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, 2010
[ ] 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.
____________________________
(Exact Name of registrant 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 [ ]
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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.
Yes [ ] No [ X ]
The aggregate market value, as of July 27, 2010, 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 $8,999,456.
The number of outstanding shares of the common stock as of July 27, 2010 was
5,063,455.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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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 87 percent of net
revenues and are sold through distributors and private board customers.
The security segment has approximately 4,000 customers. One of the distributors
accounts for approximately 43 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.
The keyboard segment has approximately 950 customers. Keyboard products are sold
to original equipment manufacturers to their specifications and to distributors
of off-the-shelf keyboards of proprietary design.
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Competition
The company has intense competition in the keyboard and burglar alarm lines.
The burglar alarm segment has five or six 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 24 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 symbal
RSKIA, is currently quoted on the OTC Bulletin Board by eight market makers.
Stock Prices and Dividends Information
2010 Fiscal Year
High Low
May 1-July 31 5.00 3.45
August 1-October 31 5.05 4.01
November 1-January 31 4.75 4.10
February 1-April 30 5.00 4.25
2009 Fiscal Year
High Low
May 1-July 31 7.00 5.00
August 1-October 31 6.00 4.25
November 1-January 31 5.23 2.91
February 1-April 30 3.95 3.25
<page>
A dividend of $0.17 per common share was declared on September 30, 2009.
This was the only dividend declared and paid during the 2010 fiscal year.
As for fiscal year 2009, a dividend of $0.17 per common share was declared
on September 30, 2008.
The number of holders of record of the company's Class A Common Stock
as of April 30, 2010, was approximately 1,300.
Item 6 Selected Financial Data
As a smaller reporting company, we are not required to respond to this item.
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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 5.0% of revenues for fiscal year 2010 and 9.1% for
2009.
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.
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 decreased $1,030,000 during the year ended April 30, 2010 while it
increased $599,000 during the year ended April 30, 2009. Other cash flow changes
are as follows. Accounts receivable increased $5,000 during the current year as
compared to a $299,000 decrease for last year. The slight increase in cash flow
for accounts receivable is a reflection that sales are trending to be on the
rise. At April 30, 2010, 80.05% of the receivables were considered current
(less than 45 days) and 6.03% of the total were over 90 days past due. For
comparison, 83.5% of the receivables were current and 6.25% were past 90 days at
April 30, 2009. Inventories decreased $732,000 for the current year as compared
to a $336,000 decrease for the same period last year. Management has continued
the trend of decreasing its purchases of raw materials in the current fiscal
year to correspond to the decrease in sales. For the year ended April 30, 2010,
prepaid expenses increased $62,000, and there was decrease of $22,000 for the
corresponding period last year. The main reason for the increase in prepaid
expenses for the current fiscal year is that the company has prepaid for raw
materials that are coming from overseas. For the last two fiscal years, there
have been income tax overpayments. There was a $79,000 increase in cash towards
income tax overpayment for the year ending April 30, 2010. And there was a
$334,000 decrease in cash towards income tax overpayment for the year ending
April 30, 2009. Management paid income tax estimates based on what taxable
income was estimated to be. And since there is an increase in taxable income,
one can expect an increase in income taxes paid.
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For the year ended April 30, 2010, accounts payable increased $22,000 as
compared to a $32,000 decrease for the same period the year before. The
change in cash in regards to accounts payable can vary. It really depends on the
time of the month the invoices are due, since the company pays all its invoices
within the terms. Accrued expenses decreased by $108,000 for the year ended
April 30, 2010, and these expenses also decreased $15,000 for the corresponding
year ended April 30, 2009.
Investing
As for our investment activities, $98,000 was spent on purchases of property and
equipment during the current fiscal year and $143,000 was spent during the year
ended April 30, 2009. 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, 2010
was $2,748,000 and $1,296,000 was spent for the corresponding period last year.
In addition, proceeds from the sale of marketable securities for the year ended
April 30, 2010 were $747,000 and $260,000 for the same period last year. We use
"money manager" accounts for most stock transactions. By doing this, the
Company gives an independent third party firm, who are experts in this field,
permission to buy and sell stocks at will. The Company pays a quarterly service
fee based on the value of the investments. There was some reorganizing of Money
Manager accounts in the second quarter that will hopefully be beneficial to the
Company. Also, $2 million was moved from a money market account into several
certificates of deposits in order to be covered more fully by FDIC insurance.
Unfortunately, all of these CDs have matured as of the date of this report and
management has not found a worthy place to invest this money, so it is sitting
in cash at this time. Furthermore, the Company continues to purchase back its
common stock when the opportunity arises. For the year ended April 30, 2010,
the Company purchased $263,000 worth of treasury stock and $171,000 worth was
bought back for the year ended April 30, 2009. We have been actively searching
for stockholders that have been "lost" over the years. The payment of dividends
over the last five fiscal years has also prompted many stockholders and/or their
relatives and descendants to sell back their stock to the Company.
Financing
Cash flows from financing activities were $780,000 for the year ended April 30,
2010, which $785,000 of that amount was for dividends payments. The company
declared a dividend of $0.17 per share of common stock on September 30, 2009
and these dividends were paid by October 31, 2009. Net cash used in financing
activities was $802,000 for the year ended April 30, 2009. A dividend of $0.17
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, 2010, with a net profit of 19.72%
net of sales. Net sales were at $7,821,000, down 11.35% over the previous year.
Additionally, net income for the year ended April 30, 2009 was $1,542,000, up
198.84% from the prior year.
Although sales were down for the fiscal year ending April 30, 2010 we expect
sales to stay steady and increase for the fiscal year ending April 30, 2011.
The company's main division of products that are sold (security switches)
are directly tied to the housing industry. And since the housing industry has
been performing poorly, the company's sales have decreased 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 2011. 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.
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The costs of goods sold expenses stayed very consistent between this year and
last year. For the year ended April 30, 2010, the cost of goods sold percentage
was at 55.29% of net sales. This is an increase of 2.63% when comparing to
fiscal year end 2009. 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.
At April 30, 2010, working capital decreased by 5.7% 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 increased to 37.758 for the year ended
April 30, 2010 from 32.878 for the year ended April 30, 2009. Marketable
securities have increased in the current year, while current liabilities
increase slightly from year to year. At April 30, 2010, the biggest long-term
liability on the books is deferred income taxes of $75,000.
New product development
The new HD-1 Hold-Up Switch is now in production. The HD-1 requires no key to
reset, is jumper selectable for latching or non-latching. It is tamper resistant
and can be incorporated into an end-of-line resistor. Engineering is currently
working with our international representative on a modified version for the
European market.
Mold design is currently being completed on a miniature surface mount contact
switch with terminal blocks. Customers have been requesting this design for
some time now. This switch will be the company's smallest surface mount
terminal switch.
The Company has added to its top selling plastic molded wire covers line
(EZ Duct Raceway). The new Quarter Round, as its name implies, has rounded
edges and is esthetically pleasing along wall lines and base boards. This will
be packaged in six, 6' sticks per bag. The Quarter Round connecting pieces,
which are for splices and corners, will be added to the product line soon.
Engineering continues work on the wireless swimming pool alarm design, along
with other wireless items, a garage door monitor, a pump guard watering station
and a high security contact 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 principals 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.
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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.
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 the Generally Accepted Accounting Principles in the United
States (US GAAP), the Company evaluates all marketable securities for other-
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 impairment 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.
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-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.
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Segment Reporting and Related Information-The Company designates the internal
organization that is used by management for allocating resources and assessing
performance as the source of the Company's reportable segments. US GAAP also
requires disclosures about products and services, geographic area and major
customers.
Related Party Transactions - The Company 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.The total lease
expense for this arrangement was $18,420 for the fiscal years ended April 30,
2010 and 2009.
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, 2010 and 2009, 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 $3,354,000 for the year ended April 30, 2010 and $4,616,000 for the
year ended April 30, 2009. The Company also received interest income from
FirsTier Bank in the amount of $31,000 for the year ended April 30, 2010 and
$100,000 for the year ended April 30, 2009.
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Item 8 Financial Statements
Index to Financial Statements
George Risk Industries, Inc.
Page
Independent Auditor's Report 12
Balance Sheets April 30, 2010 and 2009 13
Statements of Income
For the Years Ended April 30, 2010 and 2009 15
Statements of Comprehensive Income
For the Years Ended April 30, 2010 and 2009 16
Statement of Changes in Stockholders' Equity
For the Years Ended April 30, 2010 and 2009 17
Statements of Cash Flows
For the Years Ended April 30, 2010 and 2009 19
Notes to Financial Statements 21
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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, 2010 and 2009, and the related statements of income,
comprehensive income, stockholders' equity, and cash flows for the two
years then ended. 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 audits 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, 2010 and 2009, and the results of their
operations and their cash flows for the two years then ended, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Haynie & Company
Littleton, Colorado
July 28, 2010
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George Risk Industries, Inc.
Balance Sheets
April 30, 2010 and 2009
2010 2009
<c>
ASSETS
Current Assets
Cash and cash equivalents $ 3,641,000 $ 4,671,000
Investments and securities 19,607,000 15,691,000
Accounts receivable:
Trade, net of $19,700 and $7,492 doubtful
account allowance for 2010 and 2009 1,295,000 1,272,000
Other 0 1,000
Note receivable, current 11,000 3,000
Income tax overpayment 216,000 137,000
Inventories 1,968,000 2,741,000
Prepaid expenses 142,000 81,000
Deferred current income taxes 266,000 1,127,000
____________ ___________
Total Current Assets $ 27,146,000 25,724,000
Property and Equipment, net, at cost 733,000 802,000
Other Assets
Investment in Limited Land Partnership,
at cost 200,000 200,000
Projects in process 112,000 68,000
Long-term receivable 0 40,000
Note receivable 7,000 9,000
____________ ____________
Total Other Assets $ 319,000 $ 317,000
TOTAL ASSETS $ 28,198,000 $ 26,843,000
____________ ___________
____________ ___________
<FN>
See accompanying notes to financial statements.
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George Risk Industries, Inc.
Balance Sheets
As of April 30, 2010 and 2009
Liabilities and Stockholders' Equity
2010 2009
Current Liabilities
Accounts payable, trade $ 57,000 $ 35,000
Dividends payable 395,000 317,000
Accrued expenses:
Payroll and related expenses 198,000 306,000
__________ ___________
Total Current Liabilities $ 650,000 $ 658,000
Long-Term Liabilities
Aircraft ownership deposit payable 5,000 0
Deferred income taxes 75,000 86,000
___________ ___________
Total Long-Term Liabilities $ 80,000 $ 86,000
Stockholders' Equity
Convertible preferred stock, 1,000,000 shares
authorized, Series 1--noncumulative, $20
stated value, 25,000 shares authorized, 4,100
issued and outstanding 99,000 99,000
Common stock, Class A, $.10 par value, 10,000,000
shares authorized, 8,502,832 shares issued and
outstanding 850,000 850,000
Additional paid-in capital 1,736,000 1,736,000
Accumulated other comprehensive income 13,000 (940,000)
Retained earnings 28,102,000 27,423,000
Less: treasury stock,3,438,352 and
3,376,548 shares, at cost (3,332,000) (3,069,000)
___________ ___________
Total Stockholders' Equity $27,468,000 $26,099,000
___________ ___________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,198,000 $26,843,000
___________ ___________
___________ ___________
<FN>
See accompanying notes to financial statements.
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George Risk Industries, Inc.
Income Statements
For the Years Ended April 30, 2010 and 2009
Year Year
Ended Ended
Apr 30,2010 Apr 30, 2009
___________ ____________
Net Sales $ 7,821,000 $ 8,822,000
Less: Cost of Goods Sold (4,324,000) (4,646,000)
___________ ___________
Gross Profit $ 3,497,000 $ 4,176,000
Operating Expenses:
General and Administrative 719,000 748,000
Sales 1,575,000 1,813,000
Engineering 63,000 79,000
Rent Paid to Related Parties 46,000 51,000
___________ ___________
Total Operating Expenses $ 2,403,000 $ 2,691,000
Income From Operations 1,094,000 1,485,000
Other Income (Expense)
Other Income 142,000 58,000
Interest expense 0 (2,000)
Dividend and Interest Income 712,000 768,000
Gain (Loss) on Investments 277,000 (1,374,000)
Gain on Sale of Assets 7,000 0
___________ ___________
$ 1,138,000 $ (550,000)
Income Before Provision for
Income Taxes 2,232,000 935,000
Provision for Income Taxes
Current Expense 525,000 661,000
Deferred tax (benefit) expense 165,000 (242,000)
___________ ___________
Total Income Tax Expense 690,000 419,000
Net Income $ 1,542,000 $ 516,000
Basic and Diluted Earnings Per Share
of Common Stock $ 0.30 $ 0.10
Weighted Average Number of
Common Shares Outstanding 5,080,387 5,167,806
<FN>
See accompanying notes to financial statements.
