10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission File Number: 2-93277-D

MEDIZONE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

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)

(415) 331-0303

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☑   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐   No ☑

As of May 13, 2016, the registrant had 369,934,068 shares of common stock issued and outstanding.

MEDIZONE INTERNATIONAL, INC.

FORM 10-Q

TABLE OF CONTENTS

March 31, 2016

		Page No.
Part I — Financial Information
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets: March 31, 2016 and December 31, 2015	1
	Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2016 and 2015	2
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015	3
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	13
Part II — Other Information
Item 1.	Legal Proceedings	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Mine Safety Disclosures	14
Item 5.	Other Information	14
Item 6.	Exhibits	14
Signatures		15

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Condensed Consolidated Balance Sheets (Unaudited)

	March 31,			December 31,
	2016			2015 (1)
ASSETS
Current Assets:
Cash	$	288,680		$	745,078
Inventory		294,706			277,823
Prepaid expenses		43,122			31,986
Total Current Assets		626,508			1,054,887
Property and equipment, net		311			415
Other Assets:
Trademark and patents, net		168,633			176,086
Lease deposit		4,272			4,272
Total Other Assets		172,905			180,358
Total Assets	$	799,724		$	1,235,660
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	474,718		$	491,044
Accounts payable – related parties		228,109			233,109
Accrued expenses		570,107			554,834
Accrued expenses – related parties		1,928,659			1,928,659
Other payables		224,852			224,852
Notes payable		306,007			297,396
Total current liabilities		3,732,452			3,729,894
Notes payable, net of current portion		75,000			75,000
Total liabilities		3,807,452			3,804,894
Stockholders’ Deficit:
Preferred stock, $0.00001 par value: 50,000,000 shares authorized;     no shares issued or outstanding		-			-
Common stock, $0.001 par value; 395,000,000 shares authorized;     369,934,068 and 369,434,068 shares outstanding, respectively		369,934			369,434
Additional paid-in capital		32,544,146			32,496,646
Accumulated other comprehensive loss		(36,073	)		(36,968	)
Accumulated deficit		(35,885,735	)		(35,398,346	)
Total Stockholders’ Deficit		(3,007,728	)		(2,569,234	)
Total Liabilities and Stockholders’ Deficit	$	799,724		$	1,235,660

(1) The condensed consolidated balance sheet as of December 31, 2015 has been prepared using information from the audited consolidated balance sheet as of that date.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Condensed Consolidated Statements of Comprehensive Loss (Unaudited)

	For the Three Months Ended March 31,
	2016			2015
Revenues	$	-		$	-
Operating Expenses:
Cost of revenues		-			-
General and administrative		279,064			312,832
Research and development		185,961			77,233
Depreciation and amortization		13,826			13,030
Total Operating Expenses		478,851			403,095
Loss from Operations		(478,851	)		(403,095	)
Interest expense		(8,591	)		(6,396	)
Interest income		53			-
Net Loss		(487,389	)		(409,491	)
Other comprehensive gain on foreign   currency translation		895			18,231
Total Comprehensive Loss	$	(486,494	)	$	(391,260	)
Basic and Diluted Net Loss per Common Share	$	(0.00	)	$	(0.00	)
Weighted Average Number of Common Shares Outstanding		369,906,595			347,259,624

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Condensed Consolidated Statements of Cash Flows (Unaudited)

	For the Three Months Ended
	March 31,
	2016			2015
Cash Flows from Operating Activities:
Net loss	$	(487,389	)	$	(409,491	)
Adjustments to reconcile net loss to net cash  used in operating activities:
Depreciation and amortization		13,826			13,030
Stock-based compensation expense		48,000			81,229
Changes in operating assets and liabilities:
Prepaid expenses		20,364			22,954
Inventory		(16,883	)		-
Accounts payable and accounts payable – related parties		(21,326	)		(30,112	)
Accrued expenses and accrued expenses – related parties		15,273			57,500
Net Cash Used in Operating Activities		(428,135	)		(264,890	)
Cash Flows from Investing Activities:
Cost of registering patents		(6,269	)		(8,543	)
Net Cash Used in Investing Activities		(6,269	)		(8,543	)
Cash Flows from Financing Activities:
Principal payments on notes payable		(22,889	)		(23,291	)
Issuance of common stock for cash		-			171,000
Net Cash (Used in) Provided by Financing Activities		(22,889	)		147,709
Effect of Foreign Currency Exchange Rates		895			18,231
Net decrease in cash		(456,398	)		(107,493	)
Cash as of beginning of the period		745,078			140,496
Cash as of end of the period	$	288,680		$	33,003

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)

	For the Three Months Ended
	March 31,
	2016			2015
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest		$	3,318		$	482
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Financing of insurance policies		$	31,500		$	31,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1     BASIS OF PRESENTATION

The financial information of Medizone International, Inc., a Nevada corporation (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, 2015. 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 presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the full year ending December 31, 2016.

NOTE 2     CANADIAN FOUNDATION FOR GLOBAL HEALTH

In late 2008, the Company assisted in the formation of the Canadian Foundation for Global Health (“CFGH”), a not-for-profit foundation based in Ottawa, Canada. 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 the Company’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 entity’s expected residual returns as a result of holding variable interests, which are the ownership, contractual, or other financial interests in the entity. 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. The Company determined that CFGH met the requirements of a VIE effective upon the first advance to CFGH on February 12, 2009. Accordingly, the financial statements of CFGH have been consolidated with those of the Company for all periods presented.

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,
	2016				2015
Numerator: Net loss		$	(487,389	)		$	(409,491	)
Denominator: Weighted average number of common shares outstanding			369,906,595				347,259,624
Basic and diluted net loss per common share		$	(0.00	)		$	(0.00	)

Common stock equivalents, consisting of options to purchase 20,715,000 shares, have not been included in the calculation as their effect is antidilutive for the periods presented.

NOTE 4     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 liquidation of liabilities in the normal course of business.  The Company has incurred significant losses from its inception through March 31, 2016, which have resulted in an accumulated deficit of $35,885,735 as of March 31, 2016.  The Company does not have funds sufficient to cover its operating costs for the next 12 months, has negative equity, and has a working capital deficit of $3,105,943 as of March 31, 2016.  The Company has relied exclusively on debt and equity financing to sustain its operations.  Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.

5

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 4    GOING CONCERN (continued)

Continuation of the Company as a going concern is dependent upon future revenues, obtaining additional capital and ultimately, upon the Company’s attaining profitable operations.  The Company will require substantial additional funds to complete the development of its products and product manufacturing, and to fund expected 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 be forced to substantially reduce or cease operations.

The Company believes that it will need approximately $1,500,000 over the next 12 months for continued production manufacturing and related activities, research, development, and marketing activities, as well as for general corporate purposes.  No cash was generated through the sale of shares of common stock for the quarter ended March 31, 2016.  

The ability of the Company to continue as a going concern is dependent on its ability to successfully accomplish the plan described in the preceding paragraphs and eventually attain 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.

NOTE 5     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. - 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 March 31, 2016 and December 31, 2015.  The Company intends to contest the judgment if and when it is able to in the future.

Other Payables

As of March 31, 2016 and December 31, 2015, the Company has $224,852 of 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 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 applicable 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 is on a month-to-month basis 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 $500 through December 31, 2016.

6

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 6     COMMON STOCK OPTIONS

In August 2013, the Company granted options for the purchase of 250,000 shares of common stock to a consultant, of which 50,000 were immediately vested.  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 expense of $17,659 during the three months ended March 31, 2015, as milestones were achieved for the remaining 200,000 options.

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 on 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 of expense in connection with these options during the three months ended March 31, 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 in connection with these options during the three months ended March 31, 2015.

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 shares vested during the three months ended March 31, 2015, when certain milestones were achieved.  The options are exercisable for five years. The Company recognized expense of $8,342 in connection with these options during the three months ended March 31, 2015.

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 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 were fully vested on October 7, 2015.  The options are exercisable for five years. The grant date fair value of the options was $140,178.  The Company recognized $35,044 of expense in connection with these options during the three months ended March 31, 2015. 

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 shares will vest when certain required milestones are achieved.  The options are exercisable for five years. Of the 140,000 options, 35,000 options vested during the three months ended March 31, 2015 and $3,367 was recognized as expense. The Company will measure and recognize additional expense on the remaining options when the achievement of required milestones becomes probable.

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.

7

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 6     COMMON STOCK OPTIONS (continued)

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 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 $0 and $81,229 related to stock options was recorded for the three months ended March 31, 2016 and 2015, respectively.  Excluding options whose performance condition is not yet deemed probable, as of March 31, 2016, the Company had unvested outstanding options with related unrecognized expense of $104,647.  The Company will recognize this expense when the achievement of the required milestones becomes probable.

The Company estimated the fair value of the stock options described in the above paragraphs at the date of the grant or date of re-measurement, based on the following weighted average assumptions:

Risk-free interest rate		1.52% to 1.60		%
Expected life	5 years
Expected volatility		131.33% to 136.34		%
Dividend yield			0.00	%

A summary of the status of the Company’s outstanding options as of March 31, 2016 and changes during the three months then ended, is presented below:

	Shares			Weighted Average Exercise Price
Outstanding, beginning of the period		20,965,000		$	0.145
Granted		-			-
Expired/Canceled		(250,000	)		0.002
Exercised		-			-
Outstanding, end of the period		20,715,000			0.143
Exercisable		19,640,000			0.145

NOTE 7     STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS

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 $0.096 per share.  The Company recorded compensation expense of $48,000 in connection with the issuance of the shares.

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 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.

NOTE 8     ACCOUNTS PAYABLE – RELATED PARTIES

As of March 31, 2016 and December 31, 2015, the Company owed $228,109 and $233,109, respectively, to certain consultants for services.  These consultants are stockholders of the Company and are related parties.

8

MEDIZONE INTERNATIONAL, INC. AND AFFILIATE

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 9     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.  The standard 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 standard 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 disclosures in the financial statements.  ASU No. 2014-15 is effective 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 statement presentation.

In April 2015, the FASB issued 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 ASU No. 2015-03 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 ASU No. 2015-03.  ASU 2015-03 was effective for the Company in the quarter ended March 31, 2016 and there was no impact on its financial reporting.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), simplifying the presentation of deferred income taxes on the balance sheet by requiring companies to classify everything as either a non-current asset or non-current liability.  ASU No. 2015-17 is effective 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 statement presentation.

In February 2016, the FASB released ASU No. 2016-02, Leases (Topic 842), to bring transparency to lessee balance sheets. ASU No. 2016-02 will require organizations that lease assets (lessees) to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU No. 2016-02 will apply to both types of leases; capital (or finance) leases and operating leases. Previously, US GAAP has required only capital leases to be recognized on lessee balance sheets. ASU No. 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted. The Company is currently assessing the impact of ASU No. 2016-02 on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-09 is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures.  ASU No. 2016-09 is effective for years ending after December 31, 2016, and the Company is currently assessing the impact of ASU No. 2016-09 on its consolidated financial statements.

NOTE 10     SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing date of this Quarterly Report on Form 10-Q and noted none that require accounting or disclosure in the accompanying financial statements.

9

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Medizone International, Inc. (a Nevada corporation) and affiliate (collectively, “Medizone,” the “Company,” “we,” “us,” or “our”) are engaged in conducting research into the use of ozone in the disinfection of surgical and other medical treatment facilities and in other applications.  During 2012, we began to sell our patented ozone disinfection system, AsepticSure®.  Our current work is in the field of hospital disinfection, rather than human therapies.  We cannot predict when or if we will generate sufficient cash flows from operating activities to fund existing or planned operations.  If we fail to obtain additional funding, we will be forced to suspend or permanently cease operations, and may need to seek protection under U.S. bankruptcy laws.

Recent Developments

In January 2016, we finalized an agreement with a consultant to obtain the know-how necessary to source the ultra violet (UV) ozone-generating bulbs and the manufacturing expertise used in the construction of new generators that are a key component to the efficiency of our Generation III AsepticSure® system.  As consideration, we issued 500,000 common shares at $0.096 per share to this consultant and obtained access to the engineer of the generator design and supplier of the bulbs. In February 2016, we terminated the portion of the agreement with respect to future payments to the consultant. During the first quarter of 2016, Medizone entered into an agreement with the bulb supplier for manufacturing of the new generator design.  The technology of the design is unique to our AsepticSure® Generation III system and Medizone is the only customer for this product.  We believe that this agreement positions Medizone to have significantly increased production capabilities to address increases in demand during the second half of 2016, should it arise.

While our intention is to expand distribution in North America first, following final regulatory approval in the U.S., we are also in the early stages of preparation to work with potential corporate distribution partners in Europe and Asia.  In Chile, Peru, Columbia and Brazil, our distribution partner GYD S.A. is actively seeking regulatory approvals on a country by country basis in order to begin distribution activities in South America.  In the U.S., we have experienced increasing levels of interest from hospital administrators and infectious disease experts in both the private and government hospital sectors.  We expect to sell devices directly to hospitals as a result of this interest, which will help us penetrate the U.S. market more quickly than if we are required to establish other distribution channels.  As of the filing date of this quarterly report, the Company is more optimistic as to pending commercial success than at any other time in its recent history.

Results of Operations

Three Months Ended March 31, 2016 and 2015

During the quarter ended March 31, 2016, we continued our focus on: (1) expanding distribution channels; (2) seeking approval from the U.S. Environmental Protection Agency (“EPA”); and (3) improving hardware and software features of the wireless computer control interface that operates the AsepticSure® system.

For the quarters ended March 31, 2016 and 2015, we had no revenues or associated cost of revenues.

For the quarter ended March 31, 2016, we incurred a net loss of $487,389, compared with a net loss of $409,491 for the quarter ended March 31, 2015.  The increase in net loss for the quarter ended March 31, 2016 compared to the comparable quarter of the prior year was due primarily to greater research and development expenses.

For the quarters ended March 31, 2016 and 2015, we incurred $279,064 and $312,832, respectively, in general and administrative expenses. General and administrative expenses consist primarily of payroll expense, consulting fees and professional fees. The decrease in expense for the quarter ended March 31, 2016 compared to the same period of the prior year was due to higher stock-based compensation expense resulting from options granted to directors and consultants during the quarter ended March 31, 2015.

For the quarters ended March 31, 2016 and 2015, we incurred $185,961 and $77,233, respectively, in research and development expenses.  Research and development expenses consist primarily of consulting fees, interface development costs, prototypes, and research stage ozone generator and instrument development expenses.  The increase in expense for the quarter ended March 31, 2016 over the comparable quarter of the prior year was due to an increase in development software, supplies, and consulting expenses including $48,000 of stock-based compensation expense related to the 500,000 restricted commons shares issued in January 2016.

10

Principal balances on notes payable totaled $381,007 and $372,396 as of March 31, 2016 and December 31, 2015, respectively.  Interest expense on these obligations for the quarters ended March 31, 2016 and 2015, was $8,591 and $6,396, respectively. The annual interest rates on this debt range from 4.63% to 12.00%.

Liquidity and Capital Resources

As of March 31, 2016, our working capital deficit was $3,105,943, compared to a working capital deficit of $2,675,007 as of December 31, 2015. We have incurred significant losses from inception through March 31, 2016, which have resulted in an accumulated deficit of $35,885,735.  The stockholders’ deficit as of March 31, 2016 was $3,007,728, compared to $2,569,234 as of December 31, 2015.  

We will continue to require additional financing to fund operations and to test and market our hospital and medical disinfection system.  We believe we will need approximately $1,500,000 over the next 12 months for continued production manufacturing and related activities, research, development, and marketing activities, as well as for general corporate purposes.  

During the quarter ended March 31, 2015, we generated cash of $171,000 through the sale of 3,300,000 shares of common stock to eight accredited investors at prices ranging from $0.05 per share to $0.07 per share.  No cash was generated through the sale of shares of common stock for the quarter ended March 31, 2016.  We anticipate that we will be able to raise additional funds, as needed, from certain of the accredited investors who have purchased shares during previous years, although we have no agreements at this time with any of these investors to purchase our securities, and there can be no assurance that these investors will purchase additional shares.

Going Concern

Our unaudited condensed interim consolidated financial statements included in this report have been prepared with the assumption that we will continue as a going concern. There is substantial doubt that we will be able to continue as a going concern.  Through the date of this report on Form 10-Q, we have relied upon financing from the sale of our equity securities to sustain operations. Additional financing will be required if we are to continue as a going concern. If additional financing is not obtained in the near term, we will be required to curtail or discontinue operations, or seek protection under the U.S. bankruptcy laws. Even if additional financing becomes available, there can be no assurance that it will be on terms favorable to us. In any event, this additional financing will likely result in immediate and possibly substantial dilution to existing stockholders.

Forward-Looking Statements and Risks

The statements contained in this report on Form 10-Q that are not 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 of 1934, as amended (the “Exchange Act”). These statements discuss our expectations, hopes, beliefs, anticipations, commitments, intentions and strategies regarding the future. They may be identified by the use of the words or phrases that include “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 our financial performance, revenue and expense levels in the future, and the sufficiency of existing liquidity 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 our Annual Report on Form 10-K for the year ended December 31, 2015.

We believe that many of the risks previously discussed in our SEC filings are part of doing business in the industry in which we operate 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 we assume 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 our business, financial condition, performance, development, and results of operations include:

· Rigorous government scrutiny and regulation of our products and planned products;

· Potential effects of adverse publicity regarding ozone and related technologies or industries;

· Failure to sustain or manage growth including the failure to continue to develop new products; and

· The potential inability to obtain needed financing or to obtain funding on terms favorable to us.

11

Critical Accounting Policies and Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). The preparation of such statements requires our management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate these estimates, including those related to intangible assets, expenses, and income taxes. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying values of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.

We recognize revenue when a contractual arrangement exists, product is shipped, payment from the customer is reasonably assured, and the price is fixed or determinable.  We record customer deposits that have not yet been earned as unearned revenue. Revenue is recognized only when title and risk of loss passes to the customer.

Our inventory consists of our AsepticSure® product and is recorded using the specific identification cost basis.  We purchase our inventory as a finished product from unrelated manufacturing companies. We write off 100% of the cost of inventory that we specifically identify and consider obsolete or excessive to fulfill future sales estimates. Management has determined that no inventory was obsolete or excessive as of March 31, 2016.

We record compensation expense in connection with the granting of stock options and their vesting periods based on their fair values. We estimate the fair values of stock option awards issued to employees, consultants and other non-employees at the grant date by 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.

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.  The standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods therein.  Early adoption is not permitted.  We are currently assessing the impact, if any, of implementing this guidance on our 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 standard 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 note disclosures.  The standard is for annual reporting periods beginning after December 15, 2016, and interim periods within annual periods ending after December 15, 2016.  We are currently assessing the impact, if any, of implementing this guidance will have on the Company.

In April 2015, the FASB issued 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.  The ASU is effective for the Company’s financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  This includes the quarter ended March 31, 2016.  We have determined that the adoption of this ASU had no material impact on the Company’s financial reporting.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), simplifying the presentation of deferred taxes on the balance sheet by requiring companies to classify everything as either a non-current asset or non-current liability.  ASU No. 2015-17 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within annual periods ending after December 15, 2016.  We are currently assessing the impact, if any, of implementing this guidance on the Company’s financial statement presentation.

12

In February 2016, the FASB released ASU No. 2016-02, Leases (Topic 842), to bring transparency to lessee balance sheets. ASU No. 2016-02 will require organizations that lease assets (lessees) to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU No. 2016-02 will apply to both types of leases; capital (or finance) leases and operating leases. Previously, US GAAP has required only capital leases to be recognized on lessee balance sheets. ASU No. 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted. We are currently assessing the impact of ASU No. 2016-02 on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-09 is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures.  ASU No. 2016-09 is effective for years ending after December 31, 2016.  We are currently assessing the impact of ASU No. 2016-09 on its consolidated financial statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

None.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information that is required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods that are specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding any required disclosure.  In designing and evaluating these disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).  Based on this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2016.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

13

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

There were no material developments during the three months ended March 31, 2016 relative to the legal matters previously disclosed by the Company.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any securities during the quarter ended March 31, 2016.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

Effective April 30, 2016, our Chief Financial Officer, Thomas Auger, resigned to pursue other interests.  Effective April 30, 2016, we entered into an employment agreement with our new Chief Financial Officer, Boyd G. Evans.  We filed a Current Report on Form 8-K on May 6, 2016 to report this change.  The Current Report includes biographical and business background information regarding Mr. Evans.

Item 6.  Exhibits

Exhibit 31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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

14

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/ Boyd G. Evans                        

Boyd G. Evans, Chief Financial Officer

(Principal Financial and Accounting Officer)

May 13, 2016

15

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Edwin G. Marshall, certify that:

(1)           I have reviewed this quarterly report on Form 10-Q of Medizone International, Inc. for the quarter ended March 31, 2016;

(2)           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

(5)           The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2016

/s/ Edwin G. Marshall                                                     

Edwin G. Marshall

Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14

UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Boyd G. Evans, certify that:

(1)           I have reviewed this quarterly report on Form 10-Q of Medizone International, Inc. for the quarter ended March 31, 2016;

(2)           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)           The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

(a)           Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries

, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)           Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)           Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d)           Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

(5)           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions);

(a)           All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;

(b)           Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2016

/s/ Boyd G. Evans                                                           

Boyd G. Evans

Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certification Pursuant to Section 1350 of Chapter 63

of Title 18 of the United States Code

I, Edwin G. Marshall, the Chief Executive Officer of Medizone International, Inc. (“Medizone”), certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(i)           the accompanying Form 10-Q of Medizone for the quarter ended March 31, 2016 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)           the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Medizone.

/s/ Edwin G. Marshall                                                  

Edwin G. Marshall

Chief Executive Officer (Principal Executive Officer)

May 13, 2016

EX-32.2

Exhibit 32.2

Certification Pursuant to Section 1350 of Chapter 63

of Title 18 of the United States Code

I, Boyd G. Evans, the Chief Financial Officer of Medizone International, Inc. (“Medizone”), certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(i)           the accompanying Form 10-Q of Medizone for the quarter ended March 31, 2016 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)           the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Medizone.

/s/ Boyd G. Evans                                                       

Boyd G. Evans

Chief Financial Officer

(Principal Financial and Accounting Officer)

May 13, 2016

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 13, 2016
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		369,934,068
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	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Current Assets:
Cash	$ 288,680	$ 745,078	[1]
Inventory	294,706	277,823	[1]
Prepaid expenses	43,122	31,986	[1]
Total Current Assets	626,508	1,054,887	[1]
Property and equipment, net	311	415	[1]
Other Assets:
Trademark and patents, net	168,633	176,086	[1]
Lease deposit	4,272	4,272	[1]
Total Other Assets	172,905	180,358	[1]
Total Assets	799,724	1,235,660	[1]
Current Liabilities:
Accounts payable	474,718	491,044	[1]
Accounts payable – related parties	228,109	233,109	[1]
Accrued expenses	570,107	554,834	[1]
Accrued expenses – related parties	1,928,659	1,928,659	[1]
Other payables	224,852	224,852	[1]
Notes payable	306,007	297,396	[1]
Total current liabilities	3,732,452	3,729,894	[1]
Notes payable, net of current portion	75,000	75,000
Total liabilities	3,807,452	3,804,894
Stockholders’ Deficit:
Preferred stock, $0.00001 par value: 50,000,000 shares authorized; no shares issued or outstanding	0	0	[1]
Common stock, $0.001 par value; 395,000,000 shares authorized; 369,934,068 and 369,434,068 shares outstanding, respectively	369,934	369,434	[1]
Additional paid-in capital	32,544,146	32,496,646	[1]
Accumulated other comprehensive loss	(36,073)	(36,968)	[1]
Accumulated deficit	(35,885,735)	(35,398,346)	[1]
Total Stockholders’ Deficit	(3,007,728)	(2,569,234)	[1]
Total Liabilities and Stockholders’ Deficit	$ 799,724	$ 1,235,660	[1]

[1] The condensed consolidated balance sheet as of December 31, 2015 has been prepared using information from the audited consolidated balance sheet as of that date.

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2016	Dec. 31, 2015	[1]
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 issued	0	0
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	369,934,068	369,434,068

[1] The condensed consolidated balance sheet as of December 31, 2015 has been prepared using information from the audited consolidated balance sheet as of that date.

XML

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues	$ 0	$ 0
Operating Expenses:
Cost of revenues	0	0
General and administrative	279,064	312,832
Research and development	185,961	77,233
Depreciation and amortization	13,826	13,030
Total Operating Expenses	478,851	403,095
Loss from Operations	(478,851)	(403,095)
Interest expense	(8,591)	(6,396)
Interest income	53	0
Net Loss	(487,389)	(409,491)
Other comprehensive gain on foreign currency translation	895	18,231
Total Comprehensive Loss	$ (486,494)	$ (391,260)
Basic and Diluted Net Loss per Common Share (in Dollars per share)	$ 0.00	$ 0.00
Weighted Average Number of Common Shares Outstanding (in Shares)	369,906,595	347,259,624

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2016		Mar. 31, 2015
Cash Flows from Operating Activities:
Net loss	$ (487,389)		$ (409,491)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13,826		13,030
Stock-based compensation expense	48,000		81,229
Changes in operating assets and liabilities:
Prepaid expenses	20,364		22,954
Inventory	(16,883)		0
Accounts payable and accounts payable – related parties	(21,326)		(30,112)
Accrued expenses and accrued expenses – related parties	15,273		57,500
Net Cash Used in Operating Activities	(428,135)		(264,890)
Cash Flows from Investing Activities:
Cost of registering patents	(6,269)		(8,543)
Net Cash Used in Investing Activities	(6,269)		(8,543)
Cash Flows from Financing Activities:
Principal payments on notes payable	(22,889)		(23,291)
Issuance of common stock for cash	0		171,000
Net Cash (Used in) Provided by Financing Activities	(22,889)		147,709
Effect of Foreign Currency Exchange Rates	895		18,231
Net decrease in cash	(456,398)		(107,493)
Cash as of beginning of the period	745,078	[1]	140,496
Cash as of end of the period	288,680		33,003
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	3,318		482
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Financing of insurance policies	$ 31,500		$ 31,000

[1] The condensed consolidated balance sheet as of December 31, 2015 has been prepared using information from the audited consolidated balance sheet as of that date.

XML

NOTE 1 BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2016

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 (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, 2015. 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 presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for the full year ending December 31, 2016.

XML

NOTE 2 CANADIAN FOUNDATION FOR GLOBAL HEALTH

3 Months Ended

Mar. 31, 2016

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE 2     CANADIAN FOUNDATION FOR GLOBAL HEALTH

In late 2008, the Company assisted in the formation of the Canadian Foundation for Global Health (“CFGH”), a not-for-profit foundation based in Ottawa, Canada. 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 the Company’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 entity’s expected residual returns as a result of holding variable interests, which are the ownership, contractual, or other financial interests in the entity. 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. The Company determined that CFGH met the requirements of a VIE effective upon the first advance to CFGH on February 12, 2009. Accordingly, the financial statements of CFGH have been consolidated with those of the Company for all periods presented.

XML

NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE

3 Months Ended

Mar. 31, 2016

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,
	2016				2015
Numerator: Net loss		$	(487,389	)		$	(409,491	)
Denominator: Weighted average number of common shares outstanding			369,906,595				347,259,624
Basic and diluted net loss per common share		$	(0.00	)		$	(0.00	)

Common stock equivalents, consisting of options to purchase 20,715,000 shares, have not been included in the calculation as their effect is antidilutive for the periods presented.

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NOTE 4 GOING CONCERN

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Substantial Doubt about Going Concern [Text Block]

NOTE 4     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 liquidation of liabilities in the normal course of business.  The Company has incurred significant losses from its inception through March 31, 2016, which have resulted in an accumulated deficit of $35,885,735 as of March 31, 2016.  The Company does not have funds sufficient to cover its operating costs for the next 12 months, has negative equity, and has a working capital deficit of $3,105,943 as of March 31, 2016.  The Company has relied exclusively on debt and equity financing to sustain its operations.  Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.

Continuation of the Company as a going concern is dependent upon future revenues, obtaining additional capital and ultimately, upon the Company’s attaining profitable operations.  The Company will require substantial additional funds to complete the development of its products and product manufacturing, and to fund expected 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 be forced to substantially reduce or cease operations.

The Company believes that it will need approximately $1,500,000 over the next 12 months for continued production manufacturing and related activities, research, development, and marketing activities, as well as for general corporate purposes.  No cash was generated through the sale of shares of common stock for the quarter ended March 31, 2016.  

The ability of the Company to continue as a going concern is dependent on its ability to successfully accomplish the plan described in the preceding paragraphs and eventually attain 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 5 COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 5     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. - 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 March 31, 2016 and December 31, 2015.  The Company intends to contest the judgment if and when it is able to in the future.

Other Payables

As of March 31, 2016 and December 31, 2015, the Company has $224,852 of 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 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 applicable 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 is on a month-to-month basis 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 $500 through December 31, 2016.

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NOTE 6 COMMON STOCK OPTIONS

3 Months Ended

Mar. 31, 2016

Disclosure Text Block Supplement [Abstract]

Shareholders' Equity and Share-based Payments [Text Block]

NOTE 6     COMMON STOCK OPTIONS

In August 2013, the Company granted options for the purchase of 250,000 shares of common stock to a consultant, of which 50,000 were immediately vested.  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 expense of $17,659 during the three months ended March 31, 2015, as milestones were achieved for the remaining 200,000 options.

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 on 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 of expense in connection with these options during the three months ended March 31, 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 in connection with these options during the three months ended March 31, 2015.

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 shares vested during the three months ended March 31, 2015, when certain milestones were achieved.  The options are exercisable for five years. The Company recognized expense of $8,342 in connection with these options during the three months ended March 31, 2015.

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 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 were fully vested on October 7, 2015.  The options are exercisable for five years. The grant date fair value of the options was $140,178.  The Company recognized $35,044 of expense in connection with these options during the three months ended March 31, 2015. 

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 shares will vest when certain required milestones are achieved.  The options are exercisable for five years. Of the 140,000 options, 35,000 options vested during the three months ended March 31, 2015 and $3,367 was recognized as expense. The Company will measure and recognize additional expense on the remaining options when the achievement of required milestones becomes probable.

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 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 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 $0 and $81,229 related to stock options was recorded for the three months ended March 31, 2016 and 2015, respectively.  Excluding options whose performance condition is not yet deemed probable, as of March 31, 2016, the Company had unvested outstanding options with related unrecognized expense of $104,647.  The Company will recognize this expense when the achievement of the required milestones becomes probable.

The Company estimated the fair value of the stock options described in the above paragraphs at the date of the grant or date of re-measurement, based on the following weighted average assumptions:

Risk-free interest rate		1.52% to 1.60		%
Expected life	5 years
Expected volatility		131.33% to 136.34		%
Dividend yield			0.00	%

A summary of the status of the Company’s outstanding options as of March 31, 2016 and changes during the three months then ended, is presented below:

	Shares			Weighted Average Exercise Price
Outstanding, beginning of the period		20,965,000		$	0.145
Granted		-			-
Expired/Canceled		(250,000	)		0.002
Exercised		-			-
Outstanding, end of the period		20,715,000			0.143
Exercisable		19,640,000			0.145

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NOTE 7 STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS

3 Months Ended

Mar. 31, 2016

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 7     STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS

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 $0.096 per share.  The Company recorded compensation expense of $48,000 in connection with the issuance of the shares.

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 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.

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NOTE 8 ACCOUNTS PAYABLE - RELATED PARTIES

3 Months Ended

Mar. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 8     ACCOUNTS PAYABLE – RELATED PARTIES

As of March 31, 2016 and December 31, 2015, the Company owed $228,109 and $233,109, respectively, to certain consultants for services.  These consultants are stockholders of the Company and are related parties.

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NOTE 9 RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Mar. 31, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE 9     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.  The standard 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 standard 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 disclosures in the financial statements.  ASU No. 2014-15 is effective 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 statement presentation.

In April 2015, the FASB issued 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 ASU No. 2015-03 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 ASU No. 2015-03.  ASU 2015-03 was effective for the Company in the quarter ended March 31, 2016 and there was no impact on its financial reporting.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), simplifying the presentation of deferred income taxes on the balance sheet by requiring companies to classify everything as either a non-current asset or non-current liability.  ASU No. 2015-17 is effective 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 statement presentation.

In February 2016, the FASB released ASU No. 2016-02, Leases (Topic 842), to bring transparency to lessee balance sheets. ASU No. 2016-02 will require organizations that lease assets (lessees) to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. ASU No. 2016-02 will apply to both types of leases; capital (or finance) leases and operating leases. Previously, US GAAP has required only capital leases to be recognized on lessee balance sheets. ASU No. 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted. The Company is currently assessing the impact of ASU No. 2016-02 on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU No. 2016-09 is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures.  ASU No. 2016-09 is effective for years ending after December 31, 2016, and the Company is currently assessing the impact of ASU No. 2016-09 on its consolidated financial statements.

