George Risk Industries, Inc.
802 S. Elm St.
Kimball, NE 69145
September 14, 2004
Securities and Exchange Commission
Washington, DC 20549
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
transmitting herewith the attached Form 10-QSB.
Sincerely,
Kenneth R. Risk, President and CEO
George Risk Industries, Inc.
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, 2004
[ ] 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 14, 2004 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, 2004, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 2004
ASSETS
Current Assets
Cash and cash equivalents $ 4,717,000
Marketable securities (Note 2) 10,934,000
Accounts receivable:
Trade, net of $50,000 doubtful account allowance 1,838,000
Other 4,000
Inventories (Note 3) 2,382,000
Prepaid expenses 101,000
Deferred income taxes 94,000
------------
Total Current Assets $20,070,000
Property and Equipment, net at cost $ 850,000
Other Assets
Investment in Land Limited Partnership, at cost 200,000
Projects in process 11,000
Other 2,000
------------
Total Other Assets $ 213,000
TOTAL ASSETS $21,133,000
============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEET
JULY 31, 2004
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 109,000
Accrued expenses
Payroll and related expenses 240,000
Property taxes 2,000
Income tax payable 223,000
------------
Total Current Liabilities $ 574,000
Long-Term Liabilities
Deferred income taxes 27,000
------------
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 and
outstanding 850,000
Additional paid-in capital 1,736,000
Accumulated other comprehensive income (970,000)
Retained earnings 20,572,000
Less: cost of treasury stock, 3,100,304 shares,
at cost (1,763,000)
------------
Total Stockholders' Equity $20,532,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,133,000
============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED
July 31,
2004 2003
------------ ------------
Net Sales $ 3,096,000 $ 3,022,000
Less: cost of goods sold (1,498,000) (1,413,000)
------------ ------------
Gross Profit $ 1,598,000 $ 1,609,000
Operating Expenses:
General and administrative 170,000 167,000
Selling 619,000 547,000
Engineering 13,000 18,000
Rent paid to related parties 15,000 15,000
------------ ------------
Total Operating Expenses $ 871,000 $ 747,000
Income From Operations 781,000 862,000
Other Income (Expense)
Other 0 (5,000)
Dividend and interest income 82,000 87,000
Gain/(loss) on sale of investments (18,000) 21,000
------------ ------------
$ 64,000 $ 103,000
Income Before Provisions for Income Tax 845,000 965,000
Provisions for Income Tax (352,000) (402,000)
------------ ------------
Net Income $ 493,000 $ 563,000
Retained Earnings, beginning of period $20,079,000 $17,669,000
Retained Earnings, end of period $20,572,000 $18,232,000
Income Per Share of Common Stock $0.09 $0.10
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,
2004 2003
------------ ------------
Net Income $ 493,000 $ 563,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses)
arising during period (59,000) 231,000
Reclassification adjustment for (gains)
losses included in net income 18,000 (21,000)
Income tax expense related to other
comprehensive income (17,000) 88,000
------------ ------------
Other Comprehensive Income (Loss) $ (58,000) $ 298,000
Comprehensive Income (Loss) $ 435,000 $ 861,000
============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
For the three months
ended July 31,
2004 2003
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 493,000 $ 563,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 49,000 57,000
(Gain) loss on sale of investments 18,000 (21,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (103,000) (141,000)
Inventories (3,000) (75,000)
Prepaid expenses (40,000) 39,000
Other receivables 1,000 1,000
Increase (decrease) in:
Accounts payable 17,000 29,000
Accrued expenses (70,000) (52,000)
Income tax payable 352,000 402,000
------------ ------------
Net cash provided by (used in) operating
activities $ 714,000 $ 802,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Projects in progress 33,000 32,000
(Purchase) Sale of property and equipment (64,000) (63,000)
