U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 333-53458
PCS EDVENTURES!.COM, INC.
(Name of Small Business Issuer in its Charter)
IDAHO 82-0475383
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
345 Bobwhite Court, Suite #200
Boise, Idaho 83706
(Address of Principal Executive Offices)
Issuer's Telephone Number: (208) 343-3110
1655 Fairview Ave. #100
Boise, Idaho 83702
(Former Name or Former Address, if changed since last Report)
Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered: None
Securities Registered under Section 12(g) of the Exchange Act:
No par value common stock
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this Form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year: March 31, 2003 -
$1,857,491.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of a specified
date within the past 60 days.
June 25, 2003 - $1,618,557.71. There are approximately 14,714,161 shares
of common voting stock of the Registrant beneficially owned by non-affiliates.
These computations are based upon the bid price for the common stock of the
Registrant on the OTC Bulletin Board of the National Association of Securities
Dealers, Inc. ("NASD") on June 25, 2003.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not Applicable.
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes No
--- ---
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
June 25, 2003
17,844,728
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Part III, Item I.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I
Item 1. Description of Business.
------------------------
Business Development.
---------------------
PCS (the "Company," "PCS," "we," "our, "us" or similar words)
was incorporated in 1994 in the State of Idaho. In October 1994, we
acquired PCS Schools, Inc. ("PCS Schools") as a wholly owned subsidiary. PCS
Schools had created an educational enrichment program that was delivered in
owner-operated, free standing Learning Centers. This program offered a unique
atmosphere highly conducive to individual styles of learning and a system that
utilized computer technology to increase areas of inquiry and application.
Subsequently, we changed our business plan and business strategy and in
connection with this change, we divested the Learning Centers developed by PCS
Schools and focused our efforts on creating web based educational systems
utilizing and improving PCS Schools legacy curriculum.
We issued certain notes in the aggregate amount of $602,500 payable in a
private offering to "accredited investors"; these notes bear interest at 8.00%
per annum, with payments being due from April 6, 2002, through August 29,
2002. This offering also provided for a debt discount related to warrants
that were issued to note holders in conjunction with the notes, amounting to
$191,634. This discount has been fully amortized as of March 31, 2003.
For a discussion of our business development for the years ended March
31, 2000 and 1999, see our 10-KSB Annual Report for the year ended March 31,
2001, which has been previously filed with the Securities and Exchange
Commission, and is incorporated herein by reference. See Item 13, Part III.
Business.
---------
We are engaged in the business of developing and marketing educational
related technologies and programs directed to the kindergarten through
12th grade after-school market. Our products and technologies are targeted to
both the classroom and home market. Our products and technologies are
delivered to the classroom through an inventory of hardware, software, books,
and Internet access. Our technologies and products are delivered to the home
user through Internet access to our subscription based website. Our products
and technologies allow students ages 3-18 to explore the basic foundations of
mechanical engineering, structures in architecture, and math and science.
We have developed seven innovative technology based educational
programs. Our "Academy of Engineering," "Academy of Robotics", "Edventures!
Lab", "Discover! Lab" products are site-license installations for classrooms
and learning programs. Our "Brick Lab!" and "Young Learner Building Box"
products are also for classrooms and learning programs, but are not licensed.
Our "Edventures! Online" product is our comprehensive Internet delivered
educational experience that supports our Edventures! Labs and our Discover!
Labs site licenses and also serves as a stand-alone home usage program. Our
"Edventures! Online" program is delivered to the home user over the Internet
on a monthly subscription basis. Separately, and in combination, these seven
products present a platform for delivering educational services and support to
classroom, learning center and home users, and create a virtual community of
learners and parents on the web. It is our business strategy that as this
online community grows, it will become an education portal through which
additional PCS programs and services can be marketed and delivered.
We have only commenced marketing efforts for our current products and
technologies during the last three years. We are attempting to expand
distribution and marketing arrangements channels. To date, we have sold only a
limited number of products related to our current product line.
Principal Products or Services and their Markets.
-------------------------------------------------
We have now developed and are currently marketing seven innovative
technology based educational programs for the kindergarten through 12th grade
("K-12") after-school market, learning center market and home market.
Separately, and in combination, these seven products present a platform for
delivering educational services and support, and create a virtual community of
learners and parents on the web. It is our intent that as this community
grows, it becomes an education portal through which additional PCS programs
and services can be deployed. The five technologies and products that we are
currently marketing, are as follows:
Our Academy of Engineering Lab is a site license program designed
for use within various K-12 environments. Using the Academy of
Engineering, students develop, design, and produce exciting hands-on
projects ranging from catapults to robots in response to engaging
challenges in a variety of topics. The current Academy of
Engineering product includes four books from the mechanical
engineering strand and 12 extension books covering a variety of
topics. Future topic strands for expanding the program include
structural, electrical and software engineering. Each strand, when
completed, includes courseware for over 272 hours of instruction.
The Academy of Engineering program includes a variety of LEGO
(Registered) products which are used as a mechanical engineering
learning aid. An Academy of Engineering site license currently
sells for between $15,000 and $19,500 and includes materials, LEGO
(Registered) manipulatives and other building components, and
curriculum, a custom designed storage and organization unit, a
digital camera, web-based support by our "Edventures! Online"
product and various electronic assessment tools, and two days of
teacher training. We sold 56 Academy of Engineering Labs during the
previous fiscal year. Each site license includes all materials
necessary to utilize the complete Academy of Engineering program.
The Academy of Robotics Lab serves as a complement to our Academy of
Engineering or can also serve as a stand alone robotics lab. The
Academy of Robotics Lab is available in a 10, 20, or 30 student
editions. Each Lab contains a comprehensive LEGO (Registered)
inventory including LEGO (Registered) Mindstorms kits, additional
LEGO (Registered) manipulatives, digital camera, web services, and
curriculum. This Lab ranges in price from $5995 to $17,985. We
sold 17 Academy of Robotics Labs during last fiscal year, which was
the inaugural year for this Lab.
Edventures! Lab is a site license system intended for students ages
7-13 which provides a broader set of subject areas including art,
programming, web page design, chess, physics, electricity, and
others. It contains curriculum, storage cabinet, and a smaller
inventory of LEGO (Registered) manipulatives. It relies on
"Edventures! Online" for delivery of the curriculum. A site license
for an Edventures! Lab currently costs $6,995 which includes a
60-student block license for access to "Edventures! Online." We
have sold 47 Edventures! Labs during the previous fiscal year.
Discover! Lab is a scaled down model of the Edventures! Lab site
license system intended for smaller groups of approximately 15
students. It contains curriculum, a storage cabinet and
other material, but has a reduced inventory of LEGO (Registered)
materials and relies on "Edventures! Online" for delivery of the
curriculum. A site license for a Discover! Lab currently costs
$2,499 which includes a 30-student block license for access to
"Edventures! Online". We have sold 67 Discover! Labs during the
previous fiscal year.
Edventures Brick Labs! provide an inexpensive hands-on learning
solution for educators in all types of teaching environments. The
Brick Lab! combines the "Edventures! Online" curriculum, LEGO
(Registered) manipulatives, storage bins and Internet/web services
for smaller groups of approximately 30 students. The Brick Lab!
sells for $499 and is not licensed. Introduced only two years ago,
we have sold 440 Brick Labs during the previous fiscal year.
The Young Learner Building Box was designed to meet the needs of
preschoolers. Introducing children to hands-on learning, this lab
utilizes activities and games to teach number and letter
recognition, build vocabulary, counting, and more. The Young
Learner Building Box includes activity cards, large-size plastic
building blocks, the exclusive "HIGHRISE" board game, developed by
PCS for this specific Lab, and a sturdy mobile storage container.
This labs sells for $249 and is unlicensed.
"Edventures! Online" is an Internet delivered program that provides
a safe, secure and exciting learning environment for students to
interact within from home and from school. "Edventures! Online"
includes online curriculum and assessment, filtered communication
tools, forums and a variety of additional online services. The
program utilizes Internet based resources and services as a stand-
alone product and also serves as an extension service to our
school-based Edventures! Lab. "Edventures Online" can be viewed on
the web at www.edventures.com. This environment features over 200
do-at-home projects organized into a sophisticated learning model
(Merit System), an animated glossary, monitored chat rooms, live
interaction with online instructors, personal email accounts for all
students and more. The "Edventures! Online" at-home curriculum
utilizes found materials, LEGO (Registered) products, software and
other resources to teach concepts in Physics, Electricity, Internet,
Programming, Art, Architecture, Engineering, and Robotics.
"Edventures! Online" provides all lab licensees an on-line support
tool and provides a framework within which students can safely
communicate, collaborate, and learn. "Edventures! Online" is also
available as a stand-alone, home based subscription product for
$69.95 per year.
The Academy of Engineering, Academy of Robotics, Edventures! Lab,
Discover! Lab, and Brick Lab! have three main delivery models, which makes
these products suitable for use in various learning environments:
School Resource Center. The Academy of Engineering, Academy of
Robotics, Edventures! Lab, and Discover! Labs are currently being
deployed as a school-wide resource center that allows K-12 teachers
to integrate hands-on project based learning activities into their
daily curriculum. As a resource center, these mobile Labs are
rolled from classroom to classroom throughout the course of a
typical school week, being used by the entire school. Examples of
how the program is used include: (1) a platform for gifted and
talented programs; (2) to enhance and extend a science curriculum;
(3) to enhance and extend mathematics activities; (4) to serve as a
foundation for an after-school program; (5) as a
vocational-technical or technology education program; (6) and to
serve as a special education resource. This model makes the program
an ideal resource for schools around the country that are seeking
innovative and organized methods for integrating technology and
hands-on learning in the classroom.
Pre-Engineering Course. The Academy of Engineering, Academy of
Robotics, and Edventures! Labs provide a comprehensive engineering
curriculum designed around the hands-on use of LEGO (Registered)
manipulatives. This curriculum allows the program to serve as the
foundation for pre-engineering courses suitable for students in
Jr./Sr. High. The hands-on applications of technology, design and
production techniques, and the integration of the Internet based
services, makes it a highly attractive total classroom solution.
After School Program. The Academy of Engineering, Academy of
Robotics, Edventures! Lab, Discover! Lab, and Brick Lab programs
were originally designed in an after-school environment and are
ideal to meet the expanding need for educational solutions for
school-based programs, Boys & Girls Clubs, YMCA, Community Learning
Centers and similar organizations. When used in this format, these
programs become a hub for educational activities out of the
engineering curriculum, or from the online Edventures! program. The
complete support, assessment and curriculum components provide a
system for offering a flexible, effective educational offering.
We believe that education programs of our type are not currently
available from any other source and present a unique opportunity for sales and
marketing to specific segments of the education industry. We believe that PCS'
education programs deliver a unique, proven learning experience that:
* provides students with exciting and relevant activities that
brings curriculum to life;
* develops essential critical thinking and problem-solving skills;
* prepares students for real-world career demands; and
* builds a strong foundation in technical literacy.
Markets.
--------
The educational market is a significant market in the United States but
is fragmented into various segments ranging from non-profit educational
programs to the public school system. We focus our sales and marketing
efforts on specific market segments in an integrated strategy that is intended
to build brand name awareness of our PCS products in schools, at home and
within the larger educational marketplace.
We believe that a major shift of focus is taking place in education in
our public and private schools as educators and parents seek to maximize
educational experiences for children based upon advances in technology. We
believe that this shift necessitates sweeping changes in how schools are
operated, programs are taught, technology is integrated, students are assessed
and classrooms are managed. Over the past few years, the emergence of a for-
profit education industry has begun to evolve in response to parents' and
society's demand for more and better alternatives in education. Parents are
giving their children's schools low grades for teaching performance and at
the same time there is an increase in public support for school choice. The
issue of education, including the public funding of private school vouchers is
significant. A school voucher program has also been recently upheld in a case
decided at the United States Supreme Court. These factors are driving the
growth of private and charter school alternatives.
Capitalizing on this atmosphere, private education based companies
specializing in after-school, tutoring, and special skills programs are
marketing programs, technologies, and products catering to teachers, students,
and parents. Parents support alternative education programs and enrichment
activities and actively seek them out for their children, as well as exert
more and more pressure on public schools to improve their performance. We
believe that with this change and unrest taking place within the education
industry, enormous opportunities are emerging for companies who understand the
problems and promise of technology and new educational methodologies. It is
our business strategy to, through our technologies and experience, develop and
market technology enhanced learning programs to address this education demand.
