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Item 1. Financial Statements

2015-02-11 compared with 2014-11-14 · 539 added, 879 removed, 253 unchanged (85% of the section changed)

Financial Statements

The 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.

opinion of management, the Financial Statements fairly present the financial condition of the Registrant.

The 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 Financial Statements fairly present the financial condition of the Registrant.

PART I FINANCIAL INFORMATION 2

Consolidated Balance sheets (Unaudited)

Consolidated Statements of Operations (Unaudited)

Consolidated Statement of Stockholders’

Deficit (Unaudited)

Consolidated Statements of Cash Flows (Unaudited)

Notes to Consolidated Financial Statements (Unaudited)

Management’s Discussion and Analysis of Financial Conditions and Results of Operations

Consolidated Balance Sheets 4

Consolidated Income Statements 6

Consolidated Statements of Stockholders Equity 7

Consolidated Statements of Cash Flows 8

Notes to the Consolidated Financial Statements 10

Managements Discussions and Analysis of Financial Condition and Results of Operations.

Controls and Procedures 25

PART II - OTHER INFORMATION 26

EXHIBIT INDEX

PCS EDVENTURES!.COM,

SIGNATURES 28

PCS EDVENTURES!.COM, INC.

AND SUBSIDIARY

Consolidated Balance Sheets

September 30, 2014

Consolidated Balance Sheets (USD $)

December 31, 201 4

March 31, 201 4

CURRENT ASSETS

5 unchanged sentences

FIXED ASSETS, net of accumulated depreciation of $ 122,836 and $ 118,005 , respectively

Note Receivable, net of allowance of $ 47,743

Total Other Assets

The accompanying notes are an integral part

of these consolidated financial statements.

The accompanying notes are an integral part of these financial statements.

PCS EDVENTURES!.COM, INC.

1 unchanged sentence

Consolidated Balance Sheets (USD $)

September 30, 2014

December 31, 201 4

March 31, 201 4

4 unchanged sentences

Deferred revenue

Note payable, convertible, net of discount of $0 as of September 30, 2014 and March 31, 2014

Note payable, convertible, related party, net of $ 38,571 and $ 0 discount as of December 31, 2014 and March 31, 2014, respectively

Note payable, related party

Lines of Credit Payable

Line of credit payable

Total Current Liabilities

1 unchanged sentence

Notes payable, related party, long term

Convertible notes payable, long term, net of $0 and $4,693 discount as of September 30, 2014 and March 31, 2014, respectively

Convertible notes payable, long term, related party, net of discount of $0 and $315,721, as of September 30, 2014 and March 31, 2014, respectively

Normal 0 false false false EN-US ZH-CN X-NONE

Convertible notes payable, long term, related party, net of $ 0 and $ 315,721 discount as of December 31, 2014

Normal 0 false false false EN-US ZH-CN X-NONE

and March 2014, respectively

Convertible notes payable, long term, net of $ 0 and $ 4,693 discount as of December 31, 2014 and March 31, 2014, respectively

Total Long Term Liabilities

Total Liabilities

STOCKHOLDERS’

STOCKHOLDERS' EQUITY (DEFICIT)

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

2 unchanged sentences

Accumulated deficit

(39,258,329 )

(38,170,186 )

Total Stockholders’

TOTAL LIABILITIES AND STOCKHOLDERS’

The accompanying notes are an integral part

of these consolidated financial statements.

PCS EDVENTURES!.COM,

Total Stockholders' Equity (Deficit)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

The accompanying notes are an integral part of these financial statements.

PCS EDVENTURES!.COM, INC.

AND SUBSIDIARY

Consolidated Statements of Operations

Consolidated Income Statements (USD $)

For the Three Months Ended

For the Six Months Ended

September 30,

For the Nine Months Ended

International service revenue

5 unchanged sentences

Salaries and wages

Depreciation and amortization expense

Depreciation and amortization

General and administrative expenses

Total Operating Expenses

OPERATING LOSS

OPERATING INCOME (LOSS)

OTHER INCOME AND EXPENSES

1 unchanged sentence

Interest expense

Total Other Income/(Expense)

Gain on Bad Debt Collection

Total Other Income and (Expenses)

LOSS FROM CONTINUING OPERATIONS

LOSS FROM DISCONTINUED OPERATIONS

NET COMPREHENSIVE LOSS

NET INCOME/(LOSS)

NET COMPREHENSIVE INCOME/(LOSS)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ (1,088,143 )

Basic and diluted net loss per common share:

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

Basic and diluted loss per share from continuing operations

1 unchanged sentence

Basic and diluted net loss per share

Weighted Average Number of Shares

Outstanding, Basic and Diluted

The accompanying notes are an integral part

of these financial statements.

Weighted Average Number of Shares Outstanding, Basic and Diluted

The accompanying notes are an integral part of these financial statements.

PCS EDVENTURES!.COM, INC.

AND SUBSIDIARY

Consolidated Statement of Stockholders’

Consolidated Statements of Stockholders Equity (Deficit)

Comprehensive

Stockholders’

Stockholders

Balance at 03 / 31 / 2014

$ (38,170,186 )

$ (1,219,954 )

Stock for Employee

Stock for Services

3 unchanged sentences

Option/Warrant Expense

Debt Discount

Net Loss through 12 / 31 / 2014

Balance at 012 / 31 / 2014 (unaudited)

$ (39,258,329 )

$ (1,450,114 )

The accompanying notes are an integral part

of these financial statements.

The accompanying notes are an integral part of these financial statements.

PCS EDVENTURES!.COM, INC.

AND SUBSIDIARY

Consolidated Statements of Cash Flows

For the Six Months Ended

September 30,

For the Nine Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

$ (1,088,143 )

Adjustments to reconcile net loss to net cash used by operating activities:

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

Debt discount amortization

Depreciation and amortization

Stock on settlement

Common stock issued for services

Stock payable for service

Common stock for settlement

Amortization of fair value of stock options

Amortization of brain molds

Bad Debt Collection

Changes in operating assets and liabilities:

5 unchanged sentences

(Decrease) increase in accounts payable and accrued liabilities

Increase (decrease) in unearned revenue

Increase (decrease) in deferred revenue

Net Cash Provided (Used) by Operating Activities)

Normal 0 false false false EN-IN X-NONE X-NONE

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for purchase of fixed assets

Normal 0 false false false EN-US ZH-CN X-NONE

Net Cash Used by Investing Activities

Normal 0 false false false EN-US ZH-CN X-NONE

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment on LOC

Borrowings on note payable

Proceeds from note payable –

Principal payments on debt

Net Cash Provided by Financing Activities

Proceeds from notes payable

Proceeds from notes payable, related party

Principal payments on debt, related party

Net Cash Used by Financing Activities

Foreign currency translation

2 unchanged sentences

Cash at End of Period

The accompanying notes are an integral part

of these financial statements.

The accompanying notes are an integral part of these financial statements.

PCS EDVENTURES!.COM, INC.

Consolidated Statements of Cash Flows (continued)

For the Six Months Ended

September 30,

For the Nine Months Ended

NON-CASH INVESTING & FINANCING ACTIVITIES

5 unchanged sentences

Sale of Subsidiary

Stock payable accrued in prior period and issued in current period

For the Nine Months Ended

CASH PAID FOR:

The accompanying notes are an integral part

of these financial statements.

PCS EDVENTURES!.COM, INC AND SUBSIDIARY

The accompanying notes are an integral part of these financial statements.

PCS EDVENTURES!.COM, INC

Notes to the Consolidated Financial Statements

September 30, 2014

December 31, 201 4

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

The consolidated financial statements presented

are those of PCS Edventures!.com, Inc., an Idaho corporation ( “the Company”).

The consolidated financial statements presented are those of PCS Edventures!.com, Inc., an Idaho corporation ( the Company).

On August 3, 1994, PCS Education Systems, Inc.

was incorporated under the laws of Idaho to develop and operate stand-alone learning labs.

In October 1994, PCS exchanged common stock

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

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

As a result of this exchange, PCS Schools, Inc.

became a wholly owned

subsidiary of PCS.

In the late 1990s, the Company divested the stand-alone learning labs to focus more on a hands-on module coupled

with web-based technology for use in the classroom.

On March 27, 2000, PCS changed its name from

PCS Education Systems, Inc.

became a wholly owned subsidiary of PCS.

In the late 1990 s, the Company divested the stand-alone learning labs to focus on the creation of turn-key lab modules coupled with web-based technology for use in the classroom and afterschool programs.

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

to PCS Edventures!.com, Inc.

On September 26, 2014 the shareholders voted for the proposal to grant

the board of directors the authority to change the name of the company in a fashion that will remove the .com but retain the current

On November 30, 2005, PCS

entered into an agreement with 511092 N.B.

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

of 511092 N.B.

as disclosed in the 8-K as filed with the Securities and Exchange Commission (the “SEC”) on December

9, 2005 and amended on February 15, 2006.

On September 26, 2014 the shareholders voted for the proposal to grant the board of directors the authority to change the name of the company in a fashion that will remove the .com but retain the current brand.

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

LTD., a Canadian corporation (LabMentors) to exchange PCS common stock for common stock of 511092 N.B.

as disclosed in the 8-K as filed with the Securities and Exchange Commission (the SEC) on December 9, 2005 and amended on February 15, 2006.

As a result of the definitive Share Exchange Agreement, 511092 N.B.

became a wholly

owned subsidiary of the Company.

became a wholly owned subsidiary of the Company.

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

remains a Canadian corporation.

The Company had a memo of understanding with a company for the potential sale of LabMentors in

Quarter ending June 30th, 2013.

It remains a Canadian corporation.

The Company had a memo of understanding with a company for the potential sale of LabMentors in Quarter ending June 30th, 2013 .

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

In January of 2012, PCS

Edventures!.com Inc.

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

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

As of June 30, 2014 two EdventuresLab programs have been opened

and are operating in the Idaho Treasure Valley.

On January 31, 2013, PCS Edventures!.com,

In January of 2012 , PCS Edventures!.com Inc.

committed to a business plan enhancement which included the opening, operating, and licensing of EdventuresLab private learning centers and launched a pilot in the spring of 2012 .

As of June 30, 2014 two EdventuresLab programs have been opened and are operating in the Idaho Treasure Valley.

On January 31, 2013, PCS Edventures!.com, Inc.

formed a subsidiary called Premiere Science Inc.

incorporated and registered in the State of Idaho.

The subsidiary is 100%

wholly owned by PCS Edventures!.com,Inc.

and was formed to use as an additional sales and marketing tool to gain other business

opportunities.

There were no operations for the subsidiary during the quarter year ended September 30, 2014.

The subsidiary is 100 % wholly owned by PCS Edventures!.com,Inc.

and was formed to use as an additional sales and marketing tool to gain other business opportunities.

There were no operations for the subsidiary during the quarter year ended December 31, 2014 .

NOTE 2 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The September 30, 2014, consolidated financial

statements presented herein are unaudited, and in the opinion of management, include all adjustments (consisting of only normal

recurring accruals) necessary for a fair presentation of financial position, results of operations and cash flows.

Such financial

statements do not include all of the information and footnote disclosures normally included in financial statements prepared in

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

This Quarterly Report on Form 10-Q should

be read in conjunction with the Annual Report on Form 10-K for PCS Edventures!.com for the fiscal year ended March 31, 2014.

March 31, 2014, consolidated balance sheet is derived from the audited balance sheet included therein.

The operating results for the period ended September

30, 2014, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2015.

The December 31, 201 4 , consolidated financial statements presented herein are unaudited, and in the opinion of management, include all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of financial position, results of operations and cash flows.

Such financial statements do not include all of the information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America.

This Quarterly Report on Form 10-Q should be read in conjunction with the Annual Report on Form 10-K for PCS Edventures!.com for the fiscal year ended March 31, 201 4 .

The March 31, 201 4 , consolidated balance sheet is derived from the audited balance sheet included therein.

The operating results for the period ended December 31, 201 4 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 201 5 .

NOTE 3 - GOING CONCERN

The Company’s consolidated

financial statements are prepared using accounting principles generally accepted in the United States of America applicable to

a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

established sources of revenues are not

sufficient to cover the

Company’s operating costs.

The Companys consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The established sources of revenues are not sufficient to cover the Companys operating costs.

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

The combination of these items raises substantial doubt about its ability to continue as a going concern.

Management’s

plans with respect to alleviating this adverse position are as follows:

During the fiscal year

ended March 31, 2014, PCS continued its transition to more effective marketing and sales strategies including focused targeting

of afterschool markets, building a personal sales force to penetrate the classroom market, and expanding its channel partners who

already have market penetration.

PCS doubled its field sales force in Q3 and Q4 and plans to continue this expansion in FY2015

by adding on additional channel partners and expanding its internal sales force.

PCS also recognizes that its experience in operating

learning centers creates a unique opportunity to supplement the current PCS business model through opening learning centers through

licensing arrangements that will facilitate fast growth.

This approach combines PCS expertise in experiential learning with its

considerable store of intellectual property comprised of learning frameworks, content, proprietary hardware, and software developed

over the past two decades while increasing the throughput of our existing direct sales efforts.

This marketing approach will incorporate

the large body of PCS intellectual property into an afterschool program that families will pay tuition to attend.

The business plan proposes

the continued promotion and growth of the PCS Edventures Lab to further demonstrate proof of the concept, and PCS opened a second

Edventures Lab in Eagle, Idaho in Q1 of FY2015.

The premise of the EdventuresLab aspect of the business plan is two-fold:

1) EdventuresLab

revenues will be more consistent and predictable for the Company to plan and manage cash and growth;

and 2) an established network

of EdventuresLabs will serve as highly effective “showrooms”

for sales of PCS products and services into neighboring

Further, they will build significant community awareness and brand awareness in the communities they are established.

Also of note, close partnerships with schools provide an opportunity to test and improve PCS products on a regular basis and the

EdventuresLab environment is a highly effective R&D environment for the development of PCS STEM products.

Regarding International

expansion, PCS signed a license and royalty agreement with Creya Learning of India (CL) in 2011.

CL is using PCS content and support

services to implement experiential learning curriculums into Indian schools and to build out a network of experiential learning

centers in India that function as an integrated K12 STEM program within these schools.

PCS, as part of the license agreement, will

receive ongoing royalties on the tuition charged to students attending PCS based programs.

Product development in

Q1 FY2015 has focused on continued improvements and refinements to PCS products and curriculum creating a digital learning management

system for delivering content and training, With the launch of a new 3D interactive engineering curriculum, and the creation and

launch of all new PCS Robotics related materials we are pursuing an aggressive upgrade strategy with our hardware and software.

Executive management continues in its conviction that the K12 educational robotics market represents a significant market opportunity

for PCS products and has committed resources to product development, inventory, and sales and marketing to pursue this opportunity.

The Q4 FY2014 addition of Britt Ide to the Board

of Directors has brought significant expertise in corporate governance and planning, and the fresh perspective of a woman engineer

passionate about the need and opportunity for STEM education.

In June of FY2015, Andrew J.

Scoggin joined the PCS Board of Directors

bringing a rich background of executive management, entrepreneurial spirit, and increased attention to financial rigor.

FY2015, PCS plans to expand and strategically recruit new board members who can help the management team focus and execute its

business plan.

Revenue for the period ending September

30, 2014 was $1,557,104 compared to revenue of $800,224, up approximately 94.58% compared to the same period last fiscal

Net loss for the six months ended was ($1,088,143), compared to ($490,334), a 122% increase from the same period last

year resulting from:

$320,267 of note payable discount taken to interest expense on note conversion, $632,885 increased cost

of goods, investments in R&D and marketing, with some mitigation by continued effort to keep costs down.

Cash flow from

operations for the six months ended September 30, 2014 was $(421,026), which partially had to do with order fulfillment

delays related to International operations, and inventory delays.

While the efforts put in by management and the

entire employee team are beginning to be realized, as illustrated by increase in revenues this quarter, the ability of the Company

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

needed, to continue to monitor and reduce overhead costs, and to attain profitable operations.

The accompanying consolidated financial

statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 –

PREPAID EXPENSES

Managements plans with respect to alleviating this adverse position is to continue to develop and execute its strategic plan as outlined in the Plan of Operations.

The following highlights key areas of the plan and progress made in the past year:

1 ) In Q1-Q 3 PCS invested in product R&D to improve its robotics and engineering product lines and provide its expanding sales force an advantage over competitors.

Executive management continues in its conviction that the K 12 educational robotics market represents a significant market opportunity for PCS products and has committed resources to product development, inventory, and sales and marketing to pursue this opportunity.

2 ) Since January of 2014 PCS has increased its sales presence from 4 to 12 people through internal hires and the formation of a partnership with Priority Education Solutions of Florida.

We continue to actively se ek additional channel partners.

3 ) PCS is focused on actively promoting its two EdventuresLab locations in the Boise area for direct to consumer sales and is using these locations as a proving gro und for our retail offerings.

4 ) In December of 2014 , PCS formally launched its retail product line, an extension of its EdventuresLab consumer program, to further diversify its revenue streams during Q 3 , a typically slow institutional sales period.

PCS is now actively pursuing retail distribution cha nnels to grow this opportunity.

The introductory product is RiQ, an easy-to-program, fun way to learn robotics and coding.

The product has unique characteristics that position it strongly against competitors in the market that include price point, ease-of-use, availability on tablet devices, and a lot of expandability for the hobbyist market.

It has been very well received during its initial launch and is now selling through the PCS EdventuresLab website and Amazon.

5 ) PCS has existing contracts in Saudi Arabia that represent significant revenue potential for Q 4 and our FY 2015 and we are committed to delivering those contracts.

6 ) The Q 4 FY 2014 addition of Britt Ide to the Board of Directors has brought significant expertise in corporate governance and planning, and the fresh perspective of a woman engineer passionate about the need and opportunity for STEM education.

PCS plans to expand and strategically recruit new board members who can help the management team focus and execute its business plan.

Revenue for the period ending December 31 , 2014 was $ 782,322 compared to revenue of $ 348,341 , up approximately 125 % compared to the same period last fiscal year.

Net loss for the nine months ended was ($ 1, 123,512 ), compared to ($ 7 29, 1 19 ), a 54 % increase from the same period last year resulting from:

$ 331,696 of note payable discount taken to interest expense on notes payable and conversions, $ 741,280 increased cost of goods, investments in product development and marketing, with some mitigation by continued effort to keep costs down.

Cash flow used from operations for the nine months ended December 31, 2014 was $ ( 512,325 ) .

While the efforts put in by management and the entire employee team are beginning to be realized, as illustrated by increase in revenues this quarter , and the achievement of a cash positive EBIDTA for the quarter, the ability of the Company to continue as a going concern is dependent upon our ability to successfully accomplish the plans described , to raise capital as needed, to continue to monitor and reduce overhead costs, and to attain profitable operations.

The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 PREPAID EXPENSES

Prepaid expenses for the periods are as follows:

September 30, 2014

December 31, 2014

March 31, 2014

7 unchanged sentences

Assets and depreciation for the periods are as follows:

September 30, 2014

December 31, 2014

March 31, 2014

2 unchanged sentences

Total Fixed Assets

Fixed asset depreciation expense for the six months ended September

30, 2014 and 2013 was $12,582 and $9,358 respectively.

Fixed asset depreciation expense for the nine months ended December 31, 201 4 and 201 3 was $ 19,699 and $ 14,036 respectively.

NOTE 6 - ACCRUED EXPENSES

Accrued expenses for the periods are as follows:

September 30, 2014

December 31, 2014

March 31, 2014

5 unchanged sentences

Total accrued expenses

NOTE 7 –

NOTES PAYABLE

NOTE 7 NOTES PAYABLE

Notes payable consisted of the following:

September 30, 2014

December 31, 2014

March 31, 2014

Short Term Note Payable, Related Party

Short Term Convertible Note, net discount of $0 as of September 30, 2014 and March 31, 2014

Short Term Convertible Note, Related Party net discount of $ 38,571 as of December 31, 2014 and March 31, 2014

Line of Credit

1 unchanged sentence

Long Term Note Payable, Related Party

Convertible notes payable, long term, net of $0 and $4,693 discount as of September 30, 2014 and March 31, 2014, respectively

Convertible notes payable, long term, related party, net of discount of $0 and $315,721, as of September 30, 2014 and March 31, 2014, respectively

Convertible notes payable, long term, net of $ 0 and $ 4,693 discount as of December 31, 2014 and March 31, 2014, respectively

Convertible notes payable, long term, related party, net of discount of $ 0 and $ 315,721 , as of December 31, 2014 and March 31, 2014, respectively

Total Notes Payable

Long Term Note Payable

On May 1, 2014, the company entered into a 36 month note

payable of $20,000.

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

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

Total interest accrued as of September 30, 2014

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

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

Total interest accrued as of September 30, 2014 was $3,393.

There is no conversion feature associated with this promissory

Note Payable –

Related Party

On December 30,

2011, the Company entered into a note payable in the amount of $30,000.

The note bears interest at ten percent (10%) per annum

and was due on February 28, 2012 with no conversion feature.

Total interest accrued as of December 3 1 , 2014 was $ 1, 611 .

Note Payable Related Party

On December 30, 2011, the Company entered into a note payable in the amount of $ 30,000 .

The note bears

interest at ten percent ( 10 %) per annum and was due on February 28, 2012 with no conversion feature .

This note extended under the same terms and conditions to March 31, 2015 .

Total interest accrued as of September 30, 2014 was $8,014.

On January 13, 2012,

the Company entered into two separate promissory notes, which are non-convertible, in the amount of $35,000 each for an aggregate

amount of $70,000.

Total interest accrued as of December 3 1 , 2014 was $ 8,770 .

On January 13, 2012, the Company entered into two separate promissory notes , which are non-convertible, in the amount of $ 35,000 each for an aggregate amount of $ 70,000 .

The notes bear interest at nine percent ( 9 %) per annum and are due and payable on or before January 10, 2013.

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

financial institution.

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

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

The underlying loan requires

that the Company pay to the lenders financial institution monthly payments of $1,033 on or before the 1st day of each month, beginning

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

The company has paid $10,642

in principal leaving a balance of $53,558 at September 30, 2014.

On February 26,

2013, we executed a promissory note with one of our shareholders, for $65,000 at 15% interest per annum, secured by seven of our

sales orders to finance inventory purchases.

Minimum monthly payments of 1.5 % of the loan balances are required and are submitted to Lenders financial institution.

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

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

The underlying loan requires that the Company pay to the lenders financial institution monthly payments of $ 1,033 on or before the 1 st day of each month, beginning May 1, 2013, and continuing each month in like amount until the final payment due on April 1, 2020.

The company has paid $ 12,524 in principal leaving a balance of $ 51,676 at December 31 , 2014 .

On February 26, 2013, we executed a promissory note with one of our shareholders, for $ 65,000 at 15 % interest per annum, secured by seven of our sales orders to finance inventory purchases.

The promissory note was due on or before April 20, 2013.

There is no conversion feature

associated with this promissory note.

There is no conversion feature associated with this promissory note.

A payment of $ 20,000 was made against the principal on the note on April 1, 2013.

The remaining

$45,000 was extended and made part of the $95,000 convertible promissory note issued on May 24, 2013 which included an additional

$50,000 promissory note as describe in the 8-K filed on May 24, 2013, with a maturity date of August 24, 2016 ( See Convertible

Note Paya ble –

Related Party ).

