UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________

Commission File Number            1-3647           

J. W. Mays, Inc.
(Exact Name of Registrant as Specified in its Charter)

New York          11-1059070
State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
 
9 Bond Street, Brooklyn, New York 11201
Address of Principal Executive Offices Zip Code

           (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.

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☐

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:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $1 par value MAYS NASDAQ

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.

Class       Outstanding at June 4, 2020
Common Stock, $1 par value 2,015,780 shares

This report contains 30 pages.


J. W. MAYS, INC.

INDEX

Page No.
Part I - Financial Information:
 
Item 1. Financial Statements
 
Condensed Consolidated Balance Sheets – April 30, 2020 (unaudited) and July 31, 2019 3
Condensed Consolidated Statements of Operations – Three and nine months ended April 30, 2020 and 2019 (unaudited)       4
Condensed Consolidated Statements of Changes in Shareholders’ Equity – Three and nine months ended April 30, 2020 and 2019 (unaudited) 5
Condensed Consolidated Statements of Cash Flows – Nine months ended April 30, 2020 and 2019 (unaudited) 6
Notes to Condensed Consolidated Financial Statements 7 - 19
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 20 - 25
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
 
Item 4. Controls and Procedures 25
 
Part II - Other Information:
Item 1. Legal Proceedings 26
Item 1A. Risk Factors 26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
Item 3. Defaults Upon Senior Securities 26
Item 4. Mine Safety Disclosures 26
Item 5. Other Information 26
Item 6. Exhibits and Reports on Form 8-K 26
 
Signatures 27
 
Exhibit 31 Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1 - Chief Executive Officer 28
31.2 - Chief Financial Officer 29
 
Exhibit 32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
18 U.S.C. Section 1350 30

-2-


Part I - Financial Information

Item 1 - Financial Statements

J. W. MAYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

April 30 July 31
ASSETS 2020 2019
(Unaudited) (Audited)
Property and Equipment - Net       $      47,144,223       $      53,129,303
 
Current Assets:
Cash and cash equivalents 6,126,989 4,117,647
Receivables - Net 534,856 402,154
Real estate taxes refundable 101,735
Income taxes refundable 9,683
Restricted cash 292,033 181,193
Prepaid expenses 1,077,759 2,159,701
Total current assets 8,133,372 6,870,378
 
Other Assets:
Deferred charges 3,776,403 3,729,818
Accumulated amortization (1,366,996 ) (1,153,996 )
Net 2,409,407 2,575,822
Operating lease right-of-use assets 37,698,819
Restricted cash 850,949 964,884
Unbilled receivables 1,488,550 1,668,461
Marketable securities 3,487,381 3,580,227
Total other assets 45,935,106 8,789,394
 
TOTAL ASSETS $ 101,212,701 $ 68,789,075
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Long-Term Liabilities:
Mortgages payable $ 7,762,830 $
Note payable 511,931
Security deposits payable 766,506 690,422
Payroll and other accrued liabilities 85,875 448,939
Operating lease liabilities 28,166,873
Deferred income taxes 4,898,000 5,096,000
Total long-term liabilities 42,192,015 6,235,361
 
Current Liabilities:
Accounts payable 162,100 30,964
Income taxes payable 26,973
Payroll and other accrued liabilities 2,181,288 2,426,535
Other taxes payable 8,400 8,847
Operating lease liabilities 1,159,492
Current portion of mortgages payable 1,134,852 5,287,162
Current portion of note payable 210,795
Current portion of security deposits payable 42,533 192,193
Total current liabilities 4,926,433 7,945,701
 
TOTAL LIABILITIES 47,118,448 14,181,062
 
Shareholders' Equity:
Common stock, par value $1 each share (shares - 5,000,000 authorized; 2,178,297 issued) 2,178,297 2,178,297
Additional paid in capital 3,346,245 3,346,245
Retained earnings 49,857,563 50,371,323
55,382,105 55,895,865
 
Common stock held in treasury, at cost - 162,517 shares at April 30, 2020 and at July 31, 2019 (1,287,852 ) (1,287,852 )
Total shareholders' equity 54,094,253 54,608,013
 
Contingencies (Note 13)
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 101,212,701 $ 68,789,075

See Notes to Condensed Consolidated Financial Statements.

-3-


J.W. MAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended
April 30 April 30 April 30 April 30
2020 2019 2020 2019
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Rental income     $    5,128,574     $    5,267,237     $    15,203,549     $    15,705,108
Recovery of real estate taxes 8,315 53,341
Total revenues 5,128,574 5,275,552 15,203,549 15,758,449
 
Expenses
Real estate operating expenses 3,443,130 3,020,188 10,206,355 9,113,794
Administrative and general expenses 1,771,233 1,135,750 4,297,879 4,184,557
Depreciation 410,610 474,761 1,192,997 1,414,045
(Gain) loss on disposition of property and equipment (13,129 ) 40,992
Total expenses 5,611,844 4,630,699 15,738,223 14,712,396
 
Income (loss) from operations before investment income, interest expense and income taxes (483,270 ) 644,853 (534,674 ) 1,046,053
 
Investment income and interest expense:
Investment income (loss) (5,327 ) 27,377 135,591 184,488
Change in fair value of marketable securities (268,649 ) 285,426 (205,399 ) 143,209
Interest expense (52,777 ) (31,721 ) (107,278 ) (121,049 )
(326,753 ) 281,082 (177,086 ) 206,648
 
Income (loss) from operations before income taxes (810,023 ) 925,935 (711,760 ) 1,252,701
Income taxes provided (benefit) (225,000 ) 270,000 (198,000 ) 382,000
Net income (loss) $ (585,023 ) $ 655,935 $ (513,760 ) $ 870,701
 
Income (loss) per common share $ (.29 ) $ .32 $ (.25 ) $ .43
 
Dividends per share $ $ $ $
 
Average common shares outstanding 2,015,780 2,015,780 2,015,780 2,015,780

See Notes to Condensed Consolidated Financial Statements.

-4-


J.W. MAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)

Common
Stock
Additional
Paid In
Capital
Unrealized Gain
on Marketable
Securities
Retained
Earnings
Common Stock
Held in
Treasury
Total
Three Months Ended April 30, 2020
Balance at January 31, 2020    $   2,178,297    $   3,346,245    $      $   50,442,586    $   (1,287,852 )    $   54,679,276
Net loss, three months ended April 30, 2020 (585,023 ) (585,023 )
Balance at April 30, 2020 $ 2,178,297 $ 3,346,245 $ $ 49,857,563 $ (1,287,852 ) $ 54,094,253
 
Three Months Ended April 30, 2019
Balance at January 31, 2019 $ 2,178,297 $ 3,346,245 $ $ 49,071,288 $ (1,287,852 ) $ 53,307,978
Net income, three months ended April 30, 2019 655,935 655,935
Balance at April 30, 2019 $ 2,178,297 $ 3,346,245 $ $ 49,727,223 $ (1,287,852 ) $ 53,963,913
  
Common
Stock
Additional
Paid In
Capital
Unrealized Gain
on Marketable
Securities
Retained
Earnings
Common Stock
Held in
Treasury
Total
Nine Months Ended April 30, 2020
Balance at July 31, 2019 $ 2,178,297 $ 3,346,245 $ $ 50,371,323 $ (1,287,852 )    $ 54,608,013
Net loss, nine months ended April 30, 2020 (513,760 ) (513,760 )
Balance at April 30, 2020 $ 2,178,297 $ 3,346,245 $ $ 49,857,563 $ (1,287,852 ) $ 54,094,253
 
Nine Months Ended April 30, 2019
Balance at July 31, 2018 $ 2,178,297 $ 3,346,245 $ 487,136 $ 48,369,386 $ (1,287,852 )    $ 53,093,212
Reclassification of unrealized gains on marketable securities to retained earnings (487,136 ) 487,136
Net income, nine months ended April 30, 2019 870,701 870,701
Balance at April 30, 2019 $ 2,178,297 $ 3,346,245 $ $ 49,727,223 $ (1,287,852 ) $ 53,963,913

