UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
OR
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from                                to

 

Commission file number 0-1937

 

OAKRIDGE HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

 

MINNESOTA		41-0843268
(State or other jurisdiction of		(I.R.S. Employer
Incorporation or organization)		Identification Number)
400 WEST ONTARIO STREET, CHICAGO, ILLINOIS		60610
(Address of principal executive offices)		(Zip Code)

 

(312) 505-9267

(Issuer’s telephone number)

 

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

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days

 

S Yes £ No

 

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

 

S Yes £ No

 

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

 

£ Yes S No

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

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

  

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

 

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

 

Large Accelerated filer o	Accelerated Filer o
Non-accelerated filer o	Smaller reporting company _x

 

(Do not check if a smaller reporting company)

 

OAKRIDGE HOLDINGS, INC.

 

FORM 10-Q

 

For the quarter ended March 31, 2012

 

TABLE OF CONTENTS

 

PART I.	Financial Information
ITEM 1.	Condensed Consolidated Financial Statements:			2
	(a)	Condensed Consolidated Balance Sheets as of March 31, 2012 (unaudited) and June 30, 2011		2
	(b)	Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011 (unaudited) and nine months ended March 31, 2012 and 2011 (unaudited)		4
	(c)	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2012 and 2011 (unaudited)		6
	(d)	Notes to Condensed Consolidated Financial Statements		7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			13
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk			17
ITEM 4.	Controls and Procedures			18
PART II.	Other Information			18
ITEM 1.	Legal Proceedings			18
ITEM 1A.	Risk Factors			18
ITEM 2-4.	Not Applicable			18
ITEM 5.	Not Applicable			19
ITEM 6.	Exhibits			19
SIGNATURES				19

 

 

 

PART I - FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

 

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

 

		March 31,				June 30,
		2012 (unaudited)				2011 (audited)
ASSETS
Current assets:
Cash & cash equivalents		$	553,191			$	416,997
Restricted cash			86,836				89,857
Receivables, net			2,091,337				2,128,663
Inventories:
Production, net			7,145,754				7,535,252
Cemetery, mausoleum space and markers			607,448				599,445
Other current assets			95,978				44,835
Deferred income taxes			44,000				167,000
Total current assets			10,624,544				10,982,049
Property, plant and equipment:
Property, plant and equipment, at cost			7,096,295				6,822,008
Less accumulated depreciation			(4,705,443	)			(4,519,040	)
Property, plant and equipment, net			2,390,852				2,302,968
Other assets:
Preneed trust investments			2,230,832				2,075,713
Cemetery perpetual care trusts			5,486,409				5,345,922
Deferred income taxes			303,000				303,000
Deferred financing costs, net			47,749				53,556
Other			7,548				4,238
Total other assets			8,075,538				7,782,429
Total assets		$	21,090,934			$	21,067,446

 

See accompanying notes to the condensed consolidated financial statements

 

PART I - FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

 

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

 

		March 31,				June 30,
		2012 (unaudited)				2011 (audited)
LIABILITIES
Current liabilities:
Lines of credit – bank		$	1,710,845			$	1,710,845
Accounts payable			1,293,065				1,456,555
Due to finance company			1,831,344				2,088,037
Accrued liabilities			882,720				785,566
Deferred revenue			1,767,390				1,697,935
Short-term notes payable – officers			300,000				300,000
Short-term notes payable – others			10,000				30,000
Debentures - officers			560,000				—
Current maturities of long-term debt			298,754				244,800
Total current liabilities			8,654,118				8,313,738
Long-term debt:
Long-term debt, net of current maturities			3,013,036				3,249,746
Debentures - officers			—				560,000
Non-controlling interest in pre-need care trust investments			2,230,832				2,075,713
Total long-term liabilities			5,243,868				5,885,459
Total liabilities			13,897,986				14,199,197
Non-controlling interest in trust investments			5,486,409				5,345,922
Stockholders’ equity:
Common stock			143,151				143,151
Additional paid-in-capital			2,028,975				2,028,975
Accumulated deficit			(465,587	)			(649,799	)
Total stockholders’ equity			1,706,539				1,522,327
Total liabilities and stockholders’ equity		$	21,090,934			$	21,067,446

 

See accompanying notes to the condensed consolidated financial statements

 

PART I - FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

 

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

 

		Three Months Ended March 31,								Nine Months Ended March 31,
		2012				2011				2012				2011
Revenue, net:
Cemetery		$	815,743			$	874,952			$	2,619,963			$	2,431,028
Aviation			2,949,638				3,492,900				7,065,347				10,460,328
Interest – Care Funds			33,403				19,907				74,238				51,844
Other			918				(85	)			2,954				1,699
Total revenue			3,799,702				4,387,674				9,762,502				12,944,899
Operating expenses:
Cost of cemetery sales			526,643				504,094				1,576,952				1,469,378
Cost of aviation sales			2,644,717				3,216,145				6,329,588				9,428,768
Sales and marketing			64,229				87,199				294,453				317,181
General and administrative			269,733				261,271				913,289				876,668
Total operating expenses			3,505,322				4,068,709				9,114,282				12,091,995
Income from operations			294,380				318,965				648,220				852,904
Other income (expense):
Interest income			13,392				5,914				20,608				9,900
Interest expense			(127,600	)			(107,440	)			(361,616	)			(351,032	)
Total other expense			(114,208	)			(101,526	)			(341,008	)			(341,132	)
Income before income taxes			180,172				217,439				307,212				511,772
Income tax provision			73,000				85,000				123,000				200,000
Net income		$	107,172			$	132,439			$	184,212			$	311,772

 

Continued:		Three Months Ended March 31,								Nine Months Ended March 31,
		2012				2011				2012				2011
Net income per common share – basic		$	.075			$	.093			$	.129			$	.218
Weighted average number of common shares – basic			1,431,503				1,431,503				1,431,503				1,431,503
Net income per common share – diluted		$	.045			$	.055			$	.084			$	.140
Weighted average number of common shares outstanding – diluted			2,711,503				2,649,143				2,711,503				2,530,074

 

 

See accompanying notes to the condensed consolidated financial statements

 

 

 

PART I - FINANCIAL INFORMATION

ITEM 1 – FINANICAL STATEMENTS

 

OAKRIDGE HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

 

		Nine Months Ended March 31,
		2012				2011
Cash flows from operating activities:
Net income		$	184,212			$	311,772
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization			199,346				201,138
Deferred income taxes			123,000				60,000
Receivables			37,326				(641,563	)
Inventories			381,495				(732,640	)
Prepaids & other assets			(54,453	)			25,744
Accounts payable and due to finance company			(420,183	)			1,212,177
Gains (losses) on non-controlling trust investments			(2,301	)			7,802
Deferred revenue			69,455				(223,163	)
Accrued liabilities			97,154				(3,914	)
Net cash flows from operating activities			615,051				217,353
Cash flows from investing activities:
Purchases of non-controlling investments in trusts			(6,343,418	)			(6,760,708	)
Purchases of property and equipment			(281,423	)			(159,804	)
Sales of non-controlling investments in trusts			6,345,719				6,752,906
Restricted cash			3,021				(417	)
Net cash flows used in investing activities			(276,101	)			(168,023	)
Cash flows from financing activities:
Increase in note payable - bank			—				200,000
Payments on short-term debt			(20,000	)			(50,000	)
Proceeds from issuance of long-term debt			—				105,000
Principal payments on long-term debt			(182,756	)			(184,077	)
Net cash flows from (used in) financing activities			(202,756	)			70,923
Net change in cash and cash equivalents			136,194				120,253
Cash and cash equivalents:
Beginning of year			416,997				372,797
End of period		$	553,191			$	493,050

 

See accompanying notes to the condensed consolidated financial statements

 

PART I - FINANCIAL INFORMATION

ITEM 1 – FINANICAL STATEMENTS

 

OAKRIDGE HOLDINGS, INC. 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(Unaudited) 

 

1.	BASIS OF PRESENTATION
The accompanying Condensed Consolidated Financial Statements include the accounts of Oakridge Holdings, Inc. (the “Company”) and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present such information fairly. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011. Operating results for the nine-month period ended March 31, 2012 may not necessarily be indicative of the results to be expected for any other interim period or for the full year.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates in the consolidated financial statements include but are not limited to accounts receivable, depreciation and accruals. Actual results could differ from those estimates.
2.	EARNINGS PER COMMON SHARE
Earnings per Common Share (EPS) are presented on both a basic and diluted basis in accordance with the provisions of Accounting Standards Codification Topic 260- Earnings per Share. Basic EPS is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the maximum dilution that would result after giving effect to dilutive stock options and convertible debentures. The following table presents the computation of basic and diluted EPS for the three and nine months ended March 31, 2012 and 2011:

 

		Three Months Ended March 31,
		2012				2011
Income from continuing operations		$	107,172			$	132,439
Average shares of common stock outstanding used to compute basic earnings per common share			1,431,503				1,431,503
Additional common shares to be issued assuming exercise of stock options, and conversion of convertible debentures			1,280,000				1,217,640
Additional income from continuing operations, assuming conversion of convertible debentures at the beginning of the period		$	14,400			$	14,400
Shares used to compute dilutive effect of stock options and convertible debentures			2,711,503				2,649,143
Basic earnings per common share from continuing operations		$	0.075			$	0.093
Diluted earnings per common share from continuing operations		$	0.045			$	0.055

 

 

		Nine Months Ended March 31,
		2012				2011
Income from continuing operations		$	184,212			$	311,772
Average shares of common stock outstanding used to compute basic earnings per common share			1,431,503				1,431,503
Additional common shares to be issued assuming exercise of stock options, and conversion of convertible debentures			1,280,000				1,098,571
Additional income from continuing operations, assuming conversion of convertible debentures at the beginning of the period		$	43,200			$	43,200
Shares used to compute dilutive effect of stock options and convertible debentures			2,711,503				2,530,074
Basic earnings per common share from continuing operations		$	0.129			$	0.218
Diluted earnings per common share from continuing operations		$	0.084			$	0.140

 

3.	COMPREHENSIVE INCOME
The Company has no significant components of other comprehensive income and accordingly, comprehensive income is the same as net income for all periods.
4.	OPERATING SEGMENTS AND RELATED DISCLOSURES
The Company’s operations are classified into two principal industry segments: cemeteries and aviation ground support equipment.

 

The Company evaluates the performance of its segments and allocates resources to them based primarily on operating income.
The table below summarizes information about reported segments for the three and nine months ended March 31, 2012 and 2011:

 

NINE MONTHS ENDED

MARCH 31, 2012:

 

		Aviation Ground Support Equipment				Cemeteries				Corporate				Consolidation
Revenues		$	7,065,347			$	2,694,201			$	2,954			$	9,762,502
Depreciation and amortization			74,507				117,000				2,032				193,539
Gross Margin			735,759				1,117,249				2,954				1,855,962
Selling Expenses			102,128				192,325				—				294,453
General &
Administrative Expenses			210,395				480,487				222,407				913,289
Interest Expense			297,662				504				63,450				361,616
Interest Income			190				20,418				—				20,608
Income (loss) before Taxes			125,764				464,351				(282,903	)			307,212
Capital Expenditures			236,094				44,759				570				281,423
Segment Assets:
Inventory			7,145,754				607,448				—				7,753,202
Property, Plant & Equipment, net			1,685,896				698,162				6,794				2,390,852

 

NINE MONTHS ENDED

MARCH 31, 2011:

 

		Aviation Ground Support Equipment				Cemeteries				Corporate				Consolidation
Revenues		$	10,460,328			$	2,482,872			$	1,699			$	12,944,899
Depreciation and amortization			80,608				117,000				3,530				201,138
Gross Margin			1,031,560				1,013,494				1,699				2,046,753
Selling Expenses			113,055				204,126				—				317,181
General &Administrative Expenses			194,382				433,889				248,397				876,668
Interest Expense			289,207				793				61,032				351,032
Interest Income			352				9,548				—				9,900
Income (loss) before Taxes			435,268				384,234				(307,730	)			511,772
Capital Expenditures			91,395				60,176				8,233				159,804
Segment Assets:
Inventory			7,359,023				628,360				—				7,987,383
Property, Plant & Equipment, net			1,393,517				756,312				8,602				2,158,431

 

 

THREE MONTHS ENDED

MARCH 31, 2012:

 

		Aviation Ground Support Equipment				Cemeteries				Corporate				Consolidation
Revenues		$	2,949,638			$	849,146			$	918			$	3,799,702
Depreciation and amortization			30,107				39,000				500				69,607
Gross Margin			304,921				322,503				918				628,342
Selling Expenses			33,384				30,845				—				64,229
General &Administrative Expenses			62,268				131,489				75,976				269,733
Interest Expense			106,394				56				21,150				127,600
Interest Income			84				13,308				—				13,392
Income (loss) before Taxes			102,959				173,421				(96,208	)			180,172
Capital Expenditures			120,936				907				1,899				123,742

 

THREE MONTHS ENDED

MARCH 31, 2011:

 

		Aviation Ground Support Equipment				Cemeteries				Corporate				Consolidation
Revenues		$	3,492,900			$	894,859			$	(85	)		$	4,387,674
Depreciation and amortization			26,235				39,000				1,515				66,750
Gross Margin			276,755				390,765				(85	)			667,435
Selling Expenses			25,862				61,337				—				87,199
General &Administrative Expenses			58,911				152,796				49,564				261,271
Interest Expense			87,533				444				19,463				107,440
Interest Income			141				5,773				—				5,914
Income (loss) before Taxes			104,590				181,961				(69,112	)			217,439
Capital Expenditures			30,768				4,158				43				34,969

 

5.	FAIR VALUE MEASUREMENTS
The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability between market participants at a measurement date.
Generally accepted accounting principles describes a fair value hierarchy that includes three levels or inputs to be used to measure fair value. The three levels are defined as follows as interpreted for use by the Company.
Level 1 – Inputs into the fair value methodology are based on quoted market prices in active markets.
Level 2 – Inputs into the fair value methodology are based on quoted prices for similar items, broker/dealer quotes, or models using market interest rates or yield curves. The inputs are generally seen as observable in active markets for similar items for the asset or liability, either directly or indirectly, for substantially the same term of the financial instrument.
Level 3 - Inputs into fair value methodology are unobservable and significant to the fair value measurement (primarily or alternative type investments, which include but are not limited to limited partnership interests, hedges, private equity, real estate, and natural resource funds). Often, these types of investments are valued based on historical cost and then adjusted by shared earnings of a partnership or cooperative, which can require some varying degree of judgment.
Information regarding assets and liabilities measured at fair value on recurring basis as of March 31, 2012 and June 30, 2011, are as follows:

 

Recurring Fair Value Measurements using Fair Value at March 31, 2012
		Level I				Level II				Level III				Total Fair Value
Assets at Fair Value:
Cemetery perpetual care and pre-need trust investments		$	—			$	7,717,241			$	—			$	7,717,241
Liabilities at fair value:
Non-controlling interest in pre-need trust investments		$	—			$	2,230,832			$	—			$	2,230,832

 

Recurring Fair Value Measurements using Fair Value at June 30, 2011
		Level I				Level II				Level III				Total Fair Value
Assets at Fair Value:
Cemetery perpetual care and pre-need trust investments		$	—			$	7,421,635			$	—			$	7,421,635
Liabilities at fair value:
Non-controlling interest in pre-need trust investments		$	—			$	2,075,713			$	—			$	2,075,713

 

 

 

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

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

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

FINANCIAL CONDITION AND LIQUIDITY

The Company’s liquidity needs arise from its debt service, working capital and capital expenditures. The Company has historically funded its liquidity needs with proceeds from equity contributions, bank borrowing, officers’ notes payable, cash flow from operations and the offering of its subordinated debentures. For the first nine months of fiscal year 2012, the Company had an increase in cash of $136,194 compared to a cash increase in the same period in fiscal year 2011 of $120,253. As of March 31, 2012, the Company had no cash equivalents.

