UNITED STATES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended April 30, 2022

or

For the transition period from __________ to __________

Commission File Number 1-3647

J.W. Mays, Inc.

(Exact Name of Registrant as Specified in its Charter)

(718) 624-7400

Registrant’s Telephone Number, Including Area Code

Not Applicable

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

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 ☒ 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 ☒ No ☐

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

This report contains 2722 pages.

J. W. MAYS, INC.

INDEX

Part I - Financial Information

Item 1. Financial Statements

J. W. MAYS, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

See Notes to Accompanying Consolidated Financial StatementsStatements.

J. W. MAYS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

See Notes to Accompanying Consolidated Financial Statements

J. W. MAYS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

See Notes to Accompanying Consolidated Financial Statements

J. W. MAYS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

See Notes to Accompanying Consolidated Financial Statements.

J. W. MAYS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Summary of Significant Accounting Policies:Polciies:

Beginning March 2020 and continuing through April 2022, we experienced an increase in late payments due to the impactUse of COVID-19 and the related reductions in economic activity from ongoing government mandated business regulations. The effects of COVID-19 on our tenants have been reflected in our allowance for credit losses for accounts receivable. In limited circumstances, we have agreed to rent deferrals for certain tenants. We also continue to experience volatility in the valuation of our equity investments through April 30, 2022.

Looking ahead, the full impact of COVID-19 and continuing government regulation on our business is unknown and highly unpredictable. Our past results may not be indicative of our future performance and historical trends in revenues, income from operations, net income, earnings per share, cash provided by operating activities, among others, may differ materially. For example, to the extent the pandemic continues to disrupt economic activity nationally and in New York, NY, like other businesses, it could adversely affect our business operations and financial results through prolonged decreases in revenue, credit deterioration of our tenants, depressed economic activity, or declines in capital markets. In addition, many of our expenses are less variable in nature and may not correlate to changes in revenues. The extent of the impact will depend on a number of factors, including the duration and severity of the pandemic; distribution of vaccines; and the macroeconomic impact of government measures to contain the spread of the virus and related government regulations.

Basis of PresentationEstimates

The accounting records are maintained in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of the Company’s financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the disclosure of contingent assets and liabilities, incremental borrowing rates and recognition of renewal options for operating lease right-of-use assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. The estimates that we make include allowance for doubtful accounts, depreciation, impairment analysis of long-lived assets, income tax assets and liabilities, fair value of marketable securities and revenue recognition. Estimates are based on historical experience where applicable or other assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results may differ from those estimates under different assumptions or conditions.

The interim financial statements are prepared pursuant to the instructions for reporting on Form 10-Q and Article 8 of Regulations S-X of the SEC Rules and Regulations. The July 31, 20212022 consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes included in the Company's latest Form 10-K Annual Report for the fiscal year ended July 31, 2021.2022. In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. The results of operations for the current period are not necessarily indicative of the results for the entire fiscal year ending July 31, 20222023 or any other period.

As of April 30, 2022, the economic impacts of COVID-19 continue to evolve. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As additional information becomes available, our estimates may change materially in future periods.

Restricted Cash

Restricted cash primarily consists of cash held in bank accounts for tenant security deposits and other amounts required under certain loan agreements.

Accounts Receivable

Generally, rent is due from tenants at the beginning of the month in accordance with terms of each lease. Based upon its periodic assessment of the quality of the receivables, management uses its historical knowledge of the tenants and industry experience to determine whether a reserve or write-off is required. The Company uses specific identification to write-off receivables to bad debt expense in the period when issues of collectibility become known. Collectibility issues include late rent payments, circumstances when a tenant indicates their intention to vacate the property without paying, or when tenant litigation or bankruptcy proceedings are not expected to result in full payment. Management also assesses collectibility by reviewing accounts receivable on an aggregate basis where similar characteristics exist. In determining the amount of the allowance for credit losses, the Company considers past due status and a tenant’s payment history. We also consider current market conditions and reasonable and supportable forecasts of future economic conditions. Our assessment considers business and economic impacts caused by COVID-19. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict causing variability and volatility that may have a material effectimpact on our allowance for uncollectible accounts receivables in future periods.

