##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 10-Q
QUARTERLY REPORT


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Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

For the quarter ended October 31, 2002

Commission file number 0-10146

ABRAMS INDUSTRIES, INC.

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(Exact name of registrant as specified in its charter)


|                                                                       |  |                                                
|---------------------------------------------------------------------- |  | -----------------------------------------------
|Georgia
(State or other jurisdiction of
incorporation or organization) |  | 58-0522129
(I.R.S. Employer Identification No.)

1945 The Exchange, Suite 300, Atlanta, GA 30339-2029

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(Address of principal executive offices) (Zip Code)


Registrants telephone number, including area code: (770) 953-0304

Former name, former address, former fiscal year, if
changed since last report: N/A

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.

|    |   |  |  |   
|--- | - |  |  | --
|Yes | þ |  |  | No

The number of shares of $1.00 par value Common Stock of the
Registrant outstanding as of November 30, 2002 was 2,910,051.





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TABLE OF CONTENTS



|                                           |                                                                                                |  |  |  |  |  |  | 
|------------------------------------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I.                                   
|                                           | ITEM 1. FINANCIAL STATEMENTS                                                                  
|                                           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                                           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                           
|                                           | ITEM 4. CONTROLS AND PROCEDURES                                                               
|PART II.                                  
|                                           | ITEM 1. LEGAL PROCEEDINGS                                                                     
|                                           | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   
|                                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                      
|SIGNATURES                                
|CERTIFICATION BY CHIEF EXECUTIVE OFFICER  
|CERTIFICATION BY CHIEF FINANCIAL OFFICER  
|EX-99.1 - SECTION 906 CERTIFICATION OF CEO
|EX-99.2 - SECTION 906 CERTIFICATION OF CFO



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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

ABRAMS INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |            |            |            | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | -------------------------- | ---------- | ---------------- | ---------- | -------------- | ---------- | ---------- | ---------- | 
|                                                |                                                                                                                                                                               |                                                |                            |            | October 31, 2002 |            | April 30, 2002
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |               
|ASSETS                                          |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|CURRENT ASSETS:                                 |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                | Cash and cash equivalents                                                                                                                                                     |                                                | $                          | 6,476,538  |                  |            | $              | 7,911,205  |           
|                                                | Receivables (Note 3)                                                                                                                                                          |                                                |                            | 14,028,380 |                  |            |                | 12,978,375 |           
|                                                |                                                                                                                                                                               | Less: Allowance for doubtful accounts (Note 5) |                            |            | (525,074         | )          |                |            | (1,031,460 | )         
|                                                | Assets of discontinued operations (Note 4)                                                                                                                                    |                                                |                            | 102,146    |                  |            |                | 12,525,941 |           
|                                                | Costs and earnings in excess of billings                                                                                                                                      |                                                |                            | 518,809    |                  |            |                | 682,162    |           
|                                                | Property held for sale                                                                                                                                                        |                                                |                            | 258,259    |                  |            |                |           |           
|                                                | Income taxes receivable                                                                                                                                                       |                                                |                            | 1,161,834  |                  |            |                | 843,486    |           
|                                                | Deferred income taxes                                                                                                                                                         |                                                |                            | 864,036    |                  |            |                | 864,036    |           
|                                                | Other                                                                                                                                                                         |                                                |                            | 788,668    |                  |            |                | 686,842    |           
|                                               
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                |                                                                                                                                                                               |                                                | Total current assets       |            |                  | 23,673,596 |                |            |            | 35,460,587 | 
|                                               
|INCOME-PRODUCING PROPERTIES, net                |                                                                                                                                                                               |                                                | 43,734,203                 |            |                  |            | 44,545,585     |           
|PROPERTY AND EQUIPMENT, net                     |                                                                                                                                                                               |                                                | 546,415                    |            |                  |            | 642,710        |           
|OTHER ASSETS:                                   |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                | Real estate held for future development or sale                                                                                                                               |                                                |                            | 3,952,814  |                  |            |                | 4,211,073  |           
|                                                | Intangible assets, net (Note 9)                                                                                                                                               |                                                |                            | 2,464,435  |                  |            |                | 2,416,887  |           
|                                                | Goodwill (Note 9)                                                                                                                                                             |                                                |                            | 1,741,831  |                  |            |                | 1,741,831  |           
|                                                | Other                                                                                                                                                                         |                                                |                            | 2,674,825  |                  |            |                | 2,765,696  |           
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                |                                                                                                                                                                               | $                                              | 78,788,119                 |            |                  | $          | 91,784,369     |           
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|LIABILITIES
AND SHAREHOLDERS EQUITY            |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|CURRENT LIABILITIES:                            |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                | Trade and subcontractors payables                                                                                                                                             |                                                | $                          | 8,581,084  |                  |            | $              | 8,028,199  |           
|                                                | Accrued expenses                                                                                                                                                              |                                                |                            | 1,174,622  |                  |            |                | 1,637,525  |           
|                                                | Liabilities of discontinued operations (Note 4)                                                                                                                               |                                                |                            | 657,368    |                  |            |                | 12,541,036 |           
|                                                | Billings in excess of costs and earnings                                                                                                                                      |                                                |                            | 732,396    |                  |            |                | 677,987    |           
|                                                | Current maturities of long-term debt                                                                                                                                          |                                                |                            | 2,471,198  |                  |            |                | 2,700,744  |           
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                |                                                                                                                                                                               |                                                | Total current liabilities  |            |                  | 13,616,668 |                |            |            | 25,585,491 | 
|                                               
|DEFERRED INCOME TAXES                           |                                                                                                                                                                               |                                                | 4,359,894                  |            |                  |            | 4,359,894      |           
|OTHER LIABILITIES                               |                                                                                                                                                                               |                                                | 3,804,241                  |            |                  |            | 3,896,616      |           
|MORTGAGE NOTES PAYABLE, less current maturities |                                                                                                                                                                               |                                                | 23,906,616                 |            |                  |            | 19,501,385     |           
|OTHER LONG-TERM DEBT, less current maturities   |                                                                                                                                                                               |                                                | 10,921,333                 |            |                  |            | 15,662,107     |           
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                |                                                                                                                                                                               |                                                | Total liabilities          |            |                  | 56,608,752 |                |            |            | 69,005,493 | 
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|SHAREHOLDERS EQUITY:                           |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                | Common stock, $1 par value; 5,000,000 shares authorized;
3,055,539 issued and 2,910,051 outstanding in October 2002,
3,054,439 issued and 2,909,079 outstanding in April 2002 |                                                |                            | 3,055,539  |                  |            |                | 3,054,439  |           
|                                                | Additional paid-in capital                                                                                                                                                    |                                                |                            | 2,139,403  |                  |            |                | 2,135,005  |           
|                                                | Deferred stock compensation                                                                                                                                                   |                                                |                            | (5,750     | )                |            |                | (12,744    | )         
|                                                | Retained earnings                                                                                                                                                             |                                                |                            | 17,662,322 |                  |            |                | 18,273,853 |           
|                                                | Treasury stock, common shares;
145,488 in October 2002 and 145,360 in April 2002                                                                                              |                                                |                            | (672,147   | )                |            |                | (671,677   | )         
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                |                                                                                                                                                                               |                                                | Total shareholders equity |            |                  | 22,179,367 |                |            |            | 22,778,876 | 
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           
|                                                |                                                                                                                                                                               | $                                              | 78,788,119                 |            |                  | $          | 91,784,369     |           
|                                                |                                                                                                                                                                               |                                                |                            |            |                  |            |                |           

See accompanying notes to consolidated financial statements.

