----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

|      | For the quarterly period ended March 31, 2011 |
|--------------------------|-----------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware                                                       | 86-0515678                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
|                                                           |                                 |

| 25 Fairchild Avenue - Suite 250, Plainview, New York | 11803      |
|------------------------------------------------------|------------|
| (Address of principal executive offices)             | (Zip Code) |

| Large accelerated filer  o | Accelerated filer  o         |
|--------------------------------------|----------------------------------------|
| Non-accelerated filer  o   | Smaller reporting company  x |

----

----

----

|                                                                                                                                                                                                                                    |   | March 31,2011 |        |   | December 31,2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|------------------|--------|
| ASSETS                                                                                                                                                                                                                                  |   |          |        |   |             |   |
| Current Assets:                                                                                                                                                                                                                         |   |          |        |   |             |   |
| Cash                                                                                                                                                                                                                                    |   | $             | 49,858      |   |             | $      | 166,758 |   |
| Inventories                                                                                                                                                                                                                             |   |          | 507,124     |   |             |   | 442,815 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                               |   |          | 99,901      |   |             |   | 81,697 |   |
| Total Current Assets                                                                                                                                                                                                                    |   |          | 656,883     |   |             |   | 691,270 |   |
|                                                                                                                                                                                                                                    |   |          |        |   |             |   |   |   |
| Property and equipment, net of accumulated depreciation of $89,678 and $68,447,  respectively                                                                                                                                 |   |          | 204,339     |   |             |   | 231,106 |   |
| Patents and trademarks, net of accumulated amortization of $31,134 and $29,608, respectively                                                                                                                                            |   |          | 68,750      |   |             |   | 62,876 |   |
| Other assets                                                                                                                                                                                                                            |   |          | 37,285      |   |             |   | 37,280 |   |
| TOTAL ASSETS                                                                                                                                                                                                                            |   | $             | 967,257     |   |             | $      | 1,022,532 |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                |   |          |        |   |             |   |   |   |
| Current Liabilities:                                                                                                                                                                                                                    |   |          |        |   |             |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                                                   |   | $             | 725,908     |   |             | $      | 751,262 |   |
| Accrued compensation                                                                                                                                                                                                                    |   |          | 268,581     |   |             |   | 193,533 |   |
| Accrued consulting and director fees                                                                                                                                                                                                    |   |          | 144,000     |   |             |   | 144,000 |   |
| Convertible notes payable to officer and director (including accrued interest of $58,790 and $47,445 and net of debt discount of $69,620 and $0, respectively)                                                                          |   |          | 701,170     |   |             |   | 534,445 |   |
| Convertible promissory note (including accrued interest of $29,826 and $25,132 and net of debt discount of $199,654 and $241,657, respectively)                                                                                         |   |          | 475,172     |   |             |   | 428,475 |   |
| Promissory notes payable (including accrued interest of $166,204 and $140,805, respectively)                                                                                                                                            |   |          | 471,050     |   |             |   | 470,660 |   |
| Accrued dividends payable                                                                                                                                                                                                               |   |          | 190,328     |   |             |   | 190,328 |   |
| Total Current Liabilities                                                                                                                                                                                                               |   |          | 2,976,209   |   |             |   | 2,712,703 |   |
|                                                                                                                                                                                                                                    |   |          |        |   |             |   |   |   |
| Long Term Liabilities:                                                                                                                                                                                                                  |   |          |        |   |             |   |   |   |
| Notes Payable                                                                                                                                                                                                                           |   |          | 19,000      |   |             |   | 20,423 |   |
| Total Long Term Liabilities                                                                                                                                                                                                             |   |          | 19,000      |   |             |   | 20,423 |   |
| TOTAL LIABILITIES                                                                                                                                                                                                                       |   | $             | 2,995,209   |   |             | $      | 2,733,126 |   |
|                                                                                                                                                                                                                                    |   |          |        |   |             |   |   |   |
|                                                                                                                                                                                                                                    |   |          |        |   |             |   |   |   |
| Commitments and Contingencies                                                                                                                                                                                                           |   |          |        |   |             |   |   |   |
|                                                                                                                                                                                                                                    |   |          |        |   |             |   |   |   |
| Stockholders' Deficiency:                                                                                                                                                                                                               |   |          |        |   |             |   |   |   |
| Preferred stock $.001 par value; 10,000,000 shares authorized; 184,144  shares issued and outstanding  (liquidation preference $2,727,625 and $2,700,500, as of March 31, 2011 and December 31, 2010, respectively) |   |          | 184         |   |             |   | 184 |   |
| Common stock, $.001 par value; 450,000,000 authorized; 327,240,037 shares issued and 327,235,637 shares outstanding at March 31, 2011; 319,026,726 shares issued and 319,022,326 outstanding at  December 31, 2010            |   |          | 327,239     |   |             |   | 319,026 |   |
| Additional paid-in capital                                                                                                                                                                                                              |   |          | 38,213,954  |   |             |   | 37,203,196 |   |
| Treasury Stock, at cost, 4,400 shares of common stock                                                                                                                                                                                   |   |          | (5,768      | )      |             |   | (5,768 | ) |
| Subscriptions receivable - related party  (including accrued interest of $58,296 and $53,308, respectively)                                                                                                                   |   |          | (395,496    | )      |             |   | (390,508 | ) |
| Accumulated deficit (including $25,636,469 and $24,305,128 of deficit accumulated during development stage at March 31, 2011 and December 31, 2010, respectively)                                                                       |   |          | (40,168,065 | )      |             |   | (38,836,724 | ) |
| Total Stockholders’ Deficiency                                                                                                                                                                                                    |   |          | (2,027,952  | )      |             |   | (1,710,594 | ) |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                          |   | $             | 967,257     |   |             | $      | 1,022,532 |   |

