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 March 31, 2013
	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 0-8463 

PISMO COAST VILLAGE, INC.                                                     

(Exact name of registrant as specified in its charter)

                                       California                                                                                    95-2990441          

(State or other jurisdiction of incorporation or organization)                                 (IRS Employer ID No.)

165 South Dolliver Street, Pismo Beach, CA                                                                                     93449  

(Address of Principal Executive Offices)                                                                                         (Zip Code)

                                                                           (805) 773-5649                                                                     

Registrant’s telephone number, including area code

____________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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 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.          YES [X]            NO [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Subsection 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES [X]            NO [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

[  ] Large accelerated filer                                       [  ] Accelerated filer

 [  ] Non-accelerated filer                                          [X] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       YES [  ]            NO [X]

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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.            YES [  ]            NO [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.            1,787

PART I – FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

The following financial statements and related information are included in this Form 10-Q, Quarterly Report.

1.         Accountant’s Review Report

2.         Balance Sheets

3.         Statements of Operations and Retained Earnings

4.         Statements of Cash Flows

5.         Notes to Financial Statements (Unaudited)

The financial information included in Part I of this Form 10-Q has been reviewed by Brown Armstrong Accountancy Corporation, the Company's Certified Public Accountants, and all adjustments and disclosures proposed by said firm have been reflected in the data presented. The information furnished reflects all adjustments which, in the opinion of management, are necessary to a fair statement of the results for the interim periods.

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ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

STATEMENT ON FORWARD-LOOKING INFORMATION

Certain information included herein contains statements that may be considered forward-looking statements, 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.

OVERVIEW

The Company continues to promote and depend upon recreational vehicle camping as the primary source of revenue. The rental of campsites to the general public provides income to cover expenses, complete capital improvements, and allow shareholders up to forty-five free nights camping annually. Additional revenues come from RV storage and spotting, RV service and repair, on-site convenience store, and other ancillary activities such as laundromat, arcade, and bike rental.

The Company has been fortunate not to have significant impact due to the current economy. The RVing public actively seeks accommodations on the Central Coast despite volatile fuel prices and personal financial uncertainties. RVing offers an affordable outdoor recreational experience, and the Company provides quality facilities and services in a highly popular location. Total site occupancy is up 1.3% compared to this time last year due to the timing of Spring break. Occupancy projections look equal to last year throughout the remainder of the fiscal year. Revenues from ancillary operations such as the General Store, arcade, laundromat, and bike rental are flat to slightly down year-to-date, and management feels this is directly related to the economy, and that this trend will continue throughout the remainder of the fiscal year.

RV storage and towing continue to be a primary source of revenue for the Company. RV storage provides numerous benefits to the customer including: no stress of towing, no need to own a tow vehicle, use of RV by multiple family members, and convenience.

Ongoing investment in resort improvements has assured resort guests and shareholders a top quality, up-to-date facility. This quality and pride of ownership was evident when the National Association of RV Parks and Campgrounds Park of the Year was awarded to the resort for 2007-08. In addition, in a national “My Favorite Campground” contest sponsored by Woodalls, Pismo Coast Village was voted as one of the top ten favorite campgrounds for 2011. Also, Pismo Coast Village was one of forty-four parks nationally to receive an industry rated “A” park from over 33,000 surveys for customer satisfaction.

The Company’s commitment to quality, value, and enjoyment is underscored by the business’s success due to word of mouth and referrals from guests. In addition, investment for online marketing, ads in the two leading national directories, and trade magazine advertising formulates most of the business-marketing plan.

RESULTS OF OPERATIONS

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 laundry 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.

Income from resort operations for the three‑month period ended March 31, 2013, increased $107,273, or 11.1%, above the same period in 2012. This increase in income reflects a $77,851, or 11.8%, increase in site revenue due to paid occupancy increasing 6.8%. Also reflected in this increase is a $23,091, or 8.0%, increase in RV storage activity. Resort Operations Income for the six‑months ended March 31, 2013, increased $155,889, or 7.8%, from the same period ended March 31, 2012. This increase is due primarily to an increase of $105,460, or 7.6%, in site revenue as a result of a 2.1% increase in paid site occupancy and a rate increase effective January 1, 2012. RV storage activity contributed to this increase with a 7.2%, or $41,496, increase in revenue.

Seasonal fluctuations within this industry are expected, and management projects that income for the fourth quarter will be approximately 40% of its annual revenue. This approximation is based on historical information.

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Income from retail operations for the three‑month period ended March 31, 2013, increased $30,014, or 14.8%, above the same period in 2012. The General Store revenue was up $22,036, or 21.8%, and RV Service revenue increased $7,946, or 7.7%, from the previous year. Income from Retail Operations for the six‑month period ending March 31, 2013, increased by $26,237, or 6.2%, above the same period ended March 31, 2012. The General Store was up $23,527, or 11.2%, and RV Service was up $2,709, or 1.2%. Management recognizes this economy is impacting the ancillary revenue areas within the resort. The RV Service operation is marketed to off‑resort customers, and, therefore, is not as impacted by resort occupancy. Management continues to place importance upon ongoing review of retail product mix, attention to service, and staff training. The Company anticipates flat to slightly positive performance in income from retail operations through the remainder of fiscal year 2013.

Operating expenses for the three‑month period ending March 31, 2013, decreased $11,097, or 1.1%, below the same period ended March 31, 2012. This decrease in expenses primarily reflects workers’ compensation insurance, land lease, and resort repairs and maintenance. For the six‑month period ending March 31, 2013, operating expenses decreased by $36,467, or 1.8%, below the same period in 2012. This decrease reflects, workers' compensation insurance, landscaping (primarily tree trimming and removal), land lease, small equipment, and repairs and maintenance. Management continues to review and scrutinize expenses in order to maximize efficiency and profitability during this volatile economy. Due to the age of the Resort, the Company is undertaking maintenance activity that is considered necessary in order to continue providing quality facilities and services. Some of these projects include road repair, utility improvements, landscaping, and building repair.

Cost of Goods Sold expenses, as a percentage of retail income for the three‑months ended March 31, 2013, are 44.7% compared to 51.0% for the same period in 2012. For the six‑months ended March 31, 2013, Cost of Goods Sold expenses were 46.3% compared to 51.4% the previous year. These levels are well within the guidelines established by management for the individual category sales of RV supplies and General Store merchandise.

Interest Expense for the three‑months ended March 31, 2013, is $47,744, compared to $53,653 for the same period in 2012. For the six‑month period ended March 31, 2013, compared to the same period in 2012, interest expense was $96,507 and $107,723, respectively. This expense reflects financing for the purchase of additional RV storage properties which closed escrow January 11, 2006, April 6, 2006, and March 5, 2008.

Income before provision for income tax for the three‑month period ended March 31, 2013, increased by $151,386, reflecting increased income in resort and retail operations and less operating expenses compared to the previous year. For the six‑months ended March 31, 2013, income before provisions for income tax increased by $235,313, reflecting increased income from resort and retail operations and a decrease in operating expenses. Revenues during this period are directly attributed to and are consistent with seasonal occupancy of a tourist‑oriented business.

Upon review of operational expenses, occupancy, and competition, the Board of Directors may approve adjustments to the nightly site rental rates or towing and storage rates. Due to the nature of business and economic cycles and trends, rates may be adjusted accordingly, if deemed necessary. Although the supply‑demand balance generally remains favorable, future operating results could be adversely impacted by weak demand. This condition could limit the Company's ability to pass through inflationary increases in operating costs at higher rates. Increases in transportation and fuel costs or sustained recessionary periods could also unfavorably impact future results. However, the Company believes that its financial strength and market presence will enable it to remain extremely competitive. It is anticipated the published rates will continue to market site usage at its highest value and not negatively impact the Company's ability to capture an optimum market share.

LIQUIDITY

The Company plans capital expenditures of approximately $525,000 in fiscal year 2013 to further enhance the resort facilities and services. These projects include: renovation of 50 campsites and upgrading some resort television channels to high definition quality. 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. With the exception of the new financial reporting program, all other 2012 projects were completed on time and within budget.

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The Company's current cash position as of March 31, 2013, is $2,127,293, which is 16.05% more than the position on September 30, 2012. This increase in cash on hand reflects the current year to date increase in income of $182,126, or 7.5%, and a $36,467, or 1.8%, decrease in expenses. The present level of cash is being maintained in anticipation of large capital expenditures. Management is planning and implementing long‑term renovations to the Resort property, which includes redesigning sites and utilities to accommodate the needs of modern recreational vehicles and replacing restroom buildings.

Accounts payable and accrued liabilities decreased $57,173, or 18.8%, from the same period last year. This reflects some significant expenditures associated with the campsite renovation completed on March 30, 2012. All undisputed payables have been paid in full according to the Company's policy.

The Company has consistently demonstrated an ability to optimize revenues developed from the resort and retail operations during the summer season. Historically the Company, because of its seasonal market, has produced 60% to 65% of its revenue during the third and fourth quarters of the fiscal year, with more than 40% being produced during the fourth quarter. The third and fourth quarters' occupancies are expected to be consistent with that of past years.

DISCLOSURE CONCERNING WEBSITE ACCESS TO COMPANY REPORTS

The Company makes available on its website, www.pismocoastvillage.com, access to its annual report on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K, 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 (SEC).

The public may read and copy any of the materials filed with the SEC at the SEC's Public Reference Room located at 100 F Street, N. E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1‑800‑SEC‑0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy statements, and other information that the Company files with the SEC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not Applicable

ITEM 4T.     CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

As required by Rule 13a‑15 under the Securities Exchange Act of 1934 (the "1934 Act"), as of March 31, 2013, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer/General Manager (our principal executive officer) and our Chief Financial Officer (our principal financial officer). Based upon and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as described in Item 8A(T) included with our Annual Report on Form 10‑K for the year ended September 30, 2012.

5

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the 1934 Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) promulgated by the SEC under the 1934 Act) during the six‑months ended March 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II ‑ OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

No pending legal proceedings against the Company other than routine litigation incidental to the business.

ITEM 2. UNREGISTERED SALES OF EQUITY 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

ITEM 5. OTHER INFORMATION

Not Applicable

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ITEM 6. EXHIBITS

Exhibit No.	Description of Exhibit	Sequential Page Number
27	Financial Data Schedule
99	Accountant’s Review Report
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Ronald Nunlist, President and Chairman of the Board)
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Jay Jamison, Chief Executive Officer and principal executive officer)
31.3	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Wayne Hardesty, Chief Financial Officer, principal financial officer and principal accounting officer)
32.1	Certification Pursuant to 18 U. S. C. Subsection 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Ronald Nunlist, President and Chairman of the Board)
32.2	Certification Pursuant to 18 U. S. C. Subsection 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Jay Jamison, Chief Executive Officer and principal executive officer)
32.3	Certification Pursuant to 18 U. S. C. Subsection 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Wayne Hardesty, Chief Financial Officer, principal financial officer and principal accounting officer)

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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.

PISMO COAST VILLAGE, INC.

(Registrant)

Date:          May 13, 2013

Signature:   /S/ RONALD NUNLIST

Ronald Nunlist, President and Chairman of the Board

Date:          May 13, 2013

Signature:   /S/ WAYNE HARDESTY

Wayne Hardesty, V.P. - Finance/Chief Financial Officer

(principal financial officer and principal accounting officer)

Date:          May 13, 2013

Signature:   /S/ JAY JAMISON

Jay Jamison, General Manager/Chief Executive Officer

(principal executive officer)

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REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors

Pismo Coast Village, Inc.

165 South Dolliver Street

Pismo Beach, California 93449

We have reviewed the accompanying balance sheets of Pismo Coast Village, Inc. as of March 31, 2013 and 2012 and the related statements of operations and retained earnings and cash flows for the three and six-month periods ended March 31, 2013 and 2012. These interim financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

                                                                  BROWN ARMSTRONG ACCOUNTANCY CORPORATION

Bakersfield, California

May 10, 2013

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PISMO COAST VILLAGE, INC.
BALANCE SHEETS
MARCH 31, 2013 AND 2012 AND SEPTEMBER 30, 2012
		March 31,		September 30,		March 31,
		2013		2012		2012
		(Unaudited)		(Audited)		(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	2,127,293	$	1,832,935	$	1,938,907
Accounts receivable		16,114		20,547		19,256
Inventory		192,734		157,795		176,164
Current deferred taxes		74,700		73,600		73,000
Prepaid income taxes		122,800		103,800		222,500
Prepaid expenses		48,542		40,176		43,275
Total current assets		2,582,183		2,228,853		2,473,102
Pismo Coast Village Recreational Vehicle
Resort and Related Assets –
Net of accumulated depreciation		14,533,532		14,227,301		14,328,492
Other Assets		20,471		22,666		24,863
Total Assets	$	17,136,186	$	16,478,820	$	16,826,457
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued expenses	$	246,713	$	150,516	$	303,886
Accrued salaries and vacation		65,258		183,322		64,912
Rental deposits		1,537,403		882,570		1,498,662
Current portion of long-term debt		172,403		168,074		135,938
Total current liabilities		2,021,777		1,384,482		2,003,398
Long-Term Liabilities
Long-term deferred taxes		811,700		796,800		657,700
N/P Donahue Trans		82,817		91,288		33,271
N/P Mission Community Bank		3,560,163		3,639,799		4,079,638
Total Liabilities		6,476,457		5,912,369		6,774,007
Stockholders’ Equity
Common stock – no par value, 1,800 shares
Issued, 1,787 and 1,787 shares outstanding at
March 31, 2013 and 2012, respectively		5,606,919		5,606,919		5,606,919
Retained earnings		5,052,810		4,959,532		4,445,531
Total stockholders’ equity		10,659,729		10,566,451		10,052,450
Total Liabilities and Stockholders’ Equity	$	17,136,186	$	16,478,820	$	16,826,457

The accompanying notes are an integral party of these financial statements.

10

PISMO COAST VILLAGE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
THREE AND SIX MONTHS ENDED MARCH 31, 2013 AND 2012
	Three Months				Six Months
	Ended March 31,				Ended March 31,
	2013		2012		2013		2012
Income
Resort operations	$	1,071,070	$	963,797	$	2,149,942	$	1,994,053
Retail operations		233,166		203,152		450,599		424,362
Total income		1,304,236		1,166,949		2,600,541		2,418,415
Cost and Expenses
Operating expenses		966,632		977,729		1,968,892		2,005,359
Cost of goods sold		104,177		103,547		208,474		218,186
Depreciation and amortization		87,026		84,346		169,117		164,301
Total cost and expenses		1,157,835		1,165,622		2,346,483		2,387,846
Income from Operations		146,401		1,327		254,058		30,569
Other Income (Expense)
Interest and dividend income		964		561		1,927		1,319
Interest expense		(47,744)		(53,653)		(96,507)		(107,723)
Total other income (expense)		(46,780)		(53,092)		(94,580)		(106,404)
Loss Before Provision for Income Tax		99,621		(51,765)		159,478		(75,835)
Income Tax Expense (benefit)		(60,700)		(22,100)		66,200		(33,300)
Net Income (loss)	$	160,321	$	(29,665)		93,278		(42,535)
Retained Earnings – Beginning of Period						4,959,532		4,488,066
Retained Earnings – End of Period					$	5,052,810	$	4,445,531
Net Income (Loss) Per Share	$	89.72	$	(16.60)	$	52.20	$	(23.80)

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

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PISMO COAST VILLAGE, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED MARCH 31, 2013 AND 2012
	2013				2012
Cash Flows From Operating Activities
Net Income (Loss)			$	93,278			$	(42,535)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation	$	169,117			$	164,301
Decrease in accounts receivable		4,433				3,823
Increase in inventory		(34,939)				(21,709)
Increase (Decrease) in current deferred taxes		(1,100)				600
Increase in prepaid income taxes		(19,000)				(221,200)
Decrease in prepaid expenses		(8,366)				602
Decrease in other assets		2,195				2,196
Increase in accounts payable and accrued
expenses		96,198				143,504
Decrease in accrued salaries and vacation		(118,064)				(110,637)
Increase in rental deposits		654,833				702,504
Increase (decrease) in deferred taxes		14,900				(6,300)
Total adjustments				760,207				657,684
Net cash provided by operating activities				853,485				615,149
Cash Flows Used in Investing Activities
Capital expenditures		(475,350)				(411,697)
Net cash used in investing activities				(475,350)				(411,697)
Cash Flows from Financing Activities
Borrowings on long-term debt		-				-
Principal payments on note payable		(83,777)				(66,238)
Net cash (used in) financing activities				(83,777)				(66,238)
Net increase (decrease) in cash and				294,358				137,214
cash equivalents
Cash and Cash Equivalents – Beginning of				1,832,935				1,801,693
Period
Cash and Cash Equivalents – End of Period			$	2,127,293			$	1,938,907
Schedule of Payments of Interest and Taxes
Payments for interest			$	96,507			$	107,723
Payments for income tax			$	71,387			$	100,632

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

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PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2013 AND 2012 (Unaudited) AND SEPTEMBER 30, 2012 (Audited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Pismo Coast Village, Inc. (Company) is a recreational vehicle camping resort. Its business is seasonal in nature with the fourth quarter, the summer, being its busiest and most profitable.

Inventory

Inventory has been valued at the lower of cost or market on a first-in, first-out basis. Inventory is comprised primarily of finished goods in the general store and in the RV repair shop.

Depreciation and Amortization

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 resort improvements	5 to 40 years
Furniture, fixtures, equipment and leasehold improvements	5 to 31.5 years
Transportation equipment	5 to 10 years

Earnings (Loss) Per Share

The earnings per share are based on the 1,787 shares issued and outstanding. The financial statements report only basic earnings per share, as there are no potentially dilutive shares outstanding.

Cash and Cash Equivalents

The majority of the Company’s cash held with financial institutions is swept into overnight investments. Cash and cash equivalents include money market instruments and other highly liquid investments that are stated at cost, which approximates market value. Such investments, which have an original maturity of three months or less, are considered to be cash equivalents for purposes of the statement of cash flows.

Concentration of Credit Risk

At March 31, 2013, the Company had cash deposits in excess of the $250,000 federally insured limit with Mission Community Bank of $170,545; however, in the past the Company has used Excess Deposit Insurance Bond, which secures deposits up to $1,500,000. It has recently been stated by bank regulators that this insurance bond is not enforceable. Mission Community Bank is a member of CDARS, the Certificate of Deposit Account Registry Service. Large deposits are divided into smaller amounts and placed with other FDIC insured banks which are also members of the CDARS network. Then, those member banks issue CDs in amounts under $250,000, so that the entire investment is eligible for FDIC insurance.

13

PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2013 AND 2012 (Unaudited) AND SEPTEMBER 30, 2012 (Audited)

PAGE 2

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company uses the asset-liability method of computing deferred taxes in accordance with Accounting Standards Codification (ASC) Income Taxes topic. ASC 740 requires, among other things, that if income is expected for the entire year, but there is a net loss to date, a tax benefit is recognized based on the annual effective tax rate.

ASC 740 also requires, among other things, the recognition and measurement of uncertain tax positions based on a “more likely than not” (likelihood greater than 50%) approach. As of March 31, 2013, the Company did not maintain any uncertain tax positions under this approach and, accordingly, all tax positions have been fully recorded in the provision for income taxes. It is the policy of the Company to consistently classify interest and penalties associated with income tax expense separately from the provision for income taxes. The Company does not expect any material changes through March 31, 2014. Although the Company does not maintain any uncertain tax positions, tax returns remain subject to examination by the internal Revenue Service for fiscal years ending on or after September 30, 2008 and by the California Franchise Tax Board for fiscal years ending on or after September 30, 2007.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

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.

Advertising

The Company follows the policy of charging the costs of non-direct advertising as incurred. Advertising expense was $21,362 and $23,453 for the six months ended March 31, 2013 and 2012, respectively. There was no advertising expense capitalized in prepaid expense.

Subsequent Events

On April 2, 2013, the Company paid $200,000 toward the Mission Community Bank Note Payable principal balance. Subsequent events have been evaluated through May 10, 2013, which is the date the financial statements were available to be issued.

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PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2013 AND 2012 (Unaudited) AND SEPTEMBER 30, 2012 (Audited)

PAGE 3

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements

The Company has reviewed all recently issued accounting pronouncements and does not believe the adoption of such pronouncements have an impact on the Company’s financial condition or results of their operations. Various accounting standards and interpretations were issued with effective dates subsequent to December 31, 2012. The Company has evaluated the recently issued accounting pronouncements that are effective in the current period and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows when adopted.

NOTE 2 - PISMO COAST VILLAGE RECREATIONAL VEHICLE RESORT AND RELATED ASSETS

At March 31, 2013, September 30, 2012 and March 31, 2012, property and equipment included the following:

	March 31, 2013		September 30, 2012		March 31, 2012
Land	$	9,957,263	$	9,957,263	$	9,957,263
Building and resort improvements		10,730,285		10,272,349		11,074,248
Furniture, fixtures, equipment and
leasehold improvements		463,486		449,226		551,730
Transportation equipment		457,989		457,989		472,478
Construction in progress		62,984		62,027		54,886
		21,672,007		21,198,854		22,110,605
Less: accumulated depreciation		(7,138,475)		(6,971,553)		(7,782,113)
	$	14,533,532	$	14,227,301	$	14,328,492

NOTE 3 - LINE OF CREDIT

The Company’s revolving line of credit for $500,000 expired on March 24, 2013. There was no outstanding amount on the line of credit at March 31, 2013 and 2012 and September 30, 2012. The Company’s line of credit is expected to be renewed in May 2013.

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PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2013 AND 2012 (Unaudited) AND SEPTEMBER 30, 2012 (Audited)

PAGE 4

NOTE 4 - NOTE PAYABLE

The Company secured permanent financing on the purchase of storage lot land in Arroyo Grande, California, with Mission Community Bank. The loan was refinanced on April 6, 2006 and consolidated with a note for the purchase of another storage lot in Oceano, California. The total loan currently outstanding is $940,045 and was financed over a period of ten years at a variable interest rate currently at 5.00%. The lot in Oceano was formerly leased for $4,800 per month and was purchased for $925,000. The payments are currently $12,760 per month interest and principal. The Company also secured permanent financing on the purchase of another storage lot in Arroyo Grande with Mission Community Bank. The loan originated on May 8, 2008. The total loan currently outstanding is $2,775,840 and financed over a period of ten years at a variable interest rate currently at 5.0%. The payments are currently $15,416 per month interest and principal. The Company secured a vehicle lease with Donahue Transportation Services Corp on a 2008 Tow Truck. The loan originated on December 9, 2009. The total loan currently outstanding is $33,274 and financed over a period of seven years at an interest rate of 8.39%. The payments are currently $799 per month interest and principal. The Company secured a lease, which has been classified as a capital lease and included with notes payable. The capital lease is with Donahue Transportation Service Corp on a 2013 Hino Truck. The lease originated on May 10, 2012. The balance currently outstanding is $66,224 and is financed over a period of seven years at an interest rate of 4.751% The payments are currently $1,046 per month interest and principal.

For the Periods Ending March 31,
2014	$	172,403
2015		181,464
2016		190,566
2017		673,880
2018		69,295
Thereafter		2,527,775
	$	3,815,383

NOTE 5 - COMMON STOCK

Each share of stock is intended to provide the shareholder with free use of the resort for a maximum of 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 period.

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PISMO COAST VILLAGE, INC.

NOTES TO FINANCIAL STATEMENTS

AS OF MARCH 31, 2013 AND 2012 (Unaudited) AND SEPTEMBER 30, 2012 (Audited)

PAGE 5

NOTE 6 - INCOME TAXES

The provision for income taxes is as follows:

	March 31, 2013		March 31, 2012
Income tax expense (benefit)	$	66,200	$	(33,300)

The Company uses the asset-liability method of computing deferred taxes in accordance with FASB Accounting Standards Codification (ASC) Topic 740. The difference between the effective tax rate and the statutory tax rates is due primarily to the effects of the graduated tax rates, state taxes net of federal tax benefit and nondeductible variable costs of shareholder usage.

NOTE 7 - OPERATING LEASES

The Company leases a lot in Oceano, California, to use as storage lot at $2,933 per month. The lease has converted to a month-to-month lease; however, the lessor is considering a long-term renewal at this time.

The Company has a five-year lease obligation for a copier. Rental expense under this operating lease is $414 per month.

Future minimum lease payments to lease equipment are as follows:

For the Year Ended March 31,
2014	$	4,965
2015		4,965
2016		4,965
2017		4,965
2018		-
Thereafter		-
	$	19,860

Rent expense under these agreements was $41,837 and $46,409 for the six-months ended March 31, 2013 and 2012, respectively.

NOTE 8 - 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 Company’s matching portion of the 401(k) safe harbor plan was $25,724 for the six months ended March 31, 2013. The contribution to the pension plan for the six months ended March 31, 2012 was $26,189.

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