UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended April 30, 2019

OR

For the transition period fromto

Commission File Number1-4702

AMREP CORPORATION

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code:(610) 487-0905

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes ¨  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). Yes ¨  No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the 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, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No x

As of October 31, 2018,30, 2020, which was the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the Common Stock held by non-affiliates of the registrant was $29,560,483.$25,714,897. Such aggregate market value was computed by reference to the closing sale price of the registrant’s Common Stock as quoted on the New York Stock Exchange on such date. For purposes of making this calculation only, the registrant has defined affiliates as including all directors and executive officers and certain persons related to them. In making such calculation, the registrant is not making a determination of the affiliate or non-affiliate status of any holders of shares of Common Stock.

As of July 24, 2019,19, 2021, there were 8,136,9047,336,370 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

As stated in Part III of this annual report on Form 10-K, portions of the registrant’s definitive proxy statement to be filed within 120 days after the end of the fiscal year covered by this annual report on Form 10-K are incorporated herein by reference.

All references to the Company in this annual report on Form 10-K include the Registrant and its subsidiaries. Many of the amounts and percentages presented in this annual report on Form 10-K have been rounded for convenience of presentation. All references in this annual report on Form 10-K to 2021 and 2020 mean the Company’s fiscal years ended April 30, 2021 and 2020, unless the context otherwise indicates.

PART I

AMREP Corporation was organized in 1961 as an Oklahoma corporation and, through its subsidiaries, is primarily engaged in the real estate business. As of July 1, 2019, the Company¹ employed 9 full time employeestwo business segments: land development and 2 part time employees.

homebuilding. The Company has no foreign sales or activities outside the United States.Many of the amounts and percentages presented in this Part I have been rounded for convenience of presentation. All references in this Part I to 2019 and 2018 mean the Company’s fiscal years ended April 30, 2019 and 2018, unless the context otherwise indicates.

Properties – New Mexico

The Company conducts a substantial portion of its real estate business primarily in the City of Rio Rancho and certain adjoining areas of Sandoval County, New Mexico. References below to Rio Rancho include the City of Rio Rancho and such adjoining areas. The City of Rio Rancho is the third largest city in New Mexico with a population of approximately 96,000.99,000.

Rio Rancho consists of approximately 91,000 acres in Sandoval County near Albuquerque. Land Development

As of July 1, 2019,2021, the Company owned approximately 18,000 acres in Rio Rancho. The Company sellsoffers for sale both developed and undeveloped lots to national, regional and local homebuilders, commercial and industrial property developers and others.

Activities conducted or arranged by the Company include land and site planning, obtaining governmental and environmental approvals (“entitlements”), installation ofinstalling utilities and necessary storm drains, ensuring the availability of water service, building or improving of roads necessary for land development and constructing of community amenities. The Company develops both residential lots and sites for commercial and industrial use as demand warrants. The engineeringEngineering work is performed by both the Company’s employees and outside firms, but all development work is performed by outside contractors.

The Company markets land both directly and through brokers. The Company actively markets its commercial properties in Rio Rancho for sale or lease. With respect to residential development, the Company generally focuses its sales efforts on a limited number of homebuilders, with approximately 92%97% of 20192021 land sales in Rio Rancho having been made to four homebuilders. The number of new construction single-family residential starts in Rio Rancho by the Company’s customers and other builders was 1,139 in 2021 and 621 in 2020. The development of residential, commercial and industrial properties requires, among other things, financing or other sources of funding, which may not be available.

The Company also opportunistically acquires land, focusing primarily in New Mexico, after completion of market research, soil tests, environmental studies and other engineering work, a review of zoning and other governmental requirements, discussions with homebuilders or other prospective end-users of the property and financial analysis of the project and estimated development costs, including the need for and extent of offsite work required to obtain project entitlements.

In addition, the Company actively markets its commercial properties in Rio Rancho for sale or lease to tenants. The development of commercial properties for tenants will require, among other things, financing or other sources of funding, which may not be available.

The continuity and future growth of the Company’s real estate business, if the Company pursues such growth, will require that the Company acquire new properties in New Mexico or expand to other markets to provide sufficient assets to support a meaningful real estate business. The Company competes with other owners and developers of land, including in the Rio Rancho and Albuquerque area, that offer for sale developed and undeveloped residential lots and sites for commercial/industrial use.

The following table presents information on the large land holdingsdevelopment projects of the Company in New Mexico are where the Company is currently focusing its residential land activities:as of July 1, 2021:

¹ As used herein, “Company” includesLomas Encantadas is located in the Registrant and its subsidiaries.eastern section of Unit 20 in the City of Rio Rancho. Hawk Site is located in the northern section of Unit 25 in the City of Rio Rancho. Enchanted Hills/Commerce Center is located in the eastern section of Unit 20 in the City of Rio Rancho. Paseo Gateway is located in the southern section of Unit 20 in the City of Rio Rancho. La Mirada is located in the City of Albuquerque, New Mexico.

The following table presents information on the developed and undersmall land development residential and commercial/industrial land holdingsprojects of the Company in New Mexico of the Company as of July 1, 2019:2021:

OtherIn addition to the property listed in the tables above, undeveloped property in New Mexico of the Company as of July 1, 20192021 included approximately 17,000 acres, of which approximately 20% was property that the Company had 90% contiguous ownership, approximately 30% was property that the Company had at least 50% but less than 90% contiguous ownership and approximately 50% was property that the Company had less than 50% contiguous ownership. High contiguous ownership areas may be suitable for special assessment districts or city redevelopment areas that may allow for future development under the auspices of local government. Low contiguous ownership areas may require the purchase of a sufficient number of adjoining lots to create tracts suitable for development or may be offered for sale individually or in small groups.

Infrastructure Reimbursement Mechanisms. A portion of the Lomas Encantadas subdivision and a portion of the Enchanted Hills subdivision are subject to a public improvement district. The public improvement district reimburses the Company for certain on-site and off-site costs of developing the subdivisions by imposing a special levy on the real property owners within the district. The Company has accepted discounted prepayments of amounts due under the public improvement district.

¹Developed lots/acreage are any tracts of land owned by the Company that have been entitled with infrastructure work that is substantially complete.

²Acreage under development is real estate owned by the Company for which entitlement or infrastructure work is currently being completed. However, there is no assurance that the acreage under development will be developed because of the nature and cost of the approval and development process and market demand for a particular use. In addition, the mix of residential and commercial acreage under development may change prior to final development. The development of this acreage will require significant additional financing or other sources of funding, which may not be available.

³There is no assurance that undeveloped acreage will be developed because of the nature and cost of the approval and development process and market demand for a particular use. Undeveloped acreage is real estate that can be sold “as is” (e.g., where no entitlement or infrastructure work has begun on such property).

Land sales by the Company in Rio Rancho during 2019 and 2018 were as follows:

Improvement Reimbursement Mechanisms

At the request of the Company, the City of Rio Rancho approved the formation of a public improvement district over a portion of the Lomas Encantadas subdivision and a portion of the Enchanted Hills/Commerce Center subdivision. The public improvement district is expected, over a period of at least thirty years commencing in fiscal year 2020, to reimburse the Company for certain on-site and off-site costs of developing the subdivisions by imposing a special levy on the real property owners within the district.

In addition, the Company instituted private infrastructure reimbursement covenants on a portion of the property in Hawk Site.Site and Lavender Fields. Similar to a public improvement district, the covenants are expected over a period of at least thirty years commencing in fiscal year 2021, to reimburse the Company for certain on-site and off-site costs of developing Hawk Sitethe subject property by imposing a special levy on the real property owners subject to the covenants.

The Company may accepthas accepted discounted prepayments of amounts due under the public improvement district or the private infrastructure reimbursement covenants.

Other Real Estate InterestsMineral Rights. The Company owns certain minerals and mineral rights in and under approximately 55,000 surface acres of land in Sandoval County, New Mexico The lease to a third party with respect to such mineral rights expired in September 2020 and no drilling had commenced with respect to such mineral rights.

The Company owns tractscertain minerals and mineral rights in and under approximately 147 surface acres of land in Brighton, Colorado leased to a third party for as long as oil or gas is produced and marketed in paying quantities from the property or for additional limited periods of time if the lessee undertakes certain subsurfaceoperations or makes certain de minimis shut-in royalty payments. The lessee has pooled various minerals and mineral rights, including the Company’s minerals and mineral rights, for purposes of drilling and extraction. After applying the ownership and royalty percentages of the pooled minerals and mineral rights, the lessee is required to pay the Company a royalty on oil and gas produced from the pooled property of 1.42% of the proceeds received by the lessee from the sale of such oil and gas, and mineral interestssuch royalty will be charged with 1.42% of certain post-production costs associated with such oil and gas.

Commercial Property. During 2021, the Company completed construction of a 14,000 square foot, single tenant retail building on a 1.3 acre property in Colorado, including onethe Las Fuentes at Panorama Village subdivision in Rio Rancho, New Mexico. The Company sold this property ofin 2021. In June 2021, the Company acquired a 15-acre property in the La Mirada subdivision located in Albuquerque, New Mexico, which is expected to be developed into a mixed-use project with residential and commercial uses.

