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
|
||
Item 1.
|
Description
of the Business
|
3
|
Risk
Factors Related to Our Business
|
7
|
|
Item 2.
|
Description
of Property
|
11
|
Item 3.
|
Legal
Proceedings
|
10
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
10
|
Part
II
|
||
Item 5.
|
Market
for Common Equity and Related Stockholder Matters
|
10
|
Item 6.
|
Management's
Discussion and Analysis or Plan of Operation
|
11
|
Item 7.
|
Financial
Statements
|
19
|
Item 8.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
43
|
Item8A.
|
Controls
and Procedures
|
43
|
Item 8B.
|
Other
Information
|
44
|
Part
III
|
||
Item 9.
|
Directors
and Executive Officers of the Registrant
|
44
|
Item
9b
|
Other
Information
|
46
|
Item 10.
|
Executive
Compensation
|
46
|
Item 11.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters
|
49
|
Item 12.
|
Certain
Relationships and Related Transactions
|
50
|
Part
IV
|
||
Item 13.
|
Exhibits
|
51
|
Item 14.
|
Principal
Accountant Fees and Services
|
52
|
Signatures
|
54
|
-
|
operating
as a public entity, incurring non-cost of sales expenses such as
accounting, auditing, financial reporting and compliance, legal and costs
to maintain full compliance with rules governing 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.
|
Fiscal
Year 2008
|
High
Bid
|
Low
Bid
|
Quarter
Ended:
|
||
First
Quarter May 2007
|
$.42
|
$.26
|
Second
Quarter August 2007
|
$.42
|
$.29
|
Third
Quarter November 2007
|
$.51
|
$.20
|
Fourth
Quarter February 2008
|
$.40
|
$.19
|
Fiscal Year 2007
|
High
Bid
|
Low
Bid
|
Quarter
Ended:
|
||
First
Quarter May 2006
|
$.81
|
$.43
|
Second
Quarter August 2006
|
$.59
|
$.40
|
Third
Quarter November 2006
|
$.70
|
$.30
|
Fourth
Quarter February 2007
|
$.51
|
$.40
|
Years
Ended
|
||||||||||||||||
February
29,
|
February
28,
|
Percentage
|
||||||||||||||
2008
|
2007
|
Difference
|
Change
|
|||||||||||||
Sales
|
$
|
858,769
|
$
|
952,646
|
(93,877
|
)
|
-10
|
%
|
||||||||
Cost
of sales
|
491,066
|
851,970
|
(360,904
|
)
|
-42
|
%
|
||||||||||
Gross
profit
|
367,703
|
100,676
|
267,027
|
265
|
%
|
|||||||||||
Gross
profit percentage
|
43
|
%
|
11
|
%
|
||||||||||||
Selling
and marketing expenses
|
33,645
|
101,338
|
(67,693
|
)
|
-67
|
%
|
||||||||||
General
and administrative expenses
|
719,517
|
847,785
|
(128,268
|
)
|
-15
|
%
|
||||||||||
Loss
from operations
|
(385,459
|
)
|
(848,447
|
)
|
462,988
|
-55
|
%
|
|||||||||
Interest
expense
|
(55,851
|
)
|
(632,056
|
)
|
576,205
|
-91
|
%
|
|||||||||
Interest
income
|
7,887
|
16,205
|
(8,318
|
)
|
-51
|
%
|
||||||||||
Other
income
|
169,961
|
-
|
169,961
|
NA
|
||||||||||||
Net
loss
|
(263,462
|
)
|
(1,464,298
|
)
|
1,200,836
|
-82
|
%
|
|||||||||
Net
cash used in operating activities
|
(271,785
|
)
|
(361,621
|
)
|
89,836
|
-25
|
%
|
|||||||||
Net
cash provided by (used in) investing activities
|
135,967
|
(216,000
|
)
|
351,967
|
-163
|
%
|
||||||||||
Net
cash provided by (used in) financing activities
|
118,946
|
(21,225
|
)
|
140,171
|
-660
|
%
|
Selected
Financial Data
|
February
28,
2006
|
February
28,
2007
|
Difference
|
Percentage
Change
|
||||||||||||
Sales
|
$
|
751,844
|
$
|
952,646
|
$
|
200,802
|
27
|
|||||||||
Cost
of sales
|
$
|
430,134
|
$
|
851,970
|
$
|
368,736
|
86
|
|||||||||
Gross
profit
|
$
|
321,710
|
$
|
100,676
|
$
|
(167,934
|
)
|
(52
|
)
|
|||||||
Gross
profit percentage
|
43
|
%
|
11
|
%
|
(27
|
)
|
-
|
|||||||||
Selling
expenses
|
$
|
59,459
|
$
|
101,338
|
$
|
41,879
|
70
|
|||||||||
General
and administrative expenses
|
$
|
583,157
|
$
|
847,785
|
$
|
113,936
|
20
|
|||||||||
Interest
expense
|
$
|
272,653
|
$
|
615,851
|
$
|
348,416
|
128
|
|||||||||
Net
loss
|
$
|
932,456
|
$
|
1,464,298
|
$
|
(531,842
|
)
|
(57
|
)
|
|||||||
Net
cash used in operating activities
|
$
|
(205,072
|
)
|
$
|
(361,621
|
)
|
$
|
(156,549
|
)
|
(76
|
)
|
|||||
Net
cash used in investing activities
|
$
|
(117,251
|
)
|
$
|
(216,000
|
)
|
$
|
(98,749
|
)
|
(84
|
)
|
|||||
Net
cash provided by (used in) financing activities
|
$
|
934,110
|
$
|
(21,225
|
)
|
$
|
(955,335
|
)
|
(102
|
)
|
Convertible
|
||||||||||||||||||||||||
Less
Than
|
More
Than
|
to
Stock
|
||||||||||||||||||||||
Total
|
1
Year
|
1-
2 Years
|
2-3
Years
|
3
Years
|
or
Warrants
|
|||||||||||||||||||
Accounts
payable and accrued liabilities
|
$
|
133,356
|
$
|
133,356
|
||||||||||||||||||||
Customer
deposits
|
66,951
|
66,951
|
||||||||||||||||||||||
Accrued
interest to related party (1)
|
221,170
|
$
|
221,170
|
|||||||||||||||||||||
Line
of credit (2)
|
80,000
|
80,000
|
||||||||||||||||||||||
Note
payable to financial institution (3)
|
138,446
|
138,446
|
||||||||||||||||||||||
Bridge
note (4)
|
40,000
|
40,000
|
||||||||||||||||||||||
Note
payable to related party
|
396,088
|
396,088
|
||||||||||||||||||||||
1,076,011
|
418,753
|
-
|
-
|
396,088
|
261,170
|
|||||||||||||||||||
Other
contractual commitments (5)
|
129,369
|
83,412
|
43,668
|
2,289
|
||||||||||||||||||||
Total
contractual obligations
|
$
|
1,205,380
|
$
|
502,165
|
$
|
43,668
|
$
|
2,289
|
$
|
396,088
|
$
|
261,170
|
||||||||||||
(1)
Accrued interest settled with stock purchase warrants in April
2008
|
||||||||||||||||||||||||
(2)
Increased to $100,000 in March 2008
|
||||||||||||||||||||||||
(3)
Repayable when the Company sells its airplane
|
||||||||||||||||||||||||
(4)
Bridge note settled in common stock in March 2008
|
||||||||||||||||||||||||
(5)
Office lease commitment expiring August 2009 and office equipment
lease
|
ASSETS
|
||||
Current
assets:
|
||||
Cash
and cash equivalents
|
$
|
19,851
|
||
Accounts
receivable, net of allowance for doubtful accounts
|
||||
of
$2,094
|
20,709
|
|||
Inventory,
net
|
383,372
|
|||
Prepaid
expenses and other current assets
|
23,386
|
|||
Asset
held for sale
|
149,111
|
|||
Total
current assets
|
596,429
|
|||
Property
and equipment, net
|
112,095
|
|||
Intangible
assets, net
|
23,468
|
|||
Other
assets
|
6,624
|
|||
Total
assets
|
$
|
738,616
|
||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||
Current
liabilities:
|
||||
Accounts
payable and accrued expenses
|
$
|
133,356
|
||
Customer
deposits
|
66,951
|
|||
Accrued
interest due to related party
|
221,170
|
|||
Notes
payable
|
258,446
|
|||
Total
current liabilities
|
679,923
|
|||
Long-term
related party notes payable
|
396,088
|
|||
Total
liabilities
|
1,076,011
|
|||
Commitments
and contingencies (Note 10)
|
||||
Subsequent
events (Note 13)
|
||||
Stockholders'
deficit:
|
||||
Preferred
stock, 6,000,000 shares authorized, none issued or outstanding as of
February 29, 2008
|
-
|
|||
Common
stock $0.001 par value, 50,000,000 shares authorized, 25,613,670 issued
and outstanding as of February 29, 2008
|
25,614
|
|||
Additional
paid-in capital
|
6,322,685
|
|||
Accumulated
deficit
|
(6,685,694
|
)
|
||
Total
stockholders' deficit
|
(337,395
|
)
|
||
Total
liabilities and stockholders' deficit
|
$
|
738,616
|
Years
Ended
|
||||||||
February
29,
|
February
28,
|
|||||||
2008
|
2007
|
|||||||
Product
sales
|
$
|
858,769
|
$
|
842,646
|
||||
Distribution
income
|
-
|
110,000
|
||||||
Total
sales
|
858,769
|
952,646
|
||||||
Cost
of sales
|
491,066
|
851,970
|
||||||
Gross
profit
|
367,703
|
100,676
|
||||||
Selling
and marketing expenses
|
33,645
|
101,338
|
||||||
General
and administrative expenses
|
719,517
|
847,785
|
||||||
Loss
from operations
|
(385,459
|
)
|
(848,447
|
)
|
||||
Interest
expense
|
(55,851
|
)
|
(632,056
|
)
|
||||
Interest
income
|
7,887
|
16,205
|
||||||
Other
income
|
169,961
|
-
|
||||||
Loss
before income tax expense
|
(263,462
|
)
|
(1,464,298
|
)
|
||||
Income
tax expense
|
-
|
-
|
||||||
Net
loss
|
$
|
(263,462
|
)
|
$
|
(1,464,298
|
)
|
||
Net
loss per share:
|
||||||||
Basic
and Diluted
|
$
|
(0.01
|
)
|
$
|
(0.06
|
)
|
||
Weighted
average shares outstanding:
|
||||||||
Basic
and Diluted
|
25,351,604
|
25,013,807
|
Common
Stock
|
||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balance
at February 28, 2006
|
24,715,010
|
$
|
24,715
|
$
|
5,280,340
|
$
|
(4,957,934
|
)
|
$
|
347,121
|
||||||||||
Contributed
executive services
|
10,000
|
10,000
|
||||||||||||||||||
Issuance
of common stock for cash
|
53,000
|
53
|
12,697
|
12,750
|
||||||||||||||||
Issuance
of common stock in exchange for debt
|
258,597
|
259
|
165,141
|
165,400
|
||||||||||||||||
Issuance
of common stock for intellectual property
|
50,000
|
50
|
50
|
|||||||||||||||||
Issuance
of common stock for compensation
|
74,289
|
74
|
36,526
|
36,600
|
||||||||||||||||
Stock
based interest expense for warrants issued
|
466,230
|
466,230
|
||||||||||||||||||
Stock
based officer compensation for warrants issued
|
135,982
|
135,982
|
||||||||||||||||||
Net
loss
|
(1,464,298
|
)
|
(1,464,298
|
)
|
||||||||||||||||
Balance
at February 28, 2007
|
25,150,896
|
25,151
|
6,106,916
|
(6,422,232
|
)
|
(290,165
|
)
|
|||||||||||||
Contributed
executive services
|
10,000
|
10,000
|
||||||||||||||||||
Issuance
of common stock for compensation
|
83,500
|
84
|
24,545
|
24,629
|
||||||||||||||||
Issuance
of common stock as partial payment of accounts
payable
|
389,274
|
389
|
125,783
|
126,172
|
||||||||||||||||
Warrants
issued as payment of accrued interest due to related
party
|
60,509
|
60,509
|
||||||||||||||||||
Warrants
issued for services
|
32,422
|
32,422
|
||||||||||||||||||
Buy
back of common stock
|
(10,000
|
)
|
(10
|
)
|
(37,490
|
)
|
(37,500
|
)
|
||||||||||||
Net
loss
|
(263,462
|
)
|
(263,462
|
)
|
||||||||||||||||
Balance
at February 29, 2008
|
25,613,670
|
$
|
25,614
|
$
|
6,322,685
|
$
|
(6,685,694
|
)
|
$
|
(337,395
|
)
|
|||||||||
Years
Ended
|
||||||||
February
29,
|
February
28,
|
|||||||
2008
|
2007
|
|||||||
Operating
activities:
|
||||||||
Net
loss
|
$
|
(263,462
|
)
|
$
|
(1,464,298
|
)
|
||
Adjustments
to reconcile net loss to net cash
|
||||||||
used
in operating activities:
|
||||||||
Depreciation
and amortization
|
43,188
|
42,560
|
||||||
Provision
for allowance for doubtful accounts
|
2,094
|
3,988
|
||||||
Compensation
and interest exense in stock and warrants
|
57,051
|
602,212
|
||||||
Contributed
executive services
|
10,000
|
10,000
|
||||||
Stock issued for services |
-
|
36,600
|
||||||
Gain
on common stock issued as settlement of payables
|
(47,276
|
)
|
-
|
|||||
Impairment
of intellectual property
|
-
|
3,200
|
||||||
Reserve
for obsolete and slow moving inventory
|
(49,785
|
)
|
216,053
|
|||||
(Gain)
loss on disposal of property and equipment
|
(3,057
|
)
|
48,673
|
|||||
Effect
of changes in:
|
||||||||
Accounts
receivable
|
50,071
|
(43,260
|
)
|
|||||
Inventories
|
24,776
|
(182,774
|
)
|
|||||
Prepaid
expenses and other current assets
|
120,805
|
(98,920
|
)
|
|||||
Asset
held for sale
|
(11,239
|
)
|
-
|
|||||
Accounts
payable and accrued expenses
|
(17,545
|
)
|
126,672
|
|||||
Customer
deposits
|
(217,324
|
)
|
255,227
|
|||||
Accrued
interest due to related party
|
29,918
|
82,446
|
||||||
Net
cash used in operating activities
|
(271,785
|
)
|
(361,621
|
)
|
||||
Investing
activities:
|
||||||||
Proceeds
from sale of property and equipment
|
3,500
|
2,500
|
||||||
(Decrease)
increase in restricted cash
|
150,000
|
(150,000
|
)
|
|||||
Purchase
of property and equipment
|
(17,567
|
)
|
(67,483
|
)
|
||||
Increase
in intangible assets
|
(84
|
)
|
(1,017
|
)
|
||||
Decrease
in other assets
|
118
|
-
|
||||||
Net
cash used in investing activities
|
135,967
|
(216,000
|
)
|
|||||
Financing
activities:
|
||||||||
Proceeds
from the issuance of notes payable
|
179,500
|
30,000
|
||||||
Proceeds
from the issuance of notes payable to related
parties
|
96,913
|
-
|
||||||
Payments
of notes payable
|
(137,467
|
)
|
(63,975
|
)
|
||||
Proceeds
from the sale of common stock
|
-
|
12,750
|
||||||
Payments
for buy back of common stock
|
(20,000
|
)
|
-
|
|||||
Net
cash provided by financing activities
|
118,946
|
(21,225
|
)
|
|||||
Net
decrease in cash
|
(16,872
|
)
|
(598,846
|
)
|
||||
Cash,
beginning of period
|
36,723
|
635,569
|
||||||
Cash,
end of period
|
$
|
19,851
|
$
|
36,723
|
||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid for interest
|
$
|
25,933
|
$
|
10,987
|
||||
Cash
paid for income taxes
|
$
|
-
|
$
|
4,800
|
||||
Supplemental
disclosure of non-cash investing and financing
activities:
|
||||||||
Common
stock issued for services
|
$
|
24,629
|
$
|
36,600
|
||||
Common
stock issued for settlement of debt and accounts
payable
|
$
|
173,448
|
$
|
165,388
|
||||
Warrants
issued as payment of accrued interest
|
$
|
60,509
|
$
|
-
|
||||
Purchase
of property and equipment with debt
|
$
|
-
|
$
|
136,413
|
||||
Common
stock issued for purchase of technology
|
$
|
-
|
$
|
16,100
|
Years
Ended
|
||||||
February
29,
|
February
28,
|
|||||
2008
|
2007
|
|||||
Expected
life in years
|
2
|
1.25
- 3.75
|
||||
Stock
price volatility
|
167%
|
235
- 323%
|
||||
Risk
free interest rate
|
2.3
- 3.1%
|
3.5%
|
||||
Expected
dividends
|
None
|
None
|
||||
Forfeiture
rate
|
0%
|
0%
|
Raw
materials
|
$
|
210,417
|
|||
Finished
goods
|
366,600
|
||||
577,017
|
|||||
Reserve
for obsolete and slow moving inventory
|
(193,645
|
)
|
|||
$
|
383,372
|
Tooling
|
$
|
285,242
|
|||
Equipment
|
26,654
|
||||
Vehicles
|
10,000
|
||||
Furniture
and fixtures
|
15,775
|
||||
Computer
equipment
|
15,124
|
||||
Leasehold
equipment
|
4,710
|
||||
357,505
|
|||||
Less:
accumulated depreciation
|
|||||
and
amortization
|
(245,410
|
)
|
|||
$
|
112,095
|
Redi
Chlor brandname and trademark
|
$
|
16,100
|
|||
Hand
pump
|
8,000
|
||||
Patents
|
12,727
|
||||
36,827
|
|||||
Less:
accumulated amortization
|
(13,359
|
)
|
|||
$
|
23,468
|
Year
Ending
|
|||||
February 28,
|
|||||
2009
|
$
|
7,366
|
|||
2010
|
5,606
|
||||
2011
|
5,145
|
||||
2012
|
5,145
|
||||
2013
|
206
|
||||
Total
|
$
|
23,468
|
Line
of credit with a bank with a maximum borrowing of $100,000 extending
through June 2008. The line of credit is collateralized by all
business assets. Any principal amounts outstanding accrue interest at the
bank's index rate (6.25% as of February 29, 2008) plus 2% per
annum. Total available borrowings as of February 29, 2008
amounted to $20,000. This line of credit is due in June
2008. The line of credit does not contain any restrictive
financial covenants and the Company intends to renew the line of credit
for another year when it becomes due.
|
$
|
80,000
|
|||
Note
payable due to a financial institution, collateralized by the Company's
airplane, with interest at 7.375% per annum and due in monthly payments
through September 2032. As the Company expects to dispose of the airplane
within the next twelve months and use the proceeds to pay off the balance
of the note payable, the amounts have been classified as a current
liability on the accompanying consolidated balance
sheet.
|
138,446
|
||||
Bridge
note payable received from an individual in February 2008, due within six
months after issuance and earning no interest. The outstanding
amount has been converted to common stock subsequent to February 29, 2008
(see Note 13).
|
40,000
|
||||
$
|
258,446
|
Weighted-
|
|||||||||
Average
|
|||||||||
Restricted
|
Grant
Date
|
||||||||
Shares
|
Fair
Value
|
||||||||
Outstanding
at March 1, 2006
|
915,187
|
$
|
0.24
|
||||||
Granted
|
-
|
-
|
|||||||
Forfeited
|
-
|
-
|
|||||||
Vested
|
(915,187
|
)
|
0.24
|
||||||
Outstanding
at February 28, 2007
|
-
|
-
|
|||||||
Granted
|
472,774
|
0.33
|
|||||||
Forfeited
|
-
|
-
|
|||||||
Vested
|
(444,441
|
)
|
0.33
|
||||||
Outstanding
at February 29, 2008
|
28,333
|
0.40
|
|||||||
Weighted-
|
|||||||||
Average
|
|||||||||
Warrants
|
Exercise
|
||||||||
Outstanding
|
Price
|
||||||||
Outstanding
at March 1, 2006
|
6,000,000
|
$
|
0.23
|
||||||
Granted
|
100,000
|
0.40
|
|||||||
Exercised
|
-
|
-
|
|||||||
Forfeited
|
-
|
-
|
|||||||
Outstanding
at February 28, 2007
|
6,100,000
|
0.23
|
|||||||
Granted
|
707,221
|
0.21
|
|||||||
Exercised
|
-
|
-
|
|||||||
Forfeited
|
-
|
-
|
|||||||
Outstanding
at February 29, 2008
|
6,807,221
|
0.23
|
|||||||
Vested
or expected to vest at February 29, 2008
|
6,807,221
|
0.23
|
|||||||
Exercisable
at February 29, 2008
|
6,000,000
|
0.23
|
Warrants
Outstanding
|
Warrants
Exercisable
|
|||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||
Exercise
|
Remaining
|
Exercise
|
Number
|
Exercise
|
||||||||||||||||||
Number
|
Life (Years)
|
Price
|
Outstanding
|
Price
|
||||||||||||||||||
$
|
0.19
|
600,000
|
2.76
|
$
|
0.19
|
-
|
$
|
0.19
|
||||||||||||||
0.23
|
6,000,000
|
0.75
|
0.23
|
6,000,000
|
0.23
|
|||||||||||||||||
0.29
|
107,221
|
2.76
|
0.29
|
-
|
0.29
|
|||||||||||||||||
0.40
|
100,000
|
2.42
|
0.40
|
-
|
0.40
|
|||||||||||||||||
6,807,221
|
$
|
0.23
|
6,000,000
|
$
|
0.23
|
|||||||||||||||||
Years
Ended
|
|||||||||
February
29,
|
February
28,
|
||||||||
2008
|
2007
|
||||||||
Deferred
|
|||||||||
Federal
|
$
|
77,045
|
$
|
136,173
|
|||||
State
|
21,975
|
456,335
|
|||||||
99,020
|
592,508
|
||||||||
Change
in Valuation Allowance
|
(99,020
|
)
|
(592,508
|
)
|
|||||
Provision
|
$
|
-
|
$
|
-
|
Years
Ended
|
|||||||||
February
29,
|
February
28,
|
||||||||
2008
|
2007
|
||||||||
Federal
statutory rate
|
-34.00
|
%
|
-34.00
|
%
|
|||||
State
taxes - net of federal benefit
|
-5.61
|
%
|
-5.80
|
%
|
|||||
Meals
and entertainment
|
0.62
|
%
|
0.40
|
%
|
|||||
Contributed
Services
|
0.66
|
%
|
0.23
|
%
|
|||||
Penalties
|
0.03
|
%
|
0.00
|
%
|
|||||
Change
in valuation allowance
|
38.31
|
%
|
39.17
|
%
|
|||||
0.00
|
%
|
0.00
|
%
|
February
29,
|
February
28,
|
||||||||
2008
|
2007
|
||||||||
Net
operating loss
|
$
|
1,745,026
|
$
|
1,605,861
|
|||||
Interest
to related parties
|
94,749
|
107,854
|
|||||||
Inventory
reserve
|
82,958
|
104,286
|
|||||||
Fixed
assets and intangibles
|
116,019
|
140,617
|
|||||||
Tax
credits
|
16,348
|
16,348
|
|||||||
Accrued
expenses
|
1,769
|
-
|
|||||||
Warrant
amortization
|
473,608
|
449,168
|
|||||||
Other
|
148
|
-
|
|||||||
Total
deferred tax assets
|
2,530,625
|
2,424,134
|
|||||||
Deferred
tax liabilities - State taxes
|
(130,613
|
)
|
(123,142
|
)
|
|||||
Net
deferred tax asset
|
2,400,012
|
2,300,992
|
|||||||
Valuation
Allowance
|
(2,400,012
|
)
|
(2,300,992
|
)
|
|||||
Net
|
$
|
-
|
$
|
-
|
Jurisdiction
|
Open Tax Years
|
|
Federal
|
2004
– 2006
|
|
California
|
2003
- 2006
|
Year
Ending
|
|||||
February 28,
|
|||||
2009
|
$
|
83,412
|
|||
2010
|
43,668
|
||||
2011
|
2,289
|
||||
Total
|
$
|
129,369
|
|||
2008
|
2007
|
||||||||
Water
filtration products sold to
|
|||||||||
external
customers (1) in:
|
|||||||||
The
United States
|
$
|
800,277
|
$
|
870,772
|
|||||
China
|
5,021
|
36,564
|
|||||||
Asia,
except China
|
27,495
|
35,917
|
|||||||
United
Kingdom
|
12,808
|
3,109
|
|||||||
Other
countries
|
13,168
|
6,284
|
|||||||
Total
|
$
|
858,769
|
$
|
952,646
|
United
|
|||||||||||||
States
|
China
|
Total
|
|||||||||||
Property
and equipment, net
|
$
|
49,624
|
$
|
62,471
|
$
|
112,095
|
|||||||
Intangible
assets
|
23,468
|
23,468
|
|||||||||||
Other
assets
|
6,624
|
6,624
|
|||||||||||
$
|
79,716
|
$
|
62,471
|
$
|
142,187
|
NAME
|
AGE
|
POSITION HELD
|
|
Carl
Palmer
|
73
|
President,
Chief Executive Officer and Director
|
|
Richard
Parsons
|
73
|
Executive
Vice President, Secretary and Director
|
|
James
Place
|
69
|
Chief
Operating Officer, Chief Financial Officer,
Treasurer
|
|
SUMMARY
COMPENSATION TABLE
|
|||||||||||
Long
Term Compensation
|
|||||||||||
Annual
Compensation
|
Awards
|
Payouts
|
|||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
|||
Name
and Principle Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Compensation
($)
|
Restricted
Stock
Award(s)
($)(9)
|
Securities
Underlying
Option/SARs
(#)
|
LTIP
Payouts
($)
|
All
Other
Compensation
($)
|
|||
Carl
Palmer
President
& CEO
Director
|
2008
2007
2006
|
$10,000(2)
$10,000(2)
$10,000(2)
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
0
0
0
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
|||
Richard
Parsons (1)
Executive
VP
Director
|
2008
2007
2006
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$
0.00
|
(3)(5)
(3)(5)
(3)(5)(7)
|
(4)(6)
(4)(6)
(4)(6)
|
$0.00
$0.00
$0.00
|
$23,883(8)
$12,500(8)
$0.00
|
|||
James
Place (1)
COO
Director
|
2008
2007
2006
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
$
0.00
$ 0.00
$ 0.00
|
(3)
(3)
(3)
|
(4)
(4)(6)
(4)(6)
|
$0.00
$0.00
$0.00
|
$14,160(8)
$12,500(8)
$0.00
|
(1)
|
Elected
to Board of Directors during November
2004.
|
(2)
|
Effective
December 1, 2001, the Company entered into an employment agreement with
the President of the Company. The President of the Company has
decided not to accept his salary until the Company becomes
profitable.
|
(3)
|
During
November 2004, Messrs. Parsons and Place were granted 240,000 shares of
restricted common stock, which vest over two years beginning December 1,
2004. The estimated fair market value of the stock as of
November 30, 2004 was $225,600. The Company amortized the estimated fair
market value of the unearned compensation over the two-year vesting
period. On March 1, 2006, the Company adopted SFAS No. 123(R),
which required the Company to revalue the non-vested portion of this
grant. As of March 1, 2006, the unearned compensation relating
to this grant was decreased by approximately $50,500. The
Company has recorded compensation expense of approximately $4,000 and
$75,200 for the fiscal years ended February 29, 2007 and 2006,
respectively.
|
(4)
|
During
March 2005, Messrs. Parsons and Place were granted warrants to purchase
250,000 shares of restricted common stock at $0.225 per share. The first
third vested on the effective date of the agreement as an enticement to
enter into the agreement. The remaining warrants vest in equal
installments on December 1, 2005 and 2006 but are exercisable through
December 1, 2008. The fair market value of the warrants as of
November 30, 2004 was estimated at
$55,300.
|
(5)
|
During
March 2005, Mr. Parsons was granted 316,312 shares of restricted common
stock. The first third vested on the effective date of the
agreement as an enticement to enter into the agreement. The
remaining common stock vests in equal installments on December 1, 2005 and
2006. The fair market value of the restricted shares as of
November 30, 2004 was estimated at
$79,100.
|
(6)
|
During
July 2005, the Company expanded the employment agreements with Messrs.
Parsons and Place to provide management services for the
Company. As further consideration for services to be rendered,
the officers were granted 500,000 warrants redeemable into restricted
shares of the Company’s common stock at $0.225 per share. The
warrants are exercisable any time after December 1, 2006 and expire
December 1, 2008. The fair market value of the warrants as of
July 27, 2005 was estimated at
$30,000.
|
(7)
|
During
January 2006, the Company issued Mr. Parsons 37,500 shares of common stock
for services rendered. As the common stock was issued below the
Company’s market price at date of grant ($nil cost per share), the Company
recorded compensation expense relating to the estimated value of these
shares of $8,437.
|
(8)
|
During
October 2006, the Company commenced paying a monthly stipend of $2,500 to
J. Place and D. Parsons through December 2007. The Company
recorded compensation expense of $38,043 and $25,000 for the fiscal year
ended February 29, 2008 and February 28, 2007,
respectively.
|
(9)
|
Restricted
Stock (RS)– Awards of restricted stock are valued by multiplying the
number of shares granted by the closing price on the date of grant, minus
any consideration paid by the named executives. Holders of
restricted stock have voting and dividend rights with respect to their
restricted shares. To date, the Company has not declared or
paid any dividends.
|
Name
|
Grant
date
|
Type
|
Vesting
Schedule
|
Restricted
Shares Awarded
|
Grant
Date
Price
|
Grant
Date
Value
|
Total
Restricted Shares at February 29, 2008
|
Year
End
Value
|
Richard
Parsons
|
11/30/2004
|
RS
|
33.3%
on 12/1/04;
33.3%
on 12/01/05;
33.3%
on 12/1/06
|
240,000
|
$0.03
|
$112,800
|
240,000
|
$
46,248
|
Richard
Parsons
|
03/29/2005
|
RS
|
33.3%
on 12/1/04;
33.3%
on 12/01/05;
33.3%
on 12/1/06
|
316,312
|
$0.03
|
$
79,100
|
316,312
|
$129,688
|
James
Place
|
11/30/2004
|
RS
|
33.3%
on 12/1/04;
33.3%
on 12/01/05;
33.3%
on 12/1/06
|
240,000
|
$0.03
|
$112,800
|
240,000
|
$
46,248
|
NAME
AND ADDRESS
|
AMOUNT
AND NATURE OF
|
PERCENT
OF
|
||
OF
BENEFICIAL OWNER
|
BENEFICIAL
OWNERSHIP (1)(2)(4)
|
CLASS
|
||
The
TAM Irrevocable Trust
|
13,082,799
|
(3)
|
40.36%
|
|
4012
S. Rainbow #K111
|
||||
Las
Vegas, NV 80103-2012
|
||||
Carl
Palmer
|
-0-
|
-0-
|
||
251
Jeanell Dr., Ste 3
|
||||
Carson
City, NV 89703
|
||||
Richard
Parsons
|
1,601,312
|
4.94%
|
||
251
Jeanell Dr., Ste 3
|
||||
Carson
City, NV 89703
|
||||
James
Place
|
1,055,000
|
3.25%
|
||
251
Jeanell Dr., Ste 3
|
||||
Carson
City, NV 89703
|
||||
All
officers and directors as a Group (three persons)
|
2,656,312
|
8.19%
|
(1)
|
All
ownership is beneficial and of record, unless indicated
otherwise.
|
(2)
|
Beneficial
owners listed above have sole voting and investment power with respect to
the shares shown, unless otherwise
indicated.
|
(3)
|
The
TAM Irrevocable Trust is an irrevocable trust for the benefit
of certain family members of Mr. Carl Palmer. Mr. Palmer disclaims any
beneficial ownership or interest in this Trust. Cari Beck, his daughter,
is the Trustee of the Trust and has total beneficiary rights, including
all voting rights and investment power as the Trustee. The Trust is held
in her name (50%) as well as that of Lindsay Helvey (25%) and Casey Helvey
(25%), both granddaughters.
|
(4)
|
There
are no other financial instruments, including stock warrants, etc. that
are issuable within sixty days from the filing of this
document.
|
(5)
|
All
three officers spend 100% of their time managing the affairs of the
Company.
|
Exhibit No.
|
Description
|
2A*
|
Plan
of Exchange between Seychelle Environmental Technologies, Inc. and
Seychelle Water Technologies, Inc. dated January 30, 1998 as filed with
Form 10-SB 12 G on February 8, 2000.
|
3A*
|
Articles
of Incorporation dated January 23, 1998 as filed with Form 10-SB 12 G on
February 8, 2000.
|
3B*
|
Articles
of Merger of Royal Net, Inc. into Seychelle Environmental Technologies,
Inc as filed with Form 10-SB 12 G on February 8,
2000.
|
3C*
|
Amendment
to Articles of Incorporation re: Series "A" Preferred Stock as of January
31, 1998 as filed with Form 10-SB 12 G on February 8,
2000.
|
3D*
|
Amendment
to Articles of Incorporation re: Series "AA" Preferred Stock as of June 5,
1998 as filed with Form 10-SB 12 G on February 8,
2000.
|
3E*
|
Amendment
to Articles of Incorporation re: Series "AAA" Preferred Stock as of
February 18, 1999 as filed with Form 10-SB 12 G on February 8,
2000.
|
3F*
|
Bylaws
as filed with Form 10-SB 12 G on February 8,
2000.
|
10A*
|
Purchase
Agreement with Aqua Vision as filed with Form 10-SB 12 G on February 8,
2000.
|
10B*
|
Amended
Purchase Agreement with Aqua Vision as filed with Form 10-SB 12 G on
February 8, 2000.
|
10C*
|
2000
Stock Compensation Plan I, dated July 1, 2000 as filed with Registration
Statement on Form S-8 on August 31, 2000.
|
10D*
|
2002
Stock Compensation Plan I, dated February 12, 2002 as filed with
Registration Statement on Form S-8 on February 27,
2002.
|
10E*
|
Purchase
Agreement with Aqua Gear as filed with Annual Report on Form 10-KSB on
June 14, 2002.
|
10F*
|
Employment
Contract with Carl Palmer as filed with Annual Report on Form 10-KSB on
June 14, 2002.
|
10G*
|
Management
Consulting Contract with Richard Parsons
|
10H*
|
Management
Consulting Contract with James Place
|
10I*
|
Joint
Venture Agreement with Huanghua Plastic Co. Ltd. dated September 1,
2005
|
10J*
|
ABMS
Health Care Pvt. Ltd. Distribution Rights Agreement dated April 1,
2006
|
10K*
|
Confident,
Inc. Exclusive Distribution Rights Agreement dated January 1,
2006
|
10L*
|
Continental
Technologies. Inc., Purchase Agreement dated April 26,
2006
|
10M*
|
Promissory
Note to TAM Irrevocable Trust dated May 1, 2001
|
10N*
|
Promissory
Note to TAM Irrevocable Trust dated February 28,
2002
|
10O*
|
Promissory
Note to TAM Irrevocable Trust dated February 28,
2003
|
10P*
|
Promissory
Note to TAM Irrevocable Trust dated November 1,
2003
|
10Q*
|
Promissory
Note to TAM Irrevocable Trust dated February 28,
2004
|
10R*
|
Food
For Health Purchase Agreement
|
10S*
|
Food
For Health Distribution Agreement
|
10T*
|
Seychelle
Environmental Technologies, Inc. License Agreement with Mr. Gary
Hess
|
31.1**
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 of
the Sarbanes Oxley Acto of 2002)
|
31.1**
|
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)
|
23.1**
|
Auditor’s
Consent
|
99*
|
Code
of Ethics for Chief Executive Officer and Senior Financial
Officers
|
February
29,
2008
|
February
28,
2007
|
||||||||
Audit
fees
|
$
|
86,837
|
$
|
72,464
|
|||||
Audit
related fees
|
2,632
|
$
|
23,161
|
||||||
Tax
fees
|
-0-
|
-0-
|
|||||||
All
other fees
|
-0-
|
-0-
|
|||||||
SEYCHELLE
ENVIRONMENTAL TECHNOLOGIES, INC.
|
||
|
|
|
Date: May
29, 2008
|
By:
|
/s/ Carl
Palmer
|
Carl
Palmer
Chief
Executive Officer
|
|
|
|
Date:
May 29, 2008
|
By:
|
/s/ Jim
Place
|
Jim
Place
Chief Financial
Officer
|
/s/ Carl
Palmer
|
|||
Carl
Palmer, Director
|
May
29, 2008
|
||
/s/
Jim Place
|
|||
Jim
Place, Director
|
May
29, 2008
|
||
/s/
Richard Parsons
|
|||
Richard
Parsons, Director
|
May
29, 2008
|