PCS Edventures!, Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from________ to________ Commission File No. 000-49990 PCS EDVENTURES!, INC. (Exact name of Registrant as specified in its charter) Idaho 82-0475383 (State or Other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 941 S. Industry Way Meridian , Idaho 83642 (Address of Principal Executive Offices) (208) 343-3110 (Registrant’s telephone number, including area code) 11915 W. Executive Dr. , #101 Boise , ID 83713 (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Not applicable. APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: February 13, 2025: 122,189,763 shares of Common Stock Forward-Looking Statements This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Quarterly Report. We cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance on forward-looking statements. You should carefully read this Quarterly Report completely, and it should be read and considered with all other reports filed by us with the United States Securities and Exchange Commission (the “SEC”) that are contained in the SEC Edgar Archives, including issues related to “Cybersecurity” enumerated in “Part I, Item 1C. Cybersecurity,” of our 10-K Annual Report for the fiscal year ended March 31, 2024, filed with the SEC on June 28, 2024 (the “Annual Report”), which commence on page nine (9), a copy of which is attached hereto by Hyperlink in Part II-Other Information, in Item 6, Exhibits, hereof, and is incorporated herein by reference. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future. Documents Incorporated by Reference See Part II, Other Information, Item 6, Exhibits. (This space intentionally left blank.) PCS EDVENTURES!, INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2024 INDEX Page PART I – FINANCIAL INFORMATION 3 ITEM 1. Condensed Financial Statements (unaudited) 3 Condensed Balance Sheets as of December 31, 2024 (unaudited), and March 31, 2024 4 Condensed Statements of Operations for the Three and Nine Months ended December 31, 2024, and 2023 (unaudited) 5 Condensed Statement of Stockholders’ Equity for the Three and Nine Months ended December 31, 2024, and 2023 (unaudited) 6 Condensed Statements of Cash Flows for the Nine Months ended December 31, 2024, and 2023 (unaudited) 7 Notes to Condensed Financial Statements (unaudited) 8 ITEM 2, Management’s Discussion and Analysis of Financial Conditions and Results of Operations 12 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 16 ITEM 4. Controls and Procedures 16 PART II - OTHER INFORMATION 17 ITEM 1. Legal Proceedings 17 ITEM 1A. Risk Factors 17 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 17 ITEM 3. Defaults Upon Senior Securities 17 ITEM 4. Mine Safety Disclosures 17 ITEM 5. Other Information 17 ITEM 6. EXHIBIT INDEX 17 SIGNATURES 18 2 PART I –FINANCIAL INFORMATION PART I – FINANCIAL INFORMATION Item 1. Condensed Financial Statements The Condensed Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Condensed Financial Statements fairly present the financial condition of the Registrant. (This space intentionally left blank.) 3 PCS EDVENTURES!, INC. Condensed Balance Sheets December 31, 2024 March 31, 2024 (Unaudited) CURRENT ASSETS Cash $ 3,590,051 $ 1,329,708 Accounts receivable, net of allowance for doubtful accounts of $ 34,204 163,759 1,675,859 Prepaid expenses 283,611 394,091 Inventory, net 2,036,969 2,025,483 Total Current Assets 6,074,390 5,425,141 NONCURRENT ASSETS Lease Right-of-Use Asset 1,188,710 273,905 Deposits 29,747 6,300 Property and equipment, net 101,462 43,739 Deferred tax asset 2,385,355 2,541,259 Total Noncurrent Assets 3,705,274 2,865,203 TOTAL ASSETS $ 9,779,664 $ 8,290,344 CURRENT LIABILITIES Accounts payable $ 77,661 $ 100,853 Payroll liabilities and accrued expenses 109,755 229,970 Deferred revenue 22,015 14,549 Lease Liability, current portion 100,729 70,782 Total Current Liabilities 310,160 416,154 NONCURRENT LIABILITIES Lease Liability, net of current portion 1,138,093 218,373 Total Noncurrent Liabilities 1,138,093 218,373 TOTAL LIABILITIES $ 1,448,253 $ 634,527 STOCKHOLDERS’ EQUITY 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, 122,958,993 and 124,733,494 shares issued and outstanding - - Additional Paid-in Capital 40,180,438 40,570,459 Accumulated deficit ( 31,849,027 ) ( 32,914,642 ) TOTAL STOCKHOLDERS’ EQUITY 8,331,411 7,655,817 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 9,779,664 $ 8,290,344 The accompanying notes are an integral part of these unaudited condensed financial statements. 4 PCS EDVENTURES!, INC. Condensed Statements of Operations (Unaudited) 2024 2023 2024 2023 For the Three Months Ended December 31, For the Nine Months Ended December 31, 2024 2023 2024 2023 REVENUE $ 701,147 $ 459,087 $ 6,128,409 $ 6,831,694 COST OF SALES 348,660 310,657 2,459,747 2,503,552 GROSS PROFIT 352,487 148,430 3,668,662 4,328,142 OPERATING EXPENSES Salaries and wages 436,150 353,934 1,440,181 1,313,886 General and administrative expenses 375,081 231,475 1,091,005 821,116 Total Operating Expenses 811,231 585,409 2,531,186 2,135,002 INCOME (LOSS) FROM OPERATIONS ( 458,744 ) ( 436,979 ) 1,137,476 2,193,140 OTHER INCOME Tax credit - - - 31,258 Net interest income 24,920 20,183 84,043 30,774 Gain on lease modification - 2,658 - 2,658 Total Other Income 24,920 22,841 84,043 64,690 NET INCOME (LOSS) BEFORE TAXES ( 433,824 ) ( 414,138 ) 1,221,519 2,257,830 Income tax provision ( 210,935 ) - 155,904 - NET INCOME (LOSS) $ ( 222,889 ) $ ( 414,138 ) $ 1,065,615 $ 2,257,830 Net income (loss) per common share: Basic $ ( 0.00 ) $ ( 0.00 ) $ 0.01 $ 0.02 Diluted $ ( 0.00 ) $ ( 0.00 ) $ 0.01 $ 0.02 Weighted Average Common Shares Outstanding Basic 123,596,176 124,733,494 124,275,328 125,183,945 Diluted 123,596,176 124,733,494 124,275,328 125,183,945 The accompanying notes are an integral part of these condensed financial statements. 5 PCS EDVENTURES!, INC. Condensed Statement of Stockholders’ Equity (Unaudited) # of Common Shares O/S Common Stock Additional Paid-in Capital Accumulated Deficit Stockholders’ Equity (Deficit) For the nine (9) months ended December 31, 2023 and 2024 Balance at 3/31/2023 125,732,479 - $ 40,635,392 $ ( 37,355,830 ) $ 3,279,562 Net Income - - - 2,257,830 2,257,830 Shares Repurchased and cancelled ( 998,985 ) - ( 64,933 ) - ( 64,933 ) Balance at 12/31/2023 124,733,494 - $ 40,570,459 $ ( 35,098,000 ) $ 5,472,459 Balance at 3/31/2024 124,733,494 - $ 40,570,459 $ ( 32,914,642 ) $ 7,655,817 Net Income - - - 1,065,615 1,065,615 Shares Repurchased and cancelled ( 1,774,501 ) - ( 390,021 ) - ( 390,021 ) Balance at 12/31/2024 122,958,993 - $ 40,180,438 $ ( 31,849,027 ) $ 8,331,411 For the three (3) months ended December 31, 2023 and 2024 Balance at 9/30/2023 124,733,494 - $ 40,570,459 $ ( 34,683,862 ) $ 5,886,597 Net Loss - - - ( 414,138 ) ( 414,138 ) Balance at 12/31/2023 124,733,494 - $ 40,570,459 $ ( 35,098,000 ) $ 5,472,459 Balance at 9/30/2024 124,131,410 - $ 40,426,646 $ ( 31,626,138 ) $ 8,800,508 Balance 124,131,410 - $ 40,426,646 $ ( 31,626,138 ) $ 8,800,508 Net Loss - - - ( 222,889 ) ( 222,889 ) Net Income (Loss) - - - ( 222,889 ) ( 222,889 ) Shares Repurchased and cancelled ( 1,172,417 ) - ( 246,208 ) - ( 246,208 ) Balance at 12/31/2024 122,958,993 - $ 40,180,438 $ ( 31,849,027 ) $ 8,331,411 Balance 122,958,993 - $ 40,180,438 $ ( 31,849,027 ) $ 8,331,411 The accompanying notes are an integral part of these condensed financial statements. 6 PCS EDVENTURES!, INC . Condensed Statements of Cash Flows (Unaudited) 2024 2023 Nine Months Ended December 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 1,065,615 $ 2,257,830 Provision for income tax 155,904 - Depreciation and amortization 19,001 7,863 Amortization of right of use asset 108,898 112,063 Changes in operating assets and liabilities (Increase) decrease in accounts receivable 1,512,101 214,826 (Increase) decrease in prepaid expenses 110,480 ( 518,799 ) (Increase) decrease in inventories ( 11,486 ) ( 556,544 ) (Increase) decrease in other current assets - ( 32,058 ) (Decrease) increase in accounts payable and accrued liabilities ( 143,407 ) 218,636 Increase (decrease) in lease liability ( 74,038 ) ( 102,927 ) Increase (decrease) in unearned revenue 7,467 44,100 (Increase) decrease in deposits ( 23,446 ) - Net Cash Provided by Operating Activities 2,727,089 1,644,990 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for purchase of fixed assets ( 76,725 ) ( 16,096 ) Net Cash Used by Investing Activities ( 76,725 ) ( 16,096 ) CASH FLOWS FROM FINANCING ACTIVITIES Common stock repurchased and cancelled ( 390,021 ) ( 64,933 ) Net Cash Used by Financing Activities ( 390,021 ) ( 64,933 ) Net Increase (Decrease) in Cash 2,260,343 1,563,961 Cash at Beginning of Period 1,329,708 442,657 Cash at End of Period $ 3,590,051 $ 2,006,618 Cash Paid for Interest $ - $ 648 Cash Paid for taxes $ 131,432 $ 41,957 Non Cash Investing and Financing Transactions: Right of use assets obtained in exchange for new operating lease liabilities $ 1,023,703 $ 240,281 The accompanying notes are an integral part of these condensed financial statements. 7 PCS EDVENTURES!, INC. Notes to the Condensed Financial Statements December 31, 2024 and 2023 (Unaudited) NOTE 1 - DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Description of Business The condensed 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 thirty (30) different enrichment programs and typically develops at least two (2) new programs each year. Some of the more popular programs include Rockin’ Robots; Build a Better World; Summer Camp Classics; Pirate Camp; Flight and Aerodynamics; Science of the Human Body; 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 Engineering; Discover Robotics & Physics; Discover Robotics & Programming; and Discover STEM. 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 and ideal for a distance-learning environment. The series includes twelve (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. 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. 8 The Company intends to continue developing STEM education products that address demand from large markets. Interim Financial Information The accompanying unaudited condensed financial statements have been prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary in order to make the condensed financial statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three (3) months ended December 31, 2024, are not necessarily indicative of the results that may be expected for the year ending March 31, 2025, or any future periods. The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended March 31, 2024, filed with the SEC on June, 28, 2024 (the “Annual Report”). Use of Estimates The preparation of these condensed financial statements in conformity with 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 condensed 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. 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 condensed 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 $ 22,015 as of December 31, 2024, related to contractual commitments with customers where the performance obligation will be satisfied within the fiscal year ended March 31, 2025. The revenue associated with these performance obligations is recognized as the obligation is satisfied. The Company had $ 14,549 of deferred revenue as of March 31, 2024. 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, performance bonuses, 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. 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. 9 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 present the calculation of basic and diluted net income per share: SCHEDULE OF BASIC AND DILUTED NET INCOME PER SHARE 2024 2023 For the Three Months ended December 31, 2024 2023 Net Loss per common Share: Basic $ ( 0.00 ) $ ( 0.00 ) Diluted $ ( 0.00 ) $ ( 0.00 ) Weighted average number of common shares outstanding Basic 123,596,176 124,733,494 Weighted average number of common shares outstanding Fully Diluted 123,596,176 124,733,494 Net loss for the three (3) months ended December 31, 2024, and 2023 was $ ( 222,889 ) and $ ( 414,138 ) , respectively. 2024 2023 For the Nine Months ended December 31, 2024 2023 Net Income per common Share: Basic $ 0.01 $ 0.02 Diluted $ 0.01 $ 0.02 Weighted average number of common shares outstanding Basic 124,275,328 125,183,945 Weighted average number of common shares outstanding Fully Diluted 124,275,328 125,183,945 Net Income for the nine (9) months ended December 31, 2024, and 2023, was $ 1,065,615 and $ 2,257,830 , respectively. 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 December 31, 2024, the Company had $ 3.6 million in cash, $ 2.0 million in inventory, and $ 0.2 million in prepaid inventory, with no debt. Management strongly believes that the Company can sustain its operations over the course of the next twelve (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 twelve (12) months, especially given the Company’s large inventory and prepaid inventory 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 fifteen (15) to thirty (30) days. The Company performs ongoing credit evaluations of its customers. The Company established an allowance for doubtful accounts of $ 34,204 at December 31, 2024, and March 31, 2024. NOTE 4 - PREPAID EXPENSES Prepaid expenses for the periods are as follows: SCHEDULE OF PREPAID EXPENSES December 31, 2024 March 31, 2024 Prepaid insurance $ 19,137 $ 10,915 Prepaid tradeshows 13,862 25,046 Prepaid inventory 172,000 319,977 Prepaid software 36,243 17,254 Prepaid other 42,369 20,899 Total Prepaid Expenses $ 283,611 $ 394,091 10 NOTE 5 - COMMON AND PREFERRED STOCK TRANSACTIONS a. Common Stock The Company has 150,000,000 authorized shares of common stock, no par value. At December 31, 2024, the total common shares issued and outstanding was 122,958,993 . During the nine (9) months ended December 31, 2024, the Company had no option expense. During the nine (9) months ended December 31, 2024, the Company did no t issue shares of common stock. During the nine (9) months ended December 31, 2024, the Company repurchased an aggregate amount of 1,774,501 shares common stock, from three (3) different individuals who each solicited the Company for an offer, at a weighted average price of $ 0.22 per share for total payments of $ 390,020 . These shares were then immediately cancelled. b. Preferred Stock The Company has 20,000,000 authorized shares of preferred stock. As of December 31, 2024, and March 31, 2024, there were no preferred shares issued or outstanding. NOTE 6 – PAYROLL LIABILITIES & ACCRUED EXPENSES Accrued expenses for the periods are as follows: SCHEDULE OF ACCRUED EXPENSES December 31, 2024 March 31, 2024 Payroll liabilities $ 95,749 $ 165,087 Sales tax payable 11,136 9,969 State income tax payable ( 48,660 ) 39,929 Accrued expenses 51,530 14,985 Total $ 109,755 $ 229,970 NOTE 7 - RELATED PARTY TRANSACTIONS The Company had no related party transactions during the fiscal year ended March 31, 2024, nor during the nine (9) months ended December 31, 2024. NOTE 8 - SUBSEQUENT EVENTS On January 22, 2025, we purchased 769,230 shares of our no par value common stock from an investor who approached us about this purchase and who acquired these shares in a private capital raise by the Company in 2016. The price paid per share was $ 0.205 , for an aggregate purchase price of $ 157,692.15 , which was paid from current cash resources. We will cancel these shares, reducing our current outstanding shares from 122,958,993 to 122,189,763 shares. 11 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Cautionary Statements for Purposes of “Safe Harbor Provisions” of the Private Securities Litigation Reform Act of 1995: Except for historical facts, all matters discussed in this Quarterly Report, which are forward-looking, involve a high degree of risk and uncertainty. Certain statements in this Quarterly Report set forth management’s intentions, plans, beliefs, expectations, or predictions of the future based on current facts and analyses. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “intend,” or similar expressions, we intend to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. Actual results may differ materially from those indicated in such statements, due to a variety of factors, risks, and uncertainties. Potential risks and uncertainties include, but are not limited to, competitive pressures from other companies within the Educational Industries, economic conditions in the Company’s primary markets, exchange rate fluctuation, reduced product demand, increased competition, inability to produce required capacity, unavailability of financing, government action, weather conditions and other uncertainties, including those detailed in our SEC filings. We assume no duty to update forward-looking statements to reflect events or circumstances after the date of such statements. The following discussion should be read in conjunction with Item 1, Condensed Financial Statements, in Part I of this Quarterly Report. Overview of Current and Planned Operations PCS Edventures!, Inc. sells STEM / STEAM products to educational and recreational entities serving youth. At this time, we do not attempt to align our products to fit in the classroom setting although we are aware that some of our customers use our products to fill enrichment time blocks in the classroom during formal school time. Classroom curriculum must align with specific state standards to be considered for use. Each state has their own unique set of standards, making classroom curriculum development a state by-state endeavor. On the other hand, out of school programs are not subject to a state governmental standard alignments, although these programs often require that educational programs align with various sets of state or national educational standards. This difference makes it easier to penetrate out-of-school programs, as more freedoms exist for curriculum development. We focus our efforts on these out-of-school programs, which include summer school, summer camps, YMCA programs, Boys and Girls club programs and various other programs offered outside of the classroom, at all times of the year, that are too numerous to list. Oftentimes, these programs are sponsored, administered and/or supported by local school districts, and we employ considerable efforts to build relationships with these types of school districts to provide desired programing for their out-of-school programs. The majority of the time, the out-of-school programs offered are funded with grants; however, some programs are run on a for- profit basis. The Company sells to all of these types of entities. We offer professional development training for instructors using our products; and typically charge a fee for this service, with the fee primarily covering our expenses. Management does not view this service as a profit center, but rather as a customer service component of our product that adds to its uniqueness and value in the marketplace, and as a market development endeavor to build out the Company’s addressable market. The nature of our target market produces considerable seasonality for the Company’s revenue. The quarters ended June 30 and September 30 tend to be the peak of this seasonality (with the quarter ended March 31 being close to these quarters), while the quarter ended December 31 tends to be the low point of our seasonality. The Table below reflects this seasonality. Quarterly Revenue $ Quarter Ended 2021 2022 2023 2024 March 31 648,743 1,445,594 2,521,470 2,262,772 June 30 1,062,127 1,391,785 2,605,281 3,159,923 September 30 993,458 1,243,662 3,767,326 2,267,338 December 31 566,473 1,847,659 459,087 701,147 The Company, through winning a competitive Request For Proposal, added the Air Force Junior Reserve Officers’ Training Corp (“AFJROTC”) as a customer in the second half of calendar year 2022. The Company experienced elevated sales due to the fulfillment of the AFJROTC orders for the quarters ended December 31, 2022, March 31, 2023, and September 30, 2023. One of the AFJROTC revenue quarters was December 31, 2022, which corresponds with the lowest seasonal revenue quarter, so the effects of seasonality in 2022 was not as readily apparent as in other calendar years. The table below removes the AFJROTC revenue to highlight the seasonality that the Company experiences. Quarterly Revenue Less JROTC Revenue $ Quarter Ended 2021 2022 2023 2024 March 31 648,743 1,445,594 1,247,835 2,262,772 June 30 1,062,127 1,391,785 2,605,281 3,159,923 September 30 993,458 1,243,662 2,501,410 1,822,225 December 31 566,473 458,239 459,087 701,147 During the quarter ended December 31, the Company focuses on product development, restocking inventory, and general planning for the next year. Sales and marketing activities remain fairly constant throughout the year. 12 Results of Operations Revenue For the quarter ended December 31, 2024, our revenue was $701,147, which was $242,060 greater than our revenue for the quarter ended December 31, 2023, of $459,087. The difference in revenue was partially due to deferred revenue recognition. For the quarter ended September 30, 2024, we had deferred revenue of $107,336, all of which was recognized as revenue in the quarter ending December 31, 2024. For the quarter ended September 30, 2023, we had deferred revenue of $4,584, all of which was recognized as revenue in the quarter ending December 31, 2023. The difference in revenue was also partially due to increased fulfillment efficiency. We moved into our new warehouse facility in November of 2024, and have decreased the time between order receipt and order fulfillment significantly. We recognize revenue when the customer receives the product or service, so less time between order receipt and order fulfillment has the effect of increasing revenue recognized in any given quarter. For the nine (9) months ended December 31, 2024, our revenue was $6,128,409, which was $703,285 less than our revenue for the nine (9) months ended December 31, 2023, of $6,831,694. The difference in revenue is largely due to the difference between two (2) large customer orders that we fulfilled in the nine (9) months ended December 31, 2023, amounting to $1,265,916 (Air Force JROTC) and $823,143 (Iowa Scale-Up). During the nine (9) months ended December 31, 2024, these two (2) customers accounted for $453,113 and $0, respectively. While we added revenue from other customers during the nine (9) months ended December 31, 2024, we did not overcome the aggregate revenue shortfall from the two (2) customers described above of $1,635,946 when compared to the nine (9) months ended December 31, 2023. The Company has been soliciting larger customers for over two (2) years and has seen some success. The AFJROTC is the Company’s largest success by a wide margin, producing revenue of $1,265,916 in the nine (9) months ended December 31, 2023, and $1,389,420 in the nine (9) months ended December 31, 2022. The Company has experienced other successes in its campaign to find larger customers. The table below shows customer transactions by size for the periods indicated. Number of Customer Transactions by size > $1 million >$500,000 > $100,000 > $50,000 > $25,000 > $10,000 Nine (9) months ended December 31, 2024 0 1 14 21 44 90 Nine (9) months ended December 31, 2023 1 2 16 23 34 80 Nine (9) months ended December 31, 2022 1 1 8 18 30 49 Nine (9) months ended December 31, 2021 0 0 5 10 15 38 We believe that we can continue to successfully solicit larger customers; however, we cannot guarantee success, nor can we provide a numerical framework to describe the potential success. Risk factors include any developments that negatively impact education funding in the United States, challenges finding and retaining employees who meet our high standards, and disruptions to our supply chain of critical components. Cost of Sales We strive to have a cost of sales that is less than 40% of revenue. We price our products once per year, at the beginning of the calendar year, and maintain that pricing level throughout the year. During inflationary environments, when the price level of the Company’s raw materials is increasing, the Company must absorb that negative impact to gross margins until it can reprice its products at the beginning of the next calendar year. This repricing analysis considers the current pricing level of materials, as well as the likely increase in those levels in the year ahead. We attempt to incorporate shipping costs into the cost of raw materials, but oftentimes during the course of the year we are compelled to ship in a more expedient manner, which is more expensive than our baseline assumptions. For the quarter ended December 31, 2024, our cost of sales was $348,660, or 49.7% of revenue. For the quarter ended December 31, 2023, our cost of sales was $310,657, or 67.7% of revenue. For any given quarter, and especially in low revenue quarters, the cost of sales can vary significantly from our desired 40% or less of revenue. However, for any given year, the calculation is relevant and desired to be 40% or less of revenue. For the nine (9) months ended December 31, 2024, our cost of sales was $2,459,747, or 40.1% of revenue, as compared to $2,503,552, or 36.7% of revenue for the nine (9) months ended December 31, 2023. Factors affecting cost of sales include: 13 Helps sub 40% cost of sales Impedes sub 40% cost of sales Higher revenue Higher inflation Larger order size Expedited shipping Ability to take advantage of volume discounts Quality issues with raw materials Higher mix of sales from internal efforts Higher mix of sales from resellers Operating Expenses Operating expenses are divided into two categories – salary + wages, and general + administrative. Salary and wages tend to increase over time as the Company has been increasing its number of employees and we expect to continue to do so in the future. Also, the Company desires to retain employees over the long term, which requires periodic increases in compensation as their value to the Company increases. The Company also has a discretionary quarterly bonus program based on qualified revenue. Qualified revenue is defined as revenue where there are no reseller fees or other price adjustments associated with that revenue. Thus, all reseller sales are disqualified from the discretionary quarterly bonus calculation, as are other miscellaneous transactions where the Company did not receive a full margin. During quarters with higher revenue, salaries and wages will increase all other things equal. Salary and wages were $436,150 for the quarter ended December 31, 2024. For the quarter ended December 31, 2023, salaries and wages were $353,934. We had twenty-four (24) employees as of December 31, 2024, versus twenty-one (21) employees as of December 31, 2023. Salary and wages were $1,440,181 for the nine (9) months ended December 31, 2024. For the nine (9) months ended December 31, 2023, salaries and wages were $1,313,886. As with the case above, we had more employees during the nine (9) months ended December 31, 2024 than the nine (9) months ended December 31, 2023. We also want to retain our employees which necessitates annual raises to compensate for inflation and reflect an employee’s increased value to the Company. General and administrative expenses include all operating expenses outside of salaries and wages. These include the following categories: 1. Advertising and marketing expenses 2. Trade show and travel expenses 3. Product development expenses 4. Finance charges 5. Contract labor expenses 6. Lease expenses 7. Insurance premiums 8. Workers’ compensation expenses 9. Office supplies and repairs 10. Professional expenses 11. Licenses 12. State sales tax expenses 13. Office and warehouse infrastructure expenses Most of these expenses are not correlated with changes in revenue, but they tend to increase over time. General and administrative expenses were $375,081 for the quarter ended December 31, 2024. For the quarter ended December 31, 2023, general and administrative expenses were $231,475. The increase in general and administrative expenses for the quarter ended December 31, 2024 was largely due to the Company’s new facilities leases which began in the quarter ending December 31, 2024. Warehouse and Office lease and maintenance expenses were $141,847 for the quarter ending December 31, 2024 compared to $35,071 for the quarter ending December 31, 2023. These expenses included the costs of upgrading the new facilities, especially the warehouse. General and administrative expenses were $1,091,005 for the nine (9) months ended December 31, 2024. For the nine (9) months ended December 31, 2023, general and administrative expenses were $821,116. An increase of warehouse and office lease and maintenance of $109,272 and an increase of marketing expenses of $30,608 are largely responsible for the increase in general and administrative expenses for the nine (9) months ended December 31, 2024 over the nine (9) months ended December 31, 2023. 14 Other Income and Expenses Other income and expenses are those outside of the Company’s ordinary course of business. Interest income and interest expense are disclosed under other income and expenses. The Company has accumulated cash which is invested in a Vanguard money market fund that invests exclusively in repurchase agreements and short-term U.S. government securities. The ticker symbol of this fund is VMFXX. The Company’s investments in this fund produce interest income. For the quarter ended December 31, 2024, other income and expenses were $24,920, with net interest income accounting for the entire amount. For the quarter ended December 31, 2023, other income and expenses were $22,841, with net interest income totaling $20,183 of that amount. For the nine (9) months ended December 31, 2024, other income and expenses were $84,043, with net interest income accounting for the entire amount. For the nine (9) months ended December 31, 2023, other income and expenses were $64,690, with net interest income accounting for $30,774 of that amount and a tax credit accounting for $31,258 of that amount. Net Income (Loss) Before Tax For the quarter ended December 31, 2024, net income (loss) before tax was ($433,824) versus ($414,138) for the quarter ended December 31, 2023. Higher revenue and higher costs characterized the net income (loss) before tax for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023. For the nine (9) months ended December 31, 2024, net income (loss) before tax was $1,221,519 versus $2,257,830 for the nine (9) months ended December 31, 2023. The nine (9) months ended December 31, 2024 can be characterized as having less revenue and higher costs when compared to the nine (9) months ended December 31, 2023. Taxes The Company has significant net operating losses which arose due to past losses. At March 31, 2024, the Company had net operating losses of approximately $9.2 million that may be used to offset against future taxable income. Prior to fiscal year 2023, the Company offset its potential tax benefit from the operating loss carry-forwards with a valuation allowance in the same amount. As it became clear that the Company will more likely than not use its tax loss carry-forward amounts, the valuation allowance was partially removed for the fiscal year ended March 31, 2023, such that the tax benefit recognized by us in fiscal year 2023 was $1,011,466. The valuation allowance was fully removed as of March 31, 2024, resulting in a tax benefit of $1,529,793 for fiscal year 2024. While we do not expect to pay federal income taxes for fiscal year 2025, the deferred tax asset will be adjusted on a quarterly basis to reflect the amount of taxes it is offsetting for the quarter. The provision for income tax is an unwinding of the tax benefit we recorded in prior periods when we recognized the value of the deferred tax asset on the income statement. Liquidity and Capital Resources Cash Flow from Operations For the nine (9) months ended December 31, 2024, cash provided by operations was $2,727,088 compared to cash provided by operations of $1,644,990 for the nine (9) months ended December 31, 2023. Cash provided by operations increased significantly, despite the difference in net income of ($1,192,215) largely due to the difference in the change in accounts receivable. For the nine (9) months ended December 31, 2024, accounts receivable decreased by $1,512,100 compared to a decrease of $214,826 for the nine (9) months ended December 31, 2023. Other significant factors causing cash provided by operations to increase in the nine (9) months ended December 31, 2024 versus the nine (9) months ended December 31, 2023 were an increase in inventories of $11,486 for the December 31, 2024 period versus $556,544 for the December 31, 2023 period, and a decrease in prepaid expenses of $110,480 for the December 31, 2024 period versus and increase in prepaid expenses of $518,799 for the December 31, 2023 period. 15 As of December 31, 2024, total current assets were $6,074,390 and total current liabilities were $310,160, resulting in working capital of $5,764,230. As of March 31, 2024, total current assets were $5,425,141 and total current liabilities were $416,154, resulting in working capital of $5,008,987. The Company had a current ratio as of December 31, 2024, of 19.58 compared to a current ratio of 13.04 as of March 31, 2024. As of December 31, 2024, we had $3,590,051 in cash and cash equivalents compared to $1,329,708 in cash and cash equivalents as of March 31, 2024. The improvements in working capital, current ratio, and cash on hand this fiscal year-to-date are all due to a significant decrease in accounts receivable during the nine (9) months ended December 31, 2024. Cash Flow from Investing Activities For the nine (9) months ended December 31, 2024, cash used by investing activities was $76,725 compared to cash used by investing activities of $16,096 for the nine (9) months ended December 31, 2023. During the nine (9) months ended December 31, 2024, we purchased warehouse equipment related to our recent relocation of the warehouse which accounts for the increase in cash used by investing activities. Cash Flow from Financing Activities For the nine (9) months ended December 31, 2024, cash used by financing activities was $390,020 compared to cash used by financing activities of $64,933 for the nine (9) months ended December 31, 2023. In both periods, cash used by financing activities was solely due to the purchase of the Company’s common stock, by the Company, in private transactions with shareholders who solicited the Company for an offer. For the nine (9) months ended December 31, 2024, the Company purchased 1,774,501 shares of its common stock, and for the nine (9) months ended December 31, 2023, the Company purchased 998,985 shares of its common stock. In all cases the common stock purchase by the Company was retired. Off-Balance Sheet Arrangements We had no Off-Balance Sheet arrangements during the three (3) and nine (9) month periods ended December 31, 2024, and 2023. Item 3. Quantitative and Qualitative Disclosures about Market Risk. The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and is not required to provide the information required under this item. Item 4. Controls and Procedures. We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that material information relating to us is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors. These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Management, with the participation of our Chief Executive Officer and our President who acts as our Principal Financial Officer have evaluated the effectiveness, as of December 31, 2024, of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2024, due to the Company engaging the professional CPA firm of B.A. Harris to assist the Company in preparing our preliminary condensed financial statements and schedules for our auditor’s review. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 1A. Risk Factors. The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act, and is not required to provide the information required under this item. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Mine Safety Disclosures. None; not applicable. Item 5. Other Information. No director or Section 16 officer adopted or terminated a trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a “non-Rule 10b5–1” trading arrangement during the periods reported in this Form 10-Q. Item 6. Exhibits. (a) Index of Exhibits Exhibit No. Identification of Exhibit Location if other than attached hereto 3.1 Second Amended and Restated Articles of Incorporation dated October 2, 2006 Attached to our Form 10 filed October 3, 2023 3.2 Articles of Amendment dated April 12, 2012 Attached to our Form 10 filed October 3, 2023 3.3 Articles of Amendment dated September 25, 2014 Attached to our Form 10 filed October 3, 2023 3.4 Articles of Amendment dated September 25, 2015 Attached to our Form 10 filed October 3, 2023 3.5 Articles of Amendment dated September 23, 2016 Attached to our Form 10 filed October 3, 2023 3.6 Third Amended Bylaws Attached to our Form 10 filed October 3, 2023 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Todd R. Hackett, Chief Executive Officer and Chairman Attached hereto 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Michael J. Bledsoe, President, Principal Financial Officer Attached hereto 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by Todd R. Hackett, Chief Executive Officer and Chairman of the Board of Directors, and Mike J. Bledsoe, President and Principal Financial Officer Attached hereto 101.INS Inline XBRL Instance Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase 101.LAB Inline XBRL Taxonomy Extension Label Linkbase 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase 101.SCH Inline XBRL Taxonomy Extension Schema 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL. 10-K Annual Report for the fiscal year ended March 31, 2024, filed with the SEC on June 28, 2024 (the “Annual Report”) 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PCS EDVENTURES!, INC. Dated: February 14, 2025 By: /s/ Todd R. Hackett Todd R. Hackett Chief Executive Officer and Chairman of the Board of Directors Dated: February 14, 2025 By: /s/ Michael J. Bledsoe Michael J. Bledsoe President, Principal Financial Officer and Director 18