<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
For the quarterly period ended June 30, 1997
[ ] Transition Report Pursuant to 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________________ to _________________
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
- -------------------------------------------- -----
(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, 1997
- ---------------------------- ----------------------------
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
----
Condensed Consolidated Balance Sheet as of June 30, 1997 2
Condensed Consolidated Statements of Income for the Three Months
Ended June 30, 1997 and 1996, and the Nine Months Ended
June 30, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
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SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 1997
ASSETS
<TABLE>
<S> <C>
Current assets
Cash $ 99,104
Other current assets 250,000
---------
Total current assets 349,104
---------
Investments and other assets
Land and improvements, at cost 659,136
Property leased to others under operating leases, less accumulated
depreciation $818,189 5,162,206
---------
5,821,342
---------
$6,170,446
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 6,039
Current portion of long-term debt 101,766
Other current liabilities 63,908
Short-term loans, related party 50,500
---------
Total current liabilities 222,213
---------
Long-term debt, less current maturities 4,006,191
---------
Deferred taxes 34,007
---------
Deferred income 441,665
---------
Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 608,843
---------
1,566,370
Less subscribed shares 100,000
---------
1,466,370
---------
$6,170,446
=========
</TABLE>
See notes to the condensed consolidated financial statements.
2
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1997 1997 1996 1996
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue:
Rents earned $ 170,768 $ 538,025 $142,881 $ 434,753
Gain on sale of property 232,142 232,142 - -
-------- -------- ------- --------
402,910 770,167 142,881 434,753
-------- -------- ------- --------
Operating expenses:
Payroll and related costs 8,767 30,372 9,679 30,655
Depreciation 33,526 102,152 40,305 103,446
Taxes 14,569 43,637 - 1,686
Professional services 5,000 19,287 3,250 11,030
Insurance 4,358 11,571 5,621 12,468
Commissions 222 15,822 - -
Other 10,897 37,402 3,037 19,122
-------- -------- ------- --------
77,339 260,243 61,892 178,407
-------- -------- ------- --------
Operating income 325,571 509,924 80,989 256,346
-------- -------- ------- --------
Nonoperating income (expense):
Interest income 659 1,407 3,650 4,493
Interest expense ( 85,705) (249,619) (83,152) (251,414)
Gain on sale of timber from
investment property - - - 8,011
-------- -------- ------- --------
( 85,046) (248,212) (79,502) (238,910)
-------- -------- ------- --------
Income (loss) before income taxes 240,525 261,712 1,487 17,436
Income taxes 23,570 31,803 11,017 11,017
-------- -------- ------- --------
Net income (loss) $ 216,955 $ 229,909 $( 9,530) $ 6,419
======== ======== ======= ========
Income (loss) per common share $ .04 $ .04 $ - $ -
======== ======== ======= ========
</TABLE>
See notes to the condensed consolidated financial statements.
3
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ --------------
<S> <C> <C>
Cash flows from operating activities
Cash received from leases $ 549,083 $ 416,264
Interest received 1,407 4,493
Cash paid to suppliers and employees (166,356) (141,386)
Interest paid (249,619) (251,414)
-------- --------
Net cash provided by operating activities 134,515 27,957
-------- --------
Cash flows from investing activities
Purchase of investment property (342,122) -
Cash received from sale of investment property 608,184 -
Proceeds from sales of land, timber and
installment sales - 8,011
Purchase of fixed assets - ( 262)
Funds advanced to acquire investment property (250,000) -
-------- --------
Net cash provided by investing activities 16,062 7,749
-------- --------
Cash flows from financing activities
Principal payments on long-term debt ( 75,570) ( 89,717)
--------- ---------
Net cash (used in) financing activities ( 75,570) ( 89,717)
--------- ---------
Net increase (decrease) in cash 75,007 ( 54,011)
Cash at beginning of period 24,097 77,811
-------- --------
Cash at end of period $ 99,104 $ 23,800
======== ========
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 229,909 $ 6,419
Depreciation 102,152 103,446
Gain on sale of property (232,142) ( 8,011)
Deferred taxes 31,803 11,017
Deferred revenue ( 18,489) ( 18,489)
Changes in assets and liabilities:
Decrease in other assets 29,547 -
(Decrease) in liabilities ( 8,265) ( 78,551)
Decrease in tax receivable - 12,126
-------- --------
Net cash provided by operating activities $ 134,515 $ 27,957
======== ========
Supplemental schedule of non-cash investing and
financing activities
Debt incurred to purchase land investment,
retired prior to June 30, 1997 $ 300,000 $ -
======== ========
</TABLE>
See notes to the condensed consolidated financial statements.
4
<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, 1996 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, 1997:
<TABLE>
<S> <C>
Land $ 512,760
Warehouse and buildings 5,467,635
---------
5,980,395
Less accumulated depreciation 818,189
---------
$5,162,206
=========
</TABLE>
Refer to the Company's Form 10-KSB for the year ended September 30, 1996 for
further information on operating lease agreements and terms.
Note 3 - Short-term loans - related party
Short-term loans from a director of the Company consisted of the following at
June 30, 1997:
<TABLE>
<S> <C>
Cash advances, no stated interest rate or maturity
date, unsecured $ 50,500
=========
</TABLE>
Note 4 - Long-term debt
Long-term debt consisted of the following at June 30, 1997:
7.875% note payable to an insurance company due in monthly
payments of $35,633, including interest, through
June 2015, collateralized by real estate and assignment
of lease payments from the property. $4,107,957
Less current maturities 101,766
---------
$4,006,191
=========
5
<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,
1997, and a comparative analysis of the same period for the 1996 year are
presented below:
<TABLE>
<CAPTION>
Increase (Decrease)
1997 Compared to
1996
-------------------
1997 1996 Amount Percent
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Leasing revenue $538,025 $434,753 $103,272 23.8%
Operating expenses 260,243 178,407 81,836 45.9
Interest expense 249,619 251,414 ( 1,795) (1.0)
</TABLE>
Revenue from leasing has increased from 1996 primarily as a result of additional
space being leased at the strip-center facility on Washington Road. On an
annualized basis, current revenue from leasing exceeds revenue from leasing for
the Company's fiscal year ended September 30, 1996, as the Company leased
additional space at the strip-center with the lease inceptions being near or
subsequent to September 30, 1996. Lease revenue from other properties owned by
the Company has remained constant.
Refer to the Company's Form 10-KSB for the year ended September 30, 1996, for
further information regarding properties owned, lease terms and lease expiration
information.
Operating expenses have increased from 1996 primarily because of property taxes
recognized in the current period and commissions paid in the current period for
services related to obtaining new tenants at the strip-center. On an annualized
basis, current operating expenses exceed operating expenses for the Company's
fiscal year ended September 30, 1996, primarily due to increased maintenance
costs at the strip-center and commissions paid for obtaining new tenants at the
strip-center.
Interest expense for the current quarter and nine month period is comparable to
1996, and on an annualized basis is comparable to the Company's interest expense
for the fiscal year ended September 30, 1996.
During the current quarter the Company sold the leased investment property of
approximately 1.6 acres on Washington Road in Augusta, operated as a restaurant.
The Company realized a gain of $232,142 from the sale. The Company has
sufficient net operating loss carryforwards to avoid the payment of corporate
income tax on this realized gain. After application of the loss carryforwards
to the realized gain, the Company had approximately $60,000 of loss carryforward
available for future use.
Proceeds from the sale were used to retire the $300,000 note with a local bank.
See Form 10-QSB for the quarter ended March 31, 1997 for further explanation of
this note.
Proceeds from the sale were also advanced to an unrelated party to purchase
investment property. The Company is considering an Internal Revenue Code Section
1031 tax-deferred like-kind exchange involving the purchase of this property
through an intermediary if the requirements of Section 1031 have been met by the
Company.
6
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation (Continued)
The Company's ratio of current assets to current liabilities at June 30, 1997,
was 1.57. The ratio was .03 at March 31, 1997, .32 at December 31, 1996, and
was .22 at September 30, 1996.
During the current quarter, the Company satisfied liquidity needs through
operating revenues. Management of the Company continues to expect future
liquidity needs to be met from operating revenues of the Company.
The Company does not expect any significant change in the number of employees.
7
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PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the three months
ended June 30, 1997.
8
<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 & DEVELOPMENT CORPORATION
---------------------------------------
(Registrant)
August 10, 1997 By: /s/ T. Greenlee Flanagin
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T. GREENLEE FLANAGIN
President
Chief Executive Officer
9
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INDEX TO EXHIBITS
-----------------
Exhibit Number Decription Sequential Page Number
27 Financial Data Schedule 11 - 12
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 99,104
<SECURITIES> 0
<RECEIVABLES> 250,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 349,104
<PP&E> 6,639,531
<DEPRECIATION> 818,189
<TOTAL-ASSETS> 6,170,446
<CURRENT-LIABILITIES> 222,213
<BONDS> 4,107,957
0
0
<COMMON> 623,761
<OTHER-SE> 333,766
<TOTAL-LIABILITY-AND-EQUITY> 6,170,446
<SALES> 0
<TOTAL-REVENUES> 770,167
<CGS> 0
<TOTAL-COSTS> 260,243
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 249,619
<INCOME-PRETAX> 261,712
<INCOME-TAX> 31,803
<INCOME-CONTINUING> 229,909
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 229,909
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
</TABLE>
