PCSV 10-K & 10-Q changes, risk factors and insider trading

On the other hand, out of school programs focus more broadly on the goals of engagement, career exploration and development of 21st century skills. This difference makes it easier to penetrate out-of-school programs, as more freedoms exist for curriculum development. We focus our efforts on these out-of-school programs, which include summer school, summer camps, YMCA programs, Boys and Girls club programs, and various other programs offered outside of the classroom, at all times of the year, that are too numerous to list. Oftentimes, these programs are sponsored, administered, and/or supported by local school districts, and we employ considerable efforts to build relationships with these types of school districts to provide desired programingprogramming for their out-of-school programs. The majority of the time, the out-of-school programs offered are funded with grants; however, some programs are run on a for-profit basis. The Company sells to all of these types of entities.

However, given the new administration’s stated goals of removing federal influence and administration from education, and returning those functions functions to the states, we are now considering which of our products would be adaptable to the educational standards of certain larger states. states. We intend to continue to weigh state-level priorities much more heavily in the development of future products as well. We view a transition from federal dominance to state dominance of the application of educational standards to curriculum as likely, albeit over a long time long-time frame, and we are adapting our product development to this change in our market.

We have engaged various firms to help us generate more compelling evidence of our products’ effectiveness. We are early in this process, but we intend to substantially build out our library of evidence of our products’ effectiveness. The course we take to accomplish this endeavor will depend on our experiences with these early initiatives.

We offer professional development training for instructors using our products, and typically charge a fee for this service, with the fee primarily covering our expenses. Management does not view this service as a profit center, but rather as1) a customer service component of our product that adds to its uniqueness and value in the marketplace,marketplace and 2) as a market development endeavor to build out the Company’s addressable market.

WeThe haveCompany experiencedhas otherbeen successes in our campaign to findsoliciting larger customers.customers for over four (4) years and has seen some success until fiscal year 2026. The table below shows customer transactions by size for the periods indicated.

ThePrior to January 1, 2026, the Company also hashad a discretionary quarterly bonus program based on qualified revenue. Qualified revenue iswas defined as revenue where there are were no reseller fees or other price adjustments associated with that revenue. Thus, all reseller sales arewere disqualified from the discretionary quarterly bonus calculation, as arewere other miscellaneous transactions where the Company did not receive a full margin. During quarters with higher revenue, salaries and wages will increase all other things equal.

Most of these expenses are not strongly correlated with changes in revenue, but they tend to increase over time. General and administrative expenses were $1,439,014$1,418,083 for the year ended March 31, 2025.2026. For the year ended March 31, 2024,2025, general and administrative expenses were $1,148,652.$1,386,177. InWhile latemost Octoberexpenses and early November of 2024,increased, we endedexperienced oursignificant leasedecreases on our 10,000 square foot combined warehouse and office facility, and entered intofrom two (2) new leases - a 20,880 square foot warehouse and R&D facility, and a 5,016 square foot corporate office facility. This expansion was the primary driver in the increase in general and administrative expenses in fiscal year 2025 versus fiscal year 2024, although general inflation also played a significant role.areas.

Other Income/Expenses:

InterestOther income for the years ended March 31, 2026, and 2025, was entirely comprised of net interest expense are also disclosed under other income and expenses.income. The Company hadinvests considerable interest expense prior to paying off all of its promissory note debt as of March 31, 2023. Since that time and as the Company has accumulated cash, it has invested surplus cash in a Vanguard money market fund that invests exclusively in repurchase agreements and short-term U.S. government securities. The ticker symbol of this fund is “VMFXX.” Interest accrues daily and is paid monthly.

For the year ended March 31, 2025,2026, net income before tax was $1,211,263$321,455 versus $2,911,395$1,211,263 for the year ended March 31, 2024.2025. The Company experienced experienced a lower sales level in fiscal year 20252026 versus that of fiscal year 2024,2025, which largely accounts for the difference in net income before tax for these two periods. Operating expenses in fiscal year 20252026 were also higher than those for fiscal year 2024.2025 due to increased employee expenses.

Prior to fiscal year 2023, the Company offset its potential tax benefit from the operating loss carry-forwards with a valuation allowance in the same amount. As it became clear that the Company will more likely than not use its tax loss carry-forward amounts, the valuation allowance was partially removed for the fiscal year ending March 31, 2023, such that the tax benefit recognized by us in fiscal year 2023 was $1,011,466. The valuation allowance was fully removed as of March 31, 2024, resulting in a tax benefit of $1,529,793 for fiscal year 2024. Once the valuation allowance was fully removed, a provision for income taxes was disclosed. For the fiscal year ending March 31, 2025,2026, the Company’s provision for income taxes was ($264,865$68,273). For the fiscal year ending March 31, 2025, the Company’s provision for income taxes was ($317,235).

For the year ended March 31, 2025,2026, cash provided by operations was $2,520,966$96,440 compared to cash provided by operations of $975,680$2,520,966 for the year ended March 31, 2024.2025. ASeveral decreasefactors contributed to the decline in accountscash receivableprovided andby prepaidoperations expenses,from andfiscal ayear smaller increase in inventory as of March 31, 2025, compared2025 to Marchfiscal year 31,2026. 2024, were theThe largest factors behindwere net income decreased by $693,683; the increaseprovision for income taxes decreased by 209,952; and accounts receivable increased by $338,726 in fiscal year 2026 versus a decrease of cash flow from operations$1,291,987 in fiscal year 2025 over that in fiscal year 2024.;

For the year ended March 31, 2025,2026, cash used by investing activities was $79,814$18,730 compared to cash used by investing activities of $23,696$79,814 for the year ended March 31, 2024.2025. We purchased warehouse and office equipment related to our move from one facility to two during fiscal year 2025,2025. These expenses were absent in fiscal year 2026, which accounts for the increasedecrease in cash used by investing activities.

Except for historical facts, all matters discussed in this Quarterly Report, which are forward-looking, involve a high degree of risk and uncertainty. Certain statements in this Quarterly Report set forth management’s intentions, plans, beliefs, expectationsexpectations, or predictions of the the future based on current facts and analyses. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “intendintend,” 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, risksrisks, and uncertainties. Potential risks and uncertainties include, but are not limited to, competitive pressures from other companies within the Educational Industries, economic conditions in the Company’s primary markets, exchange rate fluctuation, reduced product demand, increased competition, inability to produce required capacity, unavailability of financing, government action, weather conditions and other uncertainties, including those detailed in our SEC filings. We assume no duty to update forward-looking statements to reflect events or circumstances after the date of such statements.

PCS Edventures!, Inc. sells STEM / STEAM products to educational and recreational entities serving youth. AtBecause thisthe time,majority of our customers work in out-of-school-time settings, we dohave not attempt attempted to align our products to fit in the classroom settingsetting, althoughuntil we are aware that some of our customers use our products to fill enrichment time blocks in the classroom during formal school time.recently. Classroom curriculum must alignpromote academic achievement through rigorous alignment with specific state standards to be considered for use. Each state has theirits own unique set of standards, making classroom curriculum development a state by-state endeavor.

On the other hand, out of school programs arefocus notmore subjectbroadly toon anythe state governmental standard alignments, although these programs often require that educational programs align with various setsgoals of stateengagement, orcareer nationalexploration educationaland standards.development of 21st century skills. This difference makes it easier to penetrate out-of-school programs, as more freedoms exist for curriculum development. We focus our efforts on these out-of-school programs, which include summer school, summer camps, YMCA programs, Boys and Girls club programs programs, and various other programs offered outside of the classroom, at all times of the year, that are too numerous to list. Oftentimes, these programs are sponsored, administeredadministered, and/or supported by local school districts, and we employ considerable efforts to build relationships with these types of school districts to provide desired programming for their out-of-school programs. The majority of the time, the out-of-school programs offered are funded with grants; however, some programs are run on a for- profitfor-profit basis. The Company sells to all of these types of entities.

We offer professional development training for instructors using our products;products, and typically charge a fee for this service, with the fee primarily covering our expenses. Management does not view this service as a profit center, but rather as1) a customer service component of our product that adds to its uniqueness and value in the marketplace,marketplace and 2) as a market development endeavor to build out the Company’s addressable market.

The nature of our target market produces considerable seasonality for the Company’s revenue. The quarters endedending June 30 and September 30 tend to be the peak of this seasonality (with the quarter endedending March 31 being close to these quarters), while the quarter endedending December December 31 tends to be the low point of our seasonality. The Table below reflects this seasonality.

During the quarter ended December 31, the Company focuses on product development, restocking inventoryinventory, and general planning for the next year. Sales and marketing activities remain fairly constant throughout the year.

For the quarter ended DecemberJune 31,30, 2025,2026, our revenue was $754,889,$1,740,616, which was $53,742$682,692 greaterless than our revenue for the quarter ended DecemberJune 30, 31, 2024,2025, of $701,147. Business conditions during the quarter ended December 31, 2025, were much better than those during the quarter ended December 31, 2024.$2,423,308. The revenuedifference differential of $53,742 includes deferredin revenue fromwas thedue priorto quarterweak formarket bothconditions, periods.characterized by fewer large orders and declining reseller revenue.

DespiteWe believe that once the uncertainty about funding streams is removed from our setbackmarket, we can again show some success in 2025, we will continue to solicitsoliciting larger customers; however, we cannot guarantee success, nor can we provide a numerical framework to describe the potential success. Risk factors include any developments that negatively impact education funding in the United States, challenges finding and retaining employees who meet our high standardsstandards, and disruptions to our supply chain of critical components.

We strive to have a cost of sales that is less than 40% of revenue. We price our products once per year, at the beginning of the calendar year, and maintain that pricing level throughout the year. During inflationary environments, when the price level of the Company’s raw materials is increasing, the Company must absorb that negative impact to gross margins until it can reprice its products at the beginning of the next calendar year. This repricing analysis considers the current pricing level of materials, as well as the likely increase in those levels in the year ahead. We attempt to incorporate shipping costs into the cost of raw materials, but oftentimes during the course of the year, we are compelled to ship in a more expedient manner, which is more expensive than our baseline assumptions. More recently, tariff management has become a significant factor in pricing considerations.

For the quarter ended DecemberJune 31,30, 2025,2026, our cost of sales was $270,138,$647,320, or 35.8%37.2% of revenue. For the quarter ended DecemberJune 31,30, 2024,2025, our cost of sales was $348,660,$886,771, or 49.7%36.6% of revenue. For any given quarter, and especially in low revenue quarters, the cost of sales can vary significantly from our desired 40% or less of revenue. However, for any given year, the calculation is relevant and desired to be 40% or less of revenue. For the nine (9) months ended December 31, 2025, our cost of sales was $1,798,560, or 38.2% of revenue, as compared to $2,459,747, or 40.1% of revenue for the nine (9) months ended December 31, 2024. Factors affecting cost of sales include:

Most of these expenses are not correlated with changes in revenue, but they tend to increase over time. General and administrative expenses were $262,358$409,949 for the quarter ended DecemberJune 31,30, 2025.2026. For the quarter ended DecemberJune 31,30, 2024,2025, general and administrative expenses were $353,924. $375,081. The decreaseincrease in general and administrative expenses for the quarter ended DecemberJune 31,30, 2025, versus the quarter ended December 31, 2024,2026, was largely due to theincreased Company’sspending newon facilities leases, which began in the quarter ended December 31, 2024, sales and required upgradingmarketing expenses.expenses, Theseas upgradingwell expenses were absent in the quarter ended December 31, 2025. Warehouse and Office lease and maintenance expenses were $64,149as for theprofessional quarter ended December 31, 2025, compared to $141,847 for the quarter ended December 31, 2024. The expenses included the costs of upgrading the new facilities, especially the warehouse.fees.

Other income and expenses are those outside of the Company’s ordinary course of business. Interest income and interest expense are disclosed under other income and expenses. The Company has accumulated cashcash, which is invested in a Vanguard money market fund that invests exclusively in repurchase agreements and short-term U.S. government securities. The ticker symbol of this fund is VMFXX. The Company’s investments in this fund produce interest income.

For the quarter ended DecemberJune 31,30, 2025,2026, other income and expenses were $28,837,$20,846, with net interest income accounting for the entire amount. For For the quarter ended DecemberJune 31,30, 2024,2025, other income and expenses were $24,920,$22,831, with net interest income accounting for the entire amount.

For the quarter ended DecemberJune 31,30, 2025,2026, net income (loss) before tax was ($287,804)$102,847 versus ($433,824)$595,151 for the quarter ended DecemberJune 31, 2024.30, Higher2025. Lower revenue accounted and lower costs characterizedfor the majority of the difference in net income (loss) before tax forbetween the June 30, 2026, quarter endedversus Decemberthe 31,June 30, 2025, compared to the quarter ended December 31, 2024.quarter.

The Company has significant net operating losses which arose due to past losses. At MarchJune 31,30, 2025,2026, the Company had net operating losses of of approximately $7.9$7.57 million that may be used to offset against future taxable income.

For the ninethree (93) months ended DecemberJune 31,30, 2025,2026, cash provided by operations was $262,875$24,279 compared to cash provided by operations of $2,727,089$432,279 for the ninethree (93) months ended DecemberJune 31,30, 2024.2025. Cash provided by operations decreased significantly for the nine (9) months ended December 31, 2025, as compared to the nine (9) months ended December 31, 2024, largelysignificantly, due to 1) the difference between the change in accounts receivable and 2) the difference in the net income between and the twoincreases (2)in periods.inventory and accounts receivable.

As of DecemberJune 31,30, 2025,2026, total current assets were $5,693,823$5,658,852 and total current liabilities were $399,382,$420,508, resulting in working capital of $5,238,344. As of March 31, 2026, total current assets were $5,631,022 and total current liabilities were $448,856, resulting in working capital of $5,294,441.$5,182,166. AsWorking of March 31, 2025, total current assets were $5,918,984 and total current liabilities were $326,439, resulting in working capital ofincreased $5,592,545.largely The Company had a current ratio as of December 31, 2025, of 14.3 compareddue to a currentdecrease ratioin ofaccounts 18.1 as of March 31, 2025.payable.

As of DecemberJune 31,30, 2025, we had $2,973,457 in2026, cash and cash equivalents were $2,647,668, compared to $3,223,147$2,674,538 in cash and cash equivalents as of March 31, 2025.2026.The slight decline in cash during the quarter was primarily driven by inventory purchases and share repurchases on the open market.

For the ninethree (93) months ended DecemberJune 31,30, 2025,2026, cash used by investing activities was $14,734$2,331, compared to cash used by investing activities of $76,725$7,255 for the ninethree (93) months ended DecemberJune 31,30, 2024.2025. DuringEquipment purchases were less in the nine (9) monthsquarter ended DecemberJune 31,30, 2024,2026, weversus purchased warehousethat equipment related to our recent relocation of the warehouse, expenses we did not incur during the nine (9) months ended December 31, 2025, which accounts for the decreasequarter inended cashJune used30, by investing activities.2025.

For the ninethree (93) months ended DecemberJune 31,30, 2025,2026, cash used by financing activities was $497,831$48,818, compared to cash used by financing activities of $390,021$53,501 for the ninethree (93) months ended DecemberJune 31,30, 2024.2025. InFor boththe periods,quarter ended June 30, 2026, cash used by financing activities was due to the Company’s purchaseCompany repurchasing 32,556 of its common stock.stock Foron the nineopen (9)market monthsfor endedtotal December 31, 2025, the Company purchased 4,751,512 sharesconsideration of its common stock, and for the nine (9) months ended December 31, 2024, the Company purchased 1,174,501 shares of its common stock. All common stock purchased was cancelled except for the 314,327 Treasury shares the Company held as of December 31, 2025.$48,818.

We had no Off-Balance Sheet arrangements during the three (3) and nine (9) month periods ended DecemberJune 31,30, 2025,2026, and 2024.2025.