NOTE 7 STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS

6 Months Ended

Jun. 30, 2013

Stockholders' Equity Note Disclosure [Text Block]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 7     STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS

During May and June 2013, the Company sold 5,863,636 restricted shares of common stock to 11 accredited investors for cash proceeds totaling $322,500, or $0.055 per share.

During April and May 2013, the Company sold 3,794,444 restricted shares of common stock to six accredited investors for cash proceeds totaling $170,750, or $0.045 per share.

During January, February, and March 2013, the Company sold an aggregate of 12,233,332 restricted shares of common stock to 12 accredited investors for cash proceeds totaling $367,000, or $0.03 per share.

During January and February 2012, the Company sold an aggregate of 6,653,000 restricted shares of common stock to 30 accredited investors for cash proceeds of $665,300, or $0.10 per share.

During January 2012, the Company issued 903,089 shares of common stock to Mammoth Corporation (“Mammoth”) as part of a stock equity line (“Equity Line”) for cash proceeds of $149,010, or $0.165 per share.

During June 2012, the Company issued 500,000 shares of common stock to Mammoth as part of the Equity Line for cash proceeds of $65,625, at a price of $0.131 per share.

During June 2012, the Company sold an aggregate of 1,205,556 restricted shares of common stock to two accredited investors for cash proceeds of $108,500 at a price of $.09 per share.

Stock Purchase Agreement

In November 2010, the Company entered into a two-year Stock Purchase Agreement with Mammoth providing for the Equity Line. The Stock Purchase Agreement provided that, upon the terms and subject to the conditions in the Stock Purchase Agreement, Mammoth committed to purchase up to $10,000,000 of shares of common stock over the term of the Stock Purchase Agreement under certain specified conditions and limitations. Mammoth was barred from purchasing any shares of the Company’s common stock which, when aggregated with all other shares of common stock then beneficially owned by Mammoth, would result in the beneficial ownership by Mammoth of more than 4.9% of the then outstanding shares of the Company’s common stock. These maximum share and beneficial ownership limitations could not be waived by the parties.

Under the terms of the Stock Purchase Agreement, the Company had the opportunity for a 24-month period, commencing on the date on which the Securities and Exchange Commission (“SEC”) first declared effective the registration statement filed in connection with the resale of shares issued under the Equity Line, to require Mammoth to purchase up to $10,000,000 in shares of common stock. For each share of common stock purchased under the Stock Purchase Agreement, Mammoth would pay a purchase price equal to 75% of the lowest closing bid price during the five consecutive trading-day period (the “Draw Down Pricing Period”) preceding the date a draw down notice (the “Draw Down Notice”) was delivered by the Company to Mammoth (the “Draw Down Date”) in a manner provided by the Stock Purchase Agreement.  The SEC declared the registration statement effective on January 25, 2011.  The Stock Purchase Agreement and Equity Line terminated on January 25, 2013.

Wood Wyant Canada

In April 2013, the Company and Wood Wyant Canada (“Wood Wyant”), a subsidiary of Sanimarc Group, announced that Wood Wyant had become a National Hospital Distributor of AsepticSure® in Canada.  Wood Wyant is national in scope and regional in focus, serving Canada from 16 diverse locations across all 10 provinces, providing both sales and service to the hospital market.  The Company delivered an initial order for five systems to Wood Wyant for proceeds totaling $375,000.  The Company has six more systems in production.

ADA Innovations

In December 2010, the Company reached a Services Agreement with ADA Innovations (“ADA”) for final development and production manufacturing of portable versions (the “Projects”) of the Company’s AsepticSure® disinfection systems.  A contract containing the terms of the agreement and detailed development plan was executed by the parties in January 2011 and amended in January 2012.  Any and all notes, reports, information, inventions, sketches, plans, concepts, data or other works created by ADA on its behalf under the Services Agreement will be the sole and exclusive property of the Company.

The term of the Services Agreement continues until the completion of the development and design projects contemplated by the Services Agreement, unless terminated earlier by either party in accordance with specific notices as outlined in the Services Agreement.  Deliverables include: (1) the pre-production prototype designed and manufactured to our specifications, (2) design and device content compliant with all North America, Europe and United Kingdom regulatory and licensing agency regulations, (3) a soft launch program managed by ADA and the Company, intended to be followed by increased production, and (4) additional outsourced macro-manufacturing capacity as required, supervised by the parties.  The Company paid ADA as services were provided and were completed by December 31, 2012.  During the three and six-month periods ended June 30, 2012, the Company incurred expenses totaling approximately $115,000 and $157,000, respectively, for services provided under the Services Agreement, which expenses have been included in research and development costs.  No expenses under this contract were incurred during the three and six-month periods ended June 30, 2013.  ADA’s role as developer of the production AsepticSure® system is now complete.  ADA remains available to the Company on a limited basis as a consultant.