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Item 7. Management’s Discussion and Analysis

2025-08-12 compared with 2024-07-31 · 137 added, 115 removed, 112 unchanged (69% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

7 Management’s

Discussion and Analysis of Financial Condition and Results of Operations

Risk Industries, Inc.

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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.

in marketable securities is to keep the money working and to gain interest on the cash that does not need 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.

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

(“LSDI”) and Roy Bowling.

and Roy Bowling.

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

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and Capital Resources

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 $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

cash decreased by $641,000 during the year ended April 30, 2025, compared to an increase of $2,169,000 during the year ended April 30,

Accounts receivable increased by $768,000 during the current fiscal year compared to a $417,000 increase in the prior fiscal year.

The current fiscal year increase in cash flow from accounts receivable is the result of increased sales, offset by slightly faster collection

of accounts receivable .

The average collection time in days for the year ended April 30, 2025, is 65 days, compared to 66 days for the

year ended April 30, 2024.

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.

used in financing activities consists of two items.

First, for the year ended April 30, 2024, $2,915,000 was spent on the payment of

The Company declared a dividend of $0.65 per share of common stock on September 30, 2023, for the current fiscal year, while

a $0.60 per share of common stock dividend was declared on September 30, 2022 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, 2024, the Company purchased

$391,000 of treasury stock and $7,000 was bought back for the year ended April 30, 2023.

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.

As of April 30, 2025, 72.68% of receivables were aged less than 60 days (“Current”) and 7.65%

were aged over 90 days.

In comparison, 68.12% of the receivables were considered Current and 8.53% were over 90 days past due at April

decreased by $773,000 for the year ended April 30, 2025, compared to an increase of $93,000 for the year ended April 30, 2024.

fiscal year decrease is primarily a result of having less raw materials on hand, offset by increased raw material and labor costs and

increased sales.

expenses and other assets increased by $196,000 during the year ended April 30, 2025, compared to a decrease of $418,000 for the prior

The current fiscal year’s increase is due to having increased prepayments for raw materials and renewing multi-year subscriptions

in the current fiscal year.

federal solar tax credit receivable represents the remaining federal solar tax credits we will receive from our purchase of transferable

tax credits, pursuant to transferability provisions of the Inflation Reduction Act of 2022.

Please see Note 1 - Purchase of Transferrable

Tax Credits, to our consolidated financial statements, for further information.

the year ended April 30, 2025, accounts payable increased by $10,000 compared to a decrease of $254,000 for the year ended April 30,

This difference is primarily a result of timing.

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

for production.

Accrued expenses increased $34,000 for the year ended April 30, 2025, compared to the prior year.

This is primarily due

to a higher year-end payroll accrual as of April 30, 2025, compared to April 30, 2024.

Company’s income tax payable decreased $80,000 for the year ended April 30, 2025, compared to an increase of $508,000 for the year

ended April 30, 2024.

The decrease in the current fiscal year income tax payable is due to the purchase of federal solar tax credits.

Company spent $396,000 on purchases of property and equipment during the year ended April 30, 2025, compared to $378,000 during the year

ended April 30, 2024.

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, 2025, was $980,000 versus $699,000 spent for the year ended April 30,

Net proceeds from the sale of marketable securities were $678,000 and $527,000 at April 30, 2025 and 2024, respectively.

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.

Company received a cash distribution of $269,000 from the sale of the investment in the limited land partnership during the year ended

April 30, 2025.

This was the second distribution received from the sale of the limited land partnership.

The remainder of the proceeds

are contingent on finishing wetland restoration of the land.

Please see Note.

1 - Investment in Limited Land Partnership, to our consolidated

financial statements for further information.

used in financing activities consists of declared dividends and the repurchase of the Company’s Class A common Stock.

ended April 30, 2025, $4,447,000 was spent on the payment of dividends.

The Company declared a dividend of $1.00 per share of common

stock on September 30, 2024, for the current fiscal year, while a $0.65 per share of common stock dividend was declared on September

30, 2023 and issued in the prior fiscal year.

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

For the year ended April 30, 2025, the Company purchased $72,000 of treasury stock and $391,000 was bought back for the year ended April

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.

of April 30, 2025, working capital showed a year-over -year increase of 4.68%.

