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 July 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: 6,056,906
<PAGE>
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 1999 AND JULY 31, 1998
[CAPTION]
[S] [C] [C]
ASSETS
CURRENT ASSETS
Cash $ 1,926,000 $ 753,000
Marketable Securities 5,516,000 4,783,000
Accounts Receivable: Trade, net of
$50,000 doubfull account allowance 1,974,000 1,921,000
Notes Receivable - Officer and Employees 12,000 13,000
Inventories (Note 1) 2,237,000 2,126,000
Prepaid Expenses 51,000 62,000
------------ ------------
Total Current Assets $11,716,000 $ 9,658,000
Property, Plant and Equipment, net
at cost 821,000 677,000
Other Assets 205,000 266,000
------------ ------------
TOTAL ASSETS $12,742,000 $10,601,000
============ ============
[CAPTION]
LIABILITIES AND STOCKHOLDERS' EQUITY
[S] [C] [C]
CURRENT LIABILITIES
Accounts Payable, Trade $ 40,000 $ 239,000
Notes Payable, current 58,000 52,000
Accrued Expenses 656,000 525,000
Deferred Current Taxes (31,000) (31,000)
------------ ------------
Total Current Liabilities $ 723,000 $ 785,000
LONG-TERM LIABILITIES
Notes Payable 160,000 144,000
Deferred Income Taxes 28,000 33,000
------------ ------------
Total long-term liabilities $ 188,000 $ 177,000
STOCKHOLDERS' EQUITY
Convertible Preferred Stock 257,000 257,000
Common Stock, Class A 850,000 850,000
Additional Paid-In Capital 1,734,000 1,674,000
Accumulated Other Comprehensive Income 134,000 (1,000)
Retained Earnings 9,529,000 7,464,000
Less: Cost of Treasury Stock (673,000) (605,000)
------------ ------------
Total Stockholders' Equity $11,831,000 $ 9,639,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,742,000 $10,601,000
============ ============
<PAGE>
<TABLE>
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENT
FOR THE THREE MONTHS ENDED
July 31, 1999 July 31, 1998
<S> <C> <C>
Net Sales $ 3,235,000 $ 2,905,000
Less: Cost of Goods Sold (1,647,000) (1,529,000)
------------ ------------
Gross Profit $ 1,588,000 $ 1,376,000
Operating Expenses:
General and Administrative 239,000 158,000
Sales 592,000 444,000
Engineering 25,000 27,000
------------ ------------
Total Operating Expenses $ 856,000 $ 629,000
Income From Operations 732,000 747,000
Other Income (Expense)
Interest Income 5,000 5,000
Interest Expense (4,000) (5,000)
Investment Income (Loss) 67,000 62,000
Gain (Loss) on Investments (93,000) 0
Other Income (Loss) 4,000 0
------------ ------------
$ (21,000) $ 62,000
Income Before Provisions for
Income Taxes 711,000 809,000
Provisions for Income Taxes (296,000) (286,000)
------------ ------------
Net Income $ 415,000 $ 523,000
============ ============
Income Per Share of Common Stock $ .07 $ .09
Weighted Average Number of Common
Shares Outstanding 6,056,906 6,027,658
</TABLE>
<PAGE>
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
[CAPTION]
July 31, 1999 July 31, 1998
[S] [C] [C]
Net Income $ 415,000 $ 523,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during period (79,000) (6,000)
Less: reclassification adjustment for
(gains) losses included in net income 95,000 0
------------ ------------
Other Comprehensive Income $ 16,000 $ (6,000)
Comprehensive Income $ 431,000 $ 517,000
============ ============
<PAGE>
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED
July 31, 1999 July 31, 1998
[S] [C] [C]
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 415,000 $ 523,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 39,000 27,000
Change in unrealized gain (loss) on
investments 16,000 120,000
Changes in assets and liabilities:
(Increase) Decrease in:
Marketable Securities (98,000) (363,000)
Accounts Receivable 101,000 (151,000)
Inventories (43,000) (471,000)
Prepaid Expenses 11,000 (18,000)
Other Assets (82,000) (19,000)
Receivables - officers and employees 2,000 3,000
Increase (Decrease) in:
Accounts Payable (5,000) 43,000
Accrued Expense 73,000 (132,000)
Notes Payable 61,000 (12,000)
Income Tax Payable 233,000 286,000
------------ ------------
Net cash provided by (used in)
operating activities $ 723,000 $ (164,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment (44,000) (40,000)
Purchase of Treasury Stock (7,000) 0
------------ ------------
Net cash provided by (used in)
investing activities $ (51,000) $ (40,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Treasury Stock issued 49,000 11,000
------------ ------------
Net cash provided by (used in)
financing activities $ 49,000 $ 11,000
NET INCREASE (DECREASE) IN CASH $ 721,000 $ (193,000)
============ ============
Cash at beginning of period $ 1,160,000 $ 903,000
Cash at end of period $ 1,881,000 $ 710,000
<PAGE>
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
Note 1. Inventories
At July 31, 1999 and July 31, 1998, respectively, inventories consisted
of the following:
Raw Materials $ 1,717,000 $ 1,397,000
Work in Process 296,000 341,000
Finished Goods 294,000 434,000
------------ ------------
$ 2,307,000 $ 2,172,000
Less: Allowance for obsolete
inventory (70,000) (46,000)
------------ ------------
Net Inventories $ 2,237,000 $ 2,126,000
============ ============
<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 increased $721,000 during the quarter ended July 31, 1999 as com-
pared to a decrease of $193,000 during the corresponding quarter last year.
Marketable securities only increased $98,000 this current quarter as com-
pared to a $363,000 increase for the same quarter last year. The Company
had to sell a stock for a $93,000 loss during the current period. Inven-
tories increased $43,000 during the current quarter as compared to a
$471,000 increase last year. Overall inventory and raw material are up
in dollars, but work in process and finished goods are down in numbers
because of the increase in demand for our products. Raw materials are also
up as the Company is starting to have more inventory on hand in case of any
Y2K problems that may arise from our vendors. Accounts receivable de-
creased $101,000 during the current quarter as compared to a $151,000 de-
crease for the corresponding quarter last year. The Company continues to
collect its accounts within terms. At the quarter ended July 31, 1999,
70% of the receivables are considered current (less than 45 days) and only
3% of the total are over 90 days past due. At the quarter ended July 31,
1999, accounts payable shows a decrease of $5,000 as compared to an in-
crease of $43,000 for the same quarter the year before. The Company con-
tinues 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
with the receipt of $75,000 in the form of a long-term note from the State
of Nebraska Department of Economic Development. They offer a "Community
Development Block Grant" (CDBG) program to help increase economic develop-
ment in the state. The Company received this loan to help pay for the new
building that will house our 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:
Qtr ended Qtr ended
July 31, 1999 July 31, 1998
------------- -------------
Working capital $ 10,993,000 $ 8,873,000
Current ratio 16.205 12.303
Quick ratio 13.024 9.499
Cash per share
(including marketable securities) $ 1.23 $ 0.92
Equity per share $ 1.95 $ 1.60
Net sales were $3,235,000 for the quarter ended July 31, 1999, which is an
11% increase for the corresponding quarter last year. Cost of goods sold
was 50% of gross sales for the quarter ended July 31, 1999 and the cost of
goods sold percentage to gross sales was 51% for the quarter ended July 31,
1998. 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 26% of net sales for the quarter ended July 31,
1999 as compared to 22% for the corresponding quarter 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 showed a $21,000 expense for the quarter ended
July 31, 1999 as compared to having $62,000 increase in income for the
quarter ended July 31, 1998. The Company had to sell one of its stock
holdings for a loss of $93,000 in the current quarter. In turn, net in-
come for the quarter ended July 31, 1999 was at $415,000, a 26% decrease
from the preceding quarter, which had a net income of $523,000. Earnings
per share for the quarter ended July 31, 1999 were $0.07 per share and
$0.09 per share for the quarter ended July 31, 1998.
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. 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 just introduced these new
products to the industry at the International Security Conference in New
York in early 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 in-
tent is to utilize the equipment, marketing techniques and established
customers to increase sales and profits.
The Company is building a 10,000 square foot extension to its manufactur-
ing facility. It is expected to be completed by the end of September 1999.
This new building will house the tool and die and molding departments and
will also allow for additional stockroom storage. This additional stock-
room storage will enable the Company to stock more finished goods for the
increasing demand for products.
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 is a defendant in a patent infringement action. The
likelihood of an unfavorable outcome or an estimate of potential loss is
not determinable. The Company believes the suit is without merit and in-
tends to vigorously defend its' position.
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 July 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 09-13-99 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and CEO
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> JUL-31-1999
<CASH> 1926
<SECURITIES> 5516
<RECEIVABLES> 2024
[ALLOWANCE] 50
<INVENTORY> 2237
<CURRENT-ASSETS> 11716
<PP&E> 1883
<DEPRECIATION> 1062
<TOTAL-ASSETS> 12742
<CURRENT-LIABILITIES> 723
<BONDS> 0
<COMMON> 850
0
257
<OTHER-SE> (673)
<TOTAL-LIABILITY-AND-EQUITY> 12742
<SALES> 3299
<TOTAL-REVENUES> 3235
<CGS> 1647
<TOTAL-COSTS> 2503
<OTHER-EXPENSE> 22
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1)
<INCOME-PRETAX> 711
<INCOME-TAX> 296
<INCOME-CONTINUING> 415
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 415
<EPS-BASIC> .07
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</TABLE>