The remaining $ 45,000 was extended and made part of the $ 95,000 convertible promissory note issued on May 24, 2013 which included an additional $ 50,000 promissory note as describe in the 8-K filed on May 24, 2013, with a maturity date of August 24, 2016 ( See Convertible Note Payable Related Party ) .

The debt discount was calculated as $ 21,923 .

This note was converted on July 21,

2014 with total accrued interest of $6,041 into 3,108,944 shares.

During the period ended September 30, 2014, $1,639 discount

was amortized and the remaining debt discount of $15,322 was fully expensed upon conversion.

Due to conversion within the terms

of the note, no gain or loss was recognized.

On March 22, 2013,

we entered into a loan transaction that bears interest at a rate of 8% per annum, secured with one of our board members in the

amount of $25,000.

This note was converted on July 21, 2014 with total accrued interest of $ 6,041 into 3,108,944 shares.

During the period ended September 30, 2014 , $ 1,639 discount was amortized and the remaining debt discount of $ 15,322 was fully expensed upon conversion .

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

On March 22, 2013, we entered into a loan transaction that bears interest at a rate of 8 % per annum, secured with one of our board members in the amount of $ 25,000 .

The note is secured by three of our accounts receivables to finance inventory purchases.

This note was extended

on September 30, 2013 and reclassed to a long term convertible promissory note with board member and shareholder of an 8% Convertible

Promissory Note in the amount of $25,000, convertible into shares of common stock of the Company, at a price of $0.04 per share

( See Convertible Note Payable –

Related Party) , which represents a 50% discount from the market price as of the date

This note was extended on September 30, 2013 and reclassed to a long term convertible promissory note with board member and shareholder of an 8 % Convertible Promissory Note in the amount of $ 25,000 , convertible into shares of common stock of the Company, at a price of $ 0.04 per share ( See Convertible Note Payable Related Party) , which represents a 50 % discount from the market price as of the date of the note.

The note is due 36 months from the date of the note on or before September 30, 2016.

The debt discount was calculated

The debt discount was calculated as $ 25,000 .

This note was converted on July 21, 2014 with total accrued interest as of July 21, 2014 was $ 1,611 into 665,274 shares.

1 unchanged sentence

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

On January 22, 2014

the Company entered into a loan transaction with one of our board members in the amount of $200,000, which was non-convertible.

The note bears interest at a rate of 15% per annum, secured by Catapult PO NA1314-001 to finance inventory purchases and payoff

the promissory notes dated January 7 and January 15, 2014.

The promissory note and all accrued interest were due and payable on

April 30, 2014.

On January 22, 2014 the Company entered into a loan transaction with one of our board members in the amount of $ 200,000 , which was non-convertible .

The note bears interest at a rate of 15 % per annum, secured by Catapult PO NA 1314 - 001 to finance inventory purchases and payoff the promissory notes dated January 7 and January 15, 2014.

The promissory note and all accrued interest were due and payable on April 30, 2014.

This note was paid in full including all accrued interest on April 8, 2014.

February 13, 2014 the Company entered into a loan transaction with one of our board members in the amount of $250,000, which was

non-convertible.

The note bears interest at a rate of 15% per annum, secured by Tatweer Company for Educational Services Mobile

Outreach Saudi Work Order 001 to finance inventory purchases.

The promissory note and all accrued interest were due and payable

on May 13, 2014.

This note was extended to September 30, 2014, to account for the delay in invoice acceptance and payment by Tatweer

Company for Educational Services.

On September 9, 2014, the Company accrued and paid interest in the amount of $20,445.

As of September

30, 2014 the remaining principal balance of $250,000 remains outstanding.

On February 21,

2014 the Company entered into a loan transaction with one of our board members in the amount of $70,000, which was non-convertible.

On February 13, 2014 the Company entered into a loan transaction with one of our board members in the amount of $ 250,000 , which was non-convertible .

The note bears interest at a rate of 15 % per annum, secured by Tatweer Company for Educational Services Mobile Outreach Saudi Work Order 001 to finance inventory purchases.

The promissory note and all accrued interest were due and payable on May 13, 2014.

This note was extended to September 30, 2014, to account for the delay in invoice acceptance and payment by Tatweer Company for Educational Services.

On September 9, 2014, the Company accrued and paid interest in the amount of $ 20,445 On October 21, 2014 this note was paid off when the Company entered into at 10 % Convertible Promissory Note with a current board member and shareholder , in the amount of $ 200,0 00 , convertible into shares of common stock of the Company, at the market price of $ 0.0 4 .

The note is due on or before October 22, 2015 .

T he remaining $ 50,000 was paid in full by the issuance of that certain Promissory Note of even date herewith in the principal amount of $ 870,457 .

Total interest accrued as of December 3 1 , 2014 was $ 5,137 .

On February 21, 2014 the Company entered into a loan transaction with one of our board members in the amount of $ 70,000 , which was non-convertible .

The note bears interest at a rate of 15 % per annum, secured by Catapult Learning PO NA 1314 - 090 to finance inventory purchases.

The promissory note and all accrued interest were due and payable on April 30, 2014.

This note was paid in full including all accrued

interest on April 22, 2014.

March 4, 2014 the Company entered into a loan transaction with one of our board members in the amount of $50,000.

The note is non-convertible

and bears interest at a rate of 15% per annum, secured by T4EDU Training Academy Contract to finance inventory purchases.

The promissory

note and all accrued interest were due and payable on April 30, 2014.

$37,500 of this note was paid during the period and the remaining

$12,500 was extended and rolled into a new promissory note dated July 21, 2014 for $105,000 (includes a $75,000 and $17,500 promissory

notes) with interest at 15% per annum due on or before August 30, 2014.

Total accrued interest as of September 30, 2014 on

the original note was $1,377.

(See note dated July 21, 2014)

April 3, 2014, the Company executed a promissory note with one of our board members, for $60,000 at 15% interest per annum, secured

by sales orders finance operations and inventory purchases.

This note was paid in full including all accrued interest on April 22, 2014.

On March 4, 2014 the Company entered into a loan transaction with one of our board members in the amount of $ 50,000 .

The note is non-convertible and bears interest at a rate of 15 % per annum, secured by

T 4 EDU Training Academy Contract to finance inventory purchases.

The promissory note and all accrued interest were due and payable on April 30, 2014.

$ 37,500 of this note was paid during the period and the remaining $ 12,500 was extended and rolled into a new promissory note dated July 21, 2014 for $ 105,000 (includes a $ 75,000 and $ 17,500 promissory notes) with interest at 15 % per annum due on or before August 30, 2014.

On October 21, 2014 this $ 105,000 note was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015 .

Total interest accrued as of December 3 1 , 2014 was $ 906 .

On April 3, 2014, the Company executed a promissory note with one of our board members, for $ 60,000 at 15 % interest per annum, secured by sales orders finance operations and inventory purchases.

The promissory note was due April 30, 2014.

There is no conversion

feature associated with this promissory note.

The note was replaced with on note dated July 28, 2014.

Total interest accrued up

through date of replacement was $2,860.

April 15, 2014, the Company executed a promissory note with one of our board members, for $160,000 at 15% interest per annum, secured

by sales orders to finance operations and inventory purchases.

There is no conversion feature associated with this promissory note.

The note was extended on April 30, 2014 to September 30, 2014.

The note was replaced with note dated July 28, 2014 for $ 210,000 .

Total interest accrued up through date of replacement was $ 2,860 .

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

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

On June 1, 2014 this note holder became a board member.

There is no conversion feature associated with this promissory note .

Total interest accrued as of December 3 1 , 2014 was $ 5,708 .

On April 15, 2014, the Company executed a promissory note with one of our board members, for $ 160,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due June 30, 2014.

There is no conversion

feature associated with this promissory note.

There is no conversion feature associated with this promissory note.

The note was extended to September 30, 2014.

This note was replaced by three different

This note was replaced by three different notes:

$ 25,000 note payable executed June 3 , 2014 (which was replaced by a $ 25,000 note dated June 28, 2014) ;

$60,000 note payable

executed August 20, 2014;

$75,000 of the $150,000 note payable executed June 27, 2014 (which was replaced by three other notes

dated August 20, 2014, August 07, 2014 and July 28, 2014).

Total Interest accrued during the period, up through the dates of replacement,

May 1, 2014 the Company executed a promissory note with one of our shareholders and board members, for $60,000 at 15% interest

per annum, secured by sales orders to finance operations and inventory purchases.

$ 60,000 note payable executed August 20, 2014 ;

$ 75,000 of the $ 150,000 note payable executed June 27, 2014 (which was replaced by three other notes dated August 20, 2014, August 07, 2014 and July 28, 2014) .

On October 21, 2014 these notes were paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

Total Interest accrued during the period, up through the dates of replacement, is $ 4,159 .

On May 1, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 60,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due July 15, 2014.

is no conversion feature associated with this promissory note.

There is no conversion feature associated with this promissory note.

The note was extended to September 30, 2014.

During the period ended

September 30, 2014, the notes were separated split into two notes, $17,500 and $42,500 and included in two separate notes dated

July 21, 2014 for $105,000 and July 28, 2014 for $210,000, respectively.

May 5, 2014 the Company executed a promissory note with one of our shareholders and board members, for $145,000 at 15% interest

per annum, secured by sales orders to finance operations and inventory purchases.

During the period ended September 30, 2014, the note s were separated split into two notes, $ 17,500 and $ 42,500 and included in two separate notes dated July 21, 2014 for $ 105,000 and July 28, 2014 for $ 210,000 , respectively.

On October 21, 2014 the notes for $ 105,000 and $ 210,000 were paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

Total interest accrued as of December 3 1 , 2014 w ere $ 906 and $ 1,812 respectively.

On May 5, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 145,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due July 15, 2014.

is no conversion feature associated with this promissory note.

There is no conversion feature associated with this promissory note.

The note was extended to September 30, 2014.

Total Interest accrued

as of September 30, 2014 is 3,277.

May 16, 2014 the Company executed a promissory note with one of our shareholders and board members, for $150,000 at 15% interest

per annum, secured by sales orders to finance operations and inventory purchases.

On October 21, 2014 this note was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015 .

Total interest accrued as of December 3 1 , 2014 was $ 2,384 .

On May 16, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 150,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due September 30, 2014.

There is no conversion feature associated with this promissory note.

$75,000 of this note was added to a $150,000 note payable

executed June 21, 2014.

$ 75,000 of this note was added to a $ 150,000 note payable executed June 2 1 , 2014 .

The other $ 75,000 was added to another $ 150,000 note dated June 27, 2014.

Total interest accrued up through

dates of replacement was $3,329.

May 21, 2014 the Company executed a promissory note with one of our shareholders and board members, for $50,000 at 15% interest

per annum, secured by sales orders to finance operations and inventory purchases.

Total i nterest accrued up through dates of replacement was $ 3,329 .

On May 21, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 50,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due August 30, 2014.

There is no conversion feature associated with this promissory note.

This promissory note was rolled into promissory note dated

July 28, 2014 for $210,000.

Total interest accrued up through the date of replacement was $5,523.

June 3, 2014 the Company executed a promissory note with one of our shareholders and board members (part of a replacement note

for promissory note dated April 15, 2014), for $25,000 at 15% interest per annum, secured by sales orders to finance operations

and inventory purchases.

This promissory note was rolled into promissory note dated July 28, 2014 for $ 210,000 .

All interest was paid at the time of roll into the $ 210,000 note.

On October 21, 2014 the $ 210,000 note was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

On June 3, 2014 the Company executed a promissory note with one of our shareholders and board members

(part of a replacement note for promissory note dated April 15, 2014) , for $ 25,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due September 3, 2014.

