U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2004
______________
[ ] 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.
____________________________
(Name of small business issuer in its charter)
Colorado 84-0524756
________ __________
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
802 South Elm
Kimball, NE 69145
___________ _____
(Address of principal executive (Zip Code)
offices)
Issuer's telephone number (308) 235-4645
_____________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
None None
____ ____
Securities registered under 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 Securities Exchange Act during the preceding 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 [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for the most recent fiscal year. $ 2,411,000.
__________
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of July 28, 2004 was approximately $14,524,000 based upon
the last reported sale, which occurred on July 27, 2004. For purposes of
this disclosure, Common Stock held by officers and directors of the Registrant
have been excluded in that such persons may be deemed to be "affiliates"
as that term is defined under the rules and regulations promulgated under
the Securities Act of 1933. This determination is not necessarily conclusive.
The number of shares of the Registrant's Common Stock outstanding as of
July 29, 2004 was 5,402,528.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Transitional Small Business Disclosure Format (Check one)
Yes X; No ___
Part I
ITEM 1 BUSINESS
(a) BUSINESS DEVELOPMENT
George Risk Industries, Inc. (GRI or the company) was
incorporated in 1967 in Colorado. The company is presently
engaged in the design, manufacture, and sale of computer
keyboards, push button switches, burglar alarm components and
systems, pool alarms, thermostats, EZ Duct wire covers,and hydro
sensors.
GRI Telemark Corporation (Telemark), a majority owned subsidiary,
was incorporated in October 1983 for the purpose of marketing
security alarm products. As of April 13, 1993, Telemark was merged
into GRI and presently operates as a marketing division of GRI.
PRODUCTS, MARKET, and DISTRIBUTION
The company designs, manufactures, and sells computer keyboards,
push-button switches, burglar alarm components and systems, pool
alarms, and hydro sensors. The security burglar alarm products
comprise approximately 85 percent and pool alarms comprise 9
percent of net revenues which are sold through distributors and
private board customers.
The security segment has approximately 4,000 customers. One of the
distributors accounts for approximately 42 percent of the
company's sales of these products. Loss of this distributor would
be significant to the company. However, this customer has
purchased from the company for many years and is expected to
continue.
The keyboard segment has approximately 720 customers. Keyboard
products are sold to original equipment manufacturers, to their
specifications and to distributors of off-the-shelf keyboards of
proprietary design.
COMPETITION
The company has intense competition in the keyboard and burglar
alarm lines.
The burglar alarm segment has five or six major competitors. The
company competes well based on price, product design, quality,
and prompt delivery.
The competitors in the keyboard segment are larger companies with
automated production facilities. GRI has emphasized small custom
order sales that many of its competitors decline or discourage.
RESEARCH and DEVELOPMENT
The company performs research and development for its customers
when needed and requested. Costs in connection with such product
development have been borne by the customers. Costs associated
with the development of new products are expensed as incurred.
EMPLOYEES
GRI has approximately 225 employees.
ITEM 2 PROPERTIES
The manufacturing and office facilities are owned by the company.
The manufacturing facilities were expanded by 7,200 square feet
five years ago. Total square footage of the plant in Kimball,
Nebraska is approximately 42,500. Additionally, the company leases
15,000 square feet for $1,535 per month from Eileen Risk, mother
of Ken R. Risk, who is an officer and director of the company.
As of October 1, 1996, the company also began operating a
satellite plant in Gering, NE. This expansion was done in
coordination with Twin Cities Development. The company leases
approximately 3,600 square feet and currently employs 34 employees
at the Gering site.
ITEM 3 LEGAL PROCEEDINGS
None.
ITEM 4 SUBMISSION of MATTERS to a VOTE of SECURITY HOLDERS
Not applicable.
Part II
ITEM 5 MARKET for the REGISTRANT'S COMMON EQUITY and RELATED
STOCKHOLDERS' MATTER
PRINCIPAL MARKET
The company's Class A Common Stock is currently quoted over the
counter in the NQB "Pink Sheets" by five market makers.
STOCK PRICES and DIVIDENDS INFORMATION
2004 Fiscal Year High Low
May 1-July 31 3.45 2.30
August 1-October 31 4.15 2.90
November 1-January 31 7.20 3.80
February 1-April 30 6.25 5.35
2003 Fiscal Year High Low
May 1-July 31 2.25 1.96
August 1-October 31 2.25 2.05
November 1-January 31 2.72 2.12
February 1-April 30 2.90 2.21
No dividends were paid during fiscal years ending April 30,
2003 and 2004.
