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Item 1. Financial Statements

2015-11-12 compared with 2015-08-13 · 593 added, 542 removed, 209 unchanged (84% 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.

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

Balance sheet (Unaudited)

Statement of Operations (Unaudited)

Statement of Stockholders’ Equity (Unaudited)

Statement of Cash Flows (Unaudited)

Balance sheets (Unaudited)

Statements of Operations (Unaudited)

Statement of Stockholders’

Deficit (Unaudited)

Statements of Cash Flows (Unaudited)

Notes to Financial Statements (Unaudited)

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

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

Controls and Procedures

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PCS EDVENTURES!.COM, INC.

Balance Sheets (USD $)

June 30, 2015

March 31, 2015

Balance Sheets

September 30, 2015

March 31, 2015 (audited)

CURRENT ASSETS

Accounts receivable, net of allowance for doubtful accounts of $3,184

and $4,063, respectively

Accounts receivable, net of allowance for doubtful accounts of $3,184 and $3,184, respectively

Prepaid expenses

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Total Current Assets

FIXED ASSETS, net of accumulated depreciation of $147,419 and

$144,821, respectively

FIXED ASSETS, net of accumulated depreciation of $150,018 and $144,821, respectively

Note Receivable net of allowance of $49,513 and $47,998, respectively

3 unchanged sentences

PCS EDVENTURES!.COM, INC.

Balance Sheets (USD $)

June 30, 2015

Balance Sheets

September 30, 2015

March 31, 2015

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Deferred revenue

Note payable, convertible, related party net of $14,306 discount

Note payable convertible, related party net of $3,723 and $24,063 discount for September 30 and March 31, 2015, respectively

Note payable, related party

Current portion of Notes payable

Lines of credit payable

Current portion of long term liabilities

Total Short term and current portion long term notes payable

Total Current Liabilities

Notes payable, long term

Notes payable, related party, long term

Notes payable, long term, convertible

Notes payable, convertible, related party, long term

Long term debt

Total Liabilities

STOCKHOLDERS’

EQUITY (DEFICIT)

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

issued and outstanding

Common stock, no par value, 90,000,000 authorized shares, 74,235,284

and 74,235,284 shares issued and outstanding, respectively

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

Common stock, no par value, 100,000,000 authorized shares, 75,194,368 and 74,235,284 shares issued and outstanding, respectively

Stock payable

4 unchanged sentences

Total Stockholders’

Equity (Deficit)

TOTAL LIABILITIES AND STOCKHOLDERS’

EQUITY (DEFICIT)

The accompanying notes are an integral part

1 unchanged sentence

PCS EDVENTURES!.COM, INC.

Statements of Operations (USD $)

For the three months

ended June 30,

Domestic STEM Sales

International Revenue

Statements of Operations

For the Three Months Ended

For the Six Months Ended

September 30,

International service revenue

Learning Center revenue

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Interest expense

Total Other Income and Expenses

Total Other Income/(Expense)

INCOME (LOSS) FROM OPERATIONS

1 unchanged sentence

NET COMPREHENSIVE INCOME (LOSS)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ (1,088,143 )

Net income per common share:

Weighted average number of shares outstanding

Weighted Average Number of Shares Outstanding Basic and Diluted

The accompanying notes are an integral part

1 unchanged sentence

PCS EDVENTURES!.COM, INC.

Statements of Stockholders’ Equity (Deficit)

Statement of Stockholders’

Stockholders’

Equity (Deficit)

Balance at 03/31/2015

3 unchanged sentences

Stock for RSU’s

Option Expense

Net Income through 06/30/2015

Stock for exercise of options & warrants

Stock for Cash

Conversion of Notes Payable

Option/Warrant Expense

Net Loss through 09/30/2015

Balance at 09/30/2015 (unaudited)

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of these financial statements.

PCS EDVENTURES!.COM, INC.

EDVENTURES!.COM, INC .

Statements of Cash Flows

For the Three Months Ended

For the Six Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income (Loss)

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

$ (1,088,143 )

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

Debt discount amortization

Depreciation and amortization

Stock on settlement

Impairment of Brain Mold

Common stock issued for services

Stock payable for service

Amortization of fair value of stock options

5 unchanged sentences

(Increase) decrease in other assets

(Decrease) increase in accounts payable and accrued expenses

(Decrease) increase in accounts payable and accrued liabilities

Increase (decrease) in unearned revenue

Net Cash Used by Operating Activities

Net Cash Provided used by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

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CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from note payable

Repayment on LOC

Proceeds from sale of stock

Borrowings on note payable

Proceeds from note payable –

related party

Principal payments on line of credit

Payment on debt –

Principal payments on debt –

related party

Net Cash Used by Financing Activities

Principal payments on debt

Net Cash Provided by Financing Activities

Net Increase (Decrease) in Cash

5 unchanged sentences

Statements of Cash Flows (continued)

For the Three Months Ended

For the Six Months Ended

September 30,

NON-CASH INVESTING & FINANCING ACTIVITIES

Debt discount

Conversion of debt

CASH PAID FOR

3 unchanged sentences

Notes to the Financial Statements

June 30, 2015

September 30, 2015

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

The financial statements presented are those

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

of PCS Edventures!.com, Inc., an Idaho corporation (“PCS”

or “the Company”).

In October 1994, PCS exchanged common stock

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subsidiary of PCS.

In the late 1990s, the Company divested the stand-alone learning labs to focus on the creation of turn-key lab

modules coupled with web-based technology for use in the classroom and afterschool programs.

In the late 1990s, the Company divested the stand-alone learning labs to focus on the creation of turn-key

lab modules coupled with web-based technology for use in the classroom and afterschool programs.

On March 27, 2000, PCS changed its name from

2 unchanged sentences

In August 2001, PCS successfully completed

an SB2 registration and began trading publicly on the OTC exchange.

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.

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

In December 2005, the name

of this subsidiary was formally changed to PCS LabMentors, Ltd.

(See Note 17) The Company divested Labmentors, the wholly owned

subsidiary, in August of 2013.

an offering public pursuant to an SB-2 Registration Statement and began trading publicly on the OTC Bulletin Board (“OTCBB”).

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

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

In December 2005,

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

(See Note 17).

The Company divested LabMentors in August

In January, 2012, the Company committed to

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There were no operations

for the subsidiary during the quarter year ended June 30, 2015.

for this subsidiary during the quarter year ended September 30, 2015.

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 July 23, 2015, the Board of Directors resolved

that the name of the Company be changed to PCS Edventures!, Inc.

No amendment to the Company’s Articles of Incorporation

has yet been filed, though it is anticipated that following the assignment of a new Cusip Number and the required filing with the

Financial Industry Regulatory Authority, that this name change will become effective.

No amendment to the Company’s Articles of Incorporation

has yet been filed, though it is anticipated that following the assignment of a new Cusip Number and the required filing with

the Financial Industry Regulatory Authority, that this name change will become effective.

NOTE 2 - UNAUDITED FINANCIAL STATEMENTS

The June 30, 2015, 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, 2015.

The March 31, 2015, balance

sheet is derived from the audited balance sheet included therein.

The operating results for the three-month period

ended June 30, 2015, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2016.

The September 30, 2015, 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 Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015.

Certain items for March 31, 2015 have been

reclassified to conform to presentation in the second quarter ended September 30, 2015.

The operating results for interim periods

are not necessarily indicative of the results for the entire year.

NOTE 3 - GOING CONCERN

The Company’s financial statements are

prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates

1 unchanged sentence

The established sources of revenues

are not sufficient to cover the Company’s operating costs.

The Company has accumulated significant losses and payables and

1 unchanged sentence

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

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

During the fiscal year ending March 31,

2016, PCS began implementing a strategy of profitability- derived from by optimizing and streamlining operations while moving our

digital learning and robotics product strategy forward.

A continued underlying principle will be the building of services

and products with recurring revenue traits such as online licenses.

Tactically we are focusing on improving product quality, improving

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

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

We will continue to focus on

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

our domestic STEM sales.

We will continue to fulfill existing and capture new STEM contracts with the Kingdom of Saudi Arabia.

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

a major emphasis on digital delivery of content, (2) revenue generation through afterschool and summer course fees;

through licensing EdventuresLab curriculum and methods;

and (4) revenues from STEM retail products.

We believe e-commerce

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

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

during this time frame.

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

The business plan for fiscal year 2016 reflects

the continued promotion and growth of the PCS EdventuresLab.

The further demonstrated proof of the profitable concept provides

a marketable demonstration for the scalable licensing model.

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;

established network of EdventuresLabs will serve as highly effective “showrooms” for sales of PCS products and services

into neighboring districts.

The EdventuresLab builds significant community and brand awareness for PCS Edventures!.

Also of note,

close partnerships with schools provide an opportunity to test and improve PCS products on a regular basis.

The EdventuresLab environment

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

Revenue for the quarter ending June 30, 2015

was $1,291,219 compared to revenue of $1,002,566, an increase of approximately 28% compared to the same quarter last fiscal year.

Net income for the three months ended was $130,865, compared to a net loss of ($327,260), a 350% increase from the same quarter

last year resulting from meeting the requirements of revenue recognition on two international contract milestones in the quarter

following when the majority of cost of sales was incurred.

Cash flow from operations for the three months ended June 30, 2015 was

($172,431), due to growth in receivables of international contracts.

While the efforts put in by management

and the entire employee team are beginning to be realized, as illustrated by strong 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 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

The ability of the Company to continue as

a going concern is dependent upon its ability to increase revenue, to raise capital as needed, to continue to monitor and reduce

overhead costs, and to attain profitable operations.

The accompanying consolidated financial statements do not include any adjustments

that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentration of Credit Risk

The Company extends

credit to customers and is therefore subject to credit risk.

The Company performs initial and ongoing credit evaluations of its

customers’

financial condition and does not require collateral.

An allowance for doubtful accounts is recorded to account

for potential bad debts.

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

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

In determining these percentages,

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

At September 30, 2015, Tatweer Company for Educational Services and STEMfinity accounted for 52.5% and 26.2% of the Company’s

accounts receivable, respectively.

NOTE 5 –

PREPAID EXPENSES

Prepaid expenses for the periods are as follows:

June 30, 2015

September 30, 2015

March 31, 2015

4 unchanged sentences

Total Prepaid Expenses

NOTE 5 - FIXED ASSETS

Assets and accumulated depreciation for the periods are as follows:

June 30, 2015

NOTE 6 –

Assets and depreciation for the periods are as follows:

September 30, 2015

March 31, 2015

2 unchanged sentences

Total Fixed Assets

Fixed asset depreciation expense for the three

months ended June 30, 2015 and 2014 was $2,598 and $5,465, respectively.

NOTE 6 - ACCRUED EXPENSES

Fixed asset depreciation expense for the six months ended September

30, 2015, and 2014, was $14,316 and $12,582, respectively.

NOTE 7 –

ACCRUED EXPENSES

Accrued expenses for the periods are as follows:

June 30, 2015

March 31, 2015

Interest payable

4 unchanged sentences

Total accrued expenses

NOTE 7 – NOTES PAYABLE

NOTE 8 –

NOTES PAYABLE

Notes payable consisted of the following:

June 30, 2015

September 30, 2015

March 31, 2015

Short Term Debt

Short Term Convertible Note, Related Party net discount of $3,723

and $24,063 for period ended June 30, 2015 and March 31, 2015,

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

$38,184 for period ended June 30, 2015 and March 31, 2015,

Current Portion of Notes Payable

and $24,063 for period ended September 30, 2015 and March 31, 2015, respectively

Short Term Note Payable, Related Party, net discount of $0 and $38,184 for period ended September 30, 2015 and March 31, 2015, respectively

Total Short Debt

Long Term Debt

Long Term Note Payable

Line of Credit

2 unchanged sentences

Long Term Convertible Note, Related Party

Total Notes Payable

Long Term Debt

Less current portion

Total Long Term Debt, less current portion

Long Term Note Payable

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.

The company has paid $3,827 in principal leaving a balance of $16,173 at June 30, 2015.

Total interest accrued as of June 30, 2015 was $1,685.

Note Payable – Related Party

On January 13, 2012, the Company entered into two separate promissory notes 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 were previously 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.

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

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

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

The company has paid $14,825 in principal leaving a balance of $49,375 at June 30, 2015.

On April 18, 2012, the Company entered into a long-term promissory note with Anthony A.

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

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

Monthly payments are made for interest only to the lenders financial intuition.

On June 30, 2015, $1,998 over the interest only payment had been paid resulting in ending principle amount of $21,995.

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 a 10% Convertible Promissory Note with a current board member and shareholder, in the amount of $200,000, convertible into shares of common stock of the Company, at the market price of $0.04 per share.

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

The remaining $50,000 was paid in full by the issuance of that certain Promissory Note in the principal amount of $870,457 noted below.

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 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.

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.

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 extended on April 30, 2014, to September 30, 2014.

The note balance was rolled into a replacement note dated July 28, 2014 for $210,000.

This note was paid in full by the issuance of that certain Promissory Note of even date herewith in the principal amount of $870,457.

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

All accrued interest as of the date of replacement was paid in full.

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.

There is no conversion feature associated with this promissory note.

The company has paid $7,477 in principal, leaving a balance of $52,523 at June 30, 2015.

Total interest accrued as of June 30, 2015 was $1,643.

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.

On June 11, 2014 the Company paid $60,000 and executed a new note for $25,000 on June 3, 2014.

The remaining $75,000 was added to another $75,000 for a promissory note of $150,000 on June 27, 2014.

The $25,000 note was then replaced by a note of the same terms dated August 7, 2014.

The $150,000 note was There is no conversion feature associated with this promissory note.

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.

All accrued interest as of the date of replacement was paid in full.

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.

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.

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.

Accrued interest of $ 7,568 as of the date of replacement was paid in full.

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.

There is no conversion feature associated with this promissory note.

The note was extended to September 30, 2014.

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.

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.

The other $75,000 was added to another $150,000 note dated July 21, 2014 for $105,000.

Total interest accrued 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.

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 note.

This promissory note was rolled into a 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 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.

There is no conversion feature associated with this promissory note.

This note is replaced by three different notes:

$63,000 note payable executed on August 20, 2014, a part of the $123,000 promissory note;

$25,000 note payable executed on August 7, 2014;

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

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 T4EDU 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;

May 1, 2014 for $17,500;

and May 16, 2014 for $75,000.

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 accrued interest of $ 2,243 as of the date of replacement was paid in full.

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 T4EDU 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;

May 1, 2014 for $42,500;

May 21, 2014 for $50,000;

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

On May 1, 2014, the Company entered into a

36 month note payable of $20,000.

The note bears interest at 12% per annum.

The Company has paid $5,155 in principal, leaving

a balance of $14,845 at September 30, 2015.

Total interest accrued as of September 30, 2015, was $1,973.

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 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.

There is no conversion feature associated with this promissory note.

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

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.

Accrued interest of $ 247 as of the date of replacement was paid in full.

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.

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 May 31, 2015.

Accrued interest of $2,072 as of the date of replacement was paid in full.

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, bears and interest rate of 10% per annum, is secured by accounts receivable, fixed assets, intellectual property, and the public entity PCSV net loss carry forward to finance operations and inventory purchases, due May 31, 2015.

This note due date was subsequently extended to September 30, 2015.

This note includes new cash lent 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 dated July 21, 2014;

$210,000 dated July 28, 2014;

$25,000 dated August 8, 2014;

and $123,000 dated August 20, 2014.

$22,222 of interest was rolled into principal on January 1, 2015;

resulting in a principal balance of $892,679.

Total interest accrued as of June 30, 2015 was $44,267.

On February 17, 2015, the Company executed a promissory note with one of our shareholders and board members, for $135,000 at 10% interest per annum, due June 30, 2015, secured by T4EDU existing AR on completed contracts, to finance operations and inventory purchases.

This note was extended to September 30, 2015.

There is no conversion feature associated with this promissory note.

Total interest accrued as of June 30, 2015 was $4,738.

On January 16, 2015, the Company executed a non-convertible promissory note with warrants attached, with one of our shareholders and board members, for $400,000 at 10% interest per annum, due June 30, 2015, secured by T4EDU Contract 0006/2017 Work Orders 5, 6, 7, and 8 less Zakat and holdback, to finance operations and inventory purchases.

The warrants were valued using the stock price on the date of grant, discount rates 0.35%, and volatility approximating 180%.

The value of the debt discount is accreted up to the face value of the promissory note over the term of the note using the effective interest method.

This note was subsequently extended to December 31, 2015.

The debt discount was calculated as $66,717.

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

Total interest accrued as of June 30, 2015 was $3,288.

On April 20, 2015, the Company executed a promissory note with one of our shareholders and board members, for $135,000 at 10% interest per annum, due June 30, 2015, secured by T4EDU existing AR on completed contracts, to finance operations and inventory purchases.

