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 October 31, 2009
[ ] 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
December 21, 2009 was 5,073,084.
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 six month period
ended October 31, 2009, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2009 2009
------------ ------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 2,700,000 $ 4,671,000
Investments and securities 19,107,000 15,691,000
Accounts receivable:
Trade, net of $1,945 and $7,492
doubtful account allowance 1,086,000 1,272,000
Other 1,000 1,000
Note receivable, current 7,000 3,000
Income tax overpayment 204,000 137,000
Inventories 2,154,000 2,741,000
Prepaid expenses 86,000 81,000
Deferred current income taxes 537,000 1,127,000
------------ ------------
Total Current Assets $25,882,000 $25,724,000
Property and Equipment, net, at cost 750,000 802,000
Other Assets
Investment in Limited Land Partnership,
at cost 200,000 200,000
Projects in process 126,000 68,000
Long-term receivable 40,000 40,000
Note receivable 10,000 9,000
------------ ------------
Total Other Assets $ 376,000 $ 317,000
TOTAL ASSETS $27,008,000 $26,843,000
============ ============
GEORGE RISK INDUSTRIES, INC.
BALANCE SHEETS
October 31, April 30,
2009 2009
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 30,000 $ 35,000
Dividends payable 395,000 317,000
Accrued expenses:
Payroll and related expenses 246,000 306,000
------------ ------------
Total Current Liabilities $ 671,000 $ 658,000
Long-Term Liabilities
Deferred income taxes 76,000 86,000
------------ ------------
Total Long-Term Liabilities $ 76,000 $ 86,000
Stockholders' Equity
Convertible preferred stock, 1,000,000
shares authorized, Series 1-noncumulative,
$20 stated value, 25,000 shares authorized,
4,100 issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value,
10,000,000 shares authorized, 8,502,832
shares issued and outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income (154,000) (940,000)
Retained earnings 27,033,000 27,423,000
Treasury stock, 3,429,748 and 3,376,548
shares, at cost (3,294,000) (3,069,000)
------------ ------------
Total Stockholders' Equity $26,270,000 $26,099,000
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $27,008,000 $28,843,000
============ ============
GEORGE RISK INDUSTRIES, INC.
INCOME STATEMENTS
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2009 2009 2008 2008
---------------------------------------------------
Net Sales $ 1,877,000 $ 3,840,000 $ 2,470,000 $ 4,914,000
Less: cost of goods sold (1,181,000) (2,323,000) (1,175,000) (2,371,000)
------------ ------------ ------------ ------------
Gross Profit $ 696,000 $ 1,517,000 $ 1,295,000 $ 2,543,000
Operating Expenses:
General and
administrative 181,000 348,000 205,000 383,000
Selling 428,000 831,000 444,000 947,000
Engineering 18,000 32,000 21,000 38,000
Rent paid to related
parties 11,000 23,000 12,000 28,000
------------ ------------ ------------ ------------
Total Operating Expenses $ 638,000 $ 1,234,000 $ 682,000 $ 1,396,000
Income From Operations 58,000 283,000 613,000 1,147,000
Other Income (Expense)
Other 134,000 136,000 1,000 3,000
Dividend and interest
income 159,000 343,000 184,000 393,000
Gain (loss) on
investments 26,000 (74,000) (394,000) (544,000)
Gain (loss) on sale
of assets 7,000 7,000 0 0
------------ ------------ ------------ ------------
$ 326,000 $ 412,000 $ (209,000) $ (148,000)
Income Before Provisions
for Income Tax 384,000 695,000 404,000 999,000
Provisions for Income Tax
Current expense (109,000) (217,000) (114,000) (338,000)
Deferred tax benefit
(expense) (6,000) (5,000) 55,000 78,000
------------ ------------ ------------ ------------
Total Income Tax Expense $ (115,000) $ (222,000) $ (59,000) $ (260,000)
Net Income $ 269,000 $ 473,000 $ 345,000 $ 739,000
============ ============ ============ ============
Cash Dividends
Common Stock ($0.17
per share) $ (863,000) $ (863,000) $ (880,000) $ (880,000)
Income Per Share of Common Stock:
Basic $0.05 $0.09 $0.07 $0.14
Assuming Dilution $0.05 $0.09 $0.07 $0.14
