What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-07-31 compared with 2022-08-15 · 207 added, 255 removed, 8 unchanged (98% of the section changed)

Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

George Risk Industries, Inc.

(GRI) (the “Company”)

is a diversified manufacturer of electronic components, encompassing the security industry’s widest variety of door and window

contact switches, environmental products, wire and cable installation tools, proximity switches and custom keyboards.

The security products

division comprises the largest portion of GRI sales and products are sold worldwide through distributors, who in turn sell these products

to security installation companies.

These products are used for residential, commercial, industrial and government installations.

International

sales accounted for approximately 10.7% of revenues for fiscal year 2022 and 11.9% for 2021.

GRI is known for its quality American made products,

top-notch customer service and the willingness to work with customers on their special applications.

GRI owns and operates its main manufacturing

plant and offices in Kimball, Nebraska with a satellite plant 40 miles away in Gering, Nebraska.

The Company has substantial marketable securities

holdings and these holdings have a material impact on the financial results.

For the fiscal year ending April 30, 2022, the percentage

of other income (expense) was a loss of 30.11% of income before income taxes.

In comparison, the percentage of other income (expense)

was a gain of 63.27% of the income before income taxes for the year ending April 30, 2021.

Management’s philosophy behind having

holdings in marketable securities is to keep the money working and gaining interest on the cash that is not needed to be put back into

the business.

Over the years, the investments have kept the earnings per share up when the results from operations have not fared as

Management is always open to the possibility

of acquiring a business that would complement our existing operations, which is exactly what took place in October 2017 when the Company

purchased substantially all of the assets from Labor Saving Devices, Inc.

(“LSDI”) and Roy Bowling (“Bowling”).

There are no known seasonal trends with any of

GRI’s products, since the Company mostly sells to distributors and original equipment manufacturers (OEMs).

The products are tied

to the housing industry and will fluctuate with building trends.

Liquidity and Capital Resources

Net cash decreased by $1,248,000 during the year

ended April 30, 2022 compared to an increase of $868,000 during the year ended April 30, 2021.

Accounts receivable increased by $326,000

during the current year while showing a $850,000 increase in the prior year.

The current smaller increase in cash flow from accounts

receivable is the result of slower collection of accounts receivable.

At April 30, 2022, 75.19% of receivables were less than 60 days

and 7.86% were over 90 days.

In comparison, 77.93% of the receivables were considered current (less than 60 days) and 3.76% of the total

were over 90 days past due for the prior year during the same period.

Inventories increased by $2,430,000 in fiscal

year ended April 30, 2022, while the prior year showed an increase of $557,000 at year end.

The current year increase is a result of

having more raw materials on hand since sales have increased and having the raw material costing more than before.

In turn, with material

and labor costs rising, the work in process and finished goods inventories have also increased.

Prepaid expenses increased by $903,000 while

they increased $67,000 in the current and prior year, respectively.

The larger increase in the current year is due to having more prepayments

of raw materials than at year-end last year and having to renew multi-year subscriptions in the current year.

For the year ended April 30, 2022, accounts payable

decreased by $157,000 as compared to an increase of $291,000 for the same period the year before.

The change in cash with regards to

accounts payable is largely based on timing.

Payables are paid within terms and fluctuate based primarily on inventory needs for production.

Accrued expenses decreased $5,000 for the year ended April 30, 2022, due to having slightly less accrued customer liability refund calculated

compared to the prior year.

Income tax payable increased by $196,000 for

the year ended April 30, 2022, compared to a $137,000 decrease in income tax overpayment for the year ended April 30, 2021.

increase is largely due to having increased sales and income before tax and not making enough income tax estimates.

As for investment activities, $390,000 was spent

on purchases of property and equipment during the current fiscal year, compared to $517,000 during the year ended April 30, 2021.

capitalized costs mainly consisted of purchases machinery and equipment and making capital improvements.

Additionally, the Company continues

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

Cash spent on purchases of marketable securities

for the year ended April 30, 2022 was $787,000 versus the $506,000 spent for the corresponding period last year.

Conversely, net proceeds

from the sale of marketable securities were $452,000 and $21,000 at April 30, 2022 and 2021, respectively.

The Company uses “money

manager” accounts for most stock transactions.

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

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

The Company pays quarterly service fees based on the value of the investments.

Cash used in financing activities consists of

First, for the year ended April 30, 2022, $2,257,000 was spent on the payment of dividends.

The Company declared a dividend

of $0.50 per share of common stock on September 30, 2021 for the current fiscal year, while a $0.42 per share of common stock dividend

was declared on September 30, 2020 and issued in the prior fiscal year.

Secondly, the Company continues to purchase back its Class A

common stock when the opportunity arises.

For the year ended April 30, 2022, the Company purchased $211,000 of treasury stock and $35,000

was bought back for the year ended April 30, 2021.

The Company has been actively searching for stockholders that have been “lost”

over the years.

The payment of dividends over the last sixteen fiscal years has also prompted many stockholders and/or their relatives

and descendants to sell back their stock to the Company.

At April 30, 2022, working capital decreased

0.59% in comparison to the previous fiscal year.

The Company measures liquidity using the quick ratio, which is the ratio of cash, securities

and accounts receivables to current obligations.

The Company’s quick ratio decreased to 15.549 for the year ended April 30, 2022

compared to 16.856 for the year ended April 30, 2021.

Results of Operations

GRI completed the fiscal year ending April 30,

2022 with a net profit of 17.20% of net sales.

Net sales were at $20,735,000, up 12.05% over the previous fiscal year.

The increase in

sales is a result of continued growth within our product lines and having a major competitor close its door at the end of calendar year

Cost of goods sold was 51.70% of net sales for the year ended April 30, 2022 and 49.59% for the same period last year.

goal is to keep the cost of goods sold percentage of less than 50% and was just slightly over that goal for the current fiscal year.

Management strives to be as efficient as possible since wages and material costs continue to increase, due to the increased inflation

in our economy.

7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Risk Industries, Inc.

(GRI) (the “Company”) is a diversified manufacturer of electronic components, encompassing the security

industry’s widest variety of door and window contact switches, environmental products, wire and cable installation tools, proximity

switches and custom keyboards.

The security products division comprises the largest portion of GRI sales and products are sold worldwide

through distributors, who in turn sell these products to security installation companies.

These products are used for residential, commercial,

industrial and government installations.

International sales accounted for approximately 11.1% of revenues for fiscal year 2023 and 10.7%

is known for its quality American made products, top-notch customer service and the willingness to work with customers on their special

applications.

owns and operates its main manufacturing plant and offices in Kimball, Nebraska with a satellite plant 40 miles away in Gering, Nebraska.

Company has substantial marketable securities holdings and these holdings have a material impact on the financial results.

For the fiscal

year ending April 30, 2023, the percentage of other income (expense) was a gain of 12.98% of income before income taxes.

In comparison,

for the year ending April 30, 2022, the percentage of other income (expense) was a loss of 30.11% of the income before income taxes.

Management’s philosophy behind having holdings in marketable securities is to keep the money working and to gain interest on the

cash that is not needed to be put back into the business.

Over the years, the investments have kept the earnings per share up when the

results from operations have not fared as well.

is always open to the possibility of acquiring a business that would complement our existing operations, which is exactly what took place

in October 2017 when the Company purchased substantially all of the assets from Labor Saving Devices, Inc.

(“LSDI”) and Roy

Bowling (“Bowling”).

are no known seasonal trends with any of GRI’s products, since the Company mostly sells to distributors and original equipment

manufacturers (OEMs).

The products are tied to the housing industry and will fluctuate with building trends.

and Capital Resources

cash decreased by $1,135,000 during the year ended April 30, 2023 compared to a decrease of $1,248,000 during the year ended April 30,

Accounts receivable decreased by $627,000 during the current year while showing a $326,000 increase in the prior year.

decrease in cash flow from accounts receivable is the result of a combination of slightly faster collection of accounts receivable and

decreased sales.

At April 30, 2023, 79.90% of receivables were less than 60 days and 4.95% were over 90 days.

In comparison, 75.19% of

the receivables were considered current (less than 60 days) and 7.86% of the total were over 90 days past due for the prior year during

the same period.

increased by $3,604,000 in the fiscal year ended April 30, 2023, while the prior year showed an increase of $2,430,000 at year end.

current year increase is a result of having more raw materials on hand since sales had increased previously and having the raw material

costing more than before.

