MINNESOTA 41-0843268
TABLE OF CONTENT
PART I. Financial Information
ITEM 1. Unaudited Condensed Consolidated Financial Statements:
(a) Condensed Consolidated Balance Sheets as of September 30, 2013 and June 30, 2013
(b) Condensed Consolidated Statements of Operations for the three months ended September 30, 2013 and 2012
(c) Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2013 and 2012
(d) Notes to Condensed Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
ITEM 4. Controls and Procedures
PART II. Other Information
ITEM 1. Legal Proceedings
ITEM 1A. Risk Factors
ITEM 2-4. Not Applicable
ITEM 5. Not Applicable
ITEM 6. Exhibits
PART I - FINANCIAL INFORMATION FORM 10-Q
ASSETS
|
30-Sep-2013
|
30-Jun-2013
|
Current assets
|
||
Cash
|
$ 80,507
|
$ 35,796
|
Restricted cash
|
38,102
|
38,099
|
Trade accounts receivable, net
|
829,418
|
1,626,897
|
Inventories
|
2,309,483
|
2,862,176
|
Other current assets
|
70,012
|
42,370
|
Deferred income taxes
|
235,000
|
268,000
|
Current assets of discontinued operations
|
1,150,847
|
1,239,603
|
Total current assets
|
4,713,369
|
6,112,941
|
Property, plant & e
quipment
|
||
Property, plant & equipment at cost
|
3,091,970
|
3,089,391
|
Less Accumulated depreciation
|
(1,885,494)
|
(1,860,694)
|
Total property, plant & equipment
|
1,206,476
|
1,228,697
|
Other assets
|
||
Deferred financing costs
|
71,769
|
74,329
|
Other
|
7,634
|
7,634
|
Noncurrent assets of discontinued operations
|
8,766,832
|
8,614,852
|
Total other assets
|
8,846,235
|
8,696,815
|
Total Assets
|
$ 14,766,080
|
$ 16,038,453
|
LIABILITIES & STOCKHOLDERS' DEFICIT
|
30-Sep-2013
|
30-Jun-2013
|
Current
l
iabilities
|
||
Line of credit - bank
|
$ 803,640
|
$ 1,275,000
|
Short term notes payable - others
|
300,000
|
300,000
|
Trade accounts payable
|
693,698
|
864,847
|
Due to finance company
|
149,776
|
711,577
|
Accrued liabilities
|
868,408
|
719,501
|
Current maturities of long-term debt
|
974,837
|
315,361
|
Deferred revenue
|
-
|
343,350
|
Current liabilities of discontinued operations
|
1,844,135
|
1,925,677
|
Total current liabilities
|
5,634,494
|
6,455,313
|
Long-term liabilities
|
||
Long term debt less current portion
|
2,517,811
|
3,264,191
|
Non-current liabilities and non-controlling interest of discontinued operations
|
8,179,165
|
7,934,949
|
Total Long-term liabilities and non-controlling interest
|
10,696,976
|
11,199,140
|
Total liabilities
|
16,331,470
|
17,654,453
|
Stockholders' deficit
|
||
Common stock
|
143,151
|
143,151
|
Paid-in-capital
|
2,457,975
|
2,457,975
|
Accumulated deficit
|
(4,166,516)
|
(4,217,126)
|
Total stockholders' deficit
|
(1,565,390)
|
(1,616,000)
|
Total liabilities and stockholders' deficit
|
$ 14,766,080
|
$ 16,038,453
|
Three Months Ended
|
||
30-Sep-2013
|
30-Sep-2012
|
|
(Restated)
|
||
Net revenue
|
$ 1,557,501
|
$ 3,182,782
|
Operating expenses
|
||
Cost of sales
|
1,373,155
|
2,789,735
|
Sales & marketing
|
21,399
|
27,950
|
General & administrative
|
145,862
|
167,326
|
Total operating expenses
|
1,540,416
|
2,985,011
|
Operating income
|
17,085
|
197,771
|
Other expenses
|
||
Interest income
|
3
|
45
|
Interest expense
|
(74,717)
|
(116,036)
|
Loss on extinguishment of debt
|
-
|
(224,000)
|
Total other expenses
|
(74,714)
|
(339,991)
|
Net loss from continuing operations before income taxes
|
(57,629)
|
(142,220)
|
Income tax expense (benefit)
-continuing operation
|
(23,000)
|
31,000
|
Net loss from continuing operations
|
(34,629)
|
(173,220)
|
Discontinued operations:
|
||
Net Income from discontinued operation before taxes
|
141,239
|
109,125
|
Income tax expense
-discontinued operation
|
56,000
|
44,000
|
Net Income from discontinued operation
|
85,239
|
65,125
|
Net income (loss)
|
$ 50,610
|
$ (108,095)
|
Basic and diluted net income (loss) per share (Continu
ing
operations)
|
$ (0.02)
|
$ (0.12)
|
Basic and diluted net income (loss) per share (Discontinued operations)
|
$ 0.06
|
$ 0.04
|
Basic and diluted net income (loss) per share
|
$ 0.04
|
$ (0.08)
|
Weighted -average common shares used in the computation of EPS
|
||
Basic and diluted
|
1,431,503
|
1,431,503
|
ITEM 1 - FINANICAL STATEMENTS
Three Months Ended
|
||
30-Sep-2013
|
30-Sep-2012
|
|
(Restated)
|
||
Cash flows from operating activities:
|
||
Net income (loss)
|
$ 50,610
|
$ (108,095)
|
Net income from discontinued operations
|
85,239
|
65,125
|
Net loss from continued operations
|
(34,629)
|
(173,220)
|
Adjustments to reconcile net loss to
|
||
net cash flows from operating activities-continuing operations:
|
||
Depreciation and amortization
|
27,360
|
16,747
|
Loss on extinguishment of debt
|
-
|
224,000
|
Deferred income taxes
|
33,000
|
82,000
|
Change in receivables
|
797,479
|
(164,074)
|
Change in inventories
|
552,693
|
992,945
|
Change in prepaids & other assets
|
(27,642)
|
(15,869)
|
Change in accounts payable and due to finance company
|
(732,950)
|
(412,963)
|
Change in deferred revenue
|
(343,350)
|
(433,355)
|
Change in accrued liabilities
|
148,907
|
(59,365)
|
Net cash flows from operating activities-continuing operations
|
420,868
|
56,846
|
Net cash flows from operating activities-discontinued operations
|
77,548
|
145,363
|
Net cash flows from operating activities
|
498,416
|
202,209
|
Cash flows from investing activities:
|
||
Purchases of property, plant and equipment
|
(2,579)
|
(12,609)
|
Changes in restricted cash
|
(3)
|
48,834
|
Net cash flows from investing activities-continuing operations
|
(2,582)
|
36,225
|
Net cash flows from investing activities-discontinued operations
|
(219,748)
|
(58,317)
|
Net cash flows from investing activities
|
(222,330)
|
(22,092)
|
Cash flows from financing activities:
|
||
Increase (decrease) in line of credit
|
(471,360)
|
-
|
Principal payments on long-term debt
|
(86,904)
|
(62,878)
|
Funds received from discontinued operations
|
184,689
|
18,184
|
Net cash flows from financing activities-continuing operations
|
(373,575)
|
(44,694)
|
Net cash flows from financing activities-discontinued operations
|
79,566
|
-
|
Net cash flows from financing activities
|
(294,009)
|
(44,694)
|
Net change in cash
|
(17,923)
|
135,423
|
Less: Change in cash-discontinued operations
|
(62,634)
|
87,046
|
Net change in cash-continuing operations
|
44,711
|
48,377
|
Cash-continuing operations
|
||
Beginning of year
|
35,796
|
130,740
|
End of period
|
$ 80,507
|
$ 179,117
|
ITEM 1 - FINANICAL STATEMENTS
Consolidated Statement of Operations
|
|||||||||
|
Previously
|
||||||||
Reported
|
Adjustments
|
Restated
|
|||||||
Three Months Ended September 30, 2012
|
|||||||||
Continuing Operations:
|
|||||||||
Cost of sales
|
$
2,821,573
|
$
(31,838)
|
$
2,789,735
|
||||||
Operating income
|
165,933
|
31,838
|
197,771
|
||||||
Income (loss) before income taxes
|
49,942
|
(192,162)
|
(142,220)
|
||||||
Provision for income taxes
|
20,000
|
11,000
|
31,000
|
||||||
Net income (loss)
|
29,942
|
(203,162)
|
(173,220)
|
||||||
Net income (loss)
|
95,067
|
(203,162)
|
(108,095)
|
||||||
Basic income (loss) per share - continuing operations
|
$
0.07
|
$
(0.19)
|
$
(0.12)
|
||||||
Diluted income (loss) per share - continuing operations
|
$
0.01
|
$
(0.13)
|
$
(0.12)
|
||||||
Basic income (loss) per share
|
$
0.07
|
$
(0.15)
|
$
(0.08)
|
||||||
Diluted income (loss) per share
|
$
0.04
|
$
(0.12)
|
$
(0.08)
|
||||||
Consolidated Statement of Cash Flows
|
|||||||||
Previously
|
|||||||||
Reported
|
Adjustments
|
Restated
|
|||||||
Three Months Ended September 30, 2012
|
|||||||||
Continuing Operations:
|
|||||||||
Cash flows from operating activities
|
$
62,826
|
$
(5,980)
|
$
56,846
|
||||||
Cash flows from investing activities
|
30,245
|
5,980
|
36,225
|
|
|
Three Months Ended
|
|
|
|
30-Sep-2013
|
30-Sep-2012
|
|
|
|
(Restated)
|
|
|
|
|
Net loss from continuing operations
|
(34,629)
|
(173,220)
|
|
Net Income from discontinued operation
|
85,239
|
65,125
|
|
Net income (loss)
|
$
50,610
|
$
(108,095)
|
|
|
|
|
|
Weighted -average common shares used in the computation of EPS
|
|
|
|
Basic and diluted
|
1,431,503
|
1,431,503
|
|
|
|
|
|
Basic and diluted net income (loss) per share (Continuing
operations)
|
(0.02)
|
(0.12)
|
|
Basic and diluted net income (loss) per share (Discontinued operations)
|
0.06
|
0.04
|
|
Basic and diluted net income (loss) per share
|
0.04
|
(0.08)
|
|
|
|
|
|
30-Sep-2013
|
30-Jun
-2013
|
|
Raw Material
|
1,666,460
|
1,730,189
|
Work In Process
|
643,023
|
1,131,987
|
Inventory
|
2,309,483
|
2,862,176
|
30-Sep-2013
|
30-Jun-2013
|
|
Current assets of discontinued operations:
|
||
Cash
|
$
210,822
|
$
273,456
|
Accounts receivable
|
344,648
|
364,911
|
Inventory
|
586,145
|
570,679
|
Prepaids and other
|
9,232
|
30,557
|
1,150,847
|
1,239,603
|
|
Noncurrent assets of discontinued operations:
|
||
Property, plant & equipment, net
|
745,484
|
740,426
|
Trust investments
|
8,021,348
|
7,874,426
|
8,766,832
|
8,614,852
|
|
Total Assets
|
9,917,679
|
9,854,455
|
Current liabilities of discontinued operations:
|
||
Accounts payable
|
141,968
|
144,214
|
Accrued expenses
|
235,733
|
198,912
|
Deferred Revenue
|
1,466,434
|
1,564,823
|
Current maturities of long-term debt
|
-
|
17,728
|
1,844,135
|
1,925,677
|
|
Noncurrent liabilities and non-controlling interest of discontinued operations:
|
||
Noncontrolling interest in trust investments
|
8,021,348
|
7,874,426
|
Long-term debt, less current maturities
|
157,817
|
60,523
|
8,179,165
|
7,934,949
|
|
Total liabilities
|
$
10,023,300
|
$
9,860,626
|
|
30-Sep-2013
|
30-Sep-2012
|
|
Revenue
|
$
979,801
|
$
771,138
|
Operating expenses:
|
||
Cost of sales
|
623,692
|
478,900
|
Sales & marketing
|
62,386
|
55,569
|
General & administrative
|
164,329
|
130,664
|
Total operating expenses |
850,407
|
665,133
|
Other income (expense)
|
11,845
|
3,120
|
Income before income taxes
|
$
141,239
|
$
109,125
|
30-Sep-2013
|
30-Jun-2013
|
|
Note payable — bank, payable in monthly installments of $
6,672
including interest at
6.0
%, with a balloon payment in January 2023. The note is secured by the first mortgage on property owned by Stinar, continuing commercial guarantees from both the Company and the chief executive officer/key stockholder and by the assignment of a life insurance policy on the chief executive officer/key stockholder.
|
$
905,578
|
$
922,151
|
Note payable — SBA, payable in monthly installments of $
20,503
including interest at the prime rate (as published by the Wall Street Journal) plus
1
%, adjusted every calendar quarter (
4.25
% at Sep 30 , 2013), maturing in May 2018. The note is secured by the assets of Stinar and the unconditional guarantee of the chief executive officer/key stockholder.
|
1,037,017
|
1,089,303
|
Note payable — SBA, payable in monthly installments of $
5,107
, including interest and SBA fees for an interest rate of
4.1
%, maturing March 2033. The note is secured by a second mortgage on property owned by Stinar and an unconditional guarantee from both the Company and the chief executive officer/key stockholder.
|
746,281
|
753,876
|
Note payable — bank, payable in monthly installments of $
6,091
with interest at
2.75
% over the U.S Bancorp Prime Lending Rate (
6.0
% at Sep 30 , 2013) through February 2016. The note is secured by the assets of Stinar, the unconditional guarantee of the chief executive officer/key stockholder, and by the assignment of a life insurance policy on the chief executive officer/key stockholder.
|
163,772
|
174,222
|
Long-term debt before debentures
|
2,852,648
|
2,939,552
|
|
|
|
Convertible subordinated debentures — unsecured with
9
% interest due quarterly, convertible into one common share for each $
0.40
of principal, maturing on July 1, 2014. The debentures are issued to shareholders/officers of the Company ($
560,000
) and an outside investor ($
80,000
).
|
640,000
|
640,000
|
|
|
|
Subtotal
|
3,492,648
|
3,579,552
|
Less current maturities
|
974,837
|
315,361
|
|
$
2,517,811
|
$
3,264,191
|
(a) |
Revenue Recognition |
(b) |
Going Concern |
· Engaged a third party specialist for advice and consultation
· Provided training and education to different accounting functions
· Established review controls
· Provided training for calculating the cost of raw material, work in progress, and finished goods.
· Completed review of the Company's critical accounting and internal control policies with third party advisors that are knowledgeable regarding GAAP and internal controls
· Provided training and education relating to accounting for modifications and extinguishments
· Hired third party advisors to assist in preparing consolidated financial statements
· Provide ongoing training and education relating to GAAP around complex and non-routine transactions specifically identified through regular review of emerging issues and Company business activities
· Completing our review with the assistance of a third party advisor of the Company’s financial reporting controls and implementing recommended control procedures to strengthen the Company’s control procedures in areas which involve significant judgements and estimates, which involve application of complex accounting methods under GAAP, or which could have a material impact on the accuracy of our financial statements.
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time involved in the ordinary course of 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. MINE SAFETY DISCLOSURE
Not applicable.
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 ending September 30, 2014:
1.1 Form of 9.00% Convertible Subordinated Debenture due July 1, 2014 (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
100 XBRL-Related Documents
(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.
In accordance with the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INDEX TO EXHIBITS
1.I have reviewed this quarterly report on Form 10-Q of Oakridge Holdings, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and I have
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions)
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
EXHIBIT 32
SECTION 1350 Certifications