-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BSCO2tqMfwAkv2TgLf5M1vWJMWAxRGyoc6r38QALsDU6zTaeoDKHHK5H3bupNee7 k7pzccYu4/0KI9tT/POfPQ== /in/edgar/work/0001010924-00-000107/0001010924-00-000107.txt : 20001116 0001010924-00-000107.hdr.sgml : 20001116 ACCESSION NUMBER: 0001010924-00-000107 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIZONE INTERNATIONAL INC CENTRAL INDEX KEY: 0000753772 STANDARD INDUSTRIAL CLASSIFICATION: [5122 ] IRS NUMBER: 870412648 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 002-93277-D FILM NUMBER: 770490 BUSINESS ADDRESS: STREET 1: 144 BUENA VISTA CITY: STINSON BEACH STATE: CA ZIP: 94970 BUSINESS PHONE: 4158680300 MAIL ADDRESS: STREET 1: P.O. BOX 742 CITY: STINSON BEACH STATE: CA ZIP: 94970 FORMER COMPANY: FORMER CONFORMED NAME: MADISON FUNDING INC DATE OF NAME CHANGE: 19860413 10QSB 1 0001.txt QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - ----- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 __ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANITION PERIOD FROM ___________ TO ______________ Commission File Number 2-93277-D MEDIZONE INTERNATIONAL, INC. (Exact name of small business issuer as specified in its charter) Nevada 87-0412648 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 144 Buena Vista P.O. Box 742 Stinson Beach, CA 94970 (Address of principal executive offices, Zip Code) (415) 868-0300 (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] At November 9, 2000, there were 153,915,798 shares of the registrant's common stock issued and outstanding. Transitional Small Business Disclosure Format (Check one): Yes __ No X ---- 1 MEDIZONE INTERNATIONAL, INC. FORM 10-QSB INDEX September 30, 2000 Page Number Part I - Financial Information Item 1 - Financial Statements Consolidated Balance Sheet: -September 30, 2000 and December 31, 1999..........................3 Consolidated Statement of Operations: -For the Three Months and Nine Months Ended September .............4 30, 2000 and 1999 Consolidated Statement of Cash Flow -For the Nine Months Ended September 30, 2000 and 1999......................................5 Notes to Consolidated Financial Statements.....................6 Item 2 - Management's Discussion and Analysis or Plan of Operation..........7 Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K .................................10 2 MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARY (A Development Stage Company) CONDENSED CONSOLIDATED BALANCE SHEET September 30, 2000 and December 31, 1999
ASSETS September 30, December 31, 2000 1999 --------------------- ------------------ CURRENT ASSETS (Unaudited) Cash and cash equivalents $ 8,918 $ 4,388 --------------------- ------------------ Total Current Assets 8,918 4,388 --------------------- ------------------ PROPERTY AND EQUIPMENT, net 16,572 5,667 --------------------- ------------------ $ 25,490 $ 10,055 ===================== ================== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 245,184 $ 395,370 Accrued expenses 406,374 527,045 Current portion of long-term obligations 280,491 280,491 --------------------- ------------------ Total Current Liabilities 932,049 1,202,906 --------------------- ------------------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock 153,616 149,888 Additional paid-in capital 13,165,754 12,676,882 Deficit accumulated during the development stage (14,225,929) (14,019,621) --------------------- ------------------ Total Stockholders' Equity (Deficit) (906,559) (1,192,851) --------------------- ------------------ $ 25,490 $ 10,055 ===================== ==================
See accompanying notes. 3 MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARY (A Development Stage Company) CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended 9/30/00 9/30/99 9/30/00 9/30/99 -------------- -------------- ------------- ------------- REVENUE $ - $ - $ - $ - COST OF SALES - - - - -------------- -------------- ------------- ------------- Gross Profit - - - - -------------- -------------- ------------- ------------- COSTS AND EXPENSES Research and development 7,585 - 88,392 - Depreciation and amortization 1,595 486 4,026 1,459 General and administrative 144,181 14,626 512,061 54,991 -------------- -------------- ------------- ------------- Total Costs and Expenses 153,361 15,112 604,479 56,450 -------------- -------------- ------------- ------------- LOSS BEFORE OTHER INCOME (EXPENSE) (153,361) (15,112) (604,479) (56,450) -------------- -------------- ------------- ------------- OTHER INCOME (EXPENSE) Restitution proceeds - - 415,000 - Interest expense (5,610) (5,609) (16,829) (16,829) Interest income - - - - -------------- -------------- ------------- ------------- Total Other Income (Expense) - net (5,610) (5,609) 398,171 (16,829) -------------- -------------- ------------- ------------- LOSS BEFORE INCOME TAXES (158,971) (20,721) (206,308) (73,279) INCOME TAX BENEFIT (PROVISION) - - - - -------------- -------------- ------------- ------------- NET LOSS $ (158,971) $ (20,721) $ (206,308) $ (73,279) ============== ============== ============= ============= NET LOSS PER COMMON SHARE Basic $ (0.00) $ (0.00) $ (0.00) $ (0.00) ============== ============== ============= ============= AVERAGE COMMON AND EQUIVALENT SHARES Basic 153,615,798 149,148,656 154,191,354 149,123,965 ============== ============== ============= =============
