þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the year ended December 31, 2015
|
|
or
|
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from __________ to ____________
|
Nevada
|
87-0412648
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
4000 Bridgeway, Suite 401, Sausalito, California
|
94965
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer o
|
Accelerated filer o
|
|
Non-accelerated filer o
|
Smaller reporting company þ
|
Page
|
||
Part I
|
||
Item 1
|
3
|
|
Item 1A
|
11
|
|
Item 2
|
15
|
|
Item 3
|
15
|
|
Item 4
|
Mine Safety Disclosures (omitted)
|
|
Part II
|
||
Item 5
|
16
|
|
Item 6
|
Selected Financial Data (omitted)
|
|
Item 7
|
17
|
|
Item 7A
|
Quantitative and Qualitative Disclosures About Market Risk (omitted)
|
|
Item 8
|
19
|
|
Item 9
|
19
|
|
Item 9A
|
19
|
|
Item 9B
|
20
|
|
Part III
|
||
Item 10
|
21
|
|
Item 11
|
24
|
|
Item 12
|
26
|
|
Item 13
|
26
|
|
Item 14
|
27
|
|
Part IV
|
||
Item 15
|
29
|
|
30
|
|
·
|
1 log reduction means the number of germs is 10 times smaller
|
|
·
|
2 log reduction means the number of germs is 100 times smaller
|
|
·
|
3 log reduction means the number of germs is 1000 times smaller
|
|
·
|
4 log reduction means the number of germs is 10,000 times smaller
|
|
·
|
5 log reduction means the number of germs is 100,000 times smaller
|
|
·
|
6 log reduction means the number of germs is 1,000,000 times smaller
|
|
·
|
7 log reduction means the number of germs is 10,000,000 times smaller
|
|
·
|
U.S. equipment patent (U.S. Patent No. 5,052,382) entitled “Apparatus for the Controlled Generation and Administration of Ozone” (“Patent No. 1”);
|
|
·
|
U.S. patent (U.S. Patent No. 6,073,627) entitled “External Application of Ozone/Oxygen for Pathogenic Conditions, a process patent for the treatment of external afflictions.” This patent also describes equipment evolutions and treatment envelope design for external medical applications (“Patent No. 2”);
|
|
·
|
U.S. Provisional Patent Application serial no. 10/002943, for “Method and Apparatus for Ozone Decontamination of Biological Liquids.” This application deals with protocols for biological liquid decontamination as well as the devices for conducting decontamination; and
|
|
·
|
Process U.S. patent (U.S. Patent No. 4,632,980) entitled “Ozone Decontamination of Blood and Blood Products,” covering a procedure for ozone decontamination of blood and blood products through the treatment of blood and blood components. This patent expired in February 2003. Many of the claims and primary aspects of the technology covered by this patent are assumed by or incorporated in Patent Nos. 1 and 2 described above.
|
Fiscal Year 2014
|
High
|
Low
|
||||||
First Quarter Ended March 31
|
$
|
0.17
|
$
|
0.05
|
||||
Second Quarter Ended June 30
|
$
|
0.29
|
$
|
0.16
|
||||
Third Quarter Ended September 30
|
$
|
0.22
|
$
|
0.11
|
||||
Fourth Quarter Ended December 31
|
$
|
0.19
|
$
|
0.08
|
||||
Fiscal Year 2015
|
||||||||
First Quarter Ended March 31
|
$
|
0.11
|
$
|
0.07
|
||||
Second Quarter Ended June 30
|
$
|
0.14
|
$
|
0.07
|
||||
Third Quarter Ended September 30
|
$
|
0.15
|
$
|
0.05
|
||||
Fourth Quarter Ended December 31
|
$
|
0.12
|
$
|
0.05
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
Weighted-average exercise price of outstanding options, warrants and rights
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|||||||||
|
(a)
|
(b)
|
(c)
|
|||||||||
Equity compensation plans approved by security holders
|
0
|
0
|
0
|
|||||||||
Equity compensation plans not approved by security holders (1)
|
20,965,000
|
0.20
|
4,935,000
|
|||||||||
Total
|
20,965,000
|
0.20
|
4,935,000
|
|
(1) Includes shares subject to awards granted or available for grant under consulting agreements as well as the following plans: 2008 Equity Compensation Plan, 2009 Incentive Stock Plan, 2012 Equity Incentive Award Plan, and 2014 Equity Incentive Plan.
|
Name
|
Age
|
Position
|
||
Edwin G. Marshall
|
73
|
Chairman of the Board, Chief Executive Officer
|
||
Michael E. Shannon
|
67
|
Director, President, and Director of Medical Affairs, President of CFGH
|
||
Daniel D. Hoyt
|
76
|
Director
|
||
David A. Esposito
|
47
|
Director
|
||
Vincent C. Caponi
|
66
|
Director
|
||
Thomas E. Auger
|
46
|
Chief Financial Officer
|
Name and principal position
|
Year
|
Salary
|
Option Awards
|
Total
|
||||||||||
(a)
|
(b)
|
(c)
|
(e)
|
(f)
|
||||||||||
Edwin G. Marshall (1) (2)
|
2015
|
$
|
195,000
|
$
|
113,640
|
$
|
308,640
|
|||||||
Chairman and Chief Executive Officer
|
2014
|
$
|
195,000
|
$
|
35,784
|
$
|
230,784
|
|||||||
Michael E. Shannon (3)
|
2015
|
$
|
190,187
|
$
|
113,640
|
$
|
303,827
|
|||||||
Director of Medical Affairs
|
2014
|
$
|
213,311
|
$
|
149,853
|
$
|
363,164
|
|||||||
Thomas (“Tommy”) E. Auger (4)
|
2015
|
$
|
60,000
|
$
|
26,516
|
$
|
86,516
|
|||||||
Chief Financial Officer
|
2014
|
$
|
60,000
|
$
|
14,314
|
$
|
74,314
|
|
(1)
|
No stock awards were made during these periods and therefore Column (d) is omitted from this table. Amount in column (e) represents the fair value on the date of grant of compensation paid Mr. Marshall in the form of stock options granted as compensation for Mr. Marshall’s service as a member of our Board of Directors (see “Director Compensation” following this section). Cash payments of salary made to Dr. Jill Marshall (Mr. Marshall’s wife), an employee of the Company, were $82,000 in 2015 and 2014, respectively, and are not included in the table.
|
|
(2)
|
Not included in the table are aggregate accrued and unpaid wages owed Mr. Marshall as of December 31, 2015 for periods prior to 2009, totaled $1,065,189. Not included in the table are aggregated accrued and unpaid wages and consulting fees owed as of December 31, 2015 to Dr. Jill Marshall for periods prior to 2009, totaled $441,583.
|
|
(3)
|
Dr. Shannon is President of Medizone and of CFGH, and serves as the Director of Medical Affairs and President of the Company. His salary (column (c)) is paid by CFGH in CD. Base salary is CD$240,000 per year. The above amounts have been converted to U.S. dollars using the average exchange rate between the Canadian and the U.S. dollar for each year. The average exchange rates for 2015 and 2014 were 0.7924465 and 0.8887995, respectively. Column (e) represents the fair value on the date of grant of compensation paid to Dr. Shannon in the form of stock options granted as compensation for Dr. Shannon’s service as a member of our Board of Directors (see “Director Compensation”). Not included in the table are accrued and unpaid consulting fees owed to Dr. Shannon for periods prior to 2011, which totaled $111,109 as of December 31, 2015.
|
|
(4)
|
Mr. Auger became our Chief Financial Officer on December 30, 2010. Mr. Auger’s services are provided to the Company under a consulting agreement. The fee paid to Mr. Auger was $60,000 for both 2015 and 2014. Column (e) represents the fair value on the grant date for options granted by the Company.
|
Option Awards
|
|||||||||||||||||
Name
|
Number of securities underlying unexercised options (#) exercisable
|
Number of securities underlying unexercised options (#) unexercisable
|
Equity incentive plan awards: number of securities underlying unexercised unearned options (#)
|
Option
exercise
price ($)
|
Option
expiration
date
|
||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
||||||||||||
Edwin G. Marshall
|
|||||||||||||||||
Principal Executive Officer
|
1,000,000 | - | - | $ | 0.23 |
2/21/17
|
|||||||||||
250,000 | - | - | $ | 0.163 |
4/30/19
|
||||||||||||
1,500,000 | - | - | $ | 0.087 |
8/18/20
|
||||||||||||
Michael E. Shannon
|
|||||||||||||||||
President
|
1,000,000 | - | - | $ | 0.23 |
2/21/17
|
|||||||||||
250,000 | - | - | $ | 0.163 |
4/30/19
|
||||||||||||
1,000,000 | - | - | $ | 0.13 |
8/15/19
|
||||||||||||
1,500,000 | - | - | $ | 0.087 |
8/18/20
|
||||||||||||
Thomas (“Tommy”) E. Auger
|
|||||||||||||||||
Principal Accounting and Financial Officer
|
150,000 | - | - | $ | 0.14 |
3/17/16
|
|||||||||||
250,000 | - | - | $ | 0.23 |
2/21/17
|
||||||||||||
100,000 | - | - | $ | 0.163 |
4/30/19
|
||||||||||||
350,000 | - | - | $ | 0.087 |
8/18/20
|
Name
(a)
|
Option awards
(d)
|
|||
Daniel D. Hoyt (1)
|
$
|
113,640
|
||
David A. Esposito (2)
|
$
|
56,820
|
||
Vincent C. Caponi (3)
|
$
|
56,820
|
|
(1)
|
As of December 31, 2015 and 2014, Mr. Hoyt had 2,750,000 and 1,250,000 vested shares, respectively, subject to purchase under options that have vested.
|
|
(2)
|
As of December 31, 2015 and 2014, Mr. Esposito had 1,750,000 and 1,000,000 vested shares, respectively, subject to purchase under options that have vested. Does not include additional unvested options for the purchase of 1,000,000 shares of common stock granted February 26, 2014.
|
|
(3)
|
As of December 31, 2015 and 2014, Mr. Caponi had 1,750,000 and 0 vested shares, respectively, subject to purchase under options that have vested.
|
Title of class
|
Name and Address of beneficial owner (1)
|
Amount and nature
of beneficial ownership
|
Percentage of class
|
||||
Common Stock
|
Edwin G. Marshall, Director and Chief Executive Officer (2)
|
16,057,597
|
4.1%
|
||||
Common Stock
|
Michael E. Shannon, Director and President (3)
|
6,239,000
|
1.6%
|
||||
Common Stock
|
Daniel D. Hoyt, Director (4)
|
11,251,988
|
2.9%
|
||||
Common Stock
|
David A. Esposito, Director (5)
|
2,750,000
|
*
|
||||
Common Stock
|
Vincent C. Caponi, Director (6)
|
1,750,000
|
*
|
||||
Common Stock
|
Thomas (“Tommy”) E. Auger, Chief Financial Officer (7)
|
850,000
|
*
|
||||
Common Stock
|
All Officers and Directors As a Group (6 persons) (8)
|
38,898,585
|
10.0%
|
|
(1)
|
Except as otherwise indicated, the address of the stockholder is: c/o Medizone International, Inc., 4000 Bridgeway, Suite 401, Sausalito, California 94965.
|
|
(2)
|
Amount indicated includes (i) 2,670,000 shares owned of record by Mr. Marshall’s wife, (ii) 9,759,729 shares owned directly by Mr. Marshall, and (iii) 52,868 shares held by Mr. and Mrs. Marshall as joint tenants. Also includes 3,575,000 shares subject to purchase under options that have vested, which are held in the names of Mr. Marshall (for 2,750,000 shares) and his wife, Dr. Jill Marshall (for 825,000 shares).
|
|
(3)
|
Includes 2,489,000 shares owned of record and 3,750,000 shares subject to purchase under options that have vested.
|
|
(4)
|
Includes 8,501,988 shares owned directly by Mr. Hoyt and 2,750,000 shares subject to purchase under options that have vested.
|
|
(5)
|
Includes 1,000,000 shares owned of record and 1,750,000 shares subject to purchase under options that have vested. Does not include additional unvested options for the purchase of 1,000,000 shares of common stock granted February 26, 2014.
|
|
(6)
|
Includes 1,750,000 shares subject to purchase under options that have vested.
|
|
(7)
|
Options to purchase 850,000 shares of common stock that have vested.
|
|
(8)
|
Based on a total of 369,934,068 shares outstanding as of the Table Date, plus 19,890,000 shares that may be issued upon the exercise of options that have vested, totaling 389,824,068 shares.
|
|
(i)
|
involved in any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;
|
|
(ii)
|
named as a defendant or counter-claimant in any civil litigation;
|
|
(iii)
|
convicted or plead nolo contendere in any criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
|
|
(iv)
|
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities, futures, commodities or banking activities;
|
|
(v)
|
found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
|
|
(vi)
|
involved in any judicial or administrative proceeding resulting from involvement in mail or wire fraud or fraud in connection with any business entity;
|
|
(vii)
|
involved in any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions (other than settlements of civil proceedings among private parties);
|
|
(viii)
|
involved in any disciplinary sanction or orders imposed by a stock, commodities or derivatives exchange or other similar self- regulatory organization.
|
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Audit Fees
|
$
|
30,947
|
$
|
27,917
|
||||
Audit Related Fees
|
-
|
-
|
||||||
Tax Fees
|
2,300
|
2,375
|
||||||
All Other Fees
|
- |
-
|
||||||
Total Fees
|
$
|
33,247
|
$
|
30,292
|
(a)
|
The following documents are filed as part of this report:
|
(1) Financial Statements
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2015 and 2014
|
Consolidated Statements of Stockholders’ Deficit for the Years Ended December 31, 2015 and 2014
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015 and 2014
|
|
Notes to the Consolidated Financial Statements
|
Exhibit No.
|
Description
|
|
2
|
Agreement and Plan of Reorganization, March 12, 1986 (1)
|
|
3(i)(a)
|
Articles of Incorporation (1)
|
|
3(i)(b)
|
Articles of Amendment to Articles of Incorporation (2)
|
|
3(i)(c)
|
Articles of Amendment to Articles of Incorporation (3)
|
|
3(ii)
|
Bylaws (1)
|
|
10(a)
|
Distribution Agreement (4)
|
|
31.1*
|
||
31.2*
|
||
32.1*
|
||
32.2*
|
||
101.INS*
|
XBRL Instance Document
|
|
101.SCH*
|
XBRL Taxonomy Extension Schema
|
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase
|
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase
|
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase
|
(1)
|
Incorporated by reference to Registration Statement on Form S-18 (no. 2-93277-D), May 14, 1985.
|
(2)
|
Incorporated by reference to Annual Report on Form 10-KSB for period ended December 31, 1986.
|
(3)
|
Incorporated by reference to Quarterly Report on Form 10-Q for period ended September 30, 2009.
|
(4)
|
Incorporated by reference to Current Report on Form 8-K filed November 17, 2015.
|
MEDIZONE INTERNATIONAL, INC.
|
||
Dated: March 3, 2016
|
By:
|
/s/ Edwin G. Marshall
|
Edwin G. Marshall, Chief Executive Officer
|
||
Name
|
Title
|
Date
|
||
/s/ Edwin G. Marshall
|
Chief Executive Officer (Principal Executive Officer) and Director
|
March 3, 2016
|
||
Edwin G. Marshall
|
||||
/s/ Michael E. Shannon
|
President and Director
|
March 3, 2016
|
||
Michael E. Shannon
|
||||
/s/ Daniel D. Hoyt
|
Director
|
March 3, 2016
|
||
Daniel D. Hoyt
|
||||
/s/ David A. Esposito
|
Director
|
March 3, 2016
|
||
David A. Esposito
|
||||
/s/ Vincent C. Caponi
|
Director
|
March 3, 2016
|
||
Vincent C. Caponi
|
||||
|
||||
/s/ Tommy E. Auger
|
Chief Financial Officer (Principal Accounting
|
March 3, 2016
|
||
Tommy E. Auger
|
and Financial Officer)
|
|||
Page
|
|
32
|
|
33
|
|
34
|
|
35
|
|
36
|
|
37
|
ASSETS
|
||||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Current assets:
|
||||||||
Cash
|
$
|
745,078
|
$
|
140,496
|
||||
Inventory
|
277,823
|
265,234
|
||||||
Prepaid expenses
|
31,986
|
60,705
|
||||||
Total current assets
|
1,054,887
|
466,435
|
||||||
Property and equipment, net
|
415
|
830
|
||||||
Other assets:
|
||||||||
Trademark and patents, net
|
176,086
|
208,073
|
||||||
Lease deposit
|
4,272
|
4,272
|
||||||
Total other assets
|
180,358
|
212,345
|
||||||
Total assets
|
$
|
1,235,660
|
$
|
679,610
|
||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
491,044
|
$
|
470,147
|
||||
Accounts payable – related parties
|
233,109
|
233,109
|
||||||
Accrued expenses
|
554,834
|
516,434
|
||||||
Accrued expenses – related parties
|
1,928,659
|
1,928,659
|
||||||
Customer deposits
|
-
|
30,000
|
||||||
Other payables
|
224,852
|
224,852
|
||||||
Notes payable
|
297,396
|
298,241
|
||||||
Total current liabilities
|
3,729,894
|
3,701,442
|
||||||
Notes payable, net of current portion
|
75,000
|
-
|
||||||
Total liabilities
|
3,804,894
|
3,701,442
|
||||||
Commitments and contingencies (Notes 5 and 10)
|
||||||||
Stockholders’ deficit:
|
||||||||
Preferred stock, $0.00001 par value
50,000,000 authorized: no shares outstanding
|
-
|
-
|
||||||
Common stock, $0.001 par value
395,000,000 authorized: 369,434,068 and 346,034,068 shares
outstanding, respectively
|
369,434
|
346,034
|
||||||
Additional paid-in capital
|
32,496,646
|
30,052,656
|
||||||
Accumulated other comprehensive loss
|
(36,968
|
)
|
(58,098
|
)
|
||||
Accumulated deficit
|
(35,398,346
|
)
|
(33,362,424
|
)
|
||||
Total stockholders’ deficit
|
(2,569,234
|
)
|
(3,021,832
|
)
|
||||
Total liabilities and stockholders’ deficit
|
$
|
1,235,660
|
$
|
679,610
|
For the Years Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
Revenues
|
$
|
197,000
|
$
|
-
|
||||
Operating expenses:
|
||||||||
Cost of revenues
|
114,811
|
-
|
||||||
General and administrative
|
1,737,175
|
1,445,049
|
||||||
Research and development
|
299,649
|
420,945
|
||||||
Depreciation and amortization
|
53,442
|
49,270
|
||||||
Total operating expenses
|
2,205,077
|
1,915,264
|
||||||
Loss from operations
|
(2,008,077
|
)
|
(1,915,264
|
)
|
||||
Interest expense
|
(27,872
|
)
|
(25,176
|
)
|
||||
Interest income
|
27
|
-
|
||||||
Net loss
|
(2,035,922
|
)
|
(1,940,440
|
)
|
||||
Other comprehensive loss:
|
||||||||
Gain (loss) on foreign currency translation
|
21,130
|
(31,829
|
)
|
|||||
Total comprehensive loss
|
$
|
(2,014,792
|
)
|
$
|
(1,972,269
|
)
|
||
Basic and diluted net loss per common share
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
||
Weighted average number of common shares outstanding
|
355,464,753
|
335,658,604
|
|
Accumulated
|
|||||||||||||||||||||||
Common Stock
|
Additional Paid-in
|
Other Comprehensive
|
Accumulated
|
Total Stockholders’
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Loss
|
Deficit
|
Deficit
|
|||||||||||||||||||
Balance, December 31, 2013
|
322,055,496 | $ | 322,055 | $ | 28,018,398 | $ | (26,269 | ) | $ | (31,421,984 | ) | $ | (3,107,800 | ) | ||||||||||
Common stock issued for cash ranging from $0.05 to $0.085 per share
|
23,978,572 | 23,979 | 1,580,271 | - | - | 1,604,250 | ||||||||||||||||||
Stock-based compensation
|
- | - | 453,987 | - | - | 453,987 | ||||||||||||||||||
Loss on foreign currency translation
|
- | - | - | (31,829 | ) | - | (31,829 | ) | ||||||||||||||||
Net loss
|
- | - | - | - | (1,940,440 | ) | (1,940,440 | ) | ||||||||||||||||
Balance, December 31, 2014
|
346,034,068 | 346,034 | 30,052,656 | (58,098 | ) | (33,362,424 | ) | (3,021,832 | ) | |||||||||||||||
Common stock issued for cash ranging from $0.05 to $0.10 per share
|
23,400,000 | 23,400 | 1,652,600 | - | - | 1,676,000 | ||||||||||||||||||
Stock-based compensation
|
- | - | 791,390 | - | - | 791,390 | ||||||||||||||||||
Gain on foreign currency translation
|
- | - | - | 21,130 | - | 21,130 | ||||||||||||||||||
Net loss
|
- | - | - | - | (2,035,922 | ) | (2,035,922 | ) | ||||||||||||||||
Balance, December 31, 2015
|
369,434,068 | $ | 369,434 | $ | 32,496,646 | $ | (36,968 | ) | $ | (35,398,346 | ) | $ | (2,569,234 | ) |
For the Years Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(2,035,922
|
)
|
$
|
(1,940,440
|
)
|
||
Adjustments to reconcile net loss to net cash
used in operating activities:
|
||||||||
Depreciation and amortization
|
53,442
|
49,270
|
||||||
Stock-based compensation
|
791,390
|
453,987
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Inventory
|
(12,589)
|
-
|
||||||
Prepaid expenses
|
95,127
|
37,594
|
||||||
Customer deposits
|
(30,000)
|
-
|
||||||
Accounts payable and accounts payable – related parties
|
20,898
|
(8,986
|
) | |||||
Accrued expenses and accrued expenses – related parties
|
38,400
|
(5,745
|
)
|
|||||
Net cash used in operating activities
|
(1,079,254
|
)
|
(1,414,320
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of trademark and patents
|
(21,041
|
)
|
(36,992)
|
|||||
Net cash used in investing activities
|
(21,041
|
)
|
(36,992
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Principal payments on notes payable
|
(67,253
|
)
|
(62,469
|
)
|
||||
Issuance of notes payable
|
75,000
|
-
|
||||||
Issuance of common stock for cash
|
1,676,000
|
1,604,250
|
||||||
Net cash provided by financing activities
|
1,683,747
|
1,541,781
|
||||||
Effects of foreign currency exchanges rates
|
21,130
|
(31,829
|
)
|
|||||
Net increase in cash
|
604,582
|
58,640
|
||||||
Cash as of beginning of the year
|
140,496
|
81,856
|
||||||
Cash as of end of the year
|
$
|
745,078
|
$
|
140,496
|
||||
Supplemental cash flow information:
|
||||||||
Cash paid for interest
|
$
|
1,126
|
$
|
1,520
|
||||
Non-cash financing activities:
|
||||||||
Financing of insurance premiums
|
$
|
66,408
|
$
|
65,214
|
For the Years Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
Numerator (net loss)
|
$
|
(2,035,922
|
)
|
$
|
(1,940,440
|
)
|
||
Denominator (weighted average number of common shares outstanding)
|
355,464,753
|
335,658,604
|
||||||
Basic and diluted net loss per common share
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
2015
|
2014
|
|||||||
Net operating loss carryforwards
|
$
|
4,408,800
|
$
|
4,090,400
|
||||
Related-party accruals
|
1,165,900
|
1,155,200
|
||||||
Valuation allowance
|
(5,574,700
|
)
|
(5,245,600
|
)
|
||||
$
|
-
|
$
|
-
|
2015
|
2014
|
|||||||
Income tax benefit based on U.S. statutory rate of 34%
|
$
|
(692,200
|
)
|
$
|
(659,700
|
)
|
||
Stock issued for expenses
|
269,100
|
154,400
|
||||||
Other
|
94,000
|
290,400
|
||||||
Change in valuation allowance
|
329,100
|
214,900
|
|
|||||
$
|
-
|
$
|
-
|
2015
|
2014
|
|||||||
Computers and software
|
$
|
2,938
|
$
|
2,938
|
||||
Furniture
|
2,075
|
2,075
|
||||||
5,013
|
5,013
|
|||||||
Accumulated depreciation
|
(4,598
|
)
|
(4,183
|
)
|
||||
Property and equipment, net
|
$
|
415
|
$
|
830
|
2015
|
2014
|
|||||||
Patent costs
|
$
|
383,997
|
$
|
362,956
|
||||
Trademark
|
770
|
770
|
||||||
384,767
|
363,726
|
|||||||
Accumulated amortization
|
(208,681
|
)
|
(155,653
|
)
|
||||
Trademark and patents, net
|
$
|
176,086
|
$
|
208,073
|
2015
|
2014
|
|||||||
Accrued payroll and consulting – related parties
|
$
|
1,812,106
|
$
|
1,812,106
|
||||
Accrued interest
|
529,015
|
502,269
|
||||||
Accrued payroll taxes – related parties
|
116,553
|
116,553
|
||||||
Other accruals
|
25,819
|
14,165
|
||||||
Total
|
$
|
2,483,493
|
$
|
2,445,093
|
Risk-free interest rate
|
1.52
|
% | to |
1.60
|
%
|
||||
Expected life
|
5 years
|
||||||||
Expected volatility
|
131.33
|
%
|
to
|
136.34
|
%
|
||||
Dividend yield
|
0.00
|
%
|
Shares
|
Weighted Average
Exercise Price
|
|||||||
Outstanding, January 1, 2015
|
18,565,000
|
$
|
0.18
|
|||||
Granted
|
7,400,000
|
0.09
|
||||||
Expired/Canceled
|
(5,000,000
|
)
|
0.21
|
|||||
Outstanding, December 31, 2015
|
20,965,000
|
0.14
|
||||||
Exercisable
|
19,890,000
|
0.14
|
2015
|
2014
|
|||||||
Unsecured notes payable to former directors and a family member of a former director, due at various dates in 1995, 1996 and 1997 (principal and accrued interest as of December 31, 2015), interest at 8%. The Company has the right to repay the loans with restricted stock at $0.10 per share if alternative financings do not occur. These notes payable are in default.
|
$ | 182,676 | $ | 182,676 | ||||
Unsecured notes payable to a third party in the amount of $50,000, due on September 8, 2018 (principal as of December 31, 2015), interest at 12%. Accrued interest due semi-annually, January 5 and July 5 of each year. The note holder has the right to convert 20% of the then outstanding principal into common shares at $0.10 per share.
|
50,000 | - | ||||||
Unsecured notes payable to 10 stockholders, due on demand, interest at 10% (principal and accrued interest as of December 31, 2015). The Company is obligated to accept the principal rate at face value plus accrued interest as partial payment for shares the lenders may purchase from the Company upon exercise of the lenders’ option to acquire shares from the Company.
|
60,815 | 60,815 | ||||||
Unsecured notes payable to a third party in the amount of $25,000, due on September 17, 2018 (principal as of December 31, 2015), interest at 12%. Accrued interest due semi-annually, January 5 and July 5 of each year. The note holder has the right to convert 20% of the then outstanding principal into common shares at $0.10 per share.
|
25,000 | - | ||||||
Unsecured notes payable to directors totaling $28,000 and a note payable to a third party in the amount of $9,000, due on April 22, 1995 (principal and accrued interest as of December 31, 2015), interest at 8%. Each lender has the right to convert any portion of the principal and interest into common stock at a price per share equal to the price per share under a prior private placement transaction. These notes payable are in default.
|
37,000 | 37,000 | ||||||
Unsecured notes payable to a financing company, payable in nine monthly installments, interest ranging from 4.63% to 6.43%m, mature in April, July and November 2016.
|
16,905 | 17,750 | ||||||
Total notes payable
|
372,396 | 298,241 | ||||||
Less notes payable current portion
|
(297,396 | ) | (298,241 | ) | ||||
Total notes payable long term
|
$ | 75,000 | $ | - |
Document And Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Mar. 03, 2016 |
Jun. 30, 2015 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Medizone International Inc | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 369,934,068 | ||
Entity Public Float | $ 43,934,237 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0000753772 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets (Parentheticals) - $ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 395,000,000 | 395,000,000 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares outstanding | 369,434,068 | 346,034,068 |
Consolidated Statements of Comprehensive Loss - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Revenues | $ 197,000 | $ 0 |
Operating expenses: | ||
Cost of revenues | 114,811 | 0 |
General and administrative | 1,737,175 | 1,445,049 |
Research and development | 299,649 | 420,945 |
Depreciation and amortization | 53,442 | 49,270 |
Total operating expenses | 2,205,077 | 1,915,264 |
Loss from operations | (2,008,077) | (1,915,264) |
Interest expense | (27,872) | (25,176) |
Interest income | 27 | 0 |
Net loss | (2,035,922) | (1,940,440) |
Other comprehensive loss: | ||
Gain (loss) on foreign currency translation | 21,130 | (31,829) |
Total comprehensive loss | $ (2,014,792) | $ (1,972,269) |
Basic and diluted net loss per common share (in Dollars per share) | $ (0.01) | $ (0.01) |
Weighted average number of common shares outstanding (in Shares) | 355,464,753 | 335,658,604 |
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
AOCI Attributable to Parent [Member] |
Retained Earnings [Member] |
Total |
---|---|---|---|---|---|
Balance at Dec. 31, 2013 | $ 322,055 | $ 28,018,398 | $ (26,269) | $ (31,421,984) | $ (3,107,800) |
Balance (in Shares) at Dec. 31, 2013 | 322,055,496 | ||||
Common stock issued for cash | $ 23,979 | 1,580,271 | 1,604,250 | ||
Common stock issued for cash (in Shares) | 23,978,572 | ||||
Stock-based compensation | 453,987 | 453,987 | |||
Loss on foreign currency translation | (31,829) | (31,829) | |||
Net loss | (1,940,440) | (1,940,440) | |||
Balance at Dec. 31, 2014 | $ 346,034 | 30,052,656 | (58,098) | (33,362,424) | $ (3,021,832) |
Balance (in Shares) at Dec. 31, 2014 | 346,034,068 | 346,034,068 | |||
Common stock issued for cash | $ 23,400 | 1,652,600 | $ 1,676,000 | ||
Common stock issued for cash (in Shares) | 23,400,000 | 23,400,000 | |||
Stock-based compensation | 791,390 | $ 791,390 | |||
Loss on foreign currency translation | 21,130 | 21,130 | |||
Net loss | (2,035,922) | (2,035,922) | |||
Balance at Dec. 31, 2015 | $ 369,434 | $ 32,496,646 | $ (36,968) | $ (35,398,346) | $ (2,569,234) |
Balance (in Shares) at Dec. 31, 2015 | 369,434,068 | 369,434,068 |
Consolidated Statements of Stockholders' Equity (Deficit) (Parentheticals) - Common Stock [Member] - $ / shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Minimum [Member] | ||
Common stock issued for cash, per share | $ 0.05 | $ 0.05 |
Maximum [Member] | ||
Common stock issued for cash, per share | $ 0.10 | $ 0.085 |
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] |
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The consolidated financial statements presented are those of Medizone International, Inc. (Medizone) and the Canadian Foundation for Global Health (CFGH), a not-for-profit foundation based in Ottawa, Canada, considered to be a variable interest entity (VIE) as described below. Collectively, they are referred to herein as the “Company”. The Company is in the business of designing, manufacturing and selling a patented system using ozone in the disinfection of surgical and other medical treatment facilities and in other applications.
In late 2008, the Company assisted in the formation of CFGH, a not-for-profit foundation. The Company helped establish CFGH for two primary purposes: (1) to establish an independent not-for-profit foundation intended to have a continuing working relationship with the Company for research purposes that is best positioned to attract the finest scientific, medical and academic professionals possible to work on projects deemed to be of social benefit; and (2) to provide a means for the Company to use a tiered pricing structure for services and products in emerging economies and extend the reach of its technology to as many in need as possible.
Accounting standards require a VIE to be consolidated by a company if that company absorbs a majority of the VIE’s expected losses and/or receives a majority of the VIE’s expected residual returns as a result of holding variable interests (ownership, contractual, or other financial interests) in the VIE. In addition, a legal entity is considered to be a VIE, if it does not have sufficient equity at risk to finance its own activities without relying on financial support from other parties. If the legal entity is a VIE, then the reporting entity determined to be the primary beneficiary of the VIE must consolidate the financial results of the VIE with it. Accordingly, the financial position and results of operations of CFGH are consolidated with Medizone as of and for the years ended December 31, 2015 and 2014.
b. Business Activities
The Company’s objective is to pursue an initiative in the field of hospital disinfection. The Company has developed an ozone-based technology, specifically for the purpose of decontaminating and disinfecting hospital surgical suites, emergency rooms, and intensive care units.
c. Basic and Diluted Net Loss Per Common Share
The computations of basic and diluted net loss per common share are based on the weighted average number of common shares outstanding during the year as follows:
Common stock equivalents, consisting of 20,965,000 options, have not been included in the calculation as their effect is antidilutive for the years presented.
d. Property and Equipment
Property and equipment are recorded at cost. Any major additions and improvements are capitalized. The cost and related accumulated depreciation of equipment retired or sold are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale are recorded as gain or loss on sale of property and equipment. Depreciation is computed using the straight-line method over a period of: (1) three years for computers and software, and (2) five years for office equipment and furniture.
e. Provision for Income Taxes
The Company estimates income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with assessing temporary differences resulting from differing treatment of items for income tax and financial reporting purposes. These temporary differences result in deferred income tax assets and liabilities, the net amount of which is included in the Company’s consolidated balance sheets. When appropriate, the Company records a valuation allowance to reduce its deferred income tax assets to the amount that the Company believes is more likely than not to be realized. Key assumptions used in estimating a valuation allowance include potential future taxable income, projected income tax rates, expiration dates of net operating loss and tax credit carry forwards, and ongoing prudent and feasible tax planning strategies.
As of December 31, 2015, the Company had net operating loss (“NOL”) carryforwards of approximately $11,066,000 that may be offset against future taxable income, if any, and expire through 2034. If substantial changes in the Company’s ownership should occur, there would also be an annual limitation of the amount of the NOL carryforwards which could be utilized. No tax benefit has been reported in the consolidated financial statements as, in the opinion of management, it is more likely than not that all of the deferred income tax assets will not be realized and the NOL carryforwards will expire unused. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. If the Company were to determine that it would be able to realize its deferred income tax assets in the future in excess of the net recorded amount, an adjustment to reduce the valuation allowance would increase net income or decrease net loss in the period such determination was made.
Interest and penalties associated with any underpayment of income taxes would be classified as income tax provision in the statements of comprehensive loss.
A company may adopt a policy of presenting taxes assessed by a governmental authority on revenue-producing transactions either on a gross basis or a net basis within revenues. The Company has elected to present revenues net of any tax collected.
Deferred income tax assets as of December 31, 2015 and 2014 comprised the following:
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2015 and 2014 due to the following:
The Company had no uncertain income tax positions as of December 31, 2015 and 2014.
The Company files income tax returns in the U.S. federal and California jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations for years before 2012.
f. Principles of Consolidation
The consolidated financial statements include the accounts of Medizone and the accounts of CFGH, a VIE.
All material intercompany accounts and transactions have been eliminated.
g. Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities as of the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
h. Advertising
The Company expenses the costs of advertising as incurred.
i. Stock Options
The Company records compensation expense in connection with the granting of stock options and their vesting periods based on their fair values. The Company estimates the fair values of stock option awards issued to employees at the grant date by using the Black-Scholes option-pricing model. For stock options issued to consultants and other non-employees, the Company estimates the related expense using the Black-Scholes option-pricing model. For stock options with a service condition, the expense is measured at the grant date and expensed over the vesting period. For stock options with a performance condition, the expense is measured when it is probable that the performance condition will be met, subsequently re-measured at each reporting date, and trued up upon the final completion of the performance condition.
j. Trademark and Patents
Trademark and patents are recorded at cost. Amortization is computed using the straight-line method over a period of seven years. The Company evaluates the recoverability of intangibles and reviews the amortization period on a continual basis. Several factors are used to evaluate intangibles, including management’s plans for future operations, recent operating results, and projected, undiscounted net cash flows.
k. Revenue Recognition Policy
The Company recognizes revenue when it ships its products, title and risk of loss passes to customers, payment from the customer is reasonably assured and the price is fixed or determinable. The Company records customer deposits received in advance of shipping products as a liability.
l. Inventory
The Company’s inventory consists of its AsepticSure® product and is valued on a specific identification basis. The Company purchases its inventory as a finished product from unrelated manufacturing companies. The Company determined that there was no obsolete or excess inventory as of December 31, 2015 and 2014.
m. Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, accounts payable, and notes payable. The carrying amounts of cash and accounts payable approximate their fair values because of the short-term nature of these instruments. The carrying amounts of the notes payable approximate fair values as the individual borrowings bear interest at rates that approximate market interest rates for similar debt instruments.
n. Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU No. 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU No. 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. This ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU sets forth management’s responsibility to evaluate, each reporting period, whether there is substantial doubt about the entity’s ability to continue as a going concern, and if so, to provide related footnote disclosures. This ASU is for annual reporting periods beginning after December 15, 2016, and interim periods within annual periods ending after December 15, 2016. The Company is currently assessing the impact, if any, of implementing this guidance on the Company’s financial reporting.
In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs.” To simplify presentation of debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. For public companies, the ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the ASU is permitted for financial statements that have not been previously issued. The Company is assessing the impact, if any, of implementing this guidance on its financial reporting.
o. Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which cash, at times, exceeds federally insured limits. As of December 31, 2015, the Company had approximately $212,000 of cash balances that exceeded federally insured limits. To date, the Company has not experienced a material loss or lack of access to its cash; however, no assurance can be provided that access to the Company’s cash will not be impacted by adverse conditions in the financial markets.
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NOTE 2 - PROPERTY AND EQUIPMENT |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment Disclosure [Text Block] |
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of December 31, 2015 and 2014:
Depreciation expense for the years ended December 31, 2015 and 2014 was $415 and $787, respectively.
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NOTE 3 - TRADEMARK AND PATENTS |
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Disclosure Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] |
NOTE 3 - TRADEMARK AND PATENTS
Trademark and patents consist of the following as of December 31, 2015 and 2014:
Amortization expense for the years ended December 31, 2015 and 2014 was $53,027 and $48,483, respectively. The future amortization as of December 31, 2015 is as follows: 2016-$53,910; 2017-$46,569; 2018-$34,028; 2019-$20,368; 2020-$14,090; and 2021-$7,121.
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NOTE 4 - ACCRUED EXPENSES AND ACCRUED EXPENSES - RELATED PARTIES |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities Disclosure [Text Block] |
NOTE 4 - ACCRUED EXPENSES AND ACCRUED EXPENSES – RELATED PARTIES
Accrued expenses and accrued expenses – related parties consist of the following as of December 31, 2015 and 2014:
Accrued expenses – related parties consist of accrued but unpaid payroll and consulting fees (and associated taxes) for certain of the Company’s employees and consultants who are also directors, officers or stockholders.
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NOTE 5 - COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] |
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Litigation
The Company is subject to certain claims and lawsuits arising in the normal course of business. In the opinion of management, uninsured losses, if any, resulting from the ultimate resolution of these matters will not have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.
Rakas vs. Medizone International, Inc. - A former consultant brought this action against the Company claiming the Company had failed to pay consulting fees under a consulting agreement. In September 2001, the parties agreed to settle the matter for $25,000. The Company, however, did not have the funds to pay the settlement and the plaintiff moved the court to enter a default judgment in the amount of $143,000 in January 2002. On May 8, 2002, the court vacated the default judgment and requested that the Company post a bond of $25,000 to cover the settlement previously entered into by the parties. The Company has been unable to post the required bond amount as of the date of this report. Therefore, the Company has recorded, as part of accounts payable, the original default judgment in the amount of $143,000, plus fees totaling $21,308, as of December 31, 2015 and 2014. The Company intends to contest the judgment if and when it is able to do so in the future.
Other Payables
As of December 31, 2015 and 2014, the Company has recorded other payables totaling $224,852 related to certain past due payables for which the Company has not received invoices or demands for over 10 years. Although management of the Company does not believe that the amounts will be paid, the amounts have been recorded as other payables until such time as the Company is certain that no liability exists.
Operating Leases
The Company operates a certified laboratory located at Innovation Park, Queen’s University in Kingston, Ontario, Canada, which provides a primary research and development platform. The lease term is month to month with a monthly lease payment of $1,375 Canadian dollars (“CD”) plus the applicable goods and services tax (“GST”). Leases for a second laboratory space for full scale room testing and a storage unit are on a month-to-month basis with a monthly lease payment of CD$1,375 and CD$475, respectively, plus the applicable GST.
The Company has a non-cancelable lease for office space located in California, with monthly payments of approximately $2,300 through December 31, 2015 and $2,500 through December 31, 2016.
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NOTE 6 - EQUITY TRANSACTIONS |
12 Months Ended |
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Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] |
NOTE 6 - EQUITY TRANSACTIONS
Unless otherwise stated, the following equity transactions were with unrelated parties and the securities issued were restricted. There were no underwriters involved.
Common Stock for Cash – 2014
During January, February and March 2014, the Company sold an aggregate of 9,000,000 restricted shares of common stock to five accredited investors for cash proceeds totaling $450,000, or $0.05 per share.
During March 2014, the Company sold an aggregate of 7,050,000 restricted shares of common stock to 16 accredited investors for cash proceeds totaling $599,250, or $0.085 per share.
During September 2014, the Company sold an aggregate of 2,471,429 restricted shares of common stock to five accredited investors for cash proceeds totaling $173,000, or $0.07 per share.
During November 2014, the Company sold 2,907,143 restricted shares of common stock to five accredited investors for cash proceeds totaling $203,500, or $0.07 per share.
During December 2014, the Company sold 2,550,000 restricted shares of common stock to an accredited investor for cash proceeds totaling $178,500, or $0.07 per share.
Common Stock for Cash – 2015
During February 2015, the Company sold 300,000 restricted shares of common stock to an accredited investor for cash proceeds totaling $21,000, or $0.07 per share.
During February and March 2015, the Company sold an aggregate of 3,000,000 restricted shares of common stock to seven accredited investors for cash proceeds totaling $150,000, or $0.05 per share.
During April, May and June 2015, the Company sold an aggregate of 7,500,000 restricted shares of common stock to eight accredited investors for cash proceeds totaling $375,000, or $0.05 per share.
During August 2015, the Company sold an aggregate of 2,600,000 restricted shares of common stock to five accredited investors for cash proceeds totaling $130,000, or $0.05 per share.
During November 2015, the Company sold 10,000,000 restricted shares of common stock to an accredited investor for cash proceeds totaling $1,000,000, or $0.10 per share.
Recapitalization
The Company’s amended Articles of Incorporation (“AOI”) include a class of preferred stock, par value $0.00001, with authorized shares of 50,000,000. To date, no shares of preferred stock have been issued. The rights and preferences of the authorized preferred shares will be determined by the Company’s Board of Directors.
The amended AOI authorize 395,000,000 shares of common stock, par value $0.001.
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NOTE 7 - COMMON STOCK OPTIONS |
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Shareholders' Equity and Share-based Payments [Text Block] |
NOTE 7 - COMMON STOCK OPTIONS
In May 2012, the Company granted options for the purchase of 1,000,000 shares of common stock to a consultant for distribution channel related services to be performed. The options have vested as of December 31, 2015. The options have an exercise price of $0.17 per share, and are exercisable for up to five years. The Company recognized $69,300 of expense during the year ended December 31, 2015.
In August 2013, the Company granted options for the purchase of 250,000 shares of common stock to a consultant. These options are exercisable at $0.10 per share for five years from the date of grant with 50,000 options vesting immediately and the other 200,000 options vesting upon the achievement of certain milestones, which were met in 2015. The Company recognized the remaining expense of $17,659 during the year ended December 31, 2015.
On February 26, 2014, the Company granted to a new director options for the purchase of 2,000,000 shares of common stock, with an exercise price of $0.1095 per share. Of these options, 1,000,000 vested February 26, 2015 and the remaining 1,000,000 options will vest upon the successful achievement of certain milestones. Unvested options vest immediately in the event of a change in control of the Company. The options are exercisable for five years. The Company recognized $16,017 and $80,075 during the years ended December 31, 2015 and 2014, respectively, in connection with the options that vested February 26, 2015. The Company will measure and begin recognizing the remaining expense when the achievement of the required milestones becomes probable.
On February 26, 2014, the Company granted options to six consultants and service providers for the purchase of a total of 250,000 shares of common stock at an exercise price of $0.1095 per share. Options for 200,000 shares vested immediately upon grant and options for the remaining 50,000 shares vested January 9, 2015. The options are exercisable for five years. The grant date fair value of these options was $24,023. The Company recognized expense of $800 and $23,223 during the years ended December 31, 2015 and 2014, respectively.
On April 30, 2014, the Company granted options for the purchase of a total of 1,350,000 shares of common stock for services rendered, as follows: 250,000 shares to each of four directors of the Company, 100,000 shares to each of two consultants, and 75,000 shares each to a consultant and an employee of the Company. All options vested upon grant, have an exercise price of $0.163 per share, and are exercisable for up to five years. The total value of these options at the date of grant was $193,234, which the Company recognized as an expense during the year ended December 31, 2014.
On May 6, 2014, the Company granted options to a consultant for the purchase of 100,000 shares of common stock at an exercise price of $0.19 per share. Options for 50,000 shares vested immediately upon grant and options for the remaining 50,000 vested during 2015. The options are exercisable for five years. The Company recognized expense of $8,342 and $8,342 during the years ended December 31, 2015 and 2014, respectively.
On August 15, 2014, the Company granted options to a consultant for the purchase of 75,000 shares of common stock at an exercise price of $0.13 per share. The shares will vest when certain required milestones are achieved. The options are exercisable for five years. The Company will measure and begin recognizing an expense when the achievement of the required milestones becomes probable.
On August 15, 2014, the Company granted options for services rendered to a director of the Company for the purchase of 1,000,000 shares of common stock at an exercise price of $0.13 per share. These options vested immediately upon grant. The Company recognized expense of $114,069 during the year ended December 31, 2014, which was the grant date fair value of these options.
On October 7, 2014, the Company granted to a new board member options for the purchase of 1,000,000 shares of common stock, with an exercise price of $0.16 per share. These options vested October 7, 2015. The options are exercisable for five years. The grant date fair value of the options was $140,178. The Company recognized $105,133 and $35,045 during the years ended December 31, 2015 and 2014, respectively.
On December 4, 2014, the Company granted options to four consultants for the purchase of 140,000 shares of common stock at an exercise price of $0.11 per share. The required milestones have been met and the shares are fully vested. The options are exercisable for five years. The total value of these options at the date of grant was $13,461, which the Company recognized as an expense during the year ended December 31, 2015.
In August 2015, the Company granted options for the purchase of a total of 7,150,000 shares of common stock for services rendered, as follows: 6,000,000 shares total to five directors of the Company, 650,000 shares total to four consultants, and 500,000 shares to an employee of the Company. All options vested upon grant, have an exercise price of $0.088 per share, and are exercisable for up to five years. The total value of these options at the date of grant was $541,687, which the Company recognized as an expense during the year ended December 31, 2015.
In August 2015, the Company granted options to a consultant for the purchase of a total of 250,000 shares of common stock at an exercise price of $0.085 per share. These options vested upon grant and are exercisable for up to five years. The total value of these options at the date of grant was $18,991, which the Company recognized as an expense during the year ended December 31, 2015.
The Company’s 2014 Equity Compensation Plan (the “2014 Plan”) was adopted on April 30, 2014 by the Board of Directors. The Company filed a registration statement on Form S-8 on July 17, 2014, to register 6,000,000 shares of common stock that may be issued under awards made pursuant to the 2014 Plan. As of December 31, 2015, the Company had 4,935,000 options available for grant under the 2014 Plan and previously adopted plans.
The Company estimates the fair value of each stock award by using the Black-Scholes option-pricing model, which model requires the use of exercise behavior data and the use of a number of assumptions including expected volatility of the Company’s stock price, the weighted average risk-free interest rate, and the weighted average expected life of the options. Because the Company does not pay dividends, the dividend rate variable in the Black-Scholes option-pricing model is zero. Expense of $791,390 and $453,987 was recorded for the years ended December 31, 2015 and 2014, respectively. Excluding options whose performance condition is not yet deemed probable as of December 31, 2015, the Company had various unvested outstanding options with related unrecognized expense of $104,647. The Company will recognize this expense when achievement of the required milestones become probable.
The Company estimated the fair value of the stock options at the date of the grant, based on the following weighted average assumptions:
A summary of the status of the Company’s outstanding options as of December 31, 2015 and changes during the year then ended is presented below:
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NOTE 8 - ACCOUNTS PAYABLE - RELATED PARTIES |
12 Months Ended |
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Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] |
NOTE 8 - ACCOUNTS PAYABLE – RELATED PARTIES
As of December 31, 2015 and 2014, the Company owed $233,109 to certain consultants for services. These consultants are stockholders of the Company and are related parties.
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NOTE 9 - NOTES PAYABLE |
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Debt Disclosure [Text Block] |
NOTE 9 - NOTES PAYABLE
Notes payable consist of the following as of December 31, 2015 and 2014:
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NOTE 10 - GOING CONCERN |
12 Months Ended |
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Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Substantial Doubt about Going Concern [Text Block] |
NOTE 10 - GOING CONCERN
The Company’s consolidated financial statements are prepared in accordance with US GAAP which assumes an entity is a going concern and contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company has incurred significant recurring losses from its inception through December 31, 2015, which have resulted in an accumulated deficit of $35,398,346 as of December 31, 2015. The Company has minimal cash, has a working capital deficit of $2,675,007, and a total stockholders’ deficit of $2,569,234 as of December 31, 2015. The Company has relied almost exclusively on debt and equity financing to sustain its operations. Accordingly, there is substantial doubt about its ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional capital and ultimately, upon the Company attaining profitable operations. The Company will require substantial additional funds to continue to develop its products, product manufacturing, and to fund additional losses, until revenues are sufficient to cover the Company’s operating expenses. If the Company is unsuccessful in obtaining the necessary additional funding, it will most likely be forced to substantially reduce or cease operations.
The Company believes that it will need approximately $1,000,000 during the next 12 months for continued production manufacturing research, development, and marketing activities, as well as for general corporate purposes.
During 2015, the Company raised a total of $1,676,000 through the sale of 23,400,000 shares of common stock at prices ranging from $0.05 to $0.10 per share, which funds have been used to keep the Company current in its public reporting obligations and to pay certain other corporate obligations including the costs of development for its hospital disinfection system.
The Company believes it can raise additional funds from certain investors who have purchased shares from 2009 through 2015, although there is no assurance that these investors will purchase additional shares.
The ability of the Company to continue as a going concern is dependent on successfully accomplishing the plan described in the preceding paragraphs and eventually attaining profitable operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
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NOTE 11 - CUSTOMER DEPOSITS |
12 Months Ended |
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Dec. 31, 2015 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue Disclosure [Text Block] |
NOTE 11 – CUSTOMER DEPOSITS
As of December 31, 2014, the Company received purchase orders and related customer deposits totaling $30,000 to purchase the AsepticSure® hospital disinfection systems and related equipment. During the year ended December 31, 2015, these deposits were applied toward the purchase of these units and were recognized as revenue.
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NOTE 12 - SUBSEQUENT EVENTS |
12 Months Ended |
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Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] |
NOTE 12 – SUBSEQUENT EVENTS
The Company evaluated subsequent events through the filing date of this Annual Report on Form 10-K and determined to disclose the following event.
During January 2016, the Company finalized an agreement with a consultant to obtain the know-how necessary to source the UV ozone-generating bulbs and the manufacturing expertise used in the construction of generators used in the AsepticSure® hospital disinfection systems. In exchange, the Company issued 500,000 common shares at $0.08 per share to this consultant. In February 2016, the Company terminated the agreement as to future payments to the consultant.
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Accounting Policies, by Policy (Policies) |
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Basis of Accounting, Policy [Policy Text Block] | a. Organization
The consolidated financial statements presented are those of Medizone International, Inc. (Medizone) and the Canadian Foundation for Global Health (CFGH), a not-for-profit foundation based in Ottawa, Canada, considered to be a variable interest entity (VIE) as described below. Collectively, they are referred to herein as the “Company”. The Company is in the business of designing, manufacturing and selling a patented system using ozone in the disinfection of surgical and other medical treatment facilities and in other applications.
In late 2008, the Company assisted in the formation of CFGH, a not-for-profit foundation. The Company helped establish CFGH for two primary purposes: (1) to establish an independent not-for-profit foundation intended to have a continuing working relationship with the Company for research purposes that is best positioned to attract the finest scientific, medical and academic professionals possible to work on projects deemed to be of social benefit; and (2) to provide a means for the Company to use a tiered pricing structure for services and products in emerging economies and extend the reach of its technology to as many in need as possible.
Accounting standards require a VIE to be consolidated by a company if that company absorbs a majority of the VIE’s expected losses and/or receives a majority of the VIE’s expected residual returns as a result of holding variable interests (ownership, contractual, or other financial interests) in the VIE. In addition, a legal entity is considered to be a VIE, if it does not have sufficient equity at risk to finance its own activities without relying on financial support from other parties. If the legal entity is a VIE, then the reporting entity determined to be the primary beneficiary of the VIE must consolidate the financial results of the VIE with it. Accordingly, the financial position and results of operations of CFGH are consolidated with Medizone as of and for the years ended December 31, 2015 and 2014.
b. Business Activities
The Company’s objective is to pursue an initiative in the field of hospital disinfection. The Company has developed an ozone-based technology, specifically for the purpose of decontaminating and disinfecting hospital surgical suites, emergency rooms, and intensive care units.
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Earnings Per Share, Policy [Policy Text Block] | c. Basic and Diluted Net Loss Per Common Share
The computations of basic and diluted net loss per common share are based on the weighted average number of common shares outstanding during the year as follows:
Common stock equivalents, consisting of 20,965,000 options, have not been included in the calculation as their effect is antidilutive for the years presented.
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Property, Plant and Equipment, Policy [Policy Text Block] | d. Property and Equipment
Property and equipment are recorded at cost. Any major additions and improvements are capitalized. The cost and related accumulated depreciation of equipment retired or sold are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale are recorded as gain or loss on sale of property and equipment. Depreciation is computed using the straight-line method over a period of: (1) three years for computers and software, and (2) five years for office equipment and furniture.
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Income Tax, Policy [Policy Text Block] | e. Provision for Income Taxes
The Company estimates income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with assessing temporary differences resulting from differing treatment of items for income tax and financial reporting purposes. These temporary differences result in deferred income tax assets and liabilities, the net amount of which is included in the Company’s consolidated balance sheets. When appropriate, the Company records a valuation allowance to reduce its deferred income tax assets to the amount that the Company believes is more likely than not to be realized. Key assumptions used in estimating a valuation allowance include potential future taxable income, projected income tax rates, expiration dates of net operating loss and tax credit carry forwards, and ongoing prudent and feasible tax planning strategies.
As of December 31, 2015, the Company had net operating loss (“NOL”) carryforwards of approximately $11,066,000 that may be offset against future taxable income, if any, and expire through 2034. If substantial changes in the Company’s ownership should occur, there would also be an annual limitation of the amount of the NOL carryforwards which could be utilized. No tax benefit has been reported in the consolidated financial statements as, in the opinion of management, it is more likely than not that all of the deferred income tax assets will not be realized and the NOL carryforwards will expire unused. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. If the Company were to determine that it would be able to realize its deferred income tax assets in the future in excess of the net recorded amount, an adjustment to reduce the valuation allowance would increase net income or decrease net loss in the period such determination was made.
Interest and penalties associated with any underpayment of income taxes would be classified as income tax provision in the statements of comprehensive loss.
A company may adopt a policy of presenting taxes assessed by a governmental authority on revenue-producing transactions either on a gross basis or a net basis within revenues. The Company has elected to present revenues net of any tax collected.
Deferred income tax assets as of December 31, 2015 and 2014 comprised the following:
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2015 and 2014 due to the following:
The Company had no uncertain income tax positions as of December 31, 2015 and 2014.
The Company files income tax returns in the U.S. federal and California jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations for years before 2012.
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Consolidation, Policy [Policy Text Block] | f. Principles of Consolidation
The consolidated financial statements include the accounts of Medizone and the accounts of CFGH, a VIE.
All material intercompany accounts and transactions have been eliminated.
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Use of Estimates, Policy [Policy Text Block] | g. Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities as of the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
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Advertising Costs, Policy [Policy Text Block] | h. Advertising
The Company expenses the costs of advertising as incurred.
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | i. Stock Options
The Company records compensation expense in connection with the granting of stock options and their vesting periods based on their fair values. The Company estimates the fair values of stock option awards issued to employees at the grant date by using the Black-Scholes option-pricing model. For stock options issued to consultants and other non-employees, the Company estimates the related expense using the Black-Scholes option-pricing model. For stock options with a service condition, the expense is measured at the grant date and expensed over the vesting period. For stock options with a performance condition, the expense is measured when it is probable that the performance condition will be met, subsequently re-measured at each reporting date, and trued up upon the final completion of the performance condition.
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Intangible Assets, Finite-Lived, Policy [Policy Text Block] | j. Trademark and Patents
Trademark and patents are recorded at cost. Amortization is computed using the straight-line method over a period of seven years. The Company evaluates the recoverability of intangibles and reviews the amortization period on a continual basis. Several factors are used to evaluate intangibles, including management’s plans for future operations, recent operating results, and projected, undiscounted net cash flows.
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Revenue Recognition, Policy [Policy Text Block] | k. Revenue Recognition Policy
The Company recognizes revenue when it ships its products, title and risk of loss passes to customers, payment from the customer is reasonably assured and the price is fixed or determinable. The Company records customer deposits received in advance of shipping products as a liability.
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Inventory, Policy [Policy Text Block] | l. Inventory
The Company’s inventory consists of its AsepticSure® product and is valued on a specific identification basis. The Company purchases its inventory as a finished product from unrelated manufacturing companies. The Company determined that there was no obsolete or excess inventory as of December 31, 2015 and 2014.
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Fair Value of Financial Instruments, Policy [Policy Text Block] | m. Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, accounts payable, and notes payable. The carrying amounts of cash and accounts payable approximate their fair values because of the short-term nature of these instruments. The carrying amounts of the notes payable approximate fair values as the individual borrowings bear interest at rates that approximate market interest rates for similar debt instruments.
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New Accounting Pronouncements, Policy [Policy Text Block] | n. Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU No. 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU No. 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. This ASU is effective for annual reporting periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity.
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU sets forth management’s responsibility to evaluate, each reporting period, whether there is substantial doubt about the entity’s ability to continue as a going concern, and if so, to provide related footnote disclosures. This ASU is for annual reporting periods beginning after December 15, 2016, and interim periods within annual periods ending after December 15, 2016. The Company is currently assessing the impact, if any, of implementing this guidance on the Company’s financial reporting.
In April 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs.” To simplify presentation of debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. For public companies, the ASU is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the ASU is permitted for financial statements that have not been previously issued. The Company is assessing the impact, if any, of implementing this guidance on its financial reporting.
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Concentration Risk, Credit Risk, Policy [Policy Text Block] | o. Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which cash, at times, exceeds federally insured limits. As of December 31, 2015, the Company had approximately $212,000 of cash balances that exceeded federally insured limits. To date, the Company has not experienced a material loss or lack of access to its cash; however, no assurance can be provided that access to the Company’s cash will not be impacted by adverse conditions in the financial markets.
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NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The computations of basic and diluted net loss per common share are based on the weighted average number of common shares outstanding during the year as follows:
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Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | Deferred income tax assets as of December 31, 2015 and 2014 comprised the following:
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2015 and 2014 due to the following:
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NOTE 2 - PROPERTY AND EQUIPMENT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Table Text Block] | Property and equipment consist of the following as of December 31, 2015 and 2014:
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NOTE 3 - TRADEMARK AND PATENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets [Table Text Block] | Trademark and patents consist of the following as of December 31, 2015 and 2014:
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NOTE 4 - ACCRUED EXPENSES AND ACCRUED EXPENSES - RELATED PARTIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities [Table Text Block] | Accrued expenses and accrued expenses – related parties consist of the following as of December 31, 2015 and 2014:
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NOTE 7 - COMMON STOCK OPTIONS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The Company estimated the fair value of the stock options at the date of the grant, based on the following weighted average assumptions:
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Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the status of the Company’s outstanding options as of December 31, 2015 and changes during the year then ended is presented below:
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NOTE 9 - NOTES PAYABLE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt [Table Text Block] | Notes payable consist of the following as of December 31, 2015 and 2014:
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NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) |
12 Months Ended | |
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Dec. 31, 2015 |
Dec. 31, 2014 |
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Schedule of Earnings Per Share, Basic and Diluted [Abstract] | ||
Numerator (net loss) | $ (2,035,922) | $ (1,940,440) |
Denominator (weighted average number of common shares outstanding) | 355,464,753 | 335,658,604 |
Basic and diluted net loss per common share | $ (0.01) | $ (0.01) |
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Schedule of Deferred Tax Assets and Liabilities [Abstract] | ||
Net operating loss carryforwards | $ 4,408,800 | $ 4,090,400 |
Related-party accruals | 1,165,900 | 1,155,200 |
Valuation allowance | (5,574,700) | (5,245,600) |
$ 0 | $ 0 |
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Effective Income Tax Rate Reconciliation - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
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Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
Income tax benefit based on U.S. statutory rate of 34% | $ (692,200) | $ (659,700) |
Stock issued for expenses | 269,100 | 154,400 |
Other | 94,000 | 290,400 |
Change in valuation allowance | 329,100 | 214,900 |
$ 0 | $ 0 |
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Schedule of Effective Income Tax Rate Reconciliation (Parentheticals) |
12 Months Ended | |
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Dec. 31, 2015 |
Dec. 31, 2014 |
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Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
Income tax benefit statutory rate | 34.00% | 34.00% |
NOTE 2 - PROPERTY AND EQUIPMENT (Details) - USD ($) |
12 Months Ended | |
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Dec. 31, 2015 |
Dec. 31, 2014 |
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Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 415 | $ 787 |
NOTE 2 - PROPERTY AND EQUIPMENT (Details) - Schedule of Property, Plant and Equipment - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 5,013 | $ 5,013 |
Accumulated depreciation | (4,598) | (4,183) |
Property and equipment, net | 415 | 830 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 2,938 | 2,938 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 2,075 | $ 2,075 |
NOTE 3 - TRADEMARK AND PATENTS (Details) - USD ($) |
12 Months Ended | |
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Dec. 31, 2015 |
Dec. 31, 2014 |
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Disclosure Text Block [Abstract] | ||
Amortization of Intangible Assets | $ 53,027 | $ 48,483 |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 53,910 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 46,569 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 34,028 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 20,368 | |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 14,090 | |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | $ 7,121 |
NOTE 3 - TRADEMARK AND PATENTS (Details) - Schedule of Finite-Lived Intangible Assets - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | $ 384,767 | $ 363,726 |
Accumulated amortization | (208,681) | (155,653) |
Trademark and patents, net | 176,086 | 208,073 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | 383,997 | 362,956 |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible Assets, Gross | $ 770 | $ 770 |
NOTE 4 - ACCRUED EXPENSES AND ACCRUED EXPENSES - RELATED PARTIES (Details) - Schedule of Accrued Liabilities - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Schedule of Accrued Liabilities [Abstract] | ||
Accrued payroll and consulting – related parties | $ 1,812,106 | $ 1,812,106 |
Accrued interest | 529,015 | 502,269 |
Accrued payroll taxes – related parties | 116,553 | 116,553 |
Other accruals | 25,819 | 14,165 |
Total | $ 2,483,493 | $ 2,445,093 |
NOTE 7 - COMMON STOCK OPTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options |
12 Months Ended |
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Dec. 31, 2015 | |
Schedule of Fair Value Assumptions of Stock Options [Abstract] | |
Risk-free interest rate | 1.52% |
Risk-free interest rate | 1.60% |
Expected life | 5 years |
Expected volatility | 131.33% |
Expected volatility | 136.34% |
Dividend yield | 0.00% |
NOTE 7 - COMMON STOCK OPTIONS (Details) - Schedule of Share-Based Compensation, Stock Options, Activity |
12 Months Ended |
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Dec. 31, 2015
$ / shares
shares
| |
Schedule of Share-Based Compensation, Stock Options, Activity [Abstract] | |
Outstanding, January 1, 2015 | shares | 18,565,000 |
Outstanding, January 1, 2015 | $ / shares | $ 0.18 |
Granted | shares | 7,400,000 |
Granted | $ / shares | $ 0.09 |
Expired/Canceled | shares | (5,000,000) |
Expired/Canceled | $ / shares | $ 0.21 |
Outstanding, December 31, 2015 | shares | 20,965,000 |
Outstanding, December 31, 2015 | $ / shares | $ 0.14 |
Exercisable | shares | 19,890,000 |
Exercisable | $ / shares | $ 0.14 |
NOTE 8 - ACCOUNTS PAYABLE - RELATED PARTIES (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Related Party Transactions [Abstract] | ||
Accounts Payable, Related Parties, Current | $ 233,109 | $ 233,109 |
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) - Loans Payable [Member] |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
$ / shares
|
Dec. 31, 2014
USD ($)
$ / shares
|
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Unsecured Note 1 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Due | Various dates in 1995, 1996 and 1997 | Various dates in 1995, 1996 and 1997 |
Interest | 8.00% | 8.00% |
Note Repayment Term | The Company has the right to repay the loans with restricted stock at $0.10 per share if alternative financings do not occur. | The Company has the right to repay the loans with restricted stock at $0.10 per share if alternative financings do not occur. |
Unsecured Note 2 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Interest | 12.00% | 12.00% |
Note Repayment Term | Accrued interest due semi-annually, January 5 and July 5 of each year. | Accrued interest due semi-annually, January 5 and July 5 of each year. |
Due | Sep. 08, 2018 | Sep. 08, 2018 |
Note Conversion | The note holder has the right to convert 20% of the then outstanding principal into common shares at $0.10 per share. | The note holder has the right to convert 20% of the then outstanding principal into common shares at $0.10 per share. |
Note Conversion at | $ / shares | $ 0.10 | $ 0.10 |
Unsecured Note 3 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Interest | 10.00% | 10.00% |
Stockholders | 10 | 10 |
Unsecured Note 4 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Interest | 12.00% | 12.00% |
Note Repayment Term | Accrued interest due semi-annually, January 5 and July 5 of each year. | Accrued interest due semi-annually, January 5 and July 5 of each year. |
Due | Sep. 17, 2018 | Sep. 17, 2018 |
Note Conversion | The note holder has the right to convert 20% of the then outstanding principal into common shares at $0.10 per share. | The note holder has the right to convert 20% of the then outstanding principal into common shares at $0.10 per share. |
Note Conversion at | $ / shares | $ 0.10 | $ 0.10 |
Unsecured Note 5 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Interest | 8.00% | 8.00% |
Due | Apr. 22, 1995 | Apr. 22, 1995 |
Note Conversion | Each lender has the right to convert any portion of the principal and interest into common stock at a price per share equal to the price per share under a prior private placement transaction. | Each lender has the right to convert any portion of the principal and interest into common stock at a price per share equal to the price per share under a prior private placement transaction. |
Note Default | These notes payable are in default. | These notes payable are in default. |
Unsecured Note 5 [Member] | Third Party Debt [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Note amount | $ | $ 9,000 | $ 9,000 |
Unsecured Note 6 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Due | April, July and November 2016 | April, July and November 2016 |
Note Repayment Term | Nine monthly installments | Nine monthly installments |
Director [Member] | Unsecured Note 5 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Note amount | $ | $ 28,000 | $ 28,000 |
Minimum [Member] | Unsecured Note 6 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Interest | 4.63% | 4.63% |
Maximum [Member] | Unsecured Note 6 [Member] | ||
NOTE 9 - NOTES PAYABLE (Details) - Schedule of Debt (Parentheticals) [Line Items] | ||
Interest | 6.43% | 6.43% |
NOTE 11 - CUSTOMER DEPOSITS (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Revenue Disclosure [Abstract] | ||
Customer Deposits, Current | $ 0 | $ 30,000 |
NOTE 12 - SUBSEQUENT EVENTS (Details) - Consultant [Member] - Subsequent Event [Member] |
1 Months Ended |
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Jan. 31, 2016
$ / shares
shares
| |
NOTE 12 - SUBSEQUENT EVENTS (Details) [Line Items] | |
Stock Issued During Period, Shares, Issued for Services | shares | 500,000 |
Shares Issued, Price Per Share | $ / shares | $ 0.08 |
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