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 July 31, 2013
[ ] 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
September 12, 2013 was 5,032,275.
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-month period ended
July 31, 2013, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
July 31, April 30,
2013 2013
------------ ------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 5,834,000 $ 4,859,000
Investments and securities 22,330,000 22,208,000
Accounts receivable:
Trade, net of $5,783 and $4,126
doubtful account allowance 1,764,000 1,915,000
Other 1,000 1,000
Note receivable, current 4,000 5,000
Income tax overpayment 65,000 347,000
Inventories 2,038,000 2,074,000
Prepaid expenses 100,000 60,000
Deferred current income taxes 633,000 635,000
------------ ------------
Total Current Assets $32,769,000 $32,104,000
Property and Equipment, net, at cost 685,000 701,000
Other Assets
Investment in Limited Land Partnership,
at cost 238,000 238,000
Projects in process 49,000 45,000
Note receivable 1,000 2,000
Other -- 1,000
------------ ------------
Total Other Assets $ 288,000 $ 286,000
TOTAL ASSETS $33,742,000 $33,091,000
============ ============
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
July 31, April 30,
2013 2013
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 84,000 $ 68,000
Dividends payable 817,000 817,000
Accrued expenses:
Payroll and related expenses 304,000 259,000
Property taxes 3,000 --
------------ ------------
Total Current Liabilities $ 1,208,000 $ 1,144,000
Long-Term Liabilities
Deferred income taxes 93,000 133,000
------------ ------------
Total Long-Term Liabilities $ 93,000 $ 133,000
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, 8,502,881
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income 728,000 743,000
Retained earnings 32,526,000 31,873,000
Treasury stock, 3,469,206 and 3,467,356
shares, at cost (3,498,000) (3,487,000)
------------ ------------
Total Stockholders' Equity $32,441,000 $31,814,000
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $33,742,000 $33,091,000
============ ============
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31, 2013 AND 2012
July 31,
2013 2012
------------ ------------
(unaudited) (unaudited)
Net Sales $ 2,670,000 $ 2,542,000
Less: Cost of Goods Sold (1,284,000) (1,356,000)
------------ ------------
Gross Profit $ 1,386,000 $ 1,186,000
Operating Expenses:
General and Administrative 184,000 202,000
Sales 460,000 425,000
Engineering 12,000 18,000
Rent Paid to Related Parties 5,000 11,000
------------ ------------
Total Operating Expenses $ 661,000 $ 656,000
Income From Operations 725,000 530,000
Other Income (Expense)
Other 10,000 14,000
Interest Expense (8,000) --
Dividend and Interest Income 166,000 203,000
Gain (Loss) on Sale of Investments 18,000 (151,000)
------------ ------------
$ 186,000 $ 66,000
Income Before Provisions for Income Taxes 911,000 596,000
Provisions for Income Taxes
Current Expense 285,000 222,000
Deferred tax expense (provision) (28,000) (62,000)
------------ ------------
Total Income Tax Expense $ 257,000 $ 160,000
Net Income $ 654,000 $ 436,000
Basic and Diluted Earnings Per Share of
Common Stock $ 0.13 $ 0.09
Weighted Average Number of Common Shares
Outstanding 5,033,843 5,042,550
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
July 31,
2013 2012
---------------------------
(unaudited) (unaudited)
Net Income $ 654,000 $ 436,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses)
arising during period (32,000) (461,000)
Reclassification adjustment for gains
(losses) included in net income 8,000 561,000
Income tax expense related to other
comprehensive income 10,000 (42,000)
------------ ------------
Other Comprehensive Income (Loss) $ (14,000) $ 58,000
Comprehensive Income (Loss) $ 640,000 $ 494,000
============ ============
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the three months
ended July 31,
2013 2012
---------------------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 654,000 $ 436,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 37,000 42,000
(Gain) loss on sale of investments (18,000) 151,000
Reserve for bad debts 1,000 (1,000)
Reserve for obsolete inventory 22,000 (13,000)
Deferred income taxes (28,000) (62,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 149,000 77,000
Inventories 14,000 57,000
Prepaid expenses (47,000) (6,000)
Income tax overpayment 282,000 --
Increase (decrease) in:
Accounts payable 16,000 (47,000)
Accrued expenses 48,000 69,000
Income tax payable -- 219,000
------------ ------------
Net cash provided by (used in) operating
activities $ 1,130,000 $ 922,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured & purchased 4,000 13,000
(Purchase) of property and equipment (22,000) (36,000)
Proceeds from sale of marketable securities -- 1,000
(Purchase) of marketable securities (128,000) (170,000)
Collection of loans to employees 2,000 2,000
(Purchase) of treasury stock (11,000) --
------------ ------------
Net cash provided by (used in) investing
activities $ (155,000) $ (190,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in) financing
activities $ -- $ --
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 975,000 $ 732,000
Cash and cash equivalents, beginning of
period $ 4,859,000 $ 5,773,000
------------ ------------
Cash and cash equivalents, end of period $ 5,834,000 $ 6,505,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $0 $0
Interest expense $0 $0
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 2013
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 inform-
ation and footnotes required by generally accepted accounting principles for
complete financial statements. It is suggested that these condensed finan-
cial statements be read in conjunction with the financial statements and
notes thereto included in the Company's April 30, 2013 annual report on Form
10-K. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments considered necessary for a fair presentation,
have been included. Operating results for any quarter are not necessarily
indicative of the results for any other quarter or for the full year.
Note 2 Marketable Securities
The Company has investments in publicly traded equity securities as
well as certain state and municipal debt securities. These securities are
classified 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.
Available -for-sale investments in debt securities mature between October
2013 and November 2048. The Company uses the average cost method to deter-
mine the cost of securities sold and the amount reclassified out of accum-
ulated other comprehensive income into earnings. Unrealized gains and losses
are excluded from earnings and reported separately as a component of stock-
holder's equity and other comprehensive income. Dividend and interest income
are accrued as earned.
As of July 31, 2013, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 7,436,000 $ 109,000 $ (106,000) $ 7,439,000
REITs $ 57,000 $ 3,000 $ (3,000) $ 57,000
Equity securities $11,367,000 $ 1,408,000 $ (159,000) $12,616,000
Money markets/CDs $ 2,218,000 $ -- $ -- $ 2,218,000
------------ ------------ ------------ ------------
Total $21,078,000 $ 1,520,000 $ (268,000) $22,330,000
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 evalu-
ates the nature of the investment, cause of impairment and number of invest-
ments that are in an unrealized position. When an other-than-temporary de-
cline 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
$18,000 for the quarter ended July 31, 2013 and $20,000 for the quarter ended
July 31, 2012.
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 July 31, 2013.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$4,428,000 $ (98,000) $ 247,000 $ (8,000) $ 4,675,000 $ (106,000)
REITs
$ 26,000 $ (3,000) $ -- $ -- $ 26,000 $ (3,000)
Equity securities
$2,721,000 $(112,000) $ 278,000 $ (47,000) $ 2,999,000 $ (159,000)
----------- ---------- ----------- ---------- ------------ ------------
Total
$7,175,000 $(213,000) $ 525,000 $ (55,000) $ 7,700,000 $ (268,000)
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 July 31, 2013.
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 on to these investments for
an extended period, the Company does not consider these investments to be
other-than-temporarily impaired at July 31, 2013.
Note 3 Inventories
Inventories at July 31, 2013, consisted of the following:
Raw Materials $ 1,466,000
Work in Process 461,000
Finished Goods 297,000
------------
$ 2,224,000
Less: allowance for obsolete inventory (186,000)
------------
Net Inventories $ 2,038,000
============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
July 31,
2013 2012
---------------------------
Net revenue:
Security alarm products 2,276,000 2,228,000
Other products 394,000 314,000
------------ ------------
Total net revenue $ 2,670,000 $ 2,542,000
Income from operations:
Security alarm products 618,000 465,000
Other products 107,000 65,000
------------ ------------
Total income from operations $ 725,000 $ 530,000
Identifiable assets:
Security alarm products 3,346,000 3,372,000
Other products 1,017,000 1,182,000
Corporate general 29,379,000 27,557,000
------------ ------------
Total assets $32,742,000 $32,111,000
Depreciation and amortization:
Security alarm products 4,000 6,000
Other products 28,000 32,000
Corporate general 5,000 4,000
------------ ------------
Total depreciation and amortization $ 37,000 $ 42,000
Capital expenditures:
Security alarm products 8,000 1,000
Other products -- 35,000
Corporate general 14,000 --
------------ ------------
Total capital expenditures $ 22,000 $ 36,000
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 July 31, 2013
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
------------- -------------- ---------
Net Income $ 654,000
=============
Basic EPS $ 654,000 5,033,843 $ 0.1299
Effect of dilutive Convertible
Preferred Stock -- 20,500 (0.0005)
------------- -------------- ----------
Diluted EPS $ 654,000 5,054,343 $ 0.1294
For the three months ended July 31, 2012
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
------------- -------------- ---------
Net Income $ 436,000
=============
Basic EPS $ 436,000 5,042,550 $ 0.0865
Effect of dilutive Convertible
Preferred Stock -- 20,500 (0.0004)
------------- -------------- ----------
Diluted EPS $ 436,000 5,063,050 $ 0.0861
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 the quarters ending
July 31, 2013 and 2012, respectively. There were no discretionary con-
tributions paid during the quarters ending July 31, 2013 and 2012, re-
spectively.
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 July 31, 2013, our investments consisted of money markets, publicly
traded equity securities and certain state and municipal debt securities.
Our marketable securities are valued using third-party broker statements.
The value of the investments is derived from quoted market information. 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,
which is the case for municipal bonds, the inputs are recorded as Level 2.
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 July 31, 2013
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Money Markets $ 2,218,000 -- -- $ 2,218,000
Equity Securities $12,672,000 -- -- $12,672,000
Municipal Bonds $ -- $ 7,440,000 -- $ 7,440,000
----------- ----------- ----------- -----------
Total fair value of
assets measured on a
recurring basis $14,890,000 $ 7,440,000 $ -- $22,330,000
=========== =========== =========== ===========
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 Company's audited
financial statements and discussion for the fiscal year ended April 30, 2013.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash increased $975,000 during the quarter ended July 31, 2013 as com-
pared to an increase of $732,000 during the corresponding quarter last year.
Accounts receivable decreased $149,000 for the quarter ending July 31, 2013
compared with a $77,000 decrease for the same quarter last year. The decrease
in cash flow for accounts receivable for the current period is a reflection
of slightly lower sales from the prior quarter. At the quarter ended July
31, 2013, 66.18% of the receivables are considered current (less than 45
days) while 1.56% of the total are over 90 days past due. This is in com-
parison to having 68.42% of the receivables considered current and 1.09% over
90 days past due at July 31, 2012. Inventories decreased $14,000 during the
current quarter as compared to a $57,000 decrease last year. The smaller de-
crease is a result of increased purchases and increased sales. At the quar-
ter ended July 31, 2013 there was a $47,000 increase in prepaid expenses and
at July 31, 2012, there was a $6,000 increase. This is a result of having to
prepay for raw materials that we negotiated a better price and have not re-
ceived yet. Income tax overpayment decreased by $282,000 for the quarter
ending July 31, 2013. Management has increased tax estimates as a result of
increased sales.
At the quarter ended July 31, 2013, accounts payable shows an increase of
$16,000 as compared to a decrease of $47,000 for the same quarter the year
before. 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 com-
pany pays all its invoices within the terms. Accrued expenses increased
$48,000 for the current quarter as compared to a $69,000 increase for the
quarter ended July 31, 2012.
Investing
---------
As for our investment activities, the Company has spent approximately
$22,000 on acquisitions of property and equipment for the current fiscal
quarter. In comparison with the corresponding quarter last year, there was
activity of $36,000. Additionally, the Company continues to purchase market-
able securities, which include municipal bonds and quality stocks. Cash
spent on purchases of marketable securities for the quarter ended July 31,
2013 was $128,000 compared with $170,000 spent during the quarter ended July
31, 2013. We continue to use ?money manager? accounts for most stock trans-
actions. 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 invest-
ments. Furthermore, the Company continues to purchase back common stock when
the opportunity arises. For the quarter ended July 31, 2013 the Company
purchase back $11,000 worth treasury stock, but was not able to purchase back
any during the quarter ended July 31, 2012. We have been actively searching
for stockholders that have been ?lost? over the years. The payment of
dividends over the last nine fiscal years has also prompted many stockholders
and/or their relatives and descendants to sell back their stock to the Com-
pany.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
July 31,
2013 2012
---------------------------
Working capital
(current assets - current liabilities) $ 31,561,000 $ 29,700,000
Current ratio
(current assets / current liabilities) 27.127 22.460
Quick ratio
((cash + investments + AR) / current liabilities)
24.775 20.590
Results of Operations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,670,000 for the quarter ended July 31, 2013, which is an
increase of 5.04% from the corresponding quarter last year. Net sales for
the quarter ended July 31, 2012 were $2,542,000. The Company's products are
tied to the housing market and the increase in sales is a result of a re-
covering economy. The Company is focusing on keeping and increasing sales
by having excellent customer service and being willing to make many custom-
ized parts. Cost of goods sold was 48.09% of net sales for the quarter ended
July 31, 2013 and 53.34% for the quarter ended July 31, 2012. Management's
goal is to keep labor and other manufacturing expenses within the range of 45
to 50%.
Operating expenses were 24.76% of net sales for the quarter ended July 31,
2013 as compared to 25.81% for the corresponding quarter last year. Manage-
ment's goal is to always keep the operating expenses around 30% or less of
net sales, as management has been able to achieve over the years. Income
from operations for the quarter ended July 31, 2013 was at $725,000, which
is a 36.79% increase from the corresponding quarter last year, which had in-
come from operations of $530,000.
Other income and expenses showed an $186,000 gain for the quarter ended July
31, 2013 as compared to having a $66,000 gain for the quarter ended July 31,
2012. The main reason for the bigger gain in other income for the current
quarter is that we had $18,000 of realized gains on investments for the
quarter as compared to $151,000 of realized losses for the corresponding
quarter last year. In turn, net income for the quarter ended July 31, 2013
was at $654,000, a 50% increase from the corresponding quarter last year,
which showed net income of $436,000. Earnings per share for the quarter
ended July 31, 2013 were $0.13 per common share and $0.09 per common share
for the quarter ended July 31, 2012.
New Product Development
~~~~~~~~~~~~~~~~~~~~~~~
Engineering continues work on a wireless pool alarm. The High Security
Switch is in the final testing stages of prototypes. These will have to go
through UL and possibly Department of Defense approval for certain install-
ations. Due to discontinued raw materials, our pool alarm will have to be
redesigned. This will require mold changes that will take until later in
the year to complete.
Molding is working on another case for our Current Controller. This will
allow us to manufacture a couple of different versions; a 15 amp version that
would automatically turn on a whole room of lights and a 220-volt version for
international markets. Another project in molding is a redesign for the
cover of the 29-Series terminal switch.
Other products we are developing include a twist lock for recessed steel door
contacts, including biased for high security. This variety will allow the
installer to set a precise gap. Another product we have been researching is
a fuel level monitor. Several security companies from around the world have
told us fuel theft is a major problem. They are looking for something that
will tie into the security system to be informed if tanks and trucks are
tampered with.
Recently Issued Accounting Pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In June 2011, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update No. 2011-05, Presentation of Comprehensive Income
("ASU 2011-05"), which amends the disclosure requirements for the present-
ation of comprehensive income. This guidance, effective retrospectively for
interim and annual periods beginning on or after December 15, 2011, requires
presentation of total comprehensive income, the components of net income, and
the components of other comprehensive income either in a single continuous
statement of comprehensive income or in two separate, but consecutive state-
ments. ASU 2011-05 eliminates the option to present the components of other
comprehensive income as part of the statement of changes in equity. ASU
2011-05 does not change the items that must be reported in other comprehen-
sive income, or when an item of other comprehensive income must be reclass-
ified to net income. We have included a Statement of Comprehensive Income in
our financial statements. The adoption of this accounting guidance had no
impact on our financial statements.
Other Information
~~~~~~~~~~~~~~~~~
Management is always open to the possibility to acquire a business or product
line that would complement our existing operations. This would require no
outside financing. The intent is to utilize the equipment, marketing tech-
niques and established customers to increase sales and profits.
There are no known seasonal trends with any of GRI's products, since we sell
to distributors and OEM manufacturers. Our products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officer (also working as 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, has concluded that our disclosure controls and procedures
are effective based on their evaluation of these controls and procedures re-
quired by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A. Controls and Procedures
Evaluation of disclosure controls and procedures:
-------------------------------------------------
Based on her evaluation of our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of July 31, 2013,
our president and chief executive officer (also working as our chief finan-
cial officer) has 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, as appropriate to allow
timely decisions regarding disclosure. A control system cannot provide ab-
solute assurance, however, that the objectives 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.
Internal control over financial reporting:
------------------------------------------
The Company's management is responsible for establishing and maintaining
adequate internal controls over financial reporting for the Company. Due to
limited resources, Management conducted an evaluation of internal controls
based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO"). The results of this evaluation determined that our
internal control over financial reporting was ineffective as of July 31,
2013, due to a material weakness. A material weakness in internal control
over financial reporting is defined as a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the Company's
annual or interim financial statements will not be prevented or detected on
a timely basis. A significant deficiency is a deficiency, or a combination
of deficiencies, in internal control over financial reporting that is less
severe than a material weakness, yet important enough to merit attention by
those responsible for oversight of our financial reporting.
Management's assessment identified the following material weakness in
internal control over financial reporting:
* The small size of our Company limits our ability to achieve the desired
level of separation of internal controls and financial reporting,
particularly as it relates to financial reporting and deferred taxes.
Due to the passing of our CEO, the current CEO and CFO roles are being
fulfilled by the same individual. We do not have an audit committee.
Until such time as the Company is able to hire a Controller, we do not
believe we meet the full requirement for separation for financial re-
porting purposes.
As a result of the material weakness in internal control over financial re-
porting described above, the Company's management has concluded that, as of
July 31, 2013, the Company's internal control over financial reporting was
not effective based on the criteria in Internal Control - Integrated Frame-
work issued by the COSO.
To date, the Company has not been able hire a controller. We will continue
to follow the standards for the Public Company Accounting Oversight Board
(United States) for internal control over financial reporting to include pro-
cedures that:
* Pertain to the maintenance of records in reasonable detail accurately
that fairly reflect the transactions and dispositions of the Company's
assets;
* Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of the financial statements in
accordance with generally accepted accounting principles, and that re-
ceipts and expenditures are being made only in accordance with author-
izations of management and the Board of Directors; and
* Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the Company's
assets that could have a material effect on the financial statements.
Due to the passing of the CEO during the fiscal year 2013, our internal con-
trol structure has changed such that there is no separation of duties for
financial reporting and deferred taxes, as discussed above.
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 Section
404(c) of the Sarbanes-Oxley Act of 2002, as amended, that permits the Cor-
poration 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. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company's
repurchase of common stock for the first quarter of fiscal year 2014.
Period Number of shares repurchased
------------------------------- ----------------------------
May 1, 2013 - May 31, 2013 1,350
June 1, 2013 - June 30, 2013 500
July 1, 2013 - July 31, 2013 --
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. (Removed and Reserved)
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
Exhibit No. Description
----------- -----------
31.1 Certification of the Chief Executive Officer (Principal
Financial and Accounting Officer), as required by Sec-
tion 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer (Principal
Financial and Accounting Officer), as required by Sec-
tion 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
George Risk Industries, Inc.
(Registrant)
Date 09-13-2013 By: /s/ Stephanie M. Risk-McElroy
Stephanie M. Risk-McElroy
President, Chief Financial Officer and
Chariman of the Board
