United States Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File No. 333-53458
PCS EDVENTURES!.COM, INC.
-------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
IDAHO 82-0475383
----- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
345 Bobwhite Court, Suite #200
Boise, Idaho 83706
------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (208) 343-3110
1655 Fairview Avenue, Suite #100
Boise, Idaho 83702
------------------
(Former name, former address and former
fiscal year, if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
Check whether the Registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
15,499,176
December 31, 2002
Transitional Small Business Disclosure Format (Check One): Yes X No
--- ---
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002 and March 31, 2002
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
December 31, March 31,
2002 2002
(Unaudited)
CURRENT ASSETS
Cash $ - $ 1,046
Accounts receivable 81,632 355,004
Prepaid expenses 403 -
Debt offering costs, net - 11,621
Debt extension costs, net 18,289 -
---------- ---------
Total Current Assets 100,324 367,671
---------- ---------
FIXED ASSETS (NET) 39,855 83,079
---------- ---------
OTHER ASSETS
Deposits 7,425 7,000
---------- ---------
Total Other Assets 7,425 7,000
---------- ---------
TOTAL ASSETS $ 147,604 $ 457,750
========== =========
The accompanying notes are an integral part of these consolidated financial
statements.
2
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31, March 31,
2002 2002
(Unaudited)
CURRENT LIABILITIES
Bank overdraft $ 11,596 $ 15,272
Accounts payable 180,916 274,350
Wages payable 28,314 22,211
Payroll taxes payable 246,953 120,572
Accrued interest 53,587 43,383
Accrued directors fees 78,750 -
Accrued expenses 153,629 157,432
Unearned revenue 163,730 397,015
Notes payable - related parties 165,882 158,882
Notes payable 646,680 776,271
---------- ----------
Total Current Liabilities 1,730,037 1,965,388
---------- ----------
Total Liabilities 1,730,037 1,965,388
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value, authorized
50,000,000 shares; 15,499,176 and
13,261,522 shares issued and
outstanding, respectively 21,829,540 21,596,003
Deferred Consulting Fees (4,721) (27,344)
Accumulated deficit (23,407,252) (23,076,297)
----------- -----------
Total Stockholders' Equity (Deficit) (1,582,433) (1,507,638)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 147,604 $ 457,750
============ ===========
The accompanying notes are an integral part of these consolidated financial
statements.
3
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
2002 2001 2002 2001
REVENUE $ 225,277 $ 170,544 $ 1,592,214 $ 356,797
COST OF GOODS SOLD 59,514 60,398 578,038 145,261
----------- ----------- ----------- -----------
GROSS PROFIT 165,763 110,146 1,014,176 211,536
----------- ----------- ----------- -----------
OPERATING EXPENSES
Depreciation expense 14,408 8,590 43,224 50,969
General and
administrative 348,290 338,619 1,152,137 1,289,267
---------- ----------- ----------- -----------
Total Operating
Expenses 362,698 347,209 1,195,361 1,340,236
---------- ----------- ----------- -----------
OPERATING LOSS (196,935) (237,063) (181,185) (1,128,700)
---------- ----------- ----------- -----------
OTHER INCOME AND (EXPENSE)
Interest expense (32,404) (23,839) (167,738) (57,591)
Interest income 6 10 60 40
---------- ----------- ----------- -----------
Total Other Income
and (Expense) (32,398) (23,829) (167,678) (57,551)
---------- ----------- ----------- -----------
LOSS BEFORE
EXTRAORDINARY ITEM (229,333) (260,892) (348,863) (1,186,251)
Gain on settlement of debt - - 17,908 -
---------- ----------- ----------- -----------
NET LOSS $ (229,333) $ (260,892) $ (330,955)$(1,186,251)
========== =========== =========== ===========
BASIC LOSS PER SHARE
loss before
extraordinary item $ (0.01) $ (0.02) $ (0.02)$ (0.10)
Extraordinary item 0.00 - 0.00 -
---------- ----------- ----------- -----------
$ (0.01) $ (0.02) $ (0.02)$ (0.10)
========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
