What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-07-31 compared with 2023-07-31 · 124 added, 112 removed, 103 unchanged (70% of the section changed)

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

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%

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

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

tools, proximity switches and custom keyboards.

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

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

These products are used

for residential, commercial, industrial and government installations.

International sales accounted for approximately 10.3% of revenues

for fiscal year 2024 and 11.1% for 2023.

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

2 unchanged sentences

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”).

ending April 30, 2024, net other income accounted for 39.08% of income before income taxes.

In comparison, for the year ending April

30, 2023, net other income accounted for 12.98% 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, such as the October 2017 purchase

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

(“LSDI”) and Roy Bowling.

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

manufacturers (OEMs).

manufacturers.

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

cash increased by $2,169,000 during the year ended April 30, 2024, compared to a decrease of $1,135,000 during the year ended April 30,

Accounts receivable increased by $417,000 during the current fiscal year compared to a $627,000 decrease in the prior fiscal year.

The current fiscal year increase in cash flow from accounts receivable is the result of a combination of slightly faster collection of

accounts receivable and increased sales.

The average collection time in days for the year ended April 30, 2024, is 66 days, compared

to 65 days for the year ended April 30, 2023.

As of April 30, 2024, 68.12% of receivables were aged less than 60 days (“Current”)

and 8.53% were aged over 90 days.

In comparison, 79.90% of the receivables were considered Current and 4.95% were over 90 days past due

at April 30, 2023.

increased by $93,000 for the year ended April 30, 2024, compared to an increase of $3,604,000 for the year ended April 30, 2023.

smaller current fiscal year increase is a result of having slightly less raw materials on hand and an increase in raw material costs.

In turn, with material and labor costs rising, the work in process inventory has increased while the finished goods inventory has decreased

since there were more sales than the previous fiscal year.

expenses and other assets decreased by $418,000 and $761,000 in the current and prior fiscal years, respectively.

The current fiscal

year’s decrease is due to not having as many prepayments for raw materials than at the last fiscal year-end and not having to

renew multi-year subscriptions in the current fiscal year.

the year ended April 30, 2024, accounts payable decreased by $254,000 compared to an increase of $226,000 for the year ended April 30,

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.

Payables are paid within terms and fluctuate based

primarily on inventory needs for production.

Accrued expenses increased $41,000 for the year ended April 30, 2024, due to having more

accrued payroll calculated as compared to the year ended April 30, 2023.

Company had an increase in cash flow towards income tax payable of $508,000 for the year ended April 30, 2024, compared to a

decrease of $680,000 in cash flow towards income tax receivable for the year ended April 30, 2023.

The current fiscal year income

tax payable is the result of timing between recording and paying the income tax liability.

The receivable in the 2023 fiscal year

was due to an overpayment of tax liability.

for investment activities, $378,000 was spent on purchases of property and equipment during the year ended April 30, 2024, compared to

$548,000 during the year ended April 30, 2023.

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

Cash spent on purchases of marketable securities for the year ended April 30, 2024, was $699,000 versus $764,000 spent for the

year ended April 30, 2023.

Conversely, net proceeds from the sale of marketable securities were $527,000 and $25,000 at April 30, 2024

and 2023, 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.

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.

8 unchanged sentences

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 April 30, 2024, working capital showed a year-over -year increase of 10.04%.

The Company measures liquidity using the quick ratio,

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

The Company’s quick ratio increased to

12.118 for the year ended April 30, 2024, compared to 11.135 for the year ended April 30, 2023.

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.

completed the year ending April 30, 2024 with a net profit of 34.72% of net sales.

Net sales for the current fiscal year were $21,767,000,

up 8.95% over the previous fiscal year.

The increase in sales is a result of a strengthening economy in which inflation leveled up as

compared to the previous year.

Cost of goods sold was 50.2% of net sales for the year ended April 30, 2024, and 53.08% 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.

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.

Management strives to be as efficient as possible as wages and material costs continue to increase.

Management offset some of these

added expenses by implementing a 2.5% price increase effective January 1, 2024, and a price increase of 10% that was effective on January

expenses were 20.91% of net sales for the year ended April 30, 2024, compared to 21.59% for the year ended April 30 ,2023.

goal is to keep the operating expenses around 25% 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.

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.

from operations for the year ended April 30, 2024 was $6,289,000, which is a 24.29% increase from the year ended April 30, 2023, which

had income from operations of $5,060,000.

income and expense results for the year ended April 30, 2024, produced net other income of $4,034,000, compared to a net other income

of $755,000 for the year ending April 30, 2023.

Dividend and interest income was $1,116,000 for the current fiscal year, which is up

4.49% over the $1,068,000 dividend and interest income for the prior fiscal year.

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

gain of $2,771,000 was recorded for the year ending April 30, 2024, and an unrealized loss of $31,000 was recorded for the year ending

April 30, 2023.

Net gain on the sale of investments for the current fiscal year was $148,000, which is a 150.86% increase over the net

loss on the sale of investments of $291,000 for the prior fiscal year.

income for the year ended April 30, 2024 was $7,558,000, which is up 58.88% from the $4,757,000 net income for the year ended April 30,

Basic earnings per common share (“EPS”) for the year ended April 30, 2024, was $1.54 per share, and the diluted earnings

per common share for the same period was $1.53.

Basic and diluted EPS for the year ended April 30, 2023, was $0.96 per share.

is hopeful that sales will continue to increase for the fiscal year ending April 30, 2025.

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.

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

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.

Although there were not any new products to hit the market during fiscal year 2024, we are

confident that there will be more released soon, and we are searching for products that complement our current offerings.

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.

product development

9 unchanged sentences

humidity sensors with built-in hysteresis.

An expansion of the GR3045 panic switch is in the works to include single pull, double throw

(SPDT) versions, latching, and non-latching with LED indicator lights.

A miniature profile overhead door contact based on the popular

4532 is also in development.

technology is a main area of focus for product development.

34 unchanged sentences

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

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.

When it is determined that a security will likely remain impaired, a recognized loss is recorded and the investment is

written down to its new fair value.

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

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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.

The year end balances of accounts held at this

bank were $6,712,000 and $4,637,000 for the years ended April 30, 2024 and 2023, respectively.

The Company also received interest income

from FirsTier Bank in the amount of approximately $170,000 for the year ended April 30, 2024, and approximately $103,000 was received

for the year ended April 30, 2023.

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