Nevada
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33-0836954
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(State or other jurisdiction Of incorporation)
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(IRS Employer File Number)
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32963 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
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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þ
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(Do not check if a smaller reporting company)
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Page
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|||||
PART I FINANCIAL INFORMATION
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|||||
Item 1.
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Financial Statements
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3
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|||
Condensed Consolidated Balance Sheets
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3
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||||
Condensed Consolidated Statements of Operations
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4
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||||
Condensed Consolidated Statements of Cash Flows
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5
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Notes to Condensed Consolidated Financial Statements
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6
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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9
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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12
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Item 4.
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Controls and Procedures
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12
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Item 4T.
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Controls and Procedures
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12
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PART II OTHER INFORMATION
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|||||
Item 1.
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Legal Proceedings
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13
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Item 1A.
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Risk Factors
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13
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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13
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Item 3.
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Defaults Upon Senior Securities
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13
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Item 4.
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Submission of Matters to a Vote of Security Holders
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13
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Item 5.
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Other Information
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13
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Item 6.
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Exhibits
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14
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Signatures
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15
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May 31,
2015
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February 28,
2015
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||||||
ASSETS
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$
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861,669
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$
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1,514,534
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||||
Accounts receivable, net of allowance for doubtful accounts and sales returns
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||||||||
of $13,400
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695,305
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284,121
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||||||
Related party receivable
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35,101
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12,601
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||||||
Inventory, net
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1,350,689
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1,009,491
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||||||
Deferred tax assets
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384,547
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629,838
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||||||
Prepaid expenses, deposits and other current assets
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239,295
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174,052
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||||||
Total current assets
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3,566,606
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3,624,637
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||||||
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||||||||
Property and equipment, net
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164,277
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162,107
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||||||
Intangible assets, net
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152,210
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152,643
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||||||
Deferred tax assets
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611,314
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611,314
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||||||
Other assets
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15,651
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25,491
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||||||
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||||||||
Total assets
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$
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4,510,058
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$
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4,576,192
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||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
Current liabilities:
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||||||||
Accounts payable and accrued expenses
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$
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238,836
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$
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238,009
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||||
Accrued legal and settlement fees (Note 8)
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-
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532,103
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||||||
Customer deposits
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45,153
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119,215
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||||||
Capital lease obligation, current portion
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6,568
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5,639
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||||||
Total current liabilities
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290,557
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894,966
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||||||
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||||||||
Long-term liabilities:
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Capital lease obligation, net of current
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2,659
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4,081
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||||||
Total liabilities
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293,216
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899,047
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Stockholders' equity:
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||||||||
Preferred stock, 6,000,000 shares authorized, none issued or outstanding
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-
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-
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||||||
Common stock $0.001 par value, 50,000,000 shares authorized, 25,913,646
issued and outstanding at May 31, 2015 and February 28, 2015
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25,914
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25,914
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||||||
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||||||||
Additional paid-in capital
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8,524,802
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8,457,603
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||||||
Accumulated deficit
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(4,333,874
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)
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(4,806,372
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)
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Total stockholders' equity
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4,216,842
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3,677,145
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||||||
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||||||||
Total liabilities and stockholders' equity
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$
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4,510,058
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$
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4,576,192
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For the Three Months Ended
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|||||||
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May 31,
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May 31,
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||||||
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2015
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2014
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||||||
Sales
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$
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2,347,183
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$
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1,107,298
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||||
Cost of sales
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1,068,030
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569,835
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||||||
Gross profit
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1,279,153
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537,463
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||||||
Operating Expenses
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||||||||
Selling, General, and Administrative Expenses
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551,916
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634,309
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Depreciation and Amortization
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9,712
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13,759
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||||||
Total operating expenses
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561,628
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648,068
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||||||
Income (Loss) from Operations
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717,525
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(110,605
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)
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|||||
Other Income (Expense)
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||||||||
Interest income
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189
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1,660
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||||||
Interest expense
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-
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(269
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)
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|||||
Other income
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75
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8,492
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||||||
Total other income
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264
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9,883
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||||||
Income (loss) before provision for income taxes
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717,789
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(100,722
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)
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Income tax benefit (expense)
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(245,291
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)
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37,994
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|||||
Net income (loss)
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$
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472,498
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$
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(62,728
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)
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BASIC INCOME (LOSS) PER SHARE
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$
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0.02
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$
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(0.00
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)
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DILUTED INCOME (LOSS) PER SHARE
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$
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0.02
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$
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(0.00
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)
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BASIC WEIGHTED AVERAGE NUMBER OF
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||||||||
SHARES OUTSTANDING
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25,913,646
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25,878,646
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DILUTED WEIGHTED AVERAGE NUMBER OF
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||||||||
SHARES OUTSTANDING
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26,499,618
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25,878,646
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For The Three Months Ended
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|||||||||
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May 31,
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May 31,
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|||||||
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2015
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2014
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|||||||||
OPERATING ACTIVITIES:
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|||||||||
Net income (loss)
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$
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472,498
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$
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(62,728
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)
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Adjustments to reconcile net income (loss) to net cash used in operating activities:
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|||||||||
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|||||||||
Depreciation and amortization
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9,712
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13,759
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|||||||
Stock-based compensation
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67,199
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122,175
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|||||||
Deferred tax expense (benefit)
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245,291
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(37,994
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)
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||||||
Changes in operating assets and liabilities:
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|||||||||
(Increase) decrease in accounts receivable
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(411,184
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)
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6,906
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||||||
Increase in related party receivable
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(22,500
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)
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(7,008
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)
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|||||
Increase in inventory
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(341,198
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)
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(40,288
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)
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Increase in prepaid expenses, deposits and other assets
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(55,403
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)
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(184,558
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)
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Increase (decrease) in accounts payable and accrued expenses
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827
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(27,302
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)
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||||||
Decrease in accrued legal and settlement fees
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(532,103
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)
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- |
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|||||
Decrease in customer deposits
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(74,062
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)
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(31,942
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)
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|||||
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|||||||||
Net Cash Used In Operating Activities
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(640,923
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)
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(248,980
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)
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|||||
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|||||||||
INVESTING ACTIVITIES:
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|||||||||
Purchase of property and equipment
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(11,449
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)
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(10,755
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)
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|||||
Purchase of intangible assets
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-
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(434
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)
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||||||
Net Cash Used In Investing Activities
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(11,449
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)
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(11,189
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)
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|||||||||
FINANCING ACTIVITIES:
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|||||||||
Repayment of capital lease obligation
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(493
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)
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(1,208
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)
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|||||
Net Cash Used in Financing Activities
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(493
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)
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(1,208
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)
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|||||
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|||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS
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(652,865
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)
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(261,377
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)
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|||||
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|||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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1,514,534
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2,971,825
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|||||||
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|||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$
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861,669
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$
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2,710,448
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|||||
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|||||||||
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|||||||||
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|||||||||
Supplemental disclosures of cash flow information:
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|||||||||
Cash paid for:
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|||||||||
Interest
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$
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-
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$
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269
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|||||
Income taxes
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$
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-
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$
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-
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|
For the three months ended
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|||||||
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May 31,
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|||||||
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2015
|
2014
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||||||
Numerator:
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||||||||
Net income (loss) available to common shareholders
|
$
|
427,498
|
$
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(62,728
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)
|
|||
Weighted average shares – basic
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25,913,646
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25,878,646
|
||||||
Net income (loss) per share – basic
|
$
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0.02
|
$
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(0.00
|
)
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|||
|
||||||||
Dilutive effect of common stock equivalents:
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||||||||
Warrants
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585,972
|
-
|
||||||
Weighted average shares – diluted
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26,499,618
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25,878,646
|
||||||
Net income (loss) per share – diluted
|
$
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0.02
|
$
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(0.00
|
)
|
|
Weighted-
|
|||||||
|
Average
|
|||||||
|
Warrants
|
Exercise
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||||||
|
Outstanding
|
Price
|
||||||
Outstanding at February 28, 2015
|
8,407,221
|
0.21
|
||||||
Granted
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
(2,000,000
|
)
|
0.21
|
|||||
Outstanding at May 31, 2015
|
6,407,221
|
0.21
|
||||||
Vested at May 31, 2015
|
5,446,137
|
0.21
|
||||||
Exercisable at May 31, 2015
|
5,446,137
|
0.21
|
|
Warrants Outstanding
|
Warrants Exercisable
|
||||||||
|
|
Weighted
|
Weighted
|
|
Weighted
|
|||||
|
|
Average
|
Average
|
|
Average
|
|||||
|
Number
|
Remaining
|
Exercise
|
Number
|
Exercise
|
|||||
Exercise Price
|
Outstanding
|
Life (Years)
|
Price
|
Outstanding
|
Price
|
|||||
|
$0.21
|
6,407,221
|
5.54
|
|
$0.21
|
5,446,137
|
|
$0.21
|
The Company's inventory consisted of the following at May 31, 2015 and February 28, 2015:
|
||||||||
|
May 31,
2015
|
February 28,
2015
|
||||||
Raw materials
|
$
|
831,954
|
$
|
536,302
|
||||
Finished goods
|
558,735
|
513,189
|
||||||
|
1,390,689
|
1,049,491
|
||||||
Reserve for obsolete and slow moving inventory
|
(40,000
|
)
|
(40,000
|
)
|
||||
|
$
|
1,350,689
|
$
|
1,009,491
|
|
(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 assembly 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 2015 Annual Report on Form 10-K.
|
Three-month period ended May 31, 2015 compared to the corresponding period in 2014
|
||||||||||||||||
|
||||||||||||||||
|
Year over
|
|||||||||||||||
|
2015
|
2014
|
year change
|
%
|
||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Sales
|
$
|
2,347,183
|
$
|
1,107,298
|
1,239,885
|
112
|
%
|
|||||||||
Cost of sales
|
1,068,030
|
569,835
|
498,195
|
87
|
%
|
|||||||||||
Gross profit
|
1,279,153
|
537,463
|
741,690
|
138
|
%
|
|||||||||||
Gross profit %
|
54
|
%
|
49
|
%
|
||||||||||||
Selling general and administrative expenses
|
551,916
|
634,309
|
(82,393
|
)
|
(13
|
%)
|
||||||||||
Depreciation and amortization expense
|
9,712
|
13,759
|
(4,047
|
)
|
(29
|
%)
|
||||||||||
Income (loss) before provision (benefit) for income taxes
|
717,789
|
(100,722
|
)
|
818,511
|
813
|
%
|
||||||||||
Provision (benefit) for income taxes
|
245,291
|
(37,994
|
)
|
283,285
|
746
|
%
|
||||||||||
|
||||||||||||||||
Net income (loss)
|
472,498
|
(62,728
|
)
|
535,226
|
853
|
%
|
||||||||||
Net income (loss) %
|
20
|
%
|
(6
|
%
)
|
Exhibit No.
|
Description
|
|
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) | |
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Seychelle Environmental Technologies, Inc.
|
|
|
|
|
|
|
Date: July 10, 2015
|
By:
|
/s/ Carl Palmer
|
|
|
Carl Palmer
Director, Chief Executive Officer
|
|
Date: July 10, 2015
|
By:
|
/s/ Jim Place
|
|
|
Jim Place
Director and Chief Financial Officer
|