10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended June 30, 2015
☐	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	(I.R.S. Employer
Incorporation or Organization)	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.

Large accelerated filer  ☐	Accelerated filer ☐
Non-accelerated filer ☐(Do not check if a smaller reporting company)	Smaller reporting company ☒

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 ☒ 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’s classes of common equity, as of the latest practicable date.

Class	Outstanding at August 11, 2015
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 June 30, 2015 and September 30, 2014	1
	Consolidated Statements of Income and Retained Earnings for the Three Month Period ended and for the
	Nine Month Period ended June 30, 2015 and 2014	2
	Condensed Consolidated Statements of Cash Flows for the Three Month Period ended and for the Nine
	Month Period ended June 30, 2015 and 2014	3
	Notes to the Consolidated Financial Statements	4-8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9-10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	10
Item 4.	Controls and Procedures	10-11
Part II	OTHER INFORMATION	11
Item 1.	Legal Proceedings	11
Item 1A.	Risk Factors	11
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Reserved for Future Use	11
Item 5.	Other Information	11
Item 6.	Exhibits	11
	SIGNATURES	12-14

   

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS
		June 30,		September 30,
		2015		2014
		(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	777,253	$	65,982
Receivables from tenants, net of allowance of $46,392 and $43,578
at June 30, 2015 and September 30, 2014, respectively		359,424		527,579
Total current assets		1,136,677		593,561
RESTRICTED CASH HELD BY QUALIFIED INTERMEDIARY		1,791,839		-
INVESTMENT PROPERTIES
Investment properties for lease, net of accumulated depreciation		5,208,797		5,459,560
Land and improvements held for investment or development		3,639,598		3,639,598
		8,848,395		9,099,158
OTHER ASSETS		81,636		76,239
	$	11,858,547	$	9,768,958
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	189,450	$	452,669
Income taxes payable		49,902		229,031
Current maturities of notes payable		236,281		554,065
Current maturities of deferred revenue				18,489
Current note payable to stockholder		-		50,433
Total current liabilities		475,633		1,304,687
LONG-TERM LIABILITIES
Notes payable, less current portion		3,086,192		2,435,541
Deferred income taxes		1,490,712		737,230
Total long-term liabilities		4,576,904		3,172,771
Total liabilities		5,052,537		4,477,458
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		5,948,483		4,433,973
Total Stockholders' Equity		6,806,010		5,291,500
Liabilities and Stockholders' Equity	$	11,858,547	$	9,768,958

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

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SECURITY LAND AND DEVELOPMENT CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

		For the Three Month				For the Nine Month
		Period Ended June 30,				Period Ended June 30,
		2015		2014		2015		2014
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
OPERATING REVENUE
Rent Revenue	$	383,518	$	375,529	$	1,148,443	$	1,109,529
OPERATING EXPENSES
Depreciation and amortization		41,780		42,636		126,400		108,511
Property taxes		66,158		67,549		199,808		199,519
Payroll and related costs		19,368		18,777		61,461		58,840
Insurance and utilities		18,679		19,762		36,127		37,897
Repairs and maintenance		49,754		13,851		73,255		47,121
Professional services		11,763		66,658		54,707		106,814
Bad debt		-		16,466		2,814		16,466
Penalties		7		-		11,551		-
Other		1,738		1,011		4,180		3,584
		209,247		246,710		570,303		578,752
Operating income		174,271		128,819		578,140		530,777
OTHER INCOME (EXPENSE)
Gain on Sale		1,862,235		-		1,862,235		-
Interest		(40,296)		(47,250)		(131,609)		(142,619)
Other Income		138,868		-		138,868		-
		1,960,807		(47,250)		1,869,494		(142,619)
Income before income taxes		2,135,078		81,569		2,447,634		388,158
INCOME TAXES PROVISION (BENEFIT)
Income tax expense		49,902		50,113		179,642		165,941
Income tax deferred expense (benefit)		760,473		(15,118)		753,482		(14,564)
		810,375		34,995		933,124		151,377
Net income		1,324,703		46,574		1,514,510		236,781
RETAINED EARNINGS, BEGINNING OF PERIOD		4,623,780		4,294,362		4,433,973		4,104,155
RETAINED EARNINGS, END OF PERIOD	$	5,948,483	$	4,340,936	$	5,948,483	$	4,340,936
PER SHARE DATA
Net income per common share	$	0.25	$	0.01	$	0.29	$	0.05

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

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SECURITY LAND AND DEVELOPMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

		For the Three Month						For the Nine Month
		Period Ended June 30,						Period Ended June 30,
		2015			2014			2015			2014
		(unaudited)			(unaudited)			(unaudited)			(unaudited)
OPERATING ACTIVITIES
Net income	$	1,324,703	$		46,574	$		1,514,510	$		236,781
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		41,780			42,636			126,400			108,511
Gain on sale		(1,862,235)			-			(1,862,235)			-
Deferred income tax		760,473			(15,118)			753,482			(14,564)
Changes in deferred and accrued amounts:		(96,116)			86,577			(290,612)			66,194
Net cash provided by operating activities		168,605			160,669			241,545			396,922
INVESTING ACTIVITIES
Proceeds from sale of investment properties		1,981,900			-			1,993,150			-
Addition to restricted cash held by qualified intermediary		(1,791,839)			-			(1,791,839)			-
Additions to investment properties		-			(196,591)			(11,949)			(200,591)
Net cash provided by (used in) investing activities		190,061			(196,591)			189,362			(200,591)
FINANCING ACTIVITIES
Repayments to stockholder		-			-			(50,433)			-
Proceeds from stockholder		-			-			-			50,015
Proceeds from notes payable		-			182,797			1,500,000			186,804
Principal payments on notes payable		(45,724)			(146,688)			(1,169,203)			(433,548)
Net cash provided by (used in) financing activities		(45,724)			36,109			280,364			(196,729)
Net increase (decrease) in cash		312,942			187			711,271			(398)
CASH, BEGINNING OF PERIOD		464,311			24,014			65,982			24,599
CASH, END OF PERIOD	$	777,253		$	24,201		$	777,253		$	24,201
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	47,752		$	39,823		$	137,956		$	139,955
Cash paid for income taxes	$	125,737		$	6,381		$	351,880		$	93,216

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

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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, 2014 when reviewing these 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 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 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 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 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, 2014 for further information regarding its critical accounting policies.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts (Topic 606). The new standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition

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Note 1 – Basis of Presentation, Continued

for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The Company is currently evaluating the impacts of adoption and the implementation approach to be used.

Note 2 – Investment Properties

Investment properties leased or held for lease to others under operating leases consisted of the following at June 30, 2015 and September 30, 2014:

	June 30,		September 30,
	2015		2014
	(unaudited)
National Plaza building, land and improvements	$	5,305,419	$	5,325,348
Evans Ground Lease, land and improvements		2,382,673		2,382,673
Commercial land and improvements		3,639,598		3,639,598
		11,327,690		11,347,619
Less accumulated depreciation		(2,479,295)		(2,360,803)
		8,848,395		8,986,816
Residential rental property		-		145,847
Less accumulated depreciation		-		(33,505)
		-		112,342
Investment properties for lease, net of accumulated
depreciation	$	8,848,395	$	9,099,158

Depreciation expense totaled approximately $39,000 and $42,000 for the three-month periods ended June 30, 2015 and 2014, respectively and approximately $120,000 and $105,000 for the nine-month periods ended June 30, 2015 and 2014, respectively.

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. In April 2015, the Company sold .038 acres of fee simple right-of-way, .191 acres of temporary easement for construction and .158 acres of permanent easement for construction. The sales proceeds from these transactions were $186,900. In June of 2015 the Company sold an outparcel approximating 1 acre in size on Stanley Drive and a rental house on Stanley Drive for $1,795,000. Together, the Company recognized a gain of approximately $1,862,000 on these sales. The Company is planning to reinvest the proceeds through a like kind exchange for other similar real estate held for development or lease and defer the related tax liability. The Company’s management has identified property suitable for investment and has made an offer on one. A qualified intermediary holds the proceeds from the sale approximating $1,792,000.

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.

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Note 2 – Investment Properties, Continued

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 June 30, 2015 and September 30, 2014.

Refer to the Company’s Form 10-K for the year ended September 30, 2014 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:
		June 30, 2015		September 30, 2014
		(unaudited)
In November of 2012, the Company converted the line of credit to a fixed rate loan due December 2017. The new term loan accrued interest at 5.5% annually with monthly installments of $3,287. The balance related to the purchase of the 1 acre adjoining the North Augusta,   South  Carolina   property   in  May  2008   and   was collateralized  by  the  residential  property  on  Stanley  Drive  in Augusta, Georgia. The note was paid off in March 2015.
	$	-	$	260,323
A note payable to an insurance company, secured with a mortgage interest in National Plaza and an assignment of rents.  The note was payable in monthly installments of $35,633, including principal and interest, through June  2015, and bore interest at a  fixed rate of 7.875%. The note was paid off in March 2015.
				310,423
A note payable to a regional financial institution collateralized with 17.54 acres of land in North Augusta, South Carolina.  The note was payable in monthly installments of $7,563, including principal and interest, through July 2018, and bore interest at a fixed rate of 5%. The note was paid off in March 2015.
				319,330
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%.
		1,839,603		1,918,026
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  $15,220,  including principal and interest, through April 2025, and bears interest at a fixed rate of 4%.  The proceeds were used to pay the Company’s outstanding income tax liability, four notes payable collateralized by the Company’s land held for lease and investment portfolio and one uncollateralized note payable to a shareholder.  The proceeds were also used to fund improvements at National Plaza.
		1,482,870		-

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Note 3 – Notes Payable, Continued

A construction loan to a regional financial institution collateralized with 17.54 acres of land in North Augusta, South Carolina. The loan was procured to finance tenant improvements for the lease of in-line space at National Plaza executed on January 17, 2014. In April, 2014 construction of the tenant improvements was completed and with total principal borrowed of $186,804. The loan converted to a note payable with monthly installments of $3,728 including principal and interest over a 60 month term with fixed interest of 4.25%. The related lease agreement calls for monthly payments of this amount to be paid to the Company in addition to monthly minimum rental payments. The note was paid off in March 2015.		-		181,504
A note payable to a stockholder, who is also a member of the Flanagin Family, to meet the cash flow needs of the Company. The note matured in July 2015 and accrued interest at 5%. The note was paid off in March 2015.
		-		50,433
		3,322,473		3,040,039
Less current maturities		(236,281)		(604,498)
	$	3,086,192	$	2,435,541

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 $236,281. 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, 2014 the Company had outstanding income taxes payable of $229,031, all of which was related to the fiscal year 2014. In March 2015 the Company executed a note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents and used a portion of the related proceeds to pay the outstanding tax liability for the fiscal year 2014 in full. As of June 30, 2015 the Company’s outstanding income taxes payable is $49,902, all of which relates to 2015.

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 Aiken County, South Carolina. Substantially all 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 56% and 44% 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 42% of its revenues though its lease with Publix.

Note 6 – Related Party Transactions

The Company hired an attorney who is also a member of the Company’s Board of Directors and who also serves as Vice President of the Company, to represent the Company in a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged. The matter was settled in June 2015.

During the second quarter of fiscal 2014, the Company borrowed $50,015 from a stockholder, who is also a member of the Flanagin family, to meet cash flow needs. This note was paid in full in March 2015.

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Note 7- Legal Matter

In June 2015, the Company settled a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged. The Company incurred approximately $11,000 in expenses during the quarter and recognized other income of approximately $139,000 after adjusting the $150,000 previously accrued for the matter.

Note 8- Property Transaction

On June 24, 2015 the Company sold approximately 1 acre of land, previously included as part of National Plaza, adjacent to Stanley Drive and a residential house on .43 acres of land held for lease on Stanley Drive. The gain was recognized in the quarter ended June 30, 2015. However, the Company has identified property and made an offer on one qualified property to purchase as part of a tax-free like kind exchange related to the June 2015 sale. The Company has 180 days from the June closing to purchase a qualified property and meet the requirements of the IRS regarding tax-free like kind exchanges.

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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 nine months ended June 30, 2015, and a comparative analysis of the same period for 2014 are presented below:

					Increase (Decrease)
				2015 compared to 2014
	2015		2014		Amount	Percent
Rent revenue	$ 1,148,443	$  1,109,529		$	38,914	4 %
Gain on Sale	1,862,235	-			1,862,235	N/A
Operating expenses	570,303	578,752			(8,449)	-1 %
Interest expense	131,609	142,619			(11,010)	-8 %
Income tax expense	933,124	151,377			781,747	516 %
Other Income	138,868	-			138,868	N/A
Net income	1,514,510	236,781			1,277,729	540 %

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. Rental income for the nine months period ended June 30, 2015 increased compared to the same period for 2014 due to increased occupancy in the small shops at National Plaza.

Refer to the Company’s Form 10-K for the year ended September 30, 2014 for further information regarding the properties owned and their lease terms.

In June of 2015 the Company recognized a gain on the sale of approximately 1 acre of land, previously included as part of National Plaza, adjacent to Stanley Drive and a residential house on .43 acres of land held for lease on Stanley Drive. The Company has identified property to purchase and made an offer on one property as part of a tax-free like kind exchange related to the June 2015 sale.

Total operating expenses for the nine months ended June 30, 2015 are consistent with the same period for 2014. Management expects operating expenses for the remainder of the current fiscal year to be comparable to the current operating period.

Interest expense for the nine month period ended June 30, 2015 decreased compared to 2014 due to the decrease in debt resulting from scheduled principal payments and debt restructuring. Management expects interest expense for the remainder of the current fiscal year to continue to increase given the increase in outstanding debt in March 2015.

Income tax expense for the nine month period ended June 30, 2015 increased compared to the same period for 2014 due to deferred tax expense related to the sale of the outparcel and rental house on Stanley drive noted above. Management expects income tax expense for the remainder of the current fiscal year to decrease significantly as no similar sales are anticipated for the remainder of the fiscal year.

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During 2011, the Company was notified by a tenant of a claim for reimbursement of certain expenses the Company charged in association with a tenant lease. It was the opinion of the Company's management that the Company was not liable for the claim. Beginning in 2011 the Company accrued approximately $150,000 for professional fees and other expenses to defend its position against the claim. The matter was settled in June 2015 and resulting costs totaled approximately $11,000. The remaining accrual of approximately $138,000 was written off and recognized as other income.

Liquidity and Sources of Capital:

The Company’s ratio of current assets to current liabilities at June 30, 2015 was 238%. The ratio was 45% at September 30, 2014.

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 $236,281. 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.

Cautionary Note Regarding Forward-Looking Statements:

The results of operations for the nine-month period ended June 30, 2015 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, 2014, 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, 2014 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.

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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 by the Company. It was the opinion of the Company's management that the Company was not liable for this claim. The Company accrued approximately $150,000 for professional fees and other expenses to defend its position through September 30, 2014. The matter was settled in June 2015 and resulting costs during the quarter totaled approximately $11,000.

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 June 30, 2015 is formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Retained Earnings, (iii) the condensed Consolidated Statements of Cash Flows and (iv) Notes to Consolidated Financial Statements.

- 11 -

 

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, 2015
	T. Greenlee Flanagin	Date
	President
	Chief Executive Officer and Chief Financial Officer

- 12 -

 

EX-31

EXHIBIT 31.1

CERTIFICATIONS

I, T. Greenlee Flanagin, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Security Land and Development Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors.

a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information.

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 11, 2015

/s/ T. Greenlee Flanagin

T. Greenlee Flanagin

President and Chief Executive Officer and

Chief Financial Officer

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Security Land and Development Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, T. Greenlee Flanagin, President and Chief Executive Officer of the Company, does hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)         The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 

(2)         The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:

                   /s/ T. Greenlee Flanagin

T. Greenlee Flanagin

President

Chief Executive Officer and Chief

Financial Officer

August 11, 2015

A signed original of this written statement required by Section 906 has been provided to Security Land and Development Corporation and will be retained by Security Land and Development Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

- 14 -

XML

Income Taxes

9 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Note 4 – Income Taxes

At September 30, 2014 the Company had outstanding income taxes payable of $229,031, all of which was related to the fiscal year 2014. In March 2015 the Company executed a note payable to a regional financial institution, secured with a mortgage interest in National Plaza and an assignment of rents and used a portion of the related proceeds to pay the outstanding tax liability for the fiscal year 2014 in full. As of June 30, 2015 the Company’s outstanding income taxes payable is $49,902, all of which relates to 2015.

XML

Notes Payable

9 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Notes Payable

Note 3 – Notes Payable
Notes payable consisted of the following at:
		June 30, 2015		September 30, 2014
		(unaudited)
In November of 2012, the Company converted the line of credit to a fixed rate loan due December 2017. The new term loan accrued interest at 5.5% annually with monthly installments of $3,287. The balance related to the purchase of the 1 acre adjoining the North Augusta,   South  Carolina   property   in  May  2008   and   was collateralized  by  the  residential  property  on  Stanley  Drive  in Augusta, Georgia. The note was paid off in March 2015.
	$	-	$	260,323
A note payable to an insurance company, secured with a mortgage interest in National Plaza and an assignment of rents.  The note was payable in monthly installments of $35,633, including principal and interest, through June  2015, and bore interest at a  fixed rate of 7.875%. The note was paid off in March 2015.
				310,423
A note payable to a regional financial institution collateralized with 17.54 acres of land in North Augusta, South Carolina.  The note was payable in monthly installments of $7,563, including principal and interest, through July 2018, and bore interest at a fixed rate of 5%. The note was paid off in March 2015.
				319,330
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%.
		1,839,603		1,918,026
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  $15,220,  including principal and interest, through April 2025, and bears interest at a fixed rate of 4%.  The proceeds were used to pay the Company’s outstanding income tax liability, four notes payable collateralized by the Company’s land held for lease and investment portfolio and one uncollateralized note payable to a shareholder.  The proceeds were also used to fund improvements at National Plaza.
		1,482,870		-

A construction loan to a regional financial institution collateralized with 17.54 acres of land in North Augusta, South Carolina. The loan was procured to finance tenant improvements for the lease of in-line space at National Plaza executed on January 17, 2014. In April, 2014 construction of the tenant improvements was completed and with total principal borrowed of $186,804. The loan converted to a note payable with monthly installments of $3,728 including principal and interest over a 60 month term with fixed interest of 4.25%. The related lease agreement calls for monthly payments of this amount to be paid to the Company in addition to monthly minimum rental payments. The note was paid off in March 2015.		-		181,504
A note payable to a stockholder, who is also a member of the Flanagin Family, to meet the cash flow needs of the Company. The note matured in July 2015 and accrued interest at 5%. The note was paid off in March 2015.
		-		50,433
		3,322,473		3,040,039
Less current maturities		(236,281)		(604,498)
	$	3,086,192	$	2,435,541

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 $236,281. 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.

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2015	Sep. 30, 2014
CURRENT ASSETS
Cash	$ 777,253	$ 65,982
Receivables from tenants, net of allowance of $46,392 and $43,578 at June 30, 2015 and September 30, 2014, respectively	359,424	527,579
Total current assets	1,136,677	593,561
RESTRICTED CASH HELD BY QUALIFIED INTERMEDIARY	1,791,839
INVESTMENT PROPERTIES
Investment properties for lease, net of accumulated depreciation	5,208,797	5,459,560
Land and improvements held for investment or development	3,639,598	3,639,598
Total Investment Properties	8,848,395	9,099,158
OTHER ASSETS	81,636	76,239
Total Assets	11,858,547	9,768,958
CURRENT LIABILITIES
Accounts payable and accrued expenses	189,450	452,669
Income taxes payable	49,902	229,031
Current maturities of notes payable	$ 236,281	554,065
Current maturities of deferred revenue		18,489
Current note payable to stockholder		50,433
Total current liabilities	$ 475,633	1,304,687
LONG-TERM LIABILITIES
Notes payable, less current portion	3,086,192	2,435,541
Deferred income taxes	1,490,712	737,230
Total long-term liabilities	4,576,904	3,172,771
Total liabilities	5,052,537	4,477,458
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	5,948,483	4,433,973
Total Stockholders' Equity	6,806,010	5,291,500
Liabilities and Stockholders' Equity	$ 11,858,547	$ 9,768,958

XML

Basis of Presentation

9 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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, 2014 when reviewing these 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 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 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 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 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, 2014 for further information regarding its critical accounting policies.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts (Topic 606). The new standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The Company is currently evaluating the impacts of adoption and the implementation approach to be used.

XML

Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended	9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014
Related Party Transactions [Abstract]
Proceeds from stockholder			$ 50,015		$ 50,015

XML

Property Transaction (Details Narrative) - a	9 Months Ended
	Jun. 30, 2015	Jun. 24, 2015
Number of days to meet the requirements of the IRS	180 days
National Plaza Building (Adjacent to Stanley Drive) [Member]
Area of real estate property sold		0.43
National Plaza Building (Residential House) [Member]
Area of real estate property sold		1

XML

Investment Properties

9 Months Ended

Jun. 30, 2015

INVESTMENT PROPERTIES

Investment Properties

Note 2 – Investment Properties

Investment properties leased or held for lease to others under operating leases consisted of the following at June 30, 2015 and September 30, 2014:

	June 30,		September 30,
	2015		2014
	(unaudited)
National Plaza building, land and improvements	$	5,305,419	$	5,325,348
Evans Ground Lease, land and improvements		2,382,673		2,382,673
Commercial land and improvements		3,639,598		3,639,598
		11,327,690		11,347,619
Less accumulated depreciation		(2,479,295)		(2,360,803)
		8,848,395		8,986,816
Residential rental property		-		145,847
Less accumulated depreciation		-		(33,505)
		-		112,342
Investment properties for lease, net of accumulated
depreciation	$	8,848,395	$	9,099,158

Depreciation expense totaled approximately $39,000 and $42,000 for the three-month periods ended June 30, 2015 and 2014, respectively and approximately $120,000 and $105,000 for the nine-month periods ended June 30, 2015 and 2014, respectively.

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. In April 2015, the Company sold .038 acres of fee simple right-of-way, .191 acres of temporary easement for construction and .158 acres of permanent easement for construction. The sales proceeds from these transactions were $186,900. In June of 2015 the Company sold an outparcel approximating 1 acre in size on Stanley Drive and a rental house on Stanley Drive for $1,795,000. Together, the Company recognized a gain of approximately $1,862,000 on these sales. The Company is planning to reinvest the proceeds through a like kind exchange for other similar real estate held for development or lease and defer the related tax liability. The Company’s management has identified property suitable for investment and has made an offer on one. A qualified intermediary holds the proceeds from the sale approximating $1,792,000.

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 June 30, 2015 and September 30, 2014.

Refer to the Company’s Form 10-K for the year ended September 30, 2014 for further information on operating lease agreements and land held for investment or development purposes.

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2015	Sep. 30, 2014
Statement of Financial Position [Abstract]
Receivables from tenants net of allowance (in dollars)	$ 46,392	$ 43,578
Common Stock, Par Value (in dollars per share)	$ 0.10	$ 0.10
Common Stock, Shares Authorized	30,000,000	30,000,000
Common Stock, shares issued	5,243,107	5,243,107
Common Stock, shares outstanding	5,243,107	5,243,107

XML

Investment Properties (Details) - USD ($)	Jun. 30, 2015	Sep. 30, 2014
Real Estate Properties [Line Items]
Investment property gross	$ 11,327,690	$ 11,347,619
Less accumulated depreciation	(2,479,295)	(2,360,803)
Investment property, net	$ 8,848,395	8,986,816
Residential rental property		145,847
Less accumulated depreciation		(33,505)
Residential rental property, net		112,342
Total Investment Properties	$ 8,848,395	9,099,158
National Plaza Building [Member]
Real Estate Properties [Line Items]
Investment property gross	5,305,419	5,325,348
Evans Ground Lease [Member]
Real Estate Properties [Line Items]
Investment property gross	2,382,673	2,382,673
Commercial land and improvements [Member]
Real Estate Properties [Line Items]
Investment property gross	$ 3,639,598	$ 3,639,598

XML

Document and Entity Information - shares	9 Months Ended
	Jun. 30, 2015	Aug. 11, 2015
Document and Entity Information:
Entity Registrant Name	SECURITY LAND & DEVELOPMENT CORP
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Entity Central Index Key	0000088572
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		5,243,107
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3

XML

Investment Properties (Details Narrative)	1 Months Ended			3 Months Ended		9 Months Ended
	Jun. 30, 2015 USD ($) a	Apr. 30, 2015 USD ($) a	May. 31, 2006 USD ($) a	Jun. 30, 2015 USD ($) a	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) a	Jun. 30, 2014 USD ($)	Sep. 30, 2014 USD ($)
Investment Holdings [Line Items]
Depreciation expense				$ 39,000	$ 42,000	$ 120,000	$ 105,000
Percentage of National Plaza space leased to Publix Supermarkets, Inc						81.00%
Land and improvements held for investment or development	$ 3,639,598			$ 3,639,598		$ 3,639,598		$ 3,639,598
Intermediary [Member]
Investment Holdings [Line Items]
Proceeds from sale	$ 1,792,000
Stanley Drive [Member]
Investment Holdings [Line Items]
Area of real estate property sold | a	1			1		1
Proceeds from sale	$ 1,795,000
Gain recognized	$ 1,862,000
National Plaza Building [Member]
Investment Holdings [Line Items]
Area of temporary easement | a		0.191
Area of permanent easement | a		0.158
Area of fee simple | a		0.038
Proceeds from sale		$ 186,900
Washington Road In Augusta [Member]
Investment Holdings [Line Items]
Land and improvements held for investment or development, area | a	1.1			1.1		1.1
North Augusta [Member]
Investment Holdings [Line Items]
Land and improvements held for investment or development, area | a	19.38			19.38		19.38
South Richmond County [Member]
Investment Holdings [Line Items]
Land and improvements held for investment or development, area | a	85			85		85
Lease Agreements [Member]
Investment Holdings [Line Items]
Area of land for lease in Columbia County, Georgia | a			18
Monthly rental payments, development period			$ 20,833
Annual rental payments			$ 500,000
Annual rental payments description			First 5 years
Percentage of rent increasing in years 6, 11, and 16			5.00%
Renewal period			21 years
Renewal period description			Every 5 years thereafter
Total lease term			50 years

XML

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
OPERATING REVENUE
Rent revenue	$ 383,518	$ 375,529	$ 1,148,443	$ 1,109,529
OPERATING EXPENSES
Depreciation and amortization	41,780	42,636	126,400	108,511
Property taxes	66,158	67,549	199,808	199,519
Payroll and related costs	19,368	18,777	61,461	58,840
Insurance and utilities	18,679	19,762	36,127	37,897
Repairs and maintenance	49,754	13,851	73,255	47,121
Professional services	$ 11,763	66,658	54,707	106,814
Bad debt		$ 16,466	2,814	$ 16,466
Penalties	$ 7		11,551
Other	1,738	$ 1,011	4,180	$ 3,584
Total Operating Expenses	209,247	246,710	570,303	578,752
Operating income	174,271	$ 128,819	578,140	$ 530,777
OTHER INCOME (EXPENSE)
Gain on Sale	1,862,235		1,862,235
Interest	(40,296)	$ (47,250)	(131,609)	$ (142,619)
Other Income	138,868		138,868
Total other income (expense)	1,960,807	$ (47,250)	1,869,494	$ (142,619)
Income before income taxes	2,135,078	81,569	2,447,634	388,158
INCOME TAXES PROVISION (BENEFIT)
Income tax expense	49,902	50,113	179,642	165,941
Income tax deferred expense (benefit)	760,473	(15,118)	753,482	(14,564)
Income taxes provision (benefit)	810,375	34,995	933,124	151,377
Net income	1,324,703	46,574	1,514,510	236,781
RETAINED EARNINGS, BEGINNING OF PERIOD	4,623,780	4,294,362	4,433,973	4,104,155
RETAINED EARNINGS, END OF PERIOD	$ 5,948,483	$ 4,340,936	$ 5,948,483	$ 4,340,936
PER SHARE DATA
Net income per common share (in dollars per share)	$ 0.25	$ 0.01	$ 0.29	$ 0.05

XML

Legal Matter

9 Months Ended

Jun. 30, 2015

Legal Matter

Legal Matter

Note 7- Legal Matter

In June 2015, the Company settled a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged. The Company incurred approximately $11,000 in expenses during the quarter and recognized other income of approximately $139,000 after adjusting the $150,000 previously accrued for the matter.

XML

Related Party Transactions

9 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Note 6 – Related Party Transactions

The Company hired an attorney who is also a member of the Company’s Board of Directors and who also serves as Vice President of the Company, to represent the Company in a legal matter regarding a tenant’s claim for reimbursement of certain expenses charged. The matter was settled in June 2015.

During the second quarter of fiscal 2014, the Company borrowed $50,015 from a stockholder, who is also a member of the Flanagin family, to meet cash flow needs. This note was paid in full in March 2015.

XML

Legal Matter (Details Narrative)	3 Months Ended
	Jun. 30, 2015 USD ($)
Legal Matter
Legal expenses	$ 11,000
Recognized other income	139,000
Previously accrued	$ 150,000

XML

Notes Payable (Details)		1 Months Ended	9 Months Ended
	Jan. 17, 2014 a	Nov. 30, 2012 USD ($)	Jun. 30, 2015 USD ($) a	Sep. 30, 2014 USD ($)	Apr. 30, 2014 USD ($)	May. 31, 2008 a
Debt Instrument [Line Items]
Total notes payable			$ 3,322,473	$ 3,040,039
Current notes payable			(236,281)	(554,065)
Noncurrent notes payable			$ 3,086,192	2,435,541
New Term Loan Due December 2017 [Member]
Debt Instrument [Line Items]
Total notes payable				260,323
Interest rate (in percent)		5.50%
Periodic monthly installments		$ 3,287
Area purchased in adjoining the North Augusta, South Carolina property (in acres) | a						1
Note Payable to Insurance Company Secured with Mortgage Interest in National Plaza and Assignment of Rents [Member]
Debt Instrument [Line Items]
Total notes payable				310,423
Interest rate (in percent)			7.875%
Periodic monthly installments			$ 35,633
Note Payable to Regional Financial Institution Collateralized with Land in North Augusta South Carolina [Member]
Debt Instrument [Line Items]
Total notes payable				319,330
Interest rate (in percent)			5.00%
Periodic monthly installments			$ 7,563
Land collateralized (in acres) | a			17.54
Note Payable to Insurance Company Collateralized with Land in Columbia County Georgia and Assignment of Long Term Ground Lease [Member]
Debt Instrument [Line Items]
Total notes payable			$ 1,839,603	1,918,026
Interest rate (in percent)			5.85%
Periodic monthly installments			$ 17,896
Land collateralized (in acres) | a			18
Note Payable to Regional Financial Institution Secured with Mortgage Interest in National Plaza and Assignment of Rents [Member]
Debt Instrument [Line Items]
Total notes payable			$ 1,482,870
Interest rate (in percent)			4.00%
Periodic monthly installments			$ 15,220
Construction Loan Payable [Member]
Debt Instrument [Line Items]
Total notes payable				181,504
Land collateralized (in acres) | a	17.54
Total principal borrowed					$ 186,804
Note Payable Issuable Upon Conversion of Construction Loan [Member]
Debt Instrument [Line Items]
Interest rate (in percent)			4.25%
Periodic monthly installments			$ 3,728
Term of debt			60 months
Note Payable to Stockholder to Meet Cash Flow Needs of Entity [Member]
Debt Instrument [Line Items]
Total notes payable				$ 50,433
Interest rate (in percent)			5.00%

XML

Investment Properties (Tables)

9 Months Ended

Jun. 30, 2015

INVESTMENT PROPERTIES

Schedule of Investment properties leased or held for lease

Investment properties leased or held for lease to others under operating leases consisted of the following at June 30, 2015 and September 30, 2014:

	June 30,		September 30,
	2015		2014
	(unaudited)
National Plaza building, land and improvements	$	5,305,419	$	5,325,348
Evans Ground Lease, land and improvements		2,382,673		2,382,673
Commercial land and improvements		3,639,598		3,639,598
		11,327,690		11,347,619
Less accumulated depreciation		(2,479,295)		(2,360,803)
		8,848,395		8,986,816
Residential rental property		-		145,847
Less accumulated depreciation		-		(33,505)
		-		112,342
Investment properties for lease, net of accumulated
depreciation	$	8,848,395	$	9,099,158

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Property Transaction

9 Months Ended

Jun. 30, 2015

Property, Plant and Equipment Assets Held-for-sale Disclosure [Abstract]

Property Transaction

Note 8- Property Transaction

On June 24, 2015 the Company sold approximately 1 acre of land, previously included as part of National Plaza, adjacent to Stanley Drive and a residential house on .43 acres of land held for lease on Stanley Drive. The gain was recognized in the quarter ended June 30, 2015. However, the Company has identified property and made an offer on one qualified property to purchase as part of a tax-free like kind exchange related to the June 2015 sale. The Company has 180 days from the June closing to purchase a qualified property and meet the requirements of the IRS regarding tax-free like kind exchanges.

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Basis of Presentation (Policies)

9 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Estimates of Useful Lives of Investment Properties for Purposes of Depreciation

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 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

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

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, 2014 for further information regarding its critical accounting policies.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts (Topic 606). The new standard is effective for reporting periods beginning after December 15, 2016 and early adoption is not permitted. The comprehensive new standard will supersede existing revenue recognition guidance and require revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions. The guidance permits two implementation approaches, one requiring retrospective application of the new standard with restatement of prior years and one requiring prospective application of the new standard with disclosure of results under old standards. The Company is currently evaluating the impacts of adoption and the implementation approach to be used.

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Notes Payable (Tables)

9 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Schedule of notes payable and line of credit

Notes payable consisted of the following at:
		June 30, 2015		September 30, 2014
		(unaudited)
In November of 2012, the Company converted the line of credit to a fixed rate loan due December 2017. The new term loan accrued interest at 5.5% annually with monthly installments of $3,287. The balance related to the purchase of the 1 acre adjoining the North Augusta,   South  Carolina   property   in  May  2008   and   was collateralized  by  the  residential  property  on  Stanley  Drive  in Augusta, Georgia. The note was paid off in March 2015.
	$	-	$	260,323
A note payable to an insurance company, secured with a mortgage interest in National Plaza and an assignment of rents.  The note was payable in monthly installments of $35,633, including principal and interest, through June  2015, and bore interest at a  fixed rate of 7.875%. The note was paid off in March 2015.
				310,423
A note payable to a regional financial institution collateralized with 17.54 acres of land in North Augusta, South Carolina.  The note was payable in monthly installments of $7,563, including principal and interest, through July 2018, and bore interest at a fixed rate of 5%. The note was paid off in March 2015.
				319,330
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%.
		1,839,603		1,918,026
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  $15,220,  including principal and interest, through April 2025, and bears interest at a fixed rate of 4%.  The proceeds were used to pay the Company’s outstanding income tax liability, four notes payable collateralized by the Company’s land held for lease and investment portfolio and one uncollateralized note payable to a shareholder.  The proceeds were also used to fund improvements at National Plaza.
		1,482,870		-

A construction loan to a regional financial institution collateralized with 17.54 acres of land in North Augusta, South Carolina. The loan was procured to finance tenant improvements for the lease of in-line space at National Plaza executed on January 17, 2014. In April, 2014 construction of the tenant improvements was completed and with total principal borrowed of $186,804. The loan converted to a note payable with monthly installments of $3,728 including principal and interest over a 60 month term with fixed interest of 4.25%. The related lease agreement calls for monthly payments of this amount to be paid to the Company in addition to monthly minimum rental payments. The note was paid off in March 2015.		-		181,504
A note payable to a stockholder, who is also a member of the Flanagin Family, to meet the cash flow needs of the Company. The note matured in July 2015 and accrued interest at 5%. The note was paid off in March 2015.
		-		50,433
		3,322,473		3,040,039
Less current maturities		(236,281)		(604,498)
	$	3,086,192	$	2,435,541

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Concentrations (Details Narrative) - Jun. 30, 2015 - Customer Concentration Risk [Member] - a	Total
Sales Revenue, Net [Member] | National Plaza Building [Member]
Concentration Risk [Line Items]
Concentration risk (as a percent)	56.00%
Sales Revenue, Net [Member] | Evans Ground Lease [Member]
Concentration Risk [Line Items]
Concentration risk (as a percent)	44.00%
Sales Revenue, Net [Member] | National Plaza and Evans Ground Lease [Member]
Concentration Risk [Line Items]
Number of investment properties	2
Sales Revenue, Net [Member] | Publix Supermarkets Inc [Member] | National Plaza Building [Member]
Concentration Risk [Line Items]
Concentration risk (as a percent)	42.00%
Space Leased [Member] | Publix Supermarkets Inc [Member] | National Plaza Building [Member]
Concentration Risk [Line Items]
Concentration risk (as a percent)	81.00%

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
OPERATING ACTIVITIES
Net income	$ 1,324,703	$ 46,574	$ 1,514,510	$ 236,781
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	41,780	$ 42,636	126,400	$ 108,511
Gain on sale	(1,862,235)		(1,862,235)
Deferred income tax	760,473	$ (15,118)	753,482	$ (14,564)
Changes in deferred and accrued amounts:	(96,116)	86,577	(290,612)	66,194
Net cash provided by operating activities	168,605	$ 160,669	241,545	$ 396,922
INVESTING ACTIVITIES
Proceeds from sale of investment properties	1,981,900		1,993,150
Addition to restricted cash held by qualified intermediary	$ (1,791,839)		(1,791,839)
Additions to investment properties		$ (196,591)	(11,949)	$ (200,591)
Net cash provided by (used in) investing activities	$ 190,061	$ (196,591)	189,362	$ (200,591)
FINANCING ACTIVITIES
Repayments to stockholder			$ (50,433)
Proceeds from stockholder				$ 50,015
Proceeds from notes payable		$ 182,797	$ 1,500,000	186,804
Principal payments on notes payable	$ (45,724)	(146,688)	(1,169,203)	(433,548)
Net cash provided by (used in) financing activities	(45,724)	36,109	280,364	(196,729)
Net increase (decrease) in cash	312,942	187	711,271	(398)
CASH, BEGINNING OF PERIOD	464,311	24,014	65,982	24,599
CASH, END OF PERIOD	777,253	24,201	777,253	24,201
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	47,752	39,823	137,956	139,955
Cash paid for income taxes	$ 125,737	$ 6,381	$ 351,880	$ 93,216

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Concentrations

9 Months Ended

Jun. 30, 2015

Risks and Uncertainties [Abstract]

Concentrations

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 Aiken County, South Carolina. Substantially all 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 56% and 44% 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 42% of its revenues though its lease with Publix.

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Income Taxes (Details Narrative) - USD ($)	Jun. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Total outstanding income tax payable	$ 49,902	$ 229,031