The number of holders of record of the company's Class A Common
Stock as of April 30, 2004, was approximately 1,528.
ITEM 6 MANAGEMENT'S DISCUSSION and ANALYSIS of FINANCIAL
CONDITION and RESULTS of OPERATIONS
GRI completed the fiscal year ending April 30, 2004, with a net
profit of 18.9% net of sales. Net sales were at $12,783,000, down
0.9% over the previous year.
We expect sales to stay steady and hopefully increase for the
fiscal year ending April 30, 2005. Any extra growth would be
achieved by volume increases with our present customers and with
the addition of new customers. We have an excellent marketing
department that is always on the lookout for new clients. Also,
although our warehouse in England has not performed quite as well
for fiscal year end 2004 as it did in fiscal year end 2003, we have
supplemented the European market by doing more drop shipments
directly from the factory here in the US. Sales in the European
market were down 1.5% for the fiscal year ending April 30, 2004.
We are planning to put more focus into the overseas market for
fiscal year end 2005.
The material and labor costs stayed very consistent between this
year and last year. At fiscal year end 2004 the material and labor
percentage was at 37.1% of gross sales while the same percentage
for fiscal year 2003 was at 38.5%. We continue to buy smart and
we are always looking for quality material at the best possible
price. As far as labor goes, we only hire the number of production
workers that is needed to finish products in a timely matter and we
work very hard at keeping overtime expense down. With these good
practices embedded throughout, we expect to continue to achieve a
gross profit margin of 45 to 50 percent for the coming year.
At April 30, 2004, working capital increased by 18.2% in comparison
to the previous fiscal year. Liquidity has risen this year as the
ratio of cash, securities and accounts receivables to current
obligations was 41.029 and 24.106 for the fiscal years ending
April 30, 2004 and April 30, 2003, respectively. Current assets
have increased while current liabilities have decreased. At April
30, 2004, the only long-term liability that we have on the books is
deferred income tax of $27,000. Cash per share at April 30, 2004
was at $2.78, while it was $2.29 at April 30, 2003. Equity per
share for the same dates was $3.72 and $3.18, respectively.
New products in Research and Development at this time include the
ADA series of touch sensors, which are the GRI T8800 wall temperature
sensor and the H8800 humidity sensor. The T8800 is expected to be
ready for sale by August 1, 2004. The molded box for ADA units is
complete with the exception of a few modifications to the mold.
Other new product developments are 110 and 220 volt versions of our
Current Controller product line, a door strike control, a twelve-key
keypad using the touch sensor technology, and the High Security switch.
Testing continues on the High Security switch and the Smart Start
prototypes.
Our tool and die department's priorities are the new rollerball/dome
switch molds, the 4460 spacer and the smoke box addition to the EZ Duct
Raceway.
Both the GB-551 glass break switch and the Fail Safe Water Sensor
(GRI pt #2826FS) have been introduced to the marketplace with good
response.
Furthermore, we have begun packaging Magnasphere Corporation products
in cases for their customers. This is a type of magnetic product
recently introduced to the security market.
Management is always open to the possibility of acquiring a business
that would complement our existing operations. This would probably
not require any outside financing. The intent would be 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 mostly sell to distributors and OEM manufacturers. The
products are tied to the housing industry and will fluctuate
with building trends.
CERTIFICATION OF KEN R. RISK, PRESIDENT AND CHAIRMAN OF THE BOARD,
PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
I, Ken R. Risk, certify that:
1. I have reviewed this annual report on Form 10KSB of
George Risk Industries, Inc.;
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit
to state a material fact necessary to make the
statements made, in light of the circumstances under
which such statements were made, not misleading with
respect to the period covered by this annual report.
3. Based on my knowledge, the financial statements, and
other financial information included in this annual
report, fairly present in all material respects the
financial condition, results of operations and cash
flows of the registrant as of, and for the periods
presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the registrant's board of
directors:
a) all significant deficiencies in the design or
operation of internal controls which could
adversely affect the registrant's ability to
record, process, summarize and report financial
data and have identified for the registrant's
auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether there were
significant changes in internal controls or in other
factors that could significantly affect internal
controls subsequent to the date of our most recent
evaluation, including any corrective actions with
regard to significant deficiencies and material
weaknesses.
