Mays J W Inc: Form 10-Q for the period ended Jan 31, 2025

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 its 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.

Critical Accounting Policies and Estimates:

Critical accounting policies are defined as those most important to the portrayal of a company’s financial condition and results and require the most difficult, subjective or complex judgments. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amount of revenues, and expenses during the reporting period and related disclosure of contingent assets and liabilities. We believe the critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements. Estimates are based on historical experience, where applicable or other assumptions that management believes are reasonable under the circumstances. There have been no significant changes to our critical accounting policies and estimates during the six months ended January 31, 2025 from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report to Shareholders incorporated by reference into our Annual Report on Form 10-K for the year ended July 31, 2024.

Results of Operations:

Three months ended January 31, 2025 compared to the three months ended January 31, 2024:

In the three months ended January 31, 2025, the Company reported net loss of $(157,681), or $(.08) per share. In the comparable three months ended January 31, 2024, the Company reported net loss of $(98,059), or $(.04) per share. The increased loss in the three months ended January 31, 2025 was primarily due to an increase in real estate taxes, maintenance, and insurance expenses; partially offset by increased rent from existing and new tenants, and reductions in executive payroll costs. Also, the Company had investment income on marketable securities of $262,367 to offset losses in the three months ended January 31, 2024.

Revenues in the current three months increased to $5,643,444 from $5,414,843 in the comparable three months ended January 31, 2024, primarily due to increased rent for existing tenants and several new leases; partially offset by the loss of a few tenants.

Real estate operating expenses in the current three months increased to $4,128,415 from $3,826,998 in the comparable three months ended January 31, 2024, primarily due to an increase in real estate taxes, maintenance, and insurance expenses; partially offset by decreases in payroll maintenance costs.

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Administrative and general expenses decreased in the current three months to $1,251,875 from $1,486,632 in the comparable three months ended January 31, 2024, primarily due to a decrease in executive payroll cost.

Depreciation expense in the current three months of $445,274 approximated $429,258 in the comparable three months ended January 31, 2024.

Other income (loss) and interest expense was $(21,561) in the current three months compared to $233,986 in the comparable three months ended January 31, 2024, primarily due to investment income on marketable securities of $262,367 in the 2024 three months.

Six months ended January 31, 2025 compared to the six months ended January 31, 2024:

In the six months ended January 31, 2025, the Company reported net loss of $(131,024), or $(.07) per share. In the comparable six months ended January 31, 2024, the Company reported net loss of $(290,603), or $(.14) per share. The decreased loss in the six months ended January 31, 2025 was primarily due to increased rent from existing and new tenants, and reductions in executive payroll costs; partially offset by an increase in real estate taxes, maintenance, insurance, and legal and professional expenses. Also, in the six months ended January 31, 2024, the Company had investment income on marketable securities of $108,047 to offset losses.

Revenues in the current six months increased to $11,182,573 from $10,738,644 in the comparable six months ended January 31, 2024, primarily due to increased rent for existing tenants and several new leases; partially offset by the loss of a few tenants.

Real estate operating expenses in the current six months increased to $7,878,554 from $7,519,614 in the comparable six months ended January 31, 2024, primarily due to an increase in real estate taxes, maintenance, and insurance expenses; partially offset by decreases in payroll maintenance costs.

Administrative and general expenses decreased in the current six months to $2,544,628 from $2,741,205 in the comparable six months ended January 31, 2024, primarily due to a decrease in executive payroll cost; partially offset by an increase in legal and professional fees.

Depreciation expense in the current six months of $889,340 approximated $857,522 in the comparable six months ended January 31, 2024.

Other income (loss) and interest expense was $(41,075) in the current six months compared to $38,094 in the comparable six months ended January 31, 2024, primarily due to a decrease in investment income on marketable securities of $108,047.

Liquidity and Capital Resources:

Commercial Leasing Activities

In August 2024, a tenant extended its lease through June 30, 2025 with the same terms for 10,569 square feet at the Company’s Jowein building in Brooklyn, New York.

In August 2024, the Company leased 2,051 square feet to an office tenant at the Company’s Jamaica, New York premises for ten years, with five separate one year renewal options. Monthly rent of approximately $5,500, with annual increases, commenced January 1, 2025. The Company’s costs of renovations were approximately $503,088, of which $235,000 will be reimbursed by the tenant.

In August 2024, a tenant who occupies warehouse space at the Company’s building in Circleville, Ohio, extended its lease from May 31, 2026 for additional three years to May 31, 2029. Effective November 1, 2024, the size of the leased premises expanded by 84,000 feet, including space previously leased by another tenant whose lease expired October 31, 2024. After the lease expansion, annual base rent for the warehouse space is $877,440 per annum with increases annually. Brokerage commissions were $106,867.

Effective October 1, 2024, the Company leased approximately 12,500 square feet at the Company’s Fishkill, New York building for use as storage space for three months expiring December 31, 2024. Total rent of $61,219 was prepaid at lease commencement and was amortized as revenue over the term of the lease.

In November 2024, a tenant who occupies 700 square feet at the Company’s 9 Bond Street building in Brooklyn, New York agreed to expand their space to include an additional 130 square feet for increased rent of $2,400 annually through lease expiration on January 31, 2026.

In November 2024, the company leased 305 square feet of office space at the Company’s Jowein building in Brooklyn, New York for two years at an annual rent of $7,320.

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In November 2024, a tenant who occupies 5,800 square feet at the Company’s Jowein building in Brooklyn, New York agreed to rent an additional 3,920 square feet of office space for increased rent of $12,087 a month.

In December 2024, Weinstein Enterprises, an affiliated entity, principally owned by the Chairman of the Board of Directors of both the Company and Weinstein Enterprises, (“Weinstein”) purchased 25% of the 508 Fulton Street property including an existing lease, from another landlord. Starting in January 2025, J.W. Mays began making rent payments to Weinstein with no other changes to the existing lease.

On January 30, 2025, a tenant at the Company’s 9 Bond Street building in Brooklyn, New York agreed to a six months rent concession of $25,000 per month from February until July 2025. The agreement also included a deferral of $54,825 of a receivable to be paid in three equal installments from February to April 2025.

Effective March 1, 2025, a tenant occupying 1,600 square feet at the Company’s 9 Bond Street building in Brooklyn, New York agreed to terminate their lease. Loss of rent will approximate $120,000 per annum.

Cash Flows:

The following table summarizes our cash flow activity for the six months ended January 31, 2025 and 2024:

Cash Flows From Operating Activities

Deferred Expenses: The Company incurred $136,109 for brokerage commissions during the six months ended January 31, 2025. Commissions due were primarily for one tenant’s lease extension at the Company’s Circleville, Ohio property.

Accounts Payable and Accrued Expenses: The Company had a balance due on January 31, 2025 for brokerage commissions of $276,213.

Cash Flows From Investing Activities

During the six months ended January 31, 2025, the Company had expenditures of:

• $96,342 for tenant improvements at the Company’s 9 Bond Street building in Brooklyn, New York. Total improvements for this tenant of $1,000,904 were completed in September, 2024.
• $503,088 for tenant improvements at the Company’s Jamaica, New York premises. Total improvements for this tenant were completed in January 1, 2025. A total of $235,000 will be reimbursed by the tenant.
• $32,414 for scaffolding costs were incurred at the Company’s Jowein building in Brooklyn, New York
• $31,005 for various other improvements.

Source of Funds; Cash Flows from Financing Activities; Company Indebtedness

The Company anticipates incurring an additional $1.5 million in capital expenditures over the next twelve months ending January 31, 2026. The Company’s primary source of liquidity is 1) cash provided by operations, and 2) borrowings. Total liquidity as of January 31, 2025 consists of cash and cash equivalents of $1,490,663. Total liquidity includes proceeds from fixed rate borrowings as of January 31, 2025.

Another mortgage with a bank was fully paid off on December 1, 2024. The Company is exploring other lending options to replace this mortgage.

For a more detailed description of the Company’s indebtedness, see Note 5 - Mortgages Payable to the Consolidated Financial Statements.

We believe our sources of liquidity described above have not materially changed since July 31, 2024 and will be sufficient to meet our obligations over the next 12 months.

Future Liquidity

We believe our sources of future liquidity have not materially changed since July 31, 2024 and will be sufficient to meet our obligations beyond the next 12 months.

The Company’s ability to increase cash flows from operations, and to obtain additional sources of borrowings is dependent on many factors such as the continuously evolving local and macroeconomic commercial real estate markets, the effects of the overall economy, fluctuating interest rates, inflation, trends of office versus remote work practices, city and state regulations, and increasing real estate tax assessments. There is no assurance the Company will be successful in securing additional sources of financing when needed.

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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, or 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 described under Item 1A, “Risk Factors” in our Form 10-K for the fiscal year ended July 31, 2024 and the following, 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, and interest rates both nationally and locally;
• the ability to obtain additional financing at reasonable costs and interest rates;
• changes in the financial condition of our customers;
• changes in the regulatory environment and particularly burdens of increasing local, state, and federal requirements and taxes;
• lease cancellations and particularly loss of key tenants;
• changes in our estimates of costs;
• loss of key personnel;
• war and/or terrorist attacks could significantly impact buildings leased to tenants;
• the continued availability of insurance for various policies at reasonable rates;
• outcomes of pending and future litigation;
• increasing competition by other companies;
• compliance with our loan covenants;
• climate change;
• 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;
• cybersecurity threats or incidents; and
• pandemics and the related trends of office versus remote work practices.

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 consult any additional disclosures we make in proxy statements, Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K filed with the U. S. Securities and Exchange Commission.

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

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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.

There have been no material changes to our risk factors from those disclosed in our Annual Report on Form 10-K for our fiscal year ended July 31, 2024.