| X                                                                                                                |  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                                                                             |                                                                                           |
| For the quarterly period ended: June 30, 2009                                                                    |
| or                                                                                                               |
|                                                                                                             |                                                                                           |
|                                                                                                             |  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:  000-27131 |

| DELAWARE                     |   | 88-0381258                |
|------------------------------|--------|---------------------------|
| (State or Other Jurisdiction |   | (I.R.S. Employer          |
| of Incorporation)            |   | Identification No.)  |

| 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):   N/A since the registrant is neither required nor permitted to post Interactive Data Files.        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer., or a smaller reporting company. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| 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 Act).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |  Yes | X |  No |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |
| The registrant has 32,892,975 shares of common stock outstanding at July 14, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

----

|                                                                                                                             | Page   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008 (audited)                       | 4      |
|                                                                                                                             |   |
| Condensed Consolidated Statements of Operations for the six  and three months ended June 30, 2009 and 2008 (unaudited) | 5      |
|                                                                                                                             |   |
| Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2009 and 2008 (unaudited)                  | 6      |
|                                                                                                                             |   |
| Notes to Condensed Consolidated Financial Statements                                                                             | 7-28   |

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| TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES                                                               |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)                                                                                 |   |
|                                                                                                                              |   |   |   |   |   |   |
| ASSETS                                                                                                                            |   |
|                                                                                                                              |   | Restated |   |   |  Restated |   |
|                                                                                                                              |   | June 30, |   |   | December 31, |   |
|                                                                                                                              |   | 2009 |   |   | 2008 |   |
|                                                                                                                              |   |   |   |   |   |   |
| CURRENT ASSETS                                                                                                                    |   |   |   |   |   |   |
|   Cash                                                                                                                  |   | $ | 9,573 |   |   | $ | 144,641 |   |
|   Other current assets                                                                                                  |   |   | 2,191 |   |   |   | 2,191 |   |
|           Total current assets                                                  |   |   | 11,764 |   |   |   | 146,832 |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
| FIXED ASSETS                                                                                                                      |   |   |   |   |   |   |   |   |
|   Equipment, net                                                                                                        |   |   | 2,013 |   |   |   | 2,416 |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
| Other assets                                                                                                                      |   |   |   |   |   |   |   |   |
|   Patent                                                                                                                |   |   | 11,000 |   |   |   | 11,000 |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                                                      |   | $ | 24,777 |   |   | $ | 160,248 |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                        |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
| CURRENT LIABILITIES                                                                                                               |   |   |   |   |   |   |   |   |
|    Accounts payable                                                                                                |   | $ | 121,660 |   |   | $ | 118,765 |   |
|    Accrued expenses                                                                                                |   |   | 252,226 |   |   |   | 209,863 |   |
|    Liability for stock to be issued                                                                                |   |   | 35,000 |   |   |   | 3,015 |   |
|    Convertible notes and notes payable                                                                             |   |   | 664,500 |   |   |   | 130,000 |   |
|    Settlement liabilities                                                                                          |   |   | 266,857 |   |   |   | - |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
|           Total current liabilities                                             |   |   | 1,340,243 |   |   |   | 461,643 |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
|     Commitments and contingencies                                                                             |   |   |   |   |   |   |   |   |
|                                                                                                                              |   |   |   |   |   |   |   |   |
| STOCKHOLDERS'  DEFICIT                                                                                                  |   |   |   |   |   |   |   |   |
|    Common stock, par value $.001 per share;                                                                        |   |   |   |   |   |   |   |   |
|        250,000,000 shares authorized in 2009 and 2008                                          |   |   |   |   |   |   |   |   |
|        and 27,911,286 and 22,798,024 shares issued and 27,642,975 and 22,598,413 outstanding   |   |   |   |   |   |   |   |   |
|        at June 30, 2009 and December 31, 2008, respectively                                    |   |   | 27,911 |   |   |   | 22,798 |   |
|    Additional paid-in capital                                                                                      |   |   | 44,743,523 |   |   |   | 43,702,470 |   |
|    Treasury stock, 268,311 shares and 199,611 shares at June 30, 2009 and December 31, 2008, respectively, at cost |   |   | (51,172 | ) |   |   | (37,838 | ) |
|    Accumulated deficit                                                                                             |   |   | (46,035,728 | ) |   |   | (43,988,825 | ) |
|            Total stockholders' deficit                                     |   |   | (1,315,466 | ) |   |   | (301,395 | ) |
|                                                                                                                              |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS'  DEFICIT                                                                            |   | $ | 24,777 |   |   | $ | 160,248 |   |

----

| TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES                               |   |
|----------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)                                  |   |
| FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2009 AND 2008                                    |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   | FOR THE SIX MONTHS ENDED |   |   | FOR THE THREE MONTHS ENDED |   |
|                                                                                         |   | JUNE 30, |   |   | JUNE 30, |   |
|                                                                                         |   | Restated |   |   |  Restated |   |   | Restated |   |   |  Restated |   |
|                                                                                         |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| REVENUES                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net sales                                                            |   | $ | 82,977 |   |   | $ | - |   |   | $ | 44,348 |   |   | $ | - |   |
|             Gross Profit              |   |   | 82,977 |   |   |   | - |   |   |   | 44,348 |   |   |   | - |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COSTS AND EXPENSES                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Selling, general and administrative                                  |   |   | 1,668,340 |   |   |   | 821,564 |   |   |   | 961,598 |   |   |   | 588,746 |   |
|     Reserve for doubtful account                                         |   |   | 20,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|             Total costs and expenses  |   |   | 1,688,340 |   |   |   | 821,564 |   |   |   | 961,598 |   |   |   | 588,746 |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS BEFORE OTHER INCOME (LOSS)                                                          |   |   | (1,605,363 | ) |   |   | (821,564 | ) |   |   | (917,250 | ) |   |   | (588,746 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (LOSS)                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Interest income                                                      |   |   | 2 |   |   |   | 4,554 |   |   |   | - |   |   |   | 600 |   |
|     Interest expense                                                     |   |   | (86,107 | ) |   |   | (396,311 | ) |   |   | (26,927 | ) |   |   | (123,540 | ) |
|     Legal settlement                                                     |   |   | (302,857 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|     Other                                                                |   |   | (52,578 | ) |   |   | 91 |   |   |   | (52,578 | ) |   |   | 91 |   |
|             Total other income (loss) |   |   | (441,540 | ) |   |   | (399,666 | ) |   |   | (79,505 | ) |   |   | (122,849 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS BEFORE INCOME TAX                                                                       |   |   | (2,046,903 | ) |   |   | (1,213,230 | ) |   |   | (996,755 | ) |   |   | (711,595 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX                                                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET  LOSS                                                                          |   | $ | (2,046,903 | ) |   | $ | (1,213,230 | ) |   | $ | (996,755 | ) |   | $ | (711,595 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET  LOSS PER COMMON SHARE - BASIC AND DILUTED                                     |   | $ | (0.08 | ) |   | $ | (0.11 | ) |   | $ | (0.04 | ) |   | $ | (0.05 | ) |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE OUTSTANDING SHARES                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OF COMMON STOCK - BASIC AND DILUTED                                                          |   |   | 25,250,595 |   |   |   | 11,035,320 |   |   |   | 27,062,298 |   |   |   | 13,531,207 |   |

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| TRANSFER TECHNOLOGY INTERNATIONAL CORPORATION AND SUBSIDIARIES                                               |   |
|--------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                                  |   |
| FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008                                                         |   |
|                                                                                                         |   |   |   |   |   |   |
|                                                                                                         |   | Restated |   |   |  Restated |   |
|                                                                                                         |   | 2009 |   |   | 2008 |   |
|                                                                                                         |   |   |   |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                        |   |   |   |   |   |   |
|   Net loss                                                                                         |   | $ | (2,046,903 | ) |   | $ | (1,213,230 | ) |
| Adjustments to reconcile net loss to                                                                         |   |   |   |   |   |   |   |   |
| net cash used in operating activities:                                                                       |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                |   |   | 404 |   |   |   | - |   |
| Stock issued to directors and executives compensation                                                        |   |   | 675,541 |   |   |   | 155,330 |   |
| Stock issued to employees for compensation                                                                   |   |   | 7,200 |   |   |   | - |   |
| Stock issued to vendors and consultants for compensation                                                     |   |   | 244,652 |   |   |   | - |   |
| Stock issued to shareholders as inducement for lock up agreement                                             |   |   | 52,578 |   |   |   | - |   |
| Interest resulting from beneficial conversion feature of  notes payable                            |   |   | 24,417 |   |   |   | 388,329 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Changes in Certain Assets and Liabilities                                                                    |   |   |   |   |   |   |   |   |
| Increase in accounts receivable - other                                                                      |   |   | (20,000 | ) |   |   | - |   |
| Increase in reserve for doubtful accounts receivable - other                                                 |   |   | 20,000 |   |   |   | - |   |
| (Increase) decrease in other current assets                                                                  |   |   | - |   |   |   | (671 | ) |
| Increase (decrease) accounts payable                                                                         |   |   | 2,895 |   |   |   | (15,500 | ) |
| Increase  in liability for stock to be issued                                                      |   |   | 31,985 |   |   |   | - |   |
| Increase in settlement liability                                                                             |   |   | 266,857 |   |   |   | - |   |
| Increase (decrease) accrued expenses - net                                                                   |   |   | 42,362 |   |   |   | (90,373 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |
|             Net cash used in operating activities     |   |   | (698,012 | ) |   |   | (776,115 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                         |   |   |   |   |   |   |   |   |
| Due to related parties                                                                                       |   |   | - |   |   |   | - |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
|             Net cash used in investing activities     |   |   | - |   |   |   | - |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                         |   |   |   |   |   |   |   |   |
| Proceeds from issuing restricted stock and stock to be issued                                                |   |   | 45,000 |   |   |   | - |   |
| Proceeds of treasury stock                                                                                   |   |   | (16,556 | ) |   |   | - |   |
| Proceeds from convertible notes payable                                                                      |   |   | 454,500 |   |   |   | 311,062 |   |
| Proceeds from promissory notes                                                                               |   |   | 50,000 |   |   |   | 40,000 |   |
| Payment of notes payables                                                                                    |   |   | - |   |   |   | (66,219 | ) |
| Proceeds from bridge loan                                                                                    |   |   | 30,000 |   |   |   | 98,000 |   |
| Proceeds from stock issuances                                                                                |   |   | - |   |   |   | 466,139 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
|             Net cash provided by financing activities |   |   | 562,944 |   |   |   | 848,982 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                                              |   |   | (135,068 | ) |   |   | 72,867 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                                                                |   |   | 144,641 |   |   |   | 1,915 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS - END OF YEAR                                                                      |   | $ | 9,573 |   |   | $ | 74,782 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                             |   |   |   |   |   |   |   |   |
|   Issuance of Common Stock for:                                                                    |   |   |   |   |   |   |   |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Stock issued to executives and directors                                                                     |   | $ | 675,541 |   |   | $ | 155,330 |   |
| Stock issued to employees for compensation                                                                   |   | $ | 7,200 |   |   | $ | - |   |
| Stock issued to vendors and consultants                                                                      |   | $ | 244,652 |   |   | $ | - |   |
| Stock issued to convert notes payable                                                                        |   | $ | - |   |   | $ | 429,400 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| CASH PAID DURING THE YEAR:                                                                                   |   |   |   |   |   |   |   |   |
|    Interest expense                                                                           |   | $ | - |   |   | $ | 7,877 |   |

----

----

| CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)                                                                                                                                                              |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| June 30, 2009                                                                                                                                                                                                 |   |
|                                                                                                                                                                                                          |   |   |   |
| ASSETS                                                                                                                                                                                                        |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                          |   | PreviouslyReported2009 |   |   | Change |   |   | Restated 2009 |   |
| CURRENT ASSETS                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |
|    Cash                                                                                                                                                                                             |   | $ | 9,573 |   |   | $ | - |   |   | $ | 9,573 |   |
|    Other current assets                                                                                                                                                                             |   |   | 2,191 |   |   |   | - |   |   |   | 2,191 |   |
|       Total current assets                                                                                                                                                      |   |   | 11,764 |   |   |   | - |   |   |   | 11,764 |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| FIXED ASSETS                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|    Equipment, net                                                                                                                                                                              |   |   | 2,013 |   |   |   | - |   |   |   | 2,013 |   |
| Other assets                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|    Patent                                                                                                                                                                                      |   |   | - |   |   |   | 11,000 |   |   |   | 11,000 |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                                                                                                                                                                                                  |   | $ | 13,777 |   |   | $ | 11,000 |   |   | $ | 24,777 |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                                                   |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| CURRENT LIABILITIES                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|    Accounts payable                                                                                                                                                                                 |   | $ | 121,660 |   |   | $ | - |   |   | $ | 121,660 |   |
|    Accrued expenses                                                                                                                                                                                 |   |   | 243,546 |   |   |   | 8,680 |   |   |   | 252,226 |   |
|    Liability for stock to be issued                                                                                                                                                                 |   |   | 35,000 |   |   |   | - |   |   |   | 35,000 |   |
|    Convertible notes and notes payable                                                                                                                                                              |   |   | 664,500 |   |   |   | - |   |   |   | 664,500 |   |
|    Settlement liabilities                                                                                                                                                                           |   |   | - |   |   |   | 266,857 |   |   |   | 266,857 |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total current liabilities                                                                                                                              |   |   | 1,064,706 |   |   |   | 275,537 |   |   |   | 1,340,243 |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| STOCKHOLDERS’ DEFICIT                                                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|    Common stock, par value $.001 per share; 250,000,000 shares authorized in 2008 and 27,911,286 shares issued and 27,642,975       outstanding at June 30, 2009 |   |   | 27,911 |   |   |   | - |   |   |   | 27,911 |   |
|    Additional paid-in capital                                                                                                                                                                       |   |   | 45,641,022 |   |   |   | (897,499 | ) |   |   | 44,743,523 |   |
|    Treasury stock, 268,311 shares at June 30, 2009 at cost                                                                                                                                          |   |   | (87,172 | ) |   |   | 36,000 |   |   |   | (51,172 | ) |
|    Accumulated deficit                                                                                                                                                                              |   |   | (46,632,690 | ) |   |   | 596,962 |   |   |   | (46,035,728 | ) |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total stockholders’ deficit                                                                                                                      |   |   | (1,050,929 | ) |   |   | (264,537 | ) |   |   | (1,315,466 | ) |
|                                                                                                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT                                                                                                                                                             |   | $ | 13,777 |   |   | $ | 11,000 |   |   | $ | 24,777 |   |

----

| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)                           |   |
|---------------------------------------------------------------------------------------|--------|
| FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2009                                      |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   | SIX MONTHS ENDED |   |   | THREE MONTHS ENDED |   |
|                                                                                  |   | PreviouslyReported 2009 |   |   | Change |   |   | Restated2009 |   |   | PreviouslyReported 2009 |   |   | Change |   |   | Restated2009 |   |
| REVENUES                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net Sales                                                           |   | $ | 82,977 |   |   | $ | - |   |   | $ | 82,977 |   |   | $ | 44,348 |   |   |   | - |   |   | $ | 44,348 |   |
|           Gross Profit              |   |   | 82,977 |   |   |   | - |   |   |   | 82,977 |   |   |   | 44,348 |   |   |   | - |   |   |   | 44,348 |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COSTS AND EXPENSES                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Selling, general and administrative                                 |   |   | 1,668,340 |   |   |   | - |   |   |   | 1,668,340 |   |   |   | 961,598 |   |   |   | - |   |   |   | 961,598 |   |
|    Reserve for doubtful account                                        |   |   | 20,000 |   |   |   | - |   |   |   | 20,000 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|           Total costs and expenses  |   |   | 1,688,340 |   |   |   | - |   |   |   | 1,688,340 |   |   |   | 961,598 |   |   |   | - |   |   |   | 961,598 |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS BEFORE OTHER INCOME (LOSS)                                                   |   |   | (1,605,363 | ) |   |   | - |   |   |   | (1,605,363 | ) |   |   | (917,250 | ) |   |   | - |   |   |   | (917,250 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (LOSS)                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Interest income                                                     |   |   | 2 |   |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|    Interest expense                                                    |   |   | (77,427 | ) |   |   | (8,680 | ) |   |   | (86,107 | ) |   |   | (20,417 | ) |   |   | (6,510 | ) |   |   | (26,927 | ) |
|    Legal settlement                                                    |   |   | - |   |   |   | (302,857 | ) |   |   | (302,857 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|    Other                                                               |   |   | (52,578 | ) |   |   | - |   |   |   | (52,578 | ) |   |   | (52,578 | ) |   |   | - |   |   |   | (52,578 | ) |
|           Total other income (loss) |   |   | (130,003 | ) |   |   | (311,537 | ) |   |   | (441,540 | ) |   |   | (72,995 | ) |   |   | (6,510 | ) |   |   | (79,505 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS BEFORE INCOME TAX                                                                |   |   | (1,735,366 | ) |   |   | (311,537 | ) |   |   | (2,046,903 | ) |   |   | (990,245 | ) |   |   | (6,510 | ) |   |   | (996,755 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                              |   | $ | (1,735,366 | ) |   | $ | (311,537 | ) |   | $ | (2,046,903 | ) |   | $ | (990,245 | ) |   | $ | (6,510 | ) |   | $ | (996,755 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE – BASIC AND DILUTED                                   |   | $ | (0.07 | ) |   | $ | (0.01 | ) |   | $ | (0.08 | ) |   | $ | (0.04 | ) |   | $ | (0.00 | ) |   | $ | (0.04 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE OUTSTANDING SHARES OF COMMON STOCK – BASIC AND DILUTED         |   |   | 25,250,595 |   |   |   | - |   |   |   | 25,250,595 |   |   |   | 27,062,298 |   |   |   | - |   |   |   | 27,062,298 |   |

----

| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                           |   |
|-------------------------------------------------------------------------------------------------------|--------|
| FOR THE SIX MONTHS ENDED JUNE 30, 2009                                                                |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   | PreviouslyReported |   |   |   |   |   | Restated |   |
|                                                                                                  |   | 2009 |   |   | Change |   |   | 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                 |   |   |   |   |   |   |   |   |   |
|    Net loss                                                                            |   | $ | (1,735,366 | ) |   | $ | (311,537 | ) |   | $ | (2,046,903 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                         |   |   | 404 |   |   |   | - |   |   |   | 404 |   |
| Stock issued  to directors and executives compensation                                      |   |   | 675,541 |   |   |   | - |   |   |   | 675,541 |   |
| Stock issued to employees for compensation                                                            |   |   | 7,200 |   |   |   | - |   |   |   | 7,200 |   |
| Stock issued to vendors and consultants for compensation                                              |   |   | 244,652 |   |   |   | - |   |   |   | 244,652 |   |
|  Stock issued to shareholders as inducement for lock up agreement                                |   |   | 52,578  |   |   |   |   |   |   |   | 52,578 |   |
| Interest resulting from beneficial conversion feature of notes payable                                |   |   | 24,417 |   |   |   | - |   |   |   | 24,417 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes in Certain Assets and Liabilities                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| (Increase) in accounts receivable - other                                                             |   |   | (20,000 | ) |   |   | - |   |   |   | (20,000 | ) |
| Increase in reserve for doubtful accounts receivable - other                                          |   |   | 20,000 |   |   |   |   |   |   |   | 20,000 |   |
| (Increase) in other current assets                                                                    |   |   | - |   |   |   | - |   |   |   | - |   |
| Increase (decrease) in accounts payable                                                               |   |   | 2,895 |   |   |   | - |   |   |   | 2,895 |   |
| Increase in liability for stock to be issued                                                          |   |   | 31,985 |   |   |   | - |   |   |   | 31,985 |   |
| Increase in settlement liability                                                                      |   |   | - |   |   |   | 266,857 |   |   |   | 266,857 |   |
| Increase accrued expenses - net                                                                       |   |   | 33,682 |   |   |   | 8,680 |   |   |   | 42,362 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|           Net cash used in operating activities     |   |   | (662,012 | ) |   |   | (36,000 | ) |   |   | (698,012 | ) |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Due to related parties                                                                                |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|           Net cash (used in) investing activities   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from issuing restricted stock and stock to be issued                                         |   |   | 45,000 |   |   |   | - |   |   |   | 45,000 |   |
| Payments of treasury stock                                                                            |   |   | (52,556 | ) |   |   | 36,000 |   |   |   | (16,556 | ) |
| Proceeds from convertible notes payable                                                               |   |   | 454,500 |   |   |   | - |   |   |   | 454,500 |   |
|  Proceeds from promissory notes                                                                  |   |   | 50,000  |   |   |   | -  |   |   |   | 50,000  |   |
|  Payment of notes payables                                                                       |   |   | -  |   |   |   | -  |   |   |   | -  |   |
|  Proceeds from bridge loan                                                                       |   |   | 30,000  |   |   |   | -  |   |   |   | 30,000  |   |
|  Proceeds from stock issuances                                                                   |   |   | -  |   |   |   | -  |   |   |   | -  |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|           Net cash provided by financing activities |   |   | 526,944 |   |   |   | 36,000 |   |   |   | 562,944 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                                       |   |   | (135,068 | ) |   |   | - |   |   |   | (135,068 | ) |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR                                                   |   |   | 144,641 |   |   |   | - |   |   |   | 144,641 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS – END OF YEAR                                                         |   | $ | 9,573 |   |   | $ | - |   |   | $ | 9,573 |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
|    Issuance of Common Stock for:                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued to executives and directors                                                              |   | $ | 675,541 |   |   |   | - |   |   | $ | 675,541 |   |
|  Stock issued to employees for compensation                                                      |   |   | 7,200  |   |   |   | -  |   |   |   | 7,200  |   |
| Stock issued to vendors and consultants                                                               |   | $ | 244,652 |   |   |   | - |   |   | $ | 244,652 |   |
|  Stock issued to convert notes payable                                                           |   |   | -  |   |   |   | -  |   |   |   | -  |   |
|                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH PAID DURING THE YEAR:                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                                      |   | $ | - |   |   | $ | - |   |   | $ | - |   |

----

| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)                           |   |
|---------------------------------------------------------------------------------------|--------|
| FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2008                                      |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   | SIX MONTHS ENDED |   |   | THREE MONTHS ENDED |   |
|                                                                                  |   | PreviouslyReported 2008 |   |   | Change |   |   | Restated2008 |   |   | PreviouslyReported 2008 |   |   | Change |   |   | Restated2008 |   |
| REVENUES                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Net Sales                                                           |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |
|           Gross Profit              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COSTS AND EXPENSES                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Selling, general and administrative                                 |   |   | 821,564 |   |   |   | - |   |   |   | 821,564 |   |   |   | 588,746 |   |   |   | - |   |   |   | 588,746 |   |
|    Reserve for doubtful account                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|           Total costs and expenses  |   |   | 821,564 |   |   |   | - |   |   |   | 821,564 |   |   |   | 588,746 |   |   |   | - |   |   |   | 588,746 |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS BEFORE OTHER INCOME (LOSS)                                                   |   |   | (821,564 | ) |   |   | - |   |   |   | (821,564 | ) |   |   | (588,746 | ) |   |   | - |   |   |   | (588,746 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (LOSS)                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Interest income                                                     |   |   | 4,554 |   |   |   | - |   |   |   | 4,554 |   |   |   | 600 |   |   |   | - |   |   |   | 600 |   |
|    Interest expense                                                    |   |   | (1,293,4810 | ) |   |   | 897,499 |   |   |   | (396,311 | ) |   |   | (1,021,039 | ) |   |   | 897,499 |   |   |   | (123,540 | ) |
|    Legal settlement                                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|    Other                                                               |   |   | 91 |   |   |   | - |   |   |   | 91 |   |   |   | 91 |   |   |   | - |   |   |   | 91 |   |
|           Total other income (loss) |   |   | (1,289,165 | ) |   |   | 897,499 |   |   |   | (391,666 | ) |   |   | (1,020,348 | ) |   |   | 897,449 |   |   |   | (122,849 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LOSS BEFORE INCOME TAX                                                                |   |   | (2,110,729 | ) |   |   | 897,499 |   |   |   | (1,213,230 | ) |   |   | (1,609,094 | ) |   |   | 897,499 |   |   |   | (711,595 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                                              |   | $ | (2,110,729 | ) |   | $ | 897,499 |   |   | $ | (1,213,230 | ) |   | $ | (1,609,094 | ) |   | $ | 897,499 |   |   | $ | (711,595 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS PER COMMON SHARE – BASIC AND DILUTED                                   |   | $ | (0.19 | ) |   | $ | 0.08 |   |   | $ | (0.11 | ) |   | $ | (0.12 | ) |   | $ | 0.07 |   |   | $ | (0.05 | ) |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE OUTSTANDING SHARES OF COMMON STOCK – BASIC AND DILUTED         |   |   | 11,035,320 |   |   |   | - |   |   |   | 11,035,320 |   |   |   | 13,531,207 |   |   |   | - |   |   |   | 13,531,207 |   |

----

|                                                                                                  |   | PreviouslyReported2008 |       |   | Change |   |     | Restated 2008 |   |
|-------------------------------------------------------------------------------------------------------|--------|------------------------|------------|--------|--------|--------|----------|--------------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                                 |   |                   |       |   |   |   |     |               |   |
|    Net loss                                                                            |   | $                      | (2,110,729 | )      |   | $      | 897,449  |               |   | $ | (1,213,230 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                           |   |                   |       |   |   |   |     |               |   |   |   |   |
| Depreciation and amortization                                                                         |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Stock issued to directors and executives compensation                                                 |   |                   | 155,330    |   |   |   | -        |               |   |   | 155,330 |   |
| Stock issued to employees for compensation                                                            |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Stock issued to vendors and consultants for compensation                                              |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Stock issued to shareholders as inducement for lock up agreement                                      |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Interest resulting from beneficial conversion feature of notes payable                                |   |                   | 1,285,828  |   |   |   | (897,499 | )                  |   |   | 388,329 |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| Changes in Certain Assets and Liabilities                                                             |   |                   |       |   |   |   |     |               |   |   |   |   |
| (Increase) in accounts receivable - other                                                             |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Increase in reserve for doubtful accounts receivable - other                                          |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| (Increase) in other current assets                                                                    |   |                   | (671       | )      |   |   | -        |               |   |   | (671 | ) |
| Increase (decrease) in accounts payable                                                               |   |                   | (15,500    | )      |   |   | -        |               |   |   | (15,500 | ) |
| Increase in liability for stock to be issued                                                          |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Increase in settlement liability                                                                      |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Increase accrued expenses - net                                                                       |   |                   | (90,373    | )      |   |   | -        |               |   |   | (90,373 | ) |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
|           Net cash used in operating activities     |   |                   | (776,115   | )      |   |   | -        |               |   |   | (776,115 | ) |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| Due to related parties                                                                                |   |                   | -          |   |   |   | -        |               |   |   | - |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
|           Net cash (used in) investing activties    |   |                   | -          |   |   |   | -        |               |   |   | - |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| Proceeds from issuing restricted stock and stock to be issued                                         |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Payments of treasury stock                                                                            |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Proceeds from convertible notes payable                                                               |   |                   | 311,062    |   |   |   | -        |               |   |   | 311,062 |   |
| Proceeds from promissory notes                                                                        |   |                   | 40,000     |   |   |   | -        |               |   |   | 40,000 |   |
| Payment of notes payables                                                                             |   |                   | (66,219    | )      |   |   | -        |               |   |   | (66,219 | ) |
| Proceeds from bridge loan                                                                             |   |                   | 98,000     |   |   |   | -        |               |   |   | 98,000 |   |
| Proceeds from stock issuances                                                                         |   |                   | 466,139    |   |   |   | -        |               |   |   | 466,139 |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
|           Net cash provided by financing activities |   |                   | 848,982    |   |   |   | -        |               |   |   | 848,982 |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH                                                                       |   |                   | 72,867     |   |   |   | -        |               |   |   | 72,867 |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR                                                   |   |                   | 144,641    |   |   |   | -        |               |   |   | 144,641 |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| CASH AND CASH EQUIVALENTS – END OF YEAR                                                         |   | $                      | 217,508    |   |   | $      | -        |               |   | $ | 217,508 |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                      |   |                   |       |   |   |   |     |               |   |   |   |   |
|    Issuance of Common Stock for:                                                       |   |                   |       |   |   |   |     |               |   |   |   |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| Stock issued to executives and directors                                                              |   | $                      | 155,330    |   |   |   | -        |               |   | $ | 155,330 |   |
| Stock issued to employees for compensation                                                            |   |                   | -          |   |   |   | -        |               |   |   | - |   |
| Stock issued to vendors and consultants                                                               |   | $                      | -          |   |   |   | -        |               |   | $ | - |   |
| Stock issued to convert notes payable                                                                 |   |                   | 429,400    |   |   |   | -        |               |   |   | 429,400 |   |
|                                                                                                  |   |                   |       |   |   |   |     |               |   |   |   |   |
| CASH PAID DURING THE YEAR:                                                                            |   |                   |       |   |   |   |     |               |   |   |   |   |
| Interest expense                                                                                      |   | $                      | 7,877      |   |   | $      | -        |               |   | $ | 7,877 |   |

----

----

----

----

----

----

|                                                                          |   | June 30, 2009 |       |   | June 30, 2008 |   |
|-------------------------------------------------------------------------------|--------|---------------|------------|--------|---------------|--------|
| NET LOSS                                                                      |   | $             | (2,046,903 | )      |          | $      | (2,110,729 | ) |
|                                                                          |   |          |       |   |          |   |   |   |
| WEIGHTED AVERAGE OUTSTANDING SHARES OF COMMON STOCK – BASIC AND DILUTED |   |          | 25,250,595 |   |          |   | 11,035,320 |   |

----

----

|                                      |   | June 30, 2009 |   |   | June 30, 2008 |
|-------------------------------------------|--------|---------------|--------|--------|---------------|
| Computers and equipment                   |   | $             | 2,819  |   |          | $ | 2,819 |   |   |
| Less:  accumulated depreciation |   |          | 806    |   |          |   | - |   |   |
| Computers and equipment - Net             |   | $             | 2,013  |   |          | $ | 2,819 |   |   |

----

|                                                                                                                                                                                                             |   | Amount |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| October 2008 – Unsecured convertible note payable for $ 20,000 including interest at a fixed rate of 13%. The maturity date is October 2009 at which time all principle and interest are due.    |   | $      | 20,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| November 2008 – Unsecured convertible note payable for $ 10,000 including interest at a fixed rate of 13%. The maturity date is November 2009 at which time all principle and interest are due.  |   |   | 10,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| November 2008 – Unsecured convertible note payable for $ 200,000 including interest at a fixed rate of 13%. The maturity date is November 2009 at which time all principle and interest are due. |   |   | 20,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| December 2008 – Unsecured convertible note payable for $ 5,000 including interest at a fixed rate of 13%. The maturity date is December 2009 at which time all principle and interest are due.   |   |   | 5,000  |   |
|                                                                                                                                                                                                             |   |   |   |   |
| December 2008 – Unsecured convertible note payable for $ 50,000 including interest at a fixed rate of 13%. The maturity date is December 2009 at which time all principle and interest are due.  |   |   | 50,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| December 2008 – Unsecured convertible note payable for $ 10,000 including interest at a fixed rate of 13%. The maturity date is December 2009 at which time all principle and interest are due.  |   |   | 25,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| January 2009 – Unsecured convertible note payable for $ 4,500 including interest at a fixed rate of 13%. The maturity date is January 2010 at which time all principle and interest are due.     |   |   | 4,500  |   |
|                                                                                                                                                                                                             |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 40,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due.  |   |   | 40,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 30,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due.  |   |   | 30,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 10,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due.  |   |   | 10,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 14,000 including interest at afixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due.        |   |   | 14,000 |   |
|                                                                                                                                                                                                             |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 40,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due.  |   |   | 40,000 |   |

----

| February 2009 – Unsecured convertible note payable for $ 7,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due.  |   |   | 7,000  |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                            |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 5,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due.  |   |   | 5,000  |   |
|                                                                                                                                                                                                            |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 75,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due. |   |   | 75,000 |   |
|                                                                                                                                                                                                            |   |   |   |   |
| February 2009 – Unsecured convertible note payable for $ 45,000 including interest at a fixed rate of 13%. The maturity date is February 2010 at which time all principle and interest are due. |   |   | 45,000 |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 2,500 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.        |   |   | 2,500  |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $9,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.         |   |   | 9,000  |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 10,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.       |   |   | 10,000 |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 25,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle andinterest are due.             |   |   | 25,000 |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 12,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.       |   |   | 12,000 |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 15,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle andinterest are due.             |   |   | 15,000 |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 40,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.       |   |   | 40,000 |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 6,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.        |   |   | 6,000  |   |
|                                                                                                                                                                                                            |   |   |   |   |
| March 2009 – Unsecured convertible note payable for $ 10,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.       |   |   | 10,000 |   |

----

| March 2009 – Unsecured convertible note payable for $ 20,000 including interest at a fixed rate of 13%. The maturity date is March 2010 at which time all principle and interest are due.                                                                  |   |   | 20,000  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|
|                                                                                                                                                                                                                                                                       |   |   |    |   |
| April 2009 – Unsecured convertible note payable for $ 4,500 including interest at a fixed rate of 13%. The maturity date is April 2010 at which time all principle and interest are due.                                                                   |   |   | 4,500   |   |
|                                                                                                                                                                                                                                                                       |   |   |    |   |
| April 2009 – Unsecured convertible note payable for $ 10,000 including interest at a fixed rate of 13%. The maturity date is April 2010 at which time all principle and interest are due.                                                                  |   |   | 10,000  |   |
|                                                                                                                                                                                                                                                                       |   |   |    |   |
| April 2009 – Unsecured convertible note payable for $ 10,000 including interest at afixed rate of 13%. The maturity date is April 2010 at which time all principle and interest are due.                                                                        |   |   | 10,000  |   |
|                                                                                                                                                                                                                                                                       |   |   |    |   |
| May 2009 – Unsecured promissory note payable for $ 50,000 including interest at a fixed rate of 1%. The maturity date is August 2009 at which time all principle and interest are due or note may be extended for an additional 90 days on the same terms. |   |   | 50,000  |   |
|                                                                                                                                                                                                                                                                       |   |   |    |   |
| June 2009 – Unsecured promissory note payable for $ 30,000 including interest at a fixed rate of 20%. The maturity date is October 2009 at which time all principle and interest are due.                                                                  |   |   | 30,000  |   |
|                                                                                                                                                                                                                                                                       |   |   |    |   |
| June 2009 – Unsecured convertible note payable for $ 10,000 including interest at a fixed rate of 13%. The maturity date is June 2010 at which time all principle and interest are due.                                                                    |   |   | 10,000  |   |
|                                                                                                                                                                                                                                                                       |   |   |    |   |
| Total promissory and convertible notes payable                                                                                                                                                                                                                             |   | $      | 664,500 |   |

|                                                                                                                                                                                           |   | Amount |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
|                                                                                                                                                                                           |   |   |    |
| October 2008 - Unsecured convertible note payable for $20,000 including interest at a fixed rate of 13%. The maturity date is October 2009 at which time all principal and interest are due.   |   |   | 20,000  |   |
|                                                                                                                                                                                           |   |   |    |   |
| November 2008 - Unsecured convertible note payable for $10,000 including interest at a fixed rate of 13%. The maturity date is November 2009 at which time all principal and interest are due. |   |   | 10,000  |   |
|                                                                                                                                                                                           |   |   |    |   |
| November 2008 - Unsecured convertible note payable for $20,000 including interest at a fixed rate of 13%. The maturity date is November 2009 at which time all principal and interest are due. |   |   | 20,000  |   |
|                                                                                                                                                                                           |   |   |    |   |
| December 2008 - Unsecured convertible note payable for $5,000 including interest at a fixed rate of 13%. The maturity date is December 2009 at which time all principal and interest are due.  |   |   | 5,000   |   |
|                                                                                                                                                                                           |   |   |    |   |
| December 2008 - Unsecured convertible note payable for $50,000 including interest at a fixed rate of 13%. The maturity date is December 2009 at which time all principal and interest are due. |   |   | 50,000  |   |
|                                                                                                                                                                                           |   |   |    |   |
| December 2008 - Unsecured convertible note payable for $20,000 including interest at a fixed rate of 13%. The maturity date is December 2009 at which time all principal and interest are due. |   |   | 25,000  |   |
|                                                                                                                                                                                           |   |   |    |   |
| Total convertible notes payable                                                                                                                                                                |   | $      | 130,000 |   |

|                |   | June 30, 2009 |       |   | June 30, 2008 |   |
|---------------------|--------|---------------|------------|--------|---------------|--------|
| Deferred tax assets |   | $             | 1,851,339  |   |          | $      | 1,266,372 |   |
| Less: valuation     |   |          | (1,851,339 | )      |          |   | (1,266,372 | ) |
| Totals              |   | $             | -          |   |          | $      | - |   |

----

----

----

|                       |   |                        |        |                 |   |                 |      |               |
|----------------------------|--------|-----------------------------|-------------|----------------------|--------|----------------------|-----------|--------------------|
| Year                       |   |  Warrant Type          |        |  Warrant Shares |   |  Exercise Price |      | Expiration Date    |
|                       |   |                        |        |                 |   |                 |      |               |
| 2004                       |   | Notes payable warrants      | 50,000      |                 | 0.92   |                 | None      |
|                       |   |                        |        |                 |   |                 |      |               |
| 2006                       |   | Broker warrants             | 300,000     |                 | 0.045  |                 | Apr. 2011 |
| 2006                       |   | Warrant exercise            | (300,000)   |                 | 0.045  |                 |      |
|                       |   |                        |        | 0                    |   |                 |      |               |
|                       |   |                        |        |                 |   |                 |      |               |
| 2006                       |   | Broker warrants             | 294,118     |                 | 0.085  |                 | May 2011  |
| 2006                       |   | Warrant exercise            | (294,118)   |                 | 0.085  |                 |      |
|                       |   |                        |        | 0                    |   |                 |      |               |
|                       |   |                        |        |                 |   |                 |      |               |
| 2006                       |   | Class A warrants            | 2,941,177   |                 | 0.085  |                 | May 2011  |
| 2007                       |   | Class A warrants cancelled  | (2,941,177) |                 | 0.085  |                 |      |
|                       |   |                        |        | 0                    |   |                 |      |               |
|                       |   |                        |        |                 |   |                 |      |               |
| 2006                       |   | Class B warrants            | 2,941,177   |                 | 0.50   |                 | May 2011  |
| 2007                       |   | Class B warrants cancelled  | (2,941,177) |                 | 0.50   |                 |      |
|                       |   |                        |        | 0                    |   |                 |      |               |
|                       |   |                        |        |                 |   |                 |      |               |
|  2008                 |   |  Class A warrants      |        |   4,971,538     |   |   1.25          |      |  Various 2010 |
|  2008                 |   |  Class B warrants |        |  4,971,538      |   |  1.25           |      |  Various 2011 |
|                       |   |                        |        |  9,943,076      |   |                 |      |               |
|                       |   |                        |        |                 |   |                 |      |               |
|  2009                 |   |  Class A warrants      |        |  236,500        |   |  1.25           |      |  Various 2010 |
|  2009                 |   |  Class B warrants |        |  236,500        |   |  1.25           |      |  Various 2011 |
|                       |   |                        |        |  473,000        |   |                 |      |               |
|                       |   |                        |        |                 |   |                 |      |               |
| Total warrants outstanding |   | 10,466,076                  |        |                 |   |                 |

----

|                       |   |                       |        |                 |   |                 |             |            |
|----------------------------|--------|----------------------------|-------------|----------------------|--------|----------------------|------------------|-----------------|
| Year                       |   |  Warrant Type         |        |  Warrant Shares |   |  Exercise Price |             | Expiration Date |
|                       |   |                       |        |                 |   |                 |             |            |
| 2002                       |   | Class A warrants           | 1,220,000   |                 | 1.000  |                 | April - May 2007 |
| 2003                       |   | Class A warrants cancelled | (160,000)   |                 |   |                 |             |
| 2003                       |   | Class A warrants exercised | (63,000)    |                 | 1.000  |                 |             |
|                       |   |                       |        | 997,000              |   |                 |             |            |
|                       |   |                       |        |                 |   |                 |             |            |
| 2002                       |   | Class B warrants           | 1,220,000   |                 | 1.500  |                 | April - May 2007 |
| 2003                       |   | Class A warrants cancelled | (160,000)   |                 |   |                 |             |
|                       |   |                       |        | 1,060,000            |   |                 |             |            |
|                       |   |                       |        |                 |   |                 |             |            |
| 2004                       |   | Notes payable warrants     | 50,000      |                 | 0.92   |                 | None             |
|                       |   |                       |        |                 |   |                 |             |            |
| 2004                       |   | Private placement warrants | 3,718,491   |                 | 0.75   |                 | Aug. - Oct.2007  |
| 2004                       |   | Expired                    |        | (3,718,491)          |   |                 |             |            |
|                       |   |                       |        | 0                    |   |                 |             |            |
|                       |   |                       |        |                 |   |                 |             |            |
| 2005                       |   | Broker warrants            | 50,000      |                 | 0.50   |                 | Dec. 2008        |
|                       |   |                       |        |                 |   |                 |             |            |
| 2006                       |   | Broker warrants            | 50,000      |                 | 0.50   |                 | Mar. 2009        |
|                       |   |                       |        |                 |   |                 |             |            |
| 2006                       |   | Broker warrants            | 300,000     |                 | 0.045  |                 | Apr. 2011        |
| 2006                       |   | Warrant exercise           | (300,000)   |                 | 0.045  |                 |             |
|                       |   |                       |        | 0                    |   |                 |             |            |
|                       |   |                       |        |                 |   |                 |             |            |
| 2006                       |   | Broker warrants            | 294,118     |                 | 0.085  |                 | May 2011         |
| 2006                       |   | Warrant exercise           | (294,118)   |                 | 0.085  |                 |             |
|                       |   |                       |        | 0                    |   |                 |             |            |
|                       |   |                       |        |                 |   |                 |             |            |
| 2006                       |   | Class A warrants           | 2,941,177   |                 | 0.085  |                 | May 2011         |
| 2007                       |   | Class A warrants cancelled | (2,941,177) |                 | 0.085  |                 |             |
|                       |   |                       |        | 0                    |   |                 |             |            |
|                       |   |                       |        |                 |   |                 |             |            |
| 2006                       |   | Class B warrants           | 2,941,177   |                 | 0.50   |                 | May 2011         |
| 2007                       |   | Class B warrants cancelled | (2,941,177) |                 | 0.50   |                 |             |
|                       |   |                       |        | 0                    |   |                 |             |            |
|                       |   |                       |        |                 |   |                 |             |            |
| Total warrants outstanding |   | 2,207,000                  |        |                 |   |                 |

----

----

----

----

| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
|---------|-------------------------------------------------------------|

| Item 4T. | Controls and Procedures. |
|----------|--------------------------|

----

| Item 1. | Legal Proceedings. |
|---------|--------------------|

| Item 1A. | Risk Factors. |
|----------|---------------|

| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
|---------|--------------------------------------------------------------|

| Item 3. | Defaults Upon Senior Securities. |
|---------|----------------------------------|

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

| Item 5. | Other Information. |
|---------|--------------------|

| Item 6. | Exhibits. |
|---------|-----------|

| 31.1   | Certification of CEO pursuant to Securities Exchange Act rules 13a-15 and 15d-15(c) as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                      |
| 31.2   | Certification of CFO pursuant to Securities Exchange Act rules 13a-15 and 15d-15(c) as adopted pursuant to section 302 of the Sarbanes-Oxley act of 2002. |
|   |                                                                                                                                                      |
| 32.1   | Certification of CEO pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.                            |
|   |                                                                                                                                                      |
| 32.2   | Certification of CFO pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley act of 2002.                            |

----

----