OAKRIDGE HOLDINGS INC - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - OAKRIDGE HOLDINGS INC	Financial_Report.xls
EX-31 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER - OAKRIDGE HOLDINGS INC	ex-31.htm
EX-32 - CERTIFICATION OF CHIEF FINANCIAL OFFICER - OAKRIDGE HOLDINGS INC	ex-32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2011

TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE EXCHANGE ACT

For the transition period from to

Commission file number 0-1937

OAKRIDGE HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

MINNESOTA		41-0843268
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)

400 WEST ONTARIO STREET, CHICAGO, ILLINOIS	60654
(Address of principal executive offices)	(Zip Code)

(312) 505-9267

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

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

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such a shorter period that the registrant was required to submit and post such files.)

o Yes o No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

1,431,503 shares as of the date of this report

Indicate by check mark, whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 or the Exchange Act.

Large Accelerated filer	o	Accelerated Filer	o

Non-accelerated filer	o	Smaller Reporting Company	x

(Do not check if a smaller reporting company)

OAKRIDGE HOLDINGS, INC.

FORM 10-Q

For the quarter ended December 31, 2011

TABLE OF CONTENTS

PART I.	Financial Information		3

ITEM 1.	Condensed Consolidated Financial Statements:		3

	(a)	Condensed Consolidated Balance Sheets as of December 31, 2011 (unaudited) and June 30, 2011	3

	(b)	Condensed Consolidated Statements of Income for the three months ended December 31, 2011 and 2010 (unaudited) and six months ended December 31, 2011 and 2010 (unaudited)	5

	(c)	Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2011 and 2010 (unaudited)	6

	(d)	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		13

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		18

ITEM 4.	Controls and Procedures		18

PART II.	Other Information		18

ITEM 1.	Legal Proceedings		18

ITEM 1A.	Risk Factors		18

ITEM 2-3.	Not Applicable		19

ITEM 4.	Submission of Matters to a Vote of Security Holders		19

ITEM 5.	Not applicable		19

ITEM 6.	Exhibits		19

SIGNATURES			20

PART I – FINANCIAL INFORMATION	FORM 10-Q
ITEM 1 – FINANCIAL STATEMENTS

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

	December 31, 2011 (unaudited)			June 30, 2011
ASSETS

Current assets:
Cash and cash equivalents	$	355,405		$	416,997
Restricted cash		86,752			89,857
Receivables, net		3,310,027			2,128,663
Inventories:
Production, net		6,852,077			7,535,252
Cemetery, mausoleum space and markers		593,850			599,445
Other current assets		122,754			44,835
Deferred income taxes		117,000			167,000
Total current assets		11,437,865			10,982,049

Property, plant and equipment:
Property, plant and equipment, at cost		6,979,689			6,822,008
Less accumulated depreciation		(4,641,643	)		(4,519,040	)
Property, plant and equipment, net		2,338,046			2,302,968

Other assets:
Preneed trust investments		2,253,644			2,075,713
Cemetery perpetual care trusts		5,290,058			5,345,922
Deferred income taxes		303,000			303,000
Deferred financing costs		49,684			53,556
Other		7,549			4,238
Total other assets		7,903,935			7,782,429

Total assets	$	21,679,846		$	21,067,446

See accompanying notes to the condensed consolidated financial statements

PART I – FINANCIAL INFORMATION	FORM 10-Q
ITEM 1 – FINANCIAL STATEMENTS

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

	December 31,
	2011 (unaudited)			June 30, 2011
LIABILITIES

Current liabilities:
Lines of credit - bank	$	1,710,845		$	1,710,845
Trade accounts payable		983,133			1,456,555
Due to finance company		2,009,809			2,088,037
Accrued liabilities		883,284			785,566
Deferred revenue		2,706,082			1,697,935
Notes payable – officers		300,000			300,000
Notes payable - others		10,000			30,000
Debentures – officers		560,000			—
Current maturities of long-term debt		329,803			244,800
Total current liabilities		9,492,956			8,313,738

Long-term liabilities:
Long-term debt, net of current maturities		3,043,821			3,249,746
Debentures – officers		—			560,000
Non-controlling interest in pre-need care trust investments		2,253,644			2,075,713
Total long-term liabilities		5,297,465			5,885,459

Total liabilities		14,790,421			14,199,197

Non-controlling interest in perpetual care trust investments		5,290,058			5,345,922

Stockholders’ equity:
Common stock		143,151			143,151
Additional paid-in-capital		2,028,975			2,028,975
Accumulated deficit		(572,759	)		(649,799	)
Total stockholders’ equity		1,599,367			1,522,327

Total liabilities and stockholders’ equity	$	21,679,846		$	21,067,446

See accompanying notes to the condensed consolidated financial statements

PART I – FINANCIAL INFORMATION	FORM 10-Q
ITEM 1 – FINANCIAL STATEMENTS

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

	Three Months Ended December 31,						Six Months Ended December 31,
	2011			2010			2011			2010

Revenue, net:
Cemetery	$	876,538		$	734,528		$	1,804,220		$	1,556,076
Aviation		2,045,567			3,802,964			4,115,709			6,967,428
Interest – Care Funds		20,657			13,582			40,835			31,937
Other		2,036			1,320			2,036			1,784
Total revenue		2,944,798			4,552,394			5,962,800			8,557,225

Operating expenses:
Cost of cemetery sales		502,113			498,251			1,050,309			965,284
Cost of aviation sales		1,601,640			3,367,999			3,684,871			6,212,623
Sales and marketing		128,112			75,021			230,224			229,982
General and administrative		329,455			289,561			643,556			615,397
Total operating expenses		2,561,320			4,230,832			5,608,960			8,023,286

Operating income		383,478			321,562			353,840			533,939

Other income (expense):
Interest income		1,826			2,155			7,216			3,986
Interest expense		(127,245	)		(118,972	)		(234,016	)		(243,592	)
Total other expense		(125,419	)		(116,817	)		(226,800	)		(239,606	)

Income from continuing operations before income taxes		258,059			204,745			127,040			294,333

Provision for income taxes		100,000			81,000			50,000			117,000

Net income	$	158,059		$	123,745		$	77,040		$	177,333

Net income per common share – basic	$	0.110		$	0.086		$	0.054		$	0.124

Weighted average number of common shares outstanding – basic		1,431,503			1,431,503			1,431,503			1,431,503

Net income per common shares – diluted	$	0.064		$	0.054		$	0.039		$	0.082

Weighted average number of common shares outstanding – diluted		2,711,503			2,527,217			2,711,503			2,514,290

See accompanying notes to the condensed consolidated financial statements

PART I – FINANCIAL INFORMATION	FORM 10-Q
ITEM 1 – FINANCIAL STATEMENTS

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Six Months Ended December 31,

	2011			2010

Cash flows from operating activities:
Net income	$	77,040		$	177,333
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation and amortization		127,804			134,388
Deferred income taxes		50,000			117,000
Accounts receivable		(1,181,364	)		(47,403	)
Inventories		688,770			172,879
Other assets		(81,230	)		7,663
Accounts payable and due to finance company		(551,650	)		(185,739	)
Gains (losses) on non-controlling trust investments		61,877			(49,790	)
Deferred revenue		1,008,147			(308,023	)
Accrued liabilities		97,718			(6,495	)

Net cash flows from operating activities		297,112			11,813

Cash flows from investing activities:
Purchases of property and equipment		(159,010	)		(124,836	)
Purchases of non-controlling investments in trusts		(137,399	)		(304,147	)
Sales of non-controlling investments in trusts		75,522			353,937
Restricted cash		3,105			(276	)

Net cash flows used in investing activities		(217,782	)		(75,322	)

Cash flows from financing activities:
Net borrowings (repayments) on note payable bank		—			200,000
Payments of short-term debt		(20,000	)		(30,000	)
Proceeds from issuance of long-term debt		—			50,000
Principal Payments on long-term debt		(120,922	)		(142,363	)
Net cash flows from (used in) financing activities		(140,922	)		77,637

Net change in cash		(61,592	)		14,128

Cash and cash equivalents:

Beginning of year		416,997			372,797

End of period	$	355,405		$	386,925

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	234,016		$	243,592

See accompanying notes to the condensed consolidated financial statements

PART I – FINANCIAL INFORMATION	FORM 10-Q
ITEM 1 – FINANCIAL STATEMENTS

OAKRIDGE HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements include the accounts of Oakridge Holdings, Inc. (the “Company”) and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present such information fairly. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011. Operating results for the six-month period ended December 31, 2011 may not necessarily be indicative of the results to be expected for any other interim period or for the full year.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the financial statements include but are not limited to accounts receivable, depreciation and accruals. Actual results could differ from those estimates.

2. EARNINGS PER COMMON SHARE

Earnings per Common Share (EPS) are presented on both a basic and diluted basis in accordance with the provisions of Accounting Standards Codification Topic 260 – Earnings per Share. Basic EPS is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the maximum dilution that would result after giving effect to dilutive convertible debentures. The following table presents the computation of basic and diluted EPS:

	Six Months Ended December 31,
	2011		2010

Net income from continuing operations	$	77,040	$	177,333

Average shares of common stock outstanding used to compute basic earnings per common share		1,431,503		1,431,503

Additional common shares to be issued assuming conversion of convertible debentures		1,280,000		1,082,787

Additional income from continuing operations, assuming conversion of convertible debentures at the beginning of the period		28,800		28,088

Shares used to compute dilutive effect of convertible debentures		2,711,503		2,514,290

Basic earnings per common share from continuing operations	$	.054	$	.124

Diluted earnings per common share from continuing operations	$	.039	$	.082

	Three Months Ended December 31,
	2011		2010

Net income from continuing operations	$	158,059	$	123,745

Average shares of common stock outstanding used to compute basic earnings per common share		1,431,503		1,431,503

Additional common shares to be issued assuming conversion of convertible debentures		1,280,000		1,095,714

Additional income from continuing operations, assuming conversion of convertible debentures at the beginning of the period		14,400		12,363

Shares used to compute dilutive effect of convertible debentures		2,711,503		2,527,217

Basic earnings (loss) per common share from continuing operations	$	.110	$	.086

Diluted earnings (loss) per common share from continuing operations	$	.064	$	.054

3. COMPREHENSIVE INCOME

The Company has no significant components of other comprehensive income and accordingly, comprehensive income (loss) is the same as net income (loss) for all periods.

4. OPERATING SEGMENTS AND RELATED DISCLOSURES

The Company’s operations are classified into two principal industry segments: cemeteries and aviation ground support equipment.

The Company evaluates the performance of its segments and allocates resources to them based primarily on operating income.

The tables below summarize information about reported segments for the three months and six months ended December 31, 2011 and 2010:

SIX MONTHS ENDED

DECEMBER 31, 2011:

	Aviation
	Ground
	Support
	Equipment		Cemeteries		Corporate			Consolidation

Revenues	$	4,115,709	$	1,845,055	$	2,036		$	5,962,800

Depreciation and amortization		48,272		78,000		1,532			127,804

Gross Margin		430,838		794,746		2,036			1,227,620

Selling Expenses		68,744		161,480		—			230,224

General & Administrative Expenses		148,127		348,998		146,431			643,556

Interest Expense		191,268		448		42,300			234,016

Interest Income		106		7,110		—			7,216

Income (loss) before Taxes		22,805		290,930		(186,695	)		127,040

Capital Expenditures		115,158		43,852					159,010

Segment Assets at 12/31/11:
Inventory		6,852,077		593,850		—			7,445,927
Property, Plant & Equipment, net		1,595,067		736,255		6,724			2,338,046

SIX MONTHS ENDED

DECEMBER 31, 2010:

	Aviation
	Ground
	Support
	Equipment		Cemeteries		Corporate			Consolidation

Revenues	$	6,967,428	$	1,588,013	$	1,784		$	8,557,225

Depreciation		54,373		78,000		2,015			134,388

Gross Margin		754,805		622,729		1,784			1,379,318

Selling Expenses		87,193		142,789		—			229,982

General & Administrative Expenses		135,471		281,093		198,833			615,397

Interest Expense		201,674		349		41,569			243,592

Interest Income		211		3,775		—			3,986

Income (loss) before Taxes		330,678		202,273		(238,618	)		294,333

Capital Expenditures		60,627		56,019		8,190			124,836

Segment Assets:
Inventory		6,463,821		618,043		—			7,081,864
Property, Plant & Equipment, net		1,387,049		791,154		10,075			2,188,278

THREE MONTHS ENDED

DECEMBER 31, 2011:

	Aviation
	Ground
	Support
	Equipment		Cemeteries		Corporate			Consolidation

Revenues	$	2,045,567	$	897,195	$	2,036		$	2,944,798

Depreciation and amortization		24,300		39,000		500			63,800

Gross Margin		443,927		395,082		2,036			841,045

Selling Expenses		34,755		93,357		—			128,112

General & Administrative Expenses		80,804		174,717		73,934			329,455

Interest Expense		106,765		5		20,475			127,245

Interest Income		65		1,761		—			1,826

Income (loss) before Taxes		221,668		128,764		(92,373	)		258,059

Capital Expenditures		83,424		11,873		(1,329	)		93,968

THREE MONTHS ENDED

DECEMBER 31, 2010:

	Aviation
	Ground
	Support
	Equipment		Cemeteries			Corporate			Consolidation

Revenues	$	3,802,964	$	748,110		$	1,320		$	4,552,394

Depreciation		28,173		39,000			1,515			68,688

Gross Margin		434,965		249,859			1,320			686,144

Selling Expenses		25,027		49,994			—			75,021

General & Administrative Expenses		65,866		117,899			105,796			289,561

Interest Expense		99,494		(1,954	)		21,432			118,972

Interest Income		48		2,107			—			2,155

Income (loss) before Taxes		244,626		86,027			(125,908	)		204,745

Capital Expenditures		50,510		34,664			2,550			87,724

5. FAIR VALUE MEASUREMENTS

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability between market participants at a measurement date.

Generally accepted accounting principles describes a fair value hierarchy that includes three levels of inputs to be used to measure fair value. The three levels are defined as follows as interpreted for use by the Company:

Level 1 – Inputs into the fair value methodology are based on quoted market prices in active markets.

Level 2 – Inputs into the fair value methodology are based on quoted prices for similar items, broker/dealer quotes, or models using market interest rates or yield curves. The inputs are generally seen as observable in active markets for similar items for the asset or liability, either directly or indirectly, for substantially the same term of the financial instrument.

Level 3 – Inputs into fair value methodology are unobservable and significant to the fair value measurement (primarily consisting of alternative type investments, which include but are not limited to limited partnership interests, hedges, private equity, real estate, and natural resource funds). Often these types of investments are valued based on historical cost and then adjusted by shared earnings of a partnership or cooperative, which can require some varying degree of judgment.

Information regarding assets (principally investments) and liabilities measured at fair value on a recurring basis as of December 31, 2011 and June 30, 2011 are as follows:

	Recurring Fair Value Measurements using
	Level I		Level II		Level III		Total Fair Value
December 31, 2011:

Assets at Fair Value:

Cemetery perpetual care and pre-need trust investments	$	—	$	7,543,702	$	—	$	7,543,702

Liabilities at Fair Value:

Non-controlling interest in pre-need trust investments	$	—	$	2,253,644	$	—	$	2,253,644

	Recurring Fair Value Measurements using
	Level I		Level II		Level III		Total Fair Value
June 30, 2011:

Assets at Fair Value:

Cemetery perpetual care and pre-need trust investments	$	—	$	7,421,635	$	—	$	7,421,635

Liabilities at Fair Value:

Non-controlling interest in pre-need trust investments	$	—	$	2,075,713	$	—	$	2,075,713

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of certain significant factors which have affected the Company’s financial position and operating results during the periods included in the accompanying condensed consolidated financial statements.

Management’s discussion and analysis of financial condition and results of operations, as well as other portions of this document, include certain forward-looking statements about the Company’s business and products, revenues, expenditures and operating and capital requirements. From time to time, information provided by the Company or statements made by its directors, officers or employees may contain “forward-looking” information subject to numerous risks and uncertainties. Any statements made herein that are not statements of historical fact are forward-looking statements including, but not limited to, statements concerning the characteristics and growth of the Company’s markets and customers, the Company’s objectives and plans for its future operations and products and the Company’s expected liquidity and capital resources. Such forward-looking statements are based on a number of assumptions and involve a number of risks and uncertainties, and, accordingly, actual results could differ materially for those discussed. Among the factors that could cause actual results to differ materially from those projected in any forward-looking statement are as follows: the effect of business and economic conditions; customer preferences for death care services; conditions in the industries in which the Company operates, particularly the airline industry; the Company’s ability to win government contracts; the impact of competitive products and continued pressure on prices realized by the Company for its products; constraints on supplies of raw material used in manufacturing certain of the Company’s products or services provided; capacity constraints limiting the production of certain products; changes in anticipated operating results, credit availability, equity market conditions or the Company’s debt levels that may further enhance or inhibit the Company’s ability to maintain or raise appropriate levels of cash; requirements for unforeseen maintenance, repairs or capital asset acquisitions; difficulties or delays in the development, production, testing, and marketing of products; market acceptance issues, including the failure of products to generate anticipated sales levels; difficulties in manufacturing process and in realizing related cost savings and other benefits; the effects of changes in trade, monetary and fiscal policies, laws and regulations; foreign exchange rates and fluctuations in those rates; the cost and effects of legal and administrative regulations and proceedings, including environmental proceedings; and the risk factors reported from time to time in the Company’s SEC reports. The Company undertakes no obligation to update any forward-looking statement as a result of future events or developments.

FINANCIAL CONDITION AND LIQUIDITY

The Company’s liquidity needs arise from its debt service, working capital and capital expenditures. The Company has historically funded its liquidity needs with proceeds from equity contributions, bank borrowing, short term notes from officers, cash flow from operations and the offering of its subordinated debentures. For the first six months of fiscal year 2012, the Company had a decrease in cash of $61,592 compared to a cash increase in the same period in fiscal year 2011 of $14,128. As of December 31, 2011, the Company had no cash equivalents.

During the six month period ended December 31, 2011, the Company recorded net income after taxes of $77,040. The Company’s net cash provided from operating activities was $297,112 in the first six months of fiscal year 2012 compared to net cash provided from operating activities of $11,813 in the same period in fiscal year 2011. The increase provided from operating activities was primarily due to an increase in deferred revenue and decrease in inventories, partially offset by a reduction in accounts payable and an increase in accounts receivable. During the first six months of fiscal 2012, cash used in investing activities was $217,782 primarily due to the purchase of equipment and net cash used in financing activities was $140,922 due to payments on debt to banks and short-term debt. The remaining increases and decreases in the components of the Company’s financial position reflect normal operating activity.

The Company had working capital of $1,944,909 at December 31, 2011, an decrease of $723,402 from June 30, 2011. The decrease in working capital was primarily due to the officers’ debentures becoming due July 1, 2012. Current assets amounted to $11,437,865 and current liabilities were $9,492,956, resulting in a current ratio of 1.20 to 1 at December 31, 2011. Long-term debt was $3,043,821 and equity was $1,599,367 at December 31, 2011. The Company’s present working capital must continue to improve in order for it to meet current operating needs.

Capital expenditures for the first six months of fiscal year 2012 were $159,010 compared with $124,836 for the same period in fiscal year 2011. The increase in investments reflect the Company’s increase in cash flow provided from operating activities. The Company anticipates that it will spend approximately $80,000 on additional capital expenditures during the final two quarters of fiscal year 2012 for technical manuals for aviation ground support operations and $50,000 for repairs on the mausoleums. The Company plans to finance these capital expenditures primarily through cash flows provided by operations.

The Company has three lines of credit facilities. As of December 31, 2011, $1,710,845 of aggregate borrowing capacity of $2,100,000 was outstanding leaving available credit of $389,155.

As indicated above, the Company believes that its financial position and debt capacity should enable it to meet its current and future cash requirements despite the need for improved working capital to meet current operating needs.

INFLATION

Because of the relatively low levels of inflation experienced during the first half of this fiscal year, and as of December 31, 2011, inflation did not have a significant effect on the Company’s results in the first six months of fiscal year 2012.

RESULTS OF OPERATIONS

FIRST SIX MONTHS OF FISCAL YEAR 2012

COMPARED WITH FIRST SIX MONTHS OF FISCAL YEAR 2011

Cemetery Operations:

Revenue for the six months ended December 31, 2011 was $1,845,055, an increase of $257,042, or 16%, when compared to the six months ended December 31, 2010. The increase was primarily due to an increase in selection of higher sales packages of cemetery plots of $85,461 , markers of $14,146, foundations $23,371, interment fees of $66,898, grave boxes of $38,348, mausoleum space of $9,965 and overtime of $13,550 in comparison to the prior year’s period. The increase has been due to customers selecting packages at a higher rate than in the past, due to a new cemetery law which requires the next of kin to directly come out to the cemetery and make all selections whereby in the past the funeral director made the selections for the next of kin.

Cost of sales for the six months ended December 31, 2011 was $1,050,309, an increase of $85,025, or 9%, compared to the six months ended December 31, 2010. The increase was primarily due to increased sales, which increased marker costs of $38,054, and direct labor of $53,271, partially offset by reduced dirt hauling costs of $36,759. All other costs remained constant with the prior year’s period. It is management’s opinion that costs will continue to increase in the future due to the increase in fuel, utilities, employee benefits and insurance expenses.

The resulting cemetery gross profit margin was 43% for the first six months of fiscal year 2012 versus 39% for the corresponding period in fiscal year 2011, representing a 4% increase. The increase was caused by an increase in sales volume and sales prices, whereas most of the cost of goods sold is fixed except for the markers and grave liners. Sales prices have increased in the first six months of fiscal year 2012 as a result of customers purchasing higher priced sales packages.

Selling expenses for the six months ended December 31, 2011 were $161,480, an increase of $18,691, or 13%, when compared to the six months ended December 31, 2010. The increase was due to a change in the allocation of payroll taxes to the sales department.

General and administrative expenses for the six months ended December 31, 2011, were $348,998, an increase of $67,905, or 24%, when compared to the six months ended December 31, 2010. The increase was primarily due to an increase in contributions of $14,613, office salaries for one more full time employee of $31,351 and the change in the allocation of payroll taxes of $23,231. All other costs remained constant with the prior year’s period.

Corporate:

General and administrative expenses for the six months ended December 31, 2011 were $146,431, a decrease of $52,402, or 26%, when compared to the six months ended December 31, 2010. The decrease was primarily due to decrease in professional fees for accountants and attorneys of $20,632, consultants of $21,083 and related benefits to officer of $10,450.

Interest expense for the six months ended December 31, 2011 was $42,300, an increase of $731, or 2%, when compared to the six months ended December 31, 2010. The increase is due to a higher debenture balance.

Aviation Ground Support Operations:

Revenue for the six months ended December 31, 2011 was $4,115,709, a decrease of $2,851,719, or 41%, when compared to the six months ended December 31, 2010. The decrease was primarily due to decreased General Services Administration (GSA) contracts in which Stinar is the subcontractor, and the United States government stopping the shipment of all equipment due to the 2011 Ford chassis not being able to run on jet fuel. The contracts now have been modified and production started again November 2011.

Cost of sales as a percentage of sales for the six months ended December 31, 2011 was 90%, or an increase of 1%, when compared to the six months ended December 31, 2010. The increase in costs of sales as percentage of sales was primarily due to the fixed costs associated with the operation of the plant and lower sales.

The resulting gross profit margin was 10% for the first six months of fiscal year 2011 versus 11% for the corresponding period in fiscal year 2010. As noted above, this decrease was primarily due to under utilization of plant capacity.

Selling expenses for the six months ended December 31, 2011 were $68,744, a decrease of $18,449, or 21%, when compared to the six months ended December 31, 2010. The decrease was primarily due to less outside sales commissions.

General and administrative expenses for the six months ended December 31, 2011, were $148,127, an increase of $12,656, or 9%, when compared to six months ended December 31, 2010. The increase was primarily due to the use of an outside consultant for the electrical department.

Other (income) expense, which consists of interest expense and interest income, was a net expense of $191,162 for the six months ended December 31, 2011, a decrease of $10,301 or 5%, when compared to the six months ended December 31, 2010. The decrease was due to less interest expense as a result of reduced levels of debt.

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 2011

COMPARED WITH THREE MONTHS ENDED DECEMBER 31, 2010

Cemetery Operations:

Revenue for the three months ended December 31, 2011 was $897,195, an increase of $149,085 or 20%, when compared to the three months ended December 31, 2010. The increase was primarily due to an increase in all revenue accounts, specifically, cemetery space ($73,126), interment fees of ($38,208) and markers of ($21,439). The Company’s management believes the increase in revenue is due customers selecting cemetery packages at a higher rate than in the past.

Cost of sales for the three months ended December 31, 2011 was $502,113, an increase of $3,862, or 1%, when compared to the three months ended December 31, 2010.

The resulting cemetery gross profit margin was 44% for the three months ended December 31, 2011 versus 33% for the corresponding period in the prior fiscal year, representing an 11% increase. The increase was due to customers purchasing cemetery packages with a higher gross profit margin than in the past.

Selling expenses for the three months ended December 31, 2011 were $93,357, a increase of $43,363, or 87%, when compared to the three-month period ended December 31, 2010. The increase was primarily due to higher sales commissions and related payroll taxes as a result of the increased sales.

General and administrative expenses for the three months ended December 31, 2011 were $174,717, an increase of $56,818, or 48%, when compared to the three months ended December 31, 2010. The increase was primarily due to increased donations and contributions of $15,165, increased office salaries of $16,378 for one additional full time employee, and the change in the allocation of payroll taxes. All other expenses remained constant in comparison to the prior year’s period.

Corporate:

General and administrative expenses for the three months ended December 31, 2011 were $73,934, a decrease of $31,862, or 30%, when compared to the three months ended December 31, 2010. The decrease was primarily due to decreased professional fees from attorneys and accountants ($20,632), directors fees ($3,000), and consultant fees ($21,083).

Interest expense for the three months ended December 31, 2011 was $20,475, a decrease of $957 or 4%, when compared to the three months ended December 31, 2010. The decrease is due to lower short term debt.

Aviation Ground Support Operations:

Revenues for the three months ended December 31, 2011 were $2,045,567, a decrease of $1,757,397 or 46%, when compared to the three months ended December 31, 2010. The decrease in revenue was primarily due to decreased government sales due to the fuel issue not being resolved until November.

Cost of sales for the three months ended December 31, 2011, were $1,601,640 a decrease of $1,766,359 or 52%, when compared to the three months ended December 31, 2010. The decrease was primarily related to the decrease in sales.

The resulting gross profit margin was 22% for the three months ended December 31, 2011, compared to gross profit margin of 11% for the corresponding period in fiscal year 2010. The increase of 11% is due to the mix of equipment being manufactured, efficiencies gained in the stairs department and a decrease in full time employees in drafting and engineering.

Selling expenses for the three months ended December 31, 2011 were $34,755, an increase of $9,728, or 39%, when compared to the three months ended December 31, 2010. The increase is due to increased wages for the VP of sales and marketing.

General and administrative expenses for the three months ended December 31, 2011 were $80,804, an increase of $14,938, or 23%, when compared to the three months ended December 31, 2010. The difference is primarily related to electrical consulting fees, and one additional full time office employee.

Interest expense for the three months ended December 31, 2011 was $106,765, an increase of $7,271, or 7%, when compared to the three months ended December 31, 2010. The increase is primarily due to a higher debt balance with Ford Motor Credit.

OFF BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not Applicable

ITEM 4. CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) accumulated and communicated to the Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding disclosures because of the material weakness relating to internal controls that was described in Item 9a of the Company’s Form 10-K for the year ended June 30, 2011, filed October 13, 2011.

Notwithstanding the material weakness that existed as of June 30, 2011, our Chief Executive Officer and Chief Financial Officer concluded that the financial statements included in this report present fairly, in all material respects, the financial position, results of operations and cash flows of the Company in conformity with accounting principles generally accepted in the United States of America.

No change in the Company’s internal control over financial reporting was identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the period covered by this quarterly report and that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Management has concluded that the material weakness in internal control, as described in Item 9A of our Form 10-K for the year ended June 30, 2011, has not been fully remediated. We are committed to implementing the necessary enhancements to our policies and procedures to fully remediate the material weakness discussed above. Due to lack of sufficient capital, we expect the material weakness to continue until our capital needs are met.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is from time to time involved in ordinary litigation incidental to the conduct of its businesses. The Company believes that none of its pending litigation will have a material adverse effect on the Company’s businesses, financial condition or results of operations.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The owners of 1,046,206 shares of common stock, or 73% of shares outstanding, were represented at the annual meeting of shareholders on December 16, 2011 at Faegre & Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota.

Elected as directors of the Company, each receiving a minimum of 645,980 votes was:

	645,980	Robert C. Harvey
	645,980	Robert B. Gregor
	645,980	Lester Lind
	645,980	Pamela Whitney
	645,980	Stewart Levin

In addition, the shareholders ratified the appointment of Moquist Thorvilson Kaufmann & Pieper LLC as the independent auditors of the Company for fiscal year 2012. The vote was 1,045,186 in favor and 1,020 abstaining.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2011:

1.1		Form of 9.00% Convertible Subordinated Debenture due July 1, 2012 (1)

3(i)		Amended and Restated Articles of Incorporation, as amended (2)

3(ii)		Amended and Superseding By-Laws of the Company, as amended (2)

31		Rule 13a-14(a)/15d-14(a) Certifications

32		Section 1350 Certifications

101.INS		XBRL- Instance Document

101.SCH		XBRL- Taxonomy Extension Schema Document

101.CAL		XBRL- Taxonomy Extension Calculation Document

101.LAB		XBRL- Taxonomy Extension Linkbase Document

101.PRE		XBRL- Taxonomy Extension Presentation Document

(1)	Incorporated by reference to the like numbered Exhibit to the Company’s current report on Form 8-K filed with the Commission on February 7, 2011.

(2)	Incorporated by reference to the like numbered Exhibit to the Company’s Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996.

SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Oakridge Holdings, Inc.

	/s/ Robert C. Harvey
	Robert C. Harvey
	Chief Executive Officer, Principal Accounting Officer, and Chief Financial Officer

Date: February 14, 2012

INDEX TO EXHIBITS

EXHIBIT	DESCRIPTION	PAGE

1.1	Form of 9.00% Convertible Subordinated Debenture due July 1, 2012

3(i)	Amended and Restated Articles of Incorporation of the Company (incorporated by reference)

3(ii)	Amended and Superseding By-Laws of the Company, as amended	(incorporated by reference)

31	Rule 13a-14(a)/15d-14(a) Certifications	(filed electronically)

32	Section 1350 Certifications	(filed electronically)

100.INS	XBRL Instance Document

100.SCH	XBRL Taxonomy Extension Schema Document

100.CAL	XBRL Taxonomy Extension Calculation Document

100.LAB	XBRL Taxonomy Extension Linkbase Document

100.PRE	XBRL Taxonomy Extension Presentation Document

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