10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

x	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended June 30, 2016
o	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.

SECURITY LAND AND DEVELOPMENT CORPORATION

(Exact name of issuer as specified in its charter)

Georgia	58-1088232
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

2816 Washington Road, #103, Augusta, Georgia 30909

(Address of Principal Executive Offices)

Issuers Telephone Number (706) 736-6334

(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  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in rule 12b-2 of the Exchange Act.

Large accelerated filer  o                           Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)                                  Smaller reporting company x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES x    NO  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

oYes      xNo

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 August 10, 2016
Common Stock, $0.10 Par Value	5,243,107 shares

Table of Contents

SECURITY LAND AND DEVELOPMENT CORPORATION

Form 10-Q

Index

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2016 and September 30, 2015	1
	Consolidated Statements of Income and Retained Earnings for the Three Month Periods ended and for the Nine Month Periods ended June 30, 2016 and 2015	2
	Condensed Consolidated Statements of Cash Flows for the Three Month Periods ended and for the Nine Month Periods ended June 30, 2016 and 2015	3
	Notes to the Consolidated Financial Statements	4-8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9-10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 4.	Controls and Procedures	10
Part II	OTHER INFORMATION	11
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Reserved for Future Use	11
Item 5.	Other Information	11
Item 6.	Exhibits	11
	SIGNATURES	12-14

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SECURITY LAND AND DEVELOPMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
	June 30,	September 30,
	2016	2015
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$ 540,897	$ 412,847
Receivables from tenants, net of allowance of $53,809
at June 30, 2016 and $52,255 at September 30, 2015	360,388	386,469
Prepaid property taxes	-	23,251
Income taxes receivable	42,124	14,263
Total current assets	943,409	836,830
INVESTMENT PROPERTIES
Investment properties for lease, net of accumulated depreciation	6,952,129	7,075,175
Land and improvements held for investment or development	3,804,728	3,752,863
	10,756,857	10,828,038
OTHER ASSETS	72,058	79,353
	$ 11,772,324	$ 11,744,221
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$ 236,172	$ 282,769
Current maturities of notes payable	248,049	239,168
Total current liabilities	484,221	521,937
LONG-TERM LIABILITIES
Notes payable, less current portion	2,838,761	3,025,458
Deferred income taxes	1,414,442	1,413,187
Total long-term liabilities	4,253,203	4,438,645
Total liabilities	4,737,424	4,960,582
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share; 30,000,000 shares authorized;
5,243,107 shares issued and outstanding	524,311	524,311
Additional paid-in capital	333,216	333,216
Retained earnings	6,177,373	5,926,112
Total Stockholders' Equity	7,034,900	6,783,639
Liabilities and Stockholders' Equity	$ 11,772,324	$ 11,744,221
The accompanying notes are an integral part of these consolidated financial statements.
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SECURITY LAND AND DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
	For the Three Months		For the Nine Months
	Ended June 30,		Ended June 30,
	2016	2015	2016	2015
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
OPERATING REVENUES
Rent revenues	$ 421,639	$ 383,518	$ 1,251,997	$ 1,148,443
OPERATING EXPENSES
Depreciation and amortization	49,072	41,780	147,182	126,400
Property taxes	68,198	66,158	200,876	199,808
Payroll and related costs	24,049	19,368	137,975	61,461
Insurance and utilities	30,300	18,679	57,867	36,127
Repairs and maintenance	60,214	49,754	82,120	73,255
Professional services	11,250	11,763	60,128	54,707
Bad debt	1,553	-	1,553	2,814
Penalties	-	7	-	11,551
Other	2,913	1,738	8,694	4,180
	247,549	209,247	696,395	570,303
Operating income	174,090	174,271	555,602	578,140
OTHER INCOME (EXPENSE)
Gain on sale of land	-	1,862,235	-	1,862,235
Interest expense	(38,414)	(40,296)	(118,752)	(131,609)
Other income	-	138,868	7,616	138,868
	(38,414)	1,960,807	(111,136)	1,869,494
Income before income taxes	135,676	2,135,078	444,466	2,447,634
INCOME TAXES PROVISION
Income tax expense	56,590	49,902	191,950	179,642
Income tax deferred (benefit) expense	(7,637)	760,473	1,255	753,482
	48,953	810,375	193,205	933,124
Net income	86,723	1,324,703	251,261	1,514,510
RETAINED EARNINGS, BEGINNING
OF PERIOD	6,090,650	4,623,780	5,926,112	4,433,973
RETAINED EARNINGS, END OF PERIOD	$ 6,177,373	$ 5,948,483	$ 6,177,373	$ 5,948,483
PER SHARE DATA
Net income per common share	$ 0.02	$ 0.25	$ 0.05	$ 0.29
The accompanying notes are an integral part of these consolidated financial statements.
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SECURITY LAND AND DEVELOPMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Three Months		For the Nine Months
	Ended June 30,		Ended June 30,
	2016	2015	2016	2015
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
OPERATING ACTIVITIES
Net income	$ 86,723	$ 1,324,703	$ 251,261	$ 1,514,510
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization	49,072	41,780	147,182	126,400
Gain on sale of land	-	(1,862,235)	-	(1,862,235)
Deferred income taxes	(7,637)	760,473	1,255	753,482
Changes in deferred and accrued amounts	(113,230)	(96,116)	(25,126)	(290,612)
Net cash provided by operating activities	14,928	168,605	374,572	241,545
INVESTING ACTIVITIES
Sale of investment properties and other assets for
improvements to property held for lease	-	1,981,900	-	1,993,150
Additions to restricted cash held by a qualified intermediary	-	(1,791,839)	-	(1,791,839)
Additions to investment properties and other assets for
improvements to property held for lease	(21,095)	-	(68,706)	(11,949)
Net cash (used in) provided by investing activities	(21,095)	190,061	(68,706)	189,362
FINANCING ACTIVITIES
Repayments to stockholder	-	-	-	(50,433)
Proceeds from note payable	-	-	-	1,500,000
Principal payments on notes payable	(59,994)	(45,724)	(177,816)	(1,169,203)
Net cash (used in) provided by financing activities	(59,994)	(45,724)	(177,816)	280,364
Net (decrease) increase in cash	(66,161)	312,942	128,050	711,271
CASH, BEGINNING OF PERIOD	607,058	464,311	412,847	65,982
CASH, END OF PERIOD	$ 540,897	$ 777,253	$ 540,897	$ 777,253
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$ 39,617	$ 47,752	$ 120,227	$ 137,956
Cash paid for income taxes	$ 185,000	$ 125,737	$ 219,811	$ 351,880
The accompanying notes are an integral part of these consolidated financial statements.
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SECURITY LAND AND DEVELOPMENT CORPORATION

Notes to the Consolidated Financial Statements

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q, Article 8 of Regulation S-X and accounting principles generally accepted in the United States of America; therefore, they do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows. Such statements are unaudited but, in the opinion of management, reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of results for the selected interim periods. Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the audited financial statements appearing in our Form 10-K for the year ended September 30, 2015 when reviewing these interim financial statements.

The financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the accounts of Security Land and Development Corporation and its four wholly owned subsidiaries, Royal Palms Motel, Inc., SLDC, LLC, SLDC 2, LLC and SLDC III, LLC (described on a consolidated basis as the “Company”). Significant intercompany transactions and accounts are eliminated in consolidation.

Critical Accounting Policies:

Estimates of Useful Lives of Investment Properties for Purposes of Depreciation

Management has estimated useful lives of investment properties, except for land, that is leased, and the Company utilizes the straight-line method to compute depreciation over the estimated useful lives of the investment properties. Actual depreciation of investment properties will vary from management’s estimates, and the value of investment properties is more directly impacted by market conditions and the physical condition of the investment properties.

Evaluation of Long-Lived Assets for Impairment

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of investment properties may not be recoverable. In evaluating recoverability, the Company generally estimates future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is recognized when the expected future cash flows of the asset are less than its carrying amount.

Estimates of Income Tax Rates Applicable to Deferred Taxes

The Company has deferred income taxes through a series of tax-deferred like-kind exchange transactions on certain investment properties and through accelerated depreciation elections on certain other assets. Actual income taxes that may become due when taxable gains are realized on the sale of assets may differ from management’s estimates as a result of changes in tax laws, the tax status of the Company, or the actual taxable earnings of the Company in the periods the deferred income taxes become due.

Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information regarding its critical accounting policies.

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Note 1 – Basis of Presentation, Continued

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts (Topic 606). The new standard is effective for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impacts of adoption and the implementation approach to be used.

In November 2015, the FASB amended the Income Taxes topic of the Accounting Standards Codification to simplify the presentation of deferred income taxes. Under the amended guidance, deferred tax liabilities and assets are required to be classified as noncurrent in a classified statement of financial position. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods with early adoption permitted as of the beginning of an interim or annual reporting period. The Company has not yet adopted the amended guidance. The Company is currently evaluating the impact of adoption.

In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessee’s rights to use the underlying assets for the lease terms for lease arrangement longer than 12 months. Under this approach, a lessee will account for most existing capita/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the company’s consolidated financial statements, including assessing changes that might be necessary to information technology system, processes and internal controls to capture new data and address changes in financial reporting.

In May 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Note 2 – Investment Properties

Investment properties leased or held for lease to others under operating leases consisted of the following at
June 30, 2016 and September 30, 2015:

	June 30, 2016		September 30, 2015
	(unaudited)
National Plaza building, land and improvements	$	5,322,260	$	5,305,419
Evans Ground Lease, land and improvements		2,382,673		2,382,673
Wrightsboro Road Building, land and improvements		1,905,875		1,905,875
Commercial land and improvements		3,804,728		3,752,863
		13,415,536		13,346,830
Less accumulated depreciation		(2,658,679)		(2,518,792)
Investment properties for lease, net of depreciation	$	10,756,857	$	10,828,038

Depreciation expense totaled approximately $47,000 and $39,000 for the three-month periods ended June 30, 2016 and 2015, respectively and approximately $140,000 and $120,000 for the nine-month periods ended June 30, 2016 and 2015, respectively.

National Plaza is a retail strip center located on Washington Road in Augusta Georgia. Approximately 81% of the rentable space at the National Plaza is leased to Publix Supermarkets, Inc., the National Plaza’s anchor tenant. 

The Company entered into a long-term ground lease with a major national tenant and its developer in May 2006 on approximately 18 acres of land in Columbia County, Georgia. The agreement required monthly rental payments of $20,833 during the development period, which was completed in January 2007. Following the expiration of the development period, the lease required annual rental payments of $500,000 for the first 5 years then increasing 5% in years 6, 11, and 16. The lessee has an option to renew at year 21 and another option every 5 years thereafter for a possible total lease term of 50 years. The lease provides for the tenant to pay for insurance and property taxes. The Company is recognizing rents on a straight-line basis over the lease term. 

In September of 2015 the Company purchased a commercial building consisting of approximately 25,000 square feet of retail space and 27,000 square feet of warehouse space on approximately 3.5 acres of land located on Wrightsboro Road. The retail space is currently leased to a local retailer and rent commenced on October 1, 2015. The related lease term is 10 years with annual rental payments totaling $142,000, paid monthly, increasing to $153,000 per year in 2021. The warehouse space was available for lease as of September 30, 2015. The Company is recognizing rents on a straight-line basis over the lease term. 

The Company holds several parcels of land for investment or development purposes, including 19.38 acres of land in North Augusta, South Carolina, purchased in parcels during 2007 and 2008. The Company also owns approximately 85 acres of land in south Richmond County, Georgia and a 1.1-acre parcel along Washington Road in Augusta, Georgia that adjoins the Company’s National Plaza investment property. The aggregate costs of these investment properties held for investment or development was $3,804,728 and $3,752,863 at June 30, 2016 and September 30, 2015, respectively.

Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information on operating lease agreements and land held for investment or development purposes.

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Note 3 – Notes Payable

Notes payable consisted of the following at:

	June 30, 2016	September 30, 2015
	(unaudited)
A note payable to an insurance company collateralized with approximately 18 acres of land in Columbia County, Georgia, and an assignment of the long-term ground lease. The note is payable in monthly installments of $17,896, including principal and interest, through May 1, 2027, and bears interest at a fixed rate of 5.85%.	$ 1,729,554	$ 1,812,690
A note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents. The note is payable in monthly installments of $15,220, including principal and interest, through April 2025, and bears interest at a fixed rate of 4%. The proceeds were used to pay the Company’s outstanding income tax liability, four notes payable collateralized by the Company’s land held for lease and investment portfolio and one uncollateralized note payable to a shareholder. The proceeds were also used to fund improvements at National Plaza.	1,357,256	1,451,936
	3,086,810	3,264,626
Less current maturities	(248,049)	(239,168)
	$ 2,838,761	$ 3,025,458

Management of the Company expects future liquidity needs of the Company to be funded from rent revenues, refinancing and the appreciation in investment properties (which can be sold or mortgaged, if necessary). 

Current maturities of notes payable will require the Company to make payments over the next 12 months totaling $248,049. The Company projects that it will be able to fund the payment of its current maturities of notes payable through cash flows generated from its operations and cash on hand, but there can be no assurance that this will occur.

Note 4 – Income Taxes

At September 30, 2015 the Company had income taxes receivable of $14,263 related to the fiscal year 2015. As of June 30, 2016, the Company has income taxes receivable of $42,124, all of which will be applied to estimated taxes due for the fourth quarter of 2016.

Note 5 - Concentrations

Substantially all of the Company’s assets consist of real estate located in Richmond and Columbia Counties in the state of Georgia and in Aiken County, South Carolina. Substantially all of the Company’s revenues are earned from three of the Company’s investment properties, National Plaza, the Evans Ground Lease, and the Wrightsboro Road Lease, which comprise approximately 51%, 40% and 9% of the Company’s revenues, respectively, for the three-month period ended June 30, 2016. The anchor tenant for National Plaza, Publix Supermarkets, Inc. (“Publix”), a regional food supermarket chain, leases approximately 81% of the space at National Plaza. The Company generates approximately 31% of its revenues though its lease with Publix.

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Note 6 - Related Party Transactions

The Company purchases insurance from an insurance company of which a member of the Company’s Board of Directors is President Emeritus. The Company’s Board of Directors believes that the insurance prices obtained from the insurance company were not in excess of prices that would have been paid had the Company obtained this insurance from other sources.

The Company hired an attorney who is a member of the Company’s Board of Directors and who also serves as Vice President of the Company, to represent the Company in a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged. The matter was settled in June 2015.

Note 7 - Legal Matter

In June 2015, the Company settled a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged to the tenant by the Company. Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information regarding this settlement.

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

Results of Operations:

The Company’s results of operations for the nine months ended June 30, 2016, and a comparative analysis of the same period for 2015 are presented below:

					Increase (decrease)
					2016 compared to 2015
	2016		2015		Amount		Percent
Rent revenues	$	1,251,997	$	1,148,443	$	103,554	9%
Gain on sale of land		-		1,862,235		(1,862,235)	-100%
Operating expenses		696,395		570,303		126,092	22%
Interest expense		118,752		131,609		(12,857)	-10%
Income tax expense		193,205		933,124		(739,919)	-79%
Other income		7,616		138,868		(131,252)	-95%
Net income		251,261		1,514,510		(1,263,249)	-83%

Rent revenues consist of rent revenue from the Company’s National Plaza, a strip center on Washington Road in Augusta, Georgia, and the Evans Ground Lease in Evans, Georgia. The Company also earned rent revenue from a lease on the Wrightsboro Road property with an apparel and home goods retailer and a ground lease with an auto-repair service operation on an out-parcel of National Plaza. Rental income for the nine months ended June 30, 2016 increased compared to the same period for 2015 due to the addition of the rent related to the Wrightsboro Road property lease which commenced on October 1, 2015.

Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information regarding the properties owned and their lease terms.

In June of 2015 the Company recognized a gain on the sale of approximately 1 acre of land, previously included as part of National Plaza, adjacent to Stanley Drive and a residential house on .43 acres of land held for lease on Stanley Drive. The proceeds from this sale were used in a tax deferred like kind exchange for the Wrightsboro Road property that was purchased in September 2015.

