U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB/A
[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 No.)
incorporation or organization)
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/A or any amendment to this Form 10-KSB/A. [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 com-
ponents 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 manu-
facturing 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 pre-
vious 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 in-
creases 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 mat-
erial 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, re-
spectively. 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.
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, mar-
keting 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.
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, compre-
hensive income, stockholders' equity, and cash flows for the two years then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 com-
ponents, 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 de-
preciation and any resulting gain or loss is credited or charged to oper-
ations.
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 deter-
mined based on tax rates and laws enacted as of the balance sheet date. De-
ferred 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 re-
quires 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 dis-
closures 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
The company's marketable debt and equity securities and government and muni-
cipal bonds are stated at fair market value, are recorded at average cost,
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 securities and unrealized gains and losses consist of the follow-
ing 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)
___________
___________
Additionally, in accordance with SFAS 115, if the company determines that a
marketable security has an other than temporary decline in fari value,
generally defined as when the cost basis exceeds the fair value for approx-
imately one year. When this happens the company will decrease the cost of
the marketable security to the new fair value and recognize the loss as real.
The company periodically evaluates the investments to determine if impariment
changes are required.
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 re-
quiring 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 contributed 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 owner-
ship 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 Corpora-
tion 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.
ITEM 8A CONTROLS and PROCEDURES
(a) Information required by Item 307
Our Chief Executive Officer and our Chief Financial Officer, after evaluating
the effectiveness of the Company's "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e)
or 15d-15(e)) as of the end of the period covered by this annual report, have
concluded that our disclosure controls and procedures are effective based on
their evaluation of these controls and procedures required by paragraph (b)
of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
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 account-
ant. 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 ser-
vices 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 incorpor-
ated 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
31.1 Certification pursuant to Rule 13a-14(a) of the Chief Executive
Officer
31.2 Certification pursuant to Rule 13a-14(a) of the Chief Financial
Officer
32.1 Certification pursuant to 18 U.S.C. 1350 of the Chief Executive
Officer
32.2 Certification pursuant to 18 U.S.C. 1350 of the Chief Financial
Officer
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Ex-
change 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 29, 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