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George Risk Industries, Inc.
Statements of Comprehensive Income
For the Years Ended April 30, 2010 and 2009
Year Year
Ended Ended
Apr 30,2010 Apr 30, 2009
___________ ____________
Net Income $1,542,000 $ 516,000
__________ ___________
Other Comprehensive Income, Net of Tax
Unrealized gain (loss) on securities:
Unrealized holding gains (losses)
arising during period 1,906,000 (2,740,000)
Less: reclassification adjustment for
(gains) losses included in net income (268,000) 1,239,000
Income tax expense related to other
comprehensive income (685,000) 627,000
__________ __________
Other Comprehensive Income 953,000 (874,000)
Comprehensive Income (Loss) $2,495,000 $ (358,000)
__________ __________
__________ __________
<FN>
See accompanying notes to financial statements.
Page 16
<page>
George Risk Industries, Inc.
Statement of Changes in Stockholders' Equity
For the Years Ended April 30, 2010 and 2009
Common Stock
Preferred Stock Class A
________________ ____________
Shares Amount Shares Amount
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 of tax effect - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2009 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 of tax effect - - - -
Net Income - - - -
________ ________ _________ ________
Balances, April 30,
2010 4,100 $ 99,000 8,502,832 $850,000
________ ________ _________ ________
________ ________ _________ ________
<FN>
See accompanying notes to financial statements.
Page 17
<page>
George Risk Industries, Inc.
Statement of Changes in Stockholders' Equity
For the Years Ended April 30, 2010 and 2009
Accumulated
Treasury Stock Other
Paid-In (Common Class A) Comprehensive Retained
______________
Capital Shares Amount Income Earnings Total
$1,736,000 3,326,551 $(2,898,000) $ (67,000) $27,787,000 $27,507,000
- 49,997 (171,000) - - (171,000)
- - - - (880,000) (880,000)
- - - (873,000) - (873,000)
- - - - 516,000 516,000
__________ _________ ___________ ___________ ___________ ___________
1,736,000 3,376,548 (3,069,000) (940,000) 27,423,000 26,099,000
__________ _________ ___________ ___________ ___________ ___________
- 61,804 (263,000) - - (263,000)
- - - - (863,000) (863,000)
- - - 953,000 - 953,000
- - - - 1,542,000 1,542,000
__________ _________ ___________ ___________ ___________ ___________
$1,736,000 3,483,352 $(3,332,000) $ 13,000 $28,102,000 $27,468,000
__________ _________ ___________ ___________ ___________ ___________
__________ _________ ___________ ___________ ___________ ___________
See accompanying notes to financial statements.
Page 18
<page>
George Risk Industries, Inc.
Statements of Cash Flows
Year Year
Ended Ended
Apr 30,2010 Apr 30, 2009
___________ ____________
Cash Flows from Operating Activities:
Net income $1,542,000 $ 516,000
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 167,000 173,000
(Gain) loss on sale of investments (277,000) 1,376,000
(Gain) loss on sale of property and
equipment (7,000) 0
Bad debt expense 22,000 (43,000)
Reserve for obsolete inventory 41,000 24,000
Deferred income taxes 165,000 (242,000)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (5,000) 299,000
Inventories 732,000 336,000
Prepaid expenses (62,000) 22,000
Employee receivables 1,000 0
Income tax overpayment (79,000) 334,000
Increase (decrease) in:
Accounts payable 22,000 (32,000)
Accrued expenses (108,000) (15,000)
__________ __________
Net cash provided by (used in)
operating activities $2,154,000 $ 2,748,000
__________ __________
Cash Flows From Investing Activities:
Other assets manufactured and purchased (44,000) 0
(Purchase) of property and equipment (98,000) (143,000)
Proceeds from sale of marketable
securities 747,000 260,000
(Purchase) of marketable securities (2,748,000) (1,296,000)
(Loans) made to employees (5,000) 0
Collections of loans to employees 7,000 3,000
(Purchase) of treasury stock (263,000) (171,000)
__________ __________
Net cash provided by (used in)
investing activities ($2,404,000) ($1,347,000)
__________ __________
Cash Flows From Financing Activities:
Increase in long-term debt 5,000 0
Dividends paid (785,000) (802,000)
__________ __________
Net cash provided by (used in)
financing activities ($780,000) ($802,000)
__________ __________
Net Increase (Decrease) in Cash and
Cash Equivalents $(1,030,000) $ 599,000
__________ __________
__________ __________
Cash and Cash Equivalents, beginning
of period $ 4,671,000 $4,072,000
Cash and Cash Equivalents,
end of period $ 3,641,000 $4,671,000
__________ __________
__________ __________
Supplemental Disclosure for Cash
Flow Information:
Cash Payments for:
Income taxes paid $ 639,000 $ 325,000
Interest paid $ 0 $ 2,000
Cash receipts for income taxes $ 38,000 $ 0
<FN>
See accompanying notes to financial statements
Page 19
<page>
George Risk Industries, Inc.
Notes to Financial Statements
April 30, 2010
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 $19,700 for the year ended
April 30, 2010 and $7,492 for the year ended April 30, 2009. Bad debt
expense was $19,135 and $380 for April 30, 2010 and 2009, respectively.
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.
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<page>
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:
Useful
Classification Life Cost
in Years
Dies, jigs, and molds 3-7 $1,198,000
Machinery and equipment 5-10 1,114,000
Furniture and fixtures 5-10 147,000
Leasehold improvements 5-32 174,000
Buildings 20 659,000
Automotive and aircraft 3-5 389,000
Software 2-5 129,000
Land N/A 13,000
__________
Total 3,823,000
Accumulated depreciation (3,090,000)
__________
Net $ 733,000
__________
__________
Depreciation expense of $167,000 and $173,000 were charged to operations
for the years ended April 30 2010 and 2009, 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 $334,000 and $320,000
for the years ended April 30 2010 and 2009, respectively.
Income Taxes-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
<page>
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-US GAAP requires disclosure of total non-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-
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 designates the internal
organization that is used by management for allocating resources and assessing
performance as the source of the Company's reportable segments. US GAAP also
requires disclosures about products and services, geographic area and major
customers. At April 30, 2010, the Company operated in two segments organized
by security line products and all other products. See Note 9 for further
segment information disclosures.
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<page>
Reclassifications-Certain reclassifications have been made to conform to the
current year presentation. The total net income and equity are unchanged due
to those reclassifications.
Recently Issued Accounting Pronouncements-In June 2009, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards Codification
("ASC") 105, "Generally Accepted Accounting Principles." ASC 105 establishes
the FASB ASC as the single source of authoritative nongovernmental U.S. GAAP.
The standard is effective for interim and annual periods ending after
September 15, 2009. We adopted the provisions of the standard on September 30,
2009. The adoption of the standard has changed how we reference various
elements of GAAP when preparing our financial statement disclosures, but did
not have an impact on George Risk Industries' financial position, results of
operations or cash flows.
2. INVENTORIES
Inventories at April 30, 2010 consisted of the following:
Raw materials $1,335,000
Work in process 521,000
Finished goods 282,000
__________
2,138,000
__________
Less: allowance for obsolete inventory (170,000)
__________
Totals $1,968,000
__________
__________
Page 24
<page>
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 2010 and June
2042. The Company uses the average cost method to determine the cost of
securities sold and the amount reclassified out of accumulated other
comprehensive income into earnings. Unrealized gains and losses are excluded
from earnings and reported separately as a component of stockholders' equity.
Dividend and interest income are reported as earned.
As of April 30, 2010, investments available-for-sale consisted of the following:
Gross Gross
Cost Unrealized Unrealized Fair
Basis Gains Losses Value
Municipal bonds $ 9,336,000 $ 119,000 $ (119,000) $ 9,336,000
Federal agency mortgage
backed securities $ 125,000 $ 3,000 $ 0 $ 128,000
Corporate bonds $ 180,000 $ 6,000 $ 0 $ 186,000
Equity securities $ 6,949,000 $ 424,000 $ (420,000) $ 6,953,000
Money Markets and CDs $ 2,996,000 $ 8,000 $ 0 $ 3,004,000
Total $19,586,000 $ 560,000 $ (539,000) $19,607,000
The Company evaluates all marketable securities for other-than temporary
declines in fair value, which are defined as when the cost basis exceeds the
fair value for approximately one year. The Company also 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 $108,000 for the year ended April 30,
2010 and $782,000 for the year ended April 30, 2009.
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, 2010.
Page 25
<page>
Less than 12 months 12 months or greater Total
Description Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss
Municipal bonds $1,368,000 $ (20,000) $1,917,000 $ (99,000) $3,285,000 $ (119,000)
Equity securities $1,806,000 $ (105,000) $2,012,000 $ (317,000) $3,818,000 $ (422,000)
Total $3,174,000 $ (125,000) $3,929,000 $ (416,000) $7,103,000 $ (541,000)
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, 2010.
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, 2010.
Page 26
<page>
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 $11,000 were paid during
the fiscal year ending April 30, 2010 and approximately $12,000 of matching
contributions were paid during the fiscal year April 30, 2009. Discretionary
contributions of approximately $3,700 and $6,600 were paid during 2010 and
2009, respectively.
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, 2010.
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 27
<page>
During the fiscal year ended April 30, 2010, the Company purchased 61,804
shares of Class A common stock. Of those shares 43,100 were purchased by the
Company actively seeking shares on the open market. A total of $188,230 was
spent acquiring shares on the open market.
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, 2010
___________________________________
Income Shares Per-Share
(Numerator) (Denominator) Amount
<s> <c> <c>
Net Income $1,542,000
__________
__________
Basic EPS $1,542,000 5,080,387 $.303
Effect of dilutive
Convertible Preferred
Stock - 20,500 (.001)
__________ _________ _____
Diluted EPS $1,542,000 5,100,887 $.302
__________ _________ _____
__________ _________ _____
April 30, 2009
___________________________________
Income Shares Per-Share
(Numerator) (Denominator) Amount
<s> <c> <c>
Net Income $ 516,000
__________
__________
Basic EPS $ 516,000 5,167,806 $.100
Effect of dilutive
Convertible Preferred
Stock - 20,500 (.001)
__________ _________ _____
Diluted EPS $ 516,000 5,188,306 $.099
__________ _________ _____
__________ _________ _____
Page 28
<page>
7. COMMITMENTS, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS
The Company leases a building from Ken and Bonnie Risk. Ken Risk is the
Chairman of the Board and the President and CEO of the company. Bonnie Risk is
Ken's wife, 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. The total lease expense
for this arrangement was $18,420 for the fiscal years ended April 30, 2010 and
2009.
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, 2010 and 2009, 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 $3,354,000 for the year ended April 30, 2010 and $4,616,000 for the
year ended April 30, 2009. The Company also received interest income from
FirstTier Bank in the amount of $31,000 for the year ended April 30, 2010 and
$100,000 for the year ended April 30,2009.
Page 29
<page>
8. INCOME TAXES
Reconciliation of income taxes with Federal and State taxable income:
2010 2009
____________ ____________
<c> <c>
Income before income taxes $2,232,000 $ 935,000
State income tax deduction (102,000) (126,000)
Capital loss carryforwards
(utilized) accumulated (360,000) 0
Interest and dividend income (545,000) (537,000)
Domestic production activities
deduction (104,000) (98,000)
Nondeductible expenses
and timing differences 116,000 1,366,000
__________ __________
Taxable income $1,237,000 $1,540,000
__________ __________
__________ __________
The following schedule reconciles the provision for income taxes
to the amount computed by applying the statutory rate to income
before income taxes:
<c> <c>
Income before taxes at statutory
rate $ 933,000 $ 391,000
Increase (decrease)income
taxes resulting from:
State income taxes (42,000) (53,000)
Interest and dividend income (228,000) (225,000)
Domestic production activities (43,000) (41,000)
Deferred taxes 165,000 (242,000)
Other temporary and
permanent differences (95,000) 589,000
__________ __________
Income tax expense $ 690,000 $ 419,000
__________ __________
__________ __________
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, 2010 and 2009:
<c> <c>
Deferred tax current assets:
Capital loss carryforward $ 245,000 $ 420,000
Accrued vacation 30,000 31,000
Accumulated unrealized (gain)/loss
on investments (9,000) 676,000
__________ __________
Net deferred tax assets $ 266,000 $1,127,000
__________ __________
__________ __________
Deferred tax liabilities:
Depreciation (75,000) (86,000)
__________ __________
Net deferred tax liability $ (75,000) $ (86,000)
__________ __________
__________ __________
Page 30
<page>
9. BUSINESS SEGMENTS
The following is financial information relating to industry segments:
April 30,
2010 2009
Net revenue:
Security alarm products $ 6,922,000 $ 7,926,000
Other products 899,000 896,000
___________ ___________
Total net revenue $ 7,821,000 $ 8,822,000
___________ ___________
___________ ___________
Income from operations:
Security alarm products $ 968,000 $ 1,334,000
Other products 126,000 151,000
___________ __________
Total income from operations $ 1,094,000 $ 1,485,000
___________ ___________
___________ ___________
Identifiable assets:
Security alarm products $ 2,825,000 $ 3,435,000
Other products 1,029,000 1,185,000
Corporate general 24,344,000 22,223,000
___________ ___________
Total assets $28,198,000 $26,843,000
___________ ___________
___________ ___________
Depreciation and amortization:
Security alarm products $ 25,000 $ 28,000
Other products 112,000 113,000
Corporate general 30,000 32,000
___________ ___________
Total depreciation and
amortization $ 167,000 $ 173,000
___________ ___________
___________ ___________
Capital expenditures:
Security alarm products $ 2,000 $ 3,000
Other products 76,000 108,000
Corporate general 20,000 32,000
____________ ___________
Total capital expenditures $ 98,000 $ 143,000
____________ ___________
____________ ___________
Page 31
<page>
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, 2010
and 2009, the Company's had uninsured balances of $3,104,000 and $4,366,000,
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 44%
of total sales for the year ended April 30, 2010 and 42% for the year ended
April 30, 2009. This distributor accounted for 42% and 48% of accounts
receivable at April 30, 2010 and 2009, respectively.
Security switch sales made up 87% of the total sales for the fiscal year
ended April 30, 2010 and 84% for the year ended April 30, 2009.
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.
SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to
unobservable inputs (level 3 measurements). The levels of the fair value
hierarchy under SFAS No. 157 are described below:
Level 1 Valuation is based upon quoted prices for identical instruments traded
in active markets.
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<page>
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, 2010, 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
inputs to the valuation are generally classified as Level 1 given the active
market for these securities, however, if an active market does not exist, the
inputs are recorded at a lower level in the fair value hierarchy.
Fair Value Hierarchy
The following tables set forth our assets and liabilities measured at fair value
on a recurring basis and a non-recurring basis by level within the fair value
hierarchy. As required by SFAS No. 157, assets and liabilities are classified
in their entirety based on the lowest level of input that is significant to the
fair value measurement.
Assets Measured at Fair Value on a Recurring Basis
As of April 30, 2010
Level 1 Level 2 Level 3 Total
Assets:
Marketable Securities $19,607,000 - - $19,607,000
Total fair value of assets
measured on a recurring basis $19,607,000 - - $19,607,000
Page 33
<page>
Item 9 Disagreements on Accounting and Financial Disclosures
There were no disagreements with accountants on accounting and financial
disclosure.
Item 9A(T) 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, 2010,
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, 2010 our internal control over financial reporting is
effective.
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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 rules of
the SEC that permit the Corporation to provide only the management's report in
this annual report.
Item 9B Other Information
None.
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Part III
Item 10 Directors and Executive Officers of the Registrant
(a) 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 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 62 April 25, 1977
Stephanie Risk Chief Financial Officer/Director 38 August 8, 1999
Sharon Westby Secretary/Treasurer 58 June 16, 2006
Jerry Andersen Director, retired 79 August 28, 1978
Donna Debowey Director, retired GRI plant manager 72 July 12, 2005
Joel H. Wiens Vice-Chairman, FirsTier Banks 80 September 6, 2007
The following director compensation table is furnished with respect to each
director that served during the year ended April 30, 2010:
Name Director's Stock Option Non-equity Non-qualified
Fees Paid Awards Awards incentive deferred
plan compensation
compensation earnings Total
<c>
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.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.
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(b) 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 helping 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.
Stephanie Risk, chief financial officer and controller, has over fifteen years
job experience in the accounting field. 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.
Sharon Westby, the corporate secretary, worked at GRI right after high school
for a couple of years as the personal secretary to the then 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, entered medical records transcripts
at the Kimball County Hospital in Kimball, NE, and was the manager of Motel
Kimball in Kimball, NE. Her current duties at GRI include being the executive
assistant to the President and CEO and sales administrator of the keyboard and
switch division.
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. His position with the bank for many years was as loan
officer and for the last four years he was put in charge of legal and compliance
requirements.
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, head
of quality control and she was named the plant manager and senior vice president
in 1998 and held that position until her retirement in 2003.
Joel H. Wiens, director, is an entrepreneur who has many business interests. A
few of his many jobs include: vice-chairman and principal shareholder of
FirsTier Banks Nebraska/Wyoming, chairman of FirsTier II BanCorporation (which
owns FirsTier Bank Nebraska/Wyoming), vice-chairman and principal shareholder
of FirsTier Banks Colorado, chairman of FirsTier BanCorp (which owns FirsTier
Bank Colorado), chairman of Rite-A-Way Industries (lodging and hospitality
industries), real estate investments, ranching and livestock, and insurance
products.
(c)Identification of Certain Significant Employees
Ken R. Risk, Sharon Westby and Stephanie Risk are also employees of the company.
(See Item 10 [b].)
(d) Involvement in Certain Legal Proceedings
None.
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(e) Audit Committee Financial Expert
The Company has no standing audit, nominating, or compensation committee, or
any committee performing similar functions.
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, 2010 and 2009 (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
______ ____ ______ _____ _____ ____ ________ ________ ________ ________
<c> <c> <c> <c> <c> <c>
Ken A. Risk, 2010 $76,000 $78,000 -- -- -- -- $2,000 $156,000
Chief
Executive 2009 $74,000 $89,000 -- -- -- -- $2,000 $165,000
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.
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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, 2010.
Title Name and Address Amount of Percent
of of Beneficial Beneficial of
Class Ownership Ownership Class
Class Ken R. Risk 2,945,936 58.17%
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, 2010, 2009, and 2008, 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.
<s> <c> <c> <c>
Related Party 2010 2009 2008
Airplane Lease
Ken R. Risk, President and CEO $ 27,000 $ 27,000 $ 27,000
Building and Warehouse
Leases/Rentals
Eileen M. Risk,
Mother of CEO $ 0 $ 3,400 $ 3,400
Eileen M. Risk,
Mother of CEO $ 0 $ 2,400 $ 3,600
Eileen M. Risk,
Mother of CEO $ 0 $ 0 $ 9,210
Ken R. Risk, President and CEO $ 18,420 $ 18,420 $ 9,210
Bank Balances
Joel Wiens, Director $3,353,855 $4,616,381 $4,071,929
Interest Income
Joel Wiens, Director $ 31,272 $ 99,826 $ 192,880
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Page 39
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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 accountant for the
audit of our annual financial statements and review of our financial statements
for Form 10-QSB. The amounts are listed below:
FYE 2010 $34,250 Haynie & Company
FYE 2009 $32,500 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 2010 $ 5,500 Haynie & Company
FYE 2009 $ 5,200 Haynie & Company
3) Tax Fees
There were no aggregate fees or expenses incurred for professional services
rendered by the principal accountants for tax compliance, tax advice, and tax
planning for the last two fiscal years.
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.
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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
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
Page 41
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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, 2010
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, 2010
/s/ Stephanie M. Risk Chief Financial Officer Date
Stephanie M. Risk and Controller July 29, 2010
/s/ Jerry Andersen Director Date
Jerry Andersen July 29, 2010
/s/ Joel H. Wiens Director Date
Joel H. Wiens July 29, 2010
/s/ Donna Debowey Director Date
Donna Debowey July 29, 2010
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