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
|
|
|
|
|
|
N/A
|
|
|
(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 June 30, 2007 and December 31,
2006
|
3
- 4
|
|
|
|
|
Consolidated
Statements of Cash Flows for the six months ended June 30, 2007
and
2006
|
5
|
|
|
|
|
Consolidated
Statements of Operations for the six months ended June 30, 2007
and
2006
|
6
|
|
|
|
|
Consolidated
Statements of Stockholders' Equity cumulative from December 31,
2000 to
June 30, 2007
|
7
- 9
|
|
|
|
|
Notes
to Financial Statements
|
10
- 20
|
|
|
|
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
- 39
|
|
|
|
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
|
39
|
|
|
|
ITEM
5.
|
Other
Information
|
40
|
|
|
|
ITEM
6.
|
Exhibits
|
40
|
|
|
|
SIGNATURES
|
|
40
|
Skye
International, Inc. and Subsidiaries
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
|
|
|||||||
|
June
30
|
December
31
|
||||||
|
2007
|
2006
|
||||||
|
(Unaudited)
|
(Audited)
|
||||||
|
|
|
||||||
ASSETS
|
||||||||
|
|
|
||||||
CURRENT
ASSETS
|
|
|
||||||
Cash
|
3,288
|
8,672
|
||||||
Accounts
Receivable, Net
|
-
|
-
|
||||||
Inventory
at Cost
|
223,991
|
163,062
|
||||||
Prepaid
Expenses
|
-
|
99,379
|
||||||
|
||||||||
Total
Current Assets
|
227,279
|
271,112
|
||||||
|
||||||||
EQUIPMENT,
NET
|
43,993
|
43,921
|
||||||
|
||||||||
OTHER
ASSETS
|
||||||||
Patents
and Software, Net
|
-
|
-
|
||||||
Deposits
|
2,460
|
-
|
||||||
Intangible
Assets
|
-
|
-
|
||||||
|
||||||||
Total
Other Assets
|
2,460
|
-
|
||||||
|
||||||||
Total
Assets
|
273,732
|
315,034
|
||||||
|
||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
||||||||
LIABILITIES
|
||||||||
Accounts
Payable
|
2,183,773
|
2,160,624
|
||||||
Other
Payables
|
112,532
|
31,132
|
||||||
Notes
Payable
|
1,166,076
|
1,053,615
|
||||||
Accrued
Interest Payable
|
84,042
|
72,917
|
||||||
Warranty
Accrual
|
34,570
|
34,570
|
||||||
Customer
Deposits
|
103,371
|
103,371
|
||||||
|
3,684,364
|
3,456,228
|
||||||
|
||||||||
Total
Liabilities
|
3,684,364
|
3,456,228
|
||||||
|
STOCKHOLDERS'
EQUITY
|
|
|||||||
|
|
|||||||
Common
Stock authorized is 100,000,000 shares at $0.001 par value. Issued
and outstanding on June 30, 2007 were 24,704,992 shares, and
December 31, 2006 were 21,622,243 shares
|
24,705
|
21,622
|
||||||
|
||||||||
Common
Stock Subscribed
|
108,675
|
108,675
|
||||||
|
||||||||
Paid
in Capital
|
9,949,775
|
9,256,308
|
||||||
|
||||||||
Accumulated
Deficit
|
(13,493,787 | ) | (12,527,800 | ) | ||||
|
||||||||
Total
Stockholders' Equity (Deficit)
|
(3,410,632 | ) | (3,141,194 | ) | ||||
|
||||||||
TOTAL
LIABILITIES AND STOCKHOLDERS EQUITY
|
273,732
|
315,034
|
||||||
|
Skye
International, Inc. and Subsidiaries
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
|
|
|||||||
|
|
|
||||||
|
Six
Months
|
Six
Months
|
||||||
|
Ended
|
Ended
|
||||||
|
June
30,
|
June
30,
|
||||||
|
2007
|
2006
|
||||||
|
|
|
||||||
Operating
Activities
|
|
|
||||||
|
|
|
||||||
Net
(Loss)
|
(965,987 | ) | (1,122,615 | ) | ||||
|
||||||||
Depreciation
Expense.
|
5,522
|
4,803
|
||||||
Changes
in assets and liabilities:
|
||||||||
Inventory
|
(60,929 | ) | (60,691 | ) | ||||
Accounts
Receivable
|
-
|
(9,127 | ) | |||||
Prepaid
Expense
|
99,379
|
534
|
||||||
Deposits
|
(2,460 | ) | (100,000 | ) | ||||
Accrued
Interest Payable
|
11,125
|
(16,304 | ) | |||||
Accounts
Payable and Other Payables
|
104,549
|
410,235
|
||||||
Notes
Payable
|
112,461
|
(200,000 | ) | |||||
Intangible
Assets
|
-
|
(3,982 | ) | |||||
|
||||||||
Net
Cash Provided by Operating Activities
|
(696,340 | ) | (1,097,147 | ) | ||||
|
||||||||
Investing
Activities
|
||||||||
|
||||||||
Purchase/Disposal
of Assets
|
(5,594 | ) | (986 | ) | ||||
|
||||||||
Net
Cash (Used) by Investing Activities
|
(5,594 | ) | (986 | ) | ||||
|
||||||||
Financing
Activities
|
||||||||
|
||||||||
Shares
issued for services rendered.
|
596,550
|
230,752
|
||||||
Shares
issued to retire debt and interest.
|
100,000
|
226,493
|
||||||
Stock
Subscriptions
|
-
|
-
|
||||||
Proceeds
from sale of Common Stock
|
655,000
|
|||||||
Discount
on Convertible Debt
|
-
|
|||||||
Stock
Options Granted
|
-
|
|||||||
|
||||||||
Net
Cash Provided by Financing Activities
|
696,550
|
1,112,245
|
||||||
|
||||||||
Net
Increase/(Decrease) in Cash
|
(5,384 | ) |
14,112
|
|||||
|
||||||||
Cash,
Beginning of Period
|
8,672
|
2,711
|
||||||
|
||||||||
Cash,
End of Period
|
3,288
|
16,823
|
||||||
|
||||||||
|
||||||||
Supplemental
Information:
|
||||||||
Taxes
|
-
|
-
|
||||||
Interest
Expense
|
42,444
|
10,510
|
Skye
International, Inc. and Subsidiaries
|
||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
|
|
|
||||||
|
|
|
||||||
|
Six
Months Ended
|
|||||||
|
June
30,
|
|||||||
|
2007
|
2006
|
||||||
INCOME
|
|
|
||||||
Product
Sales
|
-
|
$ |
8,032
|
|||||
Other
Income
|
-
|
5,471
|
||||||
|
||||||||
Total
Income
|
-
|
13,503
|
||||||
|
||||||||
Cost
of Goods Sold
|
52,117
|
14,299
|
||||||
|
||||||||
Gross
Income
|
(52,117 | ) | (796 | ) | ||||
|
||||||||
EXPENSES
|
||||||||
Legal
and Professional
|
644,490
|
691,448
|
||||||
General
and Administrative
|
193,565
|
358,989
|
||||||
Research
and Development
|
30,000
|
14,247
|
||||||
Advertising/Marketing
|
-
|
38,103
|
||||||
Loss
on Disposal of Assets
|
-
|
-
|
||||||
Depreciation
|
5,522
|
4,803
|
||||||
|
||||||||
Total
Expenses
|
873,577
|
1,107,590
|
||||||
|
||||||||
OTHER
INCOME AND (EXPENSE):
|
||||||||
Interest
Expense
|
(42,,446 | ) | (14,229 | ) | ||||
Gain
on Extinguishment of Indebtedness
|
2,153
|
-
|
||||||
|
(40,293 | ) | (14,229 | ) | ||||
|
||||||||
Net
(Loss) before Income Taxes
|
(965,987 | ) | (1,122,615 | ) | ||||
|
||||||||
Income
Tax Expense
|
-
|
-
|
||||||
|
||||||||
NET
(LOSS)
|
(965,987 | ) | (1,122,615 | ) | ||||
|
||||||||
Basic
and diluted (loss) per share
|
$ | (0.04 | ) | $ | (0.06 | ) | ||
|
||||||||
Weighted
Average Number of Common
|
||||||||
Shares
Outstanding
|
23,163,617
|
18,305,855
|
Skye
International, Inc., and Subsidiaries
|
||||||||||||||||||||||||
STATEMENT
OF STOCKHOLDER'S DEFICIT
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||
|
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 through exercise of warrants
|
66,667
|
67
|
|
16,600
|
16,667
|
|||||||||||||||||||
|
|
|||||||||||||||||||||||
Common
Shares cancelled in acquisition settlement
|
(2,075,000 | ) |
-2,075
|
|
2,075
|
-
|
||||||||||||||||||
|
|
|||||||||||||||||||||||
Common
Stock Options issued for services
|
|
19,000
|
19,000
|
|||||||||||||||||||||
|
|
|||||||||||||||||||||||
Common
Stock issued for prepaid services
|
2,250,000
|
2,250
|
|
110,250
|
112,500
|
|||||||||||||||||||
|
|
|||||||||||||||||||||||
Common
Shares valued at $159,876 Issued to obtain $1,075,000
debt
|
537,500
|
538
|
|
159,338
|
159,876
|
|||||||||||||||||||
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 | ) |
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 placements
|
1,814,260
|
1,814
|
653,186
|
655,000
|
||||||||||||||||||||
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 | ) |
Common
Shares issued in conjunction with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
related
party consulting services and to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
employees
for services
|
|
|
250,000
|
|
|
250
|
|
|
|
|
|
49,750
|
|
|
|
|
|
50,000
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common
Shares issued for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
consulting
and outside services
|
|
|
2,732,749
|
|
|
2,733
|
|
|
|
|
|
543,817
|
|
|
|
|
|
546,550
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Common
Shares issued to retire debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
and
interest
|
|
|
100,000
|
|
|
100
|
|
|
|
|
|
99,900
|
|
|
|
|
|
100,000
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(965,987
|
)
|
|
(965,987
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance
June 30, 2007
|
|
|
24,704,992
|
|
|
$ |
24,706
|
|
|
108,675
|
|
$
|
9,949,775
|
|
|
$ |
(13,493,787
|
)
|
|
$ |
(3,410,631
|
)
|
Note
1.
|
THE
COMPANY
|
|
·
|
Envirotech
Systems Worldwide, Inc., an Arizona corporation
(“Envirotech”);
|
|
·
|
ION
Tankless, Inc., an Arizona corporation (“ION”);
and
|
|
·
|
Valeo
Industries, Inc., a Nevada corporation
(“Valeo”).
|
Note
1.
|
THE
COMPANY - continued
|
Note
1.
|
THE
COMPANY - continued
|
Note
2.
|
SIGNIFICANT
ACCOUNTING POLICIES
|
Note
2.
|
SIGNIFICANT
ACCOUNTING POLICIES -
continued
|
June
30, 2007
|
Dec.
31, 2006
|
|||||||
Accounts Receivable
|
$ |
-0-
|
$ |
-0-
|
||||
Less:
Allowance for Doubtful Accounts
|
(-0- | ) | (-0- | ) | ||||
Net
Accounts Receivable
|
$ |
-0-
|
$ |
-0-
|
June30,
2007
|
Dec.
31, 2006
|
|||||||
Property,
Equipment, furniture and Fixtures
|
$ |
67,216
|
$ |
61,622
|
||||
Less:
Accumulated Depreciation
|
(23,223 | ) | (17,701 | ) | ||||
Net
Fixed Assets
|
$ |
43,993
|
$ |
43,921
|
Note
2.
|
SIGNIFICANT
ACCOUNTING POLICIES -
continued
|
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 June 30, 2007
|
34,570
|
Note
3.
|
NOTES
PAYABLE AND CAPITAL LEASE OBLIGATIONS
|
Three
Mos. Ended
|
Yr.
Ended
|
|||||||
June
30,
|
Dec.
31,
|
|||||||
2007
|
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
|
Note
4.
|
STOCKHOLDERS’
EQUITY
|
|
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
June 30, 2007
|
900,000
|
Note
5.
|
INCOME
TAXES
|
Six
Months
Ended
June30,
2007
|
Year
Ended
Dec.
31,
2006
|
|||||||
Deferred
Tax Asset
|
$ |
4,514,033
|
$ |
4,384,730
|
||||
Valuation
Allowance
|
$ | (4,514,033 | ) | $ | (4,384,730 | ) | ||
Current
Taxes Payable
|
$ |
0
|
$ |
0
|
||||
Income
Tax Expense
|
$ |
0
|
$ |
0
|
Year
|
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
|
$ |
236,167
|
2027
|
||||||
Total
|
$ |
12,897,237
|
Note
6.
|
LEASES
AND OTHER COMMITMENTS
|
Note
7.
|
GOING
CONCERN
|
Note
8.
|
PENDING
LITIGATION
|
Note
8.
|
PENDING
LITIGATION - continued
|
Note
8.
|
PENDING
LITIGATION - continued
|
|
·
|
Envirotech
Systems Worldwide, Inc., an Arizona corporation
(“Envirotech”);
|
|
·
|
ION
Tankless, Inc., an Arizona corporation (“ION”);
and
|
|
·
|
Valeo
Industries, Inc., a Nevada corporation
(“Valeo”).
|
|
·
|
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 Company’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. In June 2007
a
settlement of outstanding disputes between the Company and its former
financial advisor, Berry-Shino Securities, Inc. was reached that
resulted
in the issuance by the Company to Berry-Shino of 456,482 common shares
in
payment for past services rendered to the
Company.
|
|
·
|
On
June 29, 2007 the Company opened an investigation of its proposed
FORTIS™ line of water heating product with Underwriters
Laboratories, Inc. (“UL”) in order to determine its compliance with
ANSI/UL standard 499.
|
|
·
|
In
early August, 2007 the Company reached a settlement with its former
auditors Semple and Cooper thereby cancelling the
arbitration of the dispute that was scheduled to proceed on August
15,
2007.
|
For
the Six Months Ended
June
30, 2007
|
For
the Six
Months
Ended
June
30,
2006
|
|||||||
Revenues
|
$ |
-
|
$ |
13,503
|
||||
Cost
of Sales
|
$ |
52,117
|
$ |
14,299
|
||||
General
and Administrative Expenses
|
$ |
193,565
|
$ |
358,989
|
||||
Research
and development
|
$ |
30,000
|
$ |
14,247
|
||||
Total
Operating Expenses
|
$ |
873,577
|
$ |
1,107,590
|
||||
Net
Income (Loss)
|
$ | (965,987 | ) | $ | (1,122,615 | ) |
For
the Six months ended June 30:
|
2007
|
2006
|
Increase/(decrease)
|
|
$
|
%
|
|||
Revenue
|
$
-
|
$
13,503
|
$
(13,503)
|
(100%)
|
For
the six months ended June 30:
|
2007
|
2006
|
Increase/(decrease)
|
|
$
|
%
|
|||
General
& Administrative expenses
|
$193,565
|
$
358,989
|
$
(165,424)
|
(46%)
|
For
the six months ended June 30:
|
2007
|
2006
|
Increase/(decrease)
|
|
$
|
%
|
|||
Total
operating expenses
|
$
873,577
|
$
1,107,590
|
$(234,013)
|
(21%)
|
For
the six months ended June 30:
|
2007
|
2006
|
Increase/(decrease)
|
$
|
|||
Net
Profit (Loss)
|
$
(965,987)
|
$
(1,122,615)
|
($156,628)
|
June
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
Total
Assets
|
$ |
273,732
|
$ |
315,034
|
||||
Accumulated
Deficit
|
$ | (13,493,787 | ) | $ | (12,527,800 | ) | ||
Stockholders’
Equity (Deficit)
|
$ | (3,410,632 | ) | $ | (3,141,194 | ) | ||
Working
Capital (Deficit)
|
$ | (3,457,085 | ) | $ | (3,185,116 | ) |
· | rapidly improve, upgrade and expand its business infrastructures; |
|
·
|
deliver
products and services on a timely
basis;
|
|
·
|
maintain
levels of service expected by clients and
customers;
|
|
·
|
maintain
appropriate levels of staffing;
|
|
·
|
maintain
adequate levels of liquidity; and
|
|
·
|
expand
and upgrade its technology, transaction processing systems and network
hardware or software or find third parties to provide these
services.
|
|
·
|
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. |
|
•
|
|
political
and economic instability;
|
• | coordinating our communications and logistics; | ||
• | less favorable, or relatively undefined, intellectual property laws; | ||
• | unexpected changes in regulatory requirements and laws; | ||
• | export duties, import controls and trade barriers (including quotas); and | ||
• | adverse trade policies, and adverse changes to those policies. |
(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
|
(a) | Exhibits |
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification Pursuant to U.S.C. 18 Section 1350 |
SKYE
INTERNATIONAL, INC.
|
|||
Date:
August 15,
2007
|
By:
|
/s/ Perry D. Logan | |
Perry
D. Logan
|
|||
Title:
Chief Executive Officer (Interim) and Chief Accounting Officer
(Interim)
|
|||