U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 20092012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission File Number: 000-05378
George Risk Industries, Inc.
____________________________
(Name(Exact Name of small business issuerregistrant as specified in its charter)
Colorado 84-0524756
________ __________
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
802 South Elm
Kimball, NE 69145
___________ _____
(Address of principal executive (Zip Code)
offices)
Issuer's telephone number (308) 235-4645
______________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on Which Registered
None None
____ ____
Securities registered under Section 12(g) of the Act:
Class A Common Stock, $.10 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Sections 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 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 [ ]
Page 1
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 229-405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229-405 of this chapter) is not contained herein, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer,
a non-accelerated filer, or a small reporting company. See the definitions of
"large accelerated filer," "accelerated filer" and "smaller reporting company
in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check is smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act.Act).
Yes [ ] No [ X ]
The aggregate market value, as of July 27, 2009,24, 2012, of the common stock (based on
the average of the bid and asked prices of the shares on the OCTBB of George
Risk Industries, Inc.) held by non-affiliates (assuming, for this purpose, that
all directors, officers and owners of 5% or more of the registrant's common
stock are deemed affiliates) was approximately $8,549,938.$13,000,000.
The number of outstanding shares of the common stock as of July 27, 200924, 2012 was
5,082,419.5,042,550.
DOCUMENTS INCORPORATED BY REFERENCE
None.A material vendor contract with a customer that accounts for a material portion
of our sales.
Page 2
Part I
Preliminary Note Regarding Forward-Looking Statements and Currency Disclosure
This annual report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may", "should", "expects",
"plans", "anticipates", "believes", "estimates", "predicts", "potential" or
"continue" or the negative of these terms or other comparable terminology.
These statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled
"Risk Factors", that may cause our or our industry's actual results, levels
of activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States dollars, rounded to the
nearest thousand, and are prepared in accordance with United States Generally
Accepted Accounting Principles.
Item 1 Business
(a) Business Development
George Risk Industries, Inc. (GRI or the company) was incorporated in 1967
in Colorado. The company is presently engaged in the design, manufacture,
and sale of computer keyboards, push button switches, burglar alarm
components and systems, pool alarms, thermostats, EZ Duct wire covers and
water sensors.
Products, Market, and Distribution
The company designs, manufactures, and sells computer keyboards, push-button
switches, burglar alarm components and systems, pool alarms, and water sensors.
Our security burglar alarm products comprise approximately 8588 percent of net
revenues and are sold through distributors and private board customers.
The security segment has approximately 4,0003,000 customers. One of the distributors
accounts for approximately 4241 percent of the company's sales of these products.
Loss of this distributor would be significant to the company. However, this
customer has purchased from the company for many years and is expected to
continue. Also, the company has obtained a written agreement with our biggest
customer. This agreement was signed in February 2011 and initiated by the
customer. The contents of the agreement include product terms, purchasing,
payment terms, term and termination, product marketing, representations and
warranties, product support, mutual confidentiality, indemnification and
insurance, and general provisions.
Page 3
The keyboard segment has approximately 950800 customers. Keyboard products are sold
to original equipment manufacturers to their specifications and to distributors
of off-the-shelf keyboards of proprietary design.
Page 3
Competition
The company has intense competition in the keyboard and burglar alarm lines.
The burglar alarm segment has five or sixapproximately ten major competitors. The company
competes well based on price, product design, quality, and prompt delivery.
The competitors in the keyboard segment are larger companies with automated
production facilities. GRI has emphasized small custom order sales that many
of its competitors decline or discourage.
Research and Development
The company performs research and development for its customers when needed
and requested. Costs in connection with such product development have been
borne by the customers. Costs associated with the development of new products
are expensed as incurred.
Employees
GRI has approximately 150 employees.
Item 2 Properties
The company owns the manufacturing and some of the office facilities. Total
square footage of the plant in Kimball, Nebraska is approximately 42,500 sq. ft.
Additionally, the company leases 15,000 square feet for $1,535 per month with
Ken and Bonnie Risk. Ken Risk is the CEO and chairman of the board of the
company.
As of October 1, 1996, the company also began operating a satellite plant in
Gering, NE. This expansion was done in coordination with Twin Cities
Development. The company leased manufacturing facilities until July 2005.
During the first quarter of fiscal year end 2006, the company purchased a
building that is 7,200-sq. ft. in size. Currently, there are 2426 employees at
the Gering site.
Item 3 Legal Proceedings
None.
Item 4 Submission of Matters to a Vote of Security Holders
Not applicable.
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Part II
Item 5 Market for the Registrant's Common Equity and Related
Stockholders' Matter
Principal Market
The company's Class A Common Stock, which is traded under the ticker symbalsymbol
RSKIA, is currently quoted on the OTC Bulletin Board by eightone market makers.maker.
Stock Prices and Dividends Information
20092012 Fiscal Year
High Low
May 1-July 31 7.00 5.006.50 5.05
August 1-October 31 6.00 4.257.53 5.10
November 1-January 31 5.23 2.916.75 5.50
February 1-April 30 3.95 3.256.25 5.75
20082011 Fiscal Year
High Low
May 1-July 31 7.42 6.504.50 4.16
August 1-October 31 7.60 6.505.25 4.30
November 1-January 31 6.88 6.256.99 5.00
February 1-April 30 6.30 5.246.55 6.00
A dividend of $0.17$0.23 per common share was declared on September 30, 2008.2011.
This was the only dividend declared and paid during the 20092012 fiscal year.
As for fiscal year 2008,2011, a dividend of $0.17$0.20 per common share was declared
on September 30, 2007.2010.
The number of holders of record of the company's Class A Common Stock
as of April 30, 2009,2012, was approximately 1,308.1,200.
Repurchase of Equity Securities
On September 18, 2008, the Board of Directors approved an authorization for
the repurchase of up to 500,000 shares of the company's common stock.
Purchases can be made in the open market or in privately negotiated
transactions. The Board did not specify an expiration date for the
authorization.
The following tables show repurchases of GRI's common stock made on a
quarterly basis:
2012 Fiscal Year Number of shares repurchased
May 1-July 31 3,605
August 1-October 31 2,450
November 1-January 31 1,400
February 1-April 30 970
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2011 Fiscal Year Number of shares repurchased
May 1-July 31 4,665
August 1-October 31 6,100
November 1-January 31 3,340
February 1-April 30 3,400
There are still approximately 362,000 shares available to be repurchased under
the current resolution.
Item 6 Selected Financial Data
As a smaller reporting company, we are not required to respond to this item.
Page 56
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Executive Overview
__________________
George Risk Industries, Inc. (GRI) is a diversified manufacturer of electronic
components, encompassing the security industries widest variety of door and
window contact switches, environmental products, proximity switches and custom
keyboards. The security products division comprises the largest portion of GRI
sales and are sold worldwide through distribution, who in turn sell our products
to security installing companies. These products are used for residential,
commercial, industrial and government installations. International sales
accounted for approximately 9.1%5.5% of revenues for fiscal year 20092012 and 8.7%5.7% for
2008.2011.
GRI is known for its quality American made products, top-notch customer service
and the willingness to work with customers on their special applications.
GRI owns and operates its main manufacturing plant and offices in Kimball,
Nebraska with a satellite plant 40 miles away in Gering, Nebraska.
The company has substantial marketable securities holdings and these holdings
have a material impact on the financial results. For the fiscal year ending
April 30, 2012, other income accounted for 21.20% of income before income taxes.
In comparison, other income accounted for 32.32% of the income before income
taxes for the year ending April 30, 2011. Management's philosophy behind having
holdings in marketable securities is to keep the money working and gaining
interest on the cash that is not needed to be put back into the business. And
over the years, the investments have kept the earnings per share up when the
results from operations have not faired as well.
Management is always open to the possibility of acquiring a business that would
complement our existing operations. This would probably not require any outside
financing. The intent would be to utilize the equipment, marketing techniques
and established customers to increase sales and profits.
There are no known seasonal trends with any of GRI's products, since we mostly
sell to distributors and OEM manufacturers. The products are tied to the housing
industry and will fluctuate with building trends.
Liquidity and Capital Resources
_______________________________
Operating
Net cash increased $599,000$519,000 during the year ended April 30, 2009 while2012 as it decreased $539,000increased
$1,613,000 during the year ended April 30, 2008.2011. Other cash flow changes are as
follows. Accounts receivable decreased $299,000increased $95,000 during the current year as
compared to a $416,000 decrease$287,000 increase for last year. The decreasesincrease in cash flow for
accounts receivable is a reflection of the decreases in sales.that sales have improved. At April 30, 2009, 83.5%2012,
69.12% of the receivables were considered current (less than 45 days) and 6.25%0.90%
of the total were over 90 days past due. For comparison, 73.5%76.16% of the
receivables were current and 7.5%1.70% were past 90 days at April 30, 2008.2011.
Inventories decreased
$336,000increased $535,000 for the current year as compared to a $41,000 increase$81,000
decrease for the same period last year. ManagementAs sales have increased, management has
gotten a foothold on decreasing itshad to increase inventory purchases and the cost of raw materials during the current fiscal year to correspond to the decrease
in sales.has gone up
substantially. For the year ended April 30, 2009,2012, prepaid expenses decreased
$22,000, as there was decrease of $22,000$10,000, and increased $9,000 for the corresponding period last year. ForThe main
reason for the last two fiscal years, there have been income tax overpayments.
There was a $334,000small decrease in cash towards income tax overpaymentprepaid expenses for the current fiscal year ending April 30, 2009. And there was a $334,000 increase in cash towards
income tax overpaymentis
that the company has received raw materials that it prepaid for the year ending April 30, 2008.last fiscal
year.
Page 7
For the year ended April 30, 2009, management started out paying income tax estimates based on
prior year taxable income, but then looked at the estimates in more detail as
the year went on.
