What changed in this filing

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Item 1. Financial Statements

2020-12-15 compared with 2020-09-18 · 337 added, 260 removed, 385 unchanged (61% of the section changed)

unaudited financial statements for the three-month period ended July 31, 2020 are attached hereto.

Financial Statements

unaudited financial statements for the three-and six-month periods ended October 31, 2020, are attached hereto.

RISK INDUSTRIES, INC.

BALANCE SHEETS

July 31, 2020

October 31, 2020

April 30, 2020

1 unchanged sentence

Cash and cash equivalents

Investments and securities, at fair value

Investments and securities

Accounts receivable:

9 unchanged sentences

Intangible Assets, net

accompanying notes to the condensed financial statements

accompanying notes to the unaudited condensed financial statements.

RISK INDUSTRIES, INC.

BALANCE SHEETS

July 31, 2020

October 31, 2020

April 30, 2020

4 unchanged sentences

Accrued expenses:

Payroll and related expenses

Property taxes

Payroll and other expense

Income tax payable

7 unchanged sentences

Stockholders’

Convertible preferred stock, 1,000,000 shares authorized, Series 1—noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding

Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and outstanding

Convertible preferred stock, 1,000,000 shares authorized, Series

1—noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding

Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,881 shares issued and

Additional paid-in capital

4 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS’

accompanying notes to the condensed financial statements

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

INCOME STATEMENTS

THE THREE MONTHS ENDED JULY 31, 2020 AND 2019

July 31, 2020

July 31, 2019

THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2020 AND 2019

Cost of Goods Sold

Operating Expenses

General and Administrative

Rent Paid to Related Parties

and Administrative

Paid to Related Parties

Total Operating Expenses

1 unchanged sentence

Other Income (Expense)

Dividend and Interest Income

Unrealized gain (loss) on equity securities

Gain (Loss) on Sale of Investments

Income Before Provisions for Income Taxes

Provisions for Income Taxes

Current Expense

Deferred tax expense

Total Income Tax Expense

Basic Earnings Per Share of Common Stock

Diluted Earnings Per Share of Common Stock

and Interest Income

Gain (Loss) on Equity Securities

on Investments

on Sale of Assets

Income Before Provisions

for Income Taxes

Provisions for Income

Tax (Benefit) Expense

Income Tax Expense

Income Per Share of Common Stock

Weighted Average Number of Common Shares Outstanding

Weighted Average Number of Shares Outstanding (Diluted)

accompanying notes to the condensed financial statements

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

STATEMENTS OF COMPREHENSIVE INCOME

THE THREE MONTHS ENDED JULY 31, 2020 AND 2019

July 31, 2020

July 31, 2019

THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2020 AND 2019

Other Comprehensive Income, Net of Tax

Unrealized gain on debt securities:

Unrealized holding gains arising during period

Income tax expense related to other comprehensive income

Other Comprehensive Income

Unrealized gain (loss) on debt securities:

Unrealized holding gains (losses) arising during period

Income tax benefit (expense) related to other comprehensive income

Other Comprehensive Income (Loss)

Comprehensive Income

accompanying notes to the condensed financial statements

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

OF STOCKHOLDERS’

THE THREE MONTHS ENDED JULY 31, 2020 and 2019

THE THREE MONTHS ENDED OCTOBER 31, 2020 AND 2019

Preferred Stock

Balances, April 30, 2019

Balances, July 31, 2019

Purchases of common stock

Dividend declared at $0.40 per common share outstanding

Unrealized gain (loss), net of tax effect

Balances, October 31, 2019

Preferred Stock

Balances, July 31, 2020

Purchases of common stock

Dividend declared at $0.42 per common share outstanding

Unrealized gain (loss), net of tax effect

Balances, October 31, 2020

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

OF STOCKHOLDERS’

THE THREE MONTHS ENDED OCTOBER 31, 2020 AND 2019

Treasury Stock

(Common Class A)

Comprehensive

$ (4,280,000 )

$ (4,281,000 )