Other Real Estate Interests. The Company owns an approximately 160 acres160-acre property in Brighton, Colorado planned for approximately 410 homes and onean approximately 5-acre property of approximately 5 acresin Parker, Colorado zoned for commercial use. In 2018, theThe Company soldalso owns a second property in Colorado of approximately 5 acres for a sale price of $2,044,000. In addition, the Company owns subsurface oil, gas143,000 square foot warehouse and mineral interests in approximately 55,000 “surface” acres of land in Rio Rancho. In addition to the 204,000 square feet of facilitiesoffice facility located in Palm Coast, Florida discussed below, a subsidiary of theFlorida. The Company owns 2 tracts of unimproved land in Palm Coast, Florida totaling approximately 8 acres.

DISCONTINUED OPERATIONS

Prior to April 26, 2019, the Company was also engaged in the fulfillment services business operated by Palm Coast Data LLC andsold its affiliates. The fulfillment services business performed fulfillment and contact center services for publications, membership organizations, government agencies and other direct marketers.

¹ Revenues per acre may not calculate precisely due to the rounding of acres sold to the nearest acre and the rounding of revenues to the nearest thousand dollars.

On April 26, 2019, Palm Coast Data Holdco, Inc. (“Seller”), a subsidiary of the Company, entered into a membership interest purchase agreement (the “Purchase Agreement”) with Studio Membership Services, LLC (“Buyer”). The closing of the transactions contemplated by the Purchase Agreement occurred on April 26, 2019 (the “Closing Date”).

Pursuant to the Purchase Agreement, Buyer acquired the Company’s fulfillment services business through the purchase from Seller of all of the membership interests (the “Membership Interests”) of Palm Coast Data LLC (“PCDLLC”) (which owned all of the membership interests of FulCircle Media, LLC) and Media Data Resources, LLC (PCDLLC, FulCircle Media, LLC and Media Data Resources, LLC are collectively referred to herein as the “Target Group”).

The purchase price for the Membership Interests was $1,000,000, which was paid by Buyer to Seller on the Closing Date. In addition, (1) during the period from February 1, 2019 through the Closing Date, the Target Group distributed to Seller and its affiliates (not including the Target Group) $3,100,000 of cash and (2) substantially all of the intercompany amounts of the Target Group due to or from the Company and its direct and indirect subsidiaries (not including the Target Group) were eliminated through offsets, releases and capital contributions. Buyer and Seller provided customary indemnifications under the Purchase Agreement and provided each other with customary representations, warranties and covenants.

In connection with the Purchase Agreement, PCDLLC entered into two triple net lease agreements, each dated as of the Closing Date (each, a “Lease Agreement” and, together, the “Lease Agreements”), pursuant to which PCDLLC agreed to lease (1) from Two Commerce LLC (“TC”), a subsidiary of the Company, a 61,000 square foot warehouse and office facility located in Palm Coast, Florida in 2021.

Homebuilding

In 2020, the Company commenced operations in New Mexico of its internal homebuilder, Amreston Homes. The Company offers a variety of home floor plans and (2) from Commerce Blvd Holdings, LLC (“CBH”),elevations at different prices and with varying levels of options and amenities to meet the needs of homebuyers. The Company focuses on selling single-family detached homes and attached townhomes. The Company selects locations for homebuilding based on available land inventory and completion of a subsidiaryfeasibility study. The Company utilizes third-party sales brokers for the majority of home sales. Model homes are generally used to showcase the Company’s homes and their design features. The Company provides built-to-order homes where construction of the Company,homes does not begin until the customer signs the purchase agreement and speculative (“spec”) homes for homebuyers that require a 143,000 square foot facility in Palm Coast, Florida.home within a short time frame. Sales contracts with homebuyers generally require payment of a deposit at the time of contract signing and sometimes additional deposits upon selection of certain options or upgrade features for their homes. Sales contracts also typically include a financing contingency that provides homebuyers with the right to cancel if they cannot obtain mortgage financing at specified interest rates within a specified period. Contracts may also include other contingencies, such as the sale of an existing home.

PursuantThe construction of homes is conducted under the supervision of the Company’s on-site construction field managers. Substantially all construction work is performed by independent subcontractors under contracts that establish a specific scope of work at an agreed-upon price. Generally, construction materials are readily available from numerous sources. However, the cost of certain building materials, especially lumber, steel, concrete, copper and petroleum-based materials, is influenced by changes in local and global commodity prices as well as government regulation, such as government-imposed tariffs or trade restrictions on supplies such as steel and lumber. The ability to each Lease Agreement, all structural, mechanical, maintenanceconsistently source qualified labor at reasonable prices remains challenging as labor supply growth has not kept pace with construction demand. During 2021 and 2020, the Company experienced supply chain constraints, increases in the prices of building materials and shortages of skilled labor. Increased costs or shortages of skilled labor or materials cause increases in construction costs and could cause construction delays. To protect against changes in construction costs, labor and materials costs are generally established prior to or near the time when related sales contracts are signed with homebuyers. However, the Company cannot determine the extent to which necessary building materials and labor will be available at reasonable prices in the future.

A significant variable affecting the timing of homebuilding sales, other than housing demand, is the opening of a property for sale, which generally occurs promptly after receipt of land regulatory approvals. Receipt of approvals allows the Company to begin the process of obtaining executed sales contracts from homebuyers. Although the Company does not yet have sufficient historical experience to observe any seasonal effect on sales and construction activities, the Company does expect some seasonality in sales and construction activities which can effect the timing of closings. But any such seasonal effect is expected to be relatively insignificant compared to the effect of the timing of receipt of final regulatory approvals, the opening of a property for sale and the subsequent timing of closings.

The housing industry in the Albuquerque metro is highly competitive. Numerous national, regional and local homebuilders compete for homebuyers on the basis of location, price, quality, reputation, design, community amenities and homebuyers’ overall sales and homeownership experiences. This competition with other homebuilders could reduce the number of homes the Company delivers or cause the Company to accept reduced margins to maintain sales volume. The Company also competes with resales of existing homes and available rental housing. Increased competitive conditions in the residential resale or rental market could decrease demand for new homes or unfavorably impact pricing for new homes.

Regulatory and Environmental Matters

The Company’s operations are subject to extensive regulations imposed and enforced by various federal, state and local governing authorities. These regulations are complex and include building codes, land zoning and other entitlement restrictions, health and safety regulations, labor practices, marketing and sales practices, environmental regulations and various other laws, rules and regulations. The applicable governing authorities frequently have broad discretion in administering these regulations. The Company may experience extended timelines for receiving required approvals from municipalities or other government agencies that can delay anticipated development and construction activities.

Government restrictions, standards or regulations intended to reduce greenhouse gas emissions or potential climate change impacts may result in restrictions on land development or homebuilding in certain areas and may increase energy, transportation or raw material costs, which could reduce the Company’s profit margins and adversely affect the Company’s results of operations. Weather conditions and natural disasters can harm the Company. The occurrence of natural disasters or severe weather conditions can delay or increase costs of land development and home construction, adversely affect the cost or availability of materials or labor or damage homes or land development under construction. These matters may result in delays, may cause the Company to incur substantial compliance, remediation, mitigation and other costs, associated with the applicable facility being leased are the responsibility of PCDLLC. The term of each Lease Agreement is 10 years. At the option of PCDLLC, the expiration date of each Lease Agreement may be accelerated (1) to the date PCDLLC pays the applicable landlord an amount equal to the present value of all future rent calculated as of the proposed expiration dateand can prohibit or (2) to a date within 30 days after the sixth anniversary of the Closing Date if PCDLLC pays the applicable landlord an amount equal to 90% of the present value of all future rent calculated as of the proposed expiration date. Pursuant to the Lease Agreements, PCDLLC will pay to TCseverely restrict land development and CBH the aggregate annual rent set forth below, which is payablehomebuilding activity in equal monthly installments in each of the applicable years, subject to a waiver of the payment of rent attributable to the month of May 2019.environmentally sensitive areas.

Human Capital Resources

In connection with the transactions contemplated by the Purchase Agreement,As of July 1, 2021, the Company employed 19 full-time employees and its direct and indirect subsidiaries (not including1 part-time employee. The Company believes the Target Group) retained their obligations under the Company’s defined benefit pension plan following the Closing Date. The transactions contemplated by the Purchase Agreement and the associatedpeople who work force reduction with respect tofor the Company are its most important resource and its direct and indirect subsidiaries (not including the Target Group) resulted in the acceleration of the funding of approximately $5,194,000 of accrued pension-related obligationsare critical to the Company’s defined benefit pension plan pursuantcontinued success. The Company focuses significant attention on attracting and retaining talented and experienced individuals to manage and support the Employee Retirement Income Security ActCompany’s operations. The Company strives to reward employees through competitive industry pay, benefits and other programs; instill the Company's culture with a focus on ethical behavior; and enhance employees’ performance through investment in technology, tools and training to enable employees to operate at a high level. The Company’s employees are not represented by any union. The Company considers its employee relations to be good. The Company offers employees a broad range of 1974, as amended (“ERISA”),company-paid benefits, and the regulations thereunder.  The Company notifiedbelieves its compensation package and benefits are competitive with others in the Pension Benefit Guaranty Corporationindustry. All employees are expected to exhibit and promote honest, ethical and respectful conduct in the workplace. All employees must adhere to a code of the transactions contemplated by the Purchase Agreement and, as permitted by ERISA, made an election to satisfy this accelerated funding obligation over a period of seven years beginning in fiscal year 2021.

