Seychelle Environmental (SYEV) 10-Q 15 Jul 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	May 31, 2016	Jul. 14, 2016
Document And Entity Information
Entity Registrant Name	SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA
Entity Central Index Key	1,056,757
Document Type	10-Q
Document Period End Date	May 31, 2016
Amendment Flag	false
Current Fiscal Year End Date	--02-28
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		26,574,313
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,016

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	May 31, 2016	Feb. 29, 2016
ASSETS
Cash and cash equivalents	$ 747,846	$ 2,062,873
Accounts receivable, net of allowance for doubtful accounts and sales returns of $22,200 and $125,800, respectively	299,156	224,235
Related party receivable	44,779	39,575
Inventory, net	2,707,386	2,511,458
Deferred tax assets	62,145	62,145
Prepaid expenses, deposits, and other current assets	100,833	115,440
Total current assets	3,962,145	5,015,726
Property and equipment, net	224,320	222,926
Intangible assets, net	50,476	51,343
Deferred tax assets	836,642	551,571
Other assets	81,312	15,651
Total assets	5,154,895	5,857,217
Current Liabilities:
Accounts payable and accrued expenses	115,882	415,226
Income taxes payable	230,871	317,145
Customer deposits	41,700	28,219
Capital lease obligation, current portion	7,896	9,390
Total current liabilities	396,349	769,980
Long term Liabilities:
Capital lease obligation, net of current	18,253	19,439
Total liabilities	414,602	789,419
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 May 31, 2016 and February 29, 2016, respectively	26,641	26,391
Additional paid-in capital	8,944,368	8,827,118
Accumulated deficit	(4,201,036)	(3,773,431)
Less treasury stock at cost (66,000 and 36,000 shares at May 31, 2016 and February 29, 2016 respectively)	(29,680)	(12,280)
Total Stockholders' Equity	4,740,293	5,067,798
Total liabilities and stockholders' equity	$ 5,154,895	$ 5,857,217

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	May 31, 2016	Feb. 29, 2016
CURRENT ASSETS
Net of allowance for doubtful accounts	$ 22,200	$ 125,800
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	26,390,313
Common stock, outstanding shares	26,640,313	26,390,313

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	May 31, 2016	May 31, 2015
Condensed Consolidated Statements Of Income
Sales	$ 899,134	$ 2,347,183
Cost of sales	588,485	1,068,030
Gross profit	310,649	1,279,153
OPERATING EXPENSES
Selling, General, and Administrative Expenses	1,002,450	551,916
Depreciation and Amortization	22,051	9,712
Total operating expenses	1,024,501	561,628
Income (Loss) from Operations	(713,852)	717,525
OTHER INCOME (EXPENSE)
Interest income	9	189
Interest expense	(615)
Other income	1,782	75
Total other income	1,176	264
Income (loss) before provision for income taxes	(712,676)	717,789
Income tax benefit (expense)	285,071	(245,291)
Net income (loss)	$ (427,605)	$ 472,498
BASIC INCOME (LOSS) PER SHARE	$ (0.02)	$ 0.02
DILUTED INCOME (LOSS) PER SHARE	$ (0.02)	$ 0.02
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	26,580,530	25,913,646
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	26,580,530	26,499,618

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	May 31, 2016	May 31, 2015
OPERATING ACTIVITIES:
Net income (loss)	$ (427,605)	$ 472,498
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	22,051	9,712
Stock-based compensation	117,500	67,199
Provision for doubtful accounts and sales returns	(103,569)
Deferred tax expense (benefit)	(285,071)	245,291
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	28,648	(411,184)
Increase in related party receivables	(5,204)	(22,500)
Increase in inventory	(195,928)	(341,198)
Increase in prepaid expenses, deposits and other assets	(51,054)	(55,403)
Increase (decrease) in accounts payable and accrued expenses	(299,344)	827
Decrease in accrued legal and settlement fees		(532,103)
Decrease in income taxes payable	(86,274)
Increase (decrease) in customer deposits	13,481	(74,062)
Net Cash Used In Operating Activities	(1,272,369)	(640,923)
INVESTING ACTIVITIES:
Purchase of property and equipment	(22,578)	(11,449)
Net Cash Used In Investing Activities	(22,578)	(11,449)
FINANCING ACTIVITIES:
Repayment of capital lease obligation	(2,680)	(493)
Repurchase of treasury stock	(17,400)
Net Cash Used in Financing Activities	(20,080)	(493)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,315,027)	(652,865)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	2,062,873	1,514,534
CASH AND CASH EQUIVALENTS AT END OF PERIOD	747,846	861,669
Cash paid for:
Interest	615
Income taxes	$ 80,000

1. CONDENSED FINANCIAL STATEMEN

1. CONDENSED FINANCIAL STATEMENTS	3 Months Ended
	May 31, 2016
Notes to Financial Statements
CONDENSED FINANCIAL STATEMENTS	NOTE 1: CONDENSED FINANCIAL STATEMENTS The accompanying condensed consolidated financial statements have been prepared by Seychelle Environmental Technologies, Inc., and subsidiaries (the "Company") without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at May 31, 2016, 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/A for the year ended February 29, 2016. The results of operations for the periods ended May 31, 2016 and 2015 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 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 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 29, 2016 consolidated financials included in the 10-K/A filed on June 16, 2016. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

2. MANAGEMENT'S PLAN

2. MANAGEMENT'S PLAN	3 Months Ended
	May 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
MANAGEMENT'S PLAN	NOTE 2: MANAGEMENT'S PLAN 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. There were no sales to this customer during the three month period ended May 31, 2016 and the likelihood of this customer continuing to purchase our product in the future is remote. The loss of business from this customer has had a materially adverse effect on our revenues in the short term and may continue to have a materially adverse effect on our revenues in the long term if these revenues are not replaced by new products and other existing or new customers. As of May 31, 2016, the Company had $747,846 in cash and cash equivalents, $299,156 in accounts receivable, working capital of $3,565,796 and a backlog of $34,000 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 sales to existing and new customers to sustain operations. The TAM Trust has also committed to providing up to $500,000 in additional funding, if required.

3. BASIC INCOME (LOSS) PER SHAR

3. BASIC INCOME (LOSS) PER SHARE	3 Months Ended
	May 31, 2016
Earnings Per Share [Abstract]
BASIC INCOME (LOSS) PER SHARE	NOTE 3: BASIC INCOME (LOSS) PER SHARE Basic income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during each period presented. Diluted income (loss) per share is determined using the weighted average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. The dilutive effect of outstanding stock options and warrants is reflected in diluted earnings per share by application of the treasury stock method. The denominator for diluted income (loss) per share for the period ended May 31, 2016 did not include warrants as they would have been anti-dilutive. At May 31, 2016 and 2015, 6,407,221 and 5,464,137 warrants, respectively, were excluded from the denominator for diluted income (loss) per share. For the three months ended May 31, 2016 2015 Numerator: Net (loss) income available to common shareholders $ ((427,605 ) $ 472,498 Weighted average shares – basic 26,580,530 25,913,646 Net income (loss) per share – basic $ (0.02 ) $ 0.02 Dilutive effect of common stock equivalents: Warrants - 585,972 Weighted average shares – diluted 26,580,530 26,499,618 Net income (loss) per share – diluted $ (0.02 ) $ 0.02

4. COMMON STOCK PURCHASE WARRAN

4. COMMON STOCK PURCHASE WARRANTS	3 Months Ended
	May 31, 2016
Notes to Financial Statements
COMMON STOCK PURCHASE WARRANTS	NOTE 4: COMMON STOCK PURCHASE WARRANTS Common Stock During the quarter ended May 31, 2016, 250,000 shares of restricted stock were issued by the Company to an employee. During the three months ended May 31, 2016, the Company repurchased 30,000 shares of common stock for a costs of $17,400. This repurchase has been recorded as treasury stock and reflected as a reduction of stockholders' equity on the accompanying condensed consolidated balance sheet Warrants The Company had previously granted warrants to selected members of management and determined the estimated value of warrants granted using the Black-Scholes option pricing model. The warrants became fully vested during the year ended February 29, 2016. The amount of the expense charged to operations for these warrants was $0 and $67,199 for the three months ended May 31, 2016 and 2015, respectively. A summary of warrant activity for the three months ended May 31, 2016 is as follows: Weighted- Average Warrants Exercise Outstanding Price Outstanding at February 29, 2016 6,407,221 0.21 Granted - - Exercised - - Forfeited - 0.21 Outstanding at May 31, 2016 6,407,221 0.21 Vested at May 31, 2016 6,407,221 0.21 Exercisable at May 31, 2016 6,407,221 0.21 The following table summarizes significant ranges of outstanding warrants as of May 31, 2016: Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Average Average Average Number Remaining Exercise Number Exercise Exercise Price Outstanding Life (Years) Price Outstanding Price $0.21 6,407,221 4.54 $0.21 6,407,221 $0.21

5. INVENTORY

5. INVENTORY	3 Months Ended
	May 31, 2016
Notes to Financial Statements
INVENTORY	NOTE 5: INVENTORY The Company's inventory consisted of the following at May 31, 2016 and February 29, 2016: May 31, 2016 February 28, 2016 Raw materials $ 1,529,902 $ 1,084,782 Finished goods 1,217,484 1,466,676 2,747,386 2,551,458 Reserve for obsolete and slow moving inventory (40,000 ) (40,000 ) $ 2,707,386 $ 2,511,458

6. CONCENTRATIONS

6. CONCENTRATIONS	3 Months Ended
	May 31, 2016
Notes to Financial Statements
CONCENTRATIONS	NOTE 6: CONCENTRATIONS Sales to one customer accounted for 42% of sales for the three month period ended May 31, 2016. Accounts receivable from this customer accounted to $147,373 or 49% of accounts receivable as of May 31, 2016. Another customer, who did not account for a sales concentration, had accounts receivable of $35,154 or 12% as of May 31, 2016. Sales to two customers accounted for 72% of sales for the three month period ended May 31, 2015. Accounts receivable from these two customers amounted to $575,045 or 83% of accounts receivable as of May 31, 2015. 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 three months ended May 31, 2016 and 2015, purchases facilitated through the related party accounted for approximately 38% and 26%, respectively, of total raw material purchases. The Company had two other non-related vendors that accounted for 37% of raw material purchases during the three month period ended May 31, 2016. The Company had three other non-related vendors that accounted for 55% of raw material purchases during the three month period ended May 31, 2015.

7. RELATED PARTY TRANSACTIONS

7. RELATED PARTY TRANSACTIONS	3 Months Ended
	May 31, 2016
Notes to Financial Statements
RELATED PARTY TRANSACTIONS	NOTE 7: RELATED PARTY TRANSACTIONS During the three month periods ended May 31, 2016 and 2015, the Company incurred $12,500 and $50,000, respectively, for consulting services from TAM Irrevocable Trust ("TAM"), in which Cari Beck is the trustee and current Board member, as well as a daughter of Carl Palmer, an officer and Board member. These amounts are included as a component of selling, general and administrative expenses on the condensed consolidated statements of operations. Additionally, during the three months ended May 31, 2016, TAM purchased on behalf of the Company, $7,740 of raw materials from a vendor with which it already had a business relations. All amounts due to TAM had been paid in full as of May 31, 2016 and 2015. During the three month period ended May 31, 2015, TAM Trust purchased, on behalf of the Company, $185,000 of raw materials, and paid $3,500 for related tooling to a vendor with which it already had a business relationship. The Company reimbursed TAM Trust for these outlays in full during the three months ended May 31, 2015. There were no comparable transactions in the three months ended May 31, 2016. 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 three months ended May 31, 2016 and 2015, purchases facilitated through the related party accounted for approximately 38% and 26%, respectively, of total raw material purchases. The Company paid approximately $900 and $11,000 in direct commissions to the related party consultant during the three months ended May 31, 2016 and 2015, respectively. As of May 31, 2016 and 2015, the Company had receivables due from its CEO of approximately $17,000 and $8,000, respectively. In addition, the Company had advanced amounts to employees of approximately $28,000 and $27,000 as of May 31, 2016 and 2015, respectively. These amounts are being repaid through direct payroll withdrawals.

8. COMMITMENTS AND CONTINGENCIE

8. COMMITMENTS AND CONTINGENCIES	3 Months Ended
	May 31, 2016
Notes to Financial Statements
COMMITMENTS AND CONTINGENCIES	NOTE 8: COMMITMENTS AND CONTINGENCIES As of May 31, 2016, we know of no legal proceedings pending or threatened, or judgments entered against the Company or any of our directors or officers in their capacity as such.

9. SUBSEQUENT EVENTS

9. SUBSEQUENT EVENTS	3 Months Ended
	May 31, 2016
Subsequent Events [Abstract]
9. SUBSEQUENT EVENTS	NOTE 9: SUBSEQUENT EVENTS Management has evaluated subsequent events from May 31, 2016 through July 15, 2016, the date the condensed consolidated financial statements were issued, and concluded that no subsequent events have occurred that would require recognition or disclosure in these condensed consolidated financial statements.

2. BASIC INCOME (LOSS) PER SHAR

2. BASIC INCOME (LOSS) PER SHARE (Tables)	3 Months Ended
	May 31, 2016
Earnings Per Share [Abstract]
Basic and Diluted income (loss) per share	For the three months ended May 31, 2016 2015 Numerator: Net (loss) income available to common shareholders $ ((427,605 ) $ 472,498 Weighted average shares – basic 26,580,530 25,913,646 Net income (loss) per share – basic $ (0.02 ) $ 0.02 Dilutive effect of common stock equivalents: Warrants - 585,972 Weighted average shares – diluted 26,580,530 26,499,618 Net income (loss) per share – diluted $ (0.02 ) $ 0.02

4. COMMON STOCK PURCHASE WARR16

4. COMMON STOCK PURCHASE WARRANTS (Tables)	3 Months Ended
	May 31, 2016
Common Stock Purchase Warrants Tables
Summary of warrant activity	Weighted- Average Warrants Exercise Outstanding Price Outstanding at February 29, 2016 6,407,221 0.21 Granted - - Exercised - - Forfeited - 0.21 Outstanding at May 31, 2016 6,407,221 0.21 Vested at May 31, 2016 6,407,221 0.21 Exercisable at May 31, 2016 6,407,221 0.21
Significant ranges of outstanding warrants	Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Average Average Average Number Remaining Exercise Number Exercise Exercise Price Outstanding Life (Years) Price Outstanding Price $0.21 6,407,221 4.54 $0.21 6,407,221 $0.21

5. INVENTORY (Tables)

5. INVENTORY (Tables)	3 Months Ended
	May 31, 2016
Inventory Tables
Inventory	The Company's inventory consisted of the following at May 31, 2016 and February 29, 2016: May 31, 2016 February 28, 2016 Raw materials $ 1,529,902 $ 1,084,782 Finished goods 1,217,484 1,466,676 2,747,386 2,551,458 Reserve for obsolete and slow moving inventory (40,000 ) (40,000 ) $ 2,707,386 $ 2,511,458

3. BASIC INCOME (LOSS) PER SH18

3. BASIC INCOME (LOSS) PER SHARE - Basic and Diluted income (loss) per share (Details) - USD ($)	3 Months Ended
	May 31, 2016	May 31, 2015
Numerator:
Net (loss) income available to common shareholders	$ (427,605)	$ 472,498
Weighted average shares, basic	26,580,530	25,913,646
Net income (loss) per share - basic	$ (0.02)	$ 0.02
Dilutive effect of common stock equivalents:
Warrants		585,972
Weighted average shares, diluted	26,580,530	26,499,618
Net income (loss) per share - diluted	$ (0.02)	$ 0.02

4. COMMON STOCK PURCHASE WARR19

4. COMMON STOCK PURCHASE WARRANTS (Details) - USD ($)	3 Months Ended
	May 31, 2016	Feb. 29, 2016
Common Stock Purchase Warrants Details
Number of common shares repurchased and recorded as treasury stock	30,000
Value of common shares repurchased and recorded as treasury stock	$ 17,400
Warrants Outstanding	6,407,221
Warrants, Forfeited	2,000,000
Warrants, Outstanding	6,407,221
Vested	6,407,221
Exercisable	6,407,221
Warrants Weighted Average Exercise Price per Share, Outstanding	$ 0.21
Warrants Weighted Average Exercise Price per Share, Granted	0.21
Warrants Weighted Average Exercise Price per Share, Exercised	0.21
Warrants Weighted Average Exercise Price per Share, Forfeited	0.21
Warrants Weighted Average Exercise Price per Share, Outstanding	0.21
Weighted Average Exercise Price Warrants Vested	0.21	$ 0.21
Weighted Average Exercise Price Warrants Exercisable	$ 0.21	$ 0.21

5. INVENTORY (Details)

5. INVENTORY (Details) - USD ($)	May 31, 2016	Feb. 29, 2016
Inventory Details
Raw materials	$ 1,529,902	$ 1,084,782
Finished goods	1,217,484	1,466,676
Inventory	2,747,386	2,551,458
Reserve for obsolete and slow moving inventory	(40,000)	(40,000)
Inventory, Net	$ 2,707,386	$ 2,511,458

2. MANAGEMENT'S PLAN (Details N

2. MANAGEMENT'S PLAN (Details Narrative)	3 Months Ended
	May 31, 2016USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash	$ 747,846
Accounts receivable	299,156
Working capital	3,565,796
Backlog of unshipped product	$ 34,000

3. BASIC INCOME (LOSS) PER SH22

3. BASIC INCOME (LOSS) PER SHARE (Details Narrative) - shares	3 Months Ended
	May 31, 2016	May 31, 2015
Earnings Per Share [Abstract]
Warrants excluded from the denominator for diluted income (loss) per share	6,407,221	5,464,137

4. COMMON STOCK PURCHASE WARR23

4. COMMON STOCK PURCHASE WARRANTS (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2016	May 31, 2015
Common Stock Purchase Warrants Details Narrative
Expense charged to operations for warrants	$ 0	$ 67,199

6. CONCENTRATIONS (Details Narr

6. CONCENTRATIONS (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2016	May 31, 2015
Concentrations Details Narrative
Percentage of sales attributable to one customer	42.00%
Percentage of accounts receivable attributable to one customer	49.00%
Accounts receivable from one customers	$ 147,373
Percentage of accounts receivable attributable to two customers		83.00%
Percentage of sales attributable to two customers		72.00%
Accounts receivable from two customers		$ 575,045
Percentage of accounts receivable from one other customer	38.00%	26.00%

7. RELATED PARTY TRANSACTIONS (

7. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	May 31, 2016	May 31, 2015	May 31, 2014
Related Party Transactions Details Narrative
Payments to Irrevocable Trust for consulting services in which Cari Beck is a trustee as well as the daughter of the Company's President	$ 12,500	$ 50,000
Payment to TAM for future purchase of intellectual property retained by TAM	100,000
Raw materials purchased	7,740		$ 185,000
Tooling from vendor		3,500
Direct commissions paid to related party consultant	900	1,100
Receivables due from CEO	17,000	8,000
Receivables due from employee	$ 28,000	$ 27,000