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 new information becomes available in the future.

The following discussion should be read in conjunction with the attached unaudited condensed financial statements, and with the Company's audited financial statements and discussion for the fiscal year ended April 30, 2022.





Executive Summary

The Company's performance in operations stayed consistent through the three quarters of the current fiscal year with the third quarter dipping slightly in sales over the second quarter of the current fiscal year. This is mainly due the fact that our business is tied to the housing market and the winter months usually show a slowdown and the colder and snowier than normal weather has been keeping employees away from our locations at times. Opportunities include keeping up with the business growth and finding ways to get our products out to our customers in a timelier manner. One way we are doing this is by looking into more automation. We also continue to look at businesses that might be a good fit to purchase. We also have new products that are scheduled to be introduced by the end of the fiscal year. Challenges in the coming months include continuing to get product out to customers in a timely manner and dealing with the COVID-19 pandemic restrictions and inflation. 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 efficiently as possible with the hopes of getting the facilities running leaner and more profitable than ever before.





Results of Operations

? Net sales were $4,366,000 for the quarter ended January 31, 2023, which is a

13.61% decrease from the corresponding quarter last year. Year-to-date net

sales were $15,194,000 at January 31, 2023, which is a 0.38% decrease from the

same period last year. The slight reduction in sales is due to our general

winter and holiday slowdown and there has been more winter weather than normal.

But we continue to operate our business with our ongoing commitment to

outstanding customer service and our ability to customize products.

? Cost of goods sold was 55.98% of net sales for the quarter ended January 31,

2023 and was 56.61% for the same quarter last year. Year-to-date cost of goods

sold percentages were 53.15% for the current nine months and 51.85% for the

corresponding nine months last year. The current cost of goods sold percentages

are right outside of Management's goal of keeping labor and other manufacturing

expenses at less than 50% for both the quarter and year-to-date results.

Management continues to work with and train employees to work more efficiently.

Raw material prices have soared over the current fiscal year because of

inflation and wages have had to be raised to remain competitive in the job

market. Management offset some of these added expenses by implementing a 10%

price increase effective January 1, 2023.






  18

? Operating expenses decreased by $27,000 for the quarter and they decreased by

$6,000 for the nine-months ended January 31, 2023 as compared to the

corresponding periods last year. When comparing percentages in relation to net

sales, the operating expenses for the quarter ended January 31, 2023 was 23.41%

of net sales while it was 20.76% of net sales for the same quarter the prior

year. For year-to-date numbers, operating expense were 21.32% and 21.28% of net

sales for the nine months ended January 31, 2023 and 2022, respectively. The

Company has been able to keep the operating expenses at less than 30% of net

sales for many years now; however, the actual dollar amount increase is due to

increased commission amounts, related to increased sales, and additional labor

costs related wage increases.

? Income from operations for the quarter ended January 31, 2023 was $900,000, a

21.33% decrease from the corresponding quarter last year, which had income from

operations of $1,144,000. Income from operations for the nine months ended

January 31, 2023 was $3,878,000, which is a 5.37% decrease from the

corresponding nine months last year, which had income from operations of

$4,098,000.

? Other income and expenses for the quarter ended January 31, 2023 shows income

of $1,775,000, which is a $2,860,000 increase from the from the corresponding

quarter last year, which had an expense amount of $1,085,000. Comparatively,

there is an increase of $144,000 in other income for the year-to-date numbers.

Most of the activity in these accounts consists of investment interest,

dividends, real gains or losses on sale of investments, and unrealized gains or

losses on equity securities. The main reason for the increase in the current

quarter and year-to-date numbers is unrealized gain and loss on equity

securities. The Company is at the mercy of the stock market when it comes to

these figures and market has seen a recovery since the COVID-19 pandemic and


   other economic factors.

? Overall, net income for the quarter ended January 31, 2023 was up $1,848,000,

or 1147.83%, from the same quarter last year. Similarly, net income for the

nine-month period ended January 31, 2023 was up $72,000, or 2%, from the same


   period in the prior year.

? Earnings per common share for quarter ended January 31, 2023 were $0.41 per

share and $0.74 per share for the year-to-date numbers. EPS for the quarter and

nine months ended January 31, 2022 were $0.03 per share and $0.73 per share,


   respectively.