This note was extended to September 30, 2015.

There is no conversion feature associated with this promissory note.

Total interest accrued as of June 30, 2015, was $2,626.

On June 8, 2015, the Company executed a promissory note with one of our shareholders and board members, for $150,000 at 10% interest per annum, due June 30, 2015, secured by T4EDU existing AR on completed contracts, to finance operations and inventory purchases.

There is no conversion feature associated with this promissory note.

This note was paid in full with all accrued interest on June 25, 2015.

Line of Credit

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Company makes variable monthly payments.

As of June 30, 2015, the Company has paid $18,535 in principal leaving a balance

As of September 30, 2015, the Company has paid $19,592 in principal leaving a balance

of $19,458 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.

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 bringing the aggregated principle amount to $243,745 including the $34011 related party promissory note.

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.

On March 30, 2015, $17,005 of this group of notes was satisfied with $15,000 in cash payments and $2,005 taken as Gain on Cancellation of debt.

As of June 30, 2015, the ending principle balance was $209,734, including the related party convertible note balance of $34,011 noted below.

Interest accrued as of June 30, 2015, for the total set of notes remaining was $39,338.

On July 13, 2015 four (4) convertible notes of the Company have subsequently elected to convert those notes into shares of our common stock.

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

Conversion of the aggregate principal and accrued interest of these notes will result in the issuance of 1,066,006 shares of our common stock.

$34,011 of the aggregate principal amount of these notes represent loans provided to us by one of the members of our Board of Directors also documented in the Convertible Note Payable – Related Party.

Related Party Debt

Short term note payable

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 was partially taken out to

finance operations and inventory purchases and was partly a combination of the renewal of other notes with the same lender.

was due on May 31, 2015, was non-convertible, had an interest rate of 10% per annum, was secured by accounts receivable, fixed

assets, intellectual property and our net loss carry forward.

On January 1, 2015, accrued interest through

December 31, 2014, was rolled into the principal balance per the terms and conditions of the Promissory Note.

On January 1, 2015,

the Promissory Note principal balance was $892,679.

The balance was due in full on or before May 31, 2015, and was extended to

September 30, 2015, under the terms and conditions of the original Promissory Note.

On October 1, 2015, the Promissory Note executed

on October 21, 2014 went into default.

The lender has provided the Company with an extension of due dates for principle and accrued

interest of $66,768, until November 30, 2015.

On January 16, 2015, the Company executed a non-convertible promissory

note with warrants attached, with one of our shareholders and board members, for $400,000 at 10% interest per annum, due June

30, 2015, secured by T4EDU Contract 0006/2017 Work Orders 5, 6, 7, and 8 less Zakat and holdback, to finance operations and

inventory purchases.

The warrants were valued using the

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

of the debt discount is accreted up to the face value of the promissory note over the term of the note using the effective

interest method.

This note was subsequently extended to October 31 November 30, 2015.

The debt discount was calculated as

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

The principal

balance at September 30, 2015, was $400,000.

Total interest accrued as of September 30, 2015 was $10,082.

On February 17, 2015, the Company executed

a promissory note with one of our shareholders and board members, for $135,000 at 10% interest per annum, due June 30, 2015, secured

by T4EDU existing AR on completed contracts, to finance operations and inventory purchases.

This note was extended

to September 30, 2015, and then December 31, 2015.

There is no conversion feature associated with this promissory note.

Total interest accrued as of September 30, 2015 was $8,141.

On April 20, 2015, the Company executed a

promissory note with one of our shareholders and board members, for $135,000 at 10% interest per annum, due June 30, 2015, secured

by T4EDU existing AR on completed contracts, to finance operations and inventory purchases.

This note was extended

to September 30, 2015, and then December 31, 2015.

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

a $40,000 principal balance outstanding on September 30, 2015.

There is no conversion feature associated with this promissory

Total interest accrued as of September 30, 2015, was $6,029.

Short term convertible note payable

On October 21, 2014, the Company entered into

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

of common stock of the Company, at the market price of $0.04.

The debt discount was calculated as $50,000.

As of September 30,

2015, $46,277 of discount was amortized.

The note principal balance net of discount at September 30, 2015 was $196,277.

was subsequently extended to November 30, 2015.

Total accrued interest as of September 30, 2015, was $18,849.

Long term convertible note

In 2011, the Company entered into several

convertible promissory notes in the aggregate amount of $215,000, including a note in the amount of $34,011 from a related party.

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

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

annum and include attached warrants to purchase two shares of restricted Rule 144 common stock for every dollar loaned.

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

of $5,963 in to 266,492 shares of our common stock.

Long term note payable

13, 2012, the Company entered into two separate promissory notes in the amount of $35,000 each for an aggregate amount of $70,000.

The notes bear interest at 9% per annum and were previously 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 the lender’s financial institution.

The notes were amended

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

The notes 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 lender’s financial institution monthly payments of $1,033 on or before the 1st day of each month, beginning May

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

The Company has paid $17,827

in principal, leaving a balance of $46,373 at September 30, 2015.

2012, the Company entered into a long-term promissory note with a person who was then an officer and director of the Company for

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

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

Monthly payments are

made for interest only to the lender’s financial intuition.

On September 30, 2015, a total of $3,005 in principal had been

paid, resulting in ending principal amount of $21,995 .

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

The note bears interest at twelve percent

(12%) per annum.

There is no conversion feature associated with this promissory note.

The company has paid $12,020 in principal,

leaving a balance of $47,980 at September 30, 2015.

Total interest accrued as of September 30, 2015, was $873 .

Convertible Note

In 2011, the Company entered into several convertible promissory

notes in the aggregate amount of $215,000, including a note in the amount of $34,011 from a related party.