Treasury Stock

(Common Class A)

Comprehensive

$ (4,301,000 )

$ (4,302,000 )

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

OF STOCKHOLDERS’

THE SIX MONTHS ENDED OCTOBER 31, 2020 AND 2019

Preferred Stock

1 unchanged sentence

Purchases of common stock

Dividend declared at $0.40 per common share outstanding

Unrealized gain (loss), net of tax effect

Balances, July 31, 2020

accompanying notes to the condensed financial statements

Balances, October 31, 2019

Preferred Stock

Balances, April 30, 2020

Purchases of common stock

Dividend declared at $0.42 per common share outstanding

Unrealized gain (loss), net of tax effect

Balances, October 31, 2020

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

OF STOCKHOLDERS’

THE THREE MONTHS ENDED JULY 31, 2020 and 2019

THE SIX MONTHS ENDED OCTOBER 31, 2020 AND 2019

Treasury Stock

8 unchanged sentences

$ (4,302,000 )

accompanying notes to the condensed financial statements

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

STATEMENTS OF CASH FLOWS

THE THREE MONTHS ENDED JULY 31, 2020 AND 2019

July 31, 2020

July 31, 2019

STATEMENTSOF CASH FLOWS

THE SIX MONTHS ENDED OCTOBER 31, 2020 AND 2019

CASH FLOWS FROM OPERATING ACTIVITIES:

7 unchanged sentences

Deferred income taxes

(Gain) loss on sale of assets

Changes in assets and liabilities:

1 unchanged sentence

Accounts receivable

Prepaid expenses

Employee receivables

Prepaid expenses and projects in process

Other receivables

Income tax overpayment

Increase (decrease) in:

4 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of assets

(Purchase) of property and equipment

1 unchanged sentence

(Purchase) of marketable securities

(Purchase) of long-term investment

Net cash from investing activities

1 unchanged sentence

(Purchase) of treasury stock

Dividends paid

Net cash from financing activities

4 unchanged sentences

Cash payments for:

Income taxes paid

Interest paid

accompanying notes to the condensed financial statements

Cash receipts for:

accompanying notes to the unaudited condensed financial statements

RISK INDUSTRIES, INC.

TO CONDENSED FINANCIAL STATEMENTS

Interim Financial Statements

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1 Unaudited Interim Financial Statements

accompanying financial statements have been prepared in accordance with the instructions for Form 10-Q and do not include all

46 unchanged sentences

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

2 Investments

Company has investments in publicly traded equity securities, state and municipal debt securities, real estate investment trusts,

and money markets.

The investments in debt securities, which include municipal bonds and bond funds, mature between March 2021

The investments in debt securities, which include municipal bonds and bond funds, mature between April 2021

and January 2044.

4 unchanged sentences

Dividend and interest income are reported

of July 31, 2020 and April 30, 2020, investments consisted of the following:

of October 31, 2020 and April 30, 2020, investments consisted of the following:

Investments at

July 31, 2020

October 31, 2020

Municipal bonds

22 unchanged sentences

As a result of this standard, management recorded

an impairment loss of $27,000 for the quarter ended July 31, 2020.

For the prior quarter ended July 31, 2019, an impairment loss

of $34,000 was recorded.

an impairment loss of $52,000 for the quarter, and recorded a loss of $79,000 for the six months ended October 31, 2020.

the corresponding periods last year, management recorded an impairment loss of $7,000 for the quarter ended October 31, 2019 and

an impairment loss of $41,000 was recorded for the six-months ended October 31, 2019.

Company’s investments are actively traded in the stock and bond markets.

1 unchanged sentence

when a sale happens.

For the quarter ended July 31, 2020 the Company had sales of equity securities which yielded gross realized

For the quarter ended October 31, 2020 the Company had sales of equity securities which yielded gross realized

gains of $184,000 and gross realized losses of $110,000.

1 unchanged sentence

realized gains, but gross realized losses of $2,000 were recorded.

