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 quarterly period ended January 31, 2011
[ ] 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
March 17, 2011 was 5,052,275.
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 nine month period
ended January 31, 2011, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
January 31, April 30,
2011 2010
------------ ------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 4,925,000 $ 3,641,000
Marketable securities (Note 2) 18,882,000 19,607,000
Accounts receivable:
Trade, net of $12,063 and $19,700
doubtful account allowance 1,297,000 1,295,000
Note receivable, current 5,000 11,000
Income tax overpayment 239,000 216,000
Inventories (Note 3) 1,845,000 1,968,000
Prepaid expenses 75,000 142,000
Deferred income taxes 390,000 266,000
------------ ------------
Total Current Assets $27,658,000 $27,146,000
Property and Equipment, net at cost $ 663,000 $ 733,000
Other Assets
Investment in Land Limited Partnership,
at cost 210,000 200,000
Projects in process 194,000 112,000
Note receivable 2,000 7,000
Other 1,000 0
------------ ------------
Total Other Assets $ 407,000 $ 319,000
TOTAL ASSETS $28,728,000 $28,198,000
============ ============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
January 31, April 30,
2011 2010
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 57,000 $ 57,000
Dividends payable 484,000 395,000
Accrued expenses
Payroll and other expenses 271,000 198,000
Property taxes 2,000 0
------------ ------------
Total Current Liabilities $ 814,000 $ 650,000
Long-Term Liabilities
Aircraft owership deposit payable 5,000 5,000
Deferred income taxes 49,000 75,000
------------ ------------
Total Long-Term Liabilities $ 54,000 $ 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 71,000 13,000
Retained earnings 28,495,000 28,102,000
Treasury stock, 3,448,457 and 3,429,748
shares, at cost (3,391,000) (3,332,000)
------------ ------------
Total Stockholders' Equity $27,860,000 $27,468,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,728,000 $28,198,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENTS
(unaudited)
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2011 2011 2010 2010
---------------------------------------------------
Net Sales $ 2,220,000 $ 6,404,000 $ 1,918,000 $ 5,758,000
Less: cost of goods sold (1,119,000) (3,442,000) (1,062,000) (3,385,000)
------------ ------------ ------------ ------------
Gross Profit $ 1,101,000 $ 2,962,000 $ 856,000 $ 2,373,000
Operating Expenses:
General and
administrative 184,000 567,000 188,000 536,000
Selling 381,000 1,155,000 351,000 1,182,000
Engineering 22,000 59,000 19,000 51,000
Rent paid to related
parties 11,000 34,000 11,000 34,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 598,000 $ 1,815,000 $ 569,000 $ 1,803,000
Income From Operations 503,000 1,147,000 287,000 570,000
Other Income (Expense)
Other 2,000 9,000 1,000 137,000
Dividend and interest
income 216,000 536,000 204,000 546,000
Gain (loss) on sale of
investments 97,000 (2,000) 22,000 (51,000)
Gain (loss) on sale of
assets 0 0 0 7,000
------------ ------------ ------------ ------------
$ 315,000 $ 543,000 $ 227,000 $ 639,000
Income Before Provisions
for Income Tax 818,000 1,690,000 514,000 1,209,000
Provisions for Income Tax
Current Expense 202,000 476,000 128,000 345,000
Deferred tax expense
(benefit) (136,000) (192,000) 0 6,000
------------ ------------ ------------ ------------
Total Income Tax Expense 66,000 284,000 128,000 351,000
Net Income $ 752,000 $ 1,406,000 $ 386,000 $ 858,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.20
per share) 0 (1,013,000)
Common Stock ($0.17
per share) 0 (880,000)
Income Per Share of Common Stock (Note 5):
Basic and diluted $0.15 $0.28 $ 0.08 $0.17
Weighted Average Number of
Common Shares Outstanding:
Basic 5,054,500 5,059,213 5,073,084 5,085,395
Diluted 5,075,000 5,079,713 5,093,584 5,105,895
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2011 2011 2010 2010
----------------------------------------------------
Net Income $ 752,000 $ 1,406,000 $ 386,000 $ 858,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding
gains (losses) arising
during period (98,000) 50,000 209,000 1,523,000
Reclassification adjustment
for (gains) losses (76,000) 51,000 9,000 45,000
Income tax expense related
to other comprehensive
income 73,000 (43,000) (91,000) (656,000)
------------ ------------ ------------ ------------
Other Comprehensive
Income $ (101,000) $ 58,000 $ 127,000 $ 912,000
Comprehensive Income $ 651,000 $ 1,464,000 $ 513,000 $ 1,770,000
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
Nine months Nine months
ended ended
January 31, January 31,
2011 2010
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,406,000 $ 858,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 114,000 120,000
(Gain) loss on sale of investments 2,000 51,000
(Gain) loss on sale of assets 0 (7,000)
Reserve for bad debts 10,000 (47,000)
Reserve for obsolete inventory 8,000 63,000
Deferred income taxes (192,000) 6,000
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (11,000) 223,000
Inventories 115,000 588,000
Prepaid expenses 57,000 (7,000)
Income tax overpayment (23,000) (99,000)
Increase (decrease) in:
Accounts payable 0 13,000
Accrued expenses 75,000 (46,000)
------------ ------------
Net cash provided by (used in) operating
activities $ 1,561,000 $ 1,716,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured (82,000) (80,000)
(Purchase) of property/equipment (44,000) (28,000)
Proceeds from sale of marketable securities 1,584,000 239,000
(Purchase) of marketable securities (762,000) (2,558,000)
(Loans) made to employees 0 (2,000)
Collections of loans to employees 10,000 4,000
(Purchase) of treasury stock (59,000) (225,000)
------------ ------------
Net cash provided by (used in) investing
activities $ 647,000 $(2,650,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (924,000) (785,000)
------------ ------------
Net cash provided by (used in) financing
activities $ (924,000) $ (785,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 1,284,000 $(1,719,000)
Cash and cash equivalents, beginning of
period $ 3,641,000 $ 4,671,000
------------ ------------
Cash and cash equivalents, end of period $ 4,925,000 $ 2,952,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $ 497,000 $ 480,000
Interest expense 0 0
Cash receipts for:
Income taxes 0 38,000
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2011
Note 1 Unaudited Interim Financial Statements
The accompanying unaudited 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 in the United States of America (US GAAP) for complete financial
statements. These financial statements should be read in conjunction with
the financial statements and notes contained in the company's annual report
on Form 10-K for the year ended April 30, 2010. In the opinion of manage-
ment, all adjustments, consisting only of normal recurring adjustments con-
sidered 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. We have evaluated subsequent events
through March 17, 2011, the issuance date of these financial statements. The
Company did not have any material, recognizable subsequent events.
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 February 2011 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 com-
prehensive 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 January 31, 2011, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 9,394,000 $ 73,000 $ (265,000) $ 9,202,000
Corporate bonds $ 180,000 $ 7,000 $ 0 $ 187,000
Equity securities $ 7,864,000 $ 679,000 $ (370,000) $ 8,173,000
Money markets and CDs $ 1,320,000 $ 0 $ 0 $ 1,320,000
------------ ------------ ------------ ------------
Total $18,758,000 $ 759,000 $ (635,000) $18,882,000
In accordance with US GAAP, the Company evaluates all marketable
ecurities 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 did not
record an impairment loss for the quarter ended January 31, 2011 and recorded
an impairment loss of $11,000 for the nine months ended January 31, 2011. As
for the corresponding periods last year, $19,000 worth of impairment loss was
recorded for the quarter, while $108,000 of loss was recorded for the nine
months ended January 31, 2010.
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 January 31, 2011.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$4,571,000 $ (145,000) $1,742,000 $ (120,000) $6,313,000 $ (265,000)
Equity securities
$1,508,000 $ (110,000) $1,624,000 $ (260,000) $3,132,000 $ (370,000)
Total
$6,079,000 $ (225,000) $3,366,000 $ (380,000) $9,445,000 $ (635,000)
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 January 31, 2011.
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. The individual holdings have been
evaluated, and due to management's plan to hold onto these investments for an
extended period, the Company does not consider these investments to be other-
than-temporarily impaired at January 31, 2011.
Note 3 Inventories
At January 31, 2011, inventories consisted of the following:
Raw materials $ 1,273,000
Work in process 508,000
Finished goods 242,000
------------
2,023,000
Less: allowance for obsolete inventory (178,000)
------------
Totals $ 1,845,000
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
January 31,
2011 2010
---------------------------
Net revenue:
Security alarm products 1,921,000 1,713,000
Other products 299,000 205,000
------------ ------------
Total net revenue $ 2,220,000 $ 1,918,000
Income from operations:
Security alarm products 435,000 256,000
Other products 68,000 31,000
------------ ------------
Total income from operations $ 503,000 $ 287,000
Identifiable assets:
Security alarm products 2,694,000 2,861,000
Other products 974,000 926,000
Corporate general 25,060,000 23,754,000
------------ ------------
Total assets $28,728,000 $27,541,000
Depreciation and amortization:
Security alarm products 6,000 6,000
Other products 25,000 26,000
Corporate general 7,000 8,000
------------ ------------
Total depreciation and amortization $ 38,000 $ 40,000
Capital expenditures:
Security alarm products 0 0
Other products 11,000 0
Corporate general 0 0
------------ ------------
Total capital expenditures $ 11,000 $ 0
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 January 31, 2011
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 752,000
===========
Basic EPS $ 752,000 5,054,500 $ 0.149
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 752,000 5,075,000 $ 0.148
For the nine months ended January 31, 2011
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,406,000
===========
Basic EPS $1,406,000 5,059,213 $ 0.278
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,406,000 5,079,713 $ 0.277
For the three months ended January 31, 2010
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 386,000
===========
Basic EPS $ 386,000 5,073,084 $ 0.076
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 386,000 5,093,584 $ 0.076
For the nine months ended January 31, 2010
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 858,000
===========
Basic EPS $ 858,000 5,085,395 $ 0.169
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 858,000 5,105,895 $ 0.168
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
January 31, 2011 and 2010. Likewise, the Company paid matching contributions
of $9,000 during the nine-month period ending January 31, 2011 and 2010.
There were no discretionary contributions paid during either the quarters or
nine-month periods ending January 31, 2011 and 2010, 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
inherent 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 January 31, 2011, 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 January 31, 2011
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Securities $18,882,000 $ 0 $ 0 $18,882,000
------------ ---------- ---------- ------------
Total fair value of
assets measured on a
recurring basis $18,882,000 $ 0 $ 0 $18,882,000
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 con-
densed 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 $1,284,000 for the nine months ended January 31, 2011,
while, for the same period last year, net cash decreased $1,719,000.
Accounts receivable increased $11,000 for the current nine months and de-
creased $223,000 for the same period last year. The increase in cash flow
for accounts receivable is a reflection of increased sales. At January 31,
2011, 73.70% of the receivables were considered current (less than 45 days)
and 1.55% of the total were over 90 days past due. For comparison, 73.79% of
the receivables were current and 3.64% were past 90 days at January 31, 2010.
Inventories decreased $115,000 for the current nine months, as it decreased
$588,000 for the same period last year. The current decrease is due to in-
creased sales and the inability to have ample supply of some raw materials.
Changes in prepaid expenses in regards to cash flow decreased by $57,000 and
increased by $7,000 for the nine-month periods ending January 31, 2011 and
2010, respectively. For the current fiscal year, there have been income tax
overpayments. Cash towards income tax overpayment increased $23,000 for the
nine months ended January 31, 2011, as it increased $99,000 for the same
period last year. Management paid income tax estimates based on prior year
taxable income and the company has not received its income tax refund from
the federal level yet.
For the nine months ended January 31, 2011, cash flow towards accounts
payable did not fluctuate. Cash flow towards accounts payable increased
$13,000 for the same period ended January 31, 2010. The change in cash in
regards to accounts payable can vary. It really depends on the time of the
month the invoices are due, since the company pays all its invoices within
the terms. Accrued expenses increased $75,000 for the nine months ended
January 31, 2011, and these expenses decreased $46,000 for the corresponding
nine months last year. The current increase is a result of increased sales
commissions and more employees.
Investing
---------
As for our investment activities, $44,000 was spent on purchases of property
and equipment during the current nine-month period and $28,000 was spent
during the nine months ended January 31, 2010. Additionally, the Company
continues to purchase marketable securities, which include municipal bonds
and quality stocks. Cash spent on purchases of marketable securities for the
nine months ended January 31, 2011 was $762,000 and $2,558,000 was spent for
the corresponding period last year. In addition, proceeds from the sale of
marketable securities for the nine months ended January 31, 2011 were
1,584,000 and $239,000 for the same 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, permission to
buy and sell stocks at will. The Company pays a quarterly service fee based
on the value of the investments. Furthermore, the Company continues to pur-
chase back its common stock when the opportunity arises. For the nine months
ended January 31, 2011, the Company purchased $59,000 worth of treasury stock
and $225,000 worth was bought back for the nine months ended January 31,
2010. We have been actively searching for stockholders that have been "lost"
over the years. The payment of dividends over the last six fiscal years has
also prompted many stockholders and/or their relatives and descendants to
sell back their stock to the Company.
Financing
---------
Cash flows from financing activities decreased by $924,000 for the nine
months ending January 31, 2011. 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 $785,000 for the nine months ending January 31,
2010. A dividend of $0.17 per common share was also 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
January 31,
2011 2010
---------------------------
Working capital $ 26,844,000 $ 25,732,000
Current ratio 33.978 37.655
Quick ratio 30.840 33.581
Results of operations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,220,000 for the quarter ended January 31, 2011, which is a
15.75% increase from the corresponding quarter last year. Year-to-date net
sales at January 31, 2011 were $6,404,000, which is an 11.22% increase from
the same period last year. The Company has seen increases in sales as a re-
sult of overall better economic times, as compared to the same time last
year. Cost of goods sold was 50.4% of net sales for the quarter ended Jan-
uary 31, 2011 and 55.4% for the same quarter last year. Year-to-date cost of
goods sold percentages were 53.7% for the current nine months and 58.9% for
the corresponding nine months last year. Management has been keeping labor
and other manufacturing expenses in check and with the increase in sales, the
cost of goods sold percentages are getting closer to being within the desired
range of 45 to 50%. Management raised prices at January 1, 2011. This
action will also help with the increase the percentage.
Operating expenses were 26.9% of net sales for the quarter ended January 31,
2011 as compared to 29.7% for the corresponding quarter last year. Year-to-
date operating expenses were 28.3% of net sales for the nine months ended
January 31, 2011, while they were 31.3% for the same period last year. Having
relatively the same percentages for operating expenses shows that management
has a good grip on spending habits. Income from operations for the quarter
ended January 31, 2011 was at $503,000, which is a 75.26% increase from the
corresponding quarter last year, which had income from operations of
$287,000. Income from operations for the nine months ended January 31, 2011
was at $1,147,000, which is a 101.23% increase from the corresponding nine
months last year, which had income from operations of $570,000.
Other income and expenses showed gains of $315,000 and $543,000 for the
quarter and nine months ended January 31, 2011. The numbers for the cor-
responding periods last year were also gains of $227,000 for the quarter and
$639,000 for the nine-months ending January 31, 2010. Dividend and interest
income was up 5.9% for the quarter and was down 1.8% for the current nine-
month period when comparing to the same time periods last year. Gain and
loss on investments is where the biggest gains are in this category. Man-
agement did not need to write down any investments as being impaired for the
current quarter. This is compared to write downs of $19,000 for the same
quarter last year. For the year-to-date ended January 31, 2011, management
wrote down $11,000 for impaired investments and $108,000 was written down for
the same period last year.
Net income for the quarter ended January 31, 2011 was $752,000, which is a
94.8% increase from the corresponding quarter last year, which showed a net
gain of $386,000. Net income for the nine months ended January 31, 2011 was
$1,406,000, a 63.9% increase from the same period last year. Net income for
the nine months ended January 31, 2010 was $858,000. Earnings per common
share for the quarter ended January 31, 2011 was $0.15 per share and $0.28
per share for the year-to-date numbers. EPS for the quarter and nine months
ended January 31, 2010 was $0.08 per share and $0.17 per share, respectively.
New product information
~~~~~~~~~~~~~~~~~~~~~~~
Mold design has been completed and production has started on the Company's
700-Series switches. These are a miniature surface mount contact switch with
terminal blocks. Customers have requested these switches for some time now
and they will be the Company's smallest surface mount terminal switches.
The splice and corner connecting pieces for the E-Z Duct Quarter Round Race-
way are currently being molded. The Company is also working on a plastic
housing for our very popular flat magnet, which is part number MF-875.
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.
A new water sensor made from a flexible cord has been engineered. This de-
sign will contain multiple sensors to cover a larger detection area such as
along the wall of a computer or utility room.
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 Jan-
uary 31, 2011, our president and chief executive officer and our chief finan-
cial 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 controls
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 January 31, 2011 our internal control over finan-
cial 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 January 31, 2011.
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 03-17-2011 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
Date 03-17-2011 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller
