensed Financial Statements, we have provided the following is a list of ratios to help analyze George Risk Industries’ performance:

  Qtr ended  Qtr ended 
  July 31, 2021  July 31, 2020 
Working capital
(current assets – current liabilities)		 $49,401,000  $40,103,000 
Current ratio
(current assets / current liabilities)		  15.529   11.485 
Quick ratio
((cash + current investments + AR) / current liabilities)		  13.549   9.953 

  For the quarter ended 
  January 31, 2018  January 31, 2017 

Working capital

(current assets – current liabilities)

 $36,407,000  $34,041,000 

Current ratio

(current assets / current liabilities)

  18.596   17.171 

Quick ratio

((cash + investments + AR) / current liabilities)

  16.394   15.773 

New Product Development

The Company and itsits’ engineering department continueperpetually work to develop enhancements to current product lines, develop new products which complement existing products, and look for products that are well suited to our distribution network and manufacturing capabilities. Items currently in various stages of the development process include:

●A new face plateExplosion proof contacts that will be UL listed for hazardous locations are in development. There has been demand from 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.customers for this type of high security magnetic reed switch.
●

An updated version of the pool access alarm is currently going through ETL testing.(PAA) has met electrical listing testing (ETL) approval and production has started. 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.

We are currently redesigning our glass break detector switch and water shutoff system to include a brass valve.

●The case for our CC15 is complete and has been submitted to U.L. for approval for the US and Canada. This will allow us to manufacture several different versions. One is a 15-amp version that would automatically turn on a whole room of lights. Another is a 220-volt version to be used in international markets.
●We continue to work on high security switches. We have a triple biased high security switch design nearly complete and an adjustable magnet design was completed for recessed mounting applications.
●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.
●A new float water sensor is being developed that will monitor water levels in livestock tanks and sump pumps.
●Wireless technology is a main area of focus for product development. We are consideringlooking 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.
●An updated version of our 200-36 & 4532 overhead door switch line up is nearing completion with the new aluminum cases presently on order. The modified versions, the 200-36UF and 4532UF, are being made as a universal fit switch. This will allow an installer to replace an existing switch without drilling new holes into the cement or adjusting the location. The modified case has an additional mounting hole along with reshaped mounting holes.

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Other Information

In addition to researching and developing new products, 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.

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

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers. The objective of this update is to provide a robust framework for addressing revenue recognition issues and, upon its effective date, replaces almost all existing revenue recognition guidance. This update is effective in annual reporting periods beginning after December 15, 2017 and the interim periods within that year. The Company is evaluating the impact of this update on the Company’s financial statements.

In February ofJune 2016 the FASB issued ASU 2016-022016-13, “Financial Instruments - Credit Losses (Topic 326),” which was subsequently amended in February 2020 by ASU 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842).” The amendments introduce an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). UnderThe expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the new guidance, lessees willcontractual term. Financial instruments with similar risk characteristics may be required to recognize so-called right-of-use assets and liabilities for most leases having lease terms of 12 months or more. Thisgrouped together when estimating expected credit losses. The update with amendment is effective in annual reporting periodsfor fiscal years beginning after December 31, 2019 and the15, 2022, including interim periods starting thereafter.within those fiscal years. The Company is evaluatingdoes not believe this new guidance will have a material impact on its financial statements and will implement the impact ofdisclosures related to this update on the Company’s financial statements.beginning in 2023.

In February of 2018,January 2020, the FASB issued ASU 2018-02 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under this update, companies have2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the option to reclassify stranded tax effects caused by US Tax CutsInteractions between Topic 321, Topic 323, and Jobs Act (TCJA) from accumulated other comprehensive income (AOCI) to retained earnings. Under current US GAAP, effects fromTopic 815.” The ASU is based on a change in tax law is recorded as a componentconsensus of the income tax provision relatedEmerging Issues Task Force and is expected to continuing operationsincrease comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. ASU 2020-01 became effective for the Company in the periodfirst quarter of enactment, even if the deferred taxes were established for a financial statement component not part of continuing operations, such as accumulated other comprehensive income (AOCI). Adopting2021. The adoption of this standard will remove tax effects stranded in AOCI by the tax law enactment. Adoption of this ASU is optional. This update is effective in annual reporting periods beginning after December 15, 2018 and the interim periods starting thereafter. The Company is evaluating thedid not have any impact of this update on the Company’s condensed financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.

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GEORGE RISK INDUSTRIES, INC.

PART I. FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures aboutAbout Market Risk

Not applicableThis disclosure does not apply.

Item 4. Controls and Procedures

Our management, under the supervision and with the participation of our chief executive officer (also working as our chief financial officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of JanuaryJuly 31, 2018.2021. Based on that evaluation, our chief executive officer (also working as our chief financial officer)management concluded that the disclosure controls and procedures employed at the Company were not effective to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

In our annual report filed on Report 10-K for the year ended April 30, 2021, management identified the following material weakness in our 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. Due to the departure of the Controller, 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.

We continue to operate with a limited number of accounting and financial personnel. For the quarter ending July 31, 2021 the Company did not have taken measures to improve our disclosure controls and procedures. A new accounting professional was hired in October 2017a Controller, but management is looking to fill the Controller position. Regarding this filing, more trainingposition as soon as possible. Training will be required to fulfill disclosure control and procedure responsibilities, including review procedures for key accounting schedules and timely and proper documentation of material transactions and agreements. Until sufficient training has taken place offor this new Controller, we believe this control deficiency represents material weaknesses in internal control over financial reporting. To mitigate the effects of the material weakness identified in our annual report, the Company contracted with an outside CPA to perform a secondary review of our quarterly report filed on Form 10-Q.

Despite the material weaknesses in financial reporting noted above, we believe that our consolidated financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.

We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.

Changes in Internal Control Over Financial Reporting

There wasOther than those mentioned above, there were no changechanges in our internal control over financial reporting during the fiscal quarter ended JanuaryJuly 31, 20182021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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GEORGE RISK INDUSTRIES, INC.

PartPART II. OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information relating to the Company’s repurchase of common stock for the thirdfirst quarter of fiscal year 2018.2022.

PeriodNumber of shares repurchased
NovemberMay 1, 20172021 – November 30, 2017May 31, 2021-0-
DecemberJune 1, 20172021 – December 31, 2017June 30, 2021-0--13-
JanuaryJuly 1, 20182021 – JanuaryJuly 31, 20182021100-0-

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit No.Description
31.1
10.1Material Contract – Purchase Agreement
31.1Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 302 of the Sarbanes-Oxley Act of 2002.
32.132.1Certification of the Chief Executive Officer (Principal Financial and Accounting Officer), as required by Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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Pursuant to

SIGNATURES

In accordance with the requirements of the Securities Exchange Act, of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

George Risk Industries, Inc.
(Registrant)
Date March 16, 2018September 20, 2021By:/s/ Stephanie M. Risk-McElroy
Stephanie M. Risk-McElroy
President, Chief Executive Officer, Chief Financial Officer
and Chairman of the Board

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