The Growth of the Extended Learning Market. Recent high-profile federal
programs indicate a growing opportunity within the extended learning market
which encompasses before, after, and summer school programs on the campus of
public schools, or operated through the venue of organizations like the Boys &
Girls Clubs of America. The web site, "www.afterschool.gov," summarizes many
of the federal funding sources now available for this growing market segment.
Congress has appropriated $993.5 million for afterschool programs in Fiscal
Year (FY) 2003.
PCS Designated Markets.
-----------------------
We have identified as our primary market for our labs traditional public
and private schools and the after-school programs that are growing quickly
across the United States. Widespread financial support for implementing
school-based after-school programs is driving the growth of public school
programs in this segment. The growth of programs such as those offered by the
Boys & Girls Clubs of America are further proof of the market need for this
product. As a niche market, after school programs, on and off the campus of
public schools (the Extended Learning Market), represent a potential market
for PCS products.
K-12 Market in International and U.S. We have entered into a sales
agency agreement and product alliance relationship with Pitsco LEGO
(Registered) Dacta, a Pittsburg, Kansas, based educational company that holds
the exclusive distribution rights to LEGO (Registered) Dacta product sales in
the United States. Pitsco, established in 1966, has established a market
presence and reputation in the school market place and now markets its own
line of modular school labs as well as hundreds of other hands-on type
products. The Academy of Engineering product complements the Pitsco existing
product line.
Boys & Girls Clubs. We are currently continuing our efforts to
distribute our labs into the Boys and Girls Clubs. To date, clubs have
evidenced a strong interest in our program due to an organization-wide mandate
to implement educational programs like the Academy of Engineering. The
funding cycle access to funds for these programs are a significant factor in
our ability to market the Academy of Engineering to Boys and Girls Clubs. We
currently have labs in over 20 of 3,300 Boys & Girls Clubs nationwide.
Extended Learning Market. In addition to the Boys & Girls Clubs of
America, additional non-school-based programs are increasing through such
institutions as the YMCA, Community Learning Centers, and other sites such as
Science Museums. PCS is currently working to establish reference sites in
each of these markets and will follow a strategy similar to the one it is
pursuing with the Boys & Girls Clubs of America. Progress to date in these
market segments include
Edventures! Online Markets.
-------------------------
Edventures! Online is designed to provide a full-featured educational
extension via the Internet to all students participating in PCS programs such
as the Academy of Engineering. However, for families and students who do not
have access to PCS Labs through a local site license, the program is available
on a subscription basis for $69.95 per year. PCS describes the primary market
for the current Edventures! Online product as families with children ages six
to 13 who have a strong interest in education. Edventures! Online has been
approved for state level funding for homeschool students in the states of
California and Alaska. PCS is currently developing a promotional effort that
will take advantage of this funding availability to promote the Edventures!
program to the thousands of homeschool families in these states.
Marketing and Other Agreements.
-------------------------------
Direct Sales Force. Currently, we have a direct sales force consisting
of three employees and several independent agents. This direct sales force
markets our products and programs in a variety of methods to various users,
providers and others.
LEGO (Registered) Dacta and Pitsco Agreement. We have entered into a
Marketing Agreement with LEGO (Registered) Dacta and Pitsco, LLC ("Pitsco")
for the sale of our "The Academy of Engineering" product. Pitsco is an
educational company that holds the exclusive distribution rights to LEGO
(Registered) Dacta product sales in the United States. Pitsco, established in
1966, has established significant market presence and reputation in the school
market place and now markets its own line of modular school labs as well as
hundreds of other hands-on type products.
Competition.
------------
Both the education marketplace and the Internet are highly competitive
and rapidly evolving fields, and are expected to continue to undergo
significant and rapid technological change. Other companies may develop
products and services and technologies superior to our products which may
result in our products and services becoming less competitive. We are aware
of several development stage and established enterprises, including major
telecommunications and computer software and technology companies, which are
exploring the fields of online educational products and services or are
actively engaged in research and development of products and services targeted
at these fields. Many of these companies have substantially greater financial,
manufacturing, marketing and technical resources than we have and represent
significant long-term competition. To the extent that these companies offer
comparable products and services at lower prices, or higher quality and more
cost effective, our business could be adversely affected.
Potential Competitive Advantages.
---------------------------------
We believe that we potentially have certain competitive advantages which
we will attempt to maximize in developing and effecting our business strategy.
These potential advantages include the following:
High barriers exist to entry. PCS' educational programs are innovative,
unique and based on ten years of experience and product development.
Barriers to entry for competitive products that are time tested are
extremely high. Early and significant market penetration will guarantee
a "first and best" name recognition for the types of educational services
that PCS will deliver.
Utilize the Internet as a delivery and support mechanism for the
programs. By leveraging our extensive expertise in Internet technology,
PCS achieves the following significant advantages: (1) a high level of
program control; (2) the building of a significant data model regarding
program usage; and (3) a direct channel to enrolled students who access
the program at home. Each of these advantages provides tangible long-
term benefits to the Company.
Expand program offerings and distribute them via established program
licensees. After implementing and proving a successful program model,
PCS will utilize its established network of licensees to distribute
additional programs designed to integrate seamlessly into the already
deployed sites. This creates a long-term growth strategy that includes
new and residual sales to an ever-growing list of existing licensees on
an annual basis.
Proliferate licensing of PCS programs by continuing to expand other
educational market segments. PCS recognizes that the public schools and
community organizations offering educational programs are the best
choice for rapid expansion and capturing market share and visibility.
Additional market segments will be attacked individually as PCS
demonstrates program viability, market by market. By taking a long term
strategic approach to market penetration, and maintaining a policy of
solid strategic alliances for distribution, each PCS educational program
will be an asset that will continue to generate growth and sales.
Sources and Availability of Raw Materials.
------------------------------------------
None, not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
----------------
We seek to protect our technology, documentation and other written
materials under trade secret and copyright laws, which afford only limited
protection. Generally, we enter into confidentiality and non-disclosure
agreements with our employees and with key vendors and suppliers. Currently
we use the following trade names: "PCS" (TM)"; "Academy of Learning";
"business"; and "Edventures". We intend to evaluate continually the
appropriateness of seeking registration of additional product names and
trademarks as they evolve.
At the present time, we have not applied for any patents, nor do we have
any patents pending. We anticipate that our products will not be the type for
which patent protection will be sought. However, we may file for patent
protection on certain aspects of our proprietary technology in the future.
Our present or future products may be found to infringe upon the
intellectual property rights of others. If our products were found to
infringe on intellectual property rights of others, our development and sale
of such products could be severely restricted or prohibited. In such
eventuality we would be required to obtain licenses to utilize such patents or
proprietary rights of others, for which acceptable terms may be unavailable.
If we were not able to obtain such licenses, the development or sale of
products requiring such licenses could be materially and adversely affected.
In addition, we could incur substantial costs in defending against challenges
to our patents or infringement claims made by third parties or in enforcing
any patents we may obtain.
Our PCS logo has been service/trade marked (#2213678) since December 29,
1998. Protection for this service/trademark is for a ten year period. We
applied for a service/trademark (application #75-845244) for "PCS
Edventures!.COM" on November 30, 1999, and for a service/trademark
(application #60-162284) for "Senior Driver" on October 28, 1999. We
anticipate that these applications will be granted in the near future. Once
granted, the protection is for a period of ten years.
Governmental Approval of Principal Products or Services.
--------------------------------------------------------
None, not applicable.
Effects of Existing or Probable Governmental Regulations.
---------------------------------------------------------
Small Business Issuer.
----------------------
The integrated disclosure system for small business issuers adopted by
the Securities and Exchange Commission in Release No. 34-30968 and effective
as of August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25 million; is a U.S. or Canadian issuer; is not an
investment company; and if a majority-owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25 million or more.
The Securities and Exchange Commission, state securities commissions
and the North American Securities Administrators Association, Inc. ("NASAA")
have expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets.
We are deemed to be a "small business issuer," and we have selected to
comply with the "small business issuer" disclosure requirements of Regulation
SB of the Securities and Exchange Commission.
"Penny Stock" Designation.
--------------------------
Our common stock is "penny stock" as defined in Rule 3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks:
* with a price of less than five dollars per share;
* that are not traded on a "recognized" national exchange;
* whose prices are not quoted on the NASDAQ automated quotation
system; or
* in issuers with net tangible assets less than $2,000,000, if the
issuer has been in continuous operation for at least three years, or
$5,000,000, if in continuous operation for less than three years, or with
average revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities
and Exchange Commission require broker/dealers dealing in penny stocks to
provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the
document before making any transaction in a penny stock for the investor's
account. You are urged to obtain and read this disclosure carefully before
purchasing any of our shares.
Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in these stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to:
* get information about the investor's financial situation,
investment experience and investment goals;
* reasonably determine, based on that information, that transactions
in penny stocks are suitable for the investor and that the investor can
evaluate the risks of penny stock transactions;
* provide the investor with a written statement setting forth the
basis on which the broker/dealer made his or her determination; and
* receive a signed and dated copy of the statement from the
investor, confirming that it accurately reflects the investor' financial
situation, investment experience and investment goals.
Compliance with these requirements may make it harder for our
stockholders to resell their shares.
Cost and Effect of Compliance with Environmental Laws.
------------------------------------------------------
None, not applicable.
Research and Development Expenses.
----------------------------------
We incurred no research and development expenses during the last fiscal
year due to a lack of funding. However, we believe that continued investment
in research and development will contribute to attaining our strategic
objectives and, as a result, expect research and development expenses to
increase in future periods.
Number of Employees.
--------------------
We employ approximately 10 full-time employees of which three are in
sales, five are in design and project management, one in accounting/finance
and one in administration. We will hire part-time and additional
full-time employees on an "as-needed" basis. None of our employees are
represented by a labor union. We believe that our relationship with our
employees is good.
Item 2. Description of Property.
------------------------
The Company leases its principal executive offices, at 345 Bobwhite
Court, Suite #200, Boise, Idaho 83706. These offices consist of approximately
5,412 square feet of office space. Rent obligations are $5,792/month
under a non-cancelable operating lease.
Item 3. Legal Proceedings.
------------------
Warren Black v. PCS.
--------------------
On January 18, 2002, Warren Black, a former independent contractor for
the Company, filed a complaint against the Company alleging breach of
contract. Mr. Black seeks the return of certain software products that he
claimed to have provided the Company during his employment, or their monetary
equivalent, which he claims to be $15,000. The Company settled this action in
February 2003. Per the terms of the settlement agreement, the Company agreed
to issue Mr. Black a $6,000 note in full satisfaction of his claim. The note
is payable in quarterly installments of $1,500 and accrues interest at 8.0%
per annum. No payments have been made as of March 31, 2003, but the amount
has been included in the Company's notes payable balance.
Key Bank v. PCS and Maher.
--------------------------
On March 26, 2002, Key Bank, filed a complaint against the Company
seeking recovery of $25,208 alleged to be owed by the Company on a promissory
note executed by the Company and guaranteed by Anthony A. Maher, the Company's
President and CEO. The Company settled this claim on June 18, 2003, in
exchange for $20,000 in cash. As of March 31, 2003, the settlement has been
paid-in-full, and the difference, of $8,308, has been recorded as a gain on
settlement of debt.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted to the Company's shareholders during the last
quarter of our current fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
Market Information.
-------------------
There has never been any "established trading market" for our shares of
common stock. Our common stock is presently quoted on the OTC Bulletin Board
of the NASD under the symbol "PCSV" as reflected below. No assurance can be
given that any market for our common stock will develop in the future or be
maintained. If an "established trading market" ever develops in the future,
the sale of "restricted securities" (common stock) pursuant to Rule 144 of the
Securities and Exchange Commission by members of management or others may have
a substantial adverse impact on any such market.
The range of high and low bid quotations for our common stock during
each quarter since they commenced trading in September, 2001, are shown below.
Prices are inter-dealer quotations as reported by the NQB, LLC, and do not
necessarily reflect transactions, retail markups, mark downs or commissions.
Stock Quotations
----------------
Quarter Ended High Low
------------- ---- ---
September 30, 2001 $0.60 $0.25
December 31, 2001 $0.28 $0.18
March 31, 2002 $0.25 $0.06
June 30, 2002 $0.19 $0.07
September 30, 2002 $0.20 $0.10
December 31, 2002 $0.15 $0.06
March 31, 2003 $0.10 $0.065
Recent Sales of Unregistered Securities.
----------------------------------------
During the last three years, PCS Edventures!.com, Inc. sold the
securities listed below in unregistered transactions. Each of the sales was
sold in reliance on the exemption provided for in Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). No underwriting
fee or other compensation was paid in connection with the issuance of shares
except as described in Footnote 1.
Name Date Shares Consideration
---- ---- Issued Paid in Dollars
------ ---------------
Gayle Anderson, Trustee 4/17/00 37,037 27,777.75
Scott and Michelle LaBear,
Jt Wros 4/17/00 22,222 16,666.50
Joseph R. Smith, IRA -
First Union Sec. 4/17/00 100,000 75,000
Equity Advisors
International 4/17/00 50,000 37,500
James R. Chapman 4/17/00 97,778 73,333.50
Technology Literacy Group,
Inc. 4/17/00 74,075 55,556.25
Cecil D. Andrus 4/17/00 123,333.40 (2)
James R. Gaul 4/28/00 74,074 50,000
Stewart I. Perim 4/28/00 21,111 14,250
Peter S. Richards 4/28/00 37,500 25,312.50
Shannon Soulsby 5/5/00 100,000 (1)
Trent G. Rencher 5/5/00 100,000 67,500
John E. Richards 5/5/00 37,500 25,312
Ritter Family Trust 6/2/00 10,000 6,750
Loretta I. Cook 6/12/00 1,000 (3)
Mark E. Stutzman 6/12/00 1,000 (3)
Thomas M. Tice 6/12/00 1,000 (3)
Symbion, Ltd. 6/12/00 9,000 (3)
Equity Advisors
International 6/12/00 6,666 (3)
Halverson, Ronald and
Valerie, Co-Trustees 6/12/00 40,000 30,000
International Capital
Group Ltd. 8/4/00 50,000 (4)
Douglas W. Miller 8/4/00 7,000 (3)
Dan Sevier 8/4/00 1,000 (3)
Allan J. Kupczak 9/15/00 66,667 50,000.25
Ryan Canning 9/15/00 8,000 6,000
Gene R. and Sara A.
Whitlow Family Trust 9/15/00 12,000 9,000
Robert F. and Betty C.
Mitchell 9/15/00 53,333 39,999.75
Kevin Denison 9/15/00 12,000 9,000
Mark E. Urness 9/15/00 33,333 24,999.75
Dwayne J. Denison 9/15/00 13,000 9,750
Evan Hathaway 9/15/00 72,000 54,000
Reed J. Bowen, Jr. 9/15/00 72,000 54,000
Kirk J. Moser 9/15/00 23,266 17,449.50
International Capital
Group Ltd. 9/15/00 5,000 (4)
Joseph R. Smith IRA -
First Union Sec. 9/15/00 50,000 37,500
Jerry H. Canning 9/15/00 8,000 6,000
Andrew Aeling fbo-First
Trust Corp. 9/15/00 6,667 5,000.25
Thomas K. and Liesbeth L.
Benedict 9/15/00 12,000 9,000
Mark S. Boland 9/15/00 12,000 9,000
Charles L. Bradley 9/15/00 16,000 12,000
Thomas S. Brower 9/15/00 4,000 3,000
Trevor Brown, Inc.
Pension Plan 9/15/00 12,000 9,000
Trevor Brown, Inc.
Pension Plan 9/15/00 6,667 5,000.25
John C. Bult Trust 9/15/00 6,000 4,500
Judy Conger Calder 9/15/00 2,000 1,500
Coghlan Family Corporation, John
R. Coghlan, President 9/15/00 30,000 22,500
Coogan Family Ltd. P/S,
John S. Coogan, Jr., Gen. 9/15/00 12,000 9,000
Carl S. Derwig 9/15/00 10,000 7,500
John Duda 9/15/00 50,000 37,500
Daniel T. Gluch 9/15/00 8,400 6,300
Thomas R. and Anita L. Gluch 9/15/00 4,000 3,000
Greeley Orthodontic Center
Profit Sharing 9/15/00 12,000 9,000
Walter Hinckfoot, Jr. Living Trust 9/15/00 14,000 10,500
Walter Hinckfoot, Jr. Living Trust 9/15/00 10,000 7,500
Donald Ingalls, Trustee 9/15/00 6,667 5,000.25
Jensen Orthodontic Center-Profit
Sharing 9/15/00 15,000 11,250
Jeffrey E. and Miriam M. Joyce 9/15/00 12,000 9,000
Kimball Family Trust 9/15/00 60,000 45,000
Geoffrey Kopecky 9/15/00 12,000 9,000
Armand LaSorsa fbo - First Trust
Corp. 9/15/00 8,000 6,000
Leon and Elba Manfredi 9/15/00 6,000 4,500
Mechling Family Trust 9/15/00 12,000 9,000
John Montfort 9/15/00 26,667 20,000.25
Norman R. Morris Living Trust 9/15/00 10,000 7,500
Robert G. Niederkom Irrevocable
Trust 9/15/00 20,000 15,000
Diana Nichols 9/15/00 13,333 9,999.75
Clifford Nichols fbo - First Trust
Co. 9/15/00 16,000 12,000
Dennis R. Shinn and Karen Brilland 9/15/00 12,000 9,000
Henry and Nellie M. Stuit Revocable
Trust 9/15/00 12,000 9,000
Diane Stump 9/15/00 6,000 4,500
Mike Vander Plaats fbo -
First Trust Co. 9/15/00 4,000 3,000
Robert Wegner fbo - First Trust Co. 9/15/00 16,000 12,000
Michael H. Yokoyama and Jaye S.
Venturi 9/15/00 12,000 9,000
Douglas W. Miller 10/16/00 4,948 (3)
Dan Sevier 10/16/00 1,057 (3)
Tom Donovan 10/16/00 4,000 (3)
Thomas E. Thompson 10/16/00 2,316 (3)
Symbion, Ltd. 10/16/00 5,133 (3)
Loretta I. Cook 10/16/00 500 (3)
Thomas M. Tice 10/16/00 567 (3)
Ryan Cravens 10/16/00 942 (3)
James Boston 10/16/00 537 (3)
John G. Ariko, Jr. Revocable
Living Trust 10/16/00 20,000 15,000
Richard K. and Polly L. Ball, Co-
Trustees 10/16/00 6,000 4,500
Marcella D. Barnhort, Trustee 10/16/00 12,000 9,000
Barr Asset Family Ltd. Partnership 10/16/00 3,000 2,250
Ron C. Berg 10/16/00 2,000 1,500
Alan and Leslie Berlinberg,
Trustees 10/16/00 6,667 5,000.25
Jeffrey T. Canning 10/16/00 4,000 3,000
Joseph L. Draskovich, First Trust
Corp. fbo 10/16/00 10,000 7,500
Robert L. and Connie T. Dye 10/16/00 12,000 9,000
Robert D. and Rita Y. Ervin, Co-
Trustees 10/16/00 12,000 9,000
David R. and Alice M. Evers 10/16/00 16,000 12,000
Todd Gluch 10/16/00 1,333.33 1,000
Josie Gluch 10/16/00 1,333.33 1,000
Tyra Gluch 10/16/00 1,333.33 1,000
D. Hall Investments, L.L.C. 10/16/00 8,000 6,000
Ronald and Valerie Halverson, Co-
Trustees 10/16/00 35,000 26,250
Frederick Z. Herr 10/16/00 30,000 22,500
Robert E. Hinman 10/16/00 3,000 2,250
Vance L. Kalcic 10/16/00 8,000 6,000
Charles Kovaleski, First Trust
Corp. fbo 10/16/00 10,000 7,500
Chuck Leal 10/16/00 7,000 5,250
Steven Levy 10/16/00 8,000 6,000
R.C. Luker Construction Defined
Benefit fbo 10/16/00 12,000 9,000
Leon and Elba Manfredi 10/16/00 4,000 3,000
Mechling Family Trust 10/16/00 4,000 3,000
Richard T. Press, First Trust
Corp. fbo 10/16/00 13,096 9,822
Ratliff Investments 10/16/00 10,000 7,500
Karen G. Reardon 10/16/00 5,000 3,750
Robert E. Rigert 10/16/00 5,000 3,750
Hazen A. and Joseph Sandwick
Revocable Trust 10/16/00 12,000 9,000
Annette Simons and Mark Sullivan 10/16/00 4,000 3,000
Stephen G. Smith 10/16/00 10,000 7,500
Swiss American, Inc. 10/16/00 67,000 50,250
Thomas E. Thompson 10/16/00 43,333 32,499.75
Bruce Unsworth, First Trust Corp.
fbo 10/16/00 12,000 9,000
John R. Ureel 10/16/00 12,000 9,000
Jerome T. Usails, First Trust
Corp. fbo 10/16/00 33,392 25,044
Mike Vander Plaats fbo - First
Trust Co. 10/16/00 2,666.67 2,000
Robert and Sally Veazey 10/16/00 4,000 3,000
Johnny Warren 10/16/00 4,000 3,000
Gary R. Weber, Trustee 10/16/00 6,000 4,500
Steve Womack 10/16/00 10,000 7,500
Daniel Andrzejek, First Trust Corp.
fbo 10/16/00 5,333.33 4,000
Don M. Barnes 10/16/00 6,000 4,500
Trace G. Barnes 10/16/00 6,000 4,500
Brian Dusseault, First Trust Corp.
fbo 10/16/00 3,600 2,700
Ralph M. and Rita J. Eisenmann,
Trustees 10/16/00 4,000 3,000
George R. Jarkesy, Jr. 10/16/00 6,700 5,025
Armand LaSorsa fbo - First
Trust Corp. 10/16/00 8,000 6,000
Fred L. Prevost 10/16/00 20,000 15,000
Allen Reuben, M.D. P.A. 10/16/00 6,000 4,500
Dan Sevier 10/16/00 4,000 3,000
Ilene Canning 10/16/00 4,000 3,000
Nathan Pugmire 10/16/00 20,000 15,000
Richard F. Schmidt 10/16/00 50,000 (4)
Loretta I. Cook 10/16/00 10,000 100
Steve Cook 10/16/00 505 5.05
Ryan Cravens 10/16/00 6,089 60.89
Lois C. Hull 10/16/00 1,405 14.05
Nerese S. Crayton 10/16/00 1,405 14.05
Randy P. Masciarelli 10/16/00 703 7.03
Douglas W. Miller 10/16/00 29,869 298.69
Mark Miller 10/16/00 3,000 30.00
Dan Sevier 10/16/00 35,670 356.70
Frank S. Mascari 10/16/00 500 5.00
Richard D. Simpson 10/16/00 2,810 28.10
Eric M. Tice 10/16/00 400 4.00
Lauren M. Tice 10/16/00 400 4.00
Thomas M. Tice 10/16/00 10,019 100.19
Symbion Ltd. 10/16/00 56,670 566.70
Thomas E. Thompson 10/16/00 16,653 166.53
Debbie A. Tice 10/16/00 703 7.03
Tammy Deboe 10/16/00 703 7.03
Mary DeMarco 10/16/00 703 7.03
Roy and Marian Svee, Co-Trustees 10/16/00 500,000 (5)
Anthony A. Maher 10/16/00 500,000 (5)
Donald J. Farley 10/16/00 500,000 (5)
George R. Jarkesy, Jr. 10/16/00 100,000 (4)
Nathan and Kristen Pugmire 11/2/00 37,037 27,777.75
Russell B. Geyser 11/2/00 50,000 (6)
Russell B. Geyser 11/2/00 50,000 (6)
Russell B. Geyser 11/2/00 30,000 (6)
Russell B. Geyser 11/2/00 30,000 (6)
Russell B. Geyser 11/2/00 15,000 (6)
Cliff Papik 11/2/00 10,000 (6)
Elaine Montemarano 11/2/00 10,000 (6)
Jeff Block 11/2/00 5,000 (6)
Art Beroff 11/2/00 100,000 (4)
Art Beroff, Custodian for David
Beroff 11/2/00 12,500 (4)
Art Beroff, Custodian for Ilana
Beroff 11/2/00 12,500 (4)
Frank S. Mascari 11/2/00 6,448 64.48
James Boston 11/8/00 3,015 30.15
George R. Jarkesy, Jr. 11/8/00 8,291 82.91
International Capital Group Ltd. 11/8/00 7,200 72.00
Brent Fox 12/20/00 22,222 15,000
Leonard W. Burningham 4/9/01 100,000 25,000(7)
Equity Advisors 5/29/01 60,000 600(8)
Mark Stutzman 5/29/01 7,025 70(8)
J. Jay Longwell 7/18/01 6,000 4,500(9)
Samuel R. Trozzo & Marilyn A. Trozzo
TTEES FBO Trozzo Family Trust 8/24/01 250,000 25,000(10)
Douglas Miller 10/11/01 1,000 280(11)
Tom Tice 10/11/01 1,000 280(11)
Mark Stuzman 10/11/01 1,000 280(11)
Lorie Cook 10/11/01 1,000 280(11)
Walt Miller 10/11/01 1,000 280(11)
Dan Sevier 10/11/01 7,500 2,100(11)
Tom Thompson 10/11/01 3,750 1,050(11)
Ryan Cravens 10/11/01 3,750 1,050(11)
LaRocco & Associates Inc. 10/11/01 15,000 4,500(12)
Tom Hay 10/11/01 10,000 2,800(13)
Charles Bradley 10/11/01 5,000 1,400(13)
Liesbeth Benedict 10/11/01 5,000 1,400(13)
Scott Peyron & Associates, Inc. 10/26/01 59,570 37,529(14)
Vern Nelson 10/26/01 15,968 10,060(14)
Tom Hay 12/31/01 15,000 4,500(15)
John Coghlan 2/6/02 250,000 25,000(10)
Thomas Hay 3/31/02 10,000 1,400(16)
Liesbeth Benedict 3/31/02 23,000 3,220(16)
Charles Bradley 3/31/02 26,000 3,640(17)
Larocco & Associates, Inc. 4/8/02 15,000 4,500(18)
Scott Peyron & Associates, Inc. 4/8/02 207,220 14,505(19)
Vern Nelson 4/8/02 41,197 2,884(19)
Charles Bradley 5/17/02 235,000 27,541(20)
Corporate Image Bureau 5/17/02 200,000 10,680
Larocco & Associates 5/17/02 100,000 7,000(21)
Equity Advisors, Inc. 5/17/02 50,000 4,250(22)
Tom Hay 5/17/02 15,000 0(23)
Liesbeth Benedict 5/17/02 28,000 (24)
Richard F. Schmidt 6/7/02 75,000 (25)
Thomas Thompson 6/7/02 97,500 (25)
David & Jama Fox 6/7/02 120,000 (25)
Wayne Demeester 6/7/02 22,500 (25)
Trent Rencher 6/7/02 150,000 (25)
International Capital Group Ltd. 6/20/02 108,300 (25)
Vern Nelson 9/3/02 8,680 569(26)
Scott Peyron & Associates 9/3/02 157,276 10,313(26)
Stewart Johnson 9/3/02 15,333 1,005(26)
Capital Growth Planning 9/3/02 46,650 8,271(27)
John G. Ariko, Jr. 9/3/02 6,000 1,064(27)
Don M. Earnes 9/3/02 2,000 355(27)
Mark A. Boland 9/3/02 2,800 496(27)
Charles L. Bradley 9/3/02 8,000 1,418(27)
Thomas S. Brower 9/3/02 2,000 355(27)
Trevor J. Brown & Annette Kowalski 9/3/02 8,000 1,418(27)
John C. Bult 9/3/02 8,000 1,418(27)
Carl S. Derwig 9/3/02 4,000 709(27)
Kathleen M Cullinan 9/3/02 2,000 355(27)
Emtay Corporation 9/3/02 2,000 355(27)
Robert D & Rita Y Ervin 9/3/02 8,000 1,418(27)
David & Alice Evers 9/3/02 4,000 709(27)
Robert J & Anne Fyfe 9/3/02 2,000 355(27)
Robert Graybill 9/3/02 6,000 1,064(27)
William & Linda Hamm 9/3/02 4,000 709(27)
Fred & Debbie Harper 9/3/02 4,000 709(27)
Thomas Hay 9/3/02 4,000 709(27)
George & Elizabeth Hibbs 9/3/02 4,000 709(27)
Donald R. Ingalls 9/3/02 2,000 355(27)
Verl A. Jensen 9/3/02 6,000 1,064(27)
Mary A. Kalcic 9/3/02 3,000 532(27)
Paul A. & Lynn Kalcic 9/3/02 1,400 248(27)
Kenneth & Jill Flint 9/3/02 2,000 355(27)
Kenneth P. Klauer 9/3/02 4,000 709(27)
David & Sue Kimball 9/3/02 4,000 709(27)
Paul Kuehn 9/3/02 2,000 355(27)
Armand Lasorsa 9/3/02 8,000 1,418(27)
Sina L. Leatha 9/3/02 8,000 1,418(27)
David C. Levosky 9/3/02 4,600 816(27)
Ralph S. Long 9/3/02 4,000 709(27)
Donald & Nancy Lorenzen 9/3/02 2,000 355(27)
Johnnie & June Baker Louderback 9/3/02 2,000 355(27)
Norman R. Morris 9/3/02 4,000 709(27)
Bruno & Joan Nordberg 9/3/02 2,000 355(27)
Hazen A. & Josephine Sandwick 9/3/02 4,000 709(27)
Ronald Scheeler 9/3/02 2,000 355(27)
Darren Shetler 9/3/02 4,000 709(27)
Vincent Simon 9/3/02 4,000 709(27)
Diana Gayle Smith 9/3/02 4,800 851(27)
Frederick R. Stahl Jr. 9/3/02 4,000 709(27)
Steve Womack 9/3/02 4,000 709(27)
Nelson Wooster 9/3/02 4,000 709(27)
Michael H Yokoyama & Jaye Venturi 9/3/02 4,000 709(27)
Robert Ritter 9/3/02 4,000 709(27)
John R. Coghlan 9/3/02 4,000 709(27)
Johnnie I & June Louderback 9/3/02 4,000 709(27)
Waterford Financial Inc. 9/3/02 78,125 12,500(28)
Bernhard Schmitt 1/16/03 304,500 51,765(29)
Larocco & Associates 1/23/03 90,000 8,550(30)
Edward G Clark 2/3/03 39,063 3,711(31)
Cindra L. Andolshek 2/3/03 39,062 3,711(31)
Rick Schmidt 2/3/03 75,000 7,125(31)
The Ritter Family Trust 2/5/03 150,000 15,000(32)
Nelson Wooster 2/5/03 80,000 8,000(32)
John C. Bult Trust 2/5/03 400,000 40,000(32)
Lorentzen Family Trust 2/5/03 20,000 2,000(32)
Ralph S. & Vera Long Living Trust 2/5/03 20,000 2,000(32)
Marketshare Recovery, Inc. 2/19/03 130,000 12,350(33)
Armand LaSorsa 6/24/03 200,000 20,000(34)
Carl S. Derwig 6/24/03 200,000 20,000(34)
Vincent Simon 6/24/03 100,000 10,000(34)
Robert Graybill 6/24/03 150,000 15,000(34)
David R. & Alice M. Evers 6/24/03 100,000 10,000(34)
Robert D. & Rita Y. Ervin 6/24/03 200,000 20,000(34)
Trevor J. Brown & Annette Kowalaski 6/24/03 100,000 10,000(34)
Mark S. Borland 6/24/03 30,000 3,000(34)
Jim & Kathleen M. Cullinan 6/24/03 10,000 1,000(34)
Norman R. Morris 6/24/03 100,000 10,000(34)
Frederick R. Stahl, Jr. 6/24/03 100,000 10,000(34)
(1) These shares of common stock were issued to employees for services at
the rate of $5.00 per share.
(2) These shares of common stock were issued to members of the Board of
Directors at the rate of $0.25 per share.
(3) These shares of common stock were issued to employees of Capital Growth
for commissions at the rate of $0.75 per share.
(4) These shares of common stock were issued as a result of several
consulting agreements with rates ranging from $0.25 per share to $0.75
per share.
(5) These shares of common stock were issued to members of the Board of
Directors for services at the rate of $0.25 per share.
(6) These shares of common stock were issued for the purchase of the assets
of Senior Driver at the rate of $0.25 per share.
(7) These shares of common stock were issued for conversion of debt at $0.25
per share.
(8) These shares of common stock were issued for conversion of warrants at
$0.75 per share.
(9) These shares of common stock were issued for services at $0.75 per share.
(10) These shares of common stock were issued for cash at $0.10 per share.
(11) These shares of common stock were issued for services at $0.28 per
share.
(12) These shares of common stock were issued for services at $0.30 per share.
(13) These shares of common stock were issued as consideration for notes
payable at $0.28 per share.
(14) These shares of common stock were issued for conversion of payable at
$0.63 per share.
(15) These shares of common stock were issued as consideration for notes
payable at $0.30 per share.
(16) These shares of common stock were issued as considerations for notes
payable at $0.14 per share.
(17) These shares of common stock were issued as interest for notes payable at
$0.14 per share.
(18) These shares of common stock were issued for conversion of accounts
payable at $0.30 per share.
(19) These shares of common stock were issued for conversion of accounts
payable at $0.07 per share.
(20) These shares of common stock were issued for conversion of debt at $0.13
per share.
(21) These shares of common stock were issued for prepaid services at $0.07
per share.
(22) These shares of common stock were issued for accounts payable at $.08
per share.
(23) These shares of common stock are incentive shares for extension of Hay's
note payable.
(24) These shares of common stock were issued in exchange for cash for
PCS/Benedict given note payable.
(25) These shares of common stock were issued to these individuals on a 1.5:1
ratio in exchange for these individuals transferring their free-trading
shares to Corporate Image Bureau as part of Corp.IM's marketing contract.
(26) These shares of common stock were issued for conversion of accounts
payable at $0.07 per share.
(27) These shares of common stock were issued for extension of debt, valued at
an average of $0.17 per share.
(28) These shares of common stock were issued for services at $.16 per share.
(29) These shares of common stock were issued for prepaid services at $0.17
per share.
(30) These shares of common stock were issued for services at $0.095 per
share.
(31) These shares of common stock were issued for services at $0.095 per
share.
(32) These shares of common stock were issued for cash at $0.10 per share.
(33) These shares of common stock were issued for services at $0.095 per
share.
(34) These shares of common stock were issued for conversion of debt at $0.10
per share.
Holders.
--------
As of June 25, 2003, there were 17,844,728 shares of common stock
outstanding and approximately 443 stockholders of record.
Dividends.
----------
We have not paid any cash dividends since our inception and do not
anticipate or contemplate paying dividends in the foreseeable future. It is
the present intention of management to utilize all available funds for the
development of our business.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Results of Operation.
---------------------
Results and Comparison for Fiscal Years
Fiscal year ended March 31, 2003 resulted in a net loss of ($454,163).
This net loss is a decrease of ($1,106,185), or 71%, from the net loss for
fiscal year 2002 of ($1,560,348). The Basic Loss per Share for fiscal year
2003 is ($0.03), as compared to a loss per share of ($0.12) for fiscal year
2002. Details of changes in revenues and expenses can be found below.
Revenues
Revenues of $1,857,491 for fiscal year 2003 were up from revenues of
$572,356 for fiscal year 2002 by $1,285,135, or 225%. This increase is due to
increased marketing and promotion efforts as well as the introduction of two
additional lab products during this previous fiscal year.
Cost of Goods Sold/Cost of Sales
Cost of Goods Sold increased $419,394, or 183%, from fiscal year 2002,
$228,807, to fiscal year 2003, $648,201. This increase is due primarily to
increase sales as previously mentioned.
Operating Expenses
Operating expenses decreased by $97,092, or 6%, from fiscal year
2002, when operating expenses were $1,557,542 to fiscal year 2003 when
operating expenses were $1,460,450. This decrease is due cost containment
strategies, most notably temporarily eliminating research and development
costs and also cutting our workforce by 40%, or 8 people.
Liquidity.
----------
As of the fiscal year ended March 31, 2003, the Company had $11,449 in
Cash, with total current assets of $493,849 and total current liabilities of
$1,963,322. The Company has a stockholders' deficit of ($1,469,473).
Item 7. Financial Statements.
---------------------
Consolidated Financial Statements for the years ended
March 31, 2003 and 2002
Independent Auditors Report
Consolidated Balance Sheet - March 31, 2003
Consolidated Statements of Operations for the
years ended March 31, 2003 and 2002
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
for the Years Ended March 31, 2003 and 2002
Notes to Financial Statements
PCS EDVENTURES!.COM, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2003
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations. . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Stockholders' Equity (Deficit). . . . . . . . 7
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . . 9
Notes to the Consolidated Financial Statements . . . . . . . . . . . . 11
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
PCS Edventures!.COM, Inc. and Subsidiary
Boise, Idaho
We have audited the accompanying consolidated balance sheet of PCS
Edventures!.COM, Inc. and Subsidiary, as of March 31, 2003 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years ended March 31, 2003 and 2002. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of PCS Edventures!.COM, Inc. and Subsidiary, as of March 31, 2003 and the
consolidated results of their operations and their cash flows for the years
ended March 31, 2003 and 2002 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the company will continue as a going concern. As discussed in Note 9 to
the consolidated financial statements, the Company has accumulated significant
losses, has negative working capital and deficit in stockholders' equity, all
of which raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 9. The consolidated financial statements do not include any adjustments
that might result from the outcome of the uncertainty.
/S/HJ & Associates
HJ & Associates, LLC
Salt Lake City, Utah
June 26, 2003
F-3
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheet
ASSETS
March 31,
2003
CURRENT ASSETS
Cash $ 11,449
Accounts receivable 345,333
Inventory 2,073
Deferred costs (Note 2) 103,662
Debt extension costs, net (Note 2) 5,460
---------
Total Current Assets 467,977
---------
FIXED ASSETS, NET (Note 3) 25,447
---------
OTHER ASSETS
Deposits 425
---------
Total Other Assets 425
---------
TOTAL ASSETS $ 493,849
=========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31,
2003
CURRENT LIABILITIES
Bank overdraft $ 8,053
Accounts payable 109,742
Wages payable 30,603
Payroll taxes payable 233,331
Accrued interest 55,035
Accrued expenses 215,328
Unearned revenue (Note 2) 382,489
Notes payable - related parties (Note 5) 165,882
Notes payable (Note 6) 762,859
-----------
Total Current Liabilities 1,963,322
-----------
Total Liabilities 1,963,322
-----------
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value, authorized 50,000,000
shares; 17,832,301 shares issued and outstanding 22,060,987
Accumulated deficit (23,530,460)
------------
Total Stockholders' Equity (Deficit) (1,469,473)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 493,849
============
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Operations
For the Years Ended
March 31,
2003 2002
REVENUES
Lab Revenue $1,691,325 $ 494,727
License Revenue 151,254 55,699
Subscription Revenue 14,912 21,930
---------- ----------
Total Revenues $1,857,491 $ 572,356
---------- ----------
COST OF GOODS SOLD 648,201 228,807
---------- ----------
GROSS PROFIT 1,209,290 343,549
---------- ----------
OPERATING EXPENSES
Salaries and wages 597,617 606,405
Depreciation expense 57,632 82,832
General and administrative 805,201 868,305
---------- ----------
Total Operating Expenses 1,460,450 1,557,542
---------- ----------
OPERATING LOSS (251,160) (1,213,993)
OTHER INCOME AND EXPENSES
Interest expense (219,194) (346,355)
Interest income 63 -
Gain on settlement of debt (Note 7) 16,128 -
---------- ----------
Total Other Income and Expenses (203,003) (346,355)
---------- ----------
NET LOSS $ (454,163) $(1,560,348)
========== ==========
BASIC LOSS PER SHARE (Note 1) $ (0.03) $ (0.12)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 15,284,032 12,763,365
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit)
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.
F-7
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 50,000 4,250 - -
Common stock issued for
conversion of accounts
payable at $0.30 per share 15,000 4,500 - -
Common stock issued for
conversion of accounts
payable at $0.07 per share 248,417 17,389 - -
Common stock issued for
prepaid services at $0.05
per share 515,000 27,500 (27,500) -
Common stock issued for
prepaid services at $0.07
per share 100,000 7,000 (7,000) -
Common stock issued for
services at $0.07 per share 157,500 11,025 - -
Cancelled common stock
previously issued for
services that had not been
performed (20,000) - - -
Common stock issued for
conversion of debt at $0.13
per share 204,000 27,541 - -
Common stock issued for
conversion of warrants at
$0.01 per share 9,808 98 - -
Common stock issued for
services at $0.16 per share 100,800 16,128 - -
Common stock issued for
conversion of warrants at
$0.01 per share 10,500 105 - -
Common stock issued for
extension of debt, valued
at an average of $0.17 per
share 233,250 41,353 - -
Common stock issued for
services at $0.16 per share 78,125 12,500 - -
Common stock issued for
conversion of warrants at $0.01
per share 13,055 131 - -
---------- ----------- --------- ------------
Balance Forward 14,976,977 $21,765,523 $ (61,844)$(23,076,297)
---------- ----------- --------- ------------
The accompanying notes are an integral part of these consolidated financial
statements.
F-8
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Deferred
Common Shares Consulting Accumulated
Shares Amount Fees Deficit
Balance Forward 14,976,977 $21,765,523 $ (61,844)$(23,076,297)
Common stock issued for
conversion of warrants at
$0.01 per share 10,500 105 - -
Common stock issued for
prepaid services at $0.17
Per share 304,500 51,765 (51,765) -
Common stock issued for
conversion of accounts payable
at $0.07 per share 181,289 11,888 - -
Common stock issued for
services at $0.095 per share 90,000 8,550 - -
Common stock issued for
services at $0.095 per share 153,125 14,547 - -
Common stock issued for
services at $0.095 per share 130,000 12,350 - -
Common stock issued for
conversion of debt at $0.10
per share 1,290,000 129,000 - -
Common stock issued for
cash at $0.10 per share 670,000 67,000 - -
Common stock issued for
conversion of warrants at
$0.01 per share 25,910 259 - -
Amortization of deferred
consulting expense - - 113,609 -
Net loss for the year ended
March 31, 2003 - - - (454,163)
---------- ----------- --------- ------------
Balance, March 31, 2003 17,832,301 $22,060,987 $ - $(23,530,460)
========== =========== ========= ============
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended
March 31,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (454,163) $(1,560,348)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 57,632 82,832
Amortization of debt offering and extension costs 58,195 79,092
Amortization of debt discount 24,654 166,980
Amortization of expenses prepaid with common
stock 113,609 145,722
Common stock issued for services 75,100 33,130
Gain on settlement of debt (16,128) -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 9,671 (330,783)
(Increase) in prepaid expenses (103,662) -
(Increase) in inventories (2,073) -
Decrease in deposits 6,575 -
Increase in accounts payable and
accrued liabilities 81,916 328,975
Increase in interest payable 11,652 36,729
(Decrease) in commitments and contingencies - (1,938)
Increase (decrease) in unearned revenue (14,526) 367,230
--------- ----------
Net Cash Used by Operating Activities (151,548) (652,379)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets - (1,031)
--------- ----------
Net Cash Used by Investing Activities - (1,031)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in cash overdraft (36,669) 9,426
Proceeds from related party notes 27,000 89,500
Payments to related party notes (20,000) (60,750)
Proceeds from notes payable 680,866 717,500
Payments on notes payable (546,263) (65,831)
Debt offering and extension costs (52,034) (90,713)
Proceeds from sales of common stock 109,051 50,670
--------- ----------
Net Cash Provided by Financing Activities 161,951 649,802
--------- ----------
INCREASE (DECREASE) IN CASH 10,403 (3,608)
CASH AT BEGINNING OF YEAR 1,046 4,654
--------- ----------
CASH AT END OF YEAR $ 11,449 $ 1,046
========= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-10
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
For the Years Ended
March 31,
2003 2002
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for payment on notes payable
and interest $ 156,541 $ -
Common stock issued for services $ 75,100 $ 33,130
Common stock issued as consideration for notes
payable $ - $ 18,530
Common stock issued for conversion of accounts
payable $ 38,027 $ 72,774
Cash Paid For:
Interest $ 94,057 $ 2,145
Income taxes $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
F-11
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The consolidated financial statements presented are those of PCS
Edventures!.COM, Inc., an Idaho Corporation, and its wholly-owned
subsidiary, PCS Schools, Inc., an Idaho corporation (collectively, "the
Company").
On August 3, 1994, PCS Edventures!.COM, Inc., was incorporated under the
laws of Idaho to engage in web-based and site-licensable educational
products.
In October 1994, an agreement was authorized allowing the Company to
exchange, on a one-for-one basis, common stock for stock of PCS Schools,
Inc. As a result of this agreement, PCS Schools, Inc., became a wholly-
owned subsidiary of the Company.
On March 27, 2000, the Company changed its name from PCS Education
Systems, Inc. to PCS Edventures!.COM, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's consolidated financial statements are prepared using the
accrual method of accounting. The Company has elected a March 31 year
end.
b. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
c. Revenue Recognition
The Company recognizes revenues as required by Staff Accounting Bulletin
No. 101 "Revenue Recognition in Financial Statements".
Lab Revenue
The Company recognizes revenues relating to sales of the Academy of
Engineering (AOE) and Edventures! labs as they are delivered to the
customers. Binding purchase orders, typically from school districts,
are recorded upon receipt as accounts receivable, with an offsetting
amount recorded as unearned revenue. Revenue is only recognized once
the product has been delivered to the customer and all other
obligations have been met. All product inventory is purchased on a
sale-by-sale basis, and is shipped directly from third-party
suppliers to the end
F-12
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
b. Revenue Recognition (Continued)
Lab Revenue (Continued)
customer. Accordingly, all costs associated with the purchase of
product inventory are also deferred until the product is delivered.
As of March 31, 2003, the Company has recorded unearned revenues and
deferred costs of $382,489 and $103,662, respectively.
Licensing Revenue
The Company recognizes revenues relating to the AOE lab and the
Edventures! lab site licenses over the 1-year term of the license
beginning when the physical lab equipment and the license has been
delivered. Subsequent sales of AOE or Edventures! lab licenses are
recorded on the sale of the license and recognized over a 1 year time
period to revenue. Each lab license is for a period of 1 year from
the date of the renewal.
Subscription Revenue
The Company recognizes revenues relating to the subscriptions sold to
their edventures.com website on a monthly basis. Revenues relating
to other activities such as education services delivered are
recognized when the services are rendered. If a customer decides to
discontinue the use of the products, the customer must return all of
the information received except for the physical lab equipment.
Additionally, the customer will not have access to the license when
the contract is terminated. The Company does not have an obligation
to refund any portion of the proceeds received for either the sale of
the AOE lab license or the subsequent renewals of the licenses.
d. Reclassification
Certain prior year balances have been reclassified to conform with
the current year presentation.
e. Provision for Income Taxes
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely that not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
F-13
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Provision for Income Taxes (Continued)
Net deferred tax assets consist of the following components as of
March 31, 2003, and 2002:
2003 2002
----------- -----------
Deferred tax assets:
NOL Carryover $ 3,012,800 $ 2,791,595
Deferred tax liabilities: - -
Valuation allowance (3,012,800) (2,791,595)
----------- -----------
Net deferred tax asset $ - $ -
=========== ===========
The income tax provision differs from the amount of income tax
determined by applying the U.S. federal income tax rate of 39% to
pretax income from continuing operations for the years ended March
31, 2003 and 2002 due to the following:
2003 2002
----------- ------------
Book loss $ (177,124)$ (433,711)
Stock for services/options expense 73,596 -
Penalties 10,716 -
Other 12,797 -
Valuation allowance 80,015 433,711
----------- ------------
$ - $ -
=========== ============
At March 31, 2003, the Company had net operating loss carryforwards
of approximately $7,725,000 that may be offset against future taxable
income from the year 2003 through 2023. No tax benefit has been
reported in the March 31, 2003 consolidated financial statements
since the potential tax benefit is offset by a valuation allowance of
the same amount.
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax
reporting purposes are subject to annual limitations. Should a
change in ownership occur, net operating loss carryforwards may be
limited as to use in future years.
F-14
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f. Debt Offering Costs
Debt offering costs are related to private placements in 2001, and
are being amortized on a straight line basis over the term of the
related debt. Amortization expense related to these costs was
$11,622 and $79,092 in 2003, and 2002, respectively. These costs
have been fully amortized as of March 31, 2003.
g. Debt Extension Costs
As the 2001 private placement units came due, the Company entered
into debt extension agreements with most of the individual debt
holders. Per the terms of the extension agreements, each unit, of
$1,000 each, would be extended for one year in exchange for 500
shares of common stock. In total, 233,250 shares of common stock,
valued at $41,353, were issued to extend $491,500 of debt. The
Company also incurred administrative fees of $9,830 related to the
extensions. The combined value of the common stock and
administrative fees has been capitalized and amortized over the term
of the one-year extensions. During the year ended March 31, 2003,
the Company has amortized $46,573.
h. Basic Loss Per Share
The computation of basic loss per share of common stock is based on
the weighted average number of shares outstanding during the period
of the financial statements. Diluted loss per share is equal to
basic loss per share as the result of the antidilutive nature of the
stock equivalents. The Company has excluded 3,940,082 potential
common stock equivalents from the calculation of basic loss per
share.
For the Years Ended
March 31,
2003 2002
Basic loss per share from operations:
Numerator - loss $(454,163)$(1,560,348)
Denominator - weighted average number
of shares outstanding 15,284,032 12,763,365
---------- ----------
Loss per share $ (0.03) $ (0.12)
========== ==========
F-15
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Newly Issued Accounting Pronouncements
SFAS No. 145 -- On April 30, 2002, the FASB issued FASB Statement
No. 145 (SFAS 145), "Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS 145 rescinds both FASB Statement No. 4 (SFAS 4), "Reporting
Gains and Losses from Extinguishment of Debt," and the amendment to
SFAS 4, FASB Statement No. 64 (SFAS 64), "Extinguishments of Debt
Made to Satisfy Sinking-Fund Requirements." Through this
rescission, SFAS 145 eliminates the requirement (in both SFAS 4 and
SFAS 64) that gains and losses from the extinguishment of debt be
aggregated and, if material, classified as an extraordinary item,
net of the related income tax effect. However, an entity is not
prohibited from classifying such gains and losses as extraordinary
items, so long as it meets the criteria in paragraph 20 of
Accounting Principles Board Opinion No. 30, Reporting the Results of
Operations Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. Further, SFAS 145 amends paragraph 14(a)
of FASB Statement No. 13, "Accounting for Leases", to eliminate an
inconsistency between the accounting for sale-leaseback transactions
and certain lease modifications that have economic effects that are
similar to sale-leaseback transactions. The amendment requires that
a lease modification (1) results in recognition of the gain or loss
in the 9 financial statements, (2) is subject to FASB Statement No.
66, "Accounting for Sales of Real Estate," if the leased asset is
real estate (including integral equipment), and (3) is subject (in
its entirety) to the sale-leaseback rules of FASB Statement No. 98,
"Accounting for Leases: Sale-Leaseback Transactions Involving Real
Estate, Sales-Type Leases of Real Estate, Definition of the Lease
Term, and Initial Direct Costs of Direct Financing Leases."
Generally, FAS 145 is effective for transactions occurring after May
15, 2002. The Company does not expect that the adoption of SFAS 145
will have a material effect on its financial performance or results
of operations.
SFAS No. 146 -- In June 2002, the FASB issued SFAS No. 146,
"Accounting for Exit or Disposal Activities" (SFAS 146). SFAS 146
addresses significant issues regarding the recognition, measurement,
and reporting of costs that are associated with exit and disposal
activities, including restructuring activities that are currently
accounted for under EITF No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The scope of
SFAS 146 also includes costs related to terminating a contract that
is not a capital lease and termination benefits that employees who
are involuntarily terminated receive under the terms of a one-time
benefit arrangement that is not an ongoing benefit arrangement or an
individual deferred-compensation contract. SFAS 146 will be effective
for exit or disposal activities that are initiated after December 31,
2002 and early application is encouraged. The provisions of EITF No.
94-3 shall continue to apply for an exit activity initiated under an
exit plan that met the criteria of EITF No. 94-3 prior to the
adoption of SFAS 146. The effect on adoption of SFAS 146 will change
on a prospective basis the timing of when the restructuring
charges are recorded from a
F-16
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Newly Issued Accounting Pronouncements (Continued)
commitment date approach to when the liability is incurred. The
Company does not expect that the adoption of SFAS 146 will have a
material effect on its financial performance or results of
operations.
SFAS No. 147 -- In October 2002, the FASB issued Statement No. 147
"Acquisitions of Certain Financial Institutions an amendment of
FASB Statements No. 72 and 144 and FASB Interpretation No. 9" (SFAS
147). SFAS 147 removes acquisitions of financial institutions from
the scope of both Statement 72 and Interpretation 9 and requires that
those transactions be accounted for in accordance with FASB
Statements No. 141, Business Combinations, and No. 142, Goodwill and
Other Intangible Assets. Thus, the requirement in paragraph 5 of
Statement 72 to recognize (and subsequently amortize) any excess of
the fair value of liabilities assumed over the fair value of tangible
and identifiable intangible assets acquired as an unidentifiable
intangible asset no longer applies to acquisitions within the scope
of this Statement. In addition, this Statement amends FASB Statement
No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, to include in its scope long-term customer-relationship
intangible assets of financial institutions such as depositor- and
borrower-relationship intangible assets and credit cardholder
intangible assets. Consequently, those intangible assets are subject
to the same undiscounted cash flow recoverability test and impairment
loss recognition and measurement provisions that Statement 144
requires for other long-lived assets that are held and used. SFAS
147 is effective October 1, 2002. The Company does not expect that
the adoption of SFAS 147 will have a material effect on its
consolidated financial statements.
SFAS No. 148 -- In December 2002, the FASB issued SFAS No. 148,
"Accounting for Stock-Based Compensation -- Transition and
Disclosure"(SFAS 148"). SFAS 148 amends SFAS No. 123 "Accounting for
Stock-Based Compensation" ("SFAS 123"), to provide alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, SFAS 148 amends the disclosure requirements of SFAS 123 to
require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results.
SFAS 148 is effective for fiscal years beginning after December 15,
2002. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning
after December 15, 2002. The Company is currently evaluating the
effect that the adoption of SFAS 148 will have on its results of
operations and financial condition.
SFAS No. 149 In April 2003, the FASB issued Statement of Financial
Accounting Standards No. 149 ("SFAS 149"), "Amendment of Statement
133 on Derivative Instruments and Hedging Activities", to provide
clarification on the meaning of an underlying, the characteristics
of a derivative that contains financing components
F-17
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Newly Issued Accounting Pronouncements (Continued)
and the meaning of an initial net investment that is smaller than
would be required for other types of contracts that would be expected
to have a similar response to changes in market factors. This
statement will be applied prospectively and is effective for
contracts entered into or modified after June 30, 2003. The
statement will be applicable to existing contracts and new contracts
relate to forward purchases or sales of when-issued securities or
other securities that do not yet exist. The Company does not expect
that the adoption of SFAS 149 will have a material effect on the
Company's consolidated financial statements.
SFAS No. 150 In May 2003, the FASB issued Statement of Financial
Accounting Standards No 159 ("SFAS 150"), Accounting for certain
financial instruments with characteristics of both liabilities and
equity. This statement establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity. This statement
will be effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003. It is to
be implemented by reporting the cumulative effect of a change in an
accounting principal for financial instruments created before the
issuance date of the statement and existing at the beginning of
the interim period of adoption. The Company does not expect that
the adoption of SFAS 150 will have material effect on the Company's
consolidated financial statements.
NOTE 3 - FIXED ASSETS
Computer equipment and education asset software have 5-year lives.
Office equipment has a 7-year life. Depreciation is computed using
the straight-line method. Assets and depreciation for the period are
as follows:
March 31,
2003
Computer equipment $ 343,093
Office equipment 54,638
Education assets and software 278,885
Accumulated depreciation (651,169)
---------
Total Fixed Assets $ 25,447
=========
Depreciation expense for the years ended March 31, 2003 and 2002 was
$57,632 and $82,832, respectively.
F-18
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 4 - COMMON STOCK TRANSACTIONS
During the year ended March 31, 2002, the Company issued 500,000
shares of common stock for cash at $0.10 per share.
During the year ended March 31, 2002, the Company issued 175,538
shares of common stock to convert debt and accounts payable at an
average value of $0.42 per share.
During the year ended March 31, 2002, the Company issued 94,000
shares of common stock as consideration for notes payable at an
average value of $0.20 per share.
During the year ended March 31, 2002, the Company issued 67,025 of
common stock for the exercise of warrants valued at $0.75 per share.
Total cash received was $670. The balance of $49,599 was accounted
for as a stock offering cost.
During the year ended March 31, 2002, the Company issued 41,000
shares of common stock for services at an average value of $0.36 per
share.
During the year ended March 31, 2003, the Company received $698 in
exchange for the conversion of 69,773 warrants into an equivalent
number of common stock at $0.01 per share.
During the year ended March 31, 2003, the Company issued 233,250
shares of common stock in exchange for one-year extension agreements
related to the 2001 private placement. The share were valued at an
average of $0.17 per share.
During the year ended March 31, 2003, the Company sold 670,000
shares of common stock for $0.10 per share.
During the year ended March 31, 2003, the Company issued 494,706
shares of common stock in exchange for accounts payable valued at
$38,027.
During the year ended March 31, 2003, the Company issued 1,494,000
shares of common stock in exchange for notes payable valued at
$156,541.
During the year ended March 31, 2003, the Company issued 1,629,050
shares of common stock in exchange for services valued at $161,365.
F-19
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 5 - NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consisted of the following at March
31, 2003:
Notes payable to the President bearing interest
at 10% per annum, all unpaid principal and
interest due on demand $ 165,882
---------
Total Notes Payable - Related Parties $ 165,882
=========
NOTE 6 - NOTES PAYABLE
Notes payable consisted of the following at March 31, 2003:
Notes payable related to private placement memorandum
bearing interest at 8.00% per annum, with payments due
April 6, 2002, through August 29, 2003. $ 398,500
Notes payable to six unrelated individuals bearing interest
at 8.0% to 11.2% per annum, with payment due within
one year, unsecured 57,507
Line of credit with a bank bearing interest at 13.99%
per annum, unsecured 46,905
Note payable to a bank bearing interest at 7.25%
with payment due on June 15, 2003, guaranteed
by directors 60,600
Note payable to a company bearing no interest, with
monthly payments of $750 until the note is paid-in-full,
unsecured 17,250
Note payable to a company bearing interest at 7.0%
per annum, due within one year, unsecured 693
Line of credit with a bank bearing interest at 7.0%
per annum, past due, unsecured 26,549
Line of credit with a financing institution with varying
interest charges, due periodically (generally monthly),
secured by assets and specific receivables 154,855
---------
Total Notes Payable $ 762,859
=========
F-20
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 7 - GAIN ON SETTLEMENT OF DEBT
On June 18, 2002, the Company reached a settlement agreement with Key
Bank (See Note 8) whereby the Company agreed to pay $20,000 in full
satisfaction of a $28,308 debt, which included principal and interest
of $25,208 and $3,100, respectively. The difference, of $8,308, was
recorded as a gain on settlement of debt. The $20,000 obligation has
been paid-in-full as of March 31, 2003.
On March 3, 2003, the Company reached a settlement agreement with a
company to settle a $25,820 debt in exchange for a new promissory
note for $18,000. The promissory note does not accrue interest and
is payable in monthly installments of $750 until the balance is paid-
in-full. As of March 31, 2003, one payment has been made reducing
the balance to $17,250. See Note 6.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Operating Lease Obligation
The Company leases its office under a non-cancelable lease agreement
accounted for as an operating lease. The lease expires in March
2008.