During the quarter ending July 31, 2019, the Company recorded

gross realized gains and losses on equity securities of $153,000 and $104,000, respectively, as well as gross realized gains and

losses on debt securities of $3,000 and $3,000, respectively.

The gross realized loss numbers include the impaired figures listed

in the previous paragraph.

Proceeds from sales of securities available for sale were $14,000 for the quarter ended July 31, 2020

and were $9,000 for the same quarter the prior year.

As for the six-months ended October 31, 2020 the Company had

sales of equity securities which yielded gross realized gains of $286,000 and gross realized losses of $236,000.

six-month period, sales of debt securities did not yield any gross realized gains, but gross realized losses of $6,000 were recorded.

During the quarter ending October 31, 2019, the Company recorded gross realized gains and losses on equity securities of $67,000

and $57,000, respectively, while sales of debt securities did not yield any gross realized gains or losses.

During the six-months

ending October 31, 2019, the Company recorded gross realized gains and losses on equity securities of $220,000 and $161,000, respectively,

as well as gross realized gains and losses on debt securities of $3,000 and $3,000, respectively.

The gross realized loss numbers

include the impaired figures listed in the previous paragraph.

following table shows the investments with unrealized losses that are not deemed to be “other-than-temporarily impaired”,

aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position,

at July 31, 2020 and April 30, 2020, respectively.

Loss Breakdown by Investment Type at July 31, 2020

at October 31, 2020 and April 30, 2020, respectively.

Loss Breakdown by Investment Type at October 31, 2020

Less than 12 months

12 months or greater

Unrealized Loss

Municipal bonds

3 unchanged sentences

12 months or greater

Unrealized Loss

Municipal bonds

5 unchanged sentences

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 July 31, 2020.

does not consider these investments to be other-than-temporarily impaired at October 31, 2020.

Equity Securities and REITs

4 unchanged sentences

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 July 31, 2020.

at July 31, 2020 and April 30, 2020 consisted of the following:

to be other-than-temporarily impaired at October 31, 2020.

3 Inventories

at October 31, 2020 and April 30, 2020 consisted of the following:

Raw materials

3 unchanged sentences

Inventories, net

4 Business Segments

following is financial information relating to industry segments:

20 unchanged sentences

Total capital expenditures

July 31, 2020

October 31, 2020

April 30, 2020

4 unchanged sentences

Corporate general

5 Earnings per Share

and diluted earnings per share, assuming convertible preferred stock was converted for each period presented, are:

For the three months ended July 31, 2020

the three months ended October 31, 2020

(Denominator)

Effect of dilutive Convertible Preferred Stock

For the three months ended July 31, 2019

of dilutive Convertible Preferred Stock

the six months ended October 31, 2020

(Denominator)

Effect of dilutive Convertible Preferred Stock

of dilutive Convertible Preferred Stock

the three months ended October 31, 2019

(Denominator)

of dilutive Convertible Preferred Stock

the six months ended October 31, 2019

(Denominator)

of dilutive Convertible Preferred Stock

6 Retirement Benefit Plan

January 1, 1998, the Company adopted the George Risk Industries, Inc.

13 unchanged sentences

under the Plan.

Matching contributions of approximately $13,000 and $2,000 were paid in each of the quarters ending July 31, 2020

and 2019 respectively.

Value Measurements

Matching contributions by the Company of approximately $16,000 and $7,000 were paid during each quarter ending

October 31, 2020 and 2019, respectively.

Likewise, the Company paid matching contributions of approximately $29,000 and $9,000

during each six-month period ending October 31, 2020 and 2019, respectively.

7 Fair Value Measurements

carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate their fair

22 unchanged sentences

and Marketable Securities

of July 31, 2020, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts

of October 31, 2020, our investments consisted of money markets, publicly traded equity securities, real estate investment trusts

(REITs) as well as certain state and municipal debt securities.

