<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 March 31, 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
--- ---
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 March 31, 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:
<TABLE>
<CAPTION>
Page
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<S> <C>
Condensed Consolidated Balance Sheet as of March 31, 1997 2
Condensed Consolidated Statements of Income for the Six Months
Ended March 31, 1997 and 1996, and the Three Months Ended
March 31, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended March 31, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
</TABLE>
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SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Balance Sheet
(Unaudited)
March 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets
Cash $ 10,765
Other current assets 2,480
----------
Total current assets 13,245
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Investments and other assets
Land and improvements, at cost 659,135
Property leased to others under operating leases, less
accumulated depreciation $808,601 5,571,795
Deferred tax 16,244
----------
6,247,174
----------
$6,260,419
==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current liabilities
Accounts payable $ 3,517
Current portion of long-term debt 101,766
Note payable, bank 300,000
Other current liabilities 48,262
Short-term loans, related party 50,500
----------
Total current liabilities 504,045
----------
Long-term debt, less current maturities 4,031,877
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Deferred taxes 27,255
----------
Deferred income 447,828
----------
Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 391,887
----------
1,349,414
Less subscribed shares 100,000
----------
1,249,414
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$6,260,419
==========
</TABLE>
See notes to the condensed consolidated financial statements.
2
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SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
<TABLE>
<CAPTION>
Condensed Consolidated Statements of Income
(Unaudited)
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
1997 1997 1996 1996
------------ ------------ ------------ --------
<S> <C> <C> <C> <C>
Revenues, rent earned $ 171,836 $ 367,257 $ 146,042 $ 291,872
--------- --------- --------- ---------
Operating expenses:
Payroll and related costs 13,094 21,605 12,356 20,976
Depreciation 34,313 68,626 31,571 63,141
Taxes 14,534 29,068 1,686 1,686
Professional services 10,837 14,287 7,755 7,780
Insurance 3,942 7,213 -- --
Commissions 2,600 15,600 -- --
Other 17,096 26,383 12,583 22,933
--------- --------- --------- ---------
96,416 182,782 65,951 116,516
--------- --------- --------- ---------
Operating income 75,420 184,475 80,091 175,356
--------- --------- --------- ---------
Financial income (expense):
Interest income 452 748 180 843
Interest expense (81,712) (163,914) (83,857) (168,261)
Gain on sale of timber -- -- 8,011 8,011
--------- --------- --------- ---------
(81,260) (163,166) (75,666) (159,407)
--------- --------- --------- ---------
Income (loss) before
income tax (benefit) ( 5,840) 21,309 4,425 15,949
Applicable income tax 3,499 8,355 -- --
--------- --------- --------- ---------
Net income (loss) $ ( 9,339) $ 12,954 $ 4,425 $ 15,949
========= ========= ========= =========
Income (loss) per
common share $ -- $ -- $ -- $ --
========= ========= ========= =========
</TABLE>
See notes to the condensed consolidated financial statements.
3
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
<TABLE>
<CAPTION>
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 1997 and 1996
(Unaudited)
1997 1996
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<S> <C> <C>
Cash flows from operating activities
Cash received from leases $ 384,337 $ 279,548
Interest received 748 843
Cash paid to suppliers and employees (142,498) (122,429)
Interest paid (163,914) (168,261)
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Net cash provided by (used in) operating activities 78,673 (10,299)
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Cash flows from investing activities
Proceeds from asset sales - 8,011
Purchase of assets (42,121) (262)
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Net cash provided by (used in) investing activities (42,121) 7,749
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Cash flows from financing activities
Principal payments on long-term debt (49,884) (46,118)
Principal payments on long-term debt, stockholder - (19,852)
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Net cash (used in) financing activities (49,884) (65,970)
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Net (decrease) in cash (13,332) (68,520)
Cash at beginning of period 24,097 77,811
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Cash at end of period $ 10,765 $ 9,291
=========== ==========
Reconciliation of net income to net cash provided by (used in)
operating activities
Net income $ 12,954 $ 15,949
Deferred income tax 8,355 -
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation 68,626 63,141
Changes in assets and liabilities
Increase (decrease) in other assets 16,692 (8,011)
(Decrease) in accounts payable, accrued expenses and deferrals (27,954) (81,378)
------------ ----------
Net cash provided by (used in) operating activities $ 78,673 $ (10,299)
============ ==========
Supplemental schedule of non-cash investing and financing activities
Debt incurred to purchase land investment $ 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 March 31, 1997:
Land $ 813,660
Warehouse and buildings 5,566,736
-----------
6,380,396
Less accumulated depreciation 808,601
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$ 5,571,795
===========
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
March 31, 1997:
Cash advances, no stated interest rate or maturity date, $ 50,500
unsecured ===========
Note 4 - Note payable, bank
At March 31, 1997, the Company had a $300,000 note to a local bank with interest
at the prime rate plus 1%. Payments of interest are due monthly. The note
matures with principal due September 1997. The note is collateralized by land
and real estate.
5
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements (Continued)
Note 5 - Long-term debt
Long-term debt consisted of the following at March 31, 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.
$4,133,643
Less current maturities 101,766
----------
$4,031,877
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6
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ITEM 2. Management's Discussion and Analysis or Plan of Operation
The Company's results of operations for the six month period ended March 31,
1997, and a comparative analysis of the same period for the 1996 year are
presented below:
Increase (Decrease)
1997 Compared to
1996
-------------------
1997 1996 Amount Percent
---------- ---------- ------ -------
Leasing revenue $367,257 $291,872 $ 75,385 25.8%
Operating expenses 182,782 116,516 66,266 56.9
Interest expense 163,914 168,261 (4,347) (2.6)
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 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 ended March 31, 1997, the Company purchased
approximately one acre of undeveloped land on Washington Road in Augusta.. This
land is the Washington Road frontage property for the 68% interest in 6.92
undeveloped acres already owned by the Company on Washington Road. The purchase
price of the property was approximately $342,000. The Company paid approximately
$42,000 in cash and financed $300,000 on a six month note with a local bank.
See Item 1, Note 4, for details of the note.
The note is secured by land and a building owned by the Company, which is
currently leased. The Company is currently negotiating the sale of this
collateral property to the current tenants and intends to pay off the $300,000
note to the local bank with proceeds from the sale.
The Company's ratio of current assets to current liabilities at March 31, 1997,
was .03. The ratio was .32 at December 31, 1996, .22 at September 30, 1996, and
.12 at March 31, 1996.
7
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation (Continued)
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. As explained
above, the Company expects to pay off the current liability note payable to the
bank through the proceeds of the sale of a non-current asset.
The Company does not expect any significant change in the number of employees.
8
<PAGE>
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 March 31, 1997.
9
<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)
April 29, 1997 By: /s/ T. Greenlee Flanagin
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T. GREENLEE FLANAGIN
President
Chief Executive Officer
10
<PAGE>
INDEX TO EXHIBITS
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Exhibit Number Decription Sequential Page Number
27 Financial Data Schedule 12 - 13
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 10,765
<SECURITIES> 0
<RECEIVABLES> 2,480
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,245
<PP&E> 6,380,396
<DEPRECIATION> 808,601
<TOTAL-ASSETS> 6,260,419
<CURRENT-LIABILITIES> 504,045
<BONDS> 4,031,877
0
0
<COMMON> 623,761
<OTHER-SE> 333,766
<TOTAL-LIABILITY-AND-EQUITY> 6,260,419
<SALES> 0
<TOTAL-REVENUES> 367,257
<CGS> 0
<TOTAL-COSTS> 182,782
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163,914
<INCOME-PRETAX> 21,309
<INCOME-TAX> 8,355
<INCOME-CONTINUING> 12,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,954
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
