----

----

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

| 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, 2010 |        |   | December 31, 2009 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-------------|--------|------------------------|--------|
| ASSETS                                                                                                                                                                                                                                            |   |
| Current Assets:                                                                                                                                                                                                                                   |   |                |        |   |                   |   |
| Cash                                                                                                                                                                                                                                              |   | $                   | 48,722      |   |                   | $      | 107,424 |   |
| Inventories                                                                                                                                                                                                                                       |   |                | 218,768     |   |                   |   | 97,115 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                                         |   |                | 55,943      |   |                   |   | 120,083 |   |
| Total Current Assets                                                                                                                                                                                                                              |   |                | 323,433     |   |                   |   | 324,622 |   |
|                                                                                                                                                                                                                                              |   |                |        |   |                   |   |   |   |
| Property and equipment, net of accumulated depreciation of $38,517 and $33,356,  respectively                                                                                                                                           |   |                | 119,756     |   |                   |   | 115,551 |   |
| Patents and trademarks, net of accumulated amortization of $25,030 and $23,504, respectively                                                                                                                                                      |   |                | 67,454      |   |                   |   | 68,980 |   |
| Other assets                                                                                                                                                                                                                                      |   |                | 20,500      |   |                   |   | 20,500 |   |
| TOTAL ASSETS                                                                                                                                                                                                                                      |   | $                   | 531,143     |   |                   | $      | 529,653 |   |
|                                                                                                                                                                                                                                              |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                          |   |
| Current Liabilities:                                                                                                                                                                                                                              |   |                |        |   |                   |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                                                             |   | $                   | 863,741     |   |                   | $      | 656,242 |   |
| Accrued compensation                                                                                                                                                                                                                              |   |                | 80,100      |   |                   |   | 84,000 |   |
| Accrued consulting and director fees                                                                                                                                                                                                              |   |                | 142,000     |   |                   |   | 140,000 |   |
| Convertible notes payable to officer and director (including accrued interest of $39,442 and $14,685 and net of debt discount of $9,804 and $14,706, respectively)                                                                                |   |                | 416,638     |   |                   |   | 99,979 |   |
| Convertible promissory note (including accrued interest of $22,319 and $9,194 and net of debt discount of $138,234 and $104,214, respectively)                                                                                                    |   |                | 434,085     |   |                   |   | 279,980 |   |
| Promissory notes payable (including accrued interest of $140,805 and $127,221, respectively)                                                                                                                                                      |   |                | 299,027     |   |                   |   | 285,443 |   |
| Fair value of detachable warrants and options                                                                                                                                                                                                     |   |                | 383,500     |   |                   |   | 286,100 |   |
| Fair value of embedded conversion options                                                                                                                                                                                                         |   |                | 290,700     |   |                   |   | 197,900 |   |
| Accrued dividends payable                                                                                                                                                                                                                         |   |                | 190,328     |   |                   |   | 190,328 |   |
| Total Current Liabilities                                                                                                                                                                                                                         |   |                | 3,100,119   |   |                   |   | 2,219,972 |   |
|                                                                                                                                                                                                                                              |   |                |        |   |                   |   |   |   |
| Long Term Liabilities:                                                                                                                                                                                                                            |   |                |        |   |                   |   |   |   |
| Notes Payable                                                                                                                                                                                                                                     |   |                | --          |   |                   |   | 236,624 |   |
| Notes payable to officers and directors                                                                                                                                                                                                           |   |                | --          |   |                   |   | 287,000 |   |
| Total Long Term Liabilities                                                                                                                                                                                                                       |   |                | --          |   |                   |   | 523,624 |   |
| TOTAL LIABILITIES                                                                                                                                                                                                                                 |   | $                   | 3,100,119   |   |                   | $      | 2,743,596 |   |
|                                                                                                                                                                                                                                              |   |                |        |   |                   |   |   |   |
|                                                                                                                                                                                                                                              |   |                |        |   |                   |   |   |   |
| Commitments and Contingencies                                                                                                                                                                                                                     |   |                |        |   |                   |   |   |   |
|                                                                                                                                                                                                                                              |   |                |        |   |                   |   |   |   |
| Stockholders' Deficiency:                                                                                                                                                                                                                         |   |                |        |   |                   |   |   |   |
| Preferred stock $.001 par value; 10,000,000 shares authorized; 184,144  shares issued and outstanding  (liquidation preference $2,619,325 and $2,592,250, as of March 31, 2010 and December 31, 2009, respectively) |   |                | 184         |   |                   |   | 184 |   |
| Common stock, $.001 par value; 450,000,000 authorized; 284,770,809 shares issued and 284,766,409 shares outstanding at March 31, 2010; 272,162,945 shares issued and 272,158,545 outstanding at  December 31, 2009                 |   |                | 284,770     |   |                   |   | 272,162 |   |
| Additional paid-in capital                                                                                                                                                                                                                        |   |                | 30,819,719  |   |                   |   | 30,086,795 |   |
| Treasury Stock, at cost, 4,400 shares of common stock                                                                                                                                                                                             |   |                | (5,768      | )      |                   |   | (5,768 | ) |
| Subscriptions receivable - related party  (including accrued interest of $38,134 and $33,076, respectively)                                                                                                                             |   |                | (375,334    | )      |                   |   | (370,276 | ) |
| Accumulated deficit (including $1,095,507 and $17,665,444 of deficit accumulated during development stage at March 31, 2010 and December 31, 2009, respectively)                                                                        |   |                | (33,292,547 | )      |                   |   | (32,197,040 | ) |
| Total Stockholders’ Deficiency                                                                                                                                                                                                              |   |                | (2,568,976  | )      |                   |   | (2,213,943 | ) |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                    |   | $                   | 531,143     |   |                   | $      | 529,653 |   |