Allowance for Uncollectible and Bad Debt Expense

As of April 30,October 31, 2022 and July 31, 2021,2022, and primarily because of the economiclingering effects of COVID-19, the Company recorded an allowance for uncollectible receivables in the amount of $399,000$333,000 and $318,000,$393,000, respectively, as an offset to receivables.

Activity in the allowance for uncollectible receivables and bad debt expense for each period follows:

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated using the straight-line method and the declining-balance method. Amortization of improvements to leased property is calculated over the life of the lease. Lives used to determine depreciation and amortization are generally as follows:

Maintenance, repairs, renewals and improvements of a non-permanent nature are charged to expense when incurred. Expenditures for additions and major renewals or improvements are capitalized along with the associated interest cost during construction. The cost of assets sold or retired, and the accumulated depreciation or amortization thereon are eliminated from the respective accounts in the year of disposal, and the resulting gain or loss is credited or charged to income. Capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life.

During the nine months ended April 30, 2022, the Company had expenditures of $92,941 for steel work at its Jowein building in Brooklyn, New York. During this period, the Company also had expenditures of $161,337 for renovations at its 9 Bond Street building in Brooklyn, New York, and $1,050,680 at its Fishkill, New York building including:

During the nine months ended April 30, 2021, the Company had expenditures of:

Impairment

The Company reviews property and equipment and related lease intangibles for possible impairment when certain events or changes in circumstances indicate the carrying amount of the asset may not be recoverable through operations plus estimated disposition proceeds. Events or changes in circumstances that may occur include, but are not limited to, significant changes in real estate market conditions, estimated residual values, and an expectation to sell assets before the end of the previously estimated life. Impairments are measured to the extent the current book value exceeds the estimated fair value of the asset less disposition costs for any assets classified as held for sale. As of April 30,October 31, 2022 and July 31, 2021,2022, the Company has determined there was no impairment of its property and equipment.equipment or related lease intangibles.

Deferred Charges

Deferred charges consist principally of costs incurred in connection with the leasing of property to tenants. Such costs are amortized over the related lease periods, ranging from 4 to 21 years, using the straight-line method. If a lease is terminated early, such costs are expensed.

Leases - Lessor Revenue

The Company accounts for revenue in accordance with Accounting Standards Update (ASU) 2014-09 (Topic 606) Revenue from Contracts with Customers. Rental income is recognized from tenants under executed leases no later than on an established date or on an earlier date if the tenant should commence conducting business. Unbilled receivables are included in accounts receivable and represent the excess of scheduled rental income recognized on a straight-line basis over rental income as it becomes receivable according to the provisions of the lease. The effect of lease modifications that result in rent relief or other credits to tenants, including any retroactive effects relating to prior periods, are recognized in the period when the lease modification is signed. At the time of the lease modification, we assess the realizability of any accrued but unpaid rent and amounts that had been recognized as revenue in prior periods. As lessor, we have elected to combine the lease components (base rent), non-lease components (reimbursements of common area maintenance expenses) and reimbursements of real estate taxes and account for the components as a single lease component in accordance with ASC 842. If the amounts are not determined to be realizable, the accrued but unpaid rent is written off. Accounts receivable are recognized in accordance with lease agreements at its net realizable value. Rental payments received in advance are deferred until earned.

In April 2020, the Financial Accounting Standards Board issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the application of lease guidance in ASC Topic 842, Leases (“ASC 842”). The Q&A states that it would be acceptable to make a policy election regarding rent concessions resulting from COVID-19, which would not require entities to account for these rent concessions as lease modifications under certain conditions. Entities making the election will continue to recognize rental revenue on a straight-line basis for qualifying concessions. Rent deferrals would result in an increase to accounts receivable during the deferral period with no impact on rental revenue recognition. The Company elected this policy during the year ended July 31, 2020. Rent deferrals included in receivables were $220,000 and $250,000 as of October 31, 2022 and July 31, 2022, respectively.

