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 Exchange
Act of 1934
For the quarter ended January 31, 2001
[ ] 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
March 16, 2001 was 5,906,603.
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
January 31, 2001 and the nine month period ended January 31, 2001, are
attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JANUARY 31, 2001 AND JANUARY 31, 2000
ASSETS
Current Assets
Cash and cash equivalents $ 2,900,000 $ 1,819,000
Marketable securities 6,754,000 6,133,000
Accounts receivable:
Trade, net of $50,000 doubtful
account allowance 1,760,000 1,772,000
Other 1,000 2,000
Notes receivable 4,000 4,000
Inventories (Note 3) 2,228,000 2,489,000
Prepaid expenses 19,000 53,000
Deferred income taxes 31,000 31,000
------------ ------------
Total Current Assets $13,697,000 $12,303,000
Property and Equipment, net at cost $ 1,214,000 $ 1,304,000
Other Assets
Projects in process 7,000 28,000
Officer receivable 5,000 20,000
Long-term deferred tax asset 38,000 38,000
Other 16,000 12,000
------------ ------------
Total Other Assets $ 66,000 $ 98,000
TOTAL ASSETS $14,977,000 $13,705,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 176,000 $ 70,000
Accrued expenses
Payroll and related expenses 384,000 470,000
Property taxes 23,000 21,000
Income tax payable 130,000 12,000
Notes payable, current 3,000 13,000
------------ ------------
Total Current Liabilities $ 716,000 $ 586,000
Long-Term Liabilities
Notes payable 92,000 209,000
Deferred income taxes 26,000 28,000
------------ ------------
Total Long-Term Liabilities $ 118,000 $ 237,000
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 107,000 257,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,719,000 1,734,000
Accumulated other comprehensive income (329,000) 139,000
Retained earnings 12,851,000 10,577,000
Less: cost of treasury stock, 2,595,429
shares, at cost (1,045,000) (675,000)
------------ ------------
Total Stockholders' Equity $14,143,000 $12,882,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,977,000 $13,705,000
============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Three months Nine months Three months Nine months
ended ended ended ended
Jan 31,2001 Jan 31,2001 Jan 31,2000 Jan 31,2000
----------------------------------------------------
Net Sales $ 2,971,000 $10,361,000 $ 3,375,000 $10,138,000
Less: cost of goods sold (1,602,000) (5,558,000) (1,736,000) (5,194,000)
----------- ------------ ----------- ------------
Gross Profit $ 1,369,000 $ 4,803,000 $ 1,639,000 $ 4,944,000
Operating Expenses:
General and administrative 192,000 580,000 196,000 622,000
Selling 605,000 1,893,000 642,000 1,863,000
Engineering 25,000 72,000 34,000 85,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 822,000 $ 2,545,000 $ 872,000 $ 2,570,000
Income From Operations 547,000 2,258,000 767,000 2,374,000
Other Income (Expense)
Dividend and interest
income 99,000 260,000 83,000 228,000
Interest expense 0 0 (3,000) (12,000)
Gain/(loss) on sale of
assets 117,000 205,000 1,000 (79,000)
Other Income/(Loss) (30,000) (38,000) 2,000 1,000
------------ ------------ ------------ ------------
$ 186,000 $ 427,000 $ 79,000 $ 138,000
Income Before Provisions
for Income Tax 733,000 2,685,000 846,000 2,512,000
Provisions for Income Tax (320,000) (1,135,000) (354,000) (1,049,000)
------------ ------------ ------------ ------------
Net Income $ 413,000 $ 1,550,000 $ 492,000 $ 1,463,000
Retained Earnings,
beginning of period $12,438,000 $11,301,000 $10,085,000 $ 9,114,000
Retained Earnings,
end of period $12,851,000 $12,851,000 $10,577,000 $10,577,000
Income Per Share of
Common Stock $ 0.07 $ 0.26 $ 0.08 $ 0.24
Weighted Average Number
of Common Shares
Outstanding 5,906,603 5,908,584 6,054,408 6,055,079
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
Three months Nine months Three months Nine months
ended ended ended ended
Jan 31,2001 Jan 31,2001 Jan 31,2000 Jan 31,2000
----------------------------------------------------
Net Income $ 413,000 $ 1,550,000 $ 492,000 $ 1,463,000
------------ ------------ ------------ ------------
Other Comprehensive Income,
net of tax
Unrealized gain/(loss)
on securities:
Unrealized holding gains
(losses) arising during
period (122,000) (652,000) (86,000) (66,000)
Reclassification
adjustment for (gains)
losses included in net
income (73,000) 22,000 1,000 87,000
------------ ------------ ------------ ------------
Other Comprehensive
Income $ (195,000) $ (630,000) $ 85,000 $ 21,000
Comprehensive Income $ 218,000 $ 920,000 $ 577,000 $ 1,484,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
Three months Nine months Three months Nine months
ended ended ended ended
Jan 31,2001 Jan 31,2001 Jan 31,2000 Jan 31,2000
-----------------------------------------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 413,000 $ 1,550,000 $ 492,000 $ 1,463,000
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 56,000 183,000 49,000 121,000
Change in unrealized
gain/(loss) on
investments (195,000) (630,000) 85,000 21,000
Changes in assets and
liabilities:
(Increase) decrease in:
Marketable securities (45,000) (116,000) (414,000) (669,000)
Accounts receivable 612,000 163,000 283,000 304,000
Inventories (305,000) 372,000 (251,000) (295,000)
Prepaid expenses (2,000) 33,000 12,000 9,000
Other assets (27,000) 22,000 (24,000) 24,000
Receivables-officers
and employees 6,000 13,000 5,000 8,000
Increase (decrease) in:
Accounts payable 96,000 259,000 13,000 24,000
Accrued expenses
Payroll and related
expenses 39,000 85,000 115,000 151,000
Property taxes 4,000 2,000 6,000 6,000
Notes payable (3,000) (28,000) (18,000) 66,000
Income tax payable 202,000 177,000 30,000 (6,000)
------------ ------------ ------------ ------------
Net cash provided by (used in)
operating activities $ 851,000 $ 2,085,000 $ 383,000 $ 1,227,000
CASH FLOWS FROM INVESTING
ACTIVITIES:
(Purchase) Sale of property
and equipment (4,000) (136,000) (257,000) (608,000)
(Purchase) of treasury stock 0 (7,000) 0 (9,000)
------------ ------------ ------------ ------------
Net cash provided by (used in)
investing activities $ 4,000 $ (143,000) $ (257,000) $ (617,000)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Treasury stock issued 0 0 0 49,000
------------ ------------ ------------ ------------
Net cash provided by (used in)
financing activities $ 0 $ 0 $ 0 $ 49,000
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 847,000 $ 1,942,000 $ 126,000 $ 659,000
============ ============ ============ ============
Cash and equivalents,
beginning of period $ 2,053,000 $ 958,000 $ 1,693,000 $ 1,160,000
Cash and equivalents,
end of period $ 2,900,000 $ 2,900,000 $ 1,819,000 $ 1,819,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2001
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 information
and footnotes required by generally accepted accounting principals for
complete financial statements. In the opinion of management, all adjustments,
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 January 31, 2001 and January 31, 2000:
Cost basis $ 7,093,000 $ 5,994,000
Market value 6,754,000 6,133,000
------------ ------------
Net unrealized gain/(loss) $ (339,000) $ 139,000
============ ============
Gross unrealized gain $ 477,000 $ 773,000
Gross unrealized loss $ 816,000 $ 634,000
Note 3 Inventories
At January 31, 2001 and January 31, 2000, respectively, inventories
consisted of the following:
Raw Materials $ 1,502,000 $ 1,777,000
Work in Process 425,000 394,000
Finished Goods 371,000 388,000
------------ ------------
$ 2,298,000 $ 2,559,000
Less: allowance for obsolete
inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 2,228,000 $ 2,489,000
============ ============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended January 31,
2001 2000
------------------------------------
Net revenue:
Keyboard products $ 416,000 $ 526,000
Security alarm products/other 2,667,000 2,849,000
------------ ------------
Total net revenue $ 3,083,000 $ 3,375,000
Income from operations:
Keyboard products $ 74,000 $ 123,000
Security alarm products/other 473,000 644,000
------------ ------------
Total income from operations $ 547,000 $ 767,000
Identifiable assets:
Keyboard products $ 436,000 $ 581,000
Security alarm products/other 3,540,000 3,788,000
Corporate general 11,011,000 9,336,000
------------ ------------
Total identifiable assets $14,977,000 $13,705,000
Depreciation and amortization
Keyboard products $ 2,000 $ 2,000
Security alarm products 25,000 33,000
Corporate general 29,000 14,000
------------ ------------
Total depreciation and
amortization $ 56,000 $ 49,000
Capital expenditures
Keyboard products $ 0 $ 0
Security alarm products 0 18,000
Corporate general 4,000 239,000
------------ ------------
Total capital expenditures $ 4,000 $ 257,000
============ ============
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 con-
densed unaudited financial statements, and with George Risk Industries' (GRI)
audited financial statements and discussion for the fiscal year ended
April 30, 2000.
Net cash increased $847,000 during the quarter ended January 31, 2001 as com-
pared to an increase of $126,000 during the corresponding quarter last year.
As for the year-to-date numbers, net cash increased $1,942,000 for the nine
months ended January 31, 2001, while, for the same period last year, net cash
only increased by $659,000. There are many reasons as to why cash is on the
rise. First, management has been purchasing securities with the existing
cash reserves that are in the respective investment accounts and not putting
any "new" cash in the marketable securities. For the three months and nine
months ended January 31, 2001, the stock market did not perform as well as it
did for the three months and nine months ended January 31, 2000. Therefore,
there were unrealized losses for the current period, while there were unreal-
ized gains showing for the corresponding periods last year. Second,
inventory is $261,000 lower at January 31, 2001 than it was at January 31,
2000. GRI is not holding as many raw materials on hand because the fear of
shortages from Y2K is no longer a problem. Accounts receivable over both
periods in discussion have decreased in value. Sales have decreased slightly
for the quarter as compared to the same quarter last year, but are greater for
year-to-date figures. This accounts for part of the decrease in accounts
receivable, but we took some great strides to collect on some of our slow
paying customers over the quarter ended January 31, 2001. At January 31, 2000,
75.9% of the receivable were considered current (less than 45 days) while 7.8%
were over 90 days. This is compared to 62.8.5% and 9.3%, respectively, at
October 31, 2000. GRI's prepaid expenses increased slightly for the quarter
because of some computer maintenance subscriptions due at the beginning of the
year, but have decreased for the year-to-date figures due to the consumption
of these expenses without the need to replenish them yet.
Accounts payable has increased in regards to cash flow. A big portion of the
increase for the current period is that we were holding a $75,000 debit on the
books for defective inventory that was returned to the vendor, but already
paid for. Also, GRI's bills were being processed and paid for almost
immediately last year, but this year management has stepped in to make sure we
are paying our bills within terms (but not too soon) and taking purchase dis-
counts when available. Notes payable decreased by $28,000 for year-to-date
figures, while it increased $66,000 for the corresponding period last year.
One reason the for the difference is that we 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. We received this loan to help
defer costs for the new building that now houses our molding and tool and die
departments. If, after five years of this issuance of the note, we comply with
all of the conditions of the CDBG program, the note will be forgiven. As of
January 31, 2001, we have not had to make any payments toward this note.
Also, GRI finished paying off a note in July 2000 that was for the purchase of
725,000 shares of George Risk Industries stock. We had been paying $6,000 a
month on this note for the last five years, and therefore have had a savings
of $36,000 for the current fiscal year. As for property and equipment, GRI
has purchased less than 25% of the amount for the current nine months than we
purchased for the same nine month period last year.
The following is a list of ratios to help analyze GRI's performance:
Qtr ended Qtr ended
January 31, 2001 January 31, 2000
------------------------------------
Working capital $12,981,000 $11,717,000
Current ratio 19.130 20.995
Quick ratio 15.941 16.594
Cash per share (including
marketable securities) $ 1.63 $ 1.31
Equity per share $ 2.39 $ 2.13
Net sales were $2,971,000 for the quarter ended January 31, 2001, which is an
13.6% decrease over the corresponding quarter last year. Year-to-date net
sales were $10,361,000 at January 31, 2001, which is a 2.2% increase from the
same period last year. Cost of goods sold was 53.9% of net sales for the
quarter ended January 31, 2001 and 48.6% for the same quarter last year.
Year-to-date cost of goods sold percentages are 53.6% for the current nine
months and are 51.2% for the corresponding nine months last year. Having
relatively the same percentage of cost of goods sold from period to period
shows that management keeps its costs in line. We have increased our cost of
materials and direct labor in proportion to how our sales have increased. At
the beginning of the current fiscal year, management decided to change the way
it was invoicing our customers. We have always offered a 5% discount to the
majority of our security sales customers, but we were putting the 5% savings on
each line of the invoice. As of May 1, 2000, we changed this practice. We
still offer a purchase discount if the invoice is paid within terms, but no
longer allow the discount if it is not paid within terms.
Operating expenses were 27.7% of net sales for the quarter ended January 31,
2001 as compared to 25.8% for the corresponding quarter last year. Year-to-
date operating expenses were 24.6% of net sales of the nine months ended
January 31, 2001, while they were 25.4% for the same period last year. Having
relatively 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 were gains of $186,000 and $427,000 for the quarter
and nine months ended January 31, 2001. This is a 235.4% increase when
comparing quarters and 309.4% increase for the year-to-date figures. The main
difference is that we sold one of our stock holdings for a loss of $93,000
during the nine months ended January 31, 2000, while we have sold stock
holdings during the current quarter and nine months for net gains. In turn,
net income for the quarter ended January 31, 2001 was at $413,000, a 19.1% de-
crease from the corresponding quarter last year, which showed a net income of
$492,000. Net income for the nine months ended January 31, 2001 was
$1,550,000, a 5.9% increase from the same period last year. Net income for
the nine months ended January 31, 2000 was $1,463,000. Earnings per share for
the quarter ended January 31, 2001 was $0.07 per share and $0.26 per share for
the year-to-date numbers. EPS for the quarter and nine months ended January
31, 2000 was $0.08 per share and $0.24 per share, respectively.
George Risk Industries recognizes its revenues when goods are shipped and
billed to its customers. All goods are shipped F.O.B. plant, which means that
the customer takes ownership as soon as the merchandise is shipped out our
door. There is $50,000 allowance that was established to account for any
uncollectable accounts.
George Risk Industries does have two distinct business segments, security alarm
products/other 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 George Risk Industries 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).
George Risk Industries has some short-term future plans that are just beginning
to take shape. We have started another building expansion project which will
(1) expand and relocate our sales department, and (2) provide for additional
production facilities. Another project just getting under way is that we are
planning to open a warehouse for our products in England. The main reason for
this warehouse is to become more competitive in the European market.
George Risk Industries continues to search for a business that would complement
the existing business. 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. Reports on Form 8-K
A. Reports on Form 8-K
No 8-K reports were filed during the quarter ended January 31,
2001.
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 03-16-2001 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and Chairman
of the Board
By: /s/ Stephanie M. Risk
Stephanie M. Risk, Chief Financial Officer