----

|                                                                                                                                                                                                                          |   | Three Months Ended March 31, |        |   | January 1, 2002 To March 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|--------|-----------------------------------|--------|
|                                                                                                                                                                                                                          |   | 2010                              |        |   | 2009                              |   |   | 2010 |   |
| Sales                                                                                                                                                                                                                         |   | $                                 | --          |   |                              | $      | -- |   |   | $ | 471,290 |   |
| Costs and expenses (income):                                                                                                                                                                                                  |   |                              | --          |   |                              |   | -- |   |   |   |   |   |
| Cost of Sales                                                                                                                                                                                                                 |   |                              | --          |   |                              |   | -- |   |   |   | 575,680 |   |
| Selling, general and administrative, including stock-based compensation of $496,917 and $63,962 for the three months ended March 31, 2010 and  2009 and $3,875,724 for the period January 1, 2002 to March 31, 2010 |   |                              | 934,246     |   |                              |   | 418,412 |   |   |   | 11,755,813 |   |
| Non-dilution agreement termination costs                                                                                                                                                                                      |   |                              | --          |   |                              |   | -- |   |   |   | 2,462,453 |   |
| Research and development                                                                                                                                                                                                      |   |                              | 22,598      |   |                              |   | 2,234 |   |   |   | 908,285 |   |
| Interest expense - including interest expense to a related party of $10,104 and $6,250 for the three months ended March 31, 2010 and 2009, respectively, and $230,869 for the period Jan 1, 2002 to March 31, 2010            |   |                              | 113,163     |   |                              |   | 45,079 |   |   |   | 1,774,475 |   |
| Financing costs - extension of warrants                                                                                                                                                                                       |   |                              | --          |   |                              |   | -- |   |   |   | 74,700 |   |
| Interest expense - conversion provision                                                                                                                                                                                       |   |                              | --          |   |                              |   | -- |   |   |   | 113,000 |   |
| (Gain) loss on settlement of debt                                                                                                                                                                                             |   |                              | --          |   |                              |   | -- |   |   |   | 2,027,186 |   |
| Change in fair value of warrants and embedded conversion option                                                                                                                                                               |   |                              | 25,500      |   |                              |   | 162,500 |   |   |   | (459,351 | ) |
| Total costs and expenses                                                                                                                                                                                                      |   |                              | 1,095,507   |   |                              |   | 628,225 |   |   |   | 19,232,241 |   |
| Net (loss)                                                                                                                                                                                                                    |   |                              | (1,095,507  | )      |                              |   | (628,225 | ) |   |   | (18,760,951 | ) |
| Deemed dividend on preferred stock                                                                                                                                                                                            |   |                              | --          |   |                              |   | -- |   |   |   | (2,072,296 | ) |
| Preferred stock dividends                                                                                                                                                                                                     |   |                              | (27,075     | )      |                              |   | (27,075 | ) |   |   | (861,498 | ) |
|                                                                                                                                                                                                                          |   |                              | (27,075     | )      |                              |   | (27,075 | ) |   |   | (2,933,794 | ) |
| Net loss attributable to common stockholders                                                                                                                                                                                  |   | $                                 | (1,112,582  | )      |                              | $      | (655,300 | ) |   | $ | (21,694,745 | ) |
| Net loss attributable to common stockholders per common share - Basic and diluted                                                                                                                                             |   | $                                 | (0.01       | )      |                              | $      | (0.01 | ) |   |   |   |   |
| Weighted average number of shares outstanding - Basic and diluted                                                                                                                                                             |   |                              | 276,956,674 |   |                              |   | 239,169,385 |   |   |   |   |   |

----

|                                                                 |   | Preferred Stock |    |   | Common Stock |   |   | Additional Paid-In |   |   | Treasury Stock at |   |   | Subscription |    |   | Accumulated |   |       | Total Stockholders’ |   |
|----------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|--------|--------------------|--------|--------|-------------------|--------|--------|--------------|---------|--------|-------------|--------|------------|---------------------------|--------|
|                                                                 |   | Shares          |    |   | Amount       |   |   | Shares             |   |   | Amount            |   |   | Capital      |    |   | Cost        |   |       | Receivable                |   |   | Deficit |   |   | Deficiency |   |
|                                                                 |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                    |   |            | 184,144 |   |         | $      | 184    |               |   |   | 272,162,945       |   |   | $            | 272,162 |   |        | $      | 30,086,795 |                      |   | $ | (5,768 | ) |   |   | (370,276 | ) |   | $ | (32,197,040 | ) |   | $ | (2,213,943 | ) |
|                                                                 |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of common stock and warrants:                     |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.053 per share – January 29, 2010                       |   |            | --      |   |         |   | --     |               |   |   | 1,886,792         |   |   |         | 1,887   |   |        |   | 98,113     |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 100,000 |   |
|                                                                 |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued in repayment of debt:                            |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.0510 per share – February 1, 2010                      |   |            | --      |   |         |   | --     |               |   |   | 2,604,608         |   |   |         | 2,605   |   |        |   | 130,230    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 132,835 |   |
| $0.055 per share – February 19, 2010                      |   |            | --      |   |         |   | --     |               |   |   | 1,741,464         |   |   |         | 1,741   |   |        |   | 94,039     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 95,780 |   |
| Common stock issued for services                                     |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.051 per share – February 1, 2010                       |   |            | --      |   |         |   | --     |               |   |   | 2,375,000         |   |   |         | 2,375   |   |        |   | 117,475    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 119,850 |   |
| $0.057 per share – February  1, 2010                 |   |            | --      |   |         |   | --     |               |   |   | 2,000,000         |   |   |         | 2,000   |   |        |   | 112,000    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 114,000 |   |
| $0.057 per share – February 9, 2010                       |   |            | --      |   |         |   | --     |               |   |   | 2,000,000         |   |   |         | 2,000   |   |        |   | 112,000    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 114,000 |   |
| Accrued interest                                                     |   |            | --      |   |         |   | --     |               |   |   | --                |   |   |         | --      |   |        |   | --         |                      |   |   | -- |   |   |   | (5,058 | ) |   |   | -- |   |   |   | (5,058 | ) |
| Reclassification of warrants to derivative liability, net            |   |            | --      |   |         |   | --     |               |   |   | --                |   |   |         | --      |   |        |   | (80,000    | )                         |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | (80,000 | ) |
| Amortization of warrants and options for employees and non-employees |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   | 149,067    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 149,067 |   |
|                                                                 |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   |            | --      |   |         |   | --     |               |   |   | --                |   |   |         | --      |   |        |   | --         |                      |   |   | -- |   |   |   |   |   |   |   | (1,095,507 | ) |   |   | (1,095,507 | ) |
|                                                                 |   |            |    |   |         |   |   |               |   |   |              |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE – March 31 2010                                   |   |            | 184,144 |   |         | $      | 184    |               |   |   | 284,770,809       |   |   | $            | 284,770 |   |        | $      | 30,819,719 |                      |   | $ | (5,768 | ) |   | $ | (375,334 | ) |   | $ | (33,292,547 | ) |   | $ | (2,568,976 | ) |

