Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
fmboca, you responded to me: You have NO strategy!
My strategy has been consistent since we ended up, through the Marshalls' contrivances, in this mess.
I have been actively attempting to bring people together to file for a conversion to a Ch. 11 restructuring, WITHOUT any participation of previous management, all of whom have left us empty-handed.
We deserve better treatment than we have gotten for a long, long, time.
So far, the efforts for an 11 have not borne fruit. But it ain't over til it's over.
"..he is granted the authority to "operate" the company for a limited time---what is limited when dealing with the FDA?"
You're right, we have no way of knowing the "end" of the FDA process. But as I said, present indications are that the end of '18 might be the target for approval.
If the deadline for sale is pushed off till that specific date, Dec. 31, '18, then there is a limit to the trustee's stewardship, and the distinct possibility of a more robust bidding process.
Plus, the option of a Ch. 11 restructuring might be a lot more attractive to a potential investor.
As to your argument that the Trustee would be "derelict" if he "bet" on a positive outcome - if that were so cut and dried, what's the point of waiting until August 31? Whatever is done by then has no value whatsoever unless it results in eventual approval.
So if that chance is enough to wait for, the extra few months where a decent chance exists for approval would be very appropriate. It would, IMO, be really derelict to cut bait prematurely.
And by the way, a '47 Packard hood ornament is probably worth more than MZEI will be without approval.
"...tell Eddie to get a DIP funder and go for it..."
Been there, done that.
No further comment.
"Management" in this context is one man, the Trustee. That's why he needs to feel a little pressure to do more than take the path of least resistance.
You raise a valid point. If the sale is delayed, there would need to be another package of interim funding until that new date.
Somehow I think that obstacle could be overcome, if it came down to that.
"The ongoing testing can go on forever."
We don't have "forever", because of the bankruptcy court. But let's create a more favorable window of time.
Don't you agree that December will provide more clarity than August?
"My sources" are fervently attempting to gain support for an 11 conversion. It is an uphill struggle. I don't know where things stand.
My point is that based on the criteria for the Trustee's role, he must seek maximum value for the assets. See paragraph III-A in the filing linked below.
https://www.courtlistener.com/recap/gov.uscourts.nvb.372229/gov.uscourts.nvb.372229.60.0.pdf
And his contention in paragraph III-B-1 that the assets have "diminishing value" is not valid, because of the ongoing testing for FDA approval.
That's why my impression - and I believe I'm not the only one who feels this way - is that the Trustee is taking a very narrow view of his mandate, and merely wants to get it over with in the most expedient manner. He has not encountered any resistance as of now.
We can provide that resistance by advocating for a delay.
I am not suggesting that it be "open-ended". As I wrote in my previous post, the picture will be very different if the final sale would be scheduled for the end of '18.
By then it will be much clearer if the FDA work is completed, or close to being finished. August 31, we know for sure, will not provide that clarity, so the potential value is a fraction of what it would be otherwise.
It seems to me that the Trustee is obliged legally to maximize the potential value, by taking account of the larger picture.
In this case, the ones who would stand a chance to gain something are we, the shareholders.
If we go down, let's go down fighting!
If there is anything that we can do practically while this plays out behind the scenes, allow me to suggest the following:
Rather than documenting the various blunders that got us to this point, let's focus on a present blunder that is happening right now, through the actions of the Trustee, Mr. Schwartzer, who is now in control of the Company and is determining its fate.
The process has been accelerated, expedited, based on the arbitrary decisions of the Trustee. He bases his decision on the fact that the assets must be sold at maximum value, in order to satisfy the creditors' debt, and as time goes on the value of those assets is diminishing.
If this were true, of course, it would mean that every day that goes by means that there is less and less chance that we, who stand at the end of the line, will see anything at all.
However, in this case, the opposite is true!!
The reality is that as the work toward FDA approval proceeds, the actual value of the assets increases! Imagine how much more valuable the Company will be when that goes through! I've heard through my sources that if the testing moves forward as expected, Medizone expects FDA approval before the end of '18.
The value of MZEI will be multiples of what it is now. So why the rush to arbitrarily force a sale by August 31, when we all know that nothing will be finalized until months later, at the earliest.
I suggest that we as shareholders be pro-active, and file some legal action against the present threat, namely the Trustee's timeline. Let us push for a delay in the final sale until the end of '18.
This would accomplish at least two things:
1) As I said, it would allow for the potential value to be realized by the progress to FDA approval, making the bidding process more reflective of the genuine value of the assets, and increasing our chances of getting something back; and
2) It would allow more time for a possible conversion to a Ch. 11 restructuring to take place. Investors might look more favorably to such a move if the Company were really on the verge of full commercialization through the FDA approval.