See accompanying notes. 4 MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARY (A Development Stage Company) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Nine Months Ended September 30, 2000 and 1999
September 30, September 30, 2000 1999 ----------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (206,308) $ (73,279) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 4,026 1,459 Issuance of stock for services 272,600 - Change in operating assets and liablilites Accounts payable and other liabilities (270,857) 48,643 ----------------- ------------------ (200,539) (23,177) ----------------- ------------------ CASH FROM INVESTING ACTIVITIES Acquisition of property and equipment (14,931) - ----------------- ------------------ (14,931) - ----------------- ------------------ CASH FROM FINANCING ACTIVITIES Proceeds from issuance of common stock 220,000 15,556 ----------------- ------------------ 220,000 15,556 ----------------- ------------------ NET CHANGE IN CASH AND CASH EQUIVALENTS 4,530 (7,621) CASH AND CASH EQUIVALENTS Beginning of period 4,388 7,643 ----------------- ------------------ End of period $ 8,918 $ 22 ================= ================== SUPPLEMENTAL CASH FLOW INFORMATION Cash paid during the period for: Interest $ - $ - ================= ================== Income taxes $ - $ - ================= ================== NON-CASH INVESTING AND FINANCING ACTIVITIES Issuance of common stock for services $ - $ - ================= ==================
See accompanying notes. 5 MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARY (A Development Stage Company) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 - Basis of Presentation The financial information included herein is unaudited and has been prepared consistent with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, these financial statements do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. These statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 1999. In the opinion of management, these financial statements contain all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period presented. The results of operations for the nine months ended September 30, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. 2 - Loss Per Share Following is a reconciliation of the numerators of the basic and diluted loss per share for the three and nine months ended September 30, 2000 and 1999: 3 - Capital Stock
Three Three Nine Nine Months Months Months Months Ended Ended Ended Ended 9/30/00 9/30/99 9/30/00 9/30/99 -------------- -------------- ------------- ------------- Net loss available to common shareholders $ (158,971) $ (20,721) $ (206,308) $ (73,279) ============== ============== ============= ============= Weighted average shares 153,615,798 149,148,656 154,191,354 149,123,965 Effect of dilutive securities - - - - -------------- -------------- ------------- ------------- 153,615,798 149,148,656 154,191,354 149,123,965 ============== ============== ============= ============= Basic loss per share (based on weighted average shares) $ (0.00) $ (0.00) $ (0.00) $ (0.00) ============== ============== ============= =============
During the quarter ended September 30, 2000, 2,000,000 common shares were canceled by the Company. 6 Item 2 - Management's Discussion and Analysis or Plan of Operation The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this Quarterly Report on Form 10-QSB. The Company is a development stage company, primarily engaged in research and development of ozone-based treatment for diseases and health problems caused by lipid enveloped viruses, including, for example, Acquired Immune Deficiency Syndrome (AIDS), Hepatitis B, Hepatitis C and Herpes, and in the development of technology for the decontamination of blood, blood products and veterinarian serum products. The Company is also pursuing the development of external applications of its technology for medical purposes. The Company has not generated, and cannot predict when or if it will generate, significant revenues or sufficient cash flow to fund its continuing operations. It has funded its operations to date primarily through the sale of its securities. The technology and its uses are subject to regulations of the U.S. Food and Drug Administration ("FDA") and its counterparts in foreign countries. The Company does not intend to sell equipment or supplies for ozone-generating purposes until it receives required government approvals. Testing and trials can be conducted on a limited basis for research purposes and to establish efficacy of machines and applications, in order to support applications for government approvals. In November of 1997, Dr. Sunnen, the Director of Research (who later was appointed president of the Company on April 15, 1998) was instrumental in establishing a protocol for Phase II research. A double