UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 20162023
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________from________ to________
Commission File No. 000-49990
PCS EDVENTURES!.COM, INC., INC.
(Exact name of Registrant as specified in its charter)
| Idaho | 82-0475383 | |
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
345 Bobwhite Court, 11915 West Executive Drive, Suite 200101
Boise, Idaho 8370683713
(Address of Principal Executive Offices)
(208)343-3110
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) 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 (§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 Registrantregistrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or a smaller reportingan emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer☐ | Smaller reporting company ☒ |
| Emerging growth company ☐ |
Large accelerated filer [ ]Accelerated filer [ ] Non-accelerated filer [ ] Smaller reportingIf an emerging growth company, [X]indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]☐ No [X]☒
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 Sections 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.
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date:
February 10, 2017: 100,308,37214, 2024: shares of Common Stock
Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Quarterly Report. We cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance on forward-looking statements. You should carefully read this Quarterly Report completely, and it should be read and considered with all other reports filed by us with the United States Securities and Exchange Commission (the “SEC”) that are contained in the SEC Edgar Archives. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
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| 2 |
INDEXPCS EDVENTURES!, Inc.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2023
INDEX
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.
(This space intentionally left blank.)
Balance Sheets
(Unaudited)
December 31, 2023 (Unaudited) | March 31, 2023 (Audited) | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 2,006,618 | $ | 442,657 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $18,469 | 149,121 | 363,947 | ||||||
| Accounts receivable, other receivables | 45,370 | 13,312 | ||||||
| Prepaid expenses | 954,917 | 436,118 | ||||||
| Inventory, net | 1,794,416 | 1,237,872 | ||||||
| Total Current Assets | 4,950,442 | 2,493,906 | ||||||
NONCURRENT ASSETS | ||||||||
| Lease Right-of-Use Asset | 301,569 | 173,352 | ||||||
| Deposits | 6,300 | 6,300 | ||||||
| Property and equipment, net | 39,766 | 31,533 | ||||||
| Deferred tax asset | 1,011,466 | 1,011,466 | ||||||
| Total Noncurrent Assets | 1,359,101 | 1,222,651 | ||||||
| TOTAL ASSETS | $ | 6,309,543 | $ | 3,716,557 | ||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 364,436 | $ | 27,927 | ||||
| Payroll liabilities and accrued expenses | 108,358 | 226,231 | ||||||
| Deferred revenue | 51,185 | 7,085 | ||||||
| Lease Liability, current portion | 90,657 | 103,026 | ||||||
| Total Current Liabilities | 614,636 | 364,269 | ||||||
| Lease Liability, net of current portion | 222,448 | 72,726 | ||||||
| Total Noncurrent Liabilities | 222,448 | 72,726 | ||||||
| TOTAL LIABILITIES | 837,084 | 436,995 | ||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred stock, no par value, authorized shares, shares issued and outstanding | - | - | ||||||
| Common stock, no par value, authorized shares, and shares issued and outstanding | - | - | ||||||
| Additional Paid-in Capital | 40,570,459 | 40,635,392 | ||||||
| Accumulated deficit | (35,098,000 | ) | (37,355,830 | ) | ||||
| Total Stockholders’ Equity | 5,472,459 | 3,279,562 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 6,309,543 | $ | 3,716,557 | ||||
| December 31, 2016 | March 31, 2016 | |||||||
| (unaudited) | (audited) | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 41,073 | $ | 54,357 | ||||
| Accounts receivable, net of allowance for doubtful accounts of$2,096 and $2,096, respectively | $ | 177,734 | $ | 752,922 | ||||
| Prepaid expenses | $ | 49,918 | $ | 66,228 | ||||
| Finished goods inventory | $ | 390,500 | $ | 192,527 | ||||
| Note Receivables | $ | 21,198 | $ | 33,319 | ||||
| Intangible Assets, Net | $ | 11,179 | $ | 87,523 | ||||
| Total Current Assets | $ | 691,602 | $ | 1,186,876 | ||||
| NON-CURRENT ASSETS | ||||||||
| Fixed Assets, net of accumulated depreciation of $163,556 and $155,307, respectively | $ | 10,431 | $ | 18,680 | ||||
| Goodwill | $ | 1,270 | $ | 1,270 | ||||
| Deposits | $ | 12,475 | $ | 14,396 | ||||
| Total Non-Current Assets | $ | 24,176 | $ | 34,346 | ||||
| TOTAL ASSETS | $ | 715,778 | $ | 1,221,222 | ||||
The accompanying notes are an integral part of these financial statements.
PCS EDVENTURES!.COM,, INC.
Balance SheetsStatements of Operations
(Unaudited)
| December 31, 2016 | March 31, 2016 | |||||||
| (unaudited) | (audited) | |||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and other current liabilities | $ | 249,331 | $ | 417,923 | ||||
| Accounts payable, related party | $ | 2,022 | - | |||||
| Payroll liabilities payable | $ | 49,258 | $ | 42,054 | ||||
| Accrued expenses | $ | 391,338 | $ | 299,986 | ||||
| Deferred Revenue | $ | 42,982 | $ | 49,778 | ||||
| Note payable convertible, related party net of $0 and $0 discount for December 31, and March 31, 2016, respectively | - | $ | 200,000 | |||||
| Note payable | $ | 11,401 | $ | 149,878 | ||||
| Note payable, convertible | $ | 90,696 | - | |||||
| Note payable, related party net of $0 and $0 discount for December 31 and March 31, 2016 | $ | 18,570 | $ | 1,667,679 | ||||
| Note payable, related party, default | $ | 400,000 | - | |||||
| Lines of credit payable | $ | 14,599 | $ | 21,092 | ||||
| Total Current Liabilities | $ | 1,270,197 | $ | 2,848,390 | ||||
| NON-CURRENT LIABILITIES | ||||||||
| Notes payable, long term, convertible | - | $ | 90,696 | |||||
| Notes payable, long term, related party | $ | 1,503,308 | $ | 59,707 | ||||
| Total Non-Current Liabilities | $ | 1,503,308 | $ | 150.403 | ||||
| Total Liabilities | $ | 2,773,505 | $ | 2,998,793 | ||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, no par value, 20,000,000 authorized shares, no shares issued and outstanding | - | - | ||||||
| Common stock, no par value, 150,000,000 authorized shares, 100,308,372 and 76,442,668 shares issued and outstanding, respectively | $ | 39,719,796 | $ | 38,271,248 | ||||
| Restricted stock units payable | - | $ | 3,240 | |||||
| Accumulated deficit | $ | (41,777,523) | $ | (40,052,059) | ||||
| Total Stockholders’ Deficit | $ | (2,057,727) | $ | (1,777,571) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 715,778 | $ | 1,221,222 | ||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For the Three Months Ended December 31, | For the Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUE | 459,087 | 1,847,659 | 6,831,694 | 4,483,106 | ||||||||||||
| COST OF SALES | 310,657 | 751,711 | 2,503,552 | 1,833,669 | ||||||||||||
| GROSS PROFIT | 148,430 | 1,095,948 | 4,328,142 | 2,649,437 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Salaries and wages | 353,934 | 389,795 | 1,313,886 | 1,050,032 | ||||||||||||
| General and administrative expenses | 231,475 | 191,117 | 821,116 | 587,718 | ||||||||||||
| Total Operating Expenses | 585,409 | 580,912 | 2,135,002 | 1,637,750 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | (436,979 | ) | 515,036 | 2,193,140 | 1,011,687 | |||||||||||
| OTHER INCOME AND (EXPENSES) | ||||||||||||||||
| Tax credit | - | 94,703 | 31,258 | 94,703 | ||||||||||||
| Net interest income (expense) | 20,183 | (40,544 | ) | 30,774 | (114,705 | ) | ||||||||||
| (Gain) loss on lease modification | 2,658 | - | 2,658 | - | ||||||||||||
| Total Other Income (Expense) | 22,841 | 54,159 | 64,690 | (20,002 | ) | |||||||||||
| NET INCOME (LOSS) BEFORE TAXES | (414,138 | ) | 569,195 | 2,257,830 | 991,685 | |||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| NET INCOME (LOSS) | $ | (414,138 | ) | $ | 569,195 | 2,257,830 | $ | 991,685 | ||||||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic | $ | (0.00 | ) | $ | 0.00 | $ | 0.02 | $ | 0.01 | |||||||
| Diluted | $ | (0.00 | ) | $ | 0.00 | $ | 0.02 | $ | 0.01 | |||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic | 124,733,494 | 125,482,479 | 125,183,945 | 124,973,388 | ||||||||||||
| Diluted | 124,733,494 | 125,647,758 | 125,183,945 | 125,138,667 | ||||||||||||
The accompanying notes are an integral part of these financial statements.
StatementsStatement of OperationsStockholders’ Deficit
(Unaudited)
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| REVENUES | ||||||||||||||||
| Lab revenue | $ | 180,488 | $ | 224,662 | $ | 1,055,585 | $ | 1,613,195 | ||||||||
| International service revenue | $ | 182,164 | $ | 47,163 | $ | 189,664 | $ | 336,034 | ||||||||
| Learning Center revenue | $ | 34,330 | $ | 49,273 | $ | 103,880 | $ | 165,003 | ||||||||
| License and royalty revenue | $ | 15,608 | $ | 8,596 | $ | 29,415 | $ | 31,487 | ||||||||
| Total Revenues | $ | 412,590 | $ | 329,694 | $ | 1,378,544 | $ | 2,145,719 | ||||||||
| COST OF SALES | $ | 444,339 | $ | 167,702 | $ | 1,130,915 | $ | 953,448 | ||||||||
| GROSS PROFIT | $ | (31,749 | ) | $ | 161,992 | $ | 247,629 | $ | 1,192,271 | |||||||
| OPERATING EXPENSES | ||||||||||||||||
| Salaries and wages | $ | 280,501 | $ | 166,139 | $ | 820,849 | $ | 512,003 | ||||||||
| Depreciation and amortization expense | $ | 28,161 | $ | 2,598 | $ | 84,593 | $ | 16,915 | ||||||||
| General and administrative expenses | $ | 226,420 | $ | 353,126 | $ | 926,993 | $ | 1,058,868 | ||||||||
| Total Operating Expenses | $ | 535,082 | $ | 521,863 | $ | 1,832,435 | $ | 1,587,786 | ||||||||
| OPERATING LOSS | $ | (566,831 | ) | $ | (359,871) | $ | (1,584,806) | $ | (395,515) | |||||||
| OTHER INCOME AND EXPENSES | ||||||||||||||||
| Gain on Settlement | $ | 13,000 | - | $ | 13,000 | - | ||||||||||
| Interest expense | $ | (51,282 | ) | $ | (51,763) | $ | (153,658) | $ | (216,801) | |||||||
| Total Other Income/(Expense) | $ | 38,282 | $ | (51,763) | $ | (140,658) | $ | (216,801) | ||||||||
| LOSS FROM OPERATIONS | $ | (605,113 | ) | $ | (411,634) | $ | (1,725,464) | $ | (612,316) | |||||||
| NET LOSS | $ | (605,113 | ) | $ | (411,634) | $ | (1,725,464) | $ | (612,316) | |||||||
| NET COMPREHENSIVE LOSS | $ | (605,113) | $ | (411,634) | $ | (1,725,464) | $ | (612,316) | ||||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | | $ | (605,113 | ) | | $ | (411,634) | | | $ | (1,725,464) | | | $ | (612,316) | |
| Net loss per common share: | ||||||||||||||||
| Basic | $ | (0.01) | $ | (0.01) | $ | (0.02) | $ | (0.01) | ||||||||
| Diluted | $ | (0.01) | $ | (0.01) | $ | (0.02) | $ | (0.01) | ||||||||
| Weighted Average Number of Shares Outstanding Basic and Diluted | 95,444,493 | 76,134,002 | 87,816,984 | 75,247,919 | ||||||||||||
| # of Common Shares O/S | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Stockholders’ Equity (Deficit) | ||||||||||||||||
| Balance at 3/31/2022 | 124,482,479 | - | $ | 40,589,402 | $ | (40,132,007 | ) | $ | 457,395 | |||||||||||
| Net Income | - | - | - | 991,685 | 991,685 | |||||||||||||||
| Shares Issued (exercise of warrants) | 1,000,000 | - | 25,000 | - | 25,000 | |||||||||||||||
| Option expense | - | - | 15,990 | - | 15,990 | |||||||||||||||
| Balance at 12/31/2022 | 125,482,479 | - | $ | 40,630,392 | $ | (39,140,322 | ) | $ | 1,490,070 | |||||||||||
| Balance at 3/31/2023 | 125,732,479 | - | $ | 40,635,392 | $ | (37,355,830 | ) | $ | 3,279,562 | |||||||||||
| Net Income | - | - | - | 2,257,830 | 2,257,830 | |||||||||||||||
| Shares Redeemed | (998,985 | ) | (64,933 | ) | - | (64,933 | ) | |||||||||||||
| Option expense | - | - | - | - | - | |||||||||||||||
| Balance at 12/31/2023 | 124,733,494 | - | $ | 40,570,459 | $ | (35,098,000 | ) | $ | 5,472,459 | |||||||||||
| Balance at 9/30/2022 | 125,482,479 | - | $ | 40,630,392 | $ | (39,709,517 | ) | $ | 920,875 | |||||||||||
| Net Income | - | - | - | 569,195 | 569,195 | |||||||||||||||
| Shares Issued (exercise of warrants) | - | - | - | - | - | |||||||||||||||
| Option expense | - | - | - | - | - | |||||||||||||||
| Balance at 12/31/2022 | 125,482,479 | - | $ | 40,630,392 | $ | (39,140,322 | ) | $ | 1,490,070 | |||||||||||
| Balance at 9/30/2023 | 124,733,494 | - | $ | 40,570,459 | $ | (34,683,862 | ) | $ | 5,886,597 | |||||||||||
| Balance | 124,733,494 | - | $ | 40,570,459 | $ | (34,683,862 | ) | $ | 5,886,597 | |||||||||||
| Net Loss | - | - | - | (414,138 | ) | (414,138 | ) | |||||||||||||
| Net Income (Loss) | - | - | - | (414,138 | ) | (414,138 | ) | |||||||||||||
| Shares Redeemed | - | - | - | - | ||||||||||||||||
| Option expense | - | - | - | - | - | |||||||||||||||
| Balance at 12/31/2023 | 124,733,494 | - | $ | 40,570,459 | $ | (35,098,000 | ) | $ | 5,472,459 | |||||||||||
| Balance | 124,733,494 | - | $ | 40,570,459 | $ | (35,098,000 | ) | $ | 5,472,459 | |||||||||||
The accompanying notes are an integral part of these financial statements.
