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, 1998 [ ] 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: 6,067,343 PART I. FINANCIAL INFORMATION GEORGE RISK INDUSTRIES, INC. Balance Sheet January 31, 1998 [CAPTION] [S] [C] ASSETS Current Assets Cash $ 831,000 Marketable securities 4,366,000 Accounts receivable: Trade, net of $50,000 doubtful account allowance 1,411,000 Notes Receivable 65,000 Inventories (Note 1) 1,580,000 Prepaid expenses 42,000 ___________ Total current assets 8,295,000 Property And Equipment, Net, At Cost 680,000 Other Assets 88,000 ___________ TOTAL ASSETS $ 9,063,000 [CAPTION] LIABILITIES AND STOCKHOLDERS EQUITY [S] [C] Current Liabilities Accounts payable, trade $ 117,000 Notes payable, current portion 46,000 Accrued expenses 427,000 Deferred current taxes (94,000) ___________ Total current liabilities 496,000 Long term Liabilities Notes payable, FKI, Inc. 174,000 Deferred Income Taxes 34,000 ___________ Total long term liabilities 208,000 Stockholders Equity Convertible preferred stock 257,000 Common stock, Class A 850,000 Additional paid-in capital 1,674,000 Retained earnings 6,170,000 Less cost of treasury stock (592,000) ___________ Total stockholders equity 8,359,000 ___________ TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 9,063,000 [FN] See Accompanying Notes to Financial Statements GEORGE RISK INDUSTRIES INC. STATEMENTS OF INCOME (unaudited) for three months for nine months ended ended January 31 January 31 1998 1997 1998 1997 _______________________ _______________________ Net sales $2,817,000 $2,525,000 $8,377,000 $8,177,000 Less cost of goods sold 1,455,000 1,316,000 4,480,000 4,342,000 _______________________ ________________________ Gross profit $1,362,000 $1,209,000 $3,897,000 $3,835,000 Operating expenses G&A 155,000 148,000 457,000 427,000 Sales 526,000 540,000 1,568,000 1,586,000 Engineering 19,000 4,000 62,000 8,000 _______________________ ________________________ $ 700,000 $ 692,000 $2,087,000 $2,021,000 Income from operations 662,000 517,000 1,810,000 1,814,000 Other income (expenses) Interest income 57,000 52,000 184,000 147,000 Interest expense (6,000) (8,000) (20,000) (25,000) Other income 16,000 (22,000) 68,000 (22,000) _______________________ _________________________ $ 67,000 $ 22,000 $ 232,000 $ 100,000 Income before prov- ision for income tax $ 729,000 $ 539,000 $2,042,000 $1,914,000 Provision for income tax Current expense 211,000 119,000 783,000 696,000 _______________________ _________________________ Net Income $ 518,000 $ 420,000 $1,259,000 $1,218,000 Net income per common share $ .09 $ .07 $ .21 $ .20 Weighted average number of common shares out- standing 6,080,676 6,061,698 6,085,121 6,061,698 <FN> See Accompanying Notes To Financial Statements GEORGE RISK INDUSTRIES, INC Statements of Cash Flows For The Nine Months Ended January 31, [CAPTION] 1998 1997 ___________________________ [S] [C] [C] Cash Flow From Operating Activities: Net income $1,259,000 $1,218,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 92,000 85,000 Changes in assets and liabilities: (Increase) decrease in: Accounts receivable (136,000) 66,000 Note Receivable 1,000 Inventories 97,000 (111,000) Prepaid expenses 26,000 42,000 Other assets (44,000) Increase (decrease) in: Accounts payable (79,000) 101,000 Accrued expenses 61,000 53,000 Notes payable (34,000) (56,000) Income tax payable 74,000 87,000 Net cash provided by (used in) _________ __________ operating activities 1,316,000 1,486,000 Cash Flows From Investing Activities: (Purchase) sale of property and equipment (92,000) (189,000) (Purchase) sale of marketable securities (1,010,000) (1,038,000) Net cash provided by (used in) __________ __________ investing activities (1,102,000) (1,227,000) Cash Flows From Financing Activities: (Purchase) of treasury stock (36,000) Net cash provided by (used in) __________ __________ financing activities (36,000) Net increase (decrease) in cash $ 178,000 $ 259,000 Cash at beginning of period $ 653,000 $ 907,000 Cash at end of period $ 831,000 $1,166,000 GEORGE RISK INDUSTRIES, INC NOTES TO FINANCIAL STATEMENTS January 31, 1998 Note 1. Inventories At January 31, 1998, and October 31, 1997, respectively, inventories consisted of the following: Raw materials $ 1,124,000 $ 977,000 Work in process 249,000 203,000 Finished goods 253,000 208,000 ___________ ___________ 1,626,000 1,388,000 ___________ ___________ Less allowance for obsolete inventory <46,000> <46,000> ___________ ___________ Totals $ 1,580,000 $ 1,342,000 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 $176,000 during the three months ended January 31, 1998 and increased $178,000 for the nine months ended January 31, 1998. This is compared to a decrease of $123,000 for the three months ended January 31, 1997 and a $259,000 increase for the nine months ended January 31, 1997. Accounts receivable increased $136,000 for the current nine months as compared to a $66,000 decrease for the corre- sponding nine months last year. Accounts receivable collections averaged $966,000 per month for the quarter ended January 31, 1998 compared to $886,000 per month for the quarter ended January 31, 1997. Other assets increased $44,000 for the nine months ended January 31, 1998. Included are dies and molds that are being made in house and at the time of completion will be capitalized. Net cash used in investing activities decreased 11% during the current nine months as compared to the corresponding nine months ended January 31, 1997. Property and equipment purchases were down from $189,000 for the nine months ended January 31, 1997 to $92,000 for the nine months ended January 31, 1998. The Company purchased 20,000 shares of it's common stock to be held in treasury during the current quarter. This purchase resulted in $36,000 being used in financing activities for both the three and nine months ended January 31, 1998. Working capital at January 31, 1998 was $7,799,000 as compared to $6,263,000 at January 31, 1997. The current ratio was 16.72 at January 31, 1998 and 9.42 at January 31, 1997. The acid test ratio was 13.45 at January 31, 1998 and 7.05 at January 31, 1997. Net sales were $2,817,000 for the quarter ended January 31,1998, a 12% increase over the corresponding quarter last year when net sales totalled $2,525,000. For the current nine months net sales increased $200,000 to $8,377,000 as compared to $8,177,000 for the nine months ended January 31, 1997. Operating expenses were 25% of net sales for the quarter ended January 31, 1998 and were 27% of net sales for the same quarter last year. For the nine months ended January 31, 1998 as well as January 31, 1997, operating expenses were 25% of net sales. Engineering expenses increased from $8000 for the nine months last year to $62,000 for the current nine months. This substantial increase is due almost ex- clusively to increased wages and other costs relating to the hiring of an Engineer and four technicians and support people over the last several months. Management feels that the Engineering department is now adequately staffed and will be instrumental in the Company's continuing success. Cost of goods sold remained at 53% of gross sales for the nine months ended January 31, 1998, the same as the corresponding period last year. Management continues to closely monitor expenses in an effort to increase profits. Interest income totalled $57,000 for the quarter ended January 31, 1998 and $52,000 for the quarter ended January 31, 1997. Total other income increased $45,000 during the current quarter to $67,000 as compared to $22,000 for the quarter ended January 31, 1997. For the nine months ended January 31, 1998, other income totalled $232,000 as compared to $100,000 for the nine months ended January 31, 1997. Included in this other income are insurance payments for roof repairs that will be completed in the spring. Net income increased 23% to $518,000 during the current quarter as compared to $420,000 for the corresponding quarter last year. This resulted in a 29% increase in earnings per share for the quarter ended January 31, 1998 over the same quarter last year. Earnings per share for the current quarter were .09 and .07 for the quarter ended January 31, 1997. This brings the earnings per share to .21 for the nine months ended January 31, 1998 as compared to .20 for the nine months ended January 31, 1997. Management approved and implemented a 401(K) retirement plan effective January 1, 1998. The Company will make a matching contribution of 1% of the participant's elective deferral up to 4% of his annual compensation. Presently, 80% of the total eligible employees have elected to participate in the plan. The projected cost for the Company for this initial plan year is $25,000. Management has approved the purchase of an injection molding machine with an estimated cost of $45,000. It will replace an existing machine and will increase productivity as well as improve the quality of molded parts. Management is currently evaluating computer system upgrade options that will address the year 2000 compliancy issue that our current software does not provide for. A decision will be made in the coming months after all options and costs have been evaluated. The Company continues to research new markets and will be aggressive in the area of new product development. New products to be released soon include a water sensor with a relay module and a temperature sensor switch. Management is excited about the diverse product potential these applications have for residential and commercial automation and control. The Company is also looking to expand its' proximity switch line and will be attending different trade shows to determine the direction to take with that line of products. 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, 1998 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 02-18-98 Ken R. Risk Ken R. Risk, Director Date 02-18-98 Eileen M. Risk Eileen M. Risk, Director