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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, 2000
[_] 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, 2000
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Common Stock, $.10 Par Value 5,258,886 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:
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<CAPTION>
Page
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Condensed Consolidated Balance Sheet as of June 30, 2000 2
Condensed Consolidated Statements of Income for the Nine Months
Ended June 30, 2000 and 1999, and the Three Months Ended
June 30, 2000 and 1999 3
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 2000 and 1999 4
Notes to Condensed Consolidated Financial Statements 5
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SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 2000
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<S> <C>
ASSETS
Current assets
Cash $ 119,354
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Total current assets 119,354
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Investments and other assets
Land and improvements, at cost 1,677,591
Property leased to others under operating leases, less accumulated
depreciation $617,570 4,562,729
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6,240,320
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Replacement property funds 511,585
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$6,871,259
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,517
Current portion of long-term debt 128,786
Accrued interest 25,146
Other current liabilities 83,385
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Total current liabilities 240,834
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Long-term debt, less current maturities 3,628,826
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Deferred taxes 196,277
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Deferred income 367,710
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Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 1,580,085
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2,537,612
Less subscribed shares 100,000
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2,437,612
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$6,871,259
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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)
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<CAPTION>
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2000 2000 1999 1999
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<S> <C> <C> <C> <C>
Revenues:
Rent earned $ 164,902 $ 504,073 $ 167,956 $ 494,226
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Operating expenses:
Payroll and related costs 12,580 41,393 11,604 36,821
Depreciation 30,310 97,362 33,526 100,578
Taxes 17,500 52,268 14,719 44,886
Professional services 4,320 20,340 3,670 24,580
Insurance 2,958 9,283 2,401 8,893
Other 10,165 34,676 11,368 37,237
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77,833 255,322 77,288 252,995
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Operating income 87,069 248,751 90,668 241,231
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Nonoperating income (expense):
Gain on sale of property 311,816 973,910 - -
Interest income 1,593 6,340 1,804 4,815
Interest expense (74,394) (224,926) (102,333) (257,891)
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239,015 755,324 (100,529) (253,076)
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Income (loss) before income taxes 326,084 1,004,075 (9,861) (11,845)
Income taxes 60,412 153,135 2,963 8,890
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Net income (loss) $ 265,672 $ 850,940 $ (12,824) $ (20,735)
========= ========== ========= =========
Income per common share $ .05 $ .16 $ - $ -
========= ========== ========= =========
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See notes to the condensed consolidated financial statements.
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SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended June 30, 2000 and 1999
(Unaudited)
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<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities
Cash received from leases $ 519,615 $ 506,738
Interest received 6,340 4,815
Cash paid to suppliers and employees (146,444) (165,294)
Interest paid (224,926) (257,891)
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Net cash provided by operating activities 154,585 88,368
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Cash flows from investing activities
Purchase of land improvements (106,362) -
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Net cash used in investing activities (106,362) -
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Cash flows from financing activities
Principal payments on long-term debt (84,785) (97,939)
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Net cash used in financing activities (84,785) (97,939)
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Net decrease in cash (36,562) (9,571)
Cash at beginning of period 155,916 157,248
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Cash at end of period $ 119,354 $ 147,677
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Reconciliation of net income (loss) to net cash provided by
operating activities:
Net income (loss) $ 850,940 (20,735)
Depreciation 97,362 100,578
Gain on sale of property (973,910) -
Deferred taxes 153,135 8,890
Deferred revenue (18,489) (18,489)
Net change in assets and liabilities 45,547 18,124
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Net cash provided by operating activities $ 154,585 $ 88,368
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See notes to the condensed consolidated financial statements.
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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, 1999 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, 2000:
Land $ 335,797
Warehouse and buildings 4,844,502
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5,180,299
Less accumulated depreciation 617,570
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$4,562,729
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Refer to the Company's Form 10-KSB for the year ended September 30, 1999 for
further information on operating lease agreements and terms.
Note 3 - Long-term debt
Long-term debt consisted of the following at June 30, 2000:
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. $3,757,612
Less current maturities 128,786
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$3,628,826
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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,
2000, and a comparative analysis of the same period for the 1998 year are
presented below:
Increase (Decrease)
2000 Compared to
1999
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2000 1999 Amount Percent
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Leasing revenue $504,073 $494,226 $ 9,847 1.9%
Operating expenses 255,322 252,995 2,327 .9%
Interest expense 224,926 257,891 (32,965) (12.8)%
Revenue from leasing has increased from 1999 primarily as a result of a new
tenant beginning October 1, 1999 at the Company's strip center located on
Washington Road in Augusta, Georgia.
On an annualized basis, current revenue from leasing remains constant from
leasing revenue for the Company's fiscal year ended September 30, 1999.
Refer to the Company's Form 10-KSB for the year ended September 30, 1999 for
further information regarding the properties owned and lease terms.
Operating expenses for the 2000 period are comparable to 1999 and, on an
annualized basis, are comparable to the Company's operating expenses for the
fiscal year ended September 30, 1999. Management of the Company expects
quarterly operating expenses for the remainder of the fiscal year to be
comparable to the current nine month period.
Interest expense for the current period and for the current year has decreased
from 1999 as a result of the timing of a principal and interest payment by the
Company during the quarter ended June 30, 1999, in addition to the declining
principal balance. Management expects interest expense for the year ended
September 30, 2000 to decline from interest expense from the previous year as
the outstanding debt continues to amortize.
During the quarter ended June 30, 2000, the Company sold an industrial property
site located on approximately 16 acres in Athens, Georgia. The Company
recognized a gain of $311,816 on the sale.
This sale transaction has been structured as a tax-deferred like-kind exchange
under Section 1031 of the Internal Revenue Code. Accordingly, the Company has
not provided for current income taxes related to the gain on the sale, but has
provided for appropriate deferred income taxes. The Company has identified
potential replacement properties but as of June 30, 2000 has not completed the
property acquisition. The funds for acquisition are being held by a third-party
intermediary and are presented on the Company's balance sheet as Replacement
Property Funds.
The Company's ratio of current assets to current liabilities at June 30, 2000
was .50. The ratio was .75 at June 30, 1999.
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.
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The Company does not expect any significant change in the number of employees.
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.
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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, 2000.
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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 4, 2000 By: /s/ T. Greenlee Flanagin
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T. GREENLEE FLANAGIN
President
Chief Executive Officer
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INDEX TO EXHIBITS
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Exhibit Number Description Sequential Page Number
27 Financial Data Schedule 11 - 12
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