SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA - Quarter Report: 2012 May (Form 10-Q)

 
 

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)

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

 

			Page
PART I  FINANCIAL INFORMATION
Item 1.	Financial Statements			3
	Condensed Consolidated Balance Sheets			3
	Condensed Consolidated Statements of Operations			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, 2012				February 29, 2012
		(Unaudited)				(Audited)
ASSETS
Current assets:
Cash and cash equivalents		$	1,095,630			$	1,148,995
Restricted cash			145,950				146,081
Accounts receivable, net of allowance for doubtful accounts and sales returns
of $66,980 and $78,885, respectively			127,446				61,782
Inventory, net			814,365				964,580
Deferred tax assets			120,242				120,242
Prepaid expenses, deposits and other current assets			201,301				179,347
Total current assets			2,504,934				2,621,027
Property and equipment, net			152,664				171,304
Intangible assets, net			5,576				5,799
Deferred tax assets			406,039				406,039
Other assets			8,514				8,514
Total assets		$	3,077,727			$	3,212,683
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses		$	52,917			$	158,758
Customer deposits			178,272				197,696
Capital lease obligation			4,413				4,331
Total current liabilities			235,602				360,785
Long-term liabilities:
Capital lease obligation, net of current			17,456				18,591
Total liabilities			253,058				379,376
Stockholders' equity:
Preferred stock, 6,000,000 shares authorized, none issued or outstanding			-				-
Common stock $0.001 par value, 50,000,000 shares authorized, 25,800,146 issued and     outstanding at May 31, 2012 and February 29, 2012, respectively			25,800				25,800
Additional paid-in capital			7,439,453				7,350,650
Accumulated deficit			(4,640,584	)			(4,543,143	)
Total stockholders' equity			2,824,669				2,833,307
Total liabilities and stockholders' equity		$	3,077,727			$	3,212,683

		For the Three Months Ended
		May 31,				May 31,
		2012				2011
Sales		$	898,009			$	1,781,019
Cost of sales			588,205				978,616
Gross profit			309,804				802,403
Operating Expenses
Selling, General, and Administrative Expenses			467,574				471,379
Depreciation and Amortization			11,368				11,246
Total  operating  expenses			478,942				482,625
Income (Loss)  from Operations			(169,138	)			319,778
Other Income (Expense):
Interest income			318				448
Interest expense			(423	)			(624	)
Other income			515				-
Total other income (expense)			410				(176	)
Income (loss)  before provision for income taxes			(168,728	)			319,602
Income tax benefit (expense)			71,287				(170,287	)
Net  Income (Loss)		$	(97,441	)		$	149,315
BASIC INCOME (LOSS) PER SHARE		$	(0.00	)		$	0.01
DILUTED  INCOME (LOSS) PER SHARE		$	(0.00	)		$	0.01
BASIC WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING			25,800,146				25,896,776
DILUTED WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING			25,800,146				28,929,448

		For The Three Months Ended
		May 31,				May 31,
		2012				2011
OPERATING ACTIVITIES:
Net   income (loss)		$	(97,441	)		$	149,315
Adjustments to reconcile net income (loss)  to net cash provided by (used in)  operating activities:
Depreciation and amortization			11,368				11,246
Stock-based compensation			88,803				104,305
Contributed services			-				2,500
Provision for doubtful accounts			-				13,746
Gain from sale of property and equipment			(517	)			-
Increase in inventory reserve			10,392				-
Deferred tax expense			-				90,054
Changes in operating assets and liabilities:
Increase in accounts receivable			(65,664	)			(150,893	)
(Increase) decrease in inventory			139,823				(13,355	)
Increase in prepaid expenses, deposits  and other assets			(21,954	)			(11,614	)
Increase (decrease) in accounts payable and accrued expenses			(105,841	)			37,408
Decrease in restricted cash			131				-
Increase (decrease) in customer deposits			(19,424	)			38,132
Net Cash Provided By (Used In) Operating Activities			(60,324	)			270,844
INVESTING ACTIVITIES:
Purchase of property and equipment			(3,988	)			(12,021	)
Proceeds from sale of property and equipment			12,000				-
Purchase of intangible assets			-				(325)
Net Cash Provided By (Used In) Investing Activities			8,012				(12,346	)
FINANCING ACTIVITIES:
Repayment of  capital lease obligation			(1,053	)			(5,000	)
Net Cash Used in Financing Activities			(1,053	)			(5,000	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(53,365	)			253,498
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			1,148,995				1,244,290
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	1,095,630			$	1,497,788
Supplemental disclosures of cash flow information:
Cash paid for:
Interest		$	423			$	624
Income taxes		$	-			$	120,857
See accompanying notes to condensed consolidated financial statements.

 

 

 
 

						Weighted-
						Average
		Warrants				Exercise
		Outstanding				Price
Outstanding at February 28, 2012			8,467,221				0.21
Granted			-				-
Exercised			-				-
Forfeited			-				-
Outstanding at May 31, 2012			8,467,221				0.21
Vested at May 31, 2012			1,693,444				0.21
Exercisable at May 31, 2012			1,693,444				0.21

Warrants Outstanding

Warrants Exercisable

Weighted

Weighted

Weighted

Average

Average

Average

Exercise Price

Number

Remaining

Exercise

Number

Exercise

Outstanding

Life (Years)

Price

Outstanding

Price

$

0.21

8,467,221

8.54

$

0.21

1,693,444

$

0.21

The Company’s inventory consisted of the following at May 31,2012 and February 29, 2012:
Raw materials		$	470,228			$	589,774
Finished goods			362,244				382,521
			832,472				972,295
Reserve for obsolete and slow moving inventory			(18,107	)			(7,715	)
		$	814,365			$	964,580

(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;

(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 2012 Annual Report on Form 10-K.

Three-month period ended May 31, 2012 compared to the corresponding period in 2011
										Year over
		2012				2011				year change				%
Sales		$	898,009			$	1,781,019				(883,010	)			-50	%
Cost of sales			588,205				978,616				(390,411	)			-40	%
Gross profit			309,804				802,403				(492,599	)			-61	%
Gross profit %			34	%			45	%
Selling general and administrative expenses			467,574				471,379				(3,805	)			-1	%
Depreciation and amortization expense			11,368				11,246				122				1	%
Income (loss) before  provision (benefit)  for income taxes			(168,728	)			319,602				(488,330	)			-153	%
Provision (benefit) for income taxes			71,287				(170,287	)			241,574				142	%
Net Income (Loss)			(97,441	)			149,315				(246,756	)			-165	%

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)

31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)

32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350 Section 906 of the Sarbanes-Oxley Act of 2002)

32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350 Section 906 of the Sarbanes-Oxley Act of 2002)

	Seychelle Environmental Technologies, Inc.
Date: July 13, 2012	By:	/s/ Dick Parsons
		Dick Parsons Director, Chief Executive Officer

Date: July 13, 2012	By:	/s/ Jim Place
		Jim Place Director and Chief Financial Officer and Chief Operating Officer

 

 

 

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