Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 28, 2018 | Jun. 07, 2018 | Aug. 31, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | SEYCHELLE ENVIRONMENTAL TECHNOLOGIES INC /CA | ||
Entity Central Index Key | 1,056,757 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 28, 2018 | ||
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 Public Float | $ 1,886,303 | ||
Entity Common Stock, Shares Outstanding | 26,574,313 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 2,075,833 | $ 732,112 |
Accounts receivable, net of allowance for doubtful accounts of $8,617 and $47,600 respectively | 829,790 | 905,507 |
Related party receivable | 35,007 | 27,200 |
Inventory, net | 998,296 | 1,421,871 |
Prepaid expenses, deposits, and other current assets | 159,980 | 282,560 |
Total current assets | 4,098,906 | 3,369,250 |
PROPERTY AND EQUIPMENT, NET | 135,539 | 164,997 |
OTHER ASSETS | ||
Other assets | 66,670 | 81,310 |
TOTAL ASSETS | 4,301,115 | 3,615,557 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 441,866 | 476,415 |
Customer deposits | 163,184 | 99,677 |
Capital lease obligations, current portion | 5,402 | 4,047 |
Total current liabilities | 610,452 | 580,139 |
LONG-TERM LIABILITIES | ||
Capital lease obligation, net of current portion | 9,082 | 14,744 |
Total long-term liabilities | 9,082 | 14,744 |
Total liabilities | 619,534 | 594,883 |
STOCKHOLDERS' EQUITY | ||
Common stock $0.001 par value, 50,000,000 shares authorized, 26,640,313 shares issued and outstanding | 26,641 | 26,641 |
Additional paid-in capital | 8,944,368 | 8,944,368 |
Accumulated deficit | (5,259,748) | (5,920,655) |
Less treasury stock at cost (36,000 shares) | (29,680) | (29,680) |
Total Stockholders' Equity | 3,681,581 | 3,020,674 |
Total liabilities and stockholders' equity | $ 4,301,115 | $ 3,615,557 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
CURRENT ASSETS | ||
Net of allowance for doubtful accounts | $ 8,617 | $ 47,600 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, authorized shares | 6,000,000 | 6,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, outstanding shares | 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 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Condensed Consolidated Statements Of Income | ||
SALES | $ 5,279,377 | $ 4,378,436 |
COST OF SALES | 2,802,565 | 3,303,274 |
GROSS PROFIT | 2,476,812 | 1,075,162 |
OPERATING EXPENSES | ||
Selling, general and administrative expenses | 1,614,885 | 2,414,225 |
Impairment of intangible assets (Note 5) | 0 | 50,000 |
legal expenses | 162,425 | 374,103 |
Depreciation and Amortization | 60,232 | 80,781 |
Total operating expenses | 1,837,542 | 2,919,109 |
INCOME (LOSS) FROM OPERATIONS | 639,270 | (1,843,947) |
Interest income | 28 | |
Interest expense | (4,394) | (1,640) |
Other income | 32,728 | 475 |
Total other expense | 28,334 | (1,137) |
INCOME (LOSS) BEFORE INCOME TAX BENEFIT (EXPENSE) | 667,604 | (1,845,084) |
Provision for income taxes | (6,697) | (302,140) |
NET INCOME (LOSS) | $ 660,907 | $ (2,147,224) |
NET INCOME (LOSS) PER SHARE - BASIC | $ 0.02 | $ (0.08) |
NET (LOSS) INCOME PER SHARE - DILUTED | $ 0.02 | $ (0.08) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING BASIC | 26,574,313 | 26,574,313 |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DILUTED | 26,574,313 | 26,574,313 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | (Accumulated Deficit) | Total |
Begnning Balance, Shares at Feb. 29, 2016 | 26,390,313 | 36,000 | |||
Begnning Balance, Amount at Feb. 29, 2016 | $ 26,391 | $ (12,280) | $ 8,827,118 | $ (3,773,431) | $ 5,067,798 |
Issuance of common stock for compensation - shares | 250,000 | ||||
Stock based compensation, Amount | $ 250 | 117,250 | 117,500 | ||
Treasury stock at cost, Shares | 30,000 | ||||
Treasury stock at cost, Amount | $ (17,400) | 17,400 | |||
Net income | (2,147,224) | (2,147,224) | |||
Ending Balance, Shares at Feb. 28, 2017 | 26,640,313 | 66,000 | |||
Ending Balance, Amount at Feb. 28, 2017 | $ 26,641 | $ (29,680) | 8,944,368 | (5,920,655) | 3,020,674 |
Net income | 660,907 | 660,907 | |||
Ending Balance, Shares at Feb. 28, 2018 | 26,640,313 | 66,000 | |||
Ending Balance, Amount at Feb. 28, 2018 | $ 26,641 | $ (29,680) | $ 8,944,368 | $ (5,259,748) | $ 3,681,581 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
CASH FLOW FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 660,907 | $ (2,147,224) |
Adjustments to reconcile net income (loss) to net cash provided by (used in)operating activities: | ||
Depreciation and amortization | 60,232 | 80,777 |
Loss on disposal of assets | 5,587 | |
Impairment of intangible assets | 50,000 | |
Stock-based compensation | 117,500 | |
Provision (Recovery of) for doubtful accounts | 37,911 | (47,063) |
Deferred tax | (468,282) | |
Increase in valuation allowance on deferred tax assets | 1,081,998 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 37,806 | (634,209) |
Related party receivable | (7,807) | 12,375 |
Inventory | 423,575 | 1,089,587 |
Prepaid expenses, deposits and other current assets | 137,220 | (232,779) |
Accounts payable and accrued expenses | (34,549) | 61,189 |
Income taxes payable | (317,145) | |
Customer deposits | 63,507 | 71,458 |
Net Cash Provided by (Used In)Operating Activities | 1,369,802 | (1,276,231) |
CASH FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (30,774) | (27,092) |
Net Cash Used in Investing Activities | (30,774) | (27,092) |
CASH FROM FINANCING ACTIVITIES: | ||
Purchase of treasury stock | (17,400) | |
Repayment of capital lease obligation | (4,307) | (10,038) |
Net Cash Used in Financing Activities | (4,307) | (27,438) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,343,721 | (1,330,761) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 732,112 | 2,062,873 |
CASH AND CASH EQUIVALENTS AT END OF YEAR | 2,075,833 | 732,112 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
CASH PAID DURING THE YEAR FOR FOR INTEREST | 4,395 | 1,640 |
CASH PAID DURING THE YEAR FOR INCOME TAXES | $ 237,295 |
1 ORGANIZATION AND DESCRIPTION
1 ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
Feb. 28, 2018 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Seychelle Environmental Technologies, Inc. was incorporated under the laws of the State of Nevada on January 23, 1998 as a change in domicile to Royal Net, Inc., a Utah corporation that was originally incorporated on January 24, 1986. Royal Net, Inc. changed its state of domicile to Nevada and its name to Seychelle Environmental Technologies, Inc. effective in January 1998. Seychelle Water Technologies, Inc., and Fill 2 Pure International, Inc., both wholly owned subsidiaries, were formed as corporations in February 1997 and April 2013, respectively, under the laws of the state of Nevada for the purpose of marketing. Description of Business The Company designs, assembles and distributes water filtration systems. These systems include portable water bottles, pumps, home-use pitchers, and related water filtration products that can be filled from nearly any available source of fresh water. Management's Plan As of February 28, 2018, the Company had approximately $2,076,000 in cash and cash equivalents and a backlog of approximately $395,000 in unshipped product. Seychelle has been continuing to develop innovative marketing and product concepts for water purification for the world. The demand is expanding rapidly due to the health concerns caused by extensive contamination of drinking water by major industrial, agriculture and natural causes. Seychelle continues to develop new technologies that remove contaminants such as lead, Chromium and others to create products for both here in the U.S. and also around the world to ensure safe drinking water. With the growing interest for higher alkaline water, referred to as pH, Seychelle now includes a full line of products that meets these demands. This year, Seychelle products have expanded its sales efforts in the following international markets; Mexico, Sri Lanka, Vietnam, South Korea, Australia, New Zealand, Japan and China . It's our intention to expand our marketing activities more strongly to the international market and E-commerce. In addition, Seychelle is managing cost in line with current revenue. Our cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in inventory and servicing clients, and continued development and expansion of our products. Our ability to achieve profitability and meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of product orders and shipments; the timing and amount of our operating expenses; the timing and costs of product service requirements; the extent to which our products gain market acceptance; the timing and costs of product development and introductions; the extent of our ongoing and any new research and development programs; and changes in our strategy or our planned activities. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Feb. 28, 2018 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2: SIGNIFICANT ACCOUNTING POLICIES This 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 generally accepted accounting principles in the United States and have been consistently applied in the preparation of the consolidated financial statements herein as of and for the years ended February 28, 2018 and February 28, 2017. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Principles of Consolidation The Company is presently comprised of Seychelle Environmental Technologies, Inc., a Nevada corporation, with two wholly-owned subsidiaries, Seychelle Water Technologies, Inc., and Fill 2 Pure International, Inc., also Nevada corporations (collectively, the Company or Seychelle). All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made in preparing the consolidated financial statements include the allowance for doubtful accounts and sales returns, inventory reserves and the deferred income tax valuation allowance. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents in bank deposit accounts which at times may exceed federally insured limits of $250,000. The Company has not experienced any losses related to this concentration of risk. Deposits exceeded insured limits by approximately $1,826,000 as of February 28, 2018. Accounts Receivable The Company performs periodic credit evaluations of its customers' financial condition and does not require collateral. Trade receivables generally are due in 30 days. An allowance for doubtful accounts is recorded when it is probable that all or a portion of a trade receivable balance will not be collected. Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement exists, products are shipped and title has passed, the price to the buyer is fixed or determinable and collectability is reasonably assured. These criteria are typically met when the product is shipped. Revenue is not recognized at the time of shipment if these criteria are not met. Certain of the Company's sales include a right for the customer to return the product if they are not satisfied. The Company has an unconditional return policy for the first 90 days. Customers may return the product for a full refund, or they may receive a replacement at no charge. The same policy applies to any product sold from the period 91 days after purchase to one year, for any defects in materials or workmanship. In accordance with FASB ASC Topic 605, Revenue Recognition Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. Inventory is comprised of raw materials and finished goods. Raw materials consist of fittings, caps and other components necessary to assemble the Company's finished goods. Finished goods consist of water bottles and other filtration systems that are available for shipment to customers. Finished goods and work in process include the costs of materials, labor and an allocation of overhead. Total overhead allocated to inventory as of February 28, 2018 and February 28, 2017 amounted to approximately $68,000 and $234,000, respectively. At each balance sheet date, the Company evaluates its ending inventory for excess quantities and obsolescence. This evaluation includes an analysis of sales levels by product type. Among other factors, the Company considers current product configurations, historical and forecasted demand, market conditions and product life cycles when determining the net realizable value of the inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventory. The Company's reserve for excess and obsolete inventory amounted to approximately $185,000 and $416,000 as of February 28, 2018 and February 28, 2017, respectively. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets. The estimated useful lives used in determining depreciation are three to five years for tooling, five years for computers and vehicles, and five to seven years for furniture and equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the respective asset. Management evaluates useful lives regularly in order to determine recoverability. Maintenance and repairs are charged to expense as incurred; additions and betterments are capitalized. Upon retirement or sale, the cost and related accumulated depreciation of the disposed assets are removed, and any resulting gain or loss is recorded. Fully depreciated assets are not removed from the accounts until physical disposition. Intangible Assets Intangible assets include intellectual property and trademarks. All trademarks are capitalized and amortized over the economic useful lives using the straight-line method. The Company assesses whether there has been a permanent impairment of the value of intangible assets by considering factors such as expected future product revenues, anticipated product demand and prospects, and other economic factors. Long-Lived Assets The carrying value of long-lived assets, such as property and equipment, are evaluated when indicators of impairment are present. Impairment is assessed when the undiscounted future cash flows estimated to be generated by those assets are less than the assets' carrying amount. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. The Company recorded an impairment charge for certain intangible assets in the amount of $50,000 for the year ended February 28, 2017. Customer Deposits Customer deposits represent advance payments received for products and are recognized as a liability. Fair Value of Financial Instruments For certain financial instruments, including accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their relatively short maturities. Cost of Sales Cost of sales is comprised primarily of the cost of purchased product, as well as labor, inbound freight costs, allocated overhead costs and other material costs required to complete products, including inventory markdowns due to excess and obsolete inventory. Shipping and Handling All amounts billed to customers relating to shipping and handling are reported as a component of sales. Costs incurred by the Company for shipping and handling, including transportation costs paid to third party shippers, are reported as a component of cost of sales. Sales Tax The Company collects sales tax in various jurisdictions. Upon collection from customers, it records the amount as a payable to the related jurisdiction. On a periodic basis, it files a sales tax return with the jurisdictions and remits the amount indicated on the return. Advertising Advertising costs are expensed as incurred. Total advertising expenses amounted to approximately $30,000 and $2,300 for the fiscal years ended February 28, 2018 and February 28, 2017, respectively, and recorded as selling, general and administrative expenses in the accompanying consolidated statements of operations. Research and Development Research and development costs are expensed as incurred and amounted to approximately $6,100 and $1,200 for the fiscal years ended February 28, 2018 and February 28, 2017, respectively. These costs are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Stock-Based Compensation The Company follows FASB ASC Topic 718, Compensation – Stock Compensation The fair value of options and warrants is calculated using the Black-Scholes option-pricing model. This model was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions. As such, the values derived from using that model can differ significantly from other methods of valuing the Company's stock based compensation arrangements. The Black-Scholes model also requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. These factors could change in the future, affecting the determination of stock based compensation expense in future periods. The Company's fair value calculations for stock based compensation awards have been based on the following assumptions relates to year end February 28, 2018. Expected life in years 7 Stock price volatility 244% Risk free interest rate 2.9% Expected dividends None The assumptions used in the Black-Scholes model referred to above are based upon the following data: (1) The expected life of the option or warrant is estimated by considering the contractual term, the vesting period and the expected exercise date. (2) The expected stock price volatility of the underlying shares over the expected life is based upon historical share price data. (3) The risk free interest rate is based on published U.S. Treasury Department interest rates for the expected life. (4) Expected dividends are based on historical dividend data and expected future dividend activity. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the consolidated financial statements be measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered. The Company also follows ASC 740-10-25, which provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements in accordance with ASC 740, " Accounting for Income Taxes" Income (Loss) Per Common Share For the year ended February 28, February 28, 2018 2017 Numerator: Net income (loss) available to common shareholders $ 660,907 $ (2,147,224 ) Weighted average shares – basic 26,574,313 26,574,313 Net income (loss) per share – basic $ 0.02 $ (0.08 ) Dilutive effect of common stock equivalents: Warrants - - Weighted average shares – diluted 26,574,313 26,574,313 Net income (loss) per share – diluted $ 0.02 $ (0.08 ) For the year ended February 28, 2018 and 2017, 6,407,221 potential common shares issuable upon the exercise of outstanding warrants have been excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive since the warrants are not "in the money" price. For the year ended February 28, 2018 and 2017, 6,407,221 potential common shares issuable upon the exercise of outstanding warrants have been excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive since the warrants are not ?in the money? price. Concentrations The Company utilizes the services of two individuals, one of which is a related party and one of which is third-party, in China to source materials and the manufacturing of component parts with third-party vendors in China. As of February 28, 2018 and February 28, 2017, the Company had deposits for inventory purchases in China of approximately $8,067 and $3,000, respectively. For the year ended February 28, 2018, we had 3 customers that accounted for 33%, 12% and 11% (or 56%). As of February 28, 2017 we had three customer that accounted for 36%, 9% and 8% (or 53%) of our total sales. One of these customers accounted for 33% and 68% as of February 28, 2018 and February 28, 2017 of net accounts receivable. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updated ("ASU") 2014-09, Revenue from Contracts with Customers, issued as a new Topic, ASC Topic 606 ("ASU 2014-09"). The new revenue recognition standard provides a give-step analysis of transactions to determine when and how revenue is recognized. The premise of the standard is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 can be adopted by the Company either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company has elected to adopt the guidance beginning in fiscal 2019 using the modified retrospective approach. The Company is performing as assessment of the impact of adoption of this guidance, including required disclosures with assistance from an outside subject matter expert. Although its evaluation is not yet finalized, management believes that the impact of adopting the standard on our consolidated financial statements and related disclosures will not be material. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," Management does not believe any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company's present or future consolidated financial statements. |
3 INVENTORY
3 INVENTORY | 12 Months Ended |
Feb. 28, 2018 | |
Notes to Financial Statements | |
INVENTORY | NOTE 3: INVENTORY The Company's inventory consisted of the following at February 28, 2018 and February 28, 2017: February 28, 2018 February, 28 2017 Raw materials $ 860,424 $ 1,059,482 Finished goods 137,872 362,389 Net inventory $ 998,296 $ 421,871 |
4 PROPERTY AND EQUIPMENT
4 PROPERTY AND EQUIPMENT | 12 Months Ended |
Feb. 28, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4: PROPERTY AND EQUIPMENT The following is a summary of property and equipment at February 28, 2018 and February 28, 2017: February 28, February 28, 2018 2017 Tooling $ 408,453 $ 380,529 Equipment 63,117 60,268 Computer equipment 63,520 63,520 Leasehold equipment - - 535,090 504,317 Less: accumulated depreciation and amortization (399,551 ) (339,320 ) Total $ 135,539 $ 164,997 Fixed assets outside the United States included approximately $350,998 and $330,000 in tooling and equipment, at cost, located in various third party locations which manufacture the Company's component parts at February 28, 2018 and February 28, 2017, respectively. Depreciation expense included in operating expenses were $60,232 and $79,434 for the fiscal years ended February 28, 2018 and February 28, 2017, respectively. |
5 INTANGIBLE ASSETS
5 INTANGIBLE ASSETS | 12 Months Ended |
Feb. 28, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 5: INTANGIBLE ASSETS The following is a summary of intangible assets at February 28, 2018 and February 28, 2017: February 28, February 28, 2018 2017 Intellectual property $ - $ - Trademarks 24,100 24,100 Patents 22,560 22,560 46,660 46,660 Less: accumulated amortization (46,660 ) (46,660 ) Total $ - $ - Intangible assets are amortized over their estimated useful economic lives of five years. Amortization expense related to intangibles was approximately $0 and $1,100 during the fiscal years ended February 28, 2018 and February 28, 2017, respectively. During the year ended February 28, 2017, the Company identified that revenue related to the one specific product for this patent did not materialize and recorded an impairment charge in the amount of $50,000. We previously held two patents, which have expired. The first patent was for the portable water filtration system with the filter cap assembly. The second patent was for a quick connect diverter valve. We currently hold no patents. |
6 CAPITAL LEASE OBLIGATION
6 CAPITAL LEASE OBLIGATION | 12 Months Ended |
Feb. 28, 2018 | |
Debt Disclosure [Abstract] | |
CAPITAL LEASE OBLIGATION | NOTE 6: CAPITAL LEASE OBLIGATIONS The Company leases certain equipment under leases classified as capital leases. The leased equipment carried a cost of $26,000 and $26,000 as of February 28, 2018 and February 28, 2017, and is depreciated on a straight-line basis over 5 years. Total accumulated depreciation related to the leased equipment was $13,000 and $7,800 as of February 28, 2018 and February 28, 2017, respectively. Obligations outstanding as of February 28, 2018 and February 28, 2017 consisted of the following: February 28, 2018 February 28, 2017 Capital lease for equipment requiring monthly payments of principal and Interest of $546 through August 2020 bearing interest at an annual rate of 9.5% 16,914 22,918 Total capital lease obligations, principal and interest 16,914 22,918 Less amount representing interest (2,430 ) (4,127 ) Total capital lease obligations, principal 14,484 18,791 Less current portion (5,402 ) (4,047 ) Long term portion $ 9,802 $ 14,744 Future maturities of the capital lease obligation as of February 28, 2018 are: Fiscal Year Ending February 28, Amount 2019 5,402 2020 5,938 2021 3,144 Total $ 14,484 |
7 RELATED PARTY TRANSACTIONS
7 RELATED PARTY TRANSACTIONS | 12 Months Ended |
Feb. 28, 2018 | |
Notes to Financial Statements | |
RELATED PARTY TRANSACTIONS | NOTE 7: RELATED PARTY TRANSACTIONS The Company paid consulting fees to the Company's primary shareholder (the TAM Irrevocable Trust ("TAM Trust"), in which Cari Beck is the trustee and current Board member, as well as a daughter of Carl Palmer, an officer and Board member) totaling $0 and $37,350 during the years ended February 28, 2018 and February 28, 2017, respectively, which are included as a component of selling, general and administrative expenses on the consolidated statements of operations. During the years ended February 28, 2018 and February 28, 2017, TAM Trust purchased, on behalf of the Company, approximately $132,000 and $77,000, respectively, of raw materials from a vendor with which it already had a business relationship. The Company paid commission to Carl Palmer's brother-in-law for sourcing raw materials with third-party vendors in China. The Company paid approximately $63,000 and $18,000 in direct commissions to the related party during the fiscal years ended February 28, 2018 and February 28, 2017, respectively. The Company had advanced amounts to employees of approximately $28,600 and $27,200 as of February 28, 2018 and February 28, 2017. These amounts are being repaid through direct payroll withdrawals. The Company had receivable from stockholders of approximately $6,000 and $0 as of February 28,2018 and February 28, 2017, respectively. The Company had sales to two companies related to a member of the Board of Directors. Specifically, sales to Sovereign Earth, LLC (dba Revolve) totaled approximately $636,000 and $265,000 for fiscal years February 28, 2018 and February 28, 2017, respectively and sales to Amazon Seychelle totaled approximately $24,000 and $0 for fiscal years February 28, 2018 and February 28, 2017, respectively. Sovereign Earth, LLC (dba Revolve) shall be the sole and exclusive seller of the following products in worldwide markets, including Amazon World Marketplaces: amazon.com, amazon.co uk, amazon.de, amazon.fr, amazon.jp, amazon, it, amazon.ca, amazon.cn, amazon.in, and amazon.com.mx for the duration of the agreement: Generation#1 Filter Pitcher: All filter iterations (regular, standard, advanced, radiological, extreme, supreme, etc.) |
8 EQUITY TRANSACTIONS
8 EQUITY TRANSACTIONS | 12 Months Ended |
Feb. 28, 2018 | |
Equity [Abstract] | |
EQUITY TRANSACTIONS | NOTE 8: EQUITY TRANSACTIONS Restricted Stock Grants During the year ended February 28, 2017, 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 the date of the grant for a total expense of $117,500. During the year ended February 28, 2017, the Company repurchased 30,000 shares of common stock at a cost of $17,400. This repurchase has been recorded as treasury stock and reflected as a reduction of stockholders' equity . Warrants A summary of warrant activity for the fiscal years ended February 28, 2018 and February 28, 2017 is shown below. Weighted- Average Warrants Exercise Outstanding Price Outstanding at March 1, 2016 6,407,221 0.21 Granted - - Exercised - - Forfeited - - Outstanding at February 28, 2017 6,407,221 0.21 Granted - - Exercised - - Outstanding at February 28, 2018 6,407,221 0.21 Vested at February 28, 2018 6,407,221 0.21 Exercisable at February 28, 2018 6,407,221 0.21 The following table summarizes significant ranges of outstanding warrants as of February 28, 2018: Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Average Average Average Remaining Exercise Number Exercise Exercise Price Number Life (Years) Price Outstanding Price $0.21 6,407,221 2.79 $0.21 6,407,221 $0.21 As of February 28, 2018 and February 28, 2017 the total outstanding warrants had an intrinsic value of $0. |
9 INCOME TAXES
9 INCOME TAXES | 12 Months Ended |
Feb. 28, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9: INCOME TAXES Income tax expense (benefit) consists of the following: Current Deferred Total Year ended February 28, 2018: U.S. federal $ (2,970 ) - (2,970 ) State 9,667 - 9,667 Total income tax expense (benefit) $ 6,697 - 6,697 Year ended February 28 2017: U.S. federal $ (261,967 ) 501,492 239,525 State (25,884 ) 88,498 62,614 Total income tax expense $ (287,851 ) 589,990 302,139 The income tax expense (benefit) differs from the expected amount of income tax expense (benefit) determined by applying a combined U.S. federal and state income tax rate of 40% to pretax income (loss) for the years ended February 28, 2018 and February 28, 2017 as follows: 2018 2017 Expected tax (benefit) provision $ 212,520 $ (627,328 ) State Income tax (benefit) provision 40,088 (105,566 ) Other 28,468 (46,965 ) Change in tax rate 282,408 - Permanent differences 1,215 - Change in valuation allowance (558,002 ) 1,081,998 Income tax provision $ 6,697 $ 302,139 Deferred tax assets are as follows: February 28, February 28, 2018 2017 Deferred tax assets: NOL carryforwards $ 158,318 $ 379,326 Depreciation (23,600 ) (80,545 ) Reserves and accrued expenses 70,171 202,471 Stock compensation - 645,673 Other 406,293 75,728 Valuation allowance (611,182 ) (1,222,653 ) Net deferred tax assets $ - $ - Tax Cuts and Jobs Act Tax Cuts and Jobs Act In connection with the Company's initial analysis of the impact of the TCJA, the Company recorded a discrete net tax expense of $282,408 in the year ended February 28, 2018. This net expense is primarily due to the remeasurement of the Company's existing deferred tax assets and liabilities. Due to the Company having a full valuation allowance related to their deferred taxes, the $282,408 discrete tax expense associated with the remeasurement is equally offset by the valuation allowance causing an overall net zero impact on the Company's current tax rate. The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740. To the extent that a company's accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. The valuation allowance for deferred tax assets as of February 28, 2018 and February 28, 2017 $611,182 and $1,222,653, respectively. The net change in the total valuation allowance was an increase of $558,002 and $1,081,998 for the years ended February 28, 2018 and February 28, 2017, respectively. In assessing the realization of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax-planning strategies in making this assessment. It was determined that it was more likely than not that a full valuation allowance was necessary as of February 28, 2018. At February 28, 2018, the Company had unused net operating loss carryovers of approximately $496,000 and $927,000 for federal and state tax purposes, respectively, which expires beginning in 2037. The Company includes interest and penalties, if any, arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of February 28, 2018 the Company had no accrued interest or penalties related to uncertain tax positions. The tax years that remain subject to examination by major taxing jurisdictions are fiscal years 2014 through 2017 for federal purposes and fiscal years 2013 through 2017 for state purposes. |
10 COMMITMENTS AND CONTINGENCIE
10 COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Feb. 28, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10: COMMITMENTS AND CONTINGENCIES The Company entered into a lease agreement on one facility for its corporate offices, inventory and production at 22 Journey in Aliso Viejo, CA for a term of 5 years at a monthly rental of approximately $19,000, and such amounts are included in the table below. Future minimum base lease payments are as follows: Fiscal Year Ending February 28, Amount 2019 $ 246,908 2020 253,908 2021 259,000 2022 109,000 Total $ 868,816 Legal Proceedings The Company was involved in litigation or legal proceedings as of February 28, 2018. On March 27, 2017, the Company received a Notice of Filing of Discrimination complaint in the Superior Court of the State of California, County of Orange by a former employee. The Company also received on June 5, 2017, a Request for Entry of Default filed to Superior Court of California, County of Orange by the same employee. The matter is currently set for trial on June 25, 2018. The.case is in the discovery phase. The Company believes that the complaint is completely without merit and plan to vigorously contest the matter. Another pending action is Rolling Tides, LLC vs. Carl Palmer, Seychelle Environmental Technologies, Inc., and other defendants. The case was brought in the Superior Court of the State of California, County of Orange. The action alleges certain fraudulent transfers occurred from Seychelle to the various defendants. The plaintiffs have refused to identify any such transfers by date or amount. The matter is in early discovery and no trial date is set. All the defendants have denied the allegations of the complaint , and are vigorously defending the matter. It is not likely that the case will be settled without trial. The Company believes that the case has no merit. Licenses The Company has historically entered into licensing agreements with third-parties for product proprietary rights, patent and trademark ownership, and use of product name. In return, the Company agrees to pay licensing fees and/or royalties on sales of those products. During the years ended February 28, 2018 and February 28, 2017, the Company paid $22,651 and $12,500, respectively, in royalties and licensing fees related under these agreements. |
11 GEOGRAPHIC AREAS
11 GEOGRAPHIC AREAS | 12 Months Ended |
Feb. 28, 2018 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC AREAS | NOTE 11: GEOGRAPHIC AREAS The Company sells its products throughout the United States and internationally. Geographic sales information for the fiscal years ended February 28, 2018 and February 28, 2017 is as follows: 2018 2017 United States $ 5,130,357 $ 4,099,466 Asia 105,568 158 Greece - - United Kingdom - 14,944 New Zealand - 91,971 Australia - 50,615 Canada 40,291 38,971 Other countries 3,161 82,311 Total $ 5,279,377 $ 4,378,436 _____________ (1) Sales are based on the country of residence of the customer. Long lived assets at February 28, 2018 are in the following geographic areas: United States China Total Property and equipment, net $ 57,264 $ 78,275 $ 135,539 Other assets 66,670 - 66,670 Total $ 123,934 $ 78,275 $ 202,209 Long lived assets at February 28, 2017 are in the following geographic areas: United States China Total Property and equipment, net $ 75,909 $ 89,088 $ 164,997 Other assets 81,310 - 81,310 Total $ 157,219 $ 89,088 $ 246,307 |
12 SUBSEQUENT EVENTS
12 SUBSEQUENT EVENTS | 12 Months Ended |
Feb. 28, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12: SUBSEQUENT EVENTS Management has evaluated events subsequent to February 28, 2018 through the date the accompanying consolidated financial statements were filed with the Securities and Exchange Commission for transactions and other events that may require adjustment of and/or disclosure in such financial statements. Based on its review, no material events were identified that require adjustment to the financial statements or additional disclosure. |
2. SIGNIFICANT ACCOUNTING POL19
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Feb. 28, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. |
Principles of Consolidation | Principles of Consolidation The Company is presently comprised of Seychelle Environmental Technologies, Inc., a Nevada corporation, with two wholly-owned subsidiaries, Seychelle Water Technologies, Inc., and Fill 2 Pure International, Inc., also Nevada corporations (collectively, the Company or Seychelle). All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made in preparing the consolidated financial statements include the allowance for doubtful accounts and sales returns, inventory reserves and the deferred income tax valuation allowance. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers highly liquid investments with original maturities of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents in bank deposit accounts which at times may exceed federally insured limits of $250,000. The Company has not experienced any losses related to this concentration of risk. Deposits exceeded insured limits by approximately $1,826,000 as of February 28, 2018. |
Accounts Receivable | Accounts Receivable The Company performs periodic credit evaluations of its customers' financial condition and does not require collateral. Trade receivables generally are due in 30 days. An allowance for doubtful accounts is recorded when it is probable that all or a portion of a trade receivable balance will not be collected. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement exists, products are shipped and title has passed, the price to the buyer is fixed or determinable and collectability is reasonably assured. These criteria are typically met when the product is shipped. Revenue is not recognized at the time of shipment if these criteria are not met. Certain of the Company's sales include a right for the customer to return the product if they are not satisfied. The Company has an unconditional return policy for the first 90 days. Customers may return the product for a full refund, or they may receive a replacement at no charge. The same policy applies to any product sold from the period 91 days after purchase to one year, for any defects in materials or workmanship. In accordance with FASB ASC Topic 605, Revenue Recognition |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. Inventory is comprised of raw materials and finished goods. Raw materials consist of fittings, caps and other components necessary to assemble the Company's finished goods. Finished goods consist of water bottles and other filtration systems that are available for shipment to customers. Finished goods and work in process include the costs of materials, labor and an allocation of overhead. Total overhead allocated to inventory as of February 28, 2018 and February 28, 2017 amounted to approximately $68,000 and $234,000, respectively. At each balance sheet date, the Company evaluates its ending inventory for excess quantities and obsolescence. This evaluation includes an analysis of sales levels by product type. Among other factors, the Company considers current product configurations, historical and forecasted demand, market conditions and product life cycles when determining the net realizable value of the inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventory. The Company's reserve for excess and obsolete inventory amounted to approximately $185,000 and $416,000 as of February 28, 2018 and February 28, 2017, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets. The estimated useful lives used in determining depreciation are three to five years for tooling, five years for computers and vehicles, and five to seven years for furniture and equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the respective asset. Management evaluates useful lives regularly in order to determine recoverability. Maintenance and repairs are charged to expense as incurred; additions and betterments are capitalized. Upon retirement or sale, the cost and related accumulated depreciation of the disposed assets are removed, and any resulting gain or loss is recorded. Fully depreciated assets are not removed from the accounts until physical disposition. |
Intangible Assets | Intangible Assets Intangible assets include intellectual property and trademarks. All trademarks are capitalized and amortized over the economic useful lives using the straight-line method. The Company assesses whether there has been a permanent impairment of the value of intangible assets by considering factors such as expected future product revenues, anticipated product demand and prospects, and other economic factors. |
Long-Lived Assets | Long-Lived Assets The carrying value of long-lived assets, such as property and equipment, are evaluated when indicators of impairment are present. Impairment is assessed when the undiscounted future cash flows estimated to be generated by those assets are less than the assets' carrying amount. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. The Company recorded an impairment charge for certain intangible assets in the amount of $50,000 for the year ended February 28, 2017. |
Customer Deposits | Customer Deposits Customer deposits represent advance payments received for products and are recognized as a liability. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For certain financial instruments, including accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their relatively short maturities. |
Cost of Sales | Cost of Sales Cost of sales is comprised primarily of the cost of purchased product, as well as labor, inbound freight costs, allocated overhead costs and other material costs required to complete products, including inventory markdowns due to excess and obsolete inventory. |
Shipping and Handling | Shipping and Handling All amounts billed to customers relating to shipping and handling are reported as a component of sales. Costs incurred by the Company for shipping and handling, including transportation costs paid to third party shippers, are reported as a component of cost of sales. |
Sales Tax | Sales Tax The Company collects sales tax in various jurisdictions. Upon collection from customers, it records the amount as a payable to the related jurisdiction. On a periodic basis, it files a sales tax return with the jurisdictions and remits the amount indicated on the return. |
Advertising | Advertising Advertising costs are expensed as incurred. Total advertising expenses amounted to approximately $30,000 and $2,300 for the fiscal years ended February 28, 2018 and February 28, 2017, respectively, and recorded as selling, general and administrative expenses in the accompanying consolidated statements of operations. |
Research and Development | Research and Development Research and development costs are expensed as incurred and amounted to approximately $6,100 and $1,200 for the fiscal years ended February 28, 2018 and February 28, 2017, respectively. These costs are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. |
Stock-Based Compensation | Stock-Based Compensation The Company follows FASB ASC Topic 718, Compensation – Stock Compensation The fair value of options and warrants is calculated using the Black-Scholes option-pricing model. This model was developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions. As such, the values derived from using that model can differ significantly from other methods of valuing the Company's stock based compensation arrangements. The Black-Scholes model also requires subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values. These factors could change in the future, affecting the determination of stock based compensation expense in future periods. The Company's fair value calculations for stock based compensation awards have been based on the following assumptions relates to year end February 28, 2018. Expected life in years 7 Stock price volatility 244% Risk free interest rate 2.9% Expected dividends None The assumptions used in the Black-Scholes model referred to above are based upon the following data: (1) The expected life of the option or warrant is estimated by considering the contractual term, the vesting period and the expected exercise date. (2) The expected stock price volatility of the underlying shares over the expected life is based upon historical share price data. (3) The risk free interest rate is based on published U.S. Treasury Department interest rates for the expected life. (4) Expected dividends are based on historical dividend data and expected future dividend activity. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the consolidated financial statements be measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered. The Company also follows ASC 740-10-25, which provides detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements in accordance with ASC 740, " Accounting for Income Taxes" |
Income (Loss) Per Common Share | Income (Loss) Per Common Share For the year ended February 28, February 28, 2018 2017 Numerator: Net income (loss) available to common shareholders $ 660,907 $ (2,147,224 ) Weighted average shares – basic 26,574,313 26,574,313 Net income (loss) per share – basic $ 0.02 $ (0.08 ) Dilutive effect of common stock equivalents: Warrants - - Weighted average shares – diluted 26,574,313 26,574,313 Net income (loss) per share – diluted $ 0.02 $ (0.08 ) For the year ended February 28, 2018 and 2017, 6,407,221 potential common shares issuable upon the exercise of outstanding warrants have been excluded from the computation of diluted earnings per share because their inclusion would be anti-dilutive since the warrants are not "in the money" price. |
Concentrations | Concentrations The Company utilizes the services of two individuals, one of which is a related party and one of which is third-party, in China to source materials and the manufacturing of component parts with third-party vendors in China. As of February 28, 2018 and February 28, 2017, the Company had deposits for inventory purchases in China of approximately $8,067 and $3,000, respectively. For the year ended February 28, 2018, we had 3 customers that accounted for 33%, 12% and 11% (or 56%). As of February 28, 2017 we had three customer that accounted for 36%, 9% and 8% (or 53%) of our total sales. One of these customers accounted for 33% and 68% as of February 28, 2018 and February 28, 2017 of net accounts receivable. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updated ("ASU") 2014-09, Revenue from Contracts with Customers, issued as a new Topic, ASC Topic 606 ("ASU 2014-09"). The new revenue recognition standard provides a give-step analysis of transactions to determine when and how revenue is recognized. The premise of the standard is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 can be adopted by the Company either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company has elected to adopt the guidance beginning in fiscal 2019 using the modified retrospective approach. The Company is performing as assessment of the impact of adoption of this guidance, including required disclosures with assistance from an outside subject matter expert. Although its evaluation is not yet finalized, management believes that the impact of adopting the standard on our consolidated financial statements and related disclosures will not be material. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," Management does not believe any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the Company's present or future consolidated financial statements. |
2. SIGNIFICANT ACCOUNTING POL20
2. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Accounting Policies [Abstract] | |
Stock based compensation awards | The Company's fair value calculations for stock based compensation awards have been based on the following assumptions relates to year end February 28, 2018. Expected life in years 7 Stock price volatility 244% Risk free interest rate 2.9% Expected dividends None |
Earnings per share | For the year ended February 28, February 28, 2018 2017 Numerator: Net income (loss) available to common shareholders $ 660,907 $ (2,147,224 ) Weighted average shares – basic 26,574,313 26,574,313 Net income (loss) per share – basic $ 0.02 $ (0.08 ) Dilutive effect of common stock equivalents: Warrants - - Weighted average shares – diluted 26,574,313 26,574,313 Net income (loss) per share – diluted $ 0.02 $ (0.08 ) |
3 INVENTORY (Tables)
3 INVENTORY (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Inventory Tables | |
Inventory | February 28, 2018 February, 28 2017 Raw materials $ 860,424 $ 1,059,482 Finished goods 137,872 362,389 Net inventory $ 998,296 $ 421,871 |
4 PROPERTY AND EQUIPMENT (Table
4 PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of property and equipment | The following is a summary of property and equipment at February 28, 2018 and February 28, 2017: February 28, February 28, 2018 2017 Tooling $ 408,453 $ 380,529 Equipment 63,117 60,268 Computer equipment 63,520 63,520 Leasehold equipment - - 535,090 504,317 Less: accumulated depreciation and amortization (399,551 ) (339,320 ) Total $ 135,539 $ 164,997 |
5 INTANGIBLE ASSETS (Tables)
5 INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | The following is a summary of intangible assets at February 28, 2018 and February 28, 2017: February 28, February 28, 2018 2017 Intellectual property $ - $ - Trademarks 24,100 24,100 Patents 22,560 22,560 46,660 46,660 Less: accumulated amortization (46,660 ) (46,660 ) Total $ - $ - |
6 CAPITAL LEASE OBLIGATION (Tab
6 CAPITAL LEASE OBLIGATION (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Debt Disclosure [Abstract] | |
Outstanding obligations | February 28, 2018 February 28, 2017 Capital lease for equipment requiring monthly payments of principal and Interest of $546 through August 2020 bearing interest at an annual rate of 9.5% 16,914 22,918 Total capital lease obligations, principal and interest 16,914 22,918 Less amount representing interest (2,430 ) (4,127 ) Total capital lease obligations, principal 14,484 18,791 Less current portion (5,402 ) (4,047 ) Long term portion $ 9,802 $ 14,744 |
Future maturities of the capital lease obligation | Fiscal Year Ending February 28, Amount 2019 $ 246,908 2020 253,908 2021 259,000 2022 109,000 Total $ 868,816 |
8 EQUITY TRANSACTIONS (Tables)
8 EQUITY TRANSACTIONS (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Equity [Abstract] | |
Summary of warrant activity | Weighted- Average Warrants Exercise Outstanding Price Outstanding at March 1, 2016 6,407,221 0.21 Granted - - Exercised - - Forfeited - - Outstanding at February 28, 2017 6,407,221 0.21 Granted - - Exercised - - Outstanding at February 28, 2018 6,407,221 0.21 Vested at February 28, 2018 6,407,221 0.21 Exercisable at February 28, 2018 6,407,221 0.21 |
Summary of significant ranges of outstanding warrants as of February 28, 2014 | Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Average Average Average Remaining Exercise Number Exercise Exercise Price Number Life (Years) Price Outstanding Price $0.21 6,407,221 2.79 $0.21 6,407,221 $0.21 |
9 INCOME TAXES (Tables)
9 INCOME TAXES (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Income Tax Disclosure [Abstract] | |
Income tax expense (benefit) | Current Deferred Total Year ended February 28, 2018: U.S. federal $ (2,970 ) - (2,970 ) State 9,667 - 9,667 Total income tax expense (benefit) $ 6,697 - 6,697 Year ended February 28 2017: U.S. federal $ (261,967 ) 501,492 239,525 State (25,884 ) 88,498 62,614 Total income tax expense $ (287,851 ) 589,990 302,139 |
Expected income tax expense | 2018 2017 Expected tax (benefit) provision $ 212,520 $ (627,328 ) State Income tax (benefit) provision 40,088 (105,566 ) Other 28,468 (46,965 ) Change in tax rate 282,408 - Permanent differences 1,215 - Change in valuation allowance (558,002 ) 1,081,998 Income tax provision $ 6,697 $ 302,139 |
Deferred tax assets | February 28, February 28, 2018 2017 Deferred tax assets: NOL carryforwards $ 158,318 $ 379,326 Depreciation (23,600 ) (80,545 ) Reserves and accrued expenses 70,171 202,471 Stock compensation - 645,673 Other 406,293 75,728 Valuation allowance (611,182 ) (1,222,653 ) Net deferred tax assets $ - $ - |
10 COMMITMENTS AND CONTINGENC27
10 COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum base lease payments | Fiscal Year Ending February 28, Amount 2019 $ 246,908 2020 253,908 2021 259,000 2022 109,000 Total $ 868,816 |
11 GEOGRAPHIC AREAS (Tables)
11 GEOGRAPHIC AREAS (Tables) | 12 Months Ended |
Feb. 28, 2018 | |
Segment Reporting [Abstract] | |
Geographic sales information | 2018 2017 United States $ 5,130,357 $ 4,099,466 Asia 105,568 158 Greece - - United Kingdom - 14,944 New Zealand - 91,971 Australia - 50,615 Canada 40,291 38,971 Other countries 3,161 82,311 Total $ 5,279,377 $ 4,378,436 |
Long lived assets in geographic areas 2017 | United States China Total Property and equipment, net $ 57,264 $ 78,275 $ 135,539 Other assets 66,670 - 66,670 Total $ 123,934 $ 78,275 $ 202,209 |
Long lived assets in geographic areas 2016 | United States China Total Property and equipment, net $ 75,909 $ 89,088 $ 164,997 Other assets 81,310 - 81,310 Total $ 157,219 $ 89,088 $ 246,307 |
1 ORGANIZATION AND DESCRIPTIO29
1 ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 | Feb. 29, 2016 |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 2,075,833 | $ 732,112 | $ 2,062,873 |
Unshipped product | $ 395,000 |
2. SIGNIFICANT ACCOUNTING POL30
2. SIGNIFICANT ACCOUNTING POLICIES - Assumptions (Details) | 12 Months Ended |
Feb. 28, 2018 | |
Accounting Policies [Abstract] | |
Expected life in years | 7 years |
Stock price volatility | 244.00% |
Risk free interest rate | 2.90% |
Expected dividends | 0.00% |
2. SIGNIFICANT ACCOUNTING POL31
2. SIGNIFICANT ACCOUNTING POLICIES - Earnings per share (Details ) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Numerator: | ||
Net income (loss) available to common shareholders | $ 660,907 | $ (2,147,224) |
Weighted average shares - basic | 26,574,313 | 26,574,313 |
Net income (loss) per share - basic | $ 0.02 | $ (0.08) |
Dilutive effect of common stock equivalents: | ||
Warrants | ||
Weighted average shares - diluted | 26,574,313 | 26,574,313 |
Net income (loss) per share - diluted | $ 0.02 | $ (0.08) |
2. SIGNIFICANT ACCOUNTING POL32
2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
FDIC insured limit | $ 250,000 | |
Deposits exceeded insured limits | 1,826,000 | |
Obsolete inventory | 185,000 | $ 416,000 |
Advertising costs | 30,000 | 2,300 |
Research and development costs | $ 6,100 | $ 1,200 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 6,407,221 | 6,407,221 |
Deposits for inventory purchases in China | $ 8,067 | $ 3,000 |
Sales Revenue, Net [Member] | First Customer | ||
Concentrations | 33.00% | 36.00% |
Sales Revenue, Net [Member] | Second Customer | ||
Concentrations | 12.00% | 9.00% |
Sales Revenue, Net [Member] | Third Customer | ||
Concentrations | 11.00% | 8.00% |
Accounts Receivable [Member] | One Customer | ||
Concentrations | 33.00% | 68.00% |
3 INVENTORY (Details)
3 INVENTORY (Details) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
Inventory Details | ||
Raw materials | $ 860,424 | $ 1,059,482 |
Finished goods | 137,872 | 362,389 |
Inventory, Net | $ 998,296 | $ 1,421,871 |
4 PROPERTY AND EQUIPMENT - Summ
4 PROPERTY AND EQUIPMENT - Summary of property and equipment (Details) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
Property, Plant and Equipment [Abstract] | ||
Tooling | $ 408,453 | $ 380,529 |
Equipment | 63,117 | 60,268 |
Computer equipment | 63,520 | 63,520 |
Leasehold equipment | 0 | 0 |
Total of property and equipment | 535,090 | 504,317 |
Less: accumulated depreciation and amortization | (399,551) | (339,320) |
Total | $ 135,539 | $ 164,997 |
4 PROPERTY AND EQUIPMENT (Detai
4 PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
Fixed Assets outside USA | ||
Tooling and equipment located in China | $ 350,998 | $ 330,000 |
Depreciation expense for assets located outside USA | $ 60,232 | $ 79,434 |
5 INTANGIBLE ASSETS - Summary o
5 INTANGIBLE ASSETS - Summary of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intellectual property | $ 0 | $ 0 |
Trademarks | 24,100 | 24,100 |
Patents | 22,560 | 22,560 |
Total | 46,660 | 46,660 |
Less: accumulated amortization | (46,660) | (46,660) |
Total after amortization | $ 0 | $ 0 |
5 INTANGIBLE ASSETS (Details Na
5 INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense related to intangibles | $ 0 | $ 1,100 |
Impairment charge | $ 0 | $ 50,000 |
6 CAPITAL LEASE OBLIGATION - Ou
6 CAPITAL LEASE OBLIGATION - Outstanding obligations (Details) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
Debt Disclosure [Abstract] | ||
Capital lease for equipment requiring monthly payments of principal and Interest of $546 through August 2020 bearing interest at an annual rate of 9.5% | $ 16,914 | $ 22,918 |
Total capital lease obligations, principal and interest | 16,914 | 22,918 |
Less amount representing interest | (2,430) | (4,127) |
Total capital lease obligations, principal | 14,484 | 18,791 |
Less current portion | (5,402) | (4,047) |
Long term portion | $ 9,082 | $ 14,744 |
6 CAPITAL LEASE OBLIGATION - Fu
6 CAPITAL LEASE OBLIGATION - Future maturities of the capital lease obligation (Details) - USD ($) | Feb. 28, 2022 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2019 |
Debt Disclosure [Abstract] | ||||
Future maturities of capital lease obligation | $ 14,484 | $ 3,144 | $ 5,938 | $ 5,402 |
6 CAPITAL LEASE OBLIGATION (Det
6 CAPITAL LEASE OBLIGATION (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Debt Disclosure [Abstract] | ||
Leased equipment | $ 26,000 | $ 26,000 |
Accumulated depreciation related to leased equipment | $ 13,000 | $ 7,800 |
Useful Life | 5 years |
7 RELATED PARTY TRANSACTIONS (D
7 RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | 24 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | Feb. 28, 2018 | |
Advances to employees | $ 28,600 | $ 27,200 | |
TAM purchase of raw materials on behalf of the comapany | 132,000 | 77,000 | |
Payments to Irrevocable Trust for consulting services in which Cari Beck is a trustee as well as the daughter of the Company's President | 0 | 37,350 | |
Direct commissions to related party | 63,000 | 18,000 | |
Receivable from stockholders | 6,000 | 0 | $ 6,000 |
Sovereign Earth, LLC | |||
Revenue from related party | $ 636,000 | 265,000 | |
Amazon Seychelle | |||
Revenue from related party | $ 0 | $ 24,000 |
8 EQUITY TRANSACTIONS - Summary
8 EQUITY TRANSACTIONS - Summary of warrant activity (Details) - $ / shares | 12 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | Feb. 29, 2016 | |
Warrants Outstanding | |||
Outstanding at beginning | 6,407,221 | 6,407,221 | |
Granted | |||
Exercised | |||
Forfeited | |||
Outstanding at end | 6,407,221 | 6,407,221 | |
Vested | 6,407,221 | ||
Exercisable | 6,407,221 | ||
Weighted-Average Exercise Price | |||
Outstanding at beginning | $ 0.21 | $ 0.21 | |
Granted | |||
Exercised | |||
Forfeited | |||
Outstanding at end | 0.21 | $ 0.21 | |
Vested | 0.21 | ||
Exercisable | $ 0.21 | $ 0.21 | $ 0.21 |
8 EQUITY TRANSACTIONS - Summa43
8 EQUITY TRANSACTIONS - Summary of significant ranges of outstanding warrants as of February 28, 2014 (Details) - $ / shares | 12 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | Feb. 29, 2016 | |
Equity [Abstract] | |||
Execise price | $ 0.21 | ||
Number of warrants outstanding | 6,407,221 | ||
Weighted average remaining life in years | 2 years 7 months 20 days | ||
Weighted Average Execise price | $ 0.21 | $ 0.21 | $ 0.21 |
Warrants Exercisable | |||
Weighted average exercise price | $ 0.21 | $ 0.21 | $ 0.21 |
Number outstanding | 6,407,221 |
8 EQUITY TRANSACTIONS (Details
8 EQUITY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Equity [Abstract] | ||
Number of shares fully vested issued to one employee | 250,000 | |
Fair value of warrants on the date of this grant | $ 117,500 | |
Common stock repurchased | $ (17,400) | |
Common stock repurchased shares | 30,000 | |
Intrinsic value of total outstanding warrants | $ 0 | $ 0 |
9 INCOME TAXES (Components of I
9 INCOME TAXES (Components of Income Tax) (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Current: | ||
U.S. federal | $ (2,970) | $ (261,967) |
State | 9,667 | (25,884) |
Total current income tax expense (benefit) | 6,697 | (287,851) |
Deferred: | ||
U.S. federal | 501,492 | |
State | 88,498 | |
Total deferred Income tax expense (benefit) | 589,990 | |
Total | ||
Federal | (2,970) | 239,525 |
State | 9,667 | 62,614 |
Total current and deferred tax expense (benifet) | $ 6,697 | $ 302,139 |
9 INCOME TAXES (Effective Incom
9 INCOME TAXES (Effective Income Tax Rate Reconciliation) (Details) - USD ($) | 12 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | Feb. 29, 2016 | |
Income Tax Disclosure [Abstract] | |||
Expected tax (benefit) provision | $ 212,520 | $ (627,328) | |
State Income tax (benefit) provision | 40,088 | (105,566) | |
Other | 28,468 | (46,965) | |
Change in tax rate | 282,408 | 0 | |
Permanent differences | 1,215 | 0 | |
Change in valuation allowance | (558,002) | $ (1,081,998) | 1,081,998 |
Income tax provision | $ 6,697 | $ 302,139 |
9 INCOME TAXES (Deferred Tax As
9 INCOME TAXES (Deferred Tax Assets) (Details) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
Deferred tax assets: | ||
NOL carryforwards | $ 158,318 | $ 379,326 |
Depreciation | (23,600) | (80,545) |
Reserves and accrued expenses | 70,171 | 202,471 |
Stock compensation | 645,673 | |
Other | 406,293 | 75,728 |
Valuation allowance | (611,182) | (1,222,653) |
Net deferred tax assets |
9 INCOME TAXES (Details Narrati
9 INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 28, 2018 | Feb. 28, 2017 | Feb. 29, 2016 | |
Income Tax Disclosure [Abstract] | |||
Net change in the total valuation allowance | $ (558,002) | $ (1,081,998) | $ 1,081,998 |
Valuation allowance for deferred tax assets | 611,182 | $ 1,222,653 | |
Net operating loss carryovers federal | 496,000 | ||
Net operating loss carryovers state | 927,000 | ||
Discrete net tax expense | $ 282,408 |
10 COMMITMENTS AND CONTINGENC49
10 COMMITMENTS AND CONTINGENCIES - Future minimum base lease payments (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Total rent expense | $ 19,000 | |
Royalties and licensing fees | $ 22,651 | $ 12,500 |
10 Future minimum base lease pa
10 Future minimum base lease payments (Details) | Feb. 28, 2017USD ($) |
FUTURE MINIMUM BASE LEASE PAYMENTS | |
2,019 | $ 246,908 |
2,020 | 253,908 |
2,021 | 259,000 |
2,022 | 109,000 |
Total | $ 868,816 |
11 GEOGRAPHIC AREAS - Geographi
11 GEOGRAPHIC AREAS - Geographic sales information (Details) - USD ($) | 12 Months Ended | |
Feb. 28, 2018 | Feb. 28, 2017 | |
Water filtration products sold based on the country of residence of the customer | $ 5,279,377 | $ 4,378,436 |
United States [Member] | ||
Water filtration products sold based on the country of residence of the customer | 5,130,357 | 4,099,466 |
Asia [Member] | ||
Water filtration products sold based on the country of residence of the customer | 105,568 | 158 |
Greece [Member] | ||
Water filtration products sold based on the country of residence of the customer | ||
United Kingdom [Member] | ||
Water filtration products sold based on the country of residence of the customer | 14,944 | |
New Zealand [Member] | ||
Water filtration products sold based on the country of residence of the customer | 91,971 | |
Australia [Member] | ||
Water filtration products sold based on the country of residence of the customer | 50,615 | |
Canada [Member] | ||
Water filtration products sold based on the country of residence of the customer | 40,291 | 38,971 |
Other countries [Member] | ||
Water filtration products sold based on the country of residence of the customer | $ 3,161 | $ 82,311 |
11 GEOGRAPHIC AREAS - Long live
11 GEOGRAPHIC AREAS - Long lived assets in geographic areas (Details) - USD ($) | Feb. 28, 2018 | Feb. 28, 2017 |
Property and equipment, net | $ 135,539 | $ 164,997 |
United States [Member] | ||
Property and equipment, net | 57,264 | 75,909 |
Other assets | 66,670 | 81,310 |
Total | 123,934 | 157,219 |
China [Member] | ||
Property and equipment, net | 78,275 | 89,088 |
Other assets | ||
Total | 78,275 | 89,088 |
Assets, Total [Member] | ||
Property and equipment, net | 135,539 | 164,997 |
Other assets | 66,670 | 81,310 |
Total | $ 202,209 | $ 246,307 |