Total operating expenses for the nine months ended June 30, 2016 increased compared to the same period for 2015 due to a bonus to the Company’s president in relation to the sale of an approximately 1 acre outparcel of National Plaza and the Stanley Drive house. The proceeds from this sale were used in a tax deferred like kind exchange for the Wrightsboro Road property that was purchased in September 2015. The Company’s operating expenses also increased due to the property tax expense for Wrightsboro Road property purchased during 2015. Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information regarding these transactions. In addition, operating expense also increased due to depreciation cost related to the Wrightsboro Road property acquired in 2015. Management expects operating expenses for the remainder of the current fiscal year to decrease slightly relative to the current operating period as no other similar bonuses are anticipated in the current fiscal year.

Interest expense for the nine months ended June 30, 2016 decreased compared to 2015 due to the decrease in debt resulting from scheduled principal payments. Management expects interest expense for the remainder of the current fiscal year to continue to decrease as outstanding debt continues to amortize.

Income tax expense for the nine month period ended June 30, 2016 decreased compared to the same period for 2015 due to deferred tax expense recognized in 2015 related to the sale of the outparcel and rental house on Stanley Drive noted above.

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During 2011, the Company was notified by a tenant of a claim for reimbursement of certain expenses the Company charged in association with a tenant lease. It was the opinion of the Company's management that the Company was not liable for the claim. Beginning in 2011 the Company accrued approximately $150,000 for professional fees and otherexpenses to defend its position against the claim. The matter was settled in June 2015 and resulting costs totaled approximately $11,000. The remaining accrual of approximately $138,000 was written off and recognized as other income in June 2015.

Liquidity and Sources of Capital:

The Company’s ratio of current assets to current liabilities at June 30, 2016 was 195%. The ratio was 160% at September 30, 2015. 

Management of the Company expects future liquidity needs of the Company to be funded from rent revenues, refinancing and the appreciation in investment properties (which can be sold or mortgaged, if necessary). 

Current maturities of notes payable will require the Company to make payments over the next 12 months totaling $248,049. The Company projects that it will be able to fund the payment of its current maturities of notes payable through cash flows generated from its operations and cash on hand, but there can be no assurance that this will occur.

Cautionary Note Regarding Forward-Looking Statements:

The results of operations for the three and nine months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the entire fiscal year. 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.

Item  3. Quantitative and Qualitative Disclosures About Market Risks

Not applicable to smaller reporting companies

Item  4. Controls and Procedures

(a)      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 Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934. Based upon that evaluation, the Company’s Chief Executive Officer concluded that the Company’s disclosure controls and procedures were ineffective.

(b)      There were no significant changes in the Company’s internal controls over financial reporting or in other factors that could significantly affect these controls subsequent to the date the Chief Executive Officer carried out the evaluation.

           As of September 30, 2015, the Company’s management evaluated the effectiveness of its internal control. Based on the evaluation, the Company’s management concluded that the Company’s internal control over financial reporting was ineffective as of September 30, 2015 and identified a material weakness related to the lack of segregation of duties, accounting personnel with the requisite knowledge of GAAP and the lack of written policies and procedures over financial reporting.

           Notwithstanding the existence of this material weakness in our internal control over financial reporting, our management believes that the consolidated financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented. There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item  1. Legal Proceedings

During 2011, the Company was notified by a tenant of a claim for reimbursement of certain expenses charged by the Company. The Company accrued approximately $150,000 for professional fees and other expenses to defend its position. The matter was settled in the year ended September 30, 2015 and the approximately $139,000 was recognized as income as a result of the settlement. 

Item  1A. Risk Factors

The Company, as a smaller reporting company, is not required to provide the information required by this item.

Item  2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item  3. Defaults Upon Senior Securities

None

Item  4. Reserved for Future Use

Item  5. Other Information

Management of the Company notes that no Forms 8-K were filed during the period and Management is not aware of any un-reported matters occurring during the period that would require disclosure in a Form 8-K. 

Item  6. Exhibits

(a)	Exhibit No.	Description
	31.1	Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	32.1	Certification Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
	101	The following financial information from Security Land and Development Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 is formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Retained Earnings, (iii) the condensed Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements.

-11-

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	August 10, 2016
	T. Greenlee Flanagin	Date
	President
	Chief Executive Officer and Chief Financial Officer

-12-

EX-31

EXHIBIT 31.1

CERTIFICATIONS

I, T. Greenlee Flanagin, certify that:

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

2.  Based on my knowledge, this 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 report;

3.  Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and  have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under supervision, 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 report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;  and

d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors.

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information.

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 10, 2016

/s/ T. Greenlee Flanagin

T. Greenlee Flanagin

President and Chief Executive Officer and
Chief Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Security Land and Development Corporation(the “Company”) on Form 10-Q for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, T. Greenlee Flanagin, President and Chief Executive Officer of the Company, does hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

	(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
By:
	/s/ T. Greenlee Flanagin
	T. Greenlee Flanagin
	President
	Chief Executive Officer and Chief
	Financial Officer
	August 10, 2016

A signed original of this written statement required by Section 906 has been provided to Security Land and Development Corporation and will be retained by Security Land and Development Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2016	Aug. 10, 2016
Document and Entity Information:
Entity Registrant Name	SECURITY LAND & DEVELOPMENT CORP
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Entity Central Index Key	0000088572
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		5,243,107
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
CURRENT ASSETS
Cash	$ 540,897	$ 412,847
Receivables from tenants, net of allowance of $53,809 at June 30, 2016 and $52,255 at September 30, 2015	360,388	386,469
Prepaid property taxes		23,251
Income taxes receivable	42,124	14,263
Total current assets	943,409	836,830
INVESTMENT PROPERTIES
Investment properties for lease, net of accumulated depreciation	6,952,129	7,075,175
Land and improvements held for investment or development	3,804,728	3,752,863
Total investment properties	10,756,857	10,828,038
OTHER ASSETS	72,058	79,353
Total Assets	11,772,324	11,744,221
CURRENT LIABILITIES
Accounts payable and accrued expenses	236,172	282,769
Current maturities of notes payable	248,049	239,168
Total current liabilities	484,221	521,937
LONG-TERM LIABILITIES
Notes payable, less current portion	2,838,761	3,025,458
Deferred income taxes	1,414,442	1,413,187
Total long-term liabilities	4,253,203	4,438,645
Total liabilities	4,737,424	4,960,582
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share; 30,000,000 shares authorized; 5,243,107 shares issued and outstanding	524,311	524,311
Additional paid-in capital	333,216	333,216
Retained earnings	6,177,373	5,926,112
Total Stockholders' Equity	7,034,900	6,783,639
Liabilities and Stockholders' Equity	$ 11,772,324	$ 11,744,221

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Statement of Financial Position [Abstract]
Allowance on receivables from tenants	$ 53,809	$ 52,255
Common Stock, Par Value	$ 0.10	$ 0.10
Common Stock, Shares Authorized	30,000,000	30,000,000
Common Stock, shares issued	5,243,107	5,243,107
Common Stock, shares outstanding	5,243,107	5,243,107

XML

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
OPERATING REVENUES
Rent revenues	$ 421,639	$ 383,518	$ 1,251,997	$ 1,148,443
OPERATING EXPENSES
Depreciation and amortization	49,072	41,780	147,182	126,400
Property taxes	68,198	66,158	200,876	199,808
Payroll and related costs	24,049	19,368	137,975	61,461
Insurance and utilities	30,300	18,679	57,867	36,127
Repairs and maintenance	60,214	49,754	82,120	73,255
Professional services	11,250	11,763	60,128	54,707
Bad debt	1,553		1,553	2,814
Penalties		7		11,551
Other	2,913	1,738	8,694	4,180
Total operating expenses	247,549	209,247	696,395	570,303
Operating income	174,090	174,271	555,602	578,140
OTHER INCOME (EXPENSE)
Gain on sale of land		1,862,235		1,862,235
Interest expense	(38,414)	(40,296)	(118,752)	(131,609)
Other Income		138,868	7,616	138,868
Total other income (expense)	(38,414)	1,960,807	(111,136)	1,869,494
Income before income taxes	135,676	2,135,078	444,466	2,447,634
INCOME TAXES PROVISION
Income tax expense	56,590	49,902	191,950	179,642
Income tax deferred (benefit) expense	(7,637)	760,473	1,255	753,482
Total income taxes provision (benefit)	48,953	810,375	193,205	933,124
Net income	86,723	1,324,703	251,261	1,514,510
RETAINED EARNINGS, BEGINNING OF PERIOD	6,090,650	4,623,780	5,926,112	5,926,112
RETAINED EARNINGS, END OF PERIOD	$ 6,177,373	$ 5,948,483	$ 6,177,373	$ 5,948,483
PER SHARE DATA
Net income per common share	$ 0.02	$ 0.25	$ 0.05	$ 0.29

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
OPERATING ACTIVITIES
Net income	$ 86,723	$ 1,324,703	$ 251,261	$ 1,514,510
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	49,072	41,780	147,182	126,400
Gain on sale of land		(1,862,235)		(1,862,235)
Deferred income taxes	(7,637)	760,473	1,255	753,482
Changes in deferred and accrued amounts	(113,230)	(96,116)	(25,126)	(290,612)
Net cash provided by operating activities	14,928	168,605	374,572	241,545
INVESTING ACTIVITIES
Sale of investment properties and other assets for improvements to property held for lease		1,981,900		1,993,150
Additions to restricted cash held by a qualified intermediary		(1,791,839)		(1,791,839)
Additions to investment properties and other assets for improvements to property held for lease	(21,095)		(68,706)	(11,949)
Net cash (used in) provided by investing activities	(21,095)	190,061	(68,706)	189,362
FINANCING ACTIVITIES
Repayments to stockholder				(50,433)
Proceeds from note payable				1,500,000
Principal payments on notes payable	(59,994)	(45,724)	(177,816)	(1,169,203)
Net cash (used in) provided by financing activities	(59,994)	(45,724)	(177,816)	280,364
Net (decrease) increase in cash	(66,161)	312,942	128,050	711,271
CASH, BEGINNING OF PERIOD	607,058	464,311	412,847	65,982
CASH, END OF PERIOD	540,897	777,253	540,897	777,253
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	39,617	47,752	120,227	137,956
Cash paid for income taxes	$ 185,000	$ 125,737	$ 219,811	$ 351,880

XML

Basis of Presentation

9 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q, Article 8 of Regulation S-X and accounting principles generally accepted in the United States of America; therefore, they do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows. Such statements are unaudited but, in the opinion of management, reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of results for the selected interim periods. Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the audited financial statements appearing in our Form 10-K for the year ended September 30, 2015 when reviewing these interim financial statements.

The financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the accounts of Security Land and Development Corporation and its four wholly owned subsidiaries, Royal Palms Motel, Inc., SLDC, LLC, SLDC 2, LLC and SLDC III, LLC (described on a consolidated basis as the “Company”). Significant intercompany transactions and accounts are eliminated in consolidation.

Critical Accounting Policies:

Estimates of Useful Lives of Investment Properties for Purposes of Depreciation

Management has estimated useful lives of investment properties, except for land, that is leased, and the Company utilizes the straight-line method to compute depreciation over the estimated useful lives of the investment properties. Actual depreciation of investment properties will vary from management’s estimates, and the value of investment properties is more directly impacted by market conditions and the physical condition of the investment properties.

Evaluation of Long-Lived Assets for Impairment

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of investment properties may not be recoverable. In evaluating recoverability, the Company generally estimates future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is recognized when the expected future cash flows of the asset are less than its carrying amount.

Estimates of Income Tax Rates Applicable to Deferred Taxes

The Company has deferred income taxes through a series of tax-deferred like-kind exchange transactions on certain investment properties and through accelerated depreciation elections on certain other assets. Actual income taxes that may become due when taxable gains are realized on the sale of assets may differ from management’s estimates as a result of changes in tax laws, the tax status of the Company, or the actual taxable earnings of the Company in the periods the deferred income taxes become due.

Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information regarding its critical accounting policies.

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts (Topic 606). The new standard is effective for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognitionfor certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impacts of adoption and the implementation approach to be used.

In November 2015, the FASB amended the Income Taxes topic of the Accounting Standards Codification to simplify the presentation of deferred income taxes. Under the amended guidance, deferred tax liabilities and assets are required to be classified as noncurrent in a classified statement of financial position. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods with early adoption permitted as of the beginning of an interim or annual reporting period. The Company has not yet adopted the amended guidance. The Company is currently evaluating the impact of adoption.

In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessee’s rights to use the underlying assets for the lease terms for lease arrangement longer than 12 months. Under this approach, a lessee will account for most existing capita/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the company’s consolidated financial statements, including assessing changes that might be necessary to information technology system, processes and internal controls to capture new data and address changes in financial reporting.

In May 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Investment Properties

9 Months Ended

Jun. 30, 2016

INVESTMENT PROPERTIES

Investment Properties

Note 2 – Investment Properties

Investment properties leased or held for lease to others under operating leases consisted of the following at 
June 30, 2016 and September 30, 2015:

	June 30, 2016		September 30, 2015
	(unaudited)
National Plaza building, land and improvements	$	5,322,260	$	5,305,419
Evans Ground Lease, land and improvements		2,382,673		2,382,673
Wrightsboro Road Building, land and improvements		1,905,875		1,905,875
Commercial land and improvements		3,804,728		3,752,863
		13,415,536		13,346,830
Less accumulated depreciation		(2,658,679)		(2,518,792)
Investment properties for lease, net of depreciation	$	10,756,857	$	10,828,038

Depreciation expense totaled approximately $47,000 and $39,000 for the three-month periods ended June 30, 2016 and 2015, respectively and approximately $140,000 and $120,000 for the nine-month periods ended June 30, 2016 and 2015, respectively.

National Plaza is a retail strip center located on Washington Road in Augusta Georgia. Approximately 81% of the rentable space at the National Plaza is leased to Publix Supermarkets, Inc., the National Plaza’s anchor tenant. 

The Company entered into a long-term ground lease with a major national tenant and its developer in May 2006 on approximately 18 acres of land in Columbia County, Georgia. The agreement required monthly rental payments of $20,833 during the development period, which was completed in January 2007. Following the expiration of the development period, the lease required annual rental payments of $500,000 for the first 5 years then increasing 5% in years 6, 11, and 16. The lessee has an option to renew at year 21 and another option every 5 years thereafter for a possible total lease term of 50 years. The lease provides for the tenant to pay for insurance and property taxes. The Company is recognizing rents on a straight-line basis over the lease term. 

In September of 2015 the Company purchased a commercial building consisting of approximately 25,000 square feet of retail space and 27,000 square feet of warehouse space on approximately 3.5 acres of land located on Wrightsboro Road. The retail space is currently leased to a local retailer and rent commenced on October 1, 2015. The related lease term is 10 years with annual rental payments totaling $142,000, paid monthly, increasing to $153,000 per year in 2021. The warehouse space was available for lease as of September 30, 2015. The Company is recognizing rents on a straight-line basis over the lease term. 

The Company holds several parcels of land for investment or development purposes, including 19.38 acres of land in North Augusta, South Carolina, purchased in parcels during 2007 and 2008. The Company also owns approximately 85 acres of land in south Richmond County, Georgia and a 1.1-acre parcel along Washington Road in Augusta, Georgia that adjoins the Company’s National Plaza investment property. The aggregate costs of these investment properties held for investment or development was $3,804,728 and $3,752,863 at June 30, 2016 and September 30, 2015, respectively.

Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information on operating lease agreements and land held for investment or development purposes.