----

|                                                                                                                                                                          |   | Three Months Ended March 31, |       |   | For the Period From January 1, 2002 through |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|------------|--------|--------------------------------------------------|--------|
| Cash Flows from Operating Activities:                                                                                                                                         |   | 2010                              |       |   | 2009                                             |   |   | March 31, 2010 |   |
| Net loss                                                                                                                                                                      |   | $                                 | (1,095,507 | )      |                                             |   | (628,225 | ) |   | $ | (18,760,951 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities -                                                                                                  |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Loss on Sale of Property and Equipment                                                                                                                                        |   |                              | --         |   |                                             |   | -- |   |   |   | 8,177 |   |
| Depreciation and amortization                                                                                                                                                 |   |                              | 5,450      |   |                                             |   | 6,418 |   |   |   | 45,349 |   |
| Amortization of patents and trademarks                                                                                                                                        |   |                              | 1,526      |   |                                             |   | 1,317 |   |   |   | 23,648 |   |
| Interest expense - amortization of deferred financing                                                                                                                         |   |                              | --         |   |                                             |   | -- |   |   |   | 22,530 |   |
| Stock based compensation                                                                                                                                                      |   |                              | 496,917    |   |                                             |   | 63,962 |   |   |   | 3,885,924 |   |
| Interest expense - conversion provision                                                                                                                                       |   |                              | --         |   |                                             |   | -- |   |   |   | 113,000 |   |
| Interest receivable                                                                                                                                                           |   |                              | (5,058     | )      |                                             |   | (4,988 | ) |   |   | (38,134 | ) |
| Accretion of debt discount                                                                                                                                                    |   |                              | 55,582     |   |                                             |   | 34,797 |   |   |   | 743,403 |   |
| Change in fair value of warrants and embedded conversion option                                                                                                               |   |                              | 25,500     |   |                                             |   | 162,500 |   |   |   | (459,351 | ) |
| (Gain)/loss on settlement of debt                                                                                                                                             |   |                              | --         |   |                                             |   | -- |   |   |   | 2,027,187 |   |
| 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                                                                                                                                     |   |                              | 64,140     |   |                                             |   | 17,035 |   |   |   | (5,699 | ) |
| Inventories                                                                                                                                                                   |   |                              | (121,653   | )      |                                             |   | -- |   |   |   | (218,768 | ) |
| Other assets                                                                                                                                                                  |   |                              | --         |   |                                             |   | -- |   |   |   | (11,081 | ) |
| Accounts payable, accrued expenses, accrued dividends,  accrued compensation, accrued consulting and director fees, customer deposits and other current liabilities |   |                              | 249,058    |   |                                             |   | 186,587 |   |   |   | 2,750,778 |   |
| Net Cash Used in Operating Activities                                                                                                                                         |   |                              | (324,045   | )      |                                             |   | (160,597 | ) |   |   | (7,155,785 | ) |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                                                                                                         |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                                                                                                            |   |                              | (9,656     | )      |                                             |   | -- |   |   |   | (177,633 | ) |
| Patent costs                                                                                                                                                                  |   |                              | --         |   |                                             |   |   |   |   |   | (66,429 | ) |
| Proceeds from sale of property & equipment                                                                                                                                |   |                              | --         |   |                                             |   | -- |   |   |   | 4,350 |   |
| Net Cash Used in Investing Activities                                                                                                                                         |   |                              | (9,656     | )      |                                             |   | -- |   |   |   | (239,712 | ) |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| 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    |   |                                             |   | 195,500 |   |   |   | 4,501,060 |   |
| Proceeds from exercise of warrants                                                                                                                                            |   |                              | --         |   |                                             |   | -- |   |   |   | 9,350 |   |
| Proceeds from sale of common stock to be issued                                                                                                                               |   |                              | --         |   |                                             |   | -- |   |   |   | 300,000 |   |
| Deferred financing costs                                                                                                                                                      |   |                              | --         |   |                                             |   | -- |   |   |   | (22,530 | ) |
| Proceeds from convertible promissory note                                                                                                                                     |   |                              | 175,000    |   |                                             |   | -- |   |   |   | 1,350,000 |   |
| Proceeds from officers and directors convertible loans                                                                                                                        |   |                              | --         |   |                                             |   | -- |   |   |   | 350,000 |   |
| Repayment of notes payable                                                                                                                                                    |   |                              | --         |   |                                             |   | -- |   |   |   | (274,999 | ) |
| Net Cash Provided by Financing Activities                                                                                                                                     |   |                              | 275,000    |   |                                             |   | 195,500 |   |   |   | 7,408,708 |   |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Net increase (decrease) in cash                                                                                                                                               |   |                              | (58,701    | )      |                                             |   | 34,903 |   |   |   | 13,211 |   |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Cash at beginning of  period                                                                                                                                        |   |                              | 107,423    |   |                                             |   | 29,411 |   |   |   | 35,511 |   |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Cash at end of period                                                                                                                                                         |   |                              | 48,722     |   |                                             |   | 64,314 |   |   |   | 48,722 |   |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information:                                                                                                                             |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Cash paid during the year for interest                                                                                                                                        |   |                              | 335        |   |                                             |   | 567 |   |   |   | 371,878 |   |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Non-Cash Investing Activities:                                                                                                                                                |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Notes Receivable for common stock issued                                                                                                                                      |   |                              |       |   |                                             |   | -- |   |   |   |   |   |
|                                                                                                                                                                          |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Non-Cash Financing Activities:                                                                                                                                                |   |                              |       |   |                                             |   |   |   |   |   |   |   |
| Compensation satisfied by issuance of common stock                                                                                                                            |   |                              | 84,000     |   |                                             |   | -- |   |   |   | 139,250 |   |
| Common stock issued in satisfaction of liabilities                                                                                                                            |   |                              | 144,615    |   |                                             |   | 27,368 |   |   |   | 7,492,908 |   |
| Reclassification of equity instrument to derivative liabilities                                                                                                               |   |                              | (80,000    | )      |                                             |   | 18,900 |   |   |   | 439,066 |   |
| Cancellation of debt for no consideration                                                                                                                                     |   |                              | --         |   |                                             |   | -- |   |   |   | 1,327,321 |   |

----

----

|                         |   | March 31, |       |
|------------------------------|--------|----------------|------------|
|                         |   | 2010           |       |   | 2009 |   |
| Warrants                     |   |           | 39,103,516 |   |   |   | 31,432,326 |   |
| Convertible promissory notes |   |           | 13,857,904 |   |   |   | 9,537,463 |   |
| Convertible preferred stock  |   |           | 1,545,760  |   |   |   | 1,545,760 |   |
| Total                        |   |           | 54,507,180 |   |   |   | 42,515,549 |   |

----

|   | • | Level 1 – Inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 2 – Inputs use other inputs that are observable, either directly or indirectly. These inputs include quoted prices for similar assets and liabilities in active markets as well as other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Level 3 – Inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                    |   | Quoted Prices in Active Markets for Identical Liabilities(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |   | Balance at March 31, 2010 |   |
|-----------------------------------------|--------|--------------------------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|------------------------------------------|--------|--------|--------------------------------|--------|
| Embedded conversion feature             |   | $                                                                  | -      |   |                                         | $      | -      |                                     |   | $      | 290,700                        |   |   | $ | 290,700 |   |
| Warrant and option  liability |   | $                                                                  | -      |   |                                         | $      | -      |                                     |   | $      | 383,500                        |   |   | $ | 383,500 |   |
|                                    |   | $                                                                  | -      |   |                                         | $      | -      |                                     |   | $      | 674,200                        |   |   | $ | 674,200 |   |

|                                |   | Embedded Conversion Feature |    |   | Warrant Liability |   |    | Total  |   |
|-------------------------------------|--------|-----------------------------|---------|--------|-------------------|--------|---------|--------|--------|
| Balance January, 1, 2010            |   | $                           | 197,900 |   |              | $      | 286,100 |   |   | $ | 484,000 |   |
| Included in income (expense)        |   |                        | 31,900  |   |              |   | (6,400) |   |   |   | 25,500 |   |
| Included in debt discount           |   |                        | 60,900  |   |              |   | 23,800  |   |   |   | 84,700 |   |
| Included in stockholder's equity    |   |                        | -       |   |              |   | 80,000  |   |   |   | 80,000 |   |
| Transfers in and /or out of Level 3 |   |                        | -       |   |              |   | -       |   |   |   | - |   |
| Balance March 31, 2010              |   | $                           | 290,700 |   |              | $      | 383,500 |   |   | $ | 674,200 |   |

----

----

| (a) | In March 2010, the Company issued to its Chief Executive Officer 1,058,824 shares of common stock in settlement of $54,000 accrued compensation and 588,235 shares issued to the Company’s Chief Financial Officer in settlement of $30,000 accrued compensation. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | In February 2010, the Company issued 2,000,000 shares to the Company’s Chief Executive Officer.  The issuance is part of the grant the Company awarded to the officer in April 2009 in which the chief executive officer has the right to receive a total of 4,000,000 shares of common stock, of which 2,000,000 shares were issued in April 2009 and the remaining 2,000,000 shares were to be issued on January 1, 2010.  In addition to such stock grants, the officer was granted a five-year option to purchase an additional 3,000,000 shares of common stock.  The option was made fully exercisable as of its grant date and has an exercise price of $0.041 per share.  The Company incurred stock-based compensation $114,000 in connection with this issuance. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | In February 2010, the Company issued 2,000,000 shares to the Company’s Chief Financial Officer.  The issuance is part of the grant the Company awarded to the officer in April 2009 in which the Chief Financial Officer was granted the right to receive a total of 4,000,000 shares of common stock of which 2,000,000 shares were issued in April 2009 and the remaining 2,000,000 shares were to be issued on January 2010.  In addition to such stock grants, the officer was granted a five-year option to purchase an additional 3,000,000 shares of common stock.  The option was made fully exercisable as of its grant date and has an exercise price of $0.041 per share.  The Company incurred stock-based compensation $114,000 in connection with this issuance. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | In February 2010, the Company issued 600,000 shares of common stock to the Company’s Chief Executive Officer per grant that was approved by the Company’s Board of directors on February 1, 2010.  The shares were fully vested on the date of the grant and accordingly, the Company recorded $30,600 of stock-based compensation in connection with this issuance. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | In February 2010, the Company issued 600,000 shares of common stock to the Company’s Chief Financial Officer per grant that was approved by the Company’s Board of directors on February 1, 2010.  The shares were fully vested on the date of the grant and accordingly, the Company recorded $30,600 of stock-based compensation in connection with this issuance. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (a) | In April 2010, for gross proceeds of $200,000 the Company sold an aggregate of 3,373,667 shares of common stock and warrants to purchase additional 674,733 shares of common stock at an exercise price of $0.0636 to $0.0756.  The warrants have a term of three years. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | On April 7, 2010, the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer each made loans of $100,000 to the Company.  The loans accrue interest at the rate of 7% per annum.  In addition, the Company issued warrants to each officer to purchase 431,034 shares of common stock at an exercise price of $0.059 per share.  The loans are due and payable by or on October 7, 2010.  The interests accrued on the loans are to be paid on the 7th day of each month until the loans mature and paid off.  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 interests due under the note into common stock.  The conversion price was set at $0.059 per share, which was the closing market price of the common stock as of the closing date of the loans. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | In May 2010, the Company received $175,000 as the consideration for the issuance of 1,788,147 shares of common stock and warrants to purchase additional 357,629 shares of common stock at an exercise price of $0.092 to $0.1516.  The warrants have a life of 3 years.  As of May 20, 2010, shares have not been issued. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 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. |
|---------|-------------------------------------------------------------|

| Item 4T. | 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               | Principal Underwriter | Total Offering Price/Underwriting Discounts |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|-----------------------|---------------------------------------------|
|              |                                                                                                                                       |                    |                  |                                        |
| February 1, 2010  | 2,000,000 shares of common stock issued as executive compensation.                                                                         | Chief Executive Officer | NA                    | $0.057 per share/NA                         |
| February 1, 2010  | Five-year Warrants to purchase 50,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation.     | Corporate employee      | NA                    | $-0-/NA                                     |
| February 1, 2010  | Five-year Warrants to purchase 50,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation.     | Corporate employee      | NA                    | $-0-/NA                                     |
| February 1, 2010  | Five-year Warrants to purchase 50,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation.     | Corporate employee      | NA                    | $-0-/NA                                     |
| February 1, 2010  | Five-year Warrants to purchase 25,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation.     | Corporate employee      | NA                    | $-0-/NA                                     |
| February9, 2010   | 2,000,000 shares of common stock issued as executive compensation.                                                                         | Chief Financial Officer | NA                    | $0.057 per share/NA                         |
| February 26, 2010 | 500,000 shares of common stock issued as executive compensation.                                                                           | Corporate officer       | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 500,000 shares of common stock issued as executive compensation.                                                                           | Corporate employee      | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 50,000 shares of common stock issued as employee compensation.                                                                             | Corporate employee      | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 50,000 shares of common stock issued as employee compensation.                                                                             | Corporate employee      | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 50,000 shares of common stock issued as employee compensation.                                                                             | Corporate employee      | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 588,235 shares of common stock issued in settlement of $30,000 debt.                                                                       | Chief Financial Officer | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 1,058,824 shares of common stock issued in settlement of $54,000 debt.                                                                     | Chief Executive Officer | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 500,000 shares of common stock issued in settlement of $25,500 debt.                                                                       | Corporate officer.      | NA                    | $0.051 per share/NA                         |
| February 26, 2010 | 457,549 shares of common stock issued in settlement of $23,335 debt.                                                                       | Corporate employee      | NA                    | $0.051 per share/NA                         |
| March 2, 2010     | 1,741,464 shares of common stock issued in settlement of $95,780 debt.                                                                     | Consultant              | NA                    | $0.055/NA                                   |
| March 5, 2010     | 25,000 shares of common stock issued as employee compensation.                                                                             | Corporate employee      | NA                    | $0.051/NA                                   |
| March 5, 2010     | 600,000 shares of common stock issued as executive compensation.                                                                           | Chief Financial Officer | NA                    | $0.051 per share/NA                         |
| March 8, 2010     | Five-year Warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.052 per share issued as executive compensation. | Chief Executive Officer | NA                    | $-0-/NA                                     |
| March 8, 2010     | Five-year Warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.052 per share issued as executive compensation. | Corporate officer       | NA                    | $-0-/NA                                     |
| March 18, 2010    | 600,000 shares of common stock issued as executive compensation.                                                                           | Chief Executive Officer | NA                    | $0.051 per share/NA                         |
|              |                                                                                                                                       |                    |                  |                                        |
| March 22, 2010    | 943,396 shares of common stock and three year warrants to purchase 188,679 shares of common stock issued in 2010 private placement.        | Private investor.       | NA                    | $0.053/NA                                   |
| March 22, 2010    | 943,396 shares of common stock and three year warrants to purchase 188,679 shares of common stock issued in 2010 private placement.        | Private investor.       | NA                    | $.053/NA                                    |

----

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

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

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

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

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

| Dated:  May 24, 2010 | PureSafe Water Systems, Inc. |
|--------------------------------|------------------------------|
|                           |                         |   |   |
|                           |                         |   |   |
|                           | By:                     | /s/ Leslie J. Kessler |   |
|                           |                         | Leslie J. Kessler |   |
|                           |                         | Chief Executive Officer |   |
|                           |                         | (Duly Authorized Officer and Principal Executive Officer) |   |
|                           |                         |   |   |
|                           | By:                     | /s/ Terry R. Kessler |   |
|                           |                         | Terry R. Kessler |   |
|                           |                         | Chief Financial Officer |   |
|                           |                         | (Duly Authorized Officer and Principal Financial Officer) |   |

----