/s/ Ken R. Risk
______________________________
Ken R. Risk
President and Chairman of the Board
July 12, 2004
CERTIFICATION OF STEPHANIE RISK, CHIEF FINANCIAL OFFICER,
PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
I, Stephanie Risk, certify that:
1. I have reviewed this annual report on Form 10KSB of
George Risk Industries, Inc.;
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit
to state a material fact necessary to make the
statements made, in light of the circumstances under
which such statements were made, not misleading with
respect to the period covered by this annual report.
3. Based on my knowledge, the financial statements, and
other financial information included in this annual
report, fairly present in all material respects the
financial condition, results of operations and cash
flows of the registrant as of, and for the periods
presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of
the Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the registrant's board of
directors:
a) all significant deficiencies in the design or
operation of internal controls which could
adversely affect the registrant's ability to
record, process, summarize and report financial
data and have identified for the registrant's
auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether there were
significant changes in internal controls or in other
factors that could significantly affect internal
controls subsequent to the date of our most recent
evaluation, including any corrective actions with
regard to significant deficiencies and material
weaknesses.
/s/ Stephanie Risk
_________________________________
Stephanie Risk
Chief Financial Officer
July 12, 2004
ITEM 7 FINANCIAL STATEMENTS
Independent Auditor's Report
Board of Directors
George Risk Industries, Inc.
Kimball, Nebraska
We have audited the accompanying balance sheet of George Risk
Industries, Inc. as of April 30, 2004, and the related statements
of income, comprehensive income, stockholders' equity, and cash
flows for the two years then ended. These financial statements are
the responsibility of the company's management. Our responsi-
bility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of George Risk Industries, Inc. as of April 30, 2004, and the
results of their operations and their cash flows for the two
years then ended, in conformity with accounting principles
generally accepted in the United States of America.
MASON RUSSELL WEST, LLC
Littleton, Colorado
July 12, 2004
George Risk Industries, Inc.
Balance Sheet
April 30, 2004
Assets
Current Assets:
Cash and cash equivalents $ 4,280,000
Marketable securities 10,766,000
Accounts receivable:
Trade, net of allowance for doubtful
accounts of $50,000 1,735,000
Income tax overpayment 129,000
Other 5,000
Inventories 2,379,000
Prepaid expenses 65,000
Deferred income taxes 94,000
___________
Total Current Assets 19,453,000
___________
Property and Equipment, net, at cost 835,000
___________
Other Assets
Investment in Land Limited Partnership, at cost 200,000
Projects in process 46,000
___________
Total Other Assets 246,000
___________
Total Assets $20,534,000
___________
___________
See accompanying notes to financial statements
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable-trade $ 92,000
Accrued expenses:
Payroll and related expenses 317,000
___________
Total Current Liabilities 409,000
___________
Deferred Income Taxes 27,000
Commitments and Contingencies -
___________
Total Long-Term Liabilities 27,000
___________
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 850,000
Additional paid-in capital 1,736,000
Accumulated other comprehensive income (911,000)
Retained earnings 20,079,000
Less cost of treasury stock,
3,100,304 shares, at cost (1,763,000)
___________
Total Stockholders' Equity 20,098,000
___________
Total Liabilities and Stockholders' Equity $20,534,000
___________
___________
George Risk Industries, Inc.
Statements of Income
For the Years Ended April 30, 2004 and 2003
2004 2003
Net Sales $12,783,000 $12,895,000
Less cost of goods sold 6,190,000 6,327,000
___________ ___________
Gross Profit 6,593,000 6,568,000
Operating Expenses:
Selling and shipping 2,351,000 2,409,000
General and administrative 693,000 689,000
Engineering and research 71,000 62,000
Rent expense paid to
related parties 49,000 49,000
___________ ___________
Total Operating Expenses 3,164,000 3,209,000
___________ ___________
Income From Operations 3,429,000 3,359,000
Other Income (Expense):
Other income 79,000 11,000
Dividend and interest income 348,000 302,000
Gain/(loss) on sale of assets 40,000 (59,000)
___________ ___________
Total Other Income 467,000 254,000
Income Before Provision for Income
Taxes 3,896,000 3,613,000
Provision for Income Taxes:
Current expense 1,439,000 1,389,000
Deferred tax (benefit) expense 46,000 (61,000)
___________ ___________
Total Income Taxes Expense 1,485,000 1,328,000
___________ ___________
Net Income $ 2,411,000 $ 2,285,000
___________ ___________
___________ ___________
Income per Share of Common Stock $ 0.44 $ 0.42
___________ ___________
___________ ___________
Weighted Average Number of Common
Shares Outstanding 5,402,528 5,402,528
___________ ___________
___________ ___________
See accompanying notes to financial statements
George Risk Industries, Inc.
Statements of Comprehensive Income
April 30, 2004
For the Years Ended April 30,
2004 2003
Net Income $2,411,000 $ 2,285,000
__________ __________
Other Comprehensive Income, Net of Tax
Unrealized loss on securities:
Unrealized holding gains (losses)
arising during period 484,000 (235,000)
Reclassification adjustment for
(gains) losses included in net income (37,000) 185,000
Income tax related to other
comprehensive income (187,000) 17,000
__________ __________
Other Comprehensive Income (Loss) 260,000 (33,000)
__________ __________
Comprehensive Income (Loss) $2,671,000 $2,252,000
__________ __________
__________ __________
See accompanying notes to financial statements
George Risk Industries, Inc.
Statement of Changes in Stockholders' Equity
For the Years Ended April 30, 2004 and 2003
Common Stock
Preferred Stock Class A
Shares Amount Shares Amount
Balances, April 30,
2002 5,350 $107,000 8,502,832 $850,000
________ ________ _________ ________
Unrealized gain (loss) - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2003 5,350 107,000 8,502,832 850,000
Unrealized gain (loss) - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2004 5,350 $107,000 8,502,832 $850,000
________ ________ _________ ________
________ ________ _________ ________
See accompanying notes to financial statements
Accumulated
Treasury Stock Other
Paid-In (Common Class A) Comprehensive Retained
Capital Shares Amount Income Earnings Total
$1,736,000 3,100,304 $(1,763,000) $(1,428,000) $15,383,000 $14,885,000
__________ _________ ___________ ___________ ___________ ___________
- - - 33,000 - 33,000
- - - - 2,285,000 2,285,000
__________ _________ ___________ ___________ ___________ ___________
1,736,000 3,100,304 (1,763,000) (1,395,000) 17,668,000 17,203,000
- - - 484,000 - 484,000
- - - - 2,411,000 2,411,000
__________ _________ ___________ ___________ ___________ ___________
$1,736,000 3,100,304 $(1,763,000) $ (911,000) 20,079,000 20,098,000
__________ _________ ___________ ___________ ___________ ___________
__________ _________ ___________ ___________ ___________ ___________
George Risk Industries, Inc.
Statements of Cash Flows
For the Years
Ended April 30,
2004 2003
Cash Flows from Operating Activities:
Net income $2,411,000 $2,285,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 235,000 263,000
(Gain) loss on sale of investments (37,000) 58,000
Economic development debt relieved (75,000) -
Gain on sale of assets (3,000) -
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (181,000) 336,000
Inventories 50,000 (2,000)
Prepaid expenses 75,000 (54,000)
Other receivables (3,000) 2,000
Income tax overpayment (59,000) 65,000
Deferred income taxes 46,000 (61,000)
Increase (decrease) in:
Accounts payable (37,000) 25,000
Accrued expenses 28,000 43,000
__________ __________
Net cash provided(used)by
operating activities 2,450,000 2,960,000
__________ __________
Cash Flows From Investing Activities:
Proceeds from sale of assets 12,000 -
Projects in progress 34,000 (50,000)
Purchase of property and equipment (191,000) (84,000)
Proceeds from sale of marketable
securities 1,003,000 2,027,000
Purchase of marketable securities (1,567,000) (3,044,000)
Purchase of Land Limited Partnership
at cost - (200,000)
__________ __________
Net cash provided(used) by
investing activities (709,000) (1,351,000)
__________ __________
Cash Flows From Financing Activities:
Principal payments on long-term debt (160,000) (4,000)
__________ __________
Net cash provided (used) by
financing activities (160,000) (4,000)
__________ __________
Net Increase (Decrease) in Cash and
Cash Equivalents 1,581,000 1,605,000
Cash and Cash Equivalents, beginning
of year 2,699,000 1,094,000
__________ __________
Cash and Cash Equivalents, end of year $4,280,000 $2,699,000
__________ __________
__________ __________
Supplemental Disclosure of Cash
Flow Information:
Cash payments for:
Income taxes $1,568,000 $1,459,000
__________ __________
__________ __________
See accompanying notes to financial statements
George Risk Industries, Inc.
Notes to Financial Statements
1. NATURE of BUSINESS and SUMMARY of SIGNIFICANT ACCOUNTING
POLICIES
Nature of Business-The Company is engaged in the design,
manufacture, and marketing of computer keyboards, push-
button switches, security alarm components, pool alarms
thermostats, E-Z Duct wire covers and hydro sensors.
At April 30, 1993, the financial statements of the Company,
George Risk Industries, Inc. (GRI), and its majority-owned
subsidiaries, GRI Telemark Corp. (Telemark), and R&D Labs
were consolidated. Effective April 30, 1993, the Company
acquired the entire minority interest in Telemark by
issuing 22,160 shares of its Class A common stock and
merged Telemark into GRI. Telemark continues to operate as
a marketing division of GRI.
Cash and Cash Equivalents - The Company considers all
investments purchased with a maturity of three months or
less to be cash equivalents.
Inventories - Inventories are stated at the lower of cost or
market. Cost is determined using the average cost-pricing
method. The company uses standard costs to price its
manufactured inventories approximating average costs.
Property and Equipment - Property and equipment are recorded
at cost. Depreciation is calculated based on the following
estimated useful lives using the straight-line method:
Useful
Classification Life Cost
in Years
Dies, jigs, and molds 3-7 $ 715,000
Machinery and equipment 5-10 946,000
Furniture and fixtures 5-10 129,000
Leasehold improvements 5-32 171,000
Buildings 20 492,000
Automotive and aircraft 3-5 315,000
Software 2-5 123,000
Land N/A 13,000
__________
Total 2,904,000
Accumulated depreciation (2,069,000)
Net $ 835,000
__________
__________
Depreciation expense of $234,000 and $263,000 were charged
to operations for the years ended April 30, 2004 and 2003,
respectively.
Maintenance and repairs are charged to expense as incurred,
and expenditures for major improvements are capitalized.
When assets are retired or otherwise disposed of, the
property accounts are relieved of costs and accumulated
depreciation and any resulting gain or loss is credited or
charged to operations.
Advertising - Advertising costs are expensed as incurred and
included in selling expenses. Advertising expense amounted
to $378,000 and $411,000 for the years ended April 30, 2004
and 2003.
Income Taxes - The Company has adopted the provisions of the
SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109
requires use of the liability method, whereby current and
deferred tax assets and liabilities are determined based on
tax rates and laws enacted as of the balance sheet date.
Deferred tax expense represents the change in the deferred
tax asset/liability balances.
The flow-through method of accounting for tax credits has
been adopted by the company. Such credits are reflected as
a reduction of the provision for income taxes in the year
in which they become available.
Net Income Per Common Share - Net income per common share is
based on the weighted average number of common shares
outstanding during each fiscal year. Shares issuable upon
the conversion of preferred stock are excluded from the
calculations since their effect is insignificant.
Accounting Estimates - The preparation of these financial
statements requires the use of estimates and assumptions
including the carrying value of assets. The estimates and
assumptions result in approximate rather than exact
amounts.
Revenue Recognition - Revenue is recognized when risks and
benefits in ownership are transferred, which normally occurs
at the time of shipment of products.
Comprehensive Income - In the first quarter of fiscal 1999,
the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income".
SFAS 130 requires disclosure of total non-stockholder changes
in equity in interim periods and additional disclosures of
the components of non-stockholder changes in equity on an
annual basis. Total non-stockholder changes in equity includes
all changes in equity during a period except those resulting
from fiscal investments by and distributions to stockholders.
2. INVENTORIES
Inventories at April 30, 2004, consisted of the following:
Raw materials $1,693,000
Work in process 360,000
Finished goods 396,000
__________
2,449,000
__________
Less allowance for obsolete inventory (70,000)
__________
Totals $2,379,000
__________
__________
3. 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 statement of operations
and any unrealized gains and 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 April 30, 2004:
Cost basis $11,677,000
Market value 10,766,000
___________
Net unrealized gains (losses) $ (911,000)
___________
___________
Gross unrealized gain $ 46,000
___________
___________
Gross unrealized loss $ (957,000)
___________
___________
4. NOTES PAYABLE
There are no notes payable at April 30, 2004.
5. STOCKHOLDERS' EQUITY
Preferred Stock - Each share of the Series #1 preferred stock
is convertible at the option of the holder into five shares
of Class A common stock and is also redeemable at the
option of the board of directors at $20 per share. The
holders of the convertible preferred stock shall be
entitled to a dividend at a rate up to $1 per share
annually, payable quarterly as declared by the board of
directors. No dividends were declared or paid during the two
years ended April 30, 2004.
During the year ended April 30, 2000, the Company purchased
and retired 7,500 preferred shares for $167,000.
Convertible preferred stock without par value may be issued
from time to time as determined by the board of directors.
