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 December 31, 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. ------ SECURITY LAND AND DEVELOPMENT CORPORATION ----------------------------------------- GEORGIA 58-1088232 ------- ---------- (State or other Jurisdiction of (I.R.S. Employer Identification Number) Incorporation or Organization) 2816 Washington Road, #103, Augusta, Georgia 30909 - -------------------------------------------- ----- (Address of Principal Executive Offices) Zip Code Issuers Telephone Number (706) 736-6334 -------------- - -------------------------------------------------------------------------------- (Former Name, Address & fiscal year, if changed from last report.) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ------ ------- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Class Outstanding at January 31, 1999 - --------------------------- ------------------------------- Common Stock, $.10 Par Value 5,258,886 shares Transitional Small Business Disclosure Format: Yes No X ------- ------ 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 ----- Condensed Consolidated Balance Sheet as of December 31, 1999 2 Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended December 31, 1999 and 1998 3 Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 1999 and 1998 4 Notes to Condensed Consolidated Financial Statements 5 - 7 SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY Condensed Consolidated Balance Sheet (Unaudited) December 31, 1999 ASSETS Current assets Cash $ 193,297 ---------- Total current assets 193,297 ---------- Investments and other assets Land and improvements, at cost 909,135 Property leased to others under operating leases, less accumulated depreciation $1,153,452 4,827,084 ---------- 5,736,219 ---------- $5,929,516 ========== 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 49,535 ---------- Total current liabilities 206,984 ---------- Long-term debt, less current maturities 3,693,206 ---------- Deferred taxes 47,084 ---------- Deferred income 380,036 ---------- Stockholders' equity Common stock, at par value 623,761 Paid-in capital 333,766 Retained earnings 744,679 ---------- 1,702,206 Less subscribed shares 100,000 ---------- 1,602,206 ---------- $5,929,516 ========== See notes to the condensed consolidated financial statements. 2 SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY Condensed Consolidated Statements of Income and Comprehensive Income For the Three Months Ended December 31, 1999 and 1998 (Unaudited) 1999 1998 -------- -------- Revenues, rent earned $173,035 $166,358 -------- -------- Operating expenses: Payroll and related costs 12,948 10,721 Depreciation 33,526 33,526 Property taxes 17,042 15,386 Professional services 3,000 11,600 Insurance 3,669 4,325 Other 10,152 14,445 -------- -------- 80,337 90,003 -------- -------- Operating income 92,698 76,355 -------- -------- Nonoperating income and (expense) Interest income 2,286 1,455 Interest expense (75,507) (78,127) -------- -------- (73,221) (76,672) -------- -------- Income (loss) before income taxes 19,477 (317) Applicable income taxes 3,672 2,964 -------- -------- Net income (loss) $ 15,805 $ (3,281) ======== ======== Income (loss) per common share $ .00 $ .00 ======== ======== See notes to the condensed consolidated financial statements. 3 SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY Condensed Consolidated Statements of Cash Flows For the Three Months Ended December 31, 1999 and 1998 (Unaudited) 1999 1998 -------- --------- Cash flows from operating activities Cash received from leases $200,762 $ 166,417 Interest received 2,286 1,455 Cash paid to suppliers and employees (94,901) (107,711) Interest paid (50,361) (78,127) -------- --------- Net cash provided by (used in) operating activities 57,786 (17,966) -------- --------- Cash flows from financing activities Principal payments on long-term debt (20,405) (28,270) -------- --------- Net cash (used in) financing activities (20,405) (28,270) -------- --------- Net (decrease) increase in cash 37,381 (46,236) Cash at beginning of period 155,916 157,248 -------- --------- Cash at end of period $193,297 $ 111,012 ======== ========= Reconciliation of net income (loss) to net cash provided by operating activities: Net income (loss) $ 15,805 $ (3,281) Deferred income taxes 2,922 2,964 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 33,526 33,528 Changes in assets and liabilities (Increase) decrease in other assets 33,892 59 Increase (decrease) in accounts payable, accrued expenses, and deferrals (28,359) (51,236) -------- --------- Net cash provided by (used in) operating activities $ 57,786 $ (17,966) ======== ========= See notes to the condensed consolidated financial statements. 4 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 December 31, 1999: Land $ 512,760 Warehouse and buildings 5,467,776 ---------- 5,980,536 Less accumulated depreciation 1,153,452 ---------- $4,827,084 ========== 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 December 31, 1999: 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. $3,821,992 Less current maturities 128,786 ---------- $3,693,206 ========== 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Company's results of operations for the three month period ended December 31, 1999, and a comparative analysis of the same period for the 1998 year are presented below: Increase (Decrease) 1999 Compared to 1998 ------------------- 1999 1998 Amount Percent -------- -------- -------- -------- Leasing revenue $173,035 $166,358 $ 6,677 4.0% Operating expenses 80,337 90,003 (9,666) (10.7)% Interest expense 75,507 78,127 (2,620) (3.3)% Revenue from leasing has increased from 1998 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 1998 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 1999. 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, 1999. 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 has remained constant from 1998. On an annualized basis, management expects interest expense to be comparable to the Company's interest expense for the fiscal year ended September 30, 1999. The Company's ratio of current assets to current liabilities at December 31, 1999 was 1.6. The ratio was .88 at December 31, 1998. During the current quarter the Company satisfied liquidity needs through operating revenues. Management of the Company continues to expect future liquidity needs to be met from operating revenues of the Company. The Company does not expect any significant change in the number of employees. 6 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 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 December 31, 1999. 8 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SECURITY LAND & DEVELOPMENT CORPORATION --------------------------------------- (Registrant) January 27, 2000 By: /s/ T. Greenlee Flanagin ------------------------ T. GREENLEE FLANAGIN President Chief Executive Officer 9 INDEX TO EXHIBITS ----------------- Exhibit Number Description Sequential Page Number 27 Financial Data Schedule 11 - 12 10