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, 2002
[ ] 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)
1655 Fairview Avenue, Suite #100
Boise, Idaho 83702
(Address of Principal Executive Offices)
Issuer's Telephone Number: (208) 343-3110
N/A
(Former Name or Former Address, if changed since last Report)
Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered: None
Securities Registered under Section 12(g) of the Exchange Act:
No par value common stock
Check whether the 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, 2002 -
$572,356.
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.
July 8, 2002 - $1,165,400. There are approximately 9,711,669 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 July 8, 2002.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not Applicable.
(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:
July 8, 2002
14,270,347
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
$24,654, net of accumulated amortization in the amount of $166,980. See Note
6 to our consolidated financial statements that accompany this report.
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 7-18 to explore the basic foundations of
mechanical engineering, structures in architecture, and math and science.
We have developed five innovative technology based educational
programs. Our "Academy of Engineering," "Edventures! Lab" and "Discover! Lab"
products are site-license installations for classrooms and learning programs.
Our "Brick Lab!" product is also for classrooms and learning programs, but is
not licensed. Our "Edventures!.COM" product is our comprehensive Internet
delivered educational experience that supports our Academy of Engineering and
our Edventures! Labs site licenses products and also serves as a stand-alone
home usage program. Our Edventures!.COM program is delivered to the home user
over the Internet on a monthly subscription basis. Separately, and in
combination, these five 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 two 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 five 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 five 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:
Academy of Engineering. Our Academy of Engineering product 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 three books for a mechanical engineering strand. 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 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 manupulatives and other
building components, and curriculum, a custom designed storage and
organization unit, a digital camera, web-based support by our
Edventures!.COM product and various electronic assessment tools,
and two days of teacher training. We sold 36 Academy of
Engineering Labs during the previous fiscal year. Each site
license includes all materials necessary to utilize the complete
Academy of Engineering program.
Edventures! Labs is a scaled down model of the Academy of
Engineering site license system intended for those destinations
that have space or funding restrictions. It contains curriculum,
storage cabinets and other material, but has a reduced inventory of
LEGOs and relies on Edventures!.COM for delivery of the curriculum.
A site license for an Edventures! Lab currently costs $6,995 which
includes a 50-student block license for access to Edventures!.COM.
Additional student access in blocks of 50 cost $1,750 per year for
the Edventures! Labs. We have sold 50 Edventures! Labs during the
previous fiscal year.
Discover! Labs is a scaled down model of the Edventures! Lab site
license system intended for smaller groups of approximately 30
students. It contains curriculum, a storage cabinet and
other material, but has a reduced inventory of LEGOs and relies on
Edventures!.COM for delivery of the curriculum. A site license for a
Discover! Lab currently costs $1,995 which includes a 30-student
block license for access to Edventures!.COM. Introduced this past
year, we have sold 16 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!.COM curriculum, LEGO
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 this past year, we have sold four
Brick Labs during the previous fiscal year.
Edventures!.COM 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!.COM
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 Academy of Engineering product. Edventures.COM can
be viewed on the web at 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!.COM at-
home curriculum utilizes found materials, LEGO products, software
and other resources to teach concepts in Physics, Electricity,
Internet, Programming, Art, Architecture and Engineering.
Edventures!.COM is included in the Academy of Engineering site
license as an on-line support tool and provides a framework within
which students can safely communicate, collaborate, and learn.
Edventures!.COM is also available as a stand-alone, home based
subscription product for $69.95 per year. We currently have 200
stand-alone users of Edventures!.COM and approximately 10,000
users related to our Academy of Engineering and Edventures! Labs
programs.
The Academy of Engineering, 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, 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 ed" 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 and
Edventures! Labs provide a comprehensive engineering curriculum
designed around the hands-on LEGOs. 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, Edventures!
Lab and Discover! 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 intend to
attempt to achieve significant penetration of the K-12 and other extended
learning markets with the Academy of Engineering, Edventures! Lab and
Discover! Lab products through strategic alliances with existing educational
based companies such as Pitsco LEGO Dacta, EDAcom Technoligia and ZapMe! 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. In
the recent presidential political campaign, the issue of education, including
the public funding of private school vouchers, was a significant issue. 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 various
educational companies 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. A recently posted web site, "www.afterschool.gov,"
summarizes many of the federal funding sources now available for this growing
market segment. One significant driving force in this movement is the proven
impact after-school programs have for decreasing juvenile crime. Part of the
funding of the Boys & Girls Clubs of America is provided by the Department of
Justice. Other indicators in this market include the federal government's
21st Century Community Learning Center program which had a budget of
approximately $1.2 billion for the budget year 2001.
PCS Designated Markets.
-----------------------
Academy of Engineering and Edventures! Lab: Markets.
----------------------------------------------------
We have identified as our initial primary market for the Academy of
Engineering 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. To illustrate
this growing trend, $100 million was allocated in 1998 by the DOE for public
school-based after-school programs. This number grew to $200 million 1999 and
to an estimated $600 million in 2000. In addition, 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. The United States Department of Justice
allocated a $40 million grant to the Boys & Girls Clubs of America in 1999 for
the purpose of expanding and enhancing their programs. 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 Dacta, a
Pittsburg, Kansas based educational company that holds the non-exclusive
distribution rights to LEGO 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. We are attempting to
enter into a similar agreement with LEGO EDAcom Technologia based in Brazil
and Portugal, for distribution of our Academy of Engineering product in those
countries. We are also working towards alliances with LEGO counterparts in
India, Hong Kong, Belgium and Germany.
K-12 Schools in the State of Idaho. The K-12 school market in Idaho is
unique marketing opportunity for PCS due to the funding of school purchases of
our products by the J.A. & Kathryn Albertson Foundation which is currently
funding a statewide technology initiative. PCS is a pre-approved vendor for
this initiative and is driving a direct sales effort in Idaho to establish a
strong reference network of Academy of Engineering sites using the program.
We anticipate that this network of reference sites will serve as a strong
source of market feedback for continually improving the product, and is
already serving as an excellent source of testimonials from teachers and
administrators using the program. To date, we have sold site licenses for 12
Academy of Engineering centers in the State of Idaho.
Boys & Girls Clubs. We are currently continuing our efforts to
distribute our Academy of Engineering products into the Boys and Girls Clubs.
We installed an Academy of Engineering in the Ada County Boys & Girls Club in
Garden City, Idaho . Funding for the program was secured from a local
foundation (The Idaho Community Foundation). We have also installed an
Academy of Engineering at the Rainier Vista Boys & Girls Club in Seattle,
sponsored by the Microsoft Corporate Gifting Group. We are using these sites
as reference sites and we are currently attempting to contact Boys and Girls
Clubs nationwide. To date, clubs have evidenced a strong interest in the
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.
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 a site license program currently being deployed at the
Oregon Museum of Science and Industry in Portland (OMSI); a site license
program to the Boise Downtown YMCA which is seeking funding through grant
sources and a site license program to the Vista Neighborhood Community Center
in Boise, also currently seeking funding.
Edventures!.COM. Markets.
-------------------------
Edventures!.COM 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 the Academy of Engineering program 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!.COM product as
families with children ages six to 13 who have a strong interest in education.
Further, this market can be divided into homeschool families and traditional
families.
Traditional Families. There are an estimated 46 million students
currently attending K-12 schools across the U.S. The prime motivator for many
of these students initially attracted to Edventures! is the attachment to the
LEGO name and the integration of the LEGO based curriculum online. LEGO
enjoys a large brand name recognition across the country, and is a significant
brand and product to be identified with. We are attempting to market our
products so as to take advantage of the LEGO name recognition.
The K-12 Partner Program. We have recently developed a marketing
program known as the "K-12 Partners Program." This program is a fund raiser
model in which participating schools promote the Edventures!.COM product
through send-home materials, newsletter promotions and PCS demonstrations to
groups such as PTA/PTO's. Utilizing a database driven tracking process, PCS
logs all families enrolled through a partner program and shares back a portion
of the subscription revenue to the school at the end of the school year.
The PCS - ZapMe! Alliance Program. In addition to the K-12 Partner
program, PCS has entered into a strategic alliance with ZapMe!
(www.zapme.net), a San Ramon, CA, based company that is delivering complete
computer lab and satellite connectivity solutions to Middle-Senior High
schools free in exchange for permission to promote their partner programs and
online teen-community. PCS has been chosen to be a content partner in which
ZapMe! promotes Edventures!.COM in exchange for revenue sharing and the
providing of certain amounts of free PCS content for their ZapMe! Netspace.
PCS is expanding the Edventures!.COM product to provide additional content and
services to appeal to the older ZapMe! students with a focus on technical and
engineering education.
ZapMe! will also be promoting the PCS name and the Academy of Engineering
program in the schools in which it is present. ZapMe! has over 8,000 U. S.
schools currently signed up for its programs. PCS expects this alliance to
build PCSEdventures!.COM, and Academy of Engineering name recognition through
quarterly take-home CD distributions, display through the ZapMe! Netspace and
other ZapMe! promotions done through e-mail and other venues.
Edventures!.COM 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. In addition, Pitsco has been developing a sales channel into
the homeschool market for several years now that can serve as a conduit for
the Edventures!.COM product.
Marketing and Other Agreements.
-------------------------------
Direct Sales Force. Currently, we have a direct sales force consisting
four employees and thirty-two independent agents. This direct sales force
markets our products and programs in a variety of methods to various users,
providers and others.
Lego Dacta and Pitsco Agreement. We have entered into a Marketing
Agreement with Lego Dacta and Pitsco, LLC ("Pitsco") for the sale of our "The
Academy of Engineering" product. Pitsco is an educational company that holds
the non-exclusive distribution rights to LEGO 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. We believe that the existing sales and marketing force of Pitsco,
will greatly increase the opportunity for introduction of our "The Academy of
Engineering" product across the country. To date, Pitsco has sold four units
of our The Academy of Engineering product.
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.
Edventures!.COM competes with Junior Net, Apollo, Zif Davis, MultiActive
Education and Disney Daily Blast as subscription models ranging from $5.95 per
month to $9.95 per month. However, none have the combination of program depth,
interactivity, assessment of student project progress, portfolio building,
monitored chat and safe communication environments that are standard features
on Edventures!.COM at $69.95 per year.
Cisco Systems sells a product called Networking Academy which is a
vocation-technical IT engineering program. Autodesk is partnered with a
program called Project Lead the Way that is a Cad/Engineering product as well.
Other competitors include Graphics Academy and the Academy of Multi-Media, as
well as educational manipulative distributors such as Fisher-Technic, Lasy and
K'Nex.
We believe that the hands-on project based learning market is growing
both in terms of users and companies offering products and services in this
field. Additional competitors of PCS include, but are not limited to, Aero
Racers, AK Peters, DEPCO, Inc., General Robotics, Lab Volt Systems,
Paxton-Patterson, OWI, Inc., Valiant Technology and Voyager. All of these
firms offer some form of hands-on technical curriculum, some including
deliverables, to the K-12 market.
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 unique and
sophisticated. 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 12 full-time employees of which four are in
sales, four are in design and project management, one in accounting and three
are in administration and clerical. 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 1655 Fairview
Avenue Suite #100, Boise, Idaho 83702. These offices consist of approximately
6,000 square feet of Class B office space. Rent obligations are $6,217/month
until expiration on February 28, 2002, unless extended by PCS.
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. This case is still in the
discovery stage and the Company has determined that it is too early to
evaluate the likelihood of an unfavorable outcome in this case.
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 is negotiating to settle the suit on the most
favorable terms possible. At March 31, 2002, the Company has accrued the full
amount.
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
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
------ ---------------
Chris LaRocco 4/7/99 5,000 (4)
David Chase 4/7/99 20,000 (1)
Sam and Marilyn Trozzo,
Trustees 5/19/99 140,000 35,000
Trozzo Charitable
Remainder 5/19/99 100,000 25,000
William A. Coolidge 5/19/99 60,000 15,000
Gayle F. Anderson (FBO) 5/19/99 40,000 10,000
Jack and Barbara Monroe,
Trustee 5/19/99 40,000 10,000
Gary Flack 5/19/99 20,000 5,000
James D. Holladay 5/19/99 50,000 12,500
Robert E. Ritter 5/19/99 10,000 2,500
Terry and Sally Hanson 5/19/99 10,000 2,500
David and Jama Fox 5/19/99 10,000 2,500
James V. Hawkins 6/3/99 40,000 10,000
Donald J. Farley 6/3/99 13,667 (2)
Richard E. Bean 6/22/99 100,000 25,000
D.J. Farley Profit Sharing
- FSB 6/23/99 60,000 15,000
Malcolm Davenport 6/23/99 20,000 5,000
Anthony A. Maher 6/23/99 60,000 15,000
Roy M. & Marian G. Svee,
Trustees of the Roy M.
and Marian
G. Svee Family Trust 6/23/99 40,000 10,000
Thomas E. Zemlicka 6/23/99 72,000 (2)
Sam and Marilyn Trozzo
Trustees 6/23/99 43,000 (4)
Ronald T. Davis, Trustee,
R.T.D. 7/14/99 40,000 10,000
Brent Fox 7/22/99 80,000 20,000
Richard Wright 7/22/99 20,000 (1)
James R. or Norma J.
Nugent, Trustees 7/22/99 80,000 20,000
Robert O. Grover 7/22/99 79,480.2 (1)
Anthony A. Maher 8/18/99 40,000 (1)
Donald J. Farley 8/18/99 40,000 (2)
Roy M. Svee 8/18/99 40,000 (2)
Cliff Davenport 8/18/99 40,000 (2)
Thomas E. Zemlicka 8/18/99 40,126 (2)
Richard E. Bean 9/1/99 100,000 25,000
Pat Mitchell 9/1/99 15,000 (1)
Lorentzen Family Trust 9/1/99 6,000 1,500
Roy and Rose Borone,
Trustee 9/1/99 100,000 25,000
Ranae Wenger 9/1/99 5,000 (1)
Jennifer Dixon 9/1/99 5,000 (1)
Bankers Investment Group,
Ltd. 9/15/99 400,000 100,000
Roy and Marian Svee,
Trustees 11/8/99 50,000 10,000
Ronald Everson 11/8/99 92,000 23,000
Kent Christensen 12/7/99 13,334 (1)
Robert O. Grover 12/17/99 15,000 (1)
Kent Christensen 12/17/99 10,000 (1)
David Chase 12/17/99 10,000 (1)
Patrick Mitchell 12/17/99 10,000 (1)
Richard Wright 12/17/99 10,000 (1)
Ranae Wenger 12/17/99 3,000 (1)
Jennifer Dixon 1/17/99 3,000 (1)
Andrew Hamblin 12/17/99 2,000 (1)
Justin R. Mayfield 12/17/99 4,000 (1)
International Capital
Group, Ltd. 12/17/99 10,000 (4)
Roy and Marian Svee,
Trustees 12/17/99 90,000 (2)
Donald J. Farley, FSB fbo 12/17/99 60,000 (2)
Anthony A. Maher 12/17/99 60,000 (2)
Anthony A. Maher 12/20/99 40,000 (2)
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)
(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.
Holders.
--------
As of July 8, 2002, there were 14,270,347 shares of common stock
outstanding and approximately 365 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.
----------------------------------------------------------
Plan of Operation.
------------------
For the near-term, we have two objectives. First, it is our intent to
focus our marketing efforts to increase sales of our Academy of Engineering,
Edventures! and Discover! Labs. We are working with a local public
relations firm to increase corporate, brand and product awareness. We
continue to promote our subscription model to various target markets which
we have identified. Our second objective involves our ongoing commitment to
product development. We have dedicated resources to curriculum and content
development. It is our desire to remain on the leading edge of project-based
learning within the education marketplace.
Results of Operation.
---------------------
Results and Comparison for Fiscal Years
Fiscal year ended March 31, 2002 resulted in a net loss of ($1,560,348).
This net loss is a decrease of ($1,121,013), or 42%, from the net loss for
fiscal year 2001 of ($2,681,361). The Basic and Diluted Loss per Share for
fiscal year 2002 is ($0.12), as compared to a loss per share of ($0.26) for
fiscal year 2001. This decrease in loss per share of ($0.14), or 54%, results
from two components (1) an increase in our overall net loss, ($0.11)/share,
and (2) an increase in the number of shares outstanding, ($0.03)/share.
Details of changes in revenues and expenses can be found below.
Revenues
Revenues of $572,356 for fiscal year 2002 were up from revenues of
$255,717 for fiscal year 2001 by $316,639, or 124%. 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 $134,821, or 143%, from fiscal year 2001,
$93,986, to fiscal year 2002, $228,807. This increase is due primarily to
increase sales as previously mentioned.
Operating Expenses
Operating expenses decreased by $1,246,982, or 44%, from fiscal year
2001, when operating expenses were $2,804,524 to fiscal year 2002 when
operating expenses were $1,557,542. 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, 2002, the Company had $1,046 is
Cash, with total current assets of $367,671 and total current liabilities of
$1,965,388. The Company has a stockholders' deficit of ($1,507,638).
Item 7. Financial Statements.
---------------------
Consolidated Financial Statements for the years ended
March 31, 2002 and 2001
Independent Auditors Report
Consolidated Balance Sheet - March 31, 2002
Consolidated Statements of Operations for the
years ended March 31, 2002 and 2001
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
for the Years Ended March 31, 2002 and 2001
Notes to Financial Statements
PCS EDVENTURES!.COM, INC.
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
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.
Boise, Idaho
We have audited the accompanying consolidated balance sheet of PCS
Edventures!.COM, Inc. as of March 31, 2002 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for
the years ended March 31, 2002 and 2001. These consolidated financial
statements are the responsibility of the Company 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. as of March 31, 2002 and the consolidated results
of their operations and their cash flows for the years ended March 31, 2002
and 2001 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 8 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 8. The consolidated financial statements do not include any adjustments
that might result from the outcome of the uncertainties.
/S/HJ & Associates
HJ & Associates, LLC
Salt Lake City, Utah
June 26, 2002
F-3
PCS EDVENTURES!.COM, INC.
Consolidated Balance Sheet
ASSETS
March 31,
2002
CURRENT ASSETS
Cash $ 1,046
Accounts receivable 355,004
Debt offering costs, net (Note 2) 11,621
---------
Total Current Assets 367,671
---------
FIXED ASSETS, NET (Note 3) 83,079
---------
OTHER ASSETS
Deposits 7,000
---------
Total Other Assets 7,000
---------
TOTAL ASSETS $ 457,750
==========
The accompanying notes are an integral part of these financial statements.
F-4
PCS EDVENTURES!.COM, INC.
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31,
2002
CURRENT LIABILITIES
Bank overdraft $ 15,272
Accounts payable 274,350
Wages payable 22,211
Payroll taxes payable 120,572
Accrued interest 43,383
Accrued expenses 157,432
Unearned revenue 397,015
Notes payable - related parties (Note 5) 158,882
Notes payable (Note 6) 776,271
-----------
Total Current Liabilities 1,965,388
-----------
Total Liabilities 1,965,388
-----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, no par value, authorized 50,000,000
shares; 13,261,522 shares issued and outstanding 21,596,003
Deferred consulting fees (27,344)
Accumulated deficit (23,076,297)
------------
Total Stockholders' Equity (Deficit) (1,507,638)
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 457,750
============
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Operations
For the Years Ended
March 31,
2002 2001
REVENUE $ 572,356 $ 255,717
COST OF GOODS SOLD 228,807 93,986
---------- ----------
GROSS PROFIT 343,549 161,731
---------- ----------
OPERATING EXPENSES
Research and development costs - 150,000
Depreciation expense 82,832 69,226
General and administrative 1,474,710 2,585,298
---------- ----------
Total Operating Expenses 1,557,542 2,804,524
---------- ----------
OPERATING LOSS (1,213,993) (2,642,793)
OTHER INCOME AND EXPENSES
Interest expense (346,355) (41,187)
Interest income - 2,619
---------- ----------
Total Other Income and Expenses (346,355) (38,568)
---------- ----------
NET LOSS $(1,560,348) $(2,681,361)
========== ==========
BASIC AND DILUTED LOSS PER SHARE (Note 1) $ (0.12) $ (0.26)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 12,763,365 10,148,792
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Stockholders' Equity (Deficit)
Deferred
Common Shares Consulting Accumulated
Shares Amount Fees Deficit
Balance, March 31, 2000 8,247,714 18,528,262 $ - $(18,834,588)
Common stock issued for
services at an average
price of $0.43 per share 325,237 138,672 - -
Warrants granted below
market value and exercised
for cash at $0.75 per
share 203,161 152,371 - -
Stock offering costs - (150,339) - -
Common stock issued for
prepaid services at
$0.71 per share 100,000 71,000 (71,000) -
Common stock issued to
board members for services
at $0.71 per share 1,500,000 1,065,000 - -
Options granted below
market value - 84,463 (84,463) -
Common stock issued for
cash at $0.75 per share 1,599,588 1,199,691 - -
Common stock issued for
prepaid services at $.075
per share 125,000 93,750 (93,750) -
Stock offering costs - (143,075) - -
Common stock issued to
purchase assets at $0.75
per share 200,000 150,000 - -
Common stock issued for
note consideration at $0.75
per share 24,000 18,000 - -
Common stock issued for
conversion of warrants at
$0.67 per share 59,259 40,000 - -
Amortization of expenses
prepaid with common stock - - 76,147 -
Net loss for the year ended
March 31, 2001 - - - (2,681,361)
Balance, March 31, 2001 12,383,959 $21,247,795 $(173,066)$(21,515,949)
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
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-8
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Cash Flows
For the Years Ended
March 31,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,560,348) $(2,681,361)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 82,832 69,226
Amortization of debt offering costs 79,092 -
Amortization of debt discount 166,980 -
Amortization of expenses prepaid with common
stock 145,722 -
Common stock issued for services 33,130 1,399,885
Changes in operating assets and liabilities:
(Increase) in accounts receivable (330,783) (22,904)
(Increase) in prepaid expenses - (102,066)
Decrease in inventories - 525
Decrease in notes receivable - 4,100
Increase in accounts payable and
accrued liabilities 328,975 37,530
Increase (decrease) in interest payable 36,729 (2,003)
(Decrease) in commitments and contingencies (1,938) (48,164)
Increase in unearned revenue 367,230 29,785
--------- ----------
Net Cash Used by Operating Activities (652,379) (1,315,447)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (1,031) (3,255)
--------- ----------
Net Cash Used by Investing Activities (1,031) (3,255)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in cash overdraft 9,426 (14,956)
Proceeds from related parties 89,500 166,522
Payments to related parties (60,750) (75,506)
Payments on long-term debt (65,831) (13,979)
Proceeds from long-term debt 717,500 84,502
Financing debt issue costs (90,713) -
Stock offering costs paid - (143,075)
Proceeds from common stock 50,670 1,241,723
--------- ----------
Net Cash Provided by Financing Activities 649,802 1,245,231
--------- ----------
DECREASE IN CASH (3,608) (73,471)
CASH AT BEGINNING OF YEAR 4,654 78,125
--------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,046 $ 4,654
========= ==========
The accompanying notes are an integral part of these consolidated financial
statements.
F-9
PCS EDVENTURES!.COM, INC.
Consolidated Statements of Cash Flows (Continued)
For the Years Ended
March 31,
2002 2001
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of stock for payment on notes payable
and interest $ - $ 18,000
Common stock issued for services $ 33,130 $ 1,399,885
Common stock issued for fixed assets $ - $ 150,000
Common stock issued as consideration for notes
payable $ 18,530 $ -
Common stock issued for conversion of accounts
payable $ 72,774 $ -
Cash Paid For:
Interest $ 2,145 $ 39,184
Income taxes $ - $ -
The accompanying notes are an integral part of these consolidated
financial statements.
F-10
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
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.
F-11
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Provision for Taxes
At March 31, 2002, the Company has a net operating loss carryforward
available to offset future taxable income of approximately $7,520,000,
which will expire in 2022. If substantial changes in the Company's
ownership should occur, there would also be an annual limitation of the
amount of NOL carryfowards which could be utilized. No tax benefit had
been reported in the consolidated financial statements, because the
Company believes there is a 50% or greater chance the carryforwards will
expire unused. The tax benefits of the loss carryforwards are offset by
a valuation allowance of the same amount.
The income tax benefit differs from the amount computed at federal
statutory rates of approximately 38% as follows:
For the Years Ended
March 31,
2002 2001
Income tax benefit at statutory rate $ 433,711 $ 522,681
Change in valuation allowance (433,711) (522,681)
--------- ----------
$ - $ -
========= ==========
Deferred tax assets are comprised of the following:
For the Years Ended
March 31,
2002 2001
Income tax benefit at statutory rate $ 2,791,595 $ 2,357,884
Change in valuation allowance (2,791,595) (2,357,884)
----------- ------------
$ - $ -
=========== ============
Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for the 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-12
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Revenue Recognition
The Company recognizes revenues as required by Staff Accounting
Bulletin No. 101 "Revenue Recognition in Financial Statements". The
Company recognizes revenues relating to the Academy of Engineering
(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. 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.
e. Concentrations of Risk - Significant Supplier
The Company uses one supplier to provide goods used in the Company's
labs. This significant supplier accounts for 82% of the Company's
cost of goods sold and 26% of the Company's accounts payable balance.
f. Basic and Diluted 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 2,682,837 potential
common stock equivalents from the calculation of basic loss per
share.
For the Years Ended
March 31,
2002 2001
Basic loss per share from operations:
Numerator - loss $(1,560,348) $ (2,681,361)
Denominator - weighted average number
of shares outstanding 12,763,365 10,148,792
----------- ------------
Loss per share $ (0.12) $ (0.26)
=========== ============
F-13
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Research and Development
All amounts expended for research and development are charged to
expense as incurred. The Company expensed $-0- and $150,000 as
research and development for the years ended March 31, 2002 and 2001,
respectively.
h. 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
$79,092 and $0 in 2002, and 2001, respectively.
i. Newly Issued Accounting Pronouncements
SFAS No.'s 141 and 142 -- In June 2001, the Financial Accounting
Standards Board (FASB) adopted Statement of Financial Accounting
Standards SFAS No. 141, "Business Combinations," and SFAS No. 142,
"Goodwill and Other Intangible Assets." SFAS No. 141 is effective as
to any business combination occurring after June 30, 2001 and certain
transition provisions that affect accounting for business
combinations prior to June 30, 2001 are effective as of the date that
SFAS No. 142 is applied in its entirety, which will be January 1,
2002 for the Company. SFAS No. 142 is effective, generally, in
fiscal years beginning after December 15, 2001, which will be the
fiscal year ending March 31, 2002 for the Company.
SFAS No. 141 provides standards for accounting for business
combinations. Among other things, it requires that only the purchase
method of accounting be used and that certain intangible assets
acquired in a business combination (i.e. those that result from
contractual or other legal rights or are separable) be recorded as an
asset apart from goodwill. The transition provisions require that an
assessment be made of previous business combinations and, if
appropriate, reclassifications be made to or from goodwill to adjust
the recording of intangible assets such that the criteria for
recording intangible assets apart from goodwill is applied to the
previous business combinations.
F-14
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Newly Issued Accounting Pronouncements (Continued)
SFAS No. 142 provides, among other things, that goodwill and
intangible assets with indeterminate lives shall not be amortized.
Goodwill shall be assigned to a reporting unit and annually assessed
for impairment. Intangible assets with determinate lives shall be
amortized over their estimated useful lives, with the useful lives
reassessed continuously, and shall be assessed for impairment under
the provisions of SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
Goodwill is also assessed for impairment on an interim basis when
events and circumstances warrant. Upon adoption of SFAS No. 142, the
Company will assess whether an impairment loss should be recognized
and measured by comparing the fair value of the "reporting unit" to
the carrying value, including goodwill. If the carrying value
exceeds fair value, then the Company will compare the implied fair
value of the goodwill" (as defined in SFAS No. 142) to the carrying
amount of the goodwill. If the carrying amount of the goodwill
exceeds the implied fair value, then the goodwill will be adjusted to
the implied fair value.
While the Company has not completed the process of determining the
effect of these new accounting pronouncements on its financial
statements, the Company currently expects that there will be no
reclassification in connection with the transition provisions of SFAS
No. 141 based on clarifications of the transition provisions issued
by the FASB in October 2001. Accordingly, the Company expects that,
after implementation of SFAS No. 142, all intangible assets will be
amortizable and the goodwill will not be amortizable.
SFAS No. 143 -- On August 16, 2001, the FASB issued SFAS No. 143,
"Accounting for Asset Retirement Obligations," which is effective for
fiscal years beginning after June 15, 2002. It requires that
obligations associated with the retirement of a tangible long-lived
asset be recorded as a liability when those obligations are incurred,
with the amount of the liability initially measured at fair value.
Upon initially recognizing a liability for an accrued retirement
obligation, an entity must capitalize the cost by recognizing an
increase in the carrying amount of the related long-lived asset.
Over time, the liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful life
of the related asset. Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a
gain or loss upon settlement. While the Company has not completed
the process of determining the effect of this new accounting
pronouncement on its financial statements, the Company currently
expects that the effect of SFAS No. 143 on the Company's consolidated
financial statements, when it becomes effective, will not be
significant.
F-15
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Newly Issued Accounting Pronouncements (Continued)
SFAS No. 144 - On October 3, 2001, the Financial Accounting Standards
Board issued SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets" which is effective for financial statements
issued for fiscal years beginning after December 15, 2001 and,
generally, its provisions are to be applied prospectively. SFAS 144
supercedes SFAS Statement No. 121 (FAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of." SFAS 144 applies to all long-lived assets (including
discontinued operations) and consequently amends Accounting
Principles Board Opinion No. 30 (APB 30), "Reporting Results of
Operations Reporting the Effects of Disposal of a Segment of a
Business."
SFAS 144 develops one accounting model (based on the model in SFAS
121) for long-lived assets that are to be disposed of by sale, as
well as addresses the principal implementation issues. SFAS 144
requires that long-lived assets that are to be disposed of by sale be
measured at the lower of book value or fair value less cost to sell.
That requirement eliminates the requirement of APB 30 that
discontinued operations be measured at net realizable value or that
entities include under "discontinued operations" in the consolidated
financial statements amounts for operating losses that have not yet
occurred.
Additionally, FAS 144 expands the scope of discontinued operations to
include all components of an entity with operations that (1) can be
distinguished from the rest of the entity and (2) will be eliminated
from the ongoing operations of the entity in a disposal transaction.
While the Company has not completed the process of determining the
effect of this new accounting pronouncement on its consolidated
financial statements, the Company currently expects that the effect
of SFAS No. 144 on the Company's consolidated financial statements,
when it becomes effective, will not be significant.
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,
2002
Computer equipment $ 343,093
Office equipment 54,638
Education assets and software 278,885
Accumulated depreciation (593,537)
---------
Total Fixed Assets $ 83,079
=========
F-16
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 3 - FIXED ASSETS (Continued)
Depreciation expense for the years ended March 31, 2002 and 2001 was
$82,832 and $69,226, respectively.
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.
NOTE 5 - NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consisted of the following at March
31, 2002:
Notes payable to the President bearing interest
at 10% per annum, all unpaid principal and
interest due on demand $ 158,882
----------
Total Notes Payable - Related Parties $ 158,882
==========
F-17
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 6 - NOTES PAYABLE
Notes payable consisted of the following at March 31, 2002:
Notes payable related to private placement memorandum
bearing interest at 8.00% per annum, with payments due
April 6, 2002, through August 29, 2002. $ 602,500
Debt discount related to warrants issued in conjunction
with private placement memorandum, net of
accumulated amortization of $166,980. (24,654)
Notes payable to three individuals bearing interest at
18.00% per annum, with payment due on demand,
secured by accounts receivable 100,000
Line of credit with a bank bearing interest at 13.99%
per annum, unsecured 54,760
Note payable to a bank bearing interest at 11.25%
with payments due on demand, unsecured. 25,208
Note payable to a company bearing interest at 18.50%,
with monthly payments of $1,468, due September 2002,
unsecured. 18,457
---------
Total notes payable - current portion $ 776,271
=========
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Operating Lease Obligation
The Company leases its office under a non-cancelable lease agreement
accounted for as an operating lease expiring through December 2003.
Minimum rental payments under the non-cancelable operating lease is
as follows:
Years ending
March 31, Amount
2003 $ 66,000
2004 49,500
All other years -
---------
Total $ 115,500
=========
F-18
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)
Rent expense was $71,848 and $68,134 for the years ended March 31,
2002 and 2001, 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 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. This case is still in the discovery stage and
the Company has determined that it is too early to evaluate the
likelihood of an unfavorable outcome in this case.
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 is negotiating to settle the suit on the most favorable
terms possible. At March 31, 2002, the Company has accrued the full
amount.
Contracts and Agreements
On March 27, 2002, the Company executed an agreement with a marketing
and product development firm to promote the Company's product in
various high profile industry journals and websites. The Company has
agreed to issue 515,000 shares of common stock, valued at $27,500, to
the marketing firm as compensation for their services. The term of
the agreement is six months. As of March 31, 2002, no shares have
been issued and no services have yet been performed.
NOTE 8 - 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.
F-19
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 8 - GOING CONCERN (Continued)
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 9 - DILUTIVE INSTRUMENTS
a. Stock Options
The Company applied Accounting Principles Board ("APB") Option 25,
"Accounting for Stock Issued to Employees," and related
interpretations in accounting for all stock option plans. Under APB
Option 25, compensation cost is recognized for stock options granted
to employees when the option price is less than the market price of
the underlying common stock on the date of grant.
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 101% percent for all years;
risk-free interest rates of 3% to6%, and expected lives of 3 to 10
years.
For the Years Ended
March 31,
2002 2001
Net loss:
As reported $(1,560,348) $(2,681,361)
Pro Forma (1,780,940) (3,121,178)
Net loss per share:
As reported $ (0.12) $ (0.26)
Pro Forma (0.14) (0.31)
During the initial phase-in period of SFAS No. 123, the effect of
pro forma results are not likely to be representative of the effects
on pro forma results in future years since options vest over several
years and additional options could be granted each year.
F-20
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 9 - DILUTIVE INSTRUMENTS
a. Stock Options (Continued)
The Company has granted the following options as of March 31, 2002:
Date of Exercise Exercise Amount
Description Grant Number Price Exercised
1) Employee 2-05-00 50,000 $ 0.75 0
2) Officers/directors 4-20-00 600,000 $ 0.75 0
3) Employee 6-01-00 45,000 $ 0.75 0
4) Consultant 9-20-00 200,000 $ 0.50 0
5) Employees 9-01-00 200,000 $ 0.75 0
6) Director 10-01-00 200,000 $ 0.75 0
7) Employee 01-05-01 25,000 $ 0.75 0
8) Employee 6-15-01 25,000 $ 0.75 0
9) Employee 10-24-01 50,000 $ 0.30 0
10) Employee 12-1-01 24,230 $ 0.15 0
11) Board Members 12-10-01 1,000,000 $ 0.30 0
---------
2,419,230
=========
Risk-Free
Fair Interest Expected Expected
Description Value Rate Life Volatility
1) Employee $0.46 6.05% 3 92.82%
2) Officers/directors $0.46 6.15% 3 91.32%
3) Employee $0.46 6.15% 3 92.82%
4) Consultant $0.42 6.15% 3 89.37%
5) Employees $0.52 6.21% 3 85.69%
6) Director $0.52 6.21% 3 84.39%
7) Employee $0.52 6.21% 3 84.39%
8) Employee $0.39 3.76% 3 76.69%
9) Employee $0.19 3.76% 3 100.52%
10) Employee $0.14 3.76% 3 99.80%
11) Board Members $0.20 5.69% 10 99.80%
On April 20, 2000, the Company granted 600,000 options to officers
and directors out of the 800,000 authorized on January 19, 2000. On
October 1, 2000, the Company granted the remaining 150,000 options
authorized to a director. All of the option exercise prices are
$0.75 per share with a fair value determined by Black Scholes of
$0.46 and $0.52, respectively.
F-21
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 9 - DILUTIVE INSTRUMENTS
a. Stock Options (Continued)
On April 20, 2000, the Company authorized the granting of 400,000
options to employees and directors. On June 1, 2000, the Company
granted 45,000 options to an employee. On September 1, 2000, the
Company granted 200,000 options to four employees. On October 1,
2000, the Company granted 50,000 options to a director. On January
5, 2001, the Company granted 25,000 options to an employee. On
March 31, 2001, the Company had not granted 80,000 options. Each
option granted has an exercise price of $0.75 per option and a 3-
year life with a fair value determined by Black Scholes of $0.46,
$0.52, $0.52 and $0.52, respectively.
On September 22, 2000, the Company authorized the granting of
250,000 options to employees and directors of the Company with
exercise prices of $0.75 and a 3-year life. None of these options
have been granted.
On June 15, 2001, the Company granted 25,000 options to an employee.
These options had an exercise price of $ 0.75 per option and a 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.
b. Warrants
On April 27, 2000, three individuals were granted a total of 56,750
warrants which were converted into 31,750 shares of common stock.
The conversion rate was $0.675 per share and as such, no
compensation expense was recorded because the grant price exceeded
the market value.
On September 15, 2000, the Company granted warrants allowing the
holders to purchase 342,831 shares of the Company's common stock.
The warrants are exercisable at a price of $0.01 per share for two
years. On September 15, 2000, 203,161 warrants were converted into
shares of common stock. The fair value of the warrants was $150,339
and was recorded as a stock offering cost, because the warrants were
issued to individuals who raised funds for the Company.
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.
F-22
PCS EDVENTURES!.COM, INC.
Notes to the Consolidated Financial Statements
March 31, 2002 and 2001
NOTE 10 -RELATED PARTY TRANSACTIONS
During the years ended March 31, 2002, and 2001, the Company repaid
of debt owed to the president of the Company of $60,750 and $75,506,
respectively.
During the years ended March 31, 2002, and 2001, the Company
borrowed from the President of the Company $89,500 and $166,522,
respectively.
On September 22, 2000, the President of the Company was issued
500,000 shares of common stock for services valued at $355,000.
NOTE 11 - SUBSEQUENT EVENTS
Stock Issuances
On April 1, 2002, the Company issued 313,417 shares of common stock
for the conversion of various accounts payable totaling $25,389.
On April 1, 2002, the Company issued 204,000 shares for the
conversion of debt totaling $27,541.
On April 1, 2002, the Company issued 300,000 shares of common stock
for prepaid services valued at $21,000.
Subsequent to March 31, 2002, the Company issued 191,100 shares of
common stock as consideration for the exchange of 382,200 free-trading
unrestricted common stock for 382,200 shares of restricted common
shares. The shares were valued at $64,762.
Subsequent to March 31, 2002, warrant holders have exercised warrants
to purchase 20,308 shares of the Company's common stock in exchange
for $203.
Stock Cancellations
On April 8, 2002, the Company accepted the return of, and cancelled,
20,000 shares previously issued to Warren Black (See Note 7).
Private Placement Memorandum
As of April 6, 2002, the Company has defaulted on several of the
individual notes included in the private placement memorandum. This
default triggers an increase in interest rate on the total
outstanding debt, of $602,500, from 8% to 18% per annum. The
Company is currently attempting to negotiate extensions on the debt,
but has not reached any definitive agreement.
F-23
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 55 Chairman of the Board,
President, and
Chief Executive Officer
Robert O. Grover 39 Executive Vice President, Chief
Technology Officer
Christina M. Vaughn 33 Vice President, Chief Financial
Officer
Donald J. Farley 51 Secretary, Director
Roy M. Svee 75 Treasurer, Director
Cecil D. Andrus 74 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 June 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.
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. 3/31/02 120,000 0 0 0 0 0 0
Maher 3/31/01 119,500 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, 2002 and 2001 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
PCS does not currently compensate its directors for director services to
PCS. We anticipate that more formal compensation arrangements with our
directors will be finalized within the next fiscal year.
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
* 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 July 8, 2002, 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 1,758,160(3) 10.53%
1655 Fairview Avenue, Suite 100,
Boise, Idaho 83702
Robert O. Grover 521,467(4) 3.12%
1655 Fairview Avenue, Suite 100,
Boise, Idaho 83702
Roy M. Svee 1,050,000(5) 6.29%
1655 Fairview Avenue, Suite 100,
Boise, Idaho 83702
Donald J. Farley 1,172,000(6) 7.02%
1655 Fairview Avenue, Suite 100,
Boise, Idaho 83702
Cecil D. Andrus 123,333 (2)
1655 Fairview Avenue, Suite 100,
Boise, Idaho 83702
Christina M. Vaughn 75,000(7) (2)
1655 Fairview Avenue, Suite 100,
Boise, Idaho 83702
All officers and Directors as a
group 4,699,960 28.16%
(6 persons)
(1) Based upon 16,689,577 shares of common stock issued and outstanding
as of July 8, 2002, which includes 2,419,230 shares that may be issued
upon the exercise of currently exercisable options, 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) 1,100,000 shares owned of record by Mr.
Maher, (ii) 9,500 shares which are beneficially owned by a family limited
liability named Sullivan Maher for which Mr. Maher acts as a manager (iii)
35,000 shares owned by the Nick Maher foundation of which Mr. Maher is a
trustee, (iv) 4,500 shares owned by E.L. Sullivan which are voted by Mr. Maher
pursuant to an irrevocable proxy, (v) 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 April 2003, (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) 6,467 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
2002.
(5) These shares include (i) 600,000 shares owned of record by Mr. Svee,
(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 April 2003, (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.
(6) These shares include (i) 722,000 shares owned of record by Mr.
Farley, (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 April 2003, 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 are 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.
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, 2002 and 2001, 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 years ended March 31, 2002, and 2001, the Company repaid of
debt owed to the President of the Company of $60,750 and $75,706,
respectively.
During the years ended March 31, 2002, and 2001, the Company borrowed from
the President of the Company $89,500 and $16,522, respectively.
As of March 31, 2002, the Company had a note payable to Mr. Maher in the
amount of $158,882. The note bears interest at 10% per annum and is due upon
demand.
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, 2002.
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
* 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
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
PCS EDVENTURES!.COM, INC.
Date: 7/15/2002 By/s/Anthony A. Maher
------------- -------------------------------------
Anthony A. Maher
CEO, President and Chairman of the
Board of Directors
Date: 7/15/2002 By/s/Donald J. Farley
------------- -------------------------------------
Donald J. Farley
Secretary and Director
Date: 7/15/2002 By/s/Cecil D. Andrus
--------- ------------------
Director