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 October 31, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange 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)
(308) 235-4645
(Issuer's telephone number)
n/a
(Former name, address and fiscal year, if changed from last report)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.10 par value
(Title of class)
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 [ ] No [ X ]
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: 6,019,417
<PAGE>
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
OCTOBER 31, 1999, JULY 31, 1999, AND OCTOBER 31, 1998
[CAPTION]
[S] [C] [C] [C]
ASSETS
CURRENT ASSETS
Cash $ 1,693,000 $ 1,881,000 $ 1,040,000
Marketable Securities 5,719,000 5,562,000, 4,739,000
Accounts Receivable: Trade,
net of $50,000 doubtful
account allowance 2,054,000 1,974,000 2,070,000
Notes Receivable - Officer
and Employees 11,000 12,000 9,000
Inventories (Note 1) 2,238,000 2,237,000 2,129,000
Prepaid Expenses 66,000 51,000 60,000
------------ ------------ ------------
Total Current Assets $11,781,000 $11,717,000 $10,047,000
Property, Plant and Equipment,
net, at cost 1,096,000 821,000 651,000
Other Assets 74,000 205,000 356,000
------------ ------------ ------------
TOTAL ASSETS $12,951,000 $12,743,000 $11,054,000
============ ============ ============
[CAPTION]
LIABILITIES AND STOCKHOLDERS' EQUITY
[S] [C] [C] [C]
CURRENT LIABILITIES
Accounts Payable, Trade $ 57,000 $ 40,000 $ 215,000
Notes Payable, current 94,000 58,000 52,000
Accrued Expenses 352,000 657,000 756,000
Deferred Current Taxes (31,000) (31,000) (31,000)
------------ ------------ ------------
Total Current Liabilities $ 472,000 $ 724,000 $ 992,000
LONG-TERM LIABILITIES
Notes Payable 146,000 160,000 131,000
Deferred Income Taxes 28,000 28,000 33,000
------------ ------------ ------------
Total long-term liabilities $ 174,000 $ 188,000 $ 164,000
STOCKHOLDERS' EQUITY
Convertible Preferred Stock 257,000 257,000 257,000
Common Stock, Class A 850,000 850,000 850,000
Additional Paid-In Capital 1,734,000 1,734,000 1,674,000
Accumulated Other
Comprehensive Income 54,000 134,000 (239,000)
Retained Earnings 10,085,000 9,529,000 7,961,000
Less: Cost of Treasury Stock (675,000) (673,000) (605,000)
------------ ------------ ------------
Total Stockholders' Equity $12,305,000 $11,831,000 $ 9,898,000
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $12,951,000 $12,743,000 $11,054,000
============ ============ ============
<PAGE>
<TABLE>
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENT
<C> <C> <C> <C>
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
1999 1998 1999 1998
------------------------ ------------------------
Net Sales $ 3,526,000 $ 3,441,000 $ 6,762,000 $ 6,345,000
Cost of Goods Sold (1,811,000) (1,763,000) (3,458,000) (3,292,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,715,000 $ 1,678,000 $ 3,304,000 $ 3,053,000
Operating Expenses:
General and
Administrative 187,000 154,000 426,000 311,000
Sales 628,000 670,000 1,220,000 1,114,000
Engineering 26,000 32,000 51,000 60,000
------------ ------------ ------------ ------------
Total Operating
Expenses $ 841,000 $ 856,000 $ 1,697,000 $ 1,485,000
Income From
Operations 874,000 822,000 1,607,000 1,568,000
Other Income (Expense)
Interest Income 5,000 5,000 10,000 11,000
Interest Expense (4,000) (5,000) (8,000) (11,000)
Investment
Income/(Loss) 67,000 56,000 135,000 118,000
Gain/(Loss) on
Investments (1,000) 0 (94,000) 0
Gain/(Loss) on Sale
of Equipment 14,000 0 14,000 0
Other Income/(Loss) 0 1,000 3,000 1,000
------------ ------------ ------------ ------------
$ 81,000 $ 57,000 $ 60,000 $ 119,000
Income Before Provisions
for Income Taxes 955,000 879,000 1,667,000 1,687,000
Provisions for
Income Taxes (399,000) (381,000) (696,000) (666,000)
------------ ------------ ------------ ------------
Net Income $ 556,000 $ 498,000 $ 971,000 $ 1,021,000
============ ============ ============ ============
Income Per Share
of Common Stock $ 0.09 $ 0.08 $ 0.16 $ 0.17
Weighted Average Number
of Common Shares
Outstanding 6,014,558 6,027,658 6,019,417 6,027,658
</TABLE>
<PAGE>
GEORGE RISK INDUSTRIES, INC.
STATEMENT ON COMPREHENSIVE INCOME
[CAPTION]
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
1999 1998 1999 1998
------------------------ ------------------------
[S] [C] [C] [C] [C]
Net Income $ 556,000 $ 498,000 $ 971,000 $ 1,021,000
------------ ------------ ------------ ------------
Other Comprehensive Income,
net of tax
Unrealized gains/(losses)
on securities:
Unrealized holding
gains/(losses) arising
during period (80,000) (125,000) (158,000) (131,000)
Less: reclassification
adjustment for gains/
(losses) included in
net income (160,000) (363,000) (221,000) (249,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 80,000 $ 238,000 $ 63,000 $ 118,000
Comprehensive Income $ 636,000 $ 736,000 $ 1,034,000 $ 1,139,000
============ ============ ============ ============
<PAGE>
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
1999 1998 1999 1998
---------------------- -----------------------
[S] [C] [C] [C] [C]
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income $ 556,000 $ 498,000 $ 971,000 $1,021,000
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation 32,000 27,000 71,000 54,000
Change in unrealized
gain/(loss) on
investments (80,000) (238,000) (63,000) (118,000)
Changes in assets and
liabilities:
(Increase) Decrease in:
Marketable Securities (157,000) 87,000 (255,000) (277,000)
Accounts Receivable (80,000 (149,000) 21,000 (300,000)
Inventories (1,000) (3,000) (45,000) (474,000)
Prepaid Expenses (14,000) 2,000 (3,000) (15,000)
Other Assets 130,000 (90,000) 48,000 (109,000)
Receivables - officers
and employees 1,000 4,000 3,000 8,000
Increase (Decrease) in:
Accounts Payable 17,000 (24,000) 12,000 19,000
Accrued Expenses (36,000) 149,000 36,000 17,000
Notes Payable 22,000 (13,000) 84,000 (25,000)
Income Tax Payable (269,000) 81,000 (36,000) 366,000
----------- ----------- ----------- -----------
Net cash provided by
(used in) operating
activities: $ 121,000 $ 331,000 $ 844,000 $ 167,000
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of Property
and Equipment (307,000) (1,000) (351,000) (41,000)
Purchase of Treasury
Stock (2,000) 0 (9,000) 0
----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities $ (309,000) $ (1,000) $ (360,000) $ (41,000)
CASH FLOWS FROM FINANCING
ACTIVITIES
Treasury Stock issued 0 0 49,000 11,000
----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities $ 0 $ 0 $ 49,000 $ 11,000
NET INCREASE (DECREASE)
IN CASH $ (188,000) $ 330,000 $ 533,000 $ 137,000
=========== =========== =========== ===========
Cash at beginning
of period $1,881,000 $ 710,000 $1,160,000 $ 903,000
Cash at end of period $1,693,000 $1,040,000 $1,693,000 $1,040,000
<PAGE>
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
Note 1. Inventories
At Ocotober 31, 1999, July 31, 1999, and October 31, 1998, respec-
tively, inventories consisted of the following:
Raw Materials $ 1,673,000 $ 1,171,000 $ 1,430,000
Work in Process 361,000 296,000 495,000
Finished Goods 274,000 294,000 250,000
------------ ------------ ------------
$ 2,308,000 $ 2,307,000 $ 2,175,000
Less: Allowance for
obsolete inventory (70,000) (70,000) (46,000)
------------ ------------ ------------
Net Inventories $ 2,238,000 $ 2,237,000 $ 2,219,000
============ ============ ============
<PAGE>
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
<PAGE>
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, 1999.
Net cash decreased $188,000 during the quarter ended October 31, 1999, but
cash increased $533,000 for the six months ended October 31, 1999. As for
the same corresponding periods last fiscal year, cash increased $330,000
for the quarter and $137,000 for year-to-date figures. There are several
reasons why the cash for the current quarter decreased. First of all,
the Company invested in more stocks and bonds. Marketable securities in-
creased $157,000 for the quarter ended October 31, 1999 and increased
$255,000 for the current year. This is in comparison to a decrease of
$87,000 in marketable securities for the quarter ended October 31, 1998,
but an increase of $277,000 for YTD figures last year. The second reason
for the decrease in net cash for the quarter is that the Company increased
its property and equipment $307,000 for the current quarter, with an in-
crease of $351,000 for the current year. This is in comparison to an in-
crease of only $1,000 for the current quarter last year and an increase of
$41,000 for YTD last year. The main reason for the big increase in prop-
erty and equipment is that the Company completed its 10,000 square foot
addition to house the molding and tool and die departments. The building
was capitalized and the Company also purchased over $100,000 worth of
machinery to be used in the new addition during the current quarter.
Inventories only increased $1,000 for the quarter ended October 31, 1999,
but increased $45,000 for YTD numbers. This carries on the trend of having
increased raw materials and work in process inventory for the Company's
continued growth and any Y2K complications that may arise. Accounts re-
ceivable increased $80,000 during the current quarter, but decreased
$21,000 for YTD figures. As for the same periods last year, accounts re-
ceivable increased $149,000 for the quarter and increased $300,000 for the
year. The upsurge reflects the increased sales the Company is experiencing
as it continues to collect its receivables in the same amounts of time it
always has. At October 31, 1999, 72% of the receivables are considered
current (less than 45 days) and only 5% of the total are over 90 days past
due. At the quarter ended October 31, 1999, accounts payable shows an
increase of $17,000 and a $12,000 increase for the year-to-date numbers.
And when comparing the same numbers for the same periods last year, there
is a decrease for the quarter ending October 31, 1998 while the year-to-
date figures show a $19,000 increase. The Company continues to strive to
pay all of its bills within terms and take all purchase discounts that are
available. The Company's notes payable numbers are up this year with the
receipt of $75,000 in the form of a long-term note from the State of Nebr-
aska Department of Economic Development. They offer a "Community Develop-
ment Block Grant" (CDBG) program to help increase economic development in
the state. The Company received this loan to help pay for the new addition
that was completed in October 1999. This addition will house the Company's
molding and tool and die departments. If, after five years, the Company
complies with all of the conditions of the CDBG program, the note will be
forgiven.
The following is a list of ratios to help analyze the Company's
performance:
Six months ended Six months ended
October 31, 1999 October 31, 1998
---------------- ----------------
Working capital $ 11,390,000 $ 9,055,000
Current ratio 24.960 10.128
Quick ratio 20.055 20.055
Cash per share (including Mkt Sec) $ 1.23 $ 0.96
Equity per share $ 2.04 $ 1.64
Net sales were $3,526,000 for the quarter ended October 31, 1999 and
$6,762,000 for the six months ending October 31, 1999. This is an increase
of 2% and 6.5% respectively. Cost of goods sold was 50% of gross sales for
both the quarter and six months ending October 31, 1999. The cost of
goods sold percentage was 51% for both the same periods last year. 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 increased
its cost of materials and direct labor in proportion to how its sales have
increased.
Operating expenses were 23.3% of gross sales for the current quarter and
24.6% for year to date figures. For the same periods last year, operating
expenses were 24.7% and 23.0% of gross sales. Having reasonably consistent
operating expenses for all periods shows that management keeps a close eye
on its expenses to keep them in line from period to period. As sales have
increased, management has increased wages and staff accordingly.
Other income and expense showed a $81,000 gain for the quarter ended Octo-
ber 31, 1999, and a $60,000 gain for the six months ended October 31, 1999.
This is in comparison to $57,000 and $119,000 gains for the corresponding
periods last year. The Company was adviesed to sell one of its stock hold-
ings for a loss of $93,000, in order to cut its losses sooner than later on
an ill-advised investment during the first quarter to this fiscal year, but
its investment income holdings and sales have thrived during the current
quarter. In turn, net income for the quarter ended October 31, 1999 was
at $556,000, an 11.6% increase from the same quarter last year. But, as
for year to date numbers, net income was $971,000 for the six months ended
October 31, 1999, only a 5.1% decrease from last year. Earnings per share
for the quarter was $0.09 per share, compared to $0.08 per share for the
same quarter last year, but the year to date earnings per share was $0.16
this year as matched up to $0.17 at the same time last year.
The Company recognizes its revenue 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. Since the keyboard products line is less than 10% of the total
sales, the Company is not required to recognize it as a separate segment.
As far as Y2K readiness goes, management has taken many steps to be ready
when the year 2000 arrives. All of the Company's products are ready be-
cause none of the products manufactured create or use date/data inform-
ation. The Company has purchased new computer accounting software, which
the manufacturer has stated is Y2K compliant. Also, the Company has re-
placed hardware systems that did not meet compliance issues. The Company
has also polled its vendors and suppliers with a questionnaire about their
Y2K readiness and the replies have been favorable. The Y2K issue may
affect the systems of suppliers and vendors of GRI. While the Company is
addressing the issue, there is no assurance that any potential Y2K non-
compliance within the systems of these other companies will not have a
material adverse effect on the Company.
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 are currently in development include a door
channel magnet, a hold-up switch, a relay module, a high security switch,
and a multi-functional thermostat. The Company introduced these new
products to the industry at the International Security Conference in New
York in September 1999 and the response to these products was excellent.
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 increase 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.
<PAGE>
GEORGE RISK INDUSTRIES, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company was a defendant in a patent infringement 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
B. Reports on Form 8-K
No 8-K reports filed during the quarter ended
October 31, 1999.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
George Risk Industries, Inc.
(Registrant)
Date: 12-10-99 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and CEO
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 1,693,000
<SECURITIES> 5,719,000
<RECEIVABLES> 2,104,000
<ALLOWANCES> 50,000
<INVENTORY> 2,238,000
<CURRENT-ASSETS> 11,781,000
<PP&E> 2,191,000
<DEPRECIATION> 1,095,000
<TOTAL-ASSETS> 12,951,000
<CURRENT-LIABILITIES> 472,000
<BONDS> 0
0
257,000
<COMMON> 850,000
<OTHER-SE> (675,000)
<TOTAL-LIABILITY-AND-EQUITY> 12,951,000
<SALES> 6,913,000
<TOTAL-REVENUES> 6,762,000
<CGS> 3,458,000
<TOTAL-COSTS> 5,155,000
<OTHER-EXPENSES> 3,000
<LOSS-PROVISION> (55,000)
<INTEREST-EXPENSE> (2,000)
<INCOME-PRETAX> 1,667,000
<INCOME-TAX> 696,000
<INCOME-CONTINUING> 971,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 971,000
<EPS-BASIC> .16
<EPS-DILUTED> .16
</TABLE>