Shares of different series shall be of equal rank but may
vary as to terms and conditions.
Class A Common Stock - The holders of the Class A common
stock shall be entitled to receive dividends as declared by
the board of directors. No dividends may be paid on the
Class A common stock until the holders of the Series #1
preferred stock have been paid a dividend for the four
prior quarters and provision has been made for the full
dividend in the current fiscal year.
In April 2001, the Company received 190,000 shares of GRI
common stock that had been held by a bank as collateral for
a loan that had been paid several years prior. The loan was
made by GRI/FKI Trust (Trust) and the shares were owned by
the Trust. In April 2002, the Trust and the Company agreed
that the Company would pay a total of $160,000 in six month
installments of $40,000 on June 1 and December 1 in 2002 and
2003. At April 30, 2004, the liability was paid.
Stock Transfer Agent - The Company does not have an
independent stock transfer agent. All stock records are
maintained by the company.
6. EARNINGS PER SHARE
Basic and diluted earnings per share, assuming convertible
preferred stock was converted for each period presented are:
April 30, 2004
___________________________________
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $2,411,000
__________
__________
Basic EPS $2,411,000 5,402,528 $.446
Effect of dilutive
Convertible Preferred
Stock - 26,750 .002
__________ _________ _____
Diluted EPS $2,411,000 5,429,278 $.444
__________ _________ _____
__________ _________ _____
April 30, 2003
___________________________________
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $2,285,000
__________
__________
Basic EPS $2,285,000 5,402,528 $.423
Effect of dilutive
Convertible Preferred
Stock - 26,750 (.002)
__________ _________ _____
Diluted EPS $2,285,000 5,429,278 $.421
__________ _________ _____
__________ _________ _____
7. COMMITMENTS, CONTINGENCIES, and RELATED PARTY TRANSACTIONS
Leases - The Company leases facilities from certain
officers/directors/stockholders of the Company. One lease
requires an annual payment of $3,400 due each July 1 while
the other leases are on a month-to-month basis requiring
payments of $1,535 and $300.
Total lease expense under these arrangements for the fiscal
years ended April 30, 2004 and 2003, was $25,000 for each
year.
The Company leases an airplane from an officer/director/
stockholder of the company on a month -to- month basis
requiring payments of $2,250. Airplane lease expenses charged
to operations for the fiscal years ended April 30, 2004 and
2003, were $27,000 for each year. During the year ended April
30, 2000, the Company paid $210,000 and the officer contri-
buted the airplane in trade for another airplane. The Company
and the officer jointly own the newly purchased airplane and
will continue the lease on the officer's ownership of the
plane.
8. INCOME TAXES
Reconciliation of income before income taxes with Federal and
State taxable income:
2004
Federal State
____________ ____________
Income before taxes $3,896,000 $3,896,000
State income tax deduction (268,000) (268,000)
Capital loss carryforward applied (37,000) (37,000)
Nontaxable income (78,000) (78,000)
Nondeductible expenses
and timing differences (69,000) (69,000)
__________ __________
Taxable income $3,444,000 $3,444,000
__________ __________
__________ __________
Income tax - net of credits $1,171,000 $ 268,000
__________ __________
__________ __________
Tax rate to taxable income 34.0% 7.8%
___________ ___________
___________ ___________
2003
Federal State
____________ ____________
Income before taxes $3,613,000 $3,613,000
State income tax deduction (258,000) (258,000)
Capital loss carryforward 58,000 58,000
Nontaxable income (79,000) (79,000)
Nondeductible expenses
and timing differences (12,000) (12,000)
__________ __________
Taxable income $3,322,000 $3,322,000
__________ __________
__________ __________
Income tax - net of credits $1,131,000 $1,131,000
__________ __________
__________ __________
Tax rate to taxable income 34.0% 7.8%
___________ ___________
___________ ___________
Deferred tax asset (liability) consist of the following
components at April 30, 2004 and 2003:
2004 2003
_________ ________
Deferred tax current assets:
Accrued expenses and allowances
Capital Loss carry forward $ 94,000 $113,000
Deferred tax liability:
Timing differences (27,000) -
________ ________
Net deferred tax asset
(liability) $ 67,000 $113,000
________ ________
________ ________
9. BUSINESS SEGMENTS
The following is financial information relating to industry
segments:
April 30,
2004 2003
Net revenue:
Pool alarm products $ 1,132,000 $ 1,095,000
Keyboard and other products 616,000 1,054,000
Security alarm products 11,035,000 10,746,000
___________ ___________
Total net revenue $12,783,000 $12,895,000
___________ ___________
___________ ___________
Income from operations:
Pool alarm products $ 304,000 $ 282,000
Keyboard and other products 165,000 272,000
Security alarm products 2,960,000 2,805,000
___________ __________
Total income from operations $ 3,429,000 $ 3,359,000
___________ ___________
___________ ___________
Identifiable assets:
Pool alarm products $ 275,000 $ 233,000
Keyboard and other products 285,000 271,000
Security alarm products 4,025,000 3,975,000
Corporate general 15,949,000 13,377,000
___________ ___________
Total assets $20,534,000 $17,856,000
___________ ___________
___________ ___________
Depreciation and
amortization:
Pool alarm products $ 6,000 $ 3,000
Keyboard and other products 4,000 8,000
Security alarm products 143,000 158,000
Corporate general 81,000 94,000
___________ ___________
Total depreciation and
amortization $ 234,000 $ 263,000
___________ ___________
___________ ___________
Capital expenditures:
Pool alarm products $ 1,000 $ 30,000
Keyboard and other products - 5,000
Security alarm and other products 123,000 45,000
Corporate general 58,000 5,000
____________ ___________
Total capital expenditures $ 182,000 $ 85,000
____________ ___________
____________ ___________
10. CONCENTRATIONS of CREDIT RISK ARISING from CASH DEPOSITS
in EXCESS of INSURED LIMITS
The company maintains its cash balance in a financial
institution in Kimball, Nebraska. The balance is insured by
the Federal Deposit Insurance Corporation up to $100,000.
At April 30, 2004, the company's uninsured cash balance
totaled $2,359,000.
The company has sales to a group of security alarm distributors
representing 42% of total sales for the year ended April 30,
2004 and 26% of accounts receivable at April 30, 2004.
Item 8 DISAGREEMENTS on ACCOUNTING and FINANCIAL DISCLOSURES
There were no disagreements with accountants on accounting and
financial disclosure.
Part III
ITEM 9 DIRECTORS and EXECUTIVE OFFICERS of the REGISTRANT
(a) Identification of Directors and Executive Officers
All of the executive officers of the corporation serve at the
pleasure of the board of directors and do not have fixed terms.
The following information as of April 30, 2004, is furnished with
respect to each director and executive officer:
Director or
Name Principal Occupation or Employment Age Officer Since
____ __________________________________ ___ _____________
Ken R. Risk Chairman of the Board and President 56 1976
Eileen M. Risk Secretary/Treasurer 86 1976
Mary Ann Brothers Executive Vice President 64 1984
Stephanie Risk Chief Financial Officer/Controller 32 1999
Jerry Andersen Director, retired 73 1978
Michael J. Nelson Chairman, FirsTier Banks 63 1992
(b) Business Experience of Directors and Executive Officers
Ken R. Risk and Eileen M. Risk, executive officers listed above,
have served in various executive capacities with the company over
the past fourteen years.
Ken R. Risk, chairman of the board, president and director,
worked with the company after he returned from naval service for
several years. He left GRI in 1977 to start his own company,
Platte Valley Sales, in Hastings, Nebraska. He returned to the
company to assume the position of president and CEO in late 1989
after the death of his father, George Risk. He moved to Kimball,
Nebraska in 1997.
Mary Ann Brothers was controller of the company for five years
and also served as executive vice president and general manager
prior to becoming president of GRI Telemark Corporation. She
became executive vice president when Telemark was merged with GRI
in 1993.
Jerry Andersen, director, worked in the banking industry from
1967 until his retirement in August, 2000.
Michael J. Nelson, director, has worked in the banking business
since 1963 and was the president of the First State Bank in
Kimball, Nebraska until 2001. He is currently chairman of the
FirsTier Banks in Kimball, Nebraska.
Stephanie Risk, chief financial officer and controller, has nine
years' experience in the accounting field. Stephanie also worked
for the family business (Platte Valley Sales) during and after
college as a staff accountant. In 1997, she pursued her career
with an accounting manager position at Kershner's Auto Korner.
She joined the accounting staff at GRI in 1999 and then was
promoted to CFO upon retirement of the prior CFO.
(c) Identification of Certain Significant Employees
Ken R. Risk, Mary Ann Brothers and Stephanie Risk are officers and
employees of the company. (See Item 9 [b].)
(d) Involvement in Certain Legal Proceedings
None.
