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 March 31, 2018
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 May 11, 2018
Common Stock, $0.10 Par Value	3,766,290 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 March 31, 2018 and September 30, 2017	1
	Consolidated Statements of Income for the Three Month Periods ended and for the Six Month Periods ended March 31, 2018 and 2017	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Six Month Period ended March 31, 2018 and the Year Ended September 30, 2017.	3
	Condensed Consolidated Statements of Cash Flows for the Three Month Periods ended and for the Six Month Periods ended March 31, 2018 and 2017	4
	Notes to the Consolidated Financial Statements	5-11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12-13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	13
Part II	OTHER INFORMATION	14
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Reserved for Future Use	14
Item 5.	Other Information	14
Item 6.	Exhibits	14
	SIGNATURES	15-17

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

	SECURITY LAND AND DEVELOPMENT CORPORATION
	CONSOLIDATED BALANCE SHEETS
		March 31,	September 30,
		2018	2017
		(unaudited)
	ASSETS
	CURRENT ASSETS
	Cash	$ 325,295	$ 254,522
	Receivables from tenants, net of allowance of $72,793 and $71,967
	at March 31, 2018 and September 30, 2017, respectively	345,317	365,589
	Prepaid property taxes	-	29,768
	Total current assets	670,612	649,879
	INVESTMENT PROPERTIES
	Investment properties for lease, net of accumulated depreciation	6,648,855	6,742,993
	Land and improvements held for investment or development	3,804,728	3,804,728
		10,453,583	10,547,721
	OTHER ASSETS	15,245	17,774
		$ 11,139,440	$ 11,215,374
	LIABILITIES AND STOCKHOLDERS’ EQUITY
	CURRENT LIABILITIES
	Accounts payable and accrued expenses	$ 161,020	$ 223,482
	Income taxes payable	7,615	19,917
	Current maturities of notes payable	397,771	388,322
	Total current liabilities	566,406	631,721
	LONG-TERM LIABILITIES
	Notes payable, less current portion and deferred financing costs	4,131,594	4,330,863
	Deferred income taxes	913,469	1,367,556
	Total long-term liabilities	5,045,063	5,698,419
	Total liabilities	5,611,469	6,330,140
	STOCKHOLDERS' EQUITY
	Common stock, par value $.10 per share; 30,000,000 shares authorized;
	3,766,290 shares issued and outstanding at March 31, 2018 and
	3,797,137 shares issued and outstanding at September 30, 2017	376,629	379,719
	Retained earnings	5,151,342	4,505,515
	Total Stockholders' Equity	5,527,971	4,885,234
	Liabilities and Stockholders' Equity	$ 11,139,440	$ 11,215,374
The accompanying notes are an integral part of these consolidated financial statements.
-1-

SECURITY LAND AND DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
	For the Three Months		For the Six Months
	Ended March 31,		Ended March 31,
	2018	2017	2018	2017
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
OPERATING REVENUES
Rent revenues	$ 484,580	$ 431,151	$ 902,297	$ 846,090
OPERATING EXPENSES
Depreciation and amortization	48,334	49,351	96,667	98,703
Property taxes	70,023	67,594	140,047	135,187
Payroll and related costs	67,644	26,778	91,173	52,841
Insurance and utilities	11,658	8,506	18,024	21,647
Repairs and maintenance	11,556	25,213	18,707	40,225
Professional services	28,527	28,460	50,267	85,492
Other	4,280	7,737	5,289	22,572
	242,022	213,639	420,174	456,667
Operating income	242,558	217,512	482,123	389,423
OTHER EXPENSE
Interest	45,506	36,863	115,665	73,464
	45,506	36,863	115,665	73,464
Income before income taxes	197,052	180,649	366,458	315,959
INCOME TAXES PROVISION (BENEFIT)
Income tax expense	69,613	79,245	123,820	138,376
Income tax deferred benefit	(3,665)	(10,259)	(454,087)	(18,027)
	65,948	68,986	(330,267)	120,349
Net income	$ 131,104	$ 111,663	$ 696,725	$ 195,610
PER SHARE DATA
Net income per common share	$       0.03	$       0.02	$       0.18	$       0.04
The accompanying notes are an integral part of these consolidated financial statements.
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SECURITY LAND AND DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
		Additional		Total
	Common	Paid-in	Retained	Stockholders'
	Stock	Capital	Earnings	Equity
Balance, September 30, 2016 (audited)	$ 524,311	$ 333,216	$ 6,226,363	$ 7,083,890
Net income	-	-	331,817	331,817
Purchase and retirement of common stock	(144,592)	(333,216)	(2,052,665)	(2,530,473)
Balance, September 30, 2017 (audited)	379,719	-	4,505,515	4,885,234
Net income	-	-	696,725	696,725
Purchase and retirement of common stock	(3,090)	-	(50,898)	(53,988)
Balance, March 31, 2018 (unaudited)	$ 376,629	$ -	$ 5,151,342	$ 5,527,971
The accompanying notes are an integral part of these consolidated financial statements.
-3-

SECURITY LAND AND DEVELOPMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Three Months		For the Six Months
	Ended March 31,		Ended March 31,
	2018	2017	2018	2017
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
OPERATING ACTIVITIES
Net income	$ 131,104	$ 111,663	$ 696,725	$ 195,610
Adjustments to reconcile net income to net cash provided by
operating activities:
Bad debts	826	(3,019)	826	(1,503)
Depreciation and amortization	48,334	48,184	96,667	96,369
Interest on deferred financing costs	1,333	1,167	2,666	2,334
Deferred income tax	(3,665)	(10,259)	(454,087)	(18,027)
Changes in deferred and accrued amounts	(64,377)	52,351	(25,550)	142,503
Net cash provided by operating activities	113,555	200,087	317,247	417,286
FINANCING ACTIVITIES
Purchase and retirement of common stock	(11,108)	-	(53,988)	-
Principal payments on notes payable	(75,542)	(62,218)	(192,486)	(123,685)
Net cash used in financing activities	(86,650)	(62,218)	(246,474)	(123,685)
Net increase in cash	26,905	137,869	70,773	293,601
CASH, BEGINNING OF PERIOD	298,390	656,392	254,522	500,660
CASH, END OF PERIOD	$ 325,295	$ 794,261	$ 325,295	$ 794,261
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$   44,244	$   37,129	$ 113,187	$   77,508
Cash paid for income taxes	$ 121,510	$   42,862	$ 121,510	$   43,351
The accompanying notes are an integral part of these consolidated financial statements.
-4-

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, 2017 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, 2017 for further information regarding its critical accounting policies.

(Continued)

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Note 1 – Basis of Presentation, Continued

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers in future periods. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. 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.  The Company is currently evaluating the impact of adoption and the implementation approach to be used.

In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

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. 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.

In April 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.

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.

In December 2016, the FASB issued amendments to clarify the Accounting Standards Codification, correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (December 14, 2016) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

(Continued)

-6-

Note 1 – Basis of Presentation, Continued

Recently Issued Accounting Standards, continued

In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to require all leases with lease terms over 12 months to be capitalized as a right-of-use asset and lease liability on the balance sheet at the date of lease commencement. Leases will be classified as either finance leases or operating leases. This distinction will be relevant for the pattern of expense recognition in the income statement. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.

In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.

In November, 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how restricted cash is presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In October 2016, the FASB amended the Income Taxes topic of the Accounting Standards Codification to modify the accounting for intra-entity transfers of assets other than inventory. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, the FASB issued guidance to clarify the definitions of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, the FASB updated the Accounting Changes and Error Corrections and the Investments—Equity Method and Joint Ventures Topics of the Accounting Standards Codification.  The ASU incorporates into the Accounting Standards Codification recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards.  The ASU was effective upon issuance. The Company is currently evaluating the impact on additional disclosure requirements as each of the standards is adopted, however it does not expect these amendments to have a material effect on its financial position, results of operations or cash flows.

In January 2017, the FASB amended the Goodwill and Other Topic of the Accounting Standards Codification to simplify the accounting for goodwill impairment for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. The amendment removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2019.Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The Company does not expect these amendments to have a material effect on its financial statements.

(Continued)

-7-

Note 1 – Basis of Presentation, Continued

Recently Issued Accounting Standards, continued

In February 2017, the FASB amended the Other Income Topic of the Accounting Standards Codification to clarify the scope of the guidance on nonfinancial asset de-recognition as well as the accounting for partial sales of nonfinancial assets. The amendments conform the de-recognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. 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.

In September 2017, the FASB updated the Revenue from Contracts with Customers and the Leases Topics of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance about certain public business entities (PBEs) electing to use the non-PBE effective dates solely to adopt the FASB’s new standards on revenue and leases. The amendments were effective upon issuance. The Company is currently in the process of evaluating the impact of adoption of this guidance, however it does not expect these amendments to have a material effect on its financial statements.

In November 2017, the FASB updated the Income Statement and Revenue from Contracts with Customers Topic of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance related to revenue recognition. The amendments were effective upon issuance. The Company is currently evaluating the impact on revenue recognition, however it does not expect these amendments to have a material effect on its financial statements.

In March 2018, the FASB updated the Income Taxes Topic of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance related to the income tax accounting implications of the Tax Cuts and Job Act. The amendments were effective upon issuance. 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.

Reclassifications

Certain reclassifications have been made to a prior quarter ended March 31, 2017. These reclassifications had no effect on previously reported stockholders’ equity, net income or cash flows.

Note 2 – Investment Properties

Investment properties leased or held for lease to others under operating leases consisted of the following at
March 31, 2018 and September 30, 2017:

	March 31, 2018		September 30, 2017
	(unaudited)		(audited)
National Plaza building, land and improvements	$	5,322,260	$	5,322,260
Evans Ground Lease, land and improvements		2,382,673		2,382,673
Wrightsboro Road building, land and improvements		1,929,690		1,929,690
Commercial land and improvements		3,804,728		3,804,728
		13,439,351		13,439,351
Less accumulated depreciation		(2,985,768)		(2,891,630)
Investment properties for lease, net of depreciation	$	10,453,583	$	10,547,721

(Continued)

-8-

Note 2 – Investment Properties, Continued

Depreciation expense totaled approximately $47,000 for the three-month periods ended March 31, 2018 and 2017 and approximately $94,000 for the six-month periods ended March 31, 2018 and 2017.  