There is no conversion feature associated with this promissory

There is no conversion feature associated with this promissory note.

This promissory note was rolled into a promissory note dated July 28, 2014 for $ 210,000 .

Total Interest accrued up through

the date of replacement was $565.

June 27, 2014 the Company executed a promissory note with one of our shareholders and board members, for $150,000 at 15% interest

per annum (compose of two separate $75,000 notes that was previously issued and replaced dated May 16, 2014 and April 16,2014,

respectively), secured by sales orders to finance operations and inventory purchases.

All interest was paid at the time of roll into the $ 210,000 note.

On October 21, 2014 the $ 210,000 note was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

On June 27, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 150,000 at 15 % interest per annum (compose of two separate $ 75,000 notes that was previously issued and replaced dated May 16, 2014 and April 16,2014, respectively) , secured by sales orders to finance operations and inventory purchases.

The promissory note was due September 30, 2014.

4 unchanged sentences

and $ 32,500 note executed on July 28, 2014.

The remaining principal and accrued interest balance as of September 30, 2014 is $29,500

and $3,165, respectively.

July 21, 2014 the Company executed a promissory note with one of our shareholders and board members, for $105,000 at 15% interest

per annum, secured by T4EDU Contract 0006/2014, to finance operations and inventory purchases.

The remaining principal balance of $ 29,500 was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 on October 21, 2014.

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

Total interest accrued as of the date of pay off was $ 242 .

On July 21, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 105,000 at 15 % interest per annum, secured by T 4 EDU Contract 0006 / 2014 , to finance operations and inventory purchases.

The promissory note is due October 31, 2014.

There is no conversion feature associated with this promissory note.

This promissory note composed of prior issued notes

dated March 4, 2014 for $12,500;

This promissory note composed of prior issued notes dated March 4, 2014 for $ 12,500 ;

May 1, 2014 for $ 17,500 ;

and May 16, 2014 for $ 75,000 .

Total Interest accrued as of September

30, 2014 was $2,244.

July 21, 2014, the Company converted $646,500 in convertible long term related party, notes payable, and the related $49,874 in

accrued interest (individual notes identified in the convertible related parties notes payable section of (See Convertible note

related party).

On October 21, 2014 the note for $ 105,000 was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

Total interest accrued as of December 3 1 , 2014 w ere $ 906 .

On July 21, 2014, the C ompany converted $ 646,500 in convertible long term related party, notes payable, and the related $ 49,874 in accrued interest (individual notes identified in the convertible related parties notes payable section of (See Convertible note related party).

The strike price varied from $ 0.0325 to $ 0 .065 depending on the note terms.

The conversion resulted in 18,455,666

shares of common stock.

July 28, 2014, the Company executed a promissory note with one of our shareholders and board members, for $210,000 at 15% interest

per annum, secured by T4EDU Contract 0006/2014, to finance operations and inventory purchases.

The conversion resulted in 18,455,666 shares of common stock.

On July 28, 2014, the Company executed a promissory note with one of our shareholders and board members, for $ 210,000 at 15 % interest per annum, secured by T 4 EDU Contract 0006 / 2014 , to finance operations and inventory purchases.

The promissory note is due October 31, 2014.

There is no conversion feature associated with this promissory note.

This promissory note composed of prior issued notes

dated April 3, 2014 for $60,000;

This promissory note composed of prior issued notes dated April 3, 2014 for $ 60,000 ;

May 1, 2014 for $ 42,500 ;

May 21, 2014 for $ 50,000 ;

June 3, 2014 for $25,000 and June 27, 2014

June 3, 2014 for $ 25,000 and June 27, 2014 for $ 32,500 .

Total Interest accrued as of September 30, 2014 was $ 5,523 .

July 28, 2014 the Company executed a promissory note with one of our shareholders and board members, for $100,000 at 5% interest

per annum, secured by sales orders to finance operations and inventory purchases.

All interest was paid at the time of roll into the $ 210,000 note.

On October 21, 2014 the $ 210,000 note was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

On July 28, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 100,000 at 5 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note is due November 28, 2014.

There is no conversion feature associated with this promissory note.

Total interest accrued as of September 30, 2014 is $877

August 7, 2014 the Company executed a promissory note with one of our shareholders and board members, for $25,000 at 15% interest

per annum, secured by sales orders to finance operations and inventory purchases.

The note was paid in full on December 30, 2014.

Total interest accrued accrued and paid at payoff was$ 2,137 .

On August 7, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 25,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due October 31, 2014.

1 unchanged sentence

This note replaced prior issued note dated June 27, 2014.

Total interest accrued as of September 30, 2014 was $555.

August 20, 2014 the Company executed a promissory note with one of our shareholders and board members, for $123,000 at 15% interest

per annum, secured by sales orders to finance operations and inventory purchases.

On October 21, 2014 this note was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

Total interest accrued as of December 3 1 , 2014 was $ 215 .

On August 20, 2014 the Company executed a promissory note with one of our shareholders and board members, for $ 123,000 at 15 % interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due November 30, 2014.

There is no conversion feature associated with this promissory note.

This notes replaced prior issued note dated June 27, 2014

for $63,000 and April 15, 2014 for $60,000.

Total Interest accrued as of September 30, 2014 was $2,072.

This notes replaced prior issued note dated June 27, 2014 for $ 63,000 and April 15, 2014 for $ 60,000 .

On October 21, 2014 this note was paid off by an issuance of a promissory note with one of our board members in the amount of $ 870,457 .

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

Total interest accrued as of December 3 1 , 2014 was $ 1,062 .

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

The note is non-convertible and bears and interest rate of 10 % per annum , and due October 22, 2015.

This note includes new cash le nt to Borrower under this note of $ 175,000 .

This note includes $ 7,957 of accrued interest on the paid off notes listed below.

This note pays off the following notes:

$ 50,000 of the February 11, 2014 $ 250,000 Convertible long term related party;$ 145,000 dated May 7, 2014;

$ 29,500 of the June 27, 2014 $ 105,000 ;

$ 105,000 dated July 21, 2014;

$ 210,000 dated July 28, 2014;

$ 25,000 dated 08 / 08 / 2014 ;

$ 123,000 dated August 20, 2014 .

Total interest accrued as of December 3 1 , 2014 was $ 16,932 .

On October 22, 2014 the Company executed a promissory note with a related party for credit up to $ 20,000 at 12 % interest per annum .

The promissory note was due December 3 1 , 2014 .

There is no conversion feature associated with this promissory note.

The principle balance on December 31, 2014 was $ 14,217 .

This note was subsequently extended to February 15, 2015.

Total interest accrued as of December 3 1 , 2014 was $ 221 .

Line of Credit

On September 13, 2011, the Company drew down a line of

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

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

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

The Company makes

variable monthly payments.

The Company makes variable monthly payments.

As of September 30, 2014, the Company has paid $ 1 6 , 189 in principal leaving a balance of $ 22,861 payable.

Convertible Note Payable –

Non-related party

On August 1, 2012, the Company issued amendments to the

convertible note agreements (convertible into common stock at a rate of $0.15 per share) in the aggregated amount of $215,000 and

extended the due date with the repayments in the amount of $40,000 per quarter to begin April, 2013, and the final payments due

in August, 2014, with any remaining balance due at that time.

In consideration for extending the due date of the promissory notes,

the expiration dates on the warrants issued (fully expensed in the prior period) on March 31, 2011 and June 27, 2011, were amended

and extended an additional three years, making the new expiration dates August 1, 2017.

At the Lender’s sole option, Lenders

may elect to receive payment of their respective note and all accrued interest in restricted common stock of the Borrower at the

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

Subsequently and effective June 7, 2013, we executed an amendment

to the loan transaction.

The amended transaction involved the extension of the Promissory Note from April 30, 2013 to April 30,

2016, with the creditors waiving any default under the previous note.

The company made interest payments to each of the eight note

holders for all accrued interest from August 1, 2012 to April 30, 2013 for consideration of the extension.

On the fourth extension,

all accrued interest was combined with the original principal amount as of July 31, 2012.

The company has agreed to make quarterly

interest payments to each of the note holders during the term of the extension.

All other terms of the previous Promissory Note,

Security Agreement and related warrants remain in full force and effect.

As of September 30, 2014, the ending principle balance

was $243,745, including the related party convertible note balance of $34,011 noted below.

Interest accrued as of September 30,

2014 for the total set of notes was $23,420.

On April 30, 2013, the Company entered into a loan transaction

with an “accredited investor”

for a Promissory Note, payable with interest at 8% per annum in the amount of $5,000,

convertible into shares of common stock of the Company at a price of $0.20 per share.

The note is due twenty-four months from the

date of the note, on or before August 31, 2015.

Total accrued interest as of September 30, 2014 was $601.

On July 30, 2013, the Company entered into a loan transaction

with an “accredited investor”

for a promissory Note, payable with interest at 8% per annum in the amount of $5,000,

convertible into shares of common stock of the Company at a price of $0.20 per share.

The note is due twenty-four months from the

date of the note, on or before July 30, 2015.

No debt discount was recognized as the conversion price is considered “out

of the money”, therefore no discount was necessary.

Total accrued interest as of September 30, 2014 was $520.

Convertible Note Payable –

Related Party

For the transactions described above in regard to the

original $215,000 convertible notes, $34,011 was loaned from a related party and has been separated out as described in the Company’s

financial statements and accompanying notes at March 31, 2013.

Interest expense for the related party convertible note with the

ending September 30, 2014 principle balance was $3,945.

On February 26,

2013, we executed a promissory note with one of our shareholders, for $65,000 at 15% interest per annum, secured by seven of our

sales orders to finance inventory purchases.

Convertible Note Payable Non-related party

On August 1, 2012, the Company issued amendments to the convertible note agreements (convertible into common stock at a rate of $ 0.15 per share) in the aggregated amount of $ 215,000 and extended the due date with the repayments in the amount of $ 40,000 per quarter to begin April, 2013, and the final payments due in August, 2014, with any remaining balance due at that time.

In consideration for extending the due date of the promissory notes, the expiration dates on the warrants issued (fully expensed in the prior period) on March 31, 2011 and June 27, 2011, were amended and extended an additional three years, making the new expiration dates August 1, 2017.

At the Lenders sole option, Lenders may elect to receive payment of their respective note and all accrued interest in restricted common stock of the Borrower at the price per share of said common stock at same rate as the warrants.

Subsequently and effective June 7, 2013, we executed an amendment to the loan transaction.

The amended transaction involved the extension of the Promissory Note from April 30, 2013 to April 30, 2016, with the creditors waiving any default under the previous note.

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

On the fourth extension, all accrued interest was combined with the original princip al amount as of July 31, 2012.

The company has agreed to make quarterly interest payments to each of the note holders during the term of the extension.

All other terms of the previous Promissory Note, Security Agreement and related warrants remain in full force and effect.

As of September 30, 2014, the ending principle balance was $ 243,745 , including the related party convertible note balance of $ 34,011 noted below.

Interest accrued as of December 31 , 2014 for the total set of notes was $ 30,084 .

On April 30, 2013, the Company entered into a loan transaction with an accredited investor for a Promissory Note, payable with interest at 8 % per annum in the amount of $ 5,000 , convertible into shares of common stock of the Company at a price of $ 0.20 per share.

The note is due twenty - four months from the date of the note, on or before August 31, 2015.

Total accrued interest as of December 31 , 2014 was $ 701 .

On July 30, 2013, the Company entered into a loan transaction with an accredited investor for a p romissory Note, payable with interest at 8 % per annum in the amount of $ 5,000 , convertible into shares of common stock of the Company at a price of $ 0.20 per share.

The note is due twenty - four months from the date of the note, on or before July 30, 2015.

No debt discount was recognized as the conversion price is considered out of the money, therefore no discount was necessary.