Anyone out there with the know-how to engage in a class-action suit against the Trustee? How much would this cost?
Just for the record, I received notification of this filing as an email yesterday (it was addressed to "Shareholders", I assume many if not all of you also received it.)
I sent the following question to the Trustee:
"Does anything in the latest filings preclude the possibility of a conversion to a Ch. 11 filing for restructuring instead of liquidation, in the event that a proposal for such will appear before Aug. 7?"
His answer was a model of brevity:
"No."
So all that this filing indicates is that nothing has happened yet, but it could still happen. But it is a very long shot, at best.
WIV, I'm surprised at your evaluation that none of the listed firms could offer a substantial bid. Wouldn't at least Stryker, Steris, and BioQuell be in a league to come up with a lot of cash?
Eli, thanks for your updates.
Is there any way to know from the documents that are presently available if the 15 entities who are listed as bidders have already given the $100K good-faith deposit that is required?
Personally, I would imagine that if they are listed by the Court as "bidders", that means that they have already submitted a bid, and entered the deposit. For at least several of the folks who put in bids, $100K is chump change.
Or is it enough just to proclaim that I wish to appear in court on Aug. 7th and make a bid, and take care of the details then?
Thanks-
Nothing mystical or occult going on here. futurist is a medical person who has a lot of experience with ozone therapies.
So a group of investors, who hold a nice chunk of shares among them, kind of gravitated toward him over the years and discussed the attitude to their investment together, and formed a common approach.
Botany, please refer to my post #48773 in which I post the trustee's reply to that very question.
This was just confirming the announcement from the end of June, correct? Not really a change in the landscape.
OK, that's what I figured. I just wondered what caused the flurry of surprised reactions two weeks later.
I am well aware that a proposal for restructuring within an 11 needs to be approved and is not automatic. I would imagine that the primary consideration is a serious infusion of cash, enough to take care of creditors, and leave enough to run the company until it can begin to be profitable.
In our situation, that would mean sufficient funding to get through the FDA process, begin hospital testing, and begin marketing efforts.
The trustee would then presumably select a new management team, with no previous executives allowed to be involved in any capacity.
Eli, that filing was issued on June 29. We know that Ed filed the first bid, that's old news.
We also know that the trustee stated clearly that a proposal for a Ch. 11 reorganization can be submitted before the Aug. 7 court date. As of last week, this hadn't happened yet, but it's still a possibility.
Why the sudden interest in what you posted today? I'm just trying to understand.
For everyone's information:
I sent an email to the trustee two days ago, asking if the withdrawal of Marshall's Ch. 11 petition means that a reorganization within a Ch. 11 framework is no longer an option.
He wrote back yesterday with the following answer:
"Shareholders and creditors have the right to ask the bankruptcy court to convert this case to a chapter 11 case and to propose a plan of reorganization. So far, no one has done so."
As far as I can tell, and not intending to raise any false hopes, there seem to be discussions going on behind the scenes concerning an attempt at reorganization, and apparently, the window is still open. It's a very long shot, at best.
"All Shannon has done thus far is a bunch of moaning and groaning."
What in the world makes you think that you know what exactly Shannon has been doing recently? When's the last time that you spoke to him?
Oh, I get it. Shannon didn't post on IHub that Ed should pound sand... so he must be in cahoots with him.
Please, enough of this childish prattling.
You are very confused, I'm afraid, about the state of the FDA work. Shannon has machines in his Kingston lab which are used for, among other things, the FDA work.
The two machines that were sent to Innovasource were to be used for non-medical applications, if companies would request their use. That's where the "free trial run" came in, which was a great marketing concept, but tragically, due to the bankruptcy nightmare, is irrelevant.
The $200K is a separate secured loan from the Marshalls to Medizone, to maintain ongoing work in the lab.
The trustee allowed Marshall to make a bid of $500K as an opening bid for the assets, if it comes to liquidation.
That $500K I believe comes from a group that believes in the technology and is willing to put up the funds to buy it. But in my wildest dreams, I don't envision the sale at that price.
Don't you think that Dodd, with some corporate backing (speaking of Innovasource....) will come up with a lot more than that? Isn't it possible that some much larger medical device company will blow everybody out of the water and outbid them?
If it ends up in a Ch. 7 sale, I frankly doubt if either Marshall or Dodd will be part of the end game.
As far as I understand, the 200K is a separate sum dedicated to keeping the lab running until after the bankruptcy is resolved one way or another. The stalking horse bid is a horse of a different color, pardon the pun.
Your linking of Dr. Shannon to Ed's bid from liquidation is baseless. He is only involved in the $200K because he wants to move the FDA process ahead. (Since you conflate the two processes, the liquidation bid and the 200, you made a basic mistake).
Has fought consistently, first against Dodd et al, and also against Marshall, to encourage some kind of protection for the shareholders. His has been a voice in the wilderness, but it is still being heard in certain circles.
Lady gofor, I don't think that we will be back to square 1.
What seems to be happening - and let me say clearly that I don't know this for sure, it's just my guess, based on a few things that have come together - there is interest in a reorganization of Medizone. This means new people brought in, no previous management.
What makes me think this is something that Elis posted in #48737, in the second paragraph. It sounds like there is at least an openness to the idea of restructuring through the Ch. 11 process, rather than proceeding with the Ch. 7 liquidation.
If that is accurate, it can only mean that there are serious investors ready to move in with enough funding to move the Company forward through the FDA approval, initiate hospital testing, and begin real commercial activity.
Otherwise the trustee would never entertain the possibility of reverting to the Ch. 11 process.
Having said that, I don't know how that scenario fits with the most recent filing, in which Ed seems to be rescinding the Ch. 11 petition. It is really a confusing picture, with many legal mechanisms involved.
I was not aware of that, if you're correct. My impression was that Ed was not drawing a salary later also, but if I'm wrong I stand corrected.
As I said, I am not judging David Dodd. I don't know the real story about Aeterna.
But when that kind of a story exists, the burden of proof lies with the party involved. Just saying "Trust me, guys, it's all a pack of lies", may be true, but it is not enough to earn full trust.
Fact remains that in those years in which you claim that the Marshalls were "bilking" shareholders, growing fat and rich with our money, they got the technology through the EPA successfully, despite delays and misjudgments on many people's part.
And the Marshalls were not taking salaries during those years either. So much for growing rich with our money.
That's why someone like Esposito could then enter and complete the final stage of the FDA process.
You make it sound as if NOTHING at all had been achieved until Dodd rode into town. That is simply not true.
80% of the path to commercialization had been accomplished when Marshall left. Should he have left sooner? Could a more professional hand as CEO have gotten that 80% done more quickly? Very likely.
But that doesn't make your narrative any more accurtae.
All your lengthly quotes from earlier SEC filings are irrelevant. It's required by the SEC that "worst scenario" statements be made, and they were there for all the years.
We know that Medizone never had a solid funding base. But somehow the company squeaked through, despite delays and missteps, and that would have also been true when Marshall finally stepped down. As I stated earlier, several people were waiting for a call from Esposito who were willing to put in six-figure sums as PPLs, as happened all the years.
The calls never came.
What was different in the last 10K was the reference to bankruptcy proceedings, if the S-1 funding, with its draconian terms, didn't work out.
Why wouldn't Dodd et al avoid that very risky route, and pursue the PPls, instead of gifting the new S-1 funding sources with millions of free shares, just as a gesture?? Use those same shares to get PPL funds that would keep things running until the FDA came through?
Could it be that bankruptcy, a CH. 7 in particular, was a more attractive option to Dodd and his crew?
You conveniently neglect to mention the part of Dodd's resume that has an eerie resemblance to our situation, the Aeterna lawsuit. The jury's still out on that, I'm not judging. But Dodd's explanation was less than convincing to me.
ferrot, you make a good point. When the Marshalls filed their Ch. 11 petition, they were not trying to "get it all", simply because they wouldn't "get it all".
The Company would be restructured, with neither past or present management eligible for any position. The shares would possibly remain with some value, depending on the arrangement, and the technology would be developed.
The Marshalls, as major shareholders, would also benefit of course, but they wouldn't have anything more than they would have had they not filed the Ch. 11. So their filing, drastic as it was, was aimed toward maintaining the status quo of MZEI in what they felt (rightly or wrongly) was a healthier form.
It's true that now the Marshalls seem to be considering a Ch. 7 liquidation bid, but that's only because current (=former, since the trustee now "leads" the company) management chose the Ch. 7 route, making a Ch. 11 a long shot at best.
