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, 2001
[ ] Transition Report Pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period of to
Commission File Number 0-7865.
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SECURITY LAND AND DEVELOPMENT CORPORATION
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(Exact name of small business issuer as specified in its charter)
Georgia 58-1088232
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(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2816 Washington Road, #103, Augusta, Georgia 30909
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(Address of Principal Executive Offices)
Issuers Telephone Number (706) 736-6334
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- -------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Year)
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 April 30, 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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SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Form 10-QSB
Index
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet as of March 31, 2001 1
Condensed Consolidated Statements of Income for the Six
Months Ended March 31, 2001 and 2000, and the Three Months Ended
March 31, 2001 and 2000 2
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended March 31, 2001 and 2000 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis or Plan of Operation 5-6
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
INDEX TO EXHIBITS 9
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Part I. Financial Information
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, 2001
ASSETS
Current assets
Cash $ 70,733
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Total current assets 70,733
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Investments and other assets
Land and improvements, at cost 2,186,498
Property leased to others under operating
leases, less accumulated depreciation
$711,886 4,748,251
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6,934,749
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$7,005,482
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,517
Current portion of long-term debt 160,989
Accrued interest 24,290
Other current liabilities 79,194
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Total current liabilities 267,990
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Long-term debt, less current maturities 3,708,801
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Deferred taxes 213,967
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Deferred income 349,221
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Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 1,607,976
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2,565,503
Less subscribed shares 100,000
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2,465,503
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$7,005,482
==========
See notes to condensed consolidated financial statements.
1
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three Months Six Three Months Six
Ended March 31, Months Ended Ended March 31, Months Ended
2001 March 31, 2001 2000 March 31, 2000
----------------- ----------------- ----------------- -----------------
Revenues, rent earned $173,770 $ 342,094 $166,136 $ 339,171
----------------- ----------------- ----------------- -----------------
Operating expenses:
Payroll and related costs 18,928 34,635 15,865 28,813
Depreciation 31,848 64,006 33,526 67,052
Property taxes 17,193 38,479 17,726 34,768
Repairs and maintenance 5,416 11,570 5,572 10,072
Professional services 6,779 9,279 13,020 16,020
Insurance 4,629 7,712 2,656 6,325
Other 5,890 15,817 8,787 14,439
----------------- ----------------- ----------------- -----------------
90,683 181,498 97,152 177,489
----------------- ----------------- ----------------- -----------------
Operating income 83,087 160,596 68,984 161,682
----------------- ----------------- ----------------- -----------------
Nonoperating income and
(expense):
Gain on sale of property - - 662,094 662,094
Interest income 968 2,198 2,461 4,747
Interest expense (78,347) (153,068) (75,025) (150,532)
----------------- ----------------- ----------------- -----------------
(77,379) (150,870) 589,530 516,309
----------------- ----------------- ----------------- -----------------
Income before
income taxes 5,708 9,726 658,514 677,991
Applicable income taxes 825 2,459 89,051 92,723
----------------- ----------------- ----------------- -----------------
Net income $ 4,883 $ 7,267 $569,463 $ 585,268
================= ================= ================= =================
Income per
common share $ - $ - $ .11 $ .11
================= ================= ================= =================
See notes to condensed consolidated financial statements.
2
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 2001 and 2000
(Unaudited)
2001 2000
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Cash flows from operating activities
Cash received from leases $ 363,943 $ 360,736
Interest received 2,198 4,747
Cash paid to suppliers and employees (141,050) (143,327)
Interest paid (128,778) (125,386)
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Net cash provided by
operating activities 96,313 96,770
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Cash flows from investing activities
Purchase of land and improvements (277,160) (91,832)
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Net cash used in
investing activities (277,160) (91,832)
-------------------- --------------------
Cash flows from financing activites
Property acquisition debt 250,000 -
Principal payments on long-term debt (91,936) (52,278)
-------------------- --------------------
Net cash provided by (used in)
financing activities 158,064 (52,278)
-------------------- --------------------
Net decrease in cash (22,783) (47,340)
Cash at beginning of period 93,516 155,916
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Cash at end of period $ 70,733 $ 108,576
==================== ====================
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 7,267 $ 585,268
Deferred income taxes 1,459 91,973
Gain on sale of property - (662,094)
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 64,006 67,052
Changes in assets and liabilities
Decrease in receivables 34,175 34,031
Decrease in accounts
payable, accrued expenses and
deferrals (10,594) (19,460)
-------------------- --------------------
Net cash provided by operating
Activities $ 96,313 $ 96,770
==================== ====================
See notes to condensed consolidated financial statements.
3
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 March 31, 2001:
Land $ 375,796
Warehouse and buildings 5,084,341
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5,460,137
Less accumulated depreciation 711,886
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$4,748,251
==========
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 March 31, 2001:
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. $3,655,137
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. 214,653
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3,869,790
Less current maturities 160,989
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$3,708,801
==========
4
Item 2. Management's Discussion and Analysis of Plan or Operation
The Company's results of operations for the six month period ended March
31, 2001, and a comparative analysis of the same period for the 2000 year
are presented below:
Increase (Decrease) 2001
Compared to 2000
---------------------------------------
2001 2000 Amount Percent
----------------- ----------------- ----------------- -----------------
Leasing revenue $342,094 $339,171 $2,923 0.9%
Operating expenses 181,498 177,489 4,009 2.2%
Interest expense 153,068 150,532 2,536 1.7%
Revenue from leasing consists of revenue from the Company's strip center on
Washington Road in Augusta, Georgia. Revenue from leasing has remained
relatively constant from 2000 to 2001.
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.
Operating expenses for the six months ended March 31, 2001 are comparable
to the six months ended March 31, 2000 and, on an annualized basis, are
comparable to the Company's operating expenses for the fiscal year ended
September 30, 2000. Management of the Company expects operating expenses
for the remainder of the current fiscal year to be comparable to the
present six month period.
Interest expense for the current period is comparable to 2000 and, on an
annualized basis, is 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 March 31,
2001 was .26. The ratio was .49 at March 31, 2000.
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:
5
Item 2. Management's Discussion and Analysis of Plan of Operation
(Continued)
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.
6
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
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None.
(b) No reports on Form 8-K were filed during the three months ended March
31, 2001.
7
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 AND DEVELOPMENT CORPORATION
(Registrant)
By: /s/ T. Greenlee Flanagin May 8, 2001
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T. Greenlee Flanagin Date
President
Chief Executive Officer
8
INDEX TO EXHIBITS
Exhibit Number Description Sequential Page Number
None.
9