United States 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, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File No. 000-49990
PCS EDVENTURES!.COM, INC.
-------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
IDAHO 82-0475383
----- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
345 Bobwhite Court, Suite #200
Boise, Idaho 83706
------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (208) 343-3110
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
Check whether the Registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
28,488,485
July 27, 2004
Transitional Small Business Disclosure Format (Check One): Yes X No
--- ---
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.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005 and March 31, 2005
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
June 30, March 31,
2005 2005
----------- ----------
(Unaudited)
CURRENT ASSETS
Cash $ 66,013 $ 16,752
Accounts receivable 238,493 130,569
Inventory 54,596 8,304
Deferred costs - 110,367
Prepaid expenses 18,019 14,826
Other assets 1,000 -
----------- ----------
Total Current Assets 378,121 280,818
----------- ----------
FIXED ASSETS (NET) 13,242 11,917
----------- ----------
OTHER ASSETS
Deposits 6,225 6,225
----------- ----------
Total Other Assets 6,225 6,225
----------- ----------
TOTAL ASSETS $ 397,588 $ 298,960
=========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
June 30, March 31,
2005 2005
--------- ----------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 141,255 $ 183,068
Accrued compensation 58,506 40,537
Payroll taxes payable 66,673 87,669
Accrued interest 70,805 75,044
Accrued expenses 59,284 59,079
Unearned revenue 159,256 269,571
Notes payable - related parties 117,054 117,054
Notes payable 122,116 205,465
---------- ---------
Total Current Liabilities 794,949 1,037,487
---------- ---------
Total Liabilities 794,949 1,037,487
---------- ---------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, no par value, authorized
10,000,000 shares, 15,246 shares issued
and outstanding 56,372 56,372
Common stock, no par value, authorized 50,000,000
shares; 28,402,585 shares issued and outstanding 24,065,117 23,868,669
Variable deferred consulting fees - (1,000)
Accumulated deficit (24,518,850)(24,662,568)
----------- -----------
Total Stockholders' Equity (Deficit) (397,361) (738,527)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 397,588 $ 298,960
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended
June 30,
--------------------------
2005 2004
------------- ----------
REVENUES
Lab Revenue $ 889,522 $ 395,729
License Revenue 44,132 45,961
Subscription Revenue 1,318 3,008
---------- ---------
Total Revenues 934,972 444,698
---------- ---------
COST OF GOODS SOLD 382,211 147,472
---------- ---------
GROSS PROFIT 552,761 297,226
---------- ---------
OPERATING EXPENSES
Salaries and wages 106,768 116,859
Depreciation expense 1,190 -
Stock options issued for consulting services - 322,442
General and administrative 293,767 242,722
---------- ---------
Total Operating Expenses 401,725 682,023
---------- ---------
OPERATING INCOME (LOSS) 151,036 (384,797)
---------- ---------
OTHER INCOME AND (EXPENSES)
Gain on settlement of debt (Note 4) - 43,990
Interest income 5 949
Interest expense (23,778) (30,438)
Other income 16,455 7,293
Other expense - (1,467)
---------- ---------
Total Other Income and (Expenses) (7,318) 20,327
---------- ---------
INCOME BEFORE INCOME TAXES 143,718 (364,470)
INCOME TAX EXPENSE (BENEFIT) - -
---------- ---------
NET INCOME $ 143,718 $(364,470)
========== =========
BASIC INCOME (LOSS) PER SHARE $ 0.01 $ (0.01)
========== =========
DILUTED INCOME (LOSS) PER SHARE $ 0.00 $ (0.01)
========== =========
WEIGHTED AVERAGE NUMBER OF
BASIC SHARES OUTSTANDING 26,515,013 24,692,361
=========== ===========
WEIGHTED AVERAGE NUMBER OF
DILUTED SHARES OUTSTANDING 30,659,009 24,692,361
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
Common Shares Preferred Shares
----------------------- --------------------
Shares Amount Shares Amount
---------- ----------- --------- ----------
Balance, March 31, 2004 24,230,874 $ 23,023,323 82,850 $120,473
Common stock issued for
services at $0.17 per
share 30,000 5,100 - -