See Notes to Condensed Consolidated Financial Statements

-5-


J. W. MAYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended
April 30
2020 2019
(Unaudited) (Unaudited)
Cash Flows From Operating Activities:
Net income (loss) $      (513,760 )       $      870,701
 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Bad debt expense 596,292 3,328
Depreciation 1,192,997 1,414,045
Loss on disposition of property and equipment 40,992
Amortization of deferred charges 213,000 223,690
Operating lease expense in excess of cash payments 868,975
Deferred finance costs included in interest expense 22,463 17,156
Net realized and unrealized (gain) loss on marketable securities 176,853 (189,625 )
Other assets - unbilled receivables 179,911 (82,202 )
- deferred charges (46,585 ) (522,292 )
Deferred income taxes (198,000 ) 382,000
Changes in:
Receivables (728,994 ) 102,479
Real estate taxes refundable (101,735 )
Income taxes refundable 9,683 1,109
Prepaid expenses 1,081,942 984,451
Accounts payable 131,136 (37,905 )
Payroll and other accrued liabilities 340,594 232,203
Income taxes payable 26,973
Other taxes payable (447 ) (1,286 )
Cash provided by operating activities 3,292,290 3,397,852
 
Cash Flows From Investing Activities:
Acquisition of property and equipment (5,439,243 ) (3,064,228 )
Marketable securities:
Receipts from sales 621,161 219,744
Payments for purchases (705,168 ) (316,007 )
Cash (used) by investing activities (5,523,250 ) (3,160,491 )
 
Cash Flows From Financing Activities:
Borrowing - Mortgage debt 4,866,806
Increase (decrease) - security deposits payable (73,576 ) 9,453
Mortgage and other debt payments (323,823 ) (162,172 )
Mortgage financing costs paid (232,200 )
Cash provided (used) by financing activities 4,237,207 (152,719 )
 
Increase in cash, cash equivalents and restricted cash 2,006,247 84,642
 
Cash, cash equivalents and restricted cash at beginning of period 5,263,724 6,879,623
 
Cash, cash equivalents and restricted cash at end of period $ 7,269,971 $ 6,964,265

See Notes to Condensed Consolidated Financial Statements.

-6-


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

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

In late 2019, an outbreak of COVID-19 emerged and by March 11, 2020 was declared a global pandemic by The World Health Organization. Throughout the United States and locally, governments and municipalities instituted measures in an effort to control the spread of COVID-19, including quarantines, shelter-in-place orders, school closings, travel restrictions and the closure of non-essential businesses. By the end of March and into April 2020, the economic impacts became significant.

In March and April 2020, 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 shelter-in-place orders. The effects of COVID-19 on our tenants have been reflected in an increase in our allowance for credit losses for accounts receivable. March and April rent collections and increased past due activity may not be indicative of unpaid rents in any future period. In addition, we experienced volatility in the valuation of our equity investments.

Looking ahead, the full impact of COVID-19 on our business is unknown and highly unpredictable. Many of our tenants will suffer reductions in revenue and, depending upon the duration of quarantines and the corresponding economic slowdown, some of our tenants have or will seek rent deferrals or become unable to pay their rent. While we believe our tenants are required to pay rent under their leases, we are considering temporary rent relief on a case-by-case basis. 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; advances in testing, treatment and prevention; and the macroeconomic impact of government measures to contain the spread of the virus and related government stimulus measures.

            
Accounting Records and Use of Estimates:
   
 

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, 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 requirements for reporting on Form 10-Q. The July 31, 2019 condensed 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, 2019. 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, 2020.

As of April 30, 2020, the impact of COVID-19 continues to unfold. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and as additional information becomes available, our estimates may change materially in future periods.

   
  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 historical collectibility based on 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 as of April 30, 2020 considered business and market disruptions 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 impact on our allowance for uncollectible accounts receivables in future periods.

As of July 31, 2019, management determined no allowance for uncollected receivables was considered necessary. As of April 30, 2020, and primarily as a result of the effects of COVID-19, the Company recorded the following:

1) an allowance for expected uncollectible receivables in the amount of $420,000 as an offset to receivables
2) unbilled receivables were reduced by approximately $136,000 for uncollectible amounts.

For the three and nine months ended April 30, 2020 and 2019, bad debt expense included in general and administrative expense on the Consolidated Statements of Operations was $596,292 and $3,328, respectively.

-7-



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:

   
           Buildings and improvements       18-40 years
Improvements to leased property 3-10 years
Fixtures and equipment 7-12 years
Other 3-5 years
       

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.

The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. At April 30, 2020 and July 31, 2019, there were no impairments of its property and equipment.

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 1 to 21 years, using the straight-line method. If a lease is terminated early, such costs are expensed.

Leases - Lessor Revenue

Property held for leasing in the Company’s real estate rental operations is disclosed in Note 5. Rent 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 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, is 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.

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, current portion of operating lease liabilities, and long-term 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.

-8-


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 $4,002,346 as of July 31, 2019 available to offset future taxable income. As of July 31, 2019, the Company had unused state and city net operating loss carryforwards of approximately $10,170,071 for state and $8,274,000 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- based franchise taxes. Beginning with the Company’s tax year ended July 31, 2016, changes in the law required the state capital-based tax will be phased out over a 7-year period. 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.

Reclassification:

The condensed consolidated financial statements for prior years reflect certain reclassifications to conform with classifications adopted in the nine months ended April 30, 2020. These reclassifications have no effect on net income or loss as previously reported

Recently adopted accounting standards:

In January 2016, the FASB issued ASU No. 2016-01 "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. ASU No. 2016-01 is effective for interim and annual periods beginning after December 15, 2017. We adopted this standard effective August 1, 2018 and recorded a cumulative effect adjustment to increase opening retained earnings at August 1, 2018 by $487,136 as required for equity investments recorded at fair value, formerly available-for-sale securities.

In November 2016, the FASB issued ASU 2016-18, “Restricted Cash”. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We adopted this standard effective August 1, 2018 with retrospective application to our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 is intended to increase transparency and comparability among organizations in accounting for leasing arrangements. This guidance establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

-9-


In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842”, which provides amendments and clarification to ASU 2016-12 based on the FASB’s interaction with stakeholders. In July 2018, the FASB issued ASU No. 2018-11 “Leases (Topic 842): Targeted Improvements”, which amends Leases (Topic 842) to (i) add an optional transition method that would permit entities to apply the new requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption, and (ii) provide a practical expedient for lessors regarding the separation of the lease and non-lease components of a contract. In December 2018, the FASB issued ASU No. 2018-20, “Leases (Topic 842) Narrow-Scope Improvement for Lessors,” which clarifies how to apply the leases standard when accounting for sales taxes and other similar taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and non-lease components. In March 2019, the FASB issued ASU 2019-01, “Leases (Topic 842) Codification Improvements”, which provides amendments for issues brought to the Board’s attention through its interactions with stakeholders. The issues identified are as follows. 1. Determining the fair value of the underlying asset by lessors that are not manufacturers or dealers, 2. Presentation on the statement of cash flows-sales-type and direct financing leases, 3. Transition disclosures related to Topic 250, Accounting Changes and Error Corrections. These standards are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The new standards were adopted by the Company for the fiscal year beginning August 1, 2019. Upon adoption of Topic 842, the Company elected the following practical expedients:

1. The Company applied the optional transition method of recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the initial period of adoption. Upon adoption on August 1, 2019, the Company did not have an adjustment to opening retained earnings.

2. As lessee and lessor, the Company has elected not to reassess lease classifications and all leases will continue to be classified as operating leases under the new standard.

As a result of the adoption of the new lease accounting guidance, the Company recognized on August 1, 2019:

Operating lease right-of-use assets of $27.1 million.
 
Operating lease liabilities of approximately $17.9 million, based on the net present value of remaining minimum rental payments, discounted using the Company’s incremental borrowing rate of 3.88%.
 
The initial recording of operating lease right-of-use assets of $27.1 million includes adjustments of approximately $10.2 million primarily relating to building and improvements, net of accumulated depreciation, required pursuant to a ground lease with an affiliate, principally owned by a director of the Company (“landlord”). Upon lease termination in 2029, the building and all improvements will be turned over to the landlord as property owner.
 
The initial operating lease liability of $17.9 million includes an adjustment of remaining accrued rent of approximately $.95 million.

The Company’s lessor accounting remains similar under Topic 842 but updated to align with certain changes to the lessee model and the new revenue recognition standard (ASU 2014-09). Upon adoption of the lease standards on August 1, 2019, changes in accounting for the Company’s lease revenue as lessor were not significant.

Recently issued accounting standards:

In April 2020, the FASB 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 abatements would be recognized as reductions to revenue during the period in which they were granted. Rent deferrals would result in an increase to accounts receivable during the deferral period with no impact on rental revenue recognition. We are currently evaluating options related to this policy election.

2. 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 nine months ended April 30, 2020 and April 30, 2019.

3. 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.

