UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended     JanuaryJuly 31, 2018     2020

OR

¨       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________________________ to _________________________________

Commission File NumberNumber: 1-4702

AMREP Corporation

(Exact Name of Registrant as Specified in its Charter)

             (610) 487-0905             

Registrant’s telephone number, including area code:Telephone Number, Including Area Code

(610) 487-0905                                          Not Applicable                                          

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the Registrantregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrantregistrant 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 Registrantregistrant 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 Registrantregistrant was required to submit and post such files).  Yes  x    No ¨

Indicate by check mark whether the Registrantregistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the Registrantregistrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

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

Number of Shares of Common Stock, par value $.10 per share, outstanding at March 15, 2018September 4, 2020 – 8,098,704.8,130,057.

AMREP CORPORATION AND SUBSIDIARIES

INDEX

PART I. FINANCIAL INFORMATION

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except par valueshare and per share amounts)

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)

Three Months Ended July 31, 2020 and 2019

(Amounts in thousands, except per share amounts)

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three Months Ended July 31, 2020 and 2019

(Amounts in thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Retained EarningsShareholders’ Equity (Unaudited)

Three Months Ended January 31, 2018 and 2017

(Amounts (Amounts in thousands, except per share amounts)thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Retained EarningsCash Flows (Unaudited)

NineThree Months Ended JanuaryJuly 31, 20182020 and 20172019

(Amounts in thousands, except per share amounts)thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three and Nine Months Ended January 31, 2018 and 2017

(Amounts in thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows from Operations (Unaudited)

Nine Months Ended January 31, 2018 and 2017

(Amounts in thousands)

The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

NineThree Months Ended JanuaryJuly 31, 20182020 and 20172019

(1)       SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared by AMREP Corporation (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information, and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The Company, through its subsidiaries, is primarily engaged in twoone business segments:segment: the real estate business operated by AMREP Southwest Inc. (“AMREP Southwest”) and its subsidiaries and the fulfillment services business operated by Palm Coast Data LLC (“Palm Coast”) and its affiliates.business. The Company’sCompany has no foreign sales are insignificant.sales. All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, these unaudited consolidated financial statements include all adjustments, which are of a normal recurring nature, considered necessary to reflect a fair presentation of the results for the interim periods presented. The results of operations for such interim periods are not necessarily indicative of what may occur in future periods. Unless the context otherwise qualified,indicates, all references to 20182021 and 20172020 are to the fiscal years ending April 30, 20182021 and 20172020 and all references to the third quarterfirst quarters of 2021 and first nine months of 2018 and 20172020 mean the fiscal three month and nine month periods ended JanuaryJuly 31, 20182020 and 2017.2019.

The unaudited consolidated financial statements herein should be read in conjunction with the Company’s annual report on Form 10-K for the year ended April 30, 2017,2020, which was filed with the SEC on July 18, 201727, 2020 (the “2017“2020 Form 10-K”). Certain 20172020 balances in these financial statements have been reclassified to conform to the current year presentation with no effect on either net income (loss) or shareholders’ equity.

Summary of Significant Accounting Policies

The significant accounting policies used in preparing these consolidated financial statements are consistent with the accounting policies described in the 2020 Form 10-K, except for those adopted as described below.

Recently IssuedAdopted Accounting Pronouncements

In May 2014,August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,2018-13, Revenue from Contracts with CustomersFair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. Since that date,ASU 2018-13 eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements to improve the FASB has issued additional ASUs providing further revenue recognition guidance (collectively, “Topic 606”). Topic 606 clarifieseffectiveness of disclosures in the principlesnotes to financial statements. ASU 2018-13 was effective for recognizing revenues and costs related to obtaining and fulfilling customer contracts, with the objective of improving financial reporting. The core principle of Topic 606 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. Topic 606 defineson May 1, 2020. The adoption of ASU 2018-13 by the Company did not have a five-step process to achieve this core principle, and more judgment and estimates may be required under Topic 606 than are currently required under generally accepted accounting principles. The two permitted transition methods under Topic 606 are (i) the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or (ii) the modified retrospective method, in which case the cumulativematerial effect of applying the standard would be recognized at the date of adoption. The Company intends to use the modified retrospective transition method upon adoption. on its consolidated financial statements.

In August 2015,2018, the FASB issued ASU No. 2015-14,2018-14, Revenue from ContractsCompensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 removes disclosures that no longer are considered cost beneficial, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant for companies with Customers (Topic 606): Deferral of the Effective Date, which deferred the required adoption date until May 1, 2018defined benefit retirement plans. ASU 2018-14 was effective for the Company although an earlieron May 1, 2020. The adoption is permitted. The Company does not intend to early adopt Topic 606.

The Company has established an implementation team to evaluate the impact of Topic 606 on the Company’s accounting policies, processes and system requirements, as well as its consolidated financial statements. Depending on the results of the evaluation, there could be changes to the timing of recognition of revenues and related costs. The Company continues its evaluation of the impact of Topic 606. As of January 31, 2018,ASU 2018-14 by the Company haddid not determinedhave a reasonable estimate of the impact of these new ASUsmaterial effect on its consolidated financial statements, includingstatements.

In December 2019, the effectFASB issued ASU No. 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes, which removes certain exceptions for companies related to tax allocations and simplifies when companies recognize deferred tax liabilities in an interim period. ASU 2019-12 will be effective for the Company’s fiscal year beginning May 1, 2021. The Company is currently evaluating the impact that this ASU will have on the Company’s operating results, if any. consolidated financial statements.

(2)        RESTRICTED CASH

The implementation team has reported the progress and status of its evaluation to the Audit Committeefollowing provides a reconciliation of the Company’s Boardcash, cash equivalents and restricted cash as reported in the consolidated statement of Directors.cash flows for the three month period ending July 31, 2019:

Receivables,There was no restricted cash at July 31, 2020 and April 30, 2020.