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NOTE 10 SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2016

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 10     SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing date of this Quarterly Report on Form 10-Q and noted none that require accounting or disclosure in the accompanying financial statements.

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NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Tables)

3 Months Ended

Mar. 31, 2016

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,
	2016				2015
Numerator: Net loss		$	(487,389	)		$	(409,491	)
Denominator: Weighted average number of common shares outstanding			369,906,595				347,259,624
Basic and diluted net loss per common share		$	(0.00	)		$	(0.00	)

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NOTE 6 COMMON STOCK OPTIONS (Tables)

3 Months Ended

Mar. 31, 2016

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 described in the above paragraphs at the date of the grant or date of re-measurement, based on the following weighted average assumptions:

Risk-free interest rate		1.52% to 1.60		%
Expected life	5 years
Expected volatility		131.33% to 136.34		%
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, 2016 and changes during the three months then ended, is presented below:

	Shares			Weighted Average Exercise Price
Outstanding, beginning of the period		20,965,000		$	0.145
Granted		-			-
Expired/Canceled		(250,000	)		0.002
Exercised		-			-
Outstanding, end of the period		20,715,000			0.143
Exercisable		19,640,000			0.145

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NOTE 2 CANADIAN FOUNDATION FOR GLOBAL HEALTH (Details)	12 Months Ended
	Dec. 31, 2008
Disclosure Text Block [Abstract]
Variable Interest Entity, Qualitative or Quantitative Information, Purpose of VIE	(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 the Company’s technology to as many in need as possible.

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NOTE 3 BASIC AND DILUTED NET LOSS PER COMMON SHARE (Details)	3 Months Ended
	Mar. 31, 2016 shares
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	20,715,000

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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, 2016	Mar. 31, 2015
Schedule of Earnings Per Share, Basic and Diluted [Abstract]
Numerator: Net loss	$ (487,389)	$ (409,491)
Denominator: Weighted average number of common shares outstanding	369,906,595	347,259,624
Basic and diluted net loss per common share	$ 0.00	$ 0.00

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NOTE 4 GOING CONCERN (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	[1]
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Retained Earnings (Accumulated Deficit)	$ (35,885,735)	$ (35,398,346)
Working capital (deficit)	$ (3,105,943)
Going Concern Note	The Company believes that it will need approximately $1,500,000 over the next 12 months for continued production manufacturing and related activities, research, development, and marketing activities, as well as for general corporate purposes.

[1] The condensed consolidated balance sheet as of December 31, 2015 has been prepared using information from the audited consolidated balance sheet as of that date.

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NOTE 5 COMMITMENTS AND CONTINGENCIES (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2016 USD ($)	Mar. 31, 2016 CAD	Dec. 31, 2002 USD ($)	Dec. 31, 2001 USD ($)	Dec. 31, 2015 USD ($)
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Accounts Payable, Current	$ 474,718				$ 491,044	[1]
Accounts Payable, Other, Current	224,852				224,852	[1]
Certified Laboratory Space [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Operating Leases, Rent Expense, Minimum Rentals | CAD		CAD 1,375
Second Laboratory for Full Scale Room Testing [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Operating Leases, Rent Expense, Minimum Rentals | CAD		1,375
Full Scale Room Testing [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Operating Leases, Rent Expense, Minimum Rentals | CAD		CAD 475
Office Space [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Operating Leases, Rent Expense, Minimum Rentals	500
Settlement Amount, September 2001 [Member] | Rakas Litigation [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Litigation Settlement, Amount				$ 25,000
Default Judgement [Member] | Rakas Litigation [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Accounts Payable, Current	143,000				143,000
Default Judgement [Member] | Settlement Amount, January 2002 [Member] | Rakas Litigation [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Loss Contingency, Damages Sought, Value			$ 143,000
Litigation Fees [Member] | Rakas Litigation [Member]
NOTE 5 COMMITMENTS AND CONTINGENCIES (Details) [Line Items]
Accounts Payable, Current	$ 21,308				$ 21,308

[1] The condensed consolidated balance sheet as of December 31, 2015 has been prepared using information from the audited consolidated balance sheet as of that date.

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NOTE 6 COMMON STOCK OPTIONS (Details)						1 Months Ended		3 Months Ended		12 Months Ended
	Dec. 04, 2014 $ / shares shares	Oct. 07, 2014 USD ($) $ / shares shares	Aug. 15, 2014 $ / shares shares	May. 06, 2014 $ / shares shares	Feb. 26, 2014 USD ($) $ / shares shares	Aug. 31, 2015 $ / shares shares	Aug. 31, 2013 $ / shares shares	Mar. 31, 2016 USD ($) shares	Mar. 31, 2015 USD ($) shares	Dec. 31, 2015 USD ($)
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross								0
Share-based Compensation (in Dollars) | $								$ 48,000	$ 81,229
August 2015 [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						7,150,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period						5 years
Share-based Compensation (in Dollars) | $										$ 541,687
Director [Member] | October 7, 2014 [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		1,000,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares		$ 0.16
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		5 years
Share-based Compensation (in Dollars) | $									35,044
Share-based Compensation Arrangement by Share-based Payment Award, Options, Fair Value Grants in Period (in Dollars) | $		$ 140,178
Non-Employee Stock Option [Member] | August 2013 [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross							250,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares							$ 0.10
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period							5 years
Share-based Compensation (in Dollars) | $									$ 17,659
Non-Employee Stock Option [Member] | August 2013 [Member] | Share-based Compensation Award, Tranche One [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares							50,000
Non-Employee Stock Option [Member] | August 2013 [Member] | Share-based Compensation Award, Tranche Two [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares							200,000
Non-Employee Stock Option [Member] | February 2014 [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross					250,000				800
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares					$ 0.1095
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					5 years
Number of consultants and service providers issued options					6
Share-based Compensation Arrangement by Share-based Payment Award, Options, Fair Value Grants in Period (in Dollars) | $					$ 24,023
Non-Employee Stock Option [Member] | February 2014 [Member] | Share-based Compensation Award, Tranche One [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares					200,000
Non-Employee Stock Option [Member] | February 2014 [Member] | Share-based Compensation Award, Tranche Two [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares					50,000
Non-Employee Stock Option [Member] | May 6, 2014 [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				100,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares				$ 0.19
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period				5 years
Share-based Compensation (in Dollars) | $									$ 8,342
Non-Employee Stock Option [Member] | May 6, 2014 [Member] | Share-based Compensation Award, Tranche One [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares				50,000
Non-Employee Stock Option [Member] | May 6, 2014 [Member] | Share-based Compensation Award, Tranche Two [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares				50,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights				vested immediately upon grant and options for the remaining 50,000 shares vested during the three months ended March 31, 2015, when certain milestones were achieved.
Non-Employee Stock Option [Member] | August 15, 2014 [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			75,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares			$ 0.13
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			5 years
Non-Employee Stock Option [Member] | December 4, 2014 [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	140,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares									35,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares	$ 0.11
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	5 years
Share-based Compensation (in Dollars) | $									$ 3,367
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights	The shares will vest when certain required milestones are achieved.
Number of consultants and service providers issued options	4
Non-Employee Stock Option [Member] | August 2015 [Member] | Options Granted for Consulting Services [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						250,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares						$ 0.085
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period						5 years
Share-based Compensation (in Dollars) | $										$ 18,991
Non-Employee Stock Option [Member] | August 2015 [Member] | Options Granted to Four Consultants [Member[
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						650,000
Number of consultants and service providers issued options						4
Employee Stock Option [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation (in Dollars) | $								0	81,229
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars) | $								$ 104,647
Employee Stock Option [Member] | August 2015 [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						500,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares						$ 0.088
Employee Stock Option [Member] | Director [Member] | February 2014 [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross					2,000,000
Share-based Compensation by Share-based Payment Award, Options, Exercise Price of Options (in Dollars per share) | $ / shares					$ 0.1095
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period					5 years
Share-based Compensation (in Dollars) | $									$ 16,017
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights					Unvested options vest immediately in the event of a change in control of the Company
Employee Stock Option [Member] | Director [Member] | February 2014 [Member] | Share-based Compensation Award, Tranche One [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares					1,000,000
Employee Stock Option [Member] | Director [Member] | February 2014 [Member] | Share-based Compensation Award, Tranche Two [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares					1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights					vest upon the successful achievement of certain milestones
Employee Stock Option [Member] | Director [Member] | August 2015 [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross						6,000,000
Number of directors issued options						5

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NOTE 6 COMMON STOCK OPTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options	3 Months Ended
	Mar. 31, 2016
NOTE 6 COMMON STOCK OPTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options [Line Items]
Expected life	5 years
Dividend yield	0.00%
Minimum [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options [Line Items]
Risk-free interest rate	1.52%
Expected volatility	131.33%
Maximum [Member]
NOTE 6 COMMON STOCK OPTIONS (Details) - Schedule of Fair Value Assumptions of Stock Options [Line Items]
Risk-free interest rate	1.60%
Expected volatility	136.34%

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NOTE 6 COMMON STOCK OPTIONS (Details) - Schedule of Share-Based Compensation, Stock Options, Activity	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Schedule of Share-Based Compensation, Stock Options, Activity [Abstract]
Outstanding, beginning of the period | shares	20,965,000
Outstanding, beginning of the period | $ / shares	$ 0.145
Granted | shares	0
Granted | $ / shares	$ 0
Expired/Canceled | shares	(250,000)
Expired/Canceled | $ / shares	$ 0.002
Exercised | shares	0
Exercised | $ / shares	$ 0
Outstanding, end of the period | shares	20,715,000
Outstanding, end of the period | $ / shares	$ 0.143
Exercisable | shares	19,640,000
Exercisable | $ / shares	$ 0.145

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NOTE 7 STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS (Details)	1 Months Ended		2 Months Ended	3 Months Ended
	Jan. 31, 2016 USD ($) $ / shares shares	Feb. 28, 2015 USD ($) $ / shares shares	Mar. 31, 2015 USD ($) $ / shares shares	Mar. 31, 2016 USD ($)	Mar. 31, 2015 USD ($) $ / shares
NOTE 7 STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS (Details) [Line Items]
Share-based Compensation				$ 48,000	$ 81,229
Restricted Stock [Member]
NOTE 7 STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services (in Shares) | shares	500,000
Stock Issued During Period, Value, Issued for Services	$ 48,000
Shares Issued, Price Per Share (in Dollars per share) | $ / shares	$ 0.096
Share-based Compensation	$ 48,000
Stock Issued During Period, Shares, New Issues (in Shares) | shares		300,000	3,000,000
Number of Investors			7
Proceeds from Issuance or Sale of Equity			$ 150,000
Sale of Stock, Price Per Share (in Dollars per share) | $ / shares		$ 0.07	$ 0.05		$ 0.05
Stock Issued During Period, Value, New Issues		$ 21,000

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NOTE 8 ACCOUNTS PAYABLE - RELATED PARTIES (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Related Party Transactions [Abstract]
Accounts Payable, Related Parties, Current	$ 228,109	$ 233,109	[1]

[1] The condensed consolidated balance sheet as of December 31, 2015 has been prepared using information from the audited consolidated balance sheet as of that date.