For the year ended April 30, 2009,2012, accounts payable decreased $32,000 as
compared to a $60,000$71,000 decrease for the same period the year before. The
decreaseschange in the cash flow towardsin regards to accounts payable are a reflectioncan vary. It really depends on the
time of the slower salesmonth the invoices are due, since the company experienced and reductions inpays all its invoices
within the purchase of raw
materials.terms. Accrued expenses decreased by $15,000remained constant for the year ended April
30, 2009, and2012, as these expenses also decreased $15,000increased $13,000 for the corresponding year ended
April 30, 2008.
Page 6
Investing
In the prior fiscal year, the Company issued a note receivable for $17,500 to an
employee who purchased a vehicle from the company. The note matures in 4 years.
For the year ended April 30, 2009, the company has received $3,000 from the note
with $1,000 being interest income. As for purchases of property and equipment,
$143,000 was spent2011. Income tax payable increased $210,000 for the year ended April
30, 2009. One purchase2012 as it also increased $252,000 for the year ended April 30, 2011. The
current increase is a reflection for the increase in sales and income that should
be noted is thathas
occurred during the company purchasedcurrent fiscal year.
Investing
As for our investment activities, a storage buildingnet amount of $169,000 was capitalized on
other assets manufactured for $15,000 thatthe year ended April 30, 2012, while $101,000 was
previously being rented for $300 per month.spent on these activities during the prior fiscal year. A couple of molds were
completed and put to the fixed asset accounts during the current fiscal year.
$298,000 was spent on purchases of property and equipment during the current
fiscal year and $60,000 was spent during the year ended April 30, 2011.
Additionally, the Company continues to purchase marketable securities, which
include municipal bonds and quality stocks. Cash spent on purchases of
marketable securities for the year ended April 30, 2012 was $891,000 and
$868,000 was spent for the corresponding period last year. In addition,
proceeds from the sale of marketable securities for the year ended April 30,
2012 were $168,000 and $1,592,000 for the same period last year. We are continuing the use of
"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
treasuryback its common stock when the oppor-
tunityopportunity arises. For the year ended April 30,
2009,2012, the Company purchased $171,000$41,000 worth of treasury stock and $788,000 worth of treasury stock$77,000 was
bought back for the year ended April 30, 2008.2011. We have been actively searching
for stockholders that have been "lost" over the years. The payment of dividends
over the last seven fiscal years has also prompted many stockholders and/or
their relatives and their descendants to sell back their stock to the Company.
Financing
Cash flows fromused in financing activities decreased by $802,000were $1,055,000 for the year ended April 30,
2009,2012, all of which is the paymentconsisted of dividends.dividends paid. The company declared a dividend
of $0.17$0.23 per share of common stock on September 30, 20082011 and these dividends
were paid by October 31, 2008.2011. Net cash used in financing activities was
$829,000$924,000 for the year ended April 30, 2008.2011. A dividend of $0.17$0.20 per common
share was also declared and paid during the second fiscal quarter last year.
Results of Operations
_____________________
GRI completed the fiscal year ending April 30, 2009,2012, with a net profit of 5.85%25.75%
net of sales. Net sales were at $8,822,000, down 22.91%$10,285,000, up 16.11% over the previous year.
Additionally,The company has seen increases in sales as a result of overall better economic
times, as compared to the same period last year. Cost of goods sold was 46.28%
of net sales for the year ended April 30, 2012 and 52.69% for the same period
last year. Management has been keeping labor and other manufacturing expenses
in check and with the increase in sales, the cost of goods sold percentages is
back in the desired range of 45 to 50%. Also, management raised prices at
January 1, 2012 and January 1, 2011. This was the first and second overall
price increase to take place in 10 years. The new increased selling prices help
elevate the cost of goods sold percentages.
Page 8
Operating expenses were 24.19% of net sales for the year ended April 30, 2012 as
compared to 27.39% for the corresponding period last year. Management's goal is
to keep the operating expenses around 30% or less of net sale, so the goal has
been met for the current fiscal year. Income from operations for the year ended
April 30, 2012 was at $3,037,000, which is a 72.07% increase from the
corresponding period last year, which had income from operations of $1,765,000.
Other income and expenses results for the fiscal year ended April 30, 2012
produced a gain of $817,000. This is in comparison to a gain of $843,000 for
the fiscal year ended April 30, 2011. Dividend and interest income was $735,000,
which was up 10.36% for the year. Dividend and interest expense at April 30,
2011 was $666,000.
Net income for the year ended April 30, 20092012 was $516,000, down
77.22%$2,648,000, which is a 30.7%
increase from the prior year.
Although sales were downyear, which produced a net gain of $2,026,000. Earnings
per common share for the fiscal year endingended April 30, 2009 we expect2012 were $0.52 per share. EPS for
the year ended April 30, 2011 was $0.40 per share.
Management expects sales to stay steady and hopefully increase for the fiscal
year ending April 30, 2010.2013. The company's main division of products that are
sold (security switches) are directly tied to the housing industry. And since
the housing industryindustry's performance has been performing poorly,improved, the company's sales have decreasedalso
improved in relation to the economy. We are always researching and developing
new products that will help our sales increase. We have many new products
(which will be discussed in detail below) that we are planning to release into
the marketplace during fiscal year end 2010.2013. Also, we are hopeful that extra
growth can be achieved by volume increases with our present customers and with
the addition of new customers. We have an excellent marketing department that
is always on the lookout for new clients.
The costs of goods sold expenses stayed very consistent between this year and
last year. For the year ended April 30, 2009, the cost of goods sold percentage
was at 52.7% of net sales. This is an increase of 2.4% when comparing to fiscal
year end 2008. We look for quality materials at the best possible price. We are
overstocked on some raw materials due to a slow down in sales, and purchases
that we were not able to delay vendor delivery times. We hire the number of
production workers expected to finish products in a timely manner. As a result
of reduced sales, management has implemented a temporary period of voluntary and
mandatory days off to reduce labor costs. With these continued good practices,
we expect to continue to achieve a gross profit margin of about 50 percent for
the coming year.
Page 7
At April 30, 2009,2012, working capital decreasedincreased by 5.1%5.56% in comparison to the
previous fiscal year. The company measures liquidity using the quick ratio,
which is the ratio of cash, securities and accounts receivables to current
obligations. The company's quick ratio decreased to 32.87824.254 for the year ended
April 30, 20092012 from 36.86430.664 for the year ended April 30, 2008. Marketable
securities and2011. Cash, accounts
receivable, and marketable securities have decreased inincreased during the current year, as a
result of the decrease in sales,
while current liabilities increased slightly
from year to year. At April 30, 2008, the only long-term liability on the books
is deferred income tax of $86,000.by 33%.
New product development
The new Water Valve Shutoff switchGarage Door Monitor (pt #WVS)# DM question mark 1) is now on the market and
showing good sales with repeat customers. The DM question mark 1 will monitor
when the garage door has been left open and will automatically shut the door
- either by a timed delay after the door has been opened or closing at a set
time every day. Management believes this will be a good upsell as many home
burglars gain access through a garage door that is left open or unlocked.
Engineering is working on a plastic housing for our very popular MF-875 flat
magnet. They are also looking to complete a design on a 110V Current Controller
that would work with our contact switches to secure the door of a storage unit.
This switch can also turn on the light when the door is opened.
A fuel level monitor is in production and sales of
this switchthe engineering stage. Several security companies
from around the world have told us fuel theft is a major problem. They are
going as anticipated. The WVS uses our 2600 water sensor to
closelooking for a product that will tie into the main water supply linesecurity system if water is detected. Several areas can be
covered with the use of multi-ple sensors. Features of this devicetanks or trucks
are tampered with.
Other products in engineering include a voltage check onvent airflow sensor that will send a
signal if the water valve and sensor onceair conditioner breaks, loses power or freezes up in a week. Every fourth week an
automatic valve cycle check is run on the voltage and the valve is closed and
openedserver room
or anywhere else temperatures need to make sure everything is in working order. For the features included
and our competitive price, we believe sales of the WVS will be strong.
After customer requests, we have started making an Omni directional tilt sensor
to use on skylights.monitored. We have decided to bring this product into the GRI product
line since our standard tilt sensor has been a strong seller for many years. The
older model tilt sensor actuatesare also continuing work
on a 10-degree angle. The new Omni directional
tilt sensor will actuate in any direction.
One of our competitors eliminated selling to lower volume customers. In the wake
of this situation, we are developing a quick disconnect door cord. These are
used on gates, overhead doors and other openings that are difficult to secure.
Engineering continues work on the wireless line including the pool alarm line, a
low cost hold-up switch, and a Pump Guard watering station monitor.triple biased high security switch.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in conformity with generally accepted accounting principalsprinciples in the United
States. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses reported in those financial statements.
These judgments can be subjective and complex, and consequently actual results
could differ from those estimates. Our most critical accounting policies relate
to accounts receivable; marketable securities; inventory; income taxes; and
segment reporting.
Accounts Receivable-Accounts receivable are customer obligations due under
normal trade terms. The company sells its products to security alarm
distributors, alarm installers, and original equipment manufacturers. Management
performs continuing credit evaluations of its customers' financial condition and
the company generally does not require collateral.
Page 8
The company records an allowance for doubtful accounts based on an analysis of
specifically identified customer balances. The company has a limited number of
customers with individually large amounts due at any given date. Any unantici-
pated change in any one of these customers' credit worthiness or other matters
affecting the collectibility of amounts due from such customers could have a
material effect on the results of operations in the period in which such changes
or events occur. After all attempts to collect a receivable have failed, the
receivable is written off.
Marketable securities-The Company has investments in publicly traded equity
securities as well as certain state and municipal debt securities. These
securities are classified as available-for-sale securities, and are reported at
fair value. 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 reported as earned.
