UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the quarter ended July 31, 2003
[ ] 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
September 18, 2003 was 5,402,528.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three month period ended
July 31, 2003, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 2003
ASSETS
Current Assets
Cash and cash equivalents $ 3,294,000
Marketable securities (Note 2) 10,069,000
Accounts receivable:
Trade, net of $50,000 doubtful account allowance 1,694,000
Other 2,000
Inventories (Note 3) 2,505,000
Prepaid expenses 97,000
Deferred income taxes 113,000
------------
Total Current Assets $17,774,000
Property and Equipment, net at cost $ 893,000
Other Assets
Investment in Land Limited Partnership, at cost 200,000
Projects in process 46,000
Other 2,000
------------
Total Other Assets $ 248,000
TOTAL ASSETS $18,915,000
============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 2003
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 158,000
Accrued expenses
Payroll and related expenses 230,000
Property taxes 2,000
Notes payable, current 195,000
Income taxes payable 332,000
------------
Total Current Liabilities $ 917,000
Long-Term Liabilities
Notes payable 0
------------
Total Long-Term Liabilities $ 0
Stockholders' Equity
Convertible preferred stock, 1,000,000 shares
authorized, Series 1-noncumulative, $20 stated
value, 25,000 shares authorized, 5,350 issued and
outstanding 107,000
Common stock, Class A, $.10 par value, 10,000,000
shares authorized, 8,502,832 shares issued and
outstanding 850,000
Additional paid-in capital 1,736,000
Accumulated other comprehensive income (1,164,000)
Retained earnings 18,232,000
Less: cost of treasury stock, 3,100,304 shares, at cost (1,763,000)
------------
Total Stockholders' Equity $17,998,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $18,915,000
============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED
July 31, 2003 July 31, 2002
------------- -------------
Net Sales $ 3,022,000 $ 3,021,000
Less: cost of goods sold (1,413,000) (1,676,000)
------------ ------------
Gross Profit $ 1,609,000 $ 1,345,000
Operating Expenses:
General and administrative 167,000 160,000
Selling 547,000 587,000
Engineering 18,000 17,000
Rent paid to related parties 15,000 15,000
------------ ------------
Total Operating Expenses $ 747,000 $ 779,000
Income From Operations 862,000 566,000
Other Income (Expense)
Other (5,000) 0
Dividend and interest income 87,000 83,000
Interest expense 0 0
Gain/(loss) on sale of assets 21,000 4,000
------------ ------------
$ 103,000 $ 87,000
Income Before Provisions for Income Tax 965,000 653,000
Provisions for Income Tax (402,000) (272,000)
------------ ------------
Net Income $ 563,000 $ 381,000
Retained Earnings, beginning of period $17,669,000 $15,383,000
Retained Earnings, end of period $18,232,000 $15,764,000
Income Per Share of Common Stock $ .10 $ .07
Weighted Average Number of Common
Shares Outstanding 5,402,528 5,402,528
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
July 31,
2003 2002
---------------------------
Net Income $ 563,000 $ 381,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses) arising
during period 252,000 (380,000)
Reclassification adjustment for (gains)
losses included in net income (21,000) (4,000)
------------ ------------
Other Comprehensive Income $ 231,000 $ (384,000)
Comprehensive Income (Loss) $ 794,000 $ (3,000)
============ =============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
For the three months ended
July 31,
2003 2002
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 563,000 $ 381,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 34,000 64,000
Change in unrealized gain (loss) on
investments 231,000 (384,000)
Changes in assets and liabilities:
(Increase) decrease in:
Marketable securities (388,000) (225,000)
Accounts receivable (140,000) 385,000
Inventories (75,000) 117,000
Prepaid expenses 39,000 6,000
Other assets 32,000 7,000
Receivables - officers and employees 1,000 0
Increase (decrease) in:
Accounts payable 29,000 3,000
Accrued expenses (52,000) 70,000
Income tax payable 402,000 272,000
------------ ------------
Net cash provided by (used in)
operating activities $ 676,000 $ 696,000
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) Sale of property and equipment (41,000) (22,000)
(Purchase) of treasury stock 0 0
------------ ------------
Net cash provided by (used in)
investing activities $ (41,000) $ (22,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (40,000) (3,000)
Treasury stock issued 0 0
------------ ------------
Net cash provided by (used in)
financing activities $ (40,000) $ (3,000)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 595,000 $ 671,000
============ ============
Cash and cash equivalents, beginning of
period $ 2,699,000 $ 1,094,000
Cash and cash equivalents, end of period $ 3,294,000 $ 1,765,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2003
Note 1 Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10QSB and do not include all of the inform-
ation and footnotes required by generally accepted accounting principals for
complete financial statements. In the opinion of management, all adjust-
ments, consisting only of normal recurring adjustments considered necessary
for a fair presentation, have been included. Operating results for any
quarter are not necessarily indicative of the results for any other quarter
or for the full year.
Note 2 Marketable Securities
Marketable equity securities are recorded at the lower of cost or market
and are classified as available-for-sale securities. The cost of marketable
securities sold is determined on the average cost method with realized gains
or losses being reflected in the income statement and any unrealized gains
or losses being reported as a separate component of stockholder's equity
until realized. Dividend and interest income are accrued as earned.
Marketable equity securities and unrealized gains and losses consist of
the following as of July 31, 2003 and July 31, 2002:
Cost Basis $11,233,000 $10,726,000
Market Value 10,069,000 8,914,000
------------ ------------
Net Unrealized Gain (Loss) $(1,164,000) $(1,812,000)
Note 3 Inventories
At July 31, 2003 and July 31, 2002, respectively, inventories consisted
of the following:
Raw Materials $ 1,680,000 $ 1,593,000
Work in Process 527,000 442,000
Finished Goods 275,000 272,000
Warehouse in England 93,000 74,000
------------ ------------
$ 2,575,000 $ 2,381,000
Less: allowance for obsolete
inventory (70,000) (70,000)
------------ ------------
Net Inventories $ 2,505,000 $ 2,311,000
============ ============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
July 31,
2003 2002
---------------------------
Net revenue:
Pool alarm products $ 341,000 $ 308,000
Keyboard products 161,000 171,000
Security alarm and other products 2,520,000 2,542,000
------------ ------------
Total net revenue $ 3,022,000 $ 3,021,000
Income from operations:
Pool alarm products $ 97,000 $ 58,000
Keyboard products 46,000 32,000
Security alarm and other products 719,000 476,000
------------ ------------
Total income from operations $ 862,000 $ 566,000
Identifiable assets:
Pool alarm products $ 304,000 $ 252,000
Keyboard products 234,000 365,000
Security alarm and other products 4,169,000 3,747,000
Corporate general 14,208,000 11,307,000
------------ ------------
Total assets $18,915,000 $15,671,000
Depreciation and amortization:
Pool alarm products $ 2,000 $ 0
Keyboard products 1,000 2,000
Security alarm and other products 35,000 39,000
Corporate general 17,000 23,000
------------ ------------
Total depreciation and amortization $ 55,000 $ 64,000
Capital expenditures:
Pool alarm products $ 1,000 $ 0
Keyboard products 0 0
Security alarm and other products 16,000 22,000
Corporate general 6,000 0
------------ ------------
Total capital expenditures $ 23,000 $ 22,000
Note 5 Revenue Recognition
George Risk Industries recognizes its revenues when goods are shipped
and billed to its customers. There is a $50,000 allowance that was estab-
lished to account for any uncollectable accounts.
Note 6 Earnings per Share
Basic and diluted earning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended July 31, 2003
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
------------ ------------- ---------
Net Income $ 563,000
============
Basic EPS $ 563,000 5,402,528 $ 0.10
Effect of dilutive securities:
Convertible preferred stock 0 26,750
------------ ------------- ---------
Diluted EPS $ 563,000 5,429,278 $ 0.10
For the three months ended July 31, 2002
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
------------ ------------- ---------
Net Income $ 381,000
============
Basic EPS $ 381,000 5,402,528 $ 0.07
Effect of dilutive securities:
Convertible preferred stock 0 26,750
------------ ------------- ---------
Diluted EPS $ 381,000 5,429,278 $ 0.07
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 consolidated financial statements, and with the Company's audited
financial statements and discussion for the fiscal year ended April 30, 2003.
Net cash increased $595,000 during the quarter ended July 31, 2003 as
compared to an increase of $671,000 during the corresponding quarter last
year. Marketable securities increased $388,000 for the quarter as compared
to a $225,000 increase for the corresponding quarter last year. We have been
trying to not put much additional cash into the marketable securities, but
instead we are trying to use the money already in the investment accounts to
make smart investment choices. Inventories increased $75,000 during the
current quarter as compared to a $117,000 decrease last year. Accounts
receivable increased $140,000 for the quarter ending July 31, 2003, as com-
pared to a $385,000 decrease for the same quarter last year. At the quarter
ended July 31, 2003, 77.6% of the receivables are considered current (less
than 45 days) and 3.8% of the total are over 90 days past due. At the
quarter ended July 31, 2003 there was a $32,000 decrease in other assets
while at July 31, 2002, there was a $7,000 decrease. We completed two molds
by July 31, 2003, and that is the reason for the larger decrease in other
assets when comparing the current year and last year.
At the quarter ended July 31, 2003, accounts payable shows a decrease of
$29,000 as compared to an increase of only $3,000 for the same quarter the
year before. As usual, we continue to strive to pay all of our payables
within terms and take all purchase discounts that are available. Accrued
expenses decreased $52,000 for the current quarter as compared to a $70,000
increase for the quarter ended July 31, 2002 This is due in part to the fact
that we have fewer employees than we did at the same time last year. Income
tax payable increased $402,000 for the quarter ended July 31, 2003. This
compares to an increase of $272,000 for the quarter ended July 31, 2002. The
difference of $130,000 accounts for the fact that our net income is higher at
the quarter ended July 31, 2003 than the quarter ended July 31, 2002.
The following is a list of ratios to help analyze George Risk Industries'
performance:
Qtr ended Qtr ended
July 31, 2003 July 31, 2002
-----------------------------
Working capital $ 16,857,000 $ 13,991,000
Current ratio 19.383 23.068
Quick ratio 16.420 19.216
Cash per share (including marketable
securities) $ 2.47 $ 1.98
Equity per share $ 3.33 $ 2.75
Net sales were $3,022,000 for the quarter ended July 31, 2003, which is a 1%
increase from the corresponding quarter last year. Cost of goods sold was
46.8% of net sales for the quarter ended July 31, 2003 and the cost of goods
sold percentage to net sales was 55.5% for the quarter ended July 31, 2002.
Having relatively the same percentage of cost of goods sold from period to
period shows that we keep our costs in line. But for the current fiscal
year, we have been able to decrease our cost of materials and direct labor
while sales have remained steady.
Operating expenses were 24.7% of net sales for the quarter ended July 31,
2003 as compared to 25.8% for the corresponding quarter last year. Having
relatively the same percentages for both periods shows that management keeps
a close eye on our operating expenses to keep them in line from year to year.
We anticipated our sales to be about the same as they were last year, so
management was able to cut back wages and staff. Income from operations for
the quarter ended July 31, 2003 was at $862,000, which is a 52.3% increase
from the corresponding quarter last year, which had income from operations
of $566,000.
Other income and expenses showed a $103,000 gain for the quarter ended
July 31, 2003 as compared to having an $87,000 gain for the quarter ended
July 31, 2002. The main reason for the difference in the amount of the gains
from one quarter to the other is that we have been able to sell off some of
our investments for gains since the stock market has been doing better. In
turn, net income for the quarter ended July 31, 2003 was at $563,000, a
47.77% increase from the corresponding quarter last year, which showed a net
income of $381,000. Earnings per share for the quarter ended July 31, 2003
was $0.10 per share and $0.07 per share for the quarter ended July 31, 2002.
Our security sales division has obtained the "C E" Approval on our
Therm-Stats, which allows us to sell these products in the European market-
place. We have also received a C.U.L. listing for our CC-01 current con-
troller for selling in the Canadian market.
Sales has introduced the Box Tamper, the TS-01 and TSW-01 to replace our
previous tamper. This product was wholly designed and manufactured inter-
nally whereas, the previous product was purchased outside.
Due to the continued interest in our product line of Temperature Sensors, we
will soon have a fixed temperature sensor in house set for a 42 degree-trip
mark. We will also market other set temperature sensors when the demand is
large enough.
Research and development continues on the following new products: a humidity
sensor for the Therm-Stats, flex sensors, a 4-door annunciator, high security
switches, a glass break switch, a "clamp on" overhead door contact, and a
10-key keypad using our touch sensor technology. Engineering is redesigning
our pool alarm to make use of our existing Programmable Relay Module, the
PRM-1, which will reduce manufacturing costs.
Management is always open to the possibility to acquire a business that
would complement our existing operations. 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. Exhibits and Reports on Form 8-K
A. Reports on Form 8-K
No 8-K reports were filed during the quarter ended July 31, 2003.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 09-18-2003 By: /s/ Kenneth R. Risk
Kenneth R. Risk, President and Chairman
of the Board
Date 09-18-2003 By: /s/ Stephanie M. Risk
Stephanie M. Risk, Chief Financial Officer
and Controller
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 quarterly report on Form 10QSB of George Risk
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any un-
true statements 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 is made know to us
by others, particularly during the period in which the quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 45 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly 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 weakness 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
the quarterly 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 evalu-
ation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
CERTIFICATION OF STEPHANIE M. RISK, CHEIF FINANCIAL OFFICER, PURSUANT TO RULE
13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
I, Stephanie M. Risk, certify that:
1. I have reviewed this quarterly report on Form 10QSB of George Risk
Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statements 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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 is made know to us
by others, particularly during the period in which the quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 45 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly 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 weakness 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 the
quarterly 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, in-
cluding any corrective actions with regard to significant deficiencies
and material weaknesses.
By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller