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, 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 January 15, 2001
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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:
Page
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Condensed Consolidated Balance Sheet as of December 31, 2000 2
Condensed Consolidated Statements of Income and Comprehensive Income
for the Three Months Ended December 31, 2000 and 1999 3
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended December 31, 2000 and 1999 4
Notes to Condensed Consolidated Financial Statements 5
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Balance Sheet
(Unaudited)
December 31, 2000
ASSETS
Current assets
Cash $ 88,904
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Total current assets 88,904
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Investments and other assets
Land and improvements, at cost 2,186,477
Property leased to others under operating leases, less accumulated
depreciation $680,038 4,780,119
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6,966,596
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$7,055,500
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,517
Current portion of long-term debt 155,062
Accrued interest 24,290
Other current liabilities 59,898
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Total current liabilities 242,767
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Long-term debt, less current maturities 3,782,588
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Deferred taxes 214,142
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Deferred income 355,383
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Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 1,603,093
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2,560,620
Less subscribed shares 100,000
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2,460,620
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$7,055,500
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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, 2000 and 1999
(Unaudited)
2000 1999
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Revenues, rent earned $168,324 $173,035
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Operating expenses:
Payroll and related costs 15,707 12,948
Depreciation 32,158 33,526
Property taxes 21,286 17,042
Repairs and maintenance 6,154 5,572
Professional services 2,500 3,000
Insurance 3,083 3,669
Other 9,927 4,580
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90,815 80,337
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Operating income 77,509 92,698
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Nonoperating income and (expense)
Interest income 1,230 2,286
Interest expense (74,721) (75,507)
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(73,491) (73,221)
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Income before income taxes 4,018 19,477
Applicable income taxes 1,634 3,672
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Net income $ 2,384 $ 15,805
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Income per common share $ .00 $ .00
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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, 2000 and 1999
(Unaudited)
2000 1999
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Cash flows from operating activities
Cash received from leases $ 196,335 $200,762
Interest received 1,230 2,286
Cash paid to suppliers and employees (100,510) (94,901)
Interest paid (50,431) (50,361)
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Net cash provided by operating activities 46,624 57,786
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Cash flows from investing activities
Purchase of investment property (277,160) -
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Net cash (used in) investing activities (277,160) -
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Cash flows from financing activities
Property acquisition debt 250,000 -
Principal payments on long-term debt (24,076) (20,405)
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Net cash provided by (used in) financing activities 225,924 (20,405)
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Net (decrease) increase in cash (4,612) 37,381
Cash at beginning of period 93,516 155,916
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Cash at end of period $ 88,904 $193,297
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Reconciliation of net income to net cash provided by
operating activities:
Net income $ 2,384 $ 15,805
Deferred income taxes 1,634 2,922
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 32,158 33,526
Net change in assets and liabilities 10,448 5,533
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Net cash provided by operating activities $ 46,624 $ 57,786
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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, 2000 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, 2000:
Land $ 375,796
Warehouse and buildings 5,084,361
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5,460,157
Less accumulated depreciation 680,038
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$4,780,119
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Refer to the Company's Form 10-KSB for the year ended September 30, 2000 for
further information on operating lease agreements and terms.
Note 3 - Long-term debt
Long-term debt consisted of the following at December 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. $3,689,142
9.500% note payable to financial institution due in monthly
payments of $3,250, including interest, through November 2003,
with a balloon payment of approximately $200,000 due at that
time, interest adjusted based on changes in the prime rate,
secured by real estate. 248,508
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3,937,650
Less current maturities 155,062
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$3,782,588
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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, 2000, and a comparative analysis of the same period for the 1999 year are
presented below:
Increase (Decrease)
2000 Compared to
1999
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2000 1999 Amount Percent
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Leasing revenue $168,324 $173,035 $(4,711) (27)%
Operating expenses 90,815 80,337 10,478 13.0%
Interest expense 74,721 75,507 (786) 1.0%
Revenue from leasing consists substantially of revenue from the Company's strip
center on Washington Road in Augusta, Georgia. Revenue from leasing has remained
relatively constant from 1999 to 2000.
On an annualized basis, current revenue from leasing remains constant from
leasing revenue for the Company's fiscal year ended September 30, 2000.
Refer to the Company's Form 10-KSB for the year ended September 30, 2000 for
further information regarding the properties owned and lease terms.
During the three months ending December 31, 2000 the Company completed the
acquisition of additional investment property. Refer to the Company's Form 10-
KSB for the year ending September 30, 2000, in which the Company executed a tax-
deferred like-kind exchange transaction in which replacement funds were being
held in escrow at September 30, 2000. Utilizing these replacement funds, the
Company acquired approximately 4.61 acres on Old Evans Road in Evans, Georgia.
The property consists of an office building and adjacent undeveloped land. The
Company acquired the property for $800,000, utilizing the replacement funds and
debt. The acquired property is adjacent to other investment property owned by
the Company.
Operating expenses for the three months ending December 31, 2000 increased 13.0%
from the comparable 1999 quarter. This increase is attributable to an increase
in payroll costs, property taxes and general operating expenses. 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 1999. On an
annualized basis, management expects interest expense to be comparable to the
Company's interest expense for the fiscal year ended September 30, 2000.
The Company's ratio of current assets to current liabilities at December 31,
2000 was .36. The ratio was .93 at December 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.
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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 December 31, 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)
January 31, 2001 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
27 Financial Data Schedule