George Risk Industries, Inc.: Form 10-Q for the period ended Jan 31, 2026

MANAGEMENT DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “could,” “would,” “should,” “anticipate,” “expect,” “intend,” “believe,” “estimate,” “project” or “continue,” and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

The following discussion should be read in conjunction with the attached unaudited condensed financial statements, and with the Company’s audited financial statements and discussion for the fiscal year ended April 30, 2025.

Executive Summary

The Company’s performance in operations has remained consistent across the three quarters of the current fiscal year, with sales in the third quarter slightly lower than those in the second quarter of the current fiscal year. This dip is mainly due to our business being tied to the housing market and the winter months usually see a slowdown. Opportunities include keeping up with business growth and finding ways to get our products to our customers in a timelier manner. One way we are doing this is by exploring more automation and reconfiguring our production floor to improve workflow efficiency. We continue to look at businesses that might be a good fit to purchase and continue to work on new products that will be a good fit for our industry and business. Challenges in the coming months include getting products out to customers in a timely manner and managing the ongoing effects of tariffs and increased material and labor costs. Management continues to work to keep operations flowing as efficiently as possible with the hopes of getting the facilities running leaner and more profitable than ever before.

Results of Operations

• Net sales were $5,659,000 for the quarter ended January 31, 2026, which is a 15.21% increase from the corresponding quarter last year. Year-to-date net sales were $17,889,000 as of January 31, 2026, which is a 9.71% increase from the same period last year. The increase in sales in the current quarter is a result of continued growth and market share we are experiencing in our industry and catching up on back orders. Management believes the ongoing commitment to outstanding customer service and product customization are just a couple of the many reasons sales continue to grow.
• Cost of goods sold was 54.64% of net sales for the quarter ended January 31, 2026, and was 53.22% for the same quarter last year. Year-to-date cost of goods sold was 52.15% of net sales for the current nine months and 51.2% for the corresponding nine months last year. The current cost of goods sold percentage goals of keeping labor and other manufacturing expenses below 50% are just slightly over for the quarter and year-to-date. This is due to increases in wages and material costs. Management continues to work with and train employees to work more efficiently. Management offset a portion of these added expenses by implementing a 5% price increase effective January 1, 2026.
• Operating expenses increased by $147,000 for the quarter as they increased by $142,000 for the nine months ended January 31, 2026, compared to the corresponding periods last year. When comparing percentages in relation to net sales, the operating expenses for the quarter ended January 31, 2026, were 22.07% of net sales compared to 22.43% for the same quarter the prior year. For year-to-date numbers, operating expenses were 20.38% and 21.49% of net sales for the nine months ended January 31, 2026 and 2025, respectively. The Company has been able to keep operating expenses below 25% of net sales for many years; however, the year-to-date increase in actual dollar amount is due to an increase in commission amounts, related to increased sales, and additional labor costs related to wage increases.
• Income from operations for the quarter ended January 31, 2026 was $1,318,000, a 10.2% increase from the corresponding quarter last year, which had income from operations of $1,196,000. Income from operations for the nine months ended January 31, 2025, was $4,913,000, a 10.33% increase from the corresponding nine months last year, when income from operations was $4,453,000.
• Other income and expenses for the quarter ended January 31, 2026, show income of $1,697,000, which is a $632,000 increase from the corresponding quarter last year, which had income of $1,065,000. Conversely, there is an increase of $1,811,000 in other income for the year-to-date numbers. Most of the activity in these accounts consists of investment income, dividends, realized gains or losses on sale of investments, and unrealized gains or losses on equity securities. The main reason for the gains in the current quarter and year-to-date numbers is the unrealized gain and loss on equity securities. The stock market influences these figures and continues to do so positively.
• Overall, net income for the quarter ended January 31, 2026, increased $873,000, or 54.32%, from the same quarter last year. Net income for the nine-month period ended January 31, 2025, increased $2,087,000, or 31.97%, from the same period in the prior year.
• Earnings per common share for the quarter ended January 31, 2026, were $0.51 per share and $1.76 per share for the year-to-date numbers. EPS for the quarter and nine months ended January 31, 2025, were $0.33 per share and $1.33 per share, respectively.

Liquidity and capital resources

Operating

• Net cash decreased $2,008,000 during the nine months ended January 31, 2026, compared to a decrease of $1,532,000 during the corresponding period last year.
• Accounts receivable increased $224,000 for the nine months ended January 31, 2026, compared with a $193,000 decrease for the same period last year. The current year’s increase is due to increased sales and delays in collecting accounts receivable from a couple of larger customers during their ERP computer transitions. An analysis of accounts receivable shows that 19.52% of receivables were over 90 days as of January 31, 2026. Significant collections happened in February 2026, and receivables over 90 days at the end of February 2026 stand at 7.04%.
• Inventories increased $831,000 during the current nine-month period compared to a decrease of $151,000 last year. The increase in the current year is primarily due to replenishing raw material levels and higher raw materials costs due to tariffs and increased labor costs.
• Prepaid expenses decreased $175,000 for the current nine months, primarily due to reduced prepayments on inventory during the current nine-month period. The prior nine-month period showed a $106,000 increase in prepaid expenses.
• The federal solar tax credit receivable represents the remaining federal solar tax credits we will receive from our purchase of transferable tax credits, pursuant to the transferability provisions of the Inflation Reduction Act of 2022.
• Income tax receivable increased $600,000 for the current nine-month period, compared to an increase of $460,000 in income tax payable for the nine month period ended January 31, 2025. The current year income tax receivable increase is the result of increased income, in which income tax estimates have been adjusted accordingly, and delays in the utilization of the federal solar tax credits.
• Accounts payable increased $3,000 for the current nine-month period ended January 31, 2026, compared to a $57,000 increase for the prior nine-month period. The company strives to pay all invoices within terms, and the variance is primarily due to the timing of product receipts and invoice payments.
• Accrued expenses decreased $26,000 for the current nine-month period compared to a $63,000 decrease for the nine-month period ended January 31, 2025. The difference in the amounts is primarily due to timing issues.

Investing

• The Company spent approximately $133,000 on acquisitions of property and equipment for the current nine-month period, in comparison with the corresponding nine months last year, when the Company used $359,000 for property and equipment purchases.
• The Company continues to purchase marketable securities, which include municipal bonds and quality stocks. During the nine-month period ended January 31, 2026, the buy/sell activity in the investment accounts continued as usual. Net cash spent on purchases of marketable securities for the nine-month period ended January 31, 2026, was $977,000 compared to $806,000 spent in the prior nine-month period. The Company continues 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. The Company pays a quarterly service fee based on the value of the investments.
• The Company received a cash distribution of $25,000 from the investment in the limited land partnership during the nine-month period ending January 31, 2026. This was the final distribution from the sale of the limited land partnership, and this asset has been cleared from the Company’s books.

Financing

• The Company continues to purchase back common stock when the opportunity arises. For the nine months ended January 31, 2026, the Company purchased $56,000 worth of treasury stock. This is in comparison to $32,000 spent in the same nine-month period the prior year.
• The company paid out dividends of $4,467,000 during the nine months ending January 31, 2026. These dividends were paid during the second quarter. The company declared a dividend of $1.00 per share of common stock on September 30, 2025, and paid it by October 31, 2025. Dividends paid in the prior year were $4,448,000 for the nine months ending January 31, 2025. A dividend of $1.00 per common share was declared and paid during the second fiscal quarter last year.

New Product Development

The Company and its engineering department continually work to enhance current product lines, develop new products that complement existing products, and identify products well-suited to our distribution network and manufacturing capabilities. Items currently in various stages of the development process include:

• Explosion 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.
• Research 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.
• Production has begun on a couple of newly developed products. First, there are magnetic contacts 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 installations, nuclear facilities, and financial institutions. Second, we have updated our small-profile glass-break detector, and third, we have expanded the GR3045 panic switch to include single-pull, double-throw (SPDT) versions, latching and non-latching, with LED indicator lights.
• Wireless technology is a central 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. We are also working on wireless versions of monitoring devices that include glass-break detection, tilt sensing, and environmental monitoring.

Other Information

In addition to researching and developing new products, management is always open to acquiring a business or product line that would complement our existing operations. Given the Company’s strong cash position, management believes this could be achieved without outside financing. The intent is to leverage the equipment, marketing techniques, and established customers to deliver new products and increase sales and profits.

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

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer (also serving as the Chief Financial Officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of January 31, 2026. Based on such evaluation, the Company’s Chief Executive Officer has concluded that, as of January 31, 2026, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and are designed to ensure that information required to be disclosed by the Company in the reports we file or submit under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting occurred during the fiscal quarter ended January 31, 2026, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.