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##### Table of Contents



ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |            |           |           |  
|----------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | --------------------------------------------------- | ---------- | -------------------- | -------- | ---------------------- | ---------- | ------- | --------- | ---------- | ---------- | --------- | ---------- | ---------- | ---------- | --------- | --------- | -
|                                                            |                                                                                                                                                             |                       |                                                     |            | SECOND QUARTER ENDED |          | FIRST SIX MONTHS ENDED
|                                                            |                                                                                                                                                             |                       |                                                     |            | OCTOBER 31,          |          | OCTOBER 31,           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                       
|                                                            |                                                                                                                                                             |                       |                                                     |            | 2002                 |          | 2001                   |            | 2002    |           | 2001      
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |           
|REVENUES:                                                   |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            | Construction                                                                                                                                                |                       | $                                                   | 20,100,576 |                      |          | $                      | 28,979,970 |         |           | $          | 34,528,609 |           |            | $          | 64,905,126 |          
|                                                            | Rental income                                                                                                                                               |                       |                                                     | 2,616,381  |                      |          |                        | 2,722,762  |         |           |            | 5,187,543  |           |            |            | 5,496,275  |          
|                                                            | Energy management                                                                                                                                           |                       |                                                     | 732,955    |                      |          |                        | 796,616    |         |           |            | 1,398,542  |           |            |            | 1,615,928  |          
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | 23,449,912                                          |            |                      |          | 32,499,348             |            |         |           | 41,114,694 |            |           |            | 72,017,329 |           
|                                                            | Interest                                                                                                                                                    |                       |                                                     | 19,378     |                      |          |                        | 39,522     |         |           |            | 35,385     |           |            |            | 120,183    |          
|                                                            | Other                                                                                                                                                       |                       |                                                     | 840        |                      |          |                        | 28,709     |         |           |            | 42,368     |           |            |            | 42,623     |          
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | 23,470,130                                          |            |                      |          | 32,567,579             |            |         |           | 41,192,447 |            |           |            | 72,180,135 |           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|COSTS AND EXPENSES:                                         |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            | Construction                                                                                                                                                |                       |                                                     | 19,776,804 |                      |          |                        | 28,215,507 |         |           |            | 34,022,219 |           |            |            | 63,115,704 |          
|                                                            | Rental property operating expenses, excluding interest                                                                                                      |                       |                                                     | 1,565,132  |                      |          |                        | 1,498,549  |         |           |            | 3,226,360  |           |            |            | 3,017,372  |          
|                                                            | Energy management                                                                                                                                           |                       |                                                     | 320,582    |                      |          |                        | 433,995    |         |           |            | 732,602    |           |            |            | 849,364    |          
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | 21,662,518                                          |            |                      |          | 30,148,051             |            |         |           | 37,981,181 |            |           |            | 66,982,440 |           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            | Selling, general and administrative                                                                                                                         |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |            |          
|                                                            |                                                                                                                                                             | Construction (Note 5) |                                                     |            | 711,342              |          |                        |            | 810,802 |           |            |            | 914,807   |            |            |            | 1,546,794 |          
|                                                            |                                                                                                                                                             | Real estate           |                                                     |            | 248,629              |          |                        |            | 103,933 |           |            |            | 453,070   |            |            |            | 240,854   |          
|                                                            |                                                                                                                                                             | Energy management     |                                                     |            | 454,570              |          |                        |            | 336,767 |           |            |            | 843,644   |            |            |            | 647,325   |          
|                                                            |                                                                                                                                                             | Parent                |                                                     |            | 550,622              |          |                        |            | 629,500 |           |            |            | 1,185,155 |            |            |            | 1,355,307 |          
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | 1,965,163                                           |            |                      |          | 1,881,002              |            |         |           | 3,396,676  |            |           |            | 3,790,280  |           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|Interest costs incurred                                     |                                                                                                                                                             |                       | 717,801                                             |            |                      |          | 821,893                |            |         |           | 1,453,103  |            |           |            | 1,678,022  |           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | 24,345,482                                          |            |                      |          | 32,850,946             |            |         |           | 42,830,960 |            |           |            | 72,450,742 |           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | LOSS BEFORE INCOME TAXES FROM
CONTINUING OPERATIONS |            |                      | (875,352 | )                      |            |         | (283,367  | )          |            |           | (1,638,513 | )          |            |           | (270,607  | )
|                                                           
|INCOME TAX BENEFIT                                          |                                                                                                                                                             |                       | (338,787                                            | )          |                      |          | (112,000               | )          |         |           | (637,000   | )          |           |            | (111,000   | )         
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | LOSS FROM CONTINUING OPERATIONS                     |            |                      | (536,565 | )                      |            |         | (171,367  | )          |            |           | (1,001,513 | )          |            |           | (159,607  | )
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|DISCONTINUED OPERATIONS (Note 4):                           |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            | Earnings (loss) from discontinued operations, adjusted 
for applicable income tax expense (benefit) of $(3,195),
$14,000, $3,413, and $39,000, respectively |                       |                                                     | (6,017     | )                    |          |                        | 25,011     |         |           |            | 4,762      |           |            |            | 65,119     |          
|                                                            | Gain on sale of assets of discontinued operations,
adjusted for applicable income tax expense of $0, $1,056,000, $0,
$372,228 and $1,056,000, respectively  |                       |                                                     |           |                      |          |                        | 1,720,749  |         |           |            | 617,987    |           |            |            | 1,720,749  |          
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS        |            |                      | (6,017   | )                      |            |         | 1,745,760 |            |            |           | 622,749    |            |            |           | 1,785,868 |  
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            |                                                                                                                                                             |                       | NET EARNINGS (LOSS)                                 |            | $                    | (542,582 | )                      |            | $       | 1,574,393 |            |            | $         | (378,764   | )          |            | $         | 1,626,261 |  
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|NET EARNINGS (LOSS) PER SHARE  BASIC AND DILUTED (Note 8): |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            | From continuing operations                                                                                                                                  |                       | $                                                   | (.18       | )                    |          | $                      | (.06       | )       |           | $          | (.34       | )         |            | $          | (.03       | )        
|                                                            | From discontinued operations                                                                                                                                |                       |                                                     |           |                      |          |                        | .60        |         |           |            | .21        |           |            |            | .59        |          
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|                                                            | NET
EARNINGS (LOSS) PER SHARE  BASIC AND DILUTED                                                                                                           |                       | $                                                   | (.18       | )                    |          | $                      | .54        |         |           | $          | (.13       | )         |            | $          | .56        |          
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|DIVIDENDS PER SHARE                                         |                                                                                                                                                             | $                     | .04                                                 |            |                      | $        | .04                    |            |         | $         | .08        |            |           | $          | .08        |           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           
|WEIGHTED AVERAGE SHARES OUTSTANDING  BASIC AND DILUTED     |                                                                                                                                                             |                       | 2,910,148                                           |            |                      |          | 2,928,627              |            |         |           | 2,909,632  |            |           |            | 2,935,776  |           
|                                                            |                                                                                                                                                             |                       |                                                     |            |                      |          |                        |            |         |           |            |            |           |            |            |           

See accompanying notes to consolidated financial statements.

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##### Table of Contents



ABRAMS INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |            |  
|-------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | -------------------------------------------------- | ---------- | ---------------------------- | ---------- | ------- | ---------- | --------- | ---------- | -
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            | SIX MONTHS ENDED OCTOBER 31,
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                             
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            | 2002                         |            | 2001   
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |        
|Cash flows from operating activities:                    |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |        
|                                                         |                                                      |                                                                         | Net earnings (loss)                                                                    |                                                    | $          | (378,764                     | )          |         | $          | 1,626,261 |           
|                                                         |                                                      |                                                                         | Adjustments to reconcile net earnings (loss) to net
cash used in operating activities: |                                                    |            |                              |            |         |            |           |           
|                                                         |                                                      |                                                                         |                                                                                        | Depreciation and amortization                      |            |                              | 1,296,671  |         |            |           | 1,173,143  |  
|                                                         |                                                      |                                                                         |                                                                                        | (Recovery of) provision for doubtful accounts, net |            |                              | (506,386   | )       |            |           | 12,316     |  
|                                                         |                                                      |                                                                         |                                                                                        | Income from discontinued operations, net of tax    |            |                              | (622,749   | )       |            |           | (1,785,868 | )
|                                                         |                                                      |                                                                         |                                                                                        | Changes in assets and liabilities:                 |            |                              |            |         |            |           |            |  
|                                                         |                                                      |                                                                         |                                                                                        | Receivables                                        |            |                              | (2,006,036 | )       |            |           | (7,096,833 | )
|                                                         |                                                      |                                                                         |                                                                                        | Costs and earnings in excess of billings           |            |                              | 163,353    |         |            |           | 172,560    |  
|                                                         |                                                      |                                                                         |                                                                                        | Other current assets                               |            |                              | (101,826   | )       |            |           | 124,687    |  
|                                                         |                                                      |                                                                         |                                                                                        | Other assets                                       |            |                              | 86,871     |         |            |           | (125,429   | )
|                                                         |                                                      |                                                                         |                                                                                        | Trade and subcontractors payable                   |            |                              | 552,885    |         |            |           | 5,707,946  |  
|                                                         |                                                      |                                                                         |                                                                                        | Accrued expenses                                   |            |                              | 169,813    |         |            |           | (1,954,330 | )
|                                                         |                                                      |                                                                         |                                                                                        | Billings in excess of costs and earnings           |            |                              | 54,409     |         |            |           | 522,731    |  
|                                                         |                                                      |                                                                         |                                                                                        | Other liabilities                                  |            |                              | (92,375    | )       |            |           | 30,269     |  
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|                                                         |                                                      |                                                                         |                                                                                        | Net cash used in operating activities              |            |                              | (1,384,134 | )       |            |           | (1,592,547 | )
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|Cash flows from investing activities:                    |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |        
|                                                         |                                                      | Additions to income-producing properties, net                           |                                                                                        |                                                    | (36,186    | )                            |            |         | (69,799    | )        
|                                                         |                                                      | Additions to property and equipment, net                                |                                                                                        |                                                    | (57,414    | )                            |            |         |           |          
|                                                         |                                                      | Additions to intangible assets                                          |                                                                                        |                                                    | (165,464   | )                            |            |         | (31,661    | )        
|                                                         |                                                      | Acquisition, net of cash acquired                                       |                                                                                        |                                                    |           |                              |            |         | (2,971,663 | )        
|                                                         |                                                      | Repayments received on notes receivable                                 |                                                                                        |                                                    | 4,967      |                              |            |         | 67,732     |          
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|                                                         |                                                      |                                                                         |                                                                                        | Net cash used in investing activities              |            |                              | (254,097   | )       |            |           | (3,005,391 | )
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|Cash flows from financing activities:                    |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |        
|                                                         |                                                      | Debt proceeds                                                           |                                                                                        |                                                    | 4,900,000  |                              |            |         |           |          
|                                                         |                                                      | Debt repayments                                                         |                                                                                        |                                                    | (5,518,284 | )                            |            |         | (921,962   | )        
|                                                         |                                                      | Deferred loan costs paid                                                |                                                                                        |                                                    | (107,788   | )                            |            |         |           |          
|                                                         |                                                      | Repurchase of common stock                                              |                                                                                        |                                                    | (470       | )                            |            |         | (110,839   | )        
|                                                         |                                                      | Cash dividends                                                          |                                                                                        |                                                    | (232,770   | )                            |            |         | (235,404   | )        
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|                                                         |                                                      |                                                                         |                                                                                        | Net cash used in financing activities              |            |                              | (959,312   | )       |            |           | (1,268,205 | )
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|Cash flows from discontinued operations:                 |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |        
|                                                         | Operating activities                                 |                                                                         |                                                                                        | (120,325                                           | )          |                              |            | 564,137 |           
|                                                         | Mortgage payoff                                      |                                                                         |                                                                                        | (12,206,700                                        | )          |                              |            |        |           
|                                                         | Proceeds from sale of
property, net of costs of sale |                                                                         |                                                                                        | 13,489,901                                         |            |                              |            |        |           
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|                                                         |                                                      |                                                                         | Net cash provided by discontinued operations                                           |                                                    |            | 1,162,876                    |            |         |            | 564,137   |           
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|Net decrease in cash and cash equivalents                |                                                      |                                                                         | (1,434,667                                                                             | )                                                  |            |                              | (5,302,006 | )      
|Cash and cash equivalents at beginning of period         |                                                      |                                                                         | 7,911,205                                                                              |                                                    |            |                              | 11,448,750 |        
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|Cash and cash equivalents at end of period               |                                                      | $                                                                       | 6,476,538                                                                              |                                                    |            | $                            | 6,146,744  |        
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           
|Supplemental disclosure of noncash investing activities: |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |        
|                                                         |                                                      | Transfer of income-producing property to property held for sale         |                                                                                        | $                                                  |           |                              |            | $       | 12,831,542 |          
|                                                         |                                                      | Transfer of property to real estate held for future development or sale |                                                                                        | $                                                  |           |                              |            | $       | 321,710    |          
|Supplemental disclosure of noncash financing activities: |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |        
|                                                         |                                                      | Issuance of common stock under Stock Award Plan                         |                                                                                        | $                                                  | 5,500      |                              |            | $       |           |          
|                                                         |                                                      |                                                                         |                                                                                        |                                                    |            |                              |            |         |            |           |           