In accordance with SFAS 115,the Generally Accepted Accounting Principles in the United
States (US GAAP), the Company evaluates all marketable securities for other-thanother-
than temporary declines in fair value. When the cost basis exceeds the fair
market value for approximately one year, management evaluates the nature of
the investment, cause of mpairmentimpairment and number of investments that are in an
unrealized position. When it is determined that a security will probably remain
impaired, a recognized loss is booked and the investment is written down to its
new fair value. The investments are periodically evaluated to determine if
impairment changes are required.
Page 10
Inventories-Inventories are valued at the lower of cost or market value. Costs
are determined using the average cost-pricing method. The company uses standard
costs to price its manufactured inventories, approximating average costs. The
reported net value of inventory includes finished saleable products, work-in-
process and raw materials that will be sold or used in future periods. Inventory
costs include raw materials, direct labor and overhead. The Company's overhead
expenses are applied based, in part, upon estimates of the proportion of those
expenses that are related to procuring and storing raw materials as compared to
the manufacture and assembly of finished products. These proportions, the method
of their application, and the resulting overhead included in ending inventory,
are based in part on subjective estimates and approximations and actual results
could differ from those estimates.
In addition, the Company records an inventory obsolescence reserve, which
represents the cost of the inventory that has had no movement in over two years.
There is inherent professional judgment and subjectivity made by management in
determining the estimated obsolescence percentage. In addition, and as
necessary, the Company may establish specific reserves for future known or
anticipated events.
Income Taxes-The company has adopted the provisions of the SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109Taxes-US GAAP requires use of the liability method, whereby current and
deferred tax assets and liabilities are determined based on tax rates and laws
enacted as of the balance sheet date. Deferred tax expense represents the
change in the deferred tax asset/liability balances.
Segment Reporting and Related Information-The Company discloses the results of
its segments in accordance with SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information ("SFAS No. 131"). The Company designateddesignates the internal
organization that is used by management for allocating resources and assessing
performance as the source of the Company's reportable segments. SFAS
No. 131US GAAP also
requires disclosures about products and services, geographic area and major
customers.
Page 9
Related Party Transactions - The Company leased a duplex from Eileen Risk until
the end of the December 2008. Eileen Risk is the mother to Ken Risk, President
and CEO of the company. One half of the duplex is used for storage of materials
and accounting records. This lease requires an annual payment of $3,400 due each
July 1 and payments of $300 on a month-to-month basis to the related party. The
company then purchased this building at the end of December 2008 for $15,000.
The Company also leases a building from Ken and Bonnie
Risk. Ken Risk is the Chairman of the Board and President and CEO of the
company. Bonnie Risk is Ken's wife, who is also an employee of the company. This
building contains the Company's sales and accounting departments, maintenance
department, engineering department and some production facilities. This lease
requires a minimum payment of $1,535 on a month-to-month basis. TotalThe total lease
expense under the above two arrangementsfor this arrangement was $24,000$18,420 for the fiscal yearyears ended April 30,
20092012 and $25,000 for the fiscal year ended April 30, 2008.2011.
The company also leases its airplane from President and CEO Ken Risk, who is
also a majority stockholder, on a month-to-month basis requiring payments of
$2,250. Airplane lease expenses charged to operations for the fiscal years ended
April 30, 20092012 and 2008,2011, were $27,000 for each year. During the year ended April
30, 2000, the Company paid $210,000 and the President/CEO contributed the
airplane in trade for another airplane. The Company and this officer jointly
own the newly purchased airplane, and will continue the lease on the officer's
ownership of the plane.
One of the directors of the board, Joel Wiens, is the principal shareholder of
FirsTier Bank. FirsTier Bank is the financial institution the company uses for
its day to day banking operations. Year end balances of accounts held at this
bank are $4,616,000$4,818,000 for the year ended April 30, 20082012 and $4,072,000$4,648,000 for the
year ended April 30, 2008.2011. The Company also received interest income from
FirsTier Bank in the amount of $100,000$3,000 for the year ended April 30, 20092012 and
$193,000$8,000 for the year ended April 30, 2008.2011.
Page 1011
Item 8 Financial Statements
Index to Financial Statements
George Risk Industries, Inc.
Page
Independent Auditor's Report 1213
Balance Sheets April 30, 20092012 and 2008 132011 14
Statements of Income
For the Years Ended April 30, 20092012 and 2008 152011 16
Statements of Comprehensive Income
For the Years Ended April 30, 20092012 and 2008 162011 17
Statement of Changes in Stockholders' Equity
For the Years Ended April 30, 20092012 and 2008 172011 18
Statements of Cash Flows
For the Years Ended April 30, 20092012 and 2008 192011 20
Notes to Financial Statements 21
Page 1112
Report of Independent Registered Public Accounting Firm
Board of Directors
George Risk Industries, Inc.
Kimball, Nebraska
We have audited the accompanying balance sheets of George Risk Industries,
Inc. as of April 30, 20092012 and 2008,2011, and the related statements of income,
comprehensive income, stockholders' equity, and cash flows for each of the
two
years then ended.in the two-year period ended April 30, 2012. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our auditaudits in accordance with auditing standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement.
The company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
company's internal control over financial reporting. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of George Risk
Industries, Inc. as of April 30, 20092012 and 2008,2011, and the results of their
operations and their cash flows for each of the years in the two years thenyear period
ended April 30, 2012, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Haynie & Company
Littleton, Colorado
July 27, 200926, 2012
George Risk Industries, Inc.
Balance Sheets
April 30, 20092012 and 2008
2009 20082011
2012 2011
ASSETS
Current Assets
Cash and cash equivalents $ 4,617,0005,773,000 $ 4,072,0005,254,000
Investments and securities 15,691,000 17,533,00020,280,000 19,512,000
Accounts receivable:
Trade, net of $7,000$6,000 and $50,000$5,000 doubtful
account allowance for 20092012 and 2008 1,272,000 1,509,0002011,
respectively 1,669,000 1,574,000
Other 1,000 1,000
Note receivable, current 3,000 3,000
Income tax overpayment 137,000 471,0004,000 5,000
Inventories 2,741,000 3,100,0002,351,000 1,854,000
Prepaid expenses 81,000 103,000141,000 151,000
Deferred current income taxes 1,127,000 250,000119,000 166,000
____________ ___________
Total Current Assets $ 25,724,000 27,042,00030,338,000 28,517,000
Property and Equipment, net, at cost 802,000 831,000771,000 639,000
Other Assets
Investment in Limited Land Partnership,
at cost 200,000 200,000228,000 218,000
Projects in process 68,000 68,000
Long-term receivable 40,000 60,00044,000 213,000
Note receivable 9,000 12,0005,000 1,000
Other 1,000 0
1,000
___________ _______________________ ____________
Total Other Assets $ 317,000278,000 $ 341,000432,000
TOTAL ASSETS $ 26,843,00031,387,000 $ 28,214,000
_____________29,588,000
____________ ___________
_________________________ ___________
See accompanying notes to financial statements.
Page 13
Page 14
George Risk Industries, Inc.
Balance Sheets
As of April 30, 20092012 and 20082011
Liabilities and Stockholders' Equity
2009 20082012 2011
Current Liabilities
Accounts payable, trade $ 35,00096,000 $ 67,000128,000
Dividends payable 317,000 239,000589,000 483,000
Accrued expenses:
Payroll and related expenses 306,000 321,000212,000 212,000
Income tax payable 246,000 36,000
__________ ___________
Total Current Liabilities $1,143,000 $ 658,000 $ 627,000859,000
Long-Term Liabilities
Aircraft ownership deposit payable 5,000 5,000
Deferred income taxes 86,000 79,000124,000 53,000
___________ ___________
Total Long-Term Liabilities $ 86,000129,000 $ 79,00058,000
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 (941,000) (67,000)278,000 281,000
Retained earnings 27,424,000 27,788,00030,603,000 29,115,000
Less: treasury stock,3,376,548stock,3,460,282 and
3,326,5513,451,857 shares, at cost (3,069,000) (2,898,000)(3,451,000) (3,410,000)
___________ ___________
Total Stockholders' Equity $26,099,000 $27,508,000$30,115,000 $28,671,000
___________ ___________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $26,843,000 $28,214,000$31,387,000 $29,588,000
___________ ___________
___________ ___________
See accompanying notes to financial statements.
Page 14
George Risk Industries, Inc.
Income Statements
For the Years Ended April 30, 2009 and 2008
Year Year
Ended Ended
Apr 30,2009 Apr 30, 2008
___________ ____________
Net Sales $ 8,822,000 $11,444,000
Less: Cost of Goods Sold (4,646,000) (5,755,000)
___________ ___________
Gross Profit $ 4,176,000 $ 5,689,000
Operating Expenses:
General and Administrative 748,000 735,000
Sales 1,813,000 2,016,000
Engineering 79,000 72,000
Rent Paid to Related Parties 51,000 53,000
___________ ___________
Total Operating Expenses $ 2,691,000 $ 2,876,000
Income From Operations 1,485,000 2,813,000
Other Income (Expense)
Other Income 58,000 33,000
Interest expense (2,000) (6,000)
Dividend and Interest Income 768,000 845,000
Gain (Loss) on Investments (1,374,000) (163,000)
Gain (Loss) on Sale of Assets 0 15,000
___________ ___________
$ (550,000) $ 724,000
Income Before Provision for
Income Taxes 935,000 3,537,000
Provision for Income Taxes
Current Expense 661,000 1,235,000
Deferred tax expense (242,000) 37,000
___________ ___________
Total Income Tax Expense 419,000 1,272,000
Net Income $ 516,000 $ 2,265,000
Basic and Diluted Earnings Per Share
of Common Stock $ 0.10 $ 0.43
Weighted Average Number of
Common Shares Outstanding 5,167,806 5,307,829
See accompanying notes to financial statements.
Page 15
George Risk Industries, Inc.
