U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 000-49990
PCS EDVENTURES!.COM, INC.
(Name of Small Business Issuer 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
N/A
(Former Name or Former Address, if changed since last Report)
Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered: None
Securities Registered under Section 12(g) of the Exchange Act:
No par value common stock
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.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this Form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State Registrant's revenues for its most recent fiscal year: March 31,
2005 - $1,468,671.
State the aggregate market value of the Registrant's voting stock held by
non-affiliates computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of a specified
date within the past 60 days.
June 29, 2005 - $15,453,033. There are approximately 25,332,841 shares
of common voting stock of the Registrant beneficially owned by non-affiliates.
These computations are based upon the bid price for the common stock of the
Registrant on the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. ("NASD") on June 29, 2005 or $0.61 per share.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not Applicable.
Check whether the issuer has 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)
State the number of shares outstanding of each of the Registrant's
classes of common equity, as of the latest practicable date:
June 29, 2005
28,402,585
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Part III, Item I.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I
Item 1. Description of Business.
------------------------
Business Development.
---------------------
General.
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PCS (the "Company," "PCS," "we," "our, "us" or similar words)
was incorporated in 1994 in the State of Idaho. In October 1994, we
acquired PCS Schools, Inc. ("PCS Schools") as a wholly owned subsidiary. PCS
Schools had created an educational enrichment program that was delivered in
owner-operated, free standing Learning Centers. This program offered a unique
atmosphere highly conducive to individual styles of learning and a system that
utilized computer technology to increase areas of inquiry and application.
Subsequently, we changed our business plan and business strategy and in
connection with this change, we divested the Learning Centers developed by PCS
Schools and focused our efforts on creating web based educational systems
utilizing and improving PCS Schools legacy curriculum.
Fiscal Year Ended March 31, 2005.
---------------------------------
The following are the business developments during fiscal 2005:
* Opened discussions with several target companies for possible
merger and acquisition activities;
* Sold an additional 300 Labs to Edison Schools;
* Continued to investigate using parts of our Learning Labs to
create a line of specialty retail learning toys;
* Expanded our strategic alliance with K-Nex Corporation, a
manufacturer and distributor of learning manipulatives to the US
K-12 market;
* Developed a strategic alliance with Science Demo, an Israeli
Science Kit designer and manufacturer, for the Academy of
Science;
* Developed a strategic alliance with GibsonTechEd, for electronic
components to fit into our Academy of Electrical Engineering;
* Continued the development and release of additional curriculum
for a line of learning labs destined for the classroom;
* Named Agents in Egypt, Dubai, Saudi Arabia and the AOE and sold
and installed Learning Labs in each Country;
* Began to develop relationships with the World Bank and USAID for
the purpose of being included in several RFP's in the Middle
East;
* Continued to develop new marketplace strategy for the US market
by introducing new products, added sales representation and
continued to expand the state and national standards alignment
in all 50 states;
* Continued to expand our building brick supplier choices and
Reduced our reliance on our former supplier.
Fiscal Years ended March 31, 2004 and 2003.
-------------------------------------------
For a discussion of our business development during the years ended March
31, 2004 and 2003, see our 10-KSB Annual Reports for the years ended March 31,
2004 and 2003 which have been previously filed with the Securities and
Exchange Commission, and which are incorporated herein by reference. See Item
13, Part III.
Business.
---------
We are engaged in the business of developing and marketing educational
Learning Labs and related technologies and programs directed to the
kindergarten through 12th grade after-school market. Our products and
technologies are targeted to the public and private schools classroom, the
afterschool market and home market. Our products and technologies are
delivered to the classroom through an inventory of hardware, software, books,
and Internet access. Our technologies and products are delivered to the home
user through Internet access to our subscription based website. Our products
and technologies allow students ages 3-18 to explore the basic foundations of
mechanical engineering, structures in architecture, and math and science.
We have developed several innovative technology based educational
programs. Our "Academy of Engineering,", "Academy of Electric Engineering",
"Academy of Engineering, Jr.", Academy of Science", "Academy of Robotics",
"Edventures! Lab", "Discover! Lab" products are site-license installations for
classrooms and learning programs. Our "Brick Lab!" and "Young Learner Building
Box" products are also for classrooms and learning programs, but are not
licensed. Our "Edventures! Online" product is our comprehensive Internet
delivered educational experience that supports our Edventures! Labs and our
Discover! Labs site licenses and also serves as a stand-alone home usage
program. Our "Edventures! Online" program is delivered to the home user over
the Internet on a monthly subscription basis. Separately, and in combination,
these seven products present a platform for delivering educational services
and support to classroom, learning center and home users, and create a virtual
community of learners and parents on the web. It is our business strategy
that as this online community grows, it will become an education portal
through which additional PCS programs and services can be marketed and
delivered.
We have only commenced marketing efforts for our current products and
technologies during the last four years. We continue to expand distribution
and marketing channels. To date, we have sold 2,500 Labs to the US and
International markets.
Principal Products or Services and their Markets.
-------------------------------------------------
We have now developed and are currently marketing several innovative
technology based educational programs for the kindergarten through 14th grade
("K-14") after-school market, learning center market and home market.
Separately, and in combination, these Lab products present a platform for
delivering educational services and support, and create a virtual community of
learners and parents on the web. It is our intent that as this community
grows, it becomes an education portal through which additional PCS programs
and services can be deployed. The five technologies and products that we are
currently marketing, are as follows:
Our Academy of Engineering Lab is a site license program designed
for use within various K-12 environments. Using the Academy of
Engineering, students develop, design, and produce exciting hands-on
projects ranging from catapults to robots in response to engaging
challenges in a variety of topics. The current Academy of
Engineering product includes four books from the mechanical
engineering strand and 12 extension books covering a variety of
topics. Future topic strands for expanding the program include
structural, electrical and software engineering. Each strand, when
completed, includes courseware for over 272 hours of instruction.
The Academy of Engineering program includes a variety of LEGO
(Registered) products which are used as a mechanical engineering
learning aid. An Academy of Engineering site license currently
sells for between $13,995 and $21,500 and includes materials, LEGO
(Registered) manipulatives and other building components, and
curriculum, a custom designed storage and organization unit, a
digital camera, web-based support by our "Edventures! Online"
product and various electronic assessment tools, and two days of
teacher training. We sold 16 Academy of Engineering Labs during the
previous fiscal year. Each site license includes all materials
necessary to utilize the complete Academy of Engineering program.
The Academy of Robotics Lab serves as a complement to our Academy of
Engineering or can also serve as a stand alone robotics lab. The
Academy of Robotics Lab is available in a 10, 20, or 30 student
editions. Each Lab contains a comprehensive LEGO (Registered)
inventory including LEGO (Registered) Mindstorms kits, additional
LEGO (Registered) manipulatives, digital camera, web services, and
curriculum. This Lab ranges in price from $6,995 to $20,985. We
sold 41 Academy of Robotics Labs during last fiscal year.
Edventures! Lab is a site license system intended for students ages
7-13 which provides a broader set of subject areas including art,
programming, web page design, chess, physics, electricity, and
others. It contains curriculum, storage cabinet, and a smaller
inventory of LEGO (Registered) manipulatives. It relies on
"Edventures! Online" for delivery of the curriculum. A site license
for an Edventures! Lab currently costs $7,550 which includes a
60-student block license for access to "Edventures! Online." We
have sold 12 Edventures! Labs during the previous fiscal year.
Discover! Lab is a scaled down model of the Edventures! Lab site
license system intended for smaller groups of approximately 15
students. It contains curriculum, a storage cabinet and
other material, but has a reduced inventory of LEGO (Registered)
materials and relies on "Edventures! Online" for delivery of the
curriculum. A site license for a Discover! Lab currently costs
$3,250 which includes a 30-student block license for access to
"Edventures! Online". We have sold 30 Discover! Labs during the
previous fiscal year.
Edventures Brick Labs! provide an inexpensive hands-on learning
solution for educators in all types of teaching environments. The
Brick Lab! combines the "Edventures! Online" curriculum, LEGO
(Registered) manipulatives, storage bins and Internet/web services
for smaller groups of approximately 30 students. The Brick Lab!
sells for $595 and is not licensed. We have sold 441 Brick Labs
during the previous fiscal year. In addition, we have developed
The BrickLab Grade Series. This series is a complete technology
curriculum for grades 1-6. Aligned with the ITEA standards, each
level in the grade series offers hands-on and open-ended projects
for up to 30 students at one time. Each individual grade package
includes a sturdy plastic tub filled with over 5,700 building
bricks, one teacher curriculum book-- grade specific -- and
accompanying posters and labels. Each level contains an excess of
over 200 technological projects relevant to the real world. For the
fiscal year ended 2005, Grades 1 and 2 are available. Grades 3 and
4 are scheduled for completion this fiscal year, and grades 5 and 6
for the following fiscal year. We sold 352 Brick Labs in FY 2005.
The Young Learner Building Box was designed to meet the needs of
preschoolers. Introducing children to hands-on learning, this lab
utilizes activities and games to teach number and letter
recognition, build vocabulary, counting, and more. The Young
Learner Building Box includes activity cards, large-size plastic
building blocks, the exclusive "HIGHRISE" board game, developed by
PCS for this specific Lab, and a sturdy mobile storage container.
This labs sells for $299 and is unlicensed. Introduced last year
ago, we have sold 13 Young Learner Building Boxes during the
previous fiscal year.
"Edventures! Online" is an Internet delivered program that provides
a safe, secure and exciting learning environment for students to
interact within from home and from school. "Edventures! Online"
includes online curriculum and assessment, filtered communication
tools, forums and a variety of additional online services. The
program utilizes Internet based resources and services as a stand-
alone product and also serves as an extension service to our
school-based Edventures! Lab. "Edventures Online" can be viewed on
the web at www.edventures.com. This environment features over 200
do-at-home projects organized into a sophisticated learning model
(Merit System), an animated glossary, monitored chat rooms, live
interaction with online instructors, personal email accounts for all
students and more. The "Edventures! Online" at-home curriculum
utilizes found materials, LEGO (Registered) products, software and
other resources to teach concepts in Physics, Electricity, Internet,
Programming, Art, Architecture, Engineering, and Robotics.
"Edventures! Online" provides all lab licensees an on-line support
tool and provides a framework within which students can safely
communicate, collaborate, and learn. "Edventures! Online" is also
available as a stand-alone, home based subscription product for
$69.95 per year.
The Academy of Engineering, Academy of Science, Academy of Electrical
Engineering, Academy of Robotics, Edventures! Lab, Discover! Lab, and Brick
Lab! have three main delivery models, which makes these products suitable for
use in various learning Environments:
School Resource Center. The Academy of Engineering, AOE Jr, AOS, Academy of
Electrical Engineering, Academy of Robotics, Edventures! Lab, and Discover!
Labs are currently being deployed as a school-wide resource center that allows
K-12 teachers to integrate hands-on project based learning activities into
their daily curriculum. As a resource center, these mobile Labs are rolled
from classroom to classroom throughout the course of a typical school week,
being used by the entire school. Examples of how the program is used include:
(1) a platform for gifted and talented programs; (2) to enhance and extend a
science curriculum;(3) to enhance and extend mathematics activities; (4) to
serve as a foundation for an after-school program; (5) as a
vocational-technical or technology education program; (6) and to serve as a
special education resource. This model makes the program an ideal resource
for schools around the country that are seeking innovative and organized
methods for integrating technology and hands-on learning in the classroom.
Pre-Engineering Course. The Academy of Engineering, Academy of
Robotics, and Edventures! Labs provide a comprehensive engineering
curriculum designed around the hands-on use of LEGO (Registered)
manipulatives. This curriculum allows the program to serve as the
foundation for pre-engineering courses suitable for students in
Jr./Sr. High. The hands-on applications of technology, design and
production techniques, and the integration of the Internet based
services, makes it a highly attractive total classroom solution.
After School Program. The Academy of Engineering, Academy of
Robotics, Edventures! Lab, Discover! Lab, and Brick Lab programs
were originally designed in an after-school environment and are
ideal to meet the expanding need for educational solutions for
school-based programs, Boys & Girls Clubs, YMCA, Community Learning
Centers and similar organizations. When used in this format, these
programs become a hub for educational activities out of the
engineering curriculum, or from the online Edventures! program. The
complete support, assessment and curriculum components provide a
system for offering a flexible, effective educational offering.
We believe that education programs of our type are not currently
available from any other source and present a unique opportunity for sales and
marketing to specific segments of the education industry. We believe that PCS'
education programs deliver a unique, proven learning experience that:
* provides students with exciting and relevant activities that
brings curriculum to life;
* develops essential critical thinking and problem-solving skills;
* prepares students for real-world career demands; and
* builds a strong foundation in technical literacy.
Markets.
--------
The educational market is a significant market in the United States but
is fragmented into various segments ranging from non-profit educational
programs to the public school system. We focus our sales and marketing
efforts on specific market segments in an integrated strategy that is intended
to build brand name awareness of our PCS products in schools, at home and
within the larger educational marketplace.
We believe that a major shift of focus is taking place in education in
our public and private schools as educators and parents seek to maximize
educational experiences for children based upon advances in technology. We
believe that this shift necessitates sweeping changes in how schools are
operated, programs are taught, technology is integrated, students are assessed
and classrooms are managed. Over the past few years, the emergence of a for-
profit education industry has begun to evolve in response to parents' and
society's demand for more and better alternatives in education. Parents are
giving their children's schools low grades for teaching performance and at
the same time there is an increase in public support for school choice. The
issue of education, including the public funding of private school vouchers is
significant. A school voucher program has also been recently upheld in a case
decided at the United States Supreme Court. These factors are driving the
growth of private and charter school alternatives.
Capitalizing on this atmosphere, private education based companies
specializing in after-school, tutoring, and special skills programs are
marketing programs, technologies, and products catering to teachers, students,
and parents. Parents support alternative education programs and enrichment
activities and actively seek them out for their children, as well as exert
more and more pressure on public schools to improve their performance. We
believe that with this change and unrest taking place within the education
industry, enormous opportunities are emerging for companies who understand the
problems and promise of technology and new educational methodologies. It is
our business strategy to, through our technologies and experience, develop and
market technology enhanced learning programs to address this education demand.
The growth of the Extended Learning Market. Recent high-profile federal
programs indicate a growing opportunity within the extended learning market
which encompasses before, after, and summer school programs on the campus of
public schools, or operated through the venue of organizations like the Boys &
Girls Clubs of America. The web site, "www.afterschool.gov," summarizes many
of the federal funding sources now available for this growing market segment.
PCS Designated Markets.
-----------------------
We have identified as our primary market for our labs traditional public
and private schools and the after-school programs that are growing quickly
across the United States. Widespread financial support for implementing
school-based after-school programs is driving the growth of public school
programs in this segment. The growth of programs such as those offered by the
Boys & Girls Clubs of America are further proof of the market need for this
product. As a niche market, after school programs, on and off the campus of
public schools (the Extended Learning Market), represent a potential market
for PCS products.
K-12 Market in International and U.S. We have entered into a sales
agency agreement and product alliance relationship with Pitsco LEGO
(Registered) Dacta, a Pittsburg, Kansas, based educational company that holds
the exclusive distribution rights to LEGO (Registered) Dacta product sales in
the United States. Pitsco, established in 1966, has established a market
presence and reputation in the school market place and now markets its own
line of modular school labs as well as hundreds of other hands-on type
products. The Academy of Engineering product complements the Pitsco existing
product line.
Boys & Girls Clubs. We are currently continuing our efforts to
distribute our labs into the Boys and Girls Clubs. To date, clubs have
evidenced a strong interest in our program due to an organization-wide mandate
to implement educational programs like the Academy of Engineering. The
funding cycle access to funds for these programs are a significant factor in
our ability to market the Academy of Engineering to Boys and Girls Clubs. We
currently have labs in over 20 of 3,300 Boys & Girls Clubs nationwide.
Extended Learning Market. In addition to the Boys & Girls Clubs of
America, additional non-school-based programs are increasing through such
institutions as the YMCA, Community Learning Centers, and other sites such as
Science Museums. PCS is currently working to establish reference sites in
each of these markets and will follow a strategy similar to the one it is
pursuing with the Boys & Girls Clubs of America. Progress to date in these
market segments include
Edventures! Online Markets.
-------------------------
Edventures! Online is designed to provide a full-featured educational
extension via the Internet to all students participating in PCS programs such
as the Academy of Engineering. However, for families and students who do not
have access to PCS Labs through a local site license, the program is available
on a subscription basis for $69.95 per year. PCS describes the primary market
for the current Edventures! Online product as families with children ages six
to 13 who have a strong interest in education. Edventures! Online has been
approved for state level funding for homeschool students in the states of
California and Alaska. PCS is currently developing a promotional effort that
will take advantage of this funding availability to promote the Edventures!
program to the thousands of homeschool families in these states.
Marketing and Other Agreements.
-------------------------------
Direct Sales Force. Currently, we have a direct sales force consisting
of four employees and several independent agency groups. This direct sales
force markets our products and programs in a variety of methods to various
users, providers and others.
PCS Edventures is pleased to announce it has reached a formal agreement
with Science Demo, Ltd., an Israeli manufacturer and marketer of a premier
line of compact Science Demonstration Labs, for PCS to market the products in
the US and Canada. This agreement expands the products and services offered
by PCS sales representatives to include the core physical science market for
K-12 schools nationwide. A recent report released by the National Science
Foundation indicates that science and technology preparedness in US students
is dropping at an alarming rate and we are losing jobs and a leadership role
to International competitors. Solid, proven science activities fit within our
project based learning educational framework.
Competition.
------------
Both the education marketplace and the Internet are highly competitive
and rapidly evolving fields, and are expected to continue to undergo
significant and rapid technological change. Other companies may develop
products and services and technologies superior to our products which may
result in our products and services becoming less competitive. We are aware
of several development stage and established enterprises, including major
telecommunications and computer software and technology companies, which are
exploring the fields of online educational products and services or are
actively engaged in research and development of products and services targeted
at these fields. Many of these companies have substantially greater financial,
manufacturing, marketing and technical resources than we have and represent
significant long-term competition. To the extent that these companies offer
comparable products and services at lower prices, or higher quality and more
cost effective, our business could be adversely affected.
Potential Competitive Advantages.
---------------------------------
We believe that we potentially have certain competitive advantages which
we will attempt to maximize in developing and effecting our business strategy.
These potential advantages include the following:
High barriers exist to entry. PCS' educational programs are innovative,
unique and based on fifteen years of experience and product development.
Barriers to entry for competitive products that are time tested are
extremely high. Early and significant market penetration will guarantee
a "first and best" name recognition for the types of educational services
that PCS will deliver.
Utilize the Internet as a delivery and support mechanism for the
programs. By leveraging our extensive expertise in Internet technology,
PCS achieves the following significant advantages: (1) a high level of
program control; (2) the building of a significant data model regarding
program usage; and (3) a direct channel to enrolled students who access
the program at home. Each of these advantages provides tangible long-
term benefits to the Company.
Expand program offerings and distribute them via established program
licensees. After implementing and proving a successful program model,
PCS will utilize its established network of licensees to distribute
additional programs designed to integrate seamlessly into the already
deployed sites. This creates a long-term growth strategy that includes
new and residual sales to an ever-growing list of existing licensees on
an annual basis.
Proliferate licensing of PCS programs by continuing to expand other
educational market segments. PCS recognizes that the public schools and
community organizations offering educational programs are the best
choice for rapid expansion and capturing market share and visibility.
Additional market segments will be attacked individually as PCS
demonstrates program viability, market by market. By taking a long term
strategic approach to market penetration, and maintaining a policy of
solid strategic alliances for distribution, each PCS educational program
will be an asset that will continue to generate growth and sales.
Sources and Availability of Raw Materials.
------------------------------------------
None, not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
----------------
We seek to protect our technology, documentation and other written
materials under trade secret and copyright laws, which afford only limited
protection. Generally, we enter into confidentiality and non-disclosure
agreements with our employees and with key vendors and suppliers. Currently
we use the following trade names: "PCS" (TM)"; "Academy of Learning";
"business"; "Edventures", and "PCS Brick Lab" (TM". We intend to evaluate
continually the appropriateness of seeking registration of additional product
names and trademarks as they evolve.
At the present time, we have not applied for any patents, nor do we have
any patents pending. We anticipate that our products will not be the type for
which patent protection will be sought. However, we may file for patent
protection on certain aspects of our proprietary technology in the future.
Our present or future products may be found to infringe upon the
intellectual property rights of others. If our products were found to
infringe on intellectual property rights of others, our development and sale
of such products could be severely restricted or prohibited. In such
eventuality we would be required to obtain licenses to utilize such patents or
proprietary rights of others, for which acceptable terms may be unavailable.
If we were not able to obtain such licenses, the development or sale of
products requiring such licenses could be materially and adversely affected.
In addition, we could incur substantial costs in defending against challenges
to our patents or infringement claims made by third parties or in enforcing
any patents we may obtain.
Our PCS logo has been service/trade marked (#2213678) since December 29,
1998. Protection for this service/trademark is for a ten year period. "PCS
Edventures!.COM" has been service/trade marked since November 27, 2001. We
applied for a service/trademark (application #78329127) for "PCS Brick Lab" on
November 13, 2003. We anticipate that these applications will be granted in
the near future. Once granted, the protection is for a period of ten years.
Governmental Approval of Principal Products or Services.
--------------------------------------------------------
None, not applicable.
Effects of Existing or Probable Governmental Regulations.
---------------------------------------------------------
Small Business Issuer.
----------------------
The integrated disclosure system for small business issuers adopted by
the Securities and Exchange Commission in Release No. 34-30968 and effective
as of August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25 million; is a U.S. or Canadian issuer; is not an
investment company; and if a majority-owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25 million or more.
The Securities and Exchange Commission, state securities commissions
and the North American Securities Administrators Association, Inc. ("NASAA")
have expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets.
We are deemed to be a "small business issuer," and we have selected to
comply with the "small business issuer" disclosure requirements of Regulation
SB of the Securities and Exchange Commission.
Sarbanes-Oxley Act.
-------------------
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley
Act of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide
variety of new regulatory requirements on publicly-held companies and their
insiders. Many of these requirements will affect us. For example:
* Our chief executive officer and chief financial officer must
now certify the accuracy of all of our periodic reports that contain financial
statements;
* Our periodic reports must disclose our conclusions about the
effectiveness of our disclosure controls and procedures; and
* We may not make any loan to any director or executive officer
and we may not materially modify any existing loans.
The Sarbanes-Oxley Act has required us to review our current
procedures and policies to determine whether they comply with the
Sarbanes-Oxley Act and the new regulations promulgated thereunder. We will
continue to monitor our compliance with all future regulations that are
adopted under the Sarbanes-Oxley Act and will take whatever actions are
necessary to ensure that we are in compliance.
"Penny Stock" Designation.
--------------------------
Our common stock is "penny stock" as defined in Rule 3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks:
* with a price of less than five dollars per share;
* that are not traded on a "recognized" national exchange;
* whose prices are not quoted on the NASDAQ automated quotation
system; or
* in issuers with net tangible assets less than $2,000,000, if the
issuer has been in continuous operation for at least three years, or
$5,000,000, if in continuous operation for less than three years, or with
average revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities
and Exchange Commission require broker/dealers dealing in penny stocks to
provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the
document before making any transaction in a penny stock for the investor's
account. You are urged to obtain and read this disclosure carefully before
purchasing any of our shares.
Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in these stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to:
* get information about the investor's financial situation,
investment experience and investment goals;
* reasonably determine, based on that information, that transactions
in penny stocks are suitable for the investor and that the investor can
evaluate the risks of penny stock transactions;
* provide the investor with a written statement setting forth the
basis on which the broker/dealer made his or her determination; and
* receive a signed and dated copy of the statement from the
investor, confirming that it accurately reflects the investor' financial
situation, investment experience and investment goals.
Compliance with these requirements may make it harder for our
stockholders to resell their shares.
Reporting Obligations.
----------------------
Section 14(a) of the Exchange Act requires all companies with
securities registered pursuant to Section 12(g) of the Exchange Act to comply
with the rules and regulations of the Securities and Exchange Commission
regarding proxy solicitations, as outlined in Regulation 14A. Matters
submitted to stockholders of our Company at a special or annual meeting
thereof or pursuant to a written consent will require our Company to provide
our stockholders with the information outlined in Schedules 14A or 14C of
Regulation 14; preliminary copies of this information must be submitted to the
Securities and Exchange Commission at least 10 days prior to the date that
definitive copies of this information are forwarded to our stockholders.
We are also required to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Securities Exchange Commission on a
regular basis, and will be required to timely disclose certain material
events (e.g., changes in corporate control; acquisitions or dispositions of a
significant amount of assets other than in the ordinary course of business;
and bankruptcy) in a current report on Form 8-K.
Cost and Effect of Compliance with Environmental Laws.
------------------------------------------------------
None, not applicable.
Research and Development Expenses.
----------------------------------
We incurred no research and development expenses during the last fiscal
year due to a lack of funding. However, we believe that continued investment
in research and development will contribute to attaining our strategic
objectives and, as a result, expect research and development expenses to
increase in future periods.
Number of Employees.
--------------------
We employ approximately 10 full-time and 3 part-time employees of which
three are in sales, six are in design and project management, two in
accounting/finance and two in administration. We will hire part-time and
additional full-time employees on an "as-needed" basis. None of our employees
are represented by a labor union. We believe that our relationship with our
employees is good.
Item 2. Description of Property.
------------------------
The Company leases its principal executive offices at 345 Bobwhite
Court, Suite #200, Boise, Idaho 83706. These offices consist of approximately
5,412 square feet of office space. Rent obligations are $6,750/month
under a non-cancelable operating lease.
The Company leases additional warehouse space at 7646 Lemhi St, Unit
#13, Boise, Idaho 83709. This warehouse space consists of approximately 1,400
square feet. Rent obligations are $576/month through May 2006.
Item 3. Legal Proceedings.
------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted to the Company's shareholders during the last
quarter of our current fiscal year.
PART II
Item 5. Market for Common Equity, Related Stockholder Matters and Small
Business Issuer Purchases of Equity Securities.
-----------------------------------------------
Market Information.
-------------------
There has never been any "established trading market" for our shares of
common stock. Our common stock is presently quoted on the OTC Bulletin Board
of the NASD under the symbol "PCSV" as reflected below. No assurance can be
given that any market for our common stock will develop in the future or be
maintained. If an "established trading market" ever develops in the future,
the sale of "restricted securities" (common stock) pursuant to Rule 144 of the
Securities and Exchange Commission by members of management or others may have
a substantial adverse impact on any such market.
The range of high and low bid quotations for our common stock during
each quarter since they commenced trading in September, 2001, are shown below.
Prices are inter-dealer quotations as reported by the NQB, LLC, and do not
necessarily reflect transactions, retail markups, mark downs or commissions.
Stock Quotations
----------------
Quarter Ended High Low
------------- ---- ---
September 30, 2001 $0.60 $0.25
December 31, 2001 $0.28 $0.18
March 31, 2002 $0.25 $0.06
June 30, 2002 $0.19 $0.07
September 30, 2002 $0.20 $0.10
December 31, 2002 $0.15 $0.06
March 31, 2003 $0.10 $0.065
June 30, 2003 $0.12 $0.065
September 30, 2003 $0.12 $0.07
December 31, 2003 $0.17 $0.09
March 31, 2004 $0.30 $0.10
June 30, 2004 $0.35 $0.13
September 30, 2004 $0.27 $0.10
December 31, 2004 $0.12 $0.06
March 31, 2005 $0.18 $0.08
Recent Sales of Unregistered Securities.
----------------------------------------
During the last quarter, we sold the securities listed below in
unregistered transactions. Each of the sales was sold in reliance on the
exemption provided for in Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"). No underwriting fee or other compensation was
paid in connection with the issuance of shares.
Name Date Shares Consideration
---- ---- Issued Paid in Dollars
------ ---------------
None -- -- --
Holders.
--------
As of June 29, 2005, there were 28,402,585 shares of common stock
outstanding and approximately 404 stockholders of record.
Dividends.
----------
We have not paid any cash dividends since our inception and do not
anticipate or contemplate paying dividends in the foreseeable future. It is
the present intention of management to utilize all available funds for the
development of our business.
Securities Authorized For Issuance under Equity Compensation Plans.
-------------------------------------------------------------------
On April 28, 2004, we entered into a Consulting Agreement with Javan
Khazali, an independent consultant. This Consulting Agreement is for one year
and consists of compensation Mr. Khazali for services such as: marketing and
distribution strategies, structuring of transactions, vendor relations, and
business development activities. On May 21, 2004, we filed an S-8 for
10,000,000 shares at $.35 under an Equity Compensation Plan entitled "2004
Non-Qualified Stock Option Plan and Non-Qualified Stock Option Agreement" with
Javan Khazali."
Use of Proceeds From the Sale of Registered Securities.
-------------------------------------------------------
None.
Purchases of Equity Securities.
-------------------------------
None.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Results of Operation.
---------------------
Results and Comparison for Fiscal Years
Fiscal year ended March 31, 2005 resulted in a net loss of ($938,632).
This net loss is an increase of ($786,281) from the net loss for
fiscal year 2004 of ($152,351). The Basic Loss per Share for fiscal year
2005 is ($0.04), as compared to a loss per share of ($0.01) for fiscal year
2004. Details of changes in revenues and expenses can be found below.
Revenues
Revenues of $1,468,671 for fiscal year 2005 were down from revenues of
$1,830,861 for fiscal year 2004, or $362,190, for a 20% decrease.
Revenues for our fourth quarter of this fiscal year were 10% higher than
revenues for the same period during last fiscal year, $496,672 and $449,745,
respectively. Revenues for the first three quarters decreased due to a
combination of a policy change in the fourth quarter of fiscal year 2004 as
well as a slight decrease in sales. We changed our policy to give our
customers more choice in their lab materials. Under the new policy, our
customers can choose where to purchase their lab materials (e.g. LEGO
[Registered] manipulatives) and they simply purchase the PCS curriculum,
customized furniture unit and site license materials from us. There is no
effect on our gross profit as a result of our policy change as our revenues
are reduced by same amount as our cost of goods sold.
Cost of Goods Sold/Cost of Sales
Cost of Goods Sold increased $315 or 0.04%, from fiscal year 2004,
$679,009, to fiscal year 2005, $679,324. Costs of goods sold remained flat,
in spite of a decrease in sales. This is primarily due to increases in
shipping costs as well as the slight increase in sales during the fourth
quarter.
Operating Expenses
Operating expenses increased by $623,335, or 57%. Operating expenses
were $1,098,815 in fiscal year 2004 and $1,731,150 in fiscal year 2005. This
increase is primarily due to non-cash expenditures of $525,004 associated with
stock and options which were issued for services. The scope of said
consulting agreement includes advisement and consultation regarding
distribution strategies, evaluation of potential acquisition targets and the
structuring of any such transactions, and business development strategies,
including geographic and service expansion plans.
Excluding the non-cash expenditure mentioned above, operating expenses
for the fourth quarter of fiscal year 2005 increased 25%, or $101,022, from
$97,366 during the fourth quarter of fiscal year 2004 to $118,092 for same
period during fiscal year 2005. This increase is mainly due to increased
copier repair expense, warehouse expense, and increased consulting and
marketing expenses.
Liquidity.
----------
As of the fiscal year ended March 31, 2005, we had $16,752 in Cash, with
total current assets of $280,818 and total current liabilities of $1,037,487.
We have a stockholders' deficit of ($738,527).
Item 7. Financial Statements.
---------------------
Consolidated Financial Statements for the years ended
March 31, 2005 and 2004
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet - March 31, 2005
Consolidated Statements of Operations for the
years ended March 31, 2005 and 2004
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
for the Years Ended March 31, 2005 and 2004
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
PCS Edventures!.COM, Inc., and Subsidiary
Boise, Idaho
We have audited the consolidated balance sheet of PCS Edventures!.COM, Inc.,
and Subsidiary (the "Company") as of March 31, 2005, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years ended March 31, 2005 and 2004. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provided a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of PCS Edventures!.COM, Inc., and Subsidiary as of March 31, 2005 and the
results of their operations and their cash flows for the years ended March 31,
2005 and 2004, in conformity with United States generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 9 to
the consolidated financial statements, the Company has suffered recurring
losses from operations and has a working capital deficit that raises
substantial doubt about their ability to continue as a going concern.
Management's plans in regard to those matters are also described in Note 9 to
the consolidated financial statements. The consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
July 15, 2005
F-3
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheet
ASSETS
March 31,
2005
CURRENT ASSETS
Cash $ 16,752
Accounts receivable 130,569
Prepaid expenses 14,826
Deferred costs (Note 2) 110,367
Inventory 8,304
---------
Total Current Assets 280,818
---------
FIXED ASSETS, NET (Note 3) 11,917
---------
OTHER ASSETS
Deposits 6,225
---------
Total Other Assets 6,225
---------
TOTAL ASSETS $ 298,960
=========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31,
2005
CURRENT LIABILITIES
Accounts payable $ 183,068
Accrued Compensation 40,537
Payroll taxes payable 87,669
Accrued interest 75,044
Accrued expenses (Note 12) 59,079
Unearned revenue (Note 2) 269,571
Notes payable - related party (Note 5) 117,054
Notes payable (Note 6) 205,465
-----------
Total Current Liabilities 1,037,487
-----------
Total Liabilities 1,037,487
-----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, no par value, authorized 10,000,000
shares, 15,246 shares issued and outstanding (Note 4) 56,372
Common stock, no par value, authorized 40,000,000
shares; 27,355,451 shares issued and outstanding 23,868,669
Variable deferred consulting (Note 4) (1,000)
Accumulated deficit (24,662,568)
------------
Total Stockholders' Equity (Deficit) (738,527)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 298,960
============
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Years Ended
March 31,
2005 2004
REVENUES
Lab Revenue $1,294,709 $1,661,838
License Revenue 158,917 156,164
Subscription Revenue 15,045 12,859
---------- ----------
Total Revenues 1,468,671 1,830,861
COST OF GOODS SOLD 679,324 679,009
---------- ----------
GROSS PROFIT 789,347 1,151,852
---------- ----------
OPERATING EXPENSES
Salaries and wages 452,756 463,918
Depreciation expense 2,052 25,447
General and administrative 751,338 578,976
Stock for services expense 525,004 30,474
---------- ----------
Total Operating Expenses 1,731,150 1,098,815
---------- ----------
OPERATING INCOME (LOSS) (941,803) 53,037
OTHER INCOME AND EXPENSES
Interest expense (58,877) (214,804)
Interest income 993 18
Other income 17,065 4,398
Gain on settlement of debt (Note 7) 43,990 5,000
---------- ----------
Total Other Income and Expenses 3,171 (205,388)
---------- ----------
NET LOSS $ (938,632) $ (152,351)
========== ==========
BASIC LOSS PER SHARE (Note 2) $ (0.04) $ (0.01)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 26,253,256 19,447,429
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
Common Shares Preferred Shares
----------------------- --------------------
Shares Amount Shares Amount
---------- ----------- --------- ----------
Balance, March 31, 2003 17,832,301 $ 22,105,987 - $ -
Common stock issued for
extinguishment of debt and
interest at $0.09 per
share 35,000 3,150 - -
Options issued to directors
for accrued directors fees
(Note 11) - 17,857 - -
Contribution to capital
(Note 11) - 27,143 - -
Common stock issued for
conversion of accounts
payable at $0.09 per
share 11,111 1,000 - -
Common stock issued to
related party for
conversion of accrued
interest at $0.10 per
share 202,234 20,223 - -
Common stock issued for
the conversion of
warrants at $0.01 per
share 19,050 191 - -
Repriced options granted
below market value - 6,000 - -
Options granted below
market value - 8,250 - -
---------- ----------- --------- ------------
Balance Forward 18,099,696 $22,189,801 - $ -
---------- ----------- --------- ------------
Common Shares Preferred Shares
------------------------- ----------------------
Shares Amount Shares Amount
---------- ------------ --------- -----------
Balance Forward 18,099,696 $22,189,801 - $ -
Preferred stock issued
for conversion of debt
at $1.00 per share - - 5,000 5,000
Preferred stock issued
for cash at $1.00 per
share - - 5,000 5,000
Discount on preferred
stock - - - 2,500
Common stock issued for
extension of debt at
$0.10 per share 57,600 5,760 - -
Common stock issued for
conversion of
debt at $0.10 per share 150,000 15,000 - -
Common stock issued for
cash at $0.01 per share 150,000 15,000 - -
Common stock issued for
the conversion of
warrants at $0.01 per
share 6,000 60 - -
Common stock issued for
cash at $0.10 per share 550,000 55,000 - -
Revaluation of repriced
and outstanding options - (500) - -
----------- ------------- --------- -----------
Balance forward 19,013,296 $ 22,280,121 10,000 $ 12,500
---------- ----------- --------- ------------
Common Shares Preferred Shares
------------------------- ----------------------
Shares Amount Shares Amount
---------- ------------ --------- -----------
Balance forward 19,013,296 $ 22,280,121 10,000 $ 12,500
Common stock issued for
cash at $0.10 per share 200,000 20,000 - -
Common stock issued for
the conversion of
warrants at $0.01 per
share 6,000 60 - -
Common stock issued for
cash at $0.10 per share 250,000 25,000 - -
Common stock issued for
cash at $0.10 per share 200,000 20,000 - -
Common stock issued for
the conversion of warrants
at $0.01 per share 3,000 30 - -
Common stock issued for
cash at $0.10 per share 200,000 20,000 - -
Common stock issued for
cash at $0.12 per share 200,000 24,000 - -
Common stock issued for
cash at $.012 per share 200,000 24,000 - -
Common stock issued for
services and prepaid
services at $0.12 680,000 85,000 - -
------------ ------------- ---------- ------------
Balance forward 20,952,296 $ 22,498,211 10,000 $ 12,500
---------- ----------- --------- ------------
Common Shares Preferred Shares
------------------------- ----------------------
Shares Amount Shares Amount
---------- ------------ --------- -----------
Balance forward 20,952,296 $ 22,498,211 10,000 $ 12,500
Common stock issued for
accrued interest at $0.12 103,207 12,385 - -
Common stock issued for
accrued legal fees at $.012 106,384 12,766 - -
Common stock issued for cash
at $0.12 per share 100,000 12,000 - -
Common stock issued for cash
at $0.12 per share 75,000 15,000 - -
Preferred stock issued for
cash at $1.00 per share - - 12,000 12,000
Discount on preferred stock - - - 3,000
Common stock issued for cash
at $0.20 per share 50,000 10,000 - -
Common stock issued for cash
at $0.20 per share 50,000 10,000 - -
Preferred stock issued
for conversion of debt
at $1.00 per share - - 11,614 11,613
Discount on preferred stock - - - 2,903
---------- ----------- --------- ------------
Balance forward 21,436,887 $22,570,362 33,614 $ 42,016
---------- ----------- --------- ------------
Common Shares Preferred Shares
------------------------- ----------------------
Shares Amount Shares Amount
---------- ------------ --------- -----------
Balance forward 21,436,887 $22,570,362 33,614 $ 42,016
Common stock issued for
conversion of preferred at
$0.20 per share 58,070 11,613 (11,614) (11,613)
Preferred stock issued for
conversion of debt at $1.00
per share - - 15,165 15,165
Discount on preferred stock - - - 3,791
Preferred stock issued
for conversion of debt
at $1.00 per share - - 25,275 25,274
Discount on preferred stock - - - (2,527)
Common stock issued for
conversion of preferred at
$0.20 per share 126,375 25,274 (25,275) (25,274)
Common stock issued for cash
at $0.12 per share 166,667 20,000 - -
Preferred stock issued for
conversion of debt at $1.00
per share - - 15,181 15,181
Discount on preferred stock - - - 3,795
Common stock issued for cash
at $.125 per share 400,000 50,000 - -
---------- ----------- --------- ------------
Balance forward 22,187,999 $22,677,249 52,346 $ 70,862
---------- ----------- --------- ------------
Common Shares Preferred Shares
------------------------- ----------------------
Shares Amount Shares Amount
---------- ------------ --------- -----------
Balance forward 22,187,999 $22,677,249 52,346 $ 70,862
Preferred stock issued
for conversion of debt
at $1.00 per share - - 10,134 10,134
Common stock issued for
conversion of preferred at
$0.20 per share 50,670 10,134 (10,134) (10,134)
Preferred stock issued for
conversion of debt at $1.00
per share - - 5,069 5,069
Discount on preferred stock - - - 1,267
Common stock issued for
cash at $0.20 per share 125,000 25,000 - -
Common stock issued for
cash at $.016 per share 1,562,500 250,000 - -
Preferred stock issued for
conversion of debt at $1.00
per share - - 10,154 10,154
Discount on preferred stock - - - 2,538
Preferred stock issued for
conversion of debt at $1.00
per share - - 5,092 5,092
Discount on preferred stock - - - 1,273
---------- ----------- --------- ------------
Balance forward 23,926,169 $22,962,383 72,661 $ 96,255
---------- ----------- --------- ------------
Common Shares Preferred Shares
------------------------- ----------------------
Shares Amount Shares Amount
---------- ------------ --------- -----------
Balance forward 23,926,169 $22,962,383 72,661 $ 96,255
Common stock issued for cash
at $0.20 per share 50,000 10,000 - -
Preferred stock issued for
conversion of debt at $1.00
per share - - 40,746 40,745
Discount on preferred stock - - - 8,149
Common stock issued for
conversion of preferred at
$0.25 per share 203,730 40,745 (40,746) (40,745)
Preferred stock issued for
conversion of debt at $1.00
per share - - 10,189 10,189
Discount on preferred stock - - - 2,547
Preferred stock issued for
conversion of debt at $1.00
per share - - 10,195 10,195
Discount on preferred stock - - - 2,039
Common stock issued for
conversion of debt at $0.25
per share 50,975 10,195 (10,195) (10,195)
Pro-rata cumulative non-cash
preferred stock dividend - - - 1,294
Net loss for the year
ended March 31, 2004 - - - -
---------- ----------- --------- ------------
Balance, March 31, 2004 24,230,874 $23,023,323 82,850 $ 120,473
---------- ----------- --------- ------------
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
---------- ----------- --------- ------------
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
=========== ============ ========= ============
[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, 2003 $ - $ - $(23,530,460)
Common stock issued for
extinguishment of debt and
interest at $0.09 per share - - -
Options issued to directors for
accrued director's fees - - -
Contribution of capital - - -
Common Stock issued for
conversion of accounts payable
at $0.09 per share - - -
Common stock issued to
related party for
conversion of accrued
interest at $0.10 per - - -
Common stock issued for
the conversion of
warrants at $0.01 per
share - - -
Repriced options granted
below market value - - -
Options granted below
market value - - -
----------- --------- ------------
Balance Forward $ - $ - $(23,530,460)
----------- --------- ------------
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance forward $ - $ - $(23,530,460)
Preferred stock issued
for conversion of debt
at $1.00 per share - - -
Preferred stock issued
for cash at $1.00 per
share - - -
Discount on preferred
stock - - (2,500)
Common stock issued for
extension of debt at
$0.10 per share - - -
Common stock issued for
conversion of
debt at $0.10 per share - - -
Common stock issued for
cash at $0.01 per share - - -
Common stock issued for the
conversion of warrants at
$0.01 per share - - -
Common stock issued for cash
at $0.10 per share - - -
Revaluation of repriced and
outstanding options - - -
----------- --------- -----------
Balance forward $ - $ $(23,532,960)
----------- --------- -----------
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance forward $ - $ - $(23,532,960)
Common stock issued for
cash at $0.10 per share - - -
Common stock issued for
the conversion of
warrants at $0.01 per
share - - -
Common stock issued for
cash at $0.10 per share - - -
Common stock issued for
cash at $0.10 per share - - -
Common stock issued for
the conversion of warrants
at $0.01 per share - - -
Common stock issued for
cash at $0.10 per share - - -
Common stock issued for
cash at $0.12 per share - - -
Common stock issued for
cash at $.012 per share - - -
Common stock issued for
services and prepaid
services at $0.12 (67,292) - -
---------- ---------- ------------
Balance forward $ (67,292) $ - $(23,532,960)
----------- --------- -----------
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance forward $ (67,292) $ - $(23,532,960)
Common stock issued for
accrued interest at $0.12 - - -
Common stock issued for
accrued legal fees at $.012 - - -
Common stock issued for cash
at $0.12 per share - - -
Common stock issued for cash
at $0.12 per share - - -
Preferred stock issued for
cash at $1.00 per share - - -
Discount on preferred stock - - (3,000)
Common stock issued for cash
at $0.20 per share - - -
Common stock issued for cash
at $0.20 per share - - -
Preferred stock issued
for conversion of debt
at $1.00 per share - - -
Discount on preferred stock - - (2,903)
----------- --------- ------------
Balance forward $ (67,292) $ - $(23,538,863)
----------- --------- ------------
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance forward $ (67,292) $ - $(23,538,863)
Common stock issued for
conversion of preferred at
$0.20 per share - - -
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (3,791)
Preferred stock issued
for conversion of debt
at $1.00 per share - - -
Discount on preferred stock - - (2,527)
Common stock issued for
conversion of preferred at
$0.20 per share - - -
Common stock issued for cash
at $0.12 per share - - -
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (3,795)
Common stock issued for cash
at $0.125 per share - - -
----------- --------- ------------
Balance forward $ (67,292) $ - $(23,548,976)
----------- --------- ------------
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance forward $ (67,292) $ - $(23,548,976)
Preferred stock issued
for conversion of debt
at $1.00 per share - - -
Common stock issued for
conversion of preferred at
$0.20 per share - - -
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (1,267)
Common stock issued for
cash at $0.20 per share - - -
Common stock issued for
cash at $.016 per share - - -
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (2,538)
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (1,273)
----------- --------- ------------
Balance forward $ (67,292) $ - $(23,554,054)
----------- --------- ------------
Variable
Expenses Prepaid Deferred Accumulated
with Common Stock Consulting Deficit
----------------- ---------- -----------
Balance forward $ (67,292) $ - $(23,554,054)
Common stock issued for cash
at $0.20 per share - - -
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (8,149)
Common stock issued for
conversion of preferred at
$0.25 per share - - -
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (2,547)
Preferred stock issued for
conversion of debt at $1.00
per share - - -
Discount on preferred stock - - (2,039)
Common stock issued for
conversion of debt at $0.25
per share - - -
Pro-rata cumulative non-cash
preferred stock dividend - - (1,294)
Net loss for the year
ended March 31, 2004 - - (152,351)
------------ --------- ------------
Balance, March 31, 2004 $ (67,292) $ - $(23,720,434)
------------ --------- ------------
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)
----------- --------- ------------
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
(unaudited) (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
(unaudited) - - -
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 -0- $ (1,000) $(24,662,568)
========== ========= ============
The accompanying notes are an integral part of these consolidated financial
statements.
F-15
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended
March 31,
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (938,632) $ (152,351)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 2,052 25,447
Non-cash debt default additions - 52,625
Amortization of debt offering and extension costs - 5,460
Amortization of services prepaid with common
stock 101,042 -
Stock options issued for compensation 5,000 30,474
Stock options issued for consulting services 415,962 -
Stock options issued for board compensation 3,000 -
Intrinsic value of stock options issued for
services - 14,250
Gain on settlement of debt (43,990) (5,000)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 318,949 (104,185)
(Increase) decrease in prepaid expenses - 97,578
(Increase) decrease in inventories (118,671) 2,073
(Increase) decrease in deposits - (5,750)
Increase in accounts payable and
accrued liabilities 69,063 25,096
Increase in interest payable - -
Increase in unearned revenue 65,166 (178,085)
Decrease in other assets 69,958 -
--------- ----------
Net Cash Provided/ Used by Operating Activities (51,101) (192,368)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from note receivable 50,000 -
Payment of note receivable - (50,000)
Deposit on distribution rights - (45,000)
Purchase of fixed assets (13,968) -
--------- ----------
Net Cash Provided(Used) for Investing Activities 36,032 (95,000)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in cash overdraft - (8,053)
Payments on related party notes (10,654) -
Proceeds from notes payable - 450,898
Payments on notes payable (71,345) (675,447)
Proceeds from preferred stock - 17,000
Proceeds from common stock - 605,341
--------- ----------
Net Cash Provided (Used) by Financing Activities (81,999) 389,739
--------- ----------
DECREASE IN CASH (97,068) 102,371
CASH AT BEGINNING OF YEAR 113,820 11,449
--------- ----------
CASH AT END OF YEAR $ 16,752 $ 113,820
========= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-16
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
For the Years Ended
March 31,
2005 2004
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for payment on notes payable
and interest $ 75,232 $ 53,370
Common stock issued for related party debt $ 38,174 $ -
Stock options issued for accrued director fees $ 90,000 $ 45,000
Common stock issued for stock offering costs $ 45,900 $ -
Common stock issued for payment on accounts payable $ 6,875 $ 4,000
Preferred stock for notes payable $ - $ 166,124
Common stock issued for conversion of preferred
stock $ - $ 97,961
Stock options issued for consulting services $ 415,962 $ -
Stock options issued for employee and
board compensation $ 3,000 $ -
Stock options issued for deferred consulting $ 507,877 $ -
Common stock issued for services $ - $ 30,474
Cash Paid For:
Interest $ 37,142 $ 115,975
Income taxes $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
F-17
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The consolidated financial statements presented are those of PCS
Edventures!.COM, Inc., an Idaho Corporation, and its wholly-owned subsidiary,
PCS Schools, Inc., an Idaho corporation (collectively, "the Company").
On August 3, 1994, PCS Edventures!.COM, Inc., was incorporated under the laws
of Idaho to engage in web-based and site-licensable educational products.
In October 1994, an agreement was authorized allowing the Company to exchange,
on a one-for-one basis, common stock for stock of PCS Schools, Inc. As a
result of this agreement, PCS Schools, Inc., became a wholly-owned subsidiary
of the Company.
On March 27, 2000, the Company changed its name from PCS Education Systems,
Inc. to PCS Edventures!.COM, Inc.
Certain balances have been reclassified to conform to current year
presentation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's consolidated financial statements are prepared using the accrual
method of accounting. The Company has elected a March 31 year end.
b. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
c. Revenue Recognition
The Company recognizes revenues as required by Staff Accounting Bulletin No.
101 "Revenue Recognition in Financial Statements".
Lab Revenue
The Company recognizes revenues relating to sales of the Academy of
Engineering (AOE) and Edventures! labs as they are delivered to the customers.
Revenue is only recognized once the product has been delivered to the
customer and all other obligations have been met. All product inventory is
purchased on a sale-by-sale basis, and is shipped directly from third-
party suppliers to the end customer. Accordingly, all costs associated with
the purchase of product inventory are also deferred until the product is
delivered. As of March 31,2005, the Company has recorded unearned revenues
and deferred costs of $269,570 and $110,367, respectively.
F-18
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Revenue Recognition (Continued)
Licensing Revenue
The Company recognizes revenues relating to the AOE, AOE Jr., AOR,
Edventures!, and the Discover! lab site licenses over the 1-year term of the
license beginning when the physical lab equipment and the license has been
delivered. Subsequent sales of AOE, AOE Jr., AOR, Edventures! or Discover!
lab licenses are recorded on the sale of the license and recognized over a 1
year time period to revenue. Each lab license is for a period of 1 year from
the date of the renewal.
Subscription Revenue
The Company recognizes revenues relating to the subscriptions sold on their
edventures.com website on a monthly basis. Revenues relating to other
activities such as education services delivered are recognized when the
services are rendered. If a customer decides to discontinue the use of the
products, the customer must return all of the information received except for
the physical lab equipment. Additionally, the customer will not have access
to the license when the contract is terminated. The Company does not have an
obligation to refund any portion of the proceeds received for either the sale
of a lab license or the subsequent renewals of the licenses.
d. Principles of Consolidation
The accompanying consolidated financial statements consolidate the accounts of
the parent company and its wholly-owned subsidiary. All significant inter-
company accounts and transactions have been eliminated in consolidation.
e. Provision for Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely that not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
F-19
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Provision for Income Taxes (Continued)
Net deferred tax assets consist of the following components as of March 31,
2005, and 2004:
2005 2004
Deferred tax assets:
NOL Carryover $ 3,114,065 $2,981,523
Accrued Expenses 96,665 -
Deferred tax liabilities: - -
Valuation allowance (3,210,730) (2,981,523)
----------- -----------
Net deferred tax asset $ - $ -
=========== ===========
The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate of 39% to pretax income from
continuing operations for the years ended March 31, 2005 and 2004 due to the
following:
2005 2004
Book loss $(366,065) $ (59,420)
Stock for services/options expense 259,500 19,233
Penalties 445 27,365
Other 4,430 (673)
NOL utilization - 13,495
Valuation allowance 101,690 -
-------- ---------
$ - $ -
======== =========
At March 31, 2005 the Company had net operating loss carryforwards of
approximately $7,900,000 that may be offset against future taxable income from
the year 2005 through 2025. No tax benefit has been reported in the March 31,
2005 consolidated financial statements since the potential tax benefit is
offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carryforwards for Federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future years.
F-20
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the
financial statements. Diluted loss per share is equal to basic loss per share
as the result of the antidilutive nature of the stock equivalents. The
Company has excluded 3,538,441 potential common stock equivalents from the
calculation of basic loss per share.
For the Years Ended
March 31,
2005 2004
Basic loss per share from operations:
Numerator - loss $(938,632) $(152,351)
Denominator - weighted average number
of shares outstanding 26,253,256 19,447,429
---------- ----------
Loss per share $ (0.04) $ (0.01)
========== ==========
F-21
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Newly Issued Accounting Pronouncements
During the year ended March 31, 2005, the Company adopted the following
accounting pronouncements:
On December 16, 2004 the FASB issued SFAS No. 123(R), Share-Based
Payment, which is an amendment to SFAS No. 123, Accounting for Stock-Based
Compensation. This new standard eliminates the ability to account for
share-based compensation transactions using Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
generally requires such transactions to be accounted for using a
fair-value-based method and the resulting cost recognized in our financial
statements. This new standard is effective for awards that are granted,
modified or settled in cash in interim and annual periods beginning after June
15, 2005. In addition, this new standard will apply to unvested options
granted prior to the effective date. We will adopt this new standard
effective for the fourth fiscal quarter of 2005, and have not yet determined
what impact this standard will have on our financial position or results of
operations.
In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an
amendment of ARB No. 43, Chapter 4. This Statement amends the guidance in ARB
No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to
require treatment as current period charges. . . ." This Statement requires
that those items be recognized as current-period charges regardless of whether
they meet the criterion of "so abnormal." In addition, this Statement requires
that allocation of fixed production overheads to the costs of conversion be
based on the normal capacity of the production facilities. This statement is
effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. Management does not believe the adoption of this Statement will
have any immediate material impact on the Company.
In December 2004, the FASB issued SFAS No. 152, Accounting for Real
Estate Time-sharing Transactions, which amends FASB statement No. 66,
Accounting for Sales of Real Estate, to reference the financial accounting and
reporting guidance for real estate time-sharing transactions that is provided
in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate
Time-Sharing Transactions. This statement also amends FASB Statement No. 67,
Accounting for Costs and Initial Rental Operations of Real Estate Projects, to
state that the guidance for (a) incidental operations and (b) costs incurred
to sell real estate projects does not apply to real estate time-sharing
transactions. The accounting for those operations and costs is subject to the
guidance in SOP 04-2. This Statement is effective for financial statements for
fiscal years beginning after June 15, 2005. Management believes the adoption
of this Statement will have no impact on the financial statements of the
Company.
In December 2004, the FASB issued SFAS No.153, Exchange of Nonmonetary
Assets. This Statement addresses the measurement of exchanges of nonmonetary
assets. The guidance in APB Opinion No. 29, Accounting for Nonmonetary
Transactions, is based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged. The
guidance in that Opinion, however, included certain exceptions to that
principle. This Statement amends Opinion 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetrary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a
result of the exchange. This Statement is effective for financial statements
for fiscal years beginning after June 15, 2005. Earlier application is
permitted for nonmonetary asset exchanges incurred during fiscal years
beginning after the date of this statement is issued. Management believes the
adoption of this Statement will have no impact on the financial statements of
the Company.
The implementation of the provisions of these pronouncements are not
expected to have a significant effect on the Company's consolidated financial
statement presentation.
h. Stock Options
As permitted by FASB Statement 148 "Accounting for Stock Based Compensation
Transition and Disclosure" (SFAS No. 148), the Company elected to measure and
record compensation cost relative to employee stock option costs in accordance
with Accounting Principles Board ("APB") Opinion 25, "Accounting for Stock
Issued to Employees", and related interpretations and make proforma
disclosures of net income and earnings per share as if the fair value method
of valuing stock options granted to employees when the option price is less
that the market price of the underlying common stock on the date of grant.
i. Property and Equipment
Property and equipment are recorded at cost and being depreciated for
financial accounting purposes on the straight-line method over their
respective estimated useful lives ranging from five to seven years. Upon
retirement or other disposition of these assets, the cost and related
accumulated depreciation are removed from the accounts and the resulting gains
or losses are reflected in the results of operations.
Expenditures for maintenance and repairs are charged to operations. Renewals
and betterments are capitalized. Depreciation of leased equipment under
capital leases is included in depreciation.
F-23
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 3 - FIXED ASSETS
Assets and depreciation for the period are as follows:
March 31,
2005
Computer equipment $ 8,468
Office equipment 5,500
Education assets and software 278,886
Accumulated depreciation (280,937)
-------------
Total Fixed Assets $ 11,917
=============
Depreciation expense for the years ended March 31, 2005 and 2004 was $2,052
and $25,447, respectively.
NOTE 4 - COMMON AND PREFERRED STOCK TRANSACTIONS
a. Common Stock
During the year ended March 31, 2004, the Company received $341 in exchange
for the conversion of 34,050 in warrants at $0.01 per share.
During the year ended March 31, 2004, the Company issued 57,600 shares of
common stock in exchange for a one-year extension agreement related to the
2001 private placement. The shares were valued at $0.10 per share, or $5,760.
During the year ended March 31, 2004, the Company sold 4,529,167 shares of
common stock for cash of $653,000, or an average price of $0.12 per share.
F-24
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 4 - COMMON AND PREFERRED STOCK TRANSACTIONS (Continued)
a. Common Stock (Continued)
During the year ended March 31, 2004, the Company issued 46,111 shares of
common stock in exchange for accounts payable valued at $4,150, or an average
of $0.09 per share.
During the year ended March 31, 2004, the Company issued 150,000 shares of
common stock for conversion of $15,000 in notes payable or $0.10 per share.
During the year ended March 31, 2004, the Company issued 786,384 shares of
common stock in exchange for services valued at $30,474, or an average of
$0.04 per share.
During the year ended March 31, 2004, the Company issued 305,441 shares of
common stock for accrued interest payable to a related party in the amount of
$34,220, or an average of $0.11 per share.
During the year ended March 31, 2004, the Company issued 489,820 shares of
common stock for the conversion of 97,964 shares of preferred stock at $0.20
per share.
During the year ended March 31, 2005, the Company issued 270,000 shares of
common stock in exchange for services valued at $45,900.
During the year ended March 31, 2005, the Company issued 376,165 shares of
common stock for the conversion of promissory notes associated with the 2001
private placement. The shares were valued at $0.20 per share, or $75,232,
which included principal and interest.
During the year ended March 31, 2005, the Company received $75,000 in exchange
for the exercise of 750,000 options.
During the year ended March 31, 2005, the Company received a $17,500 reduction
in related party note payable in exchange for the exercise of 250,000 options
valued at $0.07 each.
During the year ended March 31, 2005, the Company issued 338,020 shares of
common stock valued at $67,603, or $0.20 per share, for the conversion of
preferred stock.
During the year ended March 31, 2005, the Company issued 250,000 shares of
common stock in exchange for marketing services valued at $22,500.
During the year ended March 31, 2005, the Company issued 500,000 shares of
common stock in exchange for legal services valued at $45,000.
During the year ended March 31, 2005, the Company issued 45,833 shares of
common stock in exchange for accounts payable valued at $6,875.
During the year ended March 31, 2005, the Company issued 344,559 shares of
common stock in exchange for related party note payable valued at $20,674.
b. Preferred Stock
On September 4, 2003, the Company amended its articles of incorporation to
establish a preferred class of stock. Under the amendment, 10,000,000 shares
of the preferred stock have been authorized. The preferred shares are
convertible into shares of common stock at a 20% discount and have a $0.25 cap
on the conversion price. The Company has reserved the option to convert the
shares into common stock at any point that the average trading price of the
Company's common stock for the previous 30 days exceeds to $0.50.
The Company recognized a total of $20,712 as beneficial conversion feature on
the issuance of preferred stock during 2004 as a result of the ability to
convert into common stock at a 20% discount. The beneficial conversion
feature has been charged directly to accumulated deficit.
The convertible preferred shares also include a cumulative 10% per annum non-
cash dividend, which at March 31, 2004 amounted to $1,294 and has been charged
directly to accumulated deficit.
During the year ended March 31, 2004, the Company sold 17,000 shares of
preferred stock for cash of $17,000, or $1.00 per share.
During the year ended March 31, 2004, the Company issued 163,814 shares of
preferred stock for conversion of $161,500 in notes payable and $2,310 in
accrued interest, or $1.00 per share.
During the year ended March 31, 2005, the Company issued 338,020 shares of
common stock for the conversion of 67,603 shares of preferred stock. The
preferred shares, originally sold for $1.00 per share were converted to common
at $0.20 per share.
The convertible preferred shares also include a cumulative 10% per annum non-
cash dividend, which at March 31, 2005 amounted to $3,502 and has been charged
directly to accumulated deficit.
F-25
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 5 - NOTES PAYABLE - RELATED PARTY
Notes payable - related party consisted of the following at March 31, 2005:
Notes payable to the President bearing interest
at 10% per annum, all unpaid principal and
interest due on demand $ 117,094
---------
Total Notes Payable Related Party $ 117,094
=========
NOTE 6 - NOTES PAYABLE
Notes payable consisted of the following at March 31, 2005:
Notes payable related to private placement memorandum
bearing interest at 8.00% per annum, with payments due
April 6, 2002, through August 29, 2004, $101,000 past due $ 101,000
Notes payable to four unrelated individuals bearing interest
at 8.0% to 11.2% per annum, with payment due within
one year, unsecured 15,003
Line of credit with a bank bearing interest at 13.99%
per annum, unsecured 36,127
Line of credit with a bank bearing interest at 7.0%
per annum, past due, unsecured 26,549
Line of credit with a financing institution with varying
interest charges, due periodically (generally monthly),
secured by assets and specific receivables 26,786
---------
Total Notes Payable $ 205,465
=========
All notes payable are considered to be current.
NOTE 7 - GAIN ON SETTLEMENT OF DEBT
During March 2004, the Company received a notice of default from the attorneys
for Xerox Capital Services, LLC (Xerox), in which Xerox assets that the
Company is in default on two lease agreements and a promissory note in the
amount of $88,242. During July 2004, the Company agreed to a Release of All
Claims and Settlement Agreement (the Settlement) with Xerox Capital Services,
LLC in regard to a past due notes payable and copier lease payments. The
Settlement calls for the payment of $44,252 in installments as follows: $7,500
upon execution; $10,000 on or before August 5, 2004; $10,000 on or before
August 19, 2004; $12,500 on or before September 15, 2004; and $4,252 on or
before October 15, 2004. In addition, the Company agreed to return the
copier. The Company has recognized a gain on extinguishment of debt of $43,990
as a result of this Settlement. As of March 31, 2005, all scheduled payments
have been made.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Operating Lease Obligation
The Company leases its office under a non-cancelable lease agreement accounted
for as an operating lease. The lease expires in March 2008.
Minimum rental payments under the non-cancelable operating lease is as
follows:
Years ending
March 31, Amount
2006 $ 81,500
2007 87,500
2008 85,250
2009 -
2010 -
---------
Total $ 254,250
=========
Rent expense was $75,500 and $69,500 for the years ended March 31, 2005 and
2004, respectively.
The Company leases warehouse space close to its headquarters. The lease
expires in May 2006. The monthly rental obligation is $576.00 for total lease
payments of $10,368. Rent expense was $1,246 for the year ended March 31,
2005.
Litigation
During March 2004, the Company received a notice of default from the attorneys
for Xerox Capital Services, LLC (Xerox), in which Xerox assets that the
Company is in default on two lease agreements and a promissory note in the
amount of $88,242. During July 2004, the Company agreed to a Release of All
Claims and Settlement Agreement (the Settlement) with Xerox Capital Services,
LLC in regard to a past due notes payable and copier lease payments. The
Settlement calls for the payment of $44,252 in installments as follows: $7,500
upon execution; $10,000 on or before August 5, 2004; $10,000 on or before
August 19, 2004; $12,500 on or before September 15, 2004; and $4,252 on or
before October 15, 2004. In addition, the Company agreed to return the
copier. The Company has recognized a gain on extinguishment of debt of $43,990
as a result of this Settlement. As of March 31, 2005, all scheduled payments
have been made; the obligation is paid in full.
NOTE 9 - 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 10 - 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 loss includes $13,722 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 Years Ended
March 31,
2005 2004
Net loss:
As reported $ (938,632) $ (152,351)
Pro Forma (1,106,204) (272,508)
Net loss per share:
As reported $ (0.04) $ (0.01)
Pro Forma (0.04) (0.01)
F-28
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 10 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
The Company has granted the following options as of March 31, 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
---------- --------- ---------- ----------
12,679,890 (1,000,000) 6,140,951 5,538,939
========== ========= ========== ==========
Amount Exercisable 4,540,406
==========
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%
F-29
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2004 and 2003
NOTE 10 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
On April 28,2004, the Company issued options to purchase 6,000,000 shares of
its common stock for prepaid consulting fees. The options are exercisable
immediately with 2,000,000 options exercisable at a price of $0.10 per share
for 60 days while 4,000,000 are exercisable at a price of $0.25 per share for
120 days. During the first quarter of fiscal year 2005, 750,000 options were
exercised at $0.10 and 1,250,000 were allowed to expire unexercised. The
issuance of these options resulted in the recording of $372,988 in variable
deferred consulting fees.
In accordance with EITF 96-18, "Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services", and due to the options being issued for ongoing services,
the options are being valued as the services are completed. In order to
capture the changes in the fair value of the options over the term of service,
changes in the fair values at interim reporting dates are attributed in
accordance with FIN 28, "Accounting for Stock Appreciation Rights and Other
Variable Stock Option or Award Plans". FIN 28 states that consulting expense
should be measured at the end of each period as the amount by which the fair
value of the options covered by a grant exceeds the option price or value
specified under the plan and should be accrued as a charge to expense over the
periods the grantee performs the related services. Changes in the quoted
market value are being reflected as adjustments of deferred consulting and
consulting expense in the period and will continue until the date the services
are complete. Consulting deferred during the service period is being adjusted
in subsequent periods up to the measurement date for changes, either increases
or decreases, in the fair value of the options covered by the grant but shall
not be adjusted below zero. The offsetting adjustment is being made to
consulting expense of the period in which changes in the fair value occur.
The issuance of these options resulted in the recording of an increase in
deferred valuation of $34,787 and $287,775 in non-cash consulting expense
during the quarter ended June 30, 2004.
On April 28, 2004, the Company issued options to purchase 800,000 shares of
its common stock for prepaid consulting fees. The options are exercisable
immediately in groups of 200,000 at prices of $0.10, $0.20, $0.30 and $0.35
per share for one year. The issuance of these options resulted in the
recording of $134,889 in variable deferred consulting fees. In accordance
with EITF 96-18 and FIN 48, the issuance of these options resulted in the
recording of an increase in deferred valuation of $73,111 and $34,667 in
non-cash consulting expense during the quarter ended June 30, 2004.
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 loss includes $13,722 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.
During June 2004, the Company issued options to purchase 600,000 of its common
stock to five employees, including one Officer. The options are exercisable
immediately at a price of $0.31 per share for five years.
During July 2004, the Company issued 250,000 shares of common stock to its
Chief Executive Officer for the non-cash exercise of options, reducing related
party debt by $17,500.
On July 29, 2004, the Company issued options to purchase 5,000 shares of its
common stock for consulting services rendered. The options are exercisable
immediately at a price of $0.15 per share for five years.
On July 29, 2004, the Company issued options to purchase 153,533 shares of its
common stock to an employee. The options are exercisable at $0.15 per share
as follows: 50,000 on or after July 29, 2005; 50,000 on or after July 29,
2006; and, 53,533 on or after July 29, 2007. The options expire on July 29,
2009.
On July 10, 2004, the Company issued options to purchase 50,000 shares of its
common stock to an employee. The options are exercisable at $0.13 per share
as follows: 10,000 on or after July 10, 2005; 20,000 on or after July 10,
2006; and, 20,000 on or after July 10, 2007. The options expire on July 10,
2009.
On July 1, 2004, the Company issued options to purchase 25,000 shares of its
common stock to an employee. The options are exercisable at $0.31 per share
as follows: 5,000 on or after July 1, 2005; 5,000 on or after July 1,
2006; and, 15,000 on or after July 1, 2007. The options expire on July 1,
2009.
On August 10, 2004, the Company issued options to purchase 50,000 shares of
its common stock to an employee. The options are exercisable at $0.13 per
share as follows: 10,000 on or after July 10, 2005; 20,000 on or after July
10, 2006; and, 20,000 on or after July 10, 2007. The options expire on July
10, 2009.
On September 14, 2004, the Company issued options to purchase 20,786 shares of
common stock to each of its three Board Members, for a total issuance of
80,358 at an exercise price of $0.14 per share. The options were issued as
compensation for Board services for the quarter ending June 30, 2003. The
options expire on September 14, 2014.
On September 14, 2004, the Company issued options to purchase 31,250 shares of
common stock to each of its three Board Members, for a total issuance of
93,750 at an exercise price of $0.12 per share. The options were issued as
compensation for Board services for the quarter ending September 30, 2003.
The options expire on September 14, 2014.
On September 14, 2004, the Company issued options to purchase 37,500 shares of
common stock to each of its three Board Members, for a total issuance of
112,500 at an exercise price of $0.10 per share. The options were issued as
compensation for Board services for the quarter ending December 31, 2003. The
options expire on September 14, 2014.
On September 14, 2004, the Company issued options to purchase 16,304 shares of
common stock to each of its three Board Members, for a total issuance of
48,912 at an exercise price of $0.23 per share. The options were issued as
compensation for Board services for the quarter ending March 31, 2004. The
options expire on September 14, 2014.
On September 14, 2004, the Company issued options to purchase 14,423 shares of
common stock to each of its four Board Members, for a total issuance of 52,692
at an exercise price of $0.26 per share. The options were issued as
compensation for Board services for the quarter ending June 30, 2004. The
options expire on September 14, 2014.
On January 4, 2005, the Company issued options to purchase 78,948 shares of
common stock to each of its four Board Members, for a total issuance of
315,792 at an exercise price of $0.10 per share. The options were issued as
compensation for Board services for the quarters ending September 30, 2004 and
December 31, 2004.
During the month of January 2005, the Company issued options to purchase 4,500
shares of common stock to a consultant for purchasing services at an exercise
price of $0.10 per share. These figures are included in the above financial
statements.
F-31
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2005 and 2004
NOTE 11 -RELATED PARTY TRANSACTIONS
On September 14, 2004, the Company authorized and issued options to purchase
335,520 shares of common stock to Board Members as payment for accrued
directors fees totaling $45,000. These options vested immediately and have an
exercise prices ranging from $0.10-$0.23 per share. This payment covered all
directors fees incurred for the year ended March 31, 2004
During 2004, the Company issued 305,441 shares of common stock to the
Company's President in payment of $32,608 in accrued interest. The stock was
valued at the market price of the stock on the dates of conversion, or an
average of $0.11 per share.
During the quarter ended June 30, 2004, the Company issued options to purchase
150,000 shares of common stock to a newly appointed member of the Board of
Directors for services rendered. The options are exercisable at $0.15 per
share for 10 years. The issuance of these options resulted in $3,000 in non-
cash director expenses included in general and administrative expense.
During July 2004, the Company issued 250,000 shares of common stock to its
Chief Executive Officer for the non-cash exercise of options, reducing related
party debt by $17,500.
During the month of September 2004, the Company issued options to purchase
14,423 shares of common stock to each of its four Board Members, for a total
issuance of 57,692 at an exercise price of $0.26 per share. The options were
issued as compensation for Board services for the quarter ending June 30,
2004.
During October 2004, the Company issued 344,559 shares of common stock at
$0.06 per share to its Chief Executive Officer for the non-cash reduction of
related party debt of $20,674.
During the month of January 2005, the Company issued options to purchase
78,948 shares of common stock to each of its four Board Members, for a total
issuance of 315,792 at an exercise price of $0.10 per share. The options were
issued as compensation for Board services for the quarters ending September
30, 2004 and December 31, 2004.
During the year ended March 31, 2005, the Company repaid debt owed to the
President of the Company of $48,828 through cash payments and issuances of
common stock.
NOTE 12 - ACCRUED EXPENSES
Accrued expenses are made up of the following at March 31, 2005:
Accrued directors fees $ 15,000
Credit card and other
miscellaneous accrued expenses 44,079
----------
Total $ 59,079
==========
NOTE 13 - SUBSEQUENT EVENTS
On April 1, 2005, the Company issued options to purchase
20,270 shares of common stock to each of its four Board Members, for a total
issuance of 81,080 at an exercise price of $0.185 per share. The options
expire on April 1, 2016. The options were issued as compensation for Board
services for the quarter ending March 31, 2005.
On May 26, 2005, the Company issued options to purchase a total of 282,467 to
eight employees. The options are exercisable at $0.50 per share and expire in
five years.
During the month of June 2005, the Board of Directors authorized the issuance
of common stock to the indentured trust holders for conversion of notes
payable. 654,706 shares were issued in exchange for the reduction of
$101,000, plus interest, in notes payable.
F-33
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
---------------------
None, not applicable.
Item 8(a). Controls and Procedures.
------------------------------------
On June 1, 2005, The Company's Audit Committee submitted for Board
approval, the following policies and procedure manuals: Accounting Policies
and Procedures; Internal Control Procedures, and Sarbanes-Oxley Compliance.
All three manuals were reviewed and unanimously approved by the Board of
Directors. In addition to formalizing the Company's already existing
policies, the Accounting Policies and Procedures and the Internal Control
Procedures manuals include guidelines which offer an additional level of
review of financial information. Due to the small accounting staff, the
Company viewed this as an area for improvement. We believe that the approval
and implementation of these policies with regards to disclosure controls and
procedures are effective in timely alerting the Chief Executive Officer and
the Chief Financial Officer to material information required to be included in
our periodic reports that are filed with 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.
Item 8(b). Other Information.
Subsequent to this filing, during the first fiscal quarter of 2006,
the Company filed a Form 8-K on May 11, 2005. This Form 8-K was filed in
accordance to Regulation FD Disclosure with regards to the following press
releases:
* Press Release dated April 26, 2005. PCS Edventures Announces Kindergarten
Curriculum.
* Press Release dated April 27, 2005. PCS Edventures Announces Discussions
with LEGO (registered).
* Press Release dated May 3, 2005. PCS Edventures Announces Lab Sale to Site
in Portugal.
* Press Release dated May 10, 2005. PCS Edventures Announces Cleveland Lab
Installations.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
Identification of Directors and Executive Officers.
---------------------------------------------------
The following table sets forth the name, address, age and position
of each officer and director of the Company:
Name Age Position
---- --- --------
Anthony A. Maher 58 Chairman of the Board,
President, and
Chief Executive Officer
Robert O. Grover 42 Executive Vice President, Chief
Technology Officer
Christina M. Vaughn 36 Vice President, Chief Financial
Officer
Donald J. Farley 54 Secretary, Director
Cecil D. Andrus 77 Director
Michael K. McMurray Director
Term of Office.
---------------
The terms of office of the current directors shall continue until
the annual meeting of stockholders, which has been scheduled by the Board of
Directors to be held in July of each year. The annual meeting of the Board
of Directors immediately follows the annual meeting of stockholders, at which
executive officers for the coming year are elected.
Business Experience.
--------------------
Anthony A. Maher, Chairman, President & CEO. Anthony A. Maher was
recruited to PCS at its inception as Chairman of the Board, President and
Chief Executive Officer and structured the purchase of PCS Schools. Since
then, Mr. Maher has overseen the development of the curriculum from four core
areas to over 60; the development of its distance developer database; and the
creation of its web based publishing expertise. From 1982 to 1989 he was
founder and Chairman of the Board of National Manufacturing Company, Inc. and
its subsidiary, National Medical Industries, Inc. From 1979 to 1982, Mr.
Maher was Executive Vice President for Littletree Inns, a hotel company based
in Boise, Idaho with properties throughout the Northwest. Mr. Maher graduated
from Boise State University in 1970 with a Bachelor of Arts degree in
Political Science.
Robert O. Grover. Robert O. Grover joined PCS at its inception and
became Executive Vice President in May 1996. Mr. Grover's current focus is on
the development of PCS distance education applications including the web-based
support and delivery systems that are integral to Edventures!.COM, Edventures
Labs, and the Academy of Engineering. In 1992, he developed the PCS Merit
System that has become the foundation of the Edventures!.COM learning systems
online. Mr. Grover graduated from Boise State University in 1987 with a
Bachelor of Arts degree in English.
Christina Vaughn was promoted to Vice President and CFO from Assistant
CFO on May 1, 2002. She joined PCS in September 2000 after serving 8 years as
an analyst for the local natural gas utility. She brings to PCS extensive
knowledge of revenue, cash, and cost forecasting, asset/liability mitigation,
managed reporting of commodities pricing as well as capital project analysis.
She graduated, cum laude, May 1990 from the College of Idaho with a BBA in
Finance, and from Atkinson Graduate School of Management/Willamette University
with an MBA in May 1992.
Donald J. Farley. Mr. Farley is a director and the Secretary of the
Company and has acted as the Company's legal counsel since 1994. Mr. Farley
is a founding partner of the law firm of Hall, Farley, Oberrecht & Blanton,
P.A. His legal practice emphasizes litigation and representation of closely
held businesses. He has been in private practice since 1975, after serving a
two year judicial clerkship with former United States District Judge J. Blaine
Anderson. Mr. Farley is admitted to practice before all state and federal
courts in Idaho and has also been admitted to practice before the United
States Supreme Court. He is a member of the American Bar Association, the
International Association of Defense Counsel, Defense Research Institute, the
Idaho State Bar Association and the Association of Trial lawyers of America.
Mr. Farley graduated from the University of Idaho in 1970 with a Bachelor of
Arts degree in Economics and from the University of Idaho College of Law in
1973.
Cecil D. Andrus. Former Idaho State Governor Andrus joined the PCS
Board of Directors in November 1995. Following his retirement from public
service in January 1995, Governor Andrus founded and now directs the Andrus
Center for Public Policy at Boise State University. Governor Andrus is the
first person in the history of Idaho to be elected Governor four different
times (1970, 1974, 1986 and 1990). When he retired from public office, he was
the senior governor in the United States in length of service. Mr. Andrus
resigned as governor in 1977 to become the Secretary of the Interior in the
Carter Administration, the first Idahoan to serve in a Presidential Cabinet.
Governor Andrus is also a director of Albertsons, KeyCorp and The Gallatin
Group.
Michael K. McMurray. Mr. McMurray comes back to the Board of PCS, having
served from 1989 through 1994. He retired from Boise Cascade after serving
there for over 30 years, starting as a Treasury Analyst in 1970, Assistant to
Realty Controller from 1971 to 1974, Manager, Cash & Banking from 1974 to
1976, Manager of Banking & Corporate Credit from 1976 to 1980, Assistant
Treasurer from 1980 to 1989, and then Assistant Treasurer and Director,
Retirement Funds from 1989 until he retired in 2000. Mr. McMurray has served
with distinction on several Boards including Regence Blue Shield of Idaho,
American Red Cross, Farmers & Merchants State Bank, Idaho Housing and Finance,
Boise Family YMCA, Hillcrest Country Club, and the Downtown Boise Association.
He is a graduate of the University of Idaho with a degree in Finance and has
completed the Program for Management Development at the Harvard Business
School.
Family Relationships.
---------------------
There are no family relationships between any of our directors or
executive officers.
Involvement in Certain Legal Proceedings.
-----------------------------------------
During the past five years, none of our present or former directors,
executive officers or persons nominated to become directors or executive
officers:
(1) Filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an
executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him or her from or
otherwise limiting his involvement in any type of business, securities or
banking activities;
(4) Was found by a court of competent jurisdiction in a civil
action, by the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated any federal or state securities law, and
the judgment in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or vacated.
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
PCS believes all forms required to be filed under Section 16 of
the Exchange Act for all of the Company's directors and executive officers
have been timely filed.
Audit Committee.
----------------
We adopted an audit committee three years ago for the purpose of
engaging HJ & Associates for the annual audit. The audit committee currently
consists of board members, Michael McMurray and Cecil Andrus. During this
last fiscal year, the audit adopted a formal policy regarding the scope,
responsibilities and length of service for the audit committee.
Code of Ethics.
---------------
We have adopted a Code of Ethics and it was attached as Exhibit 14 to our
2004 Annual Report.
Item 10. Executive Compensation.
-----------------------
Cash Compensation.
------------------
The following table shows the aggregate compensation that we have paid to
directors and executive officers for services rendered during the periods
indicated:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
-----------------------------------------------------------------
Anthony A. 3/31/05 120,000 0 0 0 * 0 0
Maher 3/31/04 120,000 0 0 0 0 0 0
President
Director
* Mr. Maher was the only executive officer of PCS whose cash
compensation exceeded $100,000 during the last two fiscal years. See the
table below under the heading "Stock Option Plans and Other Incentive
Compensation Plans" of this Item for stock options granted to Mr. Maher and
other members of management during the last two fiscal years ended March 31,
2005 and 2004.
Options Grants in Last Fiscal Year
There were grants of stock options made during the fiscal years ended
March 31, 2005 and 2004 to our directors and executive officers and others.
These options are described below under the heading "Stock Option Plans and
Other Incentive Compensation Plans" of this Item.
Compensation of Directors
Each fiscal year, the Board of Directors sets the dollar amount for the
compensation of outside directors for their services. Said compensation shall
be in the form of freely tradable PCS common stock at its then bid price, or
in the form of stock options to purchase PCS common stock at its then current
bid price. For fiscal years 2005 and 2004, the Board of Directors set the
amounts of $15,000 for each of said fiscal years.
Employment Agreements
We have no written employment agreements with our management.
Currently, we are paying our officers the following annual salaries: Anthony
A. Maher - $120,000; Robert O. Grover - $90,000; Christina Vaughn - $80,000.
The Company also provides medical and dental insurance for its officers and
other employees.
Stock Option Plans and Other Incentive Compensation Plans
PCS has not adopted any formal option plans or other incentive
compensation plans as of the date of this report. We anticipate that our
Board of Directors will, in the near future, adopt incentive compensation
plans to provide reward and incentives to employees, directors and agents of
PCS. PCS has granted the following options to officers, directors, employees
and consultants:
Number Date of Exercise Expiration
Option Holder Shares Grant Price Date
------------- ------ ----- ----- ----
Board Members* 1,000,000 6/03/02 $.16 6/03/12
Suzanne Haislip 50,000 7/01/02 $.16 1/01/06
Christina Vaughn* 50,000 7/01/02 $.16 1/01/06
William Albert 75,000 7/01/02 $.16 1/01/06
David Chase 35,000 7/01/02 $.16 1/01/06
Joe Egusquiza 15,000 7/01/02 $.16 1/01/06
Laura Baran 25,000 7/01/02 $.16 1/01/06
Robert O. Grover* 75,000 7/01/02 $.16 1/01/06
Nic Perner 5,000 8/15/02 $.16 2/15/06
Donald J. Farley* 166,666 10/21/02 $.09 10/21/12
Cecil Andrus* 166,666 10/21/02 $.09 10/21/12
Donald J. Farley* 214,285 5/15/03 $.07 5/15/13
Cecil Andrus* 214,285 5/15/03 $.07 5/15/13
Anthony Maher* 250,000 5/15/03 $.07 5/15/13
Suzanne Haislip 100,000 5/20/03 $.07 5/20/07
Joe Egusquiza 25,000 7/25/03 $.10 7/15/07
Christina Vaughn* 150,000 9/05/03 $.07 9/15/07
Suhas Pharkute 25,000 9/25/03 $.10 7/29/07
Michael McMurray* 150,000 4/28/04 $.15 4/28/14
Consultant 2,000,000 4/28/04 $.10 6/28/04
Consultant 4,000,000 4/28/04 $.25 8/28/04
Consultant 200,000 4/28/04 $.10 4/28/05
Consultant 200,000 4/28/04 $.20 4/28/05
Consultant 200,000 4/28/04 $.30 4/28/05
Consultant 200,000 4/28/04 $.35 4/28/05
David Chase 75,000 6/01/04 $.31 6/08/09
Suzanne Haislip 50,000 6/01/04 $.31 6/01/09
Richard Wright 75,000 6/01/04 $.31 6/01/09
Robert O. Grover* 250,000 6/14/04 $.31 6/14/09
Christina Vaughn* 150,000 6/16/04 $.31 6/16/09
David Chase 25,000 7/01/04 $.31 7/01/09
William Albert 50,000 7/10/04 $.13 7/10/09
Consultant 5,000 7/29/04 $.15 7/29/09
Robert O. Grover* 153,533 7/29/04 $.15 7/29/07
Laura Baran 50,000 8/10/04 $.13 7/10/09
Board Members* 80,358 9/14/04 $.14 9/22/14
Board Members* 93,750 9/14/04 $.12 9/22/14
Board Members* 112,500 9/14/04 $.10 9/22/14
Board Members* 48,912 9/14/04 $.23 9/22/14
Board Members* 57,692 9/14/04 $.26 9/22/14
Robert O. Grover* 100,000 11/14/04 $.10 11/15/09
Board Members* 315,792 1/04/05 $.10 1/04/15
Consultant 4,500 1/06/05 $.10 1/06/10
* Denotes directors and executive officers.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
The following table sets forth information concerning the beneficial
ownership of PCS common stock as of June 29, 2005, by each director and
executive officer, all directors and officers as a group, and each person
known to PCS to beneficially own 5% or more of its outstanding common stock.
Name and Address Percentage
of Beneficial Owner Shares Owned(1) Owned(1)
------------------- --------------- --------
Anthony A. Maher 2,346,147(3) 7.35%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Robert O. Grover 740,000(4) 2.32%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Donald J. Farley 1,823,632(5) 5.71%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Cecil D. Andrus 1,084,765(6) 3.40%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Michael K. McMurray 263,641(7) (2)
345 Bobwhite Court, Suite 200
Boise, Idaho 83706
Christina M. Vaughn 350,000(8) 1.10%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
All officers and Directors as a
group 6,608,185 20.69%
(6 persons)
(1) Based upon 28,402,585 shares of common stock issued and outstanding
as of June 29, 2005, including 3,538,441 shares that may be issued upon the
exercise of currently exercisable options, for a total number of shares
outstanding of 31,941,026, calculated in accordance with Rule 13d-3
promulgated under the Exchange Act. It also includes shares owned by (i) a
spouse, minor children or by relatives sharing the same home, (ii) entities
owned or controlled by the named person and (iii) other persons if the named
person has the right to acquire such shares within 60 days by the exercise of
any right or option. Unless otherwise noted, shares are owned of record and
beneficially by the named person.
(2) Under 1 percent.
(3) These shares include (i) 1,850,211 shares owned of record by Mr.
Maher, (ii) 10,000 shares owned by Louise Maher, (iii) 19,500 shares which are
beneficially owned by a family limited liability named Sullivan Maher for
which Mr. Maher acts as a manager (iv) 54,500 shares owned by the Nick Maher
foundation of which Mr. Maher is a trustee, (v) 59,000 shares owned by E.L.
Sullivan which are voted by Mr. Maher pursuant to an irrevocable proxy, (vi)
250,000 shares which may be issued upon the exercise of currently
exercisable stock options; these options are exercisable at $.07 through May
15, 2007, (vii) 166,666 shares which may be issued upon the exercise of
currently exercisable stock options; these options are exercisable at $.10
through October 21, 2012, and (viii) 20,270 shares which may be issued upon
the exercise of currently exercisable stock options; these options are
exercisable at $.19 through April 1, 2016.
(4) These shares include (i) 315,000 shares owned of record by Mr.
Grover, (ii) 75,000 shares which may be issued upon the exercise of currently
exercisable stock options; these options are exercisable at $.16 per share and
are exercisable through December 31, 2005, (iii) 250,000 shares which may be
issued upon the exercise of currently exercisable stock options; these options
are exercisable at $.31 through June 14, 2009, and (iv) 100,000 shares which
may be issued upon the exercise of currently exercisable stock options; these
options are exercisable at $.10 through November 15, 2009.
(5) These shares include (i) 722,000 shares owned of record by Mr.
Farley, (ii) 9,000 shares in the name of Ryan Farley, (iii) 9,000 shares in
the name of Brandon Farley, (iv) 250,000 shares which may be issued upon the
exercise of currently exercisable stock options; these options are exercisable
at $.30 per share and are exercisable through December 2011, (v) 250,000
shares which may be issued upon the exercise of currently exercisable stock
options; these options are exercisable at $.16 per share and are exercisable
through June 3, 2012, (vi) 214,285 shares which may be issued upon the
exercise of currently exercisable stock options; these options are exercisable
at $.07 through May 15, 2013, and (vii) 166,666 shares which may be issued
upon the exercise of currently exercisable stock options; these options are
exercisable at $.10 through October 21, 2012, (viii) 26,786 shares which may
be issued upon the exercise of currently exercisable stock options; these
options are exercisable at $.14 through September 22, 2014, (ix) 31,250 shares
which may be issued upon the exercise of currently exercisable stock options;
these options are exercisable at $.12 through September 22, 2014, (x) 37,500
shares which may be issued upon the exercise of currently exercisable stock
options; these options are exercisable at $.10 through September 22, 2014,
(xi) 16,304 shares which may be issued upon the exercise of currently
exercisable stock options; these options are exercisable at $.23 through
September 22, 2014, (xii) 14,423 shares which may be issued upon the exercise
of currently exercisable stock options; these options are exercisable at $.26
through September 22, 2014, (xiii) 78,948 shares which may be issued upon the
exercise of currently exercisable stock options; these options are exercisable
at $.10 through January 4, 2015, (xiv) 20,270 shares which may be issued upon
the exercise of currently exercisable stock options; these options are
exercisable at $.19 through April 1, 2016.
(6) These shares include (i) 123,333 shares owned of record by Mr.
Andrus, and (ii) 214,285 shares which may be issued upon the exercise of
currently exercisable stock options; these options are exercisable at $.07
through May 15, 2013, and (iii) 166,666 shares which may be issued upon the
exercise of currently exercisable stock options; these options are exercisable
at $.10 through October 21, 2012, (iv) 100,000 shares which may be issued upon
the exercise of currently exercisable stock options; these options are
exercisable at $.30 through December 31, 2011, (v) 250,000 shares which may be
issued upon the exercise of currently exercisable stock options; these options
are exercisable at $.16 per share and are exercisable through June 3, 2012,
(vi) 26,786 shares which may be issued upon the exercise of currently
exercisable stock options; these options are exercisable at $.14 through
September 22, 2014, (vii) 31,250 shares which may be issued upon the exercise
of currently exercisable stock options; these options are exercisable at $.12
through September 22, 2014, (viii) 37,500 shares which may be issued upon the
exercise of currently exercisable stock options; these options are exercisable
at $.10 through September 22, 2014, (ix) 16,304 shares which may be issued
upon the exercise of currently exercisable stock options; these options are
exercisable at $.23 through September 22, 2014, (x) 14,423 shares which may be
issued upon the exercise of currently exercisable stock options; these options
are exercisable at $.26 through September 22, 2014, (xi) 78,948 shares which
may be issued upon the exercise of currently exercisable stock options; these
options are exercisable at $.10 through January 4, 2015, (xii) 20,270 shares
which may be issued upon the exercise of currently exercisable stock options;
these options are exercisable at $.19 through April 1, 2016.
(7) These shares include (i) 150,000 shares which may be issued upon the
exercise of currently exercisable stock options; these options are exercisable
at $.15 through April 22, 2014, (ii) 14,423 shares which may be issued upon
the exercise of currently exercisable stock options; these options are
exercisable at $.26 through September 22, 2014, (iii) 78,948 shares which may
be issued upon the exercise of currently exercisable stock options; these
options are exercisable at $.10 through January 4, 2015, (iv) 20,270 shares
which may be issued upon the exercise of currently exercisable stock options;
these options are exercisable at $.19 through April 1, 2016.
(8) These shares include (i) 50,000 shares which may be issued upon the
exercise of currently exercisable stock options; these options are exercisable
at $.16 per share and are exercisable through December 31, 2005 and (ii)
150,000 shares which may be issued upon the exercise of currently exercisable
stock options; these options are exercisable at $.07 through September 15,
2007, (iii) 150,000 shares which may be issued upon the exercise of currently
exercisable stock options; these options are exercisable at $.31 through June
16, 2009.
Changes in Control.
-------------------
To our knowledge, there are no present arrangements or pledges of our
securities that may result in a change in control of our company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
----------------------------------------
During the last two fiscal years ended March 31, 2005 and 2004, we have
granted certain options to members of our management. See the heading "Stock
Option Plans and Other Incentive Compensation Plans" of Item 10, above.
During the year ended March 31, 2003, three members of the Company's
board of directors acted as guarantors on a promissory note that provided the
Company $60,600 in financing. This note was paid in full during 2004.
During the year ended March 31, 2003, the Company repaid debt owed to
the President of the Company of $20,000.
During the year ended March 31, 2003, the Company borrowed $27,000 from
the President of the Company.
On October 21, 2002, we authorized and issued options to purchase 499,998
shares of common stock to Board Members as payment for accrued directors fees
totaling $45,000. These options vested immediately and have an exercise price
of $0.09 per share. This payment covered all directors fees incurred for the
year ended March 31, 2002.
On May 15, 2003, we authorized and issued options to purchase 892,855
shares of common stock to Board Members as payment of $45,000 in accrued
director fees. The intrinsic value of these options was $17,857, while the
difference, $27,143, was treated as contributed capital from extinguishment of
related party debt.
On September 14, 2004, the Company authorized and issued options to
purchase 335,520 shares of common stock to Board Members as payment for
accrued directors fees totaling $45,000. These options vested immediately and
have an exercise prices ranging from $0.10-$0.23 per share. This payment
covered all directors fees incurred for the year ended March 31, 2004
During 2004, the Company issued 305,441 shares of common stock to the
Company's President in payment of $32,608 in accrued interest. The stock was
valued at the market price of the stock on the dates of conversion, or an
average of $0.11 per share.
During the quarter ended June 30, 2004, the Company issued options to
purchase 150,000 shares of common stock to a newly appointed member of the
Board of Directors for services rendered. The options are exercisable at
$0.15 per share for 10 years. The issuance of these options resulted in
$3,000 in non-cash director expenses included in general and administrative
expense.
During July 2004, the Company issued 250,000 shares of common stock to
its Chief Executive Officer for the non-cash exercise of options, reducing
related party debt by $17,500.
During the month of September 2004, the Company issued options to
purchase 14,423 shares of common stock to each of its four Board Members, for
a total issuance of 57,692 at an exercise price of $0.26 per share. The
options were issued as compensation for Board services for the quarter ending
June 30, 2004.
During October 2004, the Company issued 344,559 shares of common stock
at $0.06 per share to its Chief Executive Officer for the non-cash reduction
of related party debt of $20,674.
During the month of January 2005, the Company issued options to purchase
78,948 shares of common stock to each of its four Board Members, for a total
issuance of 315,792 at an exercise price of $0.10 per share. The options were
issued as compensation for Board services for the quarters ending September
30, 2004 and December 31, 2004.
During 2004, we issued 305,441 shares of common stock to the Company's
President in payment of $32,608 in accrued interest. The stock was valued at
the market price of the stock on the dates of conversion, or an average of
$0.11 per share.
During the year ended March 31, 2005, the Company repaid debt owed to
the President of the Company of $48,828.
Transactions with Promoters.
----------------------------
Except as outlined under the caption "Executive Compensation," during the
past two years, there have been no material transactions, series of similar
transactions or currently proposed transactions, to which our company or any
of our subsidiaries was or is to be a party, in which the amount involved
exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to us to own of record or beneficially more than
five percent of our common stock, or any member of the immediate family of any
of the foregoing persons, or any promoter or founder had a material interest.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K.
No Current Reports on Form 8-K of the Securities and Exchange Commission
have been filed by the Company during the last quarter of its fiscal year
ended March 31, 2005.
Exhibits*
(i)
Where Incorporated
in this Report
--------------
Registration Statement on SB-2, as Parts I, II and III
amended.**
(ii)
Exhibit
Number Description
------ -----------
21 Subsidiaries of the Company
31.1 302 Certification of Anthony A. Maher
31.2 302 Certification of Christina M. Vaughn
32 906 Certification
* Summaries of all exhibits contained within this
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of the fees billed to PCS by its principal
accountants during the fiscal years ended March 31, 2005, and March 31, 2004:
Fee category 2005 2004
------------ ---- ----
Audit fees $32,500 $19,845
Audit-related fees $ 0 $ 0
Tax fees $ 0 $ 0
All other fees $ 0 $ 0
Total fees $32,500 $19,845
Audit fees. Consists of fees for professional services rendered by
our principal accountants for the audit of our annual financial statements
and the review of financial statements included in our Forms 10-QSB or
services that are normally provided by our principal accountants in connection
with statutory and regulatory filings or engagements.
Audit-related fees. Consists of fees for assurance and related services
by our principal accountants that are reasonably related to the performance of
the audit or review of our financial statements and are not reported under
"Audit fees."
Tax fees. Consists of fees for professional services rendered by our
principal accountants for tax compliance, tax advice and tax planning.
All other fees. Consists of fees for products and services provided by
our principal accountants, other than the services reported under "Audit
fees," "Audit-related fees" and "Tax fees" above. The fees disclosed in this
category include due diligence, preparation of pro forma financial statements
as a discussion piece for a Board member, and preparation of letters in
connection with the filing of Current Reports on Form 8-K.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PCS EDVENTURES!.COM, INC.
Date: 7/14/2005 By/s/Anthony A. Maher
------------- -------------------------------------
Anthony A. Maher
CEO, President and Chairman of the
Board of Directors
Date: 7/16/2005 By/s/Christina M. Vaughn
------------- -------------------------------------
Christina M. Vaughn
Vice President and CFO
Date: 7/14/2005 By/s/Donald J. Farley
------------- -------------------------------------
Donald J. Farley
Secretary and Director
Date: 7/15/2005 By/s/Cecil D. Andrus
------------- ------------------
Cecil D. Andrus
Director