What changed in this filing

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Item 1. Financial Statements

2016-08-10 compared with 2016-02-11 · 679 added, 542 removed, 189 unchanged (87% of the section changed)

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I - FINANCIAL INFORMATION

Balance Sheets

Statements of Operations (Unaudited)

Statement of Stockholders’

Equity (Deficit) (Unaudited)

Statements of Cash Flows (Unaudited)

to Consolidated Financial Statements (Unaudited)

sheet (Unaudited)

of Operations (Unaudited)

of Stockholders’

Equity (Unaudited)

of Cash Flows (Unaudited)

to Financial Statements (Unaudited)

Management’s

Discussion and Analysis of Financial Condition and Results of Operations

Discussion and Analysis of Financial Conditions and Results of Operations

and Procedures

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EDVENTURES!.COM, INC.

December 31, 2015

June 30, 2016

March 31, 2016

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Other Receivable

Intangible Assets, Net

Total Current Assets

FIXED ASSETS, net of accumulated depreciation of $158,128 and $155,307, respectively

Note Receivable, net of allowance of $49,513

Total Other Assets

1 unchanged sentence

EDVENTURES!.COM, INC.

Sheets (continued)

December 31, 2015

June 30, 2016

March 31, 2016

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Deferred revenue

Note payable, convertible, related party, net of $0 and $24,063 discount

as of December 31, 2015 and March 31, 2015, respectively

Note payable, related party, net discount of $0 and $38,184

Current portion of long term liabilities

Total Short term and current portion

long term notes payable

Note payable, convertible, related party, net discount of $0 and $0, respectively.

Note payable, related party, net discount of $0 and $0 respectively.

Lines of credit payable

Total Current Liabilities

Long term debt

Total Long Term Liabilities

Notes payable, related party, long term

Notes payable, long term, convertible

Total Liabilities

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Stock payable

Restricted Stock Units payable

Accumulated deficit

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Total Stockholders’

Equity (Deficit)

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

accompanying notes are an integral part of these financial statements.

EDVENTURES!.COM, INC.

of Operations

For the three months ended

For the Nine Months Ended

International service revenue

Domestic STEM Sales

International Revenue

Learning Center Revenue

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COST OF SALES

OPERATING EXPENSES

OPERATING EXPENSE

Salaries and wages

Depreciation and amortization

Depreciation and amortization expense

General and administrative expenses

1 unchanged sentence

OPERATING INCOME (LOSS)

OTHER INCOME AND EXPENSES

Interest income

OTHER EXPENSES

Interest expense

Gain on Bad Debt Collection

Total Other Income and (Expenses)

LOSS FROM CONTINUING OPERATIONS

LOSS FROM DISCONTINUED OPERATIONS

Total Other Expenses

NET INCOME (LOSS)

COMPREHENSIVE INCOME/(LOSS)

LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic and diluted net income (loss) per common share:

Basic and diluted net loss per share

Weighted Average Number of Shares Outstanding, Basic and Diluted

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

Net income or (loss) per common share

Weighted average number of common shares outstanding:

accompanying notes are an integral part of these financial statements.

2 unchanged sentences

Equity (Deficit)

Stockholders’

Shareholders’

Equity (Deficit)

Balance at 03/31/16

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$ (1,777,571 )

Stock for exercise of options and warrants

Stock for Services

Stock for cash

Stock for RSU’s

Conversion of Notes Payable

Option/Warrant Expense

Net Loss through 12/31/2015

Stock payable for Employee

Stock issued for Services

Conversion of notes payable for common stock

Option Expense

Balance at 06/30/2016 (unaudited)

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EDVENTURES!.COM, INC.

Statements of Cash Flows

For the Nine Months Ended

of Cash Flows

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net loss to net cash provided (used) by operating activities:

Net Income (Loss)

Adjustments to reconcile net income (loss) to net cash used by operating activities:

Debt discount amortization

Depreciation and amortization

Amortization of intangible assets

Depreciation expense

Common stock issued for services

Common stock for settlement

Amortization of fair value of stock options

Amortization of brain molds

Impairment of Brain Molds

(Gain) on Bad Debt Collection

Changes in operating assets and liabilities:

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(Increase) decrease in other assets

(Decrease) increase in accounts payable and accrued liabilities

Increase (decrease) in deferred revenue

Net Cash Provided (Used) by Operating Activities

(Decrease) increase in accounts payable and accrued expenses

Increase (decrease) in unearned revenue

Net Cash Used by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

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CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale of stock

Proceeds from notes payable

Proceeds from notes payable, related party

Borrowings on debt

Principal payments on debt, Convertible debt

Principal payments on debt

Net Cash Used by Financing Activities

Proceeds from note payable –

related party

Payment on debt –

Principle Payments on Debt

Principal payments on debt –

related party

Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash

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of Cash Flows (continued)

For the Nine Months Ended

For the Three Months Ended

NON-CASH INVESTING & FINANCING ACTIVITIES

RSU accrued in prior period and issued in current period

Conversion of debt

Debt discount

Stock payable accrued in prior period and issued in current period

For the Nine Months Ended

Common Stock for conversion of RSUs

Conversion of Debt into common Stock

CASH PAID FOR:

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1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

financial statements presented are those of PCS Edventures!.com, Inc., an Idaho corporation (“PCS”

or “the Company”).

October 1994, PCS exchanged common stock on a one-for-one basis for common stock of PCS Schools, Inc.

As a result of this exchange,

PCS Schools, Inc.

became a wholly-owned subsidiary of PCS.

In the late 1990s, the Company divested the stand-alone learning labs

to focus on the creation of turn-key lab modules coupled with web-based technology for use in the classroom and afterschool programs.

March 27, 2000, PCS changed its name from PCS Education Systems, Inc.

Edventures.com, Inc.

(the Company) sells into the STEM education market with (1) an existing STEM library and deep expertise in

creating STEM solutions comprised of curriculum and materials;

(2) a unique learning methodology –

an adaptive (customized

to individual learners), experiential (hands-on in nature) learning framework that can be monetized in a number of ways, with

what the Company believes is an approach to educational assessment and incentivizing students for the future, and the Company

is an innovative leader in this area;

(3) an innovative K12 robotics and engineering system comprised of hardware and software

specifically designed to engage students in STEM topics such as hands-on physics, engineering, and coding;

(4) a long history

as a prime STEM provider in the Kingdom of Saudi Arabia, a relationship which the Company believes will continue to provide revenue

and (5) a continual view to the future of STEM education developments, exemplified by the Company’s anticipated

release of a STEM drone program to enhance its other product offerings.

education market is seasonal in its order flow and the Company has implemented a number of initiatives to provide revenue streams

that diversify this order flow seasonality.

The Company entered the retail consumer space with a retail product launch this year

and also has a working model for experiential learning labs.

With a plan to expand higher margin digital delivery products, the

Company is now in the development stage of a unique, subscription-based online learning system that can be licensed to schools

or non-profit organizations, as well as be used in the home environment.

The Company’s acquisition of Thrust UAV is also

expected to diversify revenue streams, as drone sales are not anticipated to be as seasonal as our education products.

financial statements presented herein are those of the Company.

October 1994, the Company exchanged common stock on a one-for-one basis for common stock of PCS Schools, Inc.

As a result of this

exchange, PCS Schools, Inc.

became a wholly-owned subsidiary of the Company.

In the late 1990s, the Company divested the stand-alone

learning labs to focus on the creation of turn-key lab modules coupled with web-based technology for use in the classroom and

afterschool programs.

March 27, 2000, the Company changed its name from PCS Education Systems, Inc.

to PCS Edventures!.

August 2001, PCS successfully completed a public offering pursuant to an SB-2 Registration Statement and began trading publicly

on the OTC Bulletin Board (“OTCBB”).

November 30, 2005, PCS entered into an agreement with 511092 N.B.

LTD., a Canadian corporation (LabMentors), to exchange PCS common

stock for common stock of 511092 N.B.

LTD., which exchange was completed in December, 2005, with LabMentors becoming a wholly-owned

August 2001, the Company successfully completed an SB-2 registration filing with the Securities and Exchange Commission (the “SEC”)

and began trading publicly on the OTC Bulletin Board.

November 30, 2005, the Company entered into an agreement with 511092 N.B.

LTD., a Canadian corporation (LabMentors), to exchange

the Company’s common stock for common stock of 511092 N.B.

LTD., which exchange was completed in December, 2005, with LabMentors

becoming a wholly-owned subsidiary.

In December 2005, the name of this subsidiary was formally changed to PCS LabMentors, Ltd.

(See Note 17).

divested LabMentors in August of 2013.

The Company divested LabMentors, the wholly-owned subsidiary, in August of 2013.

January, 2012, the Company committed to a business plan enhancement, which included the opening, operating, and licensing of EdventuresLab

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been opened and were operating in the Idaho Treasure Valley.

January 31, 2013, PCS formed a subsidiary called Premiere Science, Inc., incorporated and registered in the State of Idaho.

subsidiary is 100% wholly-owned by the Company and was formed to use as an additional sales and marketing tool to gain other business

opportunities.

There were no operations for this subsidiary during the quarter year ended December 31, 2015.

January 31, 2013, the Company formed a subsidiary called Premiere Science, Inc., incorporated and registered in the State of Idaho.

The subsidiary is 100% wholly-owned by the Company and was formed to use as an additional sales and marketing tool to gain other

business opportunities.

There were no operations for the subsidiary during the quarter ended June 30, 2016.

September 26, 2014, the shareholders voted for the proposal to grant the Board of Directors the authority to change the name of

the Company in a fashion that will remove the “.com”, but retain the current brand.

the Company in a fashion that will remove the “.com”

from its name, but retain the current brand.

July 23, 2015, the Board of Directors resolved that the name of the Company be changed to PCS Edventures!, Inc.

No amendment to

the Company’s Articles of Incorporation has yet been filed, though it is anticipated that following the assignment of a

new Cusip Number and the required filing with the Financial Industry Regulatory Authority, that this name change will become effective.

the Company’s Articles of Incorporation has yet been filed, although the Company anticipates that, following the assignment

of a new Cusip Number and the required filing with the Financial Industry Regulatory Authority, this name change will become effective.

February 15, 2016, the Company acquired Thrust UAV, a private company engaged in the development and assembly of first person

view (FPV) racing drones, for $109,000.

2 - UNAUDITED FINANCIAL STATEMENTS

December 31, 2015, financial statements presented herein are unaudited, and in the opinion of management, include all adjustments

June 30, 2016, financial statements presented herein are unaudited, and in the opinion of management, include all adjustments

(consisting of only normal recurring accruals) necessary for a fair presentation of financial position, results of operations

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financial statements prepared in accordance with accounting principles generally accepted in the United States of America.

Quarterly Report on Form 10-Q should be read in conjunction with the Annual Report on Form 10-K for PCS Edventures!.com for the

fiscal year ended March 31, 2015.

items for March 31, 2015 have been reclassified to conform to presentation in the third quarter ending December 31, 2015.

operating results for the period ended December 31, 2015 are not necessarily indicative of the results that may be expected for

the fiscal year ending March 31, 2016.

Quarterly Report on Form 10-Q should be read in conjunction with the Annual Report on Form 10-K for PCS Edventures!.com, Inc.

for the fiscal year ended March 31, 2016.

The June 30, 2016, balance sheet was derived from the audited balance sheet included

operating results for the three-month period ended June 30, 2016, are not necessarily indicative of the results that may be expected

for the fiscal year ending March 31, 2017.

3 - GOING CONCERN

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doubt about its ability to continue as a going concern.

ability of the Company to continue as a going concern is dependent upon its ability to increase revenue, to raise capital as needed,

to continue to monitor and reduce overhead costs, and to 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.

4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentration of Credit Risk

Company extends credit to customers and is therefore subject to credit risk.

The Company performs initial and ongoing credit evaluations

of its customers’

financial condition and does not require collateral.

An allowance for doubtful accounts is recorded to

account for potential bad debts.

Estimates are used in determining the allowance for doubtful accounts and are based upon an assessment

of selected accounts and as a percentage of remaining accounts receivable by aging category.

In determining these percentages,

the Company evaluates historical write-offs, and current trends in customer credit quality, as well as changes in credit policies.

At December 31, 2015, Tatweer Company for Educational Services and STEMfinity accounted for 34.3% and 52.5% of the Company’s

accounts receivable, respectively.

Management’s plans to alleviate this adverse position are as follows:

Company’s strategy to remove the going concern doubt is to optimize its operational structure, focus attention on increasing

STEM education sales through both channel partners and its direct sales force, and to bring to market a racing drone and STEM

education drone product line from Thrust UAV, the Company’s recently acquired drone development and assembly business.

will continue to focus on the improvement of our web-based marketing efforts, expand our sales force and channel partners, and

tighten sales processes for our domestic STEM sales.

We will continue to use our EdventuresLab program for (1) an R&D test

bed for product improvement and refinement with a major emphasis on digital delivery of content;

(2) revenue generation through

afterschool and summer course fees;

(3) revenue through licensing EdventuresLab curriculum and methods;

and (4) revenues from

STEM retail products.

We believe e-commerce sales of kits associated with STEM learning targeting the families of students attending

the centers as well as the larger home retail market will provide a consistent, dependable boost in Q3FY2017 revenues to offset

low education sales traditionally anticipated during this time frame.

We will actively seek retail distribution methods and channels

for our robotics retail products and expand their usability for other market segments.

Thrust UAV is currently in late-stage development

for its first major product release and is forging distributor relationships to take the product to market in Q2 of FY2107.

Revenue for the quarter ending June 30, 2016,

was $653,655 compared to revenue of $1,291,219 for same quarter in the year ago period, a decrease of approximately 49%.

for the three months ended June 30, 2016, was ($410,077) compared to a net income of $130,865 for the same quarter in the year

ago period, a 413% decrease.

These decreases in revenue and net income resulted primarily from the timing of order recognition,

as a major customer’s annual order fulfillment and revenue recognition occurred during the last quarter in FY2016 (one quarter

earlier than previous historical experience) whereas the previous annual order was completed in the first quarter of FY2016.

Additionally,

no international contracts were fulfilled in the first quarter of FY2017.

Cash used in operations for the three months ended June

30, 2016, was ($26,871), predominately due to research and development costs concerning the Thrust UAV business unit.

the efforts put in by management and the entire employee team are beginning to be realized, the ability of the Company to continue

as a going concern is dependent upon our ability to successfully accomplish the plans described, to raise capital as needed, and

to attain profitable operations.

The accompanying financial statements do not include any adjustments that might be necessary

if the Company is unable to continue as a going concern.

PREPAID EXPENSES

expenses for the periods are as follows:

December 31, 2015

June 30, 2016

March 31, 2016

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5 - FIXED ASSETS

and depreciation for the periods are as follows:

December 31, 2015

and accumulated depreciation for the periods are as follows:

June 30, 2016

March 31, 2016

Computer/office equipment

A Accumulated depreciation

Accumulated depreciation

Total Fixed Assets

asset depreciation expense for the nine months ended December 31, 2015 and 2014 was $16,915 and $19,699 respectively.

asset depreciation expense for the three months ended June 30, 2016 and 2015 was $2,821 and $2,598, respectively.

GOODWILL AND INTANGIBLE ASSETS

and other intangible assets for the period were as follows:

June 30, 2016

March 31, 2016

Intangible Assets

Accumulated Amortization Intangible Assets

Total Goodwill and Intangible Assets

asset amortization expense for the three months ended June 30, 2016 and 2015 was $26,630 and $0, respectively.

7 - ACCRUED EXPENSES

expenses for the periods are as follows:

December 31, 2015

June 30, 2016

March 31, 2016

2 unchanged sentences

Credit card debt

Professional fees:

legal, accounting & other

Total accrued expenses

1 unchanged sentence

payable consisted of the following:

December 31, 2015

June 30, 2016

March 31, 2016

Short Term Debt

Short Term Convertible Note, Related Party net discount of $0 and $24,063 for period

ended December 31, 2015 and March 31, 2015, respectively

Short Term Note Payable, Related Party, net discount of $0 and $38,184

for period ended December 31, 2015 and March 31, 2015, respectively

Total Short Term Debt

Long Term Debt

Long Term Note Payable

Note Payable Convertible Note, Related Party net discount of $0 and $0 for period ended June

30, 2016 and March 31, 2016, respectively

Short Term Note Payable, Related Party, net discount of $0 and $0 for period ended June 30, 2016

and March 31, 2016, respectively

Line of Credit

1 unchanged sentence

Long Term Convertible Note

Long Term Convertible Note, Related Party

Long Term Debt

Less current portion

Total Long Term Debt, less current portion

Term Note Payable

Total Notes Payable

February 12, 2016, the Company entered into a note payable of $84,000.

The note does not bear an interest rate, as it has a set

nine payment arrangement of $9,333 per month for nine months starting on April 1, 2016, with the final payment due on December

There was no accrued interest and the principal balance was $56,000 as of June 30, 2016.

February 12, 2016, the Company entered into a note payable of $24,547.

The note does not bear an interest rate, as it has a set

nine payment arrangement of $2,727 per month for nine months starting on April 1, 2016, with the final payment due on December

There was no accrued interest and the principal balance was $16,365 as of June 30, 2016.

May 1, 2014, the Company entered into a 36 month note payable of $20,000.

The note bears interest at 12% per annum.

Total interest

accrued as of December 31, 2015 was $2,430.

The Company has paid $5,829 in principal, leaving a remaining balance at December

31, 2015 of $14,171.

September 13, 2011, the Company drew down a line of credit at a financial institution in the amount of $39,050.

The line of credit

bears interest at 8.75% per annum.

The Company makes variable monthly payments.

As of Deccember 31, 2015, the Company has paid

$20,598 in principal leaving a balance of $18,452 payable.

Short term notes payable

October 21, 2014, the Company executed a Promissory Note with one of our shareholders and board members in the amount of $870,457.

The note was partially taken out to finance operations and inventory purchases and was partly a combination of the renewal of

other notes with the same lender.

It was due on May 31, 2015, was non-convertible, had an interest rate of 10% per annum, was

secured by accounts receivable, fixed assets, intellectual property, and our net loss carry forward.

January 1, 2015, accrued interest through December 31, 2014, was rolled into the principal balance per the terms and conditions

of the Promissory Note.

On January 1, 2015, the Promissory Note principal balance was $892,679.

The balance was due in full on

or before May 31, 2015, and was extended to September 30, 2015, under the terms and conditions of the original Promissory Note.

On October 1, 2015, the Promissory Note executed on October 21, 2014, went into default.

The lender has provided the Company with

extensions of due dates for principal and accrued interest of $89,268, until January 31, 2016.

This note due date was subsequently

January 16, 2015, the Company executed a non-convertible Promissory Note with warrants attached, with one of our shareholders

and board members, for $400,000 at 10% interest per annum, due June 30, 2015, secured by T4EDU Contract 0006/2017 Work Orders

5, 6, 7, and 8 less Zakat and holdback, to finance operations and inventory purchases.

The warrants were valued using the Company’s

common stock price on the date of grant, discount rates 0.35%, and volatility approximating 180%.

The value of the debt discount

is accreted up to the face value of the Promissory Note over the term of the note using the effective interest method.

was extended to January 31, 2016.

The note bears interest at twelve percent (12%) per

The Company had paid $12,209 in principal, leaving a balance of $7,791 at June 30, 2016.

Total interest accrued as of June

30, 2016 was $2,609.

On April 11, 2014, the Company entered into

a 36 month note payable of $60,000.

The note bears interest at twelve percent (12%) per annum.

Company has paid $36,141 in principal, leaving a balance of $23,859 at June 30, 2016.

Total interest accrued as of June 30, 2016,

Note Payable –

Related Party

October 21, 2014, the Company entered into at

10% Convertible Promissory Note with a current board member and shareholder, in the amount of $200,000, convertible into shares

of common stock of the Company at the market price of $0.04 per share.

The original note due date of October 22, 2015, was extended

until April 30, 2016.

The debt discount was calculated as $50,000.

The remaining $38,184 of the debt discount was

amortized during the quarter ending June 30, 2015.

The principal balance at December 31, 2015, was $400,000.

The lender has provided

the Company with extensions of due dates for principal and accrued interest of $20,164, until January 31, 2016.

This note due

date was subsequently extended.

February 17, 2015, the Company executed a Promissory Note with one of our shareholders and board members, for $135,000 at 10%

interest per annum, due June 30, 2015, secured by T4EDU and accounts receivable on completed contracts, to finance operations

and inventory purchases.

This note was extended to January 31, 2016.

There is no conversion feature associated with this Promissory

The lender has provided the Company with an extensions of due dates for principal of $135,000 and accrued interest of $11,544,

until January 31, 2016.

This note due date was subsequently extended.

April 20, 2015, the Company executed a Promissory Note with one of our shareholders and board members, for $135,000 at 10% interest

per annum, due June 30, 2015, secured by T4EDU existing AR on completed contracts, to finance operations and inventory purchases.

This note was extended to January 31, 2016.

Principal payments of $95,000 were made by the Company in September 2015, leaving

a $40,000 principal balance outstanding on December 31, 2015.

There is no conversion feature associated with this Promissory Note.

The lender has provided the Company with an extensions of due dates for principal and accrued interest of $7,037, until January

This note due date was subsequently extended.

Short term convertible note payable

October 21, 2014, the Company entered into at 10% Convertible Promissory Note with a current board member and shareholder, in

the amount of $200,000, convertible into shares of common stock of the Company, at the market price of $0.04.

The debt discount

was calculated as $50,000.

As of December 31, 2015, the entire debt discount of $50,000 was amortized.

The note principal balance

net of discount at December 31, 2015 was $200,000.

The lender has provided the Company with an extensions of due dates for principal

and accrued interest of $23,890, until January 31, 2016.

This note due date was subsequently extended.

Long term convertible note

2011, the Company entered into several convertible Promissory Notes in the aggregate amount of $215,000, including a note in the

amount of $34,011 from a related party.

The notes are convertible into common stock at a rate of $0.15 per share.

The notes bear

interest at 10% per annum and include attached warrants to purchase two shares of restricted Rule 144 common stock for every dollar

On July 13, 2015, the related party holder of the convertible notes of the Company elected to convert their note and accrued

interest of $5,963 into 266,492 shares of our common stock.

Due to conversion within the terms of the note, no gain of loss was

Long term note payable

O n April 29, 2016,

the note was converted, along with $30,521 in accrued interest, into 5,763,014 shares of common stock.

Due to conversion within

the terms of the note, no gain or loss was recognized.

Payable –

Related Party

January 13, 2012, the Company entered into two separate promissory notes in the amount of $35,000 each for an aggregate amount

The notes bear interest at 9% per annum and were previously due and payable on or before January 10, 2013.

monthly payments of 1.5% of the loan balances are required and are submitted to the lender’s financial institution.

notes were amended April 1, 2013, and re-written with a new principal amount of $32,100 each for an aggregate amount of $64,200.

The notes bear interest at 9% per annum and are due and payable on or before April 1, 2020.

The underlying loan requires that

the Company pay to the lender’s financial institution monthly payments of $1,033 on or before the 1st day of each month,

beginning May 1, 2013, and continuing each month in like amounts until the final payment due on April 1, 2020.

The Company has

paid $19,902 in principal, leaving a balance of $44,298 at December 31, 2015.

April 18, 2012, the Company entered into a long-term Promissory Note with a person who was then an officer and director of the

Company for $25,000, with an interest rate of 7.5% per annum.

The notes bear interest at nine percent (9%) per annum and were previously due and payable on or before January 10,

Minimum monthly payments of 1.5% of the loan balances are required and are submitted to the Lenders’

financial institution.

The note was amended April 1, 2013, and re-written with a new principal amount of $32,100 each for an aggregate amount of $64,200.

The notes bear interest at nine percent (9%) per annum and are due and payable on or before April 1, 2020.

The underlying loan

requires that the Company pay to the Lenders’

financial institution monthly payments of $1,033 on or before the 1st day

of each month, beginning May 1, 2013, and continuing each month in like amounts until the final payment due on April 1, 2020.

The Company had paid $24,152 in principal, leaving a balance of $40,048 at June 30, 2016.

No interest is accrued for this

note payable.

Total Interest paid during the quarter ending June 30, 2016 was $944.

April 18, 2012, the Company entered into a long-term promissory note with one of its employees and board members for $25,000 with

an interest rate of seven and one-half percent (7.5%) per annum.

The balance is due in full on or before April 18, 2017.

payments are made for interest only to the Lender’s financial intuition.

On December 31, 2015, a total of $3,908 in principal

had been paid, resulting in ending principal amount of $21,092.

April 11, 2014, the Company entered into a 36 month Promissory Note payable of $60,000.

The note bears interest at 12% per annum.

There is no conversion feature associated with this Promissory Note.

The Company has paid $14,356 in principal, leaving a balance

of $45,675 at December 31, 2015.

Total interest accrued as of December 31, 2015, was $2,208.

Term Convertible Note

2011, the Company entered into several convertible Promissory Notes in the aggregate amount of $215,000, including a note in the

amount of $34,011 from a related party.

The notes are convertible into common stock at a rate of $0.15 per share.

The notes bear

interest at 10% per annum and include attached warrants to purchase two shares of restricted Rule 144 common stock for every dollar

At the Lender’s sole option, Lenders may elect to receive payment of their respective note and all accrued interest

in restricted common stock of the Borrower at the price per share of said common stock at the same rate as the warrants.

are secured by that portion or percentage of the Borrower’s Intellectual Property which the principal amount of the note

bears to the fair market value of all Intellectual Property of the Borrower.

The notes had an original due date of June 29, 2011

but have been amended to extend the expiration dates to April 30, 2016.

As of March 31, 2015, the ending principal balance was

$226,740 including the related party convertible note balance of $34,011.

July 13, 2015, the holders of four of the convertible notes of the Company elected to convert those notes into shares of our common

The aggregate principal amount of the convertible notes being converted was $136,044.

Conversion of the aggregate principal

and accrued interest of $23,857 resulted in the issuance of 1,066,006 shares of our common stock.

Conversion occurred within the

terms of the note, no gain or loss was recognized.

As of December 31, 2015, the principal balance of convertible notes payable,

to a non-related party, was $90,696.

The accrued interest as of December 31, 2015, related to these notes, was $20,425.

On June 30, 2016, $4,557 over the interest only

payment had been paid resulting in an ending principal amount of $20,443.

No interest is accrued for this note payable.

Total Interest paid during the quarter ending June 30, 2016 was $246.

February 6, 2016 the Company executed a promissory note with one of its shareholders and board members, for $100,000 at 10% interest

The promissory note was due February 29, 2016, and was extended multiple months to June 30, 2016.

On June 8, 2016 this

promissory note was combined with promissory notes:

March 16, 2016, for $100,000;

April 1, 2016, for $100,000;

and April 19, 2016,

The resulting $340,000 promissory note bearing an interest rate of ten percent (10%) per annum has a due date of

December 31, 2016.

Total interest accrued as of June 30, 2016 was $3,945.

March 16, 2016, the Company executed a promissory note with one of our shareholders and board members, for $100,000 at ten percent

(10%) interest per annum.

The promissory note was due April 30, 2016, and was extended multiple months to June 30, 2016.

8, this note was consolidated with promissory notes:

February 6, 2016, for $100,000;

April 1, 2016, for $100,000;

and April 19,

2016, for $40,000.

The resulting $340,000 promissory note bearing an interest rate of ten percent (10%) per annum has a due date

of December 31, 2016.

Total interest accrued as of June 30, 2016 was $2,877.

April 1, 2016, the Company executed a promissory note with one of our shareholders and board members, for $100,000 at ten percent

(10%) interest per annum.

The promissory note was due April 30, 2016, and was extended multiple months to June 30, 2016.

8, this note was consolidated with promissory notes:

February 6, 2016, for $100,000;

March 16, 2016, for $100,000;

and April 19,

2016, for $40,000.

The resulting $340,000 promissory note bearing an interest rate of ten percent (10%) per annum has a due date

of December 31, 2016.

Total interest accrued as of June 30, 2016 was $2,493.

April 19, 2016, the Company executed a promissory note with one of our shareholders and board members, for $40,000 at ten percent

(10%) interest per annum.

The promissory note was due April 30, 2016, and was extended multiple months to June 30, 2016.

note was consolidated with promissory notes:

February 6, 2016, for $100,000;

March 16, 2016, for $100,000;

April 1, 2016, for

The resulting $340,000 promissory note bearing an interest rate of ten percent (10%) per annum has a due date of December

Total interest accrued as of June 30, 2016 was $997.

On June 8, 2016 the Company executed a promissory

note with one of its shareholders and board members, for $340,000 at 10% interest per annum that consolidated the following notes:

February 6, 2016, for $100,000;

March 16, 2016, for $100,000;

April 1, 2016, for $100,000;

and April 19, 2016 for $40,000.

promissory note is secured with the Company’s inventory, fixed and liquid assets, property, equipment, intangible assets

and intellectual property, and the Company’s net loss carry forward .

The promissory

note is due December 31, 2016.

Total interest accrued as of June 30, 2016 for all four promissory notes discussed above and combined

on June 8, 2016 was $10,312.

On September 13, 2011, the Company drew down

a line of credit at a financial institution in the amount of $39,050.

The line of credit bears interest at 17.5% per annum.

Company makes variable monthly payments.

For the period ending June 30, 2016, the company paid $890 in principle.

Since inception,

the Company has paid $22,437 in principal, leaving a balance of $16,613 payable.

Total interest paid during the period ending

June 30, 2016, was $393.

Payable, Related Party, Long Term

On October 21, 2014, the Company executed

a promissory note with one of its shareholders and board members in the amount of $870,457.

The note, originally due May 31, 2015,

was non-convertible, had an interest rate of ten percent (10%) per annum, was secured by accounts receivable, fixed assets, intellectual

property, and the Company’s net loss carry forward and was used to finance operations and purchase inventory.

This note’s

due date was extended to September 30, 2015, and included new cash loaned to the Company of $175,000.

This note includes $7,957

of accrued interest on the paid off notes listed below.

This note paid off the following notes:

$50,000 of the February 11, 2014,

$250,000 of the Convertible long term related party note;

$145,000 of the note dated May 7, 2014;

$29,500 of the June 27,

2014, 105,000 note;

$105,000 of the note dated July 21, 2014;

$210,000 of the note dated July 28, 2014;

$25,000 of the note dated

August 8, 2014;

and $123,000 of the note dated August 20, 2014.

$22,222 of interest was rolled into principal on January 1, 2015, resulting in a principal balance of $892,679.

On June 8, 2016,

this note was combined with the January 22, 2015, promissory note, at ten percent (10%) per annum, with the principal balance

of $400,000, resulting in a new note with a balance due of $1,292,679, due July 1, 2018.

This promissory note is secured with

the Company’s inventory, fixed and liquid assets, property, equipment, intangible assets and intellectual property, and

the Company’s net loss carry forward .

The accrued interest was $174,243 as of June 30, 2016.

January 22, 2015, the Company issued 2,000,000 warrants to a shareholder and board member with a 36 month term to purchase “restricted”

Rule 144 common stock, no par value (the “Shares”), as consideration for the issuance of a promissory note in the

amount of $400,000, from the Company at a purchase price of $0.04 per share of common stock (the “Exercise Price”).

These warrants are fully vested and exercisable.

The warrants were evaluated for embedded derivatives in accordance with ASC 815

and were found to not include any embedded derivatives.

The warrants attached to the note were valued using the Black Scholes

Valuation Model.

The assumptions used in the model included the historical volatility of the Company’s stock of 180%, and

the risk-free rate for the periods within the expected life of the warrant based on the U.S.

Treasury yield curve in effect of

The resulting fair value was $66,717.

This value was recorded as a debt discount and fully amortized as of March 31, 2016.

On June 8, 2016, this note was combined with the January 22, 2015, promissory note, at 10% per annum, with the principal balance

of $400,000, resulting in a new note with a balance of $1,292,679, due July 1, 2018.

The accrued interest was $174,243 as of June

February 17, 2015 and April 20, 2015, the Company executed Promissory Notes with one of our shareholders and board members for

$135,000 each at ten percent (10%) interest per annum, due June 30, 2015, secured by accounts receivable on completed contracts

to finance operations and purchase inventory.

$95,000 of the principle balance of the April 20, 2015 note was paid, leaving a

$40,000 principle balance.

The Lender had provided the Company with extensions of due dates for both notes through June 30, 2016.

The principal of $135,000 was combined with the $40,000 remaining principal into a $175,000 note due January 15, 2019.

interest at June 30, 2016, was $27,355.

On June 8, 2016, the company executed Promissory

Notes with one of our shareholders and board members for $1,292,679.

The note is due July

1, 2018, has an interest rate of ten percent (10%) per annum, is secured by inventories, fixed assets, intellectual property,

and the Company’s net loss carry forward.

This promissory note for $1,292,679, combined and replaced the October

21, 2014 promissory note for $892,679 and January 16, 2015 promissory note for $400,000 per the table below.

On June 8, 2016, the company executed Promissory Notes with one of our shareholders

and board members for $175,000.

The note is due January 15, 2019, has an interest rate of

ten percent (10%) per annum, is secured by inventories, fixed assets, intellectual property, and the Company’s net loss

carry forward.

This promissory note for $175,000, combined and replaced the promissory note dated February 17 th and

March 5 th , 2015 for $135,000 and the unpaid principle balance of $40,000 remaining on the promissory note dated April

20, 2015 per the table below.

Note Due Date

2/17/15,3/5/15

Note Payable –

Non-related party

August 1, 2012, the Company issued amendments to the convertible note agreements (convertible into common stock at a rate of $0.15

per share) in the aggregated amount of $215,000 and extended the due date with repayment in the amount of $40,000 per quarter

to begin April, 2013, and the final payment due in August, 2014, with any remaining balance due at that time.

In consideration

for extending the due date of the promissory notes, the expiration dates on the warrants issued (fully expensed in the prior period)

on March 31, 2011, and June 27, 2011, were amended and extended an additional three years, making the new expiration dates August

At the Lenders’

sole option, Lenders may elect to receive payment of their respective notes and all accrued interest

in restricted common stock of the Company at the price per share of said common stock at same rate as the warrants.

2013, the Company executed an amendment to the loan transaction.

The amended transaction involved the extension of the promissory

notes from April 30, 2013, to April 30, 2016, with the creditors waiving any default under the previous note.

The Company made

interest payments to each of the eight note holders for all accrued interest from August 1, 2012, to April 30, 2013, for consideration

of the extension.

On the fourth extension, all accrued interest was combined with the original principal amount as of July 31,

On July 13, 2015, three non-related party conversions with a principal balance of $102,033, combined with the accrued interest

to date of $17,894, were converted to 799,514 shares of common stock.

As of June 30, 2016, the ending principal balance was $90,696.

Interest accrued as of June 30, 2016 was $24,972.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Company includes fair value information in the notes to financial statements when the fair value of its financial instruments

is different from the book value.

When the book value approximates fair value, no additional disclosure is made.

NOTE RECEIVABLE

July 31, 2013, the Company signed a Memorandum of Understanding with a Canadian company owned by Joseph Khoury (“JAK”),

proposing a purchase agreement in which JAK shall purchase LabMentors from PCS for USD $150,000.

JAK has agreed to assume 100%

of LabMentors outstanding liabilities and to pay the remainder of the USD $150,000 through a note payable.

The Company note receivable

in the amount of $50,740, carries an annual interest rate of 3% compounded annually and is to be paid over a period of 60 months

in equal monthly payments beginning in month 13 of the 60 month period.

This sale was finalized during the period ending September

On April 14, 2015, JAK informed PCS of the potential closure of LabMentors and

an inability to meet its note obligations.

LabMentors had made three note payments as of the date of the notification totaling

The note receivable principal balance at December 31, 2015 was $49,513.

The note receivable allowance balance at December

31, 2015 is $49,513.

10 - COMMITMENTS AND CONTINGENCIES

proposing a purchase agreement in which JAK would purchase LabMentors from the Company for USD $150,000.

JAK agreed to assume

100% of LabMentors outstanding liabilities of approximately $100,000, and to pay the remainder through a note receivable in the

amount of $50,740, carried an annual interest rate of three percent (3%) compounded annually and was to be paid over a period

of 60 months in equal monthly payments beginning in month 13 of the 60 month period.

This sale was finalized during the period

ending September 30, 2013.

On April 14, 2015, JAK informed the Company of the potential

closure of LabMentors and an inability to meet its note obligations.

LabMentors had made three note payments as of the

date of the notification totaling $3,399.

In evaluation of the notes potential for collectability,

a note allowance was accrued to the full amount of the note receivable balance.

The note receivable principal balance at June

30, 2015 was $49,513.

The note receivable allowance balance at June 30, 2016, and June 30, 2015, was $49,513 and $49,513, respectively.

11 - ACCOUNTS RECEIVABLE

The Company had accounts receivable of $786,241

net of an allowance for $2,096 for the fiscal year ended March 31, 2016.

This accounts receivable balance included a major international

customer’s final work orders;

a major domestic customer’s annual sales order;

and an international customer’s

lab royalty fees.

The Company had an accounts receivable balance of $307,677 net of allowance of $2,096 as of June 30, 2016.

quarter over quarter decrease reflects the payments from these two major customers.

NOTE 12 –

The Company had inventory of $192,527 net

of an inventory reserve of $3,391 for the fiscal year ended March 31, 2016.

The inventory reserve is consideration for obsolete

and slow moving inventories.

This March 31, 2016 inventory balance reflected the shipment of the two major customer orders mentioned

The majority of summer camp sales span February through June.

Summer camp components are generally purchased within

the week ordered to keep inventories lean.

The company had an inventory balance of $176,740 net of an inventory reserve of $3,391

as of June 30, 2016.

The quarter over quarter decrease reflects the shipment of summer camp sales orders in que during peak season.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Operating Lease Obligation

Company leases its main office under a non-cancelable lease agreement accounted for as an operating lease.

The lease expired in

This lease was extended for 13 months beginning June 1, 2012.

On December 31, 2013, the Company signed an amendment

to the existing contract to reduce the leased square feet to 5,412 for $6,765/ month for 12 months ending December 31, 2014.

February 1, 2015, the Company signed a new lease to reduce the square feet to 3,609 for $4,511/ month for the 12 months ending

January 31, 2016.

Rent expense for the corporate offices was $13,533 and $20,295 for the quarter ended December 31, 2015 and 2014,

and $49,467 and $63,684 for the 9 months ended December 31, 2015 and 2014, respectively, under this lease arrangement.

On December 31, 2013,

the Company signed an amendment to the existing lease to reduce the leased square feet to 5,412 for $6,765 per month for the 12

months ending December 31, 2014.

On February 1, 2015, the Company signed a new lease to reduce the square feet to 3,609 for $4,511

per month for the 12 months ending January 31, 2016.

The Company signed a lease amendment for the main office space on May

11, 2016, for $15.48 per square foot or $4,647 per month for the 12 months expiring May 31, 2017.

expense for the corporate offices was $17,896 and $14,185 for the quarters ended June 30, 2016, and 2015, and $54,135 and $77,869

for the 12 months ended March 31, 2016, and 2015, respectively, under this lease arrangement.

Company leases additional warehouse space in Boise, Idaho.

This warehouse space consists of approximately 2,880 square feet.

lease expired in June 2012.

Originally, this warehouse space consisted of approximately 2,880 square

The lease expired in June 2012.

This lease was extended for 24 months, beginning July 1, 2012.

The Fifth Lease Amendment was entered

into for the warehouse space extending the lease period through October 31, 2015.

The Company signed a sixth amendment on April

15, 2015, to lease an additional approximately 1400 square foot bay adjacent to the existing leased space.

The Company signed

a Seventh Lease Amendment on October 28, 2015, leasing the same three bays through April 30, 2016, at the cost of $730 per bay.

Rent expense for the warehouse was $6,535 and $2,780 for the quarter ended December 31, 2015 and 2014, and $18,500 and $12,055

for the 9 months ended December 31, 2015 and 2014, respectively, under this lease arrangement.

Company leased an additional learning lab site in Eagle, Idaho, in Q1 of fiscal year 2015.

The lease term is three years for 1,050

square feet for an annual base rent of $16,640 or $1,387 per month, with 3% growth per year.

Maher brought suit against PCS in January of 2014, claiming breach of an employment contract, interference with economic expectancy,

Settlement was agreed in principle during mediation on July 9, 2014, as follows:

in exchange for dismissal of the suit,

and release of PCS from any liability to Mr.

Maher for any and all claims related to Mr.

Maher’s employment contract with

PCS, PCS issued Mr.

Maher 400,000 shares of the common stock of PCS, and paid him $50,000.

PCS does not admit the allegations

or any other wrongdoing, but would rather settle the matter for a modest amount to avoid the expense of defending it in court.

The settlement agreement was executed on July 9, 2014.

There are no other lawsuits pending involving PCS.

The lease was extended to

a new expiration of October 31, 2015.

The Company signed a sixth amendment on April 15, 2015, to lease an additional approximately

1,400 square feet bay adjacent to the existing leased space.

Rent expense for the warehouse was $5,620 and $5,620 for the quarters

ended June 30, 2016, and 2015, respectively, and $25,130 and $16,225 for the 12 months ended March 31, 2016, and 2015, respectively.

March 15, 2016, the Company leased a warehouse, office space, and manufacturing facility of approximately 10,000 square feet for

$6,300 per month for 12 months.

On April 28, 2016, the Company moved all inventories, property, plant, and equipment to a new

warehouse facility.

Rent expense for the new warehouse location was $18,265 and $0 for the quarters ended June 30, 2016, and 2015,

respectively, and $3,150 and $0 for the 12 months ended March 31, 2016, and 2015, respectively.

Company leased an additional learning lab site in Eagle Idaho in the first quarter of FY2015.

The lease term has a three year

term for 1,050 square feet, for an annual base rent of $16,640 or $1,387 per month, with three percent (3%) growth per year.

or about May 18, 2015, the Company was named as a co-defendant in a legal action related to one of its employees, alleged to have

been driving an automobile negligently while on work related services for the Company, and causing damages to the plaintiffs in

The Company has engaged legal counsel to represent it in this matter, and it is not presently in a position to determine

what, if any, liability it may have for the actions of its employee, or even whether such employee was negligent in any manner.

The action was brought in the District Court of the Fourth Judicial District of the State of Idaho, in and for the

County of Ada, Civil Action number CV PI 1507419.

The insurance carrier has indicated the claim would not be supported if the

employee was not on company business.

The Company has engaged legal counsel to represent it in this matter.

October 13, 2015, the Company filed a Summons and Complaint against Ty Jacobsen, dba Jacobsen Enterprises.

The complaint primarily

involved defamation and breach of contract.

The Complaint is un-resolved at this time, and the Company is in negotiations with

The outcome of this matter is unknown as of the date of this Quarterly Report.

Contingencies

October 14, 2015, the Company received a demand letter alleging patent infringement related to certain of our data processing

The Company has responded to this demand and has advised the claimed patent owner that the Company does not own the systems

claimed to be used by us in this demand.

While the Company believes that no such claimed infringement has occurred, we cannot

presently evaluate the potential costs that we might incur in regard to defending any legal action brought against us regarding

14 - STOCKHOLDERS’

the period ended December 31, 2015, the Company expensed $8,461 related to stock options and warrants granted in the current period

as well as prior periods.

the period ended December 31, 2015, a related party one warrant holder exercised 120,000 warrants issued on January 11, 2013,

at a price of $.07 for a total of $8,400, resulting in 120,000 shares of “restricted”

common stock.

the period ended December 31, 2015, the CEO exercised 25,000 options earned from an ISO agreement dated July 15, 2012, using the

cashless option into 19,000 shares of “restricted”

common stock.

the period ended December 31, 2015, the holders of four convertible notes of the Company elected to convert such notes into shares

of common stock.

The aggregate principal and interest amount of the convertible notes being converted of $159,901 resulted in

the issuance of 1,066,006 shares of common stock.

Due to conversion within terms of the note, no gain of loss was recognized.

the period ended December 31, 2015, the Company authorized 50,000 shares of common stock for services to employee, Robert Grover.

The shares were valued based on fair market price on the date of grant, as of December 31, 2015, $5,000 has been accrued in stock

the period ended December 31, 2015, the Company issued 398,000 shares of common stock for services.

The shares were valued based

on the fair market price on the date of grant for a total of $48,440.

the period ended December 31, 2015, the Company issued 692,300 in Restricted Stock Units to its non-management directors.

agreements call for payment of current year director fees via issuance of Restricted Stock Units, required continued service through

September 30, 2015, and re-election at the September 25, 2015, annual shareholder meeting.

The shares were re-valued based on

the fair market price on the date of vesting for a total of $97,846.

Prior to the issuance, the Company accrued a total of $81,345

payable in Restricted Stock Units to its non-management directors and $9,000 stock payable to a former director.

As a result of

re-valuation, the Company recognized an additional compensation expense of $7,500.

During the same period, the Company accrued

$1,500 payable in Restricted Stock Units to its non-management director.

Each restricted stock unit is valued at $0.04, based

on the closing price of the Company’s common stock at the date of grant.

These agreements call for payment of current year

director fees via issuance of restricted stock units over a vesting period ending September 30, 2016, and reelection at the next

the three months ending June 30, 2015, $22,000 has been accrued in Restricted Stock Units payable for the issue of 200,000 shares

for services that will be issued in future periods.

Each restricted stock unit is valued at a range from $0.11, based on the closing

price of the Company’s common stock at the date of grant.

The total amount recorded in stock payable as of June 30, 2015,

for these services and other prior period services is $31,000.

the three months ending June 30, 2015, the Company expensed amounts related to stock options and warrants granted in the current

period as well as prior periods valued at $3,547.

the three months ended June 30, 2015, the company accrued $8,250 payable in Restricted Stock Unit to its non-management directors.

Each restricted stock unit is valued at a range from $0.05 to $0.10, based on the closing price of the Company’s common

stock at the date of grant.

These agreements call for payment of current year director fees via issuance of restricted stock units

over a vesting period of not less than twelve months, and require continued service for twelve months and reelection at the next

annual shareholder meeting.

Ranganathan, Britt Ide, Paula LuPriore, and K.

Sue Redman resigned from the board between November 1, 2015, to December 10, 2015,

forfeiting $10,260.

This amount was removed from Restricted Stock Units payable.

As of June 30, 2015, $20,367 has been accrued for director services and recorded in stock payable.

the three months ended June 30, 2015, the company issued a total of 75,000 Rule 144 restricted common stock shares in two transactions,

to a contractor for services.

On April 26, 2016, the company issued 50,000 shares valued at $0.08, based on the common stock closing

price of the company on the day of grant.

On May 10, 2016 the company issued 25,000 Rule 144 restricted common stock shares valued

at $0.09, based on the common stock closing price of the company on the date of grant.

the three months ending June 30, 2016, $1,620 had been accrued in Restricted Stock Units payable for the issue of 81,000 shares

for services that will be issued in future periods.

Each Restricted Stock Unit was valued at $0.04, based on common stock closing

price of the Company on the date of any grant, then revalued quarterly to $0.08 at March 31, 2016, and June 30, 2016.

amount recorded in Restricted Stock Units payable as of June 30, 2016, for these services and other prior period services, was

the three months ending June 30, 2016, the Company expensed amounts related to stock options and warrants granted in the current

period as well as prior periods valued at $7,336.

the three months ended June 30, 2016, the Company accrued $16,000 in Stock Payable as a stock award of 200,000 Rule 144 restricted

common stock shares to an employee.

E ach stock unit awarded was valued at $0.08, based on

the closing price of the Company’s common stock at the date of grant.

The common stock was subsequently issued on July 8,

On October 21, 2014, the

Company entered into at ten percent (10%) Convertible Promissory Note with a current board member and shareholder, in the amount

of $200,000, convertible into shares of common stock of the Company, at the closing market price of $0.04 on such date.

April 29, 2016, the note was converted, along with $30,521 in accrued interest, into 5,763,014 shares of common stock.

conversion within the terms of the note, no gain or loss was recognized.

Preferred Stock

Company has 20,000,000 authorized shares of preferred stock.

As of December 31, 2015, there are no preferred shares issued or

As of June 30, 2016, there are no preferred shares issued or outstanding.

15 - BASIC AND DILUTED NET LOSS PER COMMON SHARE

and diluted net loss per common share for the three month periods ended December 31, 2015 and 2014, are based on 76,134,002 and

72,855,781, respectively, of weighted average common shares outstanding.

and diluted net loss per common share for the nine month periods ended December 31, 2015 and 2014, are based on 75,247,919 and

Basic net loss per common share for the three-month

periods ended June 30, 2016, and 2015, are based on 80,418,842 and 74,235,284, respectively, of weighted average common shares

Diluted net loss per share for the three-month period ended June 30, 2016 and 2015, are based on 84,818,314 and 78,791,182,

respectively, of weighted average common shares outstanding.

No adjustment has been made for any common

stock equivalents outstanding because their effects would be antidilutive.

Net income (loss) per common share:

Weighted average number of common shares outstanding:

16 - DILUTIVE INSTRUMENTS

Options and Warrants

Company is required to recognize expense of options or similar equity instruments issued to employees using the fair-value-based

2 unchanged sentences

awards, share appreciation rights, and employee share purchase plans.

Application of this standard requires significant judgment

Application of this pronouncement requires significant judgment

regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior.

1 unchanged sentence

the expected term of the award.

and Outstanding

Total Issued and Outstanding

Balance as of March 31, 2016

Common Stock Options

Balance as of December 31, 2015

14, 2015, the Company CEO converted 25,000 options using the cashless option into 19,000 shares of “restricted”

stock issued during the period ended September 30, 2015.

Board of Directors resolved on July 15, 2015, to increase the Company authorized common stock from 90,000,000 shares with no par

value to 100,000,000 shares of common stock with no par value.

The resolution was ratified on September 25, 2015, by the shareholders

at the Annual Meeting.

1, 2014, the Company granted 40,000 incentive options each to three employees per year for three years.

These options were issued

as incentive compensation to the employees.

Balance as of June 30, 2016

common stock options were exercised during the quarter ended June 30, 2016.

January 1, 2014, the Company granted 40,000

incentive options each to three employees per year for three years.

These options were issued as incentive compensation to the

employee and require the achievement of certain milestones.

The options were valued using the Black-Scholes valuation model.

The options have

an expected volatility rate of 259.07% calculated using the Company stock price for a three-year period.

A risk free interest

rate of 0.26% - 0.76% was used to value the options.

options have an expected volatility rate of 259.07% calculated using the Company common stock price for a three-year period.

A risk free interest rate of 0.26% - 0.76% was used to value the options.

The total value of these options was $17,726.

The options vest over a three

year period and are exercisable at a range of $.05 to $0.06 per share, which represented the fair market value at the date of

grant in accordance with the 2009 Equity Incentive Plan.

As of December 31, 2015, $12,278 of the total value was expensed.

was expensed in the three months ending December 31, 2015.

1, 2014, the Company granted 40,000 incentive options to one employee per year for three years.

These options were issued as incentive

compensation to the employee.

vest over a three-year period and are exercisable at a range of $.05 to $0.6 per share, which represents the fair market

value at the date of grant in accordance with the 2009 Equity Incentive Plan.

As of June 30, 2015, $6,923 of the total value was

$1,041 was expensed in the quarter ending June 30, 2015.

As of June 30, 2016, $15,735 of the total value was expensed.

$516 was expensed in the quarter ending June 30, 2016.

February 1, 2014, the Company granted 40,000

incentive options each to one employee per year for three years.

These options were issued as incentive compensation to the employee

and require the achievement of certain milestones.

The options were valued using the Black-Scholes valuation model.

The options have an expected volatility

rate of 258.20% calculated using the Company stock price for a three-year period.

A risk free interest rate of 0.41% - 0.64% was

used to value the options.

have an expected volatility rate of 258.20% calculated using the Company common stock price for a three-year period.

free interest rate of 0.41% - 0.64% was used to value the options.

The total value of these options was $4,107.

The options vest over a three-year period and are exercisable

at $.04 per share, which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

As of December 31, 2015, $2,731 of the total value was expensed.

$341 was expensed in the three months ending December 31, 2015.

May 15, 2012, the Company granted 850,000 incentive stock options to an officer, Robert Grover.

The expected volatility rate of

223.62% calculated using the Company stock price over the period beginning June 1, 2009, through date of issue.

A risk free interest

rate of 0.38 % was used to value the options.

The options were valued using the Black-Scholes valuation model.

The total value

of this option was $46,175.

The options vest over a three year period and are exercisable at $0.06 per share which represents

the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

As of June 30, 2015, the entire

value of the options was expensed.

The options vest

over a three-year period and are exercisable at a range of $.05 to $0.6 per share, which represents the fair market value at the

date of grant in accordance with the 2009 Equity Incentive Plan.

As of June 30, 2015, $1,710 of the total value was expensed.

$345 was expensed in the quarter ending June 30, 2015.

As of June 30, 2016, $3,417 of the total value was expensed.

$345 was expensed

in the quarter ending June 30, 2016.

November 18, 2015, the Company granted 200,000 stock options to an officer, Robert Grover.

The expected volatility rate of 186.52%

calculated using the Company stock price over the period beginning November 17, 2015, through date of issue.

A risk free interest

rate of 0.80 % was used to value the options.

calculated using the Company stock price over the two-year period ending November 17, 2015.

A risk free interest rate of 0.80

% was used to value the options.

The options were valued using the Black-Scholes valuation model.

The total value

of this option was $14,659.

The options vest over a three year period and are exercisable at $0.09 per share which represents

the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

For the period ending December 31,

2015, $1,757 of the option value was expensed.

July 30, 2015, 120,000 common stock warrants were exercised at a price of $.07 per share for a total of $8,400, resulting in the

issuance of 120,000 shares of “restricted”

common stock.

The total value of the options

The options vest over a three year period and are exercisable at $0.09 per share, which represents the fair market

value at the date of grant in accordance with the 2009 Equity Incentive Plan.

As of June 30, 2016, $9,027 of the total value of

the options had been expensed.

In the quarter ending June 30, 2016, $3,635 of the total value was expensed.

February 16, 2016, the Company granted 850,000 incentive stock options to three employees.

The expected volatility rate of 218.68%

was calculated using the Company stock price over the period beginning February 14, 2014, through the last business date prior

A risk free interest rate of 0.29 % was used to value the options.

The options were valued using the Black-Scholes valuation

The total value of these options was $24,154.

The options vest over a two-year period and are exercisable at $0.04 per

share, which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

30, 2016, $4,213 of the total value of the options had been expensed.

In the quarter ending June 30, 2016, $2,840 of the

total value was expensed.

During the quarter ending June 30, 2016, the

Company did not grant options.

January 22, 2015, the Company issued 2,000,000 warrants to a shareholder and board member with a 36 month term to purchase “restricted”

Rule 144 common stock, no par value (the “Shares”), as consideration for the issuance of a promissory note in the

amount of $400,000, from the Company at a purchase price of $0.04 per share of common stock (the “Exercise Price”).

These Warrants are fully vested and exercisable.

The warrants were evaluated for embedded derivatives in accordance with ASC 815

and were found to not include any embedded derivatives.

The warrants attached to the note were valued using the Black Scholes

Valuation Model.

The assumptions used in the model included the historical volatility of the Company’s stock of 180%, and

the risk-free rate for the periods within the expected life of the warrant based on the U.S.

Treasury yield curve in effect of

The resulting fair value was $66,717.

This value was recorded as a debt discount and was amortized over the life of the

The remaining $38,184 of the debt discount was amortized during the quarter ending June 30, 2015.

17 - SUBSEQUENT EVENTS

January 28, 2016, Mr.

Hackett, the holder of these Promissory Notes, approved a Note Extension Agreement extending the due dates

of the specific Promissory Notes detailed in the Note Table below:

Original Principal Balance

Principal 11/30/15

Origination Date

Original Due Date

Amended Due Date

Interest Rate

2/17 & 3/5/15

February 6, 2016, the Company entered into at 10% Promissory Note with a current board member, CEO and shareholder, Todd Hackett

in the amount of $100,000, secured by accounts receivable and NOL carry forward to finance

operations and inventory purchases, due February 29, 2016.

July 8, 2016, the Company issued 200,000 shares of “restricted”

Rule 144 common stock, no par value per share, to

a new employee based on the common stock’s closing price on the grant date of June 8, 2016, of $0.08.

Board of Directors resolved on July 14, 2016, to set the annual shareholder meeting on September 23, 2016 (the “Annual Meeting),

and associated record date to July 26, 2016.

Board of Directors resolved on July 14, 2016, to increase the Company’s authorized common stock from 100,000,000 shares

with no par value to 150,000,000 shares of common stock with no par value, and has further directed that management submit the

resolution for ratification by the shareholders at the Annual Meeting.

Board of Directors also resolved on July 14, 2016, to increase the Company 2009 Equity Incentive Plan shares from 8,000,000 to

10,000,000 authorized common stock shares with no par value and has further directed that management submit the resolution for

ratification by the shareholders at the Annual Meeting.

July 18, 2016, the Company completed the offer and sale of 6,250,000 shares of its common stock comprised of “restricted

securities”

as defined under Rule 144 of the SEC for $500,000, to “accredited investors,”

two of whom were directors

or executive officers of the Company.

The purchase price was $0.08 per share.

Prior to the completion of this private offering,

there were 82,480,682 shares of the Company’s common stock outstanding, and when these 6,250,000 shares are issued of record,

there will be 88,730,682 outstanding shares.

The 6,250,000 shares offered and sold will represent approximately seven percent

of the outstanding securities of the Company when issued.

Management’s Discussions and Analysis of Financial Condition and Results of Operations .

1 unchanged sentence

of the Private Securities Litigation Reform Act of 1995:

for historical facts, all matters discussed in this report, which are forward-looking, involve a high degree of risk and uncertainty.

Certain statements in this report set forth management’s intentions, plans, beliefs, expectations, or predictions of the

future based on current facts and analyses.

When we use the words “believe”, “expect”, “anticipate”,

“estimate”, “intend”

or similar expressions, we intend to identify forward-looking statements.

not place undue reliance on these forward-looking statements.

Actual results may differ materially from those indicated in such

statements, due to a variety of factors, risks and uncertainties.

Potential risks and uncertainties include, but are not limited

to, competitive pressures from other companies within the Educational Industries, economic conditions in the Company’s primary

markets, exchange rate fluctuation, reduced product demand, increased competition, inability to produce required capacity, unavailability

of financing, government action, weather conditions and other uncertainties, including those detailed in the Company’s Securities

and Exchange Commission filings.

The Company assumes no duty to update forward-looking statements to reflect events or circumstances

after the date of such statements.

following discussion should be read in conjunction with our audited consolidated financial statements and Management’s Discussion

and Analysis of Financial Condition and Results of Operations (“MD&A”) contained in our Form 10-K for the year

ended March 31, 2015.

sells into the STEM education market with (1) an existing STEM library and deep expertise in creating STEM solutions comprised

for historical facts, all matters discussed in this Quarterly Report, which are forward-looking, involve a high degree of risk

and uncertainty.

Certain statements in this Quarterly Report set forth management’s intentions, plans, beliefs, expectations,

or predictions of the future based on current facts and analyses.

When we use the words “believe”, “expect”,

“anticipate”, “estimate”, “intend”

or similar expressions, we intend to identify forward-looking

You should not place undue reliance on these forward-looking statements.

Actual results may differ materially from

those indicated in such statements, due to a variety of factors, risks and uncertainties.

Potential risks and uncertainties include,

but are not limited to, competitive pressures from other companies within the Educational Industries, economic conditions in the

Company’s primary markets, exchange rate fluctuation, reduced product demand, increased competition, inability to produce

required capacity, unavailability of financing, government action, weather conditions and other uncertainties, including those

detailed in the Company’s Securities and Exchange Commission (the “SEC”) filings.

The Company assumes no duty

to update forward-looking statements to reflect events or circumstances after the date of such statements.

following discussion should be read in conjunction with our audited financial statements and Management’s Discussion and

Analysis of Financial Condition and Results of Operations (“MD&A”) contained in our 10-K Annual Report for the

fiscal year ended March 31, 2016, filed with the SEC on June 22, 2016.

of Operation.

Company sells into the STEM education market with (1) an existing STEM library and deep expertise in creating STEM solutions comprised

of curriculum and materials;

(2) a unique PCS learning methodology –

an adaptive (customizes to individual learners), experiential

(hands-on in nature), learning framework that can be monetized in a number of ways, with what we believe is an approach to educational

assessment and incentivizing students for the future, and PCS is an innovative leader in this area;

(3) PCS has developed an innovative

K12 robotics and engineering system comprised of hardware and software specifically designed to engage students in STEM topics

such as hands-on physics and engineering and coding;

and (4) PCS entered the B2C space with a retail product launch this year

and also has a working model for experiential learning labs operational.

With a plan to expand higher margin digital delivery

products, PCS is now in the development stage of a unique, subscription-based online learning system that can be licensed to schools

or non-profit organizations, as well as be used in the home environment.

Phase one of this online learning platform, called EdApp,

was launched in Q3 with a product called EdApp Droneology.

Phase two is in the functional design stage and is planned to be developed

and deployed in Q4.

PCS expertise in the area of Drone technology evolved over the course of 12 months in 2015 as we developed

a drone curriculum, technical expertise, and a supply chain partner supplying drone solutions.

We believe the Drone market to

be highly viable for rapid growth of our retail product strategy.

In addition, the drone technology we are working on aligns strongly

with our STEM robotics product roadmap.

we approach FY2017, our strategy is growth and profitability driven seeking to optimize and streamline operations while aggressively

moving our digital learning and robotics product strategy forward.

A continued underlying principle will be the building of services

and products with recurring revenue traits such as online licensing.

Tactically, we will focus on improving product quality, improving

our delivery and support infrastructure to accommodate larger scale delivery, improving our sales infrastructure, and building

our new, higher margin digital products to add to our lineup of STEM products and services.

We will continue to focus on the improvement

of our web-based marketing efforts, expand our sales force and channel partners, and tighten sales processes for our domestic

We will also continue to fulfill existing and capture new STEM contracts on International projects where these make

We will continue to use our EdventuresLab program for (1) an R&D test bed for product improvement and refinement with

a major emphasis on digital delivery of content in FY2017;

(2) revenue generation through afterschool and summer course fees;

(2) a unique learning methodology –

an adaptive (customized to individual learners), experiential

(hands-on in nature) learning framework that can be monetized in a number of ways, with what the Company believes is an approach

to educational assessment and incentivizing students for the future, and the Company is an innovative leader in this area;

innovative K12 robotics and engineering system comprised of hardware and software specifically designed to engage students in

STEM topics such as hands-on physics, engineering, and coding;

(4) a long history as a prime STEM provider in the Kingdom of Saudi

Arabia, a relationship which the Company believes will continue to provide revenue growth;

and (5) a continual view to the future

of STEM education developments, exemplified by the Company’s anticipated release of a STEM drone program to enhance its

other product offerings.

Company’s strategy is profitability driven, seeking to optimize operations while moving our core STEM, digital learning,

robotics, and drone product strategies forward.

A continued underlying principle will be the building of services and products

with recurring revenue traits such as online licensing.

Tactically, we will focus on maintaining fresh product offerings, improving

our delivery and support infrastructure to accommodate larger scale delivery, improving our sales infrastructure, building

our new, higher margin digital products to add to our lineup of STEM products and services, and entering the retail market for

the Company’s STEM products.

We will continue to focus on the improvement of our web-based marketing efforts, expand our

sales force and channel partners, and tighten sales processes for our domestic STEM sales.

We will also continue to fulfill existing,

and capture new, STEM contracts with the Kingdom of Saudi Arabia.

We will continue to use our EdventuresLab program for (1)

an R&D test bed for product improvement and refinement with a major emphasis on digital delivery of content;

(2) revenue generation

through afterschool and summer course fees;

(3) revenue through licensing EdventuresLab curriculum and methods;

and (4) revenues from STEM retail products.

We believe e-commerce

sales of kits associated with STEM learning targeting the families of students attending the centers as well as the larger home

retail market will provide a consistent, dependable boost in Q3 annual revenues to offset low education sales traditionally anticipated

during this time frame.

We will actively seek retail distribution methods and channels for our robotics retail products and expand

their usability for other market segments.

We are actively pursuing an expansion strategy for retail and STEM education that involves

Drone technology.

and (4) revenues

from STEM retail products.

We believe e-commerce sales of kits associated with STEM learning targeting the families of students

attending the centers as well as the larger home retail market will provide a consistent, dependable boost in the third quarter

of FY2017 revenues to offset low education sales traditionally anticipated during this time frame.

We will actively seek retail

distribution methods and channels for our robotics and drone retail products and expand their usability for other market segments.

of Operations.

the nine-month period ended December 31, 2015, the Company reported a net loss of ($612,316) as compared to a net loss of ($1,123,512)

for the nine-month period ended December 31, 2014.

The significant reduction in net loss was predominantly due to the reduction

of interest expense year over year of $253,410.

The nine month period ending net loss December 31, 2014 included $301,131 in debt

discount amortized on July 21, 2014 as a result of $646,500 in notes payable conversion into 18,455,666 common stock shares.

remaining reduction in loss was due to a improvement in gross margin due to sales mix and reduction in employee expenses over

The Basic Loss per Share for nine-month period ended December 31, 2015, is ($0.01), which varies from the ($0.02) loss

per share for the nine-month period ended December 31, 2014.

for the nine month period ended December 31, 2015 decreased $193,707 to $2,145,719 as compared to revenue during the nine month

period ended December 31, 2014 of $2,339,426.

This was primarily due to the timing of acceptance of deliverables by our client

in Saudi Arabia.

Although contracted materials were delivered, the lack of official receiving notes from the client preclude this

revenue in this quarterly report.

We believe acceptance of these items to be imminent and will be reported in Q4.

of Sales for the nine month period ended December 31, 2015 decreased $349,579 to $953,448 (27%) as compared to cost of sales during

the nine month period ended December 31, 2014 of 1,303,027.

Gross margin was improved in the top three revenue catagories of Domestic,

Learning Centers, and International through a combination of sales mix and bill of materials and freight cost reduction.

expenses for the nine-month period ended December 31, 2015, decreased by $108,098 (6%) to $1,587,786 compared to $1,695,884 for

the nine-month period ended December 31, 2014.

The majority of savings stemming from employee expenses.

the three months ended December 31, 2015, the Company reported the net loss for the quarter was ($411,634) as compared to a net

loss of ($35,369) for the quarter ended December 31, 2014.

The Basic Loss per Share for the quarter ended December 31, 2015, is

($0.01), compared to the ($0.00) loss per share for the three month period ended December 31, 2014.

The increased loss per share

is the result of the decreased revenues not covering operations overhead.

for the three months ended December 31, 2015 decreased by $452,628 (58%) to $329,694, as compared to revenue during the quarter

ended December 31, 2014 of $782,322.

The significant difference in revenue from period to period is due to the large contract

received in FY2015 from Saudi Arabia and the non-reportable revenue for Q3 related to the current Saudi contract

expenses for the three month period ended December 31, 2015, increased by $23,214 (5%) to $521,863, as compared to $498,649 for

the three month period ended December 31, 2014.

used by operations for Q3 was ($92,392) compared to cash used by operations for Q3 ($512,325) in the same period last year.

Company ended the third quarter of FY 2016 with $57,820 in cash, total current assets of $544,707 and total current liabilities

For the quarter ended June 30, 2016, the Company

reported a net loss of $410,077 as compared to a net income for the quarter ended June 30, 2015, of $130,865, a 414% decrease

to the bottom line.

The decrease is attributable to three areas:

a major customer annual order fulfillment and revenue recognition

occurred one quarter earlier than usual, occurring in the fourth quarter of FY2016, whereas the previous annual order was completed

in the first quarter of FY2016;

no international contracts were fulfilled in the first quarter of FY2017;

and, additional research

and development costs incurred associated with the operations of the Thrust UAV business unit.

The Diluted Earnings per Share

for the quarter ended June 30, 2016, was ($0.00), compared to the $0.00 earnings per share for the three-month period ended June

for the quarter ended June 30, 2016, was $653,655 as compared to revenue during the quarter ended June 30, 2015, of $1,291,219.

Cost of sales increased 18% over the same quarter last year due to lower margins on product lines.

The Basic and Diluted Net Loss per Share for

the quarter ended June 30, 2016, were ($0.01) and ($0.00) respectively, compared to the $0.00 and $0.00 basic and diluted net

income per share for the three-month period ended June 30, 2015, respectively.

operating expenses for the three-month period ended June 30, 2016, increased by $105,693, or 21% to $614,832, over the three-month

period ended June 30, 2015.

The table below identifies the quarter over quarter changes:

International Selling

$ (25,955 )(1)

Employee Expenses

Warehouse Expense

Product Development

International

selling expense decreased from last year due to no international contract fulfillment within the quarter.

expenses increased due to additional staff levels in product development and Thrust UAV.

expenses increased with the production of Thrust UAV promotional materials and videos.

expense increased with the new warehouse facilities lease starting on March 15, 2016.

Development expense increased from the prior year due to additional development of both STEM education and Thrust UAV product

Cash used by operating activities for the

first quarter of FY2017 was ($26,871) compared to cash used by operating activities of ($172,431) in the same period last year.

The Company ended the first quarter of FY2017 with $117,929 in cash, total current assets of $685,334 and total current liabilities

of $1,083,223, resulting in a working capital deficit of ($399,889) compared to a working capital deficit of $1,661,514 for the

year ended March 31, 2016.

used in financing activities FY 2016 to December 31, 2015, was $263,350 in short term debt repayments.

For financing activities

through December 31, 2014, management obtained $538,116 in cash for operations and working capital by issuing Promissory Notes.

Company had a current ratio at December 31, 2015, and March 31, 2015, of .22 and .39, respectively.

PCS Edventures!.com, Inc.

does not possess enough current assets to pay current liabilities.

The majority of the current liabilities relate to notes payable

to one of its shareholders and board members.

This lender has on numerous occasions provided the Company with extensions of due

dates for principal and accrued interest.

The most recent grant extended the due date until February 29, 2015 for these notes.

The Company is continuing to pursue raising capital to pay these obligations.

There is no guarantee that this lender will continue

to provide extensions for payments and the Company cannot predict that it will be successful in obtaining funding or generating

cash in order to pay the lender.

The Company has an accumulated deficit of ($40,230,322) and shareholders’

equity (deficit)

of ($1,977,290).

The Company had a current ratio at June 30,

2016, and March 31, 2016, of 0.63 and 0.42, respectively.

This increase in liquidity was primarily due to the long term extension

notes payable.

The Company had an accumulated deficit of $40,462,123 and Stockholders’

Equity Deficit of $1,925,921 as of

June 30, 2016.

Company has accumulated significant losses and payables and generated past negative cash flows.

The combination of these items

raises substantial doubt about its ability to continue as a going concern.

The Company cannot predict that it will be successful

in obtaining funding for its plans or that it will achieve profitability in fiscal 2017.

Quantitative and Qualitative Disclosures About Market Risk.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements