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, 2000
[ ] 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
July 31, 2000 was 5,910,408.
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, 2000, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 2000
ASSETS
Current Assets
Cash and cash equivalents $ 1,951,000
Marketable securities 6,610,000
Accounts receivable:
Trade, net of $50,000 doubtful account allowance 2,108,000
Other 1,000
Notes receivable 11,000
Inventories (Note 2) 2,354,000
Prepaid expenses 32,000
Deferred income taxes 31,000
------------
Total Current Assets $13,098,000
Property and Equipment, net at cost $ 1,269,000
Other Assets
Projects in process 17,000
Machinery and equipment deposit 22,000
Officer receivable 5,000
Long-term deferred tax asset 38,000
Other 5,000
------------
Total Other Assets $ 87,000
TOTAL ASSETS $14,454,000
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 40,000
Accrued expenses
Payroll and related expenses 374,000
Property taxes 27,000
Notes payable, current 10,000
Income taxes payable 322,000
------------
Total Current Liabilities $ 759,000
Long-Term Liabilities
Notes payable 92,000
Deferred income taxes 26,000
------------
Total Long-Term Liabilities $ 118,000
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 1,719,000
Accumulated other comprehensive income 121,000
Retained earnings 11,818,000
Less: cost of treasury stock, 2,592,424 shares,
at cost (1,038,000)
------------
Total Stockholders' Equity $13,577,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,454,000
============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED
JULY 31,
2000 1999
---------------------------
Net Sales $ 3,565,000 $ 3,235,000
Less: cost of goods sold (1,989,000) (1,647,000)
------------ ------------
Gross Profit $ 1,576,000 $ 1,588,000
Operating Expenses:
General and administrative 203,000 239,000
Selling 599,000 592,000
Engineering 23,000 25,000
------------ ------------
Total Operating Expenses $ 825,000 $ 856,000
Income From Operations 751,000 732,000
Other Income (Expense)
Other (10,000) 4,000
Dividend and interest income 78,000 73,000
Interest expense 0 (4,000)
Gain/(loss) on sale of investments 67,000 (93,000)
------------ ------------
$ 135,000 $ (20,000)
Income Before Provisions for Income Tax 886,000 712,000
Provisions for Income Tax (396,000) (297,000)
------------ ------------
Net Income $ 517,000 $ 415,000
Retained Earnings, beginning of period $11,301,000 $ 9,114,000
------------ ------------
Retained Earnings, end of period $11,818,000 $ 9,529,000
============ ============
Income Per Share of Common Stock $ .09 $ .07
Weighted Average Number of Common Shares
Outstanding 5,910,408 6,056,506
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
July 31,
2000 1999
---------------------------
Net Income $ 517,000 $ 415,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses) arising
during period (102,000) (78,000)
Reclassification adjustment for (gains)
losses included in net income (67,000) 94,000
------------ ------------
Other Comprehensive Income $ (169,000) $ 16,000
Comprehensive Income $ 348,000 $ 431,000
============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
For the three months
ended July 31,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 517,000 $ 415,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 62,000 39,000
Change in unrealized gain/(loss) on
investments (169,000) 16,000
Changes in assets and liabilities:
(Increase) decrease in:
Marketable securities 28,000 (98,000)
Accounts receivable (185,000) 101,000
Inventories 246,000 (43,000)
Prepaid expenses 20,000 11,000
Other assets 2,000 (82,000)
Receivables-officers and employees 5,000 2,000
Increase (decrease) in:
Accounts payable 109,000 (5,000)
Accrued expenses 80,000 73,000
Notes payable (21,000) 61,000
Income tax payable 370,000 233,000
------------ ------------
Net cash provided by (used in) operating
activities $ 1,064,000 $ 723,000
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) Sale of property and equipment (71,000) (44,000)
(Purchase) of treasury stock 0 (7,000)
------------ ------------
Net cash provided by (used in) investing
activities $ (71,000) $ (51,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Treasury stock issued 0 49,000
------------ ------------
Net cash provided by (used in) financing
activities $ 0 $ 49,000
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 993,000 $ 721,000
============ ============
Cash and cash equivalents, beginning of period $ 958,000 $ 1,160,000
Cash and cash equivalents, end of period $ 1,951,000 $ 1,881,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for:
Income taxes $ 0 $ 135,000
Interest expense $ 0 $ 4,000
Cash receipts for:
Income taxes $ 0 $ 71,000
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Issuance of treasury stock in lieu of
compensation $ 0 $ 49,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
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 stockholders' 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, 2000 and July 31, 1999:
Cost basis $ 6,489,000 $ 5,428,000
Market Value 6,610,000 5,562,000
------------ ------------
Net unrealized gain $ 121,000 $ 134,000
============ ============
Gross unrealized gain $ 380,000 $ 369,000
