Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
For a description of the Company’s business, refer to Item 1 of Part I of this annual report on Form 10-K. As indicated in Item 1, the Company is primarily engaged in two business segments: land development and homebuilding. The following provides information that management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The information contained in this Item 7 should be read in conjunction with the consolidated financial statements and accompanying notes.
CRITICAL ACCOUNTING ESTIMATES
The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. The Company discloses its significant accounting policies in the notes to its audited consolidated financial statements.
The preparation of such financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of those financial statements as well as the amounts reported in the financial statements and accompanying notes. Areas that require significant judgments and estimates to be made include: (1) land sale cost of revenues, net calculations, which are based on land development budgets and estimates of costs to complete; (2) cash flows, asset groupings and valuation assumptions in performing asset impairment tests of long-lived assets and assets held for sale; (3) risk assessment of uncertain tax positions; and (4) the determination of the recoverability of net deferred tax assets. Actual results could differ from those estimates.
6
There are numerous critical assumptions that may influence accounting estimates in these and other areas. Management bases its critical assumptions on historical experience, third-party data and various other estimates that it believes to be reasonable under the circumstances. The most critical assumptions made in arriving at these accounting estimates include the following:
RESULTS OF OPERATIONS
Year Ended April 30, 2026 Compared to Year Ended April 30, 2025
For 2026, the Company had net income of $10,288,000, or $1.91 per diluted share, compared to net income of $12,716,000, or $2.37 per diluted share, in 2025.
During 2026 and 2025, the Company experienced material delays in municipal entitlements, infrastructure availability, approvals and inspections, contractor schedules and utility response times in both the land development business segment and homebuilding business segment, which caused delays in construction and the realization of revenues and increases in cost of revenues. While construction and land costs remain elevated, the Company has been able to partially offset these cost increases through land and home price increases in 2026 and 2025. The rising cost of housing due to increases in average sales prices in recent years and the level of mortgage interest rates, coupled with general inflation in the U.S. economy and other macroeconomic factors, have placed pressure on overall housing affordability, negatively affecting demand and have caused many potential homebuyers to pause and reconsider their housing choices. In addition, any tariffs on goods used as inputs in the land development business segment or homebuilding business segment may result in further increases in the cost of housing and average sales prices. Given the affordability challenges and the resulting impact on demand, the Company has provided sales incentives on certain homes, reduced the sale prices of certain homes, reduced the size of lots and homes, opportunistically leased completed homes and slowed the pace of housing starts and land development projects. During 2026 and 2025, the Company reduced the number and scope of its active land development projects and delayed proceeding with certain new land development projects due to market headwinds and uncertainty, a more intentional focus on growing the homebuilding business segment and an increase in entitlement, contractor and infrastructure delays as compared to prior years. This is expected to result in a reduction of revenues from the sale of developed residential land during fiscal year 2027 as compared to 2026. Future economic conditions and the demand for land and homes are subject to continued uncertainty due to many factors, including macroeconomic factors, changes in mortgage interest rates, inflation, tariffs, supplies of new and existing home inventory available for sale, labor shortages and other factors. The Company’s past performance may not be indicative of future results.
7
Revenues. The following presents information on revenues (dollars in thousands):
Year Ended April 30, Increase
Acres Sold Revenue Revenue Per Acre4
Developed
Acres Sold Revenue Revenue Per Acre1
Developed
Commercial — — —
The changes in the revenue per acre of developed residential land, developed commercial land and undeveloped land for 2026 compared to 2025 were primarily due to the location and mix of land sold. Revenues from the sale of undeveloped land included the sale in 2026 of 467 acres of contiguous undeveloped land in Sandoval County, New Mexico, representing $2,174,000 of revenue, to one purchaser and the sale in 2025 of 549 acres of contiguous undeveloped land in Sandoval County, New Mexico, representing $2,502,000 of revenue, to one purchaser. The Company does not expect the sale of the properties in the prior sentence to be indicative of future undeveloped land sale revenues.
Year Ended April 30,
Average selling price $ 441 $ 425
As of April 30, 2026, the Company had 75 homes in production, including 24 homes under contract, which homes under contract represented $12,983,000 of expected home sale revenues (less any sales incentives associated with such contracts) when closed, subject to customer cancellations and change orders. As of April 30, 2025, the Company had 88 homes in production, including 28 homes under contract, which homes under contract represented $12,787,000 of expected home sale revenues (less any sales incentives associated with such contracts) when closed, subject to customer cancellations and change orders.
1 Revenue per acre may not calculate precisely due to the rounding of revenue to the nearest thousand dollars.
8
● Other revenues consist of (in thousands):
Year Ended April 30,
Miscellaneous other revenues 1,163 709
Landscaping revenues consist of landscaping services provided by the Company primarily to homebuilders.
Miscellaneous other revenues for 2026 primarily consist of management fees for homeowners’ associations, residential rental revenues and billboard advertising revenues. Miscellaneous other revenues for 2025 primarily consist of extension fees for purchase contracts, management fees for homeowners’ associations and residential rental revenues.
Cost of Revenues. The following presents information on cost of revenues (dollars in thousands):
Year Ended April 30, Increase
● Land sale cost of revenues, net consist of (in thousands):
Year Ended April 30,
Less:
Public improvement district reimbursements (900) (1,183)
Private infrastructure covenant reimbursements (434) (518)
Payments for impact fee credits (1,041) (2,541)
Land sale cost of revenues, net $ 8,129 $ 12,361
Land sale gross margins were 61% for 2026 compared to 52% for 2025. The change in gross margin was primarily due to changes in public improvement district reimbursements, private infrastructure covenant reimbursements and payments for impact fee credits and the location, size and mix of property sold.
As a result of many factors, including the nature and timing of specific transactions and the type and location of land or homes being sold, revenues, average selling prices and related gross margins from land sales or home sales can vary significantly from period to period and prior results are not necessarily a good indication of what may occur in future periods.
9
General and Administrative Expenses. The following presents information on general and administrative expenses (dollars in thousands):
Year Ended April 30, Increase
The Company did not record any non-cash impairment charges on real estate inventory or investment assets in 2026 or 2025. Changes in economic and other market conditions may adversely impact the fair market value of the Company’s real estate inventory or investment assets, which could lead to impairment charges in future periods.
Interest Income, net. Interest income, net was $1,734,000 for 2026 and $1,622,000 for 2025. There were no interest or loan costs capitalized in real estate inventory in 2026 or 2025.
Income Taxes. The Company had a provision for income taxes of $3,838,000 for 2026 and $1,009,000 for 2025. The provision for income taxes for 2026 related to the amount of income before income taxes during the year. The provision for income taxes for 2025 related to the amount of income before income taxes during the year and to the reclassification of the balance of accumulated other comprehensive income (loss) to a benefit for income taxes. In connection with the termination of the Company’s defined benefit pension plan, $1,230,000 of income tax effects that remained in accumulated other comprehensive income (loss) were reclassified to a benefit for income taxes during 2025. Refer to Note 11 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding accumulated other comprehensive income (loss).
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash, cash equivalents and restricted cash as follows (dollars in thousands):
Year Ended April 30, Increase
Refer to Note 11 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding restricted cash.
AMREP Corporation is a holding company that conducts substantially all of its operations through subsidiaries. As a holding company, AMREP Corporation is dependent on its available cash and cash equivalents and on cash and cash equivalents from subsidiaries to pay expenses and fund operations. The Company’s liquidity is affected by many factors, including some that are based on normal operations and some that are related to the real estate industry and the economy generally.
10
The Company’s primary sources of funding for working capital requirements are cash flows from operations, a revolving line of credit, bank financing for specific real estate projects, interest income and existing balances of cash and cash equivalents. Land and homebuilding properties generally cannot be sold quickly, and the ability of the Company to sell properties has been and will continue to be affected by market conditions. The ability of the Company to generate cash flow from operations is primarily dependent upon its ability to sell the properties it has selected for disposition at the prices and within the timeframes the Company has established for each property. The development of additional lots for sale, construction of homes or commercial buildings for sale or lease or the pursuit of other real estate projects may require financing or other sources of funding, which may not be available on acceptable terms (or at all). If the Company is unable to obtain such financing, the Company’s results of operations could be adversely affected.
The Company expects the primary demand for funds in the future will be for the development and acquisition of land, construction of home and commercial projects and general and administrative expenses. In many instances, the development of land and construction of home and commercial projects are required to satisfy delivery obligations to customers. Further, the Company regularly evaluates property available for purchase from third parties for possible acquisition by the Company. To the extent the sources of capital described above are insufficient to meet its needs, the Company may conduct public or private offerings of securities, dispose of certain assets or draw on existing or new debt facilities. The Company believes that it has adequate cash and cash equivalents, bank financing and cash flows from operations to provide for its anticipated spending in its fiscal year ending April 30, 2027.
Any epidemic, pandemic or similar serious public health issue, and the measures undertaken by governmental authorities to address it (including quarantines, shelter-in-place orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations), could significantly disrupt or prevent the Company from operating its business in the ordinary course for an extended period, including disruptions to the Company’s supply chain and shortages in labor and certain building components and materials. As a result, the impact of such public health issues and the related governmental actions could materially impact the Company’s financial position, results of operations and cash flows.
Restricted Cash. During the fiscal year ending April 30, 2024, the Company transferred $547,000, which was the amount of residual assets (after satisfying any pension plan liabilities) following termination of the Company’s defined benefit pension plan, from the defined benefit pension plan to the Company’s 401(k) retirement plan available for future awards to eligible employees. This amount that was transferred to the Company’s 401(k) retirement plan is recognized as restricted cash on the Company’s balance sheet. The Company utilized restricted cash of $137,000 and $92,000 during 2026 and 2025 to fund its 401(k) employer contributions. Refer to Note 11 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s 401(k) plan.
Cash Flow. The following presents information on cash flows (in thousands):
Year Ended April 30,
Net cash provided by operating activities $ 12,878 $ 10,242
Net cash used in investing activities (102) (553)
Net cash used in financing activities (8) (9)
Increase in cash and cash equivalents and restricted cash $ 12,768 $ 9,680
Notes payable decreased from $26,000 as of April 30, 2025 to $18,000 as of April 30, 2026 due to principal debt repayments. Refer to Note 6 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s notes payable.
Asset and Liability Levels. The following presents information on certain assets and liabilities (dollars in thousands):
April 30, Increase
Accounts payable and accrued expenses 4,017 3,789 228 6 %
Income taxes (payable) receivable, net (104) 317 (421) (133) %
11
● Real estate inventory consists of (dollars in thousands):
April 30, Increase
Homebuilding model and completed inventory 8,675 13,090 (4,415) (34) %
Homebuilding construction in process 3,038 3,630 (592) (16) %
From April 30, 2025 to April 30, 2026, the change in land inventory was primarily due to land development activity and the acquisition of land offset in part by the sale of land, the change in homebuilding model and completed inventory was primarily due to the sale of homes offset in part by the completion of homes not yet sold and the change in homebuilding construction in process was primarily due to a decrease in the number of homes that started construction. Refer to Note 2 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding real estate inventory.
● Investment assets, net consist of (dollars in thousands):
April 30, Increase
Land held for long-term investment $ 8,482 $ 8,843 $ (361) (4) %
Owned real estate leased or intended to be leased 8,029 6,207 1,822 29 %
Less accumulated depreciation (337) (170) (167) 98 %
As of April 30, 2026, the Company leased 28 homes to residential tenants. As of April 30, 2025, the Company leased 21 homes to residential tenants. Given the impact on demand as a result of affordability challenges, the Company has opportunistically leased completed homes. Depreciation associated with owned real estate leased or intended to be leased was $167,000 for 2026 and $115,000 for 2025. Refer to Note 3 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding investment assets.
Off-Balance Sheet Arrangements. As of April 30, 2026 and April 30, 2025, the Company did not have any off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).
Recent Accounting Pronouncements. Refer to Note 1 to the consolidated financial statements contained in this annual report on Form 10-K for a discussion of recently issued accounting pronouncements.
12
IMPACT OF INFLATION
The Company’s operations can be impacted by inflation. Inflation can cause increases in interest rates and the cost of land, materials, services and labor. Unless such increased costs are recovered through increased sales prices or improved operating efficiencies, operating margins will decrease. The Company’s homebuilding segment as well as homebuilders that are customers of the Company’s land development business segment face inflationary concerns that rising housing costs, including interest costs, may substantially outpace increases in the incomes of potential purchasers and make it difficult for them to purchase a new home or sell an owned home. If this situation were to exist, the demand for homes produced by the Company’s homebuilding segment could decrease and the demand for the Company’s land by homebuilder customers could decrease. As a result of inflationary pressures, the Company has experienced increases in the prices of labor and certain materials in 2026 and 2025. Inflation may also increase the Company’s financing costs. While the Company attempts to pass on to its customers increases in costs through increased sales prices, market forces may limit the Company’s ability to do so. If the Company is unable to raise sales prices enough to compensate for higher costs, or if mortgage interest rates increase significantly, the Company’s revenues, gross margins and net income could be adversely affected.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Company. The Company and its representatives may from time to time make written or oral statements that are “forward-looking”, including statements contained in this annual report on Form 10-K and other filings with the Securities and Exchange Commission, reports to the Company’s shareholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, other written or oral statements, which constitute forward-looking statements, may be made by or on behalf of the Company. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects”, “forecasts”, “may”, “should”, variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and contingencies that are difficult to predict. All forward-looking statements speak only as of the date of this annual report on Form 10-K or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are qualified by the cautionary statements in this section. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements.
The forward-looking statements contained in this annual report on Form 10-K include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital, land development, acquisition of land, homebuilding, commercial projects, general and administrative expenses and capital expenditure needs, (2) the Company’s expected liquidity sources, including the availability of bank financing for projects and the utilization of existing bank financing, (3) anticipated development of the Company’s real estate holdings, (4) the development and construction of possible future commercial properties to be marketed to tenants, (5) the designs, pricing and levels of options and amenities with respect to the Company’s homebuilding operations, (6) the amount and timing of reimbursements under, and the general effectiveness of, the Company’s public improvement districts and private infrastructure reimbursement covenants, (7) the number of planned residential lots in the Company’s subdivisions, (8) estimates of the Company’s exposure to warranty claims and liabilities for litigation and legal claims, estimates of the cost to complete of common land development costs and the estimated relative sales values of individual parcels of land in connection with the allocation of common land development costs, (9) the adequacy of warranty reserves, subcontractor indemnities and third-party insurance to cover the ultimate resolution of any potential liabilities associated with known and anticipated warranty and construction defect related claims and litigation, (10) the conditions resulting in homebuyer affordability challenges, (11) estimates and assumptions used in determining future cash flows of real estate projects, (12) the amount of revenues from the sale of developed residential land during the fiscal year ending April 30, 2027, (13) the backlog of homes under contract and in production and the dollar amount of expected sale revenues when such homes are closed, (14) the categorization of owned real estate leased or intended to be leased, (15) the effect of seasonality on the Company’s operations, (16) the categorization of homes and buildings leased or intended to be leased to third parties, (17) the effect of recent accounting pronouncements, (18) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2016 Equity Compensation Plan, (19) the Company’s belief that its compensation package and benefits offered to employees are competitive with others in the industry, (20) the future issuance of deferred stock units to directors of the Company, (21) the future business conditions that may be experienced by the Company, including the pace of the Company’s housing starts and land development projects, (22) the dilution to earnings per share that outstanding options to purchase shares of common stock of the Company may cause in the future, (23) the adequacy of the Company’s facilities, (24) the materiality of claims and legal actions, (25) projections of future earnings for the future recoverability of deferred tax assets and state net operating losses that are not expected to be realizable and (26) the Company’s belief that its insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations and the listing standards of the New York Stock Exchange. The Company undertakes no obligation to update or publicly release any revisions to any forward-looking statement to reflect events, circumstances or changes in expectations after the date of such forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
13
Item 7A.Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 8.Financial Statements and Supplementary Data
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.
Because of the inherent limitations of internal control over financial reporting, including the possibilities of human error and the circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely basis. Accordingly, even internal controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Furthermore, projections of any evaluation of the effectiveness of internal controls to future periods are subject to the risk that such controls may become inadequate due to changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of internal control over financial reporting as of April 30, 2026 based upon the criteria set forth in a report entitled “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on its assessment, management has concluded that, as of April 30, 2026, internal control over financial reporting was effective.
This annual report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to such attestation pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report on internal control over financial reporting in this annual report on Form 10-K.
14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of AMREP Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AMREP Corporation (the “Company”) as of April 30, 2026 and 2025 and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the each of the years in the two-year period ended April 30, 2026, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the two-year period ended April 30, 2026, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/ Rosenberg Rich Baker Berman, P.A.
We have served as the Company’s auditor since 2024.
Somerset, New Jersey
July 24, 2026
15
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 2026 AND 2025
(Amounts in thousands, except share and per share amounts)
ASSETS
Income taxes (payable) receivable, net (104) 317
Deferred income taxes, net 5,772 8,969
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 4,017 $ 3,789
Notes payable 18 26
Commitments and Contingencies (Note 13)
SHAREHOLDERS’ EQUITY:
Capital contributed in excess of par value 33,900 33,409
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 144,778 $ 133,776
The accompanying notes to consolidated financial statements are an
integral part of these consolidated financial statements.
16
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
Year Ended April 30,
REVENUES:
COSTS AND EXPENSES:
Land sale cost of revenues, net 8,129 12,361
General and administrative expenses 9,025 7,278
Other expense — (4)
Provision for income taxes 3,838 1,009
Earnings per share - basic $ 1.93 $ 2.39
Earnings per share - diluted $ 1.91 $ 2.37
Weighted average number of common shares outstanding – basic 5,337 5,318
Weighted average number of common shares outstanding – diluted 5,393 5,369
The accompanying notes to consolidated financial statements are an
integral part of these consolidated financial statements.
17
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
Year Ended April 30,
Other comprehensive income, net of tax:
Other comprehensive income (loss) — (1,230)
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
18
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in thousands)
Capital Accumulated
Contributed Other
Common Stock in Excess of Retained Comprehensive
Issuance of restricted common stock 16 — — — — —
Stock compensation expense — 2 283 — — 285
Issuance of deferred common stock units — — 90 — — 90
Net income — — — 12,716 — 12,716
Other comprehensive loss — — — — (1,230) (1,230)
Issuance of restricted common stock 19 3 — — — 3
Stock compensation expense — — 351 — — 351
Issuance of deferred common stock units — — 90 — — 90
Net income — — — 10,288 — 10,288
The accompanying notes to consolidated financial statements are an
integral part of these consolidated financial statements.
19
AMREP CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Year Ended April 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
Non-cash credits and charges:
Stock-based compensation 447 423
Deferred income tax provision 3,197 839
Changes in assets and liabilities:
Real estate inventory 361 (767)
Investment assets, net (1,461) (2,329)
Accounts payable and accrued expenses 305 (1,073)
Income taxes (payable) receivable, net 421 (290)
Net cash provided by operating activities 12,878 10,242
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (102) (583)
Proceeds from the sale of property and equipment — 30
Net cash used in investing activities (102) (553)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt payments (8) (9)
Net cash used in financing activities (8) (9)
Increase in cash, cash equivalents and restricted cash 12,768 9,680
Cash, cash equivalents and restricted cash, beginning of year 39,921 30,241
Cash, cash equivalents and restricted cash, end of year $ 52,689 $ 39,921
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid, net $ 502 $ 324
The accompanying notes to consolidated financial statements are an
integral part of these consolidated financial statements.
20
AMREP CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES
Organization and principles of consolidation
The consolidated financial statements include the accounts of AMREP Corporation, an Oklahoma corporation, and its subsidiaries (collectively, the “Company”). The Company is primarily engaged in two business segments: land development and homebuilding. The Company has no foreign sales. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated balance sheets are presented in an unclassified format since the Company has substantial operations in the real estate industry and its operating cycle is greater than one year.
Fiscal year
The Company’s fiscal year ends on April 30. All references to 2026 and 2025 mean the fiscal years ended April 30, 2026 and 2025, unless the context otherwise indicates.
Revenue recognition
The Company accounts for land sale revenues, home sale revenues and other revenues in accordance with Accounting Standards Codification (“ASC”) Topic 606 (Revenue from Contracts with Customers).
Land sale revenues: Revenues and cost of revenues from land sales are recognized when the parties are bound by the terms of a contract, consideration has been exchanged, control, title and other attributes of ownership have been conveyed to the buyer by means of a closing and the Company is not obligated to perform further significant development of the specific property sold. In general, the Company’s performance obligation for each of these land sales is fulfilled upon the delivery of the land, which generally coincides with the receipt of cash consideration from the counterparty.
Land sale cost of revenues, net includes all direct acquisition costs and other costs specifically identified with the property, including pre-acquisition costs and capitalized real estate taxes and interest, and an allocation of certain common development costs associated with the entire project. Common development costs include the installation of utilities and roads, and may be based upon estimates of cost to complete. The allocation of costs is based on the estimated relative sales values of the individual parcels of land being sold to the total expected sales value for the unsold parcels of land in the applicable portion of the subdivision. Estimates and cost allocations are reviewed on a regular basis until a project is substantially completed, and are revised and reallocated as necessary on the basis of current estimates. Amounts received from public improvement districts, private infrastructure covenants and payments for impact fee credits reduce the amount of land sale cost of revenues.
Home sale revenues: Revenues and cost of revenues from home sales are recognized at the time each home is delivered and title and possession are transferred to the buyer. The Company’s performance obligation to deliver a home is generally satisfied in less than one year from the date a binding sale agreement is signed. In general, the Company’s performance obligation for each home sale is fulfilled upon the delivery of the completed home, which generally coincides with the receipt of cash consideration from the counterparty. If the Company’s performance obligations are not complete upon the home closing, the Company defers a portion of the home sale revenues related to the outstanding obligations and subsequently recognizes that revenue upon completion of such obligations. As of April 30, 2026 and April 30, 2025, deferred home sale revenues and costs related thereto were immaterial.
Forfeited customer deposits for homes are recognized in home sale revenues in the period in which the Company determines that the customer will not complete the purchase of the home and the Company has the right to retain the deposit. In order to promote sales of homes, the Company may offer sales incentives to homebuyers. These incentives vary by type and amount on a community-by-community and home-by-home basis. Incentives are reflected as a reduction in home sale revenues.
Home construction and related costs are capitalized as incurred within real estate inventory under the specific identification method on the balance sheet and are charged to home sale cost of revenues on the consolidated statement of operations when the related home is sold.
The Company offers homeowners a comprehensive third-party assurance warranty on each home. Estimates of the Company’s exposure to warranty claims are included within accrued expenses at the time home sale revenues are recognized.
21
Other revenues: Other revenues and other cost of revenues consist of sale of certain investment assets, landscaping revenues and miscellaneous other revenues.
Revenues from sale of investment assets (that are not otherwise classified as land sale revenues) are recognized when the parties are bound by the terms of a contract, consideration has been exchanged, title and other attributes of ownership have been conveyed to the buyer by means of a closing and the Company is not obligated to perform further significant development of the specific property sold. In general, the Company’s performance obligation for a sale of investment assets is fulfilled upon the delivery of the property, which generally coincides with the receipt of cash consideration from the counterparty. Other cost of revenues includes all direct acquisition costs and other costs specifically identified with the property, including pre-acquisition and acquisition costs, if applicable, closing and selling costs and construction costs.
Landscaping revenues consist of landscaping services provided by the Company primarily to homebuilders.
Miscellaneous other revenues primarily include extension fees for purchase contracts, forfeited deposits from land sale contracts and rental payments and additional rent from tenants pursuant to leases with respect to property or buildings of the Company. Base rental payments are recognized as revenue monthly over the term of the lease in accordance with ASC Topic 842 (Leases). Additional rent related to the reimbursement of real estate taxes, insurance, repairs, maintenance and other operating expenses is recognized as revenue in the period the expenses are incurred.
Cash, cash equivalents and restricted cash
Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of change in value because of changes in interest rates. A debt security is classified as a cash equivalent if it meets these criteria and has an original maturity of ninety days or less when purchased. Restricted cash consists of cash deposits with the Company’s 401(k) retirement plan representing the amount of residual assets (after satisfying any pension plan liabilities) following termination of the Company’s defined benefit pension plan. Interest payments on cash, cash equivalents and restricted cash are recorded as income on the statement of operations.
Short-Term Investments
Short-term investments are held-to-maturity debt investments that have original maturities of greater than ninety days when purchased and remaining maturities of less than one year. Held-to-maturity debt investments are debt investments, such as certificates of deposit and U.S. government securities, that the Company has the positive intent and ability to hold to maturity. Held-to-maturity debt investments are recorded at their original purchase amount (and are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable) with interest payments recorded as income on the statement of operations. The Company did not have any short-term investments as of April 30, 2026 or April 30, 2025.
Long-lived assets
Long-lived assets consist of real estate inventory and investment assets and are accounted for in accordance with ASC 360-10 (Property, Plant, and Equipment – Overall). A substantial majority of the Company’s real estate assets are located in Rio Rancho, New Mexico (“Rio Rancho”) and certain adjoining areas of Sandoval County, New Mexico. As a result of this geographic concentration, the Company has been and will be affected by changes in economic conditions in that region.
Real estate inventory: Real estate inventory includes land and improvements on land held for development or sale. The cost basis of the land and improvements includes all direct acquisition costs including development costs, certain amenities, capitalized interest, capitalized real estate taxes and other costs. Interest and real estate taxes are not capitalized unless active development is underway. Real estate inventory is stated at accumulated cost.
Investment assets, net: Investment assets, net consist of (i) land held for long-term investment, which represents property located in areas that are not planned to be developed in the near term and that has not been offered for sale in the normal course of business, and (ii) owned real estate leased or intended to be leased, which represents homes and buildings leased or intended to be leased to third parties. Investment assets are stated at the lower of cost or net realizable value. Depreciation of investment assets (other than land) is provided principally by the straight-line method at various rates calculated to amortize the book values of the assets over their estimated useful lives, which generally are 10 to 40 years for buildings and improvements. Land is not subject to depreciation.
22
Impairment of long-lived assets: Long-lived assets are evaluated and tested for impairment when events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Asset impairment tests are based upon the intended use of assets, expected future cash flows and estimates of fair value of assets. The evaluation of long-lived assets includes an estimate of future cash flows on an undiscounted basis using estimated revenue streams, operating margins and general and administrative expenses. The estimation process involved in determining if assets have been impaired and in the determination of estimated future cash flows is inherently uncertain because it requires estimates of future revenues and costs, as well as future events and conditions. If the excess of undiscounted cash flows over the carrying value of a project is small, there is a greater risk of future impairment and any resulting impairment charges could be material. Due to the subjective nature of the estimates and assumptions used in determining future cash flows, actual results could differ materially from current estimates and the Company may be required to recognize impairment charges in the future.
Leases
Right-of-use assets and lease liabilities are recorded on the balance sheet for all leases with an initial term over one year. Leases with an initial term of one year or less are not recorded on the balance sheet. Right-of-use assets are classified within other assets and the corresponding lease liability is included in accounts payable and accrued expenses in the balance sheet.
Share-based compensation
Awards of restricted stock, stock options and deferred stock units are accounted for in accordance with ASC 718-10 (Compensation - Stock Compensation - Overall), which requires that compensation cost for all stock awards be calculated and amortized over the service period (generally equal to the vesting period). Compensation expense for awards of restricted stock, stock options and deferred stock units are based on the fair value of the awards at their grant dates. The grant-date fair value of restricted stock is the price of the stock on the date of grant. The grant-date fair value of deferred stock units is the price of the underlying stock on the date of grant. To estimate the grant-date fair value of stock options, the Company uses the Black-Scholes option-pricing model. The Black-Scholes model estimates the per share fair value of an option on its date of grant based on the following: the option’s exercise price; the price of the underlying stock on the date of grant; the estimated dividend yield; a “risk-free” interest rate; the estimated option term; and the expected volatility. For the “risk-free” interest rate, the Company uses a U.S. Treasury bond due in a number of years equal to the option’s expected term. To estimate expected volatility, the Company analyzes the historic volatility of the Company’s common stock.
Income taxes
Deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured by using currently enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse. The Company provides a valuation allowance against deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized.
Earnings per share
Basic earnings per share is based on the weighted average number of common shares outstanding during each year. Unvested restricted shares of common stock are not included in the computation of basic earnings per share, as they are considered contingently returnable shares. Unvested restricted shares of common stock are included in diluted earnings per share if they are dilutive. Deferred stock units are included in both basic and diluted earnings per share computations. Stock options are not included in the computation of basic earnings per share. Stock options are included in diluted earnings per share if they are not anti-dilutive and are in-the-money.
Comprehensive income
Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources. Total comprehensive income is the total of net income or loss and other comprehensive income or loss.
Management’s estimates and assumptions
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant judgments and estimates that affect the financial statements include, but are not limited to, (i) land sale cost of revenues, net calculations, which are based on land development budgets and estimates of costs to complete; (ii) cash flows, asset groupings and valuation assumptions in performing asset impairment tests of long-lived assets and assets held for sale; (iii) risk assessment of uncertain tax positions; and (iv) the determination of the recoverability of net deferred tax assets. The Company bases its significant estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results could differ from these estimates.
23
Recent accounting pronouncements
In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes, which provides for enhanced transparency and decision usefulness of income tax disclosures. ASU 2023-09 was effective for the Company’s fiscal year ending April 30, 2026. The adoption of ASU 2023-09 by the Company did not have a material effect on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Expenses (as modified by ASU 2025-01), which provides for disclosure of certain disaggregated information about expense captions that are presented on the income statement. ASU 2024-03 will be effective for the Company’s fiscal year ending April 30, 2028. The adoption of ASU 2024-03 by the Company is not expected to have a material effect on its consolidated financial statements.
Other than as described above, there are no new accounting standards or updates to be adopted that the Company currently believes might have a significant impact on its consolidated financial statements.
(2) REAL ESTATE INVENTORY
Real estate inventory consists of (in thousands):
April 30,
Homebuilding model and completed inventory 8,675 13,090
Homebuilding construction in process 3,038 3,630
Land inventory represents costs for land and improvements on land held for development or sale. Homebuilding model and completed inventory represents costs for residential homes that are completed and ready for sale. Homebuilding construction in process represents costs for residential homes being built.
No interest was capitalized in real estate inventory in 2026 or 2025. Real estate taxes of $99,000 and $90,000 were capitalized in real estate inventory in 2026 and 2025.
(3) INVESTMENT ASSETS
Investment assets, net consist of (in thousands):
April 30,
Land held for long-term investment $ 8,482 $ 8,843
Owned real estate leased or intended to be leased 8,029 6,207
Less accumulated depreciation (337) (170)
Owned real estate leased or intended to be leased, net 7,692 6,037
Land held for long-term investment represents costs for property located in areas that are not planned to be developed in the near term and that has not been offered for sale in the normal course of business. Owned real estate leased or intended to be leased represents costs for homes and buildings leased or intended to be leased to third parties. As of April 30, 2026, the Company leased 28 homes to residential tenants. As of April 30, 2025, the Company leased 21 homes to residential tenants. Depreciation associated with owned real estate leased or intended to be leased was $167,000 for 2026 and $115,000 for 2025.
24
(4) OTHER ASSETS
Other assets consist of (in thousands):
April 30,
Miscellaneous assets 381 283
Less accumulated depreciation of property and equipment (585) (441)
Property and equipment, net 2,144 2,186
Prepaid expenses as of April 30, 2026 primarily consist of land development cash collateralized performance guaranties and insurance. Prepaid expenses as of April 30, 2025 primarily consist of land development cash collateralized performance guaranties and insurance. Property includes a 7,000 square foot office building in Rio Rancho utilized by the Company’s land development business segment and homebuilding business segment. Amortized lease cost for right-of-use assets associated with the leases of office facilities was $30,000 and $28,000 for 2026 and 2025. Depreciation expense associated with property and equipment was $145,000 and $102,000 for 2026 and 2025.
(5) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of (in thousands):
April 30,
Land development and homebuilding operations
Customer deposits 925 833
Corporate operations 713 568
(6) NOTES PAYABLE
The following tables present information on the Company’s notes payable in effect as of April 30, 2026 (dollars in thousands):
Principal Amount Available Outstanding
for New Borrowings Principal Amount
April 30, April 30,
Loan Identifier Lender 2026 2026 2025
Revolving Line of Credit BOKF $ 4,438 $ — $ —
Equipment Financing DC — 18 26
Interest Mortgaged Property Scheduled
Loan Identifier Rate Book Value Maturity
Principal Repayments Capitalized Interest and Fees
Year ended April 30, Year ended April 30,
Revolving Line of Credit $ — $ — $ — $ —
Equipment Financing 8 9 — —
Total $ 8 $ 9 $ — $ —
25
As of April 30, 2026, the Company was in compliance with the financial covenants contained in the loan documentation for the then outstanding notes payable. Additional information regarding each of the above notes payable is provided below.
ASW made certain representations and warranties in connection with this loan and is required to comply with various covenants, reporting requirements and other customary requirements for similar loans, including ASW and its subsidiaries having at least $3.0 million of unencumbered and unrestricted cash, cash equivalents and marketable securities in order to be entitled to advances under the loan. The loan documentation contains customary events of default for similar financing transactions, including: ASW’s failure to make principal, interest or other payments when due; the failure of ASW to observe or perform its covenants under the loan documentation; the representations and warranties of ASW being false; the insolvency or bankruptcy of ASW; and the failure of ASW to maintain a net worth of at least $32 million. Upon the occurrence and during the continuance of an event of default, BOKF may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. ASW incurred customary costs and expenses and paid certain fees to BOKF in connection with the loan.
Rioscapes made certain representations and warranties in connection with this loan and is required to comply with various covenants, reporting requirements and other customary requirements for similar loans. The loan documentation contains customary events of default for similar financing transactions, including: Rioscapes’s failure to make principal, interest or other payments when due; the failure of Rioscapes to observe or perform its covenants under the loan documentation; the representations and warranties of Rioscapes being false; the insolvency or bankruptcy of Rioscapes or ASW; the merger by Rioscapes or ASW into another entity; and the sale by Rioscapes or ASW of substantially all of their assets. Upon the occurrence and during the continuance of an event of default, DC may declare the outstanding principal amount and all other obligations under the loan immediately due and payable. Rioscapes incurred customary costs and expenses and paid certain fees to DC in connection with the loan.
The following table summarizes the notes payable scheduled principal repayments subsequent to April 30, 2026 (in thousands):
Fiscal Year Scheduled Payments
Total $ 18
26
(7) REVENUES
Land sale revenues. Land sale revenues are sales of developed residential land, developed commercial land and undeveloped land.
Home sale revenues. Home sale revenues are sales of homes constructed and sold by the Company.
Other revenues. Other revenues consist of (in thousands):
Year Ended April 30,
Miscellaneous other revenues 1,163 709
Landscaping revenues consist of landscaping services provided by the Company primarily to homebuilders.
Miscellaneous other revenues for 2026 primarily consist of management fees for homeowners’ associations, residential rental revenues and billboard advertising revenues. Miscellaneous other revenues for 2025 primarily consist of extension fees for purchase contracts, management fees for homeowners’ associations and residential rental revenues.
Major customers. A majority of land sale revenues were received from three customers during 2026 and three customers during 2025. Other than receivables for immaterial amounts (if any), there were no outstanding receivables from these customers as of April 30, 2026 or April 30, 2025. There was one customer that contributed in excess of 10% of the Company’s revenues for 2026. The revenues from such customer for 2026 were as follows: $8,954,000, with this revenue reported in the Company’s land development business segment. There were two customers that each contributed in excess of 10% of the Company’s revenues for 2025. The revenues from each such customer for 2025 were as follows: $11,809,000 and $6,028,000, with each of these revenues reported in the Company’s land development business segment.
(8) COST OF REVENUES
Land sale cost of revenues, net consists of (in thousands):
Year Ended April 30,
Less:
Public improvement district reimbursements (900) (1,183)
Private infrastructure covenant reimbursements (434) (518)
Payments for impact fee credits (1,041) (2,541)
Land sale cost of revenues, net $ 8,129 $ 12,361
A portion of the Lomas Encantadas subdivision and a portion of the Enchanted Hills subdivision in Rio Rancho are subject to a public improvement district. The public improvement district reimburses the Company for certain on-site and off-site costs of developing the subdivisions by imposing a special levy on the real property owners within the district. The Company has accepted discounted prepayments of amounts due under the public improvement district. The Company instituted private infrastructure reimbursement covenants on various land development projects. Similar to a public improvement district, the covenants are expected to reimburse the Company for certain on-site and off-site costs of developing the subject property by imposing a special levy on the real property owners subject to the covenants. The Company has accepted discounted prepayments of amounts due under the private infrastructure reimbursement covenants. Impact fees are charges or assessments payable by homebuilders to local governing authorities in order to generate revenue for funding or recouping the costs of capital improvements or facility expansions necessitated by and attributable to the new development. The Company receives credits, allowances, offsets and other vested rate benefits applicable to impact fees in connection with certain costs incurred by the Company in developing and entitling subdivisions, which the Company generally sells to homebuilders.
Home sale cost of revenues for 2026 and 2025 consist of the costs for residential homes that were sold.
Other cost of revenues for 2026 and 2025 consist of the cost of goods sold for landscaping services.
27
(9) GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist of (in thousands):
Year Ended April 30,
(10) FAIR VALUE MEASUREMENTS
The FASB’s accounting guidance defines fair value and establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The FASB’s guidance classifies the inputs to measure fair value into the following hierarchy:
Level 1 Unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2 Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 Inputs for the asset or liability are unobservable and reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.
The fair value measurement level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The Financial Instruments Topic of the FASB Accounting Standards Codification requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The Topic excludes all nonfinancial instruments from its disclosure requirements. Fair value is determined under the hierarchy discussed above. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions are used in estimating fair value disclosure for financial instruments: the carrying amounts of cash and cash equivalents and trade payables approximate fair value because of the short maturity of these financial instruments; and debt that bears variable interest rates indexed to secured overnight financing rate as administered by the CME Group Benchmark Administration Limited also approximates fair value as it reprices when market interest rates change.
(11) BENEFIT PLANS
Pension plan
During the fiscal year ending April 30, 2024, the Company transferred $547,000, which was the amount of residual assets (after satisfying any pension plan liabilities) following termination of the Company’s defined benefit pension plan, from the defined benefit pension plan to the Company’s 401(k) retirement plan available for future awards to eligible employees. This amount that was transferred to the Company’s 401(k) retirement plan is recognized as restricted cash on the Company’s balance sheet. The Company utilized restricted cash of $137,000 and $92,000 during 2026 and 2025 to fund its 401(k) employer contributions.
The Company recognized the known changes in the funded status of the pension plan in the period in which the changes occur through other comprehensive income, net of the related income tax effect. In connection with the termination of the Company’s defined benefit pension plan, $1,230,000 of income tax effects that remained in accumulated other comprehensive income (loss) were reclassified to a benefit for income taxes during 2025.
28
401(k)
The Company provides a 401(k) with a profit sharing plan as a retirement plan for eligible employees. Under the plan, eligible employees may contribute a portion of their annual pre-tax compensation, the Company will contribute 3% of each eligible employee’s annual pre-tax compensation each year and the Company may make discretionary contributions to eligible employees on a profit sharing basis. The Company utilized $137,000 and $92,000 of restricted cash to fund its 401(k) employer contribution for the calendar years ended December 31, 2025 and December 31, 2024.
Equity compensation plan
The AMREP Corporation 2016 Equity Compensation Plan (the “Equity Plan”) authorizes stock-based awards of various kinds to non-employee directors and employees covering up to a total of 500,000 shares of common stock of the Company. The Equity Plan will expire by its terms on, and no award will be granted under the Equity Plan on or after, September 19, 2026. As of April 30, 2026, the Company had issued 159,251 shares of common stock of the Company under the Equity Plan and had reserved 122,011 shares of common stock of the Company under the Equity Plan for future issuance with respect to outstanding deferred stock units and an outstanding option to purchase shares, resulting in 218,738 shares of common stock of the Company available for future issuance under the Equity Plan.
Shares of restricted common stock that are issued under the Equity Plan (“restricted shares”) are considered to be issued and outstanding as of the grant date and have the same dividend and voting rights as other common stock. Compensation expense related to the restricted shares is recognized over the vesting period of each grant based on the fair value of the shares as of the date of grant. The fair value of each grant of restricted shares is determined based on the trading price of the Company’s common stock on the date of such grant, and this amount will be charged to expense over the vesting term of the grant. Forfeitures are recognized as reversals of compensation expense on the date of forfeiture.
The restricted share award activity for 2026 and 2025 was as follows:
Weighted Average
Number of Grant Date Fair Value
Restricted share awards Shares Per Share
Forfeited during 2025 — —
The Company recognized non-cash compensation expense related to the vesting of restricted shares of common stock net of forfeitures of $357,000 and $311,000 for 2026 and 2025. As of April 30, 2026, there was $255,000 of unrecognized compensation expense related to restricted shares of common stock previously issued under the Equity Plan which had not vested, which is expected to be recognized over the remaining vesting term not to exceed three years.
29
In November 2021, the Company granted Christopher V. Vitale, the President and Chief Executive Officer of the Company, an option to purchase 50,000 shares of common stock of the Company under the Equity Plan with an exercise price of $14.24 per share, which was the closing price on the New York Stock Exchange on the date of grant. The option will become exercisable for 100% of the option shares on November 1, 2026 if Mr. Vitale is employed by, or providing service to, the Company on such date. Subject to the definitions in the Equity Plan, in the event (a) Mr. Vitale has a termination of employment with the Company on account of death or disability, (b) the Company terminates Mr. Vitale’s employment with the Company for any reason other than cause or (c) of a change in control, then the option will become immediately exercisable for 100% of the option shares. The option has a term of ten years from the date of grant and terminates at the expiration of that period. The option automatically terminates upon: (i) the expiration of the three month period after Mr. Vitale ceases to be employed by the Company, if the termination of his employment by Mr. Vitale or the Company is for any reason other than as hereinafter set forth in clauses (ii), (iii) or (iv); (ii) the expiration of the one year period after Mr. Vitale ceases to be employed by the Company on account of Mr. Vitale’s disability; (iii) the expiration of the one year period after Mr. Vitale ceases to be employed by the Company, if Mr. Vitale dies while employed by the Company; or (iv) the date on which Mr. Vitale ceases to be employed by the Company, if the termination is for cause. If Mr. Vitale engages in conduct that constitutes cause after Mr. Vitale’s employment terminates, the option immediately terminates. Notwithstanding the foregoing, in no event may the option be exercised after the date that is immediately before the tenth anniversary of the date of grant. Except as described above, any portion of the option that is not exercisable at the time Mr. Vitale has a termination of employment with the Company immediately terminates. The fair value of the option was $252,000 as of the date of grant using the Black-Scholes fair value option valuation model. The following assumptions were used for determining the fair value of the option: expected volatility of 38.04%; average risk-free interest rate of 1.46%; dividend yield of 0%; and expected life of 7.5 years. As of April 30, 2026, the option has not been exercised, cancelled or forfeited. The Company recognized non-cash compensation expense related to the option of $50,000 in each of 2026 and 2025. As of April 30, 2026 and April 30, 2025, the option was in-the-money and therefore was included in “weighted average number of common shares outstanding – diluted” when calculating diluted earnings per share.
On December 31, 2025 and 2024, each non-employee member of the Company’s Board of Directors on such date was issued the number of deferred stock units of the Company under the Equity Plan equal to $30,000 divided by the closing price per share of Common Stock reported on the New York Stock Exchange on such date. Based on the closing price per share of $18.80 and $31.40 on December 31, 2025 and 2024, the Company issued a total of 4,785 and 2,865 deferred stock units to members of the Company’s Board of Directors. Each deferred stock unit represents the right to receive one share of Common Stock within 30 days after the first day of the month to follow such director’s termination of service as a director of the Company. Director compensation non-cash expense, which is recognized for the annual grant of deferred stock units to non-employee members of the Company’s Board of Directors ratably over the director’s service in office during the calendar year, was $90,000 for each of 2026 and 2025. At April 30, 2026 and 2025, there was $40,000 and $30,000 of accrued compensation expense related to the deferred stock units expected to be issued in December of the following fiscal year.
(12) INCOME TAXES
All income from continuing operations before income taxes was attributable to U.S. domestic operations. The provision (benefit) for income taxes consists of the following (in thousands):
Year Ended April 30,
Current:
State and local — (66)
Deferred:
State and local 561 (13)
Total provision for income taxes $ 3,838 $ 1,009
30
The components of the net deferred income taxes are as follows (in thousands):
April 30,
Deferred income tax assets:
State tax loss carryforwards $ 2,009 $ 2,701
U.S. federal NOL carryforward 4,330 6,819
Vacation accrual 58 32
Real estate basis differences 2,581 2,419
Total deferred income tax assets 9,470 12,391
Deferred income tax liabilities:
Depreciable assets (128) (40)
Deferred gains on investment assets (2,400) (2,401)
Total deferred income tax liabilities (2,571) (2,489)
Net deferred income tax asset $ 5,772 $ 8,969
A valuation allowance is provided when it is considered more likely than not that certain deferred tax assets will not be realized. The valuation allowance relates primarily to deferred tax assets, including net operating loss carryforwards, in states where the Company either has no current operations or its operations are not considered likely to realize the deferred tax assets due to the amount of the applicable state net operating loss or its expected expiration date.
The Company has federal net operating loss carryforwards of $20,620,000 as of April 30, 2026, which do not have an expiration. The Company has state net operating loss carryforwards of $46,843,000 as of April 30, 2026 that expire beginning in the fiscal year ending April 30, 2038.
Net operating loss carryforwards may be subject to audit and possible adjustment by the U.S. Internal Revenue Service (“IRS”), which could result in a reversal of none, part or all of the income tax benefit or could result in a benefit higher than the amount recorded. If the IRS rejects or reduces the amount of the income tax benefit related to the Company’s net operating loss carryforwards, the Company may have to pay additional cash income taxes, which would adversely affect the Company’s results of operations, financial condition and cash flows. The Company cannot guarantee what the ultimate outcome will be or the amount of the tax benefit the Company will receive, if any. Under federal income tax law, net operating losses have an unlimited carryforward period and the deductibility of such federal net operating losses is limited to 80% of taxable income in any year during the carryforward period.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, the Company’s ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if the Company experiences an “ownership change.” A Section 382 “ownership change” generally occurs if one or more shareholders or groups of shareholders who own at least 5% of the Company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws in the United States. It is possible that any future ownership changes could have a material effect on the use of the Company’s net operating loss carryforwards or other tax attributes.
Effective May 1, 2025, the Company adopted ASU 2023-09, Income Taxes, on a prospective basis starting with the year ended April 30, 2026. The disclosures for the year ended April 30, 2025 have not been restated and reflect the requirements in effect for that period.
31
The following tables reconcile taxes computed at the U.S. federal statutory income tax rate from continuing operations to the Company’s actual tax provision (dollars in thousands):
Amount Percent
Computed tax provision at statutory rate $ 2,988 21.0 %
State and local income tax, net of federal income tax effect 567 4.0 %
Effect of changes in tax laws or rates enacted in the current period 61 0.4 %
Changes in valuation allowances 193 1.4 %
Other reconciling items 29 0.2 %
Actual tax provision (benefit) / effective tax rate $ 3,838 27.0 %
Year Ended April 30,
Computed tax provision at statutory rate $ 2,876
Increase (reduction) in tax resulting from:
Deferred tax rate changes 64
Change in valuation allowances (56)
State income taxes, net of federal income tax effect 499
Permanent items (258)
Other comprehensive loss, net of tax (1,230)
Actual tax provision (benefit) $ 1,009
For the years ended April 30, 2026 and April 30, 2025, state and local income tax primarily reflected taxes originating in New Mexico, which constituted the majority of the state and local tax category.
For the year ended April 30, 2026, income taxes paid, net of refunds received, were $502,000, which consisted of $500,000 paid to the U.S. federal government and $2,000 paid to state and local jurisdictions. No individual state or foreign jurisdiction accounted for 5% or more of the total income taxes paid, net of refunds.
The Company is subject to U.S. federal income taxes and various state and local income taxes. Tax regulations within each jurisdiction are subject to interpretation and require significant judgment to apply. Federal tax returns prior to the fiscal year ended April 30, 2020 are no longer subject to examination due to the expiration of the applicable statute of limitations. State tax returns prior to the fiscal year ended April 30, 2023 are no longer subject to examination due to the expiration of the applicable statutes of limitations. Tax years in which net operating losses were generated may remain subject to examination to the extent the carryforwards are utilized in open years, notwithstanding the general statute of limitations.
ASC Topic 740 (Income Taxes) clarifies the accounting for uncertain tax positions, prescribing a minimum recognition threshold a tax position is required to meet before being recognized and providing guidance on the derecognition, measurement, classification and disclosure relating to income taxes. The Company has no unrecognized tax benefits as of April 30, 2026 and April 30, 2025.
The Company has elected to include interest and penalties in its income tax expense. The Company had no accrued interest or penalties as of April 30, 2026 and April 30, 2025.
(13) COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases an office and office equipment in Pennsylvania and office equipment in New Mexico. The leases are generally non-cancelable operating leases with an initial term of two to five years. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The lease agreements do not contain any residual value guarantees or material restrictive covenants. As of April 30, 2026, right-of-use assets and lease liabilities were $144,000 and $149,000. As of April 30, 2025, right-of-use assets and lease liabilities were $39,000 and $42,000. Total operating lease expense was $64,000 and $58,000 for 2026 and 2025.
32
Remaining operating lease payments for these leases subsequent to April 30, 2026 are $24,000 in fiscal year 2027, $26,000 in fiscal year 2028, $27,000 in fiscal year 2029, $29,000 in fiscal year 2030, $31,000 in fiscal year 2031 and $11,000 in fiscal year 2032. Remaining operating lease payments had imputed interest resulting in a present value of these lease liabilities of $120,000 as of April 30, 2026. For 2026, the weighted average remaining lease term and weighted average discount rate of the Company’s operating leases were 5.34 years and 6.77%. For 2025, the weighted average remaining lease term and weighted average discount rate of the Company’s operating leases were 1.34 years and 5.50%. The lease contracts for the Company generally do not provide a readily determinable implicit rate. For these contracts, the Company estimated the incremental borrowing rate based on information available upon the adoption of ASU 2016-02. The Company applied a consistent method in periods after the adoption of ASU 2016-02 to estimate the incremental borrowing rate.
Warranty Reserves
The Company’s homebuilding business provides homebuyers with a limited warranty against certain building defects, including a one-year comprehensive limited warranty and coverage for certain other aspects of the home’s construction and operating systems for periods of up to 10 years. The Company’s homebuilding work is performed by subcontractors who must agree to indemnify the Company with regard to their work and provide certificates of insurance demonstrating that they have met the Company’s insurance requirements and have named the Company as an additional insured under their policies. Therefore, many claims relating to workmanship and materials that result in warranty spending are the primary responsibility of these subcontractors.
Warranty reserves are included in accrued expenses within the consolidated balance sheets, and the provision for warranty accruals is included in home sale cost of revenues in the consolidated statements of operations. Reserves covering anticipated warranty expenses are recorded for each home closed and are a function of the number of home closings in the period, the selling prices of the homes closed and the rates of accrual per home estimated as a percentage of the selling price of the home.
Management periodically assesses the adequacy of warranty reserves based on historical experience and the expected costs to remediate potential claims. In addition, the analysis also includes the existence of any non-recurring or community-specific warranty-related matters that might not be included in historical data and trends that may need to be separately estimated based on management’s judgment of the ultimate cost of repair for that specific issue. While estimated warranty liabilities are adjusted each reporting period based on the results of this assessment, the Company may not accurately predict actual warranty costs, which could lead to significant changes in the reserve and could have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations.
The Company maintains third-party insurance, subject to applicable self-insured retentions, for most construction defects that the Company encounters in the normal course of business. The Company believes that its warranty reserves, subcontractor indemnities and third-party insurance are adequate to cover the ultimate resolution of any potential liabilities associated with known and anticipated warranty and construction defect related claims and litigation. However, there can be no assurance that: the terms and limitations of the limited warranty will be effective against claims made by homebuyers; the Company will be able to renew its insurance coverage or renew it at reasonable rates; the Company will not be liable for damages, the cost of repairs or the expense of litigation surrounding possible construction defects, soil subsidence or building related claims; or claims will not arise out of events or circumstances not covered by insurance or not subject to effective indemnification agreements with our subcontractors.
Changes in warranty reserves are as follows (in thousands):
Year Ended April 30,
Balance at beginning of period $ 259 $ 174
Warranty issued during period 143 105
Change in pre-existing reserves — —
Warranty expenditures during period (16) (20)
Balance at end of period $ 386 $ 259
33
Security for Performance Obligations
The Company is required from time to time to provide security (such as letters of credit, reserve letters, surety bonds or cash collateral) for performance obligations in support of the Company’s land development and homebuilding obligations to municipalities related to the construction of improvements in subdivisions. Cash collateral on deposit with municipalities is included in other assets within the consolidated balance sheets. In the event any letter of credit, reserve letter or surety bond is drawn, the Company would be obligated to reimburse the issuer of the letter of credit, reserve letter or surety bond. As of April 30, 2026, the Company had (a) loan reserves outstanding under its Revolving Line of Credit in the aggregate principal amount of $1,812,000 in favor of a municipality guarantying the completion of improvements in a subdivision being constructed by the Company and (b) cash collateral of $338,000 on deposit with municipalities. As of April 30, 2025, the Company had (a) loan reserves outstanding under its Revolving Line of Credit in the aggregate principal amount of $1,812,000 in favor of a municipality guarantying the completion of improvements in a subdivision being constructed by the Company and (b) cash collateral of $229,000 on deposit with a municipality.
Litigation
The Company may be subject to various lawsuits and legal claims. Certain of the liabilities resulting from these actions may be covered in whole or in part by insurance. The Company establishes liabilities for litigation and legal claims when such matters are both probable of occurring and any potential loss is reasonably estimable. The Company accrues for such matters based on the facts and circumstances specific to each matter and revises these estimates as the matters evolve. In such cases, there may exist an exposure to loss in excess of any amounts currently accrued. To the extent the liability arising from the ultimate resolution of any lawsuit or legal claim exceeds the estimates reflected in the recorded reserves relating to such matter, the Company would incur additional charges and these charges might be significant. The Company cannot predict or determine with certainty the timing or final outcome of any lawsuit or legal claim or the effect that any adverse findings or determinations in any lawsuit or legal claim may have on the Company. The legal costs associated with any lawsuit or legal claim and the amount of time required to be spent by management and the Company’s Board of Directors on these matters, even if the Company is ultimately successful, could have a material adverse effect on the Company’s consolidated financial position, liquidity or results of operations. The Company has not accrued any amounts related to litigation matters as of April 30, 2026 or April 30, 2025.
(14) EARNINGS PER SHARE
Earnings per share – basic is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding during the period includes shares issuable upon settlement of deferred stock units but does not include unvested shares of restricted common stock or shares issuable upon the exercise of stock options. The components of earnings per share – basic are as follows (amounts in thousands, except per share amounts):
Year Ended April 30,
Numerator:
Denominator:
Weighted average number of common shares outstanding – basic 5,337 5,318
Earnings per share – basic $ 1.93 $ 2.39
34
Earnings per share – diluted is calculated by dividing net income by the sum of (1) the weighted-average number of common shares outstanding during the period plus (2) the dilutive effects of unvested shares of restricted common stock, shares issuable upon the exercise of stock options that are in-the-money and other potentially dilutive instruments. The components of earnings per share – diluted are as follows (amounts in thousands, except per share amounts):
Year Ended April 30,
Numerator:
Denominator:
Weighted average number of common shares outstanding – basic 5,337 5,318
Dilutive effect of unvested shares of restricted common stock 33 31
Weighted average number of common shares outstanding – diluted 5,393 5,369
Earnings per share – diluted $ 1.91 $ 2.37
(15) INFORMATION ABOUT THE COMPANY’S OPERATIONS IN DIFFERENT INDUSTRY SEGMENTS
The Company manages its operations through two reportable segments: land development and homebuilding. The land development segment develops residential lots and sites for commercial and industrial use, including land and site planning, obtaining governmental and environmental approvals (“entitlements”), installing utilities and storm drains, ensuring the availability of water service, building or improving roads necessary for land development and constructing community amenities. The homebuilding segment focuses on building and selling single-family detached and attached homes.
The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer. The two segments have been identified based on the way in which financial information is regularly reviewed by the CODM to assess financial performance and allocate resources. The CODM uses each segment’s profit (loss) in assessing segment performance and deciding how to allocate resources. The Company incurs general and administrative expenses associated with certain corporate functions, which are not specific to a particular segment.
With respect to the tables below, (1) revenue information provided for the land development segment includes certain amounts classified as home sale revenues in the accompanying consolidated statements of operations, (2) general and administrative expenses primarily relate to payroll, employee benefits and professional expenses and (3) segment assets exclude corporate assets, such as cash and cash equivalents, corporate facilities and tax assets.
The following table sets forth summarized data relative to the industry segments in which the Company operated for 2026 (in thousands):
Land
For the Year Ended April 30, 2026 Development Homebuilding Consolidated
General and administrative expenses 5,249 2,033 7,282
Interest income, net 1,734
Unallocated amounts:
Other corporate general and administrative expenses (1,743)
Income before income taxes $ 14,126
Capital expenditures for the year ended April 30, 2026 $ — $ 102
35
The following table sets forth summarized data relative to the industry segments in which the Company operated for 2025 (in thousands):