U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 333-53458
PCS EDVENTURES!.COM, INC.
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(Name of Small Business Issuer in its Charter)
IDAHO 82-0475383
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
1655 Fairview Avenue, Suite #100
Boise, Idaho 83702
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (208) 343-3110
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
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:
12,550,984
June 30, 2001
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.
PCS EDVENTURES!.COM, INC.
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001 and March 31, 2001
PCS EDVENTURES!.COM, INC.
Consolidated Balance Sheets
ASSETS
June 30, March 31,
2001 2001
(Unaudited)
CURRENT ASSETS
Cash $ 11,869 $ 4,654
Accounts receivable, net 78,343 24,222
Prepaid expenses 106,938 124,607
Total Current Assets 197,150 153,483
FIXED ASSETS (NET) 147,460 164,880
OTHER ASSETS
Prepaid expenses 26,183 48,459
Deposits 7,000 7,000
Total Other Assets 33,183 55,459
TOTAL ASSETS $ 377,793 $ 373,822
The accompanying notes are an integral part of these consolidated financial
statements.
PCS EDVENTURES!.COM, INC.
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
June 30, March 31,
2001 2001
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 115,297 $ 161,260
Notes payable - related parties 80,135 130,132
Notes payable 564,124 145,243
Bank overdraft 30,824 35,296
Wages payable 24,397 22,268
Payroll taxes payable 13,337 18,006
Accrued interest 6,654 6,654
Accrued contingencies - 1,938
Accrued expenses 112,663 87,380
Unearned revenue 179,796 29,785
Total Current Liabilities 1,127,227 637,962
LONG-TERM DEBT
Notes payable - 4,014
Total Long-Term Debt - 4,014
Total Liabilities 1,127,227 641,976
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value, authorized
50,000,000 shares; 12,550,984 and
12,383,959 shares issued and
outstanding, respectively 21,273,465 21,247,795
Accumulated deficit (22,022,899) (21,515,949)
Total Stockholders' Equity (Deficit) (749,434) (268,154)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 377,793 $ 373,822
The accompanying notes are an integral part of these consolidated financial
statements.
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
June 30,
2001 2000
REVENUE $ 58,526 $ 51,129
COST OF GOODS SOLD 28,557 19,429
GROSS PROFIT 29,969 31,700
OPERATING EXPENSES
Depreciation expense 18,450 17,480
General and administrative 502,650 329,751
Total Operating Expenses 521,100 347,231
OPERATING LOSS (491,131) (315,531)
OTHER INCOME AND EXPENSES
Interest expense (15,834) (4,593)
Interest income 15 -
Total Other Income and Expenses (15,819) (4,593)
NET LOSS $ (506,950) $ (320,124)
BASIC LOSS PER SHARE $ (0.04) $ (0.04)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 12,467,924 8,332,476
The accompanying notes are an integral part of these consolidated financial
statements.
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Stockholders' Equity (Deficit)
Common Shares Accumulated
Shares Amount Deficit
Balance, March 31, 2000 8,247,714 $ 18,528,262 $(18,834,588)
Common stock issued for services at
an average price of $0.52 per share 450,237 232,422 -
Warrants granted below market value
and exercised for cash at $0.75 per
share 203,161 152,371 -
Stock offering costs - (150,339) -
Common stock issued for prepaid
services at $0.71 per share 100,000 71,000 -
Common stock issued to board members
for services at $0.71 per share 1,500,000 1,065,000 -
Options granted below market value - 84,463 -
Common stock issued for cash at $0.75
per share 1,599,588 1,199,691 -
Stock offering costs - (143,075) -
Common stock issued to purchase assets
at $0.75 per share 200,000 150,000 -
Common stock issued for note
consideration at $0.75 per share 24,000 18,000 -
Common stock issued for conversion of
warrants at $0.67 per share 59,259 40,000 -
Net loss for the year ended
March 31, 2001 - - (2,681,361)
Balance, March 31, 2001 12,383,959 21,247,795 (21,515,949)
Common stock issued for conversion of
debt at $0.25 per share (unaudited) 100,000 25,000 -
Common stock issued for conversion of
warrants at $0.75 per share
(unaudited) 67,025 50,269 -
Stock offering costs (unaudited) - (49,599) -
Net loss for the three months ended
June 30, 2001 (unaudited) - - (506,950)
Balance, June 30, 2001 (unaudited) 12,550,984 $ 21,273,465 $(22,022,899)
The accompanying notes are an integral part of these consolidated financial
statements.
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Cash Flows
(Unaudited)
For the
Three Months Ended
June 30,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (506,950) $ (320,124)
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Depreciation 18,450 17,480
Common stock issued for services - 89,922
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (54,121) (9,909)
(Increase) decrease in prepaid expenses 39,944 (2,375)
(Increase) decrease in notes receivable - 4,100
Increase (decrease) in accounts payable and
accrued liabilities 1,782 (6,969)
Increase (decrease) in interest payable - 10,898
Increase (decrease) in commitments and
contingencies (1,938) (1,035)
Increase in unearned revenue 150,011 7,770
Net Cash (Used) by Operating Activities (352,822) (210,242)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (1,030) (78,333)
Net Cash (Used) by Investing Activities (1,030) (78,333)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in cash overdraft (4,471) 920
Proceeds from related parties 10,000 245,755
Payments to related parties (60,000) -
Payments on long-term debt (59,632) (36,025)
Proceeds from long-term debt 474,500 -
Proceeds from common stock 670 -
Net Cash Provided by Financing Activities 361,067 210,650
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,215 (77,925)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,654 78,125
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,869 $ 200
The accompanying notes are an integral part of these consolidated financial
statements.
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the
Three Months Ended
June 30,
2001 2000
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for payment on notes payable
and interest $ 25,000 $ -
Common stock issued for services $ - $ 89,922
Cash Paid For:
Interest $ 15,834 $ -
Income taxes $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
June 30, 2001 and March 31, 2001
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in accordance with such
rules and regulations. The information furnished in the interim
condensed consolidated financial statements include normal recurring
adjustments and reflects all adjustments, which, in the opinion of
management, are necessary for a fair presentation of such financial
statements. Although management believes the disclosures and
information presented are adequate to make the information not
misleading, it is suggested that these interim condensed consolidated
financial statements be read in conjunction with the Company's most
recent audited financial statements and notes thereto included in its
March 31, 2001 Annual Report on Form 10-KSB. Operating results for
the three months ended June 30, 2001 are not necessarily indicative
of the results that may be expected for the year ending March 31,
2002.
NOTE 2 - DILUTIVE INSTRUMENTS
a. Stock Options
The Company applied Accounting Principles Board ("APB") Option 25,
"Accounting for Stock Issued to Employees," and related
interpretations in accounting for all stock option plans. Under APB
Option 25, compensation cost is recognized for stock options granted
to employees when the option price is less than the market price of
the underlying common stock on the date of grant.
FASB Statement 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123"), requires the Company to provide proforma information
regarding net income and net income per share as if compensation
costs for the Company's stock option plans and other stock awards had
been determined in accordance with the fair value based method
prescribed in SFAS No. 123. The Company estimates the fair value of
each stock award at the grant date by using the Black-Scholes option
pricing model with the following weighted average assumptions used
for grants, respectively; dividend yield of zero percent for all
years; expected volatility of 84% to 112% percent for all years;
risk-free interest rates of 6% and expected lives of 3 years.
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
June 30, 2001 and March 31, 2001
NOTE 2 - DILUTIVE INSTRUMENTS (Continued)
The Company has granted the following options as of June 30, 2001:
Date of Exercise Exercise Amount Expiration
Description Grant Number Price Exercised Date
1) Employee 2-05-00 50,000 $ 0.75 - 2-05-03
2) Officers/
directors 4-20-00 600,000 $ 0.75 - 4-20-03
3) Employee 6-01-00 45,000 $ 0.75 - 6-01-03
4) Consultant 9-20-00 200,000 $ 0.50 - 9-20-03
5) Employees 9-01-00 200,000 $ 0.75 - 9-01-03
6) Director 10-01-00 200,000 $ 0.75 - 10-01-03
7) Employee 1-05-01 25,000 $ 0.75 - 1-05-04
8) Employee 6-15-01 25,000 $ 0.75 - 6-15-04
1,345,000
Risk-Free
Fair Interest Expected Expected Expected
Description Value Rate Life Volatility Dividends
1) Employee $ 0.46 6.05% 3 92.82% 0
2) Officers/
directors $ 0.46 6.15% 3 91.32% 0
3) Employee $ 0.46 6.15% 3 92.82% 0
4) Consultant $ 0.42 6.15% 3 89.37% 0
5) Employees $ 0.52 6.21% 3 85.69% 0
6) Director $ 0.52 6.21% 3 84.39% 0
7) Employee $ 0.52 6.21% 3 84.39% 0
8) Employee $ 0.74 6.15% 3 112.19% 0
On January 19, 2000, the Company authorized the issuance of options
to any individual board member or key management personnel to
purchase 800,000 shares of the Company's common stock at a price of
$0.75 per share. On February 5, 2000, the Company granted 50,000 of
these options to an employee.
On April 20, 2000, the Company granted 600,000 options to officers
and directors out of the 800,000 authorized on January 19, 2000. On
October 1, 2000, the Company granted the remaining 150,000 options
authorized to a director. All of the option exercise prices are
$0.75 per share with a fair value determined by Black Scholes of
$0.46 and $0.52, respectively.
On April 20, 2000, the Company authorized the granting of 400,000
options to employees and directors. On June 1, 2000, the Company
granted 45,000 options to an employee. On September 1, 2000, the
Company granted 200,000 options to four employees. On October 1,
2000, the Company granted 50,000 options to a director. On January
5, 2001, the Company granted 25,000 options to an employee. On
March 31, 2001, the Company had not granted 80,000 options. Each
option granted has an exercise price of $0.75 per option and a 3-
year life with a fair value determined by Black Scholes of $0.46,
$0.52, $0.52 and $0.52, respectively.
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
June 30, 2001 and March 31, 2001
NOTE 2 - DILUTIVE INSTRUMENTS (Continued)
On September 22, 2000, the Company authorized the granting of
250,000 options to employees and directors of the Company with
exercise prices of $0.75 and a 3-year life.
NOTE 3 - MATERIAL EVENTS
Private Placement Memorandum
The Company authorized a private placement offering memorandum (PPM)
for $100,000 minimum and a maximum of $750,000. The Company has
pledged all of its tangible and intangible assets as security for
any amounts raised. The offering is to be sold in units of $1,000
each. Each unit consists of a twelve-month promissory note bearing
interest at 85, payable quarterly in arrears. The PPM also provides
for the company to grant up to 337,500 warrants exercisable six
months after the close of the PPM at $0.01 per share. The Company
has raised approximately $475,000 as of June 18, 2001.
Related Party Transaction
The Company paid off $60,000 of the related party note payable with
proceeds from the private placement memorandum.
NOTE 4 - SUBSEQUENT EVENTS
The Company signed a promissory note with a shareholder for $5,000.
Monthly payments will start on September 1, 2001 and the note bears
an interest rate of 10%.
Item 2. Management's Discussion and Analysis or Plan of Operation.
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Plan of Operation.
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For the near-term, we have two objectives. First, it is our intent
to focus our marketing efforts to increase sales of our Academy of Engineering
Lab and our Edventures! Lab. We are working with a local public relations
firm to increase corporate, brand and product awareness. In addition, we have
recently launched an updated version of our Edventures!.com subscription
web site. We have engaged in several joint-ventures to market our
subscription model to various target markets which we have identified. Our
Second objective involves our ongoing commitment to product development. We
have dedicated resources to curriculum and content development. It is our
desire to remain on the leading edge of project-based learning within the
education marketplace.
Results of Operations.
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Three months ended June 30, 2001, compared to three months ended June 30,
2000.
- -----
Revenues for the three month period ended June 30, 2001, increased
to $58,526 as compared to $51,129 for the three month period ended June 30,
2000.
General and administrative costs have risen to $502,650 for the three
month period ended June 30, 2001, as compared to $329,751 for the three
month period ended June 30, 2000. Other general and administrative costs,
such as payroll, marketing and legal, have increased as the Company has begun
to implement its business plan.
Interest expense for the three month period ended June 30, 2001,
decreased to $15,834 as compared to $4,593 for the three month period ended
June 30, 2000.
Liquidity and Capital Resources.
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We had cash of $11,869, at June 30, 2001. Management believes that
our current cash on hand at June 30, 2001, will be sufficient to meet our
expenses during the next 12 months.
The Company is conducting a Private Placement Offering for $100,000
minimum and a maximum of $750,000; the Company has raised approximately
$475,000 as of June 18, 2001. This offering is a debt offering that is
briefly described in Item 5 of this report.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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None; not applicable.
Item 2. Changes in Securities and Use of Proceeds.
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None; not applicable.
Item 3. Defaults Upon Senior Securities.
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None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
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None; not applicable.
Item 5. Other Information.
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The Company authorized a private offering pursuant to a private
placement memorandum (the "PPM") for a $100,000 minimum and a maximum of
$750,000. The Company has pledged all of its tangible and intangible assets
as security for any amounts raised. The offering is to be sold in units of
$1,000 each. Each unit consists of a 12 month promissory note bearing
interest at 8%, payable quarterly in arrears. The PPM also provides for the
Company to grant up to 337,500 warrants exercisable six months after the close
of the PPM at $0.01 per share. The Company has raised approximately $475,000
as of June 18, 2001.
The Company paid $60,000 of a related party note from a portion of
the proceeds from this offering.
The Company signed a promissory note with a shareholder for $5,000.
Monthly payments will commence on September 1, 2001, and the note bears an
interest rate of 10%.
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
SB-2 Registration Statement Filed with an Effective Date of May 11, 2001*
* Incorporated by Reference.
(b) Reports on Form 8-K.
None.
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.
Date: 8/9/01 By:/s/Anthony A. Maher
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Anthony A. Maher
Chief Executive Officer, President and
Chairman of the Board of Directors
Date: 8/9/01 By:/s/Roy M. Svee
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Roy M. Svee
Treasurer and Director
Date: 8/9/01 By:/s/Donald J. Farley
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Donald J. Farley
Secretary and Director