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, 2007

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)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 June 15, 2008, there were 185,883,720 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, 2007

Page

Number

Part I — Financial Information

Item 1 — Financial Statements                    

           Consolidated Balance Sheets:

June 30, 2007 (Unaudited) and December 31, 2006

1

            Consolidated Statements of Operations (Unaudited):

For the Three Months and Six Months Ended June 30, 2007 and 2006

2

Consolidated Statements of Cash Flow (Unaudited)

For the Six Months Ended June 30, 2007 and 2006

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

12

Part II — Other Information

Item 1 — Legal Proceedings

13

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

13

Item 3 — Defaults Upon Senior Securities

13

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

13

Item 5 — Other Information

13

Item 6 — Exhibits

13

Signatures

13

i

PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of our financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Our unaudited balance sheet at June 30, 2007 and our audited balance sheet at December 31, 2006; the related unaudited statements of operations for the three and six month periods ended June 30, 2007 and 2006; and the related unaudited statement of cash flows for the six month periods ended June 30, 2007 and 2006, are attached hereto.

ii

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
			June 30,	December 31,
			2007	2006
			(Unaudited)
CURRENT ASSETS
	Cash		$                                -	$                                 2
		Total Current Assets	-	2
PROPERTY AND EQUIPMENT (Net)			-	-
OTHER ASSETS
	Receivable from affiliate, net		-	-
		Total Other Assets	-	-
		TOTAL ASSETS	$                                -	$                                 2
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
	Accounts payable		$                   706,257	$                    679,852
	Due to shareholders		14,266	14,231
	Stock deposits		110,100	110,100
	Accrued expenses		2,156,775	2,034,068
	Notes payable		280,491	280,491
		Total Current Liabilities	3,267,889	3,118,742
CONTINGENT LIABILITIES			224,852	224,852
		Total Liabilities	3,492,741	3,343,594
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		15,815,781	15,805,487
	Deficit accumulated during the development stage		(19,469,692)	(19,310,249)
		Total Stockholders' Equity (Deficit)	(3,492,741)	(3,343,592)
		TOTAL LIABILITIES AND STOCKHOLDERS'
		EQUITY (DEFICIT)	$                            -	$                                2

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,
	2007	2006	2007	2006	2007
REVENUES	$             -	$             -	$             -	$             -	$       133,349
EXPENSES
Cost of sales	-	-	-	-	103,790
Research and development	-	-	-	-	2,685,788
General and administrative	65,947	71,792	131,916	144,937	14,939,819
Expense on extension of warrants	9,592	-	10,294	-	1,877,151
Bad debt expense	-	-	-	-	48,947
Depreciation and amortization	-	-	-	-	47,996
Total Expenses	71,792	71,792	142,210	144,937	19,703,491
Loss from Operations	(75,539)	(71,792)	(142,210)	(144,937)	(19,570,142)
OTHER INCOME (EXPENSES)
Minority interest in loss	-	-	-	-	26,091
Other income	-	-	-	-	19,780
Gain on sale of subsidiary	-	-	-	-	208,417
Interest expense	(8,619)	(10,589)	(17,233)	(16,503)	(1,048,576)
Total Other Income (Expenses)	(8,619)	(10,589)	(17,233)	(16,503)	(794,288)
LOSS BEFORE EXTRAORDINARY ITEMS	(84,158)	(82,381)	(159,443)	(161,440)	(20,364,430)
EXTRAORDINARY ITEMS
Lawsuit settlement	-	-	-	-	415,000
Debt forgiveness	-	-	-	-	479,738
Total Extraordinary Items	-	-	-	-	894,738
NET LOSS	$   (84,158)	$   (82,381)	$ (159,443)	$ (161,440)	$ (19,469,692)
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,
			2007	2006	2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss			$                  (159,443)	$         (161,440)	$             (19,469,692)
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		10,294	-	1,879,907
	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		26,405	31,778	1,325,639
	Increase (decrease) in accrued expenses		122,707	94,708	2,579,798
		Net Cash Used by Operating Activities	(37)	(34,954)	(10,440,285)
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		35	2,500	36,067
	Payment on shareholder advances		-	-	(16,515)
	Capital contributions		-	-	423,203
	Stock issuance costs		-	-	(105,312)
	Increase in minority interest		-	-	14,470
	Increase in stock deposits		-	39,000	110,100
	Issuance of common stock for cash		-	-	8,674,522
		Net Cash Provided by Financing Activities	35	35,025	10,488,279
NET INCREASE (DECREASE) IN CASH			(2)	71	-
CASH AT BEGINNING OF PERIOD			2	-	-
CASH AT END OF PERIOD			$                                -	$                  71	$                             -

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,
		2007	2006	2007
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 (Unaudited)

June 30, 2007 and December 31, 2006

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, 2006.  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 three months and six months ended June 30, 2007 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,
	2007	2006
Numerator
- Loss before extraordinary items	$             (84,158)	$         (82,381)
- 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)

	For the Six Months Ended June 30,
	2007	2006
Numerator
- Loss before extraordinary items	$             (159,443)	$         (161,440)
- 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

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

June 30, 2007 and December 31, 2006

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, 2007, which have resulted in an accumulated deficit of $19,469,692 at June 30, 2007.  The Company does not have an established source of funds sufficient to cover its operating costs, has a working capital deficit of approximately $3,268,000, 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 Administration (“FDA”) and/o r 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.  

Until mid-March 2008, the Company held the belief that it was about to be funded by a significant investor, which investor was waiting for a significant transaction to close prior to being able to fund the Company.  The Company learned, however, that the significant transaction needed by the investor was being delayed and is not expected to close for a significant period of time.

During April 2008, the Company raised $80,000 through the sale of 8,000,000 restricted shares of common stock at $0.01 per share, which funds are being used to bring the Company current in its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and to pay certain other corporate obligations.  The Company has a verbal commitment from an accredited investor to invest $5,000,000 by purchasing 50,000,000 restricted shares of common stock at $0.10 per share.  This commitment is conditioned upon the Company being current in the filing of its reports under the Exchange Act.  No formal written agreements have been entered into with this investor.  If the Company is unsuccessful in finalizing this transaction, it will most likely be forced to cease operations.  

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 conclude 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.

6

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

June 30, 2007 and December 31, 2006

NOTE 3 -

GOING CONCERN (Continued)

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 inactivated the Company’s IND.  T he 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.”

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.

NOTE 4 -

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 5 -

STOCK DEPOSITS

The Company received a total of $110,100 from two 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 5,463,333 shares of common stock for the $110,100, which shares were eventually issued during May 2008.  Accordingly, the amount is being shown as a stock deposit at June 30, 2007 and December 31, 2006, respectively.

7

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

June 30, 2007 and December 31, 2006

NOTE 6 -

OUTSTANDING WARRANTS AND OPTIONS

On various dates over the past several years up to and including April 11, 2007, the Board of Directors of the Company agreed to extend the expiration date on certain outstanding warrants to purchase common stock to December 31, 2007, (eventually extended through August 31, 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”, 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 warrants.  Because the Company does not pay dividends, the dividend rate variable in the Black-Scholes model is zero.  Under the provisions of SFAS 123, additional expense of $10 ,294 was recorded for the six months ended June 30, 2007 under the Black-Scholes option pricing model for these warrant extensions.  

The Company estimated the fair value of the stock warrants at the date of the maturity extension, based on the following weighted average assumptions:

Risk-free interest rate	4.97%
Expected life	8.5 months
Expected volatility	218.75%
Dividend yield	0.00%

A summary of the status of the Company’s outstanding warrants as of June 30, 2007 and changes during the six months then ended is presented below:

	Shares	Weighted Average Exercise Price
Outstanding, beginning of period	12,234,629	$0.13
Granted (extension of terms)	8,079,629	$0.14
Expired/Canceled	(8,079,629)	$(0.14)
Exercised	-	n/a
Outstanding, end of period	12,234,629	$0.13
Exercisable	12,234,629	$0.13

8

MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES

(A Development Stage Company)

Notes to the Consolidated Financial Statements (Unaudited)

June 30, 2007 and December 31, 2006

NOTE 6 -

OUTSTANDING WARRANTS AND OPTIONS (Continued)

As of June 30, 2007, the following warrants were outstanding:

Warrants	Exercise Price	Termination Dates
1,000,000	$0.20	December 31, 2007
566,666	$0.15	December 31, 2007
555,555	$0.18	December 31, 2007
250,000	$0.55	December 31, 2007
1,250,000	$0.10	December 31, 2007
865,000	$0.05	December 31, 2007
509,075	$0.02	December 31, 2007
83,333	$0.03	December 31, 2007
400,000	$0.02	December 31, 2007
250,000	$0.02	December 31, 2007
400,000	$0.02	December 31, 2007
300,000	$0.02	December 31, 2007
350,000	$0.02	December 31, 2007
300,000	$0.02	December 31, 2007
150,000	$0.02	December 31, 2007
150,000	$0.02	December 31, 2007
450,000	$0.02	December 31, 2007
350,000	$0.02	December 31, 2007
350,000	$0.02	January 4, 2008
400,000	$0.02	January 20, 2008
350,000	$0.02	February 21, 2008
350,000	$0.02	March 16, 2008
250,000	$0.02	April 3, 2008
250,000	$0.02	May 3, 2008
105,000	$0.02	December 11, 2008
2,000,000	$0.40	December 26, 2008

NOTE 7 -

SUBSEQUENT EVENTS

On various dates subsequent to June 30, 2007, up to and including March 26, 2008, the Board of Directors of the Company agreed to extend the expiration date on certain of the outstanding warrants totaling 10,254,629, as described in Note 6, to purchase common stock to August 31, 2008.

On August 27, 2007, the Company’s board of directors approved various stock issuances to the Company’s directors, officers and outside consultants for a total of 11,250,000 shares of common stock, valued at $0.02 per share, the market value of the shares on the date that the shares were approved to be issued.  These shares were eventually issued during May 2008.

During April 2008, the Company received a total of $80,000 to be used to bring the Company current in its filings under the Exchange Act.  The Company issued a total of 8,000,000 shares of common stock to the investor ($0.01 per share) for the $80,000.

9

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, 2007 and 2006

There were no sales during the quarters ended June 30, 2007 or 2006. We made no expenditures for research and development during the quarters ended June 30, 2007 and 2006. 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, 2007, were $65,947 compared to $71,792 during the same period in 2006. 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 several years.

Interest expense accrued during the three months ended June 30, 2007 and 2006 was $8,619 and $10,589, respectively.

Six Months Ended June 30, 2007 and 2006

There were no sales during the six months ended June 30, 2007 or 2006. We made no expenditures for research and development during the six months ended June 30, 2007 and 2006. Since inception we have spent a total of $2,685,788 for research and development.

General and administrative expenses in the six months ended June 30, 2007, were $131,916 compared to $144,937 during the same period in 2006. 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 several years.

Interest expense accrued during the six months ended June 30, 2007 and 2006 was $17,233 and $16,503, respectively.

Liquidity and Capital Resources

At June 30, 2007, we had a working capital deficiency of $3,267,889 and stockholders' deficit of $3,492,741.  At December 31, 2006, we had a working capital deficiency of $3,118,740 and stockholders’ deficit of $3,343,592.

Net cash used in operating activities during the six months ended June 30, 2007 was $37. This was funded from shareholder advances totaling $35 for the six months ended June 30, 2007.  

Given current negative cash flows, it will be difficult for us to continue as a going concern without an influx of significant capital. While we have continued to aggressively pursue potential financing opportunities, those efforts

10

have to date produced only minimal results.  In addition, previously anticipated and announced financing commitments have failed to be fulfilled.  

During April 2008, the Company raised $80,000 through the sale of 8,000,000 restricted shares of common stock at $0.01 per share.  The proceeds from this transaction will be used to pay professional fees and other expenses related to the Company’s reporting obligations with the Securities and Exchange Commission and for general operating expenses.

Our unaudited financial statements included in this Report 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 obtain financing in the near future, we will cease operations.

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 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-KSB for the year ended December 31, 2006 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 state ments. 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.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations are based upon our unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of such statements requires us to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period and the reported amounts of assets and liabilities as of the date of the financial statements. Our estimates are based on historical experience and other assumptions that we consider to be appropriate in the circumstances. However, actual future results may vary from our estimates.

There have been no significant changes during the six months ended June 30, 2007 to the items that we disclosed as our critical accounting policies and estimates in our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006.

Recent Accounting Pronouncements

In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in

11

Income Taxes, an Interpretation of FASB Statement No. 109,” which deals with the accounting for uncertainty in income taxes.  FIN 48 was effective for the fiscal year beginning January 1, 2007.  As a result of our history of operating losses, the effects of FIN 48, if any, will be solely on our income tax-related disclosures and, therefore, we do not expect that it will have a material impact on our financial position, results of operations or cash flows for the immediate future.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 108 (“SAB 108”)  which provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. SAB 108 is effective for us as of January 1, 2007.  We do not expect SAB 108 to have a material impact on our results of operations, financial position, or cash flows.

In September 2006, Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements  (“SFAS 157”), defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. The Company will adopt the provisions of SFAS 157 effective January 1, 2008. We do not expect SFAS 157 to have a material impact on our results of operations, financial position, or cash flows.

In September 2006, SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R) (“SFAS 158”), improves financial reporting by requiring an employer to recognize the over-funded or under-funded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.  SFAS 158 will not have an impact on our results of operations, financial position, or cash flow.

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 (“SFAS 159”), which allows an entity the irrevocable option to elect fair value for the initial and subsequent measurement for certain financial assets and liabilities under an instrument-by-instrument election. Subsequent measurements for the financial assets and liabilities an entity elects to fair value will be recognized in earnings. SFAS 159 also establishes additional disclosure requirements. SFAS 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted provided that the entity also adopts SFAS 157. We have not yet determined the impact this standard will have on our financial statements.

In December 2007, the FASB issued SFAS 141(R), Business Combinations, an Amendment of SFAS 141, which provides additional guidance on business combinations including defining the acquirer, recognizing and measuring the identifiable assets acquired and the liabilities assumed, and any noncontrolling interest in the acquiree.  Also in December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, which amended ARB 51, to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  SFAS Nos. 141(R) and 160 are scheduled to become effective for us for financial statements issued for fiscal year 2009.  We are currently evaluating the effects, if any, that these statements will have on our future financial position, results of operations and operating cash flows.

Item 3.  Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the 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, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), an evaluation was performed under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our management, including our principal executive officer and our principal financial officer, concluded that the design and operation of these disclosure controls and procedures were effective at the reasonable assurance level.

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There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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, 2006.  There were no material developments during the quarter ended June 30, 2007 relative to these pending matters.

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.     Defaults Upon Senior Securities

None.

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

None.

Item 5.      Other Information

None

Item 6.

Exhibits

Exhibit 31.01 - Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.02 - Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.01 - Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.02 - Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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)

June 30, 2008

13

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, 2007;

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: June 30, 2008

/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, 2007;

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: June 30, 2008

/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, 2007, 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: June 30, 2008

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, 2007, 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: June 30, 2008

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.