Was there a hint a while back? In March's 10K the following paragraph appears:
"Risks Related to our Financing Arrangements
We may be unable to repay our convertible promissory Notes when they mature. On January 31, 2018, we issued the Notes in the aggregate principal amount of $305,000. The Notes accrue interest (payable at maturity with the principal) at a rate of 8% per annum, six months from the issue date. There is no assurance that we will be able to repay the Notes when they mature. If we fail to pay the principal of and interest on the Notes when due, the interest rate increases to a default rate of 24% per annum until paid, plus a 40% penalty is added to the outstanding balance of the Note and other penalties as set forth in the Note. In such event, or in other event of default as defined in the Notes, we will likely be required to seek protection under applicable bankruptcy laws." (emphasis added)
Hmmm... I understand that in every SEC filing there has to be a warning that things may not work out. That was always present in each filing over the years.
But in the Marshall years, the text would read: "... we may have to cease operations." No mention of bankruptcy. Is this merely an indication that the 10K was issued by a more sophisticated team, who was more familiar with what actually may happen? Maybe.
Or could it be a Freudian slip, an inadvertent betrayal of the ultimate agenda?
I honestly don't know. But the flow of events, as you pointed out, does make you wonder.
When did the hearing that you are describing take place?
Sounds like you had a fly-on-the-wall seat.
"Remarkably, Ex CEO Marshall has said nothing to Medizone shareholders about why he did what he did and what he has in mind for Medizone and its shareholders.
Why?"
Marakis, that's not really accurate. Last May 22 I posted a message that Marshall sent to me, basically asking that it be shown to shareholders. Apparently he felt the need to explain himself.
Here's what he wrote (it echoes what Manti wrote recently):
"You may share this with the shareholders should you choose to. Please appreciate I will have nothing further to comment until the next affirmative steps are taken by the chapter 7 trustee, if then.
To summarize, here is my experience of the situation:
Following a review of the deep financial trouble Medizone was in over the past 12 months, and how much in arrears they were with us and almost all vendors, we filed an involuntary chapter 11 bankruptcy, along with others, with the intention of trying to stabilize the company.
On May 4th, I had communicated to the Board our intention to try and help the company. An email chain between Mr. Esposito, Mr. Dodd, Mr. Dodd's attorney and our attorney for the chapter 11, was all part of the communication history.
Mr. Esposito called me on Saturday, May 5th and we discussed our intention. I was frank on how seriously I saw the financial problems, but also tried to be as positive as possible with the intention of bringing help to the company. After all, my sources had been funding the company for decades prior to the management change of March 1, 2017.
Three days later, out of the blue on May 8th, Medizone filed a chapter 7 bankruptcy proceeding without any further communication. This filing put a stop on our reorganization effort. A company does have a legal right to file a chapter 7, and that is exactly what transpired.
Many of us are very frustrated and are trying to see ways in which some good might come of this. Should a very significant level of funding be forthcoming, it is possible to turn the 7 into an 11 again.
Honestly, this would appear to be a long shot. Once in a 7 the normal course of events is to see assets liquidated and the shareholders lose everything.
There are thousands of losers in this, certainly counting me and my family. Once the company filed the 7, the former management team is no longer in charge. I am not in charge. The court-appointed trustee is in charge.
I never saw this coming in March of 2017, but here we are today. If anything positive can be salvaged via the trustee, I will be sure to let you know. For now, it is in the trustee's purview.
Ed"
So we may disagree vehemently with his interpretation of the facts, but the reality is that he did present his side of the story, right or wrong as it may be, to the shareholders.
To the best of my understanding, and from the limited familiarity that I have to the discussions going on, there is no question that a switch from the 7 to an 11 is possible in our situation.
The main issue is presenting a convincing scenario to the Ch. 7 trustee, who at present is presiding over the case, that sufficient funding exists to make the restructuring of the company a viable option.
What "viability" means in this context is enough funding to deal with creditors, while having enough funds available to support the development of AS until it can reasonably expect to be commercially successful.
This, I guess, includes first and foremost gaining FDA final approval, and an initial stage of hospital testing.
If such funding exists, the Ch. 7 trustee then makes a recommendation to the judge to change to a Ch. 11, and the judge has to approve it.
I don't think anyone expects the FDA approval to come in 90 days. The timeline, as I understand it, is that the submission of data from Medizone to the FDA can be finished within those 90 days.
I think that there's a meeting with the FDA people sometime soon to clarify details.
Then there is a 90-day window during which the FDA examines the data, after which they hopefully reply.
The status of the Company will be determined by then, either through a liquidation sale, or possibly through the mechanism of a Ch. 11 restructuring.
In either case, funding from the end of the summer forward will be provided either by the highest CH. 7 bidder, or the funders of the Ch. 11 process.
Without the $200K that the Marshalls came up with everything would have ground to a halt weeks ago. But that's just a stop-gap measure until the overall status is clarified.
Of course not. The Marshalls had no expectation that there will be shareholders at all, once the Ch. 7 was filed.
They did it to keep the patents current and the work on the FDA stuff going, to enhance the value of the assets, which their group - which does NOT include Shannon - hopes to acquire.
Nothing changed about the chutzpah argument. That referred to the Ch. 11 petition itself, which was made on the basis of Medizone's defaulting on its obligations to various creditors. The default itself was caused by the filing.
The "inheritance" is only a factor if the 7 ends up being the final conclusion. And who says he can outbid Dodd et al, and whatever multinational may be waiting in the wings to outbid them all, with what would be peanuts for them?
But there are those who are hoping that it will not end in liquidation. Then we will all at least have something. Including the Marshalls, who by the way have said that they would be pleased if it turns out that way.
The reason Marshall did this is because he convinced himself, and apparently a few supporters, that Dodd had no intention of maintaining Medizone as a public entity. The S-1 funding would never have worked, under its terms the lenders would then take over the company, and it would end up in liquidation anyway.
I made it clear that to him I think that it was extremely reckless of him to act on his conclusions in a way that basically destroyed the Company, and that he was at least partially basing his "proof" on mistaken premises.
There was an angry exchange of emails, and it didn't come as a shock to me that I failed to convince him that he was wrong.
Now that is, unfortunately, all history. The reality is that those $200K are what's keeping the doors open now. As I said before, this doesn't make the Marshalls into heroes or martyrs. In a way, it's the least they could do, after destroying what many of us still think had a chance of succeeding.
When I was a kid in the 50's, a widespread debate was created by the fear of Communist domination: "Better Dead than Red!", or, "Better Red than Dead!"
In our situation, maybe the debate is: "Better Dead than Ed!", or "Better Ed than Dead!"...
Personally, I don't want to be (financially) dead if I don't have to be. If that means acknowledging the reality that the Marshalls played a role in keeping the Company functioning to gain FDA approval, I'm OK with that.
It beats "Dead" by a mile.
Only you could be so unwilling to acknowledge that, as I concluded, this world is complicated.
Despite the horrible mistake that I still think the Ch. 11 filing was, and the almost inevitable Ch. 7 that followed, the reality is that there would be nothing to talk about if that $200K hadn't been given.
That doesn't make Ed and Jill "heroes". It does guarantee that they and their motivations are complex, just like most of us human beings.
I hate to be the one to break the news to you, but reality just doesn't conform to the contours of brains that only function in blacks and whites.
"I think that if any resurrection of this company occurs, it won’t happen anytime soon."
In terms of the share price, even in the event that a miracle occurs and Medizone has a future in some form as a public entity, you're right. It will probably take a while before shareholders see any real gains.
But as far as "the rest of the human race who could have benefited from this technology", I disagree. The work for FDA approval will get done somehow, I think there might even be sales in Europe before that, so the benefits for humanity will actually happen anyway.
Difficult as it is to admit under the circumstances, this is only because Ed and Jill coughed up $200K of their own money to keep the lab in operation and the patents protected (seems like fees were due).
It's a complicated world out there. Let's keep hoping that a miracle will surprise us.
I think that when a company is in bankruptcy, and the SP is a fraction of a penny, no one would consider a discussion with Dr. Shannon about the chance of a solution for abandoned shareholders to be "insider information"...
It is based on personal conversation.
He's committed to doing whatever he can to protect the shareholders' stake, and putting in every effort to make that happen.
He feels it's an ethical obligation to people who put their faith in Medizone, and in the people involved.
Will it work? Only time will tell.
And by the way, he does care very much that this should be a profitable venture. Although being the kind of person he is, that is not his only motivation.
I don't know about a white night, but there's a chance that there will be a white knight.
OK, thanks for clarifying.
I can't say much at this point, other than you are totally wrong about the notion of some kind of conspiracy between the Marshalls and Dr. Shannon.
Also, I don't know this for a fact, but I strongly doubt that the $200K that Marshall put in to keep the labs functioning for the interim was his own money that had been "squirreled away" over the years.
Rather, there seem to be one or more shareholders - I have no idea who they are - who backed the Ch. 11 filing, and will be shelling out funds to support his bid in the liquidation, if that's where things ultimately end up.
The $200K I think can be counted as part of a bid for purchasing the assets in any liquidation process (someone please correct me if I'm wrong on this). So just regard it as a down payment in an effort to gain control of the assets.