Prior to the Closing Date, Rory Burke was the chief executive officer and president of PCDLLC and FulCircle Media, LLC and was a named executive officer of the Company. In connection with the closing of the transactions contemplated by the Purchase Agreement, effective as of the Closing Date, Mr. Burke ceased to be a named executive officer of the Company.conduct that sets standards for appropriate ethical behavior.

AVAILABLE INFORMATION

The Company maintains a website atwww.amrepcorp.com. www.amrepcorp.com. The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge through the Company’s website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. The information found on the Company’s website is not part of this or any other report that the Company files with, or furnishes to, the Securities and Exchange Commission.

In addition to the Company’s website, the Securities and Exchange Commission maintains an Internet site that contains the Company’s reports, proxy and information statements, and other information that the Company electronically files with, or furnishfurnishes to, the Securities and Exchange Commission at www.sec.gov.

Not required.As a smaller reporting company, the Company has elected not to provide the disclosure under this item.

Not applicable.

The Company’s executive offices are located in approximately 2,400 square feet of leased space in an office building in Plymouth Meeting, Pennsylvania. The Company’s real estate business is located in approximately 2,3004,900 square feet of leased space in an office building in Rio Rancho, New Mexico. In addition, other real estate inventory and investment properties are described in Item 1 of Part I of this annual report on Form 10-K with certain mortgages associated with such real estate described in Item 7 of Part II of this annual report on Form 10-K ..10-K. The Company believes its facilities are adequate for its current requirements.

The Company and its subsidiaries are involved in various pending or threatened claims and legal actions arising in the ordinary course of business. While the ultimate results of these other matters cannot be predicted with certainty, management believes that they will not have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations.

Not applicable.

Information about the Company’s Executive Officers of the Registrant

Set forth below is certain information concerning persons who are the current executive officers of the Company.

Christopher V. Vitale, age 43,45, has been President and Chief Executive Officer of the Company since September 2017. From September 2014 to September 2017, Mr. Vitale was Executive Vice President, Chief Administrative Officer and General Counsel of the Company and, from 2013 to September 2014, he was Vice President and General Counsel of the Company. From 2012 to 2013, Mr. Vitale was Vice President, Legal at Franklin Square Holdings, L.P. and, from 2011 to 2012, he was Assistant Vice President, Legal at Franklin Square Holdings, L.P., a national sponsor and distributor of investment products, where he was responsible for securities matters, corporate governance and general corporate matters. During 2011, Mr. Vitale was the Chief Administrative Officer at WorldGate Communications, Inc. (“WorldGate”), and from 2009 to 2011 he was Senior Vice President, General Counsel and Secretary at WorldGate, a provider of digital voice and video phone services and video phones. In 2012, WorldGate filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Prior to joining WorldGate, Mr. Vitale was an attorney with the law firms of Morgan, Lewis & Bockius LLP and Sullivan & Cromwell LLP.

JamesAdrienne M. McMonagleUleau, age 52,53, has been Vice President, Finance and Chief Financial OfficerAccounting of the Company since September 2017.March 2020. From February 2017August 2018 to September 2017, Mr. McMonagleMarch 2020, Ms. Uleau was Vice President, FinanceController of the Company. From August 2015Prior to November 2016, Mr. McMonagle was Directorjoining the Company, Ms. Uleau had been Controller of Finance of The Lloyd Group, Inc.United Tectonics Corp., a technologyconstruction services firmcompany, from 2016 to August 2018. From 2014 to 2016, Ms. Uleau was Financial Manager of Cushman and from 2012 to July 2015, he was Vice President, Finance of SnapOne, Inc., a cloud-based mobile software company.Wakefield. Prior to 2012, Mr. McMonagle2014, Ms. Uleau held various senior accounting and financial positions for private and publicly traded companiespositions. In 2012, Ms. Uleau declared bankruptcy in multiple industries.connection with unsecured credit card debt.

The executive officers are elected or appointed by the board of directors of the Company or its appropriate subsidiary to serve until the appointment or election and qualification of their successors or their earlier death, resignation or removal.

PART II

Many of the amounts and percentages presented in this Part II have been rounded for convenience of presentation. All references in this Part II to 2019 and 2018 mean the Company’s fiscal years ended April 30, 2019 and 2018, unless the context otherwise indicates.

The Company’s common stock is traded on the New York Stock Exchange under the symbol “AXR”. On July 24, 2019,19, 2021, there were 416303 holders of record of the common stock.

The Company’s common stock is often thinly traded. As a result, large transactions in the Company’s common stock may be difficult to execute in a short time frame and may cause significant fluctuations in the price of the Company’s common stock. Among other reasons, the stock is thinly traded due to the fact that five of the Company’s shareholders beneficially owned approximately 72%68% of the outstanding common stock as of July 3, 2019.19, 2021. The average trading volume in the Company’s common stock on the New York Stock Exchange over the thirty-day trading period ending on April 30, 20192021 was approximately 5,20013,439 shares per day.

The Company is an Oklahoma corporation and the anti-takeover provisions of its certificate of incorporation and of Oklahoma law generally prohibit the Company from engaging in “business combinations” with an “interested shareholder,” as those terms are defined therein, unless the holders of at least two-thirds of the Company’s then outstanding common stock approve the transaction. Consequently, the concurrence of the Company’s largest shareholders would generally be needed for any “interested shareholder” to acquire control of the Company, even if a change in control would be beneficial to the Company’s other shareholders.

Equity Compensation Plan Information

See Item 12, which incorporates such information by reference from the Company’s Proxy Statement for its 2021 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission.

Dividend Policy

The Company has paid no cash dividends on its common stock since fiscal year 2008. The Company may consider dividends from time-to-time in the future in light of conditions then existing, including earnings, financial condition, cash position, capital requirements and other needs. No assurance is given that there will be any such future dividends declared.

Equity Compensation Plan InformationShare Repurchases

See Item 12, which incorporates such information by reference fromRefer to Note 17 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s Proxy Statement for its 2019 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission (the “Proxy Statement”).share repurchase activity.

As a smaller reporting company, the Company has elected not to provide the disclosure under this item.

INTRODUCTION

For a description of the Company’s business, refer to Item 1.1 of Part I of this annual report on Form 10-K. As indicated in Item 1, the Company, through its subsidiaries, is primarily engaged in onetwo business segment: the real estate business.segments: land development and homebuilding. The Company has no foreign sales.

The following provides information that management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and accompanying notes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. The Company discloses its significant accounting policies in the notes to its audited consolidated financial statements.

The preparation of such financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of those financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Areas that require significant judgments and estimates to be made include: (1) real estate land development cost of sales calculations, which are based on land development budgets and estimates of costs to complete; (2) cash flows, asset groupings and valuation assumptions in performing asset impairment tests of long-lived assets (including real estate inventories) and assets held for sale; (3) actuarially determined defined benefit pension plan obligations and other pension plan accounting and disclosures; (4) risk assessment of uncertain tax positions; and (5) the determination of the recoverability of net deferred tax assets. Actual results could differ from those estimates.

There are numerous critical assumptions that may influence accounting estimates in these and other areas. Management bases its critical assumptions on historical experience, third-party data and various other estimates that it believes to be reasonable under the circumstances. The most critical assumptions made in arriving at these accounting estimates include the following:

RESULTS OF OPERATIONS

Year Ended April 30, 20192021 Compared to Year Ended April 30, 20182020

Prior to April 26, 2019,For 2021, the Company had been engaged in the fulfillment services business. On April 26, 2019, the fulfillment services business was sold (refer to Item 1 of Part I of this annual report on Form 10-K for more detail). The Company’s fulfillment services business has been classified as discontinued operations in the financial statements included in this Form 10-K. Financial information from prior periods has been reclassified to conform to this presentation.

For 2019, the Company reported net income of $1,527,000,$7,392,000, or $0.19$0.95 per share, compared to net income of $238,000, or $0.03 per share, in 2018. Results consisted of (i) a net loss from continuing operations of $2,465,000, or $0.30 per share, in 2019 compared to a net loss of $2,564,000, or $0.32 per share, in 2018 and (ii) net income from discontinued operations of $3,992,000, or $0.49 per share, in 2019 compared to net income of $2,802,000, or $0.35 per share, for 2018. A discussion of continuing operations and discontinued operations follows.

