10KSB 1 edgarizedfinal10ksb9302003.txt REPORT FOR FISCAL YEAR ENDED 9-30-2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended September 30, 2003 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission file number 0-8463 PISMO COAST VILLAGE, INC. (Name of small business issuer in its charter) California 95-2990441 ________________________________ _________________________ (State or other jurisdiction (IRS Employer ID No.) of incorporation or organization) 165 South Dolliver Street, Pismo Beach, CA 93449 ____________________________________________________ (Address of Principal Executive Offices) (Zip Code) Issuer's telephone number (805)773-5649 Securities registered under Section 12(b) of the Exchange Act: Title of Each Class Name of Each Exchange on Which Registered. N/A N/A Securities registered under Section 12(g) of the Exchange Act: Common Stock _________________ (Title of Class) 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. XX YES NO Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. XX State issuer's revenues for its most recent fiscal year. $3,923,747. State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. $30,039,000. (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15 (d) of the Exchange Act after the distribution of securities under a plan confirmed by a court [ ]Yes [ ] No (APPLICABLE ONLY TO CORPORATE REGISTRANTS) State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 1,800 DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Notice of 2004 Definitive Proxy Statement for the Annual Meeting of Shareholders to be held January 17, 2004 are incorporated by reference into Part III. Transitional Small Business Disclosure Format (Check one): Yes __; No X FORM 10-KSB PART I ITEM 1 DESCRIPTION OF BUSINESS (a) BUSINESS DEVELOPMENT Pismo Coast Village, Inc., the "Registrant" or the "Company", was incorporated under the laws of the State of California on April 2, 1975. The Company's sole business is owning and operating a recreational vehicle resort (hereinafter the "Resort") in Pismo Beach, California. The Resort has continued to enhance its business by upgrading facilities and services to better serve customers. (b) BUSINESS OF ISSUER The Company is engaged in only one business, namely, the ownership and operation of the Resort. The Company generates revenue from rental of camping sites, recreational vehicle storage, recreational vehicle repair and retail sales from a general store and recreational vehicle parts store. Accordingly, all of the revenues, operating profit (loss) and identifiable assets of the Company, are attributable to a single industry segment. Pismo Coast Village, Inc., is a full-service 400 space recreational vehicle resort. Its resort operations include site rentals, RV storage business, video arcade, Laundromat, and other income sources related to the operation. The retail operations include a general store, RV parts store, and RV repair shop. In addition, the Company has a recreation department that provides a youth program and recreational equipment rentals. PUBLIC AND SHAREHOLDER USERS The present policy of the Company is to offer each shareholder the opportunity for 45 days of free use of sites at the Resort, 25 days may be used during prime time and 20 days during non- prime time. The free use of sites by shareholders is managed by designating the nights of the year as prime time and non-prime time. A prime time night is one that is most in demand, for example, Memorial Day Weekend and the period from mid-June until Labor Day. Non-prime time is that time with the least demand. Each shareholder is furnished annually a calendar that designates the prime and non-prime time days; it also provides a schedule of when reservations can be made and the procedure for making reservations. Shareholders' free use of sites average approximately 21% to 23% annually, refer to Item 6 Result of Operations MD&A, page 11. SEASONAL ASPECTS OF BUSINESS The business of the Company is seasonal and is concentrated during prime days of the year which are defined as follows: President's Day Weekend, Easter week, Memorial Day Weekend, summer vacation months, Labor Day, Thanksgiving Weekend and Christmas vacation. WORKING CAPITAL REQUIREMENTS By accumulating reserves during the prime seasons, the Company is able generally to meet its working capital needs during off- season. Industry practice is to accumulate funds during the prime season and use such funds, as necessary, in the off-season. The Company has arranged, but not used, a $500,000 line of credit to ensure funds are available, if necessary, in the off-season. COMPETITION The Company is in competition with nine other RV parks located within a five-mile radius. Since its property is the only property located adjacent to the beach, it has a competitive edge. The Company is recognized as a recreational vehicle resort rather than a park because of its upgraded facilities and amenities which include 28 Channels of Satellite TV, a heated pool, a miniature golf course and a recreational program. The Resort is noted for its ability to provide full service which includes RV storage and RV repair and service. The Resort is consistently given high ratings by industry travel guides based on resort appearance, facilities offered, and recreational programs. In Fiscal Year 1999, Pismo Coast Village, Inc., was awarded the designation of RV Park of the Year, Mega Park Category 1999, by the California Travel Parks Association (CTPA). In November 1999, Pismo Coast Village, Inc., was awarded the designation of RV Park of the Year, Large Park Category 1999, by the National Association of RV Parks and Campgrounds (ARVC) which has a membership of more than 3,600 properties. These factors allow the Resort to price its site rental fees above most of its competition based on perceived value received. Competition for the tourist market is keen between the cities on the Central Coast of California. Resort management and staff are involved with the City of Pismo Beach, Chamber of Commerce, Conference and Visitors Bureau, and Business Improvement Group and are major sponsors in cooperative events and advertising. The Resort continues to market off-season discounts and place advertisements in trade publications and industry directories. In addition, the Company places its brochure with companies selling or renting recreational vehicles and has found the Resort's Internet web page to be very effective. The marketing program also targets groups and clubs by offering group discounts, meeting facilities, and catering services. The Company's marketing plan was funded by $47,316 for Fiscal Year 2003 which was developed out of operating revenues. The major source of the Company's business is repeat business, which has been developed by attention to good customer service and providing quality recreational facilities. ENVIRONMENTAL REGULATION The Company is affected by federal, state and local antipollution laws and regulations. Due to the nature of its business operations (camping, RV storage and small retail store sales) the discharge of materials into the environment is not considered to be of a significant concern, and the EPA has not designated the Company as a potentially responsible party for clean up of hazardous waste. The main property of the Resort is located within the boundaries of those lands under the review and purview of the Coastal Commission of the State of California and the City of Pismo Beach. The water and sewer systems are serviced by the City of Pismo Beach. The Company was subject to state and federal regulations regarding the Fiscal Year 1996 reconstruction of an outflow structure that empties into Pismo Creek at the north boundary of the Resort. Because the Resort is within the wetlands area, the California Coastal Commission required permits for repair and construction to be reviewed by the following agencies: City of Pismo Beach, State Lands Commission, Regional Water Quality Board, State of California, California Department of Fish and Game, State Department of Parks and Recreation and the Army Corps of Engineers. The requirement for these permits involved the diversion of capital from operations, but did not increase cost of debt financing. EMPLOYEES As of September 30, 2003, the Company employed approximately 47 people with 22 of these on a part-time basis and 25 on full-time basis. Due to the seasonal nature of the business, additional staff is needed during peak periods and fewer during the off- Season. Staffing levels during the fiscal year ranged from approximately 42 employees to 54 employees. Management considers its labor relations to be good. ADDITIONAL INFORMATION The Company has remained conservative when considering rates and rate increases. As a result of experiencing increasing expenses and conducting a local comparative rate study, the Board voted to increase selected nightly rates effective October 1, 2002. Subsequently, in response to increasing operational expenses, especially related to utilities, insurance, and labor, the Board voted to increase all nightly rates effective October 1, 2003. These new rates range from $30 to $33 per night during the off- season and $37 to $41 per night during prime time. It is anticipated the proposed rates will continue to market site usage at is highest value and not negatively impact the Company's ability to capture an optimum market share. (c) REPORTS TO SECURITY HOLDERS Pismo Coast Village files quarterly reports, an annual report, and periodic reports providing the public with current information about the Company and its operations with the Securities and Exchange Commission. The public may read and copy any materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Additionally, the Company makes available on its website, www.pismocoastvillage.com, access to its annual report on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-KSB, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. ITEM 2 DESCRIPTION OF PROPERTIES The Company's principal asset consists of the Resort which is located at 165 South Dolliver Street in Pismo Beach, California. The Resort is built on a 26-acre site and includes 400 campsites with full hookups and nearby restrooms with showers and common facilities, such as a video arcade, recreation hall, general store, swimming pool, Laundromat, and three playgrounds. In 1980 the Company purchased a 2.1 acre parcel of real property located at 2250 22nd Street, Oceano, California, at a price of $66,564. The property is being used by the Company as a storage facility for recreational vehicles. The storage capacity of this lot is approximately 123 units. In 1981 the Company exercised an option and purchased a 3.3 acre parcel located at 300 South Dolliver Street, Pismo Beach, California, at a price of $300,000. The property, which previously had been leased by the Company, is used primarily as a recreational vehicle storage yard. The storage capacity of this lot is approximately 220 units. In 1988, the Company purchased approximately 0.6 acres of property at 180 South Dolliver Street, Pismo Beach, California, across the street from the main property, consisting of a large building with a storefront and one large maintenance bay in the rear. Also, on the property is a smaller garage-type building with three parking stalls. The Company enlarged its recreational vehicle repair operation, added RV storage for approximately eleven units and developed the storefront into a RV parts store. The property was purchased for $345,000, of which $300,000 was financed and paid in full during Fiscal Year 1997. On December 31, 1998, the Company closed escrow on a parcel of property to be developed as an additional RV storage facility. The 5.5 acre property is located in Oceano adjacent to existing Company RV storage. On October 14, 1999, construction was completed and the Company received County approval to occupy the premises. The property was purchased for $495,000, of which $395,000 was financed and paid in full in July 2000. Development cost amounted to $195,723 and was allocated from operational cash flow. On February 28, 2003 the Company closed escrow on a parcel of property to be developed as an additional RV storage facility. The 4.7 acre property is located in Oceano and was purchased for $650,000 of which $500,000 was financed. The project is currently in the permitting process and is expected to accept new storage units during Fiscal Year 2004. There is no deferred maintenance on any of the Resort's facilities. The Company's facilities are in good condition and adequate to meet the needs of the shareholder users as well as the public users. The Company continues to develop sufficient revenue from general public sites sales to support a continued positive maintenance program and to meet the demands of shareholders use of free sites. The Resort, RV Repair Shop and Parts Store and four storage facilities constitute substantially all the Company's property, and are owned in fee. Two storage lots and beach access used by the shareholders and general public visitors are leased by the Company pursuant to the herein below described leases. 1. TRAILER STORAGE YARDS. In 1986 the Company leased a parcel of land 100 feet wide by 1,600 feet long from the Union Pacific Railroad Corporation. The property is being used by the Company as a storage facility for recreational vehicles. Capital improvements in the amount of $40,000 were made to this property, which provides storage for approximately 160 units. The property was leased for $950 per month the first year, $1,400 per month for the second year, with continuing years tied to the "CPI" Index, or Fair Market Value of the property according to the lease agreement. During Fiscal Year 2003, lease payments were made in the amount of $39,958, Fiscal Year 2004 lease payments will be $41,157, and Fiscal Year 2005 lease payments will be $39,954, plus applicable changes in index or valuation. In 1991, the Company developed a lease for a five-acre RV storage lot at the Oceano Airport clear zone as storage for approximately 350 RV's. This lot was developed to replace a 100-unit storage lot that was closed when the lease was not renewed. The original lease on the storage lot was for five years and the Company has executed a third five-year option with the County of San Luis Obispo. Construction was completed in January 1992 and capital improvements in the amount of $330,768 were made to this property of which $300,000 was financed and paid in full during Fiscal 1997. Lease payments for the first year of control and occupancy area were $1,500 per month, $2,000 for the second year and continuing years are tied to the "CPI" index. During Fiscal Year 2003, lease payments were made in the amount of $29,747, Fiscal Year 2004 lease payments will be $30,937 plus applicable changes in index, and Fiscal Year 2005 lease payments will be $30,937 plus index changes. 2. AMENDMENT NO. 4 TO CONTRACT PISMO STATE BEACH, LOCATED IN SAN LUIS OBISPO COUNTY, PISMO COAST VILLAGE, INC., DATED JULY 1976. (Pertaining to the Boardwalk Concession Contract for construction and maintenance of three boardwalks to the beach for pedestrians at Pismo State Beach and to provide for continued access through the sand dunes to the State Beach abutting the Resort.) This contract is between the Company and the State of California Department of Parks and has been renewed annually since June 30, 1984. The contract was originally assigned by the former owner to the Company by an assignment, dated December 1, 1975. Continued ocean access is granted annually by payment of a license fee of $400. The Resort leases out areas to other companies to insure that the best service and equipment are available for guest use. These areas are leased from the Company pursuant to the herein below described leases. 1. RECREATIONAL ARCADE AGREEMENT WITH COIN AMUSEMENTS, INC. This agreement is dated November 1, 2003 and pursuant to this agreement, the Company granted Coin Amusements, Inc., the concession to operate various coin-operated game units at the Resort. The one year term expires on October 31, 2004, and continued renewal is expected without significant impact. 2. WEB SERVICE COMPANY, GOLETA, CA. The five-year lease expired on July 22, 2002, and was reissued for a seven-year period which will expire on October 31, 2009, and grants to Web Service Company the right to place and service coin-operated laundry machines at the Resort on a 50-50 basis for all revenues derived from their use. On October 10, 2002, Web replaced all 18 washers and 18 dryers with new equipment. Continued renewal is expected without significant impact. 3. PISMO COAST INVESTMENTS, The Company entered into an agreement with Ms. Jeanne Sousa, a California Corporations Licensed Broker for the lease of a 200-square foot building at the Resort from which she conducts sales activities in the Company's stock. The term of the lease was for three years commencing on January 1, 2001, and continued renewal is expected without significant impact. Termination or cancellation may be made by either Lessor or Lessee by giving the other party sixty (60) days written notice. ITEM 3 LEGAL PROCEEDINGS No pending legal proceedings against the Company other than routine litigation incidental to the business. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Paragraph inapplicable. PART II ITEM 5 MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS (a.) MARKET INFORMATION There is no market for the Company's common stock, and there are only limited or sporadic transactions in its stock. Ms. Jeanne E. Sousa, a licensed broker/dealer, handled sales of the Company shares as Pismo Coast Investments. The last transaction the Company is aware of occurred on September 30, 2003, at a price of $17,000 for one share conveyed. This price was used for computation of aggregate market value of Company stock on page 2 of this Report. The following table sets forth the high and low closing sales prices as reported by Pismo Coast Investments for the period October 1, 2001 to September 30, 2003. Fiscal Year Ended September 30, 2002 ____________________________________ High Low _______ _______ First Quarter $12,000 $11,500 Second Quarter $12,000 $11,500 Third Quarter $12,500 $12,000 Fourth Quarter $13,500 $12,500 Fiscal Year Ended September 30, 2003 ____________________________________ High Low _______ _______ First Quarter $13,500 $13,500 Second Quarter $14,000 $14,000 Third Quarter $15,000 $15,000 Fourth Quarter $17,000 $15,000 (b.) HOLDERS The approximate number of holders of the Company's common stock on September 30, 2003 was: 1,530. (c.) DIVIDENDS The Company has paid no dividends since it was organized in 1975, and although there is no legal restriction impairing the right of the Company to pay dividends, the Company does not intend to pay dividends in the foreseeable future. The Company selects to invest its available working capital to enhance the facilities at the Resort. (d.) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. The Company does not currently have securities authorized for issuance under equity compensation plans. (e.) RECENT SALES OF UNREGISTERED SECURITIES: USE OF PROCEEDS FROM REGISTERED SECURITIES The Company does not have sales of unregistered securities. ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Statements in this Annual Report on Form 10-KSB which express the"Belief," "Anticipation," "Intention" or "Expectation," as well as other statements which are not historical fact, and statements as to business opportunities, market conditions, and operating performance insofar as they may apply prospectively, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that could cause actual results to differ materially from those projected. Pismo Coast Village, Inc., operates as a 400 space recreational vehicle resort. The Corporation includes additional business operations to provide its users with a full range of services expected of a recreational resort. These services include a store, video arcade, Laundromat, recreational vehicle repair, RV parts shop and an RV storage operation. The Corporation is authorized to issue 1,800 shares, of one class, all with equal voting rights and all being without par value. Transfers of shares are restricted by Company bylaws. One such restriction is that transferees must acquire shares with intent to hold the same for the purpose of enjoying camping rights and other benefits to which a shareholder is entitled. Each share of stock is intended to provide the shareholder with the opportunity for 45 days of free site use per year. However, if the Corporation is unable to generate sufficient funds from the public, the Company may be required to charge shareholders for services. Management is charged with the task of developing sufficient funds to operate the Resort through site sales to general public guests by allocating a minimum of 175 sites to general public use and allocating a maximum of 225 sites for shareholder free use. The other service centers are expected to generate sufficient revenue to support themselves and/or produce a profit. Certain information included herein contains statements that may be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, such as statements relating to anticipated expenses, capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to competitive industry conditions, California tourism and weather conditions, dependence on existing management, leverage and debt service, the regulation of the recreational vehicle industry, domestic or global economic conditions and changes in federal or state tax laws or the administration of such laws. CURRENT OPERATING PLANS The Board of Directors continues its previously established policy by adopting a stringent, conservative budget for Fiscal Year 2004, which projects a positive cash flow of approximately $689,362 from operations. While the Company projects a positive cash flow, this cannot be assured for Fiscal Year 2004. Capital expenditures planned for 2004 include the continued enhancement of RV sites and services, development of a new RV storage property, road paving, entrance renovation, and a new utility pick-up. These investments are projected to be approximately $368,600, some of which can be deferred, if necessary. These proposed capital improvements will be funded from cash from operations, from existing working capital, and, if necessary, from financing obtained by the Company. Thus, budgeted cash flow for the year is expected to be within the Company's capabilities based on its present working capital position. FINANCIAL CONDITION The business of the Company is seasonal and is concentrated on prime days of the year which are defined as follows: President's Day Weekend, Easter week, Memorial Day Weekend, summer vacation months, Labor Day, Thanksgiving Weekend, and Christmas vacation. There are no known trends which affect business or affect revenue. The Company develops its income from two sources: (a) Resort Operations, consisting of revenues generated from RV site rentals, from RV storage space operations, and from lease revenues from Laundromat and arcade operations by third party lessees; and (b) Retail Operations, consisting of revenues from general store operations and from RV parts and service operations. The Company completed its plan to aggressively reduce debt by eliminating, by early payoff, all outstanding loan balances in July 2000. With the purchase of a new storage property in February 2003, the Company obtained financing from a local institution. The Company continues its policy to adopt conservative budgets with managed capital outlays. The Company has arranged a $500,000 line of credit that is currently not drawn on. The Company has no other liabilities to creditors other than current accounts payable arising from its normal day-to-day operations and advance Resort rental reservation deposits, none of which are in arrears. The Company has recently reached a settlement with the Internal Revenue Service regarding an audit of the 1999 tax return. As a result of the audit, incremental taxes were paid to total $117,600 federal liability and an additional $30,050 state liability for the years ended September 30, 2000 and 2001. The incremental taxes related to nondeductible variable costs associated with shareholder usage of the park. The impact of these nondeductible costs for the year ending September 30, 2003, is included in the current provision for income taxes. Future impact of shareholder nondeductible variable costs will be based on a formula agreed to in the settlement of the audit. LIQUIDITY The Company's policy is to use its ability to generate operating cash flow to meet its expected future needs for internal growth. The Company has continued to maintain sufficient cash so as to not require the use of a short-term line of credit during the off-season period, and the Company expects to be able to do so (although no assurance of continued cash flow can be given). Net cash provided by operating activities totaled $412,650 in 2003, compared to $658,744 in 2002. This reduction is primarily a result of deferred and prepaid income taxes, depreciation, loss on disposal of fixed assets, and increase in operational expenses. During Fiscal Year 2003, cash investments of $989,636 included down payment for a new RV storage property, construction of two new restroom/shower facilities, complete renovation of thirty-six RV sites, purchase of a new trailer tow truck, addition to the corporate office building, and the installation of an RV storage security system. During Fiscal Year 2002, cash investments of $304,852 included the construction of a new storage building, road paving, drainage and fencing for RV storage lots, electrical pedestals, rental bikes, garbage compactor, street sweeper, preliminary developmental expenses for 2003 capital projects, and the construction of a new concrete block wall along the common property line with the State Campground. The Company has continued to maintain sufficient cash from operations to not require the addition of long-term debt. However, with the purchase of the new RV storage property in February 2003, long term financing was acquired from a lending institution. With the possibility of requiring additional funds for planned capital improvements and winter season, the Company established a $500,000 Line of Credit to insure funds will be available if required. In anticipation of future large projects, the Board of Directors has instructed management to build operational cash balances. Fiscal Year 2003's current ratio (current assets to current liabilities) of 1.89 decreased from Fiscal Year 2002's current ratio of 2.95. The decrease in current ratio is the result of decreased cash and cash equivalents due to capital expenditures and increased accounts payable and accrued liabilities. Working Capital decreased to $555,787 at the end of Fiscal Year 2003 compared with $1,100,512 at year end Fiscal Year 2002. This decrease is a result planned capital improvements and the purchase of new RV storage property. CAPITAL RESOURCES AND PLANNED EXPENDITURES The Company plans capital expenditures of $368,600 in Fiscal Year 2004 to further enhance the resort facilities and services, develop a new RV storage facility, and renovate twenty-seven campsites. Funding for these projects is expected to be from normal operating cash flows and, if necessary, supplemented with outside financing. These capital expenditures are expected to increase the Resort's value to its shareholders and the general public. RESULTS OF OPERATIONS YEAR TO YEAR COMPARISON INCOME: Increased over the prior fiscal year ended September 30, 2002, by $266,679 or 7.3%. INCOME BY SEGMENT _________________
2003 2002 ____ ____ OCCUPANCY % of Shareholder Site Use 23.2% 22.9% % of Paid Site Rental 46.9% 46.8% % Total Site Occupancy 70.2% 69.7% % of Storage Rental 99.5% 98.0% Average Paid Site $32.66 $30.51 RESORT OPERATIONS Site Rental $2,237,783 $2,085,403 Storage Operations $643,233 $616,877 Support Operations $189,756 $155,278 __________ __________ Total $3,070,772 $2,857,558 RETAIL OPERATIONS Store $531,418 $517,222 RV Repair/Parts store $321,557 $282,288 __________ __________ Total $852,975 $799,510 INTEREST INCOME $12,797 $21,958 OTHER INCOME -0- $13,104 __________ __________ TOTAL INCOME $3,936,544 $3,692,130
Occupancy rates on the above table are calculated based on the quantity occupied as compared to the total sites available for occupancy (i.e., total occupied to number of total available). Average paid site is based on site revenue and paid sites. Resort support operations include revenues received from the arcade, Laundromat, recreational activities, and other less significant sources. 2003 COMPARED WITH 2002 Resort operations income increased $213,214, or 7.4%, primarily due to a $152,380 or 7.3%, increase in site revenue. Also, the Resort realized an increase of $26,356, or 5.4%, in RV storage activity. Occupancy projections continue to look strong as the local region enjoys mild weather and an ongoing positive trend of outdoor recreation and camping. Retail operations income increased $53,465, or 6.7%, due to a 2.7% increase in General Store sales and a 13.9% increase in RV Service activity. These increases are a result of management's continuing program to increase retail from increased occupancy and efforts to stock more appropriate items, more effectively merchandise, and pay greater attention to customer service. Interest Income decreased 41.7% as a result of current financial institution trends compounded with the Company utilizing significant cash reserves. These reserves were maintained in preparation for capital expenditure projects to improve the Resort's facilities and services. Operating Expenses increased $281,046, or 11.3%, as a result of payroll, employee health insurance, workers' compensation insurance, property payments, repairs and maintenance, contracted services, and expenses associated with defending the IRS audit. Maintaining the conservative approach, most expense items were managed well below Plan and in many categories below the previous year. The Board of Directors has directed management to continue maintenance projects as needed to provide a first class resort for campers using recreational vehicles. Depreciation Expense increased 8.3% due to the purchase of equipment, property improvements, and elimination of the assets deemed to no longer have a useful life. Interest Expense increased from zero ($0) in Fiscal Year 2002 to $31,777 in 2003 due to financing the purchase of the new RV storage property and interest owed on taxes paid as a result of the IRS audit. Loss on Disposal of Fixed Assets for 2003 of $38,993, represents the reclassification of certain assets determined no longer to have a useful life and were disposed of. Income before provision for taxes on income of $303,082 is reflective of the Company's current pricing policies and continuing efforts to maximize resort services and value. This figure also represents increased depreciation, interest, and loss on sale of fixed assets. Net income decreased by $306,834, or 106.0%, despite increased revenues over the previous year. This decrease in net income is a reflection of the substantial incremental federal and state taxes paid as a result of the Internal Revenue Service tax audit settlement. The loss of $17,468 for Fiscal Year 2003 is the first negative net income for the Company in fourteen years. INFLATION has not had a significant impact on our profit position. The Company has increased rates which have more than compensated for the rate of inflation. FUTURE OPERATING RESULTS could be unfavorably impacted to the extent that changing prices result in lower discretionary income for customers and/or increased transportation costs to the Resort. In addition, increasing prices affects operations and liquidity by raising the replacement cost of property and equipment. ITEM 7 FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT Board of Directors Pismo Coast Village, Inc. Pismo Beach, California 93449 We have audited the accompanying balance sheets of Pismo Coast Village, Inc. (a California corporation) as of September 30, 2003 and 2002, and the related statements of operations and retained earnings and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pismo Coast Village, Inc. as of September 30, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. GLENN, BURDETTE, PHILLIPS & BRYSON Glenn, Burdette, Phillips & Bryson Certified Public Accountants A Professional Corporation October 31, 2003 PISMO COAST VILLAGE, INC. BALANCE SHEETS SEPTEMBER 30, 2003 AND 2002 _________________________________________________________________
2003 2002 __________ ___________ ASSETS ______ Current Assets ______________ Cash and cash equivalents $ 905,110 $1,486,370 Investment in certificate of deposit 1,109 Accounts receivable 8,410 9,101 Inventory 88,175 81,585 Current deferred taxes 34,200 34,000 Prepaid income taxes 94,200 23,000 Prepaid expenses 49,044 30,476 __________ __________ Total current assets 1,180,248 1,664,532 Pismo Coast Village Recreational Vehicle Resort and Related Assets - net 6,916,410 5,830,562 _______________________________________ Other Assets 17,756 12,737 ____________ __________ __________ Total Assets $8,114,414 $7,507,831 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ____________________________________ Current Liabilities ___________________ Accounts payable and accrued liabilities $ 96,040 $ 79,605 Accrued salaries and vacation 94,296 100,505 Rental deposits 427,000 383,910 Current portion of long-term debt 7,125 _________ __________ Total current liabilities 624,461 564,020 Long-Term Liabilities _____________________ Long-term deferred taxes 193,900 120,000 N/P Santa Lucia Bank 489,710 __________ __________ Total liabilities 1,308,071 684,020 __________ __________ Stockholders' Equity ____________________ Common stock - no par value, issued and outstanding 1,800 shares 5,647,708 5,647,708 Retained earnings 1,158,635 1,176,103 __________ __________ Total stockholders' equity 6,806,343 6,823,811 __________ __________ Total Liabilities and Stockholders' Equity $8,114,414 $7,507,831 ========== ==========
The accompanying notes are an integral part of these financial statements. PISMO COAST VILLAGE, INC. STATEMENTS OF OPERATIONS AND RETAINED EARNINGS YEARS ENDED SEPTEMBER 30, 2003 AND 2002 _______________________________________________________________
2003 2002 __________ __________ Income ______ Resort operations $3,070,772 $2,857,558 Retail operations 852,975 799,510 __________ __________ Total income 3,923,747 3,657,068 __________ __________ Costs and Expenses __________________ Operating expenses 2,774,474 2,493,428 Cost of goods sold 423,423 428,142 Depreciation 364,795 336,811 __________ __________ Total costs and expenses 3,562,692 3,258,381 __________ __________ Income from operations 361,055 398,687 Other Income (Expense) ______________________ Other income (expense) 13,104 Interest income 12,797 21,958 Interest expense (31,777) Loss on sale of fixed assets (38,993) (383) _________ __________ Total other income (expense) (57,973) 34,679 _________ _________ Income Before Provision for Income Taxes 303,082 433,366 Income Tax Expense 320,550 144,000 __________________ ________ ___________ Net Income (Loss) (17,468) 289,366 _________________ Retained Earnings- Beginning of Year 1,176,103 886,737 __________________ __________ ___________ Retained Earnings-End of Year $1,158,635 $1,176,103 _____________________________ ========== ========== Net Income (Loss) Per Share $ (9.70) $ 160.76 ___________________________ =========== ==========
The accompanying notes are an integral part of these financial statements. PISMO COAST VILLAGE, INC. STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2003 AND 2002 ________________________________________________________________
2003 2002 ___________ __________ Cash Flows From Operating Activities ____________________________________ Net income (loss) $ (17,468) $ 289,366 __________ Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 364,795 336,811 Deferred income tax 73,700 1,000 Loss on disposal of fixed assets 38,993 383 (Increase) decrease in accounts receivable 691 (981) Increase in inventory (6,590) (7,156) (Increase) decrease in prepaid expenses (18,568) 34,266 Increase in prepaid income taxes (71,200) (23,000) Increase in other assets (5,019) (4,484) Increase (decrease) in accounts payable and accrued liabilities 16,435 (19,434) (Decrease) in accrued salaries and vacation (6,209) (5,289) Increase in rental deposits 43,090 57,262 __________ ___________ Total adjustments 430,118 369,378 __________ ___________ Net cash provided by operating activities 412,650 658,744 __________ ___________ Cash Flows From Investing Activities ____________________________________ Proceeds from sale of assets 10,513 Investment in certificate of deposit (1,109) Capital expenditures (989,636) (304,852) ___________ ___________ Net cash used in investing activities (990,745) (294,339) ___________ ___________ Cash Flows From Financing Activities ____________________________________ Principal repayments of note payable (3,165) ___________ Net cash used in financing activities (3,165) ___________ Net (decrease) increase in cash and cash equivalents (581,260) 364,405 Cash and Cash Equivalents - Beginning of Year 1,486,370 1,121,965 _________________________ ___________ __________ Cash and Cash Equivalents - End of Year $905,110 $1,486,370 _______________________________________ =========== ========== Schedule of Payments of Interest and Taxes __________________________________________ Cash paid for income tax $341,050 $162,582 Cash paid for interest $31,777 Schedule of Non-Cash Investing and Financing Activities _______________________________________________________ During the year ended September 30, 2003, the Company obtained land for use as a storage lot through a note payable in the amount of $500,000.
