PCS Edventures!, Inc 10-Q for FY2024 Q3
PCS Edventures!, Inc. (PCSV)
About this 10-Q
PCS Edventures!, Inc filed this 10-Q on February 16, 2024, covering the quarter ended December 31, 2023 (FY2024 Q3).
Headline figures
Quarter ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $459.09K
- down 75.2% from $1.85M a year earlier
- Net loss
- $414.14K
- compared with net income of $569.2K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from________ to________
Commission
File No.
(Exact name of Registrant as specified in its charter)
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of Principal Executive Offices)
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate
by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the Registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date:
February 14, 2024: shares of Common Stock
Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Quarterly Report. We cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance on forward-looking statements. You should carefully read this Quarterly Report completely, and it should be read and considered with all other reports filed by us with the United States Securities and Exchange Commission (the “SEC”) that are contained in the SEC Edgar Archives. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
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PCS EDVENTURES!, Inc.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2023
INDEX
| 3 |
PART I –FINANCIAL INFORMATION
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.
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PCS EDVENTURES!, INC.
Balance Sheets
December 31, 2023 (Unaudited) | March 31, 2023 (Audited) | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net
of allowance for doubtful accounts of $ | ||||||||
| Accounts receivable, other receivables | ||||||||
| Prepaid expenses | ||||||||
| Inventory, net | ||||||||
| Total Current Assets | ||||||||
NONCURRENT ASSETS | ||||||||
| Lease Right-of-Use Asset | ||||||||
| Deposits | ||||||||
| Property and equipment, net | ||||||||
| Deferred tax asset | ||||||||
| Total Noncurrent Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | $ | ||||||
| Payroll liabilities and accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Lease Liability, current portion | ||||||||
| Total Current Liabilities | ||||||||
| Lease Liability, net of current portion | ||||||||
| Total Noncurrent Liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Preferred stock, shares issued and outstanding | ||||||||
| Common stock, | ||||||||
| Additional Paid-in Capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
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PCS EDVENTURES!, INC.
Statements of Operations
(Unaudited)
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For the Three Months Ended December 31, | For the Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUE | ||||||||||||||||
| COST OF SALES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Salaries and wages | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ||||||||||||||
| OTHER INCOME AND (EXPENSES) | ||||||||||||||||
| Tax credit | ||||||||||||||||
| Net interest income (expense) | ( | ) | ( | ) | ||||||||||||
| (Gain) loss on lease modification | ||||||||||||||||
| Total Other Income (Expense) | ( | ) | ||||||||||||||
| NET INCOME (LOSS) BEFORE TAXES | ( | ) | ||||||||||||||
| Provision for income taxes | ||||||||||||||||
| NET INCOME (LOSS) | $ | ( | ) | $ | $ | |||||||||||
| Net income (loss) per common share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | $ | $ | ||||||||||
| Diluted | $ | ( | ) | $ | $ | $ | ||||||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these financial statements.
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PCS EDVENTURES!, INC.
Statement of Stockholders’ Deficit
(Unaudited)
| # of Common Shares O/S | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Stockholders’ Equity (Deficit) | ||||||||||||||||
| Balance at 3/31/2022 | $ | $ | ( | ) | $ | |||||||||||||||
| Net Income | - | |||||||||||||||||||
| Shares Issued (exercise of warrants) | ||||||||||||||||||||
| Option expense | - | |||||||||||||||||||
| Balance at 12/31/2022 | $ | $ | ( | ) | $ | |||||||||||||||
| Balance at 3/31/2023 | $ | $ | ( | ) | $ | |||||||||||||||
| Net Income | - | |||||||||||||||||||
| Shares Redeemed | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Option expense | - | |||||||||||||||||||
| Balance at 12/31/2023 | $ | $ | ( | ) | $ | |||||||||||||||
| Balance at 9/30/2022 | $ | $ | ( | ) | $ | |||||||||||||||
| Net Income | - | |||||||||||||||||||
| Shares Issued (exercise of warrants) | - | |||||||||||||||||||
| Option expense | - | |||||||||||||||||||
| Balance at 12/31/2022 | $ | $ | ( | ) | $ | |||||||||||||||
| Balance at 9/30/2023 | $ | $ | ( | ) | $ | |||||||||||||||
| Balance | $ | $ | ( | ) | $ | |||||||||||||||
| Net Loss | - | ( | ) | ( | ) | |||||||||||||||
| Shares Redeemed | - | |||||||||||||||||||
| Option expense | - | |||||||||||||||||||
| Balance at 12/31/2023 | $ | $ | ( | ) | $ | |||||||||||||||
| Balance | $ | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
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PCS EDVENTURES!, INC.
Statements of Cash Flows (Unaudited)
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net Income | ||||||||
| Stock based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Amortization
of right of use asset | ||||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| (Increase) decrease in prepaid expenses | ( | ) | ( | ) | ||||
| (Increase) decrease in inventories | ( | ) | ( | ) | ||||
| (Increase) decrease in other current assets | ( | ) | ||||||
| (Decrease) increase in accounts payable and accrued liabilities | ( | ) | ||||||
| Increase (decrease) in lease liability | ( | ) | ( | ) | ||||
| Increase (decrease) in unearned revenue | ||||||||
| Net Cash Provided by Operating Activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Cash paid for purchase of fixed assets | ( | ) | ( | ) | ||||
| Net Cash Used by Investing Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Common stock repurchased and cancelled | ( | ) | ||||||
| Principal payments on debt | ( | ) | ||||||
| Proceeds from sale of stock | ||||||||
| Net Cash Used by Financing Activities | ( | ) | ( | ) | ||||
| Net Increase (Decrease) in Cash | ||||||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | ||||||||
| Cash Paid for Interest | ||||||||
| Cash Paid for taxes | ||||||||
| Non Cash Investing and Financing Transactions: | ||||||||
Right of use assets obtained in exchange for new operating lease liabilities | ||||||||
The accompanying notes are an integral part of these financial statements.
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PCS EDVENTURES!, INC.
Notes to the Financial Statements
December 31, 2023
(Unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of Business
The financial statements presented are those of PCS Edventures!, Inc., an Idaho corporation (the “Company,” “PCS,” “PCSV,” “we,” “our,” “us” or similar words), incorporated in 1994, in the State of Idaho. PCS specializes in experiential, hands-on, K12 education and drone technology. PCS has extensive experience and intellectual property (IP) that includes drone hardware, product designs, and K-12 curriculum content. PCS continually develops new educational products based upon market needs that the Company identifies through its sales and customer networks.
Our products facilitate STEM education by providing engaging activities that demonstrate STEM concepts and inspire further STEM studies, with the goal of ultimately leading students to pursue STEM career pathways. Due to our exceptionally detailed curriculum, our products are easy to teach and do not require a teaching degree or experience to administer.
Our educational products are developed from both in-house efforts and contracted services. They are marketed through reseller channels, direct sales efforts, partner networks, and web-based channels.
PCS has developed and sells a variety of STEM education products into the K12 market which can be categorized as follows:
| 1. | Enrichment Programs |
These camps are for the informal learning market and are designed to be highly engaging for students while easily administered by the instructor. The Company offers approximately thirty (30) different enrichment programs and typically develops at least two (2) new programs each year. Some of the more popular programs include Ready, Set, Drone!; Traveling Artist; Unleash Your Wild Side, Build a Better World; Claymation; Oceanic Exploration; Pirate; and Flight and Aerodynamics.
| 2. | Discover Series Products |
These products are designed for the makerspace environment and include engaging STEM activities that motivate students to pursue educational pathways toward STEM careers. The Discover Series includes Discover Engineering; Discover Robotics & Physics; Discover Robotics & Programming; and Discover STEM.
| 3. | BrickLAB Products |
These products are designed for the grade school market and use the Company’s proprietary bricks (which are Lego compatible) and curriculum to engage students to explore, imagine and create within a STEM education framework. The Company offers a variety of grade-specific BrickLAB products.
| 4. | Discover Drones, Add-on Drone Packages and Ala Carte Drone Items |
These products are designed around using drones as a platform for STEM education and career exploration. These titles include the Discover Drones series of Products; Discover Drones Indoor Coding Bundle; Discover Drones Indoor Racing Add-On; Discover Drones Outdoor Practice Add-on; and all the spare parts and ala carte drone items offered in the Company’s comprehensive drone packages.
| 5. | STEAMventures BUILD Activity Book |
These series of activity books are designed for the K-3 market and ideal for a distance-learning environment. The series includes twelve (12) different issues. Instructor guides and/or family engagement guides are included. The Company also provides the necessary bricks for the builds in the activity books as a separate, but related product.
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| 6. | Professional Development Training |
The Company offers professional development trainings, for a fee, to educators who are implementing the Company’s products in their classroom.
The Company intends to continue developing STEM education products that address demand from large markets.
Accounting Method
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a March 31 fiscal year end.
Cash and Cash Equivalents
Cash
and cash equivalents, totaling $
Use of Estimates
The preparation of these financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the 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. The Company’s significant estimates include reserves related to accounts receivable and inventory, the valuation allowance related to deferred tax assets, the valuation of equity instruments, and debt discounts.
Concentration of Credit Risks and Significant Customers
The
Company extends credit to customers and is therefore subject to credit risk. Financial instruments that potentially subject the Company
to concentration of credit risk consist primarily of trade receivables. In the normal course of business, the Company provides credit
terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible
losses which when realized have been within the range of management’s expectations. An allowance for doubtful accounts is recorded
to account for potential bad debts. Estimates are used in determining the allowance for doubtful accounts and are based upon an assessment
of selected accounts, historic averages, and as a percentage of remaining accounts receivable by aging category. In determining these
percentages, the Company evaluates historical write- offs, and current trends in customer credit quality, as well as changes in credit
policies. The Company generally does not require collateral from its customers. The Company has established an allowance for doubtful
accounts of $
Inventory
Finished goods inventory is composed of items produced in-house, as well as items from outside suppliers. These items include, but are not limited to, Fischertechnik® manipulatives, Brick manipulatives, drone components, digital media equipment, furniture units, curriculum, and other miscellaneous items used in our various labs. Our inventory is carried at the lower of cost or market and valued using the average cost method for each item.
When
indicators of inventory impairment exist, the Company measures the carrying value of the inventory against its market value, and if the
carrying value exceeds the market value, the inventory value is adjusted accordingly. The Company has established a provision for excess
and obsolete inventory reserve of $
| 10 |
Property, Plant and Equipment
Depreciation
on property and equipment is computed using the straight-line method over the estimated useful life of the asset. The Company had fully
depreciated property and equipment prior to March 31, 2018. Beginning in fiscal year 2022 through the current reporting period, the Company
purchased various warehouse and office equipment for $
Software has been fully depreciated as of December 31, 2023 and March 31, 2023.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment annually, or when events or circumstances arise that indicate the existence of impairment for patents and other intangibles. There was no impairment recorded during the three and nine months ended December 31, 2023, and 2022.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date.
In November 2015, the Financial Accounting Standards Board issued ASU No. 2015-17, “Income Taxes (Topic 740)-Balance Sheet Classification of Deferred Taxes” (ASU 2015-17), which requires reporting the net amount of deferred tax assets and liabilities as a single noncurrent item on the classified balance sheet. Before this change, the net amounts of current and noncurrent deferred tax assets and liabilities were reported separately.
We account for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 prescribes the use of the asset and liability method to compute the differences between the tax bases of assets and liabilities and the related financial amounts, using currently enacted tax laws. If necessary, a valuation allowance is established, based on the weight of available evidence, to reduce deferred tax assets to the amount that is more likely than not to be realized. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of sufficient future taxable income. We exercise significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets.
In
accordance with GAAP, the Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns
for the open tax years in such jurisdictions. The Company currently believes that all significant filing positions are highly certain
and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has
no significant reserves for uncertain tax positions, and no adjustment to such reserves was required by GAAP. No interest or penalties
have been levied against the Company and none are anticipated, therefore no interest or penalty has been included in the provision for
income taxes in the consolidated statements of operations. The Internal Revenue Code contains provisions which reduce or limit the availability
and utilization of net operating loss (NOL) carry forwards in the event of a more than
SCHEDULE OF INCOME TAX EXAMINATION
| Tax Year | Fiscal Year End | Filed Date | Open Through | ||||
| 2021 | |||||||
| 2020 | |||||||
| 2019 |
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Revenue Recognition
The Company accounts for revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers, which we adopted on April 1, 2018. Revenue amounts presented in our financial statements are recognized net of sales tax, value-added taxes, and other taxes. Amounts received as prepayment on future products or services are recorded as unearned revenues and recognized as income when the product is shipped, or service performed.
The
Company had deferred revenue of $
Most of our contracts with customers contain transaction prices with fixed consideration; however, some contracts may contain variable consideration in the form of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. This can result in recognition of revenue over time as we perform services or at a point in time when the deliverable is transferred to the customer, depending on an evaluation of the criteria for over time recognition in FASB ASC 606. For certain fixed-fee per transaction contracts, such as delivering training courses or conducting workshops, revenue is recognized during the period in which services are delivered in accordance with the pricing outlined in the contracts.
Stock-Based Compensation
We recognize stock-based compensation expense under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”). We use the Black-Scholes option pricing model to calculate the fair value of stock options at their respective grant date. The use of option valuation models requires the input of highly subjective assumptions, including the expected stock price volatility and the expected term of the option. The fair value of restricted stock awards is the fair market value on the date of grant. We recognize these compensation costs on a straight-line basis over the requisite service period, which is generally the vesting period of the award.
During fiscal year 2023, two sets of performance options were exercised. Mike J. Bledsoe, President, exercised options at $ per share. Michelle Fisher, Director of STEM Curriculum, exercised options at $ per share. As of December 31, 2023, and March 31, 2023, the Company had no outstanding warrants or options.
Business Segments and Related Information
GAAP establishes standards for the way public business enterprises are to report information about operating segments in annual financial statements and requires enterprises to report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas and major customers. The Company currently operates in one business segment.
The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). Under ASC 260, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share (“EPS”) reflects the potential dilution that could occur assuming exercise of all dilutive unexercised stock options and warrants. The dilutive effect of these instruments was determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options and restricted stock awards, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded as income tax expense when the stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock.
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Common stock outstanding reflected in the Company’s balance sheets includes restricted stock awards outstanding. Securities that may participate in undistributed net income with common stock are considered participating securities. The computation of diluted earnings per share does not assume exercise or conversion of securities that would have an anti-dilutive effect. The following schedules presents the calculation of basic and diluted net income per share:
| 2023 | 2022 | |||||||
| For the Three Months ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Income per common Share: | ||||||||
| Basic | $ | ( | ) | $ | ||||
| Diluted | $ | ( | ) | $ | ||||
| Weighted average number of common shares outstanding Basic | ||||||||
| Weighted average number of common shares outstanding Fully Diluted | ||||||||
Net
income for the three months ended December 31, 2023, and 2022 was $(
| 2023 | 2022 | |||||||
| For the Nine Months ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net Income per common Share: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average number of common shares outstanding Basic | ||||||||
| Weighted average number of common shares outstanding Fully Diluted | ||||||||
Net
Income for the nine months ended December 31, 2023, and 2022, was $
Recently Issued Accounting Pronouncements
The Company has reviewed recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position.
NOTE 2 – BUSINESS CONDITION
As
of December 31, 2023, the Company had $
NOTE 3 – ACCOUNTS RECEIVABLE
In
the Company’s normal course of business, the Company provides credit terms to its customers, which generally range from net fifteen
(15) to thirty (30) days. The Company performs ongoing credit evaluations of its customers. The Company established an allowance for
doubtful accounts of $
NOTE 4 – ACCOUNTS RECEIVABLE, OTHER RECEIVABLES
Other
Receivables include receivables due to the Company derived from activities outside of its typical business transactions. As of December
31, 2023, these other receivables included overpayments to the Internal Revenue Service of payroll taxes in the amount of $
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NOTE 5 - PREPAID EXPENSES
Prepaid expenses for the periods are as follows:
SCHEDULE OF PREPAID EXPENSES
| December 31, 2023 | March 31, 2023 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid tradeshows | ||||||||
| Prepaid inventory | ||||||||
| Prepaid software | ||||||||
| Prepaid other | ||||||||
| Total Prepaid Expenses | $ | $ | ||||||
NOTE 6 - COMMON AND PREFERRED STOCK TRANSACTIONS
| a. | Common Stock |
The
Company has authorized shares of common stock,
During
the nine months ended December 31, 2023, the Company had
During the nine months ended December 31, 2023, the Company did not issue shares of common stock.
During
the nine months ended December 31, 2023, the Company repurchased shares common stock at $ per share for total payments of
$
| b. | Preferred Stock |
The Company has authorized shares of preferred stock. As of December 31, 2023, and March 31, 2023, there were preferred shares issued or outstanding.
NOTE 7 - NOTES PAYABLE
The
Company had
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Leases
The Company adopted ASC 842 as of November 9, 2019 using a modified retrospective transition approach for all leases existing at December 31, 2019, the date of the initial application. Consequently, financial information will not be updated, and disclosures required under ASC 842 will not be provided for dates and periods before January 1, 2020.
The Company determines if a contract is a lease or contains a lease at inception. Right of use assets related to operating type leases are reported in other noncurrent assets and the present value of remaining lease obligations is reported in accrued and other liabilities and other noncurrent liabilities on the Balance Sheets. The Company does not currently have any financing type leases.
Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s leases do not provide an implicit rate. The Company determine the incremental borrowing rates applicable to the economic environment based on the information available at commencement date, in determining the present value of future payments. The right of use asset for operating leases is measured using the lease liability adjusted for the impact of lease payments made prior to commencement, lease incentives received, initial direct costs incurred and any asset impairments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the term of the lease.
| 14 |
The Company re-measures and reallocates the consideration in a lease when there is a modification of the lease that is not accounted for as a separate contract. The lease liability is re-measured when there is a change in the lease term or a change in the assessment of whether the Company will exercise a lease option. The Company assesses right of use assets for impairment in accordance with its long-lived asset impairment policy.
The Company accounts for lease agreements with contractually required lease and non-lease components on a combined basis. Lease payments made for cancellable leases, variable amounts that are not based on an observable index and lease agreements with an original duration of less than twelve months are recorded directly to lease expense.
| a. | Office and Warehouse |
The
Company leases one building containing its main office and warehouse space under a non-cancelable lease agreement, which commenced on
March 2, 2016, accounted for as an operating lease expiring March 14, 2020. On March 3, 2020, a third amendment extended the lease for
nineteen and one-half (
| b. | Equipment |
The
Company leased a production printer for sixty-three (
As of December 31, 2023, accounted for and presented under ASC 842 guidance, the future minimum lease payments on operating leases, were as follows:
Total minimum lease obligation over the next 7 years
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
| Fiscal Year | Amount | ||||
| 2024 | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Total | $ | ||||
SCHEDULE OF LEASE PAYABLE
| Balance Sheet Location | December 31, 2023 | |||||
| Right of use assets | Other noncurrent assets | $ | ||||
| Lease payable | Current liabilities | $ | ||||
| Lease payable | Long-term liabilities | |||||
| Total lease payable | $ | |||||
Supplemental cash flow information related to operating leases:
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES
| December 31, 2023 | ||||
| Operating cash paid to settle lease liabilities | $ | |||
| Right of use asset additions in exchange for lease liabilities |
| December 31, 2023 | |||
| Weighted average remaining lease term (in years) | ||||
| Weighted average discount rate | % |
| 15 |
NOTE 9 – ACCOUNTS PAYABLE
Accounts payable for the periods are as follows:
SCHEDULE OF ACCOUNTS PAYABLE
| December 31, 2023 | March 31, 2023 | |||||||
| Accounts payable | $ | $ | ||||||
| Credit cards payable | ||||||||
| Total | $ | $ | ||||||
NOTE 10 – PAYROLL LIABILITIES & ACCRUED EXPENSES
Accrued expenses for the periods are as follows:
SCHEDULE OF ACCRUED EXPENSES
| December 31, 2023 | March 31, 2023 | |||||||
| Payroll liabilities | $ | $ | ||||||
| Sales tax payable | ||||||||
| State income tax payable | ||||||||
| Production printer accrued expenses | ||||||||
| Total | $ | $ | ||||||
NOTE 11 – INCOME TAXES
For
the three and nine months ended December 31, 2023, the Company recognized no income tax expense (or benefit) due to the partial reversal
of its valuation allowance. For the year ended March 31, 2023, the Company partially reversed its valuation allowance recognizing an
income tax benefit of $
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of December 31, 2023. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of December 31, 2023. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgments that could become subject to examination by tax authorities in the ordinary course of business. We periodically assess the likelihood of adverse outcomes resulting from these examinations to determine the impact on our deferred taxes and income tax liabilities and the adequacy of our provision for income taxes. Changes in income tax legislation, statutory income tax rates or future taxable income levels, among other things, could materially impact our valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods.
The Company files income tax returns in the United States, the State of Idaho and the State of California. The statute of limitations on a Federal tax return is the due date of the tax return plus three years. In the case of NOLs, the year in which the NOL was generated remains open up to the amount of the NOL until the statute of limitations expires on the year it was used. All required tax returns of the Company due since inception have been filed. The Company does not have any unrecognized tax benefits to report in the current period.
| 16 |
NOTE 12 - DILUTIVE INSTRUMENTS
Stock Options and Warrants
As of December 31, 2023, and March 31, 2023, the Company had dilutive instruments outstanding.
NOTE 13 - RELATED PARTY TRANSACTIONS
On
August 21, 2018, the Company granted stock options to our President, Michael J. Bledsoe. The expected volatility rate of %
was calculated using the Company’s stock price over the period beginning August 21, 2018, through date of issue. A risk-free interest
rate of % was used to value the options. The options were valued using the Black-Scholes valuation model. The options vested immediately
and were exercisable at $ per share which represents the fair market value at the date of grant in accordance with the 2009 Equity
Incentive Plan. The maturity date was August 21, 2021. The entire value of the options were expensed at time of grant as they vested
immediately. On August 21, 2021, the options expired and the Company issued
From
April 1, 2013 to March 31, 2017, the Company executed related party promissory notes with the Chairman and CEO of the Company, Todd R.
Hackett, for $
On
February 1, 2017, the Company, in the capacity of borrower, executed a non-convertible promissory note payable, with no warrants
attached, with lender Mike J. Bledsoe, a member of the Executive Management Team and Board of Directors, for $
NOTE 14 - SUBSEQUENT EVENTS
At the time of the filing of this Quarterly Report, there were no subsequent events to report.
| 17 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results from operations should be read in conjunction with our unaudited financial statements and related notes included elsewhere in this Quarterly Report and our audited financial statements contained in our Form 10 Registration Statement filed with the SEC on October 3, 2023, and as amended on November 15, 2023, which become effective on December 2, 2023 (the “Form 10”) a copy of which is available by Hyperlink in Part II, Item 6. Exhibits, below.
Overview of Current and Planned Operations
PCS Edventures!, Inc. sells STEM / STEAM products to educational and recreational entities serving youth. At this time, we do not attempt to align our products to fit in the classroom setting although we are aware that some of our customers use our products to fill enrichment time blocks in the classroom during formal school time. Classroom curriculum must align with specific state standards to be considered for use. Each state has their own unique set of standards, making classroom curriculum development a state by-state endeavor.
On the other hand, out of school programs are not subject to a state governmental standard alignments, although these programs often require that educational programs align with various sets of state or national educational standards. This difference makes it easier to penetrate out-of-school programs, as more freedoms exist for curriculum development. We focus our efforts on these out-of-school programs, which include summer school, summer camps, YMCA programs, Boys and Girls club programs and various other programs offered outside of the classroom, at all times of the year, that are too numerous to list. Oftentimes, these programs are sponsored, administered and/or supported by local school districts, and we employ considerable efforts to build relationships with these types of school districts to provide desired programing for their out-of-school programs. The majority of the time, the out-of-school programs offered are funded with grants; however, some programs are run on a for- profit basis. The Company sells to all of these types of entities.
We offer professional development training for instructors using our products; and typically charge a fee for this service, with the fee primarily covering our expenses. Management does not view this service as a profit center, but rather as a customer service component of our product that adds to its uniqueness and value in the marketplace, and as a market development endeavor to build out the Company’s addressable market.
The nature of our target market produces considerable seasonality for the Company’s revenue. The quarters ended June 30 and September 30 tend to be the peak of this seasonality (with the quarter ended March 31 being close to these quarters), while the quarter ended December 31 tends to be the low point of our seasonality. The Table below reflects this seasonality.
| Quarterly Revenue | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| 3/31 | 648,743 | 1,445,594 | 2,521,470 | |||||||||
| 6/30 | 1,062,127 | 1,391,785 | 2,605,281 | |||||||||
| 9/30 | 993,458 | 1,243,662 | 3,767,326 | |||||||||
| 12/31 | 566,473 | 1,847,659 | 459,087 | |||||||||
The Company, through winning a competitive Request For Proposal, added the Air Force Junior Reserve Officers’ Training Corp (AFJROTC) as a customer in the second half of calendar year 2022. The Company experienced elevated sales due to the fulfillment of the AFJROTC orders for the quarters ended December 31, 2022, March 31, 2023, and September 30, 2023. One of the AFJROTC revenue quarters was December 31, 2022, which corresponds with the lowest seasonal revenue quarter, so the effects of seasonality in 2022 was not as readily apparent as in other calendar years. The table below removes the AFJROTC revenue to highlight the seasonality that the Company experiences.
| Quarterly
Revenue Less Air Force JROTC Revenue | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| 3/31 | 648,725 | 1,445,595 | 1,247,835 | |||||||||
| 6/30 | 1,062,127 | 1,391,785 | 2,605,281 | |||||||||
| 9/30 | 993,458 | 1,243,662 | 2,501,410 | |||||||||
| 12/31 | 566,473 | 458,239 | 459,087 | |||||||||
During the quarter ended December 31, the Company focuses on product development, restocking inventory, and general planning for the next year. Sales and marketing activities remain fairly constant throughout the year.
| 18 |
Results of Operations
The following table shows our results from operations for the periods indicated.
| For the Three Months Ended December 31, | For the Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUES | $ | 459,087 | $ | 1,847,659 | $ | 6,831,694 | $ | 4,483,106 | ||||||||
| Total Revenues | 459,087 | 1,847,659 | 6,831,694 | 4,483,106 | ||||||||||||
| COST OF SALES | 310,657 | 751,711 | 2,503,552 | 1,833,669 | ||||||||||||
| GROSS PROFIT | 148,430 | 1,095,948 | 4,328,142 | 2,649,437 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Salaries and wages | 353,934 | 389,795 | 1,313,886 | 1,050,032 | ||||||||||||
| General and administrative expenses | 231,475 | 191,117 | 821,116 | 587,718 | ||||||||||||
| Total Operating Expenses | 585,409 | 580,912 | 2,135,002 | 1,637,750 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS | (436,979 | ) | 515,036 | 2,193,140 | 1,011,687 | |||||||||||
| OTHER INCOME AND (EXPENSES) | ||||||||||||||||
| Tax credit | - | 94,703 | 31,258 | 94,703 | ||||||||||||
| Net interest income (expense) | 20,183 | (40,544 | ) | 30,774 | (114,705 | ) | ||||||||||
| (Gain) loss on lease modification | 2,658 | - | 2,658 | - | ||||||||||||
| Total Other Income (Expense) | 22,841 | 54,159 | 64,690 | (20,002 | ) | |||||||||||
| NET INCOME (LOSS) BEFORE TAXES | (414,138 | ) | 569,195 | 2,257,830 | 991,685 | |||||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| NET INCOME (LOSS) | $ | (414,138 | ) | $ | 569,195 | 2,257,830 | $ | 991,685 | ||||||||
| Net income/loss per common share: | ||||||||||||||||
| Basic | $ | (0.00 | ) | $ | 0.00 | $ | 0.02 | $ | 0.01 | |||||||
| Diluted | $ | (0.00 | ) | $ | 0.00 | $ | 0.02 | $ | 0.01 | |||||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic | 124,733,494 | 125,482,479 | 125,183,945 | 124,973,388 | ||||||||||||
| Diluted | 124,733,494 | 125,647,758 | 125,183,945 | 125,138,667 | ||||||||||||
Revenue
For the quarter ended December 31, 2023 our revenue was $459,087. For the quarter ended December 31, 2022, our revenue was $1,847,659, of which $1,389,420 was attributable to our AFJROTC customer. Revenue for the December 31, 2022 quarter, excluding AFJROTC revenue was $458,239, not significantly different than our revenue for the December 31, 2023 quarter.
For the nine months ended December 31, 2023, our revenue was $6,831,694 compared to revenue of $4,483,106 for the comparable nine months the year prior. Excluding AFJORTC revenue, revenue for the nine months ended December 31, 2023, was $5,565,778, compared to $3,093,686 for the nine months ended December 31, 2022.
The Company has been soliciting larger customers for over two years and has seen some success. The AFJROTC is the Company’s largest success by a wide margin, producing revenue of $1,265,916 in the nine months ended December 31, 2023, and $1,389,420 in the nine months ended December 31, 2022.
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The Company has experienced other successes in its campaign to find larger customers. The table below shows customer transactions by size for the periods indicated.
Number of Customer Transactions by size
| > $1 million | >$500,000 | > $100,000 | > $50,000 | > $25,000 | > $10,000 | |||||||||||||||||||
| Nine months ended December 31, 2023 | 1 | 2 | 16 | 23 | 34 | 80 | ||||||||||||||||||
| Nine months ended December 31, 2022 | 1 | 1 | 8 | 18 | 30 | 49 | ||||||||||||||||||
| Nine months ended December 31, 2021 | 0 | 0 | 5 | 10 | 15 | 38 | ||||||||||||||||||
We believe that we can continue to experience success in soliciting larger customers, but we can offer no assurances that success will be certain, nor can we offer any numerical framework in describing the success that may occur. Risk factors include anything that would negatively affect educational funding in the United States; finding and retaining employees that meet our high standards; and anything that would negatively affect our supply chain of critical components.
Cost of Sales
We strive to have a cost of sales that is less than 40% of revenue. We price our products once per year, at the beginning of the calendar year, and maintains that pricing level throughout the year. During inflationary environments, when the price level of the Company’s raw materials is increasing, the Company must absorb that negative impact to gross margins until it can reprice its products at the beginning of the next calendar year. This repricing analysis considers the current pricing level of materials, as well as the likely increase in those levels in the year ahead. We attempt to incorporate shipping costs into the cost of raw materials, but oftentimes during the course of the year we are compelled to ship in a more expedient manner, which is more expensive than our baseline assumptions.
For the quarter ended December 31, 2023, our cost of sales was $310,657, or 67.7% of revenue. For the quarter ended December 31, 2022, our cost of sales was $751,711, or 40.7% of revenue. For any given quarter, and especially in low revenue quarters, the cost of sales can vary significantly from our desired 40% or less of revenue. However, for any given year, the calculation is relevant and desired to be 40% or less of revenue. For the nine months ended December 31, 2023, our cost of sales was $2,503,552, or 36.7% of revenue, as compared to $1,833,669, or 40.9% of revenue for the nine months ended December 31, 2022. Factors affecting cost of sales include:
| Helps sub 40% cost of sales | Impedes sub 40% cost of sales |
| Higher revenue | Higher inflation |
| Larger order size | Expedited shipping |
| Ability to take advantage of volume discounts | Quality issues with raw materials |
Operating Expenses
Operating expenses are divided into two categories – salary + wages, and general + administrative. Salary and wages tend to increase over time as the Company has been increasing its number of employees and we expect to continue to do so in the future. Also, the Company desires to retain employees over the long term, which requires periodic increases in compensation as their value to the Company increases.
The Company also has a discretionary quarterly bonus program based on qualified revenue. Qualified revenue is defined as revenue where there are no reseller fees or other price adjustments associated with that revenue. Thus, all reseller sales are disqualified from the discretionary quarterly bonus calculation, as are other miscellaneous transactions where the Company did not receive a full margin. During quarters with higher revenue, salaries and wages will increase all other things equal.
Salary and wages were $353,934 for the quarter ended December 31, 2023. For the quarter ended December 31, 2022, salaries and wages were $389,795. Salaries and wages declined in the quarter ended December 31, 2023, as compared to the quarter ended December 31, 2022, due to the fact that the Company lost a higher compensated employee on September 30, 2023, and did not replace that employee until the beginning of calendar year 2024. Also, employee bonuses were higher in the quarter ended December 31, 2022, versus that for the quarter ended December 31, 2023.
| 20 |
Salary and wages were $1,313,886 for the nine months ended December 31, 2023. For the nine months ended December 31, 2022, salaries and wages were $1,050,032. There will likely be ebb and flow in these numbers going forward, as the timing of hiring employees and the timing of revenue growth spurts will not likely coincide with each other.
General and administrative expenses include all operating expenses outside of salaries and wages. These include the following categories:
| 1. | Advertising and marketing expenses | |
| 2. | Trade show and travel expenses | |
| 3. | Product development expenses | |
| 4. | Finance charges | |
| 5. | Contract labor expenses | |
| 6. | Lease expenses | |
| 7. | Insurance premiums | |
| 8. | Workers’ compensation expenses | |
| 9. | Office supplies and repairs | |
| 10. | Professional expenses | |
| 11. | Licenses | |
| 12. | State sales tax expenses | |
| 13. | Office and warehouse infrastructure expenses |
Most of these expenses are not correlated with changes in revenue, but they tend to increase over time. General and administrative expenses were $231,475 for the quarter ended December 31, 2023. For the quarter ended December 31, 2022, general and administrative expenses were $191,117.
General and administrative expenses were $821,116 for the nine months ended December 31, 2023. For the nine months ended December 31, 2022, general and administrative expenses were $587,718.
The Company currently leases a 10,000 square foot facility which ends in October of 2024. We are currently looking for new space, with the expectation that we need at least double the amount of space we currently occupy to accommodate our needs in achieving our growth expectations. This will cause general and administrative expenses to increase noticeably, as will the additional expenses associated with being an SEC reporting company.
Other Income and Expenses
Other income and expenses are those outside of the Company’s ordinary course of business. During covid, the Paycheck Protection Program was offered to companies to keep employees on the payroll during the lockdowns. The Company operated throughout this environment and never initiated action to reduce employee headcount. The financial benefits of the Payroll Protection Program was an item disclosed in the other income and expenses category. Likewise, the Employee Retention Tax Credit was offered for similar purposes and the Company qualified for those benefits, which are also disclosed under other income and expenses.
Interest income and interest expense are disclosed under other income and expenses. The Company had considerable interest expense prior to paying off all of its promissory note debt as of March 31, 2023. Since that time and as the Company has accumulated cash, it has invested surplus cash in a Vanguard money market fund that invests exclusively in repurchase agreements and short-term U.S. government securities. The ticker symbol of this fund is VMFXX. The Company’s switch from net debtor to net creditor explains the swing from interest expense to interest income observable for both the quarter and the nine month periods ended December 31, 2023, and 2022.
For the quarter ended December 31, 2023, other income and expenses were $22,841, with interest income totaling $20,183 for the period. For the quarter ended December 31, 2022, other income and expenses were $54.159, with interest expense totaling $40,544. Tax credits from the Employee Retention Tax Credit totaled $94,703 for the period versus $0 for the quarter ended December 31, 2023.
For the nine months ended December 31, 2023, other income and expenses were $64,690, with interest income totaling $30,774. For the nine months ended December 31, 2022, other income and expenses were ($20,002), with interest expense totaling $114,705. Tax credits from the Employee Retention Tax Credit totaled $94,703 for the period versus $31,258 for the quarter ended December 31, 2023.
| 21 |
Net Income Before Tax
For the three months ended December 31, 2023, net income before tax was ($414,138) versus $569,195 for the three months ended December 31, 2022. Revenue variance between the two periods was responsible for the variance in net income before taxes. The prior year period included AFJROTC revenue of $1,389,420 while the current year period had no AFJROTC revenue. The Company’s small size relative to the opportunities it is pursuing can create significant lumpiness in quarterly results and comparisons to the prior year.
For the nine months ended December 31, 2023, net income before tax was $2,257,830 versus $991,685 for the nine months ended December 31, 2022. AFJROTC revenue was similar for the two periods, with the prior year period having $123,504 more AFJROTC revenue than the current year period. While the nine month period ended December 31, 2023 incorporates some significant customer wins that may not be present in the future, Management believes that the Company can take advantage of numerous opportunities and achieve different customer wins in the future and repeat the success is has achieved thus far in fiscal year 2024. This expectation of revenue growth is not accompanied by an expectation of consistency, making quarterly results lumpy and annual results subject to a year-over-year decline on occasion.
Taxes
The Company has significant net operating losses which arose due to past losses. At March 31, 2023, the Company had net operating losses of approximately $13.9 million that may be offset against future taxable income. No tax benefit has been reported in the quarterly consolidated financial statements for fiscal years 2024 and 2023 since the potential tax benefit is offset by a valuation allowance of the same amount. The federal and state net operating losses and tax credits expire in years beginning in 2026.
Net Income
With the large net operating losses that can be used to offset taxable income, net income is the same as net income before tax for the reporting periods shown.
Liquidity and Capital Resources
Cash Flow from Operations
For the nine months ended December 31, 2023, cash provided by operations was $1,644,991 compared to cash provided by operations of $244,659 for the nine months ended December 31, 2022. As of December 31, 2023, total current assets were $4,950,442 and total current liabilities were $614,636, resulting in working capital of $4,335,806. As of March 31, 2023, total current assets were $2,493,906 and total current liabilities were $1,222,651, resulting in working capital of $1,271,255.
The Company had a current ratio as of December 31, 2023 of 8.05 compared to a current ratio of 6.85 as of March 31, 2023.
As of December 31, 2023, we had $2,006,618 in cash and cash equivalents compared to $442,657 in cash as of March 31, 2023. The improvements in working capital, current ratio, and cash on hand are all due to a significant increase in net income during fiscal year 2024 versus that for fiscal year 2023.
Cash Flow from Investing Activities
For the nine months ended December 31, 2023, cash used by investing activities was $16,096 compared to cash used by investing activities of $16,459 for the nine months ended December 31, 2022. We purchased office equipment during these periods which accounts for the activity.
Cash Flow from Financing Activities
For the nine months ended December 31, 2023, cash used by financing activities was $64,933. We purchased 998,985 shares of common stock for $0.065 per share, which accounts for this activity. For the nine months ended December 31, 2022, cash used by financing activities was $118,327. During this period, principal payments on debt accounted for $143,327 of the cash used by financing activities whereas we received $25,000 from the sale of one million shares of stock related to the exercise of options by Mike J. Bledsoe, our President.
| 22 |
Off-Balance Sheet Arrangements
We had no Off-Balance Sheet arrangements during the three and nine month periods ended December 31, 2023, and 2022.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and is not required to provide the information required under this item.
Item 4. Controls and Procedures.
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that material information relating to us is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management, with the participation of our Chief Executive Officer and our President who acts as our Principal Financial Officer has evaluated the effectiveness, as of December 31, 2023, of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2023, because of inadequate control and expertise over preparation of the preliminary financial statements and schedules for our auditor’s review, resulting in some minor errors in applying Accounting Standards Codifications used in the United States to organize and present accounting standards and principles. Management has concluded that we will take appropriate action to add additional expertise to assist us in the preparation of our future interim financial statements for our auditor’s review to ameliorate this weakness.
Changes in Internal Control over Financial Reporting
With the exception of management’s plan to take appropriate action to add additional expertise to assist us in the preparation of our future interim financial statements to ameliorate this weakness and to assist us in designing and implementing a system of adequate controls over the preparation of our financial statements and schedules, there have been no changes in our internal control over financial reporting during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and is not required to provide the information required under this item.
| 23 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None; not applicable.
Item 5. Other Information.
No
director or Section 16 officer
Item 6. Exhibits.
(a) Index of Exhibits
| Exhibit No. | Identification of Exhibit | Location if other than attached hereto | ||
| 3.1 | Second Amended and Restated Articles of Incorporation dated October 2, 2006 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.2 | Articles of Amendment dated April 12, 2012 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.3 | Articles of Amendment dated September 25, 2014 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.4 | Articles of Amendment dated September 25, 2015 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.5 | Articles of Amendment dated September 23, 2016 | Attached to our Form 10 filed October 3, 2023 | ||
| 3.6 | Third Amended Bylaws | Attached to our Form 10 filed October 3, 2023 | ||
| 31.1 | Attached hereto | |||
| 31.2 | Attached hereto | |||
| 32 | Attached hereto | |||
| 101.INS | XBRL Instance Document | |||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | |||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | |||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |||
| 101.SCH | XBRL Taxonomy Extension Schema |
Form 10A-1 Registration Statement filed with the SEC on November 15, 2023.
| 24 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PCS EDVENTURES!, INC.
| Dated: February 16, 2024 | By: | /s/ Todd R. Hackett |
| Todd R. Hackett | ||
| Chief Executive Officer and | ||
| Chairman of the Board of Directors | ||
| Dated: February 16, 2024 | By: | /s/ Michael J. Bledsoe |
| Michael J. Bledsoe | ||
| President, Principal Financial Officer and Director |
| 25 |
Exhibit 31.1
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Todd R. Hackett, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of PCS Edventures!, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrant other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| Date: | February 16, 2024 | By: | /s/Todd R. Hackett | |
| Todd R. Hackett, Chief Executive Officer and Chairman |
Exhibit 31.2
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael J. Bledsoe, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of PCS Edventures!, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. The Registrant other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions);
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| Date: | February 16, 2024 | By: | /s/ Michael J. Bledsoe | |
| Michael J. Bledsoe, President and Principal Financial Officer |
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of PCS Edventures!, Inc. (the “Registrant”) on Form 10-Q for the period ending December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), we, Todd R. Hackett, Chief Executive Officer, and Michael J. Bledsoe, President and Principal Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.
| Date: | February 16, 2024 | By: | /s/ Todd R. Hackett | |
| Todd R. Hackett, Chief Executive Officer and Chairman |
| Date: | February 16, 2024 | By: | /s/ Michael J. Bledsoe | |
| Michael J. Bledsoe, President and Principal Financial Officer |