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

The Company’s quick ratio increased to

The Company’s quick ratio decreased to

11.252 for the year ended April 30, 2025, compared to 12.118 for the year ended April 30, 2024.

of Operations

following table summarizes key income statement components, by product line and corporate, for the three months ended April 30, 2025

and the years ended April 30, 2025 and 2024:

Quarter ended

Security alarm products

Cable & wiring tools

Other products

Total revenue

Cost of goods sold:

Security alarm products

Cable & wiring tools

Other products

Total cost of goods sold

Security alarm products

Cable & wiring tools

Other products

Total gross profit

Operating Expenses:

General and administrative

Total operating expense

Income from Operations

completed the year ending April 30, 2025 with a net profit of 31.65% of net sales.

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up 3.54% 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 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

The increase in sales is a result of the Company continuing to provide quality products to our

customers and a price increase that was implemented during the 4 th quarter of the fiscal year.

Cost of goods sold was 51.59%

of net sales for the year ended April 30, 2025, and 50.2% for the same period last year.

Management aims to keep the cost of goods sold

percentage within 50% and was just slightly over that percentage for the current 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 5% price increase

effective February 1, 2025, and a price increase of 2.5% that was effective on January 1, 2024.

expenses were 20.73% of net sales for the year ended April 30, 2025, compared to 20.91% for the year ended April 30, 2024.

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, 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.

Management’s goal is to keep the operating expenses around 25% or less of net sales, so the goal has been met for the current

Income from operations for the year ended April 30, 2025 decreased to $6,238,000, or 0.81%, from the year ended April

30, 2024, which had income from operations of $6,289,000.

This decrease was primarily due to increased cost of goods, slightly

offset by increased sales.

other income for the year ended April 30, 2025, was $2,875,000, compared to a net other income of $4,034,000 for the year ending April

Dividend and interest income was $1,410,000 for the current fiscal year, which is up 26.34% over the $1,116,000 dividend and

interest income for the prior fiscal year.

Investments in marketable securities are presented at fair value and a non-cash unrealized

gain or loss is recorded within the statements of operations.

As a result, an unrealized loss of $75,000 was recorded for the year ending

April 30, 2025, compared to an unrealized gain of $2,771,000 for the year ending April 30, 2024.

Net gain on the sale of investments

for the current fiscal year was $937,000, which is a 533.11% increase over the net gain on the sale of investments of $148,000 for the

prior fiscal year.

income for the year ended April 30, 2025 was $7,133,000, down 5.62% from the $7,558,000 net income for the year ended April 30, 2024.

This reduction is primarily related to the reduction in other income, offset by increased sales.

Basic earnings per common share (“EPS”)

for the year ended April 30, 2025, was $1.46 per share, and the diluted earnings per common share for the same period was $1.45.

and diluted EPS for the year ended April 30, 2024, was $1.54 and $1.53 per share, respectively.

is hopeful that sales will continue to increase for the fiscal year ending April 30, 2026.

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.

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

Opportunities for Management include keeping

up with business growth and 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.

Challenges facing Management include keeping costs down as raw materials and labor costs continue

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.

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.

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 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.

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

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

product development

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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.

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.

proof contacts that will be Underwriters Laboratories (UL) listed for hazardous locations are in development.

There has been demand from

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

is being done on programmable temperature and humidity sensors with built-in hysteresis, a miniature profile overhead door contact based

on our popular 4532 series, and a brass water valve shut-off system.

has begun on a couple of newly developed products.

First, there are magnetic contacts which are listed under UL 634 Level 2.

These sensors

will require additional UL testing and are used in high security applications such as government buildings, military use, nuclear facilities,

and financial institutions.

Secondly, we have updated our small profile glass break detector and, thirdly, an expansion of the GR3045

panic switch to include single-pull, double-throw (SPDT) versions, latching and non-latching with LED indicator lights.

technology is a main area of focus for product development.

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include glass break detection, tilt sensing and environmental monitoring.

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

Accounting Policies

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marketable securities;

and inventory;

income taxes.

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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.

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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