0001079974-18-000554.txt : 20181012 0001079974-18-000554.hdr.sgml : 20181012 20181012154842 ACCESSION NUMBER: 0001079974-18-000554 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 39 CONFORMED PERIOD OF REPORT: 20180831 FILED AS OF DATE: 20181012 DATE AS OF CHANGE: 20181012 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA CENTRAL INDEX KEY: 0001056757 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 330836954 STATE OF INCORPORATION: NV FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-29373 FILM NUMBER: 181120207 BUSINESS ADDRESS: STREET 1: 22 JOURNEY CITY: ALISO VIEJO STATE: CA ZIP: 92656 BUSINESS PHONE: 949-234-1999 MAIL ADDRESS: STREET 1: 22 JOURNEY CITY: ALISO VIEJO STATE: CA ZIP: 92656 10-Q 1 sey10q_8312018.htm


 
UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ending August 31, 2018
 
o TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to __________________

Commission File No. 0-29373
 
Seychelle Environmental Technologies, Inc.
(Exact Name of registrant as specified in its charter)
 
Nevada
 
33-0836954
(State or other jurisdiction Of incorporation)
 
(IRS Employer File Number)
 
 
 
22 Journey
 
 
Aliso Viejo, California
 
92656
(Address of principal executive offices)
 
(zip code)
 
 
 
(949) 234-1999
(Registrant's telephone number, including area code)
  
Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes þ  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(Section 232.405 of this chapter) during the preceding 12 months(or such shorter period that the registrant was required to submit and post such files. Yes þ  No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company", in Rule 12b-2 of the Exchange Act.

Large accelerated filer
 
Accelerated filer
Non-accelerated filer  
 
Smaller reporting company ☑
(Do not check if smaller reporting company)
 
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)  Yes o   No þ
 
The number of shares outstanding of the Registrant's common stock, as of October 11, 2018 was 26,640,313.
 
References in this document to "us," "we," or "Company" refer to Seychelle Environmental Technologies, Inc., its predecessor and its subsidiaries.
 
 

 
 

FORM 10-Q
 
Securities and Exchange Commission
Washington, D.C. 20549

Seychelle Environmental Technologies, Inc.

TABLE OF CONTENTS

     
Page
 
PART I  FINANCIAL INFORMATION
       
           
Item 1.
Financial Statements
   
3
 
 
Condensed Consolidated Balance Sheets 
   
3
 
 
Condensed Consolidated Statements of Operations
   
4
 
 
Condensed Consolidated Statements of Cash Flows
   
6
 
 
Notes to Condensed Consolidated Financial Statements
   
7
 
           
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
   
13
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
   
17
 
Item 4.
Controls and Procedures
   
17
 
Item 4T.
Controls and Procedures
   
17
 
           
PART II  OTHER INFORMATION
       
           
Item 1.
Legal Proceedings
   
19
 
Item 1A.
Risk Factors
   
19
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
   
19
 
Item 3.
Defaults Upon Senior Securities
   
19
 
Item 4.
Submission of Matters to a Vote of Security Holders
   
19
 
Item 5.
Other Information
   
19
 
Item 6.
Exhibits
   
20
 
           
Signatures
   
21
 
 
 
 
- 2 -


 
PART I
 
ITEM 1. FINANCIAL STATEMENTS

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
 
 
August 31,
2018
   
February 28,
2018
 
ASSETS
           
Current assets:
           
   Cash and cash equivalents
 
$
1,919,949
   
$
2,075,833
 
   Accounts receivable, net of allowance for doubtful accounts of $11,770 and $8,617
               
      respectively
   
594,680
     
829,790
 
   Related party receivables
   
32,951
     
35,007
 
   Inventory, net
   
1,073,355
     
998,296
 
   Prepaid expenses, deposits and other current assets
   
102,413
     
159,980
 
Total current assets
   
3,723,348
     
4,098,906
 
 
               
Property and equipment, net
   
113,086
     
135,539
 
Other current assets
   
66,670
     
66,670
 
 
               
Total assets 
 
$
3,903,104
   
$
4,301,115
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
   Accounts payable and accrued expenses
 
$
234,161
   
$
441,866
 
   Customer deposits
   
12,307
     
163,184
 
   Capital lease obligations, current portion
   
5,664
     
5,402
 
Total current liabilities
   
252,132
     
610,452
 
 
               
Long-term liabilities:
               
 Capital lease obligations, net of current
   
6,220
     
9,082
 
Total liabilities
   
258,352
     
619,534
 
 
               
Stockholders' equity:
               
   Preferred stock, 6,000,000 shares authorized, none issued or outstanding
   
-
     
-
 
   Common stock $0.001 par value, 50,000,000 shares authorized, 26,640,313
    issued and outstanding at August 31, 2018 and February 28, 2018, respectively
   
26,641
     
26,641
 
   Additional paid-in capital
   
8,944,368
     
8,944,368
 
   Accumulated deficit
   
(5,296,577
)
   
(5,259,748
)
   Less Treasury Stock at Cost (66,000 shares at August 31, 2018 and February 28, 2018 respectively)
   
(29,680
)
   
(29,680
)
Total stockholders' equity
   
3,644,752
     
3,681,581
 
 
               
 Total liabilities and stockholders' equity
 
$
3,903,104
   
$
4,301,115
 

 
See accompanying notes to condensed consolidated financial statements.
 
