UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

For the fiscal year ended December 31, 2003
OR

For the Transition period from ____ to ____

Commission file number: 0-10067

46147 7th Street West
Lancaster, CA 93534
(Address of principal executive offices)

Registrant’s telephone number, including area code: (661) 726-0565

Securities registered pursuant to Section 12(b) of the Act: None

Name of each exchange on which registered: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

Aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the price at which the common stock was last sold, or the average bid and asked price of such common stock, as of the last business day of the Registrant’s most recently completed second fiscal quarter — $6,146,895 (As of June 30, 2003).

As of April 12, 2004 there were 5,872,700 shares of the Registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None.

TABLE OF CONTENTS

PART I

Item 1. Business

     Rexhall Industries, Inc. (the “Company”) designs, manufactures and sells to dealers Class A motorhomes. Class A motorhomes are self-contained and self-powered recreational vehicles used primarily in conjunction with leisure travel and outdoor activities. The Company began operations in July 1986 as a general partnership and conducted business in that form until December 31, 1986, when the assets and business of the partnership were contributed to Rexhall Industries, Inc., a California corporation, which assumed the liabilities of the partnership. Rexhall Industries, Inc. was incorporated in California in June 1986, but except for organizational activities, conducted no operations until January 1, 1987. As used herein, the “Company” refers to Rexhall Industries, Inc. and its wholly-owned subsidiary, Price I, Inc. Price I, Inc. which the Company organized in June 2000 to operate a retail dealership for Class A motorhomes and other recreational vehicles, ceased retail operations in December 2000 and then ceased all other operations (consisting of operating a service facility) in December 2003.

     The following are trademarks of the Company: Rexhall®, RoseAir, RexAir®, Aerbus™, Vision®, American Clipper™, Anthem™, Concord™, Minibus™, EntrySlide™, and T-Rex Double & Wide™.

     The Company produces all of its products from its manufacturing facility in Lancaster, California, which also serves as its corporate headquarters. These facilities and the Company’s corporate headquarters are located at 46147 7th Street West, Lancaster, CA 93534 and the Company’s telephone number is (661) 726-0565.

Class A Motorhomes

     Based upon industry standards established by the Recreation Vehicle Industry Association (“RVIA”), the Company manufactures certain product lines classified as conventional or Class A motorhomes. Conventional or Class A motorhomes are self-powered vehicles built on a motor vehicle chassis, with engine and drive train components which are supplied by a motor vehicle manufacturer, such as Ford Motor Co., Spartan Motors Chassis, Inc. and Workhorse Custom Chassis LLC. The interior of the completed vehicle typically includes a kitchen and bathroom, as well as drivers, dining and sleeping areas. Class A motorhomes are self-contained with their own electrical generation, lighting, heating, cooking and refrigeration facilities, waste disposal and water storage tanks, permitting occupancy without requiring connection to utilities. While not designed or intended as permanent housing, Class A motorhomes do provide comfortable living quarters for short periods, particularly for people interested in travel and outdoor recreational activities.

     Class A motorhomes are different from mobile homes, which are manufactured housing designed for permanent or semi-permanent residential dwelling and, although movable, are not used for transportation. Class A motorhomes are also different from other recreational vehicles, such as Class B van campers, which are smaller and do not provide all of the features that typically are standard on Class A motorhomes; Class C mini-low profile and compact motorhomes, which are built on a van or small truck chassis that is supplied with an engine and finished cab section and are differentiated by size; and travel trailers, which are non-motorized vehicles designed to be towed by automobiles, pick-up trucks and vans, and generally by law may not be used as living quarters unless stationary. Travel trailers are further classified as conventional, fifth wheel and hybrid, and are generally differentiated by the method and vehicle employed for towing, their size, configuration and use. Other recreational vehicle categories include folding camping trailers, park trailers, truck campers, and van conversions.

     As Class A motorhomes are self-contained with kitchen, bathroom facilities and sleeping quarters, it is eligible to be treated as a “qualified residence” under the Internal Revenue Code of 1986, as amended. Thus, as in the case of other recreational vehicles suitable for overnight use, a purchaser may generally deduct interest on debt incurred to acquire a Class

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A motorhome provided the purchaser designates and uses it as one of no more than two residences and otherwise meets the requirements of the Internal Revenue Code of 1986.

Industry

Based on information furnished in March 2004 by the Recreation Vehicle Industry Association in Reston, Virginia, the following table sets forth comparisons of units and dollar sales of all recreational vehicles and Class A motorhomes in the United States compared with units and dollar sales of the Company during the years ended December 31, 2003, 2002 and 2001:

     Approximately 77 million Americans were born between the years of 1946 and 1964. Commonly known as “baby boomers”, the Company believes that baby boomers have been the historical group of potential Class A motorhome purchasers. Although the typical Class A motorhome buyers are over the age of 60, increasing disposable income in the 40 to 60 year old age group is expanding the potential Class A market. The Company’s continued product development combined with the unified efforts of the recreational vehicle industry as a whole to capture the attention of the 40 year old and greater population heralds the future growth potential of the Company’s target market.

The Company’s Motorhomes

     The Company’s motorhomes are built with attention to quality. The materials used by the Company in constructing its motorhomes are commonly found on more expensive models and, in the opinion of management, generally are superior to those found on motorhomes in the same price range as the Company’s motorhomes. The Company uses only steel, as opposed to wood or aluminum, in framing its cage. The Company uses gel-coated, high gloss, one-piece fiberglass panels for the sidewalls, and molded fiberglass front caps, rear caps and roofs, which are construction techniques used in more expensive motorhomes and eliminating many of the seams commonly found in most motorhomes. Fiberglass is generally easier to repair collision marks and scrapes than aluminum, which is the other material commonly used in sidewall construction. The Company uses polyurethane foam and polystyrene for insulation.

     The Company’s motorhomes are also built with attention to aerodynamics, by using a streamlined

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bus-style front cap that tapers to a width broader at the junction with the sidewalls than at the leading edge of the nose. This styling, coupled with rounded corners throughout the coach, contributes to a smooth ride, even in high winds or when large trucks or trailers pass the motorhome.

     The Company currently offers five lines of Class A motorhomes: RoseAir™, RexAir®, Aerbus™, American Clipper™ and Vision®. The Company’s Class A line offers many models and floor plans with multiple decors. These various models come with the following chassis and engine types:

	•		Ford F-53 chassis with a 310 H.P. 6.8L Triton sequential electronic fuel injection (SEFI) gas engine
	•		Workhorse chassis with a 340 H.P. V8 General Motors Vortec 8100 (L18) gas engine
	•		Spartan Mountain Master chassis with a 300, 350 or 370 H.P. 8.3 liter ISC diesel engine
	•		Workhorse chassis with a 400 H.P. 8.9 liter Cummins ISL turbocharged electronic diesel engine

     Models range in size from an overall length of approximately 27 feet to approximately 40 feet with wheelbase ranging from 178 inches to 252 inches. All models have an overall maximum width of eight and one half feet (102” widebody) with a height (including air conditioner) of approximately thirteen feet.

     In addition to size of chassis, RoseAir™, RexAir®, Aerbus™, American Clipper™ and Vision® models are differentiated by exterior graphics, floor plans and sleeping accommodations. Depending on the model, each motorhome is equipped to sleep four to six adults comfortably. Standard features and equipment on all the Company’s models include a 75 or 100 gallon fuel tank (depending on chassis and model), halogen headlights, dash air conditioning, power steering, automatic transmission, radial tires, stabilizing air bags, 34,000 or 35,000 BTU furnace, water heater, batteries mounted on a slide-out tray for easy access and service, and a powered entry step. Standard interior features include a double-door, flush-mounted refrigerator/freezer, a three-burner range with automatic pilot light, a large two-bowl kitchen sink, a toilet, a fiberglass shower surround, a bathroom sink, coordinating designer accents, and day/night shades. Additional standard equipment includes a television with antenna, an AM/FM stereo radio with cassette player, auxiliary power generators, a microwave oven, roof air conditioners, and a videocassette recorder. Optional equipment items that may be ordered include a back up camera, washer and dryer, hydraulic leveling jacks, electric and heated mirrors, 50 AMP service, entertainment center, satellite dish, patio awning, ducted roof air conditioning, dual-pane windows, and a simulated fireplace. Some models may vary in standard equipment.

     In third quarter of 2003, the Company announced its new T-Rex Double & Wide floor plan. Available in both gas and diesel models, the T-Rex incorporates slideouts that extend nearly the length of the motorhome on both sides, from behind the driver’s and passenger’s seats, to the rear cap. When fully extended, the opposing slides provide a considerable increase (nearly double) to the interior space without compromising safety, structural integrity or value.

     The suggested retail prices of the Company’s diesel models range from $148,000 to $206,000 with standard equipment, while the suggested retail prices for the Company’s gas models range from $76,000 to $132,000 with standard equipment.

Specialty Vehicles

     In addition to its line of Class A motorhomes, the Company also manufactures and sells specialty vehicles. These vehicles are designed for diverse purposes and varied users, some of which include mobile command posts for police and fire departments, and mobile classrooms. Some of the Company’s specialty units are also modified to be wheelchair accessible. During 2003, 2002, and 2001, sales of specialty vehicles amounted to less than 1% of total revenues. Although the Company has no intention of phasing out its specialty vehicle business, it anticipates that such business will continue to constitute a low percentage of the Company’s overall revenues in the future.

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Production

     The Company’s manufacturing facility has been designed to permit production of motorhomes on an assembly-line basis. At the beginning of the line, in an effort to achieve uniformity, a partial steel cage is pre-assembled on a jig. The steel cage is welded together on the jig, which is then welded to a wall that is welded directly to the chassis to form what the Company terms a “uni-body” design. Steel outriggers are welded in place to support floor and basement storage compartments.

