Form 10-QSB/A

10QSB/A 1 d10qsba.htm FORM 10-QSB/A Form 10-QSB/A

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-QSB/A

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

For the quarterly period ended December 31, 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

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 ¨

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 February 6, 2004
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 December 31, 2003	1

	Condensed Consolidated Statements of Income for the Three Months Ended December 31, 2003 and 2002	2

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2003 and 2002	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

This amended Form 10-QSB is being filed to reflect an adjustment to the gain on sale of real estate previously reported for the quarter ending December 31, 2003. The gain on sale of real estate previously reported was incorrect in that the basis of the property sold had not been fully included in the gain calculation.

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Part I. Financial Information

Condensed Consolidated Balance Sheet

(Unaudited)

December 31, 2003

ASSETS


Current assets
Cash	$	71,514
Lease payments receivable		13,500

Total current assets		85,014

Investments and other assets
Replacement funds		409,728
Land and improvements, at cost		2,021,478
Property leased to others under operating leases, less accumulated depreciation $1,067,089		4,491,320
Deferred commission charges, less accumulated amortization 2003 $751		44,249
Deferred tax asset		12,516

		6,979,291

	$	7,064,305

LIABILITIES AND STOCKHOLDERS’ EQUITY



Current liabilities
Accounts payable and accrued expenses	$	72,215
Current portion of long-term debt		224,707
Accrued interest		24,290
Current tax liability		71,141

Total current liabilities		392,353

Long-term debt, less current maturities		3,250,888

Deferred taxes		308,471

Deferred income		281,428

Stockholders’ equity
Common stock, at par value; 5,247,107 shares		623,761
Paid-in capital		333,766
Retained earnings		1,973,638

		2,931,165
Less subscribed shares		100,000

		2,831,165

	$	7,064,305

See notes to condensed consolidated financial statements.

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)


	Three Months Ended December 31, 2003			Three Months Ended December 31, 2002
Revenues, rent earned	$	216,039		$	182,917

Operating expenses:
Payroll and related costs		16,609			16,315
Depreciation/ amortization		33,468			36,194
Property taxes		31,357			27,353
Repairs and maintenance		8,295			14,500
Professional services		—			5,998
Insurance		450			1,576
Other		10,458			7,476

		100,637			109,412

Operating income		115,402			73,505

Nonoperating income and (expense):
Gain on sale of asset		205,928			—
Interest income		38			243
Interest expense		(67,111	)		(71,243	)

		138,855			(71,000	)

Income before income taxes		254,257			2,505

Applicable income taxes		81,362			692

Net income	$	172,895		$	1,813

Basic income per Common share	$	.03		$	.00

See notes to condensed consolidated financial statements.

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended December 31, 2003 and 2002

(Unaudited)


	2003			2002
Cash flows from operating activities
Cash received from leases	$	258,631		$	229,437
Interest received		38			243
Cash paid to suppliers and employees		(115,852	)		(147,312	)
Interest paid		(67,111	)		(71,243	)

Net cash provided by Operating activities		75,706			11,125

Cash flows from financing activities
Principal payments on debt		(47,482	)		(49,418	)

Net cash used in Financing activities		(47,482	)		(49,418	)

Net increase in cash		28,224			(38,293	)

Cash at beginning of period		43,290			116,385

Cash at end of period	$	71,514		$	78,092

Reconciliation of net income to net cash provided by operating activities:
Net income	$	172,895		$	1,813
Deferred income taxes		17,745			692
Depreciation/ amortization		33,468			36,194
Gain on sale of assets		(205,928	)		—
Net change in assets and liabilities		57,526			(27,574	)

Net cash provided by operating Activities	$	75,706		$	11,125

See notes to condensed consolidated financial statements.

SECURITY LAND AND DEVELOPMENT CORPORATION

AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements

Note 1 - Summary of significant accounting policies

The accompanying financial statements are presented in accordance with the requirements of Form 10-QSB and consequently do not include all of the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Company’s annual Form 10-KSB filing. Accordingly, the reader of this Form 10-QSB may wish to refer to the Company’s Form 10-KSB for the year ended September 30, 2003 for further information.

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

Note 2 - Investment in leases and property under operating leases

Property leased or held for lease under operating leases consists of the following at December 31, 2003:


Land	$	385,874
Warehouse and buildings		5,172,535

		5,558,409
Less accumulated depreciation		1,067,089

	$	4,491,320

Refer to the Company’s Form 10-KSB for the year ended September 30, 2003 for further information on operating lease agreements and terms.

Note 3 - Long-term debt

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


7.875% note payable to an insurance company due in monthly payments of $35,633, including interest, through June 2015, collateralized by real estate and assignment of lease payments from the property.	$	3,228,587
4% note payable to financial institution due in monthly payments of $3,251, including interest, through January 2004, with a balloon payment due at that time, interest adjusted based on changes in the prime rate, collateralized by real estate.		138,402
Prime rate note payable to financial institution due in monthly payments of $3,250, including interest, through December 2006, with a balloon payment of approximately $35,000 due at that time, interest adjusted based on changes in the prime rate, collateralized by real estate.		108,606

		3,475,595
Less current maturities		224,707

	$	3,250,888

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

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


	2003		2002		Increase (Decrease) 2003 Compared to 2002
	2003		2002		Amount			Percent
Leasing revenue	$	216,039	$	182,917	$	33,122		18.1	%
Operating expenses		100,637		109,412		(8,775	)	(8.0	)%
Interest expense		67,111		71,243		(4,132	)	(5.8	)%

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 has increased from 2002 to 2003 primarily due to lease escalations.

On an annualized basis, current revenue has increased approximately 7% from the Company’s fiscal year ended September 30, 2003.

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, 2003 for further information regarding the properties owned and lease terms.

Operating expenses for the three months ended December 31, 2003 have decreased as compared to the three months ended December 31, 2002. The decrease is primarily due to reductions in professional services and repairs and maintenance. There was no professional service expense for the first quarter December 31, 2003. The decrease in repairs and maintenance is a result of additional repairs in the strip mall in the previous year. 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, 2003.

During the quarter ended December 31, 2003 the Company sold the property located at 4269 Washington Road, Augusta, Georgia. The Company recognized a gain of $205,928 on the sale. The sale transaction has been structured as a tax-deferred like-kind exchange under Section 1031 of the Internal Revenue Code. The Company has identified potential replacement properties but has not completed the property acquisition. The funds for acquisition are being held by a third-party intermediary and are presented on the Company’s balance sheet as Replacement Property Funds.

The Company’s ratio of current assets to current liabilities at December 31, 2003 was .22. The ratio was .18 at December 31, 2002. The Company renewed a note payable. The renewal reclassified the current portion of debt to extend the life of the renewed loan.

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.

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 December 31, 2003.

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 13, 2004
	T. Greenlee Flanagin	Date
	President
	Chief Executive Officer

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