Note 3 - Deposits

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Deposit Liabilities Disclosures [Text Block]

Note

3.

Deposits

Licensing Revenue

In

2012,

we executed a joint venture agreement with Peter Holdings Pty. Ltd., the principal developer of the Isan System, whereby we jointly purchased the intellectual property associated with the Isan System, and agreed to share any royalties from any licensing revenue generated from the Isan System on an equal

50/50

basis.

In

February

2014,

we received a deposit of

$100,000

from InsulTech Manufacturing, LLC, an Arizona limited liability company d/b/a Clarion Water (“Clarion Water”) towards a worldwide, exclusive license of the Isan System. On

August

12,

2014,

we entered into a license agreement with Clarion Water in which we granted an exclusive license to commercialize the Isan System for a term expiring the latter of

10

years or upon the expiration of the licensed patents. The license agreement provides that the

$100,000

deposit is non-refundable, and is to be credited to future payments of royalties or sublicense fees due under the license agreement. The agreement further provides for a

10%

royalty of licensee’s “net sales revenue”, and

40%

of sublicensing fees. The Licensee was required to make minimum payments beginning

July

1,

2016,

of

$50,000

per quarter to maintain exclusivity and as of

July

1

and

December

31,

2016,

the Licensee is not making this payment and has relinquished exclusivity rights. The intellectual property subject to the license agreement includes all intellectual property related to the Isan System, including all patents, trademarks, proprietary knowledge, and other similar know-how or rights relating to or arising out of the Isan System or the patents related to the Isan System. The agreement contains other terms and conditions typically found in intellectual property license agreements. Clarion Water’s work to commercialize the Isan System continues. (See Part I, Item

2,

“Our Business – Clarion Water”.)

We are obligated to share any revenues under the agreement on an equal basis with Peter Holdings Pty. Ltd. On

July

1,

2016,

per the terms of the agreement the

$100,000

deposit received in

2014

was recorded to Royalty revenue, offset by the

$45,000

share paid to Peter Holdings Pty. Ltd.

Investor Deposit

On

December

18,

2015,

we received

$35,000

from a potential investor in our

2015

Unit Offering (see Note

4).

We did not receive a subscription agreement from that individual until after

December

31,

2015,

and thus we recorded this amount as a deposit until we received the executed documents and formally accepted the investment in

2016.