U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-KSB [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 30, 2007 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to _________ Commission File Number: 000-05378 George Risk Industries, Inc. ____________________________ (Name of small business issuer in its charter) Colorado 84-0524756 ________ __________ (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) No.) 802 South Elm Kimball, NE 69145 ___________ _____ (Address of principal executive (Zip Code) offices) Issuer's telephone number (308) 235-4645 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Exchange on Which Registered None None Securities registered under Section 12(g) of the Act: Class A Common Stock, $.10 par value (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for the most recent fiscal year. $ 13,419,000. The aggregate market value of the voting stock held by non-affiliates of the Registrant as of August 10, 2007 was approximately $17,270,000 based upon the last reported sale, which occurred on July 30, 2007. For purposes of this disclosure, Common Stock held by officers and directors of the Registrant have been excluded in that such persons may be deemed to be "affiliates" as that term is defined under the rules and regulations promulgated under the Securities Act of 1933. This determination is not necessarily conclusive. The number of shares of the Registrant's Common Stock outstanding as of August 10, 2007 was 5,335,228. DOCUMENTS INCORPORATED BY REFERENCE None. Transitional Small Business Disclosure Format (check one): Yes X ; No____ Part I Preliminary Note Regarding Forward-Looking Statements and Currency Disclosure This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States dollars, rounded to the nearest thousand, and are prepared in accordance with United States Generally Accepted Accounting Principles. Item 1 Business (a) Business Development George Risk Industries, Inc. (GRI or the company) was incorporated in 1967 in Colorado. The company is presently engaged in the design, manufacture, and sale of computer keyboards, push button switches, burglar alarm components and systems, pool alarms, thermostats, EZ Duct wire covers and water sensors. GRI Telemark Corporation (Telemark), a majority owned subsidiary, was incorporated in October 1983 for the purpose of marketing security alarm products. As of April 13, 1993, Telemark was merged into GRI and presently operates as a marketing division of GRI. Products, Market, and Distribution The company designs, manufactures, and sells computer keyboards, push-button switches, burglar alarm components and systems, pool alarms, and water sensors. The security burglar alarm products comprise approximately 84 percent and pool alarms comprise 8 percent of net revenues and are sold through distributors and private board customers. The security segment has approximately 4,000 customers. One of the distributors accounts for approximately 39 percent of the company's sales of these products. Loss of this distributor would be significant to the company. However, this customer has purchased from the company for many years and is expected to continue. The keyboard segment has approximately 850 customers. Keyboard products are sold to original equipment manufacturers to their specifications and to distributors of off-the-shelf keyboards of proprietary design. Competition The company has intense competition in the keyboard and burglar alarm lines. The burglar alarm segment has five or six major competitors. The company competes well based on price, product design, quality, and prompt delivery. The competitors in the keyboard segment are larger companies with automated production facilities. GRI has emphasized small custom order sales that many of its competitors decline or discourage. Research and Development The company performs research and development for its customers when needed and requested. Costs in connection with such product development have been borne by the customers. Costs associated with the development of new products are expensed as incurred. Employees GRI has approximately 225 employees. Item 2 Properties The company owns the manufacturing and office facilities. The manufacturing facilities were expanded by 7,200 square feet eight years ago. Total square footage of the plant in Kimball, Nebraska is approximately 42,500 sq. ft. Additionally, the company leases 15,000 square feet for $1,535 per month with Eileen Risk, mother of Ken R. Risk and a former officer and director of the company. As of October 1, 1996, the company also began operating a satellite plant in Gering, NE. This expansion was done in coordination with Twin Cities Development. The company leased manufacturing facilities until July 2005. During the first quarter of fiscal year end 2006, the company purchased a building that is 7,200-sq. ft. in size. Currently, there are 48 employees at the Gering site. Item 3 Legal Proceedings None. Item 4 Submission of Matters to a Vote of Security Holders Not applicable. Part II Item 5 Market for the Registrant's Common Equity and Related Stockholders' Matter Principal Market The company's Class A Common Stock is currently quoted on the OTC Bulletin Board by fifteen market makers. Stock Prices and Dividends Information 2007 Fiscal Year High Low May 1-July 31 8.05 7.00 August 1-October 31 7.50 6.50 November 1-January 31 9.00 7.20 February 1-April 30 8.75 6.85 2006 Fiscal Year High Low May 1-July 31 5.60 5.00 August 1-October 31 7.00 5.35 November 1-January 31 7.74 7.00 February 1-April 30 8.50 7.40 A dividend of $0.15 per common share was declared on September 30, 2006. This was the only dividend declared and paid during the 2007 fiscal year. As for fiscal year 2006, a dividend of $0.10 per common share was declared on September 30, 2005. The number of holders of record of the company's Class A Common Stock as of April 30, 2007, was approximately 1,356. Item 6 Management's Discussion and Analysis of Financial Condition and Results of Operations GRI completed the fiscal year ending April 30, 2007, with a net profit of 22.2% net of sales. Net sales were at $13,419,000, down 5.86% over the previous year. Additionally, net income for the year ended April 30, 2007 was $2,981,000, up 9.1% from the prior year. Although sales were down for the fiscal year ending April 30, 2007, we expect sales to stay steady and hopefully increase for the fiscal year ending April 30, 2008. We are always researching and developing new products that will help our sales increase. Also, we are hopeful that extra growth can be achieved by volume increases with our present customers and with the addition of new customers. We have an excellent marketing department that is always on the lookout for new clients. We have had some problems with the ability to get product out our doors on a timely basis, but we have taken steps to remedy this problem. One example of how this problem is being addressed is that we have recently purchased a new pick and place machine so we are able to produce our new and improved pool alarms. The new design is less labor intense. Almost all of the assembly is done via the pick and place machine. This speeds up the manufacturing time and decreases the cost of the product. The material and labor costs stayed very consistent between this year and last year. At the fiscal years ended 2007 and 2006 the material and labor percentage was at 36.6% of gross sales. We continue to buy smart and we are always looking for quality material at the best possible price. As far as labor goes, we only hire the number of production workers that is needed to finish products in a timely manner and we work very hard at keeping overtime expense down. We did notice that there was a slow down in sales during the 4th quarter and management was forced to implement a temporary period of voluntary days off and a very brief period of mandatory days off. With these good practices embedded throughout, we expect to continue to achieve a gross profit margin of about 50 percent for the coming year. At April 30, 2007, working capital increased by 9.5% in comparison to the previous fiscal year. The company's liquidity has also increased this year as the ratio of cash, securities and accounts receivables to current obligations was 37.238 and 36.594 for the fiscal years ending April 30, 2007 and April 30, 2006, respectively. Current assets have increased as current liabilities have also increased, but the assets have grown at a faster pace than the liabilities have. At April 30, 2007, there are a couple of long- term liabilities on the books. One is deferred income tax of $74,000 and the other is a note payable for the economic development agreement that was made with the City of Gering, NE when we purchased our production building in 2005. The ETL listed pool alarm is now in production with stock available to ship right away. We are currently working with UL to make more options available to the end user with our DPA pool alarms. This line will soon be able to meet customer demand on many of our specialty items. The wireless pool alarm and wireless contact switch have a target date of August 2007 to be finished by our engineering department. This will enable us to move into a whole new market, which is the wireless market. This is especially timely since the price of wire has skyrocketed. Also, a 12-key keypad is also being developed for commercial access control. A new version of our Glass Guard window sensor is in its final stages of development. We are creating this sensor in direct response to customer feedback about how our offshore competitors have had long delays in delivering this type of product. Research and development continues on the Pump Guard, water value controller and other water sensors. We are also upgrading our CC-01 current controller. The CC-01 is used to automatically turn on closet and/or cabinet lights when the switch is activated. This is usually done by simply opening the door to the closet or cabinet. This new version will be able to handle more current and inductive load and is currently at UL for quotes. We are continuing to use more and more RoHS standard materials in our products. RoHS, the Restriction of Hazardous Substances directive, was adopted in February 2003 by the European Union. It took effect on July 1, 2006. The directive restricts the use of six hazardous materials in the manufacture of various types of electronic and electrical equipment. The six restricted materials include: lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyl, and polybrominated Biphenyl ether. Even though we are required to meet the RoHS standards to sell in the over-seas market, we foresee the possibility of manufacturing all our products to meet the above referenced standards. Furthermore, we have begun working directly with some of our larger overseas customers. Ordering, invoicing, and shipping is all done through the facility here in the U.S. Our vision of the overseas warehouse is not meeting our expectations and therefore, we are in the process of closing it down. We will still have a representative out of England that will be working to promote our products in Europe and beyond, but all stock will now be shipped directly from here. Management is always open to the possibility of acquiring a business that would complement our existing operations. This would probably not require any outside financing. The intent would be to utilize the equipment, marketing techniques and established customers to increase sales and profits. There are no known seasonal trends with any of GRI's products, since we mostly sell to distributors and OEM manufacturers. The products are tied to the housing industry and will fluctuate with building trends. Item 7 Financial Statements Index to Financial Statements George Risk Industries, Inc. Page Independent Auditor's Report 8 Balance Sheets April 30, 2007 and 2006 9 Statements of Income For the Years Ended April 30, 2007 and 2006 10 Statements of Comprehensive Income For the Years Ended April 30, 2007 and 2006 11 Statement of Changes in Stockholders' Equity For the Years Ended April 30, 2007 and 2006 12 Statements of Cash Flows For the Years Ended April 30, 2007 and 2006 13 Notes to Financial Statements 14 Report of Independent Registered Public Accounting Firm Board of Directors George Risk Industries, Inc. Kimball, Nebraska We have audited the accompanying balance sheet of George Risk Industries, Inc. as of April 30, 2007 and 2006, and the related statements of income, comprehensive income, stockholders' equity, and cash flows for the two years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of George Risk Industries, Inc. as of April 30, 2007 and 2006, and the results of their operations and their cash flows for the two years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Mason Russell West, LLC Littleton, Colorado July 21, 2007 George Risk Industries, Inc. Balance Sheets April 30, 2007 and 2006 ASSETS Current Assets: Cash and cash equivalents $ 4,611,000 $ 5,495,000 Investments and securities 16,738,000 13,811,000 Accounts receivable: Trade, net of $50,000 doubtful account allowance 1,925,000 2,138,000 Other 3,000 0 Income tax overpayment 137,000 270,000 Inventories 3,060,000 2,270,000 Prepaid expenses 125,000 117,000 Deferred current income taxes 115,000 312,000 ____________ ___________ Total Current Assets $ 26,714,000 $ 24,413,000 Property and Equipment, net, at cost 828,000 926,000 Other Assets Investment in Limited Land Partnership, at cost 200,000 200,000 Projects in process 75,000 30,000 Long-term receivable 60,000 0 Other 18,000 1,000 ___________ ___________ Total Other Assets $ 353,000 $ 231,000 TOTAL ASSETS $ 27,895,000 $ 25,570,000 _____________ ___________ _____________ ___________See accompanying notes to financial statements. George Risk Industries, Inc. Balance Sheets April 30, 2007 and 2006 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable, trade $ 127,000 $ 141,000 Dividends payable 161,000 46,000 Accrued expenses: Payroll and related expenses 337,000 366,000 Notes payable, current _ 33,000 __________ ___________ Total Current Liabilities 625,000 586,000 Long-Term Liabilities: Notes payable 25,000 45,000 Deferred income taxes 74,000 73,000 ___________ ___________ Total Long-Term Liabilities $ 99,000 $ 118,000 Stockholders' Equity Convertible preferred stock, 1,000,000 shares authorized, Series 1--noncumulative, $20 stated value, 25,000 shares authorized, 4,100 issued and outstanding 99,000 99,000 Common stock, Class A, $.10 par value, 10,000,000 shares authorized, 8,502,832 shares issued 850,000 850,000 Additional paid-in capital 1,736,000 1,736,000 Accumulated other comprehensive income 165,000 (39,000) Retained earnings 26,430,000 24,250,000 Less: cost of treasury stock, 3,166,104 shares, at cost (2,109,000) (2,030,000) ___________ ___________ Total Stockholders' Equity $27,171,000 $24,866,000 ___________ ___________ Total Liabilities and Stockholders' Equity $27,895,000 $25,570,000 ___________ ___________ ___________ ___________ Page 9 George Risk Industries, Inc. Statements of Income Year Year Ended Ended Apr 30,2007 Apr 30, 2006 ___________ ____________ Net Sales $13,419,000 $14,254,000 Less: Cost of Goods Sold (6,506,000) (6,788,000) ___________ ___________ Gross Profit $ 6,913,000 $ 7,466,000 Operating Expenses: General and Administrative 689,000 724,000 Sales 2,443,000 2,512,000 Engineering 69,000 79,000 Rent Paid to Related Parties 53,000 52,000 ___________ ___________ Total Operating Expenses $ 3,254,000 $ 3,367,000 ___________ ___________ Income From Operations 3,659,000 4,099,000 Other Income (Expense) Other 7,000 30,000 Dividend and Interest Income 689,000 440,000 Gain (Loss) on Investments 188,000 (353,000) ___________ ___________ $ 884,000 $ 117,000 Income Before Provision for Income Taxes 4,543,000 4,216,000 Provision for Income Taxes Current Expense 1,483,000 1,620,000 Deferred tax (benefit) expense 79,000 (136,000) ___________ ___________ Total Income Tax Expense 1,562,000 1,484,000 Net Income $ 2,981,000 $ 2,732,000 Income Per Share of Common Stock Basic $ 0.56 $ 0.51 Diluted $ 0.56 $ 0.51 Weighted Average Number of Common Shares Outstanding 5,340,769 5,360,740 See accompanying notes to financial statements Page 10 George Risk Industries, Inc. Statements of Comprehensive Income Year Year Ended Ended Apr 30,2007 Apr 30, 2006 ___________ ____________ Net Income $2,981,000 $ 2,732,000 __________ __________ Other Comprehensive Income, Net of Tax Unrealized gain (loss) on securities: Unrealized holding gains (losses) arising during period 204,000 842,000 Less: reclassification adjustment for (gains) losses included in net income (188,000) 353,000 Income tax expense related to other comprehensive income (7,000) (500,000) __________ __________ Other Comprehensive Income 9,000 695,000 Comprehensive Income $2,990,000 $3,427,000 __________ __________ __________ __________ See accompanying notes to financial statements Page 11 George Risk Industries, Inc. Statement of Changes in Stockholders' Equity For the Years Ended April 30, 2007 and 2006 Common Stock Preferred Stock Class A ________________ ____________ Shares Amount Shares Amount Balances, April 30, 2005 4,100 $ 99,000 8,502,832 $ 850,000 Purchases of common stock - - - - Dividend declared at $0.10 per common share outstanding - - - - Unrealized gain (loss) - - - - Net Income - - - - ________ ________ _________ ________ Balances, April 30, 2006 4,100 99,000 8,502,832 850,000 Purchases of common stock - - - - Dividend declared at $0.15 per common share outstanding - - - - Unrealized gain (loss) - - - - Net Income - - - - ________ ________ _________ ________ Balances, April 30, 2007 4,100 $ 99,000 8,502,832 $850,000 ________ ________ _________ ________ ________ ________ _________ ________ See accompanying notes to financial statements George Risk Industries, Inc. Statement of Changes in Stockholders' Equity For the Years Ended April 30, 2007 and 2006 Accumulated Treasury Stock Other Paid-In (Common Class A) Comprehensive Retained ______________ Capital Shares Amount Income Earnings Total $1,736,000 3,109,379 $(1,804,000) $(881,000) $22,054,000 $22,054,000 - 46,440 (226,000) - - (226,000) - - - - (536,000) (536,000) - - - 842,000 - 842,000 - - - - 2,732,000 2,732,000 __________ _________ ___________ ___________ ___________ ___________ 1,736,000 3,155,819 (2,030,000) (39,000) 24,250,000 24,866,000 __________ _________ ___________ ___________ ___________ ___________ - 10,285 (79,000) - - (79,000) - - - - (801,000) (801,000) - - - 204,000 - 204,000 - - - - 2,981,000 2,980,000 __________ _________ ___________ ___________ ___________ ___________ $1,736,000 3,166,104 $(2,109,000) $ 165,000 $24,430,000 $27,171,000 __________ _________ ___________ ___________ ___________ ___________ __________ _________ ___________ ___________ ___________ ___________ See accompanying notes to financial statements. Page 12 George Risk Industries, Inc. Statements of Cash Flows Year Year Ended Ended Apr 30,2007 Apr 30, 2006 ___________ ____________ Cash Flows from Operating Activities: Net income $2,981,000 $2,732,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 180,000 184,000 (Gain) loss on sale of investments (188,000) 253,000 (Gain) loss on sale of property and equipment 0 0 Reserve for obsolete inventory 35,000 0 Deferred income taxes 198,000 (136,000) Changes in assets and liabilities: (Increase) decrease in: Accounts receivable 213,000 102,000 Inventories (825,000) (215,000) Prepaid expenses (8,000) (52,000) Other receivables (3,000) 9,000 Income tax overpayment 133,000 (371,000) Long-term receivable (60,000) 0 Increase (decrease) in: Accounts payable (13,000) 2,000 Accrued expenses (29,000) 15,000 __________ __________ Net cash provided by (used in) operating activities $2,614,000 $ 2,623,000 __________ __________ Cash Flows From Investing Activities: Other assets manufactured and purchased (62,000) 4,000 Proceeds from sale of assets 0 12,000 (Purchase) of property and equipment (82,000) (335,000) Proceeds from sale of marketable securities 8,387,000 2,751,000 (Purchase) of marketable securities (10,922,000) (4,323,000) (Purchase) of preferred stock 0 0 (Purchase) of treasury stock (79,000) (226,000) __________ __________ Net cash provided by (used in) investing activities ($2,758,000) ($2,117,000) Cash Flows From Financing Activities: Increase in long-term debt 0 125,000 Principal payments on long-term debt (8,000) (92,000) Dividends paid (732,000) (495,000) __________ __________ Net cash provided by (used in) financing activities ($740,000) ($462,000) __________ __________ Net Increase (Decrease) in Cash and Cash Equivalents ($ 884,000) $ 44,000 __________ __________ __________ __________ Cash and Cash Equivalents, beginning of period $ 5,495,000 $5,451,000 Cash and Cash Equivalents, end of period $ 4,611,000 $5,495,000 __________ __________ __________ __________ Supplemental Disclosure for Cash Flow Information: Cash Payments for: Income taxes $ 1,350,000 $1,991,000 __________ __________ __________ __________ Page 13 See accompanying notes to financial statements George Risk Industries, Inc. Notes to Financial Statements April 30, 2007 1. Nature of Business and Summary of Significant Accounting Policies Nature of Business-The company is engaged in the design, manufacture, and marketing of computer keyboards, push-button switches, security alarm components, pool alarms and hydro sensors. Cash and Cash Equivalents-The company considers all investments purchased with a maturity of three months or less to be cash equivalents. Allowance for Doubtful Accounts-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. The company 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 collectibility 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. As of April 30, 2007, the company has recorded an allowance for doubtful accounts of $50,000 for the years ended 2007 and 2006, respectively. Bad debt expense was $2,000 and $7,000 for April 30, 2007 and 2006, respectively. Inventories-Inventories are stated at the lower of cost or market. Cost is determined using the average cost-pricing method. The company uses standard costs to price its manufactured inventories approximating average costs. Property and Equipment-Property and equipment are recorded at cost. Depreciation is calculated based on the following estimated useful lives using the straight-line method: Useful Classification Life Cost in Years Dies, jigs, and molds 3-7 $ 921,000 Machinery and equipment 5-10 1,059,000 Furniture and fixtures 5-10 130,000 Leasehold improvements 5-32 174,000 Buildings 20 644,000 Automotive and aircraft 3-5 380,000 Software 2-5 129,000 Land N/A 13,000 __________ Total 3,450,000 Accumulated depreciation (2,622,000) __________ Net $ 828,000 __________ __________ Depreciation expense of $180,000 and $184,000 were charged to operations for the years ended April 30 2007 and 2006, respectively. Maintenance and repairs are charged to expense as incurred, and expenditures for major improvements are capitalized. When assets are retired or otherwise disposed of, the property accounts are relieved of costs and accumulated depreciation and any resulting gain or loss is credited or charged to operations. Advertising-Advertising costs are expensed as incurred and included in selling expenses. Advertising expense amounted to $339,000 and $284,000 for the years ended April 30 2007 and 2006, respectively. Income Taxes-The company has adopted the provisions of the SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires use of the 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. The flow-through method of accounting for tax credits has been adopted by the company. Such credits are reflected as a reduction of the provision for income taxes in the year in which they become available. Net Income Per Common Share-Net income per common share is based on the weighted average number of common shares outstanding during each fiscal year. The dilutive effect of convertible preferred stock is reflected in diluted earnings per share by application of the if-converted method. Under this method, preferred dividends applicable to convertible preferred stock are added to the numerator and convertible preferred stock is assumed to have been converted at the beginning of the period. Accounting Estimates-The preparation of these financial statements requires the use of estimates and assumptions including the carrying value of assets. The estimates and assumptions result in approximate rather than exact amounts. Financial Instruments-Financial instruments consist of cash and cash equivalents, marketable securities, accounts receivable and accounts payable. The carrying values of these financial instruments approximate fair value due to their short-term nature. Revenue Recognition-Revenue is recognized when risks and benefits in ownership are transferred, which normally occurs at the time of shipment of products. Benefit Plan Disclosures-SFAS No. 132, Employer's Disclosures about Pension and other Post Retirement Benefits ("SFAS No. 132"), requires certain disclosures about employers' pension and other post retirement benefit plans and specifies the accounting and measurement or recognition of those plans. SFAS No. 132 requires disclosure of information on changes in the benefit obligations and fair values of the plan assets that facilitates financial analysis. Please see Note 4 for further disclosure in accordance with SFAS No. 132. Comprehensive Income-In the first quarter of fiscal 1999, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS 130 requires disclosure of total non-stockholder changes in equity in interim periods and additional disclosures of the components of non-stockholder changes in equity on an annual basis. Total non-stockholder changes in equity include all changes in equity during a period except those resulting from fiscal investments by and distributions to stockholders. Segment Reporting and Related Information-The Company discloses the results of its segments in accordance with SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information ("SFAS No. 131"). The Company designated the internal organization that is used by management for allocating resources and assessing performance as the source of the Company's reportable segments. SFAS No. 131 also requires disclosures about products and services, geographic area and major customers. At April 30, 2007, the Company operated in three segments organized by service line: pool alarm products, keyboard products, and security alarm and other products. See Note 9 for further segment information disclosures in accordance with SFAS No. 131. Recently Issued Accounting Pronouncements-In March 2006, FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140". This Statement amends SFAS No. 140 with respect to accounting for separately recognized servicing assets and servicing liabilities. This Statement, among other provisions, requires that servicing assets and liabilities be initially measured at fair value, permits alternate measurement methods for servicing assets and liabilities subsequent to initial measurement, and contains additional disclosure requirements. SFAS No. 156 is effective for fiscal years beginning after September 15, 2006. The Company does not have servicing assets and servicing liabilities, so the adoption of this Statement will not have a material effect on the financial statements. In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" - an interpretation of FASB Statement No. 109" ("FIN 48") which prescribes a recognition threshold and measurement attribute, as well as criteria for subsequently recognizing, unrecognizing and measuring uncertain tax positions for financial statement purposes. FIN 48 also requires expanded disclosure with respect to the uncertainty in income taxes assets and liabilities. FIN 48 is effective for fiscal years beginning after December 15, 2006 and is required to be recognized as a change in accounting principle through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. We are currently evaluating the impact of adopting the provisions of FIN 48 in fiscal 2008. In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements", which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has not yet evaluated the impact, if any, that SFAS No. 157 will have on the Company's financial position and results of operations. In September 2006, FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension, and other Postretirement Plans", which requires employers to recognize the under-funded or over-funded status of a defined benefit plan as an asset or liability in its statement of financial position. The new reporting requirements and related new footnote disclosure rules of SFAS No. 158 are effective for the years ending after December 15, 2006, with changes in the funded status recognized through comprehensive income in the year in which they occur. SFAS No. 158 did not change the amount of net periodic benefit expense recognized in an entity's results of operations. As such, the adoption did not have an impact to the Company's results of operations in fiscal 2007. Adoption of SFAS No. 158 is not expected to have a material impact on the Company's financial position. SFAS No. 158 also requires employers to measure the funded status of a plan as of the date of its year-end statement of financial position. The new measurement date requirement applies for fiscal years ending after December 15, 2008. In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115" ("SFAS 159"). SFAS 159 expands the use of fair value accounting but does not affect existing standards which require assets or liabilities to be carried at fair value. Under SFAS 159, a company may elect to use fair value to measure accounts and loans receivable, available- for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a third party to provide the warranty goods or services. If the use of fair value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, e.g. debt issue costs. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. At the adoption date, unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings. Subsequent to the adoption of SFAS 159, changes in fair value are recognized in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007 and the Company will be required to adopt this statement in the first quarter of fiscal 2009. The Company is currently determining whether fair value accounting is appropriate for any of its eligible items and connot estimate the impact, if any, which SFAS 159 will have on its consolidated results of operations and financial condition. 2. INVENTORIES Inventories at April 30, 2007 consisted of the following: Raw materials $1,903,000 Work in process 850,000 Finished goods 412,000 __________ 3,165,000 __________ Less allowance for obsolete inventory (105,000) __________ Totals $3,060,000 __________ __________ 3. MARKETABLE SECURITIES The Company has investments in publicly traded equity securities as well as certain state and municipal debt securities. These securities are classified as available-for-sale securities, and are reported at fair value. Realized gains and losses are determined on the average cost basis, and included in the Company's statement of income. Unrealized gains and losses are excluded from earnings and reported separately as a component of stockholders' equity. Dividend and interest income are accrued as earned. Marketable equity securities and related unrealized gains and losses consist of the following as of April 30, 2007: Cost basis $16,454,000 Market value 16,738,000 ___________ Net unrealized gains (losses) $ 284,000 ___________ ___________ Gross unrealized gain $ 741,000 ___________ ___________ Gross unrealized loss $ (457,000) ___________ ___________ In accordance with SFAS 115, if the Company determines that a marketable security has an other-than temporary decline in fair value, generally defined as when the cost basis exceeds the fair value for approximately one year. When this happens the Company will decrease the cost of the marketable security to the new fair value and recognize a realized loss. The investments are periodically evaluated to determine if impairment changes are required. As a result of this standard, management recorded impairment losses of $57,000 for the fiscal year ended April 30, 2007 and the impairment loss recorded for the fiscal year 2006 was $443,000. 4. RETIREMENT BENEFIT PLAN On January 1, 1998, the company adopted the George Risk Industries, Inc. Retirement Savings Plan (the "Plan"). The Plan is a defined contribution savings plan designed to provide retirement income to eligible employees of the company and its subsidiaries. The Plan is intended to be qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is funded by voluntary pre-tax contributions from eligible employees who may contribute a percentage of their eligible compensation, limited and subject to statutory limits. The Plan is also funded by discretionary matching employer contributions from the company. Eligible employees cannot participate in the Plan until they have attained the age of 21 and completed one thousand hours of service in any plan year with the company. Upon leaving the company, each participant is 100% vested with respect to the participants' contributions while the company's matching contributions are vested over a six-year period in accordance with the Plan document. Contributions are invested, as directed by the participant, in investment funds available under the Plan. Matching contributions of approximately $16,000 were paid during the fiscal year ending April 30, 2007 and approximately $17,000 of matching contributions we paid during the fiscal year April 30, 2006. Discretionary contributions of approximately $4,600 and $3,400 were paid during 2007 and 2006, respectively. 5. STOCKHOLDERS' EQUITY Preferred Stock-Each share of the Series #1 preferred stock is convertible at the option of the holder into five shares of Class A common stock and is also redeemable at the option of the board of directors at $20 per share. The holders of the convertible preferred stock shall be entitled to a dividend at a rate up to $1 per share annually, payable quarterly as declared by the board of directors. No dividends were declared or paid during the two years ended April 30, 2007. During the year ended April 30, 2000, the Company purchased and retired 7,500 preferred shares for $167,000. Convertible preferred stock without par value may be issued from time to time as determined by the board of directors. Shares of different series shall be of equal rank but may vary as to terms and conditions. Class A Common Stock-The holders of the Class A common stock are entitled to receive dividends as declared by the board of directors. No dividends may be paid on the Class A common stock until the holders of the Series #1 preferred stock have been paid a dividend for the four prior quarters and provision has been made for the full dividend in the current fiscal year. Stock Transfer Agent-The Company does not have an independent stock transfer agent. The company maintains all stock records. 6. EARNINGS PER SHARE Basic and diluted earnings per share, assuming convertible preferred stock was converted for each period presented are: April 30, 2007 ___________________________________ Income Shares Per-Share (Numerator) (Denominator) Amount Net Income $2,981,000 __________ __________ Basic EPS $2,981,000 5,340,769 $.558 Effect of dilutive Convertible Preferred Stock - 20,500 (.002) __________ _________ _____ Diluted EPS $2,981,000 5,361,269 $.556 __________ _________ _____ __________ _________ _____ April 30, 2006 ___________________________________ Income Shares Per-Share (Numerator) (Denominator) Amount Net Income $2,732,000 __________ __________ Basic EPS $2,732,000 5,360,740 $.510 Effect of dilutive Convertible Preferred Stock - 20,500 (.002) __________ _________ _____ Diluted EPS $2,732,000 5,381,240 $.508 __________ _________ _____ __________ _________ _____ 7. COMMITMENTS, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS Leases-The Company leases a duplex from Eileen Risk, mother of the President/CEO of the company. One half of the duplex is used for storage of materials and accounting records. This lease requires an annual payment of $3,400 due each July 1 and payments of $300 on a month-to-month basis to the related party. The Company also leases another building from Eileen Risk. This building contains the Company's sales and accounting departments, maintenance department, engineering department and some production facilities. This lease requires a minimum payment of $1,535 on a month-to-month basis. Total lease expense under the above two arrangements was $25,000 for the fiscal years ended April 30, 2007 and 2006, respectively. The company leases an airplane from the President/CEO, who is also a majority stockholder, on a month-to-month basis requiring payments of $2,250. Airplane lease expenses charged to operations for the fiscal years ended April 30, 2007 and 2006, were $27,000 for each year. During the year ended April 30, 2000, the Company paid $210,000 and the President/CEO contributed the airplane in trade for another airplane. The Company and this officer jointly own the newly purchased airplane and will continue the lease on the officer's ownership of the plane. 8. INCOME TAXES Reconciliation of income taxes with Federal and State taxable income: 2007 2006 ____________ ____________ Income before taxes $4,544,000 $4,216,000 State income tax deduction (282,000) (309,000) Capital loss carryforwards (utilized) accumulated (188,000) 353,000 Nontaxable interest and dividend income (432,000) (206,000) Domestic production activities deduction (109,000) (119,000) Nondeductible expenses and timing differences (1,000) (81,000) __________ __________ Taxable income $3,532,000 $3,854,000 __________ __________ __________ __________ The following schedule reconciles the provision for income taxes to the amount computed by applying the statutory rate to income before income taxes: Income tax expense at statutory rate $1,899,000 $1,762,000 Increase (decrease)income taxes resulting from: State income taxes (118,000) (129,000) Other temporary and permanent differences (219,000) (149,000) __________ __________ Income tax expense $1,562,000 $1,484,000 __________ __________ __________ __________ Federal Tax Rate 34.0% 34.0% State Tax Rate 7.8% 7.8% ____ ____ Blended statutory rate 41.8% 41.8% ____ ____ ____ ____ Deferred tax asset (liability) consist of the following components at April 30, 2007 and 2006: Deferred tax current assets: Capital loss carry forward $202,000 $280,000 Accrued vacation 32,000 32,000 Unrealized portion (119,000) 0 ________ ________ Net deferred tax assets $115,000 $312,000 ________ ________ ________ ________ Deferred tax liabilities: Depreciation (74,000) (73,000) ________ ________ Net deferred tax liability $(74,000) $(73,000) ________ ________ ________ ________ 9. BUSINESS SEGMENTS The following is financial information relating to industry segments: April 30, 2007 2006 Net revenue: Pool alarm products $1,068,000 $ 1,158,000 Keyboard products 1,210,000 803,000 Security alarm and other products 11,141,000 12,293,000 ___________ ___________ Total net revenue $13,419,000 $14,254,000 ___________ ___________ ___________ ___________ Income from operations: Pool alarm products $ 291,000 $ 344,000 Keyboard products 330,000 215,000 Security alarm and other products 3,038,000 3,540,000 ___________ __________ Total income from operations $ 3,659,000 $ 4,099,000 ___________ ___________ ___________ ___________ Identifiable assets: Pool alarm products $ 259,000 $ 257,000 Keyboard products 555,000 234,000 Security alarm and other products 4,773,000 4,582,000 Corporate general 22,308,000 20,497,000 ___________ ___________ Total assets $27,895,000 $25,570,000 ___________ ___________ ___________ ___________ Depreciation and amortization: Pool alarm products $ 14,000 $ 13,000 Keyboard products 0 0 Security alarm and other products 128,000 121,000 Corporate general 38,000 50,000 ___________ ___________ Total depreciation and amortization $ 180,000 $ 184,000 ___________ ___________ ___________ ___________ Capital expenditures: Pool alarm products $ 0 $ 0 Keyboard products 0 0 Security alarm and other products 82,000 273,000 Corporate general 0 62,000 ____________ ___________ Total capital expenditures $ 82,000 $ 335,000 ____________ ___________ ____________ ___________ 10. CONCENTRATIONS The company maintains its cash balance in a financial institution in Kimball, Nebraska. Accounts at this institution are insured by the Federal Deposit Insurance Corporation for up to $100,000. For the years ended April 30, 2007 and 2006, the Company's had uninsured balances of $613,000 and $4,985,000, respectively. Management believes that this financial institution is financially sound and the risk of loss is minimal. The Company also maintains cash balances in money market funds at the above-mentioned financial institution. Such balances are not insured. The company has sales to a security alarm distributor representing 39% of total sales for the year ended April 30, 2007 and 36% for the year ended April 30, 2006. This distributor accounted for 37% and 35% of accounts receivable at April 30, 2007 and 2006, respectively. The company has a concentration in regards to its sales. Its "Security Switch" sales division made up 80.2% of the total sales for the fiscal year ended April 30, 2007 and it made up 84% of the total sales for fiscal year 2006. Item 8 Disagreements on Accounting and Financial Disclosures There were no disagreements with accountants on accounting and financial disclosure. Item 8A Controls and Procedures When evaluating the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)), our Chief Executive Officer and our Chief Financial Officer, as of the end of the period covered by this annual report, have concluded that the disclosure controls and procedures are effective. This is based on the evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15. Furthermore, there were no changes in the Company's internal control over financial reporting that occurred during the most recent fiscal quarter (the fourth fiscal quarter in the case of this annual report) that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Part III Item 9 Directors and Executive Officers of the Registrant (a) Identification of Directors and Executive Officers All of the executive officers of the corporation serve at the pleasure of the board of directors and do not have fixed terms. The following information as of April 30, 2007, is furnished with respect to each director and executive officer: Director or Name Principal Occupation or Employment Age Officer Since Ken R. Risk Chairman of the Board and President 59 1976 Stephanie Risk Chief Financial Officer/Controller 35 1999 Sharon Westby Secretary/Treasurer 55 2005 Jerry Andersen Director, retired 76 1978 Donna Debowey Director, retired GRI plant manager 69 2005 Michael J. Nelson Chairman, Nebraska Region, FirsTier Banks 66 1992 (b) Business Experience of Directors and Executive Officers Ken R. Risk, chairman of the board, president and director, worked with the company after he returned from naval service for several years. He left GRI in 1977 to start his own company, Platte Valley Sales, in Hastings, Nebraska. He returned to the company to assume the position of president and CEO in late 1989 after the death of his father, George Risk. He moved to Kimball, Nebraska in 1997. Stephanie Risk, chief financial officer and controller, has over ten years' experience in the accounting field. Stephanie also worked for the family business (Platte Valley Sales) during and after college as a staff accountant. In 1997, she pursued her career with an accounting manager position at Kershner's Auto Korner. She joined the accounting staff at GRI in 1999 and then was promoted to CFO upon retirement of the prior CFO. Sharon Westby, the corporate secretary, worked at GRI right after high school for a couple of years as the personal secretary to the then president and CEO. Before she returned to the company in 1982, Sharon was a Clerk Steno 1 at Jackson County Welfare in Kansas City, MO, entered medical records transcripts at the Kimball County Hospital in Kimball, NE, and was the manager of Motel Kimball in Kimball, NE. Her current duties at GRI include being the executive assistant to the President and CEO and sales administrator of the keyboard and switch division. Jerry Andersen, director, worked in the banking industry from 1967 until his retirement in August 2000. Donna Debowey, director, worked in various retail stores and restaurants until she started at GRI in 1968. She started on the production line, but quickly worked her way up the ranks. She has been a production line supervisor, head of quality control and she was named the plant manager and senior vice president in 1998 and held that position until her retirement in 2003. Michael J. Nelson, director, has worked in the banking business since 1963 and was the president of the First State Bank in Kimball, Nebraska until 2001. He is currently chairman of FirsTier Banks in Kimball, Nebraska. (c)Identification of Certain Significant Employees Ken R. Risk, Sharon Westby and Stephanie Risk are also employees of the company. (See Item 9 [b].) (d) Involvement in Certain Legal Proceedings None. (e) Audit Committee Financial Expert The Company has no standing audit, nominating, or compensation committee, or any committee performing similar functions. Item 10 Executive Compensation The following table sets forth certain information regarding the compensation paid or accrued by the company to or for the account of the chief executive officer, chief financial officer and the two other most highly compensated executive officers of the company for services rendered in all capacities during each of the company's fiscal years ended April 30, 2006 and 2007: Annual Compensation (a) (b) (c) (d) (e) Other Annual Position Year Salary Bonuses Compensation Ken R. Risk 2007 193,000 - - Chief Executive Officer 2006 202,000 - - Stephanie Risk 2007 43,000 - - Chief Financial Officer 2006 40,000 - - Bruce E. Smith 2007 115,000 - - Director of Sales 2006 97,000 - - David Luppen 2007 54,000 - - Director of Engineering 2006 53,000 - - Long-Term Compensation (a) (b) (f) (g) (h) (i) Restricted Options LTIP Total of Position Year Stock /SARS Payouts items Awards Ken R. Risk 2007 - - - 193,000 2006 - - - 202,000 Stephanie 2007 - - - 43,000 Risk 2006 - - - 40,000 Bruce E. 2007 - - - 115,000 Smith 2006 - - - 97,000 David Luppen 2007 - - - 54,000 2006 - - - 53,000 Ken R. Risk and Bruce E. Smith do not have employment contracts with the company. Both have a base salary and also receive compensation based on a percentage of sales for the year. Members of the board of directors were each compensated $150 for their services during the fiscal year. Item 11 Security Ownership of Certain Beneficial Owners and Management Below is certain information concerning persons who are known by the company to own beneficially more than 5 percent of any class of the company's voting shares on April 30, 2007. Title Name and Address Amount of Percent of of Beneficial Beneficial of Class Ownership Ownership Class Class Ken R. Risk 2,950,395 55.28% A Kimball, NE 69145 None of the directors or officers has the right to acquire any additional shares either directly or indirectly through any contracts or arrangements with other shareholders. Item 12 Certain Relationships and Related Party Transactions During each of three years ended April 30, 2007, 2006, and 2005, the company executed transactions with related entities and individuals. Each of the transactions was in terms at least as favorable as could be obtained from unrelated third parties. Related Party 2007 2006 2005 Airplane Lease Ken R. Risk, President $27,000 $27,000 $27,000 Building and Warehouse Leases/Rentals Eileen M. Risk, Mother of CEO $ 3,400 $ 3,400 $ 3,400 Eileen M. Risk, Mother of CEO $ 3,600 $ 3,600 $ 3,600 Eileen M. Risk, Mother of CEO $18,420 $18,420 $18,420 Stock Transfer Agent Bonnie P. Risk, Wife of CEO $21,000 $21,000 $ 0 Eileen M. Risk, Mother of CEO $ 0 $ 0 $20,000 Item 13 Exhibits and Reports on Form 8-K Item 13 Exhibits and Reports on Form 8-K 3.(1).a Articles of Incorporation - Filed as Exhibit 5 to the Registrant's Form 10-K for the fiscal year ended April 10, 1970, and incorporated by reference herein 3.(i).b Certificate of Amendment to the Articles of Incorporation of the Registrant - Filed as Exhibit 1.2 to the Registrant's Form 10-K for the fiscal year ended April 30, 1971, and incorporated by reference herein 3.(ii).c By-laws - Filed as Exhibit 1.3 to the Registrant's Form 10-K for the fiscal year ended April 10, 1971, and incorporated by reference herein 31.1 Certification pursuant to Rule 13a-14(a) of the Chief Executive Officer 31.2 Certification pursuant to Rule 13a-14(a) of the Chief Financial Officer 32.1 Certification pursuant to 18 U.S.C. 1350 of the Chief Executive Officer 32.2 Certification pursuant to 18 U.S.C. 1350 of the Chief Financial Officer Item 14 Principal Accountant Fees and Services 1)Audit Fees For each of the last two fiscal years the company incurred aggregate fees and expenses for professional services rendered by our principal accountant for the audit of our annual financial statements and review of our financial statements for Form 10-QSB. The amounts are listed below: FYE 2007 $29,250 Mason Russell West, LLC FYE 2006 $29,150 Mason Russell West, LLC 2) Audit-Related Fees The company did incur aggregate tax fees and expenses for professional services rendered by our principal accountants for the audit of the company's employee benefit plan. The amounts are listed below: FYE 2007 $ 4,485 Mason Russell West, LLC FYE 2006 $ 8,900 Mason Russell West, LLC 3)Tax Fees The company did not incur aggregate fees or expenses for professional services rendered by the principal accountants for tax compliance, tax advice, and tax planning. These services are included in our audit fees and are not billed separately. 4)All Other Fees There were no other fees incurred during each of the last two fiscal years. 5) The Board of Directors, considered whether, and determined that, the auditor's provisions of non-audit services were compatible with maintaining the auditor's independence. All the services described above were approved by the Board of Directors pursuant to its policies and procedures. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. /s/ Ken R. Risk Date Ken R. Risk, President and Chairman of the Board August 10, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Ken R. Risk President and Date Ken R. Risk Chairman of the Board August 10, 2007 /s/ Stephanie M. Risk Chief Financial Officer Date Stephanie M. Risk and Controller August 10, 2007 /s/ Jerry Andersen Director Date Jerry Andersen August 10, 2007 /s/ Michael J. Nelson Director Date Michael J. Nelson August 10, 2007 /s/ Donna Debowey Director Date Donna Debowey August 10, 2007