MAYS J W Mays Inc

Part I - Financial Information

       Item 1 - Financial Statements

See Notes to Condensed Consolidated Financial Statements.

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See Notes to Condensed Consolidated Financial Statements.

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See Notes to Condensed Consolidated Financial Statements.

See Notes to Condensed Consolidated Financial Statements

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See Notes to Condensed Consolidated Financial Statements.

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J. W. MAYS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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In accordance with the provisions of Fair Value Measurements, the following are the Company's financial assets measured on a recurring basis presented at fair value.

Fair value measurements at reporting date

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As of April 30, 2019 and July 31, 2018, the Company's marketable securities were classified as follows:

Investment income consists of the following:

On January 9, 2015, the Company refinanced its loan with a bank for $6,000,000, which included the outstanding balance as of January 2015 in the amount of $5,347,726 and an additional borrowing of $652,274. The loan is for a period of five years with a payment based on a twenty-five year amortization period. The interest rate for this period is fixed at 3.54% per annum. The mortgage loan is secured by the Bond Street building in Brooklyn, New York. The Company is in the process of refinancing the loan with a bank for an additional five years.

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The Company has committed to construct four new elevators in the Company’s Fishkill, New York building. The cost will be approximately $1,800,000 and is anticipated to be completed in the fall of 2019.

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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 u nder 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.

Critical Accounting Policies and Estimates:

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, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We believe the critical accounting policies in Note 1 to the Condensed Consolidated Financial Statements disclose our more significant judgments and estimates used in the preparation of our financial statements. Actual results may differ from these estimates under different assumptions and conditions. (See Note 1 on pages 7 through 9 to the Condensed Consolidated Financial Statements herein and Note 1 on pages 9 through 12 to the Consolidated Financial Statements in the Annual Report to Shareholders for the fiscal year ended July 31, 2018).

Results of Operations:

Three months ended April 30, 2019 compared to the three months ended April 30, 2018:

In the three months ended April 30, 2019, the Company reported net income of $655,935, or $.32 per share. In the comparable three months ended April 30, 2018, the Company reported net income of $318,172, or $.16 per share.

Revenues in the current three months increased to $5,099,988 from $4,854,910 in the comparable 2018 three months primarily due to increased rental income from existing tenants and a real estate tax refund from the Company’s Massapequa, New York property.

Real estate operating expenses in the current three months decreased to $2,844,624 from $2,918,858 in the comparable 2018 three months primarily due to decreases in maintenance costs, partially offset by increases in payroll costs and leasing commission expense.

Administrative and general expenses in the current three months increased to $1,135,750 from $1,062,316 in the comparable 2018 three months primarily due to increases in payroll costs, pension costs and legal and professional costs.

Depreciation expense in the current three months increased to $474,761 from $443,697 in the comparable 2018 three months primarily due to improvements in the Brooklyn, Jamaica and Fishkill, New York buildings.

Investment income exceeded interest expense in the current three months by $281,082 and interest expense exceeded investment income by $28,867 in the comparable 2018 three months.

Nine months ended April 30, 2019 compared to the nine months ended April 30, 2018:

In the nine months ended April 30, 2019, the Company reported net income of $870,701, or $.43 per share. In the comparable nine months ended April 30, 2018, the Company reported net income of $3,167,496, or $1.57 per share. The decrease was primarily due to the enactment of the U.S. Tax Act on December 22, 2017. These changes required an adjustment to our deferred tax assets and liabilities to the lower federal rates resulting in an estimated net tax benefit of approximately $2.4 million in the nine months ended April 30, 2018.

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Revenues in the current nine months increased to $15,235,939 from $14,431,671 in the comparable 2018 nine months primarily due to increased rental income from existing tenants and a real estate tax refund from the Company’s Levittown and Massapequa, New York properties.

Real estate operating expenses in the current nine months increased to $8,591,284 from $8,491,805 in the comparable 2018 nine months primarily due to increases in real estate taxes, payroll costs, leasing commission expense and rent expense partially offset by a decrease in maintenance costs, and utility costs.

Administrative and general expenses in the current nine months increased to $4,184,557 from $3,433,154 in the comparable 2018 nine months primarily due to the settlement of litigation cost in the amount of $635,000 (see Note 12), increases in payroll costs and pension costs.

Depreciation expense in the current nine months increased to $1,414,045 from $1,311,386 in the comparable 2018 nine months primarily due to improvements in the Brooklyn, Jamaica and Fishkill, New York buildings.

Investment income exceeded interest expense in the current nine months by $206,648 and interest expense exceeded investment income by $101,830 in the comparable 2018 nine months.

As explained above, the enactment of the U.S. Tax Act required an adjustment to our deferred tax assets and liabilities for the nine months ended April 30, 2018 to the lower federal rates resulting in an estimated net federal tax benefit of approximately $2.4 million. Income taxes provided (benefit) for the nine months ended April 30, 2018 was approximately $2.1 million.

Liquidity and Capital Resources:

Managemen t considers current working capital and borrowing capabilities adequate to cover the Company’s planned operating and capital requirements. The Company’s cash and cash equivalents amounted to $ 5,330,262 at April 30, 2019. The Company is in the process of refinancing its loan with a bank in the amount of $5,341,439 for an additional five years.

In March 2017, the Company leased 7,700 square feet to a medical facility at its Nine Bond Street Brooklyn, New York building, for a term of ten years with two five year option periods. To accommodate this tenant, an existing tenant surrendered 400 square feet of retail space. The cost of renovations for this tenant will be approximately $400,000 and brokerage commissions were $216,052. The tenant is anticipated to take occupancy and commence payment of rent in the fall of 2019.

In August, 2018, the Company entered into a lease agreement with an existing office tenant for an additional 1,849 square feet until June 30, 2022 at its Nine Bond Street Brooklyn, New York building.

In October 2018, the Company extended a lease with a retail tenant who occupies 47,100 square feet at its Jamaica, New York building for a period of ten years to expire on May 31, 2029.

In October 2018, the Company extended the lease with its landlord, who is a related party, at its Jamaica, New York building for a period of one year and ten months to expire on May 31, 2029.

In October 2018, the Company extended a lease with an office tenant who occupies 38,109 square feet at its Jamaica, New York building for an additional four years expiring November 30, 2022.

In October 2018, the Company extended a lease with one of the Company’s landlords, which expires in April 2021 for an additional ten years to expire in April 2031 at its Nine Bond Street Brooklyn, New York building.

In January 2019, the Company extended a lease with an office tenant who occupies 700 square feet at its Nine Bond Street Brooklyn, New York building, for an additional five years expiring January 31, 2024.

In March 2019, the Company extended a lease with an office tenant who occupies 13,451 square feet at its Nine Bond Street Brooklyn, New York building whose lease expires July 31, 2021, for an additional five years expiring July 31, 2026.

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The tenant who leased 20,000 square feet of area at the Company’s Massapequa, New York property to open a restaurant had their lease terminated in April 2019 for non-payment of rent. The tenant ’ s lease commenced in September 2018 and rent was supposed to begin in January 2019. The annual loss in rent would have been $72,000.

Cash Flows From Operating Activities:

Deferred Expenses: The Company had an additional $521,592 for brokerage commissions incurred due to a tenant extending their lease for an additional ten years at the Company’s Jamaica, New York building .

Payroll and Other Accrued Liabilities: The Company had a balance due at April 30, 2019 for brokerage commissions of $503,884.

Provision (Benefit) for Deferred Income Taxes: Enactment of the U.S. Tax Act on December 22, 2017, as explained above, resulted in an estimated net federal tax benefit of approximately $2.4 million in the three month period ended April 30, 2018. Although the adjustment increased the Company’s net income, it did not increase cash. To reconcile net income to net cash provided by operating activities, provision (benefit) for deferred income taxes was a benefit of approximately $2.1 million for the nine months ended April 30, 2018 compared to an expense of approximately $.4 million for the comparable 2019 nine months.

Cash Flows From Investing Activities:

The Company had expenditures of $85,274 for the nine months ended April 30, 2019 for boiler upgrades at the Company’s Nine Bond Street building in Brooklyn, New York. The Company also had expenditures of $190,091 for renovations for an existing tenant. The total cost of the project will be approximately $300,000 and was completed in May 2019. The Company also had expenditures of $194,079 for façade work and $180,120 for stairwell work.

The Company had expenditures for elevator upgrade work in the amount of $85,061 for the nine months ended April 30, 2019, at the Company’s Jamaica, New York building. The total cost of the project was $864,460, and was completed in August, 2018. The Company had expenditures of $592,671 for renovation work for an existing tenant. The total cost of the project is estimated to be approximately $700,000, and is anticipated to be completed in July 2019.

The Company had expenditures for parking lot lights in the amount of $111,698 for the nine months ended April 30, 2019, at its Fishkill, New York building. The total cost was $234,862 and was completed in August 2018. The Company also had expenditures of $397,597 for windows. The cost of the project was $1,026,364 and was completed in November 2018. The Company also had expenditures of $657,013 for four new elevators. The cost will be approximately $1,800,000 and is anticipated to be completed in the fall of 2019. The Company also had expenditures of $123,396 for a new lobby. The cost will be approximately $1,500,000 and is anticipated to be completed in September 2019. The Company also had expenditures of $65,171 for various other construction projects.

The Company had expenditures in the amount of $105,369 for stairwell work and $190,330 for steel work at its Jowein building in Brooklyn, New York. The Company also had expenditures of $60,531 for a new HVAC system for an existing tenant. The total cost of the system will be approximately $300,000 and is anticipated to be completed in June 2019.

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:

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Other factors and assumptions not identified above were also involved in the formation of these forward-looking statements and the failure of such other assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to review any additional disclosures we make in proxy statements, quarterly reports on Form 10-Q, annual reports on Form 10-K and any Form 8-K reports filed with the United States Securities and Exchange Commission.