What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2017-02-10 compared with 2016-11-10 · 429 added, 440 removed, 382 unchanged (69% of the section changed)

5 unchanged sentences

EDVENTURES!.COM, INC.

receivable, net of allowance for doubtful accounts of$2,096 and $2,096, respectively

goods inventory

Current Assets

Accounts receivable,

net of allowance for doubtful accounts of $2,096 and $2,096, respectively

Prepaid expenses

Finished goods inventory

Other Receivables

Total Current Assets

NON-CURRENT ASSETS

Fixed Assets, net

of accumulated depreciation of $160,842 and $155,307, respectively

Assets, net of accumulated depreciation of $163,556 and $155,307, respectively

Non-Current Assets

1 unchanged sentence

EDVENTURES!.COM, INC.

CURRENT LIABILITIES

payable and other current liabilities

Payroll liabilities

Accrued expenses

Deferred Revenue

Note payable convertible,

related party net of $0 and $0 discount for September 30 and March 31, 2016, respectively

Note payable, related

party net of $0 and $0 discount for

September 30 and March 31, 2016

payable, related party

liabilities payable

payable convertible, related party net of $0 and $0 discount for December 31, and March 31, 2016, respectively

payable, convertible

payable, related party net of $0 and $0 discount for December 31 and March 31, 2016

payable, related party, default

of credit payable

Notes payable, convertible

Current Liabilities

NON-CURRENT LIABILITIES

Notes payable, related

party, long term

payable, long term, convertible

payable, long term, related party

Non-Current Liabilities

STOCKHOLDERS’

Preferred stock, no par value, 20,000,000

authorized shares, no shares issued and outstanding

Common stock, no par value, 150,000,000

authorized shares, 88,800,682 and 76,442,668 shares issued and outstanding, respectively

Stock payable

Restricted Stock Units payable

Accumulated deficit

stock, no par value, 20,000,000 authorized shares, no shares issued and outstanding

stock, no par value, 150,000,000 authorized shares, 100,308,372 and 76,442,668 shares issued and outstanding, respectively

stock units payable

$ (41,777,523)

$ (40,052,059)

Total Stockholders’

Stockholders’

$ (2,057,727)

4 unchanged sentences

of Operations

Months Ended September 30,

International service

Learning Center

License and royalty

COST OF SALES

OPERATING EXPENSES

Salaries and wages

Depreciation and

amortization expense

Months Ended December 31,

International

service revenue

Center revenue

and royalty revenue

and amortization expense

and administrative expenses

Operating Expenses

OPERATING INCOME (LOSS)

$ (1,584,806)

OTHER INCOME AND EXPENSES

Interest expense

INCOME AND EXPENSES

on Settlement

Other Income/(Expense)

INCOME (LOSS) FROM OPERATIONS

$ (1,120,351 )

NET INCOME (LOSS)

FROM OPERATIONS

$ (1,725,464)

NET COMPREHENSIVE INCOME (LOSS)

$ (1,725,464)

NET LOSS ATTRIBUTABLE

TO COMMON SHAREHOLDERS

COMPREHENSIVE LOSS

$ (1,725,464)

Net income per common share:

Weighted Average Number of Shares Outstanding Basic and Diluted

LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

common share:

Average Number of Shares Outstanding Basic and Diluted

accompanying notes are an integral part of these financial statements.

4 unchanged sentences

$ (1,777,571 )

Stock issued for services

Stock issued for Cash

Options exercised

Conversion of notes payable for common

Option Expense

Balance at 9/30/2016 (unaudited)

$ (41,172,410 )

$ (1,865,709 )

issued for services

issued for Cash

issued for bonus

of notes payable for common stock

at 12/31/2016

accompanying notes are an integral part of these financial statements.

1 unchanged sentence

of Cash Flows

Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Months Ended December 31,

FLOWS FROM OPERATING ACTIVITIES

$ (1,725,464 )

Adjustments to reconcile net loss to

net cash provided by operating activities:

Debt discount amortization

Depreciation and

Amortization of assets

Stock for services

Impairment of Brain

Stock payable for

Amortization of fair value of stock

Changes in operating assets and liabilities:

(Increase) decrease

in accounts receivable

(Increase) decrease

in prepaid expenses

(Increase) decrease

in inventories

(Increase) decrease

in other current assets

(Increase) decrease

in other assets

(Decrease) increase

in accounts payable and accrued liabilities

to reconcile net loss to net cash provided by operating activities:

discount amortization

on settlement

of Brain Mold

payable for service

of fair value of stock options

in operating assets and liabilities:

decrease in accounts receivable

decrease in prepaid expenses

decrease in inventories

decrease in other current assets

decrease in other assets

increase in accounts payable and accrued liabilities

(decrease) in unearned revenue

Cash Provided used by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

$ (1,242,339 )

FLOWS FROM INVESTING ACTIVITIES

paid for purchase of fixed assets

Cash Used by Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sale

Borrowings on note

Proceeds from options

Borrowings on Debt

Principal payments

on debt –

FLOWS FROM FINANCING ACTIVITIES

from sale of stock

paid for settlement of shares for services

on note payable

payments on debt –

payments on debt

Cash Provided by Financing Activities

Net Increase (Decrease) in Cash

Cash at Beginning of Period

Cash at End of Period

Increase (Decrease) in Cash

at Beginning of Period

at End of Period

accompanying notes are an integral part of these financial statements

1 unchanged sentence

of Cash Flows (continued)

Months Ended September 30,

NON-CASH INVESTING & FINANCING ACTIVITIES

Conversion of debt

CASH PAID FOR

Months Ended December 31,

NON-CASH INVESTING

& FINANCING ACTIVITIES

accrued in prior period and issued in current period

payable accrued in prior period and issued in current period

accompanying notes are an integral part of these financial statements.

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comprised of curriculum and materials.

With its acquisition of Thrust-UAV in February, 2016, the Company is also in late-stage

development of a first person view (FPV) racing drone, which it intends to assemble and market primarily through distributors.

The Company has used this racing-drone technology to create an education drone (also FPV) for the classroom to be used as a platform

to teach STEAM topics.

This initiative is also in late stage development.

The Company sells its education products into all 50

With its acquisition of Thrust-UAV in February, 2016, the Company also develops and markets

a first person view (FPV) racing drone, which it assembles and markets primarily through distributors.

The Company has used this

racing-drone technology to create an education drone (also FPV) for the classroom to be used as a platform to teach STEAM topics.

This initiative is in late stage development and is expected to be released in February, 2017.

The Company sells its education

products into all 50 U.S.

states as well as into international markets.

Most of the Company’s domestic education business is conducted with schools

and entities that cater to after-school programs for students.

Most of the Company’s international business is conducted

with governmental agencies in that local market.

The Company anticipates revenue from its FPV racing drone to come from both domestic

and international sources.

Most of the Company’s domestic education business

is conducted with schools and entities that cater to after-school programs for students.

Most of the Company’s international

business is conducted with governmental agencies in that local market.

Most of the Company’s revenue from its FPV racing

drone has come from domestic sources, but the Company anticipates meaningful international revenue as it proceeds with its product

release strategy.

The Company expects that the vast majority of its education drone sales will be domestic.

anticipates recognizing its first meaningful revenues from its FPV racing drone division during its third fiscal quarter of 2017.

The Company anticipates

recognizing its first meaningful revenues from its FPV racing drone and its first revenues from its education drone during its

fourth fiscal quarter of 2017.

financial statements presented herein are those of the Company.

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private learning centers and launched a pilot program in the spring of 2012.

An additional LeraningLab was opened in Eagle, Idaho

An additional LearningLab was opened in Eagle, Idaho,

in June of 2014.

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business opportunities.

There were no operations for the subsidiary during the quarter ended September 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”

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

from its name, but retain the current brand.

1 unchanged sentence

No amendment to

the Company’s Articles of Incorporation regarding this name change has 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 (“FINRA”),

this name change will become effective.

the Company’s Articles of Incorporation regarding this name change has been filed.

At this time, the Company has not completed

the required filing with the Financial Industry Regulatory Authority (“FINRA”) to make this name change effective

due to the cost relative to the expected benefits of doing so.

February 15, 2016, the Company acquired Thrust UAV, a private company engaged in the development and assembly of FPV racing drones,

1 unchanged sentence

2 - UNAUDITED FINANCIAL STATEMENTS

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

December 31, 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

4 unchanged sentences

year ended March 31, 2016.

operating results for the six-month period ended September 30, 2016, are not necessarily indicative of the results that may be

items for March 31, 2016 have been reclassified to conform to presentation in the quarter ended December 31, 2016.

operating results for the nine-month period ended December 31, 2016, are not necessarily indicative of the results that may be

expected for the fiscal year ending March 31, 2017.

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Company has accumulated significant losses, accounts payable and generated negative cash flows.

The combination of these

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

The combination of these items

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

Management’s plans to alleviate this adverse

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Company’s strategy to remove the going concern doubt is to focus attention on increasing STEAM education sales through both

channel partners and its direct sales force, and to bring to market its FPV racing drone and STEAM education drone product lines

from Thrust-UAV.

The Company expects its first revenues from its FPV racing drone and STEAM education drone during Q3FY2017.

channel partners and its direct sales force, to develop retail channels to sell its STEAM education products into, and to bring

to market its FPV racing drone and STEAM education drone product lines from Thrust-UAV.

January, the Company contracted with two new salespeople who will pursue STEAM education sales in the domestic market.

has implemented a number of initiatives to support its direct sales force and generate promising sales leads for them to pursue.

The Company continues to seek retail partners for its STEAM education products.

In December, the Company released its racing drone,

the Riot 250R Pro.

The Company has secured several distribution partners who have placed the product into their retail systems.

The Company believes that sales will gain traction and become material during the fourth quarter of FY2017.

The Company anticipates

that its education drone product will be completed and available for sale in February, 2017.

Based on preliminary information

and feedback, the Company believes that its education drone sales will be material during the fourth quarter of FY2017.

4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

At September 30, 2016, and 2015, Stemfinity, one of the Company’s major customers, accounted for 23.9% and 52.5% of

the Company’s accounts receivable, respectively.

At December 31, 2016, a major international customer and a domestic reseller accounted for 13% and 27% of the Company’

accounts receivable, respectively .

PREPAID EXPENSES

expenses for the periods are as follows:

Prepaid insurance

Prepaid inventory

Prepaid software

expenses for the periods were as follows:

expenses, other

Prepaid Expenses

Total Prepaid

GOODWILL AND INTANGIBLE ASSETS

and other intangible assets for the period were as follows:

Intangible Assets

Accumulated Amortization

Intangible Assets

Amortization Intangible Assets

Goodwill and Intangible Assets

asset amortization expense for the six months ended September 30, 2016, and 2015 was $50,896 and $0, respectively.

asset amortization expense for the nine months ended December 31, 2016, and 2015, was $76,344 and $0, respectively.

and depreciation for the periods were as follows:

Computer/office equipment

Accumulated depreciation

Total Fixed Assets

asset depreciation expense for the six months ended September 30, 2016, and 2015, was $5,535 and $14,316, respectively.

Computer/office

asset depreciation expense for the nine months ended December 31, 2016, and 2015, was $8,249 and $10,486, respectively.

ACCOUNTS PAYABLE, RELATED PARTY AND OTHER ACCRUED EXPENSES

payable, related party, for the periods were as follows:

reimbursement

Accounts payable, related party

Accrued expenses for the periods were as follows:

accrued expenses

expenses for the periods were as follows:

Interest payable

Sales tax payable

Accrued commissions

Credit card debt

Total accrued

NOTES PAYABLE

payable for the periods consisted of the following:

September 30, 2016

March 31, 2016

Short term, Note payable convertible, related party net of $0 and $0 discount for September

30 and March 31, 2016, respectively

Short term, Note payable

Short term, Note payable, related party net of $0 and $0 discount for

September 30 and March 31, 2016

Short term, Lines of credit payable

Short term, Notes payable, convertible

Long term, Notes payable, related party

Long term, Notes payable, convertible

Total Notes Payable

Notes payable

for the periods consisted of the following:

payable convertible, related party net of $0 and $0 discount for December 31, and March 31, 2016, respectively

payable, convertible

payable, related party net of $0 and $0 discount for December 31, and March 31, 2016

payable, related party, default

of credit payable

payable, long term, convertible

payable, long term, related party

Notes Payable

October 14, 2016, the Company executed a non-convertible promissory note with no warrants attached with a third party for $50,025

at 20% interest per annum, due November 30, 2016.

The note was secured by accounts receivable.

The note was paid in full on November

21, 2016, with accrued interest of $905.

There was no accrued interest and the principal balance was $0 as of December 31, 2016.

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

The note does not bear a stated 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 $18,666 as of September 30, 2016.

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

December 1, 2016.

The note was paid in full according to its terms.

There was no accrued interest and the principal balance was

$0 as of December 31, 2016.

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

The note does not bear a stated 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 $5,455 as of September 30, 2016.

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

December 1, 2016.

The note was paid in full according to terms.

There was no accrued interest and the principal balance was $0

as of December 31, 2016.

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

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

The Company had paid $14,465 in principal, leaving a balance of $5,535 at September 30, 2016.

The Company had paid $16,791 in principal, leaving a balance of $3,209 at December 31, 2016.

Total interest accrued as

of September 30, 2016, was $3,002.

of December 31, 2016, was $2,290.

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

1 unchanged sentence

The Company has paid $51,808 in principal,

leaving a balance of $16,142 at September 30, 2016.

Total interest accrued as of September 30, 2016, was $1,524.

leaving a balance of $8,192 at December 31, 2016.

Total interest accrued as of December 31, 2016, was $1,524.

Note Payable –

12 unchanged sentences

Related Party

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:

November 3, 2016, the Company executed a promissory note with one of its shareholders and board members, for $60,000 at ten percent

(10%) interest per annum.

This promissory note is secured with the Company’s good faith and credit.

The promissory note

was due December 30, 2016.

Total interest accrued as of December 31, 2016, was $970.

This note is in default as of December

June 8, 2016, the Company executed a promissory note with one of its shareholders and board members, for $340,000 at ten percent

(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;

April 1, 2016, for $100,000;

and April 19, 2016 for $40,000.

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.

promissory note is due December 31, 2016.

Total interest accrued as of September 30, 2016, for all four promissory notes discussed

above totaling $340,000 and combined on June 8, 2016 was $18,882.

On 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.

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

The promissory note was due December 31, 2016.

Total interest accrued as of December, 31, 2016, for all four referenced

promissory notes totaling $340,000 and combined on June 8, 2016, was $27,452.

This note’s due date was subsequently extended

until July 30, 2017.

This note is in default as of December 31, 2016.

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.

Monthly payments are required for interest only

to the Lender’s financial intuition.

On September 30, 2016, $6,034 over the interest only payment had been paid resulting

in an ending principal amount of $18,966.

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

On December 31, 2016, $6,429 over the interest

only payment had been paid resulting in an ending principal amount of $18,571.

No interest is accrued for this note payable.

Total interest paid during the quarter

ending September 30, 2016, was $307.

interest paid during the quarter ending December 31, 2016, was $354.

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.

bears interest at seventeen and one-half (17.5%) per annum.

The Company makes variable monthly payments.

For the period ending September 30, 2016, the

Company paid $1,224 in principal.

Since inception, the Company has paid $23,662 in principal, leaving a balance of $15,389 payable.

Total interest paid during the period ending September 30, 2016, was $499.

For the period ending

December 31, 2016, the Company paid $1,224 in principal.

Since inception, the Company has paid $24,051 in principal, leaving a

balance of $14,999 payable.

Total interest paid during the period ending December 31, 2016, was $480.

Payable, Related Party, Long Term

1 unchanged sentence

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’

Minimum monthly payments of one and one-half (1.5%) of the loan balances are required and are submitted to the Lenders’

financial institution.

The 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 were amended April 1, 2013, and rewriting 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

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 $32,289 in principal, leaving a balance of $37,711 at September 30, 2016, on these notes.

No interest is

accrued for these notes payable.

Total Interest paid during the quarter ending September 30, 2016, was $762.

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 $34,372 in principal, leaving a balance of $35,628 at December 31, 2016, on

No interest is accrued for these notes payable.

Total interest paid during the quarter ending December 31, 2016,

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:

$50,000 of the February 11, 2014 note;

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:

$50,000 of the February

11, 2014 note;

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

the note dated May 7, 2014;

$29,500 of the June 27, 2014 note;

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

$29,500 of the

June 27, 2014, 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;

$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.

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

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

On June 8, 2016, this

1 unchanged sentence

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

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 for the $1,292,679 consolidated note was $239,409 as of

September 30, 2016.

December 31, 2016.

This promissory note has payment terms requiring consecutive monthly installments in the sum of $50,000 per

month commencing January 15, 2017.

This note’s principle payment comencement date was subsequently extended until July 15,

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

15 unchanged sentences

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

The accrued interest for the $1,292,679 was $206,826 as of September

The accrued interest for the $1,292,679 consolidated note was $239,409

as of December 31, 2016

February 17, 2015, and April 20, 2015, the Company executed promissory notes with one of its shareholders and board members for

6 unchanged sentences

note of $135,000 was combined with the $40,000 remaining principal on the April 20, 2015, note into a $175,000 note due January

The accrued interest on the $175,000 note, on September 30, 2016, was $31,766.

The accrued interest on the $175,000 note was $36,177 on December 31, 2016.

June 8, 2016, the Company executed a promissory note with one of its shareholders and board members for $1,292,679.

3 unchanged sentences

October 21, 2014, promissory note for $892,679 and the January 16, 2015, promissory note for $400,000, as detailed in the table

June 8, 2016, the Company executed promissory notes with one of its shareholders and board members for $175,000.

note is due January 15, 2019, has an interest rate of ten percent (10%) per annum, and is secured by inventory, 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, 2015 and March 5, 2015, for $135,000 and the unpaid principal balance

of $40,000 remaining on the promissory note dated April 20, 2015, per the table below.

The accrued interest on the $175,000

note, on September 30, 2016, was $31,766.

Note Payable –

5 unchanged sentences

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, which were subsequently extended to June 27, 2014, were amended and extended again an additional three years,

making the new expiration dates August 1, 2017.

on March 31, 2011, which were subsequently extended to June 27, 2014, were amended and extended again for an additional three

years, making the new expiration dates August 1, 2017.

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 the same rate as the warrants.

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 the same rate as the warrants.

On June 7, 2013, the Company executed an amendment to the loan transaction.

amended transaction involved the extension of the promissory notes from April 30, 2013 to April 30, 2016, with the Lenders 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, 2012.

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 September 30, 2016, the ending principal balance was $90,696.

Interest accrued as of September 30, 2016 was $27,258.

The amended loan transaction involved the extension of the promissory notes from April 30, 2013, to April 30, 2016, with the Lenders

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, 2012.

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

As of December 31, 2016, the ending principal balance was $90,696.

Interest accrued as of December 31, 2016 was $29,544.

NOTE RECEIVABLE

4 unchanged sentences

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 the amount of $50,740, carried 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.

3 unchanged sentences

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

In evaluation of the notes potential for collectability, a note allowance was accrued to the full amount of the note receivable

The note receivable principal balance at June 30, 2015, was $49,513.

The note receivable principal balance at September

30, 2016, was $49,513.

The note receivable allowance balance at September 30, 2016 is $49,513, resulting in a net $0 balance

for this note receivable.

August 10, 2016, the Company entered into a note receivable with one of its consultants for the amount of $21,198, with

an interest rate of eighteen percent (18%) per annum, and secured by future payables owed to the consultant by the Company

In evaluation of the note’s potential for collectability, a note allowance was accrued to the full amount of the

note receivable balance.

The note receivable principal balance at December 31, 2016 was $49,513.

The note receivable allowance

balance at December 31, 2016, is $49,513, resulting in a net $0 balance for this note receivable.

August 10, 2016, the Company entered into a note receivable with one of its consultants for the amount of $21,198, with an

interest rate of eighteen percent (18%) per annum, and secured by future payables owed to the consultant by the Company

for services rendered.

Interest and principal are due by January 31, 2017.

The note has not been collected as of December 31,

ACCOUNTS RECEIVABLE

Company had accounts receivable of $752,922 net of an allowance for $2,096 for the fiscal year ended March 31, 2016.

accounts receivable balance included a major international customer’s final work orders;

a major domestic customer’s

annual sales order;

This accounts

receivable balance included a major international customer’s final work orders;

a major domestic customer’s annual

and an international customer’s lab royalty fees.

All international outstanding accounts receivable

balances were paid within terms.

The Company had an accounts receivable balance of $192,643, net of allowance of $2,096 as of

September 30, 2016.

All international outstanding accounts receivable balances

were paid within terms.

The Company had an accounts receivable balance of $177,734, net of allowance of $2,096, as of December

Company had inventory of $192,527 net of an inventory reserve of $3,391 for the fiscal year ended March 31, 2016.

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The Company had an inventory balance

of $342,686 net of an inventory reserve of $3,391 as of September 30, 2016.

The growth in inventory on-hand is due to receipt

of an ocean container of our proprietary BrickLab product.

of $390,500, net of an inventory reserve of $3,391, as of December 31, 2016.

The growth in inventory on-hand is largely due to

receipt of an ocean container of our proprietary BrickLab product.

13 - COMMITMENTS AND CONTINGENCIES

Operating Lease Obligation

The Company leases its main office under a

non-cancelable lease agreement accounted for as an operating lease.

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

feet or $4,647 per month for the 12 months expiring May 31, 2017.

Rent expense for the corporate offices was $32,676 and

$29,397 for the six months ended September 30, 2016, and 2015, respectively, and $54,135 and $77,869 for

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

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

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 feet or $4,647 per month for the 12 months expiring May 31, 2017.

Rent expense for the corporate offices

was $14,780 and $13,533 for the three month ended December 31, 2016 and 2015, and $47,456 and $49,467 for the nine months ended

December 31, 2016, and 2015, respectively, under this lease arrangement.

Company leases additional warehouse space in Boise, Idaho.

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warehouse facility.

Rent expense for the new warehouse location was $37,800 and $0 for the six months ended September

30, 2016, and 2015, respectively, and $3,150 and $0 for the 12 months ended March 31, 2016, and 2015, respectively.

Rent expense for the new warehouse location was $12,600 and $6,535 for the three months ended December 31,

2016, and 2015, and $56,065 and $18,500 for the nine months ended December 31, 2016, and 2015, respectively.

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

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On October 25, 2016, the case was dismissed with prejudice.

October 13, 2015, the Company filed a Summons and Complaint against a person the Company contracted to promote the Company.

complaint primarily involved defamation and breach of contract.

The Complaint was unresolved at quarter end as the Company was

in negotiations with the person to settle this dispute.

In early October, an agreement was reached and both parties signed a confidential

October 13, 2015, the Company filed a Summons and Complaint against a person the Company contracted to provide public relations

to the Company.

The complaint primarily involved defamation and breach of contract.

On October 18, 2016, the Company negotiated

a settlement on Ada County Case No.

CV OC 1517581 originating in the Idaho Fourth Judicial District Court.

The parties to the

suit negotiated an agreement that included a confidentiality clause.

The matter was settled amicably.

Contingencies

February 23, 2016, the Company issued a press release announcing an $825,000 contract with Drones ETC.

in which its Thrust-UAV

business unit would develop and produce a drone-related technology product for Drones ETC.

December 23, 2016, the Company received a Notice of Termination of the contract from legal counsel for Drones ETC.

purported to terminate the contract, alleging breach of contract resulting from the Company’s alleged failure to provide

the product in a timely manner and demanding the return of the $33,000 it had paid to the Company on the execution of the contract.

The Company believes that the Notice of Termination is without merit, and intends to seek enforcement of the contract.

has engaged legal counsel to advise it on this matter.

14 - STOCKHOLDERS’

the six months ended September 30, 2016, the Company expensed amounts related to stock options and warrants granted in the current

the nine months ended December 31, 2016, the Company expensed amounts related to stock options and warrants granted in the current

period as well as prior periods valued at $29,244.

the six months ended September 30, 2016, an employee exercised 70,000 options earned from an Incentive Stock Option (ISO) Agreement

the nine months ended December 31, 2016, an employee exercised 70,000 options earned from an Incentive Stock Option (ISO) Agreement

dated January 14, 2014.

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totaling $2,533.

the six months ended September 30, 2016, the Company issued 200,000 shares of Rule 144 “restricted”

the nine months ended December 31, 2016, the Company issued 200,000 shares of Rule 144 “restricted”

common stock shares

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stock at the date of grant, for a total of $16,000.

the six months ended September 30, 2016, the Company issued a total of 75,000 Rule 144 “restricted”

the nine months ended December 31, 2016, the Company issued a total of 75,000 Rule 144 “restricted”

common stock shares

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stock compensation for services totaled $6,250.

the six months ended September 30, 2016, the Company issued a total of 5,763,014 Rule 144 “restricted”

the nine months ended December 31, 2016, the Company issued a total of 5,763,014 Rule 144 “restricted”

On October 21, 2014, the Company entered into a ten percent (10%) convertible

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

the six months ended September 30, 2016, the Company issued a total of 6,250,000 Rule 144 “restricted”

shares from a private equity sale offering on July 18, 2016, at a price of $0.08

totaling $500,000.

the six months ended September 30, 2016, the Company accrued $265,000 in stock payable due to the September 28, 2016, offer of

the nine months ended December 31, 2016, the Company issued a total of 17,957,690 Rule 144 “restricted”

shares from private equity sale offerings, at a price range of $.05 to $0.08 totaling

These private equity sales included:

6,250,000 Rule 144 “restricted”

common stock shares from

a private equity sale offering on July 18, 2016, at a price of $0.08 totaling $500,000;

5,076,922 Rule 144 “restricted”

common stock shares from a private equity sale offering on September 28, 2016, at

a price of $0.065 totaling $330,000;

769,230 Rule 144 “restricted”

common stock shares from

a private equity sale offering on October 21, 2016, at a price of $0.065 totaling $50,000;

861,538 Rule 144 “restricted”

common stock shares from a private equity sale offering on November 14, 2016, at

a price of $0.065 totaling $56,000;

5,000,000 Rule 144 “restricted”

common stock shares from

a private equity sale offering on December 13, 2016, at a price of $0.05 totaling $250,000.

the nine months ended December 31, 2016, the Company cancelled 200,000 shares of 144 “restricted”

common stock as

a negotiated settlement for $9,000, originally issued on July 30, 2015, at a price of $0.11 for services.

The shares were valued

based on the fair market price on the date of contract for a total of $22,000, resulting in a $13,000 gain on settlement.

the nine months ended December 31, 2016, the Company accrued $265,000 in stock payable due to the September 28, 2016, offer of

5,076,922 shares of its common stock for $330,000 comprised of “restricted securities”

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sale proceeds of $265,000 and $330,000 was due to the sale of 1,000,000 shares at $0.065 finalized on October 1, 2016.

the six months ending September 30, 2016, $6,480 in accrued Restricted Stock Units payable was reversed.

the nine months ended December 31, 2016, $3,240 in accrued Restricted Stock Units payable was reversed.

Stock compensation in

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

As of September 30, 2016, there were no preferred shares issued or

As of December 31, 2016, there were no preferred shares issued or

15 - BASIC AND DILUTED NET LOSS PER COMMON SHARE

net losses per common share for the three month periods ended September 30, 2016, and 2015, are based on 87,507,204 and 74,917,541,

net losses per common share for the three month periods ended December 31, 2016, and 2015, are based on 95,444,493 and 76,134,102,

respectively, of weighted average common shares outstanding.

Dilutive net loss per common share for the six month periods ended

September 30, 2016, and 2015, are based on 83,982,390 and 74,356,534 respectively, of weighted average common shares outstanding.

Months Ended September 30,

Net income per common share:

Weighted Average Number of Shares Outstanding,

Basic and Diluted

Dilutive net loss per common share for the nine month periods ended

December 31, 2016, and 2015, are based on 83,982,390 and 74,356,534 respectively, of weighted average common shares outstanding.

Months Ended December 31,

per common share:

Weighted Average

Number of Shares

Outstanding, Basic and Diluted

16 - DILUTIVE INSTRUMENTS

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the expected term of the award.

Balance as of March 31, 2016

Common Stock Options

Balance as of September 30, 2016

August 31, 2016, an employee of the Company exercised 70,000 options for “restricted”

common stock issued during the

period ended September 30, 2016.

The options vest over a three-year period, are exercisable at $0.0362 per share, and are valued

at $2,534 which represented the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

as of March 31, 2016

Stock Options

of December 31, 2016

August 31, 2016, an employee of the Company exercised 70,000 earned and vested options for “restricted”

issued September 8, 2016.

The options vest over a three-year period, are exercisable at $0.0362 per share, and are valued at $2,534

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

Board of Directors resolved on July 14, 2016, to increase the Company authorized common stock from 100,000,000 shares with no

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at the Annual Meeting.

The Articles Of Amendment were filed with the Idaho Secretary of State on September 23, 2016 (Exhibit

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.

The Articles of Amendment were filed with the Idaho Secretary of State on October 11, 2016.

November 1, 2016, the Company granted 500,000 stock options to an officer, Michael J.

The expected volatility rate of

230.18% was calculated using the Company’’s stock price over the period beginning July 1, 2014, through date of issue.

A risk free interest rate of 0.08 % was used to value the options.

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.

The total value of this option was $37,315.

The options vest over a three-year period and are exercisable at $0.08 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, 2016,

$6,242 of the total value was expensed.

For the nine months ended December 31, 2016, $6,242 was expensed.

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 employees.

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

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

A risk-free interest

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in accordance with the 2009 Equity Incentive Plan.

As of September 30, 2016, $12,801 of the total value was expensed.

expensed in the six months ending September 30, 2016.

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.

As of December 31, 2016, $17,726 of the total value was expensed.

months ended December 31, 2016, $3,991 was expensed.

February 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.

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.

The options have an

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

A risk 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 a range of $.03 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 September 30, 2016, $3,762 of the total value was expensed.

$900 was expensed in the

six months ending September 30, 2016.

The options vest over a three-year

period and are exercisable at a range of $0.03 to $0.60 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, 2016, $4,107 of the total value was expensed.

months ended December 31, 2016, $1,035 was expensed.

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

The expected volatility rate of

186.52% 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.

186.52% was calculated using the Company’’s stock price over the two-year period ending November 17, 2015.

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 the options was $14,659.

value of the options 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.

As of September 30, 2016, $12,702

As of December 31, 2016, $12,702

of the total value of the options had been expensed.

$7310 was expensed in the six months ending September 30, 2016.

For the nine months ended December 31, 2016, $7310 was expensed.

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

The expected volatility rate

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

interest rate of 0.38 % was used to value the options.

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

total value of this option was $44,495.

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,

of 223.62% was calculated using the Company’’s stock price over the period beginning June 1, 2009 through date of

A risk-free interest rate of 0.38% was used to value the options.

The options were valued using the Black-Scholes valuation

The total value of the options was $44,495.

The options vested over a three year period and were exercisable at $0.06 per

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

30, 2015, the entire value of the options was expensed.

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17 - SUBSEQUENT EVENTS

October 11, 2016, the Company issued the September 28, 2016, offer and sale of 5,076,922 shares of its common stock comprised

of “restricted securities”

as defined under Rule 144 of the SEC for $329,999.93, solely to “accredited investors.”

The purchase price was $0.065 per share.

Prior to the completion of this private offering, there were 88,800,682 shares of the

Company’s common stock outstanding, and when these 5,076,922 shares are issued of record, there will be 93,877,604 outstanding

The 5,076,922 shares offered and sold will represent approximately five percent of the outstanding securities of the Company.

October 14, 2016, the Company executed a non-convertible promissory note with no warrants attached, with an “accredited

investor,”

for $50,025 at 20% interest per annum, due November 30, 2016.

The note was secured by the 2016/0003-001 work

order with T4EDU.

October 6, 2016, the Company negotiated a settlement on Ada County Case No.

CV OC 1517581 originating in the Idaho Fourth

Judicial District Court.

The parties to the suit negotiated an agreement that included a confidentiality clause.

October 24, 2016, the Company issued an October 14, 2016, offer and sale of 769,230 shares of its common stock comprised of “restricted

securities”

as defined under Rule 144 of the SEC for $50,000, solely to an “accredited investor.”

price was $0.065 per share.

Prior to the completion of this private offering, there were 93,877,604 shares of the Company’s

common stock outstanding.

These 769,230 shares bring to the Company issued of record, to 94,646,834 outstanding shares.

The 5,076,922

shares offered and sold will represent approximately five percent of the outstanding securities of the Company.

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 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.

On October 25, 2016, the case was dismissed with prejudice.

January 10, 2017, the Company filed an 8-K, Current Report regarding Item 2.04 Triggering Events That Accelerate or Increase

a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

The triggering events are two promissory

notes with accrued interest and one promissory note payment in default.

February 1, 2017, the Company entered into a loan transaction in the amount of $50,000 with PCS Edventures!.com, Inc.

Vice President

and Board member, Michael J.

The transaction involved the issuance of a short term Promissory Note due April 30, 2017,

secured by accounts receivable, and bearing 20% interest at an annualized rate.

February 3, 2017, the Company entered into a loan transaction in the amount of $100,000 with Gordon Prairie, an unrelated party.

The transaction involved the issuance of a short term Promissory Note due April 30, 2017, secured by accounts receivable, and

bearing 20% interest at an annualized rate.

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

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

of Operation.

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

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

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

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

(4) a long history as a prime STEAM provider

in the Middle East, a relationship which the Company believes will continue to provide revenue growth;

and (5) a continual view

to the future of STEAM education developments, exemplified by the Company’s anticipated release of a STEAM drone program

to enhance its other product offerings.

(3) an innovative K12 robotics and engineering system comprised of hardware and software specifically designed to engage

students in STEAM topics such as hands-on physics, engineering, and coding;

(4) a long history as a prime STEAM provider in the

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

and (5) a continual view to the

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

its other product offerings.

Company is actively marketing the Thrust-UAV brand for its FPV racing drone and is forming distributor relationships.

also sells components and parts for its FPV racing drone on its website and through distributors.

The Company has formed several

partnerships with the FPV community and intends to leverage these relationships to promote its FPV racing drone.

Company’s strategy is profitability driven, seeking to optimize operations while moving our core STEAM, 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, the Company will focus on maintaining fresh product offerings,

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

new, higher margin digital products to add to the Company’s lineup of STEAM products and services, and entering the retail

market for the Company’s STEAM products.

The Company will continue to focus on the improvement of its web-based marketing

efforts, expand its sales force and channel partners, and tighten sales processes for domestic STEAM sales.

The Company will also

continue to fulfill existing, and capture new, STEAM contracts with a customer in the Middle East.

The Company 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 STEAM retail products.

The Company will actively seek retail

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

Company is actively marketing the Thrust-UAV brand for its FPV racing drone and is forming distributor relationships.

also is preparing to sell components and parts for its FPV racing drone on its website.

The Company has formed several partnerships

with the FPV community and intends to leverage these relationships to promote its FPV racing drone.

Tactically, the Company will focus its attention on sales activities.

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

tighten sales processes for domestic STEAM sales.

The Company will also continue to fulfill existing, and anticipates capturing

new, STEAM contracts with a customer in the Middle East.

The Company will actively seek retail distribution methods and channels

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

of Operations

the six month period ended September 30, 2016, the Company reported a net loss of ($1,120,351), as compared to a net loss of ($200,682)

for the six month period ended September 30, 2015.

the nine month period ended December 31, 2016, the Company reported a net loss of ($1,725,464), as compared to a net loss of ($612,316)

for the nine month period ended December 31, 2015.

The ($1,113,148) increase in loss was due to a reduction in revenue predominantly

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the ramp up of Thrust UAV.

Direct operational, marketing, and product development costs for THRUST UAV ramp up were $488,366

for the six month period ending September 30, 2016.

The Basic Loss per Share for the six month period ended September 30,

2016, was ($0.01), which varies from the ($0.00) loss per share for the six month period ended September 30, 2015.

for the six month period ended September 30, 2016, was $965,954, as compared to revenue during the six month period ended September

The Basic Loss per Share for the nine month period ended December 31, 2016, was ($0.02), which varies

from the ($0.01) loss per share for the nine month period ended December 31, 2015.

the nine month period ended December 31, 2016, revenues were $1,378,544, as compared to revenue during the nine month period ended

December 31, 2015, of $2,145,719.

The revenue decrease was due to timing of major customer order fulfillments mentioned above

and a decrease in international work orders and Learning Center enrollment.

the three month period ended December 31, 2016, the Company reported a net loss of ($605,113) as compared to a net loss of ($411,634)

for the three months ended December 31, 2015.

This increase in net loss was predominantly due to the investment in research and

development in its Thrust-UAV division.

The Basic Loss per Share for the three month period ended December 31, 2016, was ($0.01),

similar to the ($0.01) loss per share for the three-month period ended December 31, 2015.

for the three-month period ended December 31, 2016, was $412,590 as compared to revenue during the three month period ended December

31, 2015, of $329,694.

The revenue decrease was due to timing of major customer order fulfillments mentioned above and a decrease

in international work orders and Learning Center enrollment.

the three months ended September 30, 2016, the Company reported a net loss of ($710,274) as compared to a net loss of

($331,548) for the quarter ended September 30, 2015.

This increase in net loss was predominantly due to the investment in

research and development in its Thrust-UAV division.

Direct operational, marketing, and product development costs for

THRUST UAV ramp up were $312,674 for the three month period ending September 30, 2016.

The Basic Loss per Share for the quarter ended

September 30, 2016, was ($0.01), which varies from the ($0.00) loss per share for the three-month period ended September 30,

for the three months ended September 30, 2016, was $312,299 as compared to revenue during the quarter ended September 30, 2015,

The decrease in revenue was due to $190,655 less in domestic sales and a $19,693 decrease in Learning Center sales.

Operating expenses increased by $125,647

(23%) and $231,430 (22%) in the three and six months of fiscal 2017, respectively, relative to prior year periods.

factor behind this increase in operating expenses was the Company’s acquisition of Thrust-UAV which increased Company overhead.

Product development expense increased significantly due to investment in research and development at Thrust-UAV.

expense decreased by $12,917 and $62,662 in the three and first six months of fiscal 2017, respectively, relative to prior year

periods due to the conversion of debt.

Cash used by operations for the second quarter

of fiscal 2017 was $537,421, compared to cash provided by operations of $38,571 in the same period last year.

The Company ended

the second quarter of fiscal 2016 with $311,659 in cash, total current assets of $954,547, and total current liabilities

of $1,341,756, resulting in a working capital deficit of $387,209 compared to a working capital deficit of $1,661,514

for the year ended March 31, 2016.

Company had a current ratio at September 30, 2016, and March 31, 2016, of .70 and .42, respectively.

Significant short

term debt was consolidated with an extended due date reclassifying the promissory notes from short term to long term, related

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 ($41,172,410) and shareholders’

The increase in revenue was due predominantly to $44,173 less in domestic sales and a timing of $142,501

increase in International revenues.

expenses increased by $13,219 (2.5%) and $244,649 (15.4%) in the three and nine months of fiscal 2017, respectively, relative

to prior year periods.

The largest factor behind this increase in operating expenses was the Company’s acquisition of Thrust-UAV,

which increased Company overhead.

Product development expense increased significantly due to investment in research and development

at Thrust-UAV.

expense decreased by $481 and $63,143 in the three and nine months of fiscal 2017, respectively, relative to prior year periods

due to the conversion of debt.

used by operations for the third quarter of fiscal 2017 was $1,242,339 compared to cash used by operations of $92,392 in the same

period last year.

The Company ended the third quarter of fiscal 2017 with $41,073 in cash, total current assets of $691,602, and

total current liabilities of $1,270,197, resulting in a working capital deficit of $578,595 compared to a working

capital deficit of $1,661,514 for the year ended March 31, 2016.

Company had a current ratio at December 31, 2016, and March 31, 2016, of 0.55 and 0.42, respectively.

Significant short term debt

was consolidated with an extended due date reclassifying the promissory notes from short term to long term, related party debt.

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 ($41,777,523) and shareholders’’

equity (deficit) of ($2,057,727).

3 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