Leases - Lessee

The Company determines if an arrangement is a lease at inception. With the adoption of ASC 842, operating leases are included in operating lease right-of-use assets, and operating lease liabilities on the Company’s balance sheet.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Taxes

The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the year and future periods, projections of the proportion of income (or loss), and permanent and temporary differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is acquired, or as additional information is obtained. The evolving facts and circumstances surrounding COVID-19 could result in the application of different provisions of tax laws and cause our estimated annual effective tax rate to change significantly through the remainder of the year. To the extent the estimated annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in tax expense for the current quarter.

The Company had a federal net operating loss carryforward approximating $10,316,000$10,096,000 as of July 31, 20212022 available to offset future taxable income. As of July 31, 2021,2022, the Company had unused state and city net operating loss carryforwards of approximately $12,356,000$12,308,000 for state and $10,321,000$12,293,000 for city, available to offset future state and city taxable income. The net operating loss carryforwards will begin to expire, if not used, in 2035.

New York State and New York City taxes are calculated using the higher of taxes based on income or the respective capital-basedcapital- based franchise taxes. Beginning with the Company’s tax year endedending July 31, 2016,2025, changes in the law required the state capital-based tax will be phased out over a 7-year period.out. New York City taxes will be based on capital for the foreseeable future. Capital-based franchise taxes are recorded to administrative and general expense. State tax amounts in excess of the capital-based franchise taxes are recorded to income tax expenses. Due to both the application of the capital-based tax and due to the possible absence of city taxable income, the Company does not record city deferred taxes.

Recently adopted accounting standards:

In April 2020, the Financial Accounting Standards Board issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the application of lease guidance in ASC Topic 842, Leases (“ASC 842”). The Q&A states that it would be acceptable to make a policy election regarding rent concessions resulting from COVID-19, which would not require entities to account for these rent concessions as lease modifications under certain conditions. Entities making the election will continue to recognize rental revenue on a straight-line basis for qualifying concessions. Rent deferrals would result in an increase to accounts receivable during the deferral period with no impact on rental revenue recognition. The Company elected this policy for the year ended July 31, 2020. Rent deferrals included in receivables were $280,000 and $364,963 as of April 30, 2022 and July 31, 2021, respectively.

2.Income2. Income Per Share of Common Stock:

Income per share has been computed by dividing the net income for the periods by the weighted average number of shares of common stock outstanding during the periods, adjusted for the purchase of treasury stock. Shares used in computing income per share were 2,015,780 for the three and nine months ended April 30,October 31, 2022 and 2021, respectively.

3.Marketable3. Marketable Securities:

The Company’s marketable securities consist of investments in equity securities. Dividends and interest income are accrued as earned. Realized gains and losses are determined on a specific identification basis. The Company reviews marketable securities for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. The changes in the fair value of these securities are recognized in current period earnings in accordance with ASC 825.

The Company follows GAAP which establishes a fair value hierarchy that prioritizes the valuation techniques and creates the following three broad levels, with Level 1 valuation being the highest priority:

Level 1 valuation inputs are quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date (e.g., equity securities traded on the New York Stock Exchange).

Level 2 valuation inputs are from other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted market prices of similar assets or liabilities in active markets, or quoted market prices for identical or similar assets or liabilities in markets that are not active).

Level 3 valuation inputs are unobservable (e.g., an entity’s own data) and should be used to measure fair value to the extent that observable inputs are not available.

Following is a description of the valuation methodologies used for assets measured at fair value on a recurring basis. There have been no changes in the methodologies used at April 30,October 31, 2022 and July 31, 2021.2022.