Total accrued interest as of December 31 , 2014 was $ 562 .

Convertible Note Payable Related Party

For the transactions described above in regard to the original $ 215,000 convertible notes, $ 34,011 was loaned from a related party and has been separated out as described in the Companys financial statements and accompanying notes at March 31, 2013.

Interest expense for the related party conv ertible note with the ending December 31 , 2014 principle balance was $ 4,802.

On February 26, 2013, we executed a promissory note with one of our shareholders, for $ 65,000 at 15 % interest per annum, secured by seven of our sales orders to finance inventory purchases.

The promissory note was due on or before April 20, 2013.

There is no conversion feature

associated with this promissory note.

A payment of $20,000 was made against the principal on the note on April 1, 2013.

The remaining

$45,000 was extended and made part of the $95,000 convertible promissory note issued on May 24, 2013 which included an additional

$50,000 promissory note as describe in the 8-K filed on May 24, 2013, with a maturity date of August 24, 2016 and conversion rate

There is no conversion feature associated with this promissory note.

of $ 20,000 was made against the principal on the note on April 1, 2013.

The debt discount was calculated as $ 21,923 .

This note was converted on July 21, 2014 with total accrued interest of

$6,041 into 3,108,944 shares.

During the period ended September 30, 2014, $1,639 discount was amortized and the remaining debt

discount of $15,322 was fully expensed upon conversion.

This note was converted on July 21, 2014 with total accrued interest of $ 6,041 into 3,108,944 shares.

During the period ended September 30, 2014 , $ 1,639 discount was amortized and the remaining debt discount of $ 15,322 was fully expensed upon conversion .

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

On February 29, 2012, the Company entered into three separate

convertible promissory notes in the aggregate amount of $100,000.

The notes bear interest at ten percent (10%) per annum and were

due on May 30, 2012.

At the sole option of each respective Lender, the outstanding balance of the notes may be converted into shares

of restricted Rule 144 common stock of the Borrower at a price per share of $0.05.

In the event Lender elects to convert any outstanding

balance due under this note into such shares, Lender shall give written notice to the Borrower seven (7) days prior to the effective

date of such exercise.

At Borrower’s sole option, Borrower may elect to pay Lender in cash up to one-half (1/2) of the then

principal and interest due under the note.

In such event, the remaining balance of principal and interest shall be converted as

provided under the note agreement.

On June 14, 2012, one of the notes, in the amount of $50,000, was converted into 1,028,770 shares

of our “restricted”

common stock in accordance with the terms of the convertible promissory note.

The remaining two

notes were extended, with no changes to the terms, were due and payable on June 30, 2014.

On July 21, 2014 the principal balance

of the notes at $35,000 and $15,000 totaling to the $50,000 plus the accrued interest of $11,959 was converted into 1,239,178 shares

of our “restricted”

common stock in accordance with the terms of the convertible promissory note.

Discount recognized

on the convertible note were fully expensed in the prior period.

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

was recognized.

On December 3, 2012, the Company entered into a long term

convertible promissory note with a board member and shareholder in the amount of $45,000.

The note is convertible into common stock

at a rate of $0.04 per share.

The note bears interest at eight (8%) per annum and is due 36 months from the date of the agreement,

on or before December 03, 2015.

The proceeds from the note were used by the company to pay off the Security Purchase Agreement

(tranche 2) issued on June 4, 2012, along with any accrued interest, penalties and administrative costs.

The debt discount was

calculated as $18,255, of which $5,300 was amortized during the twelve months ended March 31, 2014, leaving the discount balance

remaining of $11,722.

This note was converted on July 21, 2014 with total accrued interest

of $1,105 into 1,152,617 shares of our “restricted”

common stock in accordance with the terms of the convertible

promissory note .

During the period ended September 30, 2014, $1,471 discount was amortized

and the remaining $10,251 was fully expensed upon conversion of the promissory note.

Due to conversion within the terms of the

note, no gain or loss was recognized.

On January 11, 2013, the Company entered into an 8% Convertible

Promissory Note with an “accredited investor,”

in the amount of $21,500, convertible into shares of common stock of

the Company, at the market price of $0.065.

On February 29, 2012, the Company entered into three separate convertible promissory notes in the aggregate amount of $ 100,000 .

The notes bear interest at ten percent ( 10 %) per annum and were due on May 30, 2012.

At the sole option of each respective Lender, the outstanding balance of the notes may be converted into shares of restricted Rule 144 common stock of the Borrower at a price per share of $ 0.05 .

In the event Lender elects to convert any outstanding balance due under this note into such shares, Lender shall give written notice to the Borrower seven ( 7 ) days prior to the effective date of such exercise.

At Borrowers sole option, Borrower may elect to pay Lender in cash up to one -half ( 1 / 2 ) of the then principal and interest due under the note.

In such event, the remaining balance of principal and interest shall be converted as provided under the note agreement.

On June 14, 2012, one of the notes, in the amount of $ 50,000 , was converted into 1,028,770 shares of our restricted common stock in accordance with the terms of the convertible promissory note.

The remaining two notes were extended, with no changes to the terms, were due and payable on June 30, 2014.

On J uly 21 , 2014 the princip al balance of the notes at $ 35,000 and $ 15,000 totaling to the $ 50,000 plus the accrued interest of $ 11,959 was converted into 1,239,178 shares of our restricted common stock in accordance with the terms of the convertible promissory note.

Discount recognized on the convertible note were fully expensed in the prior period.

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

On December 3, 2012, the Company entered into a long term convertible promissory note with a board member and shareholder in the amount of $ 45,000 .

The note is convertible into common stock at a rate of $ 0.04 per share.

The note bears interest at eight ( 8 %) per annum and is due 36 months from the date of the agreement, on or before December 03, 2015.

The proceeds from the note were used by the company to pay off the Security Purchase Agreement (tranche 2 ) issued on June 4, 2012, along with any accrued interest, penalties and administrative costs.

The debt discount was calculated as $ 18,255 , of which $ 5,300 was amortized during the twelve months ended March 31, 2014, leaving the discount balance remaining of $ 11,722 .

This note was converted on July 21, 2014 with total accrued interest of $ 1,105 into 1,152,617 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

During the period ended September 30, 2014, $ 1,471 discount was amortized and the remaining $ 10,251 was fully expensed upon conversion of the promissory note.

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

On January 11, 2013, the Company entered into an 8 % Convertible Promissory Note with an accredited investor, in the amount of $ 21,500 , convertible into shares of common stock of the Company, at the market price of $ 0.065 .

The note is due thirty six months from the date of note.

The note is secured by a secondary

security interest in all of the Company’s intellectual property.

The proceeds received by the Company from the sale of this

note were used by the Company for prepaying the Promissory Note dated June 5, 2012 (Tranche 3) issued to Asher Enterprises, Inc.,

as well as any administrative costs associated with the payment.

This final payment completes and pays off all outstanding notes

with Asher Enterprises.

The note is secured by a secondary security interest in all of the Companys intellectual property.

The proceeds received by the Company from the sale of this note w ere used by the Company for prepaying the Promissory Note dated June 5, 2012 (Tranche 3 ) issued to Asher Enterprises, Inc., as well as any administrative costs associated with the payment.

This final payment completes and pays off all outstanding notes with Asher Enterprises.

The Company recognized a discount on the debt issued related to the derivative liability.

This debt discount

was calculated as $9,285, of which $4,592 was amortized during the twelve months ended March 31, 2014.

note was converted on July 21, 2014 with total accrued interest of $1,385 into 352,084 shares of our “restricted”

common stock in accordance with the terms of the convertible promissory note .

period ended September 30, 2014, $740 discount was amortized and the remaining $3,953 was fully expensed upon conversion of the

promissory note.

This debt discount was calculated as $ 9,285 , of which $ 4 , 592 was amortized during the twelve months ended March 31, 2014.

This note was converted on July 21, 2014 with total accrued interest of $ 1,385 into 352,084 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

During the period ended September 30, 2014, $ 740 discount was amortized and the remaining $ 3,953 was fully expensed upon conversion of the promissory note.

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

On March 22, 2013,

we entered into a loan transaction that bears interest at a rate of 8% per annum, secured with one of our board members in the

amount of $25,000.

On March 22, 2013, we entered into a loan transaction that bears interest at a rate of 8 % per annum, secured with one of our board members in the amount of $ 25,000 .

The note is secured by three of our accounts receivables to finance inventory purchases.

This note was extended

on September 30, 2013 and reclassed to a long term convertible promissory note with board member and shareholder of an 8% Convertible

Promissory Note in the amount of $25,000, convertible into shares of common stock of the Company, at a price of $0.04 per share,

which represents a 50% discount from the market price as of the date of the note.

The note is due 36 months from the date of the

note on or before September 30, 2016.

This note was extended on September 30, 2013 and reclassed to a long term convertible promissory note with board member and shareholder of an 8 % Convertible Promissory Note in the amount of $ 25,000 , convertible into shares of common stock of the Company, at a price of $ 0.04 per share, which represents a 50 % discount from the market price as of the date of the note.

The note is due 36 months from the date of the note on or before September 30, 2016.

The debt discount was calculated as $ 25,000 .

This note was converted on July 21, 2014 with

total accrued interest as of July 21, 2014 was $1,611 into 665,274 shares.

During the period ended September 30, 2014, $455 discount

was amortized and the remaining $21,499 was fully expensed up conversion.

Due to conversion within the term of the note, no gain

or loss was recognized.

On September 30, 2013, the Company entered into a long

term convertible promissory note with board member and shareholder of an 8% Convertible Promissory Note in the amount of $150,000,

convertible into shares of common stock of the Company, at a price of $0.04 per share, which represents a 50% discount from the

market price as of the date of the note.

The note is due 36 months from the date of the

note on or before September 30, 2016.

The debt discount

was calculated as $150,000, of which $18,579 was amortized during the twelve months ended March 31, 2014, leaving the discount

balance remaining of $131,421.

This note was converted on July 21, 2014 with total accrued

interest of $9,666 into 3,991,644 shares of our “restricted”

common stock in accordance with the terms of the

convertible promissory note .

During the period ended September 30, 2014, $2,728 was amortized

and the remaining $128,693 was fully expensed upon conversion of the promissory note.

Due to conversion within the terms of the

note, no gain or loss was recognized.

On September 30, 2013, the Company entered into a Promissory

Note in the amount of $260,000 with one of our board members, payable with interest at 10% per annum, in cash on or before November

This note was converted on July 21, 2014 with total accrued interest as of July 21, 2014 was $ 1,611 into 665,274 shares.

During the period ended September 30, 2014, $ 455 discount was amortized and the remaining $ 21,499 was fully expensed up conversion.

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

On September 30, 2013, the Company entered into a long term convertible promissory note with board member

and shareholder of an 8 % Convertible Promissory Note in the amount of $ 150,000 , convertible into shares of common stock of the Company, at a price of $ 0.04 per share, which represents a 50 % discount from the market price as of the date of the note.

The note is due 36 months from the date of the note on or before September 30, 2016.

The debt discount was calculated as $ 150,000 , of which $ 18,579 was amortized during the twelve months ended March 31, 2014, leaving the discount balance remaining of $ 131,421 .

This note was converted on July 21, 2014 with total accrued interest of $ 9,666 into 3,991,644 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

During the period ended September 30, 2014, $ 2,728 was amortized and the remaining $ 128,693 was fully expensed upon conversion of the promissory note.

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

On September 30, 2013, the Company entered into a Promissory Note in the amount of $ 260,000 with one of our board members, payable with interest at 10 % per annum, in cash on or before November 29, 2013.

The Promissory Note funded payables and other corporate purposes of borrower.

This note is secured by that certain license

agreement and other agreements between borrower and Kindle Education, now Creya Learning.