Liquidity and capital resources





Operating

? Net cash decreased $813,000 during the nine months ended January 31, 2023 as

compared to a decrease of $938,000 during the corresponding period last year.






  19

? Accounts receivable decreased $824,000 for the nine months ended January 31,

2023 compared with a $91,000 decrease for the same period last year. The

current year decrease is a result of a slight decline in sales and slower

collections of accounts receivable. An analysis of accounts receivable shows

that there were 7.02% that were over 90 days at January 31, 2023.

? Inventories increased $2,444,000 during the current nine-month period compared

to an increase of $1,465,000 last year. The larger increase in the current year

is due to increases in the cost of raw materials and having more raw materials

on hand to not run into shortages like what has happened recently.

? Prepaid expenses saw a $458,000 decrease for the current nine months, primarily

due to having inventory and machinery delivered during the current nine-month

period; therefore, having less money in prepayments of raw materials on the

books. The prior nine months showed a $1,089,000 increase in prepaid expenses.

? Income tax overpayment increased $478,000 for the current nine-month period,

compared to having a decrease of $163,000 in income tax payable for the

nine-months ended January 31, 2022. The current increase is due to having to

pay additional income tax that was due for the prior fiscal year during the


   current period.

? Accounts payable shows an $84,000 increase for the current nine-month period

ended January 31, 2023 compared to a $176,000 decrease for the prior nine-month

period. The company strives to pay all invoices within terms, and the variance

in increases is primarily due to the timing of receipt of products and payment


   of invoices.

? Accrued expenses increased $184,000 for the current nine-month period compared

to a $130,000 increase for the nine-month period ended January 31, 2022. The

difference in the amounts is primarily due to increased wages.






Investing

? As for our investment activities, the Company spent approximately $221,000 on

acquisitions of property and equipment for the current nine-month period, in

comparison with the corresponding nine months last year, where there was


   activity of $164,000.

? Additionally, the Company continues to purchase marketable securities, which

include municipal bonds and quality stocks. During the nine-month period ended

January 31, 2023 the buy/sell activity in the investment accounts was continued

as usual. Net cash spent on purchases of marketable securities for the

nine-month period ended January 31, 2023 was $648,000 compared to $640,000

spent in the prior nine-month period. The Company continues to use "money

manager" accounts for most stock transactions. By doing this, the Company gives

an independent third-party firm, who are experts in this field, permission to

buy and sell stocks at will. The Company pays a quarterly service fee based on

the value of the investments.






Financing

? The Company continues to purchase back common stock when the opportunity

arises. For the nine-month period ended January 31, 2023, the Company purchased

$5,000 worth of treasury stock. This is in comparison to $35,000 spent in the

same nine months period the prior year.






  20

? The company paid out dividends of $2,689,000 during the nine months ending

January 31, 2023. These dividends were paid during the second quarter. The

company declared a dividend of $0.60 per share of common stock on September 30,

2022 and these dividends were paid by October 31, 2022. As for the prior year

numbers, dividends paid was $2,256,000 for the nine months ending January 31,

2022. A dividend of $0.50 per common share was declared and paid during the

second fiscal quarter last year.






The following is a list of ratios to help analyze George Risk Industries'
performance:



                                                                      As of
                                                     January 31, 2023       January 31, 2022
Working capital
(current assets - current liabilities)              $       48,003,000     $       48,186,000
Current ratio
(current assets / current liabilities)                          14.688                 15.470
Quick ratio
((cash + investments + AR) / current liabilities)               11.415                 12.987




New Product Development

The Company and its engineering department continue to develop enhancements to 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 the development process include:

? Explosion proof contacts that will be UL listed for hazardous locations. There

has been demand from our customers for this type of high security magnetic reed


   switch.

? The Company is developing magnetic contacts which are listed under UL 634 Level

2. These sensors are for high security applications such as government

buildings, military use, nuclear facilities, and financial institutions.

? Wireless technology is a main area of focus for product development. We are

considering 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 monitoring devices which include glass break

detection, tilt sensing and environmental monitoring. A redesign of our brass

water valve shut-off system is near completion.






Other Information

In addition to researching and 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.





  21






                          GEORGE RISK INDUSTRIES, INC.



                         PART I. FINANCIAL INFORMATION

© Edgar Online, source Glimpses