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 July 31, 2002
[ ] 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
September 13, 2002 was 5,399,653.
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, 2002, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 2002
ASSETS
Current Assets
Cash and cash equivalents $ 1,765,000
Marketable securities (Note 2) 8,914,000
Accounts receivable:
Trade, net of $50,000 doubtful account allowance 1,504,000
Other 2,000
Notes receivable 2,000
Inventories (Note 3) 2,311,000
Prepaid expenses 75,000
Deferred income taxes 52,000
------------
Total Current Assets $14,625,000
Property and Equipment, net at cost $ 1,023,000
Other Assets
Projects in process 21,000
Other 2,000
------------
Total Other Assets $ 23,000
TOTAL ASSETS $15,671,000
============
GEORGE RISK INDUSTIES, INC.
BALANCE SHEET
JULY 31, 2002
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 106,000
Accrued expenses
Payroll and related expenses 308,000
Property taxes 2,000
Notes payable, current 81,000
Income taxes payable 137,000
------------
Total Current Liabilities $ 634,000
Long-Term Liabilities
Notes payable 155,000
------------
Total Long-Term Liabilities $ 155,000
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
Common stock, Class A, $.10 par value, 10,000,000
shares authorized, 8,502,832 shares issued and
outstanding 850,000
Additional paid-in capital 1,736,000
Accumulated other comprehensive income (1,812,000)
Retained earnings 15,764,000
Less: cost of treasury stock, 3,103,179 shares, at cost (1,763,000)
------------
Total Stockholders' Equity $14,882,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15,671,000
============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENT
FOR THE THREE MONTHS ENDED
July 31,
2002 2001
------------ ------------
Net Sales $ 3,021,000 $ 3,017,000
Less: cost of goods sold (1,676,000) (1,574,000)
------------ ------------
Gross Profit $ 1,345,000 $ 1,443,000
Operating Expenses:
General and administrative 160,000 179,000
Selling 587,000 585,000
Engineering 17,000 13,000
Rent paid to related parties 15,000 15,000
------------ ------------
Total Operating Expenses $ 779,000 $ 792,000
Income From Operations 566,000 651,000
Other Income (Expense)
Other 0 (11,000)
Dividend and interest income 83,000 73,000
Interest expense 0 0
Gain/(loss) on sale of investments 4,000 (117,000)
------------ ------------
$ 87,000 $ (55,000)
Income Before Provisions for Income Tax 653,000 596,000
Provisions for Income Tax (272,000) (248,000)
------------ ------------
Net Income $ 381,000 $ 348,000
Retained Earnings, beginning of period $15,383,000 $13,526,000
Retained Earnings, end of period $15,764,000 $13,874,000
Income Per Share of Common Stock $ .07 $ .06
Weighted Average Number of Common Shares
Outstanding 5,399,653 5,717,403
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
July 31,
2002 2001
------------ ------------
Net Income $ 381,000 $ 348,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses)
arising during period (380,000) (158,000)
Reclassification adjustment for (gains)
losses included in net income (4,000) 117,000
------------ ------------
Other Comprehensive Income $ (384,000) $ (41,000)
Comprehensive Income (Loss) $ (3,000) $ 307,000
============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
For the three months
ended July 31,
2002 2001
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 381,000 $ 348,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 64,000 61,000
Change in unrealized gain (loss) on
investments (384,000) (41,000)
Changes in assets and liabilities:
(Increase) decrease in:
Marketable securities (225,000) (2,412,000)
Accounts receivable 385,000 71,000
Inventories 117,000 (106,000)
Prepaid expenses 6,000 4,000
Other assets 7,000 (58,000)
Receivables - officers and employees 0 1,000
Increase (decrease) in:
Accounts payable 3,000 26,000
Accrued expenses 70,000 59,000
Income tax payable 272,000 316,000
------------ ------------
Net cash provided by (used in) operating
activities $ 696,000 $(1,731,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) Sale of property and equipment (22,000) (17,000)
(Purchase) of treasury stock 0 0
------------ ------------
Net cash provided by (used in) investing
activities $ (22,000) $ (17,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (3,000) (3,000)
Treasury stock issued 0 0
------------ ------------
Net cash provided by (used in) financing
activities $ (3,000) $ (3,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 671,000 $(1,751,000)
============ ============
Cash and cash equivalents, beginning of
period $ 1,094,000 $ 2,502,000
Cash and cash equivalents, end of period $ 1,765,000 $ 751,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2002
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 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, 2002 and July 31, 2001:
Cost Basis $10,726,000 $ 9,520,000
Market Value 8,914,000 8,629,000
------------ ------------
Net Unrealized Gain (Loss) $(1,812,000) $ (891,000)
Note 3 Inventories
At July 31, 2002 and July 31, 2001, respectively, inventories consisted
of the following:
Raw Materials $ 1,593,000 $ 2,160,000
Work in Process 442,000 399,000
Finished Goods 272,000 314,000
Warehouse in England 74,000 62,000
------------ ------------
$ 2,381,000 $ 2,935,000
Less: allowance for obsolete
inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 2,311,000 $ 2,865,000
============ ---=========
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
July 31,
2002 2001
---------------------------
Net revenue:
Keyboard products $ 171,000 $ 284,000
Security alarm and other products 2,850,000 2,733,000
------------ ------------
Total net revenue $ 3,021,000 $ 3,017,000
Income from operations:
Keyboard products $ 34,000 $ 61,000
Security alarm and other products 532,000 590,000
------------ ------------
Total income from operations $ 566,000 $ 651,000
Identifiable assets:
Keyboard products $ 312,000 $ 360,000
Security alarm and other products 3,262,000 4,384,000
Corporate general 12,097,000 10,812,000
------------ ------------
Total assets $15,671,000 $15,556,000
Depreciation and amortization:
Keyboard products $ 2,000 $ 2,000
Security alarm and other products 39,000 35,000
Corporate general 23,000 24,000
------------ ------------
Total depreciation and amortization $ 64,000 $ 61,000
Capital expenditures:
Keyboard products $ 0 $ 0
Security alarm and other products 22,000 9,000
Corporate general 0 8,000
------------ ------------
Total capital expenditures $ 22,000 $ 17,000
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.
Note 6 Earnings per Share
Basic and diluted earning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended July 31, 2002
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Net Income $ 381,000
============
Basic EPS $ 381,000 5,399,653 $ 0.07
Effect of dilutive securities:
Convertible preferred stock 0 26,750
------------ ------------ ---------
Diluted EPS $ 381,000 5,426,403 $ 0.07
For the three months ended July 31, 2001
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Net Income $ 348,000
============
Basic EPS $ 348,000 5,717,403 $ 0.06
Effect of dilutive securities:
Convertible preferred stock 0 26,750
------------ ------------ ---------
Diluted EPS $ 348,000 5,744,153 $ 0.06
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 con-
densed consolidated financial statements, and with the GRI's audited financial
statements and discussion for the fiscal year ended April 30, 2002.
Net cash increased $671,000 during the quarter ended July 31, 2002 as compared
to a decrease of $1,751,000 during the corresponding quarter last year. Last
year, the main reason for the big decrease in that quarter was that we trans-
ferred $2,500,000 into an annuity on the marketable securities section.
Otherwise, it was pretty much business as usual for the current quarter.
Marketable securities increased $225,000 for the quarter as compared to a
$2,412,000 increase for the corresponding quarter last year. Except for the
annuity, we have not been putting much 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, 2002, the stock market performed worse than it did for the
three months ended July 31, 2001. And GRI has some stock holdings from a few
of the bad performers. Therefore, there was a bigger unrealized loss for the
current period. Inventories decreased $117,000 during the current quarter as
compared to a $106,000 increase last year. We have fewer raw materials on
hand than the same period last year. This is due to some big purchases that
we made in 2001 when we anticipated our sales to be higher. Accounts re-
ceivable decreased $385,000 for the quarter ending July 31, 2002, as compared
to a $71,000 decrease for the same quarter last year. We have done a better
job at collecting money due to us with and A/R turnover at 27 days for the
current quarter as compared to 31 days for the quarter last year. At the
quarter ended July 31, 2002, 84.2% of the receivables are considered current
(less than 45 days) and 2.5% of the total are over 90 days past due. At the
quarter ended July 31, 2002 there was a $7,000 decrease in other assets
while at July 31, 2001, there was a $58,000 increase. The reason for the
decrease in other assets is that we completed our remodeling project in our
main building in January 2002 and we have not started anything else as big at
this time.
At the quarter ended July 31, 2002, accounts payable shows an increase of
$3,000 as compared to an increase of $26,000 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
decreased by $3,000 for both the current and previous quarter. No new notes
have been needed to conduct our day to day business. We have just been pay-
ing on the notes that are already on the books. Income tax payable increased
$272,000 for the quarter ended July 31, 2002. This compares to an increase
of $316,000 for the quarter ended July 31, 2001. The difference of $44,000
accounts for the fact that we have a good size refund coming our way.
The following is a list of ratios to help analyze George Risk Industries'
performance:
Qtr ended Qtr ended
July 31, 2002 July 31, 2001
------------------------------
Working capital $13,991,000 $13,498,000
Current ratio 23.068 16.587
Quick ratio 19.216 13.135
Cash per share (including marketable
securities) $1.98 $ 1.64
Equity per share $2.76 $ 2.56
Net sales were $3,021,000 for the quarter ended July 31, 2002, which is a 1%
increase from the corresponding quarter last year. Cost of goods sold was
55.5% of net sales for the quarter ended July 31, 2002 and the cost of goods
sold percentage to net sales was 52.2% for the quarter ended July 31, 2001.
Having relatively the same percentage of cost of goods sold from period to
period shows that we keep our costs in line. We have increased our cost of
materials and direct labor in proportion to how our sales have increased.
Operating expenses were 25.8% of net sales for the quarter ended July 31,
2002 as compared to 26.3% for the corresponding quarter last year. Having
relatively the same percentages for both periods shows that management keeps
a close eye on our operating expenses to keep them in line from year to year.
We anticipated our sales to be more than they were last year, so management
had increased wages and staff a bit more than we should have last year. But
we made the correct adjustments throughout the previous year in order to
bring the operating expenses back down a bit. Income from operations for the
quarter ended July 31, 2002 was at $566,000, which is a 13.1% decrease from
the corresponding quarter last year, which had income from operations of
$651,000.
Other income and expenses showed a $87,000 gain for the quarter ended
July 31, 2002 as compared to having a $55,000 loss for the quarter ended
July 31, 2001. The main reason for the loss in the quarter ending July 31,
2001, was that we were urged to sell one of our stock holdings for a loss of
$117,000 during that quarter. This particular corporate bond had been de-
creasing in value for some time. In turn, net income for the quarter ended
July 31, 2002 was at $381,000, a 9.56% increase from the corresponding
quarter last year, which showed a net income of $348,000. Earnings per share
for the quarter ended July 31, 2002 was $0.07 per share and $0.06 per share
for the quarter ended July 31, 2001.
George Risk Industries does have two distinct business segments, security
alarm products and keyboard products that are subject to disclosure under
SFAS No. 131. See the notes to the financial statements in order to examine
the two segments.
New products that the security division has introduced into the marketplace
recently include a five, twelve and twenty-four volt DC water sensor, based
on our original water sensor. The new product line of water sensors has
grown over the past year as attempts are being made to enter new markets,
such as home automation and HVAC. The Thermstat 3 and 4 versions are near
production stage, which will assist our efforts to move into new markets.
The pool alarm product sales continue to increase mainly due to new
legislation and building code enforcement in the state of Florida. This
trend is expected to expand into other states as well, primarily California,
Arizona, and Texas. We have applied for ETL certification on the 189/289
series pool alarms to meet these new codes in Florida.
A power transfer device, the PTD-1, along with a terminal block series, the
6600 and 6601, are new products that we introduced at the International
Security Conference (ISC) in August 2002. We also showed a modified single
gang junction box for the E-Z Duct raceway line. A double gang box is in the
design mode. The E-Z Duct product has shown great growth since its intro-
duction into the market a year ago.
Research and development projects include a glass break sensor in the test-
ing stage. Engineering continues to research products using GRI's C(2)T
technology. Also, we have added two new options for the CT300 series of
touch sensors.
Management is always open to the possibility to acquire a business that would
complement our existing operations. 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, 2002.
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 09-13-2002 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and
Chairman of the Board
Date 09-13-2002 By: /s/ Stephanie M. Risk
Stephanie M. Risk, Chief Financial Officer
and Controller