<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, 1999
[_] 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
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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, 1999
- ---------------------------- ----------------------------
Common Stock, $.10 Par Value 5,237,607 shares
Transitional Small Business Disclosure Format: Yes ___________ No X
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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 June 30, 1999 2
Condensed Consolidated Statements of Income for the Nine Months
Ended June 30, 1999 and 1998, and the Three Months Ended
June 30, 1999 and 1998 3
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 1999 and 1998 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)
June 30, 1999
ASSETS
<TABLE>
<CAPTION>
Current assets
<S> <C>
Cash $ 147,677
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Total current assets 147,677
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Investments and other assets
Land and improvements, at cost 909,135
Property leased to others under operating leases, less accumulated
depreciation $1,086,400 4,894,136
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5,803,271
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$5,950,948
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,517
Current portion of long-term debt 119,064
Other current liabilities 71,417
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Total current liabilities 193,998
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Long-term debt, less current maturities 3,754,682
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Deferred taxes 52,368
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Deferred income 392,362
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Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 700,011
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1,657,538
Less subscribed shares 100,000
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1,557,538
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$5,950,948
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</TABLE>
See notes to the condensed consolidated financial statements.
2
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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,
1999 1999 1998 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rent earned $ 167,956 $ 494,226 $ 166,114 $ 507,594
--------- --------- --------- ---------
167,956 494,226 166,114 507,594
--------- --------- --------- ---------
Operating expenses:
Payroll and related costs 11,604 36,821 9,795 31,303
Depreciation 33,526 100,578 33,526 100,578
Taxes 14,719 44,886 14,554 52,969
Professional services 3,670 24,580 5,490 12,652
Insurance 2,401 8,893 3,975 8,434
Other 11,368 37,237 9,110 36,012
--------- --------- --------- ---------
77,288 252,995 76,450 241,948
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Operating income 90,668 241,231 89,664 265,646
--------- --------- --------- ---------
Nonoperating income (expense):
Interest income 1,804 4,815 - 1,025
Interest expense (102,333) (257,891) (79,131) (238,972)
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(100,529) (253,076) (79,131) (237,947)
--------- --------- --------- ---------
Income (loss) before income taxes ( 9,861) ( 11,845) 10,533 27,699
Income taxes 2,963 8,890 3,614 11,893
--------- --------- --------- ---------
Net income (loss) $ ( 12,824) $ ( 20,735) $ 6,919 $ 15,806
========= ========= ========= =========
Income per common share $ - $ - $ - $ -
========= ========= ========= =========
</TABLE>
See notes to the condensed consolidated financial statements.
3
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SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
Cash flows from operating activities
Cash received from leases $ 506,738 $ 519,054
Interest received 4,815 1,024
Cash paid to suppliers and employees (165,294) ( 87,394)
Interest paid (257,891) (238,972)
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Net cash provided by operating activities 88,368 193,712
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Cash flows from financing activities
Principal payments on long-term debt ( 97,939) ( 81,241)
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Net cash used in financing activities ( 97,939) ( 81,241)
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Net increase (decrease) in cash ( 9,571) 112,471
Cash at beginning of period 157,248 26,798
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Cash at end of period $ 147,677 $ 139,269
========= =========
Reconciliation of net income (loss) to net cash provided by
operating activities:
Net income (loss) $( 20,735) $ 15,806
Depreciation 100,578 100,578
Deferred taxes 8,890 11,893
Deferred revenue ( 18,489) ( 18,490)
Net change in assets and liabilities 18,124 83,925
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Net cash provided by operating activities $ 88,368 $ 193,712
========= =========
Supplemental schedule of non-cash investing and financing activities
Debt incurred to purchase land investment $ - $ 250,000
========= =========
</TABLE>
See notes to the condensed consolidated financial statements.
4
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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, 1998 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, 1999:
<TABLE>
<S> <C>
Land $ 512,760
Warehouse and buildings 5,467,776
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5,980,536
Less accumulated depreciation 1,086,400
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$4,894,136
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</TABLE>
Refer to the Company's Form 10-KSB for the year ended September 30, 1998 for
further information on operating lease agreements and terms.
Note 3 - Long-term debt
Long-term debt consisted of the following at June 30, 1999:
<TABLE>
<S> <C>
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. $3,873,746
Less current maturities 119,064
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$3,754,682
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</TABLE>
5
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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,
1999, and a comparative analysis of the same period for the 1998 year are
presented below:
<TABLE>
<CAPTION>
Increase (Decrease)
1999 Compared to
1998
-------------------
1999 1998 Amount Percent
-------- -------- ------ -------
<S> <C> <C> <C> <C>
Leasing revenue $494,226 $507,594 $(13,368) (2.63)%
Operating expenses 252,995 241,948 (11,047) 4.57 %
Interest expense 257,891 238,972 18,919 7.92 %
</TABLE>
Revenue from leasing has decreased from 1998 primarily as a result of decreased
common area maintenance fees from leased property and from a tenant vacancy at
the Company's retail strip center located on Washington Road in Augusta,
Georgia. The vacancy was not related to the strip center's anchor tenant.
On an annualized basis, current revenue from leasing has declined from leasing
revenue for the Company's fiscal year ended September 30, 1998.
Refer to the Company's Form 10-KSB for the year ended September 30, 1998 for
further information regarding the properties owned and lease terms.
Operating expenses for 1999 include professional fees paid to a developer to
assist the Company in identifying real estate opportunities in the Company's
market area. The Company did not incur expenses of this nature during 1998.
Except for this professional expense, operating expenses for the current quarter
are comparable to 1998 and, on an annualized basis, are comparable to the
Company's operating expenses for the fiscal year ended September 30, 1998.
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 and for the current year has increased
from 1998 as a result of the timing of a principal and interest payment during
the current quarter in which an additional payment has been recognized in the
current quarter. Management expects interest expense for the year ended
September 30, 1999 to decline from interest expense from the previous year as
the outstanding debt continues to amortize.
The Company's ratio of current assets to current liabilities at June 30, 1999
was .75. The ratio was .70 at June 30, 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
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Year 2000
Management believes internally there are no material Year 2000 issues associated
with the Company's simple EDP system. The Company is considering Year 2000
exposure related to a material concentration of business with the Company's
tenant Publix Supermarkets at the retail strip center. At this time management
cannot predict if there will be a material cost associated with Year 2000
compliance for this major customer and material concentration of business.
Cautionary Note Regarding Forward-Looking Statements
The Company may, from time to time, make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission (the "Commission") and its reports to
stockholders. Such forward-looking statements are made based on management's
belief as well as assumptions made by, and information currently available to,
management pursuant to "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may differ
materially from the results anticipated in these forward-looking statements due
to a variety of factors, including, but not limited to, competition from other
real estate companies, the ability of the Company to obtain financing for
projects, and the continuing operations of tenants.
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, 1999.
8
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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
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(Registrant)
August 1, 1999 By: /s/ T. Greenlee Flanagin
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T. GREENLEE FLANAGIN
President
Chief Executive Officer
9
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INDEX TO EXHIBITS
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Exhibit Number Description 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-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 147,667
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 147,667
<PP&E> 5,980,536
<DEPRECIATION> 1,086,400
<TOTAL-ASSETS> 5,950,948
<CURRENT-LIABILITIES> 193,998
<BONDS> 3,754,682
0
0
<COMMON> 623,761
<OTHER-SE> 700,011
<TOTAL-LIABILITY-AND-EQUITY> 5,950,948
<SALES> 0
<TOTAL-REVENUES> 494,226
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 241,981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 257,891
<INCOME-PRETAX> (11,095)
<INCOME-TAX> 9,640
<INCOME-CONTINUING> (20,735)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,735)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