See accompanying notes to consolidated financial statements.

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ABRAMS INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2002, AND APRIL 30, 2002
(UNAUDITED)

NOTE 1. ORGANIZATION AND
BUSINESS

Abrams Industries, Inc. and subsidiaries (the Company) was organized
under Delaware law in 1960. In 1984, the Company changed its state of
incorporation from Delaware to Georgia. The Company engages in (i) commercial
construction; (ii) development and ownership of income-producing real estate
properties; and (iii) energy management.

NOTE 2. UNAUDITED STATEMENTS

The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with accounting principles generally
accepted in the United States of America, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements have been condensed or
omitted pursuant to such rules and regulations, although management believes
that the disclosures contained herein are adequate to make the information
presented not misleading. In the opinion of management, the accompanying
financial statements contain all necessary adjustments, which consist of normal
recurring accruals that are necessary for a fair statement of the results for
the interim periods presented. These financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Companys Annual Report to Shareholders for the year ended
April 30, 2002. Results of operations for interim periods are not necessarily
indicative of annual results.

Certain reclassifications have been made to the fiscal 2002 consolidated
financial statements to conform to classifications adopted in the first six
months of fiscal 2003.

NOTE 3. RECEIVABLES

All net contract and trade receivables are expected to be collected within
one year.

NOTE 4. DISCONTINUED OPERATIONS

Effective May 1, 2002, the Company adopted SFAS No. 144, which requires,
among other things, that the operating results of certain income-producing
assets, sold subsequent to April 30, 2002, be included in discontinued
operations in the statements of operations for all periods presented. On June
28, 2002, the Company sold its shopping center located in Englewood, Florida,
and recognized a pre-tax gain of $990,215. As a result of the sale, the
Companys financial statements have been prepared with the propertys assets
and liabilities, results of operations, cash flows, and the gain from the sale
shown as discontinued operations. All historical statements have been restated
to conform to this presentation in accordance with Statement of Financial
Accounting Standard No. 144. Summarized financial information for the
discontinued operations is as follows:

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|                                                        |  |                    |        |      |  |   |         | 
|------------------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------- | 
|                                                        |  | Three months ended
|                                                        |  | October 31,       
|                                                        |  |                   
|                                                        |  | 2002               |        | 2001
|                                                        |  |                    |        |     
|Results
of operations                                   |  |                    |        |      |  |   |         | 
|Revenues                                                |  | $                  |       |      |  | $ | 469,160 | 
|Operating expenses, including amortization and interest |  |                    | 9,212  |      |  |   | 430,149 | 
|                                                        |  |                    |        |      |  |   |         | 
|                                                        |  | $                  | (9,212 | )    |  | $ | 39,011  | 
|                                                        |  |                    |        |      |  |   |         | 

|                                                        |  |                  |         |      |  |   |         | 
|------------------------------------------------------- |  | ---------------- | ------- | ---- |  | - | ------- | 
|                                                        |  | Six months ended
|                                                        |  | October 31,     
|                                                        |  |                 
|                                                        |  | 2002             |         | 2001
|                                                        |  |                  |         |     
|Results of operations                                   |  |                  |         |      |  |   |         | 
|Revenues                                                |  | $                | 289,173 |      |  | $ | 939,096 | 
|Operating expenses, including amortization and interest |  |                  | 280,998 |      |  |   | 834,977 | 
|                                                        |  |                  |         |      |  |   |         | 
|                                                        |  | $                | 8,175   |      |  | $ | 104,119 | 
|                                                        |  |                  |         |      |  |   |         | 

|                                  |  |                  |         |                |  |   |            | 
|--------------------------------- |  | ---------------- | ------- | -------------- |  | - | ---------- | 
|                                  |  | October 31, 2002 |         | April 30, 2002
|                                  |  |                  |         |               
|Assets of discontinued
operations |  |                  |         |                |  |   |            | 
|Property held for sale            |  | $                |        |                |  | $ | 12,502,037 | 
|Receivables                       |  |                  | 57,020  |                |  |   | 16,713     | 
|Other                             |  |                  | 45,126  |                |  |   | 7,191      | 
|                                  |  |                  |         |                |  |   |            | 
|                                  |  | $                | 102,146 |                |  | $ | 12,525,941 | 
|                                  |  |                  |         |                |  |   |            | 

|                                       |  |                  |         |                |  |   |            | 
|-------------------------------------- |  | ---------------- | ------- | -------------- |  | - | ---------- | 
|                                       |  | October 31, 2002 |         | April 30, 2002
|                                       |  |                  |         |               
|Liabilities of discontinued
operations |  |                  |         |                |  |   |            | 
|Mortgage debt                          |  | $                |        |                |  | $ | 12,206,700 | 
|Accounts payable                       |  |                  |        |                |  |   | 10,764     | 
|Income taxes                           |  |                  | 548,818 |                |  |   | 242,091    | 
|Accrued expenses                       |  |                  | 108,550 |                |  |   | 81,481     | 
|                                       |  |                  |         |                |  |   |            | 
|                                       |  | $                | 657,368 |                |  | $ | 12,541,036 | 
|                                       |  |                  |         |                |  |   |            | 

NOTE 5. CHANGE IN AN ALLOWANCE FOR DOUBTFUL ACCOUNTS

Selling, general, and administrative expense for the construction segment
for the six months ended October 31, 2002, is net of a $450,000 reduction in
the allowance for doubtful accounts reserve for a receivable from Montgomery
Ward & Company, a former customer that is now undergoing a reorganization under
Chapter 11 of the U. S. Bankruptcy Code.

NOTE 6. NEW ACCOUNTING PRONOUNCEMENTS

During August 2001, the FASB issued SFAS 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supercedes FASB 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of. In addition, SFAS 144 supercedes the accounting and reporting provisions
of APB Opinion No. 30, Reporting the Results of OperationsReporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactionsfor segments of a business to be
disposed of. SFAS 144 addresses the treatment of assets held for sale or to be
otherwise disposed of, the evaluation of impairment for long-lived assets, and
the reporting of discontinued operations. The provisions of SFAS 144 are
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The adoption of SFAS 144 is not expected to have a
significant impact on the Companys financial position or cash flows. Under
SFAS 144, as of May 1, 2002, the Company began reporting any gains or losses
recognized on sales of its income-producing real estate properties in
discontinued operations, and the results of operations of any operating
property classified as held for sale is reported in discontinued operations.

