<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
[ ] Transition Report Pursuant to 13 or 19(d) of the Securities Exchange Act of
1934
For the transition period from_____________to__________________
For Quarter Ended June 30, 1996
Commission File Number 0-7865
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SECURITY LAND AND DEVELOPMENT CORPORATION
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GEORGIA 58-1088232
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(State or other Jurisdiction of (I.R.S.Employer Identification Number)
Incorporation or Organization)
2816 Washington Road, #103, Augusta, Georgia 30909-2112
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(Address of Principal Executive Offices) Zip Code
Issuers Telephone Number (706) 736-6334
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________________________________________________________________
(Former Name, Address & fiscal year, if changed from last report.)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 X NO
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Outstanding at June 30, 1996
- - ---------------------------- ----------------------------
Common Stock, $.10 Par Value 5,237,607 shares
Transitional Small Business Disclosure Format: Yes No X
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following condensed consolidated financial statements of Security Land and
Development Corporation and Subsidiary are included herein:
PAGE
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CONDENSED CONSOLIDATED BALANCE SHEET AS OF
JUNE 30, 1996......................................................... 3 AND 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
JUNE 30, 1996 AND 1995, AND THE
NINE MONTHS ENDED JUNE 30, 1996 AND 1995.................................... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS FOR THE NINE MONTHS ENDED
JUNE 30, 1996 AND 1995................................................ 6 AND 7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.................... 8 AND 9
2
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SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 1996
- - --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 23,800
Other current assets 141
------------
Total current assets 23,941
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INVESTMENTS AND OTHER ASSETS
Land and improvements, at cost 307,719
Property leased to others under operating leases,
less accumulated depreciation $706,187 5,674,208
Other assets 17,238
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5,999,165
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$ 6,023,106
============
See Notes to Condensed Consolidated Financial Statements.
3
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,517
Current portion of long-term debt 103,973
Other current liabilities 15,483
Short-term loans, related party 50,500
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Total current liabilities 173,473
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LONG-TERM DEBT, less current maturities 4,103,772
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DEFERRED TAXES 17,297
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DEFERRED INCOME 466,316
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STOCKHOLDERS' EQUITY
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 404,721
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1,362,248
Less subscribed shares 100,000
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1,262,248
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$ 6,023,106
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4
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
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Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1996 1995 1995
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue, rents earned $ 142,881 $ 434,753 $ 80,954 $ 117,688
------------ ------------ ------------ ------------
Operating expenses:
Payroll and related costs 9,679 30,655 6,544 20,304
Professional Services 3,250 11,030 0 25,830
Depreciation 40,305 103,446 13,124 21,324
Property taxes 0 1,686 0 8,632
Maintenance and Utilities 7,310 17,757 0 0
Other 1,348 13,833 4,863 18,925
------------ ------------ ------------ ------------
61,892 178,407 24,531 95,015
------------ ------------ ------------ ------------
Operating income 80,989 256,346 56,423 22,673
------------ ------------ ------------ ------------
Nonoperating income (expense):
Interest income 3,650 4,493 318 469
Interest expense (83,152) (251,414) (18,014) (20,580)
Gain on sale of timber from
investment property 0 8,011 0 0
Gain on sale of land 0 0 0 30,229
------------ ------------ ------------ ------------
(79,502) (238,910) (17,696) 10,118
------------ ------------ ------------ ------------
Income (loss) before income taxes 1,487 17,436 38,727 32,791
Income taxes 11,017 11,017 0 1,520
------------ ------------ ------------ ------------
Net income (loss) (9,530) 6,419 38,727 31,271
============ ============ ============ ============
Income (Loss) per common share $ 0 $ 0 $ 0.01 $ 0.01
============ ============ ============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
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Nine Months Ended
June 30,
--------------------------------
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Cash received from leases $ 416,264 $ 117,688
Interest received 4,493 469
Cash paid to suppliers and employees (141,386) (93,976)
Interest paid (251,414) (20,580)
Income taxes paid 0 (1,520)
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Net cash (used in) operating activities 27,957 2,081
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Cash flows from investing activities:
Proceeds from sales of land, timber and installment sales 8,011 43,311
Purchase of fixed assets (262) (21,301)
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Net cash provided by investing activities 7,749 22,010
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Cash flows from financing activities:
Stockholder loan 0 35,000
Principal payments on long-term debt (89,717) (33,302)
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Net cash provided by (used in) financing activities (89,717) 1,698
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Net increase (decrease) in cash (54,011) 25,789
Cash at beginning of period 77,811 12,503
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Cash at end of period $ 23,800 $ 38,292
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</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
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Nine Months Ended
June 30,
--------------------------------
1996 1995
<S> <C> <C>
Reconciliation of net income to net cash provided
operating activities:
Net income $ 6,419 $ 31,271
Depreciation 103,446 21,324
Gain on sale of land (8,011) (30,229)
Deferred taxes 11,017 0
Deferred revenue (18,489) 0
Changes in assets and liabilities:
Decrease in other assets 0 7,828
(Decrease) in liabilities (78,551) (28,113)
Decrease in tax receivable 12,126 0
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Net cash provided by operating activities 27,957 2,081
=========== ===========
Supplemental schedule of non-cash investing and
financing activities:
Draws on construction loan, made through third-party
developer $ 0 $ 2,814,582
=========== ===========
Conversion of construction loan to permanent financing $ 0 $ 4,300,000
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
7
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements are presented in accordance with
the requirements of Form 10-QSB and consequently do not include all of
the disclosures normally required by generally accepted accounting
principles or those normally made in the Company's annual Form 10-KSB
filing. Accordingly, the reader of this Form 10-QSB may wish to refer
to the Company's Form 10-KSB for the year ended September 30, 1995 for
further information.
The financial information has been prepared in accordance with the
Company's customary accounting practices and has not been audited. In
the opinion of management, the information presented reflects all
adjustments necessary for a fair statement of interim results. All such
adjustments are of a normal and recurring nature.
NOTE 2. INVESTMENT IN LEASES AND PROPERTY UNDER OPERATING LEASES
Property leased or held for lease to others under operating leases
consists of the following at June 30, 1996:
Land $ 813,660
Warehouse and buildings 5,566,735
------------
6,380,395
Less accumulated depreciation 706,187
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$ 5,674,208
============
Refer to the Company's Form 10-KSB for the year ended September 30,
1995 for further information on operating lease agreements and terms.
8
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - -------------------------------------------------------------------------------
NOTE 3. SHORT-TERM LOANS - RELATED PARTY
Short-term loans from a director of the Company
consisted of the following at June 30, 1996:
Cash advances, no stated interest rate
or maturity date, unsecured $ 50,500
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NOTE 4. LONG-TERM DEBT
Long-term debt consisted of the following at
June 30, 1996:
7.875% note payable to an insurance company $ 4,207,745
due in monthly payments of $35,633, including
interest, through June 2015, collateralized by
real estate and assignment of lease payments
from the property.
Less current maturities 103,973
------------
$ 4,103,772
============
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's results of operations for the nine month period ended June 30,
1996 and a comparative analysis of the same period for the 1995 year are
presented below:
Increase (Decrease)
1996 Compared to
1995
1996 1995 Amount Percent
Leasing revenue $ 434,753 $ 117,688 $ 317,065 269.0
Operating expenses 178,407 95,015 83,392 88.0
Interest expense 251,414 20,580 230,834 1122.0
Revenue from leasing has increased from 1995 primarily because the lease
agreement for the Washington Road strip center space with Publix Supermarkets,
Inc. became effective May 1995. On an annualized basis, 1996 revenue from
leasing is comparable to the fiscal year ended September 30, 1995. Lease revenue
from other properties owned by the Company has remained level from 1995 to 1996.
In January 1996, the Company renewed the lease agreement for the commercial
building operated as a restaurant. The lease is for a three year period with
annual lease payments of approximately $45,000. All other terms of the lease
are substantially consistent with the previous agreement.
The Company obtained a new tenant to occupy a portion of the additional
leaseable space at the Washington Road strip center. Revenue from the lease
agreement will be approximately $20,000 per year. The Company is continuing to
seek additional tenants for the remaining available leaseable space.
Refer to the Company's Form 10-KSB for the year ended September 30, 1995 for
further information regarding properties owned and lease terms.
Operating expenses for 1996 have increased from 1995 primarily because of
increased maintenance, utility and depreciation costs associated with the
Washington Road strip center. On an annualized basis, 1996 operating
expenses are comparable to the fiscal year ended September 30, 1995.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (CONTINUED)
Operating expenses for 1995 include approximately $24,000 in professional
services costs related to legal proceedings of the Company. These matters were
settled in 1995. Refer to the Company's Form 10-KSB for the year ended
September 30, 1994 for further information on these proceedings.
Interest expense has increased from 1995 because the financing of the strip
center completed in May 1995 is now in place. On an annualized basis, 1996
interest expense is comparable to the fiscal year ended September 30, 1995.
Refer to the Company's Form 10-KSB for the year ended September 30, 1995 for
information regarding the financing of the strip center and management's
expectations for operating and interest expense for the current year.
The Company's ratio of current assets to current liabilities has increased from
the prior quarter to .14. Current assets to current liabilities was .12 at
March 31, 1996, .16 at December 31, 1995, .34 at September 30, 1995 and 3.33 at
June 30, 1995. The decline from the prior year has been primarily caused by
utilizing current assets to liquidate current liabilities, with the current
liability relating to long-term debt remaining substantially constant.
During the current quarter, the Company satisfied liquidity needs through
liquidation of existing assets and through operating revenues. Management of
the Company continues to expect future liquidity needs to be met from operating
revenues of the Company. Primarily from the leasing of the strip center and
from the commercial building operated as a restaurant.
The Company does not expect any significant changes in the number of employees.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
16 Letter on change in certifying accountant.
27 Financial Data Schedule
(b) The Company filed Form 8-K on May 16, 1996 to report a change in
certifying accountant.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SECURITY LAND AND DEVELOPMENT CORPORATION
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(Registrant)
August 9, 1996 BY: /S/ T. GREENLEE FLANAGIN
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T. GREENLEE FLANAGIN
PRESIDENT
CHIEF FINANCIAL OFFICER
13
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INDEX TO EXHIBITS
-----------------
EXHIBIT NUMBER DESCRIPTION SEQUENTIAL PAGE NUMBER
16 Letter on change in certifying account 15
27 Financial Data Schedule 16 and 17
14
<PAGE>
[LETTERHEAD OF MAULDIN & JENKINS GOES HERE]
Securities and Exchange Commission
Washington, DC 20549
We were previously the independent accountants for Security Land and
Development Corporation, and on December 12, 1995, we reported on the
consolidated financial statements of Security Land and Development Corporation
and subsidiary as of and for the two years ended September 30, 1995. On May
15, 1996, as a result of the merger of our Augusta office with another firm, we
resigned as independent accountants of Security Land and Development
Corporation. We have read Security Land and Development Corporation's
statements included under Item 4 of its Form 8-K dated May 16, 1996, and we
agree with such statements.
MAULDIN & JENKINS
/s/ Mauldin & Jenkins
---------------------
Augusta, Georgia
May 16, 1996
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 23,800
<SECURITIES> 0
<RECEIVABLES> 141
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,941
<PP&E> 6,705,352
<DEPRECIATION> 706,187
<TOTAL-ASSETS> 6,023,106
<CURRENT-LIABILITIES> 173,473
<BONDS> 4,103,772
0
0
<COMMON> 623,761
<OTHER-SE> 333,766
<TOTAL-LIABILITY-AND-EQUITY> 6,023,106
<SALES> 0
<TOTAL-REVENUES> 447,257
<CGS> 0
<TOTAL-COSTS> 178,407
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 251,414
<INCOME-PRETAX> 17,436
<INCOME-TAX> 11,017
<INCOME-CONTINUING> 6,419
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,419
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
