Nature of Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Apr. 30, 2024

Accounting Policies [Abstract]

Nature of Business

Nature of Business — The Company is engaged in the design, manufacture, and marketing of custom computer keyboards, proximity sensors, security alarm components, pool access alarms, liquid detection sensors, raceway wire covers, wire and cable installation tools and various other sensors and devices.

Cash and Cash Equivalents

Cash and Cash Equivalents — The Company considers all investments with a maturity of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Accounts Receivable and Allowance for Estimated Credit Losses

Accounts Receivable and Allowance for Estimated Credit Losses — 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 extends credit to its customers based on their credit worthiness and performs continuing credit evaluations of its customers’ financial condition. If the Company believes the extension of credit is not advisable, other payment methods such as prepayments are required. Balances deemed uncollectible by the Company are written off against our allowance for credit loss accounts.

The Company maintains an allowance for estimated credit losses related to accounts receivable for future expected credit losses resulting from the inability or unwillingness of our customers to make required payments. We estimate our allowance for credit losses based on relevant information such as historical experience, current conditions, and future expectation of specifically identified customer balances. This allowance is adjusted as appropriate to reflect current conditions. The Company has recorded an allowance for estimated credit losses of $34,256 for the year ended April 30, 2024, and $17,922 for the year ended April 30, 2023. For the year ended April 30, 2024, the provision for credit losses on accounts receivable was an expense of $16,334 compared to a provision of $17,171 for the year ended April 30, 2023.

Concentrations of Credit Risk

Concentrations of Credit Risk — The Company has a limited number of customers with individually substantial amounts due at any given date. Any unanticipated change in any one of these customers’ credit worthiness or other matters affecting the collectability of amounts due from such customers could have a material effect on the results of operations in the period in which such changes or events occur.

Inventories

Inventories — Inventories are stated at the lower of cost or net realized value. Cost is determined using the average cost-pricing method. The Company uses actual costs to price its manufactured inventories, approximating average costs.

1. Nature of Business and Summary of Significant Accounting Policies, continued

Property and Equipment

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:

Schedule of Property and Equipment

Classification	Useful Life in Years	2024 Cost			2023 Cost
Dies, jigs, and molds	3–7	$	1,871,000		$	1,871,000
Machinery and equipment	5–10		2,832,000			2,632,000
Furniture and fixtures	5–10		222,000			222,000
Improvements	5–32		638,000			605,000
Buildings	20–39		1,151,000			1,151,000
Automotive	3–5		131,000			126,000
Software	2–5		425,000			425,000
Land	N/A		80,000			80,000
Property and equipment, gross			7,350,000			7,112,000
Accumulated depreciation			(5,347,000	)		(5,115,000	)
Property and equipment, net		$	2,003,000		$	1,997,000

Depreciation expense of $366,000 and $323,000 was charged to operations for the years ended April 30, 2024 and 2023, 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.

Investment in Limited Land Partnership (LLP)

Investment in Limited Land Partnership (LLP) — In November 2002, the Company purchased 6.67% of a prime 22-acre land parcel for development in Winter Park-Grand County, CO for investment purposes for a total of $200,000. Over the years, there has been a total of $144,000 of additional contributions to aid in improvements and recurring expenses such as debt service, utilities, taxes, maintenance, insurance, and professional fees. The goal of the investment was to hold the property for resale(s) in 2-5 years, but many efforts to sell the property did not materialize for many years. Fortunately, the sale finally happened on June 30, 2023. Disbursement of the sale proceeds are contingent on finishing wetland restoration of the land, but the LLP made a distribution of the net proceeds in January 2024 in the amount of $12,000. Upon receiving information from the LLP management team, additional details about the contingent ongoing expenses were given to GRI and it has been determined that there is a $38,000 impairment on this investment, which has been accounted for during the year ended April 30, 2024.

Subsequently, an additional distribution of the net proceeds from the sale of the LLP in the amount of $255,000 was paid to GRI in July 2024.

Intangible Assets

Intangible Assets — Intangible assets are amortized on a straight-line basis over their estimated useful lives, unless it is determined their lives to be indefinite. The intangible asset currently being amortized is intellectual property with a useful life of 15 years. As of April 30, 2024, the Company had $1,028,000 of net intangible assets, compared to net intangible assets of $1,149,000 as of April 30, 2023. Amortization expense was $121,000 and $122,000 for the years ended April 30, 2024 and 2023, respectively.

1. Nature of Business and Summary of Significant Accounting Policies, continued

As of April 30, 2024, future amortization of intangible assets is expected as follows:

Schedule of Future Amortization of Intangible Assets

Fiscal year end	Amortization amount
2025	$	121,000
2026	$	121,000
2027	$	121,000
2028	$	121,000
2029	$	121,000
Thereafter	$	423,000
Total	$	1,028,000

Basic and Diluted Earnings per Share

Basic and Diluted Earnings per Share — The Company computes earnings per share in accordance with Accounting Standards Codification (“ASC”) 260-10-45 Earnings per Share, which requires presentation of both basic and diluted earnings per share on the face of the statement of income. Basic earnings per share is computed by dividing net earnings available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings per share exclude all potential common shares if their effect is anti-dilutive.

Advertising

Advertising — Advertising costs are expensed as incurred and are included in selling expenses. Advertising expense amounted to $116,000 and $105,000 for the years ended April 30, 2024 and 2023, respectively.

Income Taxes

Income Taxes — Deferred tax assets and liabilities are recorded for the future consequences of events that have been recognized in the Company’s financial statements or tax returns. Measurement of the deferred tax items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and tax bases of the Company’s assets or liabilities result in a deferred tax asset, we evaluate the probability of realizing the future benefits comprising that asset and record a valuation allowance if considered necessary.

Accounting standards prescribe a recognition threshold and a measurement attribute for the financial statement recognition and measurement of the positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. A “more likely than not” tax position is measured as the largest amount of benefit that is greater than a fifty percent likelihood of being realized upon ultimate settlement, or else a full reserve is established against the tax asset or a liability is recorded. The Internal Revenue Service (“IRS”) may generally access additional income tax records for the most recent three years. This would generally prevent the IRS from opening an examination for years ending on or before April 30, 2020. However, there are exceptions that can extend the statute of limitations to six years, and in some cases, prevent the statute of limitations from ever expiring. Interest and penalties accrued on uncertain tax positions are recorded as income tax expense.

1. Nature of Business and Summary of Significant Accounting Policies, continued

It has been determined that the Company does not have uncertain tax positions on its tax returns for the years 2023, 2022, and prior. Based on evaluation of the 2024 transactions and events, the Company does not have any material uncertain tax positions that require measurement.

Accounting Estimates

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.

Fair Value of Financial Instruments

Fair Value of Financial Instruments — Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows. Other financial instruments, including cash equivalents, certain investments and short-term debt, are recorded at cost, which approximates fair value. The fair values of long-term debt and financial instruments are disclosed in Note 11.

Investments

Investments — The accounting policies for the Company’s principal investments are as follows: Debt Securities and Equity Securities: Effective May 1, 2018, the Company adopted Accounting Standards Update 2016-01 “Financial Instruments-Overall (ASC Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”. As a result, the Company measures its equity securities at fair value and recognizes any changes in fair value in net income. Prior to adoption, equity securities were designated as available-for-sale and reported at fair value with unrealized capital gains (losses) recorded in Accumulated other comprehensive income (loss) (“AOCI”). The Company’s debt securities are currently designated as available-for-sale. Available-for-sale securities are reported at fair value and unrealized capital gains (losses) on these securities are recorded directly in AOCI and presented, net of related changes, in deferred income taxes. Purchases and sales of debt securities and equity securities are recorded on the trade date. Investment gains and losses on sales of securities are generally determined on a first-in-first-out (“FIFO”) basis.

The Company evaluates all marketable securities for other-than temporary declines in fair value, which are defined as when the cost basis exceeds the fair value for approximately one year. The Company also evaluates the nature of the investment, cause of impairment and number of investments that are in an unrealized position. When an “other-than-temporary” decline is identified, the Company will decrease the cost of the marketable security to the new fair value and recognize a real loss. The investments are periodically evaluated to determine if impairment changes are required.

Revenue Recognition

Revenue Recognition —The Company accounts for revenue using the guidance provided by ASC 606, “Revenue from Contracts with Customers.” The Company recognizes product revenue using a five-step approach to determine the amount and timing of revenue to be recognized. The five-step approach requires (1) identifying the contract with the customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when performance obligations are satisfied. The Company recognizes revenue for product sales upon transfer of title to the customer. Customer purchase orders and/or contracts are generally used to determine the existence of an arrangement. Shipping documents and the completion of any customer acceptance requirements, when applicable, are used to verify product delivery or that services have been rendered. The Company assesses whether a price is fixed or determinable based upon the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Payments received from customers in advance of product shipment or revenue recognition are treated as deferred revenues and recognized when the product is shipped.

1. Nature of Business and Summary of Significant Accounting Policies, continued

Variable Consideration

Variable Consideration — The Company measures revenue as the amount of consideration for which it expects to be entitled in exchange for transferring goods. Certain customers may receive cash and/or non-cash incentives such as cash rebates, customer discounts (such as volume or trade discounts), which are accounted for as variable consideration. In some cases, the Company must apply judgment, including contractual rates and historical payment trends, when estimating variable consideration.

Product Returns

Product Returns — In the normal course of business, the Company may allow customers to return products per the provisions in a sale agreement. Estimated product returns are recorded as a reduction in reported revenues with offsetting entries recorded in the balance sheet quarterly based upon historical product return experience, adjusted for known trends, to arrive at the amount of consideration expected to receive.

Product Warranties

Product Warranties — In the normal course of business, the Company offers warranties for a variety of its products. The specific terms and conditions of the warranties vary depending upon the specific product and markets in which the products were sold. The Company accrues for the estimated cost of product warranty at the time of sale based on historical experience.

Shipping and Handling Costs

Shipping and Handling Costs — The Company considers all shipping and handling to be fulfillment activities and not a separate performance obligation. Shipping and handling costs are recorded as cost of sales.

Research and Development Costs

Research and Development Costs — Generally, costs related to the research, design, and development of products are charged to engineering expense as incurred. Certain research and development costs are recognized under assets in the balance sheet.

Comprehensive Income

Comprehensive Income — US GAAP 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

Segment Reporting and Related Information — The Company designates the internal organization that is used by management for allocating resources and assessing performance as the source of the Company’s reportable segments. US GAAP also requires disclosures about products and services, geographic area and major customers. At April 30, 2024, the Company operated in three segments organized by security line products, cable and wiring tools (Labor Saving Devices - LSDI) products, and all other products. See Note 9 for further segment information disclosures.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements — In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures. The new guidance is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective retrospectively for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the financial statements and related disclosures, which is not expected to be material.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Tax Disclosures (Topic 740), to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements.

1. Nature of Business and Summary of Significant Accounting Policies, continued

Subsequent Events

Subsequent Events – Other than those discussed at the Investment in Limited Land Partnership section of this note, Management has evaluated all events or transactions that occurred after April 30, 2024 through the date of the filing. During this period, the Company did not have any material recognizable subsequent events.