Stock offering costs - (5,100) - -
Common stock issued for
services at $0.17 per
share 240,000 40,800 - -
Stock offering costs - (40,800) - -
Options issued to employees
below market value - 3,000 - -
Options issued to consultants
below market value - 507,877 - -
Common stock issued for
conversion of debt and
interest at $0.20 per
share 376,165 75,232 - -
Common stock issued for
cash at $0.10 per share
for option exercise 750,000 75,000 - -
Intrinsic value of
employee options issued
below market value - 5,000 - -
Common stock issued for
related party note payable
reduction at $0.07 per
share 250,000 17,500 - -
Fair value of options
issued to consultant - 696 - -
Common stock issued for
conversion of preferred
stock at $0.20 per share 338,020 67,603 (67,604) (67,603)
Options issued to directors
for accrued director fees - 9,241 - -
---------- ----------- --------- ------------
Balance forward 26,215,059 $23,784,472 15,246 $ 52,870
---------- ----------- --------- ------------
F-5
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Shares Preferred Shares
------------------------- ----------------------
Shares Amount Shares Amount
---------- ------------ --------- -----------
Balance forward 26,215,059 $23,784,472 15,246 $ 52,870
Contributed capital for
accrued director fee - 50,759 - -
Pro-rata cumulative
non-cash preferred stock
dividend - - - 3,502
Amortization of prepaid
expense - - - -
Amortization and revaluation
of consulting expense - (92,102) - -
Stock issued for marketing
services at $0.09 per share 250,000 22,500 - -
Stock issued for legal
services at $0.09 per share 500,000 45,000 - -
Stock issued for accounts
payable at $0.15 per share 45,833 6,875 - -
Stock issued for note
payable to related party
at $0.06 per share 344,559 20,674 - -
Amortization of prepaid
expense - - - -
Fair value of options
issued to consultant - 491 - -
Options issued to directors
for accrued director fees - 28,416 - -
Contributed capital for
accrued director fees - 1,584 - -
Net loss,
March 31, 2005 - - - -
---------- ----------- --------- ----------
Balance, March 31, 2005 27,355,451 $ 23,868,669 15,246 $ 56,372
---------- ----------- --------- ----------
F-6
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Common Shares Preferred Shares
----------------------- --------------------
Shares Amount Shares Amount
---------- ----------- --------- ----------
Balance Forward 27,355,451 $ 23,868,669 15,246 $ 56,372
Options issued to directors
for accrued director fees
(unaudited) - 15,000 - -
Treasury stock issued for
legal services (unaudited) - 21,250 - -
Stock issued for the
exercise of options for
$0.16 per share (unaudited) 15,000 2,400 - -
Stock issued for cash
for $0.20 per share
(unaudited) 35,000 7,000 - -
Stock issued for public
relations services for
$0.095/share (unaudited) 90,972 8,649 - -
Stock issued for the
exercise of options for
$0.13 per share (unaudited) 205,211 26,645 - -
Stock issued for conversion
of debt and interest at
$0.17 per share (unaudited) 654,706 112,485 - -
Stock issued for conversion
of debt and interest at
$0.17 per share (unaudited) 12,815 2,178 - -
Stock issued for cash
for $0.17 per share
(unaudited) 33,430 5,683 - -
Amortization and revaluation
of consulting expense
(unaudited) - (7,667) - -
Options issued to employees
below market value (unaudited) - 2,825 - -
Net income,
June 30, 2005 (unaudited) - - - -
---------- ----------- --------- ------------
Balance,
June 30, 2005 (unaudited)
28,402,585 $24,065,117 15,246 $ 56,372
=========== ============ ========= ============
F-7
[CONTINUED]
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance, March 31, 2004 $(67,292) $ - $(23,720,434)
Common stock issued for
services at $0.17 per
share - - -
Stock offering costs - - -
Common stock issued for
services at $0.17 per share - - -
Stock offering costs - - -
Options issued to employees
below market value - - -
Options issued to consultants
below market value - (507,877) -
Common stock issued for
conversion of debt and
interest at $0.20 per
share - - -
Common stock issued for
cash at $0.10 per share
for option exercise - - -
Intrinsic value of
employee options issued
below market value - - -
Common stock issued for
related party note payable
reduction at $0.07 per
share - - -
Fair value of options
issued to consultant - - -
Common stock issued for
conversion of preferred
stock at $0.20 per share - - -
Options issued to directors
for accrued director fees - - -
Contributed capital for
accrued director fees - - -
----------- --------- ------------
Balance forward $ (67,292) $(507,877) $(23,720,434)
----------- --------- ------------
F-5
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance forward $ (67,292) $(507,877) $(23,720,434)
Pro-rata cumulative
non-cash preferred stock
dividend - - (3,502)
Amortization of prepaid
expense 67,292 - -
Amortization and revaluation
of consulting expense - 506,877 -
Stock issued for marketing
services at $0.09 per share (22,500) - -
Stock issued for legal
services at $0.09 per share (45,000) - -
Stock issued for accounts
payable at $0.15 per share - - -
Stock issued for note
payable to related party
at $0.06 per share - - -
Amortization of prepaid
expense 67,500 - -
Fair value of options
issued to consultant - - -
Options issued to directors
for accrued director fees - - -
Contributed capital for
accrued director fees - - -
Net loss,
March 31, 2005 - - (938,632)
----------------- ---------- -----------
Balance, March 31, 2005 $ - $ (1,000) $(24,662,568)
----------------- ---------- -----------
F-6
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance Forward $ - $ (1,000) $(24,662,568)
Options issued to directors
for accrued director fees
(unaudited) - - -
Treasury stock issued for
legal services (unaudited) - - -
Stock issued for the
exercise of options for
$0.16 per share (unaudited) - - -
Stock issued for cash
for $0.20 per share (unaudited) - - -
Stock issued for public
relations services for
$0.095/share (unaudited) - - -
Stock issued for the
exercise of options for
$0.13 per share (unaudited) - - -
Stock issued for conversion
of debt and interest at
$0.17 per share (unaudited) - - -
Stock issued for conversion
of debt and interest at
$0.17 per share (unaudited) - - -
Stock issued for cash
for $0.17 per share (unaudited) - - -
Amortization and revaluation
of consulting expense (unaudited) - 1,000 -
Options issued to employees
below market value (unaudited) - - -
Net income,
June 30, 2005 (unaudited) - - 143,718
---------- --------- ------------
Balance,
June 30, 2005 (unaudited) - $ - $(24,518,850)
========== ========= ============
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the
Three Months Ended
June 30,
----------------------
2005 2004
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 143,718 $(364,470)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation 1,190 -
Gain on extinguishment - (43,990)
Stock options issued for consulting services 8,649 322,442
Stock options issued for board compensation 15,000 3,000
Stock options issued for employee compensation 2,825 -
Amortization of expenses prepaid with common stock (7,667) 21,250
Stock issued for legal expenses 35,000 -
Gain on return of common stock (13,750) -
Changes in operating assets and liabilities:
(Increase) Decrease in accounts receivable (107,924) 90,395
Decrease in prepaid expenses (4,193) 6,084
(Increase) in inventory (46,291) (12,507)
Decrease in deferred costs 110,367 -
Increase (decrease) in accounts payable and accrued
liabilities (44,976) (6,587)
Increase (decrease) in interest payable (4,240) 12,511
(Decrease) in unearned revenue (110,315) (33,692)
--------- --------
Net Cash Provided (Used) by Operating Activities (22,607) (5,564)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash receipt on notes receivable - 50,000
Purchase of fixed assets (2,515) -
--------- --------
Net Cash Provided (Used) by Investing Activities (2,515) 50,000
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) in cash overdraft - -
Payments to related parties - (10,654)
Payments on notes payable (27,726) (73,086)
Proceeds from notes payable 60,380 -
Proceeds from common stock 41,728 75,000
-------- ---------
Net Cash Provided (Used) by Financing Activities 74,382 (8,740)
-------- ---------
NET INCREASE IN CASH 49,260 35,696
CASH AT BEGINNING OF PERIOD 16,753 113,820
-------- ---------
CASH AT END OF PERIOD $ 66,013 $ 149,516
======== =========
The accompanying notes are an integral part of these consolidated financial
statements.
F-8
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the
Three Months Ended
June 30,
---------------------
2005 2004
----------- ---------
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for payment on notes payable
and interest $ 114,664 $ 75,232
Common stock issued for stock offering costs $ - $ 45,900
Common stock issued for payment on accounts payable $ - $ -
Stock options issued for consulting services $ 8,649 $ 332,442
Stock options issued for board compensation $ 15,000 $ 3,000
Stock options issued for employee compensation $ 2,825 $ -
Cash Paid For:
Interest $ 13,199 $ -
Income taxes $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 2005 and March 31, 2005
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 accounting principles generally accepted in the United States of America
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, 2005 Annual Report on
Form 10-KSB. Operating results for the three months ended June 30, 2005 are
not necessarily indicative of the results that may be expected for the year
ending March 31, 2006.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, the Company does not have significant
cash or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs. Additionally, the Company
has accumulated significant losses, has negative working capital, and a
deficit in stockholders' equity. All of these items raise substantial doubt
about its ability to continue as a going concern. Management's plans with
respect to alleviating the adverse financial conditions that caused you to
express substantial doubt about the Company's ability to continue as a going
concern are as follows:
During the fiscal year ending March 2005, the Company opened discussions with
several target companies for possible merger and acquisition activities. In
addition, the Company also continued to investigate the feasibility of
utilizing parts of our Learning Labs to create a line of specialty retail
learning toys. The Company has also entered into several strategic alliances
with K'NEX, Science Demo, and GibsonTechEd for further product development and
enhancement. The Company has also strengthened its international position by
naming agents and installing Learning Labs in Egypt, Dubai, and Saudi Arabia.
Over the next fiscal year, the Company will continue to develop marketplace
strategy for the US market as well as the international market.
The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plan described in the preceding
paragraph and eventually attain profitable operations. The accompanying
consolidated financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
NOTE 3 - DILUTIVE INSTRUMENTS
a. Stock Options
SFAS No. 148, requires the Company to provide pro forma information regarding
net loss and net loss 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. 148. The current year
pro forma net income(loss) includes $17,675 of prior year option expense
amortization.
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 100% to 538% percent for all
years; risk-free interest rates of 1% to 6%, and expected lives of 1 to 10
years.
For the Three Months Ended
June 30,
2005 2004
Net income(loss):
As reported $ 143,718 $ (364,470)
Pro Forma 173,396 (390,401)
Net income(loss) per share:
As reported $ 0.01 $ (0.01)
Pro Forma 0.00 (0.02)
F-10
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 2005 and March 31, 2005
NOTE 3 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
The Company has granted the following options as of June 30, 2005:
Amount
Date of Issue Issue Amount Expired/ Amount
Description Grant Number Price Exercised Cancelled
Outstanding
- ---------------- -------- --------- -------- --------- --------- ----------
1) Board Members 12-10-01 1,000,000 $ 0.30 0 (250,000) 750,000
2) Board Members 06-03-02 1,000,000 $ 0.16 0 (250,000) 750,000
3) Employees 07-01-02 335,000 $ 0.16 0 (10,000) 325,000
4) Employee 08-15-02 5,000 $ 0.16 0 0 5,000
5) Board Members 10-21-02 499,998 $ 0.09 0 (166,666) 333,332
6) Board Members 05-15-03 892,855 $ 0.07 (250,000) (214,285) 428,570
7) Employee 05-20-03 100,000 $ 0.07 0 0 100,000
8) Employee 07-25-03 25,000 $ 0.10 0 0 25,000
9) Employee 09-05-03 150,000 $ 0.07 0 0 150,000
10) Employee 09-25-03 25,000 $ 0.15 0 0 25,000
11) Board Member 04-28-04 150,000 $ 0.15 0 0 150,000
12) Consultant 04-28-04 2,000,000 $ 0.10 (750,000)(1,250,000) 0
13) Consultant 04-28-04 4,000,000 $ 0.25 0 (4,000,000) 0
14) Consultant 04-28-04 200,000 $ 0.10 0 0 200,000
15) Consultant 04-28-04 200,000 $ 0.20 0 0 200,000
16) Consultant 04-28-04 200,000 $ 0.30 0 0 200,000
17) Consultant 04-28-04 200,000 $ 0.35 0 0 200,000
18) Board Members 09-14-04 80,358 $ 0.14 0 0 80,358
19) Board Members 09-14-04 93,750 $ 0.12 0 0 93,750
20) Board Members 09-14-04 112,500 $ 0.10 0 0 112,500
21) Board Members 09-14-04 48,912 $ 0.23 0 0 48,912
22) Board Members 09-14-04 57,692 $ 0.26 0 0 57,692
23) Employee 07-29-04 153,533 $ 0.15 0 0 153,533
24) Employee 08-10-04 50,000 $ 0.13 0 0 50,000
25) Employee 07-10-04 50,000 $ 0.13 0 0 50,000
26) Employee 07-01-04 25,000 $ 0.31 0 0 25,000
27) Consultant 07-29-04 5,000 $ 0.15 0 0 5,000
28) Employee 11-15-04 100,000 $ 0.10 0 0 100,000
29) Board Members 01-04-05 315,792 $ 0.10 0 0 315,792
30) Consultant 01-06-05 4,500 $ 0.10 0 0 4,500
31) Employee 06-01-04 75,000 $ 0.31 0 0 75,000
32) Employee 06-14-04 250,000 $ 0.31 0 0 250,000
33) Employee 06-01-04 50,000 $ 0.31 0 0 50,000
34) Employee 06-01-04 75,000 $ 0.31 0 0 75,000
35) Employee 06-16-04 150,000 $ 0.31 0 0 150,000
36) Board Members 04-01-05 81,080 $ 0.185 0 0 81,080
37) Employees 05-26-05 175,000 $ 0.50 0 0 175,000
38) Officer 05-26-05 107,467 $ 0.50 0 0 107,467
---------- --------- ---------- ----------
13,043,437 (1,000,000) 6,140,951 5,620,019
========== ========= ========== ==========
Amount Exercisable 4,621,486
==========
Risk-Free
Fair Interest Expected Expected
Description Value Rate Life Volatility
---------------- --------- --------- -------- ----------
1) Board Members $ 0.20 5.69% 10.00 99.80%
2) Board Members $ 0.15 5.48% 10.00 128.91%
3) Employee $ 0.14 2.84% 3.50 157.77%
4) Employee $ 0.14 2.84% 3.30 163.77%
5) Board Members $ 0.09 3.94% 10.00 158.83%
6) Board Members $ 0.09 3.94% 10.00 151.61%
7) Employee $ 0.06 2.54% 4.00 151.61%
8) Employee $ 0.12 2.81% 4.00 156.24%
9) Employee $ 0.11 2.81% 4.00 152.03%
10) Employee $ 0.12 3.07% 5.85 152.03%
11) Board Member $ 0.17 4.43% 10.00 344.55%
12) Consultant $ 0.17 0.98% 0.17 187.13%
13) Consultant $ 0.17 0.98% 0.33 187.13%
14) Consultant $ 0.17 1.55% 1.00 537.80%
15) Consultant $ 0.17 1.55% 1.00 537.80%
16) Consultant $ 0.17 1.55% 1.00 537.80%
17) Consultant $ 0.17 1.55% 1.00 537.80%
18) Board Members $ 0.15 4.14% 10.00 247.04%
19) Board Members $ 0.15 4.14% 10.00 247.04%
20) Board Members $ 0.15 4.14% 10.00 247.04%
21) Board Members $ 0.15 4.14% 10.00 247.04%
22) Board Members $ 0.15 4.14% 10.00 247.04%
23) Employee $ 0.14 3.78% 5.00 250.60%
24) Employee $ 0.13 3.47% 5.00 247.04%
25) Employee $ 0.23 3.64% 5.00 250.60%
26) Employee $ 0.27 3.81% 5.00 240.27%
27) Consultant $ 0.14 3.78% 5.00 250.60%
28) Employee $ 0.10 3.53% 5.00 236.98%
29) Board Members $ 0.09 4.29% 10.00 234.54%
30) Consultant $ 0.11 3.65% 5.00 236.98%
31) Employee $ 0.31 3.91% 5.00 235.04%
32) Employee $ 0.26 3.98% 5.00 235.04%
33) Employee $ 0.31 3.91% 5.00 235.04%
34) Employee $ 0.31 3.91% 5.00 235.04%
35) Employee $ 0.31 3.91% 5.00 235.04%
36) Board Members $ 0.185 4.24% 10.00 237.88%
37) Employees $ 0.50 3.91% 5.00 257.85%
38) Officer $ 0.50 3.91% 5.00 257.85%
F-11
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 2005 and March 31, 2005
NOTE 4 - SUBSEQUENT EVENTS
During the month of July 2005, the Company issued 20,000 shares to certain
individuals who helped with converting the last of the indentured
trustholders' notes to common stock. The shares were issued valued at $0.705
per share for a total commission expense of $14,100.
During the month of July 2005, the Company issued 60,900 shares to an
indentured trust holder who converted debt to common stock. This transaction
is reflected in the above financial statements.
During the month of July 2005, the Company issued 5,000 shares to a consultant
who was exercising options. These options were exercisable at a price of
$0.15 per share.
During July 2005, the Company signed a letter of intent (LOI) to acquire
LabMentors, a Canadian based developer of hands-on virtual computer,
networking, and server labs. PCS will acquire all LabMentor's stock in
exchange for PCS' restricted stock; the final structure of the exchange has
not been determined. The purchase price is $450,000, payable in PCS
restricted common stock. In addition to the purchase price, LabMentor's
shareholders can earn additional PCS shares based on LabMentor's EBITDA
(earnings before income taxes, depreciation/amortization) for three years
after the initial purchase of LabMentors. The LOI will terminate on October
31, 2005, unless a definitive agreement is reached following PCS' due
diligence.
F-12
Item 2. Management's Discussion and Analysis or Plan of Operation.
- --------------------------------------------------------------------
Results of Operations.
- ----------------------
Three months ended June 30, 2005, compared to three months ended
June 30, 2004.
- --------------
Revenues for the three-month period ended June 30, 2005,
increased by $490,274, or 110% to $934,972 as compared to $444,698 for the
three-month period ended June 30, 2004. This increase is due to increased
sales and marketing efforts throughout the country as well as increased
international sales. In addition, we received several large orders at the end
of the previous fiscal year (ended March 31, 2005); these orders were
delivered, and the revenue recognized, during this first quarter.
Cost of goods sold for the three-month period ended June 30, 2005,
increased by $234,739, or 159% to $382,211 as compared to $147,472 for the
three-month period ended June 30, 2004. This increase is due to an increase
in sales as well as an increase in shipping costs and slightly higher supplier
pricing.
Operating expenses for the three-month period ended June 30, 2005,
decreased by $280,298, or 41% to $401,725 as compared to $682,023 for the
three-month period ended June 30, 2004. This decrease is primarily due the
non-recurring expense we booked during last year's period for non-cash
consulting expense of $322,442.
Interest expenses for the three-month period ended June 30, 2005,
decreased 22%, or $6,659 to $23,778 as compared to $30,438 for the
three-month, period ended June 30, 2004. This decrease is due to our efforts
to convert debt to equity. During this first quarter ended June 30, 2005, we
converted approximately $103,500 of indentured trust debt to equity.
Liquidity and Capital Resources.
- --------------------------------
We had a cash balance of $66,013 at June 30, 2005. Management
believes that the cash received from delivered sales orders, as well as
continued limited offerings of our common stock, will be sufficient to meet
our operating expenses for the foreseeable future.
Item 3. Controls and Procedures.
- ----------------------------------
As of the end of the period covered by this Quarterly Report, we
carried out an evaluation, under the supervision and with the participation of
our President and Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures. Based on this evaluation, our President
and Chief Financial Officer concluded that our disclosure controls and
procedures are effectively designed to ensure that information required to be
disclosed or filed by us is recorded, processed or summarized, within the time
periods specified in the rules and regulations of the Securities and Exchange
Commission. It should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how remote.
In addition, we reviewed our internal controls over financial reporting, and
there have been no changes in our internal controls or in other factors in the
last fiscal quarter that has materially affected or is reasonably likely to
materially affect our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- ----------------------------
None; not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
- ----------------------------------------------------------------------
Sales of Unregistered Securities During the Last Quarter.
---------------------------------------------------------
Common Preferred
Description Shares Amount Shares Amount
- ----------- ------ ------ ------ ------
Laura & Bill Baran 15,000 (1)
Hazen & Josephine Sandwick 35,000 (2)
Scott Peyron & Associates 90,972 (3)
Anthony A. Maher 205,211 (4)
Paul & Lynn Kalcic 12,815 (5)
Matamo Corp. LLC 16,715 (6)
Douglas Miller 16,715 (6)
Trace G. Barnes 33,382 (5)
Trevor Brown Living Trust 71,030 (5)
William & Linda Hamm 81,000 (5)
Mary Kalcic 75,000 (5)
Armand LaSorsa 66,911 (5)
Baker-Louderback Living Trust 39,539 (5)
Rodney C. Luker 100,494 (5)
Clifford W. Nichols 71,030 (5)
Nelson Wooster 40,235 (5)
John R. Coghlan 76,085 (5)
(1) These shares were issued to an employee who exercised some options. These
options were exercisable at $0.16 per share.
(2) These shares were issued for cash at $0.20 per share.
(3) These shares were issued for public relations services at $0.095 per
share.
(4) These shares were issued to an Officer/Board Member who exercised some
options. These options were exercisable at $0.13 per share.
(5) These shares were issued for the conversion of indentured trust debt and
interest at $0.17 per share.
(6) These shares were issued for cash at $0.17 per share.
Item 3. Defaults Upon Senior Securities.
- ------------------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
- --------------------------------------------------------------
None; not applicable.
Item 5. Other Information.
- ----------------------------
None; not applicable.
Item 6. Exhibits.
- -------------------
Exhibits.
31.1 302 Certification of Anthony A. Maher
31.2 302 Certification of Christina M. Vaughn
32 906 Certifications
SB-2 Registration Statement Filed with an Effective Date
of May 11, 2001*
* Incorporated by Reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Quarterly Report to be signed on its
behalf by the undersigned thereunto duly authorized.
PCS EDVENTURES.COM, INC.
Date: 8/22/2005 By:/s/Anthony A. Maher
---------- -------------------------------------
Anthony A. Maher
Chief Executive Officer, President and
Chairman of the Board of Directors
Date: 8/22/2005 By:/s/Christina M. Vaughn
---------- -------------------------------------
Christina M. Vaughn
Chief Financial Officer
Date: 8/17/2005 By:/s/Donald J. Farley
---------- -------------------------------------
Donald J. Farley
Secretary and Director
Date: 8/15/2005 By:/s/Cecil D. Andrus
---------- -------------------------------------
Cecil D. Andrus
Director