 
 
 
- 3 -

 
 

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
 
 
 
For the Three Months Ended
August 31,
 
 
 
2018
   
2017
 
Sales
 
$
735,677
   
$
991,934
 
Cost of sales
   
351,073
     
491,509
 
               Gross profit
   
384,604
     
500,425
 
Operating expenses
               
    Selling, general, and administrative
   
498,309
     
393,854
 
    Depreciation and amortization
   
13,532
     
17,380
 
           Total  operating  expenses
   
511,841
     
411,234
 
 (Loss) income from operations
   
(127,237
)
   
89,191
 
Other expense
               
     Interest expense
   
(485
)
   
(1,848
)
     Other expense
   
(1,901
)
   
(142
)
                    Total other income (expense)
   
(2,386
)
   
(1,990
)
 (Loss)  income before income tax expense
   
(129,623
)
   
87,201
 
 Income tax expense
   
-
     
(1,799
)
Net (loss) income
 
$
(129,623
)
 
$
85,402
 
BASIC INCOME (LOSS) PER SHARE
 
$
0.00
   
$
0.00
 
DILUTED  INCOME (LOSS) PER SHARE
 
$
0.00
   
$
0.00
 
BASIC WEIGHTED AVERAGE NUMBER OF
               
SHARES OUTSTANDING
   
26,574,313
     
26,640,313
 
DILUTED WEIGHTED AVERAGE NUMBER OF
               
SHARES OUTSTANDING  
   
26,574,313
     
26,640,313
 
 
 
 See accompanying notes to condensed consolidated financial statements.
 
 
 
- 4 -

 


SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
 
 
For the Six Months
Ended
August 31,
 
 
 
2018
   
2017
 
Sales
 
$
1,869,578
   
$
2,200,141
 
Cost of sales
   
954,513
     
1,155,291
 
               Gross profit
   
915,065
     
1,044,850
 
Operating expenses
               
    Selling, general, and administrative
   
922,771
     
754,945
 
    Depreciation and amortization
   
28,003
     
35,055
 
                 Total  operating  expenses
   
950,774
     
790,000
 
 (Loss) income from operations
   
(35,709
)
   
254,850
 
Other expense
               
     Interest expense
   
(1,038
)
   
(3,274
)
     Other expense
   
(84
)
   
(142
)
                    Total other expense
   
(1,122
)
   
(3,416
)
(Loss) income before income tax expense
   
(36,831
)
   
251,434
 
Income tax expense
   
-
     
(6,050
)
Net  (loss) income
 
$
(36,831
)
 
$
245,384
 
BASIC INCOME (LOSS) PER SHARE
 
$
0.00
   
$
0.01
 
DILUTED  INCOME (LOSS) PER SHARE
 
$
0.00
   
$
0.01
 
BASIC WEIGHTED AVERAGE NUMBER OF
               
SHARES OUTSTANDING
   
26,574,313
     
26,640,313
 
DILUTED WEIGHTED AVERAGE NUMBER OF
               
SHARES OUTSTANDING
   
26,574,313
     
26,640,313
 
 
 
 See accompanying notes to condensed consolidated financial statements.
 
 
 
- 5 -


 
 
  SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
 
 
For The Six Months Ended
August 31,
 
 
 
2018
   
2017
 
 
           
OPERATING ACTIVITIES:
           
Net (loss) income
 
$
(36,831
)
 
$
245,384
 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
               
 Depreciation and amortization
   
28,003
     
35,055
 
 Provision (recovery) for doubtful accounts
   
3,153
     
(34,644
)
Changes in operating assets and liabilities:
               
   Accounts receivable
   
231,959
     
343,406
 
   Related party receivables
   
2,056
     
300
 
   Inventory
   
(75,059
)
   
289,920
 
   Prepaid expenses, deposits and other current assets
   
57,567
     
(22,578
)
   Accounts payable and accrued expenses
   
(207,705
)
   
(243,361
)
   Customer deposits
   
(150,877
)
   
(48,626
)
Net cash (used in) provided by operating activities
   
(147,734
)
   
564,856
 
 
               
INVESTING ACTIVITIES:
               
Purchase of property and equipment
   
(5,550
)
   
(2,995
)
Net cash used in investing activities
   
(5,550
)
   
(2,995
)
 
               
FINANCING ACTIVITIES:
               
Repayment of  capital lease obligations
   
(2,600
)
   
(1,790
)
Net cash used in financing activities
   
(2,600
)
   
(1,790
)
 
               
       NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
   
(155,884
)
   
560,071
 
 
               
       CASH AND CASH EQUIVALENTS - beginning of period
   
2,075,833
     
732,112
 
 
               
       CASH AND CASH EQUIVALENTS - end of period
 
$
1,919,949
   
$
1,292,183
 
 
               
Supplemental disclosures of cash flow information: 
               
 
               
    Cash paid for:
               
 Interest
 
$
1,038
   
$
3,274
 
 Income taxes
 
$
-
   
$
-
 
 
 
 See accompanying notes to condensed consolidated financial statements.
 
