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Previous: SCUDDER PORTFOLIO TRUST/, 24F-2NT, 1998-05-07 |
Next: SELAS CORP OF AMERICA, 10-Q, 1998-05-07 |
<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, 1998
[_] 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 March 31, 1998
- ---------------------------- -----------------------------
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:
<TABLE>
<CAPTION>
Page
----
<S> <C>
CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS
ENDED MARCH 31, 1998 AND 1997, AND THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1997 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED MARCH 31, 1998 AND 1997 4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 5
</TABLE>
1
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MARCH 31, 1998
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS
<S> <C>
Cash $ 105,303
Other current assets 1,339
-----------
TOTAL CURRENT ASSETS 106,642
-----------
INVESTMENTS AND OTHER ASSETS
Land and improvements, at cost 909,135
Property leased to others under operating leases, less accumulated
depreciation $918,771 5,061,766
-----------
5,970,901
-----------
$ 6,077,543
===========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C>
Accounts payable $ 3,517
Current portion of long-term debt 101,766
Other current liabilities 71,229
-----------
TOTAL CURRENT LIABILITIES 176,512
-----------
LONG-TERM DEBT, LESS CURRENT MATURITIES 3,926,538
-----------
DEFERRED TAXES 39,502
-----------
DEFERRED INCOME 423,177
-----------
STOCKHOLDERS' EQUITY
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 654,287
-----------
1,611,814
Less subscribed shares 100,000
-----------
1,511,814
-----------
$ 6,077,543
===========
</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 Six Three Six
Months Months Months Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
1998 1998 1997 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues, rent earned $ 167,310 $ 341,480 $ 171,836 $ 367,257
--------- --------- --------- ----------
Operating expenses:
Payroll and related costs 10,876 21,509 13,094 21,605
Depreciation 33,526 67,052 34,313 68,626
Taxes 14,780 38,415 14,534 29,068
Professional services 4,120 7,162 10,837 14,287
Insurance 2,242 4,459 3,942 7,213
Commissions - - 2,600 15,600
Other 16,089 27,699 17,096 26,383
--------- --------- --------- ----------
81,633 166,296 96,416 182,782
--------- --------- --------- ----------
Operating income 85,677 175,184 75,420 184,475
--------- --------- --------- ----------
Financial income (expense):
Interest income 1,177 1,822 452 748
Interest expense (79,656) (159,841) (81,712) (163,914)
--------- --------- --------- ----------
(78,479) (158,019) (81,260) (163,166)
--------- --------- --------- ----------
Income (loss) before income taxes 7,198 17,165 (5,840) 21,309
Applicable income taxes 4,730 8,279 3,499 8,355
--------- --------- --------- ----------
Net income $ 2,468 $ 8,886 $ (9,339) $ 12,954
========= ========= ========= ==========
Income (loss) 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 SIX MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from leases $ 359,103 $ 384,337
Interest received 483 748
Cash paid to suppliers and employees ( 67,498) (142,498)
Interest paid (159,841) (163,914)
Income taxes paid - -
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 131,962 78,673
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of assets - (42,121)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES - (42,121)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (53,457) (49,884)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (53,457) (49,884)
--------- ---------
NET INCREASE (DECREASE) IN CASH 78,505 (13,332)
CASH AT BEGINNING OF PERIOD 26,798 24,097
--------- ---------
CASH AT END OF PERIOD $ 105,303 $ 10,765
========= =========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Net income $ 8,886 $ 12,954
Deferred income taxes 7,529 8,355
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 67,052 68,626
Changes in assets and liabilities
Increase (decrease) in other assets 28,610 16,692
(Decrease) in accounts payable, accrued expenses and
deferrals 19,885 (27,954)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 131,962 $ 78,673
========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt incurred to purchase land investment $ 250,000 $ 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, 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 March 31, 1998:
<TABLE>
<S> <C>
Land $ 512,760
Warehouse and buildings 5,467,777
----------
5,980,537
Less accumulated depreciation 918,771
----------
$5,061,766
==========
</TABLE>
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 March 31, 1998:
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. $4,028,304
==========
Less current maturities 101,766
----------
$3,926,538
==========
5
<PAGE>
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,
1998, and a comparative analysis of the same period for the 1997 year are
presented below:
<TABLE>
<CAPTION>
Increase (Decrease)
1998 Compared to
1997
-------------------
1998 1997 Amount Percent
-------- -------- ------ -------
<S> <C> <C> <C> <C>
Leasing revenue $341,480 $367,257 $(25,777) (7.02)%
Operating expenses 166,296 182,782 (16,486) (9.02)
Interest expense 159,841 163,914 ( 4,073) (2.48)
</TABLE>
Revenue from leasing has decreased from 1997 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 1997 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 of this nature in 1998.
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 have declined from the comparable 1997 six month period
primarily as a result of commissions incurred in 1997 from obtaining new tenants
for the strip center. Other operating expenses for the current quarter are
comparable to the previous quarter and prior year 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 1997 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 March 31, 1998
was .60. The ratio was .03 at March 31, 1998.
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 March 31, 1998.
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)
April 15, 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
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 105,303
<SECURITIES> 0
<RECEIVABLES> 1,339
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 106,642
<PP&E> 5,980,537
<DEPRECIATION> 918,771
<TOTAL-ASSETS> 6,077,543
<CURRENT-LIABILITIES> 176,512
<BONDS> 3,926,538
623,761
0
<COMMON> 0
<OTHER-SE> 654,287
<TOTAL-LIABILITY-AND-EQUITY> 6,077,543
<SALES> 0
<TOTAL-REVENUES> 341,480
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 166,296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 159,841
<INCOME-PRETAX> 17,165
<INCOME-TAX> 8,279
<INCOME-CONTINUING> 8,886
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,886
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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