U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
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| Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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| For the quarterly period ended | |
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| Transition Report Pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 |
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| 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 ⌧☑ NO ☐
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.
Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☑ | |
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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 ⌧☑ NO ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐☐Yes ⌧☑No
State the number of shares outstanding of each of the issuer’sissuer's classes of common equity, as of the latest practicable date.
Class |
| Outstanding at |
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 |
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Item 1. | Financial Statements |
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| Consolidated Balance Sheets as of | 1 |
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| 5-11 | |
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Item 2. |
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Item 3. |
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Item 4. |
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Part II |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I. FINANCIAL INFORMATION
SECURITY LAND AND DEVELOPMENT CORPORATION
Notes to the Consolidated Financial Statements
Note 1
The accompanying unaudited consolidated 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
Significant 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
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
Refer to the
(Continued)
Note 1 Recently |
| December 31, 2017 |
| September 30, 2017 | June 30, 2019 |
| September 30, 2018 |
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| (unaudited) |
| (audited) | (unaudited) |
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National Plaza building, land and improvements | $ | 5,322,260 |
| $ | 5,322,260 | $ | - |
| $ | 5,322,260 |
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Evans Ground Lease, land and improvements |
| 2,382,673 |
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| 2,382,673 | ||||||
Bobby Jones Ground Lease, land and lease intangible Evans Ground Lease, land and improvements |
| 15,044,916 2,382,674 |
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| - 2,382,673 |
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Wrightsboro Road building, land and improvements |
| 1,929,690 |
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| 1,929,690 |
| 2,042,690 |
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| 1,929,690 |
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Commercial land and improvements |
| 3,804,728 |
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| 3,804,728 |
| 3,478,868 |
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| 3,804,728 |
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| 13,439,351 |
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| 13,439,351 |
| 22,949,148 |
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| 13,439,351 |
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Less accumulated depreciation |
| (2,938,699) |
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| (2,891,630) | ||||||
Less accumulated depreciation and amortization |
| (696,735) |
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| (3,079,905) |
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Investment properties for lease, net of depreciation | $ | 10,500,652 |
| $ | 10,547,721 | $ | 22,252,413 |
| $ | 10,359,446 |
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and amortization |
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Depreciation and amortization expense totaled approximately $285,000 and $47,000 for the three-month periods ended December 31, 2017June 30, 2019 and 2016.2018, respectively and approximately $647,000 and $141,000 for the nine-month periods ended June 30, 2019 and 2018, respectively.
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., National Plaza's anchor tenant. The company sold this property in December of 2018 for $21,000,000 and recognized a gain on the sale of $18,367,269. See Note 7 for additional disclosures regarding the National Plaza’s anchor tenant.
(Continued)
- 8 -
Note 2 – Investment Properties, ContinuedPlaza retail strip center.
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.
(Continued)
-8-
Note 2 - Investment Properties, continued
Purchase of Bobby Jones Ground Lease
In December of 2018, the Company purchased a tract of land, consisting of 19.32 acres, and a ground lease with a major discount retailer and building owned by the retailer for $15,044,916 using proceeds from the sale of National Plaza to fund the purchase, including $44,916 in transaction costs. The ground lease commenced on November 21, 2005 and the initial term expires on May 1, 2028. The Company began recognizing rental income as of the date of closing. The original lease term is 20 years with sixteen five-year extension options. Annual rental payments total $810,636 and rent is payable monthly. The Company's management obtained an independent appraisal to determine the allocation of the purchase price, assigning $4,700,00 to land and $10,344,916 to the ground lease. Per the appraisal, the Company's management also assumed the useful life of the lease should coincide with the remaining lease term, which is approximately 112 months, and has recorded amortization expense accordingly.
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’sCompany's National Plaza investment property. This 1.1-acre parcel was included in the sale of the National Plaza investment property. The aggregate costs of these investment properties held for investment or development was $3,478,868 and $3,804,728 at December 31, 2017June 30, 2019 and September 30, 2017,2018, respectively.
Refer to the Company’sCompany's Form 10-K for the year ended September 30, 20172018 for further information on operating lease agreements and land held for investment or development purposes.
Note 3 –- Notes Payable
Notes payable consisted of the following at:
December 31, | September 30, | |||||||
(unaudited) | (audited) |
| June 30, (unaudited) |
| September 30, (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. |
$ 3,102,003 |
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$ 3,188,257 | A note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents. The note was payable in monthly installments of $33,050, through August 2027, and accrued interest at an annual fixed rate of 4.3%. The note payable was collateralized by National Plaza. In December of 2018 the Company sold National Plaza and used a portion of the proceeds to pay off this note.
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$ - |
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$ 2,925,424 |
| 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%. | 1,551,957 |
| 1,582,647 | 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%. | 1,358,165 |
| 1,457,207 |
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| 4,653,960 |
| 4,770,904 |
| 1,358,165 |
| 4,382,631 |
Less deferred financing costs | Less deferred financing costs | (50,386) |
| (51,719) | Less deferred financing costs | (27,254) |
| (46,387) |
Less current maturities of notes payable | Less current maturities of notes payable | (393,033) |
| (388,322) | Less current maturities of notes payable | (138,984) |
| (407,554) |
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| $ 4,210,541 |
| $ 4,330,863 |
| $ 1,191,927 |
| $ 3,928,690 |
(Continued)
- 9 - -9-
Note 3 – Notes Payable, Continued
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 $393,033. 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 December 31, 2017, the Company has income taxes payable of $57,355 related to the fiscal year 2017.
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 recognized in the current period ending December 31, 2017 of $463,167.
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.
DuringDeferred income taxes are the three-month period ended December 31, 2017, the Company recorded $396,215result of qualified tax-free exchanges of property transacted in current and prior years and reporting depreciation differently for income tax benefits at an effective ratepurposes. The tax effects of -233.88% The Company records income taxes using an estimated annual effective tax rate for interim reporting. The individually largest factor contributingtemporary differences that give rise to the difference between the federal statutory rate of 24.25% and the Company’s effective tax rate for the three-month period ended December 31, 2017 was the benefit relating to the revaluing of the deferred tax assetliability are as follows as of:
| June 30, 2019 |
| September 30, |
Deferred income tax liabilities: |
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Basis in Investment Properties and Straight-line Rents |
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Receivable | $ 3,924,790 |
| $ 1,006,252 |
Taxable gains deferred by the Company in prior years and liability balancesin the current year qualified for tax-free like-kind exchanges. These deferred gains for tax reporting comprise a substantial portion of the Company's deferred income tax liabilities as of June 30, 2019 and September 30, 2018, net of the effects of depreciation.
The provision (benefit) for income taxes is as follows:
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| 2019 |
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Current expense |
| $ | 1,521,000 |
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| $ | 178,460 |
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Deferred expense (benefit) |
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| 2,918,539 |
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| (462,328 | ) | |
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| $ | 4,439,539 |
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| $ | (283,868 | ) | |
The provision for income taxes for the nine months ended June 30, 2019 and 2018 differs from the amount obtained by applying the U.S. federal and state income tax rate to pretax income due to the new federal statutory rate. following:
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Net income before tax |
| $ | 17,627,112 |
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| $ | 541,175 |
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Expected federal tax expense at June, |
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2019 and 2018 is 21% and 24.25% respectively |
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| 3,701,694 |
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| 131,235 |
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State tax expense, net of federal benefit |
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| 702,650 |
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| 47,225 |
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Federal (benefit) expense of tax rate change |
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| - |
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| (462,328
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Other expense |
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| 35,195 |
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Tax expense (benefit) |
| $ | 4,439,539 |
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| $ | (283,868 | ) | |
-10-
Note 5 - Concentrations
Substantially all of the Company’sCompany'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’sCompany's rental revenues arewere earned from threefour of the Company’sCompany's investment properties, National Plaza, the Evans Ground Lease, the Bobby Jones Ground Lease and the Wrightsboro Road Lease, which comprise approximately 51%13%, 40%, 38% and 9% of the Company’sCompany's revenues, respectively, for the three-monthnine-month period ended December 31, 2017.June 30, 2019. The anchor tenant for National Plaza, Publix Supermarkets, Inc. (“Publix”("Publix"), a regional food supermarket chain, leasesleased approximately 81% of the space at National Plaza. ThePrior to the sale of National Plaza in December of 2018 the Company generatesgenerated approximately 31%29% of its revenues through its lease with Publix. See Note 7 for additional disclosures regarding the National Plaza retail strip center.
- 10 -
Note 6 - Related Party Transactions
During the quarter,nine months ended June 30, 2019, the Company paid a stockholder who is also the son of the President for accounting services. The Company’sCompany'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.
In December of 2018, the Company paid bonuses of $787,500 to stockholders, who are also board members, related to the sale of National Plaza which is included in payroll and related costs.
In December of 2018, the Company paid legal fees of $25,000 to a stockholder, who is also a board member, related to resolving an operational matter with a tenant at National Plaza.
Note 7 – Stockholders’ Equity- Sale of National Plaza
On February 7, 2017, Security Land and Development Corporation offered to purchase up to 2,526,247 shares (approximately 48.2%June 27, 2018, the Company entered into an agreement with WSQ, LLC, a Georgia Limited Liability Company, for the sale of its retail strip center (the "National Plaza") along with two adjoining outparcels, located on Washington Road in Augusta, Georgia for a combined total sales price of $21,000,000. The closing 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 valuesale occurred on December 13, 2018, and provide liquidity for the stockholders. The Offer expired on March 15, 2017, was extended by the Company andrecognized a gain 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 memberssale of the Board of Directors who are not part of the Flanagin family. As of December 31, 2017, 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 1,470,470 shares of its stock for $2,573,323. 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 in hand and funds obtained from the line of credit that has since been converted to a term note. See Note 3 – Notes Payable. $18,367,269.
Note 8 – Subsequent Events- Purchase of Bobby Jones Ground Lease
In January,On December 20, 2018, the Company purchased a tract of land, consisting of 19.32 acres, and a ground lease with a major discount retailer and building owned by the retailer for $15,044,916 using proceeds from the sale of National Plaza to fund the purchase, including $44,916 in transaction costs. The ground lease commenced on November 21, 2005 and the initial term expires on May 1, 2028. The Company's management obtained an additional 6,347 shares shares for $1.75 per share or $11,107.independent appraisal and which was utilized to allocate the purchase price, assigning $4,700,000 to land and $10,344,916 to the ground lease. Based on the appraisal the Company's management has assumed the useful life of the lease should coincide with the remaining lease term, which is approximately 112 months, and has recorded amortization expense accordingly.
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Item 2. Management’s Management's Discussion and Analysis of Financial Condition and Results of Operations
The Company’sCompany's results of operations for the threenine months ended December 31, 2017,June 30, 2019, and a comparative analysis of the same period for 20162018 are presented below:
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Rent revenues | $ | 417,717 |
| $ | 414,939 |
| $ | 2,778 |
| 1% |
Operating expenses |
| 178,151 |
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| 241,861 |
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| (63,710) |
| -26% |
Interest expense |
| 70,159 |
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| 37,768 |
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| 32,391 |
| 88% |
Income tax (benefit) expense, net |
| (396,215) |
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| 51,363 |
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| (477,578) |
| -1,147% |
Net income |
| 565,622 |
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| 83,947 |
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| 481,675 |
| 675% |
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| 2019 compared to 2018 | |||
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Rent revenue | $ | 1,255,632 |
| $ | 1,321,191 |
| $ | (65,559) |
| -5% |
Gain on sale |
| 18,367,269 |
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| - |
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| 18,367,269 |
| - |
Operating expenses |
| 1,937,694 |
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| 607,737 |
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| 1,329,957 |
| 219% |
Interest expense, net |
| 58,095 |
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| 172,279 |
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| (114,184) |
| -66% |
Income tax expense (benefit), net |
| 4,439,539 |
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| (283,868) |
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| 4,723,407 |
| -1,664% |
Net income |
| 13,187,573 |
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| 825,043 |
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| 12,362,530 |
| 1,498% |
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Rent revenues consist of rent revenue from the Company’sCompany's National Plaza, a strip center on Washington Road in Augusta, Georgia, and the Evans Ground Lease in Evans, Georgia.Georgia and the Bobby Jones Ground Lease. 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. The Company sold National Plaza on December 13, 2018 and purchased the Bobby Jones Ground Lease on December 20, 2018.
Refer to the Company’sCompany's Form 10-K for the year ended September 30, 20172018 for further information regarding the properties owned and their lease terms.
Total operating expenses for the threenine months ended December 31, 2017June 30, 2019 increased compared to the same period for 2018 due primarily to legal and professional fees and bonuses related to the sale of National Plaza and the purchase of the Bobby Jones Ground Lease in 2018 that were not incurred in the prior period. Management expects operating expenses for the remainder of the current fiscal year to decrease significantly compared to the first nine months as no additional bonuses are expected to be awarded and due to the sale of National Plaza, resulting in a reduction in related operating expenses.
Interest expense for the nine months ended June 30, 2019 decreased compared to the same period in prior year 2018 due to paying off the loan collateralized by National Plaza with proceeds from the sale of National Plaza in December of 2018. Management expects interest expense for 2016the remainder of the current fiscal year to decrease compared to the same period in prior year 2018.
Income tax expense for the nine months ended June 30, 2019 increased significantly compared to the same period for 2018 due to the sale of National Plaza and the related proceeds.
-12-
The Company's results of operations for the three months ended June 30, 2019, and a comparative analysis of the same period for 2018 are presented below:
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| Increase (decrease) | |||
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| 2019 compared to 2018 | |||
| 2019 |
| 2018 |
| Amount |
| Percent | |||
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Rent revenue | $ | 425,514 |
| $ | 418,894 |
| $ | 6,620 |
| 2% |
Operating expenses |
| 393,343 |
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| 187,563 |
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| 205,780 |
| 110% |
Interest expense, net |
| 9,189 |
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| 56,614 |
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| (47,425) |
| -84% |
Income tax expense (benefit), net |
| 59,790 |
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| 46,399 |
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| 13,391 |
| 29% |
Net (loss) income |
| (36,808) |
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| 128,318 |
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| (165,126) |
| -129% |
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Rent revenues for the three months ended June 30, 2019 are comparable to rent revenue for the three months ended June 30, 2018.
Total operating expenses for the three months ended June 30, 2019 increased compared to the same period for 2018 due primarily to roofing and plumbing repair costs incurred in 2016 that were not incurred in the current period. Referincreased amortization expense related to the Company’s Form 10-K forpurchase of the year ended September 30, 2017 for further information regarding these transactions.Bobby Jones Ground Lease in 2018. Management expects operating expenses for the remainder of the current fiscal year to be in-line with operating expenses above incurred forcomparable to the first quarter.three months ended June 30, 2019.
Interest expense net of interest income decreased for the three months ended December 31, 2017 increasedJune 30, 2019 compared to 2016the same period in 2018 due to paying off the increase in debt resultingloan collateralized by National Plaza with proceeds from the debt restructuring completedsale of National Plaza in the prior year.December of 2018. Management expects interest expense for the remainder of the current fiscal year to be in-line with interest expense incurreddecrease compared to the same period in the first quarter.prior year 2018.
Income tax expense for the three month periodmonths ended December 31, 2017 decreased significantlyJune 30, 2019 increased compared to the same period for 20162018 due to the Tax Cuts and Job Act being signed into law in December 2017.higher rent revenue as noted above.
Liquidity and Sources of Capital:
The Company’sCompany's ratio of current assets to current liabilities at December 31, 2017June 30, 2019 was 103%303%. The ratio was 103%130% at September 30, 2017.2018.
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). See Note 8 for additional disclosures regarding National Plaza retail strip center.
Current maturities of notes payable will require the Company to make payments over the next 12 months totaling $393,033.$138,984. 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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Cautionary Note Regarding Forward-Looking Statements:
The results of operations for the threenine months ended December 31, 2017June 30, 2019 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’sCompany's filings with the Securities and Exchange Commission (the “Commission”"Commission") and its reports to stockholders. Such forward-looking statements are made based on management’smanagement's belief as well as assumptions made by, and information currently available to, management pursuant to “safe harbor”"safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. The Company’sCompany'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. 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’sCompany's management, including the Company’sCompany's Chief Executive Officer, of the effectiveness of the design and operation of the Company’sCompany'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’sCompany's Chief Executive Officer concluded that the Company’sCompany's disclosure controls and procedures were ineffective.
(b) There were no significant changes in the Company’sCompany'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, 2017,2018, the Company’sCompany's management evaluated the effectiveness of its internal control. Based on the evaluation, the Company’sCompany's management concluded that the Company’sCompany's internal control over financial reporting was ineffective as of September 30, 20172018 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’sCompany's financial condition, results of operations and cash flows for the periods presented. There has been no change in the Company’sCompany's internal control over financial reporting that occurred during the Company’sCompany's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’sCompany's internal control over financial reporting.
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None
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
Management of the Company notes that Formsa Form 8-K werewas filed during the period forto disclose the departure of two memberspurchase of the Board of Directors.Bobby Jones Ground Lease. Management is not aware of any un-reported matters occurring during the period that would require any additional disclosures in a Form 8-K.
(a) |
| Exhibit No. |
| Description |
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| 31.1 |
| Certification Pursuant to Section 302 of Sarbanes-Oxley Act of 2002 |
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| 32.1 |
| Certification Pursuant to Section 906 of Sarbanes-Oxley Act of 2002 |
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| 101 |
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The following financial information from Security Land and Development | ||||
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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)
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By: | /s/ T. Greenlee Flanagin |
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| T. Greenlee Flanagin |
| Date |
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| President |
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| Chief Executive Officer and Chief Financial Officer |
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