Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 12, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Medizone International Inc | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 397,934,068 | |
Amendment Flag | false | |
Entity Central Index Key | 753,772 | |
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 | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | [1] |
Current assets: | |||
Cash | $ 22,574 | $ 398,290 | |
Inventory | 240,806 | 109,573 | |
Prepaid expenses | 91,738 | 81,666 | |
Total current assets | 355,118 | 589,529 | |
Other assets: | |||
Trademark and patents, net | 142,971 | 151,444 | |
Lease deposit | 6,938 | 4,272 | |
Total other assets | 149,909 | 155,716 | |
Total assets | 505,027 | 745,245 | |
Current liabilities: | |||
Accounts payable | 539,484 | 459,654 | |
Accrued expenses | 605,614 | 592,621 | |
Accrued expenses – related parties | 557,297 | 538,887 | |
Other payables | 224,852 | 224,852 | |
Notes payable | 307,838 | 297,332 | |
Notes payable – related parties | 1,594,690 | 1,617,881 | |
Warrant liability | 882,581 | 985,163 | |
Total current liabilities | 4,712,356 | 4,716,390 | |
Notes payable, net of current portion | 75,000 | 75,000 | |
Total liabilities | 4,787,356 | 4,791,390 | |
Commitments and contingencies (Note 7) | |||
Stockholders’ deficit: | |||
Preferred stock, $0.00001 par value: 50,000,000 authorized; no shares outstanding | 0 | 0 | |
Common stock, $0.001 par value: 500,000,000 authorized; 395,934,068 and 393,934,068 shares issued and outstanding, respectively | 395,934 | 393,934 | |
Additional paid-in capital | 34,426,358 | 33,680,146 | |
Accumulated other comprehensive loss | (50,220) | (48,043) | |
Accumulated deficit | (39,054,401) | (38,072,182) | |
Total stockholders’ deficit | (4,282,329) | (4,046,145) | |
Total liabilities and stockholders’ deficit | $ 505,027 | $ 745,245 | |
[1] | The condensed consolidated balance sheet as of December 31, 2016 has been prepared using information from the audited consolidated balance sheet as of that date. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 | |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 | [1] |
Preferred stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 | [1] |
Preferred stock, shares outstanding | 0 | 0 | [1] |
Common stock, shares authorized | 500,000,000 | 500,000,000 | [1] |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | [1] |
Common stock, shares outstanding | 395,934,068 | 393,934,068 | [1] |
Common stock, shares issued | 395,934,068 | 393,934,068 | |
[1] | The condensed consolidated balance sheet as of December 31, 2016 has been prepared using information from the audited consolidated balance sheet as of that date. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues | $ 0 | $ 0 |
Operating expenses: | ||
Cost of revenues | 0 | 0 |
General and administrative | 977,262 | 279,064 |
Research and development | 84,536 | 185,961 |
Depreciation and amortization | 14,403 | 13,826 |
Total operating expenses | 1,076,201 | 478,851 |
Loss from operations | (1,076,201) | (478,851) |
Other income (expense): | ||
Gain on measurement of warrant liability | 102,582 | 0 |
Interest expense | (8,615) | (8,591) |
Interest income | 15 | 53 |
Total other income (expense) | 93,982 | (8,538) |
Net loss | (982,219) | (487,389) |
Other comprehensive loss: | ||
Gain (loss) on foreign currency translation | (2,177) | 895 |
Total comprehensive loss | $ (984,396) | $ (486,494) |
Basic and diluted net loss per common share (in Dollars per share) | $ 0 | $ 0 |
Weighted average number of common shares outstanding (in Shares) | 394,356,290 | 369,906,595 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Cash flows from operating activities: | |||
Net loss | $ (982,219) | $ (487,389) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 14,403 | 13,826 | |
Stock-based compensation | 688,212 | 48,000 | |
Change in warrant liability | (102,582) | 0 | |
Changes in operating assets and liabilities: | |||
Inventory | (131,233) | (16,883) | |
Prepaid expenses | 13,512 | 20,364 | |
Accounts payable | 79,830 | (21,326) | |
Accrued expenses and accrued expenses – related parties | 31,403 | 15,273 | |
Net cash used in operating activities | (388,674) | (428,135) | |
Cash flows from investing activities: | |||
Cost of registering patents | (5,930) | (6,269) | |
Net cash used in investing activities | (5,930) | (6,269) | |
Cash flows from financing activities: | |||
Principal payments on notes payable and notes payable – related parties | (38,935) | (22,889) | |
Issuance of common stock for cash | 60,000 | 0 | |
Net cash provided by (used in) financing activities | 21,065 | (22,889) | |
Effects of foreign currency exchanges rates on cash | (2,177) | 895 | |
Net decrease in cash | (375,716) | (456,398) | |
Cash as of beginning of the period | 398,290 | [1] | 745,078 |
Cash as of end of the period | 22,574 | 288,680 | |
Supplemental cash flow information: | |||
Cash paid for interest | 606 | 3,318 | |
Supplemental disclosure of non-cash financing activities: | |||
Financing of insurance premiums | $ 26,250 | $ 31,500 | |
[1] | The condensed consolidated balance sheet as of December 31, 2016 has been prepared using information from the audited consolidated balance sheet as of that date. |
NOTE 1 BASIS OF PRESENTATION
NOTE 1 BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Text Block [Abstract] | |
Business Description and Basis of Presentation [Text Block] | NOTE 1 BASIS OF PRESENTATION The financial information of Medizone International, Inc., a Nevada corporation (“Medizone), the Canadian Foundation of Global Health (“CFGH) based in Ottawa, Canada, considered to be a variable interest entity (“VIE”) as described below, and Medizone Canada, Inc. a wholly owned subsidiary, (collectively, the “Company”), included herein is unaudited and has been prepared consistent with U.S. generally accepted accounting principles (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all information and notes required by US GAAP for complete financial statements. These notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In the opinion of management, these financial statements contain all adjustments (consisting solely of normal recurring adjustments) which are necessary in the opinion of management for a fair presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the full year ending December 31, 2017. |
NOTE 2 CANADIAN FOUNDATION FOR
NOTE 2 CANADIAN FOUNDATION FOR GLOBAL HEALTH | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Text Block [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 2 CANADIAN FOUNDATION FOR GLOBAL HEALTH In late 2008, Medizone assisted in the formation of CFGH, a not-for-profit foundation, 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 Medizone to use a tiered pricing structure for services and products in emerging economies and extend the reach of the Medizone’s technology to as many in need as possible. Accounting standards require a variable interest entity (“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, which are the ownership, contractual, or other financial interests in the VIE. In addition, a legal entity may be 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 its financial statements with those of the VIE. Medizone determined that CFGH met the requirements of a VIE effective upon the first advance to CFGH on February 12, 2009. After eliminations, the operations and equity of the non-controlling interest is not material to the consolidated financial statements. Accordingly, the financial statements of CFGH have been consolidated with Medizone for all periods presented. |
NOTE 3 BASIC AND DILUTED NET LO
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | NOTE 3 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 periods as follows: For the Three Months Ended March 31, 2017 2016 Numerator: Net loss $ (982,219 ) $ (487,389 ) Denominator: Weighted average number of common shares outstanding 394,356,290 369,906,595 Basic and diluted net loss per common share $ (0.00 ) $ (0.00 ) Common stock equivalents, consisting of options to purchase 21,565,000 shares and warrants to purchase up to $1,000,000 of common stock, with the number of shares determined based on a 20-day average stock price prior to the date of exercise, have not been included in the calculation as their effect is antidilutive for the periods presented. |
NOTE 4 GOING CONCERN
NOTE 4 GOING CONCERN | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Substantial Doubt about Going Concern [Text Block] | NOTE 4 GOING CONCERN The Company’s condensed consolidated financial statements are prepared using US GAAP which assumes an entity is a going concern and contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred significant recurring losses from its inception through March 31, 2017, which have resulted in an accumulated deficit of $39,054,401 of March 31, 2017. The Company has minimal cash, has a working capital deficit of $4,357,238, and a total stockholders’ deficit of $4,282,329 as of March 31, 2017. The Company has relied almost exclusively on debt and equity financing to sustain its operations. Accordingly, there is a substantial doubt about the Company’s 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’s attaining profitable operations. The Company will require substantial additional funds to continue to develop its products, manufacture products, and 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 its operations. The Company believes that it will need approximately $1,500,000 during the next 12 months for continued product manufacturing, research, development and marketing activities, as well as for limited general corporate purposes. During the three months ended March 31, 2017, the Company raised cash proceeds of $60,000 through the sale of 1,000,000 shares of common stock to its Chairman and Interim CEO at a price of $0.06 per share as part of a private offering. 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 condensed 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. |
