MAYS

Business Context and Reporting Period

Company: J.W. Mays, Inc. (MAYS)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three months ended October 31, 2025
Business Overview: The Company operates commercial real estate properties, primarily leasing office and retail space. It reports as a single operating segment and is classified as a non-accelerated filer and smaller reporting company.

Key Financial Metrics

Margins: The Company reported an operating loss of $(488,179) for the quarter, compared to operating income of $52,171 in the prior year period. Real estate operating expenses increased to $4,077,513 from $3,750,139.

Material Changes vs. Prior Period

• Revenue Decline: Total revenues decreased by approximately 5.2% ($287,715) year-over-year. Management attributes this to the loss of tenants and rent concessions, partially offset by new leases.
• Expense Increase: Real estate operating expenses rose by $327,374 (8.7%), driven by higher real estate taxes, insurance, maintenance costs, and a $167,700 loss on fixed asset disposal.
• Profitability Shift: The Company moved from a net income of $26,657 in Q1 2025 to a net loss of $(334,027) in Q1 2026.
• Interest Expense: Net interest expense improved significantly. In Q1 2025, interest expense was fully capitalized ($32,029), resulting in $0 net interest expense, compared to $(24,477) net expense in the prior year.
• Lease Activity: In August 2025, the Company exercised a five-year lease extension for its Jamaica Avenue property, increasing operating lease right-of-use assets and liabilities by $1,575,690.

Outlook, Risks, and Management Commentary

Management Commentary: Management notes that the net loss was primarily due to increased operating expenses and tenant losses. However, the Company secured several new leases in August and October 2025, including 20,000 sq. ft. in Massapequa and 5,500 sq. ft. in Brooklyn.

Liquidity and Capital Resources:

• The Company anticipates incurring approximately $1.9 million in capital expenditures over the next 12 months.
• Primary liquidity sources are cash from operations and borrowings.
• Debt Risk: The Company holds a $3.2 million mortgage with a balloon payment provision allowing the lender to demand full repayment at any time between April 1, 2025, and April 1, 2040. While the bank has not indicated intent to accelerate repayment, this creates significant short-term liquidity risk.

Risks and Contingencies:

• Related Party Transactions: The Company leases three properties from an affiliated landlord (Weinstein Enterprises, Inc.), owned by the Chairman of the Board. Rent expense for these properties totaled $356,845 for the quarter.
• Tenant Concentration: As of October 31, 2025, four tenants accounted for 66.47% of receivables, and three tenants accounted for 38.27% of rental revenue.
• Legal: The Company is subject to ordinary course litigation (e.g., slip and fall claims) but does not expect a material adverse effect.

Investor Verification Checklist

• Debt Maturity Risk: Verify the status of the $3.2 million mortgage balloon payment provision and the lender's current stance on acceleration.
• Tenant Concentration: Assess the financial stability of the top four tenants who comprise over 66% of receivables.
• Related Party Leases: Review the terms and renewal options of the three leases with the Chairman's affiliated company, which represent a significant portion of operating lease liabilities.
• Capital Expenditure Funding: Confirm the Company's ability to fund the projected $1.9 million in capital expenditures given the current net loss and reliance on operating cash flow.
• Operating Expense Trends: Monitor the trajectory of real estate taxes and insurance costs, which drove the increase in operating expenses this quarter.