KALAMAZOO — Medizone International Inc. says it may not continue to operate in its present form following a push by creditors to force the company into involuntary bankruptcy.
The bankruptcy petition filed April 18 in Nevada caused Kalamazoo-based Medizone International to default on $305,000 in unsecured convertible promissory notes issued to investors at the end of January. That’s left the small medical device company — which has been struggling financially — unable to secure the capital its needs to continue, according to a filing today with federal securities regulators.
“Therefore, it is likely that the company, in its present form, will not be able to continue as a going concern,” the firm stated in a filing with the U.S. Securities and Exchange Commission.
Medizone International began in Nevada and relocated its corporate office to Kalamazoo in March 2017. The move coincided with the appointment of David Esposito, a resident of the Kalamazoo area an experienced executive in the life sciences industry, as its chairman. The company also operates a lab in Kingston, Ontario, and has seven full-time and two part-time employees.
The company developed a medical device, known as AsepticSure, to disinfect non-porous surfaces in hospitals, potentially reducing hospital-acquired infections that cause the deaths of thousands of patients in the U.S. each year. The application also has applications in medical labs, biomedical cleanrooms and athletic facilities and on sports equipment.
Medizone International has regulatory approval for AsepticSure in New Zealand, Canada and Chile, and has been testing and gathering data on the device’s performance for an application to the U.S. Food and Drug Administration later this year.
The move to push the company into bankruptcy comes after Medizone International accumulated a deficit of $40 million at the end of 2017, recorded zero revenues for the year, and began 2018 with less than $30,000 in cash. The company recorded net losses of $2 million in 2017 and $2.6 million in 2016, when it had $237,000 in revenues, according to an earlier federal securities filing.
The involuntary bankruptcy petition from creditors includes former Chairman and CEO Jim Marshall and his wife, Dr. Jill Marshall, the company’s former director of operations. The Marshalls both left the company at the end of February 2017.
In a regulatory filing on April 13 to register 10 million shares of common stock for two existing creditors who could re-sell their shares, Medizone International said it had been in arrears since April 2017 in payments to the Marshalls under their severance agreements.
Jim Marshall was to receive $14,000 a month in principal payments, while Jill Marshall was to receive $6,900, according to the filing. At the end of 2017, Medizone International owed $122,500 to Jim Marshall and $55,900 to Jill Marshall in monthly payments.
The involuntary bankruptcy petition, filed April 18, claims Medizone International in total owed $1.1 million under the promissory notes to Jim Marshall and $466,812 to Jill Marshall, plus a combined $35,655 to two other creditors.
In response to the petition, Medizone International said in a news release and today’s regulatory filing that it was “evaluating its options.” The filing also said that the company would not hold its annual shareholders meeting that was scheduled for May 30 in Atlanta, and that Philip Theodore, the executive vice president for operations and administration, general counsel and corporate secretary since November, had submitted a 90-day written notice of his resignation.
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Nevada Bankruptcy Court Case 3:18-bk-50412 - Medizone International
Medizone International Announces Commencement of Involuntary Bankruptcy Proceedings Against the Company
KALAMAZOO, Mich., April 20, 2018 /PRNewswire/
Medizone International, Inc. (OTCQB:MZEI) or Medizone, manufacturer of the AsepticSure® system, today announced that certain creditors of the Company have commenced an involuntary bankruptcy proceeding under Chapter 11 of the United States Bankruptcy Code against the Company. The creditors include Mr. Edwin G. Marshall, the former Chairman and Chief Executive Officer of the Company, and Dr. Jill C. Marshall, the former Director of Operations of the Company. The Company is evaluating its options in light of the involuntary bankruptcy proceeding.
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