Equity securities are valued at the closing price reported on the active market on which the individual securities are traded that the Company has access to.

Mutual funds are valued at the daily closing price as reported by the fund. Mutual funds held by the Company are open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Company are deemed to be actively traded.

In accordance with the provisions of Fair value measurementsValue Measurements, the following are the Company’s financial assets measured on a recurring basis presented at reporting datefair value.

As of April 30,October 31, 2022 and July 31, 2021,2022, the Company's marketable securities were classified as follows:

Investment income consists of the following:

4.Financial4. Financial Instruments and Credit Risk Concentrations:

Financial instruments that are potentially subject to concentrations of credit risk consist principally of marketable securities, restricted cash, cash and cash equivalents, and receivables. Marketable securities, restricted cash, cash, and cash equivalents are placed with multiple financial institutions and instruments to minimize risk. No assurance can be made that such financial institutions and instruments will minimize all such risk.

Five tenants accounted for approximately 70% and 66%69% of receivables as of April 30,October 31, 2022 and July 31, 2021,2022, respectively. During the ninethree months ended April 30,October 31, 2022 and 2021, two tenants accounted for 31%30% and 30%29% of total rental revenue, respectively.

5.Long-Term5. Long-Term Debt – Mortgages:

(1) In November 2019, the Company refinanced the remaining balance of a $6,000,000, 3.54% interest rate loan with another bank for $5,255,920 plus an additional $144,080 for a total of $5,400,000. The interest rate on the new loan is fixed at 4.375%. The loan is self-liquidating over a period of five years and secured by the Nine Bond Street land and building in Brooklyn, New York.

(2) In March 2020, the Company obtained a loan with a bank in the amount of $4,000,000 to finance renovations and brokerage commissions relating to space leased to a community college at the Fishkill, New York building. The loan is secured by the Fishkill, New York land and building; amortized over a 20-year period with an interest rate of 3.98% and is due in five years.

6.Note Payable:

In April 2020, the Company obtained a $722,726 loan, with an interest rate of .98% per annum, issued by a bank through the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) under Division A. Title I of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act’’). On May 26, 2021, the SBA authorized full forgiveness of the Company’s PPP loan in the amount of $722,726, plus accrued interest. Such proceeds were recorded as a full reduction of the note payable and extinguishment of debt income in the year ending July 31, 2021.

7.Operating6. Operating Leases:

Lessor

The Company leases office and retail space to tenants under operating leases in commercial buildings. TheMost rental terms range from approximately 5 to 49 years. The leases provide for the payment of fixed base rent payable monthly in advance as well as reimbursements of real estate taxes and common area costs. The Company has elected to account for lease revenues and the reimbursements of common area costs as a single component included as rental income in our consolidated statements of operations.

The following table disaggregates the Company's revenues by lease and non-lease components:

Future minimum non-cancelable rental income for leases with initial or remaining terms of one year or more is as follows:

Lessee

The Company’s real estate operations include leased properties under long-term, non-cancelable operating lease agreements. The leases expire at various dates through 2073, including options to extend or terminate the lease when it is reasonably certain the Company will exercise that option. Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements.

In July 2022, the Company entered into lease agreements with its landlord for two of its properties as follows:

The landlord is Weinstein Enterprises, Inc., an affiliated company principally owned by the Chairman of the Board of Directors who also principally owns the Company. 

The effect of the lease modification for 504-506 Fulton Street, Brooklyn, NY on the measurement of operating lease right-of-use assets, liabilities and rent expense follows:

Operating lease costs for leased real property was exceeded by sublease rental income from the Company’s real estate operations as follows:

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of April 30,October 31, 2022:

As of April 30,October 31, 2022, our operating leases had a weighted average remaining lease term of 16.8716.52 years and a weighted average discount rate of 2.86%2.96%.

