The accompanying notes to consolidated financial statements are an

integral part of these consolidated financial statements.

AMREP CORPORATION AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity (Unaudited)

(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 Comprehensive (Loss) Income (Unaudited)

Three Months Ended July 31, 2019 and 2018

(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 (Unaudited)

Three Months Ended July 31, 20192020 and 20182019

(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)

Three Months Ended July 31, 20192020 and 20182019

(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 one business segment: the real estate business. The Company has no foreign sales or activities outside the United States.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 indicates, all references to 20202021 and 20192020 are to the fiscal years ending April 30, 20202021 and 20192020 and all references to the first quarters of 20202021 and 20192020 mean the fiscal three month periods ended July 31, 20192020 and 2018.2019.

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, 2019,2020, which was filed with the SEC on July 26, 201927, 2020 (the “2019“2020 Form 10-K”). Certain 20192020 balances in these financial statements have been reclassified to conform to the current year presentation with no effect on net income or loss(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 20192020 Form 10-K, except for those adopted as described below.

Recently Adopted Accounting Pronouncements

In February 2016,August 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,Leases. Since that date, the FASB has issued additional ASUs providing further guidance for lease transactions (collectively “ASU 2016-02”). ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in its balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In addition, ASU 2016-02 requires fixed lease payments under tenant leases to be recognized on a straight-line basis over the term of the related lease where the Company is lessor. The cumulative difference between lease revenue recognized under the straight-line method and contractual lease payments is recorded within Other assets on the consolidated balance sheets. ASU 2016-02 was effective for the Company on May 1, 2019, with the Company recognizing and measuring leases at the beginning of the earliest period presented using a modified retrospective approach. In the quarter ended July 31, 2019, right-of-use assets obtained in exchange for operating lease liabilities amounted to $198,000 as a result of adoption of ASU 2016-02. The adoption of ASU 2016-02 by the Company did not have a material effect on its consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07,Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-based Payment Accounting. ASU 2018-07 addresses several aspects of the accounting for nonemployee share-based payment transactions, including share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 was effective for the Company on May 1, 2019. The adoption of ASU 2018-07 by the Company had no impact on its consolidated financial statements.

In January 2018, the FASB issued ASU No. 2018-02,Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits but does not require the reclassification to retained earnings of certain tax effects resulting from the U.S. Tax Cuts and Jobs Act related to items in accumulated other comprehensive income. ASU 2018-02 may be applied retrospectively to each period in which the effect of the U.S. Tax Cuts and Jobs Act is recognized or may be applied in the period of adoption. ASU 2018-02 was effective for the Company on May 1, 2019. The Company had no such tax effects and therefore the adoption of ASU 2018-02 had no impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13,Fair Value Measurement (Topic 820):Measurement: Disclosure Framework-ChangesFramework – Changes to the Disclosure Requirements for Fair Value Measurement.Measurement. 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 effectiveness of disclosures in the notes to financial statements. ASU 2018-13 will bewas effective for the Company’s fiscal year beginningCompany on May 1, 2020. The adoption of ASU 2018-13 by the Company is currently evaluating the impact that this ASU willdid not have a material effect on the Company’sits consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14,Compensation—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 defined benefit retirement plans. ASU 2018-14 was effective for the Company on May 1, 2020. The adoption of ASU 2018-14 by the Company did not have a material effect on its consolidated financial statements.

In December 2019, the FASB 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, 2020.2021. The Company is currently evaluating the impact that this ASU will have on the Company’s consolidated financial statements.

Refer to Note 2 to the consolidated financial statements contained in the 2019 Form 10-K for detail about the sale in 2019 of the Company’s fulfillment services business reported as discontinued operations in the accompanying financial statements. The following table provides a reconciliation of the carrying amounts of components of pretax income of the discontinued operations to the amounts reported in the accompanying consolidated statements of operations:

The Company has entered into two Subdivision Improvement Agreements with the City of Rio Rancho, New Mexico. In connection with these agreements, the Company has signed a promissory note for each subdivision and deposited restricted funds in a reserve bank account for each subdivision. Following successful completion and acceptance of the Company’s performance in a subdivision, the applicable promissory note will be cancelled and the related restricted funds will be returned to the Company’s general cash.

During the three months ended July 31, 2019, $664,000 of cash was released from restrictions under the Subdivision Improvement Agreements. The total amount of restricted funds at July 31, 2019 was $305,000 and at April 30, 2019 was $969,000.

The following provides a reconciliation of the Company’s cash, cash equivalents and restricted cash as reported in the consolidated balance sheets to the amount reported in the statement of cash flows for the three month period ending July 31, 2019:

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:

Land held for long-term investment represents property located in areas that are not planned to be developed in the near term and thus has not been offered for sale. As of April 30, 2019,2020 and July 31, 2020, the Company held approximately 12,000 acres of land in New Mexico classified as land held for long-term investment. Construction in process relates to construction costs of a single tenant retail building in the Las Fuentes at Panorama Village subdivision in Rio Rancho, New Mexico.

The warehouse and office facilities are located in Palm Coast, Florida, aggregate 204,000 square feet and are partially leased to a third party with a lease term that expires in 2029.party. Depreciation associated with the warehouse and office facilities of $122,000 and $122,000 was charged to operations for each of the three months ended July 31, 2020 and July 31, 2019.

(5)       OTHER ASSETS

Other assets consist of:

Miscellaneous 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 three months ended July 31, 20192020 and July 31, 2018.2019. Right-of-use assets associated with leases of office facilities were $83,000 as of July 31, 2020, and $175,000 as of July 31, 2019.

(6)       ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of:

(7)       NOTES PAYABLE

Notes 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 the following outstanding financing facilities:

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:

Other assets consist of:The following table summarizes the scheduled principal repayments subsequent to July 31, 2020:

(8)REVENUES

The Company recognized deferred purchase price upon the sale100% of the Company’s fulfillment services business in April 2019. The deferred purchase price is being amortized over the term of the two lease agreements, with $52,000 of tenant lease payments reducing the deferred purchase price forreal estate land sales were made to four customers during the three months ended July 31, 2019. Prepaid expenses2020 and other, net includes property and equipment for which there was $4,000 charged to depreciation expense for the three months ended July 31, 2019 and July 31, 2018. Right-of-use assets associated with the Company’s leases, amount to $175,000, net of $23,000 of depreciation expense chargedfive customers during the three months ended July 31, 2019.

(9)      OTHER REVENUES

Accounts payable and accrued expensesOther revenues consist of:

As of July 31, 2019, accounts payable and accrued expenses for the Company’s real estate business included accrued expenses of $439,000, trade payables of $590,000, real estate customer deposits of $1,317,000 and other of $45,000. As of April 30, 2019, accounts payable and accrued expenses for the Company’s real estate business included accrued expenses of $491,000, trade payables of $652,000, real estate customer deposits of $1,198,000 and other of $18,000.

Notes payable, net consist of:

Refer to Note 79 to the consolidated financial statements contained in the 20192020 Form 10-K for additional detail about the loan agreement entered into with Main Bank in July 2018 with respect to the developmenteach category of certain planned residential lots within the Hawksite subdivision located in Rio Rancho, New Mexico. The outstanding principal amount of the loan as of July 31, 2019 was $813,000 and the Company made principal repayments of $390,000 during the three months ended July 31, 2019. The interest rate on the loan at July 31, 2019 was 7.88%. The Company capitalized $20,000 and $0 of interest related to this loan in the three months ended July 31, 2019 and July 31, 2018. In August 2019, the outstanding principal amount of the loan was fully repaid and the loan was terminated.

Refer to Note 7 to the consolidated financial statements contained in the 2019 Form 10-K for detail about the loan agreement entered into with BOKF, NA dba Bank of Albuquerque (“BoABQ”) in December 2017 with respect to the development of certain planned residential lots within the Lomas Encantadas subdivision located in Rio Rancho, New Mexico. The Company made principal repayments of $182,000 during the three months ended July 31, 2019. The Company capitalized $4,000 and $26,000 of interest related to this loan in the three months ended July 31, 2019 and July 31, 2018. In June 2019, the outstanding principal amount of the loan was fully repaid and the loan was terminated.

Refer to Note 15 to the consolidated financial statements contained in the 2019 Form 10-K for detail about the loan agreement entered into with BoABQ in June 2019 with respect to the development of certain planned residential lots within the Lomas Encantadas subdivision located in Rio Rancho, New Mexico. The outstanding principal amount of the loan as of July 31, 2019 was $28,000 and the Company made no principal repayments during the three months ended July 31, 2019. The total book value of the property within the Lomas Encantadas subdivision mortgaged to BoABQ under this loan was $922,000 as of July 31, 2019. The interest rate on the loan at July 31, 2019 was 5.39%. The Company capitalized less than $1,000 of interest related to this loan in the three months ended July 31, 2019. At July 31, 2019, the Company was in compliance with the financial covenants contained within the loan documentation.

Other revenues were $44,000other revenues. Miscellaneous other revenue for the three months ended July 31, 2019 and $57,0002020 primarily consisted of payments for impact fee credits. Miscellaneous other revenue for the three months ended July 31, 2018 and2019 primarily consisted of forfeited deposits and amortization of deferred revenue.revenue (refer to Note 2 to the consolidated financial statements contained in the 2020 Form 10-K for detail regarding amortization of deferred revenue with respect to a former business segment of the Company).

(10)       BENEFIT PLANS

Pension Plan

Refer to Note 1011 to the consolidated financial statements contained in the 20192020 Form 10-K for detail regarding the Company’s defined benefit 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, net of the related deferred income tax effect. The Company recognized other comprehensive income of $154,000$90,000 and $157,000$154,000 for the three months ended July 31, 20192020 and July 31, 2018,2019, related to the amortization of the plan’s unrecognized net loss included in Accumulated other comprehensive loss, neta decrease in the accompanying financial statements.

Company’s pension liability, net of tax. The Company funds the pension plan in compliance with IRS funding requirements. The Company did not make any contributions to the pension plan during the three months ended July 31, 20192020 or July 31, 2018.

In the quarter ended July 31, 2019, the Company initiated a limited offer for certain former employees with vested benefits in the Company’s defined benefit pension plan to elect to receive a lump sum payout of their pension benefit. The Company completed these lump sum payments from the pension plan in September 2019 to 309 former employees for approximately $7,200,000. The Company expects to recognize a non-cash pre-tax pension settlement charge in the quarter ending October 31, 2019 of approximately $2,960,000.2019. 

Equity Compensation Plan

Refer to Note 10 to the consolidated financial statements contained in the 20192020 Form 10-K for detail regarding the AMREP Corporation 2016 Equity Compensation Plan (the “2016 Equity“Equity Plan”) and the AMREP Corporation 2006 Equity Compensation Plan (together with the 2016 Equity Plan, the “Equity Plans”). The Company issued 9,000 shares and 29,200 shares of restricted common stock under the 2016 Equity Plan during each of the three months ended July 31, 20192020 and July 31, 2018.2019. During the three months ended July 31, 20192020 and July 31, 2018, 10,0002019, 9,500 shares and 8,75010,000 shares of restricted common stock previously issued under the Equity PlansPlan vested. As of July 31, 20192020 and July 31, 2018, 41,6672019, 32,334 shares and 55,20041,667 shares of restricted common stock previously issued under the Equity PlansPlan had not vested. For the three months ended July 31, 20192020 and July 31, 2018,2019, the Company recognized $25,000$18,000 and $25,000 of non-cash compensation expense related to the vesting of restricted shares of common stock. As of July 31, 20192020 and July 31, 2018,2019, there was $164,000$94,000 and $248,000$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 those dates, which is expected to be recognized over the remaining vesting term not to exceed three years. In addition, the Company recognized $22,000 and $23,000 of non-cash expense during the three months ended July 31, 2020 and July 31, 2019 related to deferred stock units expected to be issued to non-employee members of the Company’s Board of Directors in December 2019.Directors.

(11)       INTEREST INCOME, NET

Interest income, net consists of:

Refer to Note 2 to the consolidated financial statements contained in the 2020 Form 10-K for detail regarding the deferred purchase price with respect to a former business segment of the Company.

(12)       OTHER INCOME

Other income for the three months ended July 31, 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 one business segment: the real estate business. The Company has no foreign sales or activities outside the United States.

All references to the Company in this quarterly report on Form 10-Q include the Registrant and 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 consolidated financial statements and related notes thereto included in this report on Form 10-Q and with the Company’s annual report on Form 10-K for the year ended April 30, 2019,2020, which was filed with the Securities and Exchange Commission on July 26, 201927, 2020 (the “2019“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 indicates, all references to 2020 and 2019 are to the fiscal years ending April 30, 2020 and 2019 and all references to the first quarters of 2020 and 2019 mean the fiscal three month periods ended July 31, 20192020 and 20182019.

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 20192020 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 20192020 Form 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 and assumptions.

The Company’s critical accounting policies, assumptions and estimates are described in Item 7 of Part II of the 20192020 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 20192020 Form 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 20192020 Form 10-K and in the notes to the consolidated financial statements included in this report on Form 10-Q. The Company did not adopt any accounting policy in the three months ended July 31, 20192020 that had a material impacteffect on its consolidated financial statements.

The Company adopted the following accounting policies effective May 1, 2019:2020:

RESULTS OF OPERATIONS

Prior to April 26, 2019, the Company had been engaged in the fulfillment services business. On April 26, 2019, the fulfillment services business was sold (refer to Item 1 of Part I of the 2019 Form 10-K for more detail). The Company’s fulfillment services business has been classified as discontinued operations in the financial statements included in this report on Form 10-Q. Financial information from prior periods has been reclassified to conform to this presentation.

For the first quarter of 2020,2021, the Company recorded net income of $593,000, or $0.07 per share, compared to a net loss of $196,000, or $0.02 per share, compared to net income of $61,000, or $0.01 per share, for the first quarter of 2019. Results from 2020 consisted entirely of continuing operations. For the first quarter of 2019, results consisted of (i) a net loss from continuing operations of $662,000, or $0.08 per share and (ii) net income from discontinued operations of $723,000, or $0.09 per share. A discussion of continuing operations follows.

Continuing Operations

2020. Revenues were $4,767,000$4,206,000 for the first quarter of 20202021 compared to $4,238,000$4,767,000 for the same period of 2019.2020.

Revenues from land sales were $4,382,000$3,487,000 for the first quarter of 20202021 compared to $4,181,000$4,291,000 for the same period of 2019.2020. For the first quarterquarters of 20202021 and 2019,2020, 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 before indirect costs was 17%23% for the first quarter of 20202021 compared to 11%15% for the same period of 2019.2020. The profit percentage increase is attributable to the demand for lots by builders.builders resulting in higher revenue per developed 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.

Rent 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 143,000 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. There were no comparable rentsOther revenues for the first quarter of 2021 primarily consisted of $11,000 of royalties received during the first quarter of 2021 from the prior year dueoil and gas production with respect to the applicable lease agreements being signedCompany’s mineral rights in April 2019 as partBrighton, Colorado, $133,000 of the saleprivate infrastructure reimbursements, $175,000 of the Company’s fulfillment services business.

public improvement reimbursements, forfeited deposits from customers, amortization of deferred revenue and miscellaneous other income items. Other revenues were $44,000 for the first quarter of 2020 compared to $57,000 for the same periodconsisted of 2019. Other revenues included fees and$44,000 of forfeited deposits from customers and for the first quarter$91,000 of 2019, the recognition of $57,000 of deferred revenue related to an oil and gas lease.private infrastructure reimbursements.

Operating expenses for real estate increased from $276,000$559,000 for the first quarter of 20192020 to $559,000$677,000 for the same period of 2020,2021, primarily due to increased employee bonuses, new allocations of certain employee costs to operating expenses, increased accruals for real estate taxeshiring and increased health care benefitsbenefit costs.

Real estate general and administrative expenses decreased from $188,000$113,000 for the first quarter of 20192020 to $113,000$41,000 for the same period of 2020,2021, primarily due to a decrease in legalreduced professional fees. Corporate general and administrative expenses decreased from $927,000$894,000 for the first quarter of 20192020 to $894,000$726,000 for the same period of 2020,2021, primarily due to new allocations of certain employee costs to operating expensesreduced corporate headcount and lower travelconsulting and legal expenses.director fees and pension expense.

Interest income, net increaseddecreased from $28,000$124,000 for the first quarter of 20192020 to $124,000$6,000 for the same period of 2020,2021, primarily due to managementa reduction in interest rates on cash balances and no interest earned during the first quarter of excess funds in higher yielding savings accounts and2021 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 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).

The Company had a benefitprovision for income taxes of $134,000 in connection with a $330,000 loss from continuing operations before income taxes$146,000 for the first quarter of 2020, as2021 compared to a benefit for income taxes of $194,000 in connection with an $856,000 loss from continuing operations before income taxes$134,000 for the same period of 2019. The benefit for income taxes included expenses related to federal income tax as well as the net tax benefits related to state operating losses. The change in the effective tax rate in the first quarter of 2020 from the first quarter of 2019 was due to the effect of discontinued operations.

In the quarter ended July 31, 2019, the Company initiated a limited offer for certain former employees with vested benefits in the Company’s defined benefit pension plan to elect to receive a lump sum payout of their pension benefit. The Company completed these lump sum payments from the pension plan in September 2019 to 309 former employees for approximately $7,200,000. The Company expects to recognize a non-cash pre-tax pension settlement charge in the quarter ending October 31, 2019 of approximately $2,960,000.

2020.

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 real estate industry in which the Company operates 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 20192020 Form 10-K.

Operating Activities

Real estate inventory decreasedincreased from $57,773,000$53,449,000 at April 30, 20192020 to $55,515,000$57,216,000 at July 31, 2019,2020, primarily due to real estateincreased land sales, which weredevelopment activity, the acquisition of land and homebuilding 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 costs related to the construction of a 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 land development activity. Investment assets, net decreased from $17,227,000 at April 30, 2019 to $17,108,000 at July 31, 2019, primarily due to depreciation.prepaid expenses.

Accounts payable and accrued expenses increased from $2,964,000$3,125,000 at April 30, 20192020 to $3,009,000$4,105,000 at July 31, 2019,2020, primarily due to new accounting for additional lease liabilities at July 31, 2019, offset partially by a reductionan increase in builder depositsland development activity in connection with sales activity. Trade accounts payable also declined as construction activity was slower during the period.

New Mexico.

Financing Activities

Notes payable, net decreasedincreased from $1,319,000$3,890,000 at April 30, 20192020 to $842,000$5,496,000 at July 31, 2019,2020, primarily due to additional borrowings to fund land development activities, partially offset by repayments made on financingsoutstanding borrowings.

Refer to Notes 8 and 17 to the consolidated financial statements contained in the 2020 Form 10-K for land development activity. The Company’sadditional detail about each of the following outstanding financing arrangements in effect during the first quarter of 2020 are described below:facilities:

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.

Investing Activities

Capital expenditures totaledwere $3,000 for the first quarter of 2021 and $1,000 for the first quarter of 2020, primarily for office furniture and computer equipment. There were no capital expenditures in the same period of 2019.equipment.

The Company received life insurance proceeds of $85,000 during the first quarter of 2019, which is reflected in the accompanying Consolidated Statement of Cash Flows. The income associated with the life insurance proceeds was recognized in various years prior to the first quarter of 2019.

Statement of Forward-Looking Information

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 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 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 liquidity sources, (2) the availability of bank financing for projects, (3) the expected utilization of existing bank financing, (4) the timing of development of land held as investment assets, (5) the effect of recent accounting pronouncements, (5)(6) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2006 Equity Compensation Plan or the AMREP Corporation 2016 Equity Compensation Plan, (6)(7) the future issuance of deferred stock units to directors of the Company, (7)(8) the future business conditions that may be experienced by the Company and (8)(9) the recognitionforgiveness of a non-cash pre-tax pension settlement charge inany amounts due under the quarter ending October 31, 2019.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.

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