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 in 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 is available for lease. 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 at both March 31, 2018 and September 30, 2017.

Refer to the Company’s Form 10-K for the year ended September 30, 2017 for further information on operating lease agreements and land held for investment or development purposes.

-9-

Note 3 – Notes Payable

Notes payable consisted of the following at:

March 31, 2018	September 30, 2017
(unaudited)	(audited)
	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 $33,050, through August 2027, and accrues interest at an annual fixed rate of 4.3%. The note payable is collateralized by National Plaza.	$ 3,057,601	$ 3,188,257
	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%.	1,520,817	1,582,647
		4,578,418	4,770,904
Less deferred financing costs		(49,053)	(51,719)
Less current maturities of notes payable		(397,771)	(388,322)
		$ 4,131,594	$ 4,330,863

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 $397,771. 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, 2017, the Company had income taxes payable of $19,917 related to the fiscal year 2017. As of March 31, 2018, all income taxes payable related to the fiscal year 2017 had been paid.

The Tax Cuts and Jobs Act (TCJA) was signed into law by the President on Friday December 22, 2017. The TCJA  includes the reduction in the corporate tax rate from a top rate of 35% to a flat rate of 21%, changes in business deductions, and many international provisions.  The drop in the corporate rate is effective for tax years beginning after December 31, 2017.  IRC Section 15 indicates that “if any rate of tax imposed…changes, and if the taxable year includes the effective date of the change…, then tentative taxes shall be computed by applying the rate for the period before the effective date of the change, and the rate for the period on and after such date, to the taxable income for the entire taxable year, and the tax for such taxable year shall be the sum of that proportion of each tentative tax which the number of days in each period bears to the number of days in the entire taxable year.” (§15(a)).  As the Company is a fiscal year taxpayer, they will receive a partial benefit for the drop in the federal corporate tax rate for their fiscal year ended September 30, 2018.  The weighted average federal tax rate computed in accordance with IRC Section 15 is 24.25% for the current fiscal year.

Based on the drop in the corporate tax rate to a flat 21%, the Company revalued each of their deferred tax assets and liabilities in the current period using the new corporate tax rate.  The net impact from this revaluing resulted in a tax benefit of $463,167 recognized as of December 31, 2017.

(Continued)

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Note 4 – Income Taxes, Continued

Income taxes have been provided using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

During the six-month period ended March 31, 2018, the Company recorded $330,267 in income tax benefits at an effective rate of -90.12% The Company records income taxes using an estimated annual effective tax rate for interim reporting. The individually largest factor contributing to the difference between the federal statutory rate of 24.25% and the Company’s effective tax rate for the six-month period ended March 31, 2018 was the benefit relating to the revaluing of the deferred tax asset and liability balances to the new federal statutory rate.  

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 55%, 37% and 8% of the Company’s revenues, respectively, for the three-month period ended March 31, 2018. 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 29% of its revenues through its lease with Publix.

Note 6 - Related Party Transactions

During the quarter, the Company paid a stockholder who is also the son of the President for accounting services. The Company’s Board of Directors believes that the accounting services paid to the son of its President were not in excess of prices that would have been paid had the Company obtained accounting services from other sources.

Note 7 – Stockholders’ Equity

On February 7, 2017, Security Land and Development Corporation offered to purchase up to 2,526,247 shares (approximately 48.2% of the Company’s outstanding shares) of its common stock from its stockholders through a tender offer (“the Offer”) at a price of $1.25 per share. The Offer is part of a plan intended to enhance stockholder value and provide liquidity for the stockholders. The Offer expired on March 15, 2017, was extended by the Company, and on April 19, 2017 Security Land and Development Corporation amended the above offer to increase the offer price to $1.60 per share. The amended Offer expired on May 5, 2017.  On May 5, 2017, Security Land and Development Corporation amended the April 19, 2017 Offer to increase the offer price to $1.75 per share. Within the offer period, 192,860 shares were sold by members of the Board of Directors who are not part of the Flanagin family. As of March 31, 2018, the Flanagin family owned approximately 58% of the Company’s common stock. During the offer period, the Company has purchased and retired a total of 1,477,817 shares of its stock for $2,584,430. Included within these shares purchased by the Company were 192,860 shares sold by members of the Board of Directors who are not part of the Flanagin family. The Company utilized cash on hand and funds obtained from the line of credit that has since been converted to a term note. See Note 3 – Notes Payable. 

-11-

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 six months ended March 31, 2018, and a comparative analysis of the same period for 2017 are presented below:

					Increase (decrease)
					2018 compared to 2017
	2018		2017		Amount		Percent
Rent revenues	$	902,297	$	846,090	$	56,207	7%
Operating expenses		420,174		456,667		(36,493)	-8%
Interest expense		115,665		73,464		42,201	57%
Income tax (benefit) expense, net		(330,267)		120,349		(450,616)	-374%
Net income		696,725		195,610		501,115	256%

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.

Refer to the Company’s Form 10-K for the year ended September 30, 2017 for further information regarding the properties owned and their lease terms.

Total operating expenses for the six months ended March 31, 2018 decreased compared to the same period for 2017 due primarily to roofing and plumbing repair costs incurred in 2017 that were not incurred in the current period. Refer to the Company’s Form 10-K for the year ended September 30, 2017 for further information regarding these transactions. Management expects operating expenses for the remainder of the current fiscal year to be in-line with operating expenses above incurred during the first two quarters of fiscal year 2018.

Interest expense for the six months ended March 31, 2018 increased compared to 2017 due to the increase in debt resulting from the debt restructuring completed in the prior year. Management expects interest expense for the remainder of the current fiscal year to be in-line with interest expense incurred during the first two quarters of fiscal year 2018.

Income tax expense for the six-month period ended March 31, 2018 decreased significantly compared to the same period for 2017 due to the Tax Cuts and Job Act being signed into law in December 2017.

Liquidity and Sources of Capital:

The Company’s ratio of current assets to current liabilities at March 31, 2018 was 118%. The ratio was 103% at September 30, 2017. 

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 $397,771. 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.

-12-

 Cautionary Note Regarding Forward-Looking Statements:

The results of operations for the six months ended March 31, 2018 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, 2017, 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, 2017 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.

-13-

PART II - OTHER INFORMATION

Item  1. Legal Proceedings

None 

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 Forms 8-K were filed during the period for the departure of two members of the Board of Directors. Management is not aware of any un-reported matters occurring during the period that would require any additional disclosures 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 March 31, 2018 is formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Changes in Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.

-14-

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 11, 2018
	T. Greenlee Flanagin	Date
	President
	Chief Executive Officer and Chief Financial Officer

-15-

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: May 11, 2018

/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 March 31, 2018 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
	May 11, 2018

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	6 Months Ended
	Mar. 31, 2018	May 11, 2018
Document and Entity Information:
Entity Registrant Name	SECURITY LAND & DEVELOPMENT CORP
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Entity Central Index Key	0000088572
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		3,766,290
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	2018
Document Fiscal Period Focus	Q2
Small Business Entity	true

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
CURRENT ASSETS
Cash	$ 325,295	$ 254,522
Receivables from tenants, net of allowance of $72,793 and $71,967 at March 31, 2018 and September 30, 2017, respectively	345,317	365,589
Prepaid property taxes	0	29,768
Total current assets	670,612	649,879
INVESTMENT PROPERTIES
Investment properties for lease, net of accumulated depreciation	6,648,855	6,742,993
Land and improvements held for investment or development	3,804,728	3,804,728
Total investment properties	10,453,583	10,547,721
OTHER ASSETS	15,245	17,774
Total Assets	11,139,440	11,215,374
CURRENT LIABILITIES
Accounts payable and accrued expenses	161,020	223,482
Income taxes payable	7,615	19,917
Current maturities of notes payable	397,771	388,322
Total current liabilities	566,406	631,721
LONG-TERM LIABILITIES
Notes payable, less current portion and deferred financing costs	4,131,594	4,330,863
Deferred income taxes	913,469	1,367,556
Total long-term liabilities	5,045,063	5,698,419
Total liabilities	5,611,469	6,330,140
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share; 30,000,000 shares authorized; 3,766,290 shares issued and outstanding at March 31, 2018 and 3,797,137 shares issued and outstanding at September 30, 2017	376,629	379,719
Retained earnings	5,151,342	4,505,515
Total Stockholders' Equity	5,527,971	4,885,234
Liabilities and Stockholders' Equity	$ 11,139,440	$ 11,215,374

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Statement of Financial Position [Abstract]
Allowance on receivables from tenants	$ 72,793	$ 71,967
Common Stock, Par Value	$ 0.10	$ 0.10
Common Stock, Shares Authorized	30,000,000	30,000,000
Common Stock, shares issued	3,766,290	3,797,137
Common Stock, shares outstanding	3,766,290	3,797,137

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
OPERATING REVENUES
Rent revenues	$ 484,580	$ 431,151	$ 902,297	$ 846,090
OPERATING EXPENSES
Depreciation and amortization	48,334	49,351	96,667	98,703
Property taxes	70,023	67,594	140,047	135,187
Payroll and related costs	67,644	26,778	91,173	52,841
Insurance and utilities	11,658	8,506	18,024	21,647
Repairs and maintenance	11,556	25,213	18,707	40,225
Professional services	28,527	28,460	50,267	85,492
Other	4,280	7,737	5,289	22,572
Total operating expenses	242,022	213,639	420,174	456,667
Operating income	242,558	217,512	482,123	389,423
OTHER INCOME (EXPENSE)
Interest	45,506	36,863	115,665	73,464
Total other income (expense)	(45,506)	(36,863)	(115,665)	(73,464)
Income before income taxes	197,052	180,649	366,458	315,959
INCOME TAXES PROVISION (BENEFIT)
Income tax expense	69,613	79,245	123,820	138,376
Income tax deferred benefit	(3,665)	(10,259)	(454,087)	(18,027)
Total income taxes provision (benefit)	65,948	68,986	(330,267)	120,349
Net income	$ 131,104	$ 111,663	$ 696,725	$ 195,610
Net income per common share	$ 0.03	$ 0.02	$ 0.18	$ 0.04

