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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                     Annual Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                  For the Fiscal Year Ended: February 28, 2002
                           Commission File No. 0-29373

                   Seychelle Environmental Technologies, Inc.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as specified in its charter)

           Nevada                                             33-0836954
----------------------------                          --------------------------
(State or other jurisdiction                          (IRS Employer File Number)
     of incorporation)

         32921 Calle Perfecto
    San Juan Capistrano, California                              92675
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(Address of principal executive offices)                      (zip code)

                                 (949) 234-1999
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

     Securities to be Registered Pursuant to Section 12(b) of the Act: None

        Securities to be Registered Pursuant to Section 12(g) of the Act:

                    Common Stock, $0.001 per share par value

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes:  X  No:
                                               ---     ---

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     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ ]

     State issuer's revenues for its most recent fiscal year $1,971,774. The
aggregate market value of the voting stock of the Registrant held by
non-affiliates as of February 28, 2002 was approximately $1,050,000 The number
of shares outstanding of the Registrant's common stock, as of the latest
practicable date, February 28, 2002, was 9,508,480.

References in this document to "us," "we," or "the Company" refer to Seychelle
Environmental Technologies, Inc., its predecessor and its subsidiary.

                                  RISK FACTORS

     THE OWNERSHIP AND INVESTMENT IN OUR SECURITIES INVOLVES SUBSTANTIAL RISKS.
OUR COMMON SHARES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE
THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THESE
RISKS RELATING TO OUR COMPANY.

     LACK OF HISTORY. Our Company was formed on January 23, 1998 and acquired
the operations of a company which had been in existence since 1995. Since
beginning operations, we had not been profitable for the first three years.
However, we have not engaged in enough consistent business activity over a
sustained period of time to be said to have a successful operating history. Our
product lines and sales have generated enough revenue to support our Company
since becoming profitable. Still, we have limited financial results upon which
you may judge our potential. We have experienced in the past and may experience
in the future under-capitalization, shortages, setbacks and many of the
problems, delays and expenses encountered by any early stage business. These
include:

          -    operating as a public entity, incurring non-cost of sales
               expenses such as accounting, auditing, legal activities, and
               maintaining full compliance of a regulated reporting status,

          -    substantial delays and expenses related to research, development
               and testing of our new products,

          -    production and marketing problems encountered in connection with
               our existing products and technologies,

          -    competition from larger and more established companies, and

          -    under-capitalization to challenge the lack of market acceptance
               of our new products and technologies.

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     LIMITED PROFITABILITY. Sales of our products may not continue to generate
sufficient revenues to fund our continuing operations. We may not continue to
generate a positive cash flow or maintain profitability. To date, we have
incurred significant losses. As of February 28, 2002, our accumulated revenue
was $1,971,774. Even though we were marginally profitable last year, our
accountants made a going concern qualification to their accounting opinion. For
the fiscal year ended February 28, 2002, we incurred a net profit of $47,278 and
for the previous fiscal year a net loss of $878,742. These profits are marginal
as a result of:

          -    significant legal and professional fees associated with regulated
               business activities and SEC reporting requirements

          -    lack of consistent sales to maintain profitability,

          -    significant costs associated with the research and development of
               our products,

     INHERENTLY RISKY-COMPETITION. Because we are a company with a limited
history, our operations will be extremely competitive and subject to numerous
risks. The water filtration business is highly competitive with many companies
having access to the same market. Substantially all of them have greater
financial resources and longer operating histories than we have and can be
expected to compete within the business in which we engage and intend to engage.
There can be no assurance that we will have the necessary resources to be
competitive. We are subject to the risks which are common with under-capitalized
companies. Therefore, investors should consider an investment in us to be an
extremely risky venture.

     NEED FOR ADDITIONAL FINANCING. For the foreseeable future, we expect to
rely principally upon our cash flow, although we have raised limited private
placement funds on occasion. We cannot guarantee the success of this plan. We
believe that from time to time, we may have to obtain additional financing in
order to conduct our business in a manner consistent with our proposed
operations. There can be no guaranty that additional funds will be available
when, and if, needed. If we are unable to obtain such financing, or if the terms
there of are too costly, we may be forced to curtail proposed expansion of
operations until such time as alternative financing may be arranged, which could
have a materially adverse impact on our operations and our shareholders'
investment. At the present time, we have no definitive plans for additional
financing.

     POTENTIAL INABILITY TO CONDUCT SUCCESSFUL OPERATIONS. The results of our
operations will depend, among other things, upon our ability to develop and to
market our water filtration products. Further, it is possible that our proposed
operations will not continue to generate income sufficient to meet operating
expenses or sustain ourselves. Our operations may be affected by many factors,
some known by us, some unknown; and some which are beyond our control. Any of
these problems, or a combination thereof, could have a materially adverse effect
on our viability as an entity and might cause the investment of our shareholders
to be impaired or lost. Our technologies and products are in various stages of
development. The development stage products may not be completed in time to
allow production or marketing due to the inherent risks of new product and
technology development, limitations on financing, competition, obsolescence,
loss of key personnel and other factors. Although we may license or market our
development technology at its current stage of development, there can be no
assurance that we will be able to do so. Unanticipated technical obstacles can
arise at any time and result in lengthy and costly delays or in a determination
that further development is not feasible.

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     While we have a limited product line, the development of some of our
technologies have taken longer than anticipated and could be additionally
delayed. Therefore, there can be no assurance of timely completion and
introduction of improved products on a cost-effective basis, or that such
products, if introduced, will achieve market acceptance such that, in
combination with existing products, they will sustain us or allow us to maintain
profitable operations.

     DEPENDENCE UPON TECHNOLOGY. We are operating in a business, which requires
extensive and continuing research, development and testing efforts. There can be
no assurance that new products will not render our products obsolete or
non-competitive at some time in the future.

     PROTECTION OF TECHNOLOGY. A successful challenge to the ownership of our
technology could materially damage our business prospects. We rely on a
combination of patents, trademarks, copyrights, trade secret laws,
confidentiality procedures and licensing arrangements to protect our
intellectual property rights. We currently have three U.S. patents issued and a
license on two patents. Any issued patent may be challenged and invalidated.
Patents may not issue from any of our future applications. Any claims allowed
from existing or future pending patents may not be of sufficient scope or
strength to provide significant protection for our products. Patents may not be
issued in all countries where our products can be sold so as to provide
meaningful protection or any commercial advantage to us. Our competitors may
also be able to design around our patents or the patents which we license.

     Vigorous protection and pursuit of intellectual property rights or
positions characterize our industry, which has resulted in significant and often
protracted and expensive litigation. Therefore, our competitors may assert that
our technologies or products infringe on their patents or proprietary rights.
Problems with patents or other rights could increase the cost of our products or
delay or preclude new product development and commercialization by us. If
infringement claims against us are deemed valid, we may not be able to obtain
appropriate licenses on acceptable terms or at all. Litigation could be costly
and time-consuming but may be necessary to protect our future patent and/or
technology license positions or to defend against infringement claims.

     COMPETITION. Technological competition from larger and more established
companies is significant and expected to increase. Most of the companies with
which we compete and expect to compete have far greater capital resources and
more significant research and development staffs, marketing and distribution
programs and facilities, and many of them have substantially greater experience
in the production and marketing of products. Our ability to compete effectively
may be adversely affected by the ability of these competitors to devote greater
resources to the sale and marketing of their products than we can. In addition,
one or more of our competitors may succeed or may already have succeeded in
developing technologies and products that are more effective than any of those
we currently offer or are developing. In addition, there can be no guarantee
that we will be able to protect our technology from being copied or infringed
upon. Therefore, there are no assurances that we will ever be able to obtain and
to maintain a profitable position in the marketplace.

     SUCCESS DEPENDENT UPON MANAGEMENT. Our success is dependent upon the
decision making of our directors and executive officers. These individuals
intend to commit as much time as necessary to our business. The loss of any or
all of these individuals could have a materially adverse impact on our
operations. On December 1, 2001, we entered into an employment agreement with
our President.

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                                     PART I

     (a) General Development of Business

     We are a Nevada corporation. Our principal business address is 32921 Calle
Perfecto, San Juan Capistrano, California 92675. Our telephone number at this
address is 949-234-1999.

     We were incorporated under the laws of the State of Nevada on January 23,
1998 as a change of 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.

     On January 30, 1998, we entered into an Exchange Agreement with Seychelle
Water Technologies, Inc., a Nevada corporation ("SWT"), whereby we exchanged our
issued and outstanding capital shares with the shareholders of SWT on a one
share for one share basis. We became the parent company and SWT became a wholly
owned subsidiary. SWT had been formed in 1997 to market water filtration systems
of Aqua Vision International.

     On January 31, 1998, we entered into a Purchase Agreement to acquire all of
the assets of Aqua Vision International, a private California entity. This
Purchase Agreement was amended on February 26, 1999 to provide for the issuance
of 8,000 shares of Series "AAA" Cumulative Convertible Preferred Voting Stock in
lieu of all consideration which had remained unpaid under the original Purchase
Agreement. Aqua Vision International had been in operation since 1995 to
develop, manufacture, and market its own proprietary water filtration systems.

     As of February 28, 2001, we entered into a celebrity consulting and
endorsement agreement with Mr. Pat Boone. This agreement calls for the issuance
of 110,000 shares of common stock for services to be performed during the term
of the agreement, which expires on December 31, 2002. Additionally, we will make
commission payments of 2.5% of the gross revenue derived by us from sales of our
products in which Mr. Boone directly participates.

     In 2000, we sold 235,295 shares of our common stock to an unaffiliated
third party investor in a private placement for $200,000 in cash. We also
granted a stock option to this investor to purchase an additional 235,295
restricted shares at $0.85 per share. This stock option expired in September,
2000. We relied upon Sections 4(2) and 4(6) of the Securities Act of 1933, as
amended, for our exemption from registration on these transactions.

     In 2000, we entered into a consulting agreement with an unaffiliated third
party to provide marketing and consulting services to us. We granted this
unaffiliated third party a stock option to purchase 250,000 restricted shares of
our common stock at $1.125 per share. The option expires after three years, and
vests one-third per year based upon performance criteria in the consulting
agreement. The first one-third vested upon the execution of the agreement. This
agreement has been terminated, and no additional shares have vested.

     In April 2001, we repurchased all of our issued and outstanding Series A
13.5% Non-Voting, Cumulative Preferred Stock, $.01 par value per share. This
repurchase was combined with a comprehensive settlement agreement, for the
benefit of all parties, with the beneficial owner of the Preferred Stock. We
also retired all of these Series A 13.5% Non-Voting, Cumulative Preferred

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Stock, $.01 par value per share, along with the liability for associated
dividends. The TAM Irrevocable Trust, one of our principal shareholders, loaned
us $350,000.00 at 10% simple interest, repayable upon demand, to finance the
transaction. However, all accrued interest on this note has been waived by the
TAM Irrevocable Trust through the end of the fiscal year.

     Organization

     Our Company is presently comprised of one corporation with one subsidiary,
Seychelle Water Technologies, Inc., a Nevada corporation. We have a trade name,
"Seychelle Water Filtration Products, Inc.," which we use in our commercial
operations.

     (b) Operations

     General

     We are implementing a business plan to manufacture and market a range of
water filtration products. We are dedicated to improving the quality of life by
providing highly effective, economical, convenient, durable, reliable filtration
systems for assured quality drinking water. We design, manufacture and supply
water filtration systems to the general public. These systems will range from
portable water bottles that can be filled from nearly any available source, to
units which provide entire water facilities at the point of entry for a
facility. We also plan, in the coming year, to develop a product or products for
a more diverse marketplace. We have the capability of tailoring systems to meet
the needs of areas where specific water problems or severe water contamination
exist, on a local or worldwide basis and have been funding research and
development of more commercial and industrial lines of filtration.

     General Business Plan

     The Environmental Protection Agency (EPA) has established Maximum
Contamination Levels in their National Primary Drinking Water Standards. There
are forty-six (46) disclosed key contaminants out of a total of seventy-nine
(79) listed by the EPA which are addressed by our products. These forty-six (46)
disclosed key contaminants may be grouped into Volatile Organic Compounds,
Inorganics, Microbiological Organisms, Trihalomethanes, and Radiologicals.

     Our patented portable products reduce up to 99.8% of the forty-six (46)
disclosed key contaminants listed by the EPA in these five basic areas. We
combine selective micron physical filtration, adsorption, and reduction using
sorbent medias and other materials. All portable products are engineered by
first analyzing the forty-six (46) disclosed key contaminants and the
contaminants' direct effect upon health from ingestion. These forty-six (46)
disclosed key contaminants are considered in the design effort in order to reach
maximum reduction percentages of these pollutants. Health claims are represented
by the reduction in volume percentages as determined by various independent
labs. Testing is continually performed, most recently achieving verification
from Los Angeles County Laboratories - up to 95% reduction of analyte
Chromium 6.

     We develop and manufacture products in the area of water filtration. We
have historically focused our manufacturing on our flagship Portable Water
Filtration Systems that we have availed Nikken for distribution for the previous
fiscal year. We also plan to begin marketing products into residential,
commercial and industrial venues for both point-of-use and service applications.

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     For the past year, our primary marketing focus has been our strategic
alliance with Nikken Global, Inc. and Kenko World, two affiliated entities which
are private multi-level marketing companies. We will collectively call them
Nikken in this document. We were in negotiations to give to Nikken, subject to
certain restrictions, the exclusive rights to distribute our products and
technology for a period of ten years, commencing from March 1, 2001. This
relationship would be renewable for three successive one-year periods
thereafter, or until either party gives three months notice prior to the end of
the current term.

     We are reducing the emphasis of business with Nikken for the coming fiscal
year. We currently have limited sales pending with Nikken and do not foresee any
expansion. We had one product which we marketed through Nikken: The PiMag
Portable Water Filtration Bottle - 24oz. portable water filtration bottle. The
device fills from the top and has an easy grip design that also fits into bike
holders or a car caddy.

     However, we will also continue to promote our products and technologies to
non-profit organizations, such as the Red Cross, the U.S. and international
militaries, missionaries, charitable and fund-raising groups and other
philanthropic organizations, which do not sell to distributors or resell to
customers.

     We have spent much of our focus in the latter part of the last the fiscal
year researching new technologies in the field of water filtration. We believe
that these new technologies will be our focus in the coming fiscal year.

     We have been in active discussions to acquire a line of reverse
osmosis-based products which are currently being developed in China. Subsequent
to our fiscal year end, we completed an exclusive agreement with Heibei R.O.
Environmental Technologies, which is a company that will produce membrane
products for our sales and distribution in the United States. This agreement
offers us the opportunity to expand into the home market with a product that we
believe may be revolutionary and can be produced and sold at a price that we
believe is extremely competitive to the market. We believe that this affiliation
could further enable distribution of our portable filtration products throughout
China.

     We also have been examining the ozonation process as a possible technology
for us to pursue. Ozonation can be defined as an oxidation and disinfectant
process used in the water filtration industry. Ozonation is an alternative to
the chlorination processes used in water treatment. Various municipalities and
water treatment facilities have been examining and are choosing ozonation as a
replacement for chlorination because of ozones ability to effectively purify
water without side effects. We have been reviewing ozonation technology for
possible use with our existing intellectual properties as a means of removing
materials economically for the consumer, commercial, and industrial markets. We
have been looking at this technology for potential point-of-use filtration in
various situations. Our plan would be to develop a product or products which
will be able to purify water of bacteria in developed communities as well as
those without electrical supply.

     We have completed negotiations for an agreement to acquire rights of
Enviro(3) Care Incorporated, as well as all applicable intellectual properties.
We will exercise our best efforts to complete the product packaging, marketing,
and service in order to maximize sales and distribution of various ozonation
products. This acquisition includes a patent and other trade


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secret assets which we plan to use to our advantage in our distribution. This
product market includes home, spas, wells, R.V., agricultural, medical and other
commercial and industrial applications.

     On June 6, 2002, we concluded the License Agreement for a product known as
the "Hand Held Pump Technology." We licensed all proprietary rights associated
with this technology, including patent #6,136,188 and the trademark Aqua
Gear(TM) (#75/838,293). We will pay a two percent royalty and a one percent
license of trademark fee on any sales using this technology during the term of
the license. The License Agreement is for an initial term of five years, with
five successive five-year renewals. We may market this technology in the United
States and internationally. This offers us an additional proprietary product in
the portable filtration industry. We believe that this purchase compliments our
current product line.

     We also have been examining the possibility of entering the waste water
recovery business. We are examining the possibility of developing a portable,
reclamation system that would meet requirements of state and federally regulated
industries discharging water into our environment. Regulations covering water
discharge occur in municipalities, service, commercial and industrial
industries. We have had discussions with companies which service municipalities
and commercial services. We have no definite agreements at this point.

     We have entered into the first stage of contractual agreements with the
representatives of a company in Japan on an exclusive basis to market and sell
our entire product line throughout Japan. We anticipate completing the
negotiations on this agreement within this fiscal year, although there can be no
guarantee.

     We also have several products which we are not currently marketing but
have been developing for marketing in the future to other consumer markets
through avenues other than Nikken. In any event, our goal is to capture a
significant share of the water filtration market using these and other products.
We plan to continue to market our current products and to complete the
additional products in research and development.

     (d) Raw Materials

     The use of proprietary medias in the manufacturing of our line of products
is a major factor. To date, there is adequate availability of raw materials and
proprietary medias for all of our products. We do not expect this situation to
change in the near future.

     (e) Customers and Competition

     There are a number of established companies in the water filtration
business, with no one company dominating this business. However, Innova Pure
Water, Inc. (with whom we have a patent license agreement), and our company hold
patents specifically covering the majority of all portable water filtration
bottle design concepts. We cannot guarantee that we will be able to successfully
compete.

     Our primary customer in the past has been Nikken. Most of our revenues for
the past fiscal year have been based upon our sales through Nikken. We are
reducing the emphasis of business with

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Nikken for the coming fiscal year. We currently have limited sales pending with
Nikken and do not foresee any expansion. We plan to expand the focus of our
operations to include other products and markets.

     (f) Backlog

     As of February 28, 2002, we had a backorder of $595,305 in portable water
filtration units.

     (g) Employees

     As of February 28, 2002, we had eleven (11) employees, four (4) corporate
and administrative employees and seven (7) operations and warehouse employees.
Until the calendar year end, these employees worked for us under a lease
arrangement with an unaffiliated third party Professional Employer Organization.
We have discontinued this arrangement as of January 1, 2002 and now manage all
human resources internally. We hire additional employees, on a temporary or
ongoing basis, as circumstances require.

     (h) Proprietary Information

     We own a patent for the Portable Water Filtration System with the filter
cap assembly, Patent # 5,914,045. As described in the Abstract, it is "[a]
filter assembly for a flexible, portable bottle having a sealing cap including a
filter attached to the interior of the cap to filter out substantially all
INORGANICS, ORGANICS, RADIOLOGICAL CHEMICALS AND MICROBIOLOGY. The filter
assembly also may include a second filter or Iodinator sealed in the flexible
bottle to further remove micro-organisms from water passing there-through. The
filter assembly is designed so that the flexible bottle must be pressurized, as
by being hand pressed, after it is filled with water to force flow of water
through the [sic] either or both of the filters. The filter in the cap includes
a check valve to allow the bottle to be re-pressurized after water has been
dispensed from the bottle."

     We own a patent, Patent # 6,004,460, for the Portable Water Filtration
System that allows the user to fill the bottle from the bottom, thereby reducing
any chance of contaminating the filter that is attached to the top of the
bottle. The patent is described in the abstract as "[a] combination filter
assembly and flexible portable bottle having a bottom opening with a sealing cap
attached thereto, to filter out substantially all INORGANICS, ORGANICS,
RADIOLOGICAL CHEMICALS and MICROBIOLOGY held in water in the bottle. The filter
assembly may be attached to an adapter sealed to the top of the flexible bottle.
Water in the bottle passes through the filter assembly and out a top nozzle or
valve when the flexible bottle is squeezed. The flexible bottle is filled with
water through the bottom opening." This is the technology which we use for our
Bottom's UP product line.

     We own a patent, Patent #6,058,971, for Quick Connect Diverter Valve. As
described in the Abstract, it is "A quick-connect diverter valve for use in
connecting existing water faucets and water filtration units in and around a
kitchen, or other areas where clean water is desired."

     In addition, we have the trademark registration for "Pres 2 Pure,"
S.N.75/040,704.

     We have a trade name, "Seychelle Water Filtration Products, Inc.," which we
use in our commercial operations.

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     In January, 2001, we entered into a non-exclusive patent license agreement
with Innova which allows us, for a period of one year, to manufacture, market,
distribute and sell all portable water filtration bottles which are filled from
the top. The license is renewable on an annual basis providing the minimum unit
sales levels are achieved. These minimum unit level sales are 100,000 as a
condition of renewal for the initial term and escalate in 100,000 unit
increments, with 500,000 units as a condition for renewal for the fifth and all
subsequent renewal periods. The license agreement is worldwide and requires a
royalty for each unit sold. Given the shift our focus in providing water
filtration products, we are not sure if this license will continue or will be
renegotiated at some point on different terms. In any case, we do not see this
technology as being a material part of our operations in the future.

     On June 6, 2002, we concluded the License Agreement for a product known as
the "Hand Held Pump Technology." We licensed all proprietary rights associated
with this technology, including patent #6,136,188 and the trademark Aqua
Gear(TM) (#75/838,293). We will pay a two percent royalty and a one percent
license of trademark fee on any sales using this technology during the term of
the license. The License Agreement is for an initial term of five years, with
five successive five-year renewals.

     (i) Government Regulation

     We are not, as a company, subject to any material governmental regulation
or approvals. However, our products are subject to inspection and evaluation by
regulatory authorities who have jurisdiction over water quality standards. Such
authorities are on the federal, state, and local level, both in the United
States and overseas, where we market our products. Most of our products have
already been inspected and evaluated by all applicable governmental authorities
in the areas in which we operate or plan to operate in the near future. With
respect to our new proposed focus of operations, we do not know if governmental
regulation will have a material impact on us in the future.

     (j) Research and Development

     We have spent approximately $79,000 and $38,000 in research and development
activities for the fiscal years ended February 28, 2002 and February 28, 2001,
respectively.

     (k) Environmental Compliance

     At the present time we, as a company, are not subject to any material costs
for compliance with any environmental laws. With respect to our new proposed
focus of operations, we do not know if environmental compliance will have a
material impact on us in the future.

     (l) Subsequent Events

     On June 6, 2002, we concluded the License Agreement for a product known as
the "Hand Held Pump Technology." We licensed all proprietary rights associated
with this technology, including patent #6,136,188 and the trademark Aqua
Gear(TM) (#75/838,293). We will pay a two percent royalty and a one percent
license of trademark fee on any sales using this technology during the term of
the license. The License Agreement is for an initial term of five years, with
five

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successive five-year renewals. We may market this technology in the United
States and internationally.

     Subsequent to our fiscal year end, we completed an exclusive agreement with
Heibei R.O. Environmental Technologies, which is a company that will produce
membrane products for our sales and distribution in the United States. This
agreement offers us the opportunity to expand into the home market with a
product that we believe may be revolutionary and can be produced and sold at a
price that we believe is extremely competitive to the market.

     We have completed negotiations for an agreement to acquire rights of
Enviro(3) Care Incorporated, as well as all applicable intellectual properties.
We will exercise our best efforts to complete the product packaging, marketing,
and service in order to maximize sales and distribution of various ozonation
products. This acquisition includes a patent and other trade secret assets which
we plan to use to our advantage in our distribution. This product market
includes home, spas, wells, R.V., agricultural, medical and other commercial and
industrial applications.

ITEM 2. Description of Properties.

     As of February 28, 2002, our business office was located at 32921 Calle
Perfecto, San Juan Capistrano, CA 92675. Our telephone number at this address is
949-234-1999. We pay a total of $8,020 in rent per month for approximately
13,000 square feet of office space through March 31, 2002, escalating to $8,750
per month through January 14, 2003. We have a three-year lease with an
unaffiliated third party. We own our manufacturing equipment, office equipment
and inventory.

     We own three patents, a trademark, a trade-name, trade secrets and a
non-exclusive patent license agreement with Innova, see Proprietary Information
above, and other proprietary information related to our business operations.

ITEM 3. Legal Proceedings.

     During May, 2001, Seychelle Water Technologies, Inc. was named and served
with a lawsuit filed by SafeWater Anywhere, Inc. This lawsuit was filed in State
Superior Court in Orange County, California. Mr. Carl Palmer was also named as a
defendant. The complaint alleges breach of fiduciary duty, constructive fraud,
promissory fraud, rescission, constructive trust, unfair trade practices, and
conversion. The complaint sought unspecified damages and injunctive relief. We
filed a motion with the court on behalf of all defendants to have this matter
set for mediation/arbitration. The court approved our motion.
Mediation/arbitration is pending. We continue to believe that this matter is
without any merit and intend to vigorously defend our rights.

     In February, 2002, Mr. Douglas Copp filed a lawsuit on behalf of himself
and American Rescue Team International, Inc. against us, Nikken, and Carl Palmer
in the U.S. District Court for the District of New Mexico. The Complaint, which
is essentially a claim for royalty payments, alleges breach of contract, unfair
trade practices, misappropriation of publicity, unjust enrichment, violation of
the Lanham Act, and conspiracy. While we believe that the claims are without
merit and

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will aggressively defend our rights. We plan to seek an early dismissal because
we believe that the case was filed in the wrong court. We have not yet responded
in this matter.

     Otherwise, no legal proceedings of a material nature to which we are a
party are pending, and we know of no legal proceedings of a material nature
pending or threatened or judgments entered against any of our directors or
officers in his or her capacity as such.

ITEM 4. Submission of Matters to a Vote of Security Holders.

     We did not submit any matter to a vote of security holders through
solicitation of proxies during the fourth quarter of the fiscal year covered by
this report.

                                     PART II

ITEM 5. Market for Common Equity and Related Stockholder Matters.

     (a) Principal Market or Markets

     Our Common Stock began trading in 1987. Since the consummation of the
Exchange Agreement between our Company and SWT, market makers and other dealers
have provided bid and ask quotations of our Common Stock under the symbol
"SYEV." Trading was conducted in the over-the-counter market on the NASD's
"Electronic Bulletin Board" until April 20, 2000. We traded on the "Pink Sheets"
until December, 2000, when we were re-listed on the NASD's "Electronic Bulletin
Board," where we currently trade. The table below represents the range of high
and low bid quotations of our Common Stock as reported during the reporting
period herein. The following bid price market quotations represent prices
between dealers and do not include retail markup, markdown, or commissions;
hence, they may not represent actual transactions.

<Table>
<Caption>
Fiscal Year 2002                                             High           Low
----------------                                            -----          -----

<S>                                                         <C>            <C>
First Quarter
Common Shares                                               $1.28          $ .82

Second Quarter
Common Shares                                               $ .98          $ .35

Third Quarter
Common Shares                                               $ .40          $ .25

Fourth Quarter
Common Shares                                               $ .44          $ .20
</Table>

<Table>
<Caption>
Fiscal Year 2001                                             High           Low
----------------                                            -----          -----

<S>                                                         <C>            <C>
First Quarter                                               $1.43          $ .75
Common Shares

Second Quarter                                              $1.10          $ .87
Common Shares

Third Quarter                                               $1.47          $ .62
Common Shares

Fourth Quarter                                              $1.62          $ .34
Common Shares
</Table>

                                       12
<PAGE>

(b) Approximate Number of Holders of Common Stock

     As of February 28, 2002, a total of 9,508,480 of our shares of Common Stock
were outstanding and approximately 273 holders of record owned these shares.
However, we believe that we have a significantly greater number of shareholders
because a substantial number of our shares are held in nominee name.

(c) Dividends

     Holders of Common Stock and Preferred Stock are entitled to receive such
dividends as may be declared by our Board of Directors. No dividends on the
Common Stock were paid by us during the periods reported herein nor do we
anticipate paying such dividends in the foreseeable future.

ITEM 6. Management's Discussion and Analysis or Plan of Operation.

Forward-Looking Statements

     The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets, the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude customers from using our products
for certain applications, delays in our introduction of new products or
services, and our failure to keep pace with emerging technologies.

     When used in this discussion, words such as "believes," "anticipates,"
"expects," "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
document. We undertake no obligation to revise any forward-looking statements in
order to reflect events or circumstances that may subsequently arise. Readers
are urged to carefully review and consider the various disclosures made by us in
this document and other reports filed with the Securities and

                                       13
<PAGE>
Exchange Commission that attempt to advise interested parties of the risks and
factors that may affect our business.

Results of Operations

     For the fiscal year ended February 28, 2002, we saw an increase in our
sales revenues from the prior year. As a result we were marginally profitable
for the fiscal year ended February 28, 2002. Our revenues increased for the
fiscal year ended February 28, 2002 compared to the fiscal year ended February
28, 2001. They were $1,971,774 and $830,323, respectively.

     Costs of sales include all costs incurred in the manufacturing process. The
major components of direct costs are direct labor and associated benefits,
materials and freight. The major components of indirect job costs are indirect
labor costs and associated benefits and depreciation of production equipment.
Our costs of sales as a percentage of revenue decreased for the fiscal years
ended February 28, 2002 and February 28, 2001. They were 63% and 70%
respectively.

     Gross profit from operations was $738,331 or 37% for the year ended
February 28, 2002, compared to $249,080 or 30% of revenue for the year ended
February 28, 2001.

     Our general and administrative expenses were $505,407 for the year ended
February 28, 2002 and $761,349 for the year ended February 28, 2001. The major
components of general and administrative expenses are office salaries and
associated payroll costs, general and health insurance costs, rent, telephone,
accounting and legal expenses.

     We had a net profit of $47,278 for the year ended February 28, 2002,
compared to a net loss of $(878,742) for the year ended February 28, 2001. Our
basic and diluted income per share for the year ended February 28, 2002 was $0.
Our basic and diluted loss per share for the year ended February 28, 2001 was
$.11.

     While we have had a successful year marketing our products principally
through Nikken, we plan to expand the scope of our products. We are reducing the
emphasis of business with Nikken in the coming fiscal year.

     At this time, we believe that we can replace the revenues which Nikken
provided, but do not know to what extent the loss of revenues will have an
impact on us. We have had a similar situation in the past with a major customer
and were able to replace the lost revenues within approximately a one year
period. However, we cannot make a prediction at this point.

     On June 6, 2002, we concluded the License Agreement for a product known as
the "Hand Held Pump Technology." We licensed all proprietary rights associated
with this technology, including patent #6,136,188 and the trademark Aqua
Gear(TM) (#75/838,293). We will pay a two percent royalty and a one percent
license of trademark fee on any sales using this technology during the term of
the license. The License Agreement is for an initial term of five years, with
five successive five-year renewals. We may market this technology in the United
States and internationally.

                                       14
<PAGE>
     Subsequent to our fiscal year end, we completed an exclusive agreement with
Heibei R.O. Environmental Technologies, which is a company that will produce
membrane products for our sales and distribution in the United States. This
agreement offers us the opportunity to expand into the home market with a
product that we believe may be revolutionary and can be produced and sold at a
price that we believe is extremely competitive to the market.

     We have completed negotiations for an agreement to acquire rights of
Enviro(3) Care Incorporated, as well as all applicable intellectual properties.
We will exercise our best efforts to complete the product packaging, marketing,
and service in order to maximize sales and distribution of various ozonation
products. This acquisition includes a patent and other trade secret assets which
we plan to use to our advantage in our distribution. This product market
includes home, spas, wells, R.V., agricultural, medical and other commercial and
industrial applications.

     We continue to be in active discussions with various companies concerning
our current product line and the expansion of our business segments.

Liquidity and Capital Resources

     Our cash flows from operating activities produced a net $265,680 during the
year ended February 28, 2002, compared to using a net $155,408 during the year
ended February 28, 2001.

     Our investing activities used $27,796 during the year ended February 28,
2002, compared to using $29,366 for the year ended February 28, 2001. All
investing activities were directed toward the purchase of equipment.

     Financing activities used $147,450 for the year ended February 28, 2002
compared to February 28, 2001 of $260,000. The cash for these activities came
principally from sales of common stock and stockholder advances.

     Our net cash increased to $201,451 at February 28, 2002 from $111,017 at
February 28, 2001.

     Inventories increased by $99,833 for the year ended February 28, 2002,
compared to a decrease of $118,579 for the year ended February 28, 2001.

     We plan to continue to internally fund the expansion of our operations.
However, we may investigate the use of outside funding, including debt financing
or equity private placements. We have no specific plans for any outside funding
at this point.

ITEM 7. Financial Statements.


                                       15


<PAGE>
                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

<Table>
<S>                                                                             <C>
Independent Auditors' Report                                                    F-1

Financial Statements

         Consolidated Balance Sheet                                             F-2 to F-3

         Consolidated Statements of Operations                                  F-4

         Consolidated Statements of Changes in Stockholders' Deficit            F-5 to F-6

         Consolidated Statements of Cash Flows                                  F-7 to F-8

         Notes to Consolidated Financial Statements                             F-9 to F-29
</Table>

<PAGE>



                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
Seychelle Environmental Technologies, Inc.
San Juan Capistrano, California

We have audited the accompanying consolidated balance sheet of Seychelle
Environmental, Technologies, Inc. and subsidiary as of February 28, 2002, and
the related consolidated statements of operations, of changes in stockholders'
deficit, and of cash flows for each of the two fiscal years then ended. The
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Seychelle Environmental Technologies, Inc. and subsidiary at February 28, 2002
and the consolidated results of their operations and their cash flows for each
of the two fiscal years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note A to the
consolidated financial statements, the Company has recurring losses from
operations and has a net capital deficiency that raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note A. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



Solana Beach, California
June 7, 2002


                                       F-1
<PAGE>
                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                           CONSOLIDATED BALANCE SHEET
                                February 28, 2002

--------------------------------------------------------------------------------

<Table>
<S>                                                                     <C>
                                     ASSETS

CURRENT ASSETS
       Cash                                                             $201,451
       Trade receivables, net of allowance for                           167,080
             doubtful accounts $42,984
       Inventories, net                                                  268,630
       Prepaid expenses                                                   12,300
                                                                        --------
             Total current assets                                        649,461
                                                                        --------
PROPERTY AND EQUIPMENT, NET                                              111,798

INTANGIBLE ASSETS, NET                                                    13,598

OTHER ASSETS                                                                 550
                                                                        --------
             Total non-current assets                                    125,946
                                                                        --------
TOTAL ASSETS                                                            $775,407
                                                                        ========
</Table>

          See accompanying notes to consolidated financial statements.

                                      F-2

<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                     CONSOLIDATED BALANCE SHEET (CONTINUED)
                               February 28, 2002

--------------------------------------------------------------------------------

<Table>
<S>                                                                 <C>
                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
       Accounts payable                                             $   127,640
       Accrued expenses                                                 299,450
       Customer deposits                                                225,266
       Income taxes payable                                               3,597
       Stockholder advances                                             309,588
                                                                    -----------
             Total current liabilities                                  965,541
                                                                    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
       Preferred stock, $.01 par value
             Series "AAA", preferred stock, 8,000 shares                     80
               authorized, issued and outstanding
       Common stock $.001 par value - 50,000,000 shares                   9,433
          authorized; 9,433,480 shares issued and outstanding
       Additional paid-in capital                                     3,003,662
       Accumulated deficit                                           (3,160,602)
       Unearned compensation                                            (42,707)
                                                                    -----------
             Total stockholders' deficit                               (190,134)
                                                                    -----------
TOTAL LIABILITIES AND
       STOCKHOLDERS' DEFICIT                                        $   775,407
                                                                    ===========
</Table>

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                For Fiscal Years Ended February 28, 2002 and 2001

--------------------------------------------------------------------------------

<Table>
<Caption>
                                                    2002               2001
                                                 -----------        -----------

<S>                                              <C>                <C>
SALES                                            $ 1,971,774        $   830,323

COST OF SALES                                      1,233,443            581,243
                                                 -----------        -----------
             Gross profit                            738,331            249,080
                                                 -----------        -----------
OPERATING EXPENSES
       Selling                                       153,635            230,369
       General and administrative                    505,407            761,349
                                                 -----------        -----------
             Total expenses                          659,042            991,718
                                                 -----------        -----------
INCOME (LOSS) FROM OPERATIONS                         79,289           (742,638)

OTHER INCOME (EXPENSES)
       Interest expense                              (29,592)            (1,895)
       Miscellaneous income (expense)                  1,581              9,699
       Write down due to discontinuance
             of product lines                              0           (142,308)
                                                 -----------        -----------
             Total other income (expense)            (28,011)          (134,504)
                                                 -----------        -----------
INCOME (LOSS) BEFORE PROVISION
       FOR INCOME TAXES                               51,278           (877,142)

PROVISION FOR INCOME TAXES                             4,000              1,600
                                                 -----------        -----------
             Net income (loss)                   $    47,278        $  (878,742)
                                                 ===========        ===========
BASIC AND DILUTED (LOSS)
       PER SHARE                                 $      0.00        $     (0.11)
                                                 ===========        ===========
WEIGHTED AVERAGE NUMBER OF
       SHARES: BASIC AND DILUTED                   9,043,925          8,772,289
                                                 ===========        ===========
</Table>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
                For Fiscal Years Ended February 28, 2002 and 2001

--------------------------------------------------------------------------------

<Table>
<Caption>
                                                                                                                        Additional
                                                       Preferred Stock                    Common Stock                   Paid-in
                                                   Shares         Amount            Shares            Amount             Capital
                                                   ------      -----------         ---------        -----------        -----------

<S>                                                <C>         <C>                 <C>              <C>                <C>
Balance, February 29, 2000                         8,017       $        80         8,475,046        $     8,475        $ 2,544,125

Issuance of common stock in
         connection with celebrity
         consulting contract                           0                 0           110,000                110            145,090

Issuance of stock options
         for services                                  0                 0                 0                  0             59,375

Issuance of common stock for
         compensation and
         services                                      0                 0           109,139                109            109,030

Issuance of common stock to
         employees                                     0                 0            35,000                 35             14,183

Issuance of common stock to
         former consultant                             0                 0            37,000                 37                (37)

Cancellation of common stock
         of former consultant                          0                 0           (80,000)               (80)                80

Sale of common stock                                   0                 0           235,295                235            199,765

Contributed executive services                         0                 0                 0                  0             58,391

Net loss from fiscal year ended
         February 28, 2001                             0                 0                 0                  0                  0
                                                   -----       -----------         ---------        -----------        -----------
Balance, February 28, 2001                         8,017       $        80         8,921,480        $     8,921        $ 3,130,002

<Caption>
                                                                                                                Total
                                                                                        Stock Subscription   Stockholder'
                                                                                          Receivable and        Equity
                                                     Accumulated          Unearned         Stockholder       (Accumulated)
                                                       Deficit          Compensation       Receivable          (Deficit)
                                                     -----------        ------------    ------------------   -------------

<S>                                                  <C>                <C>             <C>                  <C>
Balance, February 29, 2000                           $(2,329,138)       $         0        $   (13,609)       $   209,933

Issuance of common stock in
         connection with celebrity
         consulting contract                                   0            (93,953)                 0             51,247

Issuance of stock options
         for services                                          0                  0                  0             59,375

Issuance of common stock for
         compensation and
         services                                              0                  0                  0            109,139

Issuance of common stock to
         employees                                             0                  0                  0             14,218

Issuance of common stock to
         former consultant                                     0                  0                  0                  0

Cancellation of common stock
         of former consultant                                  0                  0                  0                  0

Sale of common stock                                           0                  0                  0            200,000

Contributed executive services                                 0                  0             13,609             72,000

Net loss from fiscal year ended
         February 28, 2001                              (878,742)                 0                  0           (878,742)
                                                     -----------        -----------        -----------        -----------
Balance, February 28, 2001                           $(3,207,880)       $   (93,953)       $         0        $  (162,830)
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (CONTINUED)
               For Fiscal Years Ended February 28, 2002 and 2001

--------------------------------------------------------------------------------

<Table>
<Caption>
                                                                                                                 Additional
                                                 Preferred Stock                     Common Stock                 Paid-in
                                              Shares         Amount             Shares           Amount           Capital
                                              -----        -----------         ---------       -----------       -----------

<S>                                           <C>          <C>                 <C>             <C>               <C>
Repurchase Series A
         Preferred stock                        (17)       $         0                 0       $         0       $  (350,000)

Issuance of common stock for
         compensation and
         services                                 0                  0           507,000               507           113,585

Issuance of common stock
         to employees                             0                  0             5,000                 5             1,495

Forgiveness of interest
         due shareholder                          0                  0                 0                 0            29,580

Contributed executive
         services                                 0                  0                 0                 0            54,000

Celebrity consulting agreement                    0                  0                 0                 0                 0

Reduce negotiated share
         price on stock issued to
         board member                             0                  0                 0                 0            25,000

Net income from fiscal year ended
         February 28, 2002                        0                  0                 0                 0                 0
                                              -----        -----------         ---------       -----------       -----------
Balance, February 28, 2002                    8,000        $        80         9,433,480       $     9,433       $ 3,003,662
                                              =====        ===========         =========       ===========       ===========

<Caption>
                                                                                                         Total
                                                                                  Stock Subscription  Stockholder'
                                                                                    Receivable and       Equity
                                               Accumulated          Unearned         Stockholder      (Accumulated)
                                                Deficit           Compensation       Receivable         (Deficit)
                                               -----------        ------------    ------------------  -------------

<S>                                            <C>                <C>                <C>               <C>
Repurchase Series A
         Preferred stock                       $         0        $         0        $         0       $  (350,000)

Issuance of common stock for
         compensation and
         services                                        0                  0                  0           114,092

Issuance of common stock
         to employees                                    0                  0                  0             1,500

Forgiveness of interest
         due shareholder                                 0                  0                  0            29,580

Contributed executive
         services                                        0                  0                  0            54,000

Celebrity consulting agreement                           0             51,246                  0            51,246

Reduce negotiated share
         price on stock issued to
         board member                                    0                  0                  0            25,000

Net income from fiscal year ended
         February 28, 2002                          47,278                  0                  0            47,278
                                               -----------        -----------        -----------       -----------
Balance, February 28, 2002                     $(3,160,602)       $   (42,707)       $         0       $  (190,134)
                                               ===========        ===========        ===========       ===========
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Fiscal Years Ended February 28, 2002 and 2001

--------------------------------------------------------------------------------

<Table>
<Caption>
                                                                            2002             2001
                                                                          ---------        ---------

<S>                                                                       <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
       Net income (loss)                                                  $  47,278        $(878,742)
       Adjustments to reconcile net income (loss) to net
             cash provided (used) by operating activities:
             Depreciation and amortization                                   54,166           72,481
             Provision for doubtful accounts                                  6,674           22,551
             Stock issued for services                                      315,339          116,762
             Fair market value of stock options issued for services               0           59,375
             Forgiveness of accrued interest                                 29,580                0
             Provision for slow moving inventory                            (19,001)         142,308
             Contributed executive services                                  54,000           72,000
             Gain on disposal of equipment                                   (1,581)         (11,514)
       Changes in operating assets and liabilities:
             Trade receivables                                             (158,087)            (600)
             Inventory                                                       99,833         (118,579)
             Other current assets                                            12,084           (2,784)
             Intangible and other assets                                     12,800          (10,160)
             Accounts payable                                                39,180            8,057
             Accrued expenses                                              (243,876)         174,265
             Income tax payable                                              (1,600)               0
             Customer deposits                                               18,891          199,172
                                                                          ---------        ---------
       Net cash provided (used) by operating activities                     265,680         (155,408)
                                                                          ---------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES
       Proceeds from sale of equipment                                        2,500           25,000
       Purchase of equipment                                                (30,296)         (54,366)
                                                                          ---------        ---------
       Net cash used by investing activities                                (27,796)         (29,366)
                                                                          =========        =========
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 Fiscal Years Ended February 28, 2002 and 2001

--------------------------------------------------------------------------------

<Table>
<Caption>
                                                                       2002             2001
                                                                     ---------        ---------

<S>                                                                  <C>              <C>
CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from sale of common stock                            $       0        $ 200,000
       Repurchase preferred stock                                     (350,000)               0
       Proceeds from stockholder's advances                            350,000           80,000
       Repayments on stockholder's advances                           (147,450)         (20,000)
                                                                     ---------        ---------
       Net cash (used) provided by financing activities               (147,450)         260,000
                                                                     ---------        ---------
       NET INCREASE IN CASH                                             90,434           75,226

Cash, beginning of year                                                111,017           35,791
                                                                     ---------        ---------
Cash, end of year                                                    $ 201,451        $ 111,017
                                                                     =========        =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
       INFORMATION

       Cash paid during the year for:

             Interest                                                $       0        $     347
                                                                     =========        =========
             Income taxes                                            $   1,600        $   1,600
                                                                     =========        =========

NON-CASH INVESTING AND FINANCING ACTIVITIES

       Stock issued for services and settlement of litigation        $ 386,839        $ 109,140
                                                                     =========        =========
       Contributed executive services                                $  54,000        $  58,391
                                                                     =========        =========
       Forgiveness of accrued interest on stockholder advances       $  29,580        $       0
                                                                     =========        =========
       Reduction of value of shares issued for legal services        $  25,000        $       0
                                                                     =========        =========
       Settlement of stockholders' receivable for services           $       0        $  13,609
                                                                     =========        =========
       Stock options issued for services                             $       0        $  59,375
                                                                     =========        =========
       Settlement of accounts payable
             by stockholder advance                                  $       0        $  30,000
                                                                     =========        =========
</Table>

          See accompanying notes to consolidated financial statements.

                                       F-8
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE A:   ORGANIZATION AND DESCRIPTION OF BUSINESS

          Organization

          Seychelle Environmental Technologies, Inc. ("SET"), 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 ("SWT") was formed as a corporation in
          February 1997 under the laws of the state of Nevada for the purpose of
          marketing the products of Aqua Vision International ("Aqua Vision"), a
          private California entity operating since 1996. Prior to January 1998,
          SWT operations were limited primarily to fundraising and marketing
          activities.

          On January 30, 1998, SET entered into a stock exchange agreement with
          SWT, whereby SWT shareholders emerged as the majority stockholder of
          SET. This reverse acquisition resulted in SWT becoming a wholly owned
          subsidiary of SET. SWT had no material operations for each of the four
          fiscal years ended February 28, 2002.

          On January 31, 1998, SET purchased the assets of Aqua Vision for $9.5
          million. Only $1.2 million was paid to the Aqua Vision owners and the
          transaction was not consummated. Effective February 28, 1999, the
          Company revised its Purchase Agreement and issued 8,000 shares of its
          Series "AAA" Preferred Stock Cumulative Preferred Voting Stock
          (described in Note E) to Aqua Vision's owners. As a result, Aqua
          Vision's owners became the ultimate controlling stockholder of SET.
          Because the assets were acquired from existing shareholders, the $1.2
          million payment was treated as a distribution and the Series "AAA"
          stock issuance was treated as a recapitalization.

          Description of Business

          The Company designs, manufactures and supplies water filtration
          systems to the general public. These systems range from portable water
          bottles that can be filled from nearly any available source, to units
          which provide entire water facilities at the point of entry for a
          facility. There are a number of established companies in the water
          filtration business, with no one company dominating the business.

          During February 2001, SET entered into a strategic alliance with
          Nikken Global, Inc. and Kenko World (collectively "Nikken"), whereby
          Nikken obtained exclusive rights to distribute the SET products and
          technology for a period of ten

                                      F-9
<PAGE>
                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE A:   ORGANIZATION AND DESCRIPTION OF BUSINESS, continued

          years commencing from March 1, 2001. The Alliance would be renewable
          for three successive one-year periods thereafter, or until either
          party gives three months notice prior to the end of the current term.

          Nikken is one of the leading direct distribution organizations in the
          world. The Alliance is worldwide and royalty free. Revenue from the
          Company's sales to Nikken approximated $1,757,000 and $71,000 for the
          fiscal years ended February 28, 2002 and 2001, respectively.

          SET reserved its rights to continue marketing and selling its products
          and technology to nonprofit organizations that do not resell to
          distributors or sell to consumers, for example the Red Cross, US Armed
          Forces and similar organizations.

          The Company is reducing the emphasis of business with Nikken for the
          coming fiscal year. The Company currently has limited sales pending
          with Nikken and does not foresee any expansion. As of February 28,
          2002, the Company had received $225,266 as deposit towards purchase
          orders of approximately $465,000. The Company had one primary product,
          which they marketed through Nikken: The PiMag Portable Water
          Filtration Bottle - 24oz. Portable water filtration bottle.

          During the later part of the fiscal year ended February 28, 2002, the
          Company began discussions with other companies researching new
          technologies in the field of water filtration including -

               o    Reverse osmosis-based products;

               o    Ozination; and,

               o    Waste water recovery

          During May 2002, the Company completed negotiations for an agreement
          to acquire rights to Enviro Care Inc., as well as, all applicable
          intellectual properties, whereby the Company can market various
          ozonation products. The Company believes this agreement will provide
          opportunities in additional markets including home, spa, agriculture,
          medical and other commercial and industrial applications.

          During June 2002, the Company entered into an exclusive agreement with
          Heibei R.O. Environmental Technologies, whereby the Company can sell
          reverse osmosis-based products, which is currently being developed in
          China. The Company believes this agreement provides opportunities to
          expand into the home market with a product that can be produced and
          sold at a

                                      F-10
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE A:   ORGANIZATION AND DESCRIPTION OF BUSINESS, continued

          price that is competitive to the market. Additionally, the Company
          believes the agreement will further enable distribution of portable
          filtration products in China.

          The Company believes that these new initiatives will be their primary
          focus during the fiscal year ending February 28, 2003.

          Prior to entering into this strategic alliance, the Company entered
          into a patent license agreement with Innova Pure Water, Inc. (Innova),
          whereby Innova granted the Company a limited non-exclusive license to
          manufacture, market, distribute and sell all portable water filtration
          bottles that are filled from the top for a period of one year (initial
          term). The Company and Innova, respectively, hold patents covering the
          majority of all portable water filtration bottle design concepts. The
          agreement is renewable on an annual basis providing the minimum unit
          sales levels are achieved. The minimum unit sales level of 100,000 is
          a condition of renewal for the initial term and escalates in 100,000
          unit increments with 500,000 units as a condition for renewal for the
          fifth and all subsequent renewal periods. The license agreement is
          worldwide and requires a royalty ranging from $.25 to $.40 for each
          unit sold. Based upon the shift in focus for providing water
          filtration products, the Company is not sure if this license will
          continue or will be renegotiated at some point on different terms. In
          any case, the Company does not anticipate this technology as being a
          material part of their operations in the future. Royalty expense for
          the fiscal years ended February 28, 2002 and 2001 was approximately
          $62,000 and $7,000, respectively.

          During the fiscal year ended February 28, 2001, as a result of the
          Nikken alliance, the Company recorded non-recurring charges of
          approximately $142,000, consisting of an inventory write down of
          $126,000 and tooling costs of $16,000 to discontinue its former
          product lines no longer sold through the Company's new direct
          distribution alliance with Nikken.

          The Company sells its products throughout the United States and abroad
          including Europe and Asia. Geographic information for the fiscal years
          ended February 28, 2002 and 2001 is as follows:

<Table>
<Caption>
                                           2002             2001
                                        ----------       ----------

<S>                                     <C>              <C>
Water filtration products sold to
    external customers (1)(2) in:
         The United States              $1,945,971       $  828,017
         Canada                             11,441            1,639
         Others                             14,362              667
                                        ----------       ----------
    Total                               $1,971,774       $  830,323
                                        ==========       ==========
</Table>

                                      F-11
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE A:   ORGANIZATION AND DESCRIPTION OF BUSINESS, continued

          (1)  Sales to external customers are attributed based on the country
               of residence of the customer.

          (2)  Long lived assets outside the United States included $59,400 and
               $65,400 in tooling costs located in Asia at February 28, 2002 and
               2001, respectively.

          Basis of Presentation

          Until this current fiscal year the Company had experienced recurring
          net losses and has an accumulated deficit of $3,160,602 as of February
          28, 2002. Additionally, the Company is reducing the emphasis of
          business with Nikken for the coming fiscal year. At this time, the
          Company believes that they can replace the revenues, which Nikken
          provided through new initiatives in the field of water filtration, but
          does not know to what extent the loss of revenues will have an impact
          on them. The Company has entered into an exclusive distribution rights
          to a line of reverse osmosis-based products in the United States and
          possibly elsewhere which are currently manufactured in China.
          Additionally, the Company completed an agreement to acquire rights to
          products developed by Enviro Care Inc., as well as, all applicable
          intellectual properties, whereby the Company can sell various
          ozonation products. The Company has also entered into the first stage
          of contractual agreements with representatives of one of the largest
          companies in Japan to market and distribute the Company's entire
          product line throughout Japan. The Company expects to complete the
          negotiations within the fiscal year ending February 28, 2003.

          Accordingly, the consolidated financial statements do not include any
          adjustments relating to the recoverability and classification of
          recorded asset amounts or the amount and classification of liabilities
          or other adjustments that might be necessary should the Company be
          unable to continue as a going concern in its present form.

NOTE B:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Principles of Consolidation

          The accompanying consolidated financial statements include the
          accounts of SET and its wholly-owned subsidiary, SWT, (collectively,
          the "Company"). All significant intercompany transactions and balances
          have been eliminated.

                                      F-12
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE B:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

          Revenue Recognition

          Revenues and cost of sales are recognized when products are shipped.

          Inventories

          Inventories are stated at the lower of cost or market using the
          average cost method and consist of the following at February 28, 2002:

<TABLE>
          <S>                                                         <C>
          Raw materials                                               $ 327,830
          Work in progress                                               36,476
          Finished goods                                                 93,609
                                                                      ---------
                                                                        457,910
          Less: Reserve for obsolete or slow moving inventory          (189,280)
                                                                      ---------
          Net inventories                                             $ 268,630
</TABLE>

          As previously noted (Note A), during the fiscal year ended February
          28, 2001, the Company in anticipation of the Nikken alliance recorded
          a $126,000 inventory reserve, primarily raw materials, due to the
          discontinuance of previous product lines.

          Management reviews and estimates realization of inventory on a regular
          basis with respect to obsolete and slow moving inventory. Although
          management believes its evaluations are sound, it is at least
          reasonably possible that such estimates may change in the near term.

          Property and Equipment

          Property and equipment, including significant improvements thereto,
          are stated at cost and are depreciated using the straight-line method
          over an estimated useful lives ranging from 3 to 5 years. Maintenance
          and repairs are charged to expense as incurred.

          Intangible Assets

          Intangible assets include patents, product rights and technology
          costs. All patent, product rights and technology costs are capitalized
          and amortized over ten years 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

                                      F-13
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE B:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

          prospects and other economic factors. Intangible assets net of
          accumulated amortization amounted to $13,598 at February 28, 2002.

          Accounting For Long-Lived Assets

          Long-lived and intangible assets are reviewed for impairment whenever
          events or changes in circumstances indicate that the carrying value of
          an asset may not be recoverable. In that case, if the sum of the
          expected future cash flows is less than the carrying amount of the
          asset, an impairment loss is recognized for the difference between the
          carrying amount of the asset and the fair value of the asset.

          Customer Deposits

          Customer deposits represent advance payments received for products,
          primarily from Nikken, and is recognized as revenue when products are
          shipped.

          Research and Development Expenses

          Research and development costs are expensed as incurred and amounted
          to approximately $79,000 and $38,000 for the fiscal years ended
          February 28, 2002 and 2001, respectively, and are included in cost of
          sales in the accompanying consolidated statements of operations.

          Advertising Expenses

          Advertising expenses are expensed as incurred. Total advertising
          expenses amounted to approximately $1,000 and $30,000 for the fiscal
          years ended February 28, 2002 and 2001, respectively, and are included
          in selling expenses in the accompanying consolidated statements of
          operations.

          Concentration of Credit Risk

          Nikken is required to deposit 30 percent of the total cost of each
          order. The balance of each order is due within fifteen days of
          delivery. On other sales, the Company performs periodic credit
          evaluations of its customers' financial condition and generally does
          not require collateral. Trade receivables generally are due in 30
          days. Credit losses have consistently been within management's
          expectations. An allowance for doubtful accounts is recorded when it
          is probable that all or a portion of trade receivables balance will
          not be collected.

                                      F-14
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE B:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

          For the fiscal years ended February 28, 2002 and 2001, SET had several
          customers, which individually accounted for at least 10% of total
          sales. The following table summarizes total sales and accounts
          receivable for the fiscal years then ended for these customers:

<Table>
<Caption>
                             2002                    2001
                    ----------------------  -----------------------
                      Sales      Accounts     Sales       Accounts
                    Percentage  Receivable  Percentage   Receivable
                    ----------  ----------  ----------   ----------

<S>                 <C>         <C>         <C>          <C>
Customer 1             89%       $160,287       8%      $      0
Customer 2              4%            875      16%         7,310
Customer 3              2%              0      12%             0
</Table>

          As previously disclosed (Note A), during February 2001, SET entered
          into a strategic alliance with Nikken, whereby Nikken obtained
          exclusive rights to distribute SET products and technology and
          thereby, the Company reduced sales volumes with previously significant
          customers during the fiscal year ended February 28, 2001.

          For the fiscal years ended February 28, 2002 and 2001, SET had several
          vendors, which individually supplied at least 10% of total purchases.
          The following table summarizes total raw material purchases and
          accounts payable for the fiscal years then ended.

<Table>
<Caption>
                              2002                           2001
                  --------------------------     ----------------------------
                   Purchase         Accounts      Purchase           Accounts
                  Percentage        Payable      Percentage          Payable
                  ----------        --------     ----------          --------

<S>               <C>               <C>          <C>                 <C>
Vendor 1             45%            $35,594          34%             $35,971
Vendor 2             35%             13,017          20                    0
Vendor 3             15%             18,212          13                3,620
</Table>

          Management believes that these raw materials can be purchased through
          other comparable suppliers.

          Income Taxes

          The Company accounts for income taxes in accordance with the
          provisions of Statement of Financial Accounting Standards ("SFAS") No.
          109, "Accounting for Income Taxes," which requires the recognition of
          deferred tax liabilities and assets for the expected future tax
          consequences of events that have been included in the consolidated
          financial statements or tax returns. Under this method,

                                      F-15
<PAGE>
                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE B:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

          deferred tax liabilities and assets are determined based on the
          difference between the consolidated financial statements and the tax
          basis of assets and liabilities using enacted rates in effect for the
          year in which the differences are expected to reverse. Valuation
          allowances are established when necessary to reduce deferred tax
          assets to the amount expected to be realized.

          Issuance of Stock for Services

          Shares of the Company's common stock issued for services are recorded
          in accordance with SFAS No. 123, "Accounting for Stock-Based
          Compensation", at the fair market value of the stock issued or the
          fair market value of the services provided, whichever value is the
          more clearly evident.

          Stock Compensation Plan

          The Company accounts for stock-based compensation using the intrinsic
          value method prescribed in APBO No. 25, "Accounting for Stock Issued
          to Employees," and related interpretations. Accordingly, compensation
          cost for stock options is measured as the excess, if any, of the
          quoted market price of the Company's stock at the date of the grant
          over the amount an employee must pay to acquire the stock.

          Loss Per Common Share

          Basic net loss per common share is computed by dividing net loss by
          the weighted average number of outstanding common shares during the
          periods presented. Basic loss per share and diluted loss per share are
          the same amount because the impact of additional common shares that
          might have been issued under the Company's stock option plan, warrants
          and convertible debt would be anti-dilutive.

          Comprehensive Income

          Comprehensive income is defined as net income adjusted for changes to
          equity resulting from events other than net income or transactions
          related to an entity's capital structure. Comprehensive income equaled
          net income for all periods presented.

          Management's Estimates

          The preparation of the consolidated financial statements in conformity
          with generally accepted accounting principles in the United States,
          requires

                                      F-16
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE B:   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

          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
          period. Significant estimates made in preparing the consolidated
          financial statements include the allowance for doubtful accounts,
          sales returns, inventory reserves, deferred income tax valuation
          allowances and litigation. To the extent there are material
          differences between estimates and the actual results, future results
          of operations will be affected.

          Segment Disclosures

          SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
          Information" requires public enterprises to report financial and
          descriptive information about reportable operating segments and
          establishes standards for related disclosures about product and
          services, geographic areas, and major customers. At this time, the
          Company has only one operating segment.

          Reclassifications

          Certain amounts in the 2001 financial statements have been
          reclassified to conform to the 2002 presentation.

NOTE C:   PROPERTY AND EQUIPMENT

          The following is a summary of property and equipment at February 28,
          2002:

<Table>
<S>                                                   <C>
Tooling                                               $208,621
Equipment                                               14,392
Vehicles                                                33,433
Furniture and fixtures                                  15,775
Computer equipment                                      15,726
                                                      --------
                                                       287,947
Less: Accumulated depreciation                         176,149
                                                      --------
                                                      $111,798
                                                      ========
</Table>

          During the fiscal year ended February 28, 2002, the Company scrapped
          tooling and equipment with an approximate cost and net book value of
          $39,000 and $1,000, respectively. The loss on disposition of tooling
          and equipment is included in other expenses in the accompanying
          consolidated statement of operations.

                                      F-17
<PAGE>
                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE C:   PROPERTY AND EQUIPMENT, continued

          Total depreciation expense for the fiscal years ended February 28,
          2002 and 2001 was approximately $52,000 and $70,000, respectively.

NOTE D:   ACCRUED EXPENSES

          Accrued expenses consist of the following at February 28, 2002:

<Table>
<S>                                          <C>
Reserve for returned products                $  61,630
Accrued legal expenses                         113,500
Accrued accounting expenses                     26,979
Accrued settlement                              12,750
Accrued wages and benefits                      19,249
Accrued commissions                             10,909
Accrued credit card purchases                   25,361
Other accrued expenses                          29,072
                                             ---------
                                             $ 299,450
                                             =========
</Table>

          The Company provides a liability for returned products generally for a
          period of twelve months. Such costs are included in cost of sales.
          Total costs for returned products for the fiscal years ended February
          28, 2002 and 2001 was approximately $0 and $64,000, respectively.
          Management periodically reviews its estimate for potentially
          returnable products. Although management believes its recorded
          liability is adequate, it is at least reasonably possible that such
          estimate may change in the near term.

          The Company is currently investigating their liability under a royalty
          license agreement. Although the Company believes that no additional
          royalty payments will be made, the Company is clarifying the agreement
          terms with the license holder. Accordingly, no accrual has been made
          for potential royalties owed. Management believes that any liability
          under such agreement would be significant.

          The accrued legal expenses represent the attorney fees the Company
          incurred in connection with various litigation, of which approximately
          $108,500 will be paid in stock.

          During February 2002, the Company paid approximately $61,300 in legal
          fees of which $50,000 was accrued as of February 28, 2001, through the
          issuance of 232,000 shares of common stock. In connection with the
          issuance of 100,000 shares of this common stock, the Company again
          negotiated with a related party (Note H) to issue a similar number of
          shares valued at $0.25 per share rather than the $0.50 per share value
          on the grant date. This decrease in aggregate share value of $25,000
          was record to contributed capital.

                                      F-18
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE D:   ACCRUED EXPENSES, continued

          The accrued settlement represents an estimate of the settlement of an
          employment-related claim, of which $12,750 will be paid in stock.

NOTE E:   CAPITAL STRUCTURE

          Common Stock

          The holders of Common Stock have one vote per share on all matters
          (including election of Directors) without provisions for cumulative
          voting. The Common Stock is not redeemable and has no conversion or
          preemptive rights.

          In the event of liquidation of the Company, the holders of Common
          Stock will share equally in any balance of the Company's assets
          available for distribution to them after satisfaction of creditors and
          the holders of the Company's senior securities. The Company may pay
          dividends, in cash or in securities or other property, when and as
          declared by the Board of Directors from assets legally available. To
          date, the Company has not declared or paid dividends on its Common
          Stock.

          During March 2000, the Company sold 235,295 shares of common stock to
          an investor for $200,000. The Company also issued this investor a
          stock option to purchase an additional 235,295 shares at the then
          estimated fair market value of $0.85 per share. The stock options
          expired unexercised in September 2000.

          During the fiscal year ended February 28, 2001, the Company issued
          35,000 shares for compensation; and 219,139 shares for services
          provided.

          During May 2001, the Company settled approximately $51,000 of its
          accrued expenses as of February 28, 2001 through the issuance of
          270,000 shares of common stock.

          During February 2002, the Company settled approximately $25,000 of its
          accrued expenses as of February 28, 2001 through the issuance of
          100,000 shares of common stock. Additionally, the Company issued
          10,000 shares for compensation; and 132,000 shares for services
          provided.

          Preferred Stock

          The Board of Directors has the authority to issue Preferred Stock and
          to fix and determine its series, relative rights and preferences to
          the fullest extent permitted by the laws of the State of Nevada and
          its articles of incorporation. As of

                                      F-19
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE E:   CAPITAL STRUCTURE, continued

          February 28, 2002, three classes of Preferred Stock were authorized
          and one was outstanding.

          Series "A" 13.5% Non Voting, Cumulative, Convertible Preferred Stock

          Series "A" Preferred Stock has rights which are superior to all other
          securities of the Company, including upon liquidation and as to
          payment of dividends, if any, carries a cumulative dividend of 13.5%
          per annum, is non-voting, and is redeemable by the Company at any time
          at face value and is convertible into common shares of the Company at
          the lesser of $10 per share or 85% of the last five closing bid
          prices.

          During April 2001, the Company repurchased for $350,000 all issued and
          outstanding Series A 13.5 percent non-voting, cumulative preferred
          stock, $0.01 par value per share and settled all liability for
          dividends. This repurchase was done in conjunction with a
          comprehensive settlement agreement with the beneficial owner of the
          preferred stock.

          The stock repurchase was funded by a loan made by one of the Company's
          principal stockholders.

          Series "AA" Non Voting, Cumulative, Convertible Preferred Stock

          Series "AA" Preferred Stock had rights superior to all other
          securities of the Company except to Series "A" Preferred Stock,
          including upon liquidation and as to payment of dividends, if any,
          carried a 10% cumulative dividend, was non-voting, redeemable by the
          Company at any time at face value and was convertible into common
          shares of the Company at 85% of the last five closing bid prices. On
          June 14, 1999, all of the Series "AA" Non Voting, Cumulative
          Convertible Preferred Stock was converted into 1,337,509 shares of
          Common Stock at the original conversion terms.

          Series "AAA" 12 % Cumulative, Convertible Preferred Shares

          Series "AAA" Preferred Stock has rights which are superior to all
          other securities of the Company except Series "A" and the Series "AA"
          Preferred Stock, including upon liquidation and as to payment of
          dividends, if any. Series "AAA" Cumulative, Convertible Preferred
          Voting Stock carries a 12% per annum dividend payable in stock or
          cash, is voting, with each share equal to 100 shares of Common Stock,
          and is redeemable, at the Company's option, according to the following
          procedure: upon written notice of conversion from the holders, the
          Company shall have 45 days from receipt of such notice to repurchase
          for cash up

                                      F-20
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE E:   CAPITAL STRUCTURE, continued

          to 2,000 shares of the Series "AAA" 12 % Cumulative, Convertible
          Preferred Shares at $1,000 per share.

          As a result of the settlement of the litigation involving the Company
          and its former Chairman, in which the Company was seeking to rescind
          the issuance of all common shares in the Company previously issued to
          the former Chairman, the number of common shares issuable to the
          holders pursuant to the conversion provisions of the Series "AAA"
          Cumulative, Convertible Preferred Shares were reduced from 8,000,000
          shares to 4,500,000 shares (but after pro rata adjustments, if any,
          for stock dividends, stock splits, reverse stock splits, and any other
          similar capital stock adjustments of a general nature). There are
          8,000 shares issued and outstanding at February 28, 2002. The
          cumulative dividend shall be computed based on the Preferred Stock $80
          par value.

          Cumulative Dividends

          Aggregate preferred redemption value and cumulative dividends in
          arrears at February 28, 2002 is as follows:

          Series "AAA"

<Table>
<S>                                                            <C>
Aggregate redemption value                                     $4,500,010
Cumulative preferred dividend in arrears                       $       38
Per share cumulative preferred dividend                        $     0.00
</Table>

          As previously noted, during April 2001, the Company repurchased all
          outstanding Series "A" preferred stock and settled all liability for
          dividends for $350,000 (Note J).

          Stockholder's Receivable

          Represents advances made to a stockholder and not reimbursed at
          February 29, 2000. Such advances were settled during the fiscal year
          ended February 28, 2001.

          Contributed Executive Services

          Contributed executive services represents an estimate of the fair
          value of services donated by the President of the Company through
          November 30, 2001.

          Effective December 1, 2001, the Company entered into an employment
          agreement with the President of the Company. The agreement is for five
          years and provides for a salary of $10,000 per year plus one percent
          of the net after tax profits of the

                                      F-21
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE E:   CAPITAL STRUCTURE, continued

          Company as reported in the Company's Form 10-KSB. The agreement shall
          be automatically renew for successive one-year terms unless the
          Company or employee provides written notice of non-renewal.

          Celebrity Endorsement Contract

          During March 2000, the Company entered into a celebrity consulting and
          endorsement contract, which calls for the issuance of 110,000 shares
          of common stock for services to be performed during the term of the
          contract, which ends December 31, 2002. The shares were issued and
          recorded to contribute capital at fair market value of $145,200 and
          the related expense is amortized over the life of the contract.
          Additionally, commission payments are to be made for 2.5% of gross
          revenue derived by the Company from sales of the Company's products in
          which the consultant directly participates, for example the Red Cross,
          US Armed Forces and similar organizations. No such sales occurred
          during the fiscal years ended February 28, 2002 and 2001.

          During the fiscal year ending February 28, 2003, the Company intends
          to use the celebrity in an info-mercial.

          Consulting Agreement

          During April 2000, the Company entered into a one-year consulting
          agreement with an individual who will provide marketing and consulting
          services for the Company. The agreement can be extended one year by
          the Company. As consideration for services to be rendered, the
          consultant received a stock option agreement to purchase 250,000
          restricted shares of the Company's common stock at $1.125 per share.

          The options expire after three years, and vest one third per year
          based on performance benchmarks to be achieved according to the
          contract. The first third vested on the effective date of the
          agreement as an enticement to enter into the agreement. The fair
          market value for these options was estimated at the date of grant
          using a Black-Scholes option pricing model with the following
          assumptions for the fiscal year 2001: risk-free interest rate of 6%;
          expected life of the option of 3 years; zero dividend yield; and a
          volatility factor of the expected market price of SET common stock of
          60%. The fair market value of the options earned during the fiscal
          year ended February 28, 2001 was estimated at $59,375 and recorded to
          expense with an offset to additional paid in capital.

                                      F-22
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE E:   CAPITAL STRUCTURE, continued

          During May 2001, the parties mutually agreed to terminate the
          consulting agreement and no additional options were granted as the
          performance benchmarks were not achieved.

          Stock Compensation Plan

          During July 2000, the Company adopted a stock compensation plan to be
          administered by the Board of Directors, or a Compensation Committee to
          be appointed by the Board. Consultants, advisors, and employees of the
          Company are eligible to participate in the Plan. The Plan provides for
          the issuance of 300,000 shares of common stock to be issued as stock
          grants, or under stock option agreements. During October 2000, the
          Company settled approximately $109,200 of its accrued expenses through
          the issuance of 109,139 shares of common stock.

          During February 2002, the Company adopted an additional stock
          compensation plan to be administered by the Board of Directors or a
          Compensation Committee to be appointed by the Board. The Plan provides
          for the issuance of 300,000 shares of common stock to be issued as
          stock grants, or under stock option agreements. During February 2002,
          the Company issued 10,000 shares for compensation and 232,000 shares
          for services provided.

          The exercise price of each stock option is not to be greater than the
          fair market value of the stock at the date of grant, or the par value
          of the stock at the date of grant. However, the Board, or Compensation
          Committee, at its discretion, may grant options with an exercise price
          less than fair market value at the date of grant, but not less than
          the greater of the par value of the stock or 50% of the fair market
          value. Fair market value is defined as the mean of the sale or bid
          prices on each of the five trading days immediately preceding the date
          as of which such determination is made.

          Stock options expire on the earlier of (a) ten years form the date of
          grant, (b) six months from the date an employee terminates employment
          due to permanent disability, (c) the date of termination for an
          employee for reasons other than retirement, disability of death
          (however, may be extended by the Board for up to three years), or (d)
          three months from the date an employee retires with permission from
          the Board. The date at which the options may be exercised will be
          determined by the Board at the time of grant. There were no options
          outstanding under this Plan at February 28, 2002.

                                      F-23
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE F:   INCOME TAXES

          The components of the provision for income taxes for the fiscal years
          ended February 28, 2002 and 2001 are as follows:

<Table>
<Caption>
                                   2002             2001
                                 ---------        ---------

<S>                              <C>              <C>
Current:
     State                       $   4,000        $   1,600
     Federal                             0                0

Deferred:
     State                         (12,122)         (40,430)
     Federal                        38,425         (166,724)
     Valuation allowance           (26,303)         207,154
                                 ---------        ---------
Provision for income taxes       $   4,000        $   1,600
                                 =========        =========
</Table>

          The reconciliation of the effective tax rates and U.S. statutory tax
          rates for the fiscal years ended February 28, 2002 and 2001 are as
          follows:

<Table>
<Caption>
                                      2002        2001
                                      ----        ----

<S>                                   <C>         <C>
Tax (benefit) of statutory rate       (34)%       (34)%
Deferred tax effect of goodwill
     relating to Aqua Vision
     Acquisition                      (12)%       (12)%
Contributed executive services         12%         12%
Effect of state tax benefit            (3)%        (3)%
Other                                   4%          4%
Change in valuation allowance          33%         33%
                                    -----       -----
Effective tax Rate                      0%          0%
                                    =====       =====
</Table>

          At February 28, 2002, the Company has net operating loss carry
          forwards, for income tax reporting purposes, of approximately $
          1,746,000 and $ 1,114,000 available to offset future federal and
          California taxable income, respectively. The federal carryforwards
          expire through 2021 and the California carryforwards expire through
          2011.

          At February 2002, the Company had available tax credit carry forwards
          comprised of federal and state research and experimentation credits of
          approximately $ 8,681 and $ 5,074, respectively. The research and
          experimentation credit carryforwards expire through 2020 for federal
          purposes and do not expire for California purposes.

                                      F-24
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE F:   INCOME TAXES, continued

          The components of the net deferred tax asset and (liability) for the
          fiscal years ended February 28, 2002 and 2001 are as follows:

<Table>
<Caption>
                                           2002              2001
                                         ---------        ---------

<S>                                      <C>              <C>
Net operating loss carryforward          $ 582,780        $ 589,042
Depreciation and amortization                5,381            6,781
Inventory & bad debt reserves               84,637           79,066
Other                                        4,702           28,914
                                         ---------        ---------
                                           677,500          703,803
Less:  Valuation allowance                (677,500)        (703,803)
                                         ---------        ---------
Net deferred tax asset (liability)       $       0        $       0
                                         =========        =========
</Table>

NOTE G:   COMMITMENTS AND CONTINGENCIES

          The Company leases an office and production facility under an
          operating lease that expires in January 2003. Total rent expense
          amounted to approximately $96,000 and $99,000 for the fiscal years
          ended February 28, 2002 and 2001, respectively.

          Future minimum lease payments are as follows:

          Fiscal Year Ending February 28

<Table>
<S>                                        <C>
2003                                       $  92,250
                                           =========
</Table>

          Legal Proceedings

          During May 2001, Safewater Anywhere LLC filed a lawsuit against
          Seychelle Water Technologies, Inc., an officer of the Company and
          others in the Orange County Superior Court. The complaint alleges
          breach of fiduciary duty, constructive fraud, promissory fraud,
          rescission, constructive trust, unfair trade practices and conversion.
          The complaint sought unspecified damages and injunctive relief. During
          the fiscal year ended February 28, 2002, the Company

                                      F-25
<PAGE>
                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE G:   COMMITMENTS AND CONTINGENCIES, continued

          filed a motion to have the matter set for arbitration / mediation. The
          court approved the Company's motion and arbitration / mediation is
          currently pending. The Company believes that the claims are without
          merit and intends to aggressively defend the case. Accordingly, no
          accrual has been made for potential damages.

          In February 2002, Mr. Douglas Copp filed a lawsuit on behalf of
          himself and American Rescue Team International, Inc. against Seychelle
          Environmental Technologies, an officer of the Company and Nikken, in
          the U.S. District Court for the District of New Mexico. The Complaint,
          which is essentially a claim for royalty payments, alleges breach of
          contract, unfair trade practices, misappropriation of publicity,
          unjust enrichment, violation of the Lanham Act, and conspiracy. This
          Company believes that the claims are without merit and will
          aggressively defend the case. Accordingly, no accrual has been made
          for potential damages.

          No other legal proceedings of a material nature to which the Company
          is a defending party are pending at February 28, 2002.

          Other Commitments and Contingencies

          The Company's current management believes that the Company and SWT's
          former management entered into certain contracts, agreements and
          transactions, which were not properly authorized or consummated. At
          the date of these consolidated financial statements, the Company is
          not aware of any formal claim relating to these contracts, agreements
          or transactions and believes that any such claims would be without
          merit. The Company cannot currently estimate the potential liability
          that would arise if such claim were to be made. Accordingly, no
          accrual has been made for these contingencies

NOTE H:   RELATED PARTY TRANSACTIONS

          As previously noted (Note D), during February 2002, the Company paid
          approximately $61,300 in legal fees of which $50,000 was accrued as of
          February 28, 2001 through the issuance of 232,000 shares of common
          stock. In connection with the issuance of 100,000 shares of this
          common stock, the Company negotiated with a board member to accept as
          full renumeration a similar number of shares valued at $0.25 per share
          rather than $0.50 per share value on the grant date. This decrease in
          aggregate share value of $25,000 was recorded to contributed capital.

                                      F-26
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE H:   RELATED PARTY TRANSACTIONS, continued

          During the fiscal year ended February 28, 2001, a board member's firm
          provided legal services for the Company for which the firm was granted
          100,000 shares of common stock valued at $19,000. The board member was
          also granted 50,000 shares of common stock valued at $9,500. During
          May 2001, the Company issued these granted shares.

          During May 2001, the Company additionally paid approximately $3,800 in
          other accrued expenses through the issuance of 20,000 shares of common
          stock.

          A stockholder of the Company had outstanding advances as of February
          28, 2001 of approximately $104,500. These stockholder advances accrue
          interest at 7.5 percent per annum and mature on dates ranging from
          November 2001 through January 2002. During the 2002 fiscal year, the
          Company repaid these stockholder advances. Additionally, the principle
          stockholder waived repayment of the accrued interest on the advances
          as of February 28, 2002. This reduction in accrued interest expense of
          approximately $1,900 was recorded to contributed capital.

          During the 2001 fiscal year, an entity affiliated with an officer of
          the Company purchased tooling from the Company for $25,000 resulting
          in a gain on sale of approximately $8,000.

          During March 2001, the Company sold discontinued inventory products to
          an affiliated entity of an officer of the Company for $12,000.

          In connection with the repurchase of preferred stock, (Note E), the
          Company's principal stockholder loaned the Company $350,000. This loan
          bears interest at 10 percent and is repayable upon demand. During the
          2002 fiscal year, the Company repaid approximately $60,400 in
          stockholder loans. Additionally, the principle stockholder waived
          repayment of the accrued interest on this note as of February 28,
          2002. This reduction in accrued interest expense of approximately
          $27,700 was recorded to contributed capital.

                                      F-27
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE I:   LOSS PER SHARE

<Table>
<Caption>
                                       February 28, 2002   February 28, 2001
                                       -----------------   -----------------

<S>                                    <C>                 <C>
Numerator:
    Net income (loss)                     $    47,278         $  (878,742)
    Preferred stock dividends                     (10)           (114,760)
                                          -----------         -----------

    Income (loss) available to common
        stockholders                      $    47,268         $  (993,502)
                                          ===========         ===========

Denominator:
    Weighted average shares
        Outstanding                         9,043,925           8,772,289
                                          ===========         ===========

Basic and diluted profit (loss)
        per share                         $     (0.00)        $     (0.11)
                                          ===========         ===========
</Table>

          Options to purchase common stock were outstanding during the 2002 and
          2001 fiscal years (see Note E) but were excluded in the computation of
          the diluted loss per share because their inclusion would have an
          anti-dilutive effect.

          Also excluded from the computation of diluted loss per share because
          of their anti-dilutive effect was preferred stock convertible to
          approximately 5,587,000 shares of common stock at February 28, 2002.

NOTE J:   SUBSEQUENT EVENTS

          During May 2002, the Company completed negotiations for an agreement
          to acquire rights to Enviro Care Inc., as well as, all applicable
          intellectual properties, whereby the Company can sell various
          ozonation products. In connection with the agreement, the Company paid
          $5,000 in cash and granted 450,000 shares of common stock. The Company
          believes this agreement will open product markets including home,
          spas, agriculture, medical and other commercial and industrial
          applications.

          During June 2002, the Company entered into an exclusive agreement with
          Heibei R.O. Environmental Technologies, whereby the Company can sell
          reverse osmosis-based products, which is currently being developed in
          China. The agreement shall be for a period of three years. The Company
          will be able to purchase Heibei products for cost plus fifteen
          percent. The Company believes this agreement offers the Company to
          expand into the home market with a product that is revolutionary and
          can be produced and sold at a price that is competitive to the market.
          Additionally, the Company believes the agreement will further enable
          distribution of portable filtration products.

                                      F-28
<PAGE>

                   SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                February 28, 2002

--------------------------------------------------------------------------------

NOTE J:   SUBSEQUENT EVENTS, continued

          On June 6, 2002, the Company entered into a License Agreement for a
          product known as the "Hand Pump Technology." The Company licensed all
          proprietary rights associated with this technology, including patent
          #6,136,188 and the trademark Aqua Gear(TM). The Company will pay a two
          percent royalty and a one- percent license of trademark fee on any
          sales using this technology during the term of the license. In
          connection with the license agreement, the Company granted the
          licensor 50,000 shares of common stock. The shares were issued during
          March 2002. The License Agreement is for an initial term of five
          years, with five successive five years renewals. The Company intends
          to market this technology in the United States and internationally.

                                      F-29
<PAGE>

ITEM 8. Disagreements With Accountants on Accounting and Financial Disclosure.

     We did not have any disagreements on accounting and financial disclosures
with our present accounting firm during the reporting period.

                                    PART III

ITEM 9. Directors, Executive Officers, Promoters, and Control Persons;
        Compliance with Section 16(a) of the Exchange Act.

     Our Directors and Executive Officers, their ages and positions held in the
Company as of February 28, 2002 are as follows:

<Table>
<Caption>
NAME                           AGE              POSITION HELD
----                           ---              -------------

<S>                            <C>              <C>
Carl Palmer                    68               President, Chief Executive Officer
                                                Treasurer and Director

Paul H. Lusby                  46               Secretary and Director

Donald S. Whitlock             31               Director

Michelle Palmer                38               Vice President and Director

Kenneth Rawald                 77               Vice President - Engineering
</Table>

     Our directors have served and will serve in such capacity until the next
annual meeting of our shareholders and until their successors have been elected
and qualified. The officers serve at the discretion of our directors.

     Carl Palmer. Mr. Palmer has been the President, CEO and a director of the
Company since January, 1998. He is the founder of our company, innovator of the
complete line of Seychelle water filtration products and primary spokesperson
worldwide. He personally oversees every aspect of operations. He is the inventor
of thirteen patented products related to water purification. Mr. Palmer received
a Bachelors Degree from Whittier College.

     Paul H. Lusby. Mr. Lusby has been Secretary and a director of the Company
since January, 1998. For the past eight years he has been a principal of the law
firm of Cooper Kardaras & Kelleher LLP, formerly Cooper, Kardaras & Scharf LLP.
He has a Juris Doctor from the University of Virginia and a Bachelor of Arts
from the University of Virginia. He has been an active member of the California
Bar since 1982. He is also the immediate past Chairman of the Board of Pacific
Clinics, a non-profit organization dedicated to providing behavioral and mental
health care to children and adults suffering from behavioral and mental health
disorders.

     Donald S. Whitlock. Mr. Whitlock has been a director of our Company since
January, 1998. For the past eight years, he has been a principal of
International Corporate Development, Ltd., an investment banking firm
headquartered in Aspen, Colorado. Mr. Whitlock is a Fellow of the Aspen
Institute. He has a Bachelors degree in Economics from Loyola Marymount College.

                                       16
<PAGE>

     Michelle Palmer. Ms. Palmer has been Vice President of our Company since
January, 1998 and a director since February, 2002. Her past and present
responsibilities include all aspects of accounting, reporting, corporate
structure, operational configurations, implementation of product lines. She was
co-inventor of the Pres 2 Pure(TM) water filtration system. She received a
Bachelor of Arts Degree from California State University, Long Beach.

     Kenneth Rawald. Mr. Rawald has been a Vice President of Engineering since
January, 1998. His primary responsibilities include product design and
engineering, fixture design and assembly procedures. He provides necessary
engineering drawings as well as presentation perspective sketches in various
mediums for our Company and patent offices. He received a certification in
Engineering from Pratt Institute.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.

     Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act")
requires our officers and directors and persons owning more than ten percent of
our Common Stock, to file initial reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). Additionally, Item 405 of
Regulation S-B under the 34 Act requires us to identify in our Form 10-KSB and
proxy statement those individuals for whom one or more of the above referenced
reports was not filed on a timely basis during the most recent fiscal year or
prior fiscal years. Given these requirements, we have the following report to
make under this section. We believe that none of our officers or directors were
required to make filings during the last fiscal year.

ITEM 10. Executive Compensation.

     The following table sets forth the Summary Compensation Table for the Chief
Executive Officer and the compensated executive officers with salaries in excess
of $100,000 per annum who were serving as executive officers at the end of the
last three completed fiscal years. Compensation does not include minor
business-related and other expenses paid by us. Such amounts in the aggregate do
not exceed $10,000.

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                                  Annual Compensation                       Long Term Compensation
                                            ----------------------------------   --------------------------------------------------
                                                         Awards                                      Payouts
                                            ----------------------------------   --------------------------------------------------
                                                                                                           Restricted        All
         Name and                               Salary                Annual          Other Stock             LTIP          Other
Principal Position(1)(2)(3)      Year       Compensation($)          Bonus ($)   Compensation ($)(1)(3)     Award(s)       Options/
---------------------------      ----       ---------------          ---------   ----------------------    ----------      --------

<S>                              <C>        <C>                      <C>         <C>                       <C>             <C>
Carl Palmer                      2002          $ 56,499                 --                 --                  --             --
President(1)                     2001          $ 13,600                 --                 --                  --             --
                                 2000          $ 12,000                 --                 --                  --             --

Michelle Palmer                  2002          $101,901                 --                 --                  --             --
Vice President                   2001          $101,901                 --                 --                  --             --
                                 2000          $101,901                 --                 --                  --             --
</Table>

                                       17
<PAGE>

         (1) The fair value of Mr. Palmer's compensation, for accounting
purposes, was estimated at $56,499 for fiscal 2002, 2001 and 2000, of which
$54,000; $58,400 and $60,000 respectively was treated as capital contribution.
Mr. Palmer serves as our President on a full-time basis. On December 1, 2001, we
entered into an employment agreement with Mr. Palmer, our President. The
agreement is for five years and provides for a salary of $10,000 per year and a
profit participation.

     We have no compensation committee, retirement, pension, sharing, stock
option, insurance or other similar programs but plan to establish such programs
in the future, although there are no definitive plans to do so at this time.

     During the 2002 fiscal year we issued 12,500 shares of our Common Stock as
additional compensation to our employees for the 2002 fiscal year.

     For the fiscal years 2002 and 2001, we paid health care insurance for our
employees. We have no pension plan. We have no plans or agreements which provide
compensation in the event of a change in control. We have no plans or agreements
which provide compensation in the event of termination of employment.

     We do not customarily pay members of our Board of Directors any fees for
attendance or similar remuneration, but reimburse them for any out-of- pocket
expenses incurred by them in connection with their activities.

     In February, 2002, we issued Mr. Lusby 100,000 shares of Common Stock, as
consideration for past services rendered as an officer of our company. Mr. Lusby
is still due 50,000 shares for past services. During the fiscal year ended
February 28, 2001, we granted Mr. Lusby an additional 50,000 shares of common
stock and his law firm, a total of 100,000 shares of our common stock. These
shares were issued in January, 2001.

     Mr. Donald S. Whitlock, one of our directors and shareholders, was
personally granted 17,000 shares of common stock valued at $1,700 in 2002 for
past services rendered as a member of our Board of Directors.

     We have no compensation committee, retirement, pension, sharing, stock
option, insurance or other similar programs but plan to establish such programs
in the future, although there are no definitive plans to do so at this time.

                                       18
<PAGE>

ITEM 11. Security Ownership of Certain Beneficial Owners and Management.

The following sets forth the number of shares of our $0.001 par value Common
Stock beneficially owned by (i) each person who, as of February 28, 2002, was
known by us to own beneficially more than five percent (5%) of our Common Stock;
(ii) our individual directors and (iii) our officers and directors as a group.
As of February 28, 2002, there were a total of 9,508,480 shares of Common Stock
issued and outstanding.

<Table>
<Caption>
 NAME AND ADDRESS                      AMOUNT AND NATURE OF                 PERCENT OF
OF BENEFICIAL OWNER                 BENEFICIAL OWNERSHIP(1)(2)                CLASS
-------------------                 --------------------------              ----------

<S>                                 <C>                                     <C>
The TAM Irrevocable Trust                3,300,000(3)                         34.7%
4012 S. Rainbow #K111
Las Vegas, NV 80103-2012

FTS Worldwide Corp.                      1,320,009                            13.9%
24 Route De Malagnon
1208 Geneva, Switzerland

Carl Palmer(3)                                 -0-                             -0-
32921 Calle Perfecto
San Juan Capistrano, CA 92675

Donald S. Whitlock                          69,000(5)                           .7%
720 East Hyman Ave., Suite 301
Aspen, CO 81611

Paul H. Lusby                              152,500(6)                         1.67%
141 East Walnut Street
Pasadena, California 91103

Michelle Palmer                            102,000(4)                          1.1%
32921 Calle Perfecto
San Juan Capistrano, CA 92675

Kenneth Rawald                              67,000                              .7%
32921 Calle Perfecto
San Juan Capistrano, CA 92675

All officers and directors                 390,500                             4.1%
as a Group (five persons)
</Table>

(1) All ownership is beneficial and of record, unless indicated otherwise.

(2) Beneficial owners listed above have sole voting and investment power with
respect to the shares shown, unless otherwise indicated.

(3) The TAM Irrevocable Trust is an irrevocable trust for the benefit of certain
family members of Mr. Carl Palmer. Mr. Palmer disclaims any beneficial ownership
or interest in this Trust. In addition, this entity owns shares of our Series
"AAA" Cumulative Convertible Preferred Voting Stock.

(4) Select Property Investments, LLC is a limited liability company owned by Ms.
Michelle Palmer. This entity owns no common shares directly but owns shares of
our Series "AAA" Cumulative Convertible Preferred Voting Stock.

(5) Does not include 4,700 shares owned of record by the wife of Mr. Whitlock.
Mr. Whitlock disclaims any beneficial ownership or interest in these shares.

(6) In February, 2002, we issued Mr. Lusby 100,000 shares of Common Stock, as
consideration for past services rendered as an officer of our company. Mr. Lusby
is still due 50,000 shares for past services. During the fiscal year ended
February 28, 2001, we granted Mr. Lusby an additional 50,000 shares of common
stock and his law firm, a total of 100,000 shares of our common stock. These
shares were issued in January, 2001. Mr. Lusby's law firm, Cooper Kardaras &
Kelleher, LLP, owns a total of 200,000 shares of our common stock.

                                       19
<PAGE>

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     We have entered into a Purchase Agreement and an Amended Purchase Agreement
for the acquisition of Aqua Vision International, a private California entity
controlled by the TAM Irrevocable Trust and Select Property Investments, LLC.
The TAM Irrevocable Trust is an irrevocable trust for the benefit of certain
family members of Mr. Carl Palmer. Mr. Palmer disclaims any beneficial ownership
or interest in this Trust. Select Property Investments, LLC is a limited
liability company owned by Ms. Michelle Palmer. Mr. Palmer also disclaims any
beneficial ownership or interest in this limited liability company. Under the
terms of these agreements, these entities received 8,000 shares of Series "AAA"
Cumulative Convertible Preferred Voting Stock.

     From its inception through its acquisition by Seychelle Environmental
Technologies, Inc. on January 30, 1998, Seychelle Water Technologies, Inc. spent
most of its time and effort to raise funds to finance the common venture and to
market Aqua Vision products. The owners of both companies at the time came to
believe that both organizations would mutually profit from an affiliation
between the two companies. Mr. Palmer negotiated the transaction as an agent of
Aqua Vision. The original Purchase Agreement was negotiated by Seychelle Water
Technologies, Inc. Seychelle Environmental Technologies, Inc. acquired Aqua
Vision the day after the Seychelle Environmental Technologies, Inc. transaction.
The original Purchase Agreement and the Amended Purchase Agreement were approved
by the Board of Directors of SET after the January 30, 1998 acquisition. Mr.
Palmer was a member of the Board of Directors but did not participate in the
voting.

     In February, 2002, we issued Mr. Lusby 100,000 shares of Common Stock, as
consideration for past services rendered as an officer of our company. Mr. Lusby
is still due 50,000 shares for past services. During the fiscal year ended
February 28, 2001, we granted Mr. Lusby an additional 50,000 shares of common
stock and his law firm, a total of 100,000 shares of our common stock. These
shares were issued in January, 2001.

     Mr. Donald S. Whitlock, one of our directors and shareholders, provided
advice to us, through a firm with which he is associated, on capitalization and
business development matters during the 1998 and 1999 fiscal years. The firm
with which he is associated was issued 559,266 shares at inception and was paid
$54,478 and $150,451, respectively. In 2000, he was personally granted 40,000
shares of common stock valued at $20,000 for past services rendered as a member
of our Board of Directors. In 2002, he was personally granted 17,000 shares of
common stock for past services rendered as a member of our Board of Directors.

     During the fiscal year ended February 28, 2001, The TAM Irrevocable Trust,
on of our principal shareholders, advanced $110,000 to us, of which $20,000 was
repaid prior to the fiscal year end. These advances were to accrue interest at a
rate of 7.5% per annum and mature on dates ranging

                                       20
<PAGE>

from November, 2001 to January, 2002. The interest through the end of the fiscal
year has been waived.

     During the fiscal year ended February 28, 2001, The TAM Irrevocable Trust,
on of our principal shareholders, purchased tooling from us for $25,000.

     In April 2001, we repurchased and retired all of our issued and outstanding
Series A 13.5% Non-Voting, Cumulative Preferred Stock, $.01 par value per share.
This retirement eliminated all accrued dividends on this Stock. This repurchase
was combined with a comprehensive settlement agreement, for the benefit of all
parties, with the beneficial owner of the Preferred Stock. The TAM Irrevocable
Trust, on of our principal shareholders, loaned us $350,000.00 at 10% simple
interest, repayable upon demand, to finance the transaction. The accrued
interest through the end of the fiscal year on this note has been waived.

     On February 28, 2002, we entered into an employment agreement with Mr.
Palmer, our President. The agreement is for five years and provides for a salary
of $10,000 per year and a profit participation.

                                       21
<PAGE>

                                     PART IV

ITEM 13. Exhibits and Reports on Form 8-K.

     (a) The following financial information is filed as part of this report:

         (1) Financial Statements

         (2) Schedules

         (3) Exhibits. The following exhibits required by Item 601 to be filed
             herewith are incorporated by reference to previously filed
             documents:

Exhibit No.                           Description

 2A*            Plan of Exchange between Seychelle Environmental Technologies,
                Inc. and Seychelle Water Technologies, Inc.

 3A*            Articles of Incorporation

 3B*            Articles of Merger of Royal Net, Inc. into Seychelle
                Environmental Technologies, Inc

 3C*            Amendment to Articles of Incorporation re: Series "A" Preferred
                Stock

 3D*            Amendment to Articles of Incorporation re: Series "AA" Preferred
                Stock

 3E*            Amendment to Articles of Incorporation re: Series "AAA"
                Preferred Stock

 3F*            Bylaws

10A*            Purchase Agreement with Aqua Vision

10B*            Amended Purchase Agreement with Aqua Vision

10C*            Consulting Agreement with Mr. Stan Esecson

10D*            Consulting Agreement with Mr. Pat Boone

10E             Purchase Agreement with Aqua Gear

10F             Employment Contract with Carl Palmer

----------

*    Previously filed

     (b) Reports on Form 8-K. The Company filed one report on Form 8-K, dated
February 19, 2002, announcing the appointment of Michelle Palmer to our Board of
Directors.

                                       22
<PAGE>

                                   SIGNATURES

     In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                      SEYCHELLE ENVIRONMENTAL TECHNOLOGIES, INC.

Dated: 6/14/02                        By: /s/ Carl Palmer
                                          --------------------------------------
                                          Carl Palmer
                                          President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

                                      CHIEF FINANCIAL OFFICER

Dated: 6/14/02                        By: /s/ Carl Palmer
                                          --------------------------------------
                                          Carl Palmer
                                          Treasurer and Director

Dated: 6/14/02                        By: /s/ Paul H. Lusby
                                          --------------------------------------
                                          Paul H. Lusby
                                          Secretary and Director

Dated: 6/14/02                        By: /s/ Donald S. Whitlock
                                          --------------------------------------
                                          Donald S. Whitlock
                                          Director

Dated: 6/14/02                        By: /s/ Michelle Palmer
                                          --------------------------------------
                                          Michelle Palmer
                                          Director

                                       23

<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
NUMBER          DESCRIPTION
-------         -----------

<S>             <C>
 2A*            Plan of Exchange between Seychelle Environmental Technologies,
                Inc. and Seychelle Water Technologies, Inc.

 3A*            Articles of Incorporation

 3B*            Articles of Merger of Royal Net, Inc. into Seychelle
                Environmental Technologies, Inc

 3C*            Amendment to Articles of Incorporation re: Series "A" Preferred
                Stock

 3D*            Amendment to Articles of Incorporation re: Series "AA" Preferred
                Stock

 3E*            Amendment to Articles of Incorporation re: Series "AAA"
                Preferred Stock

 3F*            Bylaws

10A*            Purchase Agreement with Aqua Vision

10B*            Amended Purchase Agreement with Aqua Vision

10C*            Consulting Agreement with Mr. Stan Esecson

10D*            Consulting Agreement with Mr. Pat Boone

10E             Purchase Agreement with Aqua Gear

10F             Employment Contract with Carl Palmer
</Table>

----------

*    Previously filed