blind Phase II human trial into HCV is now in the planning stage and should be announced in the next 90 days. The Company has also conducted a proof-of-concept pilot trial study on forty patients infected with Hepatitis C. This study was conducted under the guidance of Dr. William Hitt, a former member of the Company's Board of Directors. The trial, conducted during the normal course of Dr. Hitt's medical practice at his clinic in Mexico, indicated significant reductions in liver enzyme levels as measured by SGOT and SGPT standard test procedures of the patients participating in the study. All of the patients' SGOT and SGPT measures returned to the normal range. In addition on average, 5 log viral load reductions (99.9%) were achieved. Six-month post treatment viral load tests, without further medical intervention during that time, indicated the viral load during the post treatment period did not increase in 38 of the 40 patients. In two of the patients, both of which were genotype 1A, there was a viral load increase in the six-month post treatment period. No toxic side effects were reported or observed in any of the patients. In March 2000, the Company received notification that it had been granted a patent by the US Patent and Trademark Office on its application for a patent covering the external applications of ozone for medical purposes. The patent application, no. 09/126,504, had been filed on July 30, 1998. Problems that might be addressed by such uses would include treatment of severe burns, infections of ulcerations of the skin (such as those that might be caused by advanced stages of diabetes) or other wounds. In connection with this use of ozone, the Company has been granted US Patent No. 9/126504, titled External Use of Ozone/Oxygen for Pathogenic Conditions. Foreign applications are being processed. In May 2000, the Company filed another patent application no. 1299-4015 under the title "Method and Apparatus for Ozone Decontamination of Biological Liquids. In addition, the Company owns patents covering its ozone decontamination technology filed in the United States (no. 4,632,980, December 30, 1986 and no. 5,052,382, October 1, 1991), and related patents granted in several foreign countries. These patents form the basis for the Company's technology used in the studies described above. The Company has also been active in pursuing veterinary trials investigating the effectiveness of ozone in deactivation of viruses in serum products. The Phase I trial on healthy serum products was concluded in October 1999 and was deemed successful by the Company's researchers. Dr. Sunnen expects that a Phase II trial should also be successful based on the results of the first round. Due to streamlining of equipment development, completion of Phase II is not now anticipated prior to September of 2001. There is no assurance that the results of such tests and studies will be favorable to the Company or that regulatory approval will be received based on such results. 7 Results of Operations General From its inception (January 1986), the Company has been a development stage company primarily engaged in research into the medical uses of ozone. The Company has not generated, and cannot predict when or if it will generate, revenues or sufficient cash flow to fund its continuing operations. Three Months Ended September 30, 2000 compared to the Three Months Ended September 30, 1999: There were no sales during the quarters ended September 30, 2000 or 1999. The Company made expenditures for research and development of $7,585 in the third quarter of 2000 and none in the third quarter of 1999. General and administrative expenses in the third quarter of 2000 were $144,182 compared to $14,626 during the third quarter of 1999. These expenses include professional fees, payroll, insurance costs and travel expenses. Interest expense accrued during the three months ended September 30, 2000 was $5,610, compared to $5,609 in the three months ended September 30, 1999. Nine Months Ended September 30, 2000 compared to the Nine Months Ended September 30, 1999: There were no sales during the nine months ended September 30, 2000 or 1999. Cash of $415,000 was provided in the first quarter of 2000 by the receipt of restitution payments from a former officer and director. The Company made expenditures for research and development of $88,392 in the nine months ended September 30, 2000 and none in the nine months ended September 30, 1999. General and administrative expenses in the nine months ended September 30, 2000 were $512,062 compared to $54,991 during the nine months ended September 30, 1999. These expenses include professional fees, payroll, insurance costs and travel expenses. Interest expense accrued during the nine months ended September 30, 2000 was $16,829, compared to $16,829 in the nine months ended September 30, 1999. Liquidity and Capital Resources At September 30, 2000, the Company had a working capital deficiency of $923,131 and stockholders' deficiency of $906,559. At December 31, 1999, the Company had a working capital deficiency of $1,198,518 and stockholders' deficiency of $1,192,851. Net cash used in operating activities was $200,539 for the nine months ended September 30, 2000. During the nine months ended September 30, 1999, the Company used $23,177 in operating activities. Cash of $415,000 was provided in the first nine months of 2000 by the receipt of restitution payments from a former officer and director and $220,000 was provided by the sale of the Company's securities through the exercise of outstanding stock purchase warrants. The Company will continue to require additional funding to enable it to fund research necessary to make the appropriate regulatory application and continue operations. It is expected that these funds will be provided by the sale of the Company's securities. The Company has developed a strategy, which it believes will enable it to fund requisite research necessary to gain regulatory approvals and continue operations. This strategy depends upon the sale of the Company's common stock or other securities to certain accredited investors. The Company has also structured and recently implemented a cohesive scientific plan encompassing a number of research initiatives, which it believes may enable it to successfully achieve its primary goals. Those goals include the submission of appropriate research data to the FDA Center for Drugs and Biologics for the approval of its blood decontamination process and to the FDA Division of Antiviral Drug Products for approval of Phase I human clinical trial status for the treatment of AIDS and Hepatitis. There can be no assurance that either the funding strategy or the scientific plan will be successful. Failure to obtain requisite funding would have a materially adverse effect on the Company and its financial condition. 8 The Company recognizes that, if it is unable to raise additional capital, it may find it necessary to substantially reduce, or cease operations. Forward-Looking Statements and Risks Affecting the Company The statements contained in this Report on Form 10-QSB that are not purely historical are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act. These statements regard the Company's expectations, hopes, beliefs, anticipations, commitments, intentions and strategies regarding the future. They may be identified by the use of words or phrases such as "believes," "expects," "anticipates," "should," "plans," "estimates," and "potential," among others. Forward-looking statements include, but are not limited to, statements contained in Management's Discussion and Analysis of Financial Condition and Results of Operations regarding the Company's financial performance, revenue and expense levels in the future and the sufficiency of its existing assets to fund future operations and capital spending needs. Actual results could differ materially from the anticipated results or other expectations expressed in such forward-looking statements for the reasons detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 under the headings "Description of Business" and "Risk Factors." The fact that some of the risk factors may be the same or similar to the Company's past reports filed with the Securities and Exchange Commission means only that the risks are present in multiple periods. The Company believes that many of the risks detailed here and in the Company's SEC filings are part of doing business in the industry in which the Company operates and competes and will likely be present in all periods reported. The fact that certain risks are endemic to the industry does not lessen their significance. The forward-looking statements contained in this report are made as of the date of this Report and the Company assumes no obligation to update them or to update the reasons why actual results could differ from those projected in such forward-looking statements. Among others, risks and uncertainties that may affect the business, financial condition, performance, development, and results of operations of the Company include: o rigorous government scrutiny and regulation of the products and planned products of the Company; o potential effects of adverse publicity regarding ozone and related technologies or industries; o failure of the Company to sustain or manage growth including the failure to continue to develop new products; and o the ability of the Company to obtain needed financing. Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits Exhibit No. Description 27 Financial Data Schedule 9 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MEDIZONE INTERNATIONAL, INC. (Registrant) /s/ Edwin G. Marshall ------------------------------ Edwin G. Marshall, Chairman and Chief Executive Officer (Principal Executive Officer) /s/ Kevin R. Andersen ------------------------------ Kevin R. Andersen, Chief Financial Officer (Principal Accounting Officer) November 14, 2000 EX-27 2 0002.txt FDS --
5 3-MOS Dec-31-2000 JUL-31-2000 SEP-30-2000 8,918 0 0 0 0 8,918 25,556 8,984 25,490 932,049 280,491 0 0 153,616 (1,060,175) (906,559) 0 0 0 0 153,361 0 5,610 (158,971) 0 (158,971) 0 0 0 (158,971) 0 0
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