ITEM 10 EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid or accrued by the company to or for the account
of the chief executive officer and each of the four other most
highly compensated executive officers of the company for services
rendered in all capacities during each of the company's fiscal
years ended April 30, 2002, 2003, and 2004:
Annual Compensation
(a) (b) (c) (d) (e)
Other Annual
Position Year Salary Bonuses Compensation
Ken R. Risk 2004 183,000 - -
Chief Executive 2003 180,000 - -
Officer 2002 181,000 - -
Mary Ann Brothers 2004 120,000 - -
Executive Vice 2003 120,000 - -
President 2002 119,000 - 10,000 stock shares
Donna Debowey 2004 14,000 - -
Senior Vice 2003 37,000 - -
President 2002 36,000 - -
David Luppen 2004 51,000 - -
Director of 2003 50,000 - -
Engineering 2002 43,000 - -
Dan Douglas 2004 46,000 - -
Vice President of 2003 45,000 - -
Materials 2002 44,000 - -
Stephanie Risk 2004 36,000 - -
Chief Financial 2003 35,000 - -
Officer 2002 33,000 - -
Long-Term Compensation
(a) (b) (f) (g) (h) (i)
Restricted Options LTIP All
Position Year Stock /SARS Payouts Other
Awards
Ken R. Risk 2004 - - - -
2003 - - - -
2002 - - - -
Mary Ann 2004 - - - -
Brothers 2003 - - - -
2002 - - - -
Donna 2004 - - - -
Debowey 2003 - - - -
2002 - - - -
David Luppen 2004 - - - -
2003 - - - -
2002 - - - -
Dan Douglas 2004 - - - -
2003 - - - -
2002 - - - -
Stephanie 2004 - - - -
Risk 2003 - - - -
2002 - - - -
Members of the board of directors were each compensated $150 for
their services during the fiscal year.
Ken R. Risk and Mary Ann Brothers do not have employment
contracts with the company. Both officers have a base salary and
also receive compensation based on a percentage of net sales for
the year.
ITEM 11 SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and
MANAGEMENT
Below is certain information concerning persons who are known by
the company to own beneficially more than 5 percent of any class
of the company's voting shares outstanding on April 30, 2004.
Title Name and Address Amount of Percent
of of Beneficial Beneficial of
Class Ownership Ownership Class
Class Ken R. Risk 2,952,905 55%
A Kimball, NE
69145
None of the directors or officers has the right to acquire any
additional shares either directly or indirectly through any
contracts or arrangements with other shareholders.
ITEM 12 CERTAIN RELATIONSHIPS and RELATED PARTY TRANSACTIONS
During each of the three years ended April 30, 2004, 2003, and
2002, the company executed transactions with related entities and
individuals. Each of the transactions was in terms at least as
favorable as could be obtained from unrelated third parties.
Related Party 2004 2003 2002
Airplane Lease
Ken R. Risk $27,000 $27,000 $27,000
President
Building and Warehouse
Leases/Rentals
Eileen M. Risk $ 3,400 $ 3,400 $ 3,400
Secretary/Treasurer
Eileen M. Risk $ 3,600 $ 3,600 $ 3,600
Secretary/Treasurer
Eileen M. Risk $18,420 $18,420 $18,420
Secretary/Treasurer
Stock Transfer Agent
Eileen M. Risk $20,000 $20,000 $20,000
Secretary/Treasurer
ITEM 13 EXHIBITS and REPORTS on FORM 8-K
3.(1).a Articles of Incorporation - Filed as Exhibit 5 to the
Registrant's Form 10-K for the fiscal year ended
April 10, 1970, and incorporated by reference herein
3.(i).b Certificate of Amendment to the Articles of
Incorporation of the Registrant - Filed as Exhibit 1.2
to the Registrant's Form 10-K for the fiscal year
ended April 30, 1971, and incorporated by reference
herein
3.(ii).c By-laws - Filed as Exhibit 1.3 to the Registrant's Form
10-K for the fiscal year ended April 10, 1971, and
incorporated by reference herein
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, the
Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
George Risk Industries, Inc.
By: /s/ Ken R. Risk
Ken R. Risk, President and
Chairman of the Board
July 12, 2004
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Signature Title Date
/s/ Ken R. Risk President and July 29, 2004
Ken R. Risk Chairman of the Board
/s/ Stephanie Risk Chief Financial Officer July 29, 2004
Stephanie Risk and Controller
/s/ Jerry Andersen Director July 29, 2004
Jerry Andersen
/s/ Michael J. Nelson Director July 29, 2004
Michael J. Nelson