10 unchanged sentences

Assets Measured at Fair Value on a Recurring Basis as of

July 31, 2020

October 31, 2020

Municipal Bonds

9 unchanged sentences

Total fair value of assets measured on a recurring basis

8 Notes Payable

April 15, 2020, the Company received loan proceeds of approximately $950,000 (the “PPP Loan”) from FirsTier Bank,

3 unchanged sentences

2022 and bears interest at a rate of 1% per annum, payable monthly commencing on November 15, 2020.

The Note may be prepaid by

the Company at any time prior to maturity with no prepayment penalties.

Funds from the PPP Loan may only be used for payroll costs,

costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on certain other debt obligations.

The Company intends to use the entire PPP Loan amount for qualifying expenses.

Under the terms of the PPP, certain amounts of

the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

If the Company submits a loan

forgiveness application within ten months of the completion of the Covered Period, it will not be required to make any payments

until the forgiveness amount is remitted to the lender by Small Business Administration (“SBA”).

Interest accrues

during the time between the disbursement of the loan and the SBA remittance of the forgiveness amount.

The Company is responsible

for paying the accrued interest only on the amount of the loan that is not forgiven.

The lender is responsible for notifying the

Company of remittance of the forgiveness amount by the SBA and, if applicable, the date on which the Company’s first payment

of the remaining balance is due.

The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

Funds from the PPP Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments,

rent, utilities, and interest on certain other debt obligations.

The Company used the entire PPP Loan amount for qualifying expenses.

Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described

in the CARES Act.

On December 3, 2020, the Company received notice from the lender that the entire amount of the PPP loan was forgiven.

9 Subsequent Events

stated above, the Company received notification on December 3, 2020 from its lender of the Paycheck Protection Program (“PPP”)

loan that the full amount of the loan was forgiven.

RISK INDUSTRIES, INC.

1 unchanged sentence

Management Discussion and Analysis of Financial Condition and Results of Operations

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCUSSION AND ANALYSIS

FINANCIAL CONDITION

RESULTS OF OPERATIONS

Quarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of

20 unchanged sentences

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 current information

becomes available in the future.

actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes

available in the future.

following discussion should be read in conjunction with the attached condensed financial statements, and with the Company’s

audited financial statements and discussion for the fiscal year ended April 30, 2020.

Company’s performance improved during the quarter ended July 31, 2020 as compared to the quarter ended July 31, 2019.

main reason for the increase is the closure of a competitor at the end of calendar year 2019, resulting in a major uptick in sales.

As a result of the increased demand, the Company is experiencing a sizable back order log;

however, management has been 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 marketplace by the end of the calendar year.

Challenges in the coming months include continuing to get product out to customers in a timely manner and dealing with COVID-19

pandemic restrictions.

Raw material prices are also a concern with tariffs being levied by the US government and other factors.

Management continues to work at keeping the facilities running leaner and more profitable than ever before.

Company’s performance continues to improve through the first half of the current fiscal year with the second quarter showing

growth over the first quarter of the current fiscal year.

This is mainly due the closure of a competitor at the end of calendar

year 2019 and having the ability to continue to work through the COVID-19 pandemic.

The state of Nebraska, where we are located,

has kept businesses open during the pandemic.

Additionally, the Company’s products are traditionally tied to the housing

market and with that market remaining strong, it in turn helps the Company’s sales grow.

Opportunities include keeping up

with the business growth and to continue looking at businesses that might be a good fit to purchase.

We also have new products

that have hit the marketplace and a couple more that are scheduled to be introduced by the end of the year.

in the coming months include continuing to get product out to customers in a timely manner and dealing with the COVID-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 economic conditions impacting the stock market.

Management continues to work at keeping

operations flowing as efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever

of Operations

sales for the quarter ended July 31, 2020 showed a 13.94% increase over the same period in the prior year.

The Company saw

increased sales resulting primarily from a competitor no longer selling competing products.

Management also believes that

they have been successful at training employees on the new computer system and production is running smoothly.

of goods sold decreased from 49.80% of sales in the prior year, to 48.23% in the current quarter, which is inside of Management’s

goal to keep labor and other manufacturing expenses within the range of 45 to 50%.