 

During the nine-month period ended March 31, 2012, the Company recorded net income after tax of $184,212. The Company’s net cash from operating activities was $615,051 in the first nine months of fiscal year 2012 compared to net cash from operating activities of $217,353 in the same period in fiscal year 2011. The increase in net cash from operating activities was primarily due to a decrease in inventory. During the first nine months of fiscal 2012, cash used by investing activities was $276,101 primarily due to capital expenditures relating to; technical data manuals for new equipment being sold in the aviation segment and computer software and hardware for the cemetery segment. Net cash used in financing activities was $202,756 and primarily was used for the reduction of debt. The remaining increases and decreases in the components of the Company’s financial position reflect normal operating activity.

The Company had working capital of $1,970,426 at March 31, 2012, a decrease of $697,885 from June 30, 2011. The decrease in working capital was primarily due to the officer debentures of $560,000 being classified as a current liability. Current assets amounted to $10,624,544 and current liabilities were $8,654,118, resulting in a current ratio of 1.22 to 1 at March 31, 2012. Long-term debt was $3,013,036 and equity was $1,706,539 at March 31, 2012.

Capital expenditures for the first nine months of fiscal year 2012 were $281,423 compared with $159,804 for the same period in fiscal year 2011. These investments reflect the Company’s continuing program to achieve business growth, improve its properties, and improve productivity. The cemetery operations’ primary expenditure was for software and hardware for the computer system, mausoleum repairs and shop equipment being upgraded. The aviation ground support operations’ primary expenditure was for technical data manuals for new equipment being sold. The Company anticipates that it will spend approximately $10,000 on capital expenditures during the final quarter of fiscal year 2012 for technical data manuals for new aviation ground support equipment to be sold. The Company plans to finance these capital expenditures primarily through cash flows provided by operations.

The Company has three line of credit facilities. As of March 31, 2012, $1,710,845 of aggregate borrowing capacity of $2,100,000 was outstanding, leaving available credit of $389,155.

The Company believes that its current financial position, remaining debt capacity and ability to issue subordinated debentures should enable it to meet its current and future capital requirements.

INFLATIION

 

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

RESULTS OF OPERATIONS

FIRST NINE MONTHS OF FISCAL YEAR 2012

COMPARED WITH FIRST NINE MONTHS OF FISCAL YEAR 2011

 

Cemetery Operations:

Revenue for the nine months ended March 31, 2012 was $2,694,201, an increase of $211,329, or 8%, when compared to the nine months ended March 31, 2011. The increase was primarily due to the increase in marker ($179,059) and foundations revenue ($37,179). All other revenue accounts remained stable compared to the prior period.

Cost of sales for the nine months ended March 31, 2012 was $1,576,952, an increase of $107,574, or 7%, compared to the nine months ended March 31, 2011. During the nine months ended March 31, 2012, the primarily increase was in general insurance of $39,542, markers of $31,935, and wages of $67,581. All other expenses in cost of sales either decreased or remained constant. The increases in markers was due to increased sales, general insurance increased due to the increase in workers compensation costs, and wages due to having more full time employees and rate increases in accordance with the union contract.

The resulting cemetery gross profit margin was 41.5% for the first nine months of fiscal year 2012 versus 40.8% for the corresponding period in fiscal year 2011, representing a 0.7% increase as a percent of sales. The increase was caused by an increase in markers and foundation sales, which have higher gross profit margins and an increase in sales prices during the 2012 period.

Selling expenses for the nine months ended March 31, 2012 were $192,325, a decrease of $11,801, or 5.8%, when compared to the nine months ended March 31, 2011. The decrease was due to lower pre-need sales commissions.

General and administrative expenses for the nine months ended March 31, 2012, were $480,487, an increase of $46,598, or 10.7%, compared to the nine months ended March 31, 2011. The increase was primarily due to increases in contributions and donations of $14,771, depreciation of $9,000, office wages of $10,575, environmental regulations of $3,629, telephone expenses of $3,861 and utilities expense of $5,197, whereas health insurance decreased $10,185, and all other expense changes were immaterial.

Corporate:

Revenue for the nine months ended March 31, 2012 was immaterial.

General and administrative expenses for the nine months ended March 31, 2012 was $222,407, a decrease of $25,990, or 11%, when compared to the nine months ended March 31, 2011. The decrease was primarily due to a decrease in legal fees of $18,770, and transfer agent expense of $7,425. Legal expenses decreased because of no legal needs, and transfer agent decreased because of no new regulations.

Interest expense for the nine months ended March 31, 2012 was $63,450, an increase of $2,418, or 4%, when compared to the nine months ended March 31, 2011. The increase is due to greater debenture debt for the 2012 period.

Aviation Ground Support Operations:

Revenue for the nine months ended March 31, 2012 was $7,065,347, a decrease of $3,394,981, or 32%, when compared to the nine months ended March 31, 2011. The decrease was primarily due to decreased GSA contracts in which Stinar is the subcontractor and due to the United States government stopping the shipment of all equipment in the first four months of the fiscal year due to the 2011 Ford chassis not being able to run on jet fuel. The contract has since been modified and production started up again in November 2011.

 

Cost of sales was $6,329,588, or 89.6% as a percentage of sales, for the nine months ended March 31, 2012, compared to $9,428,768, or 90.1% as a percentage of sales, for the nine months ended March 31, 2011.

The resulting gross profit margin was 10.4% for the first nine months of fiscal year 2012 compares favorably with the 10% margin for the corresponding period in fiscal year 2011.

Selling expenses for the nine months ended March 31, 2012 were $102,128, a decrease of $10,927, or 9.7%, when compared to the nine months ended March 31, 2011. The decrease was primarily due to a decrease in outside sales commissions to international agents.

General and administrative expenses for the nine months ended March 31, 2012 were $210,395, an increase of $16,013, or 8.2%, when compared to nine months ended March 31, 2011. The increase was primarily due to fines and penalties for using Ford chassis that will not operate on jet fuel.

Other expenses, which consist of interest expense and interest income, for the nine months ended March 31, 2012, were a combined expense of $297,472, an increase of $8,617, or 3%, when compared to the nine months ended March 31, 2011. The increase was primarily due to greater debt to finance inventory and work in process.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2012

COMPARED WITH THREE MONTHS ENDED MARCH 31, 2011

Cemetery Operations:

Revenue for the three months ended March 31, 2012 was $849,146, a decrease of $45,713, or 5.1%, when compared to the three months ended March 31, 2011. The decrease was primarily due to a decrease in two revenue accounts, specifically, grave liners ($121,153) and interment fees ($123,439), whereas markers sales increased $164,911. The Company’s management believes the decrease in revenue is due to customers selecting cemetery packages at a lower rate than in the past.

Cost of sales for the three months ended March 31, 2012 was $526,643, an increase of $22,549, or 4.5%, when compared to the three months ended March 31, 2011. The increase was primarily due to one more full time maintenance employee and related benefits and payroll costs, and the addition of seasonal employees due to the earlier spring.

The resulting cemetery gross profit margin was 38% for the three months ended March 31, 2012 versus 44% for the corresponding period in fiscal year 2011. The change was due to less at need burials in comparison to fiscal year 2011 and increased labor costs.

Selling expenses for the three months ended March 31, 2012 were $30,845, a decrease of $30,492, or 50%, when compared to the three-month period ended March 31, 2011. The decrease was primarily due to decreased sales commissions ($23,626) and related payroll taxes ($15,683), whereas health insurance increased $11,502 due to the hiring of two full time employees.

 

General and administrative expenses for the three months ended March 31, 2012 were $131,489, a decrease of $21,307 when compared to the three months ended March 31, 2011. The decrease was primarily due to decreases in computer consulting costs of $5,502, management and office salaries of $12,115 and most other accounts decreasing slightly.

Corporate:

Revenue for the three months ended March 31, 2012 was immaterial.

General and administrative expenses for the three months ended March 31, 2012 were $75,976, an increase of $26,412, or 53%, when compared to the three months ended March 31, 2011. The increase was primarily due to an increase in professional fees of $26,557 associated with addressing a Securities and Exchange Commission comment letter during the three months ended March 31, 2012 and hiring of outside consultants to file the XBRL Security and Exchange Commission filings.

Interest expense for the three months ended March 31, 2012 was $21,150, an increase of $1,687, or 9%, when compared to the three months ended March 31, 2011. The increase is due to an overall increase in debt.

Aviation Ground Support Operations:

Revenues for the three months ended March 31, 2012 were $2,949,638, a decrease of $543,262, or 16%, when compared to the three months ended March 31, 2011. The decrease in revenue was primarily due to decreased equipment sales to the government.

 

Cost of sales for the three months ended March 31, 2012, was $2,644,717, a decrease of $571,428, or 18%, when compared to the three months ended March 31, 2011. The decrease was primarily due to decreased sales and related costs to manufacture goods for those sales.
The resulting gross profit margin was 10% for the three months ended March 31, 2012 versus 8% for the corresponding period in fiscal year 2011. The increase was due to less purchases of Ford chassis for production, which has a higher cost to sales ration.
Selling expenses for the three months ended March 31, 2012 were $33,384, an increase of $7,522, or 29%, when compared to the three months ended March 31, 2011. The increase was primarily due to increased salaries.
General and administrative expenses for the three months ended March 31, 2012 were $62,268, an increase of $3,357, or 6%, when compared to the three months ended March 31, 2011. The increase was primarily due to an increase in bad debts.
Interest expense for the three months ended March 31, 2012 was $106,394, an increase of $18,861, or 22%, when compared to the three months ended March 31, 2011. The increase was attributable to an increased debenture balance.
OFF BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.

 

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not Applicable

ITEM 4.	CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (b) accumulated and communicated to the Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding disclosures because of the material weakness relating to internal controls that was described in Item 9a of the Company’s Form 10-K for the year ended June 30, 2011, filed October 13, 2011.
Notwithstanding the material weakness that existed as of June 30, 2011, our Chief Executive Officer and Chief Financial Officer concluded that the financial statements included in this report present fairly, in all material respects, the financial position, results of operations and cash flows of the Company in conformity with accounting principles generally accepted in the United States of America.
No change in the Company’s internal control over financial reporting was identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the period covered by this quarterly report and that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Management has concluded that the material weakness in internal control, as described in Item 9A of our Form 10-K for the year ended June 30, 2011, has not been fully remediated. We are committed to implementing the necessary enhancements to our policies and procedures to fully remediate the material weakness discussed above. Due to lack of sufficient capital, we expect the material weakness to continue until our capital needs are met.

 

PART II		OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS
	The Company is from time to time involved in ordinary litigation incidental to the conduct of its businesses. The Company believes that none of its pending litigation will have a material adverse effect on the Company’s businesses, financial condition or results of operations.
	ITEM 1A.	RISK FACTORS
	Not applicable.
	ITEM 2.	Unregistered Sales of Equity SECURITIES AND USE OF PROCEEDS
	Not applicable.
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES
	Not applicable.

 

	ITEM 4.	Mine Safety Disclosures
	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 March 31, 2012:

 

1.1	Form 9.0% Convertible Subordinated Debenture due July 1, 2012 (1)
3(i)	Amended and Restated Articles of Incorporation, as amended (2)
3(ii)	Amended and Superseding By-Laws of the Company, as amended (2)
31	Rule 13a-14(a)/15d-14(a) Certifications
32	Section 1350 Certifications
101	Interactive data files pursuant to Rule 405 of Regulation S-T

 

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

 

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

 

SIGNATURES

 

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

 

	Oakridge Holdings, Inc.
	/s/ Robert C. Harvey
	Robert C. Harvey
	Chief Executive Officer
	and Chief Financial Officer

 

Date: May 14, 2012

 

INDEX TO EXHIBITS

 

EXHIBIT		DESCRIPTION		PAGE
1.1		Form 9.0% Convertible Subordinated Debenture due July 1, 2012		(incorporated by reference)
3(i)		Amended and Restated Articles of Incorporation of the Company		(incorporated by reference)
3(ii)		Amended and Superseding By-Laws of the Company, as amended		(incorporated by reference)
31		Rule 13a-14(a)/15d-14(a) Certifications		(filed electronically)
32		Section 1350 Certifications		(filed electronically)
101		Interactive data files pursuant to Rule 405 of Regulation S-T		(filed electronically)

 

20 

 

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