8.7. Employees' Retirement Plan:

The Company sponsors a noncontributory Money Purchase Plan covering substantially all its non-union employees. Operations were charged $112,469$113,500 and $337,500$112,531 as contributions to the Plan for the three and nine months ended April 30,October 31, 2022 respectively, and $109,760 and $329,743 as contributions to the plan for the three and nine months ended April 30, 2021, respectively.

Multi-employer plan:

The Company contributes to a union sponsored multi-employer pension plan covering its union employees. The Company contributions to the pension plan were $29,740$27,281 and $67,239$16,413 for the three and nine months ended April 30,October 31, 2022 respectively, and $17,925 and $48,498 for the three and nine months ended April 30, 2021, respectively. Contributions and costs are determined in accordance with the provisions of negotiated labor contracts or terms of the plan.plans. The Company also contributes to a union sponsored health benefit plan.

Contingent Liability for Pension Plan:

Information as to the Company’s portion of accumulated plan benefits and plan assets is not reported separately by the pension plan. Under the Employee Retirement Income Security Act, upon withdrawal from a multi-employer benefit plan, an employer is required to continue to pay its proportionate share of the plan’s unfunded vested benefits, if any. Any liability under this provision cannot be determined: however, the Company has not made a decision to withdraw from the plan.

Information for contributing employer’s participation in the multi-employer plan:

For the plan years 2019 through November 30, 2021, under the pension fund’s rehabilitation plan, the Company agreed to pay a minimum contribution rate equal to a 9% increase over the prior year total contribution rate. Effective December 1, 2021 through the contract expiration date of November 30, 2022, the Company’s contribution rate is 19.66% of each covered employee’s pay. Effective December 1, 2022, the contract was renewed and extended through November 30, 2025. The company will continue to pay the contribution rate required under the pension fund’s rehabilitation plan, currently 19.66% of each covered employee’s pay. The contract with a unionalso covers rates of pay, hours of employment and other conditions of employment for approximately 23%27% of the Company’s 31 employees. The Company considers that its labor relations with its employees and union are good.

9.Cash8. Cash Flow Information:

For purposes of reporting cash flows, the Company considers cash equivalents to consist of short-term highly liquid investments with maturities of three months or less, which are readily convertible into cash. The following is a reconciliation of the Company’s cash and cash equivalents and restricted cash to the total presented on the consolidated statement of cash flows:

Amounts in restricted cash primarily consist of cash held in bank accounts for tenant security deposits, amounts set aside in accordance with certain loan agreements, and security deposits with landlords and utility companies.

10.Capitalization:9. Capitalization:

The Company is capitalized entirely through common stock with identical voting rights and rights to liquidation. Treasury stock is recorded at cost and consists of 162,517 shares at April 30,October 31, 2022 and at July 31, 2021.2022.

11.Related

10. Related Party Transactions:

The Company has two operating leases with Weinstein Enterprises, Inc. (“Landlord”), an affiliated company, principally owned by the Chairman of the Board of Directors of both the Company and Landlord. One lease is for building, improvements, and land located at Jamaica Avenue at 169th Street, Jamaica, New York. Another lease is for premisesPremises located at 504-506 Fulton Street, Brooklyn, New York.

In July 2022, the Company entered into lease agreements with Landlord as follows:

Rent payments and expense relating to these two operating leases with Landlord follow:

The following summarizes assets and liabilities related to these two operating leases:

Upon termination of the Jamaica, New York lease, currently in 2030, all premises included in operating lease right-of-use assets plus leasehold improvements will be turned over to the Landlord.

12.Contingencies:11. Contingencies:

There are various lawsuits and claims pending against the Company. It is the opinion of management that the resolution of these matters will not have a material adverse effect on the Company’s Consolidated Financial Statements.

If the Company sells, transfers, disposes of, or demolishes 25 Elm Place, Brooklyn, New York, then the Company may be liable to create a condominium unit for the loading dock. The necessity of creating the condominium unit and the cost of such condominium unit has not been determined at this time.

Item 2.