A long-term Convertible Promissory Note

(convertible at a rate of $0.035 per share) was executed on January 8, 2014 that replaced the September 30, 2013, payable with

interest at 8% per annum on or before January 8, 2017.

The debt discount was calculated as $156,000, of which $22,286 was amortized

during the twelve months ended March 31, 2014, leaving the discount balance remaining of $133,714.

note was converted on July 21, 2014 with total accrued interest of $18,107 into 7,945,925 shares of our “restricted”

common stock in accordance with the terms of the convertible promissory note .

period ended September 30, 2014, $12,251 was amortized and the remaining $121,463 was fully expensed upon conversion of the promissory

This note is secured by that certain license agreement and other agreements between borrower and Kindle Education, now Creya Learning.

A long-term Convertible Promissory Note (convertible at a rate of $ 0.035 per share) was executed on January 8, 2014 that replace d the September 30, 2013, payable with interest at 8 % per annum on or before January 8, 2017.

The debt discount was calculated as $ 156,000 , of which $ 22,286 was amortized during the twelve months ended March 31, 2014, leaving the discount balance remaining of $ 133,714 .

This note was converted on July 21, 2014 with total accrued interest of $ 18,107 into 7,945,925 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

During the period ended September 30, 2014, $ 12,251 was amortized and the remaining $ 121,463 was fully expensed upon conversion of the promissory note.

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

NOTE 8 –

FAIR VALUE OF FINANCIAL INSTRUMENTS

On January 1, 2008, the Company adopted

guidance that defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a

recurring basis, and expands disclosures about fair value measurements.

Beginning on January 1, 2009, the Company also applied

the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis, which includes goodwill and

intangible assets.

The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable

inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained

from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions of what market

participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

On October 21, 2014 the Company entered into at 10 % Convertible Promissory Note with a current board member and shareholder , in the amount of $ 200,0 00 , convertible into shares of common stock of the Company, at the market price of $ 0.0 4 .

The note is due on or before October 22, 2015 .

The debt discount was calculated as $ 50,000 .

During the period ended December 31, 2014, $ 11,429 discount was amortized.

NOTE 8 DERIVATIVE FINANCIAL INSTRUMENTS

The Company generally does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of its financial instruments.

The Company utilizes various types of financing to fund our business needs, including convertible debts with conversion features and other instruments not indexed to our stock.

The convertible notes include fluctuating conversion rates.

The Company uses a lattice model for valuation of the derivative.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and then re-valued at each reporting date, with changes in the fair value reported in income in accordance with ASC 815 .

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the 12 months of the balance sheet date.

The Company, in year ended March 31, 2013, issued convertible notes payable that provide for the issuance of convertible notes with variable conversion provisions.

The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Companys common stock.

The number of shares of common stock to be issued is based on the future price of the Companys common stock.

Due to the fact that the number of shares of common stock issuable is not able to be determined definitively, the equity environment is tainted and all additional convertible debentures and warrants are included in the value of the derivative.

Pursuant to ASC 815 - 15 Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date.

The fair values of the Companys derivative liabilities were estimated at the issuance date and are revalued at each subsequent reporting date, using a lattice model.

The Company eliminated the derivative as of March 31, 2013.

As a result, the loss on derivative liabilities was $- 0 - and $ - 0 - as of December 31, 201 4 and 201 3 .

NOTE 9 FAIR VALUE OF FINANCIAL INSTRUMENTS

On January 1 , 2008 , the Company adopted guidance which defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements.

Beginning on January 1, 2009, the Company also applied the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis, which includes goodwill and intangible assets.

The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used

when available.

Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Companys assumptions of what market participants would use in pricing the asset or liability developed based on

the best information available in the circumstances.

The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

Level 1 - Inputs are unadjusted quoted prices

in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar

assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not

active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.),

and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated

Level 3 - Unobservable inputs that reflect our

assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following schedule summarizes the valuation

of financial instruments at fair value on a recurring basis in the balance sheets as of September 30, 2014 and March 31, 2014:

Fair Value Measurements at September 30, 2014

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.

The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of December 31, 201 4 and March 31, 2014:

Fair Value Measurements at December 31, 2014

Convertible notes

Fair Value Measurements at March 31, 2014

NOTE 9 –

DISCONTINUED OPERATIONS

On July 31, 2013, the Company signed a Memorandum

of Understanding with a Canadian company owned by Joseph Khoury (“JAK”) proposing a purchase agreement in which JAK

shall purchase LabMentors from PCS for USD $150,000.

JAK has agreed to assume 100% of LabMentors outstanding liabilities and to

pay the remainder of the USD $150,000 through a note payable.

The note shall carry an annual interest rate of 3% compounded annually

and be paid over a period of 60 months in equal monthly payments beginning in month 13 of the 60 month period.

This sale was finalized

during the period ending September 30, 2013.

The results of discontinued operations is a

net loss of ($11,933) and ($71,949) for the quarter ended September 30, 2013 and 2012.

The assets and liabilities of PCS LabMentors

were segregated in the balance sheet and appropriately labeled as discontinued.

As of the LabMentors sale, income and expenses

are netted in the income statement and appropriately labeled as discontinued operations.

A full allowance of 50,740 was recorded

for the promissory note.

Convertible notes

NOTE 10 DISCONTINUED OPERATIONS

On July 31, 2013, the Company signed a Memorandum of Understanding with a Canadian company owned by Joseph Khoury (JAK) proposing a purchase agreement in which JAK shall purchase LabMentors from PCS for USD $ 150,000 .

JAK has agreed to assume 100 % of LabMentors outstanding liabilities and to pay the remainder of the USD $ 150,000 through a note payable.

The note shall carry an annual interest rate of 3 % compounded annually and be paid over a period of 60 months in equal monthly payments beginning in month 13 of the 60 month period.

This sale was finalized during the period ending September 30, 2013.

The assets and liabilities of PCS LabMentors were segregated in the balance sheet and appropriately labeled as discontinued.

As of the LabMentors sale, income and expenses are netted in the income statement and appropriately labeled as discontinued operations.

A full allowance of 50,740 was recorded for the promissory note.

As payments are received, the principle payment portion is recognized as Gain On Bad Debt Collection against the note receivable allowance.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Operating Lease Obligation

The Company leases its main office under a non-cancelable

lease agreement accounted for as an operating lease.

Operat ing Lease Obligation

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

The lease expired in May 2012.

This lease was extended for 13 months beginning

June 1, 2012.

Rent expense for the corporate offices was $21,196 and 26,041 for the quarter ended September 30, 2014 and 2013,

and $99,318 and $107,717 for the twelve months ended March 31, 2014 and 2013, respectively, under this lease arrangement.

31, 2013 the Company signed an amendment to the existing contract to reduce the leased square feet to 5,412 for $6,765/ month for

12 months ending December 31, 2014.

The Company leases additional warehouse space

in Boise, Idaho.

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

Rent expense for the corporate offices was $ 14,131 and 26,041 for the quarter ended December 31 , 201 4 and 201 3 , and $ 99,318 and $ 107,717 for the twelve months ended March 31, 201 4 and 201 3 , respectively, under this lease arrangement.

On December 31, 2013 the Company signed an amendment to the existing contract to reduce the

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

The Company leases additional warehouse space in Boise, Idaho.

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

The lease expired in June 2012.

This lease was

extended for 24 months, beginning July 1, 2012.

Rent expense for the warehouse was $3,975 and $3,975 for the three months ended

September 30, 2014 and 2013, respectively.

Anthony Maher brought suit against PCS in January

of 2014, claiming breach of an employment contract, interference with economic expectancy, and fraud.

Settlement was agreed in

principle during mediation on July 9, 2014 as follows:

in exchange for dismissal of the suit, and release of PCS from any liability

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

The Fifth Lease Amendment was entered into for the warehouse space extending the lease period through October 31, 2015.

Rent expense for the warehouse was $ 2,780 and $ 3,975 for the three months ended December 31 , 2014 and 2013 , respectively.

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

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

in exchange for dismissal of the suit, and release of PCS from any liability to Mr.

Maher for any and all claims related to Mr.

Maher’s employment contract with PCS, PCS issued Mr.

Maher 400,000 shares

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

PCS does not admit the allegations or any other wrongdoing, but would rather

settle the matter for a modest amount to avoid the expense of defending it in court.

The settlement agreement was executed on July

Mahers employment contract with PCS, PCS issued Mr.

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

PCS does not admit the allegations or any other wrongdoing, but would rather settle the matter for a modest amount to avoid the expense of defending it in court.

The settlement agreement was execut ed on July 9 , 2014 .

There are no other lawsuits pending involving PCS.

Contingencies

NOTE 11 - STOCKHOLDERS’

During the period ending September 30, 2014,

$77,160 has been accrued in stock payable that will be issued in future periods.

During the period ending September 30, 2014,

the Company expensed amounts related to stock options and warrants granted in the current period as well as prior periods valued

During the period ending September 30, 2014,

the Company issued 750,000 shares of common stock for consulting services.

The shares were valued based on the fair market price

on the date of grant for a total of $37,500.

During the period ending September 30, 2014,

the Company issued 400,000 shares to a related party for settlement of liabilities.

The shares were valued based on the fair market

price on the date of grant for a total of $22,000.

21, 2014, a $95,000 note was converted with total accrued interest of $6,041 into 3,108,944 shares.

Due to conversion within the

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

(See Convertible Note Payable –

Related Party)

On July 21, 2014 the principal balance of the

notes at $35,000 and $15,000 totaling to the $50,000 plus the accrued interest of $11,959 was converted into 1,239,178 shares of

our “restricted”

common stock in accordance with the terms of the convertible promissory note.

Due to conversion within

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

(See Convertible Note Payable –

Related Party)

21, 2014, a $45,000 note was converted with total accrued interest of $1,105 into 1,152,617 shares of our “restricted”

common stock in accordance with the terms of the convertible promissory note .

Due to conversion

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

(See Convertible Note Payable –

Related Party)

21, 2014, a $21,500 note was converted with total accrued interest of $1,385 into 352,084 shares of our “restricted”

common stock in accordance with the terms of the convertible promissory note .

Due to conversion

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

(See Convertible Note Payable –

NOTE 12 - STOCKHOLDERS EQUITY

During the period ending September 30, 2014, $ 77,160 has been accrued in stock payable that will be issued in future periods.

During the period ending September 30, 2014, the Company expensed amounts related to stock options and warrants granted in the current period as well as prior periods valued at $ 11,222 .

During the period ending September 30, 2014, the Company issued 750,000 shares of common stock for consulting services.

The shares were valued based on the fair market price on the date of grant for a total of $ 37,500 .

During the period ended September 30, 2014, the company accrued $ 12,308 payable in Restricted Stock Unit to its non-management directors.

Each restricted stock unit is valued at $ 0.05 , based on the closing price of the Companys common stock at the date of grant.

As of September 30, 201 4 , $ 44,808 has been accrued for director services.

For the directors who chose to defer payment in a prior year an entry was made to book fair market value of the RSU and $ 9,000 was reclassed to stock payable.

During the period ending September 30, 2014, the Company issued 400,000 shares to a related party for settlement of liabilities.

The shares were valued based on the fair market price on the date of grant for a total of $ 22,000 .

On July 21, 2014, a $ 95,000 note was converted with total accrued interest of $ 6,041 into 3,108,944 shares.

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

(See Convertible Note Payable Related Party)

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

(See Convertible Note Payable Related Party)

On July 21, 2014, a $ 45,000 note was converted with total accrued interest of $ 1,105 into 1,152,617 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

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

(See Convertible Note Payable Related Party)

On July 21, 2014, a $ 21,500 note was converted with total accrued interest of $ 1,385 into 352,084 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

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

(See Convertible Note Payable

Related Party)

21, 2014, a $25,000 note was converted with total accrued interest as of July 21, 2014 was $1,611 into 665,274 shares of

our “restricted”

common stock in accordance with the terms of the convertible promissory note .