Proceeds from sale of marketable securities 104,000 264,000
(Purchase) of marketable securities (350,000) (400,000)
------------ ------------
Net cash provided by (used in) investing
activities $ (277,000) $ (167,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt 0 (40,000)
------------ ------------
Net cash provided by (used in) financing
activities $ 0 $ (40,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 437,000 $ 595,000
======== =========
Cash and cash equivalents, beginning of
period $ 4,280,000 $ 2,699,000
Cash and cash equivalents, end of period $ 4,717,000 $ 3,294,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2004
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 stock-
holder'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, 2004:
Cost Basis $11,905,000
Market Value 10,935,000
------------
Net Unrealized Gains (Losses) $ (970,000)
============
Gross unrealized gain $ 417,000
============
Gross unrealized loss $(1,387,000)
============
Note 3 Inventories
Inventories at July 31, 2004, consisted of the following:
Raw Materials $ 1,721,000
Work in Proces 428,000
Finished Goods 231,000
Warehouse in England 72,000
------------
$ 2,452,000
Less: allowance for obsolete inventory (70,000)
------------
Net Inventories $ 2,382,000
============
Note 4 Business Segments
The following is financial information relating to industry
segments:
For the quarter ended
July 31,
2004 2003
------------ ------------
Net revenue:
Pool alarm products $ 273,000 $ 341,000
Keyboard products 127,000 161,000
Security alarm and other products 2,696,000 2,520,000
------------ ------------
Total net revenue $ 3,096,000 $ 3,022,000
Income from operations:
Pool alarm products $ 69,000 $ 97,000
Keyboard products 32,000 46,000
Security alarm and other products 680,000 719,000
------------ ------------
Total income from operations $ 781,000 $ 862,000
Identifiable assets:
Pool alarm products $ 268,000 $ 304,000
Keyboard products 241,000 234,000
Security alarm and other products 4,198,000 4,169,000
Corporate general 16,426,000 14,208,000
------------ ------------
Total assets $21,133,000 $18,915,000
Depreciation and amortization:
Pool alarm products $ 2,000 $ 2,000
Keyboard products 0 1,000
Security alarm and other products 30,000 36,000
Corporate general 17,000 18,000
------------ ------------
Total depreciation and amortization $ 49,000 $ 57,000
Capital expenditures:
Pool alarm products $ 0 $ 1,000
Keyboard products 0 0
Security alarm and other products 64,000 56,000
Corporate general 0 6,000
------------ ------------
Total capital expenditures $ 64,000 $ 63,000
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
established 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, 2004
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
------------- -------------- ---------
Net Income $ 493,000
=============
Basic EPS $ 493,000 5,402,528 $ 0.09
Effect of dilutive securities:
Convertible preferred stock 0 26,750
------------- -------------- ---------
Diluted EPS $ 493,000 5,429,278 $ 0.09
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
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, 2004.
Net cash increased $437,000 during the quarter ended July 31, 2004 as com-
pared to an increase of $595,000 during the corresponding quarter last year.
Accounts receivable increased $103,000 for the quarter ending July 31, 2004,
as compared to a $141,000 increase for the same quarter last year. At the
quarter ended July 31, 2004, 79.3% of the receivables are considered current
(less than 45 days) and 4.45% of the total are over 90 days past due.
Inventories increased a mere $3,000 during the current quarter as compared
to a $75,000 increase last year. At the quarter ended July 31, 2004 there
was a $40,000 increase in prepaid expenses while at July 31, 2003, there was
a $39,000 decrease. The main reason for the increase in cash towards prepaid
expenses is that we buy Jelly Bellies in bulk and had to purchase some in
the current quarter. Jelly Bellies are GRI's adopted trademark. A package
of jellybeans is put into every box that is shipped out and our samples
department also sends out thousands every month.