J. W. MAYS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our financial statements and related notes thereto contained in this report. In this discussion, the words “Company”, “we”, “our” and “us” refer to J.W. Mays, Inc., and subsidiaries.

Forward Looking Statements:

The following can be interpreted as including forward looking statements under the Private Securities Litigation Reform Act of 1995. The words “outlook” “intend”, “plans”, “efforts”, “anticipates”, “believes”, “expects” or words of similar import typically identify such statements. Various important factors that could cause actual results to differ materially from those expressed in the forward-looking statements are identified under the heading “Cautionary Statement Regarding Forward-Looking Statements” below. Our actual results may vary significantly from the results contemplated by these forward-looking statements based on a number of factors including, but not limited to, availability of labor, marketing success, competitive conditions, and the change in economic conditions of the various markets we serve.

The Impact of COVID-19 on our Results and Operations:

Beginning March 2020 and continuing through April 2022, we experienced an increase in late payments due to the impact of COVID-19 and the related reductions in economic activity from ongoing government mandated business regulations. The effects of COVID-19 on our tenants have been reflected in our allowance for credit losses for accounts receivable. In limited circumstances, we have agreed to rent deferrals for certain tenants. We also continue to experience volatility in the valuation of our equity investments through April 30, 2022.

Looking ahead, the full impact of COVID-19 and continuing government regulation on our business is unknown and highly unpredictable. Our past results may not be indicative of our future performance and historical trends in revenues, income from operations, net income, earnings per share, cash provided by operating activities, among others, may differ materially. For example, to the extent the pandemic continues to disrupt economic activity nationally and in New York, NY, like other businesses, it could adversely affect our business operations and financial results through prolonged decreases in revenue, credit deterioration of our tenants, depressed economic activity, or declines in capital markets. In addition, many of our expenses are less variable in nature and may not correlate to changes in revenues. The extent of the economic impact will depend on a number of factors, including the duration and severity of the pandemic; distribution of vaccines; and the macroeconomic impact of government measures to contain the spread of the virus and related government regulations.

Critical Accounting Policies and Estimates:

Critical accounting policies are defined as those most important to the portrayal of a company’s financial condition and results and require the most difficult, subjective, or complex judgments. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amount of revenues, and expenses during the reporting period and related disclosure of contingent assets and liabilities. We believe the critical accounting policies in Note 1 affect our more significant judgments and estimates used in the preparation of our financial statements. Estimates are based on historical experience, where applicable or other assumptions that management believes are reasonable under the circumstances. We have identified the policies described in Note 1below as our critical accounting policies. Actual results may differ from these estimates under different assumptions and conditions. Recently adopted accounting standards are also disclosed in Note 1.

As of April 30, 2022, the economic impacts of COVID-19 continue to evolve. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As additional information becomes available, our estimates may change materially in future periods.

Results of Operations:

Three months ended April 30, 2022 compared to the three months ended April 30, 2021:

In the three months ended April 30,October 31, 2022, the Company reported net lossincome of $(57,037),$59,517, or $(.03)$.03 per share. In the comparable three months ended April 30,October 31, 2021, the Company reported a net loss of $(41,921)$(390,750), or $ (.02)$(.19) per share. The losschange in the 2022 three months was primarily due to an increase in rental income from new tenants and a decrease in bad debt expense; partially offset by decreases in the fair value of marketable securities combined with increases in amortization of deferred charges of brokerage fees for new tenants, bad debt expense, payroll and insurance costs. These expenses were partially offset by an increase in revenue and decreases in real estate taxes.securities.

Revenues in the current three months increased to $5,484,082$5,769,734 from $5,161,888$5,079,547 in the comparable 2021 three months primarily due to rental income from fivesix new tenants and increased rents from existing tenants.

Real estate operating expenses in the current three months increased to $3,763,723$3,785,421 from $3,714,427$3,630,122 in the comparable 2021 three months primarily due to increases in real estate taxes, amortization expense of deferred charges of brokerage fees for new tenants, insurance and payroll costs; partially offset by decreases in real estate taxes.costs.

