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 Ex-
change Act of 1934
For the quarter ended October 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities Ex-
change 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) (Zip Code)
Registrant's telephone number, including area code: (308) 235-4645
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
December 22, 2000 was 5,907,403.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three month period ended
October 31, 2000 and the six month period ended October 31, 2000, are
attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
OCTOBER 31, 2000 AND OCTOBER 31, 1999
ASSETS
Current Assets
Cash and cash equivalents $ 2,053,000 $ 1,693,000
Marketable securities 6,709,000 5,719,000
Accounts receivable:
Trade, net of $50,000 doubtful account
allowance 2,372,000 2,054,000
Other 3,000 3,000
Income tax overpayment 72,000 19,000
Notes receivable 8,000 8,000
Inventories (Note 3) 1,923,000 2,238,000
Prepaid expenses 16,000 66,000
Deferred income taxes 31,000 31,000
------------ ------------
Total Current Assets $13,187,000 $11,831,000
Property and Equipment, net at cost $ 1,265,000 $ 1,096,000
Other Assets
Projects in process 40,000 4,000
Officer receivable 5,000 20,000
Long-term deferred tax asset 38,000 38,000
Other 5,000 12,000
------------ ------------
Total Other Assets $ 88,000 $ 74,000
TOTAL ASSETS $14,540,000 $13,001,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 80,000 $ 57,000
Accrued expenses
Payroll and related expenses 345,000 355,000
Property taxes 19,000 15,000
Notes payable, current 6,000 65,000
Deferred Insurance Settlement 48,000 -
------------ ------------
Total Current Liabilities $ 498,000 $ 492,000
Long-Term Liabilities
Notes payable 92,000 176,000
Deferred income taxes 26,000 28,000
------------ ------------
Total Long-Term Liabilities $ 118,000 $ 204,000
Stockholders' Equity
Convertible preferred stock, 1,000,000 shares
authorized, Series 1--noncumulative, $20
stated value, 25,000 shares authorized,
5,350 issued and outstanding 107,000 257,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832 shares
issued and outstanding 850,000 850,000
Additional paid-in capital 1,719,000 1,734,000
Accumulated other comprehensive income (145,000) 54,000
Retained earnings 12,438,000 10,085,000
Less: cost of treasury stock, 2,595,429 shares,
at cost (1,045,000) (675,000)
------------ ------------
Total Stockholders' Equity $13,924,000 $12,305,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,540,000 $13,001,000
============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2000 2000 1999 1999
---------------------------------------------------
Net Sales $ 3,934,000 $ 7,499,000 $ 3,526,000 $ 6,762,000
Less: cost of goods sold (2,076,000) (4,065,000) (1,811,000) (3,458,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,858,000 $ 3,434,000 $ 1,715,000 $ 3,304,000
Operating Expenses:
General and admin-
istrative 186,000 389,000 187,000 426,000
Selling 688,000 1,288,000 628,000 1,220,000
Engineering 24,000 46,000 26,000 51,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 898,000 $ 1,723,000 $ 841,000 $ 1,697,000
Income From Operations 960,000 1,711,000 874,000 1,607,000
Other Income (Expense)
Dividend and interest
income 82,000 160,000 72,000 145,000
Interest expense 0 (1,000) (4,000) (8,000)
Gain/(loss) on sale of
assets 22,000 89,000 13,000 (80,000)
Other Income (Loss) 2,000 (7,000) 0 3,000
------------ ------------ ------------ ------------
$ 106,000 $ 241,000 $ 81,000 $ 60,000
Income Before Provisions
for Income Tax 1,066,000 1,952,000 955,000 1,667,000
Provisions for Income Tax (446,000) (815,000) (399,000) (696,000)
------------ ------------ ------------ ------------
Net Income $ 620,000 $ 1,137,000 $ 556,000 $ 971,000
Retained Earnings,
beginning of period $11,818,000 $11,301,000 $ 9,529,000 $ 9,114,000
------------ ------------ ------------ ------------
Retained Earnings,
end of period $12,438,000 $12,438,000 $10,085,000 $10,085,000
============ ============ ============ ============
Income Per Share of
Common Stock $ 0.10 $ 0.19 $ 0.09 $ 0.16
Weighted Average Number
of Common Shares
Outstanding 5,908,742 5,909,575 6,054,324 6,055,415
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2000 2000 2000 2000
---------------------------------------------------
Net Income $ 620,000 $ 1,137,000 $ 556,000 $ 971,000
------------ ------------ ------------ ------------
Other Comprehensive Income,
net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains
(losses) arising during
period (256,000) (442,000) (80,000) (158,000)
Reclassification adjustment
for (gains) losses
included in net income 522,000 877,000 160,000 221,000
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 266,000 $ 435,000 $ 80,000 $ 63,000
Comprehensive Income $ 886,000 $ 1,572,000 $ 636,000 $ 1,034,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2000 2000 1999 1999
---------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 620,000 $ 1,137,000 $ 556,000 $ 971,000
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 65,000 127,000 32,000 71,000
Change in unrealized gain/
(loss) on investments (266,000) (435,000) (80,000) (63,000)
Changes in assets and
liabilities:
(Increase) decrease in:
Marketable securities (99,000) (71,000) (157,000) (255,000)
Accounts receivable (264,000) (449,000) (80,000) 21,000
Inventories 431,000 677,000 (1,000) (45,000)
Prepaid expenses 16,000 35,000 (14,000) (3,000)
Other assets 46,000 49,000 130,000 48,000
Receivables-officers
and employees 1,000 7,000 1,000 3,000
Increase (decrease) in:
Accounts payable 56,000 163,000 17,000 12,000
Accrued expenses (36,000) 44,000 (36,000) 36,000
Notes payable (3,000) (24,000) 22,000 84,000
Income tax payable (395,000) (26,000) (269,000) (36,000)
------------ ------------ ------------ ------------
Net cash provided by (used in)
operating activities $ 172,000 $ 1,234,000 $ 121,000 $ 844,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
(Purchase) Sale of property
and equipment (61,000) (132,000) (307,000) (351,000)
(Purchase) of treasury
stock (7,000) (7,000) (2,000) (9,000)
------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities $ (68,000) $ (139,000) $ (309,000) $ (360,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Treasury stock issued 0 0 0 49,000
------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities $ 0 $ 0 $ 0 $ 49,000
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 104,000 $ 1,095,000 $ (188,000) $ 533,000
============ ============ ============ ============
Cash and equivalents,
beginning of period $ 1,949,000 $ 958,000 $ 1,881,000 $ 1,160,000
Cash and equivalents,
end of period $ 2,053,000 $ 2,053,000 $ 1,693,000 $ 1,693,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2000
Note 1 Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10QSB and do not include all of the inform-
ation and footnotes required by generally accepted accounting principals for
complete financial statements. In the opinion of management, all adjust-
ments, consisting only of normal recurring adjustments considered necessary
for a fair presentation, have been included. Operating results for any
quarter are not necessarily indicative of the results for any other quarter
or for the full year.
Note 2 Marketable Securities
Marketable equity securities are recorded at the lower of cost or market
and are classified as available-for-sale securities. The cost of marketable
securities sold is determined on the average cost method with realized gains
or losses being reflected in the income statement and any unrealized gains
or losses being reported as a separate component of stockholders' equity
until realized. Dividend and interest income are accrued as earned.
Marketable equity securities and unrealized gains and losses consist of
the following as of October 31, 2000 and October 31, 1999:
Cost basis $ 6,804,000 $ 5,615,000
Market value 6,659,000 5,669,000
------------ ------------
Net unrealized gain/(loss) $ (145,000) $ 54,000
============ ============
Gross unrealized gain $ 290,000 $ 117,000
Gross unrealized loss $ 435,000 $ 63,000
Note 3 Inventories
At October 31, 2000 and October 31, 1999, respectively, inventories
consisted of the following:
Raw Materials $ 1,313,000 $ 1,673,000
Work in Process 444,000 361,000
Finished Goods 236,000 274,000
------------ ------------
$ 1,993,000 $ 2,308,000
Less: allowance for obsolete
inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 1,923,000 $ 2,238,000
============ ============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
October 31
2000 1999
-----------------------------
Net revenue:
Keyboard products $ 642,000 $ 349,000
Security alarm products/other 3,292,000 3,177,000
------------ -------------
Total net revenue $ 3,934,000 $ 3,526,000
Income from operations:
Keyboard products $ 156,000 $ 87,000
Security alarm products/other 804,000 787,000
------------ -------------
Total income from operations $ 960,000 $ 874,000
Identifiable assets:
Keyboard products $ 602,000 $ 373,000
Security alarm products/other 3,730,000 4,046,000
Corporate general 10,088,000 8,563,000
------------ -------------
Total identifiable assets $14,420,000 $12,982,000
Depreciation and amortization
Keyboard products $ 2,000 $ 2,000
Security alarm products/other 41,000 32,000
Corporate general 22,000 8,000
------------ ------------
Total depreciation and amortization $ 65,000 $ 42,000
Capital expenditures
Keyboard products $ 0 $ 0
Security alarm products 47,000 272,000
Corporate general 5,000 52,000
------------ ------------
Total capital expenditures $ 52,000 $ 324,000
============ ============
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 unaudited financial statements, and with George Risk Industries'
(GRI) audited financial statements and discussion for the fiscal year ended
April 30, 2000.
Net cash increased $104,000 during the quarter ended October 31, 2000 as com-
pared to a decrease of $188,000 during the corresponding quarter last year.
As for the year-to-date numbers, net cash increased $1,095,000 for the six
months ended October 31, 2000, while, for the same period last year, net cash
only increased by $533.000. There are many reasons as to why cash is on the
rise. First, management has not been putting any additional cash into the
marketable securities, but instead is using the money already in the invest-
ment accounts and making smart choices with the investments. For the three
months and six months ended October 31, 2000, the stock market did not perform
as well as it did for the three months and six months ended October 31, 1999.
Therefore, there were bigger unrealized losses for the current periods.
Second, inventory is $300,000 lower at October 31, 2000 than it was at Oct-
ober 31, 1999. GRI is not holding as many raw materials on hand because the
fear of Y2K shortages is no longer a problem. Accounts receivable over both
periods in discussion increased in value. Sales have increased, which
accounts for part of the increase in accounts receivable, but some of our
customers were slow in paying us during the quarter ended October 31, 2000.
(We have since made an effort, and for the most part succeeded, in getting
most of our accounts current.) At October 31, 2000, 62.8% of the receivables
were considered current (less than 45 days) while 9.3% were over 90 days.
This is compared to 71.5% and 10%, respectively, at July 31, 2000. GRI's
prepaid expenses have decreased due to the consumption of those expenses
without the need to replenish them yet.
Accounts payable has increased in regards to cash flows. A big portion of the
increase for the current period is that we are holding a $75,000 debit on the
books for defective inventory that was returned to the vendor, but was already
paid for. Otherwise, we continue to strive to pay all of our bills within
terms and to take all purchase discounts that are available. Notes payable
decreased by $24,000 for year-to-date figures, while it increased $84,000 for
the corresponding period last year. The reason the for the difference is that
we received $75,000 in the form of a long-term note from the State of Nebraska
Department of Economic Development in May 1999. They offer a "Community De-
velopment Block Grant" (CDBG) program to help increase economic development
in the state. We received this loan to help defer costs for the new building
that now houses our molding and tool and die departments. If, after five
years of the issuance of the note, we comply with all of the conditions of the
CDBG program, the note will be forgiven. As of October 31, 2000, we have not
had to make any payments towards this note. Also, GRI is financing two ve-
hicles which were purchased during the second quarter of last year. As for
property and equipment, GRI has purchased less than half of the amount for the
current six months than it purchased for the same six month period last year.
The following is a list of ratios to help analyze GRI's performance:
For the qtr ended October 31,
2000 1999
-----------------------------
Working capital $12,689,000 $11,339,000
Current ratio 26.480 24.047
Quick ratio 22.357 19.240
Cash per share (including marketable
securities) $ 1.48 $ 1.22
Equity per share $ 2.36 $ 2.03
Net sales were $3,934,000 for the quarter ended October 31, 2000, which is an
11.5% increase over the corresponding quarter last year. Year-to-date net
sales were $7,499,000 at October 31, 2000, which is a 10.9% increase from the
same period last year. Cost of goods sold was 52.3% of gross sales for the
quarter ended October 31, 2000 and 50.1% for the same quarter last year.
Year-to-date cost of goods sold percentages are 53.6% for the current six
months and 50.0% for the corresponding six months last year. Having rela-
tively the same percentage of cost of goods sold from period to period shows
that management keeps its costs in line. We have increased our cost of mater-
ials and direct labor in proportion to how our sales have increased.
Operating expenses were 22.8% of net sales for the quarter ended October 31,
2000 as compared to 23.9% for the corresponding quarter last year. Year-to-
date operating expenses were 23.0% of net sales of the six months ended Oct-
ober 31, 2000, while they were 25.1% for the same period last year. Having
relatively the same percentages for both periods shows that management keeps a
close eye on its operating expenses to keep them in line from year to year.
As sales have increased, management has increased wages and staff accordingly.
Other income and expenses were gains of $106,000 and $241,000 for the quarter
and six months ended October 31, 2000. This is a 30.9% increase for the
quarter and 401.7% increase for the year-to-date figures. The main difference
is that we sold one of our stock holdings for a loss of $93,000 during the six
months ended October 31, 1999, while we have sold stock holdings during the
current quarter and six months for gains. In turn, net income for the quarter
ended October 31, 2000 was at $620,000, an 11.5% increase from the correspond-
ing quarter last year, which showed net income at $556,000. Net income for
the six months ended October 31, 2000 was $1,137,000, a 17.1% increase from
the same period last year. Net income for the six months ended October 31,
1999 was $971,000. Earnings per share for the quarter ended October 31, 2000
was $0.10 per share and $0.19 per share for the year-to-date numbers. EPS for
the quarter and six months ended October 31, 1999 was $0.09 per share and
$0.16 per share, respectively.
George Risk Industries recognizes its revenues when goods are shipped and
billed to its customers. All goods are shipped F.O.B. plant, which means
that the customer takes ownership as soon as the merchandise is shipped out
our door. There is $50,000 allowance that was established to account for any
uncollectable accounts.
George Risk Industries does have two distinct business segments, security
alarm products/other and keyboard products that are subject to disclosure
under SFAS No. 131. Please see the notes to the financial statements in order
to examine the two segments.
New product development at George Risk Industries has become very aggressive
in order to stay competitive in the industry and to have continued business
growth. Several new products that have been in development and are just being
introduced to the market include a door channel magnet, a hold-up switch, a
relay module, a high security switch, and a multi-functional thermostat. New
products that are presently in development include a wireless pool alarm,
Raceway (wire-run covers and associated connectors), European contact switches
(to compete in the U.K. market), and ShockGard (a shock sensor that senses
sound waves).
George Risk Industries has some short-term future plans that are just begin-
ning to take shape. We want to start another building expansion project which
will (1) expand and relocate our sales department, and (2) provide for add-
itional production facilities. Another project just getting under way is that
we are planning to open a warehouse for our products in England. The main
reason for this warehouse is to become more competitive in the European
market.
George Risk Industries continues to search for a business that would com-
plement the existing business. This would require no outside financing. The
intent is 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 sell
mostly to distributors and OEM manufacturers. Our 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
Last fiscal year, George Risk Industries 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
The Financial Data Schedule is attached at the bottom as a separate
document.
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended October 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 undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 12-22-2000 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and Chairman of
the Board
By: /s/ Stephanie M. Risk
Stephanie M. Risk, Chief Financial Officer