Nevada
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33-0836954
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(State or other jurisdiction Of incorporation)
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(IRS Employer File Number)
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32963 Calle Perfecto
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San Juan Capistrano, California
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92675
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(Address of principal executive offices)
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(zip code)
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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þ
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(Do not check if a smaller reporting company)
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Page
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|||||
PART I FINANCIAL INFORMATION
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|||||
Item 1.
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Financial Statements
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3
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|||
Condensed Consolidated Balance Sheets
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3
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||||
Condensed Consolidated Statements of Operations
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4
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||||
Condensed Consolidated Statements of Cash Flows
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6
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||||
Notes to Condensed Consolidated Financial Statements
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7
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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10
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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14
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Item 4.
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Controls and Procedures
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14
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Item 4T.
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Controls and Procedures
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14
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PART II OTHER INFORMATION
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|||||
Item 1.
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Legal Proceedings
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15
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Item 1A.
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Risk Factors
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15
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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15
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Item 3.
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Defaults Upon Senior Securities
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15
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Item 4.
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Submission of Matters to a Vote of Security Holders
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15
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Item 5.
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Other Information
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15
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Item 6.
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Exhibits
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16
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Signatures
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17
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August 31, 2013
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February 28, 2013
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|||||||
(Unaudited)
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(Audited)
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|||||||
ASSETS
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$
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2,845,422
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$
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2,234,545
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||||
Accounts receivable, net of allowance for doubtful accounts and sales returns
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||||||||
of $14,500 and $114,591, respectively
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335,390
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641,635
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||||||
Inventory, net
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650,701
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464,998
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||||||
Deferred tax assets
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463,942
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463,942
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||||||
Prepaid expenses, deposits and other current assets
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122,436
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125,080
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||||||
Total current assets
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4,417,891
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3,930,200
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||||||
Property and equipment, net
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173,205
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179,876
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||||||
Intangible assets, net
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5,965
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4,995
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||||||
Deferred tax assets
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257,392
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257,392
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||||||
Other assets
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8,514
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8,514
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||||||
Total assets
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$
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4,862,967
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$
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4,380,977
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||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
Current liabilities:
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||||||||
Accounts payable and accrued expenses
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$
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105,018
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$
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157,253
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||||
Customer deposits
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283,772
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371,327
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||||||
Income taxes payable
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162,182
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-
|
||||||
Capital lease obligation
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4,845
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4,581
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||||||
Total current liabilities
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555,817
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533,161
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||||||
Long-term liabilities:
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||||||||
Capital lease obligation, net of current
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11,456
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14,010
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||||||
Total liabilities
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567,273
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547,171
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||||||
Stockholders' equity:
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||||||||
Preferred stock, 6,000,000 shares authorized, none issued or outstanding
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-
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-
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||||||
Common stock $0.001 par value, 50,000,000 shares authorized, 25,853,646 and 25,833,646
issued and outstanding at August 31, 2013 and February 28, 2013, respectively
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25,854
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25,834
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||||||
Additional paid-in capital
|
7,894,012
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7,715,232
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||||||
Accumulated deficit
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(3,624,172
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)
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(3,907,260
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)
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Total stockholders' equity
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4,295,694
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3,833,806
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||||||
Total liabilities and stockholders' equity
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$
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4,862,967
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$
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4,380,977
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For the Three Months Ended
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||||||||
August 31,
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||||||||
2013
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2012
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|||||||
Sales
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$
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1,096,947
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$
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719,810
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||||
Cost of sales
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592,512
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341,552
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||||||
Gross profit
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504,435
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378,258
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||||||
Operating Expenses
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||||||||
Selling, General, and Administrative Expenses
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352,778
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366,262
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||||||
Depreciation and Amortization
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13,675
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11,271
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||||||
Total operating expenses
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366,453
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377,533
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||||||
Income from Operations
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137,982
|
725
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||||||
Other Income (Expense):
|
||||||||
Interest income
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291
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192
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||||||
Interest expense
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(566
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)
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(271
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)
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||||
Other income
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150
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-
|
||||||
Total other income (expense)
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(125
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)
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(79
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)
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||||
Income before provision for income taxes
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137,857
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646
|
||||||
Income tax benefit (expense)
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(55,083
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)
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3,090
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|||||
Net Income
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$
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82,774
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$
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3,736
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||||
BASIC INCOME PER SHARE
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$
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0.00
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$
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0.00
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||||
DILUTED INCOME PER SHARE
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$
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0.00
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$
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0.00
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||||
BASIC WEIGHTED AVERAGE NUMBER OF
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||||||||
SHARES OUTSTANDING
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25,853,646
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25,800,146
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||||||
DILUTED WEIGHTED AVERAGE NUMBER OF
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||||||||
SHARES OUTSTANDING
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26,571,641
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29,397,367
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For the Six Months Ended
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||||||||
August 31,
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||||||||
2013
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2012
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|||||||
Sales
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$
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2,663,004
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$
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1,617,819
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||||
Cost of sales
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1,365,826
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929,757
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||||||
Gross profit
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1,297,178
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688,062
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||||||
Operating Expenses
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||||||||
Selling, General, and Administrative Expenses
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849,617
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833,836
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||||||
Depreciation and Amortization
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26,930
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22,639
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||||||
Total operating expenses
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876,547
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856,475
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||||||
Income (Loss) from Operations
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420,631
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(168,413
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)
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|||||
Other Income (Expense):
|
||||||||
Interest income
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514
|
510
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||||||
Interest expense
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(866
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)
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(694
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)
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||||
Other income
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53,681
|
515
|
||||||
Total other income
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53,329
|
331
|
||||||
Income (loss) before provision for income taxes
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473,960
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(168,082
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)
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|||||
Income tax benefit (expense)
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(190,872
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)
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74,378
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|||||
Net Income (Loss)
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$
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283,088
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$
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(93,704
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)
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|||
BASIC INCOME (LOSS) PER SHARE
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$
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0.01
|
$
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(0.00
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)
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|||
DILUTED INCOME (LOSS) PER SHARE
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$
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0.01
|
$
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(0.00
|
)
|
|||
BASIC WEIGHTED AVERAGE NUMBER OF
|
||||||||
SHARES OUTSTANDING
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25,846,146
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25,800,146
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||||||
DILUTED WEIGHTED AVERAGE NUMBER OF
|
||||||||
SHARES OUTSTANDING
|
25,846,146
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25,800,146
|
For The Six Months Ended
|
||||||||
August 31,
|
||||||||
2013
|
2012
|
|||||||
OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$
|
283,088
|
$
|
(93,704
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
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26,930
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22,639
|
||||||
Stock-based compensation
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178,800
|
177,608
|
||||||
Gain from sale of property and equipment
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(124
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)
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(517
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)
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||||
Provision for doubtful accounts
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(100,091
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)
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-
|
|||||
Increase in inventory reserve
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32,751
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8,513
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||||||
Changes in operating assets and liabilities:
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||||||||
(Increase) decrease in accounts receivable
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406,336
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(202,087
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)
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|||||
(Increase) decrease in inventory
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(218,454
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)
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177,033
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|||||
(Increase) decrease in prepaid expenses, deposits and other assets
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2,644
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(27,917
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)
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|||||
Decrease in accounts payable and accrued expenses
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(52,235
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)
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(62,902
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)
|
||||
Increase in income taxes payable
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162,182
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-
|
||||||
Decrease in restricted cash
|
|
|
-
|
|
|
|
146,081
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Decrease in customer deposits
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|
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(87,555
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)
|
|
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(23,312
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)
|
Net Cash Provided By Operating Activities
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|
|
634,272
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|
|
|
121,435
|
|
INVESTING ACTIVITIES:
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||||||||
Purchase of property and equipment
|
(20,931
|
)
|
(26,668
|
)
|
||||
Proceeds from sale of property and equipment
|
|
|
1,250
|
|
|
|
12,000
|
|
Purchase of intangible assets
|
|
|
(1,424
|
)
|
|
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(100
|
)
|
Net Cash Used In Investing Activities
|
|
|
(21,105
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)
|
|
|
(14,768
|
)
|
FINANCING ACTIVITIES:
|
||||||||
Repayment of capital lease obligation
|
|
|
(2,290
|
)
|
|
|
(1,765
|
)
|
Net Cash Used in Financing Activities
|
|
|
(2,290
|
)
|
|
|
(1,765
|
)
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
610,877
|
104,902
|
||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,234,545
|
1,148,995
|
||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
2,845,422
|
$
|
1,253,897
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$
|
866
|
$
|
694
|
||||
Income taxes
|
$
|
-
|
$
|
-
|
Weighted-
|
||||||||
Average
|
||||||||
Warrants
|
Exercise
|
|||||||
Outstanding
|
Price
|
|||||||
Outstanding at February 28, 2013
|
8,467,221
|
0.21
|
||||||
Granted
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
(30,000
|
)
|
0.21
|
|||||
Outstanding at August 31, 2013
|
8,437,221
|
0.21
|
||||||
Vested at August 31, 2013
|
3,374,888
|
0.21
|
||||||
Exercisable at August 31, 2013
|
3,374,888
|
0.21
|
Warrants Outstanding
|
Warrants Exercisable
|
||||||||||||||||||
Weighted
|
Weighted
|
Weighted
|
|||||||||||||||||
Average
|
Average
|
Average
|
|||||||||||||||||
Exercise Price
|
Number
|
Remaining
|
Exercise
|
Number
|
Exercise
|
||||||||||||||
Outstanding
|
Life (Years)
|
Price
|
Outstanding
|
Price
|
|||||||||||||||
$
|
0.21
|
8,437,221
|
7.29
|
$
|
0.21
|
3,374,888
|
$
|
0.21
|
The Company’s inventory consisted of the following at August 31, 2013 and February 28, 2013:
|
||||||||
August 31,
|
February 28,
|
|||||||
2013
|
2013
|
|||||||
Raw materials
|
$ | 537,354 | $ | 336,966 | ||||
Finished goods
|
194,607 | 176,541 | ||||||
731,961 | 513,507 | |||||||
Reserve for obsolete and slow moving inventory
|
(81,260 | ) | (48,509 | ) | ||||
$ | 650,701 | $ | 464,998 |
(1)
|
the portable water filtration industry is in a state of technological change, which could render some or all of the Company’s products less competitive.
|
(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 an 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 market prices of raw materials used in the Company’s manufacturing and assembly processes;
|
(4)
|
the business in which the Company operates is highly competitive.
Additional risks and uncertainties are outlined in the Company’s filings with the Securities and Exchange Commission, including its most recent fiscal 2013 Annual Report on Form 10-K.
|
Three-month period ended August 31, 2013 compared to the corresponding period in 2012
|
||||||||||||||||
Year over
|
||||||||||||||||
2013
|
2012
|
year change
|
%
|
|||||||||||||
Sales
|
$
|
1,096,947
|
$
|
719,810
|
377,137
|
52
|
%
|
|||||||||
Cost of sales
|
592,512
|
341,552
|
250,960
|
73
|
%
|
|||||||||||
Gross profit
|
504,435
|
378,258
|
126,177
|
33
|
%
|
|||||||||||
Gross profit %
|
46
|
%
|
53
|
%
|
||||||||||||
Selling, general, and administrative expenses
|
352,778
|
366,262
|
(13,484
|
)
|
-4
|
%
|
||||||||||
Depreciation and amortization expense
|
13,675
|
11,271
|
2,404
|
21
|
%
|
|||||||||||
Income before provision for income taxes
|
137,857
|
646
|
137,211
|
21,240
|
%
|
|||||||||||
(Provision) benefit for income taxes
|
(55,083
|
)
|
3,090
|
(58,173
|
)
|
1,883
|
%
|
|||||||||
Net Income
|
82,774
|
3,736
|
79,038
|
2,116
|
%
|
|||||||||||
Net Income %
|
8
|
%
|
1
|
%
|
|
|
||||||||||
Six-month period ended August 31, 2013 compared to the corresponding period in 2012
|
||||||||||||||||
Year over
|
||||||||||||||||
2013
|
2012
|
year change
|
%
|
|||||||||||||
Sales
|
$
|
2,663,004
|
$
|
1,617,819
|
1,045,185
|
65
|
%
|
|||||||||
Cost of sales
|
1,365,826
|
929,757
|
436,069
|
47
|
%
|
|||||||||||
Gross profit
|
1,297,178
|
688,062
|
609,116
|
89
|
%
|
|||||||||||
Gross profit %
|
49
|
%
|
43
|
%
|
||||||||||||
Selling, general, and administrative expenses
|
849,617
|
833,836
|
15,781
|
|
2
|
%
|
||||||||||
Depreciation expense
|
26,930
|
22,639
|
4,291
|
19
|
%
|
|||||||||||
Income (loss) before provision for income taxes
|
473,960
|
(168,082
|
)
|
642,042
|
382
|
%
|
||||||||||
Benefit (provision) for income taxes
|
(190,872
|
)
|
74,378
|
(265,250
|
)
|
357
|
%
|
|||||||||
Net Income (Loss)
|
283,088
|
(93,704
|
)
|
376,792
|
402
|
%
|
||||||||||
Net Income %
|
11
|
%
|
-6
|
%
|
|
|
||||||||||
Exhibit No.
|
Description
|
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002) | |
31.2
|
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) | |
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
|
Seychelle Environmental Technologies, Inc.
|
|||
|
|
|
|
Date: October 11, 2013
|
By:
|
/s/ Dick Parsons
|
|
Dick Parsons
Director, Chief Executive Officer
|
Date: October 11, 2013
|
By:
|
/s/ Jim Place
|
|
Jim Place
Director and Chief Financial Officer and Chief Operating Officer
|