The accompanying notes are an integral part of these financial statements. PISMO COAST VILLAGE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 _________________________________________________________________ Note 1 - Summary of Significant Accounting Policies ___________________________________________________ A. Nature of Business __________________ Pismo Coast Village, Inc. (Company) is a recreational vehicle camping resort. Its business is seasonal in nature and historically the fourth quarter, the summer, is it's busiest and generates the most revenue. B. Inventory _________ Inventory has been valued at the lower of cost or market on a first-in, first-out basis. C. Property and Equipment ______________________ Property and equipment are stated at cost. Normal, recurring, repair and maintenance costs are charged to expense as incurred. All major renovations, which will result in an extended produc- tive life, are capitalized as park improvements or leasehold improvements. Depreciation of property and equipment is computed using an accelerated method based on the cost of the assets, less allowance for salvage value, where appropriate. Depreciation rates are based upon the following estimated useful lives: Building and park improvements 5 to 40 years Furniture, fixtures, equipment and leasehold improvements 3 to 31.5 years Transportation equipment 5 to 10 years D. Earnings Per Share __________________ The earnings per share are based on the 1,800 shares issued and outstanding. E. Cash and Cash Equivalents _________________________ For purposes of the statements of cash flows, the Company considers all highly liquid investments including certificates of deposit with maturities of three months or less when purchased, to be cash equivalents. F. Concentration of Credit Risk ____________________________ At September 30, 2003, the Company had cash deposits in excess of the $100,000 federally insured limit with Santa Lucia Bank of $568,740. Santa Lucia Bank however has entered into a contract for deposit of moneys for $1,500,000 with the Company. This contract states that Santa Lucia Bank will keep as security for the Company's deposits up to $1,500,000 in U.S. Treasury securities with City National Bank of Beverly Hills. The Company receives statements quarterly from City National Bank indicating the funds held in trust. PISMO COAST VILLAGE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 PAGE 2 ______________________________ Note 1 - Summary of Significant Accounting Policies (Continued) _______________________________________________________________ G. Use of Estimates ________________ The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. H. Revenue and Cost Recognition ____________________________ The Company's revenue is recognized on the accrual basis as earned based on the date of stay. Expenditures are recorded on the accrual basis whereby expenses are recorded when incurred, rather than when paid. I. Advertising ___________ The Company follows the policy of charging the costs of advertising to expense as incurred. Advertising expense was $47,316 and $46,365 for the years ended September 30, 2003 and 2002, respectively. J. Reclassifications _________________ Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation. Note 2 - Pismo Coast Village Recreational Vehicle Resort and Related Assets _____________________________________________________________ At September 30, 2003 and 2002, property and equipment included the following:
2003 2002 __________ __________ Land $4,612,507 $3,208,617 Building and park improvements 6,802,315 6,677,338 Furniture, fixtures, equipment and leasehold improvements 267,662 487,551 Transportation equipment 443,476 332,271 Construction in progress 8,113 21,959 ___________ __________ 12,134,073 10,727,736 Less: accumulated depreciation (5,217,663) (4,897,174) ___________ ___________ $6,916,410 $5,830,562 =========== ===========
PISMO COAST VILLAGE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 PAGE 3 _____________________________ Note 3 - Line of Credit _______________________ The Company has a revolving line of credit for $500,000 with Santa Lucia Bank. The interest rate is variable based on the West Coast Prime index plus 1% with a minimum rate of 5% and a maximum rate of 30%. The purpose of the line of credit is to augment operating cash needs in off-season months. There were no outstanding amounts as of September 30, 2003 or 2002. Note 4 - Note Payable _____________________ The Company secured permanent financing on the purchase of storage lot land in Oceano with Santa Lucia Bank. The loan is for a term of ten years with a variable interest rate based on the West Coast Prime index plus 1% with a minimum rate of 7.5% and a maximum rate of 11%. The payments are $3,705 per month with the balance of the note due upon maturity in June 2013. The interest rate at September 30, 2003, was 7.5%. Future principal payments on the note payable are as follows: Year Ending September 30, _________________________ 2004 $ 7,125 2005 8,008 2006 8,630 2007 9,300 2008 10,022 Thereafter 453,750 ________ $496,835 ======== Note 5 - Common Stock _____________________ Each share of stock is intended to provide the shareholder with a maximum free use of the park for 45 days per year. If the Company is unable to generate sufficient funds from the public, the Company may be required to charge shareholders for services. A shareholder is entitled to a pro rata share of any dividends as well as a pro rata share of the assets of the Company in the event of its liquidation or sale. The shares are personal property and do not constitute an interest in real property. The ownership of a share does not entitle the owner to any interest in any particular site or camping spot. PISMO COAST VILLAGE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 PAGE 4 _____________________________ Note 6 - Income Taxes _____________________ The provision for income taxes consists of the following components:
2003 2002 ________ ________ Current: Federal $ 66,200 $108,000 State 33,000 36,000 Incremental federal tax due to resolution of tax audit 117,600 Incremental state tax due to resolution of federal tax audit 30,050 ________ ________ 246,850 144,000 Deferred: Federal 67,300 1,000 State 6,400 (1,000) ________ ________ $320,550 $144,000 ======== ========
The deferred tax assets (liabilities) are comprised of the following:
2003 2002 __________________ ___________________ Current Long-term Current Long-term _______ _________ _______ __________ Deferred tax assets: Federal $31,400 $ $31,000 $ State 2,800 3,000 Deferred tax liabilities: Federal (163,700) (96,000) State (30,200) (24,000) _______ __________ _______ _________ $34,200 $(193,900) $34,000 $(120,000) ======= ========== ======= =========
The deferred tax assets (liabilities) consist of the following temporary differences:
2003 2002 __________ __________ Depreciation $(193,900) $(120,000) __________ __________ Total gross deferred tax liabilities (193,900) (120,000) __________ __________ Vacation accrual 13,700 15,000 Miscellaneous 20,500 19,000 __________ __________ Total gross deferred tax assets 34,200 34,000 __________ __________ $(159,700) $(86,000) ========== ==========
PISMO COAST VILLAGE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 PAGE 5 _____________________________ Note 6 - Income Taxes (Continued) _________________________________ The Company has not recorded a valuation allowance for deferred tax assets since the benefit is expected to be realized in the following year. The effective income tax rate varies from the statutory federal income tax rate as follows:
2003 2002 ______ ______ Statutory federal income tax rate 34.0% 34.0% Increase (decrease): State income taxes, net of federal benefit 8.6 5.4 Effect of graduated tax rates (2.0) Nondeductible variable costs of shareholder usage 13.5 Incremental tax due to resolution of tax audit 48.9 Miscellaneous 3.0 ______ ______ Effective Income Tax Rate 106.0% 39.4% ====== ======
The Company recorded incremental tax expenses during the year ended September 30, 2003, related to (1) the resolution of an IRS audit for the years ending September 30, 2000 and 2001, (2) amended state tax returns for the years ending September 30, 2000 and 2001, and (3) additional amounts paid with the federal and state income tax returns for the year ending September 30, 2002. The incremental taxes related to nondeductible variable costs associated with shareholder usage of the park. The impact of these nondeductible costs for the year ending September 30, 2003, is included in the current provision for income taxes. PISMO COAST VILLAGE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 PAGE 6 _____________________________ Note 7 - Operating Expenses ___________________________ Operating expenses for the years ended September 30, 2003 and 2002, consisted of the following:
2003 2002 __________ __________ Administrative salaries $ 259,944 $ 223,045 Advertising and promotion 47,316 46,365 Auto and truck expense 57,847 36,379 Bad debts 1,207 111 Contract services 148,433 137,968 Corporation expense 42,247 44,807 Custodial supplies 14,732 15,307 Direct labor 813,069 759,882 Employee travel and training 21,665 16,511 Equipment lease 3,679 4,215 Insurance 315,478 213,491 Miscellaneous 29,614 33,415 Office supplies and expense 38,171 49,569 Payroll tax expense 91,602 84,485 Professional services 71,713 65,970 Property taxes 52,494 48,981 Recreational supplies 7,109 16,258 Rent - storage lots 69,705 66,138 Repairs and maintenance 112,522 93,459 Retail operating supplies 5,095 5,095 Security 119,803 98,490 Service charges 73,641 63,153 Taxes and licenses 8,691 6,770 Telephone 32,037 30,606 Uniforms 14,826 12,733 Utilities 321,834 320,225 __________ __________ Total Operating Expenses $2,774,474 $2,493,428 ========== ==========
PISMO COAST VILLAGE, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2003 AND 2002 PAGE 7 _____________________________ Note 8 - Operating Leases _________________________ The Company leases two pieces of property to use as storage lots. One is leased under a cancelable month-to-month lease. The other was renewed effective January 2001, for five years with an option to extend for an additional five years. Monthly lease payments are currently $2,554 and are increased annually based on the Consumer Price Index. The Company also leases an ATM machine for the public's use in the General Store. Lease payments on the ATM machine are $152 per month through May 2006. Future minimum lease payments under the second property lease and the obligation to lease equipment are as follows: Year Ended September 30, ________________________ 2004 $32,468 2005 32,468 2006 8,878 _______ $73,813 ======= Rent expense under these agreements was $69,705 and $66,138 for the years ended September 30, 2003 and 2002, respectively. Note 9 - Employee Retirement Plans __________________________________ The Company is the sponsor of a 401(k) profit-sharing pension plan, which covers substantially all full-time employees. Employer contributions are discretionary and are determined on an annual basis. The contribution to the pension plan, which is reported under direct labor, for the years ended September 30, 2003 and 2002, is $10,562 and $11,810, respectively. INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION ____________________________ Board of Directors Pismo Coast Village, Inc. Pismo Beach, California 93449 Our report on our audits of the basic financial statements of Pismo Coast Village, Inc. as of September 30, 2003 and 2002, appears on page 3. Those audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The statements of operations (unaudited) for the three months ended September 30, 2003 and 2002, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the basic financial statements, and, accordingly we express no opinion on it. GLENN, BURDETTE, PHILLIPS & BRYSON Glenn, Burdette, Phillips & Bryson Certified Public Accountants A Professional Corporation October 31, 2003 PISMO COAST VILLAGE, INC. STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 _________________________________________________________________
2003 2002 __________ __________ Income ______ Resort operations $1,095,770 $1,030,261 Retail operations 311,341 282,561 __________ __________ Total income 1,407,111 1,312,822 Costs and Expenses __________________ Operating expenses 771,920 699,348 Cost of goods sold 151,358 154,850 Depreciation 95,449 90,528 __________ __________ Total costs and expenses 1,018,727 944,726 __________ __________ Income from operations 388,384 368,096 Other Income (Expense) ______________________ Other income(expense) 1,101 Interest income 2,267 4,738 Interest expense (13,440) Loss on sale of fixed assets (38,993) (383) ___________ _________ Total other income (expense) (50,166) 5,456 ___________ _________ Income Before Provision For Income Taxes 338,218 373,552 ________________________________________ Provision for Tax Expense 192,266 121,904 _________________________ ___________ _________ Net Income $145,952 $251,648 __________ =========== ========= Earnings Per Share $81.08 $139.80 __________________ =========== =========
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Inapplicable. PART III ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT (a) The Company's Directors were chosen at the Shareholder's Annual Meeting on January 18, 2003. Two directors passed away during the fiscal year, Albert Brown in March 2003 and Thomas Rourke in September 2003. The Directors serve for one year, or until their successors are elected. The names, ages, background and other information concerning the Directors, including other offices held by the Directors with the Company, are set forth below. The following is a list of the Company's Directors and Executive Officers setting forth their functions and experience. There is no understanding or agreement under which the Directors hold office. HOWARD ALLARD, Director Howard Allard, age 78, resides at 5161 Diablo Drive, Sacramento, California 95842. He has a Master's degree in education administration from California State University, Sacramento. He was an elementary school principal in the Rio Linda Union School District for 29 years prior to retirement in 1985. He has been a partner since 1978 in Allard Enterprises which maintains rental properties, and he has also been a partner since 1982 in Allard Limousine. Mr. Allard has served on the Board for 23 years, including three years as President, two years as Secretary, and one year as Vice President - Administration. LOUIS BENEDICT, Director Louis Benedict is 76 years old and resides at 20955 De Mina Street, Woodland Hills, California 91364. Mr. Benedict served in the U. S. Navy from 1944 to 1946, and again during the Korean War, from 1952 to 1953. He attended the University of Southern California, majoring in electrical engineering, and following that, earned a B. S. degree in Electrical Engineering at the University of Colorado. Mr. Benedict was employed from 1957 to 1962 as a Project Engineering Manager with Lockheed Missiles and Space, from 1962 to 1964 as a Vice President with William A. Revelle Corporation, and from 1964 to 1966 as an Engineering Section Manager with Lockheed Missiles and Space. From 1966 to 1975 he was employed as the Director of Sub-Contract Administration with Litton Industries, from 1975 to 1994 as Vice -President of Contract Administration for Datametrics Corporation, and from 1994 to 1998 as a consultant in the field of U S Defense Contracts Administration. Mr. Benedict retired in 1998. He has served on the Board of Directors for two years. KURT BRITTAIN, Director and Vice President - Secretary Kurt Brittain is 73 years old and resides at 12105 Center Avenue, San Martin, California 95046. After his Marine Corps service, he was employed for more than 33 years by Orange County California, until his retirement in 1986. His background includes public works, flood control and manager of the county's harbors, beaches and parks system. He was in charge of three harbors, seven beaches and more than 26 parks, three of which were camping parks. He has completed extension courses in business administration, management, recreation and real estate. Mr. Brittain was elected to serve as Vice President - Secretary at the Board of Directors Meeting held September 21, 2002, to fill a vacancy in that office created by the resignation of Edward Hinds, Jr. He has served on Board for eleven accumulative years, from 1990 to 1999, and from January 2002 to present, serving one year as Vice President - Administration, three years as Vice President - Secretary, and five years as Executive Vice President. HARRY BUCHAKLIAN, Director Harry Buchaklian is 71 years old. He resides at 1361 East Ticonderoga Drive, Fresno California 93720. He has a B.A. degree from C.S.U.F. in industrial arts, and a secondary level teaching credential in laboratory electronics and small engine repair. His career has included employment as an assistant manager with Western Auto Stores, electronics instructor at Fresno Technical College and technical supervisor for Sears Roebuck. He retired from Sears Roebuck in 1994. He has served on the Board for 19 accumulative years, including most recently from September 1995 to present, serving one year as Executive Vice President. During his service on the Board, he has served as a Chairman of the Policy and Audit Committees. J. RUSSELL CARLSON, Director J. Russell Carlson is 60 years old. He resides at 1286 West Eymann Avenue, Reedley, California 93654. He holds a B. A. degree in music education and a California Life Teaching Credential from CSU Fresno. Mr. Carlson taught instrumental music for twenty-one years in Reedley and Visalia, California, prior to his retirement in June 2002. Prior to teaching, he worked as service manager for American Air Company and Sequoia Plumbing, a mechanical engineer and plumbing company in Visalia, California for eight years. He also owned a Napa Auto Parts store in Exeter, California for eight years. Mr. Carlson has served on the Board for two years. DOUGLAS EUDALY, Director Douglas Eudaly, age 72, resides at 3918 North Carruth Avenue, Fresno California 93705-2001. He has an Associate of Arts Degree from Fresno City College in elementary education, and a Bachelor's degree in elementary education from Fresno State College. He has done doctoral studies at Nova University in Ft. Lauderdale, Florida, and received a Ph.D. from Clayton Theological Institute in Clayton, California. He holds Life Teaching Credentials for Elementary and Junior High School, and Administrative Credentials for preschool through adult school. He retired from the Fresno Unified School District in 1991 with 31 years of service credit the last five years as program director for the Disability Awareness Program. Dr. Eudaly was President of the Fresno Teacher's Association in 1970-71, as well as chairman of the District's Negotiating Council, and served one term as Chief Negotiator. He served three years as President of the Board of Directors for Friendship Center for the Blind, and as chairman of several advisory committees for food banks and other nonprofit organizations. He served over three years as the Deacon Chairman at the Evangelical Free Church of Fresno. Dr. Eudaly has served on the Board for two years. WILLIAM L. FISCHER, Director William (Bill) Fischer, age 69, resides at 1947 Sienna Lane, Simi Valley, California 93065. He has been married 46 years and served in the U. S. Air Force during the Korean War. Mr. Fischer is a graduate of California State University, Northridge with a B. S. degree in accounting. He worked in the aerospace, entertainment and public utility industries until 1969 when he was hired by Getty Oil Company's Corporate Office as an accounting supervisor. Subsequently, Texaco, Inc., acquired Getty Oil in 1985 and he was promoted to Manager of Benefits Plans Accounting. Mr. Fischer was responsible for the Savings/Thrift, 401-K, and ESOP Plans Administration until 1989 when he elected early retirement. He then went into residential real estate and also has been a financial consultant to various companies until August 2001. He has active Real Estate Broker and Tax Preparer licenses. He is a member of the Veterans of Foreign Wars and Knights of Columbus. He looks forward to contributing his financial background to the Board of Directors. Mr. Fischer has served on the Board for two years. NORMAN GOULD, Director Norman Gould is 84 years old. He resides at 10597 Road 30, Madera, California 93637. He has a B.A. in education and an M.A. in administration. His occupation prior to retirement in 1987 was as the superintendent of schools for Madera County. He was a member of the board of directors of Kingsview, Inc., from 1968 to 1980 and held the positions of vice chairman and chairman of the board. He is currently on the board of directors of Valley Teen Ranch, Inc. Mr. Gould is currently president of the California Retired Teachers Foundation, a nonprofit corporation. He has served on the Board for 26 accumulative years, including most recently from March 1993 to present, serving nine years as President, one year as Treasurer and two years as Secretary. R. ELAINE HARRIS, Director R. Elaine Harris is 65 years old. She resides at 3418 El Potrero Lane, Bakersfield, California 93304. Mrs. Harris retired in October 1990 from Pacific Telephone with 31 years service, starting in the business office, then advancing to facility administrator the last ten years of that time. She was active with the Jaycettes Club and has worked on several political campaigns. She is now enjoying retirement and feels very blessed serving on the Board for the past four years. She is looking forward to continuing serving the shareholders. GLENN HICKMAN, Director and Executive Vice President Glenn Hickman is 70 years old. He resides at 3584 West Wathen Avenue, Fresno, California 93711. He has a B. A. in Business and a secondary teaching credential from Fresno State University. His occupation prior to retirement in 1995 was as a financial analyst and office supervisor for Cal Resources, a subsidiary of Shell Oil Company. Mr. Hickman has served on the Board for five years, and is currently serving as Executive Vice President. TERRIS HUGHES, Director Terris (Terry) Hughes, is 54 years old and resides at 2426 Sunset Street, Wasco, California 93280. Mr. Hughes holds an A.A. degree from Bakersfield Junior College in police science. He was employed by Cal Resources LLC for 23 years, from 1973 to 1997, holding the position of senior training technician for the last 10 years of that time. He is currently employed as an internal consultant for Aera Energy LLC, an oil industry company formed in 1997 between the Shell Oil and Mobil Oil Corporations. His duties are to serve as a behavior-base safety advisor and provide safety training to Aera Energy LLC employees. Mr. Hughes has served on the Board for eight years, including one year as Vice President - Policy. RONALD NUNLIST, Director and Vice President - Policy Ronald Nunlist, age 65, resides at 1105 Minter Avenue, Shafter, California 93263. Mr. Nunlist was employed in the oil business for many years. From 1995 to June 1997, he was employed as an operations foreman by Cal Resources LLC, an oil industry company owned by Shell Oil Corporation. Mr. Nunlist was then employed as a logistics specialist by Aera Energy LLC, an oil industry company formed between the Shell Oil and Mobil Oil Corporations, from June 1997 until his retirement in June 1999. He has served on the Board for 18 years, including five years as President, and is currently serving a second year as Vice President - Policy. JERALD PETTIBONE, Director and President Jerry Pettibone, age 77, resides at 4179 Court Drive, Santa Cruz, California 95062. He sold and retired from his company, Pettibone Signs, in Santa Cruz in October 1988. He started the company which operated statewide in 1960. Active in trade associations, he served on the board of directors of the National Electric Sign Association, and on the board of directors of the World Sign Association, serving as national president in 1985- 1986. He served on the board of directors of the California Electric Sign Association for 22 years and was elected a director emeritus. He has served on the Board for ten years, including three years as Chief Financial Officer, and is currently serving a seventh year as President. GARY WILLEMS, Director Gary Willems is 49 years old. He resides at 479 South Oak Drive, Reedley, California 93654. He holds a B.A. degree in Music Education and a California Life Teaching Credential from Fresno Pacific University. Mr. Willems has been teaching music since 1977, and since 1985 has been the Director of Bands at Reedley High School. He is an active member of the California Band Directors' Association and is the Past President of Fresno and Madera Counties Music Educators' Association. Mr. Willems has served on the Board of Directors for three years. JACK WILLIAMS, Director, Vice President - Finance, and Chief Financial Officer Jack Williams is 53 years old. He resides at 7801 Revelstoke Way, Bakersfield, California 93309. Mr. Williams graduated from San Diego State University in 1974 with a B.S. in accounting. Following that, he has been employed in the field of accounting in a variety of industries, including agriculture, construction, heavy equipment sales, and manufacturing. Mr. Williams established his own C.P.A. practice in 1983. He was employed as a Financial Analyst by Texaco Oil Corporation in the Bakersfield area from 1997 until March 1999. Mr. Williams has been employed with Goodwill Industries of South Central California as a Director of Business Services since March 2000. He has served on the Board of Directors for nine years, and is currently serving a seventh year as Chief Financial Officer and Vice President - Finance. CHARLES ZAHKA, Director Charles Zahka, age 77, resides at 6300 Alonzo Avenue, Encino, California 91316. He retired as vice president of the Broadway Department Stores in 1990 after 20 years. He presently serves as a private management consultant. Mr. Zahka is president of the Stroke Association of Southern California and vice chairman of the Better Business Bureau of the Southland. He has served on the Board for fifteen years, including one year as Secretary and one year as President. ALBERT BROWN, Director Albert Brown was 80 years old. He resided at 22718 Lone Eagle Road, Apple Valley, California 92308. He was employed at Hughes Aircraft for 20 years, from 1945 to 1965, TRW Systems for 3.5 years, from 1965 to 1968, and Rohr Industry, Inc., for 11.5 years, from 1968 until his retirement in 1979. He worked his way up from being an assembler to a senior industrial engineer, reporting directly to the manager of industrial engineering. He has completed extensive continued education in the field of industrial engineering at U.S.C. Mr. Brown passed away in March 2003, having served on the Board for nineteen years. THOMAS ROURKE, Director Thomas Rourke was 66 years old. He resided at 899 Stagi Lane, Los Altos, California 94024. Mr. Rourke graduated from the University of Massachusetts in 1965 with a B.B.A. degree. He was vice president of operations at Lynch Communications, Inc., in Reno, Nevada from 1980-1982, and president of Lynch Circuits, Inc., in Sunnyvale, California from 1982-1987. He was most recently president and chairman of the board of Startech Electronics, Inc., a management consulting company, in Mountain View, California, a position he held since 1988. Mr. Rourke passed away in September 2003, having served as a member of the Board of Directors for eight years. (b.) Other Officers and Significant Employees: JAY JAMISON, Assistant Corporate Secretary and General Manager Jay Jamison, 50 years old, has been employed by the Company since June 1997 as General Manager and serves as Assistant Corporate Secretary. He resides at 17105 Oak Road, Atascadero, California 93422. He has a B.S. degree in Agricultural Management from Cal Poly San Luis Obispo, graduating in 1976. Mr. Jamison was raised on his family's guest ranch, Rancho Oso, in Santa Barbara County, which included a recreational vehicle park, resident summer camp, equestrian facilities and numerous resort amenities. He worked on the ranch throughout his childhood and after college. The family business was sold in 1983, at which time Mr. Jamison was hired by Thousand Trails, Inc., a private membership resort, as a Resort Operations Manager. His last ten years at Thousand Trails were spent managing a 200-acre, 518-site, full-service resort near Hollister, California. He also managed resorts in Acton and Idyllwild in Southern California. Prior to his employment with the Company, Mr. Jamison was a General Manager with Skycrest Enterprises in Redding and managed Sugarloaf Marina and Resort on Lake Shasta in Northern California between January 1995 and June 1997. He is active in the Resort and Commercial Recreation Association and is also a member of the American Quarter Horse Association. Mr. Jamison was appointed to and has served as a commissioner on the Pismo Beach Conference and Visitors Bureau since February 1998, and since August 1999 has served as Chair. At the National Association of RV Parks and Campgrounds' Annual Convention in November 1999, Mr. Jamison was appointed to the ARVC Board of Directors representing the ten western states. At the 2001 Annual Convention, he was elected Treasurer of the National Association, and in November 2003, he was reelected to serve a third one year term. In June of 2002, Mr. Jamison was installed as a Director on the Board for the San Luis Obispo County Chapter of the American Red Cross and in June 2003 was elected Treasurer. (c.) FAMILY RELATIONSHIPS There are no familial relationships between the Directors nor between the Directors and the Officers. (d.) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS. To the knowledge of the Company, none of the officers or directors have been personally involved in any bankruptcy or insolvency proceedings. To the knowledge of the Company, none of the directors or officers have been convicted in any criminal proceedings (excluding traffic violations and other minor offenses) or are the subject of a criminal proceeding which is presently pending, nor have such persons been the subject of any order, judgment, or decree of any court of competent jurisdiction, permanently or temporarily enjoining them from acting as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director or insurance company, or from engaging in or continuing in any conduct or practice in connection with any such activity or in connection with the purchase or sale of any security, nor were any of such persons the subject of a federal or state authority barring or suspending, for more than 60 days, the right of such person to be engaged in any such activity, which order has not been reversed or suspended. (e.) AUDIT COMMITTEE FINANCIAL EXPERT The Company's Board of Directors has not yet designated an Audit Committee expert. (f.) CODE OF ETHICS On November 8, 2003, our board of directors adopted our code of ethical conduct that applies to all the Company's employees and directors, including our principal executive officer, principal financial officer, principal accounting officer or accounting supervisor, and persons performing similar functions. We believe the adoption of our Code of Ethical Conduct is consistent with the requirements of the Sarbanes-Oxley Act of 2002. The Company's Code of Ethical Conduct is designed to deter wrongdoing and to promote: * Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; * Full, fair, accurate, timely and understandable disclosure in reports and documents that we file or submit to the Securities and Exchange Commission and in other public communications made by us; * Compliance with applicable governmental laws, rules and regulations; * The prompt internal reporting to an appropriate person or persons identified in the code of violations of our Code of Ethical Conduct; and * Accountability for adherence to the Code. (G.) COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities within specified time periods to file certain reports of ownership and changes in ownership with the SEC. The Company is not aware of any failure to file reports or report transactions in a timely manner during the fiscal year ended September 30, 2003, by any director or officer. ITEM 10 EXECUTIVE COMPENSATION No Officer or Director was paid more than $100,000 during the past fiscal year. REMUNERATION OF DIRECTORS AND OFFICERS The directors and officers received no cash remuneration for their service. However, the directors and officers are entitled to mileage reimbursement for travel to and from meetings upon request. In addition, they are entitled to use of the Resort for attending meetings and are provided with food and refreshments in connection with Board Meetings. The aggregate value of the foregoing during the fiscal year ended September 30, 2003, was estimated at $19,746. OPTIONS, WARRANTS OR RIGHTS The Company has no outstanding options, warrants or rights to purchase any of its securities. INDEBTEDNESS OF MANAGEMENT No member of management was indebted to the Company during its last fiscal year. ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS Not applicable. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a.) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS No person owns beneficially of record more than 5% of the Company's securities. (b.) SECURITY OWNERSHIP OF MANAGEMENT. The following sets forth the securities beneficially owned, directly, by all directors and officers as a group as of September 30, 2003:
Amount of Percent Board Member Title of Class Ownership of Class ____________ ______________ _________ ________ Howard Allard Common Stock 1 Share 0.056% 5161 Diablo Avenue Sacramento CA 95842 Louis Benedict Common Stock 1 Share 0.056% 2955 De Mina Street Woodland Hills CA 91364 Kurt Brittain Common Stock 2 Shares 0.111% 12105 Center Avenue San Martin CA 95046 Harry Buchaklian Common Stock 1 Share 0.056% 1361 East Ticonderoga Drive Fresno CA 93720 J. Russell Carlson Common Stock 2 Shares 0.111% 1286 West Eymann Avenue Reedley CA 93654 Douglas Eudaly Common Stock 6 Shares 0.333% 3918 North Carruth Avenue Fresno CA 93705 William Fischer Common Stock 1 Share 0.056% 1947 Sienna Lane Simi Valley CA 93065 Amount of Percent Board Member Title of Class Ownership of Class ____________ ______________ _________ ________ Norman Gould Common Stock 1 Share 0.056% 10597 Road 30 Madera CA 93637 R. Elaine Harris Common Stock 4 Shares 0.222% 3418 El Potrero Lane Bakersfield CA 93304 Glenn Hickman Common Stock 1 Share 0.056% 3584 West Wathen Avenue Fresno CA 93711 Terris Hughes Common Stock 1 Share 0.056% 2426 Sunset Street Wasco CA 93280 Ronald Nunlist Common Stock 4 Shares 0.222% 1105 Minter Avenue Shafter CA 93263 Jerald Pettibone Common Stock 2 Shares 0.056% 4179 Court Drive Santa Cruz CA 95062 Thomas Rourke Common Stock 2 Shares 0.056% 899 Stagi Lane Los Altos CA 94024 Gary Willems Common Stock 2 Shares 0.111% 479 South Oak Drive Reedley CA 93654 Jack Williams Common Stock 1 Share 0.056% 7801 Revelstoke Way Bakersfield CA 93309 Charles Zahka Common Stock 1 Shares 0.056% 6300 Alonzo Way Encino CA 91316 All Officers and Directors as a Group Common Stock 31 Shares 1.722%
All such shares are owned beneficially and of record, there are no additional shares known to the Company for which the listed beneficial owner has the right to acquire beneficial ownership as specified in Rule 13D-3(d)(1) of the Exchange Act. (c.) CHANGES IN CONTROL Not applicable ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There have been no transactions during the past two years, or proposed transactions, to which the Company was or is to be a party, in which any of the officers, directors, nominees, named shareholders, or family members of any such persons, had or is to have a direct or indirect material interest, other than transac- tions where competitive bids determine the rates or charges involved, or where the amount involved does not exceed $60,000, or where the interest of the party arises solely from the owner- ship of securities of the Company and the party received no extra or special benefit that was not shared by all shareholders. ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K (a.) EXHIBITS AND INDEX OF EXHIBITS. Documents filed as part of the report: Independent Auditor's Report Balance Sheets as of September 30, 2003 and 2002 Statements of Operations and Retained Earnings (Deficit) for the years ended September 30, 2003 and 2002 Statements of Cash Flows for the years ended September 30, 2003 and 2002 Notes to Financial Statements (b.) Reports on Form 8-K: None have been filed during the last quarter of the period covered by this report. ITEM 14. CONTROLS AND PROCEDURES. a. Evaluation of disclosure controls and procedures. Within the 90 days prior to the 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 and Chief Financial Officer, of the effectiveness of the design and operation of the company's disclosure controls and procedures pursuant to Exchange Act rule 13a-14(c). Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective. b. Changes in internal controls. There have been no significant changes in the company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation. SIGNATURES __________ In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PISMO COAST VILLAGE, INC. By: /s/ JERALD PETTIBONE Date: November 8, 2003 Jerald Pettibone, President and Chairman of the Board In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ KITTY KARSTETTER Date: November 8, 2003 Kitty Karstetter, Accounting Supervisor and Principal Accounting Officer By: /s/ JERALD PETTIBONE Date: November 8, 2003 Jerald Pettibone, President and Chairman of the Board By: /s/ GLENN HICKMAN Date: November 8, 2003 Glenn Hickman, Executive Vice President and Director By: /s/ KURT BRITTAIN Date: November 8, 2003 Kurt Brittain, Vice President - Secretary and Director By: /s/ JACK WILLIAMS Date: November 8, 2003 Jack Williams, Chief Financial Officer, Vice President - Finance and Director By: /s/ RONALD NUNLIST Date: November 8, 2003 Ronald Nunlist, Vice President - Policy and Director By: /s/ HOWARD ALLARD Date: November 8, 2003 Howard Allard, Director By: /s/ LOUIS BENEDICT Date: November 8, 2003 Louis Benedict, Director By: /s/ HARRY BUCHAKLIAN Date: November 8, 2003 Harry Buchaklian, Director By: /s/ J. RUSSELL CARLSON Date: November 8, 2003 J. Russell Carlson, Director By: /s/ DOUGLAS EUDALY Date: November 8, 2003 Douglas Eudaly, Director By: /s/ WILLIAM FISCHER Date: November 8, 2003 William Fischer, Director By: /s/ NORMAN GOULD Date: November 8, 2003 Norman Gould, Director By: /s/ R. ELAINE HARRIS Date: November 8, 2003 R. Elaine Harris, Director By: /s/ TERRIS HUGHES Date: November 8, 2003 Terris Hughes, Director By: /s/ GARY WILLEMS Date: November 8, 2003 Gary Willems, Director By: /s/ CHARLES ZAHKA Date: November 8, 2003 Charles Zahka, Director