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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended October 31, 2003
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-6673
PACIFIC SECURITY COMPANIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Washington 91-0669906
------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10 North Post Street
325 Peyton Building
Spokane, Washington 99201 (509) 444-7700
- --------------------------------------- -------------------------------
(Address of principal executive offices (Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has 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 period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
1,080,161 shares of common stock, par value $3.00 per share, were outstanding on
October 31, 2003.
PACIFIC SECURITY COMPANIES, INC.
FORM 10-Q QUARTERLY REPORT
Table of Contents
-----------------
Part I. Financial Information
Item 1. Consolidated financial statements (unaudited)
Consolidated balance sheet 1-2
Consolidated statement of operations 3
Consolidated statement of cash flows 4-6
Notes to unaudited financial statements 7-9
Item 2. Management's discussion and analysis of financial condition and
results of operations
Financial condition and liquidity 10
Results of operations 12
Item 3. Qualitative and quantitative disclosures about market risk 13
Item 4. Controls and Procedures 13
Part II. Other information
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
PACIFIC SECURITY COMPANIES, INC.
CONSOLIDATED BALANCE SHEET
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ASSETS
OCTOBER 31, July 31,
2003 2003
(UNAUDITED) (Audited)
------------ -------------
ASSETS
Cash and cash equivalents $ 323,180 $ 705,564
------------ ------------
Receivables
Contracts, mortgages, finance notes,
and loans receivable 6,964,309 7,107,189
Less allowance for loan losses (934,570) (609,100)
------------ ------------
6,029,739 6,498,089
Accrued interest 39,653 42,790
Other 226,800 275,481
------------ ------------
6,296,192 6,816,360
------------ ------------
Investment in rental properties, net 11,397,986 11,344,735
Impairment on rental properties (643,680) (643,680)
------------ ------------
10,754,306 10,701,055
------------ ------------
Other investments
Property held for sale and development 4,296,065 4,367,608
------------ ------------
Other assets
Furniture and equipment, net 70,957 76,292
Prepaid and other, net 195,241 215,901
Deferred tax asset, net 528,941 284,834
Federal income tax refund receivable 54,204 54,204
------------ ------------
849,343 631,231
------------ ------------
TOTAL ASSETS $ 22,519,086 $ 23,221,818
============ ============
1
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PACIFIC SECURITY COMPANIES, INC.
CONSOLIDATED BALANCE SHEET
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LIABILITIES AND STOCKHOLDERS' EQUITY
OCTOBER 31, July 31,
2003 2003
(UNAUDITED) (Audited)
------------ -------------
LIABILITIES
Notes payable to banks $ 3,592,500 $ 3,692,500
Installment contracts, mortgage notes,
and notes payable 6,082,486 5,583,266
Debenture bonds 7,959,132 8,527,183
Accrued expenses and other liabilities
Related parties 98,244 100,933
Unrelated 816,777 873,546
------------ ------------
18,549,139 18,777,428
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock
Class A preferred stock, $100 par
value, authorized 20,000 shares;
issued and outstanding 3,000
shares 300,000 300,000
Preferred stock, authorized
10,000,000 no par value shares;
no shares issued and outstanding -- --
Common stock
Original class, authorized
2,500,000 no par value shares;
$3 stated value; issued and
outstanding, 1,080,161 and
1,080,357 shares 3,240,482 3,241,070
Class B, authorized 30,000 no par
value shares; no shares issued
and outstanding -- --
Additional paid-in capital 1,830,941 1,830,941
Retained earnings (deficit) (1,401,476) (927,621)
------------ ------------
Total stockholders' equity 3,969,947 4,444,390
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 22,519,086 $ 23,221,818
============ ============
See accompanying notes. 2
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PACIFIC SECURITY COMPANIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
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Three Months Ended October 31,
------------------------------
2003 2002
------------------------------
(UNAUDITED)
------------------------------
Income
Rental $ 347,136 $ 326,289
Interest, including loan fees of
$5,742 and $84,102 125,354 484,019
Loss on sale of real estate (1,424) (628)
Other, net 1,264 6,127
----------- -----------
472,330 815,807
----------- -----------
Expense
Rental operations
Depreciation and amortization 118,843 122,557
Interest 83,429 91,979
Other 165,485 162,484
----------- -----------
367,757 377,020
Interest, net of amount capitalized 240,648 463,205i
Salaries and commissions 113,549 332,264
General and administrative 136,284 269,637
Depreciation and amortization 6,584 12,971
Provision for loan loss 325,470 135,053
----------- -----------
1,190,292 1,590,150
----------- -----------
Loss before income tax benefit (717,962) (774,343)
Income tax benefit (244,107) (263,277)
----------- -----------
NET LOSS $ (473,855) $ (511,066)
=========== ===========
Net loss per common share basic and diluted $ (0.44) $ (0.47)
=========== ===========
Weighted average common shares
outstanding basic and diluted 1,080,259 1,083,620
=========== ===========
3
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PACIFIC SECURITY COMPANIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
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Three Months Ended October 31,
------------------------------
2003 2002
------------------------------
(UNAUDITED)
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from rentals and other $ 417,741 $ 442,938
Interest received 128,492 527,087
Cash paid to suppliers and employees (487,107) (767,510)
Interest paid, net of amounts capitalized (210,063) (389,069)
Income taxes refunded -- 71,372
----------- -----------
Net cash used by operating
activities (150,937) (115,182)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sales of real estate 5,902 1,838,239
Collections on contracts, mortgages,
finance notes, and loans receivable 214,480 1,136,773
Origination of loans receivable and
investment in contracts, mortgages,
and finance notes -- (870,776)
Additions to rental properties,
property held for sale, property
under development, furniture, and
equipment (180,726) (559,770)
----------- -----------
Net cash provided by investing
activities 39,656 1,544,466
----------- -----------
4
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PACIFIC SECURITY COMPANIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
Three Months Ended October 31,
------------------------------
2003 2002
------------------------------
(Unaudited)
------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments under line of credit agreements $ (100,000) $ (103,497)
Proceeds from installment contracts, mortgage notes,
and notes payable 552,465 --
Payments on installment contracts, mortgage notes,
and notes payable (53,245) (724,982)
Redemption of debenture bonds (669,735) (622,448)
Purchase and retirement of treasury stock (588) (2,798)
Payment of dividends on preferred stock -- (18,000)
----------- -----------
Net cash used by financing activities (271,103) (1,471,725)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS (382,384) (42,441)
Cash and cash equivalents, beginning of year 705,564 367,469
----------- -----------
Cash and cash equivalents, end of period $ 323,180 $ 325,028
=========== ===========
5
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PACIFIC SECURITY COMPANIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
Three Months Ended October 31,
------------------------------
2003 2002
------------------------------
(Unaudited)
------------------------------
RECONCILIATION OF NET LOSS TO NET CASH
USED BY OPERATING ACTIVITIES
Net loss $(473,855) $(511,066)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 125,427 135,528
Loss on sales of real estate 1,424 628
Provision for loan loss 325,470 135,053
Change in assets and liabilities:
Accrued interest receivable 3,137 43,069
Prepaid expenses, net 20,660 16,928
Interest accrued on debenture bonds 101,684 112,216
Accrued expense and other liabilities (59,458) 50,774
Income taxes receivable (244,107) (263,277)
Other, net 48,681 164,965
--------- ---------
NET CASH USED BY OPERATING ACTIVITIES $(150,937) $(115,182)
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Company financed sale of property $ 71,600 $ 172,000
========= =========
See accompanying notes. 6
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PACIFIC SECURITY COMPANIES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
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NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Pacific Security
Companies, Inc. (formerly Pacific Security Financial, Inc.) and its subsidiaries
(the Company). In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the Company's
financial position, results of operations, and cash flows for the periods
presented.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and the related disclosures contained in the
Company's annual report on Form 10-K for the year ended July 31, 2003, filed
with the Securities and Exchange Commission. Assets are presented at the lower
of cost or fair value and liabilities are recorded that are expected to be
incurred as part of the liquidation of a majority of the Company's assets to
meet its current and long-term obligations.
The results of operations for the three months ended October 31, 2003, are not
necessarily indicative of the results to be expected for the full year.
CONTRACTS, MORTGAGES, FINANCE NOTES, AND LOANS RECEIVABLE:
The Company's contracts, finance notes, and loans receivable consist primarily
of seller financed real state sales contracts and real estate development loans.