     Seamless, gel-coated fiberglass is vacuum bonded to a steel frame to form the exterior walls. Additionally, the roof structure is vacuum bonded. When all the exterior walls are in place, polyurethane foam insulation is sprayed inside the ceiling radius to fill voids and further bond the exterior shell to the frame. Exterior doors and interior decorative wallboard complete the basic construction. Vehicle components, cabinetwork, auxiliary power units, appliances, plumbing fixtures, floor coverings, window treatments, hardware, furniture and furnishings are then added. These components are generally purchased in finished form from various suppliers, none of which are a sole source.

     The Company manufactures its own driver-side doors, compartment doors, cabinetwork, draperies, and fiberglass parts and also makes some of the furniture used in its motorhomes. The Company expects to continue this practice of producing many of the components used in the manufacturing of its motorhomes as long as such practice is practical and results in cost savings and better quality.

     The Company operated one production shift, producing an average of 38 units per month during 2003. Total gross units produced in 2003 were 456 units. Increases in production can be achieved at a relatively low incremental cost on the existing production shift by increasing the number of production employees.

Raw Materials and Chassis

     The principal raw materials used in the manufacturing process are steel, fiberglass, aluminum, lumber, plywood and plastic. These materials are purchased from third parties and are generally available from numerous sources. The Company has not experienced any significant delays or problems in acquiring raw materials needed for production.

     The principal component used in the manufacturing process is the chassis, which includes the engine and drive train. The Company obtains front-engine gas chassis from Ford Motor Company (Ford) and Workhorse Custom Chassis, LLC (Workhorse). Rear-engine diesel chassis are purchased from Workhorse Custom Chassis, LLC (Workhorse) and Spartan Motors Chassis (Spartan). The Company acquires Ford products under a converter’s agreement, which is used by the Company to purchase the chassis with financing provided by the supplier’s affiliate. The financing provided to obtain Ford chassis under the converter’s agreement bears interest at the prime rate plus 1% (5.00% at December 31, 2003) and is secured by the Ford chassis obtained. Upon starting production of the motorhome, or 90 days after receipt of chassis, whichever comes first, the Company is required to pay to the lender the amount advanced for the purchase of the underlying chassis plus accrued interest. Similarly, the Company acquires its Workhorse products under a financing agreement with GE Capital Corporation (GE). The financing agreement with GE bears interest at the prime rate plus 1% (5.00% at December 31, 2003) and is secured by the Workhorse chassis obtained. The Company is required to pay the lender the amount advanced plus accrued interest upon the earliest to occur of starting production of the motorhome, or 120 days. The terms of sale for the chassis purchased from Spartan are on net 30-day basis.

     As is standard in the industry, arrangements with chassis suppliers provide that either the Company or the chassis supplier may terminate their relationship at any time. To date, the Company has not experienced any substantial shortages of chassis. The recreational vehicle industry as a whole has from time to time experienced shortages of chassis due to the concentration or allocation of available resources by suppliers of chassis to the manufacturers of vehicles other than recreational vehicles or for other causes. If Ford were to discontinue the manufacturing of motorhome chassis or

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substantially reduce the current chassis allocation, or if as a group all of the Company’s chassis suppliers significantly reduced the availability of chassis to the industry, the Company’s business and financial results could be materially adversely affected.

Sales and Distribution

     The Company sells motorhomes in most of the states in the continental United States. Additionally, the Company sells to dealers in Canada and Europe. Sales outside the U.S. were less than $1 million during each of the last three years. Consistent with industry practice, most of the Company’s dealers also stock previously owned recreational vehicles and carry recreational vehicles manufactured by competitors. For information on sales to dealers accounting for 10 percent or more of the Company’s total net revenues, see Note 8 to Notes to Consolidated Financial Statements.

     Sales are usually made to dealers on terms requiring payments within ten days or less of the dealer’s receipt of the unit. Most dealers have floor plan financing arrangements with banks or other financing institutions under which the lender advances all, or substantially all, of the purchase price of the motorhome to the Company upon shipment to the dealer. The loan is collateralized by a lien on the purchased motorhome. As is customary in the industry, the Company has entered into repurchase agreements with these lenders. In general, the repurchase agreements provide that in the event of default by the dealer on its agreement to the lending institution, the Company will repurchase the motorhome so financed. Dealers do not have the right to return motorhomes to the Company, except by statute in some states. For information on the Company’s contingent liability and repurchase history, see Note 7 to Notes to Consolidated Financial Statements.

Advertising and Promotion

     The Company advertises its motorhomes to consumers in recreational vehicle magazines and to dealers in trade publications, and uses point-of-purchase promotional materials. Its promotional activities generally consist of participation at major recreational vehicle shows (e.g., the California RV Show in Pomona, California; the RVIA Trade Show in Louisville, Kentucky; and the Tampa Super Show in Florida) held during the year, as well as local recreational vehicle shows held by its dealers. The company also advertises its product on the World Wide Web under the following site: http://www.rexhall.com. E-Mail responses from consumers show great promise for this advertising medium.

Seasonality and Backlog

     The recreational vehicle business generally has been seasonal with most sales occurring in the months of February through October, with sales from November through January generally being considerably slower. Generally, the Company’s sales follow the industry’s pattern.

     Historically, the Company has not maintained a significant inventory of finished motorhomes. Production is based on dealer orders and shipments that usually occur within four to eight weeks of the receipt of an order. At December 31, 2003, 2002 and 2001, the Company’s backlog of dealer orders, which it believed were firm, were $2,820,000, $4,205,000 and $15,133,000, respectively. The Company believes that backlog is not necessarily a reliable indication of future sales because dealer orders fluctuate and, by industry customs, may be canceled without penalty.

Product Warranty

     The Company currently provides retail purchasers of its motorhomes with a limited warranty against defects in materials and workmanship for 12 months or 12,000 miles, and a limited structural warranty on the steel cage for five years or 50,000 miles. Both are measured from date of purchase, or upon the transfer of the vehicle by the original owner, whichever occurs first. The Company’s warranty excludes certain specified components, including chassis, engines and power train, which are warranted separately by the suppliers. Warranty expense was $1,755,000, $1,904,000, and

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$1,070,000 for the years ended December 31, 2003, 2002 and 2001 respectively. In most cases, warranty work is performed by a member of the Company’s dealer network or by the Company’s own service facility.

Competition

     Competition in the manufacture and sale of motorhomes and other recreational vehicles is intense. The Company has been manufacturing Class A motorhomes for over 17 years and competes with many manufacturers of recreational vehicles, such as Coachmen Industries, Fleetwood Enterprises, Monaco Coach Corporation, National RV Holdings, Thor Industries, and Winnebago Industries. Several of the Company’s competitors have multiple product lines of Class A motorhomes and other recreational vehicles and most, including all of those competitors previously named, are larger and have substantially greater financial, marketing and other resources than the Company, as well as larger and more developed dealer networks. In addition, sales of used Class A motorhome create additional competition for the Company. The Company believes that the principal competitive factors that affect the market for the Company’s Class A motorhomes include price, product design and features, product quality, reliability and performance, quality of support and customer service, loyalty of customers and brand recognition. The Company believes its pricing and quality may help it to remain competitive.

Regulation

     The Company is subject to the provisions of the National Traffic and Motor Vehicle Safety Act and the safety standards for recreational vehicles and components which have been promulgated thereunder by the Department of Transportation. The regulations under that legislation permit the National Highway Traffic Safety Administration to require a manufacturer to remedy vehicles containing “defects related to motor vehicle safety” or vehicles that fail to conform to all applicable Federal Motor Vehicles Safety Standards. The National Traffic and Motor Vehicles Safety Act also provides for the recall and repair of recreational vehicles that contain certain hazards or defects.

     The Company is subject to the provisions of Transport Canada for vehicles exported to Canada. The regulations under that legislation are similar in nature and design to its American counterparts.

     The Company relies on certifications obtained from chassis suppliers with respect to compliance of the Company’s vehicles with applicable emission control standards and load bearing capacity. The Company believes that its facilities and products comply in all material respects with applicable environmental regulations and standards.

     The Company’s manufacturing operations are subject to a variety of federal and state environmental regulations relating to the use, generation, storage, treatment, emissions, and disposal of hazardous materials and wastes and noise pollution. Such laws and regulations are becoming more stringent, and it is likely that future amendments to these environmental statutes and additional regulations promulgated thereunder will be applicable to the Company, its manufacturing operations and its products in the future. The failure of the Company to comply with present or future regulations could result in fines being imposed on the Company, civil and criminal liability, suspension of operations, alterations to the manufacturing process or costly cleanup or capital expenditures.

     Many states regulate the sale, transportation, and marketing of recreational vehicles. The Company is also subject to state consumer protection laws and regulations, which in many cases require manufacturers to repurchase or replace chronically malfunctioning recreational vehicles. Some states also legislate additional safety and construction standards for recreational vehicles. The Company is also increasingly subject to regulations by the various states with respect to relations with its dealers.

     The Company is a member of the RVIA (Recreational Vehicle Industry Association). This association has promulgated stringent standards for construction in connection with the manufacture of recreational vehicles. Each of the

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units manufactured by the Company has an RVIA seal placed upon it to certify that such standards have been met. The Company’s facility is periodically inspected by government agencies and the RVIA to ensure that the Company’s motorhomes comply with applicable governmental and industry standards.

Patents and Trademarks

     The Company has been awarded two patents from the United States Patent and Trademark Office covering the ornamental design for its T-Rex Double & Wide motorhomes. While the Company claims Rexhall®, RoseAir™, RexAir®, Aerbus™, Vision®, American Clipper™, Anthem™, Concord™, Minibus™, T Rex Double & Wide™ and EntrySlide™ as trademarks, it does not believe its business is dependent on these names or any other marketing device.

Employees

     At December 31, 2003, the Company had a total of 205 employees. None of the Company’s employees are represented by a labor union. The Company considers its relations with its employees to be good.

Item 2. Properties

     In December 1995, the Company completed construction and moved into an 87,000 square foot manufacturing facility on ten acres in Lancaster, California. This facility serves as both a manufacturing facility and the Company’s Corporate Headquarters and the total square footage is almost 120,000 square feet. The Lancaster manufacturing plant is debt free with no mortgages on the facility.

     In September 1995, the Company purchased a 40,000 square foot facility located on a 4.5-acre site in Lancaster, California to serve as the Company’s Recreational Vehicle Service Center. This facility was purchased from the City of Lancaster’s Redevelopment Agency for $980,000. At December 31, 2003, the Company was indebted to the City of Lancaster Redevelopment Agency for the amount of $634,000 with interest at 5.93% per annum due through October 2015. From December 1997 until June 2001, the Company leased a portion of the facility to various third parties, which were major recreational vehicle retail dealers. Since June 2001, the Company has been using that portion to perform additional retail service and insurance paid repairs to motorhomes.

     In July 2000, the Company purchased approximately four acres in Mesa, Arizona to serve as a site for Price I, Inc. dba, Price One RV, which is a wholly owned subsidiary of the Company. The Company paid $809,000 for the land and a partially constructed commercial building located on the property. Another $410,000 was spent by the Company to complete the site for the retail sale and service of motorhomes. In December 2001, the Company ceased its retail operations, and continued to operate a service facility under the name Rexhall Service Center – Arizona until December 2003, at which time the Company listed the property as held for sale with a net book value of $1,189,000.

     In December 2000, the Company and Mr. William J. Rex, President & CEO, purchased 1.7 acres in Acton, California for $401,000. The Company and Mr. Rex each paid 50% of the purchase price and agreed to share equally in the construction of a building on the property. In the first quarter of 2004, the Company decided to list the property for sale.

     In January 2003, the Company completed the purchase of 12.48 acres of land adjacent to its headquarters in Lancaster, California. The Company paid $564,448 in cash and issued a promissory note for $300,000 for a total of $864,448. The agreement with the City of Lancaster would allow the promissory note to be forgiven in total or in part based upon a formula for providing jobs. Although the Company anticipates meeting hiring requirements for the debt forgiveness, the full $300,000 is reflected as long-term debt in the Company’s financial statements. In the event the hiring requirements are not met, interest on the promissory note is 10% per annum. At December 31, 2003, the Company had accrued $30,000 interest on the note. The Company plans to build a new facility on this land so that it can produce its own diesel chassis with

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a new motorhome concept to be built on that chassis. Due to changes in the Company’s manufacturing process necessitated by its introduction of the new line of T-Rex motorhomes and redesign of its standard product, late introduction of the T-Rex, and low sales, the Company had postponed any expansion plans until after 2003. However, the Company believes that it may be able to begin construction of the new facility in 2004 depending on market and economic conditions. The total anticipated cost of this expansion is projected to be approximately $5,000,000.

     The Company believes its facilities are adequate to meet its foreseeable needs for its current product offerings.

Item 3. Legal Proceedings

     The Company is involved in legal proceedings in the ordinary course of business, including a variety of warranty, “lemon law” and product liability claims typical in the recreational vehicle industry. The Company does not believe that the outcome of its pending legal proceedings, net of insurance coverage, will have a material adverse effect on the business, results of operations or financial condition of the Company.

     The Company has learned that the staff of the Securities and Exchange Commission is conducting an investigation relating to the Company. The Company believes that the investigation primarily relates to the facts and events surrounding the Company’s restatement of its results of operations for the first quarter ended March 31, 2002. The Company is cooperating with the staff in connection with the investigation.

Item 4. Submission of Matters to a Vote of Security Holders

     No matter was submitted to the vote of security holders during the fourth quarter of 2003.

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PART II

Item 5. Market for Common Equity and Related Stockholders Matters

Market Information

     The Company’s Common Stock has traded in the over-the-counter market since June 22, 1989 and sales and other information are reported in the Nasdaq National Market. The Company’s Nasdaq symbol is “REXL”. The following table sets forth the range of high and low closing sale prices of a share of the Company’s Common Stock in the over-the-counter market for each quarter during the two years ended December 31, 2003 according to the Nasdaq National Market (adjusted for the 2-for-1 stock split of July 2002):

Holders

     At April 12, 2004, the Company had 55 registered shareholders of record.

Dividends

     The payment of cash dividends on the Company’s common stock is within the discretion of its board of directors. Currently, the Company intends to retain earnings, if any, to finance its business. The Company has not paid cash dividends on its common stock and the board of directors does not expect to declare cash dividends on the common stock in the foreseeable future.

Securities Authorized Under Equity Compensation Plans

     The Company has no compensation plans or individual compensation arrangements under which equity securities are authorized for issuance.

Item 6. Selected Financial Data

     The following selected Statements of Operations data for each of the three years in the period ended December 31, 2003 and the Balance Sheet data as of December 31, 2003 and 2002 are derived from our audited consolidated financial statements included elsewhere herein. The selected Statements of Operations data for each of the two years in the period ended December 31, 2000 and the Balance Sheet data as of December 31, 2001, 2000 and 1999 were derived from our audited consolidated financial statements, which are not included in this Form 10-K. The following data should be read in

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conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of the Company, including the notes thereto, included elsewhere in this Form 10-K.

Statement of Operations Data:

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

     The following table sets forth, for each of the three years indicated, the percentage of revenues represented by certain items on the Company’s Statements of Operations:

Forward-looking Statements

     Statements contained in this Form 10-K that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. Actual performance and results may differ materially from that projected or suggested herein due to certain risks and uncertainties including, without limitation, potential fluctuations in the Company’s operating results; continuation of losses; seasonality and economic conditions; dependence on certain dealers and concentration of dealers in certain regions; dependence on chassis suppliers; potential liabilities under repurchase agreements; competition; government regulation; warranty claims; product liability the potential lack of meaningful patent protection, the Company’s dependence on its founder and Chief Executive Officer and its ability to issue preferred stock. These risks and uncertainties are more fully discussed below in the subsection “Factors that May Affect Operating Results” and in the Company’s other filings with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

     The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein. As is generally the case in the recreational vehicle industry, various factors can influence sales. These factors include demographics, changes in interest rates, consumer confidence levels, competition, restrictions on the availability of financing for the wholesale and retail purchases of recreational vehicles, as well as significant changes in the availability and price of gasoline.

     The Company was founded in 1986 as a manufacturer of recreational vehicles, and became publicly held in 1989. Historically, the Company has manufactured only Class A motorhomes and specialty vehicles on either gas or diesel chassis supplied by independent suppliers. The Company’s products are positioned to be value leaders, in that its products offer many of the design and structural characteristics and quality components of higher-priced motorhomes, but at a much more affordable price.

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     To counter the short-term and long-term effects of the bankruptcy of the Company’s largest dealer in 2000, the Company established its own retail operations in Mesa, Arizona, called Price I, Inc. dba, Price One, RV. Under the terms of the repurchase agreements with the bankrupt dealer’s lenders, the Company was only obligated to repurchase $1.2 million of inventory; however, the Company elected to repurchase $4.2 million in inventory in order to keep these motorhomes from being dumped on the market at substantially lower prices. The retail operations at Price One RV did not begin in earnest until November of 2000. In December 2001, the Company ceased its retail operations and sold the remaining Price One inventory to another dealership in Arizona. The Company reported the retail operations as a discontinued operation during 2001, and ceased all remaining operations of this subsidiary, consisting of operating a service center in Arizona, in 2003. The Company listed the Arizona property upon which it formerly conducted its retail and service center operations as held for sale.

     Approximately 49,400 Class A motorhomes were wholesaled in 1999, which was an all-time high. However, when the stock market started to slide in the spring of 2000, Class A motorhome shipments dropped dramatically. Class A motorhome sales in 2000 dropped 17% to 41,000 and dropped another 19% in 2001 to 33,400, which was the lowest annual level since 1995. The industry rebounded by 19% in 2002 to 39,600 units shipped, and increased by 5% in 2003 to 41,500 units shipped.

     As is customary in the industry, the Company generally agrees with its dealers’ lenders to repurchase any unsold recreational vehicles in the event of various circumstances. Although the Company’s maximum potential exposure under these agreements approximated $16.6 million at December 31, 2003, as with accounts receivable, the risk of loss was spread over numerous dealers and lenders and was further reduced by the resale value of the recreational vehicles that the Company would be required to repurchase. Losses under these agreements have not been material in the past and management does not believe that any future losses under such agreements will have a material adverse effect on the Company’s consolidated financial position or results of operations. Management believes that sales trends will remain consistent in the industry for the foreseeable future, and therefore would expect the Company’s historical pattern of repurchases to continue. For information on repurchases history, see Note 7 to Notes to Consolidated Financial Statements.

     Comparison of Year Ended December 31, 2003 to Year Ended December 31, 2002

     Net revenues for the year ended December 31, 2003, were $38.9 million, compared to $63.3 million for 2002, a decrease of $24.4 million or 39%. The number of units shipped, net of repurchased units, decreased 315 to 448 in 2003 from 763 in 2002, a decrease of 41%. The average net selling price increased approximately 2% during the period primarily due to a base-price increase. Wholesale unit shipments of the Company’s gas and diesel motorhomes were down 30% and 67%, respectively, when compared to 2002.

     Despite industry-wide increases in wholesale shipments of class A motorhomes in 2003, the Company’s sales were down substantially. Management believes this was due in large part to the Company’s premature announcement of its new T-Rex Double & Wide motorhome design. More specifically, mass production of the T-Rex Double & Wide, originally announced in July, 2003, was delayed through the end of the year. As a result, many dealers maintained lower than usual stocking levels of the Company’s standard-line product to make room for the new T-Rex Double & Wide. Moreover, management now believes that it may have inadvertently given the impression that it would discontinue production of its standard-line in favor of “T-Rex.” This is not the case. In reality, the Company has made considerable efforts to improve and enhance its standard-line products during the latter-half of 2003. These “new & improved” motorhomes are now available. Management is working to re-establish the Company as a quality motorhome manufacturer to its existing dealer network, and the industry as a whole.

     Additionally, in July of 2003, the Company decided that it would no longer do business with its largest Dealer—La Mesa RV (which accounted for 18% of sales in 2002). The decision was made because the dealer would no longer purchase the Company’s motorhomes without seeking substantial discounts or rebates, which, in management’s view, precluded profitable sales to this dealer.

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     Gross profit for the year ended December 31, 2003, decreased to $6.0 million from $6.9 million for 2002, a decrease of $0.9 million or 13%. The gross margin for 2003 was 15% as compared to 11% for 2002. The increase in gross margin is primarily attributable to improved per-unit manufacturing labor costs and material usage. Although management believes the Company will be able to sustain these improved margins, gross margin may fluctuate in future periods if the mix of Class A motorhomes the Company produces shifts from higher to lower gross margin units or if the Company encounters unexpected manufacturing difficulties or competitive pressures.

     Selling, general and administrative expenses (SG&A) for the year ended December 31, 2003, were $8.4 million, compared to $8.3 million for 2002, and increased as a percentage of sales from 13% to 22%. The increase in SG&A expenses is primarily related to the approximately $1.6 million the Company spent on research & development of its new T-Rex Double & Wide floorplans, and improvements to its standard-line products.

     The Company’s effective income tax rate was 0.1% for the year ended December 31, 2003 as compared with 36% for 2002. The decrease is a result of state tax refunds of approximately $606,000 and federal tax refunds of approximately $130,000, offset by a valuation allowance of $1,719,000. Basic and diluted net loss per share was ($0.41) for the year ended December 31, 2003, as compared to basic and diluted net loss per share of ($0.15) in 2002.

     Comparison of Year Ended December 31, 2002 to Year Ended December 31, 2001

     Net revenues for the year ended December 31, 2002, were $63.3 million, compared to $56.7 million for 2001, an increase of $6.6 million or 12%. The number of units shipped, net of repurchased units, increased 38 to 763 in 2002 from 725 in 2001, an increase of 5%. The average net selling price increased approximately 6% during the period due to a higher mix of diesel and large gas units. Wholesale unit shipments of the Company’s gas and diesel motorhomes were up 3% and 10%, respectively, when compared to 2001.

     Poor recreational vehicle industry fundamentals of weakened consumer confidence and tightening of credit continue to hinder the Company’s efforts in attracting large dealers east of the Rockies. The lack of new dealers was the primary cause for the Company to lag behind the industry’s 19% improvement in shipments during 2002.

     Gross profit for the year ended December 31, 2002 increased to $6.9 million from $5.1 million for 2001, an increase of $1.8 million or 35%. The gross margin for 2002 was 11% as compared to 9% for 2001. The primary drivers of the increase in gross profit were higher sales and lower discounts and incentives, partially offset by higher direct labor cost per unit.

     Selling, general and administrative expenses (SG&A) for the year ended December 31, 2002 were $8.3 million, compared to $7.3 million for 2001, both approximately 13% of sales. The increase in expenses is primarily related to the approximately $850,000 the Company spent on outside firms during the independent investigation into the restatement of its financial statements for the first quarter of 2003.

     Other income in 2001 primarily consisted of rental income on the sub-leased portion of the Company’s facilities. As of December 31, 2001, the Company was no longer sub-leasing any of its facilities, so no rental income was earned in 2002.

     The Company’s continuing operations’ effective income tax rate was 36% for the year ended December 31, 2002 as compared with 32% for 2001. The increase is a result of certain non-deductible expenses that were incurred in 2001, but not 2002. Basic and diluted net loss per share was ($0.15) for the year ended December 31, 2002, as compared to basic and diluted net loss per share of ($0.33) in 2001.

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     In December 2001, the Company ceased its retail operations, Price One in Mesa, Arizona. The retail inventory was discounted significantly and sold to another dealership in Arizona. The net results of the Company’s retail operations are presented in the accompanying financial statements as “Discontinued Operations”.

Liquidity and Capital Resources

     The Company has relied primarily on internally generated funds, trade credit and debt to finance its operations and expansions. As of December 31, 2003, the Company had working capital of $11,341,000, compared to $14,581,000 at December 31, 2002, a $3,240,000 decrease in working capital. The most significant working capital decrease was a $3,874,000 decrease in cash, a $919,000 decrease in accounts receivable, a $879,000 decrease in deferred income taxes, a $214,000 increase in accounts payable, and a $1,051,000 increase in borrowings under the Company’s lines of credit with its chassis vendors, partially offset by a $2,799,000 increase in inventory, and a $648,000 decrease in other accrued liabilities.

     Capital expenditures during 2003 were $1,124,000, which primarily consists of the 12.48 acres of land the Company purchased adjacent to its headquarters in Lancaster, California. The Company has made no commitments for, and does not expect to make material capital expenditures in 2004— depending upon market conditions. Cash flows from financing activities consisted primarily of proceeds from chassis vendor lines of credit of $1,105,000 and proceeds from the redevelopment agency of $300,000. This was partially offset by repayments on long-term debt of $54,000 and the repurchase of stock on the open market of $326,000.

     As of December 31, 2003, the Company had eliminated its entire $2,500,000 Line of Credit with a bank, which included an irrevocable Standby Letter of Credit for the Company to meet the requirements for self-insurance established by the Department of Industrial Relations which regulates Worker’s Compensation insurance in California. Because the Company had never drawn from this line of credit, and due to the costs and liability associated with maintaining a line of revolving credit, the Company eliminated its line during the second and third quarters of 2003. The requirements for self-insurance are now being met through the California Self Insurer’s Security Fund and its Alternative Security Program (ASP). Under the ASP, the fund will arrange for a composite security deposit for participating self-insurers rather than rely on such members to arrange for their security deposits on an individual basis. The Company’s covered deposit under this plan is $711,427.

     As of December 31, 2003, the Company has a line of credit with a chassis vendor, Ford Motor Credit Company (“FMCC”), with a $3,500,000 limit. This limit reflects a reduction from $5,000,000 during the first quarter of 2003. This line of credit reduction was due to an analysis by FMCC of the Company’s needs based on historical financing requirements. FMCC determined that the new $3,500,000 limit would be enough to meet the Company’s future financial requirements. Borrowings under the line bear interest at an annual rate of prime plus 1% (5.00% at December 31, 2003). All borrowings are secured by the Ford merchandise. The outstanding balance at December 31, 2003 was $2,919,000.

     Additionally, beginning in the third quarter 2003, the Company established a financing agreement with GE Capital for the purchase of chassis from Workhorse Custom Chassis. The limit on this line of credit is $1,600,000. Borrowings under this line of credit bear interest at the rate of prime plus 1% (5.00% at December 31, 2003). The chassis purchased from Workhorse secure borrowings under this line of credit. The outstanding balance under this line of credit is $1,513,000 at December 31, 2003.

     The Company placed orders for chassis during the first six months of the year, which were delivered during the second half of the year. As these deliveries coincided with a decline in sales, inventories grew during the second half of 2003. In light of the Company’s elevated inventory levels, management expects cash requirements for 2004 to be significantly lower as the Company uses up its material and raw chassis inventory and sells through its finished goods inventory. Accordingly, the Company anticipates that it will be able to satisfy its ongoing cash requirements through 2004

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primarily with cash flows from operations and chassis purchase lines of credit. Additional cash may be generated through the Company’s sale of its Mesa, Arizona and Acton, California facilities, provided the Company is able to sell the properties in the near future. Although the Company has typically funded its land purchases and development with cash flow from operations, depending on market conditions, it might consider external financing of all or part of the expansion costs required for construction of a new facility on the raw land adjacent to its headquarters in Lancaster, California. However, given the Company’s current economic condition, a definitive timeline for an expansion has not yet been determined.

Contractual Obligations and Commercial Commitments

The following table summarizes the Company’s obligations and commitments as of December 31, 2003:

Payments Due by Period (in thousands)

Amount of Commitment Expiration per Period (in thousands)

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Certain Risk Factors That Could Affect Future Results

     You should carefully consider and evaluate all of the information in this Form 10-K, including the risk factors listed below. The risks described below are not the only ones facing our company. Additional risks not now known to us or that we currently deem immaterial may also impair our business operations.

     If any of these risks actually occur, our business could be materially harmed. If our business is harmed, the trading price of our common stock could decline.

     Potential Fluctuations in Operating Results. The Company’s net sales, gross margin and operating results may fluctuate significantly from period to period due to factors such as the mix of products sold, the level of discounting employed on the Company’s products, the ability to utilize or expand manufacturing resources efficiently, material shortages, the introduction and consumer acceptance of new models offered by the Company, competition, warranty expense, the addition or loss of dealers, the timing of trade shows and rallies, and factors affecting the recreational vehicle industry as a whole, such as cyclicality and seasonality. In addition, the Company’s overall gross margin will be impacted by shifts in the Company’s product. Due to the relatively high selling prices of many of the Company’s motorhome models, a relatively small variation in the number of recreational vehicles sold in any quarter can have a significant effect on sales and operating results for that quarter.

     Continuation of Losses. The Company has had net losses totaling $2.4 million, $935,000 and $2.0 million for 2003, 2002 and 2001, respectively. Continued losses could reduce the Company’s liquidity and cause the Company to reduce its expenditures on capital improvements, machinery and equipment, and research and development. This could have a negative effect on the Company’s ability to maintain production schedules, manufacture products of high quality, and develop and manufacture new products that will achieve market acceptance. This could in turn, have a negative impact on the Company’s sales and earnings. If the Company continues to suffer losses, the Company could be unable to implement its business and financial strategies or meet its obligations when due.

     Cyclicality, Seasonality and Economic Conditions. The recreational vehicle industry has been characterized by cycles of growth and contraction in consumer demand, reflecting prevailing economic conditions, which affect disposable income for leisure-time activities. Concerns about the availability and price of gasoline, decreases in consumer confidence, increases in interest rates and reductions in available financing have had, and may in the future have, an adverse impact on recreational vehicle sales. Seasonal factors, over which the Company has no control, also have an effect on the demand for the Company’s products. Demand in the recreational vehicle industry declines over the winter season, while sales are generally highest during the spring and summer months.

     Dependence on Certain Dealers. For the year ended December 31, 2003, two dealers accounted for 14%, and 11%, respectively, of the Company’s net sales. The loss by the Company of one or more of these dealers could