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Retained Earnings / Accumulated Deficit	Total
Beginning balance, value at Sep. 30, 2016	$ 524,311	$ 333,216	$ 6,226,363	$ 7,083,890
Net income			331,817	331,817
Purchase and retirement of common stock	(144,592)	(333,216)	(2,052,665)	(2,530,473)
Ending balance, value at Sep. 30, 2017	379,719	0	4,505,515	4,885,234
Net income			696,725	696,725
Purchase and retirement of common stock	(3,090)		(50,898)	(53,988)
Ending balance, value at Mar. 31, 2018	$ 376,629	$ 0	$ 5,151,342	$ 5,527,971

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017
OPERATING ACTIVITIES
Net income	$ 131,104	$ 111,663	$ 696,725	$ 195,610
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debts	826	(3,019)	826	(1,503)
Depreciation and amortization	48,334	48,184	96,667	96,369
Interest on deferred financing costs	1,333	1,167	2,666	2,334
Deferred income tax	(3,665)	(10,259)	(454,087)	(18,027)
Changes in deferred and accrued amounts	(64,377)	52,351	(25,550)	142,503
Net cash provided by operating activities	113,555	200,087	317,247	417,286
FINANCING ACTIVITIES
Purchase and retirement of common stock	(11,108)	0	(53,988)	0
Principal payments on notes payable	(75,542)	(62,218)	(192,486)	(123,685)
Net cash used in financing activities	(86,650)	(62,218)	(246,474)	(123,685)
Net increase in cash	26,905	137,869	70,773	293,601
CASH, BEGINNING OF PERIOD	298,390	656,392	254,522	500,660
CASH, END OF PERIOD	325,295	794,261	325,295	794,261
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	44,244	37,129	113,187	77,508
Cash paid for income taxes	$ 121,510	$ 42,862	$ 121,510	$ 43,351

XML

1. Basis of Presentation

6 Months Ended

Mar. 31, 2018

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, 2017 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, 2017 for further information regarding its critical accounting policies.

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers in future periods. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. 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.  The Company is currently evaluating the impact of adoption and the implementation approach to be used.

In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

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. 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.

In April 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.

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.

In December 2016, the FASB issued amendments to clarify the Accounting Standards Codification, correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (December 14, 2016) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to require all leases with lease terms over 12 months to be capitalized as a right-of-use asset and lease liability on the balance sheet at the date of lease commencement. Leases will be classified as either finance leases or operating leases. This distinction will be relevant for the pattern of expense recognition in the income statement. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.

In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.

In November, 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how restricted cash is presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In October 2016, the FASB amended the Income Taxes topic of the Accounting Standards Codification to modify the accounting for intra-entity transfers of assets other than inventory. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, the FASB issued guidance to clarify the definitions of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, the FASB updated the Accounting Changes and Error Corrections and the Investments—Equity Method and Joint Ventures Topics of the Accounting Standards Codification.  The ASU incorporates into the Accounting Standards Codification recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards.  The ASU was effective upon issuance. The Company is currently evaluating the impact on additional disclosure requirements as each of the standards is adopted, however it does not expect these amendments to have a material effect on its financial position, results of operations or cash flows.

In January 2017, the FASB amended the Goodwill and Other Topic of the Accounting Standards Codification to simplify the accounting for goodwill impairment for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. The amendment removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The Company does not expect these amendments to have a material effect on its financial statements.

In February 2017, the FASB amended the Other Income Topic of the Accounting Standards Codification to clarify the scope of the guidance on nonfinancial asset de-recognition as well as the accounting for partial sales of nonfinancial assets. The amendments conform the de-recognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. 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.

In September 2017, the FASB updated the Revenue from Contracts with Customers and the Leases Topics of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance about certain public business entities (PBEs) electing to use the non-PBE effective dates solely to adopt the FASB’s new standards on revenue and leases. The amendments were effective upon issuance. The Company is currently in the process of evaluating the impact of adoption of this guidance, however it does not expect these amendments to have a material effect on its financial statements.

In November 2017, the FASB updated the Income Statement and Revenue from Contracts with Customers Topic of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance related to revenue recognition. The amendments were effective upon issuance. The Company is currently evaluating the impact on revenue recognition, however it does not expect these amendments to have a material effect on its financial statements.

In March 2018, the FASB updated the Income Taxes Topic of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance related to the income tax accounting implications of the Tax Cuts and Job Act. The amendments were effective upon issuance. 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.

Reclassifications

Certain reclassifications have been made to a prior quarter ended March 31, 2017. These reclassifications had no effect on previously reported stockholders’ equity, net income or cash flows.