Contracts, mortgages, finance notes, and loans receivable are stated at the
unpaid principal balance, plus accrued interest, less acquisition discounts,
unearned loan fees, and an allowance for estimated uncollectible amounts, as
necessary. Management evaluates receivables which may not be fully collectible
to determine if a provision for loss is necessary based on the present value of
expected future cash flows from the receivables in the ordinary course of
business or from amounts recoverable through foreclosures and the subsequent
resale of the collateral.
Contracts, mortgages, finance notes, and loans receivable are placed on
nonaccrual status when collection of principal or interest is considered
doubtful. Interest income previously accrued on these loans, but not yet
received, is reversed in the current period to the extent that it is considered
uncollectible. Interest subsequently recovered is credited to income in the
period collected.
7
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PACIFIC SECURITY COMPANIES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
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NOTE 1 - BASIS OF PRESENTATION (CONTINUED)
ALLOWANCE FOR LOAN LOSSES:
The allowance for loan losses is based on management's evaluation of each
specific loan. A loan is considered impaired when, based on current information
such as adverse situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral, current economic conditions, and
independent appraisals, it is probable that the Company will be unable to
collect, on a timely basis, all principal and interest according to the
contractual terms of the loan's original agreement. The amount of the impairment
is measured using cash flows discounted at the loan's effective interest rate,
except when it is determined that the sole source of repayment for the loan is
the operation or liquidation of the underlying collateral. In such cases, the
current value of the collateral, reduced by anticipated selling costs, is used
in place of discounted cash flows. Generally, when a loan is deemed impaired,
current period interest previously accrued but not collected is reversed against
current period interest income. Income on such impaired loans is then recognized
only to the extent that cash in excess of any amounts charged off to the
allowance for loan losses is received and where the future collection of
principal is probable. Interest accruals are resumed on such loans only when
they are brought fully current with respect to interest and principal and when,
in the judgment of management, the loans are estimated to be fully collectible
as to both principal and interest.
Contracts, mortgages, finance notes, and loans receivable are charged off when
management believes there has been permanent impairment of their carrying
values.
SALES OF REAL ESTATE:
Profit on sale of real estate is recognized when the buyers' initial and
continuing investment is adequate to demonstrate (1) a commitment to fulfill the
terms of the transaction, (2) that collectibility of the remaining sales price
due is reasonably assured, and (3) the Company maintains no continuing
involvement or obligation in relation to the property sold and has transferred
all the risk and rewards of ownership to the buyer.
Receipts on sales of real estate investments are accounted for as customer
deposits until the principal payments received on the sales contracts exceed the
minimum guidelines for gain recognition. Losses arising from sales of real
estate are recognized immediately upon sale.
RECLASSIFICATIONS:
Certain reclassifications have been made in the prior period's financial
statements in order to conform with the current period financials. The
reclassifications had no effect on previously reported net income (loss) or
equity.
8
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PACIFIC SECURITY COMPANIES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
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NOTE 2 - BUSINESS SEGMENT REPORTING
Information about the Company's separate continuing business segments as of and
for the three months ended October 31, 2003 and 2002, is as follows:
------------ ------------ ------------
Real Estate,
Commercial Rental, and
Lending Receivables
Operations Operations Total
------------ ------------ ------------
2003
Revenue $ 50,455 $ 421,875 $ 472,330
Loss from operations (447,115) (270,847) (717,962)
Identifiable assets, net 5,601,034 16,918,052 22,519,086
Depreciation and amortization 1,024 124,403 125,427
Capital expenditures -- 180,727 180,727
2002
Revenue $ 254,907 $ 560,900 $ 815,807
Income from operations (336,667) (437,676) (774,343)
Identifiable assets, net 17,801,203 24,522,379 42,323,582
Depreciation and amortization 1,242 134,286 135,528
Capital expenditures 2,382 557,388 559,770
The Company has determined that its reportable business segments are those that
are based on its method of disaggregated internal reporting. The Company's
reportable business segments are its commercial loan origination business and
its rental and receivable operations. Its commercial loan origination business,
operated as Cornerstone Realty Advisors, Inc., originated commercial
construction loans throughout the western United States. The rental and
receivable operations represent the selling and leasing of real properties and
the financing of contracts and loans collateralized by real estate. Some
unallocated general corporate expense items are part of the rental and
receivable segment reporting.
Management decided to dissolve its 100% owned subsidiary, Cornerstone Realty
Advisors, Inc., as of its corporation license expiration date of March 31, 2002.
Commercial lending activities are now being conducted through the parent
company.
NOTE 3 - SUBSEQUENT EVENT
Subsequent to the quarter ended October 31, 2003, the Company completed the sale
of a rental property for $3.7 million. The Company expects to close the sale on
or before December 16, 2003, with an estimated pre-tax gain in excess of
$300,000 after deducting a loan prepayment penalty of approximately $275,000.
9
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PACIFIC SECURITY COMPANIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY:
At October 31, 2003, the Company had total stockholders' equity of approximately
$3,970,000 and a total liabilities to equity ratio of 4.67 to 1, which increased
from 4.22 to 1 at July 31, 2003. During the three months ended October 31, 2003,
the Company's primary source of funds was approximately $214,000 in real estate
contract and loan collections. The primary uses of funds were approximately
$270,000 for net debt reduction, and $181,000 for property improvements.
The Company's sources of liquidity historically have included the issuance of
debentures under the auspices of the Washington State Securities Division of the
Department of Financial Institutions and borrowings from various bank lenders.
These sources of liquidity are limited either by the Washington State Securities
Division, which has capped the amount of debentures the Company may sell or by
the individual banks through restrictive covenants included in the loan
agreements. The state of Washington has mandated as a condition for issuance of
a permit that the Company reduce total debentures outstanding by $500,000 to
$7,965,000 by August 29, 2004. The requirement to do so will materially impact
the Company's liquidity.
An additional source of liquidity is the issuance of participation interests in
certain loans and contracts originated by the Company. The total of these
nonrecourse repurchasable participations was approximately $475,000 at October
31, 2003, and July 31, 2003.
At July 31, 2003, the Company's outstanding banking agreements totaled
approximately $3,592,000 with an additional $6,082,486 due for installment
contracts, mortgage notes, and notes payable. A bank continues to work with the
Company on a loan that was paid down to $780,000 on October 15, 2003, and that
is collateralized by a property in Eagle, Idaho, that was acquired through
foreclosure in June 2003. Subsequent to the fiscal year end on July 31, 2003,
the loan was evaluated based on market and other business conditions and the
maturity date was extended to June 1, 2004. Management does not believe that a
line of credit can be quickly replaced by another lender. This will materially
impact the Company's liquidity and profitability. Due to the restrictive banking
agreements, the Company has essentially stopped making new loans and has
concentrated on collection efforts to pay down outstanding debt. These
collection efforts include foreclosure proceedings on several loans.
The Company anticipates that cash flows from operations along with real estate
and receivable sales will be sufficient to provide for the retirement of
maturing debentures and mortgage obligations.
10
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PACIFIC SECURITY COMPANIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION AND LIQUIDITY (CONTINUED):
The Company continues to implement strategies for reorganizing, which include
liquidating a majority of the Company's assets over the course of the next year.
The Company reduced personnel during the prior year, incurring restructuring
charges exceeding $300,000 for severance payments and employment contracts for
seven employees. Six employees have continued to work for the Company after the
April 30, 2003, employment contract ending date. It is management's intention
that the Company will continue to own and invest in commercial real estate upon
completion of the restructuring, at which time management intends to evaluate
the opportunities to continue financing commercial real estate in light of
market conditions and available capital.
The Company's management is continuously evaluating loans for collectibility.
Additional provisions for loan losses may be required as the Company analyzes
each loan during its efforts to reduce outstanding loans receivable. Litigation
may be required in the course of collection. In addition, the Company's position
relative to bankruptcy filings by borrowers must be assessed.
The borrower on a Park City, Utah, loan filed for bankruptcy protection on May
1, 2002. The Company's principal portion of this loan totaled $1,250,000 and is
expected to be recovered through the sale of the foreclosed property,
approximately 27 acres of land, that was acquired through a trustee's sale after
the bankruptcy stay was lifted in December 2002. The Company has a sale pending
approval of entitlements.
The Company completed foreclosure proceedings on three Eagle, Idaho loans
totaling approximately $2,460,000 and obtained title to approximately 25 acres
of land in June 2003. The Company has negotiated a sale of approximately 75% of
this property pending approval of entitlements.
The Company has provided an allowance for loan loss of $100,000 on a Kirkland,
Washington, loan of approximately $140,000. The borrower was forced into
involuntary bankruptcy by unsecured creditors. A trustee's sale of the property
scheduled for May 9, 2003, was postponed. The Company is currently assessing its
potential for recovery.
The borrower on two loans totaling approximately $995,000 filed for bankruptcy
in March 2003. The loans are collateralized by eight lots, including one
partially finished house and eleven acres of land in Oakland Hills, California.
The Company is currently assessing its potential for recovery and has made a
$325,000 provision for loan loss on these loans during the quarter ending
October 31, 2003, bringing the total allowance for loan loss to approximately
$595,000.
As a result of a slowdown in economic activity since September 11, 2001, the
Company anticipates sales of its real estate, including foreclosed properties,
may involve delays and possible losses.
11
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PACIFIC SECURITY COMPANIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (THREE MONTHS):
The Company's net loss for the quarter ended October 31, 2003, was approximately
$474,000 compared with a net loss of approximately $511,000 for the quarter
ended October 31, 2002. The change was primarily attributable to a decrease of
$223,000 in interest expense, a decrease of $219,000 in salaries and
commissions, and a decrease of $133,000 in general and administrative expense
offset by a $359,000 reduction in interest income and an increase of $190,000 in
the provision for loan loss in the quarter ended October 31, 2003, compared with
the similar period in 2002.
Rental property revenue increased by approximately $21,000 (6%) to approximately
$347,000 in the quarter ended October 31, 2003, from approximately $326,000 in
2002. This increase primarily resulted from increased rents from properties
renovated during the year.
Rental property expenses were approximately $9,000 (2%) lower in 2003 than for
the comparable three months in 2002. This decrease was due to decreased
depreciation expense of approximately $4,000 (3%), increased operating expense
of $3,000 (2%), and decreased interest expense of $8,000 (9%).
Salaries and commissions were approximately $219,000 (66%) lower for the quarter
ended October 31, 2003, than the comparable three months in 2002 due to lower
commissions, severances, and bonuses paid or accrued in 2003.
Interest income, including loan fees, decreased approximately $359,000 (74%) for
the three months ended October 31, 2003, compared with the similar period in
2002 as the total amount of receivables declined. Loan fees declined
approximately $78,000 (93%) to $6,000 from $84,000 because of a lack of new loan
originations.
General and administrative expense decreased approximately $133,000 (49%) for
the three months ended October 31, 2003, compared with the same period in 2002,
primarily because of legal expense decreases of approximately $64,000 for
various matters and no restructuring expenses in 2003 compared with
approximately $41,000 in 2002.
Interest expense, exclusive of interest on debt associated with rental
properties, net of amounts capitalized, decreased approximately $223,000 (48%)
in the first quarter of 2003 compared with the same period in 2002 primarily due
to the reduction in interest-bearing debt.
The Company's effective income tax rate as a percentage of loss before federal
income tax was approximately 34% in 2003 and 2002.
12
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PACIFIC SECURITY COMPANIES, INC.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not believe that there has been a material change in its market
risk since the end of its last fiscal year.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
The Company's principal executive officer and principal financial officer have
evaluated the Company's disclosure controls and procedures (as defined in Rule
13a-14(c) under the Securities Exchange Act of 1934) as of a date within 90 days
of the filing date of this quarterly report on Form 10-Q. Based on that
evaluation, these officers concluded that the design and operation of the
Company's disclosure controls and procedures are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company was not engaged in any legal proceeding of a material nature at
October 31, 2003. From time to time, the Company is a party to legal proceedings
in the ordinary course of business wherein it enforces its security interest in
loans.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
13
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PACIFIC SECURITY COMPANIES, INC.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
ITEM 5. OTHER INFORMATION
On October 14, 2003, the Company amended its articles of incorporation to change
the name of the corporation from Pacific Security Financial, Inc. to Pacific
Security Companies, Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 CEO Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 CFO Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 CEO Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
14
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PACIFIC SECURITY COMPANIES, INC.
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
Pacific Security Companies, Inc.
/s/ David L. Guthrie
- ---------------------------------
David L. Guthrie
President/Chief Executive Officer
December 12, 2003
/s/ Donald J. Migliuri
- ---------------------------------
Donald J. Migliuri
Secretary-Treasurer/
Chief Financial Officer
December 12, 2003
15
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