UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 1997 [ ] Transition report under Section 13 or 15(d) of the Exchange Act. 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 or other jurisdiction (IRS employers of incorporation or organization) identification No.) 802 South Elm, 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 since last report) 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: 6,061,698 PART I. FINANCIAL INFORMATION GEORGE RISK INDUSTRIES, INC. Balance Sheet January 31, 1997 [CAPTION] [S] [C] ASSETS Current Assets Cash $ 1,166,000 Marketable securities 3,177,000 Accounts receivable: Trade, net of $50,000 doubtful account allowance 903,000 Officers and employees 1,000 Inventories (Note 1) 1,581,000 Prepaid expenses 127,000 Deferred income taxes 52,000 ___________ Total current assets 7,007,000 Property And Equipment, Net, At Cost 704,000 Other Assets 28,000 ___________ TOTAL ASSETS $ 7,739,000 [CAPTION] LIABILITIES AND STOCKHOLDERS EQUITY [S] [C] Current Liabilities Accounts payable, trade $ 160,000 Notes payable, current portion 76,000 Accrued expenses 508,000 ___________ Total current liabilities 744,000 Long term Liabilities Notes payable, FKI, Inc. 189,000 Deferred Income Taxes 27,000 ___________ Total long term liabilities 216,000 Stockholders Equity Convertible preferred stock 257,000 Common stock, Class A 850,000 Additional paid-in capital 1,644,000 Retained earnings 4,594,000 Less cost of treasury stock (566,000) ___________ Total stockholders equity 6,779,000 ___________ TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 7,739,000 [FN] See Accompanying Notes to Financial Statements GEORGE RISK INDUSTRIES INC. STATEMENTS OF INCOME (unaudited) for three months for nine months ended ended Jan.31 Jan.31 1997 1996 1997 1996 _______________________ _________________________ Net sales $2,525,000 $2,108,000 $8,177,000 $7,032,000 Less cost of goods sold 1,316,000 1,045,000 4,342,000 3,547,000 _______________________ _________________________ Gross profit $1,209,000 $1,063,000 $3,835,000 $3,485,000 Operating expenses G&A 148,000 134,000 427,000 460,000 Sales 540,000 427,000 1,586,000 1,471,000 Engineering 4,000 17,000 8,000 45,000 _______________________ _________________________ $ 692,000 $ 578,000 $2,021,000 $1,976,000 Income from operations 517,000 485,000 1,814,000 1,509,000 Other income (expenses) Interest income 52,000 34,000 147,000 118,000 Interest expense (30,000) (5,000) (47,000) (6,000) _______________________ _________________________ $ 22,000 $ 29,000 $ 100,000 $ 112,000 Income before prov- ision for income tax $ 539,000 $ 514,000 $1,914,000 $1,621,000 Provision for income tax Current expense 119,000 228,000 696,000 739,000 _______________________ _________________________ Net Income $ 420,000 $ 286,000 $1,218,000 $ 882,000 Net income per common share $ .069 $ 0.05 .20 .14 Weighted average number of common shares out- standing 6,061,698 6,095,397 6,061,698 6,266,408 <FN> See Accompanying Notes To Financial Statements GEORGE RISK INDUSTRIES, INC Statements of Cash Flows For The Nine Months Ended January 31, 1997 and 1996 [CAPTION] 1997 1996 ___________________________ [S] [C] [C] Cash Flow From Operating Activities: Net income $1,218,000 $ 882,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 85,000 47,000 Changes in assets and liabilities: (Increase) decrease in: Accounts receivable 66,000 89,000 Note Receivable 1,000 (3,000) Inventories (111,000) (383,000) Prepaid expenses 42,000 (15,000) Increase (decrease) in: Accounts payable 101,000 120,000 Accrued expenses 53,000 (132,000) Notes payable (56,000) 448,000 Income tax payable 87,000 63,000 Class II deferred 0 (20,000) Net cash provided by (used in) _________ __________ operating activities 1,486,000 1,096,000 Cash Flows From Investing Activities: (Purchase) sale of property and equipment (189,000) (130,000) (Purchase) sale of marketable securities (1,038,000) (382,000) Net cash provided by (used in) __________ __________ investing activities (1,227,000) (512,000) Cash Flows From Financing Activities: (Purchase) of treasury stock 0 (576,000) Net cash provided by (used in) __________ __________ financing activities 0 (576,000) Net increase (decrease) in cash $ 259,000 $ 8,000 Cash at beginning of period $ 907,000 $ 479,000 Cash at end of period $1,166,000 $ 487,000 GEORGE RISK INDUSTRIES, INC NOTES TO FINANCIAL STATEMENTS January 31, 1997 Note 1. Inventories At January 31, 1997, and October 31, 1996, respectively, inventories consisted of the following: Raw materials $ 1,081,000 $ 943,000 Work in process 213,000 162,000 Finished goods 333,000 222,000 ___________ ___________ 1,627,000 1,327,000 ___________ ___________ Less allowance for obsolete inventory <46,000> <46,000> ___________ ___________ Totals $ 1,581,000 $ 1,281,000 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, 1996. Net cash decreased $123,000 during the quarter ended January 31, 1997 as compared to a decrease of $362,000 during the corresponding quarter last year. Inventories increased $301,000 during the current quarter and increased $174,000 during the quarter ended January 31, 1996. For the nine months ended January 31, 1997, inventories have increased $111,000 as compared to an increase of $383,000 during the corresponding nine months last year. Prepaid expenses have decreased $42,000 during the nine months ended January 31, 1997 and prepaid expenses increased $150,000 during the nine months ended January 31, 1996. The total value of the Company's marketable securities increased $444,000 for the quarter ended January 31, 1997 and $1,038,000 for the nine months ended January 31, 1997. This compares to increases of $594,000 and $382,000 for the corresponding periods last year. The Company continues to invest excess cash in secure, interest bearing bonds and securities. Purchases of property and equipment in- creased $33,000 during the three months ended January 31, 1997. These asset additions include an Artos wire machine with a cost of $15,000, a welder and several new molds. Working capital at January 31, 1997 was $6,263,000 as compared to $4,810,000 at January 31, 1996. The current ratio for the period ended January 31, 1997 was 9.42 and 9.25 at January 31, 1996. The acid test ratio was 7.05 at January 31, 1997 and 5.78 at January 31, 1996. Accounts receivable collections have averaged $800,000 per month during the current quarter and the accounts receivable turnover was 2.52 for both the current quarter and the corresponding quarter last year. Net sales were $2,525,000 for the quarter ended January 31, 1997 as compared to $2,108,000 for the same quarter last year; or a 20% increase. For the nine months ended January 31, 1997, net sales increased 16.2%, from $7,032,000 last year to $8,177,000 this year. The Company continues to acquire new customers and also increase the sales volume of existing cus- tomers. The security products segment currently accounts for 90% of total sales. Operating expenses were 27% of net sales for the quarter ended January 31, 1997 as compared to 26% for the same quarter last year. Advertising expenses are up slightly over last year as well as wage expenses for hourly clerical employees. Both of these increases are reflected in the 1% increase in operating expenses. Cost of goods sold has increased from 50% of sales at January 31, 1996 to 53% at January 31, 1997. Management is beginning to see the increase in labor costs associated with two signif- icant hourly wage increases in July and September of this fiscal year. Because of a change in accounting for vacation time due for long-term salaried employees, we have increased vacation expense this fiscal year that past year's comparatives do not reflect. Other income totaled $147,000 for the nine months ended January 31, 1997 as compared to $118,000 for the nine months ended January 31, 1996. Interest expense for the nine months this year was $47,000 as compared to $6,000 for the same period last year. Interest expense is comprised of imputed interest on the FKI,Inc. and W.A. Richardson notes payable. Other income includes interest and dividend income on the Company's invest- ments. The current income tax expense decreased from $228,000 during the quarter ended January 31, 1996 to $119,000 for the quarter ended January 31, 1997. This is due to an adjustment that was made because of the prior year's overpayment which had to be credited to this year's current tax expense. This adjustment was made during the current quarter after the Company's tax return was filed. The Company continues to operate it's satellite plant in Gering, NE with employment at that site currently at 20 people. The main facility currently employs 250 for a total of 270 employees. Management expects to see sales continue to increase during the fourth quarter and expects employment to to remain at 270-275 employees. The Company is researching new areas of product development and looking forward to expanding existing product lines also. The search for a business acquisition continues and management actively prsues different avenues of opportunity in relation to manufacturing automation and equip- ment upgrading. GEORGE RISK INDUSTRIES, INC. Part II. OTHER INFORMATION Item 1. Legal Proceedings n/a Item 2. Changes in Securities n/a Item 3. Defaults upon Senior Securities n/a Item 4. Submission of Matters to a Vote of Securities n/a Item 5. Other Information n/a 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 were filed during the quarter ended January 31, 1997 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 01-31-97 Ken R. Risk Ken R. Risk, Director Date 01-31-97 Eileen M. Risk Eileen M. Risk, Director