MAYS J W INC — Interim / Quarterly Report 2016

Jun 2, 2016

10-Q 1 jw_10q.htm QUARTERLY REPORT

FORM 10-Q

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

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2016

[ ] 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
incorporation or organization)	(I.R.S. Employer Identification
No.)
9 Bond Street, Brooklyn, New
York	11201-5805
(Address of principal executive
offices)	(Zip Code)

(Registrant's telephone number, including area code) 718-624-7400

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 X No .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes X No .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer _ Accelerated filer _ Non-accelerated filer ____ Smaller reporting company *X* .

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

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

| Class | Outstanding at June
1, 2016 |
| --- | --- |
| Common Stock, $1 par value | 2,015,780 shares |
| | This
report contains 25 pages. |

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J. W. MAYS, INC.

INDEX

| | Page
No. |
| --- | --- |
| Part I - Financial Information: | |
| Item 1. Financial Statements | |
| Condensed Consolidated
Balance Sheets – April 30, 2016 (unaudited) | |
| and July 31, 2015 | 3 |
| Condensed Consolidated Statements of
Operations and Retained Earnings | |
| – Three and nine months ended April 30, 2016 and 2015
(unaudited) | 4 |
| Condensed Consolidated
Statements of Comprehensive Income | |
| – Three and nine months ended April 30,
2016 and 2015 (unaudited) | 5 |
| Condensed Consolidated Statements of Cash
Flows | |
| – Nine months ended April 30, 2016 and 2015
(unaudited) | 6 |
| Notes to Condensed
Consolidated Financial Statements | 7 - 15 |
| Item 2. Management's Discussion and Analysis
of Results | |
| of Operations and Financial Condition | 16 - 19 |
| Item 3. Quantitative and Qualitative
Disclosures About Market Risk | 19 |
| Item 4. Controls and Procedures | 19 |
| Part II - Other Information: | |
| Item 1. Legal Proceedings | 20 |
| Item 1A. Risk Factors | 20 |
| Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds | 20 |
| Item 3. Defaults Upon Senior
Securities | 20 |
| Item 4. Mine Safety Disclosures | 20 |
| Item 5. Other Information | 20 |
| Item 6. Exhibits and Reports on Form
8-K | 20 - 21 |
| Signatures | 22 |
| Exhibit 31 Certifications Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.1 - Chief Executive
Officer | 23 |
| 31.2 - Chief Financial Officer | 24 |
| Exhibit 32 Certification Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 | |
| 18 U.S.C. Section
1350 | 25 |

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Part 1 - Financial Information Item 1 - Financial Statements

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

	April 30	July 31
	2016	2015
	(Unaudited)	(Audited)
ASSETS
Property and Equipment - Net (Notes 5 and 6)	$ 49,222,890	$ 48,191,392
Current Assets:
Cash and cash equivalents
(Note 4)	4,819,753	4,085,704
Receivables (Note
4)	211,573	638,643
Income taxes
refundable	532,866	695,265
Deferred income
taxes	3,474,000	3,531,000
Security deposits	70,388	83,012
Prepaid expenses	874,495	1,477,996
Total
current assets	9,983,075	10,511,620
Other Assets:
Deferred charges	3,922,699	3,859,594
Less: accumulated
amortization	1,816,109	1,560,205
Net	2,106,590	2,299,389
Receivables (Note
4)	–	30,000
Security deposits	1,376,136	1,328,952
Unbilled receivables (Notes
4 and 8)	2,325,212	2,613,246
Marketable securities
(Notes 3 and 4)	1,433,692	1,461,504
Total
other assets	7,241,630	7,733,091
TOTAL
ASSETS	$ 66,447,595	$ 66,436,103
LIABILITIES AND SHAREHOLDERS'
EQUITY
Long-Term Debt:
Mortgage payable (Note
5)	$ 5,669,564	$ 5,786,525
Note payable - related
party (Note 7)	–	1,000,000
Security deposits
payable	738,461	693,576
Payroll and other accrued
liabilities	121,223	121,223
Deferred revenue (Note
13)	145,832	1,020,833
Total
long-term debt	6,675,080	8,622,157
Deferred Income Taxes (Note
1)	7,821,000	7,386,000
Current Liabilities:
Accounts payable	96,120	39,759
Payroll and other accrued
liabilities	2,008,534	2,597,104
Deferred revenue (Note
13)	1,166,667	1,166,667
Other taxes
payable	4,436	5,972
Current portion of note
payable - related party (Note 7)	1,000,000	–
Current portion of
long-term debt (Note 5)	155,450	150,763
Current portion of security
deposits payable	70,388	83,012
Total
current liabilities	4,501,595	4,043,277
TOTAL
LIABILITIES	18,997,675	20,051,434
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
Unrealized gain on
available-for-sale securities - net of deferred taxes of
$96,000
at April 30, 2016 and $101,000 at July 31, 2015	185,792	196,033
Retained earnings	43,027,438	41,951,946
	48,737,772	47,672,521
Less common stock held in
treasury, at cost - 162,517
shares
at April 30, 2016 and at July 31, 2015 (Note 11)	1,287,852	1,287,852
Total
shareholders' equity	47,449,920	46,384,669
Contingencies (Note 14)
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY	$ 66,447,595	$ 66,436,103