The notes are convertible

into common stock at a rate of $0.15 per share.

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

warrants to purchase two shares of restricted Rule 144 common stock for every dollar loaned.

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.

The notes are secured by that portion or percentage

of the Borrower’s Intellectual Property which the principal amount of the note bears to the fair market value of all Intellectual

Property of the Borrower.

The notes had an original due date of June 29, 2011 but have been amended to extend the expiration dates

to April 30, 2016.

As of March 31, 2015, the ending principle balance was $226,740 including the related party convertible note

balance of $34,011.

On July 13, 2015, the holders of four the

convertible notes of the Company elected to convert those notes into shares of our common stock.

The aggregate principal amount

of the convertible notes being converted was $136,044.

Conversion of the aggregate principal and accrued interest of $23,857 resulted

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

Conversion occurred within the terms of the note, no gain or loss was

As of September 30, 2015, the principal balance of convertible notes payable, non-related party was $90,696.

interest as of September 30, 2015, related to these notes, was $18,139.

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

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.

The note was due 24 months

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

The note was paid in full with all accrued interest on June 25, 2015.

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

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 June 30, 2015, was $761.

note was subsequently paid in full on with all accrued interest on July 23, 2015.

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 June 30, 2015.

Interest expense for the related party convertible

note ending June 30, 2015, was $5,974.

This note was subsequently converted on July 13, 2015.

On October 21, 2014, the Company entered into

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

of common stock of the Company, at the market price of $0.04.

The debt discount was calculated as $50,000.

As of June 30, 2015,

$35,694 discount was amortized.

The note principle balance was $200,000 at June 30, 2015.

Total accrued interest as of June 30,

2015, was $13,808.

NOTE 8 – 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.

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.

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

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 schedules summarizes the valuation

of financial instruments at fair value on a recurring basis in the balance sheets as of June 30, 2015 and March 31, 2015:

Fair Value Measurements at June 30, 2015

Derivative Liabilities

The following schedule summarizes the valuation

of financial instruments at fair value on a recurring basis in the balance sheets as of March 31, 2015:

Fair Value Measurements at March 31, 2015

Derivative Liabilities

NOTE 9 – NOTE RECEIVABLE

The note was due 24 months

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

No debt discount was recognized as the conversion price was considered

“out of the money”;

therefore, no discount was necessary.

Total accrued interest as of July 23, 2015, was $795.

note was paid in full with all accrued interest on July 23, 2015.

NOTE 9 –

NOTE RECEIVABLE

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.

2 unchanged sentences

The Company note receivable in the amount of $50,740, carries an

interest rate of 3% compounded annually and is to be paid over a period of 60 months in equal monthly payments beginning in month

13 of the 60 month period.

annual interest rate of 3% compounded annually and is to be paid over a period of 60 months in equal monthly payments beginning

in month 13 of the 60 month period.

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

1 unchanged sentence

LabMentors had made three note payments as of the date of the notification totaling $3,399.

The note receivable principle

balance at June 30, 2015 was $49,513.

The note receivable allowance balance at June 30, 2015 is $47,998.

The difference of $1,515

was subsequently taken to bad debt expense on July 22, 2015.

The note receivable principal

balance at September 30, 2015, was $49,513.

The note receivable allowance balance at September 30, 2015 is $49,513.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

On December 31, 2013, the Company signed an amendment to the

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

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

Rent expense for the corporate offices was $14,185 and $21,196 for the quarters ended June 30, 2015 and 2014, and

$77,869 and $99,318 for the twelve months ended March 31, 2015 and 2014, respectively, under this lease arrangement.

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

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

January 31, 2016.

Rent expense including CAM charges for the corporate offices, was $14,106 and $21,196 for the quarters

ended September 30, 2015 and 2014, and $77,869 and $99,318 for the 12 months ended March 31, 2015 and 2014, respectively, under

this lease arrangement.

The Company leases additional warehouse space

4 unchanged sentences

The lease was extended to a new expiration of October 31,

The Company signed a sixth amendment on April 15, 2015 to lease an additional approximately 1400 square foot bay adjacent

to the existing leased space.

Rent expense for the warehouse was $5,620 and $5,300 for the quarter ended June 30, 2015 and 2014,

and $16,225 and $15,901 for the twelve-months ended March 31, 2015 and 2014, respectively.

The Company signed a sixth amendment on

April 15, 2015, to lease an additional approximately

1400 square foot bay adjacent to the existing leased space.

Rent expense for the warehouse was $6,345 and $3,975 for the quarters

ended September 30, 2015 and 2014, and $16,225 and $15,901 for the 12 months ended March 31, 2015, and 2014, respectively.

The Company leased and additional learning

lab site in Eagle Idaho in Q1 of fiscal year 2015.

The lease term is 3 years for 1,050 sf for an annual base rent of $16,640

or $1,387 per month, with 3% growth per year.

Anthony Maher brought suit against PCS in January

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

A settlement was agreed

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 costing the

Company $10,000 after insurance settlement and $2,650 in mediation fees, to avoid the expense of defending it in court.

settlement agreement was executed on July 9, 2014.

On or about May 18, 2015, the Company was named

as a co-defendant in a legal action related to one of its employees, alleged to have been driving an automobile negligently while

on work related services for the Company, and causing damages to the plaintiffs in the action.

The Company has engaged legal

counsel to represent it in this matter, and it is not presently in a position to determine what, if any, liability it may have

for the actions of its employee, or even whether such employee was negligence in any manner.

The Company is presently evaluating

whether or not it has adequate insurance coverage for its legal representation and any potential liability.

The lease term is three years for 1,050 square feet for an annual base

rent of $16,640 or $1,387 per month, with 3% growth per year.

