SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA - Quarter Report: 2011 May (Form 10-Q)

 

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Nevada		33-0836954
(State or other jurisdiction Of incorporation)		(IRS Employer File Number)
32963 Calle Perfecto
San Juan Capistrano, California		92675
(Address of principal executive offices)		(zip code)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes þ  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(Section 232.405 of this chapter) during the preceding 12 months(or such shorter period that the registrant was required to submit and post such files. Yes o  No o

 

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes o   No þ

 

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			Page
PART I  FINANCIAL INFORMATION
Item 1.	Financial Statements			3
	Condensed Consolidated Balance Sheets			3
	Condensed Consolidated Statements of Income			4
	Condensed Consolidated Statements of Cash Flows			5
	Notes to Condensed Consolidated Financial Statements			6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			12
Item 4.	Controls and Procedures			12
Item 4T.	Controls and Procedures			12
PART II  OTHER INFORMATION
Item 1.	Legal Proceedings			13
Item 1A.	Risk Factors			13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			13
Item 3.	Defaults Upon Senior Securities			13
Item 4.	Submission of Matters to a Vote of Security Holders			13
Item 5.	Other Information			13
Item 6.	Exhibits			14
Signatures				15

 

 

		May 31, 2011				February 28, 2011
		(Unaudited)				(Audited)
ASSETS
Current assets:
Cash and cash equivalents		$	1,497,788			$	1,244,290
Accounts receivable, net of allowance for doubtful accounts
of $113,152 and $99,406, respectively			190,857				53,710
Inventory, net			460,844				447,489
Prepaid expenses and other current assets			89,134				77,520
Total current assets			2,238,623				1,823,009
Property and equipment, net			101,047				98,977
Intangible assets, net			6,273				7,243
Deferred tax assets			604,779				694,833
Other assets			8,514				8,514
Total assets		$	2,959,236			$	2,632,576
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	268,140			$	230,732
Customer deposits			103,586				65,454
Notes payable and capital lease obligations			48,037				53,037
Total current liabilities			419,763				349,223
Stockholders' equity:
Preferred stock, 6,000,000 shares authorized, none issued or outstanding			-				-
Common stock $0.001 par value, 50,000,000 shares authorized, 25,932,646 issued and outstanding			25,933				25,883
Treasury stock			(17,549	)			(17,549)
Additional paid-in capital			7,122,903				7,016,148
Accumulated deficit			(4,591,814	)			(4,741,129	)
Total stockholders' equity			2,539,473				2,283,353
Total liabilities and stockholders' equity		$	2,959,236			$	2,632,576

 

		For the Three Months Ended
		May 31,				May 31,
		2011				2010
Revenues		$	1,781,019			$	1,211,420
Cost of sales			978,616				534,119
Gross profit			802,403				677,301
Operating Expenses
Selling, General, and Administrative Expenses			471,379				185,863
Depreciation and Amortization			11,246				13,181
Total  operating  expenses			482,625				199,044
Income from Operations			319,778				478,257
Other Income (Expense)
Interest income			448				146
Interest expense-related parties			-				(4,379	)
Interest expense-other			(624	)			(1,115	)
Other income (expense)			-				-
Total other income (expense)			(176	)			(5,348	)
Net income before income taxes			319,602				472,909
Provision for income taxes			(170,287	)			-
Net Income		$	149,315			$	472,909
BASIC INCOME PER SHARE		$	0.01			$	0.02
DILUTED INCOME PER SHARE		$	0.01			$	0.02
BASIC WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING			25,896,776				25,854,146
DILUTED WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING			28,929,448				30,208,182

 

 

		For The Three Months Ended
		May 31,				May 31,
		2011				2010
OPERATING ACTIVITIES:
Net income		$	149,315			$	472,909
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			11,246				13,181
Stock-based compensation			104,305				-
Contributed services			2,500				-
Provision for doubtful accounts			13,746				-
Change in deferred tax assets			90,054				-
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable			(150,893	)			(181,050	)
(Increase) decrease in inventory			(13,355	)			(40,078	)
(Increase) decrease in prepaid expenses and other assets			(11,614	)			(61,436	)
Increase (decrease) in accounts payable and accrued expenses			37,408				87,603
Increase (decrease) in accrued interest due to related party			-				2,827
Increase (decrease) in customer deposits			38,132				(44,152	)
Net Cash Provided by Operating Activities			270,844				249,804
INVESTING ACTIVITIES:
Purchase of property and equipment			(12,021	)			(11,020	)
Purchase of intangible assets			(325	)			-
Net Cash Used in Investing Activities			(12,346	)			(11,020	)
FINANCING ACTIVITIES:
Repayment of notes payable and capital lease obligations			(5,000	)			(189,727	)
Net Cash Used in Financing Activities			(5,000	)			(189,727	)
NET INCREASE IN CASH			253,498				49,057
CASH AT BEGINNING OF PERIOD			1,244,290				502,167
CASH AT END OF PERIOD		$	1,497,788			$	551,224
Supplemental disclosures of cash flow information:
Cash paid for:
Interest		$	624			$	2,666
Income taxes		$	120,857			$	-
See accompanying notes to condensed consolidated financial statements.

 

 

 

 

						Weighted-
						Average
		Warrants				Exercise
		Outstanding				Price
Outstanding at February 28, 2011			8,467,221				0.21
Granted			-				-
Exercised			-				-
Forfeited			-				-
Outstanding at May 31, 2011			8,467,221				0.21
Vested at May 31, 2011			0				0.21
Exercisable at May 31, 2011			0				0.21

				Warrants Outstanding												Warrants Exercisable
								Weighted				Weighted								Weighted
								Average				Average								Average
Exercise				Number				Remaining				Exercise				Number				Exercise
				Outstanding				Life (Years)				Price				Outstanding				Price
$	0.21				8,467,221				9.54			$	0.21				8,467,221			$	0.21
					8,467,221				9.54			$	0.21				8,467,221			$	0.21

 

The Company’s inventory consisted of the following at May 31,2011 and February 28, 2011:
Raw materials		$	298,942			$	503,265
Finished goods			249,031				209,509
			547,973				712,774
Reserve for obsolete and slow moving inventory			(87,129	)			(265,285	)
		$	460,844			$	447,489

As of May 31, 2011, the Company had a line of credit agreement totaling $100,000.  The line of credit bears interest at the lending institution’s index rate (3.0% as of May 31, 2011) plus two percent and is due February 1, 2012.  As of May 31, 2011, the Company has borrowed approximately $48,000 against the line of credit, which is recorded as a note payable on the accompanying consolidated balance sheet.  The line of credit agreement does not include any limitations on borrowings or any restrictive debt covenants.