The decreased cost of goods sold percentage

is a reflection of training initiatives resulting in more efficient production.

expenses increased by $36,000 when comparing the current year quarter to the same quarter for the prior year;

percentage of net sales decreased to 22.46% for the quarter ended July 31, 2020 compared to 24.58% for the corresponding quarter

The dollar amount increase is the result of increased personnel and commission expense related to the increase

in net sales;

however, the Company maintained the ratio of operating expenses to net sales at less than 30%, which is in line

with historical ratios.

from operations for the quarter ended July 31, 2019 was at $1,186,000, which is a 30.33% increase from the corresponding quarter

last year, which had income from operations of $910,000.

income and expenses showed a $2,254,000 gain for the quarter ended July 31, 2020 as compared to a $388,000 gain for the quarter

ended July 31, 2019.

For the three months ended July 31, 2020, $2,114,000 of unrealized gains from equity securities were

recorded, compared to the $145,000 of unrealized gains from equity securities recorded for the three months ended July 31,

The remainder of the increase is primarily due to dividend and interest income.

Company’s provision for income taxes showed an increase of $626,000 from $322,000 in the quarter ended July 31, 2019

to $948,000 for the quarter ended July 31, 2020.

This increase is primarily due to increased deferred taxes resulting from

a much larger unrealized gain for the current quarter.

turn, net income for the quarter ended July 31, 2020 was $2,492,000, a 155.33% increase from the corresponding quarter last

year, which showed net income of $976,000.

per share for the quarter ended July 31, 2020 were $0.50 per common share and $0.20 per common share for the quarter ended

July 31, 2019.

sales were $4,647,000 for the quarter ended October 31, 2020, which is a 25.26% increase

from the corresponding quarter last year.

Year-to-date net sales were $8,694,000 at October

31, 2020, which is a 19.70% increase from the same period last year.

The increases in

sales are primarily a result of a competitor no longer selling competing products, as

discussed above.

Other than the loss of a competitor, the Company does not believe COVID-19

has had a significant effect on our net revenue and we do not expect it to have a significant

effect going forward.

Also, the ongoing commitment towards outstanding customer service

and customization of products are a few of the many reasons sales continue to grow.

of goods sold was 49.37% of net sales for the quarter ended October 31, 2020 and was

50.13% for the same quarter last year.

Year-to-date cost of goods sold percentages were

48.83% for the current six months and 49.98% for the corresponding six months last year.

The current cost of goods sold percentages are right at Management’s goal of keeping

labor and other manufacturing expenses at less than 50% for both the quarter and year-to-date

Management continues to work with and train employees to work more efficiently

and they also work at getting the best price for raw materials.

expenses were up $85,000 for the quarter and were up $121,000 for the six-months ended

October 31, 2020 as compared to the corresponding periods last year.

But when comparing

percentages in relation to net sales, the operating expenses for the quarter ended October

31, 2020 was 21.28% of net sales while it was 24.37% of net sales for the same quarter

the prior year.

For year-to-date numbers, operating expense were 21.84% and 24.48% of

net sales for the six months ended October 31, 2020 and 2019, respectively.

has been able to keep the operating expenses at less than 30% of net sales for many years

however, the actual dollar amount increase is because of increased commission amounts

(since sales have increased) and additional labor costs for hiring new employees and

wage increases.

from operations for the quarter ended October 31, 2020 was at $1,364,000, which is a

44.19% increase from the corresponding quarter last year, which had income from operations

Income from operations for the six months ended October 31, 2020 was at

$2,550,000, which is a 37.47% increase from the corresponding six months last year, which

had income from operations of $1,855,000.

income and expenses are down when comparing the current quarter to the prior quarter,

with a decrease of $167,000 in the current quarter.

Conversely, other income and expenses

are up by $1,699,000 when comparing the current six-month period to the prior six-month

Most of the activity in these accounts consists of investment interest, dividends,

real gains or losses on sale of investments, and unrealized gains or losses on equity

The main reason for the decrease in the current quarter as opposed to the

increase for the year-to-date numbers is the unrealized gain and loss on equity securities.

The Company is at the mercy of the stock market when it comes to these figures and

the COVID-19 pandemic influenced these numbers.

net income for the quarter ended October 31, 2020 was down $97,000, or 10.14%, from the

same quarter last year.

Conversely, net income for the six-month period ended October

31, 2020 was up $1,420,000, or 73.5%, from the same period in the prior year.

per common share for quarter ended October 31, 2020 were $0.17 per share and $0.68 per

share for the year-to-date numbers.

EPS for the quarter and six months ended October

31, 2019 were $0.19 per share and $0.39 per share, respectively.

and capital resources

cash increased $1,033,000 during the quarter ended July 31, 2020 as compared to an increase of $794,000 during the corresponding

quarter last year.

receivable decreased $49,000 for the quarter ending July 31, 2020 compared with a $163,000 decrease for the same quarter last

The smaller decrease in accounts receivable is directly attributable to some of the Company’s customers not paying

as timely as before.

Management believes this is because of the COVID-19 pandemic.

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 0.63% that were

over 90 days at July 31, 2020.

increased $405,000 during the current quarter as compared to a $288,000 increase last year.

The larger increase is primarily

due to the fact that the Company is stocking up on more raw materials due to increased orders.

In addition, the Company is

keeping more inventory on hand in order to reduce the likelihood of running into a shortage on some major raw materials, such

as we experienced last year.

the quarter ended July 31, 2020 there was a $94,000 decrease in prepaid expenses compared to a decrease of $79,000 for the

quarter ended July 31, 2019.

The current decrease is due to less prepayment of raw materials and running through some of our

prepaid agreements without needing to renew them.

payable shows an increase of $117,000 for the quarter ended July 31, 2020 compared to an increase of $55,000 for the same

quarter the year before, primarily due to increases in inventory of raw materials and timing issues.

Management strives to

pay all payables within terms, unless there is a problem with the merchandise.

expenses decreased $61,000 for the current quarter as compared to a $66,000 decrease for the quarter ended July 31, 2019.

cash decreased $603,000 during the six months ended October 31, 2020 as compared to an increase of $339,000 during the corresponding

period last year.

receivable decreased $32,000 for the six months ended October 31, 2020 compared with a $486,000 decrease for the same period

The smaller current year decrease is a result of improved sales and collections on accounts receivable have improved

over the last year.

An analysis of accounts shows that there were only 0.27% that were over 90 days at October 31, 2020.

increased $637,000 during the current six-month period as compared to a $583,000 increase last year.

The bigger increase in

the current year is primarily due to being prepared for the increase we have seen in sales.

In addition, the Company is keeping

more inventory on hand to reduce the likelihood of running into a shortage on some major raw materials, such as we experienced

expenses saw a $73,000 decrease for the current six months, primarily due to less prepayment of raw materials and running

through some of our prepaid agreements without needing to renew them.

The prior six months showed a $271,000 increase in prepaid

payable shows an increase for the current six-month period of $28,000 while it shows a decrease for the prior six-month periods

The company strives to pay all invoices within terms, and the variance in the decreases is primarily due to the

timing of receipt of products and payment of invoices.

expenses decreased $104,000 for the current six-month period as compared to an $11,000 increase for the six-month period ended

October 31, 2019.

The difference in the amounts is primarily due to timing issues.

tax payable for the quarter ended July 31, 2020 increased $346,000, compared to a $289,000 increase for the quarter ended

July 31, 2019.

The current increase is due to larger tax estimates in relation to increased income.

Company purchased $95,000 of property and equipment during the current fiscal quarter.

In comparison, $169,000 was spent on

purchases of property and equipment during the corresponding quarter last year.

Company continues to purchase marketable securities, which include municipal bonds and quality stocks.

Cash spent on purchases

of marketable securities for the quarter ended July 31, 2020 was $111,000 compared to $132,000 spent during the quarter ended

July 31, 2019.

We continue to use “money manager”

tax payable increased $376,000 for the current six-month period, compared to having a decrease in income tax overpayment for

the six-months ended October 31, 2019.

The current increase is largely due to having increased sales and income and not having

income tax estimates large enough.

Also, since the Company was notified that the PPP loan was forgiven, the forgiveness amount

was included in the income tax expense calculation.

As for our investment activities, the Company purchased $361,000 of property and equipment during the current six-month period.

In comparison, $179,000 was spent on purchases of property and equipment during the corresponding six months last year.

The Company continues to purchase marketable securities,

which include municipal bonds and quality stocks.

During the six-month period ended October 31, 2020 there was quite a bit

of buy/sell activity in the investment accounts.

Net cash spent on purchases of marketable securities for the six-month period

ended October 31, 2020 was $186,000 compared to $250,000 spent in the prior six-month period.

We continue to use “money

manager”

accounts for most stock transactions.

By doing this, the Company

gives an independent third party firm, who are experts in this field, permission to buy and sell stocks at will.

pays a quarterly service fee based on the value of the investments.

Company continues to purchase back common stock when the opportunity arises.

For the quarter ended July 31, 2020, the Company

did not buyback any treasury stock, compared to the $53,000 of common stock purchased during the same period the prior year.

In conjunction

with the Company’s Condensed Financial Statements, we have provided the following list of ratios to help analyze

George Risk Industries’

assets –

By doing this, the Company gives an independent third-party firm, who

are experts in this field, permission to buy and sell stocks at will.

The Company pays a quarterly service fee based on the

value of the investments.

The COVID-19 pandemic has had a negative impact on the performance of the stock market, which has

affected the real and unrealized gains/losses.

Management believes that more realized losses were recorded when investments

were sold and more write downs had to be recorded.

April 15, 2020, the Company received loan proceeds of approximately $950,000 from FirsTier Bank, pursuant to the Paycheck

Protection Program under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

Please refer to Note 8 for

more information about the loan.

In accordance with the terms of the loan, the Company used the proceeds for qualified operating

As of December 3, 2020, the liability of this loan has been completely forgiven.

Company continues to purchase back its common stock when the opportunity arises.

For the six-month period ended October 31,

2020, the Company purchased $1,000 worth of treasury stock, in comparison to $54,000 repurchased in the corresponding six-month

period last year.

company declared a dividend of $0.42 per share of common stock on September 30, 2020, which was paid out during the second

This is a slight increase to the dividend of $0.40, which was declared and paid during the second fiscal quarter

following is a list of ratios to help analyze George Risk Industries’

(current assets –

current liabilities)

assets / current liabilities)

+ current investments + AR) / current liabilities)

(current assets / current liabilities)

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

Product Development

Company and its’

engineering department perpetually 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:

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.

updated version of the pool access alarm is currently going through electrical listing testing.

Since the COVID-19 pandemic

has happened, not much testing has progressed This next-generation model combines our battery operated DPA series with our

Company and its engineering department continue to develop enhancements to product lines, develop new products that complement

existing products, and look for products that are well suited to our distribution network and manufacturing capabilities.

currently in the development process include:

proof contacts that will be UL listed for hazardous locations.

There has been demand

from our customers for this type of high security magnetic reed switch.

updated version of the pool access alarm (PAA) has met electrical listing testing (ETL)

approval and we are currently waiting on component parts to begin production and field

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.

A variety of installation options will be available through jumper

pin settings.

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

the next months we are introducing a couple of new security products.

First, the 2707 Series are triple high biased magnetic

reed contacts for high security and are available in SPDT and DPDT models.

These contacts are resistant to magnetic tamper

They are used in applications such as airports, biotechnology labs, manufacturing plants, banks, military bases

and energy-generation facilities.

Secondly, the 3040 Panic Switch contains screw terminals and uses an actuating lever which

can be triggered with only the tip of the finger.

It can be installed under a counter or desk or any similar place.

uses 12’

extreme temperature rated wire for installation in refrigerators and freezers.

Both models have a latching

LED indicating when the switch is activated and automatically resets when the lever is closed and is fully re-armed.

LED and UL Listed versions are planned to follow.

have launched our new GR1840 Oval Metal Door Channel Magnet.

This is a direct replacement for the obsolete Interlogix magnet.

This magnet fits into the top channel of a metal door and does not require drilling into the door core.

We have also paired

this with several of our ¾”

steel door contacts.

have been several new products that have been introduced for our cable and wiring tools segment.

First, a 12”

hole cutter which compliments the popular 10”

Using a standard drill, this tool allows you to drill various

size holes in the ceiling for speakers and canned lights.

The dust bin which buts against the ceiling keeps the ceiling material

and dust enclosed making for a clean, time saving installation.

Secondly, the lighted Bullnose tips come in a variety of colors;

red, green and blue to go along with the standard clear lights.

These colored lights are placed on FiberFuse wire running

rods which allows easy location of the rod ends in dark places such as attics and crawlspaces.

The rods can be color coded

for wire paths running into different rooms.

Larger batteries add to the longevity of these new lights.

addition to researching developing new products, management is always open to the possibility of acquiring a business or product

We are considering adding

wireless technology to some of our current products.

A wireless contact switch is in

the final stages of development.

Also, we are working on wireless versions of our pool

access 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.

the high security realm, the Company has introduced the 2707 Series which is a triple

high biased magnetic reed contact and available in SPDT and DPDT models.

These contacts

are resistant to magnetic tamper and defeat.

They are used in applications such as airports,

biotechnology labs, manufacturing plants, banks, military bases, and energy-generation

3045 Panic Switch contains screw terminals and uses an actuating lever which can be triggered

with only the tip of the finger.

It can be installed under a counter or desk or any similar

The 3045CT uses 12’

extreme temperature rated wire for installation in refrigerators

and freezers.

Both models have a latching LED indicating when the switch is activated

and automatically resets when the lever is closed and is fully re-armed.

and UL Listed versions will follow.

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.

6 unchanged sentences

Issued Accounting Pronouncements

In June 2016, the FASB

issued ASU No.

June 2016, the FASB issued ASU No.

2016-13, “

1 unchanged sentence

Credit Losses (Topic 326):

Measurement of Credit Losses

on Financial Instruments ”, which requires entities to use a forward looking approach based on expected losses to estimate

credit losses on certain types of financial instruments, including trade receivables.

The FASB has subsequently issued updates

to the standard to provide additional clarification on specific topics.

Topic 326 is effective for fiscal years, and interim periods

of Credit Losses on Financial Instruments ”, which requires entities to use a forward looking approach based on expected

losses to estimate credit losses on certain types of financial instruments, including trade receivables.

The FASB has subsequently

issued updates to the standard to provide additional clarification on specific topics.

Topic 326 is effective for fiscal years,

and interim periods within those fiscal years, beginning after December 15, 2019.

We have applied this guidance, as of May 1,

2020, using a modified-retrospective approach.

The application of this guidance did not require a cumulative effect adjustment

to retained earnings and did not have a material effect on our financial statements.

August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820).

The updated guidance improves

the disclosure requirements on fair value measurements.

The updated guidance is effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2019.

We have applied this guidance, as of May 1, 2020, using a modified-retrospective

The application of this guidance did not require a cumulative effect adjustment to retained earnings and did not have

a material effect on our financial statements.

In August 2018, the

FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework (Topic 820).

The updated guidance improves the disclosure

requirements on fair value measurements.

The updated guidance is effective for fiscal years, and interim periods within those

fiscal years, beginning after December 15, 2019.

Early adoption is permitted for any removed or modified disclosures.

this guidance, as of May 1, 2020.

We applied this guidance, as of May 1, 2020.

The application of this guidance did not have a material effect on our disclosures.

17 unchanged sentences

FINANCIAL INFORMATION

Quantitative and Qualitative Disclosures About

disclosure does not apply.

Quantitative and Qualitative Disclosures about Market Risk

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements