Nevada
|
33-0836954
|
(State
or other jurisdiction
|
(IRS
Employer File Number)
|
Of
incorporation)
|
|
33012
Calle Perfecto
|
|
San Juan Capistrano,
California
|
92675
|
(Address
of principal executive offices)
|
(zip
code)
|
Large
accelerated filer []
|
Accelerated
filer []
|
Non-accelerated
filer [] (Do not check if a smaller reporting
company)
|
Smaller
reporting company [X]
|
PART
I
|
Page
|
Item
1. Business
|
3
|
Item
1A. Risk Factors
|
7
|
Item
2. Property
|
11
|
Item
3. Legal Proceedings
|
11
|
Item
4. Submission of Matters to a Vote of Security Holders
|
11
|
PART
II
|
|
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
12
|
Item 6. Selected Financial Data
|
12
|
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
13
|
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
|
19
|
Item 8. Financial Statements and Supplementary Data
|
19
|
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
|
45
|
Item 9A(T). Controls and Procedures
|
45
|
Item
9B. Other Information
|
46
|
|
|
PART
III
|
|
Item
10. Directors, Executive Officers and Corporate Governance
|
46
|
Item
11. Executive Compensation
|
48
|
Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
|
50
|
Item
13. Certain Relationships and Related Transactions, and Director
Independence
|
50
|
Item
14. Principal Accountant Fees and Services
|
51
|
Item
15. Exhibits Financial Statement Schedules
|
52
|
Financial
Statements pages
|
20-45
|
Signatures
|
54
|
-
|
operating
as a public entity, incurring non-cost of sales expenses such as
accounting, auditing, financial reporting and compliance, legal and costs
to maintain full compliance with rules governing regulated reporting
status, including continuing Sarbanes-Oxley
requirements,
|
-
|
unplanned
delays and expenses related to research, development and testing of our
new products,
|
-
|
production
and marketing problems that may be encountered in connection with our
existing products and technologies,
|
-
|
competition
from larger and more established companies, and
|
-
|
under-capitalization
to challenge the lack of market acceptance of our new products and
technologies.
|
•
|
authorize
the issuance of “blank check” preferred stock that could be
issued by our board of directors to increase the number of outstanding
shares and discourage a takeover attempt; and
|
•
|
limit
who may call special meetings of
stockholders.
|
•
|
future
announcements about our Company or our competitors, including the results
of testing, technological innovations or new commercial
products;
|
•
|
negative
regulatory actions with respect to our potential products or regulatory
approvals with respect to our competitors’ products;
|
•
|
changes
in government regulations;
|
•
|
developments
in our relationships with our partners;
|
•
|
developments
affecting our partners;
|
•
|
our
failure to acquire or maintain proprietary rights to the products we
develop;
|
•
|
litigation;
and
|
•
|
public
concern as to the safety of our
products.
|
Fiscal
Year 2009
|
High
Bid
|
Low
Bid
|
Quarter
Ended:
|
||
First
Quarter May 2008
|
$.44
|
$.21
|
Second
Quarter August 2008
|
$.40
|
$.09
|
Third
Quarter November 2008
|
$.55
|
$.21
|
Fourth
Quarter February 2009
|
$.25
|
$.10
|
Fiscal
Year 2008
|
High
Bid
|
Low
Bid
|
Quarter
Ended:
|
||
First
Quarter May 2007
|
$.42
|
$.26
|
Second
Quarter August 2007
|
$.42
|
$.29
|
Third
Quarter November 2007
|
$.51
|
$.20
|
Fourth
Quarter February 2008
|
$.40
|
$.19
|
Years
Ended
|
||||||||||||||||
February
28,
|
February
29,
|
Percentage
|
||||||||||||||
2009
|
2008
|
Difference
|
Change
|
|||||||||||||
Sales
|
$
|
1,123,370
|
$
|
858,769
|
264,601
|
31
|
%
|
|||||||||
Cost
of sales
|
594,766
|
491,066
|
103,700
|
21
|
%
|
|||||||||||
Gross
profit
|
528,604
|
367,703
|
160,901
|
44
|
%
|
|||||||||||
Gross
profit percentage
|
47
|
%
|
43
|
%
|
||||||||||||
Selling
and marketing expenses
|
59,456
|
33,645
|
25,811
|
77
|
%
|
|||||||||||
General
and administrative expenses
|
520,305
|
719,517
|
(199,212
|
)
|
-28
|
%
|
||||||||||
Loss
from operations
|
(332,926
|
)
|
(385,459
|
)
|
(52,533)
|
-14
|
%
|
|||||||||
Interest
expense
|
(59,540
|
)
|
(55,851
|
)
|
(3,689)
|
-7
|
%
|
|||||||||
Interest
income
|
56
|
7,887
|
(7,831
|
)
|
-99
|
%
|
||||||||||
Other
income
|
62,255
|
169,961
|
(107,706
|
)
|
-63
|
%
|
||||||||||
Net
loss
|
(330,155
|
)
|
(263,462
|
)
|
(66,693)
|
-25
|
%
|
|||||||||
Net
cash provided by (used in) operating activities
|
255,424
|
(271,785
|
)
|
518,553
|
190
|
%
|
||||||||||
Net
cash provided by (used in) investing activities
|
42,466
|
(135,967
|
)
|
185,527
|
-136
|
%
|
||||||||||
Net
cash provided by (used in) financing activities
|
72,394
|
(118,946
|
)
|
175,590
|
-147
|
%
|
Convertible
|
||||||||||||||||||||||||
Less
Than
|
More
Than
|
to
Stock
|
||||||||||||||||||||||
Total
|
1
Year
|
1-
2 Years
|
2-3
Years
|
3
Years
|
or
Warrants
|
|||||||||||||||||||
Accounts
payable and accrued liabilities
|
$
|
92,818
|
$
|
92,817
|
||||||||||||||||||||
Customer
deposits
|
177,325
|
177,325
|
||||||||||||||||||||||
Accrued
interest to related party
|
76,359
|
$
|
245,087
|
|||||||||||||||||||||
Note
payable to related party
|
471,088
|
471,088
|
||||||||||||||||||||||
40,000
|
||||||||||||||||||||||||
Note
payable
|
126,802
|
1
26,802
|
||||||||||||||||||||||
1,113,119
|
445,555
|
-
|
-
|
471,088
|
285,087
|
|||||||||||||||||||
Other
contractual commitments (2)
|
45,957
|
43,668
|
2,289
|
|||||||||||||||||||||
Total
contractual obligations
|
$
|
1,159,076
|
$
|
489,223
|
$
|
2,289
|
$
|
$
|
471,088
|
$
|
285,087
|
|||||||||||||
________________
|
||||||||||||||||||||||||
(1)
Increased to $100,000 in March 2008
|
||||||||||||||||||||||||
(2)
Office lease commitment expiring August 2009 and office equipment
lease
|
||||||||||||||||||||||||
ASSETS
|
||||||||
2009
|
2008
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 160,415 | $ | 19,851 | ||||
Accounts
receivable, net
|
||||||||
61,447 | 20,709 | |||||||
Inventory,
net
|
409,353 | 383,372 | ||||||
Prepaid
expenses and other current assets
|
77,827 | 23,386 | ||||||
Asset
held for sale
|
- | 149,111 | ||||||
Total
current assets
|
709,042 | 596,429 | ||||||
Property
and equipment, net
|
129,964 | 112,095 | ||||||
Intangible
assets, net
|
16,374 | 23,468 | ||||||
Other
assets
|
6,624 | 6,624 | ||||||
Total
assets
|
$ | 862,004 | $ | 738,616 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ | 92,818 | $ | 133,356 | ||||
Customer
deposits
|
177,325 | 66,951 | ||||||
Accrued
interest due to related party
|
76,359 | 221,170 | ||||||
Notes
payable
|
126,802 | 258,446 | ||||||
Total
current liabilities
|
473,304 | 679,923 | ||||||
Long-term
related party notes payable
|
471,088 | 396,088 | ||||||
Total
liabilities
|
944,392 | 1,076,011 | ||||||
Commitments
and contingencies (Note 10)
|
||||||||
Stockholders'
deficit:
|
||||||||
Preferred
stock, 6,000,000 shares authorized, none issued or
outstanding
|
- | - | ||||||
Common
stock $0.001 par value, 50,000,000 shares authorized, 25,824,146 and
25,613,670 shares issued and outstanding, respectively
|
25,824 | 25,614 | ||||||
Additional
paid-in capital
|
6,907,637 | 6,322,685 | ||||||
Accumulated
deficit
|
(7,015,849 | ) | (6,685,694 | ) | ||||
Total
stockholders' deficit
|
(82,388 | ) | (337,395 | ) | ||||
Total
liabilities and stockholders' deficit
|
$ | 862,004 | $ | 738,616 | ||||
|
||||||||
For
the Years Ended
|
||||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Revenues
|
$ | 1,123,370 | $ | 858,769 | ||||
Cost
of sales
|
594,766 | 491,066 | ||||||
Gross
profit
|
528,604 | 367,703 | ||||||
Operating
Expenses
|
||||||||
Selling
and marketing expenses
|
59,456 | 33,645 | ||||||
General
and administrative expenses
|
520,305 | 665,871 | ||||||
Compensation
to executive officers
|
281,769 | 53,646 | ||||||
Total
operating expenses
|
861,530 | 753,162 | ||||||
Loss
from operations
|
(332,926 | ) | (385,459 | ) | ||||
Other
Income(Expense)
|
||||||||
Interest
income
|
56 | 7,887 | ||||||
Interest
expense-related parties
|
(47,766 | ) | (38,861 | ) | ||||
Interest
expense-other
|
(11,774 | ) | (16,990 | ) | ||||
Miscellaneous
expense(income)
|
62,255 | 169,961 | ||||||
Total
other income(expense)
|
2,771 | 121,997 | ||||||
Loss
before income tax expense
|
(330,155 | ) | (263,462 | ) | ||||
Provision
for income taxes
|
- | - | ||||||
Net
loss
|
$ | (330,155 | ) | $ | (263,462 | ) | ||
BASIC
AND DILUTED LOSS PER SHARE
|
$ | (0.01 | ) | $ | (0.01 | ) | ||
WEIGHTED
AVERAGE NUMBER OF
|
||||||||
SHARES
OUTSTANDING
|
25,773,953 | 25,351,604 | ||||||
Common
Stock
|
Additional
|
Accumulated
|
||||||||||||||||||
Shares
|
Amount
|
Paid-In
Capital
|
Deficit
|
Total
|
||||||||||||||||
Balance
at February 28, 2007
|
25,150,896 | $ | 25,151 | $ | 6,106,916 | $ | (6,422,232 | ) | $ | (290,165 | ) | |||||||||
Contributed
executive services
|
10,000 | 10,000 | ||||||||||||||||||
Issuance
of common stock for compensation
|
83,500 | 84 | 24,545 | 24,629 | ||||||||||||||||
Issuance
of common stock as partial payment of accounts payable
|
389,274 | 389 | 125,783 | 126,172 | ||||||||||||||||
Warrants
issued as payment of accrued interest due to related party
|
60,509 | 60,509 | ||||||||||||||||||
Warrants
issued for services
|
32,422 | 32,422 | ||||||||||||||||||
Buy
back of common stock
|
(10,000 | ) | (10 | ) | (37,490 | ) | (37,500 | ) | ||||||||||||
Net
loss
|
(263,462 | ) | (263,462 | ) | ||||||||||||||||
Balance
at February 29, 2008
|
25,613,670 | 25,614 | 6,322,685 | (6,685,694 | ) | (337,395 | ) | |||||||||||||
Contributed
executive services
|
- | - | 10,000 | - | 10,000 | |||||||||||||||
Issuance
of common stock for compensation
|
40,000 | 40 | 11,960 | 12,000 | ||||||||||||||||
Issuance
of common stock as partial payment of accounts payable
|
230,476 | 230 | 66,504 | 66,734 | ||||||||||||||||
Warrants
issued as payment of accrued interest due to related party
|
224,970 | 224,970 | ||||||||||||||||||
Warrants
issued for services
|
287,208 | 287,208 | ||||||||||||||||||
Buy
back of common stock
|
(60,000 | ) | (60 | ) | (15,690 | ) | (15,750 | ) | ||||||||||||
Net
loss
|
(330,155 | ) | (330,155 | ) | ||||||||||||||||
Balance
at February 28,2009
|
25,824,146 | $ | 25,824 | $ | 6,907,637 | $ | (7,045,534 | ) | $ | (82,388 | ) |
Years
Ended
|
||||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
OPERATING
ACTIVITIES:
|
||||||||
Net
loss
|
$ | (330,155 | ) | $ | (263,462 | ) | ||
Adjustments
to reconcile net loss to net cash
|
||||||||
provided
by (used in) operating activities:
|
||||||||
Depreciation
and amortization
|
31,691 | 43,188 | ||||||
Stock-based
compensation and interest expense
|
534,178 | 57,051 | ||||||
Contributed
executive services
|
10,000 | |||||||
Provision
for doubtful accounts
|
3,896 | 2,094 | ||||||
Gain
on common stock issued as settlement of payables
|
(47,276 | ) | ||||||
Reserve
for obsolete and slow moving inventory
|
(49,785 | ) | ||||||
Gain
on disposal of property and equipment
|
(3,057 | ) | ||||||
Changes
in operating assets and liabilities:
|
||||||||
(Increase)
decrease in accounts receivable
|
(44,634 | ) | 50,071 | |||||
(Increase)
decrease in inventory
|
(25,981 | ) | 24,776 | |||||
(Increase)
decrease in prepaid expenses and other assets
|
12,293 | ) | 120,805 | |||||
(Increase)
decrease in asset held for sale
|
149,111 | (11,239 | ) | |||||
Increase
(decrease) in accounts payable and accrued expenses
|
(40,538 | ) | (17,545 | ) | ||||
Increase
(decrease) in accrued interest payable to related party
|
(144,811 | ) | 29,918 | |||||
Increase
(decrease) in customer deposits
|
110,374 | (217,324 | ) | |||||
Net
Cash Provided by (Used in) Operating Activities
|
255,424 | (271,785 | ) | |||||
INVESTING
ACTIVITIES:
|
||||||||
Release
of restricted cash
|
- | 150,000 | ||||||
Proceeds
from sale of property and equipment
|
3,500 | |||||||
Purchase
in property and equipment
|
(42,466 | ) | (17,567 | ) | ||||
Increase
in intangible assets
|
(84 | ) | ||||||
Decrease
in other assets
|
118 | |||||||
Net
Cash Provided by (Used) in Investing Activities
|
(42,466 | ) | 135,967 | |||||
FINANCING
ACTIVITIES:
|
||||||||
Proceeds
from related party notes payable
|
75,000 | 96,913 | ||||||
Proceeds
from notes payable
|
179,500 | |||||||
Repayment
of notes payable
|
(131,644 | ) | (137,467 | ) | ||||
Payments
of buy back of common stock
|
(15,750 | ) | (20,000 | ) | ||||
Net
Cash Provided by (Used) by Financing Activities
|
(72,394 | ) | 118,946 | |||||
NET
INCREASE (DECREASE) IN CASH
|
140,564 | (16,872 | ) | |||||
CASH
AT BEGINNING OF YEAR
|
19,851 | 36,723 | ||||||
CASH
AT END OF YEAR
|
$ | 160,415 | 19,851 | |||||
NON-CASH
INVESTING AND FINANCING ACTIVITIES
|
||||||||
Stock
issued for settlement of debt and accounts payable
|
$ | 66,734 | $ | 173,448 | ||||
Stock
and warrants issued for services and interest
|
$ | 534,178 | $ | 85,138 | ||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
Paid for:
|
||||||||
Interest
|
$ | 29,623 | $ | 25,933 | ||||
Income
taxes
|
$ | - | $ | - |
Years
Ended
|
||||||
February
28,
|
February
29,
|
|||||
2009
|
2008
|
|||||
Expected
life in years
|
2
|
2
|
||||
Stock
price volatility
|
139-161%
|
167%
|
||||
Risk
free interest rate
|
2.3
- 3.1%
|
2.3
- 3.1%
|
||||
Expected
dividends
|
None
|
None
|
||||
Forfeiture
rate
|
0%
|
0%
|
2009
|
2008
|
|||||||
Raw
materials
|
$ | 230,018 | $ | 210,417 | ||||
Work
in Progress
|
53,187 | - | ||||||
Finished
goods
|
260,461 | 366,600 | ||||||
543,666 | 577,017 | |||||||
Reserve
for obsolete and slow moving inventory
|
(134,313 | ) | (193,645 | ) | ||||
$ | 409,353 | $ | 383,372 |
2009
|
2008
|
|||||||
Tooling
|
$ | 311,918 | $ | 285,242 | ||||
Equipment
|
56,654 | 26,654 | ||||||
Vehicles
|
10,000 | 10,000 | ||||||
Furniture
and fixtures
|
15,775 | 15,775 | ||||||
Computer
equipment
|
16,520 | 15,124 | ||||||
Leasehold
equipment
|
4,710 | 4,710 | ||||||
415,577 | 357,505 | |||||||
Less:
accumulated depreciation
|
||||||||
and
amortization
|
(285,613 | ) | (245,410 | ) | ||||
$ | 129,964 | $ | 112,095 |
2009
|
2008
|
|||||||
Redi
Chlor brand name and trademark
|
$ | 16,100 | $ | 16,100 | ||||
Hand
pump
|
8,000 | 8,000 | ||||||
Patents
|
13,052 | 12,727 | ||||||
37,152 | 36,825 | |||||||
Less:
accumulated amortization
|
(20,778 | ) | (13,359 | ) | ||||
$ | 16,374 | $ | 23,468 |
Year
Ending
|
|||||
February
28,
|
|||||
$
|
|||||
2010
|
5,606
|
||||
2011
|
5,145
|
||||
2012
|
5,145
|
||||
2013
|
478
|
||||
Total
|
$
|
16,374
|
2009
|
2008
|
|||||||
Line
of credit with a bank with a maximum borrowing of $100,000 is
collateralized by all business assets. Any principal amounts outstanding
accrue interest at the bank's index rate (5.785% as of February 28, 2009)
plus 2% per annum. There were no available borrowings as of
February 28, 2009. This line of credit is due in June 2009. The
line of credit does not contain any restrictive financial covenants and
the Company intends to renew the line of credit for another year when it
becomes due.
|
$ | 100,000 | $ | 80,000 | ||||
Bridge
note payable received from an individual in February 2008, due within six
months after issuance and earning no interest. The outstanding
amount has been converted to common stock subsequent to February 29, 2008
(see Note 8).
|
- | 40,000 | ||||||
Note
payable due to a financial institution, collateralized by the Company's
airplane, with interest at 7.375% per annum and due in monthly payments
through September 2032. As the Company expected to dispose of the airplane
within 2008 and use the proceeds to pay off the balance of the note
payable, the amounts were classified as a current liability on the
accompanying consolidated balance sheet. The Company defaulted
on this loan in July 2008 which held the Company’s airplane as
collateral. A contingent liability exists due to this
default.
|
- | 138,446 | ||||||
Bagging
machine financed for production from Capital Network Leasing
Corporation. Lease term is 27 months at an annual
interest rate of 32.575%.
|
26,802 | - | ||||||
$ | 126,802 | $ | 258,446 |
Weighted-
|
||||||||
Average
|
||||||||
Restricted
|
Grant
Date
|
|||||||
Shares
|
Fair
Value
|
|||||||
Outstanding
at March 1, 2007
|
-
|
$
|
-
|
|||||
Granted
|
472,774
|
0.33
|
||||||
Forfeited
|
-
|
-
|
||||||
Vested
|
(444,441
|
)
|
0.33
|
|||||
Outstanding
at February 29, 2008
|
28,333
|
|||||||
Granted
|
271,476
|
0.29
|
||||||
Forfeited
|
(61,000)
|
0.26
|
||||||
Vested
|
-
|
0.00
|
||||||
Outstanding
at February 28, 2009
|
238,809
|
$
|
0.40
|
|||||
Weighted-
|
||||||||
Average
|
||||||||
Warrants
|
Exercise
|
|||||||
Outstanding
|
Price
|
|||||||
Outstanding
at March 1, 2007
|
6,100,000
|
$
|
0.23
|
|||||
Granted
|
707,221
|
0.40
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
-
|
-
|
||||||
Outstanding
at February 29, 2008
|
6,807,221
|
0.23
|
||||||
Granted
|
1,730,000
|
0.33
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
2,000,000
|
-
|
||||||
Outstanding
at February 28, 2009
|
6,537,221
|
0.25
|
||||||
Vested
or expected to vest at February 28, 2009
|
5,700,000
|
0.25
|
||||||
Exercisable
at February 28, 2009
|
5,700,000
|
0.25
|
Warrants
Outstanding
|
Warrants
Exercisable
|
|||||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
||||||||||||||||||||
Average
|
Average
|
Average
|
||||||||||||||||||||
|
Remaining
|
Exercise
|
Number
|
Exercise
|
||||||||||||||||||
Exercise
|
Number
|
Life (Years)
|
Price
|
Outstanding
|
Price
|
|||||||||||||||||
$
|
0.19
|
600,000
|
2.51
|
$
|
0.19
|
-
|
$
|
0.19
|
||||||||||||||
0.23
|
4,000,000
|
0.50
|
0.23
|
4,000,000
|
0.23
|
|
||||||||||||||||
0.29
|
107,221
|
2.51
|
0.29
|
-
|
0.29
|
|||||||||||||||||
0.40
|
100,000
|
2.17
|
0.40
|
-
|
0.40
|
|||||||||||||||||
0.33
|
1,700,000
|
2.51
|
0.33
|
1,700,000
|
0.33
|
|||||||||||||||||
0.16
|
30,000
|
2.17
|
0.16
|
0.16
|
||||||||||||||||||
0.25
|
10,000
|
2.29
|
0.25
|
0.25
|
||||||||||||||||||
0.40
|
2,500
|
2.19
|
0.40
|
0.40
|
||||||||||||||||||
6,549,721
|
$
|
0.25
|
5,700,000
|
$
|
0.25
|
|||||||||||||||||
Years
Ended
|
||||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Deferred
|
||||||||
Federal
|
$
|
55,238
|
$
|
77,045
|
||||
State
|
(10,488)
|
21,975
|
||||||
44,750
|
99,020
|
|||||||
Change
in Valuation Allowance
|
(44,750
|
)
|
(99,020
|
)
|
||||
Provision
|
$
|
-
|
$
|
-
|
Years
Ended
|
||||||||
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Federal
statutory rate
|
-34.00
|
%
|
-34.00
|
%
|
||||
State
taxes - net of federal benefit
|
-5.50
|
%
|
-5.61
|
%
|
||||
Meals
and entertainment
|
0.00
|
%
|
0.62
|
%
|
||||
Contributed
Services
|
0.00
|
%
|
0.66
|
%
|
||||
Penalties
|
0.00
|
%
|
0.03
|
%
|
||||
Change
in valuation allowance
|
39.50
|
%
|
38.31
|
%
|
||||
0.00
|
%
|
0.00
|
%
|
February
28,
|
February
29,
|
|||||||
2009
|
2008
|
|||||||
Net
operating loss
|
$
|
1,875,437
|
$
|
1,745,026
|
||||
Interest
to related parties
|
85,302
|
94,749
|
||||||
Inventory
reserve
|
59,522
|
82,958
|
||||||
Fixed
assets and intangibles
|
116,019
|
116,019
|
||||||
Tax
credits
|
16,348
|
16,348
|
||||||
Accrued
expenses
|
1,769
|
|
1,769
|
|||||
Warrant
amortization
|
262,608
|
473,608
|
||||||
Other
|
148
|
148
|
||||||
Total
deferred tax assets
|
2,417,153
|
2,530,625
|
||||||
Deferred
tax liabilities - State taxes
|
(109,068
|
)
|
(130,613
|
)
|
||||
Net
deferred tax asset
|
2,308,085
|
2,400,012
|
||||||
Valuation
Allowance
|
(2,308,085
|
)
|
(2,400,012
|
)
|
||||
Net
|
$
|
-
|
$
|
-
|
Jurisdiction
|
Open
Tax Years
|
|
Federal
|
2005
– 2008
|
|
California
|
2004
- 2008
|
Year
Ending
|
||||
February
28,
|
||||
2010
|
$ | 43,668 | ||
2011
|
2,289 | |||
Total
|
$ | 45,957 |
2009
|
2008
|
|||||||
Water
filtration products sold to
|
||||||||
external
customers (1) in:
|
||||||||
The
United States
|
$
|
998,100
|
$
|
800,277
|
||||
China
|
3,573
|
5,021
|
||||||
Asia,
except China
|
17,101
|
27,495
|
||||||
United
Kingdom
|
74,180
|
12,808
|
||||||
Other
countries
|
30,416
|
13,168
|
||||||
Total
|
$
|
1,123,370
|
$
|
858,769
|
United
|
||||||||||||
States
|
China
|
Total
|
||||||||||
Property
and equipment, net
|
$
|
64,261
|
$
|
65,103
|
$
|
129,364
|
||||||
Intangible
assets
|
16,373
|
-
|
16,373
|
|||||||||
Other
assets
|
6,624
|
-
|
6,624
|
|||||||||
$
|
87,258
|
$
|
65,103
|
$
|
152,361
|
United
|
||||||||||||
States
|
China
|
Total
|
||||||||||
Property
and equipment, net
|
$
|
49,624
|
$
|
62,471
|
$
|
112,095
|
||||||
Intangible
assets
|
23,468
|
-
|
23,468
|
|||||||||
Other
assets
|
6,624
|
-
|
6,624
|
|||||||||
$
|
79,716
|
$
|
62,471
|
$
|
142,187
|
NAME
|
AGE
|
POSITION
HELD
|
|
Carl
Palmer
|
75
|
President,
Chief Executive Officer and Director
|
|
Richard
Parsons
|
75
|
Executive
Vice President, Secretary and Director
|
|
James
Place
|
71
|
Chief
Operating Officer, Chief Financial Officer, Treasurer and
Director
|
|
SUMMARY
COMPENSATION TABLE
|
||||||||||||
Long
Term Compensation
|
||||||||||||
Annual
Compensation
|
Awards
|
Payouts
|
||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
||||
Name
and Principle Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Compensation
($)
|
Restricted
Stock
Award(s)
($)(9)
|
Securities
Underlying
Option/SARs
(#)
|
LTIP
Payouts
($)
|
All
Other
Compensation
($)
|
||||
Carl
Palmer
President
& CEO
Director
|
2009
2008
2007
|
$10,000(2)
$10,000(2)
$10,000(2)
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
0
0
0
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
||||
Richard
Parsons (1)
Executive
VP
Director
|
2009
2008
2007
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
(3)(5)
(3)(5)
(3)(5)
|
(4)(6)(10)
(4)(6)
(4)(6)
|
$0.00
$0.00
$0.00
|
$7,158(8)
$23,883(8)
$12,500(8)
|
||||
James
Place (1)
COO
& CFO
Director
|
2009
2008
2007
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
$0.00
$0.00
$0.00
|
(3)
(3)
(3)
|
(4)(10)
(4)
(4)(6)
|
$0.00
$0.00
$0.00
|
$2,104(8)
$14,160(8)
$12,500(8)
|
(1)
|
Elected to Board of Directors
during November 2004.
|
(2)
|
Effective December 1, 2001, the
Company entered into an employment agreement with the President of the
Company. The President of the Company has decided not to accept
his salary until the Company becomes
profitable.
|
(3)
|
During November 2004, Messrs.
Parsons and Place were granted 240,000 shares of restricted common stock,
which vest over two years beginning December 1, 2004. The
estimated fair market value of the stock as of November 30, 2004 was
$225,600. The Company amortized the estimated fair market value of the
unearned compensation over the two-year vesting period. On
March 1, 2006, the Company adopted SFAS No. 123(R), which required the
Company to revalue the non-vested portion of this grant. As of
March 1, 2006, the unearned compensation relating to this grant was
decreased by approximately $50,500. The Company has
recorded compensation expense of approximately $4,000 and $75,200 for the
fiscal years ended February 29, 2007 and 2006,
respectively.
|
(4)
|
During March 2005, Messrs.
Parsons and Place were granted warrants to purchase 250,000 shares of
restricted common stock at $0.225 per share. The first third vested on the
effective date of the agreement as an enticement to enter into the
agreement. The remaining warrants vest in equal installments on
December 1, 2005 and 2006 but are exercisable through December 1,
2008. The fair market value of the warrants as of November 30,
2004 was estimated at
$55,300.
|
(5)
|
During March 2005, Mr. Parsons
was granted 316,312 shares of restricted common stock. The
first third vested on the effective date of the agreement as an enticement
to enter into the agreement. The remaining common stock vests
in equal installments on December 1, 2005 and 2006. The fair
market value of the restricted shares as of November 30, 2004 was
estimated at $79,100.
|
(6)
|
During July 2005, the Company
expanded the employment agreements with Messrs. Parsons and Place to
provide management services for the Company. As further
consideration for services to be rendered, the officers were granted
500,000 warrants redeemable into restricted shares of the Company’s common
stock at $0.225 per share. The warrants are exercisable any
time after December 1, 2006 and expire December 1, 2008. The
fair market value of the warrants as of July 27, 2005 was estimated at
$30,000.
|
(7)
|
During January 2006, the Company
issued Mr. Parsons 37,500 shares of common stock for services
rendered. As the common stock was issued below the Company’s
market price at date of grant ($nil cost per share), the Company recorded
compensation expense relating to the estimated value of these shares of
$8,437.
|
(8)
|
During October 2006, the Company
commenced paying a monthly stipend of $2,500 to J. Place and D. Parsons
through December 2007. The Company recorded compensation
expense of $38,043 and $25,000 for the fiscal year ended February 29, 2008
and February 28, 2007,
respectively.
|
(9)
|
Restricted Stock (RS)– Awards of
restricted stock are valued by multiplying the number of shares granted by
the closing price on the date of grant, minus any consideration paid by
the named executives. Holders of restricted stock have voting
and dividend rights with respect to their restricted shares. To
date, the Company has not declared or paid any
dividends.
Restricted
Stock – Year End Holdings and Value. At February 29, 2008, the
named executive officers held the total number of shares of restricted
stock indicated in the following chart. The year-end value of
the total number of restricted shares, as indicated below, is based on the
closing price of the Company’s stock on February 29, 2008
($0.41).
|
(10)
|
During April 2008, Messr. Parsons
was granted warrants for expanded management responsibilities to purchase
500,000 shares and Messr. Place were granted warrants to purchase 200,000
shares of restricted common stock at $0.33 per share. The
warrants are exercisable any time after December 1, 2008 and
expire December 1, 2010. The fair market value of the warrants
as of April 30, 2008 was estimated at
$158,174.
|
Name
|
Grant
date
|
Type
|
Vesting
Schedule
|
Restricted
Shares
Awarded
|
Grant
Date
Price
|
Grant
Date
Value
|
Total
Restricted
Shares
at
February
29, 2008
|
Year
End
Value
|
Richard
Parsons
|
11/30/2004
|
RS
|
33.3%
on 12/1/04;
33.3%
on 12/01/05;
33.3%
on 12/1/06
|
240,000
|
$0.03
|
$112,800
|
240,000
|
$
46,248
|
Richard
Parsons
|
03/29/2005
|
RS
|
33.3%
on 12/1/04;
33.3%
on 12/01/05;
33.3%
on 12/1/06
|
316,312
|
$0.03
|
$
79,100
|
316,312
|
$129,688
|
James
Place
|
11/30/2004
|
RS
|
33.3%
on 12/1/04;
33.3%
on 12/01/05;
33.3%
on 12/1/06
|
240,000
|
$0.03
|
$112,800
|
240,000
|
$
46,248
|
NAME
AND ADDRESS
|
AMOUNT
AND NATURE OF
|
PERCENT
OF
|
||
OF
BENEFICIAL OWNER
|
BENEFICIAL
OWNERSHIP (1)(2)(4)
|
CLASS
|
||
The
TAM Irrevocable Trust
|
14,097,799
|
(3)
|
43.55%
|
|
4012
S. Rainbow #K111
|
||||
Las
Vegas, NV 80103-2012
|
||||
Carl
Palmer
|
-0-
|
-0-
|
||
251
Jeanell Dr., Ste 3
|
||||
Carson
City, NV 89703
|
||||
Richard
Parsons
|
2,109,763
|
6.52%
|
||
251
Jeanell Dr., Ste 3
|
||||
Carson
City, NV 89703
|
||||
James
Place
|
1,255,000
|
3.88%
|
||
251
Jeanell Dr., Ste 3
|
||||
Carson
City, NV 89703
|
||||
All
officers and directors as a Group (three persons)
|
3,446,312
|
10.40%
|
(1)
|
All ownership is beneficial and
of record, unless indicated
otherwise.
|
(2)
|
Beneficial owners listed above
have sole voting and investment power with respect to the shares shown,
unless otherwise indicated.
|
(3)
|
The TAM Irrevocable
Trust is an irrevocable trust for the benefit of certain family members of
Mr. Carl Palmer. Mr. Palmer disclaims any beneficial ownership or interest
in this Trust. Cari Beck, his daughter, is the Trustee of the Trust and
has total beneficiary rights, including all voting rights and investment
power as the Trustee. The Trust is held in her name (50%) as well as that
of Lindsay Helvey (25%) and Casey Helvey (25%), both
granddaughters.
|
(4)
|
There are no other financial
instruments, including stock warrants, etc. that are issuable within sixty
days from the filing of this
document.
|
(5)
|
All three officers spend 100% of
their time managing the affairs of the
Company.
|
February
29,
2008
|
February
29,
2008
|
||||||||
Audit
fees
|
$
|
24,000
|
$
|
86,837
|
|||||
Audit
related fees
|
-0-
|
$
|
2,632
|
||||||
Tax
fees
|
-0-
|
-0-
|
|||||||
All
other fees
|
-0-
|
-0-
|
|||||||
Exhibit
No.
|
Description
|
2A*
|
Plan
of Exchange between Seychelle Environmental Technologies, Inc. and
Seychelle Water Technologies, Inc. dated January 30, 1998 as filed with
Form 10-SB 12 G on February 8, 2000.
|
3A*
|
Articles
of Incorporation dated January 23, 1998 as filed with Form 10-SB 12 G on
February 8, 2000.
|
3B*
|
Articles
of Merger of Royal Net, Inc. into Seychelle Environmental Technologies,
Inc as filed with Form 10-SB 12 G on February 8, 2000.
|
3C*
|
Amendment
to Articles of Incorporation re: Series "A" Preferred Stock as of January
31, 1998 as filed with Form 10-SB 12 G on February 8,
2000.
|
3D*
|
Amendment
to Articles of Incorporation re: Series "AA" Preferred Stock as of June 5,
1998 as filed with Form 10-SB 12 G on February 8, 2000.
|
3E*
|
Amendment
to Articles of Incorporation re: Series "AAA" Preferred Stock as of
February 18, 1999 as filed with Form 10-SB 12 G on February 8,
2000.
|
3F*
|
Bylaws
as filed with Form 10-SB 12 G on February 8, 2000.
|
10A*
|
Purchase
Agreement with Aqua Vision as filed with Form 10-SB 12 G on February 8,
2000.
|
10B*
|
Amended
Purchase Agreement with Aqua Vision as filed with Form 10-SB 12 G on
February 8, 2000.
|
10C*
|
2000
Stock Compensation Plan I, dated July 1, 2000 as filed with Registration
Statement on Form S-8 on August 31, 2000.
|
10D*
|
2002
Stock Compensation Plan I, dated February 12, 2002 as filed with
Registration Statement on Form S-8 on February 27,
2002.
|
10E*
|
Purchase
Agreement with Aqua Gear as filed with Annual Report on Form 10-K on June
14, 2002.
|
10F*
|
Employment
Contract with Carl Palmer as filed with Annual Report on Form 10-K on June
14, 2002.
|
10G*
|
Management
Consulting Contract with Richard Parsons
|
10H*
|
Management
Consulting Contract with James Place
|
10I*
|
Joint
Venture Agreement with Huanghua Plastic Co. Ltd. dated September 1,
2005
|
10J*
|
ABMS
Health Care Pvt. Ltd. Distribution Rights Agreement dated April 1,
2006
|
10K*
|
Confident,
Inc. Exclusive Distribution Rights Agreement dated January 1,
2006
|
Exhibit
No.
|
Description
|
|
10L*
|
Continental
Technologies. Inc., Purchase Agreement dated April 26,
2006
|
|
10M*
|
Promissory
Note to TAM Irrevocable Trust dated May 1, 2001
|
|
10N*
|
Promissory
Note to TAM Irrevocable Trust dated February 28, 2002
|
|
10O*
|
Promissory
Note to TAM Irrevocable Trust dated February 28, 2003
|
|
10P*
|
Promissory
Note to TAM Irrevocable Trust dated November 1, 2003
|
|
10Q*
|
Promissory
Note to TAM Irrevocable Trust dated February 28, 2004
|
|
10R*
|
Food
For Health Purchase Agreement
|
|
10S*
|
Food
For Health Distribution Agreement
|
|
10T*
|
Seychelle
Environmental Technologies, Inc. License Agreement with Mr. Gary
Hess
|
|
31.1**
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 of
the Sarbanes Oxley Act of 2002)
|
|
31.1**
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) (Section 302 of
the Sarbanes-Oxley Act of 2002)
|
|
32.1**
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350 (Section 906
of the Sarbanes-Oxley Act of 2002)
|
|
32.2**
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350 (Section 906
of the Sarbanes-Oxley Act of 2002)
|
|
23.1**
|
Auditor’s
Consent
|
|
99*
|
Code
of Ethics for Chief Executive Officer and Senior Financial
Officers
|
|
SEYCHELLE
ENVIRONMENTAL TECHNOLOGIES, INC.
|
||
|
|
|
Date: May 22, 2009
|
By:
|
/s/ Carl
Palmer
|
Carl
Palmer
Chief
Executive Officer
|
|
|
|
Date: May 22, 2009
|
By:
|
/s/ Jim
Place
|
Jim
Place
Chief Financial
Officer
|
/s/ Carl
Palmer
|
|||
Carl
Palmer, Director
|
May 22, 2009
|
||
/s/
Jim Place
|
|||
Jim
Place, Director
|
May 22, 2009
|
||
/s/
Richard Parsons
|
|||
Richard
Parsons, Director
|
May 22, 2009
|