10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-QSB

(Mark One)

X

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

TRANSITION REPORT UNDER 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 small business issuer as specified in its charter)

Nevada

87-0412648

(State or other jurisdiction

(IRS Employer Identification No.)

of incorporation or organization)

144 Buena Vista P.O. Box 742 Stinson Beach, CA 94970

(Address of principal executive offices)

(415) 868-0300

(Issuer’s telephone number)

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 [X]    No [ ]

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

At July 31, 2006, there were 161,170,387 shares of the issuer’s common stock issued and outstanding.

Transitional Small Business Disclosure Format (Check one): Yes [  ] No [X]

1

MEDIZONE INTERNATIONAL, INC.

FORM 10-QSB

INDEX

June 30, 2006

Page

Number

Part I — Financial Information

Item 1 — Financial Statements                    

           Consolidated Balance Sheets:

June 30, 2006 (Unaudited) and December 31, 2005

1

            Consolidated Statements of Operations (Unaudited):

For the Three Months and Six Months Ended June 30, 2006 and 2005

2

Consolidated Statements of Cash Flow (Unaudited)

For the Six Months Ended June 30, 2006 and 2005

3

             Notes to the Consolidated Financial Statements

5

Item 2 —Management's Discussion and Analysis or Plan of Operation

10

Item 3 — Controls and Procedures

11

Part II — Other Information

Item 1 — Legal Proceedings

11

Item 2 — Changes in Securities

11

Item 3 — Defaults by the Company on its Senior Securities

12

Item 4 — Submission of Matter to a Vote of Security Holders

12

Item 5 — Other Information

12

Item 6 — Exhibits

12

Signatures

13

i

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
	June 30,	December 31,
	2006	2005
	(Unaudited)
CURRENT ASSETS
Cash	$                        71	$                         -
Total Current Assets	71	-
PROPERTY AND EQUIPMENT (Net)	-	-
OTHER ASSETS
Receivable from affiliate, net	-	-
Total Other Assets	-	-
TOTAL ASSETS	$                        71	$                         -
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$               843,345	$               811,567
Bank overdraft	-	6,475
Due to shareholders	11,181	8,681
Stock deposits	108,000	69,000
Accrued expenses	1,909,768	1,815,060
Notes payable	280,491	280,491
Total Current Liabilities	3,152,785	2,991,274
Total Liabilities	3,152,785	2,991,274
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 250,000,000 shares authorized of
$0.001 par value, 161,170,387 shares issued
and outstanding	161,170	161,170
Additional paid-in capital	15,801,375	15,801,375
Deficit accumulated during the development stage	(19,115,259)	(18,953,819)
Total Stockholders' Equity (Deficit)	(3,152,714)	(2,991,274)
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)	$                        71	$                         -

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

1

MEDIZONE INTERNATIONAL, INC., AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
					From Inception
	For the		For the		on January 31,
	Three Months Ended		Six Months Ended		1986 Through
	June 30,		June 30,		June 30,
	2006	2005	2006	2005	2006
REVENUES	$             -	$             -	$             -	$             -	$       133,349
EXPENSES
Cost of sales	-	-	-	-	103,790
Research and development	-	-	-	-	2,685,788
General and administrative	71,792	84,567	144,937	153,004	14,640,242
Expense on extension of warrants	-	-	-	-	1,866,857
Bad debt expense	-	-	-	-	48,947
Depreciation and amortization	-	-	-	-	47,996
Total Expenses	71,792	84,567	144,937	153,004	19,393,620
Loss from Operations	(71,792)	(84,567)	(144,937)	(153,004)	(19,260,271)
OTHER INCOME (EXPENSES)
Minority interest in loss	-	-	-	-	26,091
Other income	-	-	-	-	19,780
Gain on sale of subsidiary	-	-	-	-	208,417
Interest expense	(10,589)	(5,914)	(16,503)	(11,828)	(1,004,014)
Total Other Income (Expenses)	(10,589)	(5,914)	(16,503)	(11,828)	(749,726)
LOSS BEFORE EXTRAORDINARY ITEMS	(82,381)	(90,481)	(161,440)	(164,832)	(20,009,997)
EXTRAORDINARY ITEMS
Lawsuit settlement	-	-	-	-	415,000
Debt forgiveness	-	-	-	-	479,738
Total Extraordinary Items	-	-	-	-	894,738
NET LOSS	$   (82,381)	$   (90,481)	$ (161,440)	$ (164,832)	$ (19,115,259)
BASIC LOSS PER SHARE	$       (0.00)	$       (0.00)	$       (0.00)	$       (0.00)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING	161,170,387	161,170,387	161,170,387	161,170,387

