Seychelle Environmental (SYEV) 10-Q 13 Oct 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Aug. 31, 2017	Oct. 12, 2017
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	Aug. 31, 2017
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		26,640,313
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,017

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Aug. 31, 2017	Feb. 28, 2017
ASSETS
Cash and cash equivalents	$ 1,292,183	$ 732,112
Accounts receivable, net of allowance for doubtful accounts and sales returns of $11,884 and $47,600, respectively	596,744	905,507
Related party receivables	26,900	27,200
Inventory, net	1,131,951	1,421,871
Prepaid expenses, deposits, and other current assets	236,602	282,560
Total current assets	3,284,380	3,369,250
Property and equipment, net	132,938	164,997
Other current assets	149,847	81,310
Total assets	3,567,165	3,615,557
Current Liabilities:
Accounts payable and accrued expenses	233,054	476,415
Customer deposits	51,050	99,677
Capital lease obligation, current portion	5,034	4,047
Total current liabilities	289,138	580,139
Long term Liabilities:
Capital lease obligation, net of current	11,967	14,744
Total liabilities	301,105	594,883
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, 2017 and February 28, 2017, respectively	26,641	26,641
Additional paid-in capital	8,944,368	8,944,368
Accumulated deficit	(5,675,269)	(5,920,655)
Less treasury stock at cost (66,000 and 36,000 shares at May 31, 2016 and February 29, 2016 respectively)	(29,680)	(29,680)
Total Stockholders' Equity	3,266,060	3,020,674
Total liabilities and stockholders' equity	$ 3,567,165	$ 3,615,557

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Aug. 31, 2017	Feb. 28, 2017
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	26,640,313
Common stock, outstanding shares	26,640,313	26,640,313

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Condensed Consolidated Statements Of Income
Sales	$ 991,934	$ 728,232	$ 2,200,141	$ 1,627,368
Cost of sales	491,509	358,432	1,155,291	946,917
Gross profit	500,425	369,800	1,044,850	680,451
OPERATING EXPENSES
Selling, General, and Administrative Expenses	393,854	608,121	754,945	1,621,034
Depreciation and Amortization	17,380	20,779	35,055	42,830
Total operating expenses	411,234	628,900	790,000	1,663,864
Income (Loss) from Operations	89,191	(259,100)	254,850	(983,413)
OTHER INCOME (EXPENSE)
Interest income		8		15
Interest expense	(1,848)	(388)	(3,274)	(1,002)
Other income	(142)	10,452	(142)	12,231
Total other income (expense)	(1,990)	10,072	(3,416)	11,244
Income (loss) before income tax benefit (expense)	87,201	(249,028)	251,434	(972,169)
Income tax benefit (expense)	(1,799)	100,562	(6,050)	379,358
Net income (loss)	$ 85,402	$ (148,466)	$ 245,384	$ (592,811)
BASIC INCOME (LOSS) PER SHARE	$ 0	$ (0.01)	$ 0.01	$ (0.02)
DILUTED INCOME (LOSS) PER SHARE	$ 0	$ (0.01)	$ 0.01	$ (0.02)
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	26,640,313	26,640,313	26,640,313	26,610,421
DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	26,574,313	26,640,313	26,574,313	26,610,421

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)	$ 245,384	$ (592,811)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	35,055	42,830
Loss on disposal of assets		5,587
Stock-based compensation		117,500
Provision for doubtful accounts and sales returns	(34,644)	(103,652)
Deferred tax expense (benefit)		(385,632)
Changes in operating assets and liabilities:
Accounts receivable	343,406	(107,864)
Related party receivables	300	(5,129)
Inventory	289,920	(96,389)
Prepaid expenses, deposits and other assets	(22,578)	(131,314)
Accounts payable and accrued expenses	(243,361)	(185,914)
Income taxes payable		(160,000)
Customer deposits	(48,626)	(22,364)
Net Cash Provided By (Used In) Operating Activities	564,856	(1,625,152)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(2,995)	(25,582)
Net Cash Used In Investing Activities	(2,995)	(25,582)
CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of capital lease obligation	(1,790)	(7,138)
Repurchase of treasury stock		(17,400)
Net Cash Used in Financing Activities	(1,790)	(24,538)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	560,071	(1,675,272)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	732,112	2,062,873
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,292,183	387,601
Cash paid for:
Interest	3,274	1,002
Income taxes		$ 160,000

1. CONDENSED FINANCIAL STATEMEN

1. CONDENSED FINANCIAL STATEMENTS	6 Months Ended
	Aug. 31, 2017
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" or "Seychelle") 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, 2017, 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. These condensed consolidated financial statements should 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 fiscal year ended February 28, 2017. The results of operations for the periods ended August 31, 2017 and 2016 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 these condensed consolidated financial statements and the February 28, 2017 consolidated financials included in the 10-K filed on June 14, 2017. 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	6 Months Ended
	Aug. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
MANAGEMENT'S PLAN	NOTE 2: MANAGEMENT'S PLAN As of February 28, 2017, the Company had $732,112 in cash and a backlog of approximately $465,000 in unshipped product. As of August 31, 2017, the Company had $1,292,183 in cash and cash equivalents, $596,744 in accounts receivable and a backlog of $379,346 in unshipped product. This year, Seychelle has expanded its sales efforts in the following international markets; Mexico, Sri Lanka, Vietnam, South Korea, Australia, New Zealand, Japan and China. Managements intends to expand our marketing activities more strongly in international markets and E-commerce. In addition, Seychelle is managing cost in line with current revenue.

3. BASIC INCOME (LOSS) PER SHAR

3. BASIC INCOME (LOSS) PER SHARE	6 Months Ended
	Aug. 31, 2017
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 periods ended August 31, 2017 and 2016, respectively, did not include 6,407,221 warrants as they would have been anti-dilutive. For the six months ended August 31, 2017 2016 Numerator: Net income (loss) available to common shareholders $ 245,384 $ (592,811 ) Weighted average shares – basic 26,574,313 26,610,421 Net income (loss) per share – basic $ 0.01 $ (0.02 ) Dilutive effect of common stock equivalents: Warrants - - Weighted average shares – diluted 26,574,313 26,610,421 Net income (loss) per share – diluted $ 0.01 $ (0.02 ) For the three months ended August 31, 2017 2016 Numerator: Net income (loss) available to common shareholders $ 85,402 $ (148,466 ) Weighted average 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 shares – diluted 26,574,313 26,640,313 Net income (loss) per share – diluted $ 0.00 $ (0.01 )

4.COMMON STOCK

4.COMMON STOCK	6 Months Ended
	Aug. 31, 2017
Notes to Financial Statements
COMMON STOCK	NOTE 4: COMMON STOCK Common Stock During the six month period ended August 31, 2016, 250,000 shares of fully vested restricted common stock were issued by the Company to an employee. The shares were valued at the closing price of the Company's common stock at date of grant for a total expense of $117,500. No shares were issued to employees during the current fiscal year.

5. INVENTORY

5. INVENTORY	6 Months Ended
	Aug. 31, 2017
Notes to Financial Statements
INVENTORY	NOTE 5: INVENTORY The Company's inventory consisted of the following at August 31, 2017 and February 28, 2017: August 31, 2017 February 28, 2017 Raw materials $ 1,008,083 $ 1,254,892 Finished goods 492,461 582,876 1,500,544 $ 1,837,768 Reserve for obsolete and slow moving inventory (368,593 ) (415,897 ) Net Inventory $ 1,131,951 $ 1,421,871

6. CONCENTRATIONS

6. CONCENTRATIONS	6 Months Ended
	Aug. 31, 2017
Notes to Financial Statements
CONCENTRATIONS	NOTE 6: CONCENTRATIONS 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. Sales to two customers accounted for 27% and 35%, respectively, of sales for the three and six month periods ended August 31, 2016, respectively. Accounts receivable from these two customers amounted to $290,720 or approximately 63% of accounts receivable as of August 31, 2016.

7. INCOME TAXES

7. INCOME TAXES	6 Months Ended
	Aug. 31, 2017
Income Tax Disclosure [Abstract]
INCOME TAXES	NOTE 7: INCOME TAXES The Company expects its effective tax rate for the 2018 fiscal year to be different from the federal statutory rate due primarily to a change in the income tax valuation allowance. We recorded a provision for income taxes of $1,800 for the quarter ended August 31, 2017, related to federal and state taxes, based on the Company's expected annual effective tax rate. Management evaluated the need for a full valuation allowance at the end of the quarter ended August 31, 2017. Management evaluated both positive and negative evidence. The weight of negative factors and level of economic uncertainty in our current business continues to support the conclusion that the realization of our deferred tax assets does not meet the "more likely than not" standard. Therefore, a full valuation allowance remains against the net deferred tax assets. Our federal income tax returns are open to audit under the statute of limitations for the fiscal years ended February 2014 through 2017. We are subject to income tax in California and various other state taxing jurisdictions. Our state income tax returns are open to audit under the statute of limitations for the fiscal years ended February 2014 through 2017.

8. RELATED PARTY TRANSACTIONS

8. RELATED PARTY TRANSACTIONS	6 Months Ended
	Aug. 31, 2017
Notes to Financial Statements
RELATED PARTY TRANSACTIONS	NOTE 8: RELATED PARTY TRANSACTIONS During the three month periods ended August 31, 2017 and 2016, the Company incurred consulting fees to related parties in the amounts of $0 and $25,000, respectively. During the six month periods ended August 31, 2017 and 2016, the Company incurred consulting fees to related parties in the amounts of $0 and $25,000, respectively. These fees from TAM were related for consulting services from Tam Irrevocable Trust ("TAM"), in which Cari Beck, is the trustee and current Board member of the Company, as well as a daughter of Carl Palmer, an officer and Board member of the Company. These amounts are included as a component of selling, general and administrative expenses on the condensed consolidated statements of operations. All amounts due to TAM had been paid in full. During the three month periods ended August 31, 2017 and 2016, TAM purchased, on behalf of the Company, $0 and $12,350, respectively, of raw materials from a vendor with which it already had a business relationship. During the six month periods ended August 31, 2017 and 2016, TAM purchased, on behalf of the Company, $0 and $20,090, respectively, of raw materials from the same vendor. 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, 2017 and 2016, purchases facilitated through the related party accounted for approximately 17% and 34%, respectively, of total raw material purchases. As of August 31, 2017 and February 28, 2017, the Company had receivables from employees of approximately $26,900 and $27,200. These amounts are being repaid through direct payroll withdrawals

9. COMMITMENTS AND CONTINGENCIE

9. COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Aug. 31, 2017
Notes to Financial Statements
COMMITMENTS AND CONTINGENCIES	NOTE 9: COMMITMENTS AND CONTINGENCIES In 2016, 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.

10. SUBSEQUENT EVENTS

10. SUBSEQUENT EVENTS	6 Months Ended
	Aug. 31, 2017
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 10: SUBSEQUENT EVENTS Management has evaluated subsequent events from August 31, 2017 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.

3. BASIC INCOME (LOSS) PER SH16

3. BASIC INCOME (LOSS) PER SHARE (Tables)	6 Months Ended
	Aug. 31, 2017
Earnings Per Share [Abstract]
Basic and Diluted income (loss) per share	For the six months ended August 31, 2017 2016 Numerator: Net income (loss) available to common shareholders $ 245,384 $ (592,811 ) Weighted average shares – basic 26,574,313 26,610,421 Net income (loss) per share – basic $ 0.01 $ (0.02 ) Dilutive effect of common stock equivalents: Warrants - - Weighted average shares – diluted 26,574,313 26,610,421 Net income (loss) per share – diluted $ 0.01 $ (0.02 ) For the three months ended August 31, 2017 2016 Numerator: Net income (loss) available to common shareholders $ 85,402 $ (148,466 ) Weighted average 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 shares – diluted 26,574,313 26,640,313 Net income (loss) per share – diluted $ 0.00 $ (0.01 )

5. INVENTORY (Tables)

5. INVENTORY (Tables)	6 Months Ended
	Aug. 31, 2017
Inventory Tables
Inventory	August 31, 2017 February 28, 2017 Raw materials $ 1,008,083 $ 1,254,892 Finished goods 492,461 582,876 1,500,544 $ 1,837,768 Reserve for obsolete and slow moving inventory (368,593 ) (415,897 ) Net Inventory $ 1,131,951 $ 1,421,871

3. BASIC INCOME (LOSS) PER SH18

3. BASIC INCOME (LOSS) PER SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Numerator:
Net (loss) income available to common shareholders	$ 85,402	$ (148,466)	$ 245,384	$ (592,811)
Weighted average shares, basic	26,574,313	26,640,313	26,574,313	26,610,421
Net income (loss) per share - basic	$ 0	$ (0.01)	$ 0.01	$ (0.02)
Dilutive effect of common stock equivalents:
Warrants
Weighted average shares, diluted	26,574,313	26,640,313	26,574,313	26,610,421
Net income (loss) per share - diluted	$ 0	$ (0.01)	$ 0.01	$ (0.02)

4.COMMON STOCK (Details)

4.COMMON STOCK (Details)	6 Months Ended
	Aug. 31, 2017USD ($)shares
Common Stock Purchase Warrants Details
Number of restricted common shares issued to employee | shares	250,000
Value/expense of restricted common shares issued to employee | $	$ 117,500

5. INVENTORY (Details)

5. INVENTORY (Details) - USD ($)	Aug. 31, 2017	Feb. 28, 2017
Inventory Details
Raw materials	$ 1,008,083	$ 1,254,892
Finished goods	492,461	582,876
Inventory	1,500,544	1,837,768
Reserve for obsolete and slow moving inventory	(368,593)	(415,897)
Inventory, Net	$ 1,131,951	$ 1,421,871

2. MANAGEMENT'S PLAN (Details N

2. MANAGEMENT'S PLAN (Details Narrative) - USD ($)	Aug. 31, 2017	Feb. 28, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash	$ 1,292,183	$ 732,112
Accounts receivable	596,744
Backlog of unshipped product	$ 379,346	$ 465,000

4.COMMON STOCK AND WARRANTS (De

4.COMMON STOCK AND WARRANTS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016
Common Stock Purchase Warrants Details Narrative
Expense charged to operations for warrants	$ 0	$ 67,200	$ 0	$ 134,200

6. CONCENTRATIONS (Details Narr

6. CONCENTRATIONS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017
Concentrations Details Narrative
Percentage of sales attributable to one customer	29.00%		31.00%
Accounts receivable from one customer	$ 473,476
Percentage of accounts receivable attributable to one customer	73.00%
Percentage of sales attributable to two customers	27.00%		35.00%
Accounts receivable from two customers		$ 290,720
Percentage of accounts receivable from two other customers		63.00%

8. RELATED PARTY TRANSACTIONS (

8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2017	Aug. 31, 2016	Aug. 31, 2017	Aug. 31, 2016	Feb. 28, 2017	Aug. 31, 2015
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	$ 20,240	$ 25,000	$ 20,240	$ 75,000
Payment to TAM for future purchase of intellectual property retained by TAM	12,350	208,000	20,090	393,000
Raw materials purchased	0		0			$ 3,500
Tooling from vendor				$ 3,500
Direct commissions paid to related party consultant	3,000	$ 11,000
Receivables due from employees	$ 45,000		$ 45,000		$ 40,000

7. INCOME TAXES (Details Narrat

7. INCOME TAXES (Details Narrative)	3 Months Ended
	Aug. 31, 2017USD ($)
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 1,800
Net operating loss	$ 249,000

9. COMMITMENTS AND CONTINGENC26

9. COMMITMENTS AND CONTINGENCIES (Details)	6 Months Ended
	Aug. 31, 2017USD ($)
Commitments And Contingencies Details
Aproximate lease payments per month	$ 19,000
Lease term	5 years