XML

2. Investment Properties

6 Months Ended

Mar. 31, 2018

INVESTMENT PROPERTIES

Investment Properties

Investment properties leased or held for lease to others under operating leases consisted of the following at March 31, 2018 and September 30, 2017:

	March 31, 2018			September 30, 2017
		(unaudited)			(audited)
National Plaza building, land and improvements	$	5,322,260		$	5,322,260
Evans Ground Lease, land and improvements		2,382,673			2,382,673
Wrightsboro Road building, land and improvements		1,929,690			1,929,690
Commercial land and improvements		3,804,728			3,804,728
		13,439,351			13,439,351
Less accumulated depreciation		(2,985,768	)		(2,891,630	)
Investment properties for lease, net of depreciation	$	10,453,583		$	10,547,721

Depreciation expense totaled approximately $47,000 for the three-month periods ended March 31, 2018 and 2017 and approximately $94,000 for the six-month periods ended March 31, 2018 and 2017.  

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 in 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 is available for lease. 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 at both March 31, 2018 and September 30, 2017.

Refer to the Company’s Form 10-K for the year ended September 30, 2017 for further information on operating lease agreements and land held for investment or development purposes.

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3. Notes Payable

6 Months Ended

Mar. 31, 2018

Notes Payable [Abstract]

Notes Payable

Note 3 – Notes Payable

Notes payable consisted of the following at:

	March 31, 2018			September 30, 2017
	(unaudited)			(audited)
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 $33,050, through August 2027, and accrues interest at an annual fixed rate of 4.3%. The note payable is collateralized by National Plaza.	$	3,057,601		$	3,188,257
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%.		1,520,817			1,582,647
		4,578,418			4,770,904
Less deferred financing costs		(49,053	)		(51,719	)
Less current maturities of notes payable		(397,771	)		(388,322	)
	$	4,131,594		$	4,330,863

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 $397,771. 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.

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4. Income Taxes

6 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 4 – Income Taxes

At September 30, 2017, the Company had income taxes payable of $19,917 related to the fiscal year 2017. As of March 31, 2018, all income taxes payable related to the fiscal year 2017 had been paid.

The Tax Cuts and Jobs Act (TCJA) was signed into law by the President on Friday December 22, 2017. The TCJA  includes the reduction in the corporate tax rate from a top rate of 35% to a flat rate of 21%, changes in business deductions, and many international provisions.  The drop in the corporate rate is effective for tax years beginning after December 31, 2017.  IRC Section 15 indicates that “if any rate of tax imposed…changes, and if the taxable year includes the effective date of the change…, then tentative taxes shall be computed by applying the rate for the period before the effective date of the change, and the rate for the period on and after such date, to the taxable income for the entire taxable year, and the tax for such taxable year shall be the sum of that proportion of each tentative tax which the number of days in each period bears to the number of days in the entire taxable year.” (§15(a)).  As the Company is a fiscal year taxpayer, they will receive a partial benefit for the drop in the federal corporate tax rate for their fiscal year ended September 30, 2018.  The weighted average federal tax rate computed in accordance with IRC Section 15 is 24.25% for the current fiscal year.

Based on the drop in the corporate tax rate to a flat 21%, the Company revalued each of their deferred tax assets and liabilities in the current period using the new corporate tax rate.  The net impact from this revaluing resulted in a tax benefit of $463,167 recognized as of December 31, 2017.

Income taxes have been provided using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

During the six-month period ended March 31, 2018, the Company recorded $330,267 in income tax benefits at an effective rate of -90.12% The Company records income taxes using an estimated annual effective tax rate for interim reporting. The individually largest factor contributing to the difference between the federal statutory rate of 24.25% and the Company’s effective tax rate for the six-month period ended March 31, 2018 was the benefit relating to the revaluing of the deferred tax asset and liability balances to the new federal statutory rate.  

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5. Concentrations

6 Months Ended

Mar. 31, 2018

Risks and Uncertainties [Abstract]

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 55%, 37% and 8% of the Company’s revenues, respectively, for the three-month period ended March 31, 2018. 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 29% of its revenues through its lease with Publix.

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6. Related Party Transactions

6 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Note 6 - Related Party Transactions

During the quarter, the Company paid a stockholder who is also the son of the President for accounting services. The Company’s Board of Directors believes that the accounting services paid to the son of its President were not in excess of prices that would have been paid had the Company obtained accounting services from other sources.

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7. Stockholders' Equity

6 Months Ended

Mar. 31, 2018

Equity [Abstract]

Stockholders' Equity

Note 7 – Stockholders’ Equity

On February 7, 2017, Security Land and Development Corporation offered to purchase up to 2,526,247 shares (approximately 48.2% of the Company’s outstanding shares) of its common stock from its stockholders through a tender offer (“the Offer”) at a price of $1.25 per share. The Offer is part of a plan intended to enhance stockholder value and provide liquidity for the stockholders. The Offer expired on March 15, 2017, was extended by the Company, and on April 19, 2017 Security Land and Development Corporation amended the above offer to increase the offer price to $1.60 per share. The amended Offer expired on May 5, 2017.  On May 5, 2017, Security Land and Development Corporation amended the April 19, 2017 Offer to increase the offer price to $1.75 per share. Within the offer period, 192,860 shares were sold by members of the Board of Directors who are not part of the Flanagin family. As of March 31, 2018, the Flanagin family owned approximately 58% of the Company’s common stock. During the offer period, the Company has purchased and retired a total of 1,477,817 shares of its stock for $2,584,430. Included within these shares purchased by the Company were 192,860 shares sold by members of the Board of Directors who are not part of the Flanagin family. The Company utilized cash on hand and funds obtained from the line of credit that has since been converted to a term note. See Note 3 – Notes Payable.