O n July 21, 2014 , a $ 25,000 note was converted with total accrued interest as of July 21, 2014 was $ 1,611 into 665,274 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

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

(See Convertible Note Payable –

Related Party)

21, 2014, a $150,000 note was converted with total accrued interest of $9,666 into 3,991,644 shares of our “restricted”

common stock in accordance with the terms of the convertible promissory note .

Due to conversion

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

(See Convertible Note Payable –

Related Party)

21, 2014, a $260,000 note was converted with total accrued interest of $18,107 into 7,945,925 shares of our “restricted”

common stock in accordance with the terms of the convertible promissory note .

Due to conversion

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

(See Convertible Note Payable –

Related Party)

During the period ended September 30, 2014,

the company accrued $12,308 payable in Restricted Stock Unit to its non-management directors.

Each restricted stock unit is valued

at $0.05, based on the closing price of the Company’s common stock at the date of grant.

These agreements call for payment

of current year director fees via issuance of restricted stock units over a vesting period of not less than twelve months, and

require continued service for twelve months and reelection at the next annual shareholder meeting.

Farley resigned

from the board on August 1, 2013, forfeiting $13,750.

This amount was removed from Restricted Stock Units payable.

As of September

30, 2014, $44,808 has been accrued for director services.

For the directors who chose to defer payment in a prior year an entry

was made to book fair market value of the RSU, in which $21,000 was recorded to Common Stock and $9,000 was reclassed to stock

(See Convertible Note Payable Related Party)

On July 21, 2014, a $ 150,000 note was converted with total accrued interest of $ 9,666 into 3,991,644 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

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

(See Convertible Note Payable Related Party)

On July 21, 2014, a $ 260,000 note was converted with total accrued interest of $ 18,107 into 7,945,925 shares of our restricted common stock in accordance with the terms of the convertible promissory note .

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

(See Convertible Note Payable Related Party)

During the period ending December 31, 201 4 , $ 0 has been accrued in stock payable that will be issued in future periods.

During the period ending December 31, 2014, the Company issued 1,0 1 0,000 shares of common stock for services.

The shares were valued based on the fair market price on the date of grant for a total of $ 60, 4 00 .

During the period ending December 31, 2014, the Company issued 16,000 shares of common stock for employees bonus.

The shares were valued based on the fair market price on the date of grant for a total of $ 7,760 .

During the period ending December 31, 201 4 , the Company recognized $ 5 0,000 in debt discount as an increase to stockholders equity pursuant to the terms of two different convertible promissory notes issued.

The debt discount consists of a beneficial conversion feature on both convertible promissory notes in which $ 11,429 was amortized for the period.

During the period ending December 31, 201 4 , the Company expensed $ 1,813 related to stock options and warrants granted in the current period as well as prior periods.

During the period ended December 31, 201 4 , the company accrued $ 6,924 payable in Restricted Stock Units to its non-management directors.

Each restricted stock unit is valued at $ 0.0 5 , based on the closing price of the Companys common stock at the date of grant.

These agreements call for payment of current year director fees via issuance of restricted stock units over a vesting period of not less than twelve months, and require continued service for twelve months and reelection at the next annual shareholder meeting.

As of December 31, 201 4 , $ 5 1 , 732 has been accrued for director services.

Preferred Stock

The Company has 20,000,000 authorized shares

of preferred stock.

As of September 30, 2014, there are no preferred shares issued or outstanding.

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

As of December 31, 201 4 , there are no preferred shares issued or outstanding.

NOTE 13 - BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic and diluted net loss per common share

for the three-month periods ended September 30, 2014 and 2013, are based on 60,843,159 and 50,166,265, respectively, of weighted

average common shares outstanding.

Basic and diluted net loss per common share

for the six-month periods ended September 30, 2014 and 2013, are based on 60,825,672 and 49,732,439, respectively, of weighted

average common shares outstanding.

No adjustment has been made for any common stock

equivalents outstanding because their effects would be antidilutive.

Basic and diluted net loss per common share for the three month periods ended December 31, 201 4 and 201 3 , are based on 72,855,781 and 52,504,350 , respectively, of weighted average common shares outstanding.

Basic and diluted net loss per common share for the nine month periods ended December 31, 201 4 and 201 3 , are based on 64,850,290 and 51,434,182 , respectively, of weighted average common shares outstanding.

No adjustment has been made for any common stock equivalents outstanding because their effects would be antidilutive.

An adjustment has been made to show that effect on the loss per share from discontinued operations as outlined below.

NOTE 14 - DILUTIVE INSTRUMENTS

Stock Options and Warrants

The Company is required to recognize expense

of options or similar equity instruments issued to employees using the fair-value-based method of accounting for stock-based payments

in compliance with the financial accounting standard pertaining to share-based payments.

This standard covers a wide range of share-based

compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights,

and employee share purchase plans.

Application of this standard requires significant judgment regarding the assumptions used in

the selected option pricing model, including stock price volatility and employee exercise behavior.

Most of these inputs are either

highly dependent on the current economic environment at the date of grant or forward-looking over the expected term of the award.

The Company is required to recognize expense of options or similar equity instruments issued to employees using the fair-value-based method of accounting for stock-based payments in compliance with the financial accounting standard pertaining to share-based payments.

This standard covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

Application of this standard requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior.

Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking over the expected term of the award.

and Outstanding

Balance as of March 31, 2014

Balance as of September 30, 2014

No common stock options were exercised during the period ended September

January 1, 2014, the company granted 40,000

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

Balance as of December 31, 2014

No common stock options or warrants were issued, exercised , or cancelled during the period ended December 31, 201 4 .

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

These options were issued as incentive compensation to the employee.

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

The options have an expected volatility rate of 258.20% calculated

using the Company stock price for a three-year period.

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

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

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

The options vest over a three-year period and are exercisable at a range of $.05 to

$0.6 per share, which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

As of June 30, 2014, $ 1,513 of the total value was expensed.

$650 was expensed in the six months ending June 30, 2014.

February 1, 2014, the company granted 40,000

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

These options were issued as incentive compensation to the

The options vest over a three -year period and are exercisable at a range of $ .05 to $ 0.6 per share, which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

As of December 31 , 2014 , $ 1,027 of the total value was expensed.

$ 341 was expensed in the three months ending December 31 , 2014 .

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

These options were issued as incentive compensation to the employee.

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

The options have an expected volatility rate of 259.07%

calculated using the Company stock price for a three-year period.

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

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

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

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

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

of $.05 to $0.6 per share, which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive

As of September 30, 2014, $5,424 of the total value was expensed.

$3,166 was expensed in the six months ending September

On May 15, 2012, the Company granted 850,000

incentive stock options to an officer, Robert Grover.

The expected volatility rate of 223.62% calculated using the Company stock

price over the period beginning June 1, 2009 through date of issue.

As of December 31 , 2014 , $ 3,977 of the total value was expensed.

$ 1,473 was ex pensed in the three months ending December 31 , 2014 .

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

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

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

1 unchanged sentence

The total value of this option was $ 46,175 .

The options vest over

a three year period and are exercisable at $0.06 per share which represents the fair market value at the date of grant in accordance

with the 2009 Equity Incentive Plan.

As of September 30, 2014, $40,452 in value of the options was expensed.

$7,406 was expensed

in the six months ending September 30, 2014.

The options vest over a three year period and are exercisable at $ 0.06 per share which represents the fair market value at the date of grant in accordance with the 2009 Equity Incentive Plan.

As of December 31 , 2014 , $ 40,452 in value of the options was expensed.

$ 8,031 was expensed in the three months ending December 31 , 2014 .

NOTE 15 - SUBSEQUENT EVENTS

21, 2014 the Company executed a promissory note with one of our shareholder s

and board members, for $105,000 at 15% interest per annum, secured by T4EDU Contract 0006/2014, to finance operations and inventory

The promissory note is due October 31, 2014.

There is no conversion feature associated with this promissory note.

note pays off:

the remaining $75,000 principle balance on the May 16, 2014, $150,000 promissory note;

the remaining $12,500 principal

balance on the March 4, 2014 $50,000 secured by the T4EDU Training Academy Contract ;

and applies $17,500 toward the May 1, 2014 promissory note.

Total Interest accrued as of September 30, 2014 was $2,244.

was paid in full through a note consolidation into the $870,457 promissory note dated October 21, 2014.

28, 2014, the Company executed a promissory note with one of our shareholder s

and board members, for $210,000 at 15% interest per annum, secured by T4EDU Contract 0006/2014, to finance operations and inventory

The promissory note is due October 31, 2014.

There is no conversion feature associated with this promissory note.

note pays off:

the April 3, 2014 $60,000 note payable principle balance;

the remaining $42,500 principle balance on the $60,000

May 1, 2014 promissory note;

the May 21, 2014 $50,000;

the June 3, 2014 note payable principle balance of $25,000;

of the June 27, 2014 promissory note.

Total Interest accrued as of September 30, 2014 was $5,523.

This note was paid in full through

a note consolidation into the $870,457 promissory note dated October 21, 2014.

7, 2014 the Company executed a promissory note with one of our shareholder s

and board members, for $25,000 at 15% interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due October 31, 2014.

There is no conversion feature associated with this promissory note.

This note was

paid in full through a note consolidation into $870,457 promissory note dated October 21, 2014.

Total Interest accrued as of September

30, 2014 was $247.

This note was paid in full through a note consolidation into the $870,457 promissory note dated October 21,

20, 2014 the Company executed a promissory note with one of our shareholder s

and board members, for $123,000 at 15% interest per annum, secured by sales orders to finance operations and inventory purchases.

The promissory note was due November 30, 2014.

There is no conversion feature associated with this promissory note.

This note was

paid in full through a note consolidation into $870,457 promissory note dated October 21, 2014.

Total Interest accrued as of September

30, 2014 was $2,072.

21, 2014 the Company executed a promissory note with one of our shareholder s

and board members, for $870,457 at 10% interest per annum, secured by sales orders, inventory, and other assets.

The promissory

note is due May 31, 2015.

There is no conversion feature associated with this promissory note.

This note to consolidated 7 promissory

notes, $175,000 in new cash deposited, and $7,957 of $15457 total interest accrued as of September 30, 2014.

Management’s Discussions 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:

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

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

predictions of the future based on current facts and analyses.

When we use the words “believe”,

“expect”, “anticipate”, “estimate”, “intend”

or similar expressions, we

intend to identify forward-looking statements.

On January 22 , 2015 the Company entered into at 10 % Promissory Note with a current board member and shareholder, in the amount of $ 400,000 , secured by T 4 EDU Contract 000 6 / 0 0 17 , to finance operations and inventory purchases, due June 30, 2015 .

T he Lender has also issued warrants to acquire up to 2,000,000 shares of Companys common stock for $ 0.04 per share exercisable at any time within 36 months after the date of issuance of the Warrants.

The Board of Directors of PCS Edventures!.com, Inc.

(the Company) has accepted the resignation of Andrew J.

Scoggin as a member of the board of directors of the Company.

Scoggins resignation is effective as of January 31, 2015.

On February 1, 2015 the Board of Directors of PCS Edventures!.com, Inc.

(the Company) has

Robert Grover as President and Co-Chief Executive Officer ;

Horsburgh as Vice President and Treasurer;

Todd Hackett as and Co-Chief Executive Office ;

and Britt Ide as Chair of the Board .

Managements Discussions 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 report, which are forward-looking, involve a high degree of risk and uncertainty.

Certain statements in this report set forth managements 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 the Company’s

Securities and Exchange Commission filings.

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

events or circumstances after the date of such statements.

