NEVADA
|
88-0362112
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
7701
E. Gray Road, Suite 4 Scottsdale, AZ
85260
|
||
(Address
of principal executive
offices) (Zip Code)
|
||
|
||
Company's
telephone number: (480)
993-2300
|
||
7650
E. Evans Road, Suite C Scottsdale, AZ
85260
|
||
(Former
name, address and phone number if
changed since last report)
|
|
Index
|
Page
Number
|
|
|
|
PART
I
|
FINANCIAL
INFORMATION
|
3
|
|
|
|
ITEM
1.
|
Financial
Statements (unaudited)
|
3
|
|
|
|
|
Consolidated
Balance Sheets as of March 31, 2007 and December 31, 2006
|
3-4
|
|
|
|
Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006 |
5
|
|
|
Consolidated
Statements of Cash Flows for the three months ended March 31, 2007
and
2006
|
6
|
|
|
|
|
Consolidated
Statements of Stockholders' Equity cumulative from December 31, 2000
to
March 31, 2007
|
7
-9
|
|
|
|
|
Notes
to Financial Statements
|
10-21
|
|
|
|
ITEM
2.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations/Plan of Operation
|
21-37
|
|
|
|
ITEM
3.
|
Controls
and Procedures
|
37
|
|
|
|
PART
II
|
OTHER
INFORMATION
|
37
|
|
|
|
ITEM
1.
|
Legal
Proceedings
|
37
|
|
|
|
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
39
|
|
|
|
ITEM
3.
|
Defaults
Upon Senior Securities
|
39
|
|
|
|
ITEM
4.
|
Submission
of Matters to Vote of Security Holders
|
40
|
|
|
|
ITEM
5.
|
Other
Information
|
40
|
|
|
|
ITEM
6.
|
Exhibits
|
40
|
|
|
|
SIGNATURES
|
|
40
|
Skye
International, Inc. and Subsidiaries
|
|||||||
CONSOLIDATED
BALANCE SHEETS
|
|||||||
|
|||||||
|
|||||||
|
March
31
|
December
31
|
|||||
|
2007
|
2006
|
|||||
|
(Unaudited)
|
(Audited)
|
|
||||
ASSETS
|
|||||||
CURRENT
ASSETS
|
|||||||
Cash
|
36,272
|
8,672
|
|||||
Accounts
Receivable, Net
|
-
|
-
|
|||||
Inventory
at Cost
|
163,010
|
163,062
|
|||||
Prepaid
Expenses
|
99,379
|
99,379
|
|||||
|
|||||||
Total
Current Assets
|
298,661
|
271,112
|
|||||
|
|||||||
EQUIPMENT,
NET
|
42,554
|
43,921
|
|||||
|
|||||||
OTHER
ASSETS
|
|||||||
Patents
and Software, Net
|
-
|
-
|
|||||
Deposits
|
-
|
-
|
|||||
Intangible
Assets
|
-
|
-
|
|||||
|
|||||||
Total
Other Assets
|
-
|
-
|
|||||
|
|||||||
Total
Assets
|
341,215
|
315,034
|
|||||
|
|||||||
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
|
|||||||
LIABILITIES
|
|||||||
Accounts
Payable
|
2,061,671
|
2,160,624
|
|||||
Other
Payables
|
23,649
|
31,132
|
|||||
Notes
Payable
|
1,198,512
|
1,053,615
|
|||||
Accrued
Interest Payable
|
76,267
|
72,917
|
|||||
Warranty
Accrual
|
34,570
|
34,570
|
|||||
Customer
Deposits
|
103,371
|
103,371
|
|||||
|
3,498,040
|
3,456,228
|
|||||
Total
Liabilities
|
3,498,040
|
3,456,228
|
|||||
|
|||||||
|
STOCKHOLDERS'
EQUITY
|
|||||||
Common
Stock authorized is
|
|||||||
100,000,000
shares at $0.001par value.
|
|||||||
Issued
and outstanding on December 31,
|
|||||||
2006
were 22,569,243 shares, December 31,
|
|||||||
2006
were 21,622,243 shares, December 31,
|
22,569
|
21,622
|
|||||
|
|||||||
Common
Stock Subscribed
|
108,675
|
108,675
|
|||||
Paid
in Capital
|
9,444,761
|
9,256,308
|
|||||
|
|||||||
Accumulated
Deficit
|
(12,732,830
|
)
|
(12,527,800
|
)
|
|||
|
|||||||
Total
Stockholders' Equity (Deficit)
|
(3,156,824
|
)
|
(3,141,194
|
)
|
|||
|
|||||||
TOTAL
LIABILITIES AND
|
|||||||
STOCKHOLDERS
EQUITY
|
341,215
|
315,034
|
Skye
International, Inc. and Subsidiaries
|
|||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|||||||
(Unaudited)
|
|||||||
|
|||||||
|
Three
Months Ended
|
||||||
|
March
31,
|
||||||
|
2007
|
2006
|
|||||
INCOME
|
|||||||
Product
Sales
|
$
|
-
|
$
|
8,032
|
|||
Other
Income
|
-
|
2,600
|
|||||
|
|||||||
Total
Income
|
-
|
10,632
|
|||||
|
|||||||
Cost
of Goods Sold
|
24,142
|
1,074
|
|||||
|
|||||||
Gross
Income
|
(24,142
|
)
|
9,558
|
||||
|
|||||||
EXPENSES
|
|||||||
Legal
and Professional
|
109,035
|
456,941
|
|||||
General
and Administrative
|
22,767
|
193,611
|
|||||
Research
and Development
|
30,000
|
-
|
|||||
Advertising/Marketing
|
-
|
27,929
|
|||||
Loss
on Disposal of Assets
|
-
|
-
|
|||||
Depreciation
|
2,761
|
1,906
|
|||||
Total
Expenses
|
164,563
|
680,387
|
|||||
OTHER
INCOME AND (EXPENSE):
|
|||||||
Interest
Expense
|
18,478
|
8,631
|
|||||
GainonExtinguishment
of Indebtedness
|
(2,153
|
)
|
-
|
||||
16,325
|
689,018
|
||||||
Net
(Loss) before Income Taxes
|
(205,030
|
)
|
(679,460
|
)
|
|||
|
|||||||
Income
Tax Expense
|
-
|
-
|
|||||
NET
(LOSS)
|
(205,030
|
)
|
(679,460
|
)
|
|||
Basic
and diluted (loss) per share
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
|
Weighted
Average Number of Common
|
|||||||
Shares
Outstanding
|
21,622,243
|
18,197,287
|
Skye
international, Inc. and Subsidiaries
|
|||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|||||||
(Unaudited)
|
|||||||
|
Three
Mos.
|
Three
Mos.
|
|||||
|
Ended
|
Ended
|
|||||
|
March
31,
|
March
31,
|
|||||
|
2007
|
2006
|
|||||
Operating
Activities
|
|||||||
|
|||||||
Net
(Loss)
|
$
|
(205,030
|
)
|
$
|
(679,460
|
)
|
|
|
|||||||
Depreciation
Expense.
|
2,761
|
1,906
|
|||||
Changes
in assets and liabilities:
|
|||||||
Inventory
|
52
|
(52,542
|
)
|
||||
Accounts
Receivable
|
-
|
(7,127
|
)
|
||||
Prepaid
Expense
|
-
|
(1,500
|
)
|
||||
Deposits
|
-
|
-
|
|||||
Accrued
Interest Payable
|
3,350
|
2,070
|
|||||
Accounts
Payable
|
(106,436
|
)
|
-
|
||||
Notes
Payable
|
144,897
|
-
|
|||||
Customer
Deposits
|
-
|
-
|
|||||
|
|||||||
Net
Cash Provided by Operating Activities
|
(160,406
|
)
|
(263,744
|
)
|
|||
|
|||||||
Investing
Activities
|
|||||||
Purchase/Disposal
of Assets
|
(1,394
|
)
|
(986
|
)
|
|||
|
|||||||
Net
Cash (Used) by Investing Activities
|
(1,394
|
)
|
(986
|
)
|
|||
Financing
Activities
|
|||||||
Shares
issued for services rendered.
|
188,400
|
205,500
|
|||||
Shares
issued to retire debt and interest.
|
1,000
|
-
|
|||||
Stock
Subscriptions
|
-
|
(155,000
|
)
|
||||
Proceeds
from sale of Common Stock
|
-
|
210,000
|
|||||
Discount
on Convertible Debt
|
-
|
-
|
|||||
Stock
Options Granted
|
-
|
-
|
|||||
Net
Cash Provided by Financing Activities
|
189,400
|
260,500
|
|||||
Net
Increase/(Decrease) in Cash
|
27,600
|
(4,230
|
)
|
||||
|
|||||||
Cash,
Beginning of Period
|
8,672
|
2,711
|
|||||
Cash,
End of Period
|
$
|
36,272
|
$
|
(1,519
|
)
|
||
Supplemental
Information:
|
|||||||
Taxes
|
-
|
-
|
|||||
Interest
Expense
|
$
|
18,476
|
$
|
10,510
|
Skye
International, Inc., and Subsidiaries
|
|||||||||||||||||||
STATEMENT
OF STOCKHOLDER'S DEFICIT
|
|||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||
|
Common
Stock
|
Common
Stock
|
Paid
in
|
Accumulated
|
Total
|
||||||||||||||
|
Shares
|
Amount
|
Subscribed
|
Capital
|
Deficit
|
Equity
|
|||||||||||||
|
|||||||||||||||||||
Balance
December 31, 2000
|
580,000
|
$
|
580
|
$
|
333,920
|
$
|
(828,006
|
)
|
$
|
(493,506
|
)
|
||||||||
|
|||||||||||||||||||
Common
Shares issued for Services
|
52,500
|
53
|
52,447
|
52,500
|
|||||||||||||||
Contribution
to Capital
|
24,265
|
24,265
|
|||||||||||||||||
Common
Shares issued to retire
|
|||||||||||||||||||
Convertible
Note and accrued Interest
|
60,000
|
60
|
187,022
|
187,082
|
|||||||||||||||
Net
(Loss)
|
|
|
(120,900
|
)
|
(120,900
|
)
|
|||||||||||||
|
|||||||||||||||||||
Balance
December 31, 2001
|
692,500
|
$
|
693
|
$
|
597,654
|
$
|
(948,906
|
)
|
$
|
(350,559
|
)
|
||||||||
|
|||||||||||||||||||
Common
Shares issued for cash
|
104,778
|
105
|
96,895
|
97,000
|
|||||||||||||||
Common
Shares issued for services
|
455,800
|
455
|
110,045
|
110,500
|
|||||||||||||||
Common
Shares issued for prepaid
|
|||||||||||||||||||
service
|
162,500
|
163
|
16,087
|
16,250
|
|||||||||||||||
Common
Shares issued for proposed
|
|||||||||||||||||||
business
acquisition
|
6,433,406
|
6,433
|
896,997
|
903,430
|
|||||||||||||||
Common
Shares issued to retire
|
|||||||||||||||||||
convertible
note and accrued Interest
|
60,000
|
60
|
200,670
|
200,730
|
|||||||||||||||
Common
Shares issued to retire debt
|
22,500
|
22
|
23,272
|
23,294
|
|||||||||||||||
Net
(Loss)
|
|
|
-2,798,586
|
(2,798,586
|
)
|
||||||||||||||
Balance
December 31, 2002
|
7,931,484
|
$
|
7,931
|
$
|
1,941,620
|
$
|
(3,747,492
|
)
|
$
|
(1,797,941
|
)
|
||||||||
|
|||||||||||||||||||
Common
Shares issued for Cash
|
434,894
|
435
|
967,925
|
968,360
|
|||||||||||||||
Common
Shares issued in recapitalization
|
3,008,078
|
3,008
|
(166,940
|
)
|
(163,932
|
)
|
|||||||||||||
Net
(Loss)
|
|
|
|
(371,821
|
)
|
(371,821
|
)
|
||||||||||||
Balance
December 31, 2003
|
11,374,456
|
$
|
11,374
|
$
|
2,742,605
|
$
|
(4,119,313
|
)
|
$
|
(1,365,334
|
)
|
||||||||
|
|||||||||||||||||||
Common
Shares issued for services
|
800,000
|
800
|
228,080
|
228,880
|
|||||||||||||||
|
|||||||||||||||||||
Common
Shares issued to retire Debt and interest of $91,281
|
172,354
|
172
|
91,109
|
91,281
|
|||||||||||||||
Common
Shares issued for cash
|
66,667
|
67
|
16,600
|
16,667
|
|||||||||||||||
through
exercise of warrants
|
|||||||||||||||||||
|
|||||||||||||||||||
Common
Shares cancelled in
|
(2,075,000
|
)
|
-2,075
|
2,075
|
-
|
||||||||||||||
acquisition
settlement
|
|||||||||||||||||||
|
|||||||||||||||||||
Common
Stock Options issued for
|
19,000
|
19,000
|
|||||||||||||||||
services
|
|||||||||||||||||||
Common
Stock issued for prepaid
|
2,250,000
|
2,250
|
110,250
|
112,500
|
|||||||||||||||
services
|
|||||||||||||||||||
Common
Shares valued at $159,876
|
537,500
|
538
|
159,338
|
159,876
|
|||||||||||||||
Issued to obtain $1,075,000 debt
|
|||||||||||||||||||
Net
(Loss)
|
|
|
|
(1,893,330
|
)
|
(1,893,330
|
)
|
||||||||||||
Balance
December 31, 2004
|
13,125,977
|
$
|
13,126
|
$
|
3,369,057
|
$
|
(6,012,643
|
)
|
$
|
(2,630,460
|
)
|
Balance
December 31, 2004
|
13,125,977
|
$
|
13,126
|
$
|
3,369,057
|
$
|
(6,012,643
|
)
|
$
|
(2,630,460
|
)
|
||||||||
Common
Stock granted but not
|
275,000
|
275,000
|
|||||||||||||||||
issued
until 2006
|
|||||||||||||||||||
Common
Stock granted in 2004 but
|
945,000
|
945,000
|
|||||||||||||||||
not
earned by related party
|
|||||||||||||||||||
consulting
agreements until 2005
|
|||||||||||||||||||
Common
Shares issued for
|
|||||||||||||||||||
consulting
and outside services
|
260,525
|
261
|
237,162
|
237,423
|
|||||||||||||||
Common
Shares issued in
|
391,832
|
392
|
414,129
|
414,521
|
|||||||||||||||
conjunction
with related party consulting contracts
|
|||||||||||||||||||
Issuance
of common stock for
|
524,500
|
525
|
535,646
|
536,170
|
|||||||||||||||
employee
stock Awards
|
|||||||||||||||||||
Issuance
of common stock to reduce
|
78,067
|
78
|
52,266
|
52,344
|
|||||||||||||||
existing
debt
|
|||||||||||||||||||
Common
Shares Issued in
|
|||||||||||||||||||
connection
with Debt
|
50000
|
50
|
12450
|
12,500
|
|||||||||||||||
Conversion
of convertible bridge
|
842,511
|
843
|
462,539
|
463,382
|
|||||||||||||||
notes
into common stock
|
|||||||||||||||||||
Issuance
of common stock in private
|
2,564,819
|
2,565
|
1,408,085
|
1,410,650
|
|||||||||||||||
placements
|
|||||||||||||||||||
Net
(Loss)
|
(4,051,870
|
)
|
(4,051,870
|
)
|
|||||||||||||||
Balance
December 31, 2005
|
17,838,231
|
$
|
17,839
|
$
|
275,000
|
$
|
7,436,333
|
$
|
(10,064,513
|
)
|
$
|
(2,335,340
|
)
|
||||||
Common
Shares issued in conjunction with
|
378,750
|
379
|
262,496
|
262,875
|
|||||||||||||||
related
party consulting services and to
|
|||||||||||||||||||
employees
for services
|
|||||||||||||||||||
Common
Shares issued for
|
808,100
|
808
|
420,444
|
421,252
|
|||||||||||||||
consulting
and outside services
|
|||||||||||||||||||
Common
Shares issued in private
|
370,000
|
370
|
-210,000
|
209,630
|
0
|
||||||||||||||
placements,
previously subscribed
|
|||||||||||||||||||
Common
Shares subscribed
|
43,675
|
43,675
|
|||||||||||||||||
Common
Stock options issued for services
|
32,216
|
32,216
|
|||||||||||||||||
Discount
on Convertible Debt
|
15,922
|
15,922
|
|||||||||||||||||
Common
Shares issued to retire debt and
interest
|
412,902
|
413
|
226,080
|
226,493
|
|||||||||||||||
Common
Shares issued in private stock
|
1,814,260
|
1,814
|
653,186
|
655,000
|
|||||||||||||||
placements
|
|||||||||||||||||||
Net
(Loss)
|
(2,463,287
|
)
|
(2,463,287
|
)
|
|||||||||||||||
Balance
December 31, 2006
|
21,622,243
|
$
|
21,623
|
$
|
108,675
|
$
|
9,256,308
|
$
|
(12,527,800
|
)
|
$
|
(3,141,194
|
)
|
Balance
December 31, 2006
|
21,622,243
|
$
|
21,623
|
$
|
108,675
|
$
|
9,256,308
|
$
|
(12,527,800
|
)
|
$
|
(3,141,194
|
)
|
||||||
Common
Shares issued in conjunction with
|
|||||||||||||||||||
related
party consulting services and to
|
|||||||||||||||||||
employees
for services
|
192,000
|
192
|
38,208
|
38,400
|
|||||||||||||||
Common
Shares issued for
|
|||||||||||||||||||
consulting
and outside services
|
750,000
|
750
|
149,250
|
150,000
|
|||||||||||||||
Common
Shares issued to retire debt
|
|||||||||||||||||||
and
interest
|
5,000
|
5
|
995
|
1,000
|
|||||||||||||||
Net
(Loss)
|
(205,030
|
)
|
(205,030
|
)
|
|||||||||||||||
Balance
March 31, 2007
|
22,569,243
|
$
|
22,570
|
$
|
108,675
|
$
|
9,444,761
|
$
|
(12,732,830
|
)
|
$
|
(3,156,824
|
)
|
·
|
Envirotech
Systems Worldwide, Inc., an Arizona corporation
(“Envirotech”);
|
·
|
ION
Tankless, Inc., an Arizona corporation (“ION”);
and
|
·
|
Valeo
Industries, Inc., a Nevada corporation
(“Valeo”).
|
|
|
|
Mar.
31,
2007
|
|
|
Dec.
31,
2006
|
|
Accounts Receivable
|
|
$
|
-0-
|
|
$
|
-0-
|
|
Less:
Allowance for Doubtful Accounts
|
|
|
(-0-
|
)
|
|
(-0-
|
)
|
Net
Accounts Receivable
|
|
$
|
-0-
|
|
$
|
$-0-
|
|
|
|
|
Mar.
31,
2007
|
|
|
Dec.
31,
2006
|
|
Property,
Equipment, furniture and Fixtures
|
|
$
|
63,016
|
|
$
|
61,622
|
|
Less:
Accumulated Depreciation
|
|
|
(20,461
|
)
|
|
(17,701
|
)
|
Net
Fixed Assets
|
|
$
|
42,554
|
|
$
|
43,921
|
|
Balance
of Warranty Accrual for 2003
|
$
|
3,240
|
Balance
of Warranty Accrual for 2004
|
9,725
|
|
Balance
of Warranty Accrual for 2005
|
21,625
|
|
Balance
of Warranty Accrual for 2006
|
0
|
|
Balance
of Warranty Accrual for 2007
|
0
|
|
Total
Warranty Accrual as of March 31, 2007
|
$
|
34,570
|
|
|
|
Three
Mos. Ended
|
|
|
Yr.
Ended
|
|
|
|
|
Mar.
31
|
|
|
Dec.
31,
|
|
|
|
|
2006
|
|
|
2006
|
|
Convertible
Notes, Unsecured, Matured March 2001 bear 12.5% Interest, principle
and
interest convertible into one common share and one warrant
at 75% of the average closing price over the 10-day period
prior to
conversion. Warrants have expired and notes have not been converted
and are in default.
|
|
$
|
70,000
|
|
$
|
70,000
|
|
|
|
|
|
|
|
|
|
Convertible
Notes, Unsecured, Matured one-year from issue date, bear 10%
Interest
payable quarterly, principle and interest convertible into
one common
share
for each outstanding $1.00. Forty notes were issued between January
23, 2004 and January 15, 2005. Of these notes, thirty six had
been either
repaid
or converted at December 31, 2005. Of the remaining four notes,
three were
converted in April 2006; the fourth has not been converted
or repaid
and
is in default. Aggregate Amount:
|
|
$
|
15,000
|
|
$
|
215,000
|
|
|
|
|
|
|
|
|
|
Demand
Note with Attorneys, 6% Interest, All Assets of Subsidiary,
Envirotech,
pledged as Collateral; Note is in default. Note has been acquired
by
Envirotech’s parent, Skye
|
|
$
|
194,895
|
|
$
|
194,895
|
|
|
|
|
|
|
|
|
|
Demand
Note with Former Distributor of Subsidiary, Envirotech, in
Settlement and
Repurchase of Distributorship Territory, 7% Interest; Note
is in default
|
|
$
|
519,074
|
|
$
|
519,074
|
|
|
|
|
|
|
|
|
|
Demand
Note Made by Subsidiary, Envirotech, 10% Interest, Payable
Monthly; Note
is in default
|
|
$
|
11,880
|
|
$
|
11,880
|
|
|
|
|
|
|
|
|
|
Demand
Note Made by Subsidiary, Envirotech, 6% Interest; Note is in
default
|
|
$
|
35,000
|
|
$
|
35,000
|
|
|
|
|
|
|
|
|
|
Demand
Note Made by Subsidiary, Envirotech; Note is in default
|
|
$
|
72,391
|
|
$
|
72,391
|
|
Demand
Note Made by ION Tankless in favor of related party;
|
|
$
|
120,000
|
|
$
|
120,000-
|
|
Demand
Note Made by Valeo in favor of related party;
|
|
$
|
13,000
|
|
$
|
13,000-
|
|
Demand
Note Made by Skye in favor of related party;
|
|
$
|
65,000
|
|
$
|
65,000-
|
|
Convertible
Notes, Unsecured, Issued March 2006, Matured March 2007,
bear 5%
Interest, principle and interest convertible into one common
share $0.55
per share. Notes have not been converted and are now in
default.
|
|
$
|
75,000
|
|
$
|
75,000
|
|
Demand
Note Made by SKYE in favor of consultants; Note is in default
|
|
$
|
10,000
|
|
$
|
10,000
|
Shares
|
|
Balance,
December 31, 2004
|
700,000
|
Granted,
2005
|
0
|
Expired,
2005
|
(100,000)
|
Balance,
December 31, 2005
|
600,000
|
Granted,
2006
|
300,000
|
Expired,
2006
|
0
|
Balance,
December 31, 2006
|
900,000
|
Granted
2007
|
0
|
Expired
2007
|
0
|
Balance
March 31, 2007
|
900,000
|
Three
Mos.
Ended
Mar 31,
2007
|
Year
Ended
Dec.
31,
2006
|
|||||
Deferred
Tax Asset
|
$
|
4,456,491
|
$
|
4,384,730
|
||
Valuation
Allowance
|
$
|
(4,456,491
|
)
|
$
|
(4,384,730
|
)
|
Current
Taxes Payable
|
$
|
0
|
$
|
0
|
||
Income
Tax Expense
|
$
|
0
|
$
|
0
|
|
|
Amount
|
|
|
Expiration
|
|
||
1993-2003
|
|
$
|
4,119,312
|
|
|
2013-2023
|
|
|
2004
|
|
$
|
1,893,331
|
|
|
2024
|
|
|
2005
|
|
$
|
4,051,870
|
|
|
2025
|
|
|
2006
|
|
$
|
2,463,287
|
|
|
2026
|
|
|
2007
|
$
|
71,760
|
2027
|
|||||
Total
|
|
$
|
12,732,830
|
|
|
|
·
|
Envirotech
Systems Worldwide, Inc., an Arizona corporation
(“Envirotech”);
|
·
|
ION
Tankless, Inc., an Arizona corporation (“ION”);
and
|
·
|
Valeo
Industries, Inc., a Nevada corporation
(“Valeo”).
|
·
|
On
January 5, 2007, the Company was advised that its securities had
been
cleared by the compliance unit of the National Association of Securities
Dealers ("NASD") for quotation on the OTC Bulletin Board. Accordingly,
the
Company commenced trading on the OTCBB under the trading symbol SKYY
effective on the opening on January 8, 2007.
|
·
|
On
January 16, 2007, the Company was advised that its wholly owned
subsidiary, ION, received US Patent No. 7,164,851 entitled "Modular
Tankless Water Heater Control Circuitry and Method of Operation".
|
·
|
On
January 19, 2007 the Company issued a President’s letter to shareholders
providing shareholders with an update of events in 2006 and an outlook
for
2007.
|
·
|
On
January 30, 2007, the Board of Directors of the Registrant filled
two
vacancies on the Board with the election of Mr. Perry Logan and Mr.
Ted
Marek. Both Mr. Logan and Mr. Marek will serve as directors until
the next
Annual General Meeting of the Registrant's shareholders. Mr. Logan
and Mr.
Marek were also appointed to serve as independent Directors on the
Company's Audit Committee and Corporate Governance Committee and
will
serve in such capacity until the next Annual General Meeting of
shareholders.
|
·
|
On
April 12, William Papazian resigned as a
director.
|
·
|
On
April 17, 2007, the United States Patent and Trademark Office published
the Registrant’s patent entitled “Fluid Heating System” as US Patent No.
7,206,506. The patent is related to a tube based fluid heating system
developed in connection with the Registrant’s previously announced
research and development program.
|
·
|
In
late April, 2007 the Company reached a settlement with Lawrence K.
White
after the completion of an arbitration of the dispute, but prior
to a
decision being rendered in the
matter.
|
·
|
Effective
may 1, 2007 the Company moved its principal offices to: 7701 E. Gray
Rd.,
Suite 4 Scottsdale, AZ 85260
|
·
|
At
a meeting of the Registrant’s Board of Directors on May 3, 2007 a
management reorganization was approved that resulted in the appointment
of
Perry Logan as the Company’s interim President and Chief Executive
Officer. Mr.
Logan replaced Ronald O. Abernathy, who stepped down as the Registrant’s
President to accept an appointment as the Registrant’s Vice President.
|
·
|
On
May 2, 2007, Judge Roslyn O. Silver of the United States District
Court
for the District of Arizona issued an Order rejecting the Plaintiffs’
requested Preliminary Injunction relief in the pending Skye Shareholder’s
Derivative Lawsuit, Stebbins
v. Johnson, Civil
Action No. 06-1291-PHX-ROS. The Court also dissolved all restrictions
imposed by a prior Temporary Restraining Order and Stipulated Order,
which
frees the Company to conduct its corporate business without any further
interference or restraint by the Court or the Stebbins Plaintiffs.
As a
summary of the case, the District of Arizona found that a vast majority
of
the Stebbins Plaintiffs’ complaint has been rendered moot. Based on the
Court’s May 2, 2007 rulings, Judge Silver stated “it is not clear that
Plaintiffs have any viable claims remaining” in this case. The District of
Arizona also ruled on other matters, including a ruling that the
prior
Answer and Counterclaim filed by Skye did not comply with the proper
form
of such a pleading under Rule 8 of the Federal Rules of Civil Procedure.
|
|
For
the Three Months Ended
Mar
31, 2007
|
For
the Three
Months
Ended Mar. 31, 2006
|
|||||
Revenues
|
$
|
-
|
$
|
10,632
|
|||
|
|||||||
Cost
of Sales
|
$
|
24,142
|
$
|
1,074
|
|||
|
|||||||
General
and Administrative Expenses
|
$
|
131,802
|
$
|
193,611
|
|||
|
|||||||
Research
and development
|
$
|
30,000
|
$
|
-
|
|||
|
|||||||
Total
Operating Expenses
|
$
|
164,563
|
$
|
680,387
|
|||
|
|||||||
Net
Income (Loss)
|
$
|
(205,030
|
)
|
$
|
(679,460
|
)
|
For
the Three months ended March 31:
|
2007
|
2006
|
Increase/(decrease)
|
|
$
|
%
|
|||
Revenue
|
$
-
|
$
10,632
|
$
(10,632)
|
(100%)
|
For
the three months ended March 31:
|
2007
|
2006
|
Increase/(decrease)
|
|
$
|
%
|
|||
General
& Administrative expenses
|
$
131,802
|
$
193,611
|
$
(61,809)
|
(32%)
|
For
the three months ended March 31:
|
2007
|
2006
|
Increase/(decrease)
|
|
$
|
%
|
|||
Total
operating expenses
|
$
164,563
|
$
680,387
|
$(515,824)
|
(76%)
|
For
the three months ended March 31:
|
2007
|
2006
|
Increase/(decrease)
|
$
|
|||
Net
Profit (Loss)
|
$
(205,030)
|
$
(679,460)
|
($474,430)
|
|
March
31,
|
|
December
31,
|
|
|||
|
|
2007
|
|
2006
|
|
||
Total
Assets
|
|
$
|
341,215
|
|
$
|
315,034
|
|
Accumulated
Deficit
|
|
$
|
(12,732,830
|
)
|
$
|
(12,527,800
|
)
|
Stockholders’
Equity (Deficit)
|
|
$
|
(3,156,824
|
)
|
$
|
(3,141,194
|
)
|
|
|
|
|
|
|
||
Working
Capital (Deficit)
|
|
$
|
(3,199,379
|
)
|
$
|
(3,185,116
|
)
|
·
|
ability
to commercialize new products from ongoing research and development
activities;
|
·
|
developments
in tankless water heating
technology;
|
·
|
price
and availability of alternative solutions for water heating systems;
|
·
|
availability
and cost of technology and marketing
personnel;
|
·
|
our
ability to establish and maintain key relationships with industry
partners;
|
·
|
the
amount and timing of operating costs and capital expenditures relating
to
maintaining our business, operations, and infrastructure;
|
·
|
general
economic conditions and economic conditions specific to the cost
of
electricity and water; and
|
·
|
the
ability to maintain a product margin on sales, given the early stage
of
our market for our products.
|
(a)
|
During
the year ended December 31, 2000, the Company issued five convertible
notes payable, totaling $100,000, which matured in March 2001. These
notes bear interest at the rate of 12.5% per annum. Each note is
subject to automatic conversion at the maturity date. One of these
notes, with a principal amount of $30,000, was converted in November
2006.
As of the date of this filing, the remaining four notes, totaling
$70,000,
have not yet been converted and are in default.
|
(b)
|
Between
January 2004 and January 2005, the Company issued forty notes in
connection with bridge loans made through private placements. The
notes
bear interest at 10%, interest payable quarterly, principal and interest
convertible into one common share for each outstanding $1.00 of principal
and interest. Of these notes, thirty-six have been either repaid
or
converted at December 31, 2005. Of the remaining four notes, three
were
converted in April 2006. The sole remaining note, in the principal
amount
of $15,000 has not been converted or repaid and is in
default.
|
(c)
|
Envirotech
has five notes with an aggregate principal amount of $833,240, that
are in
default, as follows:
|
Demand
Note with Attorneys, 6% Interest, All Assets of Subsidiary, Envirotech,
pledged as Collateral.
|
194,895
|
|
|
Demand
Note with Former Distributor of Subsidiary, Envirotech, in Settlement
and
Repurchase of Distributorship Territory, 7% Interest.
|
519,074
|
|
|
Demand
Note Made by Subsidiary, Envirotech, 10% Interest, Payable
Monthly.
|
11,880
|
|
|
Demand
Note Made by Subsidiary, Envirotech, 6% Interest.
|
35,000
|
|
|
Demand
Note Made by Subsidiary, Envirotech.
|
72,391
|
|
|
|
|
SKYE
INTERNATIONAL, INC.
|
|
|
|
|
Date:
May 21, 2007
|
|
/s/
Perry D. Logan
|
|
|
Perry
D. Logan
|
|
Title:
Chief Executive Officer (Interim) and Chief Accounting Officer
(Interim)
|