Nevada
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33-0836954
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(State
or other jurisdiction
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(IRS
Employer File Number)
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Of
incorporation)
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33012
Calle Perfecto
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|
San Juan Capistrano,
California
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92675
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(Address
of principal executive offices)
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(zip
code)
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Large
accelerated filer
[]
|
Accelerated
filer []
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Non-accelerated
filer [] (Do not check if a smaller reporting
company)
|
Smaller
reporting company [X]
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Page
|
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PART
I FINANCIAL INFORMATION
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Item
1. Condensed Consolidated Financial Statements
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|
Balance
Sheets
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3
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Statements
of Operations
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4
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Statements
of Cash Flows
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5
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Notes
to Financial Statements
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6
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Item
2. Management’s Discussion and Analysis and Plan of
Operation
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10
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Item
3. Quantitative and Qualitative Disclosures About Market
Risk
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13
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Item
4. Controls and Procedures
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13
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Item
4T. Controls and Procedures
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13
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PART
II OTHER INFORMATION
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Item
1. Legal Proceedings
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14
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Item
1A. Risk Factors
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14
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Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
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17
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Item
3. Defaults Upon Senior Securities
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18
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Item
4. Submission of Matters to a Vote of Security Holders
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18
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Item
5. Other Information
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18
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Item
6. Exhibits
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18
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|
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Signatures
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19
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As
of
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||||||||
May
31, 2009
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February
28, 2009
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|||||||
ASSETS
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(UNAUDITED)
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(AUDITED)
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||||||
Current
assets:
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||||||||
Cash
and cash equivalents
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$ | 138,886 | 160,415 | |||||
Accounts
receivable, net of allowance for doubtful accounts
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||||||||
of
$2,774
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105,685 | 61,447 | ||||||
Inventory,
net
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263,083 | 409,353 | ||||||
Prepaid
expenses and other current assets
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47,892 | 77,827 | ||||||
Total
current assets
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555,546 | 709,042 | ||||||
Property
and equipment, net
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121,209 | 129,964 | ||||||
Intangible
assets, net
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14,516 | 16,374 | ||||||
Other
assets
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6,624 | 6,624 | ||||||
Total
assets
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$ | 697,895 | 862,004 | |||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
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||||||||
Current
liabilities:
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||||||||
Accounts
payable and accrued expenses
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$ | 100,843 | 92,818 | |||||
Customer
deposits
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122,218 | 177,325 | ||||||
Accrued
interest due to related party
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27,596 | 76,359 | ||||||
Notes
payable
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124,168 | 126,802 | ||||||
Total
current liabilities
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374,825 | 473,304 | ||||||
Long-term
related party notes payable
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471,088 | 471,088 | ||||||
Total
liabilities
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845,913 | 944,392 | ||||||
Commitments
and contingencies (Note 10)
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||||||||
Subsequent
events (Note 13)
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||||||||
Stockholders'
deficit:
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||||||||
Preferred
stock, 6,000,000 shares authorized, none issued or outstanding as of May
31, 2009
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- | - | ||||||
Common
stock $0.02 par value, 50,000,000 shares authorized, 25,824,146 shares
issued and outstanding
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25,824 | 25,824 | ||||||
Additional
paid-in capital
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6,911,835 | 6,907,637 | ||||||
Accumulated
deficit
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(7,085,677 | ) | (7,015,849 | ) | ||||
Total
stockholders' deficit
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(148,018 | ) | (82,388 | ) | ||||
Total
liabilities and stockholders' deficit
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$ | 697,895 | 862,004 |
Three
Months Ended
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||||||||
May
31,
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May
31,
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|||||||
2009
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2008
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|||||||
Revenues
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$ | 398,375 | $ | 229,222 | ||||
Cost
of sales
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251,138 | 129,134 | ||||||
Gross
profit
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147,236 | 100,088 | ||||||
Operating
Expenses
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||||||||
Selling
and marketing expenses
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6,796 | 6,808 | ||||||
General
and administrative expenses
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183,165 | 127,411 | ||||||
Compensation
to executive officers
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5,002 | 91,205 | ||||||
Total
expenses
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194,962 | 225,424 | ||||||
Loss
from operations
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(47,726 | ) | (125,336 | ) | ||||
Other
Income(Expense)
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||||||||
Interest
income
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162 | 10 | ||||||
Interest
expense-related parties
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(16,396 | ) | - | |||||
Interest
expense-other
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(3,255 | ) | (12,205 | ) | ||||
Claim
Settlement
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- | 14,000 | ||||||
Miscellaneous
expense(income)
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(2,613 | ) | - | |||||
Total
other income(expense)
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(22,102 | ) | 1,805 | |||||
Loss
before income tax expense
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(69,828 | ) | (123,531 | ) | ||||
Provision
for income taxes
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- | - | ||||||
Net
loss
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$ | (69,828 | ) | $ | (123,531 | ) | ||
BASIC
AND DILUTED LOSS PER SHARE
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$ | - | $ | - | ||||
WEIGHTED
AVERAGE NUMBER OF
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||||||||
SHARES
OUTSTANDING
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25,824,146 | 25,810,373 |
Three
Months Ended,
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||||||||
May
31,
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May
31,
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|||||||
2009
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2008
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|||||||
OPERATING
ACTIVITIES:
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||||||||
Net
income (loss)
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$ | (69,828 | ) | $ | (123,531 | ) | ||
Adjustments
to reconcile net loss to net cash
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||||||||
used
in operating activities:
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||||||||
Depreciation
and amortization
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13,593 | 12,299 | ||||||
Stock-based
compensation and interest expense
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4,197 | - | ||||||
Contributed
executive services
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- | 135,677 | ||||||
Changes
in operating assets and liabilities:
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||||||||
(Increase)
decrease in accounts receivable
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(44,238 | ) | (10,776 | ) | ||||
(Increase)
decrease in inventory
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146,270 | 47,620 | ||||||
(Increase)
decrease in prepaid expenses and other assets
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29,935 | 9,866 | ||||||
Increase
(decrease) in accounts payable and accrued expenses
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8,026 | (50,194 | ) | |||||
Increase
(decrease) in accrued interest payable
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(48,763 | ) | 7,479 | |||||
Increase
(decrease) in customer deposits
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(55,107 | ) | 8,634 | |||||
Net
Cash Provided (Used) by Operating Activities
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(15,915 | ) | 37,074 | |||||
INVESTING
ACTIVITIES:
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||||||||
Purchase
in property and equipment
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(2,980 | ) | (4,332 | ) | ||||
Payment
for patents
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- | (325 | ) | |||||
Net
Cash Provided (Used) in Investing Activities
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(2,980 | ) | (4,657 | ) | ||||
FINANCING
ACTIVITIES:
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||||||||
Proceeds
from related party notes payable
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- | 75,000 | ||||||
Repayment
of notes payable
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(2,634 | ) | (20,542 | ) | ||||
Net
Cash Provided (Used) by Financing Activities
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(2,634 | ) | 54,458 | |||||
NET
INCREASE (DECREASE) IN CASH
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(21,529 | ) | 86,875 | |||||
CASH
AT BEGINNING OF PERIOD
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160,415 | 19,851 | ||||||
CASH
AT END OF PERIOD
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$ | 138,886 | $ | 106,726 | ||||
NON-CASH
INVESTING AND FINANCING ACTIVITIES
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||||||||
Stock
issued for settlement of debt and accounts payable
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$ | - | $ | 6,000 | ||||
Stock
and warrants issued for services and interest
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$ | - | $ | 224,970 | ||||
Supplemental
disclosures of cash flow information:
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||||||||
Cash
Paid for:
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||||||||
Interest
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$ | $ | 2,775 | |||||
Income
taxes
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$ | - | $ | - |
May
31, 2009,
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||||||||
2009
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2008
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|||||||
Net
Income (Loss)
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$
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(69,828
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)
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$
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(123,531
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)
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||
Basic
Income (Loss) Per Common Share
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$
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(0.00
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)
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$
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(0.00
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)
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||
Basic
Weighted Average Number of Share Outstanding
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25,824,146
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25,810,373
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Warrants
Outstanding
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Warrants
Exercisable
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|||||||||||||||||||||
Weighted
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Weighted
|
Weighted
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||||||||||||||||||||
Average
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Average
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Average
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||||||||||||||||||||
Exercise
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Number
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Remaining
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Exercise
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Number
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Exercise
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|||||||||||||||||
Price
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Outstanding
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Life
(Years)
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Price
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Outstanding
|
Price
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|||||||||||||||||
$ |
0.19
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600,000 | 2.16 | $ | 0.19 | - | $ | 0.19 | ||||||||||||||
0.23 | 4,000,000 | 0.25 | 0.23 | 4,000,000 | 0.23 | |||||||||||||||||
0.29 | 107,221 | 2.16 | 0.29 | - | 0.29 | |||||||||||||||||
0.40 | 100,000 | 1.75 | 0.40 | - | 0.40 | |||||||||||||||||
0.33 | 1,700,000 | 1.75 | 0.33 | 1,700,000 | 0.33 | |||||||||||||||||
0.16 | 30,000 | 1.75 | 0.16 | - | 0.16 | |||||||||||||||||
0.25 | 10,000 | 1.75 | 0.25 | - | 0.25 | |||||||||||||||||
0.40 | 2,500 | 1.75 | 0.40 | - | 0.40 | |||||||||||||||||
6,549,721 | $ | 0.25 | 5,700,000 | $ | 0.25 |
The
Company’s inventory consisted of the following at May 31, 2009:
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||||
Raw
materials
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$ | 254,046 | ||
Work
in Progress
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7,743 | |||
Finished
goods
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126,919 | |||
388,708 | ||||
Reserve
for obsolete and slow moving inventory
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(125,625 | ) | ||
$ | 263,083 |
(1)
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the
portable water filtration industry is in a state of rapid technological
change, which can render the Company’s products obsolete or
unmarketable;
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(2)
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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;
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(3)
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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;
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(4)
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the
Company’s water related product sales could be materially affected by
weather conditions and government
regulations;
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(5)
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the
Company is subject to the risks of conducting business internationally;
and
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(6)
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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 2008 Annual Report on Form
10-KSB.
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Three-month
period ended May 31, 2009 compared to the corresponding period in
2008
|
||||||||||||||||||||||
Year
over
|
||||||||||||||||||||||
2009
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2008
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year
change
|
%
|
|||||||||||||||||||
Sales
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$
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398,375
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$
|
229,222
|
169,153
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74%
|
||||||||||||||||
Cost
of sales
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251,138
|
129,134
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122,004
|
94%
|
||||||||||||||||||
Gross
profit
|
147,236
|
100,088
|
47,148
|
47%
|
||||||||||||||||||
Gross
profit percentage
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37%
|
44%
|
||||||||||||||||||||
Selling
and marketing expenses
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6,796
|
6,808
|
-12
|
0%
|
||||||||||||||||||
General
and administrative expenses
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183,165
|
127,411
|
55,754
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44%
|
||||||||||||||||||
Compensation
to executive officers
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5,002
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91,205
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-86,203
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-95%
|
||||||||||||||||||
Interest
expense to related parties
|
16,396
|
8,660
|
7,736
|
89%
|
||||||||||||||||||
Net
loss
|
$
|
(69,828)
|
$
|
(123,531)
|
53,703
|
-43%
|
-
|
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.
|
-
|
lack
of consistent sales to maintain profitability,
|
-
|
significant
legal and professional fees associated with regulated business activities
and the SEC,
|
-
|
reporting
requirements, including continuing Sarbanes-Oxley
requirements.
|
31.1
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Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 of
the Sarbanes-Oxley Act of 2002)
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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)
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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.
|
||
|
|
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Date: June
29, 2009
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By:
|
/s/ Carl
Palmer
|
Carl
Palmer
Director,
Chief Executive Officer
and President
|
|
|
|
Date: June
29, 2009
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By:
|
/s/ Jim
Place
|
Jim
Place
Director
and Chief Financial Officer and Chief Operating
Officer
|