Corporate Milestone Achievement – Revenue Production

October 2012

Greetings all

I am pleased to report that Medizone has achieved an important corporate milestone.  In our latest SEC Report filed today on Form 10Q for the September 31 reporting period, Medizone has now officially transitioned from being a Development Stage Company to a Revenue Producing Company. “As a result of operations and revenues during 2012, the Company has fully commenced its planned operations, generated significant revenues, and is no longer considered a Development Stage Company,” states the SEC report as approved by our auditors.

Given the Company only began developing the AsepticSure technology in 2008 (the first announcement of our hospital sterilization initiative was made on October 1, 2008), this demonstrates significant achievement.  Our team has developed a disinfection system that is truly unique.  Achieving greater than 6 log (>99.9999%) bacterial kill on both hard and soft surfaces inside a hospital patient or treatment room, or in an operating theater, while all medical devices and electronics remain in the room is unprecedented.  We are certain this technology will play a major role in the reduction of HAI in the hospital and long-term care environment.

While production delays and other issues with our former manufacturing partner proved very frustrating to us, we truly believe manufacturing is now in the right hands.  As announced this past Monday, Medizone has contracted with Transformix Engineering for current and future production.

Prior to our two teams sitting down in Kingston to hammer out a contract, Transformix had invested in the AsepticSure project to the extent of sending five of their top engineers to Innovation Park to spend half a day with our development engineer from ADA Innovations and Dr Michael Shannon.  An AsepticSure system was disassembled and then reassembled, while discussing the design and component function interrelationships.

They asked all of the right questions. They have embraced this project and shown great dedication to “getting it right.”

Given the enthusiasm we have seen from Transformix to build AsepticSure and factoring in their client “A list” of DuPont, P&G, Pfizer, GE and Sandvik, I believe our trust will prove to be well placed.

Unit Deliveries

Two units were delivered to our Canadian distributor C3, with two more on order – one of which is already built.  We had a pre-sale at the FIME medical purchasing show last year to a customer from New Zealand who will be training in Canada starting the 30^th of this month.  Following training he will return to NZ with his system - a 220v model specifically designed for the EU and most Asian and South American markets.  It has already seen significant use in our laboratory to confirm performance and reliability prior to delivery.

Quality Control Focus

As announced in Monday’s press release, the first Transformix-built AsepticSure systems are expected in December.  Our expectation is they will meet all of our requirements “out of the box.”  Much of Transformix’ business has been comprised of designing, building and the installation of production lines and similarly complex equipment installations for their aforementioned multi-national clients.  These one-off designs must be done right the first time.  The Transformix engineers have assured us they consider AsepticSure manufacturing a project that is easily within their capability, and we believe them based on their history and reputation.

Revenue & Sales Forecast

Following confirmation of the first Transformix-built systems’ quality and performance, we plan on an immediate production ramp-up.  Our end Q1 2013 sales target remains 40 systems either delivered or on order.  If achieved, that would represent approximately $3,000,000 in revenue.  Medizone would be on its way to profitability.  Based on current activity we believe the target of 40 units by end Q1 is reasonable and achievable.

While confirmed sales orders and product delivery for Q4 is expected to increase somewhat over Q3, the bigger increase is anticipated for Q1 2013.  Assuming the announcement of additional distribution partners between now and the end of Q1, shareholders should then expect sales to continue to increase from quarter to quarter moving forward.

Best regards,

Ed