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

2

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
			From Inception
			on January 31,
	For the Six Months Ended		1986 Through
	June 30,		June 30,
	2006	2005	2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$    (161,440)	$      (164,832)	$    (19,115,259)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization	-	-	47,996
Stock issued for services	-	-	3,131,916
Expense for extension of warrants below
market value	-	-	1,866,857
Bad debt expense	-	-	48,947
Minority interest in loss	-	-	(26,091)
Loss on disposal of assets	-	-	693,752
Gain on settlement of debt	-	-	(188,510)
Gain on lawsuit settlement	-	-	(415,000)
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses
and deposits	-	-	(48,947)
Increase (decrease) in accounts payable	31,778	45,776	1,237,875
Increase (decrease) in accrued expenses	94,708	110,507	2,332,791
Net Cash Used by Operating Activities	(34,954)	(8,549)	(10,433,673)
CASH FLOWS FROM INVESTING ACTIVITIES:
Organization costs	-	-	(8,904)
Purchase of fixed assets	-	-	(39,090)
Net Cash Used by Investing Activities	-	-	(47,994)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft	(6,475)	-	-
Proceeds from lawsuit settlement	-	-	415,000
Principal payments on notes payable	-	-	(192,774)
Cash received from notes payable	-	-	1,129,518
Advances from shareholders	2,500	2,011	32,982
Payment on shareholder advances	-	(8,679)	(16,515)
Capital contributions	-	-	421,847
Stock issuance costs	-	-	(105,312)
Increase in minority interest	-	-	14,470
Increase in stock deposits	39,000	15,000	108,000
Issuance of common stock for cash	-	-	8,674,522
Net Cash Provided by Financing Activities	$           35,025	$                 8,332	$        10,481,738

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

3

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
			From Inception
			on January 31,
	For the Six Months Ended		1986 Through
	June 30,		June 30,
	2006	2005	2006
NET INCREASE (DECREASE) IN CASH	$               71	$           (217)	$                   71
CASH AT BEGINNING OF PERIOD	-	250	-
CASH AT END OF PERIOD	$               71	$               33	$                   71
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR:
Interest	$                -	$                -	$            26,483
Income taxes	$                -	$                -	$                    -
NON-CASH FINANCING ACTIVITIES
Stock issued for services	$                -	$                -	$       3,131,916
Stock issued for conversion of debt	$                -	$                -	$       4,139,230
Stock issued for license agreement	$                -	$                -	$          693,752

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

4

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2006 and December 31, 2005

NOTE 1 -

BASIS OF PRESENTATION

The financial information included herein is unaudited and has been prepared consistent with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.  Accordingly, these financial statements do not include all information and footnotes required by generally accepted accounting principles for complete financial statements.  These statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s annual report on Form 10-KSB for the year ended December 31, 2005.  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 statement of results for the interim period presented.

The results of operations for the six months ended June 30, 2006 are not necessarily indicative of the results to be expected for the full year.

NOTE 2 -

LOSS PER SHARE

The computations of basic loss per share of common stock are based on the weighted average number of common shares outstanding during the period of the consolidated financial statements as follows:

	For the Three Months Ended June 30,
	2006	2005
Numerator
- Loss before extraordinary items	$             (82,381)	$         (90,481)
- Extraordinary items	-	-
Denominator (weighted average number of shares outstanding)	161,170,387	161,170,387
Basic Income (loss) per share
- Before extraordinary items	$                  (0.00)	$              (0.00)
- Extraordinary items	0.00	0.00
Basic Income (Loss) Per Share	$                  (0.00)	$              (0.00)

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2006 and December 31, 2005

NOTE 2 -

LOSS PER SHARE (Continued)

	For the Six Months Ended June 30,
	2006	2005
Numerator
- Loss before extraordinary items	$             (161,440)	$         (164,832)
- Extraordinary items	-	-
Denominator (weighted average number of shares outstanding)	161,170,387	161,170,387
Basic Income (loss) per share
- Before extraordinary items	$                  (0.00)	$              (0.00)
- Extraordinary items	0.00	0.00
Basic Income (Loss) Per Share	$                  (0.00)	$              (0.00)

Common stock equivalents, consisting of warrants and options, have not been included in the calculation as their effect is antidilutive for the periods presented.

5

NOTE 3 -

GOING CONCERN

The Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which 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 June 30, 2006, which have resulted in an accumulated deficit of $19,115,259 at June 30, 2006.  The Company does not have an established source of funds sufficient to cover its operating costs, has a working capital deficit of approximately $3,152,000, and has relied exclusively on debt and equity financing.  Accordingly, there is substantial doubt about its ability to continue as a going concern.  Continuation of the Company as a going concern is dependent upon obtaining additional capital, obtaining the requisite approvals from the Food and Drug Admi nistration (“FDA”) and/or the European Union for the marketing of ozone-related products and equipment, and ultimately, upon the Company’s attaining profitable operations.  The Company will require a substantial amount of additional funds to complete the development of its products, to establish manufacturing facilities, to build a sales and marketing organization, and to fund additional losses, which the Company expects to incur over the next several years.  However, if the Company is unsuccessful in raising necessary capital, it will most likely be forced to cease operations.

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2006 and December 31, 2005

NOTE 3 -

GOING CONCERN (Continued)

Because ozone-generation for the purposes of interfacing with blood and blood products is regarded as a new drug delivery system, the Company is precluded from selling or distributing its drug or the Company’s proprietary technology (the “Medizone Technology”) in the United States until after FDA approval has been granted.  In order to obtain FDA approval, the Company will be required to submit a New Drug Application (“NDA”) for review by the FDA and provide medical and scientific evidence sufficient to demonstrate that the drug and the Medizone Technology have been successfully used in pre-clinical studies followed by three phases of well-controlled clinical studies using human volunteer subjects.  The FDA will not grant an NDA unless the application contains sufficient medical evidence and data to permit a body of qualified and experienced scientists to conclu de that the new drug product is safe and effective for its recommended and proposed medical uses.  Historically, the FDA has held a strong bias against treating humans with ozone, due largely to issues of safety.

In order to initiate the first phase (i.e., Phase I) of human clinical trials required as part of an NDA, an applicant must submit to the FDA an application for an Investigational New Drug Exemption (“IND”), which contains adequate information to satisfy the FDA that human clinical trials can be conducted without exposing the volunteer human subjects to an unreasonable risk of illness or injury.  The Company submitted an IND application (assigned to the Company by its former president) to the FDA on October 6, 1985, and requested FDA approval to commence human clinical trials using ozone-oxygen to inactivate HIV.  The FDA deemed the IND application to be incomplete, and required the Company to conduct additional animal studies prior to commencing a large animal study and human trials.  In September 1994, after not receiving responses to requests for information from the Company, the FDA inactivat ed the Company’s IND.  The Company has no present plans to commence a large animal study, which would require, as a precursor, additional small animal and laboratory work.  Accordingly, there can be no assurance that the Company’s IND application will ever be reopened.  Until an NDA has been granted to the Company, it may not distribute ozone-generating devices in the United States, except to researchers who agree to follow FDA guidelines, and provided the devices are labeled as “Investigational Devices.”

6

Because ozone has been used to treat humans in Europe for at least 30 years, the EU is more accepting of human clinical trials of ozone therapies being conducted than is the United States.  Accordingly, management believes that the Company should pursue the option of conducting human clinical trials in Europe, using stringent protocols that will meet EU standards, with a view to utilizing the results of such trials in an effort to obtain EU approval, to market the product in Europe and to reopen the Company’s FDA file.  The Company estimates that 90% of its potential market is outside the United States.

The management of the Company intends to seek additional funding which will be utilized to fund additional research and continue operations.  The Company recognizes that if it is unable to raise additional capital, it may find it necessary to substantially reduce or cease operations.

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 these uncertainties.

