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 October 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: 6,087,343 PART I. FINANCIAL INFORMATION GEORGE RISK INDUSTRIES, INC. Balance Sheet October 31, 1997 [CAPTION] [S] [C] ASSETS Current Assets Cash $ 655,000 Marketable securities 4,298,000 Accounts receivable: Trade, net of $50,000 doubtful account allowance 1,453,000 Notes Receivable 65,000 Inventories (Note 1) 1,342,000 Prepaid expenses 54,000 ___________ Total current assets 7,867,000 Property And Equipment, Net, At Cost 660,000 Other Assets 140,000 ___________ TOTAL ASSETS $ 8,667,000 [CAPTION] LIABILITIES AND STOCKHOLDERS EQUITY [S] [C] Current Liabilities Accounts payable, trade $ 158,000 Notes payable, current portion 46,000 Accrued expenses 377,000 Deferred current taxes <94,000> ___________ Total current liabilities 487,000 Long term Liabilities Notes payable, FKI, Inc. 186,000 Deferred Income Taxes 34,000 ___________ Total long term liabilities 220,000 Stockholders Equity Convertible preferred stock 257,000 Common stock, Class A 850,000 Additional paid-in capital 1,674,000 Retained earnings 5,735,000 Less cost of treasury stock (556,000) ___________ Total stockholders equity 7,960,000 ___________ TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 8,667,000 [FN] See Accompanying Notes to Financial Statements GEORGE RISK INDUSTRIES INC. STATEMENTS OF INCOME (unaudited) for three months for six months ended ended October 31 October 31 1997 1996 1997 1996 _______________________ _______________________ Net sales $3,007,000 $2,936,000 $5,559,000 $5,652,000 Less cost of goods sold 1,644,000 1,597,000 3,024,000 3,026,000 _______________________ ________________________ Gross profit $1,363,000 $1,339,000 $2,535,000 $2,626,000 Operating expenses G&A 147,000 140,000 302,000 279,000 Sales 630,000 577,000 1,043,000 1,046,000 Engineering 21,000 3,000 43,000 4,000 _______________________ ________________________ $ 798,000 $ 720,000 $1,388,000 $1,329,000 Income from operations 565,000 619,000 1,147,000 1,297,000 Other income (expenses) Interest income 74,000 43,000 128,000 95,000 Interest expense (7,000) (8,000) (14,000) (17,000) Other income 46,000 51,000 _______________________ _________________________ $ 113,000 $ 35,000 $ 165,000 $ 78,000 Income before prov- ision for income tax $ 678,000 $ 654,000 $1,312,000 $1,375,000 Provision for income tax Current expense 291,000 274,000 571,000 577,000 _______________________ _________________________ Net Income $ 387,000 $ 380,000 $ 741,000 $ 798,000 Net income per common share $ .06 $ 0.06 $ .12 .13 Weighted average number of common shares out- standing 6,087,343 6,061,698 6,087,343 6,061,698 <FN> See Accompanying Notes To Financial Statements GEORGE RISK INDUSTRIES, INC Statements of Cash Flows For The Six Months Ended October 31, [CAPTION] 1997 1996 ___________________________ [S] [C] [C] Cash Flow From Operating Activities: Net income $ 741,000 $ 798,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 59,000 50,000 Changes in assets and liabilities: (Increase) decrease in: Accounts receivable (178,000) (130,000) Note Receivable 1,000 Inventories 336,000 190,000 Prepaid expenses 13,000 61,000 Other assets (96,000) Increase (decrease) in: Accounts payable (38,000) 66,000 Accrued expenses (17,000) (18,000) Notes payable (23,000) (36,000) Income tax payable 104,000 150,000 Net cash provided by (used in) _________ __________ operating activities 901,000 1,132,000 Cash Flows From Investing Activities: (Purchase) sale of property and equipment (38,000) (156,000) (Purchase) sale of marketable securities (861,000) (594,000) Net cash provided by (used in) __________ __________ investing activities (899,000) (750,000) Net increase (decrease) in cash $ 2,000 $ 382,000 Cash at beginning of period $ 653,000 $ 907,000 Cash at end of period $ 655,000 $1,289,000 GEORGE RISK INDUSTRIES, INC NOTES TO FINANCIAL STATEMENTS October 31, 1997 Note 1. Inventories At October 31, 1997, and July 31, 1997, respectively, inventories consisted of the following: Raw materials $ 977,000 $ 1,084,000 Work in process 203,000 300,000 Finished goods 208,000 281,000 ___________ ___________ 1,388,000 1,665,000 ___________ ___________ Less allowance for obsolete inventory <46,000> <46,000> ___________ ___________ Totals $ 1,342,000 $ 1,619,000 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, 1997. Net cash increased $2000 during the six months ended October 31, 1997 as compared to an increase of $382,000 during the corresponding six month period last year. The Company in- vested excess cash in marketable securities with those pur- chases totalling $861,000 for the current six month period. Last year the purchase of marketable securities for the six months totalled $594,000 resulting in a 30% increase for the period ended October 31, 1997 as compared to the same period ended October 31, 1996. Other assets increased $96,000 for the current six month period. This increase is comprised of a $50,000 equipment deposit on a CNC Tooling machine that the Company is purchasing. Once delivered and operating the total cost, estimated at $55,000 will be capitalized. Other assets also include current costs for new molds that are being built by our own tool and die department but not yet complete. At the time of completion these costs will also be capitalized. Working capital at October 31, 1997 was $7,380,000 as compared $5,829,000 at October 31, 1996. The current ratio was 16.15 for the current period and 9.3 for the same period last year. The acid test ratio was 13.29 at October 31, 1997 and 7.28 at October 31, 1996. The accounts receivable turnover was 2.31 at October 31, 1997 and 2.7 at October 31, 1996. Net sales decreased $93,000 for the six month period as compared to the same period last year, but for the three months ended October 31, 1997 sales increased $71,000 over the same three months last year. This overall decrease in net sales occurred during the first quarter and is expected to be recouped in the subsequent months that remain in the current fiscal year. Operating expenses were 25% of net sales for the six months ended October 31, 1997, up slightly from 24% for the corre- sponding period last year. Interest income increased $31,000 during the quarter ended October 31, 1997 and increased $33,000 for the six month period as compared to the quarter ended October 31, 1996 and the six months ended October 31, 1996. This increase is due to the interest bearing marketable securities that the Company continues to invest in. Other income totalled $51,000 for the six months. This is comprised of insurance reimbursements for roof repairs that are being done at the present time but not yet complete. Once complete this income will be offset by the related expense. The Company has agreed to extend the payment terms of its largest customer to 60 days. Management does not expect this agreement to compromise the operating cash flow as this cus- tomer has always paid promptly within its terms. The Company accepted, with regret, the resignation of its Director of Engineering. He had been with the Company for 17 years and is leaving the area to pursue other ventures. Management has filled the position and says the new Director "brings with him a wealth of experience, enthusiasm and knowledge that will further enable GRI to proceed into the year 2000 with confidence and bright expectations for the future". Management has agreed to pursue a proposed 401(K) or other qualified retirement plan for its employees. The options that are available are being looked at and the proposed plan and associated costs will be presented to management at a later date. Management continues to work with Paradigm Advanced Technologies to solidify the relationship between the two companies. Currently Paradigm is involved in negotiations with several multi-million dollar firms that utilize its applications. Management of both Companies predict that a short production run for testing pur- poses may take place in the next 60 to 90 days. 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 October 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 10-31-97 Ken R. Risk Ken R. Risk, Director Date 10-31-97 Eileen M. Risk Eileen M. Risk, Director