Continuing Operations

For 2019, the Company’s continuing operations reported a net loss of $2,465,000, or $0.30 perdiluted share, compared to a net loss of $2,564,000,$5,903,000, or $0.32$0.73 per share, in 2018. Revenues were $12,831,000 for 2019 compared2020. The net loss in 2020 included $8,600,000 of non-cash charges which included (1) a non-cash pre-tax pension settlement loss of $2,929,000 due to $8,927,000 for 2018.the payment of lump sum payouts of pension benefits to former employees and (2) net non-cash pre-tax impairment charges on other assets of $5,046,000 in connection with the termination of certain real estate leases.

Revenues from land sales were $12,313,000 for 2019 compared to $8,439,000 for 2018. For 2018, $2,044,000 of the $8,439,000 of revenues from land sales was for an approximate five acre undeveloped commercial property in Colorado, which had a gross profit percentage of 65%. The number of new construction single-family residential starts in Rio Rancho byfollowing presents information on revenues for the Company’s customers and other builders was 443 operations (dollars in 2019 and 473 in 2018.thousands):

(a) Percentage not meaningful.                        

The Company offers for sale both developed and undeveloped lots to national, regional and local homebuilders, commercial and industrial property developers and others. The Company sold 65 acres of residential land in 2019 at an average selling price of $190,000 per acre compared to 27 acres of residential land in 2018 at an average selling price of $237,000 per acre. The decreaseincrease in the average selling price per acre of developed residential land in 20192021 compared to 20182020 was primarily due to the location of the sold lots.

property and increased demand for lots by builders. The increase in the average gross profit percentage onselling price per acre of undeveloped residential land sales in New Mexico before indirect costs was 12% for 20192021 compared to 16% for 2018. As a result of many factors, including the nature and timing of specific transactions and the type and location of land being sold, revenues, average selling prices and related average gross profits from land sales can vary significantly from period to period and prior results are not necessarily a good indication of what may occur in future periods.

The Company did not record any non-cash impairment charges on real estate inventory or investment assets in 2019 or 2018. Due to volatility in market conditions and development costs, the Company may experience future impairment charges.

Other revenues were $518,000 for 2019 compared to $488,000 for 2018. Other revenues for 2019 primarily consisted of fees and forfeited deposits from customers, leasehold income and miscellaneous other income items. Other revenues for 2018 were2020 was primarily due to the recognitionlocation of deferred revenue relatedthe sold property and increased demand in the market.

¹Revenues per lot may not calculate precisely due to an oilthe rounding of revenues to the nearest thousand dollars.

Sales of buildings and gas lease, feesother land for 2021 consisted of $5,493,000 with respect to the sale of a 14,000 square foot, single tenant retail building in the Las Fuentes at Panorama Village subdivision in Rio Rancho, New Mexico and $4,000,000 with respect to the sale of a 61,000 square foot warehouse and office facility located in Palm Coast, Florida. Sales of buildings and other land for 2020 consisted of the sale of two undeveloped properties in Palm Coast, Florida.

Miscellaneous other revenues for 2021 primarily consisted of payments for impact fee credits, installation of telecommunications equipment in subdivisions and profit on land used in homebuilding. Miscellaneous other revenues for 2020 primarily consisted of forfeited deposits from customers and miscellaneous other income items.non-refundable option payments.

Operating expensesCost of Revenues. The following presents information on cost of revenues for the Company’s real estate business were $990,000 for 2019 compared to $1,652,000 for 2018. Operating expenses for 2019 primarily consisted of payroll and benefits, real estate taxes, land maintenance costs and depreciation. The decrease of $662,000 was primarily due to lower real estate taxes and land maintenance costs offset operations (dollars in part by higher payroll and benefits.thousands):

(a) Percentage not meaningful.

General and administrative expenses for the Company’s real estate business were $625,000 for 2019, an increase from $578,000 for 2018, primarily due to increased professional fees. Corporate Administrative Expenses. The following presents information on general and administrative expenses were $3,589,000 for 2019, an increasethe Company’s operations (dollars in thousands):

(a) Percentage not meaningful.

Interest (expense) income, net decreased to $(40,000) for 2021 from $3,474,000$334,000 for 2018,2020, primarily due to higher depreciation expense, offseta reduction in part by lower pension expense.

Interest expense was $25,000interest rates on cash balances and the elimination of the deferred purchase price and interest accrual related thereto with respect to the sale of a former business segment (refer to Note 3 to the consolidated financial statements contained in this annual report on Form 10-K for 2019 compared to $5,000 for 2018. Interest expense in both years isdetail regarding the non-cash impairment charge of the deferred purchase price related to the amortizationsale of a former business segment).

Other income of $1,028,000 for 2021 primarily consisted of a settlement payment of $650,000 from a former business segment (refer to Note 3 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the settlement agreement) and $300,000 of debt issuance costs relatedforgiveness with respect to land development activities. There was $115,000 of capitalized interest for 2019 and $13,000 for 2018.

The U.S. Tax Cuts and Jobs Act (the “Act”) was signed into law in December 2017. The Act significantly revised the future ongoing U.S. corporate income taxa loan received by among other things, lowering U.S. corporate income tax rates. The Act reduced the federal corporate tax rate to 21.0% effective January 1, 2018. As the Company has an April 30 fiscal year-end,pursuant to the lower corporate income tax rate was phasedPaycheck Protection Program administered by the U.S. Small Business Administration (refer to Note 6 to the consolidated financial statements contained in resulting inthis annual report on Form 10-K for detail regarding the Company having a blended federal tax rate of 29.7% for 2018. Effective May 1, 2018, the Company’s federal corporate tax rate was 21.0%debt forgiveness).

The Company completed its accounting for the tax effects of the Act during 2019, including adjustments to its deferred tax balances. The Company’s continuing operations had a benefitprovision for income taxes of $708,000$2,643,000 for 20192021 compared to a benefit for income taxes of $279,000$1,722,000 for 2018. During 2018 and as a result of the Act, the Company re-measured its deferred tax assets and liabilities based on the rates at which the deferred tax assets and liabilities were expected to reverse in the future, which is generally 21.0%. During 2018, the Company recognized a provisional income tax expense of $523,000 due to the re-measurement of its deferred tax assets and liabilities.2020.

As a result of the lapse of the statute of limitations, the Company’s total tax effect of gross unrecognized tax benefits in the accompanying financial statements of $58,000 at April 30, 2018 was recognized during 2019.

Discontinued Operations

The Company’s fulfillment services business operated in an industry unrelated to the Company’s continuing operations and had business operations, employees (including its management), customers, suppliers, liquidity and capital resources that were generally different from those of the Company’s continuing operations. The sale of the Company’s fulfillment services business is not expected to have a material impact on the Company’s continuing operations. As noted in Item 1 of Part I of this annual report on Form 10-K, the Company retained ownership of certain real estate in Palm Coast, Florida, which is being leased to the fulfillment services business pursuant to two triple net lease agreements.

Net income from discontinued operations was $3,992,000, or $0.49 per share, in 2019 compared to net income of $2,802,000, or $0.35 per share, for 2018. The results from discontinued operations for 2019 included a pretax gain of $2,506,000, or $0.31 per share, resulting from the sale of the fulfillment services business and for 2018 included a pretax gain of $1,318,000, or $0.16 per share, from a previously disclosed settlement agreement with the State of Florida.

LIQUIDITY AND CAPITAL RESOURCES

AMREP Corporation is a holding company that conducts substantially all of its operations through subsidiaries. As a holding company, AMREP Corporation is dependent on its available fundscash and on distributions of fundscash from subsidiaries to pay expenses and fund operations. The Company’s liquidity is affected by many factors, including some that are based on normal operations and some that are related to the industries in which the Company operatesreal estate industry and the economy generally.

The Company’s primary sources of funding for working capital requirements are cash flow from operations, bank financing for specific real estate projects, a revolving line of credit and existing cash balances. Land investmentsand homebuilding properties generally cannot be sold quickly, and the ability of the Company to sell properties has been and will continue to be affected by market conditions. The ability of the Company to generate cash flow from operations is primarily dependent upon its ability to sell the properties it has selected for disposition at the prices and within the timeframes the Company has established for each property. The development of additional lots for sale, construction of homes or pursuing other real estate projects will require financing or other sources of funding, which may not be available on acceptable terms (or at all). If the Company is unable to obtain such financing, the Company’s results of operations could be adversely affected.

COVID-19 Impact and Response

In March 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. Subsequently, the COVID-19 pandemic has continued to spread and various state and local governments have issued or extended “shelter-in-place” orders, which have impacted and restricted various aspects of the Company’s operations.

In response to the pandemic, the Company allowed all employees to work remotely during March and April 2020, with most operations in New Mexico returning to an office setting beginning in May 2020. In New Mexico, the Company’s construction operations have continued functioning during this period subject to regulated restrictions and safety constraints in order to protect the Company’s employees, trade contractors and homebuilder customers. The Company modified many of its common interactions to be virtual and attempted to minimize in-person interactions. While the above-referenced steps are necessary and appropriate in light of the COVID-19 pandemic, they did, and in some cases still do, impact the Company’s ability to operate in its ordinary and traditional course. Those restrictions, combined with a reduction in the availability, capacity and efficiency of municipal and private services necessary to progress land development and homebuilding, have reduced the Company’s sales pace and delayed certain projects and deliveries. The potential magnitude and duration of the business and economic impacts from the unprecedented public health effort to contain and combat the spread of COVID-19 are uncertain. In addition, the Company can provide no assurance as to whether the COVID-19 public health effort will be intensified to such an extent that the Company will not be able to conduct any business operations for an indefinite period.