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2006 and December 31, 2005

7

NOTE 4 -

OUTSTANDING WARRANTS AND OPTIONS

At various dates during 2006, the Board of Directors of the Company agreed to extend the expiration date on certain outstanding warrants and options to purchase common stock.  At June 30, 2006, the following warrants were outstanding:

Warrants	Exercise Price	Termination Dates
750,000	$0.20	October 2, 2006
250,000	$0.20	October 2, 2006
400,000	$0.15	October 2, 2006
166,666	$0.15	October 2, 2006
555,555	$0.18	October 2, 2006
250,000	$0.55	October 2, 2006
1,000,000	$0.10	October 2, 2006
250,000	$0.10	October 2, 2006
400,000	$0.05	October 2, 2006
100,000	$0.05	October 2, 2006
165,000	$0.05	October 2, 2006
200,000	$0.05	October 2, 2006
2,000,000	$0.40	December 26, 2008
409,075	$0.02	October 2, 2006
125,000	$0.02	August 23, 2006
83,333	$0.03	November 12, 2006
100,000	$0.02	April 28, 2007
400,000	$0.02	June 8, 2007
250,000	$0.02	June 16, 2007
400,000	$0.02	July 22, 2007
300,000	$0.02	August 9, 2007
350,000	$0.02	August 24, 2007
300,000	$0.02	Sept. 21, 2007
150,000	$0.02	Sept. 28, 2007
150,000	$0.02	October 21, 2007
450,000	$0.02	November 11, 2007
350,000	$0.02	December 14, 2007
350,000	$0.02	January 4, 2008
400,000	$0.02	January 20, 2008
350,000	$0.02	February 21, 2006
350,000	$0.02	March 16, 2008
250,000	$0.02	April 3, 2008
250,000	$0.02	May 3, 2008

The Company estimates the fair value of each stock award or expiration extension at the grant date or extension date by using the Black-Scholes option pricing model pursuant to FASB Statement 123, “Accounting for Stock-Based Compensation”.  Under the provisions of SFAS 123, no additional expense was recorded at the various dates under the Black-Scholes option pricing model for these warrant and option extensions.

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements

June 30, 2006 and December 31, 2005

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 financial position, results of operations, or cash flows.

NOTE 6 -

STOCK DEPOSITS

The Company has received a total of $108,000 from two separate directors during 2004, 2005 and 2006, the proceeds of which will be used to purchase shares of the Company’s common stock.  The Board of Directors of the Company has approved the issuance of a total of 5,358,333 shares of common stock for the $108,000, although the shares have not been issued as of the date of these financial statements.  Accordingly, the amount is being shown as a stock deposit at June 30, 2006 until the shares are issued to the directors.

8

Item 2.  Management's Discussion and Analysis or Plan of Operation

The following discussion and analysis of financial condition or plan of operation should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this Quarterly Report on Form 10-QSB.

Medizone International, Inc., a Nevada corporation (“Medizone”), organized in 1986, is a development stage company.  To date our principal business has been limited to (i) seeking regulatory approval of a precise mixture of ozone and oxygen called MEDIZONE® (sometimes referred to in this report as the "Drug"), and our process of inactivating lipid enveloped viruses for the intended purpose of decontaminating blood and blood products and assisting in the treatment of certain diseases; and (ii) developing or acquiring the related technology and equipment for the medical application of our products, including our drug production and delivery system (the “Medizone Technology").  

The Drug is intended to be used as a therapeutic drug in humans to inactivate certain viruses, and thereby afford a treatment for certain viral diseases including Human Immunodeficiency Virus (the AIDS-related virus), Hepatitis B, Hepatitis C, Epstein-Barr, herpes, and cytomegalovirus, and to decontaminate blood and blood products.

Results of Operations

From its inception in January 1986, Medizone International has been a development stage company primarily engaged in research into the medical uses of ozone. We have not generated, and cannot predict when or if we will generate, revenues or sufficient cash flow to fund our continuing 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 United States bankruptcy laws.

Three Months Ended June 30, 2006 and 2005

There were no sales during the quarters ended June 30, 2006 or 2005. We made no expenditures for research and development during the quarters ended June 30, 2006 and 2005. Since inception we have spent a total of $2,685,788 for research and development.

General and administrative expenses in the quarter ended June 30, 2006, were $71,792 compared to $84,567 during the same period in 2005. These expenses include professional fees, payroll, insurance costs, and travel expenses.  Our lack of cash has prevented us from paying all accrued salary and other expenses during the last five years.

Interest expense accrued during the three months ended June 30, 2006 and 2005 was $10,589 and $5,914, respectively.

Six Months Ended June 30, 2006 and 2005

There were no sales during the six months ended June 30, 2006 or 2005. We made no expenditures for research and development during the six months ended June 30, 2006 and 2005. Since inception we have spent a total of $2,685,788 for research and development.

General and administrative expenses for the six months ended June 30, 2006, were $144,937 compared to $153,004 during the same period in 2005. These expenses include professional fees, payroll, insurance costs, and travel expenses.  Our lack of cash has prevented us from paying all accrued salary and other expenses during the last five years.

Interest expense accrued during the six months ended June 30, 2006 and 2005 was $16,503 and $11,828, respectively.

Liquidity and Capital Resources

At June 30, 2006, we had a working capital deficiency of $3,152,714 and stockholders' deficit of $3,152,714.  At December 31, 2005, we had a working capital deficiency of $2,991,274 and stockholders’ deficit of $2,991,274.

Net cash used in operating activities during the six months ended June 30, 2006 was $34,954. This was funded from stock deposits totaling $39,000 and advances from shareholders totaling $2,500 for the six months ended June 30, 2006.  

Given current negative cash flows, it will be difficult for us to continue as a going concern without an influx of capital. While we continue to aggressively pursue potential financing opportunities, those efforts have to date produced only minimal results.  Previously anticipated and announced financing commitments have failed to be fulfilled and we have no assurance that financing will be obtained.

Our audited financial statements included in our annual report on Form 10-KSB for the year ended December 31, 2005 have been prepared on the assumption that we will continue as a going concern. Through the date of his Report, it has been necessary to rely 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, we will be required to discontinue operations. 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 result in immediate and possibly substantial dilution to existing shareholders. If we fail to receive financing in the near future, we will cease operations.

9

Forward-Looking Statements and Risks Affecting the Company

The statements contained in this Report on Form 10-QSB that are not purely 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. These statements regard our expectations, hopes, beliefs, anticipations, commitments, intentions and strategies regarding the future. They may be identified by the use of the words or phrases "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 or Plan of Operation regarding our financial performance, revenue and expense levels in the future and the sufficiency of existing assets to fund future operations and capital spending needs. Actual results could di ffer 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-KSB for the year ended December 31, 2004 under the headings "Description of Business" and "Risk Factors." The fact that some of the risk factors may be the same or similar to past reports filed with the Securities and Exchange Commission means only that the risks are present in multiple periods. We believe that many of the risks detailed here and in our SEC filings are part of doing business in the industry in which we operate and compete 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 stateme nts. 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 ability to obtain needed financing.

Item 3.    Controls and Procedures

Our principal executive and principal financial officers have participated with management in the evaluation of effectiveness of the controls and procedures required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act as of the end of the period covered by this report.  Based on that evaluation, our principal executive and principal financial officers believe that our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) are effective as of the end of the period covered by the report.  There have been no changes in our internal controls that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting during the period covered by this report.

Part II — Other Information

Item 1.     Legal Proceedings

Refer to the summaries of certain pending litigation against the Company contained in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2005.  There were no material developments during the quarter ended June 30, 2006 relative to these pending matters.

Item 2.

  Changes in Securities

None.

Item 3.     Defaults by the Company on its Senior Securities

None.

Item 4.      Submission of Matters to a Vote of Security Holders

None.

Item 5.      Other Information

None

10

Item 6.

Exhibits

(a)

Exhibits.  The following exhibits are filed herewith pursuant to Rule 601 of Regulation S-B or are incorporated by reference to previous filings.

Exhibit #    

Description

2

Agreement and Plan of Reorganization dated March 12, 1986 ⁽²⁾

3.1

Articles of Incorporation of Company ⁽²⁾

3.2

Bylaws ⁽²⁾

3.3

Articles of Amendment to Company's Articles of Incorporation ⁽³⁾

10.1

Loan agreement with Messrs. McGrath and Watrous dated as of November 16, 1992 ⁽⁴⁾

10.2

Loan Agreements between Medizone and John Kells, George Handel and John Pealer, executed as of June 11, 1993 (and promissory notes) ⁽⁴⁾

10.3

Agreement for Sale and Purchase of Shares in Medizone New Zealand Limited between Richard G. Solomon and Medizone International, Inc., dated June 22, 1995 ⁽⁵⁾

10.4

Shareholders' Agreement relating to Medizone New Zealand Limited between and among Solwin Investments Limited, Medizone International, Inc. and Medizone New Zealand Limited, dated June 22, 1995 ⁽⁵⁾

10.5

Licensing Agreement between Medizone International, Inc. and MNZ, dated June 22, 1995 ⁽⁵⁾

10.6

Managing Agent Agreement between Medizone International, Inc. and Medizone New Zealand Limited, dated June 22, 1995 ⁽⁵⁾

10.7

Funding commitment letter from Groundell Trust ⁽⁶⁾

10.8

Letter re: change in certifying accountants ⁽⁶⁾

31.1

Certification of President and Chief Executive Officer under Section 302 of Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer under Section 302 of Sarbanes-Oxley Act of 2002

32

Certification under Section 906 of Sarbanes-Oxley Act of 2002

(1)

Incorporated by reference to annual report on form 10-K for the year ended December 31, 1998.

(2)

Incorporated by reference to registration statement on Form S-18 (Registration No. 2-93277-D), effective May 14, 1985.

(3)

Incorporated by reference to annual report on Form 10-K for the period ended December 31, 1986.

(4)

Incorporated by reference to annual report on Form 10-K for the period ended December 31, 1992.

(5)

Incorporated by reference to current report on Form 8-K, dated June 22, 1995.

(6)

Incorporated by reference to annual report on Form 10-KSB for the period ended December 31, 2001.

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/ Steve M. Hanni

Steve M. Hanni, Chief Financial Officer

(Principal Accounting Officer)

August 17, 2006

11

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Edwin G. Marshall, certify that:

1. I have reviewed this quarterly report of Medizone International, Inc. for the quarter ended June 30, 2006;

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 small business issuer as of, and for, the periods presented in this report;

4. The small business issuer=s other certifying officer 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)) for the small business issuer 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 small business issuer, 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) evaluated the effectiveness of the small business issuer=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; and

 (c) disclosed in this report any change in the small business issuer=s internal control over financial reporting that occurred during the small business issuer=s most recent fiscal quarter (the small business issuer=s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer=s internal control over financial reporting; and

5. The small business issuer=s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer=s auditors and the audit committee of the small business issuer=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 small business issuer=s ability to record, process, summarize and report financial information; and

 (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer=s internal control over financial reporting.

Date: August 17, 2006

/s/Edwin G. Marshall

Edwin G. Marshall, Principal Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Steve M. Hanni, certify that:

1. I have reviewed this quarterly report of Medizone International, Inc. for the quarter ended June 30, 2006;

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 small business issuer as of, and for, the periods presented in this report;

4. The small business issuer=s other certifying officer 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)) for the small business issuer 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 small business issuer, 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) evaluated the effectiveness of the small business issuer=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; and

 (c) disclosed in this report any change in the small business issuer=s internal control over financial reporting that occurred during the small business issuer=s most recent fiscal quarter (the small business issuer=s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer=s internal control over financial reporting; and

5. The small business issuer=s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer=s auditors and the audit committee of the small business issuer=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 small business issuer=s ability to record, process, summarize and report financial information; and

 (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer=s internal control over financial reporting.

Date: August 17, 2006

/s/Steve M. Hanni

Steve M. Hanni, Principal Financial Officer

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Medizone International, Inc. (the ACompany@) on Form 10-QSB for the quarter ended June 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the AReport@), I, Edwin G. Marshall, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Edwin G. Marshall

Edwin G. Marshall, Principal Executive Officer

Date: August 17, 2006

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Medizone International, Inc. (the ACompany@) on Form 10-QSB for the quarter ended June 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the AReport@), I, Steve M. Hanni, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 (2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Steve M. Hanni

Steve M. Hanni, Principal Financial Officer

Date: August 17, 2006

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.