SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA - Quarter Report: 2013 May (Form 10-Q)

sey10q53013.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ending May 31, 2013

o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to __________________

Commission File No. 0-29373

Seychelle Environmental Technologies, Inc.

(Exact Name of registrant as specified in its charter)

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)

(949) 234-1999

(Registrant's telephone number, including area 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 þ

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.

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

The number of shares outstanding of the Registrant's common stock, as of July 8, 2013 was 25,833,646.

References in this document to "us," "we," “Seychelle,” “SYEV,” or "the Company" refer to Seychelle Environmental Technologies, Inc., its predecessor and its subsidiaries.

FORM 10-Q

Securities and Exchange Commission

Washington, D.C. 20549

Seychelle Environmental Technologies, Inc.

TABLE OF CONTENTS

		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		6
	Notes to Condensed Consolidated Financial Statements		7

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

PART I

ITEM 1. FINANCIAL STATEMENTS

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	May 31, 2013			February 28, 2013
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,859,533		$	2,234,545
Accounts receivable, net of allowance for doubtful accounts and sales returns
of $114,591 and $114,591, respectively		346,784			641,635
Inventory, net		576,323			464,998
Deferred tax assets		463,942			463,942
Prepaid expenses, deposits and other current assets		68,029			125,080
Total current assets		4,314,611			3,930,200

Property and equipment, net		171,980			179,876
Intangible assets, net		4,768			4,995
Deferred tax assets		257,392			257,392
Other assets		8,514			8,514

Total assets	$	4,757,265		$	4,380,977

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	183,246		$	157,253
Customer deposits		320,930			371,327
Income taxes payable		115,421			-
Capital lease obligation		4,581			4,581
Total current liabilities		624,178			533,161

Long-term liabilities:
Capital lease obligation, net of current		13,256			14,010
Total liabilities		637,434			547,171

Stockholders' equity:
Preferred stock, 6,000,000 shares authorized, none issued or outstanding		-			-
Common stock $0.001 par value, 50,000,000 shares authorized, 25,833,646 issued and outstanding at May 31, 2013 and February 28, 2013, respectively		25,834			25,834

Additional paid-in capital		7,800,943			7,715,232
Accumulated deficit		(3,706,946	)		(3,907,260	)
Total stockholders' equity		4,119,831			3,833,806

Total liabilities and stockholders' equity	$	4,757,265		$	4,380,977

See accompanying notes to condensed consolidated financial statements.

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended
	May 31,
	2013			2012
Sales	$	1,566,057		$	898,009
Cost of sales		773,314			588,205
Gross profit		792,743			309,804
Operating Expenses
Selling, General, and Administrative Expenses		496,839			467,574
Depreciation and Amortization		13,255			11,368
Total operating expenses		510,094			478,942
Income (Loss) from Operations		282,649			(169,138	)
Other Income (Expense):
Interest income		223			318
Interest expense		(300	)		(423	)
Other income		53,531			515
Total other income		53,454			410
Income (loss) before provision for income taxes		336,103			(168,728	)
Income tax benefit (expense)		(135,789	)		71,287
Net Income (Loss)	$	200,314		$	(97,441	)
BASIC INCOME (LOSS) PER SHARE	$	0.01		$	(0.00	)
DILUTED INCOME (LOSS) PER SHARE	$	0.01		$	(0.00	)
BASIC WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING		25,833,646			25,800,146
DILUTED WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING		25,833,646			25,800,146

See accompanying notes to condensed consolidated financial statements.

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For The Three Months Ended
	May 31,
	2013			2012

OPERATING ACTIVITIES:
Net income (loss)	$	200,314		$	(97,441	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization		13,255			11,368
Stock-based compensation		85,711			88,803
Gain from sale of property and equipment		(124	)		(517	)
Increase in inventory reserve		32,751			10,392
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		294,851			(65,664	)
(Increase) decrease in inventory		(144,076	)		139,823
(Increase) decrease in prepaid expenses, deposits and other assets		57,051			(21,954	)
Increase (decrease) in accounts payable and accrued expenses		25,993			(105,841	)
Increase in income taxes payable		115,421			-
Decrease in restricted cash		-			131
Decrease in customer deposits		(50,397	)		(19,424	)
Net Cash Provided By (Used In) Operating Activities		630,750			(60,324	)

INVESTING ACTIVITIES:
Purchase of property and equipment		(6,258	)		(3,988	)
Proceeds from sale of property and equipment		1,250			12,000
Net Cash Provided By (Used In) Investing Activities		(5,008	)		8,012

FINANCING ACTIVITIES:
Repayment of notes payable and capital lease obligations		(754	)		(1,053	)
Net Cash Used in Financing Activities		(754	)		(1,053	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		624,988			(53,365	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		2,234,545			1,148,995

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,859,533		$	1,095,630


Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	300		$	423
Income taxes	$	-		$	-

See accompanying notes to condensed consolidated financial statements.

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS

NOTE 1: CONDENSED FINANCIAL STATEMENTS

The accompanying condensed consolidated financial statements have been prepared by Seychelle Environmental Technologies, Inc., and subsidiaries (the “Company”) without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at May 31, 2013, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended February 28, 2013. The results of operations for the periods ended May 31, 2013 and 2012 are not necessarily indicative of the operating results for the full fiscal years.

The summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the condensed consolidated financial statements and the February 28, 2013 consolidated financials included in the 10-K filed on May 21, 2013.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

NOTE 2: BASIC INCOME (LOSS) PER SHARE

Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during each period presented. Diluted income (loss) per share is determined using the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. The dilutive effect of outstanding stock options and warrants is reflected in diluted earnings per share by application of the treasury stock method.

The denominator for diluted income (loss) per share for the periods ended May 31, 2013 and 2012 did not include warrants as they would have been anti-dilutive.

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS

NOTE 3: COMMON STOCK PURCHASE WARRANTS

Common Stock

During the quarters ended May 31, 2013 and 2012, the Company did not issue any shares of common stock.

Warrants

The Company has determined the estimated value of warrants granted using the Black-Scholes option pricing model. The amount of the expense charged to operations for warrants was $85,711 for the three months ended May 31, 2013 and $88,803 for the three months ended May 31, 2012. All outstanding warrants are expected to be vested in December 2015.

A summary of warrant activity for the three months ended May 31, 2013 is as follows:

				Weighted-
				Average
	Warrants			Exercise
	Outstanding			Price
Outstanding at February 28, 2013		8,467,221			0.21
Granted		-			-
Exercised		-			-
Forfeited		(30,000	)		0.21
Outstanding at May 31, 2013		8,437,221			0.21
Vested at May 31, 2013		3,374,888			0.21
Exercisable at May 31, 2013		3,374,888			0.21

The following table summarizes significant ranges of outstanding warrants as of May 31, 2013:

Warrants Outstanding

Warrants Exercisable

Weighted

Average

Exercise Price

Number

Remaining

Exercise

Number

Exercise

Outstanding

Life (Years)

Price

Outstanding

Price

0.21

8,437,221

7.54

0.21

3,374,888

0.21

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS

NOTE 4: INVENTORY

The Company’s inventory consisted of the following at May 31, 2013 and February 28, 2013:
		May 31,			February 28,
		2013			2013
Raw materials	$	461,660		$	336,966
Finished goods		195,923			176,541
		657,583			513,507
Reserve for obsolete and slow moving inventory		(81,260	)		(48,509	)
	$	576,323		$	464,998

NOTE 5: LINE OF CREDIT

As of May 31, 2013, the Company had a line of credit agreement totaling $500,000, with no outstanding borrowings as of May 31, 2013. The line expires June 30, 2014.

NOTE 6: CONCENTRATIONS

Sales to three customers accounted for 63% of sales for the three month period ended May 31, 2013. Accounts receivable from these three customers amounted to $185,145, or 53% of accounts receivable, at May 31, 2013. Accounts receivable from one other customer represented 29% of accounts receivable at May 31, 2013. Sales to four customers accounted for 47% of sales for the three month period ended May 31, 2012. Accounts receivable from these four customers amounted to $48,686 at May 31, 2012.

NOTE 7: RELATED PARTY TRANSACTIONS

During the three month periods ended May 31, 2013 and 2012, payments totaling $50,700 and $25,500 were made to TAM Irrevocable Trust for consulting services, in which Cari Beck, is a trustee as well as the daughter of the Company’s President.

NOTE 8: COMMITMENTS AND CONTINGENCIES

In the case titled Letty Garcia v. Carl Palmer; Seychelle Environmental Technologies, Inc., et, al., brought in the Superior Court for the State of California, San Diego County District, the issue was an action by the plaintiff, Ms. Garcia, to enforce judgment against Mr. Palmer by levying the assets of Seychelle. The court found against the Company in May 2012 for approximately $157,000. This amount was reflected in our February 29, 2012 consolidated financial statements. The Company believed that the ruling was incorrect and has filed an appeal. We believe that the appeal will be heard in late 2013 or early 2014, and that the Company will prevail.

Otherwise, as of May 31, 2013, we know of no other legal proceedings pending or threatened, or judgments entered against the Company or any of our directors or officers in their capacity as such.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion summarizes the significant factors affecting the operating results, financial condition and liquidity and cash flows of Seychelle Environmental Technologies, Inc., and subsidiaries (the “Company”) for the three month periods ended May 31, 2013 and 2012. The discussion and analysis that follows should be read together with the consolidated financial statements of Seychelle Environmental Technologies, Inc. and the notes to the consolidated financial statements included in the Company’s annual report on Form 10-K for the fiscal year ended February 28, 2013. Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company’s control.

Forward-Looking Statements

Certain statements contained herein are “forward-looking” statements. Forward-looking statements include statements which are predictive in nature; which depend upon or refer to future events or conditions; or which include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or variations or negatives thereof or by similar or comparable words or phrases. In addition, any statement concerning future financial performance, ongoing business strategies or prospects, and possible future Company actions that may be provided by management are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about the Company; and economic and market factors in the countries in which the Company does business, among other things. These statements are not guarantees of future performance, and the Company has no specific intentions to update these statements. Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors including, among others:

(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 2013 Annual Report on Form 10-K.

Description of the Business

We were incorporated under the laws of the State of Nevada on January 23, 1998 as a change of domicile to Royal Net, Inc., a Utah corporation that was originally incorporated on January 24, 1986. Royal Net, Inc. changed its state of domicile to Nevada and its name to Seychelle Environmental Technologies, Inc. effective in January 1998.

On January 30, 1998, we entered into an Exchange Agreement with Seychelle Water Technologies, Inc., a Nevada corporation (SWT), whereby we exchanged our issued and outstanding capital shares with the shareholders of SWT on a one share for one share basis. We became the parent company and SWT became a wholly owned subsidiary. SWT had been formed in 1997 to market water filtration systems of Aqua Vision International.

Our Company is presently comprised of Seychelle Environmental Technologies, Inc., a Nevada corporation, with two wholly-owned subsidiaries, Seychelle Water Technologies, Inc. and Fill 2 Pure International, Inc., also Nevada corporations (collectively, the Company or Seychelle). We use the trade name "Seychelle Water Filtration Products, Inc." in our commercial operations.

Seychelle designs, assembles and distributes unique, state-of-the-art ionic absorption micron filters for portable filter devices that remove up to 99.99% of all pollutants and contaminants found in any fresh water source. Patents or trade secrets cover all proprietary products.

Our principal business address is 32963 Calle Perfecto, San Juan Capistrano, California 92675. Our telephone number at this address is 949-234-1999.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Our summarized historical financial data is presented in the following table to aid in your analysis. You should read this data in conjunction with this section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations, our condensed consolidated financial statements and the related notes to the condensed consolidated financial statements included elsewhere in this report. The selected condensed consolidated statements of operations data for the three months ended May 31, 2013 and 2012 are derived from our condensed consolidated financial statements included elsewhere in this report.

Three-month period ended May 31, 2013 compared to the corresponding period in 2012

							Year over
	2013			2012			year change			%


Sales	$	1,566,057		$	898,009			668,048			74	%
Cost of sales		773,314			588,205			185,109			31	%
Gross profit		792,743			309,804			482,939			156	%
Gross profit %		51	%		34	%
Selling general and administrative expenses		496,839			467,574			29,265			6	%
Depreciation and amortization expense		13,255			11,368			1,887			17	%
Income (loss) before provision (benefit) for income taxes		336,103			(168,728	)		504,831			299	%
Provision (benefit) for income taxes		(135,789	)		71,287			(207,076	)		-290	%

Net income (loss)		200,314			(97,441	)		297,755			306	%
Net income (loss) %		13	%		(11)	%

Sales. The increase in sales is primarily due to higher sales from three customers who accounted for 63% of sales for the three month ended May 31, 2013. These three customers accounted for approximately $1.0 million in sales for the three months ended May 31, 2013, compared to $0.3 million for the three months ended May 31, 2012. The largest increases in sales at the product line level were in Mission Packs, which increased $340,000 or 50%, and in Bottles, which increased $380,000 or 51% from the comparable period in fiscal 2012. Including the increases in Mission Packs and Bottles noted above, the Company recorded increased sales in Pitchers by $77,000, or 51%, and Straws by $42,000, or 55%, from the comparable period in fiscal 2012. In the prior year period, the Company had experienced a decrease in sales across many product lines. The largest offsetting decreases in particular product lines were in Inline and Stainless Steel Bottles, which decreased $36,000 and $24,000, or 51% and 30% of product line sales, respectively. We anticipate Bottles and Replacement Filter sales may increase dramatically in the near future as we have had multiple customers express interest in distributing these higher margin new products.

Cost of sales and gross profit percentage. A portion of the increase in cost of sales is a direct result of sales increasing during the three-month period ended May 31, 2013. As a percentage of sales, the gross profit margin during the three months ended May 31, 2013 increased to 51% from 34% for the three months ended May 31, 2012. The prior year margin was considered unusually low due to the sales price concessions, production being centered on a more diverse product mix and an increase in raw material costs. The elimination of these price concessions provided for gross margins returning to previously achieved levels. Note that for the fiscal periods ended May 31, 2011 and 2010, the Company reported gross margins of 45% and 56% of sales, respectively, so 50% margin or better is within previously achieved levels making fiscal 2012 an off year. The product mix and timing of significant sales is always a significant factor in the resulting profit margins reported. The Company expects the margin percentages to remain at or above 50% in the foreseeable future.

Selling, general and administrative expenses. These expenses increased by 6% during the period ended May 31, 2013 compared to the same period ended in the prior year. The increase was largely a direct result of the increase in personnel costs, including sales commissions which would be expected to rise with the increase in sales. Although commission expense increased due to increased sales volume, commission expenses comprised only 2% of sales for the three months ended May 31, 2013 compared to 4% of sales for the comparable period in fiscal 2012. This is the combined result of product mix and negotiated terms on commission arrangements.

Depreciation and amortization expense. Depreciation and amortization expense was relatively flat from period to period, but the slight increase is due to additional tooling being purchased during the periods.

Income tax expense (benefit). The Company recorded an income tax provision of approximately $136,000 due to the pretax income of approximately $336,000 during the three-month period ended May 31, 2013, as compared to an income tax benefit of approximately $71,000 due to the pretax loss of approximately $169,000 during the three-month period ended May 31, 2012. However, with the net operating loss carryforwards (NOL) that we have of approximately $3.7 million, we don’t anticipate paying any income taxes in the foreseeable future.

Net income (loss). Net income for the three-month period ended May 31, 2013 was $200,314 for the three-month period ended May 31, 2013, up 306%, compared to a net loss of $97,441 for the three-month period ended May 31, 2012. This was primarily due to an increase of approximately $483,000 in gross profit during the three-month period ended May 31, 2013 due primarily to higher margin product sales. We plan to focus on the main factors affecting our bottom line to continue to improve the Company’s profitability in the upcoming periods during fiscal 2014 and on into fiscal 2015.

Liquidity and Capital Resources

Net cash provided by (used in) operating activities. During the three-month period ended May 31, 2013, cash provided by operating activities was approximately $631,000, primarily as the result of the net income reported for the period after adding back noncash expenses for stock based compensation and depreciation and amortization, the net of which was cash inflow of approximately $299,000. Operating cash flows was also significantly impacted by a $295,000 decrease in accounts receivable due to collections from customers and a $115,000 increase in income taxes payable, offset partially by the increase of $111,000 in inventories necessary to meet anticipated sales.

Net cash provided by (used in) investing activities. During the three-month period ended May 31, 2013, the Company spent approximately $6,000 on capital expenditures, net of $1,000 in proceeds from the sale of equipment. In the comparable period of the prior year, the Company reported the sale of a Company vehicle resulting in proceeds of $12,000, offset by the purchase of approximately $4,000 of property and equipment.

Net cash provided by financing activities. Cash used in financing activities during the three month period ended May 31, 2013 was relatively consistent with the comparable period in the prior year.

As of May 31, 2013, the Company had approximately $2.9 million in cash and cash equivalents and $500,000 available to borrow under its line of credit. The line of credit does not contain any limitations on borrowing or any restrictive debt covenants. The Company believes it has liquidity to meet its operating needs through the balance of fiscal 2014.

Critical Accounting Policies and Estimates

The Company’s discussion and analysis of its financial condition and results of operations are based upon its condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

The Company believes that the estimates, assumptions and judgments involved in the accounting policies described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of its most recent fiscal 2013 Annual Report on Form 10-K have the greatest potential impact on its consolidated financial statements, so it considers these to be its critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates the Company uses in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for inventory reserves and stock-based compensation. These policies require that the Company make estimates in the preparation of its consolidated financial statements as of a given date.

Within the context of these critical accounting policies, the Company is not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.

ITEM 4. CONTROLS AND PROCEDURES

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief Financial Officer each have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the applicable time periods specified by the SEC’s rules and forms.

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 240.13a-15 or Rule 240.15d-15 of this chapter that occurred during our most recent fiscal three months that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This report does not include an attestation report by the Company’s independent registered public accounting firm regarding internal control over financial reporting as we are not subject to this requirement.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Otherwise, as of May 31, 2013, we know of no other legal proceedings pending or threatened, or judgments entered against the Company or any of our directors or officers in their capacity as such.

ITEM 1A. RISK FACTORS

There have been no changes to our Risk Factors included in our fiscal 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 21, 2013.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three-month periods ended May 31, 2013 and 2012, there were no security issuances.

The board has approved the issuance of an addition 20,000 shares of common stock to an employee as compensation for services rendered, which are being issued during the quarter ending August 31, 2013. There have been no further issuances of securities through the date of this filing.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits

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

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Registrant has duly caused this Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

	Seychelle Environmental Technologies, Inc.

Date: July 12, 2013	By:	/s/ Dick Parsons
		Dick Parsons Director, Chief Executive Officer

Date: July 12, 2013	By:	/s/ Jim Place
		Jim Place Director and Chief Financial Officer and Chief Operating Officer