At the quarter ended July 31, 2004, accounts payable shows an increase of
$17,000 as compared to an increase of $29,000 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 $70,000 for the current quarter as compared to a $52,000 decrease
for the quarter ended July 31, 2003. Income tax payable increased $352,000
for the quarter ended July 31, 2004. This compares to an increase of $402,000
for the quarter ended July 31, 2003. The difference of $50,000 accounts for
the fact that our net income is lower for the quarter ended July 31, 2004
than it was for the quarter ended July 31, 2003.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
July 31,
2004 2003
---------------------------
Working capital $19,496,000 $16,857,000
Current ratio 34.965 19.383
Quick ratio 30.469 16.420
Cash per share (including marketable
securities) $ 2.90 $ 2.47
Equity per share $ 3.80 $ 3.33
Net sales were $3,096,000 for the quarter ended July 31, 2004, which is a
2.4% increase from the corresponding quarter last year. Cost of goods sold
was 48.4% of net sales for the quarter ended July 31, 2004 and the cost of
goods sold percentage to net sales was 46.8% for the quarter ended July 31,
2003. Having relatively the same percentage of cost of goods sold from
period to period shows that we keep our costs in line.
Operating expenses were 26.4% of net sales for the quarter ended July 31,
2004 as compared to 24.7% 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.
With the increase in sales, there is always usually a slight increase in
operating expense and that has held true for the quarter ended July 31, 2004.
Income from operations for the quarter ended July 31, 2004 was at $781,000,
which is a 9.4% increase from the corresponding quarter last year, which had
income from operations of $862,000.
Other income and expenses showed a $64,000 gain for the quarter ended
July 31, 2004 as compared to having a $103,000 gain for the quarter ended
July 31, 2004. The main reason for the difference in the amount of the
gains from one quarter to the other is that we had an $18,000 loss on the
sale of investments for the current quarter as compared to a $21,000 gain for
the same period last year. The biggest loss was that we finally sold our
holdings in Worldcom during this current quarter. In turn, net income for
the quarter ended July 31, 2004 was at $493,000, a 12.4% decrease from the
corresponding quarter last year, which showed net income of $563,000. Earn-
ings per share for the quarter ended July 31, 2003 were $0.09 per share and
$0.10 per share for the quarter ended July 31, 2003.
George Risk Industries does have three distinct business segments, security
alarm products, pool alarms and keyboard products that are subject to dis-
closure under SFAS No. 131. See the notes to the financial statements in
order to examine the segments.
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 the
first of the year. The molded box for the ADA units is completed with the
exception of a few modifications to the mold.
Other new products 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 at the moments are the 4460 spacer
mold 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 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.
At George Risk Industries' latest Board of Director's meeting, which was
held on August 25, 2004, a dividend of $0.10 per share was declared. This
dividend will be paid to stockholders of record as of September 30, 2004,
and the payment date will be October 31, 2004.
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, 2004.
B. Exhibits 31 and 32
CERTIFICATION OF KENNETH R. RISK, PRESIDENT AND CHAIRMAN OF THE BOARD,
PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
I, Kenneth 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
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 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, 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 the quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure con-
trols and procedures and presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this re-
port based on such evaluation; and
c) Disclosed in this quarterly report and change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the de-
sign or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial in-
formation; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: September 14, 2004
By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
CERTIFICATION OF STEPHANIE M. RISK, CHIEF 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 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 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our super-
vision, 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 the quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure con-
trols and procedures and presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
c) Disclosed in this quarterly report and change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the de-
sign or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial in-
formation; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: September 14, 2004
By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Kenneth R. Risk, certify, pursuant to 18 U.S.C. 18 Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
quarterly report of George Risk Industries, Inc. on Form 10QSB dated
July 31, 2004 fully complies with the requirements of Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 and that information
contained in such Form 10QSB fairly presents in all material respects the
financial condition and results of operations of George Risk Industries, Inc.
By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chief Executive Officer
I, Stephanie M. Risk, certify, pursuant to 18 U.S.C. 18 Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
quarterly report of George Risk Industries, Inc. on Form 10QSB dated
July 31, 2004 fully complies with the requirements of Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 and that information
contained in such Form 10QSB fairly presents in all material respects the
financial condition and results of operations of George Risk Industries, Inc.
By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer
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 09-14-2004 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
Date 09-14-2004 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller