PCS Edventures!, Inc. 10-K

Item 8. Financial Statements Report of Independent Registered Public Accounting Firm 17 Balance Sheets as of March 31, 2024, and March 31, 2023 18 Statements of Operations for the years ended March 31, 2024, and 2023 19 Statements of Stockholders’ Equity for the years ended March 31, 2024, and 2023 20 Statements of Cash Flows for the years ended March 31, 2024, and 2023 21 Notes to Financial Statements 22 16 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of PCS Edventures!, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of PCS Edventures!, Inc. (the Company) as of March 31, 2024 and 2023, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended March 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Deferred Tax Asset ASC 740 Income Taxes discusses the considerations for valuing deferred tax assets. The Company had significant net operating losses (NOLs), which arose due to historical losses, and resulted in deferred tax assets that were fully allowed against. During the current year, the Company determined that it is more likely than not that the deferred tax asset would be fully realized due to current earnings trends. The Company uses judgment in order to determine whether or not an allowance is needed. Because reversing the allowance directly affects net income, we considered this a significant estimate that involved subjective judgments made by management. How We Addressed it During Our Audit We reviewed ASC 740 Income Taxes in order to understand the guidance surrounding the valuation of deferred tax assets. We obtained a memo from the Company that included the assumptions used in their evaluation and estimate. We tested the assumptions used and reviewed the Company’s tax provision prepared by a 3rd party accountant. /s/ Haynie & Company Haynie & Company Salt Lake City, Utah June 28, 2024 PCAOB # 457 We have served as the Company’s auditor since 2019. 17 PCS EDVENTURES!, INC. Balance Sheets (Audited) March 31, 2024 March 31, 2023 CURRENT ASSETS Cash $ 1,329,708 $ 442,657 Accounts receivable, net of allowance for doubtful accounts of $ 34,204 and $ 18,469 , respectively 1,675,859 363,947 Accounts receivable, other receivables - 13,312 Prepaid expenses 394,091 436,118 Inventory, net 2,025,483 1,237,872 Total Current Assets 5,425,141 2,493,906 NONCURRENT ASSETS Lease Right-of-Use Asset 273,905 173,352 Deposits 6,300 6,300 Property and equipment, net 43,739 31,533 Deferred tax asset 2,541,259 1,011,466 Total Noncurrent Assets 2,865,203 1,222,651 TOTAL ASSETS $ 8,290,344 $ 3,716,557 CURRENT LIABILITIES Accounts payable $ 100,853 $ 27,927 Payroll liabilities and accrued expenses 229,970 226,231 Deferred revenue 14,549 7,085 Lease Liability, current portion 70,782 103,026 Total Current Liabilities 416,154 364,269 Lease Liability, net of current portion 218,373 72,726 TOTAL LIABILITIES 634,527 436,995 STOCKHOLDERS’ EQUITY (DEFICIT) 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, 124,733,494 and 125,732,479 shares issued and outstanding - - Additional Paid-in Capital 40,570,459 40,635,392 Accumulated deficit ( 32,914,642 ) ( 37,355,830 ) Total Stockholders’ Equity 7,655,817 3,279,562 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 8,290,344 $ 3,716,557 The accompanying notes are an integral part of these financial statements. 18 PCS EDVENTURES!, INC. Statements of Operations (Audited) 2024 2023 For the Years ended March 31, 2024 2023 REVENUE 9,094,466 7,004,575 COST OF SALES 3,359,801 2,798,617 GROSS PROFIT 5,734,665 4,205,958 OPERATING EXPENSES Salaries and wages 1,778,946 1,521,536 General and administrative expenses 1,148,652 871,967 Total Operating Expenses 2,927,598 2,393,503 INCOME FROM OPERATIONS 2,807,067 1,812,455 OTHER INCOME AND EXPENSES Net Interest income (expense) 48,904 ( 142,605 ) Tax credit 52,766 94,860 Loss on lease modification 2,658 - Total Other Income 104,328 ( 47,745 ) NET INCOME BEFORE INCOME TAX PROVISION 2,911,395 1,764,710 Income Tax Benefit 1,529,793 1,011,466 NET INCOME 4,441,188 2,776,176 Net income per common share: Basic 0.04 0.02 Diluted 0.04 0.02 Weighted Average Common Shares Outstanding Basic 125,070,138 125,109,876 Diluted 125,070,138 125,109,876 The accompanying notes are an integral part of these financial statements. 19 PCS EDVENTURES!, INC. Statement of Stockholders’ Equity (Audited) # of Common Shares O/S Common Stock Additional Paid-in Capital Accumulated Deficit Stockholders’ Equity Balance at 3/31/2022 124,482,479 - $ 40,589,402 $ ( 40,132,006 ) $ 457,396 Net Income - - - 2,776,176 2,776,176 Shares Issued (exercise of warrants) 1,250,000 - 30,000 - 30,000 Option expense - - 15,990 - 15,990 Balance at 3/31/2023 125,732,479 - $ 40,635,392 $ ( 37,355,830 ) $ 3,279,562 Balance 125,732,479 - $ 40,635,392 $ ( 37,355,830 ) $ 3,279,562 Net Income - - - 4,441,188 4,441,188 Shares Redeemed ( 998,985 ) ( 64,933 ) - ( 64,933 ) Balance at 3/31/2024 124,733,494 - $ 40,570,459 $ ( 32,914,642 ) $ 7,655,817 Balance 124,733,494 - $ 40,570,459 $ ( 32,914,642 ) $ 7,655,817 The accompanying notes are an integral part of these financial statements. 20 PCS EDVENTURES!, INC . Statements of Cash Flows (Audited) 2024 2023 For the years ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 4,441,188 2,776,176 Stock based compensation - 15,990 Depreciation and amortization 11,490 5,127 Amortization of right of use asset 139,729 93,328 Deferred tax benefit ( 1,529,793 ) ( 1,011,466 ) Changes in operating assets and liabilities (Increase) decrease in accounts receivable ( 1,298,599 ) ( 3,277 ) (Increase) decrease in prepaid expenses ( 177,173 ) ( 350,389 ) (Increase) decrease in inventories ( 787,611 ) ( 78,245 ) (Increase) decrease in other current assets - 92,002 (Decrease) increase in accounts payable and accrued liabilities 295,864 ( 112,994 ) Increase (decrease) in lease liability ( 126,878 ) ( 91,928 ) Increase (decrease) in unearned revenue 7,463 7,085 Net Cash Provided by Operating Activities 975,680 1,341,409 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for purchase of fixed assets ( 23,696 ) ( 19,495 ) Net Cash Used by Investing Activities ( 23,696 ) ( 19,495 ) CASH FLOWS FROM FINANCING ACTIVITIES Common stock repurchased and cancelled ( 64,933 ) - Principal payments on debt - ( 1,493,327 ) Proceeds from sale of stock - 30,000 Net Cash Used by Financing Activities ( 64,933 ) ( 1,463,327 ) Net Increase (Decrease) in Cash 887,051 ( 141,413 ) Cash at Beginning of Period 442,657 584,070 Cash at End of Period 1,329,708 442,657 Cash paid for taxes $ 83,440 $ 56,516 Cash paid for interest $ 648 $ 142,605 The accompanying notes are an integral part of these financial statements. 21 PCS EDVENTURES!, INC. Notes to the Financial Statements March 31, 2024 (Audited) NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Description of Business The financial statements presented are those of PCS Edventures!, Inc., an Idaho corporation (the “Company,” “PCS,” “PCSV,” “we,” “our,” “us” or similar words), incorporated in 1994, in the State of Idaho. PCS specializes in experiential, hands-on, K12 education and drone technology. PCS has extensive experience and intellectual property (“IP”) that includes drone hardware, product designs, and K-12 curriculum content. PCS continually develops new educational products based upon market needs that the Company identifies through its sales and customer networks. Our products facilitate STEM (“Science, Technology, Engineering, and Math”) education by providing engaging activities that demonstrate STEM concepts and inspire further STEM studies, with the goal of ultimately leading students to pursue STEM career pathways. Due to our exceptionally detailed curriculum, our products are easy to teach and do not require a teaching degree or experience to administer. Our educational products are developed from both in-house efforts and contracted services. They are marketed through reseller channels, direct sales efforts, partner networks, and web-based channels. PCS has developed and sells a variety of STEM education products into the K12 market, which can be categorized as follows: 1. Enrichment Programs These camps are for the informal learning market and are designed to be highly engaging for students while easily administered by the instructor. The Company offers approximately 36 different enrichment programs and typically develops at least two new programs each year. Some of the more popular programs include Rockin’ Robots; Ready, Set, Drone!; Cubelets BOT Builder; Simple Machines; Drone Designers; Coding with Drones; Pirate Camp; Dir Camp; and Claymation. 2. Discover Series Products These products are designed for the makerspace environment and include engaging STEM activities that motivate students to pursue educational pathways toward STEM careers. The Discover Series includes Discover Podcasting; Discover STEM Dynamic Duo; and Discover Digital Video Lab. 3. BrickLAB Products These products are designed for the grade school market and use the Company’s proprietary bricks (which are Lego compatible) and curriculum to engage students to explore, imagine and create within a STEM education framework. The Company offers a variety of grade-specific BrickLAB products. 4. Discover Drones, Add-on Drone Packages and Ala Carte Drone Items These products are designed around using drones as a platform for STEM education and career exploration. These titles include the Discover Drones series of Products; Discover Drones Indoor Coding Bundle; Discover Drones Indoor Racing Add-On; Discover Drones Outdoor Practice Add-on ; and all the spare parts and ala carte drone items offered in the Company’s comprehensive drone packages. 5. STEAMventures BUILD Activity Book These series of activity books are designed for the K-3 market. The series includes 12 different issues. Instructor guides and/or family engagement guides are included. The Company also provides the necessary bricks for the builds in the activity books as a separate, but related product. 22 6. Professional Development Training The Company offers professional development trainings, for a fee, to educators who are implementing the Company’s products in their classroom. The Company intends to continue developing STEM education products that address demand from large markets. Accounting Method The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a March 31 fiscal year end. Cash and Cash Equivalents Cash and cash equivalents, totaling $ 1,329,708 and $ 442,657 at March 31, 2024, and March 31, 2023, respectively, consist of operating and savings accounts. For purposes of the statements of cash flows, the Company considers all highly-liquid financial instruments with original maturities of three months or less at date of purchase to be cash equivalents. Use of Estimates The preparation of these financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include reserves related to accounts receivable and inventory, the valuation allowance related to deferred tax assets, the valuation of equity instruments, and debt discounts. Concentration of Credit Risks and Significant Customers The Company extends credit to customers and is therefore subject to credit risk. Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management’s expectations. 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, historic averages, 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. The Company generally does not require collateral from its customers. The Company has established an allowance for doubtful accounts of $ 34,204 as of March 31, 2024, and $ 18,469 as of March 31, 2023. The following Table shows the Company’s concentration of credit risk. SCHEDULE OF CONCENTRATION OF CREDIT RISK 2024 % of 3/31/2024 2023 % of 3/31/2023 Revenue % of A/R Revenue % of A/R Customer A 6.6 % 2.0 % 4.2 % 9.7 % Customer B 12.1 % 76.7 % 6.0 % 45.1 % Customer C 13.7 % 0.0 % 37.3 % 0.0 % Customer D 5.0 % 3.2 % 5.2 % 6.8 % Customer E 4.9 % 3.6 % 1.1 % 7.8 % Inventory Finished goods inventory is composed of items produced in-house, as well as items from outside suppliers. These items include, but are not limited to, Fischertechnik® manipulatives, Brick manipulatives, drone components, digital media equipment, furniture units, curriculum, and other miscellaneous items used in our various labs. Our inventory is carried at the lower of cost or market and valued using the average cost method for each item. When indicators of inventory impairment exist, the Company measures the carrying value of the inventory against its market value, and if the carrying value exceeds the market value, the inventory value is adjusted accordingly. The Company has established a provision for excess and obsolete inventory reserve of $ 3,274 as of March 31, 2024, and $ 6,343 as of March 31, 2023. 23 Property, Plant and Equipment Depreciation on property and equipment is computed using the straight-line method over the estimated useful life of the asset. The Company had fully depreciated property and equipment prior to March 31, 2018. Beginning in fiscal year 2022 through the current reporting period, the Company purchased various warehouse and office equipment for $ 62,019 and recognized $ 18,280 in depreciation of that equipment for a total property and equipment of $ 43,739 as of March 31, 2024. As of March 31, 2023, property and equipment was $ 31,533 , net of $ 6,790 in depreciation. Software has been fully depreciated as of March 31, 2024, and March 31, 2023. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment annually, or when events or circumstances arise that indicate the existence of impairment for patents and other intangibles. There was no impairment recorded during the years ended March 31, 2024, and 2023. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. In November 2015, the Financial Accounting Standards Board issued ASU No. 2015-17, “Income Taxes (Topic 740)-Balance Sheet Classification of Deferred Taxes” (ASU 2015-17), which requires reporting the net amount of deferred tax assets and liabilities as a single noncurrent item on the classified balance sheet. Before this change, the net amounts of current and noncurrent deferred tax assets and liabilities were reported separately. We account for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 prescribes the use of the asset and liability method to compute the differences between the tax bases of assets and liabilities and the related financial amounts, using currently enacted tax laws. If necessary, a valuation allowance is established, based on the weight of available evidence, to reduce deferred tax assets to the amount that is more likely than not to be realized. Realization of the deferred tax assets, net of deferred tax liabilities, is principally dependent upon achievement of sufficient future taxable income. We exercise significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets. In accordance with GAAP, the Company has analyzed its filing positions in all jurisdictions where it is required to file income tax returns for the open tax years in such jurisdictions. The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions, and no adjustment to such reserves was required by GAAP. No interest or penalties have been levied against the Company and none are anticipated; therefore no interest or penalty has been included in the provision for income taxes in the consolidated statements of operations. The Internal Revenue Code contains provisions which reduce or limit the availability and utilization of net operating loss (“NOL”) carry forwards in the event of a more than 50 % change in ownership. If such an ownership change occurs with the Company, the use of these net operating losses could be limited. The table below details the years that remain open to tax examinations: SCHEDULE OF INCOME TAX EXAMINATION Tax Year Fiscal Year End Filed Date Open Through 2022 3/31/2023 8/23/2023 8/23/2026 2021 3/31/2022 2/3/2023 2/3/2026 2020 3/31/2021 1/18/2022 1/18/2025 24 Revenue Recognition The Company accounts for revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers , which we adopted on April 1, 2018. Revenue amounts presented in our financial statements are recognized net of sales tax, value-added taxes, and other taxes. Amounts received as prepayment on future products or services are recorded as unearned revenues and recognized as income when the product is shipped, or service performed. The Company had deferred revenue of $ 14,549 as of March 31 2024, related to contractual commitments with customers where the performance obligation will be satisfied within the fiscal year ending March 31, 2025. The revenue associated with these performance obligations is recognized as the obligation is satisfied. The Company had $ 7,085 of deferred revenue as of March 31, 2023. Most of our contracts with customers contain transaction prices with fixed consideration; however, some contracts may contain variable consideration in the form of discounts, rebates, refunds, credits, price concessions, incentives, penalties and other similar items. When a contract includes variable consideration, we evaluate the estimate of variable consideration to determine whether the estimate needs to be constrained; therefore, we include the variable consideration in the transaction price only to the extent that it is probable that a significant reversal of the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We recognize revenue when we satisfy a performance obligation by transferring control over a product or service to a customer. This can result in recognition of revenue over time as we perform services or at a point in time when the deliverable is transferred to the customer, depending on an evaluation of the criteria for over time recognition in FASB ASC 606. For certain fixed-fee per transaction contracts, such as delivering training courses or conducting workshops, revenue is recognized during the period in which services are delivered in accordance with the pricing outlined in the contracts. Stock-Based Compensation We recognize stock-based compensation expense under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”). We use the Black-Scholes option pricing model to calculate the fair value of stock options at their respective grant date. The use of option valuation models requires the input of highly subjective assumptions, including the expected stock price volatility and the expected term of the option. The fair value of restricted stock awards is the fair market value on the date of grant. We recognize these compensation costs on a straight-line basis over the requisite service period, which is generally the vesting period of the award. During fiscal year 2024, no performance options were issued or exercised. During fiscal year 2023, two sets of performance options were exercised. Michael J. Bledsoe, President, exercised 1,000,000 options at $ 0.025 per share; and Michelle Fisher, Director of STEM Curriculum, exercised 250,000 options at $ 0.02 per share. As of March 31, 2024, and March 31, 2023, the Company had no outstanding warrants or options. Business Segments and Related Information GAAP establishes standards for the way public business enterprises are to report information about operating segments in annual financial statements and requires enterprises to report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosure about products and services, geographic areas and major customers. The Company currently operates as one business segment. Net