Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - SECURITY LAND & DEVELOPMENT CORPFinancial_Report.xls
EX-32 - SECURITY LAND & DEVELOPMENT CORPexhibit32-1.htm
EX-31 - SECURITY LAND & DEVELOPMENT CORPexhibit31-1.htm

 

 

 

 

 

 

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 December 31, 2012

 

 

 

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 Web site, 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 February 5, 2013

Common Stock, $0.10 Par Value

 

5,243,107 shares

  

 

 

 

 


 


 

 

 

 

 

 

Table of Contents

 

SECURITY LAND AND DEVELOPMENT CORPORATION

Form 10-Q

Index

 

Part I

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets as of December 31, 2012 and September 30, 2012

1

 

 

 

 

Consolidated Statements of Income and Retained Earnings for the Three Month Period ended December 31, 2012 and 2011

2

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Month Period ended  December 31, 2012 and 2011

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.

Quantitative and Qualitative Disclosures About Market Risk

9

 

 

 

Item 4.

Controls and Procedures

9-10

 

 

 

Part II

OTHER INFORMATION

10

 

 

 

Item 1.

Legal Proceedings

10

 

 

 

Item 1A.

Risk Factors

10

 

 

 

Item 2.

Unregistered Sales of Equity Securities and use of Proceeds

10

 

 

 

Item 3.

Defaults Upon Senior Securities

10

 

 

 

Item 4.

Reserved for Future Use

10

 

 

 

Item 5.

Other Information

10

 

 

 

Item 6.

Exhibits

10

 

 

 

 

SIGNATURES

11-13

 

 

 



 

 

 

 


 


 

 

 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 

 

SECURITY LAND AND DEVELOPMENT CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

 

 

December 31,

 

September 30,

 

 

 

 

2012

 

2012

 

 

 

 

(Unaudited)

 

 

ASSETS

CURRENT ASSETS

 

 

 

 

 

Cash

 

$

25,134 

 

$

48,767 

 

Receivables from tenants, net of allowance of $8,454 and $5,322

 

 

 

 

 

 

at December 31, 2012 and September 30, 2012

 

281,092 

 

398,338 

 

 

 

Total current assets

 

306,226 

 

447,105 

 

 

 

 

 

 

 

 

INVESTMENT PROPERTIES

 

 

 

 

 

Investment properties for lease, net of accumulated depreciation

 

5,556,280 

 

5,587,324 

 

Land and improvements held for investment or development

 

3,639,598 

 

3,639,598 

 

 

 

 

 

9,195,878 

 

9,226,922 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

81,898 

 

83,802 

 

 

 

 

 

$

9,584,002 

 

$

9,757,829 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

 

 

 

 

 

Accounts payable and accrued expenses

 

$

237,259 

 

$

382,242 

 

Income taxes payable

 

308,240 

 

283,747 

 

Current maturities of notes payable and line of credit

 

531,924 

 

538,079 

 

Current maturities of deferred revenue

 

24,652 

 

24,652 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

1,102,075 

 

1,228,720 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES

 

 

 

 

 

Notes payable and line of credit, less current portion

 

3,012,191 

 

3,136,794 

 

Deferred income taxes

 

772,490 

 

771,847 

 

Deferred revenue, less current portion

 

34,907 

 

41,071 

 

 

 

 

 

 

 

 

 

 

 

Total long-term liabilities

 

3,819,588 

 

3,949,712 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

4,921,663 

 

5,178,432 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

Common stock, par value $.10 per share; 30,000,000 shares authorized; 5,243,107

 

 

 

 

 

   shares issued and outstanding

 

524,311 

 

524,311 

 

Additional paid-in capital

 

333,216 

 

333,216 

 

Retained earnings

 

3,804,812 

 

3,721,870 

 

 

 

 

 

 

 

 

Total Equity

 

4,662,339 

 

4,579,397 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

$

9,584,002 

 

$

9,757,829 

 

 

 

 

 

 

 

 

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

-1-

 

 

 

 


 


SECURITY LAND AND DEVELOPMENT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

     

For the Three Month

Period Ended December 31,

 

2012

   

2011

 

(Unaudited)

   

(Unaudited)

OPERATING REVENUE

     

Rent Revenue

$

359,103

  $

352,085

     

OPERATING EXPENSES

     

Depreciation and amortization

 

32,948

   

32,688

Property taxes

 

64,625

   

63,011

Payroll and related costs

 

22,479

   

22,888

Insurance and utilities

 

14,019

   

10,520

Repairs and maintenance

 

9,210

   

10,829

Professional services

 

18,001

   

33,662

Bad Debt

 

4,405

   

1,282

Other

 

4,726

   

1,719

     
 

170,413

   

176,599

     

Operating income

 

188,690

   

175,486

     

OTHER EXPENSE

     

Interest

 

(55,612)

   

(67,746)

     
 

(55,612)

   

(67,746)

     
     

Income before income taxes

 

133,078

   

107,740

     

INCOME TAXES PROVISION

     

Income Tax Expense

 

49,493

   

37,912

Income Tax Deferred

 

643

   

1,889

 

50,136

   

39,801

     

Net income

 

82,942

   

67,939

     

RETAINED EARNINGS, BEGINNING OF PERIOD

 

3,721,870

   

3,437,609

     

RETAINED EARNINGS, END OF PERIOD

$

3,804,812

  $

3,505,548

     
     

PER SHARE DATA

     

Net income per common share

$

0.02

  $

0.01

     

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

-2-

 

 


 


 

 

SECURITY LAND AND DEVELOPMENT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

For the Three Month

 

 

 

Period Ended December 31,

 

 

 

2012

 

2011

 

 

 

(Unaudited)

 

(Unaudited)

OPERATING ACTIVITIES

 

 

 

 

Net income

$

82,942 

 

$

67,939 

 

Adjustments to reconcile net income to net cash provided

 

 

 

 

  by operating activities:

 

 

 

 

 

Depreciation and amortization

32,948 

 

32,688 

 

 

Changes in deferred and accrued amounts:

(8,765)

 

(5,550)

 

 

 

 

 

 

 

 

Net cash provided by operating activities

107,125 

 

95,077 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

Repayments to shareholder

(30,000)

 

 

Proceeds from shareholder

30,000 

 

 

Principal payments on notes payable

(130,758)

 

(122,790)

 

 

 

 

 

 

 

 

Net cash used in financing activities

(130,758)

 

(122,790)

 

 

 

 

 

 

 

 

Net decrease in cash

(23,633)

 

(27,713)

 

 

 

 

 

 

CASH, BEGINNING OF PERIOD

48,767 

 

51,190 

 

 

 

 

 

 

CASH, END OF PERIOD

$

25,134 

 

$

23,477 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

 

 

Cash paid for interest

$

55,612 

 

$

67,746 

 

 

 

 

 

 

 

Cash paid for income taxes

$

25,000 

 

$

 

 

 

 

 

 

NON-CASH FINANCING ACTIVITIES

 

 

 

 

Refinancing of line of credit to term note

$

301,170 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

-3-

 

 


 


 

 

 

 

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, 2012 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.

  

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-K for the year ended September 30, 2012 for further information regarding its critical accounting policies.

 

 

 

 

 

- 4 -

 


 


 

 

 

 

 

Note  2 – Investment Properties

 

Investment properties leased or held for lease to others under operating leases consisted of the following at December 31, 2012 and September 30, 2012:

 

 

December 31,

 

September 30,

2012

 

2012

 

(unaudited)

 

 

 

 

 

 

National Plaza building, land and improvements

$

5,138,796

 

$

5,138,796

Evans Ground Lease, land and improvements

2,430,373

 

2,430,373

Commercial land and improvements

3,639,598

 

3,639,598

 

11,208,767

 

11,208,767

 

 

 

 

Less accumulated depreciation

(2,129,980

)

(2,099,614

 

9,078,787

 

                      9,109,153

 

 

 

 

Residential rental property

145,847

 

145,847

Less accumulated depreciation

(28,756

)

(28,078

 

117,091

 

117,769

 

 

 

 

Investment properties for lease, net of accumulated depreciation

$

9,195,878

 

$

9,226,922

 

Depreciation expense totaled approximately $31,000 for each of the three-month periods ended December 31, 2012 and 2011.

 

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.  As of December 31, 2012, the Company is working with Publix on plans to renovate and upgrade this center.  Currently the Company is working with creditors to finance the planned renovation.

 

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 lessee has an option to renew at year 21 and another option every 5 years thereafter for a possible total lease term of 50 years.  The lease provides for the tenant to pay for insurance and property taxes. The Company is recognizing rents on a straight-line basis over the lease term.

 

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 $3,639,598 at December 31, 2012 and September 30, 2012.

 

Refer to the Company’s Form 10-K for the year ended September 30, 2012 for further information on operating lease agreements and land held for investment or development purposes.

 

 

 

 

- 5 -

 


 


 

 

 

 

Note  3 – Notes Payable and Line of Credit

 

Notes payable and line of credit consisted of the following at:

 

 

 

 

December 31,
2012

 

 

September 30,
2012

 

 

 

 

(unaudited)

 

 

 

 

A note payable to the seller of approximately 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 at a fixed rate of 6%.

 

 

$

42,349

 

 

$

63,052

 

 

 

 

 

 

 

 

 

 

 

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%.

 

 

967,474

 

 

1,054,186

 

 

 

 

 

 

 

 

 

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 $19,137, including interest, through May 1, 2027, and bears interest at a fixed rate of 5.85%.

 

 

2,233,122

 

 

2,257,635

 

 

 

 

 

 

 

 

 

A note payable with a regional financial institution.  In March 2008 the Company took out a line of credit with a regional financial institution for up to $251,934 with a floating interest rate based on prime and originally payable in full in April 2009. In April 2009 the Company refinanced the $243,019 line of credit with a regional financial institution. The Company entered into an agreement with the same regional financial institution to borrow the outstanding balance of $243,019, bearing interest based on the greater of prime or 6% with interest payments due monthly, maturing in April 2010. In January 2010 the Company renewed this line of credit and increased the open balance to $300,250. This agreement originally matured in February 2011. In December 2010, the Company renewed the line of credit to December 5, 2011, at the greater of prime plus 1% or 6%. In December 2011, the Company renewed the line of credit to December 12, 2012, at the greater of prime plus 1% or 6%. In November of 2012, the Company converted the line of credit to a fixed rate loan due December 2017.  The new term loan accrues interest at a 5.5% annually with monthly installments of $3,287.  The current balance relates to the purchase of the 1 acre adjoining the North Augusta, South Carolina property in May 2008 and is collateralized by the residential property on Stanley Drive in Augusta, Georgia.

 

 

 

301,170

 

 

300,000

 

 

 

 

 

 

 

 

 

 

 

 

3,544,115

 

 

3,674,873

 

Less current maturities

 

 

(531,924

)

 

(538,079

)

 

 

 

 

 

 

 

 

 

 

 

$

3,012,191

 

 

$

3,136,794

 

 

 

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).  Additionally, funding can be obtained from members of the Company’s Board of Directors.

 

Current maturities of notes payable will require the Company to make payments over the next 12 months totaling $531,924.  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.

 

 (Continued)

- 6 -

 


 


 

 

 

 

Note  3 – Notes Payable and Line of Credit, (Continued)

 

 

If the Company is unsuccessful in their efforts described above, the Company intends to seek additional financing or sell certain of its assets.

 

Note  4 – Income Taxes

 

The Company has a total outstanding income tax payable in the amount of $308,240.  Of this amount, $49,493 is related to the first quarter of 2013, $202,950 is related to 2012 and the remaining $55,797 is related to the 2011 tax expense.  An additional $5,000 was paid in January 2013.

 

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 North Augusta, South Carolina.  Approximately 99% of the Company’s revenues are earned from two of the Company’s investment properties, National Plaza and the Evans Ground Lease, which comprise approximately 52% and 47% of the Company’s revenues, respectively.   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.

 

Note  6 –  Related Party Transactions

 

The Company hired an attorney who sits on the Company’s Board of Directors and who also serves a Vice President of the Company, to represent the Company in a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged.  It is the opinion of the Company’s management that the Company is not liable for this claim.

 

During the quarter, the Company borrowed $30,000 from a member of the Company’s Board of Directors, who is also a member of the Flanagin family, to meet cash flow needs.  The amount was repaid during the quarter also with interest at a rate of 6%.

 

Note 7 – Subsequent Events

 

 

As of January 2013 the Company is involved in an agreement with the Georgia Department of Transportation regarding the potential sale of .5 acres of the land parcel that contains the Evans Ground Lease in Columbia County, Georgia for $156,000.  Of this amount, approximately $144,000 is obligated to go to principal pay down on the associated debt and the remaining approximately $12,000 will go to the lessee.  Management does not believe that the parcel in question has any significant affect on the Evans Ground Lease or the Company’s ability to continue leasing the property or related rental revenues.  As of January 2013, Management expects this sale to close before February 28, 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 7 -

 


 


 

 

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 three months ended December 31, 2012, and a comparative analysis of the same period for 2011 are presented below:

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

 

2012 compared to 2011

 

 

 

2012

 

2011

Amount

 

Percent

 

 

 

 

 

 

 

 

 

 

Rent revenue

 

$

   

359,103

 

$

352,085

$

7,018

 

2

 %

Operating expenses

 

170,413

 

176,599

(6,186)

 

-4

 %

Interest expense

 

55,612

 

67,746

(12,134)

 

-18

 %

Income tax expense

 

50,136

 

39,801

10,335

 

26

 %

Net income

 

82,942

 

67,939

15,003

 

22

%

 

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. 

 

Refer to the Company’s Form 10-K for the year ended September 30, 2012 for further information regarding the properties owned and their lease terms.

 

Total operating expenses for the three months ended December 31, 2012 decreased slightly compared to the same period for 2011 due primarily to decreased professional fees.  Professional fees decreased due to decreased legal fees compared to the prior year related to an ongoing dispute over a tenant’s claim for reimbursement of certain expenses charged.  This dispute is unresolved as of December 31, 2012. It is the opinion of the Company’s management that the Company does not owe any reimbursement.  Management expects operating expenses for the remainder of the current fiscal year to be comparable to the current operating period.

 

Interest expense for the three month period ended December 31, 2012 decreased compared to 2011 due to the decrease in debt resulting from scheduled principle payments. Management expects interest expense for the remainder of the current fiscal year to continue to decrease slightly as outstanding debt is amortized.

 

Income tax expense for the three month period ended December 31, 2012 increased compared to the same period for 2011 due mainly to increased income as a result of lower professional fees and interest expense as noted above.  Management expects income tax expense for the remainder of the current fiscal year to be comparable to the current operating period.

 

 

 

 

 

 

 

 

- 8 -

 


 


 

 

 

 

 

 

Liquidity and Sources of Capital:

 

The Company’s ratio of current assets to current liabilities at December 31, 2012 was 28%.  The ratio was 37% at September 30, 2012. 

 

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).  Additionally, funding can be obtained from members of the Board of Directors.

 

Current maturities of notes payable will require the Company to make payments over the next 12 months totaling $531,924.  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.

 

If the Company is unsuccessful in their efforts described above, the Company intends to seek additional financing or sell certain of its fully owned and un-collateralized assets or borrowing money from certain shareholders.

 

Cautionary Note Regarding Forward-Looking Statements:

 

The results of operations for the three-month period ended December 31, 2012 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, 2012, 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, 2012 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.

 

- 9 -

 


 


 

 

 

 

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.

 

 

 

PART II - OTHER INFORMATION

 

Item  1. Legal Proceedings

During 2011, the Company was notified by a tenant of a claim for reimbursement of certain expenses charged.  It is the opinion of the Company's management that the Company is not liable for this claim.  The Company has accrued approximately $100,000 for professional fees and other expenses to defend its position.

Item  1A. Risk Factors

 

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

 

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

 

None

 

Item  3. Defaults Upon Senior Securities

 

None

 

Item  4. Reserved for Future Use

 

Item  5. Other Information

 

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

 

Item  6. Exhibits

 

(a)

 

Exhibit No.

 

Description

 

 

31.1

 

Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

32.1

 

Certification Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

         

 

 

101   

 

The following financial information from Security Land and Development Corporation's Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 is  formatted in Extensible Business Reporting Language (XBRL):  (i) The Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Retained Earnings, (iii) the Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements.

 

 

 

 

 

- 10 -

 


 


 

 

 

 

 

 

 

 

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

 

February 5, 2013

 

 

 

 

 

 

T. Greenlee Flanagin

 

Date

 

 

President

 

 

 

 

Chief Executive Officer and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                                                                                           

 

 

- 11 -