(3)SETTLEMENT AGREEMENT

Refer to Note 2 to the consolidated financial statements contained in the 2020 Form 10-K for detail regarding a former business segment of the Company. During the three months ended July 31, 2020, affiliates of the Company and affiliates of this former business segment entered into a settlement agreement pursuant to which, among other things, the Company received $650,000 as a settlement payment and $350,000 for rent with respect to properties in Palm Coast, Florida for the period May 2020 through August 2020.

(4)       INVESTMENT ASSETS, NET

Investment assets, net consist of:

DuringLand held for long-term investment represents property located in areas that are not planned to be developed in the first nine months of 2018, revenues from one major customer of the Company’s fulfillment services business totaled $3,189,000 or approximately 10.3% of total revenuesnear term and thus has not been offered for the Company.sale. As of JanuaryApril 30, 2020 and July 31, 2018,2020, the Company’s fulfillment services business had $682,000Company held approximately 12,000 acres of outstanding accounts receivable from this customer, which was collectedland in full by March 16, 2018. This customer has givenNew Mexico classified as land held for long-term investment. Construction in process relates to construction costs of a single tenant retail building in the Company’s fulfillment services business notice that a significant portion of its business will be transferred fromLas Fuentes at Panorama Village subdivision in Rio Rancho, New Mexico.

The warehouse and office facilities are located in Palm Coast, atFlorida, aggregate 204,000 square feet and are partially leased to a third party. Depreciation associated with the endwarehouse and office facilities of 2018.

Property, plant and equipment, net consist of:

Depreciation of property, plant and equipment$122,000 was charged to operations was $319,000 and $954,000 for each of the three months ended July 31, 2020 and nine month periods ended JanuaryJuly 31, 2018 and $341,000 and $1,051,000 for the three and nine month periods ended January 31, 2017.2019.

Other assets consist of:

Deferred order entry costs represent costs incurred in connectionMiscellaneous other, net includes property and equipment and right-of-use assets associated with leases of office facilities. Depreciation expense associated with property and equipment was $7,000 and $4,000 for the data entrythree months ended July 31, 2020 and July 31, 2019. Right-of-use assets associated with leases of customer subscription information to database filesoffice facilities were $83,000 as of July 31, 2020, and are charged directly to operations generally over a twelve month period.$175,000 as of July 31, 2019.

(6)       ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of:

Fulfillment Services: As of January 31, 2018, the accounts payable and accrued expenses total for the Company’s fulfillment services business included customer postage deposits of $3,362,000, accrued expenses of $496,000, trade payables of $443,000 and other of $1,119,000. As of April 30, 2017, the accounts payable and accrued expenses total for the Company’s fulfillment services business included customer postage deposits of $3,178,000, accrued expenses of $488,000, trade payables of $617,000 and other of $1,354,000.(7)       NOTES PAYABLE

Real Estate: AsNotes payable, net consist of: 

Refer to Notes 8 and 17 to the consolidated financial statements contained in the 2020 Form 10-K for additional detail about each of January 31, 2018, the accounts payable and accrued expenses total for the Company’s real estate business included accrued expenses of $900,000, trade payables of $1,961,000, real estate customer deposits of $490,000 and other of $5,000. As of April 30, 2017, the accounts payable and accrued expenses total for the Company’s real estate business included accrued expenses of $967,000, trade payables of $0, real estate customer deposits of $155,000 and other of $16,000.following outstanding financing facilities:

Notes payable consist of:

During December 2017, Lomas Encantadas Development Company LLC (“LEDC”), an indirect subsidiary of AMREP Corporation, entered into a Development Loan Agreement with BOKF, NA dba Bank of Albuquerque (“Lender”). The Development Loan Agreement is evidenced by a Non-Revolving Line of Credit Promissory Note, dated December 18, 2017, and is secured by a Mortgage, Security Agreement and Financing Statement, between LEDC and Lender, dated November 16, 2017, with respect to 343 planned residential lots within the Lomas Encantadas subdivision (the “Mortgaged Property”) located in Rio Rancho, New Mexico. Pursuant to a Guaranty Agreement, dated December 18, 2017, entered into by AMREP Southwest in favor of Lender, AMREP Southwest has guaranteed LEDC’s obligations under each of the above agreements. The Development Loan Agreement, Non-Revolving Line of Credit Promissory Note, Mortgage, Security Agreement and Financing Statement, Guaranty Agreement and other related transaction documents are collectively referred to as the “Loan Documentation.”

Pursuant to the Loan Documentation, Lender agrees to lend up to $4,750,000 to LEDC on a non-revolving line of credit basis to partially fund the development of the Mortgaged Property. LEDC expects to fully utilize the $4,750,000 for its land development activities. Interest on the outstanding principal amount of the loan is payable monthly at the annual rate equal to the London Interbank Offered Rate for a thirty-day interest period plus a spread of 3.0%, adjusted monthly. Lender is required to release the lien of its mortgage on any lot included in the Mortgaged Property upon LEDC making a principal payment of $43,000 or $53,000 depending on the location of the lot. LEDC is required to make periodic principal repayments to the extent not previously paid as follows: $1,370,000 on or before August 18, 2019, $599,000 on or before November 18, 2019, $599,000 on or before February 18, 2020, $599,000 on or before May 18, 2020, $599,000 on or before August 18, 2020 and $599,000 on or before November 18, 2020. The outstanding principal amount of the loan as of January 31, 2018 was $638,000. The outstanding principal amount of the loan may be prepaid at any time without penalty. The loan is scheduled to mature on December 18, 2021. LEDC incurred certain customary costs and expenses and paid certain fees to Lender in connection with the loan.

LEDC and AMREP Southwest have made certain representations and warranties in the Loan Documentation and are 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: LEDC’s failure to make principal, interest or other payments when due; the failure of LEDC or AMREP Southwest to observe or perform their respective covenants under the Loan Documentation; the representations and warranties of LEDC or AMREP Southwest being false; the insolvency or bankruptcy of LEDC or AMREP Southwest; and the failure of AMREP Southwest to maintain a tangible net worth of at least $35 million. Upon the occurrence and during the continuance of an event of default, Lender may declare the outstanding principal amount and all other obligations under the Loan Documentation immediately due and payable. At January 31, 2018, both LEDC and AMREP Southwest were in compliance with the covenants contained within the Loan Documentation.

Refer to Note 8 to the consolidated financial statements contained in the 2020 Form 10-K for additional detail about each of the following expired or terminated financing facilities:

The following table summarizes the scheduled principal repayments subsequent to July 31, 2020:

(8)REVENUES

100% of real estate land sales were made to four customers during the three months ended July 31, 2020 and to five customers during the three months ended July 31, 2019.

(9)      OTHER REVENUES

Other revenues for the third quarter and first nine months of 2018 and 2017 consist of:

Deferred revenue and other includes the recognition of deferred revenue related to an oil and gas lease noted below, as well as fees and forfeited deposits from customers earned by AMREP Southwest, together with miscellaneous other income items.

Refer to Note 9 to the consolidated financial statements contained in the 20172020 Form 10-K for additional detail about each category of other revenues. Miscellaneous other revenue for the settlement agreement entered into between Palm Coastthree months ended July 31, 2020 primarily consisted of payments for impact fee credits. Miscellaneous other revenue for the three months ended July 31, 2019 primarily consisted of forfeited deposits and the Stateamortization of Florida in the first quarter of 2018. In June 2009, Palm Coast received $3,000,000 pursuant to an agreement with the State of Florida (the “Award Agreement”) as part of the incentives made available in connection with the consolidation of the Company’s fulfillment services operations at its Palm Coast, Florida location. The Award Agreement included certain performance requirements in terms of job retention, job creation and capital investment which, if not met by Palm Coast, entitled the State of Florida to obtain the return of a portion, or all, of the $3,000,000. Palm Coast had not met certain of the performance requirements in the Award Agreement. During the first quarter of 2018, Palm Coast entered into a Settlement Agreement and Mutual General Release (the “Settlement Agreement”) with the State of Florida. Pursuant to the Settlement Agreement, (1) the Award Agreement was terminated, (2) each of the parties released all claims relating to the Award Agreement that the releasing party may have had against the other party and (3) Palm Coast agreed to pay the State of Florida $1,763,000 as follows: (a) $163,000 during the first quarter of 2018 and (b) 40 quarterly payments of $40,000 each, without interest, on the first business day of each calendar quarter starting on October 1, 2017 and ending on July 1, 2027. Palm Coast timely paid the State of Florida $163,000 during the first quarter of 2018, $40,000 during the second quarter of 2018 and $40,000 during the third quarter of 2018, leaving a balance owed to the State of Florida of $1,520,000 as of January 31, 2018.

In the Company’s consolidated financial statements and as a result of entering into the Settlement Agreement, Palm Coast reduced its previously recorded liability of $3,000,000 and a related $26,000 interest accrual by $1,620,000 to $1,406,000 by recognizing a pre-tax gain of $1,318,000 and recording deferred revenue of $302,000. The $1,318,000 pre-tax gain was determined based on depreciation previously taken on assets acquired with Award Agreement funds that were retained by Palm Coast and was recognized in Other revenues during the first nine months of 2018. The $302,000 deferred revenue will be recognized over the remaining life of these assets (approximately seven years from January 31, 2018), with $61,000 having been recognized during the first nine months of 2018 resulting in a deferred revenue balance of $241,000 as of January 31, 2018. As a result of paying the State of Florida $163,000 during the first quarter of 2018, $40,000 during the second quarter of 2018 and $40,000 during the third quarter of 2018, Palm Coast recognized $41,000 of imputed interest expense and reduced its remaining balance sheet liability of $1,406,000 as of the date of the Settlement Agreement to $1,204,000 as of January 31, 2018. These balance sheet liability numbers are less than the amounts owed to the State of Florida of $1,763,000 as of the date of the Settlement Agreement and $1,520,000 as of January 31, 2018 because they have been adjusted to reflect the present values of these deferred non-interest bearing obligations. In February 2018, the Company, Palm Coast and the State of Florida entered into an agreement with respect to the remaining payment obligations under the Settlement Agreement (see Note 10).

In addition, refer(refer to Note 102 to the consolidated financial statements contained in the 20172020 Form 10-K for detail about the Oil and Gas Lease and the Addendum thereto with Thrust Energy, Inc. and Cebolla Roja, LLC. No royalties under the Lease were received during the first nine months of 2018. Revenue from this transaction is being recorded over the lease term and approximately $57,000 and $171,000 was recognized during the third quarter and first nine months of each of 2018 and 2017. At January 31, 2018, there was approximately $133,000regarding amortization of deferred revenue remainingwith respect to be recognized before the enda former business segment of the lease term in September 2018.Company).

During the first quarter of 2017, a subsidiary of AMREP Southwest sold a single tenant retail commercial building in Rio Rancho, New Mexico, which resulted in a pre-tax gain of $1,496,000 that was recognized in Other revenues during the first nine months of 2018.(10)       BENEFIT PLANS

Retirement planPension Plan

The Company has aRefer to Note 11 to the consolidated financial statements contained in the 2020 Form 10-K for detail regarding the Company’s defined benefit retirement plan for which accumulated benefits were frozen and future service credits were curtailed as of March 1, 2004. The Company has secured $4,535,000 of accrued pension-related obligations with first lien mortgages on certain real property in favor of the Pension Benefit Guaranty Corporation (the “PBGC”). On an annual basis, the Company is required to provide updated appraisals on each mortgaged property and, if the appraised value of the mortgaged properties is less than two times the amount of the accrued pension-related obligations secured by the mortgages, the Company is required to make a payment to its pension plan in an amount equal to one-half of the amount of the shortfall. During the third quarter of 2018, there was no change in the appraised value of the mortgaged properties that required the Company to make any additional payments to its pension plan.

The Company recognizes the known changes in the funded status of the pension plan in the period in which the changes occur through other comprehensive income, (loss) net of the related deferred income tax effect. The Company recognized other comprehensive income of $225,000$90,000 and $674,000$154,000 for the three and nine months ended JanuaryJuly 31, 2018,2020 and $248,000 and $746,000 for the same periods of 2017,July 31, 2019, related to the amortization of the plan’s unrecognized net loss includeda decrease in the Accumulated other comprehensive loss,Company’s pension liability, net in the accompanying financial statements.

of tax. The Company funds the pension plan in compliance with IRS funding requirements. The Company contributed $1,040,000did not make any contributions to the pension plan during the ninethree months ended JanuaryJuly 31, 2018 and none for the same period of 2017.2020 or July 31, 2019. 

Equity compensation planCompensation Plan

In September 2016,Refer to Note 10 to the consolidated financial statements contained in the 2020 Form 10-K for detail regarding the AMREP Corporation 2016 Equity Compensation Plan (the “2016 Equity“Equity Plan”) replaced the AMREP Corporation 2006 Equity Compensation Plan (together with the 2016 Equity Plan, the “Equity Plans”). The Company issued 25,7509,000 shares of restricted common stock under the 2016 Equity Plan during each of the first ninethree months of 2018. In addition, 5,000 shares of restricted common stock issued under the 2006 Equity Plan prior to 2018 were returned to the Company during the second quarter of 2018ended July 31, 2020 and will not vest due to the retirement of an employee.July 31, 2019. During the first ninethree months of 2018, 10,500ended July 31, 2020 and July 31, 2019, 9,500 shares and 10,000 shares of restricted common stock previously issued under the Equity Plans vested leaving 34,750Plan vested. As of July 31, 2020 and July 31, 2019, 32,334 shares and 41,667 shares of restricted sharescommon stock previously issued under the Equity Plans thatPlan had not vested as of January 31, 2018.vested. For the third quarterthree months ended July 31, 2020 and first nine months of 2018,July 31, 2019, the Company recognized $31,000$18,000 and $76,000$25,000 of non-cash compensation expense related to the vesting of restricted shares of common stock issued, and $19,000 and $48,000 for the same periods of 2017.stock. As of JanuaryJuly 31, 2018,2020 and July 31, 2019, there was $138,000$94,000 and $164,000 of unrecognized compensation expense related to restricted shares of common stock previously issued under the Equity PlansPlan which had not vested as of that date,those dates, which is expected to be recognized over the remaining vesting term not to exceed three years.

On the last trading day of calendar year 2017, and based upon days of service, each non-employee member of the Company’s Board of Directors was issued the number of deferred common share units of In addition, the Company underrecognized $22,000 and $23,000 of non-cash expense during the 2016 Equity Plan equalthree months ended July 31, 2020 and July 31, 2019 related to $20,000 divided by the closing price per share of commondeferred stock reported on the New York Stock Exchange on such date. Based on the closing price per share of $7.02 on December 29, 2017, the Companyunits expected to be issued a total of 11,396 deferred common share units to non-employee members of the Company’s Board of Directors. Director compensation expense is recognized for the annual grant of deferred common share units ratably over the director’s service in office during the calendar year.During the first nine months of 2018,the total non-cash director fee compensation related to the deferred common share units was $60,000.

The U.S. Tax Cuts and Jobs Act (the “Act”) was signed into law in December 2017. The Act significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates. The Act reduces the federal corporate tax rate to 21.0% effective January 1, 2018. As the Company has an April 30 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal corporate tax rate of approximately 29.7% for our fiscal year ending April 30, 2018, and a 21% rate for subsequent fiscal years. The 29.7% federal corporate tax rate is a blended rate for the April 30, 2018 fiscal year-end based on a prorated percentage of the number of days prior and subsequent to the January 1, 2018 effective date.

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Act. SAB 118 provides for a measurement period that should not extend beyond one year from the Act enactment date for companies to complete the accounting under Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Act.(11)       INTEREST INCOME, NET

As of January 31, 2018, the Company had not completed its accounting for the tax effects of the Act, but was able to make reasonable estimates of the impact of the reduction in corporate tax rate and the re-measurement of deferred tax balances:

The Company’s effective tax rate for the third quarter and first nine months was increased by the effect of a net income tax expense increase of $3,057,000 related to accounting for the tax effects of the Act. Excluding this increase, the Company’s effective tax rate was 27.7% and 32.5% for the third quarter and first nine months of 2018 compared to 35.5% and 32.5% for the same periods of 2017. The difference between the statutory rate and the effective rate of the tax provision after excluding the $3,057,000 was primarily due to state taxes.consists of:

The total tax effect of gross unrecognized tax benefits in the accompanying financial statements at both January 31, 2018 and April 30, 2017 was $58,000, which, if recognized, would have an impact on the effective tax rate. The Company believes it is reasonably possible that the liability for unrecognized tax benefits will not change in the next twelve months.

Refer to Note 72 to the consolidated financial statements contained in the 2020 Form 10-K for detail aboutregarding the Settlement Agreement between the State of Florida and Palm Coast entered into in the first quarter of 2018. In February 2018, Palm Coast and the Company entered intodeferred purchase price with respect to a Release Agreement (the “Release Agreement”) with the State of Florida. Pursuant to the Release Agreement, (1) Palm Coast paid the State of Florida $956,000, (2) eachformer business segment of the parties released all claims relating to the guaranty agreement (the “Guaranty Agreement”) between the Company and the State of Florida entered into in the first quarter of 2018 and the payment obligations under the Settlement Agreement that the releasing party may have had against each of the other parties and (3) each of the Guaranty Agreement and the payment obligations under the Settlement Agreement shall be deemed terminated and none of the parties shall have any further liabilities or obligations with respect thereto. The Company expects to recognize a gain related to the Release Agreement of approximately $257,000 during the fourth quarter of 2018.Company.

(12)       OTHER INCOME

The following tables set forth summarized data relative to the industry segments in which the Company operatedOther income for the three and nine month periodsmonths ended JanuaryJuly 31, 2018 and 2017 (in thousands):2020 consisted of a settlement payment of $650,000 from a former business segment of the Company (refer to Note 2 to the consolidated financial statements contained in the 2020 Form 10-K for detail regarding the settlement agreement).

(13)       SUBSEQUENT EVENT

In August 2020, the Company repurchased 11,847 shares of common stock of the Company at a price of $4.48 per share in a privately negotiated transaction. As of the date of the repurchase, the repurchased shares were retired and returned to the status of authorized but unissued shares of common stock.

INTRODUCTION

AMREP Corporation (the “Company”), through its subsidiaries, is primarily engaged in two business segments: the real estate business operated by AMREP Southwest Inc. (“AMREP Southwest”) and its subsidiaries andbusiness. The Company has no foreign sales or activities outside the fulfillment services business operated by Palm Coast Data LLC (“Palm Coast”) and its affiliates. Information concerning industry segments is set forth in Note 11 of the notesUnited States. All references to the consolidated financial statements includedCompany in this quarterly report on Form 10-Q. All significant intercompany accounts10-Q include the Registrant and transactions have been eliminated in consolidation. The Company’s foreign sales and activities are not significant.

its subsidiaries. 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 section should be read in conjunction with the unaudited consolidated financial statements and related notes thereto appearing elsewhereincluded in this quarterly report on Form 10-Q and with the Company’s annual report on Form 10-K for the year ended April 30, 2017,2020, which was filed with the Securities and Exchange Commission on July 18, 201727, 2020 (the “2017“2020 Form 10-K”). Many of the amounts and percentages presented in this Item 2 have been rounded for convenience of presentation. Unless the context otherwise qualified,indicates, all references to 20182020 and 20172019 are to the fiscal years ending April 30, 20182020 and 20172019 and all references to the third quarterfirst quarters of 2020 and first nine months of 2018 and 20172019 mean the fiscal three month and nine month periods ended JanuaryJuly 31, 20182020 and 2017.2019.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis of financial condition and results of operations is based on the accounting policies used and disclosed in the 20172020 consolidated financial statements and accompanying notes that were prepared in accordance with accounting principles generally accepted in the United States of America and included as part of the 20172020 Form 10-K.10-K and in Note 1 of the notes to the consolidated financial statements included in this report on Form 10-Q. The preparation of those consolidated financial statements required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual amounts or results could differ from those estimates.estimates and assumptions.

The Company’s critical accounting policies, assumptions and estimates are described in Item 7 of Part II of the 20172020 Form 10-K. There have been no changes in these critical accounting policies.

The significant accounting policies of the Company are described in Note 1 to the consolidated financial statements contained in the 20172020 Form 10-K.10-K and in Note 1 of the notes to the consolidated financial statements included in this report on Form 10-Q. Information concerning the Company’s implementation and the impact of recent accounting standards issued by the Financial Accounting Standards Board is included in the notes to the consolidated financial statements contained in the 20172020 Form 10-K and in the notes to the unaudited consolidated financial statements included in this quarterly report on Form 10-Q. The Company did not adopt any accounting policy in the first ninethree months of 2018ended July 31, 2020 that had a material impacteffect on its consolidated financial statements.

RESULTS OF OPERATIONS

For the thirdfirst quarter of 2018,2021, the Company recorded net income of $593,000, or $0.07 per share, compared to a net loss of $2,851,000, or $0.35 per share, compared to net income of $174,000,$196,000, or $0.02 per share, for the thirdfirst quarter of 2017. For2020. Revenues were $4,206,000 for the first nine monthsquarter of 2018, the Company recorded a net loss of $1,125,000, or $0.14 per share,2021 compared to net income of $916,000, or $0.11 per share,$4,767,000 for the same period of 2017. Operating results included an increase in income tax expense of $3,057,000, or $0.38 per share, for the third quarter and first nine months of 2018 as a result federal tax law changes enacted during the third quarter of 2018.2020.

Revenues were $10,379,000 and $30,880,000 for the third quarter and first nine months of 2018 compared to $9,777,000 and $33,450,000 for the same periods of the prior year.

Revenues from land sales at AMREP Southwest and its subsidiaries were $2,510,000 and $6,603,000$3,487,000 for the third quarter and first nine months of 2018 compared to $1,461,000 and $7,710,000 for the same periods of 2017. $2,044,000 of the $6,603,000 of revenues from land sales for the first nine months of 2018 was for an approximate five acre undeveloped commercial property in Colorado, which was sold in the first quarter of 2018 and had a gross profit percentage2021 compared to $4,291,000 for the same period of 65%.

2020. For the third quarterfirst quarters of 2021 and first nine months of 2018 and 2017,2020, the Company’s land sales in New Mexico were as follows (dollars in thousands):

The average gross profit percentage on land sales in New Mexico land salesbefore indirect costs was 16% and 17%23% for the thirdfirst quarter and first nine months of 20182021 compared to 42% and 17%15% for the same periodsperiod of 2017.2020. The profit percentage increase is attributable to the mix ofdemand for lots sold withby builders resulting in higher revenue per developed lots having a lower profit percentage compared to undeveloped lots.lot. As a result of many factors, including the nature and timing of specific transactions and the type and location of land being sold, revenues, average selling prices and related average gross profits from land sales can vary significantly from period to period and prior results are not necessarily a good indication of what may occur in future periods.

OperatingRent revenues were $350,000 for first quarter of 2021 compared to $341,000 for same period of 2020 from the leasing of the Company’s 61,000 square foot facility and selling143,000 square foot facility located in Palm Coast, Florida.

Other revenues were $369,000 for the first quarter of 2021 compared to $135,000 for the same period of 2020. Other revenues for the first quarter of 2021 primarily consisted of $11,000 of royalties received during the first quarter of 2021 from oil and gas production with respect to the Company’s mineral rights in Brighton, Colorado, $133,000 of private infrastructure reimbursements, $175,000 of public improvement reimbursements, forfeited deposits from customers, amortization of deferred revenue and miscellaneous other income items. Other revenues for the first quarter of 2020 consisted of $44,000 of forfeited deposits from customers and $91,000 of private infrastructure reimbursements.

Operating expenses for real estate increased from $370,000 and $1,188,000 for the third quarter and first nine months of 2017 to $470,000 and $1,563,000 for the same periods of 2018, primarily due to increased costs of storm water pollution prevention, broker commissions on sales activity and personnel costs, offset in part by lower consulting fees.

Revenues from the Company’s fulfillment services operations decreased from $8,222,000 and $23,908,000 for the third quarter and first nine months of 2017 to $7,676,000 and $22,952,000 for the same periods in 2018. The lower revenues were attributable to reduced business volumes from existing customers, certain price concessions on renewed contracts and lost business. Magazine publishers are one of the principal customers of the Company’s fulfillment services operations, and these customers have continued to be negatively impacted by increased competition from new media sources, alternative technologies for the distribution, storage and consumption of media content, weakness in advertising revenues and increases in paper costs, printing costs and postal rates. The result has been reduced subscription sales, which has caused publishers to close some magazine titles, change subscription fulfillment providers and seek more favorable terms from Palm Coast and its competitors when contracts are up for bid or renewal. One customer of the fulfillment services business whose revenues were approximately 10.3% of the total Company revenues$559,000 for the first nine months of 2018 has given notice that a significant portion of its business will be transferred from Palm Coast at the end of 2018. Operating and selling expenses for fulfillment services decreased from $6,855,000 and $20,235,000 for the third quarter and first nine months of 2017 to $6,338,000 and $18,415,000 for the same periods in 2018, primarily due to lower payroll and benefits and order entry costs, resulting from reduced business volumes, together with lower communications, software and equipment maintenance costs, offset in part by increased bad debt expense.

Other revenues were $193,000 and $1,685,000 for the third quarter and first nine months of 2018 compared to $94,000 and $1,832,000 for the same periods of 2017. Other revenues for the first nine months of 2018 were primarily due to a pre-tax gain of $1,318,000 related to a settlement agreement with the State of Florida by Palm Coast (refer to Note 7 of the notes to the consolidated financial statements included in this report on Form 10-Q). Other revenues for the first nine months of 2017 were primarily the result of the sale of a retail commercial property by AMREP Southwest, which resulted in a pre-tax gain of $1,496,000. In addition to these pre-tax gains, Other revenues includes the recognition of deferred revenue related to an oil and gas lease, as well as fees and forfeited deposits from customers earned by AMREP Southwest, together with miscellaneous other income items.

Fulfillment services general and administrative expenses decreased from $345,000 and $1,025,000 for the third quarter and first nine months of 2017 to $313,000 and $970,000 for the same periods of 2018, primarily due to lower payroll and benefits, professional costs, bank fees and amortization of intangible assets. Real estate general and administrative expenses increased from $130,000 for the third quarter of 20172020 to $156,000$677,000 for the same period of 2018,2021, primarily due to an increase in payrollincreased employee hiring and increased health care benefit costs.

Real estate general and administrative expenses decreased from $433,000$113,000 for the first nine months in 2017quarter of 2020 to $356,000$41,000 for the same period of 2018,2021, primarily due to reductions in rent, legal expense and insurance.reduced professional fees. Corporate general and administrative expenses decreased from $787,000 and $2,364,000 in$894,000 for the thirdfirst quarter and first nine months of 20172020 to $690,000 and $2,194,000$726,000 for the same periodsperiod of 2018,2021, primarily due to reduced corporate headcount and lower pension costs, consulting and director fees and legal expenses, offset in part by higher payroll costs.pension expense.

Interest expense was $18,000 and $49,000income, net decreased from $124,000 for the thirdfirst quarter and first nine months of 2018 compared2020 to $22,000 and $328,000$6,000 for the same periodsperiod of 2017. Interest expense2021, primarily due to a reduction in 2018 was primarilyinterest rates on cash balances and no interest earned during the first quarter of 2021 on the deferred purchase price related to the sale of the Company’s fulfillment services business, partially offset by a reduction in interest expense.

Other income for the three months ended July 31, 2020 consisted of a settlement and remaining liability withpayment of $650,000 from a former business segment of the StateCompany (refer to Note 2 to the consolidated financial statements contained in the 2020 Form 10-K for detail regarding the settlement agreement).

The Company had a provision for income taxes of Florida noted above and interest expense in 2017 was primarily related to two notes payable of AMREP Southwest that were paid in full during 2017. There was no capitalized interest$146,000 for the first nine monthsquarter of 20182021 compared to $45,000 and $83,000a benefit for income taxes of $134,000 for the thirdfirst quarter and first nine months of 2017.

The U.S. Tax Cuts and Jobs Act (the “Act”) was signed into law in December 2017. The Act significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates. The Act reduces the federal corporate tax rate to 21.0% effective January 1, 2018. As the Company has an April 30 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal corporate tax rate of approximately 29.7% for our fiscal year ending April 30, 2018, and a 21% rate for subsequent fiscal years. The 29.7% federal corporate tax rate is a blended rate for the April 30, 2018 fiscal year-end based on a prorated percentage of the number of days prior and subsequent to the January 1, 2018 effective date.2020.

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Act. SAB 118 provides for a measurement period that should not extend beyond one year from the Act enactment date for companies to complete the accounting under Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Act.

As of January 31, 2018, the Company had not completed its accounting for the tax effects of the Act, but was able to make reasonable estimates of the impact of the reduction in corporate tax rate and the re-measurement of deferred tax balances:

The Company’s effective tax rate for the third quarter and first nine months was increased by the effect of a net income tax expense increase of $3,057,000 related to accounting for the tax effects of the Act. Excluding this increase, the Company’s effective tax rate was 27.7% and 32.5% for the third quarter and first nine months of 2018 compared to 35.5% and 32.5% for the same periods of 2017. The difference between the statutory rate and the effective rate of the tax provision after excluding the $3,057,000 was primarily due to state taxes.

The total tax effect of gross unrecognized tax benefits in the accompanying financial statements at both January 31, 2018 and April 30, 2017 was $58,000, which, if recognized, would have an impact on the effective tax rate. The Company believes it is reasonably possible that the liability for unrecognized tax benefits will not change in the next twelve months.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s primary sources of funding for working capital requirements are cash flow from operations, bank financing for specific real estate projects and existing cash balances. The Company’s liquidity is affected by many factors, including some that are based on normal operations and some that are related to the industries in which the Company operatesreal estate industry and the economy generally. Except as described below, there have been no material changes to the Company’s liquidity and capital resources as reflected in the Liquidity and Capital Resources section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 20172020 Form 10-K.

Refer to Note 9 to the consolidated financial statements contained in the 2017 Form 10-K for detail about the settlement agreement entered into between Palm Coast and the State of Florida in the first quarter of 2018. In June 2009, Palm Coast received $3,000,000 pursuant to an agreement with the State of Florida (the “Award Agreement”) as part of the incentives made available in connection with the consolidation of the Company’s fulfillment services operations at its Palm Coast, Florida location. The Award Agreement included certain performance requirements in terms of job retention, job creation and capital investment which, if not met by Palm Coast, entitled the State of Florida to obtain the return of a portion, or all, of the $3,000,000. Palm Coast had not met certain of the performance requirements in the Award Agreement. During the first quarter of 2018, Palm Coast entered into a Settlement Agreement and Mutual General Release (the “Settlement Agreement”) with the State of Florida. Pursuant to the Settlement Agreement, (1) the Award Agreement was terminated, (2) each of the parties released all claims relating to the Award Agreement that the releasing party may have had against the other party and (3) Palm Coast agreed to pay the State of Florida $1,763,000 as follows: (a) $163,000 during the first quarter of 2018 and (b) 40 quarterly payments of $40,000 each, without interest, on the first business day of each calendar quarter starting on October 1, 2017 and ending on July 1, 2027. Palm Coast timely paid the State of Florida $163,000 during the first quarter of 2018, $40,000 during the second quarter of 2018 and $40,000 during the third quarter of 2018, leaving a balance owed to the State of Florida of $1,520,000 as of January 31, 2018.Operating Activities

InReal estate inventory increased from $53,449,000 at April 30, 2020 to $57,216,000 at July 31, 2020, primarily due to increased land development activity, the Company’s consolidated financial statementsacquisition of land and as a resulthomebuilding construction, offset in part by real estate land sales. Investment assets, net increased from $18,644,000 at April 30, 2020 to $18,798,000 at July 31, 2020, primarily due to capitalization of entering into the Settlement Agreement, Palm Coast reduced its previously recorded liability of $3,000,000 and a related $26,000 interest accrual by $1,620,000 to $1,406,000 by recognizing a pre-tax gain of $1,318,000 and recording deferred revenue of $302,000. The $1,318,000 pre-tax gain was determined based on depreciation previously taken on assets acquired with Award Agreement funds that were retained by Palm Coast and was recognized in Other revenues during the first nine months of 2018. The $302,000 deferred revenue will be recognized over the remaining life of these assets (approximately seven years from January 31, 2018), with $61,000 having been recognized during the first nine months of 2018 resulting in a deferred revenue balance of $241,000 as of January 31, 2018. As a result of paying the State of Florida $163,000 during the first quarter of 2018, $40,000 during the second quarter of 2018 and $40,000 during the third quarter of 2018, Palm Coast recognized $41,000 of imputed interest expense and reduced its remaining balance sheet liability of $1,406,000 as of the date of the Settlement Agreement to $1,204,000 as of January 31, 2018. These balance sheet liability numbers are less than the amounts owed to the State of Florida of $1,763,000 as of the date of the Settlement Agreement and $1,520,000 as of January 31, 2018 because they have been adjusted to reflect the present values of these deferred non-interest bearing obligations.

In February 2018, Palm Coast and the Company entered into a Release Agreement (the “Release Agreement”) with the State of Florida. Pursuant to the Release Agreement, (1) Palm Coast paid the State of Florida $956,000, (2) each of the parties released all claims relating to the guaranty agreement (the “Guaranty Agreement”) between the Company and the State of Florida entered into in the first quarter of 2018 and the payment obligations under the Settlement Agreement that the releasing party may have had against each of the other parties and (3) each of the Guaranty Agreement and the payment obligations under the Settlement Agreement shall be deemed terminated and none of the parties shall have any further liabilities or obligations with respect thereto. The Company expects to recognize a gaincosts related to the Release Agreementconstruction of approximately $257,000 during the fourth quarter of 2018.

Operating Activitiesa single tenant retail building, offset in part by depreciation. Other assets increased from $934,000 at April 30, 2020 to $959,000 at July 31, 2020, primarily due to an increase in prepaid expenses.

Accounts payable and accrued expenses increased from $7,035,000$3,125,000 at April 30, 20172020 to $9,187,000$4,105,000 at JanuaryJuly 31, 2018,2020, primarily due to an increase in land development activity in Rio Rancho, New Mexico.

Real estate inventoryFinancing Activities

Notes payable, net increased from $56,090,000$3,890,000 at April 30, 20172020 to $58,271,000$5,496,000 at JanuaryJuly 31, 2018,2020, primarily due to an increase inadditional borrowings to fund land development activity in Rio Rancho, New Mexico,activities, partially offset in part by real estate land sales. Property, plant and equipment decreased from $10,852,000 at April 30, 2017 to $10,028,000 at January 31, 2018 due to normal depreciation of fixed assets.repayments made on outstanding borrowings.

Other liabilitiesRefer to Notes 8 and deferred revenue decreased from $3,376,000 at April 30, 2017 to $1,653,000 at January 31, 2018, primarily due17 to the previously described settlement agreement between Palm Coast andconsolidated financial statements contained in the State2020 Form 10-K for additional detail about each of Florida.the following outstanding financing facilities:

Accrued pension costs decreased from $10,967,000In August 2020, the Company repurchased 11,847 shares of common stock of the Company at April 30, 2017 to $9,707,000 at January 31, 2018, primarily due to $1,040,000a price of Company contributions$4.48 per share in a privately negotiated transaction. As of the date of the repurchase, the repurchased shares were retired and returned to the pension plan.status of authorized but unissued shares of common stock.

Investing Activities

Capital expenditures totaled $130,000 were $3,000 for the first nine monthsquarter of 2018 2021 and $63,000 $1,000 for the same periodfirst quarter of 2017, 2020, primarily for the fulfillment services business.

Financing Activities

During December 2017, Lomas Encantadas Development Company LLC (“LEDC”), an indirect subsidiary of AMREP Corporation, entered into a Development Loan Agreement with BOKF, NA dba Bank of Albuquerque (“Lender”). The Development Loan Agreement is evidenced by a Non-Revolving Line of Credit Promissory Note, dated December 18, 2017,office furniture and is secured by a Mortgage, Security Agreement and Financing Statement, between LEDC and Lender, dated November 16, 2017, with respect to 343 planned residential lots within the Lomas Encantadas subdivision (the “Mortgaged Property”) located in Rio Rancho, New Mexico. Pursuant to a Guaranty Agreement, dated December 18, 2017, entered into by AMREP Southwest in favor of Lender, AMREP Southwest has guaranteed LEDC’s obligations under each of the above agreements. The Development Loan Agreement, Non-Revolving Line of Credit Promissory Note, Mortgage, Security Agreement and Financing Statement, Guaranty Agreement and other related transaction documents are collectively referred to as the “Loan Documentation.”

Pursuant to the Loan Documentation, Lender agrees to lend up to $4,750,000 to LEDC on a non-revolving line of credit basis to partially fund the development of the Mortgaged Property. LEDC expects to fully utilize the $4,750,000 for its land development activities. Interest on the outstanding principal amount of the loan is payable monthly at the annual rate equal to the London Interbank Offered Rate for a thirty-day interest period plus a spread of 3.0%, adjusted monthly. Lender is required to release the lien of its mortgage on any lot included in the Mortgaged Property upon LEDC making a principal payment of $43,000 or $53,000 depending on the location of the lot. LEDC is required to make periodic principal repayments to the extent not previously paid as follows: $1,370,000 on or before August 18, 2019, $599,000 on or before November 18, 2019, $599,000 on or before February 18, 2020, $599,000 on or before May 18, 2020, $599,000 on or before August 18, 2020 and $599,000 on or before November 18, 2020. The outstanding principal amount of the loan as of January 31, 2018 was $638,000. The outstanding principal amount of the loan may be prepaid at any time without penalty. The loan is scheduled to mature on December 18, 2021. LEDC incurred certain customary costs and expenses and paid certain fees to Lender in connection with the loan.

LEDC and AMREP Southwest have made certain representations and warranties in the Loan Documentation and are 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: LEDC’s failure to make principal, interest or other payments when due; the failure of LEDC or AMREP Southwest to observe or perform their respective covenants under the Loan Documentation; the representations and warranties of LEDC or AMREP Southwest being false; the insolvency or bankruptcy of LEDC or AMREP Southwest; and the failure of AMREP Southwest to maintain a tangible net worth of at least $35 million. Upon the occurrence and during the continuance of an event of default, Lender may declare the outstanding principal amount and all other obligations under the Loan Documentation immediately due and payable. At January 31, 2018, both LEDC and AMREP Southwest were in compliance with the covenants contained within the Loan Documentation.computer equipment.

Statement of Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 (the “Act”) 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 report 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 Act.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 report 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 report include, but are not limited to, statements regarding (1) the Company’s expected lossliquidity sources, (2) the availability of a material customer contract andbank financing for projects, (3) the effectutilization of such loss,existing bank financing, (4) the timing of development of land held as investment assets, (5) the effect of recent accounting pronouncements, on the Company,(6) the timing of recognizing unrecognized compensation expense related to shares of restricted common stock issued under the AMREP Corporation 2016 Equity Plans,Compensation Plan, (7) the liability for unrecognized tax benefits not changing in the next twelve months, the availabilityfuture issuance of bank financing for projects, the expected utilization of existing bank financing, the impactdeferred stock units to directors of the U.S. Tax Cuts and Jobs Act on the Company, and(8) the future business conditions that may be experienced by the Company.Company and (9) the forgiveness of any amounts due under the loan issued pursuant to the Paycheck Protection Program. 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.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s chief executive officerChief Executive Officer and chief financial officer,Vice President, Finance and Accounting, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. As a result of such evaluation, the Company’s chief executive officerChief Executive Officer and chief financial officerVice President, Finance and Accounting have concluded that such disclosure controls and procedures arewere effective as of July 31, 2020 to provide reasonable assurance that the information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) accumulated and communicated to the Company’s management, including its chief executive officerthe Company’s Chief Executive Officer and chief financial officer,Vice President, Finance and Accounting, as appropriate, to allow timely decisions regarding disclosure. The Company believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

No change in the Company’s system of internal control over financial reporting“financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

PART II. OTHER INFORMATION

SIGNATURE

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.

EXHIBIT INDEX