U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-QSB

x		Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the quarterly period ended June 30, 2008

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 small business 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 shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

Class		Outstanding at June 30, 2008
Common Stock, $0.10 Par Value		5,247,107 shares

Transitional Small Business Disclosure Format: YES o NO x

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	June 30,		September 30,
	2008		2007
			(audited)
CURRENT ASSETS
Cash and cash equivalents	$	294,614	$	347,024
Receivables from tenants	164,381		156,879
Prepaid property taxes	—		20,088
Income taxes receivable	10,840		—

Total current assets	469,835		523,991

INVESTMENT PROPERTIES
Investment properties for lease, net of accumulated depreciation	6,217,792		6,310,924
Land and improvements held for investment or development	3,628,581		2,711,464

	9,846,373		9,022,388

OTHER ASSETS	99,744		104,041

	$	10,415,952	$	9,650,420

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	169,813	$	171,656
Income taxes payable	—		30,553
Current maturities of notes payable	590,836		324,283
Current maturities of deferred revenue	24,652		24,652

Total current liabilities	785,301		551,144

LONG-TERM LIABILITIES
Notes payable, less current portion	5,421,749		5,123,640
Deferred income taxes	476,146		467,091
Deferred revenue, less current portion	145,842		164,331

Total long-term liabilities	6,043,737		5,755,062

Total liabilities	6,829,038		6,306,206

STOCKHOLDERS’ EQUITY
Common stock, par value $.10 per share; 30,000,000 shares authorized; 5,247,107 shares issued and outstanding	524,711		524,711
Additional paid-in capital	332,816		332,816
Retained earnings	2,729,387		2,486,687

	3,586,914		3,344,214

	$	10,415,952	$	9,650,420

The accompanying notes are an integral part of these consolidated financial statements.

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SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2008			2007			2008			2007

RENT REVENUE	$	359,683		$	335,647		$	1,062,483		$	905,994

OPERATING EXPENSES
Depreciation and amortization	32,476			31,948			97,429			95,162
Property taxes	63,309			33,101			181,366			89,189
Payroll and related costs	15,456			19,912			46,771			49,377
Insurance and utilities	11,342			13,745			32,419			31,335
Repairs and maintenance	5,427			5,486			20,741			16,886
Professional services	3,025			3,423			27,386			25,792
Other	1,307			1,116			4,614			2,472

	132,342			108,731			410,726			310,213

Operating income	227,341			226,916			651,757			595,781

OTHER INCOME (EXPENSE)
Interest	(88,264		)	(78,214		)	(264,667		)	(194,274		)

Income before income taxes	139,077			148,702			387,090			401,507

INCOME TAXES	51,353			48,337			144,390			133,064

Net income	87,724			100,365			242,700			268,443

RETAINED EARNINGS, BEGINNING OF PERIOD	2,641,663			2,302,000			2,486,687			2,133,922

RETAINED EARNINGS, END OF PERIOD	$	2,729,387		$	2,402,365		2,729,387			2,402,365

PER SHARE DATA
Net income per common share	$	0.02		$	0.02		$	0.03		$	0.05

The accompanying notes are an integral part of these consolidated financial statements.

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SECURITY LAND AND DEVELOPMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2008			2007			2008			2007
OPERATING ACTIVITIES
Net income	$	87,724		$	100,365		$	242,700		$	268,443
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	32,476			31,948			97,429			95,162
Changes in deferred and accrued amounts:	(673		)	71,426			(40,085		)	(155,388		)

Net cash provided by operating activities	119,527			203,739			300,044			208,217

INVESTING ACTIVITIES
Purchases of, and improvements to, investment properties	(829,267		)	(2,180,247		)	(917,117		)	(2,180,247		)

FINANCING ACTIVITIES
Repayments to stockholders, net	—			—			—			(500		)
Proceeds from (repayments to) line of credit, net	250,000			(419,890		)	250,000			(183,100		)
Payment of debt Issuance costs	—			(65,500		)	—			(65,500		)
Proceeds from notes payable	553,773			3,000,000			555,707			3,000,000
Principal payments on notes payable	(156,825		)	(161,403		)	(241,044		)	(341,320		)

Net cash provided by financing activities	646,948			2,353,207			564,663			2,409,580

Net increase (decrease) in cash and cash equivalents	(62,792		)	376,699			(52,410		)	437,550

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	357,406			80,079			347,024			19,228

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	294,614		$	456,778		$	294,614		$	456,778

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest	$	88,264		$	81,056		$	275,016		$	197,116

Cash paid for income taxes	$	47,660		$	160,000		$	177,154		$	160,000

The accompanying notes are an integral part of these consolidated financial statements.

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SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARIES

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-QSB 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-KSB for the year ended September 30, 2007 when reviewing 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.

Certain expense classifications in prior 2008 quarters have been reclassified to conform to the presentation in the current quarter.

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 are 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 the 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-KSB for the year ended September 30, 2007 for further information regarding its critical accounting policies.

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Note 2 – Investment Properties

Investment properties leased or held for lease to others under operating leases consisted of the following at June 30, 2008 and September 30, 2007:

	June 30, 2008			September 30, 2007
				(audited)

National Plaza building, land and improvements	$	5,136,296		$	5,136,296
Evans Ground Lease, land and improvements	2,535,588			2,535,588
Commercial land and improvements	3,628,581			2,711,464
	11,300,465			10,383,348

Less accumulated depreciation	(1,583,398		)	(1,492,303		)
	9,717,067			8,891,045

Residential rental property	145,847			145,847
Less accumulated depreciation	(16,541		)	(14,504		)
	129,306			131,343

Investment properties for lease, net of accumulated depreciation	$	9,846,373		$	9,022,388

Depreciation expense totaled $124,176 for the year ended September 30, 2007. Depreciation expense totaled $97,429 and $95,162, respectively, for the nine-month period ended June, 2008 and 2007, respectively.

The 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 requires annual rental payments of $500,000 for the first 5 years then increasing 5% in years 6, 11, and 16. The lease has an option to renew at year 21 and another option every 5 years thereafter for a possible total lease term of 50 years. The lease provides for the tenant to pay for insurance and property taxes. The Company is recognizing rents on a straight-line basis over the lease term.

The Company also holds several parcels of land for investment or development purposes, including 18.38 acres of land in North Augusta, South Carolina, purchased for $2,951,746, and 84.4 acres of land in south Richmond County, Georgia.

Refer to the Company’s Form 10-KSB for the year ended September 30, 2007, for further information on operating lease agreements and land held for investment or development purposes.

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Note 3 – Notes Payable and Line of Credit

Notes payable consisted of the following at:

	June 30, 2008			September 30, 2007
				(audited)
A note payable to the seller of approx. 2.81 acres of land in North Augusta, South Carolina, collateralized by the land. The note is payable in monthly installments of $7,182 through June 2013, and bears interest of a fixed rate of 6%.	$	371,500		$	—
Wachovia Short Term Note Payable drawn to procure site work on the North Augusta, South Carolina property during the second quarter of 2008 and also to purchase an additional acre adjoining the North Augusta, South Carolina property in May 2008. This loan is secured by an Auction Rate Security account held as part of the Company’s cash equivalents. The note bears interest at prime plus 2.125% (7.125% at June 30, 2008)	182,272			—
First Bank Line of Credit – A line of credit procured in March 2008 with a floating interest rate based on prime (5% at June 30, 2008) and payable in full in April 2009. The current balance relates to the purchase of the 1 acre adjoining the North Augusta, South Carolina property in May 2008.	251,934			—
A note payable to an insurance company, secured with a mortgage interest in National Plaza and an assignment of rents. The note is payable in monthly installments of $35,633, including interest, through June 2015, and bears interest at a fixed rate of 7.875%.	2,295,356			2,474,553
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 $21,234, including interest, through May 1, 2027, and bears interest at a fixed rate of 5.85%. A portion of the proceeds from the loan was used to pay off other notes payable outstanding.	2,911,523			2,973,370
	6,012,585			5,447,923
Less current maturities	(590,836		)	(324,283		)

	$	5,421,749		$	5,123,640

Note 4 – 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 North Augusta, South Carolina. Approximately 100% of the Company’s revenues are earned from two of the Company’s investment properties, National Plaza and the Evans Ground Lease which both comprise approximately 50% of the Company’s revenues. 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 37% of its revenues though its lease with Publix.