Administrative and general expenses in the current three months increaseddecreased to $1,281,229$1,250,231 from $1,243,872$1,404,112 in the comparable 2021 three months primarily due to a decrease in bad debt expense; partially offset by increases in insurance, payroll costs and bad debt expense.state capital-based franchise taxes.

Depreciation expense in the current three months of $421,858 approximated $445,825decreased slightly to $418,496 from $451,270 in the comparable 2021 three months.

Interest expense and investment losses in the current year aggregated $(241,069) compared to $(126,793) in the comparable 2021 three months, aggregated $(91,309) primarily due to a $(61,161) changedecreases in the fair value of marketable securities; partially offset by a decrease in interest expense. In the three months ended April 30, 2021, the fair value of marketable securities increased resulting in investment income exceeding interest expense by $174,315.

Nine months ended April 30, 2022 compared to the nine months ended April 30, 2021:

In the nine months ended April 30, 2022, the Company reported net loss of $(643,617), or $(.32) per share. In the comparable nine months ended April 30, 2021, the Company reported a net loss of $(511,452) or $ (.25) per share. The loss in the 2022 nine months was primarily due to a decrease in fair value of marketable securities combined with increases in amortization of deferred charges of brokerage fees for new tenants, bad debt expense, payroll and insurance costs. These expenses were partially offset by an increase in revenue and decreases in real estate taxes.

Revenues in the current nine months increased to $15,891,978 from $15,043,749 in the comparable 2021 nine months primarily due to rental income from five new tenants and increased rents from existing tenants.

Real estate operating expenses in the current nine months increased to $11,063,910 from $10,882,590 in the comparable 2021 nine months primarily due to increases in amortization expense of deferred charges of brokerage fees for new tenants, insurance and payroll costs; partially offset by decreases in real estate taxes.

Administrative and general expenses in the current nine months increased to $4,102,753 from $3,757,064 in the comparable 2021 nine months primarily due to increases in insurance, payroll costs and bad debt expense.

Depreciation expense in the current nine months of $1,325,540 approximated $1,335,268 in the comparable 2021 nine months.

Interest expense and investment losses in the current nine months aggregated $(281,392) primarily due to a $(297,899) change in the fair value of marketable securities; partially offset by an increase in investment income and decrease in interest expense. In the nine months ended April 30, 2021, the fair value of marketable securities increased resulting in investment income exceeding interest expense by $196,721.

Liquidity and Capital Resources:

The impact of COVID-19 andIn August 2022, the related reductions in economic activity from business disruptions and government regulations continued inCompany leased 58,832 square feet at the nine months ended April 30, 2022. The Company had bad debt expense of $214,350 from August 2021 to April 2022. We continue to experience volatility in the valuation of our equity investments through April 30, 2022. To the extent the COVID-19 pandemic and government regulations continue to disrupt economic activity nationally and inCompany’s Fishkill, New York NY,building for use as storage space for six months expiring February 2023. Total rent of $576,259 was prepaid at lease commencement and is being amortized as revenue over the impact may include increased bad debt expense, lower rental income and occupancy levels at our properties which may result in less cash provided by operating activities. Manyentire term of our expenses are less variable in nature and may not correlate to changes in revenues.the lease. Brokerage commissions were $27,084.

In November 2020,August 2022, a tenant notified the Company leased 23,000 square feetof its intention to an office tenant atextend its Jowein building in Brooklyn, New York. The cost of renovationsleases for this tenant were $501,293 and brokerage commissions were $979,000. Occupancy and rental payments commenced in January 2022.one year through September 30, 2023 as follows:

In April 2021, the Company leased 1,600September 2022, a tenant who occupies 10,000 square feet to a retail tenant at its Nine Bond Street Brooklyn,the Company’s Levittown, New York building. Rent commenced in November 2021.

In July 2021,property exercised its option to renew the Company leased 2,270 square feet to an office tenant at its Nine Bond Street Brooklyn, New York building. Rent commenced in September 2021. To accommodate this tenant, an existing tenant surrendered 440 square feet.lease for another five-year term through May 4, 2028.

On November 24, 2021,October 4, 2022, a tenant who occupies 5,3501,140 square feet of retail space at the Company’s Nine Bond Street building in Brooklyn, New York exercised their optionagreed to terminate their lease effective MayOctober 31, 2022. The annual loss in rental income will approximate $320,000$70,000 per annum.

In JanuaryEffective November 1 2022, the company leased 500a tenant who occupies 10,000 square feet at its Jamaica, New York building. Rent commencedthe Company’s Jowein building in January 2022.

In April 2022, the Company leased 14,100 square feet to an office tenant for a term of ten years at its Nine Bond Street Brooklyn, New York building. Rent commencedagreed to terminate their lease. The loss in June 2022. To accommodate this new tenant, an existing tenant who is on a month-to-month lease surrendered 10,788 square feet. The tenant surrendering spacerental income will continue to occupy 46,421 square feet at these premises on a month-to-month lease.approximate $120,000 per annum.

Cash Flows From Operating Activities:

Accounts Payable and Accrued Expenses: The Company had a balance due on April 30,October 31, 2022 for brokerage commissions of $709,299$533,652.

Beginning in March 2020 and continuing through April 2022, we experienced an increase in late payments due to the impact of COVID-19 and the related reductions in economic activity from government mandated business disruptions and regulations. The effects of COVID-19 on our tenants have been reflected in our allowance for credit losses for accounts receivable.

From August 2021 through April 2022, the Company had bad debt expense of $214,350. We continue to experience volatility in the valuation of our equity investments through April 30, 2022. To the extent the COVID-19 pandemic continues to disrupt economic activity nationally and in New York, New York, the impact may include increased bad debt expense, lower rental income and occupancy levels at our properties which may result in less cash provided by operating activities. Many of our expenses are less variable in nature and may not correlate to changes in revenues.

Cash Flows From Investing Activities:

During the ninethree months ended April 30,October 31, 2022, the Company had expenditures of $92,941 for steel work at its Jowein building in Brooklyn, New York. During this period, the Company also had expenditures of $161,337 for renovations at its 9 Bond Street building in Brooklyn, New York, and $1,050,680 at its Fishkill, New York building including:of:

During the three months ended October 31, 2022, the Company also had expenditures of $147,799 for facade restoration at its 9 Bond Street building in Brooklyn, New York.

Related Party Transactions:

The Company has two operating leases with Weinstein Enterprises, Inc. (“Landlord”), an affiliated company, principally owned by the Chairman of the Board of Directors of both the Company and Landlord. One lease is for building, improvements, and land located at Jamaica Avenue at 169th Street, Jamaica, New York. Another lease is for premisesPremises located at 504-506 Fulton Street, Brooklyn, New York.

In July 2022, the Company entered into lease agreements with Landlord as follows:

Rent payments and expense relating to these two operating leases with Landlord follow:

The following summarizes assets and liabilities related to these two operating leases:

Upon termination of the Jamaica, New York lease, currently in 2030, all premises included in operating lease right-of-use assets plus leasehold improvements will be turned over to the Landlord.

Cautionary Statement Regarding Forward-Looking Statements:

This section, Management’s Discussion and Analysis of Financial Condition and Results of Operations, other sections of this Report on Form 10-Q and other reports and verbal statements made by our representatives from time to time may contain forward-looking statements that are based on our assumptions, expectations and projections about us and the real estate industry. These include statements regarding our expectations about revenues, our liquidity, our expenses, and our continued growth, among others. Such forward-looking statements by their nature involve a degree of risk and uncertainty. We caution that a variety of factors, including but not limited to the factors listed below, could cause business conditions and our results to differ materially from what is contained in forward-looking statements: