UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549  FORM 10-Q  (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended September 30, 2008   TRANSITION REPORT PURSUANT TO 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 registrant 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, Zip Code)  (415) 868-0300 (Registrants telephone number, including area code)   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 large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).  See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]  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 October 31, 2008, there were 195,592,795 shares of the issuers common stock issued and outstanding.   i   MEDIZONE INTERNATIONAL, INC. FORM 10-Q   INDEX September 30, 2008   Page Number  Part I  Financial Information  Item 1  Financial Statements  Consolidated Balance Sheets: September 30, 2008 (Unaudited) and December 31, 2007 1  Consolidated Statements of Operations (Unaudited): For the Three Months and Nine Months Ended September 30, 2008 and 2007 2  Consolidated Statements of Cash Flow (Unaudited) For the Nine Months Ended September 30, 2008 and 2007 3  Notes to the Consolidated Financial Statements 5  Item 2  Management's Discussion and Analysis of Financial Condition and Results of Operations 11  Item 3  Quantitative and Qualitative Disclosures About Market Risk 13  Item 4  Controls and Procedures 14  Part II  Other Information Item 1  Legal Proceedings 14  Item 1A  Risk Factors 14  Item 2  Unregistered Sales of Equity Securities and Use of Proceeds 14  Item 5  Other Information 14  Item 6  Exhibits 15  Signatures 15               ii     PART I - FINANCIAL INFORMATION  ITEM 1.  FINANCIAL STATEMENTS  The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q 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 September 30, 2008 and our audited balance sheet at December 31, 2007; the related unaudited statements of operations for the three month and nine months periods ended September 30, 2008 and 2007; and the related unaudited statements of cash flows for the nine month periods ended September 30, 2008 and 2007, are attached hereto.     iii


MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES(A Development Stage Company)Consolidated Balance SheetsASSETSSeptember 30,December 31,20082007(Unaudited)CURRENT ASSETSCash$11,193$-Deferred consulting fees152,500-Total Current Assets163,693-PROPERTY AND EQUIPMENT (Net)3,936-TOTAL ASSETS$167,629$-LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable$753,167$733,808Due to shareholders9,61615,266Stock deposits-110,100Accrued expenses2,397,9872,500,787Loan payable10,000-Notes payable280,491280,491Total Current Liabilities3,451,2613,640,452CONTINGENT LIABILITIES224,852224,852Total Liabilities3,676,1133,865,304STOCKHOLDERS' EQUITY (DEFICIT)Common stock, 250,000,000 shares authorized of $0.001par value, 195,592,795 and 161,170,387 shares issuedand outstanding, respectively195,593161,170Additional paid-in capital16,591,04515,836,224Deficit accumulated during the development stage(20,295,122)(19,862,698)Total Stockholders' Equity (Deficit)(3,508,484)(3,865,304)TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT)$167,629$-  The accompanying notes are an integral part of these consolidated financial statements.


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MEDIZONE INTERNATIONAL, INC., AND SUBSIDIARIES(A Development Stage Company)Consolidated Statements of Operations(Unaudited)From InceptionFor theFor theon January 31,Three Months EndedNine Months Ended1986 ThroughSeptember 30,September 30,September 30,20082007200820072008REVENUES$-$-$-$-$133,349EXPENSESCost of sales----103,790Research and development----2,685,788General and administrative186,870290,080342,889421,99615,634,137Expense on extension of warrants--64,96210,2941,965,312Bad debt expense----48,947Depreciation and amortization129-129-48,125Total Expenses186,999290,080407,980432,29020,486,099Loss from Operations(186,999)(290,080)(407,980)(432,290)(20,352,750)OTHER INCOME (EXPENSES)Minority interest in loss----26,091Other income----19,780Gain on sale of subsidiary----208,417Interest expense(5,914)(8,623)(24,444)(25,856)(1,091,398)Total Other Income (Expenses)(5,914)(8,623)(24,444)(25,856)(837,110)LOSS BEFORE EXTRAORDINARY ITEMS(192,913)(298,703)(432,424)(458,146)(21,189,860)EXTRAORDINARY ITEMSLawsuit settlement----415,000Debt forgiveness----479,738Total Extraordinary Items----894,738NET LOSS$(192,913)$(298,703)$(432,424)$(458,146)$(20,295,122)BASIC LOSS PER SHARE$(0.00)$(0.00)$(0.00)$(0.00)WEIGHTED AVERAGE NUMBER OFCOMMON SHARES OUTSTANDING189,527,578161,170,387175,183,560161,170,387     The accompanying notes are an integral part of these consolidated financial statements.


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES(A Development Stage Company)Consolidated Statements of Cash Flows(Unaudited)From Inceptionon January 31,For the Nine Months Ended1986 ThroughSeptember 30,September 30,200820072008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss$(432,424)$(458,146)$(20,295,122)Adjustments to reconcile net loss to net cashused in operating activities:Depreciation and amortization129-48,125Stock issued for services49,500-3,181,416Expense for extension of warrants belowmarket value64,96210,2941,965,312Bad debt expense--48,947Minority interest in loss--(26,091)Loss on disposal of assets--693,752Gain on settlement of debt--(188,510)Gain on lawsuit settlement--(415,000)Changes in assets and liabilities:(Increase) decrease in prepaid expensesand deposits--(48,947)Increase (decrease) in accounts payable19,35939,6151,372,549Increase (decrease) in accrued expenses122,200407,2003,046,010Net Cash Used by Operating Activities(176,274)(1,037)(10,617,559)CASH FLOWS FROM INVESTING ACTIVITIES:Organization costs--(8,904)Purchase of fixed assets(4,065)-(43,155)Net Cash Used by Investing Activities(4,065)-(52,059)CASH FLOWS FROM FINANCING ACTIVITIES:Bank overdraft---Proceeds from lawsuit settlement--415,000Principal payments on notes payable--(192,774)Cash received from notes payable--1,129,518Advances from shareholders7,5911,03544,658Payment on shareholder advances(5,059)-(21,574)Cash received from loans payable10,00010,000Capital contributions--423,203Stock issuance costs--(105,312)Increase in minority interest--14,470Issuance of common stock for cash179,000-8,963,622Net Cash Provided by Financing Activities191,5321,03510,680,811NET INCREASE IN CASH11,193(2)11,193CASH AT BEGINNING OF PERIOD-2-CASH AT END OF PERIOD$11,193$-$11,193  The accompanying notes are an integral part of these consolidated financial statements.


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES(A Development Stage Company)Consolidated Statements of Cash Flows (Continued)(Unaudited)From Inceptionon January 31,For the Nine Months Ended1986 ThroughSeptember 30,Sept. 30,200820072008SUPPLEMENTAL CASH FLOW INFORMATIONCASH PAID FOR:Interest$-$-$26,483Income taxes$-$-$-NON-CASH FINANCING ACTIVITIESStock issued for services$49,500$-$3,181,416Stock issued for prepaid consulting fees$152,500$$152,500Stock issued for conversion of debt$233,182$-$4,372,412Stock issued for license agreement$-$-$693,752           The accompanying notes are an integral part of these consolidated financial statements.


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements (Unaudited) September 30, 2008 and December 31, 2007  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-Q and Article 10 of Regulation S-X.  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, 2007.  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 nine months ended September 30, 2008 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 September 30,20082007Numerator- Loss before extraordinary items$            (192,913)$         (298,703)- Extraordinary items--Denominator (weighted average number of shares outstanding)189,527,578161,170,387Basic Income (loss) per share- Before extraordinary items$                  (0.00)$              (0.00)- Extraordinary items0.000.00Basic Income (Loss) Per Share$                  (0.00)$              (0.00)  For the Nine Months Ended September 30,20082007Numerator- Loss before extraordinary items$            (432,424)$         (458,146)- Extraordinary items--Denominator (weighted average number of shares outstanding)175,183,560161,170,387Basic Income (loss) per share- Before extraordinary items$                  (0.00)$              (0.00)- Extraordinary items0.000.00Basic 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.


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements (Unaudited) September 30, 2008 and December 31, 2007  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 September 30, 2008, which have resulted in an accumulated deficit of $20,295,122 at September 30, 2008.  The Company does not have an established source of funds sufficient to cover its operating costs, has a working capital deficit of approximately $3,290,000, 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/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.  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 2008, the Company has raised a total of $179,000 through the sale of 11,300,000 restricted shares of common stock at prices ranging from $0.01 to $0.03 per share, which funds have been 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 including the initial costs of development for its hospital sterilization initiative.  The Company is currently working on possible additional funding sources.  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, which is expected to be received in January 2009 due to short-term liquidity considerations of the investor.  No formal written agreements have been entered into with this investor, however.  If the Company is unsuccessful in finalizing additional funding, 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.  However, the Companys hospital sterilization initiative falls outside of the regulatory requirements of the FDA since it is not a drug, therapy or medical device.  The initiative will be based on sound engineering and laboratory and hospital trials.  Assuming funds become available, the Company currently believes that this technology will be fully tested and ready for manufacture during late 2009.


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements (Unaudited) September 30, 2008 and December 31, 2007  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.  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.  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.  Recently, the Company is pursuing the development of a novel ozone-based technology which will offer a safe, inexpensive means of disinfecting medical facilities of all bacteria, fungi and viruses known to cause hospital derived infections.  Since this technology is not considered a medical treatment or a diagnostic, its developmental pathway will not be subject to regulatory review or the requirement for a lengthy clinical trial process.  The Company hopes to commercialize this technology during the fourth quarter of 2009, which if successful, may provide the necessary revenue to fund additional advanced efforts with this technology for bio-terrorism counter measures, as well as other projects that the Company is working on, as previously discussed.   The development time table is contingent upon acquiring the required on-going funding for this project, which at the date of this report, has not been secured.  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.


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements (Unaudited) September 30, 2008 and December 31, 2007  NOTE 5 - OUTSTANDING WARRANTS AND OPTIONS  On various dates over the past several years up to and including October 23, 2008, the Board of Directors of the Company agreed to extend the expiration date on certain outstanding warrants to purchase common stock to March 31, 2009.  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 $64,962 and $10,294 was recorded for the nine months ended September 30, 2008 and 2007, respectively, 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 rate1.48% - 2.25%Expected life3 to 5 monthsExpected volatility202.94% - 220.08%Dividend yield0.00%  A summary of the status of the Companys outstanding warrants as of September 30, 2008 and changes during the nine months then ended is presented below:  SharesWeighted Average Exercise PriceOutstanding, beginning of period12,484,629$0.13Granted (extension of terms)30,763,887$0.14Expired/Canceled(30,638,887)$(0.14)Exercised-n/aOutstanding, end of period12,609,629$0.13Exercisable12,609,629$0.13


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements (Unaudited) September 30, 2008 and December 31, 2007  NOTE 5 - OUTSTANDING WARRANTS AND OPTIONS (Continued)  As of September 30, 2008, the following warrants were outstanding:  WarrantsExercise PriceTermination Dates1,000,000$0.20October 31, 2008566,666$0.15October 31, 2008555,555$0.18October 31, 2008250,000$0.55October 31, 20081,250,000$0.10October 31, 2008865,000$0.05October 31, 2008509,075$0.02October 31, 200883,333$0.03October 31, 2008400,000$0.02October 31, 2008250,000$0.02October 31, 2008250,000$0.02October 31, 2008400,000$0.02October 31, 2008300,000$0.02October 31, 2008350,000$0.02October 31, 2008300,000$0.02October 31, 2008150,000$0.02October 31, 2008150,000$0.02October 31, 2008450,000$0.02October 31, 2008350,000$0.02October 31, 2008350,000$0.02October 31, 2008400,000$0.02October 31, 2008350,000$0.02October 31, 2008350,000$0.02October 31, 2008250,000$0.02October 31, 2008250,000$0.02October 31, 2008125,000$0.02October 31, 2008105,000$0.02December 11, 20082,000,000$0.40December 26, 2008  NOTE 6 - STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS During 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 or $225,000, 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. Also during May 2008, the Company issued 8,000,000 shares of common stock for cash proceeds received during March and April 2008 totaling $80,000, or $0.01 per share. In addition, during May 2008, a total of 5,463,333 shares of restricted common stock were issued for cash proceeds previously received during 2004, 2005 and 2006 (previously recorded as stock deposits) totaling $110,100.  An additional 409,075 shares of common stock were issued to a Company director in repayment of a $2,500 loan previously received by the Company in a prior year. During July and September 2008, the Company issued an additional 3,300,000 shares of common stock for cash proceeds of $99,000, or $0.03 per share.


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MEDIZONE INTERNATIONAL, INC. AND SUBSIDIARIES (A Development Stage Company) Notes to the Consolidated Financial Statements (Unaudited) September 30, 2008 and December 31, 2007  NOTE 6 - STOCK TRANSACTIONS AND SIGNIFICANT CONTRACTS (Continued) Effective September 2, 2008, the Companys board of directors approved the issuance of a total of 1,000,000 restricted shares to be issued to a public relations firm, for public relations and corporate communications services to be rendered valued at $42,000, or $0.042 per share, which represented the market value of the shares on the date that the shares were approved to be issued.  The consulting agreement is based on a one-year term, the shares will vest in equal increments, and the consulting expense will be recognized over the same period.  $3,500 of the $42,000 consulting expense was recognized for the period ended September 30, 2008, with the remaining $38,500 recorded as deferred consulting fees, to be recognized over the remaining eleven month period at $3,500 per month. Effective September 15, 2008, the Companys board of directors approved the issuance of a total of 1,000,000 restricted shares to be issued to a strategic management consulting firm for services rendered valued at $40,000, or $0.04 per share, which represented the market value of the shares on the date that the shares were approved to be issued. Effective September 19, 2008, the Companys board of directors approved the issuance of a total of 4,000,000 free-trading shares to be issued to two individuals for management consulting services to be rendered valued at $120,000, or $0.03 per share, which represented the market value of the shares on the date that the shares were approved to be issued.  The consulting agreements are based on a four-month term, the shares will vest in equal increments, and the consulting expense will be recognized over the same period.  $6,000 of the $120,000 consulting expense was recognized for the period ended September 30, 2008, with the remaining $114,000 recorded as deferred consulting fees, to be recognized over the remaining approximate three-and-a-half month period at $30,000 per month. Total deferred consulting fees related to the above mentioned agreements as of September 30, 2008 was $152,500 which will be recognized over the subsequent periods as previously discussed.


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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. 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 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 September 30, 2008 and 2007 There were no sales during the quarters ended September 30, 2008 or 2007. We made no expenditures for research and development during the quarters ended September 30, 2008 and 2007. Since inception we have spent a total of $2,685,788 for research and development. General and administrative expenses in the quarter ended September 30, 2008, were $186,870 compared to $290,080 during the same period in 2007. The reduction in the current year as compared to the prior year was related to additional stock compensation that was recorded for the prior year for shares to be issued to certain officers, directors and consultants valued at $225,000, offset by current period stock compensation for shares issued to consultants valued at $49,500.  The remaining general and administrative expenses include professional fees, payroll, office expenses, 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 September 30, 2008 and 2007 was $5,914 and $8,623, respectively. Nine Months Ended September 30, 2008 and 2007 There were no sales during the nine months ended September 30, 2008 or 2007. We made no expenditures for research and development during the nine months ended September 30, 2008 and 2007. Since inception we have spent a total of $2,685,788 for research and development. General and administrative expenses in the nine months ended September 30, 2008, were $342,889 compared to $421,996 during the same period in 2007. The reduction in the current year as compared to the prior year was related to additional stock compensation that was recorded for the prior year for shares to be issued to certain officers, directors and consultants valued at $225,000 (as previously discussed), offset by current period stock compensation for shares issued to consultants valued at $49,500.The remaining general and administrative expenses include professional fees, payroll, office expenses, 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 nine months ended September 30, 2008 and 2007 was $24,444 and $25,856, respectively. Liquidity and Capital Resources At September 30, 2008, we had a working capital deficiency of $3,287,568 and stockholders' deficit of


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$3,508,484.  At December 31, 2007, we had a working capital deficiency of $3,640,452 and stockholders deficit of $3,865,304. Net cash used in operating activities during the nine months ended September 30, 2008 was $176,274. This was funded from shareholder advances (net) totaling $2,532, other loans of $10,000, and common stock issued for cash totaling $179,000 for the nine months ended September 30, 2008. 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 have to date produced only minimal results.  In addition, previously anticipated and announced financing commitments have failed to be fulfilled. 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, as described, 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-Q 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 Financial Condition and Results of Operations 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, 2007 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 statements. 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 nine months ended September 30, 2008 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, 2007.


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Recent Accounting Pronouncements 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 was adopted effective January 1, 2008. We do not expect SFAS 159 to have a material impact on our results of operations, financial position, or cash flows. In December 2007, the FASB issued SFAS No. 141(R), Business Combinations.  SFAS 141(R) replaces SFAS No. 141, Business Combinations, but retains the requirement that the purchase method of accounting for acquisitions be used for all business combinations. SFAS 141(R) expands on the disclosures previously required by SFAS 141, better defines the acquirer and the acquisition date in a business combination, and establishes principles for recognizing and measuring the assets acquired (including goodwill), the liabilities assumed and any non-controlling interests in the acquired business. SFAS 141(R) also requires an acquirer to record an adjustment to income tax expense for changes in valuation allowances or uncertain tax positions related to acquired businesses. SFAS 141(R) is effective for all business combinations with an acquisition date in the first annual period following December 15, 2008; early adoption is not permitted. The impact SFAS 141(R) will have on the Companys consolidated financial statements will depend on the nature and size of acquisitions the Company completes after it adopts SFAS 141(R). In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51.  SFAS 160 requires that non-controlling (or minority) interests in subsidiaries be reported in the equity section of the companys balance sheet, rather than in a mezzanine section of the balance sheet between liabilities and equity. SFAS 160 also changes the manner in which the net income of the subsidiary is reported and disclosed in the controlling companys income statement. SFAS 160 also establishes guidelines for accounting for changes in ownership percentages and for deconsolidation. SFAS 160 is effective for financial statements for fiscal years beginning on or after December 1, 2008 and interim periods within those years; early adoption is not permitted. The adoption of SFAS 160 is not expected to have a material impact on the Companys financial position, results of operations or cash flows. In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133 ("SFAS No. 161"). SFAS 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about how and why an entity uses derivative instruments, how the instruments are accounted for under SFAS No. 133 and its related interpretations, and how the instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. The guidance in SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the potential impact of the adoption of SFAS No. 161 on its disclosures in the Company's financial statements. In May of 2008, the FASB issued Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles.  This statement identifies literature established by the FASB as the source for accounting principles to be applied by entities which prepare financial statements presented in conformity with generally accepted accounting principles (GAAP) in the United States.  This statement is effective 60 days following approval by the SEC of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.  This statement will require no changes in the Companys financial reporting practices. In May of 2008, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 163, Accounting for Financial Guarantee Insurance  an interpretation of FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises.  This statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation.  This statement also clarifies how Statement 60 applies to financial guarantee insurance contracts.  This statement is effective for fiscal years beginning after December 15, 2008.  This statement has no effect on the Companys financial reporting at this time. Item 3.  Quantitative and Qualitative Disclosures About Market Risk We are exposed to changes in prevailing market interest rates affecting the return on our investments but do not consider this interest rate market risk exposure to be material to our financial condition or results of operations.  We invest primarily in United States Treasury instruments with short-term (less than one year) maturities.  The carrying amount of these investments approximates fair value due to the short-term maturities.  Under our current policies, we do not use derivative financial instruments, derivative commodity instruments or other financial


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instruments to manage our exposure to changes in interest rates or commodity prices. Item 4.  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. 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, 2007.  There were no material developments during the quarter ended September 30, 2008 relative to these pending matters.  Item 1A.     Risk Factors  For information regarding risk factors, see Part I. Item 1. Risk Factors, in our Annual Report on Form 10-KSB for the year ended December 31, 2007.  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  During the quarter ended September 30, 2008, the Company issued 2,000,000 shares of common stock to outside consultants, valued at $82,000 or prices ranging from $0.04 to $0.042 per share, the market value of the shares on the date that the shares were approved to be issued.  $43,500 of the $82,000 consulting expense was recognized for the period ended September 30, 2008, with the remaining $38,500 recorded as deferred consulting fees, to be recognized monthly over the remaining term of the agreements.  The Company also issued 3,300,000 shares of common stock for cash proceeds received during July and September 2008 totaling $99,000, or $0.03 per share.  These issuances and sales of shares were made without registration under the Securities Act of 1933, as amended, in reliance upon exemptions from registration, including, without limitation, the exemption provided under Regulation D and Rule 506 under the Securities Act for private and limited offers and sales of securities made to accredited investors.  Item 5.     Other Information  On August 18, 2008, Dr. Michael E. Shannon was appointed a member of the Board of Directors.  Dr. Shannon, a former Director General for the Laboratory Center of Disease Control, Health Canada, has been actively engaged in medical bio-oxidative (O3 based), research since 1987 and was directly responsible for the first human clinical trial to have ever been approved in North America which examined the efficacy of O3 delivered via autohemotherapy in the treatment of AIDS.  He was also responsible for several primate studies utilizing O3 involving scientists from various departments with the Canadian Federal Government, as well as senior investigators from


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Cornell University.  In addition to his responsibilities as a member of the Board of Directors, Dr. Shannon is also working as a paid consultant, on a month-to-month basis, leading all medical affairs for the Company.  It is anticipated that Dr. Shannon will become an officer and full-time employee of the Company, should full and adequate funding become available.  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)  November 14, 2008


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