<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, 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
Incorporation or Organization) Number)
2816 Washington Road, #103,
Augusta, Georgia 30909
- --------------------------------- -----
(Address of Principal Executive Zip Code
Offices)
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 March 31, 2000
- ---------------------------- -----------------------------
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:
Page
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Condensed Consolidated Balance Sheet as of March 31, 2000 2
Condensed Consolidated Statements of Income for the Six Months
Ended March 31, 2000 and 1999, and the Three Months Ended
March 31, 2000 and 1999 3
Condensed Consolidated Statements of Cash Flows for the Six Months
Ended March 31, 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)
March 31, 2000
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets
Cash $ 108,576
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Total current assets 108,576
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Investments and other assets
Land and improvements, at cost 1,663,061
Property leased to others under operating leases, less accumulated
depreciation $1,186,979 4,793,558
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6,456,619
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$6,565,195
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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 64,736
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Total current liabilities 222,185
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Long-term debt, less current maturities 3,661,333
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Deferred taxes 136,135
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Deferred income 373,873
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Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 1,314,142
----------
2,271,669
Less subscribed shares 100,000
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2,171,669
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$6,565,195
==========
</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 Six Three Six
Months Months Months Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2000 2000 1999 1999
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Revenues, rent earned $166,136 $ 339,171 $159,912 $ 326,270
-------- --------- -------- ---------
Operating expenses:
Payroll and related costs 15,865 28,813 14,496 25,217
Depreciation 33,526 67,052 33,526 67,052
Taxes 17,726 34,768 14,781 30,167
Professional services 13,020 16,020 9,310 20,910
Insurance 2,656 6,325 2,167 6,492
Other 14,359 24,511 11,425 25,870
-------- --------- -------- ---------
97,152 177,489 85,705 175,708
-------- --------- -------- ---------
Operating income 68,984 161,682 74,207 150,562
-------- --------- -------- ---------
Nonoperating income (expense):
Gain on sale of property 662,094 662,094 - -
Interest income 2,461 4,747 1,556 3,011
Interest expense (75,025) (150,532) (77,431) (155,558)
-------- --------- -------- ---------
589,530 516,309 (75,875) (152,547)
-------- --------- -------- ---------
Income (loss) before income taxes 658,514 677,991 (1,668) (1,985)
Applicable income taxes 89,051 92,723 2,963 5,927
-------- --------- -------- ---------
Net income (loss) $569,463 $ 585,268 $ (4,631) $ (7,912)
======== ========= ======== =========
Income (loss) per common share $ .11 $ .11 $ - $ -
======== ========= ======== =========
</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, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Cash received from leases $ 360,736 $ 344,945
Interest received 4,747 3,011
Cash paid to suppliers and employees (143,327) (137,082)
Interest paid (125,386) (155,558)
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Net cash provided by operating activities 96,770 55,316
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Cash flows from investing activities
Purchase of land and improvements (91,832) -
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Net cash used in investing activities (91,832) -
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Cash flows from financing activities
Principal payments on long-term debt (52,278) (57,738)
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Net cash used in financing activities (52,278) (57,738)
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Net decrease in cash (47,340) (2,422)
Cash at beginning of period 155,916 157,248
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Cash at end of period $ 108,576 $ 154,826
========= =========
Reconciliation of net income to net cash provided by
operating activities:
Net income (loss) $ 585,268 $ (7,912)
Deferred income taxes 91,973 5,927
Gain on sale of property (662,094) -
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
Depreciation 67,052 67,052
Changes in assets and liabilities
Decrease in receivables 34,031 31,000
Increase (decrease) in accounts payable, accrued expenses
and deferrals (19,460) (40,751)
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Net cash provided by operating activities $ 96,770 $ 55,316
========= =========
</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, 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 March 31, 2000:
Land $ 512,760
Warehouse and buildings 5,467,776
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5,980,536
Less accumulated depreciation 1,186,978
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$4,793,558
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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 March 31, 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. $3,790,119
Less current maturities 128,786
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$3,661,333
==========
5
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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,
2000, and a comparative analysis of the same period for the 1999 year are
presented below:
Increase (Decrease)
2000 Compared to
1999
-------------------
2000 1999 Amount Percent
-------- -------- -------- -------
Leasing revenue $339,171 $326,270 $12,901 4.0%
Operating expenses 177,489 175,708 1,781 1.0%
Interest expense 150,532 155,558 (5,026) (3.2)%
Revenue from leasing has increased from 1999 primarily as a result of a new
tenant beginning October 1, 1999 at the Company's retail 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
operating expenses for the remainder of the fiscal year to be comparable to the
present six month period.
Interest expense for the current period is comparable to 1999 and, on an
annualized basis, is comparable to the Company's interest expense for the fiscal
year ended September 30, 1999.
During the quarter ended March 31, 2000 the Company sold approximately 32 acres
of undeveloped land located on Washington Road in Augusta, Georgia. The Company
recognized a gain of $662,094 on the sale. A principal officer and stockholder
of the Company acted as real estate agent on the sale through a brokerage
company. The brokerage company received a commission of $47,000 on the sale.
The Company invested the sale proceeds in purchases of additional undeveloped
land. The Company purchased approximately 10 acres in Evans, Georgia on Belair
Road and North Belair Road Extension, at Washington Road. The land was
purchased in two transactions. The Company owns a 68% interest in 6.92 acres on
Washington Road. The first transaction was to acquire the remaining
approximately 32% of this tract, and approximately 4 additional acres. The land
was acquired from an entity in which a principal stockholder and member of the
Board of Directors of the Company is a significant owner. The purchase price of
the land was $522,846. The second transaction was a purchase of approximately 4
acres in Evans, Georgia at North Belair Road Extension, adjacent to the
purchased property previously described. The land was jointly owned by
principal stockholders and members of the Board of Directors of the Company and
their families, and was acquired by the Company from these individuals. The
purchase price of the land was $371,970.
The sale and purchase transactions described above have 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.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's ratio of current assets to current liabilities at March 31, 2000
was .49. The ratio was .87 at March 31, 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.
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.
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 March 31, 2000.
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)
May 15, 2000 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> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 108,576
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 108,576
<PP&E> 7,643,598
<DEPRECIATION> 1,186,979
<TOTAL-ASSETS> 6,565,195
<CURRENT-LIABILITIES> 222,185
<BONDS> 3,661,333
0
0
<COMMON> 623,761
<OTHER-SE> 1,547,908
<TOTAL-LIABILITY-AND-EQUITY> 6,565,195
<SALES> 0
<TOTAL-REVENUES> 1,001,265
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 177,489
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 150,532
<INCOME-PRETAX> 677,991
<INCOME-TAX> 92,723
<INCOME-CONTINUING> 585,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 585,268
<EPS-BASIC> .11
<EPS-DILUTED> .11
</TABLE>
