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, 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 Identification Number)
Incorporation or Organization)
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 January 31, 2002
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Common Stock, $.10 Par Value 5,247,107 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 December 31, 2001 1
Condensed Consolidated Statements of Income for the Three Months
Ended December 31, 2001 and 2000 2
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended December 31, 2001 and 2000 3
Notes to Condensed Consolidated Financial Statements 4-5
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 Sheet
(Unaudited)
December 31, 2001
ASSETS
Current assets
Cash $ 86,286
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Total current assets 86,286
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Investments and other assets
Land and improvements, at cost 2,186,478
Property leased to others under operating
leases, less accumulated depreciation $811,174 4,648,983
Deferred tax asset 364
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6,835,825
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$6,922,111
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,517
Current portion of long-term debt 135,580
Accrued interest 24,290
Other current liabilities 61,692
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Total current liabilities 225,079
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Long-term debt, less current maturities 3,608,051
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Deferred taxes 226,520
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Deferred income 330,732
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Stockholders' equity
Common stock, at par value 623,761
Paid-in capital 333,766
Retained earnings 1,674,202
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2,631,729
Less subscribed shares 100,000
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2,531,729
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$6,922,111
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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 Three
Months Months
Ended Ended
December December
31, 2001 31, 2000
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Revenues, rent earned $ 178,891 $ 168,324
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Operating expenses:
Payroll and related costs 11,755 15,707
Depreciation 31,896 32,158
Property taxes 21,190 21,286
Repairs and maintenance 6,303 6,154
Professional services -- 2,500
Insurance 2,742 3,083
Other 7,215 9,927
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81,101 90,815
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Operating income 97,790 77,509
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Nonoperating income and
(expense):
Interest income 499 1,230
Interest expense (73,019) (74,721)
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(72,520) (73,491)
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Income before
income taxes 25,270 4,018
Applicable income taxes 4,641 1,634
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Net income $ 20,629 $ 2,384
========= =========
Income per
common share $ .00 $ .00
========= =========
See notes to condensed consolidated financial statements.
2
SECURITY LAND AND DEVELOPMENT CORPORATION
AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 2001 and 2000
(Unaudited)
2001 2000
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Cash flows from operating activities
Cash received from leases $ 206,904 $ 196,335
Interest received 499 1,230
Cash paid to suppliers and employees (103,430) (100,510)
Interest paid (73,019) (50,431)
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Net cash provided by
Operating activities 30,954 46,624
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Cash flows from investing activities
Purchase of land and improvements -- (277,160)
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Net cash used in
Investing activities -- (277,160)
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Cash flows from financing activites
Property acquisition debt -- 250,000
Principal payments on debt (43,133) (24,076)
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Net cash provided by (used in)
Financing activities (43,133) 225,924
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Net decrease in cash (12,179) (4,612)
Cash at beginning of period 98,465 93,516
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Cash at end of period $ 86,286 $ 88,904
========= =========
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 20,629 $ 2,384
Deferred income taxes 3,644 1,634
Depreciation 31,896 32,158
Net change in assets and liabilities (25,215) 10,448
--------- ---------
Net cash provided by operating
Activities $ 30,954 $ 46,624
========= =========
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 accounting principles generally
accepted in the United States of America 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, 2001 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.
Recent Accounting Pronouncements
--------------------------------
In June 2001, the Financial Accounting Standards Board issued two
Statements of Financial Accounting Standards, No. 141, Business
Combinations (SFAS No. 141), and No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142). SFAS No. 141 addresses financial
accounting and reporting for business combinations and supersedes APB
Opinion No. 16, Business Combinations, and FASB Statement No. 38,
Accounting for Preacquisition Contingencies of Purchased Enterprises.
All business combinations in the scope of SFAS No. 141 are to be
accounted for using one method, the purchase method. The provisions of
SFAS No. 141 apply to all business combinations initiated after June
30, 2001. Use of the pooling-of-interests method for those business
combinations is prohibited. The provisions of SFAS No. 141 also apply
to all business combinations accounted for by the purchase method for
which the date of acquisition is July 1, 2001, or later.
SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in
a business combination) should be accounted for in financial statements
upon their acquisition. SFAS No. 142 also addresses how goodwill and
other intangible assets should be accounted for after they have been
initially recognized in the financial statements. Under SFAS No. 142,
goodwill and intangible assets that have indefinite useful lives will
not be amortized but rather will be tested at least annually for
impairment. Intangible assets that have finite useful lives will
continue to be amortized over their useful lives, but without the
constraint of the 40-year maximum life required by SFAS No. 142. The
provisions of SFAS No. 142 are required to be applied starting with
fiscal years beginning after December 15, 2001.
The Company adopted the provisions of SFAS No. 142 effective October
1, 2001. The adoption of the provisions of SFAS No. 142 did not have a
material effect on the Company's financial position or results of
operations.
4
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, 2001:
Land $ 375,796
Warehouse and buildings 5,084,361
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5,460,157
Less accumulated depreciation 811,174
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$ 4,648,983
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Refer to the Company's Form 10-KSB for the year ended September 30, 2002
for further information on operating lease agreements and terms.
Note 3 - Long-term debt
Long-term debt consisted of the following at December 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.
$ 3,547,560
9.500% note payable to financial institution due in monthly
payments of $3,250, including interest, through September 2003,
with a balloon payment of approximately $144,000 due at that time,
interest adjusted based on changes in the prime rate, secured by
real estate.
196,071
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3,743,631
Less current maturities 135,580
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$ 3,608,051
================
Item 2. Management's Discussion and Analysis of Plan or Operation
The Company's results of operations for the three month period ended
December 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 $ 178,891 $ 168,324 $ 10,567 6.3%
Operating
expenses 81,101 90,815 (9,714) (10.7%)
Interest
expense 73,019 74,721 (1,702) (2.3%)
5
Item 2. Management's Discussion and Analysis of Plan of Operation
(Continued)
Revenue from leasing consists primarily 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, 2001.
Refer to the Company's Form 10-KSB for the year ended September 30, 2001
for further information regarding the properties owned and lease terms.
Operating expenses for the three months ended December 31, 2001 are
comparable to the three months ended December 31, 2000 and, on an
annualized basis, are comparable to the Company's operating expenses for
the fiscal year ended September 30, 2001. Management of the Company expects
operating expenses for the remainder of the current fiscal year to be
comparable to the present three 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, 2001.
The Company's ratio of current assets to current liabilities at
December 31, 2001 was .38. The ratio was .36 at December 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:
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
December 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 February 5, 2002
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T. Greenlee Flanagin Date
President
Chief Executive Officer
8
INDEX TO EXHIBITS
Exhibit Number Description Sequential Page Number
None.
9