 
 
- 6 -

 
 

SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS
August 31, 2018
 
 
NOTE 1:    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
The accompanying condensed consolidated financial statements have been prepared by Seychelle Environmental Technologies, Inc., and subsidiaries (the "Company") without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at August 31, 2018, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended February 28, 2018.  The results of operations for the periods ended August 31, 2018 and 2017 are not necessarily indicative of the operating results for the full fiscal years.

The summary of significant accounting policies of the Company is presented to assist in understanding the Company's condensed consolidated financial statements. The condensed 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 accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the condensed consolidated financial statements and the February 28, 2018 consolidated financials included in the 10-K filed on June 8, 2018.

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
 
Except for the accounting policy for revenue recognition, which was updated as a result of adopting a new accounting standard related to revenue recognition, there have been no material changes to our significant accounting policies in Note 2 - Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2018.

The Financial Accounting Standards Board, or FASB, issued an accounting standards update that creates a single source of revenue guidance under U.S. GAAP for all companies, in all industries. We adopted this guidance on February 1, 2018 using the modified retrospective approach. The adoption of this guidance did not have a significant impact on our condensed consolidated financial statements.  Refer to Note 5 of these Notes to Condensed Consolidated Financial Statements for additional information.
 
 
NOTE 2:    BASIC INCOME (LOSS) PER SHARE

Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during each period presented.  Diluted income per share is determined using the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents, assuming conversion, exercise, or issuance of all potential common stock equivalents unless the effect is to reduce a loss or increase the income per share.  If the inclusion of common stock equivalents in the weighted average number of common shares outstanding would be anti-dilutive these items would be omitted from the calculation of net income per common share.  The dilutive effect of outstanding stock options and warrants is reflected in diluted earnings per share by application of the treasury stock method.


 
- 7 -


 
 
SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS
August 31, 2018
 
 
NOTE 2:    BASIC INCOME (LOSS) PER SHARE (CONTINUED)

The denominator for diluted income (loss) per share for the periods ended August 31, 2018 and 2017, respectively, did not include 6,407,221 warrants as they would have been an ti-dilutive.
 
 
 
For the six months ended
 
 
 
August 31,
 
 
 
2018
   
2017
 
             
Net income (loss) available to common shareholders
 
$
(36,831
)
 
$
245,384
 
Weighted average common shares – basic
   
26,574,313
     
26,640,313
 
Net income (loss) per share – basic
 
$
0.00
   
$
0.01
 
 
               
Dilutive effect of common stock equivalents:
               
Warrants
   
-
     
-
 
Weighted average common shares – diluted
   
26,574,313
     
26,640,313
 
Net income (loss) per share – diluted
 
$
0.00
   
$
0.01
 
 
 
 
 
For the three months ended
 
 
 
August 31,
 
 
 
2018
   
2017
 
             
Net income (loss) available to common shareholders
 
$
(129,623
)
 
$
85,402
 
Weighted average common shares – basic
   
26,574,313
     
26,640,313
 
Net income (loss) per share – basic
 
$
0.00
   
$
0.00
 
 
               
Dilutive effect of common stock equivalents:
               
Warrants
   
-
     
-
 
Weighted average common shares – diluted
   
26,574,313
     
26,640,313
 
Net income  (loss) per share – diluted
 
$
0.00
   
$
0.00
 
 
 


 
- 8 -


 

NOTE 3:   COMMON STOCK
 
Common Stock

During the quarter ended August 31, 2018 and 2017, no securities were issued by the Company.
 
Warrants

A summary of warrant activity for the six months ended August 31, 2018 is shown below.
 
 
 
 
 
 
Weighted-
 
 
 
 
 
 
Average
 
 
 
Warrants
 
 
Exercise
 
 
 
Outstanding
 
 
Price
 
 
 
 
 
 
 
 
Outstanding at March 1, 2018
 
 
6,407,221
 
 
 
0.21
 
Granted
 
 
-
 
 
 
-
 
Exercised
 
 
-
 
 
 
-
 
Forfeited
 
 
-
 
 
 
-
 
Outstanding at August 31, 2018
 
 
6,407,221
 
 
 
0.21
 
Vested at August 31, 2018
 
 
6,407,221
 
 
 
0.21
 
Exercisable at February 28, 2018
 
 
6,407,221
 
 
 
0.21
 
 
The following table summarizes significant ranges of outstanding warrants as of August 31, 2018:

 
Warrants Outstanding
Warrants Exercisable
 
    
Weighted
Weighted
 
Weighted
 
    
Average
Average
 
Average
 
    
Remaining
Exercise
Number
Exercise
Exercise Price
Number
Life (Years)
Price
Outstanding
Price
 
 
 
 
 
                
 
  $0.21
 
   6,407,221
 
   2.27
 
  $0.21
 
   6,407,221
 
  $0.21
 

NOTE 4:    INVENTORY
 
The Company's inventory consisted of the following at August 31, 2018 and February 28, 2018:
 
 
 
August 31,
2018
   
February 28,
2018
 
Raw materials
 
$
759,324
   
$
860,424
 
Finished goods
   
316,051
     
137,872
 
 
   
1,075,375
   
$
998,296
 
 
 
- 9 -


SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS
August 31, 2018
 
 

NOTE 5:    REVENUE RECOGNITION AND CONCENTRATIONS

We derive our revenue primarily from product sales.  We determine revenue recognition through the following steps: (1) identification of the contract with a customer; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; (5) recognition of revenue when, or as, we satisfy a performance obligation.

The Company's performance obligations consist soley of product shipped to customers.  Revenue from product sales is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for these products.  Revenue is recognized net of returns and any taxes collected from customers.  We offer standard contractual terms in our purchase orders. In addition, we use the practical expedient related to commissions paid since they would be amortized in less than one year.

Sales to two customers accounted for 50% and 57% of sales for the three and six month periods ended August 31, 2018, respectively.  Accounts receivable from these customers amounted to $416,254 or approximately 70% of accounts receivable as of August 31, 2018.

Sales to one customer accounted for 29% and 31% of sales for the three and six month periods ended August 31, 2017, respectively. Accounts receivable from one customer amounted to $473,476 or approximately 73% of accounts receivable as of August 31, 2017.



NOTE 6:    RELATED PARTY TRANSACTIONS

During the six months ended August 31, 2018 and 2017, TAM purchased on behalf of the Company approximately $36,550 and $40,448 respectively.  All amounts due to TAM had been paid in full as of August 31, 2018.

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 six months ended August 31, 2018 and 2017, purchases facilitated through the related party accounted for approximately 14% and 17%, respectively, of total raw material purchases. The Company paid approximately $31,000 and $22,000 in direct commissions to the related party consultant during the six months ended August 31, 2018 and 2017, respectively.
 
The Company had advanced amounts to an employee of approximately $26,000 and $27,000 as of August 31, 2018 and 2017, respectively. These amounts are being repaid through direct payroll withdrawals.

The Company had receivable from stockholders of approximately $7,000 and $0 as of August 31, 2018 and 2017 respectively.

The Company had sales to two companies related to a member of the Board of Directors.  Specifically, sales to Sovereign Earth, LLC (dba Revolve) totaled approximately $438,000 and $227,000 for the six months ended August 31, 2018 and 2017, respectively and sales to Amazon Seychelle totaled approximately $56,000 and $0 for the six months ended August 31, 2018 and 2017, respectively.  Sovereign Earth, LLC (dba Revolve) is the sole and exclusive seller of the following products in worldwide markets, including Amazon World Marketplaces:  amazon.com, amazon.co uk, amazon.de, amazon.fr, amazon.jp, amazon, it, amazon.ca, amazon.cn, amazon.in, and amazon.com.mx for the duration of the agreement:  Generation#1 Filter Pitcher:  All filter iterations (regular, standard, advanced, radiological, extreme, supreme, etc.)
 
 
- 10 -

 
 
 
SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS
August 31, 2018

 


NOTE 7:  COMMITMENTS AND CONTINGENCIES

The Company entered into a lease agreement on one facility for its 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.

 Legal Proceedings
 
The Company was involved in litigation during the fiscal quarter ended August 31, 2018.  In June, 2018, the Company resolved a Discrimination complaint in the Superior Court of the State of California, County of Orange filed by a former employee. 

In addition there is a pending action titled Rolling Tides, LLC vs. Carl Palmer, Seychelle Environmental Technologies, Inc., and other defendants.  The case was brought in the Superior Court of the State of California, County of Orange.  The action alleges certain fraudulent transfers occurred from Seychelle to the various defendants.  The plaintiffs have refused to identify any such transfers by date or amount.  The matter is in early discovery and no trial date is set.  All the defendants have denied the allegations of the complaint and are vigorously defending the matter.  It is not likely that the case will be settled without trial.  The Company believes that the case has no merit.

Licenses

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 six months ended August 31, 2018 and 2017, the Company paid $4,051 and $14,963, respectively, in royalties and licensing fees related under these agreements.



NOTE 8: SUBSEQUENT EVENTS

Management has evaluated subsequent events from August 31, 2018 through the date the condensed consolidated financial statements were issued, and has concluded that no subsequent events have occurred that would require recognition or disclosure in these condensed consolidated financial statements.



NOTE 9:  INCOME TAX

Tax Cuts and Jobs Act

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"). The TCJA makes broad and complex changes to the U.S. tax code, including, but not limited to, reducing the U.S. statutory corporate income tax rate from 35 percent to 21 percent, effective January 1, 2018. U.S. GAAP requires that deferred income tax assets and liabilities be remeasured at the income tax rate expected to apply when those temporary differences reverse, and that the effects of any change to such income tax rate be recognized in the period when the change was enacted.

In connection with the Company's initial analysis of the impact of the TCJA, the Company recorded a discrete net tax expense of $282,408 in the year ended February 28, 2018. This net expense is primarily due to the remeasurement of the Company's existing deferred tax assets and liabilities. Due to the Company having a full valuation allowance related to their deferred taxes, the $282,408 discrete tax expense associated with the remeasurement is equally offset by the valuation allowance causing an overall net zero impact on the Company's current tax rate.

The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740. To the extent that a company's accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.



 
- 11 -

 
 
 
SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED (UNAUDITED) FINANCIAL STATEMENTS
August 31, 2018

 

NOTE 9:  INCOME TAX (CONTINUED)
 
We recorded the effects of the TCJA for year ended February 28, 2018 using our best estimates and the information available to us through the date the financial statements were issued. However, our analysis is ongoing and as such, the income tax effects that we have recorded are provisional.

Tax Provision

The Company expects its effective tax rate for the 2019 fiscal year to be different from the federal statutory rate due primarily to a change in valuation allowance.

We recorded a provision for income taxes of $0 and $1,800 for the quarter ended August 31, 2018 and 2017 respectively, related to federal and state taxes, based on the Company's expected annual effective tax rate.
 
 
- 12 -

 
 
 
 
 
ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
This discussion summarizes the significant factors affecting the operating results, financial condition and liquidity and cash flows of Seychelle Environmental Technologies, Inc., and subsidiaries (the "Company") as of and for the three and six month periods ended August 31, 2018 and 2017. 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 condensed consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2018.  Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company's control.
 
Forward-Looking Statements
 
Certain statements contained herein are "forward-looking" statements.  Forward-looking statements include statements which are predictive in nature; which depend upon or refer to future events or conditions; or which include words such as "expects", "anticipates", "intends", "plans", "believes", "estimates", or variations or negatives thereof or by similar or comparable words or phrases. In addition, any statement concerning future financial performance, ongoing business strategies or prospects, and possible future Company actions that may be provided by management are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions about the Company; and economic and market factors in the countries in which the Company does business, among other things. These statements are not guarantees of future performance, and the Company has no specific intentions to update these statements. Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors including, among others:
 
(1) the portable water filtration industry is in a state of rapid technological change, which can render the Company's products obsolete or unmarketable;
 
(2) any failure by the Company to anticipate or respond to technological developments or changes in industry standards or customer requirements, or any significant delays in product development or introduction, could have a material adverse effect on the Company's business, operating results and financial condition;
 
(3) the Company's cost of sales may be materially affected by increases in the market prices of the raw materials used in the Company's assembly processes;

(4) the Company's dependence on a few customers. Sales to these customers are unpredictable and difficult to estimate, and as such, may result in material fluctuations in sales from period to period. 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;
 
(4) the Company's water related product sales could be materially affected by weather conditions and government regulations;
 
(5) the Company is subject to the risks of conducting business internationally; and
 
(6)
the industries in which the Company operates are highly competitive. Additional risks and uncertainties are outlined in the Company's filings with the Securities and Exchange Commission, including its most recent fiscal Annual Report on Form 10-K for the fiscal year ended February 28, 2017.
 
 
 
- 13 -

 
 
 
Description of the Business
 
We were incorporated under the laws of the State of Nevada on January 23, 1998 as a change of domicile to Royal Net, Inc., a Utah corporation that was originally incorporated on January 24, 1986. Royal Net, Inc. changed its state of domicile to Nevada and its name to Seychelle Environmental Technologies, Inc. effective in January 1998.
 
On January 30, 1998, we entered into an Exchange Agreement with Seychelle Water Technologies, Inc., a Nevada corporation ("SWT"), whereby we exchanged our issued and outstanding capital shares with the shareholders of SWT on a one share for one share basis. We became the parent company and SWT became a wholly owned subsidiary. SWT had been formed in 1997 to market water filtration systems of Aqua Vision International.
 
Our Company is presently comprised of Seychelle Environmental Technologies, Inc., a Nevada corporation, with two wholly-owned subsidiaries, Seychelle Water Technologies, Inc. and Fill 2 Pure International, Inc., also Nevada corporations (collectively, the "Company" or "Seychelle"). We use the trade name "Seychelle Water Filtration Products, Inc." in our commercial operations.
 
Seychelle designs, assembles and distributes unique, state-of-the-art ionic absorption micron filters for portable filter devices that remove up to 99.99% of all pollutants and contaminants found in any fresh water source.  Patents and trade secrets cover all proprietary products.

Our principal business address is 22 Journey, Aliso Viejo, California 92656. Our telephone number at this address is 949-234-1999.
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Results of Operations
 
Our summarized historical financial data is presented in the following table to aid in your analysis. You should read this data in conjunction with this section entitled Management's Discussion and Analysis of Financial Condition and Results of Operations, our condensed consolidated financial statements and the related notes to the condensed consolidated financial statements included elsewhere in this report. The selected condensed consolidated statements of operations data for the three and six month periods ended August 31, 2018 and 2017 are derived from our condensed consolidated financial statements included elsewhere in this report.
 
Three month period ended August 31, 2018 compared to the corresponding period in 2017
 
 
 
 
             
Period over
       
 
 
2018
   
2017
   
Period change
   
%
 
 
                       
 
                       
Sales
 
$
735,677
   
$
991,934
     
(256,257
)
   
(26
%)
Cost of sales
   
351,073
     
491,509
     
(140,436
)
   
(29
%)
Gross profit
   
384,604
     
500,425
     
(115,821
)
   
(23
%)
Gross profit %
   
52
%
   
50
%
   
45
%
   
-
 
Selling, general, and administrative expenses
   
498,309
     
393,854
     
104,455
     
27
%
Depreciation and amortization
   
13,532
     
17,380
     
(3,848
)
   
(22
%)
Other income (expense)
   
(2,386
)
   
(1,990
)
   
(396
)
   
20
%
(Loss) income before income tax benefit (expense)
   
(129,623
)
   
87,201
     
(216,824
)
   
(249
%)
Provision for income taxes
   
-
     
(1,799
)
   
1,799
     
(100
%)
Net (loss) income
   
(129,623
)
   
85,402
     
(215,025
)
   
(252
%)
 
Sales. Sales decreased by $256,257 or (26%) to $735,677 during the three months ended August 31, 2018 from $991,934 during the three months ended August 31, 2017.  The decrease is primarily due to decrease in sales of our bottle, portable retail, pitcher replacement and pitcher custom product lines. Sales during the three months ended August 31, 2017 of this product line were $535,055, compared to $338,226 in the comparable current period 2018.
 
 
- 14 -

 
 

Cost of sales and gross profit percentage. As a percentage of sales, the gross profit margin during the three months ended August 31, 2018 increased to 52% from 50%.   The product mix and timing of significant sales is always an important factor in the resulting profit margins reported.  The Company believes that the average gross margin percentages overall could decrease to a range around approximately 45% in the foreseeable future.

Selling, general, and administrative expenses. These expenses increased by $104,455, or 27%, during the three months ended August 31, 2017 compared to the same period ended in the prior year.  The increase was a direct result of the increase in legal and advertising costs.

Depreciation and amortization.  Depreciation and amortization expense was decreased due to fully depreciated fixed assets.

Income tax benefit (expense).  The Company recorded provision of $0 due to a pretax loss of $129,623 during the three month period ended August 31, 2018 compared to income tax benefit of $1,799 due to the pretax income of $87,201 during the three months ended August 31, 2017.
 
Net (loss) income. Net (loss) for the three month period ended August 31, 2018 was $129,623 compared to net income for the three month period ended August 31, 2017 of $85,402.  This was primarily due to the decrease of $256,257 or (26%) in sales and an increase of $104,455 in selling, general and administrative expenses.

Six month period ended August 31, 2018 compared to the corresponding period in 2017
 
 
 
 
 
             
Period over
       
 
 
2018
   
2017
   
Period change
   
%
 
 
                       
 
                       
Sales
 
$
1,869,578
   
$
2,200,141
     
(330,563
)
   
(15
%)
Cost of sales
   
954,513
     
1,155,291
     
(200,778
)
   
(17
%)
Gross profit
   
915,065
     
1,044,850
     
(129,785
)
   
(12
%)
Gross profit %
   
49
%
   
47
%
   
39
%
       
Selling, general, and administrative expenses
   
922,771
     
754,945
     
167,826
     
22
%
Depreciation and amortization
   
28,003
     
35,055
     
(7,052
)
   
(20
%)
Other income (expense)
   
(1,122
)
   
(3,416
)
   
2,294
     
(67
%)
(Loss) income before income tax benefit (expense)
   
(36,831
)
   
251,434
     
(288,265
)
   
(115
%)
Income tax benefit
   
-
     
(6,051
)
   
6,051
     
(100
%)
(Loss) net income
   
(36,831
)
   
245,384
     
(287,214
)
   
(115
%)
 
Sales. The decrease in sales to $1,869,578 during the six months ended August 31, 2018 from $2,200,141 during the six months ended August 31, 2017.  The decrease of 15% is primarily due to decrease in sales of our bottle, portable retail and pitcher product lines.

Cost of sales and gross profit percentage. As a percentage of sales, the gross profit margin during the six months ended August 31, 2018 increased to 49% from 47%.  The product mix and timing of significant sales is always an important factor in the resulting profit margins reported.  The Company believes that the average gross margin percentages overall could decrease to a range around approximately 45% in the foreseeable future.

Selling, general, and administrative expenses. These expenses increased by $167,826, or 22%, during the six months ended August 31, 2018 compared to the same period in the prior year.  The increase was a direct result of the increase in legal and advertising costs.
 
 
- 15 -

 


Depreciation and amortization.  Depreciation and amortization was decreased due to fully depreciated fixed assets.
 
Income tax benefit (expense).  The Company recorded an income tax $0 due to pretax loss of $36,831 compared to an income tax of $6,050 due to the pretax income of $251,435 during the six month period ended August 31, 2017.
 
Net (loss) income. Net loss for the six month period ended August 31, 2018 was $36,831 compared to net income of $245,384 for the six month period ended August 31, 2017.

Net cash from operating activities. During the six-month period ended August 31, 2018, cash used in operating activities was $147,734, compared to cash provided in operating activities of  $564,856 in the same period during 2017.This was primarily the result of decreased sales and increased expenses combined with collections of accounts receivable.
 
Net cash from investing activities. During the six month period ended August 31, 2018, the Company spent approximately $5,550 on capital expenditures.  In comparable period of the prior year, the Company spent $2,995 on capital expenditures.
 
Net cash from financing activities. Cash used in financing activities during the six month period ended August 31, 2018 was $2,600 compared to $1,790 during the comparable period. This was a result of the addition of a new capital lease in this fiscal year compared to various leases added in the previous year.
 
Management's Plan. As of August 31, 2018, the Company had $1,919,949 in cash and cash equivalents, $594,680 in accounts receivable and a backlog of $91,138 in unshipped product.  This year, Seychelle plans to release a variety of new products in the upcoming months that introduce hollow fiber technology and further improvements to our filter effectiveness and production.  We anticipate an increase in earnings with the addition of our innovative technology to products that focus on water soluble medical cannabis in conjunction with our portable products. 

Critical Accounting Policies and Estimates
 
The Company's discussion and analysis of its financial condition and results of operations are based upon its condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
 
The Company believes that the estimates, assumptions and judgments involved in the accounting policies described in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of its most recent fiscal 2018 Annual Report on Form 10-K have the greatest potential impact on its consolidated financial statements, so it considers these to be its critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates the Company uses in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for inventory reserves and stock-based compensation. These policies require that the Company make estimates in the preparation of its consolidated financial statements as of a given date.
 
Within the context of these critical accounting policies, the Company is not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. There were no material changes to the Company's critical accounting policies or estimates during the six-month period ended August 31, 2018.
 
 
- 16 -


 

 
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updated ("ASU") 2014-09, Revenue from Contracts with Customers, issued as a new Topic, ASC Topic 606 ("ASU 2014-09"). The new revenue recognition standard provides a step analysis of transactions to determine when and how revenue is recognized. The premise of the standard 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. The Company adopted the guidance beginning in fiscal 2019 using the modified retrospective approach. The adoption of this guidance did not have a significant impact on our 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. The Company is currently evaluating the potential impact this standard will have on its condensed 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 condensed consolidated financial statements.
 
 
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
None.
 
 
ITEM 4.  CONTROLS AND PROCEDURES
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow for timely decisions regarding required disclosure. As required by Rule 15d-15(b) of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.  Based on the foregoing, our principal executive and principal financial officer concluded that our disclosure controls and procedures are not effective to ensure the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed and reported within the time periods specified in the SEC's rules and forms.
 


- 17 -

 

Management's Annual Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Principal Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and includes those policies and procedures that:

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

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

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 financial statements;

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

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

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 financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

Management has used the framework set forth in the report entitled Internal Control-Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, management has concluded that our internal control over financial reporting was not effective as of August 31, 2018.

A material weakness is a deficiency, or combination of deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses at August 31, 2018:

(1)
lack of a functioning audit committee and lack of a majority of outside directors on the Company's Board of Directors capable to oversee the audit function;

(2)
inadequate segregation of duties due to limited number of personnel, which makes the reporting process susceptible to management override;

Management believes that the material weaknesses set forth in items (1) through (2) above did not have an effect on the Company's financial reporting during the period ended August 31, 2018.

We are committed to improving our financial organization. We planned and implemented sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements.
 
 

- 18 -


 


We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

This 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 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

There was no change in internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during our first fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  In addition, management improved written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements and controls over period end financial disclosure and reporting processes.  Management believes this addressed certain aspects of this material weakness previously identified.  Management will continue to assess the effectiveness of its remediation efforts in connection with policies and procedures for accounting and financial reporting.
 
  
PART II - OTHER INFORMATION
 
ITEM 1.   LEGAL PROCEEDINGS
 
The Company was involved in litigation during the fiscal quarter ended August 31, 2018.  In June, 2018, the Company resolved a Discrimination complaint in the Superior Court of the State of California, County of Orange filed by a former employee. 

In addition there is a pending action titled Rolling Tides, LLC vs. Carl Palmer, Seychelle Environmental Technologies, Inc., and other defendants.  The case was brought in the Superior Court of the State of California, County of Orange.  The action alleges certain fraudulent transfers occurred from Seychelle to the various defendants.  The plaintiffs have refused to identify any such transfers by date or amount.  The matter is in early discovery and no trial date is set.  All the defendants have denied the allegations of the complaint, and are vigorously defending the matter.  It is not likely that the case will be settled without trial.  The Company believes that the case has no merit.
 
 
ITEM 1A. RISK FACTORS

There have been no changes to our Risk Factors included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 8, 2018.
 
 
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
During the quarter ended August 31, 2018, the Company did not issue any securities.
 
 
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
 
None
 
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
None
 

ITEM 5.  OTHER INFORMATION

None

 
 
- 19 -

 
 

 ITEM 6.  EXHIBITS

Exhibits
 
Exhibit No.
 
Description
     
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)
     
     
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002)
     
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document*
     
101.INS
 
XBRL Instance Document
     
101.SCH
 
XBRL Taxonomy Extension Schema Document
     
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
     
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
- 20 -



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

 
 
Seychelle Environmental Technologies, Inc.
 
  
  
  
 
Date: October 12, 2018
By:  
/s/ Carl Palmer
 
 
Carl Palmer
Director, Chief Executive Officer
and Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 21 -
EX-31 2 ex31_1.htm
 
Exhibit 31.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
  
 
I, Carl Palmer, as to Seychelle Environmental Technologies, Inc. (the "Registrant"), certify that:
 
1. I have reviewed this Quarterly Report on Form 10-Q;
 
2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
 
4.  I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
 
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurnce regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d) Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
 
5.  I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
 
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
 
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
 
 
Date: October 12, 2017
By:
/s/ Carl Palmer
 
 
 
Carl Palmer
 
 
 
Chief Executive Officer
and Chief Financial Officer
 
 
 
 
EX-32.1 3 ex32_1.htm
 
Exhibit 32.1
 
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTIONS 1350
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 
In connection with the Quarterly report of Seychelle Environmental Technologies, Inc. (the "Registrant") on Form 10-Q  for the three-month period ended August 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Carl Palmer, Chief Executive Officer/Chief Financial Officer of the Registrant certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of the undersigned's knowledge and belief:
 
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
 
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.
 
 
Date: October 12, 2017
By:
/s/ Carl Palmer
 
 
 
Carl Palmer
 
 
 
Chief Executive Officer
and Chief Financial Officer
 
 

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Document and Entity Information - shares
6 Months Ended
Aug. 31, 2018
Oct. 11, 2018
Document And Entity Information    
Entity Registrant Name SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA  
Entity Central Index Key 0001056757  
Document Type 10-Q  
Document Period End Date Aug. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --02-28  
Is Entity an Emerging Growth Company false  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Non-accelerated Filer  
Is Entity a Entity a Small Business true  
Entity Common Stock, Shares Outstanding   26,640,313
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2018  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.10.0.1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
Aug. 31, 2018
Feb. 28, 2018
ASSETS    
Cash and cash equivalents $ 1,919,949 $ 2,075,833
Accounts receivable, net of allowance for doubtful accounts and sales returns of $11,770 and $8,617 594,680 829,790
Related party receivables 32,951 35,007
Inventory, net 1,073,355 998,296
Prepaid expenses, deposits, and other current assets 102,413 159,980
Total current assets 3,723,348 4,098,906
Property and equipment, net 113,086 135,539
Other current assets 66,670 66,670
Total assets 3,903,104 4,301,115
Current Liabilities:    
Accounts payable and accrued expenses 234,161 441,866
Customer deposits 12,307 163,184
Capital lease obligation, current portion 5,664 5,402
Total current liabilities 252,132 610,452
Long term Liabilities:    
Capital lease obligation, net of current 6,220 9,082
Total liabilities 258,352 619,534
STOCKHOLDERS' EQUITY    
Preferred stock, 6,000,000 shares authorized, none issued or outstanding
Common stock $0.001 par value, 50,000,000 shares authorized, 26,640,313 and 26,390,313 issued and outstanding at August 31, 2018 and February 28, 2018, respectively 26,641 26,641
Additional paid-in capital 8,944,368 8,944,368
Accumulated deficit (5,296,577) (5,259,748)
Less treasury stock at cost (66,000 and 36,000 shares at August 31, 2018 and February 28, 2018 respectively) (29,680) (29,680)
Total Stockholders' Equity 3,644,752 3,681,581
Total liabilities and stockholders' equity $ 3,903,104 $ 4,301,115
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.10.0.1
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
Aug. 31, 2018
Feb. 28, 2018
CURRENT ASSETS    
Net of allowance for doubtful accounts $ 11,770 $ 8,617
STOCKHOLDERS' EQUITY    
Preferred stock, authorized shares 6,000,000 6,000,000
Preferred stock, issued shares 0 0
Preferred stock, outstanding shares 0 0
Preferred stock, par value $ 0 $ 0
Common stock, par value $ 0.001 $ 0.001
Common stock, authorized shares 50,000,000 50,000,000
Common stock, issued shares 26,640,313 26,640,313
Common stock, outstanding shares 26,640,313 26,640,313
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.10.0.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Aug. 31, 2018
Aug. 31, 2017
Aug. 31, 2018
Aug. 31, 2017
Condensed Consolidated Statements Of Income        
Sales $ 735,677 $ 991,934 $ 1,869,578 $ 2,200,141
Cost of sales 351,073 491,509 954,513 1,155,291
Gross profit 384,604 500,425 915,065 1,044,850
OPERATING EXPENSES        
Selling, general, and administrative expenses 498,309 393,854 922,771 754,945
Depreciation and amortization 13,532 17,380 28,003 35,055
Total operating expenses 511,841 411,234 950,774 790,000
(Loss) income from operations (127,237) 89,191 (35,709) 254,850
OTHER EXPENSE        
Interest expense (485) (1,848) (1,038) (3,274)
Other income (1,901) (142) (84) (142)
Total other income (expense) (2,386) (1,990) (1,122) (3,416)
(Loss) income before income tax expense (129,623) 87,201 (36,831) 251,434
Income tax expense (1,799) (6,050)
Net (loss) income $ (129,623) $ 85,402 $ (36,831) $ 245,384
BASIC INCOME (LOSS) PER SHARE $ 0.00 $ 0.01 $ 0.00 $ 0.01
DILUTED INCOME (LOSS) PER SHARE $ 0.00 $ 0.00 $ 0.00 $ 0.01
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 26,574,313 26,640,313 26,574,313 26,640,313
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 26,574,313 26,640,313 26,574,313 26,640,313