AXR 10-K & 10-Q changes, risk factors and insider trading

For a description of the Company’s business, refer to Item 1 of Part I of this annual report on Form 10-K. As indicated in Item 1, the Company is primarily engaged in two business segments: land development and homebuilding. The following provides information that management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The discussioninformation contained in this Item 7 should be read in conjunction with the consolidated financial statements and accompanying notes.

During 20252026 and 2024,2025, the Company experienced material delays in municipal entitlements, infrastructure availability, approvals and inspectionsinspections, contractor schedules and utility response times in both the land development business segment and homebuilding business segment, which caused delays in construction and the realization of revenues and increases in cost of revenues. While construction and land costs remain elevated, the Company has been able to partially offset these cost increases through land and home price increases in 20252026 and 2024 due to a strong pricing environment, which may not continue.2025. The rising cost of housing due to increases in average sales prices in recent years and the level of mortgage interest rates, coupled with general inflation in the U.S. economy and other macroeconomic factors, have placed pressure on overall housing affordability, negatively affecting demand and have caused many potential homebuyers to pause and reconsider their housing choices. In addition, any tariffs on goods used as inputs in both the land development business segment andor homebuilding business segment may result in further increases in the cost of housing and average sales prices. Given the affordability challenges and the resulting impact on demand, the Company has provided sales incentives on certain homes, reduced the sale prices of certain homes, reduced the size of lots and homes, opportunistically leased completed homes and slowed the pace of housing starts and land development projects. During 20252026 and 2024,2025, the Company reduced the number and scope of its active land development projects and delayed proceeding with certain new land development projects due to market headwinds and uncertaintyuncertainty, a more intentional focus on growing the homebuilding business segment and an increase in entitlemententitlement, contractor and infrastructure delays as compared to prior years. This is expected to result in a reduction of revenues from the sale of developed residential land during the fiscal year ending April 30, 20262027 as compared to 2024 and 2025.2026. Future economic conditions and the demand for land and homes are subject to continued uncertainty due to many factors, including macroeconomic factors, changes in mortgage interest rates, inflation, tariffs, supplies of new and existing home inventory available for sale, labor shortages and other factors. The Company’s past performance may not be indicative of future results.

The changes in the revenue per acre of developed residential land, developed commercial land and undeveloped land for 20252026 compared to 20242025 were primarily due to the location and mix of land sold. Revenues from the sale of undeveloped land included the sale in 2026 of 467 acres of contiguous undeveloped land in Sandoval County, New Mexico, representing $2,174,000 of revenue, to one purchaser and the sale in 2025 of 549 acres of contiguous undeveloped land in Sandoval County, New Mexico, representing $2,502,000 of revenue, to one purchaser and the sale in 2024 of 147 acres in Brighton, Colorado, representing $7,200,000 of revenue, to one purchaser. The Company does not expect the sale of the properties in the prior sentence to be indicative of future undeveloped land sale revenues.

As of April 30, 2026, the Company had 75 homes in production, including 24 homes under contract, which homes under contract represented $12,983,000 of expected home sale revenues (less any sales incentives associated with such contracts) when closed, subject to customer cancellations and change orders. As of April 30, 2025, the Company had 88 homes in production, including 28 homes under contract, which homes under contract represented $12,787,000 of expected home sale revenues when(less closed,any subjectsales toincentives customerassociated cancellationswith andsuch change orders. As of April 30, 2024, the Company had 64 homes in production, including 20 homes under contract, which homes under contract represented $8,719,000 of expected home sale revenuescontracts) when closed, subject to customer cancellations and change orders.

Miscellaneous other revenues for 2026 primarily consist of management fees for homeowners’ associations, residential rental revenues and billboard advertising revenues. Miscellaneous other revenues for 2025 primarily consist of extension fees for purchase contracts, management fees for homeowners’ associations and residential rental revenues. Miscellaneous other revenues for 2024 primarily consist of extension fees for purchase contracts and residential rental revenues.

Land sale gross margins were 52%61% for 20252026 compared to 36%52% for 2024.2025. The change in gross margin was primarily due to changes in public improvement district reimbursements, private infrastructure covenant reimbursements and payments for impact fee credits and the location, size and mix of property sold (including the sale of 690.4 acres for 2025 as compared to 222.9 acres for 2024 of undeveloped land with a low associated land sale cost of revenues).sold.

The Company did not record any non-cash impairment charges on real estate inventory or investment assets in 20252026 or 2024.2025. Due to volatilityChanges in economic and other market conditions andmay developmentadversely costs,impact the Companyfair maymarket experiencevalue of the Company’s real estate inventory or investment assets, which could lead to impairment charges in future impairment charges.periods.

Interest Income, net. Interest income, net was $1,734,000 for 2026 and $1,622,000 for 2025 and $823,000 for 2024.2025. There were no interest or loan costs capitalized in real estate inventory in 2026 or 2025. Interest and loan costs of $2,000 were capitalized in real estate inventory in 2024.

Income Taxes. The Company had a provision for income taxes of $3,838,000 for 2026 and $1,009,000 for 20252025. andThe $1,735,000provision for 2024.income taxes for 2026 related to the amount of income before income taxes during the year. The provision for income taxes for 2025 related to the amount of income before income taxes during the year and to the reclassification of the balance of accumulated other comprehensive income (loss) to a benefit for income taxes. In connection with the termination of the Company’s defined benefit pension plan, $1,230,000 of income tax effects that remained in accumulated other comprehensive income (loss) were reclassified to a benefit for income taxes during 2025. Refer to Note 1211 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding accumulated other comprehensive income (loss). The provision for income taxes for 2024 correlated to the amount of income before income taxes during the year.

The Company’s primary sources of funding for working capital requirements are cash flows from operations, a revolving line of credit, bank financing for specific real estate projects, interest income and existing balances of cash and cash equivalents. Land and homebuilding properties generally cannot be sold quickly, and the ability of the Company to sell properties has been and will continue to be affected by market conditions. The ability of the Company to generate cash flow from operations is primarily dependent upon its ability to sell the properties it has selected for disposition at the prices and within the timeframes the Company has established for each property. The development of additional lots for sale, construction of homes or commercial buildings for sale or lease or pursuingthe pursuit of other real estate projects may require financing or other sources of funding, which may not be available on acceptable terms (or at all). If the Company is unable to obtain such financing, the Company’s results of operations could be adversely affected.

PensionRestricted Plan.Cash. The Company’s defined benefit pension plan was terminated in 2024. The Company did not make any contributions toDuring the pensionfiscal planyear duringending 2024.April During30, 2024, the Company transferred $547,000, which was the amount of residual assets (after satisfying any pension plan liabilities) following termination of the Company’s defined benefit pension plan, from the defined benefit pension plan to the Company’s 401(k) retirement plan available for future awards to eligible employees. This amount that was transferred to the Company’s 401(k) retirement plan is recognized as restricted cash on the Company’s balance sheet. During 2025, theThe Company utilized $92,000restricted cash of this$137,000 restrictedand cash$92,000 during 2026 and 2025 to fund its 401(k) employer contribution for the calendar year ended December 31, 2024.contributions. Refer to Note 11 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding the Company’s 401(k) plan.

ReferAs of April 30, 2026, the Company leased 28 homes to Noteresidential 3 to the consolidated financial statements contained in this annual report on Form 10-K for detail regarding investment assets.tenants. As of April 30, 2025, the Company leased 21 homes to residential tenants. As of April 30, 2024, the Company leased 10 homes to residential tenants. Given the impact on demand as a result of affordability challenges, the Company has opportunistically leased completed homes. Depreciation associated with owned real estate leased or intended to be leased was $167,000 for 2026 and $115,000 for 20252025. andRefer $82,000to Note 3 to the consolidated financial statements contained in this annual report on Form 10-K for 2024.detail regarding investment assets.

The forward-looking statements contained in this annual report on Form 10-K include, but are not limited to, statements regarding (1) the Company’s ability to finance its future working capital, land development, acquisition of land, homebuilding, commercial projects, general and administrative expenses and capital expenditure needs, (2) the Company’s expected liquidity sources, including the availability of bank financing for projects and the utilization of existing bank financing, (3) anticipated development of the Company’s real estate holdings, (4) the development and construction of possible future commercial properties to be marketed to tenants, (5) the designs, pricing and levels of options and amenities with respect to the Company’s homebuilding operations, (6) the amount and timing of reimbursements under, and the general effectiveness of, the Company’s public improvement districts and private infrastructure reimbursement covenants, (7) the number of planned residential lots in the Company’s subdivisions, (8) estimates of the Company’s exposure to warranty claims and liabilities for litigation and legal claims, estimates of the cost to complete of common land development costs and the estimated relative sales values of individual parcels of land in connection with the allocation of common land development costs, (9) the adequacy of warranty reserves, subcontractor indemnities and third-party insurance to cover the ultimate resolution of any potential liabilities associated with known and anticipated warranty and construction defect related claims and litigation, (10) the conditions resulting in homebuyer affordability challenges, (11) estimates and assumptions used in determining future cash flows of real estate projects, (12) the amount of revenues from the sale of developed residential land during the fiscal year ending April 30, 2026,2027, (13) the backlog of homes under contract and in production and the dollar amount of expected sale revenues when such homes are closed, (14) the categorization of owned real estate leased or intended to be leased, (15) the effect of seasonality on the Company’s operations, (1516) the categorization of homes and buildings leased or intended to be leased to third parties, (1617) the effect of recent accounting pronouncements, (1718) the timing of recognizing unrecognized compensation expense related to shares of common stock issued under the AMREP Corporation 2016 Equity Compensation Plan, (1819) the Company’s belief that its compensation package and benefits offered to employees are competitive with others in the industry, (1920) the future issuance of deferred stock units to directors of the Company, (2021) the future business conditions that may be experienced by the Company, including the pace of the Company’s housing starts and land development projects, (2122) the dilution to earnings per share that outstanding options to purchase shares of common stock of the Company may cause in the future, (2223) the adequacy of the Company’s facilities, (2324) the materiality of claims and legal actions, (2425) projections of future earnings for the future recoverability of deferred tax assets and state net operating losses that are not expected to be realizable and (2526) the Company’s belief that its insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations and the listing standards of the New York Stock Exchange. The Company undertakes no obligation to update or publicly release any revisions to any forward-looking statement to reflect events, circumstances or changes in expectations after the date of such forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Management’s discussion and analysis of financial condition and results of operations is based on the accounting policies used and disclosed in the 2025 condensed2026 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 20252026 Form 10-K. The preparation of the unaudited condensed consolidated financial statements included in this report on Form 10-Q 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 unaudited condensed 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.

Information concerning the Company’s implementation and the impact of recent accounting standards or updates issued by the Financial Accounting Standards Board is included in the notes to the consolidated financial statements contained in the 20252026 Form 10-K and in the notes to the unaudited condensed consolidated financial statements included in this report on Form 10-Q. The Company did not adopt any accounting policies during the ninethree months ended JanuaryJuly 31, 2026 that had a material effect on its unaudited condensed consolidated financial statements.

For the three months ended JanuaryJuly 31, 2026, the Company had net income of $3,147,000,$276,000, or $0.58$0.05 per diluted share, compared to net income of $717,000,$4,692,000, or $0.13$0.87 per diluted share, for the three months ended JanuaryJuly 31, 2025. For the nine months ended January 31, 2026, the Company had net income of $9,039,000, or $1.68 per diluted share, compared to net income of $8,823,000, or $1.64 per diluted share, for the nine months ended January 31, 2025.

As of JanuaryJuly 31, 2026, the Company had 6783 homes in production, including 1523 homes under contract, which homes under contract represented $7,797,000$12,505,000 of expected home sale revenues (less any sales incentives associated with such contracts) when closed, subject to customer cancellations and change orders. As of JanuaryJuly 31, 2025, the Company had 10162 homes in production, including 1624 homes under contract, which homes under contract represented $7,204,000$11,508,000 of expected home sale revenues (less any sales incentives associated with such contracts) when closed, subject to customer cancellations and change orders.

Cost of Revenues. The following presents information on cost of revenues (dollars in thousands):

The Company did not record any non-cash impairment charges on real estate inventory or investment assets in the three and nine months ended JanuaryJuly 31, 2026 or JanuaryJuly 31, 2025. Changes in economic and other market conditions may adversely impact the fair market value of the Company’s real estate inventory or investment assets, which could lead to impairment charges in future periods.

Interest Income, net. Interest income, net was $393,000$448,000 and $1,308,000$456,000 for the three and nine months ended JanuaryJuly 31, 2026 and $410,000 and $1,267,000 for the three and nine months ended JanuaryJuly 31, 2025. There were no interest or loan costs capitalized in real estate inventory in the three and nine months ended JanuaryJuly 31, 2026 orand JanuaryJuly 31, 2025.

Notes payable decreased from $26,000$18,000 as of April 30, 20252026 to $21,000$17,000 as of JanuaryJuly 31, 2026 due to principal debt repayments. Refer to Note 6 to the unaudited condensed consolidated financial statements included in this report on Form 10-Q and Note 6 to the consolidated financial statements contained in the 20252026 Form 10-K for detail regarding the Company’s notes payable.

From April 30, 20252026 to JanuaryJuly 31, 2026, the change in land inventory was primarily due to land development activity and the acquisition of land offset in part by the sale of land, the change in homebuilding model and completed inventory was primarily due to the sale of homes offset in part by the completion of homes not yet sold and the change in homebuilding construction in process was primarily due to aan decreaseincrease in the number of homes that started construction. Refer to Note 2 to the consolidated financial statements contained in the 2026 Form 10-K for detail regarding real estate inventory.

As of JanuaryJuly 31, 2026, the Company leased 2830 homes to residential tenants. As of April 30, 2025,2026, the Company leased 2128 homes to residential tenants. Given the impact on demand as a result of affordability challenges, the Company has opportunistically leased completed homes. Depreciation associated with owned real estate leased or intended to be leased was $54,000$41,000 and $142,000$39,000 for the three and nine months ended JanuaryJuly 31, 2026 and $33,000 and $64,000 for the three and nine months ended JanuaryJuly 31, 2025. Refer to Note 3 to the consolidated financial statements contained in the 2026 Form 10-K for detail regarding investment assets, net.

Off-Balance Sheet Arrangements. As of JanuaryJuly 31, 2026 and JanuaryJuly 31, 2025, the Company did not have any off-balance sheet arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K).