In turn, with material and labor costs rising, the work in process and finished goods inventories have also

expenses decreased by $761,000 while they increased $903,000 in the current and prior year, respectively.

The current year decrease is

due to not having as many prepayments of raw materials than at year-end last year and not having to renew multi-year subscriptions in

the current year.

tax overpayment increased by $680,000 for the year ended April 30, 2023, compared to a $196,000 increase in income tax payable for the

year ended April 30, 2022.

The current increase is largely due to having slightly lower sales and income before tax and not making larger

income tax estimates than last year.

the year ended April 30, 2023, accounts payable increased by $226,000 as compared to a decrease of $157,000 for the same period the year

The change in cash with regards to accounts payable is largely based on timing.

Payables are paid within terms and fluctuate

based primarily on inventory needs for production.

Accrued expenses increased $111,000 for the year ended April 30, 2023, due to having

significantly more accrued customer liability refund calculated compared to the prior year.

for investment activities, $548,000 was spent on purchases of property and equipment during the current fiscal year, compared to $390,000

during the year ended April 30, 2022 These capitalized costs mainly consisted of purchases of machinery and equipment and making capital

improvements.

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

Cash spent on purchases of marketable securities for the year ended April 30, 2023 was $764,000 versus the $787,000 spent for the corresponding

period last year.

Conversely, net proceeds from the sale of marketable securities were $25,000 and $452,000 at April 30, 2023 and 2022,

respectively.

The Company uses “money manager” accounts for most stock transactions.

By doing this, the Company gives an

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

The Company pays quarterly service

fees based on the value of the investments.

used in financing activities consists of two items.

First, for the year ended April 30, 2023, $2,689,000 was spent on the payment of

The Company declared a dividend of $0.60 per share of common stock on September 30, 2022 for the current fiscal year, while

a $0.50 per share of common stock dividend was declared on September 30, 2021 and issued in the prior fiscal year.

Second, the Company

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

For the year ended April 30, 2023, the Company purchased

$7,000 of treasury stock and $211,000 was bought back for the year ended April 30, 2022.

In an effort to repurchase its Class A Common

Stock, the Company has been actively searching for stockholders that have been “lost” over the years.

April 30, 2023, working capital increased 3.28% in comparison to the previous fiscal year.

The Company measures liquidity using the quick

ratio, which is the ratio of cash, securities and accounts receivables to current obligations.

The Company’s quick ratio decreased

to 14.648 for the year ended April 30, 2023 compared to 15.549 for the year ended April 30, 2022.

of Operations

completed the fiscal year ending April 30, 2023 with a net profit of 23.81% of net sales.

Net sales were at $19,979,000, down 3.65% over

the previous fiscal year.

The decrease in sales is a result of a slowing economy which has seen inflation grow to some of its highest

levels in the last 15 years.

Cost of goods sold was 53.08% of net sales for the year ended April 30, 2023 and 51.70% for the same period

Management aims to keep the cost of goods sold percentage within 50% and was just slightly over that percentage for the current

Management strives to be as efficient as possible since wages and material costs continue to increase, due to the increased

inflation in our economy.

Management offset some of these added expenses by implementing a 10% price increase effective January 1, 2023.

Operating expenses were 21.06% of net sales for

the year ended April 30, 2022 as compared to 21.74% for the corresponding period last year.

Management’s goal is to keep the operating

expenses around 30% or less of net sales, so the goal has been met for the current fiscal year.

Income from operations for the year ended

April 30, 2022 was at $5,648,000, which is a 6.45% increase from the corresponding period last year, which had income from operations

of $5,306,000.

Other income and expense results for the fiscal

year ended April 30, 2022 produced a loss of $(1,307,000).

This is in comparison to a gain of $9,140,000 for the fiscal year ended April

expenses were 21.59% of net sales for the year ended April 30, 2023 as compared to 21.06% for the corresponding period last year.

goal is to keep the operating expenses around 30% or less of net sales, so the goal has been met for the current fiscal year.

from operations for the year ended April 30, 2023 was at $5,060,000, which is a 10.41% decrease from the corresponding period last year,

which had income from operations of $5,648,000.

income and expense results for the fiscal year ended April 30, 2023 produced a gain of $755,000.

This is in comparison to a loss of $1,307,000

for the fiscal year ending April 30, 2022.

Dividend and interest income was $1,068,000, which is up 3.99% over the prior year.

Dividend and interest income at April

30, 2021 was $757,000.

Investments in marketable securities are presented at fair value and an unrealized gain or loss is recorded within

the statements of operations, a non-cash entry.

As a result, an unrealized loss of $(2,764,000) was recorded for the fiscal year ended

April 30, 2022 and an unrealized gain of $7,007,000 was recorded for the prior year ended April 30, 2021.

Net gain on the sale of investments

for the current fiscal year was $414,000, which is a 14.05% increase over the prior year.

Net gain on the sale of investments for the

fiscal year ending April 30, 2021 was $363,000.

Net income for the year ended April 30, 2022

was $3,566,000, which is down 67.05% from the prior year, which produced net income of $10,822,000.

Basic and diluted earnings per common

share (EPS) for the year ended April 30, 2022 was $0.72 per share.

Basic and diluted earnings per common share (EPS) for the year ended

April 30, 2021 was $2.19 and $2.18 per share, respectively.

Management is hopeful that sales will continue

to increase for the fiscal year ending April 30, 2023.

With the purchase of the assets from Labor Saving Devices, Inc., the Company has

seen an overall increase in sales, and we have also seen growth in our existing product lines as well with a major competitor going out

of business at the end of 2019.

Because of this closure, we have seen our orders increase and we are still adjusting to grow to fulfill

these orders.

Management is also having challenges in getting certain raw materials and the cost of the raw materials continue to increase

because of inflation.

The Company also struggles to get enough workers to fill production needs.

Our Security sales division, which is

our largest sales generator, is directly tied to the housing industry and we normally experience the same fluctuations.

We are always

researching and developing new products that will help our sales increase.

While only a few new or improved products were successfully

launched in fiscal year 2022, we are confident that more new products will be released soon, and we are searching for products that complement

our current offerings.

Management is always open to the possibility of acquiring a business or product line that would complement our

existing operations.

Due to the Company’s strong cash position, management believes this could be achieved without the need for

outside financing.

The intent is to utilize the equipment, marketing techniques and established customers to deliver new products and

increase sales and profits.

New product development

The GRI Engineering department continues to develop

enhancements to our existing products as well as to develop new products that will continue to secure our position in the industry.

Explosion proof contacts that will be UL listed

for hazardous locations are in development.

There has been demand from our customers for this type of high security magnetic reed switch.

An updated version of the pool access alarm (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 such as instant

alarm and a seven second delay.

Wireless technology is a main area of focus for

and interest income at April 30, 2022 was $1,027,000.

Investments in marketable securities are presented at fair value and an unrealized

gain or loss is recorded within the statements of operations, a non-cash entry.

As a result, an unrealized loss of $31,000 was recorded

for the fiscal year ended April 30, 2023 and an unrealized loss of $2,764,000 was recorded for the prior year ended April 30, 2022.

loss on the sale of investments for the current fiscal year was $291,000, which is a 170.29% decrease over the net gain on the sale of

investments of $414,000 for the fiscal year ending April 30, 2022.

income for the year ended April 30, 2023 was $4,757,000, which is up 33.40% from the prior year, which produced net income of $3,566,000.

Basic and diluted earnings per common share (“EPS”) for the year ended April 30, 2023 was $0.96 per share.

Basic and diluted

EPS for the year ended April 30, 2022 was $0.72 per share.

is hopeful that sales will increase for the fiscal year ending April 30, 2024.

Opportunities for Management include focusing on finding

ways to get our products out to our customers in a timelier manner.

One way we are doing this is by looking into more automation.

facing Management include obtaining certain raw materials and the increased costs of most raw materials because of inflation.

also struggles to get enough workers to fill production needs.

Our Security sales division, which is our largest sales generator, is

directly tied to the housing industry and we normally experience the same fluctuations.

We are always researching and developing new

products that will help our sales increase.

There were a few new or improved products that were successfully launched in fiscal year

2023, and we are confident that more new products will be released soon, and we are searching for products that complement our current

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.

intent is to utilize the equipment, marketing techniques and established customers to deliver new products and increase sales and profits.

product development

GRI Engineering department continues to develop enhancements to our existing products as well as to develop new products that will continue

to secure our position in the industry.

proof contacts that will be UL listed for hazardous locations are in development.

There has been demand from our customers for this type

of high security magnetic reed switch.

Company is developing magnetic contacts which are listed under UL 634 Level 2.

These sensors are for high security applications such

as government buildings, military use, nuclear facilities, and financial institutions.

is being done on updating our small profile glass break detector, in addition to looking at development of programmable temperature and

humidity sensors with built-in hysteresis.

technology is a main area of focus for product development.

We are considering adding wireless technology to some of our current products.

A wireless contact switch is in the

final stages of development.

Also, we are working on wireless versions of monitoring devices which include glass break detection, tilt

sensing and environmental monitoring.

A redesign of our brass water valve shut-off system is near completion.

The Company is developing magnetic contacts which

are listed under UL 634 Level 2.

These sensors are for high security applications such as government buildings, military use, nuclear

facilities, and financial institutions.

Critical Accounting Policies

The discussion and analysis of the financial

condition and results of operations are based upon the financial statements, which have been prepared in conformity with generally accepted

accounting principles in the United States.

The preparation of these financial statements requires the use of estimates and assumptions

that affect the reported amounts of assets, liabilities, revenues and expenses reported in those financial statements.

These judgments

can be subjective and complex, and consequently actual results could differ from those estimates.

The most critical accounting policies

relate to accounts receivable;

A wireless contact switch is in the final stages of development.

Also, we are working on wireless versions of monitoring devices which

include glass break detection, tilt sensing and environmental monitoring.

A redesign of our brass water valve shut-off system is near

Accounting Policies

discussion and analysis of the financial condition and results of operations are based upon the financial statements, which have been

prepared in conformity with generally accepted accounting principles in the United States.

The preparation of these financial statements

requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses reported

in those financial statements.

These judgments can be subjective and complex, and consequently actual results could differ from those

The most critical accounting policies relate to accounts receivable;

marketable securities;

income taxes;

and segment reporting.

Accounts receivable —Accounts receivable

are customer obligations due under normal trade terms.

The Company sells its products to security alarm distributors, alarm installers,

and original equipment manufacturers.

Management performs continuing credit evaluations of its customers’ financial condition and

the Company generally does not require collateral.

The Company records an allowance for doubtful

accounts based on an analysis of specifically identified customer balances.

The Company has a limited number of customers with individually

large amounts due at any given date.

Any unanticipated change in any one of these customers’ credit worthiness or other matters

affecting the collectability of amounts due from such customers could have a material effect on the results of operations in the period

in which such changes or events occur.

After all attempts to collect a receivable have failed, the receivable is written off.

Marketable securities— The Company

has investments in publicly traded equity securities, state and municipal debt securities, and real-estate investment trusts (REITs).

receivable —Accounts receivable are customer obligations due under normal trade terms.

The Company sells its products to security

alarm distributors, alarm installers, and original equipment manufacturers.

Management performs continuing credit evaluations of its

customers’ financial condition and the Company generally does not require collateral.

Company records an allowance for credit losses based on an analysis of specifically identified customer balances.

The Company has a limited

number of customers with individually large amounts due at any given date.

Any unanticipated change in any one of these customers’

credit worthiness or other matters affecting the collectability of amounts due from such customers could have a material effect on the

results of operations in the period in which such changes or events occur.

After all attempts to collect a receivable have failed, the

receivable is written off.

securities— The Company has investments in publicly traded equity securities, state and municipal debt securities, and real-estate

investment trusts (REITs).

The investments in securities are reported at fair value.

The Company uses the average cost method to determine the cost of securities

sold and any unrealized gains or losses on equity securities are reported in the respective period’s earnings.

Unrealized gains

and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s equity.

and interest income are reported as earned.

In accordance with the Generally Accepted Accounting

Principles in the United States (US GAAP), the Company evaluates all marketable securities for other-than temporary declines in fair

When the cost basis exceeds the fair market value for approximately one year, management evaluates the nature of the investment,

cause of impairment and number of investments that are in an unrealized loss position.

When it is determined that a security will likely

remain impaired, a recognized loss is booked and the investment is written down to its new fair value.

The investments are periodically

evaluated to determine if impairment changes are required.

Inventories —Inventories are valued

at the lower of cost or net realizable value.

The Company uses the average cost method to determine

the cost of securities sold and any unrealized gains or losses on equity securities are reported in the respective period’s earnings.

Unrealized gains and losses on debt securities are excluded from earnings and reported separately as a component of stockholder’s

Dividend and interest income are reported as earned.

accordance with the Generally Accepted Accounting Principles in the United States (US GAAP), the Company evaluates all marketable securities

for other-than temporary declines in fair value.

When the cost basis exceeds the fair market value for approximately one year, management

evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized loss position.

is determined that a security will likely remain impaired, a recognized loss is booked and the investment is written down to its new

The investments are periodically evaluated to determine if impairment changes are required.

Inventories —Inventories

are valued at the lower of cost or net realizable value.

Costs are determined using the average cost-pricing method.

The Company uses actual costs

to price its manufactured inventories, approximating average costs.

The reported net value of inventory includes finished saleable products,

work-in-process and raw materials that will be sold or used in future periods.

Inventory costs include raw materials, direct labor and

The Company’s overhead expenses are applied, based in part, upon estimates of the proportion of those expenses that are related

to procuring and storing raw materials as compared to the manufacture and assembly of finished products.

These proportions, the method

of their application, and the resulting overhead included in ending inventory, are based in part on subjective estimates and approximations

and actual results could differ from those estimates.

In addition, the Company records an inventory

obsolescence reserve, which represents the cost of the inventory that has had no movement in over two years.

There is inherent professional

judgment and subjectivity made by management in determining the estimated obsolescence percentage.

In addition, and as necessary, the

Company may establish specific reserves for future known or anticipated events.

Income Taxes —US GAAP requires use

of the assets and liability method;

whereby current and deferred tax assets and liabilities are determined based on tax rates and laws

enacted as of the balance sheet date.

Deferred tax expense represents the change in the deferred tax asset/liability balances.

Segment Reporting and Related Information —The

Company designates the internal organization that is used by management for allocating resources and assessing performance as the source

of the Company’s reportable segments.

US GAAP also requires disclosures about products and services, geographic area and major

Related Party Transactions — One

of the directors of the board, Joel Wiens, is the principal shareholder of FirsTier Bank.

FirsTier Bank is the financial institution

the Company uses for its day-to-day banking operations.

Year end balances of accounts held at this bank are $5,058,000 for the year ended

April 30, 2022 and $6,885,000 for the year ended April 30, 2021.

The Company also received interest income from FirsTier Bank in the

amount of approximately $58,800 for the fiscal year ended April 30, 2022 and approximately $54,800 was received for the fiscal year ended

April 30, 2021.

The Company uses

actual costs to price its manufactured inventories, approximating average costs.

The reported net value of inventory includes finished

saleable products, work-in-process and raw materials that will be sold or used in future periods.

Inventory costs include raw materials,

direct labor and overhead.

The Company’s overhead expenses are applied, based in part, upon estimates of the proportion of those

expenses that are related to procuring and storing raw materials as compared to the manufacture and assembly of finished products.

proportions, the method of their application, and the resulting overhead included in ending inventory, are based in part on subjective

estimates and approximations and actual results could differ from those estimates.

addition, the Company records an inventory obsolescence reserve, which represents the cost of the inventory that has had no movement

in over two years.

There is inherent professional judgment and subjectivity made by management in determining the estimated obsolescence

In addition, and as necessary, the Company may establish specific reserves for future known or anticipated events.

Taxes —US GAAP requires use of the assets and liability method;

whereby current and deferred tax assets and liabilities are

determined based on tax rates and laws enacted as of the balance sheet date.

Deferred tax expense represents the change in the deferred

tax asset/liability balances.

Reporting and Related Information —The Company designates the internal organization that is used by management for allocating

resources and assessing performance as the source of the Company’s reportable segments.

US GAAP also requires disclosures about

products and services, geographic area, and major customers.

Party Transactions — One of the directors of the board, Joel Wiens, is the principal shareholder of FirsTier Bank.

Bank is the financial institution the Company uses for its day-to-day banking operations.

Year end balances of accounts held at this

bank are $4,637,000 for the year ended April 30, 2023 and $5,058,000 for the year ended April 30, 2022.

The Company also received interest

income from FirsTier Bank in the amount of approximately $102,700 for the fiscal year ended April 30, 2023 and approximately $58,800

was received for the fiscal year ended April 30, 2022.

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-K

Item 7. Management’s Discussion and Analysis