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

Results of Operations:

The Company’s results of operations for the nine months ended June 30, 2008, and a comparative analysis of the same period for 2007 are presented below:

					Increase (Decrease)
					2008 compared to 2007
	2008		2007		Amount			Percent

Rent revenue	$	1,062,483	$	905,994	$	156,489		17	%
Operating expenses	410,726		310,123		100,603			32	%
Interest expense	264,667		194,274		70,793			36	%
Income tax expense	144,390		133,064		11,326			9	%
Net income	242,700		268,443		(25,743		)	(10	)%

Rent revenue consists primarily 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 ground lease with an auto-repair service operation on an out parcel of National Plaza. Rent revenue increased for the nine months ended June 30, 2008 primarily due to the completion of the development period of the long-term ground lease on the approximately 18 acres in Columbia County, Georgia in January 2007. Upon completion of the development period, in January 2007, the Company began earning full monthly revenue. During the development period the Company had been receiving $20,833 in monthly rent. Upon expiration of the development period, which was January 2007, the Company began receiving $41,677 a month.

Refer to the Company’s Form 10-KSB for the year ended September 30, 2007 for further information regarding the properties owned and their lease terms.

Total operating expenses for the nine months ended June 30, 2008 increased compared with the same period for 2007. This increase was due largely to increase property taxes, which increased due to the purchase of the approximately 14.57 acres of land in North Augusta, South Carolina, in April 2007 and a tax reassessment on the Evans, Georgia property. Management expects operating expenses for the remainder of the current fiscal year to be comparable to the current operating period.

Interest expense for the current period increased compared to 2007 due to debt undertaken to procure the approximately 14.57 acres of land in North Augusta, South Carolina, purchased in April 2007, the additional 1 acre procured in March 2008 and the additional 2.81 acres procured in June 2008. Management expects interest expense for the remainder of the current fiscal year to be comparable to the current operating period.

Income tax expense for the nine-month period ended June 30, 2008 increased as the Company’s net income which decreased due to increased operating and interest expense was offset by the differences between the reporting of deferred revenue for financial accounting purposes and income tax purposes.

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Liquidity and Sources of Capital:

The Company’s ratio of current assets to current liabilities at June 30, 2008 was 60%. The ratio was 95% at September 30, 2007. Management of the Company expects future liquidity needs of the Company to be funded from operating revenues of the Company and appreciation in investment properties (which can be sold or mortgaged, if necessary). The Company continues to pursue additional sources of rent revenue and to evaluate opportunities to reduce operating costs. The Company has the ability to obtain additional short term financing, should it become necessary, until revenues and cash flow from operations can be sufficiently increased.

Cautionary Note Regarding Forward-Looking Statements:

The results of operations for the three-month period and the nine-month period ended June 30, 2008 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. Controls and Procedures

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

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

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PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(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

(b)	No reports on Form 8-K were filed during the three months ended June 30, 2008.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SECURITY LAND AND DEVELOPMENT CORPORATION

(Registrant)


By:	/s/ T. Greenlee Flanagin	August 12, 2008

	T. Greenlee Flanagin	Date
	President
	Chief Executive Officer and Chief Financial Officer

Part I	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of June 30, 2008 and September 30, 2007	1

	Consolidated Statements of Income and Retained Earnings for the Three Month Period Ended and the Nine Month Period Ended June 30, 2008 and 2007	2

	Condensed Consolidated Statements of Cash Flows for the Three Month Period Ended and the Nine Month Period Ended June 30, 2008 and 2007	3

	Notes to the Consolidated Financial Statements	4-7


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8-9


Item 3.	Controls and Procedures	9


Part II	OTHER INFORMATION

Item 6.	Exhibits and Reports on Form 8-K	10

	SIGNATURES	10