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 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 sales continue to grow through the first half of the current fiscal year with the second quarter showing an increase in sales over the first quarter of the current fiscal year. This is mainly due to having the ability to obtain raw materials that are needed to complete the manufacture of our products and keeping employees staffed at our locations. Additionally, the Company's products are traditionally tied to the housing market and with that market remaining strong, it in turn helps the Company's sales grow. As far as overall company performance, the net income is down when comparing the current six-month period to the prior six-month period. This is because the current year realized and unrealized gains (losses) on investments are showing losses, while for the same period last year both of those categories were income amounts. Opportunities include keeping up with the business growth, finding ways to get our products out to our customers in a timelier manner, which includes looking into more automation, and to continue looking at businesses that might be a good fit to purchase. We also have new products that are expected to hit the marketplace 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 efficient as possible with the hopes of getting the facilities running leaner and more profitable than ever before.





Results of Operations



  ? Net sales were $5,617,000 for the quarter ended October 31, 2022, which is a
    7.11% increase from the corresponding quarter last year. Year-to-date net
    sales were $10,827,000 at October 31, 2022, which is a 6.16% increase from the
    same period last year. The increases in sales are primarily a result of a
    competitor no longer selling competing products and implementing a price
    increase that became effective on January 1, 2022. Also, the ongoing
    commitment towards outstanding customer service and customization of products
    are a few of the many reasons sales continue to grow.




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  ? Cost of goods sold was 52.95% of net sales for the quarter ended October 31,
    2022 and was 52.04% for the same quarter last year. Year-to-date cost of goods
    sold percentages were 52.01% for the current six months and 49.49% for the
    corresponding six 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. The increased cost of goods sold percentages are a result of
    inflation that has afflicted the economy recently. Management has seen
    significant price increases in raw materials and has had to raise wages to
    remain competitive in the job market.

  ? Operating expenses were up $39,000 for the quarter and were up $19,000 for the
    six-months ended October 31, 2022 as compared to the corresponding periods
    last year. But when comparing percentages in relation to net sales, the
    operating expenses for the quarter ended October 31, 2022 was 20.12% of net
    sales while it was 20.80% of net sales for the same quarter the prior year.
    For year-to-date numbers, operating expense were 20.48% and 21.55% of net
    sales for the six months ended October 31, 2022 and 2021, 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
    because of increased commission amounts (since sales have increased) and
    additional labor costs for wage increases.

  ? Income from operations for the quarter ended October 31, 2022 was at
    $1,513,000, which is a 6.25% increase from the corresponding quarter last
    year, which had income from operations of $1,424,000. Income from operations
    for the six months ended October 31, 2022 was at $2,979,000, which is just an
    0.85% increase from the corresponding six months last year, which had income
    from operations of $2,954,000.

  ? Other income and expenses are down when comparing the current quarter to the
    same quarter of the prior year, with a decrease of $1,798,000 in the current
    quarter. Comparably, other income and expenses are down by $2,717,000 when
    comparing the current six-month period to the prior six-month period. 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 decreases in the current quarter
    and year-to-date numbers is the unrealized gain and loss on equity securities.
    The Company is at the mercy of the stock market when it comes to these figures
    and inflation and the current state of the economy has influenced these
    numbers.

  ? Overall, net income for the quarter ended October 31, 2022 was down
    $1,081,000, or 64.04%, over the same quarter last year. Similarly, net income
    for the six-month period ended October 31, 2022 was down $1,775,000, or
    51.69%, over the same period in the prior year.

  ? Earnings per common share for quarter ended October 31, 2022 were $0.12 per
    share and $0.34 per share for the year-to-date numbers. EPS for the quarter
    and six months ended October 31, 2021 were $0.34 per share and $0.69 per
    share, respectively.




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Liquidity and capital resources





    Operating

  ? Net cash decreased $1,485,000 during the six months ended October 31, 2022 as
    compared to a decrease of $1,219,000 during the corresponding period last
    year.

  ? Accounts receivable decreased $75,000 for the six months ended October 31,
    2022 compared with a $185,000 decrease for the same period last year. The
    smaller current year decrease is a result of improved sales and having a
    slight improvement in collections of accounts receivable over the last year.
    An analysis of accounts receivable shows that 5.02% of the receivables were
    over 90 days at October 31, 2022, while 4.84% were over 90 days for the same
    period last year.

  ? Inventories increased $1,755,000 during the current six-month period as
    compared to a $1,528,000 increase last year. The bigger increase in the
    current year is primarily due to having more inventory on hand to reduce the
    likelihood of running into a shortage on some major raw materials and seeing
    increases in costs of these raw materials.

  ? Prepaid expenses saw a $798,000 decrease for the current six months, primarily
    due to having inventory delivered during the current six-month period;
    therefore, having less money in prepayments of raw materials on the books. The
    prior year six months showed a $337,000 increase in prepaid expenses.

  ? Income tax overpayment increased $364,000 for the current six-month period,
    compared to having an increase of $140,000 in income tax payable for the
    six-months ended October 31, 2021. 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 a decrease for the current six-month period of $80,000
    as it shows a decrease for the prior six-month periods of $183,000. The
    company strives to pay all invoices within terms, and the variance is
    primarily due to the timing of receipt of products and payment of invoices.

  ? Accrued expenses increased $48,000 for the current six-month period as
    compared to a $4,000 decrease for the six-month period ended October 31, 2021.
    The difference in the amounts is primarily due to timing issues.

    Investing

  ? As for our investment activities, the Company purchased $209,000 of property
    and equipment during the current six-month period. In comparison, $40,000 was
    spent on purchases of property and equipment during the corresponding six
    months last year.

  ? The Company continues to purchase marketable securities, which include
    municipal bonds and quality stocks. During the six-month period ended October
    31, 2022 there was quite a bit of buy/sell activity in the investment
    accounts. Net cash spent on purchases of marketable securities for the
    six-month period ended October 31, 2022 was $224,000 compared to $208,000
    spent in the prior six-month period. We continue to use "money manager"
    accounts for most stock transactions. By doing this, the Company gives an
    independent third-party firm, who are experts in this field, permission to buy
    and sell stocks at will. The Company pays a quarterly service fee based on the
    value of the investments.




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    Financing

  ? The Company continues to purchase back its common stock when the opportunity
    arises. For the six-month period ended October 31, 2022, the Company purchased
    $3,000 worth of treasury stock, in comparison to $26,000 repurchased in the
    corresponding six-month period last year.

  ? The company declared a dividend of $0.60 per share of common stock on
    September 30, 2022, which was paid out during the second quarter. This is an
    increase to the dividend of $0.50, which 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
                                                     October 31, 2022       October 31, 2021
Working capital
(current assets - current liabilities)              $       45,396,000     $       48,623,000
Current ratio
(current assets / current liabilities)                          15.155                 16.358
Quick ratio
((cash + investments + AR) / current liabilities)               11.927                 13.940




New Product Development

The Company and its engineering department continue to develop enhancements to product lines, develop new products that 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.

  ? 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.





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                          GEORGE RISK INDUSTRIES, INC.

                         PART I. FINANCIAL INFORMATION

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