NOTE 5 INVENTORY
NOTE 5 INVENTORY | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory Disclosure [Text Block] | NOTE 5 INVENTORY In December 2016, the Company terminated a Distribution and License Agreement with a distributor due to lack of market development by the distributor. In connection with the termination, the Company negotiated the return of five disinfection units on or before January 17, 2017 paying the distributor $25,000 per unit. The units have been upgraded to the current technology to support the ongoing expansion of the Company’s commercial strategy |
NOTE 6 WARRANT LIABILITY
NOTE 6 WARRANT LIABILITY | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Text Block [Abstract] | |
Derivatives and Fair Value [Text Block] | NOTE 6 WARRANT LIABILITY The Company accounts for its common stock warrants under ASC 480, Distinguishing Liabilities from Equity. In October 2016, the Company issued warrants to purchase from the Company up to $1,000,000 in common stock with the number of shares determined based on a 40% discount to the 20-day average stock price prior to the date of exercise. The warrants are exercisable between January 31, 2017 and January 30, 2018, at which point the outstanding warrants expire. Since the exercise price of the warrant is yet to be determined, the Company recorded a common stock warrant liability of $937,951 on the warrant’s issuance date and remeasured it at fair value on December 31, 2016 at $985,163. The warrant liability is remeasured at fair value at each quarter end until the warrant liability expires. The estimate was calculated using the following inputs: Input March 31, 2017 Risk-free interest rate 103 % Expected life 10 months Expected volatility 102.89 % Dividend yield 0.00 % Stock price $ 0.10 As of March 31, 2017, the Company recorded a decrease in the warrant liability of $102,582 which resulted from the fluctuation in the Company’s stock price at the end of the year. The warrant liability was $882,581 as of March 31, 2017. |
NOTE 7 COMMITMENTS AND CONTINGE
NOTE 7 COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 7 COMMITMENTS AND CONTINGENCIES 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. Litigation Rakas vs. Medizone International, Inc Related Party Agreements In July 2016, the Company converted $228,109 of accounts payable – related parties, and $1,389,772 of accrued expenses – related parties into three promissory notes payable – related parties aggregating to $1,617,881. The amounts converted represent accrued expenses and accrued wages prior to 2009 owed to certain officers and executives of the Company. On February 28, 2017, the Company entered into separation and release agreements (Separation Agreements) with its former Chairman and CEO, Edwin Marshall, and its former Director of Operations, Dr. Jill Marshall. The Separation Agreements include principal payment schedules for the promissory notes issued to these individuals and modify the terms of common stock option awards granted to them under the Company’s 2014 Equity Incentive Plan by increasing the exercise period of the grants from three months to three years following termination. The Company is currently in default with the terms of the agreements. On March 1, 2017, the Company entered into an employment agreement with its new chairman and interim CEO, David Esposito, which states the terms of his employment and compensation. Mr. Esposito’s compensation consists of: 1) an annual base salary of $225,000, 2) a potential target bonus of up to 50% of base salary based on performance goals determined by the Board of Directors of the Company (“Board”), 3) equity awards, and 4) standard employee benefits, including vacation. Mr. Esposito’s employment agreement has an initial term of three years, but can be terminated by either party for any reason with 60 days’ notice. Other Payables As of March 31, 2017, and December 31, 2016, the Company had $224,852 of past due payables for which the Company has not received statements or demands for payment for over 19 years. Although management of the Company does not believe that the amounts will be required to be paid, the amounts are recorded as other payables until such time as the Company is certain that no liability exists and until the statute of limitations has expired. 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 June 30, 2016 through June 29, 2018 with a monthly lease payment of $3,550 Canadian dollars (“CD”) plus the applicable goods and services tax (“GST”). The Company has a lease arrangement for office space in Kalamazoo, Michigan. Monthly payments are approximately $1,000 and the lease expires in February of 2018. The Company had a month-to-month lease for office space located in California, with monthly payments of approximately $2,556. In February 2017, the Company gave 60-days’ notice that the lease would be terminated as of April 30, 2017. The Company does not have any leases in California as of April 30, 2017. |
NOTE 8 EQUITY TRANSACTIONS
NOTE 8 EQUITY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Text Block Supplement [Abstract] | |
Shareholders' Equity and Share-based Payments [Text Block] | NOTE 8 EQUITY TRANSACTIONS Recapitzalization On December 15, 2016, the Company’s stockholders approved the Board’s recommendation to increase the number of shares of common stock authorized from 395,000,000 to 500,000,000 shares in order to provide the Company with sufficient authorized shares to accomplish its objectives. The Company filed an amendment to modify its Articles of Incorporation with the State of Nevada on January 4, 2017, which was approved by the State on January 24, 2017. Common Stock Issuances During January 2016, the Company issued 500,000 restricted shares of common stock to a consultant. The fair value of the shares on the date of grant was $48,000, or $0.96 per share. The Company recorded compensation expense of $48,000 in connection with the issuance of the shares. During March 2017, the Company sold 1,000,000 restricted shares of common stock at a price of $0.06 per share to an investor, who is also a board member and executive officer, for net proceeds of $60,000 as part of a private offering. The market price of the Company’s common stock on the date of the transaction was $0.10 per share. Common Stock Options and Awards The Company recognizes stock-based compensation expense for grants of stock option awards, stock awards, restricted stock units and restricted stock under the Company’s Incentive Plan to employees and nonemployee members of the Company’s Board of Directors. In addition, the Company grants stock options to nonemployee consultants from time to time in exchange for services performed for the Company. The Company’s 2016 Equity Incentive Award Plan (the “2016 Plan”) was approved on December 15, 2016 by the stockholders. The 2016 Plan replaces the Company’s 2008 Equity Incentive Plan (the “2008 Plan”), 2009 Incentive Stock Plan (the “2009 Plan”), 2012 Equity Incentive Award Plan (the “2012 Plan”), and the 2014 Equity Incentive Plan ( the “2014 Plan” and, together with the 2008, 2009, and 2012 Plans, the “Prior Plans”). Options and awards previously granted under the Prior Plans that have not yet expired by their terms will remain outstanding until their expiration dates. The Company will no longer make any grants or awards under the Prior Plans. The 2016 Plan replaces all previous plans and reserves a total of 10,000,000 shares of common stock for awards granted under the 2016 Plan. As of March 31, 2017, 5,900,000 options have been granted, 1,000,000 shares have been awarded with an additional 1,000,000 shares to be awarded upon achievement of certain performance milestones under the 2016 Plan. 2,100,000 options are available for future grant. The Company estimates the fair value of each stock option 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 volatility of the Company’s stock price, the weighted average risk-free interest rate, and the expected life of the options. Because the Company does not pay dividends, the dividend rate variable used in the Black-Scholes option-pricing model is zero. For the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation of $688,212 and $0, respectively, of which $434,688, relates to options granted to employees, directors and consultants for the quarter ending March 31, 2017. Upon the appointment of its new Chairman and CEO, the Company incurred a one-time charge of $89,064 relating to the modification of vesting relating to 750,000 options issued in 2014 and a one-time charge of $150,000 pertaining to a stock award of 1,000,000 shares of common stock. The Company also recorded a one-time charge of $14,460 of stock-based compensation expense for the modification relating to the extension of exercisability from three weeks to three years upon retirement related to Mr. Marshall’s and Dr. Marshalls stock options. Mr. Esposito is also eligible to receive an additional 1,000,000 shares of common stock