The following discussion should be read in conjunction

with our audited consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results

of Operations (“MD&A”) contained in our Form 10-K for the year ended March 31, 2014.

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 Companys primary markets, exchange rate fluctuation, reduced product demand, increased competition, inability to produce required capacity, unavailability of financing, government action, weather conditions and other uncertainties, including those detailed in the Companys Securities and Exchange Commission filings.

The Company assumes no duty to update forward-looking statements to reflect events or circumstances after the date of such statements.

The following discussion should be read in conjunction with our audited consolidated financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contained in our Form 10-K for the year ended March 31, 2014.

Plan of Operation

In fiscal year 2015, PCS will expand its commitment

to the research and development of PreK-16, brain-based learning programs in Science, Technology, Engineering and Math (STEM) that

embed 21st century thinking skills and new technologies through the deployment of EdventuresLab sites starting in Boise, Idaho.

PCS follows a Strategic Business Unit (SBU) structure that targets sales efforts to the following markets:

1) K6 programs for the elementary classroom

2) Tech Ed programs for grades 6-12

3) Afterschool programs

4) Services that provide educational solutions

for the international market

During fiscal year 2015 we will continue to

build a more focused approach to our

web-based marketing efforts, expanding sales force, and tightened

sales processes for our domestic STEM sales.

The Edventures Lab program is a key strategic addition to our plan and serves the

following purposes:

PCS holds a unique position in the STEM education market with 1) an existing STEM library and deep expertise in creating STEM solutions comprised of curriculum and materials;

2) a unique PCS learning methodology an adaptive (customizes to individual learners), experiential (hands-on in nature), learning framework that can be monetized in a number of ways.

This approach to educational assessment and incentivizing students is the educational approach for the future and PCS is a thought leader in this area;

3) PCS has developed an innovative K12 robotics and engineering system comprised of hardware and software specifically designed to engage students in STEM topics such as hands-on physics and engineering and coding;

4) PCS has established itself as a prime STEM provider in the Kingdom of Saudi Arabia and is growing its revenues from the K ingdom;

and 5) PCS entered the B2C space with a retail product launch this year and also has a working model for expe riential learning labs operational.

With a plan to expand its B2C offerings, PCS is now in the planning stages of a unique, subscription-based online learning system that can be scaled nationwide if successful.

In fiscal year 2015, PCS has continued its commitment to the research and development of PreK-16, brain-based learning programs in Science, Technology, Engineering and Math (STEM) that embed 21st century thinking skills and new technologies through the expansion of its engineering and robotics products and the deployment of a second EdventuresLab site in Eagle , Idaho.

PCS offers products and services to the following markets :

1) K6 STEM programs for the elementary classroom

2) Tech Ed STEM programs for grades 6-12 that include robotics and engineering products

3) STEM labs and packages for Afterschool programs

4) Customized STEM consulting solutions for the international market

5) Direct to consumer (B2C) sales of STEM services and retail products such as our retail robotics kit

During the remainder of fiscal year 2015 we will continue to focus on the improvement of our web-based marketing efforts, expand our sales force and channel partners , and tighten sales processes for our domestic STEM sales.

We will continue to fulfill existing and capture new STEM contracts with the Kingdom of Saudi Arabia.

We will continue to build our Edventures Lab program because it is a key strategic addition to our plan and serves the following purposes:

1) R&D test bed for product improvement and refinement;

2) Revenue generation through afterschool and summer

This course revenue stream will be more predictable and consistent compared to the seasonal revenues associated with

education budgets;

3) The centers will serve as showrooms for PCS products in strategic locations and key districts around the

We believe this will provide PCS with significant competitive advantages over other solution providers since administrators

and educators can visit local centers for support, training, and demonstrations of our products in action;

4) Revenues from STEMretail

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

as well as the larger home retail market will provide a boost in Q3 revenues to offset low education sales traditionally anticipated

during this time frame.

We have deployed a second program in Eagle,

2) Revenue generation through afterschool and summer course fees.

This course revenue stream will be more predictable and consistent compared to the seasonal revenues associated with education budgets;

3) S howrooms for PCS products in strategic locations and key districts around the country.

We believe this will provide PCS with significant competitive advantages over other solution providers since administrators and educators can visit local centers for support, training, and demonstrations of our products in action;

4) Revenues from STEM retail products .

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

as the larger home retail market will provide a consistent, dependable boost in Q3 revenues to offset low education sales traditionally anticipated during this time frame.

We will actively seek retail distribution channels for our robotics retail products.

To further our EdventuresLab business plan, we deployed a second program in Eagle, Idaho in Q2.

The establishment of this initial network of centers will enable more rapid expansion in FY2015 and beyond.

We believe the

strategic deployment of Edventures Labs to be a viable and sound approach based on our initial trial programs.

We believe the strategic deployment of Edventures Labs to be a viable and sound approach based on our initial trial programs.

Results of Operations

For the six-month period ended September 30,

2014, the Company reported a net loss of ($1,088,143) as compared to a net loss of ($489,631) for the six-month period ended September

The increased loss was due to the full amortization of all note payable discounts totaling $301,131 on July 21, 2014

as a result of $646,500 in notes payable conversion into 18,455,666 common stock shares and increase in cost of sales on international

The Basic Loss per Share for six-month period ended September 30, 2014, is ($0.02), which varies from the ($0.01) loss

per share for the six-month period ended September 30, 2013.

the six-month period ended September 30, 2014 was $1,557,104, as compared to revenue during the six-month period ended September

30, 2013 of $800,223.

The revenue increase was predominantly due to $504,794 in international sales.

Operating expenses for the six-month period

ended September 30, 2014, increased by $370,393 (45%) to $1,197,235;

compared to $826,842 for the six-month period ended September

For the three months ended September 30, 2014,

the Company reported a net loss of ($760,883) as compared to a net loss of ($228,886) for the quarter ended September 30, 2013.

The increased loss was predominantly due to the full amortization of all note payable discounts totaling $301,131 on July 21, 2014

as a result of $646,500 in notes payable conversion into 18,455,666 common stock shares.

The Basic Loss per Share for the quarter

ended September 30, 2014, is ($0.01), which varies from the ($0.00) loss per share for the three-month period ended September 30,

Revenue for the three months ended September

30, 2014 was $554,539, as compared to revenue during the quarter ended September 30, 2013 of $446,438.

The revenue increase was

predominantly due to $219,711 in international sales.

Additional orders received from International efforts in Q2, though not invoiced,

were substantial and anticipated to continue in growth this fiscal year.

Further, management is confident that its new sales and

marketing strategy will continue to yield positive results as an expanded sales force is deployed in Q3 and Q4.

Operating expenses for the three-month period ended September 30,

2014, increased by $145,792 (35%) to $564,470 as compared to $446,438 for the three-month period ended September 30, 2013.

table below identifies the quarter over quarter changes:

For the nine-month period ended December 31, 2014, the Company reported a net loss of ($1, 123,512 ) as compared to a net loss of ($ 75 9, 487 ) for the nine-month period ended December 31, 2013.

The increased loss was predominantly due to the full amortization of all note payable discounts totaling $301,131 on July 21, 2014 as a result of $646,500 in notes payable conversion into 18,455,666 common stock shares .

The Basic Loss per Share for nine-month period ended December 31, 2014, is ($ 0.0 2), which varies from the ($0.01) loss per share for the nine-month period ended December 31, 2014.

Revenues for the nine month period ended December 31, 2014 increased $1,190,864 to $2,339,426 as compared to revenue during the nine month period ended December 31, 2013 of $1,148,563.

This was primarily due to the fulfillment of several in ternational contract milestones, with some growth in domestic sales.

Operating expenses for the nine-month period ended December 31, 2014, increased by $ 487,081 ( 4 0 %) to $1, 695,885 ;

compared to $ 1,208,804 for the nine-month period ended December 31, 2014.

For the three months ended December 31, 201 4 , the Company reported net ordinary income for the quarter was $11,067.69, and after interest and other expense the net loss for the quarter was ($ 35,369 ) as compared to a net loss of ($239,962 ) for the quarter ended December 31, 201 3 .

The Basic Loss per Share for the quarter ended December 31, 201 4 , is ($0.0), which is comparable to the ( $0.0 ) loss per share for the three month period ended December 31, 201 3 .

Revenue for the three months ended December 31, 201 4 increase by $433,983 (125%) to $ 782,322 , as compared to revenue during the quarter ended December 31, 201 3 of $348,339 .

The significant difference in revenue from period to period is due to the large contract received in FY201 5 from Saudi Arabia .

Operating expenses for the three month period ended December 31, 201 4 , increased by $ 117,392 ( 31 %) to $ 498,649 , as compared to $ 381,257 for the three month period ended December 31, 201 3 .

The table below identifies the quarter over quarter changes:

Operating Expenses

3 months ended

September 30, 2014

December 31 , 2014

9 months ended

September 30, 2014

December 31 , 2014

Product Development

2 unchanged sentences

Product Development KSA

International Administrative Travel & Consulting Expense

Professional Fees

2 unchanged sentences

Employee Expenses increased due to filling of open positions for marketing and product development, and added international contract administration.

Bad Debt 2013 contained LabMentor Sales Note Receivable.

Bad Debt 2013 contained LabMentor Sales Allowance Note Receivable.

Settlement Expense of Anthony Maher July 9, 2014.

Product Development Kingdom Saudi Arabia (KSA) for specialized contract fulfillment.

International Travel for contract bids and Consulting travel and expense on International contract fulfilment.

Professional Fees increased due to cost incurred for capital raising efforts.

Total other income (expense) for Q2 FY 2014

and FY 2013 was ($36,524) and ($36,172) respectively, showed little change in interest expense year over year.

Cash used by operations for Q2 was ($421,026)

compared to cash provided by operations of ($244,269) in the same period last year.

The Company ended the second quarter of FY

2015 with $18,472 in cash, total current assets of $ 585,349, and total current liabilities of $1,178,167 resulting in a working

capital deficit of $592,818 compared to a working capital deficit of $385,254 for the year ended March 31, 2014.

For financing activities in FY 2015, management

obtained $820,158 by issuing Promissory Notes.

Cash used by operations for Q3 was ($ 512,325 ) compared to cash used by operations for Q3 ($529,671 ) in the same period last year.

The Company ended the third quarter of FY 201 5 with $ 20,323 in cash, total current assets of $ 646,325 and total current liabilities of $ 1,771,174 , resulting in a working capital deficit of $ 1,124,849 compared to a working capital deficit of $ 385,254 for the year ended March 31, 201 4 .

For financing activities in FY 201 5 , management obtained $ 538,116 by issuing Promissory Notes.

Proceeds were used for operations and working capital.

The Company had a current ratio at September

30, 2014 and June 30, 2014 of .33 and .47, respectively.

This decrease in liquidity was due primarily to the reduction in accounts

receivable from payment of large invoices for major customers.

We have an accumulated deficit of ($39,258,329) and shareholders’

equity of ($1,450,114).

The Company cannot predict that it will be successful

in obtaining funding for its plans or that it will achieve profitability in fiscal year 2015.

Quantitative and Qualitative Disclosures About Market

The Company is a smaller reporting company as

defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is not required to

provide the information required under this item.

The Company had a current ratio at December 31, 201 4 and September 30, 201 4 of 0.3 6 and 0.

.34 , respectively.

This in crease in liquidity was due primarily to a n inc rease in international accounts receivable .

We have an accumulated deficit of ($ 39,293,698 ) and shareholders equity of ($1, 426,74 5 ).

The Company cannot predict that it will be successful in obtaining funding for its plans or that it will achieve profitability in fiscal year 201 5 .

Quantitative and Qualitative Disclosures About Market Risk.

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange Act) and is not required to provide the information required under this item.

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

What changed 10-Q

Item 1. Financial Statements