Anthony Maher brought suit against PCS in

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

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

Maher for any and all claims related

Maher’s employment contract with PCS;

PCS issued Mr.

Maher 400,000 shares of the common stock of PCS;

Maher $50,000.

PCS does not admit the allegations or any other wrongdoing, but settled the matter for a modest amount costing

the Company $10,000 after insurance settlement and $2,650 in mediation fees, to avoid the expense of litigation.

The settlement

agreement was executed on July 9, 2014.

On or about May 18, 2015, the Company was

named as a co-defendant in a legal action related to one of its employees, alleged to have been driving an automobile negligently

while on work related services for the Company, and causing damages to the plaintiffs in the action.

The Company has engaged

legal counsel to represent it in this matter, and it is not presently in a position to determine what, if any, liability it may

have for the actions of its employee, or even whether such employee was negligence in any manner.

Contingencies

NOTE 11 - STOCKHOLDERS’ EQUITY

During the three months ending June 30, 2015,

$22,000 has been accrued in Restricted Stock Units payable for the issue of 200,000 shares for services that will be issued in

future periods.

Each restricted stock unit is valued at a range from $0.11, based on the closing price of the Company’s common

stock at the date of grant.

The total amount recorded in stock payable as of June 30, 2015, for these services and other prior

period services is $31,000.

During the three months ending June 30, 2015,

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

During the three months ended June 30, 2015,

the company accrued $8,250 payable in Restricted Stock Unit to its non-management directors.

Each restricted stock unit is valued

at a range from $0.05 to $0.10, based on the closing price of the Company’s common stock at the date of grant.

These agreements

call for payment of current year director fees via issuance of restricted stock units over a vesting period of not less than twelve

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

As of June 30, 2015,

$20,367 has been accrued for director services and recorded in stock payable.

On October 14, 2015, the Company received a demand letter alleging

patent infringement related to certain of our data processing systems.

The Company has responded to this demand and has

advised the claimed patent owner that the Company does not own the systems claimed to be used by us in this demand.

the Company believes that no such claimed infringement has occurred, we cannot presently evaluate the potential costs that we

might incur in regard to defending any legal action brought against us regarding such claims.

NOTE 11 - STOCKHOLDERS’

During the three months ended September 30,

2015, the Company expensed amounts related to stock options and warrants granted in the current period as well as prior periods

valued at $1,834.

During the three months ended September 30, 2015, a related party

one warrant holder exercised 120,000 warrants issued on January 11, 2013, at a price of $.07 for a total of $8,400, resulting

in 120,000 shares of “restricted”

common stock.

During the three months ended September 30,

2015, the CEO exercised 25,000 options earned from an ISO agreement dated July 15, 2012, using the cashless option into 19,000

shares of “restricted”

common stock.

During the three months ended September 30, 2015, the Company issued

200,000 shares of “restricted”

common stock for consulting services.

The shares were valued based on the fair market

price of $0.11 on the date of grant for a total of $22,000.

During the three months ended September 30, 2015, the Company accrued

$10,140 in stock payable for consulting services for 78,000 shares to be issued in future periods.

Each stock unit was valued

at $0.13, based on the closing price of the Company’s common stock at the date of grant.

During the three months ending September 30,

2015, $10,730 has been accrued in Restricted Stock Units payable for the issue of 165,082 shares for services that will be issued

in future periods.

Each Restricted Stock Unit was valued at $0.065, based on the closing price of the Company’s common stock

at the date of grant.

The total amount recorded in stock payable as of September 30, 2015, for deferred RSU’s and other

services was $20,140.

During the three months ended September 30,

2015, the holders of four convertible notes of the Company elected to convert such notes into shares of common stock.

The aggregate

principal and interest amount of the convertible notes being converted of $159,901 resulted in the issuance of 1,066,006 shares

of common stock.

conversion within terms of the note, no gain

or loss was recognized.

During the six months ending September

30, 2015, the Company expensed amounts related to stock options and warrants granted in the current period as well as prior periods

valued at $5,381.

During the six

months ended September 30, 2015, the Company accrued $18,980 payable in Restricted Stock Units to its non-management directors.

Each Restricted Stock Unit was valued at $0.065, based on the closing price of the Company’s common stock at the date of

These agreements call for payment of current

year director fees via issuance of Restricted Stock Units, required continued service through September 30, 2015, and re-election

at the September 25, 2015, annual shareholder meeting.

The Restricted Stock Units were revalued to $0.15 at the close of the market

on the date of vesting resulting in an additional accrual of $50,248.

As of September 30, 2015, $81,345 has been accrued for director

services and recorded in stock payable.

Preferred Stock

1 unchanged sentence

of preferred stock.

As of June 30, 2015, there are no preferred shares issued or outstanding.

As of September 30, 2015, there are no preferred shares issued or outstanding.

NOTE 12 - BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic net loss per common share for the three-month

periods ended June 30, 2015, and 2014, are based on 74,235,284 and 53,335,167, respectively, of weighted average common shares

Dilutive net loss per common share for the three-month periods ended June 30, 2015, and 2014, are based

on 78,491,182 and 55,705,477, respectively, of weighted average common shares outstanding.

Net income (loss) per common share:

Weighted average number of common

Basic net loss per common share for the three

month periods ended September 30, 2015, and 2014, are based on 74,917,541 and 60,843,159, respectively, of weighted average common

shares outstanding.

Dilutive net loss per common share for the six month periods ended September 30, 2015, and 2014, are based

on 74,365,634 and 60,825,672, respectively, of weighted average common shares outstanding.

For the Three Months Ended

September 30,

For the Six Months Ended

September 30,

Net income per common share:

Weighted Average Number

Outstanding, Basic and Diluted

NOTE 13 - DILUTIVE INSTRUMENTS

3 unchanged sentences

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 pronouncement 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

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

1 unchanged sentence

Common Stock Options

Balance as of June 30, 2015

No common stock options were exercised during the quarter ended

June 30, 2015.

