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 July 31, 2001
[ ] 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) (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
September 15, 2001 was 5,717,403.
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
July 31, 2001, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 2001 AND JULY 31, 2000
ASSETS
Current Assets
Cash and cash equivalents $ 751,000 $ 1,949,000
Marketable securities (Note 2) 8,629,000 6,610,000
Accounts receivable:
Trade, net of $50,000 doubtful account
allowance 1,995,000 2,108,000
Other 6,000 1,000
Notes receivable 3,000 11,000
Inventories (Note 3) 2,865,000 2,354,000
Prepaid expenses 45,000 32,000
Deferred income taxes 52,000 31,000
------------ ------------
Total Current Assets $14,346,000 $13,096,000
Property and Equipment, net at cost $ 1,100,000 $ 1,269,000
Other Assets
Projects in process 91,000 17,000
Machinery and equipment deposit 0 22,000
Officer receivable 0 5,000
Long-term note receivable 3,000 0
Long-term deferred tax asset 0 38,000
Other 16,000 5,000
------------ ------------
Total Other Assets $ 110,000 $ 87,000
TOTAL ASSETS $15,556,000 $14,452,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 205,000 $ 24,000
Accrued expenses
Payroll and related expenses 310,000 374,000
Property taxes 18,000 26,000
Notes payable, current 13,000 13,000
Income taxes payable 320,000 323,000
------------ ------------
Total Current Liabilities $ 866,000 $ 760,000
Long-Term Liabilities
Notes payable 76,000 89,000
Deferred income taxes 0 26,000
------------ ------------
Total Long-Term Liabilities $ 76,000 $ 115,000
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 107,000 107,000
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 1,719,000
Accumulated other comprehensive income (891,000) 121,000
Retained earnings 13,874,000 11,818,000
Less: cost of treasury stock, 2,785,429
shares, at cost (1,045,000) (1,038,000)
------------ ------------
Total Stockholders' Equity $14,614,000 $13,577,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15,556,000 $14,452,000
=========== ===========
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENT
FOR THE THREE MONTHS ENDED
July 31,
2001 2000
---------------------------
Net Sales $ 3,017,000 $ 3,535,000
Less: cost of goods sold (1,574,000) (1,959,000)
------------ ------------
Gross Profit $ 1,443,000 $ 1,576,000
Operating Expenses:
General and administrative 194,000 203,000
Selling 585,000 599,000
Engineering 13,000 23,000
------------ ------------
Total Operating Expenses $ 792,000 $ 825,000
Income From Operations 651,000 751,000
Other Income (Expense)
Other (11,000) (10,000)
Dividend and interest income 73,000 78,000
Interest expense 0 0
Gain/(loss) on sale of investments (117,000) 67,000
------------ ------------
$ (55,000) $ 135,000
Income Before Provisions for Income Tax 596,000 886,000
Provisions for Income Tax (248,000) (369,000)
------------ ------------
Net Income $ 348,000 $ 517,000
Retained Earnings, beginning of period $13,526,000 $11,301,000
Retained Earnings, end of period $13,874,000 $11,818,000
Income Per Share of Common Stock $ .06 $ .09
Weighted Average Number of Common Shares
Outstanding 5,717,403 5,910,408
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
July 31,
2001 2000
---------------------------
Net Income $ 348,000 $ 517,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses) arising
during period (158,000) (102,000)
Reclassification adjustment for (gains)
losses included in net income 117,000 (67,000)
------------ ------------
Other Comprehensive Income $ (41,000) $ (169,000)
Comprehensive Income $ 307,000 $ 348,000
============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
For the three months ended
July 31,
2001 2000
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 348,000 $ 517,000
Adjustments to reconcile net income to net
cash providedby operating activities:
Depreciation 61,000 62,000
Change in unrealized gain (loss) on
investments (41,000) (169,000)
Changes in assets and liabilities:
(Increase) decrease in:
Marketable securities (2,412,000) 28,000
Accounts receivable 71,000 (185,000)
Inventories (106,000) 246,000
Prepaid expenses 4,000 20,000
Other assets (58,000) 2,000
Receivables - officers and employees 1,000 5,000
Increase (decrease) in:
Accounts payable 26,000 107,000
Accrued expenses 59,000 80,000
Income tax payable 316,000 370,000
------------ ------------
Net cash provided by (used in) operating
activities $(1,731,000) $ 1,083,000
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) Sale of property and equipment (17,000) (71,000)
(Purchase) of treasury stock 0 0
------------ ------------
Net cash provided by (used in) investing
activities $ (17,000) $ (71,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (3,000) (21,000)
Treasury stock issued 0 0
------------ ------------
Net cash provided by (used in) financing
activities $ (3,000) $ (21,000)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $(1,751,000) $ 991,000
============ ============
Cash and cash equivalents, beginning of period $ 2,502,000 $ 958,000
Cash and cash equivalents, end of period $ 751,000 $ 1,949,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2001
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 information
and footnotes required by generally accepted accounting principals for com-
plete financial statements. In the opinion of management, all adjustments,
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 stockholder's 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 July 31, 2001 and July 31, 2001:
Cost Basis $ 9,520,000 $ 6,489,000
Market Value 8,629,000 6,610,000
------------ ------------
Net Unrealized Gain (Loss) $ (891,000) $ 121,000
Note 3 Inventories
At July 31, 2001 and July 31, 2000, respectively, inventories consisted
of the following:
Raw Materials $ 2,160,000 $ 1,637,000
Work in Process 399,000 489,000
Finished Goods 314,000 298,000
Warehouse in England 62,000 0
------------ ------------
$ 2,935,000 $ 2,424,000
Less: allowance for obsolete inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 2,865,000 $ 2,354,000
============ ============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
July 31,
2001 2000
---------------------------
Net revenue:
Keyboard products $ 471,000 $ 553,000
Security alarm and other products 2,546,000 2,982,000
------------ ------------
Total net revenue $ 3,017,000 $ 3,535,000
Income from operations:
Keyboard products $ 102,000 $ 89,000
Security alarm and other products 549,000 662,000
------------ ------------
Total income from operations $ 651,000 $ 751,000
Identifiable assets:
Keyboard products $ 360,000 $ 483,000
Security alarm and other products 4,384,000 4,125,000
Corporate general 10,812,000 9,844,000
------------ ------------
Total assets $15,556,000 $14,452,000
Depreciation and amortization:
Keyboard products $ 2,000 $ 2,000
Security alarm and other products 35,000 38,000
Corporate general 24,000 22,000
------------ ------------
Total depreciation and amortization $ 61,000 $ 62,000
Capital expenditures:
Keyboard products $ 0 $ 0
Security alarm and other products 9,000 59,000
Corporate general 8,000 12,000
------------ ------------
Total capital expenditures $ 17,000 $ 71,000
Note 5 Revenue Recognition
George Risk Industries recognizes its revenues when goods are shipped and
billed to its customers. There is a $50,000 allowance that was established to
account for any uncollectable accounts.
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, 2001.
Net cash decreased $1,751,000 during the quarter ended July 31, 2001 as com-
pared to an increase of $991,000 during the corresponding quarter last year.
The main reason for the big decrease in the current quarter is that we
transferred $2,500,000 into an annuity on the marketable securities section.
Marketable securities increased $2,412,000 for the quarter as compared to a
$28,000 decrease for the corresponding quarter last year. Except for the
annuity, we have not been putting any additional cash into the marketable
securities, but instead we are using the money already in the investment
accounts and hopefully are making smart investment choices. For the quarter
ended July 31, 2001, the stock market performed only slightly better than it
did for the three months ended July 31, 2000. Therefore, there was a bigger
unrealized gain for the current period. Inventories increased $106,000 during
the current quarter as compared to a $246,000 decrease last year. We have a
few more raw materials on hand than normal because prices for materials have
gone up and we expected to receive some sizable orders during our ISC show
discount period. This period runs from the middle of August to the middle of
September. Accounts receivable decreased $71,000 during the current quarter
as compared to a $185,000 increase for the corresponding quarter last year.
Sales have decreased, which accounts for part of the decrease in accounts
receivable, but we strive to continue to collect our accounts within terms.
At the quarter ended July 31, 2001, 64% of the receivables are considered
current (less than 45 days) and 7.8% of the total are over 90 days past due.
At the quarter ended July 31, 2001 there was a $58,000 increase in other
assets while at July 31, 2000, there was a $2,000 decrease. The reason for
the big increase in other assets is that we are in the process of doing a
remodeling project in our main building. This project consists of making
office space available for our sales staff. This project is expected to be
completed sometime within the next fiscal quarter.
At the quarter ended July 31, 2001, accounts payable shows an increase of
$26,000 as compared to an increase of $107,000 for the same quarter the year
before. As usual, we continue to strive to pay all of our payables within
terms and take all purchase discounts that are available. Notes payable de-
creased by $3,000 for the current quarter, while it decreased $21,000 for the
corresponding quarter last year. No new notes have been needed to conduct our
day to day business. We have just been paying on the notes that are already
on the books. Income tax payable decreased $54,000 from July 31, 2000 to
July 31, 2001, because net income for the quarter decreased by $169,000.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
July 31,
2001 2000
---------------------------
Working capital $13,480,000 $12,336,000
Current ratio 16.566 17.232
Quick ratio 13.135 14.036
Cash per share (including marketable
securities) $ 1.64 $ 1.45
Equity per share $ 2.56 $ 2.30
Net sales were $3,017,000 for the quarter ended July 31, 2001, which is a 17%
decrease from the corresponding quarter last year. Cost of goods sold was
52.2% of net sales for the quarter ended July 31, 2001 and the cost of goods
sold percentage to net sales was 55.4% for the quarter ended July 31, 2000.
We have decreased our cost of materials and direct labor in proportion to how
our sales have decreased.
Operating expenses were 26.3% of net sales for the quarter ended July 31, 2001
as compared to 23.3% for the corresponding quarter last year. Income from
operations for the quarter ended July 31, 2001 was at $651,000, which is a 15%
decrease from the corresponding quarter last year, which had income from
operations of $751,000. Sales have decreased for the quarter ended July 31,
2001 as compared to the quarter ended July 31, 2000 by 14.7%. Operating
expenses decreased 4.0% and income from operations decreased 13.3% when
comparing results at the quarter ended July 31, 2001 to the corresponding
quarter last year.
Other income and expenses showed a $55,000 loss for the quarter ended July 31,
2001 as compared to having a $135,000 gain for the quarter ended July 31,
2000. The main reason for the loss is that we were urged to sell one of our
stock holdings for a loss of $117,000 during the current quarter. This
particular corporate bond had been decreasing in value for some time now. In
turn, net income for the quarter ended July 31, 2001 was at $348,000, a 48.6%
decrease from the corresponding quarter last year, which showed a net income
of $517,000. Earnings per share for the quarter ended July 31, 2001 was
$0.06 per share and $0.09 per share for the quarter ended July 31, 2000.
George Risk Industries does have two distinct business segments, security
alarm products and keyboard products that are subject to disclosure under
SFAS No. 131. The keyboard sales have decreased approximately $190,000 for
the quarter ended July 31, 2001 from the corresponding quarter. This
represents a 77% decrease. The lack of orders for our custom keyboards may
be a trend or it could be and order timing problem. The end user of many
of our custom keyboards is the Federal Aviaition Administration and they
have stopped placing orders with our customers at the present time. The
security alarm products sales includes sales to a significant customer
representing 41.5% of total net sales.
New product development at GRI has become very aggressive in order to stay
competitive in the industry and to have continued business growth. Several
new products that were in development and are just being introduced to the
market include a door channel magnet, a window channel magnet, a hold-up
switch, a multi-functional thermostat, E-Z Duct wire covers, the Water Wizard,
and an aluminum MT-10 switch (a smaller switch for use in rugged
environments). New products that are presently in development include a
wireless pool alarm, a glass break sensor, a cabinet light controller, an
under-the-carpet water sensor, absence of water sensor, and a "Switch Net" (a
4-wire system to monitor a number of contacts).
George Risk Industries continues to search for a business that would
complement 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
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
Not applicable
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. Reports on Form 8-K
No 8-K reports were filed during the quarter ended July 31, 2001.
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 09-14-2001 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and Chairman of the Board
Date 09-14-2001 By: /s/ Stephanie M. Risk
Stephanie M. Risk, Chief Financial Officer