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, 2003

¨ 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	(I.R.S. Employer Identification Number)
Incorporation or Organization)

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  ¨

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 July 31, 2003
Common Stock, $.10 Par Value	5,247,107 shares

Transitional Small Business Disclosure Format:     YES    ¨      NO  x

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Form 10-QSB

Index

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheet as of June 30, 2003	1
	Condensed Consolidated Statements of Income for the Nine Months Ended June 30, 2002 and 2003, and the Three Months Ended June 30, 2002 and 2003	2
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2002 and 2003	3
	Notes to Condensed Consolidated Financial Statements	4-5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5-6
Item 3.	Controls and Procedures	7
Part II	OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K	7
	SIGNATURES	8

Part I. Financial Information

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Balance Sheet

(Unaudited)

June 30, 2003

ASSETS

Current assets
Cash	$	91,215
Total current assets		91,215
Investments and other assets
Land and improvements, at cost		2,186,478
Property leased to others under operating leases, less accumulated depreciation $1,019,943		4,586,061
Other assets		5,635
Deferred charge		22,500
		6,800,674
	$	6,891,889

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable and accrued expenses	$	122,037
Current portion of long-term debt		334,653
Accrued interest		24,290
Total current liabilities		480,980
Long-term debt, less current maturities		3,240,615
Deferred taxes		265,388
Deferred income		293,754
Stockholders’ equity
Common stock, at par value		623,761
Paid-in capital		333,766
Retained earnings		1,753,625
		2,711,152
Less subscribed shares		100,000
		2,611,152
	$	6,891,889

See notes to condensed consolidated financial statements.

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SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

	Three Months Ended June 30, 2003			Nine Months Ended June 30, 2003			Three Months Ended June 30, 2002			Nine Months Ended June 30, 2002
Revenues, rent earned	$	183,748		$	560,495		$	179,545		$	542,726
Operating expenses:
Payroll and related costs		15,988			51,670			15,514			44,944
Depreciation		36,194			108,582			36,563			105,022
Property taxes		23,999			75,600			17,839			57,061
Repairs and maintenance		12,216			38,212			6,662			18,530
Professional services		2,660			17,240			2,017			13,723
Insurance		1,910			5,510			3,116			9,279
Other		7,645			25,618			8,924			23,885
		100,612			322,432			90,635			272,444
Operating income		83,136			238,063			88,910			270,282
Nonoperating income and (expense):
Interest income		199			578			433			1,384
Interest expense		(69,381	)		(210,885	)		(71,450	)		(216,729	)
		(69,182	)		(210,307	)		(71,017	)		(215,345	)
Income before income taxes		13,954			27,756			17,893			54,937
Applicable income taxes		3,859			7,675			3,653			10,210
Net income	$	10,095		$	20,081		$	14,240		$	44,727
Income per common share	$	.00		$	.00		$	.00		$	.01

See notes to condensed consolidated financial statements.

2

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended June 30, 2003 and 2002

(Unaudited)

	2003			2002
Cash flows from operating activities
Cash received from leases	$	594,690		$	570,738
Interest received		578			1,384
Cash paid to suppliers and employees		(258,512	)		(194,007	)
Interest paid		(210,885	)		(216,729	)
Net cash provided by operating activities		125,871			161,386
Cash flows from financing activities
Principal payments on debt		(151,041	)		(133,224	)
Net cash used in financing activities		(151,041	)		(133,224	)
Net increase (decrease) in cash		(25,170	)		28,162
Cash at beginning of period		116,385			98,465
Cash at end of period	$	91,215		$	126,627
Reconciliation of net income to net cash provided by operating activities:
Net income	$	20,081		$	44,727
Deferred income taxes		7,675			9,210
Depreciation		108,582			105,042
Net change in assets and liabilities		(10,467	)		2,407
Net cash provided by operating Activities	$	125,871		$	161,386

See notes to condensed consolidated financial statements.

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SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Item 1. Notes to Condensed Consolidated Financial Statements

Note 1—Summary of significant accounting policies

The accompanying financial statements are presented in accordance with the requirements of Form 10-QSB and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Company’s annual Form 10-KSB filing. Accordingly, the reader of this Form 10-QSB may wish to refer to the Company’s Form 10-KSB for the year ended September 30, 2002 for further information.

The financial information has been prepared in accordance with the Company’s customary accounting practices and has not been audited. In the opinion of management, the information presented reflects all adjustments necessary for a fair statement of interim results. All such adjustments are of a normal and recurring nature.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The determination of the useful lives and the appropriate method of recognizing depreciation on investment property for leasing is based on the Company’s evaluation of the property and the Company’s estimates of the utilization of each property. Management of the Company utilizes available information to make this determination. In addition, management evaluates investment property for leasing for indications of impairment.

Note 2—Investment in leases and property under operating leases

Property leased or held for lease to others under operating leases consists of the following at June 30, 2003:

Land	$	397,673
Warehouse and buildings		5,208,331
		5,606,004
Less accumulated depreciation		1,019,943
	$	4,586,061

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

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Note 3—Long-term debt

Long-term debt consisted of the following at June 30, 2003:

7.875% note payable to an insurance company due in monthly payments of $35,633, including interest, through June 2015, collateralized by real estate and assignment of lease payments from the property.	$	3,312,682
Prime +.25% note payable to financial institution due in monthly payments of $3,250, including interest, through November 2003, with a balloon payment of approximately $144,000 due at that time, interest adjusted based on changes in the prime rate, collateralized by real estate.		151,386
Prime rate note payable to financial institution due in monthly payments of $1,330, including interest, through June 2005, with a balloon payment of approximately $90,000 due at that time, interest adjusted based on changes in the prime rate, collateralized by real estate.		111,200
		3,575,268
Less current maturities		334,653
	$	3,240,615

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

The Company’s results of operations for the nine-month period ended June 30, 2003, and a comparative analysis of the same period for 2002 are presented below:

					Increase (Decrease) 2003 Compared to 2002
	2003		2002		Amount			Percent
Leasing revenue	$	560,495	$	542,726	$	17,769		3.27	%
Operating expenses		322,432		272,444		49,988		18.35	%
Interest expense		210,885		216,729		(5,844	)	(2.70	%)

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

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

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

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

Operating expenses for the nine months ended June 30, 2003 have increased as compared to the nine months ended June 30, 2002. The increase is primarily due to increases in depreciation, property taxes, and repairs and maintenance. The increase in depreciation expense is a result of additional depreciable leasing property acquired by the Company. The increase in property taxes is a result of an increase in the assessments by the taxing authorities. The increase in repairs and maintenance is a result of additional repair costs incurred related to the strip center. Management of the Company expects operating expenses for the remainder of the current fiscal year to be comparable to the present three-month period.

Interest expense for the current period is comparable to 2002 and, on an annualized basis, is comparable to the Company’s interest expense for the fiscal year ended September 30, 2002.

The Company’s ratio of current assets to current liabilities at June 30, 2003 was .19. The ratio was .39 at June 30, 2002. This decrease is due to a maturity date for balloon payment on a loan falling within the next 12 months, thus increasing current liabilities.

During the current quarter the Company satisfied liquidity needs through operating revenues. Management of the Company continues to expect future liquidity needs to be met from operating revenues of the Company.

The Company does not expect any significant change in the number of employees.

Cautionary Note Regarding Forward-Looking Statements:

The Company may, from time to time, make written or oral forward-looking statements, including statements contained in the Company’s filings with the Securities and Exchange Commission (the “Commission”) and its reports to stockholders. Such forward-looking statements are made based on management’s belief as well as assumptions made by, and information currently available to, management pursuant to “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, but not limited to, competition from other real estate companies, the ability of the Company to obtain financing for projects, and the continuing operations of tenants.

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Item 3. Controls and Procedures

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

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

Part II—Other Information

Item 6. Exhibits and Reports on Form 8-K

(a)	Exhibit No.	Description
	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, 2003.

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SIGNATURES

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

SECURITY LAND AND DEVELOPMENT CORPORATION

(Registrant)

By:	/s/ T. Greenlee Flanagin	August 11, 2003
	T. Greenlee Flanagin President Chief Executive Officer	Date

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