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Notes Payable

9 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Notes Payable

Note 3 – Notes Payable

Notes payable consisted of the following at:

	June 30, 2016	September 30, 2015
	(unaudited)
A note payable to an insurance company collateralized with approximately 18 acres of land in Columbia County, Georgia, and an assignment of the long-term ground lease. The note is payable in monthly installments of $17,896, including principal and interest, through May 1, 2027, and bears interest at a fixed rate of 5.85%.	$ 1,729,554	$ 1,812,690
A note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents. The note is payable in monthly installments of $15,220, including principal and interest, through April 2025, and bears interest at a fixed rate of 4%. The proceeds were used to pay the Company’s outstanding income tax liability, four notes payable collateralized by the Company’s land held for lease and investment portfolio and one uncollateralized note payable to a shareholder. The proceeds were also used to fund improvements at National Plaza.	1,357,256	1,451,936
	3,086,810	3,264,626
Less current maturities	(248,049)	(239,168)
	$ 2,838,761	$ 3,025,458

Management of the Company expects future liquidity needs of the Company to be funded from rent revenues, refinancing and the appreciation in investment properties (which can be sold or mortgaged, if necessary). 

Current maturities of notes payable will require the Company to make payments over the next 12 months totaling $248,049. The Company projects that it will be able to fund the payment of its current maturities of notes payable through cash flows generated from its operations and cash on hand, but there can be no assurance that this will occur.

XML

Income Taxes

9 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 4 – Income Taxes

At September 30, 2015 the Company hadincome taxesreceivable of $14,263 related to the fiscal year 2015.As of June 30, 2016, the Company has income taxesreceivable of $42,124, all of which will be applied to estimated taxes due for the fourth quarter of 2016.

XML

Concentrations

9 Months Ended

Jun. 30, 2016

Concentrations

Concentrations

Note 5 - Concentrations

Substantially all of the Company’s assets consist of real estate located in Richmond and Columbia Counties in the state of Georgia and in Aiken County, South Carolina.Substantially all of the Company’s revenues are earned from three of the Company’s investment properties, National Plaza, the Evans Ground Lease, and the Wrightsboro Road Lease, which comprise approximately 51%, 40% and 9% of the Company’s revenues, respectively, for the three-month period ended June 30, 2016. The anchor tenant for National Plaza, Publix Supermarkets, Inc. (“Publix”), a regional food supermarket chain, leases approximately 81% of the space at National Plaza. The Company generates approximately 31% of its revenues though its lease with Publix.

XML

Related Party Transactions

9 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

Note 6 - Related Party Transactions

The Company purchases insurance from an insurance company of which a member of the Company’s Board of Directors is PresidentEmeritus. The Company’s Board of Directors believes that the insurance prices obtained from the insurance company were not in excess of prices that would have been paid had the Company obtained this insurance from other sources.

The Company hired an attorney who is a member of the Company’s Board of Directors and who also serves asVice President of the Company, to represent the Company in a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged. The matterwas settled in June 2015.

XML

Legal Matter

9 Months Ended

Jun. 30, 2016

Legal Matter

Legal Matter

Note 7 - Legal Matter

In June 2015, the Company settled a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged to the tenant by the Company.Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information regarding this settlement.

XML

Basis of Presentation (Policies)

9 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Estimates of Useful Lives of Investment Properties for Purposes of Depreciation

Estimates of Useful Lives of Investment Properties for Purposes of Depreciation

Management has estimated useful lives of investment properties, except for land, that is leased, and the Company utilizes the straight-line method to compute depreciation over the estimated useful lives of the investment properties. Actual depreciation of investment properties will vary from management’s estimates, and the value of investment properties is more directly impacted by market conditions and the physical condition of the investment properties.

Evaluation of Long-Lived Assets for Impairment

Evaluation of Long-Lived Assets for Impairment

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of investment properties may not be recoverable. In evaluating recoverability, the Company generally estimates future cash flows expected to result from the use of the asset and its eventual disposition. An impairment loss is recognized when the expected future cash flows of the asset are less than its carrying amount.

Estimates of Income Tax Rates Applicable to Deferred Taxes

Estimates of Income Tax Rates Applicable to Deferred Taxes

The Company has deferred income taxes through a series of tax-deferred like-kind exchange transactions on certain investment properties and through accelerated depreciation elections on certain other assets. Actual income taxes that may become due when taxable gains are realized on the sale of assets may differ from management’s estimates as a result of changes in tax laws, the tax status of the Company, or the actual taxable earnings of the Company in the periods the deferred income taxes become due.

Refer to the Company’s Form 10-K for the year ended September 30, 2015 for further information regarding its critical accounting policies.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts (Topic 606). The new standard is effective for reporting periods beginning after December 15, 2017 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognitionfor certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impacts of adoption and the implementation approach to be used.

In November 2015, the FASB amended the Income Taxes topic of the Accounting Standards Codification to simplify the presentation of deferred income taxes. Under the amended guidance, deferred tax liabilities and assets are required to be classified as noncurrent in a classified statement of financial position. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods with early adoption permitted as of the beginning of an interim or annual reporting period. The Company has not yet adopted the amended guidance. The Company is currently evaluating the impact of adoption.

In February 2016, the FASB issued new guidance to change accounting for leases and that will generally require most leases to be recognized on the balance sheet. The new lease standard only contains targeted changes to accounting by lessors, however, lessees will be required to recognize most leases in their balance sheets as lease liabilities for lease payments and right-of-use assets representing the lessee’s rights to use the underlying assets for the lease terms for lease arrangement longer than 12 months. Under this approach, a lessee will account for most existing capita/finance leases as Type A leases and most existing operating leases as Type B leases. Type A and Type B leases have unique accounting and disclosure requirements. Existing sale-leaseback guidance, including guidance for real estate, will be replaced with a new model applicable to both lessees and lessors. The new guidance will be effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted for all companies and organizations. Management is currently analyzing the impact of the adoption of this guidance on the company’s consolidated financial statements, including assessing changes that might be necessary to information technology system, processes and internal controls to capture new data and address changes in financial reporting.