Weighted Average Number of
Common Shares Outstanding:
Basic 5,076,805 5,091,550 5,175,998 5,176,098
Diluted 5,097,305 5,112,050 5,196,498 5,196,598
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME
Three months Six months Three months Six months
ended ended ended ended
October 31, October 31, October 31, October 31,
2009 2009 2008 2008
----------------------------------------------------
Net Income $ 269,000 $ 473,000 $ 345,000 $ 739,000
------------ ------------ ------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding
gains (losses) arising
during period 408,000 1,314,000 (1,861,000) (2,581,000)
Reclassification adjustment
for (gains) losses included
in net income (117,000) 37,000 258,000 393,000
Income tax expense related
to other comprehensive
income (122,000) (565,000) 670,000 915,000
------------ ------------ ------------ ------------
Other Comprehensive
Income $ 169,000 $ 786,000 $ (933,000) $(1,273,000)
Comprehensive Income $ 438,000 $ 1,259,000 $ (588,000) $ (534,000)
============ ============ ============ ============
GEORGE RISK INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
Six months Six months
ended ended
October 31, October 31,
2009 2008
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 473,000 $ 739,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 80,000 82,000
(Gain) loss on sale of investments 74,000 544,000
(Gain) loss on sales of assets (7,000) 0
Reserve for bad debts (56,000) 0
Reserve for obsolete inventory 64,000 0
Deferred income taxes 5,000 (78,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 241,000 59,000
Inventories 524,000 (54,000)
Prepaid expenses (5,000) 9,000
Other receivables 0 (1,000)
Income tax overpayment (67,000) (248,000)
Increase (decrease) in:
Accounts payable (5,000) 31,000
Accrued expenses (60,000) (109,000)
------------ ------------
Net cash provided by (used in) operating
activities $ 1,261,000 $ 974,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured (58,000) (38,000)
(Purchase) of property and equipment (28,000) (39,000)
Proceeds from sale of marketable securities 225,000 1,000
(Purchase) of marketable securities (2,364,000) (792,000)
Collections of loans to employees 2,000 2,000
(Purchase) of treasury stock (225,000) (2,000)
------------ ------------
Net cash provided by (used in) investing
activities $(2,448,000) $ (868,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (784,000) (802,000)
------------ ------------
Net cash provided by (used in) financing
activities $ (784,000) $ (802,000)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $(1,971,000) $ (696,000)
Cash and cash equivalents, beginning of
period $ 4,671,000 $ 4,072,000
------------ ------------
Cash and cash equivalents, end of period $ 2,700,000 $ 3,376,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $ 320,000 $ 586,000
Interest expense $ 0 $ 0
Cash receipts for:
Income taxes $ 38,000 $ 0
GEORGE RISK INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 2009
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 information
and footnotes required by generally accepted accounting principles for com-
plete financial statements. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's April 30, 2009 annual report on Form 10-K.
In the opinion of management, all adjustments, consisting only of normal re-
curring 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 class-
ified as available-for-sale securities, and are reported at fair value.
Refer to Note 7, Fair Value Measurements, for additional information on the
fair value measurements for all assets and liabilities, including invest-
ments, that are measured at fair value in these financial statements. Avail-
able -for-sale investments in debt securities mature between November 2009
and June 2042. The Company uses the average cost method to determine the
cost of securities sold and the amount reclassified out of accumulated other
comprehensive income into earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholder's equity.
Dividend and interest income are accrued as earned.
As of October 31, 2009, investments available-for-sale consisted of the
following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 9,552,000 $ 130,000 $ (152,000) $ 9,530,000
Federal agency mortgage
backed securities $ 125,000 $ 4,000 $ -- $ 129,000
Corporate bonds $ 220,000 $ 4,000 $ -- $ 224,000
Equity securities $ 6,260,000 $ 354,000 $ (612,000) $ 6,002,000
Money markets/CDs $ 3,216,000 $ 6,000 $ -- $ 3,222,000
------------ ------------ ------------ ------------
Total $19,373,000 $ 498,000 $ (764,000) $19,107,000
In accordance with SFAS 115, 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 evaluates the nature of the investment, cause of impairment
and number of investments that are in an unrealized position. When an other-
than-temporary decline is identified, the Company will decrease the cost of
the marketable security to the new fair value and recognize a real loss. The
investments are periodically evaluated to determine if impairment changes are
required. As a result of this standard, management recorded impairment
losses of $34,000 for the quarter ended October 31, 2009 and $89,000 for the
six months ended October 31, 2009. As for the corresponding periods last
year, $302,000 worth of impairment loss was recorded for the quarter, while
$405,000 of loss was recorded for the six months ended October 31, 2008.
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 October 31, 2009.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$1,419,000 $ (31,000) $3,138,000 $(120,000) $ 4,557,000 $ (151,000)
Federal agency mortgage backed securities
-- -- -- -- -- --
Corporate bonds
-- -- -- -- -- --
Equity securities
$ 732,000 $ (68,000) $2,395,000 $(545,000) $ 3,127,000 $ (613,000)
----------- ------------ ----------- ---------- ------------ ------------
Total
$2,151,000 $ (99,000) $5,533,000 $(665,000) $ 7,684,000 $ (764,000)
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 October 31, 2009.
Federal Agency Mortgage-Backed Securities
The unrealized losses on the Company's investment in federal agency mortgage-
backed securities were caused by interest rate increases. The Company pur-
chased these investments at a discount relative to their face amount, and the
contractual cash flows of these investments are guaranteed by an agency of
the U.S. government. Accordingly, it is expected that the securities would
not be settled at a price less than the amortized cost of the Company's in-
vestment. Because the decline in market value is attributable to changes in
interest rates and not credit quality and because the Company has the ability
to hold these investments until a recovery of fair value, which may be matur-
ity, the Company does not consider these investments to be other-than-temp-
orarily impaired at October 31, 2009.
Corporate Bonds
The Company's unrealized loss on investments in corporate bonds relates to
several bonds. The contractual term of these investments do not permit the
issuer to settle the security 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 October
31, 2009.
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. Management has evaluated the in-
dividual holdings, and because of the recent decline in the stock market,
does not consider these investments to be other-than-temporarily impaired at
October 31, 2009.
Note 3 Inventories
At October 31, 2009, inventories consisted of the following:
Raw Materials $ 1,436,000
Work in Process 579,000
Finished Goods 330,000
------------
$ 2,345,000
Less: allowance for obsolete inventory (191,000)
------------
Net Inventories $ 2,154,000
============
Note 4 Business Segments
The following is financial information relating to industry
segments:
For the quarter ended
October 31,
2009 2008
---------------------------
Net revenue:
Security alarm products 1,703,000 2,278,000
Other products 174,000 192,000
------------ ------------
Total net revenue $ 1,877,000 $ 2,470,000
Income from operations:
Security alarm products 53,000 565,000
Other products 5,000 48,000
------------ ------------
Total income from operations $ 58,000 $ 613,000
Identifiable assets:
Security alarm products 2,545,000 3,262,000
Other products 1,328,000 2,037,000
Corporate general 23,135,000 21,481,000
------------ ------------
Total assets $27,008,000 $26,780,000
Depreciation and amortization:
Security alarm products 6,000 7,000
Other products 26,000 26,000
Corporate general 8,000 8,000
------------ ------------
Total depreciation and amortization $ 40,000 $ 41,000
Capital expenditures:
Security alarm products 2,000 0
Other products 0 0
Corporate general 15,000 10,000
------------ ------------
Total capital expenditures $ 17,000 $ 10,000
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 October 31, 2009
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 269,000
===========
Basic EPS $ 269,000 5,076,805 $ 0.05
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 269,000 5,097,305 $ 0.05
For the six months ended October 31, 2009
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 473,000
===========
Basic EPS $ 473,000 5,091,550 $ 0.09
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 473,000 5,112,050 $ 0.09
For the three months ended October 31, 2008
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 345,000
===========
Basic EPS $ 345,000 5,175,998 $ 0.07
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 345,000 5,196,498 $ 0.07
For the six months ended October 31, 2008
-------------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
----------- ------------- -----------
Net Income $ 739,000
===========
Basic EPS $ 739,000 5,176,098 $ 0.14
Effect of dilutive securities:
Convertible preferred stock 0 20,500
----------- ------------- -----------
Diluted EPS $ 739,000 5,196,598 $ 0.14
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 and $4,000 were paid during each quarter
ending October 31, 2009 and 2008, respectively. Likewise, the Company paid
matching contributions of approximately $5,000 and $6,000 during each six-
month period ending October 31, 2009 and 2008, respectively. There were no
discretionary contributions paid during either the quarters or six-month
periods ending October 31, 2009 and 2008, respectively.
Note 7 Fair Value Measurements
As of May 1, 2008, we adopted Statement of Financial Accounting Standards
No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 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 re-
strictions, and credit risk.
SFAS No. 157 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 prior-
ity to unobservable inputs (level 3 measurements). The levels of the fair
value hierarchy under SFAS No. 157 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 October 31, 2009, our investments consisted of publicly traded equity
securities as well as certain state and municipal debt securities. Our
marketable securities are valued using third-party broker statements. The
value of the majority of securities is derived from quoted market inform-
ation. The inputs to the valuation are generally classified as Level 1 given
the active market for these securities, however, if an active market does not
exist, the inputs are recorded at a lower level in the fair value hierarchy.
Fair Value Hierarchy
- --------------------
The following tables set forth our assets and liabilities measured at fair
value on a recurring basis and a non-recurring basis by level within the fair
value hierarchy. As required by SFAS No. 157, 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 October 31, 2009
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Securities $19,107,000 $ 0 $ 0 $19,107,000
------------ ---------- ---------- ------------
Total fair value of
assets measured on a
recurring basis $19,107,000 $ 0 $ 0 $19,107,000
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
condensed consolidated financial statements, and with the George Risk
Industries' audited financial statements and discussion for the fiscal year
ended April 30, 2009.
Liquidity and capital resources
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Operating
- ---------
Net cash decreased $1,971,000 for the six months ended October 31, 2009,
while, for the same period last year, net cash decreased $696,000. Accounts
receivable decreased $241,000 for the current six months and decreased
$59,000 for the same period last year. At October 31, 2009, 71.99% of the
receivables were considered current (less than 45 days) and 3.93% of the
total were over 90 days past due. Inventory decreased $524,000 for the cur-
rent six months, while it increased $54,000 for the same period last year.
The main reason for the decrease in cash expenditures towards inventory is
that sales are down and not as much inventory is needed at this time.
Changes in prepaid expenses in regards to cash flow increased by $5,000 for
the six months ending October 31, 2009. Conversely, changes in prepaid ex-
penses in regards to cash flow decreased by $9,000 for the six-month ending
October 31, 2008. Cash towards income tax overpayment increased $67,000 for
the six months ended October 31, 2009 and it increased $248,000 for the same
period last year. Management paid income tax estimated based on prior year
taxable income.
For the six months ended October 31, 2009, accounts payable decreased $5,000,
and increased $31,000 for the same period ended October 31, 2008. The cur-
rent decrease accounts for the decreases in the cost and need of raw
materials. Accrued expenses decreased $60,000 for the six months ended
October 31, 2009, as it decreased by $109,000 for the same period last year.
The smaller decrease is due to reduced sales commissions and fewer employees.
Investing
- ---------
As for our investment activities, the Company has spent approximately $28,000
on acquisitions of property and equipment for the current six-month period
and $39,000 was spent during the six months ended October 31, 2008.
Additionally, the Company continues to purchase marketable securities, which
include municipal bonds and quality stocks. Cash spent on purchases of mar-
ketable securities for the six months ended October 31, 2009 was $2,364,000
and $792,000 was spent for the corresponding period last year. We use "money
manager" accounts for most stock transactions. By doing this, the Company
gives an independent third party firm, who are experts in this field, per-
mission to buy and sell stocks at will. The Company pays a quarterly service
fee based on the value of the investments. Also, $2 million was moved from a
money market account into several certificates of deposits in order to be
covered more fully by FDIC insurance. Furthermore, the Company continues to
purchase back its common stock when the opportunity arises. For the six
months ended October 31, 2009, the Company purchased $225,000 worth of
treasury stock and $2,000 worth was bought back for the six months ended
October 31, 2008. We have been actively searching for stockholders that have
been "lost" over the years. The payment of dividends over the last five
fiscal years has also prompted many stockholders and/or their relatives and
descendants to sell back their stock to the Company. We have also made pur-
chases of company stock on the open market.
