Nevada
|
33-0836954
|
(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)
|
Item
|
Description
|
Page
|
Part
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Financial
Statements
|
3
|
Condensed
Consolidated Balance Sheet as of November 30, 2007
(unaudited)
|
3
|
|
Condensed
Consolidated Statements of Operations for the three-month periods
ended
November 30, 2007 (unaudited) and 2006 (unaudited)
|
4
|
|
Condensed
Consolidated Statements of Operations for the nine-month periods
ended
November 30, 2007 (unaudited) and 2006 (unaudited)
|
5
|
|
Condensed
Consolidated Statements of Cash Flows for the nine-month periods
ended
November 30, 2007 (unaudited) and 2006 (unaudited)
|
6
|
|
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
8
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
15
|
Item
3.
|
Controls
and Procedures
|
25
|
Part
II
|
OTHER
INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
25
|
Item
2.
|
Changes
in Securities
|
25
|
Item
3.
|
Defaults
Upon Senior Securities
|
26
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
26
|
Item
5.
|
Other
Information
|
26
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
26
|
Signatures
|
27
|
ASSETS
|
|
November
30,2007
|
||
CURRENT
ASSETS
|
|
(unaudited)
|
|
|
Cash
|
|
$
|
174,447
|
|
Trade
receivables, net of
allowance for doubtful accounts of $1,700
|
|
|
53,319
|
|
Inventories,
net
|
|
|
413,419
|
|
Prepaid
expenses
|
|
|
24,334
|
|
Asset
held for
sale
|
|
|
149,111
|
|
|
|
|
|
|
Total
current
assets
|
|
|
814,630
|
|
|
|
|
|
|
PROPERTY
AND EQUIPMENT,
NET
|
|
|
115,106
|
|
|
|
|
|
|
INTANGIBLE
ASSETS,
NET
|
|
|
27,796
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
7,438
|
|
|
|
|
|
|
Total
non-current
assets
|
|
|
150,340
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
964,970
|
CURRENT
LIABILITIES
|
||||
Accounts
payable
|
$
|
15,758
|
||
Accrued
expenses
|
348,167
|
|||
Line
of credit
|
80,000
|
|||
Note
payable to financial institution
|
139,205
|
|||
Accrued
interest due to related parties
|
274,199
|
|||
Customer
deposits
|
82,040
|
|||
Total
current liabilities
|
939,369
|
|||
Note
payable to related party
|
396,088
|
|||
Total
long-term liabilities
|
396,088
|
|||
COMMITMENTS
AND CONTINGENCIES
|
||||
STOCKHOLDERS'
DEFICIT
|
||||
Common
stock $.001 par value - 50,000,000 shares authorized;
25,490,342
issued and outstanding
|
25,490
|
|||
Additional
paid-in capital
|
6,222,640
|
|||
Accumulated
deficit
|
(6,618,617)
|
|||
Total
stockholders' deficit
|
(370,487)
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
$
|
964,970
|
For
The Three-Month
Periods
Ended November 30,
|
||||||||
2007
|
2006
|
|||||||
SALES
|
$
|
178,023
|
$
|
295,313
|
||||
COST
OF SALES
|
64,454
|
116,999
|
||||||
Gross
profit
|
113,569
|
178,314
|
||||||
OPERATING
EXPENSES
|
||||||||
Selling
|
26,654
|
45,161
|
||||||
General
and administrative
|
167,824
|
153,521
|
||||||
Compensation
to executive officers
|
8,125
|
13,208
|
||||||
Total
expenses
|
202,603
|
211,890
|
||||||
INCOME
(LOSS) FROM OPERATIONS
|
(89,034)
|
(33,576)
|
||||||
OTHER
INCOME (EXPENSE)
|
||||||||
Interest
income
|
2,102
|
4,022
|
||||||
Interest
expense related parties
|
(21,573)
|
(284,430)
|
||||||
Interest
expense – others
|
(5,565)
|
|||||||
Miscellaneous
expense
|
(239)
|
(2,714)
|
||||||
Total
other income (expense)
|
(25,275)
|
(283,122)
|
||||||
NET
INCOME (LOSS)
|
$
|
(114,309)
|
$
|
(316,698)
|
||||
BASIC
AND DILUTED EARNING (LOSS) PER SHARE
|
(0.00)
|
(0.01)
|
||||||
WEIGHTED
AVERAGE NUMBER OF SHARES: BASIC AND DILUTED
|
25,435,804
|
22,810,836
|
For
The Nine-Month
Periods
Ended November 30,
|
||||||||
2007
|
2006
|
|||||||
SALES
|
$
|
725,656
|
$
|
684,212
|
||||
COST
OF SALES
|
344,929
|
337,132
|
||||||
Gross
profit
|
380,727
|
347,080
|
||||||
OPERATING
EXPENSES
|
||||||||
Selling
|
51,377
|
81,957
|
||||||
General
and administrative
|
578,328
|
473,408
|
||||||
Compensation
to executive officers
|
39,625
|
126,928
|
||||||
Total
expenses
|
669,330
|
682,293
|
||||||
LOSS
FROM OPERATIONS
|
(288,603)
|
(335,213)
|
||||||
OTHER
INCOME (EXPENSE)
|
||||||||
Interest
income
|
7,293
|
13,166
|
||||||
Interest
expense – related parties
|
(65,747)
|
(595,250)
|
||||||
Interest
expense – others
|
(18,812)
|
|
||||||
Claim
settlement
|
168,000
|
-
|
||||||
Miscellaneous
expense
|
(4,202)
|
-
|
||||||
Total
other income (expense)
|
86,532
|
(582,084)
|
||||||
NET
LOSS
|
$
|
(202,071)
|
$
|
(917,297)
|
||||
BASIC
AND DILUTED LOSS PER SHARE
|
(0.00)
|
(0.04)
|
||||||
WEIGHTED
AVERAGE NUMBER OF SHARES: BASIC AND DILUTED
|
25,288,757
|
22,642,826
|
For
The Nine-Month
Periods
Ended November 30,
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
2007
|
2006
|
||||||
Net
loss
|
$
|
(202,071)
|
$
|
(917,297)
|
||||
Adjustments
to reconcile net loss to net cash
used
in operating activities:
|
||||||||
Depreciation
and amortization
|
32,655
|
25,158
|
||||||
Stock-based
compensation and interest expense
|
16,070
|
573,918
|
||||||
Accrued
interest due to related parties
|
22,438
|
75,763
|
||||||
Contributed
executive services
|
34,670
|
7,500
|
||||||
Provision
for
doubtful accounts
|
1,700
|
-
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Trade
receivables
|
17,855
|
(47,173)
|
||||||
Inventories
|
(55,056)
|
(206,732)
|
||||||
Prepaid
expenses and other assets
|
119,161
|
(327,593)
|
||||||
Asset
held for sale
|
(11,239)
|
-
|
||||||
Accounts
payable
|
(27,198)
|
8,808
|
||||||
Accrued
expenses
|
155,283
|
131,937
|
||||||
Customer
deposits
|
(202,235)
|
586,612
|
||||||
Income
tax payable
|
(2,800)
|
|||||||
Net
cash used in operating activities
|
(97,967)
|
(91,899)
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Release
of restricted cash
|
150,000
|
-
|
||||||
Purchase
of property and equipment
|
(13,147)
|
(63,209)
|
||||||
Down
payment on purchase of airplane
|
-
|
(10,000
|
)
|
|||||
Increase
in intangible assets
|
(867)
|
(2,400
|
)
|
|||||
Insurance
proceeds from damaged equipment
|
2500
|
|||||||
Net
cash provided by (used in) investing activities
|
135,986
|
(73,109)
|
For
The Nine-Month
Period
Ended November 30,
|
||||||||
2007
|
2006
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds
from
sale of common stock
|
-
|
12,750
|
||||||
Proceeds
from
sale of equipment
|
-
|
|||||||
Proceeds
from
note payable to financial institution
|
139,500
|
|||||||
Payment
of note payable to financial institution
|
(136,708)
|
|||||||
Proceeds
from
(repayment of) related party notes payable
|
96,913
|
(63,975)
|
||||||
Net
cash provided by (used in) financing activities
|
99,705
|
(51,225)
|
||||||
INCREASE
(DECREASE) IN CASH
|
137,724
|
(216,233)
|
||||||
Cash,
beginning of period
|
36,723
|
635,569
|
||||||
Cash,
end of period
|
$
|
174,447
|
$
|
419,336
|
||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$
|
84,559
|
$
|
-
|
||||
Income
taxes
|
$
|
1,600
|
$
|
-
|
||||
SUPPLEMENTAL DISCLOSURES OF | ||||||||
NON-CASH
INVESTING AND FINANCING ACTIVITIES
|
||||||||
Purchase
of
airplane with debt
|
$
|
-
|
$
|
136,413
|
||||
Stock
issued for settlement of debt
|
$
|
71,057
|
$
|
165,068
|
||||
Stock
issued for intellectual property
|
$
|
-
|
$
|
16,100
|
||||
Stock
issued for services
|
$
|
1,417
|
$
|
3,072
|
For
the three-month period
ended
November 30,
|
||||||||
2007
|
2006
|
|||||||
General
and administrative
|
$
|
6,785
|
$
|
1,948
|
||||
Compensation
to executive officers
|
-
|
61,580
|
||||||
Interest
expense to related parties
|
-
|
155,410
|
||||||
Total
stock and warrant based compensation expense
|
$
|
6,785
|
$
|
218,938
|
For
the nine-month period
ended
November 30,
|
||||||||
2007
|
2006
|
|||||||
General
and administrative
|
$
|
20,022
|
$
|
3,896
|
||||
Compensation
to executive officers
|
-
|
180,847
|
||||||
Interest
expense to related parties
|
-
|
466,230
|
||||||
Total
stock and warrant based compensation expense
|
$
|
20,022
|
$
|
650,973
|
For
the nine month period
ended
November 30,
|
||||||||
2007
|
2006
|
|||||||
Weighted
average risk-free interest rate
|
6.5%
|
6.5%
|
||||||
Expected
life (in years)
|
2.00
– 3.00
|
1.58-3.33
|
||||||
Expected
stock volatility
|
360%
|
235-323%
|
||||||
Dividend
yield
|
None
|
None
|
The
following is a summary of inventory as of November 30,
2007:
|
||||
Raw
materials
|
$
|
131,665
|
||
Work
in progress
|
237,227
|
|||
Finished
goods
|
278,761
|
|||
647,653
|
||||
Less: reserve
for obsolete or slow moving inventory
|
(234,234)
|
|||
Net
inventories
|
$
|
413,419
|
Tooling
|
$
|
280,884
|
||
Equipment
|
26,299
|
|||
Vehicles
|
10,000
|
|||
Furniture
and fixtures
|
15,775
|
|||
Computer
equipment
|
15,124
|
|||
Leasehold
improvements
|
4,710
|
|||
352,792
|
||||
Less:
accumulated depreciation
|
(237,686)
|
|||
$
|
115,106
|
Redi
Chlor brand name and trademark
|
$
|
16,100
|
||
Hand
pump
|
8,000
|
|||
Patents
|
14,702
|
|||
38,802
|
||||
Less:
accumulated amortization
|
(11,006)
|
|||
$
|
27,796
|
Accrued
legal expenses
|
$
|
127,413
|
||
Accrued
accounting and consulting fees
|
180,404
|
|||
Accrued
commissions
|
12,849
|
|||
Accrual
for stock purchase (Continental Technologies)
|
27,500
|
|||
$
|
348,166
|
-
|
operating
as a public entity, incurring non-cost of sales expenses such
as
accounting, auditing, financial reporting and compliance, legal
and
maintaining full compliance of a regulated reporting status,
including
continuing Sarbanes-Oxley requirements.
|
-
|
unplanned
delays and expenses related to research, development and testing
of our
new products
|
-
|
production
and marketing problems that may be encountered in connection
with our
existing products and technologies,
|
-
|
competition
from larger and more established companies, and
|
-
|
under-capitalization
to challenge the lack of market acceptance of our new products
and
technologies.
|
(a) Business
Development History of Seychelle
|
(b) Business
of Seychelle General
|
Three-month
period ended November 30, 2007 compared to the corresponding period
in
2006
|
||||||||||||||||
Selected
Financial Data
|
2007
|
2006
|
%
|
Year
over year change
|
%
|
|||||||||||
Sales
|
$
|
178,023
|
$
|
295,313
|
$
|
(117,290
|
) |
(40)
|
||||||||
Cost
of sales
|
$
|
64,454
|
$
|
116,999
|
$
|
(52,545
|
) |
(45)
|
||||||||
Gross
profit
|
$
|
113,569
|
$
|
178,314
|
$
|
(64,745
|
) |
(36)
|
||||||||
Gross
profit percentage
|
64
|
%
|
60
|
%
|
4
|
%
|
|
|||||||||
Selling
expenses
|
|
26,654
|
|
45,161
|
|
|
(18,507
|
) |
(41)
|
|||||||
General
and administrative expenses
|
$
|
167,824
|
$
|
153,521
|
$
|
14,303
|
9
|
|||||||||
Compensation
to executive officers
|
$
|
8,125
|
$
|
13,208
|
$
|
(5,083
|
) |
(38)
|
||||||||
Interest
expense to related parties
|
$
|
21,573
|
$
|
284,430
|
$
|
(262,857
|
)
|
(92)
|
||||||||
Net
income (loss)
|
$
|
(114,308
|
) |
$
|
(316,698
|
) |
$
|
202,390
|
64
|
Nine-month
period ended November 30, 2007 compared to the corresponding period
in
2006
|
||||||||||||||||
Selected
Financial Data
|
2007
|
2006
|
%
|
Year
over year change
|
%
|
|||||||||||
Sales
|
$
|
725,656
|
$
|
684,212
|
$
|
41,444
|
6
|
|||||||||
Cost
of sales
|
$
|
344,929
|
$
|
337,132
|
$
|
7,797
|
2
|
|||||||||
Gross
profit
|
$
|
380,726
|
$
|
347,080
|
$
|
33,646
|
10
|
|||||||||
Gross
profit percentage
|
52
|
%
|
51
|
%
|
1
|
%
|
-
|
|||||||||
Selling
expenses
|
$
|
51,377
|
|
$ | 81,957 |
|
(30,580) |
(37)
|
||||||||
General
and administrative expenses
|
$
|
578,328
|
$
|
473,408
|
$
|
104,920
|
22
|
|||||||||
Compensation
to executive officers
|
$
|
39,625
|
$
|
126,924
|
$
|
(87,299)
|
(69)
|
|||||||||
Interest
expense to related parties
|
$
|
65,747
|
$
|
595,250
|
$
|
(529,503)
|
(89)
|
|||||||||
Net
loss
|
$
|
(202,071)
|
$
|
(917,297)
|
$
|
715,226
|
78
|
|||||||||
Net
cash used in operating activities
|
$
|
(97,968)
|
$
|
(91,899)
|
$
|
(6,068)
|
7
|
|||||||||
Net
cash provided (used in) investing activities
|
$
|
135,986
|
$
|
(73,109)
|
$
|
209,095
|
286
|
|||||||||
Net
cash provided (used in) financing activities
|
$
|
99,705
|
$
|
(51,225)
|
$
|
150,930
|
295
|
(1)
|
the
portable water filtration industry is in a state of rapid technological
change, which can render the Company’s products obsolete or
unmarketable;
|
(2)
|
any
failure by the Company to anticipate or respond to technological
developments or changes in industry standards or customer requirements,
or
any significant delays in product development or introduction, could
have
a material adverse effect on the Company’s business, operating results and
financial condition;
|
(3)
|
the
Company’s cost of sales may be materially affected by increases in the
market prices of the raw materials used in the Company’s manufacturing
processes;
|
(4)
|
the
Company’s water related product sales could be materially affected by
weather conditions and government
regulations;
|
(5)
|
the
Company is subject to the risks of conducting business internationally;
and
|
(6)
|
the
industries in which the Company operates are highly competitive.
Additional risks and uncertainties are outlined in the Company’s filings
with the Securities and Exchange Commission, including its most recent
fiscal 2007 Annual Report on Form
10-KSB.
|
Common
Stock
|
||||
Issued
to
|
Shares
|
Estimated
price per share
|
||
Carrie
Garcia
|
10,000
|
$0.37
|
||
Alexis
Mayden
|
10,000
|
$0.37
|
||
Joaquin
Sierra
|
10,000
|
$0.37
|
||
Arturo
Villafuerte
|
10,000
|
$0.37
|
||
Grace
Wiles
|
1,000
|
$0.37
|
||
Common
Stock
|
||||
Issued
to
|
Shares
|
Estimated
price per share
|
||
Wong
Johnson & Associates
|
133,498
|
$0.35
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section
302 of
the Sarbanes-Oxley Act of 2002)
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) (Section
302 of
the Sarbanes-Oxley Act of 2002)
|
32.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350 Section
906 of
the Sarbanes-Oxley Act of 2002)
|
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350 Section
906 of
the Sarbanes-Oxley Act of 2002)
|
Seychelle
Environmental Technologies, Inc.
|
||
|
|
|
Date: January
14, 2008
|
By:
|
/s/ Carl
Palmer
|
Director,
Chief Executive Officer
and President
|
|
|
|
Date: January
14, 2008
|
By:
|
/s/ Jim
Place
|
Director
and Chief Financial Officer and Chief Operating
Officer
|