BASIC SHARES OUTSTANDING 15,492,717 12,536,425 15,056,075 12,540,586
========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
Deferred
Common Shares Consulting Accumulated
Shares Amount Fees Deficit
Balance, March 31, 2001 12,383,959 $ 21,247,795 $(173,066)$ (21,515,949)
Common stock issued for
conversion of debt at
$0.25 per share 100,000 25,000 - -
Common stock issued for
conversion of warrants
at $0.75 per share 67,025 50,269 - -
Stock offering costs - (49,599) - -
Common stock issued for
services at $0.75 per
share 6,000 4,500 - -
Common stock issued for
cash at $0.10 per share 250,000 25,000 - -
Warrants issued in
conjunction with private
placement memorandum at
$0.73 per warrant - 191,634 - -
Common stock issued for
services at $0.28 per
share 20,000 5,600 - -
Common stock issued for
services at $0.30 per
share 15,000 4,500 - -
Common stock issued as
consideration for notes
payable at $0.28 per share 20,000 5,600 - -
Common stock issued for
conversion of payable at
$0.63 per share 75,538 47,774 - -
Common stock issued as
consideration for notes
payable at $0.30 per share 15,000 4,500 - -
Common stock issued for
cash at $0.10 per share 250,000 25,000 - -
Common stock issued as
consideration for notes
payable at $0.14 per share 59,000 8,430 - -
Amortization of expenses
prepaid with common stock - - 145,722 -
Net loss for the year ended
March 31, 2002 - - - (1,560,348)
Balance, March 31, 2002 13,261,522 $21,596,003 $ (27,344) $(23,076,297)
The accompanying notes are an integral part of these consolidated financial
statements.
5
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)(Continued)
Deferred
Common Shares Consulting Accumulated
Shares Amount Fees Deficit
Balance, March 31, 2002 13,261,522 $21,596,003 $ (27,344) $(23,076,297)
Common stock issued for
conversion of accounts
payable at $0.08 per
share (unaudited) 50,000 4,250 - -
Common stock issued for
conversion of accounts
payable at $0.30 per
share (unaudited) 15,000 4,500 - -
Common stock issued for
conversion of accounts
payable at $0.07 per
share (unaudited) 248,417 17,389 - -
Common stock issued for
prepaid services at $0.05
per share (unaudited) 515,000 27,500 (27,500) -
Common stock issued for
prepaid services at $0.07
per share (unaudited) 100,000 7,000 (7,000) -
Common stock issued for
services at $0.07 per
share (unaudited) 157,500 11,025 - -
Cancelled common stock
previously issued for
services that had not been
performed (unaudited) (20,000) - - -
Common stock issued for
conversion of debt at $0.13
per share (unaudited) 204,000 27,541 - -
Common stock issued for
conversion of warrants at
$0.01 per share (unaudited) 9,808 98 - -
Common stock issued for
services at $0.16 per share
(unaudited) 100,800 16,128 - -
Common stock issued for
conversion of warrants at
$0.01 per share (unaudited) 10,500 105 - -
Common stock issued for
extension of debt, valued
at an average of $0.17 per
share (unaudited) 233,250 41,353 - -
Common stock issued for
services at $0.16 per
share (unaudited) 78,125 12,500 - -
Common stock issued for
prepaid servies at $0.17
Per share (unaudited) 203,000 34,510 (34,510) -
Balance Forward 15,166,922 $21,799,902 $ (96,354) $(23,076,297)
The accompanying notes are an integral part of these consolidated financial
statements.
6
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)(Continued)
Deferred
Common Shares Consulting Accumulated
Shares Amount Fees Deficit
Balance Forward 15,166,922 $21,799,902 $ (96,354) $(23,076,297)
Common stock issued for
services at $0.17 per share
(unaudited) 101,500 17,255 - -
Common stock issued for
conversion of accounts
payable at $0.07 per share
(unaudited) 181,289 11,888 - -
Common stock issued for
conversion of warrants at
$0.01 per share (unaudited) 49,465 495 - -
Amortization of deferred
consulting expense
(unaudited) - - 91,633 -
Net loss for the nine months
ended December 31, 2002
(unaudited) (330,955)
Balance, December 31,
2002 (unaudited) 15,499,176 $21,829,540 $ (4,721) $(23,407,252)
The accompanying notes are an integral part of these consolidated financial
statements.
7
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the
Nine Months Ended
December 31,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (330,955) $ (1,186,251)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation 43,224 50,969
Common stock issued for services 56,908 16,890
Expenses prepaid with common stock - 1,250
Common stock issued for debt extensions 41,353 -
Amortization of debt discount 24,654 -
Amortization of debt offering and extension
costs 45,365 -
Amortization of deferred consulting costs 91,633 161,347
Gain on extinguishment of debt (17,908) -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 273,372 (148,899)
(Increase) decrease in prepaid expenses (403) -
(Increase) in deposits (425)
Increase (decrease) in accounts payable and
accrued liabilities 194,174 257,384
Increase (decrease) in interest payable 10,204 13,494
Increase (decrease) in commitments and
contingencies - (1,938)
Increase (decrease) in unearned revenue (233,285) 248,823
--------- -----------
Net Cash Provided (Used) by Operating
Activities 197,911 (586,931)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets - (1,030)
---------- ----------
Net Cash (Used) by Investing Activities - (1,030)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in cash overdraft (33,126) (13,666)
Proceeds from related parties 27,000 50,000
Payments to related parties (20,000) (60,750)
Payments on notes payable (239,811) (64,786)
Payments on short term financing (234,990) -
Proceeds from notes payable 118,315 712,082
Proceeds from short term financing 234,990 -
Debt extension costs (52,033) -
Proceeds from common stock 698 670
---------- ----------
Net Cash Provided (Used) by Financing
Activities (198,957) 623,550
---------- ----------
INCREASE (DECREASE) IN CASH (1,046) 35,589
CASH AT BEGINNING OF PERIOD 1,046 4,654
---------- ----------
CASH AT END OF PERIOD $ - $ 40,243
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
8
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the
Nine Months Ended
December 31,
2002 2001
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for payment on notes payable
and interest $ 27,541 $ -
Common stock issued for services $ 56,908 $ 16,890
Common stock issued for payment on accounts
Payable $ 38,027 $ 69,025
Common stock issued for debt extensions $ 41,353 $ -
Expenses prepaid with common stock $ - $ 1,250
Cash Paid For:
Interest $ 74,231 $ 31,690
Income taxes $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
9
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2002 and March 31, 2002
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in accordance with such
rules and regulations. The information furnished in the interim
condensed consolidated financial statements include normal recurring
adjustments and reflects all adjustments, which, in the opinion of
management, are necessary for a fair presentation of such financial
statements. Although management believes the disclosures and
information presented are adequate to make the information not
misleading, it is suggested that these interim condensed consolidated
financial statements be read in conjunction with the Company's most
recent audited financial statements and notes thereto included in its
March 31, 2002 Annual Report on Form 10-KSB. Operating results for
the nine months ended December 31, 2002 are not necessarily
indicative of the results that may be expected for the year ending
March 31, 2003.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and liquidation
of liabilities in the normal course of business. However, the
Company does not have significant cash or other material assets, nor
does it have an established source of revenues sufficient to cover
its operating costs. Additionally, the Company has accumulated
significant losses, has negative working capital, and a deficit in
stockholders' equity. All of these items raise substantial doubt
about its ability to continue as a going concern. The Company has
expanded its product line to include four additional educational
labs, which they believe will boost future revenues. The Company
also intends to continue offerings of its common stock to raise the
capital necessary to cover operating costs not provided for by
current revenues. The ability of the Company to continue as a going
concern is dependent upon its ability to successfully accomplish the
plan described in the preceding paragraph and eventually attain
profitable operations. The accompanying consolidated financial
statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
NOTE 3 - DILUTIVE INSTRUMENTS
a. Stock Options
The Company applied Accounting Principles Board ("APB") Option 25,
"Accounting for Stock Issued to Employees," and related
interpretations in accounting for all stock option plans. Under APB
Option 25, compensation cost is recognized for stock options granted
to employees when the option price is less than the market price of
the underlying common stock on the date of grant.
10
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2002 and March 31, 2002
NOTE 3 - DILUTIVE INSTRUMENTS (Continued)
FASB Statement 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123"), requires the Company to provide pro forma information
regarding net income and net income per share as if compensation
costs for the Company's stock option plans and other stock awards had
been determined in accordance with the fair value based method
prescribed in SFAS No. 123. The Company estimates the fair value of
each stock award at the grant date by using the Black-Scholes option
pricing model with the following weighted average assumptions used
for grants, respectively; dividend yield of zero percent for all
years; expected volatility of 84% to 128% percent for all years;
risk-free interest rates of 3% to 6%, and expected lives of 3 to 10
years.
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
2002 2001 2002 2001
Net loss:
As reported $(229,333) $(260,892) $(330,955) $(1,186,251)
Pro Forma (229,333) (260,892) (485,078) (1,186,251)
Net loss per share:
As reported $ (0.01) $ (0.02) $ (0.02) $ (0.10)
Pro Forma (0.01) (0.02) (0.03) (0.10)
The Company has granted the following options as of December 31, 2002:
Date of Exercise Exercise Amount Amount
Description Grant Number Price Exercised Vested
----------- ------- -------- -------- --------- ------
1) Employee 2-05-00 50,000 $ 0.75 0 50,000
2) Officers/directors 4-20-00 600,000 $ 0.75 0 600,000
3) Employee 6-01-00 45,000 $ 0.75 0 45,000
4) Consultant 9-20-00 200,000 $ 0.50 0 200,000
5) Employees 9-01-00 200,000 $ 0.75 0 200,000
6) Director 10-01-00 200,000 $ 0.75 0 200,000
7) Employee 1-05-01 25,000 $ 0.75 0 25,000
8) Employee 6-15-01 25,000 $ 0.75 0 25,000
9) Employee 10-24-01 50,000 $ 0.30 0 50,000
10) Employee 12-1-01 24,230 $ 0.15 0 24,230
11) Board Members 12-10-01 1,000,000 $ 0.30 0 1,000,000
12) Board Members 6-03-02 1,000,000 $ 0.16 0 1,000,000
13) Employees 7-01-02 335,000 $ 0.16 0 0
14) Employees 7-15-02 15,000 $ 0.16 0 0
15) Employees 8-15-02 5,000 $ 0.16 0 0
--------- ---------
3,774,230 3,419,230
========= =========
11
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2002 and March 31, 2002
NOTE 3 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
Risk-Free
Fair Interest Expected Expected
Description Value Rate Life Volatility
----------- ----- --------- -------- ----------
1) Employee $ 0.46 6.05% 3 92.82%
2) Officers/directors $ 0.46 6.15% 3 91.32%
3) Employee $ 0.46 6.15% 3 92.82%
4) Consultant $ 0.42 6.15% 3 89.37%
5) Employees $ 0.52 6.21% 3 85.69%
6) Director $ 0.52 6.21% 3 84.39%
7) Employee $ 0.52 6.21% 3 84.39%
8) Employee $ 0.39 3.76% 3 76.69%
9) Employee $ 0.19 3.76% 3 100.52%
10) Employee $ 0.14 3.76% 3 99.80%
11) Board Members $ 0.20 5.69% 10 99.80%
12) Board Members $ 0.15 5.48% 10 128.91%
13) Employees $ 0.12 2.84% 2 157.77%
14) Employees $ 0.12 2.84% 2 152.96%
15) Employees $ 0.13 2.84% 2 163.78%
On April 20, 2000, the Company granted 600,000 options with a 3-year
life to officers and directors out of the 800,000 authorized on
January 19, 2000. On October 1, 2000, the Company granted the
remaining 150,000 3-year life options authorized to a director. All
of the option exercise prices are $0.75 per share with a fair value
determined by Black Scholes of $0.46 and $0.52, respectively.
On April 20, 2000, the Company authorized the granting of 400,000
options to employees and directors. On June 1, 2000, the Company
granted 45,000 options to an employee. On September 1, 2000, the
Company granted 200,000 options to four employees. On October 1,
2000, the Company granted 50,000 options to a director. On January
5, 2001, the Company granted 25,000 options to an employee. On March
31, 2001, the Company had not granted 80,000 options. Each option
granted has an exercise price of $0.75 per option and a 3-year life
with a fair value determined by Black Scholes of $0.46, $0.52, $0.52
and $0.52, respectively.
On September 22, 2000, the Company authorized the granting of
250,000 options to employees and directors of the Company with
exercise prices of $0.75 and a 3-year life. None of these options
have been granted.
On June 15, 2001, the Company granted 25,000 options to an employee.
These options had an exercise price of $ 0.75 per option and a 3-
year life with a fair value determined by Black Scholes of $0.39.
On December 1, 2001, the Company granted employees 24,230 3-year
life options. The options have an exercise price of $0.15 per
share. As the exercise price of the shares was less than the
trading price of the Company's common shares on the date of
issuance, the Company has recognized $1,696 of expense related to
these options.
12
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2002 and March 31, 2002
NOTE 3 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
On December 5, 2001, the Company's Board of Directors approved the
granting of 1,050,000 options to employees and board members. On
October 24, 2001, the Company granted 50,000 3-year life options to
an employee. On December 10, 2001, the Company granted 1,000,000
10-year life options to board members. Each option granted has an
exercise price of $0.30 and a fair value determined by Black Scholes
of $0.14 and $0.20, respectively.
On June 3, 2002, the Company's Board of Directors granted options to
purchase 1,000,000 shares of common stock to members of the Board of
Directors. Each option granted has an exercise price of $0.16, a 3-
year life and a Black Scholes fair value of $0.15.
On July 1, 2002, the Company granted employees 335,000 options. The
options have an exercise price of $0.16 per share and 93,000 vest on
June 15, 2003, 120,500 on June 15, 2004 and 121, 500 on June 15,
2005. These options expire on December 31, 2005. The Black Scholes
fair value of these options is $0.12 per share.
On July 15, 2002, the Company granted an employee 15,000 options.
The options have an exercise price of $0.16 per share and 5,000 vest
in July 15, 2003, 5,000 on July 15, 2004 and 5,000 on July 15, 2005.
These options expire on December 31, 2005. The Black Scholes fair
value of these options is $0.12 per share.
On August 15, 2002, the Company granted an employee 5,000 options.
The options have an exercise price of $0.16 per share and 1,000 vest
on August 15, 2003, 2,000 on August 15, 2004 and 2,000 on August 15,
2005. These options expire on December 31, 2005. The Black Scholes
fair value of these options is $0.13 per share.
b. Warrants
On April 27, 2000, three individuals were granted a total of 56,750
warrants which were converted into 31,750 shares of common stock.
The conversion rate was $0.675 per share and as such, no
compensation expense was recorded because the grant price exceeded
the market value. All remaining warrants have expired as of
December 31, 2002.
On September 15, 2000, the Company granted warrants allowing the
holders to purchase 342,831 shares of the Company's common stock.
The warrants were exercisable at a price of $0.01 per share for two
years. On September 15, 2000, 203,161 warrants were converted into
shares of common stock. The fair value of the warrants was $150,339
and was recorded as a stock offering cost, because the warrants were
issued to individuals who raised funds for the Company. As of
December 31, 2002, all of the remaining warrants have been issued or
have expired.
During the year ended March 31, 2002, the Company issued warrants
allowing the holders to purchase 263,607 shares of the Company's
common stock. The warrants were issued in conjunction with the
private placement memorandum and are exercisable at a price of $0.01
per share for two years. The fair value of the warrants, as
determined by Black Scholes, was $191,634, and was recorded as debt
discount. As of December 31, 2002, 69,773 of these warrants have
been exercised for $698, leaving 193,834 warrants still outstanding.
13
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2002 and March 31, 2002
NOTE 4 - MATERIAL EVENTS
Sales
On May 31, 2002, the Company completed the sale of twenty Academy of
Engineering Labs to a Michigan school district. The revenues
recognized related to this single transaction were $395,980, or 25%
of the Company's reported revenues for the nine months ended
December 31, 2002.
On June 17, 2002, the Company completed the sale of seven Academy of
Engineering Labs to a Georgia school district. The revenues
recognized related to this single transaction were $137,145, or 9%
of the Company's reported revenues for the nine months ended
December 31, 2002.
Extension of Debts
During the nine months ended December 31, 2002, the Company entered
into one year debt extension agreements with nearly all of the
individual owners of the 2001 debt offering units. The Company
successfully extended $527,500 of the total $602,500 outstanding
related to the debt offering. The terms of the agreements require
the Company to issue 500 shares of common stock and pay a 2% cash
extension fee for each $1,000 of debt extended. During the nine
months ended December 31, 2002, the Company capitalized $52,033 of
costs related to the extension and is amortizing those costs over
the life of the extension, or one year.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Commitments
On July 24, 2002, the Company entered into a consulting agreement
with a marketing firm to increase the profile of the Company and its
stock. Compensation for the services will be based upon the amount
of capital raised through sales of common stock.
On July 24, 2002, the Company signed a letter of intent with an
investment banking firm, whereby the investment banking firm would
use its best efforts to obtain commitments for various financing of
up to $10,000,000. Total compensation for these services will be
based on the amount of financing obtained. The Company paid a
$25,000 retainer upon execution of the final agreement in the form
of $12,500 and 78,125 shares of common stock valued at $0.16 per
share, or $12,500.
Contingencies
On July 11, 2002, the Company settled its dispute with Key Bank for
$20,000. The Company had previously recorded a liability for
$25,208 plus interest of $3,809. The difference, of $9,017, was
recognized as a gain on extinguishment of debt.
14
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 2002 and March 31, 2002
NOTE 6- SUBSEQUENT EVENTS
Stock Issuances
Subsequent to December 31, 2002, the Company has issued 243,125
shares of common stock valued at $23,097, in exchange for consulting
and marketing services.
15
Item 2. Management's Discussion and Analysis or Plan of Operation.
--------------------------------------------------------------------
Plan of Operation.
------------------
For the near-term, we have two objectives, which center around
corporate awareness and marketing our product lines. First, we are working
with several public relations firms to increase corporate, brand and product
awareness on a more national level. Our second objective involves the
continued marketing of our product lines. In addition to the launch of our
Brick Lab, Discover!Lab and our Academy of Engineering Jr. Lab last year, we
have also introduced our Academy of Robotics and our Young Learner Lab. All
have been met with favorable results in the marketplace. As it is our desire
to remain on the leading edge of project-based learning within the education
marketplace, we will continue to commit resources to product development and
improvement over the next year.
The notes to our financial statements for the quarterly period ended
December 31, 2002, indicate that there is substantial doubt about our ability
to continue as a "going concern," due to our lack of significant cash or other
material assets, our lack of an established source of revenue sufficient to
cover our operating costs and our accumulated losses, negative working capital
and deficit in stockholders' equity. Accordingly, the future outlook of our
Company, under present circumstances, is not assured.
Results of Operations.
----------------------
Three months ended December 31, 2002, compared to three months ended
December 31, 2001.
------------------
Revenues for the three month period ended December 31, 2002,
increased to $225,277 as compared to $170,544 for the three month period ended
December 31, 2001. Revenues increased due to increased lab sales over the
same period last year.
General and administrative costs have increased to $348,290 for the
three month period ended December 31, 2002, as compared to $338,619 for the
three month period ended December 31, 2001. The increase is primarily due to
increases in marketing and public relations expenses.
Interest expense for the three month period ended December 31, 2002,
increased to $32,404 as compared to $23,839 for the three month period ended
December 31, 2001.
We had a net loss of $(229,333) for the three months ended December
31, 2002, as compared to a net loss of $(260,892) for the quarterly period
ended December 31, 2001.
Nine months ended December 31, 2002, compared to nine months ended December
31, 2001.
---------
Revenues for the nine month period ended December 30, 2002, increased
to $1,592,214 as compared to $356,797 for the nine month period ended December
31, 2001. This increase in revenues is primarily due to a significant
increase in our first quarter revenues. See Footnote 4 "Sales" in the Notes
to our Consolidated Financial Statements for further details.
General and administrative costs have decreased to $1,152,137 for the
nine month period ended December 31, 2002, as compared to $1,289,267 for the
nine month period ended December 31, 2001. The decrease is due to lower
overall marketing and personnel costs, and the reduction of a debt-cost charge
for the same period in the prior year (i.e. $90,713 for the period ending
December 31, 2001, as compared to $8,930 for the period ending December 31,
2002.
Interest expense for the nine month period ended December 31, 2002,
increased to $167,738 as compared to $57,591 for the nine month period ended
December 31, 2001.
We had a net loss of $(330,955) for the nine months ended December
31, 2002, as compared to a net loss of $(1,186,251) for the nine months ended
December 31, 2001.
Liquidity and Capital Resources.
--------------------------------
We had no cash at December 31, 2002. Management believes that the
cash received from delivered sales orders as well as continued offerings of
common stock, will be sufficient to meet our operating expenses.
Item 3. Controls and Procedures.
----------------------------------
(a) Evaluation of Disclosure Controls and Procedures
PCS's Chief Executive Officer and Chief Financial Officer have evaluated
our Company's disclosure controls and procedures as of February 10, 2003, and
they have concluded that these controls and procedures are effective.
(b) Changes in Internal Controls
There are no significant changes in internal controls or in other factors
that could significantly affect these controls subsequent to February 10,
2003.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
----------------------------
On July 11, 2002, we settled our dispute with Key Bank for $20,000
and recognized the additional principal and accrued interest in the amount of
$9,017 as gain on extinguishment of debt.
Item 2. Changes in Securities and Use of Proceeds.
----------------------------------------------------
Sales of Unregistered Securities During the Last Quarter.
---------------------------------------------------------
Date Description Shares Amount
---- ----------- ------ ------
10/2 Common stock issued for conversion of
warrants at $0.01 per share 15,000 150.00
10/10 Common stock issued for conversion of
warrants at $0.01 per share 2,810 28.10
12/9 Common stock issued for conversion of
warrants at $0.01 per share 7,500 75.00
------
Total shares issued 25,310
------
Item 3. Defaults Upon Senior Securities.
------------------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
--------------------------------------------------------------
None; not applicable.
Item 5. Other Information.
----------------------------
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
-------------------------------------------
(a) Exhibits.
SB-2 Registration Statement Filed with an Effective Date of May 11, 2001*
* Incorporated by Reference.
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
PCS EDVENTURES.COM, INC.
Date: 2/11/03 By:/s/Anthony A. Maher
--------- -------------------------------------
Anthony A. Maher
Chief Executive Officer, President and
Chairman of the Board of Directors
Date: 2/11/03 By:/s/Christina M. Vaughn
--------- -------------------------------------
Christina M. Vaughn
Chief Financial Officer
Date: 2/12/03 By:/s/Roy M. Svee
--------- -------------------------------------
Roy M. Svee
Treasurer and Director
Date: 2/12/03 By:/s/Donald J. Farley
--------- -------------------------------------
Donald J. Farley
Secretary and Director
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony A. Maher, Chief Executive Officer of PCS Edventures!.com,
Inc., (the "Registrant"), certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of the
Registrant (the "Quarterly Report");
2. Based on my knowledge, this Quarterly 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 Quarterly Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Quarterly 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
Quarterly Report;
4. The Registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
have:
a) designed such disclosure controls and procedures 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
Quarterly Report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the "Evaluation Date"); and
c) presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's Board of Directors (or persons performing the
equivalent function);
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer and I have indicated in
this Quarterly Report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Dated: February 11, 2003 Signature:/s/Anthony A. Maher
Anthony A. Maher
Chief Executive Officer
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Christina M. Vaughn, Chief Financial Officer of PCS Edventures!.com,
Inc., (the "Registrant"), certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of the
Registrant (the "Quarterly Report");
2. Based on my knowledge, this Quarterly 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 Quarterly Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Quarterly 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
Quarterly Report;
4. The Registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
have:
a) designed such disclosure controls and procedures 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
Quarterly Report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Quarterly Report (the "Evaluation Date"); and
c) presented in this Quarterly Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors and the
audit committee of Registrant's Board of Directors (or persons performing the
equivalent function);
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer and I have indicated in
this Quarterly Report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
Dated: February 11, 2003 Signature:/s/Christina M. Vaughn
Christina M. Vaughn
Chief Financial Officer
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!.com, Inc. (the
"Registrant") on Form 10-QSB for the period ending December 31, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Quarterly
Report"), we, Anthony A. Maher, Chief Executive Officer and President, and
Christy Vaughn, Chief 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.
Dated: February 11, 2003 /s/ Anthony A. Maher
------------------ -----------------------------
Anthony A. Maher, Chief Executive
Officer and President
Dated: February 11, 2003 /s/ Christy Vaughn
------------------ -----------------------------
Christy Vaughn, Chief Financial
Officer