Financing
- ---------
Cash flows from financing activities decreased by $784,000 for the six months
ending October 31, 2009. That figure consists of the payment of dividends
during the second quarter. The company declared a dividend of $0.17 per
share of common stock on September 30, 2009 and these dividends were paid by
October 31, 2009. As for the prior year numbers, net cash used in financing
activities was $802,000 for the six months ending October 31, 2008. A div-
idend of $0.17 per common share was also declared and paid during the second
fiscal quarter last year.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
October 31,
2009 2008
---------------------------
Working capital $ 25,211,000 $ 24,987,000
Current ratio 38.572 40.852
Quick ratio 34.118 32.563
Results of Operations
~~~~~~~~~~~~~~~~~~~~~
Net sales were $1,877,000 for the quarter ended October 31, 2009, which is a
24% decrease from the corresponding quarter last year. Year-to-date net
sales were $3,840,000 at October 31, 2009, which is a 21.86% decrease from
the same period last year. The Company is tied to the housing industry and
with that industry not performing well over the last year or so, we are
seeing a decrease in our sales also. Cost of goods sold was 62.9% of net
sales for the quarter ended October 31, 2009 and 47.6% for the same quarter
last year. Year-to-date cost of goods sold percentages were 60.5% for the
current six months and 49.3% for the corresponding six months last year.
Management has been trying to keep labor and other manufacturing expenses
down, but our sales have been much lower than anticipated. Therefore, that
is the reason for the over 10% increase in costs of good sold percentage.
Operating expenses were 34.0% of net sales for the quarter ended October 31,
2009 as compared to 27.6 % for the corresponding quarter last year. Year-to-
date operating expenses were 32.1% of net sales for the six months ended
October 31, 2009, while they were 28.4% for the same period last year.
Keeping operating expenses around 30% of net sales, as the company has been
able to achieve over the years, shows that management keeps a close eye on
these expenses from year to year. Income from operations for the quarter
ended October 31, 2009 was at $58,000, which is a 90.5% decrease from the
corresponding quarter last year, which had income from operations of
$613,000. Income from operations for the six months ended October 31, 2009
was at $283,000, which is a 75.3% decrease from the corresponding six months
last year, which had income from operations of $1,147000.
Other income and expenses showed gains of $326,000 and $412,000 for the
quarter and six months ended October 31, 2009, respectively. The other in-
come and expense numbers for last year showed losses of $209,000 for the
quarter and $148,000 for the six months ending October 31, 2008. Dividend
and interest income was down 13.59% for the current quarter and was down
12.72% for the current six-month period when compared to the same time per-
iods last year. Gain and loss on investments is where the biggest gain is
in this category. Also, management did not have to write down as much for
impaired investments. For the quarter ended October 31, 2009, management
wrote down $34,000 for impaired investments. This is compared to write downs
of $302,000 for the same quarter last year. For the year-to-date ended
October 31, 2009, management wrote down $89,000 for impaired investments and
$405,000 was wrote down for the same period last year.
Net income for the quarter ended October 31, 2009 was at $269,000, a 22.0%
decrease from the corresponding quarter last year, which showed net income of
$345,000. Net income for the six months ended October 31, 2009 was $473,000,
a 36% decrease from the same period last year. Net income for the six months
ended October 31, 2008 was $739,000. Earnings per common share for the
quarter ended October 31, 2009 were $0.05 per share and $0.09 per share for
the year-to-date numbers. EPS for the quarter and six months ended October
31, 2008 were $0.07 per share and $0.14 per share, respectively.
New Product Development
~~~~~~~~~~~~~~~~~~~~~~~
The Omni-Directional Tilt Sensor (pt # ODTS-1) is now in production. When
mounted onto an object, such as industrial equipment, tool boxes, air con-
ditioners, museum pieces, skylight, and such, it can detect a slight movement
of tilt in any direction should a thief or burglar try to tamper with or re-
move the equipment or device. With copper theft from air conditioning units
at all time highs, this product is now being installed commonly on A/C units
behind homes and businesses.
Another new product, the Quick Disconnect Cord (pt # QDC-20), is routinely
used by security installers to transfer power from one side of a fence across
a gate or door to the other side of a fence. It can also be used on overhead
doors and is intended to meet certain specialty applications for security
installers.
Engineering continues to work on a wireless swimming pool alarm design, a
low cost hold-up switch for banks and offices, a pump guard watering station
monitor, and a high security contact switch.
Recently Issued Accounting Pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Financial Accounting Standards Board established Accounting Standards
Codification (the "Codification") commencing on July 1, 2009, as the source
of authoritative United States Generally Accepted Accounting Principles
("GAAP") to be applied by nongovernmental entities. The Codification does
not necessarily change GAAP, but literature excluded from the Codification
will not be considered authoritative. The Codification is effective for
financial statements issued for periods ending after September 15, 2009.
The Company is in compliance with the Codification.
The Company implemented FASB ASC 855-10-50 with respect to subsequent events
as of September 30, 2009. This standard establishes general standards of
accounting for and disclosures of events that occurred after the balance
sheet date but before the financial statements were issued.
Other Information
~~~~~~~~~~~~~~~~~
There are no known seasonal trends with any of our products, since we sell
to distributors and OEM manufacturers. The products are tied to the housing
industry and will fluctuate with building trends.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officer and our Chief Financial Officer, after evaluating
the effectiveness of the Company's "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e)
or 15d-15(e)) as of the end of the period covered by this quarterly report,
have concluded that our disclosure controls and procedures are effective
based on their evaluation of these controls and procedures required by para-
graph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 3A(T). Controls and Procedures
Evaluation of disclosure controls and procedures:
- -------------------------------------------------
Based on their evaluation of our disclosure controls and procedures (as de-
fined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of October
31, 2009, our president and chief executive officer and our chief financial
officer have concluded that our disclosure controls and procedures are
effective such that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities
and Exchange Commission's rules and (ii) accumulated and communicated to our
management, including our chief executive officer and our chief financial
officer, as appropriate to allow timely decisions regarding disclosure. A
control system cannot provide absolute assurance, however, that the ob-
jectives of the control systems are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud,
if any, within a company have been detected.
Changes in internal controls over financial reporting:
- ------------------------------------------------------
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, that has materially
affected, or is reasonably likely to materially affect, our internal con-
trols over financial reporting.
Management's Annual Report on Internal Control over Financial Reporting:
- ------------------------------------------------------------------------
Our management is responsible for establishing and maintaining adequate in-
ternal control over financial reporting, as such term is defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was
designed to provide reasonable assurance regarding the reliability of finan-
cial reporting and the preparation of financial statements for external pur-
poses, in accordance with generally accepted accounting principles. Because
of inherent limitations, a system of internal control over financial re-
porting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide no reasonable assurance of
achieving their control objectives. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate due to change in conditions, or that the degree of com-
pliance with the policies or procedures may deteriorate.
Our management, including our principal executive officer and principal
accounting officer, conducted an evaluation of the effectiveness of our in-
ternal control over financial reporting using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Based on its evaluation, our manage-
ment concluded that as of October 31, 2009 our internal control over
financial reporting is effective.
This quarterly report does not include an attestation report of the Corpor-
ation's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by
the Corporation's registered public accounting firm pursuant to temporary
rules of the SEC that permit the Corporation to provide only the management's
report in this quarterly report.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
31. Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Chief Financial Officer
32. Certifications pursuant to 18 U.S.C. 1350
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Chief Financial Officer
B. Reports on Form 8-K
No 8-K reports were filed during the quarter ended October 31, 2009.
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 12-21-2009 By: /s/ Kenneth R. Risk
Kenneth R. Risk
President and Chairman of the Board
Date 12-21-2009 By: /s/ Stephanie M. Risk
Stephanie M. Risk
Chief Financial Officer and Controller