UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended January 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______________ to ________________
Commission File Number: 0-5378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St., Kimball, NE 69145
(Address of principal executive offices)
(308) 235-4645
(Issuer's telephone number)
n/a
(Former name, address and fiscal year, if changed from last report)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered pursuant to 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 Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act, after the distribution
of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,018,719
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JANUARY 31, 2000 AND JANUARY 31, 1999
[CAPTION]
[S] [C] [C]
ASSETS
CURRENT ASSETS
Cash $ 1,819,000 $ 1,711,000
Marketable Securities 6,133,000 5,305,000
Accounts Receivable: Trade, net of
$50,000 doubtful account allowance 1,772,000 2,008,000
Notes Receivable 6,000 1,000
Inventories (Note 1) 2,489,000 2,153,000
Prepaid Expenses 53,000 50,000
------------ ------------
Total Current Assets $12,272,000 $11,228,000
Property And Equipment, net, at cost 1,304,000 636,000
Other Assets 98,000 407,000
------------ ------------
TOTAL ASSETS $13,674,000 $12,271,000
============ ============
[CAPTION]
LIABILITIES AND STOCKHOLDERS' EQUITY
[S] [C] [C]
CURRENT LIABILITIES
Accounts Payable, trade $ 70,000 $ 173,000
Notes Payable, current 76,000 52,000
Accrued Expenses 503,000 1,211,000
Deferred Current Taxes (31,000) (31,000)
------------ ------------
Total Current Liabilities $ 618,000 $ 1,405,000
Long-Term Liabilities
Notes Payable 146,000 118,000
Deferred Income Taxes 28,000 33,000
------------ ------------
Total Long-Term Liabilities $174,000 $ 151,000
Stockholders' Equity
Convertible Preferred Stock 257,000 257,000
Common Stock, Class A 850,000 850,000
Additional Paid in Capital 1,734,000 1,674,000
Accumulated Other Comprehensive
Income 139,000 143,000
Retained Earnings 10,577,000 8,416,000
Less: Cost of Treasury Stock (675,000) (625,000)
------------ ------------
Total Stockholders' Equity $12,882,000 $10,715,000
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $13,674,000 $12,271,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENT
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31 JANUARY 31
2000 1999 2000 1999
------------------------ ------------------------
Net Sales $ 3,375,000 $ 3,162,000 $10,138,000 $ 9,508,000
Cost of Goods Sold (1,736,000) (1,669,000) (5,194,000) (4,962,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,639,000 $ 1,493,000 $ 4,944,000 $ 4,546,000
Operating Expenses:
General and
Administrative 196,000 164,000 622,000 475,000
Sales 642,000 608,000 1,863,000 1,722,000
Engineering 34,000 19,000 85,000 79,000
------------ ------------ ------------ ------------
Total Operating
Expenses $ 872,000 $ 791,000 $ 2,570,000 $ 2,276,000
Income From
Operations 767,000 702,000 2,374,000 2,270,000
Other Income (Expense)
Interest Income 5,000 5,000 15,000 16,000
Interest Expense (3,000) (5,000) (12,000) (16,000)
Investment
Income/(Loss) 78,000 69,000 213,000 186,000
Gain/(Loss) on
Investments 1,000 75,000 (92,000) 76,000
Gain/(Loss) on Sale
of Equipment 0 0 14,000 0
Other Income/(Loss) (2,000) 0 1,000 1,000
------------ ------------ ------------ ------------
$ 79,000 $ 144,000 $ 139,000 $ 263,000
Income Before Provisions
for Income Taxes 846,000 846,000 2,513,000 2,533,000
Provisions for
Income Taxes (354,000) (353,000) (1,050,000) (1,058,000)
------------ ------------ ------------ ------------
Net Income $ 492,000 $ 493,000 $ 1,463,000 $ 1,475,000
============ ============ ============ ============
Income Per Share
of Common Stock $ 0.08 $ 0.08 $ 0.24 $ 0.24
Weighted Average Number
of Common Shares
Outstanding 6,014,558 6,020,413 6,018,719 6,025,243
GEORGE RISK INDUSTRIES, INC.
STATEMENT ON COMPREHENSIVE INCOME
[CAPTION]
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31 JANUARY 31
2000 1999 2000 1999
------------------------ ------------------------
[S] [C] [C] [C] [C]
Net Income $ 492,000 $ 493,000 $ 1,463,000 $ 1,475,000
------------ ------------ ------------ ------------
Other Comprehensive Income,
net of tax
Unrealized gains/(losses)
on securities:
Unrealized holding
gains/(losses) arising
during period 118,000 347,000 (98,000) 239,000
Less: reclassification
adjustment for gains/
(losses) included in
net income (33,000) 35,000 119,000 25,000
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 85,000 $ 382,000 $ 21,000 $ 264,000
Comprehensive Income $ 577,000 $ 875,000 $ 1,484,000 $ 1,739,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED NINE MONTHS ENDED
JANUARY 31 JANUARY 31
2000 1999 2000 1999
---------------------- -----------------------
[S] [C] [C] [C] [C]
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income $ 492,000 $ 493,000 $1,463,000 $1,475,000
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 49,000 27,000 121,000 82,000
Change in unrealized
gain/(loss) on
investments 85,000 382,000 21,000 264,000
Changes in assets and
liabilities:
(Increase) Decrease in:
Marketable Securities (414,000) (565,000) (669,000) (842,000)
Accounts Receivable 283,000 63,000 303,000 (238,000)
Inventories (251,000) (24,000) (296,000) (498,000)
Prepaid Expenses 12,000 9,000 9,000 (6,000)
Other Assets (24,000) (52,000) 24,000 (160,000)
Receivables - officers
and employees 5,000 8,000 8,000 16,000
Increase (Decrease) in:
Accounts Payable 13,000 (42,000) 24,000 (23,000)
Accrued Expenses 121,000 64,000 157,000 80,000
Notes Payable (18,000) (13,000) 66,000 (38,000)
Income Tax Payable 30,000 353,000 (4,000) 758,000
----------- ----------- ----------- -----------
Net cash provided by
(used in) operating
activities: $ 383,000 $ 703,000 $1,227,000 $ 870,000
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of Property
and Equipment (257,000) (12,000) (608,000) (53,000)
Purchase of Treasury
Stock 0 (20,000) (9,000) (20,000)
----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities $ (257,000) $ (32,000) $ (617,000) $ (73,000)
CASH FLOWS FROM FINANCING
ACTIVITIES
Treasury Stock issued 0 0 49,000 11,000
----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities $ 0 $ 0 $ 49,000 $ 11,000
NET INCREASE (DECREASE)
IN CASH $ 126,000 $ 671,000 $ 659,000 $ 808,000
=========== =========== =========== ===========
Cash at beginning
of period $1,693,000 $1,040,000 $1,160,000 $ 903,000
Cash at end of period $1,819,000 $1,711,000 $1,819,000 $1,711,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000
Note 1. Inventories
At January 31, 2000 and January 31, 1999, respectively, inventories
consisted of the following:
[S] [C] [C]
Raw Materials $ 1,777,000 $ 1,666,000
Work in Process 394,000 272,000
Finished Goods 388,000 261,000
------------ ------------
$ 2,559,000 $ 2,199,000
Less: Allowance for obsolete
inventory (70,000) (46,000)
------------ ------------
Net Inventories $ 2,489,000 $ 2,153,000
============ ============
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements, and with the Company's audited
financial statements and discussion for the fiscal year ended April 30, 1999.
Net cash increased $126,000 during the quarter ended January 31, 2000, and
cash increased $659,000 for the nine months ended January 31, 2000. As for
the same corresponding periods last fiscal year, cash increased $671,000 for
the quarter and $808,000 for year-to-date figures. The biggest reason for
the increase in cash is that accounts receivable decreased $283,000 for the
current quarter and A/R decreased $303,000 for year-to-date figures. This is
in comparison to a decrease of accounts receivable of $63,000 for the quarter
ended January 31, 1999, and an increase of $238,000 for the nine months ended
January 31, 1999. The decline reflects the increased sales the Company is
experiencing as it continues to collect its receivables in a more aggressive
manner. At January 31, 2000, 74% of the receivables are considered current
(less than 45 days) and only 4% of the total are over 90 days past due.
Another reason that overall cash increased is that investments in marketable
securities did increase for the current year, but not as much as they did for
the same periods last year. Marketable securities increased $414,000 for the
quarter ended January 31, 2000 and increased $669,000 for the current year.
This is in comparison to an increase of $565,000 in marketable securities for
the quarter ended January 31, 1999, and an increase of $842,000 for YTD fig-
ures last year. The Company still continued to invest in new items, but
since some bonds have matured, the cash outlay has not been as great. Inven-
tories increased $251,000 for the quarter ended January 31, 2000, but only
increased $296,000 for YTD numbers. This carries on the trend of having
increased raw materials and work in process inventory for the Company's con-
tinued growth. At the quarter ended January 31, 2000, accounts payable shows
an increase of $13,000 and a $24,000 increase for the year-to-date numbers.
And when comparing the same numbers for the same periods last year, there is
a decrease of $42,000 for the quarter ending January 31, 1999 and the
year-to-date figures show a $23,000 increase. The increase in the current
fiscal year goes hand in hand with the increase in inventory and capital
equipment. The Company's notes payable numbers are up this year with the
receipt of $75,000 in the form of a long-term note from the State of Nebraska
Department of Economic Development. They offer a "Community Development
Block Grant" (CDBG) program to help increase economic development in the
state. The Company received this loan to help pay for the new addition that
was completed in October 1999. This addition houses the Company's molding
and tool and die departments. If, after five years, the Company complies
with all of the conditions of the CDBG program, the note will be forgiven.
The following is a list of ratios to help analyze the Company's performance:
Nine months ended Nine months ended
January 31, 2000 January 31, 1999
----------------- -----------------
Working capital $ 11,654,000 $ 9,823,000
Current ratio 19.858 7.991
Quick ratio 15.735 6.423
Cash per share (including Mkt Sec) $ 1.32 $ 1.16
Equity per share $ 2.14 $ 1.78
Net sales were $3,375,000 for the quarter ended January 31, 2000 and
$10,138,000 for the nine months ending January 31, 2000. This is an increase
of 6.7% and 6.6%, respectively, when comparing to last year's figures. At
January 31, 2000, there was over $850,000 worth of orders in house that had
yet to be filled. Cost of goods sold was 51% and 50% of gross sales for the
quarter and nine months ended January 31, 2000. The cost of goods sold
percentage was 52% and 51% for the corresponding periods last year. Having
relatively the same percentage of cost of goods sold from period to period
shows that the Company keeps its costs in line. The Company has increased
its cost of materials and direct labor in proportion to how its sales have
increased.
Operating expenses were 25.5% of gross sales for the current quarter and
24.9% for year to date figures. For the same periods last year, operating
expenses were 24.8% and 23.6% of gross sales. Having reasonably consistent
operating expenses for all periods shows that management keeps a close eye on
its expenses to keep them in line from period to period. As sales have in-
creased, management has increased wages and staff accordingly. There are a
couple of reasons for the slight increase in operating expenses. First,
legal expenses were up by 0.4% because of the Company had to get legal
council for a patent infringement lawsuit. The lawsuit has since been dis-
missed, but the expense is still there. Second, depreciation expense has
increase with all the capital equipment that has been purchased. Third, with
the need to expand into new and different markets and to keep current goods
up-to-date, new product development has increased 0.6% from last year.
Finally, as an incentive to our customers, we offer them a distributor volume
rebate. Customers only receive this rebate if they increase their sales from
quarter to quarter. More customers fell into this category over the past
year, so this expense increased by 0.3%.
Other income and expenses showed a $79,000 gain for the quarter ended
January 31, 2000, and a $139,000 gain for the nine months ended January 31,
2000. This is in comparison to $144,000 and $263,000 gains for the cor-
responding periods last year. The Company was advised to sell one of its
stock holdings for a loss of $93,000, in order to cut its losses sooner than
later during the first quarter to this fiscal year, but its investment income
holdings and sales have thrived since then. In turn, net income for the
quarter ended January 31, 2000 was at $492,000, a slight decrease from the
same quarter last year. The same goes for year to date numbers. Net income
was $1,463,000 for the nine months ended January 31, 2000, as compared to
$1,475,000 for the nine months ended January 31, 1999. Earnings per share
for the quarter was $0.08 per share, compared to $0.08 per share for the same
quarter last year, and the year to date earnings per share was $0.24 this
year and $0.24 at the same time last year.
The Company recognizes its revenue when goods are shipped and billed to its
customers. There is a $50,000 allowance that was established by the Company
to account for any uncollectable accounts.
The Company does have two distinct business segments, security alarm products
and keyboard products, that are subject to disclosure under SFAS No. 131.
Since the keyboard products line is less than 10% of the total sales, the
Company is not required to recognize it as a separate segment.
As for Y2K, the Company did not see any complications arise from this situ-
ation. The Company prepared itself by taking many steps. First, all of the
Company's products were ready because none of the products manufactured
create or use date/data information. Second, the Company purchased new
computer accounting software, which the manufacturer stated was Y2K compliant.
Also, the Company replaced hardware systems that did not meet compliance
issues. The Company polled its vendors and suppliers with a questionnaire
about their Y2K readiness and the replies were favorable. The Company has
not experienced any problems with getting products from its suppliers.
New product development at the Company has become very aggressive in order
to stay competitive in the industry and to have continued business growth.
Several new products that are currently in development include:
* High security optic switch
* Absence of water sensor
* Water Wizard
* Closet switch
* Smart Start
There are two new products that are going to be showcased at the ISC Expo
Trade Show in Las Vegas, NV in March 2000. The Programmable Thermostat uses
a digital thermal sensor to track temperature readings, which is some of the
latest technology in this field. The Programmable Relay Module is capable of
monitoring any open or closed loop sensor. When it is paired with our Water
Sensor, the module is a battery or externally powered device.
The Company is continuing to search for a business that would complement the
existing business. This would require no outside financing. The intent is
to utilize equipment, marketing techniques, and established customers to
increase sales and profits.
There are no known seasonal trends with any of the Company's products, since
the Company sells to distributors and OEM manufacturers. The products are
tied to the housing industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company was a defendant in a patent infringement action. The action
was settled by an order that dismissed the case. This order was signed and
dated by the U.S. District Court on November 8, 1999.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
No 8-K reports filed during the quarter ended
January 31, 2000
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
George Risk Industries, Inc.
(Registrant)
Date: 03-14-2000 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and CEO