Gross unrealized loss $ 259,000 $ 235,000
Note 3 Inventories
At July 31, 2000 and July 31, 1999, respectively, inventories consisted
of the following:
Raw Materials $ 1,637,000 $ 1,717,000
Work in Process 489,000 296,000
Finished Goods 298,000 294,000
------------ ------------
$ 2,424,000 $ 2,307,000
Less: allowance for obsolete inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 2,354,000 $ 2,237,000
============ ============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
July 31,
2000 1999
--------------------------
Net revenue:
Keyboard products $ 422,000 $ 144,000
Security alarm products 3,143,000 3,091,000
------------ ------------
Total net revenue $ 3,565,000 $ 3,235,000
Income from operations:
Keyboard products $ 89,000 $ 33,000
Security alarm products 662,000 699,000
------------ ------------
Total income from operations $ 751,000 $ 732,000
Identifiable assets:
Keyboard products $ 483,000 $ 300,000
Security alarm products 4,125,000 8,512,000
Corporate general 9,846,000 3,962,000
------------ ------------
Total assets $14,454,000 $12,774,000
Depreciation and amortization
Keyboard products $ 2,000 $ 2,000
Security alarm products 38,000 30,000
Corporate general 22,000 7,000
------------ ------------
Total depreciation and amortization $ 62,000 $ 39,000
Capital expenditures
Keyboard products $ 0 $ 0
Security alarm products 59,000 44,000
Corporate general 12,000 0
------------ ------------
Total capital expenditures $ 71,000 $ 44,000
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 financial statements, and with the Company's audited financial
statements and discussion for the fiscal year ended April 30, 2000.
Net cash increased $993,000 during the quarter ended July 31, 2000 as com-
pared to an increase of $721,000 during the corresponding quarter last year.
Marketable securities decreased $28,000 for the current quarter while they
increased $98,000 for the same quarter last year. The Company has not been
putting any additional cash into the marketable securities, but instead is
using the money already in the investment accounts and making smart choices
with its investments. For the quarter ended July 31, 2000, the stock market
did not perform as well as it did for the three months ended July 31, 1999.
Therefore, there was a bigger unrealized loss for the current period.
Inventories decreased $246,000 during the current quarter as compared to a
$43,000 increase last year. The Company is not holding as many raw materials
on hand because the fear of shortages from Y2K is no longer a threat. And
there was almost $124,000 worth of credit (a receivable) on the books from a
vendor that owes the Company for defective raw materials. Accounts
receivable increased $185,000 during the current quarter as compared to a
$101,000 decrease for the corresponding quarter last year. Sales have in-
creased, which accounts for part of the increase in accounts receivable, but
the Company continues to collect its accounts within terms. At the quarter
ended July 31, 2000, 71.5% of the receivables are considered current (less
than 45 days) and 10% of the total are over 90 days past due. There was a
big change in the other assets category in regards to cash flows. At the
quarter ended July 31, 2000 there was a $2,000 decrease in other assets while
at July 31, 1999, there was a $82,000 increase. This difference is the fact
that the Company, at July 31, 1999 was in the middle of constructing addi-
tional production space. This project was completed (and capitalized) in
the second quarter of fiscal year end April 30, 2000.
At the quarter ended July 31, 2000, accounts payable shows an increase of
$109,000 as compared to a decrease of $5,000 for the same quarter the year
before. A big portion of the increase for the current period is that the
Company is holding a $97,000 debit on the books for defective inventory that
was returned to the vendor, but was already paid for. Otherwise, the Company
continues to strive to pay all of its payables within terms and take all pur-
chase discounts that are available. Notes payable decreased by $21,000 for
the current quarter, while it increased $61,000 for the corresponding quarter
last year. The reason the for the difference is that the Company received
$75,000 in the form of a long-term note from the State of Nebraska Department
of Economic Development in May 1999. They offer a "Community Development
Block Grant" (CDBG) program to help increase economic development in the
state. The Company received this loan to help defer costs for the new build-
ing (which was mentioned above) that houses our molding and tool and die
departments. If, after five years, the Company complies with all of the con-
ditions of the CDBG program, the note will be forgiven. As of July 31, 2000,
the Company has not had to make any payments towards this note. Income tax
payable increased $370,000 for the quarter ended July 31, 2000. This compares
to an increase of $233,000 for the quarter ended July 31, 1999. The differ-
ence of $137,000 is that the Company underestimated its income taxes for the
fiscal year ended April 30, 1998 and therefore had to make a payment with its
estimates that were calculated during the quarter ended July 31, 1999.
The following is a list of ratios to help analyze the Company's performance:
Qtr ended July 31,
2000 1999
--------------------------
Working capital $12,339,000 $10,993,000
Current ratio 17.257 15.560
Quick ratio 14.057 12.473
Cash per share (including marketable
securities) $ 1.45 $ 1.23
Equity per share $ 2.03 $ 1.95
Net sales were $3,565,000 for the quarter ended July 31, 2000, which is a 10%
increase over the corresponding quarter last year. Cost of goods sold was
44% of gross sales for the quarter ended July 31, 2000 and the cost of goods
sold percentage to gross sales was 49% for the quarter ended July 31, 1999.
Having relatively the same percentage of cost of goods sold from period to
period shows that the Company keeps its costs in line. The Company has in-
creased its cost of materials and direct labor in proportion to how its sales
have increased.
Operating expenses were 23% of net sales for the quarter ended July 31, 2000
as compared to 26.5% for the corresponding quarter last year. Having rela-
tively the same percentages for both periods shows that management keeps a
close eye on its operating expenses to keep them in line from year to year.
As sales have increased, management has increased wages and staff accordingly.
Other income and expenses showed a $135,000 gain for the quarter ended July
31, 2000 as compared to having a $20,000 loss for the quarter ended July 31,
1999. The main difference is that the Company had to sell one of its stock
holdings for a loss of $93,000 during the quarter ended July 31, 1999, while
the Company has sold stock holdings during the current quarter for gains. In
turn, net income for the quarter ended July 31, 2000 was at $517,000, a 24.5%
increase from the corresponding quarter last year, which showed a net income
of $415,000. Earnings per share for the quarter ended July 31, 2000 were
$0.09 per share and $0.07 per share for the quarter ended July 31, 1999.
The Company recognizes its revenues when goods are shipped and billed to its
customers. There is a $50,000 allowance that was established by the Company
to account for any uncollectable accounts.
The Company does have two distinct business segments, security alarm products
and keyboard products that are subject to disclosure under SFAS No. 131.
Please see the notes to the financial statements in order to examine the two
segments.
New product development at the Company 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 hold-up switch, a relay module,
a high security switch, and a multi-functional thermostat. New products that
are presently in development include a wireless pool alarm, Raceway (wire-run
covers and associated connectors), European contact switches (to compete in
the U.K. market), and ShockGard (a shock sensor that senses sound waves).
The company moved into its new 7,200 sq. ft. building addition in October
1999. This building houses the tool and die and molding departments and also
allows for additional stockroom storage. This additional stockroom storage
enables the company to stock more finished goods for the increasing demands
of its customers. This new addition was built in part with a grant received
from Nebraska's Department of Economic Development (DED). This program from
the DED, called the Community Development Block Grant, is designed to help
with the economic growth of Nebraska's rural communities.
The Company has some short-term future plans that are just beginning to take
shape. GRI wants to start another building expansion project which will (1)
expand and relocate its sales department, and (2) provide for additional
production facilities. Another project just getting under way is that the
Company is planning to open a warehouse for its products in England. The
main reason for this warehouse is to become more competitive in the European
market.
The Company is continuing to search for a business that would complement the
existing business. This would require no outside financing. The intent is
to utilize equipment, marketing techniques and established customers to in-
crease sales and profits.
There are no known seasonal trends with any of the Company's products, since
they sell to distributors and OEM manufacturers. The 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
Last fiscal year, the Company was a defendant in a patent infrigement
action. The action was settled by an order that dismissed the case. This
order was signed and dated by the U.S. District Court on November 8, 1999.
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. Exhibits
Exhibit 27. Financial Data Schedule
The Financial Data Schedule is attached at the bottom as a separate
document.
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended July 31, 2000.
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 09-14-2000 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and Chairman of
the Board