While we cannot reasonably estimate the length or severity of this pandemic or if there will be additional periods of increases or spikes in the number of COVID-19 cases, future mutations or related strains of the virus in areas in which the Company operates, an extended economic slowdown could materially impact the Company’s consolidated financial position, consolidated results of operations and consolidated cash flows. The Company could be negatively impacted over the medium-to-longer term if the disruptions related to COVID-19 (a) decrease consumer confidence generally or with respect to purchasing a home or cause civil unrest, (b) precipitate a prolonged economic downturn or an extended rise in unemployment or tempering of wage growth, any of which could lower demand for the Company’s products, impair the Company’s ability to sell and build finished lots and homes in a typical manner or at all, impair the Company’s ability to generate revenues and cash flows, or impair the Company’s ability to access the capital or lending markets (or significantly increase the costs of doing so), (c) increase the costs or decrease the supply of construction materials or the availability of subcontractors and other talent, including as a result of infections or medically necessary or recommended self-quarantining, or governmental mandates to direct production activities to support public health efforts or (d) result in the Company recognizing charges in future periods, which may be material, for impairments related to the Company’s inventory or investment assets. The unprecedented uncertainty surrounding COVID-19, due to rapidly changing governmental directives, public health challenges and progress, macroeconomic consequences and market reactions thereto, also makes it more challenging for the Company to estimate the future performance of the business and develop strategies to generate growth.

Should the adverse impacts described above (or others that are currently unknown) occur, whether individually or collectively, the Company would expect to experience, among other things, increases in defaults under customer contracts, and decreases in future demand for finished lots and homes, possibly resulting in reduced revenues and profitability. Such impacts could be material to the Company’s consolidated financial statements. The Company could also be forced to reduce its average selling prices in order to generate homebuilder or homebuyer demand or in reaction to competitive pressures. In addition, should the COVID-19 public health effort intensify to such an extent that the Company cannot operate in Rio Rancho, the Company could generate few or no sales during the applicable period, which could be prolonged. If there are prolonged government restrictions on the Company’s operations or the Company’s employees, trade contractors or customers, or an extended economic recession, the Company could be unable to produce revenues and cash flows sufficient to conduct operations, meet the terms of the Company’s covenants and other requirements under its financing arrangements or service the Company’s outstanding debt. Such a circumstance could, among other things, exhaust the Company’s available liquidity (and ability to access liquidity sources) or trigger an acceleration to pay a significant portion or all of the Company’s then-outstanding debt obligations, which the Company may be unable to do.

Pension Plan

The Company has a defined benefit pension plan for which accumulated benefits were frozen and future service credits were curtailed as of March 1, 2004. Under generally accepted accounting principles, the Company’s defined benefit pension plan was underfunded atas of April 30, 20192021 by $6,401,000,$476,000, with $23,903,000$21,102,000 of assets and $30,304,000$21,578,000 of liabilities, and was underfunded atas of April 30, 20182020 by $9,051,000,$5,014,000, with $23,372,000$18,260,000 of assets and $32,423,000$23,274,000 of liabilities. The pension plan liabilities were determined using a weighted average discount interest rate of 3.54%2.48% per year atas of April 30, 20192021 and 3.82%2.29% per year atas of April 30, 2018,2020, which are based on the FTSE Pension Discount Curve (formerly known as the Citigroup yield curve) as of such dates as it corresponds to the projected liability requirements of the pension plan. As of April 30, 2019,2021, for aeach 0.25% increase in the weighted average discount interest rate, the pension plan liabilities are forecasted to decrease by approximately $663,000$457,000 and for aeach 0.25% decrease in the weighted average discount interest rate, the pension plan liabilities are forecasted to increase by approximately $690,000.$475,000. As of April 30, 2019,2021, the effect of every 0.25% change in the investment rate of return on pension plan assets would increase or decrease the subsequent year’s pension expense by approximately $56,000,$49,500, and the effect of every 0.25% change in the weighted average discount interest rate would increase or decrease the subsequent year’s pension expense by approximately $13,000.

As noted in Item 1 of Part I of this annual report on Form 10-K, the The Company retained its obligations undermade voluntary contributions to the Company’s defined benefit pension plan following the sale of the Company’s fulfillment services business.$1,847,000 and $3,600,000 during 2021 and 2020. The work force reduction with respect to the Company recognized a non-cash pre-tax pension settlement loss of $2,929,000 in connection with the sale of the fulfillment services business resulted in the acceleration of the funding of approximately $5,194,000 of accrued pension-related obligations2020 due to the Company’s defined benefit pension plan pursuantpaying an aggregate of $7,280,000 in lump sum payouts of pension benefits to ERISA and the regulations thereunder.  The Company notified the PBGC of the sale of the fulfillment services business and, as permitted by ERISA, made an election to satisfy this accelerated funding obligation over a period of seven years beginningformer employees. There were no such charges in fiscal year 2021.

The closing of certain facilities in fiscal year 2011 and the associated work force reduction resulted in the PBGC requiring the Company to accelerate the funding of approximately $11,688,000 of accrued pension-related obligations to the Company’s defined benefit pension plan.  The Company entered into a settlement agreement with the PBGC in fiscal 2014 with respect to such liability. The settlement agreement with the PBGC terminated by its terms in 2019 with the PBGC being deemed to have released and discharged the Company and all other members of its controlled group from any claims thereunder.

Oil and Gas Leases

Operating Activities

Real estate inventory decreased from $58,874,000 at April 30, 2018 to $57,773,000 at April 30, 2019. Inventory inThe following presents information on the Company’s core real estate market of Rio Rancho decreasedoperating activities (dollars in thousands):

Land inventory in New Mexico increased from $54,929,000 at April 30, 20182020 to $53,831,000 at April 30, 2019,2021 by $456,000 primarily due to real estate land sales, which were offset in part by an increase inincreased land development activity and the acquisition of property. The balanceland. Homebuilding finished inventory increased from 2020 to 2021 by $417,000 due to the construction of real estate inventory primarily consisted of propertiesmodel and spec homes. Homebuilding construction in Colorado.process increased from 2020 to 2021 by $1,235,000 due to increased homebuilding activity.

Investment assets decreased from $17,725,000 at April 30, 2018 to $17,227,000 at April 30, 2019, primarily due to depreciation charges. Investment assets include (i) investment land, which represents vacant, undeveloped land

Land held for development orlong-term investment represents property located in areas that are not planned to be developed in the near term and that has not been offered for sale in the normal course of business,business. As of April 30, 2021 and (ii) two facilitiesApril 30, 2020, the Company held approximately 12,000 acres of land in New Mexico classified as land held for long-term investment.

Construction in process relates primarily to construction costs of a 14,000 square foot, single tenant retail building in the Las Fuentes at Panorama Village subdivision in Rio Rancho, New Mexico, which was completed during 2021. As of April 30, 2021, buildings were comprised of a 143,000 square foot warehouse and office facility located in Palm Coast, Florida. As of April 30, 2020, buildings were comprised of a 143,000 square foot warehouse and office facility located in Palm Coast, Florida that aggregate 204,000and a 61,000 square feetfoot warehouse and are leased to a third party.office facility located in Palm Coast, Florida. During 2021, the Company sold the 14,000 square foot retail building and the 61,000 square foot warehouse and office facility. Depreciation associated with the buildings was $542,000 and $517,000 for 2021 and 2020.

Other assets increased from $594,000 at April 30, 2018 to $6,475,000 at April 30, 2019, primarily due to the present value of expected lease payments deemed to be consideration from sale of the Company’s fulfillment services business.

Taxes receivable, net decreased from $764,000 at April 30, 2018 to $283,000 at April 30, 2019, primarily due to the receipt of a federal tax refund of $272,000. Deferred income taxes, net increased from $2,965,000 at April 30, 2018 to $4,536,000 at April 30, 2019, primarily due to the addition of federal net operating loss carry forwards resulting in a deferred tax asset of $2,079,000.

Accounts payable and accrued expenses increased from $2,767,000 at April 30, 2018 to $2,964,000 at April 30, 2019, primarily due to an increase in land development activity in New Mexico.

·

Deferred income taxes, net decreased from 2020 to 2021 by $3,331,000 primarily due to a reduction of $11,249,000 in federal net operating loss carry forwards.

Other liabilities and deferred revenue decreased from $134,000 at April 30, 2018 to none at April 30, 2019, due to the amortization of deferred revenue related to an oil and gas lease payment received in fiscal year 2015.

The unfunded pension liability of the Company’s frozen defined benefit pension plan decreased from $9,051,000 at April 30, 2018 to $6,401,000 at April 30, 2019, primarily due to Company contributions to the pension plan and favorable investment results of plan assets during 2019. The Company recorded, net of tax, other comprehensive income of $903,000 in 2019 and other comprehensive income of $1,306,000 in 2018, reflecting the change in the unfunded pension liability in each year net of the related deferred tax and unrecognized prepaid pension amounts.

Financing Activities

Notes payable, net decreased from $1,843,000 at$3,890,000 as of April 30, 20182020 to $1,319,000 at$3,448,000 as of April 30, 2019,2021, primarily due to repayments made on financing foroutstanding borrowings partially offset by additional borrowings to fund land development activity. Given below are descriptionsactivities.

The following presents information on the Company’s notes payable in effect as of April 30, 2021 (dollars in thousands):

The following presents information on the Company’s notes payable in effect as of April 30, 2020 and terminated prior to April 30, 2021 (in thousands):

Refer to Note 6 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding each of the Company’s financing arrangements:notes payable.

LEDC and ASW made certain representations and warranties in connection with this loan and were requiredRefer to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contained customary events of default for similar financing transactions, including: LEDC’s failureNote 17 to make principal, interest or other payments when due; the failure of LEDC or ASW to observe or perform their respective covenants under the loan documentation; the representations and warranties of LEDC or ASW being false; the insolvency or bankruptcy of LEDC or ASW; and the failure of ASW to maintain a tangible net worth of at least $35 million. Upon the occurrence and during the continuance of an event of default, Lender had the right to declare the outstanding principal amount and all other obligations under the loan immediately due and payable. LEDC incurred customary costs and expenses and paid certain fees to Lender in connection with the loan. As noted above, in June 2019, the outstanding principal amount of the loan was fully repaid and the loan was terminated.

LEDC andASWhave made certain representations and warranties in connection with this loan and are required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including: LEDC’s failure to make principal, interest or other payments when due; the failure of LEDC orASWto observe or perform their respective covenants under the loan documentation; the representations and warranties of LEDC orASWbeing false; the insolvency or bankruptcy of LEDC orASW; and the failure ofASWto maintain a tangible net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, Lender may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. LEDC incurred customary costs and expenses and paid certain fees to Lender in connection with the loan.

HDC and ASW have made certain representations and warranties in connection with this loan and are required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including: HDC’s failure to make principal, interest or other payments when due; the failure of HDC or ASW to observe or perform their respective covenants under the loan documentation; the representations and warranties of HDC or ASW being false; and the insolvency or bankruptcy of HDC or ASW. Upon the occurrence and during the continuance of an event of default, Main Bank may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. At April 30, 2019, both HDC and ASW were in compliance with the covenantsconsolidated financial statements contained in this annual report on Form 10-K for detail regarding the loan. HDC incurred customary costs and expenses and paid fees to Main Bank in connection with the loan.Company’s share repurchase activity.

Investing Activities

Capital expenditures were approximately $8,000$5,000 for 20192021 and $52,000$9,000 for 2018,2020 primarily for upgrades related to technology in both years. The Company believes that it has adequate cash, bank financing and cash flows from operations to provide for anticipated capital expenditures and land development spending in fiscal year 2020.2021.

Off-Balance Sheet Arrangements

As of April 30, 2019,2021 and April 30, 2020, the Company did not have any off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).

Recent Accounting Pronouncements

SeeRefer to Note 1 to the consolidated financial statements includedcontained in this annual report on Form 10-K for a discussion of recently issued accounting pronouncements.

SEGMENT INFORMATION

The Company operates in one business segment: real estate.

IMPACT OF INFLATION

Operations of theThe Company’s real estate businessoperations can be impacted by inflation. Inflation can cause increases in the cost of land, materials, services, interest and labor. Unless such increased costs are recovered through increased sales prices or improved operating efficiencies, operating margins will decrease. A large partThe Company’s homebuilding segment as well as homebuilders that are customers of the Company’s real estate sales are to homebuilders wholand development business segment face their own inflationary concerns that rising housing costs, including interest costs, may substantially outpace increases in the incomes of potential purchasers and make it difficult for them to purchase a new home or sell an owned home. If this situation were to exist, the demand for homes produced by the Company’s homebuilding segment could decrease and the demand for the Company’s land by these homebuilder customers could decrease. In general, in recent years interest rates have been at historically low levels and other price increases have been commensurate with the general rate of inflation in the Company’s markets, and as a result the Company has not found the inflation risk to be a significant problem in its business. Despite low inflation, the Company’s real estate operations are experiencing price increases as a result of recent tariffs and labor and material shortages. Inflation may also increase the Company’s financing costs. While the Company attempts to pass on to its customers increases in costs through increased sales prices, market forces may limit the Company’s ability to do so. If the Company is unable to raise sales prices enough to compensate for higher costs, or if mortgage interest rates increase significantly, the Company’s revenues, gross margins and net income could be adversely affected.

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral statements that are “forward-looking”, including statements contained in this annual report on Form 10-K and other filings with the Securities and Exchange Commission, reports to the Company’s shareholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, other written or oral statements, which constitute forward-looking statements, may be made by or on behalf of the Company. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects”, “forecasts”, “may”, “should”, variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and contingencies that are difficult to predict. All forward-looking statements speak only as of the date of this annual report on Form 10-K or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are qualified by the cautionary statements in this section. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements.

The forward-looking statements contained in this annual report on Form 10-K include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital, land development, homebuilding and capital expenditure needs, (2) the Company’s expected liquidity sources, including the amount of principal available for borrowing under the Company’s financing arrangements, (3) anticipated future development of the Company’s real estate holdings, including the 15-acre property in the La Mirada subdivision, (4) the development and construction of possible future commercial properties to be marketed to tenants, (5) the designs, pricing and levels of options and amenities with respect to the Company’s homebuilding operations, (6) the timing of reimbursements under, and the general effectiveness of, the Company’s public improvement districts and private infrastructure reimbursement covenants, (6)(7) the number of planned residential lots in the Company’s subdivisions, (7)(8) estimates and assumptions used in determining future cash flows of real estate projects, (8)(9) the utilization of existing bank financing, (9)(10) the effect of recent accounting pronouncements, (10) the anticipated(11) contributions by the Company to the pension plan, the amount of future annual benefit payments to the pension plan participants payable from plan assets, the appropriateness of valuation methods to determine the fair value of financial instruments in the pension plan, the expected return on assets in the pension plan, the expected long-term rate of return on assets in the pension plan, the effect of changes in the weighted average discount interest rate on the amount of pension plan liabilities and the effect of changes in the investment rate of return on pension plan assets with respect to pension expense, (11)(12) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2006 Equity Compensation Plan or the AMREP Corporation 2016 Equity Compensation Plan, (12)(13) the future issuance of deferred stock units to directors of the Company, (13)(14) the adequacy of the Company’s facilities, and (14)(15) the materiality of claims and legal actions arising in the normal course of the Company’s business.business, (16) the negative impact of the COVID-19 pandemic on the Company’s financial position and ability to continue operations at normal levels or at all, (17) the duration, effect and severity of the COVID-19 pandemic and (18) the measures that governmental authorities may take to address the COVID-19 pandemic which may precipitate or exacerbate one or more of the above-mentioned or other risks and significantly disrupt or prevent the Company from operating in the ordinary course for an extended period of time. The Company undertakes no obligation to update or publicly release any revisions to any forward-looking statement to reflect events, circumstances or changes in expectations after the date of such forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Not required.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is 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 in the United States of America.

Because of the inherent limitations of internal control over financial reporting, including the possibility of human error and the circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely basis. Accordingly, even internal controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Furthermore, projections of any evaluation of the effectiveness of internal controls to future periods are subject to the risk that such controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of internal control over financial reporting as of April 30, 20192021 based upon the criteria set forth in a report entitled “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on its assessment, management has concluded that, as of April 30, 2019,2021, internal control over financial reporting was effective.

This annual report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to such attestation pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report on internal control over financial reporting in this annual report on Form 10-K.

Report of Independent Registered Public Accounting FirmREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors and Shareholders of

AMREP Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of AMREP Corporation and Subsidiaries (the “Company”) as of April 30, 20192021 and 2018,2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the two years in the period ended April 30, 2019,2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2019,2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB"(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allocation of Common Development Costs

For the year ended April 30, 2021, the Company’s land sale cost of revenues was approximately $17.3 million, which includes all direct acquisition costs and other costs specifically identified with the land and an allocation of common development costs associated with its land development projects. As discussed in Note 1 to the consolidated financial statements, common development costs are allocated based on the relative sales value of the individual parcels of land being sold. At the time of the closings of the sales of individual land parcels, certain common development costs may not yet be incurred. To recognize the appropriate amount of cost of revenues, the Company estimates the total remaining common development costs associated with its land development projects. Estimates are affected by changes to zoning laws, land development requirements and the cost of labor, material, and subcontractors.

Auditing the Company’s allocation of common development costs associated with its land development projects was complex and subject to sensitive management assumptions.

To test the Company’s allocation of common development costs associated with its land development projects, our audit procedures included, among others, testing the significant assumptions used to develop the estimated costs to complete the land development projects and testing the completeness and accuracy of the underlying data and allocation calculation. For example, we compared the estimated land development costs to actual costs of similar communities developed by the Company; agreed the actual development costs to supporting documentation, including underlying contracts; and reviewed margins disaggregated by project for reasonableness.

/s/ Marcumllp

Marcum LLP

We have served as the Company’s auditor since 2017.

2017.

Philadelphia, Pennsylvania

July 26, 201927, 2021

AMREP CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

APRIL 30, 20192021 AND 20182020

(Amounts in thousands, except share and per share amounts)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share amounts)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Amounts in thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Organization and principles of consolidation

The consolidated financial statements include the accounts of AMREP Corporation, an Oklahoma corporation, and its subsidiaries (collectively, the “Company”). The Company, through its subsidiaries, is primarily engaged in onetwo business segment: the real estate business.segments: land development and homebuilding. The Company has no foreign sales. All significant intercompany accounts and transactions have been eliminated in consolidation.

Prior to April 26, 2019, the Company had been engaged in the fulfillment services business. The fulfillment services business performed fulfillment and contact center services for publications, membership organizations, government agencies and other direct marketers. On April 26, 2019, the Company’s fulfillment services business was sold. Results of the Company’s fulfillment services business are retrospectively reported as discontinued operations in the accompanying consolidated financial statements for all periods presented. Prior year information has been adjusted to conform to the current year presentation. Unless otherwise stated, the information disclosed in the footnotes accompanying the consolidated financial statements refers to continuing operations. See Note 2 – Discontinued Operations for more information regarding results from discontinued operations.

The consolidated balance sheets are presented in an unclassified format since the Company has substantial operations in the real estate industry and its operating cycle is greater than one year. Certain 20182020 balances in these financial statements have been reclassified to conform to the current year presentation with no effect on the net income or loss or shareholders’ equity.

Fiscal year

The Company’s fiscal year ends on April 30. All references to 20192021 and 20182020 mean the fiscal years ended April 30, 20192021 and 2018,2021, unless the context otherwise indicates.

Revenue recognition

Real estateLand sale revenues: The Company accounts for land sale revenues in accordance with Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from land sales are recognized when the parties are bound by the terms of a contract, consideration has been exchanged, title and other attributes of ownership have been conveyed to the buyer by means of a closing and the Company is not obligated to perform further significant development of the specific property sold. In general, the Company’s performance obligation for each of these land sales is fulfilled upon the delivery of the land, which generally coincides with the receipt of cash consideration from the counterparty.

CostLand sale cost of land salesrevenues includes all direct acquisition costs and other costs specifically identified with the property, including pre-acquisition costs and capitalized real estate taxes and interest, and an allocation of certain common development costs associated with the entire project. Common development costs include the installation of utilities and roads, and may be based upon estimates of cost to complete. The allocation of costs is based on the relative sales value of the property. Estimates and cost allocations are reviewed on a regular basis until a project is substantially completed, and are revised and reallocated as necessary on the basis of current estimates.

Home sale revenues: The Company accounts for revenue from home sales in accordance with ASU 2014-09. Revenues and cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer. The Company’s performance obligation to deliver a home is normally satisfied in less than one year from the date a binding sale agreement is signed. In general, the Company’s performance obligation for each home sale is fulfilled upon the delivery of the completed home, which generally coincides with the receipt of cash consideration from the counterparty. If the Company’s performance obligations are not complete upon the home closing, the Company defers a portion of the home sale revenues related to the outstanding obligations and subsequently recognizes that revenue upon completion of such obligations. As of April 30, 2021, deferred home sale revenues and costs related thereto were immaterial.

Forfeited customer deposits for homes are recognized in home sale revenues in the period in which the Company determines that the customer will not complete the purchase of the home and the Company has the right to retain the deposit. In order to promote sales of homes, the Company may offer home buyers sales incentives. These incentives vary by type and amount on a community-by-community and home-by-home basis. Incentives are reflected as a reduction in home sale revenues.

Home construction and related costs are capitalized as incurred within real estate inventory under the specific identification method on the consolidated balance sheet and are charged to home sale cost of revenues on the consolidated statement of operations when the related home is sold.

Rental revenues: The Company may enter into leases with tenants with respect to property or buildings it owns. Base rental payments from tenants are recognized as revenue monthly over the term of the lease. Additional rent related to the reimbursement of real estate taxes, insurance, repairs and maintenance, and other operating expenses is recognized as revenue in the period the expenses are incurred.

Building sales and other revenues: The Company accounts for building sales and other revenues in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Building sales revenues consist of building sales in New Mexico and Florida. Revenue from these building sales are recognized when the parties are bound by the terms of a contract, consideration has been exchanged, title and other attributes of ownership have been conveyed to the buyer by means of a closing and the Company is not obligated to perform further significant development of the specific property sold. In general, the Company’s performance obligation for each of these building sales is fulfilled upon the delivery of the property, which generally coincides with the receipt of cash consideration from the counterparty.

Building sales and other cost of revenues includes all direct acquisition costs and other costs specifically identified with the property, including pre-acquisition and acquisition costs, if applicable, closing and selling costs and construction costs.

Cash, and cash equivalents

Cash equivalents consist of highly liquid investments that have an original maturity of ninety days or less when purchased and are readily convertible into cash. Restricted cash consists of cash deposits with a bank that are restricted due to two Subdivision Improvement Agreementssubdivision improvement agreements with the Citya governmental authority. The Company did not have any restricted cash as of Rio Rancho, New Mexico.

Reclassifications

In connection with the sale of the Company’s fulfillment services business, certain real property previously classified as property, plant and equipment but currently rented to the fulfillment services business has been reclassified on the consolidated balance sheets as investment assets in the periods presented. These reclassifications have no effect on previously reported net incomeApril 30, 2021 or retained earnings.April 30, 2020. 

Real estate inventory

Real estate inventory includes land and improvements on land held for future development or sale. The Company accounts for its real estate inventory in accordance with ASCAccounting Standards Codification (“ASC”) 360-10. The cost basis of the land and improvements includes all direct acquisition costs including development costs, certain amenities, capitalized interest, capitalized real estate taxes and other costs. Interest and real estate taxes are not capitalized unless active development is underway. Real estate inventory held for future development or sale is stated at accumulated cost and is evaluated and reviewed for impairment when events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Provisions for impairment are recorded when undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of the assets. For real estate projects under development, an estimate of future cash flows on an undiscounted basis is determined using estimated future expenditures necessary to complete such projects and using management’s best estimates about sales prices and holding periods. The estimation process involved in determining if assets have been impaired and in the determination of estimated future cash flows is inherently uncertain because it requires estimates of future revenues and costs, as well as future events and conditions. If the excess of undiscounted cash flows over the carrying value of a project is small, there is a greater risk of future impairment and any resulting impairment charges could be material. Due to the subjective nature of the estimates and assumptions used in determining future cash flows, actual results could differ materially from current estimates and the Company may be required to recognize impairment charges in the future.

Investment assets, net

Investment assets, net consist of (i) investment land, which represents vacant, undeveloped land not held for development or sale in the normal course of business, and (ii) real estate assets that are leased or intended to be leased to third parties. Investment assets are stated at the lower of cost or net realizable value.

Depreciation of investment assets (other than land) is provided principally by the straight-line method at various rates calculated to amortize the book values of the respective assets over their estimated useful lives, which generally are 10 to 40 years for buildings and improvements. Land is not subject to depreciation.

Impairment of long-lived assets

Long-lived assets consist of real estate being leased to third partiesinventory and investment assets and are accounted for in accordance with ASC 360-10. Long-lived assets are evaluated and tested for impairment when events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Asset impairment tests are based upon the intended use of assets, expected future cash flows and estimates of fair value of assets. The evaluation of operating asset groups includes an estimate of future cash flows on an undiscounted basis using estimated revenue streams, operating margins and general and administrative expenses. The estimation process involved in determining if assets have been impaired and in the determination of estimated future cash flows is inherently uncertain because it requires estimates of future revenues and costs, as well as future events and conditions. If the excess of undiscounted cash flows over the carrying value of a project is small, there is a greater risk of future impairment and any resulting impairment charges could be material. Due to the subjective nature of the estimates and assumptions used in determining future cash flows, actual results could differ materially from current estimates and the Company may be required to recognize impairment charges in the future

Leases

Right-of-use assets and lease liabilities are recorded on the balance sheet for all leases with an initial term over one year. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. Right-of-use assets are classified within other assets and the corresponding lease liability is included in accounts payable and accrued expenses in the consolidated balance sheet.

Share-based compensation

The Company accounts for awards of restricted stock and deferred stock units in accordance with ASC 718-10, which requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). Compensation expense for awards of restricted stock and deferred stock units are based on the fair value of the awards at their grant dates.

Income taxes

Deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured by using currently enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized.

Earnings (loss) per share

Basic earnings (loss) per share is based on the weighted average number of common shares outstanding during each year. Unvested restricted shares of common stock (see Note 10)11) are not included in the computation of basic earnings per share, as they are considered contingently returnable shares. Unvested restricted shares of common stock are included in diluted earnings per share if they are dilutive. Deferred stock units (see Note 10)11) are included in both basic and diluted earnings per share computations.

Pension plan

The Company recognizes the over-funded or under-funded status of its defined benefit pension plan as an asset or liability as of the date of the plan’s year-end statement of financial position and recognizes changes in that funded status in the year in which the changes occur through comprehensive income (loss).

Comprehensive income

Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources. Total comprehensive income is the total of net income or loss and other comprehensive income or loss that, for the Company, consists solely of the minimum pension liability net of the related deferred income tax effect.

Management’s estimates and assumptions

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates that affect the financial statements include, but are not limited to, (i) real estateland sale cost of salesrevenue calculations, which are based on land development budgets and estimates of costs to complete; (ii) cash flows, asset groupings and valuation assumptions in performing asset impairment tests of long-lived assets and assets held for sale; (iii) actuarially determined benefit obligationobligations and other pension plan accounting and disclosures; (iv) risk assessment of uncertain tax positions; and (v) the determination of the recoverability of net deferred tax assets. The Company bases its significant estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results could differ from these estimates.

Discontinued operations

The Company records discontinued operations when the disposal of a separately identified business unit constitutes a strategic shift in the Company’s operations, as defined in Accounting Standards Codification (“ASC”) Topic 205-20, Discontinued Operations (“ASC Topic 205-20”).

Recent accounting pronouncements

In May 2014,December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Income Taxes – Simplifying the Accounting Standards Update (“ASU”) No. 2014-09,Revenue from Contracts with Customers. Since that date, the FASB has issued additional ASUs providing further guidance (collectively, “Topic 606”). Topic 606 clarified the principles for recognizing revenues and costsIncome Taxes, which removes certain exceptions for companies related to obtainingtax allocations and fulfilling customer contracts. The core principle of Topic 606 is tosimplifies when companies recognize revenues when promised goods or services are transferred to customersdeferred tax liabilities in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Topic 606 defines a five-step process to achieve this core principle, and more judgment and estimates are required under Topic 606 than were required under the prior generally accepted accounting principles. Topic 606 wasinterim period. ASU 2019-12 will be effective for the Company'sCompany’s fiscal year beginning May 1, 2018.2021. The Company adopted Topic 606 usingis currently evaluating the modified retrospective method. Results for reporting periods beginning after May 1, 2018 are presented under Topic 606, while prior period amounts were not adjusted and continue to be reported in accordance with ASC 360-20. The adoption of Topic 606 had no impact that this ASU will have on the Company's results of operations.Company’s consolidated financial statements.

In February 2016,August 2018, the FASB issued ASU  No. 2016-02,2018-13, Leases. Since that date,Fair Value Measurement: Disclosure Framework – Changes to the FASB has issued additional ASUs providing further guidanceDisclosure Requirements for lease transactions (collectively “ASU 2016-02”)Fair Value Measurement. ASU 2016-022018-13 eliminates certain disclosure requirements for fair value measurements for all entities, requires that a lessee recognizepublic entities to disclose certain new information and modifies some disclosure requirements to improve the assets and liabilities that arise from operating leases. A lessee should recognize in its balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a termeffectiveness of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Upon adoption of ASU 2016-02, the Company will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 will be effective for the Company for fiscal year 2020 beginning May 1, 2019. The adoption of ASU 2016-02 by the Company is not expected to have a material effect on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15,Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 reduces the diversity in practice regarding how certain cash receipts and cash payments are presented and classifieddisclosures in the statement of cash flows, including classifying proceeds from company-owned life insurance proceeds as an investing activity.notes to financial statements. ASU 2016-152018-13 was effective for the Company’s fiscal year beginning May 1, 2018. The Company received life insurance proceeds of $85,000 during 2018, which is reflected in the accompanying Consolidated Statement of Cash Flows as an investing activity. The income associated with the life insurance proceeds was recognized in various years prior to 2019.

In January 2018, the FASB issued ASU 2018-02,Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits the reclassification to retained earnings of certain tax effects resulting from the U.S. Tax Cuts and Jobs Act related to items in accumulated other comprehensive income. ASU 2018-02 may be applied retrospectively to each period in which the effect of the U.S. Tax Cuts and Jobs Act is recognized or may be applied in the period of adoption. ASU 2018-02 will be effective for the Company’s fiscal year 2020 beginning May 1, 2019. The Company has determined it will not elect to reclassify such tax effects, and as such, the adoption of ASU 2018-02 will not have an effect on its consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07,Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-based Payment Accounting. ASU 2018-07 addresses several aspects of the accounting for nonemployee share-based payment transactions, including share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 will be effective for the Company’s fiscal year 2020 beginning May 1, 2019.2020. The adoption of ASU 2018-072018-13 by the Company isdid not expected to have a material effect on its consolidated financial statements.

In August 2018, the FASB issued ASU  No. 2018-13,2018-14, Fair Value Measurement:Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework – Framework—Changes to the Disclosure Requirements for Fair Value MeasurementDefined Benefit Plans. (ASU 2018-13), which2018-14 removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures and adds and modifies certain disclosure requirements identified as relevant for fair value measurements. Under the new guidance, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public business entities will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income.companies with defined benefit retirement plans. ASU 2018-13 will be2018-14 was effective for the Company’s fiscal year 2021 beginning May 1, 2020. The adoption of ASU 2018-14 by the Company is currently evaluating the impact that this guidance willdid not have a material effect on the Company’sits consolidated financial statements.

There are no other new accounting standards or updates to be adopted that the Company currently believes might have a significant impact on its consolidated financial statements.

On April 26, 2019, Palm Coast Data Holdco, Inc. (“Seller”), a wholly owned subsidiary of the Company, entered into a membership interest purchase agreement (the “Purchase Agreement”) with Studio Membership Services, LLC (“Buyer”). The closing of the transactions contemplated by the Purchase Agreement occurred on April 26, 2019 (the “Closing Date”).

Pursuant to the Purchase Agreement, Buyer acquired the Company’s fulfillment services business through the purchase from Seller of all of the membership interests (the “Membership Interests”) of Palm Coast Data LLC (“PCDLLC”) (which included PCDLLC’s wholly owned subsidiary FulCircle Media, LLC) and Media Data Resources, LLC (PCDLLC, FulCircle Media, LLC and Media Data Resources, LLC are collectively referred to herein as the “Target Group”). Pursuant to ASC 205-20, “Presentation of Financial Statements - Discontinued Operations”, the membership interests sold are reported as discontinued operations in the accompanying financial statements.

The purchase price for the Membership Interests was $1,000,000, which was paid by Buyer to Seller on the Closing Date. In addition, substantially all of the intercompany amounts of the Target Group due to or from the Company and its direct and indirect subsidiaries (not including the Target Group) were eliminated through offsets, releases and capital contributions. Buyer and Seller provided customary indemnifications under the Purchase Agreement and provided each other with customary representations, warranties and covenants.

In connection with the Purchase Agreement, PCDLLC entered into two triple net lease agreements, each dated as of the Closing Date (each, a “Lease Agreement” and, together, the “Lease Agreements”), pursuant to which PCDLLC has agreed to lease (1) from Two Commerce LLC (“TC”), a subsidiary of the Company, a 61,000 square foot facility located in Palm Coast, Florida, and (2) from Commerce Blvd Holdings, LLC (“CBH”), a subsidiary of the Company, a 143,000 square foot facility in Palm Coast, Florida.

Pursuant to each Lease Agreement, all structural, mechanical, maintenance and other costs associated with the applicable facility being leased are the responsibility of PCDLLC. The term of each Lease Agreement is 10 years. At the option of PCDLLC, the expiration date of each Lease Agreement may be accelerated (1) to the date PCDLLC pays the applicable landlord an amount equal to the present value of all future rent calculated as of the proposed expiration date or (2) to a date within 30 days after the sixth anniversary of the Closing Date if PCDLLC pays the applicable landlord an amount equal to 90% of the present value of all future rent calculated as of the proposed expiration date. Pursuant to the Lease Agreements, PCDLLC will pay to TC and CBH the aggregate annual rent set forth below, which is payable in equal monthly installments in each of the applicable years, subject to a waiver of the payment of rent attributable to the month of May 2019.

The gain before income taxes recorded on the sale of the Company’s fulfillment services business was $2,506,000 and consisted of the following:

The following table provides a reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations noted above to the assets and liabilities classified as discontinued operations in the accompanying balance sheets (in thousands, intercompany accounts have been eliminated):

The following table provides a reconciliation of the carrying amounts of components of pretax income of the discontinued operations to the amounts reported in the accompanying consolidated statements of operations (in thousands):

The following is a reconciliation of the Company’s cash and cash equivalents from the consolidated balance sheet as of April 30, 2018 to the consolidated statements of cash flows:

Prior period adjustment