PCS EDVENTURES!.COM, INC., INC.
StatementStatements of Stockholders’ DeficitCash Flows (Unaudited)
(Unaudited)
| # of | Total | |||||||||||||||||||
| Common | Capital | Stock & RSU | Accumulated | Shareholders’ | ||||||||||||||||
| Shares O/S | Stock | Payable | Deficit | Equity (Deficit) | ||||||||||||||||
| Balance at 3/31/16 | 76,442,668 | $ | 38,271,248 | $ | 3,240 | $ | (40,052,059 | ) | $ | (1,777,571 | ) | |||||||||
| Stock issued for services | 75,000 | 6,250 | - | - | 6,250 | |||||||||||||||
| Stock Settlement | (200,000) | (22,000) | - | - | (22,000 | ) | ||||||||||||||
| Stock issued for Cash | 17,957,690 | 1,186,000 | - | - | 1,186,000 | |||||||||||||||
| Options exercised | 70,000 | 2,533 | - | - | 2,533 | |||||||||||||||
| Stock issued for bonus | 200,000 | 16,000 | - | - | 16,000 | |||||||||||||||
| RSU grants | - | - | (3,240 | ) | - | (3,240 | ) | |||||||||||||
| Conversion of notes payable for common stock | 5,763,014 | 230,521 | - | - | 230,521 | |||||||||||||||
| Option Expense | - | 29,244 | - | - | 29,244 | |||||||||||||||
| Net Loss | - | - | - | (1,725,464 | ) | (1,725,464 | ) | |||||||||||||
| Balance at 12/31/2016 (unaudited) | | | 100,308,372 | | | $ | 39,719,796 | | | $ | - | | | $ | (41,777,523 | ) | | $ | (2,057,727 | ) |
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Income | 2,257,830 | 991,685 | ||||||
| Stock based compensation | - | 15,990 | ||||||
| Depreciation and amortization | 7,863 | 3,470 | ||||||
| Amortization of right of use asset | 112,063 | 73,833 | ||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | 214,826 | (68,572 | ) | |||||
| (Increase) decrease in prepaid expenses | (518,799 | ) | (336,247 | ) | ||||
| (Increase) decrease in inventories | (556,544 | ) | (358,716 | ) | ||||
| (Increase) decrease in other current assets | (32,058 | ) | 92,002 | |||||
| (Decrease) increase in accounts payable and accrued liabilities | 218,636 | (98,641 | ) | |||||
| Increase (decrease) in lease liability | (102,927 | ) | (72,433 | ) | ||||
| Increase (decrease) in unearned revenue | 44,100 | 2,288 | ||||||
| Net Cash Provided by Operating Activities | 1,644,990 | 244,659 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash paid for purchase of fixed assets | (16,096 | ) | (16,459 | ) | ||||
| Net Cash Used by Investing Activities | (16,096 | ) | (16,459 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Common stock repurchased and cancelled | (64,933 | ) | - | |||||
| Principal payments on debt | - | (143,327 | ) | |||||
| Proceeds from sale of stock | - | 25,000 | ||||||
| Net Cash Used by Financing Activities | (64,933 | ) | (118,327 | ) | ||||
| Net Increase (Decrease) in Cash | 1,563,961 | 109,873 | ||||||
| Cash at Beginning of Period | 442,657 | 584,070 | ||||||
| Cash at End of Period | 2,006,618 | 693,943 | ||||||
| Cash Paid for Interest | 648 | 107,955 | ||||||
| Cash Paid for taxes | 41,957 | 4,868 | ||||||
| Non Cash Investing and Financing Transactions: | ||||||||
Right of use assets obtained in exchange for new operating lease liabilities | 240,281 | - | ||||||
The accompanying notes are an integral part of these financial statements.
PCS EDVENTURES!.COM, INC., INC.
Statements of Cash Flows
(Unaudited)
| Nine Months Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Loss | $ | (1,725,464 | ) | $ | (612,316 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Debt discount amortization | - | $ | 62,247 | |||||
| Gain on settlement | $ | (13,000 | ) | - | ||||
| Depreciation of assets | $ | 8,249 | $ | 7,792 | ||||
| Amortization of assets | $ | 76,344 | - | |||||
| Stock for services | $ | 19,010 | $ | 131,668 | ||||
| Impairment of Brain Mold | - | $ | 9,119 | |||||
| Stock payable for service | - | - | ||||||
| Amortization of fair value of stock options | $ | 29,244 | $ | 8,461 | ||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in accounts receivable | $ | 587,309 | $ | 206,414 | ||||
| (Increase) decrease in prepaid expenses | $ | 16,310 | $ | 58,079 | ||||
| (Increase) decrease in inventories | $ | (197,974 | ) | $ | (6,005 | ) | ||
| (Increase) decrease in other current assets | $ | 1,921 | $ | 18,722 | ) | |||
| (Increase) decrease in other assets | - | $ | 2,464 | |||||
| (Decrease) increase in accounts payable and accrued liabilities | $ | (37,492 | ) | $ | 198,935 | |||
| Increase (decrease) in unearned revenue | $ | (6,796 | ) | $ | (140,528 | ) | ||
| Net Cash Provided used by Operating Activities | $ | (1,242,339 | ) | $ | (92,392 | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash paid for purchase of fixed assets | - | - | ||||||
| Net Cash Used by Investing Activities | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from sale of stock | $ | 1,186,000 | $ | 8,400 | ||||
| Cash paid for settlement of shares for services | $ | (9,000 | ) | - | ||||
| Borrowings on note payable | $ | 250,380 | $ | 285,000 | ||||
| Proceeds from options | $ | 2,533 | - | |||||
| Principal payments on debt – Convertible | - | $ | (10,000 | ) | ||||
| Principal payments on debt | $ | (200,858 | ) | $ | (263,350 | ) | ||
| Net Cash Provided by Financing Activities | $ | 1,229,055 | $ | 20,050 | ||||
| Net Increase (Decrease) in Cash | $ | (13,284 | ) | $ | (72,342 | ) | ||
| Cash at Beginning of Period | $ | 54,357 | $ | 130,162 | ||||
| Cash at End of Period | $ | 41,073 | $ | 57,820 | ||||
The accompanying notes are an integral part of these financial statements
Statements of Cash Flows (continued)
(Unaudited)
| Nine Months Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| NON-CASH INVESTING & FINANCING ACTIVITIES | ||||||||
| Conversion of debt | $ | 230,521 | $ | 159,901 | ||||
| RSU accrued in prior period and issued in current period | - | 12,117 | ||||||
| Stock payable accrued in prior period and issued in current period | - | 9,000 | ||||||
| 2016 | 2015 | |||||||
| CASH PAID FOR | ||||||||
| Interest | $ | 102,376 | $ | 16,777 | ||||
| Income Taxes | $ | 800 | $ | 830 | ||||
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements
December 31, 20162023
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
PCS Edventures.com, Inc. (the Company) develops and markets STEAM (Science, Technology, Engineering, Arts, and Math) education products comprisedDescription of curriculum and materials. With its acquisition of Thrust-UAV in February, 2016, the Company also develops and markets a first person view (FPV) racing drone, which it assembles and markets primarily through distributors. The Company has used this racing-drone technology to create an education drone (also FPV) for the classroom to be used as a platform to teach STEAM topics. This initiative is in late stage development and is expected to be released in February, 2017. The Company sells its education products into all 50 U.S. states as well as into international markets. Most of the Company’s domestic education business is conducted with schools and entities that cater to after-school programs for students. Most of the Company’s international business is conducted with governmental agencies in that local market. Most of the Company’s revenue from its FPV racing drone has come from domestic sources, but the Company anticipates meaningful international revenue as it proceeds with its product release strategy. The Company expects that the vast majority of its education drone sales will be domestic. The Company anticipates recognizing its first meaningful revenues from its FPV racing drone and its first revenues from its education drone during its fourth fiscal quarter of 2017.Business
The financial statements presented herein are those of the Company.
In October 1994, the Company exchanged common stock on a one-for-one basis for common stock of PCS Schools, Inc. As a result of this exchange, PCS Schools, Inc. became a wholly-owned subsidiary of the Company. In the late 1990s, the Company divested the stand-alone learning labs to focus on the creation of turn-key lab modules coupled with web-based technology for use in the classroom and afterschool programs.
On March 27, 2000, the Company changed its name from PCS Education Systems, Inc. to PCS Edventures!. com,, Inc.
In August 2001, the Company successfully completed, an SB-2 registration filing with the Securities and Exchange CommissionIdaho corporation (the “SEC”) and began trading publicly on the OTC Bulletin Board.
On November 30, 2005, the Company entered into an agreement with 511092 N.B. LTD., a Canadian corporation (LabMentors), to exchange the Company’s common stock for common stock of 511092 N.B. LTD., which exchange was completed in December, 2005, with LabMentors becoming a wholly-owned subsidiary. In December 2005, the name of this subsidiary was formally changed to PCS LabMentors, Ltd. The Company divested LabMentors, the wholly-owned subsidiary, in August of 2013.
In January, 2012, the Company committed to a business plan enhancement, which included the opening, operating, and licensing of EdventuresLab private learning centers and launched a pilot program in the spring of 2012. An additional LearningLab was opened in Eagle, Idaho, in June of 2014.
On January 31, 2013, the Company formed a subsidiary called Premiere Science, Inc.“Company,” “PCS,” “PCSV,” “we,” “our,” “us” or similar words), incorporated and registeredin 1994, in the State of Idaho. The subsidiary is 100% wholly-ownedPCS specializes in experiential, hands-on, K12 education and drone technology. PCS has extensive experience and intellectual property (IP) that includes drone hardware, product designs, and K-12 curriculum content. PCS continually develops new educational products based upon market needs that the Company identifies through its sales and customer networks.
Our products facilitate STEM education by providing engaging activities that demonstrate STEM concepts and inspire further STEM studies, with the goal of ultimately leading students to pursue STEM career pathways. Due to our exceptionally detailed curriculum, our products are easy to teach and do not require a teaching degree or experience to administer.
Our educational products are developed from both in-house efforts and contracted services. They are marketed through reseller channels, direct sales efforts, partner networks, and web-based channels.
PCS has developed and sells a variety of STEM education products into the K12 market which can be categorized as follows:
| 1. | Enrichment Programs |
These camps are for the informal learning market and are designed to be highly engaging for students while easily administered by the instructor. The Company offers approximately thirty (30) different enrichment programs and was formed to use as an additional salestypically develops at least two (2) new programs each year. Some of the more popular programs include Ready, Set, Drone!; Traveling Artist; Unleash Your Wild Side, Build a Better World; Claymation; Oceanic Exploration; Pirate; and marketing tool to gain other business opportunities.Flight and Aerodynamics.
| 2. | Discover Series Products |
On September 26, 2014, the shareholders votedThese products are designed for the proposalmakerspace environment and include engaging STEM activities that motivate students to grantpursue educational pathways toward STEM careers. The Discover Series includes Discover Engineering; Discover Robotics & Physics; Discover Robotics & Programming; and Discover STEM.
| 3. | BrickLAB Products |
These products are designed for the Boardgrade school market and use the Company’s proprietary bricks (which are Lego compatible) and curriculum to engage students to explore, imagine and create within a STEM education framework. The Company offers a variety of Directorsgrade-specific BrickLAB products.
| 4. | Discover Drones, Add-on Drone Packages and Ala Carte Drone Items |
These products are designed around using drones as a platform for STEM education and career exploration. These titles include the authority to changeDiscover Drones series of Products; Discover Drones Indoor Coding Bundle; Discover Drones Indoor Racing Add-On; Discover Drones Outdoor Practice Add-on; and all the namespare parts and ala carte drone items offered in the Company’s comprehensive drone packages.
| 5. | STEAMventures BUILD Activity Book |
These series of activity books are designed for the K-3 market and ideal for a distance-learning environment. The series includes twelve (12) different issues. Instructor guides and/or family engagement guides are included. The Company also provides the necessary bricks for the builds in the activity books as a fashion that would remove the “.com” from its name,separate, but retain the current brand.related product.
On July 23, 2015, the Board of Directors resolved that the name of the
| 6. | Professional Development Training |
The Company be changedoffers professional development trainings, for a fee, to PCS Edventures!, Inc. No amendment toeducators who are implementing the Company’s Articles of Incorporation regarding this name change has been filed. At this time, theproducts in their classroom.
The Company has not completed the required filing with the Financial Industry Regulatory Authority (“FINRA”)intends to make this name change effective due to the cost relative to the expected benefits of doing so.continue developing STEM education products that address demand from large markets.
On February 15, 2016, the Company acquired Thrust UAV, a private company engaged in the development and assembly of FPV racing drones, for $109,000.Accounting Method
NOTE 2 - UNAUDITED FINANCIAL STATEMENTS
The December 31, 2016 financial statements presented herein are unaudited, and in the opinion of management, include all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of financial position, results of operations and cash flows. Such financial statements do not include all of the information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016.
Certain items for March 31, 2016 have been reclassified to conform to presentation in the quarter ended December 31, 2016.
The operating results for the nine-month period ended December 31, 2016, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2017.
NOTE 3 - GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally acceptedthe accrual method of accounting. The Company has elected a March 31 fiscal year end.
Cash and Cash Equivalents
Cash and cash equivalents, totaling $2,006,618 and $442,657 at December 31, 2023, and March 31, 2023, respectively, consist of operating and savings accounts. For purposes of the statements of cash flows, the Company considers all highly-liquid financial instruments with original maturities of three months or less at date of purchase to be cash equivalents.
Use of Estimates
The preparation of these financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the United States of America applicable to a going concern that contemplates the realizationamounts of assets and liquidationliabilities and disclosure of contingent assets and liabilities inat the normal coursedate of business. The established sourcesthe financial statements and the reported amounts of revenues are not presently sufficient to coverand expenses during the Company’s operating costs. The Company has accumulated significant losses, accounts payable and generated negative cash flows. The combination of these items raises substantial doubt about its ability to continue as a going concern. Management’s plans to alleviate this adverse position are as follows:
reporting period. Actual results could differ from those estimates. The Company’s strategysignificant estimates include reserves related to removeaccounts receivable and inventory, the going concern doubt isvaluation allowance related to focus attention on increasing STEAM education sales through both channel partnersdeferred tax assets, the valuation of equity instruments, and its direct sales force, to develop retail channels to sell its STEAM education products into, and to bring to market its FPV racing drone and STEAM education drone product lines from Thrust-UAV.debt discounts.
In January, the Company contracted with two new salespeople who will pursue STEAM education sales in the domestic market. The Company has implemented a number of initiatives to support its direct sales force and generate promising sales leads for them to pursue. The Company continues to seek retail partners for its STEAM education products. In December, the Company released its racing drone, the Riot 250R Pro. The Company has secured several distribution partners who have placed the product into their retail systems. The Company believes that sales will gain traction and become material during the fourth quarter of FY2017. The Company anticipates that its education drone product will be completed and available for sale in February, 2017. Based on preliminary information and feedback, the Company believes that its education drone sales will be material during the fourth quarter of FY2017.
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Concentration of Credit RiskRisks and Significant Customers
The Company extends credit to customers and is therefore subject to credit risk. TheFinancial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs initial and ongoing credit evaluations of its customers’ financial conditioncustomers and does not require collateral.maintains allowances for possible losses which when realized have been within the range of management’s expectations. An allowance for doubtful accounts is recorded to account for potential bad debts. Estimates are used in determining the allowance for doubtful accounts and are based upon an assessment of selected accounts, historic averages, and as a percentage of remaining accounts receivable by aging category. In determining these percentages, the Company evaluates historical write-offs,write- offs, and current trends in customer credit quality, as well as changes in credit policies. AtThe Company generally does not require collateral from its customers. The Company has established an allowance for doubtful accounts of $18,469 at December 31, 2016, a major international customer2023, and a domestic reseller accountedMarch 31, 2023.
Inventory
Finished goods inventory is composed of items produced in-house, as well as items from outside suppliers. These items include, but are not limited to, Fischertechnik® manipulatives, Brick manipulatives, drone components, digital media equipment, furniture units, curriculum, and other miscellaneous items used in our various labs. Our inventory is carried at the lower of cost or market and valued using the average cost method for 13% and 27%each item.
When indicators of inventory impairment exist, the Company measures the carrying value of the Company’ say accounts receivable, respectively.inventory against its market value, and if the carrying value exceeds the market value, the inventory value is adjusted accordingly. The Company has established a provision for excess and obsolete inventory reserve of $6,343 as of December 31, 2023, and March 31, 2023.
NOTE 5 – PREPAID EXPENSESProperty, Plant and Equipment
Prepaid expensesDepreciation on property and equipment is computed using the straight-line method over the estimated useful life of the asset. The Company had fully depreciated property and equipment prior to March 31, 2018. Beginning in fiscal year 2022 through the current reporting period, the Company purchased various warehouse and office equipment for $54,419 and recognized $14,653 in depreciation of that equipment for a total property and equipment of $39,766 as of December 31, 2023. As of March 31, 2023, property and equipment was $31,533, net of $6,790 in depreciation.
Software has been fully depreciated as of December 31, 2023 and March 31, 2023.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment annually, or when events or circumstances arise that indicate the existence of impairment for patents and other intangibles. There was no impairment recorded during the three and nine months ended December 31, 2023, and 2022.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the periodsfuture tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.
In November 2015, the Financial Accounting Standards Board issued ASU No. 2015-17, “Income Taxes (Topic 740)-Balance Sheet Classification of Deferred Taxes” (ASU 2015-17), which requires reporting the net amount of deferred tax assets and liabilities as a single noncurrent item on the classified balance sheet. Before this change, the net amounts of current and noncurrent deferred tax assets and liabilities were as follows:reported separately.
| December 31, 2016 | March 31, 2016 | |||||||
| Prepaid insurance | - | $ | 4,766 | |||||
| Prepaid inventory | $ | 31,956 | $ | 38,940 | ||||
| Prepaid software | $ | 14,000 | $ | 10,931 | ||||
| Prepaid expenses, other | $ | 3,962 | $ | 11,591 | ||||
| Total Prepaid Expenses | $ | 49,918 | $ | 66,228 | ||||
NOTE 6 – GOODWILL AND INTANGIBLE ASSETSWe account for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 prescribes the use of the asset and liability method to compute the differences between the tax bases of assets and liabilities and the related financial amounts, using currently enacted tax laws. If necessary, a valuation allowance is established, based on the weight of available evidence, to reduce deferred tax assets to the amount that is more likely than not to be realized. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of sufficient future taxable income. We exercise significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets.
GoodwillIn accordance with GAAP, the Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns for the open tax years in such jurisdictions. The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions, and no adjustment to such reserves was required by GAAP. No interest or penalties have been levied against the Company and none are anticipated, therefore no interest or penalty has been included in the provision for income taxes in the consolidated statements of operations. The Internal Revenue Code contains provisions which reduce or limit the availability and utilization of net operating loss (NOL) carry forwards in the event of a more than 50% change in ownership. If such an ownership change occurs with the Company, the use of these net operating losses could be limited. The table below details the years that remain open to tax examinations:
SCHEDULE OF INCOME TAX EXAMINATION
| Tax Year | Fiscal Year End | Filed Date | Open Through | ||||
| 2021 | 3/31/2022 | 2/3/2023 | 2/3/2026 | ||||
| 2020 | 3/31/2021 | 1/18/2022 | 1/18/2025 | ||||
| 2019 | 3/31/2020 | 1/28/2021 | 1/28/2024 |
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Revenue Recognition
The Company accounts for revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, which we adopted on April 1, 2018. Revenue amounts presented in our financial statements are recognized net of sales tax, value-added taxes, and other intangible assetstaxes. Amounts received as prepayment on future products or services are recorded as unearned revenues and recognized as income when the product is shipped, or service performed.
The Company had deferred revenue of $51,185 as of December 31, 2023, related to contractual commitments with customers where the performance obligation will be satisfied within the fiscal year ended March 31, 2024. The revenue associated with these performance obligations is recognized as the obligation is satisfied. The Company had $7,085 of deferred revenue as of March 31, 2023.
Most of our contracts with customers contain transaction prices with fixed consideration; however, some contracts may contain variable consideration in the form of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. This can result in recognition of revenue over time as we perform services or at a point in time when the deliverable is transferred to the customer, depending on an evaluation of the criteria for over time recognition in FASB ASC 606. For certain fixed-fee per transaction contracts, such as delivering training courses or conducting workshops, revenue is recognized during the period in which services are delivered in accordance with the pricing outlined in the contracts.
Stock-Based Compensation
We recognize stock-based compensation expense under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”). We use the Black-Scholes option pricing model to calculate the fair value of stock options at their respective grant date. The use of option valuation models requires the input of highly subjective assumptions, including the expected stock price volatility and the expected term of the option. The fair value of restricted stock awards is the fair market value on the date of grant. We recognize these compensation costs on a straight-line basis over the requisite service period, which is generally the vesting period of the award.
During fiscal year 2023, two sets of performance options were exercised. Mike J. Bledsoe, President, exercised options at $ per share. Michelle Fisher, Director of STEM Curriculum, exercised options at $ per share. As of December 31, 2023, and March 31, 2023, the Company had no outstanding warrants or options.
Business Segments and Related Information
GAAP establishes standards for the period wereway public business enterprises are to report information about operating segments in annual financial statements and requires enterprises to report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas and major customers. The Company currently operates in one business segment.
The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). Under ASC 260, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share (“EPS”) reflects the potential dilution that could occur assuming exercise of all dilutive unexercised stock options and warrants. The dilutive effect of these instruments was determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options and restricted stock awards, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded as follows:income tax expense when the stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock.
| December 31, 2016 | March 31, 2016 | |||||||
| Goodwill | $ | 1,270 | $ | 1,270 | ||||
| Intangible Assets | $ | 100,048 | $ | 100,048 | ||||
| Accumulated Amortization Intangible Assets | $ | (88,869 | ) | $ | (12,525 | ) | ||
| Total Goodwill and Intangible Assets | $ | 12,449 | $ | 88,793 | ||||
| 12 |
Intangible asset amortization expenseCommon stock outstanding reflected in the Company’s balance sheets includes restricted stock awards outstanding. Securities that may participate in undistributed net income with common stock are considered participating securities. The computation of diluted earnings per share does not assume exercise or conversion of securities that would have an anti-dilutive effect. The following schedules presents the calculation of basic and diluted net income per share:
| 2023 | 2022 | |||||||
| For the Three Months ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Income per common Share: | ||||||||
| Basic | $ | (0.00 | ) | $ | 0.00 | |||
| Diluted | $ | (0.00 | ) | $ | 0.00 | |||
| Weighted average number of common shares outstanding Basic | 124,733,494 | 125,482,479 | ||||||
| Weighted average number of common shares outstanding Fully Diluted | 124,733,494 | 125,647,758 | ||||||
Net income for the three months ended December 31, 2023, and 2022 was $(414,138) and $569,195, respectively.
| 2023 | 2022 | |||||||
| For the Nine Months ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Income per common Share: | ||||||||
| Basic | $ | 0.02 | $ | 0.01 | ||||
| Diluted | $ | 0.02 | $ | 0.01 | ||||
| Weighted average number of common shares outstanding Basic | 125,183,945 | 124,973,388 | ||||||
| Weighted average number of common shares outstanding Fully Diluted | 125,183,945 | 125,138,667 | ||||||
Net Income for the nine months ended December 31, 2016,2023, and 2015,2022, was $76,344$2,257,830 and $0,$991,685, respectively.
Recently Issued Accounting Pronouncements
The Company has reviewed recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.
NOTE 72 – FIXED ASSETSBUSINESS CONDITION
Assets and depreciation for the periods were as follows:
| December 31, 2016 | March 31, 2016 | |||||||
| Computer/office equipment | $ | 46,632 | $ | 46,632 | ||||
| Software | $ | 127,355 | $ | 127,355 | ||||
| Accumulated depreciation | $ | (163,556 | ) | $ | (155,307 | ) | ||
| Total Fixed Assets | $ | 10,431 | $ | 18,680 | ||||
Fixed asset depreciation expense for the nine months ended December 31, 2016, and 2015, was $8,249 and $10,486, respectively.
NOTE 8 – ACCOUNTS PAYABLE, RELATED PARTY AND OTHER ACCRUED EXPENSES
Accounts payable, related party, for the periods were as follows:
| December 31, 2016 | March 31, 2016 | |||||||
| Contract labor | $ | 1,260 | $ | - | ||||
| Employee reimbursement | $ | 762 | $ | - | ||||
| Total Accounts payable, related party | $ | 2,022 | $ | - | ||||
Other Accrued expenses for the periods were as follows:
| December 31, 2016 | March 31, 2016 | |||||||
| Interest payable | $ | 337,369 | $ | 222,409 | ||||
| Sales tax payable | $ | 2,065 | $ | 334 | ||||
| Credit card debt | $ | 51,904 | $ | 77,243 | ||||
| Total accrued expenses | $ | 391,338 | $ | 299,986 | ||||
NOTE 9 – NOTES PAYABLE
| Notes payable for the periods consisted of the following: | ||||||||
| December 31, 2016 | March 31, 2016 | |||||||
| Note payable convertible, related party net of $0 and $0 discount for December 31, and March 31, 2016, respectively | - | $ | 200,000 | |||||
| Note payable | $ | 11,401 | $ | 149,878 | ||||
| Notes payable, convertible | $ | 90,696 | - | |||||
| Note payable, related party net of $0 and $0 discount for December 31, and March 31, 2016 | $ | 18,570 | $ | 1,667,679 | ||||
| Note payable, related party, default | $ | 400,000 | - | |||||
| Lines of credit payable | $ | 14,599 | $ | 21,092 | ||||
| Notes payable, long term, convertible | - | $ | 90,696 | |||||
| Notes payable, long term, related party | $ | 1,503,308 | $ | 59,707 | ||||
| Total Notes Payable | $ | 2,038,574 | $ | 2,189,052 | ||||
Note Payable
On October 14, 2016, the Company executed a non-convertible promissory note with no warrants attached with a third party for $50,025 at 20% interest per annum, due November 30, 2016. The note was secured by accounts receivable. The note was paid in full on November 21, 2016, with accrued interest of $905. There was no accrued interest and the principal balance was $0 asAs of December 31, 2016.
On February 12, 2016,2023, the Company entered into a note payablehad $2.0 million in cash, $1.8 million in inventory, and $0.9 million in prepaid inventory, with no debt. Management strongly believes that the Company can sustain its operations over the course of $84,000. The note does not bear a stated interest rate, asthe next twelve (12) months with the cash it has a set nine payment arrangement of $9,333 per month for the nine months starting on April 1, 2016,hand, and with the final payment due on December 1, 2016. The note was paid in full accordingrevenue and associated profit generated from the sales expected over the course of the next twelve (12) months, especially given the Company’s large inventory and prepaid inventory balances.
NOTE 3 – ACCOUNTS RECEIVABLE
In the Company’s normal course of business, the Company provides credit terms to its terms. There was no accrued interestcustomers, which generally range from net fifteen (15) to thirty (30) days. The Company performs ongoing credit evaluations of its customers. The Company established an allowance for doubtful accounts of $18,469 at December 31, 2023, and March 31, 2023.
NOTE 4 – ACCOUNTS RECEIVABLE, OTHER RECEIVABLES
Other Receivables include receivables due to the principal balance was $0 asCompany derived from activities outside of its typical business transactions. As of December 31, 2016.
On February 12, 2016,2023, these other receivables included overpayments to the Company entered into a note payableInternal Revenue Service of $24,547. The note does not bear a stated interest rate, as it has a set nine payment arrangement of $2,727 per month for the nine months starting on April 1, 2016, with the final payment due on December 1, 2016. The note was paid in full according to terms. There was no accrued interest and the principal balance was $0 as of December 31, 2016.
On May 1, 2014, the Company entered into a 36 month note payable of $20,000. The note bears interest at twelve percent (12%) per annum. The Company had paid $16,791 in principal, leaving a balance of $3,209 at December 31, 2016. Total interest accrued as of December 31, 2016, was $2,290.
On April 11, 2014, the Company entered into a 36 month note payable of $60,000. The note bears interest at twelve percent (12%) per annum.The Company has paid $51,808 in principal, leaving a balance of $8,192 at December 31, 2016. Total interest accrued as of December 31, 2016, was $1,524.
Convertible Note Payable – Related Party
On October 21, 2014,the Company entered into at 10% Convertible Promissory Note with a current board member and shareholder,payroll taxes in the amount of $200,000, convertible into shares$44,570 and an $800 advance to an employee for a total of common stock$45,370. As of March 31, 2023, these other receivables included an Employee Retention Tax Credit of $13,312, which was ultimately deemed uncollectable by the Company at the market price of $0.04 per share. The original note due date of October 22, 2015, was extended until April 30, 2016.The debt discount was calculated as $50,000. On April 29, 2016, the note was converted, along with $30,521 in accrued interest, into 5,763,014 shares of common stock. Due to conversion within the terms of the note, no gain or loss was recognized.
Note Payable – Related Party
On November 3, 2016, the Company executed a promissory note with one of its shareholders and board members, for $60,000 at ten percent (10%) interest per annum. This promissory note is secured with the Company’s good faith and credit. The promissory note was due December 30, 2016. Total interest accrued as of December 31, 2016, was $970. This note is in default as of December 31, 2016.September 30, 2023.
| 13 |
On June 8, 2016, the Company executed a promissory note with one of its shareholders and board members, for $340,000 at ten percent (10%) interest per annum that consolidated the following notes: February 6, 2016, for $100,000; March 16, 2016, for $100,000; April 1, 2016, for $100,000; and April 19, 2016 for $40,000. This promissory note is secured with the Company’s inventory, fixed and liquid assets, property, equipment, intangible assets and intellectual property, and the Company’s net loss carry forward. The promissory note was due December 31, 2016. Total interest accrued as of December, 31, 2016, for all four referenced promissory notes totaling $340,000 and combined on June 8, 2016, was $27,452. This note’s due date was subsequently extended until July 30, 2017. This note is in default as of December 31, 2016.
On April 18, 2012, the Company entered into a long-term promissory note with one of its employees and board members for $25,000 with an interest rate of seven and one-half percent (7.5%) per annum. The balance is due in full on or before April 18, 2017. Monthly payments are required for interest only to the Lender’s financial intuition. On December 31, 2016, $6,429 over the interest only payment had been paid resulting in an ending principal amount of $18,571. No interest is accrued for this note payable. Total interest paid during the quarter ending December 31, 2016, was $354.
Line of Credit
On September 13, 2011, the Company drew down a line of credit at a financial institution in the amount of $39,050. The line of credit bears interest at seventeen and one-half (17.5%) per annum. The Company makes variable monthly payments. For the period ending December 31, 2016, the Company paid $1,224 in principal. Since inception, the Company has paid $24,051 in principal, leaving a balance of $14,999 payable. Total interest paid during the period ending December 31, 2016, was $480.
Note Payable, Related Party, Long Term
On January 13, 2012, the Company entered into two separate promissory notes in the amount of $35,000 each for an aggregate amount of $70,000. The notes bear interest at nine percent (9%) per annum and were previously due and payable on or before January 10, 2013. Minimum monthly payments of one and one-half (1.5%) of the loan balances are required and are submitted to the Lenders’ financial institution. The notes were amended April 1, 2013, and rewriting with a new principal amount of $32,100 each for an aggregate amount of $64,200. The notes bear interest at nine percent (9%) per annum and are due and payable on or before April 1, 2020. The underlying loan requires that the Company pay to the Lenders’’ financial institution monthly payments of $1,033 on or before the 1st day of each month, beginning May 1, 2013, and continuing each month in like amounts until the final payment due on April 1, 2020. The Company had paid $34,372 in principal, leaving a balance of $35,628 at December 31, 2016, on these notes. No interest is accrued for these notes payable. Total interest paid during the quarter ending December 31, 2016, was $1,017.
On October 21, 2014, the Company executed a promissory note with one of its shareholders and board members in the amount of $870,457. The note, originally due May 31, 2015, was non-convertible, had an interest rate of ten percent (10%) per annum, was secured by accounts receivable, fixed assets, intellectual property and the Company’s net loss carry forward, and was used to finance operations and purchase inventory. This note’s due date was extended to September 30, 2015, and included new cash loaned to the Company of $175,000. This note includes $7,957 of accrued interest on the paid off notes listed below: $50,000 of the February 11, 2014 note; $250,000 of the Convertible long term related party note; $145,000 of the note dated May 7, 2014; $29,500 of the June 27, 2014, note; $105,000 of the note dated July 21, 2014; $210,000 of the note dated July 28, 2014; $25,000 of the note dated August 8, 2014; and $123,000 of the note dated August 20, 2014.$22,222 of interest was rolled into principal on January 1, 2015, resulting in a principal balance of $892,679. On June 8, 2016, this note was combined with the January 22, 2015, promissory note, at ten percent (10%) per annum, with the principal balance of $400,000, resulting in a new note with a balance due of $1,292,679, due July 1, 2018. This promissory note is secured with the Company’s inventory, fixed and liquid assets, property, equipment, intangible assets and intellectual propertyand the Company’s net loss carry forward. The accrued interest for the $1,292,679 consolidated note was $239,409 as of December 31, 2016. This promissory note has payment terms requiring consecutive monthly installments in the sum of $50,000 per month commencing January 15, 2017. This note’s principle payment comencement date was subsequently extended until July 15, 2017.
On January 22, 2015, the Company issued 2,000,000 warrants to a shareholder and board member with a 36 month term to purchase “restricted” Rule 144 common stock, no par value (the “Shares”), at a purchase price of $0.04 per share of common stock (the “Exercise Price”) as consideration for the issuance of a promissory note in the amount of $400,000 from the Company. These warrants are fully vested and exercisable. The warrants were evaluated for embedded derivatives in accordance with ASC 815 and were found to not include any embedded derivatives. The warrants attached to the note were valued using the Black Scholes Valuation Model. The assumptions used in the model included the historical volatility of the Company’s stock of 180%, and the risk-free rate for the periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 0.35%. The resulting fair value was $66,717. This value was recorded as a debt discount and fully amortized as of March 31, 2016. On June 8, 2016, this note was combined with the January 22, 2015, promissory note, at 10% per annum, with the principal balance of $400,000, resulting in a new note with a balance of $1,292,679, due July 1, 2018. The accrued interest for the $1,292,679 consolidated note was $239,409 as of December 31, 2016
On February 17, 2015, and April 20, 2015, the Company executed promissory notes with one of its shareholders and board members for $135,000 each at ten percent (10%) interest per annum, due June 30, 2015, secured by accounts receivable on completed contracts to finance operations and purchase inventory. The principal on the April 20, 2015, note was paid down to $40,000. The Lender had provided the Company with extensions of due dates for both notes through June 30, 2016. The principal on the February 17, 2015, note of $135,000 was combined with the $40,000 remaining principal on the April 20, 2015, note into a $175,000 note due January 15, 2019. The accrued interest on the $175,000 note was $36,177 on December 31, 2016.
On June 8, 2016, the Company executed a promissory note with one of its shareholders and board members for $1,292,679.The note is due July 1, 2018, has an interest rate of ten percent (10%) per annum, and is secured by inventory, fixed assets, intellectual property and the Company’s net loss carry forward. This promissory note for $1,292,679, combined and replaced the October 21, 2014, promissory note for $892,679 and the January 16, 2015, promissory note for $400,000, as detailed in the table below.
| 03/31/16 | Consolidated | Interest | Consolidated | |||||||||||||||||||||||||
| Principal | Origination | Original | Amended | Note Due | Interest | Principal | Accrued | Note | ||||||||||||||||||||
| Balance | Date | Due Date | Due Date | Date | Rate | 03/31/16 | 03/31/16 | Balance | ||||||||||||||||||||
| $ | 892,679 | 10/21/2014 | 5/31/2015 | 6/30/2016 | 10.00 | % | $ | 892,679 | $ | 111,768 | ||||||||||||||||||
| $ | 400,000 | 1/16/2015 | 6/30/2015 | 6/30/2016 | 7/1/2018 | 10.00 | % | $ | 400,000 | $ | 30,247 | $ | 1,292,679 | |||||||||||||||
| $ | 135,000 | 2/17/15, 3/5/15 | 6/30/2015 | 6/30/2016 | 10.00 | % | $ | 135,000 | $ | 14,947 | ||||||||||||||||||
| $ | 40,000 | 4/20/2015 | 6/30/2015 | 6/30/2016 | 1/15/2019 | 10.00 | % | $ | 40,000 | $ | 8,045 | $ | 175,000 | |||||||||||||||
Convertible Note Payable – Non-related party
On August 1, 2012, the Company issued amendments to the convertible note agreements (convertible into common stock at a rate of $0.15 per share) in the aggregate amount of $215,000 and extended the due date with repayment in the amount of $40,000 per quarter to begin April, 2013, with the final payment due in August, 2014, to include any remaining balance due at that time. In consideration for extending the due date of the promissory notes, the expiration dates on the warrants issued (fully expensed in the prior period) on March 31, 2011, which were subsequently extended to June 27, 2014, were amended and extended again for an additional three years, making the new expiration dates August 1, 2017. At the Lenders’ sole option, Lenders may elect to receive payment of their respective notes and all accrued interest in “restricted” common stock of the Company at the price per share of said common stock at the same rate as the warrants. On June 7, 2013, the Company executed an amendment to the loan transaction. The amended loan transaction involved the extension of the promissory notes from April 30, 2013, to April 30, 2016, with the Lenders waiving any default under the previous note. The Company made interest payments to each of the eight note holders for all accrued interest from August 1, 2012, to April 30, 2013, for consideration of the extension. On the fourth extension, all accrued interest was combined with the original principal amount as of July 31, 2012. On July 13, 2015, three non-related party conversions with a principal balance of $102,033, combined with the accrued interest to date of $17,894, were converted to 799,514 shares of common stock. As of December 31, 2016, the ending principal balance was $90,696. Interest accrued as of December 31, 2016 was $29,544.
NOTE 10 – NOTE RECEIVABLE
On July 31, 2013, the Company signed a Memorandum of Understanding with a Canadian company owned by Joseph Khoury (“JAK”) proposing a purchase agreement in which JAK shall purchase LabMentors from PCS for USD $150,000. JAK has agreed to assume 100% of LabMentors outstanding liabilities and to pay the remainder of the USD $150,000 through a note payable. The Company note receivable in the amount of $50,740, carried an annual interest rate of 3% compounded annually and is to be paid over a period of 60 months in equal monthly payments beginning in month 13 of the 60 month period. This sale was finalized during the period ending September 30, 2013.On April 14, 2015, JAK informed PCS of the potential closure of LabMentors and an inability to meet its noteobligations. LabMentors had made three note payments as of the date of the notification totaling $3,399. In evaluation of the note’s potential for collectability, a note allowance was accrued to the full amount of the note receivable balance. The note receivable principal balance at December 31, 2016 was $49,513. The note receivable allowance balance at December 31, 2016, is $49,513, resulting in a net $0 balance for this note receivable.
On August 10, 2016, the Company entered into a note receivable with one of its consultants for the amount of $21,198, withan interest rate of eighteen percent (18%) per annum, and secured by future payables owed to the consultant by the Company for services rendered. Interest and principal are due by January 31, 2017. The note has not been collected as of December 31, 2016.
NOTE 11 – ACCOUNTS RECEIVABLE5 - PREPAID EXPENSES
Prepaid expenses for the periods are as follows:
SCHEDULE OF PREPAID EXPENSES
| December 31, 2023 | March 31, 2023 | |||||||
| Prepaid insurance | $ | 17,464 | $ | 8,891 | ||||
| Prepaid tradeshows | 43,480 | 34,316 | ||||||
| Prepaid inventory | 852,753 | 374,926 | ||||||
| Prepaid software | 21,677 | 16,287 | ||||||
| Prepaid other | 19,543 | 1,698 | ||||||
| Total Prepaid Expenses | $ | 954,917 | $ | 436,118 | ||||
NOTE 6 - COMMON AND PREFERRED STOCK TRANSACTIONS
| a. | Common Stock |
The Company has authorized shares of common stock, no par value. At December 31, 2023 the total common shares issued and outstanding was .
During the nine months ended December 31, 2023, the Company had no option expense.
During the nine months ended December 31, 2023, the Company did not issue shares of common stock.
During the nine months ended December 31, 2023, the Company repurchased shares common stock at $ per share for total payments of $64,933. These shares were then immediately cancelled.
| b. | Preferred Stock |
The Company has authorized shares of preferred stock. As of December 31, 2023, and March 31, 2023, there were preferred shares issued or outstanding.
NOTE 7 - NOTES PAYABLE
The Company had accounts receivable of $752,922 net of an allowance for $2,096 for the fiscal year ended March 31, 2016. This accounts receivable balance included a major international customer’s final work orders; a major domestic customer’s annual sales order; and an international customer’s lab royalty fees. All internationalno notes payable outstanding accounts receivable balances were paid within terms. The Company had an accounts receivable balance of $177,734, net of allowance of $2,096, as of December 31, 2016.
NOTE 12 – INVENTORY
The Company had inventory of $192,527 net of an inventory reserve of $3,391 for the fiscal year ended2023, and March 31, 2016. The inventory reserve is consideration for obsolete and slow moving inventories. The March 31, 2016, inventory balance reflected the shipment of the two major customer orders mentioned in Note 11. The majority of summer camp sales span February through June, 2016. Summer camp components are generally purchased within the week ordered to keep inventories lean. The Company had an inventory balance of $390,500, net of an inventory reserve of $3,391, as of December 31, 2016. The growth in inventory on-hand is largely due to receipt of an ocean container of our proprietary BrickLab product.2023.
NOTE 138 - COMMITMENTS AND CONTINGENCIES
a. Leases
The Company adopted ASC 842 as of November 9, 2019 using a modified retrospective transition approach for all leases existing at December 31, 2019, the date of the initial application. Consequently, financial information will not be updated, and disclosures required under ASC 842 will not be provided for dates and periods before January 1, 2020.
The Company determines if a contract is a lease or contains a lease at inception. Right of use assets related to operating type leases are reported in other noncurrent assets and the present value of remaining lease obligations is reported in accrued and other liabilities and other noncurrent liabilities on the Balance Sheets. The Company does not currently have any financing type leases.
Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s leases do not provide an implicit rate. The Company determine the incremental borrowing rates applicable to the economic environment based on the information available at commencement date, in determining the present value of future payments. The right of use asset for operating leases is measured using the lease liability adjusted for the impact of lease payments made prior to commencement, lease incentives received, initial direct costs incurred and any asset impairments. Lease Obligationterms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the term of the lease.
| 14 |
The Company re-measures and reallocates the consideration in a lease when there is a modification of the lease that is not accounted for as a separate contract. The lease liability is re-measured when there is a change in the lease term or a change in the assessment of whether the Company will exercise a lease option. The Company assesses right of use assets for impairment in accordance with its long-lived asset impairment policy.
The Company accounts for lease agreements with contractually required lease and non-lease components on a combined basis. Lease payments made for cancellable leases, variable amounts that are not based on an observable index and lease agreements with an original duration of less than twelve months are recorded directly to lease expense.
| a. | Office and Warehouse |
The Company leases one building containing its main office and warehouse space under a non-cancelable lease agreement, which commenced on March 2, 2016, accounted for as an operating lease.lease expiring March 14, 2020. On DecemberMarch 3, 2020, a third amendment extended the lease for nineteen and one-half (19.5) months, expiring October 31, 2013, the Company signed an amendment to the existing lease to reduce the leased2021 at $0.60 a square feet to 5,412 for $6,765 per month for the 12 months ending December 31, 2014.foot. On February 1, 2015,September 16, 2021, the Company signed a newfourth amendment to the lease to reduce the square feet to 3,609 for $4,511with a monthly rental amount starting at $6,800 and escalating by $200 per month forat the 12 months ending Januaryend of each lease year, which is due to expire on October 31, 2016. The Company signed a2024. Building lease amendment for the main office space on May 11, 2016, for $15.48 per square feet or $4,647 per month for the 12 months expiring May 31, 2017. Rent expense for the corporate offices was $14,780$80,020 and $13,533 for the three month ended December 31, 2016 and 2015, and $47,456 and $49,467$79,093 for the nine months ended December 31, 2016,2023, and 2015, respectively, under this lease arrangement.2022, respectively.
| b. | Equipment |
The Company leases additional warehouse space in Boise, Idaho. Originally, this warehouse space consisted of approximately 2,880 square feet. The lease expired in June 2012. This lease was extended for 24 months, beginning July 1, 2012. The lease was extended to a new term ending October 31, 2015. The Company signed a sixth amendment on April 15, 2015, to lease additional warehouse space of approximately 1,400 square feet adjacent to the existing leased space to April 30, 2016. The Company moved all warehousing to the new facility, vacating and completing the lease agreement ending April 30, 2016.
On March 15, 2016, the Company leased a warehouse, office space and manufacturing facility of approximately 10,000 square feetproduction printer for $6,300 per month for 12 months. On April 28, 2016,sixty-three (63) months commencing on November 3, 2023. The first three payments were deferred, with the Company moved all inventories, property, plant and equipment to this new warehouse facility. Rentfirst payment due February 3, 2024. Equipment lease expense for the new warehouse location was $12,600 and $6,535 for the three months ended December 31, 2016, and 2015, and $56,065 and $18,500$28,596 for the nine months ended December 31, 2016,2023, and 2015, respectively.
The Company leased an additional learning lab site in Eagle, Idaho, in the first quarter of FY2015. The lease has a three-year term$23,922 for 1,050 square feet, for an annual base rent of $16,640 or $1,387 per month, with three percent (3%) growth per year.
b. Litigation
On or about May 18, 2015, the Company was named as a co-defendant in a legal action related to one of its employees, alleged to have been driving an automobile negligently while on work related services for the Company, and causing damages to the plaintiffs in the action. The action was brought in the District Court of the Fourth Judicial District of the State of Idaho, in and for the County of Ada, Civil Action number CV PI 1507419. The insurance carrier indicated the claim would not be supported if the employee was not on company business, which the Company asserted was the case. The Company engaged legal counsel to represent it in this matter. On October 25, 2016, the case was dismissed with prejudice.
On October 13, 2015, the Company filed a Summons and Complaint against a person the Company contracted to provide public relations to the Company. The complaint primarily involved defamation and breach of contract. On October 18, 2016, the Company negotiated a settlement on Ada County Case No. CV OC 1517581 originating in the Idaho Fourth Judicial District Court. The parties to the suit negotiated an agreement that included a confidentiality clause. The matter was settled amicably.
c. Contingencies
On February 23, 2016, the Company issued a press release announcing an $825,000 contract with Drones ETC. in which its Thrust-UAV business unit would develop and produce a drone-related technology product for Drones ETC.
On December 23, 2016, the Company received a Notice of Termination of the contract from legal counsel for Drones ETC. in which it purported to terminate the contract, alleging breach of contract resulting from the Company’s alleged failure to provide the product in a timely manner and demanding the return of the $33,000 it had paid to the Company on the execution of the contract. The Company believes that the Notice of Termination is without merit, and intends to seek enforcement of the contract. The Company has engaged legal counsel to advise it on this matter.
NOTE 14 - STOCKHOLDERS’ EQUITY
a. Common Stock
During the nine months ended December 31, 2016,2022.
As of December 31, 2023, accounted for and presented under ASC 842 guidance, the Company expensed amountsfuture minimum lease payments on operating leases, were as follows:
Total minimum lease obligation over the next 7 years
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
| Fiscal Year | Amount | ||||
| 2024 | 27,272 | ||||
| 2025 | 82,330 | ||||
| 2026 | 38,892 | ||||
| 2027 | 43,232 | ||||
| 2028 | 48,024 | ||||
| 2029 | 53,315 | ||||
| 2030 | 20,040 | ||||
| Total | $ | 313,105 | |||
SCHEDULE OF LEASE PAYABLE
| Balance Sheet Location | December 31, 2023 | |||||
| Right of use assets | Other noncurrent assets | $ | 301,569 | |||
| Lease payable | Current liabilities | $ | 90,657 | |||
| Lease payable | Long-term liabilities | 222,448 | ||||
| Total lease payable | $ | 313,105 | ||||
Supplemental cash flow information related to stock options and warrants granted in the current period as well as prior periods valued at $29,244.operating leases:
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES
| December 31, 2023 | ||||
| Operating cash paid to settle lease liabilities | $ | 82,006 | ||
| Right of use asset additions in exchange for lease liabilities | - |
| December 31, 2023 | ||||
| Weighted average remaining lease term (in years) | 6.3 | |||
| Weighted average discount rate | 10 | % |
During
| 15 |
NOTE 9 – ACCOUNTS PAYABLE
Accounts payable for the periods are as follows:
SCHEDULE OF ACCOUNTS PAYABLE
| December 31, 2023 | March 31, 2023 | |||||||
| Accounts payable | $ | 357,893 | $ | 18,814 | ||||
| Credit cards payable | 6,543 | 9,113 | ||||||
| Total | $ | 364,436 | $ | 27,927 | ||||
NOTE 10 – PAYROLL LIABILITIES & ACCRUED EXPENSES
Accrued expenses for the periods are as follows:
SCHEDULE OF ACCRUED EXPENSES
| December 31, 2023 | March 31, 2023 | |||||||
| Payroll liabilities | $ | 93,184 | $ | 201,724 | ||||
| Sales tax payable | 5,184 | 3,399 | ||||||
| State income tax payable | - | 21,108 | ||||||
| Production printer accrued expenses | 9,990 | - | ||||||
| Total | $ | 108,358 | $ | 226,231 | ||||
NOTE 11 – INCOME TAXES
For the three and nine months ended December 31, 2016,2023, the Company recognized no income tax expense (or benefit) due to the partial reversal of its valuation allowance. For the year ended March 31, 2023, the Company partially reversed its valuation allowance recognizing an employee exercised 70,000 options earnedincome tax benefit of $1,011,466, which represents an effective tax rate of (57%). As the Company recently generated positive income, management expects the effective tax rate to differ from an Incentive Stock Option (ISO) Agreement dated January 14, 2014.its annual effective tax rate from the most recent year and from its U.S. Federal statutory rate due to changes in the valuation allowance. For the three and nine month period ended December 31, 2023, the Company relieved its valuation allowance equal to the estimated income tax expense based on U.S statutory rate of 21% and a State statutory rate of 7%. The ISO Agreement option pricenet effect is that no income tax expense was $0.0362 per exercised share of “restricted” common stock, totaling $2,533.
Duringrecorded for the three and nine months ended December 31, 2016,2023, and the Company issued 200,000 shares of Rule 144 “restricted” common stock shares to an employee. The shares were valued based oneffective tax rate is 0.00%. For the fair market price of $0.08, the closing price of the Company’s common stock at the date of grant, for a total of $16,000.
During thethree and nine months ended December 31, 2016,2023, no benefit from income taxes was recorded due to the Company issuedbeing in a full valuation allowance position, resulting in an effective tax rate of 0.0%.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2023. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of 75,000 Rule 144 “restricted” common stock sharesunrecognized tax benefits will materially change over the next twelve months.
Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgments that could become subject to examination by tax authorities in two transactionsthe ordinary course of business. We periodically assess the likelihood of adverse outcomes resulting from these examinations to determine the impact on our deferred taxes and income tax liabilities and the adequacy of our provision for income taxes. Changes in income tax legislation, statutory income tax rates or future taxable income levels, among other things, could materially impact our valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods.
The Company files income tax returns in the United States, the State of Idaho and the State of California. The statute of limitations on a contractor for services. On April 26, 2016,Federal tax return is the Company issued 50,000 shares valued at $0.08, baseddue date of the tax return plus three years. In the case of NOLs, the year in which the NOL was generated remains open up to the amount of the NOL until the statute of limitations expires on the common stock closing priceyear it was used. All required tax returns of the Company on the date of grant. On May 10, 2016, thedue since inception have been filed. The Company issued 25,000 Rule 144 “restricted” common stock shares valued at $0.09, based on the common stock closing price of the Company on the date of grant. The cumulative stock compensation for services totaled $6,250.
During the nine months ended December 31, 2016, the Company issued a total of 5,763,014 Rule 144 “restricted” common stock shares. On October 21, 2014,the Company entered into a ten percent (10%) convertible promissory note with a current board member and shareholder in the amount of $200,000 convertible into shares of common stock of the Company at the closing market price of $0.04 on such date.On April 29, 2016, the note was converted, along with $30,521 in accrued interest, into 5,763,014 shares of common stock. Due to conversion within the terms of the note, no gain or loss was recognized.
During the nine months ended December 31, 2016, the Company issued a total of 17,957,690 Rule 144 “restricted” common stock sharesfrom private equity sale offerings, at a price range of $.05 to $0.08 totaling $1,185,999. These private equity sales included: 6,250,000 Rule 144 “restricted” common stock sharesfrom a private equity sale offering on July 18, 2016, at a price of $0.08 totaling $500,000; 5,076,922 Rule 144 “restricted” common stock sharesfrom a private equity sale offering on September 28, 2016, at a price of $0.065 totaling $330,000; 769,230 Rule 144 “restricted” common stock sharesfrom a private equity sale offering on October 21, 2016, at a price of $0.065 totaling $50,000; 861,538 Rule 144 “restricted” common stock sharesfrom a private equity sale offering on November 14, 2016, at a price of $0.065 totaling $56,000; 5,000,000 Rule 144 “restricted” common stock sharesfrom a private equity sale offering on December 13, 2016, at a price of $0.05 totaling $250,000.
During the nine months ended December 31, 2016, the Company cancelled 200,000 shares of 144 “restricted” common stock as a negotiated settlement for $9,000, originally issued on July 30, 2015, at a price of $0.11 for services. The shares were valued based on the fair market price on the date of contract for a total of $22,000, resulting in a $13,000 gain on settlement.
During the nine months ended December 31, 2016, the Company accrued $265,000 in stock payable due to the September 28, 2016, offer of 5,076,922 shares of its common stock for $330,000 comprised of “restricted securities” as defined under Rule 144 of the SEC, solely to “accredited investors.” The purchase price was $0.065 per share. The $65,000 variance between the sale proceeds of $265,000 and $330,000 was due to the sale of 1,000,000 shares at $0.065 finalized on October 1, 2016.
During the nine months ended December 31, 2016, $3,240 in accrued Restricted Stock Units payable was reversed. Stock compensation in the form of Restricted Stock Units is only authorized for independent directors. The current Board of Directors does not have a qualifying independent member.any unrecognized tax benefits to report in the current period.
b. Preferred Stock
The Company has 20,000,000 authorized shares of preferred stock. As of December 31, 2016, there were no preferred shares issued or outstanding.
NOTE 15 - BASIC AND DILUTED NET LOSS PER COMMON SHARE
Basic net losses per common share for the three month periods ended December 31, 2016, and 2015, are based on 95,444,493 and 76,134,102, respectively, of weighted average common shares outstanding. Dilutive net loss per common share for the nine month periods ended December 31, 2016, and 2015, are based on 83,982,390 and 74,356,534 respectively, of weighted average common shares outstanding.
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
| Diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
| Weighted Average Number of Shares Outstanding, Basic and Diluted | | | 95,444,493 | | | | 76,134,002 | | | | 87,816,984 | | | | 75,247,919 | |
NOTE 1612 - DILUTIVE INSTRUMENTS
Stock Options and Warrants
TheAs of December 31, 2023, and March 31, 2023, the Company is required to recognize expense of options or similar equityhad dilutive instruments issued to employees using the fair-value-based method of accounting for stock-based payments in compliance with the financial accounting standard pertaining to share-based payments. This standard covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. Application of this standard requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking over the expected term of the award.outstanding.
| Total Issued | ||||||||||||||||||||||||
| Issued | Cancelled | Executed | and Outstanding | Exercisable | Not Vested | |||||||||||||||||||
| Balance as of March 31, 2016 | 30,906,655 | 16,483,457 | 9,907,210 | 4,515,988 | 3,465,988 | 1,050,000 | ||||||||||||||||||
| Warrants | - | - | - | - | - | - | ||||||||||||||||||
| Common Stock Options | 200,000 | 449,465 | 70,000 | (319,465 | ) | (359,465 | ) | 40,000 | ||||||||||||||||
| Balance as of December 31, 2016 | 31,106,655 | 16,932,922 | 9,977,210 | 4,196,523 | 3,106,523 | 1,090,000 | ||||||||||||||||||
NOTE 13 - RELATED PARTY TRANSACTIONS
On August 31, 2016, an employee of the Company exercised 70,000 earned and vested options for “restricted” common stock issued September 8, 2016. The options vest over a three-year period, are exercisable at $0.0362 per share, and are valued at $2,534 which represented the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.
The Board of Directors resolved on July 14, 2016, to increase the Company authorized common stock from 100,000,000 shares with no par value to 150,000,000 shares of common stock with no par value. The resolution was ratified on September 23, 2016, by the shareholders at the Annual Meeting. The Articles of Amendment were filed with the Idaho Secretary of State on October 11, 2016.
On November 1, 2016,21, 2018, the Company granted 500,000 stock options to an officer,our President, Michael J. Bledsoe. The expected volatility rate of 230.18%% was calculated using the Company’’sCompany’s stock price over the period beginning July 1, 2014,August 21, 2018, through date of issue. A risk freerisk-free interest rate of 0.08 % was used to value the options. The options were valued using the Black-Scholes valuation model. The total value of this option was $37,315. The options vest over a three-year periodvested immediately and arewere exercisable at $0.08$ per share which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan. As of December 31, 2016, $6,242 of the total valueThe maturity date was expensed. For the nine months ended December 31, 2016, $6,242 was expensed.
On January 1, 2014, the Company granted 40,000 incentive options each to three employees per year for three years. These options were issued as incentive compensation to the employees.August 21, 2021. The options were valued using the Black-Scholes valuation model. The options have an expected volatility rate of 259.07% calculated using the Company stock price for a three-year period. A risk-free interest rate of 0.26% - 0.76% was used to value the options. The total value of these options was $17,726. The options vest over a three-year period and are exercisable at a range of $.05 to $0.6 per share, which represented the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan. As of December 31, 2016, $17,726 of the total value was expensed. For the nine months ended December 31, 2016, $3,991 was expensed.
On February 1, 2014, the Company granted 40,000 incentive options to one employee per year for three years. These options were issued as incentive compensation to the employee. The options were valued using the Black-Scholes valuation model. The options have an expected volatility rate of 258.20% calculated using the Company’s stock price for a three-year period. A risk free interest rate of 0.41% - 0.64% was used to value the options. The total value of these options was $4,107. The options vest over a three-year period and are exercisable at a range of $0.03 to $0.60 per share, which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan. As of December 31, 2016, $4,107 of the total value was expensed. For the nine months ended December 31, 2016, $1,035 was expensed.
On November 18, 2015, the Company granted 200,000 stock options to an officer, Robert O. Grover. The expected volatility rate of 186.52% was calculated using the Company’’s stock price over the two-year period ending November 17, 2015. A risk-free interest rate of 0.80% was used to value the options. The options were valued using the Black-Scholes valuation model. The total value of the options was $14,659. The options vest over a three year period and are exercisable at $0.09 per share, which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan. As of December 31, 2016, $12,702 of the total value of the options had been expensed. For the nine months ended December 31, 2016, $7310 was expensed.
On May 15, 2012, the Company granted 850,000 incentive stock options to an officer, Robert O. Grover. The expected volatility rate of 223.62% was calculated using the Company’’s stock price over the period beginning June 1, 2009 through date of issue. A risk-free interest rate of 0.38% was used to value the options. The options were valued using the Black-Scholes valuation model. The total value of the options was $44,495. The options vested over a three year period and were exercisable at $0.06 per share which represented the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan. As of June 30, 2015, the entire value of the options was expensed.
Warrants
were expensed at time of grant as they vested immediately. On July 30, 2015, 120,000 common stock warrantsAugust 21, 2021, the options expired and the Company issued 1,000,000 new options with a one year maturity and a strike price of $ accounted for as a modification. These options were exercised aton August 18, 2022.
From April 1, 2013 to March 31, 2017, the Company executed related party promissory notes with the Chairman and CEO of the Company, Todd R. Hackett, for $1,292,679, $175,000, and $340,000 paid down to a priceprincipal balance of $.07$220,648, with interest of 10% per shareannum. Monthly interest payments have been made in cash starting in January of 2019. On April 19, 2019, these notes were consolidated to one promissory note for a total$1,688,327, with interest of $8,400, resulting10% per annum, and extending the due date to April 20, 2020. Total interest accrued and paid in the issuancefiscal year ended March 31, 2020 totaled $142,210. Principal payments were made totaling $245,000 for an ended principal balance at March 31, 2020 of 120,000 shares$1,443,327. The note was subsequently amended with a maturity date of “restricted” common stock.May 1, 2021, with all other terms and conditions remaining the same. No principal payments were made on this note in fiscal year 2021, leaving a principal balance as of March 31, 2021 of $1,443,327. This promissory note due date was subsequently amended to a new due date of May 1, 2022, with all other terms and conditions remaining the same. No principal payments were made on this note during fiscal year 2022, leaving a principal balance as of March 31, 2022, of $1,443,327. During fiscal year 2023, this promissory note was paid in full to Mr. Hackett.
On February 1, 2017, the Company, in the capacity of borrower, executed a non-convertible promissory note payable, with no warrants attached, with lender Mike J. Bledsoe, a member of the Executive Management Team and Board of Directors, for $50,000 at 20% interest per annum, due April 30, 2017. The note’s principal balance of $50,000, and accrued interest of $23,342 as of May 31, 2019, was amended on June 1, 2019. The promissory note June 1, 2019, amendment reduced the interest rate to 10% per annum, but to accrue interest on both the $50,000 principal balance and the $23,342 accrued interest and extended the due date to May 31, 2020. This promissory note due date was subsequently amended to a new due date of May 31, 2021. As of March 31, 2021, the principal balance on this note was $50,000 and the accrued interest was $36,805. This promissory note due date was subsequently amended to a new due date of May 1, 2022, with all other terms and conditions remaining the same. During fiscal year 2023, the Company paid this promissory note in full to Mr. Bledsoe.
NOTE 1714 - SUBSEQUENT EVENTS
On January 10, 2017,At the Company filed an 8-K, Currenttime of the filing of this Quarterly Report, regardingItem 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.The triggeringthere were no subsequent events are two promissory notes with accrued interest and one promissory note payment in default.to report.
On February 1, 2017, the Company entered into a loan transaction in the amount of $50,000 with PCS Edventures!.com, Inc. Vice President and Board member, Michael J. Bledsoe. The transaction involved the issuance of a short term Promissory Note due April 30, 2017, secured by accounts receivable, and bearing 20% interest at an annualized rate.
On February 3, 2017, the Company entered into a loan transaction in the amount of $100,000 with Gordon Prairie, an unrelated party. The transaction involved the issuance of a short term Promissory Note due April 30, 2017, secured by accounts receivable, and bearing 20% interest at an annualized rate.
Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations.
Cautionary Statements for Purposes of “Safe Harbor Provisions” of the Private Securities Litigation Reform Act of 1995:
Except for historical facts, all matters discussed in this Quarterly Report, which are forward-looking, involve a high degree of risk and uncertainty. Certain statements in this report set forth management’s intentions, plans, beliefs, expectations, or predictions of the future based on current facts and analyses. When we use the words “believe”, “expect”, “anticipate”, “estimate”, “intend” or similar expressions, we intend to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated in such statements, due to a variety of factors, risks and uncertainties. Potential risks and uncertainties include, but are not limited to, competitive pressures from other companies within the Educational Industries, economic conditions in the Company’s primary markets, exchange rate fluctuation, reduced product demand, increased competition, inability to produce required capacity, unavailability of financing, government action, weather conditions and other uncertainties, including those detailed in the Company’s Securities and Exchange Commission filings. The Company assumes no duty to update forward-looking statements to reflect events or circumstances after the date of such statements.
The following discussion should be read in conjunction with our audited financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)Operations.
The following discussion and analysis of our financial condition and results from operations should be read in conjunction with our unaudited financial statements and related notes included elsewhere in this Quarterly Report and our audited financial statements contained in our Form 10-K Annual Report for the fiscal year ended March 31, 2016,10 Registration Statement filed with the SEC on June 22, 2016.October 3, 2023, and as amended on November 15, 2023, which become effective on December 2, 2023 (the “Form 10”) a copy of which is available by Hyperlink in Part II, Item 6. Exhibits, below.
PlanOverview of OperationCurrent and Planned Operations
PCS Edventures!, Inc. sells STEM / STEAM products to educational and recreational entities serving youth. At this time, we do not attempt to align our products to fit in the classroom setting although we are aware that some of our customers use our products to fill enrichment time blocks in the classroom during formal school time. Classroom curriculum must align with specific state standards to be considered for use. Each state has their own unique set of standards, making classroom curriculum development a state by-state endeavor.
On the other hand, out of school programs are not subject to a state governmental standard alignments, although these programs often require that educational programs align with various sets of state or national educational standards. This difference makes it easier to penetrate out-of-school programs, as more freedoms exist for curriculum development. We focus our efforts on these out-of-school programs, which include summer school, summer camps, YMCA programs, Boys and Girls club programs and various other programs offered outside of the classroom, at all times of the year, that are too numerous to list. Oftentimes, these programs are sponsored, administered and/or supported by local school districts, and we employ considerable efforts to build relationships with these types of school districts to provide desired programing for their out-of-school programs. The majority of the time, the out-of-school programs offered are funded with grants; however, some programs are run on a for- profit basis. The Company sells intoto all of these types of entities.
We offer professional development training for instructors using our products; and typically charge a fee for this service, with the STEAM educationfee primarily covering our expenses. Management does not view this service as a profit center, but rather as a customer service component of our product that adds to its uniqueness and value in the marketplace, and as a market with (1) an existing STEAM library and deep expertise in creating STEAM solutions compriseddevelopment endeavor to build out the Company’s addressable market.
The nature of curriculum and materials; (2) a unique learning methodology – an adaptive (customized to individual learners), experiential (hands-on in nature) learning framework that can be monetized in a number of ways, with what the Company believes is an approach to educational assessment and incentivizing studentsour target market produces considerable seasonality for the future,Company’s revenue. The quarters ended June 30 and September 30 tend to be the Company is an innovative leader inpeak of this area; (3) an innovative K12 robotics and engineering system comprisedseasonality (with the quarter ended March 31 being close to these quarters), while the quarter ended December 31 tends to be the low point of hardware and software specifically designed to engage students in STEAM topics such as hands-on physics, engineering, and coding; (4) a long history as a prime STEAM provider in the Middle East, a relationship which the Company believes will continue to provide revenue growth; and (5) a continual view to the future of STEAM education developments, exemplified by the Company’s anticipated release of a STEAM drone program to enhance its other product offerings.our seasonality. The Table below reflects this seasonality.
| Quarterly Revenue | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| 3/31 | 648,743 | 1,445,594 | 2,521,470 | |||||||||
| 6/30 | 1,062,127 | 1,391,785 | 2,605,281 | |||||||||
| 9/30 | 993,458 | 1,243,662 | 3,767,326 | |||||||||
| 12/31 | 566,473 | 1,847,659 | 459,087 | |||||||||
The Company, is actively marketingthrough winning a competitive Request For Proposal, added the Thrust-UAV brand for its FPV racing drone and is forming distributor relationships. The Company also sells components and parts for its FPV racing drone on its website and through distributors. The Company has formed several partnerships with the FPV community and intends to leverage these relationships to promote its FPV racing drone.
The Company’s strategy is profitability driven, seeking to optimize operations while moving our core STEAM, digital learning, robotics and drone product strategies forward. Tactically, the Company will focus its attention on sales activities. The Company will continue to focus on the improvement of its web-based marketing efforts, expand its sales force and channel partners, and tighten sales processes for domestic STEAM sales. The Company will also continue to fulfill existing, and anticipates capturing new, STEAM contracts withAir Force Junior Reserve Officers’ Training Corp (AFJROTC) as a customer in the Middle East.second half of calendar year 2022. The Company will actively seek retail distribution methodsexperienced elevated sales due to the fulfillment of the AFJROTC orders for the quarters ended December 31, 2022, March 31, 2023, and channelsSeptember 30, 2023. One of the AFJROTC revenue quarters was December 31, 2022, which corresponds with the lowest seasonal revenue quarter, so the effects of seasonality in 2022 was not as readily apparent as in other calendar years. The table below removes the AFJROTC revenue to highlight the seasonality that the Company experiences.
| Quarterly Revenue Less Air Force JROTC Revenue | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| 3/31 | 648,725 | 1,445,595 | 1,247,835 | |||||||||
| 6/30 | 1,062,127 | 1,391,785 | 2,605,281 | |||||||||
| 9/30 | 993,458 | 1,243,662 | 2,501,410 | |||||||||
| 12/31 | 566,473 | 458,239 | 459,087 | |||||||||
During the quarter ended December 31, the Company focuses on product development, restocking inventory, and general planning for its roboticsthe next year. Sales and drone retail products and expand their usability for other market segments.marketing activities remain fairly constant throughout the year.
Results of Operations
The following table shows our results from operations for the periods indicated.
| For the Three Months Ended December 31, | For the Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUES | $ | 459,087 | $ | 1,847,659 | $ | 6,831,694 | $ | 4,483,106 | ||||||||
| Total Revenues | 459,087 | 1,847,659 | 6,831,694 | 4,483,106 | ||||||||||||
| COST OF SALES | 310,657 | 751,711 | 2,503,552 | 1,833,669 | ||||||||||||
| GROSS PROFIT | 148,430 | 1,095,948 | 4,328,142 | 2,649,437 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Salaries and wages | 353,934 | 389,795 | 1,313,886 | 1,050,032 | ||||||||||||
| General and administrative expenses | 231,475 | 191,117 | 821,116 | 587,718 | ||||||||||||
| Total Operating Expenses | 585,409 | 580,912 | 2,135,002 | 1,637,750 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | (436,979 | ) | 515,036 | 2,193,140 | 1,011,687 | |||||||||||
| OTHER INCOME AND (EXPENSES) | ||||||||||||||||
| Tax credit | - | 94,703 | 31,258 | 94,703 | ||||||||||||
| Net interest income (expense) | 20,183 | (40,544 | ) | 30,774 | (114,705 | ) | ||||||||||
| (Gain) loss on lease modification | 2,658 | - | 2,658 | - | ||||||||||||
| Total Other Income (Expense) | 22,841 | 54,159 | 64,690 | (20,002 | ) | |||||||||||
| NET INCOME (LOSS) BEFORE TAXES | (414,138 | ) | 569,195 | 2,257,830 | 991,685 | |||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| NET INCOME (LOSS) | $ | (414,138 | ) | $ | 569,195 | 2,257,830 | $ | 991,685 | ||||||||
| Net income/loss per common share: | ||||||||||||||||
| Basic | $ | (0.00 | ) | $ | 0.00 | $ | 0.02 | $ | 0.01 | |||||||
| Diluted | $ | (0.00 | ) | $ | 0.00 | $ | 0.02 | $ | 0.01 | |||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic | 124,733,494 | 125,482,479 | 125,183,945 | 124,973,388 | ||||||||||||
| Diluted | 124,733,494 | 125,647,758 | 125,183,945 | 125,138,667 | ||||||||||||
Revenue
For the quarter ended December 31, 2023 our revenue was $459,087. For the quarter ended December 31, 2022, our revenue was $1,847,659, of which $1,389,420 was attributable to our AFJROTC customer. Revenue for the December 31, 2022 quarter, excluding AFJROTC revenue was $458,239, not significantly different than our revenue for the December 31, 2023 quarter.
For the nine months ended December 31, 2023, our revenue was $6,831,694 compared to revenue of $4,483,106 for the comparable nine months the year prior. Excluding AFJORTC revenue, revenue for the nine months ended December 31, 2023, was $5,565,778, compared to $3,093,686 for the nine months ended December 31, 2022.
The Company has been soliciting larger customers for over two years and has seen some success. The AFJROTC is the Company’s largest success by a wide margin, producing revenue of $1,265,916 in the nine months ended December 31, 2023, and $1,389,420 in the nine months ended December 31, 2022.
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The Company has experienced other successes in its campaign to find larger customers. The table below shows customer transactions by size for the periods indicated.
Number of Customer Transactions by size
| > $1 million | >$500,000 | > $100,000 | > $50,000 | > $25,000 | > $10,000 | |||||||||||||||||||
| Nine months ended December 31, 2023 | 1 | 2 | 16 | 23 | 34 | 80 | ||||||||||||||||||
| Nine months ended December 31, 2022 | 1 | 1 | 8 | 18 | 30 | 49 | ||||||||||||||||||
| Nine months ended December 31, 2021 | 0 | 0 | 5 | 10 | 15 | 38 | ||||||||||||||||||
We believe that we can continue to experience success in soliciting larger customers, but we can offer no assurances that success will be certain, nor can we offer any numerical framework in describing the success that may occur. Risk factors include anything that would negatively affect educational funding in the United States; finding and retaining employees that meet our high standards; and anything that would negatively affect our supply chain of critical components.
Cost of Sales
We strive to have a cost of sales that is less than 40% of revenue. We price our products once per year, at the beginning of the calendar year, and maintains that pricing level throughout the year. During inflationary environments, when the price level of the Company’s raw materials is increasing, the Company must absorb that negative impact to gross margins until it can reprice its products at the beginning of the next calendar year. This repricing analysis considers the current pricing level of materials, as well as the likely increase in those levels in the year ahead. We attempt to incorporate shipping costs into the cost of raw materials, but oftentimes during the course of the year we are compelled to ship in a more expedient manner, which is more expensive than our baseline assumptions.
For the quarter ended December 31, 2023, our cost of sales was $310,657, or 67.7% of revenue. For the quarter ended December 31, 2022, our cost of sales was $751,711, or 40.7% of revenue. For any given quarter, and especially in low revenue quarters, the cost of sales can vary significantly from our desired 40% or less of revenue. However, for any given year, the calculation is relevant and desired to be 40% or less of revenue. For the nine months ended December 31, 2023, our cost of sales was $2,503,552, or 36.7% of revenue, as compared to $1,833,669, or 40.9% of revenue for the nine months ended December 31, 2022. Factors affecting cost of sales include:
| Helps sub 40% cost of sales | Impedes sub 40% cost of sales |
| Higher revenue | Higher inflation |
| Larger order size | Expedited shipping |
| Ability to take advantage of volume discounts | Quality issues with raw materials |
Operating Expenses
Operating expenses are divided into two categories – salary + wages, and general + administrative. Salary and wages tend to increase over time as the Company has been increasing its number of employees and we expect to continue to do so in the future. Also, the Company desires to retain employees over the long term, which requires periodic increases in compensation as their value to the Company increases.
The Company also has a discretionary quarterly bonus program based on qualified revenue. Qualified revenue is defined as revenue where there are no reseller fees or other price adjustments associated with that revenue. Thus, all reseller sales are disqualified from the discretionary quarterly bonus calculation, as are other miscellaneous transactions where the Company did not receive a full margin. During quarters with higher revenue, salaries and wages will increase all other things equal.
Salary and wages were $353,934 for the quarter ended December 31, 2023. For the quarter ended December 31, 2022, salaries and wages were $389,795. Salaries and wages declined in the quarter ended December 31, 2023, as compared to the quarter ended December 31, 2022, due to the fact that the Company lost a higher compensated employee on September 30, 2023, and did not replace that employee until the beginning of calendar year 2024. Also, employee bonuses were higher in the quarter ended December 31, 2022, versus that for the quarter ended December 31, 2023.
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Salary and wages were $1,313,886 for the nine months ended December 31, 2023. For the nine months ended December 31, 2022, salaries and wages were $1,050,032. There will likely be ebb and flow in these numbers going forward, as the timing of hiring employees and the timing of revenue growth spurts will not likely coincide with each other.
General and administrative expenses include all operating expenses outside of salaries and wages. These include the following categories:
| 1. | Advertising and marketing expenses | |
| 2. | Trade show and travel expenses | |
| 3. | Product development expenses | |
| 4. | Finance charges | |
| 5. | Contract labor expenses | |
| 6. | Lease expenses | |
| 7. | Insurance premiums | |
| 8. | Workers’ compensation expenses | |
| 9. | Office supplies and repairs | |
| 10. | Professional expenses | |
| 11. | Licenses | |
| 12. | State sales tax expenses | |
| 13. | Office and warehouse infrastructure expenses |
Most of these expenses are not correlated with changes in revenue, but they tend to increase over time. General and administrative expenses were $231,475 for the quarter ended December 31, 2023. For the quarter ended December 31, 2022, general and administrative expenses were $191,117.
General and administrative expenses were $821,116 for the nine months ended December 31, 2023. For the nine months ended December 31, 2022, general and administrative expenses were $587,718.
The Company currently leases a 10,000 square foot facility which ends in October of 2024. We are currently looking for new space, with the expectation that we need at least double the amount of space we currently occupy to accommodate our needs in achieving our growth expectations. This will cause general and administrative expenses to increase noticeably, as will the additional expenses associated with being an SEC reporting company.
Other Income and Expenses
Other income and expenses are those outside of the Company’s ordinary course of business. During covid, the Paycheck Protection Program was offered to companies to keep employees on the payroll during the lockdowns. The Company operated throughout this environment and never initiated action to reduce employee headcount. The financial benefits of the Payroll Protection Program was an item disclosed in the other income and expenses category. Likewise, the Employee Retention Tax Credit was offered for similar purposes and the Company qualified for those benefits, which are also disclosed under other income and expenses.
Interest income and interest expense are disclosed under other income and expenses. The Company had considerable interest expense prior to paying off all of its promissory note debt as of March 31, 2023. Since that time and as the Company has accumulated cash, it has invested surplus cash in a Vanguard money market fund that invests exclusively in repurchase agreements and short-term U.S. government securities. The ticker symbol of this fund is VMFXX. The Company’s switch from net debtor to net creditor explains the swing from interest expense to interest income observable for both the quarter and the nine month periods ended December 31, 2023, and 2022.
For the quarter ended December 31, 2023, other income and expenses were $22,841, with interest income totaling $20,183 for the period. For the quarter ended December 31, 2022, other income and expenses were $54.159, with interest expense totaling $40,544. Tax credits from the Employee Retention Tax Credit totaled $94,703 for the period versus $0 for the quarter ended December 31, 2023.
For the nine months ended December 31, 2023, other income and expenses were $64,690, with interest income totaling $30,774. For the nine months ended December 31, 2022, other income and expenses were ($20,002), with interest expense totaling $114,705. Tax credits from the Employee Retention Tax Credit totaled $94,703 for the period versus $31,258 for the quarter ended December 31, 2023.
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Net Income Before Tax
For the three months ended December 31, 2023, net income before tax was ($414,138) versus $569,195 for the three months ended December 31, 2022. Revenue variance between the two periods was responsible for the variance in net income before taxes. The prior year period included AFJROTC revenue of $1,389,420 while the current year period had no AFJROTC revenue. The Company’s small size relative to the opportunities it is pursuing can create significant lumpiness in quarterly results and comparisons to the prior year.
For the nine months ended December 31, 2023, net income before tax was $2,257,830 versus $991,685 for the nine months ended December 31, 2022. AFJROTC revenue was similar for the two periods, with the prior year period having $123,504 more AFJROTC revenue than the current year period. While the nine month period ended December 31, 2016,2023 incorporates some significant customer wins that may not be present in the future, Management believes that the Company reported a net losscan take advantage of ($1,725,464), as comparednumerous opportunities and achieve different customer wins in the future and repeat the success is has achieved thus far in fiscal year 2024. This expectation of revenue growth is not accompanied by an expectation of consistency, making quarterly results lumpy and annual results subject to a year-over-year decline on occasion.
Taxes
The Company has significant net lossoperating losses which arose due to past losses. At March 31, 2023, the Company had net operating losses of ($612,316)approximately $13.9 million that may be offset against future taxable income. No tax benefit has been reported in the quarterly consolidated financial statements for fiscal years 2024 and 2023 since the potential tax benefit is offset by a valuation allowance of the same amount. The federal and state net operating losses and tax credits expire in years beginning in 2026.
Net Income
With the large net operating losses that can be used to offset taxable income, net income is the same as net income before tax for the nine month period ended December 31, 2015. The ($1,113,148) increase in loss was due to a reduction in revenue predominantly due to the timing of major customer order fulfilled by our March 31, 2016, fiscal year end. The same order previous year was fulfilled in Aprilreporting periods shown.
Liquidity and May of 2015. Additional contributors were the reduction in international work orders fulfilled year over year, and the ramp up of Thrust UAV. The Basic Loss per Share for the nine month period ended December 31, 2016, was ($0.02), which variesCapital Resources
Cash Flow from the ($0.01) loss per share for the nine month period ended December 31, 2015.Operations
For the nine month period ended December 31, 2016, revenues were $1,378,544, as compared to revenue during the nine month period ended December 31, 2015, of $2,145,719. The revenue decrease was due to timing of major customer order fulfillments mentioned above and a decrease in international work orders and Learning Center enrollment.
For the three month period ended December 31, 2016, the Company reported a net loss of ($605,113) as compared to a net loss of ($411,634) for the three months ended December 31, 2015. This increase in net loss2023, cash provided by operations was predominantly due$1,644,991 compared to the investment in research and development in its Thrust-UAV division. The Basic Loss per Sharecash provided by operations of $244,659 for the three month periodnine months ended December 31, 2016, was ($0.01), similar to the ($0.01) loss per share for the three-month period ended2022. As of December 31, 2015.
Revenue for the three-month period ended December 31, 2016, was $412,590 as compared to revenue during the three month period ended December 31, 2015, of $329,694. The increase in revenue was due predominantly to $44,173 less in domestic sales and a timing of $142,501 increase in International revenues.
Operating expenses increased by $13,219 (2.5%) and $244,649 (15.4%) in the three and nine months of fiscal 2017, respectively, relative to prior year periods. The largest factor behind this increase in operating expenses was the Company’s acquisition of Thrust-UAV, which increased Company overhead. Product development expense increased significantly due to investment in research and development at Thrust-UAV.
Interest expense decreased by $481 and $63,143 in the three and nine months of fiscal 2017, respectively, relative to prior year periods due to the conversion of debt.
Liquidity
Cash used by operations for the third quarter of fiscal 2017 was $1,242,339 compared to cash used by operations of $92,392 in the same period last year. The Company ended the third quarter of fiscal 2017 with $41,073 in cash,2023, total current assets of $691,602,were $4,950,442 and total current liabilities of $1,270,197,were $614,636, resulting in a working capital deficit of $578,595 compared to a$4,335,806. As of March 31, 2023, total current assets were $2,493,906 and total current liabilities were $1,222,651, resulting in working capital deficit of $1,661,514 for the year ended March 31, 2016.$1,271,255.
The Company had a current ratio atas of December 31, 2016, and2023 of 8.05 compared to a current ratio of 6.85 as of March 31, 2016,2023.
As of 0.55December 31, 2023, we had $2,006,618 in cash and 0.42, respectively. Significant short termcash equivalents compared to $442,657 in cash as of March 31, 2023. The improvements in working capital, current ratio, and cash on hand are all due to a significant increase in net income during fiscal year 2024 versus that for fiscal year 2023.
Cash Flow from Investing Activities
For the nine months ended December 31, 2023, cash used by investing activities was $16,096 compared to cash used by investing activities of $16,459 for the nine months ended December 31, 2022. We purchased office equipment during these periods which accounts for the activity.
Cash Flow from Financing Activities
For the nine months ended December 31, 2023, cash used by financing activities was $64,933. We purchased 998,985 shares of common stock for $0.065 per share, which accounts for this activity. For the nine months ended December 31, 2022, cash used by financing activities was $118,327. During this period, principal payments on debt was consolidated with an extended due date reclassifyingaccounted for $143,327 of the promissory notescash used by financing activities whereas we received $25,000 from short termthe sale of one million shares of stock related to long term, related party debt. There is no guarantee that this Lender will continue to provide extensions for payments, and the Company cannot predict that it will be successful in obtaining funding or generating cash in order to pay the Lender. The Company has an accumulated deficitexercise of ($41,777,523) and shareholders’’ equity (deficit) of ($2,057,727).options by Mike J. Bledsoe, our President.
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Off-Balance Sheet Arrangements
We had no Off-Balance Sheet arrangements during the three and nine month periods ended December 31, 2023, and 2022.
Item 3. Quantitative and Qualitative Disclosures Aboutabout Market Risk.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act, of 1934, as amended (the “Exchange Act”) and is not required to provide the information required under this item.
Item 4. Controls and ProceduresProcedures.
Changes in Internal Control Over Financial Reporting.
None.
Disclosure Controls and Procedures
The Company maintains “disclosureWe maintain disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the SEC defines such terms. We haveExchange Act that are designed theseto ensure that material information relating to us is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to reasonably assureensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the periods specified in the SEC’s rules and forms. We have also designed our disclosure controls to provide reasonable assurance that such information is accumulated and communicated to the Chief Executive Officer, Executive Vice President, and Vice President/Treasurer, as appropriate, to allow them to make timely decisions regarding our required disclosures.
Management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act as of December 31, 2016. Based on this evaluation, the Chief Executive Officer, Executive Vice President, and the Vice President/Treasurer, acting as principal financial officer, concluded that the Company’s disclosure controls and procedures, including the accumulation and communication of disclosures to the Company’s Chief Executive Officer, Executive Vice President, and Vice President/Treasurer, as appropriate to allow timely decisions regarding required disclosure, were not effective as of this date to provide reasonable assurance that information required to be disclosed by the Company in the reportsare filed or submitted under the Exchange Act isare recorded, processed, summarized, and reported within the time periods specified byin the SEC’s rules and forms. The Company’s quarter-end closing process did not adequatelyDisclosure controls and procedures include, without limitation, controls and procedures designed to ensure that all transactions were accounted forinformation required to be disclosed by an issuer in accordance with GAAP andthe reports that required adjustments were made to the financial statements to prevent them from being materially misstated. Management acknowledges that as a smaller reporting entity, it is difficult to have adequate accounting staff to perform appropriate additional reviews of the financial statements.
Management’s Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f)files or submits under the Exchange Act). Our internal control overAct is accumulated and communicated to our management, including our principal executive and principal financial reporting is a process designedofficers, or persons performing similar functions, as appropriate, to provide reasonable assuranceallow timely decisions regarding required disclosure. Management, with the reliabilityparticipation of financial reporting and the preparation of financial statements for external purposes.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Management, including our Chief Executive Officer Executive Vice President, and our Vice President/Treasurer, actingPresident who acts as principal financial officer, does not expectour Principal Financial Officer has evaluated the effectiveness, as of December 31, 2023, of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable,were not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Management, with the participation of the Chief Executive Officer, as principal executive officer, Executive Vice President, and the Vice President/Treasurer, acting as principal financial officer, evaluated the effectiveness of the Company’s internal control over financial reportingeffective as of December 31, 2016. In making this assessment, management used the criteria set forth by the Committee2023, because of Sponsoring Organizationsinadequate control and expertise over preparation of the Treadway Commission (“COSO”)preliminary financial statements and schedules for our auditor’s review, resulting in some minor errors in applying Accounting Standards Codifications used in the United States to organize and present accounting standards and principles. Management has concluded that we will take appropriate action to add additional expertise to assist us in the preparation of our future interim financial statements for our auditor’s review to ameliorate this weakness.
Changes in Internal Control – Integrated Framework. Consistent with its review forover Financial Reporting
With the year ending March 31, 2016, when management identified a material weaknessexception of management’s plan to take appropriate action to add additional expertise to assist us in the internal control over financial reporting, management concluded that, aspreparation of December 31, 2016, the Company’s internal control over financial reporting was not comprehensive.
This material weakness was evidenced through the Company’s year-end closing process, which did not adequately ensure that all transactions were accounted for in accordance with GAAP and that required adjustments were made to theour future interim financial statements to prevent them from being materially misstated. Based onameliorate this evaluation,weakness and to assist us in designing and implementing a system of adequate controls over the preparation of our management, with the participation of the Chief Executive Officer, Executive Vice Presidentfinancial statements and Principal Financial Officer,schedules, there have been no changes in this case, our Vice President, concluded, as of March 31, 2016, our internal control over financial reporting was not effective. Management acknowledgesduring the quarter ended December 31, 2023, that as a smaller reporting entity, it is difficulthave materially affected, or are reasonably likely to have adequate accounting staff to perform appropriate additional reviews of thematerially affect, our internal control over financial statements.reporting.
Item 1. Legal Proceedings.
On or about May 18, 2015, the Company was named as a co-defendant in a legal action related to one of its employees, alleged to have been driving an automobile negligently while on work related services for the Company, and causing damages to the plaintiffs in the action. The action was brought in the District Court of the Fourth Judicial District of the State of Idaho, in and for the County of Ada, Civil Action number CV PI 1507419. The Company engaged legal counsel to represent it in this matter. On October 25, 2016, the judge presiding over this case dismissed it with prejudice.None.
On October 13, 2015, the Company filed a Summons and Complaint against a person the Company contracted to promote the Company. The complaint primarily involved defamation and breach of contract. The Complaint was unresolved at quarter end as the Company was in negotiations with the person to settle this dispute. In early October, an agreement was reached and both parties signed a confidential agreement. The matter was settled amicably.
On February 23, 2016, the Company issued a press release announcing an $825,000 contract with Drones ETC. in which its Thrust-UAV business unit would develop and produce a drone-related technology product for Drones ETC. On December 23, 2016, the Company received a Notice of Termination of the contract from legal counsel for Drones ETC. in which it purported to terminate the contract, alleging breach of contract resulting from the Company’s alleged failure to provide the product in a timely manner and demanding the return of the $33,000 it had paid to the Company on the execution of the contract. The Company believes that the Notice of Termination is without merit, and intends to seek enforcement of the contract. The Company has engaged legal counsel to advise it on this matter.
Item 1A. Risk Factors.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and is not required to provide the information required under this item.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Security issuances occurred during the nine months ended December 31, 2016.None.
| Name of Person or Group | Shares | Consideration | ||||||||||
| **Consultants | 75,000 | $ | 6,250 | |||||||||
| **Legal Consultants | - | - | ||||||||||
| * Employees: Benefits | 270,000 | $ | 18,532 | |||||||||
.
Item 3. Defaults Upon Senior Securities.
None; not applicable.None.
Item 4. Mine Safety Disclosures.
None; not applicable.
Item 5. Other Information.
None.No director or Section 16 officer adopted or terminated a trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a “non-Rule 10b5–1” trading arrangement during the periods reported in this Form 10-Q.
(a) Index of Exhibits
| Identification of Exhibit | Location if other than attached hereto | |||
| 3.1 | Second Amended and Restated Articles of Incorporation dated October 2, 2006 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.2 | Articles of Amendment dated April 12, 2012 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.3 | Articles of Amendment dated September 25, 2014 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.4 | Articles of Amendment dated September 25, 2015 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.5 | Articles of Amendment dated September 23, 2016 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.6 | Third Amended Bylaws | Attached to our Form 10 filed October 3, 2023 | ||
| 31.1 | Attached hereto | |||
| 31.2 | Attached hereto | |||
Certification | ||||
| Attached hereto | ||||
| XBRL Instance Document | ||||
| XBRL Taxonomy Extension Presentation Linkbase | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | |||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | |||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |||
| 101.SCH | XBRL Taxonomy Extension Schema |
Form 10A-1 Registration Statement filed with the SEC on November 15, 2023.
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.
PCS EDVENTURES!.COM,, INC.
| Dated:February 16, 2024 | By: | /s/ Todd R. Hackett | |||
| Todd R. Hackett | |||||
| Chief Executive Officer and | |||||
| Chairman of the Board of Directors | |||||
| Dated: February 16, 2024 | By: | ||||
| /s/ Michael J. Bledsoe | |||||
| Michael J. Bledsoe | |||||