See Notes to Condensed Consolidated Financial Statements.

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J. W. MAYS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

	Three Months Ended
	April 30			April 30
	2016	2015		2016		2015
	(Unaudited)	(Unaudited)		(Unaudited)		(Unaudited)
Revenues
Rental income (Notes 4 and
8)	$ 4,383,471	$	4,447,781	$	12,976,805	$	13,200,371
Recovery of real estate
taxes	–		–		–		10,625
Revenue to temporarily
vacate lease (Note 13)	291,667		291,667		875,001		875,001
Total
revenues	4,675,138		4,739,448		13,851,806		14,085,997
Expenses
Real estate operating
expenses	2,508,975		2,588,714		7,488,630		7,383,648
Administrative and general
expenses	1,037,323		918,865		3,357,776		3,041,595
Depreciation and
amortization (Note 6)	408,886		402,260		1,223,036		1,287,067
(Gain) loss on dispositon
of property and equipment	(500	)	27,648		(500	)	27,648
Total
expenses	3,954,684		3,937,487		12,068,942		11,739,958
Income from operations before investment income,
interest expense and income
taxes	720,454		801,961		1,782,864		2,346,039
Investment income and interest
expense:
Investment income (Note
3)	9,653		13,525		16,795		46,069
Interest expense (Notes 5,
7 and 10)	(34,716	)	(64,524	)	(158,167	)	(265,561	)
	(25,063	)	(50,999	)	(141,372	)	(219,492	)
Income from operations before income
taxes	695,391		750,962		1,641,492		2,126,547
Income taxes provided	244,000		329,000		566,000		937,000
Net income	451,391		421,962		1,075,492		1,189,547
Retained earnings, beginning of period	42,576,047		40,510,849		41,951,946		39,743,264
Retained earnings, end of
period	$ 43,027,438	$	40,932,811	$	43,027,438	$	40,932,811
Income per common share (Note 2)	$ .22	$	.21	$	.53	$	.59
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.

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J. W. MAYS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended		Nine Months Ended
	April 30		April 30
	2016	2015	2016	2015
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Net income	$ 451,391	$ 421,962	$ 1,075,492	$	1,189,547
Unrealized gain (loss) on available-for-sale securities:
Unrealized holding gains
(losses) arising during the period,
net
of taxes (benefit) of $23,000 and ($14,000) for the three
months
ended April 30, 2016 and 2015, respectively,
and
($5,000) and $37,000 for the nine months ended
April
30, 2016 and 2015, respectively.	43,213	17,369	(10,241	)	46,708
Comprehensive income	$ 494,604	$ 439,331	$ 1,065,251	$	1,236,255

See Notes to Condensed Consolidated Financial Statements.

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

	Nine Months Ended
	April 30
	2016	2015
	(Unaudited)	(Unaudited)
Cash Flows From Operating
Activities:
Net income	$ 1,075,492	$	1,189,547
Adjustments to reconcile net income
to
net cash provided by
operating activities:
Depreciation and
amortization	1,223,036		1,287,067
Amortization of deferred
charges	255,904		268,570
Realized (gain) loss on
sale of marketable securities	36,999		(6,455	)
(Gain) loss on disposition
of property and equipment	(500	)	27,648
Other assets - unbilled
receivables	288,034		(26,720	)
-
deferred charges	(63,105	)	(425,495	)
Deferred income
taxes	497,000		734,000
Deferred revenue	(875,001	)	(875,001	)
Changes in:
Receivables	457,070		113,583
Income taxes
refundable	162,399		(184,292	)
Prepaid expenses	603,501		552,136
Accounts payable	56,361		(65,389	)
Payroll and other accrued
liabilities	(588,570	)	(98,200	)
Other taxes
payable	(1,536	)	(3,250	)
Cash
provided by operating activities	3,127,084		2,487,749
Cash Flows From Investing Activities:
Capital
expenditures	(2,254,034	)	(1,398,110	)
Security deposits	(34,560	)	29,711
Marketable
securities:
Receipts
from sales or maturities	314,008		344,271
Payments
for purchases	(338,436	)	(376,967	)
Cash
(used) by investing activities	(2,313,022	)	(1,401,095	)
Cash Flows From Financing
Activities:
Increase - security
deposits	32,261		29,285
Increase - mortgage
debt	–		652,274
Mortgage and other debt
payments	(112,274	)	(99,173	)
Cash
provided (used) by financing activities	(80,013	)	582,386
Increase in cash and cash equivalents	734,049		1,669,040
Cash and cash equivalents at beginning
of period	4,085,704		1,892,760
Cash and cash equivalents at end of period	$ 4,819,753	$	3,561,800

See Notes to Condensed Consolidated Financial Statements.

-6-

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

1. 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, and the reported amounts of revenues and expenses during the reporting period. The estimates that we make include allowance for doubtful accounts, depreciation and amortization, 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, 2015 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, 2015. 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, 2016. 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. To the extent that 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. On September 13, 2013, the U.S. Department of the Treasury and the Internal Revenue Service released final income tax regulations on the deduction and capitalization of expenditures related to tangible property (“tangible property regulations”). The tangible property regulations clarify and expand sections 162(a) and 263(a) of the Internal Revenue Code (“IRC”), which relate to amounts paid to acquire, produce, or improve tangible property. Additionally, the tangible property regulations provide final guidance under IRC section 167 regarding accounting for and retirement of depreciable property and regulations under IRC section 168 relating to the accounting for property under the Modified Accelerated Cost Recovery System. The tangible property regulations affect all taxpayers that acquire, produce, or improve tangible property, and generally apply to taxable years beginning on or after January 1, 2014. The Company implemented the tangible property regulations with the filing of the federal tax return for the year ended July 31, 2015. For the year ended July 31, 2015, after implementing the tangible property regulations, the Company incurred a federal net operating loss of $8,244,000. The Company was able to carryback $1,611,000, generating a federal income tax refund receivable of $537,881. The remainder of the federal net operating loss approximating $6,633,000 will be available to offset future taxable income. In addition, as of July 31, 2015 the Company had state and city net operating loss carryforwards of approximately $9,000,000 available to offset future state and city taxable income. The net operating loss carryforwards will expire, if not used, in 2035. New York State and New York City taxes for years through July 31, 2015 are calculated using the higher of taxes based on income or the respective capital-based franchise taxes. In April 2014, the New York State governor signed into law legislation overhauling the New York State franchise tax on corporations. The changes in the law will be effective for the Company’s year ending July 31, 2016. The state capital-based tax will be phased out over a 7-year period. The Company anticipates New York State taxes will be based on capital through 2022, and New York City taxes will be based on capital for the foreseeable future. Capital based franchise taxes are recorded to administrative and general expense.

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| | Due to the application
of the capital-based tax while the net operating loss still applies, or
due to the possible absence of State taxable income in the years beyond
2022 to which the State loss can be carried, the Company has not recorded
the New York State or New York City tax benefit of its net operating loss
carryforwards. Also, to reflect its expectation that reversal of temporary
differences will not result in New York State or City tax based on income,
as of July 31, 2015 the Company decreased the deferred tax asset, deferred
tax liability, and deferred taxes on unrealized loss on available-for-sale
securities by $380,000, $771,000 and $26,000, respectively, resulting in a
State and City deferred tax benefit of $365,000. Recent accounting
pronouncements: In July 2013, the
Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) 2013-11, "Presentation of an Unrecognized Tax Benefit When a
Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Carryforward
Exists.” The Company adopted ASU 2013-11 in the fourth quarter of fiscal
year ended July 31, 2015. The adoption of this standard did not have a
significant impact on these condensed consolidated financial statements. In May 2014, the FASB
issued an update (“ASU 2014-09”) establishing ASC Topic 606 Revenue from
Contracts with Customers. ASU 2014-09 establishes a single comprehensive
model for entities to use in accounting for revenue arising from contracts
with customers and supersedes most of the existing revenue recognition
guidance. ASU 2014-09 requires an entity to recognize revenue when it
transfers promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services and also requires certain additional
disclosures. ASU 2014-09 is effective for interim and annual reporting in
fiscal years that begin after December 15, 2016. ASU 2015-14 extended the
implementation date for fiscal years beginning after December 31, 2017.
The adoption of the update on August 1, 2018 is not expected to have a
significant impact on our consolidated financial
statements. |
| --- | --- |
| 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, 2016
and April 30, 2015. |
| 3. | Marketable
Securities: The Company categorizes
marketable securities as either trading, available-for-sale or
held-to-maturity. Trading securities are carried at fair value with
unrealized gains and losses included in income. Available-for-sale
securities are carried at fair value measurements using quoted prices in
active markets for identical assets or liabilities with unrealized gains
and losses recorded as a separate component of shareholders' equity.
Held-to-maturity securities are carried at amortized cost. 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 Company did not classify any securities as trading or
held to maturity during the nine months ended April 30, 2016 and July 31,
2015. |

-8-

| 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, 2016 and July 31, 2015. 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 using | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Total | | | | Total | | | |
| | April 30, | | | | July 31, | | | |
| Description | 2016 | Level 1 | Level 2 | Level 3 | 2015 | Level 1 | Level 2 | Level
3 |
| Assets: | | | | | | | | |
| Marketable securities - | | | | | | | | |
| available-for-sale | $ 1,433,692 | $ 1,433,692 | $ – | $ – | $ 1,461,504 | $ 1,461,504 | $ – | $ – |

Fair Value of Investments in Entities that Use NAV

The following table summarizes investments measured at fair value based on NAV per share as of April 30, 2016 and July 31, 2015, respectively.

| April 30,
2016 | Fair Value | Unfunded — Commitments | Redemption Frequency — (if currently
eligible) | Redemption — Notice
Period |
| --- | --- | --- | --- | --- |
| First Eagle Global CL I | $ 286,365 | n/a | Daily | None |
| Parnasus Core Equity Investor CL | $ 304,356 | n/a | Daily | None |
| | | Unfunded | Redemption Frequency | Redemption |
| July 31,
2015 | Fair Value | Commitments | (if currently
eligible) | Notice
Period |
| First Eagle Global CL I | $ 271,462 | n/a | Daily | None |
| Parnasus Core Equity Investor CL | $ 305,626 | n/a | Daily | None |
| Columbia Flexible Income CL A | $ 271,076 | n/a | Daily | None |

-9-

As of April 30, 2016 and July 31, 2015, the Company's marketable securities were classified as follows:

| | April 30,
2016 | Gross | Gross | | July 31,
2015 | Gross | Gross | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Unrealized | Unrealized | Fair | | Unrealized | Unrealized | Fair |
| | Cost | Gains | Losses | Value | Cost | Gains | Losses | Value |
| Noncurrent: | | | | | | | | |
| Available-for-sale: | | | | | | | | |
| Mutual funds | $ 475,702 | $ 115,019 | $ – | $ 590,721 | $ 719,245 | $ 131,639 | $ 2,720 | $ 848,164 |
| Equity securities | 676,198 | 168,724 | 1,951 | 842,971 | 445,227 | 168,113 | – | 613,340 |
| | $ 1,151,900 | $ 283,743 | $ 1,951 | $ 1,433,692 | $ 1,164,472 | $ 299,752 | $ 2,720 | $ 1,461,504 |

The Company's debt and equity securities, gross unrealized losses and fair value, aggregated by investment category and length of time that the investment securities have been in a continuous unrealized loss position at April 30, 2016 are as follows:

| | April 30,
2016 | Less Than | July 31,
2015 | Less Than |
| --- | --- | --- | --- | --- |
| | Fair Value | 12 Months | Fair Value | 12 Months |
| Corporate stock | $ 215,529 | $ 1,951 | $ – | $ – |
| Mutual funds | – | – | 271,076 | 2,720 |
| | $ 215,529 | $ 1,951 | $ 271,076 | $ 2,720 |

Investment income consists of the following:

	Three Months Ended		Nine Months Ended
	April 30		April 30
	2016	2015	2016		2015
Gain (loss) on sale of marketable
securities	$ 1,539	$ 6,069	$ (36,999	)	$ 6,455
Interest income	3,785	860	5,450		2,147
Dividend income	4,329	6,596	48,344		37,467
Total	$ 9,653	$ 13,525	$ 16,795		$ 46,069

-10-

| 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 forty-nine tenants, of which one tenant accounted for
18.59% and another tenant accounted for 15.92% of rental income during the
nine months ended April 30, 2016. No other tenant accounted for more than
10% of rental income during the same period. The Company has one
irrevocable Letter of Credit totaling $230,000 at April 30, 2016 and July
31, 2015 provided by a tenant as a security deposit. |
| --- | --- |
| 5. | Long-Term Debt –
Mortgage: |

| | | | April 30,
2016 | | July 31,
2015 | |
| --- | --- | --- | --- | --- | --- | --- |
| | Current | | | | | |
| | Annual | Final | Due | Due | Due | Due |
| | Interest | Payment | Within | After | Within | After |
| | Rate | Date | One Year | One Year | One Year | One Year |
| Bond St. building, Brooklyn,
NY | 3.54 % | 2/01/20 | $ 155,450 | $ 5,669,564 | $ 150,763 | $ 5,786,525 |

The Company, on August 19, 2004, closed a loan with a bank for a $12,000,000 multiple draw term loan. The loan consisted of: a) a permanent, first mortgage loan to refinance an existing first mortgage loan affecting the Fishkill, New York property, which matured on July 1, 2004 (the “First Permanent Loan”), b) a permanent subordinate mortgage loan in the amount of $1,870,000 (the “Second Permanent Loan”), and c) multiple, successively subordinate loans in the amount of $8,295,274 (“Subordinate Building Loans”). The Company, in February 2008, converted the loan totaling $12,000,000 to a seven (7) year permanent mortgage loan. The interest rate on conversion was 6.98%. On January 9, 2015, the Company refinanced the loan for $6,000,000, which included the outstanding balance as of January 2015 in the amount of $5,347,726 and an additional borrowing of $652,274. The loan is for a period of five years with a payment based on a twenty-five year amortization period. The interest rate for this period is fixed at 3.54% per annum. The mortgage loan is secured by the Bond Street building in Brooklyn, New York.

-11-

1. Property and Equipment – at cost:

	April 30	July 31
	2016	2015
Property:
Buildings and
improvements	$ 77,487,792	$ 76,289,486
Improvements to leased
property	1,478,012	1,478,012
Land	6,067,805	6,067,805
Construction in
progress	1,648,748	639,042
	86,682,357	84,474,345
Less accumulated
depreciation	37,608,211	36,413,975
Property
- net	49,074,146	48,060,370
Fixtures and equipment and
other:
Fixtures and
equipment	144,544	144,544
Other fixed
assets	236,809	235,623
	381,353	380,167
Less accumulated
depreciation	232,609	249,145
Fixtures and equipment and
other - net	148,744	131,022
Property
and equipment - net	$ 49,222,890	$ 48,191,392
Construction in progress
includes:
	April 30	July 31
	2016	2015
Building improvements at 9 Bond Street
in Brooklyn, NY	$ –	$ 144,041
Building improvements at 25 Elm Place in Brooklyn, NY	1,648,748	495,001
	$ 1,648,748	$ 639,042

| 7. | Note Payable -
Related Party: |
| --- | --- |
| | On December 15, 2004,
the Company borrowed $1,000,000 on an unsecured basis from a former
director of the Company, who at the time was also a greater than 10%
beneficial owner of the outstanding common stock of the Company. The
former director passed away in November 2012 and the note is currently an
asset of the estate of the former director. Interest payments pursuant to
the note have been assigned to a trust provided for by the will of the
deceased former director. The loan has been repeatedly renewed to its
current maturity date of December 15, 2016 at an interest rate of 5% per
annum. The note is prepayable in whole or in part at any time without
penalty. The constant quarterly payment of interest is $12,500. The
interest paid was $37,500 for the nine months ended April 30, 2016 and
2015, respectively. |
| 8. | 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. |

-12-

| 9. |
| --- |
| The Company sponsors a
noncontributory Money Purchase Plan covering substantially all of its
non-union employees. Operations were charged $96,653 and $292,371 for the
three and nine months ended April 30, 2016, respectively, and $70,811 and
$281,306 as contributions to the Plan for the three and nine months ended
April 30, 2015, 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 $11,428 and
$41,020 for the three and nine months ended April 30, 2016, respectively,
and $10,853 and $34,761 for the three and nine months ended April 30,
2015, 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,
2014 |
| Certified
zone status: | Critical
Status |
| Status
determination date: | January 1,
2014 |
| Plan used
extended amortization provisions in status calculation: | Yes |
| Minimum
required contribution: | None |
| Employer
contributing greater than 5% of Plan contributions for year ended
December 31, 2014: | Yes |
| Rehabilitation plan implemented: | Yes |
| Employer
subject to surcharge: | Yes |
| Contract
expiration date: | November 30,
2016 |

-13-

| 10. |
| --- |
| 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. |

| Supplemental
disclosure: | Nine Months
Ended | |
| --- | --- | --- |
| | April 30 | |
| | 2016 | 2015 |
| Interest
paid, net of capitalized interest of $49,084 (2016) | | |
| and $6,367 (2015) | $ 159,082 | $ 280,522 |
| Income taxes
paid | $ 87,804 | $ 387,163 |

11.	Common Stock:
	The Company has one
class of common stock with identical voting rights and rights to
liquidation.
12.	Accumulated
Other Comprehensive Income:
	The only component of
accumulated other comprehensive income is unrealized gains (loss) on
available-for-sale securities.
	A summary of the changes
in accumulated other comprehensive income for the three and nine months
ended April 30, 2016 and 2015 is as
follows:

| | Three Months
Ended | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | April 30 | | | April 30 | | | | |
| | 2016 | 2015 | | 2016 | | 2015 | | |
| | (Unaudited) | (Unaudited) | | (Unaudited) | | (Unaudited) | | |
| Beginning
balance, net of tax effect | $ 142,579 | $ | 158,751 | $ | 196,033 | $ | 129,412 | |
| Other comprehensive income, net of tax
effect: | | | | | | | | |
| Unrealized gains (loss) on
available-for-sale | | | | | | | | |
| securities | 66,213 | | 31,369 | | (15,241 | ) | 83,708 | |
| Tax
effect | (23,000 | ) | (14,000 | ) | 5,000 | | (37,000 | ) |
| Unrealized gains (loss) on
available-for-sale | | | | | | | | |
| securities,
net of tax effect | 43,213 | | 17,369 | | (10,241 | ) | 46,708 | |
| Ending balance, net of tax
effect | $ 185,792 | $ | 176,120 | $ | 185,792 | $ | 176,120 | |

-14-

| 13. | Entry into a Material Definitive
Agreement: |
| --- | --- |
| | On June 16, 2014, the
Company entered into a Second Amendment of Lease (the "Amendment") with 33
Bond St. LLC ("Bond"), its landlord, for certain truck bays and
approximately 1,000 square feet located at the cellar level within a
garage at Livingston and Bond Street ("Premises"). Pursuant to the
Amendment, (1) a lease option for the Premises was exercised extending the
lease until December 8, 2043, (2) the Company, simultaneously with the
execution of the Amendment, vacated the Premises so that Bond may demolish
the building in which the Premises is located in order to develop and
construct a new building at the location, and (3) Bond agreed to redeliver
to the Company possession of the reconfigured Premises after construction. As consideration under
the Amendment, Bond agreed to pay the Company a total of $3,500,000. Upon
execution of the Amendment, the Company recorded $3,500,000 to deferred
revenue to be amortized to revenue to temporarily vacate the premises over
the expected vacate period of 36 months. Bond tendered $2,250,000
simultaneously with the execution of the Amendment, and the balance due of
$1,250,000 on June 16, 2015 has been received by the Company. In connection with the
Amendment, the parties also agreed to settle a pending lawsuit in the
Supreme Court of the State of New York, Kings County, Index No. 50796/13
(the "Action"), in which the Company sought, among other things, a
declaratory judgment that it validly renewed the lease for the Premises,
and Bond sought, among other things, a declaratory judgment that the lease
expired by its terms on December 8, 2013. Pursuant to a stipulation of
settlement, filed on June 16, 2014, the Action, including all claims and
counterclaims, has been discontinued with prejudice, without costs or
attorneys' fees to any party as against the other. The stipulation of
settlement also contains general releases by both parties of all
claims. |
| 14. | Contingencies: |
| | There are various
lawsuits and claims pending against the Company. It is the opinion of
management that the resolution of these matters will not have a material
adverse effect on the Company's Condensed 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. Because of defective
workmanship and breach of contract, the Company commenced litigation
against a contractor to pay damages and return in full $376,467 of a
deposit paid when work commenced to replace a roof on the Fishkill, New
York building. As of April 30, 2016, this deposit is included in other
assets on the Condensed Consolidated Balance Sheet in security deposits.
Based on limited information available at this time, the Company cannot
predict the outcome of this matter and expects to vigorously pursue this
contractor until the deposit is returned and damages are paid. |

-15-

Item 2.

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

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.

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 page 7 and 8 to the Condensed Consolidated Financial Statements herein and Note 1 on pages 9 through 11 to the Consolidated Financial Statements in the Annual Report to Shareholders for the fiscal year ended July 31, 2015).

Results of Operations:

Three months ended April 30, 2016 compared to the three months ended April 30, 2015:

In the three months ended April 30, 2016, the Company reported net income of $451,391, or $.22 per share. In the comparable three months ended April 30, 2015, the Company reported net income of $421,962, or $.21 per share.

Revenues in the current three months decreased to $4,675,138 from $4,739,448 in the comparable 2015 three months primarily due to non-payment of rent from a retail tenant, who vacated the building in December 2015, at the Nine Bond Street building in Brooklyn, New York, partially offset by a new office tenant at the same building.

Real estate operating expenses in the current three months decreased to $2,508,975 from $2,588,714 in the comparable 2015 three months primarily due to decreases in utility costs and licenses and permits, partially offset by increases in maintenance costs.

Administrative and general expenses in the current three months increased to $1,037,323 from $918,865 in the comparable 2015 three months primarily due to New York State and New York City capital based franchise taxes of $117,150 which were included in 2016 and there were none in 2015.

Depreciation and amortization expense in the current three months increased to $408,886 from $402,260 in the comparable 2015 three months.

There was a $500 gain on disposition of property and equipment in the three months ended April 30, 2016 versus a loss of $27,648 in the comparable period in 2015.

-16-

Interest expense exceeded investment income in the current three months by $25,063 and by $50,999 in the comparable 2015 three months. The decrease was due to capitalized interest expense.

Nine months ended April 30, 2016 compared to the nine months ended April 30, 2015:

In the nine months ended April 30, 2016, the Company reported net income of $1,075,492, or $.53 per share. In the comparable nine months ended April 30, 2015, the Company reported net income of $1,189,547, or $.59 per share.

Revenues in the current nine months decreased to $13,851,806 from $14,085,997 in the comparable 2015 nine months primarily due to non-payment of rent from a retail tenant, who vacated the building in December 2015, at the Nine Bond Street building in Brooklyn, New York, partially offset by a new office tenant at the same building.

Real estate operating expenses in the current nine months increased to $7,488,630 from $7,383,648 in the comparable 2015 nine months primarily due to increases in real estate taxes, maintenance costs and payroll costs partially offset by decreases in utility costs and licenses and permits.

Administrative and general expenses in the current nine months increased to $3,357,776 from $3,041,595 in the comparable 2015 nine months primarily due to New York State and New York City capital based franchise taxes of $181,203 which were included in 2016 and there were none in 2015. Also legal and professional costs and payroll costs increased in 2016.

Depreciation and amortization expense in the current nine months decreased to $1,223,036 from $1,287,067 in the comparable 2015 nine months primarily due to expiring depreciation on the Fishkill, New York building.

There was a $500 gain on disposition of property and equipment in the nine months ended April 30, 2016 versus a loss of $27,648 in the comparable period in 2015.

Interest expense exceeded investment income in the current nine months by $141,372 and by $219,492 in the comparable 2015 nine months. The decrease was due to a lower interest expense due to a lower interest rate on the refinanced mortgage with a bank in the 2015 year and capitalized interest expense, partially offset by a loss on the sale of securities in the 2016 year.

Liquidity and Capital Resources:

Management considers current working capital and borrowing capabilities adequate to cover the Company’s planned operating and capital requirements. The Company’s cash and cash equivalents amounted to $4,819,753 at April 30, 2016.

In November 2014, the Company entered into a lease agreement with an existing tenant to occupy an additional 5,640 square feet of office space at the Jowein building in Brooklyn, New York. Rent commenced in February 2016.

In May 2015, the Company entered into a 20 year lease agreement with a new tenant (cancellation clause after the 10th year) to occupy 17,425 square feet of office space at the Jowein building in Brooklyn, New York. Rent is anticipated to commence in late 2016. The amount of brokerage commissions and construction costs will be approximately $500,000 and $2,000,000, respectively. The construction is expected to be completed in the fall of 2016.

A tenant who occupies 2,000 square feet of office space at its Jamaica, New York building, terminated its lease as of December 31, 2015. The loss in rental income will be $42,000 per annum. The Company is actively seeking through brokers, tenants to occupy the vacated space.

The Company was in litigation with a retail tenant who occupied 7,401 square feet at its Nine Bond Street Brooklyn, New York building for non-payment of rent since June 2015. The tenant vacated the premises in December 2015. The Company has only accrued rent in the amount of the security deposit held, which is two months’ rent. The Company is in negotiations with a retail tenant for such space.

-17-

In March 2016, the Company extended a lease with a retail tenant who occupies 126,996 square feet at the Company’s Nine Bond Street Brooklyn, New York property. The original expiration date was April 29, 2021 and was extended until January 31, 2036. The tenant also has two five year option periods.

In April 2016, a tenant who occupies 5,500 square feet of retail space at the Company’s Jowein building in Brooklyn, New York extended its lease for an additional five year period ending on September 30, 2021.

In April 2016, the Company extended a lease with an office tenant who occupies 11,128 square feet at the Company’s Nine Bond Street Brooklyn, New York property. The original expiration date was April 29, 2021 and was extended until January 31, 2036. The tenant also has two five year option periods.

In April 2016, the Company extended a lease with a warehouse tenant who occupies 8,500 square feet at the Company’s 25 Elm Place Brooklyn, New York property. The original expiration date was April 29, 2021 and was extended until January 31, 2036. The tenant also has two five year option periods.

In May 2016, an office tenant who occupies 1,558 square feet at the Company’s Nine Bond Street Brooklyn, New York Property extended its lease for an additional five year period ending on July 31, 2021.

Cash Flows From Operating Activities:

Deferred Charges: The Company incurred expenditures in the amount of $63,105 for brokerage commissions for an existing office tenant at the Company’s Nine Bond Street building in Brooklyn, New York who renewed its lease for an additional five years.

Payroll and Other Accrued Liabilities: The Company had a balance due at April 30, 2016 for brokerage commissions of $316,038. Brokerage commissions in the amount of $352,877 were paid in the nine months ended April 30, 2016.

Cash Flows From Investing Activities:

The Company had expenditures of $106,986 for the nine months ended April 30, 2016 at its Jamaica, New York building for renovations for an existing tenant. The project was completed in February 2016. The Company also had expenditures of $31,040 for elevator upgrades which were completed in January 2016 and February 2016, respectively.

The Company had expenditures of $1,153,748 for the nine months ended April 30, 2016, for a new office tenant at its Jowein building in Brooklyn, New York. The cost of the project will be approximately $2,000,000 of which $1,648,748 has been paid. The project is anticipated to be completed in the fall of 2016. The Company also had an expenditure of $135,000 for a new roof which was completed in September 2015 and $23,408 for a loading dock upgrade which was completed in March 2016.

The Company had expenditures of $274,645 for the nine months ended April 30, 2016 for construction costs at its Fishkill, New York building. The projects were completed in January 2016.

The Company had expenditures of $325,700 in the nine months ended April 30, 2016 for new roofs at the Company's Nine Bond Street, Brooklyn, New York building. The projects were all completed by March 2016. The Company also had expenditures of $91,986 for a new boiler. The total cost of the project was $236,027 and was completed in February 2016. The Company also had expenditures of $35,178 for elevator upgrades which were completed in April 2016.

-18-

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; and |
| ● | changes in estimates
used in our critical accounting policies. |

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, 2016, the Company had fixed-rate debt of $6,825,014.

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.

-19-

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.

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, 2015.

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:

Exhibit		Sequentially — 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	23
	(31.2) Chief Financial Officer	24
(32)	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350	25
(95)	Mine safety disclosure	N/A

-20-

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 during the three months ended April 30, 2016.

Items reported:

The Company reported its financial results for the three and six months ended January 31, 2016. Date of report filed - March 3, 2016.

The Company reported the election of a director to the Board of Directors. Date of report filed - March 17, 2016.

-21-

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 1, 2016	Lloyd J. Shulman
		Lloyd J.
Shulman
		President
		Chief Executive
Officer
Date:	June 1, 2016	Mark S.
Greenblatt
		Mark S.
Greenblatt
		Vice
President
		Chief Financial
Officer

-22-