MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF


                                   OPERATIONS

This Quarterly Report on Form 10-Q, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the "safe harbor" created by those sections. Any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as "may," "will," "could," "would," "should," "anticipate," "expect," "intend," "believe," "estimate," "project" or "continue," and the negatives of such terms are intended to identify forward-looking statements. The information included herein represents our estimates and assumptions as of the date of this filing. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if current information becomes available in the future.

The following discussion should be read in conjunction with the attached condensed financial statements, and with the Company's audited financial statements and discussion for the fiscal year ended April 30, 2021.





Executive Summary

The Company's performance remained steady during the quarter ended July 31, 2021 as compared to the quarter ended July 31, 2020. Although sales have increased when comparing to the same quarter last year, overall net income is down because unrealized gains on investments aren't as big as they were for the same quarter last year. The uptick in sales is direct result of the closure of a competitor at the end of calendar year 2019 and having the ability to continue working through the COVID-19 pandemic. As a result of the increased demand, the Company is experiencing a sizable back order log; however, management has been able to increase inventory. Management now intends to focus on ramping up production to meet customer's needs in a timely manner. Opportunities include continuing to learn and grow with our computer system and to continue looking at businesses that might be a good fit to purchase. We also have new products that are scheduled to enter the marketplace by the end of the calendar year. Challenges in the coming months include continuing to get product out to customers in a timely manner and dealing with COVID-19 pandemic restrictions. Possible COVID-19 challenges include, but are not limited to, price increases and/or delays in the supply chain, reduced sales, workforce interruptions, and economic conditions impacting the stock market. Management continues to work at keeping operations flowing as efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever before.





Results of Operations



  ? Net sales for the quarter ended July 31, 2021 showed a 22.44% increase over
    the same period in the prior year. The Company saw increased sales resulting
    primarily from a competitor no longer selling competing products and having
    the ability to continue to work through the COVID-19 pandemic. Management also
    believes that sales continue to grow due to our ongoing commitment to
    outstanding customer service and our ability to customize products.

  ? Cost of goods sold decreased from 48.23% of sales in the prior year, to 46.78%
    in the current quarter, which is inside of Management's goal to keep labor and
    other manufacturing expenses within the range of 45 to 50%. The decreased cost
    of goods sold percentage is a reflection of training initiatives resulting in
    more efficient production.




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  ? Operating expenses increased by $198,000 when comparing the current year
    quarter to the same quarter for the prior year; however, the percentage of net
    sales decreased to 22.34% for the quarter ended July 31, 2020 compared to
    22.46% for the corresponding quarter last year. The dollar amount increase is
    the result of increased personnel and commission expense related to the
    increase in net sales; however, the Company maintained the ratio of operating
    expenses to net sales at less than 30%, which is in line with historical
    ratios.

  ? Income from operations for the quarter ended July 31, 2021 was at $1,530,000,
    which is a 29.01% increase from the corresponding quarter last year, which had
    income from operations of $1,186,000.

  ? Other income and expenses showed a $817,000 gain for the quarter ended July
    31, 2021 as compared to a $2,254,000 gain for the quarter ended July 31, 2020.
    For the three months ended July 31, 2021, $420,000 of unrealized gains from
    equity securities were recorded, compared to the $2,114,000 of unrealized
    gains from equity securities recorded for the three months ended July 31,
    2020. The remainder of the increase is primarily due to dividend and interest
    income and gains on sales of investments.

  ? The Company's provision for income taxes showed a decrease of $347,000 from
    $948,000 in the quarter ended July 31, 2020 to $601,000 for the quarter ended
    July 31, 2021. This decrease is primarily due to decreased deferred taxes
    resulting from a much smaller unrealized gain for the current quarter.

  ? In turn, net income for the quarter ended July 31, 2021 was $1,746,000, a
    29.94% decrease from the corresponding quarter last year, which showed net
    income of $2,492,000.

  ? Earnings per share for the quarter ended July 31, 2021 were $0.35 per common
    share and $0.50 per common share for the quarter ended July 31, 2020.

Liquidity and capital resources





        Operating

    ?   Net cash increased $1,005,000 during the quarter ended July 31, 2021 as
        compared to an increase of $1,033,000 during the corresponding quarter
        last year.

    ?   Accounts receivable decreased $154,000 for the quarter ending July 31,
        2021 compared with a $49,000 decrease for the same quarter last year. The
        bigger decrease in accounts receivable is directly attributable to an
        increase in sales and customers being able to pay timely as the COVID-19
        pandemic has become a part of our everyday life. Management still has the
        ability to collect on accounts and to keep past due accounts to a minimum.
        An analysis of accounts shows that there were only 3.26% that were over 90
        days at July 31, 2021.

    ?   Inventories increased $549,000 during the current quarter as compared to a
        $405,000 increase last year. The larger increase is primarily due to the
        fact that the Company is continuing to buy more raw materials due to
        increased orders and that the prices of raw materials continue to
        increase.




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    ?   For the quarter ended July 31, 2021 there was a $196,000 increase in
        prepaid expenses compared to a decrease of $94,000 for the quarter ended
        July 31, 2020. The current increase is due to more prepayments of raw
        materials. Lead times and costs have risen on raw materials, making it a
        challenge to obtain these raw materials.

    ?   Accounts payable shows a decrease of $236,000 for the quarter ended July
        31, 2021 compared to an increase of $117,000 for the same quarter the year
        before. The variance is primarily due to timing differences of when
        product is received. Management strives to pay all payables within terms,
        unless there is a problem with the merchandise.

    ?   Accrued expenses increased $99,000 for the current quarter as compared to
        a $61,000 decrease for the quarter ended July 31, 2020. The difference in
        the amounts is primarily due to timing of when payroll periods end.

    ?   Income tax payable for the quarter ended July 31, 2021 increased $547,000,
        compared to a $346,000 increase for the quarter ended July 31, 2020. The
        current increase is due to larger tax estimates in relation to increased
        income.

        Investing

    ?   The Company purchased $40,000 of property and equipment during the current
        fiscal quarter. In comparison, $95,000 was spent on purchases of property
        and equipment during the corresponding quarter last year.

    ?   The Company continues to purchase marketable securities, which include
        municipal bonds and quality stocks. Cash spent on purchases of marketable
        securities for the quarter ended July 31, 2021 was $98,000 compared to
        $111,000 spent during the quarter ended July 31, 2020. We continue to use
        "money manager" accounts for most stock transactions. By doing this, the
        Company gives an independent third party firm, who are experts in this
        field, permission to buy and sell stocks at will. The Company pays
        quarterly service fees based on the value of the investments.

        Financing

    ?   The Company continues to purchase back common stock when the opportunity
        arises, but for the quarter ended July 31, 2021 and 2020, respectively,
        the Company did not buyback any treasury stock.




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In conjunction with the Company's Condensed Financial Statements, we have
provided the following list of ratios to help analyze George Risk Industries'
performance:



                                                      Qtr ended           Qtr ended
                                                    July 31, 2021       July 31, 2020
Working capital
(current assets - current liabilities)             $    49,401,000     $    40,103,000
Current ratio
(current assets / current liabilities)                      15.529              11.485
Quick ratio
((cash + current investments + AR) / current
liabilities)                                                13.549               9.953




New Product Development

The Company and its' engineering department perpetually work to develop enhancements to current product lines, develop new products which complement existing products, and look for products that are well suited to our distribution network and manufacturing capabilities. Items currently in various stages of the development process include:





    ?   Explosion proof contacts that will be UL listed for hazardous locations
        are in development. There has been demand from our customers for this type
        of high security magnetic reed switch.

    ?   An updated version of the pool access alarm (PAA) has met electrical
        listing testing (ETL) approval and production has started. This
        next-generation model combines our battery operated DPA series with our
        hard wired 289 series. A variety of installation options will be available
        through jumper pin settings.

        We are currently redesigning our glass break detector switch and water
        shutoff system to include a brass valve.

    ?   Wireless technology is a main area of focus for product development. We
        are looking into adding wireless technology to some of our current
        products. A wireless contact switch is in the final stages of development.
        Also, we are working on wireless versions of our Pool Alarm and
        environmental sensors that will be easy to install in current
        construction. We are also concentrating on making products compatible with
        Wi-Fi, smartphone technology and the increasing popular Z-Wave standard
        for wireless home automation.




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Other Information

In addition to researching developing new products, management is always open to the possibility of acquiring a business or product line that would complement our existing operations. Due to the Company's strong cash position, management believes this could be achieved without the need for outside financing. The intent is to utilize the equipment, marketing techniques and established customers to deliver new products and increase sales and profits.

There are no known seasonal trends with any of GRI's products, since we sell to distributors and OEM manufacturers. Our products are tied to the housing industry and will fluctuate with building trends.

Recently Issued Accounting Pronouncements

In June 2016 the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)," which was subsequently amended in February 2020 by ASU 2020-02, "Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842)."The amendments introduce an impairment model that is based on expected credit losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments (e.g., loans and held-to-maturity securities), including certain off-balance sheet financial instruments (e.g., loan commitments). The expected credit losses should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. Financial instruments with similar risk characteristics may be grouped together when estimating expected credit losses. The update with amendment is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not believe this new guidance will have a material impact on its financial statements and will implement the disclosures related to this update beginning in 2023.

In January 2020, the FASB issued ASU 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815." The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. ASU 2020-01 became effective for the Company in the first quarter of 2021. The adoption of this standard did not have any impact on the Company's condensed financial statements.

There are no other new accounting pronouncements that are expected to have a significant impact on our financial statements.





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                          GEORGE RISK INDUSTRIES, INC.



                         PART I. FINANCIAL INFORMATION

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