Part I.    Financial Information

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Balance Sheet

(Unaudited)

March 31, 2003

ASSETS

Current assets
Cash	$	95,502
Total current assets		95,502
Investments and other assets
Land and improvements, at cost		2,186,478
Property leased to others under operating leases, less accumulated depreciation $983,749		4,622,255
Deferred tax asset		5,635
		6,814,368
	$	6,909,870

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable and accrued expenses	$	96,550
Current portion of long-term debt		338,735
Accrued interest		24,290
Total current liabilities		459,575
Long-term debt, less current maturities		3,287,792
Deferred taxes		261,529
Deferred income		299,917
Stockholders’ equity
Common stock, at par value		623,761
Paid-in capital		333,766
Retained earnings		1,743,530
		2,701,057
Less subscribed shares		100,000
		2,601,057
	$	6,909,870

See notes to condensed consolidated financial statements.

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SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

	Three Months Ended March 31, 2003			Six Month Ended March 31, 2003			Three Months Ended March 31, 2002			Six Month Ended March 31, 2002
Revenues, rent earned	$	193,830		$	376,747		$	184,290		$	363,181
Operating expenses:
Payroll and related costs		19,367			35,682			17,675			29,430
Depreciation		36,194			72,388			36,563			68,459
Property taxes		24,248			51,601			18,032			39,222
Repairs and maintenance		11,496			25,996			5,565			11,868
Professional services		8,582			14,580			11,706			11,706
Insurance		2,024			3,600			3,421			6,163
Other		10,497			17,973			7,746			14,961
		112,408			221,820			100,708			181,809
Operating income		81,422			154,927			83,582			181,372
Nonoperating income and (expense):
Interest income		136			379			452			951
Interest expense		(70,261	)		(141,504	)		(72,260	)		(145,279	)
		(70,125	)		(141,125	)		(71,808	)		(144,328	)
Income before income taxes		11,297			13,802			11,774			37,044
Applicable income taxes		3,124			3,816			1,916			6,557
Net income	$	8,173		$	9,986		$	9,858		$	30,487
Income per common share	$	.00		$	.00		$	.00		$	.00

See notes to condensed consolidated financial statements.

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SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended March 31, 2003 and 2002

(Unaudited)

	2003			2002
Cash flows from operating activities
Cash received from leases	$	417,105		$	391,193
Interest received		379			951
Cash paid to suppliers and employees		(197,082	)		(153,144	)
Interest paid		(141,504	)		(145,279	)
Net cash provided by operating activities		78,898			93,721
Cash flows from financing activities
Principal payments on debt		(99,781	)		(88,024	)
Net cash used in financing activities		(99,781	)		(88,024	)
Net decrease in cash		(20,883	)		5,697
Cash at beginning of period		116,385			98,465
Cash at end of period	$	95,502		$	104,162
Reconciliation of net income to net cash provided by operating activities:
Net income	$	9,986		$	30,487
Deferred income taxes		3,816			5,557
Depreciation		72,388			68,459
Net change in assets and liabilities		(7,292	)		(10,782	)
Net cash provided by operating activities	$	78,898		$	93,721

See notes to 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 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, 2002 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, 2003:

Land	$	397,673
Warehouse and buildings		5,208,331
		5,606,004
Less accumulated depreciation		983,749
	$	4,622,255

Refer to the Company’s Form 10-KSB for the year ended September 30, 2002 for further information on operating lease agreements and terms.

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Note 3—Long-term debt

Long-term debt consisted of the following at March 31, 2003:

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.	$3,353,846
Prime +.25% note payable to financial institution due in monthly payments of $3,250, including interest, through November 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.		158,934
Prime rate note payable to financial institution due in monthly payments of $1,330, including interest, through June 2005, with a balloon payment of approximately $90,000 due at that time, interest adjusted based on changes in the prime rate, secured by real estate.		113,747
		3,626,527
Less current maturities		338,735
	$	3,287,792

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s results of operations for the six month period ended March 31, 2003, and a comparative analysis of the same period for the 2002 year are presented below:

					Increase (Decrease) 2003 Compared to 2002
	2003		2002		Amount			Percent
Leasing revenue	$	376,747	$	363,181	$	13,566		3.74	%
Operating expenses		221,820		181,809		40,011		22.01	%
Interest expense		141,504		145,279		(3,775	)	2.60	%

Revenue from leasing consists primarily of revenue from the Company’s strip center on Washington Road in Augusta, Georgia and from the office building on old Evans Road in Evans, Georgia. Revenue from leasing increased slightly between 2002 and 2003 due to the additional rental property purchased in June 2002 and increased common area maintenance fees.

On an annualized basis, current revenue from leasing remains constant from leasing revenue for the Company’s fiscal year ended September 30, 2002.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Refer to the Company’s Form 10-KSB for the year ended September 30, 2002 for further information regarding the properties owned and lease terms.

Operating expenses for the six months ended March 31, 2003 have increased as compared to the six months ended March 31, 2002. The increase is primarily due to increases in depreciation, property taxes, and repairs and maintenance. The increase in depreciation expense is a result of additional depreciable leasing property acquired by the Company. The increase in property taxes is a result of an increase in the assessments by the taxing authorities. The increase in repairs and maintenance is a result of additional repair costs incurred related to the strip center. 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 2002 and, on an annualized basis, is comparable to the Company’s interest expense for the fiscal year ended September 30, 2002.

The Company’s ratio of current assets to current liabilities at March 31, 2003 was .21. The ratio was .35 at March 31, 2002. This decrease is due to a maturity date for balloon payment on a loan falling within the next 12 months, thus increasing current liabilities.

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.

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Item 3.    Controls and Procedures

Within the 90 days prior to the filing date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s Chief Executive Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’s SEC filings. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date the Chief Executive Officer carried out the evaluation.

Part II—Other Information

Item 6.    Exhibits and Reports on Form 8-K

(a)  Exhibit No.	Description
99.1	Certification Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
(b)  No reports on Form 8-K were filed during the three months ended March 31, 2003.

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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 AND DEVELOPMENT CORPORATION

(Registrant)

By:	/s/    T. GREENLEE FLANAGIN	May 6, 2003
	T. Greenlee Flanagin President Chief Executive Officer	Date

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CERTIFICATIONS

I, T. Greenlee Flanagin, certify that:

1.    I have reviewed this quarterly report on Form 10-QSB of Security Land and Development Corporation;

2.    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.    I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:

a)    designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)    evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c)    presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date;

5.    I have disclosed, based on my most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)    all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.    I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 6, 2003

/s/    T. GREENLEE FLANAGIN      

T. Greenlee Flanagin

President and Chief Executive Officer

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