Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the quarter ended July 31, 2014
[ ] Transition report under Section 13 or 15(d) of the Securities Ex-
change Act of 1934
For the transition period from ___________ to ____________
Commission File Number: 000-05378
GEORGE RISK INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Colorado 84-0524756
(State of incorporation) (IRS Employers Identification No.)
802 South Elm St.
Kimball, NE 69145
(Address of principal executive offices) (Zip Code)
(308) 235-4645
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares of the Registrant's Common Stock outstanding, as of
September 9, 2014 was 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-month period ended
July 31, 2014, are attached hereto.
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
July 31, April 30,
2014 2014
------------ ------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 6,622,000 $ 5,872,000
Investments and securities 24,328,000 23,904,000
Accounts receivable:
Trade, net of $0 and $4,588
doubtful account allowance 2,141,000 2,034,000
Other 6,000 3,000
Inventories, net 2,236,000 2,233,000
Prepaid expenses 105,000 132,000
------------ ------------
Total Current Assets $35,438,000 $34,178,000
Property and Equipment, net, at cost 604,000 625,000
Other Assets
Investment in Limited Land Partnership,
at cost 238,000 238,000
Projects in process 58,000 41,000
Other 1,000 1,000
------------ ------------
Total Other Assets $ 297,000 $ 280,000
TOTAL ASSETS $36,339,000 $35,083,000
============ ============
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
July 31, April 30,
2014 2014
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade $ 95,000 $ 109,000
Dividends payable 953,000 953,000
Accrued expenses:
Payroll and related expenses 358,000 278,000
Property taxes 3,000 --
Income tax payable 421,000 75,000
Deferred incom taxes 815,000 769,000
------------ ------------
Total Current Liabilities $ 2,645,000 $ 2,184,000
Long-Term Liabilities
Deferred income taxes 91,000 100,000
------------ ------------
Total Long-Term Liabilities $ 91,000 $ 100,000
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 1,295,000 1,222,000
Retained earnings 33,150,000 32,417,000
Treasury stock, 3,473,106 and 3,472,706
shares, at cost (3,527,000) (3,525,000)
------------ ------------
Total Stockholders' Equity $33,603,000 $32,799,000
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY $36,339,000 $35,083,000
============ ============
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED JULY 31, 2014 AND 2013
July 31,
2014 2013
------------ ------------
(unaudited) (unaudited)
Net Sales $ 2,998,000 $ 2,670,000
Less: Cost of Goods Sold (1,513,000) (1,284,000)
------------ ------------
Gross Profit $ 1,485,000 $ 1,386,000
Operating Expenses:
General and Administrative 194,000 184,000
Sales 492,000 460,000
Engineering 19,000 12,000
Rent Paid to Related Parties 5,000 5,000
------------ ------------
Total Operating Expenses $ 710,000 $ 661,000
Income From Operations 775,000 725,000
Other Income (Expense)
Other 1,000 10,000
Interest Expense - (8,000)
Dividend and Interest Income 153,000 166,000
Gain (Loss) on Sale of Investments 136,000 18,000
------------ ------------
$ 290,000 $ 186,000
Income Before Provisions for Income Taxes 1,065,000 911,000
Provisions for Income Taxes
Current Expense 349,000 285,000
Deferred tax expense (benefit) (16,000) (48,000)
------------ ------------
Total Income Tax Expense $ 333,000 $ 237,000
Net Income $ 732,000 $ 674,000
Basic and Diluted Earnings Per Share of
Common Stock $ 0.15 $ 0.13
Weighted Average Number of Common Shares
Outstanding 5,029,910 5,033,843
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
July 31,
2014 2013
---------------------------
(unaudited) (unaudited)
Net Income $ 732,000 $ 674,000
------------ ------------
Other Comprehensive Income, net of tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses)
arising during period 273,000 (32,000)
Reclassification adjustment for gains
(losses) included in net income (146,000) 8,000
Income tax expense related to other
comprehensive income (53,000) 10,000
------------ ------------
Other Comprehensive Income (Loss) $ 74,000 $ (14,000)
Comprehensive Income (Loss) $ 806,000 $ 660,000
============ ============
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the three months
ended July 31,
2014 2013
---------------------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 732,000 $ 674,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 33,000 37,000
(Gain) loss on sale of investments (137,000) (18,000)
Reserve for bad debts (5,000) 1,000
Reserve for obsolete inventory 23,000 22,000
Deferred income taxes (16,000) (49,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (103,000) 150,000
Inventories (25,000) 14,000
Prepaid expenses 28,000 (47,000)
Employee receivables (3,000) -
Income tax overpayment - 282,000
Increase (decrease) in:
Accounts payable (14,000) 16,000
Accrued expenses 82,000 48,000
Income tax payable 347,000 -
------------ ------------
Net cash provided by (used in) operating
activities $ 942,000 $ 1,130,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Other assets manufactured & purchased (17,000) 4,000
(Purchase) of property and equipment (12,000) (22,000)
Proceeds from sale of marketable securities 5,000 -
(Purchase) of marketable securities (165,000) (128,000)
Collection of loans to employees - 2,000
(Purchase) of treasury stock (3,000) (11,000)
------------ ------------
Net cash provided by (used in) investing
activities $ (192,000) $ (155,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in) financing
activities $ - $ -
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 750,000 $ 975,000
Cash and cash equivalents, beginning of
period $ 5,872,000 $ 4,859,000
------------ ------------
Cash and cash equivalents, end of period $ 6,622,000 $ 5,834,000
============ ============
Supplemental Disclosure of Cash Flow
Information
Cash payments for:
Income taxes $0 $0
Interest expense $0 $0
See accompanying notes to condensed financial statements
GEORGE RISK INDUSTRIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
JULY 31, 2014
Note 1 Unaudited Interim Financial Statements
The accompanying financial statements have been prepared in accordance
with the instructions for Form 10-Q and do not include all of the inform-
ation and footnotes required by generally accepted accounting principles for
complete financial statements. It is suggested that these condensed finan-
cial statements be read in conjunction with the financial statements and
notes thereto included in the Company's April 30, 2014 annual report on Form
10-K. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments considered necessary for a fair presentation,
have been included. Operating results for any quarter are not necessarily
indicative of the results for any other quarter or for the full year.
Note 2: Investments
The Company has investments in publicly traded equity securities,
corporate bonds, state and municipal debt securities, real estate investment
trusts, money markets, certificates of deposits and hedge funds. The
investments in securities, which include all investments except for the hedge
funds, are classified as available-for-sale securities, and are reported at
fair value. Available-for-sale investments in debt securities mature between
October 2014 and November 2048. 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
stockholders' equity. Dividend and interest income are reported as earned.
The Company has elected to record the investments in hedge funds at cost
cost due to the small ownership percentage. These investments are reported at
an aggregate carrying amount of $727,000, as of July 31, 2014. Additionally,
the investments have been evaluated for impairment and have been determined to
not be impaired as of July 31, 2014.
As of July 31, 2014, investments consisted of the following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
------------ ------------ ------------ ------------
Municipal bonds $ 6,586,000 $ 217,000 $ (47,000) $ 6,756,000
Corporate bonds $ 30,000 $ 1,000 $ - $ 31,000
Hedge Funds $ 727,000 $ - $ - $ 727,000
REITs $ 56,000 $ 9,000 $ - $ 65,000
Equity securities $12,663,000 $ 2,162,000 $ (116,000) $14,709,000
Money markets/CDs $ 2,040,000 $ - $ - $ 2,040,000
------------ ------------ ------------ ------------
Total $22,102,000 $ 2,389,000 $ (163,000) $24,328,000
The Company evaluates all marketable securities for other-than
temporary declines in fair value, which are defined as when the cost basis
exceeds the fair value for approximately one year. The Company also evalu-
ates the nature of the investment, cause of impairment and number of invest-
ments that are in an unrealized position. When an " other-than-temporary"
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 did not record any impairment losses
for the quarter ended July 31,2014 and recorded an $18,000 impairment loss for
the quarter ended July 31, 2013.
The following table shows the investments with unrealized losses that
are not deemed to be "other-than-temporarily impaired", aggregated by invest-
ment category and length of time that individual securities have been in a
continuous unrealized loss position, at July 31, 2014.
Less than 12 months 12 months or greater Total
----------------------- --------------------- ---------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
...........................................................................
Municipal bonds
$ 243,000 $ (3,000) $1,217,000 $ (44,000) $ 1,460,000 $ (47,000)
REITs
$ - $ - $ - $ - $ - $ -
Equity securities
$ 962,000 $ (50,000) $1,003,000 $ (66,000) $ 1,965,000 $ (116,000)
----------- ---------- ----------- ---------- ------------ ------------
Total
$1,205,000 $ (53,000) $2,220,000 $(110,000) $ 3,425,000 $ (163,000)
Municipal Bonds
---------------
The unrealized losses on the Company's investments in municipal bonds were
caused by interest rate increases. The contractual terms of these invest-
ments do not permit the issuer to settle the securities at a price less than
the amortized cost of the investment. Because the Company has the ability to
hold these investments until a recovery of fair value, which may be maturity,
the Company does not consider these investments to be other-than-temporarily
impaired at July 31, 2014.
Marketable Equity Securities
----------------------------
The Company's investments in marketable equity securities consist of a wide
variety of companies. Investments in these companies include growth, growth
income, and foreign investment objectives. The individual holdings have been
evaluated, and due to management's plan to hold on to these investments for
an extended period, the Company does not consider these investments to be
other-than-temporarily impaired at July 31, 2014.
Note 3 Inventories
Inventories at July 31, 2014, consisted of the following:
Raw Materials $ 1,666,000
Work in Process 498,000
Finished Goods 277,000
------------
$ 2,441,000
Less: allowance for obsolete inventory (205,000)
------------
Net Inventories $ 2,236,000
============
Note 4 Business Segments
The following is financial information relating to industry segments:
For the quarter ended
July 31,
2014 2013
---------------------------
Net revenue:
Security alarm products 2,551,000 2,276,000
Other products 447,000 394,000
------------ ------------
Total net revenue $ 2,998,000 $ 2,670,000
Income from operations:
Security alarm products 660,000 618,000
Other products 115,000 107,000
------------ ------------
Total income from operations $ 775,000 $ 725,000
Identifiable assets:
Security alarm products 4,062,000 3,575,000
Other products 813,000 788,000
Corporate general 31,464,000 28,746,000
------------ ------------
Total assets $36,339,000 $33,109,000
Depreciation and amortization:
Security alarm products 4,000 4,000
Other products 24,000 28,000
Corporate general 5,000 5,000
------------ ------------
Total depreciation and amortization $ 33,000 $ 37,000
Capital expenditures:
Security alarm products 2,000 8,000
Other products 10,000 -
Corporate general - 14,000
------------ ------------
Total capital expenditures $ 12,000 $ 22,000
Note 5 Earnings per Share
Basic and diluted earning per share, assuming convertible preferred
stock was converted for each period presented, are:
For the three months ended July 31, 2014
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
------------- -------------- ---------
Net Income $ 732,000
=============
Basic EPS $ 732,000 5,029,910 $ 0.1455
Effect of dilutive Convertible
Preferred Stock -- 20,500 (0.0006)
------------- -------------- ----------
Diluted EPS $ 732,000 5,050,410 $ 0.1449
For the three months ended July 31, 2013
----------------------------------------
Income Shares Per-share
(Numerator) (Denominator) Amount
------------- -------------- ---------
Net Income $ 674,000
=============
Basic EPS $ 674,000 5,033,843 $ 0.1339
Effect of dilutive Convertible
Preferred Stock -- 20,500 (0.0005)
------------- -------------- ----------
Diluted EPS $ 674,000 5,054,343 $ 0.1334
Note 6 Retirement Benefit Plan
On January 1, 1998, the Company adopted the George Risk Industries, Inc.
Retirement Savings Plan (the "Plan"). The Plan is a defined contribution
savings plan designed to provide retirement income to eligible employees of
the corporation. The Plan is intended to be qualified under Section 401 (k)
of the Internal Revenue Code of 1986, as amended. Matching contributions by
the Company of approximately $3,000 were paid during the quarters ending
July 31, 2014 and 2013, respectively. There were no discretionary con-
tributions paid during the quarters ending July 31, 2014 and 2013, 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 July 31, 2014, our investments consisted of money markets, publicly
traded equity securities and certain state and municipal debt securities.
Our marketable securities are valued using third-party broker statements.
The value of the investments is derived from quoted market information. The
inputs to the valuation are generally classified as Level 1 given the active
market for these securities, however, if an active market does not exist,
which is the case for municipal bonds, the inputs are recorded as Level 2.
Fair Value Hierarchy
--------------------
The following table sets forth our assets and liabilities measured at fair
value on a recurring basis and a non-recurring basis by level within the fair
value hierarchy. As required by US GAAP, assets and liabilities are
classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
as of July 31, 2014
---------------------------------------------------
Level 1 Level 2 Level 3 Total
------- ------- ------- -------
Assets:
Municipal Bonds $ - $ 6,756,000 $ -- $ 6,756,000
Corporate Bonds $ 31,000 $ -- $ -- $ 31,000
REITS $ 65,000 $ -- $ -- $ 65,000
Equity Securities $14,709,000 $ -- $ -- $14,709,000
Money Markets and CDs $ 2,040,000 $ -- $ -- $ 2,040,000
----------- ----------- ----------- -----------
Total fair value of
assets measured on a
recurring basis $16,845,000 $ 6,756,000 $ -- $23,601,000
=========== =========== =========== ===========
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
This Quarterly Report on Form 10-Q, includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended
(the Securities Act) and Section 21E of the Securities Exchange Act of 1934,
as amended (the Exchange Act), which are subject to the "safe harbor" created
by those sections. Any statements herein that are not statements of his-
torical fact may be deemed to be forward-looking statements. For example,
words such as "may," "will," "could," "would," "should," "anticipate,"
"expect," "intend," "believe," "estimate," "project" or "continue," and the
negatives of such terms are intended to identify forward-looking statements.
The information included herein represents our estimates and assumptions as
of the date of this filing. Unless required by law, we undertake no obliga-
tion to update publicly any forward-looking statements, or to update the
reasons actual results could differ materially from those anticipated in these
forward-looking statements, even if new information becomes available in the
future.
The following discussion should be read in conjunction with the attached
condensed consolidated financial statements, and with the Company's audited
financial statements and discussion for the fiscal year ended April 30, 2014.
Executive Summary
The Company's performance remains steady through the first quarter,
showing strong sales and investment returns. Opportunities include continued
growth with our customers, as well as some of our distributors' customers
landing jobs that specified GRI Security products exclusively. Challenges in
the coming months include the burden of regulatory requirements of the
Accountable Care Act, as well as selection and implementation of new hardware
and software systems which will enhance productivity and communication
throughout the organization.
Results of Operations
* Net sales showed a 12.28% increase over the same period in the prior
year due to strong sales in the southeast markets and the Company's
on-going commitment to outstanding customer service.
* Cost of goods sold saw a small uptick from 48.09% of sales in the
prior year, to 50.47% in the current quarter, which just misses
Management's goal to keep labor and other manufacturing expenses
within the range of 45 to 50%. The Company continues to pursue new
vendors for quality raw materials at lower costs.
* Operating expenses were down slightly at 23.68% of net sales for the
quarter ended July 31, 2014 as compared to 24.76% for the cor-
responding quarter last year. The Company has been able to keep the
operating expenses at less than 30% of net sales over the last
several years; however, the effects of the Accountable Care Act pro-
vide a concern on the ability to maintain this pattern.
* Income from operations for the quarter ended July 31, 2014 was at
$775,000, which is a 6.89% increase from the corresponding quarter
last year, which had income from operations of $725,000.
* Other income and expenses showed a $290,000 gain for the quarter
ended July 31, 2014 as compared to an $186,000 gain for the quarter
ended July 31, 2013, primarily due to the gain on sale of
investments.
* Provision for income taxes showed an increase of $96,000, up from
$237,000 in the quarter ended July 31, 2013 to $333,000 for the
quarter ended July 31, 2014.
* In turn, net income for the quarter ended July 31, 2014 was
$732,000, an 8.6% increase from the corresponding quarter last year,
which showed net income of $674,000.
* Earnings per share for the quarter ended July 31, 2014 were $0.15
per common share and $0.13 per common share for the quarter ended
July 31, 2013.
Liquidity and capital resources
Operating
* Net cash increased $750,000 during the quarter ended July 31, 2014
as compared to an increase of $975,000 during the corresponding
quarter last year.
* Accounts receivable increased $103,000 for the quarter ending July
31, 2014 compared with a $150,000 decrease for the same quarter last
year. The increase in accounts receivable is directly attributable
to an increase in sales as no accounts over 90 days were found to be
uncollectible.
* Inventories increased $25,000 during the current quarter as compared
to a $14,000 decrease last year, primarily due to the receipt of a
large order of raw materials in the first quarter.
* At the quarter ended July 31, 2014 there was a $28,000 decrease in
prepaid expenses and at July 31, 2013, there was a $47,000 increase.
The current decrease is caused by the receipt of goods in the first
quarter that the Company had previous prepaid for.
* There was no income tax overpayment for the quarter ended July 31,
2014, while there was a decrease of $282,000 for the quarter ending
July 31, 2013. As the income tax overpayment has been eliminated,
it creates increases in the income tax payable/expenses.
* Accounts payable shows decrease of $14,000 for the quarter ended
July 31, 2014 compared to an increase of $16,000 for the same quar-
ter the year before, primarily due to timing issues. All payables
are paid within terms.
* Accrued expenses increased $82,000 for the current quarter as com-
pared to a $48,000 increase for the quarter ended July 31, 2013.
Investing
* As for our investment activities, the Company spent approximately
$12,000 on acquisitions of property and equipment for the current
fiscal quarter. In comparison with the corresponding quarter last
year, there was activity of $22,000.
* Additionally, the Company continues to purchase marketable
securities, which include municipal bonds and quality stocks.
Cash spent on purchases of marketable securities for the quarter
ended July 31, 2014 was $165,000 compared to $128,000 spent during
the quarter ended July 31, 2013. We continue to 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, permission to buy and sell stocks at will. The Company pays
a quarterly service fee based on the value of the investments.
* Furthermore, the Company continues to purchase back common stock
when the opportunity arises. For the quarter ended July 31, 2014,
the Company purchased $3,000 worth of treasury stock, compared to
$11,000 in the same period the prior year.
The following is a list of ratios to help analyze George Risk Industries'
performance:
For the quarter ended
July 31,
2014 2013
---------------------------
Working capital
(current assets - current liabilities) $ 32,793,000 $ 30,514,000
Current ratio
(current assets / current liabilities) 13.398 19.813
Quick ratio
((cash + investments + AR) / current liabilities)
12.511 18.451
New Product Development
~~~~~~~~~~~~~~~~~~~~~~~
The Company and its' engineering department perpetually work to develop
enhancements to current product lines, develop new products which complement
existing products, and look for products that are well suited to our distri-
bution network and manufacturing capabilities. Items currently in the
development process include:
* Wireless pool alarm
* High Security Switch
* Redesign of our Current Controller that will allow us to manufacture
a 15 amp version that would automatically turn on a whole room of
lights and a 220-volt version for international markets
* Redesign for the cover of the 29-Series terminal switch
* Twist lock for recessed steel door contacts, including biased for
high security
* Fuel level monitor
Other Information
In addition to researching developing new products, management is always open
to the possibility of acquiring a business or product line that would comple-
ment our existing operations. Due to the Company's strong cash position,
management believes this could be achieved without the need for outside
financing. The intent is to utilize the equipment, marketing techniques and
established customers to deliver new products and increase sales and profits.
There are no known seasonal trends with any of GRI's products, since we sell
to distributors and OEM manufacturers. Our products are tied to the housing
industry and will fluctuate with building trends.
Recently Issued Accounting Pronouncements
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In July 2013, the FASB issued Accounting Standards Update No. 2013-11,
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry-
forward, a Similar Tax Loss, or a Tax Credit Carryforward Exists,
("ASU 2013-11"). The objective of this update is to eliminate the diversity
in practice in the presentation of an unrecognized tax benefit when a net
operating loss carryforward, a similar tax loss or a tax credit carryforward
exists. The amendments in this update require an entity to present an unrecog-
nized tax benefit in the financial statements as a reduction to a deferred
tax asset for those instances described above, except in certain situations
discussed in the update. ASU 2013-11 is effective for fiscal years, and
interim periods within those years, beginning after December 15, 2013. The
adoption of this standard is not expected to have a material impact on the
Company's financial statements.
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue
from Contracts with Customers. The objective of this update is to provide a
robust framework for addressing revenue recognition issues and, upon its
effective date, replaces almost all existing revenue recognition guidance.
This update is effective in annual reporting periods beginning after December
15, 2016 and the interim periods within that year. The Company is evaluating
the impact of this update on the Company's financial statements.
GEORGE RISK INDUSTRIES, INC.
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
This disclosure does not apply.
Item 4: Controls and Procedures
(a) Information required by Item 307
Our Chief Executive Officer and our Controller, 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 paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.
(b) Information required by Item 308
This disclosure is not yet required.
Item 4A. Controls and Procedures
Quarterly evaluation of disclosure controls and procedures:
----------------------------------------------------------
Based on their evaluation of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of
July 31, 2014, our president and chief executive officer and our controller
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, sum-
marized 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 controller,
as appropriate to allow timely decisions regarding disclosure. A control
system cannot provide absolute assurance, however, that the objectives of
the control systems are met, and no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within a company have been detected.
Changes in internal controls over financial reporting:
-----------------------------------------------------
Previously, over the past year and a half, the Company stated that there was
a material weakness in internal control over financial reporting, particularly
as it relates to financial reporting and deferred taxes. This was due to the
rather sudden death of the Chief Executive Officer in February 2013. The com-
pany was not able to hire a controller until May 2014. With the hiring of the
Controller, the Company now believes that we meet the full requirement for
separation for financial reporting purposes.
GEORGE RISK INDUSTRIES, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 1A. Risk Factors
Not applicable
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information relating to the Company's
repurchase of common stock for the first quarter of fiscal year 2014.
Period Number of shares repurchased
------------------------------- ----------------------------
May 1, 2014 - May 31, 2014 -0-
June 1, 2014 - June 30, 2014 400
July 1, 2014 - July 31, 2014 -0-
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits
Exhibit No. Description
----------- -----------
31 Certifications pursuant to Rule 13a-14(a)
31.1 Certification of the Chief Executive Officer
31.2 Certification of the Controller
32 Certifications pursuant to 18 U.S.C 1350
32.1 Certification of the Chief Executive Officer
32.2 Certification of the Controller
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
George Risk Industries, Inc.
(Registrant)
Date 09-09-14 By: /s/ Stephanie M. Risk-McElroy
Stephanie M. Risk-McElroy
President, Chief Executive Officer
and Chairman of the Board
Date 09-09-14 By: /s/ Julie M. Schnell
Julie M. Schnell
Controller
