FORM
8-K
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
CURRENT
REPORT
Date
of
Report (date of earliest event reported) December
12, 2006
Commission
File No. 0-29373
Seychelle
Environmental Technologies, Inc.
(Exact
Name of registrant as specified in its charter)
|
Nevada
|
33-6159915
|
|
(State
or other jurisdiction
|
(IRS
Employer File Number)
|
|
of
incorporation)
|
|
|
|
|
|
33012
Calle Perfecto
|
|
|
San
Juan Capistrano, California
|
92675
|
|
(Address
of principal executive offices)
|
(zip
code)
|
|
|
|
(949)
234-1999
(Registrant's
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
-
1
-
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the
Securities Act of 1934
References
in this document to "us," "we," “Seychelle” or "Company" refer to Seychelle
Environmental Technologies, Inc., a Nevada corporation and our wholly-owned
subsidiary, Seychelle Water Technologies, Inc., also a Nevada corporation.
Item
4.02(a) Non-Reliance
on Previously Issued Financial Statements or a Completed Interim
Review.
On
December 5, 2006 the Company’s Board of Directors, with the concurrence of
Windes & McClaughry Accountancy Corporation, the Company’s independent
registered public accounting firm, concluded that the Company’s financial
statements for the fiscal quarter ended May 31, 2006 and any related
reports of its independent registered public accounting firm and all earnings
and press releases and similar communications issued by the Company relating
to
periods commencing on March 1, 2006 should no longer be relied upon. The
Company intends to file its restated financial statements as soon as practicable
after the completion of the review of such restatements by Windes &
McClaughry.
The
Company became aware of certain errors in its previously filed financial
statements in the course of responding to comments of the Securities and
Exchange Commission resulting from their review of the Company’s General Form
for Registration of Securities on Form 10 and Quarterly Report on Form 10-QSB
for the quarter ended May 31, 2006 and during the preparation of its
financial statements in connection with its second quarter ended August 31,
2006.
On
March
1, 2006, the Company adopted
Statement of Financial Accounting Standards No.
123
(revised 2004), Share
Based Payment,
(“FAS
123R”) which establishes standards for the accounting of transactions in which
an entity exchanges its equity instruments for goods or services, primarily
focusing on accounting for transactions where an entity obtains services in
share based payment transactions. In March 2005, the Securities and Exchange
Commission issued Staff Accounting Bulletin No. 107 (SAB 107) relating to FAS
123®.
Prior
to
March 1, 2006, the Company accounted for stock based awards using the intrinsic
value method in accordance with APB 25 as allowed under Statement of Financial
Accounting Standards No. 123, Accounting
for Stock Based Compensation
(FAS
123). Under the intrinsic value method, no stock based compensation expense
had
been recognized in the Company’s finanical statements, other than as related to
warrants or restricted common shares granted to employees and consultants below
the fair market value of the underlying stock at the date of grant.
In
connection with recalculating its compensation expense under FAS 123R it was
determined that an incorrect volatility factor was previously utilized resulting
in an approximate $100,000 understatment of expenses during the three-month
period ended May 31, 2006. The Company has also applied the provisions of SAB
107 in its adoption of FAS 123R. Additionally, since the Company elected the
modified prospective transition method, the Company reclassified its additional
paid in capital as of the beginning of the year for the carrying amounts of
unearned compensation cost.
-
2
-
During
April 2006, the Company issued 50,000 common shares, subject to a one year
restriction period, to shareholders of Continental Technologies, Inc.
(“Continental’) for the Redi Chlor brand name and trademark. As the purchase
agreement provides the shareholders of Continental the right to sell the
common
shares back-to the Company, at Continental’s sole option for a period of six
months after the restriction period at $0.75 per share the amount should
have
been recorded as a liablitiy..Previously, the Company had overstated the
fair
value of the brand name and trademark by approximately $10,700 and recorded
the
estimated fair market value of the common shares, approximately $16,100,
as an
equity transaction.
Finally,
as recommended by the SEC the company reclassified the California minimum
franchise fee from provision for income taxes to a component of general and
administrative expenses.
The
following is a summary of the anticipated effects of these changes cited
above
on the condensed consolidated balance sheets as May 31, 2006 as well as the
anticipated effects of these changes on the condensed consolidated statements
of
operations for the quarter then ended.
May 31,
2006:
|
Condensed
Consolidated Balance Sheets
|
||||||||||
|
As Previously
Reported
|
Adjustments
|
As
Restated
|
||||||||
|
Intangible
assets
|
44,128
|
(10,700
|
)
|
33,428
|
||||||
|
Total
assets
|
1,255,545
|
(10,700
|
)
|
1,244,845
|
||||||
|
Accrued
expenses
|
224,968
|
5,400
|
230,368
|
|||||||
|
Total
liabilities
|
886,365
|
5,400
|
891,765
|
|||||||
|
Additional
paid in capital
|
5,530,113
|
(85,252
|
)
|
5,444,861
|
||||||
|
Unearned
compensation
|
(169,413
|
)
|
169,413
|
-
|
||||||
|
Unearned
interest
|
(287,753
|
)
|
(163,145
|
)
|
(450,898
|
)
|
||||
|
Accumulated
deficit
|
(5,174,489
|
)
|
(100,261
|
)
|
(5,274,750
|
)
|
||||
|
Net
(loss)
|
(216,555
|
)
|
(100,261
|
)
|
(316,816
|
)
|
||||
|
Net
(loss) per share-basic and diluted
|
(0.01
|
)
|
-
|
(0.01
|
)
|
|||||
|
Total
stockholders’ equity
|
369,180
|
(16,100
|
)
|
353,080
|
||||||
|
Total
liabilities and stockholders’ equity
|
1,255,545
|
(10,700
|
)
|
1,244,845
|
||||||
For
Quarter Ended May 31, 2006:
|
|
Condensed
Consolidated Statements of Operations
|
|||||||||
|
|
As Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||
|
Consulting
fees to related parties
|
$
|
(35,000
|
)
|
$
|
(21,860
|
)
|
$
|
(56,860
|
)
|
|
|
Total
operating expenses
|
(203,429
|
)
|
(19,912
|
)
|
(223,341
|
)
|
||||
|
Net
loss from operations
|
(144,948
|
)
|
(19,912
|
)
|
(164,860
|
)
|
||||
|
Interest
expense to related parties
|
(75,582
|
)
|
(79,828
|
)
|
(155,410
|
)
|
||||
|
Total
other income (expense)
|
(70,007
|
)
|
(81,949
|
)
|
(151,956
|
)
|
||||
|
Net
loss before provision for income taxes
|
(214,955
|
)
|
(101,861
|
)
|
(316,816
|
)
|
||||
|
Provision
for income taxes
|
(1,600
|
)
|
1,600
|
-
|
||||||
|
Net
loss
|
(216,555
|
)
|
(100,261
|
)
|
(316,816
|
)
|
||||
|
Net
(loss) per share-basic and diluted
|
(0.01
|
)
|
-
|
(0.01
|
)
|
|||||
-
3
-
The
Company expects that the incremental non-cash compensation expense reflected
in
the restatement will not affect the Company’s current cash position or financial
condition. Moreover, the stock based compensation-related restatement will
not
affect previously reported revenues.
As
a
result of these matters, management is currently evaluating the impact of
this
restatement on the Company’s internal control over financial reporting and will
appropriately disclose its conclusion in Item 4 of the Company’s Quarterly
Report of Form 10-Q for the quarter ended August 31, 2006.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
|
|
|
|
|
SEYCHELLE
ENVIRONMENTAL TECHNOLOGIES, INC.
|
|
Date:
December
12, 2006.
|
By:
|
/s/
Carl Palmer
|
|
|
Carl
Palmer
|
|
|
|
President
|
|
-
4 -