Income Statements
For the Years Ended April 30, 2012 and 2011
Year Year
Ended Ended
Apr 30,2012 Apr 30, 2011
___________ ____________
Net Sales $10,285,000 $ 8,858,000
Less: Cost of Goods Sold (4,760,000) (4,667,000)
___________ ___________
Gross Profit $ 5,525,000 $ 4,191,000
Operating Expenses:
General and Administrative 776,000 754,000
Sales 1,612,000 1,552,000
Engineering 54,000 74,000
Rent Paid to Related Parties 46,000 46,000
___________ ___________
Total Operating Expenses $ 2,488,000 $ 2,426,000
Income From Operations 3,037,000 1,765,000
Other Income (Expense)
Other Income 19,000 9,000
Dividend and Interest Income 735,000 666,000
Gain on Investments 51,000 168,000
Gain on Sale of Assets 12,000 0
___________ ___________
$ 817,000 $ 843,000
Income Before Provisions for
Income Taxes 3,854,000 2,608,000
Provisions for Income Taxes
Current Expense 1,087,000 696,000
Deferred tax expense (benefit) 119,000 (114,000)
___________ ___________
Total Income Tax Expense 1,206,000 582,000
Net Income $ 2,648,000 $ 2,026,000
Basic and Diluted Earnings Per Share
of Common Stock $ 0.52 $ 0.40
Weighted Average Number of
Common Shares Outstanding 5,045,103 5,057,337
See accompanying notes to financial statements.
Page 16
George Risk Industries, Inc.
Statements of Comprehensive Income
For the Years Ended April 30, 20092012 and 20082011
Year Year
Ended Ended
Apr 30,200930,2012 Apr 30, 20082011
___________ ____________
Net Income $2,648,000 $ 516,000 $ 2,265,0002,026,000
__________ ___________
Other Comprehensive Income, Net of Tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses)
arising during period (2,740,000) (591,000)(159,000) 558,000
Less: reclassification adjustment for
(gains) losses included in net income 1,239,000 192,000154,000 (97,000)
Income tax expense related to other
comprehensive income 627,000 167,0002,000 (193,000)
__________ __________
Other Comprehensive Income (874,000) (232,000)(3,000) 268,000
Comprehensive Income (Loss) $ (358,000) $2,033,000$2,645,000 $2,294,000
__________ __________
__________ __________
See accompanying notes to financial statements.
Page 16
George Risk Industries, Inc.
Statement of Changes in Stockholders' Equity
For the Years Ended April 30, 2009 and 2008
Common Stock
Preferred Stock Class A
________________ ____________
Shares Amount Shares Amount
Balances, April 30,
2007 4,100 $99,000 8,502,832 $850,000
Purchases of common
stock - - - -
Dividend declared at
$0.17 per common
share outstanding - - - -
Unrealized gain (loss) - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2008 4,100 99,000 8,502,832 850,000
Purchases of common
stock - - - -
Dividend declared at
$0.17 per common
share outstanding - - - -
Unrealized gain (loss) - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2009 4,100 $ 99,000 8,502,832 $850,000
________ ________ _________ ________
________ ________ _________ ________
See accompanying notes to financial statements.
Page 17
George Risk Industries, Inc.
Statement of Changes in Stockholders' Equity
For the Years Ended April 30, 20092012 and 20082011
Common Stock
Preferred Stock Class A
________________ ____________
Shares Amount Shares Amount
Balances, April 30,
2010 4,100 $ 99,000 8,502,832 $850,000
Purchases of common
stock - - - -
Dividend declared at
$0.20 per common
share outstanding - - - -
Unrealized gain (loss),
net of tax effect - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2011 4,100 99,000 8,502,832 850,000
________ ________ _________ ________
Purchases of common
stock - - - -
Dividend declared at
$0.23 per common
share outstanding - - - -
Unrealized gain (loss),
net of tax effect - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2012 4,100 $ 99,000 8,502,832 $850,000
________ ________ _________ ________
________ ________ _________ ________
See accompanying notes to financial statements.
Page 18
George Risk Industries, Inc.
Statements of Changes in Stockholders' Equity
For the Years Ended April 30, 2012 and 2011
Accumulated
Treasury Stock Other
Paid-In (Common Class A) Comprehensive Retained
______________
Capital Shares Amount Income Earnings Total
$1,736,000 3,166,104 $(2,109,000)3,438,352 $(3,332,000) $ 165,000 $26,430,000 $27,171,00013,000 $28,102,000 $27,468,000
- 160,447 (789,000)13,505 (78,000) - - (789,000)(78,000)
- - - - (907,000) (907,000)(1,013,000) (1,013,000)
- - - (232,000)268,000 - (232,000)268,000
- - - - 2,265,000 2,265,0002,026,000 2,026,000
__________ _________ ___________ ___________ ___________ ___________
1,736,000 3,326,551 (2,898,000) (67,000) 27,788,000 27,508,0003,451,857 (3,410,000) 281,000 29,115,000 28,671,000
__________ _________ ___________ ___________ ___________ ___________
- 49,997 (171,000)8,425 (41,000) - - (171,000)(41,000)
- - - - (880,000) (880,000)(1,160,000) (1,160,000)
- - - (874,000)(3,000) - (874,000)(3,000)
- - - - 516,000 516,0002,648,000 2,648,000
__________ _________ ___________ ___________ ___________ ___________
$1,736,000 3,376,548 $(3,069,000)3,460,282 $(3,451,000) $ (941,000) $27,424,000 $26,099,000278,000 $30,603,000 $30,115,000
__________ _________ ___________ ___________ ___________ ___________
__________ _________ ___________ ___________ ___________ ___________
See accompanying notes to financial statements.
Page 18
George Risk Industries, Inc.
Statements of Cash Flows
Year Year
Ended Ended
Apr 30,200930,2012 Apr 30, 20082011
___________ ____________
Cash Flows from Operating Activities:
Net income $ 516,000 $2,265,000$2,648,000 $2,026,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 173,000 170,000160,000 153,000
(Gain) loss on sale of investments 1,376,000 163,000(51,000) (169,000)
(Gain) loss on sale of property and
equipment (12,000) 0
(15,000)
Economic developmentBad debt relievedexpense 0 (25,000)
Reserve for bad debts (43,000) 08,000
Reserve for obsolete inventory 24,000 038,000 33,000
Deferred income taxes (242,000) 37,000119,000 (114,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 299,000 416,000(95,000) (287,000)
Inventories 336,000 (41,000)(535,000) 81,000
Prepaid expenses 22,000 22,00010,000 (9,000)
Employee receivables 0 2,000
Income tax overpayment 334,000 (334,000)(1,000)
Increase (decrease) in:
Accounts payable (32,000) (60,000)71,000
Accrued expenses (15,000) (15,000)0 13,000
Income tax payable 210,000 252,000
__________ __________
Net cash provided by (used in)
operating activities $2,748,000$2,460,000 $ 2,585,0002,057,000
__________ __________
Cash Flows From Investing Activities:
Other assets manufactured and purchased 169,000 (101,000)
Proceeds from sale of assets 20,000 0 25,000
(Purchase) of property and equipment (143,000) (176,000)(298,000) (60,000)
Proceeds from sale of marketable
securities 260,000 5,510,000168,000 1,592,000
(Purchase) of marketable securities (1,296,000) (6,868,000)(891,000) (868,000)
(Purchase) of long-term investment (10,000) (18,000)
(Loans) made to employees (10,000) 0
Collections of loans to employees 3,000 2,0007,000 12,000
(Purchase) of treasury stock (171,000) (788,000)(41,000) (77,000)
__________ __________
Net cash provided by (used in)
investing activities ($1,347,000) ($2,295,000)886,000) $ 480,000
__________ __________
Cash Flows From Financing Activities:
Dividends paid (802,000) (829,000)(1,055,000) (924,000)
__________ __________
Net cash provided by (used in)
financing activities ($802,000) ($829,000)$(1,055,000) $ (924,000)
__________ __________
Net Increase (Decrease) in Cash and
Cash Equivalents $ 599,000519,000 $ (539,000)1,613,000
__________ __________
__________ __________
See accompanying notes to financial statements
Page 19
Cash and Cash Equivalents, beginning
of period $ 4,072,000 $4,611,0005,254,000 $3,641,000
Cash and Cash Equivalents,
end of period $ 4,671,000 $4,072,0005,773,000 $5,254,000
__________ __________
__________ __________
Supplemental Disclosure for Cash
Flow Information:
Cash Payments for:
Income taxes paid $ 325,000 $1,567,000
Interest paid855,000 $ 2,000658,000
Cash receipts for income taxes $ 6,000
Supplemental Disclosure of Noncash
Investing and Financing Activities
Note receivable received in
exchange for property and equipment21,000 $ 0 $ 18,000214,000
See accompanying notes to financial statements
Page 1920
George Risk Industries, Inc.
Notes to Financial Statements
April 30, 20092012
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business-The company is engaged in the design, manufacture, and
marketing of computer keyboards, push-button switches, security alarm
components, pool alarms and hydro sensors.
Cash and Cash Equivalents-The company considers all investments purchased
with a maturity of three months or less to be cash equivalents.
Allowance for Doubtful Accounts-Accounts receivable are customer
obligations due under normal trade terms. The company sells its products
to security alarm distributors, alarm installers, and original equipment
manufacturers. The company performs continuing credit evaluations of its
customers' financial condition and the company generally does not require
collateral.
The company records an allowance for doubtful accounts based on an analysis
of specifically identified customer balances. The company has a limited
number of customers with individually large amounts due at any given date.
Any unanticipated change in any one of these customers' credit worthiness
or other matters affecting the collectibility of amounts due from such
customers could have a material effect on the results of operations in the
period in which such changes or events occur. After all attempts to collect
a receivable have failed, the receivable is written off. The company has
recorded an allowance for doubtful accounts of $7,000$6,000 for the year ended
April 30, 20092012 and $50,000$5,000 for the year ended April 30, 2008. Bad2011. For the fiscal
year ended April 30, 2012, bad debt expense was $380 and $8,000 fora net credit of $213 due to
bad debt recoveries during the year. For the fiscal year ended April 30,
2009 and 2008, respectively.2011, bad debt expense was $8,499.
Inventories-Inventories are stated at the lower of cost or market. Cost is
determined using the average cost-pricing method. The company uses standard
costs to price its manufactured inventories approximating average costs.
Page 21
Property and Equipment-Property and equipment are recorded at cost.
Depreciation is calculated based on the following estimated useful lives
using the straight-line method:
Classification Useful Classification Life Cost2012 2011
in Years Cost Cost
Dies, jigs, and molds 3-7 $1,132,000$1,503,000 $1,222,000
Machinery and equipment 5-10 1,103,0001,134,000 1,134,000
Furniture and fixtures 5-10 142,000147,000 147,000
Leasehold improvements 5-32 174,000178,000 178,000
Buildings 20 659,000658,000 658,000
Automotive and aircraft 3-5 391,000406,000 398,000
Software 2-5 129,000 129,000
Land N/A 13,000 13,000
__________ __________
Total 3,743,0004,168,000 3,879,000
Accumulated depreciation (2,941,000)(3,397,000) (3,240,000)
__________ __________
Net $ 802,000771,000 $ 639,000
__________ __________
__________ __________
Depreciation expense of $173,000$160,000 and $170,000$153,000 were charged to operations
for the years ended April 30 20092012 and 2008,2011, respectively.
Maintenance and repairs are charged to expense as incurred, and
expenditures for major improvements are capitalized. When assets are
retired or otherwise disposed of, the property accounts are relieved of
costs and accumulated depreciation and any resulting gain or loss is
credited or charged to operations.
Advertising-Advertising costs are expensed as incurred and included in
selling expenses. Advertising expense amounted to $320,000$221,000 and $357,000$257,000
for the years ended April 30 20092012 and 2008,2011, respectively.
Income Taxes-The company has adopted the provisions of the SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109Taxes-US GAAP requires use of the liability method, whereby current
and deferred tax assets and liabilities are determined based on tax rates
and laws enacted as of the balance sheet date. Deferred tax expense
represents the change in the deferred tax asset/liability balances.
Page 22
The flow-through method of accounting for tax credits has been adopted by
the company. Such credits are reflected as a reduction of the provision
for income taxes in the year in which they become available.
Net Income Per Common Share-Net income per common share is based on the
weighted average number of common shares outstanding during each fiscal year.
The dilutive effect of convertible preferred stock is reflected in diluted
earnings per share by application of the if-converted method. Under this
method, preferred dividends applicable to convertible preferred stock are
added to the numerator and convertible preferred stock is assumed to have
been converted at the beginning of the period.
Accounting Estimates-The preparation of these financial statements requires
the use of estimates and assumptions including the carrying value of assets.
The estimates and assumptions result in approximate rather than exact amounts.
Financial Instruments-Financial instruments consist of cash and cash
equivalents, marketable securities, accounts receivable and accounts payable.
The carrying values of these financial instruments approximate fair value due
to their short-term nature.
Revenue Recognition-Revenue is recognized when risks and benefits in ownership
are transferred, which normally occurs at the time of shipment of products.
Comprehensive Income-Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income"Income-US GAAP requires disclosure of total non-
stockholdernon-stockholder
changes in equity in interim periods and additional disclosures of the
components of non-stockholder changes in equity on an annual basis. Total non-stockholdernon-
stockholder changes in equity include all changes in equity during a period
except those resulting from fiscal investments by and distributions to
stockholders.
Segment Reporting and Related Information-The Company discloses the results
of its segments in accordance with SFAS No. 131, Disclosures About Segments
of an Enterprise and Related Information ("SFAS No. 131"). The Company
designateddesignates the internal
organization that is used by management for allocating resources and assessing
performance as the source of the Company's reportable segments. SFAS No. 131US GAAP also
requires disclosures about products and services, geographic area and major
customers. At April 30, 2008,2012, the Company operated in threetwo segments organized
by security line products and all other products. See Note 9 for further
segment information disclosures in accordance with SFAS
No. 131.disclosures.
Page 23
Reclassifications-Certain reclassifications have been made to conform to the
current year presentation. The total net income and equity are unchanged due
to those classifications.reclassifications.
Recently Issued Accounting Pronouncements-In December 2007,Pronouncements- In May, 2011, the FASBFinancial
Accounting Standards Board ("FASB") issued FASB Statement No. 141R, Business Combinations (FAS 141R)new guidance for fair value
measurements intended to achieve common fair value measurement and FASB Statement
No. 160, Non-controlling Interestsdisclosure
requirements in ConsolidatedU.S. GAAP and Interntional Financial Statements an
amendmentReporting Standards. The
amended guidance provides a consistent definition of fair value to ARB No. 51 (FAS 160). FAS 141Rensure that
the fair value measurement and FAS 160 require most
identifiable assets, liabilities, non-controlling interests,disclosure requirements are similar between U.S.
GAAP and goodwill
acquired in a business combination to be recorded at "fullInternational Financial Reporting Standards. The amended guidance
changes certain fair value"value measurement principles and require non-controlling interests (previously referred to as minority
interests) to be reported as a component of equity, which changesenhances the accountingdisclosure
requirements, particularly for transactions with non-controlling interest holders. Both
Statements areLevel 3 fair value measurements. The amended
guidance was effective for periodsus beginning on or after December 15,
2008, and earlier adoption is prohibited. FAS 141RFebruary 1, 2012. We do not anticipate
that these changes will be applied to
business combinations occurring after the effective date. FAS 160 will be
applied prospectively to all non-controlling interests, including any that
arose before the effective date. The Company does not expect the adoption
of FAS 141R and FAS 160 to have ana significant impact on the Company'sour financial position,
results of operations or cash flows.
In October 2008,June 2011, the FASB issued FASB Staff Position No. 157-3, "Determining
Fair Valueguidance that modified how comprehensive income
is presented in an entity's financial statements. The guidance issued requires
an entity to present the total of a Financial Assetcomprehensive income, the components of net
income, and the components of other comprehensive income either in a Market That Is Not Active" ("FSP No.
157-3"). FSP No. 157-3 clarifiedsingle
continuous statement of comprehensive income or in two separate but consecutive
statements and eliminates the applicationoption to present the components of SFAS No. 157 in an
inactive market. FSP No. 157-3 demonstrates howother
comprehensive income as part of the fair valuestatement of aequity. We have adopted the
revised financial asset is determined when the marketstatement presentation for that financial asset is
inactive. FSP No. 157-3 wascomprehensive income. This becomes
effective upon issuance, including prior periods
for which financial statements had not been issued. The implementation of
this standard did not have a material impact on our Financial Statements.May 1, 2012.
2. INVENTORIES
Inventories at April 30, 20092012 and 2011 consisted of the following:
2012 2011
__________ __________
Raw materials $1,813,000$1,682,000 $1,413,000
Work in process 749,000543,000 424,000
Finished goods 308,000291,000 220,000
__________ 2,870,000
__________
Less2,516,000 2,057,000
__________
Less: allowance for obsolete inventory (129,000)(165,000) (203,000)
__________ __________
Totals $2,741,000$2,351,000 $1,854,000
__________ __________
__________ __________
Page 24
3. MARKETABLE SECURITIES
The Company has investments in publicly traded equity securities as well as
certain state and municipal debt securities. These securities are classified
as available-for-sale securities, and are reported at fair value. Available-
for-sale investments in debt securities mature between June 20092012 and August
2031.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 stockholders' equity.
Dividend and interest income are reported as earned.
As of April 30, 2009,2012, investments available-for-sale consisted of the following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
Municipal bonds $ 8,412,0009,202,000 $ 100,000291,000 $ (201,000)(35,000) $ 8,311,000
Federal agency mortgage
backed securities $ 125,000 $ 4,000 $ 0 $ 129,0009,458,000
Corporate bonds $ 219,000268,000 $ 08,000 $ (24,000)(2,000) $ 195,000274,000
Equity securities $ 6,810,0008,989,000 $ 172,000 $(1,668,000)467,000 $ 5,314,000(252,000) $ 9,204,000
Money Markets and CDs $ 1,740,000 $ 2,0001,344,000 $ 0 $ 1,742,0000 $ 1,344,000
Total $17,306,000$19,803,000 $ 278,000 $(1,893,000) $15,691,000766,000 $ (289,000) $20,280,000
In accordance with SFAS 115, theThe Company evaluates all marketable securities for other-than temporary
declines in fair value, which are defined as when the cost basis exceeds the
fair value for approximately one year. The Company also 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 loss. The investments are periodically evaluated to
determine if impairment changes are required. As a result of this standard,
management recorded impairment losses of $782,000$72,000 for the year ended April 30,
20092012 and $235,000$11,000 for the year ended April 30, 2008.2011.
The following table shows the investments with unrealized losses that are not
deemed to be other-than-temporarily impaired, aggregated by investment category
and length of time that individual securities have been in a continuous
unrealized loss position, at April 30, 2009.2012.
Page 25
Less than 12 months 12 months or greater Total
Description Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
Municipal bonds $ 843,000425,000 $ (50,000) $2,831,000(4,000) $1,153,000 $ (142,000) $3,674,000(31,000) $1,578,000 $ (192,000)(35,000)
Corporate bonds 13,000 (2,000) $ 38,000114,000 $ (2,000) $ 51,0000 $ (4,000)0 $ 114,000 $ (2,000)
Equity securities $2,581,000$2,195,000 $ (934,000) $1,358,000(177,000) $ (734,000) $3,939,000 $(1,668,000)663,000 $ (73,000) $2,858,000 $ (250,000)
Total $3,437,000$2,734,000 $ (986,000) $4,227,000(183,000) $1,816,000 $ (878,000) $7,664,000 $(1,864,000)(104,000) $4,550,000 $ (287,000)
Municipal Bonds
The unrealized losses on the Company's investments in municipal bonds were
caused by interest rate increases. The contractual terms of these investments
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 occurs, which may be maturity,
the Company does not consider these investments to be other-than-temporarily
impaired at April 30, 2009.2012.
Corporate BondsBOnds
The Company's unrealized loss on investments in corporate bonds relates to severaltwo
bonds. The contractual term of these investments does not permit the issuer to
settle the securities at a price less than the amortized cost of the
investments. Because the Company has the ability to hold these investments
until a recovery of fair value occurs, which may be maturity, the Company does
not consider these investments to be other-than-temporarily impaired at April
30, 2009.2012.
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
individual holdings, and because of the recent decline in the stock market,
does not consider these investments to be other-than-temporarily impaired
at April 30, 2009.2012.
Page 26
4. 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 company and its subsidiaries. The Plan is intended to be qualified
under Section 401(k) of the Internal Revenue Code of 1986, as amended.
It is funded by voluntary pre-tax contributions from eligible employees who
may contribute a percentage of their eligible compensation, limited and
subject to statutory limits. The Plan is also funded by discretionary
matching employer contributions from the company. Employees are eligible to
participate in the Plan when they have attained the age of 21 and completed
one thousand hours of service in any plan year with the company. Upon leaving
the company, each participant is 100% vested with respect to the participants'
contributions while the company's matching contributions are vested over a
six-year period in accordance with the Plan document. Contributions are
invested, as directed by the participant, in investment funds available under
the Plan. Matching contributions of approximately $12,000 were paid during
the fiscal year ending April 30, 20092012 and approximately $13,000$11,000 worth of matching
contributions were paid during the fiscal year ended April 30, 2008.2011. There
were no discretionary contributions paid during the fiscal year ending April
30, 2012. Discretionary contributions of approximately $6,600 and $5,100$1,800 were paid during 2009 and
2008, respectively.the fiscal
year ending April 30, 2011.
5. STOCKHOLDERS' EQUITY
Preferred Stock-Each share of the Series #1 preferred stock is convertible at
the option of the holder into five shares of Class A common stock and is also
redeemable at the option of the board of directors at $20 per share. The
holders of the convertible preferred stock shall be entitled to a dividend at
a rate up to $1 per share annually, payable quarterly as declared by the board
of directors. No dividends were declared or paid during the two years ended
April 30, 2009.2012.
Convertible preferred stock without par value may be issued from time to time
as determined by the board of directors. Shares of different series shall be
of equal rank but may vary as to terms and conditions.
Class A Common Stock-The holders of the Class A common stock are entitled to
receive dividends as declared by the board of directors. No dividends may be
paid on the Class A common stock until the holders of the Series #1 preferred
stock have been paid a dividend for the four prior quarters and provision has
been made for the full dividend in the current fiscal year.
Page 2728
During the fiscal year ended April 30, 2009,2012, the Company purchased 49,9978,425
shares of Class A common stock. Of those shares 47,183 were purchasedThis was accomplished by stockholders
contacting the Company and actively seeking shares on the open market. A total of $160,142
was spent acquiring these shares.company.
Stock Transfer Agent-The Company does not have an independent stock transfer
agent. The company maintains all stock records.
6. EARNINGS PER SHARE
Basic and diluted earnings per share, assuming convertible preferred stock was
converted for each period presented are:
April 30, 20092012
___________________________________
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $ 516,000$2,648,000
__________
__________
Basic EPS $ 516,000 5,167,806 $.100$2,648,000 5,045,103 $.5249
Effect of dilutive
Convertible Preferred
Stock - 20,500 (.001)(.0022)
__________ _________ ___________
Diluted EPS $ 516,000 5,188,306 $.099$2,648,000 5,065,603 $.5227
__________ _________ ___________
__________ _________ ___________
April 30, 20082011
___________________________________
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $2,265,000$2,026,000
__________
__________
Basic EPS $2,265,000 5,307,829 $.427$2,026,000 5,057,337 $.401
Effect of dilutive
Convertible Preferred
Stock - 20,500 (.002)
__________ _________ _____
Diluted EPS $2,265,000 5,328,329 $.425$2,026,000 5,077,837 $.399
__________ _________ _____
__________ _________ _____
Page 28
7. COMMITMENTS, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS
The Company leasedleases a duplexbuilding from EileenKen and Bonnie Risk. Ken Risk until the end of December 2008.
Eileen is the
mother to Ken Risk,Chairman of the Board and the President and CEO of the company. One halfBonnie Risk is
Ken's wife, is also an employee of the duplex is used for storage of materials and accounting records. This
lease requires an annual payment of $3,400 due each July 1 and payments of
$300 on a month-to-month basis to the related party. The company then purchased
this building at the end of December 2008 for $15,000.
The Company also leases another building from Ken and Bonnie Risk.company. This building contains the
Company's sales and accounting departments, maintenance department,
engineering department and some production facilities. This lease requires a
minimum payment of $1,535 on a month-to-month basis. TotalThe total lease expense
under the above two arrangementsfor this arrangement was $24,000$18,420 for the fiscal yearyears ended April 30, 20092012 and
$25,000 for the fiscal year ended April 30, 2008.2011.
The company also leases its airplane from PresidentandPresident and CEO Ken Risk, who is
also a majority stockholder, on a month-to-month basis requiring payments of
$2,250. Airplane lease expenses charged to operations for the fiscal years ended
April 30, 20092012 and 2008,2011, were $27,000 for each year. During the year ended
April 30,
2000,30,2000, the Company paid $210,000 and the President/CEO contributed the
airplane in trade for another airplane. The Company and this officer jointly own
the newly purchased airplane and will continue the lease on the officer's
ownership of the plane.
One of the directors of the board, Joel Wiens, is the principal shareholder of
FirsTier Bank. FirsTier bank is the financial institution the company uses for
its day to day banking operations. Year end balances of accounts held at this
bank are $4,616,000$4,818,000 for the year ended April 30, 20092012 and $4,072,000$4,648,000 for the
year ended April 30, 2008.2011. The Company also received interest income from
FirstTier Bank in the amount of $100,000$3,000 for the year ended April 30,200930, 2012 and
$193,000$8,000 for the year ended April 30,2008.30,2011.
Page 29
8. INCOME TAXES
Reconciliation of income taxes with Federal and State taxable income:
2009 20082012 2011
____________ ____________
Income before income taxes $ 935,000 $3,536,000$3,854,000 $2,608,000
State income tax deduction (126,000) (221,000)(211,000) (136,000)
Capital loss carryforwards
(utilized) accumulated 0 0(120,000) (162,000)
Interest and dividend income (537,000) (487,000)(603,000) (541,000)
Domestic production activities
deduction (98,000) (179,000)(266,000) (180,000)
Nondeductible expenses
and timing differences 1,366,000 (154,000)(85,000) 50,000
__________ __________
Taxable income $1,540,000 $2,803,000$2,569,000 $1,639,000
__________ __________
__________ __________
The following schedule reconciles the provision for income taxes
to the amount computed by applying the statutory rate to income
before income taxes:
Income before taxes at statutory
rate $ 391,000 $1,477,000$1,611,000 $1,090,000
Increase (decrease)income
taxes resulting from:
State income taxes (53,000) (92,000)(88,000) (57,000)
Interest and dividend income (225,000) (197,000)(252,000) (226,000)
Domestic production activities (41,000)(111,000) (75,000)
Deferred taxes (242,000) 36,000119,000 (114,000)
Other temporary and
permanent differences 589,000 123,000(73,000) (36,000)
__________ __________
Income tax expense $1,206,000 $ 419,000 $1,272,000582,000
__________ __________
__________ __________
Federal Tax Rate 34.0% 34.0%
State Tax Rate 7.8% 7.8%
____ ____
Blended statutory rate 41.8% 41.8%
____ ____
____ ____
Deferred tax asset (liabilities) consist of the following
components at April 30, 20092012 and 2008:2011:
Deferred tax current assets:
Capital loss carryforward $ 420,000 $172,000287,000 $ 337,000
Accrued vacation 32,000 31,000 30,000
Accumulated unrealized (gain)/loss
on investments 676,000 48,000(200,000) (202,000)
__________ __________________
Net deferred tax assets $1,127,000 $250,000$ 119,000 $ 166,000
__________ ________
__________
__________________ __________
Deferred long-term tax liabilities:assets (liabilities):
Depreciation (86,000) (79,000)(124,000) (53,000)
__________ __________________
Net deferred long-term tax liabilityassets (liabilities) $ (86,000) $(79,000)(124,000) $ (53,000)
__________ ________
__________
__________________ __________
Of the $287,000 in current capital loss carryforwards, $127,000 of that number
expires on April 30, 2013 and the rest, $160,000, expires on April 30, 2014.
Page 30
9. BUSINESS SEGMENTS
The following is financial information relating to industry segments:
April 30,
2009 20082012 2011
Net revenue:
Security alarm products $ 7,926,0009,045,000 $ 9,989,0007,791,000
Other products 896,000 1,546,0001,240,000 1,067,000
___________ ___________
Total net revenue $10,285,000 $ 8,822,000 $11,444,0008,858,000
___________ ___________
___________ ___________
Income from operations:
Security alarm products $ 1,334,000 2,433,0002,671,000 $ 1,552,000
Other products 151,000 380,000366,000 213,000
___________ __________
Total income from operations $ 1,485,0003,037,000 $ 2,813,0001,765,000
___________ ___________
___________ ___________
Identifiable assets:
Security alarm products $ 3,435,0003,463,000 $ 4,008,0002,953,000
Other products 1,185,000 1,281,0001,213,000 995,000
Corporate general 22,223,000 22,925,00026,711,000 25,640,000
___________ ___________
Total assets $26,843,000 $28,214,000$31,387,000 $29,588,000
___________ ___________
___________ ___________
Depreciation and amortization:
Security alarm products $ 28,00024,000 $ 31,00023,000
Other products 113,000 109,000112,000 100,000
Corporate general 32,00024,000 30,000
___________ ___________
Total depreciation and
amortization $ 173,000160,000 $ 170,000153,000
___________ ___________
___________ ___________
Capital expenditures:
Security alarm products $ 3,0000 $ 1,00011,000
Other products 108,000 148,000281,000 32,000
Corporate general 32,000 27,00017,000 17,000
____________ ___________
Total capital expenditures $ 143,000298,000 $ 176,00060,000
____________ ___________
____________ ___________
Page 31
10. CONCENTRATIONS
The company maintains its cash balance in a financial institution in Kimball,
Nebraska. Accounts at this institution are insured by the Federal Deposit
Insurance Corporation for up to $250,000. For the years ended April 30, 20092012
and 2008,2011, the Company's had uninsured balances of $4,366,000$4,568,000 and $3,972,000,$4,398,000,
respectively. Management believes that this financial institution is
financially sound and the risk of loss is minimal. The Company also maintains
cash balances in money market funds at the above-mentioned financial
institution. Such balances are not insured.
The company has sales to a security alarm distributor representing 42%41%
of total sales for the yearsyear ended April 30, 20092012 and 2008.42% for the year ended
April 30, 2011. This distributor accounted for 48%51% and 43%48% of accounts
receivable at April 30, 20092012 and 2008,2011, respectively.
Security switch sales made up 84%88% of the total sales for both the fiscal
years ended April 30, 20092012 and 2008.2011.
11. Fair Value Measurements
The carrying value of our cash and cash equivalents, accounts receivable and
accounts payable approximate their fair value due to their short term nature.
The fair value of our investments is determined utilizing market based
information. Fair value is 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.
Generally accepted accounting principles in the United States of America (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
unobservable inputs (Level 3 measurements). The levels of the fair value
hierarchy under US GAAP are described below:
Page 32
Level 1 Valuation is based upon quoted prices for identical instruments traded
in active markets.
Level 2 Valuation is based upon quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets
that are not active, and model-based valuation techniques for which all
significant 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 April 30, 2012, 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 information. The
valuations are generally classified as Level 1 given the active market for these
securities. Marketable securities utilizing Level 2 inputs include municipal
and corporate bonds. These securities are valued using market corroborated
pricing, matrix pricing, or other models that use observable inputs.
Fair Value Hierarchy
The following tables set forth our assets and liabilities measured at fair value
on a recurring basis and a non-recurring basis by level within the fair value
hierarchy. As required by US GAAP, assets and liabilities are classified in
their entirety based on the lowest level of input that is significant to the
fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
As of April 30, 2012
Level 1 Level 2 Level 3 Total
Assets:
Money Markets and CDs $ 1,344,000 _ _ $ 1,344,000
Equity Securities $ 9,204,000 - _ $ 9,204,000
Municipal and Corporate Bonds _ $9,732,000 _ $ 9,732,000
Total fair value of assets
measured on a recurring basis $10,548,000 $9,732,000 - $20,280,000
Page 33
Item 9 Disagreements on Accounting and Financial Disclosures
There were no disagreements with accountants on accounting and financial
disclosure.
Item 9A(T)9A Controls and Procedures
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 April 30, 2009,2012,
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 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:
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 controls over
financial reporting.
Management's Annual Report on Internal Control over Financial Reporting:
Our management is responsible for establishing and maintaining adequate internal
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 financial reporting
and the preparation of financial statements for external purposes, in accordance
with generally accepted accounting principles. Because of inherent limitations,
a system of internal control over financial reporting 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 compliance 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 internal
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 management concluded
that as of April 30, 20092012 our internal control over financial reporting is
effective.
Page 3334
This annual report does not include an attestation report of the Corporation'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 rulesSection 404(c) of
the SECSarbanes-Oxley Act of 2002, as amended, that permit the Corporation to
provide only the management's report in this annual report.
Item 9B Other Information
None.
Page 3435
Part III
Item 10 Directors and Executive Officers of the Registrant
(a)(a & b) Identification of Directors and Executive Officers
All of the executive officers of the corporation serve at the pleasure of the
board of directors and do not have fixed terms.
The following information as of April 30, 2012 is furnished with respect to
each director and executive officer:
Director or
Name Principal Occupation or Employment Age Officer Since
Ken R. Risk Chairman of the Board and President 6164 April 25, 1977
Stephanie Risk Chief Financial Officer/Director 3740 August 8, 1999
Sharon Westby Secretary/Treasurer 5760 June 16, 2006
Jerry Andersen Director, retired 7881 August 28, 1978
Donna Debowey Director, retired GRI plant manager 7174 July 12, 2005
Joel H. Wiens Vice-Chairman, FirsTier Banks 7982 September 6, 2007
The following director compensation table is furnished with respect to each
director that served during the year ended April 30, 2009:2012:
Name Director's Stock Option Non-equity Non-qualified
Fees Paid Awards Awards incentive deferred
plan compensation
compensation earnings Total
Ken Risk (1) -- -- -- -- -- --
Stephanie Risk (1) -- -- -- -- -- --
Sharon Westby (1) -- -- -- -- -- --
Jerry Andersen (2) $ 150.00 -- -- -- -- $ 150.00
Donna Debowey (2) $ 150.00 -- -- -- -- $ 150.00
Joel H.WiensH. Wiens (2) $ 150.00 -- -- -- -- $ 150.00
The inside directors (1), or employees of the company, do not receive additional
compensation for their services. Outside directors (2) are paid $150 per
meeting for their services.
Page 3536
(b)(c) Identification of Certain Significant Employees
None.
(d) Family Relationships
Ken Risk and Stephanie Risk have a father-daughter relationship.
(e) Business Experience of Directors and Executive Officers
Ken R. Risk, chairman of the board, president and director, worked with the
company after he returned from naval service for several years. His duties
included the position of plant manager, and helpingassisting in purchasing and sales
aspects of the company. He left GRI in 1977 to start his own company, Platte
Valley Sales, in Hastings, Nebraska. He returned to the company to assume the
position of president and CEO in late 1989 after the death of his father,
George Risk. He serves on various charitable and non-profit organization
boards.
Mr. Risk has retained the position of President, CEO of the company because of
his "common sense" approach to business. He is a grass roots leader who is
interested in the day to day aspects of what his company is doing. He maintains
a great working relationship with all of his department heads, ensuring that our
customer service and product reliability are considered among the top in the
industry.
Stephanie Risk, chief financial officer and controller, has over ten years'sixteen years
of experience in the accounting field. Ms. Risk graduated from Hastings College
with a degree in Accounting. Stephanie worked for Platte Valley Sales from May
1990 until January 1997 as a staff accountant. In 1997, she pursued her career
with an accounting manager position at Kershner's Auto Korner. She joined the
accounting staff at GRI in 1999 and then was promoted to CFO upon retirement of
the prior CFO.
Ms. Risk serves on the Board of Directors of GRI, as a direct link to the
financial condition of the company. She and her staff oversee all the
accounting obligations of the Company. She has knowledge and experience in
business outside of the company that makes her an asset to the Board.
Sharon Westby, the corporate secretary, worked at GRI right after high school
for a couple of years as the personal secretary to the thenfounder of the company,
George Risk, who was president and CEO. Before she returned to the company in
1982, Sharon was a Clerk Steno 1 at Jackson County Welfare in Kansas City, MO,
enteredworked in medical records transcripts at the Kimball County Hospital in Kimball, NE, and
wasalso managed motels in Texas and Nebraska. She is the manager of Motel
Kimball in Kimball, NE. Her current duties at GRI include being the executive
assistantExecutive Assistant to
the President and CEO and sales administratorSales Administrator of the keyboardKeyboard and switch division.Switch
division of GRI.
Page 37
Ms. Westby continues in her position on the Board of Directors at GRI with over
26 years of experience with the company. She has seen the company through many
years of ups and downs, has great knowledge of her product line and is very
customer oriented in trying to sell her products to the "non-security use"
industry.
Jerry Andersen, director, worked in the banking industry from 1967 until his
retirement in August 2000. He was the Senior Vice President at American National
Bank in Kimball, NE.NE as well as serving several years in high positions at First
State Bank in Kimball. His position with the bank for many years was as loan
officer and for the last four years he was putheld the position of Compliance Officer.
Mr. Andersen has served many years on the Board of Directors at GRI. He brings
knowledge in chargefinancial and business matters to the table and although is
retired, he still has an active interest in the success of legal and compliance
requirements.the company.
Donna Debowey, director, worked in various retail stores and restaurants until
she started at GRI in 1968. She started on the production line, but quickly
worked her way up the ranks. She has been a production line supervisor, headProduction Line Supervisor,
Director of quality controlQuality Control and she was named the plant managerPlant Manager and senior vice presidentSenior Vice
President in 1998 and1998. She held that position until her retirement in 2003.
Ms. Debowey made the transition from employee of GRI to a member of the Board of
Directors with no hesitation after her retirement. She brings her 40+ years of
experience in the industry to the table and has a vested interest in seeing the
continued success of the company that she helped to build.
Joel H. Wiens, director, is an entrepreneur who haswith many business interests. A
few of his many jobs include: vice-chairmanHe is
Vice-Chairman and principal shareholder of FirsTier Banks Nebraska/Wyoming,
chairmanChairman of FirsTier II BanCorporation (which owns FirsTier Bank Nebraska/Wyoming), vice-chairmanVice-Chairman and principal shareholder of FirsTier Banks Colorado,
chairmanChairman of FirsTier BanCorp (which owns FirsTier Bank Colorado), chairmanChairman of
Rite-A-Way Industries (lodging and hospitality industries), real estate
investments, ranching and livestock, and insurance products.
(c)IdentificationMr. Wiens took his place on the Board of Certain Significant Employees
Ken R. Risk, Sharon WestbyDirectors when his predecessor Mike
Nelson, (who is affiliated with Mr. Wiens' financial institutions) retired from
the Board to take another position within the Banks and Stephanie Risk are also employees of the company.
(See Item 10 [b].)
(d)moved away. Joel's
knowledge and experience in business and industry span 50+ years and serves as a
valuable asset to GRI.
(f) Involvement in Certain Legal Proceedings
None.
(g) Promoters and Control Persons
None.
Page 3638
(e) Audit CommitteeCompliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires our executive officers and directors
and persons who own more than 10% of a registered class of our equity securities
to file with the SEC initial statements of beneficial ownership, reports of
changes in ownership and annual reports concerning their ownership of our common
stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required by the SEC
regulations to furnish us with copies of all Section 16(a) reports that they
file.
Based solely on our review of copies of the Section 16(a) reports filed for the
fiscal year ended April 30, 2012, we believe that all filing requirements
applicable to our officers, directors, and greater than 10% beneficial owners
were complied with except as follows:
Ken R. Risk, Chairman of the Board and President, did not timely file one report
on Form 4 and Form 5 pertaining to one late-reported transaction. The deemed
execution date of the transaction was January 20, 2010. As of the fiscal year
ended April 30, 2012, the relevant reports have not been filed.
Stephanie Risk, Chief Financial ExpertOfficer and Director, has not filed her initial
Form 3 or any subsequent Forms 4 or 5. As of the fiscal year ended April 30,
2012, the relevant reports have not been filed.
Sharon Westby, Secretary, has not filed her initial Form 3 or any subsequent
Forms 4 or 5. As of the fiscal year ended April 30, 2012, the relevant reports
have not been filed.
Donna Debowey, Director, has not filed her initial Form 3 or any subsequent
Forms 4 or 5. As of the fiscal year ended April 30, 2012, the relevant reports
have not been filed.
Code of Ethics and Code of Business Conduct
The Companycompany does not have a written code of ethics at this time. The company is
a small business and employees know that the President of the company must
approve all material business. The company also has nochecks and balances to make
sure that there is not any fraud or illegal activities taking place.
Corporate Governance
Nominating and Compensation Committees
We do not have standing audit, nominating or compensation committee,committees, or any committeecommittees
performing similar functions. Our Board of Directors believes that it is not
necessary to have a standing compensation committee at this time because our
Board of Directors adequately performs the functions of such committee.
Page 39
Our Board of Directors also is of the view that it is appropriate for us not to
have a standing nominating committee because our Board of Directors has
performed and will perform adequately the functions of a nominating committee.
Our Board of Directors has not adopted a charter for the nomination committee.
There have not been any defined policy or procedure requirements for
stock-holders to submit recommendations or nomination for directors. Our Board
of Directors does not believe that a defined policy with regard to the
consideration of candidates recommended by stockholders is necessary at this
time because we believe that, given the early stages of our development, a
specific nominating policy would be premature and of little assistance until our
business operations are at a more advanced level.
Audit Committee
We do not have a standing audit committee at the present time. Our Board of
Directors has determined that we do not have a board member that qualifies as an
"audit committee financial expert" as defined in Item 401(h) of Regulation S-K,
nor do we have a board member that qualifies as "independent" as the term is
used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of
1934, as amended.
Other Committees
All proceedings of our Board of Directors for the year ended April 30, 2012 were
conducted by resolutions consented to in writing by our directors and filed with
the minutes of the proceedings of the Board of Directors. Our Company currently
does not have any committees.
Page 40
Item 11 Executive Compensation
The following table sets forth certain information regarding the compensation
paid to or accrued by the company for the chief executive officer for services
rendered in all capacities during each of the company's fiscal years ended
April 30, 20092012 and 20082011 (no other officer had compensation over $100,000):
Change
in Pension
Value and
Non-qualified
Name and Non-Equity Deferred All Other
principal Stock Option Incentive Plan Compensation Compen-
position Year Salary Bonus Awards Awards Compensation Earnings sation Total
______ ____ ______ _____ _____ ____ ________ ________ ________ ________
Ken A. Risk, 2009 $74,000 $89,0002012 $83,000 $102,000 -- -- -- -- $2,000 $165,000$187,000
Chief
Executive 2008 $62,000 $115,0002011 $80,000 $ 84,000 -- -- -- -- $3,000 $180,000$2,000 $166,000
Officer
Ken R. Risk does not have an employment contract with the company. He receives
a base salary and bonus/commission based on a percentage of sales for the year.
Other compensation consists of a yearly discretionary match by the company,
which includes the unused medical reimbursement funds from the prior year, and
the contribution match made by the company into the 401K plan. The match
consists of 25% of the deferral that is made by the employee, up to 4% of their
earnings.
Page 3741
Item 12 Security Ownership of Certain Beneficial Owners and Management
Below is certain information concerning persons who are known by the company to
own beneficially more than 5 percent of any class of the company's voting shares
on April 30, 2009.2012.
Title Name and Address Amount of Percent
of of Beneficial Beneficial of
Class Ownership Ownership Class
Class Ken R. Risk 2,947,490 56.81%2,945,936 58.42%
A Kimball, NE
69145
None of the directors or officers has the right to acquire any additional
shares either directly or indirectly through any contracts or arrangements
with other shareholders.
Item 13 Certain Relationships and Related Party Transactions
During each of three years ended April 30, 2009, 2008,2012, 2011, and 2007,2010, the company
executed transactions with related entities and individuals. Each of the
transactions was in terms at least as favorable as could be obtained from
unrelated third parties.
Related Party 2009 2008 20072012 2011 2010
Airplane Lease
Ken R. Risk, President and CEO $ 27,000 $27,000$ 27,000 $ 27,000
Building and Warehouse
Leases/Rentals
Eileen M. Risk,
Mother of CEO $ 3,400 $ 3,400 $ 3,400
Eileen M. Risk,
Mother of CEO $ 2,400 $ 3,600 $ 3,600
Eileen M. Risk,
Mother of CEO $ 0 $ 9,210 $ 18,420
Ken R. Risk, President and CEO $ 18,420 $ 9,21018,420 $ 018,420
Bank Balances
Joel Wiens, Director $4,616,381 $4,071,929 $4,610,811$4,818,466 $4,648,365 $3,353,855
Interest Income
Joel Wiens, Director $ 99,8263,150 $ 192,8808,373 $ 139,76331,272
Page 38
Page 3842
Item 14 Principal Accountant Fees and Services
1)Audit Fees
For each of the last two fiscal years the company incurred aggregate fees and
expenses for professional services rendered by our principal accountantaccountants for the
audit of our annual financial statements and review of our financial statements
for Form 10-QSB.10-Q. The amounts are listed below:
FYE 2009 $32,5002012 $37,000 Haynie & Company
FYE 2008 $30,5002011 $35,700 Haynie & Company
2) Audit-Related Fees
The company incurred aggregate fees and expenses for professional services
rendered by our principal accountants for the audit of the company's employee
benefit plan. The amounts are listed below:
FYE 20092012 $ 5,2005,800 Haynie & Company
FYE 20082011 $ 4,5005,800 Haynie & Company
3) Tax Fees
The company incurred aggregate fees or expenses for professional services
rendered by theour principal accountants for tax compliance, tax advice, and
tax planning for the last two fiscal year ending 2008. The company did not incur any of the
above mentioned fees for fiscal year end 2009. These services are included in
our audit fees and are not billed separately.years. The amounts are listed below:
FYE 20092012 $ 01,500 Haynie & Company
FYE 20082011 $ 1,0001,200 Haynie & Company
4)All Other Fees
There were no other fees incurred during each of the last two fiscal years.
5) The Board of Directors, considered whether, and determined that,
the auditor's provisions of non-audit services were compatible with
maintaining the auditor's independence. All the services described above
were approved by the Board of Directors pursuant to its policies and
procedures.
Page 3943
Part IV
Item 15 Exhibits and Reports on Form 8-K
3.(1).a Articles of Incorporation - Filed as Exhibit 5 to the
Registrant's Form 10-K for the fiscal year ended
April 10, 1970, and incorporated by reference herein
3.(i).b Certificate of Amendment to the Articles of
Incorporation of the Registrant - Filed as Exhibit 1.2
to the Registrant's Form 10-K for the fiscal year
ended April 30, 1971, and incorporated by reference
herein
3.(ii).c By-laws - Filed as Exhibit 1.3 to the Registrant's Form
10-K for the fiscal year ended April 10, 1971, and
incorporated by reference herein
10.1 Vendor agreement dated as of February 16, 2011 between Honeywell
International, Inc., acting through the ADI business of its Security
Group ("ADI") and George Risk Industries, Inc. - filed herewith (see
footnote below)
31.1 Certification pursuant to Rule 13a-14(a) of the Chief Executive Officer
31.2 Certification pursuant to Rule 13a-14(a) of the Chief Financial Officer
32.1 Certification pursuant to 18 U.S.C. 1350 of the Chief Executive Officer
32.2 Certification pursuant to 18 U.S.C. 1350 of the Chief Financial Officer
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 under the Securities Exchange Act of
1934.
Page 4044
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
/s/ Ken R. Risk Date
Ken R. Risk, President and Chairman of the Board July 29, 200927, 2012
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
/s/ Ken R. Risk President and Date
Ken R. Risk Chairman of the Board July 29, 200927, 2012
/s/ Stephanie M. Risk Chief Financial Officer Date
Stephanie M. Risk and Controller July 29, 200927, 2012
/s/ Jerry Andersen Director Date
Jerry Andersen July 29, 200927, 2012
/s/ Joel H. Wiens Director Date
Joel H. Wiens July 29, 200927, 2012
/s/ Donna Debowey Director Date
Donna Debowey July 29, 200927, 2012
Page 4145