Minimum rental payments under the non-cancelable operating lease is
as follows:
Years ending
March 31, Amount
2004 $ 69,500
2005 75,500
2006 81,500
2007 87,500
2008 85,250
--------
Total $399,250
========
Rent expense was $74,132 and $71,848 for the years ended March 31,
2003 and 2002, respectively.
Litigation
Warren Black v. PCS - On January 18, 2002, Warren Black, a former
independent contractor for the Company, filed a complaint against the
Company alleging breach of contract. Mr. Black sought the return of
certain software products that he claimed to have provided the
Company during his employment, or their monetary equivalent, which he
claimed to be $15,000. The Company settled this action in February
2003. Per the terms of the settlement agreement, the Company agreed
to issue Mr. Black a $6,000 note in full satisfaction of his claim.
The note is payable in quarterly installments of $1,500 and accrues
interest at 8.0% per annum. No payments have
F-21
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Litigation (Continued)
been made as of March 31, 2003, but the amount has been included in
the Company's notes payable balance.
Key Bank v. PCS and Maher - On March 26, 2002, Key Bank, filed a
complaint against the Company seeking recovery of $25,208 and accrued
interest alleged to be owed by the Company on a promissory note
executed by the Company and guaranteed by Anthony A. Maher, the
Company's President and CEO. The Company settled this claim on June
18, 2003, in exchange for $20,000 in cash. As of March 31, 2003, the
settlement has been paid-in-full, and the difference, of $8,308, has
been recorded as a gain on settlement of debt.
NOTE 9 - GOING CONCERN
The Company's consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going
concern which contemplates the realization of assets and liquidation
of liabilities in the normal course of business. However, the
Company does not have significant cash or other material assets, nor
does it have an established source of revenues sufficient to cover
its operating costs. Additionally, the Company has accumulated
significant losses, has negative working capital, and a deficit in
stockholders' equity. All of these items raise substantial doubt
about its ability to continue as a going concern. The Company has
expanded its product line to include three additional educational
labs, which they believe will significantly 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 10 - DILUTIVE INSTRUMENTS
a. Stock Options
The Company has 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.
22
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 10 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
FASB Statement 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123"), requires the Company to provide proforma information
regarding net income and net income per share as if compensation
costs for the Company's stock option plans and other stock awards had
been determined in accordance with the fair value based method
prescribed in SFAS No. 123. The Company estimates the fair value of
each stock award at the grant date by using the Black-Scholes option
pricing model with the following weighted average assumptions used
for grants, respectively; dividend yield of zero percent for all
years; expected volatility of 84% to 163% percent for all years;
risk-free interest rates of 3% to 6%, and expected lives of 3 to 10
years.
For the Years Ended
March 31,
2003 2002
Net loss:
As reported $(454,163) $(1,560,348)
Pro Forma (609,146) (1,780,940)
Net loss per share:
As reported $ (0.03) $ (0.12)
Pro Forma (0.04) (0.14)
The Company has granted the following options as of March 31, 2003:
Date of Exercise Exercise Amount
Description Grant Number Price Exercised
1) Officers/directors 4-20-00 600,000 $ 0.75 0
2) Employee 6-01-00 45,000 $ 0.75 0
3) Consultant 9-20-00 200,000 $ 0.50 0
4) Employees 9-01-00 200,000 $ 0.75 0
5) Director 10-01-00 200,000 $ 0.75 0
6) Employee 01-05-01 25,000 $ 0.75 0
7) Employee 6-15-01 25,000 $ 0.75 0
8) Employee 10-24-01 50,000 $ 0.30 0
9) Employee 12-1-01 24,230 $ 0.15 0
10) Board Members 12-10-01 1,000,000 $ 0.30 0
11) Board Members 6-3-02 1,000,000 $ 0.16 0
12) Employees 7-1-02 335,000 $ 0.16 0
13) Employees 7-15-02 15,000 $ 0.16 0
14) Employees 8-15-02 5,000 $ 0.16 0
---------
3,724,230
=========
F-23
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 10 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
Risk-Free
Fair Interest Expected Expected
Description Value Rate Life Volatility
1) Officers/directors $0.46 6.15% 3 91.32%
2) Employee $0.46 6.15% 3 92.82%
3) Consultant $0.42 6.15% 3 89.37%
4) Employees $0.52 6.21% 3 85.69%
5) Director $0.52 6.21% 3 84.39%
6) Employee $0.52 6.21% 3 84.39%
7) Employee $0.39 3.76% 3 76.69%
8) Employee $0.19 3.76% 3 100.52%
9) Employee $0.14 3.76% 3 99.80%
10) Board Members $0.20 5.69% 10 99.80%
11) Board Members $0.15 5.48% 10 128.91%
12) Employees $0.14 2.84% 3.5 157.77%
13) Employees $0.14 2.84% 3.5 152.96%
14) Employees $0.14 2.84% 3.5 163.77%
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 three
year life with a fair value determined by Black Scholes of $0.39.
On December 1, 2001, the Company granted employees 24,230 options to
employees. 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.
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 shares to an employee.
On December 10, 2001, the Company granted 1,000,000 shares 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 May 14, 2002, the Company authorized the issuance of 1,000,000
options to members of the board of directors. These options vested
immediately and have an exercise price of $0.16 per share and are
exercisable for ten years. All 1,000,000 of the options were
granted on June 3, 2002. The options were determined to have a fair
value of $0.15 per share using the Black-Scholes valuation model.
The granting of these options had a $154,983 impact on the pro forma
net income of for the Company.
F-25
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 10 - DILUTIVE INSTRUMENTS (Continued)
a. Stock Options (Continued)
On May 14, 2003, the Company also authorized the issuance of 500,000
options to employees. These options vest over three and one-half
years and have an exercise price of $0.16 per share. The Company
granted 355,000 of the options to employees during July and August
of 2002. The options were determined to have a fair value of $0.14
per share using the Black-Scholes valuation model. As none of these
options have vested as of March 31, 2003, their granting had no
impact on the pro form net income of the Company.
b. Warrants
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. This discount has been fully amortized as of March 31,
2003.
During the year ended March 31, 2003, 69,773 of these warrants were
exercised and converted into an equivalent number of common shares
in exchange for $698 in cash.
NOTE 11 - RELATED PARTY TRANSACTIONS
During the year ended March 31, 2003, three members of the Company's
board of directors acted as guarantors on a promissory note that
provided the Company $60,600 in financing.
During the years ended March 31, 2003, and 2002, the Company repaid
of debt owed to officers of the Company of $20,000 and $60,750,
respectively.
During the years ended March 31, 2003, and 2002, the Company
borrowed from the President of the Company $27,000 and $89,500,
respectively.
F-25
PCS EDVENTURES!.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 2003 and 2002
NOTE 12 - SUBSEQUENT EVENTS
Stock Issuances
On May 8, 2003, the Company issued 35,000 shares of common stock to
a note holder as payment of interest and late charges associated
with a note that had been paid-in-full subsequent to year end. The
shares were valued at $0.09 per share.
On June 6, 2003, the Company issued 202,234 shares of common stock
to the Company's President and CEO as payment for accrued interest
on his outstanding note (See Note 5). The shares were valued at
$0.09 per share.
On June 6, 2003, the Company issued 11,111 shares to an employee as
reimbursement for expenses incurred. The shares were valued at
$0.09 per share.
F-26
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
---------------------
None, not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
No reports are required to be filed by members of management or other
shareholders because our company is required to file its reports under
Section 15(d) of the Exchange Act.
Identification of Directors and Executive Officers.
---------------------------------------------------
The following table sets forth the name, address, age and position
of each officer and director of the Company:
Name Age Position
---- --- --------
Anthony A. Maher 56 Chairman of the Board,
President, and
Chief Executive Officer
Robert O. Grover 40 Executive Vice President, Chief
Technology Officer
Christina M. Vaughn 34 Vice President, Chief Financial
Officer
Donald J. Farley 52 Secretary, Director
Roy M. Svee 76 Treasurer, Director
Cecil D. Andrus 75 Director
Term of Office.
---------------
The terms of office of the current directors shall continue until
the annual meeting of stockholders, which has been scheduled by the Board of
Directors to be held in May of each year. The annual meeting of the Board
of Directors immediately follows the annual meeting of stockholders, at which
executive officers for the coming year are elected.
Business Experience.
--------------------
Anthony A. Maher, Chairman, President & CEO. Anthony A. Maher was
recruited to PCS at its inception as Chairman of the Board, President and
Chief Executive Officer and structured the purchase of PCS Schools. Since
then, Mr. Maher has overseen the development of the curriculum from four core
areas to over 60; the development of its distance developer database; and the
creation of its web based publishing expertise. From 1982 to 1989 he was
founder and Chairman of the Board of National Manufacturing Company, Inc. and
its subsidiary, National Medical Industries, Inc. From 1979 to 1982, Mr.
Maher was Executive Vice President for Littletree Inns, a hotel company based
in Boise, Idaho with properties throughout the Northwest. Mr. Maher graduated
from Boise State University in 1970 with a Bachelor of Arts degree in
Political Science.
Robert O. Grover. Robert O. Grover joined PCS at its inception and
became Executive Vice President in May 1996. Mr. Grover's current focus is on
the development of PCS distance education applications including the web-based
support and delivery systems that are integral to Edventures!.COM, Edventures
Labs, and the Academy of Engineering. In 1992, he developed the PCS Merit
System that has become the foundation of the Edventures!.COM learning systems
online. Mr. Grover graduated from Boise State University in 1987 with a
Bachelor of Arts degree in English.
Christina Vaughn was promoted to Vice President and CFO from Assistant
CFO on May 1, 2002. She joined PCS in September 2000 after serving 8 years as
an analyst for the local natural gas utility. She brings to PCS extensive
knowledge of revenue, cash, and cost forecasting, asset/liability mitigation,
managed reporting of commodities pricing as well as capital project analysis.
She graduated, cum laude, May 1990 from the College of Idaho with a BBA in
Finance, and from Atkinson Graduate School of Management/Willamette University
with an MBA in May 1992.
Donald J. Farley. Mr. Farley is a director and the Secretary of the
Company and has acted as the Company's legal counsel since 1994. Mr. Farley
is a founding partner of the law firm of Hall, Farley, Oberrecht & Blanton,
P.A. His legal practice emphasizes litigation and representation of closely
held businesses. He has been in private practice since 1975, after serving a
two year judicial clerkship with former United States District Judge J. Blaine
Anderson. Mr. Farley is admitted to practice before all state and federal
courts in Idaho and has also been admitted to practice before the United
States Supreme Court. He is a member of the American Bar Association, the
International Association of Defense Counsel, Defense Research Institute, the
Idaho State Bar Association and the Association of Trial lawyers of America.
Mr. Farley graduated from the University of Idaho in 1970 with a Bachelor of
Arts degree in Economics and from the University of Idaho College of Law in
1973.
Roy M. Svee. Mr. Svee is, and has been since 1996, a director and the
Treasurer of the Company. Mr. Svee has served with distinction throughout his
business career on the Board of Directors of such organizations as Southgate
Bank; First National Bank; Colonial Savings; Eastern Heights Bank; TFC Bank
and its parent; Hansen Engine and Hansen Air Systems, Inc.; Genius
Technologies and JF Goodhouse, Inc., all in Minnesota and Michigan. During
his working career, he served as Regional Manager of Montgomery Ward and after
that as Senior Vice President-Strategic Planning for Target Stores. He
retired from JB Goodhouse, Inc. as President & CEO in 1991. Mr. Svee has a
Bachelor of Business Administration degree from the University of Minnesota
and served as a pilot in the Navy Air Corps.
Cecil D. Andrus. Former Idaho State Governor Andrus joined the PCS
Board of Directors in November 1995. Following his retirement from public
service in January 1995, Governor Andrus founded and now directs the Andrus
Center for Public Policy at Boise State University. Governor Andrus is the
first person in the history of Idaho to be elected Governor four different
times (1970, 1974, 1986 and 1990). When he retired from public office, he was
the senior governor in the United States in length of service. Mr. Andrus
resigned as governor in 1977 to become the Secretary of the Interior in the
Carter Administration, the first Idahoan to serve in a Presidential Cabinet.
Governor Andrus is also a director of Albertsons, KeyCorp and The Gallatin
Group.
Family Relationships.
---------------------
There are no family relationships between any of our directors or
executive officers.
Involvement in Certain Legal Proceedings.
-----------------------------------------
During the past five years, none of our present or former directors,
executive officers or persons nominated to become directors or executive
officers:
(1) Filed a petition under the federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an
executive officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him or her from or
otherwise limiting his involvement in any type of business, securities or
banking activities;
(4) Was found by a court of competent jurisdiction in a civil
action, by the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated any federal or state securities law, and
the judgment in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or vacated.
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
Each of the Company's directors and executive officers will file
their Form 3's Initial Statement of Beneficial Ownership of Securities with
the Securities and Exchange Commission within three days of the filing of
this Report.
Item 10. Executive Compensation.
-----------------------
Cash Compensation.
------------------
The following table shows the aggregate compensation that we have paid to
directors and executive officers for services rendered during the periods
indicated:
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
-----------------------------------------------------------------
Anthony A. 3/31/03 120,000 0 0 0 0 0 0
Maher 3/31/02 120,000 0 0 0 * 0 0
President
Director
* Mr. Maher was the only executive officer of PCS whose cash
compensation exceeded $100,000 during the last two fiscal years. Mr. Maher
was issued 500,000 shares of "restricted securities" as additional
compensation in October, 2000. See the table below under the heading "Stock
Option Plans and Other Incentive Compensation Plans" of this Item for stock
options granted to Mr. Maher and other members of management during the last
two fiscal years ended March 31, 2002 and 2001.
Options Grants in Last Fiscal Year
There were grants of stock options made during the fiscal years ended
March 31, 2003 and 2002 to our directors and executive officers and others.
These options are described below under the heading "Stock Option Plans and
Other Incentive Compensation Plans" of this Item.
Compensation of Directors
Each fiscal year, the Board of Directors sets the dollar amount for the
compensation of outside directors for their services. Said compensation shall
be in the form of freely tradable PCS common stock at its then bid price, or
in the form of stock options to purchase PCS common stock at its then current
bid price. For fiscal years 2002 and 2003, the Board of Directors set the
amounts of $15,000 for each of said fiscal years.
Employment Agreements
We have no written employment agreements with our management.
Currently, we are paying our officers the following annual salaries: Anthony
A. Maher - $120,000; Robert O. Grover - $84,000; Christina Vaughn - $75,000.
The Company also provides medical and dental insurance for its officers and
other employees.
Stock Option Plans and Other Incentive Compensation Plans
PCS has not adopted any formal option plans or other incentive
compensation plans as of the date of this report. We anticipate that our
Board of Directors will, in the near future, adopt incentive compensation
plans to provide reward and incentives to employees, directors and agents of
PCS. PCS has granted the following options to officers, directors, employees
and consultants:
Number Date of Exercise Expiration
Option Holder Shares Grant Price Date
------------- ------ ----- ----- ----
Anthony A. Maher* 200,000 04/20/00 $.75 04/20/03
Roy M. Svee* 200,000 04/20/00 $.75 04/20/03
Donald J. Farley* 200,000 04/20/00 $.75 04/20/03
Robert O. Grover* 200,000 10/01/00 $.75 10/01/03
Christy Vaughn* 75,000 09/01/00 $.75 09/01/03
David Chase 50,000 09/01/00 $.75 09/01/03
Les Parish 50,000 02/05/00 $.75 02/05/03
Richard Wright 50,000 09/01/00 $.75 09/01/03
Laura Hosie 45,000 06/01/00 $.75 06/01/03
Anita Ashcraft-Drake25,000 09/01/00 $.75 09/01/03
Nathan Cook 25,000 01/05/01 $.75 01/05/04
Consultant 200,000 09/20/00 $.50 09/20/03
Bill Albert 25,000 06/15/01 $.75 6/15/04
Frances Guiney 50,000 10/21/01 $.30 10/24/04
Bill Albert 2,310 12/01/01 $.15 12/01/04
Nathan Cook 1,155 12/01/01 $.15 12/01/04
Robert O. Grover* 6,467 12/01/01 $.15 12/01/04
Suzanne Haislip 3,696 12/01/01 $.15 12/01/04
Christa Roesberry 1,442 12/01/01 $.15 12/01/04
Anthony A. Maher* 9,160 12/01/01 $.15 12/01/04
Donald J. Farley* 250,000 12/10/01 $.30 12/10/04
Roy M. Svee* 250,000 12/10/01 $.30 12/10/04
Anthony A. Maher* 400,000 12/10/01 $.30 12/10/04
Cecil D. Andrus* 100,000 12/10/01 $.30 12/10/04
Board Members* 1,000,000 6/03/02 $.16 6/03/12
Suzanne Haislip 50,000 7/01/02 $.16 1/01/06
Christina Vaughn* 50,000 7/01/02 $.16 1/01/06
William Albert 75,000 7/01/02 $.16 1/01/06
David Chase 35,000 7/01/02 $.16 1/01/06
Joe Egusquiza 15,000 7/01/02 $.16 1/01/06
Laura Baran 25,000 7/01/02 $.16 1/01/06
Robert O. Grover* 75,000 7/01/02 $.16 1/01/06
Christa Roesberry 10,000 7/01/02 $.16 1/01/06
Nathan Cook 15,000 7/15/02 $.16 1/15/06
Nic Perner 5,000 8/15/02 $.16 2/15/06
* Denotes directors and executive officers.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
The following table sets forth information concerning the beneficial
ownership of PCS common stock as of June 25, 2003, by each director and
executive officer, all directors and officers as a group, and each person
known to PCS to beneficially own 5% or more of its outstanding common stock.
Name and Address Percentage
of Beneficial Owner Shares Owned(1) Owned(1)
------------------- --------------- --------
Anthony A. Maher 1,770,394(3) 8.21%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Robert O. Grover 590,000(4) 2.74%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Roy M. Svee 850,000(5) 3.94%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Donald J. Farley 981,000(6) 4.55%
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Cecil D. Andrus 123,333 (2)
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
Christina M. Vaughn 150,000(7) (2)
345 Bobwhite Court, Suite 200,
Boise, Idaho 83706
All officers and Directors as a
group 4,464,727 20.70%
(6 persons)
(1) Based upon 17,844,728 shares of common stock issued and outstanding
as of June 25, 2003, including 3,724,230 shares that may be issued upon the
exercise of currently exercisable options, for a total number of shares
outstanding of 21,568,958, calculated in accordance with Rule 13d-3
promulgated under the Exchange Act. It also includes shares owned by (i) a
spouse, minor children or by relatives sharing the same home, (ii) entities
owned or controlled by the named person and (iii) other persons if the named
person has the right to acquire such shares within 60 days by the exercise of
any right or option. Unless otherwise noted, shares are owned of record and
beneficially by the named person.
(2) Less than one percent.
(3) These shares include (i) 1,302,234 shares owned of record by Mr.
Maher, (ii) 10,000 shares owned by Louise Maher, (iii) 9,500 shares which are
beneficially owned by a family limited liability named Sullivan Maher for
which Mr. Maher acts as a manager (iv) 35,000 shares owned by the Nick Maher
foundation of which Mr. Maher is a trustee, (v) 4,500 shares owned by E.L.
Sullivan which are voted by Mr. Maher pursuant to an irrevocable proxy, (vi)
9,160 shares which may be issued upon the exercise of currently exercisable
stock options; these options are exercisable at $.15 per share and are
exercisable through December 2004, and (vii) 400,000 shares which may be
issued upon the exercise of currently exercisable stock options; these options
are exercisable at $.30 per share and are exercisable through December 2004.
(4) These shares include (i) 315,000 shares owned of record by Mr.
Grover, (ii) 200,000 shares which may be issued upon the exercise of
currently exercisable stock options; these options are exercisable at $.75 per
share and are exercisable through October 2003, and (iii) 75,000 shares which
may be issued upon the exercise of currently exercisable stock options; these
options are exercisable at $.16 per share and are exercisable through December
31, 2005.
(5) These shares include (i) 600,000 shares owned of record by Mr. Svee,
and (ii) 250,000 shares which may be issued upon the exercise of currently
exercisable stock options; these options are exercisable at $.30 per share and
are exercisable through December 2004.
(6) These shares include (i) 722,000 shares owned of record by Mr.
Farley, (ii) 9,000 shares in the name of Ryan Farley, and (iii) 250,000 shares
which may be issued upon the exercise of currently exercisable stock options;
these options are exercisable at $.30 per share and are exercisable through
December 2004.
(7) These shares include (i) 75,000 shares which may be issued upon the
exercise of currently exercisable stock options. These options are
exercisable at $.75 per share and are exercisable through September 2003, and
(ii) 75,000 shares which may be issued upon the exercise of currently
exercisable stock options; these options are exercisable at $.16 per share and
are exercisable through December 31, 2005.
Changes in Control.
-------------------
To our knowledge, there are no present arrangements or pledges of our
securities that may result in a change in control of our company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
----------------------------------------
During the last two fiscal years ended March 31, 2003 and 2002, we have
granted certain options to members of our management. See the heading "Stock
Option Plans and Other Incentive Compensation Plans" of Item 10, above. In
October, 200, we also issued 500,000 shares of our "restricted securities" to
Anthony A. Maher, our President.
During the year ended March 31, 2003, three members of the Company's
board of directors acted as guarantors on a promissory note that provided the
Company $60,600 in financing.
During the years ended March 31, 2003, and 2002, the Company repaid of
debt owed to the President of the Company of $20,000 and $60,750,
respectively.
During the years ended March 31, 2003, and 2002, the Company borrowed from
the President of the Company $27,000 and $89,500, respectively.
On September 22, 2000, the President of the Company was issued 500,000
shares of common stock for services valued at $355,000.
Transactions with Promoters.
----------------------------
Except as outlined under the caption "Executive Compensation," during the
past two years, there have been no material transactions, series of similar
transactions or currently proposed transactions, to which our company or any
of our subsidiaries was or is to be a party, in which the amount involved
exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to us to own of record or beneficially more than
five percent of our common stock, or any member of the immediate family of any
of the foregoing persons, or any promoter or founder had a material interest.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K.
No Current Reports on Form 8-K of the Securities and Exchange Commission
have been filed by the Company during the last quarter of its fiscal year
ended March 31, 2003.
Exhibits*
(i)
Where Incorporated
in this Report
--------------
Registration Statement on SB-2, as Parts I, II and III
amended.**
(ii)
Exhibit
Number Description
------ -----------
21 Subsidiaries of the Company
99-1 906 Certification
* Summaries of all exhibits contained within this
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
SIGNATURES
In accordance with the requirements of the Act, the Registant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PCS EDVENTURES!.COM, INC.
Date: 7/10/03 By/s/Anthony A. Maher
------------- -------------------------------------
Anthony A. Maher
CEO, President and Chairman of the
Board of Directors
Date: 7/10/03 By/s/Christina M. Vaughn
------------- -------------------------------------
Christina M. Vaughn
Vice President and CFO
Date: 7/10/03 By/s/Donald J. Farley
------------- -------------------------------------
Donald J. Farley
Secretary and Director
Date: 7/11/03 By/s/Cecil D. Andrus
------------- ------------------
Cecil D. Andrus
Director
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony A. Maher, CEO, President and Chairman of the Board of
Directors of PCS Edventures.com, Inc. (the "Registrant"), certify that:
1. I have reviewed this Annual Report on Form 10-KSB of the Registrant;
2. Based on my knowledge, this Annual 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 Annual Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Annual 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
Annual 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
Annual 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 Annual Report (the "Evaluation Date"); and
c) presented in this Annual 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 Annual 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.
Date: 7/10/03 By/s/Anthony A. Maher
------------- -------------------------------------
Anthony A. Maher
CEO, President and Chairman of the
Board of Directors
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Christina M. Vaughn, Vice President and CFO of PCS Edventures.com,
Inc., (the "Registrant") certify that:
1. I have reviewed this Annual Report on Form 10-KSB of the Registrant;
2. Based on my knowledge, this Annual 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 Annual Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Annual 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
Annual 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
Annual 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 Annual Report (the "Evaluation Date"); and
c) presented in this Annual 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 Annual 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.
Date: 7/10/03 By/s/Christina M. Vaughn
------------- -------------------------------------
Christina M. Vaughn
Vice President and CFO