----

|                                                                                                                                                                                                                           |   | Three Months Ended March 31, |        |   | January 1, 2002 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|--------|----------------------|--------|
|                                                                                                                                                                                                                           |   | 2011                         |        |   | 2010                 |   |   | To March 31, 2011 |   |
| Sales                                                                                                                                                                                                                          |   | $                            | --          |   |                 | $      | -- |   |   | $ | 471,290 |   |
| Costs and expenses (income):                                                                                                                                                                                                   |   |                         | --          |   |                 |   | -- |   |   |   |   |   |
| Cost of Sales                                                                                                                                                                                                                  |   |                         | --          |   |                 |   | -- |   |   |   | 575,680 |   |
| Selling, general and administrative, including stock-based compensation of $651,075 and $496,917 for the three months ended March 31, 2011 and  2010 and $4,922,953 for the period January 1, 2002 to March 31, 2011 |   |                         | 1,171,826   |   |                 |   | 934,246 |   |   |   | 15,298,771 |   |
| Non-dilution agreement termination costs                                                                                                                                                                                       |   |                         | --          |   |                 |   | -- |   |   |   | 2,462,453 |   |
| Research and development                                                                                                                                                                                                       |   |                         | 46,679      |   |                 |   | 22,598 |   |   |   | 1,167,032 |   |
| Interest expense - including interest expense to a related party of $14,845 and $10,104 for the three months ended March 31, 2011 and 2010, respectively, and $541,445 for the period Jan 1, 2002 to March 31, 2011            |   |                         | 112,836     |   |                 |   | 113,163 |   |   |   | 2,369,949 |   |
| Financing costs - extension of warrants                                                                                                                                                                                        |   |                         | --          |   |                 |   | -- |   |   |   | 74,700 |   |
| Interest expense - conversion provision                                                                                                                                                                                        |   |                         | --          |   |                 |   | -- |   |   |   | 113,000 |   |
| (Gain) loss on settlement of debt                                                                                                                                                                                              |   |                         | --          |   |                 |   | -- |   |   |   | 1,888,925 |   |
| Change in fair value of warrants and embedded conversion option                                                                                                                                                                |   |                         | --          |   |                 |   | 25,500 |   |   |   | 2,157,249 |   |
| Total costs and expenses                                                                                                                                                                                                       |   |                         | 1,331,341   |   |                 |   | 1,095,507 |   |   |   | 26,107,759 |   |
| Net (loss)                                                                                                                                                                                                                     |   |                         | (1,331,341  | )      |                 |   | (1,095,507 | ) |   |   | (25,636,469 | ) |
| Deemed dividend on preferred stock                                                                                                                                                                                             |   |                         | --          |   |                 |   | -- |   |   |   | (2,072,296 | ) |
| Preferred stock dividends                                                                                                                                                                                                      |   |                         | (27,075     | )      |                 |   | (27,075 | ) |   |   | (969,798 | ) |
|                                                                                                                                                                                                                           |   |                         | (27,075     | )      |                 |   | (27,075 | ) |   |   | (3,042,094 | ) |
| Net loss attributable to common stockholders                                                                                                                                                                                   |   | $                            | (1,358,416  | )      |                 | $      | (1,112,582 | ) |   | $ | (28,678,563 | ) |
| Net loss attributable to common stockholders per common share - Basic and diluted                                                                                                                                              |   | $                            | (0.00       | )      |                 | $      | (0.00 | ) |   |   |   |   |
| Weighted average number of shares outstanding - Basic and diluted                                                                                                                                                              |   |                         | 323,478,011 |   |                 |   | 276,956,674 |   |   |   |   |   |

----

|                                                                 |   |            |    |   |         |   |   |    |   |   |        |   |   | Additional   |    |   | Treasury    |   |       |                |   |   |    |   |   | Total      |     |
|----------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|--------|---------|--------|--------|-------------|--------|--------|--------------|---------|--------|-------------|--------|------------|---------------------|--------|--------|---------|--------|--------|------------|----------|
|                                                                 |   | Preferred Stock |    |   | Common Stock |   |   | Paid-In |   |   | Stock       |   |   | Subscription |    |   | Accumulated |   |       | Stockholders’ |   |
|                                                                 |   | Shares          |    |   | Amount       |   |   | Shares  |   |   | Amount      |   |   | Capital      |    |   | at Cost     |   |       | Receivable          |   |   | Deficit |   |   | Deficiency |     |
|                                                                 |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2010                                         |   |            | 184,144 |   |         | $      | 184    |    |   |   | 319,026,726 |   |   | $            | 319,026 |   |        | $      | 37,203,196 |                |   | $      | (5,768  | )      |   |       | (390,508 | ) |   | $ | (38,836,724 | ) |   | $ | (1,710,594 | ) |
|                                                                 |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of common stock                                   |
| $0.138 per share – January 11, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 181,554     |   |   |         | 182     |   |        |   | 24,818     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 25,000 |   |
| $0.137 per share – January 13, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 182,083     |   |   |         | 182     |   |        |   | 24,818     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 25,000 |   |
| $0.145 per share – February 16, 2011                           |   |            | --      |   |         |   | --     |    |   |   | 344,828     |   |   |         | 345     |   |        |   | 49,655     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 50,000 |   |
|                                                                 |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Proceeds from exercise of warrants                                   |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| $0.088 per share – January 24, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 273,974     |   |   |         | 274     |   |        |   | 23,726     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 24,000 |   |
| $0.122 per share – January 25, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 49,358      |   |   |         | 49      |   |        |   | 5,953      |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 6,002 |   |
| $0.042 per share – February 8, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 95,238      |   |   |         | 95      |   |        |   | 3,905      |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 4,000 |   |
| $0.038 per share – February 24, 2011                           |   |            | --      |   |         |   | --     |    |   |   | 128,125     |   |   |         | 128     |   |        |   | 4,792      |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 4,920 |   |
| $0.042 per share – February 24, 2011                           |   |            | --      |   |         |   | --     |    |   |   | 95,238      |   |   |         | 95      |   |        |   | 3,905      |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 4,000 |   |
|                                                                 |
| Common stock issued for loan conversion                              |
| $0.056 per share – January 4, 2011                             |   |            | --      |   |         |   | --     |    |   |   | 493,924     |   |   |         | 494     |   |        |   | 27,166     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 27,660 |   |
| $0.055 per share – February 4, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 1,002,020   |   |   |         | 1,002   |   |        |   | 54,108     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 55,110 |   |
| $0.055 per share – February 10, 2011                           |   |            | --      |   |         |   | --     |    |   |   | 502,399     |   |   |         | 502     |   |        |   | 27,130     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 27,632 |   |
|                                                                 |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Common stock issued in repayment of debt                             |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| $0.132 per share – January 25, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 86,670      |   |   |         | 87      |   |        |   | 11,353     |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   | 11,440 |   |
|                                                                 |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Common stock issued for services                                     |
| $0.138 per share – January 13, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 452,900     |   |   |         | 453     |   |        |   | 62,047     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 62,500 |   |
| $0.137 per share – January 27, 2011                            |   |            | --      |   |         |   | --     |    |   |   | 325,000     |   |   |         | 325     |   |        |   | 44,200     |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 44,525 |   |
| $0.135 per share – March 9, 2011                               |   |            | --      |   |         |   | --     |    |   |   | 2,000,000   |   |   |         | 2,000   |   |        |   | 268,000    |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 270,000 |   |
| $0.135 per share – March 21, 2011                              |   |            | --      |   |         |   | --     |    |   |   | 2,000,000   |   |   |         | 2,000   |   |        |   | 268,000    |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 270,000 |   |
| Accrued interest                                                     |   |            | --      |   |         |   | --     |    |   |   | --          |   |   |         | --      |   |        |   | --         |                |   |   | --      |   |   |       | (4,988   | ) |   |   | -- |   |   |   | (4,988 | ) |
| Debt Discount                                                        |   |            | --      |   |         |   | --     |    |   |   | --          |   |   |         | --      |   |        |   | 103,132    |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 103,132 |   |
| Amortization of warrants and options for employees and non-employees |   |            |    |   |         |   |   |    |   | 4,050  |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   | 4,050      |     |
|                                                                 |   |            |    |   |         |   |   |    |   |   |        |   |   |         |    |   |        |   |       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   |            | --      |   |         |   | --     |    |   |   | --          |   |   |         | --      |   |        |   | --         |                |   |   | --      |   |   |       |     |   |   |   | (1,331,341 | ) |   |   | (1,331,341 | ) |
| BALANCE – March 31 2011                                        |   |            | 184,144 |   |         | $      | 184    |    |   |   | 327,240,037 |   |   | $            | 327,239 |   |        | $      | 38,213,954 |                |   | $      | (5,768  | )      |   | $          | (395,496 | ) |   | $ | (40,168,065 | ) |   | $ | (2,027,952 | ) |

----

|                                                                                                                                                               |   | Three Months EndedMarch 31, |       |   | For the Period From January 1, 2002 through March 31, 2011 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|----------------------------------------------------------------------|--------|
| Cash Flows from Operating Activities:                                                                                                                              |   | 2011                        |       |   | 2010                                                                 |   |   |   |   |
| Net loss                                                                                                                                                           |   | $                           | (1,331,341 | )      |                                                                 |   | (1,095,507 | ) |   | $ | (25,636,469 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities -                                                                                       |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Loss on Sale of Property and Equipment                                                                                                                             |   |                        | --         |   |                                                                 |   | -- |   |   |   | 8,177 |   |
| Depreciation and amortization                                                                                                                                      |   |                        | 21,231     |   |                                                                 |   | 5,450 |   |   |   | 96,221 |   |
| Amortization of patents and trademarks                                                                                                                             |   |                        | 1,526      |   |                                                                 |   | 1,526 |   |   |   | 29,752 |   |
| Interest expense - amortization of deferred financing                                                                                                              |   |                        | --         |   |                                                                 |   | -- |   |   |   | 22,530 |   |
| Stock based compensation                                                                                                                                           |   |                        | 651,075    |   |                                                                 |   | 496,917 |   |   |   | 4,933,153 |   |
| Interest expense - conversion provision                                                                                                                            |   |                        | --         |   |                                                                 |   | -- |   |   |   | 113,000 |   |
| Interest receivable                                                                                                                                                |   |                        | (4,988     | )      |                                                                 |   | (5,058 | ) |   |   | (58,296 | ) |
| Accretion of debt discount                                                                                                                                         |   |                        | 75,515     |   |                                                                 |   | 55,582 |   |   |   | 1,228,858 |   |
| Change in fair value of warrants and embedded conversion option                                                                                                    |   |                        | --         |   |                                                                 |   | 25,500 |   |   |   | 2,157,249 |   |
| (Gain)/loss on settlement of debt                                                                                                                                  |   |                        | --         |   |                                                                 |   | -- |   |   |   | 1,888,926 |   |
| Non-dilution agreement termination cost                                                                                                                            |   |                        | --         |   |                                                                 |   | -- |   |   |   | 2,462,453 |   |
| Inventory reserve                                                                                                                                                  |   |                        | --         |   |                                                                 |   | -- |   |   |   | 159,250 |   |
| Write-off of stock subscription receivable                                                                                                                         |   |                        | --         |   |                                                                 |   | -- |   |   |   | 21,800 |   |
| Financing costs - warrant extension                                                                                                                                |   |                        | --         |   |                                                                 |   | -- |   |   |   | 74,700 |   |
| Change in assets and liabilities -                                                                                                                                 |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Prepaid expenses and other current assets                                                                                                                          |   |                        | (18,204    | )      |                                                                 |   | 64,140 |   |   |   | (49,657 | ) |
| Inventories                                                                                                                                                        |   |                        | (64,309    | )      |                                                                 |   | (121,653 | ) |   |   | (507,124 | ) |
| Other assets                                                                                                                                                       |   |                        | --         |   |                                                                 |   | -- |   |   |   | (27,861 | ) |
| Accounts payable, accrued expenses, accrued dividends, accrued compensation, accrued consulting and director fees, customer deposits and other current liabilities |   |                        | 93,570     |   |                                                                 |   | 249,058 |   |   |   | 3,276,079 |   |
| Net Cash Used in Operating Activities                                                                                                                              |   |                        | (575,925   | )      |                                                                 |   | (324,045 | ) |   |   | (9,807,259 | ) |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                                                                                              |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                                                                                                 |   |                        | --         |   |                                                                 |   | (9,656 | ) |   |   | (288,689 | ) |
| Patent costs                                                                                                                                                       |   |                        | (7,400     | )      |                                                                 |   | -- |   |   |   | (73,829 | ) |
| Proceeds from sale of property & equipment                                                                                                                     |   |                        | --         |   |                                                                 |   | -- |   |   |   | 4,350 |   |
| Net Cash Used in Investing Activities                                                                                                                              |   |                        | (7,400     | )      |                                                                 |   | (9,656 | ) |   |   | (358,168 | ) |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash Flows from Financing Activities:                                                                                                                              |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Reduction of stock subscription receivable                                                                                                                         |   |                        | --         |   |                                                                 |   | -- |   |   |   | 65,700 |   |
| Proceeds from sale of preferred stock                                                                                                                              |   |                        | --         |   |                                                                 |   | -- |   |   |   | 1,130,127 |   |
| Proceeds from sale of common stock                                                                                                                                 |   |                        | 100,000    |   |                                                                 |   | 100,000 |   |   |   | 5,793,999 |   |
| Proceeds from exercise of warrants                                                                                                                                 |   |                        | 42,922     |   |                                                                 |   | -- |   |   |   | 547,269 |   |
| Proceeds from sale of common stock to be issued                                                                                                                    |   |                        | --         |   |                                                                 |   | -- |   |   |   | 300,000 |   |
| Deferred financing costs                                                                                                                                           |   |                        | --         |   |                                                                 |   | -- |   |   |   | (22,530 | ) |
| Proceeds from convertible promissory note                                                                                                                          |   |                        | 100,000    |   |                                                                 |   | 175,000 |   |   |   | 1,870,000 |   |
| Proceeds from officers and directors convertible loans                                                                                                             |   |                        | 225,000    |   |                                                                 |   | -- |   |   |   | 975,000 |   |
| Repayment of officers and directors loans                                                                                                                          |   |                        | --         |   |                                                                 |   | -- |   |   |   | (200,000 | ) |
| Repayment of notes payable                                                                                                                                         |   |                        | (1,497     | )      |                                                                 |   | -- |   |   |   | (279,791 | ) |
| Net Cash Provided by Financing Activities                                                                                                                          |   |                        | 466,425    |   |                                                                 |   | 275,000 |   |   |   | 10,179,774 |   |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                                                                                               |   |                        | (116,900   | )      |                                                                 |   | (58,701 | ) |   |   | 14,347 |   |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash at beginning of  period                                                                                                                             |   |                        | 166,758    |   |                                                                 |   | 107,423 |   |   |   | 35,511 |   |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash at end of period                                                                                                                                              |   |                        | 49,858     |   |                                                                 |   | 48,722 |   |   |   | 49,858 |   |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information:                                                                                                                  |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash paid during the year for interest                                                                                                                             |   |                        | 4,555      |   |                                                                 |   | 335 |   |   |   | 395,139 |   |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Non-Cash Investing Activities:                                                                                                                                     |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Notes Receivable for common stock issued                                                                                                                           |   |                        |       |   |                                                                 |   | -- |   |   |   |   |   |
|                                                                                                                                                               |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Non-Cash Financing Activities:                                                                                                                                     |   |                        |       |   |                                                                 |   |   |   |   |   |   |   |
| Compensation satisfied by issuance of common stock                                                                                                                 |   |                        | --         |   |                                                                 |   | 84,000 |   |   |   | 229,250 |   |
| Common stock issued in satisfaction of liabilities                                                                                                                 |   |                        | 121,842    |   |                                                                 |   | 144,615 |   |   |   | 8,095,792 |   |
| Reclassification of derivative liabilities                                                                                                                         |   |                        | --         |   |                                                                 |   | -- |   |   |   | 3,645,166 |   |
| Reclassification of equity instrument to derivative liabilities                                                                                                    |   |                        | --         |   |                                                                 |   | (80,000 | ) |   |   | 48,600 |   |
| Cancellation of debt for no consideration                                                                                                                          |   |                        | --         |   |                                                                 |   | -- |   |   |   | 1,327,321 |   |
| Debt discount for conversion and warrant rights                                                                                                                    |   |                        | 103,132    |   |                                                                 |   | -- |   |   |   | 103,132 |   |

----

----

| Raw materials  |   | $      | 254,614 |   |
|----------------|--------|--------|---------|--------|
| Finished Goods |   |   | 252,510 |   |
| Total          |   | $      | 507,124 |   |

----

|                         |   | March 31, |       |
|------------------------------|--------|-----------|------------|
|                         |   | 2011      |       |   | 2010 |   |
| Warrants                     |   |      | 27,705,817 |   |   |   | 39,103,516 |   |
| Convertible promissory notes |   |      | 11,702,778 |   |   |   | 13,857,904 |   |
| Convertible preferred stock  |   |      | 1,545,760  |   |   |   | 1,545,760 |   |
| Total                        |   |      | 40,954,355 |   |   |   | 54,507,180 |   |

----

| (a) | On February 7, 2011, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer each made loans of $50,000 to the Company.  The loans accrue interest at the rate of 10% per annum.  In addition, the Company issued warrants to each officer to purchase 89,928 shares of common stock at an exercise price of $0.139 per share.  The loans are due and payable by or on February 7, 2012.   The loan and accrued interest are to be paid on the maturity date.  The loans were evidenced by the promissory notes the Company issued to the two officers which each contain a conversion clause that allow the officers at the officer’s sole option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock.  The conversion price was set at $0.139 per share, which was the closing market price of the common stock as of the closing date of the loans. The gross proceeds from the sale of the notes $100,000 were recorded net of a discount of $33,612.   The debt discount is being charged to interest expense ratably over the term of the convertible notes. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | On February 14, 2011, the Company sold and issued a convertible promissory note in the principal amount of $100,000 bearing interest at 10% per annum and warrants to purchase 127,389 shares of common stock at an exercise price of $0.1884 per share.  The convertible note matures on February 14, 2012.  The holder of the note is entitled to convert all or a portion of the convertible note plus any unpaid interest, at the lender’s sole option, into shares of common stock at a conversion price of $0.157 per share. The gross proceeds from the sale of the note $100,000 was recorded net of a discount of $27,438.  The debt discount is being charged to interest expense ratably over the term of the convertible note.  |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | On March 16, 2011, the Company’s Chief Financial Officer made a loan of $85,000 to the Company.  The loan accrues interest at the rate of 10% per annum.  In addition, the Company issued warrants to purchase 174,180 shares of common stock at an exercise price of $0.122 per share.  The loan is due and payable by or on March 16, 2012.  The loan and accrued interest are to be paid on the maturity date.  The loan is evidenced by the promissory note the Company issued to the officer which contains a conversion clause that allow the officer at the officer’s sole option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock.  The conversion price was set at $0.122 per share, which was the closing market price of the common stock as of the closing date of the loans. The gross proceeds from the sale of the notes $85,000 were recorded net of a discount of $28,610   The debt discount is being charged to interest expense ratably over the term of the convertible notes. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | On March 28, 2011, the Company’s Chief Financial Officer made a loan of $40,000 to the Company.  The loan pays interest monthly at the rate of 10% per annum.  In addition, the Company issued warrants to purchase 83,333 shares of common stock at an exercise price of $0.12 per share.  The loan is due and payable by or on March 28, 2012.  The loan and accrued interest are to be paid on the maturity date.  The loan is evidenced by the promissory note the Company issued to the officer which contains a conversion clause that allow the officer at the officer’s sole option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock.  The conversion price was set at $0.12 per share, which was the closing market price of the common stock as of the closing date of the loans. The gross proceeds from the sale of the notes $40,000 were recorded net of a discount of $13,472.   The debt discount is being charged to interest expense ratably over the term of the convertible notes.  |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a) | On January 13, 2011, the Company issued a total of 452,900 shares of common stock to its five directors, including shares issued to the Chief Executive Officer and Chief Financial Officer, each of which received 90,580 shares for their first quarter of 2011 director fees.  The issuance is part of the annual compensation that was authorized by the Company’s Board of Directors on May 26, 2010, when the Board approved the annual director fees to be $50,000, paid in shares of common stock, payable quarterly, and valued at the beginning of each quarter. The Company incurred stock-based compensation of $62,500 in connection with the January 2011 issuance. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | On March 9, 2011, the Company issued 2,000,000 shares of common stock to the Company’s Chief Financial Officer per grant that was approved by the Company’s Board of directors on January 21, 2011.  The shares were fully vested on the date of the grant and accordingly, the Company recorded $270,000 of stock-based compensation in connection with this issuance. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | On March 21, 2011, the Company issued 2,000,000 shares of common stock to the Company’s Chief Executive Officer per grant that was approved by the Company’s Board of directors on January 21, 2011.  The shares were fully vested on the date of the grant and accordingly, the Company recorded $270,000 of stock-based compensation in connection with this issuance. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | On February 7, 2011, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer each made loans of $50,000 to the Company.  The loans accrue interest at the rate of 10% per annum.  In addition, the Company issued warrants to each officer to purchase 89,928 shares of common stock at an exercise price of $0.139 per share.  The loans are due and payable by or on February 7, 2012.   The loan and accrued interest are to be paid on the maturity date.  The loans were evidenced by the promissory notes the Company issued to the two officers which each contain a conversion clause that allow the officers at the officer’s sole option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock.  The conversion price was set at $0.139 per share, which was the closing market price of the common stock as of the closing date of the loans. The gross proceeds from the sale of the notes $100,000 were recorded net of a discount of $33,612.   The debt discount is being charged to interest expense ratably over the term of the convertible notes.   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (e) | On March 16, 2011, the Company’s Chief Financial Officer made a loan of $85,000 to the Company.  The loan accrues interest at the rate of 10% per annum.  In addition, the Company issued warrants to purchase 174,180 shares of common stock at an exercise price of $0.122 per share.  The loan is due and payable by or on March 16, 2012.  The loan and accrued interest are to be paid on the maturity date.  The loan is evidenced by the promissory note the Company issued to the officer which contains a conversion clause that allow the officer at the officer’s sole option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock.  The conversion price was set at $0.122 per share, which was the closing market price of the common stock as of the closing date of the loans. The gross proceeds from the sale of the notes $85,000 were recorded net of a discount of $28,610   The debt discount is being charged to interest expense ratably over the term of the convertible notes.  |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | On March 28, 2011, the Company’s Chief Financial Officer made a loan of $40,000 to the Company.  The loan pays interest monthly at the rate of 10% per annum.  In addition, the Company issued warrants to purchase 83,333 shares of common stock at an exercise price of $0.12 per share.  The loan is due and payable by or on March 28, 2012.  The loan and accrued interest are to be paid on the maturity date.  The loan is evidenced by the promissory note the Company issued to the officer which contains a conversion clause that allow the officer at the officer’s sole option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock.  The conversion price was set at $0.12 per share, which was the closing market price of the common stock as of the closing date of the loans. The gross proceeds from the sale of the notes $40,000 were recorded net of a discount of $13,472.   The debt discount is being charged to interest expense ratably over the term of the convertible notes.  |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (a) | From April 1 through May 18, 2011, for gross proceeds of $167,000 the Company sold an aggregate of 1,828,935 shares of common stock and warrants to purchase an additional 457,228 shares of common stock at an exercise price of $0.1032 to $0.1152.  The warrants have a term of three years and were fully vested on the grant date. |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | On April 26, 2011, the Company received gross proceeds of $12,000 through warrant exercise.  The Company issued aggregate of 175,941 shares of common stock in connection with warrant exercises. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)  | On April 28, 2011, the Company issued a total of 558,035 shares of common stock to its five directors, including shares issued to the Chief Executive Officer and Chief Financial Officer, each of which received 111,607 shares for their second quarter of 2011 director fees.  The issuance is part of the annual compensation that was authorized by the Company’s Board of Directors on May 26, 2010, when the Board approved the annual director fees to be $50,000, paid in shares of common stock, payable quarterly, and valued at the beginning of each quarter. The Company incurred stock-based compensation of $62,500 in connection with the April 2011 issuance. |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
|---------|----------------------------------------------------------------------------------------------|

| • | our ability to raise capital to finance our research and development and operations, when needed and on terms advantageous to us; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------|

| • | our ability to manage growth, profitability and marketability of our products; |
|---------|--------------------------------------------------------------------------------|

| • | general economic and business conditions; |
|---------|-------------------------------------------|

| • | the effect on our business of recent credit-tightening throughout the United States and the world, especially with respect to federal, state, local and foreign government procurement agencies, as well as quasi-public, charitable and private emergency response organizations; |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | the effect on our business of recently reported losses within the financial, banking and other industries and the effect of such losses on the income and financial condition of our potential clients; |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | the impact of developments and competition within the industries in which we intend to compete |
|---------|------------------------------------------------------------------------------------------------|

| • | adverse results of any legal proceedings; |
|---------|-------------------------------------------|

| • | the impact of current, pending or future legislation and regulation on water safety, including, but not limited to, changes in zoning and environmental laws and regulations within our target areas of operations; |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | our ability to maintain and enter into relationships with suppliers, vendors and contractors of acceptable quality of goods and services on terms advantageous to us; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | the volatility of our operating results and financial condition; |
|---------|------------------------------------------------------------------|

| • | our ability to attract and retain qualified senior management personnel; and |
|---------|------------------------------------------------------------------------------|

| • | the other risks and uncertainties detailed in this Form 10-Q and, from time to time, in our other filings with the Securities and Exchange Commission. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

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

|   | This Item is not applicable to smaller reporting companies. |
|--------|-------------------------------------------------------------|

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

----

----

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

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

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

| Date             | Title and Amount(1)                                                                                                                                        | Purchaser          | Underwriter | Principal   Total Offering Price/  Underwriting Discounts |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|-------------|------------------------------------------------------------------------------------|
|             |                                                                                                                                                       |               |        |                                                                               |
| January 4, 2011  | 493,924 shares of common stock issued through conversion of loan                                                                                           | Private investor   | NA          | $0.056 per share/NA                                                                |
| January 11, 2011 | 181,554 shares of common stock and three year warrants to purchase 36,311 shares of common stock at exercise price $0.1652 through 2010 Private Placement. | Private investor   | NA          | $0.1377 per share/NA                                                               |
| January 13, 2011 | 452,900 shares of common stock issued for compensation                                                                                                     | Board of directors | NA          | $0.138 per share/NA                                                                |
| January 13, 2011 | 182,083 shares of common stock and three year warrants to purchase 36,417 shares of common stock at exercise price $0.1648 through 2010 Private Placement. | Private investor   | NA          | $0.1373 per share/NA                                                               |
| January 24, 2011 | 273,974 shares of common stock issued through exercise of warrants.                                                                                        | Private investor   | NA          | $0.0876 per share/NA                                                               |
| January 25, 2011 | 49,358 shares of common stock issued through exercise of warrants                                                                                          | Private investor   | NA          | $0.1216 per share/NA                                                               |
| January 25, 2011 | 86,670 shares of common stock issued in connection with settlement of debt.                                                                                | Consultant         | NA          | $0.132 per share/NA                                                                |
| January 27, 2011 | 325,000 shares of common stock issued as compensation.                                                                                                     | Corporate employee | NA          | $0.137 per share/NA                                                                |

----

| February 4, 2011  | 1,002,020 shares of common stock through loan conversion.                                                                                                 | Private investor        | NA | $0.055 per share/NA  |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|----|----------------------|
| February 8, 2011  | 95,238 shares of common stock issued through exercise of warrants.                                                                                        | Private investor        | NA | $0.042 per share/NA  |
| February 10, 2011 | 502,399 shares of common stock issued through loan conversion.                                                                                            | Private investor        | NA | $0.055 per share/NA  |
| February 16, 2011 | 344,828 shares of common stock and three year warrants to purchase 68,966 shares of common stock at exercise price $0.174 through 2010 Private Placement. | Private investor        | NA | $0.145 per share/NA  |
| February 24, 2011 | 95,238 shares of common stock issued through exercise of warrants.                                                                                        | Private investor        | NA | $0.042 per share/NA  |
| February 24, 2011 | 128,125 shares of common stock issued through exercise of warrants.                                                                                       | Private investor        | NA | $0.0384 per share/NA |
| March 9, 2011     | 2,000,000 shares of common stock issued as executive compensation.                                                                                        | Chief Financial Officer | NA | $0.135 per share/NA  |
| March 21, 2011    | 2,000,000 shares of common stock issued as executive compensation.                                                                                        | Chief Executive Officer | NA | $0.135 per share/NA  |
| February 7, 2011  | Five-year Warrants to purchase 89,928 shares of common stock at an exercise price of $0.139 per share issued in connection with a loan.                   | Chief Executive Officer | NA | $-0-/NA              |
| February 7, 2011  | Five-year Warrants to purchase 89,928 shares of common stock at an exercise price of $0.139 per share issued in connection with a loan.                   | Chief Financial Officer | NA | $-0-/NA              |
| February 14 2011  | Five-year Warrants to purchase 127,389 shares of common stock at an exercise price of $0.1884 per share issued in connection with a loan.                 | Private investor        | NA | $-0-/NA              |
| March 1, 2011     | Three-year Warrants to purchase 500,000 shares of common stock at an exercise price of $0.135 per share issued as compensation.                           | Consultant              | NA | $-0-/NA              |
| March 15, 2011    | Five-year Warrants to purchase 174,180 shares of common stock at an exercise price of $0.122 per share issued in connection with a loan.                  | Chief Financial Officer | NA | $-0-/NA              |
| March 28, 2011    | Five-year Warrants to purchase 83,333 shares of common stock at an exercise price of $0.12 per share issued in connection with a loan.                    | Chief Financial Officer | NA | $-0-/NA              |

----

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

| Item 4. | Removed and Reserved |
|---------|----------------------|

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

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

| ExhibitNumber | Exhibit Description                                                |
|---------------|--------------------------------------------------------------------|
|          |                                                               |
| 31.1          | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. |
| 31.2          | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. |
| 32.1          | Section 1350 Certification of Chief Executive Officer.             |
| 32.2          | Section 1350 Certification of Chief Financial Officer.             |

| Dated:  May 20, 2011 | PureSafe Water Systems, Inc. |
|--------------------------------|------------------------------|
|                           |                         |   |
|                           |                         |   |
|                           | By:                          | /s/ Leslie J. Kessler |
|                           |                         | Leslie J. Kessler |
|                           |                         | Chief Executive Officer |
|                           |                         |   |
|                           | By:                          | /s/ Terry R. Lazar |
|                           |                         | Terry R. Lazar |
|                           |                         | Chief Financial Officer |

----