In May 2016, the FASB amended the Revenue from Contracts with Customers topic of the Accounting Standards Codification to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

XML

Investment Properties (Tables)

9 Months Ended

Jun. 30, 2016

INVESTMENT PROPERTIES

Schedule of Investment properties leased or held for lease

Investment properties leased or held for lease to others under operating leases consisted of the following at
June 30, 2016 and September 30, 2015:

	June 30, 2016		September 30, 2015
	(unaudited)
National Plaza building, land and improvements	$	5,322,260	$	5,305,419
Evans Ground Lease, land and improvements		2,382,673		2,382,673
Wrightsboro Road Building, land and improvements		1,905,875		1,905,875
Commercial land and improvements		3,804,728		3,752,863
		13,415,536		13,346,830
Less accumulated depreciation		(2,658,679)		(2,518,792)
Investment properties for lease, net of depreciation	$	10,756,857	$	10,828,038

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Notes Payable (Tables)

9 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of notes payable and line of credit

Notes payable consisted of the following at:

	June 30, 2016	September 30, 2015
	(unaudited)
A note payable to an insurance company collateralized with approximately 18 acres of land in Columbia County, Georgia, and an assignment of the long-term ground lease. The note is payable in monthly installments of $17,896, including principal and interest, through May 1, 2027, and bears interest at a fixed rate of 5.85%.	$ 1,729,554	$ 1,812,690
A note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents. The note is payable in monthly installments of $15,220, including principal and interest, through April 2025, and bears interest at a fixed rate of 4%. The proceeds were used to pay the Company’s outstanding income tax liability, four notes payable collateralized by the Company’s land held for lease and investment portfolio and one uncollateralized note payable to a shareholder. The proceeds were also used to fund improvements at National Plaza.	1,357,256	1,451,936
	3,086,810	3,264,626
Less current maturities	(248,049)	(239,168)
	$ 2,838,761	$ 3,025,458

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Investment Properties (Details) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Real Estate Properties [Line Items]
Investment property gross	$ 13,415,536	$ 13,346,830
Less accumulated depreciation	(2,658,679)	(2,518,792)
Investment properties for lease, net of depreciation	10,756,857	10,828,038
National Plaza building, land and improvements [Member]
Real Estate Properties [Line Items]
Investment property gross	5,322,260	5,305,419
Evans Ground Lease, land and improvements [Member]
Real Estate Properties [Line Items]
Investment property gross	2,382,673	2,382,673
Wrightsboro Road Building land and improvements [Member]
Real Estate Properties [Line Items]
Investment property gross	1,905,875	1,905,875
Commercial land and improvements [Member]
Real Estate Properties [Line Items]
Investment property gross	$ 3,804,728	$ 3,752,863

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Investment Properties (Details Textual)	1 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) ft² a	May 31, 2006 USD ($) a	Jun. 30, 2016 USD ($) a	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) a	Jun. 30, 2015 USD ($)
Depreciation expense			$ 47,000	$ 39,000	$ 140,000	$ 120,000
Percentage of National Plaza space leased to Publix Supermarkets, Inc						81.00%
Operating lease renewable term					21 years
Land and improvements held for investment or development	$ 3,752,863		$ 3,804,728		$ 3,804,728
Retail Space [Member]
Minimum rental payment of operating lease	$ 142,000
Renewal period	10 years
Purchased of commercial building | ft²	25,000
Increase minimum rental payment after 6 year	$ 153,000
Washington Road In Augusta [Member]
Land and improvements held for investment or development, area | a			1.1		1.1
North Augusta [Member]
Land and improvements held for investment or development, area | a			19.38		19.38
South Richmond County [Member]
Land and improvements held for investment or development, area | a			85		85
Warehouse Space [Member]
Purchased of commercial building | ft²	27,000
Land and improvements held for investment or development, area | a	3.5
Lease Agreements [Member]
Area of land for lease in Columbia County, Georgia | a		18
Monthly rental payments, development period		$ 20,833
Annual rental payments		$ 500,000
Annual rental payments description		First 5 years
Percentage of rent increasing in years 6, 11, and 16		5.00%
Renewal period		21 years
Renewal period description		Every 5 years thereafter
Total lease term		50 years

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Notes Payable (Details)	9 Months Ended
	Jun. 30, 2016 USD ($) a	Sep. 30, 2015 USD ($)
Debt Instrument [Line Items]
Total notes payable	$ 3,086,810	$ 3,264,626
Less current maturities	(248,049)	(239,168)
Noncurrent notes payable	2,838,761	3,025,458
Note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents [Member]
Debt Instrument [Line Items]
Total notes payable	$ 1,357,256	1,451,936
Interest rate (in percent)	4.00%
Periodic monthly installments	$ 15,220
Note payable to an insurance company collateralized in Columbia County, Georgia, and an assignment of the long-term ground lease [Member]
Debt Instrument [Line Items]
Total notes payable	$ 1,729,554	$ 1,812,690
Interest rate (in percent)	5.85%
Periodic monthly installments	$ 17,896
Area purchased in adjoining the North Augusta, South Carolina property (in acres) | a	18

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Income Taxes (Details Textual) - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Total outstanding income tax payable	$ 42,124
Income Taxes Receivable		$ 14,263