<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to ______________________
Commission File Number 0-7865.
------
SECURITY LAND AND DEVELOPMENT CORPORATION
(A GEORGIA CORPORATION)
INTERNAL REVENUE SERVICE
EMPLOYER IDENTIFICATION NUMBER 58-1088232
2816 WASHINGTON ROAD, #103, AUGUSTA, GA 30909
TELEPHONE NUMBER 706-736-6334
Securities registered pursuant to Section 12(b) of the Act
None
Securities registered pursuant to Section 12(g) of the Act
Common Stock
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the 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 ____
---
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.[X]
The registrant's total revenues for the fiscal year ended September 30, 1999
were $694,165.
As of the close of the period covered by this report, registrant had outstanding
5,258,886 shares of common stock. There is no established market for the common
stock of the registrant. Therefore, the aggregate market value of the voting
stock held by non-affiliates of the registrant is not known.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
PART I.
ITEM 1. DESCRIPTION OF BUSINESS
Security Land and Development Corporation (the "Company") was organized and
incorporated in Georgia in 1970. The Company, including its wholly owned
subsidiary, the Royal Palms Motel, Inc., has developed two (2) primary business
activities, these activities being (1) the acquisition of undeveloped land for
investment purposes and sale at a future date or development of the land and
sale after developed and, (2) the acquisition or development of income producing
properties for investment purposes and income from leasing activities. The
Company's principal office and activities are in Augusta, Georgia.
The Company's primary development and income producing activities are:
1. Retail strip center on approximately 15 acres on Washington Road in
Augusta. Approximately 56,000 square feet is being leased to Publix
Supermarkets, Inc. and is operated as a retail food supermarket. The
remaining approximately 13,000 square feet of rental space is available for
lease to additional tenants. At September 30, 1999, approximately 11,700
square feet of this space was leased. The Company owns approximately 35
acres of undeveloped land adjacent to the strip center and is marketing
this property for sale as commercial and residential real estate.
2. Building on approximately 1.6 acres of land in Augusta. Approximately 1.4
acres of this property (which includes the building) was sold to the
current tenant during the Company's fiscal year ending September 30, 1997.
The remaining approximately .2 acres is adjacent to the retail strip center
and was retained by the Company. See Item 6, "Management's Discussion and
Analysis or Plan of Operation - Results of Operations" for information
regarding the sale of this property.
3. Sixteen-acre industrial property site located in Athens, Georgia. The site
contains a warehouse facility that is in poor condition, with none of the
facility in a leaseable condition. Management of the Company believes the
value of this investment to be the industrial site property.
4. Commercial property on Washington Road in Augusta, currently leased as a
single family home.
The Company owns certain other properties that are fully described in Item 2,
"Description of Property."
Construction of the retail strip center in Augusta was completed in May 1995 and
the lease with Publix became effective May 15, 1995. The center represents
approximately 95% of the Company's net leased assets. Leasing revenue from the
lease with Publix Supermarkets, Inc. represented 86% and 77% of the Company's
total leasing revenue for the years ended September 30, 1999 and 1998,
respectively. Management of the Company expects this lease to continue to
provide a substantial portion of the Company's revenue from leasing. See Item
2, "Description of Property" for additional information related to this property
and the lease agreement.
1
<PAGE>
The warehouse facility on the industrial property site in Athens provided 0% and
2% of the Company's total leasing revenue for the years ended September 30, 1999
and 1998, respectively. Occupancy of the warehouse has been less than 10%
annually for the past three years. While there are no known competing bulk
warehouses in Athens, the demand for bulk storage space has been insufficient to
obtain substantial occupancy. Management of the Company does not expect leasing
revenue from this facility to contribute substantially to the Company's
continuing leasing revenue. See "Description of Property" for additional
information related to this property and lease agreements.
The Company owns additional undeveloped land in Dublin, Georgia and in the
Augusta, Georgia area that is being held for investment purposes.
A significant portion of the Company's real estate owned is on or near
Washington Road in Augusta, Georgia. The area contains a large number of
business establishments. Management of the Company believes that land in this
area is in great demand and that the market value of the property owned is
greater than the carrying value.
The Company presently has three part-time employees, all of whom are officers
and/or stockholders of the Company.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns developed and undeveloped real estate in several locations in
the State of Georgia. There are no limitations on the percentage of assets which
may be invested in any one property or type of property. The Company acquires
various properties for investment purposes and for leasing activities.
The Company currently owns the following properties in fee simple interest:
1. Strip center on approximately 15 acres on Washington Road in Augusta,
Georgia.
2. Approximately 35 acres of undeveloped land on Washington Road in Augusta,
Georgia, adjacent to the strip center owned by the Company.
3. Industrial property site on approximately 16 acres in Athens, Georgia.
4. A 68% interest in 3.68 acres with a residential structure on Washington
Road in Augusta, Georgia.
5. A 68% interest in 6.92 undeveloped acres on Washington Road in Augusta,
Georgia.
6. 108 undeveloped acres in south Richmond County, Georgia.
7. A one-acre lot adjacent to the Royal Palms Motel in Augusta, Georgia.
8. One lot on Stanley Drive in Augusta, Georgia.
2
<PAGE>
9. Approximately 1.0 acres of undeveloped land on Old Evans Road, near
Washington Road in Augusta, Georgia.
10. One undeveloped lot in Dublin, Georgia.
11. Approximately 1.0 acres of undeveloped land held for investment purposes on
Washington Road in Augusta, Georgia.
Description of real estate and operating data -
The net book value of the strip center amounts to approximately 77% of the
Company's total assets at September 30, 1999. No other property owned by the
Company at September 30, 1999, had a book value amounting to ten percent or more
of the total assets of the Company.
Construction of the retail strip center on Washington Road was completed May
1995. The center has 69,000 square feet of available lease space. The center was
constructed with the intention of being operated as a strip center and is
suitable and adequate for such purpose. The Company has leased 56,000 square
feet to Publix Supermarkets, Inc., which, as the center's anchor store, operates
a retail food supermarket. The Company, as lessor, has a twenty year lease
agreement with Publix. The lease became effective May 15, 1995. The lease
provides for annual rentals of $463,205, and for the Company to receive 1.25% of
this store's annual gross sales in excess of approximately $37 million. For the
Company's years ended September 30, 1999 and 1998, the supermarket had not
achieved this sales level. The lease also provides for Publix to reimburse the
Company for property taxes paid on the facility on a pro rata basis of the space
occupied by Publix. For 1999 this reimbursement was approximately $33,890. At
the lessee's option the lease may be extended in five year increments for an
additional twenty years on substantially the same lease terms. As part of the
lease agreement, Publix contributed approximately $500,000 to the construction
of the facility. The Company capitalized this contribution and is recognizing it
as revenue over the twenty year life of the lease. The center, excluding land,
cost approximately $4,800,000. The Company has financed the center with a
$4,300,000 loan fixed at 7.875% interest amortized monthly for twenty years.
Annual principal and interest payments are $427,596. The balance of the loan was
$3,842,397 at September 30, 1999. The loan matures May 2015 and will be fully
amortized at that time. The loan is secured by the center and the assignment of
lease payments from the property. The property is located on Washington Road in
Augusta, Georgia. This road is the location of numerous business establishments,
including competing strip centers. The road also has a high volume of traffic
providing potential customers for the Company's tenants. The Company's operation
of the center is dependent upon management's ability to maintain an anchor
tenant and to maintain a high occupancy of the 13,000 square feet leased to
other tenants. The Company competes with other strip centers in the area to
maintain stable occupancy. Management of the Company believes that the location
and visibility of the center provides for favorable conditions for maintaining
occupancy. At September 30, 1999, the Company had leased 90% of the 13,000
square feet not leased to Publix. These individual leases have terms of from
three to five years with monthly lease payments ranging from $1,200 to $2,800.
Following is certain information regarding the strip center at September 30,
1999:
3
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Occupancy rate - 98% (Publix is the only tenant to occupy 10% or more of
the leasable square feet.)
Effective rental rates - Square Feet Rental Per
Leased Square Foot
------ -----------
Publix Supermarkets, Inc. 56,146 $ 8.85
Other tenants 11,700 14.69
The principal business of the other tenants currently includes a hair salon,
take-out restaurant, pet service store, dry cleaner and similar small business
operations.
Schedule of lease expirations for each of the next ten years, beginning with the
Company's year end September 30, 2000 is presented below (does not include
potential extensions).
<TABLE>
<CAPTION>
Total area in Percentage of
Number of tenants square feet Annual rental gross annual
Year ending whose leases will covered by represented by rental represented
September 30, expire expiring leases expiring leases by expiring leases
- ------------- ------ --------------- --------------- -------------------
<S> <C> <C> <C> <C>
2000 4 5,200 66,954 10%
2001 2 2,600 30,690 6
2002 - - - -
2003 1 1,300 16,900 4
2004 - - - -
2005 - 2009 - - - -
</TABLE>
The percentage of gross annual rental represented by expiring leases as
presented above is based on the gross annual rental for the current year and was
calculated as if each lease was in effect for the full twelve month fiscal
period.
The Company currently does not have plans for significant renovations or
improvements to the center.
The Federal tax basis of the center, excluding land and before accumulated
depreciation, is $4,832,562. Accumulated depreciation is $888,036. The
building and structure is being depreciated by the straight-line method over 39
years. The site work of the center is being depreciated by the 150% declining
balance method over 15 years. Total property taxes on the center for 1999 were
$41,839.
The approximately 35 acres of undeveloped land adjacent to the strip center has
a Federal tax basis of $222,272. There is no debt on the property. The land is
accessed from Washington Road and Stanley Drive. The Company currently has no
plans for development or improvement of this property and is currently marketing
this property for sale as professional and residential real estate. The property
is located in an area of continued development with a decreasing supply of
vacant land. The close proximity of the land to the strip center owned by the
Company may also enhance the competitive marketability of the property. Total
property taxes on the property were $2,462 for 1999.
4
<PAGE>
The industrial property site located in Athens, Georgia is known as Chase Park
and is located on approximately 16 acres of land on Barber, Oneta and Chase
Streets. The site contains two bulk warehouse storage facilities with a combined
total space of 248,000 square feet. The warehouse is in poor condition and is in
need of substantial repairs. None of the 248,000 square feet is in a leaseable
condition. This facility is currently for sale by the Company. The declining
condition of the warehouse and the weak demand for warehouse space may be a
detriment to the Company's ability to successfully market this property.
However, management of the Company believes the value of this investment to be
industrial property and not the warehouse facility. There is no debt on the
property. The Federal tax basis of the property net of accumulated depreciation
of $575,026 is $216,853 at September 30, 1999. The property is being depreciated
by the straight-line method over an average life of eighteen years. Annual real
estate taxes are $3,457. Due to the non-occupancy of the warehouse, presentation
of average annual effective rental rates would not provide meaningful
information.
The approximately 1.0 acres of undeveloped land on Old Evans Road in Augusta,
Georgia has a Federal tax basis of $342,122. There is no debt on the property.
The Company currently has no plans for development or improvement of this
property. The property is held by the Company for investment and appreciation.
The property is located in an area of Augusta that has experienced both
commercial and residential growth for a number of years. This land is also
located near Washington Road (though not near the strip center). The continued
development in this area and the decreasing supply of vacant land may enhance
the appreciation and future marketability of the property. Total property taxes
on the property were $3,137 for 1999.
The approximately 4.0 acres of undeveloped land on Washington Road in Augusta,
Georgia has a federal tax basis of $250,000. There is no debt on the property.
The property is held by the Company for investment and appreciation. Total
property taxes on the property were $3,370 for 1999.
The combined Federal tax basis of the remaining investment properties of the
Company is approximately $140,000. There is no debt on any of these properties.
The properties are undeveloped real estate held by the Company for investment
and appreciation. The Company currently has no plans for development or
improvement of these properties.
All of the properties owned by the Company, including properties for which the
Company is a less than 100% owner, are owned in fee simple interest.
In the opinion of management of the Company, all of the properties owned by the
Company are adequately covered by insurance.
ITEM 3. LEGAL PROCEEDINGS
The Company is presently not a party to any matters of litigation.
ITEM 4. SUBMISSION OF MATTERS TO SECURITY HOLDERS
The annual meeting of stockholders of the Company was held on March 2, 1999, for
the purpose of voting to set the number of directors serving the Company to
seven, to elect a slate of directors to serve the Company, and to elect an audit
firm for the Company.
5
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no public trading market for the Company's securities. The approximate
number of holders of the Company's common stock is 750.
No dividends have been declared or paid during the two years ending September
30, 1999. The Company has no restrictions that currently, or that may
reasonably be expected, to limit materially the amount of dividends paid.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's primary business activities are the acquisition, development and
leasing of developed and undeveloped real estate. The objectives of the Company
are capital appreciation from real estate investments and income from leasing.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Increase (Decrease)
1999 compared to
1998
---------------------
1999 1998 Amount Percent
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Leasing revenue $694,165 $719,968 $ (25,803) (4)%
Operating expenses 357,507 319,993 37,514 12
Interest expense 333,942 317,537 16,405 5
Net income 8,129 75,345 (67,216) (89)
</TABLE>
<TABLE>
<CAPTION>
Increase (Decrease)
1998 compared to
1997
---------------------
1998 1997 Amount Percent
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Leasing revenue $719,968 $741,304 (21,336) (3)%
Operating expenses 319,993 336,325 (16,332) (5)
Interest expense 317,537 343,306 (25,769) (8)
Land sale - 231,694 (231,694) (100)
Net income 75,345 266,467 (191,122) (72)
</TABLE>
Revenue from leasing activities is provided by the following properties:
1999 1998 1997
-------- --------- --------
Retail strip center $671,221 $ 682,961 $688,354
Bulk storage warehouse 1,400 3,400 9,400
Commercial building, operated as a restaurant - - 26,043
Other 21,544 33,607 17,507
6
<PAGE>
Years Ended September 30, 1999 and 1998
The retail strip center was completed in May 1995, with 1996 being the first
full twelve month period of operations. The center consists of approximately
69,000 square feet. Approximately 56,000 square feet is leased to Publix
Supermarkets, Inc. as the center's anchor store. See Item 2, "Description of
Property" for information regarding the lease agreement with Publix. The
remaining approximately 13,000 square feet is available for lease to additional
tenants. This additional space was 90% leased as of the period ending September
30, 1999 and 90% leased as of the period ended September 30, 1998. Also see Item
2, "Description of Property" for effective rental rates and lease expirations
related to this property.
Leasing revenue from the retail strip center remained relatively consistent
compared with respective prior year's amounts. However, a slight decline from
1998 did occur primarily as a result of uncollectible rents from certain
tenants. Management expects the strip center to be a principal activity of the
Company and to continue to provide a substantial portion of the Company's
operating revenue.
Revenue from the bulk storage warehouse on the industrial property site has
declined from 1998 to 1999. Occupancy of the warehouse has been less than 10%
annually for the last four years. This property is currently for sale by the
Company.
Revenue from the Company's other leasing properties has remained relatively
constant from 1998.
Operating expenses increased $37,514 (12%) from 1998. Management of the Company
expects operating expenses for 2000 to be consistent with 1999. Significant line
item expense fluctuations from 1998 to 1999 are presented below.
Commission expense increased $5,200 from 1998 due to commissions paid to
professionals for leasing property owned by the Company.
Repairs and maintenance expense increased approximately $6,400 from 1998 as a
result of fees paid to have property, owned by the Company, graded in
preparation for future leasing.
Professional services expenses increased approximately $9,800 from 1998 due to
fees paid to a consultant to locate additional tenants for the Company's
properties and to locate potential purchasers for the Company's properties
currently for sale.
An increase from 1998 of approximately $8,300 in payroll and related costs was
primarily the result of a salary increase awarded an employee of the Company for
assuming additional responsibilities.
Interest expense for the current fiscal year has increased from 1998 as a result
of the timing of a principal and interest payment during the current fiscal year
in which an additional payment has been recognized in the current fiscal year.
Management expects interest expense for the year ending September 30, 2000 to
decline from interest expense for the current fiscal year as the outstanding
debt continues to amortize.
Income tax expense decreased approximately $10,800 from 1998 due to the
Company's decrease in income before income taxes.
7
<PAGE>
The ratio of current assets to current liabilities was .83 at September 30,
1999, and was .93 at September 30, 1998. Management of the Company expects
future liquidity needs of the Company to be met from operating revenues of the
Company.
The Company believes that the market value of much of the real estate owned by
the Company is greater than the original cost and that significant value has
been added to the real estate by the continued development and decreasing supply
of vacant land in the area. These properties are available as a source of
capital to the Company.
Years Ended September 30, 1998 and 1997
The retail strip center was completed in May 1995, with 1996 being the first
full twelve month period of operations. The center consists of approximately
69,000 square feet. Approximately 56,000 square feet is leased to Publix
Supermarkets, Inc. as the center's anchor store. See Item 2, "Description of
Property" for information regarding the lease agreement with Publix. The
remaining approximately 13,000 square feet is available for lease to additional
tenants. This additional space was 90% leased as of the periods ending
September 30, 1998 and 1997.
Leasing revenue from the retail strip center decreased $8,189 (2%) from 1997,
primarily as a result of the following:
a. decrease in the effective rental rate from 1997 on the 13,000 additional
square feet.
b. approximately $40,000 of common area maintenance fees received from center
tenants in 1998. Fees received in 1997 were approximately $60,000.
Management expects the strip center to be a principal activity of the Company
and to continue to provide a substantial portion of the Company's operating
revenue.
Revenue from the bulk storage warehouse on the industrial property site has
declined from 1997 to 1998. Occupancy of the warehouse has been less than 10%
annually for the last three years. This property is currently for sale by the
Company. During the current year a company not related to the Company allowed
an option to purchase this property expire. The Company recognized
approximately $15,000 of revenue from the expiration of the option.
There was no revenue from the commercial building operated as a restaurant in
1998 as this property was sold by the Company to the current tenants in the 1997
year. The Company realized a gain of $231,694 from the sale. The proceeds of
the sale were used to acquire 1.0 acres of undeveloped land near Augusta.
During the year ended September 30, 1998, the Company also used proceeds from
the sale to acquire approximately 1.0 acres of undeveloped land adjacent to the
retail strip center. The Company intends to hold these properties for investment
and future development.
Revenue from the Company's other leasing properties has remained relatively
constant from 1997.
Operating expenses decreased $16,332 (5%) from 1997. Except as stated below,
management of the Company expects operating expenses for 1999 to be consistent
with 1998. Significant line item expense fluctuations from 1997 to 1998 are
presented below.
8
<PAGE>
Commission expense decreased $16,805 from 1997 due to commissions paid to
professionals for sale of land in 1997. Management expects commission expense
for 1999 to increase from 1998 due to the hiring of a consultant to locate
additional tenants for the Company's properties and to locate potential
purchasers for the Company's properties currently for sale.
Income tax expense decreased $16,809 from 1997 due to the Company's decrease in
income before income taxes.
The liquidity of the Company improved in 1998 primarily as a result of increased
funds provided by the increased occupancy of the retail strip center. The ratio
of current assets to current liabilities was .93 at September 30, 1998, and was
.37 at September 30, 1997. Management of the Company expects future liquidity
needs of the Company to be met from operating revenues of the Company.
The Company believes that the market value of much of the real estate owned by
the Company is greater than the original cost and that significant value has
been added to the real estate by the continued development and decreasing supply
of vacant land in the area. These properties are available as a source of
capital to the Company.
Year 2000
Management believes internally there are no material Year 2000 issues associated
with the Company's simple EDP system. The Company utilizes off-the-shelf
software and cost to replace or upgrade is insignificant. The Company is
developing a plan to address its Year 2000 exposure related to material
concentration of business in one customer, Publix Supermarkets, a major retail
grocery chain. Management does not know 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.
9
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
The following consolidated financial statements of Security Land & Development
Corporation and Subsidiary are included herein:
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Report of Independent Certified Public Accountants 11
Consolidated Balance Sheets as of September 30, 1999 and 1998 12
Consolidated Statements of Income and Comprehensive Income
for the years ended September 30, 1999 and 1998 13
Consolidated Statements of Stockholders' Equity for the years
ended September 30, 1999 and 1998 14
Consolidated Statements of Cash Flows for the years ended
September 30, 1999 and 1998 15
Notes to Consolidated Financial Statements 16 - 21
</TABLE>
10
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Security Land and Development
Corporation and Subsidiary
Augusta, Georgia
We have audited the accompanying consolidated balance sheets of Security Land
and Development Corporation and Subsidiary as of September 30, 1999 and 1998,
and the related consolidated statements of income and comprehensive income,
stockholders' equity and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Security Land and
Development Corporation and Subsidiary as of September 30, 1999 and 1998, and
the consolidated results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles.
/s/ Cherry, Bekaert & Holland, L.L.P.
Augusta, Georgia
November 12, 1999
11
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 1999 and 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Current assets
Cash and cash equivalents $ 155,916 $ 157,248
Lease payments receivable 34,031 31,141
---------- ----------
Total current assets 189,947 188,389
---------- ----------
Investments and other assets
Land and improvements, at cost 909,135 909,135
Property leased to others under operating leases, less
accumulated depreciation 1999 $1,119,927; 1998 $985,222 4,860,470 4,994,574
Deferred tax asset 7,877 -
---------- ----------
Total investments and other assets 5,777,482 5,903,709
---------- ----------
$5,967,429 $6,092,098
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Accounts payable $ 3,517 $ 3,578
Accrued expenses 28,781 22,687
Accrued property taxes 68,094 61,546
Current maturities of long-term debt 128,786 119,063
---------- ----------
Total current liabilities 229,178 206,874
---------- ----------
Long-term debt, less current maturities 3,713,611 3,852,622
---------- ----------
Deferred taxes 52,039 43,478
---------- ----------
Deferred income 386,199 410,851
---------- ----------
Stockholders' equity
Common stock, par value $.10 per share, authorized 30,000,000
shares; issued 6,258,886, outstanding 5,258,886 623,761 623,761
Additional paid-in capital 333,766 333,766
Retained earnings 728,875 720,746
---------- ----------
1,686,402 1,678,273
Less subscribed shares (1,000,000 shares) 100,000 100,000
---------- ----------
Total stockholders' equity 1,586,402 1,578,273
---------- ----------
$5,967,429 $6,092,098
========== ==========
</TABLE>
See notes to consolidated financial statements.
12
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Income and Comprehensive Income
Years ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Revenue, rents earned $ 694,165 $ 719,968
--------- ---------
Operating expenses
Payroll and related costs 49,847 41,549
Depreciation 134,104 134,104
Repairs and maintenance 32,734 26,312
Property taxes 68,167 61,546
Commissions 5,200 -
Professional services 31,756 21,975
Insurance 13,737 12,153
Other 21,962 22,354
--------- ---------
357,507 319,993
--------- ---------
Operating income 336,658 399,975
--------- ---------
Nonoperating income (expense)
Interest income 6,847 5,162
Interest expense (333,942) (317,537)
--------- ---------
(327,095) (312,375)
--------- ---------
Income before income taxes 9,563 87,600
Applicable income taxes 1,434 12,255
--------- ---------
Net income $ 8,129 $ 75,345
========= =========
Income per common share $0.00 $0.02
========= =========
</TABLE>
See notes to consolidated financial statements.
13
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock
---------------------- Total
Outstanding Par Paid-In Retained Subscribed Stockholders'
Shares Value Capital Earnings Shares Equity
----------- -------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
September 30, 1997 5,258,886 $623,761 $333,766 $645,401 $100,000 $1,502,928
Net income - - - 75,345 - 75,345
--------- -------- -------- -------- -------- ----------
Balance,
September 30, 1998 5,258,886 623,761 333,766 720,746 100,000 1,578,273
Net income - - - 8,129 - 8,129
--------- -------- -------- -------- -------- ----------
Balance,
September 30, 1999 5,258,886 $623,761 $333,766 $728,875 $100,000 $1,586,402
========= ======== ======== ======== ======== ==========
</TABLE>
See notes to consolidated financial statements.
14
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Cash received from leases $ 666,623 $ 705,856
Interest received 6,847 5,162
Cash paid to suppliers and employees (211,572) (152,955)
Interest paid (333,942) (317,537)
--------- ---------
Net cash provided by operating activities 127,956 240,526
--------- ---------
Cash flows from investing activities
Purchase of investment real estate - (250,000)
Advanced funds to purchase real estate - 250,000
--------- ---------
Net cash provided by investing activities - -
--------- ---------
Cash flows from financing activities
Principal payments on long-term debt (129,288) (110,076)
--------- ---------
Net cash used in financing activities (129,288) (110,076)
--------- ---------
Net increase (decrease) in cash and cash equivalents (1,332) 130,450
Cash and cash equivalents
Beginning 157,248 26,798
--------- ---------
Ending $ 155,916 $ 157,248
========= =========
Reconciliation of net income to net cash provided by
operating activities
Net income $ 8,129 $ 75,345
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 134,104 134,103
Amortization of deferred income (24,652) (24,651)
Changes in assets and liabilities:
Increase in accrued property tax 6,548 40,243
Net change in other asset and liability accounts 3,827 15,486
--------- ---------
Net cash provided by operating activities $ 127,956 $ 240,526
========= =========
</TABLE>
See notes to consolidated financial statements.
15
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 1999 and 1998
Note 1 - Nature of business and significant accounting policies
Nature of business
Security Land and Development Corporation is engaged in the acquisition of
developed and undeveloped real estate to be held for investment purposes or to
be developed and leased as income producing property. Acquired and leased
properties are within the State of Georgia, predominantly in Richmond, Columbia
and Clarke counties.
Royal Palms Motel, Inc., a wholly-owned subsidiary of Security Land and
Development Corporation, is presently not engaged in business operations. The
assets and liabilities of the subsidiary are not significant to the consolidated
statement presentation.
For the years ended September 30, 1999 and 1998, substantially all operating
revenues and operating expenses were related to the activity of real estate
leasing. For 1999 and 1998, approximately 95% of net leased assets consisted of
a retail strip center of which approximately 80% is leased to a regional food
supermarket.
During the years ended September 30, 1999 and 1998, leasing revenues were
received from predominantly one property. The retail strip center provided
approximately 90% of gross leasing revenue for each of the years. During 1999
and 1998, approximately 80% of revenue from the strip center was from a lease
with a regional food supermarket.
During the year ended September 30, 1999 the Company adjusted its reported
number of common shares outstanding to 5,258,886 from the amounts previously
presented in annual reports and financial statements. The adjustment had no
effect on net income or earnings per share of previous year or current year
annual reports or financial statements.
Significant accounting policies
Basis of presentation - The consolidated financial statements include the
- ---------------------
accounts of Security Land and Development Corporation and its wholly-owned
subsidiary, Royal Palms Motel, Inc., (described on a consolidated basis as the
"Company"). Significant intercompany transactions and accounts are eliminated
in consolidation.
Use of estimates - The preparation of financial statements in conformity with
- ----------------
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Revenue recognition - The Company recognizes rental and lease payments as
- -------------------
revenue in the lease period to which the payment relates. Revenue from sales of
real estate is recognized when appropriate actions have been completed by
purchaser and seller to support revenue recognition.
16
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
September 30, 1999 and 1998
Note 1 - Nature of business and significant accounting policies - Continued
Property, equipment and land - Property, equipment and land is stated at cost.
- ----------------------------
Depreciation of property and equipment is computed principally by the straight-
line method over the following estimated useful lives:
Property leased to others 30 - 40 years
Fixtures and furnishings 5 - 7 years
Maintenance and repairs of property and equipment are charged to operations and
major improvements which extend the useful life of the assets are capitalized.
Upon retirement, sale or other disposition of property and equipment, the cost
and accumulated depreciation are eliminated from the accounts and the gain or
loss is included in income in the period of disposition.
Cash and cash equivalents - For purposes of reporting cash flows, the Company
- -------------------------
considers financial instruments of a demand nature to be cash equivalents.
Income taxes - The Company files a consolidated tax return.
- ------------
Provisions for income taxes are based on amounts reported in the consolidated
statements of income and comprehensive income and include deferred taxes on
temporary differences in the recognition of income and expense for tax and
financial statement purposes. Deferred taxes are computed on the liability
method.
Earnings per share - Earnings per share are calculated on the basis of the
- ------------------
weighted average number of shares outstanding. The Company has no stock option
plans.
Fair value of financial instruments - In preparing fair value estimate
- -----------------------------------
disclosures, the Company generally utilizes quoted market prices for financial
instruments. In cases where quoted market prices are not available for certain
financial instruments, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by the
assumptions used.
New accounting pronouncements - The Financial Accounting Standards Board has
- -----------------------------
issued the following Statements of Financial Accounting Standards (SFAS) that
the Company has adopted during the current year or is evaluating for adoption:
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information". This Statement establishes standards for the manner of
reporting information about operating segments, products and services in a
set of financial statements. This Statement was adopted by the Company
during the current year and did not have a material effect on the Company's
financial reporting.
17
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
September 30, 1999 and 1998
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 September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Land $ 512,760 $ 512,760
Warehouse and buildings 5,467,637 5,467,636
---------- ----------
5,980,397 5,980,396
Less accumulated depreciation 1,119,927 985,822
---------- ----------
$4,860,470 $4,994,574
========== ==========
</TABLE>
The Company's primary leasing activity is a retail strip center.
Approximately 80% of the retail strip center is leased to a regional food
supermarket. The lease requires minimum annual rental payments of $463,200,
expires in 2015 and is renewable for a total of an additional twenty years at
substantially the same lease terms. The lease provides for the supermarket to
pay for interior maintenance and utilities and property taxes on a proportional
basis.
In construction of the retail strip center, the supermarket contributed
approximately $500,000 to the cost of the construction. The Company has
recorded this contribution as a deferred revenue and is recognizing the revenue
using the straight-line method over the twenty-year life of the lease with the
supermarket.
The lease agreement also provides for the Company to receive each year 1.25% of
the individual supermarket's gross sales in excess of approximately $37 million.
For 1999 and 1998, the supermarket did not achieve this sales level.
At September 30, 1999, future minimum lease payments under the operating lease
agreements for the retail strip center are as follows (not including potential
extensions):
<TABLE>
<CAPTION>
<S> <C>
2000 $ 536,545
2001 500,856
2002 480,105
2003 467,430
2004 463,205
Thereafter 4,554,845
---------
$7,002,986
=========
</TABLE>
The Company has other lease agreements that are short-term in nature and are not
material for inclusion in the above presentation.
18
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
September 30, 1999 and 1998
Note 3 - Long-term debt
Long-term debt consisted of the following at September 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
7.875% note payable to an insurance company due in monthly
payments of $35,633, including interest, through June 2015,
collateralized by retail strip center and assignment of lease
payments from the property. $3,842,397 $3,971,685
Less current maturities 128,786 119,063
---------- ----------
$3,713,611 $3,852,622
========== ==========
</TABLE>
Aggregate maturities of long-term debt are due as follows:
2000 $ 128,786
2001 139,302
2002 150,677
2003 162,981
2004 176,289
Later 3,084,362
----------
$3,842,397
==========
All interest incurred for 1999 and 1998 was expensed by the Company.
Note 4 - Related party transactions
A director of the Company is also an investor of an entity that is a tenant at
the retail strip center. Total gross leasing revenue from this tenant was
approximately $33,800 for the 1999 year end, and $33,800 for 1998.
Note 5 - Income taxes
The total income taxes in the consolidated statements of income are as follows:
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1999 1998
------ ------
<S> <C> <C>
Deferred tax expense $1,434 $ 13,534
Net change, deferred tax valuation allowance - (1,279)
------ --------
Deferred tax expense $1,434 $ 12,255
====== ========
</TABLE>
19
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
September 30, 1999 and 1998
Note 5 - Income taxes (Continued)
The Company's provision for income taxes differs from the amounts computed by
applying the Federal income tax statutory rates to income before income taxes.
A reconciliation of the differences is as follows:
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
------------------ ------------------
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
Tax at statutory rate $1,434 15% $ 13,140 15%
Increase (decrease) in income taxes
resulting from:
Valuation allowance - - (1,279) ( 2)
Other, net - - 394 1
------ ------- ---------- -------
Provision for income taxes $1,434 15% $ 12,255 14%
====== ======= ========== =======
</TABLE>
Net deferred tax assets consist of the following components as of September
30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Loss carryforwards $ 12,280 $ 4,403
Less valuation allowance 4,403 4,403
------- -------
7,877 -
------- -------
Deferred tax liabilities, leased property 52,039 43,478
------- -------
$(52,039) $(43,478)
======= =======
</TABLE>
For the year ended September 30, 1996, the Company recorded a net adjustment to
the deferred tax valuation allowance of $14,838, for a total valuation allowance
of $24,518. For the year ending September 30, 1997, the Company utilized a
substantial portion of the deferred tax asset and recorded a reduction in the
valuation allowance of $18,753. For the year ended September 30, 1998, the
Company reduced the valuation allowance by $1,279, and has not adjusted the
allowance during 1999. The valuation allowance is to reduce the recorded
deferred tax assets to an amount that management believes will ultimately be
realized. Realization of deferred tax assets is dependent upon sufficient future
taxable income during the period that deductible temporary differences and
carryforwards are expected to be available to reduce taxable income.
At September 30, 1999, the Company has approximately $76,000 of net operating
loss carryforwards for tax purposes available for use by the Company. The
carryforwards expire from 2010 to 2013.
20
<PAGE>
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Notes to Consolidated Financial Statements - Continued
September 30, 1999 and 1998
Note 6 - Fair values of financial instruments
Methods and assumptions of determining estimated fair value, and the estimated
fair values of the Company's financial instrument assets and liabilities are as
follows at September 30, 1999 and 1998:
Cash and cash equivalents - Due to their demand nature, the estimated fair
value approximates the carrying amount.
Long-term debt - The fair value of the long-term debt is estimated based on
management's estimate of interest rates available to the Company for
comparable debt having similar remaining maturities and collateral
requirements. The estimated fair value at September 30, 1999 was
approximately $3.7 million, compared to the carrying amount of
approximately $3.8 million. The estimated fair value at September 30, 1998
was approximately $3.8 million, compared to the carrying amount of
approximately $3.9 million.
Note 7 - Year 2000 (unaudited)
Many existing computer systems and applications, and other control devices,
use only two digits to identify a year in the date field, without
considering the impact of the upcoming changes in the century. As a result,
such systems and applications could fail or create erroneous results unless
corrected so that they can process data related to the year 2000. Security
Land and Development Corporation and Subsidiary (the "Corporation") relies
on its systems, applications, and devices in operating and monitoring all
major aspects of its business, including financial systems, customer
services, infrastructure, embedded computer chips, networks, and
telecommunications equipment and end products. The Corporation also relies,
directly and indirectly, on external systems of other companies and
organizations such as suppliers, creditors, financial services
organizations and governmental entities for accurate exchange of data. The
Corporation's current estimate is that the costs associated with the year
2000 issue will not have a material adverse effect on the results of
operations or financial position of the Corporation in any given year.
However, despite the Corporation's efforts to address the year 2000 impact
on its internal systems, the Corporation cannot fully predict such impact
or whether it can resolve it without disruption of its business and without
incurring significant expense. In addition, even if the internal systems of
the Corporation are not materially affected by the year 2000 issue, the
Corporation could be affected through disruption in the operation of the
enterprises with which the Corporation interacts.
21
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following table sets forth certain information for the current directors and
executive officers of the Company. There are no arrangements or understandings
between any officers and any other persons pursuant to the election of the
officers.
<TABLE>
<S> <C>
NAME, AGE AND
POSITION LAST FIVE YEARS BUSINESS EXPERIENCE
W. Stewart Flanagin, Jr. Pharmacist and store owner of Hill Drug Company and past manager
51 - Chairman of Board of Directors since 1983; of Revco Drug Store, Inc.
member of Board since 1983; brother of President.
T. Greenlee Flanagin Licensed real estate agent
50 - President since 1983; member of Board since
1983; brother of Chairman of Board.
M. David Alalof Former President; stockholder and agent with A.H.S. Inc., an
55 - Vice President; member of Board since 1977. insurance concern
E. R. Murphy Retired
81 - Assistant Secretary/Treasurer; member of Board
since 1980.
John C. Bell, Jr. Attorney at Law
51 - Member of Board since 1983.
Gregory B. Scurlock Senior Vice President, First Union Bank, Augusta, GA
51 - Secretary/Treasurer; member of Board since
1983.
Robert M. Flanagin Licensed real estate agent
41 - Member of Board since 1987.
brother of President and Chairman.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the SEC thereunder require the Company's executive officers and
directors and persons who own more than 10% of the Company's Common Stock, as
well as certain affiliates of such persons, to file initial reports of ownership
and reports of changes in ownership with the SEC. Executive officers, directors
and persons owning more than 10% of the Company's Common Stock are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. Based solely on its review of the copies of such forms received by
it and written representations that no other reports were required for those
persons, the Company believes that during the fiscal year ended September 30,
1999 the Company's executive officers, directors and owners of more than 10% of
its Common Stock complied with all filing requirements.
22
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
The table below shows the compensation of the Chief Executive Officer for the
three most recent fiscal years. There were no executive officers whose
compensation exceeded $100,000.
NAME COMPENSATION DATE
T. Greenlee Flanagin $28,586 September 30, 1999
T. Greenlee Flanagin 26,216 September 30, 1998
T. Greenlee Flanagin 20,616 September 30, 1997
There were no annuity, pension or retirement benefits paid during the fiscal
year ended September 30, 1999 and none are proposed to be paid to any officer or
director of Security Land & Development Corporation.
The Company does not have a stock option plan.
Each Director of the Company receives compensation of $100 per Director's
meeting for services performed as a Director.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders:
The following table sets forth certain information regarding the beneficial
ownership of the common stock as of September 30, 1999 by each person who is
known to the Board of Directors of the Company to own beneficially five percent
(5%) or more of the outstanding common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
<S> <C> <C>
T. Greenlee Flanagin (1) 781,205 14.8
Ann Flanagin Smith (1) 387,541 7.3
W. Stewart Flanagin, Jr. (1) 463,052 8.8
Robert Flanagin (1) 499,083 9.4
John C. Bell, Jr. 330,865 6.3
</TABLE>
(1) Combined with the following, these individuals form the "Flanagin family
group":
<TABLE>
<S> <C> <C>
W. Stewart Flanagin, Sr. 79,585 1.5
Harriette F. Flanagin 34,008 0.6
</TABLE>
The Flanagin family group owns 2,244,474 shares which is approximately 43% of
all shares of stock outstanding.
23
<PAGE>
Security Ownership of Management:
The following table sets forth certain information with respect to the
beneficial ownership of the common stock, as of September 30, 1999, by Directors
and executive officers:
<TABLE>
<CAPTION>
NAME OF COMMON STOCK
BENEFICIAL BENEFICIALLY PERCENT
OWNER ADDRESS OWNED OF CLASS
<S> <C> <C> <C>
W. Stewart Flanagin, Jr. 1117 Glenn Avenue 463,052 8.8
Augusta, GA 30904
T. Greenlee Flanagin 3326 Wheeler Road 781,205 14.9
Augusta, GA 30903
M. David Alalof P.O. Box 15637 27,526 0.5
Augusta, GA 30909
E. R. Murphy 2224 Anthony Road 50,000 0.9
Augusta, GA 30904
John C. Bell, Jr. P.O. Box 1547 330,865 6.3
Augusta, GA 30903
Gregory B. Scurlock 821 Heard Avenue 500 0.1
Augusta, GA 30904
Robert M. Flanagin 3052 Skinner Mill Road 499,083 9.4
Augusta, GA 30909
All Directors and officers as a group
consisting of seven individuals. 2,125,231 40.5
</TABLE>
The Flanagin family and all Directors and Officers as a group beneficially own
2,626,365 shares which is approximately 50% of all shares of stock outstanding.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of business, the Company may enter into transactions with
Directors, officers or security holders. During 1999 and 1998, the Company did
not enter into any such transactions that are required to be presented under
this Item.
24
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits required by Item 601 of Regulation S-B.
EXHIBIT
NUMBER DESCRIPTION
11 Computation of Earnings Per Share
21 Subsidiaries of the Registrant
27 Financial data schedules
b) The Company did not file any reports on Form 8-K during the quarter ended
September 30, 1999.
25
<PAGE>
INDEX TO EXHIBITS
Page
11 Computation of Earnings Per Share 28
21 Subsidiaries of the Registrant 29
27 Financial data schedules 30 and 31
26
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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)
/s/ T. Greenlee Flanagin December 20, 1999
------------------------------------------------------
T. GREENLEE FLANAGIN (Date)
President
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date so indicated.
/s/ W. Stewart Flanagin, Jr. December 20, 1999
------------------------------------------------------
W. STEWART FLANAGIN, JR. (Date)
Chairman of Board
Chief Financial Officer
Chief Accounting Officer
/s/ M. David Alalof December 20, 1999
------------------------------------------------------
M. DAVID ALALOF (Date)
Secretary-Treasurer
/s/ E. R. Murphy December 20, 1999
------------------------------------------------------
E. R. MURPHY (Date)
Assistant Secretary-Treasurer
/s/ Gregory B. Scurlock December 20, 1999
------------------------------------------------------
GREGORY B. SCURLOCK (Date)
Director
27
<PAGE>
EXHIBIT 11. COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Year Ended
September 30,
1999 1998
<S> <C> <C>
Net income $ 8,129 $ 75,345
Weighted average number of shares outstanding 5,237,607 5,237,607
---------- ----------
Net income per common shares $ 0.00 $ 0.02
========== ==========
</TABLE>
<PAGE>
EXHIBIT 21. SUBSIDIARIES OF THE REGISTRANT
Royal Palms Motel, Inc. - 100% owned by Security Land & Development Corporation.
Incorporated in Georgia. Presently not engaged in business activities.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 155,916
<SECURITIES> 0
<RECEIVABLES> 34,031
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 189,947
<PP&E> 6,889,532
<DEPRECIATION> 1,119,927
<TOTAL-ASSETS> 5,967,429
<CURRENT-LIABILITIES> 229,178
<BONDS> 3,713,611
623,761
0
<COMMON> 0
<OTHER-SE> 333,766
<TOTAL-LIABILITY-AND-EQUITY> 5,967,429
<SALES> 0
<TOTAL-REVENUES> 694,165
<CGS> 0
<TOTAL-COSTS> 357,507
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 333,942
<INCOME-PRETAX> 9,563
<INCOME-TAX> 1,434
<INCOME-CONTINUING> 8,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,129
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
