NOTE 5 COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2013

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, 2013 and 2012.  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, 2013 and 2012, 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 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 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 corporate office lease with monthly payments of $2,300 through December 31, 2014.

ADA Innovations

In December 2010, the Company entered into an arrangement with ADA Innovations (“ADA”) for final development and production manufacturing of portable versions of the Company’s AsepticSure® disinfection system.  A contract containing the terms of the agreement and detailed development plan (the “Services Agreement”) 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 the Company’s behalf under the Services Agreement are the sole and exclusive property of the Company.  

The term of the Services Agreement continued until the completion of the development and design projects contemplated by the Services Agreement.  Deliverables included: (1) the pre-production prototype designed and manufactured to the Company’s 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 completed in 2012.  During the year ended December 31, 2012, the Company incurred expenses totaling approximately $212,000 for services provided under the Services Agreement.  Of these amounts, approximately $204,000, were recorded as research and development expenses.  No expenses under this contract were incurred during the year ended December 31, 2013.  ADA’s role as developer was completed on December 31, 2012.  ADA remains available to the Company on a limited basis as a consultant.