Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the quarter ended October 31, 2010
[ ] 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: 000-05378
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)
(308) 235-4645
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
December 15, 2010 was 5,054,665.
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 and six month period
ended October 31, 2010, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2010 2010
------------ ------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,789,000 $ 3,641,000
Investments and securities 18,756,000 19,607,000
Accounts receivable:
Trade, net of $11,365 and $19,700
doubtful account allowance 1,262,000 1,295,000
Other 1,000 0
Note receivable, current 9,000 11,000
Income tax overpayment 280,000 216,000
Inventories 1,691,000 1,968,000
Prepaid expenses 42,000 142,000
Deferred current income taxes 190,000 266,000
------------ ------------
Total Current Assets $27,020,000 $27,146,000
Property and Equipment, net, at cost 690,000 733,000
Other Assets
Investment in Limited Land Partnership,
at cost 210,000 200,000
Projects in process 167,000 112,000
Note receivable 3,000 7,000
------------ ------------
Total Other Assets $ 380,000 $ 319,000
TOTAL ASSETS $28,090,000 $28,198,000
============ ============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2010 2010
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 106,000 $ 57,000
Dividends payable 485,000 395,000
Accrued expenses:
Payroll and related expenses 213,000 198,000
------------ ------------
Total Current Liabilities $ 804,000 $ 650,000
Long-Term Liabilities
Aircraft ownership deposit payable 5,000 5,000
Deferred income taxes 57,000 75,000
------------ ------------
Total Long-Term Liabilities $ 62,000 $ 80,000
Stockholders' Equity
Convertible preferred stock, 1,000,000
shares authorized, Series 1-noncumulative,
$20 stated value, 25,000 shares authorized,
4,100 issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income 173,000 13,000
Retained earnings 27,743,000 28,102,000
Treasury stock, 3,445,117 and 3,438,352
shares, at cost (3,377,000) (3,332,000)
------------ ------------
Total Stockholders' Equity $27,224,000 $27,468,000
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $28,090,000 $28,198,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENTS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2010 2010 2009 2009
---------------------------------------------------
Net Sales $ 2,177,000 $ 4,184,000 $ 1,877,000 $ 3,840,000
Less: cost of goods sold (1,094,000) (2,323,000) (1,181,000) (2,323,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,083,000 $ 1,861,000 $ 696,000 $ 1,517,000
Operating Expenses:
General and
administrative 202,000 384,000 181,000 348,000
Selling 383,000 774,000 428,000 831,000
Engineering 20,000 37,000 18,000 32,000
Rent paid to related
parties 11,000 23,000 11,000 23,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 616,000 $ 1,218,000 $ 638,000 $ 1,234,000
Income From Operations 467,000 643,000 58,000 283,000
Other Income (Expense)
Other 4,000 7,000 134,000 136,000
Dividend and interest
income 137,000 320,000 159,000 343,000
Gain (loss) on
investments (43,000) (99,000) 26,000 (74,000)
Gain (loss) on sale
of assets 0 0 7,000 7,000
------------ ------------ ------------ ------------
$ 98,000 $ 228,000 $ 326,000 $ 412,000
Income Before Provisions
for Income Tax 565,000 871,000 384,000 695,000
Provisions for Income Tax
Current expense (185,000) (274,000) (109,000) (217,000)
Deferred tax benefit
(expense) 25,000 57,000 (6,000) (5,000)
------------ ------------ ------------ ------------
Total Income Tax Expense $ (160,000) $ (217,000) $ (115,000) $ (222,000)
Net Income $ 405,000 $ 654,000 $ 269,000 $ 473,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.20
per share) $(1,013,000) $(1,013,000)
Common Stock ($0.17
per share) $ (880,000) $ (880,000)
Income Per Share of Common Stock:
Basic $0.08 $0.13 $0.05 $0.09
Assuming Dilution $0.08 $0.13 $0.05 $0.09
Weighted Average Number of
Common Shares Outstanding:
Basic 5,060,248 5,061,570 5,076,805 5,091,550
Diluted 5,080,748 5,082,070 5,097,305 5,112,050
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2010 2010 2009 2009
----------------------------------------------------
Net Income $ 405,000 $ 654,000 $ 269,000 $ 473,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding
gains (losses) arising
during period 502,000 149,000 408,000 1,314,000
Reclassification adjustment
for (gains) losses included
in net income 40,000 125,000 (117,000) 37,000
Income tax expense related
to other comprehensive
income (227,000) (115,000) (122,000) (565,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 315,000 $ 159,000 $ 169,000 $ 786,000
Comprehensive Income $ 720,000 $ 813,000 $ 438,000 $ 1,259,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
Six months Six months
ended ended
October 31, October 31,
2010 2009
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 654,000 $ 473,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 75,000 80,000
(Gain) loss on sale of investments 99,000 74,000
(Gain) loss on sales of assets 0 (7,000)
Reserve for bad debts 9,000 (56,000)
Reserve for obsolete inventory 23,000 64,000
Deferred income taxes (56,000) 5,000
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 24,000 241,000
Inventories 254,000 524,000
Prepaid expenses 90,000 (5,000)
Other receivables 1,000 0
Income tax overpayment (64,000) (67,000)
Increase (decrease) in:
Accounts payable 49,000 (5,000)
Accrued expenses 14,000 (60,000)
------------ ------------
Net cash provided by (used in) operating
activities $ 1,172,000 $ 1,261,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured (55,000) (58,000)
(Purchase) of property and equipment (32,000) (28,000)
Proceeds from sale of marketable securities 1,558,000 225,000
(Purchase) of marketable securities (532,000) (2,364,000)
Collections of loans to employees 6,000 2,000
(Purchase) of treasury stock (46,000) (225,000)
------------ ------------
Net cash provided by (used in) investing
activities $ 899,000 $(2,448,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (923,000) (784,000)
------------ ------------
Net cash provided by (used in) financing
activities $ (923,000) $ (784,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 1,148,000 $(1,971,000)
Cash and cash equivalents, beginning of
period $ 3,641,000 $ 4,671,000
------------ ------------
Cash and cash equivalents, end of period $ 4,789,000 $ 2,700,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $ 336,000 $ 320,000
Interest expense $ 0 $ 0
Cash receipts for:
Income taxes $ 0 $ 38,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2010
Note 1 Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10-Q and do not include all of the information
and footnotes required by generally accepted accounting principles for com-
plete financial statements. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's April 30, 2010 annual report on Form 10-K.
In the opinion of management, all adjustments, consisting only of normal re-
curring 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
The Company has investments in publicly traded equity securities as well
as certain state and municipal debt securities. These securities are class-
ified as available-for-sale securities, and are reported at fair value.
Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements. Avail-
able -for-sale investments in debt securities mature between December 2010
and June 2042. The Company uses the average cost method to determine the
cost of securities sold and the amount reclassified out of accumulated other
comprehensive income into earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholder's equity.
Dividend and interest income are accrued as earned.
As of October 31, 2010, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 9,465,000 $ 199,000 $ (76,000) $ 9,588,000
Federal agency mortgage
backed securities $ 75,000 $ -- $ -- $ 75,000
Corporate bonds $ 180,000 $ 12,000 $ -- $ 192,000
Equity securities $ 7,606,000 $ 579,000 $ (416,000) $ 7,769,000
Money markets/CDs $ 1,132,000 $ -- $ -- $ 1,132,000
------------ ------------ ------------ ------------
Total $18,458,000 $ 790,000 $ (492,000) $18,756,000
In accordance with US GAAP, the Company evaluates all marketable
securities for other-than temporary declines in fair value, which are defined
as when the cost basis exceeds the fair value for approximately one year.
The Company also evaluates the nature of the investment, cause of impairment
and number of investments that are in an unrealized position. When an other-
than-temporary decline is identified, the Company will decrease the cost of
the marketable security to the new fair value and recognize a real loss. The
investments are periodically evaluated to determine if impairment changes are
required. As a result of this standard, management recorded impairment
losses of $3,000 for the quarter ended October 31, 2010 and $11,000 for the
six months ended October 31, 2010. As for the corresponding periods last
year, $34,000 worth of impairment loss was recorded for the quarter, while
$89,000 of loss was recorded for the six months ended October 31, 2009.
The following table shows the investments with unrealized losses that
are not deemed to be other-than-temporarily impaired, aggregated by invest-
ment category and length of time that individual securities have been in a
continuous unrealized loss position, at October 31, 2010.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$ 864,000 $ (12,000) $1,387,000 $ (64,000) $ 2,251,000 $ (76,000)
Equity securities
$1,481,000 $ (140,000) $1,698,000 $(276,000) $ 3,179,000 $ (416,000)
----------- ------------ ----------- ---------- ------------ ------------
Total
$2,345,000 $ (152,000) $3,085,000 $(340,000) $ 5,430,000 $ (492,000)
Municipal Bonds
---------------
The unrealized losses on the Company's investments in municipal bonds were
caused by interest rate increases. The contractual terms of these invest-
ments do not permit the issuer to settle the securities at a price less than
the amortized cost of the investment. Because the Company has the ability to
hold these investments until a recovery of fair value, which may be maturity,
the Company does not consider these investments to be other-than-temporarily
impaired at October 31, 2010.
Marketable Equity Securities
----------------------------
The Company's investments in marketable equity securities consist of a wide
variety of companies. Investments in these companies include growth, growth
income, and foreign investment objectives. Management has evaluated the in-
dividual holdings, and because of the recent decline in the stock market,
does not consider these investments to be other-than-temporarily impaired at
October 31, 2010.
Note 3 Inventories
At October 31, 2010, inventories consisted of the following:
Raw Materials $ 1,170,000
Work in Process 498,000
Finished Goods 216,000
------------
$ 1,884,000
Less: allowance for obsolete inventory (193,000)
------------
Net Inventories $ 1,691,000
============
Note 4 Business Segments
The following is financial information relating to industry
segments:
For the quarter ended
October 31,
2010 2009
---------------------------
Net revenue:
Security alarm products 1,974,000 1,703,000
Other products 203,000 174,000
------------ ------------
Total net revenue $ 2,177,000 $ 1,877,000
Income from operations:
Security alarm products 423,000 53,000
Other products 44,000 5,000
------------ ------------
Total income from operations $ 467,000 $ 58,000
Identifiable assets:
Security alarm products 2,612,000 2,545,000
Other products 887,000 1,328,000
Corporate general 24,591,000 23,135,000
------------ ------------
Total assets $28,090,000 $27,008,000
Depreciation and amortization:
Security alarm products 6,000 6,000
Other products 24,000 26,000
Corporate general 8,000 8,000
------------ ------------
Total depreciation and amortization $ 38,000 $ 40,000
Capital expenditures:
Security alarm products 11,000 2,000
Other products 0 0
Corporate general 4,000 15,000
------------ ------------
Total capital expenditures $ 15,000 $ 17,000
Note 5 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 October 31, 2010
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 405,000
===========
Basic EPS $ 405,000 5,060,248 $ 0.08
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 405,000 5,080,748 $ 0.08
For the six months ended October 31, 2010
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 654,000
===========
Basic EPS $ 654,000 5,061,570 $ 0.13
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 654,000 5,082,070 $ 0.13
For the three months ended October 31, 2009
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 269,000
===========
Basic EPS $ 269,000 5,076,805 $ 0.05
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 269,000 5,097,305 $ 0.05
For the six months ended October 31, 2009
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 473,000
===========
Basic EPS $ 473,000 5,091,550 $ 0.09
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 473,000 5,112,050 $ 0.09
Note 6 Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc.
Retirement Savings Plan (the "Plan"). The Plan is a defined contribution
savings plan designed to provide retirement income to eligible employees of
the corporation. The Plan is intended to be qualified under Section 401(k)
of the Internal Revenue Code of 1986, as amended. Matching contributions by
the Company of approximately $3,000 were paid during each quarter ending
October 31, 2010 and 2009. Likewise, the Company paid matching contributions
of approximately $6,000 and $5,000 during each six-month period ending
October 31, 2010 and 2009, respectively. There were no discretionary con-
tributions paid during either the quarters or six-month periods ending
October 31, 2010 and 2009, respectively.
Note 7 Fair Value Measurements
Generally accepted accounting principles in the United States of America
(US GAAP) defines fair value as the price that would be received from selling
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When determining the fair value
measurements for assets and liabilities, which are required to be recorded at
fair value, we consider the principal or most advantageous market in which we
would transact and the market-based risk measurements or assumptions that
market participants would use in pricing the asset or liability, such as in-
herent risk, transfer restrictions, and credit risk.
US GAAP establishes a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to un-
observable inputs (level 3 measurements). The levels of the fair value
hierarchy under US GAAP are described below:
Level 1 - Valuation is based upon quoted prices for identical in-
struments traded in active markets.
Level 2 - Valuation is based upon quoted prices for similar in-
struments in active markets, quoted prices for identical
or similar instruments in markets that are not active,
and model-based valuation techniques for which all sig-
nificant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that
use significant assumptions not observable in the market.
These unobservable assumptions reflect our own estimates
of assumptions that market participants would use in
pricing the asset or liability. Valuation techniques
include use of option pricing models, discounted cash
flow models and similar techniques.
Marketable Securities
---------------------
As of October 31, 2010, our investments consisted of publicly traded equity
securities as well as certain state and municipal debt securities. Our
marketable securities are valued using third-party broker statements. The
value of the majority of securities is derived from quoted market inform-
ation. The inputs to the valuation are generally classified as Level 1 given
the active market for these securities, however, if an active market does not
exist, the inputs are recorded at a lower level in the fair value hierarchy.
Fair Value Hierarchy
--------------------
The following tables set forth our assets and liabilities measured at fair
value on a recurring basis and a non-recurring basis by level within the fair
value hierarchy. As required by US GAAP, assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
as of October 31, 2010
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Securities $18,756,000 $ 0 $ 0 $18,756,000
------------ ---------- ---------- ------------
Total fair value of
assets measured on a
recurring basis $18,756,000 $ 0 $ 0 $18,756,000
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
condensed consolidated financial statements, and with the George Risk
Industries' audited financial statements and discussion for the fiscal year
ended April 30, 2010.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash increased $1,148,000 for the six months ended October 31, 2010,
while, for the same period last year, net cash decreased $1,971,000.
Accounts receivable decreased $24,000 for the current six months and de-
creased $241,000 for the same period last year. At October 31, 2010, 79.16%
of the receivables were considered current (less than 45 days) and 2.61% of
the total were over 90 days past due. Inventory decreased $254,000 for the
current six months, while it also decreased $524,000 for the same period last
year. The main reason for the smaller decrease in cash expenditures towards
inventory is that sales have started to increase and the company has used up
some of the overstock it had for the last couple of years. Changes in pre-
paid expenses in regards to cash flow increased by $90,000 for the six months
ending October 31, 2010. Conversely, changes in prepaid expenses in regards
to cash flow increased by $5,000 for the six-month ending October 31, 2009.
Cash towards income tax overpayment increased $64,000 for the six months
ended October 31, 2010 and it increased $67,000 for the same period last
year. Management paid income tax estimated based on prior year taxable in-
come.
For the six months ended October 31, 2010, accounts payable increased
$49,000, and decreased $5,000 for the same period ended October 31, 2009.
The current increase is a reflection of higher costs of raw materials and the
need for more inventory since sales have increased. Accrued expenses in-
creased $14,000 for the six months ended October 31, 2010, as it decreased by
$60,000 for the same period last year. The increase is due to elevated sales
commissions and more employees than last year.
Investing
---------
As for our investment activities, the Company has spent approximately $32,000
on acquisitions of property and equipment for the current six-month period
and $28,000 was spent during the six months ended October 31, 2009.
Additionally, the Company continues to purchase marketable securities, which
include municipal bonds and quality stocks. Cash spent on purchases of mar-
ketable securities for the six months ended October 31, 2010 was $532,000 and
$2,364,000 was spent for the corresponding period last year. We use "money
manager" accounts for most stock transactions. By doing this, the Company
gives an independent third party firm, who are experts in this field, per-
mission to buy and sell stocks at will. The Company pays a quarterly service
fee based on the value of the investments. Furthermore, the Company con-
tinues to purchase back its common stock when the opportunity arises. For
the six months ended October 31, 2010, the Company purchased $46,000 worth of
treasury stock and $225,000 worth was bought back for the six months ended
October 31, 2009. We have been actively searching for stockholders that have
been "lost" over the years. The payment of dividends over the last six fis-
cal years has also prompted many stockholders and/or their relatives and
descendants to sell back their stock to the Company. We have also made pur-
chases of company stock on the open market.
Financing
---------
Cash flows from financing activities decreased by $923,000 for the six months
ending October 31, 2010. That figure consists of the payment of dividends
during the second quarter. The company declared a dividend of $0.20 per
share of common stock on September 30, 2010 and these dividends were paid by
October 31, 2010. As for the prior year numbers, net cash used in financing
activities was $784,000 for the six months ending October 31, 2009. A
dividend of $0.17 per common share was declared and paid during the second
fiscal quarter last year.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
October 31,
2010 2009
---------------------------
Working capital $ 26,216,000 $ 25,211,000
Current ratio 33.607 38.572
Quick ratio 30.854 34.118
Results of Operations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,177,000 for the quarter ended October 31, 2010, which is a
15.98% increase from the corresponding quarter last year. Year-to-date net
sales were $4,184,000 at October 31, 2010, which is an 8.96% increase from
the same period last year. Since the majority of the Company's products are
tied to the housing market, the increase in sales is a result of the in-
creased growth in the housing market. Cost of goods sold was 50.25% of net
sales for the quarter ended October 31, 2010 and 62.9% for the same quarter
last year. Year-to-date cost of goods sold percentages were 55.5% for the
current six months and 60.5% for the corresponding six months last year.
Management has been keeping labor and other manufacturing expenses in check
and with the increase in sales, the costs of good sold percentages are on the
rise. Also, the actual expense for inventory has decreased because we are
using up excess inventory and new orders placed have been delayed.
Operating expenses were 28.3% of net sales for the quarter ended October 31,
2010 as compared to 34.0 % for the corresponding quarter last year. Year-
to-date operating expenses were 29.1% of net sales for the six months ended
October 31, 2010, while they were 32.1% for the same period last year.
Keeping operating expenses around 30% of net sales, as the company has been
able to achieve over the years, shows that management keeps a close eye on
these expenses from year to year. Income from operations for the quarter
ended October 31, 2010 was at $467,000, which is a 705.17% increase from the
corresponding quarter last year, which had income from operations of $58,000.
Income from operations for the six months ended October 31, 2010 was at
$643,000, which is a 127.21% increase from the corresponding six months last
year, which had income from operations of $283,000.
Other income and expenses showed gains of $98,000 and $228,000 for the quar-
ter and six months ended October 31, 2010, respectively. The other income
and expense numbers for last year also showed gains of $326,000 for the
quarter and $412,000 for the six months ending October 31, 2009. Dividend
and interest income was down 13.84% for the current quarter and was down
6.71% for the current six-month period when compared to the same time periods
last year. Gain and loss on investments is where the biggest loss is in this
category. Management did not have to write down as many impaired investments
for the current periods. It just happened that bonds matured and management
bought those bonds at premiums, so the loss is now posted on the books. For
the quarter ended October 31, 2010, management wrote down $3,000 for impaired
investments. This is compared to writes down of $34,000 for the same quarter
last year. For the year-to-date ended October 31, 2010, management wrote
down $11,000 for impaired investments and $89,000 was wrote down for the same
period last year.
Net income for the quarter ended October 31, 2010 was at $405,000, a 50.56%
increase from the corresponding quarter last year, which showed net income of
$269,000. Net income for the six months ended October 31, 2010 was $654,000,
a 38.27% increase from the same period last year. Net income for the six
months ended October 31, 2009 was $473,000. Earnings per common share for
the quarter ended October 31, 2010 were $0.08 per share and $0.13 per share
for the year-to-date numbers. EPS for the quarter and six months ended
October 31, 2009 were $0.05 per share and $0.09 per share, respectively.
New Product Development
~~~~~~~~~~~~~~~~~~~~~~~
The new Hold-Up Switch (pt # HD-1) is now in production. The HD-1 requires
no key to reset and is jumper selectable for latching or non-latching. It is
tamper resistant, and can incorporate an end-of-line resistor.
Mold design is currently being completed on a miniature surface-mount contact
switch with terminal blocks. This has been requested by customers for some
time and will be the Company's smallest surface mount terminal switch.
The E-Z Duct Quarter Round line is in stock and a line of connecting pieces
of splices and corners will soon be added.
Along with the dual terminal resistor packs the Company has also added a
single terminal version that incorporates one specified value resistor.
From more customer requests the Company has added a stubby version to our
3/4" and 1" steel door recessed contacts. These will be in the Company's
80RS-12 and 8080-TRS series switches.
Engineering is completing design on a garage door alert which will monitor
when the garage door has been left open and will automatically shut the
door - either by a timer function after each vehicle leaves the garage and/or
closing at dusk. Management believes this will be a good complimentary
product as most home burglaries happen through a garage door that is left
open or unlocked.
Engineering is also working on a monitoring device for guns or other moveable
merchandise. This alarm will have a wire run through the merchandise and
when someone wants to look at the item, the alarm is disarmed for removal of
the item and the reset. If the alarm is not reset or if the merchandise is
tampered with, the alarm will sound. Management anticipates that this
product will sell well to pawn shops, secondhand stores, flea markets, and
other types of retail outlets.
Engineering is also looking to complete a design on an 110-volt Current
Controller which would work with our contact switches to secure the door of
a storage unit and also turn on the light when the door is opened.
Recently Issued Accounting Pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There are no new accounting pronouncements that significantly affect the
Company.
Other Information
~~~~~~~~~~~~~~~~~
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 our products, since we sell to
distributors and OEM manufacturers. The products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. 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 quarterly report,
have concluded that our disclosure controls and procedures are effective
based on their evaluation of these controls and procedures required by para-
graph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A(T). Controls and Procedures
Evaluation of disclosure controls and procedures:
-------------------------------------------------
Based on their evaluation of our disclosure controls and procedures (as de-
fined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October
31, 2010, our president and chief executive officer and our chief financial
officer have concluded that our disclosure controls and procedures are
effective such that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and (ii) accumulated and communicated to our
management, including our chief executive officer and our chief financial
officer, as appropriate to allow timely decisions regarding disclosure. A
control system cannot provide absolute assurance, however, that the ob-
jectives of the control systems are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if any, within a company have been detected.
Changes in internal controls over financial reporting:
------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal con-
trols over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting:
------------------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate in-
ternal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was
designed to provide reasonable assurance regarding the reliability of finan-
cial reporting and the preparation of financial statements for external pur-
poses, in accordance with generally accepted accounting principles. Because
of inherent limitations, a system of internal control over financial re-
porting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide no reasonable assurance of
achieving their control objectives. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate due to change in conditions, or that the degree of com-
pliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our in-
ternal control over financial reporting using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on its evaluation, our manage-
ment concluded that as of October 31, 2010 our internal control over
financial reporting is effective.
This quarterly report does not include an attestation report of the Corpor-
ation's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by
the Corporation's registered public accounting firm pursuant to temporary
rules of the SEC that permit the Corporation to provide only the management's
report in this quarterly report.
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. Exhibits
31. Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Chief Financial Officer
32. Certifications pursuant to 18 U.S.C. 1350
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Chief Financial Officer
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended October 31, 2010.
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 12-15-2010 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
Date 12-15-2010 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller
