UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q10-Q/A
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTIONQuarterly report under Section 13 or 15(d) OF THE SECURITIES EX-
CHANGE ACT OFof the Securities Ex-
change Act of 1934
For the quarterly periodquarter ended JanuaryJuly 31, 20142013
[ ] TRANSITION REPORT UNDER SECTIONTransition report under Section 13 or 15(d) OF THE SECURITIES EX-
CHANGE ACT OFof the Securities Ex-
change Act of 1934
For the transition period from ___________ to ____________
Commission File Number: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St.
Kimball, NE 69145
(Address of principal executive offices) (Zip Code)
(308) 235-4645
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
March 17,August 6, 2014 was 5,031,225.5,029,775.
Transitional Small Business Disclosure Format: Yes [ X ] No [ ]
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the three and nine monththree-month period ended
JanuaryJuly 31, 2014,2013, are attached hereto.
Explanatory Note
This Amendment No. 1 to the quarterly Report on Form 10-Q of George Risk
Industries, Inc. (GRI), (the "Company") for the quarter ended July 31, 2013
is being filed to amend the financial information contained in the Manage-
ment's Discussion and Analysis of Financial Condition and Plan of Operation
and the financial statements on Form 10-Q for quarter ended July 31, 2013
which was filed with the Securities and Exchange Commission (SEC) on Sep-
tember 13, 2013 (the "Form 10-Q").
In its previously filed financial statements for the quarter ended July 31,
2013, the Company misstated the deferred taxes due to an error in the cal-
culation. The Company has restated its financial statements for the period
ended July 31, 2013 to reflect the proper adjustments.
Except as described above, no other parts of the 10-Q are being amended.
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
JanuaryJuly 31, April 30,
20142013 2013
------------ ------------
(unaudited) As Amended
ASSETS
Current AssetsAssets:
Cash and cash equivalents $ 5,174,0005,834,000 $ 4,859,000
MarketableInvestments and securities (Note 2) 23,071,00022,330,000 22,208,000
Accounts receivable:
Trade, net of $8,379$5,783 and $4,126
doubtful account allowance 1,687,0001,764,000 1,915,000
Other 01,000 1,000
Note receivable, current 2,0004,000 5,000
Income tax overpayment 275,00065,000 347,000
Inventories (Note 3) 2,121,0002,038,000 2,074,000
Prepaid expenses 232,000100,000 60,000
Deferred income taxes 759,000 635,000
------------ ------------
Total Current Assets $33,321,000 $32,104,000$32,136,000 $31,469,000
Property and Equipment, net, at cost $ 632,000 $685,000 701,000
Other Assets
Investment in Limited Land Limited Partnership,
at cost 238,000 238,000
Projects in process 39,00049,000 45,000
Note receivable 01,000 2,000
Other 1,000-- 1,000
------------ ------------
Total Other Assets $ 278,000288,000 $ 286,000
TOTAL ASSETS $34,231,000 $33,091,000$33,109,000 $32,456,000
============ ============
See accompanying notes to the condensed financial statements.statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
JanuaryJuly 31, April 30,
20142013 2013
------------ ------------
(unaudited) As Amended
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 104,00084,000 $ 68,000
Dividends payable 954,000817,000 817,000
Accrued expensesexpenses:
Payroll and otherrelated expenses 203,000304,000 259,000
Property taxes 3,000 0
--------------
Deferred income taxes 414,000 432,000
---------- ------------
Total Current Liabilities $ 1,264,0001,622,000 $ 1,144,0001,576,000
Long-Term Liabilities
Deferred income taxes 82,00092,000 133,000
------------ ----------------------
Total Long-Term Liabilities $ 82,00092,000 $ 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 903,000728,000 743,000
Retained earnings 32,813,000 31,873,00031,480,000 30,806,000
Treasury stock, 3,471,6563,469,206 and 3,467,356
shares, at cost (3,516,000)(3,498,000) (3,487,000)
------------ ------------
Total Stockholders' Equity $32,885,000 $31,814,000$31,395,000 $30,747,000
TOTAL LIABILITIESLIABILITES AND STOCKHOLDERS' EQUITY $34,231,000 $33,091,000$33,109,000 $32,456,000
============ ============
See accompanying notes to the condensed financial statements.statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31, 2013 AND 2012
July 31,
2013 2012
------------ ------------
(unaudited) Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2014 2014 2013 2013
---------------------------------------------------(unaudited)
Net Sales $ 2,480,0002,670,000 $ 8,070,000 $ 2,551,000 $ 7,662,0002,542,000
Less: costCost of goods sold (1,169,000) (3,761,000) (1,031,000) (3,676,000)
------------ ------------Goods Sold (1,284,000) (1,356,000)
------------ ------------
Gross Profit $ 1,311,0001,386,000 $ 4,309,000 $ 1,520,000 $ 3,986,0001,186,000
Operating Expenses:
General and administrative 186,000 547,000 200,000 616,000
Selling 469,000 1,352,000 443,000 1,302,000Administrative 184,000 202,000
Sales 460,000 425,000
Engineering 19,000 45,000 20,000 58,00012,000 18,000
Rent paidPaid to related
partiesRelated Parties 5,000 14,000 11,000 34,000
------------ ------------
------------ ------------
Total Operating Expenses $ 679,000661,000 $ 1,958,000 $ 674,000 $ 2,010,000656,000
Income From Operations 632,000 2,351,000 846,000 1,976,000725,000 530,000
Other Income (Expense)
Other 0 4,000 (2,000) 17,00010,000 14,000
Interest Expense (8,000) --
Dividend and interest
income 222,000 529,000 238,000 605,000Interest Income 166,000 203,000
Gain (loss)(Loss) on saleSale of investments 38,000 176,000 57,000 0
Gain (loss) on sale of
assets 0 127,000 0 0
------------ ------------Investments 18,000 (151,000)
------------ ------------
$ 260,000186,000 $ 836,000 $ 293,000 $ 622,00066,000
Income Before Provisions for Income Tax 892,000 3,187,000 1,139,000 2,598,000Taxes 911,000 596,000
Provisions for Income TaxTaxes
Current Expense 327,000 1,026,000 330,000 786,000285,000 222,000
Deferred tax expense (benefit) 138,000 (290,000) 19,000 (7,000)
------------ ------------(provision) (48,000) (62,000)
------------ ------------
Total Income Tax Expense 465,000 736,000 349,000 779,000$ 237,000 $ 160,000
Net Income $ 427,000674,000 $ 2,451,000 $ 790,000 $ 1,819,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.30
per share) 0 (1,510,000)
Common Stock ($0.50
per share) (2,519,000)
Common Stock ($0.22
per share) (1,108,000)
Income436,000
Basic and Diluted Earnings Per Share of
Common Stock (Note 5):
Basic $0.08 $0.49 $0.16 $0.36
Diluted $0.08 $0.49 $0.16 $0.36$ 0.13 $ 0.09
Weighted Average Number of Common Shares
Outstanding:
Basic 5,031,689 5,032,547 5,035,851 5,038,583
Diluted 5,052,189 5,053,047 5,056,351 5,059,083Outstanding 5,033,843 5,042,550
See accompanying notes to the condensed financial statements.statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
July 31,
2013 2012
---------------------------
(unaudited)
Three months Nine months Three months Nine months
ended ended ended ended
January 31, January 31, January 31, January 31,
2014 2014 2013 2013
----------------------------------------------------(unaudited)
Net Income $ 427,000674,000 $ 2,451,000 $ 790,000 $ 1,819,000
------------ ------------436,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses)
arising during period (121,000) 411,000 488,000 340,000(32,000) (461,000)
Reclassification adjustment for (gains) losses (42,000) (136,000) (35,000) 430,000gains
(losses) included in net income 8,000 561,000
Income tax expense related to other
comprehensive income 68,000 (115,000) (189,000) (322,000)
------------ ------------10,000 (42,000)
------------ ------------
Other Comprehensive Income (Loss) $ (95,000)(14,000) $ 160,000 $ 264,000 $ 448,00058,000
Comprehensive Income (Loss) $ 332,000660,000 $ 2,611,000 $ 1,054,000 $ 2,267,000
============ ============494,000
============ ============
See accompanying notes to the condensed financial statements.statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Nine months NineFor the three months
ended ended
JanuaryJuly 31,
January 31,
2014 2013 ----------------------------2012
---------------------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,451,000674,000 $ 1,819,000436,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 114,000 128,00037,000 42,000
(Gain) loss on sale of investments (176,000) 0
(Gain) loss on sale of assets (127,000) 0(18,000) 151,000
Reserve for bad debts 4,000 (4,000)1,000 (1,000)
Reserve for obsolete inventory 20,000 (1,000)22,000 (13,000)
Deferred income taxes (290,000) (7,000)(49,000) (62,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 224,000 (2,000)150,000 77,000
Inventories (67,000) 35,00014,000 57,000
Prepaid expenses (160,000) 71,000
Employee receivables 1,000 0(47,000) (6,000)
Income tax overpayment 72,000 (407,000)282,000 --
Increase (decrease) in:
Accounts payable 36,000 (10,000)16,000 (47,000)
Accrued expenses (53,000) 106,00048,000 69,000
Income tax payable -- 219,000
------------ ------------
Net cash provided by (used in) operating
activities $ 2,049,0001,130,000 $ 1,728,000922,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured (6,000) 8,000
Proceeds from sale of assets 127,000 0& purchased 4,000 13,000
(Purchase) of property/property and equipment (47,000) (95,000)(22,000) (36,000)
Proceeds from sale of marketable securities 4,000 79,000-- 1,000
(Purchase) of marketable securities (415,000) (604,000)
Collections(128,000) (170,000)
Collection of loans to employees 5,000 3,0002,000 2,000
(Purchase) of treasury stock (11,000) --
------------ ------------
Net cash provided by (used in) investing
activities $ (332,000)(155,000) $ (609,000)(190,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (1,373,000) (2,290,000)
(Purchase) of treasury stock (29,000) (36,000)
------------ ------------
Net cash provided by (used in) financing
activities $(1,402,000) $(2,326,000)$ -- $ --
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 315,000 $(1,207,000)975,000 $ 732,000
Cash and cash equivalents, beginning of
period $ 4,859,000 $ 5,773,000
------------ ------------
Cash and cash equivalents, end of period $ 5,174,0005,834,000 $ 4,566,0006,505,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $ 1,163,000 $ 1,207,000$0 $0
Interest expense 8,000 2,000
Cash receipts for:
Income taxes 233,000 19,000$0 $0
See accompanying notes to the condensed financial statements.statements
GEORGE RISK INDUSTRIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JANUARYJULY 31, 20142013
Note 1 Unaudited Interim Financial Statements
The accompanying unaudited financial statements have been prepared in accordance
with the instructions for Form 10-Q and do not include all of the informationinform-
ation and footnotes required by generally accepted accounting prin-
ciples in the United States of America (US GAAP)principles for
complete financial statements. These financialIt is suggested that these condensed finan-
cial statements should be read in conjunction with the financial statements and
notes containedthereto included in the company'sCompany's amended April 30, 2013 annual report
on Form 10-K for the year ended April 30, 2013.10-K/A. In the opinion of manage-
ment,management, all adjustments, consisting
only of normal recurring adjustments con-
sideredconsidered necessary for a fair presentation,present-
ation, have been included. Operating results for any quarter are not
necessarily indicative of the results for any other quarter or for the full
year.
We have evaluated subsequent events
through March 17, 2014,Restatement--In its previously filed financial statements for the issuance datequarter
ended July 21, 2013, and included in its quarterly report in Form 10-Q, the
Company incorrectly calculated deferred income taxes. Accordingly, the
Company has restated its financial statements for the period ended July 31,
2013. The table below reflects the effect of theserestatement on the Company's
financial statements.statements for the quarter.
Net income prior to restatement $ 654,000
Recalculated deferred income taxes $ 20,000
Net income after restatement $ 674,000
The Company did not have any material, recognizable subsequent events.tables below reflect the effect of restatement of Company's financial
statements for the quarter ended July 31, 2013 as described above.
Balance Sheet-July 31, 2013 As Filed Adjustments Re-stated
Current Assets:Deferred Income Taxes $ 633,000 $ 633,000 $ -
Current Liabilities:Deferred Income Taxes - $ 414,000 $ 414,000
Stockholders' Equity $32,441,000 $(1,047,000) $31,394,000
Income Statement-July 31, 2013
Deferred tax (benefit) expense $ (28,000) $ (20,000) $ (48,000)
Net Income $ 654,000 $ 20,000 $ 674,000
Statement of Cash Flows-July 31, 2013
Net income $ 654,000 $ 20,000 $ 674,000
Deferred Income taxes $ (28,000) $ (21,000) $ (49,000)
Accounts receivable $ 149,000 $ 1,000 $ 150,000
Statement of Comprehensive Income-July 31, 2013
Net income $ 654,000 $ 20,000 $ 674,000
Comprehensive income $ 640,000 $ 20,000 $ 660,000
Note 2 Marketable Securities
The Company has investments in publicly traded equity securities as
well as certain state and municipal debt securities. These securities are
class-
ifiedclassified as available-for-sale securities, and are reported at fair value.
Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements.
Avail-
able-for-saleAvailable -for-sale investments in debt securities mature between March 2014October
2013 and November 2048. The Company uses the average cost method to determinedeter-
mine the cost of securities sold and the amount reclassified out of accumulatedaccum-
ulated other comprehensive income into earnings. Unrealized gains and losses
are excluded from earnings and reported separately as a component of stockholders'equity.stock-
holder's equity and other comprehensive income. Dividend and interest income
are accrued as earned.
As of JanuaryJuly 31, 2014,2013, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 6,619,0007,436,000 $ 150,000109,000 $ (80,000)(106,000) $ 6,689,000
Corporate bonds7,439,000
REITs $ 30,00057,000 $ 03,000 $ (1,000)(3,000) $ 29,00057,000
Equity securities $12,565,000$11,367,000 $ 1,696,0001,408,000 $ (217,000) $14,044,000
REITs $ 56,000 $ 5,000 $ (2,000) $ 59,000(159,000) $12,616,000
Money markets and markets/CDs $ 2,250,0002,218,000 $ 0-- $ 0-- $ 2,250,0002,218,000
------------ ------------ ------------ ------------
Total $21,520,000$21,078,000 $ 1,851,0001,520,000 $ (300,000) $23,071,000(268,000) $22,330,000
In accordance with US GAAP, theThe 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 evaluatesevalu-
ates the nature of the investment, cause of impairment and number of investmentsinvest-
ments that are in an unrealized position. When an other-
than-temporary declineother-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 did not record anyrecorded impairment losses for the quarter ended January 31, 2014, but did record im-
pairment losses of
$18,000 for the nine monthsquarter ended JanuaryJuly 31, 2014. Like-
wise, as for the corresponding periods last year, management did not record
impairment losses2013 and $20,000 for the quarter ended
JanauryJuly 31, 2013, but did record
impairment losses of $20,000 for the nine months ended January 31, 2013.2012.
The following table shows the investments with gross unrealized losses that
are not deemed to be other-than-temporarily impaired, aggregated by investmentinvest-
ment category and length of time that individual securities have been in a
continuous unrealized loss position, at JanuaryJuly 31, 2014.2013.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$1,992,000$4,428,000 $ (50,000)(98,000) $ 622,000247,000 $ (30,000) $2,614,000(8,000) $ (80,000)
Corporate bonds4,675,000 $ 30,000 $ (1,000) $ 0 $ 0 $ 30,000 $ (1,000)
Equity securities
$3,378,000 $ (189,000) $ 219,000 $ (28,000) $3,597,000 $ (217,000)(106,000)
REITs
$ 26,000 $ (2,000)(3,000) $ 0-- $ 0-- $ 26,000 $ (2,000)(3,000)
Equity securities
$2,721,000 $(112,000) $ 278,000 $ (47,000) $ 2,999,000 $ (159,000)
----------- ---------- ----------- ---------- ------------ ------------
Total
$5,426,000$7,175,000 $(213,000) $ (242,000)525,000 $ 841,000(55,000) $ (58,000) $6,267,0007,700,000 $ (300,000)(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 JanuaryJuly 31, 2014.
Corporate Bonds
---------------
The Company's unrealized loss on investments in corporate bonds relates to
one bond. The contractual term of this investment does not permit the issuer
to settle the security at a price less than the amortized cost of the invest-
ment. Because the Company has the ability to hold this investment until a
recovery of fair value, which may be maturity, the Company does not consider
this investment to be other-than-temporarily impaired at January 31, 2014.2013.
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 ontoon to these investments for
an extended period, the Company does not consider these investments to be
other-
than-temporarilyother-than-temporarily impaired at JanuaryJuly 31, 2014.2013.
Note 3 Inventories
At JanuaryInventories at July 31, 2014, inventories2013, consisted of the following:
Raw materialsMaterials $ 1,507,0001,466,000
Work in process 465,000Process 461,000
Finished goods 333,000Goods 297,000
------------
2,305,000$ 2,224,000
Less: allowance for obsolete inventory (184,000)(186,000)
------------
TotalsNet Inventories $ 2,121,0002,038,000
============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
JanuaryJuly 31,
2014 2013 2012
---------------------------
Net revenue:
Security alarm products 1,955,000 2,211,0002,276,000 2,228,000
Other products 525,000 340,000394,000 314,000
------------ ------------
Total net revenue $ 2,480,0002,670,000 $ 2,551,0002,542,000
Income from operations:
Security alarm products 498,000 730,000618,000 465,000
Other products 134,000 116,000107,000 65,000
------------ ------------
Total income from operations $ 632,000725,000 $ 846,000530,000
Identifiable assets:
Security alarm products 3,028,000 3,508,0003,575,000 3,372,000
Other products 1,297,000 1,163,000788,000 1,182,000
Corporate general 29,906,000 26,701,00028,746,000 27,557,000
------------ ------------
Total assets $34,231,000 $31,372,000$33,109,000 $32,111,000
Depreciation and amortization:
Security alarm products 4,000 6,000
Other products 29,000 33,00028,000 32,000
Corporate general 5,000 4,000
------------ ------------
Total depreciation and amortization $ 38,00037,000 $ 43,00042,000
Capital expenditures:
Security alarm products 0 08,000 1,000
Other products 0 2,000-- 35,000
Corporate general 2,000 12,00014,000 --
------------ ------------
Total capital expenditures $ 2,00022,000 $ 14,00036,000
Note 5 Earnings per Share
Basic and diluted earningsearning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended JanuaryJuly 31, 2014
-------------------------------------------2013
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ------------------------- ---------
Net Income $ 427,000
===========674,000
=============
Basic EPS $ 427,000 5,031,689674,000 5,033,843 $ 0.0840.1339
Effect of dilutive securities:
Convertible
preferred stock 0Preferred Stock -- 20,500 -----------(0.0005)
------------- ------------------------- ----------
Diluted EPS $ 427,000 5,052,189674,000 5,054,343 $ 0.0840.1334
For the ninethree months ended JanuaryJuly 31, 2014
-------------------------------------------2012
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- ------------------------- ---------
Net Income $2,451,000
===========$ 436,000
=============
Basic EPS $2,451,000 5,032,547 $ 0.487436,000 5,042,550 $ 0.0865
Effect of dilutive securities:
Convertible
preferred stock 0Preferred Stock -- 20,500 -----------(0.0004)
------------- -----------
Diluted EPS $2,451,000 5,053,047 $ 0.485
For the three months ended January 31, 2013
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 790,000
===========
Basic EPS $ 790,000 5,035,851 $ 0.157
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- ------------------------- ----------
Diluted EPS $ 790,000 5,056,351436,000 5,063,050 $ 0.156
For the nine months ended January 31, 2013
--------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $1,819,000
===========
Basic EPS $1,819,000 5,038,583 $ 0.361
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $1,819,000 5,059,083 $ 0.3600.0861
Note 6 Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc.
Retirement Savings Plan (the "Plan")"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)401 (k)
of the Internal Revenue Code of 1986, as amended. Matching contributions by
the Company of approximately $2,000 were paid during the quarter ending
January 31, 2014 and $3,000 were paid during the corresponding quarter the
prior fiscal year. Likewise, the Company paid matching contributions
of approximately $7,000 during the nine-month periodquarters ending
JanuaryJuly 31, 20142013 and $9,000 during the nine-month period ending January 31, 2013.2012, respectively. There were no discretionary contributionscon-
tributions paid during either the quarters or nine-month
periods ending JanuaryJuly 31, 20142013 and 2013, respectively.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.
Investments and Marketable Securities
----------------------------------------------------------
As of JanuaryJuly 31, 2014,2013, our investments consisted of money markets, publicly
traded equity securities a corporate bond as well asand certain state and municipal debtvsecurities.debt securities.
Our marketable securities are valued using third-party broker statements.
The value of the majority of the securitiesinvestments 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 JanuaryJuly 31, 20142013
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Money Markets and CDs $ 2,250,0002,218,000 -- -- $ 0 $ 0 $ 2,250,0002,218,000
Equity Securities $14,103,000 $ 0 $ 0 $14,103,000$12,672,000 -- -- $12,672,000
Municipal and Corporate Bonds $ 0-- $ 6,718,0007,440,000 -- $ 0 $ 6,718,000
------------ ------------ ---------- ------------7,440,000
----------- ----------- ----------- -----------
Total fair value of
assets measured on a
recurring basis $16,353,000$14,890,000 $ 6,718,0007,440,000 $ 0 $23,071,000-- $22,330,000
=========== =========== =========== ===========
Note 8 Subsequent Events
None
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 2. Management Discussion and Analysis of Financial Condition and
Results of Operations
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached con-
densed consolidated financial statements, and with the George Risk
Industries'Company's amended audited
financial statements and discussion for the fiscal year ended April 30, 2013.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
---------
Net cash increased $315,000$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 nine months ended Januaryquarter ending July 31, 2014,
while,2013
compared with a $77,000 decrease for the same period last year, net cash decreased $1,207,000.
Accounts receivable decreased $224,000 for the current nine months and in-
creased $2,000 for the same periodquarter last year. The decrease
in cash flow for accounts receivable for the current period is a reflection
of being able to
collect on accounts in a timelier manner and collecting on past due items.slightly lower sales from the prior quarter. At Januarythe quarter ended July
31, 2014, 70.16%2013, 66.18% of the receivables wereare considered current (less than 45
days) and 0.6%while 1.56% of the total wereare over 90 days past due. ForThis is in com-
parison 71.09%to having 68.42% of the receivables wereconsidered current and 0.32% were past1.09% over
90 days past due at JanuaryJuly 31, 2013.2012. Inventories increased $67,000 fordecreased $14,000 during the
current nine
months, and decreased $35,000 for the same periodquarter as compared to a $57,000 decrease last year. The current in-smaller de-
crease is due toa result of increased purchases and increased sales. At the quar-
ter ended July 31, 2013 there was a $47,000 increase in sales and the prices of raw materials rising
slightly. Changes in prepaid expenses in regardsand
at July 31, 2012, there was a $6,000 increase. This is a result of having to
cash flow increased by
$160,000prepay for raw materials that we negotiated a better price and decreased by $71,000 for the nine-month periods ending January
31, 2014 and 2013, respectively. The large increase is due to prepayment of
inventory from overseas and down payments on molds being developed for the
Company.have not re-
ceived yet. Income tax overpayment decreased $72,000by $282,000 for the nine monthsquarter
ending JanuaryJuly 31, 2014, while it2013. Management has increased $407,000 for the corresponding period
last year. Management had to increase income tax estimates sinceas a result of
increased sales.
At the prior
year taxes were underpaid and the prior year refund was received.
For the nine monthsquarter ended JanuaryJuly 31, 2014,2013, accounts payable increased
$36,000, and decreased $10,000shows an increase of
$16,000 as compared to a decrease of $47,000 for the same period ended January 31, 2013.quarter the year
before. The change in cash in regards to accounts payable can vary. It
really de-
pendsdepends on the time of the month the invoices are due, since the companycom-
pany pays all its invoices within the terms. Accrued expenses decreased $53,000increased
$48,000 for the nine months ended January 31, 2014, and these expenses increased $106,000current quarter as compared to a $69,000 increase for the
corresponding nine months last year. The current decrease is a re-
sult of when the payroll pay date landed this year. There were nine less
days being accrued this year.quarter ended July 31, 2012.
Investing
---------
As for our investment activities, the Company has spent approximately
$47,000$22,000 on acquisitions of property and equipment for the current nine-month period
and $95,000fiscal
quarter. In comparison with the corresponding quarter last year, there was
spent during the nine months ended January 31, 2013. The
Company has also received proceedsactivity of $127,000 from the sale of an asset.
The airplane that was owned by the Company was sold during the second quarter
of the current fiscal year.$36,000. Additionally, the Company continues to purchase marketablemarket-
able securities, which include corporate and municipal bonds and quality stocks. Cash
spent on purchases of marketable securities for the nine monthsquarter ended JanuaryJuly 31,
20142013 was $415,000 and $604,000 was$128,000 compared with $170,000 spent forduring the corresponding period last year. In addition, proceeds from the sale of
marketable securities for the nine monthsquarter ended JanuaryJuly
31, 2014 were $4,000
and $79,000 for the same period last year.2013. We continue to use "money manager"?money manager? accounts for most stock transactions.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 investments.
Financing
---------
During the nine months ending Janaury 31, 2014, the Company spent $1,373,000
for the payment of dividends during the second quarter. The company declared
a dividend of $0.30 per share of common stock on September 30, 2013 and these
dividends were paid by October 31, 2013. As for the prior year numbers, cash
used for the payment of dividends was $2,290,000 for the nine months ending
January 31, 2013. Two dividends of $0.28 and $0.22 per common share were de-
clared and paid during the second and third quarters last fiscal year,
respectively.invest-
ments. Furthermore, the Company continues to purchase back its common stock when
the opportunity arises. For the nine monthsquarter ended JanuaryJuly 31, 2014,2013 the Company
purchased $29,000purchase back $11,000 worth of treasury stock, and $36,000 worthbut was boughtnot able to purchase back
forany during the nine monthsquarter ended JanuaryJuly 31, 2013.2012. We have been actively searching
for stockholders that have been "lost"?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 Company.Com-
pany.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
JanuaryJuly 31,
2014 2013 2012
---------------------------
Working capital
(current assets - current liabilities) $ 32,057,00030,514,000 $ 28,934,00029,700,000
Current ratio
(current assets / current liabilities) 26.362 21.20519.81 22.460
Quick ratio
((cash + investments+investments + AR) / current liabilities)
23.680 19.42518.45 20.590
Results of operationsOperations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $2,480,000$2,670,000 for the quarter ended JanuaryJuly 31, 2014,2013, which is a
2.78% decreasean
increase of 5.04% from the corresponding quarter last year. Year-to-date netNet sales at Januaryfor
the quarter ended July 31, 20142012 were $8,070,000, which is a 5.32% increase from the
same period last year.$2,542,000. The Company's products are
tied to the housing market and the slight gainincrease in sales is a result of the Company focusing on gaining
market share in the industry.a re-
covering economy. The Company is accomplishing thisfocusing on keeping and increasing sales
by having excellent customer service and being willing to make many customizedcustom-
ized parts. Cost of goods sold was 47.14%48.09% of net sales for the quarter ended
JanuaryJuly 31, 20142013 and 40.42%53.34% for the same quarter last year. Year-to-date cost of goods
sold percentages were 46.6% for the current nine months and 47.98% for the
corresponding nine months last year. Management continuesended July 31, 2012. Management's
goal is to keep labor and other manufacturing expenses down and strives to stay inwithin the desired cost of
goods sold percentage range of 45
to 50%.
Operating expenses were 27.38%24.76% of net sales for the quarter ended JanuaryJuly 31,
20142013 as compared to 26.42%25.81% for the corresponding quarter last year. Year-to-
dateManage-
ment's goal is to always keep the operating expenses were 24.26%around 30% or less of
net sales, for the nine months ended
January 31, 2014, while they were 26.23% for the same period last year.
Having relatively the same percentages for operating expenses shows thatas management has a good grip on spending habits.been able to achieve over the years. Income
from operations for the quarter ended JanuaryJuly 31, 20142013 was at $632,000,$725,000, which
is a 25.3% decrease36.79% increase from the corresponding quarter last year, which had incomein-
come from operations of $846,000. Income from operations for the nine months ended January 31, 2014
was at $2,351,000, which is an 18.98% increase from the corresponding nine
months last year, which had income from operations of $1,976,000.$530,000.
Other income and expenses showed gains of $260,000 and $836,000an $186,000 gain for the quarter and nine months ended JanuaryJuly
31, 2014. The other income and expense
numbers for last year also showed gains of $293,0002013 as compared to having a $66,000 gain for the quarter and
$622,000ended July 31,
2012. The main reason for the nine-months ending January 31, 2013. Dividend and interestbigger gain in other income was down 6.72%for the current
quarter is that we had $18,000 of realized gains on investments for the
quarter and was down 12.56%as compared to $151,000 of realized losses for the current
nine-month period when comparing to the same time periodscorresponding
quarter last year. During
the current quarter, there was a $38,000 gain on investments recorded and a
gain of $176,000 for the current year to date figures. Management did not
write down any investments during the quarters ending January 31, 2014 and
2013, respectively.
NetIn turn, net income for the quarter ended JanuaryJuly 31, 20142013
was $427,000, which isat $654,000, a 45.95% decrease50% increase from the corresponding quarter last year,
which showed a net gainincome of $790,000. Net income$436,000. Earnings per share for the nine monthsquarter
ended January 31, 2014 was
$2,451,000, a 34.74% increase from the same period last year. Net income for
the nine months ended JanuaryJuly 31, 2013 was $1,819,000. Earningswere $0.13 per common share and $0.09 per common share
for the quarter ended JanuaryJuly 31, 2014 was $0.08 per share and $0.49
per share for the year-to-date numbers. EPS for the quarter and nine months
ended January 31, 2013 was $0.16 per share and $0.36 per share, respectively.2012.
New product informationProduct 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 obsolete component parts,discontinued raw materials, our pool alarm will have to be
redesigned. This will require mold changes that are nearing completion. Management is
working with a consultant who is helping withwill take until later in
the development of a wireless
pool alarm.year to complete.
Molding is working on a CC-15another case for our Current Controller. This will
allow us to manufacture a couple of different versions:versions; a 15-amp15 amp version that
would automatically turn on a whole room of lights and a 220-volt version for
international markets. MoldingAnother project in molding is developing a new designredesign for the
cover of ourthe 29-Series terminal switch.
Progress continues onOther 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 and theyproblem. They are looking for something that
will tie into theirthe security system to be informed if fuel tanks orand trucks are
tampered with.
Engineering continues working on a Sprinkler Controller. This is a ground
sensor that can be installed with a sprinkler system. The controller will
monitor the amount of water in the soil and prevent the sprinkler system from
watering if the soil has enough moisture.
Recently issued accounting pronouncementsIssued Accounting Pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
There areIn 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
new accounting pronouncements that significantly affect the
Company.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 techniquestech-
niques and established customers to increase sales and profits.
There are no known seasonal trends with any of ourGRI's products, since we sell
to distributors and OEM manufacturers. TheOur 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 JanuaryJuly 31, 2014,2013,
our president and chief executive officer (also working as our chief financialfinan-
cial officer) has concluded that our disclosure controls and procedures are
effective such that information required to be disclosed by us in the re-
portsreports
that we file or submit under the Exchange Act is (i) recorded, pro-
cessed,processed,
summarized and reported within the time periods specified in the Sec-
uritiesSecurities
and Exchange Commission'sCommission?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 absoluteab-
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
de-
tected.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
in-
ternalinternal control over financial reporting was ineffective as of JanuaryJuly 31,
2014,2013, 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
in-
ternalinternal 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 re-
porting,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 reportingre-
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
JanuaryJuly 31, 2014,2013, 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 procedurespro-
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 receiptsre-
ceipts and expenditures are being made only in accordance with authorizationsauthor-
izations of management and the Board of Directors; and
* Provide reasonable assurance regarding prevention or timely de-
tectiondetection
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'sManagement?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'smanagement?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 thirdfirst quarter of fiscal year 2014.
Period Number of shares repurchased
--------------------------------------------------------------------- ----------------------------
NovemberMay 1, 2013 - November 30,May 31, 2013 50
December1,350
June 1, 2013 - DecemberJune 30, 2013 500
July 1, 2013 - July 31, 2013 0
January 1, 2014 - January 31, 2014 700--
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities(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 AccoutingAccounting Officer), as required by SectionSec-
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 SectionSec-
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 03-17-201408-06-2014 By: /s/ Stephanie M. Risk-McElroy
Stephanie M. Risk-McElroy
President, Chief Financial Officer and
ChairmanChariman of the Board