upon certain performance milestones being met. No expense has yet been recorded in conjunction with this award as the milestones have not been met as of March 31, 2017. As of March 31, 2017, the Company had 425,000 unvested outstanding options with related unrecognized expense of $44,629. The Company will recognize this expense over the service period or when the achievement of the required milestones becomes probable. The Company estimated the fair value of the stock options at the date of grant, based on the following weighted average assumptions: Risk-free interest rate 1.43% to 1.99 % Expected life 5 years Expected volatility 98.38% to 101.86 % Dividend yield 0.00 % A summary of the status of the Company’s outstanding options as of March 31, 2017 and changes during the three months then ended, is presented below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value As of December 31, 2016 20,715,000 $ 0.143 2.08 $ 261,220 Granted 5,900,000 0.102 Expired and canceled (5,050,000 ) 0.230 Exercised - - As of March 31, 2017 21,565,000 0.111 4.42 $ 91,695 Exercisable 21,140,000 0.111 4.43 91,695 The intrinsic value for stock options is defined as the difference between the current market value and the exercise price. W ar In October 2016, the Company issued warrants to purchase up to $1,000,000 in common stock with the number of shares determined based on a 20-day average stock price prior to the date of exercise with the exercise prices discounted 40%. The warrants are exercisable between January 31, 2017 and January 30, 2018, at which point the outstanding warrants expire (see Note 6). |
NOTE 9 RELATED PARTY TRANSACTIO
NOTE 9 RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 9 RELATED PARTY TRANSACTIONS During March 2017, the Company sold 1,000,000 restricted shares of common stock to its Chairman and CEO at a $0.06 per share, for net proceeds of $60,000 as part of a private placement financing. The private offering price was discounted 40% to the market price of the common stock as of the date the terms of the offering were approved by the Company’s Board (see Note 4). |
NOTE 10 RECENT ACCOUNTING PRONO
NOTE 10 RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | NOTE 10 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 interim periods therein. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016. The Company is assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740) In February 2016, the FASB released ASU No. 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting In October 2016, the FASB issued ASU No. 2016-17, Interests held Through Related Parties That are Under Common Control In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” |
NOTE 11 SUBSEQUENT EVENTS
NOTE 11 SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | NOTE 11 SUBSEQUENT EVENTS In April 2017, the Company sold 2,000,000 restricted shares of common stock in a private placement to two accredited investors, including the Company’s Chairman and Interim CEO, for net proceeds of $120,000 as part of a private placement financing. The price of the common stock in the private placement was set at a 40% discount to the market price of the Company’s common stock immediately prior to the date the terms of the offering were approved by the Board. On April 6, 2017, the U.S. Food and Drug Administration (“FDA”) notified the Company that it believes that AsepticSure®, the Company’s disinfectant system, should be classified as a medical device under Section 201(h) of the Food, Drug, and Cosmetic Act of 1938, as amended (“FDCA”). The FDA representatives recommended that the Company consider whether it is appropriate for the Company to submit a premarket notification to the FDA or to seek pre-market approval of AsepticSure and invited Company representatives to schedule follow up meetings in the near future to discuss the best approach for introduction of the AsepticSure technology into the U.S. market. The Company is working with legal and regulatory advisors on a response to the FDA to establish the most efficient route to gain regulatory approval of AsepticSure as a medical device under the FDCA. In the interim, the Company will not market AsepticSure in the U.S. under its EPA clearance until it has obtained 510(k) clearance or an approval from the FDA. |
NOTE 3 BASIC AND DILUTED NET 17
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [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 periods as follows: For the Three Months Ended March 31, 2017 2016 Numerator: Net loss $ (982,219 ) $ (487,389 ) Denominator: Weighted average number of common shares outstanding 394,356,290 369,906,595 Basic and diluted net loss per common share $ (0.00 ) $ (0.00 ) |
NOTE 6 WARRANT LIABILITY (Table
NOTE 6 WARRANT LIABILITY (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Text Block [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block] | The estimate was calculated using the following inputs: Input March 31, 2017 Risk-free interest rate 103 % Expected life 10 months Expected volatility 102.89 % Dividend yield 0.00 % Stock price $ 0.10 |
NOTE 8 EQUITY TRANSACTIONS (Tab
NOTE 8 EQUITY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 grant, based on the following weighted average assumptions: Risk-free interest rate 1.43% to 1.99 % Expected life 5 years Expected volatility 98.38% to 101.86 % Dividend yield 0.00 % |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | A summary of the status of the Company’s outstanding options as of March 31, 2017 and changes during the three months then ended, is presented below: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value As of December 31, 2016 20,715,000 $ 0.143 2.08 $ 261,220 Granted 5,900,000 0.102 Expired and canceled (5,050,000 ) 0.230 Exercised - - As of March 31, 2017 21,565,000 0.111 4.42 $ 91,695 Exercisable 21,140,000 0.111 4.43 91,695 |
NOTE 3 BASIC AND DILUTED NET 20
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details) | 3 Months Ended |
Mar. 31, 2017shares | |
Employee Stock Option [Member] | |
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details) [Line Items] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 21,565,000 |
Warrant [Member] | |
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details) [Line Items] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,000,000 |
NOTE 3 BASIC AND DILUTED NE
NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details) - Schedule of Earnings Per Share, Basic and Diluted - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Schedule of Earnings Per Share, Basic and Diluted [Abstract] | ||
Numerator: Net loss | $ (982,219) | $ (487,389) |
Denominator: Weighted average number of common shares outstanding | 394,356,290 | 369,906,595 |
Basic and diluted net loss per common share | $ 0 | $ 0 |
NOTE 4 GOING CONCERN (Details)
NOTE 4 GOING CONCERN (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | [1] | Jan. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Retained Earnings (Accumulated Deficit) | $ (39,054,401) | $ (39,054,401) | $ (38,072,182) | ||
Working capital (deficit) | (4,357,238) | (4,357,238) | |||
Stockholders' Equity Attributable to Parent | (4,282,329) | $ (4,282,329) | $ (4,046,145) | ||
Substantial Doubt about Going Concern, Conditions or Events | The Company believes that it will need approximately $1,500,000 during the next 12 months for continued product manufacturing, research, development and marketing activities, as well as for limited general corporate purposes. | ||||
Proceeds from Issuance or Sale of Equity | $ 60,000 | $ 60,000 | |||
Stock Issued During Period, Shares, New Issues (in Shares) | 1,000,000 | 1,000,000 | |||
Shares Issued, Price Per Share (in Dollars per share) | $ 0.06 | $ 0.06 | $ 0.96 | ||
[1] | The condensed consolidated balance sheet as of December 31, 2016 has been prepared using information from the audited consolidated balance sheet as of that date. |
NOTE 5 INVENTORY (Details)
NOTE 5 INVENTORY (Details) | 1 Months Ended |
Dec. 31, 2016USD ($) | |
Inventory Disclosure [Abstract] | |
Number of Units Returned | 5 |
Unit, Discount Rate | $ 25,000 |
NOTE 6 WARRANT LIABILITY (Detai
NOTE 6 WARRANT LIABILITY (Details) - USD ($) | Oct. 21, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | [1] |
Disclosure Text Block [Abstract] | |||||
Warrant, Description | In October 2016, the Company issued warrants to purchase from the Company up to $1,000,000 in common stock with the number of shares determined based on a 40% discount to the 20-day average stock price prior to the date of exercise. | ||||
Common Stock Equivalents, Value | $ 1,000,000 | ||||
Derivative Liability, Current | $ 937,951 | $ 882,581 | $ 985,163 | ||
Derivative, Gain (Loss) on Derivative, Net | $ 102,582 | $ 0 | |||
[1] | The condensed consolidated balance sheet as of December 31, 2016 has been prepared using information from the audited consolidated balance sheet as of that date. |
NOTE 6 WARRANT LIABILITY (D
NOTE 6 WARRANT LIABILITY (Details) - Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques | 3 Months Ended |
Mar. 31, 2017$ / shares | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Abstract] | |
Risk-free interest rate | 103.00% |
Expected life | 10 months |
Expected volatility | 102.89% |
Dividend yield | 0.00% |
Stock price (in Dollars per share) | $ 0.10 |
NOTE 7 COMMITMENTS AND CONTIN26
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) | Mar. 01, 2017USD ($) | Feb. 28, 2017 | May 08, 2002USD ($) | Jul. 31, 2016USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2017CAD | Dec. 31, 2016USD ($) | Dec. 31, 2002USD ($) | Dec. 31, 2001USD ($) | |
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Accounts Payable, Current | $ 539,484 | $ 459,654 | [1] | |||||||
Number of Notes | 3 | |||||||||
Debt Instrument, Face Amount | $ 1,617,881 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 3 years | 3 months | ||||||||
Employment Agreement, Base Salery | $ 225,000 | |||||||||
Employment Agreement, Bonus Terms | a potential target bonus of up to 50% of base salary based on performance goals determined by the Board of Directors of the Company | |||||||||
Employment Agreement, Term | 3 years | |||||||||
Accounts Payable, Other, Current | $ 224,852 | $ 224,852 | [1] | |||||||
Ontario, Canada [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Lease Expiration Date | Jun. 29, 2018 | Jun. 29, 2018 | ||||||||
Ontario, Canada [Member] | Building [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Operating Leases, Rent Expense, Minimum Rentals | CAD | CAD 3,550 | |||||||||
Kalamazoo, Michigan [Member] | Building [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 1,000 | |||||||||
California [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Lease Expiration Date | Apr. 30, 2017 | Apr. 30, 2017 | ||||||||
Description of Lessee Leasing Arrangements, Operating Leases | In February 2017, the Company gave 60-days’ notice that the lease would be terminated as of April 30, 2017 | In February 2017, the Company gave 60-days’ notice that the lease would be terminated as of April 30, 2017 | ||||||||
California [Member] | Building [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 2,556 | |||||||||
Rakas Litigation [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Loss Contingency, Damages Sought, Value | $ 25,000 | |||||||||
Default Judgement [Member] | Rakas Litigation [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Accounts Payable, Current | 143,000 | 143,000 | ||||||||
Litigation Fees [Member] | Rakas Litigation [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Accounts Payable, Current | $ 21,308 | $ 21,308 | ||||||||
Accounts Payable- Related Party [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Debt Conversion, Converted Instrument, Amount | 228,109 | |||||||||
Accrued Expenses - Related Parties [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Debt Conversion, Converted Instrument, Amount | $ 1,389,772 | |||||||||
Settlement Amount, September 2001 [Member] | Rakas Litigation [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Litigation Settlement, Amount | $ 25,000 | |||||||||
Settlement Amount, January 2002 [Member] | Default Judgement [Member] | Rakas Litigation [Member] | ||||||||||
NOTE 7 COMMITMENTS AND CONTINGENCIES (Details) [Line Items] | ||||||||||
Loss Contingency, Damages Sought, Value | $ 143,000 | |||||||||
[1] | The condensed consolidated balance sheet as of December 31, 2016 has been prepared using information from the audited consolidated balance sheet as of that date. |
NOTE 8 EQUITY TRANSACTIONS (Det
NOTE 8 EQUITY TRANSACTIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Mar. 31, 2017 | Oct. 31, 2016 | Jan. 31, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 15, 2016 | Dec. 14, 2016 | Dec. 31, 2015 | ||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 | 500,000,000 | [1] | 500,000,000 | 395,000,000 | ||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures | 500,000 | |||||||||
Stock Issued During Period, Value, Restricted Stock Award, Net of Forfeitures (in Dollars) | $ 48,000 | |||||||||
Shares Issued, Price Per Share (in Dollars per share) | $ 0.06 | $ 0.96 | $ 0.06 | |||||||
Share-based Compensation (in Dollars) | $ 688,212 | $ 48,000 | ||||||||
Stock Issued During Period, Shares, New Issues | 1,000,000 | 1,000,000 | ||||||||
Proceeds from Issuance or Sale of Equity (in Dollars) | $ 60,000 | $ 60,000 | ||||||||
Share Price (in Dollars per share) | $ 0.10 | $ 0.10 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 10,000,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 5,900,000 | |||||||||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 1,000,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 2,100,000 | 2,100,000 | ||||||||
Allocated Share-based Compensation Expense (in Dollars) | $ 688,212 | $ 0 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 21,565,000 | 20,715,000 | ||||||||
Class of Warrant or Rights, Granted | 1,000,000 | |||||||||
Warrant, Description of Warrant | number of shares determined based on a 20-day average stock price prior to the date of exercise with the exercise prices discounted 40% | |||||||||
Performance Milestones [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 1,000,000 | |||||||||
Chief Executive Officer [Member] | Performance Milestones [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 1,000,000 | |||||||||
Chief Executive Officer [Member] | Modification of Vesting Options [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 750,000 | |||||||||
Adjustments to Additional Paid in Capital, Share-based Compensation, Stock Options, Requisite Service Period Recognition (in Dollars) | $ 89,064 | |||||||||
Chief Executive Officer [Member] | Stock Award [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 1,000,000 | |||||||||
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition (in Dollars) | $ 150,000 | |||||||||
Chief Executive Officer [Member] | Modification of Exercisability of Options [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Adjustments to Additional Paid in Capital, Share-based Compensation, Stock Options, Requisite Service Period Recognition (in Dollars) | $ 14,460 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | 21 days | ||||||||
Employee Stock Option [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Allocated Share-based Compensation Expense (in Dollars) | $ 434,688 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 425,000 | 425,000 | ||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars) | $ 44,629 | $ 44,629 | ||||||||
Minimum [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Warrants, Expiration Date | January 31, 2017 | |||||||||
Maximum [Member] | ||||||||||
NOTE 8 EQUITY TRANSACTIONS (Details) [Line Items] | ||||||||||
Warrants, Expiration Date | January 30, 2018 | |||||||||
[1] | The condensed consolidated balance sheet as of December 31, 2016 has been prepared using information from the audited consolidated balance sheet as of that date. |
NOTE 8 EQUITY TRANSACTIONS
NOTE 8 EQUITY TRANSACTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options | 3 Months Ended |
Mar. 31, 2017 | |
NOTE 8 EQUITY TRANSACTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options [Line Items] | |
Expected life | 5 years |
Dividend yield | 0.00% |
Minimum [Member] | |
NOTE 8 EQUITY TRANSACTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options [Line Items] | |
Risk-free interest rate | 1.43% |
Expected volatility | 98.38% |
Maximum [Member] | |
NOTE 8 EQUITY TRANSACTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options [Line Items] | |
Risk-free interest rate | 1.99% |
Expected volatility | 101.86% |
NOTE 8 EQUITY TRANSACTION29
NOTE 8 EQUITY TRANSACTIONS (Details) - Schedule of Share-Based Compensation, Stock Options, Activity - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule of Share-Based Compensation, Stock Options, Activity [Abstract] | ||
Number of Shares, Balance | 21,565,000 | 20,715,000 |
Weighted Average Exercise Price, Balance | $ 0.111 | $ 0.143 |
Weighted Average Remaining Contractual Term, Balance | 4 years 153 days | 2 years 29 days |
Aggregate Intrinsic Value, Balance | $ 91,695 | $ 261,220 |
Number of Shares, Exercisable | 21,140,000 | |
Weighted Average Exercise Price, Exercisable | $ 0.111 | |
Weighted Average Remaining Contractual Term, Exercisable | 4 years 156 days | |
Aggregate Intrinsic Value, Exercisable | $ 91,695 | |
Number of Shares, Granted | 5,900,000 | |
Weighted Average Exercise Price, Granted | $ 0.102 | |
Number of Shares, Expired and Canceled | (5,050,000) | |
Weighted Average Exercise Price, Expired and Canceled | $ 0.230 | |
Number of Shares, Exercised | 0 | |
Weighted Average Exercise Price, Exercised | $ 0 |
NOTE 9 RELATED PARTY TRANSACT30
NOTE 9 RELATED PARTY TRANSACTIONS (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2017 | Jan. 31, 2016 | |
Debt Disclosure [Abstract] | |||
Stock Issued During Period, Shares, New Issues | 1,000,000 | 1,000,000 | |
Shares Issued, Price Per Share | $ 0.06 | $ 0.06 | $ 0.96 |
Proceeds from Issuance or Sale of Equity | $ 60,000 | $ 60,000 | |
Stock Issued, Discount Rate | 40.00% |
NOTE 11 SUBSEQUENT EVENTS (Deta
NOTE 11 SUBSEQUENT EVENTS (Details) | 1 Months Ended | 3 Months Ended | |
Apr. 30, 2017USD ($)shares | Mar. 31, 2017USD ($)shares | Mar. 31, 2017USD ($)shares | |
NOTE 11 SUBSEQUENT EVENTS (Details) [Line Items] | |||
Stock Issued During Period, Shares, New Issues | shares | 1,000,000 | 1,000,000 | |
Proceeds from Issuance or Sale of Equity | $ | $ 60,000 | $ 60,000 | |
Subsequent Event [Member] | |||
NOTE 11 SUBSEQUENT EVENTS (Details) [Line Items] | |||
Stock Issued During Period, Shares, New Issues | shares | 2,000,000 | ||
Number of Investors | 2 | ||
Proceeds from Issuance or Sale of Equity | $ | $ 120,000 | ||
Share Issued, Price Per Share, Description | The price of the common stock in the private placement was set at a 40% discount to the market price of the Company’s common stock immediately prior to the date the terms of the offering were approved by the Board |