<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 December 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.
------
SECURITY LAND AND DEVELOPMENT CORPORATION
-----------------------------------------
GEORGIA 58-1088232
- ------------------------------- ----------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2816 Washington Road, #103, Augusta, Georgia 30909
- ---------------------------------------------- ----------------------
(Address of Principal Executive Offices) Zip Code
Issuers Telephone Number (706) 736-6334
--------------
------------------------------------------------------------------
(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 December 31, 1997
- ---------------------------- --------------------------------
Common Stock, $.10 Par Value 5,237,607 shares
Transitional Small Business Disclosure Format: Yes No X
----- -----
<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 DECEMBER 31, 1997 2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS
ENDED DECEMBER 31, 1997 AND 1996 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS
ENDED DECEMBER 31, 1997 AND 1996 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Cash $ 83,537
Other current assets 1,339
----------
TOTAL CURRENT ASSETS 84,876
----------
INVESTMENTS AND OTHER ASSETS
Land and improvements, at cost 909,135
Property leased to others under operating leases, less accumulated
depreciation $885,245 5,095,291
----------
6,004,426
----------
$6,089,302
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,517
Current portion of long-term debt 101,766
Other current liabilities 56,030
----------
TOTAL CURRENT LIABILITIES 161,313
----------
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,953,781
----------
DEFERRED TAXES 35,522
----------
DEFERRED INCOME 429,340
----------
STOCKHOLDERS' EQUITY
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 651,819
----------
1,609,346
Less subscribed shares 100,000
----------
1,509,346
----------
$6,089,302
==========
</TABLE>
See notes to the condensed consolidated financial statements.
2
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Revenues, rent earned $ 174,170 $ 195,421
--------- ---------
Operating expenses:
Payroll and related costs 10,633 8,511
Depreciation 33,526 34,313
Taxes 23,635 14,554
Professional services 3,042 3,450
Insurance 2,217 3,271
Commissions - 13,000
Other 11,610 9,287
--------- ---------
84,663 86,386
--------- ---------
Operating income 89,507 109,035
--------- ---------
Financial income (expense):
Interest income 645 296
Interest (expense) ( 80,185) ( 82,202)
--------- ---------
( 79,540) ( 81,906)
--------- ---------
Income before income taxes 9,967 27,129
Applicable income taxes 3,549 4,856
--------- ---------
Net income $ 6,418 $ 22,273
========= =========
Income per common share $ - $ -
========= =========
</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 THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from leases $197,955 $217,328
Interest received 645 296
Cash paid to suppliers and employees (35,462) (95,203)
Interest paid (80,185) (82,202)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 82,953 40,219
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (26,214) (24,698)
-------- --------
NET CASH (USED IN) FINANCING ACTIVITIES (26,214) (24,698)
-------- --------
NET INCREASE IN CASH 56,739 15,521
CASH AT BEGINNING OF PERIOD 26,798 24,097
-------- --------
CASH AT END OF PERIOD $ 83,537 $ 39,618
======== ========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income $ 6,418 $ 22,273
Deferred income taxes 3,549 4,856
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 33,526 34,313
Changes in assets and liabilities
(Decrease) in other assets (3,694) (1,339)
Increase in accounts payable, accrued expenses and deferrals 43,154 (19,884)
-------- --------
NET CASH (USED IN) OPERATING ACTIVITIES $ 82,953 $ 40,219
======== ========
</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, 1997 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 December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Land $ 512,760
Warehouse and buildings 5,467,726
----------
5,980,486
Less accumulated depreciation 885,245
----------
</TABLE>
$5,095,291
==========
Refer to the Company's Form 10-KSB for the year ended September 30, 1997 for
further information on operating lease agreements and terms.
NOTE 3 - LONG-TERM DEBT
Long-term debt consisted of the following at December 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. $4,055,547
----------
Less current maturities 101,766
----------
$3,953,781
==========
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's results of operations for the three month period ended December
31, 1997, and a comparative analysis of the same period for the 1997 year are
presented below:
<TABLE>
<CAPTION>
Increase (Decrease)
1997 Compared to
1996
------------------
1997 1996 Amount Percent
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Leasing revenue $174,170 $195,421 $(21,251) (10.8)%
Operating expenses 84,663 86,386 (1,723) (1.9)
Interest expense 80,185 81,906 (1,721) (2.1)
</TABLE>
Revenue from leasing has decreased from 1996 primarily as a result of the
following:
a. During the quarter ended June 30, 1997, the Company sold leased property
located in Augusta, Georgia, operated by the tenant as a restaurant. Leasing
revenue from the property was approximately $11,000 per quarter. See Form
10-QSB for the quarter ended June 30, 1997 for details of the sale.
b. A payment of additional common area maintenance fees received during the
comparable 1996 quarter from several tenants at the retail strip center
located on Washington Road in Augusta, Georgia. These additional payments
were non-recurring and the Company did not expect to receive additional
payments in the quarter ended December 31, 1997.
On an annualized basis, current revenue from leasing has decreased from leasing
revenue for the Company's fiscal year ended September 30, 1997.
Refer to the Company's Form 10-KSB for the year ended September 30, 1997 for
further information regarding the properties owned and lease terms.
Operating expenses for the current quarter are comparable to 1996 and, on an
annualized basis, are comparable to the Company's operating expenses for the
fiscal year ended September 30, 1997. Management of the Company expects
quarterly operating expenses for the remainder of the fiscal year to be
comparable to the current quarter.
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, 1997.
The Company's ratio of current assets to current liabilities at December 31,
1997 was .50. The ratio was .32 at December 31, 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.
6
<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 December 31, 1997.
7
<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)
February 10, 1998 By: /s/ T. Greenlee Flanagin
----------------------------
T. GREENLEE FLANAGIN
President
Chief Executive Officer
8
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit Number Description Sequential Page Number
27 Financial Data Schedule 10 - 11
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 83,537
<SECURITIES> 0
<RECEIVABLES> 1,339
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 84,876
<PP&E> 6,889,671
<DEPRECIATION> 885,245
<TOTAL-ASSETS> 6,089,302
<CURRENT-LIABILITIES> 161,313
<BONDS> 3,953,781
623,761
0
<COMMON> 0
<OTHER-SE> 651,819
<TOTAL-LIABILITY-AND-EQUITY> 1,509,346
<SALES> 0
<TOTAL-REVENUES> 174,170
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 84,663
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80,185
<INCOME-PRETAX> 9,967
<INCOME-TAX> 3,187
<INCOME-CONTINUING> 6,418
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,418
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