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1. Basis of Presentation (Policies)

6 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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, 2017 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.

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, 2017 for further information regarding its critical accounting policies.

Recently issued accounting standards

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance to change the recognition of revenue from contracts with customers in future periods. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. 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.  The Company is currently evaluating the impact of adoption and the implementation approach to be used.

In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers. As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

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. 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.

In April 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.

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.

In December 2016, the FASB issued amendments to clarify the Accounting Standards Codification, correct unintended application of guidance, and make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments were effective upon issuance (December 14, 2016) for amendments that do not have transition guidance. Amendments that are subject to transition guidance will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In December 2016, the FASB issued technical corrections and improvements to the Revenue from Contracts with Customers Topic. These corrections make a limited number of revisions to several pieces of the revenue recognition standard issued in 2014. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its financial statements.

In February 2016, the FASB amended the Leases topic of the Accounting Standards Codification to require all leases with lease terms over 12 months to be capitalized as a right-of-use asset and lease liability on the balance sheet at the date of lease commencement. Leases will be classified as either finance leases or operating leases. This distinction will be relevant for the pattern of expense recognition in the income statement. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.

In August 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. The Company does not expect these amendments to have a material effect on its financial statements.

In November, 2016, the FASB amended the Statement of Cash Flows topic of the Accounting Standards Codification to clarify how restricted cash is presented and classified in the statement of cash flows. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017 including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In October 2016, the FASB amended the Income Taxes topic of the Accounting Standards Codification to modify the accounting for intra-entity transfers of assets other than inventory. The amendments will be effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, the FASB issued guidance to clarify the definitions of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect these amendments to have a material effect on its financial statements.

In January 2017, the FASB updated the Accounting Changes and Error Corrections and the Investments—Equity Method and Joint Ventures Topics of the Accounting Standards Codification.  The ASU incorporates into the Accounting Standards Codification recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards.  The ASU was effective upon issuance. The Company is currently evaluating the impact on additional disclosure requirements as each of the standards is adopted, however it does not expect these amendments to have a material effect on its financial position, results of operations or cash flows.

In January 2017, the FASB amended the Goodwill and Other Topic of the Accounting Standards Codification to simplify the accounting for goodwill impairment for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill. The amendment removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.  The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  The Company does not expect these amendments to have a material effect on its financial statements.

In February 2017, the FASB amended the Other Income Topic of the Accounting Standards Codification to clarify the scope of the guidance on nonfinancial asset de-recognition as well as the accounting for partial sales of nonfinancial assets. The amendments conform the de-recognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. 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.

In September 2017, the FASB updated the Revenue from Contracts with Customers and the Leases Topics of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance about certain public business entities (PBEs) electing to use the non-PBE effective dates solely to adopt the FASB’s new standards on revenue and leases. The amendments were effective upon issuance. The Company is currently in the process of evaluating the impact of adoption of this guidance, however it does not expect these amendments to have a material effect on its financial statements.

In November 2017, the FASB updated the Income Statement and Revenue from Contracts with Customers Topic of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance related to revenue recognition. The amendments were effective upon issuance. The Company is currently evaluating the impact on revenue recognition, however it does not expect these amendments to have a material effect on its financial statements.

In March 2018, the FASB updated the Income Taxes Topic of the Accounting Standards Codification. The amendments incorporate into the Accounting Standards Codification recent SEC guidance related to the income tax accounting implications of the Tax Cuts and Job Act. The amendments were effective upon issuance. 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.

Reclassifications

Reclassifications

Certain reclassifications have been made to a prior quarter ended March 31, 2017. These reclassifications had no effect on previously reported stockholders’ equity, net income or cash flows.

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2. Investment Properties (Tables)

6 Months Ended

Mar. 31, 2018

INVESTMENT PROPERTIES

Schedule of Investment properties leased or held for lease

	March 31, 2018			September 30, 2017
		(unaudited)			(audited)
National Plaza building, land and improvements	$	5,322,260		$	5,322,260
Evans Ground Lease, land and improvements		2,382,673			2,382,673
Wrightsboro Road building, land and improvements		1,929,690			1,929,690
Commercial land and improvements		3,804,728			3,804,728
		13,439,351			13,439,351
Less accumulated depreciation		(2,985,768	)		(2,891,630	)
Investment properties for lease, net of depreciation	$	10,453,583		$	10,547,721

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3. Notes Payable (Tables)

6 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of notes payable

	March 31, 2018			September 30, 2017
	(unaudited)			(audited)
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 $33,050, through August 2027, and accrues interest at an annual fixed rate of 4.3%. The note payable is collateralized by National Plaza.	$	3,057,601		$	3,188,257
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%.		1,520,817			1,582,647
		4,578,418			4,770,904
Less deferred financing costs		(49,053	)		(51,719	)
Less current maturities of notes payable		(397,771	)		(388,322	)
	$	4,131,594		$	4,330,863

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2. Investment Properties (Details - Real estate) - USD ($)	Mar. 31, 2018	Sep. 30, 2017
Real Estate Properties [Line Items]
Investment property gross	$ 13,439,351	$ 13,439,351
Less accumulated depreciation	(2,985,768)	(2,891,630)
Total investment properties	10,453,583	10,547,721
National Plaza building, land and improvements [Member]
Real Estate Properties [Line Items]
Investment property gross	5,322,260	5,322,260
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	1,929,690	1,929,690
Commercial land and improvements [Member]
Real Estate Properties [Line Items]
Investment property gross	$ 3,804,728	$ 3,804,728

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2. Investment Properties (Details Narrative)	3 Months Ended		6 Months Ended
	Mar. 31, 2018 USD ($) ft² a Integer	Mar. 31, 2017 USD ($)	Mar. 31, 2018 USD ($) ft² a Integer	Mar. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)
Depreciation expense | $	$ 47,000	$ 47,000	$ 94,000	$ 94,000
Cost of properties held for investment or development | $	$ 3,804,728		$ 3,804,728		$ 3,804,728
National Plaza [Member]
Operating lease description			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 in year 21 and another option every 5 years thereafter for a possible total lease term of 50 years.
National Plaza [Member] | Rentable Space [Member] | One Customer [Member]
Concentration percentage			81.00%
Wrightsboro [Member]
Operating lease description			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 is available for lease. The Company is recognizing rents on a straight-line basis over the lease term.
Acres of property held | Integer	3.5		3.5
Wrightsboro [Member] | Retail Space [Member]
Area of property held | ft²	25,000		25,000
Wrightsboro [Member] | Warehouse Space [Member]
Area of property held | ft²	27,000		27,000
North Augusta, SC [Member]
Acres of property held	19.38		19.38
Richmond County [Member]
Acres of property held	85		85
Washington Road [Member]
Acres of property held	1.1		1.1

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3. Notes Payable (Details - Notes payable) - USD ($)	6 Months Ended
	Mar. 31, 2018	Sep. 30, 2017
Debt Instrument [Line Items]
Total notes payable	$ 4,578,418	$ 4,770,904
Less deferred financing costs	(49,053)	(51,719)
Less current maturities	(397,771)	(388,322)
Noncurrent notes payable	4,131,594	4,330,863
Note Payable 1 [Member]
Debt Instrument [Line Items]
Total notes payable	3,057,601	$ 3,188,257
Interest rate (in percent)		4.30%
Periodic monthly installments	$ 33,050
Debt maturity date	Aug. 31, 2027
Collateral	Mortgage interest in National Plaza and an assignment of rents
Note Payable 2 [Member]
Debt Instrument [Line Items]
Total notes payable	$ 1,520,817	$ 1,582,647
Interest rate (in percent)		5.85%
Periodic monthly installments	$ 17,896
Debt maturity date	May 01, 2027
Collateral	18 acres of land in Columbia County, GA, and an assignment of the long-term ground lease

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3. Notes Payable (Details Narrative)	Mar. 31, 2018 USD ($)
Notes Payable [Abstract]
Current maturities of notes payable	$ 397,771

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4. Income Taxes (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018	Mar. 31, 2017	Sep. 30, 2017
Income taxes payable	$ 7,615		$ 7,615		$ 19,917
Weighted average tax rate			24.25%
Net impact from revaluing tax benefit			$ 463,167
Total income taxes provision (benefit)	(65,948)	$ (68,986)	$ 330,267	$ (120,349)
Effective tax rate			(90.12%)
Fiscal Year 2017 [Member]
Income taxes payable	$ 0		$ 0		$ 19,917

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5. Concentrations (Details)	6 Months Ended
	Mar. 31, 2018
Sales Revenue, Net [Member] | Publix [Member]
Concentration percentage	29.00%
National Plaza [Member] | Rent Revenue [Member]
Concentration percentage	55.00%
National Plaza [Member] | Rentable Space [Member] | One Customer [Member]
Concentration percentage	81.00%
Evans Ground Lease [Member] | Rent Revenue [Member]
Concentration percentage	37.00%
Wrightsboro Road Lease [Member] | Rent Revenue [Member]
Concentration percentage	8.00%

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7. Stockholders' Equity (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended	12 Months Ended
	May 05, 2017	Mar. 31, 2018	Sep. 30, 2017
Purchase and retirement of common stock		$ 53,988	$ 2,530,473
Buy Back Offer [Member]
Purchase and retirement of common stock	$ 2,584,430
Purchase and retirement of common stock, shares	1,477,817
Flanagin [Member]
Equity interest owned		58.00%
Purchase and retirement of common stock, shares		192,860