-10-


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, 2020 and July 31, 2019.

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 Measurements, the following are the Company's financial assets measured on a recurring basis presented at fair value.

Fair value measurements at reporting date

Total Total
April 30, July 31,
Description     2020     Level 1       Level 2     Level 3     2019     Level 1     Level 2     Level 3
Assets:
Marketable securities $      3,487,381 $      3,487,381 $      – $      – $      3,580,227 $      3,580,227 $      – $      –

As of April 30, 2020 and July 31, 2019, the Company's marketable securities were classified as follows:

April 30, 2020 July 31, 2019
Gross Gross Gross Gross
Unrealized Unrealized Fair Unrealized Unrealized Fair
      Cost       Gains       Losses       Value       Cost       Gains       Losses       Value
Noncurrent:
Mutual funds $ 1,076,183 $ 155,070 $ $      1,231,253 $ 845,306 $ 264,425 $      – $      1,109,731
Equity securities 1,537,832 730,165 11,869 2,256,128 1,656,156 814,340 2,470,496
$      2,614,015 $      885,235 $      11,869 $ 3,487,381 $      2,501,462 $      1,078,765 $ $ 3,580,227

Investment income consists of the following:

Three Months Ended Nine Months Ended
April 30 April 30
      2020 2019       2020 2019
Gain (loss) on sale of marketable securities $      (18,435 ) $ $ 28,546 $ 46,415
Interest income 1,270 15,025 14,320 42,466
Dividend income 11,838 12,352 92,725 95,607
Total $      (5,327 )       $      27,377 $      135,591       $      184,488

-11-



4. Financial Instruments and Credit Risk Concentrations:
          

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

The Company derives rental income from approximately fifty tenants, of which one tenant accounted for 16.45%, another tenant accounted for 14.49% and a third tenant accounted for 12.26% of rental income during the nine months ended April 30, 2020. The nine months ended April 30, 2019 had one tenant account for 18.22%, another tenant account for 14.40% and a third tenant account for 11.81% of rental income. No other tenant accounted for more than 10% of rental income during the same periods.

As of April 30, 2020, two tenants accounted for approximately 41.9% of receivables and three tenants accounted for 48.14% of unbilled receivables. As of July 31, 2019, four tenants accounted for 68.8% of receivables and four tenants accounted for 68.44% of unbilled receivables.

-12-



5.

Property and Equipment:

          

All buildings owned by the Company are held for leasing except for a small portion used for Company offices.


           April 30 July 31
      2020       2019
Land $      6,067,805 $      6,067,805
 
Buildings held for leasing

Buildings and improvements

69,509,426 86,461,353

Improvements to leased property

1,478,012

Construction in progress

3,787,801 2,325,940
73,297,227 90,265,305

Accumulated depreciation

(32,344,996 ) (43,310,270 )

Buildings - net

40,952,231 46,955,035
 
Fixtures and equipment and other:

Fixtures and equipment

144,545 144,545

Other fixed assets

175,139 164,066
319,684 308,611

Accumulated depreciation

(195,497 ) (202,148 )

Fixtures and equipment and other - net

124,187 106,463
 

Property and equipment - net

$ 47,144,223 $ 53,129,303
 
Construction in progress includes:
April 30 July 31
2020 2019
Building improvements at 9 Bond Street in Brooklyn, NY $ $ 29,132
Building improvements at 25 Elm Place in Brooklyn, NY 426,533 426,533
Improvements to leased property 303,975
Building improvements at Fishkill, NY building 3,361,268 1,566,300
$ 3,787,801 $ 2,325,940
 

Leased property included in the Company’s real estate rental operations consists of the following:

 
                 Estimated Useful Life       April 30, 2020
Operating lease right-of-use-assets Lease Terms – 7 to 54 years $      37,698,819

          

The initial recording of operating lease right-of-use assets on August 1, 2019 includes adjustments of $10,190,334, net of accumulated amortization, primarily relating to building and improvements included in a ground lease with an affiliate, principally owned by a director of the Company (“landlord”). The ground lease required the Company to construct a building during the lease period. Upon lease termination in 2029, the building and all improvements will be turned over to the landlord as property owner.

Until this lease agreement with the landlord terminates in 2029, the Company remains solely responsible for the building, improvements and maintenance of the property included in this lease and is solely entitled to tax depreciation and other tax deductions.

-13-



6.

Long-Term Debt – Mortgage:

          
           April 30, 2020 July 31, 2019
Current
Annual Final Due Due Due Due
Interest Payment Within After Within After
      Rate       Date       One Year       One Year       One Year       One Year
(1) Bond St. building, 4.375 % 12/1/2024 $      1,001,268 $      4,074,909 $      5,298,610 $
(2) Fishkill building 3.980 % 4/1/2025 133,584 3,866,416
Deferred financing costs (178,495 ) (11,448 )
Net $ 1,134,852 $ 7,762,830 $ 5,287,162 $

          

(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 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 building; amortized over a 20-year period with an interest rate of 3.98% and is due in five years.

   
7. 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''). PPP loan payments are deferred for a period of six months until October 10, 2020. Thereafter, payments aggregating $210,795 will be due through April 30, 2021; with payments continuing for the remainder of $511,931 maturing April 10, 2022. PPP provides forgiveness of loan proceeds used for qualified and documented payroll costs, mortgage interest payments, rent payments and utilities, if less than 25% of such proceeds are used for non-payroll costs.
 
8.

Operating Leases

 

Lessor

The Company leases office and retail space to tenants under operating leases in commercial buildings. The 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 condensed consolidated statements of operations and retained earnings.

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

           Three Months Ended Nine Months Ended
April 30 April 30
      2020       2019       2020       2019
Base rent - fixed $      4,481,258 $      4,787,888 $      13,533,287 $      14,263,378
Reimbursements of common area costs 291,889 193,661 605,324 557,734
Non-lease components (real estate taxes) 355,427 285,688 1,064,938 883,996
Rental income $ 5,128,574 $ 5,267,237 $ 15,203,549 $ 15,705,108

-14-



          

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


           Under ASC 842
As of April 30, 2020
Company
Owned Leased
Fiscal Year       Property       Property       Total
For the remainder of 2020 $      2,312,566 $      1,491,489 $      3,804,055
2021 9,720,596 4,902,022 14,622,618
2022 8,056,526 3,916,701 11,973,227
2023 7,231,670 3,148,299 10,379,969
2024 5,420,577 2,864,682 8,285,259
2025 4,255,120 2,286,979 6,542,099
After 2025 23,408,985 9,682,265 33,091,250

Total

$ 60,406,040 $ 28,292,437 $ 88,698,477
 
Under ASC 840
As of July 31, 2019
Company
Owned Leased
Fiscal Year Property Property Total
2020 $ 10,038,712 $ 6,120,283 $ 16,158,995
2021 9,521,380 5,009,044 14,530,424
2022 7,878,165 4,039,069 11,917,234
2023 7,399,288 3,270,666 10,669,954
2024 6,483,940 2,987,050 9,470,990
After 2024 52,632,826 14,842,540 67,475,366

Total

$ 93,954,311 $ 36,268,652 $ 130,222,963

-15-



          

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.

Effective April 1, 2020, four of the Company’s property leases were extended. The effect of these lease extensions on the measurement of operating lease right-of-use assets, liabilities and rent expense follows:


Operating Lease Operating Lease Monthly Rent
                 Right-of-Use-Asset       Liability       Expense
Upon initial adoption, August 1, 2019 $ 27,104,937 $ 16,728,284 $ 235,350
After various lease extensions through April 30, 2020 $ 37,698,819 $ 29,326,365 $ 277,570

          

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


           Three Months Ended Nine Months Ended
      April 30, 2020       April 30, 2020
Sublease income $              1,880,508 $                5,402,369
Operating lease cost (798,132 ) (2,308,189 )
Excess of sublease income over lease cost $ 1,082,376 $ 3,094,180
 
The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of April 30, 2020:
            
April 30, 2020       $      1,989,126
April 30, 2021 2,112,289
April 30, 2022 2,128,723
April 30, 2023 2,145,753
April 30, 2024 2,163,029
Thereafter 28,095,443
Total undiscounted cash flows 38,634,363
Less: present value discount (9,307,998 )
Total Lease Liabilities $ 29,326,365
 

Other information:

Operating cash flows from operating leases

$ 1,387,214

Weighted-average remaining lease term - operating leases

18.23 years

Weighted-average discount rate - operating leases

2.89 %

-16-



         The following table represents future minimum lease payments under non-cancelable operating leases at July 31, 2019 as presented in the Company's Annual Report on Form 10-K:
 
      Operating
Fiscal Year Leases
2020 $      1,897,318
2021 1,941,494
2022 2,057,814
2023 2,072,000
2024 2,086,697
After 2024 11,701,293
Total required* $ 21,756,616
 
  * Minimum payments have not been reduced by minimum sublease rentals of $36,268,652 under operating leases due in the future under non-cancelable leases.
   
         Rent payments related to an affiliate principally owned by a director of the Company totaled $246,812 and $740,436 for the three and nine months, respectively, for each of the periods ending April 30, 2020 and 2019. The rental payments are for two leases which expire May 31, 2030 and April 30, 2031, respectively.
 
9.

Unbilled Receivables and Rental Income:

Unbilled receivables 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 each lease.
 
10.

Employees' Retirement Plan:

The Company sponsors a noncontributory Money Purchase Plan covering substantially all of its non-union employees. Operations were charged $67,312 and $314,897 as contributions to the Plan for the three and nine months ended April 30, 2020, respectively, and $106,580 and $359,353 as contributions to the Plan for the three and nine months ended April 30, 2019, 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 $14,360 and $46,180 for the three and nine months ended April 30, 2020 respectively and $16,327 and $45,786 as contributions to the plan for the three and nine months ended April 30, 2019, respectively. Contributions and costs are determined in accordance with the provisions of negotiated labor contracts or  terms of the plans. The Company also contributes to union sponsored health benefit plans.

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.

-17-



        

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

   
                 Legal name of Plan:        United Food and Commercial
Workers Local 888 Pension Fund
Employer identification number: 13-6367793
Plan number: 001
                 Date of most recent Form 5500:       December 31, 2018
Certified zone status: Critical and declining status
Status determination date: January 1, 2018
Plan used extended amortization provisions in status calculation: Yes
Minimum required contribution: Yes
Employer contributing greater than 5% of Plan contributions for year ended December 31, 2018: Yes
Rehabilitation plan implemented: Yes
Employer subject to surcharge: Yes
Contract expiration date: November 30, 2022
 
           For the plan years 2019-2022, under the pension fund’s rehabilitation plan, the Company agreed to pay a minimum contribution rate equal to 9.1% of the prior year total contribution rate. The Company has 29 employees and has a contract, expiring November 30, 2022, with a union covering rates of pay, hours of employment and other conditions of employment for approximately 21% of its employees. The Company considers that its labor relations with its employees and union are good.
 
11.

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 (3) 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:
 
       April 30
2020 2019
Cash and cash equivalents $      6,126,989 $      5,330,262
Restricted cash, tenant security deposits  793,539 1,342,124
Restricted cash, escrow 321,603 258,399
Restricted cash, other 27,840 33,480
$ 7,269,971 $ 6,964,265
 
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.
 
Supplemental disclosure:       Nine Months Ended
April 30
2020       2019
Cash Flow Information
Interest paid, net of capitalized interest of $101,064 (2020) and $41,024 (2019) $      68,781 $      104,802
Income taxes paid (refunded) (23,041 )
 
Non-cash information
Recognition of operating lease right-of-use assets $ 39,464,411
Recognition of operating lease liabilities 30,222,981
Mortgage refinance 5,255,920

-18-



12.     

Common Stock:

The Company has one class of common stock with identical voting rights and rights to liquidation.
            
13.

Contingencies:

On November 2, 2018 the Company settled the lawsuit relating to defective workmanship and breach of contract to replace a roof and various other work on its Fishkill, New York building. The Company agreed to pay $635,000 to the Plaintiffs, D. Owens Electric, Inc., Mid-Hudson Structural Concrete, Inc. d/b/a Recycle Depot, and BSB Construction, Inc., in settlement of the claims made against the Company. This settlement resolves the actions and disputes referred to in the Decision and Order dated October 30, 2018 of the Supreme Court of the State of New York, County of Dutchess. The $635,000 was paid in full on November 6, 2018.

There are various other 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 cannot be determined at this time.

-19-


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:

In late 2019, an outbreak of COVID-19 emerged and by March 11, 2020 was declared a global pandemic by The World Health Organization. Throughout the United States and locally, governments and municipalities instituted measures in an effort to control the spread of COVID-19, including quarantines, shelter-in-place orders, school closings, travel restrictions and the closure of non-essential businesses. By the end of March and into April 2020, the economic impacts became significant.

In March and April 2020, 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 shelter-in-place orders. The effects of COVID-19 on our tenants have been reflected in an increase in our allowance for credit losses for accounts receivable. March and April rent collections and increased past due activity may not be indicative of unpaid rents in any future period. In addition, we experienced volatility in the valuation of our equity investments.

Looking ahead, the full impact of COVID-19 on our business is unknown and highly unpredictable. Many of our tenants will suffer reductions in revenue and, depending upon the duration of quarantines and the corresponding economic slowdown, some of our tenants have or will seek rent deferrals or become unable to pay their rent. While we believe our tenants are required to pay rent under their leases, we are considering temporary rent relief on a case-by-case basis. 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; advances in testing, treatment and prevention; and the macroeconomic impact of government measures to contain the spread of the virus and related government stimulus measures.

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 10 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, 2019).

As of April 30, 2020, the impact of COVID-19 continues to unfold. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and as additional information becomes available, our estimates may change materially in future periods.

-20-


Results of Operations:

Three months ended April 30, 2020 compared to the three months ended April 30, 2019:

In the three months ended April 30, 2020, the Company reported net loss of ($585,023), or ($.29) per share. In the comparable three months ended April 30, 2019, the Company reported net income of $655,935, or $.32 per share. Revenue in the current three months decreased, real estate operating expenses increased and administrative and general expense increased as explained below.

Revenues in the current three months decreased to $5,128,574 from $5,275,552 in the comparable 2019 three months primarily due to loss of rental income from four tenants and a reduction in rent from an existing tenant, partially offset by rental from one new tenant.

Real estate operating expenses in the current three months increased to $3,443,130 from $3,020,188 in the comparable 2019 three months primarily due to:

1) increases in real estate taxes and license and permit costs,
2) increases in rent expense due to the recording of the building to right-of-use asset (see Notes 1, 5 and 8),
3) partially offset by decreases in payroll costs and leasing commissions

Administrative and general expenses in the current three months increased to $1,771,233 from $1,135,750 in the comparable 2019 three months primarily due to:

1) increases in bad debt expense in the amount of $556,000 due to the recording of an allowance for uncollectible receivables and a reduction of unbilled receivables for uncollectible amounts (see Note 1). Increased bad debt expense was mostly caused by the effects of COVID-19 and the result of government mandated business disruptions and shelter-in-place orders.
2) increases in legal and professional costs.

The gain on disposition of property and equipment in the three months ended April 30, 2020 in the amount of $13,129 was from the sale of an automobile.

Depreciation expense in the current three months decreased to $410,610 from $474,761 in the comparable 2019 three months primarily due to a decrease in depreciation on the Jamaica building due to the recording of the building to right-of-use asset (see Notes 1, 5 and 8).

Interest expense exceeded investment income in the current three months by $326,753 and investment income exceeded interest expense by $281,082 in the comparable 2019 three months. The decrease in investment income was primarily due to the change in fair value of marketable securities resulting from the effects of COVID-19.

Nine months ended April 30, 2020 compared to the nine months ended April 30, 2019:

In the nine months ended April 30, 2020, the Company reported net loss of ($513,760), or ($.25) per share. In the comparable nine months ended April 30, 2019, the Company reported net income of $870,701, or $.43 per share. Revenue in the current nine months decreased and real estate operating expenses increased as explained below.

Revenues in the current nine months decreased to $15,203,549 from $15,758,449 in the comparable 2019 nine months primarily due to loss of rental income from four tenants and a reduction in rent from an existing tenant, partially offset by rental from one new tenant.

Real estate operating expenses in the current nine months increased to $10,206,355 from $9,113,794 in the comparable 2019 nine months primarily due to:

1) increases in real estate taxes and license and permit costs,
2) increases in rent expense due to the recording of the building to right-of-use asset (see Notes 1, 5 and 8),
3) partially offset by decreases in maintenance costs and leasing commissions

-21-


Administrative and general expenses in the current nine months increased to $4,297,879 from $4,184,557 in the comparable 2019 nine months primarily due to:

1) increases in bad debt expense in the amount of $556,000 due to the recording of an allowance for uncollectible receivables and a reduction of unbilled receivables for uncollectible amounts (see Note 1). Increased bad debt expense was mostly caused by the effects of COVID-19 and the result of government mandated business disruptions and shelter-in-place orders.
2) increases in legal and professional costs.
3) partially offset due to settlement of litigation costs in the amount of $635,000 in the 2019 nine months (see Note 13).

The loss on disposition of property and equipment in the nine months ended April 30, 2020 in the amount of $40,992 was from a loss of $54,121, for the removal of a canopy at the Company’s Fishkill, New York property offset by a gain of $13,129 from the sale of an automobile. The 2019 nine months did not have a loss on disposition of property and equipment.

Depreciation expense in the current nine months decreased to $1,192,997 from $1,414,045 in the comparable 2019 nine months primarily due to a decrease in depreciation on the Jamaica building due to the recording of the building to right-of-use asset (see Notes 1, 5 and 8), partially offset by additional depreciation from prior year improvements in the Brooklyn buildings.

Interest expense exceeded investment income in the current nine months by $177,086 and investment income exceeded interest expense by $206,648 in the comparable 2019 nine months. The decrease in investment income was primarily due to the change in fair value of marketable securities resulting from the effects of COVID-19.

-22-


Liquidity and Capital Resources:

In March and April 2020, we experienced an increase in late payments due to the impact of COVID-19 and the related reductions in economic activity from business disruptions and shelter-in-place orders. In addition, we experienced declines in the valuation of our equity investments. To the extent the COVID-19 pandemic continues to disrupt economic activity nationally and in New York, NY, 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.

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 was $329,154 and brokerage commissions were $216,052. The tenant took occupancy and commenced payment of rent in October 2019.

The tenant who leased 20,000 square feet of space 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 Company re-leased these premises in August 2019 to a fast food restaurant expiring in April 2030. Rent is expected to commence in September 2020.

In July 2019, the Company leased 47,000 square feet to a community college at its Fishkill, New York building for a term of fifteen years with two five-year option periods. The cost of renovations for this tenant will be approximately $3,200,000 and brokerage commissions will be $448,939. The tenant is expected to take occupancy and commence payment of rent in June 2020.

In July 2019, the retail tenant at the Company’s Fishkill, New York building who occupies 90,000 square feet gave notice to terminate their lease effective October 30, 2019. The loss in annual rent will be approximately $250,000. The Company and the tenant then agreed to extend the lease until December 2019.

In August 2019, a tenant who occupies 23,603 square feet of office space at the Company’s Jowein building in Brooklyn, New York vacated the premises. The loss in annual rent will be approximately $814,000.

In September 2019, a retail tenant who occupies 128,196 square feet surrendered approximately 22,000 square feet at the Company’s Nine Bond Street building in Brooklyn, New York. The loss in annual rent will be approximately $965,000.

In November 2019, the Company refinanced a loan with a bank for the balance due in the amount of $5,255,920 plus an additional $144,080 for a total of $5,400,000. The interest rate is 4.375% per annum. The loan is self-liquidating over a five-year period.

In November 2019, the Company extended a lease with one of the Company’s landlords, which expires in April 2026 for an additional eight years and eight months to expire in December 2034 at its Nine Bond Street building in Brooklyn, New York.

In February 2020, a retail tenant who occupies 5,500 Square feet at the Company’s Jowein building in Brooklyn, New York vacated the premises. The annual loss in rents will be approximately $165,000.

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 building; amortized over a 20-year period with an interest rate of 3.98% and is due in five years (See Note 6).

In April 2020, the Company extended leases with three of the Company’s landlords at its Nine Bond Street building in Brooklyn, New York. All three of the leases were extended until April 2044. The Company also extended its lease with its landlord at the Company’s Jamaica, New York building until May 2030.

In April 2020, a tenant who occupies 108,000 square feet of warehouse space at the Company's Circleville, Ohio building extended their lease for an additional three years to expire May 31, 2023.

-23-


In April 2020, the Company obtained a $722,726 loan issued by a bank through the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). PPP loan payments are deferred for a period of six months until October 10, 2020. The interest rate on the loan is .98% per annum and it matures in twenty-four months on April 10, 2022. PPP provides forgiveness of loan proceeds used for qualified and documented payroll costs, mortgage interest payments, rent payments and utilities, if less than 25% of such proceeds are used for non-payroll costs (See Note 7).

Cash Flows From Operating Activities:

Deferred Expenses: The Company had an additional $46,585 for brokerage commissions incurred from an existing tenant’s extension of a lease at the Company’s Jamaica, New York building.

Payroll and Other Accrued Liabilities: The Company had a balance due at April 30, 2020 for brokerage commissions of $583,428.

In March and April 2020, we experienced an increase in late payments due to the impact of COVID-19 and the related reductions in economic activity from business disruptions and shelter-in-place orders. In addition, we experienced declines in the valuation of our equity investments. To the extent the COVID-19 pandemic continues to disrupt economic activity nationally and in New York, NY, 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:

The Company had expenditures of $289,699 for the nine months ended April 30, 2020 for elevator upgrade work at the Company’s Nine Bond Street building in Brooklyn, New York.

The Company had expenditures for elevator upgrade work in the amount of $152,336 for the nine months ended April 30, 2020, at the Company’s Jamaica, New York building. The Company also had expenditures of $291,545 for renovation work for two existing tenants.

The Company had expenditures for renovations for a new tenant in the amount of $2,875,331 for the nine months ended April 30, 2020, at its Fishkill, New York building. The total cost was $3,481,909 and was completed in May 2020. The Company also had expenditures of $615,243 for four new elevators for the nine months ended April 30, 2020. The total cost will be approximately $1,800,000 and is anticipated to be completed in early 2021. The Company also had expenditures of $771,544 for a new lobby for the nine months ended April 30, 2020. The total cost was $1,645,886 and was completed in April 2020. The Company also had expenditures of $130,508 for a second lobby in the nine months ended April 30, 2020. The total cost will be approximately $900,000 and is expected to be completed in December 2020.

The Company had expenditures in the amount of $221,442 for elevator upgrade work at its Jowein building in Brooklyn, New York.

Cash flows from Financing Activities:

In November 2019, the Company refinanced with a bank the remaining balance of a previous loan due of $5,255,920 plus an additional $144,080 for a total of $5,400,000 (See Note 6).

In March 2020, the Company obtained a loan with a bank in the amount of $4,000,000 (See Note 6).

In April 2020, the Company obtained a $722,726 loan issued by a bank through the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) (See Note 7).

-24-


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:

changes in the rate of economic growth in the United States;
the ability to obtain credit from financial institutions and the related costs;
changes in the financial condition of our customers;
changes in regulatory environment;
lease cancellations;
changes in our estimates of costs;
war and/or terrorist attacks on facilities where services are or may be provided;
outcomes of pending and future litigation;
increasing competition by other companies;
compliance with our loan covenants;
recoverability of claims against our customers and others by us and claims by third parties against us;
changes in estimates used in our critical accounting policies; and
pandemics and the ongoing effects of COVID-19.

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk:

The Company uses fixed-rate debt to finance its capital requirements. These transactions do not expose the Company to market risk related to changes in interest rates. The Company does not use derivative financial instruments. At April 30, 2020, the Company had fixed-rate debt of $9,798,903.

Item 4. Controls and Procedures:

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective and provide reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are likely to materially affect, our internal control over financial reporting.

-25-


Part II - Other Information

          Item  1. Legal Proceedings
From time to time we are involved in legal actions arising in the ordinary course of business. In our opinion, the outcome of such matters in the aggregate will not have a material adverse effect on our financial condition, results of operations or cash flows. See also Note 12 to the Company’s Condensed Consolidated Financial Statements.
Item 1A. Risk Factors
There have been no changes to our risk factors from those disclosed in our Annual Report on Form 10-K for our fiscal year ended July 31, 2019, except that as stated in “Cautionary Statements Regarding Forward-Looking Statements”, the last factor listed thereon, “pandemics and the ongoing effects of COVID-19” could adversely affect our results and operations as set forth on page 20 and further explained on various other pages under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a)  List of Exhibits:
Sequentially
Exhibit      Numbered
Number Exhibit      Page
(3) Articles of Incorporation and Bylaws. N/A
(10) Material contracts. N/A
(11) Statement re computation of per share earnings N/A
(12) Statement re computation of ratios N/A
(14) Code of ethics N/A
(15) Letter re unaudited interim financial information. N/A
(18) Letter re change in accounting principles. N/A
(19) Report furnished to security holders. N/A
(31) Additional exhibits - Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.1) Chief Executive Officer 28
(31.2) Chief Financial Officer 29
(32) Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. 30
(95) Mine safety disclosure. N/A
EX-101.INS           XBRL Instance Document
EX-101.SCH XBRL Taxonomy Extension Schema
EX-101.PRE XBRL Taxonomy Extension Presentation Linkbase
EX-101.LAB XBRL Taxonomy Extension Label Linkbase
EX-101.CAL XBRL Taxonomy Extension Calculation Linkbase
EX-101.DEF   XBRL Taxonomy Extension Definition Linkbase
(b)  Reports on Form 8-K – Two reports on Form 8-K were filed by the registrant for the period ended April 30, 2020.
Item reported:
The Company reported its financial results for the three and six months ended January 31, 2020.
Date of report filed – March 5, 2020.
  The Company reported entry into a material definitive agreement.
Date of report filed – March 5, 2020.

-26-


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

            J.W. MAYS, Inc.      
(Registrant)
 
 
 
Date:      June 4, 2020       Lloyd J. Shulman
    Lloyd J. Shulman
    President  
  Chief Executive Officer  
 
 
 
Date:      June 4, 2020 Mark S. Greenblatt
Mark S. Greenblatt
Vice President
Chief Financial Officer

-27-


EXHIBIT 31.1

CERTIFICATION

I, Lloyd J. Shulman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America;
 
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     June 4, 2020
 
/s/ Lloyd J. Shulman
  Lloyd J. Shulman
President
Chief Executive Officer

-28-


EXHIBIT 31.2

CERTIFICATION

I, Mark S. Greenblatt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of J.W. Mays, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America;
 
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     June 4, 2020
 
/s/ Mark S. Greenblatt
  Mark S. Greenblatt
Vice President
Chief Financial Officer

-29-


EXHIBIT 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of J.W. Mays, Inc. (the "Company") on Form 10-Q for the period ended April 30, 2020 as filed with the United States Securities and Exchange Commission (the "Report"), we, Lloyd J. Shulman and Mark S. Greenblatt, Chief Executive Officer and Chief Financial Officer, respectively, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

       Date:     June 4, 2020
 
/s/ Lloyd J. Shulman
  Lloyd J. Shulman
Chief Executive Officer
  
/s/ Mark S. Greenblatt
Mark S. Greenblatt
Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to J.W. Mays, Inc. and will be retained by J.W. Mays, Inc. and furnished to the United States Securities and Exchange Commission or its staff upon request.

-30-


v3.20.1
The Impact of COVID-19 on our Results and Operations (Property and equipment depreciation and amortization period) (Details)
9 Months Ended
Apr. 30, 2020
Buildings and improvements [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 18 years
Buildings and improvements [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 40 years
Improvements to leased property [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 3 years
Improvements to leased property [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 10 years
Fixtures and equipment [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 7 years
Fixtures and equipment [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 12 years
Other [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 3 years
Other [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Useful life 5 years
v3.20.1
The Impact of COVID-19 on our Results and Operations (Policies)
9 Months Ended
Apr. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
The Impact of COVID-19 on our Results and Operations
The Impact of COVID-19 on our Results and Operations:
            

In late 2019, an outbreak of COVID-19 emerged and by March 11, 2020 was declared a global pandemic by The World Health Organization. Throughout the United States and locally, governments and municipalities instituted measures in an effort to control the spread of COVID-19, including quarantines, shelter-in-place orders, school closings, travel restrictions and the closure of non-essential businesses. By the end of March and into April 2020, the economic impacts became significant.

In March and April 2020, 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 shelter-in-place orders. The effects of COVID-19 on our tenants have been reflected in an increase in our allowance for credit losses for accounts receivable. March and April rent collections and increased past due activity may not be indicative of unpaid rents in any future period. In addition, we experienced volatility in the valuation of our equity investments.

Looking ahead, the full impact of COVID-19 on our business is unknown and highly unpredictable. Many of our tenants will suffer reductions in revenue and, depending upon the duration of quarantines and the corresponding economic slowdown, some of our tenants have or will seek rent deferrals or become unable to pay their rent. While we believe our tenants are required to pay rent under their leases, we are considering temporary rent relief on a case-by-case basis. 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; advances in testing, treatment and prevention; and the macroeconomic impact of government measures to contain the spread of the virus and related government stimulus measures.

Accounting Records and Use of Estimates
Accounting Records and Use of Estimates:
   
 

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, 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 requirements for reporting on Form 10-Q. The July 31, 2019 condensed 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, 2019. 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, 2020.

As of April 30, 2020, the impact of COVID-19 continues to unfold. As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and as additional information becomes available, our estimates may change materially in future periods.

Accounts Receivable
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 historical collectibility based on 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 as of April 30, 2020 considered business and market disruptions 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 impact on our allowance for uncollectible accounts receivables in future periods.

As of July 31, 2019, management determined no allowance for uncollected receivables was considered necessary. As of April 30, 2020, and primarily as a result of the effects of COVID-19, the Company recorded the following:

1) an allowance for expected uncollectible receivables in the amount of $420,000 as an offset to receivables
2) unbilled receivables were reduced by approximately $136,000 for uncollectible amounts.

For the three and nine months ended April 30, 2020 and 2019, bad debt expense included in general and administrative expense on the Consolidated Statements of Operations was $596,292 and $3,328, respectively.

Property and Equipment
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:

 
Buildings and improvements       18-40 years
Improvements to leased property 3-10 years
Fixtures and equipment 7-12 years
Other 3-5 years
     

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.

The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. At April 30, 2020 and July 31, 2019, there were no impairments of its property and equipment.

Deferred Charges

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 1 to 21 years, using the straight-line method. If a lease is terminated early, such costs are expensed.

Leases - Lessor Revenue

Leases - Lessor Revenue

Property held for leasing in the Company’s real estate rental operations is disclosed in Note 5. Rent 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 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, is 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.

Leases - Lessee

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, current portion of operating lease liabilities, and long-term 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

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 $4,002,346 as of July 31, 2019 available to offset future taxable income. As of July 31, 2019, the Company had unused state and city net operating loss carryforwards of approximately $10,170,071 for state and $8,274,000 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- based franchise taxes. Beginning with the Company’s tax year ended July 31, 2016, changes in the law required the state capital-based tax will be phased out over a 7-year period. 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.

Reclassification

Reclassification:

The condensed consolidated financial statements for prior years reflect certain reclassifications to conform with classifications adopted in the nine months ended April 30, 2020. These reclassifications have no effect on net income or loss as previously reported

Recently adopted accounting standards

Recently adopted accounting standards:

In January 2016, the FASB issued ASU No. 2016-01 "Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." ASU 2016-01 amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. ASU No. 2016-01 is effective for interim and annual periods beginning after December 15, 2017. We adopted this standard effective August 1, 2018 and recorded a cumulative effect adjustment to increase opening retained earnings at August 1, 2018 by $487,136 as required for equity investments recorded at fair value, formerly available-for-sale securities.

In November 2016, the FASB issued ASU 2016-18, “Restricted Cash”. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Restricted cash and restricted cash equivalents will be included with cash and cash equivalents when reconciling the beginning of period and end of period balances on the statement of cash flows upon adoption of this standard. ASU 2016-18 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2017. We adopted this standard effective August 1, 2018 with retrospective application to our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 is intended to increase transparency and comparability among organizations in accounting for leasing arrangements. This guidance establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842”, which provides amendments and clarification to ASU 2016-12 based on the FASB’s interaction with stakeholders. In July 2018, the FASB issued ASU No. 2018-11 “Leases (Topic 842): Targeted Improvements”, which amends Leases (Topic 842) to (i) add an optional transition method that would permit entities to apply the new requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption, and (ii) provide a practical expedient for lessors regarding the separation of the lease and non-lease components of a contract. In December 2018, the FASB issued ASU No. 2018-20, “Leases (Topic 842) Narrow-Scope Improvement for Lessors,” which clarifies how to apply the leases standard when accounting for sales taxes and other similar taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and non-lease components. In March 2019, the FASB issued ASU 2019-01, “Leases (Topic 842) Codification Improvements”, which provides amendments for issues brought to the Board’s attention through its interactions with stakeholders. The issues identified are as follows. 1. Determining the fair value of the underlying asset by lessors that are not manufacturers or dealers, 2. Presentation on the statement of cash flows-sales-type and direct financing leases, 3. Transition disclosures related to Topic 250, Accounting Changes and Error Corrections. These standards are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The new standards were adopted by the Company for the fiscal year beginning August 1, 2019. Upon adoption of Topic 842, the Company elected the following practical expedients:

1. The Company applied the optional transition method of recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the initial period of adoption. Upon adoption on August 1, 2019, the Company did not have an adjustment to opening retained earnings.

2. As lessee and lessor, the Company has elected not to reassess lease classifications and all leases will continue to be classified as operating leases under the new standard.

As a result of the adoption of the new lease accounting guidance, the Company recognized on August 1, 2019:

Operating lease right-of-use assets of $27.1 million.
 
Operating lease liabilities of approximately $17.9 million, based on the net present value of remaining minimum rental payments, discounted using the Company’s incremental borrowing rate of 3.88%.
 
The initial recording of operating lease right-of-use assets of $27.1 million includes adjustments of approximately $10.2 million primarily relating to building and improvements, net of accumulated depreciation, required pursuant to a ground lease with an affiliate, principally owned by a director of the Company (“landlord”). Upon lease termination in 2029, the building and all improvements will be turned over to the landlord as property owner.
 
The initial operating lease liability of $17.9 million includes an adjustment of remaining accrued rent of approximately $.95 million.

The Company’s lessor accounting remains similar under Topic 842 but updated to align with certain changes to the lessee model and the new revenue recognition standard (ASU 2014-09). Upon adoption of the lease standards on August 1, 2019, changes in accounting for the Company’s lease revenue as lessor were not significant.

Recently issued accounting standards

Recently issued accounting standards:

In April 2020, the FASB 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 abatements would be recognized as reductions to revenue during the period in which they were granted. Rent deferrals would result in an increase to accounts receivable during the deferral period with no impact on rental revenue recognition. We are currently evaluating options related to this policy election.

v3.20.1
Long-Term Debt - Mortgage (Tables)
9 Months Ended
Apr. 30, 2020
Debt Disclosure [Abstract]  
Schedule of long-term debt
April 30, 2020 July 31, 2019
Current
Annual Final Due Due Due Due
Interest Payment Within After Within After
      Rate       Date       One Year       One Year       One Year       One Year
(1) Bond St. building, 4.375 % 12/1/2024 $      1,001,268 $      4,074,909 $      5,298,610 $
(2) Fishkill building 3.980 % 4/1/2025 133,584 3,866,416
Deferred financing costs (178,495 ) (11,448 )
Net $ 1,134,852 $ 7,762,830 $ 5,287,162 $

          

(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 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 building; amortized over a 20-year period with an interest rate of 3.98% and is due in five years.

v3.20.1
Operating Leases (Schedule of Additional Information Related to Leases) (Details)
9 Months Ended
Apr. 30, 2020
USD ($)
Other information:  
Operating cash flows from operating leases $ 1,387,214
Weighted-average remaining lease term - operating leases 18 years 2 months 23 days
Weighted-average discount rate - operating leases 2.89%
v3.20.1
Operating Leases (Schedule of Future Minimum Non-Cancelable Rental Income) (Details) - USD ($)
Apr. 30, 2020
Apr. 30, 2019
Lessor, Lease, Description [Line Items]    
2020 $ 3,804,055 $ 16,158,995
2021 14,622,618 14,530,424
2022 11,973,227 11,917,234
2023 10,379,969 10,669,954
2024 8,285,259 9,470,990
2025 6,542,099  
After 2024 and 2025 33,091,250 67,475,366
Total 88,698,477 130,222,963
Company Owned Property [Member]    
Lessor, Lease, Description [Line Items]    
2020 2,312,566 10,038,712
2021 9,720,596 9,521,380
2022 8,056,526 7,878,165
2023 7,231,670 7,399,288
2024 5,420,577 6,483,940
2025 4,255,120  
After 2024 and 2025 23,408,985 52,632,826
Total 60,406,040 93,954,311
Leased Property [Member]    
Lessor, Lease, Description [Line Items]    
2020 1,491,489 6,120,283
2021 4,902,022 5,009,044
2022 3,916,701 4,039,069
2023 3,148,299 3,270,666
2024 2,864,682 2,987,050
2025 2,286,979  
After 2024 and 2025 9,682,265 14,842,540
Total $ 28,292,437 $ 36,268,652
v3.20.1
Cash Flow Information (Schedule of supplemental disclosure) (Details) - USD ($)
9 Months Ended
Apr. 30, 2020
Apr. 30, 2019
Jul. 31, 2019
Cash Flow Information      
Interest paid, net of capitalized interest of $101,064 (2020) and $41,024 (2019) $ 68,781 $ 104,802  
Income taxes paid (refunded) (23,041)  
Capitalized interest 101,064 $ 41,024  
Non-cash information      
Recognition of operating lease right-of-use assets 39,464,411   $ 27,100,000
Recognition of operating lease liabilities 30,222,981   $ 17,900,000
Mortgage refinance $ 5,255,920    
v3.20.1
Contingencies (Details)
Nov. 06, 2018
USD ($)
Settled Litigation [Member]  
Loss Contingencies [Line Items]  
Payment of litigation settlement $ 635,000
v3.20.1
Property and Equipment (Schedule of Leased Property real estate Rental Operations Consists) (Details) - USD ($)
Apr. 30, 2020
Aug. 02, 2019
Jul. 31, 2019
Property, Plant and Equipment [Line Items]      
Operating lease right-of-use-assets $ 37,698,819 $ 10,190,334
Minimum [Member]      
Property, Plant and Equipment [Line Items]      
Estimated useful life lease terms 7 years    
Maximum [Member]      
Property, Plant and Equipment [Line Items]      
Estimated useful life lease terms 54 years    
v3.20.1
Marketable Securities (Schedule of classified marketable securities) (Details) - USD ($)
Apr. 30, 2020
Jul. 31, 2019
Marketable Securities [Line Items]    
Fair Value $ 3,487,381 $ 3,580,227
Noncurrent [Member]    
Marketable Securities [Line Items]    
Fair Value 3,487,381 3,580,227
Gross Unrealized Gains 885,235 1,078,765
Gross Unrealized Losses 11,869
Cost 2,614,015 2,501,462
Noncurrent [Member] | Mutual Funds [Member]    
Marketable Securities [Line Items]    
Fair Value 1,231,253 1,109,731
Gross Unrealized Gains 155,070 264,425
Gross Unrealized Losses
Cost 1,076,183 845,306
Noncurrent [Member] | Corporate Equity Securities [Member]    
Marketable Securities [Line Items]    
Fair Value 2,256,128 2,470,496
Gross Unrealized Gains 730,165 814,340
Gross Unrealized Losses 11,869
Cost $ 1,537,832 $ 1,656,156
v3.20.1
Operating Leases (Narrative) (Details) - USD ($)
3 Months Ended 9 Months Ended
Apr. 30, 2020
Apr. 30, 2019
Apr. 30, 2020
Apr. 30, 2019
Lessor, Lease, Description [Line Items]        
Minimum sublease rentals $ 36,268,652   $ 36,268,652  
Rent payments related to an affiliate principally owned by director $ 246,812 $ 246,812 $ 740,436 $ 740,436
Lease termination term     Apr. 30, 2029  
Leasee One [Member]        
Lessor, Lease, Description [Line Items]        
Lease termination term     May 31, 2030  
Leasee Two [Member]        
Lessor, Lease, Description [Line Items]        
Lease termination term     Apr. 30, 2031  
Minimum [Member]        
Lessor, Lease, Description [Line Items]        
Operating leases extended period 5 years   5 years  
Maximum [Member]        
Lessor, Lease, Description [Line Items]        
Operating leases extended period 49 years   49 years  
v3.20.1
Long-Term Debt - Mortgage
9 Months Ended
Apr. 30, 2020
Debt Disclosure [Abstract]  
Long-Term Debt - Mortgage
6.

Long-Term Debt – Mortgage:

          
           April 30, 2020 July 31, 2019
Current
Annual Final Due Due Due Due
Interest Payment Within After Within After
      Rate       Date       One Year       One Year       One Year       One Year
(1) Bond St. building, 4.375 % 12/1/2024 $      1,001,268 $      4,074,909 $      5,298,610 $
(2) Fishkill building 3.980 % 4/1/2025 133,584 3,866,416
Deferred financing costs (178,495 ) (11,448 )
Net $ 1,134,852 $ 7,762,830 $ 5,287,162 $

          

(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 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 building; amortized over a 20-year period with an interest rate of 3.98% and is due in five years.

v3.20.1
Employees' Retirement Plan
9 Months Ended
Apr. 30, 2020
Retirement Benefits [Abstract]  
Employees' Retirement Plan
10.

Employees' Retirement Plan:

The Company sponsors a noncontributory Money Purchase Plan covering substantially all of its non-union employees. Operations were charged $67,312 and $314,897 as contributions to the Plan for the three and nine months ended April 30, 2020, respectively, and $106,580 and $359,353 as contributions to the Plan for the three and nine months ended April 30, 2019, 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 $14,360 and $46,180 for the three and nine months ended April 30, 2020 respectively and $16,327 and $45,786 as contributions to the plan for the three and nine months ended April 30, 2019, respectively. Contributions and costs are determined in accordance with the provisions of negotiated labor contracts or  terms of the plans. The Company also contributes to union sponsored health benefit plans.

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:

   
                 Legal name of Plan:        United Food and Commercial
Workers Local 888 Pension Fund
Employer identification number: 13-6367793
Plan number: 001
                 Date of most recent Form 5500:       December 31, 2018
Certified zone status: Critical and declining status
Status determination date: January 1, 2018
Plan used extended amortization provisions in status calculation: Yes
Minimum required contribution: Yes
Employer contributing greater than 5% of Plan contributions for year ended December 31, 2018: Yes
Rehabilitation plan implemented: Yes
Employer subject to surcharge: Yes
Contract expiration date: November 30, 2022
 
           For the plan years 2019-2022, under the pension fund’s rehabilitation plan, the Company agreed to pay a minimum contribution rate equal to 9.1% of the prior year total contribution rate. The Company has 29 employees and has a contract, expiring November 30, 2022, with a union covering rates of pay, hours of employment and other conditions of employment for approximately 21% of its employees. The Company considers that its labor relations with its employees and union are good.
v3.20.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Apr. 30, 2020
Jul. 31, 2019
ASSETS    
Property and Equipment - Net $ 47,144,223 $ 53,129,303
Current Assets:    
Cash and cash equivalents 6,126,989 4,117,647
Receivables - Net 534,856 402,154
Real estate taxes refundable 101,735
Income taxes refundable 9,683
Restricted cash 292,033 181,193
Prepaid expenses 1,077,759 2,159,701
Total current assets 8,133,372 6,870,378
Other Assets:    
Deferred charges 3,776,403 3,729,818
Accumulated amortization (1,366,996) (1,153,996)
Net 2,409,407 2,575,822
Operating lease right-of-use assets 37,698,819
Restricted cash 850,949 964,884
Unbilled receivables 1,488,550 1,668,461
Marketable securities 3,487,381 3,580,227
Total other assets 45,935,106 8,789,394
TOTAL ASSETS 101,212,701 68,789,075
Long-Term Liabilities:    
Mortgage payable 7,762,830
Note payable 511,931
Security deposits payable 766,506 690,422
Payroll and other accrued liabilities 85,875 448,939
Operating lease liabilities 28,166,873
Deferred income taxes 4,898,000 5,096,000
Total long-term liabilities 42,192,015 6,235,361
Current Liabilities:    
Accounts payable 162,100 30,964
Income taxes payable 26,973
Payroll and other accrued liabilities 2,181,288 2,426,535
Other taxes payable 8,400 8,847
Operating lease liabilities 1,159,492
Current portion of mortgages payable 1,134,852 5,287,162
Current portion of note payable 210,795
Current portion of security deposits payable 42,533 192,193
Total current liabilities 4,926,433 7,945,701
TOTAL LIABILITIES 47,118,448 14,181,062
Shareholders' Equity:    
Common stock, par value $1 each share (shares - 5,000,000 authorized; 2,178,297 issued) 2,178,297 2,178,297
Additional paid in capital 3,346,245 3,346,245
Retained earnings 49,857,563 50,371,323
Stockholders' Equity before Treasury Stock 55,382,105 55,895,865
Common stock held in treasury, at cost - 162,517 shares at April 30, 2020 and at July 31, 2019 (1,287,852) (1,287,852)
Total shareholders' equity 54,094,253 54,608,013
Contingencies (Note 13)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 101,212,701 $ 68,789,075
v3.20.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
9 Months Ended
Apr. 30, 2020
Apr. 30, 2019
Cash Flows From Operating Activities:    
Net income (loss) $ (513,760) $ 870,701
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Bad debt expense 596,292 3,328
Depreciation 1,192,997 1,414,045
Loss on disposition of property and equipment 40,992
Amortization of deferred charges 213,000 223,690
Operating lease expense in excess of cash payments 868,975
Deferred finance costs included in interest expense 22,463 17,156
Net realized and unrealized (gain) loss on marketable securities 176,853 (189,625)
Other assets - unbilled receivables 179,911 (82,202)
Other assets - deferred charges (46,585) (522,292)
Deferred income taxes (198,000) 382,000
Changes in:    
Receivables (728,994) 102,479
Real estate taxes refundable (101,735)
Income taxes refundable 9,683 1,109
Prepaid expenses 1,081,942 984,451
Accounts payable 131,136 (37,905)
Payroll and other accrued liabilities 340,594 232,203
Income taxes payable 26,973
Other taxes payable (447) (1,286)
Cash provided by operating activities 3,292,290 3,397,852
Cash Flows From Investing Activities:    
Acquisition of property and equipment (5,439,243) (3,064,228)
Marketable securities:    
Receipts from sales 621,161 219,744
Payments for purchases (705,168) (316,007)
Cash (used) by investing activities (5,523,250) (3,160,491)
Cash Flows From Financing Activities:    
Borrowing - Mortgage debt 4,866,806
Increase (decrease) - security deposits payable (73,576) 9,453
Mortgage and other debt payments (323,823) (162,172)
Mortgage financing costs paid (232,200)
Cash provided (used) by financing activities 4,237,207 (152,719)
Increase in cash, cash equivalents and restricted cash 2,006,247 84,642
Cash, cash equivalents and restricted cash at beginning of period 5,263,724 6,879,623
Cash, cash equivalents and restricted cash at end of period $ 7,269,971 $ 6,964,265
v3.20.1
Note Payable (Details)
9 Months Ended
Apr. 30, 2020
USD ($)
Debt instrument face amount $ 5,255,920
SBA Loan [Member]  
Debt instrument face amount $ 722,726
Current Annual Interest Rate 0.98%
Final Payment Date Apr. 10, 2022
Payments due through April 30, 2021 $ 210,795
Payments due through April 10, 2022 $ 511,931
v3.20.1
Property and Equipment (Details) - USD ($)
9 Months Ended
Apr. 30, 2020
Aug. 02, 2019
Jul. 31, 2019
Property, Plant and Equipment [Line Items]      
Property and equipment - net $ 47,144,223   $ 53,129,303
Construction in progress $ 3,787,801   2,325,940
Building and improvements net of accumulated depreciation     10,200,000
Lease termination term Apr. 30, 2029    
Operating lease right-of-use assets $ 37,698,819 $ 10,190,334
Building Improvements at 9 Bond Street in Brooklyn, NY [Member]      
Property, Plant and Equipment [Line Items]      
Construction in progress   29,132
Building improvements at 25 Elm Place in Brooklyn, NY [Member]      
Property, Plant and Equipment [Line Items]      
Construction in progress 426,533   426,533
Improvements to leased property [Member]      
Property, Plant and Equipment [Line Items]      
Construction in progress   303,975
Building improvements at Fishkill, NY building [Member]      
Property, Plant and Equipment [Line Items]      
Construction in progress 3,361,268   1,566,300
Land [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment 6,067,805   6,067,805
Buildings and Improvements [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment 69,509,426   86,461,353
Improvements to Leased Property [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment   1,478,012
Construction in Progress [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment 3,787,801   2,325,940
Property [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment 73,297,227   90,265,305
Accumulated depreciation (32,344,996)   (43,310,270)
Property and equipment - net 40,952,231   46,955,035
Fixtures and Equipment [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment 144,545   144,545
Other Fixed Assets [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment 175,139   164,066
Fixtures and equipment and other [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment 319,684   308,611
Accumulated depreciation (195,497)   (202,148)
Property and equipment - net $ 124,187   $ 106,463
v3.20.1
Marketable Securities (Schedule of financial assets measured at fair value on recurring basis) (Details) - USD ($)
Apr. 30, 2020
Jul. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities $ 3,487,381 $ 3,580,227
Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities 3,487,381 3,580,227
Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities
Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Marketable securities