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NOTE 7. OPERATING SEGMENTS

The table below exhibits selected financial data on a segment basis.
Earnings (loss) from continuing operations before income taxes are total
revenues less operating expenses (including depreciation and interest) of
continuing operations. Parent expenses have not been allocated to the
subsidiaries.

|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |       |  |   |          |          |   |   |            |            | 
|-------------------------------------------------------------- | ----------------------------------------- | ------------ | ---------- | ----------- |  | ---------- | --------- | --------- |  | ------------ | ------- | ------------ |  | - | -------- | ----- |  | - | -------- | -------- | - | - | ---------- | ---------- | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              | Energy  |              |  |   |          |       |  |   |          |          |   |   |           
|For the Quarter Ended October 31, 2002                         |                                           | Construction |            | Real Estate |  | Management |           | Parent    |  | Eliminations |         | Consolidated
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |             
|Revenues from unaffiliated customers                           |                                           | $            | 20,100,576 |             |  | $          | 2,616,381 |           |  | $            | 732,955 |              |  | $ |         |       |  | $ |         |          |   | $ | 23,449,912 |           
|Interest and other income                                      |                                           |              | 3,157      |             |  |            | 12,417    |           |  |              |        |              |  |   | 4,644    |       |  |   |         |          |   |   | 20,218     |           
|Intersegment revenue                                           |                                           |              |           |             |  |            | 112,388   |           |  |              |        |              |  |   |         |       |  |   | (112,388 | )        |   |   |           |           
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |       |  |   |          |          |   |   |            |           
|                                                               | Total revenues from
continuing operations |              | $          | 20,103,733  |  |            | $         | 2,741,186 |  |              | $       | 732,955      |  |   | $        | 4,644 |  |   | $        | (112,388 | ) |   | $          | 23,470,130 | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |       |  |   |          |          |   |   |            |           
|Earnings (loss) from continuing operations
before income taxes |                                           | $            | (450,797   | )           |  | $          | 207,781   |           |  | $            | (42,429 | )            |  | $ | (597,066 | )     |  | $ | 7,159    |          |   | $ | (875,352   | )         
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |       |  |   |          |          |   |   |            |           

|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |        |  |   |          |          |   |   |            |            | 
|-------------------------------------------------------------- | ----------------------------------------- | ------------ | ---------- | ----------- |  | ---------- | --------- | --------- |  | ------------ | ------- | ------------ |  | - | -------- | ------ |  | - | -------- | -------- | - | - | ---------- | ---------- | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              | Energy  |              |  |   |          |        |  |   |          |          |   |   |           
|For the Quarter Ended October 31, 2001                         |                                           | Construction |            | Real Estate |  | Management |           | Parent    |  | Eliminations |         | Consolidated
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |             
|Revenues from unaffiliated customers                           |                                           | $            | 28,979,970 |             |  | $          | 2,722,762 |           |  | $            | 796,616 |              |  | $ |         |        |  | $ |         |          |   | $ | 32,499,348 |           
|Interest and other income                                      |                                           |              | 8,092      |             |  |            | 54,452    |           |  |              |        |              |  |   | 80,092   |        |  |   | (74,405  | )        |   |   | 68,231     |           
|Intersegment revenue                                           |                                           |              |           |             |  |            | 122,845   |           |  |              |        |              |  |   |         |        |  |   | (122,845 | )        |   |   |           |           
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |        |  |   |          |          |   |   |            |           
|                                                               | Total revenues from
continuing operations |              | $          | 28,988,062  |  |            | $         | 2,900,059 |  |              | $       | 796,616      |  |   | $        | 80,092 |  |   | $        | (197,250 | ) |   | $          | 32,567,579 | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |        |  |   |          |          |   |   |            |           
|Earnings (loss) from continuing operations
before income taxes |                                           | $            | (107,620   | )           |  | $          | 480,467   |           |  | $            | 23,600  |              |  | $ | (659,315 | )      |  | $ | (20,499  | )        |   | $ | (283,367   | )         
|                                                               |                                           |              |            |             |  |            |           |           |  |              |         |              |  |   |          |        |  |   |          |          |   |   |            |           

|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |        |  |   |          |          |   |   |            |            | 
|-------------------------------------------------------------- | ----------------------------------------- | ------------ | ---------- | ----------- |  | ---------- | --------- | --------- |  | ------------ | --------- | ------------ |  | - | ---------- | ------ |  | - | -------- | -------- | - | - | ---------- | ---------- | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              | Energy    |              |  |   |            |        |  |   |          |          |   |   |           
|For the Six Months Ended October 31, 2002                      |                                           | Construction |            | Real Estate |  | Management |           | Parent    |  | Eliminations |           | Consolidated
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |             
|Revenues from unaffiliated customers                           |                                           | $            | 34,528,609 |             |  | $          | 5,187,543 |           |  | $            | 1,398,542 |              |  | $ |           |        |  | $ |         |          |   | $ | 41,114,694 |           
|Interest and other income                                      |                                           |              | 8,116      |             |  |            | 56,785    |           |  |              |          |              |  |   | 19,186     |        |  |   | (6,334   | )        |   |   | 77,753     |           
|Intersegment revenue                                           |                                           |              |           |             |  |            | 222,563   |           |  |              |          |              |  |   |           |        |  |   | (222,563 | )        |   |   |           |           
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |        |  |   |          |          |   |   |            |           
|                                                               | Total revenues from
continuing operations |              | $          | 34,536,725  |  |            | $         | 5,466,891 |  |              | $         | 1,398,542    |  |   | $          | 19,186 |  |   | $        | (228,897 | ) |   | $          | 41,192,447 | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |        |  |   |          |          |   |   |            |           
|Earnings
(loss) from continuing operations
before income taxes |                                           | $            | (532,242   | )           |  | $          | 331,326   |           |  | $            | (184,683  | )            |  | $ | (1,267,239 | )      |  | $ | 14,325   |          |   | $ | (1,638,513 | )         
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |        |  |   |          |          |   |   |            |           

|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |         |  |   |          |          |   |   |            |            | 
|-------------------------------------------------------------- | ----------------------------------------- | ------------ | ---------- | ----------- |  | ---------- | --------- | --------- |  | ------------ | --------- | ------------ |  | - | ---------- | ------- |  | - | -------- | -------- | - | - | ---------- | ---------- | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              | Energy    |              |  |   |            |         |  |   |          |          |   |   |           
|For the Six Months Ended October 31, 2001                      |                                           | Construction |            | Real Estate |  | Management |           | Parent    |  | Eliminations |           | Consolidated
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |             
|Revenues from unaffiliated customers                           |                                           | $            | 64,905,126 |             |  | $          | 5,496,275 |           |  | $            | 1,615,928 |              |  | $ |           |         |  | $ |         |          |   | $ | 72,017,329 |           
|Interest and other income                                      |                                           |              | 50,598     |             |  |            | 96,453    |           |  |              |          |              |  |   | 106,375    |         |  |   | (90,620  | )        |   |   | 162,806    |           
|Intersegment revenue                                           |                                           |              |           |             |  |            | 243,148   |           |  |              |          |              |  |   |           |         |  |   | (243,148 | )        |   |   |           |           
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |         |  |   |          |          |   |   |            |           
|                                                               | Total revenues from
continuing operations |              | $          | 64,955,724  |  |            | $         | 5,835,876 |  |              | $         | 1,615,928    |  |   | $          | 106,375 |  |   | $        | (333,768 | ) |   | $          | 72,180,135 | 
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |         |  |   |          |          |   |   |            |           
|Earnings (loss) from continuing operations
before income taxes |                                           | $            | 160,054    |             |  | $          | 903,667   |           |  | $            | 114,869   |              |  | $ | (1,470,535 | )       |  | $ | 21,338   |          |   | $ | (270,607   | )         
|                                                               |                                           |              |            |             |  |            |           |           |  |              |           |              |  |   |            |         |  |   |          |          |   |   |            |           

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##### Table of Contents



NOTE 8. EARNINGS PER SHARE

Basic earnings per share are computed by dividing net earnings by the
weighted average shares outstanding during the reporting period. Diluted
earnings per share is computed giving effect to dilutive stock equivalents
resulting from outstanding options. The dilutive potential common shares for
the second quarter and the first six months of fiscal 2003 were 12,119 and
20,822, respectively. Since the Company had losses from continuing operations
for both periods presented in fiscal 2003, all stock equivalents were
antidilutive during these periods and are excluded from weighted average shares
outstanding.

In May 2001, the Company issued 150,616 incentive stock options with an
exercise price of $4.00 per share to certain employees. In July 2002, the
Company issued an additional 355,856 incentive stock options to certain
employees and 253,144 non-qualified stock options to the Companys directors,
certain employees, and an independent contractor. All of the options issued in
July 2002 have an exercise price of $5.10 per share. On July 29, 2002, the
Company granted a restricted stock award of a total of 1,100 shares of common
stock to certain eligible employees, which will vest on July 29, 2003, as long
as the grantees continue to be employed by the Company until the vesting date.
No stock options or stock awards were granted in the three months ended October
31, 2002.

NOTE 9. GOODWILL AND OTHER
INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for all of the
Companys intangible assets as of October 31, 2002, are as follows:

|                                                                                             |                |                                                    |                                           |              |           |                |           |             |           |         |  | 
|-------------------------------------------------------------------------------------------- | -------------- | -------------------------------------------------- | ----------------------------------------- | ------------ | --------- | -------------- | --------- | ----------- | --------- | ------- |  | 
|                                                                                             |                |                                                    |                                           |              |           | Gross Carrying |           | Accumulated
|Amortized intangible assets                                                                  |                | Amount                                             |                                           | Amortization
|                                                                                             |                |                                                    |                                           |             
|                                                                                             |                | Computer-based
work and energy management products |                                           | $            | 953,641   |                |           | $           | 287,636   |        
|                                                                                             |                | Computer software                                  |                                           |              | 364,398   |                |           |             | 278,696   |        
|                                                                                             |                | Real estate lease costs                            |                                           |              | 1,758,710 |                |           |             | 873,916   |        
|                                                                                             |                | Deferred loan costs                                |                                           |              | 942,563   |                |           |             | 454,247   |        
|                                                                                             |                | Other                                              |                                           |              | 28,660    |                |           |             | 4,303     |        
|                                                                                             |                |                                                    |                                           |              |           |                |           |            
|                                                                                             |                | $                                                  | 4,047,972                                 |              |           | $              | 1,898,798 |            
|                                                                                             |                |                                                    |                                           |              |           |                |           |            
|Unamortized intangible assets                                                                |                |                                                    |                                           |              |           |                |           |            
|                                                                                             |                | Goodwill                                           |                                           |              |           |                |           | $           | 1,741,831 |        
|                                                                                             |                | Trademark                                          |                                           |              |           |                |           |             | 315,261   |        
|                                                                                             |                |                                                    |                                           |              |           |                |           |            
|                                                                                             |                |                                                    |                                           |              |           | $              | 2,057,092 |            
|                                                                                             |                |                                                    |                                           |              |           |                |           |            
|Aggregate amortization expense for all amortized intangible assets                           |                |                                                    |                                           |              |           |                |           |            
|                                                                                             |                |                                                    | For the quarter ended October 31, 2002    |              |           |                |           |             | $         | 128,540 | 
|                                                                                             |                |                                                    | For the six months ended October 31, 2002 |              |           |                |           |             |           | 252,575 | 
|                                                                                            
|Estimated amortization expense for all amortized intangible assets for the
fiscal year ended |                |                                                    |                                           |              |           |                |           |            
|                                                                                             | April 30, 2004 |                                                    |                                           |              |           |                | $         | 424,996     |          
|                                                                                             | April 30, 2005 |                                                    |                                           |              |           |                |           | 400,310     |          
|                                                                                             | April 30, 2006 |                                                    |                                           |              |           |                |           | 286,722     |          
|                                                                                             | April 30, 2007 |                                                    |                                           |              |           |                |           | 181,562     |          
|                                                                                             | April 30, 2008 |                                                    |                                           |              |           |                |           | 146,448     |          

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NOTE 10. KMART BANKRUPTCY

In January 2002, Kmart Corporation filed for protection under Chapter 11
of the U.S. Bankruptcy Code. At that time, four of the Companys seven owned
retail properties contained stores leased to Kmart, two of which were
freestanding stores. The Company sold at a gain its Englewood shopping center,
which is co-anchored by a Kmart store, on June 28, 2002. See Note 4. The
remaining three Kmart stores owned by the Company are currently open and
operating. The seven freestanding Kmart stores that the Company developed,
sold, leased back, and then sub-leased to Kmart are currently open and
operating.

In March 2002, Kmart published a list of stores that it would close. None
of the properties leased or subleased to Kmart by the Company was on the list.
The Bankruptcy Court has not provided the Company any further information as to
whether any additional Kmart stores will be closed or which leases will be
rejected or affirmed. The Bankruptcy Court has ordered Kmart to affirm or
reject the Companys owned property leases and leaseback subleases by March 31,
2003.

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

Changes in CONSOLIDATED BALANCE SHEETS between April 30, 2002, and October 31,
2002.

Accounts receivable increased by $1,050,005 and trade and subcontractors
payable increased by $552,885, primarily because of the timing of the
submission and payment of invoices for construction work performed.

Assets of discontinued operations decreased by $12,423,795, as a result of
the sale of the shopping center in Englewood, Florida (see Note 4 to the
consolidated financial statements).

Current maturities of long-term debt decreased by $229,546 and mortgage
notes payable increased by $4,405,231, primarily due to the refinancing of the
corporate headquarters building in Atlanta, Georgia. The prior acquisition and
construction loan in the amount of $4,279,361 was previously classified as
other long-term debt, and $317,322 was included in current maturities of
long-term debt.

Liabilities of discontinued operations decreased by $11,883,668, primarily
due to the repayment of the debt on the sold shopping center located in
Englewood, Florida (see Note 4 to the consolidated financial statements).

Results of operations of the second quarter and the first six months of fiscal
2003 compared to the second quarter and the first six months of fiscal 2002.

REVENUES From Continuing Operations

For the second quarter 2003, consolidated revenues from continuing
operations, including interest income and other income, and net of intersegment
eliminations, were $23,470,130, compared to $32,567,579 for the second quarter
2002, a decrease of 28%. For the first six months of fiscal 2003, consolidated
revenues from continuing operations were $41,192,447, compared to $72,180,135
for the first six months of fiscal 2002, a decrease of 43%.

The figures in Chart A are Segment revenues from continuing operations,
net of intersegment eliminations, and do not include interest income or other
income.

CHART A
REVENUES FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT
(Dollars in Thousands)

|                      |  |                      |        |        |  |          |        |          |  |        |        |                  |  |          |     |          |  |   |        |  |  |   |        |  |  |   |         |   |  |  |     |  
|--------------------- |  | -------------------- | ------ | ------ |  | -------- | ------ | -------- |  | ------ | ------ | ---------------- |  | -------- | --- | -------- |  | - | ------ |  |  | - | ------ |  |  | - | ------- | - |  |  | --- | -
|                      |  | Second Quarter Ended |        |        |  |          |        |          |  |        |        | Six Months Ended |  |          |     |          |  |   |        | 
|                      |  | October 31,          |        |        |  |          |        |          |  |        |        | October 31,      |  |          |     |          |  |   |        | 
|                      |  |                      |        | Amount |  | Percent  |        |          |  | Amount |        | Percent         
|                      |  | 2002                 |        | 2001   |  | Decrease |        | Decrease |  | 2002   |        | 2001             |  | Decrease |     | Decrease
|                      |  |                      |        |        |  |          |        |          |  |        |        |                  |  |          |     |         
|Construction (1)      |  | $                    | 20,101 |        |  | $        | 28,980 |          |  | $      | (8,879 | )                |  |          | (31 | )        |  | $ | 34,529 |  |  | $ | 64,905 |  |  | $ | (30,376 | ) |  |  | (47 | )
|Real Estate (2)       |  |                      | 2,616  |        |  |          | 2,722  |          |  |        | (106   | )                |  |          | (4  | )        |  |   | 5,187  |  |  |   | 5,496  |  |  |   | (309    | ) |  |  | (6  | )
|Energy Management (3) |  |                      | 733    |        |  |          | 797    |          |  |        | (64    | )                |  |          | (8  | )        |  |   | 1,399  |  |  |   | 1,616  |  |  |   | (217    | ) |  |  | (13 | )
|                      |  |                      |        |        |  |          |        |          |  |        |        |                  |  |          |     |          |  |   |        |  |  |   |        |  |  |   |         |   |  |  |     |  
|                      |  | $                    | 23,450 |        |  | $        | 32,499 |          |  | $      | (9,049 | )                |  |          | (28 | )        |  | $ | 41,115 |  |  | $ | 72,017 |  |  | $ | (30,902 | ) |  |  | (43 | )
|                      |  |                      |        |        |  |          |        |          |  |        |        |                  |  |          |     |          |  |   |        |  |  |   |        |  |  |   |         |   |  |  |     |  

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NOTES TO CHART A



|(1) |  | Revenues decreased for the second quarter and the first six months of
2003 from the same periods in 2002 primarily due to: a) managements
election to reduce revenue volume rather than continuing to bid at prices
that offered the Company unacceptable levels of potential profitability on
a number of jobs for the Companys largest customer (revenues from this
customer decreased by approximately $2.3 million in the second quarter and
$21.4 million in the first six months of fiscal 2003 as compared to the
same periods in 2002); b) an unusually large construction job for another
customer, which was included in fiscal 2002 revenues; and c) a reduction
in the number of construction jobs available in a very competitive
marketplace, which is a result of a marked deceleration in capital
spending by retail companies. Management expects these trends to
continue. The Company is actively seeking to identify customers and
contracts that place more value on the Companys high quality and high
service approach, and is exploring different commercial market sectors for
potential opportunities to broaden and increase construction segment
revenues.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Revenues for the second quarter and the first six months of 2003 are
lower primarily due to the termination of subleases on two Kmart leaseback
centers in the fourth quarter of fiscal 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(3) |  | Revenues decreased for the second quarter and the first six months of
2003 from the same periods in 2002 primarily due to the general slowdown
in the economy resulting in a decline in spending by customers for the
products and services offered by the Company. The Company anticipates
this trend will continue in the short-term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

The following table indicates the backlog of contracts and rental income
from continuing operations for the next twelve months by industry segment.

|                              |               |   |             |            |      |   |            |            | 
|----------------------------- | ------------- | - | ----------- | ---------- | ---- | - | ---------- | ---------- | 
|                              |               |   | October 31,
|                              |               |   |            
|                              |               |   | 2002        |            | 2001
|                              |               |   |             |            |     
|Construction (1)              |               | $ | 15,011,000  |            |      | $ | 23,890,000 |           
|Real Estate-rental income (2) |               |   | 8,705,000   |            |      |   | 9,761,000  |           
|Real Estate-sales (3)         |               |   | 850,000     |            |      |   | 465,000    |           
|Energy Management (4)         |               |   | 619,000     |            |      |   | 555,000    |           
|                              |               |   |             |            |      |   |            |           
|                              | Total Backlog |   | $           | 25,185,000 |      |   | $          | 34,671,000 | 
|                              |               |   |             |            |      |   |            |           



|(1) |  | See Note 1 to Chart A above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Included in the real estate rental income backlog at October 31, 2001,
was rent of approximately $552,000 related to the two Kmart leaseback
subleases that were terminated during fiscal 2002. The remaining
difference is primarily due to lease expirations.                                                                                                                                                                                                                                                 
|   
|(3) |  | Included in the real estate sales backlog at October 31, 2001, was a
contract to sell an outparcel in North Ft. Myers, Florida which was sold
at a gain. Included in the real estate sales backlog at October 31, 2002,
were contracts to sell an outparcel in Jackson, Michigan, and an outparcel
and an anchor store pad in Davenport, Iowa. The Davenport properties are
expected to be sold at a gain in December 2002, and the sale of the
Jackson outparcel is scheduled to close prior to April 30, 2003.

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|(4) |  | Energy management contracts that can be cancelled with less than one years
notice are not included in backlog. As of October 31, 2002, such contracts
totaled approximately $1.05 million in potential revenue over the next
twelve months, assuming cancellation provisions are not invoked.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

COSTS AND EXPENSES APPLICABLE TO REVENUES
From Continuing Operations

As a percentage of total segment revenues from continuing operations (See
Chart A) for the second quarter and the first six months of 2003 and 2002, the
total applicable costs and expenses (See Chart B) were 92% and 93%,
respectively. In reviewing Chart B, the reader should recognize that the
volume of revenues generally will affect the amounts and percentages.

The figures in Chart B are net of intersegment eliminations.

CHART B
COSTS AND EXPENSES APPLICABLE TO REVENUES
FROM CONTINUING OPERATIONS SUMMARY BY SEGMENT
(Dollars in Thousands)

|                      |  |                      |        |                      |  |                  |        |                  |  |                    |    |      |  |      |    |      |  |   |        |                    |  |   |        |  |  |  |    |  |  |  |    | 
|--------------------- |  | -------------------- | ------ | -------------------- |  | ---------------- | ------ | ---------------- |  | ------------------ | -- | ---- |  | ---- | -- | ---- |  | - | ------ | ------------------ |  | - | ------ |  |  |  | -- |  |  |  | -- | 
|                      |  |                      |        |                      |  |                  |        |                  |  | Percent of Segment |    |      |  |      |    |      |  |   |        | Percent of Segment
|                      |  |                      |        |                      |  |                  |        |                  |  | Revenues for       |    |      |  |      |    |      |  |   |        | Revenues for      
|                      |  | Second Quarter Ended |        | Second Quarter Ended |  | Six Months Ended |        | Six Months Ended
|                      |  | October 31,          |        | October 31,          |  | October 31,      |        | October 31,     
|                      |  |                      |        |                      |  |                  |        |                 
|                      |  | 2002                 |        | 2001                 |  | 2002             |        | 2001             |  | 2002               |    | 2001 |  | 2002 |    | 2001
|                      |  |                      |        |                      |  |                  |        |                  |  |                    |    |      |  |      |    |     
|Construction (1)      |  | $                    | 19,777 |                      |  | $                | 28,216 |                  |  |                    | 98 |      |  |      | 97 |      |  | $ | 34,022 |                    |  | $ | 63,116 |  |  |  | 99 |  |  |  | 97 | 
|Real Estate (2)       |  |                      | 1,565  |                      |  |                  | 1,498  |                  |  |                    | 60 |      |  |      | 55 |      |  |   | 3,226  |                    |  |   | 3,017  |  |  |  | 62 |  |  |  | 55 | 
|Energy Management (3) |  |                      | 321    |                      |  |                  | 434    |                  |  |                    | 44 |      |  |      | 54 |      |  |   | 733    |                    |  |   | 849    |  |  |  | 52 |  |  |  | 53 | 
|                      |  |                      |        |                      |  |                  |        |                  |  |                    |    |      |  |      |    |      |  |   |        |                    |  |   |        |  |  |  |    |  |  |  |    | 
|                      |  | $                    | 21,663 |                      |  | $                | 30,148 |                  |  |                    | 92 |      |  |      | 93 |      |  | $ | 37,981 |                    |  | $ | 66,982 |  |  |  | 92 |  |  |  | 93 | 
|                      |  |                      |        |                      |  |                  |        |                  |  |                    |    |      |  |      |    |      |  |   |        |                    |  |   |        |  |  |  |    |  |  |  |    | 

NOTES TO CHART B



|(1) |  | The increase in the percentage of costs and expenses applicable to
revenues for the first six months of fiscal 2003 compared to the same
period of fiscal 2002 is primarily attributable to the amount of losses on
jobs compared to revenues in the respective periods. Losses taken on jobs
in fiscal 2003 increased by approximately $240,000 compared to the same
period in fiscal 2002. Management continues to see an oversupply of
contractors in the construction segments marketplace and the
consequential pressure on margins, which is a result of a significant
decrease in demand due to the reduction in the number of available
construction jobs because of ongoing weakness of capital spending in the
retail industry.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The increases in the dollar amount and percentage of costs and expenses
applicable to revenues from continuing operations for the second quarter
and the first six months of 2003 compared to the same periods of 2002 are
primarily attributable to depreciation expense on the Companys shopping
center located in North Ft. Myers, Florida, which was not depreciated
during the second quarter and the first six months of 2002, as it was held
for sale during those periods.                                                                                                                                                                                                                                                       

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|(3) |  | The decrease in the percentage of costs and expenses applicable to
revenues for the second quarter of 2003 compared to the same period of
2002 is primarily a result of the change in the mix of services and
products sold.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
From Continuing Operations

For the second quarter of 2003 and 2002, selling, general and
administrative expenses from continuing operations, net of intersegment
eliminations, were $1,965,163 and $1,881,002, respectively. As a percentage of
consolidated revenues from continuing operations, these expenses were 8% and
6%, respectively. For the first six months of 2003 and 2002, selling, general
and administrative expenses from continuing operations, net of intersegment
eliminations, were $3,396,676 and $3,790,280, respectively. As a percentage of
consolidated revenues from continuing operations, these expenses were 8% and
5%, respectively. In reviewing Chart C, the reader should recognize that the
volume of revenues generally will affect the amounts and percentages. The
percentages in Chart C are based upon expenses as they relate to segment
revenues from continuing operations (Chart A), except that parent and total
expenses relate to consolidated revenues from continuing operations.

CHART C
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FROM CONTINUING OPERATIONS BY SEGMENT
(Dollars in Thousands)

|                      |  |                      |       |                      |  |                  |       |                  |  |                    |    |      |  |      |    |      |  |   |       |                    |  |   |       |  |  |  |    |  |  |  |    | 
|--------------------- |  | -------------------- | ----- | -------------------- |  | ---------------- | ----- | ---------------- |  | ------------------ | -- | ---- |  | ---- | -- | ---- |  | - | ----- | ------------------ |  | - | ----- |  |  |  | -- |  |  |  | -- | 
|                      |  |                      |       |                      |  |                  |       |                  |  | Percent of Segment |    |      |  |      |    |      |  |   |       | Percent of Segment
|                      |  |                      |       |                      |  |                  |       |                  |  | Revenues for       |    |      |  |      |    |      |  |   |       | Revenues for      
|                      |  | Second Quarter Ended |       | Second Quarter Ended |  | Six Months Ended |       | Six Months Ended
|                      |  | October 31,          |       | October 31,          |  | October 31,      |       | October 31,     
|                      |  |                      |       |                      |  |                  |       |                 
|                      |  | 2002                 |       | 2001                 |  | 2002             |       | 2001             |  | 2002               |    | 2001 |  | 2002 |    | 2001
|                      |  |                      |       |                      |  |                  |       |                  |  |                    |    |      |  |      |    |     
|Construction (1)      |  | $                    | 711   |                      |  | $                | 811   |                  |  |                    | 4  |      |  |      | 3  |      |  | $ | 915   |                    |  | $ | 1,547 |  |  |  | 3  |  |  |  | 2  | 
|Real Estate (2)       |  |                      | 249   |                      |  |                  | 104   |                  |  |                    | 10 |      |  |      | 4  |      |  |   | 453   |                    |  |   | 241   |  |  |  | 9  |  |  |  | 4  | 
|Energy Management (3) |  |                      | 455   |                      |  |                  | 337   |                  |  |                    | 62 |      |  |      | 42 |      |  |   | 844   |                    |  |   | 647   |  |  |  | 60 |  |  |  | 40 | 
|Parent (4)            |  |                      | 550   |                      |  |                  | 629   |                  |  |                    | 2  |      |  |      | 2  |      |  |   | 1,185 |                    |  |   | 1,355 |  |  |  | 3  |  |  |  | 2  | 
|                      |  |                      |       |                      |  |                  |       |                  |  |                    |    |      |  |      |    |      |  |   |       |                    |  |   |       |  |  |  |    |  |  |  |    | 
|                      |  | $                    | 1,965 |                      |  | $                | 1,881 |                  |  |                    | 8  |      |  |      | 6  |      |  | $ | 3,397 |                    |  | $ | 3,790 |  |  |  | 8  |  |  |  | 5  | 
|                      |  |                      |       |                      |  |                  |       |                  |  |                    |    |      |  |      |    |      |  |   |       |                    |  |   |       |  |  |  |    |  |  |  |    | 

NOTES TO CHART C



|(1) |  | On a dollar basis, selling, general and administrative expenses were
lower for the second quarter of 2003 compared to the same period of 2002
primarily due to a reduction in personnel and incentive compensation
costs. On a dollar basis, selling, general and administrative expenses
were lower for the first six months of 2003 compared to the same period of
2002 due to: (1) a $450,000 reduction in an allowance for doubtful
accounts reserve for a receivable from Montgomery Ward & Company; and (2)
a reduction in personnel and incentive compensation costs.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | On a dollar and percentage basis, selling, general and administrative
expenses were higher for the second quarter and the first six months of
2003 compared to the same periods of 2002 primarily due to increased
professional fees.                                                                                                                                                                                                                                                                                                                                       

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|(3) |  | On a dollar and percentage basis, selling, general and administrative
expenses were higher for the second quarter and the first six months of
2003 compared to the same periods of 2002 primarily due to an increase in
personnel costs and consulting fees.                                                                                                                                                                                 
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(4) |  | On a dollar basis, selling, general and administrative expenses were
lower for the second quarter and first six months of 2003 compared to the
same periods of 2002 primarily because of a reduction in personnel and
incentive compensation costs. On a percentage basis, selling, general and
administrative expenses were higher for the first six months of 2003
compared to the same periods last year due to the reduction of revenues.

Liquidity and capital resources.

Between April 30, 2002, and October 31, 2002, working capital increased by
$181,832. Operating activities used cash of $1,384,134. Investing activities
used cash of $254,097. Financing activities used cash of $959,312.
Discontinued operations provided cash of $1,162,876.

At October 31, 2002, the Company had commitments from a bank for unsecured
lines of credit totaling $9 million to finance working capital and other
general corporate purposes, of which $650,000 was restricted to secure two
letters of credit described subsequently in this section. These lines of
credit bear interest at the prime rate or LIBOR plus 2%, and have a commitment
fee of 0.375% on any unused portion. The lines of credit expire on October 30,
2003. At October 31, 2002, no amounts were outstanding under these lines of
credit.

In conjunction with the origination of a mortgage on an income-producing
property, the Company obtained an irrevocable, standby letter of credit in the
amount of $500,000. The letter of credit was originally issued in July 1997,
and has been extended to mature on June 1, 2003. The mortgage lender is
allowed to draw on the letter in order to reduce the related mortgage loan if
certain leasing requirements are not met. The letter of credit is secured by a
bank line of credit discussed above.

In 1999, in connection with the financing of the purchase of the Companys
shopping center in Jacksonville, Florida, the Company obtained a permanent
mortgage loan in the amount of $9,500,000, which is secured by the center. The
loan bears interest at 7.375% and is scheduled to be fully amortized over
twenty years. The loan matures in 2019, but the lender may call the loan at any
time after September 1, 2002. If the loan were called at any time after that
date, the Company would have up to thirteen months to repay the principal
amount of the loan without penalty. In conjunction with the loan, an Additional
Interest Agreement was executed which entitles the lender to be paid additional
interest equal to fifty percent of the quarterly net cash flow and fifty
percent of the appreciation in the property upon sale or refinance. The
liability related to the lenders fifty percent share of the appreciation in
the property was $2,474,253 at October 31, 2002. The mortgage debt and related
unamortized loan discount was $8,734,858 and $1,598,170, respectively, at
October 31, 2002.

In October 2002, the maturity date of the loan related to the Companys
shopping center in North Ft. Myers, Florida, was extended to February 2004.
The Company currently plans to refinance the shopping center prior to that
maturity date. There can be no assurance that the property can be refinanced
or that sufficient proceeds from any such refinancings will be available to pay
off this loan on or before the maturity date.

On June 28, 2002, the Company sold its shopping center located in
Englewood, Florida, at a gain. The Company plans to use the excess cash
remaining, after repaying the debt and selling expenses, for operating cash
requirements, capital improvements to owned real estate, or to pursue
investment in other growth opportunities.

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In July 2002, the Company refinanced the acquisition and construction loan
on its corporate headquarters building in Atlanta, Georgia, which loan had a
balance of $4,596,683, as of April 30, 2002. The new permanent loan, in the
original principal amount of the $4,900,000, bears interest at 7.75%, is due in
ten years, and is to be amortized on a twenty-five year schedule. Net proceeds
from the new loan, remaining after repayment of the original loan and
refinancing costs, are being used for operating cash needs. In conjunction
with the refinancing of the loan, the Company is required to provide for
potential future tenant improvements and lease commissions through additional
collateral, in the form of a letter of credit in the amount of $150,000 for
each of the first three loan years, $300,000 during the fourth, fifth, and
sixth loan years, and $450,000 during the seventh, eighth, ninth and tenth loan
years. The $150,000 letter of credit for the first three loan years is secured
by a bank line of credit discussed above.

The Companys other commitments primarily include operating leases for its
seven leaseback shopping centers and two ground leases for two of its owned
buildings leased to Kmart. The Company has no long-term commitments to
purchase building materials or other supplies.

Cautionary statement regarding forward-looking
statements.

Certain statements contained or incorporated by reference in this
Quarterly Report on Form 10-Q, including without limitation, statements
containing the words believes, anticipates, expects, plans, and words
of similar import, are forward-looking statements within the meaning of the
federal securities laws. Such forward-looking statements involve known and
unknown risks, uncertainties and other matters which may cause the actual
results, performance or achievements of the Company to be materially different
from any past or future results, performance or uncertainties expressed or
implied by such forward-looking statements.

Factors relating to general global, national, regional and local economic
conditions, including international political stability, national security,
employment levels, wage and salary levels, consumer confidence, availability of
credit, taxation policies, interest rates, capital spending and inflation could
negatively impact the Company and its customers, suppliers and sources of
capital. Any significant negative impact from these factors could result in
material adverse effects on the Companys results of operations and financial
condition.

The Company is at risk for many other matters beyond its control,
including, but not limited to: the impact of the Kmart Corporation bankruptcy
on the Companys rental revenues; co-tenancy provisions in other anchor leases;
the Companys ability to sell or refinance its real estate; the possibility of
not achieving projected backlog revenues or not realizing earnings from such
revenues; continuing competitive pressures on the availability and pricing of
construction projects; the cost and availability of insurance; the ability of
the Company to attract and retain key personnel; weather conditions; changes in
laws and regulations, including changes in accounting standards and generally
accepted accounting principles; overall capital spending trends in the economy;
the timing and amount of earnings recognition related to the possible sale of
real estate properties held for sale; delays in customers orders; the ultimate
collectibility of the Companys receivable from the Montgomery Ward & Company
bankruptcy; the availability, timing and amount of possible refinancings
related to real estate properties; the level and volatility of interest rates;
the potential loss of a significant customer; the failure of a subcontractor to
perform; and the deterioration in the financial stability of an anchor tenant,
significant subcontractor or other significant customer.

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Critical Accounting Policies

A critical accounting policy is one which is both important to the
portrayal of a Companys financial position and results of operations, and
requires the Company to make estimates and assumptions in certain circumstances
that affect amounts reported in the accompanying consolidated financial
statements and related notes. In preparing these financial statements, the
Company has made its best estimates and judgments regarding certain amounts
included in the financial statements, giving due consideration to materiality.
The application of these accounting policies involves the exercise of judgment
and use of assumptions regarding future uncertainties, and as a result, actual
results could differ from those estimates. Management believes that the
Companys most critical accounting policies are discussed below:

Principles of consolidation and basis of presentation

The consolidated financial statements include the accounts of Abrams
Industries, Inc., its wholly owned subsidiaries, and its 80% investment in
Abrams-Columbus Limited Partnership. All significant intercompany balances and
transactions have been eliminated in consolidation.

Revenue recognition

Construction revenues are reported on the percentage-of-completion method,
using costs incurred to date in relation to estimated total costs of the
contracts to measure the stage of completion. The cumulative effects of
changes in estimated total contract costs and revenues are recorded in the
period in which the facts requiring the revisions become known. At the time it
is determined that a contract is expected to result in a loss, the entire
estimated loss is recorded.

The Company leases space in its income-producing properties to tenants,
and recognizes minimum base rentals as revenue, on a straight-line basis over
the lease terms. Tenants may also be required to pay additional rental amounts
based on property operating expenses. In addition, certain tenants are
required to pay incremental rental amounts, which are contingent on store
sales. These percentage rents are recognized only as earned.

Revenues from the sale of real estate are recognized at the time of
closing of a transaction. Costs of sales related to real estate are based on
the specific property sold. When a portion or unit of a development property
is sold, a proportionate share of the total cost of the development is charged
to cost of sales.

Energy management revenues primarily consist of services and product
sales. Revenues are recognized as services are completed, and depending upon
the product type and customer agreement, product sales are recognized when
products are shipped or delivered.

Income-producing properties and property and equipment

Income-producing properties are stated at cost, and are depreciated for
financial reporting purposes using the straight-line method over the estimated
useful lives of the assets.

Property and equipment are recorded at cost and are depreciated for
financial reporting purposes using the straight-line method over the estimated
useful lives of the assets. Significant additions, which extend asset lives,
are capitalized. Normal maintenance and repair costs are expensed as incurred.

Interest and other carrying costs related to any real estate assets under
development are capitalized. Costs of development and construction are also
capitalized. Capitalization of interest and other carrying costs is
discontinued when a project is substantially completed or if active development
ceases.

15



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Impairment of long-lived assets, including goodwill, and assets to be disposed of

Long-lived assets and certain intangible assets, including goodwill, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount
of the asset to future net cash flows expected to be generated by the asset.
If an asset is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the asset exceeds the
assets estimated fair value. Assets to be disposed of are reported at the
lower of their carrying amount or estimated fair value less cost to sell.
Depreciation is suspended during the period the asset is marketed for sale.

Income taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect of a change in
tax rates on deferred tax assets and liabilities is recognized in income in the
period that includes the enactment date.

New accounting pronouncements

See Note 6 to the consolidated financial statements.




ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Companys capital structure includes the use of variable rate and
fixed rate indebtedness. As such, it is exposed to the impact of changes in
interest rates. The Company typically refinances maturing debt instruments at
then-existing market interest rates and at terms which may be more or less than
the interest rates and terms on the maturing debt. As of October 31, 2002, the
fixed rate and variable rate debt represented 68% and 32%, respectively, of the
Companys total debt outstanding.

See ITEM 2. Liquidity and capital resources for discussion regarding the
debt on the Companys former shopping center in Englewood, Florida, its
shopping center in North Ft. Myers, Florida, and its corporate headquarters
office building in Atlanta, Georgia. There have been no other material changes
since April 30, 2002. Refer to the Companys Annual Report on Form 10-K for
the fiscal year ended April 30, 2002, for detailed disclosures about
quantitative and qualitative disclosures about market risk.




ITEM 4. CONTROLS AND PROCEDURES

As required by new Rules 13a-14 and 15d-14 under the Securities Exchange
Act of 1934, as amended (the Exchange Act), the Company has evaluated its
disclosure controls and procedures as defined by the Exchange Act within 90
days of the filing date of this Quarterly Report. This evaluation was carried
out under the supervision and with the participation of the Companys
management, including its Chief Executive Officer and Chief Financial Officer.
Based on this evaluation, these officers have concluded that the Companys disclosure controls and procedures were
effective as of the date of the evaluation. There were no significant changes
to the Companys internal controls or in other factors that could significantly
affect internal controls subsequent to the date of their evaluation.

16



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##### Table of Contents






PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

In November 2002, the Companys subsidiary, Abrams Construction, Inc.
(ACI), was notified by Montgomery Ward, LLC (Ward), as
debtor-in-possession, of its intent to file a complaint in bankruptcy court in
Delaware to recover approximately $1.84 million in alleged preference
payments made by Ward to ACI prior to Wards Chapter 11 bankruptcy filing on
December 28, 2000. Under federal bankruptcy law, a bankrupt
debtor-in-possession can sue to recover preferential payments made to the
bankrupts creditors within the 90-day period preceding the filing for
bankruptcy protection, subject to certain defenses, including for payments made
in the ordinary course of business. The Company believes the claim against ACI
is without merit and intends to vigorously defend against the claim.

On September 25, 2002, the Companys subsidiary, Abrams Properties, Inc.
(API), filed a claim in the Superior Court of Cobb County, Georgia against
APIs former real estate asset manager. The defendant subsequently made a
demand against API for arbitration and filed a counterclaim in the Cobb County
proceeding. The disputes arise out of the defendants former provision of real
estate asset management services to API. Currently, API and the defendant have
agreed to stay any arbitration activities until the Superior Court decides
whether the disputes should be arbitrated or litigated in Superior Court. The
Company believes APIs claims against its former asset manager, and its
defenses to the managers claims, are meritorious and intends to vigorously
pursue the claims and assert the defenses.

The Company believes the ultimate disposition of the above-noted claims
and proceedings will not have a material adverse effect on the financial
condition, cash flows or results of operations of the Company.

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##### Table of Contents






ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Companys Annual Meeting, held on August 21, 2002, the shareholders
voted upon and approved the Nominees for the Board of Directors. The voting
was as follows:

| |  |                          |  |           |           |                |  |  |        | 
| |  | ------------------------ |  | --------- | --------- | -------------- |  |  | ------ | 
| |  | DIRECTORS                |  | VOTES FOR |           | VOTES WITHHELD
| |  |                          |  |           |           |               
| |  | Alan R. Abrams           |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | David L. Abrams          |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | Edward M. Abrams         |  |           | 2,779,394 |                |  |  | 45,015 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | J. Andrew Abrams         |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | Paula Lawton Bevington   |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | Gilbert L. Danielson     |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | Melinda S. Garrett       |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | Robert T. McWhinney, Jr. |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | B. Michael Merritt       |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | L. Anthony Montag        |  |           | 2,779,594 |                |  |  | 44,815 | 
| |  |                          |  |           |           |                |  |  |        | 
| |  | Felker W. Ward, Jr.      |  |           | 2,779,594 |                |  |  | 44,815 | 




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits



| |  | Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  | -----------------------------------------------------------------------------------------------------------------------------------
|
| |  | Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)  Reports on Form 8-K during the quarter ended October 31, 2002



| |  | None.
| |  | -----

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SIGNATURES

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.

|                        |  |                                           
|----------------------- |  | ------------------------------------------
|                        |  | ABRAMS INDUSTRIES, INC.                   
|                        |  |                                           
|                        |  | (Registrant)                              
|                        |  |                                           
|                        |  |                                           
|Date: December 13, 2002 |  | /s/ Alan R. Abrams                        
|                        |  |                                           
|                        |  | Alan R. Abrams
Chief Executive Officer    
|                        |  |                                           
|                        |  |                                           
|Date: December 13, 2002 |  | /s/ Melinda S. Garrett                    
|                        |  |                                           
|                        |  | Melinda S. Garrett
Chief Financial Officer

19



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##### Table of Contents






CERTIFICATION BY CHIEF EXECUTIVE OFFICER

I, Alan R. Abrams, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Abrams
Industries, Inc.;                                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:                                                                                                      



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated
in this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                       
|----------------------- |  | --------------------------------------
|Date: December 13, 2002 |  | /s/ Alan R. Abrams                    
|                        |  |                                       
|                        |  | Alan R. Abrams
Chief Executive Officer

20



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##### Table of Contents






CERTIFICATION BY CHIEF FINANCIAL OFFICER

I, Melinda S. Garrett, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Abrams
Industries, Inc.;                                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                      



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c. |  | Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors (or persons
performing the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | All significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                           
|----------------------- |  | ------------------------------------------
|Date: December 13, 2002 |  | /s/ Melinda S. Garrett                    
|                        |  |                                           
|                        |  | Melinda S. Garrett
Chief Financial Officer

21