10QSB 1 0001.txt SECURITY LAND & DEVELOPMENT CORP 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 June 30, 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. ------ 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 June 30, 2000 ---------------------------- ---------------------------- 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 June 30, 2000 2 Condensed Consolidated Statements of Income for the Nine Months Ended June 30, 2000 and 1999, and the Three Months Ended June 30, 2000 and 1999 3 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2000 and 1999 4 Notes to Condensed Consolidated Financial Statements 5
SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY Condensed Consolidated Balance Sheet (Unaudited) June 30, 2000 ASSETS Current assets Cash $ 119,354 ---------- Total current assets 119,354 ---------- Investments and other assets Land and improvements, at cost 1,677,591 Property leased to others under operating leases, less accumulated depreciation $617,570 4,562,729 ---------- 6,240,320 ---------- Replacement property funds 511,585 ---------- $6,871,259 ========== 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 83,385 ---------- Total current liabilities 240,834 ---------- Long-term debt, less current maturities 3,628,826 ---------- Deferred taxes 196,277 ---------- Deferred income 367,710 ---------- Stockholders' equity Common stock, at par value 623,761 Paid-in capital 333,766 Retained earnings 1,580,085 ---------- 2,537,612 Less subscribed shares 100,000 ---------- 2,437,612 ---------- $6,871,259 ==========
See notes to the condensed consolidated financial statements. 2 SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY Condensed Consolidated Statements of Income (Unaudited)
Three Nine Three Nine Months Months Months Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2000 2000 1999 1999 --------- ---------- --------- --------- Revenues: Rent earned $ 164,902 $ 504,073 $ 167,956 $ 494,226 --------- ---------- --------- --------- Operating expenses: Payroll and related costs 12,580 41,393 11,604 36,821 Depreciation 30,310 97,362 33,526 100,578 Taxes 17,500 52,268 14,719 44,886 Professional services 4,320 20,340 3,670 24,580 Insurance 2,958 9,283 2,401 8,893 Other 10,165 34,676 11,368 37,237 --------- ---------- --------- --------- 77,833 255,322 77,288 252,995 --------- ---------- --------- --------- Operating income 87,069 248,751 90,668 241,231 --------- ---------- --------- --------- Nonoperating income (expense): Gain on sale of property 311,816 973,910 - - Interest income 1,593 6,340 1,804 4,815 Interest expense (74,394) (224,926) (102,333) (257,891) --------- ---------- --------- --------- 239,015 755,324 (100,529) (253,076) --------- ---------- --------- --------- Income (loss) before income taxes 326,084 1,004,075 (9,861) (11,845) Income taxes 60,412 153,135 2,963 8,890 --------- ---------- --------- --------- Net income (loss) $ 265,672 $ 850,940 $ (12,824) $ (20,735) ========= ========== ========= ========= Income per common share $ .05 $ .16 $ - $ - ========= ========== ========= =========
See notes to the condensed consolidated financial statements. 3 SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARY Condensed Consolidated Statements of Cash Flows For the Nine Months Ended June 30, 2000 and 1999 (Unaudited)
2000 1999 --------- --------- Cash flows from operating activities Cash received from leases $ 519,615 $ 506,738 Interest received 6,340 4,815 Cash paid to suppliers and employees (146,444) (165,294) Interest paid (224,926) (257,891) --------- --------- Net cash provided by operating activities 154,585 88,368 --------- --------- Cash flows from investing activities Purchase of land improvements (106,362) - --------- --------- Net cash used in investing activities (106,362) - --------- --------- Cash flows from financing activities Principal payments on long-term debt (84,785) (97,939) --------- --------- Net cash used in financing activities (84,785) (97,939) --------- --------- Net decrease in cash (36,562) (9,571) Cash at beginning of period 155,916 157,248 --------- --------- Cash at end of period $ 119,354 $ 147,677 ========= ========= Reconciliation of net income (loss) to net cash provided by operating activities: Net income (loss) $ 850,940 (20,735) Depreciation 97,362 100,578 Gain on sale of property (973,910) - Deferred taxes 153,135 8,890 Deferred revenue (18,489) (18,489) Net change in assets and liabilities 45,547 18,124 --------- --------- Net cash provided by operating activities $ 154,585 $ 88,368 ========= =========
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 June 30, 2000: Land $ 335,797 Warehouse and buildings 4,844,502 ---------- 5,180,299 Less accumulated depreciation 617,570 ---------- $4,562,729 ========== 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 June 30, 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. $3,757,612 Less current maturities 128,786 ---------- $3,628,826 ========== 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Company's results of operations for the nine month period ended June 30, 2000, and a comparative analysis of the same period for the 1998 year are presented below: Increase (Decrease) 2000 Compared to 1999 ------------------- 2000 1999 Amount Percent -------- -------- -------- ------- Leasing revenue $504,073 $494,226 $ 9,847 1.9% Operating expenses 255,322 252,995 2,327 .9% Interest expense 224,926 257,891 (32,965) (12.8)% Revenue from leasing has increased from 1999 primarily as a result of a new tenant beginning October 1, 1999 at the Company's 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 quarterly operating expenses for the remainder of the fiscal year to be comparable to the current nine month period. Interest expense for the current period and for the current year has decreased from 1999 as a result of the timing of a principal and interest payment by the Company during the quarter ended June 30, 1999, in addition to the declining principal balance. Management expects interest expense for the year ended September 30, 2000 to decline from interest expense from the previous year as the outstanding debt continues to amortize. During the quarter ended June 30, 2000, the Company sold an industrial property site located on approximately 16 acres in Athens, Georgia. The Company recognized a gain of $311,816 on the sale. This sale transaction has 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. The Company has identified potential replacement properties but as of June 30, 2000 has not completed the property acquisition. The funds for acquisition are being held by a third-party intermediary and are presented on the Company's balance sheet as Replacement Property Funds. The Company's ratio of current assets to current liabilities at June 30, 2000 was .50. The ratio was .75 at June 30, 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. 6 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 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 June 30, 2000. 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) August 4, 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