Earnings (Loss) Per Share of Common Stock The Company calculates net income (loss) per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). Under ASC 260, basic net income (loss) per common share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. The weighted average number of shares of common stock outstanding includes vested restricted stock awards. Diluted net income (loss) per share (“EPS”) reflects the potential dilution that could occur assuming exercise of all dilutive unexercised stock options and warrants. The dilutive effect of these instruments was determined using the treasury stock method. Under the treasury stock method, the proceeds received from the exercise of stock options and restricted stock awards, the amount of compensation cost for future service not yet recognized by the Company and the amount of tax benefits that would be recorded as income tax expense when the stock options become deductible for income tax purposes are all assumed to be used to repurchase shares of the Company’s common stock. 25 Common stock outstanding reflected in the Company’s balance sheets includes “restricted” stock awards outstanding. Securities that may participate in undistributed net income with common stock are considered participating securities. The computation of diluted earnings per share does not assume exercise or conversion of securities that would have an anti-dilutive effect. The following schedules presents the calculation of basic and diluted net income per share: SCHEDULE OF BASIC AND DILUTED NET INCOME 2024 2023 For the Years Ended March 31, 2024 2023 Net Income per common Share: Basic $ 0.04 $ 0.02 Diluted $ 0.04 $ 0.02 Weighted average number of common shares outstanding Basic 125,070,138 125,109,876 Weighted average number of common shares outstanding Fully Diluted 125,070,138 125,109,876 Net Income for the year ended March 31, 2024, and 2023, was $ 4,441,188 and $ 2,776,176 , respectively. As of March 31, 2024, and March 31, 2023, the Company had no outstanding dilutive instruments. Recently Issued Accounting Pronouncements The Company has reviewed recent accounting pronouncements and has determined that they will not significantly impact the Company’s results of operations or financial position. NOTE 2 – BUSINESS CONDITION As of March 31, 2024, the Company had $ 1.3 million in cash, $ 2.0 million in inventory, $ 0.3 million in prepaid inventory, and $ 1.7 million in accounts receivable, with no debt. Management strongly believes that the Company can sustain its operations over the course of the next 12 months with the cash it has on hand, and with the revenue and associated profit generated from the sales expected over the course of the next 12 months, especially given the Company’s large cash, inventory, and accounts receivable balances. NOTE 3 – ACCOUNTS RECEIVABLE In the Company’s normal course of business, the Company provides credit terms to its customers, which generally range from net 15 to 30 days. The Company performs ongoing credit evaluations of its customers. The Company established an allowance for doubtful accounts of $ 34,204 at March 31, 2024, and $ 18,469 as of March 31, 2023. NOTE 4 – ACCOUNTS RECEIVABLE, OTHER RECEIVABLES Other Receivables include receivables due to the Company derived from activities outside of its typical business transactions. As of March 31, 2024, the Company had no other receivables outstanding. As of March 31, 2023, these other receivables consisted of an Employee Retention Tax Credit of $ 13,312 , which was ultimately deemed uncollectable by the Company as of September 30, 2023. NOTE 5 - PREPAID EXPENSES Prepaid expenses for the periods are as follows: SCHEDULE OF PREPAID EXPENSES March 31, 2024 March 31, 2023 Prepaid insurance $ 10,915 $ 8,891 Prepaid tradeshows 25,046 34,316 Prepaid inventory 319,977 374,926 Prepaid software 17,254 16,287 Prepaid other 20,899 1,698 Total Prepaid Expenses $ 394,091 $ 436,118 26 NOTE 6 - COMMON AND PREFERRED STOCK TRANSACTIONS a. Common Stock The Company has 150,000,000 authorized shares of common stock, no par value. At March 31, 2024, the total common shares issued and outstanding was 124,733,494 . As of March 31, 2023, the total common shares issued and outstanding was 125,732,479 . During the year ended March 31, 2024, the Company had no option expense. During the year ended March 31, 2023, the Company expensed $ 15,990 related to options granted. During the year ended March 31, 2024, the Company did not issue any shares of common stock. During the year ended March 31, 2023, the Company issued 1,250,000 shares of “restricted” Rule 144 common stock related to the exercise of employee performance options. During the year ended March 31, 2024, the Company repurchased 998,985 shares common stock at $ 0.065 per share for total payments of $ 64,933 . These shares were then immediately cancelled. No shares were repurchased during the year ended March 31, 2023. b. Preferred Stock The Company has 20,000,000 authorized shares of preferred stock. As of March 31, 2024, and March 31, 2023, there were no preferred shares issued or outstanding. As of March 31, 2024 and 2023, the Company had no dilutive instruments outstanding. NOTE 7 – NOTES PAYABLE The Company had no notes payable outstanding as of March 31, 2024, and March 31, 2023. NOTE 8 – COMMITMENTS AND CONTINGENCIES Leases The Company adopted ASC 842 as of November 9, 2019, using a modified retrospective transition approach for all leases existing at December 31, 2019, the date of the initial application. Consequently, financial information will not be updated, and disclosures required under ASC 842, will not be provided for dates and periods before January 1, 2020. The Company determines if a contract is a lease or contains a lease at inception. Right of use assets related to operating type leases are reported in other noncurrent assets and the present value of remaining lease obligations is reported in accrued and other liabilities and other noncurrent liabilities on the Balance Sheets. The Company does not currently have any financing type leases. Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company’s leases do not provide an implicit rate. The Company determines the incremental borrowing rates applicable to the economic environment based on the information available at commencement date, in determining the present value of future payments. The right of use asset for operating leases is measured using the lease liability adjusted for the impact of lease payments made prior to commencement, lease incentives received, initial direct costs incurred and any asset impairments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the term of the lease. The Company re-measures and reallocates the consideration in a lease when there is a modification of the lease that is not accounted for as a separate contract. The lease liability is re-measured when there is a change in the lease term or a change in the assessment of whether the Company will exercise a lease option. The Company assesses right of use assets for impairment in accordance with its long-lived asset impairment policy. 27 The Company accounts for lease agreements with contractually required lease and non-lease components on a combined basis. Lease payments made for cancellable leases, variable amounts that are not based on an observable index and lease agreements with an original duration of less than twelve months are recorded directly to lease expense. a. Office and Warehouse The Company leases one building containing its main office and warehouse space under a non-cancelable lease agreement, which commenced on March 2, 2016, accounted for as an operating lease expiring March 14, 2020. On March 3, 2020, a third amendment extended the lease for 19.5 months, expiring October 31, 2021 , at $ 0.60 a square foot. On September 16, 2021, the Company signed a fourth amendment to the lease with a monthly rental amount starting at $ 6,800 and escalating by $ 200 per month at the end of each lease year, which is due to expire on October 31, 2024 . Building lease expense was $ 110,693 and $ 106,462 for the years ended March 31, 2024, and 2023, respectively. b. Equipment The Company leased a production printer for 63 months commencing on November 3, 2023. The first three payments were deferred, with the first payment due February 3, 2024. Equipment lease expense was $ 43,127 for the year ended March 31, 2024, and $ 31,896 for year ended March 31, 2023. As of March 31, 2024, accounted for and presented under ASC 842 guidance, the future minimum lease payments on operating leases, were as follows: Total minimum lease obligation over the next six years SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS Fiscal Year Amount 2025 82,330 2026 38,892 2027 43,232 2028 48,024 2029 53,315 2030 23,362 Total $ 289,155 SCHEDULE OF LEASE PAYABLE Balance Sheet Location March 31, 2024 Right of use assets Other noncurrent assets $ 273,905 Lease payable Current liabilities $ 70,782 Lease payable, Current liabilities $ 70,782 Lease payable Long-term liabilities 218,373 Lease payable, Long-term liabilities 218,373 Total lease payable $ 289,155 Supplemental cash flow information related to operating leases: SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO OPERATING LEASES March 31, 2024 Operating cash paid to settle lease liabilities $ 113,596 Right of use asset additions in exchange for lease liabilities 240,281 March 31, 2024 March 31, 2023 Weighted average remaining lease term (in years) 6.0 1.5 Weighted average discount rate 10 % 10 % NOTE 9 – ACCOUNTS PAYABLE Accounts payable for the periods are as follows: SCHEDULE OF ACCOUNTS PAYABLE March 31, 2024 March 31, 2023 Accounts payable $ 90,800 $ 18,814 Credit cards payable 10,053 9,113 Total $ 100,853 $ 27,927 28 NOTE 10 – PAYROLL LIABILITIES & ACCRUED EXPENSES Accrued expenses for the periods are as follows: SCHEDULE OF ACCRUED EXPENSES March 31, 2024 March 31, 2023 Payroll liabilities $ 165,087 $ 201,724 Sales tax payable 9,969 3,399 State income tax payable 39,929 21,108 Production printer accrued expenses 14,985 - Total $ 229,970 $ 226,231 NOTE 11 – INCOME TAXES For the year ended March 31, 2024, the Company fully reversed its valuation allowance recognizing an income tax benefit of $ 1,529,793 . For the year ended March 31, 2023, the Company partially reversed its valuation allowance recognizing an income tax benefit of $ 1,011,466 . FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2024. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The Company may be subject to potential examination by federal, state, and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with federal, state, and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next 12 months. Although we believe that our tax estimates are reasonable, the ultimate tax determination involves significant judgments that could become subject to examination by tax authorities in the ordinary course of business. We periodically assess the likelihood of adverse outcomes resulting from these examinations to determine the impact on our deferred taxes and income tax liabilities and the adequacy of our provision for income taxes. Changes in income tax legislation, statutory income tax rates or future taxable income levels, among other things, could materially impact our valuation of income tax assets and liabilities and could cause our income tax provision to vary significantly among financial reporting periods. The Company files income tax returns in the United States, the State of Idaho and the State of California. The statute of limitations on a Federal tax return is the due date of the tax return plus three years. In the case of NOLs, the year in which the NOL was generated remains open up to the amount of the NOL until the statute of limitations expires on the year it was used. All required tax returns of the Company due since inception have been filed. The Company does not have any unrecognized tax benefits to report in the current period. 29 Net deferred tax assets and liabilities consist of the following components as of March 31, 2024, and 2023: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2024 2023 March 31, 2024 2023 Deferred tax assets Right of use liabilities 76,693 48,539 Goodwill amortization 13,121 15,041 Charitable Contribution carryover - 19 NOL carryover 2,539,181 3,255,242 Total deferred tax assets 2,628,995 3,318,841 Deferred tax liabilities Right of use assets ( 76,693 ) ( 48,539 ) Depreciation ( 11,043 ) ( 5,101 ) Total deferred tax liabilities ( 87,736 ) ( 53,640 ) Net deferred tax assets 2,541,259 3,265,201 Less valuation allowance - ( 2,253,735 ) Net deferred tax assets 2,541,259 1,011,466 The reconciliation of the Company’s net income taxes for fiscal years 2024 and 2023 are as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION March 31, 2024 March 31, 2023 U.S. Federal income tax at statutory rate $ 617,681 $ 376,732 State taxes, net of Federal benefit 208,403 127,569 Non-taxable income - ( 4,200 ) Change in valuation allowance ( 2,355,877 ) ( 1,511,567 ) Income Tax Benefit ( 1,529,793 ) ( 1,011,466 ) The Company files income tax returns in the United States, the State of Idaho, and the State of California. The statute of limitations on a Federal tax return is the due date of the tax return plus three years. In the case of NOLs, the year in which the NOL was generated remains open up to the amount of the NOL until the statute of limitations expires on the year it was used. All required tax returns of the Company due since inception have been filed. Summary of Federal Operating Loss Carryforwards SCHEDULE OF FEDERAL OPERATING LOSS CARRYFORWARDS Unused operating loss carryforward March 31, 2023 $ 12,111,354 Operating loss carryforwards realized $ 2,981,269 Expiration of operating loss carryforward - Unused operating loss carryforward March 31, 2024 $ 9,173,444 NOTE 12 - SUBSEQUENT EVENTS On March 17, 2023, Michelle Fisher, our Director of Curriculum, exercised 250,000 performance options and purchased 250,000 shares of “restricted” Rule 144 common stock at $ 0.02 per share, for total consideration of $ 5,000 . In April of 2024, Ms. Fisher approached the Company about selling her shares back to the Company. On May 7, 2024, an agreement was reached in which the Company will purchase 250,000 shares of “restricted” Rule 144 stock from Ms. Fisher at $ 0.195 per share in a private transaction. This transaction has not yet been finalized. When it is, the Company intends to cancel the purchased shares. Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure None. 30