SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA - Annual Report: 2016 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

( X ) ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 29, 2016

( ) 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	(IRS Employer File Number)
Of incorporation)

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)

Securities Registered Pursuant to Section 12(b) of the Exchange Act: None

Securities Registered Pursuant to Section 12(g) of the Exchange Act:

Common Stock, $0.001 per share par value

Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [] No [X].

Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [] No [X].

Indicate by check mark whether the registrant: (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 [X] No [ ]

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 [X] No [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained herein to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. [ ]

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 []	Accelerated filer []
Non-accelerated filer [] (Do not check if a smaller reporting company)	Smaller reporting company [X]

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

The number of shares outstanding of the registrant's common stock, as of June 15, 2016 was 26,354,313.

The aggregate market value of the voting stock of the Registrant held by non-affiliates as of August 31, 2015 was approximately $5.1 million.

References in this document to "Seychelle", "us," "we," or "Company" refer to Seychelle Environmental Technologies, Inc., a Nevada corporation and our wholly-owned subsidiaries, Seychelle Water Technologies, Inc. and Fill 2 Pure International, Inc., also Nevada corporations.

TABLE OF CONTENTS

PART I	Page

Item 1. Business	3

Item 1A. Risk Factors	8

Item 1B. Unresolved Staff Comments	13

Item 2. Properties	13

Item 3. Legal Proceedings	13

Item 4. Mine Safety Disclosures	13

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14

Item 6. Selected Financial Data	15

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	15

Item 7A. Quantitative and Qualitative Disclosures About Market Risk	20

Item 8. Financial Statements and Supplementary Data	20

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	39

Item 9A. Controls and Procedures	39

Item 9B. Other Information	40

PART III

Item 10. Directors, Executive Officers and Corporate Governance	40

Item 11. Executive Compensation	42

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	44

Item 13. Certain Relationships and Related Transactions, and Director Independence	45

Item 14. Principal Accounting Fees and Services	45

Item 15. Exhibits, Financial Statement Schedules	46

Signatures	48

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FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of Section 27A of the Securities Act (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We have based these statements on our beliefs and assumptions, based on information currently available to us. These forward-looking statements are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations, our total market opportunity and our business plans and objectives set forth under the sections entitled "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Forward-looking statements are not guarantees of performance. Our future results and requirements may differ materially from those described in the forward-looking statements. Many of the factors that will determine these results and requirements are beyond our control. In addition to the risks and uncertainties discussed in "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," investors should consider those discussed under "Risk Factors."

These forward-looking statements speak only as of the date of this report. We do not intend to update or revise any forward-looking statements to reflect changes in our business, anticipated results of our operations, strategy or planned capital expenditures, or to reflect the occurrence of unanticipated events.

PART I

Item 1. BUSINESS.

History of Seychelle

We are a Nevada corporation. Our principal corporate office address is 32963 Calle Perfecto, San Juan Capistrano, California 92675. Our telephone number at this address is 949-234-1999.

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.

Organization

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.

Business of Seychelle

General

Seychelle designs, assembles and distributes unique, state-of-the-art ionic adsorption micron filters specifically for portable filter devices that remove up to 99.99% of all pollutants and contaminants found in any fresh water source as well as increase the alkalinity of the water up a pH level of 9.5. Patents or trade secrets cover all proprietary products. Seychelle water filtration products addressing a worldwide problem of access to clean drinking water and makes available low-cost, effective filtration products that will meet the need for safe, great tasting, and high quality drinking water.

Seychelle markets its portable water filtration bottles throughout the world to customers such as individuals, dealers, distributors, non-governmental organizations and emergency relief organizations such as the Jimmy Bakker Ministry. In addition, the Company has donated thousands of portable bottles to church groups and missionaries worldwide during the life of the Company.

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In 2015, Beverage Marketing reported that the bottled water beverage business grew approximately 7.3% in calendar year 2014, far above the overall U.S. liquid refreshment beverage market annual growth of approximately 2.2%. Seychelle products compete in a more limited market; the home and portable filtration product segment which includes such brands as Brita, PUR, KOR Water, Soma and Bobble.

In developing countries, many people in rural areas boil their water for drinking and cooking to kill bacteria, but this process does not remove the pyrogens, chemicals, toxins, volatile organic compounds, heavy metals or other pathogens that remain in the water. The World Health Organization estimates that approximately 2.2 million people, mostly children in developing nations, die annually from water-related diseases.

Business Plan

The management of Seychelle represents over 100 years of combined experience in developing improvements and innovations in the field of bottled water, reverse osmosis, ultra filtration and filter technology. As a result, our products can deliver up to 2 micron absolute filtration for pennies per gallon, with pressure as low as 2 pounds per square inch (PSI). Further, our point of difference filtration systems remove up to 99.99% of pollutants and contaminants most commonly found in fresh drinking water supplies in the five major areas of concern as follows:

AESTHETICS: Taste, chlorine, sand, sediment and odor problems.

BIOLOGICS: Pathogens such as Cryptosporidium, Giardia and E.Coli Bacteria.

CHEMICALS: Pesticides, detergents, toxic chemicals and industrial waste.

DISSOLVED SOLIDS: Heavy metals such as aluminum, asbestos, copper, lead, mercury and chromium 6.

RADIOLOGICAL: Cesium 134 & 137, Radon, Radium, Uranium, Radioactive Iodine, etc.

New pH Product which increases the alkalinity of source water up to 9.5 pH level or more.

Seychelle filters have been tested by independent and government laboratories. Selected results from the United States are displayed on our Website at www.seychelle.com, but such information included on our website is not incorporated into this filing. The benefit of such filtration can save lives worldwide as more people become aware of the benefits of using products utilizing Seychelle's proprietary portable water filtration technology.

Principal Products or Services and Their Markets

Current Products

Seychelle has a varied line of portable filter bottles for people on the go. The current products include: Flip-Top and Pull Top bottles, Canteens, Water Pitchers, Pure Water Pump, Stainless Steel bottles, In-Line Filter, Pure Water Bag, Pump N' Pure, Pure Water Pouch and Pure Water Straws. They include regular, standard or advanced filters (for virus and bacteria control up to 99.99% reduction). Sizes are from 20 ounce to 42 ounces, and provide up to 150 gallons of pure drinking water from any fresh water source; running or stagnant (such as rivers, lakes, ponds and streams).

New Products

Product design is a constant focus and all products are reviewed annually.

Manufacturing

The Company has determined that the production and assembly of some of our product components can be achieved in China and Mexico at a lower cost than in the U.S. while maintaining equivalent quality standards. However, our proprietary filter will continue to be manufactured in the U.S. The assembly of all our products is completed at our facility in San Juan Capistrano, California which has been expanded to an adjacent building to increase the production capacity.

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Sales Channels

Sales channels pursued include: retail, missionaries, multi-level marketing, international, OEM and joint ventures. Several distributors sell the Company's portable water filtration products to customers in specific distribution channels; including: retail, multi-national corporations, foundations and sports.

Raw Materials

Seychelle's filters include powdered, activated coconut and other media as components in the porous plastic ionic filter. To date, there is an adequate availability of material for all of our products. We do not expect this situation to change in the near future.

Customers and Competition

Seychelle products compete against companies offering water filtration and bottled water including (1) bottled water, (2) portable water filtration systems and (3) home water treatment systems provided by suppliers (such as independent dealers, distributors, catalogs, internet sellers, etc.) in the form of reverse osmosis systems, distillation, and filtration systems. Therefore, Seychelle's portable and home filtration products compete in a limited segment of the drinking water market as an alternative to other sources of filtered or purified drinking water.

Seychelle has a negligible share of the world's filtered or purified water market. Our products sell in a niche category of the market - portable filtration bottles that use powder-activated carbon filters that compete with our powder-activated coconut filters with various media called ionic adsorption micron filtration technology (IAMF) which remove many organic and inorganic contaminants that simple activated carbon filters cannot. Most powder activated carbon filters on the market remove Chlorine, sediment and dirt thus improving taste and odor, as well as a handful of other contaminants such as Lead, Mercury, Zinc and Copper. This would include leading brands such as Brita, PUR, General Electric and Culligan, who collectively dominate the home market. In the portable segment of the market, there are hundreds of small companies selling a variety of specialized filters, with no one company having a majority share and no industry data available. We believe that our current share of this market is negligible.

Seychelle sells its products in two ways. First, it sells its own brand to individuals, dealers, distributors, multilevel marketing companies and missionaries on a direct basis. Second, the Company offers specially designed products to the same customers as a private label supplier if purchasers buy in significant volume. In some instances, we may supply only filters for their bottles or hydration backpacks as opposed to complete products.

Currently, the majority of our sales are to customers in the U.S. However, we are in contact with several overseas distributors and sales could increase in the future in these countries if customers have a greater demand for safe drinking water. For the year ended February 29, 2016, we had three customers that accounted for 76% of our total sales. For the year ended February 28, 2015, we had four customers that accounted for 66% of our total sales.

Backlog

As of February 29, 2016 and February 28, 2015, we had a backlog of approximately $217,000 and $350,000 in unshipped orders.

Employees

As of February 29, 2016, we had a President and two (2) executive employees managing the Company with seven (7) administrative employees supporting that effort. In assembly, operations and warehousing we had thirty-three (33) full-time employees and one (1) part-time employees working to fill orders.

As of June 15, 2016, our employees consisted of a Chief Executive Officer, a President and Chief Financial Officer, and five (5) administrative employees supporting that effort. In assembly, operations and warehousing we had twenty (20) full-time employees and one (1) part-time employee working to fill orders

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Proprietary Information and Technology

We own a patent for the portable water filtration system with the filter cap assembly, Patent # 5,914,045, which expires on June 22, 2016. As described in the Abstract, it is "[a] filter assembly for a flexible, portable bottle having a sealing cap including a filter attached to the interior of the cap to filter out substantially all inorganics, organics, radiological chemicals and microbiology. The filter assembly also may include a second filter or iodinator sealed in the flexible bottle to further remove micro-organisms from water passing there-through. The filter assembly is designed so that the flexible bottle must be pressurized, as by being hand pressed, after it is filled with water to force flow of water through the [sic] either or both of the filters. The filter in the cap includes a check valve to allow the bottle to be re-pressurized after water has been dispensed from the bottle." The filter cap assembly is the core to the Company's product lines. The media itself, the formulation process, and manufacturing methodology are governed by trade secrets.

We also own a second patent, Patent #6,058,971, which expires on May 9, 2017 for a quick connect diverter valve. As described in the abstract, it is "A quick-connect diverter valve for use in connecting existing water faucets and water filtration units in and around a kitchen, or other areas where clean water is desired." The quick connect diverter value is used in the above the counter filter system currently being sold in the United States, Pakistan and China. The Company believes this is a viable and growing product line for developing countries where the quality of water continues to deteriorate.

As these patents expire in 2016 and 2017, the Company cannot at this time estimate the financial impact of the expiration of these patents.

During April 2006, the Company issued 50,000 shares of common stock to the shareholders of Continental Technologies, Inc. (Continental) with an approximate value of $16,100 for the Redi Chlor brand name, trademark and the use of the EPA Registration Number 55304-4-7126.

We have filed and received approval for five trademarks with the United States Patent and Trademark Office which were granted: Seychelle®, which has been used in commerce since 1997, along with Pres 2 Pure, Fill 2 Pure, pH20 Plus and Aq-RO-matic.

We have a trade name, "Seychelle Water Filtration Products, Inc.," which we use in our commercial operations.

Government Regulation

We are not, as a company, subject to any material governmental regulation or approvals. However, our products are subject to inspection and evaluation by regulatory authorities that have jurisdiction over water quality standards. Such authorities are on the federal, state, and local level, both in the United States and overseas, where we market our products. Most of our products have already been inspected and evaluated by all applicable governmental authorities in the areas in which we operate or plan to operate in the near future. With respect to our current focus of operations, we do not know if governmental regulation will have a material impact on us in the future.

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Research and Development

We did not spend a significant amount for research and development activities during the fiscal year ended February 29, 2016.

Environmental Compliance

At the present time, Seychelle is not subject to any material costs for compliance with any environmental laws. With respect to our current focus of operations, we do not know if environmental compliance will have a material impact on us in the future.

Recent Developments

On March 18, 2016, the Board of Directors removed Mr. Carl Palmer from all of operational duties with the Company. Mr. Palmer remained a Director. This decision of the Board was the result of its dissatisfaction with Mr. Palmer's past performance regarding both ongoing operations and customer and employee relations. On April 26, 2016, the Board of Directors voted to return Mr. Palmer to CEO, with a co-management structure for senior management where Mr. James Place became President. This decision of the Board is the result of extensive negotiations on how to best move the Company forward toward its sales and profit goals.

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Item 1A. RISK FACTORS

THE OWNERSHIP AND INVESTMENT IN OUR SECURITIES INVOLVES SUBSTANTIAL RISKS. OUR COMMON SHARES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THESE RISKS RELATING TO OUR COMPANY.

We Have Been Profitable for Our Most Recent Fiscal Year End and in Six of Our Seven Most Recent Fiscal Years. However, We Cannot Guarantee That We Will Continue to Conduct Profitable Operations.

We recorded net income (loss) and positive cash flows from operations for the most recent fiscal year ending February 29, 2016. We had the following net income (loss) for the years ending:

	Net Income (Loss)
February 29, 2016	$	1,032,941
February 28, 2015	$	(1,405,909	)
February 28, 2014	$	506,797
February 28, 2013	$	635,883
February 29, 2012	$	197,986
February 28, 2011	$	1,711,790
February 28, 2010	$	562,930

While we believe that we have had a successful operating history, we cannot guarantee that we will continue to be profitable. If we do not continue to be profitable, we may go out of business, and an investor could lose his entire investment.

We Have a Significant Dependence on a Few Customers.

During the fiscal year ended February 29, 2016, the Company had three customers who accounted for approximately 34%, 28% and 14% (or 76% total) of total sales during the fiscal year ended February 29, 2016. One of those customers accounted for approximately 22% of net accounts receivable as of February 29, 2016. As of February 28, 2015, the Company had four customers who accounted for approximately 76% of net accounts receivable (37%, 14%, 13% and 12%, respectively). These four customers accounted for approximately 7%, 33%, 12% and 14% (or 66% total) of total sales during the fiscal year ended February 28, 2015. Management believes that if future revenues from its significant customers decline, those revenues can be replaced through the sales to other customers. However, there can be no assurance that this will occur, which could result in an adverse effect on the Company's financial condition or results of operations in the future.

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The Water Filtration Business is Subject to Intense Competition and Subject to Numerous Risks. Many of Our Competitors Have Substantially Greater Capabilities and Resources and May be Able to Develop and Commercialize Products Before We Do.

The water filtration business is highly competitive with many companies having access to the same market. Technological competition from larger and more established companies is significant and expected to increase. Most of the companies with which we compete and expect to compete have far greater capital resources and significant research and development staffs, marketing and distribution programs and facilities, and many of them have substantially greater experience in the production and marketing of products. Our ability to compete effectively may be adversely affected by the ability of these competitors to devote greater resources to the sale and marketing of their products than we can. In addition, one or more of our competitors may succeed or may already have succeeded in developing technologies and products that are more effective than any of those we currently offer or are developing. In addition, there can be no guarantee that we will be able to protect our technology from being copied or infringed upon. There can be no assurance that we will have the necessary resources to be competitive. Therefore, investors should consider an investment in us to be an extremely risky venture.

As an Organization, We are Dependent Upon Technology for the Development of Our Products.

We are operating in a business that requires continuing research, development and testing efforts. There can be no assurance that new products will not render our products obsolete or non-competitive at some time in the future.

Our Success as an Organization Depends, in Large Part, Upon Our Ability to Protect Our Intellectual Property Rights.

A successful challenge to the ownership of our technology could materially damage our business prospects. We rely principally on trade secrets as well as trade secret laws, two patents, five trademarks, copyrights, confidentiality procedures and licensing arrangements to protect our intellectual property rights. We currently have two U.S. patents issued and a license on one patent. As these two patents expire in 2016 and 2017, respectively, we cannot at this time estimate the financial impact of the expiration of these patents. Any issued patent may be challenged and invalidated. Patents may not be issued from any of our future applications. Any claims allowed from existing or future pending patents may not be of sufficient scope or strength to provide significant protection for our products. Patents may not be issued in all countries where our products can be sold so as to provide meaningful protection or any commercial advantage to us. Our competitors may also be able to design around our patents or the patents that we license.

Vigorous protection and pursuit of intellectual property rights or positions characterize our industry, which has resulted in significant and often protracted and expensive litigation. Therefore, our competitors may assert that our technologies or products infringe on their patents or proprietary rights. Problems with patents or other rights could increase the cost of our products or delay or preclude new product development and commercialization by us. If infringement claims against us are deemed valid, we may not be able to obtain appropriate licenses on acceptable terms or at all. Litigation could be costly and time-consuming but may be necessary to protect our future patent and/or technology license positions or to defend against infringement claims.

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Our Success is Dependent Upon the Decision Making of Our Directors and Executive Officers.

Our directors and executive officers have made a full commitment to our business. The loss of any or all of these individuals could have a materially adverse impact on our operations because we have no succession plan for any of them. We will depend on our senior executive officers as well as other key personnel. If any key employee decides to terminate his employment with us, this termination could delay the commercialization of our products or prevent us from sustaining our profitability. Competition for qualified employees is intense among companies in our industry and the loss of qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for the expansion of our activities, could hinder our ability to successfully develop and maintain marketable products.

Our Board of Directors and the Majority of the Shares of the Company is Under the Complete Control of Mr. Carl Palmer.

The Board of Directors is now completely under the control of Mr. Carl Palmer. The current Board of Directors consists of Mr. Palmer, his daughter, Mrs. Cari Beck, her husband and Mr. Palmer's son-in-law, Mr. John Beck, and Mr. Place. Ms. Eggett, a former Director, has resigned from the Board and has no further Board association, although she continues to provide financial services as a third party consultant. Mr. Place remains the only person on the Board of Directors and in senior management not directly associated with Mr. Palmer.

Further, as a result of his control of the majority of the shares of the Company and its Board of Directors, as well as the lack of any independent directors, it must be assumed that all final decisions of the Company will ultimately be made solely by Mr. Palmer. The amount of outside input and advice which Mr. Palmer will utilize can be expected to be entirely within his sole discretion. It should be noted that the Company has pledged to populate the Board of Directors in the future with one or more independent directors but that has yet to happen.

The Acquisition of Other Technologies Could Result In Operating Difficulties, Dilution and Other Harmful Consequences.

We may selectively pursue strategic acquisitions, any of which could be material to our business, operating results and financial condition. Future acquisitions could divert management's time and focus from operating our business. In addition, integrating an acquired technology is risky and may result in unforeseen operating difficulties and expenditures.

The anticipated benefits of future acquisitions, if consummated, may not materialize. Future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, including our common stock, the incurrence of debt, contingent liabilities, or write-offs of intellectual properties any of which could harm our financial condition. Future acquisitions may also require us to obtain additional financing, which may not be available on favorable terms or at all.

We Face Risks Associated With Currency Exchange Rate Fluctuations.

Although we currently transact business primarily in U.S. dollars, a large portion of our revenues and related cost of goods sold may be determined in foreign currencies if we continue to expand our international operations. Conducting business in currencies other than U.S. dollars subjects the Company to fluctuations in currency exchange rates that could have a negative impact on our reported operating results. Fluctuations in the value of the U.S. dollar relative to other currencies may impact our revenue, cost of goods sold and operating gross margin, and result in foreign currency translation gains and losses. Historically, we have not engaged in exchange rate hedging activities.

Changes to Financial Accounting or Other Standards May Affect Our Operating Results and Cause Us To Change Our Business Practices.

We prepare our consolidated financial statements in accordance with generally accepted accounting principles, or GAAP, in the United States. These accounting principles are issued by the Financial Accounting Standards Board (FASB). The Securities and Exchange Commission also provides interpretation, guidance and principles in the preparation of financial statements. A change in those policies could have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced.

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If We Fail in Maintaining Effective Internal Control Over Financial Reporting, The Price of Our Common Stock May be Adversely Affected.

We are required to establish and maintain appropriate internal control over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely impact our public disclosure regarding our business, financial condition or results of operations. In addition, our future assessments of internal control over financial reporting may identify additional weaknesses and conditions that need to be addressed in our internal control over financial reporting or other matters that may raise concerns for investors. Any material weaknesses that needs to be addressed in management's assessment of our internal control over financial reporting or in the report on the effectiveness of our internal controls by our independent registered public accounting firm, when, and if, applicable, may have an adverse impact of our common stock.

If We Fail to Comply with Section 404 of the Sarbanes-Oxley Act of 2002 in a Timely Manner, Our Business Could Be Harmed and Our Stock Price Could Decline.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require management's annual assessment of our internal control over financial reporting. The standards that must be met for the management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We have incurred significant expenses and we devote resources to Section 404 compliance on an ongoing basis. In the event that our Chief Executive Officer and Chief Financial Officer determine that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react on how the market prices of our shares will be affected, however, we believe that there is a risk that investor confidence and share value may be negatively impacted.

Maintaining and Improving Our Financial Controls and The Requirements Of Being a Public Company May Strain Our Resources, Divert Management's Attention, and Affect Our Ability to Attract and Retain Qualified Members For Our Board of Directors.

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002. The requirements of these rules and regulations increase our legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming and costly, and may also place undue strain on our personnel, systems, and resources. The Sarbanes-Oxley Act of 2002 requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Fulfilling this requirement can be difficult to achieve and maintain.

As a result, management's attention may be diverted from other business concerns, which could harm our business, operating results and financial condition. These efforts also involve substantial costs.

We May be Impacted By the Implementation of Regulatory Requirements as a Result of the Passage of the Dodd-Frank Act.

In July, 2010, Congress enacted the Dodd-Frank Act, which instituted major changes in the regulatory regime for public companies. At the present time, we do not believe that Seychelle will be impacted in a material way by this legislation. However, the implementation of the provisions of the Dodd-Frank Act is subject to regulations which have not yet been written and its statutory provisions have not been the subject of extensive judicial review, so we cannot guarantee that we may not come under its purview at some point in the future and be affected negatively by it.

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Our Articles of Incorporation and Bylaws Could Discourage Acquisition Proposals, Delay a Change in Control, or Prevent Other Transactions.

Provisions of our articles of incorporation and bylaws, as well as provisions of the Nevada Business Corporation Act, may discourage, delay or prevent a change in control of our Company that you as a stockholder may consider favorable and may be in your best interest. Our certificate of incorporation and bylaws contain provisions that:

•	authorize the issuance of "blank check" preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares and discourage a takeover attempt; and

•	Limit who may call special meetings of stockholders.

Our Stock Price Can Be Volatile.

The future market price of our common stock could fluctuate widely because of:


•	Future announcements about our Company or our competitors, including the results of testing, technological innovations or new commercial products;

•	negative regulatory actions with respect to our potential products or regulatory approvals with respect to our competitors' products;

•	changes in government regulations;

•	developments in our relationships with our partners including customers, vendors and distributors;

•	developments affecting our partners; including customers, vendors and distributors;

•	our failure to acquire or maintain proprietary rights to the products we develop;

•	litigation; and

•	Public concern as to the safety of our products.

The stock market has experienced price and volume fluctuations that have particularly affected the market price for many emerging companies. These fluctuations have often been unrelated to the operating performance of these companies. These broad market fluctuations may cause the market price of our common stock to be lower or more volatile than otherwise expected.

Buying Penny Stocks is Very Risky and Speculative. The Applicability of the "Penny Stock Rules" to Broker-dealer Sales of Our Common Stock Will Have a Negative Effect on the Liquidity and Market Price of Our Common Stock.

Trading in our shares is subject to the "penny stock rules" adopted pursuant to Rule 15g-9 of the Securities and Exchange Act of 1934, as amended, which apply to companies that are not listed on an exchange and whose common stock trades at less than $5.00 per share or which have a tangible net worth of less than $5,000,000 - or $2,000,000 if we have been operating for three or more years. The penny stock rules impose additional sales practice requirements on broker-dealers which sell such securities to persons other than established customers and institutional accredited investors. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. Consequently, the penny stock rules will affect the ability of broker-dealers to sell shares of our common stock and may affect the ability of shareholders to sell their shares in the secondary market, as compliance with such rules may delay and/or preclude certain trading transactions. The rules could also have an adverse effect on the market price of our common stock.

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These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our common stock. Many brokers may be unwilling to engage in transactions in our common stock because of the added disclosure requirements, thereby making it more difficult for stockholders to dispose of their shares. You will also find it difficult to obtain accurate information about, and/or quotations as to the price of our common stock.

We have added a stock broker to create or maintain a market in our common stock, which could favorably impact the price and liquidity of our securities.

We Do Not Expect to Pay Dividends on Our Common Stock.

We have not paid any cash dividends with respect to our common stock, and it is unlikely that we will pay any dividends on our common stock in the foreseeable future, as we are a growth company.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

A smaller reporting company is not required to provide the information in this Item.

ITEM 2. PROPERTIES.

As of February 28, 2015, our business office was located at 32963 Calle Perfecto, San Juan Capistrano, CA 92675 with an additional warehouse located at 32901 Calle Perfecto, San Juan Capistrano, CA 92675 and an additional facility that houses production and customer service at 32893 Calle Perfecto, San Juan Capistrano, CA 92675. Our office telephone number is 949-234-1999. We pay a total of approximately $17,000 in rent per month for approximately 15,800 square feet of office, operations and warehousing. We have a lease for the 32963 location with an unaffiliated third party, which was initiated in June 2009 and will expire in May 2019. The lease for the 32901 location is with a different unaffiliated third party, was initiated November 2011, and will expire in July 2017. The lease for the 32893 location is with a different unaffiliated third party, was initiated in July 2014, and will expire in July 2017. The Company has committed on moving to a new facility with the corporate offices, inventory and production at 22 Journey in Aliso Viejo on July 1, 2016 and will attempt to sub-lease all of its three current locations noted previously.

We own two patents and numerous trade secrets (see Proprietary Information and Technology above), and other proprietary information related to our business operations. We have filed for five trademarks with the United States Patent and Trademark Office which were granted: Seychelle®, which has been used in commerce since 1997, along with Pres 2 Pure, Fill 2 Pure, pH20 Plus and Aq-RO-matic.

ITEM 3. LEGAL PROCEEDINGS.

The Company previously reported that it was involved in a 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 case was settled on November 16, 2015. The outstanding obligations were paid in full during the year ended February 29, 2016.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Principal Market or Markets

Our Common Stock began trading in 1997 on the OTC Bulletin Board ("OTCBB"). Since the consummation of trading our common stock, market makers and other dealers have provided bid and ask quotations of our Common Stock under the symbol "SYEV." We were de-listed from the OTCBB in 2002 and were traded on the "Pink Sheets" from December 2002 to March 11, 2008, when we were re-listed on the OTCBB. The table below represents the range of high and low bid quotations of our common stock as reported during the reporting period herein. The following bid price market quotations represent prices between dealers and do not include retail markup, markdown, or commissions; hence, they may not represent factual transactions. As of June 15, 2016, the common stock had a closing price of $0.54.

Fiscal Year 2016	High Bid		Low Bid

Quarter Ended:

First Quarter May 2015	$	0.30	$	0.19

Second Quarter August 2015	$	0.53	$	0.26

Third Quarter November 2015	$	0.64	$	0.27

Fourth Quarter February 2016	$	0.59	$	0.24

Fiscal Year 2015	High Bid		Low Bid

Quarter Ended:

First Quarter May 2014	$	0.70	$	0.37

Second Quarter August 2014	$	0.55	$	0.20

Third Quarter November 2014	$	0.40	$	0.20

Fourth Quarter February 2015	$	0.25	$	0.12

Approximate Number of Holders of Common Stock

As of February 29, 2016, there were approximately 358 shareholders of record of our common stock.

Dividends

Holders of our common stock are entitled to receive such dividends as may be declared by our Board of Directors. We paid no dividends on our common stock during the periods reported herein nor do we anticipate paying such dividends in the foreseeable future.

- 14 -

ITEM 6. SELECTED FINANCIAL DATA

A smaller reporting company is not required to provide the information in this Item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company and its subsidiaries as of and for the fiscal years ended February 29, 2016 and February 28, 2015. 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 elsewhere in this annual report on Form 10-K. 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.

Application of Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are affected by management's application of accounting policies.

Critical accounting policies for us include our accounting for inventory reserves, allowance for doubtful accounts and sales returns reserves, share based payment arrangements and determination of the valuation allowance for deferred tax assets.

Inventory Reserves

At each balance sheet date, the Company evaluates its ending inventory for excess quantities and obsolescence. This evaluation includes an analysis of sales levels by product type. Among other factors, the Company considers current product configurations, historical and forecasted demand, market conditions and product life cycles when determining the market value of the inventory. This requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, and the period over which cash flows will occur. Provisions are made to reduce excess or obsolete inventories to their estimated market values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventory.

Allowance for Doubtful Accounts and Sales Returns Reserves

The Company analyzes its current accounts receivable portfolio and sales returns in accordance with FASB Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. Estimates for potential uncollectible accounts receivable and sales returns are based on a variety of factors, the age of the receivable, historical payment patterns, and actual return experience of specific products or similar products. The Company also reviews its estimates for product returns based on expected return data communicated to us by customers. Management is able to make reasonable and reliable estimates of its allowance for doubtful accounts and product returns based on our history in this business.

Stock Based Compensation

FASB ASC Topic 718, Compensation – Stock Compensation, requires companies to estimate the fair value of stock based compensation on the date of grant. For stock grants, the Company uses the closing price on the date of grant. For warrants, the Company uses the Black-Scholes option pricing model. In order to estimate the fair value of the warrants, certain assumptions are made regarding future events. Such assumptions include the estimated future volatility of the Company's stock price, the expected lives of the awards and the expected dividends, and risk-free rate. Changes in these estimates would change the estimated fair value of the awards, the corresponding accounting for the awards.

- 15 -

Income Taxes

We account for income taxes using the asset and liability method under which deferred tax assets or liabilities are calculated at the balance sheet date using current tax laws and rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized.

Recent Accounting Pronouncements

On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which is effective for public entities for annual reporting periods beginning after December 15, 2017. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. The Company is currently evaluating the impact of the pending adoption of ASU 2014-09 on the consolidated financial statements and has not yet determined the method by which the Company will adopt the standard in fiscal year 2018.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern—Disclosures of Uncertainties about an entity's Ability to Continue as a Going Concern ("ASU 2014-15") . ASU 2014-15 provides new guidance related to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards and to provide related footnote disclosures. This new guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The requirements of ASU 2014-15 are not expected to have a significant impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the potential impact this standard will have on our consolidated financial statements and related disclosures.

Management does not believe any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company's present or future consolidated financial statements.

Results of Operations

Our summary historical financial data is presented in the following table to aid you 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 consolidated financial statements and the related notes to the consolidated financial statements included elsewhere in this annual report. The selected financial data below for the fiscal years ended February 29, 2016 and February 28, 2015 are derived from our consolidated financial statements included elsewhere in this annual report.

- 16 -

Fiscal year ended February 29, 2016 compared to the corresponding period in fiscal 2015.

Selected Financial Data

	Years Ended
	February 29,			February 28,						Percentage
	2016			2015			Difference			Change

Sales	$	10,910,067		$	4,305,205			6,604,862			153	%
Cost of sales		5,906,131			2,477,124			3,429,007			138	%
Gross profit		5,003,936			1,828,081			3,175,855			174	%
Gross profit percentage		46	%		42	%		4	%

Archette and Garcia legal expenses		344,078			1,611,729			(1,267,651	)		(79	%)
Impairment of intangible assets		100,000			-			100,000			100	%
Selling, general and administrative expenses		2,476,994			2,297,882			179,112			8	%

Income (loss) from operations		1,997,445			(2,144,689	)		4,142,134			193	%

Interest expense		(838	)		(1,106	)		268			(24	%)
Interest income		440			2,345			(1,905	)		(81	%)
Other income (expense)		(4,707	)		12,551			(17,258	)		(138	%)
Income (loss) before income taxes		1,992,340			(2,130,898	)		4,123,238			193	%
Income (loss) before income taxes percentage		18	%		(49	)%		67	%

Benefit (expense) from income taxes		(959,399	)		724,990			(1,684,389	)		(232	%)
Net income (loss)		1,032,941			(1,405,908	)		2,438,849			173	%
Net income (loss) percentage		9	%		(33	%)		42	%
Net income (loss) per share - basic and diluted	$	0.04		$	(0.05	)

Net cash (used in) provided by operating activities		689,016			(1,237,644	)
Net cash used in investing activities		(121,506	)		(215,443	)
Net cash used in financing activities		(19,171	)		(4,204	)

Sales. The increase in sales of $6.6 million, or 153%, during the year ended February 29, 2016 is mainly due to increased sales to our three largest customers. During the fiscal year ended February 29, 2016, sales to our three largest customers increased approximately $6.0 million, to $8.4 million, an increase of 255% compared to prior year sales to the same three customers. Our largest customer, which has developed a private label pitcher and bottle, and significantly increased its distribution line, increased its sales approximately $3.2 million, or 531%, during the year ended February 29, 2016 compared to the year ended February 28, 2015. Additionally, the launch of our pH2O product line, which increases the alkalinity of municipal water to between 8.0-9.5 pH, also increased sales during the current period. During the year ending February 29, 2016, sales of the pH2O line were approximately $2.0 million, compared to none during the comparable prior period.

Sales of our pH2O product line during the first, second, third and fourth quarters of the year ended February 29, 2016 were approximately $1.0 million, $866,000, $248,000 and $102,000, respectively. We anticipate that sales of this product line will be significantly more as we expand distribution of this product in the subsequent fiscal year.

Our most significant customer in fiscal 2016 appears to have ceased business and will presumably no longer be available to purchase our products. The loss of business from this customer could have a materially adverse effect on our revenues in the short term and in the long term if these revenues are not replaced by new products and other existing or new customers. There may be some decreases in sales to other customers in the subsequent year as well, but this will have to be offset by planned new products and sales to both current and new customers.

Cost of sales and gross profit percentage. The increase in cost of sales is largely a direct result of the 153% increase in sales for the year ended February 29, 2016 as compared to the year ended February 28, 2015. Cost of sales increased by only 138% from period to period by comparison, resulting in gross profit margin increasing to 46% from approximately 42% in the prior year. Our profit margin will fluctuate from time to time based on the product mix within sales. Sales of the aforementioned pH2O product line increased approximately $2.2 million during the year ended February 29, 2016. We are selling this product with strict minimum order quantities that allow us to achieve greater profit margins, averaging 68% during the year ended February 29, 2016, which has increased our overall gross margin.

Our largest customer has favorable pricing that averages approximately 36% gross margin across product lines. This customer purchased approximately $3.7 million and $600,000 in the years ended February 29, 2016 and February 28 2015, respectively. In the current fiscal year, these sales were approximately 34% of our total sales, and offset the gross margin increase from the pH2O product line.

Additionally, we have experienced an overall increase in materials and freight-in costs that have impacted our costs of goods. We anticipate gross margins to remain relatively flat in the subsequent fiscal year.

- 17 -

Archette and Garcia legal expenses. The Archette case was settled on March 4, 2015 and accrued as of February 28, 2015 and there were no further legal expenses related to this case incurred during year ended February 29, 2016. The Garcia case was settled on November 16, 2015 and there will be no further legal expenses related to the case incurred going forward. We anticipate our legal expenses to be substantially reduced in future periods as we have no on-going legal matters.

Impairment of intangible assets. During the prior year, the Company purchased intellectual property from a related party for $150,000. During the current year, sales of the product related to this intellectual property were lower than expected. We do not currently have plans to assign further resources to further development or market expansion, and consequentially recorded an impairment charge in the amount of $100,000 against the intangible asset carried on the accompanying consolidated balance sheet. There was no impairment charges recorded during the year ended February 28, 2015.

Selling, general and administrative. The selling, general and administrative expenses increased $179,000, or 8%, from prior year. This increase was primarily due to cost of employees. During the year ended February 29, 2016, we hired an inventory control manager and a sales manager for the Mexico region, which increased payroll expense by approximately $100,000. We also experienced an increase of approximately $24,000 during the current year in medical insurance costs, which was caused by new employees, higher premiums, and an increase in employees utilizing the group plan offered to all qualified employees. Additionally, we had stock grants to employees and related parties during the current year of approximately $157,000, compared to none in the prior year.

Also during the current year, we increased expenses incurred with third-party consultants to approximately $58,000, an increase of approximately $36,000 compared to prior year. This was due to additional services required in verbal and written translation for foreign markets, as well as the employment of temporary labor and consultant labor to transition responsibilities of former employees.

These increases were offset by a decrease in the current year related to the expense for warrants (see Note 8). First, one warrant holder retired in April 2015 and forfeited his warrants as part of his retirement. This caused a decrease of $83,000 expense related to the vesting of these warrants in the year ended February 29, 2016 compared to the prior period. Additionally, the remaining outstanding warrants became fully vested in December 2015, causing only a partial year expense related to the vesting of these warrants during the year ended February 29, 2016. The end of the vesting period of these remaining outstanding warrants result in a decrease of $56,000 in expense during the year ended February 29, 2016 compared to the prior year.

We do not expect to issue additional warrants, and therefore the decrease in related expense is expected to be permanent. The other increases in selling, general and administrative expenses will be recurring.

Interest income and expense. Interest income and expense was relatively consistent from year to year.

Other income and expense. Other income and expense was relatively consistent from year to year.

Benefit (expense) from income taxes.

In the fiscal year ended February 29, 2016, the Company recorded an income tax provision of approximately $959,000. As of February 29, 2016, the company had utilized all NOLs available for federal and state tax purposes, respectively. In the fiscal year ended February 28, 2015, the Company recorded an income tax benefit of approximately $725,000, all of which was a deferred benefit, and which was net of a $123,000 valuation allowance recorded in the current year

Net Income. The net income for the year ended February 29, 2016 was $1,033,000 ($0.04 income per basic share and $0.04 income per diluted share) or 173% higher than the year ended February 28, 2015, which had a loss of $1,405,909 ($0.05 loss per basic and diluted share). This was primarily due to higher revenues and decreased legal expenses discussed above. The $0.04 income per share would have been higher, however, our NOL (net loss carryforwards) have been used up and as a consequence we have a higher income tax liability. To the extent we report profitable results in the future, we will be paying taxes accordingly without the benefit of NOL carryforwards.

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CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF BALANCE SHEET ARRANGEMENTS

The Company has various contractual obligations, which are recorded as liabilities in the consolidated financial statements. Other items, such as certain lease agreements are not recognized as liabilities in our consolidated financial statements but are required to be disclosed. For example, the Company is contractually committed to make certain minimum lease payments to rent its current corporate location.

The following table summarizes our significant contractual obligations on an undiscounted basis as of February 29, 2016 and the future periods in which such obligations are expected to be settled in cash or converted into the Company's common stock. In addition, the table reflects the timing of principal payments on outstanding borrowings. Additional details regarding these obligations are provided in footnotes, as referenced below:

	Total		Less Than 1 Year		1- 3 Years		3-5 Years		More Than 5 Years
Accounts payable and accrued liabilities	$	415,226	$	415,226	$	-	$	-	$	-
Income taxes payable		317,145		317,145
Customer deposits		28,219		28,219		-		-		-
Capital lease		28,829		9,390		16,257		3,182		-
Other contractual commitments (1)		1,570,000		316,000		623,000		522,000		109,000
Total contractual obligations	$	2,359,419	$	1,085,980	$	639,257	$	525,182	$	109,000

(1) Office lease commitments expiring July 2017, May 2019 and July 2021 and equipment lease expiring in fiscal year 2020.

Subsequent to year-end, the Company entered into a lease agreement on one facility that will house corporate offices, inventory and production at 22 Journey in Aliso Viejo, CA for a term of 5 years and monthly rental of approximately $19,000, and these amounts are reflected in the table above. The Company is in the process of attempting to sub-leasing all of its three current locations noted previously.

Effective April 18, 2016, Messrs. Carl Palmer and James Place each entered into identical employment agreements with the Company. The term of each agreement is for a period of five years from the date of the employment agreement. Each individual will be paid the sum of $60,000 per year plus customary employee benefits for the period of the employment agreement. Effective April 18 and 21, 2016, the Company also entered into two one-year consulting agreements with former employees for $85,000 and $110,000, respectively.

Liquidity and capital resources.

Net cash provided by (used in) operating activities. During the fiscal years ended February 29, 2016, the Company had cash provided by operating activities of $689,000, compared to cash used in operating activities of $1.0 million in the comparable prior period. During the year ended February 28, 2015, the Company funded its operations through sales of products and cash on hand from prior year's operations. During the year ended February 29, 2016, the Company had net income of $1.03 million and maintained materially consistent timely collections in its accounts receivable. This was offset by a build-up of inventory-on-hand of approximately $1.5 million, the pay-down of accrued legal and settlement fees of $532,000, and the utilization of customer deposits of $91,000.

Net cash used in investing activities. The $121,506 of cash used in investment activities during the year ended February 29, 2016 was for the purchase of additional tooling and molding to increase our production capacity, as well as an upgraded server and phone system for our corporate offices. The $215,443 of cash used in investment activities during the year ended February 28, 2015 was for the purchase of intellectual property and equipment throughout the year.

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Net cash used in financing activities. In fiscal 2016 and 2015, we repaid $6,891 and $4,204 in capital leases payable. In fiscal 2016, we also repurchased 36,000 shares of common stock for a cost of $12,280.

The Company currently estimates monthly cash requirements of approximately $200,000 to cover selling, general and administrative costs. Gross profits from sales are expected to provide sufficient cash flows to meet these cash requirements and pay contractual commitments.

As of February 28, 2016, the Company has unrestricted cash of approximately $2,063,000 and a backlog of approximately $217,000 in orders to fill.

Capital expenditures.

We do not expect any major capital expenditures in fiscal 2017. However, minor purchases of additional molds or tooling may be needed to expand our product line. We will be able to fund these purchases from cash on hand and we will not require outside financing.

Employees.

As of June 14, 2016, our employees consisted of a Chief Executive Officer, a President and Chief Financial Officer, and five (5) administrative employees supporting that effort. In assembly, operations and warehousing we had fifteen (15) full-time employees and one (1) part-time employee working to fill orders.

Any seasonal aspects

We have not experienced seasonal spikes in our sales as a result of our very limited retail store distribution and our sales are not subject to seasonal fluctuation.

Off-Balance Sheet Arrangements : None

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

A smaller reporting company is not required to provide the information in this Item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

of Seychelle Environmental Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of Seychelle Environmental Technologies, Inc. and subsidiaries (the Company) as of February 29, 2016 and February 28, 2015, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the two-year period ended February 29, 2016. Seychelle Environmental Technologies, Inc.'s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Seychelle Environmental Technologies, Inc. as of February 29, 2016 and February 28, 2015, and the results of their operations and their cash flows for each of the years in the two-year period ended February 29, 2016 in conformity with accounting principles generally accepted in the United States of America.

/s/ Ramirez Jimenez International CPAs


Irvine, California

June 15, 2016

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SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Consolidated Balance Sheets

ASSETS
	February 29,			February 28,
	2016			2015
CURRENT ASSETS
Cash and cash equivalents	$	2,062,873		$	1,514,534
Accounts receivable, net of allowance for doubtful accounts and sales returns of $125,800 and $13,400, respectively		224,235			284,121
Related party receivable		39,575			12,601
Inventory, net		2,511,458			1,009,491
Deferred tax assets		62,145			629,838
Prepaid expenses, deposits and other current assets		115,440			174,052
Total current assets		5,015,726			3,624,637

PROPERTY AND EQUIPMENT, NET		222,926			162,107

OTHER ASSETS
Intangible assets, net		51,343			152,643
Deferred tax assets, net of current portion		551,571			611,314
Other assets		15,651			25,491

TOTAL ASSETS	$	5,857,217		$	4,576,192

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	415,226		$	238,009
Accrued legal and settlement fees (Note 10)		-			532,103
Income taxes payable		317,145			-
Customer deposits		28,219			119,215
Capital lease obligations, current portion		9,390			5,639
Total current liabilities		769,980			894,966

LONG-TERM LIABILITIES

Capital lease obligations, net of current portion		19,439			4,081
Total long-term liabilities		19,439			4,081

Total liabilities		789,419			899,047

Commitments and contingencies (Note 10)

STOCKHOLDERS' EQUITY
Preferred stock, 6,000,000 shares authorized,
none issued or outstanding		-			-
Common stock $0.001 par value, 50,000,000 shares
authorized, 26,390,313 and 25,913,646 shares
issued and outstanding, respectively		26,391			25,914
Additional paid-in capital		8,827,118			8,457,603
Accumulated deficit		(3,773,431	)		(4,806,372	)
Less treasury stock at cost (36,000 shares)		(12,280	)		-

Total stockholders' equity		5,067,798			3,677,145
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	5,857,217		$	4,576,192

The accompanying notes are an integral part of these consolidated financial statements.

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SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Consolidated Statements of Operations

	For the Year Ended
	February 29,			February 28,
	2016			2015

SALES	$	10,910,067		$	4,305,205
COST OF SALES		5,906,131			2,477,124
GROSS PROFIT		5,003,936			1,828,081

Selling, general and administrative expenses		2,476,994			2,297,882
Impairment of intangible assets (Note 5)		100,000			-
Archette and Garcia legal expenses (Note 10)		344,078			1,611,729
Depreciation and amortization		85,419			63,159

Total operating expenses		3,006,491			3,972,770

INCOME (LOSS) FROM OPERATIONS		1,997,445			(2,144,689	)

Interest income		440			2,345
Interest expense		(838	)		(1,106	)
Other		(4,707	)		12,551

Total other (expense) income		(5,105	)		13,790

INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE)		1,992.340			(2,130,899	)

Income tax (expense) benefit		(959,399	)		724,990

NET INCOME (LOSS)	$	1,032,941		$	(1,405,909	)
NET INCOME (LOSS) PER SHARE
Basic	$	0.04		$	(0.05	)
Diluted	$	0.04		$	(0.05	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		26,210,545			25,902,194
Diluted		29,341,308			25,902,194

The accompanying notes are an integral part of these consolidated financial statements.

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SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Consolidated Statements of Stockholders' Equity

For the Years Ended February 29, 2016 and February 28, 2015


										Additional
	Common Stock					Treasury Stock				Paid-In			(Accumulated
	Shares		Amount			Shares		Amount		Capital			Deficit)				Total

Balance at February 28, 2014		25,853,646		$	25,854		-	$	-		$	8,067,163		$	(3,400,463	)		$	4,692,554

Stock-based compensation		60,000			60		-		-			390,440			-				390,500
Net loss		-			-		-		-			-			(1,405,909	)			(1,405,909	)
Balance at February 28, 2015		25,913,646		$	25,914		-		-		$	8,457,603		$	(4,806,372	)		$	3,677,145

Stock-based compensation	476,667		477	-		-			369,515		-			369,992
Treasury stock at cost	-		-	36,000		(12,280	)							(12,280	)
Net income	-		-	-		-			-		1,032,941			1,032,941
Balance at February 29, 2016	26,390,313	$	26,391	36,000	$	(12,280	)	$	8,827,118	$	(3,773,431	)	$	5,067,798

The accompanying notes are an integral part of these consolidated financial statements.

- 24 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Consolidated Statements of Cash Flows

	February 29, 2016			February 28, 2015

CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)	$	1,032,941		$	(1,405,909	)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization		85,419			63,159
Loss on disposal of assets		2,568			12,490
Impairment of intangible assets		100,000			-
Stock-based compensation		369,992			390,500
Provision for (recovery of) doubtful accounts		112,400			(10,000	)
Increase in inventory reserve		-			5,000
Deferred tax provision (benefit)		644,896			(745,919	)
Increase in valuation allowance on deferred tax assets		(17,460	)		-
Changes in operating assets and liabilities:
Accounts receivable		(52,512	)		42,237
Related party receivable		(26,974	)		1,722
Inventory		(1,501,967	)		(24,238	)
Prepaid expenses, deposits and other current assets		68,452			(84,798	)
Accounts payable and accrued expenses		177,215			66,366
Accrued legal and settlement fees		(532,103	)		532,103
Income taxes payable		317,145			-
Customer deposits		(90,996	)		(80,357	)

Net Cash Provided by (Used In) Operating Activities		689,016			(1,237,644	)

CASH FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(121,506	)		(65,009	)
Purchase of intangible assets		-			(150,434	)

Net Cash Used in Investing Activities		(121,506	)		(215,443	)

CASH FROM FINANCING ACTIVITIES:
Purchase of treasury stock		(12,280	)		-
Repayment of capital lease obligations		(6,891	)		(4,204	)

Net Cash Used in Financing Activities		(19,171	)		(4,204	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		548,339			(1,457,291	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		1,514,534			2,971,825

CASH AND CASH EQUIVALENTS AT END OF YEAR		2,062,873		$	1,514,534

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

NONCASH INVESTING AND FINANCING ACTIVITIES
Acquisition of equipment under capital leases	$	26,000			-
CASH PAID DURING THE YEAR FOR:
Interest	$	838		$	1,106
Income taxes		-			-

The accompanying notes are an integral part of these consolidated financial statements.

- 25 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization

Seychelle Environmental Technologies, Inc. was incorporated under the laws of the State of Nevada on January 23, 1998 as a change in 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. Seychelle Water Technologies, Inc., and Fill 2 Pure International, Inc., both wholly owned subsidiaries, were formed as corporations in February 1997 and April 2013, respectively, under the laws of the state of Nevada for the purpose of marketing.

Description of Business

The Company designs, assembles and distributes water filtration systems. These systems include portable water bottles, pumps, home-use pitchers, and related water filtration products that can be filled from nearly any available source of fresh water.

Management's Plan

As of February 29, 2016, the Company had $2,062,873 in cash and a backlog of $217,000 in unshipped product. Additionally, the Company has developed an innovative new concept of a world filter product to sell in the world where quality drinking water is not available. Both the bottle and cap will to be sourced locally to make the finished product competitive in the international market. The Company initiated these foreign sales plans subsequent to year-end with the appointment of its first international exclusive sales agent. Accordingly, management believes that over the next twelve months, sufficient working capital and liquidity will be obtained from revenues to sustain operations.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of the Company is presented to assist in understanding the Company's consolidated financial statements. The consolidated financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States and have been consistently applied in the preparation of the consolidated financial statements herein as of and for the years ended February 29, 2016 and February 28, 2015.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Principles of Consolidation

The 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). All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made in preparing the consolidated financial statements include the allowance for doubtful accounts and sales returns, stock-based compensation, inventory reserves, valuation allowances for property and equipment and intangible assets, and the deferred income tax valuation allowance. To the extent there are material differences between estimates and the actual results, future results of operations will be affected. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.

- 26 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents

Cash equivalents are comprised of certain highly liquid investments with original maturities of three months or less when purchased. The Company maintains its cash and cash equivalents in bank deposit accounts which at times may exceed federally insured limits of $250,000. The Company has not experienced any losses related to this concentration of risk. Deposits exceeded insured limits by approximately $1,693,000 as of February 29, 2016.

Accounts Receivable

The Company performs periodic credit evaluations of its customers' financial condition and does not require collateral. Trade receivables generally are due in 30 days. An allowance for doubtful accounts is recorded when it is probable that all or a portion of a trade receivable balance will not be collected.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, products are shipped and title has passed, the price to the buyer is fixed or determinable and collectability is reasonably assured. These criteria are typically met when the product is shipped. Revenue is not recognized at the time of shipment if these criteria are not met. Certain of the Company's sales include a right for the customer to return the product if they are not satisfied. The Company has an unconditional return policy for the first 90 days. Customers may return the product for a full refund, or they may receive a replacement at no charge. The same policy applies to any product sold from the period 91 days after purchase to one year, for any defects in materials or workmanship. In accordance with FASB ASC Topic 605, Revenue Recognition, the Company makes periodic assessments of return activity and if necessary records a reserve for product returns.

Inventory

Inventory is stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. Inventory is comprised of raw materials and finished goods. Raw materials consist of fittings, caps and other components necessary to assemble the Company's finished goods. Finished goods consist of water bottles and other filtration systems that are available for shipment to customers. Finished goods and work in process include the costs of materials, labor and an allocation of overhead. Total overhead allocated to inventory as of February 29, 2016 and February 28, 2015 amounted to approximately $505,000 and $216,000, respectively.

At each balance sheet date, the Company evaluates its ending inventory for excess quantities and obsolescence. This evaluation includes an analysis of sales levels by product type. Among other factors, the Company considers current product configurations, historical and forecasted demand, market conditions and product life cycles when determining the net realizable value of the inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventory. The Company's reserve for excess and obsolete inventory amounted to approximately $40,000 as of February 29, 2016 and February 28, 2015.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets. The estimated useful lives used in determining depreciation are three to five years for tooling, five years for computers and vehicles, and five to seven years for furniture and equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the respective asset. Management evaluates useful lives regularly in order to determine recoverability.

Maintenance and repairs are charged to expense as incurred; additions and betterments are capitalized. Upon retirement or sale, the cost and related accumulated depreciation of the disposed assets are removed, and any resulting gain or loss is recorded. Fully depreciated assets are not removed from the accounts until physical disposition.

Intangible Assets

Intangible assets include intellectual property, patents and trademarks. All patents and trademarks are capitalized and amortized over the economic useful lives using the straight-line method. The Company assesses whether there has been a permanent impairment of the value of intangible assets by considering factors such as expected future product revenues, anticipated product demand and prospects, and other economic factors.

- 27 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Long-Lived Assets

The carrying value of long-lived assets, such as property and equipment and intangible assets, are evaluated when indicators of impairment are present. Impairment is assessed when the undiscounted future cash flows estimated to be generated by those assets are less than the assets' carrying amount. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. The Company recorded an impairment charge for certain intangible assets in the amount of $100,000 for the year ended February 29, 2016.

Customer Deposits

Customer deposits represent advance payments received for products and are recognized as revenue in accordance with the Company's revenue recognition policy.

Fair Value of Financial Instruments

For certain financial instruments, including accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their relatively short maturities.

Cost of Sales

Cost of sales is comprised primarily of the cost of purchased product, as well as labor, inbound freight costs, allocated overhead costs and other material costs required to complete products, including inventory markdowns due to excess and obsolete inventory.

Shipping and Handling

All amounts billed to customers relating to shipping and handling are reported as a component of sales. Costs incurred by the Company for shipping and handling, including transportation costs paid to third party shippers, are reported as a component of cost of sales.

Sales Tax

The Company collects sales tax in various jurisdictions. Upon collection from customers, it records the amount as a payable to the related jurisdiction. On a periodic basis, it files a sales tax return with the jurisdictions and remits the amount indicated on the return.

Advertising

Advertising costs are expensed as incurred. Total advertising expenses amounted to approximately $10,700 and $3,700 for the fiscal years ended February 29, 2016 and February 28, 2015, respectively, and recorded as selling, general and administrative expenses in the accompanying consolidated statements of operations.

Research and Development

Research and development costs are expensed as incurred and amounted to approximately $2,000 and $1,000 for the fiscal years ended February 29, 2016 and February 28, 2015, respectively. These costs are included in selling, general and administrative expenses in the accompanying consolidated statements of income.

- 28 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation

The Company follows FASB ASC Topic 718, Compensation – Stock Compensation, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, primarily focusing on accounting for transactions where an entity obtains services in share based payment transactions. ASC 718 requires entities to measure the cost of services received in exchange equity instruments, including stock options and warrants, based on the grant date fair value of the award and to recognize it as compensation expense over the period services are to be provided, usually the vesting period.

The fair value of options and warrants is calculated using the Black-Scholes option-pricing model. This model was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions. As such, the values derived from using that model can differ significantly from other methods of valuing the Company's stock based compensation arrangements. The Black-Scholes model also requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. These factors could change in the future, affecting the determination of stock based compensation expense in future periods.

The Company's fair value calculations for stock based compensation awards have been based on the following assumptions.

Expected life in years	7
Stock price volatility	244%
Risk free interest rate	2.9%
Expected dividends	None

The assumptions used in the Black-Scholes model referred to above are based upon the following data: (1) The expected life of the option or warrant is estimated by considering the contractual term, the vesting period and the expected exercise price. (2) The expected stock price volatility of the underlying shares over the expected life is based upon historical share price data. (3) The risk free interest rate is based on published U.S. Treasury Department interest rates for the expected life. (4) Expected dividends are based on historical dividend data and expected future dividend activity.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the consolidated financial statements be measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.

The Company also follows ASC 740-10-25, which provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements in accordance with ASC 740, "Accounting for Income Taxes". ASC 740-10-25 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Income (Loss) Per Common Share

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of outstanding common shares during each of the periods presented. Diluted net income per common 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.

- 29 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

During the years ended February 29, 2016 and February 28, 2015, 0 and 6,725,776 warrants, respectively, were excluded from diluted income (loss) per share as their inclusion would be anti-dilutive.

	For the year ended
	February 29,		February 28,
	2016		2015
Numerator:
Net (loss) income available to common shareholders	$	1,032,941	$	(1,405,909	)
Weighted average shares – basic		26,210,545		25,902,194
Net income per share – basic	$	0.04	$	(0.05	)

Dilutive effect of common stock equivalents:
Warrants		3,130,763		-
Weighted average shares – diluted		29,341,308		25,902,194
Net (loss) income per share – diluted	$	0.04	$	(0.05	)

Concentrations

The Company utilizes the services of two individuals, one of which is a related party and one of which is third-party, in China to source materials and the manufacturing of component parts with third-party vendors in China. As of February 29, 2016 and February 28, 2015, the Company had deposits for inventory purchases in China of approximately $25,000 and $37,000, respectively. For the fiscal years ended February 29, 2016 and February 28, 2015, purchases facilitated through the related party accounted for approximately 34% and 46%, respectively, of total raw material purchases. The Company has two other vendors that respectively accounted for an additional 20% and 17% of raw material purchases for the fiscal year ended February 29, 2016 and 18% and 12% of total raw material purchases for the fiscal year ended February 28, 2015.

For the year ended February 29, 2016, we had three customers that accounted for 34%, 28% and 14% (or 76% total) of our total sales. As of February 29, 2016, one of these customers accounted for 22% of net accounts receivable. Our largest customer during the year ended February 29, 2016, has raised concerns regarding the effectiveness of certain of our filters, in particular, the efficacy of fluoride removal. The likelihood of this customer continuing to purchase our product is remote. The Company has agreed to replace any filters for this customer. While the Company believes it is adequately reserved for any potential future returns, there can be no assurance that future returns will not exceed our estimate.For the year ended February 28, 2015, we had four customers that accounted for 66% (7%, 33%, 12% and 14%) of our total sales. As of February 28, 2015, the Company had four customers who accounted for approximately 76% of net accounts receivable (37%, 14%, 13% and 12%, respectively).

Reclassifications

Certain reclassifications have been made to the fiscal 2015 consolidated financial statements to conform to the fiscal 2016 presentation.

- 30 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which will require lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the potential impact this standard will have on its consolidated financial statements and related disclosures.

NOTE 3: INVENTORY

The Company's inventory consisted of the following at February 29, 2016 and February 28, 2015:

	February 29,			February, 28
	2016			2015
Raw materials	$	1,084,782		$	536,302
Finished goods		1,466,676			513,189
		2,551,458			1,049,491
Reserve for obsolete and slow moving inventory		(40,000	)		(40,000	)
Net inventory	$	2,511,458		$	1,009,491

- 31 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 4: PROPERTY AND EQUIPMENT

The following is a summary of property and equipment at February 29, 2016 and February 28, 2015:

	February 29,				February 28,
	2016				2015
Tooling		$	423,620			$	348,087
Equipment			71,972				70,972
Computer equipment			73,222				35,231
Leasehold equipment			17,804				11,129
			586,618				465,419
Less: accumulated depreciation and amortization			(363,692	)			(303,312	)
Total		$	222,926			$	162,107

Fixed assets outside the United States included approximately $318,000 and $275,000 in tooling and equipment, at cost, located in various third party locations which manufacture the Company's component parts at February 29, 2016 and February 28, 2015, respectively. Depreciation expense included in operating expense was $84,119 and $61,426 for the fiscal years ended February 28, 2016 and 2015, respectively.

NOTE 5: INTANGIBLE ASSETS

The following is a summary of intangible assets at February 29, 2016 and February 28, 2015:

	February 29,			February 28,
	2016			2015
Intellectual property	$	50,000		$	150,000
Trademarks		24,100			24,100
Patents		22,560			22,560
		96,660			196,660
Less: accumulated amortization		(45,317	)		(44,017	)
Total	$	51,343		$	152,643

Intangible assets are amortized over their estimated useful economic lives of five years. Amortization expense related to intangibles was approximately $1,300 and $1,700 during the fiscal years ended February 29, 2016 and February 28, 2015, respectively. Amortization expense is expected to be approximately $1,000 in fiscal year 2017 at which time a majority of the amortizable intangible assets will be fully amortized. During the year ended February 29, 2016, the Company identified certain indicators of impairment relating to its intellectual property and recorded an impairment charge in the amount of $100,000.

- 32 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 6: CAPITAL LEASE OBLIGATIONS

The Company leases certain equipment under leases classified as capital leases. The leased equipment carried a cost of $50,295 and $24,295 as of February 29, 2016 and February 28, 2015, and is depreciated on a straight-line basis over 5 years. Total accumulated depreciation related to the leased equipment was $23,250 and $15,790 as of February 29, 2016 and February 28, 2015, respectively. Obligations outstanding as of February 29, 2016 and February 28, 2015 consisted of the following:

	February 29,			February 28,
	2016			2015
Capital lease for equipment requiring monthly payments of principal and interest of $491 through October 2016 bearing interest at an annual rate of 7.5%	$	4,959		$	10,311
Capital lease for equipment requiring monthly payments of principal and Interest of $546 through August 2020 bearing interest at an annual rate of 9.5%		29,484			-
Total capital lease obligations, principal and interest		34,443			10,311
Less amount representing interest		(5,614	)		(591	)
Total capital lease obligations, principal		28,829			9,720
Less current portion		(9,390	)		(5,639	)
Long term portion	$	19,439		$	4,081

Future maturities of the capital lease obligation as of February 29, 2016 are:

Fiscal Year Ending
February 28,	Amount

2017	$	9,390
2018		4,916
2019		5,403
2020		5,938
2021		3,182
Total	$	28,829

As of February 28, 2015, the Company had a line of credit agreement totaling $500,000, with no outstanding borrowings as of February 28, 2015. The line expired on September 1, 2015 and was not renewed.

NOTE 7: RELATED PARTY TRANSACTIONS

The Company paid consulting fees to the Company's primary shareholder (the TAM Irrevocable Trust (the TAM Trust), in which Cari Beck is the trustee and current Board member, as well as a daughter of Carl Palmer, an officer and Board member) totaling $138,000 and $252,000 during the years ended February 29, 2016 and February 28, 2015, respectively, which are included as a component of selling, general and administrative expenses on the consolidated statements of operations.

During the year ended February 28, 2015, the Company paid $150,000 to TAM Trust for purchase of intellectual property retained by TAM when the Company was organized in 1998.

During the years ended February 29, 2016 and February 28,2015, TAM Trust purchased, on behalf of the Company, $552,000 and $40,000, respectively, of raw materials from a vendor with which it already had a business relationship. During the year ended February 29, 2016, the Company reimbursed TAM for approximately $10,000 of business travel costs incurred on behalf of its CEO, Carl Palmer. During the year ended February 28, 2015, the Company reimbursed TAM for $1,500 it paid for tooling to a vendor with which it already had a business relationship.

The Company utilizes the services of an individual, who is a related party to source materials and provide the manufacturing of component parts with third-party vendors in China. For the fiscal years ended February 29, 2016 and February 28,2015, purchases facilitated through the related party accounted for approximately 34% and 46%, respectively, of total raw material purchases. The Company paid approximately $44,000 and $37,000 in direct commissions to the related party consultant during the fiscal years ended February 29, 2016 and February 28,2015, respectively. In addition to the materials sourced, this related party also facilitated fixed asset purchases of $67,000 and $34,000 during the years ended February 29, 2016 and February 28, 2015, respectively.

As of February 29, 2016 and February 28, 2015, the Company had a receivable due from its CEO of approximately $12,000 and $8,000. The amounts were paid in full subsequent to year-end. In addition, the Company had advanced amounts to employees of approximately $28,000 and $8,000 as of February 29, 2016 and February 28, 2015. These amounts are being repaid through direct payroll withdrawals.

The Company also issued shares of restricted common stock to TAM and TAM's trustee (See Note 8).

- 33 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 8: EQUITY TRANSACTIONS

Restricted Stock Grants

During the year ended February 29, 2016, 225,000 shares of restricted common stock were issued to employees and officers of the Company. Additionally, 200,000, 41,667, and 10,000 shares of restricted common stock were issued to TAM, vendors, and TAM's trustee, respectively. The shares were fully vested upon issuance. The value recorded in the accompanying consolidated financial statements was based on the estimated fair value of the stock on the date of the grant and aggregated $157,400 for year ended February 29, 2016.

During the year ended February 28, 2015, 60,000 shares of restricted stock were issued by the Company to employees. 50,000 shares vest over a two year period, whereby 17,000 shares vested upon issue, and 17,000 and 16,000 shares vest after one and two years, respectively. The value recorded in the accompanying consolidated financial statements related to the portion vested during the fiscal year, based on the estimated fair value of the stock on the date of the grant, was approximately $16,000. The other 10,000 shares were fully vested upon issuance. The value recorded in the accompanying consolidated financial statements was based on the estimated fair value of the stock on the date of the grant was approximately $3,800.

During the year ended February 29, 2016, the Company repurchased 36,000 shares of common stock for a costs of $12,280. This repurchase has been recorded as treasury stock and reflected as a reduction of stockholders' equity on the accompanying fiscal year 2016 consolidated balance sheet.

Warrants

A summary of warrant activity for the fiscal years ended February 29, 2016 and February 28, 2015 is shown below.

				Weighted-
				Average
	Warrants			Exercise
	Outstanding			Price

Outstanding at March 1, 2014		8,407,221			0.21
Granted		-			-
Exercised		-			-
Forfeited		-			-
Outstanding at February 28, 2015		8,407,221			0.21
Granted		-			-
Exercised		-			-
Forfeited		(2,000,000	)		-
Outstanding at February 29, 2016		6,407,221			0.21
Vested at February 29, 2016		6,407,221			0.21
Exercisable at February 29, 2016		6,407,221			0.21

The following table summarizes significant ranges of outstanding warrants as of February 29, 2016:

Warrants Outstanding

Warrants Exercisable

Weighted

Average

Remaining

Exercise

Number

Exercise

Exercise Price

Number

Life (Years)

Price

Outstanding

Price

0.21

6,407,221

4.79

0.21

6,407,221

0.21

During the year ended February 28, 2011, 8,467,221 warrants were issued to employees and related parties for future services to be rendered, with a vesting term of five (5) years and an exercise price of $0.21. The fair value of these warrants on the date of grant totaled approximately $1.7 million and was being amortized to income over the vesting period. The amortization of these warrants was $213,000 and $353,000 during the years ended February 29, 2016 and February 28, 2015, respectively. During the year ended February 28, 2014, 60,000 warrants were forfeited upon termination of employment of two employees. During the year ended February 29, 2016, 2,000,000 warrants were forfeited upon termination of employment of one employee. The value of these warrants was fully amortized during the year ended February 29, 2016.

As of February 29, 2016 and February 28, 2015, the total outstanding warrants had an intrinsic value of $1,858,094 and $0, respectively.

- 34 -

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 9: INCOME TAXES

Income tax expense (benefit) consists of the following:

	Current		Deferred			Total
Year ended February 29, 2016:
U.S. federal	$	256,530		548,162			804,692
State		57,973		96,734			154,708
Total income tax expense (benefit)	$	314,503		644,896			959,399
Year ended February 28 2015:
U.S. federal	$	—		(633,032	)		(633,032	)
State		20,729		(112,687	)		(91,958	)
Total income tax expense	$	20,729		(745,719	)		(724,990	)

The income tax expense (benefit) differs from the expected amount of income tax expense (benefit) determined by applying a combined U.S. federal and state income tax rate of 40% to pretax income (loss) for the years ended February 29, 2016 and February 28, 2015 as follows:

	2016			2015
Expected tax expense (benefit)	$	815,617		$	(846,350	)
Permanent differences		13,255			5,149
Forfeiture of warrants		140,870			-
True up of state tax payable		(27,803	)		(7,014	)
Change in valuation allowance		17,460			123,225
Income tax expense (benefit)	$	959,399		$	(724,990	)

Deferred tax assets are as follows:

	February 29,			February 28,
	2016			2015
Deferred tax assets:
NOL carryforwards	$	-		$	631,027
Depreciation		29,725			(15,484	)
Accrued expenses		160,027			88,556
Stock compensation		564,626			611,315
Other		-			48,963
Valuation allowance		(140,655	)		(123,225	)
Net deferred tax assets	$	613,716		$	1,241,152

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SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 9: INCOME TAXES (CONTINUED)

The valuation allowance for deferred tax assets as of February 29, 2016 and February 28, 2015 $140,655 and $123,225, respectively. The net change in the total valuation allowance was an increase of $17,400 and $123,225 for the years ended February 29, 2016 and February 28, 2015, respectively. In assessing the realization of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment.

As of February 29, 2016, the Company had utilized all NOL carryforwards for federal and state purposes, respectively. As of February 28, 2015, the Company had approximately $1.6 million and $1.7 million of NOL carryforwards for federal and state purposes, respectively.

The Company includes interest and penalties, if any, arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of February 29, 2016 and February 28, 2015, the Company had no accrued interest or penalties related to uncertain tax positions. The tax years that remain subject to examination by major taxing jurisdictions are fiscal years 2012 through 2015 for federal purposes and fiscal years 2011 through 2015 for state purposes.

NOTE 10: COMMITMENTS AND CONTINGENCIES

The Company's office facility lease expires in May 2019. The Company also leases a production facility and warehouse facility that expire in July 2017. The three leases are at a monthly aggregate cost of $14,000. Total rent expense amounted to approximately $188,000 and $189,000 for the fiscal years ended February 29, 2016 and February 28, 2015, respectively. The Company also has operating leases for certain equipment at a monthly cost of approximately $545.

Subsequent to year-end, the Company entered into a lease agreement on one facility that will house corporate offices, inventory and production at 22 Journey in Aliso Viejo, CA for a term of 5 years at a monthly rental of approximately $19,000, and such amounts are included in the table below. The Company is in the process of attempting to sub-lease all of its three current locations noted previously.

Future minimum base lease payments are as follows:

Fiscal Year Ending
February 28,	Amount

2017	$	316,000
2018		337,000
2019		286,000
2020		263,000
2021		259,000
Thereafter		109,000
Total	$	1,570,000

Legal Proceedings

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SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 10: COMMITMENTS AND CONTINGENCIES (CONTINUED)

Otherwise, as of February 29, 2016 we know of no other material legal proceedings pending or threatened, or judgments entered against the Company or any of our directors or officers in their capacity as such.

Significant Agreements

The Company has historically entered into licensing agreements with third-parties for product proprietary rights, patent and trademark ownership, and use of product name. In return, the Company agrees to pay licensing fees and/or royalties on sales of those products. During the years ended February 29, 2016 and February 28,2015, the Company paid $12,000 and $37,125 in royalties and licensing fees related to these agreements.

NOTE 11: GEOGRAPHIC AREAS

The Company sells its products throughout the United States and internationally. Geographic sales information for the fiscal years ended February 29, 2016 and February 28, 2015 is as follows:

	2016		2015
The United States	$	10,570,209	$	4,077,810
Asia		105,881		3,427
Greece		74,185		24,035
United Kingdom		47,141		49,462
New Zealand		39,816		102,919
Australia		33,973		-
Canada		21,660		28,667
Other countries		17,202		18,885
Total	$	10,910,067	$	4,305,205

_____________

(1) Sales are based on the country of residence of the customer.

Long lived assets at February 29, 2016 are in the following geographic areas:

	United
	States		China		Total

Property and equipment, net	$	96,210	$	126,716	$	222,926

Intangible assets		51,343		-		51,343

Other assets		15,651		-		15,651

Total	$	163,204	$	126,716	$	289,920

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SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Notes to the Consolidated Financial Statements

NOTE 11: GEOGRAPHIC AREAS (CONTINUED)

Long lived assets at February 28, 2015 are in the following geographic areas:

	United
	States		China		Total

Property and equipment, net	$	58,847	$	103,260	$	162,107

Intangible assets		152,643		-		152,643

Other assets		25,491		-		25,491

Total	$	236,981	$	103,260	$	340,241

NOTE 12: SUBSEQUENT EVENTS

On April 14, 2016, the Company entered into a lease agreement on one facility that will house corporate offices, inventory and production at 22 Journey in Aliso Viejo, CA. The lease is for 5 years with monthly payments of approximately $19,000. The Company is in the process of attempting to sub-lease all of its three current locations noted previously.

In May 2016, the Company has instituted a whistleblower policy using Mr. Place, the President and CFO, as a focal point for employee reporting.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.

We did not have any disagreements on accounting and financial disclosures with our present independent registered public accounting firm during the reporting periods.

ITEM 9A. CONTROLS AND PROCEDURES.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). As a result of this evaluation, we identified material weaknesses in our internal control over financial reporting as of February 29, 2016. Accordingly, we concluded that our disclosure controls and procedures were not effective as of February 29, 2016.

An aggregation of control deficiencies in the Company's "tone at the top" was manifested in three areas described below. The control environment is the responsibility of senior management, and sets the tone of our organization, influences the control consciousness of employees, and is the foundation for the other components of internal control over financial reporting. Although each area described below involved its own deficiencies, a significant contributory factor to all of our deficiencies aggregating to the material weakness was the Company's lack of appropriate "tone at the top" set by certain senior members of management.

1. Lack of oversight for the segregation of duties in the conduct of the co-management by the President, Mr. James Place, and the CEO, Mr. Carl Palmer. The remedy to this situation is to better define the duties of each party. The Company has also instituted a whistleblower policy using Mr. Place, the President and CFO, as a focal point for employee reporting.

2. Secondly, the Board of Directors is now completely under the control of the CEO. The President, Mr. Place, is the only person on the Board of Directors and in senior management not directly associated with the CEO. The remedy is to populate the Board of Directors with one or more independent directors to comply with best practices, as we agreed to do. The Company plans to take action soon by adding independent board members as senior management in most companies report to the board. Mr. Carl Palmer is the father and father-in-law of Ms. Cari Beck and Mr. John Beck, respectively. Accordingly, neither are independent directors.

3. The Board did not have information required to review and approve or disapprove inventory and fixed asset purchases facilitated by two related parties during the fiscal year ended February 29, 2016. As a result, relevant information was not provided to the financial accounting and reporting function on a timely basis. The could have caused – but in this case did not cause – a failure to ensure that appropriate financial reporting of the transactions was made in all material respects in a timely manner. For the fiscal year ended February 29, 2016, required disclosures about these purchases from related parties were included in the accompanying financial statements.

Our internal control over financial reporting (ICFR) are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U. S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

ii. provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our consolidated financial statements in accordance with U. S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

Management's Annual Report on Internal Control Over Financial Reporting.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, management has concluded, as of February 29, 2016, we did not maintain effective control over the financial reporting process for the reasons discussed above.

Inherent Limitations Over Internal Controls

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

- 39 -

Attestation Report of the Registered Public Accounting Firm.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management's report in this annual report.

Changes in Internal Control Over Financial Reporting.

We have made no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

Not Applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Our Directors and Executive Officers as of May 27, 2016, their ages and positions held in the Company are as follows:

Carl Palmer	82	Chief Executive Officer ("CEO") and Director
James Place	77	President, Secretary-Treasurer, Chief Financial Officer and Director
Cari Beck	55	Director
John Beck	58	Director

Our Directors have served and will serve in such capacity until the next annual meeting of our shareholders and until their successors have been elected and qualified. The officers serve at the discretion of our Directors. The Board of Directors as a whole serves as the audit committee and Mr. Place is the "financial expert" within the meaning of the rules and regulations of the SEC. The Board of Directors has determined that each of its members is able to read and understand fundamental financial statements and has substantial business experience that results in that member's financial sophistication. Accordingly, our Board of Directors believes that each of its members has sufficient knowledge and experience necessary to fulfill the duties and obligations that an audit committee would have. . Mr. Carl Palmer is the father and father-in-law of Ms. Cari Beck and Mr. John Beck, respectively. Ms. Cari Beck and Mr. John Beck are wife and husband. None of the Directors have been involved in the types of litigation specified in Item 401d of Regulation S-B.

Biographies of Our Executive Officers and Directors

Carl Palmer. Mr. Palmer is the Chief Executive Officer (CEO) and a Director of the Company. He was the founder of our Company in 1998, innovator of the complete line of Seychelle water filtration products and primary spokesperson worldwide. He is an internationally recognized expert in the field for over 40 years and pioneered the development of the reverse osmosis (RO) home and office pure water business in the U.S. in the late 1970's. That company, Aq-Ro-Matic, was later sold to Coca-Cola in 1973. He developed the cellulose triacetate membrane, a breakthrough technological development in the industry and subsequently, created and sold pure water companies to Coca Cola Los Angeles as noted previously, AMF/Cuno in 1985 and Shaklee in 1989. Also, in the late 1980's Mr. Palmer developed the Best Water reverse osmosis business for Shaklee and sold over $53 million in above-the-counter systems. Carl's 30 years of direct sales experience has led to many significant business relationships, many of which continue today. He is the inventor of thirteen patented products related to water purification. Mr. Palmer received a Bachelors Degree from Whittier College. Mr. Palmer became the Company's CEO in April 2016.

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James Place. Mr. Place is the President, Chief Financial Officer (CFO), Secretary-Treasurer, and a Director of our Company He joined the Company November 2004 as COO. ). He has over 40 years of experience in food, beverages and bottled water. While at Arrowhead, he took the liter, still and sparkling water business from $5 million to $100 million in 5 years. Mr. Place also had extensive marketing, new product development and operating experience with Fortune 500 companies such as Carnation, Kerr Glass and Hunt-Wesson. Mr. Place was Vice President and General Manager of the Grocery Products Division at Arrowhead from 1981 to 1988, a Vice President of Sales/Marketing - New Products at Kerr Glass from 1988 to 1990, Manager, New Products at Carnation from 1979 to 1981 and Sales/Marketing Manager at Hunt-Wesson Foods from 1970 to 1976.

Mr. Place also has substantial experience in business development, mergers and acquisitions and with the investment community. Mr. Place ran his own consulting business in consumer products including water and other beverages with small to medium sized companies from 1990 to 2004. This included working successfully with these companies on financing plans for both new products and expansion programs. Mr. Place has an MBA from Michigan State University and a Bachelors degree from Albion College. Mr. Place became the Company's President in April, 2016.

Cari Beck. From 1992-2002, Mrs. Beck worked as the production coordinator for Krystal Enterprises, one of the largest limousine manufacturers in the world. During her time at Krystal Enterprises, Ms. Beck worked collaboratively with major US auto manufacturers to purchase chassis for limousine production. She was responsible for coordinating all aspects of production and accounts receivable to ensure timely delivery and satisfaction to the customer. She was instrumental in coordinating the preparation, organization and set up for all quarterly trade shows. Ms. Beck worked directly with the Executive Vice President handling the company's national accounts and maintaining inventory levels on all finished products. During her tenure, Krystal Enterprises grew from a company producing 20 vehicles to 150 monthly. For the past seven years Ms. Beck has consulted for Seychelle (in her role as the trustee of the TAM Trust), with a focus on manufacturing, assembly and process control. Ms. Beck became a Director in April, 2016.

John Beck. Mr. Beck currently holds the position of Vice President of Operations at Grech Motors, a private company, whose annual sales are currently approximately $50 million. He has a history of being a part of a team working to help companies grow. From 1976-1986, Mr. Beck worked for Quality Bowling Corporation where he started as the sixth employee hired and finished his time there as a purchasing agent in a company that had grown to over 40 employees. In 1983, Mr. Beck purchased his first limousine and started a part-time limousine venture that led to a 30-year career with Krystal Enterprises, a private company. His responsibilities included sales, marketing, and substantial input on design and production. Over his 30 years at Krystal Enterprises, sales grew from $150,000 a month during the early 1980's to approximately $10 million a month in sales during the late 1990's. After Krystal Enterprises was sold in 2011, Mr. Beck retired. Not long after retiring he began consulting and then was hired on as the Vice President of Operations for Grech Motors. Mr. Beck became a Director in May 2016.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors and executive officers, and persons who own more than 10% of a registered class of the Company's outstanding equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on its review of the copies of such reports furnished to the Company during the fiscal year ended February 29, 2016, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with except for the TAM Trust, which filed a Form 4 and Form 5 late.

Code of Ethics for Chief Executive Officer and Senior Financial Officers

On May 20, 2006, the Board of Directors of the Company adopted the Code of Ethics for the Chief Executive Officer and Senior Financial Officers. The Code is designed to deter wrong-doing and promote honest and ethical behavior, full, fair, timely, accurate and understandable disclosure and compliance with applicable governmental laws, rules and regulations. It is also designed to encourage prompt internal reporting of violations of the Code to an appropriate person and provides for accountability for adherence to the Code. We will provide to any person without charge, upon written request to our principal executive offices, a copy of our Code. Any waiver of the Code pertaining to one of our executive officers will be disclosed in a report on Form 8-K filed with the SEC.

Indemnification of Directors and Officers.

The Company's Bylaws provide that it will indemnify its officers and directors to the full extent permitted by Nevada state law. The Company's bylaws likewise provide that it will indemnify and hold harmless its officers and directors for any liability including reasonable costs of defense arising out of any act or omission taken on behalf of the Company, to the full extent allowed by Nevada law, if the officer or director acted in good faith and in a manner the officer or director reasonably believed to be in, or not opposed to, the best interests of the corporation.

- 41 -

In so far as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Item 11. EXECUTIVE COMPENSATION

The following table sets forth the Summary Compensation Table for the President and the executive officers at the end of the last three completed fiscal years. Compensation does not include minor business-related and other expenses paid by us.

SUMMARY COMPENSATION TABLE

								Long Term Compensation
		Annual Compensation						Awards				Payouts
(a)	(b)	(c)		(d)		(e)		(f)		(g)		(h)		(i)
						Other		Restricted		Securities				All
						Annual		Stock		Underlying		LTIP		Other
		Salary		Bonus		Compensation		Award(s)		Option/SARs		Payouts		Compensation
Name and Principle Position	Fiscal Year	($)		($)		($)		($)			(#)	($)		($)

Carl Palmer	2016	$	45,000	$	80,000		0.00	$	0.00	$	0.00	$	$0.00	$	0.00	(4)
CEO	2015		0.00		0.00	$	0.00		0.00		0.00		0.00		0.00
Director	2014		0.00		0.00		0.00		0.00		0.00		0.00		0.00

James Place (1)	2016		40,874		0.00		0.00		0.00		0.00		0.00		0.00
President & CFO	2015		39,762.00		4,784.00		0.00		0.00		0.00		0.00		0.00
Director	2014		37,045		2,379		0.00		0.00		0.00		0.00		0.00

Cari Beck (2)	2016		0.00		0.00		0.00		0.00		0.00		0.00		0.00
HR Manager	2015		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Director	2014		0.00		0.00		0.00		0.00		0.00		0.00		0.00

John Beck (3)	2016		0.00		0.00		0.00		0.00		0.00		0.00		0.00
Director	2015		0.00		0.00		0.00		0.00		0.00		0.00		0.00
	2014	$	0.00	$	0.00	$	0.00	$	0.00	$	0.00	$	0.00	$	0.00

__________________

(1)

Elected to Board of Directors during November 2004.

(2)

Elected to Board of Directors during April 2016.

(3)

Elected to Board of Directors during May 2016.

(4)

In February 2016, the Company leased a vehicle for Mr. Palmer at a cost of approximately $700 per month. The first payment was not due until March 2016, therefore the other compensation related with this lease is not reflected in the 2016 compensation information.

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OPTION/SAR GRANTS IN LAST FISCAL YEAR. The Company granted no options during the fiscal year ended February 29, 2016. The Company had no options outstanding as of the fiscal year ended February 29, 2016.

AGGREGATED OPTIONS/SARS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES. There were no outstanding options as of the fiscal year ended February 29, 2016.

EMPLOYMENT CONTRACTS WITH EXECUTIVE OFFICERS. Effective April 18, 2016, Messrs. Carl Palmer and James Place each entered into identical employment agreements with the Company. The term of each agreement is for a period of five years from the date of the employment agreement. Each individual will be paid the sum of $60,000 per year plus customary employee benefits for the period of the employment agreement.

DIRECTOR COMPENSATION. The Company made payments totaling $165,874, $180,387, and $312,428 combined for the fiscal years ended February 29, 2016 and February 28, 2015 and 2014, respectively.

The Board of Directors as a whole acts as a compensation committee. We have no retirement, pension, sharing, stock option, insurance or other similar programs.

We do not have a separately designated audit, compensation or nominating committee of our Board of Directors. We are not a "listed company" under SEC rules and are therefore not required to have separate committees comprised of independent directors.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following sets forth the number of shares of our $0.001 par value common stock beneficially owned by (i) each person who, as of May 1, 2016, was known by us to own beneficially more than five percent (5%) of its common stock; (ii) our individual Directors and (iii) our Officers and Directors as a group. As of May 1, 2016 there were a total of 26,354,313 common shares outstanding and 6,407,221 outstanding warrants for a total of 32,761,534 common shares and warrants.

NAME AND ADDRESS	AMOUNT AND NATURE OF	PERCENT OF
OF BENEFICIAL OWNER	BENEFICIAL OWNERSHIP (1)(2)(4)	CLASS

The TAM Irrevocable Trust	15,307,799 (3)	46.72%
4012 S. Rainbow #K111
Las Vegas, NV 80103-2012

Carl Palmer	-0-	-0-
251 Jeanell Dr., Ste 3
Carson City, NV 89703

James Place (The Place Trust)	1,755,000	5.36%
251 Jeanell Dr., Ste 3
Carson City, NV 89703

Cari Beck	15,307,799 (3)	46.72%
514 S Peralta Hills Dr	110,000	.01%
Anaheim, CA 92807

John Beck	15,307,799 (3)	46.72%
514 S Peralta Hills Dr
Anaheim, CA 92807

All officers and directors as a Group (three persons)	17,172,799	52.42%



Richard Parsons (Parsons Family Trust)	649,763	1.98%
251 Jeanell Dr., Ste 3
Carson City, NV 89703

_______________

(1)	All ownership is beneficial and of record, unless indicated otherwise.

(2)	Beneficial owners listed above have sole voting and investment power with respect to the shares shown, unless otherwise indicated.

(3)

The TAM Irrevocable Trust is an irrevocable trust for the benefit of certain family members of Mr. Carl Palmer. Mr. Palmer disclaims any beneficial ownership or interest in this Trust. Cari Beck, his daughter, is the Trustee of the Trust and has total beneficiary rights, including all voting rights and investment power as the Trustee. The Trust is held in her name (50%) as well as that of Lindsay Helvey (25%) and Casey Helvey (25%), both granddaughters.

(4)	There are no other financial instruments, including stock warrants, etc. that are issuable within sixty days from the filing of this document.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

As of February 29, 2016 and February 28, 2015, the Company had a receivable due from its CEO of approximately $12,000 and $8,000. the amounts were paid in full subsequent to year end.

The Company also issued shares of restricted common stock to TAM and TAM's trustee.

The Company paid consulting fees to the Company's primary shareholder (the TAM Irrevocable Trust (the TAM Trust), in which Cari Beck is the trustee, as well as a daughter of Carl Palmer, an officer and Board member) totaling $138,000 and $252,000 during the years ended February 28, 2016 and 2015, respectively, which are included as a component of selling, general and administrative expenses on the consolidated statements of operations.

During the year ended February 28, 2015, the Company paid $150,000 to TAM Trust for purchase of intellectual property retained by TAM when the Company was organized in 1998.

ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

On March 2, 2012, our Board of Directors voted to approve Ramirez Jimenez International CPAs (RJI) as our independent registered public accounting firm. Our Board of Directors does not have an audit committee. The functions customarily delegated to an audit committee are performed by our full Board of Directors. Our Board of Directors approves in advance, all services performed by RJI. Our Board of Directors considers whether the provision of non-audit services is compatible with maintaining the principal accountant's independence.

The following table sets forth fees billed by RJI during the last two fiscal years for services rendered for the audit of our annual consolidated financial statements and the review of our quarterly financial statements, services by our independent registered public accounting firm that are reasonably related to the performance of the audit or review of our consolidated financial statements and that are not reported as audit fees, services rendered in connection with tax compliance, tax advice and tax planning, and all other fees for services rendered.

	February 29,			February 28,
	2016			2015

Audit fees		$	65,000		$	63,500
Audit related fees			-0-			-0-
Tax fees			8,000			8,000
All other fees			-0-			-0-

Audit fees. The audit fees in fiscal 2016 and 2015 include $65,000 and $63,500, respectively, of fees billed by RJI related to the audit of our consolidated financial statements, and quarterly reviews.

Tax fees. This represents professional services rendered for tax compliance, tax advice and tax planning.

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibits

Exhibit No.	Description

2A*	Plan of Exchange between Seychelle Environmental Technologies, Inc. and Seychelle Water Technologies, Inc. dated January 30, 1998 as filed with Form 10-SB 12 G on February 8, 2000.

3A*	Articles of Incorporation dated January 23, 1998 as filed with Form 10-SB 12 G on February 8, 2000.

3B*	Articles of Merger of Royal Net, Inc. into Seychelle Environmental Technologies, Inc as filed with Form 10-SB 12 G on February 8, 2000.

3C*	Amendment to Articles of Incorporation re: Series "A" Preferred Stock as of January 31, 1998 as filed with Form 10-SB 12 G on February 8, 2000.

3D*	Amendment to Articles of Incorporation re: Series "AA" Preferred Stock as of June 5, 1998 as filed with Form 10-SB 12 G on February 8, 2000.

3E*	Amendment to Articles of Incorporation re: Series "AAA" Preferred Stock as of February 18, 1999 as filed with Form 10-SB 12 G on February 8, 2000.

3F*	Bylaws as filed with Form 10-SB 12 G on February 8, 2000.

10A*	Purchase Agreement with Aqua Vision as filed with Form 10-SB 12 G on February 8, 2000.

10B*	Amended Purchase Agreement with Aqua Vision as filed with Form 10-SB 12 G on February 8, 2000.

10C*	2000 Stock Compensation Plan I, dated July 1, 2000 as filed with Registration Statement on Form S-8 on August 31, 2000.

10D*	2002 Stock Compensation Plan I, dated February 12, 2002 as filed with Registration Statement on Form S-8 on February 27, 2002.

10E*	Purchase Agreement with Aqua Gear as filed with Annual Report on Form 10-K on June 14, 2002.

10F*	Employment Contract with Carl Palmer as filed with Annual Report on Form 10-K on June 14, 2002.

10G*	Management Consulting Contract with Richard Parsons

10H*	Management Consulting Contract with James Place

10I*	Joint Venture Agreement with Huanghua Plastic Co. Ltd. dated September 1, 2005

10J*	ABMS Health Care Pvt. Ltd. Distribution Rights Agreement dated April 1, 2006

10K*	Confident, Inc. Exclusive Distribution Rights Agreement dated January 1, 2006

- 46 -

Exhibit No.	Description


10L*	Continental Technologies. Inc., Purchase Agreement dated April 26, 2006

10M*	Promissory Note to TAM Irrevocable Trust dated May 1, 2001

10N*	Promissory Note to TAM Irrevocable Trust dated February 28, 2002

10O*	Promissory Note to TAM Irrevocable Trust dated February 28, 2003

10P*	Promissory Note to TAM Irrevocable Trust dated November 1, 2003

10Q*	Promissory Note to TAM Irrevocable Trust dated February 28, 2004

10R*	Food For Health Purchase Agreement

10S*	Food For Health Distribution Agreement

10T*	Seychelle Environmental Technologies, Inc. License Agreement with Mr. Gary Hess

10U*	Employment Agreement with Mr. Carl Palmer

10V*	Employment Agreement with Mr. James Place

21*	Subsidiaries

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

31.1**	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)

99*	Code of Ethics for Chief Executive Officer and Senior Financial Officers

___________________

* Previously filed with the Securities and Exchange Commission as indicated and incorporated by reference herein

** Attached hereto

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Date: June 15, 2016	By:	/s/ Carl Palmer
		Carl Palmer Chief Executive Officer




Date: June 15, 2016	By:	/s/ Jim Place
		Jim Place Chief Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


/s/ Carl Palmer
Carl Palmer, Director		June 15, 2016

/s/ Jim Place
Jim Place, Director		June 15, 2016

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