January 1, 2014, the Company granted 40,000

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

These options were issued as incentive compensation to the

employee and require the achievement of certain milestones.

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

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

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

The total value of these options was $15,926.

The options vest

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

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

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

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

February 1, 2014, the company granted 40,000

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

These options were issued as incentive compensation to the employee

and require the achievement of certain milestones.

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

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

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

expensed in the quarter ending June 30, 2015.

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

incentive stock options to an officer, Robert Grover and require the achievement of certain milestones.

The expected volatility

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

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

The options were valued using the Black-Scholes valuation

The total value of 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.

the quarter ending June 30, 2015, $2,161 of the total value was expensed

On January 22,

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

Rule 144 Common Stock, no par value (the "Share"), as consideration for the issuance of a promissory note in the amount

of $400,000, from the Company at a purchase price of $0.04 per share of Common Stock (the "Exercise Price").

Warrants are fully vested and exercisable.

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

were found to not include any embedded derivatives.

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

Valuation Model.

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

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

Treasury yield curve in effect

The resulting fair value is $ 66,717.

This value was recorded as a debt discount

and is being amortized over the life of the loan.

The remaining $38,184 of the debt discount was amortized during the quarter ending

June 30, 2015.

NOTE 14 - SUBSEQUENT EVENTS

On January 16, 2015, the Company executed a

non-convertible promissory note with warrants attached, with one of our shareholders and board members, for $400,000 at 10% interest

per annum, due June 30, 2015.

The note due date was subsequently amended to October 31, 2015.

On July 13, 2015, the holders of four (4) convertible

notes of the Company elected to convert those notes into shares of our common stock.

The aggregate principal amount of the convertible

notes being converted is $136,044.

Conversion of the aggregate principal and accrued interest of these notes will result in the

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

$34,011 of the aggregate principal amount of these notes represent loans provided

to us by one of the members of our Board of Directors.

With accrued interest, the conversion of these notes and interest payable,

reduces our total debt by $159,901.

Balance as of September 30, 2015

On July 14, 2015, the Company CEO converted

25,000 options using the cashless option into 19,000 shares of “restricted” Rule 144, no par value, Common Stock.

On July 23, 2015, the Company paid the promissory

note dated July 30, 2013, 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 was due twenty four months from the date of the note, on or before July

The note was paid in full with accrued interest of $795.

25,000 options using the cashless option into 19,000 shares of

“restricted”

common stock issued

during the period ended September 30, 2015.

The Board of Directors resolved on July 15,

2015, to increase the Company authorized common stock from 90,000,000 shares with no par value to 100,000,000 shares of common

stock with no par value, and has further directed that management submit the resolution for ratification by the shareholders at

the Annual Meeting.

stock with no par value.

The resolution was ratified on September 25, 2015, by the shareholders at the Annual Meeting.

January 1, 2014, the Company granted 40,000 incentive options each

to three employees per year for three years.

These options were issued as incentive compensation to the employees.

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.

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

As of September 30, 2014, $10,803 of the total value was expensed.

$2,530 was expensed in the six months ending September 30,

February 1, 2014, the Company granted 40,000 incentive options

to one employee per year for three years.

These options were issued as incentive compensation to the employee.

The options were

valued using the Black-Scholes valuation model.

The options have an expected volatility rate of 258.20% calculated using the Company

stock price for a three-year period.

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

The 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 September

30, 2015, $2,389 of the total value was expensed.

$690 was expensed in the six months ending September 30, 2015.

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.

The options were

valued using the Black-Scholes valuation model.

The total value of this option was $44,495.

The options vest over a three year

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

2009 Equity Incentive Plan.

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

$2,161 was expensed in the six

months ending September 30, 2015.

On July 30, 2015, 120,000 common stock warrants were exercised

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

NOTE 14 - SUBSEQUENT EVENTS

On January 16, 2015, the Company executed

a non-convertible promissory note with warrants attached, with one of our shareholders and board members, for $400,000 at 10%

interest per annum, due June 30, 2015.

The note due date was subsequently amended to November 30, 2015.

On October 13, 2015, PCS filed

a Summons and Complaint against Ty Jacobsen (Ada County Case No.

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

parties to the suit are PCS Edventures!, Inc., plaintiff, v.

Ty Jacobsen d/b/a Jacobsen Enterprises, defendant.

Our claims primarily

involve defamation, breach of contract and injunctive relief.

Through the Complaint, PCS alleges Jacobsen violated the terms of

his Consulting Agreement, which included a non-disparagement agreement, by publishing false and defamatory material in a Facebook

forum and on his Twitter feed, along with making defamatory statements to other PCS investors or potential investors.

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, bears

and interest rate of 10% per annum, is secured by accounts receivable, fixed assets, intellectual property, and the public entity

PCS net loss carry forward to finance operations and inventory purchases, due May 31, 2015.

This note due date was extended

to September 30, 2015, then amended and extended to November 30, 2015.

On October 21, 2014, the Company entered into

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

of common stock of the Company, at the market price of $0.04.

This note due date was extended to September 30, 2015, then amended

and extended to November 30, 2015.

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

(the “Company”) has accepted the resignation of Britt E.

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

There were no disagreements between the Company and Ms.

Ide regarding her resignation.

Ide has no family relationships

with anyone at PCS.

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:

Except for historical facts, all matters discussed

in this Quarterly Report, which are forward-looking, involve a high degree of risk and uncertainty.

Certain statements in this

report set forth management’s intentions, plans, beliefs, expectations, or predictions of the future based on current facts

and analyses.

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

“intend”

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

You should not place undue reliance

on these forward-looking statements.

Actual results may differ materially from those indicated in such statements, due to a variety

of factors, risks and uncertainties.

Potential risks and uncertainties include, but are not limited to, competitive pressures

from other companies within the Educational Industries, economic conditions in the Company’s primary markets, exchange rate

fluctuation, reduced product demand, increased competition, inability to produce required capacity, unavailability of financing,

government action, weather conditions and other uncertainties, including those detailed in 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 financial statements and Management’s Discussion and Analysis of Financial Condition and Results

of Operations (“MD&A”) contained in our Form 10-K for the year ended March 31, 2015.

Plan of Operation

PCS sells into the STEM education market with

(1) an existing STEM library and deep expertise in creating STEM solutions comprised of curriculum and materials;

PCS learning methodology –

an adaptive (customizes to individual learners), experiential (hands-on in nature),

learning framework that can be monetized in a number of ways, with what we believe is an approach to educational assessment and

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

( 3) PCS has developed an innovative

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

such as hands-on physics and engineering and coding;

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

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

With a plan to expand higher margin digital

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

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

As we enter FY2016, our strategy is profitability

driven seeking to optimize and streamline operations while moving our digital learning and robotics product strategy forward.

A continued underlying principle will be the building of services and products with recurring revenue traits such as online licensing.

Tactically, we will focus on improving product quality, improving our delivery and support infrastructure to accommodate larger

scale delivery, improving our sales infrastructure, and building our new, higher margin digital products to add to our lineup

of STEM products and services.

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

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

We will continue to use our EdventuresLab

program for (1) an R&D test bed for product improvement and refinement with a major emphasis on digital delivery of content

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

(3) revenue through licensing EdventuresLab

curriculum and methods;

and (4) revenues from STEM retail products.

We believe e-commerce sales of kits associated with STEM

learning targeting the families of students attending the centers as well as the larger home retail market will provide a consistent,

dependable boost in Q3 annual revenues to offset low education sales traditionally anticipated during this time frame.

will actively seek retail distribution methods and channels for our robotics retail products and expand their usability for other

market segments.

Results of Operations

For the six month period ended September 30,

2015, the Company reported a net loss of ($200,682) as compared to a net loss of ($1,088,143) for the six month period ended September

The $887,461 reduction in loss was

due to a 22% improvement in gross margin due

to sales mix and reduction in employee expenses over last year, and full amortization of the note payable discounts totaling $301,131

in the second quarter of fiscal 2015 , as a result of $646,500 in notes payable conversion into 18,455,666 shares of our common

The Basic Loss per Share for the six month period ended September 30, 2015, was ($0.00), which varies from the ($0.01)

loss per share for the six month period ended September 30, 2014.

for the six month period ended September 30, 2015, was $1,816,026, as compared to revenue during the six month period ended September

30, 2014, of $1,557,104.

The revenue increase was due to an increase in domestic product sales to our two major customers.

For the three months ended September 30, 2015,

the Company reported a net loss of ($331,548) as compared to a net loss of ($760,883) for the quarter ended September 30, 2014.

The loss reduction was predominantly due to the prior year 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 shares of our common stock.

The Basic Loss

per Share for the quarter ended September 30, 2015, was ($0.00), which varies from the ($0.01) loss per share for the three-month

period ended September 30, 2014.

Revenue for the three months ended September

30, 2015, was $524,807, as compared to revenue during the quarter ended September 30, 2014, of $554,539.

The decrease in revenue

was due to $218,409 less in international sales that was almost recaptured in a domestic sales increase of $175,550 over the same

period in the prior year.

Additional work orders from International efforts in the second quarter of fiscal 2016, though not

invoiced, were substantial, although not anticipated to continue beyond this fiscal year.

Operating expenses decreased by $7,686 (1%)

and $131,312 (11%) in the three and six months of fiscal 2016, respectively, relative to prior year periods.

The largest changes

decreases in the areas of product development, decreases in employee expenses, and increase in Restricted Stock Unit accrued

Product development expense decreased significantly due to prior year fulfillment of outreach contract custom product development

for Tatweer Company for Education Services.

Employee expenses decreased due to not filling open positions, product development,

and international contract administration.

The Restricted Stock Units were revalued at the close of the market on the date of

vesting for Board of Director compensation through September 30, 2015.

Interest expense decreased by $283,274 and

$252,552 in the three and first six months of fiscal 2016, respectively, relative to prior year periods.

Interest expense in the

second quarter of fiscal 2015 included amortization of note payable discounts totaling $301,131 as a result of $646,500 in conversion

of notes payable into common stock.

Cash provided by operations for the second

quarter of fiscal 2016 was $38,571 compared to cash used by operations of ($421,026) in the same period last year.

ended the second quarter of fiscal 2016 with $192,665 in cash, total current assets of $891,685, and total current liabilities

of $2,409,754, resulting in a working capital deficit of $1,518,069 compared to a working capital deficit of $1,313,347 for the

year ended March 31, 2015.

The Company had a current ratio at September 30, 2015, and March

31, 2015, of .37 and .39, respectively.

PCS Edventures!.com, Inc.

does not possess enough current assets to pay current liabilities.

The majority of the current liabilities relate to notes payable to one of its shareholders and board members.

This lender has

on numerous occasions provided the Company with extensions of due dates for principal and accrued interest.

The most recent grant

extended the due date until November 30, 2015 for these notes.

The company is continuing to pursue raising capital to pay these

There is no guarantee that this lender will continue to provide extensions for payments and the Company cannot predict

that it will be successful in obtaining funding or generating cash in order to pay the lender.

The Company has an accumulated

deficit of ($39,818,688) and shareholders’

equity (deficit) of ($1,598,036).

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.

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