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SECURITY LAND & DEVELOPMENT CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations

February 14, 2014



Results of Operations:

The Company's results of operations for the three months ended December 31, 2013, and a comparative analysis of the same period for 2012 are presented below: Increase (Decrease) 2013 compared to 2012 2013 2012 Amount Percent Rent revenue $ 373,748$ 359,103$ 14,645 4 % Operating expenses 164,472 170,413 (5,941) -3 % Interest expense 47,399 55,612 (8,213) -15 % Income tax expense 61,450 50,136 32,718 23 % Net income 100,427 82,942 (3,919) 21 %



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, 2013 for further information regarding the properties owned and their lease terms.

Total operating expenses for the three months ended December 31, 2013 decreased slightly compared to the same period for 2012 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, 2013. 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, 2013 decreased compared to 2012 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, 2013 increased compared to the same period for 2012 due mainly to increased rental income as a result of higher occupancy for National Plaza and lower interest and operating expenses as noted above. Management expects income tax expense for the remainder of the current fiscal year to be comparable to the current operating period.

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Liquidity and Sources of Capital:

The Company's ratio of current assets to current liabilities at December 31, 2013 was 39%. The ratio was 48% at September 30, 2013.

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 $594,891. 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, sell certain of its fully owned and un-collateralized assets or borrow money from certain stockholders.

Cautionary Note Regarding Forward-Looking Statements:

The results of operations for the three-month period ended December 31, 2013 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.


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Source: Edgar Glimpses


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